{"body": "CityCouncil", "date": "2009-02-07", "page": 1, "text": "MINUTES OF THE SPECIAL CITY COUNCIL MEETING\nSATURDAY - -FEBRUARY 7, 2009-8:30 A.M.\nVice Mayor deHaan called the meeting to order at 9:00 a.m.\nRoll Call - Present Councilmembers\ndeHaan,\nGilmore,\nMatarrese, Tam and Mayor Johnson - 5.\n[Note: Mayor Johnson arrived at 9:05 a.m.\n]\nAbsent :\nNone.\nThe City Manager provided a brief introduction.\nSharon Cornu, Alameda Labor Council, stated labor management\nrelations are not following a democratic, fair bargaining process ;\nlabor organizations object to the policy that states the City is\ncommitted to using private sector resources in delivering municipal\nservices.\n(09-061) Recommendation to accept the Financial Report for the\nSecond Fiscal Quarter - October, November and December 2008.\nThe City Manager gave a brief presentation to provide budget\ncontext.\nThe Interim Finance Director gave a presentation.\nMayor Johnson requested an explanation of the just over $200,000\ndifference; stated the Council needs to understand to ensure it\ndoes not happen again.\nThe Interim Finance Director responded the math for revenue and\nexpenses were off; stated the budget was done using Excel\nspreadsheets instead of the City's finance system; mathematical\nerrors cannot be precluded; a retirement anticipated in the Finance\nDepartment did not occur.\nCouncilmember Matarrese inquired whether the amount was a math\nerror or misprojection about someone retiring.\nThe Interim Finance Director responded both; stated the amount was\noff by $100,000, which seems like a math error since the number is\neven; the projection was one person would leave.\nCouncilmember Matarrese stated $217,000 might be the amount needed\nto keep the library open; the cause of the error has to be\nidentified in order to minimize the occurrence in the future.\nSpecial Meeting\nAlameda City Council\n1\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 2, "text": "The Interim Finance Director stated there are several ways to stop\nthe error from occurring; human beings make errors; the financial\nsystem is being redone to prevent re-keying in the budget.\nMayor Johnson inquired whether assumptions about retirements are\nfactored into the budget and whether said procedure is the normal\nway to operate.\nThe Interim Finance Director responded that she is addressing how\nto solve the math error; stated the other issue is how to plan\nstaff reductions; planning for the next budget started really\nearly; staffing decisions will be made well in advance.\nMayor Johnson inquired what is the normal budget development\nprocess for factoring in staffing levels.\nThe Interim Finance Director responded a position would have to be\ncut to compensate if retirement does not happen; stated departments\nneed to have a contingency plan to prevent the same situation.\nMayor Johnson suggested funding for the position be included in the\nbudget until the person retires to prevent departments from\noverspending.\nThe Interim Finance Director outlined how service levels would be\nreviewed for the next fiscal year budget.\nMayor Johnson stated it sounds like the City has a fairly archaic\nfinance system; good work is being done to improve things\nquestioned what can be done to ensure that the City does not go\nbackwards again.\nThe Interim Finance Director provided a brief explanation of how\nthe budget is being changed to make it a useful management tool.\nMayor Johnson stated the Council needs to know what the issues are\nand needs to set priorities; the City cannot continue to be run the\nsame way; greater emphasis on analysis is needed; the budget should\nbe each manager's number one priority; a lot more emphasis on\nfiscal matters is needed; a lot of catch up is being done.\nCouncilmember Matarrese inquired whether 103 is the appropriate\nnumber of funds for a city of Alameda's size; stated an item for\nthe issue bin should be whether the City would realize clarity and\nefficiency by consolidating accounts.\nThe Interim Finance Director responded some funds could be\nSpecial Meeting\nAlameda City Council\n2\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 3, "text": "consolidated; stated the City probably should be closer to 70\nfunds; the City has a lot of Assessment Districts impact fees by\ngeography are being reviewed for Capital Improvement funds, which\ncurrently have four funds; work is harder than it needs to be in\nsome areas; staff is working on cleaning up the FY 2009-10 budget.\nCouncilmember Gilmore inquired whether ancient hardware cannot run\nthe finance software or whether the current software needs to be\nused differently.\nThe Interim Finance Director responded both; stated the software is\nunix based, which is a problem.\nMayor Johnson noted the problem seems to be a deferred maintenance\nissue.\nThe Interim Finance Director stated the hardware cannot run\nanything new; the matter would be discussed under the Internal\nService Funds (ISF) ; staff is addressing the issue.\nCouncilmember Tam inquired whether one finance staff person is\nassigned as a liaison for each department.\nThe Interim Finance Director responded departments are divided\namongst four staff members; outlined the assignments.\nCouncilmember Tam stated deferred maintenance has been passed on\nfrom prior years and continues to be pushed off; it is mutually\nexclusive to spend money to improve operations while cuts are being\nmade at the same time; stated that she needs to understand how said\ntension is dealt with to achieve a balance.\nVice Mayor deHaan stated budgets have been cut by $4 to $5 million\nevery year; there always seem to be surprises some surprises were\nimproper accounting of funds; there are always discoveries late in\nthe game that he would like to hear how the City will avoid said\ncircumstance.\nThe Interim Finance Director stated having a fresh set of eyes\nhelps; staff is going through each fund; a lot was discovered in\nthe first quarter that she is confident in the way program\nperformance budgets work; issues will be smoked out once the City\nforces itself to budget revenue and expenses on an expenditure\nprogram basis; funds are being cleaned up to make management\neasier; surprises come up when funds have been earmarked in an\nannotation, but not included in the accounting system; the two\nworlds have not met; in the last six months, the Finance Department\nhas worked diligently to determine what funds are available; that\nSpecial Meeting\nAlameda City Council\n3\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 4, "text": "she was 70% sure there would be no surprises when she started;\ntoday, she is 95% sure.\nVice Mayor deHaan stated revenue streams can shift; too often there\nhave been internal surprises.\nThe Interim Finance Director provided an overview of the mid-year\nbudget.\nMayor Johnson inquired how much would be budgeted for Other Public\nEmployee Benefits (OPEB) during the current fiscal year.\nThe Interim Finance Director responded the matter would be\naddressed later in the day; staff has a recommendation; continued\nher presentation by providing a debt overview.\nMayor Johnson stated the Council does not believe the way the City\nhas been balancing budgets can be sustained; the City has been\nusing a band-aid method; real steps need to be taken towards a\nsustainable, balanced budget the corporate world refers to it as\nadjusting the corporate structure to reflect current realities.\nVice Mayor deHaan stated debt has been restructured two times;\nlooking at restructuring a third time is a problem.\nCouncilmember Gilmore stated debt is a part of how cities run; the\noverall question is whether the City's level of debt is\nappropriate.\nCouncilmember Tam stated refinancing was one of the tools that\nbrought the budget into balance; each department took a hit;\nsacrifices have been made.\nMayor Johnson stated the refinancing was positive.\nThe Interim Finance Director provided an overview of the debt\nreport; stated the City only has one outstanding general obligation\nbond, which is very low; the City also has tax increment, which is\nthe way redevelopment agencies work; tax increment is not an\nobligation of the City.\nThe Development Services Director briefly commented on tax\nincrement.\nCouncilmember Matarrese requested staff to discuss the $900,000 the\nState took from redevelopment\nThe Development Services Director stated the amount is being paid\nSpecial Meeting\nAlameda City Council\n4\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 5, "text": "out of the reserve if the fund did not have a reserve, funds would\nhave to come from operating expenses, which would have impacted\nstaffing.\nVice Mayor deHaan inquired whether the funds had been obligated, to\nwhich the Development Services Director responded in the negative.\nThe Interim Finance Director stated it would take 15 years to\naccumulate the amount of cash needed for a redevelopment project;\ndebt is the nature of redevelopment.\nMayor Johnson stated redevelopment transforms blighted areas into\npositive parts of the community.\nCouncilmember Matarrese stated ISF touch other funds ; the balance\nsheet has a $5 million negative liability; inquired whether $2. 7\nmillion needs to be made up from other funds.\nThe Interim Finance Director responded in the affirmative stated\nalternatives would be reviewed after lunch; continued the debt\npresentation.\nIn response to Mayor Johnson's inquiry regarding Golf Course debt,\nthe Interim Finance Director stated Certificates of Participation\n(COP) were used for driving range improvements.\nMayor Johnson stated a policy needs to be in place to ensure that\ndebt does not extend to the life of the project the driving range\nneeds major renovations and the previous renovations have not been\npaid off.\nThe City Manager stated the issue would be added to the issue bin.\nCouncilmember Tam stated the COP were financed at a 4.5% interest\nrate; inquired whether the amount is lower now.\nThe Interim Finance Director responded in the negative; stated tax-\nexempt issues in the market today are at 9%.\nMayor Johnson stated the State's historically low bond rating has a\ndirect impact on cities and local government; the City's bond\nrating has not changed, but the ability to obtain bonds is\naffected.\nThe Interim Finance Director stated the City had to respond to a\nseries of questions from a bond-rating agency due to an outside\nclaim that the City is going into bankruptcy.\nSpecial Meeting\nAlameda City Council\n5\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 6, "text": "In response to Vice Mayor deHaan's comments regarding debt, the\nInterim Finance Director responded debt public relations would be\nadded to the issue bin.\nWalter Schlueter, Alameda, discussed financial systems ; urged\ninternal systems be reviewed and changed.\nGretchen Lipow, Alameda, discussed the State and school budgets.\nMayor Johnson stated Council would wait to take action on the item\nuntil after the OPEB discussion.\n[Note: The motion was made at the end of the meeting, see page 30. ]\n*\n*\n*\nMayor Johnson called a recess at 10:50 a.m. and reconvened the\nmeeting at 11:05 a.m.\n(09-062) Discussion of draft General Financial Policies and Guiding\nPrinciples; no action required.\nThe Interim Finance Director gave a brief presentation; stated\ndeferred maintenance would be added to each section in response to\na suggestion made by the Public Works Director; suggested comments\nbe provided on each section starting with Section I, Guiding\nPrinciples.\nMayor Johnson stated, under Expenditures [Section I.E], there\nshould be a requirement to report things that the City is not\npaying for in order to balance the budget.\nThe Interim Finance Director suggested language be added to the\nBudget section [Section II].\nIn response to Mayor Johnson's inquiry whether language should be\nadded to Policy I.E.1 or under the Budget section, the Interim\nFinance Director stated current year expenditures is limited and\ndoes not mean full liabilities; that she would work on language\nthat indicates the current year revenues shall fund the current\nyear expenditures and a proportionate share of liabilities.\nThe Development Services Director inquired whether the policies are\nonly about the General Fund; stated policies are not going to work\nfor some of the other funds.\nThe Interim Finance Director responded some of the policies do not\nwork for the Housing Authority, Alameda Municipal Power (AMP ) and\nSpecial Meeting\nAlameda City Council\n6\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 7, "text": "the redevelopment agency; stated a subsection would be created to\ndeal with said groups.\nCouncilmember Matarrese stated the general policies and principles\nneed to apply to the entire City; accounting principles apply to\neverybody; human resource management should apply to everyone and\nneeds a lot of work; debt management should apply to everyone; the\n\"how to\" would be specific to each; policies should address what\nhas to be done, how it is done is fund and agency dependent; \"how\ntos\" should not be addressed too heavily.\nMayor Johnson stated clear disclosure of what, if anything, is not\nbeing paid for is needed; the City has not been making needed\ninvestments in the Finance Department; running a City on dinosaur\ntechnology is inexcusable the Council did not know about the\nmatter until today; questioned how the Council can prioritize\nwithout knowing about assets.\nIn response to Councilmember Matarrese, the Interim Finance\nDirector stated an appendix could be added to address the \"how tos\"\non a larger scale.\nCouncilmember Gilmore stated the policy that the City shall utilize\none-time revenues for one-time expenditures should be throughout\nthe document, similar to deferred maintenance; one-time revenues\nshould not be allocated for on going maintenance or salaries under\nexpenditures, surplus revenues [Policy I.E.2] includes a laundry\nlist, but does not include unfunded liabilities like OPEB.\nThe Interim Finance Director stated the list would also include\nreducing deferred maintenance liabilities some things need to be\nconstantly restated.\nMayor Johnson stated the City always needs to have a plan for\noperation and maintenance before approving new infrastructure;\ninquired whether said concept is included in the policies.\nThe Interim Finance Director responded in the affirmative; read\nlanguage suggested by the Public Works Director.\nThe City Manager stated the issue is addressed in Policy I.G.3, but\nneeds to be reemphasized.\nCouncilmember Gilmore stated certain principles that are important\nenough should be a general theme throughout the entire document a\ncouple that are so overarching and impact the way the City should\nbe doing business have already been identified.\nSpecial Meeting\nAlameda City Council\n7\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 8, "text": "The Interim Finance Director stated the list includes : one-time\nrevenues, deferred maintenance and future liabilities.\nCouncilmember Matarrese stated the principles should be for every\noperation; absolutes include: setting an OPEB figure for new\nemployees and the debt ratio; the worst-case scenario should be\nselected for the benchmark.\nThe Interim Finance Director stated the same debt ratio might exist\nfor the Housing Authority and AMP, but Development Services could\ncause a problem given the nature of redevelopment debt.\nCouncilmember Matarrese stated there is revenue; the same standard\ncould apply.\nCouncilmember Gilmore stated, if there is an exception, staff\nshould spell out why the policy should not apply.\nCouncilmember Matarrese stated the policies should be general, but\nstrong enough if the benefit is so great that the City has to\ndeviate from its guiding principles, the matter can be taken to the\ngoverning body; adding loopholes would be a mess and impossible for\nthe next group to interpret.\nVice Mayor deHaan stated sustainability should be an overriding\nprinciple; suggested a definition be included.\nThe Interim Finance Director stated a glossary could be added.\nThe AMP General Manager stated the guiding principles might need to\nbe distilled to a higher level to apply to AMP; AMP revenues come\nfrom rates; the way revenues are collected is very different from\nthe General Fund; AMP's bond rating is different and looks at\ncertain ratios; reserve levels and labor costs differ; the\nspecifics in the later part of the document do not apply; that he\nwould take the document to the Public Utilities Board (PUB) and\nsuggest amendments as part of its budget process.\nThe Housing Authority Executive Director stated the Housing\nAuthority can seek up to 105% of budget when going out for\nfinancing.\nCouncilmember Tam requested that the speaker's comments [ on Policy\nI.E.3] be addressed.\nThe Interim Finance Director stated financial analysis done under a\nprogram performance budget applies a methodology to determine if\nthe City should operate a program; the program is evaluated on the\nSpecial Meeting\nAlameda City Council\n8\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 9, "text": "discussion could be held on human resource policies.\nVice Mayor deHaan suggested the policy be amended to: \"The City\nshall deliver service in the most cost effective and efficient\nmanner.\nBob Sikora, Alameda, stated many people are concerned that not\nenough attention is being paid to biological and geophysical\nsustainability suggested a policy be inserted.\nVice Mayor deHaan stated it [environmental sustainability] should\nbe included in the definitions.\nThe Interim Finance Director gave an overview of Section II, Budget\nDevelopment and Adoption.\nMayor Johnson inquired about the intent of Policy 3 under Balanced\nBudget [II.G.3]; stated fund balance spent should be identified as\nfund balance draws.\nThe Interim Finance Director stated Council has to authorize\nspending from the fund balance.\nMayor Johnson inquired whether money from the fund balance cannot\nSpecial Meeting\nAlameda City Council\n9\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 10, "text": "be spent without Council approval, to which the Interim Finance\nDirector responded only Council can authorize use of money from the\nfund balance.\nMayor Johnson inquired whether the policy could be specifically\nstated, to which the Interim Finance Director responded in the\naffirmative.\nRed Wetherall, Alameda, stated the policies have been discussed and\nshould already be in place; encouraged appropriate use of\nvolunteers.\nThe Interim Finance Director stated Section III on Budget\nAdministration and Financial Reporting includes a lot of \"how to\"\nitems.\nCouncilmember Matarrese inquired whether requirements are mandated\nby outside agencies.\nThe Interim Finance Director responded the annual report and audit\nof certain funds are mandated.\nCouncilmember Matarrese suggested flagging policies which have\nadditional requirements.\nThe Interim Finance Director stated interfund transfers and loans\nare addressed under Revenue Management [Section IV]; most language\nfor User Fee Cost Recovery [Section V] was drafted and adopted\nprior to her arrival: numbers and percentages need to be updated;\nPolicy V.H. 2 addresses appeal fees, which should be revisited.\nIn response to Mayor Johnson's inquiry regarding the appeal fee,\nthe City Manager stated the matter would be added to the issue bin.\nMayor Johnson stated the City has had some experience under the\ncurrent situation; it is time to review the fee.\nCouncilmember Matarrese stated the broad policy question deals with\nwhether or not the appeal is granted; the fee should be the current\namount if the appeal is granted; an increased amount should be paid\nif the appeal is denied; further stated there is a process for\nrecovering user fees; inquired whether a policy addressing each\nuser fee is needed.\nThe Interim Finance Director responded that some language could be\ndeleted; stated that she was creating a trail of what exists;\ncontinued her review; stated the ferry should be removed from the\nEnterprise Fund [Section VI].\nSpecial Meeting\nAlameda City Council\n10\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 11, "text": "Councilmember Matarrese stated enterprise funds should be defined;\nthere is an artificial notion that the sewer fund makes money;\nfurther stated that he would like AMP included in Section VI.\nIn response to the Interim Finance Director's comments regarding a\nchart of accounts, Councilmember Gilmore stated having a chart of\nall funds is a great idea; the Development Services and Planning\nand Building Departments' budgets should include restrictions about\nhow revenues can be spent.\nVice Mayor deHaan inquired why the ferry should be removed from the\nenterprise fund.\nThe Interim Finance Director responded an enterprise fund should\nhave fees that pay for the service, be self-sustaining and have\nassets and liabilities akin to a private sector \"for profit\"\noperation.\nThe Public Works Director stated many funds are used for the ferry,\nwhich does not pay for itself.\nThe Interim Finance Director stated the matter could be added to\nthe issue bin; perhaps the ferry could be moved into a special\nrevenue fund.\nMayor Johnson stated, under golf, the City needs to avoid having\nmanagement spend down reserve funds to pay for operating costs;\nsuggested language be added; further stated the definition of\noperating costs should include maintenance.\nCouncilmember Matarrese inquired whether an option could be\nprovided to get rid of the term \"enterprise fund;\" stated none are\nreally self sustaining unless every sewer were up to date, there\nis an artificial expectation that it is a true enterprise; said\nsituation was discovered with golf and telecom; the City is not in\nbusiness to make a profit.\nThe Interim Finance Director stated the funds are enterprise under\nGovernmental Accounting Standards Board (GASB) rules; gave a brief\nreview of Section VII, Revenue Distribution.\nCouncilmember Tam stated the policy should be explicit that General\nFund revenue is not earmarked; inquired whether or not funds could\nbe dedicated for fire when the City sought revenue enhancement with\nMeasure P.\nThe Interim Finance Director responded the Jarvis family of\nSpecial Meeting\nAlameda City Council\n11\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 12, "text": "propositions require a 2/3 vote for a specific tax and 50% for a\ngeneral tax; provided a brief review of Section VIII, Investments.\nIn response to Mayor Johnson's inquiry about whether \"or designee\"\nshould be removed from Policy A, the City Manager stated the\nlanguage could be tightened up.\nThe Interim Finance Director provided a brief review of\nAppropriations Limit [Section IX ] and Fund Balance and Reserves\n[Section x].\nMayor Johnson inquired whether Equipment Replacement [Section X.B)\nincludes computer systems, to which the Interim Finance Director\nresponded in the negative.\nCouncilmember Tam inquired what computer systems fall under, to\nwhich the Interim Finance Director responded ISF.\nCouncilmember Matarrese stated staff should address whether there\nis creative way to make the whole IT system a capital asset.\nThe Interim Finance Director stated the matter would be added to\nthe issue bin; reviewed Capital Improvement Management [Section XI]\nand Capital Financing and Debt Management [Section XII].\nCouncilmember Tam stated the debt ratio [XII.D.5 is 4:1; inquired\nwhether the ratio was pulled from an existing policy.\nThe Interim Finance Director responded investments bankers would\nsay 4:1 is the most conservative ratio; stated 3:1 can be a very\nhealthy ratio; the State recommends 4:1; the ratio could be\nchanged.\nCouncilmember Tam stated that she is only interested in amending\nthe ratio if it helps the City's credit worthiness and bond rating.\nMayor Johnson inquired whether \"Pay-As-You-Go' XII.A. 4] is clear\nenough.\nThe Interim Finance Director responded in the negative stated it\nneeds to be defined.\nMayor Johnson suggested adding factors for not favoring pay-as-you-\ngo financing questioned whether the policy should be not to favor\npay-as-you-go.\nCouncilmember Gilmore stated pay-as-you-go means not incurring\ndebt, which sounds like a good thing.\nSpecial Meeting\nAlameda City Council\n12\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 13, "text": "The City Manager stated pay-as-you-go for OPEB differs from pay-as-\nyou-go for capital improvement projects.\nThe Interim Finance Director stated that she would change the\nwording.\nCouncilmember Matarrese stated the document should be in plain\nEnglish.\nVice Mayor deHaan inquired whether XII.D.! should include : \"the\nCity may consider allowing a value-to-debt ratio of 3:1. \"\nThe Interim Finance Director stated the ratio might be considered\nin certain circumstances for a really good project.\nVice Mayor deHaan inquired whether the City has ever done so, to\nwhich the Interim Finance Director responded not to her knowledge.\nCouncilmember Matarrese stated if the reason not to follow the\npolicy outweighs the benefit of following it, the matter could come\nto Council; there should not be wiggle room.\nThe Interim Finance Director stated that she would leave the\nsentence, but take out the 3:1 ratio; she would keep in mind said\ntheme about exceptions when she goes through the document : reviewed\nHuman Resources Management [Section XIII] ; inquired whether the\nsection should be deleted and addressed under personnel policies\nand procedures.\nMayor Johnson stated part relates to the Council's role in the\nbudget i suggested parts that are not Council budget issues be\nremoved.\nThe Interim Finance Director stated the theme in the first one\n[XIII.A.: 1] could be used and the rest of the \"how tos\" could be\ncollapsed.\nMayor Johnson stated Council needs to see which positions are\nfunded and which are not under XIII. A. 3.\nThe Interim Finance Director stated the budget template would show\nthat [ funded positions]\nCouncilmember Matarrese stated financing should meet, not drive,\nthe requirements of organizational structures and supervising.\nMayor Johnson inquired where cut items would end up; stated that\nSpecial Meeting\nAlameda City Council\n13\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 14, "text": "she would like to leave in XIII.C. 1 with additional language that\nthe organization is efficient and effective.\nVice Mayor deHaan inquired where human resource policies are\ncurrently held.\nThe Human Resource Director responded the policies are in various\nplaces, such as MOUs and civil service rules, but could be put in\none comprehensive document.\nMayor Johnson stated that she wants language added about funding an\nefficient and effective organization.\nVice Mayor deHaan suggested the item be moved to the front section.\nThe Interim Finance Director stated the section would be\neliminated, made macro and made part of the Guiding Principles at\nthe beginning.\nThe Council expressed consensus.\nMayor Johnson stated, wherever Compensation Standards [XIII.I E] ends\nup, it should include that the City will make an effort to have\ninformation presented to the public more understandable.\nThe Interim Finance Director addressed Productivity and Performance\nMeasurement, Section XIV, and Contracting for Services, Section XV;\ninquired whether Section XV should be kept or deleted.\nCouncilmember Matarrese stated the best way to have control over\ncore day-to-day services is by having employees; projects, such as\nbuilding construction and certain professional services, cannot be\nstaffed by City employees.\nMayor Johnson stated the section seems to address \"how tos\" and\ndoes not need to be included.\nCouncilmember Matarrese stated the issue could be discussed in work\nprograms and project budgeting.\nThe Interim Finance Director stated the thought about core day-to-\nday services being provided by employees translates into a good\nfront-end principle.\nVice Mayor deHaan inquired where the policies were before.\nThe Interim Finance Director responded that she developed the\npolicies ; stated a principle could be written to address\nSpecial Meeting\nAlameda City Council\n14\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 15, "text": "contracting out criteria.\nCouncilmembe: Gilmore stated the suggestion makes sense; the policy\ncould indicate that employees deliver the best services and provide\nguiding principles if there is an occasion to use outside\ncontractors.\nDorothy Freeman, Alameda, discussed the City's list of projects for\nfederal stimulus funding.\nThe Deputy City Manager provided an update.\n* * *\nMayor Johnson called a recess at 12:40 p.m. and reconvened the\nmeeting at 1 :13 p.m.\n(09-063) Recommendation to accept Budget Program and Format for FY\n2009-10.\nThe Interim Finance Director gave a brief presentation.\nIn response to Mayor Johnson's inquiry regarding the Fire\nDepartment's Advanced Life Support (ALS) program, the Fire Chief\ngave a brief overview.\nMayor Johnson inquired whether ALS is just transport, to which the\nFire Chief responded in the negative.\nMayor Johnson stated breaking out transport would be really\nhelpful.\nThe Interim Finance Director stated the idea could be reviewed and\nwould be added to the issue bin.\nMayor Johnson stated the cost of running the Fire Academy should be\nidentified.\nThe Fire Chief stated the academy is included under training.\nThe Interim Finance Director stated converting to the format is a\nprocessi there are activities within each program; the City needs\nto get everything under programs before breaking it down to the\nnext level; activities could be addressed as part of the FY 2010-11\nbudget.\nVice Mayor deHaan inquired what is in place now, to which the\nInterim Finance Director responded the current budget does not have\nSpecial Meeting\nAlameda City Council\n15\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 16, "text": "the level of detail being proposed.\nVice Mayor deHaan inquired whether the Recreation and Parks\nDepartment currently has the same cost centers.\nThe Interim Finance Director responded in the affirmative; stated\nthe cost centers remain the same in some cases; further stated the\ngoal is to break down everything into programs to see the cost of\nproviding the service.\nMayor Johnson stated the programs should be broken down to the\ncorrect level even if it cannot be done in a year; for example, the\ncost of the Fire Academy should be known; Council needs to know the\ncost in order to set priorities.\nCouncilmember Gilmore stated the categories provided [in Attachment\nC) would feed into the template for the upcoming budget inquired\nwhether costs could still be obtained even if the deeper level\nwould not be added to the template until FY 2010-11\nThe Interim Finance Director responded in the affirmative. reviewed\nthe format.\nCouncilmember Gilmore inquired how cost recovery is captured for\nnon-revenue generating departments, to which the Interim Finance\nDirector responded the department's portion of cost allocation is\nshown as revenue.\nMayor Johnson inquired whether the Finance Department gets money\nfrom other departments.\nThe Interim Finance Director responded in the affirmative; gave a\nbrief explanation of cost allocation.\nMayor Johnson inquired whether technology costs, including\nhardware, are part of cost allocation, to which the Interim Finance\nDirector responded user departments are charged for IT.\nVice Mayor deHaan inquired whether other municipalities have\nsimilar systems in place so Alameda does not have to reinvent the\nwheel.\nThe Interim Finance Director responded the format presented is a\nstandard program performance budget there are a variety of budget\nformats the proposed format is the way to identify service costs.\nIn response to Vice Mayor deHaan's inquiry, the Interim Finance\nDirector provided background information on program performance\nSpecial Meeting\nAlameda City Council\n16\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 17, "text": "budgets.\nVice Mayor deHaan inquired whether funding from other entities is\nshown as revenue, to which the Interim Finance Director responded\nin the affirmative.\nIn response to Mayor Johnson's inquiry about how long completely\nbuilding the budget would take, the Interim Finance Director\nreviewed the timeline.\nMayor Johnson inquired where vehicles, equipment and training would\nbe in the budget.\nThe Interim Finance Director responded vehicles would be under ISF;\ntraining would be in departmental budgets; further stated training\nwould be allocated by program.\nVice Mayor deHaan inquired how AMP does its internal financial\nmanagement and whether it is done the same way\nThe AMP General Manager responded the PUB is going through the same\nprocess, is looking at improving reporting and would be making some\nchanges stated the budgets may not be identical next year AMP is\ngoing in the same general direction as the City.\nCouncilmember Matarrese stated the City and AMP seem to be going\nthrough the same process in parallel; hopefully, the process will\nmatch upi the items in the spreadsheet are the only required\ncustomization; inquired whether one effort could be used, rather\nthan two separate efforts.\nThe Interim Finance Director responded financial information for\nthe Housing Authority and AMP is not in the City's system; stated\nthe City does payroll for both and is reimbursed, but does not\nhandle budget revenue and expenses; staff would be hard pressed to\nget the City and redevelopment agency converted to the new system;\nthe Housing Authority and AMP would have some similar pieces, but\ncomplete conversion would be impossible.\nCouncilmember Matarrese inquired whether services are being\nduplicated, to which the Interim Finance Director responded in the\nnegative.\nThe AMP General Manager stated AMP has a completely different\nsystem and accounting rules; AMP can use the same format for its\npart of the City's budget document.\nMayor Johnson stated the AMP budget should be consistent with the\nSpecial Meeting\nAlameda City Council\n17\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 18, "text": "City's format; the program-based format should be consistent\nthroughout the City.\nThe AMP General Manager stated that he would bring up the issue\nwith the PUB i outlined the process.\nMayor Johnson stated the public should only have to learn to read\none budget format.\nVice Mayor deHaan inquired what implementing the proposed format\nwould cost.\nThe Interim Finance Director stated the cost is hours of staff\nwork; further stated setting up the system is labor intensive, but\nmaintaining the system is easy.\nMayor Johnson stated switching to the proposed format is a good\nthing because it allows Council to understand how money is being\nspent; further stated Council should be informed if additional\nmoney is needed for implementation.\nLorree Zuppan, Alameda, stated the effort is commendable; the City\nshould be cautious not to take programs down to too far of a level;\ntime might end up being spent on things that have no net impact,\nwhich wastes resources.\n* *\nMayor Johnson called a recess at 1:55 p.m. and reconvened the\nmeeting at 2:05 p.m.\n(09-064) Consider various funding options for cost recovery of\nInternal Service Fund (ISF) deficits.\nThe City Manager gave brief comments.\nThe Interim Finance Director gave a presentation on the ISF.\nCouncilmember Matarrese inquired whether department budgets would\nhave to absorb the charge back to cover the deficit, to which the\nInterim Finance Director responded in the affirmative.\nCouncilmember Matarrese inquired whether the amount is a true\ndeficit.\nThe Interim Finance Director responded the negative balance is an\noperating deficit; the funds represent fixed charges a sufficient\namount has not been charged back for a number of reasons; staff has\nSpecial Meeting\nAlameda City Council\n18\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 19, "text": "done due diligence to get to true numbers; the question is what\nneeds to be done now.\nCouncilmember Matarrese stated building a budget starting with the\nfixed costs makes sense.\nMayor Johnson inquired whether the negative amounts are due to not\ncharging enough or departments not paying.\nThe Interim Finance Director responded the issue is a system issue,\nnot departmental; funds are taken out of department budgets.\nMayor Johnson inquired whether the amount is from the current\nfiscal year.\nThe Interim Finance Director responded in the negative; stated the\namount has been reached over many years; $2.6 million is too much\nto absorb.\nMayor Johnson requested an explanation of the significance of\nhaving a negative in the workers' compensation fund.\nThe Interim Finance Director stated workers' compensation premiums\nand claims are being paid from other funds.\nThe City Attorney inquired how much of the workers' compensation\ndeficit is a build up over time from not charging departments and\nhow much is from choosing not to backfill from the account used to\npay claims.\nThe Interim Finance Director responded both; stated it is not\nuncommon for an ISF to run negative because a claim that was\nestimated to cost $250,00 might end up costing $500,000; the\nadditional $250,000 should be factored in the next year and the\ndepartment would have to pay an increased rate. the fund should be\nbuilt up to create a reserve.\nMayor Johnson inquired whether claim payment comes from the General\nFund and is reimbursed.\nThe Interim Finance Director responded in the negative; stated a\ntransfer is not made between the General Fund and the ISF; the\nclaim is paid and adds to the cumulative negative.\nMayor Johnson inquired where does the money come from.\nThe Interim Finance Director responded the cash comes from the\nCity's cash account and is negative cash.\nSpecial Meeting\nAlameda City Council\n19\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 20, "text": "Councilmember Gilmore stated there seems to be a structural\nproblem; departments have not been adequately charged, which has\nbuilt up the deficit over the years; a formula based on a certain\npercent does not work; the amount needs to be recalculated every\nyear.\nThe Interim Finance Director stated the amount is personalized\nbased on the fund users, which needs to be revisited every year.\nCouncilmember Gilmore stated workers' compensation has a negative\nbalance over $2 million; inquired where money would come from if\nthere were a new $1 million charge.\nThe Interim Finance Director responded the claim is charged to the\nworkers' compensation ISF; stated the City has money in cash;\nnegative funds are not netted out at the end of every year if the\nnegative amounts were zeroed out , the amount would be a hit against\nthe fund responsible for the claim; if the claim were for a General\nFund department, the amount would come from the General Fund; the\nvast majority of the departments with claims are General Fund\ndepartments.\nMayor Johnson inquired whether the amount comes from the [General\nFund reserve.\nThe Interim Finance Director responded the amount would [come from\nthe General Fund reserve] if not recovered from the department.\nCouncilmember Gilmore inquired whether the $2.6 million deficit is\nmeasured against the fund balance; and whether the $8 million in\ncash indicated in the budget document, accounts for the $2.6\nmillion or if the amount still needs to be subtracted out.\nThe Interim Finance Director responded the latter the amount still\nneeds to be subtracted out].\nCouncilmember Matarrese stated a policy is needed that prohibits\nthe ISF rolling deficit; ISF need to be zeroed out right now.\nCouncilmember Gilmore stated the unrestricted General Fund cash\nreserves are not truly the amount listed the budget document\nshould reflect the true unrestricted cash number.\nMayor Johnson inquired whether there is a break down of the $2.046\nmillion deficit; and whether the intent is to assign amount to\ndepartments.\nSpecial Meeting\nAlameda City Council\n20\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 21, "text": "The Interim Finance Director responded in the affirmative; stated\nstaff knows how the amount accumulated over many years.\nMayor Johnson inquired whether the intent is to use the breakdown\nto have the departments pay back outstanding amounts.\nThe Interim Finance Director responded debt would not continue\ngoing forward; stated small amounts would be easy to fix; larger\namounts accumulated overtime would be difficult to resolve.\nThe City Manager noted the IT funds would be expended this fiscal\nyear.\nCouncilmember Tam stated that she is trying to match the seven\ncategories in the ISF against the guiding principles, which has\ndesignations for major equipment replacement, public facilities,\nworkers' compensation and OPEB; inquired whether there is an\nability to transfer between the [ISF] funds; stated the balance of\nother [ISF] funds exceeds $2.6 million; inquired whether the\nBeltline litigation was under the risk management column and each\ndepartment paid a portion.\nThe Interim Finance Director responded only departments involved\nwould pay.\nMayor Johnson requested that the Council be provided an answer to\nthe question about the Beltline litigation charges.\nThe Interim Finance Director stated that she would look up the\ncharges.\nCouncilmember Matarrese inquired whether departments that owe money\nto the deficit would be assessed for the amount owed, to which the\nInterim Finance Director responded in the affirmative.\nMayor Johnson inquired whether the General Fund balance with the\n[deficit] amount removed would be $8.8 million minus $2.6 million.\nThe Interim Finance Director responded it would if the amount were\ntaken from the fund balance; stated staff is suggesting\nalternatives; the amount cannot be resolved in one year; $2.6\nmillion would be a serious cut in services and programs.\nCouncilmember Gilmore stated that she understands $2.6 million\ncannot be made up in one year, but the budget document should\nreflect the $6.6 million in true cash and should not include\namounts that are needed to pay for something else.\nSpecial Meeting\nAlameda City Council\n21\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 22, "text": "Mayor Johnson stated debt should not be incurred without\ndetermining how to pay for it.\nCouncilmember Matarrese stated $8. 8 million is not a true figure\nmoney is being spent that is not being assessed; the only two\npayment choices are to cut services or take the amount from the\nfund balance; that he would not support options to defer or borrow\nto pay for it [deficit].\nMayor Johnson stated a policy needs to be in place that the City\ncannot accumulate debt or negative fund balances that are not being\npaid; inquired how many years the deficit has been in place.\nThe Interim Finance Director responded that she does not know off\nthe top of her head.\nMayor Johnson requested that Council receive the breakdown [ amount\nowed] for each department.\nCouncilmember Matarrese stated the only course is to zero out the\namount against the General Fund balance.\nThe Interim Finance Director stated staff suggests working within\nthe funds to cover half of the deficit and create a repayment plan.\nVice Mayor deHaan requested that providing Council with the\nbreakdown be added to the issue bin.\nMayor Johnson inquired whether money in current department budgets\ncould be used to start paying the workers' compensation deficit, to\nwhich the Interim Finance Director responded in the negative.\nMayor Johnson inquired whether more debt is being incurred this\nyear, to which the Interim Finance Director responded in the\nnegative.\nMayor Johnson inquired whether the $2 million [deficit in workers'\ncompensation] was spent.\nThe City Attorney provided an explanation of workers' compensation\ncharges.\nMayor Johnson noted the $2 million debt is in addition to the money\nthat has to be set aside in the event all claims have to be paid.\nThe City Manager gave a presentation on the ISF and the staff\nsuggestion on how to resolve the deficit.\nSpecial Meeting\nAlameda City Council\n22\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 23, "text": "Councilmember Gilmore inquired whether the $2.6 million deficit\nwould be caught up in three years under the proposed plan, to which\nthe City Manager responded in the affirmative.\nMayor Johnson stated a decision cannot be made until Council hears\nthe OPEB options; inquired whether staff has a better handle on the\nnumbers to ensure the departments pay their share going forward.\nThe Interim Finance Director responded the formula is fine going\nforward.\nVice Mayor deHaan inquired what is the need for $600,000 for IT.\nThe Interim Finance Director responded major work needs to be done\nbetween now and June 30 because the system is becoming too risky to\noperate; outlined the needs; stated auditors have commented that\nupgrades are needed; the cost to massively overhaul the system\nwould be over $2 million.\nVice Mayor deHaan inquired whether any of the fund has been\nobligated, to which the Interim Finance Director responded in the\nnegative.\nIn response to Vice Mayor deHaan's inquiry about when the City\nlearned of the problems, the Interim Finance Director stated the\nanalysis came recently; the new GASB rules require an IT audit.\nVice Mayor deHaan inquired why he did not see the analysis, to\nwhich the Interim Finance Director responded the analysis was in a\nseparate memo.\nMayor Johnson inquired whether the City would be changing from the\nGroupwise system.\nThe Interim Finance Director responded that she does not know; more\ndetail would be provided.\nVice Mayor deHaan stated the information should have been presented\nas part of the audit at the last meeting; inquired whether the\nFiscal Sustainability Committee (FSC) has been informed.\nThe Interim Finance Director responded in the negative.\nMayor Johnson requested that the Groupwise issue be addressed.\nCouncilmember Matarrese stated $600,000 from equipment replacement\nneeds to be reprioritized for IT to deal with a critical problem;\nrolling over debt goes to the bottom line of the General Fund; that\nSpecial Meeting\nAlameda City Council\n23\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 24, "text": "the fund balance is $1. 1 million less should be made clear.\nCouncilmember Gilmore stated that she is recommending that the fund\nbalance reflect the true amount, not that the amount be taken out\nof the General Fund and the ISF deficit be zeroed out she prefers\nthe three year repayment plan.\nMayor Johnson inquired why the IT amount is reflected if it has not\nbeen spent, to which the City Manager responded the number\nrepresents the amount projected to be spent by the end of the\nFiscal Year.\nMayor Johnson requested a breakdown of the IT number.\nCouncilmember Gilmore stated the plan is good; the amount will be\naccounted for on the front page of the fund balance; departments\nwould be charged for three years to catch upi staff would account\nfor future costs; Council reprioritized IT funds years ago;\nrequested that IT give a presentation breaking down how the\n$600,000 would be spent and the plans going forward to modernize\nthe City, including cost.\nThe Interim Finance Director suggested the information be presented\nas part of the Finance budget.\nMayor Johnson inquired whether the Council has ever made cuts in\nthe amounts departments pay to the IT ISF.\nCouncilmember Gilmore stated IT was a separate department when\nCouncil cut the budget.\nThe City Manager stated that the IT ISF started a year ago.\nMayor Johnson stated that she does not recall IT being cut.\nVice Mayor deHaan stated that he could not support paying off the\n[ISF] deficit without knowing the history, which should be\nprovided.\nCouncilmember Matarrese stated IT is the ideal situation to\ncontract out; server farms can be maintained by companies offsite;\nthat he wants separate direction given; the Council seems to be in\nconsensus that the fund balance on the front page of the budget\nshould be the true number; separate direction should be given about\nwhether the debt should be repaid over three years or zeroed out\nnow.\nMayor Johnson stated money should not be taken out of the fund\nSpecial Meeting\nAlameda City Council\n24\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 25, "text": "balance; the City needs to be disciplined and live within its\nmeans; inquired whether the equipment plan would be okay under the\nthree-year repayment plan.\nThe Interim Finance Director responded in the affirmative\nMayor Johnson stated the amount going into the equipment reserve\nfund should be reviewed; perhaps too much money is going into said\nfund; that she supports the idea of the down payment and repayment\nduring the next two years; inquired whether the down payment would\nbe the first year and repayment would occur during the next two\nyears.\nThe Interim Finance Director responded the fund transfer would\noccur this year and repayment would occur in three years starting\nJuly 1.\nMayor Johnson stated that she agrees that the actual fund balance\nshould be reflected; inquired whether money is included for the\nEast Bay Regional Communications System.\nThe City Manager responded the amount was not included; stated the\nmatter would be added to the issue bin.\nMayor Johnson noted the City can withdraw before debt is incurred\nand might need to do so.\nCouncilmember Matarrese inquired whether money being repaid each\nyear by departments would be reflected in the figure that shows the\nfund balance available cash, to which the Interim Finance Director\nresponded in the affirmative.\nThe City Treasurer stated that he is concerned about the integrity\nof the equipment replacement budget, which is $1.6 million short\nthis year.\nThe Interim Finance Director stated equipment replacement\nappreciation is done based on present value; planning for future\nvalue can be done but has a cost.\nThe City Treasurer stated the FSC is using future value; that he is\ncurious how the equipment replacement fund has ended up with a\nsurplus; $1.3 million of the workers' compensation deficit seems to\nhave occurred this year; inquired how it happened; stated the City\nhas historically low workers' compensation claims inquired whether\nthe year was a fluke or a trend; inquired when a more accurate\nworkers' compensation premium would be built into the system and\nwhat would be the percentage of payroll.\nSpecial Meeting\nAlameda City Council\n25\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 26, "text": "The Supervising Accountant responded two bases are used for the\ncalculations : the actual pay out for workers' compensation claims\nand the department payroll.\nThe City Treasurer inquired how much the department payroll is\nbumped up.\nThe Interim Finance Director responded around 3 to 5% the exact\nnumber would be provided.\nThe City Treasurer stated approximately $4 million could be needed\nin the next fiscal year.\nMayor Johnson stated using present value [for equipment\nreplacement ] does not make sense.\nThe Interim Finance Director stated the model could be run using\nfuture value.\nThe City Treasurer stated workers' compensation costs should be\nassigned to the source.\nIn response to Vice Mayor deHaan's inquiry regarding the $4\nmillion, the City Treasurer reviewed how he came up with his\nestimate.\nThe City Manager concluded the discussion.\n* * *\nMayor Johnson called a recess at 3:35 p.m. and reconvened the\nmeeting at 3:50 p.m.\n***\n(09-065) Consider various financing and pre-funding options for\nOther Public Employee Benefit (OPEB)\nThe City Manager gave a brief presentation.\nMayor Johnson requested staff to provide a breakdown of the amount\nowed; stated the Council received a report that the range was from\n$70 million to $140 million; inquired whether there is no longer a\nrange and the amount is $75 million.\nThe Interim Finance Director responded the amount required to be\nfunded is the net present value of the unfunded liability, which is\n$75.6 million; stated the breakdown is: $34. 1 million for police,\n$34.2 million for fire, and $7.5 million for all others.\nSpecial Meeting\nAlameda City Council\n26\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 27, "text": "Mayor Johnson inquired what the $140 million represents, to which\nthe Interim Finance Director responded the amount was from the\nBartel report.\nMayor Johnson stated the $70 million figure assumes that the\nfederal government will enact national health care.\nThe Interim Finance Director stated the assumption is not factored\ninto the $75.6 million calculation; the amount increases to over\n$200 million if the City continues to pay-as-you-go.\nThe City Manager and the Interim Finance Director continued the\npresentation.\nMayor Johnson inquired whether investing $75 million at 4.5% would\npay for the benefit; and whether borrowing said amount and paying\ninterest would not be sufficient.\nThe Interim Finance Director responded in the affirmative; stated\nthe scenario described would finance OPEB, which is not stationary\nand would increase and require overlaying debt.\nMayor Johnson inquired whether the $75 million only covers current\nand retired employees, to which the Interim Finance Director\nresponded new employees are not included.\nThe Interim Finance Director continued her presentation.\nThe City Manager provided an overview of the actuarial.\nThe Interim Finance Director continued her presentation.\nVice Mayor deHaan inquired whether reaching $10 million would take\n8 years, to which the Interim Finance Director responded in the\naffirmative.\nCouncilmember Matarrese inquired whether the plan is to finance $25\nmillion to pay for the 1079/1082 retirement plans, continue paying\n$2.1 million for OPEB [pay-as-you-go] and set aside and invest\nmoney for 8 years until it reaches $10 million.\nThe Interim Finance Director responded in the affirmative; stated\nthe annual OPEB obligation would be absorbed until there is enough\nmoney to mitigate.\nCouncilmember Matarrese inquired whether the tables assume the $10\nmillion is compounding and nothing is taken out , to which the\nSpecial Meeting\nAlameda City Council\n27\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 28, "text": "Interim Finance Director responded in the affirmative.\nCouncilmember Matarrese inquired whether a formula could be applied\nthat would use some of the gain to pay the incremental [OPEB]\nincrease.\nThe Interim Finance Director responded in the affirmative; stated\nthe maximum amount of capital would be obtained in the first five\nyears in spite of the difficult economic situation; if the economy\nrecovers in five year, there might be additional options.\nMayor Johnson inquired what interest rates were used, to which the\nInterim Finance Director responded since the bond would be taxable,\nthe variable coupon rate would have a range of 3.5 to 4% for the\nfirst five to six years and go to 7.2% 30 years from now numbers\nwould be obtained if Council is comfortable with the concept.\nIn response to Mayor Johnson's inquiry regarding future OPEB\npayments, the Interim Finance Director listed the payment amounts.\nThe Interim Finance Director continued her presentation.\nCouncilmember Matarrese stated interest earned on the savings\nshould be calculated.\nThe Interim Finance Director continued her presentation.\nThe City Attorney gave a brief explanation of the validation\naction.\nVice Mayor deHaan inquired whether the idea has been presented to\nthe City Treasurer and FSC .\nThe Interim Finance Director responded in the negative; stated that\nshe talked to the City Treasurer about leveraging debt; a\npresentation has not been made to the FSC, but doing so would not\nbe a problem.\nCouncilmember Matarrese stated the FSC is considering a debt\nvehicle as one options.\nMayor Johnson stated the City Treasurer had to leave, but could not\ncomment since he had not seen the details; the matter should be\ndiscussed with the City Treasurer and he could bring it to the FSC.\nIn response to Mayor Johnson's request, the Interim Finance\nDirector provided a breakdown of the annual payment structure.\nSpecial Meeting\nAlameda City Council\n28\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 29, "text": "Councilmember Matarrese stated that he likes the idea because it\nforces discipline; the City Treasurer and FSC have mentioned an\nobligation bond [for OPEB]; he would like an explanation if the\nInterim Finance Director is not comfortable with it [OPEB bond ] ; he\nwould like to see the figures presented today compared side by side\nwith an OPEB bond.\nMayor Johnson stated other options that were explored should also\nbe addressed when the matter returns to Council.\nThe Interim Finance Director stated financing $75 million could be\nan issue.\nCouncilmember Tam commended staff for coming up with the creative\nidea of leveraging the 1079/1082 plans; that she is not comfortable\nwith the idea of a $75 million bond, which is a huge debt during a\ndifficult time; she would urge Council to direct staff to do\nparallel vetting: 1) going through the validation process in the\ncourt system; and 2) going through the FSC and showing the two\noptions [1079/1082 bond versus OPEB bond].\nMayor Johnson inquired whether said direction is acceptable.\nCouncilmember Matarrese responded in the affirmative; stated that\nhe would like to see whether the risk of carrying the larger debt\nhas benefits that might be worth considering.\nCouncilmember Gilmore stated that she concurs with her colleagues\nthe financing scheme takes care of the current debt; when new\nemployees are hired, the budget would include salary and OPEB funds\nupfront to keep from adding to the liability.\nMayor Johnson stated Council should be very clear that it has no\nintention of leaving the benefit the way it is now, which is not\nsustainable.\nCouncilmember Gilmore inquired whether $75,000 would go into the\nOPEB savings account when new employees are hired, to which the\nInterim Finance Director responded in the affirmative.\nVice Mayor deHaan stated that he would like to see the final\nprojections; he has reservations there are options encouraged the\nInterim Finance Director to play with the numbers.\nMayor Johnson stated the numbers need to be run out to see if there\nare big payments in 30 years; the upfront investment might need to\nbe bigger ; inquired whether the intent is to actually prepay when\nnew employees are hired.\nSpecial Meeting\nAlameda City Council\n29\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 30, "text": "The City Manager responded in the affirmative.\nThe Interim Finance Director noted a 1079/1082 bond would be a\npension obligation bond (POB) and an OPEB bond is a benefit\nobligation bond (BOB) .\nCouncilmember Matarrese stated the City Attorney indicated\nvalidation could take three to six months inquired whether Council\ncould give direction to start now.\nThe City Attorney stated the validation process would be started\nright away.\nMayor Johnson stated the direction includes comments from Vice\nMayor deHaan and Councilmember Matarrese about the upfront size\n[bond amount and projecting out the whole 30 years; borrowing $75\nmillion for OPEB would be reviewed.\nCouncilmember Matarrese stated $97 million could be borrowed, which\nis $75 million for OPEB and $23 million for 1079/1082; multiple\noptions should be reviewed 1) a 1079/1082 bond, 2) an OPEB bond,\nand 3) bonds for both the OPEB and 1079/1082 plan.\nMayor Johnson stated $75 million is based on 4.5% interest the\namount needed would be greater if the 4.5% interest rate cannot be\nmet.\nVice Mayor deHaan stated pay-as-you-go increases 10-14% per year ;\nthe City has to react.\nCouncil thanked the Interim Finance Director, Finance Department\nstaff, the City Manager and Department Heads.\n* *\n(09-061A) Recommendation to accept the Financial Report for the\nSecond Fiscal Quarter - October, November and December 2008.\n[Note: The item was discussed at beginning of meeting see Page 1]\nCouncilmember Tam moved approval of the staff recommendation.\nCouncilmember Gilmore seconded the motion, which carried by\nunanimous voice vote - 5.\nThe City Manager provided closing comments.\nSpecial Meeting\nAlameda City Council\n30\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}
{"body": "CityCouncil", "date": "2009-02-07", "page": 31, "text": "Adjournment\nThere being no further business, Mayor Johnson adjourned the\nSpecial Meeting at 5:08 p.m.\nRespectfully submitted,\nLara Weisiger\nCity Clerk\nThe agenda for this meeting was posted in accordance with the Brown\nAct.\nSpecial Meeting\nAlameda City Council\n31\nFebruary 7, 2009", "path": "CityCouncil/2009-02-07.pdf"}