 Hi, Claire, I can hear you. I just wanted to let you know that we had to go live so the co-hosts could get in for some reason the link wasn't working. So Alan is on as well. We're just muting and until everybody joins. Perfect. Okay, thank you. Hi, Megan. We're promoting you to panelists right now. Okay. Hello. Hi. This is Trisha. I have my camera on now. We are live as we needed to get some people moved over. So we're just going to be starting in a few minutes, but I wanted to let you know we are live. Yeah, we just want to tell people that so they don't start like picking their nose. Hi, Jan. We are live so I just wanted to let you know that if you want to mute yourself and you can have your camera off until everyone arrives but we had a problem getting a few people moved over to panelists so we are live. Good afternoon, Chair Rogers and Sue. We did go live as we were having problems getting everyone moved over to panelists. So I just wanted to let you know that we're still waiting on Schwedhelm and Sawyer. Hi, Tom. Hello. I just wanted to let you know that we are live as we had a few issues getting people moved over to panelists. So we're just waiting on Sawyer. You should be here any while. Oh, perfect. I think you just got here. I was going to make comment on his technical challenges but boom, there he is. Here I am. Am I viewed and is sound coming across? You're looking good, John. All right. Thanks, Tom. I can't see myself. There we are. We can't hear you, Chris. That's weird. He's unmuted. Looks like he's trying to talk to us. I'm trying. There he is. All right. Is everybody good? Can you hear me now? All right, let's go ahead and get started and let's take the role. Great. Chair Rogers. Here. Member Schwedhelm. Here. Member Sawyer. Here. Thank you. All right. So all of us are here. Let's do housekeeping as a reminder to subcommittee members, please keep your audio on mute unless you're speaking. Staff will remain muted until they need to speak as well. As members of the public join the meeting, they'll be able to participate as an attendee. Your microphone and camera will be muted and only today's panelists will be viewed during the meeting. If you're calling in from a telephone and choose to speak during public comment on today's different items. You can also rename your viewable phone number as resident with the last four digits of your phone number. And that's what we'll call on as well. Madam recording secretary, could you please explain to the public how public comment will be made at today's meeting? Great. At each agenda item, the item is presented. The chair will ask for subcommittee members to comment and then open it up to the public public comment. The host in the zoom will be. The public comments until public comment is open for agenda items. Once the chair has called for public comment, the chair will announce for the public to raise their hands if they wish to speak on a specific agenda item. If you are calling in to listen to the meeting audibly, you can dial star nine to raise your hand. The host will then call on the public. If you have raised their hands, public comment will be limited to three minutes and a timer will appear on the screen for the subcommittee members and public to see. Sorry. Once all live public comments have been heard, the meeting host will read email submitted. If you've provided a live public comment on an agenda item, but also submitted an email, your email comment will not be read during the meeting. There is one public comment period on today's agenda to speak on to speak on non-agenda item, which is item two. This is the time where all persons may address the subcommittee on matters not listed in the agenda. We can no longer hear you. Let's try this. We heard you say let's try this. Okay. I apologize. I don't know what's going on. I'm feeling like John over here. I don't know. So with that, let's go on to not agenda items for today's meeting that is item number two. It will be only for items that are within the purview of the long-term finance committee. But if you have a public comment that is not as on an item that is not on today's agenda, go ahead and hit the raise hand feature on zoom or hit star nine. Not seeing any hands raised. And there was no female comment received. Excellent. We'll move on to approval of the minutes. We have minutes from June 10 2021 on today's agenda item. Council members, did you have any amendments to those minutes? I did not. All right, let's see if there's any public comment on them. I'm not seeing any hands pop up. So without objection, we'll show those as adopted as amended. All right, we'll go on to item 4.1. And Trisha is going to share her screen. That's how we're going to end it if we can get to the first slide. I like when we start at the end Claire, just like our way backwards. My thunder has been stolen. I apologize. That's all good. So thank you. So the item today is focused on one element. And it is the city's loan term sheet. Related to the renewal enterprise districts. Red housing fund. We are preparing a multifaceted package for the city council for July 20th. This is going to be one piece of that, that package, but this one was important enough to bring to this subcommittee prior to that. And start vetting out some of the terms of this, of this city loan. So next slide. And before I get started on a overview of the work that's been done. In the last, well, in the last several years, but in particular the last several months as we're looking at the use of a red housing fund. I wanted to. I wanted to talk a little bit about that. With the city team, but also with red and their fund advisors. And so I want to acknowledge Megan passenger. She's our interim director for housing and community services. So she's here on the panel. Sue Gallagher. She's our city attorney. And Jan Masek, our chief financial officer. This has been the core team that has worked on the drafting of the housing fund. And also coordinating with. The foresight street advisors, which is the consulting team that's helping to set up the housing fund. And while this is a staff presentation, so that's why we see a CS on your panel. And even though I will be leading these slides, all of us are here to answer questions on the city team. So I want to thank you all for being here today. And thank you all for your attendance. For questions. And especially as we move into some of the policy. Discussion points. You leave. Leapons. He's with foresight street advisors. As is Daniela. Gravel and Olivia spec. So those are. The sort of primary folks that have kind of put this package together. And I think we, there was a lot of collaboration and alignment. So we really have very few policy issues to put on the table for you today, but we are going to be looking for some direction. So with that, this background kind of shows the timeline of, of how we got here into this opportunity really. And it started with. Acknowledging our housing crisis in the city. And the adoption after. In 2016, we adopted the housing action plan. And in that action plan, we had at least 30 different measures and different directions for how to address housing. And one of them was to be creative and start looking regionally and into financial partnerships to produce housing. So that's one of those tools is getting. It's getting traction today with this item. In 2020 post 2017. Tubbs and nuns fires. The city did receive a PGD settlement. Amount. And that is $95 million. And with that came a lot of interest by the community upon which how to. Address this one time opportunity. And one of the. One of the topics that came up through our community outreach was to address housing production. And in response to the Sonoma County Board of Supervisors, they as well received a PGD settlement one time amount. And it also went into community outreach. Late in 2020. They held a study session. And at that time, this was one of other items, but at that time they did direct that $10 million. Would be invested. Into this red housing fund opportunity. They had a caveat. They wanted it to be matched by the city of Santa Rosa. And I'll get into a little bit about why, but I think it's a good idea. And I'll get into the city of Santa Rosa. And I'll get into a little bit about why, but. That the essentially what is the effort here is to, to couple the city and the county's efforts together. Through the red and then a red housing fund and create a $20 million opportunity to fund housing. In December of 2020, we held a study session with our city council. And at that time. We were looking at different options. For investing in housing. We looked at the red housing fund. We were able to answer, introduce that to the public and ask questions about it. We also considered investment into our, the city's housing authority. We considered that information and it was in February of this year that the city council at the, at the accumulation of the goal setting session, the city council. And that brings us to today. And I talked about that. We are packaging up this item as well as some other items that are headed to the full city council. So we are looking at this mentions a joint powers authority amendment related to additional members. We are looking at an assessment request to fund the red. And also looking at the opportunity to see a member on the new red housing fund. Or next slide. So just to, there's a lot to say about red. There's a lot that went into it. A lot of creative thought and energy into creating something that was new and different, but also something that would leverage things that we couldn't otherwise do. So looking at housing in a regional, in a regional way. And also looking at leveraging public. And private money and nonprofit efforts and, and finding a, an entity that could help. Advocate for that together. Pull the financing tools together. And also share the risks and benefits that come with that. So it's. A bit experimental. It was formed in 2018. So it has to date. And it's been a long time since we've had a red housing fund. And it's been an earmark to come up with an opportunity. Like the red housing fund, but other examples that the red. Has been enacted in. Is helping developers come together to do a collective grant request. Be successful in that approach. Or otherwise they might apply on their own. Or and, and not get the grant. So. Again, leveraging resources. To help. Help us at the level of that. Another element as an example of what the. Runeau enterprise district is looking into. Yeah, yeah. Enterprise. Infrastructure district idea. And so they are looking at that as another tool that would help. Housing. In the next slide. is city and county has two members. Each has two seats at the table. For the city side we have our council member Fleming and council member Tibbet and for the county we have David Rabbit and Chris Corsi. One of the the item that's before you today is about the red housing fund and again the red has contracted out with four site street advisors or four site and they have spent quite a bit of time collaborating again with the board with Michelle Whitman and with the city and the county staff and coming up with how this housing fund will get established, how it will work and where its opportunities lie. Next slide. So I'm going to drill down into the terms of the loan and just get to our discussion for today. So it's $10 million city loan it's not a grant it's a loan and as we're progressing we are looking to be in alignment with the county's $10 million. They are also working on their term sheet, their terms for the loan. They did have a study session on the term sheet but they are still working on the final language of it. So we are really kind of in lockstep and it's been an iterative process and part of the housing fund, I'm not in part, the housing fund is based on the leveraging potential. Right now it's public sector capital but it is actively looking for additional partners whether it's additional jurisdictions as the red receives additional members or if it's private philanthropists or banking institutions or private institutions that care about housing at this level and are willing to invest in such a fund and we do think there's interest in it but for the time being it is the city and county are the primary lenders. The lending would be based on the project criteria that's adopted by the red board so that's the connection between the red and the red housing fund. It would be based on the red project criteria that is established and amended over time by that red board so that's the accountability of what types of projects we get funded. And the initial push what's kind of different about this fund the way it's launching and expecting to catalyze is this one is open to supporting market rate and one of the things that we've talked about before with the council is the this fledgling market that we're trying to start up in our downtown in particular. There's just not enough comparables to get the types of loans that our developers need. We feel like we're close and this is the thing that will sort of click that last gap we hope and able to catalyze these highly desirable mid to high rise market rate projects for our Santa Rosa's downtown and this initial funds would allow for some of those projects to go forward. There will also be affordable projects but it's not exclusive to affordable projects. The idea is once you catalyze that downtown market rate development market then the banks will start funding these projects because they will have real examples and real comparables to work with so that's a little bit different than some of the other funding opportunities out there. And then you'll hear this a lot especially as we go into discussion. Flexibility is key. We're trying something new here and so we're looking at every aspect of this trying to be nimble and flexible and again these are things that we can monitor report on adjust over time but really at this get go at this startup we are looking at a variety of different platforms and products and just flexibility in general. The Red Housing Board did consider two different types of entities whether it's a 501 3C or a CDFI and they have chosen to go with the 501 3C option which is a not-profit and so that is the government structure that we're working with. And then a Ministry of Readiness I think this was a question that came up quite a bit at our study session in December. How long how would you actually start this up? Don't you need staffing? And they sure do because it's starting up a new entity you need not only to figure out what your plan is and your logistics but the board set up and also who's going to process the notice of funding availability who's going to monitor the loans you know especially in the the initial years and so I wanted to give the subcommittee the heads up that we have been collaborating on an opportunity to use our housing authority staff which is known to improve and to be able to be nimble and quick in processing ANOFA and certainly to managing loans. So next step or next slide. Okay so we're going to get into these and I'm just going to highlight them because I want to drill down on the cup there's really only there's one and a half items where I think we can spend the most time today which is I think phenomenal this just shows how much cooperation we've had across the table we're getting down to some of you know the finest of fine tune elements to this but they're very important so worth discussion. So just going through this list so we are this are public loans we want maximum flexibility we want to help the developers make this catalytic move in our downtown so we're looking at zero percent interest it's a 20-year loan and the principle would be doing maturity so as they are paid off or matured then the idea is that they would fold back into additional projects and then after 20 years the city can decide it is our loan what we want to do do we want to extend the offer or do we want to take the money those are a lot of things that would happen at the end of the end of the process three three year origination period we'll talk about in a little bit this is the half item it may or may not matter depending on where we go with the with the other item but the idea of an origination period is that it's going to take time to get it up and running and allocated and the reporting structure set up and so and also just the initial steps of activating the loans we're looking to do this this year quickly so that's why we're headed to council on July 20th we will be asking the council to allow and authorize the mayor to work with staff to execute the final agreements and get on with this thing and then one thing to note is our loan the sales loan as well as the counties would be subordinate to all of their debt so we will be last in line to collect but this is not unusual for a fund set up in this way and then I think this has come up quite a bit just compliance with the city's investment policy so as the money is in the escrow account or and as interest earns income that money it's very important that it's staying compliant with our city's investment policy so even though this is a fund that will be operated by a separate entity that's very important staff fields that we connect that with that and the county has similar stance and then we do have a commitment to have the city's 10 million dollars come into the city limits and I can say that based on all the discussions at the board of supervisors and certainly at the board that the intention by the county is to also likewise invest their 10 million dollars into our downtown Santa Rosa's downtown as the initial phase of the NOFA. Now over time there is interest in other areas of the county in general but primarily into specific plan areas or station area specific plan areas as well as priority development areas and we talked about the red project criteria and I think I have a couple slides to highlight like what what that criteria is so next slide so all of the projects that would get would be eligible for this red housing fund these loans need to be an infill site we are looking at mid to high density and we are looking at mostly residential but obviously the practicality of these transit oriented opportunities we want an active ground floor so we are recognizing that probably most of these will be some sort of mixed use but it could be residential only and then we talked about the locational criteria so these are all requirements and then next slide and in addition to those minimum requirements there's a second tier and this is where you would get bonus bonus points in your eligibility and the competition for this finite resource if you had affordable housing incorporated into your project certainly childcare and certainly project readiness we talk about shovel ready we that is going to be a high criteria for especially for this initial NOFA the whole purpose of this is to activate housing not to leverage investment and and and weight on that so I know that will be a primary criteria and next slide other fine elements of the term sheet includes that we want to make sure these loans go to housing and not vacation rentals or short term rentals so this is in lockstep with the county's interest as well which is good news so it's we decided to put on the table is for the term of the loan that would honor the investment that we make and that that after that point it would be subject to the interest of the of the project owner and then we talked about flexibility of product types and so again offered to affordable projects but also middle income and market rate projects but the products will be different depending on that income level so for affordable maximum flexibility so they sometimes need help with design costs or pre-construction costs so these loans would be available for that and then of course like the middle income and market also into construction loans and permanent loans and then soft costs soft costs are for the these are for the the projects that are applying for the loan again more flexibility for affordable projects they tend and this is based on our own experience working with affordable housing developers that we wanted to set a maximum because we we want them to build the housing but we do recognize that part of their gap in financing are some of these soft costs so the loans could support up to 25 percent for affordable projects and 15 percent from middle and market and now we get to the item that we hope to have a discussion with you on and that is the interest income for administrative administrative costs for the red housing fund so it's not for the red it's a separate entity red housing fund will be its own entity 5013c have its own voting board seven member board and the the housing fund is as an entity needs to have a strategy long term for how it's going to support itself operationally and it it's not just a revolved around the no for a notice of funding availability it's it's all the extra support that comes in play along the life of the along the life of the loans and so what we're putting on the table for discussion is a 50 percent max for administration that could be of the interest income that could be funneled back into the entity and then after the origination period which we had put on the table is three years it would it would be there would be no ability to use that interest income and pull it back into administrative costs that it would have to be self-supporting by leveraging fees or other other money's grants opportunities that the fund can attract and I want to finish the presentation but come back to this we do have a couple of options we want to vet out with you and I do want to make sure that other city staff as well as our representatives from red and foresight have an opportunity to say a few words about the different options as well because they whether you have a max or not it makes a big difference to the fund and if you have a max or cap or a cap you know what what are the different options for that one of the implications next slide okay and so as I mentioned it's a seven member board that's going to support this 5013c before I get to the quarterly reports was it was annual reports and quarterly reports these are really important to have we want to we want to measure the progress of this we have not done this before and this is going to be extremely important lots of communication especially in the early stages of setting this up and so both the city and the county have have earmarked specific requirements for for how that gets communicated and again the the board is going to have seven voting members and there is not necessarily going to be two advisory members that's up for consideration by the red board but I'll talk about that so the makeup of the board will include one representative that represents the red the red board and actually that that what that appointment was just made was it earlier this week it was yes it was earlier this week on I think on Monday at their meeting they appointed Michelle Whitman to represent the red board so she will sit on the red housing fund board and in addition the red board recommended for appointment two of the independent and the first of which is Veronica Ferguson she's a former county employee county administrator and the second independent is Tom Sheffield and I believe he is from the community first banking and I'm sure they'll correct me if I got that one and I apologize if I do so they have put in those first three of the seven and that is the minimum needed to start this entity so we can now once they get finalized we can move forward with the rest of the process but in addition to those the city as a member will have a opportunity to seat somebody the county will also and then there'll be two additional independent seats so we'll talk about this more on July 20th but city staff has taken a look at the opportunity here and we would recommend that the council consider appointing our city member representative not any different than you would appoint other boards and commission representatives where the council collectively decides for that one seat to be filled we do know that there'll be a number of interested candidates for that and we feel that would be the safe not the safest but the most appropriate process so you can weigh a lot of different backgrounds and interests and and and pick the one individual that the council can can all agree on for for the sake of this board the two advisory members that's an option that the red board can consider it came up as an interest affairs those would not be voting members and those could potentially be like the one one of our red board members like Fleming or Tibet and likewise the same with the county and they would just be in a part of the board process but not be able to vote and next slide so that ends the presentation that I put together for this but again this is the city team so I would like to make sure that they have an opportunity if there's something I misspoke on or or misrepresented or they wanted to add something that now would be a great time to do that and again the the primary discussion point is going to be on the use of the interest income and whether or not the city cares to have a cap or not and if so at what at what at what rate and we and to do that we should understand the implications of it all right thank you Claire um so council members I know I had at least uh Michelle reach out I think John you probably did too and Tom I suspect you did as well specifically on that question um and so I'd it'd be helpful for me to gain some clarity on why the city is recommending the direction that we're recommending and whether that is consistent with what other funds of this type have done so in any of the city team can jump in um we felt the reason why we put the cap in place just as a point of conversation really was because we've we wanted to demonstrate that we want most of the money certainty that most of the money even an interest of income even the income generated by interest will go back into projects so we just picked 50% because we wanted to create a cap and so totally flexible on the percentage the idea of a cap is just certainty that the sum of the sum of the interest income would go back to projects so that is that is why we put that into play anyone else but there are implications and so I I do want to make sure that um Michelle and the foresight team get an opportunity to talk about that yeah and I was in particular curious about the decision not even just the 50% but the decision for it to be for the first three years and then zero going forward after that I'm not sure Megan to say I'm I'm happy to to jump in and I see Janice turned her camera on as well the the original um idea behind the origination period was to give a certain term that the fund can get up and running so to give them some startup money and able to establish the operations of their funds and so that was the intent behind the origination period and capping the interest income during that time okay and is that typical I would I would defer to Jan or Sue um within typical within the housing authority no our um our product products are different um and we put a principal and interest back into our lending pool um but certainly others could speak to to a similar fund so um Mayor Rogers and um committee members um you know so I my approach in thinking about the red fund was okay this is investment I mean capital investment oriented so in my mind um it took on a picture similar to how we treat uh bond proceeds in a financing and so so one speaking to interest it's not an insignificant amount of interest over the period of three years it's almost even assuming really low rates at like a 1.5 percent you know it's about 450 million on 10 million over a three-year period and so what what you don't want to have is you you you so in when we do financings you're limited as to the soft costs you're limited as to costs um because the goal is to deliver capital and once you start opening so usually capital is accumulated in the same sort of investment fund and I thought that once you started using um interest to fund operations I mean it goes really very quickly and so the cap so speaking to the cap I what we gave them was like a ramp up period thought about it as a ramp up period to you know source other funds if you will and then after that point which I think is a reasonable startup period then it would solely be for capital investment all right John or Tom if I can get clarity John I heard you say 450 million how much money are we talking about the 50 percent no I said 450,000 okay so that's over a three-year period yeah about one and a half percent it may be a little bit high now depending on where funds are invested but yes okay Mr. Mayor do you want to ask other questions that we had on the presentation or just on this yeah no any questions or fine Tom okay John do you mind if I start so please go ahead so early in the slides we talked about the admin support from the housing authority do we have the capacity and what impact if we were to go in this direction would that have on current housing authority projects and workload we do have the capacity at this time um if we are we were looking at it as a discrete notice of funding availability and based it off of our recent experience with the CDBG DR NOFA for 38 and a half million dollars and so we were able to draw our time estimates from that that recent experience great thanks and then the we talked about these the different uses of these monies are we looking at this as two 10 million dollar pools of funding or one 20 million dollar pool of money I believe it'll be executed as one 20 million dollar fund of money okay and then for the housing red housing fund board because I had heard about it when someone was applying for what was the process for the selection of these and was it a conscious effort just to fill two of the four independent spots what was the process that was used and who made those selections that would be a good question for Ms. Whitman if you give her an opportunity to answer that question later because the red staff is process that the application process the candidacy and the presentation to the red board but I believe that there was interest in getting the fund up and running which needs the minimum of three um three board members and so that was the interest is to start with the red board representative appointment um and two independence right I guess for me it was just news and I would have you know if we're looking for qualified candidates I'm not sure if that was known to council members say if you know of anyone to encourage them to apply so it's more of that process that someone I was told by a community member that they had applied and which is news to me which was somewhat surprising and then on those of those positions one being a city whomever if we go in this direction is that an independent decision maker or do we go like we've done on several appointments with the mayor that the mayor goes to the city council we provide direction the mayor votes as we direct or is this an independent person like what we do with boards and commissions where they're processing it on their own even though I may have appointed someone that's a good question um and we'll have the answer certainly as we move forward in that um process but uh we it will rep it will it will fulfill the representation of the city on that seven member board it will be our only dedicated city representation on that board but I get that so ultimately my question is who does that person take direction from if anyone at all those are the only questions I've got okay and I would just weigh in that that Michelle director Whitman uh can can probably answer that question it's my understanding that the city will be able to choose how it chooses and structures that uh that appointment but I would ask uh that Ms Whitman confirm or clarify thank you and through the chair I've been unmuted this is Michelle Whitman I'm just waiting for a queue to talk so whenever you want me I'm ready yeah if you could answer go ahead all right so um if we can go back to the first question on the um recruit or the solicitation for the independent board members uh council member Schwedhelm um we did distribute that really pretty widely but didn't um I didn't send it to you be happy to do it because we've just just today opened a solicitation for two more independent board members that will be appointed at probably in August so I'll make a note to send that to you we want a deeper pool it was sent out to thousands of um recipients on various distribution lists um and we only got six applicants six really good applicants but we definitely want a deeper pool for those next two seats so thank you for bringing that up and then um with regard to uh board composition um this is a non-profit it's not a government agency and uh for the purposes of scaling the fund for the purposes of um uh instilling investor confidence for outside investors and uh there are a variety of reasons why it needs to be an independent board um it will have the city the county and the red appointee and then the independence the county for their appointee um is last I've heard considering somebody from the auditor controller's office somebody with a financial background um foresight is set up a number of these funds and the board composition for those funds and they are in different cities around the country um have generally had somebody from either uh to represent the city of the county somebody with an economic development background somebody with a housing authority uh background or a finance background but what the city does with that appointment is um your prerogative and I think those were the only two questions that were directed at me but correct me if I'm mistaken yeah thank you michelle my question michelle uh john soyer I have two questions um one request could you when you send the the um list or the the what the call for um applicants out to the mayor could you uh include the list that the original list the of um contacts that was that was distributed and I assume that that was done from the red board who who came up with the with the original list so I sent the um I have a network that for all of our board meetings for example it's a population of about 100 individuals but um supervisor corcy sent it out to his newsletter list the county gov serve distribution list which is huge it went out to that it went out to the county's cdc a variety of lists that the cdc has the community development so it was um very broadly distributed I changed the language a little bit um in this current solicitation um in case it was intimidating trying to make it a little bit more welcoming so um I'd be happy to forward that to you as well as the the the um list of distribution lists that it went to okay that sounds good it's just so we're not done not duplicating lists um just want to make sure it gets a nice wide um birth um and the other question I have has to do with the administration um in the um the question or the text that was sent out earlier today um there seemed to be some a little bit of um anxiety around I wasn't really sure whether it was the cap or whether it was um the the three years um I'd have to reread the text but I'm what concerns me is it sounds like and what jan has just mentioned is that there's about in in those first three years about seven hundred thousand dollars in administrative costs um potentially from interest alone and I what what concerns me is especially in government administration can start to get very um uh expensive and um can uh what cost a little more in the in the public sector than it does in the private sector and I understand the reasons why but I'm I'm curious if there are and if there are any estimates as to the administrative costs in those first three years and why a um potentially according to our figures anyway that it could cost quite that much for three years of administration sure I'm happy to answer that and um today we were able to share some projections with the team here that I think um cleared up some misconceptions about what the financial plan looks like for the fund over time so you're right council member Sawyer there will be um more activity at the beginning here we're going to generate more fees at the very beginning and in fact we expect that the fund if it's able to retain revenue um can start paying its own overhead as early as year two and so we're out fundraising to get the overhead covered for year one what we have to remember and keep in mind this is my first time setting up a housing fund Forsythe has done a bunch of them and I they can really fill in the gaps it will um open their microphones but let's keep in mind that this is a 20-year fund most of we're going to generate fees at the beginning we are then going to be servicing loans and have overhead for 20 years when we're no longer generating fees some of the um the market rate projects will have um hopefully constructed their projects return the money to the fund and then we're recycling it to go out to um uh affordable projects that weren't caught in the first phase so the spread is on affordable projects is you know a lot narrower than the spread for the market rate so what we've done is come up with a financial model so that this this fund can support itself through the 20 years it's going to be negative for certainly for the second half in terms of revenue it's returning so it's important that if we've been positive at the beginning that's retained and it sustains it in the later years I'm very concerned about setting up a fund that cannot sustain itself the margins are thin this is not a board that's going to be serving champagne and caviar at its meetings the board members themselves are extremely high qualified certainly Veronica and Todd Sheffield you know they could make money being on boards they're going to be uncompensated I want to be able to attract and retain really strong board members and um I don't want to set this up to fail and that was the really if you heard any anxiety in my text today that was it I want this to be shining success something that other communities are going to look at and say wow they did it we can do it too um the other funds that force life have set up has set up have this same model they know it works and those have been in bigger cities I believe we're the smallest city and believe me Santa Rosa is not a small city anymore we need to recognize we're you know we're a real city but this is the first city of its size as far as I know that has set up this type of fund so I really want to prove it as a success and not something that you know struggles along stresses out the board members can't achieve its mission and its goals so I'll stop ranting and I don't know if you want to open it up to foresight but um they're definitely the smartest in well maybe not in the entire room but they know a lot more about this than I do and Claire by the way fantastic presentation Claire you really you really become a student of this and I respect that thank you well and thanks Michelle and I would like to hear from the foresight because I'm curious as to what their what the anticipated administrative costs will be um to put some um it's kind of ground to me in in why in in the importance of not having a cap um and just kind of an explanation is to it's kind of to make raise my comfort level I guess because not having a cap um it starts to throw the door open and my lack of familiarity with this with this kind of um product uh is it would help to hear from them as to why a cap is not um a good idea in those first three years sure um this is you we sweep in with foresight I can go first and then Danielle can chime in with more details um I would just comment that you know we have set up a variety of these funds across the spectrum um you know from New York to San Francisco to Los Angeles to Baltimore generally larger cities than Santa Rosa um in Sonoma County and um we've never had a cap before it is challenging um to have a business essentially a new business that you're setting up that is intending to provide loans and not be able to take any of the interest income from the business activity of the new fund and use that to pay for the services it needs to provide um it's something we haven't previously encountered it does present significant challenges to limit that income in the first three years and take it away in subsequent years for a 20-year period it really means that we are struggling to come up with a model where you can essentially put away enough money um from lending income in the first three years to sustain 20 years of operations and it's not something that we previously had to solve for um I would say that the challenge is exacerbated by the size of the fund um you know in general those cities that I mentioned are larger cities where sort of the corpus of lending capital is larger you can make more loans have more investment activity generate more income 20 million dollars is relatively small for the level of service that's going to be needed to sustain this sort of an effort I certainly appreciate that that explanation and the last thing I would want to do is to set us up for failure um and it's just it's in in essence my ignorance of the of the of this process and this kind of product that that makes me question that so that's I think that's a great explanation I appreciate it thank you if I may through the chair we want this to be successful as well so we did meet with them earlier today we did learn a lot about the 20-year projections and what the cap would do and that the income that is earned in the early years offsets the needs in the in the later years of the loan so 100 we get that and we want it to be successful um when we were looking at that the draft terms we were weighing on the overall strategy from the inception of the fund was that it was not going to be just the city money and the county money um and even this extraordinary one-time fund opportunity we always imagine that there'll be additional funds uh leveraged in this and that they would also have some fair share responsibility to support the administrative operations what we learned this morning through our conversation is that uh that there is activation and um some encouraging information about that we may get additional partners in the fund but more than likely the biggest capital will be the city and county's contribution it's a lot of capital it's a great opportunity so we it will be our interest income that really takes a lion's share of of supporting the fund and that that's just what we learned and and so we're looking to you for where you want to weigh in on it and we don't have a strong opinion either way but it's just learning about how this works and and how important the city's contribution is to to the whole fund itself john any other questions no no more questions at this point thank you tom okay we'll go ahead and see if there's any public comment all right i'm not saying any no emails were received okay i'll go ahead bring it back then here for some discussion and perhaps some direction here so so and claire i assume that what you're looking for is for the committee to sign off on the term sheet to send to the full council all right i'll start with you tom and see what your thoughts are can you just specifically ask what what specific direction did you want to hear from us is it the 50 of the first three years is that what we're talking i think i think yes on that and on the rest of the term sheet if you're comfortable sending it to to council for approval and my understanding that is the recommendation of at least the city staff that what we've received here that is the recommendation that that go forward with to the entire council is that accurate yeah yes we'd like to move the all of the terms forward and the really we're down to um like on slide nine of the presentation where it talks about interest income where we should apply a cap or not and if so right i don't have a number i'm supportive of the staff recommendation um and i'd be interested to hear when you said on July 20th with the entire council where they feel with that i'm a little bit concerned what we heard from the consultants where no one else has done this um so might be some more exploration before the 20th council meeting john thanks mayor well i kind of i can certainly see tom's position i'm leaning in the other direction i am um the subject matter expert uh is cautioning us about several issues around the um the the concerns around uh given the size of the fund and trying to use this the model that is usually applied to larger cities and i understand that um i would be i feel like i'm be we are being cautioned to not tie the hands um of the of the board in in exercising its ability to be um successful and although i i'm generally conservative when it comes to um kind of unknown numbers uh and there's there are some unknown numbers here that that that as as far as administrative costs um i am i'm concerned with setting us up for failure now i would be um i'd be willing to take staff's recommendation and bring it to council but at the same time i would want to have a thorough uh conversation with the consultants um the and allowing them to um bring their cautions to the council um because i'm it's you know the subject matter experts that i'm that i'm looking to and this is an unusual at least for santa rosa and for the and for the county uh an unusual program not for the not for the consultants they sound like they this is a pretty commonplace project for them um and even though i am oftentimes concerned about how a high administrative cost can go and that that every dollar that goes to administration is a dollar that doesn't necessarily go to a builder um so i'll go with the staff recommendation um and expect a full vetting of the of the reason why the consultants are concerned about it to the full council and allow us to hear and by that time we may have even more details that will help us to to make uh to make a decision so um i'll i'll just i'll go with staff's recommendation and then expect that full conversation with the council all right and i see both sides of it as well john and uh i too uh was leaning uh towards the the direction of the experts uh for foresight as well i i think i'm gonna stay that way uh and my preference would be that we send it without the cap and then have staff get additional information talking with foresight and others uh on whether they would still stick with their recommendation uh when it comes to council it sounds like we will have a more deep conversation around that point in particular um and i i hear the direction from the from the subcommittee uh my preference would have been to to go with the foresight's recommendation uh and then ask staff uh for more information not the other way around but it looks like that's the direction that we'll go is passing on the term sheet to council as written in in the draft document and we'll have a lively discussion i think uh amongst the full council well mayor can i ask for a reconsideration i i'm i'm fine with that but i'll look at tom and make sure tom that too it's a toughy and this is just i i feel like i'm shooting in the dark and um and hoping to hit the target and um i i have a feeling that we're going to get a full a really full conversation at the council um uh justifying our recommendation and because i i'm really split i really split on this but but based on what i'm hearing from foresight it does concern me that we might be setting ourselves up for failure uh at least in part and um so if it if i had to lean in if a forced lean would push me into your camp um at this point it and honestly john for me the deciding factor is that we have made decisions to to be bold and to try new things and uh i said this when we committed the 10 million to the rural enterprise district i think we owe it to ourselves and the staff to see whether or not we can make this work and if the recommendation from folks who have done this is is that that we don't have that cap then i'm going to listen to that for now so and i'm loathe to not take staff's recommendation because i usually do and and i'm sure that they're struggling with this one as well and i but they there's no one that wants us to work more than they do uh i i know that's i know that to be the case and i just i just want us to be successful one way or another with with as much information as we can garner to make that happen all right we have our direction then thank you and like i said i think we'll have another lively conversation when we come to the full council um so item five next meeting agenda items do we have anything council members uh they the uc is urgent that we need to set for our next meeting uh and i will say i was mentioning this to john earlier in discussions about the broader budget topic conversation that we had on tuesday i do intend to ask the city manager to start bringing some of those conversations that council members went home that you requested the deeper dive to look into each department later this year to see whether or not we can start doing each month looking at a different department with a more deep look i'll talk more with the city manager about how we actually schedule that outside of that issue is there anything that you want on the next uh long-term finance committee agenda you know for me with all the discussion we've been having there's so many priorities we're going through now and i think we just had a new date for their council goal re establishment of the priorities you know i would leave it up to you mr mayor because you're having more of these conversations than i think john or i are but i don't have anything specific that i'd really like to talk to her next one okay and i agree i mean i other than that deeper dive and you know what what you brought up the other night tom uh as far as looking at we were being specific to one department but indeed all the departments in my experience on the council i don't believe we've ever um allowed staff to look at their departments in quite that way where they they do that deep dive look at those services that they that they feel they that they absolutely need to provide to the community those that are maybe a little on the on the cusp and some that could go by the wayside to allow them to fully provide the services and those other areas that are so important the the tier one services i guess whatever whatever we want to call them to give the the the uh the various departments an opportunity to really look at their and analyze what they need to do what they want to do and and what they are capable of and so what they're what they're what they have the capacity for so i'm really look it's it's going to be a lot of work i'm looking forward to that exercise it's will be not be a small one but in my experience it's never been done and i think it's it's probably this would be a great time to start that process so thank you mayor for offering to bring it back to this subcommittee and um you know our our plate is full but and our meetings are long and uh if we can if we can avoid any any more wealth you know 12 and 13 hour meetings uh i'm all for that but i don't see that on the horizon hate to tell you john you're not going to like next tuesday i figured okay uh jan or or any other staff are there any is there anything allen is there anything pressing that you want to see on the next agenda i i don't have anything we we may want to uh uh well i i don't know if jan doesn't jan doesn't either maybe this is one or we we cancel that one i'm i'm not sure it's i don't have anything right now that doesn't mean something won't come up but i don't i don't have anything right now well we'll keep it on the we'll keep it on the agenda and we can cancel right yeah it found hours always a good hour so all right all right i appreciate that uh we'll go ahead and adjourn this meeting and i'll see you all soon