Regular City Council Meeting April 21, 2020

0:13:13And you know allow out Greg an army how we can hear you.

0:14:24I'm on the phone my have an echo on my camera doesn't work.

0:14:30So I'm sorry.

0:14:31You probably had to two meetings on make sure your computer

0:14:40is muted that better try.

0:14:52Now I think I may fixed it.

0:14:53Paul can you say something again.

0:14:56Hello And there's still an echo on here.

0:15:00I only had one I could try one more time for me.

0:15:12Paul There we go.

0:15:20There's still feedback for you.

0:15:35In hear me now we can but there is still an echo.

0:16:02Hello doesn't Can you hear me.

0:16:17We can hear you.

0:16:20You know what Holly you have a little bit

0:16:22of an ego to actually do I. OK.

0:16:25Before we get started I'm going to just call it on my phone

0:16:28then don't I'm sorry You're doing well.

0:16:44Paula we can hear you fine now.

0:16:47You can.

0:16:48Yes there's not an echo no slight lag but not an echo.

0:16:55Oh OK.

0:16:58And is that is that on my computer or on my phone

0:17:02I'm dial Linda the phone.

0:17:04I hang up the phone Me.

0:17:10Well you should mute maybe your computer.

0:17:12Can you meet your computer it's on mute now.

0:17:16It is.

0:17:17OK Can someone can find they can hear me I can hear OK.

0:17:52Thank you.

0:17:53Yes.

0:17:53Paul you want to try one more time.

0:17:56How long can you before he does can you

0:17:57mute his computer which is the one that says Pete

0:18:00fidelity Yes.

0:18:03OK.

0:18:04It's needed right now.

0:18:05Android phone and by trying to name names for me

0:18:15Paul there's still a lot of feedback.

0:18:17The other thing.

0:18:17Good try to turn off the sound on your computer.

0:18:21Not just meeting the microphone but actually muting

0:18:24the sound on your computer.

0:18:26I think that's what's causing the feedback OK.

0:18:38There you go.

0:18:40That's that takes it perfect.

0:18:41That's the hurricane Here you go.

0:18:43Oh good.

0:18:43But no I'm not on screen is that right.

0:18:47No.

0:18:49OK.

0:18:56Paul can you see us on the screen.

0:18:59I can see your Yes and I have the agenda

0:19:02and I see the box too I see Greg so so you go if you go down

0:19:06to the bottom see if your camera is

0:19:09muted my camera is faded it's got read it well

0:19:20it's not red Oh OK.

0:19:22Think that was Mary Yeah yeah.

0:19:28My echoing I'm going I'm going.

0:19:30Yeah.

0:19:30Yes you got it.

0:19:32OK I'm just going to use my phone

0:19:42but I'll let you we're ready to start.

0:19:48Yeah.

0:19:48I have good sound but no visual and you can see the screen

0:19:55you can see the presentation correct I see the city

0:20:00council agenda Excellent.

0:20:03Yeah that's where we're at.

0:20:05Yes.

0:20:06They're taking your the Echo is not there for now

0:20:08so we can hear you down.

0:20:11Thank you So I think and Mayor we are.

0:20:17If all of the council members have come back from our break

0:20:19with Tish the lead they have are still waiting for Janet leave.

0:20:27And Greg I'll just need a yell to get recognizes that Ed.

0:20:31there.

0:20:32Yes well I'll make sure I come to everybody

0:20:34on a routine basis.

0:20:36OK.

0:20:36Thank you Can you hear me.

0:21:16This is Janet.

0:21:18Yes.

0:21:19Oh OK.

0:21:21Because I thought I was OK.

0:21:23And then you said everybody was there.

0:21:24But I've been there a long time.

0:21:26OK.

0:21:26I was waiting for your camera to be turned on indicate.

0:21:30So on OK.

0:21:36OK.

0:21:37Excellent.

0:21:39At this point no one would see me.

0:21:42I'm you're not like like before You're not on my front page

0:21:46so I can't tell if your camera's on or not.

0:21:48You're now ON MY.

0:21:50YOU'RE ONE OF MY LITTLE PEOPLE ON THE LINE OF PEOPLE.

0:21:53Excellent I will I will wave to you.

0:21:56Hello All right.

0:22:00I don't know the April 21st regular meeting

0:22:04of the Swedish city council is called to order at 7 eleven.

0:22:09Will the City Clerk please call the roll man or lineman

0:22:16and present Farnborough Kent for Delhi.

0:22:21Council member Ableton.

0:22:22Present council member party with Moto

0:22:26present no Quito doesn't we have a quorum.

0:22:33Excellent So before we begin I will report out

0:22:36from our special city council meeting of six

0:22:39o'clock this evening.

0:22:41Public comments that were received regarding

0:22:43the special meeting agenda items were provided to the city

0:22:46council in advance of convening to close section

0:22:49and we'll be posted online as supplemental materials.

0:22:52We met with our labour negotiators and we provided

0:22:55guidance to the Labour negotiator as well

0:23:00as additionally we will be pulling item seven C tonight

0:23:06and we'll be hearing at a future date to determine

0:23:12with that we'll move on to item 1 teleconference

0:23:16and public comment.

0:23:17Instructions City Clerk would you like to provide

0:23:21tips and instructions.

0:23:24Well thank you so much Mayor.

0:23:26I just have A reminder now that this is not our first meeting

0:23:29on WebEx but for city council members

0:23:31and staff participating directly through

0:23:33the teleconference platform.

0:23:35Please remember to keep your microphone commuted

0:23:37whenever you are not speaking any web cameras that

0:23:40are enabled will be visible on the public livestream

0:23:44and except for direct chat to me as the host

0:23:47for technical issues.

0:23:48Please do not utilize the chat feature if you wish to speak.

0:23:52Please use the right hand function

0:23:54by hovering over your name on the participant list

0:23:57and selecting the hand icon to raise your hand

0:24:00after you speak.

0:24:01Please select the hand icon again to lower your hand.

0:24:05For those calling in the phone only

0:24:07you will not have these features available to you

0:24:09but can verbally request the mayor for permission

0:24:11to speak for members of the public who

0:24:14are participating from home.

0:24:16The period for submitting public comments

0:24:18will remain open until announced prior to the City Council

0:24:22taking action on an applicable item

0:24:24submitted comments will be read into the record comments

0:24:27for items not on the agenda on the consent calendar

0:24:30and presentation item will all be heard during agenda item

0:24:34number three oral communications from the public

0:24:37all other comments will be heard at the time

0:24:39the agenda item is discussed.

0:24:42Comments can be submitted one of two ways via email

0:24:45to city clerk at C I dot E L dash the Rito that C A that U S

0:24:53or by voicemail at 5 1 0 3 0 6 2 5 5 8 when submitting comments.

0:25:02Please be sure they are identified in the subject line

0:25:05or stated in a voicemail as public comments

0:25:08not on the agenda or public comment followed

0:25:10by the agenda item number.

0:25:12Please also include your name and city

0:25:14of residence For the record.

0:25:16Please note that all information provided in public comments

0:25:20including phone number called with email

0:25:22address or any other personal information written or stated

0:25:26is subject to disclosure on the broadcast

0:25:28of the telephone conference meeting following the meeting.

0:25:32All comments read into the record

0:25:33will be posted online supplemental material

0:25:36and will have personal information redacted.

0:25:39This completes my instructions for the meeting.

0:25:41Mayor.

0:25:42We are ready to move on to the next item Great.

0:25:45Thank you.

0:25:45That's item 2 council staff communications At this point

0:25:50I will find out if there is any staff announcements

0:25:53or communications.

0:25:55Sure.

0:25:55Thank you Your Honor.

0:25:56I just wanted to give a very brief overview of what the city

0:26:00has been working on in the past couple of weeks

0:26:03since our last meeting with regard

0:26:04to the current health order.

0:26:07I know that I've been putting this information out

0:26:10in my city manager update which is

0:26:12also available on our website.

0:26:14The latest issue that we are working on is staff

0:26:18and that we are dealing with is that the county has put out

0:26:20a new revision to their health order requiring face coverings

0:26:25and so that means that goes into effect

0:26:28as far as enforcement enforcement tomorrow

0:26:33April 22nd.

0:26:35If you are in public and you work at an essential business

0:26:39you are inside an essential business like a grocery store.

0:26:43If you visit a health care provider

0:26:45or you're in line or riding public transportation

0:26:49you need to be wearing a face covering of some sort.

0:26:51Whether it's a spa or a bath and so I just want to make sure

0:26:57that everyone understands that those effect Morrow.

0:27:01We have not received much other information as far as

0:27:05from the county health office.

0:27:06As far as whether or not the health order

0:27:09will be extended past May 3rd we do expect that they will.

0:27:13But we haven't heard that yet.

0:27:16But we are preparing for that possibility I just

0:27:20want to remind everyone that our city playgrounds our picnic

0:27:24areas our tennis courts our fields are closed

0:27:27per the county health order.

0:27:29I've been walking around the neighborhoods

0:27:31and I've been seeing everyone very doing really

0:27:34well with social distancing wearing masks

0:27:38so I just want to thank the public or law

0:27:41abiding by all of these regulations that

0:27:44have come down from the county.

0:27:46I'm sure my police chief would be the first to tell you

0:27:49that we're not we don't want to be the social distancing police

0:27:52so we're really happy that we have had such a great response

0:27:56our community who are doing what they're supposed to be doing

0:27:59staying at home and Saving Lives Again for those people who

0:28:03have business with the city encourage

0:28:05you to call us or e-mail us.

0:28:08Most of us are working from home every single day.

0:28:11There's very few people in city buildings.

0:28:14Again with respect to the county health order

0:28:17and we will get further into some of these details

0:28:20later but again I just wanted to remind the community about face

0:28:24coverings and thank them for all of their compliance

0:28:27with the health order and and and how

0:28:30we're all working together.

0:28:31So thank you Your Honor.

0:28:33Great thank you.

0:28:36Council member reports I have a brief follow up here.

0:28:49We can hear you.

0:28:50Go ahead or you can hear me OK.

0:28:52The I am in a category of people.

0:28:58Which is supposed to not leave the house very often

0:29:04and be especially vigilant about coverings and so forth.

0:29:09And what I've been discovering as I

0:29:11went around the small amounts that I did is that they aren't.

0:29:14There are no provisions for people in those categories

0:29:18to ever obtain any of those coverings from the usual place

0:29:23that one could obtain them that they're

0:29:25all going to some other place.

0:29:28So for example you go to CBS you can't get either maps

0:29:33or anything to cover your hand and I was wondering

0:29:38if that concern could be passed along to the county

0:29:43when you go to your meetings.

0:29:44Karen yes certainly thank you.

0:29:50Mm hmm.

0:29:54Any other cultural reports Paul sadly I just go on

0:30:01to say that I was a god involved with the call

0:30:03in with the supervisor joy and Buffy

0:30:06Wicks our assembly woman on the update for the county

0:30:10coveted 19 and they gave him much of the information

0:30:13that Karen just gave and then also I was on a webinar

0:30:16last week with the American Council for Energy Efficiency

0:30:20Economy dealing with climate change

0:30:22in the time of on a virus.

0:30:26So thank you.

0:30:27And Councilwoman Kita I see your head at.

0:30:30Thank you Mayor.

0:30:32Good evening everyone I was content with our caucus and a

0:30:36to Sunday's office Many of our small businesses

0:30:40have reached out to me and the Chamber regarding

0:30:45the small business school.

0:30:48As you know on the federal level it was just passed in Congress

0:30:55so hopefully on Thursday it it will be all signed and approved

0:31:01so we're hoping that these small business loans will

0:31:06be sent to small cities like else

0:31:09read out their small businesses.

0:31:11So Mark the Sun News office will have

0:31:15a small business webinar Town Hall on Friday

0:31:19April 24th at 2:00 p.m.

0:31:22And we're going to have an introduction by a special guest

0:31:27over a member of Congress former Congressman George Miller

0:31:32and he will be part that small town.

0:31:36The webinar business town hall that will be on Friday.

0:31:40So I want to thank Sandel scales fund congressman

0:31:45to Sunday's office and she's been getting

0:31:48all the phone calls as well.

0:31:50And I want to thank our our chamber for sending notices

0:31:54out this afternoon about this event

0:31:57so I'm hoping our small businesses

0:32:01take this webinar and and learn what is available

0:32:05and how this can possibly help your business.

0:32:09Right now so but I know many you have been calling me

0:32:14and I know where it's been very frosty

0:32:17seeing a lot of these banks not returning phone calls.

0:32:23But I know that this is going to start up once again

0:32:28and hopefully it will be signed by the president

0:32:31and we can go forward sometime on Friday

0:32:35That's my report right.

0:32:37Thank you.

0:32:38Council member Purdue Okamoto Yes I am.

0:32:42I wanted to report out on a call I was on yesterday

0:32:46with the National League of Cities

0:32:49and wanted to help all of our residents put into perspective

0:32:55Briefly and we're going to talk about it a lot more

0:32:57tonight where we are budgetary wise.

0:33:03We had a crisis and then we have a crisis on top of a crisis.

0:33:08We have our free current pre corroded budget

0:33:12and then now we have to work on our post

0:33:14Corona budget which is going to be more cuts coming up.

0:33:20But just to put into perspective the timeline a bit

0:33:25we did have projected budgetary shortfall.

0:33:31We were in the black half a million dollars doing well

0:33:37before this all hit us not as well as we should be

0:33:41but at least in the black and we put together

0:33:45a plan with the city manager to cut two million dollars

0:33:50effective with the next budget which would be in July

0:33:55and so things were looking good.

0:33:57Then the corona hit and now we have to rethink

0:34:00what we're going to do.

0:34:02Our budget shortfall is going to be higher

0:34:04due to decreased revenues which is

0:34:07still uncertain at this point.

0:34:09But projected to be close to four million dollars

0:34:12and we're going to discuss that more later.

0:34:15But the good news is I wanted to mention that we're

0:34:19not a city with a lot of debt.

0:34:22And from being on the call we we had put things into place

0:34:28right now where we were going to get ourselves back on track.

0:34:31Well now we're in the boat with 70 to 80 percent of cities

0:34:37across the nation that are experiencing

0:34:40extreme revenue deficits due to the corona virus.

0:34:45So while we were our low reserves

0:34:49made us unique the fact that we are having a budgetary crisis

0:34:54right now is across the board with 70 to 80 percent

0:34:58of the cities all across the entire United States

0:35:02that we're on this call.

0:35:04And if you've been paying attention

0:35:07to what's been going on in the news

0:35:09the cares Bill that was passed it did provide

0:35:12some relief for some folks.

0:35:14But as far cities are concerned it only provided relief

0:35:17to cities that have over five hundred

0:35:20thousand people in population.

0:35:24What was passed today by the Senate was a four hundred

0:35:27and eighty dollar interim stimulus which fortunately

0:35:32would go to small businesses and hopefully

0:35:36our small businesses here and El Serato

0:35:37will be able to obtain that.

0:35:40But it also still needs to pass the House a point of contention

0:35:44that when the bill is that there there was no help for what

0:35:49you'll see in the news as the states

0:35:51but the states also included cities unfortunately

0:35:56or it's the state.

0:35:57In addition the Senate bill did not not have ever have nor does

0:36:02it have any relief for small cities

0:36:05There is a bill still brewing in the House for two hundred

0:36:10and fifty billion dollars which would provide really funding

0:36:16for local governments such as US and we are trying to

0:36:21and that is the National League of Cities

0:36:23which we're a member of the League of Cities California.

0:36:26And so therefore part of the National League we are lobbying

0:36:30to have relief for small cities and that would

0:36:36in this current bill in its current language

0:36:38have some relief for cities less than fifty thousand people

0:36:45problems still with this bill though is loss of revenue which

0:36:49is covered related and we are currently

0:36:53trying to lobby them to include loss of revenue

0:37:00as it related so that is still in the works.

0:37:04It could potentially provide our city with some relief

0:37:08although at this point we certainly are counting chickens

0:37:12before they're hatched.

0:37:16So if you're more interested in learning more about this bill

0:37:20or how to advocate for it so that our city can have

0:37:24some more money H.R. sixty four sixty seven

0:37:28is the number of the bill.

0:37:30And that concludes my report.

0:37:33Actually that is a excellent opportunity for me

0:37:35to give a couple things to announce

0:37:37but it's an excellent opportunity for me

0:37:38to bring an item that you asked for us to consider on May 16th

0:37:44after the agenda was published.

0:37:46City staff became aware of a request from the league

0:37:48California cities for letters of support for H.R. sixty four

0:37:52sixty seven Coronas corona virus community Relief Act which

0:37:57would provide emergency federal financial support

0:37:59for local governments.

0:38:01At that point the agenda for this meeting

0:38:03had already been published because of the speed at which

0:38:06federal legislation is moving There is a need an urgent need

0:38:10to send a letter of support for this bill

0:38:12before the next city council meeting

0:38:14under government code section 5 4 9 5 4.

0:38:18Point to be to the Brown Act allows for the addition

0:38:22of an item to the agenda when there is a need

0:38:25to take immediate action and the need for action

0:38:29came to the attention of the city

0:38:31after the agenda was published.

0:38:33A two thirds vote of the council is required

0:38:36to put it on the agenda.

0:38:38I would request that a member of the council move

0:38:40to make these findings and add an item to the agenda

0:38:44authorizing me to sign a letter in support of H.R. sixty four

0:38:48sixty seven moved by came to an end.

0:38:53Rochelle Pardue Okamoto and seconded by April sun

0:38:58we get a roll call vote to put this agenda item.

0:39:01Put this on the agenda mainlining yes.

0:39:06May I present Delhi.

0:39:09Yes council member able Singh Yes council

0:39:13member party Okamoto yes.

0:39:17Council member Kito Yes.

0:39:20Carrie great thanks.

0:39:22We now have the consideration of H R

0:39:25a letter of support for H.R. sixty four six seven

0:39:28on the agenda.

0:39:31The we take that up at this time Is that advisable since we've

0:39:37already discussed it.

0:39:39Yes I would.

0:39:40I would suggest that taking a vote on the action now as well.

0:39:44Excellent So good option to approve the item.

0:39:48Excellent.

0:39:49Second by motion by Ables and seconded by Quito all those

0:39:53in favour please say oh sorry can you please have

0:39:55a roll call vote for the approving

0:39:58the motion to write a letter.

0:40:03Mayor Lyman yes.

0:40:05May I present to Delhi.

0:40:07Yes.

0:40:08Council member Ableton yes.

0:40:11Council member Pardue Okamoto yes.

0:40:15Council member Canto yes.

0:40:18Smashing carries.

0:40:19Right.

0:40:19Thank you.

0:40:21Still in item number two I believe we are right in.

0:40:26Council will go to.

0:40:29I want to remind everyone about the census.

0:40:32It's April.

0:40:33The census is ongoing.

0:40:36The statistics I saw just the other day

0:40:38say that 60 percent of El Cerrito

0:40:41has participated in the census.

0:40:43But we need to have everyone counted so that we can reap

0:40:48the benefits of those funds that are appropriated

0:40:52associated with population.

0:40:54I'm going to give a special heartfelt thanks

0:40:57to our frontline workers both first responders and essential

0:41:01workers that are working in those businesses

0:41:03that are supporting Spanx grocery

0:41:06stores sexual businesses we wouldn't be able to have

0:41:11the little semblance of normal life

0:41:14we have without those people's selflessness.

0:41:17So thank you to those people.

0:41:19Tomorrow is Earth Day.

0:41:21I know we did not have an opportunity to celebrate Earth

0:41:24Day with a work party but I certainly

0:41:27want to recognize Earth Day and understand

0:41:30that it's an important component of our culture here.

0:41:33Burrito.

0:41:34And finally Karen thank the chamber.

0:41:37I want to also thank the chamber.

0:41:39They are an important partner with us in dealing

0:41:43with the current crisis.

0:41:44And so I want to thank them for all of their actions

0:41:48they've stepped up during this crisis

0:41:49to stay in touch with our businesses

0:41:53and we really appreciate what they're doing

0:41:55and what support they can offer guiding information

0:41:58to help people to subvert survive

0:42:04through this suffering period.

0:42:05Thank you All right.

0:42:12At this point we will move on to item three item three

0:42:15is all communications from the public at this time

0:42:20the period for submitting public comments regarding matters

0:42:23not on the agenda on regarding consent items and presentation

0:42:28items is closed.

0:42:31I will ask the city clerk to proceed at this time

0:42:40think Thank you Mr. Lyman at comments that were received

0:42:45by 12:00 p.m. today were posted on the city's Web site

0:42:48and supplemental material and provided directly

0:42:50to city council members in advance of the meeting this

0:42:53includes comments received by the following individuals

0:42:57regarding public comments not on the agenda.

0:42:59Gary Prost Avon Ben Irish Cher now Debra Saunders Rebecca Nya

0:43:07Sue Duncan Bernhard junior reset Mimi Donald Simon and Janice Wu

0:43:16public comments on consent.

0:43:17Item four C were received by Al Miller and Michael Fisher

0:43:22and comments on presentation.

0:43:24Item 5.

0:43:25A legacy by Ira.

0:43:27Share now in addition to these comments

0:43:30we have received nine additional submissions for public comment

0:43:35regarding either items not on the agenda

0:43:38on the consent calendar or presentations tonight.

0:43:42The mayor does have the discretion

0:43:43to reduce the three minute time limit per person mission

0:43:46as well as limit the total time allotted for public comment.

0:43:50Mayor Lyman Can you please confirm the amount of time

0:43:52per speaker and if you wish to limit the total time

0:43:57are you able to do two and a half minutes per person.

0:44:01I believe I can name yes Excellent.

0:44:11Let's go ahead and do two and a half that would

0:44:13that should conclude as just over 20 minutes.

0:44:22Yeah.

0:44:24To our Oh thank you to our lives I probably

0:44:30would have gone on to that but I don't think that's a good idea.

0:45:10OK there we go.

0:45:12OK.

0:45:12So I will proceed with reading public comments at a two minute

0:45:16and 30 second time limit per submission.

0:45:19We will start with comments 54 items not on the agenda

0:45:25and I will start the timer now a public comment

0:45:30received from Nick Zambrano at the last city

0:45:34council meeting of April 7th two thousand twenty.

0:45:37I proposed to billing health insurance plans

0:45:39for e m s first responder calls an ambulance transport

0:45:43on the subject of creating new revenue sources

0:45:46for budget deficit relief.

0:45:48There was some discussion on this subject.

0:45:50City manager responded that they were looking into it which

0:45:53I interpreted to mean that there was a significant possibility

0:45:56of this happening.

0:45:58There was nothing in the agenda items

0:46:00however that addresses billing for EMR

0:46:03or that if it was even considered I again

0:46:06am asking that the City Manager and City Council consider this

0:46:09as a source of new revenue that could

0:46:11bring in hundreds of thousands of dollars

0:46:13into the city coffers.

0:46:15Any money is generated from billing for even mass should be

0:46:19exclusively committed to funding Strategic Plan service

0:46:22priorities such public safety emergency preparedness

0:46:26and schools education.

0:46:28I.e. library hours.

0:46:30There should also be a financial commitment

0:46:32towards increasing funding for the fire department.

0:46:35Vegetation Management.

0:46:36Fire prevention mitigation program

0:46:39that could be implemented on a year

0:46:41round basis and not just during the summer months.

0:46:44Submitted by an exam Orono make L3

0:46:47Reno fire you starting a time limit for the next speaker.

0:47:04Starting now knitted by Robin Mitchell.

0:47:07Dear mayor.

0:47:08Council members and city staff Here is my request.

0:47:11I ask for the city council make a recommendation that the seat

0:47:15be allowed to meet virtually possibly

0:47:17multiple times a month unless it is possible to meet

0:47:20in person again.

0:47:21The timing could be such that staff

0:47:23would have to take extra time.

0:47:25Maybe it could be in late afternoon instead of evening

0:47:28and they could be shorter and confined

0:47:30to very specific topics.

0:47:32I think it is critical that the each

0:47:33you see take on a larger role in determining

0:47:36the city's solution to CO2 reduction

0:47:39because time is of the essence.

0:47:41Here is my thinking I know that the city council and staff are

0:47:45all dealing with several serious issues

0:47:47now including the financial health of the city

0:47:50and the pandemic we are experiencing which makes

0:47:54the financial situation worse.

0:47:56I know that these issues require your complete attention however

0:48:00and even more dire fate awaits us in the form of climate

0:48:03change which makes this pandemic pale

0:48:06in comparison in terms of how it will affect our society.

0:48:10I know that even though you can't imagine having to deal

0:48:13with yet another important and serious issue

0:48:16I know I feel that way.

0:48:17I think we somehow need to keep the issue of climate change

0:48:20front and center in every everything

0:48:23the city does this means continuing to make progress

0:48:26on revising the city's climate action plan

0:48:29and continuing to make progress in the City Council

0:48:31subcommittee on climate action.

0:48:33These members are Greg Lyman and Janet Abel.

0:48:37I know that city staff has said in the before time that

0:48:40revising the CHP will take up to two years to complete

0:48:44and with the new budget cut it might take even longer.

0:48:47I believe that is why the city council climate action

0:48:50subcommittee was formed to determine actions

0:48:52the city could take before the CHP is revised that would move

0:48:57closer to their presumed goal of net zero emissions

0:49:01by 2045 which is the goal of the state of California.

0:49:05I suspect the subcommittee hasn't been

0:49:07able to make much progress.

0:49:08Given the current financial crisis as well as

0:49:11council person able since absent due to health

0:49:14issues my proposal would be that the city give the Environmental

0:49:18Quality Committee some of the work

0:49:20that both staff and the City Council subcommittee

0:49:23would have been doing but don't currently have the bandwidth

0:49:26to take on the QC members comprise

0:49:29some of the best talent in the East Bay in terms

0:49:31of knowledge of climate change issues and solutions

0:49:34to reduce emissions.

0:49:36If they were able to take on this challenge

0:49:38and actually produce those recommendations themselves

0:49:41I think the city could make significant progress

0:49:43on CO2 reduction solutions and not burden

0:49:46that that concludes the time for that public comment.

0:49:54The next submission is starting now Also not on the agenda.

0:50:01City council as a resident of Eldorado

0:50:03who grew up in this city and has come

0:50:05back to raise my family here.

0:50:07It's extremely distressing to learn

0:50:09about the financial issues plaguing the city.

0:50:12I urge the city council to start making the cuts necessary

0:50:15now not later this year.

0:50:17I know this will mean difficult choices including layoffs

0:50:21but by delaying these decisions we put the city on a very

0:50:24possible path to insolvency.

0:50:26As someone who lived in the layoff during their bankruptcy

0:50:29This is not something I want to see our city go through.

0:50:33Considering the current pandemic and economic pain

0:50:35the world is going through.

0:50:37We cannot rely on new revenues streams to get us out of this.

0:50:42Services will have to be reduced and we

0:50:44need to focus on just the most essential

0:50:46services health and safety.

0:50:48Please be brave and make the painful cuts now

0:50:51that we do not continue to dig ourselves a digger ditch

0:50:54than the one we're already in.

0:50:56Sincerely Karen Long maybe begin next public comment now

0:51:09submitted by Barbara chain It is interesting to see

0:51:14that the fears of an invisible virus

0:51:16impelled millions of people around the world to radically

0:51:19change their behavior while people were willing to tolerate

0:51:22increasing toxic air pollution toxic chemicals in water

0:51:26and soil and rising sea.

0:51:28And yet as a result of FIP the air

0:51:31is usually polluted the air is usually polluted regions

0:51:35like L.A. or Taj Mahal and even our bay area

0:51:39is clear as a result of less driving

0:51:41and manufacturing emissions.

0:51:43The reader once prided it prided itself on being a green city.

0:51:48Now it is a city in the red while we

0:51:50act to pull ourselves out of the financial hole

0:51:52we find ourselves in.

0:51:54I urge the council and staff to incorporate climate emergency

0:51:57action to drastically reduce our g h g impact

0:52:01along with financial impact.

0:52:04We do not have to reinvent the wheel.

0:52:06We can follow our neighbors like the city of Alameda and Albany

0:52:10who adopted their climate plans months ago.

0:52:12It is beyond time for the reader to take bold systematic action

0:52:16for our environmental and financial stability

0:52:19and included our links to resources on the Alameda

0:52:24and in Albany website And moving on from items not on the agenda

0:52:33to item on consent to start the next one

0:52:38now submitted by George Gauger council members.

0:52:42My name is George Gauger and my family

0:52:44has lived in Eldorado for 14 year as a member of the Arts

0:52:48and Culture Commission.

0:52:49I have heard suggestions that the council might

0:52:51be considering the use of some portion of the city's art fund

0:52:55to pay for ongoing library services.

0:52:57Libraries are beautiful places but they

0:52:59are a risk filled luxury that we cannot afford to spend.

0:53:03Our few remaining resources on the fund

0:53:06is also a wonderful luxury.

0:53:08But if it is going to get spent for some alternative purpose

0:53:12why not make it a very low interest loan

0:53:15so that the money can come back to entertain

0:53:17us some time in the future.

0:53:19Today the city must preserve its precious resources

0:53:22so that it can protect the health

0:53:23and safety of its residents.

0:53:26At the time the council at the same

0:53:29that council must balance the budget now

0:53:31to ensure that they will have the time

0:53:33to identify and implement a viable plan for their future.

0:53:37There are also federal and state funding resources that Eldorado

0:53:41can pursue not just for library but for our seniors

0:53:44our health services our child care facilities

0:53:47and the other needs of our great city.

0:53:50Change the focus of our economic development committee

0:53:53planning Restaurant Week to taking the state and federal

0:53:56funding we to reduce the costs of these programs

0:53:59to the city Beginning next comments submitted by Al Miller

0:54:10Mayor Lyman pretend FDLE council members able

0:54:13then Pardue Okamoto and Cato please

0:54:16correct my error in the second paragraph of my comments.

0:54:18This agenda item sent earlier today that program.

0:54:22That paragraph was meant to read and if and when

0:54:25any library service technology grants become available

0:54:28I hope you will direct staff to do what they can to obtain one.

0:54:33Either to fund the current operating hours of our existing

0:54:36library or to provide equipment for a new library moving

0:54:47on to the next submission.

0:54:48This is from my being.

0:54:49Teller who is also adding that if a correction is permitted

0:54:56I forgot to add the following to my comments submitted earlier.

0:55:01One critical purpose for the additional 15 library hours

0:55:04was to expand library programming

0:55:07so that the librarians could work

0:55:09on STEM and other much needed projects with K through 12 the

0:55:12to school.

0:55:14Since the 15 hours were added librarians

0:55:17have been working on many school related

0:55:18projects including going on site to Eldorado high school.

0:55:23Recently the library foundation with the encouragement

0:55:26of local elementary school funded a STEM program called

0:55:29Charlie cart that focuses on food education and nutrition

0:55:34and that has been really successful in many cities.

0:55:37The goal is that these added hours which help dramatically

0:55:41expand the library programs would

0:55:43then attract private Flint.

0:55:45Miller's Tropic fund.

0:55:48This would greatly help the library

0:55:49to become more self-sustaining by attracting grant funding.

0:55:54In addition in 2019 the foundation

0:55:56established a permanent endowment fund that is meant

0:55:59to fund programs and services at the library

0:56:02for future generations the added 15 hours

0:56:05has already made an enormous difference to the library

0:56:08school focused programming and I hope

0:56:10that will continue particularly to attract donor funding that

0:56:14will benefit our resident V word now

0:56:22moving on to comments on Item 5 A which presentation tonight.

0:56:30From Mike Cunningham I would like

0:56:32to thank Mr Badawi for his steadfast effort

0:56:35to clearly report Eldorado readers

0:56:37dire financial predicament including insisting

0:56:40ongoing concern warnings in the fiscal year 17 fiscal year

0:56:4418 and fiscal year 19 audit.

0:56:46Unfortunately the city did not heed the warning did not

0:56:49rein in its bandit your growth did not rebuild

0:56:52any general bank reserve and left the city and its residents

0:56:56vulnerable to immediate crisis at the emerge

0:57:00of any financial fiscal shock will

0:57:03the council please invite Mr Badawi to elaborate

0:57:06on fiscal year 19 budget deficit on June 4th 2019 staffed budget

0:57:12update showed a surplus of general fund revenues

0:57:15over expenditures of thirty eight

0:57:16thousand dollars while the fiscal year nineteen

0:57:19Kaffir shows expenses exceeding revenues by eight hundred

0:57:23and forty nine thousand and twelve dollars

0:57:26does this simply reflect different ways of reporting

0:57:29the same financial situation or was the June

0:57:314 surplus projection erroneous.

0:57:34Does Mr. Dow we have any recommendations

0:57:37to improve the clarity and usefulness

0:57:39of financial reporting to city council.

0:57:42In addition with the council and will the council invite

0:57:46Mr Badawi to elaborate on the city's overhead liability which

0:57:50he and the state auditor have highlighted since the city

0:57:53provides host employment medical coverage only for retirees

0:57:57that agree to pay the cost.

0:57:59Why does the camera show a multimillion dollar unfunded

0:58:02liability does the city's method of collecting payments

0:58:06from retirees adequately insulate it

0:58:09from financial liability for retiree medical benefits

0:58:14Finally while the council will the council request Mr

0:58:17Badawi to comment on whether unspent a bail fund should

0:58:21be included reporting the city's general fund preserve balance.

0:58:26What is the significance of including

0:58:28or excluding UN spendable funds in the reported reserve.

0:58:32Submitted by Mike Cunningham Osorio

0:58:34resident starting next public comment from Kathy Kendall.

0:58:44This comment brief please listen to the auditor

0:58:48please ask them the following question What made you bring up

0:58:51a going concern issue in 2018.

0:58:54What did you what did that mean exactly.

0:58:57Q Did you feel like the city has taken appropriate actions

0:59:00to mitigate the concern.

0:59:023 What actions would you recommend now.

0:59:05Thank you.

0:59:05Kathy Henryville Osorio won a quick check to ensure we did

0:59:12not have any additional 1 pay.

0:59:15That concludes the items under oral communications

0:59:19from the public great that concludes.

0:59:23Item number three we will now move on to item number

0:59:27four adoption of the Senate calendar.

0:59:31We have just four items on the consent calendar today it

0:59:38Item A is wildlife community preparedness Day proclamation.

0:59:42I would encourage everyone in the community

0:59:45to take a time between now and May 2nd

0:59:48and especially on May 2nd to go out and do something

0:59:53to treating the vegetation in your neighborhood

0:59:56so we can prepare our community for wildfire.

0:59:59Please start thinking about reducing your fire

1:00:02load on May 7 or so on.

1:00:07B For B as alcohol Awareness Month proclamation.

1:00:12This is to increase education around alcohol awareness

1:00:16and the alcohol abuses by youth for C

1:00:21is letter in support of federal emergency.

1:00:23Library funding action at the request of Michael

1:00:27Fisher our current representative

1:00:28to the Contra Costa Library Commission

1:00:30to pass a motion authorizing a letter in support of emergency

1:00:34funding for libraries to be included in Cogan 19 relief

1:00:37legislation and Item 4 D. Adoption of a landscape

1:00:42and letting it lighting resolution of intent

1:00:45and set a public hearing.

1:00:48This is great.

1:00:48We will accept the engineer's report specifying assessment

1:00:51for the landscape lighting an assessment district number 19

1:00:55a dash one for the fiscal year twenty twenty one

1:00:59adopt a resolution of intent to order

1:01:01improvements pursuant to the landscape lighting

1:01:03and Assessment Act of nineteen seventy two and three

1:01:06set the time date and place of the public hearing

1:01:09as May 5th twenty twenty at 7:00 p.m.

1:01:14I'd like to move adoption of the consent calendar staying

1:01:19behind by keen to it by Hamilton I have a comment

1:01:23for one of the item please.

1:01:26OK Mr. FDLE Yeah I don't need to pull out 4-D

1:01:29but just what you were talking about council man Lyman we

1:01:36talked about this at the last council meeting

1:01:39and we we talked about some stormwater issues

1:01:42and the money that is left out of our analysis

1:01:46that our general fund will have to come up with

1:01:50to finish the payment.

1:01:51And I'm hoping I don't know if anyone can answer what

1:01:54that amount is again here but I think that information should

1:01:58be in our analysis so the public and we

1:02:01can see what our fees do not pay for as far

1:02:05as lighting and landscaping.

1:02:09And that's not in here again this year this time

1:02:15And secondly I see there is a May 5th hearing coming up Can

1:02:20I just ask the city manager is there a reason why we need

1:02:24to get a 200 page document.

1:02:27Is that required that we receive it

1:02:29when there is no real pertinent information

1:02:32in that document for us other than codes for addresses.

1:02:37Certainly that is the engineer's report that you are adopting.

1:02:41We have asked the engineer to remove people's names

1:02:44and addresses from the report because we have had concerns

1:02:47passed regarding privacy.

1:02:49So that's why it's only listed by parcel number.

1:02:52If you would like to see the names and addresses people

1:02:54we do have a document that includes

1:02:56that but this is the report that you are adopting.

1:03:00All residential as you can see all residential parcels

1:03:03are essentially the same US My question is do

1:03:07we basically need to accept it.

1:03:09Can we just have the first page second page.

1:03:14So that we're not copying 200 pages for all of us

1:03:17that doesn't really matter.

1:03:18Yeah.

1:03:19Paul this is the mayor Greg Lemond.

1:03:21Let me just.

1:03:22The.

1:03:22Any time you want to go electronic you

1:03:24will save those paper trees.

1:03:27For example I'm electronic and I didn't get the report

1:03:30but I see Mr. Woodruff wants to speak to this matter Yeah.

1:03:33Hi this is the city attorney I was just

1:03:35going to say that the engineers report is required to be

1:03:38part of the public record.

1:03:40And so while any individual or council member can figure out

1:03:45a way Chief feel the production does need to be part

1:03:48of the public record and the council member does need to be

1:03:50familiar with it as part of the action that's proposed council

1:03:54member able some I I think I would just agree with what's

1:03:59already been said there is the information itself is not as

1:04:04meaningless as some people might think from time to time

1:04:07I've had people look at the parcel that belonged to them

1:04:15and and see something something that required action.

1:04:20For example if you like my house is on two parcels

1:04:24and there was one time when that was an interesting issue

1:04:29for somebody and so.

1:04:31So the actual information I would say yes

1:04:34there's a reason to have it but it

1:04:36could certainly be put online.

1:04:38I'm sure it is already online in fact right.

1:04:42The packet is just because the packet is online and yes it is.

1:04:47Anybody who wanted to view it could in fact

1:04:49do that already that way but with no addresses

1:04:53on that huge document.

1:04:55It's of little value to any of us to just look numbers.

1:04:59Well that would be asked looking at somebody else's I

1:05:03understand that.

1:05:04I just don't know if we can we can summarize for us

1:05:08and give us demonstrate that it's not

1:05:10a summary thing it's each you know not

1:05:14everybody has the same rate.

1:05:16For example and so an individual could look at their number

1:05:20on the I assume their tax bill and reference that number

1:05:25and then go look up the amount through their property.

1:05:30If you were harassed in the do that has come up in the past.

1:05:34I just think that 98 percent of it is the same rate.

1:05:37So anyway I'm going it's fine with me

1:05:41I just would like more information

1:05:43than last as far as what our general fund is

1:05:46owed from these efforts.

1:05:48Thank you Is the public works director on

1:05:53and speak to how much or the finance director on to speak

1:05:57to how much the general fund subsidizes landscape lighting

1:06:01assessment district actual actions Well I now say

1:06:08that raises one hundred and eighty five thousand dollars

1:06:11and we need to seek other sources to get

1:06:13the rest of the money and we never know what

1:06:16that amount at that is on the line

1:06:21Go ahead of it with expenses total about one point

1:06:28four million dollars at one point

1:06:32four million that we need to come up with and lab

1:06:36generates about the slight but the less than eight hundred

1:06:41thousand dollars.

1:06:42So it's a six hundred thousand dollar deficit

1:06:45that the general fund subsidizes for landscape lighting

1:06:47and assessment district in our medians

1:06:50pathways and parks I think I made my point thank you.

1:06:58I'm attempting to raise my hand.

1:06:59This is Janet.

1:07:00Go ahead.

1:07:01OK.

1:07:02There is.

1:07:03OK The question I had about this is there is an alternative

1:07:10to taking money out of the general fund for this purpose

1:07:15we could reduce the amount of landscape and lighting

1:07:20that's done right That is the thing that's been done

1:07:23in the past certainly was before my time

1:07:26I don't know any details but that we could

1:07:28instead of having say one street light every half block we could

1:07:33have one street light per block or anything

1:07:36else we would decide.

1:07:39So there is an alternate to this and that would be that would

1:07:44certainly be an alternative.

1:07:47I don't know that anyone would like it.

1:07:49However that would be an alternative.

1:07:53Correct and it's still being that that is an action that we

1:07:56will probably take into consideration as we move

1:07:58into May and June as we look at different budget sections

1:08:02of our of our overall budget.

1:08:05So I would look I think is no one else

1:08:07has I can't recall I thought we did have a motion

1:08:12and a second motion was almost like seeing

1:08:16you in a second budget customer Ableton correct.

1:08:19That's my recollection Any other comments

1:08:22at this time seeing none can we have a roll call vote

1:08:26please Mayor Lyman.

1:08:29Yes.

1:08:30May I pretend to Delhi yes council

1:08:33member Ableton yes council member Pardue Okamoto yes.

1:08:40Council member Well yes I can carry it.

1:08:45Thank you.

1:08:47That concludes.

1:08:47Item four we will not move on to item five presentations.

1:08:51We have one presentation on our agenda tonight.

1:08:54There's five a discussion with the city's independent auditor

1:08:59supplement the presentation materials were provided

1:09:02in the supplemental materials that

1:09:04are available as Agenda Item 10 on the city's Web site

1:09:22I see Mr Badawi here.

1:09:24So I think I am here.

1:09:26I'm not sure I get started or yes yet

1:09:32I would like to go ahead and get started.

1:09:34Yeah that'll be great.

1:09:35All right.

1:09:36Sounds good.

1:09:37Good evening Mr. Mayor.

1:09:39Members of the Council members of the audience.

1:09:43My name is I'm Ed Bradley and they

1:09:45sent you an example of it's the year 2000 Nike not it.

1:09:49And I do not have control of my slides

1:09:52so I'm just going to say the slide number.

1:09:56So see I believe city clerk would be controlling my sites

1:10:02so I'm gonna get started on slide number

1:10:05two and agenda of what I'm going to be covering.

1:10:10I'll let you know who they gave me even once a year.

1:10:14What were the variables and the scope of an audit.

1:10:17Areas we emphasized on that type of audit opinion

1:10:20we issued provide you some of the numbers

1:10:24in your financial statements and that as a summarized fashion

1:10:28provided some of the required communication as you

1:10:30and an auditor a brief overview of the new accounting

1:10:33standards coming your way.

1:10:35Also see if you have any questions for me

1:10:38or is if frequent can talk me anytime you have questions.

1:10:42I also understand that you had a very busy agenda I'm going

1:10:45to do my best to move to the presentation at the so

1:10:52moving on to Slide number 4.

1:10:56This would be that composition of our engagement.

1:10:59That was the key partner That means that I'm

1:11:03the one ultimately responsible for the entire audit

1:11:06I'm planning to execution.

1:11:08Reporting.

1:11:10And we always have a quality contributor and that

1:11:13was in the background there.

1:11:14And I who might work and make sure

1:11:16that he had the professional standards

1:11:19behind that manager on the audit senior to professional staff.

1:11:24And in inspectors assigned to the audit of the city of slide

1:11:29number five that deliverables and the scope

1:11:32of our audit so a listing of things that we were engaged to.

1:11:37If you or Cupid Forman or the city of US

1:11:40retail and me are mean engagement

1:11:42is to provide you know the city's basic make statements

1:11:45that separate PNC Bank and annual reports at the city

1:11:49if you could annually.

1:11:50The city is subject to complement auditing standards

1:11:53which required us to issue on a controller

1:11:56with financial reporting and on compliance

1:11:58with laws and regulations.

1:12:01Also the city this year was subject to what

1:12:05we call the single audit or the audit federal grants.

1:12:08And the reason is that the city have expended more than several

1:12:11hundred thousand in federal funds

1:12:14and that triggered that compliance

1:12:16audit with the predator grants.

1:12:17We have to perform that as well.

1:12:19We perform the compliance transfer Development Act

1:12:23an audit of that city about every pension plan

1:12:28you perform the agreed upon procedures at three

1:12:30domestic installment sale agreements and the agreed

1:12:35upon procedures which began limit

1:12:36where the appropriation limit.

1:12:38And then finally the communication

1:12:40with the city council.

1:12:41It's what I'm doing today.

1:12:43So these were all of our rebuttals

1:12:47in terms of areas of primary audit emphasis on slide number

1:12:52six and this area is reluctant to meet revenues

1:12:58and we see So by nature revenues peacekeepers are areas

1:13:05of a higher risk audit than standard

1:13:08it's basically requires us to assume that individuals

1:13:12or organizations have the motivation to overstate

1:13:17their revenues Of course also that we could be shrimp

1:13:21or that risk increases with the financial condition.

1:13:24I'm not very very strong we're not saying that there was

1:13:30any improper revenue recognition but we just

1:13:32have to maintain order accordingly and have

1:13:37the government the funds we have and a lot of confirmations

1:13:41we can send confirmation directly

1:13:43for the county to confirm all revenues submitted city.

1:13:46And we can start going back to the records.

1:13:49He was sales tax was a state franchise taxes

1:13:53and a variety of other revenue sources You perform

1:13:56a lot of ethical analysis on the proprietary revenues

1:14:01and second area of emphasis and focus for us

1:14:03our pension and Oak trusts for the fact

1:14:07that they are very complex in nature and that it all matters.

1:14:12And so we have viewed management entries that were used

1:14:16to be quite active in each.

1:14:17We also communicate directly with the pension plan

1:14:20and the auditors and the pension plan to the documentation

1:14:23on them on how they came up with us as those calculations

1:14:28Finally we hope the inquiry reports and review elsewhere

1:14:32sometimes that we're used in Germany

1:14:34goes on that's Finally on slide number seven

1:14:40the last area of a lot of emphasis

1:14:42is the risk of management overriding controls

1:14:44That is a risk that exists in any audit that we do.

1:14:47It is not unique to the city of us

1:14:49though and yet management are the ones who

1:14:51are responsible for designing the controls They

1:14:54are the one responsible for ensuring that is it.

1:14:56It's put in place and responsible for monitoring them

1:15:01and they also have the ability to override

1:15:03them if they choose to do so.

1:15:05So we have to do something that audit in a way that mitigate

1:15:08that risk that would as things within entries

1:15:11prepared by management using estimates

1:15:15and by management make sure that they are free of bias

1:15:19or creating an element of unpredictability in the audit

1:15:22procedures and rationale for any unusual transactions

1:15:27and a variety of other cities perform on slide number 9

1:15:33as the audit reports type of opinion the issue.

1:15:37So at the end of the day we have issued an unmodified

1:15:40and that in simple terms means it's a cute audit opinion

1:15:45that states and the audit was performed in accordance

1:15:48with Generally Accepted audit standard and government audit

1:15:51standards and whether unmodified opinion means it means

1:15:55that the financial statements are fairly serious normal here

1:15:58respects all estimates are reasonable at all distortions

1:16:03of the property reflected and that all significant policies

1:16:06have been consistently applied the audit opinion must have

1:16:11what we call an emptiness of the matter integrity

1:16:14but it's an additional Pendergraph

1:16:16that we had a standard audit opinion

1:16:19and it's really have to do as a going concern.

1:16:21The financial condition obviously it's

1:16:24just a fact it used to you bring the attention of the reader

1:16:30the fact that there is a going concern.

1:16:32So for in the next in this group I if I go to Slide number

1:16:39eleven that is basically a very high level

1:16:46summary of the cities numbers don't

1:16:49expect the financial statements comparison

1:16:51over the last three years.

1:16:52So on slide number eleven is the composite of the city's assets.

1:16:56And that's really taken all funds combined

1:17:00and all infrastructure assets and it's a foolproof basis

1:17:04accounting and you just summarize for you

1:17:07what are the composition of the assets for the city

1:17:10and you can see that your two largest assets are

1:17:12your receivables your cash and investments

1:17:15and your captain assets I would say

1:17:20no major activities there Yes.

1:17:24That's why I asking you that are the numbers over the last three

1:17:29years on slide number twelve number 12 proposition

1:17:34of the city's liability over the last three years Clearly

1:17:37the net pension liability is the largest liability wouldn't see

1:17:41at followed by The Long Death.

1:17:43And that would include all your long term and savings bonds

1:17:47and loans and and those types of bonds

1:17:51Again no major fluctuation or activity during the there no so

1:17:58moving on to slide number 13.

1:18:00And that is a safety net position.

1:18:04Basically just taking the city's assets

1:18:05minus the city's liabilities.

1:18:08And even though that said these assets exceed the city's

1:18:13liabilities we wanted to provide you

1:18:16a breakdown of what makes up the equity you find

1:18:20for you identified for you.

1:18:22What is available spending what it's strictly

1:18:24it was under strict that first column on the left

1:18:27its net investment after that since this

1:18:29is an amount that it is not ready available for spending.

1:18:33This is the amount that was invested in capital assets

1:18:36and buildings and infrastructure and net of Hugh debt

1:18:41that was issued finance those assets.

1:18:44So it was announced would most likely never become expendable.

1:18:47The city liquidate its assets and start selling more than the

1:18:52restricted amounts or amounts that are normally

1:18:54expected by a third party.

1:18:56Those can be either unspent Grant proceeds

1:19:00or unspent bond proceeds or gas tax

1:19:04money that has not been spent.

1:19:06It's something that the council has not

1:19:08changed the purpose they are legally strictly

1:19:10restricted for that purpose.

1:19:12That was the unrestricted amount it is the amount that

1:19:15is within the Council of control you

1:19:17can see this amount is a deficit if he

1:19:20for almost fifty five million.

1:19:23Obviously the main contributing factor to that absent is

1:19:26the net income liability And that's a very long term

1:19:31liability but nonetheless if the city were to liquidate

1:19:37everything You wouldn't.

1:19:40You would be in a deficit in that

1:19:45So moving on to Slide number 14 In Slide number 14 just taking

1:19:51the city's revenues minus these expenses for the year

1:19:54and compare them over the last three years My point

1:19:58here that it's not drawing on the slide 12 years which

1:20:02is what I just realized that that but starting

1:20:06from the left there one point four million

1:20:09is two thousand seventy million the one point five million

1:20:14is two thousand eight in and then the nine point

1:20:17five million it's in 2009.

1:20:20I do I do want to highlight it that's a big contributing

1:20:27factor in that big loss on the financial statements

1:20:31have to do with some unique activities that had to do

1:20:35with the main that was sold proceeds

1:20:39were transferred to the county.

1:20:42So when the city had to transfer those proceeds to the county

1:20:45it actually got stronger as an expense and that was I believe

1:20:49a few million dollars there.

1:20:50And so.

1:20:51So some of that are not selling US operation but they are not

1:20:56systematic transactions that occurred here and is causing

1:21:01that big drop to nine point five Moving on to slide number

1:21:0815 This is compares in what we call the net cost

1:21:12to service and tax revenues.

1:21:14The net cost of service is the cost of running.

1:21:16City Departments minus any revenues that those departments

1:21:20are able to bring in.

1:21:22So for example any grants that they bring in the ease

1:21:26that they charge you that the customer is probably

1:21:30it's not against the cost of those apartments

1:21:33The idea is to see how how much of a deficit exists

1:21:38and whether there are sufficient tax revenue to keep the deficit

1:21:43in those operating expenses for those departments

1:21:47and it is quite normal that that seed

1:21:50elements do not cover the cost and they

1:21:52are dependent on tax revenues.

1:21:54That is the case with almost every city we audit.

1:21:57The question is whether the tax revenues

1:21:59are sufficient to cover that deficit or not.

1:22:02And as you can see here that over the years

1:22:06the tax revenues were never higher

1:22:09than the net processors always being built

1:22:11within that process service.

1:22:14Obviously there are some find some other revenue

1:22:16sources of income in that investment

1:22:19earnings and things like that.

1:22:20But ideally you want to see that tax revenue higher than

1:22:24in subservience if we want to just focus on the general fund

1:22:29and that's on slide number 16 what we tried to present here

1:22:36is unassigned unbalance or the unbalanced

1:22:39and that it's up there the accounts control is

1:22:42in a spend of important and compare

1:22:45that to annual expenditures.

1:22:47And the idea is to see how long can the city continue

1:22:52to pay bills in the very unlikely scenario

1:22:55that all the revenue sources start coming in

1:22:59and obviously you can see that over the years

1:23:02that the city had a deficit in bare feet unbalance

1:23:06or that that's this deficit is about one point seven million.

1:23:12And so you said so even though the general fund fund

1:23:17balance in total deficit 56000.

1:23:25But really there is a big chunk of the general fund fund

1:23:29balance that is tied up or represented by a receivable

1:23:32from the Redevelopment Agency and that is in litigation

1:23:37and that collect the ability of that conceivably

1:23:40is not guaranteed and.

1:23:43And and we and it's not something that is expected

1:23:46in a silly next months or or so So it's not

1:23:50being counted as a bit of a fund that's

1:23:52that's it's an instant That's the reason why

1:23:54you're seeing that one point seven million bets.

1:23:57So obviously this is the main reason

1:23:59why we are giving it going.

1:24:00So in our in our audit committee is the fact

1:24:04that we don't believe that city have

1:24:06sufficient Bandar's or any fund balance

1:24:10to be able to be in emergency situations.

1:24:17So that's focusing just on the general fund.

1:24:21The next few slides are going to focus mainly

1:24:23on that on that retirement benefits so slide number

1:24:2617 just comparing the city's contribution to that pension

1:24:31plans over the last three years proposed

1:24:34the safety and the miscellaneous spend Slide number 18 is

1:24:42providing that funded status of the safety

1:24:44plan over the last three years over the last three

1:24:47actuarial valuation.

1:24:50So you would see that first column of the assets

1:24:52invested in the plan that bit of column

1:24:55are the liability of the man and the last column on the right

1:24:59is the net pension liability difference between the assets

1:25:03and the liabilities.

1:25:04So as of the most recent valuation scheme 43 million

1:25:09in net pension liability for that safety plan

1:25:12and then same ones then miscellaneous.

1:25:14Now on slide number 9 in the city have about eighteen point

1:25:18seven million unfunded liability that one thing that I like

1:25:24to highlight its wristband on is on slide number 20

1:25:29is that the pension it has an estimated number.

1:25:33It is developed by an actuary and they use a certain set

1:25:38of assumptions and and oftentimes reality

1:25:42are different assumptions.

1:25:45One of the more significant assumption

1:25:47is what we refer to as a discount rate currently

1:25:51or the city's financial statements

1:25:53or using that seven point one five percent discount rate.

1:25:57So we just wanted to highlight for you what the pension

1:26:01liability numbers would look like that discount rate is

1:26:04either increased by 1 percent or decreases by 16

1:26:08so you can see that's partly the row is the city's liability

1:26:13seven point twenty five percent and the two

1:26:16point sixty one million sixty one point eight nine deaths.

1:26:20This contract goes up to eight point one

1:26:22the five percent you're estimating that you would be

1:26:25about 40 million That's a big drop but forcing the discount

1:26:29rate goes down 6 1 5 percent.

1:26:33Labor.

1:26:33He goes after 88 million obviously

1:26:37a I'm not with scalpers and I would not know what the future

1:26:44would look like in terms of discount rate

1:26:46but just based on what I see and what to hear in the industry

1:26:50that that eight point one five discount rate is very very

1:26:53unlikely that This is a direction

1:26:56that they would be going to test for the pension plan.

1:27:00If we move to that slide number 21 that's the whole plan.

1:27:06So that's the retiree medical benefits So this is that those

1:27:10are the contributions that the city is making to plan

1:27:16and then basically on slide number 20

1:27:21to our unfunded liability off the city.

1:27:26Mr. Mayor Dallas.

1:27:28Yes sir.

1:27:29Yeah.

1:27:29This is the mayor.

1:27:30When we met back in March early March

1:27:35you did a very good job explaining

1:27:37why you are how and why you're calculating and OpEx

1:27:40liability for the city.

1:27:44I was wondering if you would be willing to explain note number

1:27:4710 from I believe it's Page 70 in in terms of why the city has

1:27:55a liability here even though retirees are making payments

1:28:03you are calculating a liability for us

1:28:06so first I would like to clarify and guide our firm is not

1:28:11the one company thing that I do we just the condition is

1:28:15done by an actuary.

1:28:17They are the ones who come up with that assumption

1:28:20and do the calculation.

1:28:21All we have to do is review that something makes

1:28:25it that they're reasonable.

1:28:27And also if you make the city the death information correct.

1:28:32But in terms of why does the city

1:28:34have a liability even though the retirees are the one

1:28:37that basically paid a premiums.

1:28:40That the reason I said that is that the city is

1:28:43in a way subsidizing those retirees Phoenix the city

1:28:48the benefit that was offered to retirees

1:28:51is that they would be allowed to continue to participate

1:28:55in the city as planned and that will ensure that they will get

1:28:59a subsidized rate or even though they they they

1:29:04they paid a premium under.

1:29:07So that that means that the active amount of the CPD where

1:29:12the city is paying for the active employees it already

1:29:16includes a subsidy enable the retirees to have that county

1:29:22by county standards wants the city to account

1:29:26for the liability under the assumption that if you are

1:29:30unable to maintain that land at the behest of the city in order

1:29:36to honor the benefits that they were offered that retirees

1:29:40senior would have to go out in the marketplace and either pay

1:29:44the difference in you to offer the retirees or seeing this

1:29:47county demands or find another plan that will offer them that

1:29:53so that the liability instead created based

1:29:56on an assumption that the city

1:29:59may not be able to maintain that plan as it's however

1:30:03every year when you maintain that plan

1:30:07that liability is liquidated.

1:30:09Part of it is liquidated without the city making any.

1:30:12So technically you can end up liquidating

1:30:15all those liabilities without having to make an immense

1:30:19because you're indirectly making payments when you're

1:30:21paying back for each subsidize.

1:30:25So those requirements I hope I hope

1:30:27that I was able to explain it.

1:30:30I believe so All right.

1:30:35Okay.

1:30:35So I would move on to Slide number one 24

1:30:41and this is the required communications ads

1:30:44independent auditor in the slide number

1:30:47twenty four things about that.

1:30:48The responsibility so on the left side

1:30:51is our responsibility as the audit firm.

1:30:54So we may be responsible for having an opinion on

1:30:56whether the city spending statements are fairly stated

1:30:59or not.

1:31:00We're also responsible for evaluating internal control

1:31:04over financial reporting including the tone at the top

1:31:08that we think compliance with laws and regulations

1:31:11ensuring financial statements are clean and transparent

1:31:15and communicating with the city council management

1:31:18have many responsibilities The fact that our firm is hired

1:31:23to certify the numbers is not through the management

1:31:25from its responsibility for neatness

1:31:28and accuracy of those benefits management

1:31:31is the one responsible for establishing

1:31:32an internal control over financial reporting

1:31:36or making financial records available through us

1:31:38be able to support that account balances addressing

1:31:41the financial statements to correct any given statements

1:31:45or establishing controls that would prevent

1:31:46and fraud for most of all no suspected fraud.

1:31:51Mine was not by was laws and regulations in take

1:31:54corrective action on findings on slide number 25

1:32:02are independents.

1:32:03Obviously our audit opinion sees that we

1:32:06are independent auditors so it's strictly our responsibility.

1:32:10You mean independent.

1:32:11The city doesn't really need to do anything to ensure that we

1:32:15look at NASA from many aspects of independence in substance

1:32:20we evaluate any additional services that we offer the city

1:32:24and make sure that there's not going to get our independence

1:32:28and we put safeguards in place to ensure

1:32:30that our independence isn't it.

1:32:32We also identify by asking our employees be questionnaires

1:32:39identifying any direct or indirect relation to clients

1:32:43we remove any individuals that have

1:32:45any direct or indirect relation to city staff.

1:32:47Wouldn't city in general And then

1:32:50finally dependence and appearance.

1:32:52We obviously are very careful about trust our interaction

1:32:58in public waste management and with the city in general just

1:33:03to make sure that nothing is being it's entered.

1:33:06That's not giving I mean obviously we determine that you

1:33:11are independent and we were able to complete the audits

1:33:15and was the timing of the audit We

1:33:17believe that the audit was performed at the time being

1:33:20communicated the engagement letter

1:33:21and CFP issued audit opinion by December 21st

1:33:26which which means finding that mine on slide number 26.

1:33:33Every year there are new accounting standards.

1:33:36It doesn't mean that the audit committee the city.

1:33:38But we nonetheless we always have

1:33:40a discussion with management about those new accounting

1:33:42standards.

1:33:42And we wrote to the audit but we're not.

1:33:45So this year there were two that were discussed as management

1:33:48I believe none of them would have become

1:33:49but the city also wanted to make sure

1:33:53that some of the numbers and the financial statements

1:33:55are estimated numbers that is acceptable

1:33:58as long as there is a reasonable basis behind the estimates.

1:34:01I just wanted to give you some examples of what those numbers

1:34:04are Slide number 27.

1:34:09Again I'm not gonna go through those in detail

1:34:12but just wanted to list for you some

1:34:15of what we think are important disclosure

1:34:18in your financial statements.

1:34:19Some of the focus that I believe provides

1:34:23some valuable information about the composition of the assets.

1:34:28We're pleased to say that we encountered

1:34:30no difficulties during our audit on slide number 28.

1:34:36We did have some adjustments and declassifying

1:34:38entries and management has posted all of those adjustments

1:34:42adjustments means that after the city closed its books

1:34:45and presented the numbers for us to audit based on the audit

1:34:48procedures we determine that some of these numbers

1:34:51required some corrections Management has agreed

1:34:55and have recorded all this that we're

1:35:00not aware of any significant exposures.

1:35:03The legal matter and potential liabilities

1:35:06are closing the bank statements.

1:35:08Obviously when I say in who are significant risk exposure here

1:35:12that was three core with 19.

1:35:14So as we do that fiscal year 2020 Audit obviously there

1:35:18would be honest discussions about what was a city impacted

1:35:22and what our satanic he's the remain

1:35:27and what the impact this would have on the financial statement

1:35:32On slide number 29 we're pleased to say

1:35:34that we had no disagreement with management.

1:35:37We had some deficiencies in our control.

1:35:39The first one we considered can be

1:35:41emptier weakness which is a bit of continue as a going concern.

1:35:46Uh the reason why we see this as a weakness

1:35:49and has been in control is we believe

1:35:52that the action would have been taken

1:35:57to address the matter sooner.

1:36:04The going concern is city.

1:36:07It wasn't city opinion for a number of years

1:36:09so it's not new.

1:36:11And as you probably see from the results of the 2009

1:36:15Kean financial statements even the janitor found revenues

1:36:23exceeded the expenses or expenditures by one hundred

1:36:26forty nine thousand in total.

1:36:30I do want to break your attention that that was

1:36:32after several onetime revenues that are not going

1:36:36to be coming in the future.

1:36:37For example there was about 800 thousand see the property.

1:36:42It's a onetime revenue that came to the general fund.

1:36:47It was also about one million or one point one million

1:36:49transferred from grant funds to correct

1:36:52some previous accounting issues.

1:36:56Again that's another one time revenue that was transferred

1:37:00to the general fund.

1:37:01So those are almost two million dollar in onetime revenues

1:37:04that were transferred to getting even

1:37:06and it's taking those into consideration the general fund

1:37:09still overspent by about one hundred

1:37:12and forty thousand dollars.

1:37:15And in addition to that it is also about 800 or 900 size

1:37:20and sitting in the general fund revenues which should present

1:37:23challenges to other funds.

1:37:26And we couldn't really sustain it.

1:37:28What was the basis for those charges for example

1:37:31that that recycling fund the Enterprise

1:37:35Fund was charged fifty thousand on the general fund.

1:37:39Well we don't really know what those targets really pretending

1:37:41present scene was the gas that's where I was charged about one

1:37:46hundred and fifty So if the city is unable to provide

1:37:51a basis for those revenues we wouldn't basically question

1:37:54those revenues in the future.

1:37:55So so we just wanted to highlight that

1:37:58even whereas the general fund showing only one hundred

1:38:02and forty thousand excess of expenditures over revenues

1:38:06reality is that there is a significant amount of revenues

1:38:09that are non-recurring revenues.

1:38:12So that's the reason we felt that this was a mature weakness

1:38:17maybe in the in the budgeting process

1:38:19more as the budgetary controls.

1:38:23We also had some significant efficiency relating to grant

1:38:26management and accounting.

1:38:29So there were two saints that were

1:38:30grant expenditure to states and were incurred sizing EPA.

1:38:36There were federal expenditures and they required seeing

1:38:39an audit compliance audit.

1:38:41The city did not report those timesheets Compliance

1:38:44audit was not done timely.

1:38:47But in addition to that at one point one million or so

1:38:50that were transferred back to the general fund

1:38:52but really resolved.

1:38:54That's not Grant County or what was happening

1:38:58is that the grant revenues were going to grant

1:39:01but the expenditures would be March against the

1:39:06and that was not good for the budgets

1:39:08but that's what was happening.

1:39:12And that's the reason why you would transfer the money back

1:39:14to those were the application seizing control that we

1:39:17identified on slide number 30.

1:39:22We have requested certain to agents from management

1:39:26normally before we issue our financial statements request

1:39:29management signed a letter saying that they have presented

1:39:32to us all known facts we have represented less known fraud

1:39:36all the only assets that be whether the transactions

1:39:40in a variety of other we're not aware that the city had

1:39:45to work with any other accounting

1:39:46firms to consult audit matters.

1:39:50On slide number 31.

1:39:52Other than our engagement letter and a presentation better we

1:39:55had no other significant event management.

1:39:59There were no most mature uncertainties relating

1:40:01to events and conditions and we cannot become aware of any

1:40:05instance of fraud effect.

1:40:08And finally just on slide number two

1:40:10I'm not going to go over those These are

1:40:14all the new accounting standards that are coming

1:40:16your way by the year of employment

1:40:19however I do want to say that the government that I cabinet

1:40:22standard was responsible for issuing all those accounting

1:40:25standards currently discussing the postponement

1:40:29of all those new standards by one due to the court in 1983.

1:40:36So we would probably know that sometime in mid-May.

1:40:39There may be some relief cities accounting function

1:40:43by not having to implement any new accounting

1:40:47standards in 2020.

1:40:48But we don't know that for sure.

1:40:50But I think that I hope I didn't think too much of your time.

1:40:54I want say thank you for allowing us the opportunity

1:40:58to provide service to the city and I'm

1:41:01happy to answer any additional questions that exist All right.

1:41:07Council members Janet Ables and I see you've admitted it.

1:41:13Go ahead I am OK.

1:41:18So on these one time I think they

1:41:28were We got we received one time moneys

1:41:34of why did I can't remember the number was 2 million somewhere.

1:41:39That was one of the numbers I think what I wonder about

1:41:43that maybe you can answer is were there

1:41:46expenses that were corresponding so that it sort of washes that

1:41:52or what.

1:41:53What was that situation.

1:41:57You wouldn't be hard to me to answer and say

1:42:00there were onetime expenditures that were used that were paid

1:42:03from those one time revenues I would not have

1:42:08that level of detail of the reason I'm asking

1:42:11is because we often have things that

1:42:14could be classified like that.

1:42:17For example if we received a grant to do roadwork

1:42:22those can be for us a large sum of money and it

1:42:28so it's ones you know as a money comes

1:42:30and then some money goes out that that's

1:42:34it should be a wash.

1:42:36Yeah.

1:42:36No I don't believe that.

1:42:37This may not be in a particular calendar year

1:42:40because you have to usually finish the work before you can

1:42:44get paid So there's there may be a lapse in that way

1:42:50that I'm wondering how that corresponded to those lips

1:42:55you want to call them that.

1:42:57Well I believe that that is the case

1:42:59the grand revenues are normally recognized when

1:43:02the expenditure is in turn.

1:43:04So it would be a wash like you said normally if you receive

1:43:07brand funds in one year but no expenditures you wouldn't

1:43:11recognize any revenues for that and protect the money

1:43:15from the federal government.

1:43:17For example sometimes for a project like that

1:43:21you have to have completed the work

1:43:23I believe correct me perhaps but that's what I've been told.

1:43:31So I mean I'm not sure I mean obviously every grain we can

1:43:35give people in advance of it.

1:43:37They're doing the work is what that means let's say it's

1:43:41a road project of some sort and somebody bids

1:43:46to do the job and they you know they did a million

1:43:48dollars let's say then they don't

1:43:53we don't give them a million dollars at that point.

1:43:56No no we won't be able to say that you

1:44:00made your progress payments.

1:44:01And yes so.

1:44:03So those may be in different calendar years for example.

1:44:06So I was just wondering how all of those activities which

1:44:12can be you know they they require a lot of work

1:44:16to manage that they should not have any impact not

1:44:21fact when you are build from a contractor on a progress basis.

1:44:29That expenditure is normally allocated the time

1:44:32when you see the service not when you were paying for it

1:44:36and then we say with normally go ahead

1:44:39and build the federal government to get reimbursed at that time

1:44:44that the city will recognize and receive

1:44:46a loan from the federal government and revenues

1:44:50unless the revenues have been collected significant

1:44:53past the end of the fiscal year that

1:44:55would be a different situation.

1:44:56But I do also want to highlight that we're really focusing more

1:44:59on the drought on and under normal circumstances

1:45:03that you're not funded not accountable

1:45:04or where we wouldn't be at those funds anyway.

1:45:08Yeah it would be in a different place

1:45:11but again that doesn't mean that there

1:45:13are no onetime expenditures of their I

1:45:17just don't know the detail of whether there were

1:45:20onetime expenditures but the point

1:45:22would it be possible for us maybe to get from south maybe

1:45:27this is a staff question information that addresses

1:45:30the issue I mean I'm sure like you mentioned for staff

1:45:42this is the city manager there.

1:45:46Yeah sorry.

1:45:47I'm meeting I am I'm meeting myself.

1:45:50Some of the some of the ones part

1:45:54of the one time expenditures are on revenues

1:45:58now what we're talking about we're also property sales

1:46:01at for example when we sold the properties last year that were

1:46:07former redevelopment properties those

1:46:09did not have any expenses that were that were attached to it.

1:46:14So that's what the one time revenue

1:46:16was what he was referring to.

1:46:19So what we did what we did with that if you recall it made when

1:46:24we discussed this at I think it was at midyear last year

1:46:28is that we decided to use that one time money to write off

1:46:34the due TOS that was in there that

1:46:37was designated in the previous budget which Mr Badawi can.

1:46:42That was on his advice to be able to do that

1:46:45and he can maybe elaborate on that but that that's

1:46:48what we were talking about.

1:46:49Is that what we have to be careful of

1:46:52is that we are not using one time revenue

1:46:55for ongoing expenses and that's exactly

1:46:57what we are trying to make sure that we're going forward.

1:47:00And and following that we did do do

1:47:04do it as advised in the situation

1:47:07that was described when we.

1:47:08Yes.

1:47:09OK.

1:47:11Well I mean I do clarify when we say as advised we don't

1:47:16normally I don't know has my word shown in your report

1:47:26that that's a better way to say that.

1:47:28Right.

1:47:29We just thought it.

1:47:30What is What do you mean.

1:47:32We have demanded that those things were written off

1:47:34can be written off because these were receivables

1:47:37owed to the general fund.

1:47:39And we felt that those other funds that

1:47:42owed the money had no ability to repay that is get

1:47:46us back to the word advised.

1:47:49Yes.

1:47:49So how to represent it in the report.

1:47:53I'm not saying anything further than that But I think.

1:48:00I guess what I would like to certified is maybe

1:48:03that the expectations once that situation

1:48:07where we see a client have a deficit fund balance

1:48:11or pay low fund balance what we would expect to see you

1:48:15with a client demonstrate that yes we are trying to get out

1:48:19of this situation as doing onetime revenues

1:48:22or it's extra tax revenues that comes from new measures

1:48:27that they are being used to mean we build up reserves to be

1:48:31ready for situations like the situation

1:48:33we're dealing with right now.

1:48:34Knight and we just did not see that happen in the past.

1:48:43We did not see that the reserves at

1:48:47and I guess that was our our focus.

1:48:51Okay.

1:48:52It's up to me I know it wasn't here

1:48:55but it's the next step you might say is that the we do have

1:49:04the Kobe virus problem now and it's

1:49:08going to have a big impact from what I can tell on cities

1:49:12across all over the United States

1:49:15especially in things like tax sales tax revenue for example

1:49:19when businesses are closed and practically either entire Elsa

1:49:23retail Plaza is closed right now we're not getting sales tax

1:49:28revenue from that in the same way that we would

1:49:34would have planned it in our budget and so what so what.

1:49:42So the question that I have as a council member

1:49:45is what should we be doing to adjust what whatever it is

1:49:52we should be adjusting while we deal with this big humongous

1:49:59issue that we are facing.

1:50:02And anyway so and how does that impact what

1:50:07a what information about that is relevant to the audit and the

1:50:16audit process is very relevant.

1:50:20We have we ordered a lot of cities and while

1:50:22we only in California.

1:50:23But like you said it's an additional one

1:50:26but our focus is on California almost every city in California

1:50:30we have will be impacted there obviously

1:50:34some will be more than others cities that are more

1:50:36dependent on property taxes may not see a significant impact

1:50:40at least immediately as cities waterline on CSX or relying

1:50:45on transit occupancy Those cities are going to be impacted

1:50:51a lot quicker and I'll be a lot harder cities that have built

1:50:58on balance and reserve over the years

1:51:01are probably going to be able to navigate that.

1:51:04That's what we've been building and balanced

1:51:05and reserves for situations like that and and cities

1:51:12have nots would have to figure out some other ways

1:51:16it would be out of my scope.

1:51:19You suggests what those other ways are.

1:51:22It would not be my area of expertise

1:51:24and I definitely would not be I mean

1:51:28I would be looking for a management plan

1:51:30on how the city is going to be addressing that situation

1:51:34but I would I would definitely not be qualified

1:51:37can suggest a service or doing anything

1:51:41that's not Michael thank you.

1:51:45Council member it was some of that.

1:51:47Finish your question right.

1:51:49Yeah.

1:51:51All right.

1:51:52I'm not certain if council member or new Okamoto it looks

1:51:56like you have your hand up.

1:51:58Yes.

1:51:59I don't have my put my hand up but I'm

1:52:02would like to speak Yeah.

1:52:05All right.

1:52:05So I want to continue talking on what council

1:52:10member Abel Sen has started to speak

1:52:14about our progress real quick.

1:52:18You can see my notes but I don't run out of battery unexpectedly

1:52:24but I think that's a lot a ways off First question

1:52:28is there some numbers that I heard you say in your report

1:52:33that I'm not exactly Sure.

1:52:37It seem a little off from some of the the numbers that I've

1:52:40heard more recently when we're talking about our budgeting

1:52:45And that was you said that we were one points seven million

1:52:50in the negative.

1:52:52You two are basically the the argument

1:52:57that we're having with the state of California

1:53:01in regards to what we should pay them back or not

1:53:03is that was that as of the end of 2019 or.

1:53:11I mean I guess that's also a question for our management.

1:53:13Has any of that money actually been paid back.

1:53:18So the general fund for me is the I mean.

1:53:24So that would be yes.

1:53:25As I'm trying to 2019 if it's our understanding

1:53:29that his management at that as a debate

1:53:32we issued a report which I believe it was December 21st

1:53:36there was an understanding that there was still about one point

1:53:40three million owed to the general fund

1:53:44on the form of redevelopment.

1:53:45You can see in that we don't really we

1:53:51don't have any and any information

1:53:53to indicate any of that was OK.

1:53:57And then it's another year other other funds

1:54:01that we paid backward they were different times not the not

1:54:05to the status California.

1:54:07OK.

1:54:10The other number I heard is that we were one hundred and forty

1:54:13thousand dollars in the negative whereas I

1:54:17had been hearing the number fifty six thousand

1:54:19in the negative.

1:54:19What what is the discrepancy between those two numbers

1:54:24One hundred and fifty six thousand

1:54:26is your equity your assets minus liabilities in the general fund

1:54:31and that includes that receive from the form

1:54:34and redevelopment.

1:54:35So that's 56000 is the total assets minus total liabilities

1:54:41of the government.

1:54:42However we we when we are presented to the council we

1:54:47want you to be considering that receivable performing

1:54:49redevelopment agency because the general fund

1:54:53is supposed to represent what's available to you

1:54:55spend it and we don't believe that those funds

1:54:58would be appropriate.

1:54:59Spend some based on the information we have or else

1:55:04you may end up collecting on that.

1:55:05And if you do collect them then they will become.

1:55:08But until then we don't really have any information

1:55:12to indicate that there was a very the hundred and forty

1:55:16one thousand that you're referring to just really

1:55:18looking at all the rest of the money keeping

1:55:20the jumper on during the fiscal year minus all

1:55:23the money that whatnots and what went

1:55:26out during the fiscal year.

1:55:28But one hundred forty thousand more than what

1:55:31came in OK the other going out because of a ghost.

1:55:38I'm sorry as I say that's because our previous fund

1:55:40balance was about eighty thousand

1:55:42dollars so eighty thousand.

1:55:47And then the difference between that is the minus and then

1:55:55the other question I had was also

1:55:57for both of you I know that this keeps coming up.

1:56:01So I wanted even more clarity on the overhead liability

1:56:08Mr. Bradley was when speaking about liability

1:56:14is our city unique or is liability usually used to talk

1:56:22about actual funds owed for retirement benefits health

1:56:27care I want to see your city is unique.

1:56:33It's know common sense.

1:56:35We see that every province has been open for the premiums

1:56:41but that accounting rules were set up

1:56:44on not necessarily what you're legally

1:56:47obligated a what you promised.

1:56:51OK.

1:56:52And even though I know you think the city

1:56:54is not technically paying any sanctions retiree but the fact

1:56:57that allowing them to be part of your plan

1:57:00is enabling them to get at discounted rates

1:57:04and that that benefit that system

1:57:08is having a discounted rate.

1:57:11So if their plan terminate then you

1:57:14may need to make up that difference between the rate

1:57:17in the market is for this reason to promise them

1:57:20and that's what your liability to present is.

1:57:24And honestly I would argue that maybe this liability may never

1:57:29be realized meaning that if the city keeps its health

1:57:33plan and every nothing change you're never going to have

1:57:36to pay anything on that my bill but that accounting standards

1:57:42want you to account for it under law is really

1:57:46unlikely scenarios where your plan is terminating

1:57:51and you having to go out to the market

1:57:53and find coverage for those with their needs

1:57:56and the city may make up the difference

1:57:58between the discounted rate and the market

1:58:00rate OK Miss Pincus Mr. Weaver.

1:58:05Do we have a legal a legal obligation

1:58:07to pay if for some reason for any reason

1:58:14these health care benefits if a retiree

1:58:20does not pay their premium we will not provide the benefit.

1:58:23So if for some reason they stop paying then

1:58:28we would kick them off our plan and they

1:58:31would not be allowed to rejoin.

1:58:32So that's the difference is that the legal obligation that we

1:58:36have had in our country our prior contracts that have said

1:58:41we will allow people to continue on our health

1:58:44plan as long as there's no cost to the city.

1:58:47And so we're we're we're fulfilling that.

1:58:50But again if they do not pay the premium

1:58:54they do not stand up when I have sky Woodruff the city attorney.

1:59:00I've never understood the ability for retirees

1:59:04to participate in this program to be in essence invested

1:59:08right of retirees but we'd have to do

1:59:11some additional legal research because I know

1:59:13it's reframed the question that way to my office

1:59:18headlining this Greg.

1:59:20So if if we Mr. Bradley's scenario

1:59:23is that if we were to change our health program such that we now

1:59:30had a different cost to to incur so let's say we were let's

1:59:36say they're paying five hundred dollars a month

1:59:40and we change the program and now that we're

1:59:43asking them seven hundred.

1:59:45The question is are we now liable for the difference

1:59:48between the five hundred and the seven hundred.

1:59:51Now that's my understanding of what

1:59:52the liability calculation is and what

1:59:57I've heard the city say No.

1:59:58But that's that's the underlying question

2:00:01is if we change the plan we obligated to continue

2:00:05to underwrite or further subsidize

2:00:08a retiree between the 500 and the 700 in my.

2:00:15If I may just comment on that the accounting standards

2:00:19are nobody making any legal determination about students

2:00:23liability obligation.

2:00:25The accounting standards are making that assumption

2:00:28the city wants to honor the benefits that were promised

2:00:32and also that the possibility that if the benefits that were

2:00:35promised I'm not honored that they

2:00:37may be potential litigations from retirees and so on.

2:00:42However can City take a position and say yes we believe that we

2:00:46are legally obligated to take those benefits

2:00:48and we are changing our minds and our benefits.

2:00:52And if anyone wants to to stand and do that then

2:00:56obviously if you change your accounting

2:00:58goons like your your your plan.

2:01:01And yes that accounting rules would change the rules

2:01:05are designed that under the assumption

2:01:07that the city wants to continue to offer the benefits

2:01:13and that will follow the past practices of continuing

2:01:18to offer benefits.

2:01:20However we do have she's aircraft terminated.

2:01:24They are all part plans for significant change

2:01:27in I hope that clarifies since Is there a way

2:01:34that we could potentially rewrite

2:01:38the obligation so that there wouldn't

2:01:40be the liability on our side.

2:01:43I mean if we really can terminate it at any given time

2:01:47I mean is there a way to kind of draw that up legally so that we

2:01:50don't have this what appears to be a big liability on our books

2:02:00I mean I wasn't speaking to the legal side of it but I would

2:02:03say from an accounting perspective the way to not

2:02:08report the liability is to basically get the retirees that

2:02:11we are no longer going to spit on a plant or if you want

2:02:15to participate in the plan you will need a what they call

2:02:18the age adjusted premia which would be

2:02:21the I'm not a subsidized premium but a premium

2:02:24that you would normally

2:02:25get if you go out in a marketplace based

2:02:27on your age that's currently what they will pay you pay

2:02:30the same as a 20 year old 25 year old active employees So

2:02:37in reality the active employee is subsidizing

2:02:39that every get that threat.

2:02:42And we're saying the city stop the subsidy

2:02:46but wants to continue to offer the benefits

2:02:48and this is the liability part is that subsidy

2:02:51but if you decide that no we are no longer going to allow this

2:02:55if you want to stay in the plan you would pay

2:02:57an agent a drastic premium and at this point

2:03:01I would eat probably more liability of course an actuary

2:03:04would have to make that assessment

2:03:07because at the end of the day those were not the one that

2:03:11made that assessment.

2:03:12It's based on the actuarial standards office

2:03:15and when we evaluate these plans and what

2:03:17the professional liability software and so on so my guess

2:03:25would be that if subsidizing them then

2:03:29that isn't a viable okay.

2:03:32Thank you.

2:03:34Yes that concludes questions for now.

2:03:39Mr. Wilson did you add a new question.

2:03:41Oh I just had a comment.

2:03:43What was just being said in the city.

2:03:46It's it's actually the comment is actually about retirement

2:03:49I believe not health care but it may address the issue would get

2:03:54could get dealt with if we were thinking of doing something

2:03:58which I mean you know it is another issue

2:04:01but the we used to have a retirement plan

2:04:07and what they did is join in another retirement plan

2:04:12which I guess was when we joined the state retirement plan too.

2:04:18I think I don't really know for sure

2:04:20but anyway what happened is is that all

2:04:22the people who wanted to stay in the old plan

2:04:25did until they died.

2:04:27And I think I don't know if there's anyone still alive

2:04:31but we actually came to a point where we didn't have

2:04:35enough money in the retirement plan

2:04:38to cover the retirement benefits of those employees

2:04:42former employees who had retired and so we had to put out

2:04:46money every month a little bit of money

2:04:48every it was pretty close.

2:04:49But you know we did have to put out money and so it could

2:04:55it could be that that would be how we would

2:04:57do a transaction like that which would be just

2:05:00to shut it down for New it.

2:05:02It's based on being a new employee or an old employee.

2:05:06So there are no.

2:05:09So that kind of there's a dividing line

2:05:12that makes it kind of easier to process I guess is the word.

2:05:19So I just wanted to add that information Thank you.

2:05:27Mr. FDLE yes can you hear me.

2:05:32Yes thank you.

2:05:33I'm sorry about the camera trading.

2:05:36I've got three questions I'll try to be brief.

2:05:41And I'm I'm glad to hear again that the good

2:05:44is there was no has been no fraud here

2:05:46and elsewhere though.

2:05:50And I and I keep hearing also that as far as good news

2:05:54our city doesn't have much debt.

2:05:58And compared to other cities and I was just want to ask

2:06:02the question generally how do you view that we could use that

2:06:07as an advantage to us in our circumstance where and what we

2:06:11must be doing now is there anything how we can play

2:06:14on the fact that we don't have a lot of debt that's the question

2:06:26Hello there is this question for the auditors or for me you know

2:06:33I honestly don't know if I have an answer for that I'm just

2:06:41trying to focus on an advantage we may have with a bit good

2:06:46news of less debt than other cities Well I mean I would

2:06:55say that the way we look at it

2:06:57is having debt as long as you have the ability to repay

2:07:04is not necessarily it's not always a bad thing.

2:07:10I honestly don't know how the city

2:07:12can leverage that position.

2:07:15The city's been borrowing every year

2:07:20at what we call the trend note the tax revenue in station No.

2:07:24And that's a short term borrowing to enable the city

2:07:27to meet its cash flow needs So every year that a six million

2:07:31dollar borrowing that happens.

2:07:33General Fund and it gets paid within the within the year

2:07:40And again I I would not know what

2:07:43other options or products or we're saying that are

2:07:47out there for that city.

2:07:49OK.

2:07:50Thank you.

2:07:50So the channels are going to be my next question

2:07:52and I don't know if we're on a certain timeline

2:07:56to find out when we might have the information

2:07:59whether we have that or not.

2:08:02But what year did you you came to us as a new auditor in 2018.

2:08:05Is that correct I believe that 2017

2:08:09was the first year 2017 okay.

2:08:12And when you did come one of the things

2:08:14you did tell us was about borrowing some of the concern

2:08:18that you had was the every year borrowing that we were doing

2:08:23and and as a new city councilman kind of the impact

2:08:27to the feedback I got was that that's just the normal thing

2:08:30to do we do it all the time.

2:08:33How normal is that for other cities

2:08:35as far as borrowing every year to meet

2:08:38that to deal with that trend.

2:08:44I guess it depends on on situations.

2:08:46I know for example of the city of Berkeley

2:08:49does that every year.

2:08:50One of my clients and they do that and a bigger number

2:08:54I've to maybe 25 30 million a year in the spend note so it's

2:08:59not by itself not necessarily something we shouldn't be doing

2:09:03it's just a tool that we should think about in the context

2:09:07of our budget.

2:09:08I think that the concern we had was answering

2:09:10that if the lender can't come one day

2:09:13and say no we're not giving you the money

2:09:15we're not renewing you are immediately or 5 million.

2:09:20That was a no you would not the city would not

2:09:24have the liquidity that smiles.

2:09:29The city gets the money from the fund every year.

2:09:32Can I ask our city manager Is there

2:09:35any news on when we might hear about our request

2:09:38for a loan We will.

2:09:41We will talk about this in the next agenda item but we do not.

2:09:46We don't have an answer right yet.

2:09:47We have been Marc and I have been working

2:09:49with our financial advisors and we

2:09:52hope to have an answer hopefully within the next few weeks.

2:09:56We actually are are getting into the game earlier than usual

2:09:59so we're hoping that that is going to benefit us.

2:10:03OK.

2:10:03And my last my last question when you take over for a city

2:10:10and I know cities like to rotate every so often with auditors

2:10:14which is a good idea.

2:10:16Were you did you.

2:10:17Obviously you researched and read past audits of our city

2:10:22from the previous auditor.

2:10:23Is that correct.

2:10:24That's correct.

2:10:25Yes when did they have in our city

2:10:29kind of has a history of using our reserves for general fund

2:10:34builds Did the previous auditors maybe

2:10:38this is an inappropriate question What

2:10:40were their comments to our city about doing that

2:10:43and how long we should be doing that about using the reserves.

2:10:49Well yes over a long period of time

2:10:54I think if I recall correctly I'm not sure

2:10:56but if I recall correctly the prior auditors made

2:10:59a comment about the city's financial position

2:11:03saying they elevated it to included in that audit opinion

2:11:07as what we consider what we call a going concern.

2:11:12Normally what we do is we had a paragraph in an audit

2:11:15saying that there is a growing concern that

2:11:17is in certain states zero and the prior auditors

2:11:21I believe that they had a common a finding regarding

2:11:24that financial position of fund balance

2:11:26but they did not need it to be in the audit.

2:11:29That's just a comment.

2:11:31And as you say they didn't raise it to the growing concern level

2:11:34that you hear from debt And I honestly

2:11:37don't know what information they had at the time

2:11:39so I wouldn't be making a judgment on them.

2:11:45But obviously when we came into the city

2:11:47we had an idea that there are some in the financial position

2:11:51is not very strong and that's not

2:11:53going to sell me a determining factor for us

2:11:56by itself in determining whether we should accept an audit

2:11:59or not.

2:12:00Because you can still have strong accounting

2:12:02processes even if you don't like the numbers.

2:12:05But if if the process is correct numbers are accurate that's

2:12:09what we care about most.

2:12:11That's our objective But I also want to just clarify Comment

2:12:18on your previous questions that were not financial advisors who

2:12:22were not in any way say city should or should not be

2:12:25using debt or anything nature.

2:12:28Our responsibility is to just report the facts as the honor

2:12:32and present them in the financial statements

2:12:36that we are in.

2:12:38There aren't some cities that that uses that

2:12:40very carefully and works out great

2:12:43for them and others that don't.

2:12:45And we have no opinion on that.

2:12:47Thank you.

2:12:48Thank you.

2:12:53Mr. Kato thank you.

2:12:56They're looking at this and looking through the years

2:12:59we have always had it.

2:13:01We've always been on the edge thought

2:13:05that the years that I did on the council since 2010

2:13:09and we've always done that and looking at how the books were

2:13:16done before you were we hire you redevelopment is always

2:13:23in the books and they should have taken that out

2:13:27and kept it down.

2:13:28Is that correct.

2:13:31You look at the one point seven that for 2019

2:13:37and you look at the big development

2:13:39funds were taken away.

2:13:42That is so really from 2012.

2:13:47And for the last 10 years we've been on the edge

2:13:51because of that redevelopment funds that were taken out

2:13:56of the general fund is correct Well

2:14:01I agree no with that because of what what led that situation.

2:14:06But just to put some some some history into when we came

2:14:13in seeing one of the main one of our first comments

2:14:17regarding City's financial position

2:14:19was an accounting matter relating to not accruing paid

2:14:22or at gonna cut the city's fund down some half when the city

2:14:27hit that accounting correction.

2:14:29That was the first source of basically slashing

2:14:32down that fund balance.

2:14:34Then we looked at there were a lot of receivables

2:14:38on a fund that were representing basically

2:14:40borrowings done by other funds within that department

2:14:43redevelopment.

2:14:45And when we evaluated those receivables

2:14:47we found that a lot of them were just not good.

2:14:50He said that those funds had no ability to repay.

2:14:54So we started by putting them into a non spend on the portion

2:14:58of fund balance and then eventually asked

2:15:00the city to write them off simply and some more

2:15:03that the city would be looking at in 2020

2:15:08That's how we feel that the city got to that point.

2:15:13So there were also certain states that maybe were not

2:15:18reported the way they should have

2:15:19been reported specialty surplus borrowings from other funds.

2:15:25Borrowings from other funds should not be outstanding

2:15:27or a long period of time constant approval

2:15:31and repayments get your and in a process

2:15:36that needs to be bottom.

2:15:37And those things were not in place

2:15:42So I believe that the combination of correcting

2:15:47that accounting and accruing paid or writing off receivables

2:15:51are valid receivables and also in some situations overspending

2:15:59or having a budget that was not designed to keep

2:16:01in reserve as I say this is what net

2:16:03you the general fund situation.

2:16:07And in your report it said that we lack

2:16:10grant making is that correct.

2:16:14No.

2:16:15The grant issues were actually things

2:16:18working with our fund benefit.

2:16:20This year we found what the city found one fund

2:16:25and we found another one where we trust some money sitting

2:16:29there and that's unusual for a grant fund

2:16:34to have just cash sitting.

2:16:35No money in a grant fund you Spence you incurred

2:16:40the expenditure first and then you

2:16:41filed for reimbursement then and you get your money back.

2:16:44So normally you don't have five hundred thousand sitting

2:16:46there Yes well after research done by the city

2:16:50we discovered that grant revenues were reported

2:16:53in the grant funds but the expenditures were are recorded

2:16:57in the general fund the general fund and the expenditure

2:17:00was on getting reimbursed So this year

2:17:03the city requested an entry fee to reimburse the general fund

2:17:07for all those expenditures.

2:17:09And that amount to about one point one million.

2:17:12So that was one part of the comment

2:17:14that we been on rent management and just

2:17:16grant accounting in Canada.

2:17:18And that report was released into compliance

2:17:21is that the city had expended whether it's

2:17:24in fiscal year ending in a in excess of seven hundred

2:17:27and fifty thousand and at that time

2:17:30the city should have reported that we had expended

2:17:34about that amount because that triggers

2:17:37a compliance on the city did not do that compliance

2:17:40audit on time because they did not report that they spent

2:17:44that much in federal funds.

2:17:46And so we thought in fiscal 19.

2:17:48So we did do compliance audits and fiscal union one for

2:17:51fiscal year 18 for fiscal year.

2:17:54And I talked to LA elected officials and other cities

2:18:00throughout the state and even in our county

2:18:02we have cities that have are 25 percent rainy day fire

2:18:08or reserve fund 30 percent And if you look at small cities

2:18:15like retail and we don't have that and and so looking

2:18:21at our history on looking at all the years when we've gone

2:18:27from nothing to 5 percent or 10 percent

2:18:32we should have been looking at a rainy day fund all along

2:18:36and cutting them and cutting.

2:18:40So we didn't have a huge deficit.

2:18:43So I look forward in working with that.

2:18:47My colleagues to make sure that we change

2:18:51course that future to make sure that we do

2:18:54have a rainy day fund.

2:18:57I'm amazed to see cities close by us

2:18:59to have an emergency fund to help small businesses.

2:19:05And I can't tell you how painful it

2:19:07was to speak to small business has been saying I'm sorry we

2:19:14don't provide that then.

2:19:16But they're saying well hey we're dead it

2:19:18and conquer the debt and debt.

2:19:21But but for small cities we're suffering now.

2:19:25So all this looking at your report

2:19:28is precluded so just imagining what those it is.

2:19:36I'm looking at double that what I was originally going to cut.

2:19:42So and that's just being very very conservative

2:19:46on what I see.

2:19:48So you know I thank you for this report to

2:19:53and I believed you back in 2018 19

2:19:57and definitely we will make some changes this year

2:20:01around make sure that we don't go this way ever again.

2:20:05So looking at this and knowing that these changes that we need

2:20:10to do are going to hurt and they're going to be painful

2:20:15but you can have we're not going to go bankrupt.

2:20:18We still can make these changes and make these changes in time.

2:20:24So I look forward and working with my colleagues on this

2:20:26committee Thank you Mr. DOLBY.

2:20:31Thank you very much for your presentation tonight.

2:20:34And meeting with me in early March

2:20:36Thank you for your explanation of our open liability.

2:20:41One of the.

2:20:41You were on board when comments were read about this item

2:20:45and it was one comment you've touched on it a couple times

2:20:49now about unspent double plans and you in response

2:20:54to council member Okamoto a question about the one

2:20:56point seven million.

2:20:58You've talked about the UN spendable

2:21:01transferring things to UN spendable funds.

2:21:03Can you speak to what the UN spendable

2:21:05fund what that concept is and how that plays out.

2:21:10It clearly counts towards being the general fund budget

2:21:15but it's not spendable so I was wondering if you could speak

2:21:18to that so the general fund most government

2:21:23and funds are focused on that ability to provide service.

2:21:27So beyond different than the private sector

2:21:29account where they focus on measuring.

2:21:33So regardless of where the revenues were collected

2:21:35some customers would not be hurting them.

2:21:39You want the record to revenues because that

2:21:41measures the profitability was government.

2:21:44It's a little bit different especially in the job.

2:21:49The focus is on availability of funds to provide services

2:21:53or to respond and gets emergency.

2:21:56So funds that are not going to be available to spending

2:21:59within a reasonable amount of time

2:22:01is normally not recognized as revenues or what

2:22:05to fund balance category.

2:22:06That is not spending.

2:22:08So examples of these non spendable categories

2:22:11unbalanced it is any long term receivables.

2:22:15You cannot lend money to another funds

2:22:19and they're not expecting collected

2:22:20for the next five years.

2:22:22It is in those money are not available for spending

2:22:25and that's what fund balance I've spent.

2:22:27The fund balance reflects also that not

2:22:31spending and category may include sends that or spent.

2:22:35For example if you purchase inventory

2:22:38if you prepay some expenses like insurance

2:22:41premiums or something like that.

2:22:43And those funds are no longer available

2:22:45even though because you paid them in advance

2:22:47they're not in your expense but they're also not

2:22:50available for spending anymore.

2:22:52The idea that not spending one category of unbalance

2:22:55is to communicate to the reader that even though you have

2:22:58equity of this much on balance of this not all

2:23:02it's actually in a spending bill for and wouldn't

2:23:04be available for or operations.

2:23:08It's one of the reasons why when we compare your fine balance

2:23:11to your annual expenditures would

2:23:13aren't to focus on the spending bill.

2:23:15That's the one that's gonna be available

2:23:16for you to respond quickly with 19 to respond to emergencies.

2:23:21That there's other amounts like that amounts.

2:23:22Oh it's from the RGA.

2:23:25Maybe it would be.

2:23:26I mean who knows.

2:23:27But there's a possibility that would not at least timely

2:23:32and that's the reason why the separate right.

2:23:35Thank you very much.

2:23:37And then you've had you've to reiterate you've made

2:23:41in my fellow council members have talked

2:23:43about you've not found any evidence of fraud

2:23:47and you're going concern.

2:23:49Comment is mostly around the policies decisions that

2:23:54have been made over years to not build that reserve that you you

2:24:00value that we all value that the government g f o a government

2:24:07government funded government GFA Officers Association had values

2:24:13a two to four month liquid capacity for two

2:24:19types of revenue shortfalls that were now experiencing

2:24:22in real time with Kobe nineteen your comment about going

2:24:26as Stern is is really just about the policy decisions

2:24:29that have gotten to this point.

2:24:32And then my apologies if my if I use language armor

2:24:37the only language we're allowed to use on audits

2:24:41does not it does not provide the absolute assurance so we are

2:24:44never in a position to say that ordinal fraud going on

2:24:48in the city.

2:24:49All we can say is that we we have not become aware of any

2:24:54and definitely we have not become aware of any that had

2:24:57a material attack on the bank.

2:24:59It's thank you.

2:25:02But in any organization and actually one of the questions

2:25:04that we always that's governing bodies and management

2:25:08is Are you aware that broad can exist in your organization

2:25:11even when you have internal controls in place

2:25:15so fraud can exist.

2:25:18Thank you.

2:25:20Any last questions for the.

2:25:22Mr seeing none.

2:25:28Thank you very much.

2:25:30Thank you for having me.

2:25:31Good evening everybody.

2:25:36Thank you.

2:25:37That concludes item five a presentations

2:25:40and we'll now go to item six which is public hearings.

2:25:44We have no public hearings this evening.

2:25:47That concludes Item 6.

2:25:48We will now go to item seven item seven as policy matters.

2:25:53We have three remaining items on our policy items

2:25:58Tonight we have seven a seven B and seven D.

2:26:03As I said earlier seven C has been removed to future meeting

2:26:10at this time we'll move to 7 a 7 A is the fiscal here 20 1920 20

2:26:18third quarter general fund budget update

2:26:20and covered nineteen impacts we are to receive and file

2:26:25an update from the finance director

2:26:30the period for submitting public comments on this item

2:26:34is now closed.

2:26:36Comments will be heard before council takes action.

2:26:40And I would like to for council members

2:26:42I would like to get public comment as

2:26:45well the presentation and comment on the questions

2:26:47on the presentation and then good public comments

2:26:48at that time And at this time we would

2:26:55like to get a presentation from Mr. Simon Thank you Mr. Mayor.

2:27:00Good evening.

2:27:01Honorable Mayor and Council members

2:27:03microsite one instructor here and I'm here

2:27:06to present an update on the city's budget

2:27:09to actuals through the nine months ended March 30

2:27:13first and also reflect on B Corps with 19 impacts

2:27:21on the general And to ask council

2:27:25do you see we filed this report and also

2:27:27provide us with directions on preparing the next step.

2:27:31But any budget.

2:27:32So that's what I'm looking at here.

2:27:36I don't have a PowerPoint presentation for you tonight.

2:27:38Like I usually do and back in February I came before Council

2:27:45with the mid-year budget adjustment presentation

2:27:49and a five year forecast that I brought the council

2:27:54down since that point in time.

2:27:57As everybody knows things have completely

2:28:00changed the landscape both on the revenue side

2:28:03and on the economic side has completely changed.

2:28:09But I did make my presentation to council

2:28:12on the failure focus.

2:28:14I think I highlighted the fact that one

2:28:16of the more significant risks to that forecast

2:28:19was an economic one.

2:28:21And that is exactly what is happening and it is telling

2:28:26that we just a couple of months back looked five years ahead

2:28:31of us and we reflected on the fact that the general fund

2:28:36balance was a negative fifty six thousand and had to be built

2:28:39back up by taking off a couple of million dollars from

2:28:44the budgets to come and also to provide for writing off some

2:28:48of these are the amounts owed to the general fund starting in 23

2:28:5324 and 25 you might recall that conversation has gone up

2:28:58but all that has changed and that without labouring

2:29:03the point too much I might say that that change has

2:29:07happened in the last three to

2:29:09four weeks or thing it has so fast

2:29:14so hard that he completely changed

2:29:17the whole revenue landscape.

2:29:19In a nutshell we have a 40 Million Dollar General

2:29:22Fund budget that's looking at a 10

2:29:25percent reduction in revenues.

2:29:27Again taking a worst case scenario

2:29:29hit a 10 percent reduction in revenues

2:29:31in just this last order of 1920 that is April May and June.

2:29:38And in my comments what assumptions that I make

2:29:42in making these estimates is that this state has

2:29:45we'll assist perhaps even long after that time frame and this

2:29:51could also precipitate hopefully not long

2:29:56and deep recession in the U.S..

2:29:58So these are things that I have worked on

2:30:03but haven't had the time be quantitative backing

2:30:07at this point it's too soon to tell.

2:30:10Come up with something like more concrete on both point out

2:30:14and we have this little staff report

2:30:16that put together for you.

2:30:18So without Much Ado I'm just going

2:30:20to jump into this and the high points

2:30:23and as always a pause for questions

2:30:25and try and provide the best possible answer that I could

2:30:28under the circumstances that we get ugly in so the general fund

2:30:34at the media adjustment back in February

2:30:36was slated to end the bit about half a million dollars.

2:30:39The positive is the plan and we had made deep cuts

2:30:44to the general expenditure side of the budget

2:30:47get increased certain expenditures and then

2:30:49interest ahead of us to have a positive 500

2:30:52to in 44000 in general fund surplus

2:30:57but with what's happened in the last three weeks I was forced

2:31:01to go back and look at each one of those revenue line items

2:31:05and in my staff reports I have hit the big ones privately

2:31:09property taxes sales taxes and a few other taxes.

2:31:14And then of course fines and forfeitures and charges

2:31:17for services.

2:31:18So the prime area is from which we have found reductions that

2:31:22will come to us in the next week so we

2:31:24anticipate change on the property tax side of things.

2:31:29I am glad to know that we have received

2:31:32property tax allotments for this fiscal year as

2:31:35of the 17th of April.

2:31:38So that has come through and that

2:31:39was expected from this side.

2:31:41It's to say that property taxes would not be impacted

2:31:44as much in this current fiscal year

2:31:46over what the sales tax side.

2:31:48We've had estimates prepared by HDL

2:31:51that estimate that if this thing would have continuing to June

2:31:55we would see approximately a one point one million

2:31:58dollar reduction in sales tax revenues

2:32:01or the entire fiscal year.

2:32:02So in the next three months typically we make six hundred

2:32:05thousand six hundred or so a hundred thousand a month

2:32:07in sales taxes and meet projecting that we would lose

2:32:11about 30 percent of that at a minimum 30 to 35 40 percent

2:32:15in some cases at a median on the sales tax side

2:32:18and that adds up to about approximately one

2:32:21point one million dollars Some of these

2:32:25will never come back as some of will be deferred to someone

2:32:29buying a car from Honda for example

2:32:31may not bite in the next three months but they come back

2:32:34and perhaps pick something up in July or August

2:32:36so that Red will come back to us.

2:32:38But some of these will never come back again.

2:32:41The real property transfer tax side

2:32:43I'm happy to note that we made the numbers because we have two

2:32:48point seven million in our PTT collections

2:32:51primarily because of a single property that changed hands

2:32:54back in March that generated about six hundred thousand

2:32:57our TDD is a building right opposite the Honda dealership

2:33:03on San Pablo Avenue and that's a huge condominium complex

2:33:08and that generated a significant amount of RTD

2:33:10so taking that one outlier out picture we would

2:33:15made two to two dollars in our PDP

2:33:18to the end of March which was spot on his depth

2:33:21what we had budgeted for.

2:33:24He would have continued to draw our TDD hopefully during April

2:33:27May and June and things be normal

2:33:31but I have assumed that I'm going to collect

2:33:34anything in April May or June.

2:33:37But here again is something that will come to us beyond June

2:33:41July August and September has properties

2:33:43to hopefully change hands as the interest

2:33:45rate climate dips below.

2:33:47Lows our people find it to their advantage

2:33:51to buy properties of things.

2:33:54Some of these will be coming back to us

2:33:55in the longer timeframe keeping the economy

2:33:59as the fixed component here.

2:34:03I have estimated you utilize franchise fees business license

2:34:07taxes and others dropped by about a million dollars

2:34:11and this might be a bit of this but I just

2:34:19want to present to you what I thought in my opinion was

2:34:23the most outlandish here so far reductions in revenues

2:34:28and assuming that things go on through the end of June

2:34:31rather than into April the middle of May

2:34:35or something like that that the shut

2:34:37down shut shutdowns of the champagne

2:34:39may have continued to June.

2:34:41Yes Mr. Mayor.

2:34:43Yeah.

2:34:44Thank Larkin.

2:34:45Can you go into.

2:34:45There were four components that feed into this million dollar

2:34:49almost million dollar decrease.

2:34:51Can you go into each one of those components and

2:34:55and give us some of the assumptions that you're using.

2:34:58I like the fact that you told us that sales tax you're looking

2:35:01at between 30 and 40 percent sales

2:35:03tax reduction over the fourth quarter.

2:35:06If you could go into the 300 to 600 the 40 and the 50

2:35:11and give us some sense of the of the assumptions

2:35:14that you're making on those four line items

2:35:19So looking at franchise taxes starting with franchise S.C. it

2:35:23and I'm looking at attachment 1 which is the budgetary income

2:35:28statement it shows you the general fund revenues

2:35:30and identify expenses presented in the form of the budget

2:35:35and it also touch on a few things on the table

2:35:38you guys the 17 18 actuals the 18 19 actuals on that

2:35:45and I have the actuals through March

2:35:4730 first the amended budget.

2:35:49Next to that the actual as a percentage of budget

2:35:53the estimated Corbett impacts happened between 1920

2:35:58projected year end.

2:35:59So going back to the franchise fees for example

2:36:03the franchise fees backing twenty 1718

2:36:06and refers to the budget for the current fiscal year

2:36:09together was about one point four million dollars and then

2:36:1418 19 we found that the franchise fees had dropped

2:36:17to one point to that as the budget for the current year

2:36:20runs at one point five million dollars and franchise fees

2:36:23are primarily from three sources for us

2:36:27and the East base century company is

2:36:3263 percent of that Comcast is about 14 percent of that back

2:36:36and about PG&E and others combined come

2:36:38to around 33 percent of that.

2:36:40And looking at that trend we were hoping to make one

2:36:43point five million at media.

2:36:46But clearly you probably won't even

2:36:48end up making what we made last year which because one point to

2:36:52and so I would expect that to come down to around 950000

2:36:57at the end of the current fiscal year.

2:36:59Like I said these are aggressive estimates made with whatever

2:37:03incomplete information we have at this point.

2:37:05So we decided to take that by 600000.

2:37:08So for the franchise taxes that you're looking at

2:37:11are all related to utilities using our rights away.

2:37:17Yes and those utilities are incurring

2:37:23less revenue because of Cove in 19

2:37:27and therefore we're seeing less revenue.

2:37:30You're projecting less revenue than last year which is six

2:37:33hundred thousand dollars less than what you were

2:37:35hoping to get for this year.

2:37:37That is going to do the same analysis for the other ones.

2:37:42Yeah but it does go pretty much and again

2:37:46be when I put this thing together

2:37:49I had to decide when I was going to draw the line.

2:37:53What was the magnitude of the decline

2:37:55that I was going to report back on this Anything

2:37:59over forty thousand is the amount

2:38:01that would come into this.

2:38:02And that's why it's showing that you'd probably see changes

2:38:05in the others to the smallest levels

2:38:07but those have not been picked up in each of these line items

2:38:13Any other questions on that Okay.

2:38:19So moving along the same table attachment number one

2:38:23find them for features I dropped that down

2:38:26by a hundred and forty thousand assuming that enforcement

2:38:29action to be deferred or delayed or even completely not done

2:38:34license and license and permits these

2:38:37would be things that would come back to us

2:38:38after June 30th perhaps.

2:38:40So that's still a drop in the current fiscal year.

2:38:43More importantly charges for services

2:38:46from the recreation department would take a significant hit.

2:38:49If these are programs offer well enough out there

2:38:54through the end of June.

2:38:55So that would be a significant component

2:38:57And that's the one point three million that you sure

2:39:00as reduction charges for services building

2:39:05construction permitting and so on

2:39:07would be deferred hopefully after July.

2:39:09But in the current fiscal year alone you

2:39:11might be impacted by a reduction in that activity so all in all

2:39:18we're looking at a three point seventy

2:39:19eight million dollar reduction approximately four

2:39:21million dollars on a 40 million dollar revenue budget

2:39:26And I was just comparing this with the city

2:39:29of Oakland for example.

2:39:31And based on numbers that I heard this morning

2:39:34from the mayor of the city of Oakland

2:39:36she pointed out that they were expecting an 80 million

2:39:38dollar hit in revenues that on a per capita basis which

2:39:45is Oakland's population that works out to about 160 dollars

2:39:50per person And if you take that same calculus to the city of El

2:39:55Salvador we are looking at a 4 million

2:39:57reduction on the 25000 population between itself

2:40:01160 dollars per person.

2:40:04We have pretty much in the ballpark just

2:40:06to see that across the city across across the bay

2:40:09area politically cities are seeing pretty much

2:40:12the same types of impacts on an average basis

2:40:15And that's not unusual for us.

2:40:19So that's something just to that I'd point that out as our

2:40:25and then moving down to the expenditure side of the budget

2:40:36I just want to point out that not that it matters that be

2:40:40send them the unified media budget backing February Exxon

2:40:45expenses were trending at somebody 5 percent a budget as

2:40:48of March 30 first March 30 first being

2:40:51set up for the year we were pretty

2:40:53much spot on on top of it.

2:40:56And I would venture to guess that had Corbett 90 not

2:40:59been there he may have ended up exactly what he said people

2:41:03at the end of June 30th as council member Rochelle

2:41:08O'Keefe what is so aptly pointed out you were

2:41:10on track to achieve these numbers that we had presented

2:41:15back in February but then as we as I said pick up the hit

2:41:19and things completely changed again on this

2:41:23I've been fairly conservative.

2:41:25You have taken steps to reduce costs but reductions that

2:41:29have shown under the Corbett nine an estimated

2:41:32impacts are minimal.

2:41:34I have tried not take a maximum look at that.

2:41:38For example we have followed staff.

2:41:42We have cut certain allowances for management and so on

2:41:46and these will start working their way through the system

2:41:49in the last three months.

2:41:51And but I've taken a conservative 150 thousand

2:41:54as the initial reduction in costs.

2:41:57I could be more.

2:41:58But these are just to of estimates on what we think be

2:42:03saving as a consequence of some of the actions

2:42:05that we have taken.

2:42:08And so that's on the expense side of the budget

2:42:12And I'll pause here to take any questions you might have

2:42:16on anything put gone attachment 1 or anything else before

2:42:21jumping to the 1 balance issue.

2:42:28I have questions but I'll wait and see if anybody

2:42:31else has questions okay.

2:42:40I have any on attachment 1.

2:42:42Do you have some guess questions and comments on attachment

2:42:46to you.

2:42:46So we'll.

2:42:47I'll try listening as well.

2:42:49Okay.

2:42:50I I have a question on attachment 1

2:42:53You say that the the third column over from the left I

2:42:57guess is the fourth and the third column of numbers

2:42:59from the left fiscal year twenty nineteen twenty twenty

2:43:02amended budget that's the total amended

2:43:06budget that we're proposing.

2:43:08And is that amended budget what we adopted in February

2:43:15or is that what we had dropped it.

2:43:17Is this does this reflect the 2 million dollars worth of cuts

2:43:21that we were talking about just last month

2:43:25or last to two weeks ago so be the amended

2:43:28budget media amended budget that be amended back on February 18.

2:43:33Prior to the 2 million dollar in cuts

2:43:352 million dollars in cuts based on the limited budgets plus

2:43:39slated to go into effect in 2021 which is the next budget

2:43:44cycle and more on that.

2:43:47But at this point two million dollars

2:43:49is not factored into this.

2:43:51This is our baseline budget against which people have taken

2:43:54a million reduction with either the 2021

2:43:58budget things being normal.

2:44:01So we do need I mean that the estimated

2:44:04the bottom half of this table general fund

2:44:07expenses fund balance.

2:44:09Does does it have to really reduce

2:44:15what we've have to do something there in order to begin

2:44:18to balance in this current fiscal year we can't

2:44:21wait till next fiscal year.

2:44:24Is that a fair statement.

2:44:25That is correct.

2:44:26In fact the last column tells that even

2:44:29being the hole to the tune of two

2:44:30point two million dollars if all of happen as forecasted right.

2:44:37And that's that's what I'm.

2:44:40I mean that you're realizing and again our estimates on the year

2:44:43estimates on the on the revenue do

2:44:45sound like I mean they're they're conservative

2:44:48but they're do sound like they are reasonable estimates.

2:44:51And so what I'm left with is trying to figure out

2:44:54where we make me leave even if we just balance

2:44:59this so that it's we find two point

2:45:02three million dollars in cuts.

2:45:04We we just maintaining our reserve at 0 9

2:45:07is holding our reserve right and of course this reflects the two

2:45:14point three million down below is net

2:45:17and shows an increase of eight hundred

2:45:21thousand almost in real property transfer tax.

2:45:23Correct.

2:45:24Yes it is.

2:45:26So.

2:45:26So in reality we need to be in order to stay on on on budget.

2:45:32We really need to be looking at for almost three million

2:45:34dollars in cuts If you take the property

2:45:40transfer backs unexpected sometimes

2:45:42someone doesn't hurt a bit.

2:45:43Yes exactly right.

2:45:46Is and the slides it that's a windfall I mean I question you

2:45:51at the time of the two million dollars

2:45:53was the 2 million dollars for the amended budget.

2:45:56Accurate or not.

2:45:57And you and we we agreed to go with the 2 million dollar

2:46:02amended budget.

2:46:03So I'm saying OK let's.

2:46:04That was the budget therefore this eight hundred thousand

2:46:07dollars is windfall that should if we take that off the top

2:46:12and say we're going to try and put that towards our reserve

2:46:15then we need to find three million dollars in cuts

2:46:18is what is true.

2:46:19Yes Any other questions on attachment 1

2:46:28and a question grade when when you're saying 3 million dollars

2:46:31in cuts are you saying 3 million in addition to the 2 million

2:46:36we've already talked about.

2:46:37Are you talking about 3 million total my understanding.

2:46:41That was my question.

2:46:42The 2 2 million dollars we've been talking about

2:46:44is for next fiscal year and would

2:46:46not affect this fiscal year.

2:46:49I'm now saying is that we need to find effectively somewhere

2:46:52between 2 million and 3 million dollars worth of cuts

2:46:54for this fiscal year and that means

2:46:57between now which is March April 15th and June

2:47:01June 30th we would not.

2:47:03We've got to find a way to reduce our expenditures

2:47:05by 10 percent or not quite 10 percent

2:47:097 something percent and 7.

2:47:14Just be clear 7 percent reduction in cost over a one

2:47:18quarter period is like taking a 20

2:47:21percent reduction over the whole year 30 percent Yes.

2:47:26Thank you.

2:47:27Thank you.

2:47:27I was doing it in my head quickly.

2:47:33And I mean that's a huge reduction.

2:47:38That's if you can drop in services and personnel

2:47:42and everything else two point three million

2:47:45and that is something that is that

2:47:50excuse me Marquardt or we're hoping

2:47:53to use that train on as well.

2:47:55Or is that separate from the loan we're

2:47:58hoping to get to pay for things I think you touched

2:48:05on an important point and let me just

2:48:08jump right into that which is a loss in revenues

2:48:12also translates to a loss in cash.

2:48:15I think if the live news the deferred

2:48:17to a different point in time beyond June

2:48:20the immediate future it is April through June.

2:48:23If you lose three million dollars in revenue

2:48:24you're pretty much looking at about 22 to two

2:48:26and a half million dollars loss in cash

2:48:29and the point of generating or using a short facilities

2:48:35such as the train is to help you manage the ebbs and flows

2:48:41throughout the fiscal year.

2:48:43And so that's going to place a bit of strain

2:48:47on the trend whatever that strand number of track number

2:48:49is going to be.

2:48:50You don't the 9 million now in the tab is that right We have

2:48:55asked for 9 million in the last few asking the Congress

2:48:57clearing 19 20 but I think that the 9 million

2:48:59dollar trend at this point.

2:49:02And I would ask for a 9 million and go back and ask

2:49:07for a 9 million dollar trend and that's what

2:49:11we're working on at this stage.

2:49:13Yeah.

2:49:14We've arrived at the game a little early.

2:49:16We are told by our financial advisors and so by their scope

2:49:21out what's out there in terms of brand related products

2:49:27that would be my request.

2:49:29So you've already done that you've asked for a 9 9

2:49:32by chance.

2:49:34Yes we have.

2:49:35We have framed the bump.

2:49:36We've provided all the information that they need

2:49:38and they now start looking around

2:49:40to see which bank would be prepared to offer

2:49:42something along those lines.

2:49:44So does a 3 million dollars that Greg is talking about go

2:49:49beyond what we're hoping to finance but the train

2:49:55the train we cover that as well.

2:49:58Right.

2:49:59Because the train is going to be useful from July

2:50:02through December mid then we get our first installment

2:50:05up property taxes selling.

2:50:08So there's not a need to necessarily not

2:50:10that I'm against cuts but to cut three more million hits we need

2:50:14to make cuts in June at the train you're planning to cover

2:50:20that amount whatever we may get right down to go good as you

2:50:27say this is this is Karen.

2:50:28I just wanted to jump in and say cutting three million dollars

2:50:32in the next two months would require me pretty much sending

2:50:35every single employee home.

2:50:38We're not we are absolute we can't do that.

2:50:41We can't run our city on so there's

2:50:45I mean that doesn't mean that we're not going

2:50:47to be making significant cuts.

2:50:48That doesn't mean that we're not looking at more things to cut.

2:50:52This fiscal year particularly if this health order continues

2:50:56and I can talk about that as well in a few moments

2:50:59but I also don't want there to be an expectation that it's

2:51:04it's really possible for us in the next two months

2:51:07to cut a full three million dollars out of that.

2:51:09We I think we need to try to understand that.

2:51:12Yes the train will help get us through but we are

2:51:14looking at a deficit this year.

2:51:16No question Okay.

2:51:19And the train is essentially a cash flow solution

2:51:25that takes our negative number and puts it

2:51:28into the future Yes it doesn't make

2:51:33the negative number go away.

2:51:35It just moves the negative number

2:51:37so that we have to resolve We have more time to resolve it

2:51:40and we have to resolve it at some point in the future

2:51:43That is true and that is part of my presentation

2:51:48which is to bring to your attention

2:51:51that in the upcoming budget cycle of the city

2:51:55manager had proposed to reductions at the last meeting

2:51:59and we'd probably need another 2 million

2:52:01on top back for a total of 4 million reductions

2:52:04to sip the whole thing back on its feet.

2:52:09And so that's yeah you're looking at a 4 million

2:52:11reduction in the upcoming budget cycle

2:52:13I'm not in the next three months but upcoming.

2:52:16And as you pointed out that it's almost impossible to think

2:52:19of taking out 2 million dollars in the next three months but I

2:52:24was thinking and anything else on that so not if I move along

2:52:37here I just want to touch a bit on the budget process before I

2:52:42get into something else and balance and something that I

2:52:45guess seeking direction from Council on be at a point is

2:52:52the 22nd of April and we are at a point where you have to start

2:53:01putting together a budget that can be brought back to council

2:53:05by the end of June so that can be

2:53:07approved and adopted and would be the document

2:53:10that becomes at least in

2:53:12the budget for the next fiscal year.

2:53:15And staff has been thinking along

2:53:17how this can be done best.

2:53:19And one of the thoughts we've had is to make within budget

2:53:25and have that appropriate and again limit prepared for that

2:53:28and appropriations limit calculations done for that

2:53:31and have it approved by adopted by council by the end of June

2:53:37and then returned to council by the end

2:53:41of the first quarter of next fiscal year

2:53:43with the final version of the budget.

2:53:45Once we have more clarity in terms of revenue numbers

2:53:49and it's been expenditure reductions so that put

2:53:52something back staff was thinking about

2:53:55and we thought we'd come back to Council

2:53:56and seek you direction on that.

2:54:00We can have a number of different options here.

2:54:02One being arrived ending a biennial budget for next cycle.

2:54:07We could do just an annual budget

2:54:09and then come back the biennial for the following cycle

2:54:12although there aren't enough to back up again

2:54:14that would buy time for us.

2:54:16While the numbers firm up in terms

2:54:18of where the economy is headed our revenues

2:54:20are headed our costs are headed.

2:54:24These are things that are still up there

2:54:26and I just want to share that with you to let you know

2:54:28that we are thinking along those lines and a direction

2:54:31that sense would be helpful.

2:54:34The second thing I want to ask you

2:54:35was again in the light of this presentation

2:54:39tonight before I touched on it a two point three million dollar

2:54:43reduction would 0 0 out the fund balance

2:54:47from a negative to a zero balance

2:54:50And if you recall at the February 5 year forecast

2:54:56presentation we had a trajectory that we would have followed

2:55:00in restoring fund balance to what

2:55:01a five year time frame review senior of expenditures

2:55:06by 1 million.

2:55:07Keeping our revenues here does not generate a fund balance

2:55:12it just balances the budget and so far we

2:55:17are to provide a fund balance provision in our upcoming

2:55:22budget That too is going to add a burden on the 4 million

2:55:25dollars it's going to be for the full 5 million

2:55:27generated One Million Dollar General Fund Reserve.

2:55:30So that's something else to keep in mind as well and be

2:55:34direction on that as well from council but that being said I

2:55:38just want to jump in to if I might in to my financial

2:55:44considerations section of the staff report before I was

2:55:49and take more questions if any As I pointed out previously we

2:55:54had planned on a 504 four thousand gel fund balance

2:55:57at media is not going to happen and big reductions with

2:56:02the loss in revenues would potentially end up with a two

2:56:07point three million dollar funding deficit with

2:56:12a corresponding loss in cash flow as well

2:56:15which we are at this point looking to a trend

2:56:18or a facility audit to

2:56:21try and mitigate that problem.

2:56:25You may recall from the presentation

2:56:26by management partners at the last meeting

2:56:30stressed that that facility would

2:56:32be absolutely important for us to maintain solvency

2:56:35and we recognize that.

2:56:37I also wish to point out that these estimates have been made

2:56:41in an environment of limited information

2:56:44in a fast changing environment and I have not factored

2:56:49in the likelihood of a major deep recession following

2:56:53this three month timeframe.

2:56:55There are reports that California

2:56:56is already in a recession and we haven't seen that yet.

2:57:00But you have in fact with those in our calculations.

2:57:04And that's part of the reason we are seeking to extend

2:57:06the budget process beyond July 1st

2:57:09to try and get a handle a better handle on some of the numbers

2:57:11that we can now expect to see change significantly at least

2:57:16on the revenue side Go ahead.

2:57:20Some more ahead.

2:57:22Mark to be to be clear we can take

2:57:26actions to reduce costs any day or every day from this point

2:57:32forward.

2:57:34The budget is setting the budget balance of both expenditures

2:57:39and revenue is is the setting of the budget.

2:57:42So just because we're delaying the adopting

2:57:46of a balanced budget or even a budget that might be negative

2:57:50or hopefully a budget that's positive that's not stopping us

2:57:53from making good prudent decisions about expenses

2:57:57that we're incurring now you know Do you

2:58:02mind if I jump in here Mark.

2:58:04I just you know I just.

2:58:05Yeah.

2:58:06So that's absolutely true.

2:58:07And so just you know kind of going back on a few points

2:58:12that Mark made you know just as a reminder this far so far

2:58:16this fiscal year we have already done the part time furloughs.

2:58:19We've also implemented hiring freezes spending freezes

2:58:23and we've cut benefits.

2:58:24We've also put off most capital projects

2:58:27if the order is extended and we are expecting

2:58:29it will be we're already looking at what we

2:58:32have to do for full time staff.

2:58:33And that could include furloughs and likely

2:58:36will include furloughs and reductions

2:58:38and how we would implement those.

2:58:40So unlike the private sector we just can't

2:58:43simply cut everyone's salary or simply

2:58:46immediately lay people off.

2:58:47We have civil service rules we have

2:58:49labor contracts that have to be followed and we're doing that.

2:58:52We also have to do the work.

2:58:54There is work that needs to be done.

2:58:56So the fact of the matter is the city is still

2:58:58running as an essential business so we are

2:59:01indeed looking at a deficit but so is

2:59:03every city across the country.

2:59:04So again the problem being that we don't have a general fund

2:59:08reserve to balance our budget this year

2:59:12but for next fiscal year.

2:59:13I just want to emphasize that that is what we need to look

2:59:16at as far as everything being on the table

2:59:18and being considered as far as cuts now and next fiscal year.

2:59:22So in that regard we are actually

2:59:25already working on that.

2:59:27As you know we brought you the two million dollars

2:59:29in cuts at the last meeting.

2:59:31Since then I have tasked all of our executive team

2:59:33with coming up with further reductions including looking

2:59:36at staff reductions So that means a little bit

2:59:39of going back to the drawing board

2:59:41from that original 2 million dollars

2:59:43in cuts that we brought to you.

2:59:45So right now I will be I will tell you

2:59:47I have H.R. working on some lists for the bargaining units

2:59:52and the management and confidential group.

2:59:54The majority of which is subject or civil service rules.

2:59:57We have to map out the processes to make any staff reductions

3:00:00including all of who is involved the bumping rights all

3:00:04of those things that are required

3:00:05and those also require meat and confers with the unions.

3:00:09I have H.R. and finance casting out various scenarios

3:00:12for furloughs and cuts were under represented members

3:00:16or employees I have public works doing further analysis

3:00:20on capital projects.

3:00:21Earlier you brought up the lad and what would wouldn't

3:00:25be funded by Ladd and the staff that are related to all

3:00:28of those projects Can we shift more special funds to Measure

3:00:32H or other special funds I'm having a and finance

3:00:37calculate reduced hours at all of our facility at City Hall.

3:00:41So I'm Center Senior Center recycling center everywhere I

3:00:45know we'll be talking about the library hours

3:00:46later so I won't get into that now

3:00:48but I just wanted to be clear that there

3:00:50aren't any tradeoffs as to what's

3:00:51being considered right now.

3:00:53We are looking at everything we are

3:00:54re analyzing it so that we can bring you these real scenarios.

3:00:58And as Mark indicated since we're

3:01:00working with such uncertainty it's

3:01:02not an easy job to know if what we're contemplating

3:01:04is even enough.

3:01:05And if as Mark pointed out four million dollars

3:01:08might get us to a balanced budget but not any reserve

3:01:11at all.

3:01:12So that's why our proposal is an interim budget which again will

3:01:16reflect the previous cuts but will only be the ability for us

3:01:20to continue moving forward.

3:01:21The city council can choose to amend the budget at any time

3:01:24it wants throughout the year.

3:01:26Anyway we're just proposing is a way for us not

3:01:28to do the full budget process.

3:01:30And the other part of this is our staff right now is engaged

3:01:34in emergency operations.

3:01:36So doing a full blown budget process right now there

3:01:40would be barely any community engagement.

3:01:42This type of community this isn't we're

3:01:44doing meetings as required but this isn't

3:01:46real community engagement.

3:01:49So what we would hope is that the council would provide

3:01:52us direction on that tonight.

3:01:54Then we can adjust our timelines we will continue

3:01:56to work on the immediate issues we

3:01:57would continue to work on the cuts now

3:02:00and into the next fiscal year.

3:02:01But this allows us to provide a real budget

3:02:04document later when we have a better clearer

3:02:08picture of where we're at.

3:02:15And it looks like you have a call.

3:02:17Yeah.

3:02:19Just trying to figure out which of my many tools

3:02:21I could use to raise my hand I guess

3:02:23I could give us the sort of build on what Karen just said

3:02:31or tear it down I don't know which I'm sorry is one

3:02:35of the things that worries me is when I get input

3:02:39from the public about their real world today

3:02:44and I hear things from my daughter

3:02:47just told me today that her landlord isn't

3:02:51going to is going to let her pay the rent later.

3:02:55Well she already is on furlough from her job.

3:02:58Shit.

3:02:59Social.

3:03:00I think she's eligible apply for unemployment

3:03:03but probably won't receive anything

3:03:05for a long time and and so and she has all kinds of student

3:03:11debt which I think is also forgiven for them not forgiven

3:03:15but postpone for the moment.

3:03:17So she has all these debts.

3:03:19They're not going away.

3:03:21She's at the age where we have a lot of consumerism

3:03:26so a lot of people like her.

3:03:29She's in her 20s and the what worries

3:03:34me is that OK we go along let's say let's say we go along five

3:03:39months and the virus is gone let's

3:03:42just pretend like that's gonna happen then the debt or rental

3:03:50of property for five months becomes due at some level

3:03:56and you may or may not have a job

3:03:59and you certainly don't have a bunch of reserves

3:04:02to pay property tax with.

3:04:05That's where we get our orders come from So

3:04:10what worries me is that we aren't gonna see the

3:04:15that the numbers projected for the decrease in our revenue

3:04:19sources are not going to be substantial enough reductions

3:04:25to to accurately predict the reality of what may happen.

3:04:31And I think we saw the beginning of that trend.

3:04:35The unfortunate negative trend with our own East Bay Santa

3:04:40Cherry was reporting that nobody was paying their utility bill

3:04:46and we get some of our income through that utility Bill

3:04:51the utility users tax right.

3:04:55And so there hurt is also are hurt

3:05:00not just directly but indirectly and what worries me.

3:05:08Getting back to my real point is that the numbers that we're

3:05:11using for projecting the depth of the despair of this moment

3:05:18will continue longer than we might think.

3:05:22I don't know that's longer than I think because I'm worried

3:05:26about it for I want I don't know that it will ever go back I

3:05:30don't know that anyone will ever want to go out to a restaurant

3:05:35to eat because people seem to be approach

3:05:40my small circle at this point.

3:05:44That's you know physical is nobody

3:05:47wants to get near anybody.

3:05:49It's like there if they think that the person next to them

3:05:52has the plague or something.

3:05:54And so I think all of this will have a very

3:05:59net negative impact on our revenue

3:06:02streams that we think of as automatic so.

3:06:08But I I just want to put that on our table today.

3:06:13I'm done talking.

3:06:15Okay thank you.

3:06:17Any other questions before Mr. size

3:06:20resumes his presentation at least moves on the attachment

3:06:23to any other questions about attachment 1

3:06:25or comments to this point.

3:06:28I have comments so I I don't underestimate what's going on

3:06:38with the city with our world with the state

3:06:44and it sounds to me what Mark is proposing if you can't really

3:06:50come up with logical and good and fair estimates

3:06:53is maybe the process we're gonna be heading toward.

3:06:57But I just had the question this cove it didn't happen would we

3:07:00be having a real budget document before tonight

3:07:04because I have to admit and I told the city managers that I

3:07:08was really disappointed that we didn't have a page or two

3:07:13with tangible items that our staff has looked at

3:07:16and prioritized so that our residents

3:07:19can see what we're doing.

3:07:21You know we talk about the need to have public process in here

3:07:25and that future ahead will make it difficult if we had a dock

3:07:29page or two with where you guys would think we need to cut

3:07:33what we need to reorganize.

3:07:35It would become a talking paper for our residents

3:07:39and we could hear back from them about what they prioritize.

3:07:42So I thank you promise in our analysis

3:07:47that we will be updated as far as what you may be

3:07:51proposing ideas you may have.

3:07:54And I just want to know how that gets out to the public

3:07:56and how do we proceed from here.

3:07:58Because we don't have it here obviously

3:08:01and we're not going to be voting on any on that tonight.

3:08:05The.

3:08:06Yes.

3:08:06And that is actual debt is absolutely

3:08:09what we are preparing on and that is what we are working on.

3:08:13The Latin when we talked about this at the last city council

3:08:15meeting that there are you know as I pointed out the real

3:08:20reductions we have to come from staffed and in one week We

3:08:25cannot put all of that together to be

3:08:27able to bring you exactly what that is going to look like.

3:08:30Oh that's going to be we have to be able to already.

3:08:34I thought we did last at the last meeting

3:08:37kind of present priorities of where we thought

3:08:39we should be headed as far as cuts

3:08:41and reorg as far as priorities for.

3:08:46I'm sorry can you repeat what you mean by that.

3:08:50Yes I thought I thought the council had given

3:08:53adequate direction at the last meeting

3:08:56that we might be getting the The Greatest Hits tonight in this

3:09:00in this analysis again the majority of it

3:09:06in additional these additional reductions has to come

3:09:11from some sort of staff reductions

3:09:13or going back to the drawing board

3:09:15and doing more reductions in what we are asking you

3:09:17for tonight is to be able to allow us to be able to do

3:09:22that more thoughtfully I again within one week

3:09:25being able to bring you another two million dollars

3:09:27of cuts was just not possible.

3:09:29No I hear you and I was just talking not necessarily

3:09:33the actual cuts but just the general

3:09:36where is our city moving toward as far as the big plan.

3:09:42But I hear what you're saying.

3:09:44I have sympathy.

3:09:46I'm hoping our community does because we

3:09:48do need to deal with what's happening

3:09:50and this is bigger than also retail it's

3:09:52bigger than all of us right now as Janet has said.

3:09:56So I appreciate that I would be in favor of moving forward as

3:10:00long as we get something in a couple

3:10:02of weeks that talks about ideas that we

3:10:05are planning Thank you Yeah.

3:10:13Go ahead Rochelle and since we're on all these topics

3:10:19and I'm not sure where we're going to throw them all in I

3:10:22guess I'll just have a couple of notes here

3:10:24I just wanted to ask real quick in case we don't come back

3:10:30In regards to the trend It was my understanding that we took

3:10:36out more money than we actually needed

3:10:39last year in terms of the 9 million

3:10:42dollars versus the 6 million.

3:10:46Could you Could you elaborate on that a bit

3:10:49and where we're at right now with the cash well

3:10:55some of the numbers that are out there that we're

3:10:58confusing to me and I think it confused some of our people

3:11:01at home as well.

3:11:03Is it the number we're gonna get to attachment to next.

3:11:08But the number on attachment to our fund equity totals

3:11:12were negative three point seven million

3:11:16and then our revenue shortage for this upcoming quarter

3:11:21is a loss of three point eight million as well

3:11:25and I think those numbers are so close that maybe

3:11:27people might have thought they were the same thing.

3:11:30So could you talk about one the trend and then

3:11:32and then move on to the next questions.

3:11:37So the trend that you took out last year

3:11:41was for 9 million dollars year.

3:11:43And at the time that we asked the bank for that money

3:11:51if you recall that the Fab had been noodling

3:11:53around for a couple of years.

3:11:56I would say that at a minimum on revising the fund balance

3:12:00policy and they came up with the Emergency Disaster Recovery

3:12:04Fund balance and so on and the Fab recommended that we have

3:12:08sufficient funds to take care of a disaster like an earthquake

3:12:13or a fire they had never thought of anything

3:12:15like a wireless contract.

3:12:17And so at the time that he applied for the trend

3:12:19he probably would have done with six or seven dollars

3:12:23as we have done in the previous years.

3:12:25We went ahead and asked for a mandate

3:12:27and requested the bank for 9 million.

3:12:30And on the premise that even if we didn't have an ADR

3:12:34f at least if we had cash to the tune of 3 million dollars

3:12:38that would help us through a disaster of the magnitude

3:12:42of an earthquake or something like that

3:12:45let I didn't quite think that this would happen but it was

3:12:50just a notional amount that I had thought

3:12:54would help the cash flow and guess what has happened.

3:12:59So we find that the cash has come in useful

3:13:03though it has been sitting in leaf account

3:13:06like we are required to do.

3:13:08Currently I have approximately eight point two million

3:13:11in my life account and I have five million

3:13:15in our checking account which is because

3:13:17of the property taxes that came in just a few years ago.

3:13:21But at the end of the day the trend was 9 million

3:13:24and we will repay this trend when it comes due in July

3:13:298 million has been earning interest as much interest

3:13:33as we would pay for the trend.

3:13:35But a plus and it was in fact in excess

3:13:38of what the plan interest was.

3:13:40But the recent past it's also dropped

3:13:42significantly below the trend interest among the dead bank.

3:13:45So that has been going on as well.

3:13:50In terms of the attachment to if I want to attachment to

3:13:55and this is an attachment that summarizes for the assets

3:14:01and liabilities at a specific point in time in this case

3:14:06it's a thirty first of March of this fiscal year.

3:14:09And it's called a balance sheet.

3:14:12And on this balance sheet we compared the prior fiscal year

3:14:15numbers with what's happened through the thirty first

3:14:18of March reduced by nine months in the current fiscal year.

3:14:21So the bottom balance sheet you have that says fund equity

3:14:25and it shows you how much revenues have been earned

3:14:28through the 30 plus to march and how much expenses

3:14:32have been expended to the.

3:14:33Mr. Martin those two numbers that you see the other 26

3:14:36point for nothing 9 million thirty point

3:14:39one for seven million tied back to the budgeted

3:14:43income statement.

3:14:44They just presented moments ago to look under the actual call

3:14:48for the night first nine months of the fiscal you'll

3:14:51see revenues of twenty six point four 9 9.

3:14:54And expenses thirty point one.

3:14:56So what that essentially does is it keeps track of revenues

3:14:59and expenses and the net benefit is what we call a fund balance.

3:15:03So at this point in time the year has not ended.

3:15:06You have three more months left and in my quoting the one

3:15:09about the last column I think on my attachment

3:15:121 there is a projection of how much revenues are

3:15:15left to be collected and how much

3:15:16expenses are left to be spent.

3:15:18I mean those do happen.

3:15:20The numbers here would also correspondingly

3:15:22changed and the three point seven million equity

3:15:26daughter that you'll see is forecasted to end at two point

3:15:30seven million which is the deficit that I predict

3:15:32or the current fiscal year.

3:15:35So this this thing is in motion meaning

3:15:37it's a snapshot in time.

3:15:38It's as of March 30 first about three months left to run

3:15:42for this whole thing to be all.

3:15:43And by the time it gets to June 30th

3:15:46hopefully not the revenues that have to be collected left

3:15:49and the expenses would have been paid out

3:15:50as planned and therefore the difference

3:15:52would work out to your fund balance

3:15:54of two point seven million.

3:15:55Right now it's three point seven.

3:15:57Going to transit ancillary thing.

3:15:59It's a snapshot in time it might be earned mind to be spent.

3:16:03And then that does happen.

3:16:04It's whole being zeros into the number

3:16:07that we have on that income statement Okay.

3:16:12I would like to repeat back to you then my understand of it

3:16:15because I think that some of the feedback that I've gotten

3:16:19from residents is that they looked at this fund balance

3:16:23here the snapshot that was taken on three thirty one twenty

3:16:28and they were under the impression

3:16:30that we were already three point seven million

3:16:33dollars basically in the hole.

3:16:36And then we had this additional three point seven million

3:16:39dollars or three point eight million dollars

3:16:41from the last quarter which would make us

3:16:46seven million dollars in the hole

3:16:47and then basically instantly bankrupt

3:16:52whereas the true picture is we actually do have money

3:16:57in our checking account and that money in the in the layoffs

3:17:01which is an investment account which will

3:17:04be able to weather us at least through for a few months

3:17:10and help.

3:17:10And then of course we're all hoping that the train will come

3:17:13through to make sure that we're able to pay all

3:17:15of our bills and our payroll throughout the summer

3:17:18and through the year as we balance our budget.

3:17:22Is that an accurate assessment That is correct.

3:17:26I mean it's important to recognize that a balance

3:17:28sheet which is different from the income statement

3:17:30that we have to attach from one because you

3:17:33can only construct a balance sheet at any point in time.

3:17:36And it just captures for us the total revenue

3:17:38earned as it back in time.

3:17:40And there's really no stand to be earned for the rest of it.

3:17:43I mean that field does in this picture we change right.

3:17:48So I'd also just like to reiterate for the public

3:17:52that that three point eight million dollars

3:17:56and lack of revenues more than four this quarter that were

3:18:00enduring the covered shutdown is a projection and it's our best

3:18:06is our best guesstimate but it hasn't materialized yet.

3:18:10I do believe that it will materialize

3:18:12and hopefully we all can hope that it will be for less.

3:18:15But I think it over the long term

3:18:17is as council member able since said it probably be for more.

3:18:22So we need to plan for that.

3:18:24And then I'd like to reiterate what we have been talking

3:18:27about with our manager as city manager Karen Pincus is that we

3:18:34are in the process of trying to balance the budget

3:18:38and make cuts now and we do want to start

3:18:43these conversations as close to immediately as possible.

3:18:46I know everybody many people wish that it was tonight

3:18:50but it will definitely be at our next meeting

3:18:53and probably for every meeting from here

3:18:54on out in terms of what we're doing in terms of balancing

3:18:58the budget and the the final big thick paper

3:19:03budget that will be presented as our budget

3:19:07as you're requesting.

3:19:09And I I believe that I'm at this point going along with it

3:19:12is that we'll have that big presentation sort of budget

3:19:16that will be done by the fall.

3:19:19But that doesn't mean we're not continuously

3:19:21working on the budget continuously looking

3:19:23at how much cash we have on hand and how we're going to continue

3:19:29to fund the city and how the necessary cutbacks that we'll

3:19:33have to make due to the original crisis

3:19:38of having a lack of reserves.

3:19:40Now with the compounded crisis of Cove in nineteen scientist

3:19:45those were just a couple of numbers

3:19:47I wanted to to point out because I think that the first infusion

3:19:52at home about what's going on and we would just want to make

3:19:57it as clear as possible and once again if you have any more

3:20:00questions you're listening at home and you want to reach out

3:20:04please go to the city website and get my email address.

3:20:07I'd be happy to talk with you more

3:20:08about it Janet do you have any questions on the item

3:20:14to example exhibit 2.

3:20:17I think most of what I'm really worried about tonight is based

3:20:25on the our revenue projections and how accurate they are and I

3:20:31I don't know how in any way that they could be accurate because

3:20:35of the fact that the thing with the call

3:20:38that 19 virus is that we don't have any experience with this.

3:20:43And and there are certain expenses

3:20:46that go which go back to individuals that are repeating

3:20:50expenses and if they don't get in the income

3:20:53because they don't have a job then.

3:20:56What we're seeing is debt piling up there

3:20:58and if there is debt piled up there

3:21:00I think that the public sector is know gonna be a place where

3:21:08they look to not paying the bill so that's why they won't they

3:21:12may not pay their property tax.

3:21:15I know in it.

3:21:16So it won't become delinquent.

3:21:18So you know who knows what that leads to.

3:21:20I don't really know.

3:21:21But you know it's not gonna be income

3:21:24to the city I do know that.

3:21:26And so I'm I'm really getting more and more concerned

3:21:33about the revenue side of this.

3:21:37And as I get concerned with the revenue side

3:21:41the only thing that I see that we can do is be really drastic

3:21:47and doing what we can to reduce our expenditure

3:21:50side because that we do have some control over.

3:21:56And so we have to be really judicious as we

3:21:59go through the different items that are budgeted

3:22:03for the period of time we have to really look at everything

3:22:07and say you know is this a is you

3:22:12know we could put things into categories

3:22:14and say Is this a need.

3:22:16Is this a desire or you know we could

3:22:19we could categorize things and charts like that

3:22:22and then we could say first we're

3:22:24going to do the needs we've got to because it's a need.

3:22:27You know it may may involve you know lives being lost

3:22:31or something and then there are things

3:22:33that we would like to do which we're gonna be happy have to be

3:22:37really going to have to think twice

3:22:42or maybe three times before we say yes to things that normally

3:22:46would have been a very easy guess for us

3:22:49because we believe in whatever it

3:22:51is that that thing represents.

3:22:53So I think that's where we are right now

3:22:56and it's a terrible place I think

3:22:59the whole United States is pretty much that way right now.

3:23:02I don't think we're unique That doesn't make it any better.

3:23:09That it it is where we are.

3:23:13And I'll just leave it at that.

3:23:14Thank you for it.

3:23:15Thank you I do have questions on attachment to mark but I do

3:23:22recognize that the six point two million which is asset totals

3:23:27represents what we have essentially

3:23:32through three quarters perhaps on on March 30 first.

3:23:36And I recognize that the nine point nine million

3:23:38is our liability.

3:23:41As of March 30 first and that nine point nine million

3:23:46includes the nine million dollar of their short term

3:23:49payable on the face of this it does not look like we have

3:23:55the funds to pay the note off.

3:23:59So.

3:24:00So I'll ask you can we are can we repay the trend that we

3:24:04took out from June of 2019 if I have

3:24:07to rebuild that track today.

3:24:09I can begin as I have a total of 14 to 15 million dollars

3:24:13in cash including leaf and the bank.

3:24:16The question is What do you do for the rest of the year.

3:24:18Right.

3:24:19So we actually had two squares left just

3:24:22on this piece of paper alone is life on here equity

3:24:25in cash right at the top.

3:24:27You have leaf investments which is one two

3:24:30three four five fifth drawdown.

3:24:32Yeah eight point two million exactly you said and you said

3:24:36you've got 14 but this only shows that you have

3:24:40six million square where how does this show me that you have

3:24:4314 million so 5 million off that 14 million can mean a company

3:24:48is a.

3:24:49I know that after the after March 30 Okay.

3:24:52Right.

3:24:53Great.

3:24:53That's a great answer.

3:24:55So so that we can pay our June 20 19 tax anticipation note off

3:25:01That's a great answer.

3:25:04How does our bond rating and anticipate

3:25:10and the anticipated reduction in revenue

3:25:12that you're showing in attachment

3:25:151 influence our ability to get a tax tax anticipation

3:25:21note for this year We are currently

3:25:28out there in the market mood looking for a trend

3:25:32and there's a price for any type of risk

3:25:35the idea bank that would be prepared

3:25:37to lend that sum of money at a different rate of interest

3:25:41than what we've used to be used to in the past.

3:25:43So that's one of the options in terms of a bond rating

3:25:47if if forced to go in for a public offering that's valid

3:25:50but the bond rating would come in because a tranny is

3:25:52typically private placement between a bank and us

3:25:55and the bank would factor that into their calculus meaning

3:25:59come into conflict interest rate when you go out

3:26:01for public offering it's an option

3:26:04and that would be impacted by the UN rating

3:26:12in the agenda bill in the agenda Bill on the paragraph

3:26:19that you use for property taxes.

3:26:24You talk about the timing of property taxes

3:26:28whether it's in this fiscal year or next fiscal year.

3:26:31Can you Can you elaborate on that.

3:26:34I mean since we're now at a point

3:26:37where cash flow seems to be more important than our

3:26:43because we're negative our balance is going

3:26:45to be negative for a while.

3:26:47We've already established that.

3:26:48So to me I'm focusing on cash flow.

3:26:51Can you please explain to me what why you've made

3:26:55a distinction over which fiscal year we get that tax payment

3:27:04really see the experiment do you mean property taxes or sales

3:27:07tax property taxes it's the paragraph that you've got

3:27:11it's it's the paragraph you've got second paragraph from

3:27:14property taxes you start talking about the timing of of property

3:27:19payments and just trying to find a sheet of paper you must

3:27:33circumvent everything and so in my report here on property

3:27:57taxes most taxes would have been collected by April 10 the due

3:28:03date and the city received the property taxes from different

3:28:09state county under the TDA plan which we have

3:28:12received by the way and there

3:28:16was no risk in the current fiscal year

3:28:20as far as we could sustain.

3:28:23But there was no I didn't think I saw anything

3:28:31time your property taxes on that side of the senses

3:28:35says this would not be too much of an impact on the city

3:28:38since the delayed receipts will still be received

3:28:40in the current fiscal year.

3:28:41Can you I don't understand that sentence

3:28:43Can you explain that sentence.

3:28:45Oh let me go back to that sales tax that's sales tax that's

3:28:57the second paragraph on the property taxes

3:28:59that has to do with sales taxes property taxes.

3:29:02Yes.

3:29:04So again the timing the timing of our revenue.

3:29:07Can you explain why you went into the discussion

3:29:10of the timing revenue it at this point.

3:29:13I have the simple simple answer if you want it.

3:29:15Sure.

3:29:16Most people pay their entire property tax

3:29:19just December payment but I've been told Well the sales

3:29:28tax is all about sales ideas.

3:29:30But you know I am talking about sales tax right.

3:29:33So so sales tax what we're what we're what we're trying

3:29:36to anticipate is that the governor is allowing businesses

3:29:40to delay their payments which means that sales taxes we may

3:29:44have received in this quarter for this fiscal year

3:29:47will now be delayed until next fiscal year.

3:29:49Right.

3:29:50Mr. Mayor that pertains to sales tax as the second paragraph

3:29:53under that section is on sales taxes.

3:29:56OK.

3:29:56And if the governor were to extend

3:29:59any one of these alternatives to making the actual payment

3:30:03AS LONG AS WE COLLECTED BY within 60 days of the end

3:30:06of the fiscal year that would be I put a quarter on fiscal year.

3:30:10That's pretty what it says.

3:30:11But if the Ghana were to extend that beyond the 60 day

3:30:14timeframe that would be treated as deferred revenue

3:30:17under the next fiscal year and would impact

3:30:19the current fiscal year itself.

3:30:21Property actually in the first paragraph

3:30:23you know I understand.

3:30:24Let's focus on that.

3:30:25So it impacts us in this year.

3:30:28So it just makes us have a bigger negative number.

3:30:30But we get it in the next fiscal year

3:30:33a lot of us all or negative number in the next fiscal year.

3:30:37So it's it's all negative.

3:30:40What I'm trying to focus on cash flow and what I'm hearing

3:30:44is we have 14 million dollars in the bank We have a nine million

3:30:48dollar note to pay leaving us roughly five

3:30:51million dollars of available cash

3:30:54to pay payroll for the next five rolls.

3:30:58We have 10 weeks left in this payroll.

3:30:59We have 5 million 5 payrolls left

3:31:022 million dollars of payroll.

3:31:03So our cash flow is is we'll have

3:31:07zero cash on June 30th which of course is

3:31:11what the Kaffir fit focuses on.

3:31:14And that's why you're.

3:31:14That's why you're talking about timing.

3:31:16But if but if I understand correctly

3:31:19we've asked how our situation affects us on getting the tax

3:31:24anticipation You're you're hoping

3:31:26to get a tax in anticipation note worth 6 to 9 million

3:31:32that will get us 9 payrolls maybe 10 payrolls which gets us

3:31:3910 payrolls is 20 weeks that gets us from July 1 to December

3:31:4615 when we get our tax payment from the county and the tax

3:31:51payment from the county the first tax payment in the county

3:31:53is slightly bigger or slightly less

3:31:56but that won't carry us to April we'll get the next tax

3:31:58payment from the county.

3:32:01So it just just trying to figure out what the cash flow is

3:32:05to get us to a year from now so if you mind if I might take you

3:32:10back to attachment 1 which has a column that gives us

3:32:14the estimated remaining risk news for fiscal year

3:32:17it's about the last one but the last column right

3:32:22and that shows us the figure of approximately one

3:32:24million dollars in money is due to us between now and June 30th

3:32:29and a corresponding 10 million dollars in expenses

3:32:31is flowing out from us between now and June 30th.

3:32:34Right.

3:32:34And of that 11 million five is already in the bank.

3:32:38Yes.

3:32:39So that shows a six million more for the bond issue this year

3:32:43not exactly so that would take care of the expenses

3:32:47for the remaining quarter of this year.

3:32:49So you could take all three out of the trend cash

3:32:52that you currently have that leads you to the small surplus

3:32:56So the key thing is to get another trend that can carry us

3:33:00through the rest of the fiscal year beyond July

3:33:03until the challenge is correct Kansas Christian it does.

3:33:14Okay.

3:33:14I think if there's no questions I'd

3:33:17like to go to a public comment at this time.

3:33:19I think we have seven comments that

3:33:21came in that need to be read in addition to the ones

3:33:23that we received in our supplemental packet

3:33:26the comments in the supplemental packet

3:33:29are available on our Web site as item

3:33:31and which is Supplemental communications.

3:33:34There were a number of comments that

3:33:36did get that we did receive on 7 a prior to this point in time.

3:33:41However at this point in time I believe we have seven comments.

3:33:44Is correct this quarter Ed can we do two and a half minutes.

3:33:53Again you certainly can so as the mayor mentioned we did

3:34:00receive comments on this item the item the comments that were

3:34:05received by 12:00 today were posted on the city's website

3:34:08as supplemental materials and provided directly to the city

3:34:11council members in advance of the meeting.

3:34:13Comments four agenda item seven a

3:34:15were received by the following individual Irish share.

3:34:18Now Dan Schulman Pearson Miller movie

3:34:22McDonald to dunk in a red zone Aga Denise Dennis.

3:34:30Janet Wu and Howdy Gowdy and then we

3:34:33have received an additional seven comments

3:34:37that we will do for you two and a half minutes as the mayor has

3:34:41directed and I am just going to double check

3:34:44and make sure that they are no.

3:34:45Yes we are still at 7.

3:34:47So I will go ahead now and proceed

3:34:49with reading those comments into the record beginning with Mike

3:34:53Cunningham starting the time now seen

3:34:58as the staff memo provides no new information

3:35:01and proposes no action.

3:35:03Council members are going to have to step up and ask

3:35:06for information and to establish the strategy to get

3:35:09through the immediate crisis.

3:35:11Although management partners estimated

3:35:13that revenues may fall as much as 6 million from pre

3:35:17Kobe 19 levels.

3:35:19The city is recommending only 4 million

3:35:21and cut the pre Kobe 2 million plus and add another 2 million

3:35:27pre covered reductions rely heavily

3:35:29on savings from eliminating long they can't police positions.

3:35:34Council members need to know if these are real saving

3:35:37square feet where fiscal year 20 1 expenditure levels built

3:35:41with an assumption that these positions would

3:35:44finally be funded and filled.

3:35:46If not eliminating them doesn't save any money

3:35:48and doesn't help get your cut.

3:35:50Target staff memo is vague on when a 2 million

3:35:54dollar when a second 2 million of cuts will be made.

3:35:57What is the council's dollar target for additional cash

3:36:00to be effective on July 1st.

3:36:03Is the council seeking an indiscriminate across the board

3:36:075 percent reduction What are the areas that the council believes

3:36:11can be passed with the least impact on residents

3:36:14is the council seeking reductions to management

3:36:16salaries and position reductions in fire department overtime

3:36:20elimination of duplicate Consultant Services cost

3:36:23saving changes to senior services

3:36:27or other targeted reductions.

3:36:29What is the council's timeline for considering and adopting

3:36:31these cuts What is the city's cash flow situation

3:36:35and when will the city run out of money without a payday loan.

3:36:38What is the size of the required loan and staff forecast ending

3:36:43fiscal year 20 with a negative two point three million

3:36:46General fund balance and are not proposing sufficient fiscal

3:36:49year 21 cuts to fill that form.

3:36:52How long can the city realistically

3:36:53maintain a two point three million negative fund balance

3:36:57submitted by Mike Cunningham a resident

3:37:07My apologies I'm having some technical difficulty here.

3:37:13That Well I apologize I'm having some technical difficulties

3:37:42with the screen share on their computer.

3:37:45There we see one second.

3:37:47Mr. Mayor.

3:37:48This is Sky Woodruff the city attorney

3:37:49while the clerk's sunscreen.

3:37:52Can I suggest that we make a motion

3:37:54to continue the meeting past ten thirty

3:38:08Mayor Lyman Are you on the call.

3:38:17I can make that motion.

3:38:19Is anyone else.

3:38:20Go on Can the council What.

3:38:28While he's doing this I'll just see if I can jump that help.

3:38:31Mary Lyman.

3:38:32Are you still on OK.

3:38:37A pro tem FDLE I heard you still on.

3:38:44Yeah.

3:38:45Council member Ableton Are you still

3:38:47on council member Perdue Okamoto council member Canto OK.

3:38:59Oh yeah.

3:38:59I'm only seeing myself Melanie and you and

3:39:04and Paul and Ken I'm only on the phone.

3:39:10Yeah.

3:39:24OK I think we're just gonna have to wait for a minute.

3:39:26Well it works it's kind of completely

3:39:51whether people have to call back I'm from I think Melanie

3:39:56has the whole function out.

3:39:58Yeah.

3:39:58Mila.

3:39:59Melanie just texted to confirm she has the host function

3:40:01and I think we're the only ones still

3:40:02on so I think others are going to have to call back

3:40:07in or reconnect Is there a way for you

3:40:10to take your hosting function.

3:40:13Well Melanie you can hear me can you please try.

3:40:18No she's not going even to reconnect.

3:40:20I don't see myself listed on here.

3:40:24OK well done.

3:40:26That's that kind of I'm no longer you.

3:40:30Holly I can hear you.

3:40:31Can you hear me.

3:40:33Can you take it back.

3:40:33Being the host.

3:40:34If I get in you become the host.

3:40:37If you're the while it's I don't know it's helped me

3:40:41disconnected and if you can't see

3:40:42me on the list of participants you

3:40:44you can't give it back to me.

3:40:47And I don't OK.

3:40:50It looks like it may be back.

3:40:52I'm here that I'm there shows that I'm the host here.

3:40:57We try I don't you're going up on our screen

3:41:01with fries on that if you have a screen that will be OK.

3:41:04We could call back and go and me and I declined to disclose.

3:41:09Close it out because then everybody will be forced

3:41:11to call back instead of right.

3:41:15Yeah.

3:41:16Is there I can't because it's not showing me as the host

3:41:20even though it least care that I'm the host.

3:41:23What if just Melanie drops off that island.

3:41:29What if just Melanie drops off it

3:41:31shouldn't that hook shift the host to somebody else.

3:41:34It could but it may only be you even though I still

3:41:37see every one of my my end but it does

3:41:40say is that disconnected but it still shows me

3:41:43as the host factor that it's absolutely

3:41:46going to pop everybody off.

3:41:48So if they close I mean yeah what got I hope everybody

3:41:53will call back in so I think we should try and do that reboot

3:41:57and close it out and try and reconnect.

3:42:01I'm conferring with IP.

3:42:03Yes it's me let's OK.

3:42:04Yes.

3:42:05OK.

3:42:05So I'm going to end this week.

3:42:06I mean I kind of it.

3:42:08Now Melanie before you do that Can you try one more thing

3:42:12and try to Transfer Host to the public comment user

3:42:15do you still see that on the call No all I see

3:42:20is a call in user 5 1 0 2 8 a call

3:42:23in user 5 1 0 7 7 8 Polsky event just got back on guys Yeah.

3:42:30OK.

3:42:31That's it recipient.

3:42:33If I close this I think it's gonna boot Melanie off it also

3:42:37even though she's the host Hi Jennifer.

3:42:40I finally got I finally just got back on OK.

3:42:44Janet we were having difficulties

3:42:47with the entire system so hang tight because it looks

3:42:49like a lot of people are still trying to get back including me

3:42:52as the host so we're troubleshooting

3:42:54where I feel right now I'm on the phone I'm

3:42:56on the phone now OK.

3:43:00So we just disconnect everybody.

3:43:01Holly you think every day that I'm going to do that I am going

3:43:09to disconnect and meeting this guy if you could help me

3:43:12since you're one of the few that can hear me to text

3:43:16however is an app.

3:43:18Yes.

3:43:18Yes.

3:43:19Holly choose someone I could trade the role to could

3:43:24I say this to somebody or no if you

3:43:27see the U.S. city of El Cerrito listed

3:43:28as that as a participant.

3:43:32No Ali they're not yet here.

3:43:37No I I I jumped off and then I jump back in and now I can see.

3:43:43So I think that people just need to try to be patient.

3:43:48OK.

3:43:48I was going to try but if I took out my finished fourth it

3:43:53restarts a little bit everybody else

3:43:55that I see there's no other option.

3:43:56Thank you so much So what do we do.

3:43:59Those would like to make the baton better about giving

3:44:03a few minutes and then try calling back

3:44:05and I have to say we found out system is trying.

3:44:09You can ask.

3:44:10OK.

3:44:11OK.

3:44:12We'll do that now.

3:44:16OK.

3:44:18I will hold on to make sure everybody since I can see in

3:44:21here just to make sure everybody gets off

3:44:24and I'm so and meeting right.

3:44:26Yeah.

3:44:27Just wait until the last person sees this.

3:44:32Just watch until you make sure that everybody cough OK OK.

3:44:37Weird why did you do that OK Paul fidelity.

3:44:44Can you disconnect.

3:44:46You hang up hang up I just my phone.

3:44:51Yeah.

3:44:52Hang up.

3:44:53We're going to reboot the system.

3:44:59OK.

3:45:00I think it's I mean one more programs.

3:45:02So I'll drop this phone call though so I'm going to drop by.

3:45:06I don't disconnect.

3:45:08Yeah.

3:45:08Melanie go ahead and get connected well.

3:45:10OK OK.

3:45:11My guy I'm back on file as well Right.

3:46:45I'm going to try texting council members sky

3:46:59It's Gabe I'm I'm on already.

3:47:01Yeah I see you.

3:47:01Thank you.

3:48:20Hello Paul.

3:48:26This is Skye.

3:48:27I can see that.

3:48:29Gabe keep those on.

3:48:31And Alex is alone.

3:48:33And Melanie is on an I can see it you're also.

3:48:37So I think people are slowly trickling back on we

3:48:40hear you I'm on my phone now.

3:48:51Not I'm not using my iPad OK.

3:49:01This is Holly I'm back on the call.

3:49:05Karen it looks like you were able to get it

3:49:07restarted Can everyone hear me.

3:49:13Yes yes.

3:49:15OK.

3:49:17Perfect.

3:49:20Karen are you is that you are you logged

3:49:25into the hotel account or am I. I think it's me

3:49:29but I don't see you.

3:49:33OK.

3:49:35OK.

3:49:35I think we're good.

3:49:36OK.

3:49:36So we have council member Kato at the camp

3:49:41a member of the daily Are you on your phone as well.

3:49:45Council member FDLE Yeah.

3:49:47OK.

3:49:49I'm going to be the squared one Drake.

3:50:03Thank you Mayor.

3:50:03Like many I am working on the last two council members

3:50:08to get them to try calling in again

3:50:18You have me and don't Yeah.

3:50:21You have your council member Ableton and council member

3:50:24Pardue Okamoto just after the meeting no

3:50:27and I just sent it to her so hopefully she

3:50:29will be back back on shortly.

3:50:33I can't get back on this one.

3:50:35I did did.

3:50:35I did.

3:50:36No I didn't put it in and it let me just

3:50:39hit a county All righty said that it looks like the WebEx

3:50:48software is what crashed.

3:50:51So hopefully we will not continue

3:50:53to have the technical challenges I

3:50:56trying to get back on with the second computer

3:50:59while we wait for council member doohickey Moto Thank you all

3:51:07for your patience For those of you

3:51:09listening at home including your own 401.

3:51:37Yes.

3:51:37Gone.

3:51:38OK.

3:51:39So I think Rochelle is the only council

3:51:40member who is not back on yet.

3:51:47And my staff is helping me right now.

3:51:50He's going to try giving her a call

3:51:52so that we can hopefully get started.

3:51:54OK.

3:51:55Yeah I'd suggest if she can't get back in by video

3:51:57that she just call in I think we have the full kicking back.

3:53:23OK.

3:53:26I didn't do a quick sound check this to make sure I'm going

3:53:28to do a quick roll call just to make sure we have other council

3:53:30members before we start again.

3:53:32Major lining.

3:53:34Yes.

3:53:35Mayor Purdum Fidelity or family member Eagleton here.

3:53:43Council member Paddy Okamoto air anthem member Kinkel yes.

3:53:50Perfect.

3:53:51Thank you so much.

3:53:52Thank you everyone for your patience.

3:53:54And I am need one more seconds that I am unable to get

3:54:00on on the secondary computer.