Oxnard Council 3-27-18: Pension liabilities could hit the fan; Downtown Revitalization “Parklets”; $48MM in debt renewed.

By George Miller

Consultants darkly warned the City of exploding pension liabilities and necessary funding, doubling in 5 years and mushrooming for the next two decades. Some off-agenda discussion on disposition of Redevelopment Successor Agency properties, which are taking a long time. Downtown “parklets” plan approved. $38MM debt refinancing and $10MM Line of credit approved. Temporarily extended City service to Channel Islands Beach for Ventura County

 

NAME DATE AGENDA EVENT
City Council Meeting 3-27-18 Agenda View Event

 

Agenda Item C1- Public Employees Retirement System Costs Overview and City Debt Overview

SUBJECT: Public Employees Retirement System Cost Overview and City Debt Overview. (30/20/10)
RECOMMENDATION: That City Council receive a presentation on the current status and projections for the CalPERS pension program.
Legislative Body: CC Contact: Jim Throop Phone: 385-7475
Document: C1 Staff Report
Document: C1 Presentation
 

Jim Throop said they would talk about near and longer term CALPERS and other debt liabilities. He introduced Craig Hill and Mike Meyer, NHA Advisors consultants, who made the presentation.

$283 MM CALPERS pension liability (3x all other bonded debt of $81 mm). CALPERS was earning 10% on investments, but is now down to 6%,. State has only slowly brought their estimates in line- still too high. Life expectancy estimates are also incorrect.

The city is way behind the power curve on unfunded liabilities and will have to greatly increase payments. It was not specified where this money would come from. City pension payments must rapidly increase for the next five years- DOUBLING- and will continue to grow for 15-20 years.

 

So, this is all a combination of pension fund bureaucrats not making timely, hard decisions to recognize increasing retiree lifespans and lower investment returns, along with City officials committing way more pension liabilities than it could afford.

Meyer said that pensions are now 22% of expenditures and safety is 50% (actual numbers are higher). Payments will go from $28MM to 45MM by 2024.

Mayor Flynn said we will need courage and patience and will have to deal with bargaining units on how we will address large unfunded liabilities. He said we should deal with this before it ended up as a “draconian” ballot issue. He doesn’t think it is a doomsday scenario and believes it can be addressed by a broad collation without compromising city services. Another recession or revaluation would be a big problem. He said that the city never quit making pension contributions, even when there was a (phony) surplus.

The charts above are based upon current known information and assumptions.

Mayor ProTem Carmen Ramirez is happy about the Carman Override special tax (helps fund pensions) and wants to increase it. She referred to it as a “benefit.”

The discussion sounded almost  like dealing with some natural disaster rather than a conscious effort to grant unaffordable benefits. CALPERS was blamed for their asset valuation rather than over committing by the city. All CALPERS did was to belatedly begin to recognize reality.

Other debt

Per Craig Hill $81MM General Fund Obligations, a “very comfortable number, as he described it. Debt payments for General Fund  forecast to be going down over time. Low bond ratings increase Oxnard’s credit costs. Rating dropped from A+ to A-. Rating agencies consider city to be stabilizing.

Reserve Policy

Target is 18% of operating budget, which is about $25 million. Utility reserves target is 25% or about $40 million.

 

Deciding on how to allocate reserves is critical. Restructuring variable rate debt will help the city’s financial health and remove some uncertainty. Rating agencies are concerned about fund balances.

Council Comments

Madrigal- maintaining reserves is top priority? You are recommending getting to 18% and at least $15%?

Ramirez- Thanks for the clarity. We have so much money but so many needs. Noted that Moorpark is debt-free. Oxnard has lots of old infrastructure, big city needs. (She failed to note that Moorpark is far more prosperous.) We have to find a way to increase our revenue. Use it well and not hurt our employees.

Perello- Complained that past City Mgr. did not bring this item to us. Complained he was not allowed to attend these bond rating meetings. What if Measure M lawsuit goes against us? If we’re required to pay back money, we would take out judgement bonds (these do NOT require voter approval), so no danger of bankruptcy. Also, Interim City Manager Whitney’s Red Team applied for $10MM in outright grants (most require in-kind funding).

Flynn- pointed out that best practices are 20% reserves. Debt load now is sustainable. But some very large looming  issues are unsustainable- Channel Islands Harbor Sea Walls maintenance, post-retirement benefits and more. Want to set a goal of AAA rating. Reserves must be addressed to achieve this. Measure O is part of the unreserved cash balance. It should be used for improving services. Paid cash for fire engines, police cars, radios. 81% of General Fund expenditures are employee salaries. Oxnard has $600+ per resident revenues, while Ventura has $900+.

The General Fund balance, less Measure O is now $21 million, Per CFO Jim Throop. $16MM in Measure O money was used to balance the budget 2 years ago.

Perello- Are February, March reserves 18%? Jim Throop did not know for Feb. and said March numbers not done (it’s still March).

There was no vote to accept the report. After a two minute break which went 12 minutes,  they unanimously (MacDomald absent) approved the previous two items.

 

Agenda Item C2 was much less taxing, if you’ll forgive the expression. It consisted of naming Dog Parks after two fallen Oxnard  police dogs.

The Oxnard City Council on Tuesday unanimously agreed that Windrow Dog Park, located at 3052 North Ventura Rd, be renamed “Jax’s Windrow Dog Park,” and that College Dog Park, located at 3200 S. Rose Ave., be renamed “College Park, Rudy’s Dog Park.”

This item, which looked like an easy, quick slam dunk, went on and on. All this took long enough so that at least one item had to be dropped from the agenda. One Council Member  had more to say about this item than he did on nearly $300MM in pension liabilities. 

Document: C2 Staff Report
Document: C2 Presentation

 

E. Public Comment on Items Not on the Agenda

Jackie Tedeshi- Southbank Council- Michelle Ascencion showed up to talk about special election and more. Thanked Whitney for instructing beat officer Bentley on presentation. Note new Oxnard Police Resources Guide.

Ed Castillo- Clarified his last week’s council talk about City’s headhunter fees. How an item gets placed on a Council agenda: Individual council member can raise an issue- 1 of 2 means; 1- At Council Meeting a Member can request that an item be placed on agenda for discussion. Flynn has not been honoring such requests, per Castillo.

Steve Nash- Re: Saturday marches- Ventura March- political leaders were there-wish more were there to show support for victims killed and for “common sense gun control.”  County has started action on increasing local gun control. Oxnard has greatest gun violence issue, can’t sit still. NRA holding fundraiser in Oxnard. Outraged. NRA is a “death Cult.”

Pat Brown- Recall challengers not as good as incumbents. They won’t work hard, go to meetings. Their personalities won’t fit.

Abel Magama- Exec Director Oxnard Downtown Improvement District. Had event w/stakeholders last Wed. on Downtown vision.

Woody Thomas- Whitney is best suitable City Manager; need to make hiring decision ASAP.

Julio Encala?- Produced  a video on fieldworkers-honoring Cesar Chavez, – In English, Spanish and Mixteco. Preview Thurs 6-730 PM., at CSUCI Malibu Hall 100.

Larry Stein Why not fix broken crime monitoring video cameras in downtown Oxnard? Want more transparent budget hearing with multiple options.  Want surplus, deficit or breakeven.

 

F. City Manager’s Weekly Report

Next week’s meeting Housing Authority, medical mariijuana. State of the City meetings being delivered at Inter-Neighborhood Council meetings.

Utilities task force meeting next week. For more, click the link below …

Document: City Manager’s Weekly Report

Public Comment

Woody Thomas called for term limits. Complimented Chief/Acting City Manager Scott Whitney.

Council Comments:

Madrigal- Was at Carnegie Art Museum Board meeting; Rose Park neighborhood meeting- crime lower there; Attended Young Life Banquet.

Ramirez- Congratulated on Downtown improvement plan getting underway; Water education for Latinos conference– made presentation there; Attended Ventura March for Life which she claims was organized by a student; teachers, parents, relatives have to worry; city picking up guns from people who shouldn’t have them; blamed fun show (which forces gun background checks); discouraged gun shows and advertising them; working on City Manager recruiting brochure.

Perello- Attended multiple neighborhood Council mtgs; People very interested in recall election procedure; City Clerk got compliments, people concerned about cost of election; school parent pulled  a gun on another one; Rose Park has a “kick butt” neighborhood watch; League of Women Voters recall debate Wed 7-9 Pacifica HS; talked about City Manager recruiting and job description; wants whole Council to rule on Committee conclusions; current job description includes “end poverty.” Flynn disagrees, said don’t get involved in”wordsmithing.” Flynn has not spoken to recruiter.

Ramirez- focus is on the recruiting brochure, not job description, which says reduce, not eliminate poverty.

 

J. Information Consent Agenda

Document: J1 Staff Report

Document: J2 Staff Report

Document: J3 Staff Report

Document: J4 Staff Report

Items pulled for discussion: Perello: None, but should be recognition of strawberry pickers from the former “OXNARD Strawberry Festival.”

Public speaker Peggy Rivera- re $60,000 to close out Redevelopment Successor agency. Wants to see a full report before closeout. Haven’t had job creation here in a long time.

Flynn called up Economic Development Director Kimberly Horner to address Rivera’s concern- Nyhoff said to have Costmont (Realtor) help in disposition of properties. She knows it’s urgent, but does require extensive coordination w/other depts. Waited until Vision Plan and 3 years implementation plan were approved to dispose of properties.

Perello- La Dolce Vita property sold at way under value- a “Sweetheart deal.” Horner pointed out that higher appraisal was for “highest and best use”  (office). Restaurant use has lower value- never appraised as such. Perello pressed for rigorous future appraisal/transaction handling. Horner said exciting projects coming up. City will only get 19% of sale prices.

Ramirez- Realtor said it WAS the best offer and good cultural use of restaurant. Re: Ormond Beach sales was to ensure there would be no development- just restoration. Sometime snot just about money, but vision.

Flynn- Highest and best use not necessarily best cultural use. Heritahe Square and OIrmond Beach are treasures for te city.

Vote- 4-0 unanimous (MacDomald absent)

 

K1- Downtown Parklet Pilot Program

Development Services Dept., presented by Doug Spondell, Principal Planner. 10-181-18 Downtown 12-19 vision plan., Capital improvement plans presented, then policies, including maintenance and licensing agreement. 3 step process- 3 day approval foreseen. $965fee. Traffic impact fee- request waiver during 2 year pilot program.

Parklet = outdoor dining area. Now exists at the Collection. Cost about $10,000. This is an inexpensive restaurant expansion  opportunity. Multiple city depts. collaborated on this downtown parklet project. High level plans, policies, procedures are done. Currently approve for downtown restaurants and cafes. Will diagonal park, use part of street.

Need to codify this as an ordinance.

Document: K1 Staff Report
Document: K1 Presentation
 
Public comments
 
Steve Nash- In favor. This can be a nucleus to revitalize downtown.
 
Daniel Chavez, Jr.- Great idea, step in the right direction. See lots of outdoor seating businesses in SFV. What about parking? Parking structure- is it monitored?
 
Jackie Tedeshi- A step forward. Concerns- no smoking, safety- refereed to Costco auto collision with building.
 
Abel Magamo- Thanks for cogent and clear presentation- Claudia Pedroso, too. Very collaborative. We fully support it, Should activate streetscape.
 
Tom Garcia of Tomas cafe may be early prime candidate, also Woolworth Building/former “Kitchen’ restaurant.
 
Pat Brown- Saw it in San Francisco and other places- fantastic idea.
 
Woody Thomas- Good idea, but traffic problems.  Do it on Oxnard Blvd., currently a drug haven.
 
Council comments
 
Madrigal- Pilot focus is on A and B St. Would like to include C street.
 
Ramirez- Support it- sorry it’s taking so long. Costly. Make Oxnard Blvd. more pedestrian-friendly.
 
Perello- There are steel protective barriers (optional depending upon traffic risk).
 
Motion passed 4-0. Ordinance is next.
 
 

L1- Refinancing of Lease/Revenue Refunding Bonds for General Fund

Covers $38 million in debt refinancing. Jim Throop says this was approved by Fiscal Policy task Force. Will take bonds to a fixed rate and costs saved. Letters of credit will no longer be needed.  Craig Hill, advisor, says 9.4 MM 2003, 23.5 mm in 2006 paper + “swaps” agreements. Will cost $5 MM to buy back swaps, but will still be  a net positive for the city. Blended interest rate is 5.85%, will go to 3.75% estimated range, but over 5% effective rate when transaction costs are considered. This will also release 3 fire stations and parking structure as collateral.  Plan to close by end of April if approved.
 
Document: L1 Staff Report
Document: L1 Presentation
 
Public comment:
 
Larry Stein- How much principal are we paying down? How much has been paid down?  What is the useful life of Capital Improvement Projects being financed? Paying all kinds of fees- real savings may not be there? What’s it going to cost us?  Per Asst City Manager Jesus Nava: doing for actual $ savings and to undo disadvantageous legal covenants, including variable rate bonds/letters of credit. Net savings of $1 million.
 
Council comments
 
Madrigal- is it a long term win- any risks? Consultant- no and would reduce risk of losing variable rate financing.
 
Ramirez- variable rate financing is very dangerous, can’t see any reason not to do this project..
 
Perello- Please list costs of all transactions, savings. Consultants (Staff report p[82),  Chair-Mayor, Vice Mayor, City Clerk, CFO are authorized to manage this. Why isn’t Treasurer included? Consultant would not answer- deferred to City Atty. Consultant says he has fiduciary responsibility. We were never told we were in technical default for several years. Consultant said it should come out in annual disclosure. Would come if it was an agendized item. He said is not standard practice to have Treasurers involved in this.
 
Flynn- How do we know that it is the best deal- with ALL costs included? Nava assured him it is. Flynn not in favor of including Treasurer in the process.
 
Unanimously approved 4-0
 

L2- Use of Line of Credit for Large Capital Projects- $10,000,000 escrow. Master equipment leasing.

Now with Bank of America, but  expires April 1. Very good market rate for renewal.

Staff says we need to hold cash rather than spend for things- 3-7-10 years term and interest rates, depending upon item life. This is a line of credit to use on an as-needed basis. Did use $4.8 million to purchase garbage trucks. Asking council to mention potential projects, including fire truck, ERP software, etc.

One of the main reasons for doing this is to preserve cash to maintain reserves,.

Document: L2 Staff Report
Document: L2 Presentation
 
Public Comment
 

Larry Stein- Don’t want to take on more debt unnecessarily. Stop going into debt, stop paying interest, buy used equipment, borrow less. Opposed to this line of credit.

Asst. City Mgr. Nava responded – this agreement is already in place- we’re talking about a renewal, want keep our cash in treasury, serious looming costs ahead. Generous terms- let’s keep our cash and get what we need.
 
CFO Throop responded – we can pay down this debt early. $4.8MM already planned for this credit line for trash trucks, etc,  Also need reserves for contingencies. Don’t now have the luxury to do pay as you go for most things.
 
Daniel Chavez- Who was monitoring that equipment delivery was late? How did we get a good rate with our low rating? Wants City Treasure involved.
 
Council Comment
 
Ramirez- Don’t run treasury empty, terms seem generous. Need these items.
 
Perello- Is it a fixed rate? Yes, per Throop. Expires 3-31-18. Perello_ Does life expectancy exceed equipment life? yes.
 
City Mgr Whitney: Big ticket items upcoming- ERP software, PD cars, fire truck, police comms system.
 
Flynn- concerned about accumulating debt; referred to and says he stands by his ballot statement (ruled false in VC Superior Court recently) of having a clean audit and balanced budget. Need to avoid emergency financing.
 
Approved unanimously 3-1, with Flynn dissenting.
 

L3- Fireworks Social Host Liability Ordinance (Dropped from agenda for lack of time)

Document: L3 Staff Report
Document: L3 Presentation
 

L4- Payment of future utility bills from Channel Islands Beach Community Service District.- for park and median landscaping and median landscaping and bathrooms.

Ashley Golden- The city receives a share of taxes. City has continued arrangement without a memorandum of agreement. Asking for extension of temp. agreement until June 8, or cease services on 3-31-18.

Document: L4 Staff Report
Document: L4 Presentation
 
Public Comment
Robert Bravo- Representing Ventura County, want services from Oxnard for County’s harbor.
Martin Jones- Described Aaron Starr as not a good citizen for the recall, which Jones says has no reason. Not making wastewater plant better. Says he has no plan and he is a fraud.
 
Unanimously approved 4-0
 

L-5- Remodel of City Hall third floor (dropped from agenda for lack of time)

Document: L5 Staff Report
Document: L5 Presentation

 

 

 

George Miller is Publisher/Co-Founder of CitizensJournal.us and a “retired” operations management consultant residing in Oxnard.


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One Response to Oxnard Council 3-27-18: Pension liabilities could hit the fan; Downtown Revitalization “Parklets”; $48MM in debt renewed.

  1. Tom March 28, 2018 at 3:52 pm

    Is Oxnard going to be one of those hundreds of cities?

    The first paragraph of a recent column by Dan Walters.

    “Over the past few years, voters in hundreds of California cities and other local governments were asked to pass tax increases, and indications are that another big batch of local tax measures will be on this year’s ballots.”

    https://calmatters.org/articles/commentary/commentary-local-tax-hikes-cleverly-packaged/

    Yesterday’s meeting agenda item number 1, Public Employees Retirement System Cost Overview and City Debt Overview.
    (30/20/10) stated that “However, given that the override tax is limited to a maximum tax rate ($.076637) per $100K of assessed valuation”. ($0.38 for a $500,000 house).

    The power point presentation “Primary General Fund Financial Liabilities” stated that the Carman Override is a maximum of $0.076637 per $100 of assessed valuation. ($383 for a $500,000 house).

    Reply

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