| Time | Speaker | Text |
|---|---|---|
| 00:00:00.03 | Janelle Kellman | I just learned that the gentleman who owns the Junction lives next up the street from me. Yeah, Robin says, Yeah, and they're working on a pizza program for the cruising club. |
| 00:00:11.32 | Serge Avila | And Madam Mayor, we are now. |
| 00:00:12.60 | Janelle Kellman | No. Thank you, wonderful. Thank you so much, Serge. We'll go ahead and call this meeting to order. This is the City of South Slido, regular city council meeting for Tuesday, April 26, 2022. Can you please go ahead and call the role surgeon? |
| 00:00:29.14 | Councilmember Sobieski | Thank you. |
| 00:00:29.21 | Serge Avila | Council member Salvieski yes here |
| 00:00:29.41 | Unknown | Council. |
| 00:00:32.08 | Councilmember Sobieski | Thank you. |
| 00:00:32.23 | Serge Avila | Council member, I can move on. |
| 00:00:32.45 | Councilmember Sobieski | Thank you. |
| 00:00:32.50 | Janelle Kellman | Councilman. |
| 00:00:34.73 | Serge Avila | Thank you. |
| 00:00:34.78 | Vice Mayor Blasden | Thank you. |
| 00:00:34.79 | Serge Avila | Council member Hoffman. |
| 00:00:34.81 | Vice Mayor Blasden | Councilman. |
| 00:00:36.55 | Serge Avila | Thank you. |
| 00:00:36.56 | Vice Mayor Blasden | Here. |
| 00:00:36.99 | Serge Avila | Thank you. |
| 00:00:37.10 | Vice Mayor Blasden | Bye. |
| 00:00:37.26 | Serge Avila | Vice Mayor Blasden. |
| 00:00:38.98 | Vice Mayor Blasden | here. |
| 00:00:39.64 | Serge Avila | Mayor Kellman. Here. |
| 00:00:42.71 | Janelle Kellman | Thank you. |
| 00:00:42.74 | Serge Avila | Our members are present and we do have a quorum. |
| 00:00:46.13 | Janelle Kellman | Thank you, Serge. So today item 1B or closed session items, we have four of them. Item D1, Conference with Legal Counsel, existing litigation, Susan Gordon and Albert Titus versus Caltrans in South Slido. Lydia McNair versus Caltrans and City of South Lido. Ron Rauda and George Glass versus Caltrans and City of South Lido. and Winston Ashmead and David Johnson versus Caltrans at the city of Saucyote. Item D2, confidential legal counsel, is the city of Saucelida versus California affiliated risk management authorities. Case number CIV1902916. Item D3 is conference with labor negotiators, agency designated representatives, Charles Sakai and Sloan Sakai. and the employer organization is the SEIU Local 1021. the Saucena Police Association Management. And then item D4, again, conference with legal counsel, real property negotiations, we'll be looking at MLK, property at 100 Ebtide Suite 220. So do we have any public comment on closed session items? |
| 00:01:47.27 | Serge Avila | Mayor I see no members of the public in the meeting at this time. |
| 00:01:51.49 | Janelle Kellman | Okay, then we'll go ahead and close public comment and adjourn to the closed session. Thanks, Ruth. |
| 00:02:03.94 | Serge Avila | to admit all participants. |
| 00:02:11.28 | Serge Avila | Thank you. |
| 00:02:11.30 | Janelle Kellman | Thank you. |
| 00:02:11.32 | Serge Avila | Madam Mayor, all participants are in the room now and we're live. |
| 00:02:11.37 | Janelle Kellman | And I'm... |
| 00:02:15.13 | Janelle Kellman | Great, thank you. And welcome everybody to the Saucedo City Council meeting for April 26th, 2022. We are returning from closed session and we do not have any announcements. So we're gonna move on to item 2B, which is approval of the agenda. Do I have a motion and a second to approve the agenda? |
| 00:02:33.46 | Councilmember Sobieski | to approve the agenda. |
| 00:02:35.20 | Janelle Kellman | Thank you. Second. THANK YOU. SERGE, PLEASE CALL THE ROLL. |
| 00:02:39.85 | Serge Avila | Council Member Sobieski. |
| 00:02:42.91 | Unknown | Thank you. |
| 00:02:42.96 | Serge Avila | Thank you. |
| 00:02:42.98 | Unknown | Thank you. |
| 00:02:43.03 | Serge Avila | Council member Blouse, council member. |
| 00:02:43.18 | Unknown | Council member Blavis. |
| 00:02:44.04 | Vice Mayor | Yeah. |
| 00:02:44.85 | Unknown | Thank you. |
| 00:02:46.22 | Serge Avila | Hoffman. |
| 00:02:46.32 | Vice Mayor | Hoffman. |
| 00:02:47.75 | Janelle Kellman | Thank you. |
| 00:02:47.77 | Vice Mayor | Yes. |
| 00:02:48.26 | Unknown | Thank you. |
| 00:02:48.31 | Vice Mayor | Thank you. |
| 00:02:48.38 | Unknown | Bye. |
| 00:02:48.92 | Serge Avila | Vice Mayor Blotstein. |
| 00:02:48.95 | Vice Mayor | Bye. |
| 00:02:49.19 | Unknown | Thank you. |
| 00:02:50.81 | Vice Mayor | Thank you. |
| 00:02:50.84 | Janelle Kellman | Yes. |
| 00:02:51.46 | Serge Avila | Mayor Kellman. |
| 00:02:51.55 | Janelle Kellman | I'm not. |
| 00:02:51.72 | Vice Mayor | THE END OF THE END OF THE |
| 00:02:52.80 | Janelle Kellman | Yes. Passes a four zero. Thank you. We'll move on to item 1A or item one is special presentations or managed announcements. Item 1A is a proclamation acknowledging April, 2022 as fair housing month. So I have a proclamation here that I'm going to go ahead and read. So this is the proclamation of the city of Salcedo supporting fair housing. Whereas the principle of fair housing is not only state and national law and policy, but a fundamental human concept and entitlement for all citizens. And whereas discrimination based on race, national origin, gender, disability, familial status, exclusion of minor children. Religion, marital status, and sexual orientation is illegal in California. And whereas as a community, we welcome all good neighbors, recognizing the contributions and riches tendered by a wide variety of young and old, male and female, people of all colors and ethnic backgrounds, religious traditions, et cetera, And whereas interest parties from both the private and public sectors will participate in a city, state and national effort to promote fair housing, Now, therefore, I, Janelle Kelman, Mayor of the City of Sausalito, do hereby proclaim the month of April 2022 to be Fair Housing Month. In the city of Sausalito, I urge all residents of our community to personally adopt the spirit of equal housing opportunity and adhere to the letter and character of the fair housing laws. Thank you, everybody. |
| 00:04:16.30 | Janelle Kellman | Any comments from other, I don't see a public comment, I suppose we should take public comment on that as well. |
| 00:04:25.10 | Serge Avila | Madam Mayor, would you like me to let the participants know how to provide public comment? Yes, please. |
| 00:04:32.17 | Unknown | Video? |
| 00:04:32.44 | Serge Avila | Video or audio public comment participation is limited to three minutes per speaker. If you would like to make a comment, please raise your hand in the Zoom application, and you will be called upon when it's your time to speak. To raise your hand from a phone, press start 9, and each speaker will be notified when the time has elapsed. |
| 00:04:52.19 | Janelle Kellman | Thank you, Serge. Do you see any hands? |
| 00:04:55.04 | Serge Avila | Madam Mayor, is he no hands raised? |
| 00:04:57.20 | Janelle Kellman | Okay, any comments from council members? If not, we'll move on to item 1B. Not seeing any hands. Item 1B is a planning commission, a special 10 minute presentation. Christina Feller, chair of the planning commission, will be presenting to us tonight. |
| 00:05:19.88 | Janelle Kellman | So I'll just ask Serge or Heidi, do you see Chair Feller? |
| 00:05:26.14 | Serge Avila | I see no Chair Beller in the room. um, Perhaps if Chair Feller can raise her hand then we can quickly assign co-host functions. |
| 00:05:39.62 | Heidi Scoble | Mayor Kelman, I don't see Chair Feller in the room at this moment. Okay. |
| 00:05:45.75 | Janelle Kellman | Thank you. |
| 00:05:46.83 | Heidi Scoble | Thank you. |
| 00:05:46.85 | Janelle Kellman | Well, she may have been called away. I know she had some travel to do. THE END OF City Manager Zapata. Uh... Do you see anybody or Heidi, do you see anybody from the planning commission here? If not, we will. move this to another meeting night. |
| 00:06:04.68 | Heidi Scoble | Senator Kelman, I do not see any other planning commissioners in attendance at this moment. |
| 00:06:10.01 | Janelle Kellman | Okay. All right then, so I will note that, and then we will at agenda setting reschedule this item. Then we'll go ahead to item two, which is the action minutes of the previous meeting. Is there a comment? No. All right, so this is the approval of the minutes for April 12th, 2022. I'll see if there's any comments or corrections and then we'll take public comments. |
| 00:06:40.52 | Janelle Kellman | Okay, I don't see any hands or comments or corrections. Serge, any hands for public comments? |
| 00:06:46.31 | Serge Avila | Madam Mayor, I see no hands raised for this particular item. |
| 00:06:51.02 | Janelle Kellman | Okay, then we will go ahead and ask for a, Motion and a second. Thank you. |
| 00:06:58.24 | Vice Mayor Blasden | move. |
| 00:06:58.65 | Janelle Kellman | Thank you. |
| 00:06:59.27 | Eva | Thank you. |
| 00:06:59.29 | Vice Mayor Blasden | Thank you. second and please note Councilmember Sobieski's |
| 00:07:01.69 | Councilmember Sobieski | No. |
| 00:07:04.35 | Vice Mayor Blasden | legal pad with a note that says he cannot unmute himself. |
| 00:07:07.05 | Councilmember Sobieski | I now unmuted Vice Officer. |
| 00:07:09.10 | Vice Mayor Blasden | Because I'm in a... |
| 00:07:09.53 | Janelle Kellman | Thank you. |
| 00:07:09.55 | Councilmember Sobieski | Thank you, Serge. |
| 00:07:11.19 | Janelle Kellman | Okay, we have our first and our second. Can you please go ahead, Sergeant, and call the roll? |
| 00:07:15.68 | Unknown | Councilman. |
| 00:07:16.01 | Serge Avila | Council member Sobieski? |
| 00:07:16.05 | Unknown | Thank you. |
| 00:07:17.85 | Serge Avila | Council Member Hoffman. |
| 00:07:18.48 | Unknown | Thank you. |
| 00:07:21.85 | Serge Avila | Thank you. |
| 00:07:21.87 | Janelle Kellman | Thank you. |
| 00:07:21.97 | Serge Avila | Yes. |
| 00:07:22.43 | Councilmember Hoffman | you |
| 00:07:22.66 | Vice Mayor | Thank you. |
| 00:07:22.76 | Janelle Kellman | Thank you. |
| 00:07:22.85 | Serge Avila | Vice Mayor Blaustein. |
| 00:07:22.88 | Janelle Kellman | Thank you. Bye. |
| 00:07:23.37 | Vice Mayor | Thank you. |
| 00:07:25.24 | Janelle Kellman | Yes. |
| 00:07:26.14 | Serge Avila | And Mayor Kellman. |
| 00:07:27.56 | Janelle Kellman | Yes. Okay, thank you very much. All right, moving on to item three, which is the consent calendar. We have six items on the consent calendar tonight. Matters listed under the consent calendar are considered routine and non-controversial, require no discussion, are expected to have unanimous council support, and may be enacted by the council in one motion. There'll be no separate discussion of consent calendar items. However, before the council votes on a motion to adopt the consent calendar items, council members, city staff, or members of the public may request that specific items be removed. from the consent calendar for separate action. Items removed from the consent calendar will be discussed later on the agenda and public comment will be heard on any item that is removed. So like I said, we had six items. Item 3A, adopt a resolution approving the final parcel map for 201 Bridget Boulevard. Item 3B adopt resolution of the city council of the city of Sausageo accepting Dunphy Park improvement project phase one project as complete and direct the city engineer to file a notice of completion. 3C, adopt a resolution authorizing the city manager to execute the two-year construction contract with Roy's Sewer Service for the cleaning of sanitary sewer hotspots for the basement amount of $595,500 and authorize a construction contingency in the amount of $60,000 for a total authorized amount of $650,500. adopt a resolution authorizing the city manager to execute a funding agreement with TAM and execute a professional services agreement participate in the Ride and Drive Clean campaign in an amount not to exceed $4,500. M3E adopt a resolution of City Council of the City of Sausalito supporting the Digital Marine Strategic Plan. And item 3F, adopt a resolution to continue to conduct the city's council and other city board commission committee meetings remotely due to health and safety concerns for the public. We'll go ahead and open a public comment on this and ask surgery if we have any. |
| 00:09:14.95 | Serge Avila | Madam Mayor, there are no hands raised for the consent calendar. |
| 00:09:19.24 | Janelle Kellman | Okay, thanks very much. Any council discussion or direction? Yes, Vice Mayor. |
| 00:09:25.36 | Vice Mayor | I just wanted to note on item 3D that the ride and drive clean campaign is something the sustainability commission has been working on signing on for for quite some time. So I wanted to acknowledge their efforts and thank the city manager for including this and also. Just note that these events will likely show up in Sausalito Currents, so stay tuned because there will be fun activities like demos of new EVs and how to charge and ways you can reduce your emissions through transportation. So I just wanted to make that note. |
| 00:09:53.83 | Janelle Kellman | Great, great work sustainability committee. Thank you for that vice mayor. Okay, so I don't see any public comment and no council direction. So do we have a motion to approve the consent calendar? move. second. |
| 00:10:10.79 | Councilmember Sobieski | Thank you. |
| 00:10:12.34 | Serge Avila | Second. |
| 00:10:13.64 | Janelle Kellman | Okay. Can you please call the roll, sir? |
| 00:10:15.83 | Unknown | Thank you. |
| 00:10:16.04 | Serge Avila | Council Member Sobieski. Yes. Councilmember Hoffman. |
| 00:10:19.88 | Janelle Kellman | Yes. Thank you. |
| 00:10:20.66 | Serge Avila | Vice Mayor Blasdeen. |
| 00:10:22.13 | Janelle Kellman | Yes. |
| 00:10:22.97 | Serge Avila | Mayor Kallman. |
| 00:10:23.97 | Janelle Kellman | Yes. Great. Thanks very much. Well, we'll move on to business items. I know everybody's eagerly awaiting this. So tonight, Main event is going to be pensions, so item 4A. where we see the pension report and pension obligation information from Bartell and associates, uh, as well as some information about, uh, I'm not sure. I'm sorry, as information from the city manager, Chris Zapata. So I'll hand it over to you, Mr. Zappato. |
| 00:10:51.20 | Chris Zapata | Thank you, Mayor, members of the council, members of the public. This has been a very important topic for our organization and our community. We talked about it on October 30th that you're planning and prioritization session about what this was looking like in terms of future draws on our revenue streams. We talked about it last meeting with respect to our overall financial health and as part of this effort the city council authorized that we go out and hire a consultant to come in and talk to you about the details of our pension environment. And as we know in the industry, Bartell and Associates is the go-to firm for a lot of cities in California when it comes to pensions. And so we're fortunate to have them provide a report this evening. And tonight they will cover three key areas. The plans themselves, which are our police, our miscellaneous, as well as our old fire Department. They will also speak to the pension obligation bond environment and also cover some thoughts on our 115 trust. So with that, I want to turn it over to the vice president from Bartell & Associates, Mary Beth Redding, to do a presentation. My sense of it is it's information that's important. And if we can hold questions till the end of the presentation, that would probably be what we would recommend. So, uh, Mary Beth. |
| 00:12:20.08 | Mary Beth Redding | Welcome, Mary Beth. Thank you, Chris. Thank you, mayor and council members. Give me a second and make sure I can share my screen so you all can see it. DID IT WORK? Yes, we see it. Okay. Um, I'm gonna just jump right in and say, first of all, thank you very much for having me here. It's a pleasure to get to talk with cities and um, help, uh, council members to understand what's going on with their pension plans and the options the city has going forward. I'm going to start with several slides of background and talking about what CalPERS is all about and how we got into the situation of having an underfunded pension plan, because I think it lays the groundwork and makes everything else we'll be talking about that easier to understand. CalPERS is a state agency. It administers all the pension plans for state and public employees in California. It goes back to 1932, and its basis is in the state law, the government code. So it can only do what is in the state law. It has to follow those rules. Right now, there's about 2.1 million members, active employees or retirees in CalPERS. There are 650,000 of those members are public agency employees or retirees. So just like the city of Sausalito's employees. There are almost 1600 public agencies, so cities, towns, and special districts that are members of COMPERS. And they have about $460 billion of assets right now. And they're the largest U.S. pension fund. So CalPERS is a huge agency. that, um, They administer all of the city's pension plans, as I said, in accordance with the state law and the board policy. So for example, the list of pension formulas that can be offered is in the state law. CalPERS calculates the benefits for retirees, pays them their monthly checks, Tracks all the data they collect the contributions that are made by the employees and the employers, those are and they have actuaries who calculate what those required contributions are. And then finally, they take the money, the contributions that have been paid into the fund by employees and the employers, and they invest that money again, following policies selected by the board. So once the city chooses to join CalPERS, there's not a lot the city does. It's basically send the money that's required off to CalPERS and CalPERS does everything else. CalPERS is run by a board. It has 13 members and they're listed here. What I find really interesting is that even though CalPERS members, employees, and retirees vote on members of the board, the cities themselves do not actually vote for a member of the board to represent their interests. So, the board. Does like to hear public comment, you know, cities and other public agencies that like or don't like what CalPERS are doing are really encouraged to show up at the board meetings and tell the board what you think. The pension benefit that's being paid by CalPERS is what we call a defined benefit plan, which means employees get a monthly annuity for life. And it's calculated on a formula that takes into account their final pay, the number of years of service they have with each public agency, and some factor that's like 2% or 3%, you know, something in that range. So you multiply those out, pay times service times times this percentage and it tells you what monthly pension benefit is going to be paid every month for the life of the employee and often the employee spouse after the employee In addition, employees retirees have a cost of living increase of up to about 2% a year. But I'll say it again, it's very important to remember that none of the city employees have Social Security benefits. So this is really their only source of retirement income. The plan is funded by the city and its employees. That's it. There's no money coming in from the state or from, you know, statewide taxes or anything like that. It can only be funded through contributions from the cities, the employees, and investment earnings. The contributions of members pay are specified in state law with our classic employees hired before 2013, paying a fixed percentage of their pay, something like 7% or 9% of pay into CalPERS. And the later hired PEPRA employees pay half of the cost of the benefits that are being earned every year into CalPERS. And then the city pays everything else that's required. So really the burden of the unfunded liability is falling on the city. |
| 00:17:30.20 | Mary Beth Redding | A couple more terms just to define sort of from background. The way we calculate required contributions or values and benefits, it's done by CalPERS actuaries, not by me. they look at all the benefits that are ever going to be paid to retirees and active employees and figure out what the value of them now is, discounting for interest and also discounting for the fact that not all active employees are actually going to work until retirement and get paid their benefits. And they're also taking into account things like how long retirees are going to live when they're trying to figure out what the value of the payments is. So the value of the payment for any employee, the idea is to have it fully funded by the time the employee retires. So to have enough money to pay the retirement benefits set aside by each employee's retirement date. It's funded a little bit every year over an employee's working lifetime. So kind of along with their pay and that piece that's paid every year is called the normal cost. The cost of benefits being earned during the year. The other word we'll talk about a lot is the unfunded actuarial accrued liability. The actuarial accrued liability, I think of as the accumulation of all the normal costs we've paid in the past. If everything had gone as expected when we set aside the normal costs, That's how much money we would have set aside in the trust. The assets would exactly equal the liabilities and there would be no unfunded liabilities. But where we sit now, there is an unfunded liability. There's not as much money as we should have. And so that's called the unfunded liability and every, when the city makes contributions to CalPERS, there's really two pieces of the contribution. There's the normal cost, the cost of benefits being earned this year, and then a payment to help pay back this unfunded liability. |
| 00:19:28.29 | Mary Beth Redding | Let's talk about reasons why we have an unfunded liability. We think the primary reason is investment return. This is the kind of chart you've probably seen before. The green line has little dots on it that show the investment return actually earned by CalPERS in every year, going back to 1996. You'll see pretty obviously the very low point in 2008 and nine in the Great Recession. CalPERS lost a lot of money. And on the far right is fiscal year 2021, where they had a very good year and are a little bit over 21%. So there's a lot of ups and downs every year. And for pension purposes, we measure them relative to this blue line near the middle of the graph that's around 7%. And that's the rate CalPERS expects to earn every year. If they earn more than that blue line, it's a good year. If they earn less than that, it's a bad year, even if they earn more than zero in a year. So for example, The year before this past year, CalPERS earned 4.7%, even though that was more than zero, it was a bad year because they didn't earn the 7% that was expected. The brown line in the middle of this chart is showing the 10-year rolling average of returns. And it's kind of interesting in the past three years because 2008 and 2009 have dropped out of it, the 10-year rolling average is actually in the range of sort of 8%. So higher than expected. I think we often have this feeling that CalPERS never earns what they're supposed to, but actually in the long run, they have done quite well and have met their targets. But, I just said that 2008 and nine and the recession was the cause of a lot of the unfunded liabilities. Why did I say that? Well, they lost a lot of money in 2008 and nine And that meant there was less money in the fund to take advantage of the good years that followed. Why was there less money in the fund? A lot goes back to CalPERS's old contribution policy. They were directed to try to keep the rates that cities pay very smooth, not to have a lot of sharp increases or decreases. So they built that into their funding policy and it did great in keeping rates smooth, but it really did very badly at getting enough money back into the fund. The third thing we think of as really driving unfunded liabilities is this whole concept called enhanced benefits. If we go back to the year 1999, 2000 ish, most of the public plans in California were very well funded, typically about 140% funded. And so there arose this concept at the time that this was more money than would ever be needed in the pension plans and maybe we should Deal with that by increasing benefits for employees. And so that was done in most public agencies around the state, most but not all. And it was typically done sort of all of a sudden overnight and employees were not asked to help pay for those increases. This chart here shows the city's different benefit formulas. The tier one are all enhanced formulas, although for miscellaneous, not the highest of the enhanced formulas. So there was that, that's a good thing. The tier two formulas apply to people HIRED Lateral transfers after about 2012, they're lower formulas than the PEPRA. People are even lower formulas than that. And I'll show you a picture on the next slide that will help a little bit. But because Sausalito does have the Tier 1 enhanced formulas, that helps reduce the funded status of the plant. So just for your enjoyment later on, this is a pictorial illustration of all the different benefit formulas CalPERS does offer. And you'll see the red line up at the top in this group of three is the enhanced formula that the city adopted for its tier one, its classic employees. And it's the lowest of the enhanced formulas, but it's still much higher than the formulas that more recent employees get. The last thing driving unfunded liabilities is demographics. And what we see everywhere across the state is that we have more and more retirees and pension plans as compared to active employees. Um, And there's a couple of reasons for that. First, the group of retirees is consistently growing. We have more people retiring that are leaving the retired group. And then we have a not growing or often decreasing number of active employees. So that ratio just gets higher and higher. And Sausalito has more retirees than actives and more than average for the state of California. What that does is increases contribution volatility. We think of it as, You have this group of retirees. They are not working for you anymore. They have a lot of pension assets. as the pension assets perform better or worse than expected You have to pay more money for those retirees and it makes your contribution increase or decrease um relative to the city's budget more than it would if you did not have this big group of retirees you're having to fund. So CalPERS recently has been looking back at all these things that have been happening, particularly that the plans are not getting much better funded. They've made a lot of changes. They've taken a lot of the smoothing out of the contribution calculations. They've required unfunded liabilities to be paid back faster. Um, they have And this is old news going back several years they lowered the discount rate down to 7% but even though it's old news. that's still being phased into the city's contribution rates, it was not increased implemented all at once, but only slowly over time, so we still don't have that full 7% discount rate in the race, the city is paying now. And then just this past November in the CalPERS board meeting, they adopted a new discount rate and new investment allocation that we think is going to be pretty significant. The discount rate was dropped to 6.8% from seven, meaning the long-term average expected earnings on the fund are 6.8%. But given the market conditions, the investment advisors said that it was going to be very difficult to earn that 6.8%, even in the long run, without making changes to the investments that CalPERS holds. And so what they did was they added a lot of more risky investments to their portfolio. They have a lot more private investments, private equity now, and they're even borrowing to give them more money to invest. So all of that, all of these things taken together mean that we expect a lot more volatility and contributions going forward. And what I mean by that is the contributions will increase or decrease year to year a lot more sharply than they would have in the past. The last thing that's going on at CalPERS is they still have in effect their risk mitigation strategy. They would like to reduce this volatility. The way to do that is by having less volatile investments, but those tend to earn less. They tend to be things like fixed income with lower expected returns in the future. Having lower expected returns would increase the contribution rates. So CalPERS would like to very slowly over time shift their fund to be a little more conservative, have less volatility in that. And when that happens, the discount rate will drop. We think that over time, the discount rate will get down to about 6%. |
| 00:27:35.33 | Carlito Berg | It's a good thing. |
| 00:27:44.68 | Mary Beth Redding | Okay, we finished background. Um, I am going to go and talk about each of the three city plans specifically, and then, and what we project for their contributions. So first up for the city's miscellaneous plan, I'm just gonna show you a few selected slides out of our report and talk about the interesting things I see on them. The first one is the number of participants Um, in the city's miscellaneous plan. So this is everybody except sworn police and sworn fire. This chart tracks the number of employees and retirees back to 2001. And in this chart, the blue columns are the number of retirees every year. And you'll see that that increases. The number of retirees just increases every year. There's a little blip in 2012, which is a change in the way CalPERS counted people. It's not. that something happened to a lot of our retirees. The red columns are the number of active employees and what you can see is back in 2001 we had about the same number of employees and retirees and right now we have double the number of retirees as active employees. Towards the right hand side of the chart, you'll see the red column actually has a green bar on top of it. And the green are the number of the new PEPPER people. This is really important because the PEPPER people, again, have lower pension benefits and are paying more of the share of themselves. So as we have more and more pension, more and more PEPPER people, it's helping the city's costs. The one thing to note on this slide is that the city's funded ratio for the miscellaneous plan is about 69 and a half percent. The average CalPERS agency is funded 72%. Why is the city's plan worst funded? The city's always paid what CalPERS said it has. It's not like you've been underpaying. But because we have the enhanced formulas and because there are so many retirees, it just leads to a poorer funded status. If we look at a chart showing the funded status of the plan for the 2019 valuation year, 2020 in the center, which is the most current valuation we have, and then what we expect to see when the 21 valuations are released on the right. The green bar represents the dollar amount of assets in CalPERS fund. And you'll see that in 2021, it increases a lot because they did so well with their investments. But the liabilities in 2021 also increase as CalPERS is lowering the discount rate But net net of it all, the unfunded liability is projected to be about $10 million next year. So significantly down from 13 million this year. |
| 00:30:35.42 | Mary Beth Redding | I am going to skip forward and show you, um, this chart that looks at the funded status of the city's miscellaneous plan and Even though the funded status has been very constant for the past 10 years, we only have data specifically back to 2011 for this plan. The funded status has remained pretty much the same, and that might lead you to think that things are stagnating in the plan, but they're not. The red bar shows the actual accrued liability and it's growing steadily every single year. It's growing because employees are earning benefits and because the liability is growing with interest. The green columns represent the value of assets in the city's CalPERS plan, and it's growing too. It doesn't grow as steadily because CalPERS has good and bad investment years, but it's growing. The problem is, that it can't grow fast enough just from investment earnings to catch up with the liabilities. It just can't. It would take a lot of years, you know, and if you look at the far right two columns, you can see how much the assets grew in a year where we had 21% return. If we could do that for, you know, three or four years in a row, the plan might become 100% funded, but that's really not a realistic expectation. The only way to get the plans fully funded. It's not realistic to happen through investment earnings. It has to happen through the city putting a lot more money into the plan. One last historical chart. The interesting thing on this chart is the bright green triangles. These represent the city's normal cost payment, the cost of benefits being earned by employees every year, going back from 2004 through the present. And what's interesting about that is it's a really flat line. It's just about 11% of pay. And this represents what the miscellaneous plan would cost if there was no unfunded liability. It would cost about 11% of pay. So if you're asking yourself, Is this a sustainable plan? Really what you want to look at is once the unfunded is paid off, is 11% of pay a reasonable amount to pay for pensions, especially considering that our employees are not in Social Security and you're not paying Social Security taxes for them. |
| 00:33:02.44 | Mary Beth Redding | I WANT TO TALK ABOUT THIS. I'm going to skip again and talk, move into the section where we'll be looking at projected contributions for each plan. And what the, my sort of lead in on these slides applies to all of the three plans. We've taken into account everything we know about CalPERS and the pension plans and doing these projections. We've taken into account that they've earned 21% in the fiscal year 21. We've taken into account that investment advisors say that the earnings on CalPERSIS fund are expected to be a lot lower than the target rate, about 5.9% over the next 10 years, and then much better than the target rate, about 7.5% after that. But there are going to be a lot of ups and downs. They won't earn the average rate every year. They'll earn above and below it in a lot of the time. And our modeling does take into account the sort of randomness of investment returns. We haven't built in any other gains and losses other than investments into our numbers. But what we have taken into account is the employee cost sharing where the city has actually negotiated with its classic tier one employees that they will pay additional amounts, about half a percent of pay to help the city fund its pension plan. So the first little snapshot, is a picture This is a 30 year projection of the city's contribution rate for the miscellaneous plan And the green line is where we project rates to be going forward now, given what happened in 2001. And I really just want you to take a quick look at this. The blue line is where rates would have been if CalPERS had earned 7% last year and not 21%. You can see that in a lot of years, close to an 8% difference in the contribution rates. What that means is if CalPERS had earned Only 7% last year, the city for every dollar the city paid in payroll, it would be paying an extra 8 cents to CalPERS. 8% of pay, more to CalPERS if CalPERS earned only 7% last year. So just a very huge difference in the rates for one year's investment earnings. Okay, so just sort of keeping in mind how much things can change one year in one year. We'll go and look where we project rates to go going forward. And the first slide I want to show you is again for the miscellaneous plan. It's about a 10 year look at where rates are expected to be. The green line represents the most likely place for contribution rates to be. Right now they're about 31 and a half percent of pay. And what that means for is for every dollar CalPERS pays in payroll, they send 31 cents. off to, sorry, for every dollar the city pays in payroll, 31 cents goes to CalPurpose to support miscellaneous employees' pension plans. I'm sorry. As you move out to the right in later years, you can see that we have little numbers above and below the green line and they're marking the likely places, the likely range that contributions will be inside. We can't predict CalPERS investment return exactly. So we can't say, you know, we know that it's not likely that rates will exactly follow this green line. They'll move up and down and be around it. And most likely they'll be inside the 25th and 75th percentile markers. So for example, in the last year, 2033 out to the right, most of the time, half of the time, rates will be somewhere between 47% of pay and 14% of pay, most likely around 35% of pay. They could be higher, they could be lower than that. That's a really wide range. And that's part of what we mean when we talk about how volatile rates are now. that there is a wide range, a lot of potential increases in the rates just to be keeping in mind when you do your planning. We look at a 30 year projection of contribution rates for miscellaneous. The first 10 years are the same. It just looks a lot steeper up and down because the chart is squished. But you'll see that the long-term projection for this plan is that rates drop slowly for a couple years. They increase, they peak out around the year 2035, and then they decrease. And about the mid-early 2040s, they really flatten out at about 10% of pay. And what's happening in that time period is that the city has been putting a lot of money into the CalPERS pension plan to pay off the current unfunded liability Eventually that gets paid off and then by the 2040s, what we're left with is a plan that hopefully has a little more conservative investments and less volatility. And all the employees at that point will be PEPRA, they are paying a larger share of their pension benefit and they have a lower pension benefit itself. So costs should be more stable and much lower than they are now. But there is still a good chance that, you know, indicated by the little boxes above and below the line, that contribution rates could be different than we're projecting. skip the next couple slides that are more for budgeting and just show you this one on the funded status projection we're still projecting this the plan will become 100 funded about the early 2040s that's really the same as where we were projecting before calpers had the great year in 2021 and you might ask well gee why aren't we projecting it to be fully funded sooner? And the reason is that CalPERS responds to a good investment year by lowering cities' future contributions so that unfunded doesn't really end up getting paid off any faster. I'll talk briefly about the police plan. A lot of the information is the same. So I'm just going to show you a few of the slides. for the police safety plan. This chart is again, the number of participants every year, going back to 2001 on the left, 2020 on the right. And what you'll see here, He is. a really different picture. The number of active employees, again, is kind of level. Um, but the number of retirees, even as far back as 2001, we had way more retirees and active employees. And now several times as many retirees as active employees. We look at the funded status of the plan. The city's plan is 69% funded, slightly under average for the state. Again, partly due to enhanced formulas, but just about every safety plan in the state has enhanced formulas. So there's no difference there, but again, you have a lot of retirees. Looking at the funded status of the plan, again, we expect a significant decrease in the unfunded liability next year due to the good asset performance and even after considering the drop in the discount rate and the higher liability it will produce. I'm going to skip the rest of the charts because they're really the same picture and look at projected contribution rates. and just show you the 30 year picture for the police plan. The first thing you'll probably notice is we're looking at about 31 to 35% of pay contribution rates. for the miscellaneous group. For the police safety group, the rates in the next two years are over 70% of pay. Safety plans are more expensive for several reasons. The pension benefit for police officers is better than for miscellaneous employees. They tend to retire earlier, so they're in retirement for a longer period of time, collecting the pension for longer. And because they retire early, we have less time to save up money for them, so we have to put more aside every year. And all that means that they have a higher contribution rate. We expect a significant drop in what the city pays after the next couple of years. One large piece of the unfunded will actually be fully paid off at that time that will lower the rates. But after that, we'll have an increase in rates, some kind of similar to the curve we saw for the miscellaneous plan until the early thirties, um, rates will drop. And in the early 2040s, we're expecting them to stabilize at the long-term rate. about 17% of pay for the police plan again because their benefit is more expensive. Um, We look at fire. show you the same things, but they're a little bit more interesting. We don't have as much data on the fire plan. So there's a lot of holes in here. But what you'll see is, again, the blue bar is the number of retirees And the red bars represent the number of active employees. And as you know, the city no longer has any active fire employees. Um, What? The benefits that those employees had earned while they were working for the city is still a liability that the city is required to pay. It's retained that liability. It has an unfunded liability associated with that and the city still must contribute towards the benefits that those fire employees earned while they were city employees. SO IF WE LOOK AT THE the funded status of the city's plan of the fire plan. It's currently about $8 million unfunded. And we expect that to decrease similar to the other plans to about $6 million next year. I'm going to skip all the way to projected contributions for this plan. A very similar pattern. Um, Because we don't have any employees with pay, this chart is not as a percent of pay, but it's in dollars. um The amount of contribution increases a little bit next year, then it decreases. Similar to the other plans, it increases again until the early 30s. Um, but for this plan, because we have no active employees, when the unfunded is paid off, you know, expected to be in the early 2040s, there would be no contribution or expected to be no contribution going forward. However, as long as any of these employees or retirees are alive, there are assets held on their behalf. Those assets can have gains and losses. there could well be an unfunded that liability that would arise in the future. So you're not going to be done with this plan for a very long time. |
| 00:44:07.16 | Mary Beth Redding | um, The slide that shows the dollar amount of contributions projected forward for the next 11 years for the city's plan in total, all on one page. The purple line is the dollars being paid for the miscellaneous plan, going from about $1.4 million in the current fiscal year, up to about $2.2 million for fiscal year 32-33. the yellowish colored line is the safety plan also increasing over that time period and then the combined helpers bill if you think of it that way again will have some ups and downs but go from about 3.7 million dollars for the current fiscal year up to five million dollars in the 32 33 year which is close to the peak hopefully it will start leveling off after that i don't want you to think that because that line goes up it'll go up and up forever Um, Okay. |
| 00:45:08.42 | Mary Beth Redding | going to take a deep breath and totally change gears and talk about a couple other things sort of miscellaneous topics before we get on to what to do about the unfunded liability. And the first is leaving CalPERS. I just want to sort of make sure everyone's clear on the fact that For all practical purposes, you can't leave the CalPERS. You're stuck. I think it's a good question. Anything that you could do in a private sector plan to reduce benefits, like taking your new hires and saying, let's put our new hires in the 401k plan, or even freezing benefits for your current employees, isn't allowed and would be considered withdrawing from CalPERS. Remember we're operating by under state law. So this isn't something that CalPERS really has any control of. If you withdraw from CalPERS, CalPERS, treats this as a planned termination. They retain the liability to pay all your employees and retirees their benefits. They don't have any recourse to come back to the city for more money. So they want to invest those assets that they do have very conservatively so that there will be enough to pay the benefits. And that means the liability increases a lot. And what do we mean by a lot? If you look at the bottom line on this chart, right now, the city's total unfunded liability is about $34 million dollars. On the basis that CalPERS would use, if you left CalPERS, the unfunded liability would be somewhere between $180 million and $117 million. They would ask you to pay that. The current unfunded liability, remember, we're paying off over the next 20-ish years. CalPERS would ask you to pay off this unfunded termination liability. I think they're now giving somewhere between two and five years to pay that off. So it's really just not practical to leave, to come up with this money it would take to leave. |
| 00:47:16.74 | Mary Beth Redding | Um, We have a few slides in here talking about cost sharing with employees that I am gonna skip for the moment to try to get to what I think are gonna be the more interesting parts of the discussion. but they're there for your information. And I want to talk about ways to deal with the unfunded liability and what everybody else is doing. And first of all, there's really two parts of the discussion. One is how can you get your hands on some extra money that you could apply to paying down the unfunded liability. And then the second half of the discussion is once you have extra funds, how are you going to use them? And the reason I, I talk about extra funds is because really anything, you can do to Um, pay down the unfunded liability or mitigate the unfunded liability involves paying more money and paying it sooner. The unfunded liability is an obligation you have. It's growing with interest every year. And the way you save money is by paying it sooner and avoiding all those future interest payments. So where do people find funds to do this? Some people have money in their budgets. One common tactic people are using is trying to designate some one-time payments, one-time funds that are left at the end of the year to be applied to CalPERS. So if you get to the end of the year, there's money left that's been unspent. Some city councils will pass a resolution that says a certain percentage of that money is designated to go towards CalPERS obligation. And then the other thing that's really important interesting these days. People are very excited about our pension obligation bonds. and spend a little bit of time talking about what they are. A pension obligation bond is where a public agency sells a taxable bond and then takes the proceeds of that bond and gives that money to CalPERS. And the value proposition here is that you're borrowing in the fixed income, the bond market, um, hopefully paying a lower rate on the money you're borrowing and that CalPERS has a wide variety of investment vehicles, including equities, private equities, all this sort of stuff. And they're going to be able to earn more money on those funds and you're going to pay in borrowing costs. TODAY. By giving CalPERS the proceeds from the bond, it means that your CalPERS plan will be better funded and the unfunded liability payments that the city is required to make will be reduced. And instead of those, the city will be paying debt service on the bond. Um, keeping in mind that similar to the fire plan, you're never done with these plans. You're never fully paid off. Even if then funded is paid off at a moment in time, um calpros is investing your funds and they will have gains and losses on those investments and so additional pieces of unfunded can arise in the future The GFOA is the Government Finance Officers Association. It's a national organization and they have a recommendation, a current recommendation where they say they do not recommend that people do pension obligation bonds. I want to talk about that a little bit because they go through in that advisory lay out all the reasons why they think cities should not do or not issue pension obligation bonds But the way most POBs are designed these days, we think that most of their reasons are no longer really significant. One thing they say is, you know, if you're paying off your pension obligation over 20 years, you should not issue a 40 year POB to reduce that. People aren't doing that. They're not lengthening the payoff period. that we're going to be They talk about using up the city's debt capacity. I think that really isn't an issue. You have pension debt already. You're just replacing it with a bond debt. Um, It could increase the total amount that the city owes if the CalPERS investments underperform. That would be a concern in any case. And also the GFOA says that these are really complex investments, but I think these days are being done with much more straightforward investments. there's not a lot of leveraging, they're callable, and I think that just the design of POBs is a lot more straightforward and people are a little more comfortable with them than they used to be. What we're seeing in the past several years is that as interest rates became very, very low, POBs have gotten very popular. This is a count we have of the POBs issued in California over the past three years. In 2019, as far as we know, there were seven. In 2021, there were 33. Why? Because the rates were so low, it seems like a good deal. And these have been, um, you know, all different size POBs. The smallest one we saw was for about $5 million. The average was 110 million because there have been a couple of very large POBs issued by counties, but the median, sort of the middle of the road, POB is about 65 million. |
| 00:52:54.81 | Mary Beth Redding | Um, Previously our firm used to, be worn a lot against pension obligation bonds back when you were paying, you know, 6% interest on a bond. I think as we look at rates in the past year being more like 3%, I think they're something that agencies maybe should consider, but what we want to make sure everyone understands is that POBs are risky. They are not a hundred percent a sure thing, as much as they might look at it if you only look at the interest rates. There's situations where if you issue a pension obligation bond, the city could end up paying more for pensions and not less. One that's really hard to think about is caused by this law we have called PEPRA. It requires that even when a plan is overfunded, the city has to keep paying the normal costs, the cost of benefits being earned every year. They can't be reduced if your plan is more than 100% funded. So you have this situation where if you just imagine CalPERS strung together two or three or four really good years, the plan even without a POB would become overfunded. The city would have to pay the normal costs. If the city had issued a pension obligation bond in that situation, it would have the exact same requirement to keep paying CalPERS the normal cost, but it would also have debt service on the bond. So the total cash flow went up even when things went well. And then obviously if CalPERS assets underperform what's expected and particularly underperform the rate of that the bond is issued for that will cause increased costs. So, We do a lot of modeling for entities considering issuing pension obligation bonds to try to calculate how likely we think they are to reduce the city's cash flow. Most of our calculations show that there's about somewhere between 65 or 75% likelihood that the POBs will be a good deal in the long run. And it really depends on a lot of things, but most importantly, what interest rate the bonds are issued at. |
| 00:55:11.26 | Unknown | I'm not sure. |
| 00:55:12.44 | Mary Beth Redding | That was pension obligation bonds. Let's talk about, Other ways to pay down the unfunded liability because the city does have some funds set aside right now for pensions. Um, There's a couple options for what to do with money you have set aside. And one is just to give it to CalPERS. Um, If you give the money to CalPERS, you're very locked into what happens to that money and how it's applied. CalPERS one way or another will apply it to reduce your contribution every year in the future. They won't just save up the money and let you spend it in a year when you want to. Thank you. The other thing to remember is that the more money of yours that CalPERS has, invested, when they have a bad year, they're going to lose more money because they started with more money. So if you give money to CalPERS, there's something called a fresh start you can use that locks yourself into higher contributions in the short run. That one's not particularly popular. There's a second option called an additional discretionary payment or ABP where you give the money to CalPERS. You're going to apply it to reduce your contribution over a period of time. And CalPERS gives you several choices for how to do that. The other option is the one that the city has taken so far, which is to set up a section 115 pension trust. That's where you set aside money in a qualified trust. And the only thing that money can be used for is either to read the, Pay money directly to CalPERS whenever the city wants to or to reimburse itself for money the city has just paid to CalPERS. The reason these trusts are popular We think there's probably over 350 of them around the state right now. But, um, one thing that people like about them, besides that the money's in a trust and really has to be spent on pensions, is that the investment rules are much less restricted than for the city's funds, and you have a wide choice of investments that can be used for that trust. The one thing to note is the assets don't count for the accounting rules, but they are city funds and they are going to be in your financial statements. THE FEDERAL. The 115 trust is very flexible. The city is entirely in control of when and if, and how much money to put into a 115 trust. And then again, totally in control of whether you're gonna take money out of the trust to spend on pensions, or if you're just gonna let it sit there. I think that's a good question. is totally in the city's control. So when we compare Should we keep money in a supplemental trust to should we give money to CalPERS? I really look at it as the supplemental trust gives you so much more flexibility. And I think especially when we look into the future and we expect a lot more volatility and CalPERS's contributions, a lot more ups and downs, that flexibility might be very important to the city. On the other hand, if the money were given to CalPERS, the use of that money and the way it's spent would be very locked in. You couldn't change it. You certainly couldn't target the years you wanted to use the money, but we do kind of think that in the long run, the very long run, it would get a better invested return. We have a couple illustrations of what the city could do with the supplemental trust you have right now. um, The city has about $2.7 million set aside in a fairly conservative portfolio, very heavily fixed income. And what we did for the illustrations was to spread that $2.7 million out among the three plans. And we said let's say the city, rather than just letting the money sit there, the city would like to spend that money in the years when we think that the contributions for CalPERS are going to be the highest. OK. Um, I'll go and show you a picture of that, and then we'll go back and talk about the savings. So for the miscellaneous plan, this is the same green line we were talking about before that showed projected contributions. AND I THINK THAT'S A LOT OF And what we said is let's take the money in the 115 trust and spend it in these years in the late 2020s, early 2030s to bring the contribution rate down from the green line to the orange line. TODAY. picked those years because if I look at the balance in the trust, it exactly uses up the balance of the trust. At the end of those years, there would be no money left in the trust. But the city would have a very predictable and knowable contribution in those high years. If you did that, it chose that particular pattern that's here in the first column, the city would save about $770,000 over that time period. That's on top of the million dollars that you're saving by spending the trust money. And in the present value of that in today's dollars, that's $277,000. So quite a bit of savings. You would get the same kind of savings from doing the same thing for the police plan and the fire safety plan. Again, applying the money that's set aside already in the 115 trust to pay down to reduce the expected contributions in those highest years. But again, this is flexible. Um, This is something the city could do. It would save money. But the city wouldn't have to because the contributions in the future might not play out the way they're drawn in this chart, likely will not, likely there will be differences. Um, or the city might decide that there's years sooner where the money needs to be spent, or they'd rather just leave the money sitting in the trust and defer to some, time in the future. So it's really giving the city a lot of flexibility, but this is one of the options that you would have available to you. Um, our report has similar charts for the other two plans, just sort of illustrating how that can be done in the savings that would happen. That's the end of my presentation. Thank you so much for listening to me talk for so long and I would be very happy to answer questions. |
| 01:01:55.01 | Janelle Kellman | Mary Beth, thank you. I had read your 2018, Bartels and Associates report when I first took office and was impressed with your work and you did not disappoint us tonight. So thank you. I know that was very thorough. Really, really appreciate that. And many thanks also to the city manager for pursuing this and bringing this to us tonight. I know it was a lot of work. So just wanna publicly thank both of you for that. |
| 01:02:06.11 | Carlito Berg | I know those. |
| 01:02:18.37 | Janelle Kellman | So I will take a round of questions and then we'll open up to our public and we'll come back for some direction and just to be clear Chris tonight what direction do you need us to provide? |
| 01:02:33.45 | Chris Zapata | In this item, Mayor, this is all information. |
| 01:02:34.23 | Janelle Kellman | Uh, Okay, great, thank you. I will start with council member Sobieski and then the vice mayor. And then Councilman Hoffman and then I'll give some comments. |
| 01:02:48.64 | Councilmember Sobieski | Thanks, Mayor. you One question I have is about this minimum PEPPER payment, even if we have an overfunded plan. Can you explain again why there's, even in the case of an overfunded plan, there's still going to be a minimum proper payment. |
| 01:03:12.08 | Mary Beth Redding | When the PEPPER Law was passed in 2013, THE FEDERAL. 2008 and nine were still fresh in everybody's mind. And I wish I had a funded status picture that goes back to 2000 and the year 2000, but CalPERS doesn't provide it for your plan. What we saw then was the plans were really well-funded and so well-funded that Thank you. cities were no longer required to make contributions to the plans. And in hindsight, In 2013, people said, aha, well, that's one of the reasons we're in this mess. We allowed people to have contribution holidays. You know, we're 150% funded then, and now we're 60% funded. So obviously there's never enough money. And so the law was passed at that point that said, you still have to keep making these normal cost payments. even if you're overfunded. |
| 01:04:07.68 | Councilmember Sobieski | Okay, thanks. You know, I actually have 20 questions. I'm just gonna ask five and then we're gonna stop Others ask, and if you have time, I'll ask some more. But my second question is about long bonds. You talked about them as actually being something not recommended by best practices. When you're thinking about smoothing out an uneven cash flow payment in the camel-shaped curve that you have there, The notion of doing a 40-year bond or a 50-year bond, if you could, or some sort of bond ladder, and just for the purposes of smoothing the payments out seems like it would be appropriate. Why would a long bond not be? appropriate. |
| 01:04:48.32 | Mary Beth Redding | Um, I think the best I can do is give you the reasoning of the GFOA, which is that Ideally, they would like pension debt. paid over the lives of the employee, the working lifetimes of the employees. They know that's not practical. So they want it paid as fast as possible and they, it's just, um, considered bad to extend the period that you're paying it over and Chris maybe have a better answer than I do on that. |
| 01:05:25.43 | Councilmember Sobieski | What's the length of the typical pension obligation? |
| 01:05:28.85 | Mary Beth Redding | These days they are set to usually to mirror the length of the city's current unfunded payoff, if not be slightly faster. |
| 01:05:40.36 | Councilmember Sobieski | Well, that I don't understand because there's, as you pointed out, it is an endless unfunded liability in one sense. So what is the actual years that you would have a pension obligation bond issued for? |
| 01:05:51.58 | Mary Beth Redding | So you would say right now we have this unfunded liability, $23 million for the city. We have a payment schedule from CalPERS for this current unfunded liability. It's gonna get paid off over, let's say 20 years, it's about 20 years. So the bond would be issued with payments for 20 years, most typically. So, And then any new pieces of unfunded that arise in the future would not, would just sort of be on top of the bond. They would be new and added added to your CalPERS payments. |
| 01:06:25.67 | Councilmember Sobieski | It's easy for you to show that graph that shows the integral of the obligations. over time that add up to the 23 million dollar unfunded liability do you have that graph handy |
| 01:06:39.98 | Mary Beth Redding | I do not have the graph that shows each of the pieces, the unfunded liability. |
| 01:06:45.51 | Councilmember Sobieski | the piece i'm missing even in your statement and i'm still not getting is our obligation for our retirees continues So the. To the future. So in one sense. Um, 30. there is a liability and there's an expectation of the minimum payment we can make. But what makes the portion of the liability unfunded versus funded. |
| 01:07:12.18 | Mary Beth Redding | SO, RIGHT. Let me see if I can share and go back to. |
| 01:07:26.00 | Mary Beth Redding | Maybe this one will help. |
| 01:07:31.97 | Mary Beth Redding | even though this is fire, which is kind of weird. Um, But right now you have obligations for fire of let's say $27 million. That's the amount we owe right now for fire people's benefits. and we have about 20 million dollars of assets so about six million dollars is unfunded you would issue the bond for six million dollars or potentially less some people don't do the whole thing maybe four million dollars but let's say you issued a six million dollar bond you would take six million dollars you would give it to calpers now you would be perfectly funded OK. BUT, What happens if five years down the road, CalPERS has a big asset loss? right? They would lose some of that money. You would now have a new piece of unfunded and the city would be responsible for paying that back. |
| 01:08:24.44 | Councilmember Sobieski | Yeah, so just saying that another way, our unfunded liability is based strictly on the hurdle rate, their expected return, the asset values that are currently in the plan. and the pension obligations that are defined by the cost of living increase and the salaries that are due to the retirees. And coming out of that formula is where you get $6 million today, if you have actual returns that are different, over time, then the liability can swing substantially one direction or another. |
| 01:08:51.03 | Mary Beth Redding | Yes. |
| 01:08:51.91 | Councilmember Sobieski | Um, So when we are talking about our unfunded liability That's just the number we have today. we don't know really what it'll be. It can be wildly divergent. depending on the reality of what actually happens. |
| 01:09:08.51 | Mary Beth Redding | CORRECT. |
| 01:09:09.68 | Councilmember Sobieski | So, On that one take, and this is my last question, before we go on to others and I maybe will have another term of return if we have time. We're going to be we're entering an unusually high inflationary environment that may be short lived or long lived. the current, uh, In one of your slides, you talked about the COLA increases for retirees as being 2%. My question is, if that's really fixed or is it, does it vary with federal co-op? federal price index or what and Is there, well, and the related question is, is there a scenario in which in which investment returns nominally because of inflation. actually substantially eat away the pension liability because the difference between them and the real return based on the cost of living adjustments of retirees. is an arbitrage in the city's favor. |
| 01:10:08.84 | Mary Beth Redding | So the 2% is fixed, there is a mechanism for if there, if you get way too far behind the cost of living. There's an adjustment mechanism, but pretty much it's fixed and it's not actually 2%, it's limited to cost of living. So before this year, there were a lot of years when retirees had less than a 2% increase, but it's easiest to think about it as fixed. In a high inflationary environment, you would expect to get higher investment returns. And so that would favor the city as compared to retirees cost of living. But the other thing that's going to happen in a higher inflationary environment is probably your pay raises will be a lot higher. And so that will also increase the liability. It's still a little bit in favor of the assets. |
| 01:11:01.78 | Councilmember Sobieski | Yeah, but the state still fixes it at 2%. It's really up to the city who does the pay increases in the frame. |
| 01:11:07.95 | Mary Beth Redding | Right. fixes the increases on pensions for people already retired to be 2%, but the wage increases are I don't want to speak to what you're negotiating with your employees groups, but we expect that in an environment where inflation is high for a long time, you would be giving higher raises than otherwise. |
| 01:11:28.58 | Councilmember Sobieski | I'm not. Thank you very much. |
| 01:11:31.19 | Mary Beth Redding | Thank you. Thank you, council member. |
| 01:11:32.96 | Vice Mayor | THE VICE MAYOR. Thank you, Mary Beth. I know you talked for a long time, but it was all critically important. And I appreciate how you outlined the background of CalPERS and how we got to where we are, because it's rare that we have those conversations as reminders about things like additional benefits and trends. So I really appreciated that and the time you took looking at recommendations for us. I have a couple of questions since we're on the topic of being in a high inflationary environment, maybe you could put up slide 32, which I think is on page 16 of the presentation. |
| 01:11:57.65 | Carlito Berg | THE END OF |
| 01:11:57.74 | Unknown | I'm not sure. |
| 01:11:57.82 | Carlito Berg | environment. |
| 01:12:04.60 | Vice Mayor | So in this slide, you give sort of projected what we can expect returns will be in PEPRA or sorry, in CalPERS over time. And it says that there were a thousand projections, essentially, or a thousand simulations or trials to get to this number. But given the macroeconomic trends we're seeing, and also the numbers we saw from 2008 and 2009, and the conversations around potentials for recession, Is this considered in the thousand trials or is there a possibility that there's a higher risk environment given what's happening with the high inflation? |
| 01:12:40.33 | Mary Beth Redding | So the... The modeling does not specifically say oh let's build in a recession in this year or that year it's it's really um I think of it as almost as if you're rolling dice every year and saying, what is the investment return going to be that year? Except they're loaded dice that come out more often, you know, according to the average. So when you do that, you just sort of naturally in some of your trials, you get years where investment returns are bad for, you know, several years in a row. And then you get years where they're good for several years in a row. And when you look at all the different, 1,000 trials of 30 years each, you see the patterns and the averages. um, because timing matters a lot, when you have the bad years are sooner rather than later, that really impacts how everything plays out. There is a 2.5% sort of underlying inflation in all the numbers. And so we're really hoping that um, The current environment is temporary and we come back to that as a long-term average. But if not, there are a lot of offsetting factors. So when you get higher inflation, as we were just talking about, you expect higher investment returns, but you're also going to see higher pay raises and there's some offset of the two. |
| 01:14:08.85 | Vice Mayor | And you would also, this is when given the return from 2021, CalPERS will be making more higher risk investments to get to that 6.8% goal. |
| 01:14:17.19 | Mary Beth Redding | Yes. And what we have, I didn't specifically say, but we built in their, um, risk mitigation policies so that when in our modeling we get a really good investment year we're assuming that they're pulling some risk out of the fund and dropping the discount rate. |
| 01:14:33.29 | Vice Mayor | Okay, and so then assuming that this is realistic with these trials that you've put together, I'm just trying to make sense of the recommendations that you're providing to us to see what next steps we can take or should take. So it looks like your recommendation is to not move forward with a POB Do you think that there should be no... Well, go ahead. I'm sorry. |
| 01:14:51.02 | Mary Beth Redding | I just think that, um, I don't know enough about the city's finances or the city's strategies to really make a recommendation. I just believe that if the city is going to proceed with a POB, they should really you really need to look at the risks and not just assume that because you can borrow it 4%, um, you're going to be ahead of the game the whole time. |
| 01:15:15.97 | Vice Mayor | And your projections are that it's 55 to 65%. |
| 01:15:19.75 | Mary Beth Redding | It depends, we've been getting 65 to 75. That was when rates were in the 3%. But it really depends a lot on how the PAO is structured. |
| 01:15:32.15 | Vice Mayor | Okay, yeah, because we had seen previously in some of our budgeting conversations what that would look like if we did have a POB. So I wanted to get a sense from you what your thoughts were. And then on the last, so what you do seem to be recommending with our Section 115 trust is the payment over that five-year period, or how many years is that in the late 2000s on the last slide? |
| 01:15:53.43 | Mary Beth Redding | It's, |
| 01:15:54.31 | Vice Mayor | Thank you. |
| 01:15:54.32 | Mary Beth Redding | Thank you. |
| 01:15:54.37 | Vice Mayor | Thank you. |
| 01:15:56.16 | Mary Beth Redding | Sorry. And that's fine. |
| 01:16:01.29 | Vice Mayor | there's a lot of really great things here. |
| 01:16:03.22 | Mary Beth Redding | It's about seven years. little bit different for each plan from 29 through 36. And then, and I, again, I don't want to say this is a recommendation, it's more of a, you have this money set aside already, should you choose to keep it set aside, sort of an idea of how it could look. |
| 01:16:27.52 | Vice Mayor | And then that would essentially, if we did take this path forward, we would save around $225,000 in today's dollars. |
| 01:16:34.86 | Mary Beth Redding | Yes. |
| 01:16:35.87 | Vice Mayor | And then it would still take us the 20 years to pay off the 23 million, assuming it doesn't change. |
| 01:16:40.36 | Mary Beth Redding | Right. But what would, you would have is some certainty about your budgeted rates in these years. |
| 01:16:47.02 | Vice Mayor | Right, okay, which is really critical. Okay, I'll let my colleagues, I also have many more questions, but I'll let my colleagues go ahead. Thank you very much again for the presentation. Thank you. |
| 01:16:55.23 | Mary Beth Redding | Thank you. Thank you. |
| 01:16:55.68 | Vice Mayor | Thank you. |
| 01:16:56.37 | Mary Beth Redding | I'm not going to stop sharing because I think I'll have to open it up again. |
| 01:16:59.68 | Janelle Kellman | Bye. |
| 01:17:00.10 | Mary Beth Redding | Probably. |
| 01:17:00.96 | Janelle Kellman | Councilor Hoffman? |
| 01:17:08.61 | Councilmember Hoffman | Sorry. Okay. So yeah, thank you, Mary Beth and Chris, our city manager for putting together this presentation. you know this is interesting information but not new this is something we've been addressing at city council in earnest, I think since 2018, before that, We had some challenges with our been sitting counsel about recognizing the risk that was the unfunded liability. I'm glad that we've clearly set forth, you know, what's going on with unfunded liability. So just to be clear though, Mary Beth the unfunded liability continues to grow annually because of the compound interest and and so you know it's not a static thing it's tied directly to the discount rate and the failure to meet the discount rate going forward, going back, it's liability we've already incurred that continues to grow exponentially because it's compounded by interest. You know, that's the risk. that we have, you know, trying to figure out what to do going forward. I will say that when we set up the pension trust fund, The idea was that those fund those funds would be used in those later years to help smooth out our payments so and decrease the risk in those later years when you sort of see the projection of the bell curve so Um, I like this presentation. You know, we talked about the pension, the bonds, And so the risk of the bonds, Mary Beth, is that we We take out the money, we pay off, you know, we pay off the unfunded liability, not just the regularly occurring liability, but the unfunded liability. and that for some reason CalPERS would have a better return than what we're projecting and what we're |
| 01:19:05.21 | Mary Beth Redding | You actually, the risk is on both ends. If CalPERS has really good returns you lose and that your cash flow goes up. And then if they have really bad returns, you lose because your cash flow goes up. So I'm not okay so if they have really good returns you get stuck in this situation where the plan is overfunded and you still you make the same payments to calpers either way okay um so that's the harder one to understand because it does doesn't seem to make any sense um But the easier one to understand is if you borrow money at 3% and you give it to CalCERS thinking they're going to earn 6.8, but instead they earn 2%, I THINK THAT'S A GREAT THING. you're going to end up paying more. |
| 01:19:55.06 | Councilmember Hoffman | Thank you. |
| 01:19:55.08 | Mary Beth Redding | Bye. |
| 01:19:55.23 | Councilmember Hoffman | You're still gonna have, yeah, you're still gonna accrue unfunded liability, right? |
| 01:19:58.88 | Mary Beth Redding | Thank you. |
| 01:19:58.91 | Councilmember Hoffman | Right. |
| 01:19:59.42 | Mary Beth Redding | It's not going to earn enough on that money you gave them to cover the debt service payments. |
| 01:20:05.09 | Councilmember Hoffman | Yeah, well, but the benefit is that you're, you're not paying that exponential compound interest on the larger amount that you haven't refinanced through your pension obligation bonds right so that would be the benefit to the city Um, Even though it's a risk, I mean, I understand the risk there, |
| 01:20:24.09 | Mary Beth Redding | If CalPERS does really badly, if they don't earn the rate you've borrowed at that sort of compound interest is built into the borrowing costs. So you're going to lose. not I don't wanna say it's unlikely, but it's not a very likely scenario. The more likely scenario is that they earn you know, somewhere around their expected return and typically better than your borrowing cost. So most of the time it comes out kind of okay. |
| 01:20:56.42 | Unknown | Okay. |
| 01:20:56.94 | Mary Beth Redding | But there are these sort of extreme examples where it doesn't come out well. |
| 01:21:02.56 | Councilmember Hoffman | Thank you. |
| 01:21:02.58 | Mary Beth Redding | Oh, yeah. |
| 01:21:02.65 | Councilmember Hoffman | Okay. |
| 01:21:02.90 | Mary Beth Redding | Thank you. |
| 01:21:02.95 | Councilmember Hoffman | I thank you for that. I don't know. I think I'd like to hear our city managers sort of take on this as well at some point, maybe after Mary Beth is done and then we can have Chris weigh in. So, okay. |
| 01:21:15.98 | Janelle Kellman | AND I THINK IT'S A GOOD |
| 01:21:16.35 | Councilmember Hoffman | Thank you. |
| 01:21:16.48 | Janelle Kellman | Thank you, Councilman Kaufman. Okay, I'll keep it to my four or five questions as well. So I just want to make sure we're all talking about the same numbers. My understanding is that in 2000, South State had no pension debt. |
| 01:21:16.69 | Councilmember Hoffman | Thank you. |
| 01:21:28.41 | Janelle Kellman | By 2005, this had become a $5 million pension debt. And by 2015, the pension debt had grown to $20 million. I've heard you use 23. I thought I saw 26 in the presentation and I thought there was a 34. Can you just level set? |
| 01:21:46.15 | Mary Beth Redding | Thank you. |
| 01:21:47.35 | Janelle Kellman | Thank you. |
| 01:21:47.36 | Mary Beth Redding | THE You're right. I think I just got my numbers wrong in my head. The total as of June 30th, 2020, the official last valuation we have is And I shouldn't, I shouldn't pull it up on this slide, but it's where you see it together is $34 million. Okay. So we would project that to be somewhat less Next year in the 20s, probably 26th. I'M THINKING RIGHT. Um, But that's Thank you. our projections, it's not guaranteed. The one, the one solid number we have is 34. |
| 01:22:25.79 | Janelle Kellman | Okay, sorry, on slide 75, I thought I had seen Um, I had seen 26 million as of June 30th. THAT'S OUR PROJECTED |
| 01:22:37.03 | Mary Beth Redding | June 30th of 2021. So we think the 34 that we know will come down to 26. um It's gonna be really close to that. CalCERS has changed some assumptions and we don't know exactly what they are. You know, your people will change a little bit. It'll be pretty close to 26. Okay. |
| 01:22:58.97 | Janelle Kellman | And $8 million of that is related to fire costs. |
| 01:23:06.07 | Mary Beth Redding | Yes, we'll go back, sorry. THE FIRE IS 6. 6 million. Okay. 6 million next year, 8 million this year. Okay. |
| 01:23:18.41 | Janelle Kellman | All right, all right. So and then I just want to make sure I understand this, and I think this probably some of the confusion. Is it accurate that most of the money we send to CalPERS every year is actually interest expenses? Yes. |
| 01:23:32.95 | Mary Beth Redding | Thank you. Thank you. |
| 01:23:33.86 | Janelle Kellman | SO, |
| 01:23:34.03 | Mary Beth Redding | So luckily, a lot due to CalPERS changing their methodology. It used to be that All the money you sent to CalPERS was interest. But finally, you're paying a little bit of principal. |
| 01:23:50.64 | Janelle Kellman | Okay, yeah, I think I'd like to understand that. It doesn't need to be in this moment, How much principal can we pin on? Because it gets to the 115 trust. questions I'll get to in a second. on. And then, Yeah, go ahead. |
| 01:24:03.02 | Mary Beth Redding | Thank you. I'm just gonna tell you really quickly on the miscellaneous plan because it's... hidden here. Sorry. |
| 01:24:15.55 | Mary Beth Redding | You're paying this year for the miscellaneous plan, you're paying about 8.1% of the unfunded liability, 7% is interest. |
| 01:24:25.55 | Eva | Thank you. |
| 01:24:25.59 | Mary Beth Redding | So you're paying really just a teeny tiny little bit of principal. |
| 01:24:25.75 | Eva | Okay. |
| 01:24:25.91 | Janelle Kellman | So you're paying rent? |
| 01:24:26.77 | Eva | I'm really excited. |
| 01:24:29.90 | Janelle Kellman | Okay, I wanna keep those in mind when we get to the 115 trust. Cuz I have some questions about that. But before we get that, you touched on, you were talking about COLA with one of the council members. And so my understanding is that Sausalito has a high ratio of retired former employees who don't contribute to the pension plan versus the active employees who do contribute to the pension plan. How should we be thinking about that with long-term plan? |
| 01:24:55.25 | Mary Beth Redding | Thank you. So I think about the retirees as a fixed obligation. They have an unfunded liability sort of allocated to them. The only thing you can do to help that unfunded liability is to pay it down faster. You really have no control over it other than that. But even if you pay it down faster, remember it's an investment risk. And there's just not much you can do about that. |
| 01:25:26.06 | Janelle Kellman | Thank you. Okay, and I think I heard you say you weren't recommending the POB and that perhaps you were either recommending or neutral on the 115 trust? Um, |
| 01:25:37.84 | Mary Beth Redding | Thank you. So I said I'm not recommending anything, which I don't want to say exactly. I do recommend that something you know you take actions to address the unfunded liability, but I don't think it's my place to recommend exactly what you do. The POB I think. Given the low interest rate can be a very good bet, but it's still a bit of a bet, there's risk there. Um, And then you have the choice of either giving money to CalPERS or continuing on the 115 track, the 115 track gives you a lot of flexibility that might be very key going forward. But giving the money to CalPERS is also not a bad idea. It's just much more locked in. |
| 01:26:27.61 | Janelle Kellman | Okay, so that's something I kind of want to explore it because my understanding of the 115 trust is that it's basically a cash management tool. So we earmark and keep the cash on hand for any unexpected spike, but the, but tell me if I have this correct, that the cost of the trust is actually increased pension costs for the city, because the city would get a better return on investment by sending the money to CalPERS and paying down some pension debt. So for us, instead of earning, let's say 6.8% or 8.1%, whatever it is right now, by sending the money to CalPERS, we chose to earn something less, 3% to 4%. I'm trying to reconcile that as a cash management tool versus a long-term obligation. Thank you. |
| 01:27:09.07 | Mary Beth Redding | I really think of the two choices, the supplemental, the 115 trust versus paying CalPERS as a trade-off. This chart kind of gives a comparison of the two. But to me, the most important thing is the supplemental trust gives you flexibility, gives you budget flexibility, cash management flexibility going forward. the CalPERS, giving the money to CalPERS, I think in the long run is gonna give you a higher return. But remember in the long run, you've put the supplemental trust, you've chosen a fairly conservative investment for it. And I think if you're thinking about it as a cash flow management emergency fund, there's good reason to choose that lower return, hopefully more stable fund. Um, CalPERS is going to have, they've got a lot of risky investments. They're going to have a lot of ups and downs. likely better in the very long run. Thank you. |
| 01:28:07.73 | Janelle Kellman | Okay, I think that's an important point right before what you said about how we wanna use this the risk around it, right? I believe back in 2018, we as a council agreed to a long-term plan to fund the trust. And according to the plan, by June 2022, the city would have $4.5 million in the 115 trust. But the city manager gave us a presentation on April 12th that we only have two and a half million in trust. And so, You know, I guess there's some things beyond, I mean, it's not necessarily beyond our control, but if you do a 115 trust, you have to be diligent, obviously, about funding it. |
| 01:28:45.73 | Unknown | Thank you. |
| 01:28:45.75 | Janelle Kellman | Thank you. |
| 01:28:45.88 | Unknown | Thank you. |
| 01:28:45.90 | Janelle Kellman | Thank you. Okay. All right, let me pause and then may just make a comment. It's 8.30, let's do about 20 minutes more of questions unless there are less and we'll go to the city manager and then we'll go back to the council member Sobieski. |
| 01:29:06.67 | Chris Zapata | Very quickly, Mayor and Council, The city has the number that I think you reference of about 4.5 million is a combination of two trusts. you have a pension trust and then you have a post-employment benefit trust that are both in the 115 trust funds. And that's a total is about four and a half million dollars. |
| 01:29:32.69 | Janelle Kellman | Do we currently have some type of plan to continue to pay into that? And if so, Do you have details on that plan? |
| 01:29:39.17 | Chris Zapata | as far as paying into the plan, there is no, Uh, policy direction or um, Yeah. track record that I've seen where the city council or the city staff here has said, we're going to put X amount into that pension plan every year. You have put money into it in the past, which is a good thing, but it's not all available for pensions. The other half of it or a smaller portion of the half is available for post-employment benefit costs that the city has incurred. when you're trying to lower that obligation as best you can with that investment vehicle. But if you want to put more money into the pension 115 trust, that's a policy direction the council can make at any time if you have the money and if it makes sense. But I think when we get to the next item on the agenda, I could give you some thoughts about what can set that up. |
| 01:30:35.74 | Janelle Kellman | Thank you, State Manager. I'll just make the note that I do believe in 2018, then Finance Director Melanie, whose last name escapes me, did in fact outline a strategy for contributions to the 115 Trust And I believe we had a policy around it, but I don't know exactly where that went. Okay, let's go to Councilor Sobieski and then back to the vice mayor. |
| 01:30:54.89 | Councilmember Sobieski | Thanks, Mayor Mary Beth. I presume in the graph of the unfunded liability you looked at earlier. there's an expected payroll increase year on year as well as employee count changes But I didn't hear anything about that. What's implied in your calculation? |
| 01:31:16.85 | Mary Beth Redding | IN OUR CALCULATION, WE'VE assumed that the number of employees stays level um, And we sort of track them through their careers. So there's an implicit number of retirees continuing to grow. But the number of employees actively working for the city is assumed to stay level. Average payroll is soon to grow. So, at two and three quarter percent per year now. And that's overall payroll. And when CalPERS actually looks at individual employees, those that stay with the city, have different amount of raises every year, depending on how long they've been with the city. But that total payroll growth is projected at 2.5%. |
| 01:32:02.65 | Councilmember Sobieski | Is it possible to do a sensitivity analysis on that? |
| 01:32:06.19 | Mary Beth Redding | It is. |
| 01:32:07.82 | Councilmember Sobieski | It seems like relatively modest changes in the payroll. |
| 01:32:07.88 | Mary Beth Redding | It seems like... |
| 01:32:11.18 | Councilmember Sobieski | percentage increases could have profound implications on the out of your library. |
| 01:32:15.01 | Mary Beth Redding | Um, They do. And, So the question is really, Again, I kind of hate to keep coming back to the same thing. Yes. Um, the, long-term reason for payroll being very different than the two and a half, three quarters percent is inflation. So, that's going to also impact the investment return. |
| 01:32:39.45 | Councilmember Sobieski | Well, it's total payroll, so of course, This isn't talking about pay increases necessarily. That's only to fix the number of employees than, of course, 2.75% is a pay increase, but if you have a change in the total head count, in the words of- Right. Then you could also have profound implications on either increasing dramatically or decreasing. the liability. So would it be possible to get a range of sensitivity analyses? . |
| 01:33:11.38 | Mary Beth Redding | Certainly. |
| 01:33:14.33 | Councilmember Sobieski | headcount and payroll and the way we think about compensation over the long term. |
| 01:33:20.45 | Mary Beth Redding | Yeah, certainly. We'd be happy to do that. We would need to work with the city manager to understand what the long-term plans are. |
| 01:33:28.44 | Councilmember Sobieski | Okay, on the 115 Trust. One of your slides said that we're trying to spy percent three years in a row, that was pretty amazing. What was, what did you do, Justin? Or maybe? |
| 01:33:36.47 | Mary Beth Redding | No. I think that's That's what we used to do our fairly simplistic projections of the 115 Trust. THE Where the city has its money now is a fairly conservative trust that we would probably not expect to actually earn 5% in the long run. But given that you're invested with PARS, they offer a wide range of investment vehicles and it's pretty easy to move that and we find that people do move among their options. |
| 01:34:09.90 | Councilmember Sobieski | Okay. What do you find is, are there any examples of municipalities using this relatively small amount of money as a on an expected return basis and much more aggressive investments. So to actually have a goal of potentially beating CalPERS in a meaningful way. |
| 01:34:28.34 | Mary Beth Redding | Some people have tried it. I don't know how well they've done. I think, One hindrance might be that Um, So there are sort of commercially available 115 trusts where they're all set up and you just need to buy into them, you know, give them their money and they invest it |
| 01:34:39.99 | Carlito Berg | Sure. |
| 01:34:49.86 | Mary Beth Redding | And. none of them are particularly aggressive. If you wanted to try to beat CalPERS, you would need to set up your own legal trust and hire your own investment managers. And that would add, you know, fees that you're not paying quite as much when you're part of a pooled investment fund. But there's no reason you couldn't do it. |
| 01:35:10.73 | Councilmember Sobieski | Okay. And then I just note again, I mean, it's really amazing. We went in one year. from 34 million to 26 million in our pension liability, almost a 30% decrease. |
| 01:35:21.21 | Unknown | Yes. |
| 01:35:22.33 | Councilmember Sobieski | just because of this CalPERS change. And So, you know, the real, a real challenge of this whole situation is as a municipal government, uh, making any kind of planning when you have that kind of liability swinging around. is, is, crazy-making. Yeah. |
| 01:35:44.11 | Mary Beth Redding | . |
| 01:35:44.15 | Councilmember Sobieski | Thank you. |
| 01:35:44.18 | Mary Beth Redding | Thank you. |
| 01:35:44.87 | Councilmember Sobieski | to say the least. Um, and to have a rational view of the future is crazy making. uh, He talked about a variety of strategies that don't involve prepaying the CalPERS money. And have you seen people essentially run a mirror retirement program so that they actually meaningfully fund their unfunded liability but they never give it to CalPERS. I know it's a 115 trust could be a version of this, but I'm talking about finding $20 million somewhere and actually having the that money off the books and paying not off books, but not giving it to CalPERS, but also having it be managed by the city so that it always, the retirement obligation in any particular year is its first and foremost payment, but if there's excess funds, then that can go back into the general fund. to be used for other city priorities. |
| 01:36:43.04 | Mary Beth Redding | So, I will say that one of the very first section 115 trusts was done by a large water district And They created the 115 trust, they invested it themselves and they invested it to the point where between the 115 trust and CalPERS, they were a hundred percent funded. So that has been done. That was really the genesis of all of this. but, um, That money has to be, in order to invest it in anything other than very conservative, Investments that don't pay anything. They're designed to preserve cash, right? What the city can invest in. It has to be in the 115 trust. And if it's in the 115 trust, it can only be used to pay for pensions. So you couldn't, if you ended up with too much money, if you became overfunded, you couldn't just take that money back. You could, however, use it to pay all your required contributions to CalPERS forever after as long as there was money in the trust, but you couldn't take it back. |
| 01:37:56.16 | Unknown | Thank you. |
| 01:37:59.48 | Mary Beth Redding | Thank you. |
| 01:37:59.57 | Janelle Kellman | Thank you. Let's go over to the vice mayor. |
| 01:38:02.88 | Vice Mayor | Thanks. Okay. So council member Sobieski brought up the point that the liability went down from 34 million to anticipated 26 million. mostly because of the 21% returns we saw in CalPERS. But you mentioned as well in your presentation that average consistently for CalPERS is 8%. So is it still an exercise in futility to predict what our liabilities might be given that CalPERS average, despite high rises or big falls is the same? I mean, can we, Is it crazy to say we can still expect some sort of liability that can be paid out around 20 years at about 25 million? given that the CalPERS average is the same. |
| 01:38:42.80 | Mary Beth Redding | Thank you. |
| 01:38:42.84 | Unknown | you |
| 01:38:43.04 | Mary Beth Redding | you I think it's, It's reasonable to say we think that it's very likely that the unfunded liability will be paid off in that time period. And that's really because CalPERS's policies are all focused at making you pay enough money to make that happen. |
| 01:39:03.88 | Unknown | Mm-hmm. |
| 01:39:04.22 | Mary Beth Redding | Um, It. Isn't reasonable to say that at any one point during that time, we think the unfunded liability will be this amount or the contribution will be that amount, but we think it's likely it'll be kind of in these ranges. |
| 01:39:19.23 | Vice Mayor | So in years that we see the stock market doing really well, should we expect that our unfunded liability will go down? Or is CalPERS portfolio so high risk that we really can't use that as a tracking mechanism and it's just really, luck. |
| 01:39:32.35 | Mary Beth Redding | It's a lot of it's luck. Frankly, I mean, This year, they're not doing so well so far, but it's not the end of the year yet. So, If you, if you remember the slide where we had the big column that was liabilities and the big column that was assets and the difference between them was the unfunded. I think if you keep that picture in your mind So we saw the unfunded liability go from 34 million to 26 million, which seems like a huge decrease. But why did that happen? It happened because. We've got a lot of assets. Right in the assets earned, the total amount of assets earned 21%. And then the total amount of liabilities grew when they dropped the discount rate. So you have these very big numbers, the amount of assets. that the excess return is operating on. And as you get closer and closer to unfunded, the unfunded is small, but it can have relatively big big, what do I want to say? There's a lot of leveraging, right, on the unfunded. |
| 01:40:39.74 | Vice Mayor | So what I'm hearing is we can expect that in 20 years, according to CalPERS policies, this will be paid out. We won't know how much it will be at any given time. We don't have any say in CalPERS investment portfolio. So given that we don't have any say, but we know there's this extended period of time And we have two tools, three tools at our disposal, right? We have the 115 trust, we have POBs, and then we have our own payroll structures. Have you seen, just focusing on the last one for a moment, have you seen changes to payroll structures that have positively impacted unfunded liabilities that you might suggest to us or could propose going down the line? that we can do in-house that wouldn't impact our obligations to CalPERS. |
| 01:41:20.55 | Mary Beth Redding | The biggest thing we've seen is one thing the city's already done, which is negotiating cost sharing with its employees to ask them to pay a larger portion of the city's pension costs. Um, And that's... small but effective. It adds up some cities, |
| 01:41:38.84 | Janelle Kellman | It, it, it, it, |
| 01:41:42.05 | Mary Beth Redding | have bargained fairly large contributions from their employees. But I think you run into the issue that if you ask for too much, it's difficult to attract the talent you want to attract. And the same thing happens if you were to say, well, what if we just don't give people raises? You know, that's fine for a year or two, Um, again, you need to, to have the people working for you that you want to support the city. And that means keeping, um, salaries competitive. |
| 01:42:13.69 | Vice Mayor | Okay, and then I have a few questions about our two other options. The POB is in the section 115. So does the POB have the same flexibility as a section 115 in terms of our investment decisions? |
| 01:42:23.95 | Mary Beth Redding | Thank you. If you issue, my understanding, okay, I'm not a bond person. My understanding is that if you actually issue a pension obligation bond, the terms of that bond are that the money's going to CalPERS. Um, I assume there are other types of bonds you could issue where you would have more flexibility. |
| 01:42:43.78 | Vice Mayor | Okay, and is the interest rate that you've seen consistently still at 4% on those POVs, or is it going up given the rates of inflation? |
| 01:42:50.51 | Mary Beth Redding | We Chris may know where current ones are. I think the ones that are being issued now or in the past couple months, we're still in the low threes. But the process is long. And so I think people are kind of thinking that where we'll be in another six months is closer to four, but that's a guess. |
| 01:43:12.75 | Vice Mayor | Okay, and then this is my last question on this, and thank you for bearing with me. I know I've had many questions and so has the council, Um, Is there an opportunity then within our section 115 to make some riskier investments to move our return, not just to 5%, but beyond the 5% if that was a risk we wanted to take? |
| 01:43:31.70 | Mary Beth Redding | certainly a risk you can do um the city has a fiduciary responsibility so to that money so you can't go crazy. Um, But to this. The issue really is if you want to invest in a commercially available pooled fund, they're just not going to get too risky. If you want to be more risky than that, that means you need to manage the money yourself. |
| 01:43:58.33 | Vice Mayor | Thank you. |
| 01:43:58.36 | Janelle Kellman | Great. Thank you so much, Mary Beth. I appreciate it. Thank you, Vice Mayor. Great points, great questions. We'll take a comment from Council Member Hoffman and then we will open it up to public comment. And then if Council members have more questions, we'll come back up. Yeah. |
| 01:44:11.80 | Councilmember Hoffman | Thank you. Thanks. So my recollection was that back and we probably need to look back at some prior city council meetings right around 2018 but when the idea of the pension trust fund came up and we, you might recall, the current city council might recall that last spring we discussed this in the context of whether or not we were gonna pay off some of the side funds with the pension trust fund or whether or not we were gonna take those out of the general fund. The idea in 2018 was that we were going to set up the pension trust fund. We were going to fund it certain payments, over a period of three to four or five years out of frankly revenue we were generating supposedly from the TOT increase in from the business license tax was supposed to go and be used to pay these payments in the pension trust fund so that it would grow in a certain amount And then we would stop paying and the interest rate would to flatten out our payments over those the big fat years. So I think we probably need to look at that. Based on what I saw last year, I don't think that we've been complying with the payments that we were supposed to be making into the pension trust fund in order to ensure that it's growing. as a strategy that was formed and voted on by the city council back in 2018. So that's one thing I believe we need to do The other thing is, the discount rate and I'm just gonna, it's confusing when I say that. So I'm just gonna say that the projected interest rate for the CalPERS fund, because that's easier for people to understand. |
| 01:45:36.53 | Unknown | Thank you. |
| 01:45:36.66 | Councilmember Hoffman | Thank you. And so we're talking about rate of return. When the rate of return isn't met, then that's your unfunded liability. That's in simple terms. 8% is a risky number. And that's where part of the unfunded liability came from was that interest rate wasn't being hit by the investments from the CalPERS fund. And so when the interest rate for certain years is only 6%, you have an unfunded liability. that becomes your liability regardless of what the interest rate does the next year. And so, when you look at projected interest rates for CalPERS and what our unfunded liability is going forward, 21% is an absolute outlier. I don't, you can't use that projection. So anytime you're looking at projections and looking at what, what the interest rate of return on the CalPERS Investment Fund is gonna be in future years, You have to back that out. because that's why that's why CalPERS keeps lowering the discount rate. In other words, the return rate of investment because you're not hitting that amount. And so you have to, adjust that so you don't have this continuing unfunded liability in this big, you know, retirement fund. I mean, it's just not responsible to set a projected discount rate for something, you know, you're not going to hit. So that's why you keep seeing the lowering of the discount rate. So when we're talking about you know, what's the risk going forward? We really need calculations on, you know something less than 8% probably something 6% or something what we're looking at. for us a strategy of 115 trust fund. combined with perhaps a bond to pay off the interest, well the interest too but also the the actual unfunded liability, right? That doesn't keep exponentially rising every year. So I mean, from a strategy standpoint, that's kind of what we're looking at. And so are we in comments now or still in questions? We're still in questions. Yeah, so isn't that right, Mary Beth? |
| 01:47:38.48 | Unknown | Right. |
| 01:47:39.81 | Councilmember Hoffman | I mean, that's a real, I wanted to make sure that everybody's clear that that's kind of what we're looking at in the context. Right, exactly. |
| 01:47:45.97 | Mary Beth Redding | So a POB, a pension obligation bond would go to CalPERS and it would pay off some of the principle of the unfunded liability. And your hope is that if things go more or less as expected, it'll just be paid off forever. But, you know, it won't go as expected every year. |
| 01:48:12.03 | Janelle Kellman | it sounds like we want to smooth out that risk. And so that's the strategy. What can we use and what combination factors to smooth out that long-term risk? Yeah, there is unknown. |
| 01:48:18.44 | Councilmember Hoffman | Yeah, which is one of the mayor's questions was principal versus interest. Pay off the principal and your interest goes down. |
| 01:48:20.10 | Janelle Kellman | Yeah. |
| 01:48:26.93 | Councilmember Hoffman | Thank you. |
| 01:48:27.01 | Eva | Thank you. |
| 01:48:27.03 | Mary Beth Redding | Yeah. |
| 01:48:27.23 | Councilmember Hoffman | Thank you. |
| 01:48:27.39 | Mary Beth Redding | Thank you. |
| 01:48:27.44 | Councilmember Hoffman | Thank you. That works. Oh. |
| 01:48:29.43 | Mary Beth Redding | Thank you. |
| 01:48:29.49 | Councilmember Hoffman | That's what I'm saying. |
| 01:48:29.97 | Mary Beth Redding | And that's why you save money. You've paid off principal. |
| 01:48:34.49 | Janelle Kellman | Okay, well, thank you everybody. Really great round of questions. And Mary Beth, you can see we've been thinking about this for a long time and we're eagerly awaiting having you. So let's just pause the council questions and open up to public comment. Serge, I see two hands, but will you also just read again how to give public comment? |
| 01:48:50.18 | Unknown | Sure. |
| 01:48:50.40 | Janelle Kellman | Thank you. |
| 01:48:50.42 | Serge Avila | Of course. |
| 01:48:50.56 | Unknown | Yeah. Thank you. |
| 01:48:52.83 | Serge Avila | Video or audio public comment participation is limited to three minutes per speaker. If you would like to make a comment, please raise your hand in the Zoom application, and you will be called upon when it's your time to speak. |
| 01:49:04.38 | Unknown | Thank you. |
| 01:49:04.53 | Serge Avila | To raise your hand from a phone, press nine and each speaker will be notified when the time has elapsed. |
| 01:49:04.54 | Unknown | Thank you. |
| 01:49:10.40 | Serge Avila | Madam Mayor, would you like to keep the time at three minutes or two minutes? I apologize if I missed it. |
| 01:49:15.65 | Janelle Kellman | I think we're gonna stay with two minutes tonight just because of the hour and we wanna keep moving forward |
| 01:49:21.18 | Serge Avila | Great. With that, Madam Mayor, we do have David Sudo. And David, you have been... unmute it and ask to share your video. |
| 01:49:34.50 | David Sudo | Good evening city council. Thanks for having us on the uh on the agenda. It's always great to keep the town apprised of where we are on pensions, what you're trying to do to meet our obligations. I heard a couple things in here. And I'm definitely not an expert. I'm not a financial person, but I have read things after a while. keep a hold of bond issues and stuff like that. I think You know, the life of the bond, I think it's important to keep the life of, lifetime of the bond to be commensurate with the current pension obligation, just like you don't want to 50-year bond on a building that only is going to last 25 years you end up having to replace the building and you need a new bond and you still have an old bond to pay for and you can get into a bind with your ability to borrow money. Also, I think the 6.8 target. for CalPERS is important to remember because that's also their That's also their targeted rate of return. So they're adjusting their risk portfolio to hit that number. So if we borrow money at 3%, we have a pretty big spread, 3.8% spread, but if we borrow at 5%, our spread is half. Um, So we have a you know, the risk. uh reward ratio uh, increases greatly as our borrowing costs go up. Thanks. Bye. |
| 01:51:16.07 | Janelle Kellman | Thanks, David. |
| 01:51:18.53 | Serge Avila | Our next speaker is Sandra Bushmaker. Sandra, you've been unmuted and asked to share your video. |
| 01:51:24.94 | Sandra Bushmaker | Good evening, everybody. That was a real mind twisting event to listen to all this. One thing occurs to me, it sounds as council member Hoffman was saying, and Mayor Kelman, we need to pay down that principle that's killing us. Maybe it's time to liquidate some assets that are, have grown in, value I'm thinking of the B of A building. which I understand is worth $5 million now. Now, I realize you're in negotiations, but that would be a big chunk of money that could be put toward this problem, which is not going to go away. I would like to, before you make your decision on what to do, happy to see that you're not leaning toward a POB, but, make sure we know what the costs are of the 115 trust. before we put all our eggs in that basket. and also who's managing those funds for us and what it's costing the city. So those are my two comments right now. I will just add that, you know, I was part of the council when we didn't have a pension obligation, unfunded pension obligation. And that was really, a special time. However, we were warned 20 years ago that we better do something and start planning for it now then. So it's unfortunate we got to the situation. And I realize not all of it is our fault, but some of it is our fault. And we need to really get a hold of it and take care of this problem. Thank you. Thank you, Sandra. |
| 01:53:04.54 | Serge Avila | Next speaker is Peter Van Meter. Peter, you've been unmuted and asked to share your video. |
| 01:53:20.99 | Janelle Kellman | you are still muted. |
| 01:53:22.21 | Peter Van Meter | THERE WE GO. |
| 01:53:22.34 | Janelle Kellman | one. THE END OF THE END OF THE |
| 01:53:23.85 | Peter Van Meter | A little bit of a cross connection there and who's unmooting. Unmuting. Anyway, um, You know, very important topic. . I'll just make a comment that I think we'd agree that the premier citizen group on analyzing pensions in the county. is the Citizens for Sustainable Pension Plans, CSPP. And I know that following the activities of this group over the years in general, they are really not in favor of POBs. They're really the concept of sort of kicking the can down the road. And depending on the term that you set up for those bonds, it could in fact be a higher cost in the long run than otherwise. So just keep that in mind as you help make your decision. The other thing is that I'm not sure. Interest rates are rising very rapidly right now. And so the timing I'm trying to execute this bond is going to be very critical. And I think as David pointed out, narrowing that spread is gonna be very, Highly probable. Moving forward. Plus, of course, the investment returns in the market are really going down. So CalPERS performance this year is gonna have a big effect that might I had to change that. number back to 34 million, who knows? So that's something to be careful for as well. And finally, I really like the idea of using the 115 trust to level out the payments over in future years, as was shown in those illustrations. And maybe if I've got another few seconds here, the idea of negotiating with your PEPRA employees They have a higher contribution. So happy to hear that you're already doing that. I know we are on the fire board That's something that we did in our negotiations at that time, although fire is in MSERA, not CalPERS, but the same concepts apply. So it's good to do that in your employee negotiations for higher contributions. Thank you. |
| 01:55:15.31 | Janelle Kellman | Thanks very much, Peter. |
| 01:55:17.73 | Peter Van Meter | Thank you. |
| 01:55:17.75 | Serge Avila | The next speaker is Jacob. Jacob, you're being unmuted and has to share your video. |
| 01:55:24.97 | Serge Avila | Thank you. |
| 01:55:24.99 | Jacob | to unmute. Ahoy from Sausalito, California. I kind of hope you can see me and I kind of hope you don't. Hello, mayor, hello city council. 20 or so residents that are listening into this We'll start with THE FAMILY IS NOT A the chief of police and his pension. As far as I know, he has been collecting a pension as well as a full salary from Sausalito. If that is not true, he can correct that. If it is true, I think this discussion is not to the point. I THINK I'M GOING TO BE The other point. to the point that I want to make is that these investments after Sausalito City Council has declared a climate emergency. Investments. should not be in fossil fuel industries. that you should be divesting from those no matter what kind of return you get. Until we are serious about this, THIS ISSUES. will be with us. So thank you very much. |
| 01:56:35.16 | Janelle Kellman | Thank you, Jacob. All right, Serge, any other hands for public comment? |
| 01:56:39.88 | Serge Avila | Madam Mayor, there are no other hands raised. |
| 01:56:42.30 | Janelle Kellman | Okay, public comment is now closed. We'll bring it back up the dais. So we have no action to take tonight. We're just receiving that. Although the city manager does have sort of a follow up here. And I do believe there is action associated with that comment. So let me hand it over to the city manager to sort of summarize and next steps for us and then council members to give comments and additional questions. |
| 01:57:11.24 | Chris Zapata | Thank you, Mayor, Council members of the public. I think there's been plenty of discussion had about this at various levels. It's intended to inform you because this is a complicated and a big, big type of matter that you're trying to deal with. You're talking about millions of dollars. You're talking about employees that are working for you, employees that have served you. And so any decision you make has to be done with as much information as possible. And that's what we try to provide. So the next item on the agenda is where I believe I can speak more to where I think you should. try to do in the future and whether you accept that or not, I will abide by it because I've had some mixed feelings about this from day one. but now I'm learning a little more as we all are. And I would like to impart that at my next conversation piece with you on the next item, if I can. |
| 01:58:04.24 | Janelle Kellman | OKAY. THANK YOU, SENATOR MANAGER. So any other questions before we do move on and take, I think sort of direct action related to this item. Yes, council member Svieski. |
| 01:58:13.77 | Councilmember Sobieski | I was wondering if there's any opposition asking the city manager to ask Mary Beth to do the sensitivity analysis I described that talks about different level, the changing the percentage of payroll that's implied in the liability. We're but this council is going to be engaged in a in the discussion about how we structure our our administration, our city government, and And that has a profound, potentially profound effect on the liability. and could serve as a guidepost, but to ourselves and future city councils. |
| 01:58:52.35 | Janelle Kellman | Thank you for that, Councilor Sobiski. but he not want Mary Beth and senior manager to pursue that. Okay, so it looks like city manager Mary Beth, that is a line of inquiry that would be helpful, I think for further analysis. |
| 01:59:09.94 | Councilmember Sobieski | And then, you know, I think Senator Bushmaker brought up the, selling the Bank of America building, which I know she was opposed to buying in the first place. But under her broader point about the notion that we may have a lot of assets in the city, that are unknown is one I made at our last meeting and that I know we are working on with the great work of Mike Wagner. our new property manager, Bill building a value spreadsheet. But that hasn't been tied to this question. We don't know the city's balance sheet. we know our cash balance sheet and we know our our investment balance sheet. We have a pretty good sense of our income and expenses, but we don't know our balance sheet. The city owns a lot of real estate. all across town. And I think her point that that ought to be fairly considered as a good one. And we ought, again, if there's no objection really to encourage it to be a staff task, to develop a valuation of all the city owned property as best we can. so that we can incorporate that into our thinking. Spinnaker restaurant, the old city hall. We own lots all across town. Certainly many things we, for one reason or another, would never imagine selling, but some of them we might. And we certainly should know what they're worth so that we can make wise choices with the city resources. |
| 02:00:33.60 | Janelle Kellman | Interesting idea. Thank you. Councillor Subieski. Um, Vice mayor? |
| 02:00:37.65 | Councilmember Sobieski | Vice Mayor? Is there any opposition to asking And would you do that? |
| 02:00:42.11 | Janelle Kellman | No, no opposition for me. I think Councillor Hoffman is on board. I think the vice mayor is as well. THANK YOU, MA'RNE. Vice mayor. |
| 02:00:50.85 | Vice Mayor | Yeah, I just, I think from this presentation, it's clear that we've got the situation we're in and thanks Councilman Hoffman for really laying out really clearly where we stand in terms of the 21% being irregular and how much is owed. But the macroeconomic trends are really what determined how we got to where we are in terms of the low returns and enhanced benefits. And we can't really predict for those. And that's why I appreciated the comments from all I think all of us and also from public comment about paying down. some of the principal. And I'm wondering as we go into our meeting this coming Saturday and have these big deep dive conversations, about the budget, if we might consider where we can make bigger structural changes and what the potential payments down just in thinking about it. What could we potentially pay down in CalPERS as we look at those numbers and I'm not sure how to direct staff on that, but I think it's something we're all. considering based on this presentation. So I just wanted to put that out there. |
| 02:01:45.12 | Janelle Kellman | Yeah, thank you for planting that seed. And I'm sure the city manager will absorb that and come back with some recommendations. So appreciate that framework. Okay, any last comments before we move on to item 4B? |
| 02:02:03.78 | Janelle Kellman | Okay, well then thank you and the excellent conversation. Mary Beth, thank you again. I'm sure we'll see you again. Couple of follow-up items. So we will move on then to item 4B. which is a review of the request for proposals for financial advisory services in authorization for the city manager to negotiate insurance agreements for financial advisor services with NHA advisors in an amount up to $67,000. So Chris, is your... moment. |
| 02:02:30.76 | Chris Zapata | That's... Thank you mayor, council members in public. Last June when I had my first council meeting, which was about 10 months ago, the idea of helping our budget were surfaced by former finance strategic officer Charlie Francis, the pension obligation bonds. were something we should look at. And at that time, I said what a lot of people said tonight, GFOA doesn't recommend this. They're complicated. They failed in some cities. And so I also took it upon myself to be educated. And so as former mayor Bushmaker said, we got to get ahold of this. And so how do we do that? And, right now on our team in terms of the city of Sausalito In many cities, you don't have the financial expertise to look at these types of debt instruments, which are fairly complicated. And in some cases, legally, you can't. You need actual financial advisors that are licensed and so forth. So what this agenda item is about is to take your direction, which you provided about three months ago, to go out and request proposals from financial advisors and look at pairing that with our legal advisor, who's part of our associate financing authority, Brian Quint and create a team to explore these things and to do it quickly. Cause time is ticking and You know, the information I'm getting is essentially what you heard tonight. You know, interest rates were really, really low, historically low six months ago and they're climbing. And so if it's going to make sense, we need to know sooner than later. So this particular item is not to go out and sell pension obligation bonds. It's not to go out and do anything that would commit the city It's to allow me to bring somebody on board at a price of two. with certain contingencies built in that would allow you to ask those hard questions and get informed in a way that says, okay, you know, Bartell and Associates said that there was a 65% to 75% possibility that investing in pension obligation bonds might work. Let's hear it from a real financial expert professional. That's one need. The other one is your 115 trust. I heard earlier things about what we could do with that, when we should do something with that. what our investment policy is on that. We should be more aggressive, maybe not more conservative is where you've been. So that kind of advice would come from this kind of consultant. And so again, I wanna make it clear that approving this item and allow me to go out and bring back a financial advisor to you. who I recommend of the two proposals we received, NHA advisors, to answer questions before you jump headlong into uh, something that's complicated and that, you know, needs real vetting by a professional. And again, uh, I'm not the city manager to do that. I don't believe there's one in the state unless they're a certified financial professional with a bunch of investment licenses. But this is something that's, you know, for real people to do that, do that every day. And that's part of their, their profession. So, um, Again, the quotes that we got from the two firms were ranging from 55,000 all in from Sperry and then up to $67,500 with NHA advisors. And none of those costs are certain. Some of them are contingent on you actually going out and issuing pension obligation bonds. But you really need that type of expertise to answer a bunch of the questions that came up tonight. So I would recommend that you authorize me to go out and negotiate with NHA advisors some type of agreement to bring back to you so you could look at pension obligation bonds and see if you really want to do that and you know pairing that with the bartell information you heard tonight And you could look at your 115 trusts and see if, in fact, what you want to do might make sense. And I also would advise and recommend that we bring in our PARS trust managers to talk about that actual instrument that they manage and what they believe and see and know about it. And maybe you do that at a finance committee meeting, but you certainly want to hear from them as well. So again, you know, pensions are complicated. Decisions are needed. you know, there are potential solutions to consider and time is ticking. So with that, I recommend that you approve the recommendation that is in front of you tonight regarding hiring NHA advisors. |
| 02:06:59.48 | Janelle Kellman | Thank you, City Manager Zapata. Council Member Sobieski and I have had the privilege of taking a first crack at reviewing this and it looks like a real positive move in the right direction. So let's turn it over to Council Member Huffman. It looks like you have a question. |
| 02:07:18.25 | Councilmember Hoffman | I don't have a question. I just wanted to weigh in that I support that. And I think that we should go out and get some, specific advice on this. You know, it seems to me that this is a moment of opportunity with the Thank you. dramatic decrease in our pension liability this year because of the interest rates from last year this this decrease is not sustainable there is no way that we're going to continue to decrease. it's more likely, I mean, you know, is more likely that we're gonna bounce back up next year and it's gonna continue to go back up the unafunded liability. I mean, And that would be good information we had some, um, financial experts look at that and give us some projections on that. But I, that's why I'm, I think now is our moment to look at this. If we were ever gonna do it, Right now is the moment to do it. based on what I've seen in the past eight years in tracking the exponential rise in our pension unfunded liability. |
| 02:08:24.06 | Janelle Kellman | Thank you, Councillor Hoffman. |
| 02:08:25.21 | Councilmember Hoffman | Thank you. |
| 02:08:25.26 | Unknown | Thank you. |
| 02:08:25.43 | Councilmember Hoffman | Thank you. |
| 02:08:25.56 | Janelle Kellman | Any other questions before we take public comment? Okay, Serge, anybody have their hand up for public comments? |
| 02:08:35.79 | Serge Avila | Madam Mayor, there are no hands raised at the moment. |
| 02:08:39.20 | Janelle Kellman | Okay, then we'll go ahead and close public comment, bring it back up here. Would someone like to make a motion? Vice Mayor, yes. Vice Mayor. |
| 02:08:46.44 | Vice Mayor | Yeah, I would echo council member Hoffman's comments and definitely say, especially given the environment of macroeconomic trends we're seeing and what might happen with inflation this is we need to know now so i would make a motion right now to authorize the city manager to move ahead with this proposal for up to sixty seven thousand five hundred dollars Did I say that appropriately? This is great. |
| 02:09:09.20 | Janelle Kellman | Thank you. |
| 02:09:09.23 | Councilmember Hoffman | THANK YOU. |
| 02:09:09.44 | Janelle Kellman | Thank you. |
| 02:09:09.47 | Councilmember Hoffman | Yeah. |
| 02:09:09.72 | Janelle Kellman | Bye. |
| 02:09:09.74 | Councilmember Hoffman | Thank you. |
| 02:09:09.88 | Janelle Kellman | Thank you. |
| 02:09:09.98 | Councilmember Hoffman | Bye. |
| 02:09:09.99 | Janelle Kellman | Yeah. |
| 02:09:10.01 | Councilmember Hoffman | Yeah. |
| 02:09:10.03 | Janelle Kellman | Do we have a second? |
| 02:09:10.62 | Councilmember Hoffman | Thank you. Thank you. |
| 02:09:11.88 | Janelle Kellman | One second. |
| 02:09:12.83 | Councilmember Hoffman | Thank you. |
| 02:09:12.85 | Janelle Kellman | Okay. Unless Ian wanted to. |
| 02:09:13.08 | Councilmember Sobieski | Oh, my God. Yeah. |
| 02:09:16.05 | Janelle Kellman | I think we all want to, that's a great idea. So thank you again, city manager for bringing this to us. Will the clerk please call the roll? |
| 02:09:23.14 | Unknown | because, |
| 02:09:23.36 | Serge Avila | Councilmember Sobieski? Yes. |
| 02:09:23.48 | Unknown | Yes. |
| 02:09:25.35 | Serge Avila | Council member Hoffman. Thank you. |
| 02:09:27.29 | Janelle Kellman | Yes. |
| 02:09:27.86 | Serge Avila | Vice Mayor Blomstein. |
| 02:09:28.13 | Janelle Kellman | Thank you. Yes. |
| 02:09:30.29 | Serge Avila | Thank you. |
| 02:09:30.38 | Janelle Kellman | Thank you. |
| 02:09:30.41 | Serge Avila | Mayor Kelman. Thank you. |
| 02:09:31.37 | Janelle Kellman | Yes. |
| 02:09:31.86 | Serge Avila | Thank you. Thank you. Motion passes. |
| 02:09:33.45 | Janelle Kellman | Wonderful, thank you. Thank you again, Mary Beth and city manager. And now we will turn it over to item 4C, which is the, pardon me, the machine shop. An update and reconsideration of acquisition options from our community development department and Heidi Scoble will be given. the presentation. |
| 02:09:53.06 | Heidi Scoble | Thank you and good evening Mayor Hoff, or sorry, Mayor Kelman and members of the city council. I was just shifting gears quickly. Thank you so much for this opportunity to provide another update on the machine shop. Over the past year, the city council has reviewed the machine shop a few times. And so the purpose of this item is to receive an update on the machine shop acquisition process and also to convert and confirm which acquisition option the City Council would like to pursue. So the two options that are on the table would be a negotiated sale and a public benefit conveyance. So before we get into the chronology of the site and options for consideration just wanted to familiarize everyone with the site the project site is 25 liberty ship way is located within the marine ship and the building is known as the machine shop and this is the blow-up picture of it it's about a 1.72 acre site the site is comprised with two buildings you have your machine shop and then you also have your butler building. The machine shop was designated as a historic landmark in 2016. The butler building does not have any historic designation on it currently. And As you can see with this chronology of events, last year, the council received an update and information from representatives of the United States General Services Administration regarding the potential acquisition of the machine shop. At that meeting, no action was taken. The item was then continued to the July 21st, 2021 City Council meeting. where the city council decided to pursue a negotiated sale option and directed the city manager to sign a letter of intent. On February 8th of this year, the city council received an update from staff regarding the negotiated sale process So basically from July to February, staff has been communicating and working with representatives of the General Services Administration to try to figure out how we can move this acquisition process along. At that meeting, The GSA did recommend pursuing a public benefit conveyance historic monument program. This is a specific program that's established by the General Services Administration and provides a specific path moving forward for the acquisition through this process, which I will speak to in just a little bit. So on February 10th of this year, the machine shop working group, which is comprised of Mayor Kelman, council member Sobieski, members of staff. We met with staff from the general services administration and representatives of the national Park Service to discuss what the historic monument program really would entail and how if the city were to pivot and possibly pursue this option, what does that mean to the negotiated sale? And for the past couple of months, staff has been working with GSA staff and, and the GSA has provided a deadline for the city to provide them with which process the city would like to pursue. And we have to provide the GSA with a formal response no later than May 9th of this year. |
| 02:13:24.57 | Heidi Scoble | Okay, so as presented at both the June and June, 2021 and July, 2021 meetings, the general services administration staff identified the disposal process. So as you know, in 2006, The US Army Corps of Engineers who used to own this machine shop building site decided that they no longer needed this property and they identified it as excess. So then it was They were the general services administration was deciding what process to go through. It was identified that there was an opportunity for a federal transfer. So the property was transferred from the army corps of engineer to the betterment veterans administration, the veterans administration wanted to pursue some type of development of the site. They faced some obstacles regarding this process. and now the Veterans Administration wants to dispose of that property. So So the two options that are on the table would be a public benefit can stay in historic monument process. The PBC historic monument does support property uses and benefits the community as well, with the caveat that there is a historic preservation element that's required. So whatever happens with the property, the city would be working with the national park service to ensure that the historic integrity of the site and our buildings is preserved. And through the PBC process, Department of the Interior's National Park Service is the entity that is charged with managing this historic monument program. And there would be this direct relationship with the National Park Service. And they would sponsor us. The benefit of the historic monument process is that the city could receive up to 100% discount for the acquisition of this property. So unlike a negotiated sale, whereby there would be a cost associated with the acquisition of this property through this historic monument process, the city could enter into an agreement with the National Park Service to sponsor And this and then we, the city could move forward with the acquisition of this property with no cost to it. And the National Park Service will help the city with the application for the historic monument and to provide a recommendation to the General Services Administration on whether or not to pursue this transfer. So right now we are still in process with this negotiated sale option. So what's happening with this process is that The city staff has been working with the general services, services administration staff to prepare a scope related to an appraisal. So thank you to Michael Wagner for providing some input on that draft scope. and the appraisal is expected or anticipated to be completed by mid to late August of this year. With the negotiated sale and through this appraisal process, there would be a cost associated with the acquisition of the property. And the other item with this, similar to the historic monument process, is that there would be encumbrances or restricted covenants that could potentially be placed on this property regarding historic preservation or any other environmental constraints that run with the land. For example, a document that was included in your packet identified that due to the soils of the property that the site is not or cannot be used for residential uses, but could be used for industrial and our commercial uses. So the good news is we have two options to pursue. If the city decides to pursue the historic monument public benefit conveyance first, We can go through that process, work with the National Park Service staff, see if we can find a path that actually makes sense to the city. And if we find that then great, then we'll move to the next step and see figure out what we're gonna need to do moving it forward. If the city decides that the historic monument process is not really working out or whatever agreement we would come up with the National Park Service really isn't feasible. |
| 02:17:48.82 | Carlito Berg | I can tell you that. |
| 02:17:50.18 | Heidi Scoble | then we can pivot once again and resume the negotiated sale process. So there's no real harm in pursuing a historic monument. The challenges with the historic monument is that the city would have 60 days to prepare an application. With this application, we would need to identify specific uses on how we would utilize the property. So with that, staff is recommending that the city council provide direction on whether to proceed with a negotiated sale acquisition option or the public benefit conveyance and direct the city manager to submit a letter to the general services administration regarding which acquisition approach we'd like to take. So with that, I am available to answer any questions you may have. Great. Thank you. |
| 02:18:36.03 | Vice Mayor | SO MUCH. |
| 02:18:36.40 | Heidi Scoble | Bye. |
| 02:18:36.67 | Vice Mayor | Let's start with the vice mayor. Thanks, Heidi. I really appreciate it. I'm a little bit confused because my understanding was we agreed to send a letter to express interest in negotiated sale, but we hadn't said we were absolutely buying the machine shop at this point. Is that correct? |
| 02:18:53.67 | Heidi Scoble | That's correct. At that July 21st, 2021 city council meeting, there was direction for the city manager to sign that letter and we did it. And since then we've been working with the, |
| 02:19:02.42 | Carlito Berg | AND WE'RE GOING TO BE |
| 02:19:07.03 | Heidi Scoble | General Services Administration staff to really refine the scope related to the appraisal, which is the necessary next step regarding the negotiated sale. And then we were also trying to work through the elements of the Section 106 process. So whenever the federal government is working with federal government land. And especially if there's a historic designated property on it, then there's a certain level of care that we need to address. |
| 02:19:32.76 | Vice Mayor | Yeah, I'm just, I'm curious, do we have an idea? Have we conducted a building inspection? Do we have an idea of the foundation in the building or? the infrastructure costs, Thank you. |
| 02:19:43.02 | Heidi Scoble | We haven't done that. So those would be important things to know about before we actually acquire it. It's my understanding that through the process to date, those items have been identified, but we have not pursued them. But so, |
| 02:19:59.97 | Vice Mayor | we move forward with the historic designation we're essentially saying that doesn't matter because we might get it for free or I'm sorry, at little to no cost. |
| 02:20:08.56 | Heidi Scoble | Uh, not necessarily. I mean, we, we know that there's going to be a cost to rehab the building just because of the current state that it's in. And, um, you know, whether it's a negotiated sale. And once we acquire the property, we're gonna need to figure out what we're gonna need do with it or with the historic monument application process we're going to need to kind of refine our scope as well and there there might be an opportunity to dive a little bit deeper into some of those elements that you're speaking to but today again we haven't we haven't done that and um even though we've been it's been identified through this process that that would be necessary, a timeline to get that information hasn't been set. |
| 02:20:49.53 | Vice Mayor | Thank you. |
| 02:20:50.54 | Heidi Scoble | Thank you. |
| 02:20:50.56 | Vice Mayor | But also at this point, we don't have a plan for the building or like any conversation about partners or what we would do with the space. So we'd just be taking on the liability of the structural changes necessary for the building to continue to exist. That's correct. And at this point, the GSA pays for a 24-7 security garden building, right? |
| 02:21:07.96 | Heidi Scoble | I believe they still are doing that since they own it. |
| 02:21:10.77 | Vice Mayor | So we would have to incur that cost. in addition to upwards of at least probably around $10 million in infrastructure improvements to the building. |
| 02:21:21.76 | Heidi Scoble | Can you say that again? Sorry. |
| 02:21:23.06 | Vice Mayor | like we'd have to pay for this if we if we move forward with this we would be paying for the security guard in addition to you know and we know how much that costs because of the money we've spent on the encampment and then we would have to pay also for the liabilities associated with the infrastructure of the building. I'm not sure. Taking on the building itself, knowing that the roof is in decay. I don't know what the foundation looks like. I'm just trying to get a sense of the risk, given that we just heard a presentation about how we're 26-some million dollars in debt, and we have all of the structural deficit, and we have a lot of controversy around the B of A building. So I want to understand the benefit of it from a fiscal standpoint if we take it on. |
| 02:22:00.42 | Janelle Kellman | Heidi, can I jump in here based on the conditions we've had? So great, excellent question. And certainly one we need to dig into, and I'm sure it seems a little backward as it did for Councilor Sobieski and I of, well, you want us to decide the process before we know anything more about the building? And we've been asking. And so I think the question here really comes down to, let's just stay on a PVC. When we say the historic integrity is preserved or be a historical monument, what exactly does that mean? I don't believe that requires a full rehab of the building. And so that would be something we would work through with the National Park Service. So for example, we have with just very loosely discussed some potential options with the GSA that would not have a huge refurbishment requirement. So for example, relocating the corporation yard or using that as some type of city parking, something with an immediate use that would not require any type of infrastructure improvements and certainly not along the lines of the numbers you cited. The historic monument provision doesn't necessarily mean the building needs to be completely rehabbed. And so Heidi, you might want to speak a little bit more. It was one of my questions that what do you, what is your impression right now? What it means to have the historic integrity preserved and I don't recall in the meeting with the park service, but I was late to that meeting. I don't recall them. specifically saying what that meant at this time. |
| 02:23:23.45 | Heidi Scoble | No, exactly. And the historic integrity is going to be defined through this application process. So we know in 2016, we had a relatively intact building. We know now that half of the building, the roof has collapsed on half of the building. And so the city has lost some of its character defining features. So the character defining features are those elements of the building that make that building historically significant. So in working with the National Park Service through this process, we'd identify really what type of encumbrances we would be taking on and what additional, you know, liability and risk relative to the rehab of the building that would be. So we don't know yet, but I do wanna say, so one of the concerns throughout the history of this site has been, you know, what is the VA gonna do with it? And now that we know the VA doesn't wanna do it, anything with it, on one of my slides, I identified the, surplusing process. So if the city chooses not to pursue one of the options then the GSA will then try to sell the property on an open market. So what we're trying to do right now is do our due diligence, try to find a path where we can acquire the building at the lowest cost possible, figure out what our risks and liabilities are relative to the acquisition of the property and maintaining it moving forward with uses. But if the city decides not to do that, then just know that the GSA isn't going to always hold onto this property. They're holding onto it right now because they wanna work with the city, but there's gonna come a time that if we're not moving forward in a timely manner, and they are gonna give us more strict deadlines and we're gonna need to come up with a decision to do something. |
| 02:25:16.00 | Vice Mayor | Right, but if we decide not to purchase it, the city still determines the zoning for that building, right? So we would still be able to determine and be a partner in what goes into the building. That is correct. |
| 02:25:25.17 | Heidi Scoble | that's a good question. And the city of Sausalito is a certified local government. So as part of the section 106 process, we would be in control regarding the historic integrity as well. |
| 02:25:34.43 | Vice Mayor | So regardless of if we go forward with this, there is a way to ensure that the historic integrity of the building is maintained. |
| 02:25:40.64 | Heidi Scoble | There is the public process and the public process, you know, has decision makers and there's a whole like land use process that may on our process if someone wanted to challenge some of the decisions that we make. |
| 02:25:53.50 | Vice Mayor | Right. I mean, I'm not saying I don't think it would be wonderful to have another asset. I'm just aware of our serious deficit and our the issues we're facing with the pen after the pension presentation, knowing how much money we owe and the liability associated even just with paying for a 24 seven security guard coming out of our general fund right now. makes me a little nervous. I'm very open to whatever additional information you might want to share about about how we would perhaps financially benefit or structure this in such a way that it would be a huge financial benefit to the city as opposed to a liability, then I would have no concern about it. But I'm just given our fiscal stance right now a little concerned about acquiring another piece of property because as council member sobieski pointed out we don't even have a clear assessment of our properties as they stand now So that's what I'm trying to get to the bottom of. |
| 02:26:45.73 | Heidi Scoble | Yeah, and I definitely appreciate your comments. And the purpose of this item is that we are in process |
| 02:26:45.78 | Vice Mayor | Yeah. |
| 02:26:51.02 | Heidi Scoble | with working with the general services administration based on the July, 2021 direction from the city council. If the city council wants to change that direction, we can do that. But the general services administration has recommended that the city, if we, we, the city want to pursue the acquisition of this property, then it is highly encouraged and recommended to go through the historic monument process. And that's the purpose of this item is to see if you would like to pursue that option or still proceed with a negotiated sale. |
| 02:27:25.10 | Janelle Kellman | I think, sorry, I just want to clarify for the, for the vice mayor. I think I see the gap here. |
| 02:27:25.28 | Heidi Scoble | And they're. |
| 02:27:31.00 | Janelle Kellman | we're not obligating the city to anything. We're actually just signaling that we want more information. And that if we proceed in this manner, we will receive more information along the lines of what you articulated vice mayor, as well as other information that is pertinent to this acquisition, the refurbishment and historic monument use. And so, um, There's no, there's no obligation if we, if we, put a direction towards the PVC. It doesn't mean we have to do it. It doesn't mean we have to acquire it. But if we don't do it, we lose the opportunity. And that is the purpose of the, of the, the museum, the element tonight, so to have that on. Thank you. |
| 02:28:11.03 | Vice Mayor | Okay. |
| 02:28:11.11 | Janelle Kellman | Thank you. |
| 02:28:11.15 | Vice Mayor | Thank you. THAT'S NOT A LITTLE BIT. that certainly helps make it a little more clear. And then just the last question I would have is in terms of structurally historic, Are there requirements for types of contractors we would have to use that might incur an additional cost as opposed to going forward with a regular negotiated sale? |
| 02:28:22.32 | Heidi Scoble | We'd have |
| 02:28:28.83 | Heidi Scoble | Well, any type of enhancement that we do to the building, I believe would be subject to prevailing wages. So, you know, we would go through, you know, the RFP process. |
| 02:28:38.20 | Vice Mayor | Thank you. |
| 02:28:38.27 | Unknown | Thank you. |
| 02:28:38.42 | Vice Mayor | Thank you. |
| 02:28:38.75 | Heidi Scoble | I don't know. |
| 02:28:38.91 | Vice Mayor | No, no, I know. I just, I mean something like if we need to replace a window pane and it's a specific type, does it have to stay that type from a specific distributor that matches the historic context if we go with HPC versus a negotiated sale. I'm just wondering what are the benefits or negative things that might come forward? |
| 02:28:53.01 | Vicki Nichols | I'm sorry. |
| 02:28:53.08 | Vice Mayor Blasden | and it's a good thing. |
| 02:28:58.23 | Heidi Scoble | Yeah, so with the application process for the historic monument and working with the National Park Service, we would identify, again, those elements that are those character defining features that are historically significant. And once we establish what those features are, then the Secretary of the Interior Standards for the Treatment of Historic Buildings actually has, you know, technical documents as to how we would replace those options. And so, you know, the recommended version, a great example is in our historic, downtown historic. you know, technical documents as to how we would replace those options. And so, you know, the recommended version, a great example is, um, in our historic downtown historic district, we have historic design guidelines. And in those design guidelines, it identifies different paths. You know, this is the preferred alternative. This one is acceptable. This one would not be acceptable. So it would be something similar to that. So if we were to, you know, you know, if a window is defined as historically significant and we wanna replace it, we would need to follow those practices and do what's most appropriate. And we could use the historic building code which is basically can grant almost any exception from the current California building code. But, you know, historic buildings typically are on average 30% more to, you know, upkeep, maintain that type of thing. But in speaking with... of the General Services Administration. You were talking about the historic monument process and how the Butler building may or may not relate to the site. And is the Butler building historically significant or not? And if it's determined that the historic or the Butler building is not historically significant, and then the city could utilize that building for almost anything but we would need to work with the park service on defining what that is and the anticipated use and money that would be generated or revenue generated by that use will be required to go back into the maintenance of the building so it's almost like a Mills Act, quasi Mills Act, in the sense that you're generating or maybe a baby enterprise fund, you're generating money based on the uses on the site that a percentage of that would be required to go back into the building. There could be some revenue savings there. |
| 02:31:15.44 | Vice Mayor | Okay, great. I just, I kinda, I'm just trying to, I'm not opposed to pursuing this or understanding it. I'm just trying to understand from a fiscal perspective, given the situation that we're out with our budget. how we justify it and what's the best path forward. for us. I really appreciate the presentation and the considerations and just in explaining the line of questioning. |
| 02:31:27.71 | Unknown | Yeah. |
| 02:31:32.94 | Heidi Scoble | Yeah. |
| 02:31:33.07 | Vice Mayor | Yeah. |
| 02:31:34.04 | Janelle Kellman | Thank you. |
| 02:31:34.05 | Heidi Scoble | through the process we can even, |
| 02:31:35.88 | Vice Mayor | Thank you. |
| 02:31:35.93 | Heidi Scoble | Sorry. Mary. Helen, would you? |
| 02:31:38.03 | Janelle Kellman | I'd like to speak. Well, only just I think we're beating it dead worth a little bit because we're just talking about a missed opportunity or lost opportunity if we don't pursue. We don't know any obligations. We don't know that we would have to replace a window. We don't know that the structural integrity would require a complete refurbishment. We just need to understand that there's a process that if we use it or lose it, And so I just don't want us to get in too far into the weeds about what we may or might not need to do for the historic resource component. because I don't think we're there yet. And frankly, we don't have enough information from the Park Service. But what I am hearing from the Vice Mayor is that we very much want to obtain that information from the Park Service. And it needs to be a fundamental aspect of this conversation should we pursue the PBC. |
| 02:32:22.45 | Heidi Scoble | Yes. And I was just going to add onto that through the, um, PPC application process, we will need to clearly define everything associated with the use of uses and maintenance and construction related to the project. And, and we can even, you know, work on preparing a cost benefit analysis, um, that would be helpful. Um, you know, there, Just because we're entering into this application or we would potentially be entering into an application process doesn't mean that, again, we're going to acquire it because that will take an act of the city council to decide that. But for the next step, whichever process the city decides to go with, either negotiated sale or PBC, we would provide a full package of what the risks would be associated with it or the liabilities would be associated with it. |
| 02:33:13.87 | Janelle Kellman | Awesome. Thank you, Vice Mayor, awesome questions. Thank you for raising those. And Heidi, really great job. Any other, okay. So Ian, you had your hand up, is it down now? |
| 02:33:24.33 | Councilmember Sobieski | Actually, Joe was ahead of me. |
| 02:33:25.70 | Janelle Kellman | Oh, okay. |
| 02:33:33.07 | Councilmember Hoffman | Sorry, I'm just noting that I'm recusing myself to this because I have a property that's, I think, within a thousand feet for sure. And I'm not sure if it's a 500 feet or not. So out of abundance of caution for this vote, I'm gonna recuse, I'm sorry. I should have said that at the beginning and I missed it, so. |
| 02:33:50.50 | Janelle Kellman | And I think staff should probably double check that and confirm. |
| 02:33:56.00 | Councilmember Sobieski | All right, Councillor O'Rourke, |
| 02:33:56.24 | Janelle Kellman | Oh wait, Councillor Sabyaski, you're back. |
| 02:33:57.24 | Councilmember Sobieski | I did have one question for Heidi just to clarify some of the vice mayor's questions. |
| 02:33:57.84 | Councilmember Hoffman | Thank you. |
| 02:34:02.96 | Councilmember Sobieski | It's not yet clear. whether the historical significance of the machine shop from the point of view of the government, the federal government, is in architectural elements of the building. or what happened there? as far as I understand it. And please correct me if I'm wrong, but the labor movement that started there with Joseph James and Thurgood Marshall might be. quantified as the historically significant a lot of element that the government is interested in preserving. And that may require a very different kind of. capital investment. been say reconstructing the paper mache walls or the butterfly troughs. use. Exactly. Correct. Heidi? |
| 02:34:48.72 | Heidi Scoble | It is correct. You know, with historic preservation, in terms of actual physical improvements you know with historic preservation you have four elements you have is the site or building associated with notable events people architectural vernacular or prehistory so we got automatically mark off prehistory so the civil rights items with Joseph James typically those would be related to some type of physical monument itself and would not necessarily affect an aspect of the building that needs to be preserved the aspects of the buildings that would be identified to be preserved with would be those specific character defining features such as the barrel roof or those windows or the t111 siding or the rectilinear or rectangular form of the building |
| 02:35:40.88 | Councilmember Sobieski | So it's theoretically possible. Again, we don't know it until we turn those cards over. that the government could just for example, ensure that there was some meaningfully notable historical recognition of what occurred in the site But the vast majority of the site could be used for a public benefit, like the Mary Hope line, the corporation yard, the parking garage, of it or some other civic use. |
| 02:36:08.46 | Unknown | Mm-hmm. |
| 02:36:09.44 | Councilmember Sobieski | And that, for instance, just using that example again, That could be as Thank you. a revenue generator to the city. They keep in charge for safe parking. |
| 02:36:22.94 | Heidi Scoble | Yeah, and there's examples of that all throughout the US where you see these buildings that are being used for something totally different than the original intended use. You have a monument or some type of designated plaque that identifies what happened there. |
| 02:36:40.18 | Councilmember Sobieski | Okay, and just the last question, if you could just confirm the understanding that the mayor and I had last year when we looked at the environmental reports on this building. It turns out that the environmental contaminants as I understood it are those that are associated with the miscellaneous contamination found typically in railway yard. that we have. of a completely different order and much less of a concern than than you might find in more substantially toxic environments. our understanding is that the remediation was modest at best that would be required. It might not require anything for the kind of use, at least for the corporation that the mayor talked about, involved just an asphalt Yeah. Is there anything in about that that seems incorrect. I think. |
| 02:37:40.17 | Heidi Scoble | That's consistent with the information that staff has in its records as well. |
| 02:37:45.88 | Unknown | Thanks. |
| 02:37:49.01 | Heidi Scoble | Thank you. |
| 02:37:49.03 | Janelle Kellman | Well, great presentation, Heidi. Thank you for the update. Let's move the public comment. And let's see, city clerk, do we have I see two hands here, Kevin Carroll and Biggie Nichols. |
| 02:38:02.67 | Serge Avila | And Mayor, we do have a couple of hands raised, actually three now we're gonna call on. Kevin Carroll, Kevin, you've been unmuted. I'd like to share your video. |
| 02:38:13.35 | Unknown | Thank you. |
| 02:38:15.97 | Kevin Carroll | Thank you and good evening. Thank you. My real question is, My mom worked at the shipyard. back in 43, And so, The last two real buildings of the shipyards are this building and of course next door, the Corps of Engineer and the little museum in front of it. I'm just curious if we know or if we could find out what the long-term future of the Corps of Engineering building and the museum associated with it. is. Is it subject to disposal in the future? Would we have a right to bid on it at some point down with the city have the right to bid on it? at some point down the road. So at least one of these two structures stays as a monument to the shipyard. is the basis of my question. |
| 02:39:13.12 | Vice Mayor Blasden | Thank you, Kevin. |
| 02:39:15.06 | Serge Avila | Our next speaker is Vicki Nichols. Vicki, you've been unmuted and asked to share your video. |
| 02:39:21.25 | Vicki Nichols | Thank you. Thank you, Mayor Kalman and council members. As I believe you all know, I have a great deal of interest in this building. It was helped get it put on the National Register. Um, I'm pleased to see that you've moved this far along in the process and I would urge you to take the option with the GSA and their recommendations. I recently attended a California Preservation Foundation conference and I don't know if you've explored this, but I'm sure you will under the, um, working with the GSA and the park service there are funds available for these kinds of rehabs and given the the the rarity of existing buildings left. Granted, this roof is caved in But this has been created by negligence by the VA. and they have not done any remedial I'm not sure. steps that they were required to do. So I'd urge you to take the first option. And secondly, I'd like to clarify what obligations they currently have, at least to get, if nothing else, the existing roof tarped. This is just really neglect that frankly is illegal for them with a national register site to not be taken care of. So explore the money. There's money out there and there's actually companies that do loans for historic rehabilitation. Thank you. These speakers all gave a presentation during this conference. I'm happy to pass this particular recording on to the city for references to these individuals. Thank you. Thank you, Vicki. |
| 02:41:05.74 | Serge Avila | Next speaker, it's Peter Van Meter. Peter, you've been unmuted and as you share your video. |
| 02:41:11.84 | Peter Van Meter | Sorry, no video tonight. You're really looking at a dilemma here as to which approach in either approach, the city is gonna be subjected to potentially millions of dollars. It's an absolute money pit. My recommendation is to abandon the entire acquisition process entirely. The city is getting broke. YOU CANNOT GO INTO ANOTHER IMPORTANT. property acquisition process. If you decide that you have to go ahead, DON'T BE DELUSIONED BY THINKING THAT THEY Monument is actually going to be freed. You're gonna be exposed to the same potential millions of dollars, absolute money pit in kinds of these kinds of projects. doing the rehab. getting rid of any toxicity. You've got asbestos sides. et cetera, et cetera. So, Please, please. Just forget about it. You can manage whatever goes in there in the public domain. You know, in fact, The appraisal should probably be a negative value. but they won't do it. Thank you. |
| 02:42:14.90 | Janelle Kellman | Okay. |
| 02:42:15.03 | Serge Avila | Thank you. |
| 02:42:15.20 | Janelle Kellman | Yeah. |
| 02:42:15.32 | Serge Avila | Thank you. Our next speaker. Jacob, Jacob, you're being unmuted and has to share your video. |
| 02:42:27.23 | Jacob | Ahoy from in front of Molly Stone's restaurant here. Beautiful Sausalito, California. Cal is going to accompany me on the guitar. I've got an idea. I have an idea here for Joseph James is beautiful civil rights battle along with Thurgood Marshall. which is now being fought once again. by the houseless and the anchor outs. for civil rights victory since Thurgood Marshall. Tomorrow, if anybody wants to zoom in, We'll have a federal court hearing at 3 p.m. Six pro se lawsuits so far. and the seventh coming up. So we have not been asking for money primarily. We've been asking for Civil rights. Housing for the houseless. and a place to More. for people with boats. as has been allowed here before there ever were houses. So for the machine shop, What we're recommending is that we use the money that will be winning if and when we win these lawsuits. for the machine shop to become the anchor out experience. So even if the insane plan of taking every boat off of Richardson's Bank comes to fruition, there will still be a place for us to come. and live through the beat mix. and the hippies. And now the anchor outs, the civil rights warriors, and the people that are fighting for the working class and fighting for you. Thank you very much. |
| 02:44:14.64 | Janelle Kellman | and |
| 02:44:14.71 | Serge Avila | Thank you. |
| 02:44:14.74 | Janelle Kellman | Thank you. |
| 02:44:16.13 | Serge Avila | Our next speaker, it's Eva, Eva, iPhone, you've been unmuted. Can I share your video? |
| 02:44:24.48 | Eva | Thanks. Can you hear me okay? Yes, thanks. My great answer was |
| 02:44:29.04 | Eva | at Marinship And I think they'd be pretty surprised that anyone was going to all this trouble. to try to buy a rundown building that was going to cost them more than it was worth. Thank you. Um, you know, these were modest women, um, and they served their country and they served their cities for their entire lives. Um, I think they'd be pretty horrified to find that, that you guys are, wow, I'm not even sure I should repeat the number of millions of dollars that I heard you're you're now in arrears, but it doesn't sound like a really good idea. It also doesn't like the notion of buying this building doesn't seem to honor the people who actually worked in it. You know, I heard Vicki Nichols talk about how she got this onto the historic register or something. Look. You know, all these people who worked in the shipyards, they, they were fighting, uh, They were working so that people could have a decent life, not so that we could crush people's homes and dreams and stick them in a camp on a tennis court. You know, my great answer would be absolutely heartbroken. You know, I miss them to pieces, but I'm so glad that they can't live to see what is happening in Sausalito right now. You should abandon this stupid idea and you should focus on making things right. you know, and, and working with the anchor outs. It's, too much damage to too many people's lives. |
| 02:46:12.02 | Janelle Kellman | Okay, thanks very much Eva. |
| 02:46:15.01 | Serge Avila | Next speaker, it's Carlito Berg. Carlito, you're being unmuted and has to share your video. |
| 02:46:23.57 | Carlito Berg | Hey everybody, hope everyone's well tonight. Thank you, Serge. Thank you, Mayor. Thank you, Vice Mayor. um, I guess I'll keep my comments pretty brief and numbers-based. You know, if you figure that you're going to have a 24-hour security guard at 40 bucks an hour, That's 910. and $60 a day. 365 days a year, it's about 350 grand. The Urban Alchemy contract for about 400 grand is running out. So... You know, if one was to take that on and the camp still existed, you, you know, basically have, you know, a little more than three quarters of a million dollars. insecurity alone. that the city would be responsible for um, I think that the liability associated with that building is just totally immense. in a way that Um, I'm not sure people are thinking about. I totally think I'm totally all for the city kicking tires. Kicking tires is the foundation of any good deal. at the same time, you just, the facts are what they are. So if you have $6 million in cash, which I think it was, the last part of the unrestricted funds you have and that building's 37,000 feet, then you have to spend $162 a foot to begin to touch it and that's all of the funds that the city has in cash, all of them. it seems like that are unrestricted. So you can't begin to touch that building for $162 a foot. whether or not Some people think that there are uses like parking or other uses that could be done. the inside of that building is structurally unsound. and to begin to I'm not sure. to touch that building, if you touch it for 350 bucks a foot at 37,000 feet, that's $12.9 million. That's just to bring it up to a standard where it could be even beginning to be used And then you need to tend and improve whatever you're doing. So, you know, the, the, like, did |
| 02:48:26.35 | Janelle Kellman | Thanks very much, Carlito. Appreciate your comments. Thank you. Thank you. |
| 02:48:29.61 | Carlito Berg | Thank you. |
| 02:48:29.62 | Janelle Kellman | THE END OF you. |
| 02:48:33.29 | Janelle Kellman | Okay, do we have any other public comment tonight? |
| 02:48:36.85 | Serge Avila | Madam Mayor, there are no further hands raised. |
| 02:48:39.36 | Janelle Kellman | Okay, wonderful. Well, we'll bring it back up to the dais. I think I'm going to take a stab at leading off As one of the working group members who's been looking at this the last year and a half So this is extremely helpful. I think probably as a working group, we need to do a little bit better in terms of our communication about where we are in the process. and where what that means and where and when we're obligated. So I think what I'm hearing tonight is there's a lot of assumptions about the city's responsibility, assumptions about the rehab, assumptions about the use cases, And we just don't know the answers to those yet. If we want to know the answers to those assumptions, then we have to proceed in further dialogue with the GSA and they're recommending the PBC. And so I just want to make sure we're not putting the cart before the horse. We don't need to talk about what type of rehab or the extent of the rehab or the square footage of the rehab because we just don't know what the obligation is yet. But I think the feedback is so useful because now, Councilor Sobieski and I, when we do talk to GSA and the Park Service, we can start to ask these more detailed and pointed questions around what they would envision. What does that mean for it to be a national monument? And with these comments in mind, We could reject the situation if it sounds like it will be burdensome or we can proceed and bring it back to the council and advise council to proceed if it looks like it will be a much lighter left. And so the working group has looked at a very broad range of potential uses, everything from a a parking lot to an opportunity to move the preparation yard over there so we could free up the corporate share for some much needed housing. which could be affordable housing since the city owns a corporation yard, all the way to public-private partnership for an innovation center or some other use case in that area. So there's a broad range of possibilities, but a number of assumptions, many of which we heard tonight that I think we will endeavor to find answers to. I also highlight again that the Butler building would be a part of this. And though we don't have confirmation yet, there's been every indication from GSA that it does not have the same historic designation. and it is in much better shape. So it is something that could be utilized more immediately. So my recommendation will be to pursue the public benefit conveyance so that we can answer many of these questions that were presented tonight and then bring it back when we have more information. And so I found this very helpful. I see and hear what the vice mayor and what members of the community are concerned about. And I think that provides a very good set up talking points for things for us to resolve. in talking with the Park Service and also with GSA. so um that is kind of where i stand after hearing the feedback and i appreciate everybody's uh comments Thank you. |
| 02:51:28.03 | Vice Mayor | So, |
| 02:51:28.48 | Janelle Kellman | Thank you. |
| 02:51:28.60 | Vice Mayor | Thank you. |
| 02:51:28.63 | Janelle Kellman | THE COUNTRY. |
| 02:51:29.04 | Vice Mayor | your hands up. I just had a couple more questions for Heidi, given some of the public comment that we heard and just trying to understand where we're at. So the Butler building is separate. But would the Butler building be subject, say we go through this process and they say the Butler building is historic. Does that mean it's subject to all of the same requirements if |
| 02:51:49.04 | Heidi Scoble | Through the process, it is identified that the Butler building has historic significance. Then through this process, we'd be working with the National Park Service to figure out how that building is going to be used and what type of improvements would be made to the building. |
| 02:52:02.32 | Vice Mayor | And then the 60 day requirement, does that mean like from the beginning of choosing this, we're going to have 60 days or we have a variety of time and conversation before the 60 days. I just want to, cause there are a lot of questions and I just, 60 days is not a lot of time to get all of those answered. |
| 02:52:15.78 | Heidi Scoble | Yeah, so our timeline is a little crunched. So what we need to do is, you know, from, Thank you. the time that we provide a response to the general services administration regarding which path we'd like to choose then we were going to need to you know come up with a timeline to reach out to the national park service to get to a point when our 60-day clock starts So there will be a fairly quick turnaround. The GSA will be dictating pretty much when that clock starts and in concert with working with the National Park Service as well. Thank you. |
| 02:52:49.97 | Vice Mayor | there's a little flexibility like we could say we need these questions answered before our 60 day clock starts. |
| 02:52:56.92 | Heidi Scoble | But there's not a lot of flexibility and that flexibility is only going to be granted by the GSA and that National Park Service. |
| 02:52:57.06 | Unknown | Bye. |
| 02:52:57.18 | Vice Mayor | I don't know. |
| 02:53:03.84 | Vice Mayor | Okay. That's the end of my questions. I guess council members, so we asked, you can give a comment and then I'll give my comment. or whatever, however you want to do it. Councilman. |
| 02:53:12.97 | Janelle Kellman | Thank you. |
| 02:53:13.02 | Vice Mayor | can go for it. |
| 02:53:15.77 | Councilmember Sobieski | Please go ahead and handle us. I'm not sure. |
| 02:53:18.46 | Vice Mayor | Sure. I mean, I am both excited and a little bit wary about the potentials for acquisitions of the machine shop, given the fiscal status of our budget and given the THEIR OWN real numbers that we spent two hours reflecting on together as a council this evening. Please know that my questions are coming from a place of wanting to be sure we're making appropriate fiscal choices. and being excited about and understanding that there are potential uses for the machine shop that the city could collaboratively be engaged in uses around without necessarily purchasing the property like a public private partnership or you know where we work on zoning and |
| 02:53:56.26 | Carlito Berg | Yeah. |
| 02:53:58.47 | Vice Mayor | I just visited a really amazing innovation hub that was an old, um, military food factory and has been turned into a huge startup innovation hub with with support from the city. So I think that there are a lot of interesting avenues to pursue. My concerns and my questions are around what will it cost us? And can we afford it given the situation we're in and given that we just acquired the B of A building and we're still trying to figure out a lease and appropriate use for that. And so, I mean, I would happily come to consensus with the working group on whichever decision they whichever process you think makes the most fiscal sense to pursue hearing this I think given that we might be able to acquire the building for free not nothing's for free these days but given that we might be able to acquire it at a very reasonable cost through the historic process I would be open to that. I would be I just I would really like to be able to provide perhaps the working group with a list of questions of about the fiscal implications for the purchase that we would need to see from GSA. And I would also want to make sure that we would have um, enough time to consider what that means. And so it's hard for me to say yes or no, before we have our big budgeting meeting on Saturday and have an understanding of our real estate portfolio and where we stand. And I think that's also really important to consider before we make the acquisition. So I support the working group's hard work on this. I know you guys have put a lot into it and you're trying to pursue every avenue and you don't have all the answers yet because they haven't told you them until you move forward with this process. I know we're all thinking about the budget and I just want to keep that at top of mind. So that's where my questions come from. But I appreciate all the hard work and time you put in working with the GSA to get to the bottom of this and I trust your judgment on which process makes the most sense. |
| 02:55:45.79 | Janelle Kellman | Yeah, thanks very much and I welcome important questions and be happy to use them as we engage further with GSA and the Park Service. Councilor Sobieski. |
| 02:55:55.26 | Councilmember Sobieski | Yeah. Well, I listened attentively, Vice Mayor, and thanks a lot for all those comments and concerns and I too if you wanted to I think I could just listen to the tape to write down a lot of your questions, but if you wanted to bother writing them down and emailing them to the mayor and I, I'd love to. receive them so we can carry that water. with the GSA. I'm not sold on buying the building. But this, but I certainly think it's worth the hours required to turn over the cards to find out what the deal would be and what the constraints of the deal would require. I think, uh, Peter Van Meter articulated some concerns about ultimate liability and that's absolutely something that we need to pay attention to on a capital cost basis. Carlito Burke mentioned that. too. And those numbers need to be run with a sharp pencil, but we have no idea. what constraints, if any. Park Service would require. And then you, Vice Mayor, talked about operating costs, which is another whole part of the picture. Now it goes in the front end. And that has to be done with with an eye towards our budget expenses. But bear in mind, the devil actually is in the details. You know, we, Thank you. to invest it in. the Bank of America building for a little less than $2 million. And as was pointed out earlier, it's now worth $4 or $5 million in just two and a half years. Kudos to the previous city council for that brilliant investment. those that were concerned about being opposed to the investment at the time, need to acknowledge that the balance sheet of the city is $2 million bigger now after that acquisition. the operating budget of the city could be hugely negatively impacted by the vision for what could go with the machine shop, or it could be dramatically enhanced if that worked out. The capital requirements could be financed because of the revenue opportunities that could come from it, no revenue financing could be available because there isn't a plausible idea. So we're nowhere close to that. when we actually had to make a go, no-go decision, we'd have to have those details in mind. But, you know, I wouldn't let the... you know, the, the, Finances of the city are in a pickle because of the enhanced pension benefits that were granted by the city council in the early 2000s. And that. at took our pension my belief in a few hundred thousand dollars a year to now three million dollars every year. So these details can really make a difference, but that's the number one problem with our budget. compared to that, the capital outlays, we can't let that stop us from dreaming about all the ways we can make Sausalito better and hope that we would not let that be the monster under the bed. It needs to be attended to, but the number one way of attending to it is going to be how we manage our personnel costs and our personnel structure. Because the pension liability is fundamentally a personnel cost issue. and not a capital cost issue. So they really kind of live in are of course related but they really live in separate universes and need to be thought of kind of with a sharp pencil. So I think it's worth turning over this card to see what kind of constraints are for the bank, for the, machine shop, but until we know those details, it's hard to say whether we should pursue it or not. |
| 02:59:37.45 | Vice Mayor | SHOULD I SEND THE just an email list of my questions as a one-way communication. |
| 02:59:43.17 | Unknown | Great. |
| 02:59:43.66 | Vice Mayor | By all means, yes, please. Thank you. |
| 02:59:47.19 | Janelle Kellman | Well, thank you both. I really appreciate and enjoy the... balanced conversation how we uh wind and unwind uh the concerns so thank you to both of you for doing that Okay, so the question tonight is truly just whether we would like to explore the PBC or the negotiated sale I think. It sounds like we're all moving towards the PBC. That would be my recommendation. And so that is the recommendation I think we should give to staff. And I'll just hear from my colleagues. um, if they're in agreement with them. DO YOU NEED TO DO THAT? |
| 03:00:24.23 | Vice Mayor | TO MAKE A MOTION, MAYOR? |
| 03:00:25.34 | Janelle Kellman | Thank you. Do we have to? |
| 03:00:26.20 | Vice Mayor | Thank you. |
| 03:00:27.00 | Janelle Kellman | Heidi, do you need an actual motion |
| 03:00:28.97 | Vice Mayor | here tonight. Thank you. |
| 03:00:31.05 | Heidi Scoble | it would be helpful to have emotions. Okay. Sure. OK, I promise. |
| 03:00:38.67 | Vice Mayor | Okay, I move to support the working group's recommendation of, or I move to move ahead with the PVC pursue all of the machine shop acquisition to get answers to some of our questions and figure out next steps. |
| 03:00:56.75 | Janelle Kellman | OKAY. Ian, do you want to separate that? |
| 03:00:59.82 | Councilmember Sobieski | Oh, second, sorry. No. |
| 03:01:01.79 | Janelle Kellman | Great, thank you. City Clerk, would you please call the roll? |
| 03:01:08.27 | Unknown | Councilman. |
| 03:01:08.61 | Serge Avila | Councilmember Sobieski? |
| 03:01:08.69 | Unknown | I'm sorry. |
| 03:01:11.80 | Unknown | Thank you. |
| 03:01:11.82 | Serge Avila | Um, Vice Mayor Blonstein. |
| 03:01:14.13 | Janelle Kellman | Thank you. |
| 03:01:14.20 | Unknown | Thank you. |
| 03:01:14.28 | Janelle Kellman | Thank you. |
| 03:01:14.32 | Unknown | Thank you. |
| 03:01:15.90 | Janelle Kellman | Yes. |
| 03:01:16.58 | Serge Avila | And the mayor of Kelman. |
| 03:01:16.69 | Janelle Kellman | and Mayor Kelly. Ayas. Passes three zero again. Yeah, thank you. That was a very, very helpful. |
| 03:01:21.60 | Serge Avila | AGAIN, THANK YOU. |
| 03:01:25.22 | Janelle Kellman | And I think a really good dialogue OK, it's it's 10 o'clock in I am going to recommend and suggest that we not try to tackle this last item, item 4D, which is direction on 429 and a half Johnson Street. let me ask my fellow council members how they would feel about moving that. Yes, please. Okay, two thumbs up. Okay. All right, so we're all in agreement with that. So Lauren, thank you for sticking with us, Mike. Good to see you. I really appreciate the opportunity to see you both, but please enjoy the rest of your evening. |
| 03:02:03.89 | Peter Van Meter | Thank you very much. |
| 03:02:05.28 | Janelle Kellman | Okay, then we'll move that over to item five, which is communications. And this is the time on the agenda for members of the public to write any public comment for items that are not on the agenda. You have to limit a situation. State law precludes the council from taking action on or engaging discussions concerning ends of business that are not on the agenda. However, the council may briefly respond to statements made or questions posed by a member of the public. Ask clarifying questions, make a brief announcement, or refer matters not on the agenda to city staff or direct that the subject be agendized for a future meeting. So if you would like to provide a public comment, please raise your hand and I will turn it over to our city clerk to see 30 comments on items not on the agenda. |
| 03:02:41.78 | Serge Avila | And Mayor, we do have a hand raise and... Jacob. You have been unmuted and as to share your video. |
| 03:02:50.05 | Unknown | Okay? |
| 03:02:50.52 | Serge Avila | WE'RE ON. |
| 03:02:56.24 | Jacob | My boy again. on the guitar. |
| 03:03:02.60 | Jacob | Now, What I, called the council for quite a while now about a lawsuit being filed. I was hoping that One of you. or the city manager or even the city clerk or even the city librarian would have been willing to talk. with anybody on the anchorage. or with any of the houseless members And saved yourself quite a bit of money and quite a bit of time. Bye. for whatever number of reasons you chose not to do that. So now we're negotiating with our federal court with Edward Chen, former ACLU attorney and now a federal judge. The idea that police men and women And people that have just been released from prison are running a camp. of houseless people. And THAT THE FEDERAL courts are overseen. That's it. issues about kitty cats. issues about parking, permits for one person. issues about two tents being too close together seems to me quite absurd. But here we are and here we go. So if anybody wants to watch at 3 p.m. every Wednesday... We are having a settlement conference. Of course, we want to go to trial as quickly as possible. We don't want to stretch this out. We want this to end, but we don't want this to end. with an empty anchorage. AND WITH NO THE FAMILY. left to be salty in the city of Sausalito. So we fight on. lost a lot of battles. |
| 03:04:58.70 | Serge Avila | Jacob, you're two minutes have a lab. Start next speaker is Eva's iPhone. Eva, you've been unmuted and a sharing video. |
| 03:05:08.47 | Eva | Thanks. Can you hear me okay? Yes. Thanks. I do want to point out |
| 03:05:14.02 | Eva | THAT You know, for many years, the city of Sausalito had an opportunity to work with the anchor outs rather than bully them. And, you know, it's, It's disappointing to see what the end result of this has been. There were endless opportunities for Sausalito City Council members to appeal. Thank you. to RBRA before they left to stop the the improper seizure of so many people's homes from the anchorage. and then the destruction of those boat homes. That was really ramped up under Curtis Havel. I'm not sure why the city of Sausalito isn't looking at suing RBRA, but it's pretty obvious that the anchor outs don't want to be in the position of having to go to court over this. You have, you know, people who would rather be working with you. they've been rebuffed at almost... every turn. These people have a really long history. in Sausalito much longer than the transplants. You find them distasteful or unsightly. They live with a very small carbon footprint and they give the town what's left of its character, which is not much anymore. So, um... I hope that, you know, I'm not very optimistic. I mean, you guys are what you are, but, you know, I would hope that, people could be more sensible and more cooperative because it just seems like it's making things a lot worse for you guys. And you're dealing with a group of people who, you know, are willing to take on big legal fights because Thanks very much, Eva. Thank you. |
| 03:07:13.47 | Janelle Kellman | I appreciate your comments. City Clerk, do we have any other public comments? |
| 03:07:20.77 | Serge Avila | Madam mayor, I see no other hands raised. |
| 03:07:23.15 | Janelle Kellman | Okay, thanks very much. We'll move on to item six, council member committee reports. Does anybody have anything to add? on their work on various committees. Okay, we'll move on to item seven. No, actually, pardon me. Let me open up for public comment on council member committee reports. And city clerk, do we have any public comments? |
| 03:07:44.38 | Serge Avila | Madam Mayor, there are no hands raised for this item. |
| 03:07:47.40 | Janelle Kellman | Okay, thanks very much. Great, we'll move on then to item seven. This is the city manager report, city council appointments. and other council business. So go ahead and take public comment on item 7B through 7E. |
| 03:08:04.01 | Janelle Kellman | CITY CLERP? |
| 03:08:05.96 | Serge Avila | I see no hands raised for item 7B through 7E. |
| 03:08:10.47 | Janelle Kellman | Okay, we will close public comment. Thanks very much. And we will turn it over then to City Manager, Item 7B. |
| 03:08:19.95 | Chris Zapata | Thank you, Mayor and Council members of the public. one of the things that you did is you authorized directed that we hire some grant resources. And so we hired three different entities to help us put grants out there. You came up with some ideas that we could follow through on and as did staff. And so what I wanna say is that we were looking at four different opportunities at this time that involves potentially a homeless application. And low emissions application, bicycle application, And then there's also a Make sure I got my notes right. EV charging station. So that's in the hopper. There obviously should be a lot more and will be a lot more, but we needed to start and start somewhere using these resources to try to bring other people's money into Saucerito to meet some of their priorities. I also wanted to provide a little brief update to to the council on other things that are happening. There have been conversations with the Congressman Huffman's office since the council looked at the fema reimbursement that hasn't happened and been denied on multiple occasions We were directed to continue working on that. Today I had a good conversation with the office of congressman huffman and they've agreed to talk to fema to see if they could learn understand and potentially help out so wanted to report that and then obviously we did receive 167 000 from the county to help with our homelessness costs there were reports given last week by different people that suggested that the state and potentially the county could bring more money to help us with this challenge, I've been significant. And then Mayor Kellman and Vice Mayor Blaustein. are working on an ask with the different state representatives for assistance on sea level rise and a big strategy. TO DEAL WITH THAT. And that concludes my report, Mayor and Council. |
| 03:10:30.36 | Janelle Kellman | Excellent. Thank you for your hard work, city manager. Any questions for the city manager on These comments. Okay, so then we'll move on. Item 7C, we don't have no appointments tonight. Item 7D, future agenda items. And I just, I mean, comment, I do see a member of the public has their hand up. Unfortunately, Mr. Bruce, public comment is closed. So we will not be able to take your comment, but we will turn over to the vice mayor and then councilman Sobieski. |
| 03:10:58.66 | Vice Mayor | And before I dive into future agenda items, I just want to remind the public that we're having a special meeting on our budget on Saturday from 10 to two. So if you, wanted to tune into some of the stuff we talked about today. You could join us on Saturday. I have a bunch of future agenda items. many of which are from the Sustainability Commission, as usual. So the sustainability commission has been working on a resiliency hub project and they would like to have a discussion on resiliency hubs come up on the calendar. Also, I know we've mentioned this over and over again, and it is probably on the future agenda item, but just the leaf blower slash gas appliance ban. The county is considering an electrification ordinance for all new buildings around appliances, and so I think it would be helpful as that moves forward for the council to have some sort of report on the county's work. on that. I also we received some correspondence about a an art project in the tunnel between Sausalito and Marin City. I know we've heard from that group before, perhaps an update on that project, even on consent for how we might be helpful. would be really useful. Also, I know we at the Racial Justice Working Group have been. discussing an event for Juneteenth. And I don't know if this needs to be calendared, but the consideration of Juneteenth as an official holiday for the city Um, would like to add that to the calendar. And then also I know that the RBRA group has been really busy and I think it would be helpful for the full council to have an update from the status of RBRA or what's going on with the mooring fields. So sorry, that's a lot, but those are what I'd like to see on the agenda. |
| 03:12:38.93 | Janelle Kellman | Yeah, those are great. The leaf blower is on for May 10th. Right. So if the city manager thinks that's going to get cut off, let us know. Okay. Thank you for that great list. Councilor Sobieski. |
| 03:12:51.47 | Councilmember Sobieski | I wanted to see if any of my colleagues have an objection to having a closed session at the front end of Saturday's meeting. to do a city manager review. Some of the topics that are gonna come up later in the day, I think. of informed. a short review and also the review might inform smaller thinking later in the day. Thank you. |
| 03:13:13.92 | Janelle Kellman | I would be happy to, unfortunately, I cannot start until 9.30 on Saturday. |
| 03:13:18.62 | Councilmember Sobieski | and maybe have 15 minutes or so at the front. of the meeting. even if it starts at the same time. just for closed session. |
| 03:13:26.32 | Janelle Kellman | Yeah. It's fine by me. Councilman Hoffman, Vice Mayor? No objection. |
| 03:13:32.98 | Councilmember Sobieski | Okay, thanks. The only other agenda item is, you've been seeing a lot of public comment and discussion about KEYAC. And I know we're feeling our way through that process. My understanding is that at some point a critical juncture will be what building sites are going to get and environmental impact review done by our expensive consultant. I want to be sure that City Council has an opportunity to chime in on those recommendations from HIAC before we are well she gets to chime in to make sure that all the sites that should be reviewed are reviewed So I'd like to have that on a future agenda topic when HIAC finally comes up with their final list. |
| 03:14:20.42 | Janelle Kellman | Yes. And so on the HIAC topic, thank you for the reminder. It's everybody May 9th. We have a town hall. on HIAC on just that very topic. And then also Councilor Sobieski, and actually let me ask if I'm looking for Heidi, if Heidi is still here or maybe the city manager, if we could get a copy of the housing element schedule as a one-way communication to everybody on council, you will see that it is built into the schedule that that will absolutely come to council and council has the final say on the sites but I think if you can attend the May 9th meeting then you can hear some of the the public dialogue on that so thank you for that prompt Okay, and then I will add, I think I added it last time, I remember the fishing pier. maybe turning into a Saucyus municipal pier. And talking about that would be one of my items. And then obviously tonight, Dorothy Gibson will get moved and then Planning Commission presentation will get moved. So I still see two council members with their hands up. Do you have further additions? Okay. Councilman Hoffman, anything on your Okay, great. This is an excellent list and we will endeavor to get it on quickly. Other reports of significance. There are no other reports of significance. So with that, I will... suggests that we adjourn. Oh, yes. Hold on. Hold on. Before we agree with that, city manager. |
| 03:15:46.28 | Chris Zapata | Oh, yes. THEIR OWNERS. I know it's getting late but I received some communication I believe all of you did regarding a recommendation from the housing element advisory commission to hold some type of public session if you think that that may meeting suffices for that but there was a specific request that that be an in-person meeting so I'd like to get some direction from you all on that. suggestion that you put it on the agenda Saturday and talk about it then. |
| 03:16:19.25 | Janelle Kellman | Okay, thank you very much. So just to be clear, the question is whether the town hall would be in-person, hybrid, or remote, and staff has some insight on our capabilities around that. So we'll just plan to talk about that on Saturday. Thank you, Chris. |
| 03:16:37.92 | Janelle Kellman | Okay, with that, I'll go back to the suggestion that we adjourn. Anybody disagree? Excellent. Okay. Thanks everybody. We'll see you on Saturday. Have a good night. Thank you. |
Sandra Bushmaker — Neutral: Suggested liquidating assets like the B of A building to pay down principal, advised against POBs, and requested cost details for the 115 trust. ▶ 📄
Peter Van Meter — Against: Cited opposition to POBs from citizen groups, highlighted rising interest rates and market declines, and supported using the 115 trust to level payments. ▶ 📄
Jacob — Neutral: Raised concerns about double-dipping pensions and urged divestment from fossil fuels in investments due to the climate emergency declaration. ▶ 📄