Finance Management Subcommittee

A finance management subcommittee focusing on the agenda. Are there any other topic on the agenda seem to really move this along? Three folks, if you recall at the last subcommittee meeting, and that may have been obvious and wanted some more discussion on the districts assessment districts. Well, it was so relevant almost from down Examiner as doing this one against the word Mr.. So we're going to have this on every guy. So Ed, last name, we talk a little bit about the old program that sort of trepidation. Why, why, why would you consider it? So that's the members as far as Speaker one The is going to pass to zero. Your again will make a positive result. I we do that as we project so this and we probably you know if you want such reasonable and important sections and see what we're doing for so services and resources very much so I'm going to open this up as so many issues share this, the finance infrastructure is one of the tools that was out and you look the variety things that are sidewalks, parks and that reason is more structural. And next page you also are able to respond services, which you do all this conversation about how do you even as we develop an infrastructure and services that allegedly held special tax I think is really flexible inheritance amazing when you do an assessment, you have that one name is very specific. There are not a lot of is these days just because it's it's it's all the roads are for example our assessment is what is happening has a and you had this series of houses on it. Well you got to you know it is very tax related here any of the different it and so it's just complicated and that's that's why these are so so let's see if these are a upon development and the point is to spur economic development to incentivize developers and for them to move and to build most their development housing has been attached to look around the state. That's just to its uses because associated with the cost of enhance financing is significant over if you're looking at a long term financing using today's market, you're looking at a five and a half percent answer. We get out. The world is probably is going to be much more expensive, but it's also long term massive and it's something that's established by investors. If there's a large market to California for this, for this reason, obviously the obvious thing to know there is around is leverage property is their balance sheet in the asset and it allows them to do financing and we have to remain on the property. So it does increase the returns or the city benefits are one is going to push infrastructure development sooner, even encourage it. Also give push to get more you know, improve our approach towards that. That's a big reason why choose the other thing you can do is you place long term housing or so when the bonds are no longer. We have the cash to do to save our share, to pay for our streets goes down a lot, which is a benefit in a lot of cities, like I said. And we don't ever want to go in this way again. So that is something that we agree that should have value as a longer term strategy to help offset our challenges with infrastructure. And again, I want to mention the in there because it no longer works. So we're going to allow us here in this market to build. Sure. Because otherwise we have to wait for companies to come in over 20 years. This is this example or that pause in terms of where I'd walk through the framework of our next slide. Really, at this point, we don't do that right in range with the facilities infrastructure in place. There be more facilities and infrastructure when you're going to be expected to spend that money within three years or sometimes the challenge, for example, and as you know, one of the services is responsible workforce. Yeah, that is one service we do to take it. And I should point out every job that the community has. So I think I've touched on this a little bit is governed by regressive portion, which is basically a broader problem that sells how it works. And actuaries typically, you know, you local jurisdictions will say, okay, this is our max tax rate. We were once you hired in the 1617 or whatever it is, all the tax rate deduction, it's a it's a charge on their on your decision. But at that time you would structure rather you look at that and look at it and we walk through what can be done in to announcement you have to have rules and policies from the city goes how long is this rule? The owners will be updated but you you'll really worry about it when you think about this special tax structure, your square footage law or you could do it both on commercial and as well as residential commercial status, doing certainly the tax rate was 2% a year. That doesn't have to read and decide how you want to work. But typically communities look like, okay, these are other 2% a year out of ashes inflation and that's why there's got typical village in Yorkshire. These are 40 year words. What you show was the 30 year lifespan and they're actually ten years. They share in services of course, and what they're doing, unless you went by the margins, it relaxed about this. So I wanted to speak to what it's going show. You started off with myself. I worked with the city many, many years ago. One person that's sitting that you be responding exact us, which we're not anymore, whose lives had me answering the call. Right. So the city edition which was very much legacy of the unions and as you know based on assessment on bonds listed here on page eight. Thank you very much. Some of this after this, we're done. We get a real walk down, 100 units and marble, 500 Oak Hills. So there's there's always waters. Well, that's out there. And then the 70,000 was a commercial for the out of the idea was going to have that project or what does it mean was it was refunded in 2011 and again in 22. So so what happens and typically when you do start with property is initial condition and they have no boundaries. There. So when they build the houses, their credit, what we do is also as time goes by assured 0.8%. So the city has over the years or has had districts you go out your quantity lower debt service. I think last year we wanted a variety this definition renaissance brought that some of the city. What do you attribute the abuse in a walk I'm just going out memory was built in 1977. The district was probably around 98 and then refund is in 2011 when the raising rates were better in 11 and then 22 again. So yeah, we look at or really it looks at all the different bonds and sees what there is over the windows that can say this money. And that's kind of how we went business, right? What we look at the better and say oh it we're going opportunity there and reach out to the city is which got in the spotlight so so those actions were adequate actually worth almost and then we had San Marco there's no more last year was one point in time which raised more You'll see typically you see we're putting about ten years later that was the original was a failure of production which is standard the market for investors suspect. So it was pointed out you see the way interest rates are now you did a sit down in ten years. We're hoping that rates will be more competitive. And so I this last year raising very high and a little rough. I have our optimism that some 20 words will drop down over the next like so the city does have those policies but we're not straightforward so that's really won't be available to the city or a specific area. It doesn't pay them, which is pretty broad. Allows for 2% escalators, no transaction orders. It's actually not cheap through that percent. That's the part that we will see were 2% in the state. We tend to we will see our tax rate on all the one warning charge on just coming out. It was 2% plus 22.8 more. And that's something that now your old policy or a 3 to 9 million that was the value the thought we know what's been challenged the amount of bonds which include there was a shortening. It's just in the 77 bonds. On the next slide, we laid out some. The first of all, we is for certain, such provisions were also known to a variety of other jurisdictions. Three assets. The one of the jurisdictions. So one thing to point out here is the more special tax registrants everybody from small issued results to 24 year are the ones. The assessments are only places we're doing it this time, you and your reporting down. But we've also listed out you really see this inversion on taxes. One of the reasons got tax rates and they're really low. That's 238 as a unit you look at the problem, 13,000, which is while it give you a sense of kind of what happens, but I guess the point is, is that a lot of these do you realize this is a segment that, well, you are right and what the market experience and can and a lot of it has a lot of them. We have in August we had a lot of is of the that it was the Sacramento region was so much more developed. You know what happens well and Brentwood how are they doing they're like so I know you can do your structure right? So what are they using there for? Is it road maintenance, ongoing maintenance landscape, ongoing maintenance? Is it initial infrastructure? All sorts of these are for initial infrastructure, but it is this is not for is services an all and there's a lot of assessment programs being out. All right so so I think we'll stop there when the next section was just evolving is not to do with right now that I can that looks like it works this way there's a screen and what is the size of some of the initial investment, right, that the developer makes so again, it's like these bonds like. So I guess it depends on the size of the project. So small right there in and their costs are right now they have a larger product that obviously that that moment, the stuff that they typically sold in our store and we see every week, every year because the factory ran. So it's much so I think the smaller proceeds are going to use 1.11 inch over to look at who's looking at around these. So they're still there and they're just that reason sells for 35, $40,000. So what we're also going to start with the offer that was just that describes everything and these that we have in our city. So there you said they're 30 years, they're over a 30 year weather issue. So we're just remaining you know, this we just have all have different terms. They're all about that. Years, 12 minutes, What was it that I want? And then about well so the if you look at this is no longer required. So that is exactly 35 access. It was never the assignment and so they'll have to find out. So maybe as an independent, they know they have a 500 unit that they're going to build. They go through an appraisal to calculate the value and make sure that they're under the 3 to 1 threshold or they're within the threshold. And they could include sidewalks or gutter streets, water, whatever, for longer lines. And so let's say that 500 acres is to the acre, 120 550 acres. I just you would know and it has a value of 15 million. They would basically have a constraint if they wanted to do either of those. And so that's how they would all evaluate what infrastructure they may be paid for. A 15 and 20%. They're also panel versus this fine balance. And you okay so yeah, the cost capital so that's ten 13% for the developer. Yeah so that was so that they're going to add that they sell price at a higher interest rate. So so that that answered my question because I think you're more able to provide the financing at lower rates. Right? A homeowner wins in the long run. Right. Because it's financing at a lower rate than if the developer were to have done that. And granted the sale price of the other instruments as opposed to sometimes what we run into with existing development agreements, you know, they will build are number two at the 700 units. And so now we're waiting, you know, when you have or you know and even they of job multiple or how long the community wanted that in the San Marco neighborhood and boy it was probably the under it's forever yeah and it's just a worked out okay you're going to be able to share the resolution and then okay yeah but my my initial question was around the overall cost to the homeowner over a 30 year period. Right. Is it more. But that answer my question was it was a cost capital developer versus what they can get out of this program. Okay. Very good. Thank you. Mr. Holmes, are there any other comments or questions? Was there a initially there was a recommendation on the actual program, Right. Or is there. Yes, we really have to go through. And so when you go to the resolution, I don't know if you've ever seen it on the phone that that you would just as a resolution approve the program in place and monitor in stack that doesn't work as well so that it's just another option for them to evaluate no obligations to the city. And so that's what's nice is you can sort of sit there, you know, they're trying to figure out how to finance everything while we have this program you can go through or you can self-finance however you want to do it. There are some options for you. And they had I it was the most cost effective or they're all purchasing or yeah I don't I would support the one program moving forward and to obviously a little bit of money that will go to the local nonprofits will help long. Thank you very much for your feedback. The next item on the agenda is Assistant Director Andy Lyons on the calling for a budget review through November 2023. Keeping in that cycles five the year. At this point, we're still there. There have been no anomalies that are there and that is they give us any undue alarm. We as you well as you know, and we talked about earlier, our property tax revenues will be higher than originally broadcast. Our sales and tax revenues are coming in a little bit, a lot more lower due to COVID. Are you leaving or we receive some good news Monday, Tuesday from Avenue that will be cushioned somewhat. We're going to expect about $1.1 million more over that. So for this year, obviously, that's very helpful. There was a lot of battery storage projects that went to the accounting pool instead of going straight to revenue. And so through a year assessment, a reality looking at that, that we were notified that that actually is going to be changed to where it's about at $1.1 million. The city of right here on present to the general fund manager and following that monthly financial analysis to give assurance. So we're looking at looking at the summary base two years actuals are about the budget, the amended budget actuals available forward and then column G, which is the actual the field over here and first line item. I have opposed the carry forward on balance from prior year, so it's actually close to 27.8 million is a and I estimate the anybody down from 20 or 20 to 23 hasn't yet close. It's being carried forward at the beginning balance for our current fiscal 2223 looking at revenue and here we have for the month of November we ended at around 11.86, $6 million, which we have about 3.7 of departmental revenues, $1 million overhead and then $70 million from all other revenue sources, all their revenue sources in this case were allocation and business taxes in these parties, etc.. So we're about 18% year to date compared to on the on business. We share 42% within our historical at this stage of the normal training, keeping in mind that property taxes are usually received twice a year before December, usually the first tranche comes through. So again, the operating expenditures for the most part that are always going a 1 to 12.3% match revenues coming in charge for General one. So I'm sorry and I would expect this year by next quarter. And also the 1.1 that positive reimbursement from the county that we're I mentioned that is not accounted for in this number here. So as well we'll be on to expenditure side so or centers where I am complementary, the actuals were anticipated as we spend on some of the measure of surplus. General fund surplus and the emergency expenditure. You realize otherwise the normal operating budget will be surplus negative and that's something that we can give you the unique circumstance of revenue. We're going to spend out some of the enrollment reserves as part of that. That's where I see a big bracket at the end of a lot of other number. I get nervous to disclaim that we are aware of it, but it's always expenditures looking at across the board where all the ground work, mostly farmers are within their means that there is a major 40%. But I was on track with the exception of our rental, which consists of we're that would be for projects and at the end of the project in particular. So I have an actual breakdown in their interest to show your details. Otherwise I'd look at this and that I believe it is operating under normal pattern. There's nothing extraordinary. Authorities online. And does that mean we haven't we haven't actually spent that much. Our project is been taking those pockets for the money out of the general fund into various project budgets, which still aren't originally reported on here. But we have spent a lot of work spent that money. Is this reality quite wonderful? So taking a step back quickly, comparing our October-November or November-December assets and there has been a 4% increase or about $2.9 billion and total revenue increases at 5.7. And I total expenditure increases or so netting our area here is over. What? Well, I look at our current year operating surplus deficit over year. Today is again going to show a deficit. But as we move forward with those numbers all the way through that, as it were, all the way would turn into a lot of our cubicles, larger numbers, those on a monthly basis are projected based on the budget without a major adjustment. Right now, we're still seeing are showing a level of 3.7 in the deficit after the change. I want to show you what the adjustments that I came up with. So again, this last line voiceover is indicating what the prior year carried forward in the time our combined with our current year operating surplus, we're deficit. This is the estimate at any one balance for whatever we should be looking at column or the I've done the budget call. There were two particular adjustments that I want to genetically increase our fund balance and years we added back to two of these items or for the EOC impacts and the courtyard, out of which I made two assumptions that we will be covering at least 70% of the total cost that let's keep in mind, the 70% assumption is actually very conservative. But based on my I will be collecting your balance of neighbors or anything. So this therefore, I just went back to show that we cover these cost this year or another adjustment. I went back to our analysis. Our schedule are the project. These amounts are chosen and areas or replacing expenditures under budget are projects where we're not spending themselves by end of the year. We have about $3.6 million of expenditure on that. They have not. Instead, which is mostly out of back to reflect that in our finances. So with these two adjustments, adding that to our estimate of our palace, we would arrive at a $26 million based on the embedded budget comparing to our anything else for the prior year actuals. That is about a I only look at the budget, whereas without that as well or 1.8 or higher one dollars or 6%. And looking at our percentage of reserve, which is stating the area five divided by operating expenditure across or for the past two years, we have around the 50 to 45% for the House and then we for we anticipate that will be around 40, 35 to 49 versus I don't they this is a $1 condition or are there any questions? They went over a lot of. So we of course are focused on the general fund. Is there any as I said, Andy and I have reviewed all of the city funds, takes a look as well, where there's no red flags, everything. So in is there any desire to see going back to or ready to move on to the next agenda item But perfectly happy to answer that you have I didn't have a question on other funds, but I did have a question. Time is I want to clarify my understanding. So in the surplus slash deficit. Right. So given your adjustments, what was the number, again, that we would end up in with a 1.7 million? And if we were to look at all, which is the amount of budget without any mid-year adjustment, our prior adjustment without any our is in our dollars adding to these adjustments together, we anticipate when we end around $26 million. Again, this is a very, very conservative estimate. I think our income will be in a 30. I don't know which. Okay, I'm sorry, 6 million is approximately one about 45% fund balance percentage. It is about 34%. And so we're taking a lot closer look at this. You and I have sent out our media templates to the departments and we are working diligently on providing the full council. I made your report in that order. So any other questions or comments or weight moving items or our general fund surplus and other major surplus, etc.? All right. So go to work on revenues as we do every month. So when I kind of zoom classes, first couple of is as we all at this point know this slide shows. All right. So last many updates on our side. There's been really no changes. Other expenses increased by about 500,000 from the 100 page, 1.4 million, the most the most obvious that we've seen and a lot of that was are going to reviving the heart of this project which you can see happening. So very exciting about downtown and the business coaching program because there are some good expenditures in this measure of surplus. So this is no change in our expected surpluses for the obviously last year, this year, in the year after, for those looking at our 2023 actuals. But that are online there, what you'll see is is an especially I'll get to is money we spent 30,000 since our last second in October. So the only number that's changed on the right side of your screen is that spend okay so 30,040 Maria updates 20 $23 being spent and I think the reality is a little bit more detail in your handouts. We're of your hand right now. So let's see know real where I have included a new analysis On the right side of your screen is the measure and reserve. I'm not really count of this as an expenditure, but it's something that we got from the general or seasonal measure of revenues before we great measure surplus. And the reason I'm bringing this up is for the rest, unfortunately, the train and the carousel that small town America love to be spending oligarch, as you know and together they require about $295,000 in repair. The first would be 100 170 or around 200,000 for replacement of the train with a diesel train for the only diesel in our trains in California. Yeah, there's not many of them left. Yes, we've looked into fixing that because could have been one of the only. So we've also kind of train this one as a replacement of one was built by the Pittsburgh resident. So the very first train that we have right now and that this has been a machinist for the steel mill was retired built, was building. Then the next one, you know, this one we bought from somebody else, it was used to train the carousel was a used carousel and there city except maybe those Ferris wheel and the Ferris wheel was maybe you bought it, but they all were either together. I something all of people's bedrooms, mostly large bathrooms. I think this is so much better than car, because if you come from Concord over here, just so the train would be looking at would be electric and it would be we need to do some work on the brakes. But the passenger cars only start as they happen to stop later. We want to show us so we can get a city employee efficiency that give you something for the electric train. And then we can make the television. And this is how wonderful the city of Pittsburgh is, because our train, those electric that everybody's talking about, another one, I hear it all the time. You really have all that stuff? Yes. The school district has or is a maybe AMC can do something and so that they can partnership. So they get a partnership replacement of the train and repairs to the trailer. And so on page three of your handout, you'll see the same table from page two updates and some propositions that I would love their feedback on. So the highlighted areas are essentially showing what changes we would like to be able to do for these fixes. So that can be done before the model reopens again on the season. The first would be the top yellow highlight. You'll notice on page two there was a $200,000 allocation for security cameras at the marina. While we still do want to prioritize security, we received three bills for enterprise level build out of security cameras arena And if we want to exceeds 200,000, we honor that. There's at the moment no other planned public works as well as have no plans to get that done this year. So I would recommend those that $200,000 allocation of that project to an ongoing fiscal year in the future. From measure the other is why I included the Reserve on the previous slide is we would also propose to take 95,000 from the measure and reserve is a $200,000 reserve as one of this year. It's not the reserve that we fund 200 every year wants to hundreds in there. That's the amount that we've got to keep there. So we would take 95,000 from the current reserve as well as 200,000 from the cameras to pay these two items, keeping in mind that we would have to replenish the reserves at a rate of 95,000 next year. You'll notice at the bottom as well that that would bring us to a negative available balance already in fiscal $24 that we haven't even received yet. That's not necessarily an alarming negative number. The revenue expectation for revenue for a measure that we projected is conservative. So as well as the items listed above, are not necessarily outdated and we have options from that balance. So how conservative and I can either weigh in on how conservative the budget and revenues are for fiscal 24, especially with the result that comes. They give us one of the categories conservative the most likely the most likely and optimistic. So we never go with optimistic, I guess most likely, but for the services of measure because we've been seeing it decline in the recent years is that we went conservative that looks like and generally we do see that we're coming around looks like we hope that was so. I will. So in summary, what you see on your screen here is our bedroom reserve. If if this is we would earmark 295,000 for the repairs and replacement, we'd have 301,487 available measure and balance that the surplus balance. And then we would take 95,000 of the measure of reserves, making the Reserve. So I will stop there to get any thoughts from the South side. So I'm tired of the security cameras for an arena and our family live at Marina said There is a war which is going to be better and I've senator this affects the voters out the door. I know it's I think the voters really not have to raise your rates and want security and never go, oh, no, no, no. And everyone. Excellent. Do we have any kind of security cameras there like we did last 25 security cameras at the marina? Right now, they're putting in an effort with video. We actually just revamp them so that they're all working, they're all online in a good amount of time where they were a little bit iffy. Most of them are outside the marina. They look at the parking lot facilities or the building facilities or 51 marina or the Authorizers Office or the major gangways that lead into the thing where there's a lot of boats, but there's not much camera coverage inside. One of those are I mean, we have other security measures like our key FOB gates throughout, and we definitely the to have that up and running all the time. We have alarm systems and things like that. But, you know, having security cameras inside is definitely a goal in that respect. We wanted to give you an idea of what we're receiving both for enterprise systems that Marina will be putting in something like 65% of which I was offering in a number no server. It would be cloud based so that we can save on long term server costs. Again, those are 6 to 800000 for that. All of our automated effort at this point and you know, there's other revenue sources as we can see in the same or standard and we can also evaluate as we have before, maybe you just do annual contracts that don't have the capital cost as it is, but ring cameras is everywhere right? Those are affecting also your phone. So so along those lines, is there another revenue source for the train funding for 95,000? That's the reality maintenance funding set aside for tomorrow. Our revenues from all of our overall what I like to do some research on that. I think I know the answer but ask a we probably need only look at our worth. Finally we are I don't get what the revenue in small part doesn't cover the costs of coming out operating. The other funding that we had consider was our partner will be, but that's also struggling at this time. It will be in the air either own that long term will allow for asset maintenance or a small part as well. That's okay. I ask the question because we need to understand. Right. So ten years from now when that new train breaks again, Right. Or is upon which is we set thousand dollars every year into a rainy day fund where this first of all, park this is built over time. So the way you want to spend that balance, do you want to charge it? We have to evaluate the rates. They want to charge whatever the entrance fee is or added on with that dollar, then go to a maintenance fund. It may not solve all the ills of the world, that would be sure. But it's not a good idea for the funds are good ideas. Okay. Yeah. At least from an accounting standpoint, maybe not for ratepayers. And we've had some pretty extensive conversations done just that in a future setting funds to save or and we've done that over the last two years. The council has been pretty clear on trying to transition that or at least in other vehicles. How do we do a better job of avoiding that catastrophic water plant? So I think the other question I have is the the reserve, the 200,000 I know we set it aside initially, I think it was just trying to be conservative at the time. I don't recall the exact rationale behind it. Right. But but, you know, previous to doing that, we had not had a reserve homer measure. And so my question is, do we still need it and or do we understand why? We have worked very hard? I think it was because it happened in 2020 and because we had such we didn't know what was going to happen with our revenues. And so to be conservative we just decided, you know what, we don't know. Let's just set some money aside and it's just been that way. Said it is it was that one very prudent move by the council. Yes. Over 90. Yes. And you know so the question. Yeah. You needed going forward? Probably not. But we're still seeing a fluctuation in revenues and they're not going up necessarily losing two of your top ten sales tax or reserves either. And so it may not hurt or it certainly is prudent to wait for another year or two, potentially working with the subcommittee of the council. And when you know the numbers of all and, you know, we've got a very good handle, we bring about it and we can adjust that we really can do for reevaluation or or an improved company. It sounds good adding grants for trains and yeah you not really fast to light it maybe that's win for grants. They did a great job raising rates and then we just hear about one of the guys that we applied for another round last year. So it will be posted by recession and there are no workers that are living on offer similar to ARPA. Identify areas where the revenue earmarks are allocated. So we did ask Ed in the last place days, mostly on the street, I think street, your replacement expenses, those are all reasonable and there's no picture of that on there will be gone there. So yes, we've created this logo is there to advertise once awesome things are going on with measure M dollars or and this and they're going to do things like that. So you'll see the QR code on the bottom right hand corner of that logo. A little easier to measure on page that you just slowly scroll down kind of gives the community an idea of what measure M is, how it's spent, where the revenues are that work for them. So this is the first iteration of a landing page we are working on kind of making a more robust information base that bottom line, they will be clickable when we realize that your question is a piece of the project dollar amounts and try to really make sure that the public understands where the dollars go and they realize they're going to see that measure and logo and that that's something that's great. Thanks very much, Sarah. Item five in the subcommittee and staff reports or remarks. And next item on the agenda is to adjourn.