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WELCOME[ CALL TO ORDER: Mayor Bill Wells]
AND LADIES AND GENTLEMEN TO THETHE MEETING IS NOW CALLED TO ORDER AND I'D LIKE TO ASK THE CITY CLERK TO CALL THE ROLL.
ALL COUNCIL MEMBERS ARE PRESENT.
I SEE JOEL SCOWL ZETI IN THE AUDIENCE.
JOE, WOULD YOU LEAD US IN THE PLEDGE OF ALLEGIANCE? PLEASE? WOULD Y'ALL BE WILLING TO STAND FOR THE PLEDGE OF ALLEGIANCE AND THEN AFTER THAT REMAINED STEADY FOR A BRIEF MOMENT OF SILENCE RIGHT DOWN OVER YOUR HEART.
READY BEGIN TO THE FLAG OF THE UNITED STATES OF AMERICA AND TO THREE POWER ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY AND JUSTICE FOR ALL.
[ POSTINGS: The City Clerk posted Orders of Adjournment of the February 11, 2020, Meetings and the Agenda of the February 25, 2020, Meetings in accordance to State Law and Council/Authority/Successor Agency to the Redevelopment Agency Policy.]
THE CITY CLERK POSTED ORDERS OF A GERMAN OF FEBRUARY 11TH, 2020 MEETING AND THE AGENDA OF THE FEBRUARY 25TH, 2020 MEETING IN ACCORDANCE WITH STATE LAW COUNCIL AND HOUSING AUTHORITY POLICY.THERE ARE NO PRESENTATIONS ON TODAY'S AGENDA.
STAFF, DO YOU HAVE ANY AGENDA CHANGES, MR MAYOR? WE HAVE NO CHANGES TO THE AGENDA.
COUNCIL, ANY AGENDA SHADERS ALL RIGHT,
[7. CONSENT ITEMS: Consent Items are routine matters enacted by one motion according to the RECOMMENDATION listed below. With the concurrence of the City Council, a Council Member or person in attendance may request discussion of a Consent Item at this time.]
THAT BRINGS US TO CONSENT ITEMS. CONSENT ITEMS ARE ROUTINE MATTERS AND ACTIVE BY ONE MOTION ACCORDING TO THE RECOMMENDATION LISTED BELOW WITH THE CONCURRENCE OF THE CITY COUNCIL, A COUNCIL MEMBER OR PERSON IN ATTENDANCE MAY REQUEST DISCUSSION WITH A CONSENT ITEM AT THIS TIME.COUNCIL MEMBERS DO WISH TO PULL CONSENT ITEMS. STAFF? YES SIR.
ANGELA, DO WE HAVE ANY SPEAKERS FOR CONSENT ITEMS? WE HAVE NO CARD, SIR.
ALL RIGHT, I'D LIKE TO MAKE A MOTION THEN TO APPROVE THE CONSENT ITEMS. SECOND.
MOTION CARRIES BY UNANIMOUS VOTE WITHOUT
[ PUBLIC COMMENT: At this time, any person may address a matter within the jurisdiction of the City Council/Housing Authority/Successor Agency to the El Cajon Redevelopment Agency that is not on the Agenda. Comments relating to items on today’s docket are to be taken at the time the item is heard. State law prohibits discussion or action on items not on the Agenda; however, Council, Authority and Agency Members may briefly respond to statements or questions. An item may be placed on a future Agenda.]
PUBLIC COMMENT.AT THIS TIME, ANY PERSON MAY ADDRESS A MATTER WITHIN THE JURISDICTION OF THE CITY COUNCIL HOUSING AUTHORITY SUCCESSOR AGENCY TO THE ALCOHOL REDEVELOPMENT AGENCY.
COMMENTS RELATED TO THE ITEMS ON TODAY'S AGENDA ARE TO BE TAKEN AT THE TIME THAT THE ANIMAS HEARD.
STATE LAW PROHIBITS DISCUSSION OR ACTION ITEMS NOT ON THE AGENDA.
HOWEVER, CITY COUNCIL AND HOUSING AUTHORITY MEMBERS MAY BRIEFLY RESPOND TO STATEMENTS OR QUESTIONS AND ITEM MAY BE PLACED ON A FUTURE AGENDA.
ANGELA, DO WE HAVE ANY CARDS UNDER PUBLIC COMMENT? YES, SIR.
UM, SIR, WOULD YOU MIND PULLING THE MICROPHONE SO WE CAN HEAR YOU? HOW'S THIS PRO? JUST AFRAID TO MOUTH THANKS.
UM, I HAVE A COUPLE ITEMS. UH, MY FIRST ITEM IS, UH, CONCERNS THE TRAFFIC SIGNAL AT CHASE IN SOUTH MAGNOLIA.
YOU GUYS GOT IT WHERE IT'S AT BY CHASE ELEMENTARY NOW.
I'M SURE YOU'RE ARE ALL AWARE OF THE TRAFFIC PROBLEMS AT THIS INTERSECTION.
I'D LIKE TO FOCUS ON, ON THE TRAFFIC PROBLEMS AS THEY RELATE TO THE ELEMENTARY SCHOOL.
AT THE BEGINNING AND END OF THE SCHOOL DAY, THERE IS A GREAT DEAL OF FOOT TRAFFIC AND VEHICLE TRAFFIC RESULTING IN GRIDLOCK.
THIS PROBLEM IS COMPOUNDED BY INCONSIDERATE PARENTS ILLEGALLY PARKING, STOPPING IN THE MIDDLE OF THE STREET IN ORDER TO LOAD AND UNLOAD STUDENTS IN TRAFFIC AND ALSO DRIVING IN THE WRONG DIRECTION ON NORTHBOUND MAGNOLIA CAUSED BY THE ILLEGAL PARKERS.
THIS IS WITH KIDS WALKING IN THE CROSSWALK ALL AT THE SAME TIME.
I UNDERSTAND THAT THE CITY IS PLANNING TO MODIFY THIS TRAFFIC SIGNAL.
I KNOW A LITTLE BIT ABOUT THIS KIND OF STUFF AND I AGREE THAT A MODIFICATION IS WARRANTED.
UNFORTUNATELY, I DO NOT THINK THAT THE TRAFFIC SIGNAL MODIFICATION IS THE ANSWER.
THE PROBLEM IN THIS CASE IS NOT HOW WELL THE TRAFFIC SIGNAL WORKS.
THE PROBLEM IS TOO MANY CARS, NO MATTER HOW WELL THIS SIGNAL PERFORMS, THE SHEER VOLUME OF TRAFFIC DURING THESE TIMES WILL LARGELY REMAIN THE SAME.
THE ANSWER TO THIS PROBLEM OF TOO MANY CARS IS STORAGE.
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IT'S NOT THE TRAFFIC SIGNAL.THE STORAGE IN THIS CASE IS ON THE SCHOOL'S OWN PROPERTY.
THE SCHOOL HAS A LARGE SWATH OF LAND THAT CAN BE USED FOR STORAGE, PICK UP AND DROP OFF OF STUDENTS.
THIS IS THIS HUGE AREA WHERE THE PARENTS COULD DRIVE INTO THE SCHOOL, DRIVE ALL THE WAY AROUND THE FIELD AND HELP PARKING, UH, YOU KNOW, ON THE BORDERS AND THE KIDS WOULD BE SO MUCH SAFER BECAUSE THEY WOULD BE EXITING OUT THE BACK, NOT DEALING WITH THE, UH, WITH THE, UH, TRAFFIC AND THE ILLEGAL ACTIVITY BY THE DRIVERS ON THE MAIN STREET.
LET ME GET BACK TO WHERE I HAD MY LITTLE SPEECH HERE ADDITIONALLY.
YES, YOU'RE OUT OF TIME, BUT I'M CURIOUS ABOUT THIS.
I WANT YOU TO GO AHEAD AND FINISH, BUT I JUST WANT TO ACKNOWLEDGE THAT WE'VE RUN OUT OF TIME, BUT GO AHEAD AND FINISH BECAUSE THIS IS SOUNDS LIKE A VERY IMPORTANT ISSUE.
UM, TO BE CLEAR, THIS IS NOT A CITY OF EL CAHONE PROBLEM.
THE SCHOOL HAS AMPLE PROPERTY TO PROVIDE THE NECESSARY ACCESS.
I AM STATING THIS IN A PUBLIC FORUM SO THE SCHOOL UNDERSTANDS THAT THEY ALONE HAVE THE WHEREWITHAL TO SOLVE THIS PROBLEM AND I HOPE THEY GET IT DONE BEFORE SOMETHING BAD HAPPENS.
ALSO, WE NEED TO GET THE SCHOOL TO POLICE PARENTS WHO ARE ILLEGALLY PARKING ON MAGNOLIA, FORCING DRIVERS TO DRIVE AGAINST TRAFFIC.
GREG GOT A COUPLE OF QUESTIONS AND THE COUNCIL MAY HAVE SOME QUESTIONS.
FIRST OFF, HAVE YOU TALKED TO DAVE AMIR SHERO AT THE DISTRICT OFFICE OR HAVE YOU TALKED TO THE PRINCIPAL OF THE SCHOOL ABOUT THIS? I HAVE NOT.
I THINK THAT WILL BE A GOOD FIRST STEP.
UM, I THINK THE CITY CAN HELP YOU WITH THAT.
AND I'M GOING TO HAVE SOMEBODY FROM THE CITY MEET WITH YOU RIGHT NOW AND GET YOUR CONTACT INFORMATION SO THAT WE CAN START WORKING ON THIS PROBLEM.
I CAN DROP UP THIS LITTLE SPEECH TOO, SO THEY CAN LOOK AT HELPFUL.
AND THEN AS FAR AS, UM, THE ONE THING I WOULD DISAGREE WITH YOU ABOUT IS THAT WE DO HAVE SOME RESPONSIBILITY WHEN IT COMES TO PARKING ILLEGALLY.
AND SO WE'RE GOING TO MAKE SURE THAT OUR POLICE OFFICERS KNOW, UM, THAT THAT'S AN ISSUE AND SEE WHAT THEY CAN DO ABOUT IT.
UM, GRAHAM, ARE YOU, UM, PREPARE THIS TALK AT ALL ABOUT THIS, UH, MODIFICATION? HE'S TALKING ABOUT IT AND I KNOW THAT SCHOOL VERY WELL.
I KNOW WHAT HE'S TALKING ABOUT.
WE NEED TO ASSESS THE SITUATION FIRST BEFORE WE, UH, INVEST CAPITAL DOLLARS INTO SOMETHING HE HAD JUST MET.
HE HAD MENTIONED THAT THERE WAS A, UH, A CHANGE THAT WAS COMING.
SAY THAT THERE'S A, THERE'S A SMALL AMOUNT OF VACATION.
FROM WHAT I UNDERSTAND, THEY'RE ACTUALLY, THEY'RE TRYING TO GET A SMALL MODIFICATION FOR A TRAFFIC SIGNAL.
THERE'S SOME TRAFFIC SIGNAL ADJUSTMENTS THAT ARE GOING ON THAT, THAT ENTIRE AREA.
ALL RIGHT, WELL, UH, WELL, UH, ASK THE OTHER COUNCIL MEMBERS IF THEY HAVE QUESTIONS THEN WE'LL COME BACK TO YOU GRAHAM GRAHAM.
WHAT WOULD YOU BE WILLING TO, UM, ASSIGN SOMEBODY TO WORK WITH THIS GENTLEMAN OF OVER THIS AND THEN WOULD YOU BE WILLING TO COME BACK AND REPORT TO THE COUNCIL WHAT, WHAT HAS HAPPENED? YES, WE CAN DO THAT, SIR.
I THINK THIS IS GONNA GO A LONG WAY TO RESOLVE THIS ISSUE.
I'LL GIVE IT A LITTLE BIT OF TIME AND GO THROUGH THE PROCESS AND IF IT DOESN'T, WOULD YOU BE WILLING TO COME BACK AND LET US KNOW, YOU KNOW, WHAT, WOULD YOU BE WILLING TO COME BACK EITHER WAY? IF IT'S WORKING GREAT.
IF IT'S NOT WORKING, LET US KNOW.
I REALLY APPRECIATE YOU TAKING THE TIME OUT OF YOUR BUSY DAY TO COME TO A COUNCIL MEETING IN THE MIDDLE OF THE DAY AND LET US KNOW THAT WE, A LOT OF TIMES WE DON'T KNOW THINGS ARE PROBLEMS UNLESS SOMEBODY LIKE YOU COMES AND TELLS US.
ON THE POLICING, IT'S, I'M SURE THAT THE POLICE HAS, YOU KNOW, THEIR, WHAT THEY CAN DO.
BUT UH, LOOK THESE PEOPLE, TH TH THE SCHOOL, IT'S THE PARENTS THAT ARE DOING ALL THIS STUFF.
THE COPS COME ONCE IN A WHILE AND DO A LITTLE SOMETHING AND THEN THAT, BUT IT'S A, IT'S A DAILY THING AND I THINK THAT, YOU KNOW, THEY COULD POLICE A LOT THEMSELVES.
YOU KNOW, IT'S JUST A, TO ME THAT'S JUST ME.
BUT UH, MY HUNCH IS THERE'S A LOT WE CAN DO TO MAKE THE SITUATION BETTER.
COUNSEL, ARE THERE ANY MORE QUESTIONS? THANK YOU SIR FOR COMING.
I HAVE ONE MORE THING YOU WANT TO SAY, BRITT ISSUE IF YOU DON'T MIND.
YOU GUYS ASKED ME TO COME BACK AND GIVE A FOLLOWUP.
UM, I HAVE THE, I HAD A, A BAD PROSTITUTION PROBLEM
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ON MY ARM.SO, UM, UH, HERE'S MY UPDATE ON THE PROSTITUTION.
UH, THAT WAS GOING ON THE STREET IN FRONT OF MY HOUSE.
UM, THAT'S, THIS IS ON SOUTH MAGNOLIA, SOUTH OF CHASE, JUST ABOVE THE ELEMENTARY SCHOOL, BUT ON MAGNOLIA.
SO TO REFRESH YOUR MEMORY, I WAS TRYING TO KICK THESE PEOPLE OUT OF MY AREA THERE, YOU KNOW, UH, THIS PROSTITUTION AND IT JUST GOT BIGGER AND BIGGER AND I WASN'T ABLE TO KEEP UP WITH IT AND I ASKED YOU ALL TO HELP ME OUT.
UM, AND I DIDN'T EVEN GET HOME FROM THIS MEETING AND I WAS STOPPED OUT SIDE BY THE POLICE AND THEY CAME UP WITH A PLAN TO START DOING THE REPORTS OUT THERE AND IT WASN'T MUCH, BUT IT WAS, THAT WAS, THAT WAS ALL IT WAS NECESSARY.
THEY GOT THE IDEA AND IT WASN'T JUST ME AGAINST THEM CAUSE AT A CERTAIN POINT THEY KIND OF GO, THIS SKINNY LITTLE GUY, WE DON'T REALLY PAY ATTENTION TO HIM, BUT WHEN THE, WHEN THE POLICE CAME IT, IT REALLY HELPED OUT.
AND, AND, AND NOW, UH, ALSO OVERALL I'D LIKE TO THANK ROLL ALSO, UH, FROM MY BELIEF TRAFFIC ENGINEERING, THEY'RE, THEY'RE, THEY'RE PUTTING A, A STREETLIGHT THERE.
UH, SO, UM, IN ANY CASE, UM, UH, I JUST WANT TO LET YOU ALL KNOW THAT THERE'S A WHOLE LOT LESS SEX GOING ON IN THE CARS IN FRONT OF MY HOUSE.
AND ALSO AGAIN, THANK YOU TO THE POLICE AND THANKS TO A ROLLO.
IF YOU HADN'T COME UP AND SPOKEN UP, UH, IT WOULD BE THE SAME AS IT WAS.
THIS IS THE SAME THING, BUT IT'S KINDA ON A RELATE IT DEAL.
THAT SAME AREA, THEY HAVE A DEVELOPMENT GOING IN, YOU KNOW, RIGHT BEHIND CHASE ELEMENTARY, THAT HUGE, A SUBDIVISION THAT'S GOING IN.
THAT GUY, UH, THE DEVELOPER HAS BOUGHT ONE MORE HOUSE.
AND THAT HOUSE SITS THERE NOW ABANDONED AND HE'S DOING WORK.
BUT LAST TIME THERE WAS THREE ABANDONED HOUSES THERE AND I HAD A FIGHT WITH 25 HOMELESS GUYS LIVING THERE ALL THE TIME.
HYPODERMIC NEEDLES, LOOKERS, EVERYTHING COULD, I HAVEN'T ASKED HIM, BUT I'M HOPING THAT SOMEBODY COULD EXPEDITE THE, UM, DEMOLITION JUST SO THAT I, IF THAT HOUSE IS LEFT ALONE, IT'S GOING TO BE A ATTRACTIVE NUISANCE FOR THE GUYS.
THE BAD GUYS THAT COME IN THERE.
AND IT WAS ABOUT THE LAST TIME THEY HAD ABANDONED HOUSES ON THAT PROPERTY.
THEY HAVE THREE ABANDONED HOUSES AND I WAS FIGHTING IN A FIGHT AND FINALLY THEY FINALLY ENDED UP IN A HUGE FIRE DURING SCHOOL HOURS NEXT DOOR TO CHASE ELEMENTARY.
AND UH, THANK GOD THAT WAS THE END OF THIS PROBLEM.
BUT THE AMOUNT OF PEOPLE THAT GO INTO THOSE AMANDA AND HOUSES, UNBELIEVABLE.
AND IT'S UNSTOPPABLE ONCE THEY'RE IN.
SO I'M JUST HOPING, HOPING THAT NUMBER ONE, HE WANTS TO TEAR IT DOWN AND NUMBER TWO, Y'ALL CAN HELP HIM EXPEDITE THAT THING SO THAT I DON'T HAVE TO DEAL WITH THE HOMELESS PEOPLE.
GREG, COULD YOU, UM, ADDRESS THAT ISSUE AS WELL? WE'LL LOOK INTO, SEE WHERE WE'RE AT WITH THE PERMIT.
I DON'T KNOW WHERE WE'RE AT, BUT WE'LL, IF THERE'S AN OPPORTUNITY TO EXPEDITE, WE WILL
WE DON'T HOLD THAT BACK CAUSE IT'S A GOOD THING FOR THE COMMUNITY.
UM, DO I JUST GO NOW OR DO I HAVE SOMEBODY GONNA MEET WITH YOU? UM, IF YOU SIT DOWN, HERE'S SOMEBODY, SOMEBODY WILL ALL TALK TO YOU AND GET YOUR INFORMATION AND I WILL SEE YOU AGAIN, UH, A LATER DATE.
YOU TELL US HOW MUCH BETTER THINGS ARE I HOPE.
THE LAST SPEAKER IS JOEL'S CONSIDERING I DRAW.
WELL, GOOD AFTERNOON MAYOR COUNCIL MEMBER.
I HAVE LITTLE DONUT SHOP DOWNTOWN, UH,
AND UM, ABOUT A YEAR AND A HALF AGO I DECIDED TO BRING MY BUSINESS HERE TO EL CAHONE.
UM, I WAS REALLY IMPRESSED WITH THE DOWNTOWN PROMINENT AND IN THE FIELD THAT DOWNTOWN HAD, UH, I WORKED REALLY HARD AND ANXIOUSLY, UH, WITH SEVERAL THOUSANDS AND THOUSANDS OF DOLLARS TO, UH, BRING A NICE CHARACTER TYPE SHOP TO DOWNTOWN.
SO PEOPLE CAN COME AND ENJOY IT.
UM, BUT, UH, QUICKLY AFTER I OPENED, I, I GOT THE REALITY THAT THERE'S SOME CHALLENGES TO DOWNTOWN EL CAHONE AND, UM, BEING PART OF, UM, IN MY LIFE, I, I SEE THINGS
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AS BEING PART OF THE SOLUTION INSTEAD OF JUST A PROBLEM.I TRIED TO, UM, ATTACK THOSE, THOSE CHALLENGES.
UH, AND WHAT I SEE IS IT'S HARD TO GET, THERE'S A NUMBER OF CARS THAT COME DOWNTOWN EVERY DAY, ALL DAY LONG.
AND I JUST WAS TRYING TO GRASP SOME OF THOSE PEOPLE IN AND GET THEM TO STOP AND GET THEM TO WALK DOWNTOWN, GET THEM TO ENJOY A LITTLE DONUT, A SANDWICH ON THE PROMINENT WALK IN THE PARK.
UM, SO I PUT SOME SIGNS UP, SOME LITTLE THINGS THAT I HAVE AT MY OTHER LOCATIONS.
ALSO THINGS THAT THE KIDS ENJOY, THINGS THAT THEY COULD GO OUT AND TAKE A PICTURE IN FRONT OF AND SMILE AND HAVE THEIR PARENTS ENJOY IT AND MAKE A LITTLE MEMORY OF DOWNTOWN.
UM, BUT SOON AFTER THAT I'VE GOT, UM, VIOLATIONS AND CITATIONS THAT, UM, I DIDN'T REALLY UNDERSTAND.
UM, SOME OF THE THINGS THAT THEY SENT ME, THERE WERE EXAMPLES OF SIGNS THAT WERE ATTRACTIVE AND SIGNS WERE UNATTRACTIVE.
AND TO ME, THEY ALL KIND OF LOOKED SIMILAR, UM, IN THE MODEL THAT THEY WERE.
AND, AND I UNDERSTAND THAT WE NEED A LITTLE CHARACTER DOWNTOWN AND I BROUGHT THE SIGN THAT I HAVE THAT HAS CHARACTER THAT BRINGS KIDS OUT TO WANT THEIR PICTURE IN FRONT OF IT.
UM, I GUESS IT JUST DOESN'T FIT INSIDE SOME OF THE PREFERENCES THAT YOU HAVE DOWNTOWN.
AND I, I'M JUST A LITTLE CONFUSED ON WHAT IS AN ATTRACTIVE TO ME.
I THINK MY SLIDES ARE DRAFTED, BUT WHAT IS AN ATTRACTIVE SIGN AND WHAT IS ATTRACTIVE SIGN? THEY SENT ME SOME EXAMPLES, BUT UM, I REALLY JUST NEED SOME HELP DOWNTOWN.
I NEED SOME, SOME HELP WHERE IF THERE'S SOMETHING THAT DOESN'T FIT IN THAT THEY WOULD COME AND SAY, HEY, JOEL, COME UP TO MY OFFICE.
LET'S SEE IF WE CAN GET YOU TO KIND OF STILL ACHIEVE WHAT YOU WANT TO ACHIEVE AND STILL STAY INSIDE THE LINES.
UM, YOU KNOW, I KNOW SOME OF YOUR STUFF GOES BY MY SHOP TWO AND THREE TIMES A WEEK AND I JUST DIDN'T GET THAT HOMETOWN FEEL OF HEY, YOU KNOW, THAT MAYBE DOESN'T FIT IN, BUT LET'S, LET'S TALK ABOUT SOMETHING AND SAID, I'M JUST GETTING, YOU KNOW, CITATIONS THAT SCARE YOU A LITTLE BIT OF THOUSAND DOLLARS PER DAY, UH, VIOLATIONS.
AND TO ME, I'M JUST WORKING REALLY, REALLY HARD AT JUST TRYING TO BRING COMMERCE AND MEMORIES AND, AND THINGS IN CHARACTER TO OUR DOWNTOWN.
SO I'M REALLY RESPECTFULLY ASKING YOU TO, UM, SEE IF WE CAN GET A MEETING TOGETHER, SEE IF WE CAN CHANGE SOME OF THE MAYBE ARCHAIC OR MAYBE JUST PREFERENCES OF DOWNTOWN TO ADD A LITTLE CHARACTER SO WE CAN SURVIVE DOWNTOWN FINANCIALLY AND OUR BUSINESSES AND WE CAN CREATE SOMETHING THAT'S WANTED IT TO BE DOWNTOWN.
WE'LL HOLD TIGHT FOR A SECOND.
JOEL GRAHAM, A COUPLE OF THINGS.
FIRST OF ALL, IT'S MY UNDERSTANDING THAT NO CITATIONS HAVE BEEN ISSUED.
THAT COULD BE WRONG, BUT I KNOW THAT THERE'S BEEN TWO SORT OF IN STORE VISITS AND I THINK WE'VE SENT TWO WARNING LETTERS AND IT DOES TALK ABOUT IF THINGS, IF WE HAVE TO SITE THEN THERE WILL BE, THESE ARE THE PENALTIES OF THE CITATION, BUT I DON'T BELIEVE A CITATION HAS BEEN BEEN ISSUED.
UM, I ALSO UNDERSTAND THAT THE, THE STANDARDS BY WHICH THE SIGNS ARE REGULATED IN THE DOWNTOWN, WE'RE, WE'RE A BIT OF A NEGOTIATION BETWEEN THE DOWNTOWN PARTNERSHIP AND THE CITY COUNCIL AT THE TIME.
UH, I THINK THE COURSE OF ACTION THAT I'D RECOMMEND TO, UM, MR SCOTTY IS THAT HE ACTUALLY ENGAGED THE DOWNTOWN BUSINESS PARTNERSHIP AND SEE IF THEY WANT TO REOPEN THAT AND THEN WE CAN WORK WITH THEM AS A WHOLE RATHER THAN PIECEMEAL ONE STORE AT A TIME.
I THINK THAT WOULD BE THE GOAL TO HAVE A UNIFORM SIGN, UH, PROGRAM IS, SO THERE WOULD BE SOME LEVEL OF UNIFORMITY BUT, BUT THERE IS SOME VALUE IN HAVING SOME, SOME VARIATION AS WELL.
BUT I WOULD NOT RECOMMEND THAT THE CITY COUNCIL ENGAGE IN, IN SORT OF ONE Z, ONE BUSINESS AT A TIME, CHANGES TO THE MUNICIPAL CODE.
THIS REALLY SHOULD BE HELD AT A MORE OF A HOLISTIC APPROACH.
THAT'S AT LEAST MY RECOMMENDATION.
DO YOU KNOW THE FOLKS DOWNTOWN BUSINESS PARTNERSHIP? NO, I DON'T.
I UM, I'VE BEEN KIND OF, UH, FOCUSING ON BUSINESS.
I'VE NEVER BEEN APPROACHED BY THE DOWNTOWN.
UM, I NEVER ASKED FOR REAL DEVELOPMENT MONEY.
I, I'M JUST TRYING TO REALLY STRIVE IT AT KEEPING MY BUSINESS KINDA GOING.
UM, YOU KNOW, EVERY SIGN IS NOT GOING TO FIT IN JUST EXACTLY THE WHAT EVERYBODY ELSE'S SIGNS.
THAT'S WHY THEIR SIGNS ARE JUST A LITTLE DIFFERENT VARIATIONS.
UM, SO LIKE I SAID, I, I, I WOULDN'T WANT YOU GUYS TO CHANGE THE POLICY IF THERE IS A POLICY.
UM, LIKE I SAID, I HAD SOME EXAMPLES THEY SENT ME.
I JUST WAS WONDERING IF WE COULD ADD SOME CHARACTER AND SEE IF WE CAN ALL LIVE INSIDE THE, THE LINES TOGETHER.
SO ALL I WOULD REALLY REQUEST IS JUST
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KIND OF A SIT DOWN WITH MAYBE GRAHAM AND, AND TONY AND SEE IF WE CAN COME UP WITH SOMETHING THAT'S ACCEPTABLE.UM, I, I DON'T KNOW WHO THE REDEVELOPMENT CO OR ECONOMIC, WHAT IS IT? THEY CALL, THERE'S A GROUP, A GROUP CALLED THE DOWNTOWN BUSINESS PARTNERSHIP.
YOU KNOW THAT THIS AREA IS A, A BUSINESS IMPROVEMENT DISTRICT.
SO THE, THE GROUP THAT RUNS IT, THEY HAVE A LOT TO DO WITH THE REGULATIONS THAT WE HAVE THERE AS FAR AS SIGNAGE AND OTHER THINGS THAT HAVE TO DO WITH THE DOWNTOWN AREA.
I THINK, I THINK IT'S ACTUALLY A GOOD, A GOOD IDEA TO TALK WITH THEM TOO ABOUT THIS.
AND I, I, I DON'T THINK IT'S, I DON'T THINK WHAT YOU'RE PROPOSAL IS A BAD IDEA.
THERE'S, THERE'S ALWAYS ROOM FOR IMPROVEMENT IN THESE OF THINGS.
UM, GRAHAM, COULD YOU HELP HELP HIM FACILITATE THAT? UH, GET HIM THE CONTACT INFORMATION, THE PEOPLE YOU'VE TALKED TO.
LET'S START JOEL, START WITH THAT.
UM, DARRELL PRIEST IS RUNNING THAT.
HE'S, UH, HE'S OBVIOUSLY A BUSINESS FRIENDLY GUY.
AND IF YOU THEN IT'S NOT WORKING AND YOU NEED TO BUMP IT UP TO A HIGHER LEVEL, WE CAN, WE CAN ALWAYS DO THAT.
BUT A DOPE DON'T GIVE UP ON IT.
I THINK WHAT YOU'RE ASKING FOR IS REASONABLE AND WE SHOULD ALL CONSTANTLY LOOKING AT WHAT OPTIONS WE HAVE.
AND THAT'S JUST SORT OF THE SOLUTIONS THAT I NEED TO OPTIONS THAT NEED AS TO THE SAB AVENUES WHERE WE CAN GO AND TRY TO FIGURE THINGS OUT JUST BEFORE LETTERS AND CITATIONS THAT, YOU KNOW, FRUSTRATE OTHER BUSINESS PEOPLE, NOT JUST ME.
WELL, I KNOW THAT, THAT THAT CAN BE SCARY WHEN THE, WHEN THE GOVERNMENT, UH, EVERY TIME I SEE A LETTER FROM THE IRS I START TO SWEAT.
THERE'S ANY QUESTIONS MR GOLDWELL.
IT'S A GENERAL COMMENT ON A COMMENT ON JUST THE SIGN ATMOSPHERE DOWNTOWN.
THE STRUGGLE IS A SMALL BUSINESS OWNER IS YOU HAVE CARS DRIVING BY, BUT YOU DON'T REALLY KNOW WHAT'S THERE FOR A BUSINESS DISTRICT.
YOU GOT TO TAKE YOUR EYES OFF THE ROAD AND LOOK UP ON THE SIDE BECAUSE THERE'S NOTHING AN EYE LEVEL.
SO I'M SYMPATHETIC TO A SIGN THAT HAS SOME CHARACTER, SOME PERSONALITY THAT SAYS, WOW, THAT'S REALLY COOL.
THAT'S A SUCH AND SUCH A SHOP THAT'S A SUCH AND SUCH A SHOP WITHOUT HAVING TO, TO LOOK 20 FEET UP AND TAKE MY EYES OFF THE ROAD.
I THINK THAT THAT KIND OF SIGN CHARACTER ADDS LIFE TO A COMMUNITY, ESPECIALLY WHEN WE'RE KIND OF HOPING PEOPLE WILL GET OUT OF THEIR CARS AND WALK, BUT THEY DON'T KNOW IF THEY DON'T SEE AN EYE LEVEL, WHAT KIND OF THINGS THEY ARE.
WITH THAT SAID, THERE'S ALSO A BALANCE.
YOU DON'T WANT TO SEE A BIG UH, TOY INFLATABLE MATTRESS SITTING ON THE SIDE OF THE SIDEWALK INDICATING IT'S A FURNITURE STORE.
I'M MORE, UH, CONCERNED ABOUT ALL THESE LED LIGHTS THAT SEEMED TO RIM THE WINDOWS AND THE FLASHING SIGNS AND THINGS LIKE THAT.
THAT LOOKS MORE GAUDY THAN A PINK DONUT SIGN, WHICH SAYS, WE SELL DONUTS HERE.
SO I THINK GETTING TOGETHER WITH THE DOWNTOWN PARTNERSHIP IS A GREAT IDEA.
LET'S, LET'S TIGHTEN SOME THINGS UP AND MAKE SOME MORE THINGS, MORE FLEXIBLE COMMUNITY CHARACTER.
ANY OTHER COMMENTS OR THOUGHTS? PHIL? NO, I THINK IT'S A GREAT IDEA.
I MEAN WE'VE INVESTED A LOT OF, UH, CAPITAL IN REDOING THE MAGNOLIA.
I THINK WE ALL WANT TO SEE THE DOWNTOWN THRIVE.
SO LISTENING TO OUR BUSINESSES DOWNTOWN IS PART OF THAT EQUATION.
AND YEAH, STARTING WITH THE DOWNTOWN BUSINESS PARTNERSHIP, WHICH SEEMS TO COALESCE.
I THINK THAT'S A GREAT START AND UM, I'M ALL FOR IT, SO.
ALL RIGHT, WELL YOU MAY HAVE JUST VOLUNTEERED TO, TO LEAD THIS WHOLE EFFORT, SO I APPRECIATE YOU COMING AND SITTING UP.
LOOK, GO THROUGH THE PROCESS AND COME BACK AND LET US KNOW HOW IT'S GOING AND I APPRECIATE IT.
I'M SURE THAT WE CAN FIND A WAY THAT EVERYBODY WINS.
I'M SURE WE CAN'T DO, THAT'S WHY WE'RE HERE.
DID YOU BRING DONUTS WITH YOU TODAY? I DIDN'T, BUT I'M JUST STEPS AWAY AND I KNOW YOU GUYS GOT A SHORT AGENDA, SO I'LL SEE YOU ALL DOWN THERE.
WELL, I WAS A LITTLE PHRASE AND A CALL ME OUT AS BEING ONE OF THE GUYS THAT COMES THERE THREE TIMES A WEEK.
SO ANYMORE CARDS? NO MORE CARDS.
[9. Delinquent Refuse Collection Charges RECOMMENDATION: That the City Council: Opens the Public Hearing and considers public testimony; Closes the Public Hearing; Adopts the next Resolution, in order, confirming the list of property owners as delinquent in the payment of their mandatory trash service bills; and Authorizes the City Clerk to record the amount owed as a lien on the property and forward the list to the County Tax Assessor for billing on the next property tax bill.]
WE ARE NOW AT PUBLIC HEARINGS.ITEM NINE IS FOR DELINQUENT REFUSE COLLECTION CHARGES AND STAFF.
WOULD YOU TELL US ABOUT THIS PLEASE? YEAH, WE DO.
GOOD AFTERNOON MAYOR AND CITY COUNCIL MEMBERS.
[00:25:01]
YOUR DIRECTOR OF PUBLIC WORKS AND HAPPY TO INTRODUCE THIS ITEM TO YOU TODAY.UM, AS YOU MAY BE ACCUSTOMED, NORMALLY WE HAVE TWO ITEMS THAT ARE VERY SIMILAR, A REFUSE AND A, A SEWER, A DELINQUENT SEWER CHARGES.
WE DON'T HAVE OUR SEWER DELINQUENT CHARGES.
SO, UM, AND THE REASON BEHIND THAT IS BECAUSE WE'RE IN THE PROCESS OF, OF SELECTING A LONGTERM SOLUTION FOR SEWER BILLING OPTIONS.
SO BECAUSE OF THAT, WE ARE NOT, UH, INCURRING ANY LATE PENALTIES WITH THE BILLING.
SO, UH, WE'RE, WE'RE HAVING A LITTLE GRACE PERIOD THERE SO THERE AREN'T ANY DELINQUENT A SEWER CHARGES THIS, THIS MONTH.
UH, SO I BRING TO YOU THE DELINKO REFUGE COLLECTION CHARGES.
AND, UM, JUST AS A LITTLE BACKGROUND, UH, WE SENT OUT 685, UH, LIEN NOTICES TOTALLY IN A A HUNDRED THOUSAND 600 $9,669 AND 69 CENTS.
AND, UH, SINCE WE SENT OUT THOSE NOTICES, A 253 OF THEM HAVE BEEN PAID OFF, LEAVING A BALANCE AS OF YESTERDAY OF 432, UH, DELINQUENT ACCOUNTS TOTALING $64,745 AND 4 CENTS.
AND SO, UH, BEFORE YOU TODAY IS, IS THAT RATIFICATION AND FOR YOUR VOTE AND WE ASK YOU TO PLEASE CONSIDER THAT.
ARE THERE ANY, UM, SPIRIT CARDS OF THIS ITEM? NO CARD, SIR.
DO WE NEED TO CLOSE THE PUBLIC HEARING THAT WITH NO CARS? YEAH.
THE CLOSE THE PUBLIC HEARING MOVE.
MOTION CARRIES BY UNANIMOUS VOTE.
HEATED DISCUSSION OR IT'S ABOUT LIKE TO MAKE A MOTION.
MOTION CARRIES BY UNANIMOUS VOTE.
[10. Strategies to Address Unfunded Pension Liabilities RECOMMENDATION: That the City Council: Directs staff to commence judicial validation proceedings in order to obtain authority to issue Pension Obligation Bonds in the future; Directs City Manager to enter into a professional services agreement with Stradling, Yocca, Carlson & Rauth to file the judicial validation proceedings; Directs staff to establish a Public Agency Retirement Services (PARS) Section 115 Trust to fund employee benefit costs and serve as pension stabilization fund; Directs staff to draft Pension Funding Policies to document long-term financing plan to address unfunded retirement costs and to bring draft policies back for City Council adoption.]
ADMINISTRATIVE REPORTS, WE HAVE ONE ITEM REGARDING STRATEGIES TO ADDRESS UNFUNDED PENSION LIABILITIES AND STAFF.WOULD YOU PLEASE TELL US ABOUT THIS? GOOD AFTERNOON, MR MAYOR.
MEMBERS OF THE COUNCIL, UM, FOR YEARS, CITY COUNCILS AND CITY STAFFS AROUND THE STATE HAVE BEEN TALKING ABOUT THE CHALLENGE OF INCREASING OR INCREASE IN PENSION COSTS.
MUCH OF THIS IS DRIVEN BY THE JURY, A SPECIFIC JURISDICTIONS, UNFUNDED LIABILITY, PENSION LIABILITY, UH, EL CORONAS NOT BEEN DISSIMILAR FROM ALL OF THOSE OTHER CITIES WE'VE BEEN TALKING ABOUT IT.
WE'VE HIRED CONSULTANTS OVER THE YEARS TO UNDERSTAND IT.
UM, THE CITY COUNCIL WAS VERY PROACTIVE AND FISCALLY DISCIPLINED AND HAS BEEN PUTTING MONEY AWAY YEAR AFTER YEAR WHEN THERE'S SOME RESERVE OR SUR SURPLUS IN THE RESERVES AND HAS, UM, SOCKED AWAY ABOUT $8 MILLION, WHICH IS PRETTY RARE FOR A LOT OF CITIES.
UNFORTUNATELY, THAT $8 MILLION IS JUST SITTING IN A BANK ACCOUNT THAT EARNS A ABOUT 2% INTEREST ON A GOOD DAY.
SO IT'S, IT'S NOT DOING A LOT OF GOOD.
WE'VE SET THIS MONEY ASIDE WITHOUT DOING MUCH.
BUT ONE OF THE CHALLENGES IS THAT, THAT EVERY ANALYSIS THAT WE'VE RUN, BY PAYING THAT $8 MILLION IN LOSING ALL THAT SECURITY, IT DOESN'T MAKE MUCH OF A DIFFERENCE IN THE MASSIVE AMOUNT OF PENSION LIABILITY THAT WE HAVE.
SO IT'S HARD TO GIVE UP THAT MUCH MONEY IN EXCHANGE FOR NOTHING, UM, WITHOUT REALLY SEEING A BIG IMPACT.
ONE OF THE THINGS THAT THE CITY COUNCIL DID EARLIER THIS YEAR WAS DIRECT STAFF TO HIRE, UM, UH, FROM URBAN FUTURES TO LOOK AT HOW TO UTILIZE NOT ONLY THAT MONEY, BUT OTHER POLICIES AND OTHER TOOLS THAT ARE AVAILABLE IN THE TOOLBOX TO SORT OF TACKLE THIS PENSION PROBLEM.
AND LET'S BE HONEST, IT'S NOT GOING TO GO AWAY.
THERE'S NO MAGIC WAND THAT CAN JUST MAKE IT HAPPEN.
BUT THERE ARE SOME STRATEGIES THAT WE CAN START TAKING BIGGER BITES AT THIS MASSIVE ELEPHANT THAT WE ARE TRYING TO CONSUME.
SO, UM, WHAT WE'VE DONE IS WE'VE WORKED WITH URBAN FUTURES STAFF AND WE'VE IDENTIFIED SOME RECOMMENDATIONS THAT WE THINK MAKE SENSE FOR THIS CITY.
I'M JULIO MORALES, A DIRECTOR WITH URBAN FUTURES IS GOING TO KIND OF TAKE OVER THE PRESENTATION FROM HERE, TALK ABOUT SOME OF THE IDEAS THAT WE'VE DISCUSSED AND THEN SOME STRATEGIES THAT WE'RE RECOMMENDING THE CITY COUNCIL TAKE ACTION ON.
AS HE CONCLUDES ONE OF THE LAST SLIDE, SEE IS A LIST OF FOUR RECOMMENDATIONS, WHICH ARE ALSO INCLUDED IN THE STAFF REPORT THAT WE'D LIKE TO GET SOME DIALOGUE IN SOME DIRECTION FROM THE COUNCIL.
UH, GOOD AFTERNOON, MAYOR, UH, MEMBERS OF THE CITY COUNCIL.
I GUESS TODAY'S CONVERSATION IS GOING TO BE HOW TO EAT THIS ELEPHANT.
SO IF I MAY, WE'RE GOING TO COMMENCE ON THIS
[00:30:01]
PROCESS.UM, SO I'M GOING TO QUICKLY JUST GO OVER SOME, SOME BASIC NUMBERS TO GET A FUNDAMENTAL AND THEN KIND OF GO OVER AN APPROACH THAT WE'D LIKE TO TAKE AND THEN PROVIDE SOME SPECIFIC RECOMMENDATIONS.
SO, UM, COLLECTIVELY YOU HAVE A $204 MILLION LIABILITY.
THEY'RE BROKEN UP BETWEEN YOUR MISCELLANEOUS PLAN AND YOUR SAFETY PLAN BECAUSE THEY GET DIFFERENT BENEFITS.
BUT THE WAY YOU KIND OF TAKE A LOOK AT THE PIE, THE UNFUNDED LIABILITY IS THAT GRAY AMOUNT AND ACTUARY DETERMINES HOW MUCH YOU OWE.
IN TOTAL, YOU HAVE MARKET VALUE ASSETS.
SO THE NET IN FOR EXAMPLE, FOR THE GREEN, WHICH IS YOUR MISCELLANEOUS, IS 77 MILLION.
AND FOR YOUR SAFETY PLAN YOU HAVE A TOTAL LIABILITY OF $329 MILLION.
YOU HAVE ASSETS OF 203 MILLION, SO YOU HAVE AN UNFUNDED PORTION OF $126 MILLION.
COLLECTIVELY IT COMES OUT TO 204 MILLION.
IT'S IMPORTANT FOR YOU TO NOTE THERE REALLY ARE TWO PARTS OF YOUR PENSION LIABILITY.
ONE PART IS YOUR NORMAL COSTS.
I'M GOING TO LIKEN IT TO YOUR WATER BILL OR YOUR ELECTRICAL BILL.
THAT'S THE CURRENT MONTH'S PAYMENT.
THAT'S WHAT THE CURRENT EMPLOYEES EARN IT IN THE CURRENT YEAR.
AND THE UAL, THE PART IN THE GRAY THAT WE'RE TALKING ABOUT IS A PAST DUE PAYMENT.
NOW, IN 2013 CALPERS HAD PEPPER REFORM, WHICH YOU KNOW, THEY LOWERED THE BENEFIT RATIO, UM, THAT EMPLOYEES WOULD GET PAID.
IN ADDITION TO THAT, THEY STARTED A WHOLE NEW PROGRAM OF FISCAL TRANSPARENCY AND CHANGED THE WAY THAT PEOPLE LOOKED AT THE UAL.
SO NOW YOU PAY A PERCENTAGE OF PAYROLL FOR YOUR CURRENT EMPLOYEES, AND WE HAVE ESSENTIALLY A SERIES OF LOAN PAYMENTS FOR THE PAST DUE AMOUNT.
SO THIS UAL IS COMPRISED OF A SERIES OF PAYMENTS AND RIGHT NOW YOU HAVE ABOUT $12 MILLION OF THE PAYMENTS DUE AND THESE ARE FIXED DOLLAR PAYMENTS.
THAT'S IMPORTANT TO NOTE BECAUSE THEY'RE GOING TO GO UP TO $21 MILLION.
SO RIGHT NOW WE'RE AT 12 AND GOING UP TO $21 MILLION AND AS GRAHAM NOTED, $8 MILLION WOULD NOT DO MUCH TO ALLEVIATE THAT IN ANY INDIVIDUAL YEAR.
IT'S A GREAT AMOUNT TO START WITH AND WE THINK IT'S A GREAT TOOL IN THE FUTURE, BUT I THINK WE HAVE TO TAKE A LOOK AT SOME OTHER SOLUTIONS.
I'M GOING TO GO REAL QUICKLY TO TALK ABOUT THE NUMBERS AND GO BACK JUST TO THAT SLIDE SO YOU CAN UNDERSTAND EACH YEAR, AND THIS IS AN IMPORTANT THING TO NOTE.
CALPERS ESSENTIALLY ADJUST YOUR BALANCE JUST LIKE YOU WOULD WITH ANY UTILITY.
OH, LAST MONTH YOU PAID $200 YOU OWED 200 GREAT, YOU'RE DUE, BUT NOW YOU DIDN'T PAY ENOUGH IN THE CURRENT BILLS.
SO WHAT HAPPENED IS, AND THIS WAS EXPECTED, YOU WENT FROM $185 MILLION TO $204 MILLION.
NOW THIS WAS EXPECTED FOR THE MOST PART.
SO WHAT WE'RE GOING TO EXPLAIN TO YOU IS THAT YOUR UAL, YOUR UNFUNDED LIABILITY IS REALLY COMPRISED OF A SERIES OF LOANS.
AND IF YOU CAN THINK OF IT AS A SERIES OF LOANS, I THINK IT'S A LOT EASIER TO UNDERSTAND.
ALL THOSE LOANS HAVE DIFFERENT TERMS. AS YOU CAN SEE THE TERM, THEY'RE FIVE 2030 30 YEARS IN THE LIKE, AND THEY HAVE DIFFERENT AMOUNTS AND PAYMENTS.
SO IF YOU WANT TO TAKE A LOOK AT IT DIFFERENTLY, YOU MIGHT SAY THAT YOU HAVE A SERIES OF 40 LOANS OR 40 CREDIT CARDS, ALL AT 7% HOWEVER YOU WANT TO SEE THAT WITH DIFFERENT MONTHLY PAYMENTS OR IN THIS CASE, ANNUAL PAYMENTS.
NOW, LAST YEAR IN 2018 YOU HAD A NEW ACTUARIAL EVALUATION AND CALPERS DID THREE THINGS.
NUMBER TWO WAS THE DISCOUNT RATE, WHICH EVERYONE IS ANTICIPATING.
THAT WAS THE FINAL STEP FROM SEVEN AND A QUARTER TO 7% BUT IN ADDITION THEY CHANGED THE METHODOLOGY.
WHAT THEY'RE REALLY DOING IS GETTING MORE AND MORE ACCURATE PROJECTIONS.
UNFORTUNATELY, SOMETIMES THEY COST MORE MONEY, SO FOR EXAMPLE, THEY TRACKED HISTORICAL EARNINGS.
SOMETIMES YOU MAY HAVE AN EMPLOYEE LIKE GRAHAM WHO WAS WORKING AS A CITY MANAGER RETIRES AND THEN DECIDES TO TAKE ANOTHER POSITION AS A UH, LET'S SAY MANAGEMENT ANALYST ONE CAUSE HE JUST LOVES WORKING IN A DEPARTMENT.
WELL, THE WAY THE MODEL WORKS IN THEIR PROJECTIONS, HIS SALARY WOULD GO ONE WAY AND BE CUT IN HALF, BUT THE PROJECTIONS WOULD USE HIS LAST YEAR.
SALARY IS THE LAST THREE YEARS.
WHAT THEY NOW DO IS TAKE HISTORICAL EARNINGS TRACKING SO IT'S MORE ACCURATE.
ALSO THE MODEL INSTEAD OF DOING SEMI-ANNUAL TRACKING NOW DOES IT ON A MONTHLY BASIS.
LONG STORY SHORT, IT ENDS UP GETTING MORE ACCURATE PROJECTIONS, BUT IT DIDN'T WORK TO ANYONE'S ADVANTAGE.
THE LAST PART, AS YOU MAY KNOW, AND THIS IS THE PART THAT WE WILL HAVE AN ADJUSTMENT EACH AND EVERY YEAR, IS THE CALPERS RETURN.
NOW YOU GOT A CREDIT FOR CALPERS WERE TURNED LAST YEAR.
THEY RETURNED 8.6% AND THE HURDLE RATE OR BENCHMARK RATE IS 7% SO EVERY YEAR THAT YOU EXCEED 7% YOU GET A CREDIT.
EVERY YEAR YOU'RE BELOW, YOU GET AN ADDITIONAL BASE ADDED ON.
NOW, I DON'T KNOW WHAT HAPPENED YESTERDAY, I DIDN'T FIGURE OUT WHAT HAPPENED IN THE MARKET TODAY AS OF CLOSE, BUT WE LOST ALL OF OUR EARNINGS FOR THE CALENDAR YEAR LAST YEAR.
NOW IF YOU ENDED UP THERE, WE'D PROBABLY BE ABOUT 5% FOR THE YEAR.
HOWEVER, RECUPERATE FOR THE END OF THE YEAR,
[00:35:01]
WE COULD END UP AT THE SAME LEVEL OR ANOTHER CREDIT.BUT THE ONE THING THAT IS CONSISTENT IS EACH AND EVERY YEAR, NO MATTER WHAT, CALPERS MAKES AN ADJUSTMENT FOR INVESTMENT PERFORMANCE AS WELL AS SOME OTHER FACTORS.
SO WHAT WE DID IS WE MET WITH STAFF, WE TALKED ABOUT A NUMBER OF FACTORS, AND I THINK ONE OF THE THINGS IS THIS IS A REALLY BIG ELEPHANT AND YOU NEED A NUMBER OF SOLUTIONS ON HOW TO CUT IT AND CONSUME THIS ALL AT ONCE.
AND I THINK THE MOST IMPORTANT THING THAT THE RATING AGENCIES ALWAYS WANT YOU TO KNOW IS THAT EVEN IF YOU ATE THAT WHOLE ELEPHANT, THERE MIGHT BE MORE ELEPHANT SERVINGS COMING LATER ON.
THAT THEY WANT YOU TO KNOW THAT THERE'S ADDITIONAL BASIS.
SO EVEN IF YOU PAY OFF THAT 204 A COUPLE OF YEARS FROM NOW, YOU COULD GET AN ADDITIONAL BASE.
WE'RE IN THE FIVE OR $10 MILLION.
WHAT THAT REALLY MEANS IS THAT THIS IS A LONGTERM PROBLEM THAT WE HAVE TO ADDRESS AND HAVE TO THINK OF SOLUTIONS, NOT AS JUST ONE TIME FIXES, BUT SYSTEMATIC WAYS OF APPROACHING IT.
SO ONE OF THE THINGS WE DO IS YOU DEVELOP A PENSION MODEL.
WE LOOKED AT SOME, UH, RECESSION SCENARIOS AND WE'VE TRIED TO DEVELOP A COMPREHENSIVE PLAN.
AND TODAY WE'RE COMING UP WITH INITIAL STEPS START MOVING FORWARD AND THEN THAT PROCESS, PROBABLY THE KEY COMPONENT OF THAT IS DEVELOPING A PENSION FUNDING PLAN BECAUSE WE'LL COME UP WITH FINANCIAL TERMS, BUT WE'RE GONNA NEED A POLICY DOCUMENT BOTH FOR THE STAFF AND FOR THE COUNCIL TO SERVE AS A GUIDELINE IN THE FUTURE BECAUSE THIS ISSUE IS GOING TO BE A LONG MORE THAN ONE OR TWO OR THREE OR FOUR CITY COUNCILS.
SO YOU'RE GOING TO NEED A POLICY DOCUMENT WHICH CAN BE AND SHOULD BE REVISED FROM TIME TO TIME.
THAT'S GOING TO SERVE AS THE GUIDING PRINCIPLES OF HOW YOU'RE GOING TO ADDRESS THESE FINANCIAL ISSUES.
AND PRIMARILY YOU'LL DESCRIBE THE LIABILITY.
YOU WILL TALK ABOUT HOW YOU'RE GOING TO ALLOCATE RESOURCES, NAMELY AT THE END OF THE YEAR, IF YOU HAVE ANY ACCESS MONIES OR RESERVES, IT'S ALWAYS AS ISSUE CAUSE THERE'S A PREP PROJECT YOU WANT TO FINANCE, BUT AT THE SAME TIME, THIS PRO, THIS FINANCING REQUIRES, REQUIRES LONGTERM FINANCIAL DISCIPLINE.
SO IT'S ALWAYS GOING TO BE THIS ISSUE.
WE ENDED UP WITH $2 MILLION EXTRA, WHERE SHOULD IT GO? HOW MUCH OF IT SHOULD GO TOWARDS THE PENSION LIABILITY, HOW BIG IS THAT PENSION LIABILITY.
YOU CAN STOP ME AT ANY POINT IF YOU HAVE ANY QUESTIONS BY THE WAY.
UM, SO WE'RE GOING TO, THAT'S PART OF THE DIRECTION WE'RE GOING TO ASK TO HELP DRAFT THAT FUNDING POLICY AND WE'LL COME BACK WITH A, A FLESHED OUT POLICY, UH, IN AN UPCOMING MEETING, CORRECT GRAM.
SO WE CAME UP AND LOOKED AT SEVEN P, UH, PENSION FUNDING SOLUTIONS.
I'LL TALK ABOUT THREE OR FOUR OF THEM TODAY.
ONE IS ALLOCATION AMONG FUNDS.
AND I BELIEVE YOU WERE TALKING ABOUT HOW MUCH, FOR EXAMPLE, YOU HAVE YOUR UAL, YOU ALLOCATE TOWARDS YOUR ENTERPRISE, YOUR WATER SEWER FUNDS, A SYNTHETIC FRESH START WITH TARGETING.
I'LL GIVE YOU AN ILLUSTRATION, BUT BASICALLY ALL THOSE BASES THAT YOU HAVE WITH CALPERS, WHEN YOU MAKE A PAYMENT, A LOT OF IT'S GOING TO BE HARD.
UM, THEY'RE GOING TO TELL YOU WHICH ONE DO YOU APPLY TO A FIVE-YEAR BASE OR A 28 YEAR BASE OR 30 YEAR BASE.
SO THE MODEL HELPS YOU DETERMINE WHAT THE FINANCIAL SAVINGS ARE, OR IN OTHER WORDS, YOU GET TO DO THIS MORE SURGICALLY THAN JUST APPLYING, OH, WE SENT $1 MILLION.
CALPERS SAYS, WHAT DO YOU WANT TO DO? MAXIMIZE CASH FLOW SAVINGS, OR LOOK AT THE MOST IMMEDIATE BUDGETARY IMPACT.
WE'LL ALSO LOOK AT TAX AND THE EXCHANGE AND PENSION OBLIGATION BONDS.
AND THIS LAST CONCEPT, IT FITS IN WITH THE PENSION FUNDING POLICIES, THE NOTION OF BOOTSTRAPPING.
SO IF YOU DO SAVE MONEY EITHER THROUGH ONE OF THESE MECHANISMS OF SOMEWHERE ELSE, IT'S THE IDEA OF RECYCLING THOSE SAVINGS BACK INTO PAY DOWN YOUR LOAN.
THIS IS NOT ANY DIFFERENT FROM PAYING DOWN YOUR HOME MORTGAGE OR A CREDIT CARD SOONER, FASTER.
BUT IN BOTH CASES IT REQUIRES FINANCIAL DISCIPLINE AND A PLAN.
SO THE POINTS THAT I THINK WE'RE GOING TO HAVE TO DISCUSS IS ONE, THE PENSION STABILIZATION FUND THAT GRAHAM MENTIONED, YOU HAVE $8 MILLION IN THAT FUND, BUT IT'S ONLY EARNING 2%.
PLACE IT INTO A ONE 15 TRUST IS A GOOD, UH, A GOOD SUGGESTION BECAUSE IT HAS TWO PRIMARY ADVANTAGES.
ONE, IT PLACES THE MONEY IN A RESTRICTED, UH, TRUST.
THAT'S WHAT THE ONE 15 DESIGNATED IS.
SO IT CAN ONLY BE USED FOR PREGNANT PERSON, EXCUSE ME, PENSION PURPOSES.
SECONDLY, AND MORE IMPORTANTLY IN NOW CAN EARN A HIGHER YIELD BECAUSE YOU CAN INVEST IT IN PROCEEDS, THE PROCEEDS OUTSIDE OF THE CALIFORNIA INVESTMENT CODE, WHICH IS JUST FIVE-YEAR BONDS.
NOW YOU CAN DO SOME COMBINATION OF BOND AND EQUITY TO HELP GAIN A GREATER YIELD.
UH, WE'LL TALK ABOUT THE POB VALIDATION PROCESS, THE USE OF ONE-TIME RESERVES, THE MONEY.
ALL OF THESE THINGS ARE GONNA HAVE TO BE IN FUTURE DIALOGUES, BUT WE WANTED TO SET THE TABLE NOW TO HAVE YOU THINKING ABOUT THIS AVAILABLE PROJECTS FOR SIA, CIP PROJECTS FOR A CONCEPT KNOWN AS TAX EXEMPT EXCHANGE, WHICH IS ESSENTIALLY A TAX EXEMPT POB RISK MITIGATION STRATEGIES FOR WITH
AND I THINK A REALLY CRITICAL ONE THAT WE'RE GOING TO HAVE TO THINK ABOUT BECAUSE YOUR PAYMENTS PEAK IN 2031 AND THE EXPIRATION IN YOUR SALES TAX IS 2029.
[00:40:01]
THIS IS WHAT THIS PRESCIENT LONGTERM PLANNING THINKS ABOUT.HEY, WE GOT THESE PAYMENTS COME AND DO RIGHT AT THAT SAME TIME, THIS SALE TAXES, YOU'RE GOING TO HAVE PEOPLE RENEWED BEFOREHAND OR THINK ABOUT WHAT YOU'RE GOING TO DO WITH THAT AND THE LAST ARE RECESSION SCENARIOS BECAUSE UNFORTUNATELY IF ANYTHING SCARED ME IS WHAT HAPPENED YESTERDAY AND THE LIKELIHOOD THAT YOU CAN HAVE AN ADJUSTMENT IN THE MARKET, ONE BAD BIT OF NEWS AND ALL OF A SUDDEN WE'RE GOING TO HAVE TO DEAL WITH THE LARGER UAL AND GREATER PAYMENTS.
SO ONE OF THE FIRST THING WE TAKE A LOOK AT IS THE HOW MUCH YOU HAVE IN RESERVES.
THE FIRST THING WE TALKED ABOUT IS THAT MONEY IS UNDERPERFORMING IN IRREGULAR GOVERNMENT ACCOUNT SHOULD BE PLACED ON ONE 15 TRUST THAT ALLOWS YOU TO ONE RESTRICTED LEGALLY IN TO EARN MORE MONEY.
SO THE, THE RECOMMENDATION WAS TO PLACE IT ON ONE 15 TRUST AND THEN ALSO TO ESTABLISH THOSE CERTAIN POLICIES AS TO HOW YOU WOULD USE THAT.
I THINK WE CAN COME UP TO THAT, HAVE THAT DISCUSSION SOME POINT IN THE FUTURE.
BUT OUR FIRST RECOMMENDATION WAS TO TAKE A LOOK AT THAT.
NOW, IS THERE A SUBSTANTIAL INCREASE IN RISK WHEN WE GO OVER TO ONE 15 TRUST? CAUSE USUALLY THERE'S SOME RELATIONSHIP TO PUNE RISK AND RATE OF RETURN COUNCIL MEMBER, YOU SAID IT ABSOLUTELY CORRECTLY BUSINESS SCHOOL WOULD TELL YOU THE EXACT SAME THING.
YOU HAVE A GREATER VOLATILITY WHEN YOU HAVE A HIGHER RISK PROFILE, BUT YOU USUALLY HAVE ABOUT THREE INVESTMENT CHOICES.
USUALLY THERE'S A LOW, MODERATE AND HIGHER RISK AND STILL ALL OF IT IS LESS THAN CALPERS.
AND WHAT YOU'RE DOING IS SHIFTING BASICALLY ALMOST ALL FIXED INCOME, A LITTLE BIT MORE EQUITY.
SO IT WOULD DEPEND ON WHAT YOUR STRATEGY WOULD BE.
AND EVEN THEN I WOULD SUGGEST THAT YOU DON'T PLACE IT ALL IN ONE STRATEGY, BUT YOU LADDER PORTIONS OF IT, A CERTAIN PORTION THAT YOU'RE NOT GOING TO USE RIGHT AWAY, THAT YOU PUT IT IN A SUDDENLY LIKE A MODERATE INVESTMENT AND ANOTHER PORTION THAT YOU WOULD PUT IN THE LOWER AND MAYBE EVEN SOME UNSTABLE VALUE.
SO THE ANSWER IS YES, IT DEPENDS AND YOU COULD LOOK AT A STRATEGY ON HOW YOU INVEST THAT.
SO I THINK WE KIND OF WENT AHEAD.
RIGHT? THAT WAS MY NEXT SLIDE.
BUT ONCE AGAIN, I'LL GO OVER THE PENSION STABILIZATION FUND.
THE IMPORTANT PART IS WE CAN TALK ABOUT THE INVESTMENT STRATEGY, BUT WHAT WE WANT TO HAVE IS DIRECTION TO ALLOCATE THE MONEY'S IN THERE AND THEN DOES THAT DESIGNATE THAT POLICY.
BUT THE LAST POINT WAS REALLY TO TAKE A LOOK AT A DIVERSIFIED INVESTMENT HOLDING SO WE MITIGATE SOME OF THAT RISK OR DO JUST THE RISK.
THAT OF COURSE WOULD ALSO BE DONE IN CONJUNCTION WITH THE CASH FLOW THAT YOU PROJECT.
SO I'M GOING TO HAND IT OVER TO UH, UH, BRIAN FOR BETH WHO WORKS WITH STRATTON, UH, YUCCA CARLSON AND ROTH.
HE IS OUR, UH, THE BOND COUNSEL WORK ON THIS TRANSACTION.
IN ORDER TO ISSUE PENSION OBLIGATION BONDS, YOU HAVE TO GO THROUGH A VALIDATION PROCEEDING.
AND I HAVE COINED THE TERM THAT A VALIDATION PROCEEDING IS LIKE A BUILDING PERMIT.
IT IS A PROCESS THAT YOU HAVE TO GO THROUGH ADDITIONAL, UM, PROCEEDINGS TO ACTUALLY GET AUTHORITY TO ISSUE THESE PENSION OBLIGATION BONDS.
AND WITH THAT STATING, UNDERSTANDING THAT WE HAVE TO GO THROUGH THIS PROCESS INITIALLY TO GET LEGAL AUTHORIZATION AND THEN GO BACK AND WE'RE GOING TO HAVE TO GO BACK TWO MORE TIMES.
THE CITY COUNCIL IN ORDER TO ISSUE
SO WHAT WE'RE DOING TODAY IS COMMENCING THIS PROCESS.
IF I MAY, I'M GONNA INTRODUCE BRIAN FOR BETH.
WHAT ELSE COUNCIL MEMBERS BUYING FOR ABOUT, FROM STRADDLING ACROSS RALPH.
PLEASURE TO BE HERE IN FRONT OF THIS AFTERNOON.
SO AS, UM, MR
AND ESSENTIALLY WHAT HAPPENS IS THE CITY ESSENTIALLY FILES A, ESSENTIALLY A LAWSUIT ESSENTIALLY SUES ITSELF TO, TO PROVE TO THE COURT TO GET A JUDGMENT THAT THE OBLIGATIONS OF THE CITY TO MAKE THAT SERVICE PAYMENTS ON THE PENSION OBLIGATION.
BONDS ARE AN OBLIGATION IMPOSED BY LAW.
ESSENTIALLY, YOU'RE REFUNDING THE EXISTING OBLIGATIONS TO PURGE WITH A NEW DEBT INSTRUMENT AND WITH THE VOTER, WITH THE JUDICIAL, UM, VALIDATION PROCEEDINGS, THERE IS NOT A REQUIREMENT FOR A, UM, UH, A VOTE OF THE PEOPLE.
UH, IT'S, IT'S, UH, EXEMPT FROM THE CONSTITUTIONAL DEBT LIMIT AS AN OBLIGATION IMPOSED BY LAW.
SO THE WHOLE PROCESS TAKES ABOUT 90 TO 120 DAYS TO GO THROUGH AND, UM, WE WOULD FILE AN ACTION IN SUPERIOR COURT AT YOUR DIRECTION.
UM, THE NEXT STEP REALLY WOULD BE IF, IF, UM,
AND THAT WOULD SORT OF KICK OFF THE PROCESS.
AND THEN ON THIS NEXT SLIDE YOU CAN SORT OF SEE THE, UH, TIMEFRAME TIMEFRAME OF WALKING THROUGH IT.
IT ISN'T A SORT OF A LONG DRAWN OUT PROCESS THAT IT TAKES.
[00:45:01]
AND AT THE END OF THE PROCESS, ASSUMING WE GET A COURT TO VALIDATE THE BONDS, THERE WOULD BE A FINAL APPROVAL OF THE CITY COUNCIL AT THAT POINT IN TIME TO APPROVE WHAT WE WOULD CALL AN OFFERING DOCUMENT OR OFFICIAL STATEMENT FOR THE BONDS.AND THAT IS SORT OF THE COUNCIL'S SORT OF FINAL GO, NO GO ON.
WHETHER OR NOT THE ISSUE, THE PENSION OBLIGATION BONDS, HOW MUCH YOU WANT TO ISSUE AND TO MAKE WHATEVER OTHER DECISIONS AT THAT TIME.
SO EVEN IF YOU DECIDE TO MOVE FORWARD AND INSTITUTE THE VALIDATION PROCEEDINGS, IT'S NOT THAT YOU'RE GIVING A FULL HEARTED BLESSING TO MOVE FORWARD AT THAT TIME.
THERE IS A SECOND BITE AT THE APPLE AT IT WITHOUT, I'D BE MORE HAPPY TO ANSWER ANY OTHER QUESTIONS.
ANY QUESTIONS? SORRY, CARRY ON.
GO SEE IF, UH, I'VE GOT ABOUT THREE QUESTIONS.
FIRST IS, ARE THESE UNSECURED? THEY ARE UNSECURED OBLIGATIONS OF THE CITY.
THEY'RE NOT SECURED BY, YOU KNOW, NORMALLY THE CITY WOULD ISSUE DEATH THROUGH A LEASE STRUCTURE.
UM, YOU KNOW, AT LEAST REVENUE BONDS OR CERTIFICATES OF PARTICIPATION.
THIS WILL BE AN UNSECURED OBLIGATION OF THE CITY.
AND, UH, GIVEN THAT WE'RE BURNING MONEY, UH, OF FROM CALPERS AT 7%, WHAT DO, I KNOW IT'S AN ESTIMATE ON YOUR PART, BUT WHAT WOULD THE MARKET RATE ON THOSE BONDS BE AS, UH, TODAY? LET'S SAY ABOUT THREE AND A HALF IS A GOOD RULE OF THUMB, RIGHT? SO ESSENTIALLY WE'D BE BORROWING MONEY AT THREE AND A HALF YES.
SO KIND OF LIKE REFINANCING YOUR HOUSE AT A LOWER RATE.
AND THAT IS THE LEGAL THEORY BEHIND THE VALIDATION IS THAT YOU HAVE THIS OBLIGATION AND POSED BY LAW ALREADY TO CALPERS AND ALL WE'RE SIMPLY DOING IS REFINANCING THAT OBLIGATION WITH THESE, WITH THESE BONDS.
SO THE BONDS ARE STEPPING INTO THE SHOES OF THE OBLIGATION OF CALPERS.
ISN'T THIS WITH THE COUNTY OF SAN DIEGO? DID A NUMBER OF YEARS AGO.
THERE'S BEEN A, THERE'S CITY OF SAN DIEGO HAS PENSION OBLIGATION BONDS.
THERE'S, THERE'S BEEN A LOT, YEAH.
THERE'S ONE DOWNSIDE TO ISSUING IN, WHICH IS IF YOU INVEST THE IS ALL AT ONE TIME AND YOU HAVE AN IMMEDIATE, UH, LOSS IN THE MONEY YOU GET, YOU LOSE THE ADVANTAGE OF SOME OF YOUR SAVINGS.
I THINK IN A FUTURE DATE, WE WON'T TALK ABOUT THE KIND OF RISKS AND HOW TO MITIGATE THAT.
BUT ESSENTIALLY YOU'LL STILL HAVE THE CASH FLOW SAVINGS.
SO ON ONE SIDE THE CASHFLOW SAVINGS IS PRETTY MUCH LOCKED IN.
THE OTHER LOOKS AT HOW THE MONEY PERFORMANCE, THE CALPERS OVER TIME, AND YOU'RE NEVER QUITE CERTAIN UNTIL THE END OF THAT 25 30 YEAR PERIOD.
BUT THE MOST SIGNIFICANT RISK IS IF YOU HAVE AN IMMEDIATE LOSS, LIKE IF YOU'D ISSUED BONDS YESTERDAY OR TWO DAYS AGO AND YOU HAVE THAT IMMEDIATE ONE-TIME LOSS, A LOT OF THE SAVINGS ADVANTAGE GOES AWAY.
BUT THERE ARE SOME MITIGATION MEASURES YOU CAN TAKE.
I WANT TO BE CLEAR ON SOMETHING.
SO WE'RE TAKING THIS MONEY, ARE WE USING IT TO PAY DOWN OUR LOAN FROM CALPERS OR ARE WE USING IT TO GO OUT IN THE MARKET AND BUY INVESTMENTS? NO, YOU, YOU BY LAW YOU'RE REQUIRED TO PROVIDE THE MONEY TO CALPERS.
OTHERWISE YOU'RE NOT EXTINGUISHING THAT LOAN.
SO YOU'RE NOT TAKING AN INVESTMENT RISK YOURSELF.
YOU'RE TAKING THE MONEY AND GIVING IT TO CALPERS AND ESSENTIALLY ELIMINATING YOUR LOAN LIABILITY AND THEY THEN IN TURN INVEST IN LIKE ALL OF THE PROCEEDS THAT YOU SEND TO THEM.
BUT THE DIFFERENCE IS YOU'RE BORROWING MONEY AT THREE AND A HALF PERCENT RATHER THAN 7% YOU.
UM, I WANT TO MAKE SURE THAT WE'RE NOT, UH, BORROWING MONEY.
I'M NOT THAT WE'RE NOT INCURRING ADDITIONAL DEBT THAT THE CALPERS THING KIND OF SOUNDS LIKE PAPER DEBT, BUT THE POB SOUNDS LIKE REAL DEBT.
CAN YOU CLARIFY THAT? YOU KNOW, THAT'S AN ARGUMENT THAT PEOPLE MADE ABOUT 10 YEARS AGO.
I THINK THE MOST IMPORTANT COMMENT IS THAT THIS LIABILITY IS NOW ON YOUR BOOKS.
GATSBY 68 STATES IT, AND YOU'LL SEE $200 MILLION ON YOUR BOOKS, ON YOUR BALANCE SHEET.
SO IT'S A REAL, WELL, THAT'S ONE, TWO, AND MORE IMPORTANTLY, CALPERS HAS FIXED DOLLAR PAYMENTS THAT YOU ARE REQUIRED TO MAKE SO THAT ACTS AND SMELLS AND LOOKS LIKE ALONE.
AS MUCH AS I'VE BEEN A BOND GUY 25 YEARS, THAT LOOKS LIKE ONE, THEY HAVE A 7% PAYMENT.
I CAN'T GET THIS TO GO BACKWARDS.
SO IT'S NOT A PAPER LIABILITY.
YOU'RE IN FACT REQUIRED TO MAKE THESE FIXED DOLLAR PAYMENTS RIGHT HERE.
THOSE ARE SCHEDULED FIXED DOLLAR PAYMENTS.
SO IN THE SAME WAY THAT I PAY A MORTGAGE, CASH OUT OF POCKET, AND IF I REFINANCE THAT MORTGAGE, I'M STILL CASH OUT OF POCKET JUST AT A LOWER INTEREST RATE AND A LOWER PAYMENT.
EXACTLY WHAT EXACTLY WHAT YOU SAID.
AND WE SHOULD REALLY LOOK AT BEING GOOD WITH THE PUBLIC SPIDER TO SEE IF WE SAVE INTEREST, WE SHOULD POUR THAT BACK INTO LOWER THE PRINCIPLE ON THE MORTGAGE THAT WE OH
[00:50:01]
ABSOLUTELY.AND THERE AND WHEN WE COME TO THE FINAL STRUCTURE AND OBJECTIVE, WE'LL TAKE THAT INTO ACCOUNT AS WELL AS THE OTHER, UM, COMPONENTS THEY MIGHT RUN INTO IN THE FUTURE.
RECALL THAT THAT'S YOUR CURRENT LIABILITY.
SO I THINK ONE OF THE THINGS YOU HAVE TO DO, ANTICIPATE IS THAT YOU MAY HAVE ADDITIONAL BASES ADDED ON IN THE FUTURE.
AND WHAT THIS WOULD IDEALLY SET YOU UP IN A POSITION IS TO RESET THE TABLE AT ZERO AND NOW YOU'RE ABLE TO PAY, OH, I HAVE A NEW $2 MILLION BASE, LET'S USE OUR RESERVES THIS YEAR TO PAY THAT OFF IN FULL.
SO I ENDED UP PAYING 5 MILLION IN TOTAL PAYMENTS.
BUT FOR CLARITY FOR THE PUBLIC TO SAY THAT WE HAVE A LIABILITY IS LIKE SAYING WE HAVE A MORTGAGE.
I THINK WHAT YOU'RE SAYING WITH THIS SLIDE IS WE HAVE A MORTGAGE PAYMENT TODAY OF IN THE NEIGHBORHOOD OF 11 POINT $8 MILLION.
WE'RE SAYING IF WE CHOOSE THESE OTHER THINGS, WE'LL STILL HAVE A PAYMENT JUST AT A DIFFERENT INTEREST RATE.
SO WE'RE NOT REALLY UM, TAKING ON NEW ADDITIONAL DEBT BEYOND THE DEBT THAT WE'RE ALREADY THE PAYMENT THAT WE'RE ALREADY MAKING.
NOW I'VE GOT ANOTHER OFF THE WALL QUESTION.
WILD THINGS HAPPEN DURING AN ELECTION YEAR BECAUSE ONE THING THE MARKET LIKES IS CERTAINTY AND INTEREST RATES AND INVESTMENTS.
I THINK BACK TO 2008 WHEN THINGS WERE GOING TO CHANGE AND AFFORDABLE CARE ACT WAS BEING TALKED ABOUT AND CORPORATE INVESTMENT KIND OF FROZE.
THE WHOLE MARKET JUST KIND OF SAID, LET'S WAIT AND SEE WHO'S GOING TO END UP MAKING POLICY.
UH, ARE WE IN A SITUATION LIKE THAT TODAY? IN YOUR OPINION, IS THIS THE RIGHT TIME TO BE THINKING ABOUT THAT OR SHOULD WE WAIT TO SEE WHAT THE NEW POLICY OR IF IT'S A DIFFERENT POLICY, WHAT'S YOUR OPINIONS ON AN ELECTION YEAR IMPACT? I THINK YOU HIT THE NAIL ON THE HEAD.
THERE'S ALWAYS SOME UNCERTAINTY RELATED TO ELECTION YEAR.
ON THE INVESTMENT SIDE, THE DOWNS I WOULD, THE DIFFICULTY WITH A PENSION OBLIGATION BOND IS YOU HAVE REALLY TWO ISSUES THAT YOU HAVE TO OPTIMIZE AND OFTENTIMES THEY WORK IN OPPOSITE DIRECTIONS.
YOU WANT TO LOWER THE TOTAL COST OF BORROWING WHO HAS THE LOWEST INTEREST RATE AND AT THE SAME TIME YOU'D LIKE TO BE ABLE TO MAKE SURE THAT YOU INVEST MONIES WHILE THE MARKET IS STILL MOVING UP AND IF YOU INVEST IT AT ONE POINT AND THEN IT GOES DOWN, THAT IS NOT IDEAL.
WE WILL AT SOME POINT TALK BY THESE MITIGATION STRATEGIES, THE BEST OF WHICH IS TO TRY TO DO SOMETHING LIKE DOLLAR COST AVERAGING, WHICH IS TO INVEST OVER TIME OR TO DO IT IN SERIES.
WE ARE TRYING TO KEEP THIS PRESENTATION SIMPLE.
I WILL, I JUST KNOW THAT WE WILL COME BACK AND TALK ABOUT THIS IN MORE DETAIL, BUT THERE ARE STRATEGIES AT THIS POINT, WHAT WE WANT TO DO IS GET THE LEGAL AUTHORITY AND THEN TALK ABOUT WHAT THE MARKET LOOKS LIKE AND THE STRATEGIES WE CAN IMPLEMENT.
BUT THAT'S EXACTLY OUR BIGGEST ISSUE OR CONCERN IS HOW TO APPROACH THIS FROM A STRATEGIC PERSPECTIVE TO ADDRESS THAT ONE POTENTIAL RISK.
LET'S TALK ABOUT THE $8 MILLION RESERVE.
I THINK WHAT MR. MITCHELL IS SAYING, LOOK, WE OWE $204 MILLION, SO IF WE APPLIED 8 MILLION TOWARDS A $204 MILLION LIABILITY, IT'S NOT REALLY GONNA CHANGE OUR OUR GRAPH BATCH.
ONLY IF YOU SAVED IT AND SAID ONE YEAR WE HAD A BIG DOWNTURN.
WE WERE LIKE, OH, I HAVE THAT 21 MILLION MILLION DOLLAR A YEAR.
I THINK THAT'S PROBABLY ONE OF THE BETTER WAYS IS THAT TRUE EMERGENCY RESERVE TO HELP ON A BUDGET CHAIR PERSPECTIVE.
BUT IF YOU PREPAID $8 MILLION, EVEN IN THE GREATEST CASE, YOU WOULD SAVE ABOUT $20 MILLION IN TOTAL PAYMENTS, BUT THAT CHART WOULD NOT LOOK DRAMATICALLY DIFFERENT.
MY FINAL QUESTION HAS TO DO WITH WHO WOULDN'T WANT TO REFINANCE AT THREE AND A HALF PERCENT INSTEAD OF 7%.
WHY DON'T MORE COMMUNITIES DO THIS? THAT'S A REALLY GOOD QUESTION.
I THINK THERE'S ONE SIMPLE ANSWER TO THAT.
IN 2008, THE GFA WROTE A RECOMMENDATION TO NOT ISSUE PENSION OBLIGATION BONDS.
AND IT'S IMPORTANT TO UNDERSTAND THAT
AND MOST OF IT IS WRITTEN FOR THE SMALLEST PARISH IN LOUISIANA.
AND WHAT HAD HAPPENED BACK IN THOSE DAYS, AND I SHOULD NOTE, I WAS IN THE NATIONAL DEBT ADVISORY COMMITTEE FOR THE GOA, UM, WAS THAT THERE WERE A NUMBER OF BAD PRACTICES, BAD FINANCIAL PRACTICES, AND THERE WAS ALSO SOME CHANGES IN THE BOND SUBSEQUENTLY.
SO IF I MAY, I'M GOING TO GO TO THIS REAL QUICKLY.
WELL, WE'RE GETTING INTO SECRET SLIDES AT THIS POINT.
WELL, THEY LIMITED HOW MANY ARE, THERE WE GO.
I DO THIS A NUMBER OF TIMES AND I HAVE A NUMBER OF, OF SLIDES IN THE APPENDIX BECAUSE WE GET THESE SAME QUESTIONS.
SO THESE ARE THE FIVE MAIN POINTS THAT WE TALKED ABOUT.
IF YOU DO NOT MIND, I'LL GO OVER THEM REAL QUICKLY.
THE FIRST ONE YOU'RE TALKING ABOUT, AND YOU ASKED IT AS WELL, DOES IT INCREASE THE DEBT BURDEN, REDUCED CAPACITY AND FLEXIBILITY? ONE GATSBY 60 HAD ALREADY PUTS THE LIABILITY ON THE BOOKS TO UL PAYMENTS IN CALIFORNIA.
WE DON'T CARE WHAT HAPPENS, ILLINOIS OR MARYLAND OR OTHER STATE, OUR FIXED DOLLAR PAYMENTS.
SO NO, IT DOES NOT INCREASE CAPACITY AND IT ALREADY LOOKS AND ACTS AND SMELLS LIKE
[00:55:01]
ALONE TOO.THEY HAD MAKE WHOLE CALL FEATURES IN THE OLD DAYS, AND THIS IS A STANDARD PROVISION IN THE CORPORATE BOND MARKET MAY CALL A CALL FEATURE.
BASICALLY TELLS AN INSTITUTIONAL INVESTOR, IF YOU WANT TO REFINANCE YOUR BONDS OR TURN THEM IN, YOU HAVE TO PAY ME WHAT I WOULD HAVE MADE OVER TIME.
IT MADE IT UNECONOMICAL FOR YOU TO REFINANCE IT.
UNLIKE TYPICAL TAX EXEMPT MUNICIPAL BONDS THAT HAVE A 10 YEAR CALL FEATURE THAT YOU PAY A ONE OH TWO A 1% A 2% PREMIUM AND YOU CAN REFINANCE THEM AT A LOW INTEREST RATE.
THEN EVERY SINGLE BOND THEREAFTER, PENSION OBLIGATION BOND NOW HAS A 10 YEAR, ALMOST ALL HAVE A 10 YEAR CALL FEATURE THREE AND IT SAYS FINANCE NORMAL COSTS OR EXTENDED REPAYMENT PERIODS.
NOW THIS WAS THE PART I WAS TELLING ABOUT THE POOR FINANCIAL MANAGER MANAGEMENT PRACTICES, AND AS A SIMPLE RULE OF THUMB, I CALL IT THE DETROIT RULE.
DON'T DO ANYTHING THE CITY OF DETROIT DOES.
THEY WOULD FINANCE NORMAL COSTS, EXTEND 10 YEAR PAYMENTS INTO 30 YEAR PAYMENTS.
THAT'S LIKE BUYING YOUR CAR ON A 15 YEAR PAYMENT PLAN.
THOSE THINGS YOU SHOULD NOT DO.
THIS IS NOT WHAT THIS COUNCIL AND STAFF IS CONTEMPLATING, BUT PEOPLE CAN TAKE OUT REVERSE MORTGAGES, TAKE OUT ALL THE EQUITY ON THE HOME AND MAKE POOR FINANCIAL DECISIONS USING A FINANCING MECHANISM.
AND THAT IS WHAT HAPPENED IN THE PAST.
SO AS LONG AS YOU DON'T DO THOSE THINGS, AS LONG AS YOU'RE IN FACT SHORTENING THE REPAYMENT PERIOD, NOT EXTENDING PAYMENTS AND ALSO NOT DOING COMPLEX INSTRUMENTS, DERIVATIVE SWAPS, AUCTION RATES, SECURITIES, BUT RATHER PLAIN VANILLA FIXED RATE BONDS FOR A FIXED LIGHT LIABILITY, YOU'RE NOT GOING TO GET YOURSELF INTO THOSE TYPE OF PROBLEMS. NUMBER FOUR, AND THIS TALKS ABOUT WHAT STAFF HAS DONE IN THEIR APPROACH IS IT HAS TO BE PART OF A COMPREHENSIVE PLAN TO ADDRESS THE PENSION SHORTFALLS.
AND THE OTHER ONE IS PART OF PENSION REFORM.
WE KNOW PENSION FORM HAS ALREADY TAKEN PLACE WITH PEPPER.
AND THE PLAN THAT WE'RE TALKING ABOUT, WE'VE MENTIONED THESE COMPONENTS THAT WE'RE STARTING, IT'S NOT JUST THE
AS WE NOTED, YOU WILL KNOW WHAT THE TOTAL IMPACT, WHETHER IT WAS A GOOD DEAL OF BAD AT THE END OF 25 YEARS, BUT THERE IS SOME HEDGING MECHANISMS NAMELY TO INVEST EITHER IN SERIES OR SOME TYPE OF DOLLAR COST AVERAGING.
SO THOSE ARE THE REASONS AND IT TAKES STUDY AND TIME TO THINK ABOUT THIS, WHAT YOU ARE DOING.
SO THERE ARE A NUMBER OF CLIENTS WORKING ON THIS.
I AM WORKING ON SEVEN OF THESE TRANSACTIONS PERSONALLY AT THIS TIME AND HAVE A NUMBER OF OTHERS IN THE PIPELINE, SO I THINK THEY'RE STARTING TO GET THERE.
IT'S JUST I THINK THE, YOU ARE CORRECT ABOUT THE TIMING OF THE ELECTION MAY HAVE SOME IMPACT, BUT PEOPLE ARE STARTING TO GET THERE BECAUSE THAT'S THE OTHER PART.
IT'S TIME IS WORKING AGAINST THEM.
THEY KEEP ON MAKING THESE PAYMENTS AND IT'S GOING FROM 12 MILLION TO 14 MILLION AND IT'S GOING TO KEEP ON GOING UP.
ANY FURTHER QUESTIONS? THIS MIGHT BE A RUDIMENTARY QUESTION, BUT I THINK IT'S IMPORTANT FOR THE PUBLIC TO KNOW.
DOES THE STATE OF CALIFORNIA MAKE PAYMENTS TOWARDS THESE UH, PENSION LIABILITIES? YES, THEY HAVE THEIR OWN LIABILITIES.
MAYBE YOU SAW MY PRESENTATION IN THE INDEPENDENT CITIES CONFERENCE, SO PEOPLE ASK THIS ONE, UM, THE VIABILITY OF A STATE FUNDED SOLUTION, IS IT GOING TO BE, I DON'T PUT MUCH CONFIDENCE IN THE STATE OF CALIFORNIA TO DO IT.
I'D WANT TO MAKE SURE THAT OUR STRATEGY ISN'T BANKING ON THIS STATE DOING.
THANK YOU SO MUCH FOR A GUY WHO'S BEEN WORKING IN CALIFORNIA PUBLIC FINANCE, THEY SEEM TO HAVE SOME ISSUES, BUT LET'S PUT SOME NUMBERS TO IT.
ALL THE LOCAL AGENCIES, 90 BILLION STATE OF CALIFORNIA, 300 BILLION FOR ITS OWN INDIVIDUAL LIABILITIES.
THE STATE TROOPERS, CAL STIRS IT'S OPEB, WHICH IS FUNDED AT 1%.
SO THE LIKELIHOOD THAT THEY'RE GOING TO BE ABLE TO SOLVE THEIR FINANCIAL ISSUE AND HAVE MONEY LEFT ASIDE FOR US IS NOT VERY LIKELY.
AND I THINK I HAVE ONE MORE SLIDE.
THE LAST ONE GOES TO EACH TIME THEY HAVE A FINANCIAL DOWNTURN, WHICH I THINK ALL OF YOU MAY REMEMBER.
WE'VE HAD IE RAFF, WE'VE HAD RDA, THEY SEEM TO LIKE TO COME BACK TO THE LOCAL MUNICIPALITIES TO HELP BALANCE THEIR BUDGET.
SO YOU DO HAVE, THE APPROACH I WOULD STRONGLY RECOMMEND IS WE, WE SOLVE IT OURSELVES.
SO THEN YOU MAY HAVE ANSWERED MY SECOND QUESTION INADVERTENTLY.
WE'RE NOT BANKING ON THE RATE OF RETURN ON THE INVESTMENTS THAT THE CALPERS BOARD'S INVESTMENT STRATEGY IS.
I MAY, I MAY HAVE BUTCHERED THAT QUESTION.
YOU'RE HOPING THAT THEY RETURN A 7% RATE.
SO WE LEVEL OUR PAYMENTS, BUT I BELIEVE ONE OF THE THINGS THAT GRAHAM AND THE REST OF THE STAFF HAS SAID IS WE'RE GOING TO RUN SOME, SOME RECESSION SCENARIOS AND ANTICIPATE WHAT MIGHT HAPPEN.
BUT THE SECOND PART, AND MAYBE WHAT YOU'RE ASKING IS CAN WE OUT EARN THIS PROBLEM? THAT IS NOT LIKELY.
MY QUESTION WA WELL, YES, THAT W THAT'S A GOOD POINT.
I'VE HEARD THAT THE BOARD FOR CALPERS HAS CHANGED THEIR INVESTMENT STRATEGY DUE TO IDEOLOGICAL REASONS WHICH WOULD YIELD LESS
[01:00:01]
OF A RETURN.HAVE YOU HEARD, HAVE YOU HEARD THAT OR, OR ARE THEY CHANGING? IS THAT A CHANGE THAT HAS BEEN MADE? WELL THIS IS ALWAYS KIND OF A DIFFICULT QUESTION TO ANSWER.
I HAD LUNCH WITH A BOARD MEMBER YESTERDAY.
UM, SO THEY'VE ALWAYS HAD SOME IDEOLOGICAL BENT.
I THINK THAT'S SOME ISSUE THAT SOME HAVE, BUT I DON'T KNOW IF THAT IMPACTS PERFORMANCE IS GREAT AS PEOPLE ANTICIPATE.
THAT'S ONE, TWO I THEY HAVE VERY DIVERSE HOLDINGS.
AND IF YOU'RE TAKING A LOOK AT PRO, IF SOMEONE WERE TO ASK, HOW MUCH OF THESE UH, POLICY DIRECTED INVESTMENTS ARE THOSE THAT PROBABLY A VERY SMALL PERCENTAGE ARE THOSE AT RISK? MOST OF IT IS REGULAR BONDS IN, IN OTHER TYPES OF INVESTMENTS.
SOMETIMES WHAT THEY HAVE ARE MINORITY OWNED INVESTMENT FIRMS AND SOME TYPE OF GREEN INITIATIVES, BUT IT'S NOT LIKE 20% OR 10% OF THE PORTFOLIO IS INVESTED AS SUCH.
THAT'S THEIR ASSET ALLOCATION RIGHT THERE.
SO YOU ANALOGIZE US AS A REFINANCING A HOUSE, RIGHT? YES.
UM, DO CITIES EVER GET IN TROUBLE? CAUSE I KNOW PEOPLE SOMETIMES GET IN TROUBLE.
THEY REFINANCE THEIR HOUSE FOR GOOD REASONS, AND THEN THEY SEE A JACUZZI THEY WANT OR THE OR A BOAT OR, AND THEY START BUYING THINGS THEY CAN'T AFFORD WITH, WITH KIND OF FAKE MONEY.
TWO CITIES ARE GETTING TROUBLE WITH THAT.
THE CITY OF DETROIT IS MY FAVORITE EXAMPLE.
UM, BUT IN ALL EARNESTNESS, I THINK THAT'S WHY YOU HAVE THAT PENSION FUNDING POLICY AND YOU HAVE A STAFF THAT'S VERY CONCERNED ABOUT THAT.
AND THERE'S ONE OTHER THING THAT'S IMPORTANT TO SAY.
THIS IS AN ACTUAL CASHFLOW SAVINGS.
YOU'RE REALLY DEFERRING FUTURE COSTS.
SO WHAT A POB WOULD LIKELY DO IS LOCK IN YOUR SAVINGS OR YOUR ANNUAL PAYMENTS AT AROUND $12 MILLION.
SO FROM A BUDGETARY PERSPECTIVE, EVEN THOUGH YOU MIGHT BE SAVING 10 11, $7 MILLION OUT IN THE FUTURE, THOSE AREN'T REALLY MONIES THAT WERE, IT DOESN'T CHANGE THE BASIS OF YOUR BUDGET.
DOES THAT MAKE SENSE? THAT'S SITTING IN THE BANK.
I SAVED MONEY BY NOT HAVING TO PAY ADDITIONAL GAUZE, BUT MY PAYMENTS MIGHT BE LOCKED IN AT 12 OR 13 OR $10 MILLION.
SO THAT LEADS ME MY NEXT QUESTION.
THIS GRAPHS PERFECT BECAUSE WE'VE BEEN TALKING FOR A COUPLE OF YEARS NOW ABOUT WHAT'S GOING TO HAPPEN AS YEAR OVER YEAR.
WE START PAYING MASSIVE AMOUNTS MORE TO CALPERS.
WILL THIS CHANGE THAT SCENARIO WHERE WE HAVE TO PAY LESS? WILL THAT STOP US FROM GETTING TO THAT $21 MILLION MARK? YES, I HOPE SO.
UM, OH MY THUMB IS TOO STRONG.
LET ME SEE IF WE HAVE, THAT IS AN ILLUSTRATION OF WHAT POTENTIAL SAVINGS MIGHT LOOK LIKE UNDER A PENSION OBLIGATION BOND.
SO WHAT IT DOES IS IT LOPS OFF THE MOUNTAIN, BUT IT'S IMPORTANT TO NOTE, AS I MENTIONED BEFORE, THAT IF YOU HAVE THIS TYPE OF SAVINGS, YOU ALSO HAVE TO ANTICIPATE THAT YOU MAY HAVE ADDITIONAL BASIS OR ADDITIONAL PAYMENTS YOU MAY HAVE TO MAKE.
YOU MAY HAVE ADDITIONAL PAYMENTS SUCH AS THAT.
AND THAT'S ONE OF THE THINGS WE'LL TALK ABOUT IN FURTHER DISCUSSION IF YOU'D LIKE.
BUT YES, IT, IT KNOCKS OFF THE TOP OF THE MOUNTAIN.
IS IT A SMOOTHING MECHANISM? WELL, NO, REALLY WHAT IT IS, BUT YET WE STRUCTURE THE PAYMENTS TO ESSENTIALLY PROVIDE LEVEL DEBT SERVICE PAYMENTS.
AND THIS ALL SOUNDS LIKE A GREAT IDEA TO ME.
I DON'T, I'M KIND OF SEARCHING MY MIND TO LOOK FOR THE DOWNSIDES OF THIS CAUSE I THINK THAT'S PART OF OUR RESPONSIBILITY.
UM, WHAT HAPPENS IF CITIES ALL OVER CALIFORNIA AND PERHAPS THE NATION, UM, GO INTO A STATE OF BANKRUPTCY BECAUSE THEY CAN NO LONGER MAKE THESE PAYMENTS.
AND THERE'S DECISIONS MADE IN BANKRUPTCY COURT THAT SAYS, OKAY, YOU ONLY HAVE TO PAY 60% NOW OF YOUR PENSION OBLIGATIONS IF WE PAY FOR IT UP FRONT.
DOES THAT CUT US OUT OF, OUT OF THAT PROCESS? I'M GOING TO TRY TO SKIRT AROUND THIS BRYANT A LITTLE, BUT ONLY SAY ONE THING.
WELL, WHY DON'T YOU MENTION THAT FOR A SO, SO THERE'S BEN OH, ABOUT THIS AND, AND UM, YOU KNOW, IN UM, STOCKTON, SAN BERNARDINO AND OTHER PLACES WHERE THE OBLIGATION TO CALPERS WAS NOT DISAVOWED IN THE BANKRUPTCY COURT.
UM, HOWEVER PENSION OBLIGATION BOND OBLIGATIONS IN SAN BERNARDINO, THOSE BOND OWNERS GOT ZERO OR VERY LITTLE.
AND IN THE CASE OF, UH, OF THE SAN
[01:05:01]
BERNARDINO BANKRUPTCY, IT WAS AN UNSECURED OBLIGATION.SO, UM, THE FACT THAT YOU CHOSE TO PARTICIPATE IN THIS AND GOD FORBID OF FINANCIAL CATASTROPHE HAPPENS TO THE CITY, I DON'T THINK IT REALLY CHANGES YOUR OUTCOME.
IF ANYTHING, IT MIGHT ENHANCE YOUR OUTCOME OUT OF A BANKRUPTCY.
AND THE FACT THAT, UM, PENSION OBLIGATION BONDS ARE TRULY AN UNSECURED OBLIGATION.
AND THEN COURTS AND THEN IN SAN BERNARDINO COUNTY HAVE DETERMINED THAT THOSE WERE NOT SUBJECT TO BE, THEY, THEY WERE, UM, CITI WAS NOT OBLIGATED TO MAKE ALL THE PAYMENTS ON THOSE BONDS AS PART OF THE BANKRUPTCY PROCEEDINGS.
IT SEEMED TO ME THAT WERE CLOSE TO HISTORIC INTEREST RATES, LOW OR LOW INTEREST RATES.
UH, I GUESS THE MARKET'S ALREADY BUILT IN THE FED LOWERING RATES.
UH, AND MAYBE EVEN ANOTHER, IF THIS CORONA VIRUS THING GETS WORSE.
SO IT SEEMS WE MIGHT BE BORROWING MONEY IF THIS COMES ONLINE AND SIX MONTHS OR SO AT A REALLY HISTORIC LOW RATE AND THEN WE'RE LOCKED IN FOR 10 YEARS.
RIGHT? CAUSE THERE'S A 10 YEAR CALL ONE.
BUT YOU DON'T IF IN FACT THAT'S HISTORICALLY LOW RATES, YOU GET THAT FOR 2025 YEARS.
THAT'S LIKE HAVING A MORTGAGE AT 2%.
MOST PEOPLE WOULD NOT REFINANCE OR HAVE THE ABILITY TO REFINANCE A TWO OR 3% MORTGAGE.
THE, THE OPTION, THE OPTION TO REFINANCE IS ALWAYS THE ISSUERS OPTION TO REFINANCE.
AND SO WHAT, SO WHAT HAPPENS IS, YOU KNOW, IF YOU BORROW FOR 25 YEARS, 25 YEAR, DAD IS COST THIS MUCH.
AS THE TERM GETS SHORTER, IT USUALLY BECOMES CHEAPER TO BORROW FOR A SHORTER PERIOD OF TIME.
SO AFTER THE 10 YEAR CALL, THE, THE, THE DEBT IS A SHORT PERIOD AND USUALLY IT CAN BE REFINANCED ON THAT, UH, PER SAVINGS.
BECAUSE INDUSTRIES CAN'T GO A WHOLE LOT LOWER THAN ZERO.
AND WE WERE JUST TALKING ABOUT THAT NOW A CONCEPT CALLED ROLLING DOWN THE CURVE.
AND BECAUSE THE YIELD CURVE IS SO FLAT, IN OTHER WORDS, THERE'S ALMOST NO DIFFERENTIAL BETWEEN A 10 AND A 30 YEAR RATE.
NORMALLY YOU MIGHT PAY ON A TAX EXEMPT BOND.
YOU PAY 1% FOR FIVE YEAR, 2% FOR A 10 YEAR AND 3% THREE AND A HALF PERCENT, 2030 YEAR.
SO AS IT GETS SHORTER AND SHORTER, YOU GET SOME ADVANTAGE.
RIGHT NOW THE YIELD CURVE LOOKS LIKE THIS.
IT'S ALMOST FLAT BETWEEN 10 AND 30 YEARS.
SO THERE'S NOT MUCH ADVANTAGE.
I'M, IS THAT ANSWER YOUR QUESTION? YEAH, I'M, YEAH, THAT COMES, I WANT TO PROVIDE AND I'LL NOTE TO PROVIDE AN ILLUSTRATION OF HISTORICAL RATES IN THE YIELD CURVE SHAPE IN OUR NEXT PRESENTATION.
AND THE OTHER THING, IT SEEMS THAT A LOT OF FOREIGN MONEY IS COMING IN RIGHT NOW FOR SAFE HAVEN.
THAT'S GONNA, THAT'S DRIVING DOWN RATES AND THIS MIGHT BE A GOOD TIME FOR US TO DO A REFINANCE.
AND I THINK ONE OF THE ADVANTAGES IS TO CHOOSE WHO YOU ACTUALLY SELL THE BONDS TO.
I THINK PENSION OBLIGATION BONDS ARE SEEN AS QUASI SOVEREIGN DEBT.
SO YOU MIGHT HAVE SOME INSTITUTIONAL INVESTORS FROM OUTSIDE OF THE BORDERS.
INTERNATIONAL INVESTORS WHO WANT TO INVEST IN THE UNITED STATES ARE OVERBURDENED WITH TREASURIES, BUT WE'D LIKE TO FIND A COMPARABLE MUNICIPALITY, WHICH IS LIKE A QUASI SOVEREIGN AND DON'T HAVE THE ADVANTAGE OF THAT TAX EXEMPT STATUS.
OPO BEES ARE VERY ATTRACTIVE TO INTERNATIONAL INVESTORS.
BOB AND I READ AN ARTICLE THE OTHER DAY ABOUT UM, INTEREST RATES CONTINUING TO GO DOWN AND THE FACT THEY'RE TALKING ABOUT NEGATIVE INTEREST RATES TO WHERE YOU WOULD EARN INTEREST ON YOUR MORTGAGE RATHER THAN PAYING INTEREST ON YOUR MORTGAGE AND THINGS OF THAT NATURE.
AND THAT GOES COUNCIL MEMBER HAND IN HAND WITH THE INTERNATIONAL INVESTORS WHERE WE SEE THOSE NEGATIVE RATES ARE IN OTHER COUNTRIES, RIGHT? SO IF YOU'RE EARNING A NEGATIVE RATE AND YOU MIGHT SEE WHAT IS A LOW WAY TO US, BUT A TWO OR 3% IN THE UNITED STATES FOR A QUASI SOVEREIGN DEBT, IT MAKES IT VERY ATTRACTIVE AND HOPEFULLY TO YOU MEANS MORE DEMAND AND A LOWER INTEREST RATE FOR YOU AS A BORROWER.
THEY WERE TALKING ABOUT IT POSSIBILITY THAT IT COULD EVEN COME OVER HERE.
I THINK IN JAPAN THEY'VE HAD THAT FOR A NUMBER OF PERIODS.
I DON'T KNOW, BUT RATES ARE, I'VE BEEN IN THIS BUSINESS 25 YEARS, THEY'RE AS LOW AS I'VE EVER SEEN HIM.
I AGREE WITH YOU BECAUSE I WAS IN BUSINESS FOR 50 YEARS AND I REMEMBER PAYING 22% INTEREST WHEN THE JIMMY CARTER WAS IN OFFICE.
I WILL SAY THE ONE DOWNSIDE TO THIS OF COURSE IS THE BENEFIT OF LOW INTEREST RATES IS THE FLIP SIDE TO THAT IS WE HAVE A HARDER TIME GAINING ON THE INVESTMENT RETURN SIDE.
SO THAT'S THE FLIP SIDE OF THE COIN.
AND UM, WE APPRECIATE YOU TAKING THE TIME AND THANK YOU.
SO AT THIS POINT I THINK WE HAVE ANY MORE QUESTIONS, BUT WE MAY CALL YOU BACK IF NEED BE.
WELL I THINK GRAHAM, DO YOU WANT TO GO WITH THOSE LAST RECOMMENDATIONS DIRECTLY? SO MR MAYOR AND COUNCIL, IF THERE'S NO MORE MORE
[01:10:01]
QUESTIONS, THERE ARE FOUR RECOMMENDATIONS ASSOCIATED WITH THIS AGENDA.ITEM ONE IS THAT THIS COUNCIL DIRECT STAFF TO BEGIN THE VALIDATION PROCESS THROUGH THE JUDICIARY, UM, TO ISSUE PO BS.
NOW REMEMBER THAT'S JUST THE VALIDATION PROCESS.
WE WOULD COME BACK AT A LATER DATE TO ACTUALLY TALK ABOUT WHAT, WHAT SIZE AND TO WHAT LEVEL AND THERE'S SOME LADDERING OPPORTUNITIES.
SO WE WOULD HAVE MORE OF A DIRECT POWER, MORE OF A COMPLETE PACKAGE AT THAT TIME.
IF THE COUNCIL WANTED US TO, UM, PROCEED WITH A VALIDATION PROCESS, WE WOULD NEED TO GET COUNCIL AUTHORIZATION FOR ME TO ENTER THE CITY INTO AN AGREEMENT WITH STRADDLING TO ACTUALLY COMMENCE THAT PROCESS.
UM, WE WOULD ALSO RECOMMEND THAT THE COUNCIL DIRECT STAFF TO ESTABLISH A SECTION ONE 15 TRUST FUND WITH PARS AND THEN FINALLY DIRECT STAFF TO COME BACK WITH A MORE COMPREHENSIVE, UM, CITY WIDE PENSION POLICY TO HELP GIVE US SOME FISCAL DISCIPLINE DURING THE GOOD YEARS IN THE BATTLE.
SO STAFF'S HERE TO ENTERTAIN ANY QUESTIONS ABOUT THOSE COUNSEL? ANY QUESTIONS? SEE IF I GOT A QUESTION.
NUMBER THREE, THAT'S KIND OF LIKE A BIG MOVE FORWARD.
IT SEEMS LIKE, UH, THE OTHERS ARE KIND OF LET'S KEEP GOING.
AND THIS ONE'S LIKE, YEAH, LET'S ACTUALLY DO SOMETHING.
WHAT CAN YOU TALK ABOUT THAT? CERTAINLY THIS, THIS WOULD BE TO TAKE THE $8 MILLION THAT WE CURRENTLY HAVE SITTING IN OUR GENERAL FUND RESERVE AND PUT THAT INTO THE SECTION ONE 15 TRUST THAT JUST PROTECTS IT.
UM, AT THIS POINT WE DON'T HAVE AN INVESTMENT POLICY THAT WOULD ALLOW US TO BE VERY AGGRESSIVE.
SO AT THE MEANTIME WE WILL BE PRETTY CONSERVATIVE, OUR INVESTMENT, BUT WE'D GET SOME DIRECTION FROM COUNCIL TO HOW THEY WOULD WANT THAT INVESTED.
BUT, BUT GETTING IT INTO THE SECTION 51 15 TRUST WOULD BE THAT FIRST STEP.
I DON'T THINK WE WANT TO BE RISKY WITH THAT MONEY AT ALL RIGHT NOW.
I THINK WE WANT TO GIVE YOU SOME FLEXIBILITY, BUT CERTAINLY DON'T WANT TO START TAKING RISKS AT THIS POINT.
WHEN YOU SAY IT PROTECTS IT, UM, IF THERE WERE, UH, A DIFFERENT COUNCIL A FEW YEARS FROM NOW THAT ONE OF THE SPEND THAT MONEY, WOULD THAT BE OUT OF THEIR REACH? IT WOULD BE OUT OF THEIR REACH.
SO WHAT YOU'RE TALKING ABOUT, YEAH.
UH, HOW LIQUID IS THAT MONEY? WHAT MY CONCERN IS THAT
I DIDN'T WANT TO HAVE TO BE LAYING OFF POLICE, FIRE AND PARAMEDICS BECAUSE WE DON'T HAVE THE MONEY.
SO I WANT TO BE ABLE TO HAVE ACCESS TO THAT MONEY.
UH, SO WE DON'T HAVE CATASTROPHIC LAYOFFS WHERE THE SAFETY OF THE PUBLIC IS IMPACTED.
SO I'M GOING TO LET MR MIRALIS ADDRESS PART OF THAT ULTRA ULTRAS.
THE SECOND HALF OF THAT THERE'S, CAUSE THERE'S TWO PARTS TO THAT.
I'LL JUST DIRECTLY ADDRESS THE LIQUIDITY.
THESE INVESTMENTS, THEY ARE PRETTY MUCH FOCUSED ON AT LEAST 50% FIXED INCOME SECURITIES, WHICH ARE HIGHLY LIQUID.
THESE ARE HIGH YIELDING INVESTMENTS.
I'M SORRY, HIGHLY HIGH CREDIT INVESTMENTS USUALLY DOUBLE RATE BETTER.
BUT YOU CAN, WITH PARS, THE MAIN ADVANTAGE IS YOU CAN ACTUALLY CREATE A CUSTOMIZED INVESTMENT PORTFOLIO, INDIRECT IN THE INVESTMENTS THAT YOU WANT.
IDEALLY THEY SHOULD BE SOMETHING DIFFERENT THAN YOU DID UNDER THE CALIFORNIA CODE.
OTHERWISE YOU'RE NOT TAKING FULL ADVANTAGE OF SOME SLIGHTLY HIGHER INVESTING.
UH, BUT YOU'RE NOT LOOKING AT HIGH RISK INVESTMENTS.
YOU'RE USUALLY PUTTING THEM IN SOMETHING TO MAINTAIN THAT, THAT CUSHION SPORT.
AND THEN IN TERMS OF PROTECTING THE CITY IN THE EVENT OF A MASSIVE RECESSION, THESE FUNDS CAN ONLY BE USED FOR PURRS PAYMENTS.
BUT REMEMBER, PURRS PAYMENTS MAKE UP A BIG PERCENTAGE OF OUR GENERAL FUND SO YOU COULD ALLOCATE MORE MONEY OUT OF THIS FUND TO PAY YOUR PURSE COSTS THAT COULD THEN PROTECT THE GENERAL FUND.
SO THERE ARE, THERE ARE SOME WAYS TO UTILIZE THAT MONEY IN THE EVENT OF AN EMERGENCY.
BUT AGAIN, THERE'S AN ADVANTAGE BECAUSE THEORETICALLY A SEXUAL ONE 15 TRUST COULD BE USED 100% FOR ALL YOUR PURSE PAYMENTS ONE YEAR AND YOU COULD WIPE THAT TRUST FUND OUT IN ONE YEAR AND A FUTURE, A FUTURE CITY COUNCIL COULD DO THAT.
UM, SO THERE, THERE WAS SOME VALUE IN HAVING THE POLICY THAT WE'LL BE BRINGING FORWARD, ADDRESS SOME OF THOSE FACTORS.
SO TO UNDERSTAND, YOU'RE SAYING IF IF IN A FUTURE YEAR WE USE THAT FUND TO PAY THE PPARS PAYMENT IN LIEU OF GENERAL FUND PAYING THE PURSE PURSE PAYMENT, THAT'S WHAT WE'RE TALKING ABOUT, RIGHT? THAT'S CORRECT.
IF WE END UP WITH A GOOD YEAR AND UM, HAVE MORE MONEY TO PUT IN THIS FUND, UH, CAN WE PUT THAT IN IMMEDIATELY INTO THE ONE 15 OR DO WE HAVE TO SET IT ASIDE AGAIN WITH A NO, THAT WORKS IMMEDIATELY.
KIND OF LIKE HOW YOUR OTHER, YOUR OTHER INVESTMENT FUNDS PARS IS RIGHT HERE IN SOUTHERN CALIFORNIA.
YOU WOULD WIRE OVER, CLAY WOULD WIRE OVER THE MONEY IN THE DIRECTION, YOU CAN ESTABLISH IT.
HE SAID IN A LADDER AND A DIFFERENT TYPE OF INVESTMENT.
OR YOU COULD DECIDE TO PREPAY A PORTION WHERE UAL, YOU CAN USE THE MONEY HOWEVER YOU WANT, BUT CERTAINLY CAN, YOU CAN WIRE IT OVER OVERNIGHT.
[01:15:02]
OR QUESTIONS? ALL RIGHT.ALL RIGHT, WELL LET'S SEE IF WE HAVE ANY SPEED CARS FOR THIS ITEM.
WE DO SERVE, WE HAVE ONE SPEAKER, MS BONNIE PRICE.
UH, THIS IS A VERY GOOD PRESENTATION BY THE WAY.
UH, SO A LOT OF MY QUESTIONS WERE ANSWERED.
I'M JUST WONDERING HOW LONG HAS THIS UNFUNDED SITUATION BEEN IN EXISTENCE? AND WHEN WAS THE LAST TIME OF PROPERTY TAX WAS INCREASED TO HELP PAY FOR THIS? MR. BARRY? I CAN ANSWER THE SECOND PART.
ONE IS, UM, A PROPERTY TAX INCREASE WOULD REQUIRE A VOTE OF THE PEOPLE.
WE'VE NOT DONE A PROPERTY TAX INCREASE TO DO THIS AND I DON'T EVEN KNOW IF STATE LAW WOULD EVEN ALLOW US TO DO THAT.
THE FIRST HALF OF THE QUESTION IS HOW LONG HAS THIS EXISTED? UM, I DON'T KNOW THE EXACT YEAR, BUT IT'S EXISTED FOR MANY, MANY YEARS.
THE, THE CHANGE OF WHY WE ARE TALKING ABOUT IT TODAY WHERE WE WEREN'T BEFORE IS THAT PEPPER REFORM THAT WENT INTO EFFECT WHERE IT ALL BECAME MORE TRANSPARENT.
SO BEFORE OUR UNFUNDED LIABILITY WAS JUST LUMPED IN WITH OUR NORMAL COSTS AND WE DIDN'T REALLY KNOW HOW MUCH WAS WHAT UNDER THE, THE PEP WRA.
UM, NOW WE HAVE THESE DISTINCT, UM, FUNDS, THESE DISTINCT, UH, LIABILITIES.
AND MR MORALEZ SHOWED THAT GREAT GRAPH THAT SHOWED OR THAT THE PIE CHART THAT SHOWED THAT AMOUNT, THAT'S WHAT ONE OF THE ADVANTAGES OF PETRA.
SO IT'S ALLOWED US TO ACTUALLY HAVE A MORE INTELLIGENT CONVERSATION AROUND IT.
THOSE WHO LIVE IN THE UNINCORPORATED AREAS HAVE NO CHOICE.
2% INCREASE ON YOUR PROPERTY PER YEAR.
WE GET A 2% IN LIVING IN THE CITY ALTO.
IT'S NOT NO DIFFERENT UNLESS, UNLESS WE HAD A RECESSION AND THE PROPERTY VALUES WENT DOWN AND THEY RE WERE REAPPRAISED YOUR LOWER VALUE LIKE THEY DID DURING THE OH SEVEN OH EIGHT TIME PERIOD, GARY.
WELL, ACTUALLY THE WAY IT WORKS WITH THE PROPERTY TAXES IS UH, UNDER PROP 13, WHICH PASS BACK A 78 AND 79 THAT THE, UH, ASSESSED VALUE CAN'T GO UP MORE THAN 2% PER YEAR WITH THE EXCEPTION THAT IF THE, UH, CALIFORNIA, UH, CONSUMER PRICE INDEX GOES UP LESS THAN 2%, IT WILL, LIKE, IT DID SERVE FOR SEVERAL YEARS DURING THE GREAT RECESSION.
IT CANNOT EXCEED THE CALIFORNIA CONSUMER PRICE INDEX.
SO THERE ARE MANY YEARS WHERE THERE WAS A MAYBE 1% INCREASE IN THE ASSESSED VALUE.
AND THEN IF THE VALUE OF THE PROPERTY, UH, GOES DOWN, UH, YOU D ASSESSOR CAN NEVER PUT A VALUE ON IT.
THAT'S MORE THAN WHAT THE MARKET VALUE.
THE ENTIRE STATE IS TREATED THE SAME.
WE'RE LUCKY TO HAVE COUNCILMEMBER KENDRA, HE'S A GOT A MASTER'S DEGREE IN REAL ESTATE.
ALSO WORKED FOR THE COUNTY ASSESSOR'S OFFICE FOR 80 YEARS.
ARE THERE ANY, ARE OTHER CARTS? NO MORE CARDS, SIR.
THEN, UM, WE DON'T HAVE TO CLOSE THE PUBLIC HEARING SO WE CAN HAVE MORE DISCUSSION OR WE CAN HAVE EMOTION.
I THINK WE'VE ASKED A LOT OF REALLY PERTINENT QUESTIONS.
I THINK WE'VE GOT, I THINK IT'S CERTAINLY WORTH, UM, KIKI OR BACK TO THE STAFF SO THEY CAN WORK WITH THIS AND BRING IT BACK TO US AND SEE WHAT OUR OPTIONS ARE.
ANYTIME YOU COULD REFINANCE THE DEBT TO A LOWER LEVEL, THAT'S SOMETHING A PRUDENT, UH, INVESTOR OR, OR DEBT OER WOULD DO.
UH, THE KEY IS WHAT DO YOU DO WITH THE SAVINGS? AND IF YOU BELIEVE IN SMALLER GOVERNMENT, THEN YOU TAKE THOSE SAVINGS AND YOU PUT THOSE BACK INTO PAYING DOWN YOUR DEBT.
IF YOU BELIEVE IN BIGGER GOVERNMENT, USE THOSE SAVINGS TO CREATE MORE GOVERNMENT PROGRAMS. I THINK WE KIND OF BELIEVE WE OUGHT TO PAY DOWN OUR DEBT BECAUSE THAT'S MONEY WE OWE PEOPLE WHO HAVE WORKED FOR US AND THAT'S A BETTER USE OF THAT MONEY THEN TO CREATE NEW SOCIAL PROGRAMS AROUND THE CITY.
SO I'D LIKE TO AT LEAST SEND SOME DIRECTION, UH, WITH THE INTENT OF UH, USING THE SAVINGS TO PAY DOWN DEBT.
I THINK WE'RE ALL AGREEMENT ABOUT THAT.
UM, AND IT LOOKS LIKE THERE ARE WAYS TO UH, STRUCTURE SO THAT IT CAN BE SHELTERED AND SAFE.
[01:20:05]
OH, MORGAN, DO WE NEED FOR A SEPARATE MOTIONS? NO.YOU CAN MAKE, IF YOU'D LIKE TO ACCEPT THE RECOMMENDATION YOU CAN MAKE ONE MOTION TO APPROVE THE RECOMMENDATION ENTIRETY, A MOTION TO APPROVE THEIR RECOMMENDATION AND IN ITS ENTIRETY.
SECOND LOSING SECRETARY, PLEASE VOTE.
MOTION CARRIES BY UNANIMOUS VOTE.
WELL THANK YOU JOHN FOR COMING AND THANK YOU FOR ALL THE HARD WORK YOU'VE PUT INTO THIS.
[13. ACTIVITIES REPORTS/COMMENTS OF MAYOR WELLS: SANDAG (San Diego Association of Governments) Board of Directors; SANDAG – Audit Committee, San Diego Division; Heartland Fire Training JPA – Alternate; LAFCO.]
I BELOVED IS MY ACTIVITY REPORT IS AS REPORTED.THERE IS NO LEGISLATIVE REPORT ON TODAY'S AGENDA
[14. ACTIVITIES REPORTS/COMMENTS OF COUNCILMEMBERS:]
AND WE'RE NOW AT ACTIVITY REPORT FOR THE COUNCIL MEMBERS COUNCIL BARBARA KENDRICK AS REPORTED COUNCIL MEMBER MCCLELLAN COUNCIL MEMBER GLOBAL AS REPORTED.I WANT TO MAKE A QUICK NOTE TOMORROW.
UH, THERE'LL BE 10 U S ARMY FUTURE SOLDIERS BEING SWORN IN HERE IN THE COUNCIL CHAMBERS FROM OUR VERY OWN ARMY RECRUITMENT STATION HERE IN, UH, IN ALCOHOL.
THEY JUST SURPASSED THEIR RECRUITMENT GOALS FIRST TIME DONE IN ALMOST 10 YEARS AND THEY'RE GOING TO BE SWORN IN LIVE FROM THE INTERNATIONAL SPACE STATION FROM A KERNEL.
THAT'S THEIR FIRST TIME, UH, IN THE CITY OF OKLAHOMA.
ANYONE'S TALKED TO ANYONE IN SPACE.
SO, UH, LOOK FOR, UH, MAYBE SOME MEMBERS OF OUR MEDIA CAN REPORT ON IT, BUT I THOUGHT THAT WAS A NEAT, UH, EVENT THAT'S GOING TO HAPPEN HERE TOMORROW.
NICE TIME IS, WAS JUST CHANGED.
NINE 30 TO 1130, I THINK IS A TIMEFRAME.
I'M NOT SURE WHAT TIME PEOPLE IN SPACE HAVE IN THEIR SCHEDULES, SO YEAH.
THERE ARE NO JOINT COUNCILOR REPORTS ON TODAY'S AGENDA.
[17. El Cajon Animal Shelter Donations for January 2020 RECOMMENDATION: In accordance with City Council Policy B-2, staff informs the City Council about receiving the following donations for the El Cajon Animal Shelter for the month of January: United Way - Anonymous $524.24 Rancho Santee Lions Association $200.00 Total $724.24]
ITEM 17 IS A REPORT OF DONATIONS TO THE ANIMAL SHELTER IN THE MONTH OF JANUARY AND THAT WAS $724 AND 24 CENTS WE HAVE THOUGH FIRST OR SECOND READINGS OF ORDINANCES ON TODAY'S AGENDA[23. CLOSED SESSIONS:]
AND THAT BRINGS US TO CLOSE SESSION.OUR CITY ATTORNEY WILL ASK HIM TO RECITE THE TITLE AND LEAD US IN THE CLOSED SESSION.
THANK YOU MAYOR CITY COUNCIL BE MEETING CLOSED SESSION FOR ONE ITEM, A CONFERENCE.
WE REAL PROPERTY NEGOTIATORS PURSUANT TO GOVERNMENT CODE SECTION FIVE FOUR NINE FIVE 6.8 THE LOCATION OF THE PROPERTY IS 1373 NORTH MARSHALL AVENUE AND THE NEGOTIATING PARTY IS THE SAN DIEGO HUMANE SOCIETY AND THE CITY'S NEGOTIATORS ARE THE CITY MANAGER, ASSISTANT CITY MANAGER, CITY ATTORNEY AND UNDER NEGOTIATION WILL BE PRICE AND TERMS FOR A LEAST OF ALL OR PART OF THE PROPERTY.
I'LL MAKE A MOTION THEN TO ENTER IN THE CLOSED SESSION.
MOTION CARRIES BY UNANIMOUS VOTE.
WE'LL BE A JUST A SHORT PERIOD OF TIME FOR CLOSED SESSION.
WE'LL COME BACK AND CONCLUDE THE COUNCIL MEETING.
THE CITY COUNCIL MET IN CLOSED SESSION ON ITEM 18 AND GAVE DIRECTION TO ITS NEGOTIATORS.
THIS BRINGS US TO A GERMAN, THE GERMAN RAILROAD, A JOINT MEETING OF THE ALCON CITY COUNCIL AND ALCOHOL HOUSING AUTHORITY.
HOW THIS 25TH DAY OF FEBRUARY, 2020 IS ADJOURNED TILL TUESDAY, FEBRUARY 25TH, 2020 AT 7:00 PM THANK YOU.