Finance Management Subcommittee, Pittsburg (Contracosta County): October 20, 2023

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And since we do have Ralph here, you can definitely provide his expertise. So I have, I think, stored long enough and I will hand it over to Ralph. Thank you very much. So here is just to start there a mechanism utilized to fund infrastructure and apply a tax to the property that stays with the property and pays for the cost of infrastructure while we go ahead and apply it. Thank you. So just big picture. I'm going to try and go through this relatively quickly in the questions you have, but the Rules Act, as I see it, is our authorizing. The act was put in place after 1213 in 1982 to allow for the funding of the infrastructure. It allows you to fund these a larger fund infrastructure development. You can issue tax them for taxable municipal bonds based on the tax. And that's really what's done. This market in order to move forward through different paths. One is that it's pushed by the public agency themselves. The other is what is really technical, which is the developer comes to the public to see a request that you put in place on their behalf to fund infrastructure. You can plan both infrastructure as well as services, which the city does in order to move forward. Most districts are done before there are city citizen voters living on the property. So here we make reference to the two thirds vote that there are cities or districts that are done with resources that live there. Typically, that's not the case. And I'm going to focus on what is typical, which is that the land is undeveloped. You have one property owner better one voting, and they make the vote on behalf of that problem. Go ahead with your next slide. So I'm not going to drag you through all of this. I want to talk about a big picture. You know, in terms of performance here. You have to have goals and policies. The city, Pittsburgh has one with your average CFD feedback before. And what that says is, okay, this these are the rules we're going to apply. One of those being tax rate. We're going to have a maximum tax rate. We don't want them to go above a certain number. Typically, that number is about 1.8. Northern California and Southern California, they tend to go up to 2% volatility. So when you issue bonds, you're going to want a certain value of the property persevering against that property. And that's part of the goals and policies. And what you can find is also in discussing those goals and policies, you've already got to adopt the goals and policies in terms of know forming a district. Following this requires two legislative acts a resolution, intention or resolution formation. They have to be more than 30 days apart. So these are the two different housing units. And, you know, there's a lot of things that go into that. But what happens typically when you have a piece, the developer comes to the city to request that you consider it, and they talk about specifically what they want to do in terms of what they want to find and tax rate and what the project is. And, you know, you would be intimately involved with the project, you know what's going on in the city, What happens when the city decides to go forward? A special tax consultant is brought in. I think Bill been consulting typically then they work on the boundary map. They work on a method of apportionment rate, method of apportionment space, a complete work problem that describes how the tax forms and excise tax is based on size of units. I'm not out of line like that. That's a rule. It's got to be by size of units. The rate method portion is probably a 15 page document and just kind of tell us how the tax works. You would take that for resolution intention at a city council meeting to start the process. Following that, you'd have the next meeting would be no more than 30 days later resolution formation. At that meeting, you would have the vote, the popular votes, native forest ballots and inform the district. And then what happens is you have a second reading the next meeting and it goes into place. So it's pretty straightforward, which is a lot of things are read out here. But I necessarily think we need to go through each of these. Let's go ahead and go to the next slide is they try something that announces like, oh, I did. Oh, you just saw it. I'm so sorry here, sort of referencing the second legislative hearing. As you get a public hearing and the notice of issuing bonds should you had a maximum bonding amount, that's that's the tax the district and then, of course, the elections. So it's a pretty straightforward process. It's done by many cities throughout the state there. Again, it's authorized by state. So we made reference to our May, which is the rate method. The question is what our Standards board we lay out of here just kind of what's included in that, how the special tax works in typically developed special tax there's before that is final map of special tax and sort of when you move to development the tax may differ including this also are those prepayment provisions whether the tax rate goes over time which stays the same, which they can do either. And it's sort of how the tax is collected. So typically a special tax is collected first on the ballot property and then on the rest of the properties. It also lays out how long to tax the next tax, and that's the next slide. So what put into place super fast, A lot of you know, under the CFP law, the law demands some curbs, supply control parts, open space pretty much. And you can also do libraries and more general benefit projects, which you can get from from assessment. Just talk about assessment restrictions in a moment. You can find these are school fees county you've got fees that a special district fees really really flexible to like next slide to only go through assessment districts and just quickly because next slide please. So assessment districts are much older tool they were actually put in place in 1913 of the 1915 13 Act that allows the formation of assessing District 15 Act, that allows for issuing debt to fund those projects, very similar to a CFD, but limited in terms of what you can do. The big difference is you have to have a and engineer's report that assigns actual benefit for the property, and every property has an actual dollar amount assigned to it. So if you're a house, you know, this is what my assessment is, you can prepay that assessment at any time. And typically when you form that condition, you have the right to write a check within the first 30 days to pay that off. The challenge to the assessments is publicly challenged, and that's what one for all. But they're not as flexible in terms of what you can do. We're assuming it's a special tax. This is an actual assessment. It's saying a dollar amount. Again, as I said, you know, fixed dollar obligation, as stated here, something but nonetheless, that's slightly so most of the process here really similar to what you do with the CFP. The difference is you have an eight year report as opposed to a rate document that's prepared by next year. The rest of this is kind of similar ballots. You probably don't have the vote on it. And I we'll go through each the steps that so there is item five is the ability to make a cash payment versus the assessment over time. One thing I point out with assessing districts is your board, the district, you have an obligation is your property charter with your taxes and issue bonds because the tax rate is that's because the interest rate is not set versus AML rules. You set the actual tax rate when you issue bonds for whatever terminal support, next location. So, you know, just a little bit more information on assessment is generally what's included an engineer report and it's it's I guess I you say it's more specific and less general. I see. If you just has more flexibility. Just, you know, that's really next. Like, so what you find most are things you can do. First of all, you've got the infrastructure. You can't, you it has to have a specific benefit to the property. So you can't find things like schools or libraries. You can't fund things. What water, the water things, those sorts of things. Again, very similar to see if you're just not as flexible. It looks like let's maybe I'll jump in here to give some context. So as we go through this comparison, the next few slides here, an assessment district that's in the city is Century Plaza. When the automobiles bill the engineer's report they laid out. All right, we're going to have the roads, the infrastructure and the way to pay for it is we're going to form an assessment. District council had to approve it. And that assessment is ongoing as part of the project. And then a CFD pick one of the blue dot stuff on, you know, what do they want? Homes will light homes as a CFD. So I guess I'm trying to give you two different areas at least are fresh in your mind and as you see this comparison on actually slides slide, it's sort of like, okay, I get it, you know, and when opportunities or developers come to us and say staff and then ultimately city council, we'd like to see a copy. But I'm hoping, you know, you'll have in the back of your mind one that's interesting, but why not in the assessment district or why not? And we if we can really probe the developer to say, you know, if you're can accomplish all roads or whatever, what's better for potentially the residents or the businesses? And I want to make sure that the finance company has a comfort level whenever these proposals come so you can go, okay, that's like the Century Plaza, and that's what we did or, you know, Alps Ranch. And they want to see B, just hopefully give some background because I'm sure as we have more of these developments come along, you all are going to be asked to consider that the alternative if we didn't have I got in your presentation that's I have the alternative. If we didn't have this ability, you know, a century ago would be the developer would have to put it all in capital upfront and then pass it on to the business or the residents. And sometimes that would could potentially kill a development because the developer doesn't have that much capital to do that and build a thousand homes or so. You know, another could be, you know, as you know, the Bay Walk Project is trying to figure out traffic. You know, where do you put 2000 homes and people on the roads? You know, obviously I'm not a traffic engineer and I'm not trying to act like one. But you know where the cars go. You know, Railroad and Bailey are pretty darn awful from our anecdotal evidence. So they need another way to get those cars. How would they finance that back to be potentially something that they would come to the city saying we need we'd like to do either an assessment district or a C and D, So sorry to hijack that, use both and apply it to the city in the past. So the next couple of slides is just comparisons of the two you see there. You know, the dollarization I have, we spoke to that already 1359 versus 1982. You know, obligation, as I said, a special underwriter to see if it's a special tax or it's actual of this is what your taxes and the size of your home for as a 2%. Typically this has been underground as a this is all part of our assessment and you will pay what that's whatever that's what said is I think I spoke on the board services so services and stuff like that that cities have used for more and more to find for places buyer specifically but other needs because new development doesn't pay for itself. And so that's sort of the trade assessment typically is just for the improvements that you apply an assessment. And then prior to leaving city and assessment districts come before the department or part of the taxes. So they come before that, which is important part of the credit when you're selling bonds to market. So the Police Service Public Safety Committee, we had Andy, that's about what, two and a half million public safety Committee annual. Yeah. So just to give you scale as are all talks about how you know how two new homes pay their way or their fair share. You know the new homes are now contributing two and a half million dollars more to public safety because of this EMT that's in that area. And honestly, it's because new development does pay for itself. It's kind of hard to justify allowing the construction of lots of homes except for housing. But, you know, so so that helps the plug. I can. Next slide, please. So that, you know, these are kind of more specific. They're covered most these things with the boundaries. Again, if you think of the auto model or you know, this very contiguous, very close, our public safety safety is scattered quite around. We've added some of the affordable housing developments, have paid a smaller B or C, and of course, there's been certain areas and it doesn't have to be always contiguous. And, you know, again, the public service simply does not bonded. It's just it's just the tax next line. So courtesy of the fund improvements or impact fees for a variety of agencies, oftentimes we'll have a financing or have a lead agency like the city. And then you have other entities that are fees funded or improvements. If you wanted facilities agreement to do that timing, you know, they're pretty easy to follow in terms of timing, 9220 days, sometimes a little longer. The negotiation upfront with sort of what it's going to look like really kind of drives it. But that's all it takes time when you actually start forming in July, 120 days, you know. Sure, these are allowed to add additional property and without any changes that certain districts can't really challenge. It doesn't have much technology, maximum rate. So that's something that we'll be discussing your goals and policy typically and the goals that it will be, you know, you still lost 2%. You're not supposed to have an all in tax rate, but 2% of your assessed value. So you take into account Geo GATT and all sorts of other property ownership. And then for city bonds you have to have a minimum of 3 to 1 based on the market looks for 4 to 1, by the way, and that's typical assessment doesn't have that limitation. And so, you know, this is sort of a bond process. It's separate from the formation process. When you issue bonds on the different. And then what happens is what when, when the property what makes sense is that typically when we have finished laws for building houses got sufficient value. You have an appraisal put together to produce documents and sell bonds as probably another 4 to 6 month process is laid out here In terms of, you know, kind of different steps, I don't think get you to come through with details that I think the next slide is bold toward. I don't know if you want to. Well, or maybe we can ask other questions as we've gone through this. Anything that is new in that sense. Yes. You had mentioned towards the beginning there are two ways to bring in CFD. One is the city can propose, if it wants a developer to come to the city and propose it does a city in the second option. Does the city have an obligation to move forward with the CFD if a developer proposes it? Not necessarily, but sometimes you hear the term benefit district is what's the difference there. And I think of other districts that make them a benefit district. I mean, that's like an assessment, but sometimes sort of seems to be lingering on for people that come in to later into the district. Somewhat to the assessments. Yeah, I it's it's really more of and it's not used. I mean so if you look at what's used out in the world, probably 95% of all of the is now if you went back 25 years, you'd see a lot more. You see a lot more of our age. Well, I know I do. But is there any part of the city that is another one of these older areas that are the older. Yeah. Yeah. Because these will come about after those houses being constructed. I mean, you can have a property on a road and we do see some cities do that where they, you know, the Citizens Budget Office did have a special tax to pay for certain things in the future. So it's not an easy one to get since San Marco was one that was written into the 1995 to development agreement but wasn't put into place until oh three, I think was real bad somewhere around there. But yes, so in the nineties it really started picking up steam here in the newer subdivisions and even some of the downtown areas that went to meet your goal. And then when the new people came in, in their development, they needed this as a way to finance the Olson project. Marina Walk was an assessment district. Yeah, yeah. In 97 and we refinanced that last year and it was last year with had intention to reduce taxes for the council I think saved on the pay use, if you will, $100 or more a year by doing that, you can see it on their tax bill. Some of us live in all the neighborhoods and sure, there are still I see it now. Yeah. So then an enhanced infrastructure finance district is a subset of a facility that's a big no no. That's the edge that the redevelopment of redevelopment like. Yeah, that's no additional assessment tax. So that is shifting right? Yeah, that's an improvement. That's right. I got it quick. Is there any trend data around kind of the cost burden to the homeowner over time? When you do it, the developer takes the upfront capital cost, translate it or puts it into the sale price of the home versus CFD. Over time, an assessment versus CFD versus not? No, I don't know of any studies. So, you know, the conversations just really lower the price of the house to a certain place and it's something that gets debated, right, because you know, it should be that. And if I'm going to take this additional cost, additional tax, I'm not going to have as much money to pay a mortgage. So I should impact and also should impact the cost of construction and what not to tell her. But I don't know of a study that does that. So I don't care. No, just what you're probably logically going through your brain on that. But they're trying to figure out now. But well, it's not a study. Vice Mayor and Ralph, you may have mentioned this briefly as you're going through your slides, the general, And while this is not a legal requirement, but the standard, the rule of thumb is you do not want these to abuse assessments or whatever to exceed 2% of the sales price of the home. That's that's sort of the well, not necessarily the study that you're looking for, the cost comparison. That is what's been generally kind of developed as the rule of thumb for marketability of homes versus what people can afford, what people are willing to pay. That's what a lot of this can be based on. Those annual increases seem so much. No, and I'm not saying that she was intended to increase the maximum residential property tax burden. It's on page 18 of the slides. Is the standard, not a legal requirement, but the standard is not to exceed 2% of the sale price of a home and oftentimes low wages. You'll say, yeah, in our policies we're going to say 1.8 to 1.9 more below that. And so and so when you structure the tax, you take a you take into account the G.O. bonds are being issued by the school district, all other taxes, the 1% and it's the developers as well as all students. Then they look at the tax rates now. Okay, what capacity would have been under your tax when we were negotiating and we added the fire safety first time, that was a calculus. That was out there with the developer and they were going through like we can handle and it with a $75 thing because they were looking at what would that homeowner the fees be adding on top of the mortgage. So they were evaluating how much they had been in and not impact the sale price too much. And my question has come more from the infrastructure side of the CFD, not necessarily the services side. It's more logical to me. It makes sense that the services, it's an ongoing thing. We want to pay for the services that are provided to new developments. But my perspective is more how do we what's best for long term for the city in terms of the higher home prices. Right. But also for the ultimate homeowner that's going to be paying this on their assessment of their tax bill. What is the lowest cost of options potentially, whether it's an upfront investment into your mortgage at rates, a certain rate, or is it? You know, I think the CFD version, but I guess I just don't have enough information about how the CFD is financed. And you know what fees are structured into the CFD over time. So yeah, it's it's hard to figure that out. I just that part, I think one thing I did I do hear all the time is developers will look at a project and say, okay, this doesn't pencil unless I've got something that, unless I can do a finance as some of this concept. And so a lot of times it for pushing the project forward. So now I had lost I had something, I'm going to respond. I can come, you know in terms of your user or your probably use for new development and you really don't see a lot of that, I might say. You know, it's it's it's kind of the cost of housing because everything is so expensive. The cost to develop that I mean impact fees associated with the new house are 175 to 100 grand which is very expensive. I think that's what almost segueing into what bold can do for development as well. So what do you want to do, Want to run with? I'll give you a break. I've got just a couple of slides, but I'm going to rely a lot on your expertise. Okay. So we've talked about kind of the bond inside, but just a little bit of background. So CMP, the California Municipal Finance Authority is a statewide JPA and the members are the public entities or numerous public entities throughout the state and assume that they have the authority to issue these bonds that we've kind of been discussing here with the goal of supporting economic development. Definitely something the city also sees is a benefit here, not just for residential projects, but also for a lot of these commercial and industrial projects that could be coming down the pipeline, job creation and social programs. It's no secret that the residential development challenges us to provide the necessary infrastructure and the facilities to serve all of these new residents. And all this growth so bold is designed to help municipal agencies and developers finance the infrastructure projects. One of the things that we really like about the whole program is that all of the administration would be handled by CMS at no cost to the city, at least in this instance, is led by as well for bond counsel, because consulting for special tax consulting and Ralph and his team of Piper Sandler for underwriting services. So kind of we were just chatting about this. It's an opportunity to finance infrastructure facilities through the MFA, who issue the bonds bonds are issued and then paid back through a CFD that's part of the property tax bill. Unlike some of the service codes that would be for a limited period, it would have a sunset, it would be a perpetual assessment or CFD that that's place on the tax bill. And then once bond issuance occurs, the city would receive those bond proceeds pursuant to a joint committee Facilities agreement. So as Ruth mentioned, any CFD creation would have to go through the city. This does not allow developers to just go and create these sea of these as these assessments. It would have to go through the city to be approved requires all the normal CFD formation procedures and computation of special tax rates and will be included in the resolutions that form the CFD. And then as we mentioned, you know, the total amount of taxes on developed land generally will not exceed 2% of its market value. And just a couple other quick notes. CFD is formed early in the development process and as Rob mentioned, it's usually when the land is under a single ownership prior to the actual development. So as far as know, the two thirds vote, the developer in this instance would really be choosing to do this. So that's not generally I can't see that being an issue of minimum 4 to 1 value. The debt ratio is going to be the most common non-discretionary approvals required for build out necessary entitlements. What this board means is they have to have all their entitlements before they can enroll in the bulk program and then create these here. These can be pending a vesting, tentative map can be pending a rezoning that they will have had to go through the general entitlement process and then a financing plan. There are similar programs to build. One is called Skip and I can't tell you all time I had one SKIP stands for. But one of the reasons we really like bold compared to some of these others is that CMF shares a portion of the issuance fees or annual fees to bond charities, nonprofits that are designated by the member communities. So the city Council has a specific charity or nonprofit that they would like to support. CMF They actually will share a portion of the annual fees. I believe it's a quarter of a quarter with that nonprofit or charity. So what we're here today to do is to gather feedback. We'd like to bring this to the City council. We were potentially looking at November, but we will bring that resolution when the subcommittee recommends and sees fit for council consideration. And then once the resolution authorizing city participation involved is adopted, or I should say if it is adopted, then developers could begin to submit applications as part of their entitlement proceedings. Again, nothing would be created until all the entitlements are in place, but they could some of those applications as part of the proceedings. So happy to answer any questions and we'll look to. But there's anything to protect and volunteer background on both. So it was basically a tool that allows you to allow facility financing, but you don't have to do the formation process or actually put it on the tax bill or two in the box. And so just to bring my answer and then I guess maybe to and as the city manager was doing earlier, but just to provide a couple potential examples and not that these are applications we received, but projects we know could potentially be coming that a project or a bold application or bold bond could potentially facilitate. You would look at things like road connections, whether that's maybe what's going to Apple to facilitate either a residential or even the commercial that could be out there in the industrial corridor. We know that we've got some water pressure, future issues that could need to be addressed as barge development could come up or will come in that area potentially at the US steel site. So those are the types of things that could potentially utilize bold and we'll need to look at the data, the cost of those projects. But opportunities for those developers to use, build and to work with the city to really provide enhanced infrastructure, not necessarily in enhancing enhanced structure, but enhanced infrastructure to really facilitate development and sort of interest what's being talked about here, the quarter percent, I mean, what does that look like in terms of actual dollars on a give me an example of a $40 million bond insurance calculator. But typically what is I can't say so $40 million, assuming that they charge a fee because we process these or this 1%. So of that being so I'm $40 million, that's 400 grand. That is we'll send $100,000 back to the stadium for administrative costs and then they will allocate another hundred thousand dollars towards a share of charitable use. And if you look at the CFA website, the list of all the charities, you support the local jurisdiction. If you have something you to apply to, you tell them and they do that. Okay, great. My eyes are getting bigger and bigger because of the project I'm working on and there are all these ways to get money out of people's to do business with the city. But it's easier when they know it's like that then of having to go one on one and say, you know, you've done this much business and I'm just coming up with a write off. So what in going to actually or you hold a poker tournament first or we ever had when we had to raise the money or that was really the part because the city manager said that may or may be they have a fairly small or small or you could go out and raise them. And we do. So then Jordan, it says here we're requesting so many feedback is there is that feedback turned over to the subcommittee members me broad Yeah, and I don't have an issue with the whole concept. I mean it seems like a to do CFD of baseball incentives. The city gets to designate it's nonprofit. So that to me sounds like a slam dunk. My big issue or questions still are around when the city pursues these and I still don't have enough information to make an informed decision as to and I know that that is a future decision, right? It's a project like project. It's not necessarily like what's in front of us now, but I would like to use this time to or this process to kind of get that information and flesh it out and understand a little bit more. So I don't know if it's possible to at the next subcommittee to have some examples of the remains that issued or been part of the city. And then a little bit of the finances around the codes as they exist today. Right. Is it possible to get the balances of any bond issuance that are still within the state, within the city? For some of the CDs, some of the newer CDs, I thought a little list and I didn't do it. Yes. Should I even get that? I can give tax rates for the existing and corporate staff and give that information. And I think it makes sense just to help us in the decision making process. Whenever we have to do a CFD or we're asked to do the CFD, we're getting kind of knowledgeably understand what it is that we're putting on the future, because there's a lot of small details and I'm sure a fine print that we probably don't dive into it each each time. But I think if we can understand it now to be the person I think it would be considered in the future should matter. If you're shopping at Sprouts and so many options. And why do I have all of these things on? Right. I'm like, any other questions on gold? So obviously we have a follow up here. Yeah, I know we have a hard stop for one or both of you. I'm not sure, Mr. Vice Mayor, how you are that small compared to Madam Chair? You have a part stop now or I need. Well, we can continue this with the vice mayor. That is the luncheon and going through the other items. But certainly we will give you an update. Thank you. And with that being said, item number three, the 2324 by did summary for September as well as the 20 to 23 year end review with regards to 2324, well then the revenues for the first three months of no come in yet, they'll be in by next month. We wanted to focus on the 2223 year end. And with that Andy Wang, the city's new finance assistant finance veteran here present. Now he has a which allowed you to go macro and micro as you like. You really have the ability to narrow down the background or or. Good morning. I'm one and in front of you there is going to be a copy of my spreadsheet. It's actually this is summarizing our fiscal year 2223 General 11110. There are various different columns here, but for today's focus, we're going to be looking at column C, which demonstrates our estimated in the fund for fiscal year 2223, focusing on the bottom line as you can see on the on the very the second well that says $6.5 million that essentially is our projected estimated ending fund operating income balance for the current year. It is currently at best deficit rather than keep in mind this amount does include various different projects and two of the primary cost factor that's causing a deficit are was the storm drain project, which came out to be $4.6 million and the courtyard at $1.4 million. If we to on the eight please tell me expand and we give you that I'm going to give you that. Sure We refer this out to correct. So we use the two projects that I was referring to the EOC storm impact the $4.6 million and before, you know, at 1.4, if we were to exclude all the current projects, then it's actually looking at the line assets, net operating surplus slash deficit of most projects or loans are ending. Fund balance came out pretty healthy and it was at $4 million. The change defined balance. So that would be the change the fund is actually measure depending on working our way back up into the operating general fund expenditures. We have the broken down into three major categories, Line 17 here shows a $47.1 million consist of our departmental expenditures line 39 and 42 is the non-departmental expenditures such as interest rate out and then the non departmental allocations charges. And so that came out to be a total of $6.4 million. And the last component of the expenditure will be measure and specifically and that was at $4.9 and this is excluding the economic development portion of 450,000. And then at the very top we have our projected estimated revenue came out to a total of $62.893 million. And that did the calculation we did was using all of this all of the. Can you please on the escape? Well, thank you. Thank you all for all three components of this expenditure is adding up to be about $58.8 million subtracting for the current year revenue of 62.8, arriving at $4 million, now adding an additional project that's how we did this as a $6.5 million deficit. So overall, the operating price is a surplus. So the departmental revenue, the revenues coming in less, the departmental ongoing expenditures, plus there are some non-departmental and and other expenditures. There is a surplus of $4 million when you start and you then add in the 4.6 million, the emergency spending that we had to do because of this storm we spend, if you recall, the general fund surplus project was that we created the council rate in 2021. It was approximately 1.3 million going out of memory area. We also had some measure M surplus monies that the council's identified. That was another 1.5 million roughly, or 1.71.7, 1.7. So when you take those down from the formula and that's where you get the best. And so again, from an operating standpoint, we have a surplus if we needed because of a shortfall or concern on cash flow in terms they get off on on many of the projects that still are to be planned do have a surplus. They wouldn't be raising any cash shortfall. We're looking at staffing or other normal operational issues where the when you look at the fund balance percentage, I think we went from what, 70% in 21, somewhere around there, I think it's about 59% going up in 22 maybe, and maybe it's dropped down to about 52 somewhat 49% in 23. Again, here, overall fund balance percentage is still very robust considering the budget stabilization aircraft. So because those sustainability audits are occurring. So it's something we expected some spend down because of the project works. But I'm keeping a very close eye on this. But there any questions or any drill downs that the subcommittee members would like to see? So in terms of fund balance within our expenditure, that was or even 40% of the thing and we do not anticipate continuing to draw down but a balance into the future. There will be some as part of the general fund surplus, the 4.6 will come back from FEMA and that'll push that back up. So that's the one kind of branch that we're not interested otherwise. It was a nice progression that we can easily return. Okay. And as the city manager mentioned, these funds for projects in particular, they haven't been spent. They've been transferred into project accounts. If the council wants to pivot, we're certainly able to do that and in fact it's appropriate that next item agenda that Sara Belafonte is going to provide, update us on our general fund surplus and major surplus if there's no other questions. Our board sorry, just one more, but this is a new format for monthly summaries, but it can be what what you would like to know and I appreciate it. Very simple for me to follow. My only feedback is if we could add the fund balance percentage. And one one other change we made is I think we're using audited fund balance and that's are we using worthy capital reserves or using with bond funds? B the 35.39 Or does the audit fund I don't want to get too much. I know that we probably know we haven't right now. I'm trying to yeah, we don't have that in there, but we are the real cash, so it has more. Thank you, Sara. Item number two more. I want to make sure in my question. Yeah, I mean, at some point I want to understand or address the issue of like the property is not being preserved. I didn't want your to hopefully I'm not misspeaking. We're going to bring to you an updated 20 year forecast. And that's all in included in that. Yeah, and we do have we do have that on standby. Okay. We'll deal with that later. I think we start great again With that, we'll move on to the special revenues updates. Let's go to the next slide. I want to run back on your comments. Last subcommittee meeting. I'm not crazy. The your question less in committee meeting was why domestic violence prevention was listed at an expense for measure. And I was I mean, I drew a complete blank, but I knew that I created these slides with the help of my resources, which as soon as they went out to my desk, I took a look at the description of Measure M in the budget book, as well as the city attorney was able to confirm with me that her impartial analysis accompanying that that the ballot measure. So going all the way back to to give them closure was that the city may use the funds for a variety of purposes, including public safety, gang and domestic violence prevention, job creation programs, president, senior center operations, road repairs and operation of this program. We had just boiled that down to make it super easy to say youth, seniors, public safety stories of economic development. So it fell under the public good. Yeah, exactly. It was good that because I hope to this point we're going to have to call that our I've always repeated these bullets here. So it's kind of interesting that is that was brought forward as probably food for thought as to how we're allocating some of these public safety dollars. Responding responded well to be in the spirit of the measure, you know so that's a good reminder. Yeah, absolutely. There's definitely a moment where I was like, I feel crazy. This is crazy. And we're not going to get them sort of out of the next slide and we will. This is going to be a pretty quick update as it has been the last couple of months. But so no changes on revenue, earmarks or allocated. We have spent about 200,000 is more like 150,000 more since our last update last month. So now expenditures of ARPA funds are at 903 and all of what's left to spend for what's been allocated is the remaining of the 750,000 that's been allocated to the 340 to any question. So that's for so the 200,000 that's been spent was for grade 40 Marina or something. Mostly ordinary. Yeah. Next slide, a small update to this slide. You'll notice that the bottom line, the blue line is a little bit flatter. We are expecting a decrease in we received to measure our fund revenue information earlier this week. So the 23 numbers are actuals and they're about 14 and a half thousand less than we anticipated. But it's not really a material change. And the fiscal 24 is 1.3 million. That's about that's the conservative number. That's about 160,000 less than anticipated. So our our measure and as we've been talking about over the last few meetings, are not coming in at the $2 million mark, bigger than what we thought in 21 and 22. But these are closer estimates. Again, the 2024 number being more on the more conservative side. But the 2023 numbers down here being the actual. And what I appreciate what Sara has done with the finance is before we would use sort of projections of what would come in in that how we're going to spend the basic 4.9. I'll say that the accounts are created in August two years ago in order 50 for economic development and 4.5 for youth or 25 for seniors, age 54, roughly 750 for public works and 2.5 as of 2.85 for police. You sort of created a baseline already and there was an additional 200,000, for instance. So the first one was 5.1 million. The contingency or one nine every year is basically what the council said and then come back. We're spending above that that amount. What Sarah and the finance team has done is they've now moved it. So it's partial dollars that we're bringing to here from the prior years. So when we know the measure on top of that or but a nine baseline is actual dollars that can be spent, not well, we think it could be one seven or one three or once it'll be actual dollars that you're committing to. So we don't have any shortage or overage. And to be very specific, back up on slide as well, the expenditures for our but we're not on the 3040 marina that's measure. And our next slide they were on budget road trail the Courtyard hotel we if you study and EV charger installation projects in the heart of Fitchburg beautification that's what we've been spending our ARPA on that's what's reflected in your handout. We saw the most movement on the front of drug trail where there was an increase in spending. There. Now we'll move forward, Measure M surplus in action. So the difference here on the fiscal $22, obviously we have allocated all of fiscal $22 remaining expenditures, 140,000, and those are for the 3040 marina updates. I apologize for the confusion, but that's reflected in your end up as well. The 20 $23 are being spent remaining expenses also and excuse me, expenses increase about 20,000. So the last time we met a month ago and after earmarking, there's an additional earmark for 300,000 or a police camera server. That is an item that will be coming to council, I believe, next month. If we earmark $300,000 and availability of $3,774. You recall that that earmark was discussed last meeting, but the available amount was closer to 18,000. And this difference is because of the 14,000 reduced revenue, actual revenues. Any questions on that? And so let's and then similarly, with our general fund surplus revenues, there have been no changes since last month other than an increase in expenditures. So we continue to make progress on these projects and spend down the allocated amounts. So the general fund surplus projects are the city public. Our city utility boards are part of Pittsburgh and Brad Bash is a partner of design landscaping, which includes sort of the we can't apartment city park restrooms, city entrance features, street led replacements which jobs out here. But the first batch of levy lines just came in so they're going to start putting those in around the city then in the landscape master plan. And then we basically spent about half a million of that 5.50. So you move on to item number five, but I'm also going to be voting on we've got Sarah and Charlie here from MDR In case there are any questions that I can answer, hopefully I'll answer them already when I'll let these choke up. So we can. How do I find it if I had it now? There it is. Not inside there. Well, when I about. Oh, thank you. Thank you, Thank you. Great job. Sorry. Thank you for the question. So in 2021, the staff conducted a comprehensive rate analysis during which city challenged MDR staff to meet four criteria. We're going to start with I'm going to back up. There's two different rates rate requests being requested. Here is the first having to do with residential collection rates, the other having to do with our receipts. The two biggest. So we'll start with the residential collection rates, which do not require necessarily council input, but wanted to bring you up to speed on how we've been doing over the last three years of this five year rate increase. So is 2021 and we are conducting a comprehensive rate study during which staff challenged the artist's Artemis or criteria, keep the rate increase options at single digit, preserve affordability of low income senior rates, maintain a small barriers between our costs and produce a long term strategy for ensuring public safety and reducing cart contamination. In Pittsburgh, a reminder contamination occurs when the wrong kind of waste wasn't wrong. Bin doses don't go in the recycle bin positive donor cycle unless your health is as recyclable. If with those challenges in mind, MDR developed two options for base rate increases and we'll go to the next slide and achieved all four of the challenges. So in 22, you'll remember that the council took three actions first, to adopt a base rate increase phased in over five years. This is to pay for the increased costs due to SB 1383 organics diversion. This included CART compliance, outreach and education monitoring and inspection organics facility improvements and processing. They also, the Council also authorized retirement of the 32 gallon cart over five years. This was to discourage cart contamination to ensure that everyone had ample room in their black card or black card waste. And the third thing they did was cancel did was uphold the CPI, annual CPI increase for the franchise agreement. So in August of this year, as customarily expected, we received a rate increase request from MDR that has identified a 6% CPI increase. So it doesn't request anything other than what City Council has already approved. The five year annual increase plus CPI at 6% is really the reason we're bringing onto this change. The next slide is to just kind of give you a heads up on where we are with over the five year increase. So on the left side is the table that we brought to you in 2022. This is a very informative slide. I'll break it down for you by back to you in 2022. On the right side is the exact same, but with actual numbers. So everything highlighted in yellow is an assumption at that time their CPI was unknown. What I really want to point out is that the orange line 6% rate increase across the board, except for a 9.41% increase for the 32 gallon cars. This is to achieve the goal of phasing the 32 gallon cart out. It needs to meet the price of the 64 gallon curve. So it was assumed back in 2022 that the growth rate of the price of the 32 gallon cart would be 3.41% higher than that of the 64 gallon cart. So if you add 3.41% to 6%, you get 9.41%. Does that boil down this amazing slide? Only some 4% are trying to get rid of this or go for. And there are certain exceptions where certain seniors, if they can't handle the weight of a third of the economy being larger, they can keep it. But a lot of families of four, five, six were taking the cheapest garbage can, which was the 32. And then they were just throwing the recycle and whatever garbage one would say. It's a well-known trend that's been noticed that when you change the price of cards, you can change people's tendencies. So it was actually intentionally 32 gallon cards were made cheap, intentionally in many jurisdictions when recycling became a big deal. And we gave you the biggest recycling card so that you could recycle as much as possible. We wanted to encourage people to recycle, and while that worked a bit, recycling rules have changed. What's recyclable and all that kind of stuff has changed. And so sorry, sorry. So we're kind of applying the same theory to get people to use their cards correctly next time. And then you came up with this little green thing. Yes. I don't have to spend. Yeah, we can get you. No, I have common garbage there. Are you going to give that to those people? That'll be a hold. That that's one of the reasons for the rate increase. Yes. And the fun that the people behind you. Can I again. And construction is we've heard and to learn all this. So you'll get to learn it actually. Why don't we have the groundbreaking ceremony? Why don't we have a groundbreaking survey? We did one in Boulder Sunday morning at eight. And believe it or not, we have a contractor on the ground. So good morning as well. So this slide just shows that the converging rates, it's working. They're converging over time of the 64 going on 32 gallons below. What I'll show you actually is the next slide. So the convergence of prices is actually making a difference in the rate at which people are signing up for a 64 gallon cart. So the way we roll this out was kind of a hybrid. People that had 32 gallon cards already, we are taking the five years to remove the 32 gallon carts off the street from existing customers. But we're also not allowing New Start's new customers to get a 32 gallon cart. So you'll see that in August of 20, September of 23, the the 32 gallons, the people who had 32 gallon carts has officially crossed over with those that have 64 gallon cars. So the change that we're hoping to happen is, is making and I confirmed with my staff that that we're achieving this convergence not only by the swaps that our staff is carrying out, you know, taking the 32 off the cart off the street incrementally. But also, residents are calling in, noticing that price difference, calling in and swapping out their carts. So we're achieving the goal the council set. Any questions on commercial excuse me, on residential rates. I'll actually have one more slide on residential rates. So even with the increase and especially the increase in 32 gallon cart, which is notably higher than other locations, we are still under the average monthly residential cost or collection service. And we're right in the middle eighth lowest or ninth highest out of 17 total. So I just wanted to keep that in mind. And like I said, the only reason we're bringing this up is because a 6% CPI is pretty darn high. It's allowed in the cities franchise agreement to have an annual CPI increase and there's no cap that on this end where that goes beyond city manager approval. I just wanted to bring these numbers to some questions. People can go to the next slide for the recycling center and transfer station rates. So beginning in 22, the council made three actions as well. They approved an increase of $16.16 and $0.25 for the costs associated with infrastructure, equipment and processing to be spread over three years at $5.42 a ton. This is the last year of that three year increase that we'll be seeing. The council approved a new authorized mixed rate that brought the authorized fixed rate up to $120 per ton beginning January 2022. And they authorize the city manager to approve annual CPI adjustments, but put a 4% cap on the city manager's ability to approve CPI adjustments. So this current request for our CTS rates is a five, six, 9% CPI adjustment. So this is something that would need to go to council for approval. This CPI adjustment would adjust the tipping fee to $142.52 per ton from the current rate at $129.75 for just like I said, even with that increase, that's the third year of the $5.42 plus the 5.9%. We are still right in the middle of Bay Area average. Our CTS rates, we are the ten total. There are ten total. This put us at the six lowest or the fifth highest ever. You want to see it? Five The so the it's a the franchise agreement doesn't necessarily have a concrete end date. We are working on amending or restating the entire thing. It's been through seven amendments since its inception. So actually I just had staff type of all seven amendments in a way that made sense. It's 28 pages long. We will be working with MDR to restate and make sure that we're in compliance with 33 in the upcoming report as well. It's basically a 15 year term that renews every year. We would have to terminate it and there'd be a mechanism for that. So yeah, your feedback is welcome. Again, we're the only item here that's technically required to go to council is the 5.69% on the six item. And then what's behind the 5.6 times increase? It's the hour, it's the August to August increase. The reason why is 6% is on the residential side is it's calculated October to October and it's 5.96. I'm on the other perspective is August August and that's we've customarily done it. But the exactly one thing we want to address in our franchise agreement restate is uniform making that uniform so that we don't two different CPI requests in the same year or numbers for one of the questions in 30. And then the last item I will be chatting about briefly is on your memo, the same memo as the our item as item number six. And given the delays that were experienced in the gold adoption this year, I wanted to come to the subcommittee sooner than later to propose our calendar and process for approving 2020 fiscal year 2025 goals. So I won't read this entire table, but I can make some highlights. We would like to have a special meeting on January 19th to clarify goals, redefine and redefine priority areas. I know that we've had some councilmembers interested in looking at the priority areas, and then on Saturday, January 20th, we wanted to have a facilitated goals workshop with both council and staff. This would preempt any recommendations by city council, by staff to four goals. So what happened last year was we we recommended and brought goals forward before, having clear direction on priority areas and council input. So we want to make sure that council has an opportunity on January 20th to ask follow up questions on redefining any priority areas, honing in on defining any new areas, and then provide basis for staff to develop their 2025 goals. Then between January and February, essentially each division and department would need to go to their their respective subcommittee with their suggested goals and provide an update from subcommittees. Then in February, late February, we'd have a staff workshop with City council as well to receive not only additional feedback from council members on the proposed goals that were brought to each subcommittee, but an update to fiscal year 24 goals and then hopefully adopt goals by March 18. In the meantime, Jennifer and her staff will be working with the Government Performance Ad Hoc Subcommittee on the Public Facing Achievements site to better understand goals and redesign priority areas as well. I know this is great is is going to be shared or recommended shared with councilmembers. So we're all like, yeah, we wanted to bring it to the subcommittee first to make sure that there were no comments or changes or suggestions before we shared it. Council works in the Saturday one agenda with a facilitator with that it may or may not be with Patrick, but it will be facilitated. So Unser has been very good at training staff to live by these dates and Meghan's been the leader of Achieve It. Yes. Okay. So seeing no other questions, Madam Treasurer, did you have any questions or comments? So the item seven, are there any subcommittee or staff reports, remarks from members, seeing them before before we adjourn? I just want to get some clarification going forward on the next week. We have presented the finance and Budget report with an emphasis on the general fund. What I'm understanding is you really like this one act as to presenting in the best case. Well, great. Thank you. And that we are adjourned. But.

Agenda textFinance Management Subcommittee

65 Civic Avenue Pittsburg, CA 94565 P: (925) 252-6900 F: (925) 252-4814 pittsburgca.gov AGENDA FINANCE MANAGEMENT SUBCOMMITTEE Friday, October 20, 2023 10:45 AM Pacific Time (US and Canada) Pittsburg City Hall First Floor Conference Room, 4B 65 Civic Avenue Pittsburg, CA 94565 Subcommittee Members Shanelle Scales-Preston, Mayor Juan Banales, Vice Mayor 1. 2. 3. 4. 5. ARPA, General Fund Surplus, and Measure M Surplus Staff will provide the Subcommittee with an update related to the City of Pittsburg’s ARPA, General Fund and Measure M. Subcommittee feedback requested. Subcommittee and Staff Reports or Remarks Mt. Diablo Resource Recovery Proposed Collection & Recycling Center and Transfer Station Rates Staff will provide the Subcommittee with an update related to the agencies listed. Subcommittee feedback requested. Fiscal Year 2024/2025 Goals Process Staff will provide the Subcommittee with an update related to the Goal Process for FY 24/25. Subcommittee feedback requested. 8. Adjournment 23-24 Budget – September /22-23 Year End Review Staff will provide the Subcommittee with an overview of the 2023-2024 Fiscal Year Budget for the month of September. Staff will also present an unaudited overview of the fiscal 2022-23 year. Subcommittee feedback requested. 6. Bond Opportunities for Land Development (“BOLD”) Program Staff will provide an overview of the BOLD Program. Subcommittee feedback requested. 7. Public Comment on Non-Agenda Items

65 Civic Avenue Pittsburg, CA 94565 P: (925) 252-6900 F: (925) 252-4814 pittsburgca.gov MEMORANDUM To: Finance and Administration Subcommittee From: Jordan Davis, Director of Community and Economic Development Re: Bond Opportunities for Land Development(“BOLD”)Program The City is a member of the California Municipal Finance Authority (“CMFA”), a State- wide joint powers authority (“JPA”) whose members are numerous public entities throughout California. CMFA has the authority to issue bonds to meet its mission of supporting economic development, job creation and social programs throughout the State. Staff has been provided information regarding the Bond Opportunities for Land Development (“BOLD”) Program offered by CMFA that can be used to finance public infrastructure required for new development within the City. The BOLD Program offers a means to finance new or continuing construction of infrastructure and public facilities through bonds CMFA issues as an alternative to issuance of land-secured bonds directly by a public entity. Under the BOLD Program, bonds are issued by a Community Facilities District (“CFD”) formed by CMFA under the Mello-Roos Community Facilities Act of 1982 (California Government Code Section 53311 et seq.) (the “Act”). Although the CFD would be formed within the City’s jurisdiction, the BOLD Program is administered by a team of bond industry professionals with experience in CFDs in the State. CMFA and its consultant team would form and approve each CFD. CMFA will issue bonds on behalf of the CFD and will utilize the services of a special tax consultant and administrator to create the special tax formula and administer, levy, collect the special taxes. However, the City will need to approve the use of a CFD to acquire public facilities and the financing thereof, and enter into an acquisition or similar agreement to receive the bond proceeds, and to meet the general requirements to maintain the tax exemption of interest on the bonds. Formation of the CFD requires the establishment of the annual special tax rates. The formula for computing special tax rates will be included in the resolutions to be adopted as part of the CFD formation proceedings. Typically, the formula will include a basic, undeveloped land tax with an increase in rate and shifting of the tax to developed lands at building permit stage. The total amount of taxes on developed land generally will not exceed 2% of its market value in its completed state, per industry standards. Once bond issuance occurs, the City would receive bond proceeds pursuant to an agreement to be entered into between the City and CMFA to ensure bond proceeds are spent in accordance with the Act and other applicable law. The proceeds are held by a bond trustee and are not directly paid to the developer but are available as directed by

City of Pittsburg pittsburgca.gov Page 2 the developer and approved by the local agency, to be used to meet obligations to the City according to the structure and timing required for development approvals. The City would determine and agree to its role in inspecting and accepting infrastructure and/or payment of financed impact fees. The CFD may be formed early in the development process, with issuance of bonds at a later time or in multiple series. The following are the typical criteria for bond issuance. • Minimum 4:1 value-to-debt ratio overlapping (assessed or appraised); • No discretionary approvals required for build-out of the portion of the CFD directly relating to the bond security; • Entitlements received that are necessary for phase to be bonded; and • Financing plan for backbone infrastructure complete or imminent and/or performance bond in place. In addition, a grant from a portion of the issuance fee is made to the California Foundation for Stronger Communities (“CFSC”) to fund charities designated by the member communities. A portion of the annual fees received by CMFA are in turn directed to charitable activities within California communities, particularly those of members and participating local government agencies (approximately 25% of the CMFA issuance fee).

PIPER SANDLER | 1 City of Pittsburg, CA Overview of Land Secured Financing Structures BOLD Program SAN FRANCISCO | EL SEGUNDO | WALNUT CREEK | SACRAMENTO | NEW YORK | MINNEAPOLIS Ralph Holmes Managing Director Tel: 512-788-5951 Email: ralph.holmes@psc.com Jake Smith Vice President Tel: 720-576-6457 Email: jake.smith@psc.com

PIPER SANDLER | 2 Table of Contents Overview of Community Facilities DistrictsI. Overview of Assessment DistrictsII. Comparison of CFDs and Assessment DistrictsIII.

PIPER SANDLER | 3 I. Overview of Community Facilities Districts (CFDs)

PIPER SANDLER | 4 Community Facilities Districts (CFDs)  Senator Henry Mello and Assemblyman Mike Roos prompted the passing of the Mello-Roos Community Facilities Act of 1982 (the “Mello-Roos Act”).  Legislation was a result of Proposition 13 passed in 1978 that limited the ability of developers and public agencies to finance new development projects and public services.  The Mello-Roos Act authorizes public agencies to create Community Facilities Districts for purposes of levying a special tax to pay for public infrastructure improvements as well as public services.  Under the Mello-Roos Act, public agencies are allowed to issue tax-exempt or taxable bonds that will be repaid from the special tax levied within the boundary of the CFD.  To institute the formation of a CFD a written request must be received by two members of the governing agency or a petition is filed by eligible voters:  Must be approved by 2/3 of qualified voters in the proposed district.  If there are less than 12 registered voters with the proposed district, the election and vote can be passed by the landowners.  Formation usually requires two legislative hearings (I) Resolution of Intention and (II) Resolution of Formation as well as an election. Generally for development projects, the election can be held at the same time as the second hearing for the Resolution of Formation. What are CFDs and how are they formed?

PIPER SANDLER | 5 1  Adopt Local Goals and Policies:  Local agency may initiate process to establish a CFD only after adopting local goals and policies  Outline special tax limits, eligible facilities, bond requirements, reporting requirements 2  Initiation of proceedings can be started by either:  Legislative Body: A written request signed by two members of the legislative body  Petition: A petition signed by not less than 10% of the registered voters residing in the territory to be included in the district or owners of not less than 10% of territory in district  Legislative body must institute proceedings to form CFD within 90 days  Pre-formation costs paid by legislative body or landowners (boundary map, RMA, draft resolutions, counsel) Community Facility Districts (CFDs) Formation Process  Draft Rate and Method of Apportionment (RMA):  First legislative action must specify the rate and method of apportionment, therefore RMA needs to be drafted before first legislative hearing  Prepared by Special Tax Consultant  Outlines tax categories, maximum special tax that can be levied, order of levy and prepayment provisions  Resolutions of Intention to Establish CFD:  CFD Name  Boundary Map  Eligible facilities and fees  Rate and Method of Apportionment (RMA)  Public hearing dates for CFD formation  Election/Voting Procedures  Resolutions of Intention to Incur Bonded Indebtedness:  Maximum amount of bonded debt allowed  Establish hearing to incur debt First Legislative Hearing 2 3 4

PIPER SANDLER | 6  After adoption of Resolution of Intention  Record boundary map  Publish notice of hearing for public hearings, protests and continuation (minimum 7 days prior to hearing)  Resolution of Intention must be transmitted to city or county  CFD Report (outlines facilities/fees, estimated costs)  Joint Community Facilities Agreement (establishes who will own and operate constructed facilities) Community Facility Districts (CFDs) Formation Process Second Legislative Hearing 5 6 7  Election:  Held no earlier than 90 days but not longer than 180 after ROF  Waiting period can be waived by eligible landowners and can be held at same time as ROF  2/3 approval required  If less than 12 registered voters, vote is by landowners based on proportional share of land  Resolution Declaring Results of Election  If approved, adopt Ordinance Levying Special Taxes  Recordation of Notice of Special Tax Lien, not later than 15 days after Resolution Declaring Election Results  Public Hearing  Public testimony and protests against the establishment of the CFD  If 50% of registered voters or 50% of owners protest, proceeding must stop for at least one year  Continuation: 30 days or 6 months with special finding  Resolutions of Necessity to Incur Bonded Indebtedness:  Maximum amount of bonded debt allowed  Resolution Calling Special Election:  Levy of special taxes  Not-to-exceed bonded indebtedness  Appropriation limit  Resolutions of Formation of the CFD:  Form CFD  Establish Boundaries  Approve RMA and Special Tax Levy  Finalize types of facilities, fees and services

PIPER SANDLER | 7  The Special Tax levied within a CFD is determined by the Rate and Method of Apportionment  Special Tax Rate determined by developer or local agency pursuant to level of needed funding and total maximum tax rate  CFD Goals and Policies set forth maximum overall tax rate allowed within boundary of CFD  RMA will outline various items for the levying of the Special Tax including:  Special Tax Categories − Developed Property − Final Map Property − Undeveloped Property  Changes to the Special Tax including prepayment provisions  Growth of Special Tax Rate  Method and order of levying the Special Tax  Manner and collection of Special Tax − Special Taxes are usually collected with ad valorem property taxes and are subject to same penalties and benefits as ad valorem taxes (foreclosure and applicable Teeter Plans).  RMA will outline the length of time that Special Tax can be levied  Special Tax will be levied so long as any bonds are outstanding  Maximum term of the special tax  Special Tax for services will be levied for as long as services to CFD are provided or until eliminated by Voters Summary of Special Taxes and RMA Community Facility Districts (CFDs)

PIPER SANDLER | 8 Eligible improvements are extremely flexible and include:  Streets and Sidewalks  Sewer and Water Treatment Capacity  Water and Sewer Lines  Flood Control  Parks  Open Space  Street Lighting  School Facilities Additionally, CFDs may allow for the financing of fees, including:  City and Fees or County Fees (may require agreement)  School Fees (requires an agreement with the school district)  Special District (requires agreement) CFDs also allow for the ongoing funding of services including fire, police, etc. Community Facilities Districts can fund a variety of public facilities and public services and can also potentially fund impact fees pending approval by local agency Typical Uses of CFD Proceeds Community Facility Districts (CFDs)

PIPER SANDLER | 9 II. Overview of Assessment Districts

PIPER SANDLER | 10 Assessment Districts  Two acts that authorize the establishment of assessment districts and the levy of assessments  Improvement Act of 1911 (Street & Highways Code §5000 et seq.). 1911 Act can also fund maintenance improvements.  Municipal Improvement Act of 1913 (Streets & Highways Code §10000 et seq.).  The Improvement Bond Act of 1915 (Streets & Highways Code §8500 et seq.) is used in conjunction with the aforementioned Acts to issue tax-exempt or taxable bonds to finance public facilities or infrastructure.  Assessment Districts create a fixed dollar obligation against each parcel of land within the District  Assessment levied against each parcel is derived from the value the parcel received from the proposed infrastructure improvements (benefit finding)  Assessment amount is based on the direct benefit each property received from the improvements  To begin formation, a petition is signed by owners of the property within the District  Formation of the District must be approved through ballots under Proposition 218  Formation generally requires three to four legislative sessions with approvals required for the Engineers Report, formation resolutions; public hearings and tabulation of the ballots. What are Assessment Districts and how are they formed?

PIPER SANDLER | 11 1  Prepare Engineer’s Report, Assessment Diagram and Boundary Map  Prepared by the Engineer of Work  Outlines costs of public improvements and financing costs  Determines special benefit each property will receive from improvements  Prepare Boundary Map that shows boundary of district and outlines of property in District 2  First legislative meeting:  Resolution of Intention to Make Acquisitions and Improvements  Resolution Preliminarily Approving Engineer’s Report and Directing Actions With Respect Thereto  Can be approved at same meeting as first resolution  Tentatively approves Engineer’s report and sets date for public hearing and assessment ballot  Directs the recording of the Boundary Map Assessment Districts Formation Process  Prepare and Mail Notice and Ballots; Record Boundary Map  Prepare and mail the Notices of Proposed New Assessment and Assessment Ballots  Each property owner must receive a ballot  Notice shows amount of assessment and how assessments are apportioned  Notices and Ballots must be mailed at least 45 days before the date of the public hearing  Send out notices on workshops to discuss the proposed assessments 2 3 4  Second Legislative meeting:  45 days after date of mailing notices  Public hearing on the proposed assessment  Public allowed to speak on matter of the assessment  Ballots tabulated, llegislative body can confirm ballot results at same meeting  Approval by majority based on dollars assessed  If approved, can adopt Resolution Adopting Engineer’s Report, Confirming Assessment, Ordering the Work and Directing Actions with Respect Thereto (formerly approves assessments on each property)

PIPER SANDLER | 12  Mail and Publish Notices of Assessment Cash Payment  Mail out notices to each property owner confirming the assessment  Notice contains the cash payment option for a minimum of 30 days  Property owner may pay part or all of the confirmed assessment directly to forming agency  If paid off in full, property owner relieved of the obligation to pay over time  Final Legislative Hearing  Takes place at the end of the cash payment period  Adopt Resolution Authorizing the Issuance of Limited Obligation Improvement Bonds  Confirms amount of assessments unpaid after the cash payment period Formation Process 5 6 Assessment Districts

PIPER SANDLER | 13 Summary of Assessments and Engineer’s Report Assessment Districts  The Assessment levied within the boundary of the of the District is determined by the Final Engineer’s Report  Assessment is based on special benefits received by the property from the public improvements, different properties within the District may have different assessments  The Assessment is set at a fixed dollar amount based on benefit received  As time passes, the assessed lien against the property will be paid down  Property owners may prepay the assessment and be relieved of obligation to pay it off over time  Assessments are usually collected with ad valorem property taxes and are subject to same penalties and benefits as ad valorem taxes (foreclosure and applicable Teeter Plans).  The Final Engineer’s Report will typically include:  Plans and specifications of the capital improvements to be constructed  A cost estimate of the public capital improvements  Assessment Roll that shows the amount of the assessment against each parcel of property  Method of Assessment is a statement explaining how the Assessment Engineer determined the amount to assessed against each parcel  Assessment Diagram/ Boundary Map is a diagram showing the property/parcels to be assessed within the boundaries of the District

PIPER SANDLER | 14 Typical Public Capital Improvements Include:  Streets and Sidewalks  Sewer and Water Treatment Capacity  Water and Sewer Lines  Flood Control  Parks  Street Lighting Assessment District may not finance general benefit facilities which include:  Schools  Libraries Assessment District may finance impact fees for public capital improvement projects:  Water Fees  Wastewater Fees Assessment Districts may allow for the funding of services but is generally limited to maintenance of the public infrastructure improvements Assessments are primarily used to finance public capital improvements of local special benefit Eligible Funding for Assessment Districts Assessment Districts

PIPER SANDLER | 15 III. Comparison of CFDs and Assessment Districts

PIPER SANDLER | 16 Comparison CFDs and Assessment Districts Authority/Resolution Assessment District Obligation CFDs Eligible Improvements Services Priority Factor Mello-Roos Community Facilities Act of 1982 Special Tax determined by public hearing and election. Not restricted to benefit. Must be reasonable. Public capital improvements and governmental facilities (schools and libraries). Much broader scope of services including police, fire, ambulance, recreation, library and park. Lien takes priority over all other liens. Municipal Improvement Act of 1913 with bonds issued under Improvement Act of 1915 Fixed dollar amount based on benefit property receives from improvement. Must be specific benefit. Can only fund public capital improvements (no general benefit improvements). Primarily restricted to maintaining the improvements. Lien takes priority over all other liens.

PIPER SANDLER | 17 Comparison CFDs and Assessment Districts Boundaries of District Assessment District Collections CFDs Event of Default Bonds Prepayment of Lien Factor May contain scattered parcels. Boundaries may also be expanded later to annex in more land. Collected at same time as Ad Valorem taxes. Subject to court foreclosure (not tax sale) May issue tax-exempt debt, debt service is usually escalating given 2% growth in Special Tax Only Allowed if included in the RMA Boundaries are fixed when the Assessments are confirmed. Collected at same time as Ad Valorem taxes. Subject to court foreclosure (not tax sale) May issue tax-exempt debt, debt service is usually level given fixed amount of assessment Allowed under California State Statutes. Cash payment option for minimum of 30 days after approval

PIPER SANDLER | 18 Comparison CFDs and Assessment Districts User/Public Entity Assessment District Formation Timing CFDs Change Maximum Residential Property Tax Burden Minimum Value-to-Lien requirement for Bond Sale Factor Any public entity (city, county, special district or joint powers authority and school districts) 90-120 days pending if waiting time for election is waived Special Tax formula and boundaries may be changes with public hearing and election Standard is to not exceed 2% of Sale Price Minimum requirement of 3:1 Value- to-Lien Nearly all public entities (city, county, special district, or joint powers authority but no school districts) 90-120 days pending tabulation of ballots Assessment and boundary are final once established (only under few exceptions can be changed) Standard is to not exceed 2% of Sale Price

PIPER SANDLER | 19 Overview of Bond Sale Process District is formed by local agency  All necessary formation resolutions passed  Notice of Special Tax Lien or Assessment provided to property owners  Approve bond sale directly after formation or at a later legislative meeting Legal documents for bond sale drafted  Collect relevant information (owners, property type, status)  Draft acquisition or JCFA agreements  Consultant reports (appraisals, market)  Draft bond documents (Indenture, resolutions) Review information and structure bonds  Verify all disclosed information is accurate  Prepare offering memorandum outlining credit of district  Determine structure of the bonds (maturity, amortization, call features, continuing disclosure) Engage with investors  Offering Memorandum distributed to investors  1-2 week marketing period engaging in conversations with investors  Site tours if needed  Make structure changes if required by investors Price Bonds and Close  Price bonds 1-2 weeks after release of Offering Memorandum.  Lock in interest for bonds  Finalize legal documents for transaction  Close and fund project account District Formation 1 Legal Document Preparation 2 Underwriting and Due Diligence 3 Marketing 4 Bond Sale and Closing 5 Land Secured Bond Issuance Process

PIPER SANDLER | 20 IV. CMFA Bond Opportunities for Land Development (BOLD) Program

PIPER SANDLER | 21 The BOLD Program  Bond Opportunities for Land Development (BOLD) is a financing program offered by the California Municipal Financing Authority (CMFA) that allows for the financing of public infrastructure and impact fees for development projects under the Marks-Roos Local Bond Pooling Act of 1985.  Any public agency can participate in the BOLD program, which offers low-cost, tax-exempt financing for development projects.  To facilitate the program, Community Facilities Districts (CFDs) will be formed, managed and administered by CMFA, and minimal public agency efforts will be required in the process. The formation of a CFD will not necessitate the issuance of bonds or payment of debt service until a project is ready to issue debt.  A CFD may be formed for a project with bonds issued at a later time when it best meets the project’s development timeline.  Bonds will be issued at multiple times throughout the year and may include more than one CFD, offering the advantage and option of low-cost, pooled financing What is the BOLD Program and why is it being offered?  Local Agency agrees to approve the project’s participation in BOLD  Local Agency does not issue debt or provide ongoing administration and continuing disclosure documents  BOLD team works with applicant and local agencies to determine which facilities and impact fees are eligible to be funded with tax-exempt bond proceeds or, if needed, taxable bonds  Tax-exemption - Fees must be used on eligible capital projects and be expended within 3 years  Developer submits application for their project to participate in BOLD  An Application for the program is available as a PDF document that can be filled out and submitted to CMFA online. Developer provides deposit to CMFA to pay for formation of the CFD Special tax consultant drafts the Rate and Method of Apportionment and prepares CFD boundary map CFDs are established by CMFA and special taxes are billed in CMFA’s name Formation proceedings are conducted by CMFA Public hearing and landowner vote are conducted by CMFA CFDs can be formed in as little as 3 months

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65 Civic Avenue Pittsburg, CA 94565 P: (925) 252-6900 F: (925) 252-4814 pittsburgca.gov MEMORANDUM To: Finance Management Subcommittee From: Paul Rodrigues, Finance Director Re: Agenda Item No. 3 Item No. 3: Budget Review September Staff has been providing the Finance Management Subcommittee with monthly budget reports since the Covid-19 pandemic. The report compares the year to date revenues and expenditures to the annual budget. The Subcommittee has found this report to be helpful in identifying trends and items which require a closer examination to determine if budget adjustments are required. Many revenues and expenditures are received or expended on a consistent monthly basis, while other revenues and expenditures are received on an annual or quarterly basis. Staff will present a brief presentation highlighting many of the City’s funds and departments. Subcommittee feedback is requested.

1 65 Civic Avenue Pittsburg, CA 94565 P: (925) 252-6900 F: (925) 252-4814 pittsburgca.gov MEMORANDUM To: Finance Management Subcommittee From: Sara Bellafronte Re: Agenda Item No. 4 _____________________________________________________________ Item No. 4: ARPA / General Fund Surplus / Measure M Surplus Update The following are tables giving additional detail to figures presented for item No. 3. ARPA In Action, Slide 3 Project Earmarked Allocated Spent Frontage Rd Trail $812,250 $812,250 $197,602 Courtyard Hotel $600,000 $599,000 $579,426 Code Enforcement $100,000 - - Business Coaching $350,000 $200,000 - Fleet Study, EV Chargers, Vehicles $1,500,000 $207,189 $101,780 Heart of Pittsburg Beautification $388,000 $388,000 $24,827 Premier Fields $3,535,477 $6,078,288 - Dream Courts $5,750,000 $5,750,000 - ERP $1,190,000 - - Non-Profit Assistance $400,000 - - COVID Response $400,000 - - Business Incentives $300,000 - - Trash Capture Devices $400,000 $400,000 - Marina & Senior Center Solar $115,000 - - PACF Assistance $400,000 - - Homeless Cleanup $400,000 - - Storm Recovery $200,000 Total $16,290,477 $14,434,727 $903,635 .

2 Measure M In Action, Slide 5 Annual Revenue $1,748,700 $1,346,244 $1,300,000 $1,745,276 Earmarked FY 22 Revenue FY 23 Revenue FY 24 Revenue FY 25 Revenue Allocated Allocated Proposed Proposed Econ Dev-W Leland Traffic Signal $850,000 $850,000 - - - PW-City Park Tree Removal - $63,700 - - - PW-Streetlight Data CCTA (2 Years) $135,000 $85,000 - - - Youth-Marina Center Improvements $1,500,000 $750,000 - - - 3rd Party Code Enforcement (3 Years) $300,000 - - - - 3rd Party Park Patrol (3 Years) $865,000 - $200,000 $200,000 $220,000 3rd Party Security Cams– Marina (3 Years) $750,000 - $200,000 - - 3rd Party Security Cams – PD (3 Years) - PW-Sidewalk Repair $750,000 - $170,803 $100,000 $100,000 Youth-Create Youth Fund $200,000 - $200,000 - - Youth-Library Hours (3 Years) $350,000 - $121,667 $121,667 $121,667 Econ Dev-Waterfront Feasibility $150,000 - - - - Youth-CBO Programs $100,000 - - - - Youth-Outdoor Fitness Center $200,000 - - - $200,000 Youth-Premier Fields - - $150,000 $825,000 - Youth-Steam Camps $25,000 - - - - Youth-YAYASMP $875,000 - - - - $1,748,700 $1,042,470 $1,246,667 $621,667 Earmarked $300,000 Available - $3,774 $53,333 $1,123,609 .

3 General Fund Surplus In Action, Slide 6 Project Earmarked Allocated Spent Pavement - Street Improvements and Slurry $1,251,300 $1,251,300 - City - Public Art Installations $250,000 $200,000 $104,160 City - Utility Box Art Murals (3 Yrs) $60,000 $60,000 $0 Landscape - Heart of Pittsburg Grant Match $62,000 $62,000 $62,000 Youth - Skate Park @ City Park $500,000 $465,187 $280,926 Non-Profit - PAL Programs and Staffing (3 Yrs) $300,000 - - Youth - My Brothers Keeper Program (3 Yrs) $750,000 - - Youth - My Sisters Keeper Program (3 Yrs) $750,000 - - Landscape - Park Restrooms – Buchanan Park $500,000 $500,000 - Landscape - Park Restrooms – City Park $750,000 $750,000 - City - Entrance Features $250,000 $250,000 - Pavement - Streetlight Data (CCTA) (2 Yrs) $15,000 - - Pavement - Streetlight LED Replacement $500,000 $500,000 - Landscape - Landscape Master Plan $1,500,000 $1,500,000 - $7,438,300 $5,538,487 $447,086 Un-earmarked $413,000

Special Revenues Update October 20, 2023

ARPA $16,290,477 • Public Health • Econ. Impacts • Comm. Svcs • Premium Pay • Infrastructure • Revenue Replacement • Admin. • Storm • C.D. • Transportation Meas. M Surplus Revenues • Youth • Seniors • Public Safety • Streets • Economic Development GF Surplus $7,851,300 • Salaries • CalPERS • Benefits & Insurance • Contractual & Professional Services • Pavement • Unanticipated Background

ARPA In Action Revenue: $16,290,477 Earmarked: $ 16,290,477 Allocated: $14,434,727 Spent: $903,635

Measure M Surplus Over 3 Years $1,748,700 $1,346,244 $1,300,000 $0 $1,000,000 $2,000,000 FY 2022 FY 2023 FY 2024 Actual/Estimated Pre-2022 Projection

FY 22 Measure M Surplus In Action FY 22 Dollars Revenue: $1,748,700 Earmarked: $0 Allocated: $1,748,700 Available: $0 Spent: $1,608,312 FY 23 Dollars Revenue: $1,346,244 Earmarked: $1,342,470 Allocated: $1,042,470 Available: $3,774 Spent: $41,318

General Fund Surplus In Action Revenue: $7,851,300 Earmarked: $ 7,438,300 Allocated: $5,538,487 Spent: $447,086

65 Civic Avenue Pittsburg, CA 94565 P: (925) 252-6900 F: (925) 252-4814 pittsburgca.gov MEMORANDUM To: Finance Management Subcommittee From: Sara Bellafronte Re: Agenda Items No. 5, and 6 _____________________________________________________________ Item No. 5: Mt. Diablo Resource Recovery (MDRR) 2024 Proposed Collection & Recycling Center and Transfer Station Rates As considered annually, the City received a proposal for 2024 solid waste collection and Recycling Center & Transfer Station (RCTS) rates as shown in the tables below. Table 1: Proposed Collection Rates 2023 Rates Proposed CPI Proposed 2024 Rates Delta in Dollars Low Income/Senior $32.53 6% $34.48 $1.95 32 Gallon $49.84 9.41% $54.54 $4.70 64 Gallon $58.03 6% $61.51 $3.48 96 Gallon $65.15 6% $69.06 $3.91 Proposed Collection rates include a 6% CPI increase across the board with the exception of a 9.41% increase to the 32-gallon cart. In 2022, City Council approved a 5-year phase out of the 32-gallon cart resulting in equal costs of the 32- and 64- gallon carts after a 5 year period. This rate convergence requires the cost of the 32- gallon cart to outpace that of the 64-gallon cart by 3.41% annually. Additionally, per the City’s Franchise Agreement with MDRR, an annual CPI adjustment based on all urban consumers for San Francisco-Oakland-Hayward is allowed at the City Manager’s discretion. While not required, staff desires to bring this item to Subcommittee attention given the unusually high CPI calculation of 6%. Despite the CPI spike, Pittsburg’s proposed collection costs remain under average among other East Bay Area jurisdictions. Table 2: Proposed RCTS Rates 2023 Rate CPI @ 5.69% $16.25 over 3 years 2024 Total Increase Proposed Proposed 2024 Rate Bulk & Compacted Loads (Mixed Waste Rate) Per Ton $129.75 $7.38 $5.41 $12.79 $142.50 Proposed RCTS rates constitute a 89.9% increase from 2023 and include: • The third of three annual $5.41 increases approved by Council on 9/20/21 for costs associated with infrastructure, equipment, and processing • A CPI increase of 5.69% based on all urban consumers for San Francisco-Oakland-Hayward • Rounding of the proposed rate to the nearest $0.25 Per the City’s Franchise Agreement with MDRR, an annual CPI adjustment based on all urban consumers for San Francisco-Oakland-Hayward is allowed at the City Manager’s discretion up to 4%. Staff desires to present this item to Subcommittee given the unusually high CPI calculation of 5.69% and aims to bring this for Council consideration

in November. Item No. 6: Fiscal Year 2024/2025 Goals Process Date Relevant Publishing Date Activity Deliverable December 4, 2023 Nov 17, 2023 Council Changeover Introduce Incoming Mayor and Incoming Vice-Mayor December 18, 2023 December 1, 2023 Incoming Mayor’s first business meeting as Mayor and New Subcommittee Assignments New subcommittee assignments Friday, January 19, 2024 January 16 Special Meeting (evening) • Clarifying goals • Redefining priority areas Saturday, January 20, 2024 January 17 Facilitated Goals Workshop 1, With Council and Staff • Ask follow-up questions • Hone in on defining new (or keeping existing) city-wide priority areas • Provide basis for staff to develop FY 25 goals February 19, 2024 February 2, 2024 Goals Workshop 2: Update to FY 24 goals and Introduction of FY 25 goals to Council • Provide update on FY 24 goals progress • Introduce FY 25 department goals for the first time • Receive feedback from Councilmembers on proposed goals February 20-29, 2024 72 hours prior to each subcommittee date Staff workshops FY 25 goals at each subcommittee Receive additional feedback from Councilmembers on proposed goals March 18, 2024 March 1, 2024 Adopt FY 25 goals by minute order • Present any changes to goals between that occurred between Feb 2 and Feb 29 • Adoption of FY 25 goals

Proposed CPI Increases to 2024 MDRR Rates FINANCE MANAGEMENT SUBCOMMITTEE OCTOBER 20, 2023 1

1. Keep all rate increase options in single digit; and 2. Preserve affordability of Low-Income Senior Rates; and 3. Maintain a small variance between cart costs; and 4. Produce a long-term strategy for ensuring public safety and reducing cart contamination in Pittsburg 2 Comprehensive Rate Analysis

Background: Curbside Collection Rates Beginning in 2022, Council: • Adopted a base rate increase phased in over five years (2022-2026) • Upheld annual CPI per existing Franchise Agreement • Authorized retirement of the 32-gallon cart over five years As proposed, rates effective Jan 1, 2024 will include a 6% CPI increase: 3 Low Income / Sr. 32 Gal 64 Gal 96 Gal $34.48 $54.54 $61.51 $69.06

Meeting record textFinance Management Subcommittee — Closed Captions

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And since we do have Ralph here, you can definitely provide his expertise. So I have, I think, stored long enough and I will hand it over to Ralph. Thank you very much. So here is just to start there a mechanism utilized to fund infrastructure and apply a tax to the property that stays with the property and pays for the cost of infrastructure while we go ahead and apply it. Thank you. So just big picture. I'm going to try and go through this relatively quickly in the questions you have, but the Rules Act, as I see it, is our authorizing. The act was put in place after 1213 in 1982 to allow for the funding of the infrastructure. It allows you to fund these a larger fund infrastructure development. You can issue tax them for taxable municipal bonds based on the tax. And that's really what's done. This market in order to move forward through different paths. One is that it's pushed by the public agency themselves. The other is what is really technical, which is the developer comes to the public to see a request that you put in place on their behalf to fund infrastructure. You can plan both infrastructure as well as services, which the city does in order to move forward. Most districts are done before there are city citizen voters living on the property. So here we make reference to the two thirds vote that there are cities or districts that are done with resources that live there. Typically, that's not the case. And I'm going to focus on what is typical, which is that the land is undeveloped. You have one property owner better one voting, and they make the vote on behalf of that problem. Go ahead with your next slide. So I'm not going to drag you through all of this. I want to talk about a big picture. You know, in terms of performance here. You have to have goals and policies. The city, Pittsburgh has one with your average CFD feedback before. And what that says is, okay, this these are the rules we're going to apply. One of those being tax rate. We're going to have a maximum tax rate. We don't want them to go above a certain number. Typically, that number is about 1.8. Northern California and Southern California, they tend to go up to 2% volatility. So when you issue bonds, you're going to want a certain value of the property persevering against that property. And that's part of the goals and policies. And what you can find is also in discussing those goals and policies, you've already got to adopt the goals and policies in terms of know forming a district. Following this requires two legislative acts a resolution, intention or resolution formation. They have to be more than 30 days apart. So these are the two different housing units. And, you know, there's a lot of things that go into that. But what happens typically when you have a piece, the developer comes to the city to request that you consider it, and they talk about specifically what they want to do in terms of what they want to find and tax rate and what the project is. And, you know, you would be intimately involved with the project, you know what's going on in the city, What happens when the city decides to go forward? A special tax consultant is brought in. I think Bill been consulting typically then they work on the boundary map. They work on a method of apportionment rate, method of apportionment space, a complete work problem that describes how the tax forms and excise tax is based on size of units. I'm not out of line like that. That's a rule. It's got to be by size of units. The rate method portion is probably a 15 page document and just kind of tell us how the tax works. You would take that for resolution intention at a city council meeting to start the process. Following that, you'd have the next meeting would be no more than 30 days later resolution formation. At that meeting, you would have the vote, the popular votes, native forest ballots and inform the district. And then what happens is you have a second reading the next meeting and it goes into place. So it's pretty straightforward, which is a lot of things are read out here. But I necessarily think we need to go through each of these. Let's go ahead and go to the next slide is they try something that announces like, oh, I did. Oh, you just saw it. I'm so sorry here, sort of referencing the second legislative hearing. As you get a public hearing and the notice of issuing bonds should you had a maximum bonding amount, that's that's the tax the district and then, of course, the elections. So it's a pretty straightforward process. It's done by many cities throughout the state there. Again, it's authorized by state. So we made reference to our May, which is the rate method. The question is what our Standards board we lay out of here just kind of what's included in that, how the special tax works in typically developed special tax there's before that is final map of special tax and sort of when you move to development the tax may differ including this also are those prepayment provisions whether the tax rate goes over time which stays the same, which they can do either. And it's sort of how the tax is collected. So typically a special tax is collected first on the ballot property and then on the rest of the properties. It also lays out how long to tax the next tax, and that's the next slide. So what put into place super fast, A lot of you know, under the CFP law, the law demands some curbs, supply control parts, open space pretty much. And you can also do libraries and more general benefit projects, which you can get from from assessment. Just talk about assessment restrictions in a moment. You can find these are school fees county you've got fees that a special district fees really really flexible to like next slide to only go through assessment districts and just quickly because next slide please. So assessment districts are much older tool they were actually put in place in 1913 of the 1915 13 Act that allows the formation of assessing District 15 Act, that allows for issuing debt to fund those projects, very similar to a CFD, but limited in terms of what you can do. The big difference is you have to have a and engineer's report that assigns actual benefit for the property, and every property has an actual dollar amount assigned to it. So if you're a house, you know, this is what my assessment is, you can prepay that assessment at any time. And typically when you form that condition, you have the right to write a check within the first 30 days to pay that off. The challenge to the assessments is publicly challenged, and that's what one for all. But they're not as flexible in terms of what you can do. We're assuming it's a special tax. This is an actual assessment. It's saying a dollar amount. Again, as I said, you know, fixed dollar obligation, as stated here, something but nonetheless, that's slightly so most of the process here really similar to what you do with the CFP. The difference is you have an eight year report as opposed to a rate document that's prepared by next year. The rest of this is kind of similar ballots. You probably don't have the vote on it. And I we'll go through each the steps that so there is item five is the ability to make a cash payment versus the assessment over time. One thing I point out with assessing districts is your board, the district, you have an obligation is your property charter with your taxes and issue bonds because the tax rate is that's because the interest rate is not set versus AML rules. You set the actual tax rate when you issue bonds for whatever terminal support, next location. So, you know, just a little bit more information on assessment is generally what's included an engineer report and it's it's I guess I you say it's more specific and less general. I see. If you just has more flexibility. Just, you know, that's really next. Like, so what you find most are things you can do. First of all, you've got the infrastructure. You can't, you it has to have a specific benefit to the property. So you can't find things like schools or libraries. You can't fund things. What water, the water things, those sorts of things. Again, very similar to see if you're just not as flexible. It looks like let's maybe I'll jump in here to give some context. So as we go through this comparison, the next few slides here, an assessment district that's in the city is Century Plaza. When the automobiles bill the engineer's report they laid out. All right, we're going to have the roads, the infrastructure and the way to pay for it is we're going to form an assessment. District council had to approve it. And that assessment is ongoing as part of the project. And then a CFD pick one of the blue dot stuff on, you know, what do they want? Homes will light homes as a CFD. So I guess I'm trying to give you two different areas at least are fresh in your mind and as you see this comparison on actually slides slide, it's sort of like, okay, I get it, you know, and when opportunities or developers come to us and say staff and then ultimately city council, we'd like to see a copy. But I'm hoping, you know, you'll have in the back of your mind one that's interesting, but why not in the assessment district or why not? And we if we can really probe the developer to say, you know, if you're can accomplish all roads or whatever, what's better for potentially the residents or the businesses? And I want to make sure that the finance company has a comfort level whenever these proposals come so you can go, okay, that's like the Century Plaza, and that's what we did or, you know, Alps Ranch. And they want to see B, just hopefully give some background because I'm sure as we have more of these developments come along, you all are going to be asked to consider that the alternative if we didn't have I got in your presentation that's I have the alternative. If we didn't have this ability, you know, a century ago would be the developer would have to put it all in capital upfront and then pass it on to the business or the residents. And sometimes that would could potentially kill a development because the developer doesn't have that much capital to do that and build a thousand homes or so. You know, another could be, you know, as you know, the Bay Walk Project is trying to figure out traffic. You know, where do you put 2000 homes and people on the roads? You know, obviously I'm not a traffic engineer and I'm not trying to act like one. But you know where the cars go. You know, Railroad and Bailey are pretty darn awful from our anecdotal evidence. So they need another way to get those cars. How would they finance that back to be potentially something that they would come to the city saying we need we'd like to do either an assessment district or a C and D, So sorry to hijack that, use both and apply it to the city in the past. So the next couple of slides is just comparisons of the two you see there. You know, the dollarization I have, we spoke to that already 1359 versus 1982. You know, obligation, as I said, a special underwriter to see if it's a special tax or it's actual of this is what your taxes and the size of your home for as a 2%. Typically this has been underground as a this is all part of our assessment and you will pay what that's whatever that's what said is I think I spoke on the board services so services and stuff like that that cities have used for more and more to find for places buyer specifically but other needs because new development doesn't pay for itself. And so that's sort of the trade assessment typically is just for the improvements that you apply an assessment. And then prior to leaving city and assessment districts come before the department or part of the taxes. So they come before that, which is important part of the credit when you're selling bonds to market. So the Police Service Public Safety Committee, we had Andy, that's about what, two and a half million public safety Committee annual. Yeah. So just to give you scale as are all talks about how you know how two new homes pay their way or their fair share. You know the new homes are now contributing two and a half million dollars more to public safety because of this EMT that's in that area. And honestly, it's because new development does pay for itself. It's kind of hard to justify allowing the construction of lots of homes except for housing. But, you know, so so that helps the plug. I can. Next slide, please. So that, you know, these are kind of more specific. They're covered most these things with the boundaries. Again, if you think of the auto model or you know, this very contiguous, very close, our public safety safety is scattered quite around. We've added some of the affordable housing developments, have paid a smaller B or C, and of course, there's been certain areas and it doesn't have to be always contiguous. And, you know, again, the public service simply does not bonded. It's just it's just the tax next line. So courtesy of the fund improvements or impact fees for a variety of agencies, oftentimes we'll have a financing or have a lead agency like the city. And then you have other entities that are fees funded or improvements. If you wanted facilities agreement to do that timing, you know, they're pretty easy to follow in terms of timing, 9220 days, sometimes a little longer. The negotiation upfront with sort of what it's going to look like really kind of drives it. But that's all it takes time when you actually start forming in July, 120 days, you know. Sure, these are allowed to add additional property and without any changes that certain districts can't really challenge. It doesn't have much technology, maximum rate. So that's something that we'll be discussing your goals and policy typically and the goals that it will be, you know, you still lost 2%. You're not supposed to have an all in tax rate, but 2% of your assessed value. So you take into account Geo GATT and all sorts of other property ownership. And then for city bonds you have to have a minimum of 3 to 1 based on the market looks for 4 to 1, by the way, and that's typical assessment doesn't have that limitation. And so, you know, this is sort of a bond process. It's separate from the formation process. When you issue bonds on the different. And then what happens is what when, when the property what makes sense is that typically when we have finished laws for building houses got sufficient value. You have an appraisal put together to produce documents and sell bonds as probably another 4 to 6 month process is laid out here In terms of, you know, kind of different steps, I don't think get you to come through with details that I think the next slide is bold toward. I don't know if you want to. Well, or maybe we can ask other questions as we've gone through this. Anything that is new in that sense. Yes. You had mentioned towards the beginning there are two ways to bring in CFD. One is the city can propose, if it wants a developer to come to the city and propose it does a city in the second option. Does the city have an obligation to move forward with the CFD if a developer proposes it? Not necessarily, but sometimes you hear the term benefit district is what's the difference there. And I think of other districts that make them a benefit district. I mean, that's like an assessment, but sometimes sort of seems to be lingering on for people that come in to later into the district. Somewhat to the assessments. Yeah, I it's it's really more of and it's not used. I mean so if you look at what's used out in the world, probably 95% of all of the is now if you went back 25 years, you'd see a lot more. You see a lot more of our age. Well, I know I do. But is there any part of the city that is another one of these older areas that are the older. Yeah. Yeah. Because these will come about after those houses being constructed. I mean, you can have a property on a road and we do see some cities do that where they, you know, the Citizens Budget Office did have a special tax to pay for certain things in the future. So it's not an easy one to get since San Marco was one that was written into the 1995 to development agreement but wasn't put into place until oh three, I think was real bad somewhere around there. But yes, so in the nineties it really started picking up steam here in the newer subdivisions and even some of the downtown areas that went to meet your goal. And then when the new people came in, in their development, they needed this as a way to finance the Olson project. Marina Walk was an assessment district. Yeah, yeah. In 97 and we refinanced that last year and it was last year with had intention to reduce taxes for the council I think saved on the pay use, if you will, $100 or more a year by doing that, you can see it on their tax bill. Some of us live in all the neighborhoods and sure, there are still I see it now. Yeah. So then an enhanced infrastructure finance district is a subset of a facility that's a big no no. That's the edge that the redevelopment of redevelopment like. Yeah, that's no additional assessment tax. So that is shifting right? Yeah, that's an improvement. That's right. I got it quick. Is there any trend data around kind of the cost burden to the homeowner over time? When you do it, the developer takes the upfront capital cost, translate it or puts it into the sale price of the home versus CFD. Over time, an assessment versus CFD versus not? No, I don't know of any studies. So, you know, the conversations just really lower the price of the house to a certain place and it's something that gets debated, right, because you know, it should be that. And if I'm going to take this additional cost, additional tax, I'm not going to have as much money to pay a mortgage. So I should impact and also should impact the cost of construction and what not to tell her. But I don't know of a study that does that. So I don't care. No, just what you're probably logically going through your brain on that. But they're trying to figure out now. But well, it's not a study. Vice Mayor and Ralph, you may have mentioned this briefly as you're going through your slides, the general, And while this is not a legal requirement, but the standard, the rule of thumb is you do not want these to abuse assessments or whatever to exceed 2% of the sales price of the home. That's that's sort of the well, not necessarily the study that you're looking for, the cost comparison. That is what's been generally kind of developed as the rule of thumb for marketability of homes versus what people can afford, what people are willing to pay. That's what a lot of this can be based on. Those annual increases seem so much. No, and I'm not saying that she was intended to increase the maximum residential property tax burden. It's on page 18 of the slides. Is the standard, not a legal requirement, but the standard is not to exceed 2% of the sale price of a home and oftentimes low wages. You'll say, yeah, in our policies we're going to say 1.8 to 1.9 more below that. And so and so when you structure the tax, you take a you take into account the G.O. bonds are being issued by the school district, all other taxes, the 1% and it's the developers as well as all students. Then they look at the tax rates now. Okay, what capacity would have been under your tax when we were negotiating and we added the fire safety first time, that was a calculus. That was out there with the developer and they were going through like we can handle and it with a $75 thing because they were looking at what would that homeowner the fees be adding on top of the mortgage. So they were evaluating how much they had been in and not impact the sale price too much. And my question has come more from the infrastructure side of the CFD, not necessarily the services side. It's more logical to me. It makes sense that the services, it's an ongoing thing. We want to pay for the services that are provided to new developments. But my perspective is more how do we what's best for long term for the city in terms of the higher home prices. Right. But also for the ultimate homeowner that's going to be paying this on their assessment of their tax bill. What is the lowest cost of options potentially, whether it's an upfront investment into your mortgage at rates, a certain rate, or is it? You know, I think the CFD version, but I guess I just don't have enough information about how the CFD is financed. And you know what fees are structured into the CFD over time. So yeah, it's it's hard to figure that out. I just that part, I think one thing I did I do hear all the time is developers will look at a project and say, okay, this doesn't pencil unless I've got something that, unless I can do a finance as some of this concept. And so a lot of times it for pushing the project forward. So now I had lost I had something, I'm going to respond. I can come, you know in terms of your user or your probably use for new development and you really don't see a lot of that, I might say. You know, it's it's it's kind of the cost of housing because everything is so expensive. The cost to develop that I mean impact fees associated with the new house are 175 to 100 grand which is very expensive. I think that's what almost segueing into what bold can do for development as well. So what do you want to do, Want to run with? I'll give you a break. I've got just a couple of slides, but I'm going to rely a lot on your expertise. Okay. So we've talked about kind of the bond inside, but just a little bit of background. So CMP, the California Municipal Finance Authority is a statewide JPA and the members are the public entities or numerous public entities throughout the state and assume that they have the authority to issue these bonds that we've kind of been discussing here with the goal of supporting economic development. Definitely something the city also sees is a benefit here, not just for residential projects, but also for a lot of these commercial and industrial projects that could be coming down the pipeline, job creation and social programs. It's no secret that the residential development challenges us to provide the necessary infrastructure and the facilities to serve all of these new residents. And all this growth so bold is designed to help municipal agencies and developers finance the infrastructure projects. One of the things that we really like about the whole program is that all of the administration would be handled by CMS at no cost to the city, at least in this instance, is led by as well for bond counsel, because consulting for special tax consulting and Ralph and his team of Piper Sandler for underwriting services. So kind of we were just chatting about this. It's an opportunity to finance infrastructure facilities through the MFA, who issue the bonds bonds are issued and then paid back through a CFD that's part of the property tax bill. Unlike some of the service codes that would be for a limited period, it would have a sunset, it would be a perpetual assessment or CFD that that's place on the tax bill. And then once bond issuance occurs, the city would receive those bond proceeds pursuant to a joint committee Facilities agreement. So as Ruth mentioned, any CFD creation would have to go through the city. This does not allow developers to just go and create these sea of these as these assessments. It would have to go through the city to be approved requires all the normal CFD formation procedures and computation of special tax rates and will be included in the resolutions that form the CFD. And then as we mentioned, you know, the total amount of taxes on developed land generally will not exceed 2% of its market value. And just a couple other quick notes. CFD is formed early in the development process and as Rob mentioned, it's usually when the land is under a single ownership prior to the actual development. So as far as know, the two thirds vote, the developer in thi

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