| Time | Speaker | Text |
|---|---|---|
| 00:01:29.06 | Walfred Solorzano | Council members, the meeting, the city council meeting of June 25, 2024 is being broadcast live on cable TV channel 27. It's also live on zoom and is live on the city's website. Mayor. |
| 00:01:43.68 | Steven Woodside | Thank you, Mr. City Clerk. We will call this meeting to order, and we'll begin with the Pledge of Allegiance. |
| 00:01:53.14 | Steven Woodside | All right. |
| 00:01:53.41 | Steven Woodside | Thank you. Thank you. |
| 00:01:57.30 | Steven Woodside | Thank you. |
| 00:01:57.33 | Steven Woodside | Thank you. |
| 00:01:57.53 | Steven Woodside | you Thank you. Under God, in the earth of the earth, the creation of God's cross. And then tonight we have only one business item. That's item 2A, the City Council Review and Recommended Action. uh well i take that back there are several business items they're all related to the budget so i will not go over the agenda again we don't do not have a consent calendar uh, But we can begin with item 2A. Would you like to say anything? |
| 00:02:27.25 | Steven Woodside | So before we start with our normal business items, Mayor, I wanted to make a clarification to some comments I made at our last city council meeting regarding a proposal that the city had received from community venture partners. I expressed my explanation for some of the reasons I voted against that proposal at that time. The principal of community venture partners reached out to me to alert me to his perspective that some of my perspective was mistaken. I explained to him that I relied on information I had received from members of the community and city staff, but I acknowledge, you know, reasonable minds can vary on various things. And so I acknowledge that the principle of community venture partners has a different perspective on some of the issues that I raised during our discussion last week, and I respect his his right to have his own views about those things. And I certainly don't take what I say as gospel truth. I'm simply reiterating what I've heard from others. So I just wanted to make that clarification. I also wanna say, I greatly admire a lot of the work that community venture partners does. I just didn't see a fit between that proposal and our needs at that time. So thank you for allowing me |
| 00:03:51.74 | Steven Woodside | Thank you. to the next episode. |
| 00:03:52.81 | Steven Woodside | use. |
| 00:03:53.04 | Steven Woodside | Thank you. Thank you, Vice Mayor. We will move on to our first business item. That is 2A City Council Review and recommended adoption of a 25% reserve level for general fund contingencies by adding an additional 10% contribution to the economic shortfall fund. To the current policy amounts, 5% for budget stabilization and 10% for economic shortfall. So city staff, are you giving the presentation, Mr. President? I am, Mayor. Very well. |
| 00:04:18.52 | Chris Zapata | I am, Mayor. Very well. |
| 00:04:19.69 | Steven Woodside | Thank you. |
| 00:04:19.70 | Chris Zapata | I will give the presentation to Zapata. I want to thank everybody for being here at this special meeting. Really important to make sure that we make the time to work on these important matters, especially in our financial arena. I want to thank the public for paying attention and weighing in as well. I want to thank past councils for the work they've done. I want to note that this city council listed our reserve policies as a priority this past year. And in doing that workshop and that strategy session, we bring this to you tonight. This is not new to Sausalito. In 2011, June of 2011, to hedge against emergencies and create a rainy day fund, the city of Sausalito adopted a resolution 5% for budget stabilization and 10% for emergency shortfalls. So that 15% policy has been in place and in writing for the past, you know, 14, 15 years. It's been told to me by people, former mayor Ray Withey, that there was a practice of the city, taking 10% on top of that and using that as an unofficial hedge as well to create a de facto 25% reserve. So again, these policies are based on governmental accounting standards board regulations called GASB. you know having a rainy day fund is really important for a city, but the amount of that rainy day fund, how they're categorized, what funds they're put into, that's something that is a little bit different in almost every community. So in addition to the rainy day fund of the emergency shortfall and the budget stabilization of 15% of our general fund budget, to do some quick math, if we have a 10% reserve policy and we have a $20 million general fund, that means the city must set aside $2 million. dollars. If you add 5% on top of that, that's another $500,000. So the city has to set aside $2.5 million on a $20 million general fund that is typically close to what we spend and have in Sausalito. I want to note that these funds are augmented by other funds. The city has had a practice of keeping money in different accounts. The parking fund is an account that the city keeps money in that's separate from this. The MLK fund, the city keeps money here as well is separate from the five and 10% and the old city hall fund. So these are funds that have been set up as quasi enterprise funds. So the city, if there's something that is needed at MLK, there's money there to fix it. If there's something needed is needed at MLK, there's money there to fix it. If there's something needed at the old city hall, there's money there to fix it. And the same with parking and parking lots. So all of that to say the city has been very well managed financially. It is not ever dipped into the 5 percent or 10 percent since their inception in 2011. |
| 00:07:30.58 | Chris Zapata | Because there is a great variation between what cities are comfortable with and doing with their reserves and how they characterize them and what they want to put into them as an amount. We provided a survey to you. It's in your staff report of all Marin County cities. And the long and short of that are the high is 50 percent in one city. The low is 10 percent in San Rafael. Obviously, bigger cities have bigger budgets the lowest 10% in San Rafael. Obviously bigger cities have bigger budgets, so 10% of San Rafael's budget is $10 million. 10% of Saucerito's budget is not $10 million. So it's never an apples to apples comparison. Secondly, what is also important is in your report as well, we looked at other cities close to us, cities under 100,000, cities in Alameda County, cities in Napa County, cities in Sonoma County, and there you have a different range. You have an 8% to a 50% range. So Saucelito is currently at 15% with a practice of 25%. What I'm recommending is that we formalize that additional 10%. Look at this annually. See if in fact there's a need to leave it alone or go up. because, again, the comfort level depends on the city council, and you are the ones that set these policies. We make recommendations, and our recommendation, my recommendation is 25% is more than adequate today. Maybe tomorrow, it may be too high. Maybe tomorrow, maybe too low. But at this point in time, 25% is what you've been doing. It's adequate. I wouldn't go higher than it. Obviously, it's your call to make. So at this point, I open the floor for questions and see if we can get to a determination as to what you want to peg this at, mayor and council. |
| 00:09:16.28 | Steven Woodside | Thank you, city manager. Are there just one question? Is Mr. Hess here as the director of finance here tonight? He is with us. I sure am. Just curious if he was here. Any questions for my colleagues? |
| 00:09:23.05 | Chad Hess | I sure am. |
| 00:09:32.85 | Steven Woodside | we'd like to start. |
| 00:09:34.71 | Jill Hoffman | A general question, maybe in 2011. How might we compare the 2011 macroeconomic climate to where we are today. I want to make sure that we're not just trying to compare over time when things have really changed quite dramatically, both for the city in terms of our known deferred maintenance and our known consolidation needs, as well as just things that have happened in the general economy since 2011. And so as our finance director, are there things that you want us to be aware of as we consider the reserve policy? |
| 00:10:17.61 | Jill Hoffman | You can mention interest rates if you'd like. Yeah. |
| 00:10:20.78 | Chad Hess | Yeah. So. You know, I think over overall, it's important to look at our risk. There's no one size fits all for all. in the city. I think we do need to take a look at our... |
| 00:10:34.45 | Steven Woodside | Can you lean a little more into your microphone? Yep. |
| 00:10:37.43 | Chad Hess | Yep. Are you guys sharing me better now? |
| 00:10:39.24 | Steven Woodside | Now you're great. When you lean back, it's a little bit quieter. That's all. |
| 00:10:41.65 | Chad Hess | Okay, sorry about that, thank you. I WANT TO TALK ABOUT THIS. So based upon Based upon the risks of the city and the comfort level of council, I think a 25% reserve is justify it. I think if we want to refine that estimate more, we should undertake a thorough risk-based assessment What risks the city faces, what are the probabilities of those risks, and what are the potential financial impacts of those risks. If you want to get very detailed, that is the way the GFOA is now recommending we address fund balance. In the past, they have always said just a blanket two months reserve. Um, I think that is low. I think having 25% in reserves is sufficient based upon the needs of the city. and the historical trends that I've seen of the city. |
| 00:11:36.38 | Chris Zapata | Amir, if I can, I'd like to address that as well. Please. You know, is it different today than it was five years ago? Absolutely. But the question is, are the risk and the cost of those risks different? And, you know, I'll give you some examples. In 1999, 2000,.com, bubble burst, cities having trouble. 2006, 2007, you know, Great Recession, cities having trouble. You know, 2020, 2021, pandemic, cities having trouble. So cities run through cycles of trouble. It's constant. And the question is, you know, if what you have in your reserve is enough to hedge against those, I think that that's a comfort level you have to have. But we're always going to have conditions that are going to create need and emergency. And so you've been able to manage pandemic. I'm assuming that after the Great Recession, that probably spurred some of this move to put money aside. Maybe, you know, putting money aside for your pensions was part of that as well. But you've been putting money aside, and I'd argue you've put too much money aside and have not used that money for things that you could use it for. because if we're sitting on today's dollars and we have today's needs and, you know, we're not maximizing our investment returns or we're not putting them into needed projects that help the community or diminish our infrastructure backlog, why sit on 10 million bucks? You need to put that money to work. so in my mind um you know when i came here and i saw the problem we were into with covid and having to pull money out of the parking uh enterprise at the same time getting assistance mind, you know, when I came here and I saw the problem we were into with COVID and having to pull money out of the parking enterprise at the same time, getting assistance from the feds. Yeah, that was a critical point. but we didn't get into our five or 10% then. You know, now we're talking about you know, $10 million in that account with those combined funds. And I'm assuming that you all will do something that, you know, brings that number up from 5% to 10%, but it shouldn't be 50%. The environment is, you know, uncertain. But if there is an uncertainty, that's why you have insurance, and that's why you're paying a lot of money for insurance this year. There's always some type of, if there's a true disaster, there's a state and federal and potentially a county response. So you won't be on your own. So, you know, I would not be overly aggressive in adding to that 25%. If you want to go to 30%, no problems. If you want to go higher than that, I'd recommend you don't. |
| 00:14:15.54 | Steven Woodside | Yeah. I don't know if I want to address this to the city manager or to chat. You mentioned the 2011 25% but we adopted a resolution in 2018 setting our reserve policy at 25% that year as well 15 and 10 and so We did that by way of resolution when we adopted the budget. We didn't adopt a separate resolution specifically pertaining to the reserve fund, but we did do that in 2018 as well. So I guess my first question was, were you aware of that? |
| 00:14:54.44 | Chris Zapata | The answer is no. So I only know two things. One, what we saw in 2011, and my conversation with Mr. Withy and with the former city manager about when these types of activities occurred, but I wasn't aware of a formal resolution adopting a 25% policy, but thank you, because that's the recommendation. |
| 00:15:12.97 | Steven Woodside | Exactly. And I also wanted to distinguish between unassigned fund balance and reserve. If you're talking about reserves, I don't believe our reserves then or today are too high. If you're talking about unassigned fund balance, when you say we are carrying too much, you may have a point. But I am grateful that. And so are you talking about unassigned fund balance when you say we're carrying too much? |
| 00:15:42.23 | Chris Zapata | Correct. I think, you know, you have a five and 10 and now you're telling me a 25% reserve. That's adequate. Anything above that, you should be putting into projects or investing, but it shouldn't be sitting there idle. |
| 00:15:55.22 | Steven Woodside | So given the change in our insurance situation and the uncertainty regarding the very vary the change in our SIR, would you agree that it's prudent to have more unassigned fund balance than perhaps in prior years? |
| 00:16:18.43 | Chris Zapata | Yes. |
| 00:16:18.76 | Steven Woodside | Thank you. |
| 00:16:20.13 | Steven Woodside | Those were my questions. Thank you. |
| 00:16:24.50 | Steven Woodside | somewhere we're hopping. |
| 00:16:25.60 | Jill Hoffman | I'll follow up on that just for a second. to the vice mayor's point of unassigned fund balance with regard to the increased risk from our increase I guess we're going to call it deductible or our self-insured number. Right. So that number... for next year. Hold on. Anybody hearing that feedback? Let's go. Okay. Is it? Okay, can I do? |
| 00:16:58.99 | Steven Woodside | Someone's stealing your car. Thank you. |
| 00:17:03.52 | Jill Hoffman | Take it. OK. Mike, are you getting this on the... I hope. You're okay. Okay, sorry. All right, everybody just, I think we're okay, but I can feel the dais shaking. Anybody else feel that? Anybody know? Put your hand on the dais. It's shaking over here. No one can feel it. |
| 00:17:32.22 | Steven Woodside | Thank you. |
| 00:17:32.26 | Sergio Rudin | and shakes. I see the camera pretty shooting. |
| 00:17:34.97 | Unknown | She's all the time. Thank you. |
| 00:17:36.71 | Jill Hoffman | Yeah, it's shaking over here. We might check that at a break, figure out what that's about. Okay, back to the budget. So one of the issues with having this in the ordering, I think, of our meeting tonight is that we're talking about what's an appropriate reserve. Our next conversations with regard to our balance, our budget, our balance, our deficit, and – the last two items, which is our insurance coverage, it will become clearer the risk, I think, of our budget for the next year. YOU KNOW, One of the things I'm wondering is whether or not we want to take action and do the resolution on an increase either a 25% reserve, which I think we've already directed, or whether or not we want to have a higher reserve at the end of our after we do the insurance, the final insurance discussion. So I'll just put that out there and we can discuss that during our discussion. But back to back to the issue of. the increased risk against, and this could be either Chad or Chris, against either calling it a greater unassigned or a greater reserve. And that's my, you know, that's my question. And, you know, an informal unassigned fund balance, or do we would just want to call that a reserve and add that to our reserve for a certain period of time. So as a policy matter, we can agree to have a 25% reserve period with a, an additional 5% or additional 10% of unassigned that is specifically going to address certain other unforeseen matters that may come up. And I don't know exactly how to address that, but it may just be, we add that to our total reserve and do a higher reserve this year as opposed to other years. Do you have any thoughts? Thoughts on that one way or the other? Either you, our attorney, or our... Finance director. |
| 00:19:39.85 | Chad Hess | Yeah, so... As it stands now, we As we address the budget item, we have a planned deficit spend of just over a million dollars. we will still have excess resources of over $6 million as it stands today if we do nothing and change our reserves. If we change our reserves to 25%, we will have roughly One second. We will have. 500 and 66,000 or 500. $5,664,924 as unassigned. fund balance. So we will still have a significant unassigned fund balance and we are not planning to spend all of that in this budget. So it's still available in the event that we need to draw funds for a large claim. |
| 00:20:34.39 | Jill Hoffman | So one of the things that I, and this is why all of these things are interestingly intertwined tonight, because I talked to. I talked to our, and I know Chad, you know this, and I know Chris, you know this too, That our insurance index, the way to bring that down is to attack certain things, not attack, but to take measures to fix certain things that will lower our index. So in other words, we have a high index because we have a high volume of. slip and falls. They're not high, they're not high dollar, but it's a high volume. That's an easy thing that we can focus on in the next year and direct staff as a policy matter to look at that. There's some other, efforts that we can that we can go after Additionally, to decrease our index fund. Those things cost money. They cost additional money. Those things will come out of our unallocated fund balance. So the discussion... with regard to our policy and our spend for next year, should also include those policy issues about what we want to do in 2025 or 2024-25. I mean, that's why I'm wondering, and that's why this number you know, that gets batted around about what our unallocated funds are, are they unallocated or are they just... funds that are unspent on necessary capital improvements that are increasing our insurance costs. |
| 00:22:12.13 | Chris Zapata | That's part of the argument. Had we not had an increase in insurance this year, you'd hear me ask you for a budget that would have said, let's take some of that and invest it in our roads, in our buildings, so that we could, in fact, you know, begin to lower any potential risk associated with sidewalks and buildings that we have now. so that is a problem it's something that you know we can't lose sight of so yeah it's going to be a little bit different taking money and paying insurance for it. But what you're paying for is coverage. And so, you know, Chad and Sergio can walk through the coverage with you. But that extra money that you're paying for after you get past the self-insured retention amount is millions of dollars. The cap is $25 million, is my recollection. So we're paying for it in a number of ways so that we can be secure, that we're not going to do something or something catastrophic is not going to happen in the city so that we can or have a problem with our finances. We have a short-term problem with our finances based on this one year's dues and this one-year requirement. Will that continue into the future? Hope not. I would have to guess that it wouldn't. I think we've got what I call the worst end of the insurance bill this year because obviously we had a 10-year run of bad things happen and we're in a bad insurance market. And so we're paying top dollar, paying a million dollars more than we paid last year. And that, in effect, can't continue because obviously you're drawing into your, your unassigned cash to pay for that. but you do have other resources that you can attach to any potential problems. And your point earlier about having policies in place that minimize our risk. Yeah, exactly. You know, the Miller Pacific study that said we need to look at our land use regulations for hillsides and what we need to do with that. That's important. The idea of sidewalk maintenance and, you know, that responsibility being worked on by our community in partnership with the city, that's important. Looking at our businesses and our buildings specifically, or buildings in our infrastructure and assessing what that need is so we can begin to decide which one do we do first. We know there's a big gap, there is a big need there, but no one's told me do this building first or that street first, but that's what that will lead us to. And then last but not least, you know, you have new revenue coming in through Measure L that you really should think about how you use because there are ways to use that to fund the current level of infrastructure, but there are also ways to use that to advance that through different ways of financing improvements today with today's dollars. So you don't have to do it, but it could be a trade-off between money down the road, seven years from now, where Measure L has expired and money gotten today. So, you know, we want to bring all of that to you, but, you know, today we're talking about insurance costs that I believe have peaked. I could be wrong. But, you know, I believe we have a peaking situation that they will level off and ultimately come down to something more manageable. But this year it's not that way. |
| 00:25:18.95 | Jill Hoffman | So that's a little bit different than the conversation I had with our city attorney earlier. and what's been presented to us. My understanding was that our increased insurance was the best possible that we could get. It's high, but it's the best that we could possibly get on any market. and that it's likely gonna stay this way until we can bring down the factors that led to this high cost. Meaning, what are we going to change how we're doing? And if we don't change what we're doing, our number is not going to come down. You would agree with that. |
| 00:25:52.58 | Chris Zapata | Yeah. And I'd also say we are changing what we're doing. That's why we're having this conversation. That's why you authorize the risk manager being hired. That's why we've gone off and said, you know, we need money for infrastructure. That's why we're doing these assessments of our facilities. All those things are in process and there's still more to do, but we're not sitting on our hands. |
| 00:26:09.86 | Jill Hoffman | But as I understand it, We are going to meet with the insurance company in six months. and present them with how we're doing And if we're not doing well, our insurance costs are going to go up further. if we can present to them you know, real evidence that our insurance costs would go down. And I've never heard of, frankly, insurance costs going down, but I'm hopeful. And I think if we try really hard and we work really hard between now and then, maybe we can make a good argument, but I haven't seen anything that, that, there hasn't been any presentation to us that I'm aware of. So your statement just now that this is the idea is that this year is an anomaly and that we can expect. with any certainty. any hope. that our insurance costs are gonna go down. We, Maybe. I mean, But we won't know that until six months out. And we'll know in six months whether or not it looks like they're going to go down. And I know we're digressing to other things on tonight's agenda, but that's my point, right? what an appropriate Reserve is depends on the policy decisions that we make later in the meeting. and the reserve versus unallocated funds that we're going to set aside informally, I suppose, to address increased risk factors. So that's why I'm a little bit uncomfortable, because I know we're going to talk about all these things later. If we get to a certain point where we've decided you know, with our policy decisions as we move through the through the agenda, then I think we can have a lower reserve. But if we're going to, not do that, then I think we need to have a higher reserve. So that's my position. |
| 00:27:51.89 | Steven Woodside | Thank you. |
| 00:27:51.90 | Steven Woodside | Thank you. |
| 00:27:53.12 | Kathy Nikitas | tonight? |
| 00:27:53.39 | Steven Woodside | Vice Mayor next and then Council Member Blasstein. |
| 00:27:56.98 | Steven Woodside | I just wanted to ask a couple of follow on questions to clarify some of Council Member Hoffman's questions. So this may be for the city attorney. City attorney use it. How would insurance premiums go down by way of example workers comp insurance is priced based on an EMR or experience modification rate isn't that right. |
| 00:28:19.51 | Sergio Rudin | Yes, as is our general liability insurance and I suspect also our property insurance as well. |
| 00:28:25.70 | Steven Woodside | And the EMR is a three-year running calculation, correct? |
| 00:28:30.38 | Sergio Rudin | I think it depends on between risk pools and also on the private insurance market. I have been told that it's typically a five-year rolling average that is frequently used. But yes, it will depend based on what PRISM's program is. |
| 00:28:46.39 | Steven Woodside | And so looking at our workers' comp, we had two huge incidents in the last two years, which were unusual and which are very unlikely to recur with respect to two very senior members of our police department. Isn't that right? |
| 00:29:02.88 | Sergio Rudin | Yes. |
| 00:29:03.71 | Steven Woodside | And so the most recent of those is already a year behind us. The other is two years behind us. And so in the third year or certainly in the fifth year, that EMR, barring any other major issues, would certainly be expected to go down. Yes? |
| 00:29:20.41 | Sergio Rudin | Yes. |
| 00:29:21.60 | Steven Woodside | Speaking to our general liability, we had Thank you. Two huge events, not just small slip and falls, which didn't amount to a lot, but in terms monetarily, but a landslide in 2019 and a homeless encampment in 2020. Again, those are two unicorn events. Wouldn't you agree? |
| 00:29:44.31 | Sergio Rudin | Yes, at least in terms of the intensity and the severity and the number of claims that those generate. |
| 00:29:51.60 | Steven Woodside | And the expense and the overall expense. When you look at our claims expense, those accounted for a lot of the reason that our payouts versus our premiums were at a percentage that was unacceptable to BCJPA. Wouldn't you agree? |
| 00:30:15.33 | Sergio Rudin | Yes, that was definitely a significant contributing factor. |
| 00:30:18.58 | Steven Woodside | And so again, those events are already three, four years behind us. And so our rolling five-year average, barring other events, would be expected to go down next year. Would you agree? |
| 00:30:31.00 | Sergio Rudin | I do agree with that. |
| 00:30:32.69 | Steven Woodside | And isn't it true that this year our insurance claims have been way down compared to prior years in terms of numerosity and amount? |
| 00:30:45.38 | Sergio Rudin | This particular year, yes, has been a very good year since at least October. |
| 00:30:50.29 | Steven Woodside | And so that also would bode well towards an anticipation that our three or five year rolling average in terms of calculation of premium would be in a downward direction. Yes? Yes. |
| 00:31:03.86 | Sergio Rudin | At this point, that's what we expect. |
| 00:31:05.77 | Steven Woodside | And so, and then we're doing the things that PRISM asked of us by hiring a risk manager. We've adopted some geological projects. Um, uh, factors to address landslides. We are in the process of changing sidewalk management policies. We're devoting Measure L funds to improving infrastructure. We're considering sewer consolidation, which will get us out of the collection business and reduce those infrastructure issues. So all of those things combined, wouldn't you agree, would also militate towards lower insurance premiums moving forward. |
| 00:31:48.22 | Sergio Rudin | I agree. I agree that they would. Obviously those are going to be Ongoing processes for the city and you know radical change doesn't happen overnight, but I think the general trend is that the city is doing everything possible to try and lower its risk profile, including undertaking all of those programs you just mentioned. |
| 00:32:07.12 | Steven Woodside | And then finally, with respect to the, and this may be for the city manager, with respect to the reserve policy, you're asking us tonight as part of the budget, because we must do this as part of the budget to adopt An amount, but isn't it true that you plan to come back to us with a policy regarding what could be spent from that reserve versus what would be allocated to unassigned fund balance and other resources. |
| 00:32:35.62 | Chris Zapata | Yeah, I think you're a couple of steps ahead of me, Vice Mayor. What I'm trying to get through tonight is, you know, if you want to make 25% the number you're comfortable with, you want to revisit that in a year, it may be too low. Or tonight you want to go higher or lower. You know, just getting something started in terms of a conversation. Because again, at the retreat, this is one of the things you said is one of your six priorities. We want to talk about what our reserve policy should be. And so this is not to be the end all be all. It's to start that discussion in earnest. And I think, you know, learning from you tonight that, you know, we had something adopted in 2018. Thank you for that. You know, learning from the former city manager, what happened in 2011, that was important. But tonight is just another chapter. But we don't have the end result in mind right now. I don't. I think I know what I would feel comfortable recommending. And that's why I said add 10% to the existing. But it seems to me that's already been done. If you want to do more than that, you know, like I said, 5% more, go to 30. Great. Higher than that, I would have some recommendations that, you know, you're putting money in a mattress when you're putting money in a mattress when your windows are falling apart. Okay. |
| 00:33:48.15 | Steven Woodside | And would you agree that we have other opportunities after tonight to recalibrate these numbers, should it be appropriate, such as the mid-year budget? |
| 00:33:59.00 | Chris Zapata | Thank you. |
| 00:33:59.02 | Steven Woodside | Thank you. |
| 00:33:59.04 | Chris Zapata | Absolutely. |
| 00:34:00.10 | Steven Woodside | And so between now and the mid-year budget, Are you anticipating that we will make further progress on our evaluation of our existing facilities, our sewer consolidation, our implementation of the GHAD measures, our implementation of sidewalk repair approach, and other measures designed to Um, better understand and plan for those issues that could lead to claims. |
| 00:34:36.38 | Chris Zapata | Yes, and I think one of the most important ones is we're getting set to contract out with a retired risk manager that PRISM has recommended to us while we're trying to hire a full-time risk manager, because that is really going to be one of the driving factors to all of those things that someone worked with all of our departments, city council, our stakeholders on how we move these things forward, because it's a comprehensive approach to lowering our risk profile. It's not just one action. So you laid out the ones that we laid out for the underwriting committee at PRISM. They seem to agree with them. I think the one thing that we also told them that is really important is we don't have a fire department in Sausalito and we have a very safe city. It's not to say that something couldn't happen in Sausalito, but our violent crime in Sausalito is practically non-existent. And so those are the things that worry other cities. You know, what's going to happen with something in public safety? We obviously have some concerns about some natural and geographic concerns. But I think that if we do the things that you laid out and the risk manager and I work with Chad and Sergio and the rest of the departments very diligently, then we should be able to come back to you and say, and also to PRISM in the six-month period, look what we've done, because it needed to be done. It should have been done a long time ago. It's being done now and with haste. |
| 00:36:03.19 | Steven Woodside | Thank you, City Manager. Us, the attorney. |
| 00:36:06.29 | Steven Woodside | Councilmember Blaustein, then Councilmember Kellman. |
| 00:36:09.48 | Unknown | Great, thank you. To follow along on some of the vice-merc's questions, City Manager, you sent a letter on June 3rd to Scott Schminke, who's the chair of Underwriting Committee at PRISM, right? Correct. Okay. And in that letter, you identified some of the things that are being prioritized to improve our risk profile, correct? Yes. Okay. So I'm going to read them. You can tell me if I'm missing one. So the settlement of the legal case with the compassionate closure of the homeless encampment, which we spoke of, which was a significant cost, correct? Okay. And then the approval of the risk manager position, which we've discussed, the ongoing review of our loss history to target resources and minimize risk in programs, policies and facilities. Is that going to cost additional funds to the city for that ongoing review? |
| 00:36:20.47 | Chris Zapata | Correct. |
| 00:36:26.78 | Chris Zapata | Yes. |
| 00:36:52.09 | Chris Zapata | Well, that's a part of our internal work that we have to do and will be front and center for our risk manager. |
| 00:36:58.79 | Unknown | Okay. And then we've also completed the geologic hazard report, which is listed here, correct? Correct. Okay. And then working with historic insurance providers to spread risk and exploration of catastrophic insurance to layer on top of existing coverage. That's ongoing, correct? |
| 00:37:12.19 | Chris Zapata | Yeah, that's what we showed them how we were a little more sophisticated than most cities. |
| 00:37:16.80 | Unknown | Okay. And then you mentioned disaster preparedness agreements and training with Marin County. Those are ongoing. Correct. And are those at a cost to the city? |
| 00:37:21.88 | Chris Zapata | Correct. their internal costs, we share them with our partners. |
| 00:37:28.81 | Unknown | Okay, and you list continuing to work on utility undergrounding opportunities with PG&E and private residents. Again, is that an additional cost to the city? |
| 00:37:35.86 | Chris Zapata | Staff time. |
| 00:37:36.81 | Unknown | Staff time. Okay. organization-wide training exercise for the active shooter simulation and cybersecurity training for all employees. |
| 00:37:43.90 | Kathy Nikitas | Yes. |
| 00:37:44.10 | Unknown | Okay. And then city council to consolidate departments, which we've talked about, And then you list as well the passage of Measure L, which will generate $24 million over the next eight years for infrastructure needs. So you have a plan for implementing that with regards to our insurance risk profile. Correct. Okay. And then the million dollar sea level rise adaptation grant for the risk assessment. Okay. And when you shared this with PRISM, they responded positively, correct? |
| 00:38:00.82 | Chris Zapata | Correct. |
| 00:38:12.31 | Chris Zapata | Well, This was in June. My understanding was in May. Without that information, they were going to deny us. After we shared this with them, the city attorney and myself, they voted 8-1 to approve us as an underwriting committee and forward us the membership. Because we wanted to show them motion and awareness and, you know, just being aggressively going after our risk profile in a way that would lower it. And so I think we made our point, and that's why we received an 8-1 support from that committee. It then went to the executive committee, and now you have in front of you tonight a membership opportunity, which we were really concerned about because, as you recall, a month and a half ago we were looking at a $4 million private, |
| 00:38:55.46 | Steven Woodside | Mm-hmm. |
| 00:38:56.44 | Chris Zapata | package, and now we're staring at a $1 million extra pool package. |
| 00:39:02.01 | Unknown | And I hate to bring this up, Director Hess, because I know you feel very bad about it, but we did see that, in fact, our deficit from this potential cost was a million, not two million, correct? |
| 00:39:11.87 | Unknown | Correct, yes. |
| 00:39:12.71 | Chad Hess | Thank you. |
| 00:39:12.93 | Unknown | Okay. And you spent, okay. Thank you for that. And, and city manager, you spent significant time with our staff to get to the best possible risk profile at this presentation. |
| 00:39:23.38 | Chris Zapata | I can't tell you how much time the city attorney, the finance director, the human resources manager, and our former consultant, Deborah, much more spent with our staff to get 10 years' worth of history on facilities, buildings, court claims, submit them to five different pools plus the private sector. It was quite the lift, but, yeah, we spent a lot of time doing that, and here we are almost at the finish line with PRISM. |
| 00:39:46.86 | Unknown | And going into the six-month assessment, based on your current discussions with PRISM, the idea is that a conversation is to encourage a reduction in the premium following these steps. |
| 00:39:56.62 | Chris Zapata | We want to solidify our membership with them. We want to show them that we're not bad actors and that this should result in them being more not as difficult with their pricing in the future if we decide to stay with them. |
| 00:40:12.26 | Unknown | And this might be a silly question, but the point of holding insurance is to cover potential risk that we might ensue beyond our 25 or 30% or 15% reserve. Correct. |
| 00:40:22.45 | Chris Zapata | Yes. |
| 00:40:23.38 | Unknown | And in the past, have we dipped into our reserves in the event of a catastrophic event? |
| 00:40:27.89 | Chris Zapata | Not to my knowledge. |
| 00:40:29.03 | Unknown | Okay, so we're holding insurance and we have not yet dipped into our 15% reserve, and yet you are suggesting an additional 10% increase in our existing reserves. |
| 00:40:36.38 | Chris Zapata | That's correct. |
| 00:40:37.32 | Unknown | Okay. And so going forward, it's, I'm sorry, I want to bring my attention, your attention to one other piece of your staff report where you said, and it's, I believe in the last paragraph quote, however, if Sausalito included its 115 trust fund for pension and its calculation to add to its existing 15% and unassigned cash at over $7.7 million, it would be well over 50% of unassigned as of July 1st, 2023. |
| 00:41:01.66 | Chris Zapata | Yeah, that's accurate. And the premise there is you have $3.7 million in your pension trust and I believe another $2 million in your post-employment benefit. And if you choose to offset general fund expenses with that money, that's legal for pensions and post-employment benefits. So in theory, if you had a $5 million problem and no money, you could use all of that money to balance your budget, even if it's all general fund expenses. So that's additive to the 5% to 10% and the unassigned. So it's there. And again, I mentioned earlier, you have other funds that involve MLK. I believe there's a million dollars in that fund. There is some money in the parking fund. I think we reached into our old city hall fund this year to do some work that have kind of zeroed that out. But those are other sources of fund that could be tapped in a general fund way if you had the need. So it's not just those three funds. There are additional funds as well. |
| 00:41:47.10 | Unknown | Mm-hmm. |
| 00:41:57.88 | Unknown | Okay. And then you said in the staff report, it's also important to note that SOSLITA will finish this year, ending June 30th in the black, positive with more annual revenue in the general fund than annual expense. Director Huss, is that accurate? |
| 00:42:11.23 | Chad Hess | Yes, that is correct. |
| 00:42:13.44 | Unknown | Okay. So we'll be ending the year in a positive, a net positive, and you're asking for an additional reserve, but we have never dipped into our reserves. |
| 00:42:23.48 | Chris Zapata | Yes, but we're in a different circumstance this year. Last year was last year. This year is, you know, we already know that we're going to have to pay those costs for additional costs for insurance. We know we're going to have to pay the additional cost for our pensions, and we're projecting a downturn in our sales tax. |
| 00:42:40.04 | Jill Hoffman | Thank you. |
| 00:42:40.05 | Unknown | Okay, great. Thank you very much, city manager. |
| 00:42:42.09 | Steven Woodside | when we're coming. |
| 00:42:43.87 | Unknown | Thank you. |
| 00:42:43.90 | Jill Hoffman | Thank you. Thank you to my colleagues. A lot of good diligence and research and very helpful. I want to excuse me. getting over a cold, I want to take a slightly different approach, which is, I think, what maybe we would all benefit from is an agreed-upon structure and criteria for deciding on the reserves. So thank you, city manager, you, and staff have put together some really excellent background information and trajectory. But what I want to dive into are three areas that have been mentioned by some of my colleagues that I think should influence our decision on reserve size and see if we can get some consensus around what those might be. So the first obviously is risk mitigation. So we know that during COVID we had this buffer, which was a great thing to have in the bank. But I also urge us to remember that the city is very unique. We are a big property owner. A lot of other cities are not a big property owner. Therefore, we are landlords and are responsible for things that are unforeseen in our structures. We run a number of classes and events that have their own consultants and contractors that have to be accounted for. And we found out some of the troubles with that this year. We have some climate resilience issues. I'm sure everybody recalls the March 2023 Coast Guard video that was sent to us showing the storm surge coming up and over the rip-wrap. on Bridgeway and hitting a vehicle driving northbound. These are things that I can't predict, but I am seeing more and more of them. We have proof of them here in town. And then, of course, for maintenance, we have a physical infrastructure assessment. And so I think the city has some unique concerns that need to be weighed carefully. And so I would urge that risk mitigation be the first bucket. I'm sure there are others that I've missed. The second, and I think the finance director alluded to this, is stability and credit worthiness. I think Councilmember Hoffman was asking about this, that cities with robust reserves could be viewed more favorably by credit rating agencies, maybe lowering borrowing costs for infrastructure projects. I don't think we've discussed that enough. And I would like to really understand that trade-off. So if we keep money available to spend, but putting in the reserve opens up better loan terms for us, I want to understand that tradeoff. And then the third, and the city manager mentioned this in his response to my first question, was around flexibility for investments. We have not been that strategic in investing our monies, and thanks to the now mayor, we found an opportunity to improve that. And there's probably others. So those are the three that I think about when I think about a reserve policy. I think about risk mitigation, stability and credit worthiness, and flexibility for investments. I would also say that the specific size of the reserves should reflect three other things, our revenue volatility, So we should be talking about the sales tax decline that we're experiencing right now? We should talk about the uptick in TOT that we're experiencing right now and understanding why and what the COVID rebound looked like. We should be looking at potential economic risks to us. That's mostly around tourism, but it could be other things. And then we should be looking at our long-term financial goals. I think the biggest one is how to pay down our pension debt. And we haven't talked about that in the context of the reserve yet. So with all of that said, my goal tonight would be that we agree upon the buckets of criteria because we're not the first or will we be the last council to evaluate this and create some consistency in that analysis. And then to the vice mayor's point, um, Revisit this with a mid-year budget with a Gantt chart timeline to evaluate whether we should add an additional 5% based on our ability to achieve the suggestions in the GAD I mean, it took a very long time to even get to the GAD. So how far will we be in six months? our sidewalk program, how far will we be in six months, our sewer consolidation, hiring a risk manager, our road improvement. How far can we really get in six months knowing that so many of these things are policies that are excellent policies but can take a long time to implement? And so I just want to be very practical about that over a specific time period. And, yes, I'm going to say it. Back to the smart goals. I want it to be specific and measurable over a time frame. So I don't know, Mayor, if that's kind of where my brain is going. There's lots of good information from staff. I don't want to debate any of it. I just want there to be structure around the analysis so we can all come to the same place. |
| 00:47:21.85 | Steven Woodside | Why don't we take public comment and then we'll continue our discussion so public comment city clerk |
| 00:47:27.25 | Walfred Solorzano | Members of the public who would like to make comments. If you're on Zoom, you can use the raise hand function. If you are, you can just go up, miss, but Google and we'll |
| 00:47:42.89 | Babette McDougall | THE FAMILY. Thank you. Good evening. And thank you for having this special meeting just to talk about the numbers. It's about time. I'm sorry I arrived about five or ten minutes late, so I missed the pledge. I'm sorry. But I probably missed some really important data. So I don't know if you started by giving a quick summary on How's it working out for 2024? We had a lot of exceptional things happen. First thing that comes to my mind is the Sausalito Center for the Arts and the realization among the community for the very first time of this huge economic loss to the city. because a rental lease was not legally honored. and some special deal was made as an interim measure, Then yet another deal was made here at the council for an interim measure. But then nobody heard anything after that. Meantime, I hear the chamber's gonna move in too. Does anybody know anything about that? So where are we in 2024 in terms of how the city's working out? And then we went forward to say, let's take a chance on the PBIT, which I'm all in favor of as long as we understand the upside and the downside, because city equals citizens. So whatever the city puts itself on the hook for, Folks. You're putting every single one of the citizens on the hook floor. All right. Well, I have a lot of other budget questions too, but thank you. |
| 00:49:13.71 | Walfred Solorzano | No further public comment. |
| 00:49:16.34 | Steven Woodside | Oh, wait. Rip, if you're with me. Good one. |
| 00:49:16.94 | Walfred Solorzano | Sorry. |
| 00:49:25.17 | Unknown | Good evening, counsel. I wasn't actually going to make public comment, but... You know, if you listen to what the city manager says about, and correctly so, about our general fund balance. But I've won 15 trust funds. But the money we have stashed away in our enterprise funds, okay, I would hazard a guess that we are the most financially endowed city relative to our general fund in the whole of Marin County. Number one. Number two. um You can change your reserve policy anytime you want. All you've got to have is an appropriately agendized meeting. Okay, so 25%, I fully support. I think we should move up to that. And that would still give you 5.5 million At the end of this year, $4.5 million because of our $1 million deficit. $5.5 million currently of fund balance in excess of reserves. You can call it unassigned, you can call it whatever you want. And what a reserve policy means is that the council needs to take special action to dip into it. You have a five, four, $5 million cushion that it's up to you, by resolution, to actually use. And if you want to use it for infrastructure, you will pass a resolution and use it. If you want to use it to supplement further the $5.7 million in 115 trust funds, you can pass a resolution and do it. So the issue of setting the reserve is what is the amount that you are going to debate Bye. to use above it. Period. It's a very simple question. Decision. |
| 00:51:31.38 | Walfred Solorzano | Okay, no further public comment. |
| 00:51:33.98 | Steven Woodside | We'll close public comment and bring it back up here. And just to kick it off, we'll just make a motion but the recommended motion increased the overall general fund reserve policy from 15 to 25% by requiring An additional 10% in the economic shortfall fund with annual review during budgeted option effective July 1st, 2024. |
| 00:51:50.94 | Steven Woodside | Second. |
| 00:51:51.34 | Jill Hoffman | Thank you. |
| 00:51:52.29 | Steven Woodside | So that motion is on the table for discussion. We have discussion, but Council Member Kellman |
| 00:51:53.49 | Steven Woodside | Thanks, guys. |
| 00:51:55.95 | Jill Hoffman | Yeah. Mayor, will you entertain a friendly amendment that we establish criteria to review in the future so we can have some consistency? And the ones I would recommend, we risk mitigation... stability and credit worthiness. and flexibility for investments. |
| 00:52:16.40 | Steven Woodside | Thank you. Can we tighten that up? I'm trying to think how to tighten up the languages. |
| 00:52:19.51 | Jill Hoffman | Sure, certainly. And I just wanted to put on the table, the reason that I wanna do this is because so easy to talk about numbers as though they're unattached to really anything. And I want to attach them to things. I want to attach them to clear outcomes and clear needs. And, you know, although I believe very strongly in the sidewalk program and the sewer consolidation effort and hiring a risk manager, these things take a long time and they'll take a long time for us to see the benefits. And if the reduction in the insurance premiums and the reduction in our risk profile is tied to our achievement of these goals. then we need to be very clear about that and revisit that and some type of frequent cadence to measure our success in achieving those goals. |
| 00:52:59.64 | Steven Woodside | Could we make this motion and then separately do direction along the lines of what you're saying? That it comes back in six months. So let's keep this motion clean before we leave this topic. |
| 00:53:04.11 | Jill Hoffman | I think. |
| 00:53:10.05 | Steven Woodside | tighten up the language if you want to screw something down so that it's tight as direction to staff. And we can then discuss that as a separate motion. Sure. |
| 00:53:18.22 | Steven Woodside | I was just gonna agree with the tightening of the language. Yeah, and did staff get the direction from |
| 00:53:22.82 | Steven Woodside | Council member. |
| 00:53:22.86 | Steven Woodside | Councilmember Kelman. |
| 00:53:24.22 | Steven Woodside | We could... Do you want to take an opportunity to tighten it up? We'll act on this motion, or are you satisfied with what you said as sufficient direction? Thank you. |
| 00:53:33.39 | Steven Woodside | Thank you. |
| 00:53:35.68 | Steven Woodside | I just want to make sure you're satisfied that it was effectively communicated to the city clerk and that he heard what you said. |
| 00:53:42.46 | Jill Hoffman | Yeah, the reason why I wanted it in the motion mirror is because We talk about the reserves like it's just a bucket of money in a rainy day account, and it can't be. It has to be tied to a policy objective. We have to agree on what that policy objective is. Otherwise, the conversation we then have about the budget doesn't have as much force and importance. And so this helps us prioritize, hey, look, if we're saying that 25% is enough and we don't need an additional five, then we really, in the next conversation, we're going to need to really focus on the GAD, the sidewalk, sewer, right? We're really going to do that because we just said we only need 25 because we're going to get there through these other things. And that's where I want to find agreement. |
| 00:54:20.25 | Steven Woodside | So how about we modify it to bring it back for affirmation in six months and... |
| 00:54:25.53 | Steven Woodside | Well, |
| 00:54:25.82 | Steven Woodside | that |
| 00:54:26.20 | Steven Woodside | We already have it as a top six priority to establish a reserve policy. So that's already... the top priority for the city manager. So I think that what we're doing is refining the direction to the city manager for establishing that policy. If you want to set a time limit, That's fine, but that's one of our six top priorities for the year. |
| 00:54:46.39 | Jill Hoffman | So vice versa, thank you for that. I'm wondering maybe I'm maybe I'm the confused one. What I what I want to do is make sure that the reserve policy has an explanation associated with it. Right. So we judge our reserve policy based on these three things, these four things. These are the criteria for our reserve policy, as opposed to just having a reserve policy that is a number. Right, I agree. And so, great. So the reason that policy that comes back would have the criteria. |
| 00:55:06.57 | Steven Woodside | Thank you. |
| 00:55:06.62 | Sandra Bushmaker | I agree. There's a policy that comes. |
| 00:55:10.97 | Steven Woodside | you |
| 00:55:11.33 | Jill Hoffman | Yes. |
| 00:55:14.28 | Steven Woodside | Okay. So the motions |
| 00:55:15.73 | Steven Woodside | So the motion stands and we've given direction to staff based on a majority of the council so far, |
| 00:55:22.92 | Steven Woodside | Go right ahead, Councilor Huffman. |
| 00:55:24.79 | Jill Hoffman | So, you know, to put my position in context in light of the public comments and the discussion that we've had up here at the council, which I think, interestingly, we're all sort of driving toward the same thing. But here here's my issue is we have this to council member Kelman's point We have this reserve policy. We don't really define what we mean by the reserve policy. So the reserve policy shouldn't be this amorphous rainy day fund. It should be tied to certain policy decisions. My conversation and my questions with regard to other things that are on the agenda later. In other words, what are we going to spend? You know, our, we have our budget that we're going to receive. That's going to have about a million dollar deficit in it. We are going to have, uh, funds above that, unallocated funds above that, But as I said, I would not like to keep 4.5 million in unallocated funds, giving the risk factors that we have currently in town that are known, and that spending money on addressing those risk factors with regard to infrastructure mainly we can bring a increase the safety of our town. But B, bring our insurance costs down. And that's the... What I don't want to do is spend too much of our unallocated reserve or unallocated funds and just have the reserve left or have a very small amount above the reserve. That's the number that I'm trying to drive for. That's the conversation. that I hope that we would have had tonight. And that I think it's really difficult to have it without having the information in those things that are later on the budget. all of the things, all of the great work that the staff did and all of the analysis that the staff did about we're decreasing our costs, we're the We have. Uh, We have two unicorns in the past, maybe three, but I think if you have more than one unicorn, then they're no longer unicorns by definition. Unicorns are an unanticipated, you know, Outlier. Landslides in Sausalito are not unanticipated. We know we're going to have landslides. We had a very serious one in 1999, I think. 98. We had another very serious one in 2019. We constantly have landslides all over town. So, I mean, not all over town, but every year, depending upon our rain, we have landslides. We also have, as Council Member Kellman's talked about, subsidence and sea level rise issues. So we have, because of our, unique geographic location. We have a lot of risk, which is reflected now in our insurance costs. All of these issues that we've talked about, about how we're moving in the right direction, those were all presented to the risk to prism. That's how we got insurance Period. Before that, we were going to be denied. So that's the floor. Hopefully we keep moving in that direction, but that's. a risk. If we say we don't know what's going to happen in the future, which we don't, then we're entering into more risky behavior if we don't appropriately address the unknowns. And that's what I believe our reserve policy should encompass. at this point until we know what our increased costs about are going to be with regard to our much higher deductibles, or if you want to call it, are uninsured reserve policies, right? So those have quadrupled. So... That's my position on why I think that we should have a higher, we should entertain a higher reserve or if we want to call it something else above the reserve, that we just want to tie to insurance, for this year to see how we get through this year and how we end up. after the six month assessment, from the insurance company. So we'll know that in six months, how we're doing, We'll know if our insurance is gonna stay the same whether it's going to go down or whether or not it's going to go up. So that's, I think the time for not addressing future risk. Um, has passed us. And we need to engage in more, uh, conservative assessments, at least for the next year, until we find out on more solid ground where we're at. |
| 00:59:46.64 | Steven Woodside | Any other comments before we vote? Oh, Councilmember Boston. |
| 00:59:51.08 | Unknown | I'll just say I think all of us on the dais are very aware of and concerned with our risk and our taking steps and directing staff to take steps to decrease our risk. And just to reiterate the point that former Mayor Withey made, at any time, if we are deeply concerned about the direction that our budget is taking, we can make a change to our reserve policy. So I agree. Karen Hollweg, appreciate the comments and the consideration of our of our reserve going forward and taking this very seriously, and I think we are all thinking about it from a future standpoint, and I really appreciate that Councilmember Kellman is asking for specific. uh measures for that and i think we are we all i like to your point councilman i think we're all going the same place with this so so i hope we can get there with our boat |
| 01:00:36.07 | Steven Woodside | All right, so let's call the question all in favor of the motion. Say aye. Aye. Opposed? |
| 01:00:40.00 | Jill Hoffman | Bye. No, because I think we should have, I don't think we should have a 25%. I think we should have a 30% reserve. |
| 01:00:47.17 | Steven Woodside | Okay, so motion carries four to one. Moving on, and thank you for the discussion and the action. Moving on to item 2B, adoption of fiscal year 24-25 budget and allocated and funded positions. Who is giving the presentation, Mr. Senator? Director Hess. Director Hess, the floor is yours. |
| 01:01:05.43 | Chad Hess | Thank you. Good evening, mayor, council, and members of the community. Tonight, before you, we bring the fiscal 24-25 budget for the city of Sausalito. The general fund budget includes $17,241,000. 800. $82 in outside revenues from external sources. It includes 20,700,000 709 $5,566 worth of expenditures. And it also includes net transfers from other funds. in the amount of $2,450,000. In addition to the aforementioned value, the city will balance our budget using 1 million, $17,684 of unassigned fund balance. in excess of reserve. It is important to note that the general fund, as of the last external audit, contained $3 million. $134,000. of reserves, under the policy, the 15% policy. and $7,747,600 dollars in fund balance, in excess of reserves. Based on the action tonight, of increasing the fund balance policy to 25% this increase in reserves of 2,092,000 $673, leaves the restated balance of unassigned or Leaves a restated balance of $5,227,338 of now reserves at the 25% level. That also leaves $5,664,000 of fund balance. in excess of reserve. It's also important to note that the general fund is projected to end the year, fiscal year 24, in the black. by over a half a million dollars, which will again add to our fund balance and excess reserves. As noted in previous discussions with council, our insurance challenges are the significant change over the prior year. Tireless effort by staff to secure an opportunity to join PRISM was paramount in limiting the projected deficit in this coming year. premiums paid to prison over Um, over those paid to Bay Cities, is roughly 170,000. this significant increase for the budget also comes from the SIR. increasing tenfold. to a half a million dollars, from the previous Bay City's $500,000 $50,000, I'm sorry, before or expulsion. or potential expulsion in October. To account for this, In the city's budget, we have budgeted 750,000 of, SIR set aside for the general liability. and $250,000 for workers' compensation. that settle any future claims. The SIR set aside is an estimate based on an analysis of historical data. actual performance of the city will vary. We may spend very little of the SIR, or we may spend most of it and need to come back to council. solely based on our experience of settling and defending claims. also included in this year's budget. We are funding a risk manager position under the finance department. and again to the degree that we manage our risks, really the destiny is in our hands. As discussed in our first budget meeting this year, we are not drawing funds out of the Section 115 trust. based on council feedback. However, because this trust is our worst performing asset that the city holds in its portfolio, We are exploring other trust providers to better manage the city's pension and OPEB resources. Also on the pension front, we will continue to work with CalPERS and continue to review the study by Bartels & Associates. to really examine other ways that we can help manage our pension UAL payments. Discretionary payments may be an option. Realigning the layers within our UAL may be an option. But again, the goal is really to manage that $35 million pension obligation. Now, our capital projects will continue on as planned. These are funded. by external or other resources outside of the general fund. So in fiscal year 24, we had a planned budget of $4 million for capital, as we do in fiscal year 25. These again are primarily funded by Measure L sales tax revenue, which passed A couple of years ago. the gas tax from the state. county-level sales tax measures for and roast. addition to the dollars that are available in the Tidelands Fund that we can spend on special projects within that granted land zone. With that, I would like to open it up for your question and comment. |
| 01:05:55.61 | Steven Woodside | Questions for Director Hess, please. Who would like to go? Let's just pick the order now. Who wants to go first, second, third? We'll just go down the line. Who would like to go first? Anyone? No questions? I didn't. |
| 01:06:06.58 | Steven Woodside | I did have... A question. |
| 01:06:09.40 | Steven Woodside | Okay, the vice mayor will be first, and if there are no other questions after that, we'll be doing it. |
| 01:06:13.77 | Steven Woodside | Thank you. You do anything? |
| 01:06:15.19 | Steven Woodside | Thank you. |
| 01:06:15.22 | Steven Woodside | Thank you. |
| 01:06:15.85 | Steven Woodside | All right. Bye, Samaritan. |
| 01:06:17.40 | Steven Woodside | Thank you, Director Hess, for that presentation tonight. And thank you for all the work. you know, and all of the that you've imparted to us leading up to this evening. I looked with particular interest at the various department details in the budget and was pleased to see reductions this year over last year for several departments, but I was curious about the finance. It's on page 59 of our staff report. It shows 2024 adopted, 1,021,604, 2025 adopted 1,148,598, and then 2025 change, zero. So I didn't understand how the change from 2024 to 2025 came out to zero when it looks to me as though we're spending slightly more in 2025. |
| 01:07:11.32 | Chad Hess | Oh, I see that. So on... Yeah, on page... 19, if you're looking at that grand total, I have a formatting issue there. Um, |
| 01:07:22.35 | Steven Woodside | Grand total. |
| 01:07:23.50 | Chad Hess | Yeah, yeah, I do have a formatting issue. . The salaries and benefits are increasing by 18%. The professional services are holding stable and supplies and materials are increasing by 9%. I can open up my budget workbook and give you that, grand total percentage change if something you'd like to see now, or I can update that in the budget book that we publish online. |
| 01:07:49.07 | Steven Woodside | The other number that confused me was the telephone went up 900%. Um, and so- |
| 01:07:55.53 | Chad Hess | Ah. That is not correct. |
| 01:07:56.71 | Steven Woodside | That. And you and I had had a conversation about greatly reducing our telephone costs. |
| 01:08:02.95 | Chad Hess | That's, that's, well, we just, yes, we just found another $1,100. Thank you. |
| 01:08:08.95 | Steven Woodside | Yeah, so... anyway, if you, I think it's important for the adopted budget that this detail be accurate. So you can, um, |
| 01:08:18.72 | Steven Woodside | Yes. |
| 01:08:21.41 | Steven Woodside | make the corrections to this. |
| 01:08:23.73 | Chad Hess | Thank you. |
| 01:08:24.23 | Steven Woodside | you |
| 01:08:24.25 | Chad Hess | Um, Now I can change the percentage. I can fix that formatting error. I don't know if I can change that telephone expense now because everything is tied into our GAN limit that we need to approve this evening. but I will make sure that that gets corrected in our mid-year budget. Thank you. |
| 01:08:40.55 | Steven Woodside | Thank you. |
| 01:08:40.70 | Steven Woodside | Thank you. |
| 01:08:40.72 | Steven Woodside | Okay. |
| 01:08:40.72 | Chad Hess | Would that be an acceptable solution? |
| 01:08:45.75 | Steven Woodside | That was my initial question regarding this. |
| 01:08:48.60 | Steven Woodside | Council member Kelman? |
| 01:08:50.98 | Steven Woodside | Thank you. |
| 01:08:51.01 | Jill Hoffman | Sure. Thank you, Chad. I know this is no light lift. I have a... Small question and then a big question. I'll go with a small question. In our last council meeting attached to, I can't remember which agenda item, was a SWOT analysis from different departments. And I noticed that the community development department SWOT analysis had as a weakness that it was understaffed. And we talked a little bit about how you were projecting costs for different departments in terms of people who are in place today versus vacancies. I'm wondering if you could step us through that. Are we planning to hire? I mean, I know the directors here, do we need to hire? Should we be thinking about hiring? I don't know how to absorb that information in the context of this budget, but I saw that that was a weakness, and I'd like to address it. |
| 01:09:43.07 | Chad Hess | Yeah, so from a budgetary standpoint, I can tell you the methodology that we used to project that but from a staffing level requirement I would defer that to the director. |
| 01:09:53.64 | Steven Woodside | Thank you. |
| 01:09:55.73 | Chad Hess | So in this budget, we did budget for all approved positions. We budgeted at full employment. Our goal is to fill all positions. And we used a reasonable salary that is commensurate with where they are plus the next step and their COLA. I did not budget at Top Step before. But regarding if there is an additional position, there is no additional positions in this year's budget. But if a need for additional resources in that department is required or needed, I would defer that to Director Phipps. |
| 01:10:29.43 | Unknown | And thank you, Chad, for the opportunity to comment. So I'll respond to kind of the initial question and the statement that the department is understaffed. That's what was written on the heels of one of our planning staffers actually leaving the department. So we have at current one unfilled position in CDD. That is the position of was senior planner. We did an internal promotion from associate to senior planner which has now opened up the position of associate planner, which we are currently soliciting applications for. And my understanding, based on collaboration with our head of HR, and thank you, Kathy, for the work that we've received an abundance of interest in the role. So that's point one. Second point is CDD is shouldering a tremendous burden of taking on and becoming acquainted with the slew of state housing policies, which is a burden for a relatively small department. That comment of being understaffed is partly related to the burden associated with integrating those new housing policies into the way that we review I'd say new applications, but particularly in connection with new applications for residential projects. I will make the point that at Current we have a number of consultants that assist us in integrating those policies into our department and assist us with expert review. However, it's not certain that that support will be there forever, and I believe that as we conclude projects like the housing element, we will have less need for those consultants, and there may be an opportunity to move from that consulting-related expense into a staffing expense. |
| 01:12:27.28 | Jill Hoffman | So Director Phipps, how should we be thinking about those added costs of consultants over the next year? |
| 01:12:34.05 | Unknown | Thank you for the question. My kind of quick response would be, I would not see that as an additional cost because any additional costs that we take on with staffing will be accounted for based on reduction in consulting costs. So that's something that we have accomplished, I will say, significantly in the last year in CDD. We used to spend over $100,000 a month on fourleaf. Now we spend less than $20,000 a month on them. So we've reduced that number significantly with in-house staffing. I believe we can do the same in this instance. |
| 01:13:09.20 | Jill Hoffman | So like for DeNovo and others, do you want this council to consider additional allocations? Should we be mindful of that? |
| 01:13:19.29 | Unknown | I'd like to discuss that approach with city management and make sure that we're aligned and that my requests are aligned with the vision of city management and council. But I believe that that would be reasonable. |
| 01:13:32.54 | Jill Hoffman | Okay, so we should have a conversation about that. That was the small question, Chad. The larger question, thank you, Dr. Phipps. You introduced this agenda item very quickly, talked about increased costs relating to pension UAL payments, and I'm hoping you could go back and maybe more methodically step us through that. and your game plan. |
| 01:13:54.53 | Chad Hess | the pension. Yes, so There are a couple of ways that I think we can look at our pension debt. Last year when we went to the CalPERS educational forum, we sat down and met with our actuary And we discussed various ways that we can work within our UAL payments, either by making a discretionary payment which we could target a specific layer and that reduces the overall interest cost that we would bear over the life of that unfunded layer. Currently, we pay 6.8% annually on our unfunded pension liability. That's the discount rate that helpers assign. So, In addition to that, we want to work with kelpers and or Bartels to really focus on When is the optimal time to spend down our Pension 115 Trust resources for pensions? The goal is really to level out that peak of pension UAL payments when they start to rise in early 2031, 32, kind of in that timeframe. Pensions is a very complex area of discussion and I think more information is really needing to be learned by myself, just learning more about the CalPERS system and how that works and how we can fund it. So leveraging our resources at CalPERS is really a first step, I believe, in undertaking the management of that UAL payment in subsequent years. |
| 01:15:31.04 | Steven Woodside | Okay, transferable. you Can I add to that? Do you want to follow up? Even as a chat. |
| 01:15:33.95 | Jill Hoffman | Well, Sure, very complicated, obviously, marking conditions, interest rates and such. But I think just maybe for the purposes of this conversation, Your overall direction as to how we might account for this large long-term debt obligation would help us think strategically as to where our decisions tonight may fit into the next three to five years. |
| 01:15:59.89 | Walfred Solorzano | Okay. |
| 01:16:00.58 | Chad Hess | it. out as of Pension UAL payments is really a moving target. As you said, it's really a factor of the interest rate and the interest rate environment for the rate of return that CalPERS can receive. And there's always a two year lag between when they close their fiscal year at 630. and when they release the new UAL payments go into effect. As it stands now, we know what our UAA payments will be for 2025. and the 2026 payment on the new schedule is not yet released. So there's uncertainty there, but I know that it will increase in 2026, simply because CalPERS missed their estimated rate of return last year. Now, based upon the market conditions now, CalPERS fiscal year ends in about five days. And I believe that there's a pretty good chance that they will meet their investment return of 6.8%. If that's the case, our UAL payment in 2027 will be decreased because they had better than expected performance. in long-term planning of this, Thank you. I think really being intentional about Knowing where those increased costs or those accelerating costs will start to impact the city's budget is paramount. And also really looking at our city's finances in a longer in a longer horizon, I think. the 10-year plan that Mayor Sobieski and Councilmember Hoffman and former Mayor Ray Withyard working on is going to be a key part of this planning for the long term. it's, it's taking a little longer than expected to prepare that plan simply because of our insurance issues that we, we came into this fiscal year. But again, I think looking at our long-term plan is going to be important to manage that cost. And additional rules. Education on my part, I think is required to really manage that. as effectively as possible. So I don't have all of the answers on that pension debt at this point. Thank you. Thank you. |
| 01:18:17.61 | Steven Woodside | Unfortunately. Thank you. |
| 01:18:18.67 | Unknown | Thank you. |
| 01:18:18.69 | Jill Hoffman | Okay. |
| 01:18:19.03 | Unknown | Thank you. |
| 01:18:19.21 | Jill Hoffman | Thank you. |
| 01:18:19.23 | Unknown | Thank you. |
| 01:18:19.26 | Jill Hoffman | THANK YOU. |
| 01:18:19.53 | Unknown | Thank you. |
| 01:18:19.99 | Steven Woodside | Councilmember of Laskin, when did he be recognized? |
| 01:18:22.27 | Unknown | Thank you. So you asked Director Phipps about staffing, so it brought me up. So, Chad, you and I had a conversation today and we talked a little bit about the structure of the budget and that this year's budget is designed a little differently than last year's in terms of how we look at staffing. So I just wanted to ask a couple of questions about that. That is correct. So this year's budget, you... |
| 01:18:40.91 | Steven Woodside | That's correct. |
| 01:18:44.47 | Unknown | did not budget for top step for every employee. |
| 01:18:47.85 | Unknown | Thank you. |
| 01:18:47.88 | Chad Hess | That is great. |
| 01:18:48.17 | Unknown | Right. |
| 01:18:48.25 | Chad Hess | All right. |
| 01:18:48.39 | Unknown | Thank you. |
| 01:18:48.42 | Chad Hess | Thank you. |
| 01:18:48.88 | Unknown | Okay, so how did you budget? |
| 01:18:50.62 | Chad Hess | I budgeted at where they are at today. Plus the next step that they would be eligible for at their anniversary. and then the COLA, the cost of living adjustment that was approved. this year. So basically, I took a more realistic approach at what is our labor cost going to be. Whereas last year we, we, overstated our our labor costs simply because we were overestimating what that cost would be per individual. So we're still at full staffing. but we're, we're cutting back on where people are I know that I'm not at top step. I know my team is not at top step and there are others within the city staff that are not at top step. So it wasn't a realistic, expectation of through labor costs. for fiscal year 24. 25 will be much closer. |
| 01:19:39.81 | Unknown | 25. But you did budget for full staff. |
| 01:19:44.08 | Chad Hess | Full staff, yes. Our intention is to fill every available position to provide exceptional service to the community. |
| 01:19:50.52 | Unknown | Okay, then I have a couple of questions for Director Kathy Nikitas just about where our employees fall and how common or not raises are just to make sure we're being smart about these projections and we can consider them realistic. So I would love to understand how many employees now do we have at Fullstap? |
| 01:20:02.03 | Babette McDougall | Thank you. |
| 01:20:02.06 | Kathy Nikitas | I don't know. |
| 01:20:02.27 | Babette McDougall | Thank you. |
| 01:20:07.94 | Kathy Nikitas | So of our full-time employees, we have 79 positions. We have 67 of them filled. And 17 of those 67 people are at top step. And a little over, let's see, nine of them have been working for the city for 15 plus years, some up to 29 years. |
| 01:20:28.42 | Unknown | In order to achieve full step. Exactly. And how long does it typically take to get to full step? |
| 01:20:33.17 | Kathy Nikitas | It depends. Most of the, the, the grades have seven steps, the hourly positions. And so sometimes people come in higher than step one. Otherwise it would take them seven, seven years. |
| 01:20:46.35 | Unknown | Okay, and right now of those 67 filled positions, |
| 01:20:50.58 | Kathy Nikitas | you |
| 01:20:50.90 | Unknown | Thank you. Are there anyone, is there anyone expected to achieve full step by the end of the year? And how many roughly? |
| 01:20:56.60 | Kathy Nikitas | Hmm. Jeez. The steps. Sorry. |
| 01:20:59.07 | Unknown | Sorry if the specific, but. I just really want to ensure that Director Hess's modeling is based on the realistic outcome for or outlook of our staff, which I believe it is, but I would love to hear that reinforced. |
| 01:21:01.60 | Steven Woodside | Thank you. |
| 01:21:11.59 | Kathy Nikitas | Yes, most definitely. He is looking at where people actually are. And if someone is slated to go, they have their anniversary coming up in, say, October, and they're at a step six, he's budgeted them starting at going to a step seven in October. So looking at the reality. |
| 01:21:27.01 | Unknown | So, Director Hess, in fact, you've already budgeted for everyone, whether or not they will, based on assessment, to advance the steps. So you are being... Thank you. Correct. |
| 01:21:34.27 | Chad Hess | Correct. |
| 01:21:35.00 | Unknown | white conservative in terms of what our pay is now. You're just not going to full step. |
| 01:21:39.38 | Chad Hess | Yeah, correct. So if somebody's at step five, I'm assuming they're going to hit step six during the fiscal year. And then I'm adjusting that range because of the 2% COLA for SEIU. |
| 01:21:44.40 | Unknown | Yeah. |
| 01:21:49.37 | Unknown | And Kathy, has someone ever jumped from say step three to step seven in one year? |
| 01:21:54.55 | Kathy Nikitas | There have been a couple of occasions that has happened, and it's usually been made up by other savings if, say, a position has been vacant for a certain amount of time. So it doesn't happen very often, but there have been a couple of instances. |
| 01:22:09.39 | Unknown | But based on your productions, Director Hess, there's some room for step for each employee and not every employee will get a step up necessarily. And at this time, oh, sorry, go ahead, Director. |
| 01:22:22.69 | Unknown | Go ahead. No. Oh, I'll defer. |
| 01:22:25.33 | Unknown | And you've also budgeted for a full workforce. So for every position filled, correct? |
| 01:22:30.02 | Chad Hess | Yes, yes. Every position filled, even our risk manager that we don't currently have. |
| 01:22:32.81 | Unknown | Thank you. I really have. And so we have 67 now of 79. Kathy, have we ever filled every position in your time here or in the last several years? |
| 01:22:41.25 | Kathy Nikitas | Certainly not in my time, and I haven't seen it in the last several years. |
| 01:22:45.67 | Unknown | Okay, so we also still have significant cushion from the unfilled positions. |
| 01:22:50.56 | Steven Woodside | Correct. |
| 01:22:51.54 | Kathy Nikitas | We have two positions that are frozen, as far as I know, for budgeting. So they exist on our approved plan, but they're not being funded currently. |
| 01:23:01.51 | Unknown | Okay, but they're still being budgeted for out of an abundance of conservative view for what could happen. |
| 01:23:06.71 | Chad Hess | Say that one more time. |
| 01:23:07.69 | Unknown | still being they're still included in your projections for |
| 01:23:09.90 | Chad Hess | Those two that are frozen in the PD are not funded because there's no intention to fill those. |
| 01:23:15.89 | Unknown | But 77 of the 69 are budgeted, even though we're only currently employing 69 of those 77. |
| 01:23:15.93 | Chad Hess | at this point. |
| 01:23:22.27 | Unknown | That is correct. |
| 01:23:23.33 | Unknown | 67 of the, okay. Okay, great. So that would leave several hundred thousand dollars in cushions. |
| 01:23:28.77 | Unknown | in the event of |
| 01:23:29.54 | Unknown | In the event of one of our employees from step three jumped to step seven, we would still have significant, likely to have significant coverage for that. Okay, great. Just wanted to make sure we were being smart about our budgeting. Thank you. |
| 01:23:38.40 | Steven Woodside | I just wanted to see. Thank you. |
| 01:23:40.83 | Jill Hoffman | Thank you. |
| 01:23:40.87 | Steven Woodside | Absolutely. You're welcome. |
| 01:23:44.68 | Jill Hoffman | So I'll just follow up on that line of questioning from Councilmember Blaustein. So you and I have discussed this. We actually discussed this in our at length in our 10 year modeling group as well about how we want to budget for employees in our budget and There's a policy discussion behind that. And so, Council Member Blassing has gone through why you believe that the current and past policy of budgeting for a full staff at full at Full Step. You believe that's not, anyway, you have decided to budget in a different way, and that's resulted in a different number in our budget. in our budget. under that employee cost line, That's different. and below what would have been budgeted had we used the prior method, correct? |
| 01:24:36.01 | Chad Hess | Yes, you're referring to the discussion that we had last week where you were asking about the change in salaries from the table code 400,000 And I had that note disclosure down below that said, based upon the change in the budget methodology, Actual wages are increasing faster or more than that 400,000. |
| 01:24:55.05 | Steven Woodside | Thank you. |
| 01:24:55.08 | Jill Hoffman | Right. |
| 01:24:55.20 | Chad Hess | The goal of this change was to give you a more realistic budget. |
| 01:24:55.22 | Jill Hoffman | the goal. |
| 01:25:01.16 | Jill Hoffman | Sure. But there's actually two issues with this, I think. the policy issue that I think should be a council decision about how we're going to budget. Are we going to budget in the prior method, which was, Um, full employees at full step, or are we going to go with a different method that's going to result in a different number for our employee costs? That's That's one issue. A separate and distinct issue is how are we reporting the costs from last year to this year in our budget. And so. And that was our discussion last week, and it's set forth. It's nowhere in our staff reports tonight, and we don't have any written presentations tonight, correct? |
| 01:25:45.59 | Steven Woodside | No. |
| 01:25:46.64 | Jill Hoffman | So it's not in our staff report tonight, but it's slide 19 of the the presentation that's now attached to the agenda for last week, And that talks about no matter what methodology you use, if you use a consistent methodology between the two years, in other words, if you use the old methodology, which was, Full staff at full pay at full step. Or if you use the current methodology, which is your reduced methodology, if you apply those consistently between the two years, the increased cost is a million dollars. You still agree with that? |
| 01:26:22.36 | Chad Hess | I love you. |
| 01:26:23.03 | Jill Hoffman | you |
| 01:26:23.05 | Chad Hess | Yes, yes. It's more than what you're showing because of that change in methodology. My goal is to give you a more realistic budget instead of overflating expenses simply because. |
| 01:26:35.45 | Jill Hoffman | Well, it doesn't matter because if you use the new methodology that you came up with, If you use that last year, for 2023. and you're applying it this year at 2024, consistent methodology results in million dollar increased costs of staff, correct? |
| 01:26:55.47 | Unknown | That is correct. Actual cost. |
| 01:26:57.22 | Jill Hoffman | Yeah. And that's not reflected in the budget currently. |
| 01:27:00.55 | Unknown | it is reflected in the budget. |
| 01:27:01.81 | Chad Hess | you |
| 01:27:02.19 | Jill Hoffman | It is that a million dollar increase in employee cost. |
| 01:27:05.54 | Chad Hess | It's there. Everybody is going to be paid at their rate plus the step. So the actual cost will come in higher than fiscal year 24's actual labor cost. |
| 01:27:18.03 | Jill Hoffman | So where is that, where is the million dollar increase in the staff costs reflected in the current budget? It's set forth on slide 19 that that's the outcome if you use consistent methodology. But I don't believe that it's currently in the current budget book that we have now. |
| 01:27:33.77 | Chad Hess | I guess I'm not sure what you want me to show in this. My goal is to give you a reasonable, accurate budget I mean, I could over-inflate all of our professional services. I could over-inflate all of our supplies and materials. and we could have a horrible budget and it could show massive deficit. but that doesn't give us any value to make decisions. |
| 01:27:55.22 | Jill Hoffman | Okay. |
| 01:27:55.76 | Chad Hess | At the end of the day, my goal is to give you accurate information. that is reflective of current reality. |
| 01:28:03.56 | Jill Hoffman | Well, That's not what I'm asking. My point is that if you used your new methodology or the same staff analysis from 23, you still have a million dollar cost, increased cost for the staff. So it's not overinflated. If you go back and use your same methodology for 23, the new methodology, the new accurate methodology that you use for 24, The increase in staff cost is the same. It's a million dollars. So the decrease in the staff cost between the two years is because you changed the methodology. Correct? |
| 01:28:43.27 | Chad Hess | Yes, I did change the methodology in an effort to give you a better budget. |
| 01:28:55.74 | Jill Hoffman | Can I express my confusion about this? So, sorry, thank you, Director. So by better budget, do you mean |
| 01:28:57.12 | Chris Zapata | about this. |
| 01:29:02.94 | Jill Hoffman | you changed the methodology so it would be balanced or- No. Right, so you're saying it's all accounted for. |
| 01:29:05.69 | Chad Hess | No. accounted for. |
| 01:29:09.64 | Jill Hoffman | this year. |
| 01:29:10.16 | Chad Hess | Thank you. |
| 01:29:10.20 | Jill Hoffman | Thank you. |
| 01:29:10.22 | Chad Hess | Thank you. Correct. I'm trying to give you a more accurate budget. So if we redid last year's budget, fiscal year 24 with the current methodology that I use for fiscal year 25. it would show less expenses for salaries and a higher surplus. Conversely, if I did the budget for 25, The way I did it in 24, you would show higher labor costs and a substantially higher deficit. It's The goal is to give you a more accurate reflection of what we're going to experience during the year. If I over inflate expenses, it doesn't give us accurate information to make decisions on. So my goal is to give you a better budget. by giving you more accurate or precise rejections. |
| 01:29:58.98 | Jill Hoffman | So, sorry, I feel very lost on this topic now. So then does that mean that last year, It was. somehow overinflated, |
| 01:30:08.44 | Chad Hess | Yeah, the wages was overinflated last year because we budgeted everybody's going to be paid the top dollar. And, As Kathy just stated, there are 17 people that are paid top dollar. The rest are paid at a lower step. than that. So there was substantial budgetary slack. in last year's budget. That is being consumed up this year because I'm being more precise with my projections. |
| 01:30:30.57 | Unknown | Yeah. |
| 01:30:30.85 | Steven Woodside | Thank you. |
| 01:30:30.91 | Unknown | Thank you. |
| 01:30:30.93 | Steven Woodside | Thank you. |
| 01:30:35.94 | Steven Woodside | So Councilmember Blaustein then Vice Mayor. Right. |
| 01:30:39.01 | Unknown | So just quickly, Chad, just to kind of clarify and make clear. So let's assume, I don't know that these are the numbers, I'm making them up just for the sake of clarification. If everyone was paid at top step last year, it was an extra million dollars in the budget. But in this assumption, everyone is paid going up a step still at full staffing, so it's more like. $500,000 less or whatever. So this is that cost. |
| 01:31:00.36 | Steven Woodside | Thank you. Yeah. |
| 01:31:00.46 | Unknown | you. Yeah. Actually, if you look at our black this year and also where we made changes, that was because of the slack and salary, correct? You've mentioned that a lot throughout the budget. |
| 01:31:00.97 | Unknown | Thanks. |
| 01:31:08.95 | Chad Hess | Thank you. Yep, yep, I'm reducing the budgetary slack. Right. Is all I'm doing. |
| 01:31:12.91 | Unknown | Right. |
| 01:31:13.22 | Steven Woodside | Thank you. |
| 01:31:13.93 | Chad Hess | Thank you. |
| 01:31:13.94 | Unknown | Right. |
| 01:31:14.03 | Steven Woodside | All right. |
| 01:31:14.30 | Chad Hess | I'm trying to be more accurate. |
| 01:31:14.72 | Steven Woodside | I'm trying to get it. Thank you. And Chad, one or two meetings ago, I actually had requested that you provide us a budget based on the total number of employees we have, 67 versus 79. Instead, you gave us a budget. You explained to us at our last meeting that you were giving us a budget with 79 FTEs, even though we only currently employ 67, but you were going to adjust the salaries down instead of top step to reflect actual salaries. Right. So, |
| 01:31:52.81 | Chad Hess | Thank you. |
| 01:31:54.68 | Steven Woodside | Thank you. |
| 01:31:54.70 | Chad Hess | Can you repeat that? I'm not sure I followed. |
| 01:31:57.78 | Steven Woodside | Two meetings ago, I asked that we see what we would actually be spending based on our 67% currently filled positions versus budgeting for 79, |
| 01:32:07.54 | Steven Woodside | Okay. |
| 01:32:10.90 | Steven Woodside | FTEs, which we are not likely to ever meet, according to our human resources director. |
| 01:32:14.81 | Sergio Rudin | Okay. Yep. |
| 01:32:17.38 | Steven Woodside | Instead of doing that, you more accurately said, I'm going to keep the 79 since it's our goal to have full employment, but I'm going to adjust the salaries to reflect actuality as opposed to top step for every position. Correct? |
| 01:32:34.39 | Unknown | Yes, that's correct. |
| 01:32:35.64 | Steven Woodside | And you explained that to us at our last meeting. |
| 01:32:38.52 | Unknown | That is correct. |
| 01:32:39.53 | Steven Woodside | presentation. |
| 01:32:40.93 | Unknown | Yes. Yes, I did. |
| 01:32:43.58 | Steven Woodside | And the reason that we have a million dollars increased salary expense, if you compare 79 FTEs last year at top step to 79 FTEs this year at top step, is that four out of five council members this year approved increased salaries across the board for our various employment units. Isn't that right? Right. |
| 01:33:10.53 | Unknown | That is correct. |
| 01:33:11.55 | Steven Woodside | And we did that based on a four out of five vote in order to increase retention beyond the dismal retention rates that we had previously been experiencing to bring our salaries up to the mid range for our county so that we could actually hold on to some of our employees and maintain institutional knowledge rather than having such high turnover. Isn't that right? |
| 01:33:35.69 | Unknown | That is correct, Councilmember. |
| 01:33:36.96 | Steven Woodside | All right. I just wanted to clarify the record. Thank you. |
| 01:33:40.72 | Steven Woodside | Okay, any last questions before the council member hop? |
| 01:33:42.56 | Steven Woodside | Yeah. Thank you. |
| 01:33:43.19 | Jill Hoffman | Yeah, so I think, as I said, we were talking about two different policy decisions about how we budget. a, you know, one, one issue is, are we going to change the policy? And I think it appears that we're going to change the policy. Um, but there are, you know, there are valid reasons to do it, um, the old way. And that is to budget, um, so that you have the flexibility to have a full staff, everybody at top step. We have done that in the past. We, in a department, we raised everybody up to a top step as, um, as a salary measure in, I think it was 2023, as a retention measure in 2023. So luckily we had that flexibility. But let me go back to the point of I want to make sure that this is clear, that you have changed the methodology, and we've changed the methodology now for how we budget for staff starting this year. If you go back and use that same methodology for last year, |
| 01:34:46.13 | Chris Zapata | Yeah. |
| 01:34:50.67 | Jill Hoffman | And compare the two years. So I think I said 23, 24, but it was the budget year, right? So last year was 23. This year's, sorry, this year's 25. |
| 01:35:01.13 | Steven Woodside | 24. Thank you. |
| 01:35:03.56 | Jill Hoffman | So if you go back last year and apply your new and improved methodology, you still have a million dollars in increased costs, correct? Thank you. |
| 01:35:11.36 | Chad Hess | Yeah. |
| 01:35:11.58 | Jill Hoffman | Thank you. |
| 01:35:11.71 | Chad Hess | Thank you. Yeah. an actual cost. When we issue that audit report, |
| 01:35:14.48 | Unknown | Thank you. |
| 01:35:14.55 | Jill Hoffman | Yeah. |
| 01:35:16.89 | Chad Hess | we will have increased costs for wages. |
| 01:35:19.95 | Unknown | Okay. Thank you. Just a clarification point for the record for Kathy. We don't have, we've never had, or maybe for the city manager, I don't believe we've ever had a time where we voted for every employee to be a top step. That was not part of our, was that part of our 2023 campaign? |
| 01:35:31.51 | Jill Hoffman | I didn't say every employee, I said every employee in a certain department. |
| 01:35:35.27 | Chris Zapata | When you adopted the budgets in the- |
| 01:35:37.58 | Jill Hoffman | time. |
| 01:35:38.04 | Unknown | I'm aware that I voted for raises for employees, probably. Everybody up to the top. |
| 01:35:40.96 | Steven Woodside | Let's stay focused on questions. City Manager, do you have a comment before we take public comment? |
| 01:35:44.97 | Chris Zapata | No, I think I can answer the question. I think it's been said again and again, the practice of Sausalito was to budget for full employment at Top Step. |
| 01:35:54.96 | Steven Woodside | Okay. City Clerk, could you kindly open public comments? |
| 01:35:57.70 | Jill Hoffman | Hold on. I have a follow-up question based on that. Because there's an intimation that we didn't do that. In a past year, I think it was 2023, we brought everybody in a certain department up to a top step. |
| 01:36:12.66 | Steven Woodside | I guess I will ask you a question. Director Hess. |
| 01:36:15.95 | Gregory Taylor | I'm sorry. |
| 01:36:17.15 | Steven Woodside | When you compare actual expenses from the previous fiscal year to your budgeted expenses for that fiscal year, would it be more accurate to use your new methodology of... |
| 01:36:26.52 | Chris Zapata | Absolutely. |
| 01:36:32.69 | Steven Woodside | I want to characterize it or the methodology of top step full employment, which one's more accurate. |
| 01:36:32.98 | Unknown | No one can. |
| 01:36:33.51 | Chris Zapata | Thank you. |
| 01:36:33.52 | Unknown | Thank you. |
| 01:36:33.54 | Chris Zapata | Thank you. |
| 01:36:33.56 | Unknown | Thank you. |
| 01:36:33.66 | Chad Hess | Yeah. |
| 01:36:37.96 | Chad Hess | the full employment, reasonable wage. Non-top-stop. |
| 01:36:43.63 | Jill Hoffman | Thank you, Mayor. Thank you. But that wasn't my question. And I would like for an answer to that question. |
| 01:36:44.15 | Chad Hess | Yeah. |
| 01:36:44.36 | Steven Woodside | Thank you. |
| 01:36:48.42 | Steven Woodside | City manager? Sorry, I didn't know. I apologize to you. See, manager, I'm sorry. I stepped on council member Hoffman's question. She wanted an answer to it. |
| 01:36:57.06 | Chris Zapata | There has never been a direction by the council to fund every single person in a department at top step. Thank you. Thank you. |
| 01:37:03.56 | Jill Hoffman | That's not my question. |
| 01:37:04.45 | Chris Zapata | Okay, what's your question? |
| 01:37:05.85 | Jill Hoffman | My question is, it's true that in 2023, we raised everybody in a certain department up to top steps. |
| 01:37:13.99 | Chris Zapata | We provided increase in the police department, which brought many of them to top step. But the direction was never given. The bonus that was provided, the agreement that was adopted provided that some of that happened. But there was no direction that everybody in a department get top step ever. |
| 01:37:32.74 | Jill Hoffman | So, how would you describe what happened then in that year? Because my recollection was everybody that was, I believe that had a step. It wasn't every, sorry, you're right. Let me rephrase that. Everybody that had a step. So the management, I don't believe have step increases. It's the, the, um, |
| 01:37:54.89 | Chris Zapata | That's correct. So at that particular time we were hemorrhaging officers. We were looking to stay competitive. So we took a step and the manager had the authority to do that to take the line level patrolman to top step, but not the entire department. |
| 01:37:55.62 | Jill Hoffman | Whatever it's called. |
| 01:38:02.30 | Jill Hoffman | Mm-hmm. |
| 01:38:09.54 | Jill Hoffman | Right. Sorry. Thank you for that. I appreciate that clarification. Thank you for that. But we had the luxury and the ability to do that because that's the way we had budgeted. |
| 01:38:18.37 | Chris Zapata | And that was within the city manager's authority as well. |
| 01:38:21.20 | Jill Hoffman | Okay, thanks. |
| 01:38:23.07 | Chris Zapata | City Clerk, would you kindly open up public comment? |
| 01:38:24.97 | Steven Woodside | Thank you. |
| 01:38:25.61 | Walfred Solorzano | Bye-bye, MacDulay. |
| 01:38:34.97 | Babette McDougall | Thank you. Don't you just love getting down to the nitty gritty? I do. They always say the devil is in the details. So this has been a very vigorous discussion. And I really want to thank each and every one of you for staying on. important, subtle, but important different aspects of why we have to have full transparency of what it takes to run this city. and with the here and nows, that we talk about to some extent, but also the things that we try to plan ahead for, because we know they're going to happen. We just walk into our own futures. So I want to thank you for all of that. I just want to ask one thing, and that is, there needs to be a written, there's so many written policies, like whatever happened with negotiating the real property portfolio, speaking of the current budget year, that we still don't know where we stand. So it's hard to go forward without knowing where we stand. I'm going to raise that again. So, all right. So then now looking at the employee situation, On the one hand, I hear our director of finance, who generally I have a lot of trust in this man. So if he says we need to tighten the screws up a little, I believe him. On the other hand, if we're using a policy that has been heretofore understood, and managed against, then we need to understand Subtle, however they may be, changes still they are. And if there are these changes, in light of the need to be transparent and openly clear to those of us that are not that smart with numbers, just to be as clear as possible. So I want to thank. Councilmember Hoffman for delivering on the point. I want to thank Ms. Blaustein for trying to break down the barriers to bring subtle common bounds. to make this discussion move a little better. And I always appreciate what Ms. Kelman has to say because she thinks outside the box in a very smart way, and I like to listen to Ms. Cox come right down like a train on a track. So thank you, Mayor. You've got quite a lineup here. |
| 01:40:37.33 | Steven Woodside | Right. |
| 01:40:37.70 | Walfred Solorzano | Uh, |
| 01:40:37.74 | Steven Woodside | Uh, |
| 01:40:37.97 | Steven Woodside | I'm not. |
| 01:40:38.09 | Unknown | Thank you. |
| 01:40:38.77 | Steven Woodside | Mr. Withy here is walking up to the podium. Thank you. |
| 01:40:43.29 | Unknown | Thank you. I just want to make one comment on this salary stuff before I actually make my main comment. The comment is between... 2012 and 2020. We budgeted salaries in the way Chad is budgeting for this budget. I can't speak to what happened in 22 or 23. I wasn't here. So let's just be clear. We always budgeted at full number of staff at their actual staffing wages. So that's how it was done. And so Chad is just going back to how it was done for eight years, at least in my experience. So very briefly, what I wanted to say Pass this budget. But I used to joke when I was running teams, and I've even joked from the dais, that... Congratulations on passing the budget. Next year's budget in process starts tomorrow. And that means there's a lot of work that needs to be done between now and now. and January mid-year budget and to bring some of these issues together. I think it's very important that you don't get to January and then suddenly say, oh, whoops, we don't have this information or we don't have that information. Well, that will have to punt to next year. So I would really strongly urge us to make sure that you know what information you want. How to use the pension trusts, for instance, is an example. Council Member Kelman, your questions about that are quite right. The final thing I want to make is I read the SWOT analysis. I read the turnover report. I'm running out of time. But. It's really important to recognize that our staff is overworked. |
| 01:42:47.39 | Steven Woodside | Sure. |
| 01:42:52.62 | Unknown | There's not enough of them. Thank you, sir. And you need to act accordingly. Thank you. Right. |
| 01:43:00.97 | Steven Woodside | I'm sorry. |
| 01:43:00.99 | Unknown | Yeah. |
| 01:43:05.04 | Gregory Taylor | Thank you. |
| 01:43:05.11 | Steven Woodside | All right. |
| 01:43:05.51 | Gregory Taylor | and I think that's a good thing. piece of paper. |
| 01:43:07.86 | Steven Woodside | Would that make you happy? You can just introduce yourself. |
| 01:43:07.94 | Gregory Taylor | I think he's- |
| 01:43:10.79 | Steven Woodside | Oh, thank you. You have two minutes. |
| 01:43:10.91 | Gregory Taylor | Oh, thank you. So Gregory Taylor, Let me give you a little history lesson. Some of you don't look old enough to really remember some of the names you might hear me say. Before I begin that, I want to say the devil in the details. I haven't heard that mentioned in this room for... Quite a number of years. Some of you might be old enough to remember Amy Belzer. who came before Sandra Bushmaker. She had two sayings she was always famous for saying. The devil's in the details. You know, we all, those of you who don't know who I'm talking, we all loved Amy Belzer. including myself. She would say the devil's in the details and her other favorite thing to say, as some of you may know, was We don't want to throw the baby out with the bath water. I'm afraid that's kind of what we did here in Sausalito when we exterminated all the anchor outs, much to our detriment. So I just want to touch on that. I forgot about it. few seconds left. Thank you for being so patient. I'm just a dumb country boy from Louisiana. I don't spell very well. not that good at writing. but I'm good with it. with numbers. And so what I want to tell you is a fellow named Joe Cryans came here as a high-ranking deputy with a Shonoma County Sheriff's Department. He became chief. number of years. Then he moved to Nevada and became chief. And then he retired. He came out of retirement to become the interim police chief for the city of Vallejo. And I read in the IJ, our favorite rag, that he was making over half a million dollars a year. I also read in that same paper that Stacey Gregory, who I like very much, and I'm sure most of the people, if not all in here do too, is only making $210,600 a year. Just remember, when everyone's running away from whatever bad things happen, it's the cops that are running towards it. So let's give everybody a raise. Thank you. |
| 01:45:16.51 | Steven Woodside | Thank you so much. |
| 01:45:17.10 | Walfred Solorzano | All right, we have Sandra Bushmaker online. |
| 01:45:22.23 | Sandra Bushmaker | Hi, everybody. Uh, Amy Belser and I overlapped, FYI. We were on the council together. And indeed, she used the expression of the devils in the details. And she frequently, in exasperation, would use the word crikey. over and over again. That was her thing. Anyway, my question is this. In reading the budget book, I see there's 161 percent increase in insurance premiums. So that's one aspect. Plus we've got out-of-pocket expenses for insurance. and our self-insured workers comp. and defense legal fees on top of that, I'd really like to know what the number is Uh, and compare it to various years. I thought one of the council members asked for that, a chart of those different numbers. Those legal defense fees are for insurance claims are on top of the premiums. And that is on top of the $606,000 that we're already paying for legal counsel for the city. So I would just like to have some some solidity in those numbers so that I can compare and contrast, or the public can compare and contrast, what we have been paying over the past five years, say, in this department. Because these are considerable increases in costs. and I'm concerned about them. as we all are, I hope. All right. Thank you very much. |
| 01:46:55.21 | Walfred Solorzano | No further public comment? |
| 01:46:57.71 | Steven Woodside | All right, we'll come back up here. and open up for discussion. I think We could start with a motion, just the recommended motion. Want to do that, Vice Mayor? Shit. |
| 01:47:09.93 | Steven Woodside | Sure. I'll move we adopt a resolution to adopt the fiscal year 2024-2025 city manager's budget and allocated and funded labor positions as required to meet state of California legal requirements. |
| 01:47:23.78 | Steven Woodside | Second. Okay, the motion's made and seconded. Let's just go down for discussion, starting with either Councilman or Hoffman or Kelman, or does someone else want to start? |
| 01:47:34.47 | Steven Woodside | I'll start. Vice Mayor? |
| 01:47:35.04 | Steven Woodside | Spice Mayor starts. |
| 01:47:35.68 | Steven Woodside | Thank you. Sure. I just had a very few comments. So I completely endorse former mayor with these comments about needing to start next year's budgeting process. Now, I think you know, we have new staff. this has been a learning experience. I think they've done a brilliant job, but as, as, evidenced by some of the questions from the dais tonight, there are aspects of the budget that I'd like to see us dig down deeper into. An example is the pension. So I definitely think we need to better define our long-term plan for addressing pensions, UAL, Um, The use of the 115 trust, You know, we set forth a very clear plan in 2018 for how we would manage long-term pension obligations to flatten the curve in terms of the escalation in premium expenses and then that all got blown. to smithereens by the change in the manner in which CalPERS assigns liability and manages its own funding. And so, I, I, I don't know when our 10 year plan is going to be complete, but I definitely would like to start planning now for better management of our 115 trust, as well as our long term plan for meeting what we know will be escalating AND I THINK THAT'S A pension obligations even though We can't be certain what those are. I appreciate cuts in the budgets by various, in their budgets by various departments this year, the library, city administration, community development and parks and rec. As part of next year's budget process, I'd like to see each department not only provide its projected budget for next year, but also demonstrate how it could cut its budget by 10% if needed. I appreciate the refinement in staff costs to more accurately reflect actuality and not top step for each position. I believe we are still overstating our actual labor costs, as I mentioned during questioning, because I don't believe we will reach full staffing this year, moving from 67 to 79%. full-time equivalent positions. And I endorse the comments from former Mayor Bushmaker. I do believe we need to commence tracking insurance metrics in a way we've never done before because we've never faced the challenges we are now We need to be tracking. premium payments, defense costs, and other metrics to really accurately reflect the actual expenses we're incurring this year so that we have a better barometer for future years. Those are my comments. Thank you. |
| 01:50:38.60 | Steven Woodside | Thank you, Vice Mayor. Who would like to go next? |
| 01:50:42.79 | Steven Woodside | Thank you. |
| 01:50:42.81 | Unknown | I'm happy to go. |
| 01:50:43.45 | Steven Woodside | I'll remember blasting. |
| 01:50:44.65 | Unknown | Sure. Great. And I want to thank staff again for the hard work and effort put in, not just on the planning of the budget by Director Hess, which was really fantastic and thoughtful, but each of the department heads who took the time this year to consider where it made sense to have budget cuts. I know we didn't dig into the SWOT analyses that each of the directors submitted, but that was a lot of work and I know there'll be consideration for that going forward. So really appreciate the hard work from staff and for all of you to be here tonight for questions as well. Really appreciate that extra time and effort put in. And I'm, you know, very much in favor of us moving forward with the budget. There are some things, though, that I really appreciate that my colleagues brought up this evening that I want to make sure that we do talk about. I really appreciate it that Councilmember Kelman made the point, especially with regards to our reserves, that these are not. theoretical or hypothetical dollars that we're spending and we need to be accountable and have metrics for those. So I look forward to us reviewing our reserve policy and thinking about how that makes sense going forward and generally being more clear in exactly where the spending for each of those metrics goes to. And to that point, I'm sorry that during questioning this didn't come up, but I did want to give some direction in addition to moving forward with the budget that we have some, and maybe we can welcome ideas from others on the dais, but some sort of metrics as well for the care or the cost and revenue efficiency plan as suggested in the city manager report. Because what that's doing is saying, this is our budget today, but there is opportunity to save more going forward. And so we need to hold staff to that and to understand what those opportunities look like. So what are those expenditures and what are the revenue increasing opportunities and how are we assessing those, whether it's quarterly, what does that look like going forward? And then to add to that, I'm again going to ask that we see that 10-year plan that we've been talking about. I think it's really critical that we come back with that at least definitely by January when we have our mid-year report. But again, I also agree with former Mayor Withey and with the Vice Mayor that our new budgeting process starts tomorrow. So let's get as much information as we possibly can so that we can make smarter decisions for that 10-year plan. So. I would really like us to have some additional direction on the care plan so that we can make sure we're following through on these revenue generating opportunities and considering where there might be opportunities for further cuts. I think our staffing is the more realistic approach to how we measure for staffing. I think it's good that we keep it at the full staff because I would like to see us get to a level of service where we do have all of our positions filled one day, dare to dream. But again, I really appreciate the hard work of staff here and think we can move forward, but want to have metrics for both reserve policy and the care policy going forward. |
| 01:53:29.77 | Steven Woodside | Thank you, Councilmember. Councilman Hoffman. |
| 01:53:35.66 | Jill Hoffman | Thank you. And thank you to the staff for all your hard work on this. I will note that the budget book is attached to the agenda. And so the agenda tonight actually is attached last week and the week prior. So. just search for budget book on the agenda. So my concern and my questions with regard to the staff and the methodology was to highlight what I think is a underreporting of our deficit. And the math is pretty easy. You just look at a million dollar increased costs and staff costs from last year to this year and you use the same methodology. That summary, Chad did, and that's slide 19 to the, to the, presentation last week. So there was a presentation, a slide presentation by Chad and then slide 19 where he calls that out. and gives us that number. So, Like I said, there were two issues tonight. One was, do we want to change the methodology, which I think it seems we do. But the second issue was consistently applying that, whatever methodology it is, the prior one or the current one, The result is the same. You have a million dollars change in staff staff costs, but that's not how it's reflected in the budget. And that's my concern. Um, overall, though, I think, um, I think it's interesting that, you know, the proposition that we start budgeting, you know, tomorrow. And I completely agree with that. And I think it would be helpful to reconstitute the Finance Committee. So of the committees, the vote that we made in 2021 to dissolve the non-statutory boards and commissions. The only one we actually dissolved was the Finance Committee. And so that was probably... the most helpful committee that we had at the council level and actually for the staff level, because The finance committee, I've served on it. The vice mayor served on it. I think Councilmember Kellman served on it. And, you know, it forces the staff to look at these things, these questions and issues. consistently throughout the year, and you have vetting by two council members of whatever it is we're talking about. I think that would be helpful. We are working on the 10 year plan, but we haven't met since 2023. So we haven't actually had a meeting for more than six months. And so I think that if we reconstituted the finance committee, and had a monthly meeting, a part of that would be the 10 year plan, obviously. But it would also be some of these other things that we've been talking about. which I think have a lot of merit. and I've discussed it with Chad, and I know Council Member Kelman has too, especially about the pension risk and about all these other financial risks and how to address them, and that will help us, I think, with our overall risk that we're looking at when you pull them all into the same bucket of increased insurance. That is absolutely a tremendous increased financial risk for us, and then also how to attack that, decreasing some of the other geologic issues in streets and sidewalks. And that goes back to, the conversation we just had on the first item with regard to the reserve. And what do we do with our unassigned funds? Do we just leave them sitting there or do we actually put them to work? I completely agree that we should put them to work as a strategy to reduce our risk. So those are my thoughts. |
| 01:57:07.29 | Steven Woodside | Don't see me very coming. |
| 01:57:08.52 | Jill Hoffman | Thank you, everybody. Again, very hard work and appreciate staff and city manager. and Director has bringing this to us. I think my colleagues captured a lot of the straight on budget stuff very well, so I'll try to offer something a little bit different, which is I kind of approached tonight thinking this is gonna be a little bit more of a strategy meeting as well as a budget approval. And so part of me is some of my comments will be more strategic, but I just wanna note that on page two of the staff report, First paragraph, we said that increased costs relating to pension UAL payments, doubling of insurance premiums, and a slowdown in sales tax revenue have created the perfect storm for the city. I think right there, that is a roadmap. for first thing tomorrow morning, what we should be focusing on for our budget. And one of the things that I didn't get out of tonight's conversation, and I don't know that it was appropriate to get it, but I wanted to nonetheless, is some direction to allocate for those budget priorities. We talked about this during the reserve policy and risk management. I want to know how we're going to address roads and resilience. Should we have talked tonight about more funds for those two things? Should we have heard from Director McGowan around the Kavanaugh Approvement Program and the status of the GAD and our geologic hazards? Should we have heard more from our police chief around public health and safety? I mean, it feels like we have some of those concerns, and we're approving a budget without really talking about the strategy behind the budget. We were all provided with some confidential information on tenure claim statistics. And if you looked at those from our city attorney, you will, I think, agree with me that there are specific actions we can and should prioritize in our budget to address that risk. And so I just, that was missing for me tonight. And I just wanna share that. It might not have been the appropriate meeting to have that conversation, but I just wanna share that with my colleagues. I also just wanna mention and support the reconvening of the finance committee and that 10-year plan post haste. In fact, I would love to hear an update I don't know, within two council meetings or whatever is reasonable for that subcommittee. And I also think we need to have some time frames for review. Again, if we are going to balance a budget based on anticipated action, then how frequently will we hear updates on those anticipated actions? City manager and I talked today about Marinship Park. I realized and then it's not a priority. Don't by any means say that that's a priority, but I realize there are certain projects we haven't heard about in a while. And I and I think we should continue to make sure we have that running list and run through them. And so I just feel like I. We have six items we have from a strategy session. I would love to see them continually blended into the budget, And so, whatever time you start tomorrow morning when we start our new budget cycle, I think that we need to keep thinking about those and focusing on those and again page to the staff report outlines exactly those perfect storm events. |
| 02:00:09.81 | Steven Woodside | Thank you, council member. All right. Well, I just want to thank the, maybe I'll take my, comments just to say thank you to the staff. This was a robust discussion and to my colleagues, but really just kudos to the staff. A real fire drill around the insurance situation. Again, it's easy to move on to the next problem, but I really want to triple underline the extraordinary accomplishment that the city employees accomplished on behalf of all our citizens, residents here in Sausalito in, in acquiring a new insurance carrier at a, best possible circumstance among the options price so uh kudos uh excited for the budget underlining that we are ending this year this fiscal year ending in surplus the previous fiscal year we had a surplus previous year to that we had a surplus this year we're forecasting a deficit uh if we are successful in hiring fully so uh we have the opportunity to do mid-course correction as and with the attention of all of us here on the dais and with the members of the community i'm sure we're going to continue to uh fine-tune this uh i look at low-hanging fruit around revenue generation as well here in town uh the way we really are going to solve our infrastructure problem is not by tweaking around the edges uh saving a few thousand dollars here and there uh the way we're really going to tackle our infrastructure challenges is uh |
| 02:01:22.93 | Chris Zapata | town. |
| 02:01:36.65 | Steven Woodside | Amplifying the business model of Sausalito. And we have that capacity in town. We have an incredible. unfair competitive advantage and extraordinary resources from the blue economy possibilities in the industrial zone. to a different way of thinking about our businesses here in town. So I think that there is a case for optimism, not least because of the clear improving excellence of our staff that's on display and how it handled the insurance and handled the entire budget this year so. The next year budgeting process does indeed start tomorrow and i'll go ahead and just call the question on the motion which was made and seconded so. All in favor say aye. |
| 02:02:19.37 | Unknown | Thank you. Bye. Bye. All opposed? |
| 02:02:21.20 | Steven Woodside | All opposed? Okay, motion carries unanimously. We'll now move on to item 5C, adoption of a resolution for the GAN limit for the fiscal year 2025. Mayor. Manager, yes. |
| 02:02:31.15 | Jill Hoffman | Mayor, like, Sorry, before we move on, I think I would like to have, because it's on the agenda, because it's within the scope of this item that we just took a motion on it, but we can still have a policy discussion and direction to staff about how we want to address these things with regard to risk factors, right? So, and I'm just building on Councilmember Kelman's discussion. I mean, it's 8 o'clock. The next two things I think are going to go fairly quickly. We set this meeting aside to discuss... finance and policy issues. So I think that might be helpful to help guide us forward. |
| 02:03:03.18 | Steven Woodside | Sure. |
| 02:03:07.52 | Steven Woodside | Finally, is there a proposal for some direction that you or Councilmember Kellman have that you wanted to provide under the auspices of the adoption of the budget that's allowed under that? |
| 02:03:17.96 | Steven Woodside | I think we've already given direction. |
| 02:03:19.94 | Steven Woodside | Thank you. |
| 02:03:20.09 | Steven Woodside | Given each of our comments here this evening and what we think should be prioritized, I'd like to hear back from city staff in response to our direction with their plan for implementing, such as reconstituting the Finance Committee and identifying risk factors to start tracking for creating our upcoming budget. |
| 02:03:41.57 | Jill Hoffman | Well, I think, yeah, let me just refine that a little bit. Because I think... I think based on the staff report and the discussions that we've had, I believe we all agree that we want to attack as a policy matter and direction to staff, right, of prioritizing, the priority is matters that are going to reduce our risk factors with our insurance coverage, and those are very defined sort of buckets. That's number one. Number two is, and that's in the buckets I think we already talked about in the, well, actually um, well, I don't actually, we haven't talked about yet because insurance is coming up, but, um, but we actually, sorry, we did talk about a little bit on the reserve policy because they're kind of mushed together now, but okay. So I think it's, you know, it's, um, addressing those risk factors, right? So it's sidewalks it's low-hanging fruit number one is the sidewalks um number two is um reducing um the overall instance of the geologic hazards in town, right? Which is different from sidewalks, but geologic hazards means, you know, the subsidence and our hillside issues, which led to the landslides in 2019 And also the landslide in Um, 1999 or 98 and also the landslides that we currently have that are, um, still existing in Sausalito. So that's number two. I can't remember what the third one is, if anybody else can too, but. |
| 02:05:24.71 | Steven Woodside | So we had infrastructure, pension UAL payments. Oh, yeah, yeah. Thank you. Slow down in sales tax revenue. I took notes as Council Member Kellman was speaking. So I'm happy to share my notes with city staff. |
| 02:05:28.04 | Jill Hoffman | Yeah. |
| 02:05:37.35 | Steven Woodside | but we've been over this. |
| 02:05:38.73 | Jill Hoffman | But I think that's what we haven't given direction on it. And we haven't said that's what we're going to adhere to as a council, as a policy matter. And that's what I'm hoping. I'm just putting it out there that that might be a good outcome for our discussion tonight while we're on this item. It's within the scope of certainly our conversation. |
| 02:05:44.81 | Steven Woodside | Thank you. |
| 02:05:44.83 | Steven Woodside | Well, |
| 02:05:45.08 | Steven Woodside | All right. |
| 02:05:58.11 | Steven Woodside | Thank you. |
| 02:05:58.19 | Jill Hoffman | our, uh, |
| 02:05:58.95 | Steven Woodside | Thank you. |
| 02:05:59.73 | Steven Woodside | That's great. |
| 02:05:59.80 | Steven Woodside | Bye. |
| 02:05:59.81 | Jill Hoffman | Yeah. |
| 02:06:00.03 | Steven Woodside | I'm not prepared to discuss these strategies. We have separate meetings set up to discuss the infrastructure, the geologic hazards, sidewalks and roads and resilience. All of the items enunciated in the city manager's letter to the to prism to persuade them to take us on. I have not come prepared tonight to thoughtfully. provide direction on these items, although I'm happy to do it at a future meeting. |
| 02:06:30.15 | Jill Hoffman | Yeah, I... |
| 02:06:30.17 | Steven Woodside | Yeah, I agree. |
| 02:06:30.98 | Jill Hoffman | Let me just follow up on that, and I think that's fine to move on. |
| 02:06:32.68 | Steven Woodside | that's fine to move on i can cry let's let's just that was a great list we have it okay |
| 02:06:37.14 | Jill Hoffman | Okay, but let me just follow, if you don't mind. So I think that stove piping, it doesn't help us, right? We need to be able to talk about it comprehensively as a council and prioritize. So to your point, I agree that we probably need to set then another city council meeting to help us prioritize moving forward and set it soon. That needs to be very soon because that provides a roadmap of what staff prepares and what makes it on our agenda and what doesn't. And that's what I think has been lacking |
| 02:07:09.98 | Steven Woodside | So thank you, Councilmember. Let's add that to the future agenda items. City Clerk. Item 2C, adopt a resolution for the GAN limit for fiscal year 2025. City Manager, are you giving this? City Director Chas, please. Yes, please go ahead. Thank you. |
| 02:07:26.24 | Unknown | Yes. |
| 02:07:26.68 | Steven Woodside | you |
| 02:07:27.01 | Unknown | you |
| 02:07:27.27 | Steven Woodside | director of |
| 02:07:27.73 | Unknown | Yes, we're going to start calling you Jess. |
| 02:07:30.26 | Steven Woodside | Director Hess, please go ahead. |
| 02:07:31.46 | Chad Hess | Here we go. All right, one second, let me pull up the GAN limit here. So the GAN limit is a state requirement that we pass a, or we, we do a calculation every year that is based upon. the change in population and the change in CPI. What it does is, let me share my screen here and I'll show you the resolution. We'll just walk through the calculation real quick. |
| 02:07:57.55 | Chad Hess | All right. So here is the GAN limit. We start with last year's GAN limit as our starting point. The state publishes population for each county and city. |
| 02:08:07.98 | Steven Woodside | You're going to have to make your font size bigger. |
| 02:08:09.88 | Chad Hess | Oh, yes. Sorry about that. |
| 02:08:12.35 | Steven Woodside | if you actually want to, or just read the numbers out loud. Yeah. |
| 02:08:14.63 | Chad Hess | Thank you. |
| 02:08:14.64 | Steven Woodside | Yeah. |
| 02:08:15.35 | Steven Woodside | to have. |
| 02:08:15.59 | Steven Woodside | Well, we have a staff report. |
| 02:08:17.16 | Steven Woodside | just for the members of the public that may not see it is in the staff report for anyone who's watching at home that would follow along, but that's, |
| 02:08:19.00 | Steven Woodside | See you. |
| 02:08:19.79 | Chad Hess | isn't it? |
| 02:08:24.67 | Chad Hess | Is this better? |
| 02:08:26.45 | Steven Woodside | Yes, we can. |
| 02:08:26.69 | Chad Hess | weekend. |
| 02:08:27.70 | Steven Woodside | Go ahead. |
| 02:08:28.02 | Chad Hess | So our starting point is last year's appropriation limit, and then we take the change in population based upon the city or county, whichever is more favorable, to the city, And then we also do the change in per capita income, which is published by the state to arrive at our new updated GAN limit. And this is the amount of tax revenues that we're allowed to spend in a given fiscal year. Then we compare that number to the taxes that we collect and expect to spend. and compare that to the GAN limit. And if we exceed the GAN limit, we have to bring it to a vote to officially exceed that GAN limit. In the case of Sidious Haustelito, we are $4.7 million below the GAN limit, so we have plenty of thresholds. under this calculation. Now it could be noted and it is noted in the staff report that we went back and recalculated the GAN limit for a number of years because we were always using the city's thinking population. and we are allowed to use the city or county. So we went back and recalculated that. for a number of years so we can increase our GAN limit in the event that we need additional capacity. Um, really all I have to share about the GAN limit. It's kind of a technicality that we have to pass by resolution. before the budget year begins. |
| 02:09:56.43 | Steven Woodside | Thank you, Director Hess. Any questions? No questions. We'll open public comment. City clerk. |
| 02:10:05.27 | Walfred Solorzano | Babette McDougall, do you want to make up? Okay. |
| 02:10:07.69 | Steven Woodside | keep passing. you seeing none okay we'll close public comment any discussion |
| 02:10:12.73 | Steven Woodside | Mayor, I'll go ahead and move. We adopt a resolution which selects per capita personal income and city population as the factors to be used. in calculating the fiscal year 2025 appropriations. limit and that we adopt the attached resolution. Second. Oh, you can have it, Councilmember Kellman. |
| 02:10:33.93 | Steven Woodside | Okay. made and seconded by Councilmember Kelman. |
| 02:10:35.73 | Unknown | Thank you. |
| 02:10:35.75 | Steven Woodside | Move along. Second. Second. |
| 02:10:39.62 | Steven Woodside | So Councilmember Hoffman just stepped out. |
| 02:10:41.88 | Steven Woodside | me to see. I presume she feels this is a non-controversial vote and probably would be offended by |
| 02:10:51.09 | Steven Woodside | All right, we'll take a... Actually, let's take a... one minute bio break as the question hangs in the balance and we'll be back in one minute that council member hoffman is to adopt the recommended motion is made by the vice mayor and seconded by council member kalman so all in favor of this motion say hi hi any any opposed motion unanimously carried moving on to item 2d the adoption of a resolution improving an investment policy for 2025 fiscal year. City Manager? Do you have a reporter that director has? |
| 02:11:24.05 | Chad Hess | Yes, that would be me as well. So a annual requirement of the city is to adopt a investment policy. So before you tonight, we have a resolution to officially adopt our investment policy for fiscal year 2425. There have been no changes to the investment policy at this time. So it would be the same investment policy that was approved last year. Thank you. Yeah. Are there any questions from council on what's in the... I see there has a question, Director has. |
| 02:11:52.48 | Steven Woodside | Thank you. |
| 02:11:52.58 | Steven Woodside | Thank you. |
| 02:11:52.60 | Steven Woodside | has a question. |
| 02:11:53.09 | Steven Woodside | Thank you. |
| 02:11:53.93 | Steven Woodside | I have a question. So I back in the beginning in mid-May, forwarded to you, Director Hess, and to the city manager, information about California CLAS, which is an alternative to LEIF. And I was hoping that we would consider diversifying our investment policy to include California CLAS, since it performs equally or better to LEIF. |
| 02:12:09.22 | Chris Zapata | Alternative. |
| 02:12:21.03 | Steven Woodside | circumstances. So can you please advise on the status of that consideration? |
| 02:12:21.25 | Chris Zapata | you |
| 02:12:26.05 | Steven Woodside | Thank you. |
| 02:12:26.06 | Chad Hess | Yes. So that is, it's not in the budget book. I'm sorry, the investment policy at this point. But if that is a direction that the council would like to take, I would be willing to update the investment policy to include that. And an acceptable investment based upon the state's regulation on what we can invest in. Each year, the state updates their investment guide or their investment policy, so we need to make sure that we are in compliance with that as well. Um, if that is desired, um, |
| 02:12:55.91 | Chris Zapata | If that's... |
| 02:12:58.61 | Chad Hess | I would ask that we adopt this this evening just so it's in place, but then I can bring a new investment policy back. at a later council meeting as a consent item. |
| 02:13:07.83 | Steven Woodside | So I would just ask my fellow council members I provided information, it is an alternative to life that actually provides more flexibility in in certain ways and allows you to earmark funds and withdraw funds with no penalty. So again, I am just asking that staff bring that back to us for consideration. |
| 02:13:25.23 | Jill Hoffman | Shape that ice for them. Me too. I don't know anything about it. I just put it. |
| 02:13:26.65 | Steven Woodside | Thank you. |
| 02:13:26.66 | Steven Woodside | Thank you. |
| 02:13:26.78 | Steven Woodside | Thank you. |
| 02:13:26.80 | Steven Woodside | Thank you. |
| 02:13:26.86 | Steven Woodside | Thank you. |
| 02:13:29.04 | Steven Woodside | Any other questions? Yes, Calvin. |
| 02:13:30.29 | Jill Hoffman | Yes, me. You're emerging on the names. Yes. Um, So this is just maybe a question for you, Mayor, but an education question. So you very wisely helped us identify an opportunity for higher interest bearing account for some of our monies. What actions are we taking to pursue those opportunities? What other opportunities might there be? We won't have that low hanging fruit again, I hope, because that means we've taken care of it. Where else might we look for those advantages? |
| 02:14:04.34 | Steven Woodside | That's a question to you, Director Hess. |
| 02:14:06.06 | Chad Hess | Yeah, so currently we are invested in in Treasury. We could also invest in these investment pools like LEIF or CLASP. And really their return, I believe, would be very similar to our Treasury bills that we currently receive. Right now, we're trading treasuries right around that 5% mark. for one year out maturity. Um, But as of now, I'm actively managing our cash that is in our primary checking account and trying to keep that as low as possible to meet the city's cash flow needs. And the remainder, I'm investing in T-bills as it stands now. But I am open to considering LEIF or CLASS. as an alternative to, again, earn additional yield, but safety is paramount in that discussion. |
| 02:15:01.21 | Sergio Rudin | Yeah, and on that subject, just to supplement that, state law does generally restrict what kind of investments are permitted for municipal governments in terms of permitted securities and where you can Um, put your unallocated reserves. The purpose of those restrictions are to prevent and safeguard from speculative investments. So there is a statutory list of kinds of instruments that the city is allowed to invest in. |
| 02:15:33.95 | Jill Hoffman | Thank you, Sergio. And then might I request that the reconstituted finance committee that we'll hopefully meet very soon review those statements on a regular basis and just be aware of market forces and opportunities? by manner of policy. |
| 02:15:51.08 | Steven Woodside | So my question, Chad, are there any other questions? uh, Great that we own some T-bills. Did you build a T-bill ladder? |
| 02:16:00.29 | Chad Hess | Yes, I have maturities every month. |
| 02:16:02.82 | Steven Woodside | How far out is your ladder? |
| 02:16:04.06 | Chad Hess | Uh, it goes out. I've got a trade that'll be placed on Thursday and it'll bring me out to July of 2025. |
| 02:16:12.09 | Steven Woodside | So that's a policy choice therein about whether, especially now, when we might be in a period of peak interest rates and the capacity to lock in over-term yields going forward, there could be substantial security there. But of course, when you do that, that money, though not locked up because the treasuries is a very liquid market, you can always get it out. You can suffer loss if you're forced to get it out. So you'd want to- Yeah. |
| 02:16:20.86 | Steven Woodside | Yeah. |
| 02:16:35.65 | Chad Hess | Yes, there is interest rate rate. |
| 02:16:37.43 | Steven Woodside | We want to put money there that you actually don't need and, And so there is a policy discussion to be had about that, but we would have to be presented alternatives by a professional like you. in concert with our banking partners, you know, understand the best practice about how much to lock into a longer term bond versus a shorter term bond. And I'm wondering, do you need direction as part of this? |
| 02:16:51.54 | Chad Hess | you know. |
| 02:17:03.22 | Steven Woodside | in that way, or would that be something, direction that we can give you individually and as a council leader? |
| 02:17:09.77 | Chad Hess | Yeah, I would be open to either. I guess my My comfort level is right around that year mark. I don't want, like you said, commit myself and need that cash and be exposed to interest rate risk, but I would be open to extending that out to potentially two or three year maturities for a portion of our portfolio as we have significant resources that we, are not spending. So, yeah, I would be open to that. And I think it would be a great discussion in the finance committee to have those discussions on where do we want to invest. And what are those alternatives? So I would be open to a discussion here or privately. |
| 02:17:49.54 | Steven Woodside | And then it's a question that could lead to a comment later, but we were having a discussion about the 115 whether to take money in our budget from the 115 trust or whether to take it in funds in excess of reserves. Correct. And because of a great accomplishment of the previous city councils of which I think Councilmember Hoffman and the vice mayor were a member, we had a plan that was put together for the |
| 02:18:01.84 | Unknown | Correct. |
| 02:18:17.00 | Steven Woodside | both investing in the 115 trust and rolling funds out of that. But that was done at a time of... an era of low interest rates. And amazingly, that fund is the worst performing investment asset currently. Yeah. Since money is fungible, there have been a kind of an apples to apples argument to take money out of the funds in excess of reserves. just because out of the 115 trust because it's earning lower. So the question is, I know we can switch advisors, but they take a fee and they also have these sort of, I'll call them outdated, some balance models. Is there an alternative in the 115 trust that you can present to us? And is this part of today's discussion or a future one? |
| 02:18:48.92 | Chris Zapata | Thank you. |
| 02:18:49.02 | Steven Woodside | Yeah. |
| 02:19:01.34 | Steven Woodside | for, uh, or at least considering the alternative of building a bond ladder inside the 115 trust of treasuries. |
| 02:19:08.74 | Chad Hess | Yeah, so my understanding is there's a limited number of of companies that can allow or administer Section 115 trusts in the state. PARS is one of them. and CalPERS is the other that I know of that are allowed in the state of California. We are starting conversations with helpers to invest in their Section 115 Trust and learn more about their investment opportunities. From my current understanding, they only offer kind of select balanced models as we are seeing in PARs, You can't specifically pick treasuries or build a ladder. under that model is my understanding. I'm not sure. But it would be a future council meeting discussion once we have more information from CalPERS. |
| 02:19:55.16 | Steven Woodside | So is that something you can investigate then? It's not. Council. Yes, yes, I can. I will add that maybe if you decide to your list. |
| 02:19:58.47 | Chad Hess | Yes. Yes, I can. |
| 02:20:03.90 | Steven Woodside | And then one question about UAL as it ties to the investment policy. An investment of cash into the CalPERS fund, is that on an apples to apples basis, is that yielding 6.8% or does it yield something different? because of that. |
| 02:20:21.35 | Chad Hess | So the CalPERS section 115 trust itself is not a guaranteed 6.8%. It is market driven. If we chose to pay down our UAL with a discretionary payment, we would effectively realize a 6.8% because that is the interest rate that they are charging on that outstanding debt. So if we pay down our 6.8% debt, we would incur less interest and in the end, save us additional dollars. So that is an option to start paying it down instead of leaving the dollars in the 115 trust. |
| 02:20:58.76 | Steven Woodside | Thank you. if there are no more questions we'll take public comment please uh any public comment city clerk Ms. McDougall has raised her hand here in the audience. |
| 02:21:06.18 | Chris Zapata | Yeah. |
| 02:21:06.20 | Chad Hess | That's right. |
| 02:21:17.15 | Babette McDougall | Thank you. So I want to go back to this general idea of a policy for investments going forward. Again, going back to the problem of risk management. which is fundamental to just about every aspect of your discussion this evening. So looking ahead, balls that are in motion. What do the implications of transitioning, say, to charter city status involve? Are there going to be costs to the city of Sausalito as a charter city, for example? I mean, we have only begun this discussion. So how this is going to impact a decision you might make going forward on how to allocate or reallocate, either with more conservative decisions or more ambitious. leanings. is affected by these kinds of here and now questions. So I think the idea of trying to not come back to the here and now and where we are in the here and now within the context of these policy discussions, is something that I'd like to invite your attention to once again. um, Maybe a more open democratic exchange would help to focus how the citizens' concerns right now can be more appropriately reflected in the bigger policy questions that you wish to attack this evening. and the degree to which they may or may not connect. Thank you. |
| 02:22:42.91 | Steven Woodside | Anyone online, Mr. City Clerk? See no further public comment? Close public comment. You'd like to make a motion. |
| 02:22:49.92 | Steven Woodside | Yes, Mayor, I will make a motion that we adopt the resolution of the City Council of the City of Sausalito, annual approval of the investment policy. Second. |
| 02:23:02.57 | Steven Woodside | Notions made and seconded. Any discussion or we'll just move to a vote? |
| 02:23:05.84 | Steven Woodside | Thank you. |
| 02:23:05.88 | Jill Hoffman | Vice Mayor, did you want to add the direction on the other... Thank you. |
| 02:23:09.05 | Steven Woodside | Yes, I would like to add direction that staff, that's separate from the motion. I would like to add direction that the staff continue to explore additional investment opportunities, including class. review of T bill ladder. approaches where appropriate. the appropriate administrator for our 115 trust and the programs and the investments the investment direction for whoever that administrator may be. |
| 02:23:41.59 | Steven Woodside | Okay, motions made and seconded. All in favor? Aye. Opposed. |
| 02:23:45.72 | Steven Woodside | Bye. |
| 02:23:47.51 | Steven Woodside | Okay, motion carries unanimously. I don't shoot. |
| 02:23:50.50 | Steven Woodside | One correction, if we can spell the mayor's name correctly on the resolution, that would be great. Thank you. |
| 02:23:55.83 | Steven Woodside | Thank you. uh, Thank you. 2e, adopt a resolution of the City Council of Sausalito to join the Public Risk Innovation Solutions and Management. known by its acronym PRISM. authorize the city manager to approve all program documents related to GL1 excess workers compensation and property programs. City manager, is this yours? Is it City Director Hess? City Attorney, Mr. Rudin. |
| 02:24:24.23 | Sergio Rudin | So I will field this agenda item. So... The proposed item before you is necessary for the city to join prism. Um, The resolution that is being presented to you tonight would authorize the city would approve the joint powers agreement prism is a joint powers authority. For the purpose of pooled self insurance programs above among the counties and various other public agencies in the state of California. The resolution will also authorize the city manager to execute all of the memorandums of coverage and all related program documents for the general liability, excess workers' comp, and property coverages that are provided by PRISM. I'm not sure. And Again, I think as Chad has this evening presented you as part of the budget agenda item, the programs of insurance that are available through PRISM are the most cost-effective options that the city has been presented with to date. and the Differences in terms of premium cost are, um, significantly lower than the coverage that would be available for the general liability and for the property coverages on the private market. Um, In terms of alternatives on workers comp there is some discussion in your staff report on that particular subject, the city does have an alternative available option with the state. compensation insurance fund based on recent discussions with hub, the initial quote that the city received at $302,000. 302. Uh, 300,000 Uh, And, would be adjusted based on the city's experience modification. potentially upwards closer to 400,000. uh, making the excess workers comp and potentially self-insurance, um, for the primary layer under 350,000 SIR a more cost-effective strategy for the city to pursue. So with that, I'm available for any questions. |
| 02:26:44.33 | Steven Woodside | Thank you, Mr. Rudin. Any questions for our city attorney? It comes from Everhoffman. |
| 02:26:49.69 | Jill Hoffman | Yeah, this is just a summary question. Because we've got some late information, I think, that was supplemental to what's in the staff report. So I just – and I did send an email that you were CC'd on, Sergio, about this later this afternoon. So it looks to me like. And either you or Chad can weigh on this. But it looks to me like our total self-insured. obligation starting next year. is going to be $875,000 a year. Is that, that's, we will pay everything under that in different categories. So I know there's different categories, but I asked for what the total was amongst the property, amongst workers comp, And it looks to me like the total SIR across all is 875,000. Is that, have I got that right? |
| 02:27:42.48 | Sergio Rudin | So this under the prison programs, the city's SIR for the property program is $25,000 for all property related risks. Um, And that is, of course, insurance for the city's own property, not for property damage for other people's property. Um, under the general liability program, and that is, again, per claim. Under the general liability program, the city's self-insured retention is half a million dollars per claim. So you would be self-insuring at any claims that fall underneath that amount and paying you know, a half million dollar deductible before Prism kicks in coverage. Um, And then on the workers comp again, Your self-insured retention is $350,000 per claim. So I would not add the categories in that way. |
| 02:28:42.47 | Jill Hoffman | You would not what? |
| 02:28:43.41 | Sergio Rudin | I wouldn't add the categories because- |
| 02:28:43.48 | Jill Hoffman | I would. They're different, but okay. But collectively you would agree that it's $875,000 in our total SIR going forward. And I agree that there's different categories and there's, you know, |
| 02:28:56.54 | Sergio Rudin | Yes, and I mean, there is a potential based on your loss history in any given year that You know, you may never get to you know, say in your workers comp program, you may never get to $350,000 that you're paying that year in SIRs. Yeah. |
| 02:29:11.17 | Jill Hoffman | . I agree. This number wasn't in the staff report and I'm just trying to get us updated. And then, So the total increase... Total increase in premiums. No. Yeah. In premiums from Bay City's amongst all these categories moving forward. I think I had 1.365, but is that accurate given these new categories that we just added in? |
| 02:29:39.54 | Sergio Rudin | So, I think that your figure for premiums is correct. That is what we're expecting to pay in premiums. Now, keep in mind that on top of the premium, you have to pay for the self-insured retention before coverage kicks in. You know, so. |
| 02:29:54.54 | Jill Hoffman | Right. So that's also an increase, sort of unknown increased costs, right? So that's the number that from zero to 500 in the general liability and zero from zero to 350 in the workers' comp and zero to 25,000 in the property category, anything under those numbers. the city will be responsible for paying those claims. Not just paying the claims, but also defending them in the legal costs. Yes. |
| 02:30:25.29 | Sergio Rudin | Yes, that's correct. And your, you know, cost of legal defense, those are going to go towards your SIR. |
| 02:30:26.20 | Jill Hoffman | I'm not. |
| 02:30:31.95 | Jill Hoffman | Okay. That's maybe the biggest risk factor with our insurance, other than the increase in payments, is the unknowable what it's going to cost us. Okay, thank you. |
| 02:30:47.50 | Steven Woodside | Any other, Councilman Kellman. |
| 02:30:49.39 | Jill Hoffman | Yeah, so now I think it's the right time to go full circle on the questions that Councilmember Hoffman had asked about the risk management strategy. And so I guess I noted that prepared by, so you're turning but reviewed by, City Manager and the Finance Director, I'm wondering if someone from a narrative perspective can disconnect the dots. So we went to Prism. They said that in six months we come back to them. with a list of things that we've completed, then we may enjoy a lower premium next year. Where's the work plan? for us to achieve those things, and how are they baked into our budget? |
| 02:31:25.16 | Sergio Rudin | So, As part of becoming a new member of PRISM, PRISM requires that new members undergo an evaluation and claims audit during their first year. So that is a requirement. We will be going through that. Um, Additionally, as part of the excess workers comp program, we're required to hire a third party administrator to administer the claims process and adjust claims. Prism has a recommended list of third party administrators that the city is presently evaluating. Typically in the workers' comp, program. Those are administered on a per-claim basis. So, you know, we're relying on PRISM in terms of Um, getting the professional assistance and the institutional capacity to you know, adequately run that program and Additionally, city staff have reached out to PRISM in terms of hiring consultants or an interim risk manager while the city is trying to recruit a full-time risk manager. So we're leveraging the resources that we would get as a new member of PRISM to try and improve our risk management practices. We're gonna follow, you know, I assume we're going to follow all of the recommended practices that PRISM is going to give us unless we find a way to do it better or more innovatively ourselves. But we're going to start with what you know, evaluating what they recommend and seeing if that's the best fit for the city. Um, So again, we're starting as a new member We're looking at the resources that are available as part of the largest pool in California, and we're going to leverage them as best as possible. So already we're conducting interviews for TPAs this week. We've reached out to all of the TPAs that are on Prism's recommended list. Additionally, these DPAs sometimes specialize in placing in-house risk manager candidates inside of public agencies. So we're seeing those as potential options and evaluating them. Um, and then I think in terms of addressing the claims history and the loss run. Again, once the city has a risk manager in place or outside consultant or in or in person, you know, we're going to start tackling, I'm not sure. reviewing doing a comprehensive review of department policies and practices to see that doing the most that we can to lower risk, I think additionally, you know, one of the issues that the city is being very proactive on is funding infrastructure improvement. And I think Again, we're going to need to be looking at prioritizing our infrastructure projects based on the likelihood of claims, you know, focusing on areas where there's high utilization by the public, ensuring that those areas are addressed first in terms of public improvements, accessibility, and, you know, any sort of... dangerous conditions or deficiencies. So those are all practices that I think are going to be Thank you. put into place or already being worked on. |
| 02:34:40.39 | Chris Zapata | I can add to that, Mayor and Council, if I can. Besides the risk manager and working on infrastructure, you know, the Miller Pacific study that talked about what we do with hillsides and land use regulations, it would help mitigate those types of issues. That's one, making sure that we move at speed for work toward consolidating the sewer enterprise. and then obviously when we talk about infrastructure funding, trying to find more funding for infrastructure beyond what we currently have in the capital improvement program. So those are the ones that we presented to the underwriting committee. You know, they're a roadmap. There's obviously more we'll get when we get a professional person looking under the hood of our city. And then we can get bigger and better in terms of our approach and our plan, and we'll have to prove that and show that to PRISM at six months. So we're already taking and notating and documenting all the things that we have to do and are doing with respect to anything that's PRISM-related so we can report out every month to ourselves and then consolidate that into a six-month report to the PRISM board. |
| 02:35:51.06 | Jill Hoffman | So if I may follow up, Mayor. So, um... Two follow up questions. So one is under the fiscal impact on the staff report. Should this more appropriately include the hiring of the risk manager as a full time position as part of the fiscal impact on this measure? Is that appropriate? |
| 02:36:11.17 | Jill Hoffman | Vice Mayor, you're shaking your head now. Yeah, I mean, I don't know. This is a question. Chad, how should we be? |
| 02:36:16.20 | Steven Woodside | Thank you. |
| 02:36:16.83 | Sandra Bushmaker | THE FAMILY. |
| 02:36:16.90 | Steven Woodside | I think we're a risk manager not just to please PRISM, but to actually, it's a holistic effort to address various things across the city that will result, hopefully, in lower premiums. But I don't believe it's solely related to our membership program. |
| 02:36:16.96 | Sandra Bushmaker | Yeah, so I think we're... Thank you. |
| 02:36:33.15 | Jill Hoffman | Thank you. |
| 02:36:33.16 | Steven Woodside | Sure. Although required by. |
| 02:36:34.97 | Jill Hoffman | So I totally have no... I totally get that. I think what I'm trying to understand is from a budgeting perspective is, Is it all hands on deck? to meet what PRISM may be looking for, in which case should we be considering authorizing Kathy to go to a higher amount, Hire the best person post haste so that we have the plan that the city manager manage. So, right. So we're not connecting for me, the dots are not getting connected in terms of we're saying in six months, we want to go back, but I'm not seeing the path to get there unless we do X, Y, or Z. And so I want this council to have a conversation about it. the absolute priorities that must be undertaken. to mitigate our risk. So if that means hire the risk manager, then if nothing else today, we should have a conversation about what Kathy needs to make sure that that happens, because we've been trying. We haven't been able to do it. I don't know why I should think we should be able to do it unless we do something differently. And so that's, I'm trying to figure out how do we plan for this. I don't know if this is tautological, but I am trying to be linear. |
| 02:37:43.60 | Jill Hoffman | I THINK Yeah, if I could weigh in on that. I think that's... Oh, I'm sorry. |
| 02:37:47.70 | Steven Woodside | I do want to try to move us along. I appreciate that slid into a bit of a comment. That was fine. That was fine. There was a question in there. Do you feel like you understand the question? |
| 02:37:52.44 | Steven Woodside | I'll see you next time. |
| 02:37:52.48 | Jill Hoffman | I'm not sure. |
| 02:37:52.68 | Steven Woodside | I was like, I'm not sure. |
| 02:37:55.23 | Steven Woodside | Thank you. |
| 02:37:55.24 | Steven Woodside | THE END OF |
| 02:37:59.41 | Steven Woodside | Well, isn't it true that we're right now hiring a temporary risk manager, a retired, the city manager said this earlier, a retired. |
| 02:38:07.58 | Steven Woodside | Mm-hmm. |
| 02:38:07.86 | Steven Woodside | Thank you. |
| 02:38:09.47 | Steven Woodside | risk manager who will work for us on a part-time basis to see us through until we're able to recruit and hire the risk manager of our choice. Isn't that true? |
| 02:38:21.03 | Kathy Nikitas | Yes, that is correct. We've gotten a scope of work from him this morning, and we're putting that in place so that we can have that framework. ready for when we do bring in a full-time person You know, we're going to keep trying and we're going to try harder and harder. But. having this person on board in the interim will help us set the framework so that when we do bring someone on full time, they won't be starting starting from scratch and saying, what should I do first? This is going to be helping us tailor, get our program ready for a full-time person. |
| 02:38:57.97 | Chris Zapata | person. And this person came to us through contact with prison. Right. |
| 02:39:03.97 | Steven Woodside | question? |
| 02:39:04.38 | Chris Zapata | Thank you. |
| 02:39:04.48 | Steven Woodside | Thank you. Thank you. |
| 02:39:05.78 | Steven Woodside | and it's not. |
| 02:39:05.86 | Steven Woodside | Vice Mayor. |
| 02:39:05.88 | Steven Woodside | Thank you. In terms of the work plan, isn't it true that the real essence of the work plan is your email to PRISM? That is our work plan, and we are expanding upon that with advice from our temporary risk manager. There are other things we're doing that aren't even in that work plan, like requiring event participants to provide certificates of insurance for all of our various events, maintaining insurance, historical insurance. We didn't allow them to buy us out. And then I asked Council Member Kelman earlier this evening for the identity of the excess risk programs. So we're considering parametric. So I believe we already have a work plan well underway. But I do agree with Councilmember Kelman about the importance of reporting back to us on progress. And making sure we fund it. Yeah. |
| 02:39:58.70 | Steven Woodside | Thank you. Any other questions? All right, let's do public comment, Mr. City Clerk. |
| 02:40:04.98 | Walfred Solorzano | Bye-bye. Would you like to... |
| 02:40:06.19 | Steven Woodside | Any comments from the audience? Thank you. |
| 02:40:09.57 | Walfred Solorzano | Amen. |
| 02:40:09.92 | Steven Woodside | any online. |
| 02:40:11.52 | Walfred Solorzano | Seen, uh, Seaman? |
| 02:40:13.13 | Steven Woodside | All right, we'll close by the comment. When you make a motion? |
| 02:40:16.50 | Steven Woodside | Yes, I move. We adopt the resolution of the City Council of the City of Sausalito to join the Public Risk Innovation Solutions and Management, PRISM. I authorize the city manager to approve all program documents related to GL one excess workers comp and property programs and clarify that we are indeed joining the prism workers comp plan, not the state fund. Not state compensation insurance fund and then separately, I would like to give direction that the city manager continue to and staff continue to explore. parametric and continue to implement the list of ongoing, the work plan that was already provided by the city manager to PRISM and that persuaded them to hire us. |
| 02:41:05.93 | Steven Woodside | Is there a second? Second. All right. Madison Maiden second. Have any discussion? Yes, please. Councilmember Cullen. |
| 02:41:07.08 | Steven Woodside | again. Thank you. |
| 02:41:09.86 | Jill Hoffman | especially. |
| 02:41:10.15 | Steven Woodside | Thank you. |
| 02:41:11.23 | Jill Hoffman | I would like to add the additional direction that we get some type of budget estimates associated with the work plan so that when we hit the mid-year budget, we know what it is we should be thinking about and allocating money towards in order to achieve that work plan. So thank you, Vice Mayor, for sharing with the public and reminding me that that existed. And I just want to make sure that we know what it will cost, and then we can prioritize that in that mid-year budget review. |
| 02:41:41.06 | Steven Woodside | I assume no objection to that direction, Vice Mayor? No. I wholly endorse it. Any other comments? Yes, Council Member Kaufman. |
| 02:41:44.29 | Jill Hoffman | then that's it. |
| 02:41:45.03 | Jill Hoffman | Part of the- Holy endorse it. |
| 02:41:50.80 | Jill Hoffman | So, Who's Council Member Kaufman? Hoffman. That's what he meant to say, Hoffman. So Council Member Kellman and I are not the same person. And anyway, so, okay, so breathe full circle, right? So here we go. So our total SIR, different categories, right? I understand that. But total is $875,000 annually. |
| 02:41:53.43 | Steven Woodside | That's not a good hard time. |
| 02:41:53.97 | Steven Woodside | And that's... |
| 02:41:54.70 | Chris Zapata | THE END OF THE END OF THE |
| 02:42:02.46 | Chris Zapata | Right. |
| 02:42:17.36 | Jill Hoffman | And so we've got to set aside and this goes back to the reserve. Or how we're going to address this. We have a set aside SIR at about a million, right? So what we're budgeting for, well, what we're addressing right now with the way we've set up our budget is that we have about enough for one claim a year in excess of the SIR per category. And, probably not the litigation costs that would be associated with each one of those high claims, because by definition, if it's a high claim, it's a complex case. So that, you know, that causes me concern at a time when we're at additional risk anyway with our budget with regard to unknowables in how many claims we might have that are not going to be, that are going to be below our that's the other side, that are going to be below the self-insured level, right? So in other words, all the claims below $500,000, what that volume is going to be, what the cost is going to be to address those, to defend those claims. And so you have a reserve to address risk. I mean, that's why you have a reserve. So my concern is that was my point and my concern about the discussion of the reserve and why I think it would have been more fruitful for us to have had that discussion after this discussion. And otherwise, I support this, obviously. I don't think we have a choice. Good, you know, great job, great job by the staff. in really you know, a tremendous amount of work. And I understand it was a tremendous amount of work right up until this afternoon about what our costs were going to be. So thanks to everybody who worked on that. |
| 02:44:13.83 | Steven Woodside | Thank you for your comments. So I'll call the question all in favor of the vice mayor's motion. |
| 02:44:18.46 | Jill Hoffman | Thank you. |
| 02:44:18.47 | Steven Woodside | Bye. |
| 02:44:19.30 | Steven Woodside | Okay. All opposed. Motion carries unanimously. The last item on today's business agenda is adopt a resolution authorizing application to the Director of Industrial Relations, State of California for a certificate of consent to self-insured workers' compensation liabilities. Is that a city attorney, city staff? |
| 02:44:39.18 | Sergio Rudin | Yeah, I'll handle this one as well. So this agenda item is being brought to you tonight as part of your decision to join PRISM's Excess Workers Compensation Program. Because it's an excess program, meaning that it only pays after the $350,000 SIR is triggered, the city is self-managing and self-insuring claims that fall underneath that SIR. One of the regulatory requirements is that the city has to actually receive approval from the Director of Industrial Relations in order to have a self-insured program for workers' compensation in California. This authorizes the city to file the application that would be necessary to provide a service Uh, undertake that program. So with that, I'll take any questions. |
| 02:45:30.95 | Steven Woodside | Any questions for our city attorney? All right, no questions. Can we take public comment, Mr. City Clerk? There was one comment from the audience. |
| 02:45:40.28 | Walfred Solorzano | You have a Bette McDougall. |
| 02:45:48.64 | Babette McDougall | Thank you, and I'm glad that the city attorney is standing by. Once again, the devil is in the details. And once again... We are living in the here and now, where we are transitioning along the calendar year. And we have all manner of risk exposure now. The reason why we are looking at this workers' comp situation now is because somehow our city took the eye off the risk management ball. And the amount of litigation now facing us has become so unbearable that we got dropped. from an insurance pool that we helped start. That's pretty bad. So, I mean, this cannot be a more moment of inflection than where we sit now and the future of this community and its well-being. So I'd like to urge you to just think carefully. Of course, we have to cooperate. We have to do what is necessary. I'd like to commend the city manager and his team for trying to pull together how to keep a ship from sinking. Because in a sense, that's what would be happening to us. And I'd like to, again, applaud each council person. And I hate to keep pointing to Ms. Hoffman, but let's face it, you really have to think seriously about the exposure financial exposure to the citizens and to the city. If everything goes sideways, And we already have a significant amount of litigation costs facing us. These issues have to be very carefully thought about. And I don't see any choice except to go with the recommended actions. that the manager and his team have put before us. in the short term, but in the long term, I think we need to get serious about the risk issue. Thank you. |
| 02:47:43.32 | Steven Woodside | Is there any other online city? clerk comments see you none all right we'll close city comments uh city we'll close by with comments is there any are there any uh comments here discussion on the dice |
| 02:47:54.71 | Steven Woodside | Mayor, I'll make a motion that we adopt a resolution authorizing application to the Director of Industrial Relations, State of California, for a certificate of consent to self-insure workers' compensation liabilities in conjunction with the motion that we just made to join PRISM under those circumstances. Thank you. |
| 02:48:15.79 | Steven Woodside | Is there a second? |
| 02:48:16.82 | Jill Hoffman | I'll suck him. But I will also note by way of conversation that there was at least one, and I support this suggestion, that do schedule another meeting to talk strategically around the risk management spend and strategies for that. I think, Council Member Hoffman, it was you that brought that up, and I support that. So if my colleagues are interested or available, I'm happy to participate. |
| 02:48:41.40 | Steven Woodside | Thank you. Motions made seconded. Any other discussion? All right, we'll call the question. All in favor, say aye. |
| 02:48:48.73 | Unknown | Bye. |
| 02:48:49.25 | Steven Woodside | Thank you. Opposed? Motion carries unanimously. The next action is adjournment. And our next regular meeting will be held on July the 16th at approximately 7 p.m. But before then, we'll have Fourth of July. So I wish everyone a very happy Fourth of July celebrating our parade and our town and our country, for which we are immensely grateful. Good night. Be well. And see you on the Fourth. |
Ray Withey — In Favor: Supported moving to a 25% reserve, noting the city is likely the most financially endowed in Marin relative to its general fund. Explained that a reserve policy defines the amount requiring special council action to spend, and the city would still have a significant cushion ($5.5M) above that reserve to use for infrastructure or other needs by resolution. ▶ 📄