Community Town Hall on the Budget February 1, 2020

0:19:50We'll begin in a few minutes.

0:19:51People are still coming in.

0:19:52There are still seats up front.

0:19:54So please feel free to come up front.

0:21:49Good morning.

0:21:50There are still a few seats up front.

0:21:52If you're coming in now, there's at least six seats up here.

0:21:57So feel free to have a seat.

0:22:01My name Greg Lyman, I'm the mayor of El Cerrito.

0:22:04Welcome for coming to our town hall, our financial town hall

0:22:08today.

0:22:09It is going to be record both audio and visual.

0:22:14So we ask that as we get into the question and answer period

0:22:18that you wait for a microphone to come to you to ask

0:22:21the question So that you can be recorded

0:22:24for those that are going to be watching this later.

0:22:27This town hall meeting is going to be on the basic side.

0:22:32And if as a result of questions we received today,

0:22:34we need another town hall meeting that's

0:22:35going to be more complicated, diving deeper into the issues,

0:22:40we will be relying on this audio tape and this videotape

0:22:44to have people educated prior to that meeting.

0:22:47So it's really important that people participate

0:22:49by talking into a microphone.

0:22:53We do have a presentation that Karen

0:22:55and I will be giving to you.

0:22:57We are going to break in the middle

0:22:58of that presentation for questions on the first half

0:23:02of the presentation.

0:23:04So that we can take questions as they're relevant to

0:23:07those slides.

0:23:09I am going to call for a break, at least one break,

0:23:12about halfway through so that we can all get up and move around

0:23:16and potentially use the restrooms because we

0:23:18do have a full house.

0:23:22We-- what's the other thing?

0:23:24There was one more thing I was supposed to say?

0:23:29Comment cards-- in the back, there are comment cards.

0:23:32If you're shy and don't want to be recorded on the camera

0:23:35or on the microphone, we do have comment cards

0:23:38in the back for you to write your questions down.

0:23:42I'm joined today by fellow council

0:23:45members Paul Fadelli, Gabe Quinto,

0:23:49and Rochelle Pardue-Okimoto.

0:23:54With that, I want to hand it over to Karen.

0:24:01Thank you, your honor.

0:24:02My name is Karen Pinkos.

0:24:03I'm the city manager.

0:24:04I've been the city manager since just the end of December 2018,

0:24:08So just finishing up my first year.

0:24:11City staff, can you--

0:24:13if you can your hands?

0:24:16We have, let's see, our finance director.

0:24:18Can everyone hear me?

0:24:19[INAUDIBLE]

0:24:21Yeah, it's kind of a funny.

0:24:22OK, so finance director Mark Rasiah,

0:24:25police chief Paul Keith.

0:24:27[INAUDIBLE]

0:24:28Fire chief Mike Pigoni, assistant city

0:24:32manager Alexandra Orologas, and public

0:24:36works director Yvetteh Ortiz.

0:24:38Thought I saw-- back there is Pete

0:24:41Salazar who's our IT manager.

0:24:45Will Provost works in public works,

0:24:48our current acting environmental services

0:24:50and maintenance manager.

0:24:52There's-- I see Kristen Cunningham, who's our human

0:24:56resources manager.

0:24:58Pulling out more chairs is our recreation director

0:25:01Chris Jones.

0:25:02Right behind him is our city clerk Holly Charléty.

0:25:05Any other staff I missed throughout the crowd?

0:25:09OK, so I want to thank you all for being here.

0:25:16When I put out my updates and I tried to solicit some questions

0:25:21and feedback, and I've been on different social media

0:25:25and emails, we've got a lot of questions,

0:25:27various questions that were really good questions.

0:25:30And so we're going to take you through a presentation

0:25:32which I'm hoping will answer a lot of those questions.

0:25:37Some people are asking very basic

0:25:38questions, how the budget works, some

0:25:40asking very detailed questions.

0:25:42So what we're going to do is we're going to kind of start

0:25:44off with this presentation so in hopes of answering

0:25:48many of those questions.

0:25:49And then after once we get to the question and answer part,

0:25:52we can get more detail so that everyone

0:25:53has sort of the same basis of information.

0:25:58[INAUDIBLE] OK, so just so we can all talk to-- yes.

0:26:04Hi.

0:26:04[INAUDIBLE]

0:26:06OK, so we've set up some additional chairs outside,

0:26:09and there's a video on outside as well.

0:26:12So what we'll do today then in this presentation

0:26:15is we'll go over city budget information, kind

0:26:17of an overall budget, how the general fund,

0:26:20expenditures and revenues, and our current financial position.

0:26:24Then we'll go over the budget challenges.

0:26:25A lot of good questions I got was,

0:26:27well, how did you get here?

0:26:29What have we done and what are the future challenges we face?

0:26:32And then at that point, we'll open it

0:26:34up for questions and answers.

0:26:37OK, so to begin, the city and its funds--

0:26:46so these are all of the funds that contribute to this--

0:26:52this is all of the funds--

0:26:53I'm sorry.

0:26:54This is expenditures.

0:26:55But these are all the funds that contribute to the city.

0:26:58So the city-- one of the key principles

0:27:00to understanding local government budgeting

0:27:03is what a fund is.

0:27:04So for most of us in our homes, our household,

0:27:08we put together all our money to cover our expenses.

0:27:11But governments operate differently.

0:27:13So it's separated into various funds

0:27:16that can be thought of as separate checking accounts.

0:27:20So the main checking account is this one,

0:27:23the city's general fund.

0:27:25And that's unrestricted and can be spent on anything--

0:27:29any purpose, any service.

0:27:31The general fund is where the majority, as you can see,

0:27:33of our city's operating budget is paid from.

0:27:37The city also has several additional checking

0:27:39accounts that we call special purpose funds.

0:27:41And those are the smaller parts of the pie that you see there.

0:27:44These funds are created for specific purposes,

0:27:47and the money in those funds can only be spent

0:27:49on what they're created for.

0:27:50For example, street improvements--

0:27:53that's the Measure A sales tax.

0:27:55Anything that goes into that fund

0:27:56can only be spent on what is restricted to street

0:28:00improvements that is in the ordinance

0:28:02that the voters passed for that measure.

0:28:06So it can't be used for any other purposes.

0:28:11So general fund expenditures, which is the biggest piece

0:28:14of the pie, this is what we put to here-- so

0:28:16how our general fund is spent.

0:28:18So this shows that the majority of costs in the general fund

0:28:21are, not surprisingly, for personnel.

0:28:24This is because the city is a service organization

0:28:27and personnel-- so salaries and overtime, benefits, retirement.

0:28:32So these two pieces of the pie include total compensation.

0:28:37So personnel are required to provide those services.

0:28:39We can't provide services without people.

0:28:41We are a service organization.

0:28:44So part of that is that we do struggle

0:28:46to continue to provide our employees

0:28:48with competitive wages and to provide the services

0:28:51that all of you expect.

0:28:53So of the city's general fund, about 76% of our expenses

0:28:57are budgeted to go toward employee compensation.

0:29:00And especially this part of the pie

0:29:02is increasing because of our pension

0:29:05and medical costs continue to rise.

0:29:08And this is true in every industry.

0:29:11So the discretionary part of the pie

0:29:14is that 24%, the green part.

0:29:20So like I said, people provide services.

0:29:22So unlike a business that creates or manufactures items

0:29:26that you can then sell and make a profit off of,

0:29:29we provide the community with police, fire,

0:29:31economic development, public works, recreation, building,

0:29:35planning, environmental, and administrative services

0:29:38that are not provided by the private sector.

0:29:41We have around 180 full time positions.

0:29:44That includes preschool teachers, engineers, planners,

0:29:48firefighters, police officers.

0:29:51Plus, we also carry a number of seasonal part time positions,

0:29:55particularly in our recreation department.

0:29:57For those of you who have ever experienced

0:29:59our camps or our pool, we do a lot of seasonal part time

0:30:04positions to do those programs.

0:30:07So as in most of these, as you can see by the chart,

0:30:09public safety, which is police and fire,

0:30:11makes up the majority of our personnel

0:30:13costs in the general fund.

0:30:16And it should be noted that the public works department

0:30:19has a small slice of the pie.

0:30:20But that that's a little misleading

0:30:22because they are paid--

0:30:24that's the general fund.

0:30:26That's what they are paid for out of the general fund.

0:30:28The rest of what they're paid for is out of the special funds

0:30:31that I referred to earlier because a majority

0:30:33of those special funds are special purpose funds that

0:30:35do public works, including streets, landscaping, lighting,

0:30:40and a lot of the grants that do a lot

0:30:43of our infrastructure work.

0:30:45Also, can't forget [INAUDIBLE] also

0:30:51one of our employees, our integrated waste management

0:30:54fund, which is what all of you pay for in your garbage bills.

0:30:59That runs the recycling center and all recycling services

0:31:01in our environmental services.

0:31:06[INAUDIBLE]

0:31:07Revenues-- so where the funds come from.

0:31:11So this chart shows what's collected to make up the city's

0:31:14general fund revenue.

0:31:15So the majority of our revenue comes from taxes.

0:31:19This includes property taxes, sales

0:31:20taxes, utility users taxes.

0:31:24Other revenues come from fees, permits, fines,

0:31:27contract revenue for the services,

0:31:29including the contract to either [INAUDIBLE] Kensington

0:31:33for the fire station up there-- we operate that fire station--

0:31:37West Contra Costa, the school resource officers,

0:31:40although you may have heard that that is

0:31:43going to be shrinking as well.

0:31:45In addition to the general fund, the special funds,

0:31:47as I referred to earlier, collect revenue that goes

0:31:50directly toward those items--

0:31:52[INAUDIBLE] center, storm drain, national pollutant discharge

0:31:56elimination, and [INAUDIBLE].

0:31:59Measure J for transportation, landscape and lighting,

0:32:02integrated waste management, public art, capital

0:32:05improvements, and all of our federal state and local grants

0:32:08that cover, again, the specific types of services that we

0:32:13apply for those grants for.

0:32:15But most services are paid for out of the general fund,

0:32:17and that's why we focus on it the most.

0:32:22So this is just a chart to show all of you

0:32:25where your property tax dollar goes.

0:32:26And this is not inclusive of all those extra special taxes

0:32:30that you guys all have voted for or not

0:32:33voted for as the case may be.

0:32:35On the other side of that little column

0:32:37on your property tax bill, this is what one property

0:32:39tax dollar goes towards.

0:32:40So you can see actually the majority

0:32:43of it does go to the school district, part of it

0:32:46to the county.

0:32:47These are all of the other mosquito district, air quality

0:32:50district, [INAUDIBLE] sanitary district,

0:32:52regional parks, East Bay MUD, hospital, transit

0:32:54agencies, community college.

0:32:56The city gets $0.22 of every property tax dollar.

0:33:06So what Karen's talking about is your tax bill.

0:33:10You all have a tax bill.

0:33:12And on the left hand side is the ad valorem side.

0:33:15And on the very first line, it says 1%.

0:33:17This is how that 1% is divided.

0:33:20And all the other line items that

0:33:22are on here for the school district

0:33:24are on top of how this gets distributed.

0:33:27And everything on the right hand side is parcel based.

0:33:30So that's just to give you a fine point description of how

0:33:34this works out is that we're talking

0:33:37about the first line on the right hand

0:33:40side of the tax bill.

0:33:44That goes to all of these people, all of these agencies.

0:33:47[INAUDIBLE] tax [INAUDIBLE]

0:33:50[INAUDIBLE] so what he just said is we get 22% of that 1%.

0:33:54[INAUDIBLE]

0:33:59Sales tax-- so in El Cerrito right now, we're at 9.75%

0:34:04sales tax, and this is how it's divided.

0:34:08Majority goes to the state.

0:34:12These are county public safety augmentation

0:34:16funds, [INAUDIBLE] Transit Authority,

0:34:19BART, city's general fund.

0:34:21So all of this is the basis.

0:34:25Those two are special taxes that were passed locally.

0:34:28Measure A-- that was for streets that I referred to earlier.

0:34:32And measure R, which was first passed in 2010,

0:34:36was renewed in 2014.

0:34:38That's a one time sales tax, and that sunset in March 2027.

0:34:43These are all-- except for a measure A

0:34:45because that's special.

0:34:46But the other measure R, the city's measure R,

0:34:49is a general tax.

0:34:50So that goes to the general fund.

0:34:53I'm going to pause here for a second

0:34:55and see if anybody has any questions on our budget.

0:35:02So you'll need to use a mic.

0:35:03So [INAUDIBLE]

0:35:08I thought we had a mic runner.

0:35:09So we'll wait for that for a second.

0:35:11But--

0:35:13[INAUDIBLE]

0:35:16Can you hear me?

0:35:17Go ahead and use that one there.

0:35:20OK.

0:35:20[INAUDIBLE]

0:35:22I'd like to know if this PowerPoint is available to us

0:35:25online.

0:35:26You've got to be much closer.

0:35:28[INAUDIBLE]

0:35:30Hello?

0:35:30Did you turn it on?

0:35:32Can you hear me?

0:35:34Oh, OK.

0:35:35[INAUDIBLE] hear yourself.

0:35:36I can't hear myself.

0:35:39I'd like to know if this is available online for us

0:35:41so we don't have to take notes.

0:35:43Yeah, thank you for asking that.

0:35:45Yes, we are going to put this online.

0:35:47And actually, I'm going to put it online with some

0:35:50of the notes that I have so that if you've not seen it,

0:35:53you can read through it, and I'll have the notes explained.

0:35:56So thank you.

0:35:59So on the property tax, the little 1%,

0:36:05the school district gets 44 point--

0:36:07and then the whole block beneath it is in addition to that?

0:36:13So anything that's a partial tax or the additional school

0:36:16taxes or city taxes, and the mayor apparently

0:36:20has an example.

0:36:21So we can show you.

0:36:23[INAUDIBLE] all see it [INAUDIBLE]..

0:36:28If you don't know, your tax bill is a public record

0:36:31based on your address.

0:36:33So someone can go and look up your tax

0:36:35bill based on your address using the county's website.

0:36:38So this isn't private information.

0:36:40You can come see mine if you want

0:36:43at the break to get a better understanding of how this 1%

0:36:47works.

0:36:50OK, over here.

0:36:55Hi so my question is, is it true that El

0:36:59Cerrito has the highest sales tax in Contra Costa county?

0:37:04And is it also true that in 2012, [INAUDIBLE]

0:37:07got legislation passed so that the city could go over

0:37:10the normal maximum for cities?

0:37:14Yes to both of those questions.

0:37:17Yes, I believe is El Cerrito is matched

0:37:20with several other cities at 9.75.

0:37:23And yes, in order to get-- can you go to the next slide.

0:37:28In order to exceed 1% locally, we did need

0:37:31to have special legislation.

0:37:32We're at 1 and 1/2% locally.

0:37:38[INAUDIBLE]

0:37:40That mic's not on yet.

0:37:42[INAUDIBLE]

0:37:46Does the city have a balance [INAUDIBLE]

0:37:48tax, parcel tax [INAUDIBLE]?

0:37:55So if I understand your question,

0:37:56you want to know how the parcel tax on the left hand

0:37:59side of our tax bill functions.

0:38:07So that everyone understands, there are [INAUDIBLE] things

0:38:10like the [INAUDIBLE] parcel tax, the storm drain

0:38:14reconstitution and mosquito vector emergency meds,

0:38:17a swim center parcel tax.

0:38:19There's another school district assessment.

0:38:21[INAUDIBLE] sanitary sewer has a charge on there,

0:38:23East Bay trails and East Bay MUD both have charges on there.

0:38:28So each one of those were passed at some point as a parcel tax

0:38:32at a flat rate.

0:38:33So it doesn't matter what size parcel you have.

0:38:35It doesn't matter what type of value you have.

0:38:38[INAUDIBLE] has the storm drain and the swimming center

0:38:42are the two-- and the landscape widening

0:38:44and assessment district should be on there as well.

0:38:46So we have three parcel taxes that we collect.

0:38:52They're fixed.

0:38:52They have not changed since before we [INAUDIBLE]

0:38:55the assessment district has not changed

0:38:57since 1998 when it passed.

0:38:59The swim center charge is at its maximum since 2012.

0:39:08And the storm drain assessment tax has not changed

0:39:12since it was put in place.

0:39:13And the year is not in here, but it's

0:39:15been at least 20 years since the storm drain parcel

0:39:18tax has been put in place.

0:39:20So all those are revenues to special funds.

0:39:22Do you want to go back to the restricted funds?

0:39:27Oh.

0:39:28All the revenues that Karen mentioned that are dedicated

0:39:32funds, the landscaping one, assessment district [INAUDIBLE]

0:39:35storm sewer assessment and the swimming pool

0:39:41are all restricted funds.

0:39:43So as we just recently as Measure H

0:39:46renewed the swim center one.

0:39:48And so that will go on for another time--

0:39:52it's going ongoing.

0:39:54So those are all restricted funds that

0:39:55go into restricted accounts.

0:39:57And all of those needed to be passed

0:40:00by the voters in order that--

0:40:02state law requires that any tax needs

0:40:05to be passed by the voters.

0:40:06If it's a special tax, it needs to be

0:40:08passed by 2/3 of the voters.

0:40:13[INAUDIBLE]

0:40:15OK, thanks.

0:40:16Can you go back to the property tax slide, please?

0:40:18I just want to make an observation for the benefit

0:40:21of the group here.

0:40:23So if you look at city, 23% West Contra Costa Unified,

0:40:2744 for the BART or maybe transit agency five.

0:40:34Community college is six.

0:40:37And the [INAUDIBLE] high [INAUDIBLE] entity.

0:40:39So that's 75% of property tax dollars going to agencies who

0:40:45are having financial problems.

0:40:49So keep that in mind.

0:40:50It's not just potentially the city or the school

0:40:54district or transit agencies.

0:40:56And this is not an observation as an excuse.

0:41:01This is an observation that there

0:41:03are severe financial stress across many organizations.

0:41:07So my plea to the city, please enlighten us

0:41:12in a way that's better than what BART has been trying to explain

0:41:16or what the school district has been trying to explain,

0:41:19and I'll be watching for the explanation.

0:41:21Thanks.

0:41:21We'll do our best, thank you.

0:41:28Here and then [INAUDIBLE].

0:41:33I just wanted to clarify for myself something

0:41:35that you said a minute ago about needing 2/3 of the voters

0:41:41to approve a tax.

0:41:43A special tax.

0:41:44A special tax.

0:41:45So I understand now that [INAUDIBLE]

0:41:49a charter city that 2/3 votes are not always required.

0:41:56What is not required?

0:41:58So it is state law.

0:42:00So whether we're a charter or not, it doesn't matter.

0:42:03So if it's a special restricted tax measure--

0:42:05H that was just passed as an example,

0:42:07that can only be spent--

0:42:09there was an ordinance that the city council

0:42:12passed and put it on the ballot essentially

0:42:13for everyone to look at.

0:42:14It can only be spent on essentially

0:42:16parks and recreation facilities and maintenance

0:42:19and nothing else.

0:42:20So if it's special, that has to be passed by two-thirds.

0:42:23That's state law.

0:42:24But a general tax like the last measure

0:42:26R or the real property transfer tax,

0:42:29which was Measure [INAUDIBLE].

0:42:31That can be spent on anything.

0:42:32It goes into the city's general fund.

0:42:35So it's a general tax which, again, we cannot

0:42:38specify where it goes to.

0:42:40That can be passed with 50%.

0:42:41But that is state law, and that's regardless of if you're

0:42:44a charter city or not.

0:42:48OK, thank you.

0:42:51So I'm looking at the [INAUDIBLE] cents goes

0:42:57to every property tax dollar.

0:42:59Can you move closer to the mic please?

0:43:00OK.

0:43:02[INAUDIBLE]

0:43:04So my question is if 2.1 cents of every dollar

0:43:08goes for East Bay MUD, why am I monthly statements from them?

0:43:13[LAUGHTER]

0:43:16That may be a question for East Bay MUD.

0:43:19But again, I think that East Bay MUD, like I

0:43:22guess [INAUDIBLE] any agency, we're

0:43:24kind of an agency like that if you count our recycling fee.

0:43:27So the agency does have taxes that support it,

0:43:30but then fees for service are separate.

0:43:33So same with the integrated waste management--

0:43:36when you take fees for service for your recycling,

0:43:39that is separate from the property taxes that you pay.

0:43:41It's called-- what we do here, it's

0:43:43called an enterprise fund so that it [INAUDIBLE]

0:43:46support the enterprise.

0:43:47That's my best answer, but maybe East Bay MUD

0:43:51would have another.

0:43:53OK, so we'll take a couple of questions.

0:43:56The conclusion of fiscal year '18-'19.

0:43:58What will the actual revenues and expenditures?

0:44:01These are the amounts presented at the last city

0:44:02council meeting.

0:44:04Yes, we will get to that in just a minute

0:44:06when we talk about financial statements.

0:44:11[INAUDIBLE]

0:44:12OK, all right.

0:44:14[INAUDIBLE] presentation.

0:44:16OK.

0:44:21OK.

0:44:24Here's my non-favorite chart.

0:44:26[INAUDIBLE]

0:44:32[INAUDIBLE]

0:44:33So general fund reserve--

0:44:36so another important factor in our budget

0:44:38is the general fund reserve number.

0:44:41The reserve is the difference between how

0:44:43much money comes into the city and how much we spend.

0:44:45So it's essentially the city's main savings account.

0:44:49It's money that we set aside to protect the city from events

0:44:52that could impact the financial condition of the city

0:44:54and provide a safety net in case of emergency.

0:44:57So we do have adopted financial policies which were actually

0:45:00updated just last year.

0:45:02Our goal is to maintain a 10% reserve, which is the red line,

0:45:09of our general fund.

0:45:10So 10% of our revenues would be our savings account.

0:45:17Last year, again, we approved an additional emergency

0:45:21and disaster recovery fund which was recommended

0:45:24by the financial advisory board that the city

0:45:27council [INAUDIBLE] began to set aside

0:45:29money to save for real emergency or disaster events.

0:45:34So any use of the reserve does have

0:45:37to be approved by city council either through the budget

0:45:40processor or through separate appropriations

0:45:42at a city council meeting.

0:45:45And as you can see, the city has had to use a general fund

0:45:49reserve to balance our budget in recent years,

0:45:51not only dropping below the minimum

0:45:53but dropping below the axis here.

0:45:59Obviously, this is not sustainable.

0:46:01I don't think I have to tell anybody that.

0:46:04So we are-- and what's going to happen.

0:46:06And we'll talk about this later and we'll talk about this

0:46:09in future meetings as well--

0:46:10that the city needs to use balancing measures

0:46:13in order to make sure that--

0:46:15and just flat out reductions in order

0:46:18to try to make sure that we're getting

0:46:20closer to that red line.

0:46:22And we'll talk a little bit more about how we've got here

0:46:25and why we got here in the next couple slides.

0:46:27The mayor is going to go over that.

0:46:29But some of the things that happened,

0:46:32just kind of a very basic timeline of how this happened,

0:46:37this is when the recession started to hit city agencies.

0:46:41So we started to decline here.

0:46:44This was the loss of the city's redevelopment agency.

0:46:48That was a loss of $1 million right off the bat

0:46:51to the city's general fund reserve,

0:46:53because some of that money was used for some

0:46:57of the general fund activities.

0:46:59They worked together, including staff

0:47:03and economic development that took a million dollars

0:47:06right off the top.

0:47:07A year, yes.

0:47:08That took a million dollars right off the top.

0:47:11We changed auditors about 2015, 2016,

0:47:16and some new audit rules came into play.

0:47:19So for the accountants in the room,

0:47:20you may be able to explain this better than me.

0:47:22And I'm looking at you, Marlene, as well,

0:47:24from our financial advisory board, who

0:47:26was a former auditor herself.

0:47:27But some-- what happened here was

0:47:30an adjustment that was made by our auditor with respect

0:47:34to table accruals.

0:47:37We had been-- if I get this wrong, Marlene, help me out.

0:47:41Or Mark-- I don't know where Mark is.

0:47:43Help me out.

0:47:43So our fiscal year begins on July 1st.

0:47:49So sometimes the July payroll overlaps--

0:47:52we do two week payrolls so we get paid every other Friday,

0:47:57and sometimes that overlaps fiscal years.

0:48:00So going along the years, we had not been accruing the payroll.

0:48:06So some of you, if any of you have ever had a paycheck that

0:48:10stops in the middle of your payroll period

0:48:13for a fiscal year for any of your agencies,

0:48:15some agencies do that.

0:48:16We have taken it across, but we had not accounted for it

0:48:20in our financial statements.

0:48:22Our new auditor came in, noticed that we were doing it in a way

0:48:26that he felt was not appropriate,

0:48:28and we needed to make an adjustment.

0:48:30The adjustment was almost $1 million,

0:48:33which had to come out of this reserve.

0:48:35So part of the oddity of showing it like this,

0:48:41it doesn't meant necessarily that we only had $0.6 million

0:48:45here.

0:48:46Were it not for that audit adjustment,

0:48:48we would have had an additional $900,000.

0:48:52Do I make-- did I--

0:48:53[INAUDIBLE]

0:48:57I just wanted to point out that it's

0:48:59one over, were you to get down to the 0.1,

0:49:02that's why the adjustment was made.

0:49:04It was while I was here.

0:49:06That was done in 2017.

0:49:08Yes, she's correct.

0:49:10So I just-- see, I know sometimes that-- and like I

0:49:14said, I'm not an accountant, but other things that

0:49:17added or subtracted from our general fund,

0:49:22the senior center, the school district.

0:49:25These two lease for $1 a year.

0:49:29The senior center that was behind the library

0:49:31next to Fairmont School, the school district

0:49:34informed us that we had to vacate the property.

0:49:38So we set up a new midtown activity center

0:49:42over on a piece of property that used to be a parking

0:49:45lot that we had over on the other side

0:49:46of the public safety building.

0:49:48To prep that parking lot to bring the portables in cost

0:49:53$425,000.

0:49:55It was not budgeted for.

0:49:57And we lease those portables for $100,000 a year.

0:50:01It was not budgeted, so it was another half

0:50:03a million dollars that we lost.

0:50:06So those are just examples.

0:50:07So-- and again, we'll go into a little bit more detail,

0:50:09the mayor will go into a little bit

0:50:10more detail of how we got here.

0:50:12But before the recession, we were doing well

0:50:17and we relied on balancing--

0:50:20or the reserve to balance the budget.

0:50:22So when these hits happened, we didn't have our own safety net,

0:50:26which speaks to the point of how we

0:50:28have to rebuild our reserves.

0:50:35So where we are right now, or at least,

0:50:38as of the end of fiscal year 2019,

0:50:41which ended on June 30, 2019.

0:50:45So we get audited every year by an independent auditor.

0:50:49It's a third-party auditor, and when--

0:50:52[INAUDIBLE] we go out to bid.

0:50:54We do what's called a request for proposals.

0:50:55We put it out into auditor land, and people bid,

0:50:59and then we choose an auditor.

0:51:00And it's good practice for cities

0:51:02to do that every few years or so to make sure that they're not

0:51:05relying on same auditor year after year

0:51:07after year after year because then it gives a fresh look.

0:51:10You saw what the fresh look did.

0:51:12But at any rate, so we got-- we were audited as of the end

0:51:16of fiscal year 2019.

0:51:18We've been working with the auditor

0:51:19on producing what's called a comprehensive annual

0:51:21financial report, which you'll hear me

0:51:23and others refer to as the CAFR.

0:51:25So that's our financial statements each year.

0:51:28Each year is posted on the website, back to,

0:51:30I think the early 2000s or several years back.

0:51:34We have archived all of these on our website.

0:51:37So this year we were audited again,

0:51:39and our audit firm is called [INAUDIBLE] and Associates.

0:51:42We received an unqualified opinion,

0:51:44which means the clean audit.

0:51:45That means that any independent auditor's judgment

0:51:50of financial statements are fairly and appropriately

0:51:52represented, without exceptions, and in compliance

0:51:54with generally accepted accounting principles.

0:51:57A clean audit.

0:51:58So that's good.

0:51:59That means we're transparent.

0:52:00You are not hiding anything.

0:52:02There's no fraud raised or anything that has

0:52:03been identified by the auditor.

0:52:07It's just [INAUDIBLE].

0:52:09So before you is a basic chart of the general fund

0:52:11reserve balance as at the end of fiscal year 2019.

0:52:15So I'll go through this a little bit.

0:52:17Those are the revenues that we received in the general fund.

0:52:20Those are the expenditures we received

0:52:22out of the general fund.

0:52:24And while it-- I will make a note

0:52:26here that it is slightly over.

0:52:28Obviously we're supposed to try to stay

0:52:30within or have that balanced, but some of these are--

0:52:36some of these expenditures include--

0:52:39and I'm looking at Yvetteh because she

0:52:41does this a lot in her--

0:52:43in the public works department-- multi-year projects

0:52:46sometimes go from year to year.

0:52:48So some of those expenditures may

0:52:50have been budgeted in the previous year's revenues,

0:52:53but came through here.

0:52:54So this doesn't necessarily meant you went $1 million

0:52:56over budget.

0:52:57I just want to point that out.

0:52:59But this is how we ended the year,

0:53:00so that's what that means.

0:53:03So proceeds from the sale of land.

0:53:04So we as part of the redevelopment agency--

0:53:09does everyone understand what I mean by the redevelopment

0:53:11agency going away?

0:53:13I see some-- OK.

0:53:14So the city-- actually, many-- most cities, if not many cities

0:53:18in the state of California, had what was

0:53:21called a redevelopment agency.

0:53:23And it was a separate agency from the city,

0:53:26as far as separate funding, separate governance.

0:53:30Although it was under the control of the city,

0:53:31and the city council served as the board

0:53:34of the redevelopment agency.

0:53:35The redevelopment-- each city would

0:53:37create a redevelopment area.

0:53:39Ours was essentially San Pablo Avenue all the way to the BART

0:53:41tracks.

0:53:43And the agency could then use tax increment, which

0:53:47is a part of the property tax bill, that would go

0:53:49to the agency directly in order to funnel

0:53:53that back into the agency area.

0:53:56I was gonna say [INAUDIBLE]---- to, again, redevelop.

0:54:00The idea was to--

0:54:01back in the day when it was created in the '50s, '60s,

0:54:04it was meant to eliminate blight,

0:54:06and promote development.

0:54:08So to be clear, the tax increment,

0:54:11if the property was worth $100,000 and its tax

0:54:14was 1% of that, when it was redevelopment

0:54:18it was worth $1 million.

0:54:21All $900,000, or the tax on that $900,000, 100% of that

0:54:25came to El Cerrito.

0:54:28It didn't go to other-- because we caused

0:54:30that incremental change, we got all

0:54:32of that incremental benefit.

0:54:34So that's what the redevelopment agency basically was saying.

0:54:37So what ends up happening is now, without redevelopment,

0:54:42that $1 million goes to that pie chart before

0:54:44and we only get 22% of the total value.

0:54:47So that's what the redevelopment agency meant.

0:54:50And so when all of sudden that tax increment, that $900,000

0:54:53value goes away, we lose $1 million a year of revenue.

0:54:58That's what the dissolution of the redevelopment agency meant.

0:55:04Right.

0:55:04So redevelopment agency has existed until the state

0:55:08passed a law to eliminate them.

0:55:12That was in, I think, 2010, but it was effective in 2012.

0:55:16Because of that, the city now has created what's

0:55:20called a successor agency to the redevelopment agency,

0:55:24and please don't blame me for this.

0:55:25This is all state law.

0:55:27So the successor agency then held any property

0:55:31that the redevelopment agency owned, and was required

0:55:35by the state, because they eliminated redevelopment,

0:55:39we are required to dissolve all of that, and sell any property.

0:55:43The Cerrito Theater was a redevelopment agency property.

0:55:48The redevelopment agency owned that property

0:55:51and leased it first to one company,

0:55:55now to the company that owns it now.

0:55:57They own it now because we were required to sell it to them.

0:56:00We sold that, I believe, last year.

0:56:03We've also had some other land.

0:56:05There was some other land over on East Shore Triangle.

0:56:09And so, again, we were required to sell that.

0:56:12So part of that is what this is, right here.

0:56:16So we did make some--

0:56:18we did make the sales including the theater.

0:56:20So this is considered revenue.

0:56:24So really, that's the revenue--

0:56:26that 39 million plus the 800,000 that the general fund got.

0:56:30However, at mid-year, we told the city council

0:56:35that some of the audit adjustments that had been made

0:56:39previously transferred between this general fund

0:56:43and the redevelopment agency in prior years,

0:56:46needed to be accounted for.

0:56:49So that $800,000 was not counted as a revenue

0:56:52is actually counted as a transfer.

0:56:55So it's not able to be equated within our fund balance.

0:57:00Again, I'm sorry if I'm talking in accountant speak.

0:57:03And maybe Mark and Greg can--

0:57:06we're going to talk about this a little bit further, I promise.

0:57:08So the other financing sources include, again,

0:57:12those transfers, and then paying out--

0:57:15we also have a mortgage on this building, for example.

0:57:18Any other debt service that comes out

0:57:20of other financing sources.

0:57:22Yes, actually put it under on that one.

0:57:25So this resulted in a change from the previous year

0:57:28of $144,000.

0:57:31But because our beginning fund balance last year

0:57:33was only $87,000, our ending fund balance

0:57:36is negative $56,000.

0:57:38Negative $57,000.

0:57:43So clearly, what this show us-- we have work to do.

0:57:47And our draft CAFR was finished and posted on our website

0:57:50last week, and the final CAFR is ready as of, like, yesterday,

0:57:56I think.

0:57:56And so we're going to be posting that on the website,

0:57:59providing that to the city council,

0:58:01and that will be discussed at the February

0:58:0318th council meeting in detail.

0:58:06[INAUDIBLE]

0:58:08Yes.

0:58:08A copy of the CAFR is--

0:58:11we will update the website Monday with the final,

0:58:15but the draft CAFR, I believe, is-- there

0:58:17wasn't many changes in it.

0:58:19Just little edits.

0:58:20The numbers are the same.

0:58:21So the draft CAFR is on the website now,

0:58:24and the final CAFR will be on the website on Monday.

0:58:30[INAUDIBLE]

0:58:42So I was also wondering-- it's great to have the information

0:58:45from this audit, but will we also

0:58:47have the independent audit that was

0:58:48suggested by the state posted, and if that's happening.

0:58:52[INAUDIBLE]

0:58:53Good question.

0:58:53I'll get to that in just a moment.

0:58:57So I want to take a minute to talk about the transfer

0:59:00of the $800,000 property sale that

0:59:02was used to remove transfers.

0:59:05If you could go back one slide.

0:59:09So in the fiscal years that are up here, in '11, '12, 2012-13,

0:59:17we transferred--

0:59:20there was money that was transferred

0:59:21from other departments into the general fund.

0:59:24And they're associated with a redevelopment

0:59:27agency and other departments, like solid waste,

0:59:29integrated waste.

0:59:31And those transfers sat there in the general fund

0:59:37for all of those years.

0:59:38And it wasn't until recently the auditor--

0:59:42our independent auditor, not the state's independent auditor,

0:59:44but our El Cerrito auditor--

0:59:47said that we've been carrying those too long on the books,

0:59:50and they need to be removed.

0:59:51And so-- can I have the next slide?

0:59:54Sorry.

0:59:56So one of the ways we did that, and not end up with a million

1:00:00dollar negative number, was we sold redevelopment property,

1:00:04and that revenue was used to offset that transfer.

1:00:08So in this negative $56,000 balance,

1:00:14I believe the bulk of our transfers have been resolved.

1:00:17I'm looking at Mark.

1:00:18Yes.

1:00:19The answer from Mark was yes, the bulk

1:00:21of all of our inter-fund transfers have been resolved.

1:00:28That is correct.

1:00:29[INAUDIBLE]

1:00:32And as unemployment [INAUDIBLE] back in March of [INAUDIBLE]

1:00:442019, staff proposed to council [INAUDIBLE]

1:00:48balance of all [INAUDIBLE].

1:00:51It made sense to us to use one-time funds to pay

1:00:54off these one-time [INAUDIBLE].

1:00:58So a sale of property fortunately

1:01:00coincided with that transfer [INAUDIBLE]

1:01:04of the whole thing--

1:01:05we still have the same dollars, because it's

1:01:06a match between the expense and the revenue.

1:01:12But we did also-- one other thing.

1:01:16And again, it's also good to note

1:01:18that we do this at the end of fiscal year,

1:01:19so that we have a comparison over time.

1:01:21But it is also just a picture in time.

1:01:23For example, we got a payment from the city

1:01:26of Richmond that should have been

1:01:29received prior to this year.

1:01:32However, it was late.

1:01:35I'll just leave that there.

1:01:36But the auditor won't allow us to count it

1:01:39if it's received 60 days after the close

1:01:41of the books-- which it was.

1:01:43So that was an additional $114,000

1:01:45that should have appeared here, that had been paid on time.

1:01:48So again, it's not great.

1:01:49I'm not saying that it's great.

1:01:50But because we don't have the safety net,

1:01:55little things like that make a huge difference,

1:01:57and cause us to go negative.

1:01:59[INAUDIBLE]

1:02:05[INAUDIBLE] Is your fiscal year running from July 1 to June 30,

1:02:10or otherwise?

1:02:11Correct.

1:02:11Thank you.

1:02:12Yes.

1:02:14Hi.

1:02:18The independent auditor expressed concern

1:02:20that El Cerrito would not be able to continue

1:02:22as a going concern for three straight years now.

1:02:27Can you explain actually what that statement means?

1:02:30I've heard it at council meetings.

1:02:33What triggers that, specifically?

1:02:35Also, SEP has lowered our bond rating.

1:02:39It's going down and down.

1:02:40It's now down to BBB.

1:02:42And what is triggering that?

1:02:45I have other questions too.

1:02:48Yes.

1:02:48Thank you.

1:02:49This is triggering that.

1:02:51Both of those things are triggering it.

1:02:53So a going concern is essentially making sure

1:02:55that the agency can continue.

1:03:03And we'll get into this a little bit more onto what we did,

1:03:06and why we did it, and how we got here.

1:03:08But part of that is, the city needs

1:03:11to make this fund balance--

1:03:15meet our goals.

1:03:16First of all, meet our goals.

1:03:17But also, make it healthy, in order for there not to be

1:03:20a concern about anything--

1:03:23or a going concern.

1:03:24I'm sorry.

1:03:25And yes, our bond rating is based on this.

1:03:28That's absolutely true.

1:03:29And the bond rating, what that means

1:03:30is, if we were to go borrow money, it would cost us more.

1:03:33Just like your credit score.

1:03:35We don't have a good credit score, right now.

1:03:37And this is why.

1:03:40Someone's going to ask if we're close to bankruptcy.

1:03:43And I would say we are not, because we can take

1:03:47action in order to make this.

1:03:50I've told the city council.

1:03:52If we wanted to make this fund balance increase

1:03:56next year, the year after, at whatever level

1:03:59the city council tells me to go back and figure out,

1:04:02we can do that.

1:04:03However, that would mean major changes

1:04:05to the city and its services.

1:04:08If we were to cut a million dollars,

1:04:09if we were to cut $2 million, $3 million to push this up,

1:04:12we can do that.

1:04:13But we're not gonna have the same city

1:04:15services we have right now.

1:04:16And that is the balancing act that the city

1:04:18council is now faced with.

1:04:20How much services do you want to cut?

1:04:23At some point, a million dollars,

1:04:25over a million dollars-- if you're cutting services,

1:04:28and I said earlier, services equals people.

1:04:31That means you're cutting people.

1:04:32That means you're making layoffs.

1:04:34And every department has an issue.

1:04:36So I'm just sort of putting that out there,

1:04:39that whatever the city council tells me and decides to do

1:04:44is going to be based on what [INAUDIBLE]..

1:04:46Based on what that they feel over the next month, which

1:04:48we'll get into in a minute.

1:04:49But I just want to point that out.

1:04:51Regarding bond funding, specifically, bond funding

1:04:55is used for large cash infusion that you

1:04:59would use for a project.

1:05:01The projects we might use bond funding for

1:05:04are building a building or a large road

1:05:07paving project in the city.

1:05:10So pretty much those are all on hold.

1:05:14So the fact that our bond rating has dropped

1:05:16would only hurt us if we had to go to the market place

1:05:19and get funding for a large project.

1:05:25Their hand was raised first.

1:05:31Would you clarify about the [INAUDIBLE] payment

1:05:33in Richmond?

1:05:35Are you saying if we subtract the ending sum

1:05:38balance from that $114,000, we would be in the black

1:05:43to $57,000?

1:05:45Yes.

1:05:46OK.

1:05:47And to talk about the payment from Richmond--

1:05:48so we contracted Richmond for our 911.

1:05:53For our emergency services.

1:05:55So you'd think, oh, that money should be going to them.

1:05:58However, that's not completely true.

1:06:02You get a portion of Home Depot's tax revenue.

1:06:07There is a portion of Home Depot that's in El Cerrito.

1:06:11It's the garden area and the parking lot.

1:06:15So shop there.

1:06:16[LAUGHTER]

1:06:18Actually, Karen's making a joke, but actually, the tax assessor,

1:06:24at one point, said, only the two registers in the garden area

1:06:30would actually be the revenue that we would get.

1:06:32So it there was a period of time where

1:06:34that did make a difference, you should

1:06:35all go out the garden area.

1:06:37However, at one point, the state tax entity

1:06:42said, oh, El Cerrito's got all the pavement,

1:06:45all the sidewalk, all the roadway,

1:06:48you should split it 50-50.

1:06:50And for a while, we did.

1:06:52Then they came back and said, no, no.

1:06:54That's not right.

1:06:54It should be based on the percentage square foot

1:06:57that's in El Cerrito.

1:06:58And so for some of those years, we actually

1:07:01were paying Richmond back for money that we had

1:07:05inadvertently over-received.

1:07:08And so, for a long period of time, instead of Richmond--

1:07:11who was collecting the taxes and sending our portion to us--

1:07:17they were collecting the taxes and sending nothing to us,

1:07:21to basically pay off the debt when the state had

1:07:25changed their mind to be 50-50.

1:07:27So that's how complicated the system is.

1:07:30So when you ask the simple question,

1:07:32it's not a simple answer.

1:07:34But the reason Richmond owed us a hundred-and-some thousand

1:07:38dollars was probably associated with the Home Depot sales taxes

1:07:41that they had collected.

1:07:42And then they held on-- we're being recorded, right?

1:07:46I shouldn't say this out loud.

1:07:48It came to us 60 days after the close of [INAUDIBLE]

1:07:50That's the positive way to say it.

1:07:52Yes.

1:07:53And we had that deal with Richmond, and so we--

1:07:55[INAUDIBLE]

1:08:01If you could go back one slide.

1:08:04If you could go back one slide.

1:08:05There you go.

1:08:06So am I to understand that part of the budget surplus

1:08:10that's shown, let's say, 2010 and around there, is funds that

1:08:15needed to be transferred and just

1:08:18weren't to the redevelopment agency, and whatnot?

1:08:20Would you say that's true, Mike?

1:08:26Well, I'll speak to $1.3 million of that.

1:08:28$1.3 million of that was a lawsuit that we're currently

1:08:33still in, that we are expecting as part

1:08:36of the redevelopment agency.

1:08:38We're diving into the weeds again.

1:08:41The redevelopment agency owned property.

1:08:44And we transferred that property and cash to a nonprofit.

1:08:48A third entity.

1:08:49Right?

1:08:50So not the city, not the redevelopment agency,

1:08:52but a non-profit.

1:08:55And we did it before redevelopment went away.

1:08:59And our argument is that that entity

1:09:02properly owns those funds.

1:09:06The state auditor-- no, it's not the auditor.

1:09:09But the state basically clawed that money back.

1:09:13We paid it.

1:09:15So for those that ask us, with the lawsuit resolved,

1:09:19do we have any additional financial obligations,

1:09:22my understanding is no, because we've

1:09:24already paid the $1.3 million.

1:09:25We think it's owed to us.

1:09:27However, the auditor has said--

1:09:30department of finance.

1:09:33Our independent auditor-- so the city's independent

1:09:35auditor has said, you cannot rely on that $1.3 million.

1:09:38So there's $1.3 million in those older years

1:09:42that we feel we're owed.

1:09:44And we still have a court case that's going

1:09:46to be resolved at some point.

1:09:48And therefore, it's gone.

1:09:50That $1.3 million has been taken out of the books.

1:09:52OK.

1:09:52So that's part of this [INAUDIBLE]..

1:09:55Also, so that's at least $1.3 million

1:09:57of that reserve that was going to fall through [INAUDIBLE]

1:10:00In addition, the payroll adjustment

1:10:03that was done around 2017, that's a one-time thing

1:10:07for about a million, correct?

1:10:08Correct.

1:10:10[INAUDIBLE] Sorry.

1:10:16We'll get to you.

1:10:17I'm very interested to know how the requirement for pension

1:10:24funding down the road--

1:10:25our unfunded obligations-- how does that fit into all of this?

1:10:29What are those numbers?

1:10:30We have a slide.

1:10:31Yeah.

1:10:32We will be explaining that in just a moment.

1:10:33[INAUDIBLE]

1:10:34Oh, yes.

1:10:35Oh, yes.

1:10:36Oh, yes.

1:10:39Amalia, and then Barbara.

1:10:42Amalia.

1:10:47Staying on this slide, we've heard a lot about the reserves,

1:10:50and why that structure is there [INAUDIBLE] some factors

1:10:53that were maybe not as expected.

1:10:56Maybe some that could have been expected,

1:10:58but they are what they are.

1:11:01I'd like to hear a little bit more about the planning.

1:11:03I'm looking at this, and I'm wondering

1:11:05if this means that for the last four years,

1:11:07the city budget has been growing.

1:11:09Every year, the city council has approved a budget

1:11:12there has been more than the year before,

1:11:14while the reserves have not kept pace.

1:11:17So I'm hoping you're going to talk more about the factors

1:11:21within the city's control that have led to that [INAUDIBLE]

1:11:24continuing to grow.

1:11:27[APPLAUSE]

1:11:30Sure.

1:11:31I mean, I'll start that, before--

1:11:34[INAUDIBLE] I'll start the discussion on that.

1:11:37It's actually-- it's a simple equation.

1:11:40It's revenue minus expenses equals,

1:11:42effectively, general fund decline, here.

1:11:45And so what the means is that our revenue has not been going

1:11:48up as fast as our expenses, and that's

1:11:51what this chart represents.

1:11:53That gap between the red line and the blue bars

1:11:56represents the gap between our revenue and our expenses.

1:12:00And you're all sitting out there saying, why?

1:12:04I'm paying more in taxes, I'm paying more here, why isn't it

1:12:07going up?

1:12:09Most of that is the result of staff costs

1:12:13and their burden, their overhead,

1:12:16their health care costs and the [INAUDIBLE] CAFRs.

1:12:21So that's the real reason why this is widening.

1:12:25This represents the difference between revenue and expenses.

1:12:30Let's talk on expenses first.

1:12:33Look around the room and look at the staff.

1:12:38This is some of the best staff in the state.

1:12:41In theory, we pay median, right?

1:12:45But we actually probably pay above median,

1:12:47because we have the highest-educated police

1:12:50force in the area.

1:12:51Every single one of them has a college degree and some of them

1:12:54have master's degrees.

1:12:55We have a fire department that has paramedics riding on that.

1:13:00They save lives because they get there faster than anyone else.

1:13:03So we have a highly educated workforce,

1:13:06both, you know, sworn in and non sworn in.

1:13:12To keep them from Berkeley or BART or other cities,

1:13:18we have to actually pay a competitive wage.

1:13:23And to pay that competitive wage,

1:13:25those salaries are going up.

1:13:27So for this talk about revenue, why

1:13:30isn't revenue going up, right?

1:13:34The revenue's not going up because of property taxes.

1:13:38We need home sales to occur and we

1:13:40need property sales to occur.

1:13:43We need businesses to rejuvenate along the avenue for sales tax

1:13:48to increase.

1:13:49And what we're seeing is, property owners

1:13:51along the avenue are putting in tenant improvements

1:13:54to attract new businesses.

1:13:56So we're having business sale losses.

1:14:00The home sale values-- we're not selling

1:14:03even 200 homes a year, right?

1:14:05There's 10,000 parcels in El Cerrito There's

1:14:078,000, 7,500 private homes.

1:14:10There's 1,400 multi-family homes, right?

1:14:14If they don't sell then the set value doesn't change,

1:14:18and thus the revenue doesn't go up.

1:14:20Well you say, the median value is going up.

1:14:22Well, that's based on a few homes selling,

1:14:24not enough to make a difference in this equation.

1:14:28Oh, you've got new tax revenue.

1:14:30You've got Measure R, right?

1:14:32You've got the real property transfer tax.

1:14:35Real property transfer tax is estimated at 2.7 million.

1:14:39We're going to get 2.3 million out of it.

1:14:41So it's not what we estimated, right?

1:14:43So we can only tell you that we're doing our best

1:14:47to predict the revenue.

1:14:49The revenue is not going up as fast as we want it to go

1:14:52and it's not successfully closing this gap.

1:14:55So choices are reduce your cost or increase your revenue.

1:15:00Barbara.

1:15:02That goes to my question of [INAUDIBLE]..

1:15:06The staff is always talking about cutting services.

1:15:10The council talks about cutting services.

1:15:12When are we going to start the conversation

1:15:14about how do we renovate our revenues

1:15:18to diversify our revenues?

1:15:24So I'm going to-- we don't have a slide on that today.

1:15:27So what I'm going to do is answer that question, right?

1:15:31You saw me hold up my tax bill.

1:15:34And on the left hand side, right, are six parcel fees.

1:15:38And I already said once today, all those parcel fees

1:15:41have been locked in flat for a very, very long time.

1:15:45We even chose not to increase the pool

1:15:48and park measure, right?

1:15:50We kept that flat.

1:15:52The landscape value assessment district set in 1988

1:15:55has not been increased in months.

1:15:56In fact, the pace were less than 75% of the same--

1:16:01what that cost is dedicated for.

1:16:03The state auditor, in my conversation with him,

1:16:07said, why aren't we going out and increasing that, right?

1:16:11The sewer fees-- and Yvetteh I'm looking--

1:16:15give me the nod.

1:16:15The sewage that the-- the storm seal fee that we collect,

1:16:19storm drain fee, sorry.

1:16:20The storm drain fee that we collect followed up

1:16:23on paid for half of the state mandated

1:16:25need to sweep the streets and put it traffic [INAUDIBLE]..

1:16:29How much, half?

1:16:30Not even.

1:16:31About half.

1:16:32So that feed has been flat for 20 plus years.

1:16:35It isn't even covering half of the cost that's needed in order

1:16:38to comply with state law.

1:16:41So, Barbara, your question is, why aren't we looking

1:16:45at ways to increase revenue?

1:16:46Because we're worried you guys are tired of having us

1:16:49beseech you for more revenue.

1:16:51But the problem is, the revenue doesn't cover our cost.

1:16:56Microphone, please.

1:16:58Microphone.

1:16:59I'm not talking about increasing our taxes and more surcharges.

1:17:03I'm talking about being more innovative in terms

1:17:07of the types of industries or business

1:17:09that we could be drawing here into El Cerrito.

1:17:12If you look at the San Pablo corridor, which

1:17:15goes through at least seven cities,

1:17:17right, other cities have other kinds of businesses.

1:17:21You mentioned that you think it's the property owners on San

1:17:24Pablo Avenue who aren't upgrading their properties

1:17:27to attract other businesses.

1:17:28But I'm wondering what we're doing as city council staff

1:17:33and the citizens, the residents who live here,

1:17:36to help brainstorm ideas, to bring new kinds

1:17:38of industry or green industry-- remember

1:17:41I'm an environmentalist--

1:17:43into our city.

1:17:45That's what I think we need to be talking about,

1:17:47and not just cutting.

1:17:48We need to have a balanced conversation.

1:17:51Yeah, just to touch on that, there

1:17:54are many different types of revenue sources

1:17:57that we can look at.

1:17:58One that I'm aware of that would not necessarily

1:18:02be a burden on many of us is that we can charge BART parkers

1:18:07a fee as a charter city.

1:18:10We would actually be allowed to do local income measures.

1:18:13So that would speak to probably your previous comment

1:18:16about diversifying our revenue.

1:18:18Melanie is here-- this is in 2014

1:18:20we passed the San Pablo Avenue Specific Plan.

1:18:23The San Pablo Avenue Specific Plan was specifically

1:18:28identified to spark growth along the avenue, and it has, right?

1:18:35And the whole goal of that was to change

1:18:36into a forum-based code.

1:18:39So I don't know if, Melanie, you want to speak

1:18:41to our success of that?

1:18:46Good morning.

1:18:47Good morning, everyone.

1:18:48My name is Melanie, and I'm the city's

1:18:49community development director.

1:18:50Thanks so much for dedicating so much time this morning.

1:18:55So the Specific Plan and San Pablo Avenue.

1:18:59A couple things.

1:18:59So specifically to your question, Barbara--

1:19:03industry is hard to attract here.

1:19:06The whole Specific Plan area is 200 acres.

1:19:09That's one parcel in Emeryville or in San Diego.

1:19:12So really just realizing, large places

1:19:16like Emeryville and Berkeley have a lot of land for that.

1:19:19We don't have that much land.

1:19:20So in 2006 and 2011 and intermittently since,

1:19:24we do check with economists about what

1:19:26we could do for that.

1:19:27And most have said, focus on attracting high quality

1:19:31residential urban development.

1:19:33That will stimulate your small business sector.

1:19:35So that is what we've done.

1:19:36And by doing that, since 2014, when

1:19:40we adopted it and changed the code,

1:19:42we have approved about 15 projects.

1:19:45So just to give an example for a project,

1:19:48you can see across the street that's-- we put a big story on.

1:19:53[INAUDIBLE]

1:19:55[INAUDIBLE] living in El Cerrito.

1:19:56Those properties will be re-assessed

1:19:58at about $40 million.

1:20:00Some of them are going from a base of $800,000 or a million.

1:20:04The Mayfeld property, which actually has not

1:20:06been generating taxes, it was vacant for 40 years,

1:20:12will be re-assessed.

1:20:14Half of it will be affordable housing, so that won't--

1:20:17or a third of it.

1:20:18But the marketed portion will be constructed,

1:20:20and it will be done in January or February,

1:20:22and it'll be the effect of about $50 or $60 million.

1:20:26So take that along those projects.

1:20:28Similarly, however, those people--

1:20:30some of them will be entrepreneurs

1:20:31that live in those places--

1:20:33they will definitely frequent the local businesses.

1:20:34So that's kind of my short answer.

1:20:36We can talk more about that, but that is our biggest opportunity

1:20:39whenever we check with experts, is

1:20:42in terms of how we diversify.

1:20:45Similarly, those taxes, as we all know, with the change

1:20:48in the retail economy, those are very up and down.

1:20:51These are going to be much more permanent change,

1:20:53and it's a big transformation from what the avenue's been.

1:20:57There's still going to be a lot of small parcels.

1:20:58We still hope that the property owners, if any of you

1:21:01are in the room, will invest in those properties,

1:21:04will attract businesses.

1:21:05We do know there's a gap in those.

1:21:06They are not wanting to put money into those old buildings.

1:21:10They don't often put tenant improvements.

1:21:12There's no [INAUDIBLE].

1:21:13They're not willing to invest in building that.

1:21:16So some do themselves.

1:21:17Some people [INAUDIBLE] like you built a [INAUDIBLE]..

1:21:20Some of the new properties also--

1:21:22a couple more points on this in terms of that question.

1:21:25There's about-- of those 18 projects, many of them--

1:21:29we were also told that residential is

1:21:31what's going to have potential.

1:21:32New commercial development on its own

1:21:34does not have potential.

1:21:35You can't build a building and expect

1:21:37the rent from those buildings.

1:21:39However, we do require ground floor commercial in nodes,

1:21:42so to create kind of pedestrian-friendly [INAUDIBLE]

1:21:45anywhere.

1:21:45If somebody wants to come locate industry here, we're open.

1:21:48But us putting a lot of effort into trying to attract it

1:21:50is not what we've been guided to do.

1:21:54So about 30,000 square feet of new commercial

1:21:56has been approved as a part of those businesses.

1:21:59Some people said, well, what about--

1:22:01what if they sit vacant?

1:22:02The answer is, hopefully not.

1:22:04Some do.

1:22:05You see in other towns sometimes they sit vacant for many years

1:22:08and then they become something that people love.

1:22:10I like to look at the mac and cheese place in Oakland.

1:22:12That sat vacant for like eight years

1:22:13and now it's a super popular homeroom.

1:22:15Many places south of the university,

1:22:17unfortunately, go that way.

1:22:18So you encourage at least in those nodes around the theater,

1:22:21around Mosier, around El [INAUDIBLE]..

1:22:23Keep your ground for retail, because someday it'll populate

1:22:26and it'll be the amenities that we all want.

1:22:29However also in that time we've got some other diversification.

1:22:32There's a hotel that's been approved,

1:22:34and that's right across from Mayfair,

1:22:36and so they have submitted the building permit.

1:22:38110 rooms.

1:22:40That will be re-assessed also, probably about, I don't know,

1:22:4220 or 30 million.

1:22:43Plus transient occupancy tax will be about a half a million

1:22:46a year.

1:22:47So these are all really, really big things.

1:22:49If you look 30 years back on the avenue--

1:22:52remember, the avenue was built as an auto corridor or highway

1:22:55to Sacramento.

1:22:56It was gas stations and there were

1:22:58some fun bars and dance halls.

1:22:59I would love to get a dance hall.

1:23:02So I have more info.

1:23:04I'm always here and available to answer those questions.

1:23:06I think we should have seen regionally

1:23:08having a lot of success for what the challenges

1:23:11of having just one corridor, a heavy corridor, are.

1:23:14Gentleman in the hat, then Denise.

1:23:18Thank you.

1:23:20Maybe one other [INAUDIBLE] more dialogue back and forth,

1:23:23not just coming in January from the city to the residents

1:23:28give more input.

1:23:30A couple things I'd like to point out for Proposition H.

1:23:35Actually, quickly, I'd like to take this away from the city

1:23:40federal fund, because the initial proposition was just

1:23:44for, well, mainly [INAUDIBLE] acquisitions

1:23:48through these projects.

1:23:49Now the minimum that you use for making some of the projects,

1:23:55so that would take some additional funding

1:24:02off the general fund.

1:24:04So you would have to see possibly what [INAUDIBLE]..

1:24:10The main thing, though, I think, is

1:24:12that you see you revenues are going up

1:24:14and the general fund is going down.

1:24:18And this is over an actual five years, maybe?

1:24:24And there's been one or two big talks here

1:24:27about this continuing problem.

1:24:31So I'm wondering, who--

1:24:33I mean, if you run a business, if you're

1:24:35spending more than you're making, you're in trouble.

1:24:39So there's evolving cities in the state of California

1:24:45[INAUDIBLE] El Cerrito maybe seventh years [INAUDIBLE]

1:24:49is still overkill in terms of financial health.

1:24:53I'm wondering what we can do about the oversight.

1:24:57Someone must have seen this happening,

1:25:00but the expenditures between the two increase,

1:25:03but the return rate is the revenue.

1:25:08So how did that happen?

1:25:10Why wasn't someone saying, wait, you've

1:25:13got to cut back somewhere before that could happen?

1:25:16Because what I'd assume is, the possibility--

1:25:19you might be honest to suggest you

1:25:22should cut services and raise taxes.

1:25:26And that just seems to me that our city's position

1:25:31of El Cerrito, where the other cities around are increasing

1:25:35their services, they're getting more revenue, and they're still

1:25:38have reserves much higher than El Cerrito.

1:25:42So what's unique about us here?

1:25:46To answer one of your questions about the fact

1:25:49that costs have been going up and are

1:25:51not balancing out the revenue.

1:25:53There were assumptions about the revenue made that have not

1:25:57necessarily come to fruition.

1:25:59And so we made assumptions about revenue that hasn't occurred.

1:26:06And that assumption about revenue

1:26:08influenced property tax, sales tax,

1:26:10and the property transfer tax.

1:26:13So all three of those revenues are underperforming.

1:26:16And on Tuesday nights we being a two-meeting process

1:26:20with regards to a mid-year review,

1:26:23and that will come out in that review process of our budget.

1:26:27So I hope that begins to answer your question,

1:26:30but we'll go into much more detail over the next two

1:26:32regular scheduled council meetings.

1:26:35Microphone, and we do need to move on to other people,

1:26:38as well.

1:26:41It's very standard there is an assumption that there's going

1:26:44to be additional $500,000 from the dispenser

1:26:53that it didn't occur, but the money was spent anyway.

1:26:58You usually don't spend money that you don't

1:27:00have just based on a sentence.

1:27:02So I'm wondering, if we're saying

1:27:06that this deficit occurred because

1:27:10of unforeseen speculation.

1:27:15I don't know if that's the [INAUDIBLE] at your policy.

1:27:19The second thing is, is there going to be

1:27:22an independent auditor report?

1:27:24I mean, when is that due?

1:27:27So I'll talk to your independent auditor report.

1:27:29We've got two auditors that we've been talking about today.

1:27:32One is our city independent auditor

1:27:35and one is the state auditor.

1:27:37The independent auditor report has been published,

1:27:41so the city audit report is available.

1:27:44The stake audit has not even started yet,

1:27:47and to the best of my knowledge, we didn't

1:27:48see that report until August.

1:27:51[INAUDIBLE]

1:27:52And I do want to address the [INAUDIBLE] money.

1:27:54I'm sorry.

1:27:56That was budgeting this fiscal year.

1:27:58We had not spent it.

1:27:59It would be re-adjusted.

1:28:01We are going to bring mid-year adjustments to the city council

1:28:03on February 18th, and that would be

1:28:05deducted from the budget as a result,

1:28:08because they have not included it.

1:28:11So I want to go back to Barbara Chan's question, too, Greg.

1:28:15Because I didn't hear-- to me I didn't hear any type

1:28:18of an adequate response.

1:28:19I hear the same old type of response

1:28:21that I've been hearing from this city for 19 years.

1:28:24The fundamental problem here, it's not how

1:28:27much you're paying our people.

1:28:29It's not the overtime that we're paying.

1:28:31And I want to say to the firemen and policemen in particular,

1:28:34thank you for going out on all of these calls

1:28:36that you've gone out to save California.

1:28:39We couldn't have saved all these communities without you.

1:28:41I'm so grateful.

1:28:43And I know that it looks like we're overpaying people when

1:28:46you see their huge overtime bills,

1:28:48but these are to defend cities.

1:28:51That's not the problem that we have here.

1:28:53The problem we have is we have no imagination in this city

1:28:56about diversifying our tax base.

1:28:59Diversifying our tax base is not about collecting

1:29:01park fees, parking fees.

1:29:04That will do nothing to save their pensions.

1:29:07That would do nothing to pay people.

1:29:09We need to rethink it, like San Jose rethought

1:29:12the Santana Row area, Berkeley rethought

1:29:15the Fourth Street area.

1:29:17We need to rethink this community

1:29:19to do those kinds of things.

1:29:21You are not going to get out of your problems short term,

1:29:25and long term this is going to be a catastrophe if you

1:29:28keep going the way we're going.

1:29:30And you and I talked about this Greg for 17 years,

1:29:33and nothing has changed.

1:29:35Nothing.

1:29:36All you've done is tax the residents more and more

1:29:38and you have not diversified the tax base.

1:29:41You have to diversify the tax base.

1:29:44There's just no other way here, and Barbara Chan

1:29:47has talked about this for many, many years.

1:29:49Other people have talked about it.

1:29:51So the question is, Karen, are you going to do that?

1:29:53Are you going to be innovative and use the skills

1:29:56that you've been promoting all over the world

1:29:58about being a leader?

1:30:00When are we going to do that here?

1:30:02That's the problem.

1:30:04With diversifying the tax base, what does that mean to you?

1:30:07Because other than sparking redevelopment along the avenue,

1:30:12what are some of the suggestions you're making

1:30:14for diversifying the tax base?

1:30:17And she can get the microphone back, because this, I think,

1:30:20is the dialogue that people are looking for.

1:30:22Whoever has the microphone?

1:30:26Because we would love to have economic development

1:30:29along the avenue.

1:30:30That's what Melanie just gave us a five minute discussion about.

1:30:33That's not what you gave us.

1:30:34She gave us bad retail.

1:30:36We have a ton of retail in the city.

1:30:38I don't know how many people really

1:30:42patronize the retail here.

1:30:43I just came from Berkeley and I probably saw 19 neighbors

1:30:46over in Berkeley shopping.

1:30:47They don't really want to shop here or as much.

1:30:49So we need to have non-retail businesses

1:30:53that are coming here.

1:30:54We have Google buses that show up every day, Facebook buses,

1:30:58a lot of tech buses.

1:30:59We're one of the only cities in the entire Bay Area with zero

1:31:02technology businesses here.

1:31:04We need to rethink that.

1:31:06And if you're not thinking that, you know,

1:31:09then we're not doing our job.

1:31:10Because that's the growth industry,

1:31:14whether it's clean energy or whatever it is,

1:31:15it's all related to technology.

1:31:17We have zero.

1:31:18We need to have those businesses operating in the day

1:31:21so their people want to go out to good restaurants,

1:31:23to good retail, which will drive better

1:31:25retail and drive midday retail and revenue for the city.

1:31:29It's a bedroom community.

1:31:31That's really what this is, is a bedroom community,

1:31:33and we're getting bypassed.

1:31:35But their people are buying houses here.

1:31:37All right, so to answer one of your questions,

1:31:39when [INAUDIBLE] closed, I looked at that baton

1:31:42and went to the city manager and the economic development group

1:31:44and said, hey, let's get a startup in here.

1:31:46Let's get them looking at a tech campus

1:31:48as opposed to a school campus so that we get good paying jobs

1:31:52here, so that we would get the business

1:31:54license fee from that area, but we'd

1:31:56also get the daily businesses.

1:31:58So it's not like we haven't tried.

1:32:00That got scooped up by a charter school and the charter

1:32:02school opened up, and before we had

1:32:04an opportunity to get in there.

1:32:06So it's not that we weren't thinking outside the box

1:32:09and trying to get businesses in here,

1:32:11but they don't want to come here.

1:32:13There's not good class A office space.

1:32:15And trying to get somebody to convert

1:32:17their storefront to class A office space is difficult.

1:32:20As a matter of fact, we allowed--

1:32:22we bent the rules.

1:32:24In the Safeway development there is a car

1:32:29shipping company in there.

1:32:30And there's a business that has class B space,

1:32:34and they have 10 employees.

1:32:35And all 10 of the employees commute from other locations

1:32:37to El Cerrito because it was close to [INAUDIBLE] and BART.

1:32:41So they're using the buses and they're using BART from San

1:32:44Francisco to come work here.

1:32:46So it's not that we aren't trying to.

1:32:48That's supposed to be retail space

1:32:49and we've allowed it to be office space.

1:32:51So I think we're trying to achieve

1:32:53what you're asking us to do.

1:32:55It's just outside of our control.

1:32:58I disagree, Greg.

1:33:01You are the only ones that have the control.

1:33:03You're the municipality.

1:33:05If you guys can't figure it out, then you should resign

1:33:07and you should put people in office

1:33:09that can figure this out.

1:33:10Other cities have figured it out.

1:33:13This is your responsibility, to figure it out, to do something.

1:33:17You have the authority.

1:33:19We do not.

1:33:20We elect you, but you're not doing your job

1:33:23and working at this.

1:33:24You can assign a task force to bring in very creative people

1:33:28like what Berkeley did, like what San Jose did.

1:33:31And those two areas are some of the most vibrant

1:33:33parts of the whole Bay Area.

1:33:36I mean, Fourth Street is fantastic.

1:33:38I see Karen down there.

1:33:40You know, Santana Row I see neighbors

1:33:42down there having lunch in San Jose on Santana Row.

1:33:45It's beautiful.

1:33:46And that whole area has got the best class A space now

1:33:51in all of the Silicon Valley.

1:33:53So we can do it here.

1:33:54We just have to have a focus from you as the mayor to do it.

1:33:59And we don't have a focus.

1:34:00I don't hear you talking about that.

1:34:02I mean, great, 10 people.

1:34:03That's a start.

1:34:0410 people, wow.

1:34:05But what we need is 1,000 people coming here

1:34:08during the day by BART or by bus or however

1:34:12working in class A space.

1:34:13You have the power to do that, Greg.

1:34:18And I would just want to add that, wealth taken.

1:34:23And I've worked with Melanie on trying

1:34:27to be as creative as we can.

1:34:28I think that one of our stumbling blocks

1:34:31is it's Melanie.

1:34:33Just Melanie.

1:34:34She has a very small staff.

1:34:35We have a very small staff.

1:34:36It's hard for us to compete with San Jose and Berkeley.

1:34:39I would love to, but we just can't, so we're

1:34:41doing our very best to do that.

1:34:43But I absolutely hear you and I am absolutely open to being

1:34:47as creative as possible.

1:34:48I agree with Melanie that the San Pablo Avenue Specific Plan,

1:34:52once it starts to really bear fruit,

1:34:54I think it's going to help be that catalyst.

1:34:57But again, that doesn't mean that we can't continue

1:35:00to think differently and try to utilize

1:35:03our staff to be able to look into different things.

1:35:06I mean, that's one side.

1:35:10I saw one person in the audience say, what

1:35:12about the BART parking lot.

1:35:13So you can speak to BART.

1:35:14BART studied it.

1:35:15BART would love to do reverse commute.

1:35:17He would love to.

1:35:18It has not penciled in there showing

1:35:20if that wouldn't be possible.

1:35:22And they did ask a certain Concord property--

1:35:25I think this park board member here.

1:35:27So to do that, they didn't get any responses.

1:35:30So I agree with one of the things

1:35:32that I just heard someone say.

1:35:35I keep hearing people say, we should attract Google,

1:35:37we should attract Facebook, we should be a job center.

1:35:40I think we've all had that dream, that that's

1:35:43what's going to bring our third wave

1:35:45coffee shops, our cool things.

1:35:47Really to be dominant we need to focus on that for many years.

1:35:50It was not something bore fruit and we're not giving

1:35:53any indication that it will.

1:35:54Richmond has a lot of property.

1:35:56There might be a lot of jobs that do come there.

1:35:59So I do welcome--

1:35:59I think my invitation is meet with the mayor and me

1:36:02if you have a contact with a CEO at one

1:36:04of those places that wants to come here.

1:36:06We will figure it out.

1:36:09I also want to remind you that when Santana Row was--

1:36:12let's remember the growth in Silicon Valley.

1:36:14Redevelopment agencies who had no additional dollars

1:36:17to do anything to attract any of these.

1:36:19So those that we are attracting, it's completely

1:36:21with our own private dollars.

1:36:23So I just want to put that out, too.

1:36:25We don't have money to put to it,

1:36:27and we are welcome and open for business if any of them

1:36:30want to come.

1:36:31The development team that is coming

1:36:33is finding this to be the city, city

1:36:35council, our policies to be very innovative, very flexible.

1:36:39You can see this around the Bay Area.

1:36:40We are small.

1:36:42There's big clusters.

1:36:43The chamber's here today, too.

1:36:45So we're all welcome, and if you know that that's true bring it.

1:36:50We're happy to do business with them.

1:36:53[INAUDIBLE]

1:36:56Did you want to speak first, sir?

1:36:59Yes.

1:37:00And then we'll go back to Denise.

1:37:01OK.

1:37:04Other cities have used tax credits.

1:37:08OK, other cities have used tax credits to attract business.

1:37:12Is El Cerrito doing that?

1:37:13If it's not, why not?

1:37:16So we did use tax credits to attract the Target

1:37:19store, 25, 30 years ago.

1:37:23And they promised that they weren't moving out of town.

1:37:25And they were actually a fairly good tax generator, much

1:37:28better than a grocery store.

1:37:30And they left.

1:37:31So they left before their contract,

1:37:34their tax credit contract was completed.

1:37:37So it is a tool in our tool box to potentially use

1:37:41a tax credit.

1:37:43But it doesn't necessarily-- it may not benefit

1:37:47us as greatly as you think.

1:37:50And we would have to weigh that into it.

1:37:52But it is a tool that we have used in the past

1:37:54and consider for the future.

1:37:56Denise?

1:37:56So just want to maybe do a couple

1:37:58more questions because we still have a little bit more

1:38:00to get to in the presentation.

1:38:03I wanted to go back to what Mindy was saying,

1:38:05that she wants help.

1:38:06I don't see that the city really does.

1:38:08You seem to want to have your political insiders only on

1:38:13these committees to help you.

1:38:14There are a lot of really smart people in the city

1:38:16that I'm sure would be willing to help you.

1:38:18But you need to ask for that, and to bring

1:38:22those people in here, and listen to them,

1:38:23and not shut them down.

1:38:25And Karen, you have a great amount of power.

1:38:28And I've heard you talk across the country to other city

1:38:31managers about bringing in people

1:38:33that are on the outside sit at the table with you

1:38:36and help you.

1:38:37When are you going to do that here,

1:38:39and why not take this issue and get it started?

1:38:42What are we waiting for?

1:38:43Are we waited for the pensions to collapse?

1:38:46I don't get it.

1:38:47Why are the employees standing on the sidelines?

1:38:50You guys should be--

1:38:51you should be yelling at the city

1:38:52saying protect our pensions.

1:38:54Protect our pay.

1:38:55We have an obligation if we promised them.

1:38:57We can't do what United did, United Airlines, which

1:39:00would say, hey, sorry, pilots.

1:39:02You're now 60.

1:39:04You can't fly anymore.

1:39:05And sorry.

1:39:05Your pension's gone.

1:39:06That's where we're headed if we don't get this changed.

1:39:09I don't know what we're waiting for.

1:39:11We're not waiting.

1:39:12I'm not waiting.

1:39:14I'm actually doing this right.

1:39:16[INAUDIBLE]

1:39:17Just one-- I will answer that question simply

1:39:20because I've been city manager for a year,

1:39:23and I just will tell you, yes, I have been here for 17 years.

1:39:26But maybe 20 feet from one desk chair to another

1:39:30is a whole lifetime of difference.

1:39:32And I'm looking at things through a very different lens.

1:39:34I have been working with Melanie on that topic.

1:39:37I've been working with other directors in their departments

1:39:40on how we can be more creative, innovative, how

1:39:43we can do things differently.

1:39:44I am doing that.

1:39:47Some of it doesn't bear fruit right away.

1:39:50But I commit to all of you that that is one of mu focuses.

1:39:53So I will, and I am.

1:39:55And we will ask for help.

1:39:57So I just wanted to point out that 4th Street

1:40:00is a vibrant place right now.

1:40:01But when they first started, it was not.

1:40:05It was not successful.

1:40:07It was not successful when 4th Street first started.

1:40:10And it started 30 years ago or whatever.

1:40:13And it has over time become very successful.

1:40:15But it did not start that way.

1:40:17So it's very difficult to make things happen.

1:40:21And just using a current example that's very successful

1:40:24doesn't necessarily tell you how to do it yourself.

1:40:27Gentleman on the aisle and then Ira.

1:40:31This is speculative and I may ask

1:40:34you to speculate a bit-- well, actually

1:40:37whether you have or not.

1:40:38And that is should you drop [INAUDIBLE] adjustment pass,

1:40:48would that make any significant difference

1:40:52to the city's income?

1:40:55So that would be on commercial property of [INAUDIBLE]..

1:41:00Correct.

1:41:01I believe it would, but color me pessimistic.

1:41:08If that passed, yes.

1:41:10Of course it would help the city.

1:41:13But I just can't count on it.

1:41:15And I don't know.

1:41:17I am not looking at the political spectrum

1:41:20whether or not that would pass by the voters,

1:41:22I think would be a really big fight.

1:41:24So if that's something that's of interest to the people

1:41:26in this room, that's something you might

1:41:28want to think about or work on.

1:41:29But, of course, it would help that we, as--

1:41:33our city is a member of the League

1:41:34of California Cities, which is a state-wide association

1:41:37of all of the cities.

1:41:39Once there is an actual ballot measure,

1:41:41they will analyze it and tell us what it would mean for cities.

1:41:45So I don't really have that information.

1:41:47But I'm not trying to count chickens

1:41:51before they're hatched.

1:41:56We're having the goal of 10% reserves.

1:42:00And I think Albany has a goal of 25% reserves.

1:42:03[INAUDIBLE] that goal, why is our target so low?

1:42:08Also, I have this table here that

1:42:09said table A1, our net position, if I understand it correctly--

1:42:14I'm not an accountant-- increase by $10 million.

1:42:18And then finally--

1:42:20I'm sorry-- then finally, if we dream for 2019 Council meeting

1:42:27where the city is discussing it's increased revenue

1:42:30and how they're going to spend the additional $500 million

1:42:32without putting anything away for savings.

1:42:36So I'm wondering, giving we're not even close to $10

1:42:39million reserves, 10% reserves.

1:42:42Why Council is not thinking about putting

1:42:45some of this extra money into savings.

1:42:48And I noticed from the current budget

1:42:53there was a projection of $10 million more in expenses.

1:42:57But [INAUDIBLE] the [INAUDIBLE] that just came out

1:43:02said we over spent $2.9 million over budget.

1:43:06Now this meeting I just referred to

1:43:09was just a few weeks before the end of the fiscal year.

1:43:12Yet no one seemed to know what was

1:43:15going on in terms of all this spending

1:43:18how can that possibly be.

1:43:21So I'm wondering why--

1:43:24Karen is talking about the more optimistic.

1:43:27The finance director is talking about the more optimistic.

1:43:30There's talk about how the going concern requirement

1:43:35is likely to go away.

1:43:37That did not happen.

1:43:39And then the council, [INAUDIBLE] the night before.

1:43:45And I asked about what was our reserve amount.

1:43:49Could we update?

1:43:50And he says, I understand you people

1:43:52don't have any update on that.

1:43:56So my understanding is Council has a fiduciary responsibility

1:44:00to oversee the budget.

1:44:03And if you don't have basic information, how can

1:44:07you actually do the job you're supposed to have.

1:44:11And then finally, when are you going to have an update

1:44:13as of December 31, 2018?

1:44:15You have those numbers now.

1:44:17A month has passed.

1:44:20It's not $500 million.

1:44:22We're not that big.

1:44:24You meant $500,000, but you said $500 million.

1:44:30Yeah.

1:44:31So I want to make sure that those that

1:44:32are watching this in the future realize that we

1:44:35aren't that rich a city.

1:44:38The answer to your question is--

1:44:41and I'm going to have to work them backwards.

1:44:43And you may need to shout out what the questions are.

1:44:46There's no question that we didn't

1:44:48know what the capital balance was because it was fluctuating.

1:44:53And because of Richmond's numbers coming in late,

1:44:57and we were hoping to count that in,

1:44:58and there were other things that was going on,

1:45:00we actually didn't know what the number

1:45:02was until it was published.

1:45:05And it's negative $56,000.

1:45:07But at one point, it could have been positive,

1:45:10and we weren't successful in getting them

1:45:11to count that towards that.

1:45:15The fiscal responsibility, ideally, The Council is

1:45:18the one that sets their budget.

1:45:20And we're the ones that need to have a lookout over it.

1:45:22So to answer your question about the December numbers,

1:45:25we're going to have a budget update on Tuesday.

1:45:28So that's been published already.

1:45:29I'm looking for Mach.

1:45:31Meeting is going to be on February 18.

1:45:33February 18.

1:45:34So in two weeks plus a few days we're

1:45:38going to have the new year budget that will come up to us.

1:45:42What was your first question?

1:45:44Do you remember?

1:45:48So the basic thing is that the budget projection [INAUDIBLE]

1:45:53actual budget is that expenses increased by over $10 millions

1:45:59that when I looked at the CAFR which just came

1:46:02out a few days ago that we had $2.9 million in expense

1:46:07over that.

1:46:08And when I was watching just recently the general meeting,

1:46:13the Council people are talking about how we have no money--

1:46:17let's spend it-- no one seemed to realize

1:46:19that expenses were going way over what was projected.

1:46:24So these are expenses.

1:46:26So [INAUDIBLE] people not know it?

1:46:29Karen and the finance director were talking about how

1:46:33things were looking up.

1:46:34We're not going to have the going issue again.

1:46:39And I don't hear any Council members saying, wait.

1:46:42We got a big problem here.

1:46:43We need to be saving money, we're

1:46:44overspending, none of that.

1:46:48So I think money just comes in.

1:46:50And I mentioned earlier the 2012 tax.

1:46:54All that money's gone.

1:46:58So other people are saying it too.

1:47:02More money comes in.

1:47:03And all that money, just as soon as it comes in,

1:47:06it immediately goes out.

1:47:08To answer one of your statements,

1:47:11I think Council Member Quinto could

1:47:13stand up and be very adamant.

1:47:15But he is clear that none of that real property transfer tax

1:47:18should be spent.

1:47:19We did, I think, account for about $500,000 of it

1:47:24to be spent during that meeting.

1:47:25So the fact is that we really didn't [INAUDIBLE] not to--

1:47:30we meant to put a large portion of that towards our reserves,

1:47:34the real property transfer tax.

1:47:35It's not as large as we expected it to be,

1:47:37and we had other income that didn't come up.

1:47:39And we had costs that exceeded what we expected it to be.

1:47:43So I unserstand what you're saying,

1:47:46and we're certainly going to lift the hood

1:47:48and look a lot closer this particular year.

1:47:51And I don't know who was next, actually.

1:47:54We'll go with Thomas first and then [INAUDIBLE]..

1:47:57Hey, everyone.

1:47:58I'm Thomas Spencer.

1:47:59I just moved to El Cerrito.

1:48:01I hear the word--

1:48:02yep, in October.

1:48:03I heard the word optimism in the last statement.

1:48:05And I wanted to share a little bit of mine,

1:48:07being a new person in this community.

1:48:10I move-- yeah, I was priced out of San Francisco,

1:48:13priced out of Oakland.

1:48:14I bought a home in El Cerrito.

1:48:15There's two BART stations.

1:48:16They had a specific and a public plan.

1:48:18Really excited for the future And growth of El Cerrito.

1:48:22It's also is a smaller environment.

1:48:24You feel kind of disillusioned or frustrated,

1:48:27like you don't have a voice in Oakland or in San Francisco.

1:48:30It's really great to see everybody here,

1:48:31this town hall can have a voice, and actively participate,

1:48:34and join committees.

1:48:36So I'm very optimistic.

1:48:38Maybe that's some naive optimism.

1:48:40Time will tell.

1:48:41But I think that there are a lot of people like me

1:48:45who are moving to El Cerrito because they

1:48:48see it as a place to grow.

1:48:50And I'm really excited to see it grow

1:48:51with everybody in this room.

1:48:52So I wanted to share a little bit of that.

1:48:55So thank you.

1:48:55[APPLAUSE]

1:49:00Welcome, Thomas.

1:49:01Thanks.

1:49:02We need more of you.

1:49:02Bring your friends.

1:49:04So just, actually, we should encourage more people

1:49:07like Thomas, because they're coming

1:49:09in at that high price point.

1:49:10More revenue.

1:49:11[LAUGHTER]

1:49:12And thank you, Thomas.

1:49:15One thing on the chart here, is the minimum reserve goal

1:49:21the red line that's going up.

1:49:23So I assume that's tracking with an expenditures line?

1:49:26Correct.

1:49:26That's 10% of the general fund, not total expenditures,

1:49:29because we do have grant funds that come in that we

1:49:32use to spend on the pavement.

1:49:34And there's other funds that are getting ready as well.

1:49:36[INAUDIBLE]

1:49:38Yeah.

1:49:38This is just the general fund.

1:49:41So does the red line track with the actual expenditures?

1:49:4410% of-- yeah, 10% of actuals.

1:49:48Because just doing some quick math in the last five years,

1:49:50that means our expenditures have gone up about by about 50%.

1:49:52Is that a fair assessment?

1:49:58That seems kind of excessive.

1:50:08Well, this is meant to be revenues, right?

1:50:12This is meant-- the revenues that we get in?

1:50:14The general fund.

1:50:14The general fund.

1:50:15Yes.

1:50:15So and in recent years, as we, for example,

1:50:17like that past year, this also reflects not only the increases

1:50:23in all of the taxes and increases

1:50:25in additional funding like measure B or measure R

1:50:28and some these over here.

1:50:30So that has helped track.

1:50:32The pie has grown.

1:50:34But it says 10% of fiscal year expenditures in parentheses

1:50:38up there.

1:50:39And so I'm assuming that's tracking our expenditures.

1:50:43Yeah.

1:50:44So they've gone up 50%.

1:50:45That seems like an excessive amount in five years.

1:50:51This is over 10 years.

1:50:54No, but I'm looking from 2014 to 2019.

1:51:00An additional $1 million.

1:51:03That would be in round terms, $10 million over 30,

1:51:07so it's gone up 33%.

1:51:09But from 2014 to 2019, that would be five years.

1:51:13Correct.

1:51:13So if this is 10%, and in 2014, it's just below $30 million,

1:51:19and then 2019, it's at $40 million.

1:51:22So it's gone up $10 million over that period of time.

1:51:28Any other questions, because I do

1:51:31have more on the presentation.

1:51:32Sure.

1:51:36[INAUDIBLE] a little optimism.

1:51:39I've lived here most of my 75 years.

1:51:47Great place to live.

1:51:48Now I see it getting better over the recent number of years.

1:51:54And I not only [INAUDIBLE].

1:52:00Saw the new projects that are coming in.

1:52:03I certainly appreciate that because I

1:52:05think it will increase the population of El Cerrito

1:52:08by 14%.

1:52:09A lot of that will be [INAUDIBLE] as you said,

1:52:13there will be more people who want to shop here.

1:52:15So I'll put a positive spin on that.

1:52:19[INAUDIBLE] because of the difficulties,

1:52:20I'll be watching this a lot more closely

1:52:22and keep your feet to the fire.

1:52:25And one thing I've asked over the years on the occasions

1:52:29that I've had, is what addresses on San Pablo Avenue

1:52:34are in El Cerrito?

1:52:37The age old question.

1:52:38Because I once asked a few city managers ago, where do you--

1:52:43I saw him in a tire shop in a city vehicle.

1:52:48And I said is this address in Richmond or El Cerrito?

1:52:52And he said it's in Richmond.

1:52:54And even though I agreed with him,

1:52:56he was on San Pablo Avenue, [INAUDIBLE]

1:52:59is viable and exciting as possible.

1:53:03I think since we all appreciated the tax revenue [INAUDIBLE]

1:53:06for our really nice streets rater

1:53:09than our property taxes or addendums.

1:53:12I'd really like to know [INAUDIBLE] talk to friends

1:53:16and say, once you move to that new office

1:53:18building you need or office [INAUDIBLE] offices here.

1:53:20Why don't you [INAUDIBLE].

1:53:22And a lot of people in this room probably know people all over

1:53:25and people you work for who were looking to expand [INAUDIBLE]

1:53:31a viable map that says these addresses on San Pablo

1:53:35are in Richmond and not [INAUDIBLE]..

1:53:40It is in Richmond.

1:53:41El Cerrito Natural Grocery is not in El Cerrito.

1:53:43Yeah.

1:53:44I knew that.

1:53:44That's a good example.

1:53:45Right.

1:53:46El Cerrito Tire.

1:53:46El Cerrito Tire is not in El Cerrito.

1:53:48That's where I was at the time.

1:53:50El Cerrito [INAUDIBLE] is not in El Cerrito.

1:53:53That's why I suggest that we should all

1:53:57maybe-- not that we want any businesses on San Pablo

1:53:58to go down.

1:53:59We want it to be an attractive avenue.

1:54:03But I would suggest that the city and all of us

1:54:08go to El Cerrito businesses [INAUDIBLE]..

1:54:13So is there a map somewhere online

1:54:15we can say these are the businesses

1:54:17that pay, the properties that pay taxes to El Cerrito.

1:54:21So the map is the map.

1:54:25So I like to joke that I think whoever

1:54:27drew the border along San Pablo Avenue

1:54:29must've been drunk one day.

1:54:32But actually, so it's almost like this sort

1:54:35of midtowny place down to the oil change shop.

1:54:42So the sidewalk is Richmond--

1:54:44or I'm sorry-- the side walk is El Cerrito.

1:54:47And if you actually look at each intersection,

1:54:49there's a sign that says City of Richmond.

1:54:51That's the city limit.

1:54:53So it's mostly this part.

1:54:55And then it really does go down to--

1:55:01yeah, we should have a good map.

1:55:04But I'm told historically-- and if there's

1:55:06any Historical Society people in the room,

1:55:08correct me if I'm wrong.

1:55:09I was told historically that when the city was incorporated

1:55:12100 years plus ago, the city limits

1:55:16were based on the precincts that they [INAUDIBLE] incorporate.

1:55:19And so that was the border.

1:55:24I've heard that story.

1:55:26It's better than saying whoever drew the borders were drunk.

1:55:28But anyway, so no.

1:55:30El Cerrito Natural is not in El Cerrito.

1:55:32And I agree with you, and I don't want

1:55:34to dis my friends in Richmond.

1:55:36And Melanie can go a little bit further because we have

1:55:38been working with them on that.

1:55:40The San Pablo Avenue specific plan

1:55:42was originally intended to be a joint project

1:55:45with the city of Richmond.

1:55:47So let me give this to Melanie to finish up on that.

1:55:51A couple of things that I'd like to share.

1:55:53So there is a map that you can find online of all--

1:55:56so for those of you--

1:55:58and I know that I think that Mayor and Karen might trying

1:56:01to get through this slide show for those that [INAUDIBLE]

1:56:04and then there will be more time for Q&A.

1:56:07Basically, back to answer the question, the Economic

1:56:09Development Committee and Chamber,

1:56:10I'm sure we'd be happy to host a forum where we could all

1:56:12generate ideas about all the great things that

1:56:14could happen on the Avenue.

1:56:18So stay tuned, and there will be something like that.

1:56:21In the meantime, the stuff that is happening--

1:56:22and I appreciate somebody said over the last few years,

1:56:24it seems like [INAUDIBLE] changing.

1:56:26I think there is.

1:56:27We kind of hit a moment.

1:56:30But online, you can go to elsorreto.org/majorprojects,

1:56:33and you can see those projects, or to backlash SPAFP,

1:56:38and you see the specific plan.

1:56:40In terms of Richmond, Karen's right.

1:56:42I would love-- we are being recorded,

1:56:44but I would love to annex the annex, of course.

1:56:49But probably not going to happen.

1:56:50In the meantime, as a sense of place,

1:56:52I think people who live here, I'm glad El

1:56:54Cerrito Natural is there.

1:56:55I'd love it to be in El Cerrito, but I'm glad it's here.

1:56:58So I think the quality of life both sides of the street

1:57:00become really important.

1:57:02We need community development directors and planning managers

1:57:05at the city of Richmond and public works

1:57:07meets very closely with them.

1:57:09As Karen said, the other side of the street,

1:57:11the sidewalks are ours, but businesses

1:57:12are largely in Richmond.

1:57:15But they are looking to update their code to match ours

1:57:18because they're finding some investors saying it doesn't

1:57:21match right now what the market just like ours used to not,

1:57:23which is why nothing happened.

1:57:25So I just want to kind of share that,

1:57:27share that we can kind of generate

1:57:29these economic development ideas.

1:57:30And yes, we also have a--

1:57:33we're happy to kind of [INAUDIBLE] this.

1:57:35But there are new businesses coming to El Cerrito

1:57:36all the time.

1:57:37Maybe some of you guys have seen the new restaurant [INAUDIBLE]

1:57:39is new and doing very well.

1:57:41There's many.

1:57:42But we do work closely with the city of Richmond.

1:57:44And then going back to that, we only have so many acres

1:57:47so things happening on that side do

1:57:48help create that cluster that makes

1:57:49it more of an attractive place for businesses.

1:58:00Hi.

1:58:01[INAUDIBLE]

1:58:03I'm a 38-year-old in El Cerrito.

1:58:06I work for a Fortune 50 company for a long time

1:58:09in strategic planning and forecasting.

1:58:11So my question is, we heard a lot of discussion

1:58:15tonight about expenditures growing

1:58:18faster than expected and revenue growing slower than expected.

1:58:23So my question is, where are your forecasters?

1:58:26Because I can look at this graph right here.

1:58:30The trend is very clear, even if you look at the first four

1:58:33years before this recession hit, before the RDA [INAUDIBLE],,

1:58:41the trend is clearly up, no question.

1:58:44And I suspect any forecaster planner

1:58:47worth their salt would have just projected that forward,

1:58:51clear, no surprise.

1:58:54Then you get a dip for two years.

1:58:58Any forecaster or planner worth their salt

1:59:01would not have accepted that as the long term trend.

1:59:04And, in fact, they would have right

1:59:07because the trend since is up.

1:59:09In fact one can look at the last two years,

1:59:12it's actually growing faster than it has been in the past.

1:59:15So the working assumption should be

1:59:19expenditures are going up whatever it is, 4% or 5%

1:59:24a year.

1:59:25And then you hear about the revenue stream

1:59:27has not performed as expected.

1:59:32So how long is that going to happen?

1:59:36Some time, I suspect, because the reserves are going down.

1:59:41So my question is, where are your--

1:59:47to use someone's phrase, top quality,

1:59:50highly compensated staff?

1:59:54Where are they to spot this trend

1:59:58years go, and more importantly, where are they now?

2:00:04What are they telling you guys now for the next five years?

2:00:09So, like I said, I worked for 30 years for a Fortune 50 company.

2:00:16If I was presenting these results, and the business,

2:00:21another person talked about a business

2:00:22under this kind of duress, the response

2:00:26would have been so different.

2:00:29And, in fact, in my job, if I had not

2:00:33brought this to my boss's attention,

2:00:36I need not finish the sentence.

2:00:39Sure.

2:00:39Great.

2:00:40Thanks for your comments.

2:00:42With that, I'm actually going to go through a slide.

2:00:46Where is it?

2:00:48So we've covered most of the things

2:00:49on this slide about how we got here.

2:00:54And my eyes are not good enough to read the screen in the back.

2:01:00We talked about the recession.

2:01:02We talked about redevelopment.

2:01:03We talked about-- actually, we haven't

2:01:04talked about the dispatch contract with Richmond yet.

2:01:07So dispatch-- Richmond is now providing our dispatch.

2:01:11They were before as well.

2:01:13And we were going out to get a better contract for us

2:01:16that were going to save money.

2:01:18And it was with the Sheriff.

2:01:20And at the time that we were going out,

2:01:21we became a sanctuary city.

2:01:23And the values that come along with the sanctuary city,

2:01:26we opposed the ICE contract at the Sheriff's prison

2:01:31in West Contra Costa.

2:01:33So the Sheriff decided that he would cancel

2:01:36our contract arbitrarily.

2:01:38And that resulted in about between $300,000 and $500,000

2:01:43of increased cost associated with dispatch.

2:01:46So that's one of the things that helped us get to this location.

2:01:50Karen already covered this midtown activity

2:01:52center and audit adjustments, so that's that.

2:01:57But to speak to your point then, we've seen this problem coming.

2:02:05And we've taken steps to counter it.

2:02:09With your help-- with everyone in this room's help,

2:02:12we have passed revenue-generating decisions

2:02:16that have helped us offset the trend line.

2:02:19Now some of those have not necessarily

2:02:22yielded all of the resources we're looking for.

2:02:25So 2008 was measure A. We've gone

2:02:28from the 4th worst city streets in the Bay Area

2:02:31to the 4th best.

2:02:35The end of it--

2:02:36second best.

2:02:37So with your help in measure A, we've actually

2:02:40been able to pave our streets.

2:02:42And we're continuing to do updates on those streets.

2:02:45Those original set of contracts took advantage of the recession

2:02:49and our dollar really far.

2:02:51So thank you for supporting measure

2:02:53A. Thank you for supporting measure H. I think it was--

2:02:56someone said that measure H should decrease the pressure

2:03:00on the general fund-- it will.

2:03:03But also, we want measure H to do some of the things

2:03:05that's supposed to do.

2:03:06There's about $600,000 a year of revenue and about $300,000

2:03:10a year that needs to go to the pool.

2:03:12So there is some relief to the general fund.

2:03:17Measure R in 2010 and 2014.

2:03:25So right here-- so in November 2010, measure R passed.

2:03:37That was then removed in November 2014.

2:03:43So you gave it to us-- our revenue to try

2:03:48and offset that trend line.

2:03:52So we do not--

2:03:55wrong one.

2:03:56I'm revealing some of my secrets.

2:03:59So we have been trying to address the revenue issues.

2:04:04Measure V, the real property transfer tax, was 2018.

2:04:07We're just beginning to--

2:04:09we've got a full year now of measure V in income

2:04:13so we can begin to dictate that over time.

2:04:18And as Melanie has discussed, San Pablo has a specific plan--

2:04:23housing and mixed use projects that are under construction

2:04:27will ultimately be revalued and we'll get

2:04:29more property tax from that.

2:04:38That's not the end of it, right?

2:04:41And as Greg has pointed out, we need

2:04:43to be aware of the projections that are coming up

2:04:45and pay attention to what our forecasters said.

2:04:50Unfortunately, we're going to be hearing about the fact

2:04:54that we're going to probably be expecting a property decline.

2:04:57Our consultant, HDL, is telling us

2:05:00that we actually should be looking

2:05:02at a property tax decline.

2:05:07Sales tax revenue is what is going to remain level.

2:05:15Personnel costs, particularly medical and benefits,

2:05:21are increasing.

2:05:27Yes, I actually have asked that question

2:05:29and so all I can tell you is I don't believe it.

2:05:32But that's what the consultants are telling us.

2:05:35I don't-- it doesn't make sense to me and maybe Mark,

2:05:38who is having conversations with them, can explain it.

2:05:45So [INAUDIBLE].

2:05:48It is-- This is live.

2:05:57So why do the consultants [INAUDIBLE]

2:05:59with an estimate of the median selling price of homes.

2:06:04And for the last couple of years,

2:06:06we've had a median selling price of about $950,000.

2:06:10That has declined to about $890,000.

2:06:15And the forecast that HDL has provided us for the next

2:06:17five years-- and these are not just my forecasts,

2:06:19it's theirs--

2:06:20[INAUDIBLE] are we going to be a lot more-- we

2:06:22take more risks than they do.

2:06:24Has been on the order of 4.5% or 5% more property taxes.

2:06:30Now that's not to say property taxes you

2:06:31are not good-- they are good.

2:06:34Property taxes, as you pointed out at the start,

2:06:36are 1% of the assessed value of the property, right?

2:06:39So the assessed value across the city is about $4 billion.

2:06:44So technically, we should be making four--

2:06:471% of that as [INAUDIBLE].

2:06:50So that is shrinking.

2:06:52And as a consequence, we recognize that property taxes

2:06:55that have been moving up--

2:06:56driven about 6, 6 1/2 over the last seven

2:06:58years are now slowing down.

2:07:00That so the forecasting that I plan

2:07:02to do for the next presentation would see the property

2:07:06tax growth at about 5.5%.

2:07:09That's in the immediate future.

2:07:10And as we look outwards-- and we've got to keep that in mind,

2:07:13there is a macroeconomic environment there [INAUDIBLE]

2:07:17to this.

2:07:18So there's a [INAUDIBLE] on the macro economy, and then

2:07:21sales decline, which means probably

2:07:24that's going to [INAUDIBLE] half as frequent.

2:07:26Which consequently the [INAUDIBLE]

2:07:28that you use assessed value.

2:07:29So these past impacts--

2:07:31these are long term impacts.

2:07:33So these are all metrics that impact that [INAUDIBLE]..

2:07:35And I'll also speak to the issue of sales taxes, all right?

2:07:38I can tell you that supporting this--

2:07:39the projected sales taxes are now

2:07:41dropped to a 1% growth rate.

2:07:43That's about it.

2:07:44From 3% in the past.

2:07:48Please wait for the mic.

2:07:51It is growing, but it's not growing at the rate

2:07:53that it used to.

2:07:57[INAUDIBLE]

2:07:58I'm sorry, there's a difference between expecting

2:08:01decline and expecting decline in the growth rate.

2:08:05That is true.

2:08:06That is true.

2:08:06So, probably that's revenues.

2:08:08Somewhere in the ballpark of collectively,

2:08:10about $8 or $9 million dollars.

2:08:12That rate is not growing at the same rate

2:08:14that it has in the past.

2:08:15All right?

2:08:22So since you're the finance guy, can you tell us--

2:08:26so the growth rate you're expecting to decline.

2:08:28But in net dollars, when somebody that

2:08:30owned a $20,000 house that they bought 60 years ago

2:08:34sells their house--

2:08:35even for $890,000, that's a huge difference

2:08:38to the bottom line to the city.

2:08:40So you're saying, to this gentleman's point,

2:08:42the growth rate may be declining based on unnatural increases,

2:08:47but the actual dollars to the city is still increasing.

2:08:51Unless we're selling properties for $20,000,

2:08:53which I'm not aware of?

2:08:56I mean, how are you doing your calculations?

2:08:58This is really critical.

2:08:59It is important.

2:09:00The point we are making is the actual dollars

2:09:04to the city are increasing.

2:09:05But the thing that finally becomes the general fund

2:09:08reserves is the difference between dollars

2:09:10received and dollars spent.

2:09:12Your expenditures grow faster than the rate at which

2:09:15the actual dollars come in.

2:09:27OK, financial income coming from--

2:09:35or revenue coming from property tax.

2:09:41Have you done any research that El Cerrito is--

2:09:48you said [INAUDIBLE] a lower [INAUDIBLE]

2:09:54average rates compared to Berkley or Oakland or Richmond.

2:10:00Is it just El Cerrito or is it across the board?

2:10:03And if it's just El Cerrito why El Cerrito?

2:10:06That's number one-- that's my question.

2:10:10Have you done the research?

2:10:12I can tell you that we've compared numbers

2:10:15with other cities around us.

2:10:17And there are other cities that are

2:10:19that declining point, as well.

2:10:20Not all of them, but there cities out there

2:10:23and we are aware of that.

2:10:25But El Cerrito itself--

2:10:27our consulting company told us in the past

2:10:29we've been at 5 and 1/2 or 6, now it's [INAUDIBLE]..

2:10:33I understand that, but I guess you haven't done the research

2:10:37to see if this a uniquely occurring result relative

2:10:42to other cities in the state.

2:10:45The other question is you say how do you get there?

2:10:48I just wanted specific points.

2:10:52Is that a history within the United States and events.

2:10:56But overall, it seems like with our past,

2:10:59there's been active oversight.

2:11:02The trends now with the reserve banks are in the negative.

2:11:09So how did that happen on a city level?

2:11:13Was there a lack of oversight?

2:11:16And what can you do to have more oversight

2:11:20or accountability by the city to manage the financial health

2:11:26of the city?

2:11:28That's a specific question, not to just list problems.

2:11:33Every city's got problems.

2:11:36So I'll take responsibility for that.

2:11:39As everybody knows, the board-- the council's number guy.

2:11:42And the last two budget cycles I've

2:11:45been dealing with personal issues with my family,

2:11:47and I've not been able to delve into this

2:11:49as deep as I normally do.

2:11:51So I will take some of the ownership of this.

2:11:54As the number person, I've been the one that's

2:11:58been doing the most oversight.

2:12:00And I've had to trust staff because of past experience.

2:12:06And trust to verify is now going to be the mantra going forward.

2:12:10I would tell you that Council Member Pardue-Okimo, Council

2:12:14Member Fadelli, and Council Member Quinto are all here,

2:12:17and they are hearing this and they are all engaged now.

2:12:21So to get to your point, and everyone's point

2:12:25that we need more fiscal oversight--

2:12:27you're going to get it.

2:12:28Not only that, staff has already said

2:12:31they're going to change the way that they're providing

2:12:33this information so that we can get that oversight

2:12:36at a higher level of detail.

2:12:38And that information will be publicized.

2:12:41So that it's something that you all can help

2:12:43us stay on top of this.

2:12:45As Denise has said and as Greg-- he's still here.

2:12:50They've got expertise that we don't have.

2:12:53I'm a civil engineer and I do a lot of work with numbers.

2:12:57But I'm not a financial person, I'm not an accountant.

2:13:01So we want to make sure that you guys are providing

2:13:04us the support you can.

2:13:06Christian and then Ed.

2:13:17Greetings.

2:13:20You mentioned a couple times that basically one

2:13:24of the big lacks of return is the lower

2:13:27number of houses sold, basically property transfers.

2:13:33So isn't it a little bit counterintuitive

2:13:37to advertise and have people vote on a property transfer tax

2:13:42which, in effect, puts an obstacle on property transfers.

2:13:50So I'm thinking that there's a flip here that's pretty much--

2:13:55you just introduced a property transfer tax

2:13:58which effectively makes people not want

2:14:04to transfer their properties.

2:14:07When that happens, people are more likely to sell.

2:14:11Then you put that as the reason that you

2:14:15have less revenue coming in.

2:14:17So I'm thinking the whole idea of property transfer tax

2:14:22is not helping the cause of what you're trying to achieve.

2:14:28And I think also the history of financial challenges kind

2:14:34of shows that some of is is due to [? Scott Hammond ?]

2:14:38at a city management position.

2:14:40And I just remember him getting [INAUDIBLE]

2:14:42and being congratulated out of his job.

2:14:45And I kind of feel that's kind of slap in the face of us

2:14:51and of our intelligence.

2:14:53Because I think some of the things that--

2:14:56major accounting mistakes have been made falls into the years

2:15:00that he was in charge.

2:15:02So congratulating him out of a job

2:15:05and thanking him for his vote is kind of an insult

2:15:09to our intelligence.

2:15:11And I just find it comical at this point.

2:15:15Thank you.

2:15:16To your two comments-- one of them

2:15:17is regarding Scott [? Hammond's ?] career.

2:15:20Scott [? Hammond ?] was here for fifteen or more years.

2:15:24And when you look at what the city was like at the beginning

2:15:27of his career versus at the end of his career,

2:15:29that that is something that is commendable.

2:15:31So I want to make sure that you are not just

2:15:35looking at the last couple of years that are potentially

2:15:38reflected by these charts, but you're

2:15:39looking at his entire career.

2:15:42To your first point, which--

2:15:44sorry.

2:15:47Transfer tax.

2:15:48I understand your-- your argument is well crafted.

2:15:53I just don't think that people are disincentivized.

2:15:57If the house is going for sale, people are buying it.

2:16:01The biggest challenge we have right

2:16:02now is the lack of sales, not purchases.

2:16:06There is no market-- continue to go

2:16:08down or stay very low until--

2:16:12I think, somebody has mentioned to me

2:16:14recently in the last quarter they're seeing the medians flat

2:16:17or potentially staying flat.

2:16:19So the Bay Area market isn't necessarily changing.

2:16:22And so it's really-- the disincentive-- is

2:16:26there a third rail in the room?

2:16:28The disincentive to sell is Prop 13, not the transfer tax.

2:16:33So if I just touched the third rail,

2:16:35sorry, but that's my opinion--

2:16:37is the disincentive is Prop 13.

2:16:41This gentleman and then Amalia.

2:16:45Sorry, It's Ed and then Amalia.

2:16:49So, two items.

2:16:50I know it's hard to report on these things,

2:16:51especially when you're not an accountant.

2:16:53I have some accounting background.

2:16:54I took a few classes and I have an MBA,

2:16:56but I'm not an accountant.

2:16:58But I recognize that a lot of these reports are budgeted

2:17:01or they are audited figures that are--

2:17:05and they are based on which year you put things in,

2:17:07so not cash based.

2:17:10We all build our budgets on a cash basis.

2:17:12We don't forecast what's coming unless you do your own taxes.

2:17:17If you're self-employed, then you've got to deal

2:17:19with that whole nightmare.

2:17:21If you're self-employed, you can appreciate

2:17:22not knowing how much money is coming in

2:17:24but still having to pay the government for some of it.

2:17:27So I respect that limit.

2:17:29But I think having reliance on auditors

2:17:32to tell you what's wrong with the city is part of what's

2:17:34wrong with this problem.

2:17:35I'd suggest that maybe what's needed is a management audit.

2:17:40Somebody to come in, tell us who's doing what?

2:17:43Are these jobs necessary?

2:17:44Are they efficient?

2:17:46Do we have enough people in the right places?

2:17:49And make those kinds of adjustments

2:17:51because they can basically big dividends of expenditures.

2:17:55Thank you, Ed.

2:17:59It's Amalia, then Greg, and then--

2:18:01I don't know your name.

2:18:03Jerry.

2:18:03So it'll be Amalia, Greg, and then Jerry.

2:18:08All right, Mayor.

2:18:08I've got to say you are doing a great job of recognizing people

2:18:12and keeping your composure.

2:18:14I just want to acknowledge that.

2:18:17It's not easy to be a local elected official.

2:18:20I hope everyone knows it's really a volunteer gig.

2:18:22So you do have to respect that as we're

2:18:24working through these issues.

2:18:26I just wanted to point out a little bit about property tax

2:18:28because there were some discussions

2:18:29circling about that.

2:18:31I think just to clarify and make explicit one

2:18:33of the things that came out of that is that slide

2:18:35is mis-worded, right?

2:18:37The first should be property tax revenue

2:18:39growth expecting decline, not the absolute revenues.

2:18:44Agreed.

2:18:45So that might be causing some confusion.

2:18:48And then the other point is that property tax--

2:18:52the locals are really hosed when it comes to getting

2:18:55property tax in California.

2:18:57So, you know, the city is very dependent on it.

2:19:00As Karen said, they get about 22% of the 1%.

2:19:03So I came up with the number $40 million as the estimated assess

2:19:08value of the Mayfair Block once complete.

2:19:10And of course, that might change when it actually is complete.

2:19:14But for a $40 million development,

2:19:16the city is going to get maybe $100,000

2:19:18a year in property tax.

2:19:19That's really not that much, even for a small city

2:19:22like El Cerrito.

2:19:24When a house changes hands, the assessed value

2:19:27might go up by $500,000 or something like that,

2:19:29it's really peanuts.

2:19:31So the trend here is just keep the bargain going,

2:19:35and turn over those properties.

2:19:36But any one property, in and of itself, any one development,

2:19:39even one [INAUDIBLE] is not going to make

2:19:42a particularly big difference.

2:19:44Plus, all those new development that are housing related

2:19:47create a greater demand for services.

2:19:50New residentials are always net [INAUDIBLE]

2:19:53in terms of tax revenue profit.

2:19:56You could say for the local agencies

2:19:57this is just part of how it is in the state of California.

2:20:01So so to some extent, you're working

2:20:03against some structural issues, but again, I

2:20:05think that the residential and the BART parking

2:20:08lot and it exacerbates some of these problems,

2:20:10but that's just--

2:20:11I'd love to see office there.

2:20:13To that end, the cities of El Cerrito-- the cities of Contra

2:20:18Costa are represented on ABAG--

2:20:21the Association of Bay Area Governments.

2:20:23And we gave our Contra Costa representative

2:20:28to that overarching authority.

2:20:31We gave them clear direction that when

2:20:35the regional housing needs allocation, is distributed--

2:20:45so we have an obligation to create

2:20:48a certain amount of affordable housing on an annual basis.

2:20:52Over a certain period of time.

2:20:53And every once in a while those numbers get reset.

2:20:56And they're about to be reset again.

2:20:58And we gave-- they're all mentioned cities of--

2:21:01Contra Costa gave the same direction

2:21:03to our regional representation, which is you need houses.

2:21:08They need to go where the jobs are.

2:21:10And jobs need to go where the housing is going in.

2:21:14So for those that don't believe we're trying to make a change,

2:21:17we are.

2:21:18We are telling the regional people that we don't--

2:21:21[INAUDIBLE] has stepped up.

2:21:22We're doing our job with regard to housing.

2:21:25What we need is jobs.

2:21:26And that was a message I gave just 14 days ago

2:21:30to our regional representation.

2:21:32So we do try to walk and talk the same message.

2:21:36So I just want to make sure you all know

2:21:39that that is what we're doing.

2:21:41So Greg and then Jerry.

2:21:48Greg's in the back row.

2:21:50Oh, Greg's done.

2:21:51OK, so Jerry, on the aisle.

2:21:53And then the gentleman-- what's your name?

2:21:56Hi John.

2:21:58Ah yeah, just stay there--

2:22:02I don't want to go there!

2:22:03So I'm [INAUDIBLE].

2:22:06So Prop 13 has been with us for a long time.

2:22:10And it's an incentive to stay.

2:22:13And those of you have recently purchased homes here,

2:22:1720 years from now, you will appreciate

2:22:20that it's a reason to stay.

2:22:25[INAUDIBLE] as expenses continue to go up for all kinds

2:22:29of reasons of mismanagement.

2:22:31With the [INAUDIBLE] school district,

2:22:32which is now West Contra Costa, administration

2:22:34that was between 30 years ago, now

2:22:38out of control as [INAUDIBLE].

2:22:42Prop 13 just changed [INAUDIBLE] educational system

2:22:47I have [INAUDIBLE] on Prop 13, so it's just my [INAUDIBLE]

2:22:56for that.

2:22:58Thank you, Jerry.

2:23:00John?

2:23:01Thank you, and thanks for having this event.

2:23:04This is my first city event that I've ever attended.

2:23:07So thanks for hosting.

2:23:08Well,thank you for coming.

2:23:09I just had a question in regards to this new development

2:23:12about class A office space.

2:23:14So that's where I [INAUDIBLE] I [INAUDIBLE] in Class A

2:23:16office space Do you all want class

2:23:19A office space in El Cerrito?

2:23:21And what are you being told are the obstacles to it?

2:23:26And do you believe that?

2:23:27You know, what's preventing us from having

2:23:30class A office space here?

2:23:31I've been asking for class A office space

2:23:33for over a decade, because I think we have

2:23:37one-- do you have any class A?

2:23:42I don't think we do.

2:23:44Is [INAUDIBLE] headquarters class A. It might be, right?

2:23:48So, again, I know people are here for so

2:23:51many different purposes today.

2:23:52And so I would be happy to have--

2:23:56host a separate meeting about this

2:23:58and maybe it's time re-evaluate.

2:23:59I'd have to--

2:24:01[INAUDIBLE] strategic economics is a consultant who's

2:24:03worked in this area, who has shared with me when they've

2:24:06done their parts for the city is when is the city going to get

2:24:08that that's not it future.

2:24:11However, that was when [INAUDIBLE] opened,

2:24:13it had a ton of vacancies.

2:24:15Which, of course opened has changed.

2:24:16So the pace of change is fast.

2:24:19Similarly, when I first started, ABAG and NPC doing projections

2:24:24and were very frustrated when they thought some of the job

2:24:26centers were going to be Oakland, San Jose.

2:24:29And Amalia works in economic development,

2:24:31so she could share also how Concord has tried for decades

2:24:35to position itself that way.

2:24:36It might get there.

2:24:37And like [INAUDIBLE].

2:24:39It's a [INAUDIBLE].

2:24:40There's a lot you could say.

2:24:41You could move your whole business if you

2:24:42compete with [INAUDIBLE].

2:24:43I don't know.

2:24:45So everybody tells us no.

2:24:47I'd be happy to keep looking at it.

2:24:50On the other hand, what we know is those little offices

2:24:53above Trader Joe's are in demand and there's

2:24:56all kinds of fun things happening up there, right?

2:24:58I have had somebody look a little bit at what happened

2:25:00digitally in [INAUDIBLE].

2:25:01It with a big tech company that came in and funded all

2:25:04of their broadband upgrades.

2:25:06And there was a ton of land that was repurposes.

2:25:09Again, scale is interesting thing here.

2:25:11Sometimes I do--

2:25:12I used to--

2:25:13I have shifted to [INAUDIBLE].

2:25:16It's got to be the best budgeted community ever.

2:25:18And what does that mean for residents in terms of amenities

2:25:21and financial stability.

2:25:22I think those are questions we are all grappling with.

2:25:25So on this question, I don't have much of an update

2:25:27because all of the comments said that you

2:25:28guys stopped focusing on it and go in the other direction.

2:25:32We could take another look at it and see

2:25:34if there is another type of hub that's happening.

2:25:37I know there's somebody in town people have looked at.

2:25:39It's more of an opportunity, because we

2:25:41have a lot of home occupations.

2:25:42A lot of people working from their home.

2:25:45A lot of them are presumably the low tech workers, right?

2:25:49Is there opportunity to create kind of a hub [INAUDIBLE]

2:25:51there.

2:25:51So I know there are teams exploring that downtown, again,

2:25:53with a lot of outside funds.

2:25:55So this isn't coming--

2:25:57another thing to point out.

2:25:58The city has not had systemized redevelopment-- any funding

2:26:03in economic development.

2:26:03So we are doing it all through creating a great place for us

2:26:07all to live.

2:26:07And hope that that--

2:26:08There's some evidence-- and even some of our local restaurants

2:26:11are owned by-- like Los Moles.

2:26:14Another one that will hopefully open up on Potrero--

2:26:16are owned by local residents.

2:26:17So what do local residents-- what kind of creativity

2:26:19do they bring?

2:26:21Let's all meet and talk.

2:26:22I don't think we're going solve that here.

2:26:24But let's talk and look.

2:26:26With our two BART stations, what does that mean?

2:26:28What if that opportunity?

2:26:31We're going to--

2:26:31I promised a break.

2:26:33I've been asked to deliver on that break.

2:26:35When we come back, we're going to deal with this slide.

2:26:37But I'm going to leave it up so you guys

2:26:39to digest it while we go to break.

2:26:43So we'll give five minutes.

2:26:45We'll resume 10 minutes after noon.

2:38:05Hi, everyone.

2:38:07This is the mayor.

2:38:08This is Greg Lyman speaking.

2:38:10I'm hoping we can pull ourselves back together.

2:38:13Please move toward seats.

2:38:16If we could please move toward seats.

2:38:17[SIDE CONVERSATIONS]

2:38:37[REPEATED CLAPPING]

2:38:51Hi, everyone.

2:38:54Our goal is to get out by 1:00.

2:38:56We may run a little longer than that.

2:38:58But I would like to work back together.

2:39:00It's 12:15.

2:39:01[SIDE CONVERSATIONS]

2:39:28So let me explain this chart to you guys.

2:39:43So there's four pieces of data on here.

2:39:47There's miscellaneous normal cost, safety normal cost.

2:39:53This darker bar in here is miscellaneous unfunded

2:40:08accrual liability, I think.

2:40:10And then this at the top-- the top piece is

2:40:12unfunded accrual liability for public safety,

2:40:15firefighters and police.

2:40:17And what this unfunded portion for the-- let's

2:40:21talk about the two that are easy to begin.

2:40:23This is their current staff, active staff.

2:40:27And it shows a 3% increase to here.

2:40:31And then we haven't negotiated any contracts for this period.

2:40:34So it's straight across.

2:40:37And that's partially funded by our employees

2:40:40themselves and the city.

2:40:42So this is basically the ongoing,

2:40:45these two are the ongoing obligations of the city

2:40:49to pay for the retirement benefits of our city employees

2:40:52that are working for us currently.

2:40:55And that obligation does not include post-employment health

2:41:00benefits, as the city does not pay post-employment health

2:41:05benefits.

2:41:06The employees can pay for it themselves out of their pocket.

2:41:11But the city does not pay for that.

2:41:14These two are pretty simple to explain.

2:41:17They're pretty simple to understand.

2:41:20The other two, the dark and the brown, a lot harder.

2:41:25And it's unfunded liability.

2:41:28And it's based on employees that were working for us that may

2:41:32have retired, and some may be still

2:41:34working for us, because it goes back to the '90s.

2:41:37During the '90s, there was a period of time when

2:41:41interest rates were going up.

2:41:42And CalPERS said, oh, we're doing great.

2:41:44And they said, cities, you don't need to give

2:41:48us any retirement money.

2:41:51And so we didn't.

2:41:53Times changed.

2:41:54Recession came back.

2:41:56CalPERS came and said, you, cities,

2:41:59have unfunded liability.

2:42:03You, cities, now owe us in current dollars

2:42:07what you could have paid for us using 1990 dollars.

2:42:12So our obligation is 10 times, in today's dollars,

2:42:1710 times what it would have been had we paid it back then.

2:42:21Now, most of these [INAUDIBLE] cities, El Cerrito

2:42:24didn't do this.

2:42:25Some cities didn't trust CalPERS.

2:42:27And they put that money into investments

2:42:30in order to be in a much better financial situation than us.

2:42:33In 1990, the city had no general fund reserve then either.

2:42:40So we used the savings from not paying

2:42:44our CalPERS requirements in the '90s

2:42:46to dig ourselves out of the hole.

2:42:48And so we're back in it in a different way.

2:42:53What this shows is, over the next year, 2020,

2:42:57and we're looking at between three and seven,

2:43:00so $4 million dollars of extra payments

2:43:03beginning May, going up to $6 million in extra payments

2:43:06that we're going to make over the next decade.

2:43:11This is part of why our general fund reserve problems

2:43:16are going to exist for a while.

2:43:19It's a structural problem that was created

2:43:22in the '90s by another entity.

2:43:26We have to live with it.

2:43:29Almost 90% of the cities in California

2:43:32have to live with this.

2:43:33This is not unique to us.

2:43:37As those retirees-- and I looked up today--

2:43:41most are, CalPERS is projecting that men will live--

2:43:46I think it's 30 years post-retirement

2:43:49and women are 35, something to that effect.

2:43:53So this is when those workers are no longer with us.

2:44:03That's what this reflects.

2:44:052038, that reflects those dates workers

2:44:07that were with us in the '90s are no longer with us.

2:44:12So this is real.

2:44:15And it's accelerated.

2:44:16CalPERS could have taken this out

2:44:18over a longer period of time, but they've accelerated.

2:44:21And it's reflecting the total obligation

2:44:27of all of our past retirees and our current workers

2:44:32that will become retirees.

2:44:34So it's their entire projection for their actuarial lifetime,

2:44:40which is 91 for men and 92 for women.

2:44:47So if a firefighter, this is their safety UAL, the top line.

2:44:51A firefighter retires at say, 50,

2:44:53if they're allowed to do it.

2:44:55They have another 41 years, if he's a man,

2:44:58and 42 years if she's a woman.

2:45:00So they'll be getting some defined benefit.

2:45:05And that's what this is left, is that obligation at 100%.

2:45:09If the actuarials are spot on, that's

2:45:12what this is, our obligation.

2:45:13If the person lives shorter, passes away for some reason,

2:45:18then this obligation won't be right.

2:45:22It's overstating the obligation.

2:45:23If they live past that age, then this is

2:45:26understating that obligation.

2:45:28This is using the current 7% return rate.

2:45:33What if the return rate goes down?

2:45:35Then this understates our obligation.

2:45:37If the return rate goes up, it overstates our obligation.

2:45:43This is a variable that's constantly changing.

2:45:47And this is for our projection using equations and predictions

2:45:53to show what else to you those obligation

2:45:55is going into the future.

2:45:57And it's most often, and I was asked during the break

2:46:02if we can stop paying.

2:46:04The answer is no.

2:46:08And so this is a cost that we're carrying in our budget

2:46:13that we need to make room for as we go forward.

2:46:20I just wanted to make sure you all had a chance to think

2:46:23about this and look at it.

2:46:25Gentleman with the hat, what's your name?

2:46:27Don.

2:46:28John?

2:46:29Don.

2:46:29Don.

2:46:30If you could give Don the mic.

2:46:39I guess I was wondering, during the 2008 financial crisis that,

2:46:47for instance, cities and towns like San Francisco

2:46:50started new hires at a lower rate [INAUDIBLE]

2:46:53pension funds and other benefits.

2:46:56They cut the benefits.

2:46:57I was wondering if El Cerrito has any options for new hires

2:47:01to start cutting these prospective future benefits.

2:47:06As of 2013, state law changed.

2:47:09And I don't remember what type of experience right

2:47:12off the top of my head, public employees--

2:47:14Captain McCormack.

2:47:16Captain McCormack, thank you.

2:47:18That went into effect.

2:47:19And so, yes, all new hires that have not previously

2:47:22been a part of the PERS system are at a lower

2:47:26retirement calculation.

2:47:28So the [INAUDIBLE] system in El Cerrito

2:47:31is 2.7% at 55 for miscellaneous employees--

2:47:36and that's everybody but public safety-- and 3% at 50

2:47:40for public safety, that's police and fire.

2:47:43But now, for non-sworn miscellaneous,

2:47:47it's 2% at 62 and 2.7% at 57.

2:47:55And those are for all new hires into the city

2:47:58that had not previously been part of the PERS system.

2:48:01Denise?

2:48:03[INAUDIBLE]

2:48:05I have a question.

2:48:06But whose numbers are those?

2:48:07Are those from CalPERS?

2:48:07Or are those the numbers that are created by the city?

2:48:11Those are CalPERS numbers.

2:48:12CalPERS numbers?

2:48:13So a couple points.

2:48:15Just because a fireman may die or a police officer, sorry

2:48:18guys, it doesn't mean that your widows or your family

2:48:21or a disabled child won't continue

2:48:23those benefits for potentially a hundred years.

2:48:26If the child is an infant, it could

2:48:28keep those benefits forever.

2:48:29So it's not really true that however long

2:48:33they live, those benefits end.

2:48:35It's unknown.

2:48:37Yes, I agree.

2:48:37It's totally unknown.

2:48:38That was part of my trying to demonstrate the program.

2:48:42So I think we do, in this city, we

2:48:44do need to rethink these retirement

2:48:46ages and no disrespect to our firefighters,

2:48:49our police officers, and even to our non-safety officers.

2:48:53I don't see any reason today why we

2:48:56are starting a pension for a non-safety person at age 55.

2:49:02It's unrealistic to me.

2:49:03And I see many of these former El

2:49:05Cerrito people going to work on a second career

2:49:08and double-dipping.

2:49:09Yeah, they're going to another--

2:49:11they're getting credit to go to another agency.

2:49:13We have many former senior people in this city

2:49:16that are doing that.

2:49:17And I think that the new people that are moving in here

2:49:21are not generally public employees.

2:49:23They can't afford to live here, as public employees and newer

2:49:26neighbors don't understand us.

2:49:28So I would like to see thought given to non-safety personnel

2:49:34to have some kind of a rational approach

2:49:38to what is that retirement pension start at,

2:49:42not their highest single year.

2:49:43In the public sector, the ones that do have it,

2:49:45the few companies that still have a defined benefit,

2:49:48it's generally based on your top five years or top 10 years.

2:49:52And there's caps on that, on how far it increases.

2:49:55We don't have that here.

2:49:56So that's one thing.

2:49:57Second thing with public safety, I

2:50:00don't know what the age should be, given all of the exposures

2:50:04that they have.

2:50:05But I think we have to relook at that as well

2:50:08and make sure that whatever we offer

2:50:10them is going to be there for them.

2:50:12And I do think that we do need to be

2:50:13looking at some kind of a contribution

2:50:16for health care for them.

2:50:17Most firemen I know in retirement are sick.

2:50:22They're not healthy.

2:50:23They're not living 51 years, I think is what Karen said.

2:50:26I don't see that in the firemen that I know that are retired.

2:50:29And most of them have illnesses related

2:50:31to on-the-job that cancers or whatever

2:50:34coming from the plastics, exposure to some solar panels

2:50:39or whatever it is.

2:50:40And I think we have an obligation

2:50:42to do something there.

2:50:43What the right retirement age is, I don't know.

2:50:46I don't think we need--

2:50:47I don't think we want a fireman on a roof at age 60,

2:50:49climbing a ladder.

2:50:50Maybe that's the right age.

2:50:51I don't think it is.

2:50:53But we need to do something and make

2:50:54sure that whatever is offered is going

2:50:57to be there to protect them.

2:50:58But I think we also have an obligation

2:51:01to provide them health care, whatever that looks like.

2:51:07And the last thing is that many neighbors

2:51:10I've seen on social media don't understand

2:51:14the amount of overtime.

2:51:19And I think it's unfair, these numbers that are being put out,

2:51:23particularly for public safety on overtime hours.

2:51:26These guys are going out for weeks at a time

2:51:28to save other communities.

2:51:30And I've previously asked the former administration

2:51:33before Karen took over, Scott Hanin specifically,

2:51:36if he could break out the overtime

2:51:37and then show the reimbursement rate from the state.

2:51:40And I was told that's not possible.

2:51:42And I'm raising it here in a public forum.

2:51:45We need to have that visibility.

2:51:47These guys are not out there just joyriding

2:51:49and having fun on overtime.

2:51:50They're going out to--

2:51:52they have put their own lives at risk for weeks

2:51:54or even, with one of our battalion chiefs, for months

2:51:56at a time, needed with their skill set.

2:51:59So I would like to see, effective July 1,

2:52:02that overtime is broken out for public safety

2:52:05on what's called for--

2:52:08what do you guys call it when you go out?

2:52:11Mutual aid.

2:52:12Yes.

2:52:13Thank you.

2:52:13Or when we're responding as our police

2:52:16chief did, putting additional people

2:52:17on when we have a blackout.

2:52:19Thank you very much for doing that.

2:52:20[INAUDIBLE] feels very relieved that you had done that.

2:52:23So we need to see that visibility.

2:52:25And then if the state is reimbursing us for CAL FIRE,

2:52:27you need to show that because it's not fair to see somebody

2:52:30with $300,000, with $200- some in overtime when, in fact,

2:52:35most of that is being done through mutual aid.

2:52:37So again, I'm raising that.

2:52:38I've raised that before.

2:52:39The city has been obstinately refusing to do that.

2:52:44And I think you need to do that because it's unfair for people

2:52:47in this community to think that we

2:52:49just have excessive overtime.

2:52:51With respect to your comments, to that last comment

2:52:53about overtime.

2:52:55There is in the budget book a particular detailed fund

2:52:59that shows that CAL FIRE reimbursement to us.

2:53:03But it doesn't break out into how much of that is normal pay

2:53:07and how much of that's overtime pay.

2:53:09We have a separate line.

2:53:12And it should be broken into two [INAUDIBLE]

2:53:14comment, with a separate line that's just overtime.

2:53:17Some of that overtime is for Cal OES.

2:53:19And some of that overtime is associated with people that

2:53:23are serving our community while we have firefighters that

2:53:28are out in other communities.

2:53:29So recall, and I will reiterate it because I think it's worth

2:53:36noting so we have more transparency on that overtime

2:53:38line, that overtime line has to be broken into what's OES

2:53:42and what's for here in the city, whether it's for coverage

2:53:46of an OES shift or not.

2:53:48So I agree with that comment.

2:53:51So thank you, Heidi.

2:53:51And I have some--

2:53:52And if it's here in the city and it's related to OES,

2:53:56that needs to be designated that way.

2:53:58So the statement for those on the tape if you have

2:54:01the overtime is here in the city to cover OES shifts that people

2:54:06who are away doing OES, it should be incorporated

2:54:08in the OES overtime line.

2:54:09So thank you.

2:54:10Right.

2:54:10Or if it's for entering a public safety shutdown,

2:54:14I think that should be covered as well because hopefully PG&E

2:54:17or hopefully we've made a request or demand to PG&E

2:54:20to get reimbursed for that.

2:54:22I love that idea.

2:54:23Thank you.

2:54:23And we have--

2:54:24I love that.

2:54:25[INAUDIBLE] the grants that are available.

2:54:26We did apply we haven't heard back yet.

2:54:28And, yes, I am indeed.

2:54:29I have been working with the fire chief

2:54:31on exactly that so that we can try to address that

2:54:34within our next budget cycle.

2:54:35So it's Heidi.

2:54:37I'm in the process of doing it right now.

2:54:39So, yes.

2:54:40It's Heidi and then what's your name?

2:54:42Anna.

2:54:42Anna.

2:54:43Heidi and then Anna.

2:54:45Thank you so much, Barbara.

2:54:47So I have just a comment about that too.

2:54:49I agree that it's important to have more clarity

2:54:51because it's so easy when everyone is stressed

2:54:53about the financial state to look at numbers

2:54:56and just say how are they getting so much money,

2:54:57and start planning things.

2:54:59So I think more clarity and more transparency,

2:55:02even if it's not numbers we want to see,

2:55:04it's just tge overarching theme is really what we need to see.

2:55:08And I do think it's important to separate pensions for safety

2:55:11workers and non-safety workers.

2:55:13I can't even imagine having a pension

2:55:15that's so beyond anything I can imagine.

2:55:18I feel like as a non-safety worker,

2:55:20I just kind of understand in the private sector

2:55:22that's what life is now.

2:55:23And I think we just need to look at that realistically,

2:55:26even though it's not really a time

2:55:28that we can do that anymore for non-safety workers.

2:55:30And I just wanted to make a quick announcement

2:55:32for anyone who's interested after the meeting.

2:55:35There's a group of us that really, really

2:55:37wanted this meeting to happen.

2:55:38And we're so grateful that it was set up

2:55:39and that everyone's here.

2:55:41So we have an email list.

2:55:43And if anyone wants to join it, come up to me after and sign

2:55:46up to we can all [INAUDIBLE].

2:55:48[INAUDIBLE]

2:55:55OK, I have 15 years living in El Cerrito.

2:55:59Can you please share city's plan for our library?

2:56:03Can you please share city's plan for our library?

2:56:06Sure.

2:56:07And thank you for wearing your green stickers.

2:56:10You can shake your fingers--

2:56:11Janet [INAUDIBLE] loves this.

2:56:13You can do this, the silent cheer.

2:56:17As I stated earlier, bond rating would not

2:56:21be susceptible to going out and doing

2:56:23a capital improvement program of that magnitude at this time.

2:56:26We're looking at a structure that's probably in order

2:56:29of $20 million to build.

2:56:32Right now, we don't necessarily have

2:56:34the real estate for a library that would be combined

2:56:39into our other buildings.

2:56:41So, for example we have a public safety building across

2:56:43the street that's 60 years old.

2:56:45If we were to combine the library with the public safety

2:56:47building, that's one choice.

2:56:48We are a community center that's 65 years old.

2:56:52If we put the library there, that's

2:56:54a location we could potentially get co-habitate two

2:56:58uses on the same property.

2:57:01So BART is looking at putting a library at El Plaza,

2:57:08at El Cerrito Plaza Station as part of their redevelopment

2:57:11of the plaza parking area.

2:57:14We don't know if we would need to come up with $20 million

2:57:17to insert that into that project.

2:57:21But all of those, all of that capital improvement program

2:57:26would require support in the community to do

2:57:31that type of capitalization.

2:57:33And it would require funds.

2:57:34And so the faster we can solve the problem we're talking out

2:57:38today, the better our bond rating would become,

2:57:41and the cheaper it'll cost us to build that library.

2:57:43So there is a future for the library.

2:57:47It is something we are looking at.

2:57:50And we are--

2:57:53I'm afraid to even say this because Karen will

2:57:56potentially break out in tears.

2:57:58Karen has been working on the library for her entire career

2:58:01at El Cerrito, all three iterations

2:58:04of the library use study.

2:58:06And so there is no question that the library's

2:58:08near and dear to Karen's heart.

2:58:11And [INAUDIBLE] follow-up comment,

2:58:13so Holly will give it to you.

2:58:18Can we move the library right across from our rec center

2:58:23and build the same building to make it the new building?

2:58:29Yes, maybe.

2:58:31Madeleine is still in the room.

2:58:32I don't know if she is.

2:58:35The property directly across from

2:58:36the recreation center across [INAUDIBLE]

2:58:39or across the parking lot?

2:58:40Across the parking lot.

2:58:42That's owned by the school district.

2:58:44And when we approached them when I was last mayor in 2016 to ask

2:58:50them to sell that property to us,

2:58:52they gave us a definitive no, that they would

2:58:55never consider doing that.

2:58:58You notice I did not mention that in my litany

2:59:02of properties that were there.

2:59:04But the school district is in their own financial straits.

2:59:08And so there potentially could be an opportunity

2:59:13there for us to help them monetize

2:59:16that six acres that's there.

2:59:19And that would potentially give us an opportunity to build

2:59:25a library in that location.

2:59:27Does temporarily moving library staff

2:59:29[INAUDIBLE] library facility to that location

2:59:35just temporarily-- not forever?

2:59:39For those that don't think we think out of the box,

2:59:42in the big shell game of property that the city owns,

2:59:45the city owns the current library, which is now 70--

2:59:49somebody will tell me it's 75 years

2:59:51old or something like that.

2:59:52And we revitalized a long time ago.

2:59:57And if we could find a temporary location for the library,

3:00:01like Church of Life Christ, for example, that's in between two

3:00:05of the large parcels the city owns, maybe

3:00:08we could swap land with them.

3:00:09And then we end up with almost an acre plus of land right

3:00:12across the street from here.

3:00:14And that synergy of a Civic Center

3:00:18here would be something I would love to see.

3:00:21And [INAUDIBLE] have talked to me about this,

3:00:23don't oppose that.

3:00:25But it is contingent on finding a temporary location

3:00:29for the library.

3:00:30A temporary location for the library

3:00:32could be one of the vacant storefronts

3:00:34that Melanie is saying was being built along San Pablo Avenue.

3:00:38So we are trying to think of ways that we

3:00:42can fin the type of consolidated land

3:00:44for this type of development.

3:00:47But all of that has to take a backseat

3:00:49to what we're doing this year.

3:00:55We're going to do Ira, and then we've

3:00:57got three more slides that Karen would like to get into.

3:01:00And then we would go back to question 18.

3:01:01I'm trying to understand the mutual aid agreements

3:01:04that the fire department has.

3:01:06So I understand that they're two different things.

3:01:08One is with the state [INAUDIBLE]

3:01:10north to help those big fires.

3:01:14And so say someone goes there to fight a fire,

3:01:19some of our fire people.

3:01:21But then the people who back up have to be overtime.

3:01:24Are we reimbursed at overtime or regular rate?

3:01:28And then the other thing is we have

3:01:30a mutual aid agreement with the local communities around here.

3:01:34And we seem to be fighting a lot of fires in other communities.

3:01:37And I'm wondering if we're getting a fair deal on that.

3:01:40So it's good that we have an agreement

3:01:42but should there be some compensation

3:01:45to El Cerrito for that?

3:01:47Yeah, Ira.

3:01:48Thank you very much for looking at the data.

3:01:51We did receive and [INAUDIBLE] some of this.

3:01:54I'm going to try and set the stage, Mike, for you.

3:01:57In El Cerrito, and I don't know the numbers

3:02:01by the back of my hand.

3:02:02But let's say you have 4,000 different calls in a year.

3:02:08Over 60% of those are still trips and falls, picking people

3:02:13up, basically medical calls.

3:02:16And about 200 in round terms are actual fires.

3:02:22In the 15 years I've lived in my current home,

3:02:26there have been two fires on my street

3:02:28that have done significant damage to the property.

3:02:31No lives were lost, thank goodness.

3:02:34And both of those fires were at the north end of town,

3:02:37and both of fires, there was Contra Costa Fire and Richmond

3:02:40Fire trucks there on the scene.

3:02:42In some cases, Richmond Fire truck was there first.

3:02:44So the concept of mutual aid, and the fact

3:02:50that we've got mostly medical calls

3:02:52and not so many fire calls, and the rest are mutual aid.

3:02:57And that's the concept of what the fire department does.

3:03:00Mike.

3:03:02I'm close enough on this one.

3:03:04The mutual aid, as the mayor has talked about,

3:03:09we're dealing when there's the fire

3:03:12such as last summer, the Kincade fire,

3:03:14and the many fires before that.

3:03:17When we sent personnel out, whether it be on our fire

3:03:20engine, whether it's our fire engine

3:03:22or it's the state-owned engine that we keep here,

3:03:24the OES engine--

3:03:26That's the yellow one.

3:03:27That's the yellow engine.

3:03:29The city is reimbursed 100% for all

3:03:33of personnel that go on that.

3:03:35That is reimbursed at time and a half of our salaries.

3:03:39And on top of that, there's an administrative fee

3:03:42that is put with that.

3:03:44Now, some of the people that go out, two out of every six days

3:03:48they're out as their normal shifts.

3:03:50So they are not here to fill those slots.

3:03:54There has to be two people, or four people,

3:03:56however many people that are hired on overtime to backfill.

3:04:01Those slots are also filled.

3:04:03And the people that are out on the engine in essence

3:04:06are getting their regular wage for those days.

3:04:09So in essence, if we send four people out,

3:04:12the state is paying us time and a half

3:04:15or all of that, plus there is a fee

3:04:18in there to cover their FICA charges

3:04:21and the administrative charges.

3:04:23If we happen to send out one of our own engines,

3:04:26as we have done in the past, they pay for those engines.

3:04:30When our battalion chief goes out,

3:04:32they pay for the pickup as well as their wages.

3:04:37They pick up our meal expenses.

3:04:40They basically pick up the entire expenses.

3:04:43So what we do when we go out to these other entities,

3:04:47is for the most part, it's totally covered.

3:04:51We have to wait a little while to get the money.

3:04:54But the money will come back from us through the state,

3:04:57whether it's a state or a federal fire with it.

3:05:01Now the other part that was brought up

3:05:03is the mutual aid or what we actually refer to as an auto

3:05:07aid that we do with our surrounding agencies.

3:05:11Contra Costa County, or at least with El Cerrito

3:05:15and everybody but Richmond, we are dispatched by the Contra

3:05:19Costa County Fire.

3:05:21Earlier, we were talking about Richmond dispatch.

3:05:23That is for PD.

3:05:27The Richmond Police Department dispatch that we were talking

3:05:31about earlier, that is for PD.

3:05:34As far as fire is concerned, we are dispatched

3:05:37by Contra Costa County Fire.

3:05:39It is a regional dispatch.

3:05:43We are dispatched by whoever is closest to the calls.

3:05:47Our engines are tracked by the dispatch

3:05:50through a computer-aided dispatch system.

3:05:53And so when there is a fire or any type of a call,

3:05:56whatever resource is closest-- it does not

3:05:59matter what city it is, does not matter

3:06:01what uniform we have on--

3:06:03whatever emergency vehicle is closest

3:06:07is going to respond to that.

3:06:09Then some information put out there about how many times

3:06:14we go across the avenue over here,

3:06:17if we're dealing with just fire or if we're dealing

3:06:20with total calls, if you want to look at a 10-year history

3:06:27on it, we responded into Richmond approximately 22%

3:06:31of all of our calls.

3:06:33If we want to look back on just the last couple of years

3:06:36because there has been some major changes in how we are

3:06:40dispatched, and those major changes are--

3:06:43one is priority medical dispatching

3:06:46where we don't respond to every single medical call

3:06:49if it's just a minor slip and fall, no injury.

3:06:53It's just an ambulance call.

3:06:55The other major change that was made--

3:06:57and this is with Richmond and pretty much county wide--

3:07:02I believe we've been doing this for about three

3:07:04years now, three or four years.

3:07:05But there was a time when there was a fire alarm,

3:07:08just somebody turned post and they set off their fire alarm.

3:07:15There was a time where we sent a full contingency-- that's

3:07:18four engines, a truck, two battalion chiefs,

3:07:21a couple PDs, an ambulance.

3:07:23Basically, we sent everybody to it.

3:07:26You get there.

3:07:27It's like, oh, burnt toast, steam out of the shower--

3:07:30whatever-- we turn everybody around.

3:07:33That used to rack up a lot of numbers.

3:07:35That is the reason.

3:07:39Whatever reason-- Richmond probably

3:07:41got a lot more of these.

3:07:43I won't call them false alarms, but false triggering,

3:07:47so what we do in El Cerrito.

3:07:49But since then those numbers have changed.

3:07:532019 based on our last fiscal year, that percentage

3:07:57went down to our calls into Richmond.

3:08:01I went down to 19% calls into El Cerrito and Kensington,

3:08:07which we provide service to is at 74%.

3:08:10The rest of that percentage is what

3:08:12we do for going into Berkeley, going into Tilden

3:08:15Park, [INAUDIBLE],, San Pablo, basically,

3:08:19the rest of the surround-- or Albany

3:08:20also, the rest of the surrounding areas.

3:08:23Keep in mind those agencies, when we need help here,

3:08:27they come to us.

3:08:29We have to rely on--

3:08:33we have to rely on our neighbors to come back to us.

3:08:35What that balance is, how many times they come to us,

3:08:40how many times you go to them, it is a close balance.

3:08:42If it's not, then basically, people are going to get--

3:08:46the agencies are going to get a little upset and saying, hey,

3:08:49we're providing too much one way or the other.

3:08:54Everybody is in agreement on this that it is--

3:08:57we're serving the public the best with the way

3:09:00the system is going with processed resources

3:09:03going out there for it.

3:09:06So hopefully that answered it.

3:09:09We're going to go with Heather, Pam, and then back to Don.

3:09:13Don, right?

3:09:16So I just have a question for the pension

3:09:20obligations for overtime.

3:09:22Does the state pay those pension obligations based

3:09:25on the amount of hours worth?

3:09:26So let's say firefighters from El Cerrito

3:09:29are sent to Kincade fires.

3:09:31And they-- however many hours they're paid by the state,

3:09:35that I'm assuming goes into their pension obligations

3:09:38because it's the amount of hours worth.

3:09:40Is that the state's [INAUDIBLE] as well?

3:09:43Our pension obligations is on our base pay.

3:09:46We do not-- any overtime we make,

3:09:48that does not add to our pensions.

3:09:52We might be a number of years ago,

3:09:54and I think that was probably more with 37 Act county

3:09:58pensions where people used to spike their pensions with

3:10:03[INAUDIBLE].

3:10:04Overtime does not count towards that.

3:10:07So to answer your question, does the state pay for it?

3:10:09No.

3:10:10But neither does the city.

3:10:11That does not-- yeah.

3:10:13It does not go towards it.

3:10:15So to be clear though, the regular salary--

3:10:19so when they're getting paid overtime,

3:10:20they're being paid regular half, right?

3:10:24The pension, the pension obligation on the regular

3:10:26is covered.

3:10:27There is no pension obligation on the half time overtime.

3:10:36While I have the mic, I'd like to thank Greg and Karen

3:10:40and the rest of the staff for this meeting [INAUDIBLE]

3:10:45our input and prep for [INAUDIBLE]..

3:10:48[APPLAUSE]

3:10:54I have a question about the Fire Department.

3:10:58In my experience, when an ambulance arrives at my house,

3:11:03a fire truck also comes to.

3:11:05Can you tell me why that is done?

3:11:13So I mentioned earlier that having family issues,

3:11:15and my parent are both turning 90 this year.

3:11:18And just in this month, they've both

3:11:20been taken out of their home by a Fire Department,

3:11:24[INAUDIBLE] Fire Department.

3:11:26And because of their critical condition,

3:11:28it takes four people to lift them off the floor

3:11:33because that's where they are.

3:11:34And then [INAUDIBLE].

3:11:37And so if it's just the paramedics that's rolling,

3:11:39they would never get my parents off that floor

3:11:43if it's just two people.

3:11:45And so that, from personal experience, there is no way--

3:11:51in some cases, the paramedics would not even participate.

3:11:54They're not strong enough to actually participate in getting

3:11:57my parents off the floor.

3:11:58So [INAUDIBLE].

3:12:03I mean, there's-- that is definitely one reason.

3:12:06I mean, not only the physical lifting--

3:12:08as you know, the majority of the homes in El Cerrito

3:12:11are either uphill or downhill or on an upper hill

3:12:15or on the lower hill.

3:12:16So many, many times you have stairs

3:12:19to transverse with patients.

3:12:21So again, the extra personnel are needed.

3:12:24Biggest reason is the fact that many times, the fire

3:12:28department can get there a lot faster

3:12:31than what the ambulance can.

3:12:33As you are all aware, all of our engines run with paramedics.

3:12:37So we are able to offer advanced life support measures for you.

3:12:42So if we're dealing with a heart attack,

3:12:45we're getting there quicker.

3:12:46Our medics are able to pretty much do-- or not pretty much.

3:12:50They can do everything other than transport

3:12:53that the ambulance can do.

3:12:54And we can get there many times a lot sooner for it.

3:12:59Just real quick-- and that's not what this meeting is about,

3:13:01but just while we're talking about it, anybody who

3:13:04has dialed 911 for a medical, you know how many questions

3:13:09you get drilled, you know?

3:13:11Are they conscious?

3:13:12Are they breathing?

3:13:13Are they bleeding?

3:13:14The whole reason behind that is for the dispatcher

3:13:18to determine if you even need the fire department there.

3:13:21If it's just something that I've slipped,

3:13:24you know, I'm on the floor, I hurt, I'm not bleeding,

3:13:28it's nothing life threatening, many times, just an ambulance

3:13:33is going to show up.

3:13:34If it's uncertain, if it sounds very serious,

3:13:38then you are going to end up with an engine and an ambulance

3:13:41there with it.

3:13:43So it's mainly because it's an unknown.

3:13:46It's because we can get there a whole lot faster.

3:13:50And many times, as the mayor said,

3:13:53we need the extra people to get the patient up

3:13:58and out and to the ambulance.

3:13:59If it's, from that point on, the engine,

3:14:03if we don't have to send somebody in with the hospital

3:14:06or with the ambulance to the hospital, which would be

3:14:09on some sort of a serious-- a heart issue or something

3:14:12where they feel they need extra help in the back.

3:14:14Then the engine goes back into service,

3:14:17and the ambulance goes to the-- the ambulance

3:14:19goes into the transport.

3:14:23John [INAUDIBLE]

3:14:26[INAUDIBLE] thanks.

3:14:28[INAUDIBLE] say I [INAUDIBLE] appreciate the [INAUDIBLE]

3:14:47I have two questions.

3:14:48One is has somebody looked at what we provide as a contractor

3:14:54[INAUDIBLE] universal [INAUDIBLE] contractor

3:15:03[INAUDIBLE] cover the expenses [INAUDIBLE] that's [INAUDIBLE]..

3:15:14Another one is the [INAUDIBLE] this situation

3:15:19is [INAUDIBLE] fires [INAUDIBLE] that are other [INAUDIBLE]

3:15:31to the transport [INAUDIBLE] protection [INAUDIBLE]

3:15:38the city for [INAUDIBLE].

3:15:45That's [INAUDIBLE] I imagine it has to impact on [INAUDIBLE]

3:15:51or just [INAUDIBLE] tires.

3:15:55And [INAUDIBLE] just say what you think

3:15:59is needed as far as [INAUDIBLE] cover [INAUDIBLE]

3:16:04tough situation, and you guys are doing,

3:16:07I'm sure, as best as you can and [INAUDIBLE]..

3:16:12The first thing is a question about fire suppression,

3:16:19[INAUDIBLE].

3:16:21What about the overtime [INAUDIBLE]

3:16:26with [INAUDIBLE] firefighters [INAUDIBLE] north [INAUDIBLE]

3:16:34going to happen [INAUDIBLE] fire [INAUDIBLE] here in the city.

3:16:40[INAUDIBLE] have to call in.

3:16:43[INAUDIBLE] overtime, right?

3:16:46Or you [INAUDIBLE] additional money.

3:16:49Does the state cover that also, or do

3:16:52you guys have to pick it up out of the [INAUDIBLE] budget?

3:16:58I know that they'll cover the [INAUDIBLE] you send out.

3:17:01But [INAUDIBLE] additional [INAUDIBLE] overtime.

3:17:09So [INAUDIBLE].

3:17:11I'll take the easy one.

3:17:13I'll take the easy ones first if I can remember them all here.

3:17:16As far as us sending people out of the city, now again,

3:17:20if we're talking an [INAUDIBLE] to just our surrounding areas--

3:17:23you know, we go to Richmond.

3:17:25We go to Berkeley.

3:17:25You know, we're talking short term.

3:17:28You know, maybe we're there three or four hours.

3:17:32If it's three or four hours, we are going

3:17:34to do move ups if we have to.

3:17:37We're not necessarily bringing people back into the system.

3:17:40When we send people out of county,

3:17:42we know they're going to be gone the rest

3:17:44of the day or week, et cetera.

3:17:47Those people we're bringing back in, yes, the state

3:17:50is picking it up.

3:17:52We're sending four people out on that engine and somebody-- four

3:17:58people either on the engine or back in the station

3:18:01are being paid overtime by either

3:18:03backfill or on that engine.

3:18:05And that is what the state is totally paying.

3:18:08The Kensington-- the Kensington contract

3:18:11that we have been doing now for 25 years,

3:18:14we just signed another 10 year extension on that contract.

3:18:19It's a variable percentage of our budget,

3:18:22at the city's budget, of the city's fire department

3:18:25budget, that they pay.

3:18:26In round numbers, it comes out that they're paying roughly

3:18:29about 30% of our total budget.

3:18:35We have to keep in mind a couple of things.

3:18:37One, that provides an engine that responds into El Cerrito

3:18:42as we respond into Kensington.

3:18:45It is another resource to us.

3:18:47Secondly, the fire district maintains the public safety

3:18:51building in Kensington.

3:18:53They buy their own engines.

3:18:56So they also provide one of our staff vehicles

3:19:00that we have here.

3:19:02So there are some other costs that we normally

3:19:05would have to deal with as far as the El Cerrito stations

3:19:10that we do not deal with in Kensington.

3:19:13So we can argue whether it should be 30 or 33, you know,

3:19:18go back and forth considering the value

3:19:20that the city, the actual El Cerrito city

3:19:23gets from this contract with them

3:19:27and having additional people.

3:19:30Yes, I feel that it is a very fair contract

3:19:34that we have with them.

3:19:36And it's been going--

3:19:37as I said, it's been 25 years we've

3:19:39been getting along fairly well.

3:19:41And you know, and I hope these next 10 years with the option

3:19:47for another five on top of that, you know,

3:19:50it will continue to be a good relationship with us.

3:19:54That station management I think you talked about,

3:19:57does that add to our overtime?

3:20:00It does add some to the overtime because it takes people

3:20:06that we had going up there working

3:20:07with some of the hand, the Cal Fire hand crews that come in.

3:20:11We have people up there burning tiles.

3:20:13They're people that do a number of different functions

3:20:18out there.

3:20:19On top of it, we have a fire prevention officer

3:20:23and our fire Marshal that put in countless hours

3:20:27during the summer.

3:20:29Between El Cerrito and Kensington,

3:20:31we have over 40,000 parcels that we have to go

3:20:35out and inspect every year.

3:20:38And that is 14,000, not 1,400.

3:20:41This past year, which was a bad year for a couple of reasons--

3:20:47one was probably the heavy rainfall.

3:20:49Two is the fact that the council has

3:20:52put a higher pressure on the fire safety

3:20:56is of those 14,000 parcels that we went out and inspected,

3:21:01we processed over 1,300 violations.

3:21:05That's done by the fire prevention

3:21:08officer, which is one person, and the fire

3:21:10marshal, one other person--

3:21:13a lot of work for two people to put out.

3:21:17So we make it happen.

3:21:19They get help in certain areas with the engine crews.

3:21:23But again, we're putting that work out.

3:21:27It is costing us money.

3:21:29This year-- and not this fiscal year we're talking about,

3:21:33but the current fiscal year we're in,

3:21:36of those 1,300 violations out there,

3:21:39we ended that process processing, I believe,

3:21:44more or less 20 properties that we had.

3:21:48And when I say we, the city had to go in and abate.

3:21:51Now the nice thing is we will eventually

3:21:53get that money back through their taxes,

3:21:56through the county.

3:21:56But it is still a chunk of change

3:22:00that the city had to put out for fire safety

3:22:03to get rid of these fire hazards that we could

3:22:05not get property owners to volunteer

3:22:09on clearing their property.

3:22:12But keep in mind, as I said before, there is 1,300

3:22:16properties that were violated.

3:22:19And I won't ask anyone to show hands who got the nastygrams.

3:22:23But if you did get a nastygram last year,

3:22:26before we get into April, do everything

3:22:29you can to get your property--

3:22:32get your weeds mowed, trees trimmed up.

3:22:39Do everything yourself to make yourself

3:22:42as fire safe as you can, OK?

3:22:43It saves a lot of work on us.

3:22:46OK, so it's time check.

3:22:47It's 1 o'clock.

3:22:49I have two people who want questions with Tom

3:22:51and this gentleman [INAUDIBLE].

3:22:53Tom-- Tom and Deborah.

3:22:55And three more slides.

3:22:57And then at that point, we'll have

3:23:00to decide what we're going to do and how much more

3:23:04of a conversation we need to have because it may be prudent

3:23:07at this point to schedule another session like this

3:23:10so that we can continue the dialogue.

3:23:14Some of the slides, we'll discuss

3:23:16some of the new opportunities that are coming up.

3:23:17But we certainly want to deal with the [INAUDIBLE]..

3:23:20So Tom, Deborah, and then Karen.

3:23:28I wanted to make a comment about a dialogue that

3:23:31was particularly captivating for me that

3:23:33occurred a couple of hours ago.

3:23:35And it was with some people in the audience commenting about

3:23:40the need to diversify revenues.

3:23:42And some of them suggested some rather bold moves.

3:23:46And the rejoinder from the city manager

3:23:48was not to disagree but in addition

3:23:51to explain about the constraints that she

3:23:54works under with limited resources here in the city.

3:23:59And it reminded me in my own career working

3:24:02in entrepreneurial companies at times where during tough times,

3:24:07they actually decided to bet the farm

3:24:09and take more risks than ordinary to make investments

3:24:14that might secure the company for the future, which

3:24:16worked out.

3:24:17But things don't always.

3:24:18But it's in the DNA of entrepreneurs

3:24:21to do that kind of thing.

3:24:22And at other points in my career when

3:24:25I worked as an administrator in public sector,

3:24:28[INAUDIBLE] county, where the attention to regulations

3:24:32and to long term commitments really

3:24:35mitigates against that kind of orientation.

3:24:39And it's just quite a balancing act,

3:24:42and I appreciate the constraints of this side

3:24:48and also of perhaps the necessity of at least seriously

3:24:53considering at this point some bolder moves than

3:24:56might ordinarily be [INAUDIBLE] usually in the midst of

3:25:00and maybe because of tough times.

3:25:03And I just would like to offer suggestions for how politically

3:25:07that could be feasible to a public entity like El Cerrito

3:25:13which I have been a resident of for 25 years,

3:25:15And that would be to invest a little bit in some consultation

3:25:20and in the analysis of a project that might have a good chance

3:25:28of payoff with some investment that

3:25:31might require a bond or taxes.

3:25:33So it might require us to have skin in the game for this.

3:25:37And every step along the way to have some sort of town hall

3:25:42meeting like this so that people are apprised of the situation

3:25:46and informed about the risk reward of a possible investment

3:25:50and a bolder move to attract more business into El Cerrito

3:25:54that I think would then attract higher

3:25:56price values for properties and more people here as well.

3:26:00So it could have a real [INAUDIBLE]..

3:26:04But it will take some risk.

3:26:06And it's not something that I think

3:26:07the city manager can do and mayor

3:26:10without the political will of the residents.

3:26:13And so having dialogues like this and meetings

3:26:16to bring all of us and then have us help with making

3:26:19the choices, the decision, I think

3:26:22that's the way politically to go in a public sector environment

3:26:25with a bolder move like this.

3:26:28So that's a suggestion I will just offer.

3:26:31And it's a very good one, thank you.

3:26:33Thank you, Tom.

3:26:35Deborah, and then we're going to go to Karen.

3:26:37We'll get through questions after Karen

3:26:39finishes the three slides.

3:26:41She got interrupted on this slide.

3:26:42Right, OK.

3:26:43This is our-- to go back to the prior slide just one second.

3:26:48[INAUDIBLE] is that better?

3:26:49Yeah.

3:26:49Thanks.

3:26:50So I'm looking at this, and I'm getting really scared.

3:26:55And I think that there's another part of this, which is CalPERS

3:26:59is actually reducing its earning assumption to 6%, which is,

3:27:03if this is based on 7, that's going

3:27:05to make this even worse, right?

3:27:07So I'm looking at this pig in a python,

3:27:09and I want to cry, which I'm sure that you

3:27:11probably do as well.

3:27:13And there are great suggestions for how to get $100,000 raised

3:27:18property values, which would be great if anybody would

3:27:21actually sell their houses.

3:27:22But I think that's a little hard [INAUDIBLE] city.

3:27:25So I know we're at sort of our time limit, but $100,000

3:27:30here or there, getting property values up-- those services

3:27:34that we have are absolutely [INAUDIBLE]

3:27:35critical to the people here.

3:27:38I just wanted to kind of fast forward maybe

3:27:42to what is the zero options.

3:27:46I don't see [INAUDIBLE] office space on San Pablo, if we're

3:27:54lucky enough to get it on our side, being the solution

3:27:57any time soon.

3:27:59I think what are we even talking about?

3:28:02That's kind of my question.

3:28:04So everyone, thank you all for being here.

3:28:06I mean, it's been three plus hours of discussion.

3:28:10So I appreciate that.

3:28:11But Deborah, the charts that showed 10, 15 years of us

3:28:16getting into this problem.

3:28:19As much as I'd love a library within the next five years,

3:28:22it's going to take us 10 to 15 years

3:28:25to get out of this problem.

3:28:27So it's not a--

3:28:30as you were saying--

3:28:34and Melanie has said this also, and I think some of you

3:28:38pointed out the fact that a $40 million

3:28:41reassessment of a property is only

3:28:43going to generate a limited amount of revenue for us.

3:28:46This is going to be a sustained effort.

3:28:48And whether it's Tom's ideas, or Denise's ideas, or Greg's ideas

3:28:53about focusing and taking bold move and being innovative,

3:28:57those are not going to happen overnight.

3:28:59And frankly, in 2014, we were innovative

3:29:03when we passed the San Pablo Avenue Specific plan.

3:29:06So the city was not completely averse to that.

3:29:10And we are going to have more meetings like this, where we're

3:29:13going to give opportunities for people

3:29:14to give us those bold ideas.

3:29:16Today's scope was to give us the basic dialogue

3:29:21around the city's budget and economics

3:29:23so that we could have some of the more

3:29:25complex conversations like economic development

3:29:28and revenue choices.

3:29:30Just to throw out some revenue choices--

3:29:31I've thrown out one already, which is [INAUDIBLE]

3:29:35these are all diversifications.

3:29:37[INAUDIBLE] BART fees, parking, parking meters which

3:29:41would require us to [INAUDIBLE] capital investment

3:29:44to put parking meters in.

3:29:47Those are some of the things that are diversifying

3:29:50our revenue streams.

3:29:53At the San Francisco airport, parking is

3:29:56their number 1 revenue stream.

3:29:59BART-- and I don't know if [INAUDIBLE] is still here--

3:30:02that BART parking is one of their major revenue streams.

3:30:06So just to throw those two out there.

3:30:09They're not popular.

3:30:10But they are potential diversification

3:30:13of revenue stream.

3:30:15Did you want to respond to Deborah's question,

3:30:17or [INAUDIBLE] the slides?

3:30:18Actually, I'll do a little bit of both.

3:30:22Because the other side of that equation is cutting expenses.

3:30:26And that's the part that none of us want to talk about,

3:30:29myself included.

3:30:31If you date all the way back to the recession,

3:30:33one of the choices that we made at the time--

3:30:36and I'll just start this conversation

3:30:37by saying hindsight is 20/20--

3:30:40but at the time, the city council, the city staff,

3:30:43we chose to dip into reserves instead of cutting

3:30:48services and laying people off.

3:30:51And at the time, we were proud that we

3:30:52were able to try to do that.

3:30:54And, you know, again, when you were mayor, Council Member

3:30:59Pardue-Okimoto, we can maybe question that now, because that

3:31:03is part of why we're here.

3:31:04We did take those--

3:31:06we did take a lot of steps.

3:31:09For example, at the time the city was paying--

3:31:13in the pension, there's two different calculations.

3:31:16There's the employer's share and the employer's share,

3:31:19the city's share.

3:31:20At the time, the city was paying both when the recession began.

3:31:24It is now where every employee is paying fair share.

3:31:27So that has changed.

3:31:28That was a benefit we used to offer.

3:31:30We don't offer that anymore.

3:31:31We had furlough days for non-safety members.

3:31:35We held about a 20% vacancy rate for a few years.

3:31:39But non-sworn or not--

3:31:42I'm sorry, unrepresented employees that work here

3:31:47didn't get a merit increase or a cost

3:31:49of living adjustment for probably three or four years.