 Y'all set Tom? I was born ready, Mr. Mayor. All right, we'll go ahead and call the meeting to order then. Let's go ahead and start with a roll call vote or a roll call. Chair Rogers. Here. Member Schwedhelm. Here. And member Sawyer. Let the order reflect that all subcommittee members are present with the exception of member Sawyer. All right, thank you so much. We'll go to item number two on the agenda public comment. If you're interested in providing public comment, go ahead and hit the raise hand feature on your Zoom. And I do see council member Sawyer is now an attendee. So if we can get him promoted and let the record reflect that he's present, that'd be great. He and Ellen are being promoted right now. Wait, make sure it's John and not Dan. Can we vote on that? Everyone needs to be nice now. That was nice. And I was being very supportive, John. Thank you, John. Thank you, Mr. Schwedhelm. Well, council member, sorry. We are on our public comment for non-agenda items. If you're interested in providing public comment, go ahead and hit the raise hand feature. And Madam Clark, I'm not seeing any hands. Do we have any emails or prerecorded voicemails? No emails were received. Okay. We have one set of minutes today. That's the November 4th, 2021 meeting minute. Council members, do either of you have amendments to those minutes? I do not. No. Okay, let's see if there's any comment from the public on them. Give it a second here for people to raise their hand. All right, seeing none, we'll show those adopted as presented without objection. Let's move on to item 4.1. Mr. City Manager, are you taking this one or should I just kick it right over to Allen? Kick it right over to Allen. So, thank you, Chair Rogers and members of the committee. So this is our year-end fiscal year 2021 general fund performance. We can go to the next slide, please. So we've shown some of this and some of these slides will look familiar to you from our first quarter performance, but we wanted to go ahead and look back. We have our final numbers for the last fiscal year. As a little bit of context before we go into those, just to remind you and the folks that are watching this kind of how we develop our budget, we do use long range forecasting for both revenues and expenditures. For both, actually, we use a combination of known costs for expenditures, known costs plus past performance and fill them in that way. And for revenues, we have some consultants that help us with our sales tax and our property tax. So they help us with that forecasting. We take that information. We also look locally and kind of try to base off of past performance and then going forward. We have a number of departments that have general fund revenues and we work with them to try to develop the revenue picture for that year and for going forward. When we budget expenditures for positions, we do that at 100% basis. So unfortunately, that typically do not have full employment of city positions. Usually we offset that with some sort of a credit that will have it where we are not overly inflating our expenditure budget so that we do account for some vacancy that we know that there will be. Unfortunately, because vacancies do vary over time, it's very hard for us to come up with just a hard and fast vacancy percentage. So we generally try to look at what we have vacant in a current year at a current time and then try to project out with any information that we know and come up with an amount to offset some of the salary and benefit costs. The whole goal in our budget is to try to come up with a reasonable number, not overly aggressive or overly conservative but to try to hit that in the middle. During COVID, we were probably more on the conservative end especially with revenues just because of the unknown. And just so you recall the time when we were building the budget, it was really bright when COVID was having us locked down. So we were seeing things that look like it was gonna be very bad from a revenue standpoint. And fortunately for us, it didn't quite turn out that way. In fact, we came in much better. So next slide, please. So here is our year-end closed numbers. What we're showing here are more of the recurring operating budgets or recurring revenues, recurring expenditures. These are what we would typically wanna build a budget on. It takes out some of the outlier revenues or the one-time expenditure thing. So what you're looking at is when we look at budget affordability that's kind of getting into that realm of where we need to be. And we budgeted low or our revenues anticipating impacts to COVID. As you can see that did not happen. In fact, we had stronger revenues and we also held back expenditures. We had a hiring freeze going at the time. So which we were able to hit the target for our expenditures or our hiring freeze. And the combination of the two of those brought us from a projected deficit to an actual surplus. So next slide, we'll start getting into some of the details. So with our, just at a high level with our general fund revenue detail, the biggest variance we had to the good was with sale paths. In fact, actually, let's go to the next slide. I think you can kind of see what we were dealing with. So as you can see that this shows two years with the same revenue types kind of split out. So you have the year ending right when the pandemic was starting. And then you have the fiscal year that just ended which we were building the budget for during that initial pandemic stage. So you can see that we were starting to see a decline in sales tax. So we budgeted accordingly for that, but that decline quickly turned into an increase. So that's where you see the $11 million over how our adopted. But you can see that in most of our major categories, we did have a stronger than what we thought revenue, which was great. It's good not to have those impacts, but in virtually every one of these, we felt that there would be impact and it turned out not to be. The one thing with real property transfer tax looks to be a bit of an outlier. We were seeing pretty consistent revenue in about the three and a half average million dollar amount. And for it to come in at $2 million over that it's something that we'll take a look at. We think that it has a lot to do with people actually moving into the area, maybe that they were able to work from home. They were Bay Area folks that came up here. There's a lot of things we could speculate. Real property transfer tax is a function of volume of sales and sales prices for real estate. So clearly, there were a lot of transactions and good prices and resulted in very strong revenues for us. So what we'll be looking at going forward is that trend continues. We expected it will lower off some, but hopefully it still shows strong growth there. We did see declines in occupancy tax, which is what we kind of figured that there would be. We lowered our revenue estimates and we came in even lower than that. That was one speculation that did bear out. Recreation fees was another one. And this is from us virtually shutting down all of our recreation programs. Again, saw the issue adjusted and actually even we were a little bit optimistic thinking that, well, maybe there'll be something going on towards the laptop and not so much the case. So now that we're fully programming and doing that, we expect to see a strong rebound there. Next slide, please. So this is a look back at the last five years. I show this to kind of you can see where we've had some steady incline increases in revenues and areas, which is good. In some areas, they're kind of popping up a little bit more than what we anticipated. These are all actual revenues, by the way. So there are things that we look at, right? We hope that there's gonna be significant growth in revenues, but we wanna take a look back to make sure that if anything kind of a sanity check on where do we wanna go going forward? There are a couple of revenues that I wanna bring to your attention. Canada's industry tax is something that we started in the 17, 18 fiscal year, kind of see some low revenue as it gets started and then steadily going up. So we'll be looking to see if there's, it's still an upward trend or if we're plateauing on that. And then I also mentioned the real property transfer tax and you can kind of see what I was talking about in terms of there being around a three and a half average, three and a half million dollar amount over that five years and then all of a sudden it just jumped. So we'll, again, we look back, look at current trends and try to forecast going forward. Next slide. This shows our, now our general fund expenditures and then our normal categories that we have as we roll things up. The general government is basically all of your administrative departments, the finance department, city manager, city attorney, HR, those types of departments. And then the other ones are pretty self-explanatory. We, this for fire, the increase that was, or the being over budget is largely a factor of strike team overtime. And there is a corresponding revenue amount to that. So, but you see this here. I think going forward, we will have another column in here that kind of shows what the final budget is. It's a little bit off to be looking at where you adopted the budget and then where the actual results are. But for the purposes of this, because we're just showing the two, going forward, we'll have a little bit more of a, you'll have more of a sense of changes during the year. Next slide, please. So ultimately, this is where we get to is where our reserves are. So you have our, and the way that I'm showing here are different, what our total reserve for contingencies were, and then kind of how we break out what we need. So you have a council policy that mandates an operating reserve and it's really from 15 to 17%. So again, I apologize for this being at the 15% amount. Going forward, we'll have it at 17. Because you really want to, 17% is about two months of operating. And that's where you want to show, where you want to have that show, not at the bottom end of this. But either way, you've met your reserve requirement. You've also committed funds from PG&E. We received the money, it sits in the reserves until you appropriate it. And so what we wanted to do though, on some of these things that you're in weren't appropriated yet, but we know that you've committed those funds. So we wanted to go ahead and account for those, which we've done with this amount. And even the uncommitted $7 million, because we know that you will ultimately commit those funds that appropriate them as well. Also, you committed $40 million to those PG&E funds toward fiscal stability for the general fund. So we wanted to kind of pull that aside. And I'll get into that a little bit more at the end of this presentation, but actually in the next presentation. But with all of those things pulled aside, all those commitments met, you are still about almost $9 million over all those commitments. So that is a good place to be. And that's necessary given where we know that we are going forward. So next slide, please. There are future cost impacts that we know that are gonna be there in the general fund. We have come to agreement on most of the labor contracts. Right now, we know that there's about a $9.2 million ongoing impact to the general fund as a result of those labor contracts. That will be part of our, when we update our long range financial forecast. And those are known costs. Those will be part of that forecast going forward. We know that there will be an increase in our unfunded liability for our pension. While that isn't solely a general fund impact, there is largely to the general fund. And we estimate that as being about $110 million over the next 14 years. And that's over what we currently pay. So if you look at our baseline, UAL payment of being about $30 million, this that 110 is the amount over that baseline that we would look at. We also know that there are some large scale capital replacement costs that are out there. Fire apparatus can run anywhere from, 700,000 to over a million dollars depending on what the apparatus is. And they are not currently in our normal equipment replacement program. So those are costs that are out. In fact, actually, I think that there are a couple of fire engines that will be coming to council pretty soon that we're actually looking at doing a lease for that will, because interest rates are low enough, but those are the types of costs that have been coming up in our current way of dealing with that is that when the vehicle is ready to replace, we just come to the general fund and brought down on reserves from that. Also body warm cameras, I believe the cost to replace those are around a million and a half dollars. And we know that coming up pretty soon we'll need to replace tasers. And that we think is probably around 750,000 to a million dollars there. These are things that we know that are out there in the future, there's stuff that we need to deal with. So while we get, while it's very good that we are able to get to a surplus on a given year, we need to be able to try to work toward having an ongoing surplus with that. And we do know that there are some challenges ahead in that regard. That said, let's go to the next slide. What we want to do going forward is to be more proactive in our analysis. We want to be able to react more quickly than we have when we do see things where we want to, we know our revenues may be lower than what they should be to make those adjustments that mid-year. And also if there are expenditures or costs that are out there that we need to recognize in the budget to do that mid-year as well. This is not exactly what I'm planning to do at mid-year, this is more of an initial look at it. We still have a couple more months of data that we need to analyze, especially on the revenue side. But basically when we got the year-end numbers, one of the first things that I did was then look at our budgeted revenue numbers. And I could see that our budgeted revenue was actually less than where we came in in the last year. Now where some of those, there may be some outlier revenues there, but for the most part, I think we can look at that the trends would support us bringing our revenue up to at least where we ended in the prior year. And if possible, if there is some growth that needs to be recognized as well, we could do that at that time. From the expenditure standpoint, we've just approved those labor contracts, but we need to appropriate the funds for that. So what that $6 million represents is not only the about $7.5 million of the first year general fund impact from the labor agreement, but it also reflects a credit for vacancies. We know that we have vacancies in the budget. We, for this fiscal year, we did not budget a credit. So I'd wanna do that. So we're not to try to limit the amount of salary and benefit savings coming back at the end of the fiscal year. So what ends up happening is that even when we factor in higher revenue, but we offset that with the higher labor cost, we do end up still projecting a deficit by the end of the fiscal year. So I think this is the last slide for this presentation. So if you have any questions, I'd be happy to answer them. Council Member Sawyer. Thanks Mayor, and thanks Alan for a really great presentation. This is, in putting you in the place of the wizard and me putting in my place of either Dorothy or Toto, is the organization aware of our realities? So I mean, we have a challenge in coming across with figures that are difficult to predict. And then we come up with figures that are more substantive. Do they, is our organization understanding the challenges of coming, of trying to come up with figures that are assessments and as opposed to reality. And how do we communicate with our organization, the reality of our fiscal reality, both positive and negative? Now, Alan, maybe I can start with that and you can fill in. This is something that's been of concern, I think to the organization for some months now, particularly as we started the negotiation process for our labor contracts. And it's not unusual to have those kinds of questions and need for further information. So one of the things that I worked with Alan on to do was to prepare a series of briefings for employees on our general fund budget. And I think we did a total of four of those. Three of those were available online. A couple of them were recorded so that employees could access them at their convenience. And one was done early in the morning at the field services yard with our maintenance workers and all the numbers projected up on the screen. And the goal here was to provide as much information as we could to explain how we generated our budget projections, what we were beginning to see in terms of some preliminary indications of improvements and the layout for them when we thought we would be able to close the last fiscal year and what we would do with the information that we got at that time. And what we told them was we anticipated closing the books for the last fiscal year in November. We would start by informing our council members and the long-term financial planning subcommittee. And then we would proceed back to a briefing of the full council and we would make adjustments as necessary at mid-year. So if we had unanticipated revenues, those might be adjustments either to reserves or additional expenditures. If we had unanticipated losses, those could be things like furloughs and hiring freezes and looking for more revenues and all of those kinds of things. We also took time to solicit ideas from employees because we were anticipating that even if we had a very good year, like we ended up having, we would still have an ongoing deficit in the general fund. And that's exactly what you're seeing here today. We had a very good year last year. We ended up with an $8 million surplus, but after we plugged that back in and we factor in the pension costs, our labor costs and something that we haven't talked about yet, which is the ongoing need for capital improvements and maintenance and so forth, we still have work to do in the general fund. And so we asked employees, what are some of your ideas? We laid out a few of ours. Do you have other ideas for raising revenues? Do you have other ideas for efficiencies and savings that we can incorporate? And we've gotten 10 or so of those ideas from city employees and we're gonna come back out, share this information with them and evaluate the ideas, present them to the council and see which ones we wanna move forward with. You know, I really appreciate that because there is a tendency for our organization to feel that it can be a little mysterious in how we see whether or not we are in a good place or in a desperate place. And so being open and honest with our organization and allowing them an opportunity to be a part of the solution is really important. And I really appreciate both you, Jeff and you, Alan, in involving the organization in trying to come up with solutions because it removes some of the mystery and the stigma attached to the fiscal analysis of running a city. Fiscal analysis of running a city. So thank you very much. I really appreciate the answer and I know it's not easy and you're doing the best you can at both educating our organization and asking them for potential solutions. So thanks for the answer. I really appreciate it. Council Member Sveta. Thanks, Mr. Mayor. Alan, I'm just trying to track the numbers. On that last slide about the mid-year changes for expenditures and we talked about the MOUs that we've just accomplished. I know the question was asked of the city manager during one of our council meetings, total costs of all the packages. I think general fund was around 9 million. All departments was around 12 million. And so is that 6 million and 51,000 mid-year change? Is that directly related to that figure? Is that why we have that? Yeah, so the ongoing cost is $9.2 million. But the first year cost is $7.5 million. Then we are inputting or we will put in a credit of about 1.5 million to offset vacancy. So basically, and so you're seeing the net of those two. Great, thank you for that. I'm just trying to follow the bouncing balls or the bouncing dollar figures so I can kind of explain it to others. So thank you, that was very helpful. And then I saw first just recently confirmed next year discount rate is 6.8%. Does that have, how does that factor in any of these projections or is that what we thought it was going to be? Well, yes, we knew that it was headed there. PERS goes a couple of years out front. So it's not in a part of this, but it's in a part of what we're going to talk about in the next slide. Okay, great. And then I can, I just want to add a little bit to that, Alan. And so the discount rate is one of the major factors. And as it goes down, it increases our unfunded liabilities or our annual costs. So that's one factor that we look at. You'll remember earlier in the year that PERS also reported out on their investment returns. And that is the other factor that contributes to our unfunded liability and rates. And on that side, they reported 20, 27%. I forget the exact figure, but very good figure, well above their 7% projected return. And so that's going to have the impact of reducing our unfunded liability. Exactly how much each of those are going to contribute. We'll find out next August, but we think the net impact will be positive for us because the magnitude of the earnings exceeding the expected return is greater than the reduction in the discount rate. Okay. And then in this maybe in the next discussion too, the 115 trust, is that in the next one or is going to ask a question at this presentation? It's in the next one, but you can ask. Yeah, we can talk about that now. Well, again, I know we haven't counseled as made decisions, but might this be an opportunity? You know, we have the 8 million plus to take a percentage of that. Would this be a situation where if we had the 115 and if council was in agreement, we would take let's say 20% of this revenue that we weren't expecting and put into that 115 trust. Is this the type of situation where we may be able to take advantage of that opportunity? Yeah. We believe it is and it may be. And part of what we are hoping to discuss with the subcommittee in the next section is how would we describe that? What are some of the guidelines then the policies that the council might want to consider to guide those decisions now and in the future? And then the other question I had because Alan, you mentioned some of the fire apparatus trucks and I understand the bigger bucks ones are not part of the vehicle replacement funding. Is that also in the next discussion? Because I have them. Yep. Yes. Okay, I'll save those comments for that part. And thank you for all this info. All right. Yeah, and I'll save some of my comments for that discussion, Alan. I think that they go hand in hand. So let's go to public comment really fast and see if there's anybody who'd like to provide public comment on this item. I'm not seeing any hands pop up. Do we have any prerecorded voice bills or emails related to the item 4.1? No emails were received. Okay, I'll bring it back to council members see if there's any additional questions or comments before we move on to item 4.2. And I'm seeing shaking heads. So Alan, let's roll into 4.2. So what this item is, is an overview of where we're headed with fiscal policy. And we go to the next slide. So we'll go through these here, kind of where we're headed in terms of next steps is that we have a study session at the council to discuss policies, these policies on December 7th. So as we go through this or if there's additions that you would like us to see in that presentation, we'd like to know that so I can make adjustments and add where necessary. Based on the direction from that study session, we would develop actual written policies and methodologies for what we're about to talk about. And then work with this committee on refining the wording and the methodology of that and then ultimately going back to council to adopt. What we're gonna do here is kind of go over background of where we've been with fiscal policy and an overview of where we're headed. And then look into three that we are looking at right now as potential candidates to be a reserve, if you will, for each one of these types of things. And one would be a pension stabilization fund and another one would be a large capital replacement fund. Another one would deal with extreme events. So with that, let's just jump into the background part. So we began looking at what's known as risk-based reserves back in 2017. At that time, the reserves surpassed council policy requirements. We knew that we needed to mitigate cost impacts that were hitting the general funder that would. But then the fires hit and we kind of paused that item. One, we had lost a lot of our reserves but also in the finance department, we kind of had to shift gears into our recovery mode for the disaster. But we have a renewed commitment in the finance department to establish policies that provide stability to the general fund. It's really just something that began earlier in the year and it's something that we are very committed to of taking and looking at things in the future and being more proactive and less reactionary when it comes to things that fall outside of our every year budget. One of the things that we wanna try to move away from is that we, for a lot of these things that we'll talk about, our current practice is just to come to council and dip into the reserves. When you have a lot of reserves, that's you're able to do that. But we should be able to, we know that there are expenses that are out there. We should be able to plan, especially in times like these where we have been able to build our reserves back up. We have the really kind of unprecedented situation of having those fiscal stability funds with us right now for the general fund that allows us the opportunity to kind of look out in the future and try to mitigate risks that we know that we will come up against. So next slide, please. So the idea of risk-based reserves is something that's been around for a bit. GFOA did a case study of Colorado Springs. It's stuff that I know that a number of other jurisdictions kind of look at as a way of analyzing risks and developing methods for funding reserves to mitigate the potential of risk in the future. So we would look at things that we know right now are getting our operating budget or will in the future. The pension costs that Jeff talked about earlier and the impact of either a purse dropping their discount rate or however that impacts our unfunded liability, those are things that we may not know the amount, but we know that the cost is out there. You've also seen presentations that we've given that dealt with the amount over baseline of our UAL costs. So those things that we know that are out there, we mentioned the large capital replacements that are there. We have what I'm just using as a all-encompassing term of extreme events, whether it's natural disasters or public safety power shutoffs or whatever it is or even emergency infrastructure, these are things in the last five years, I think that we can say that it's pretty much a certainty that something, unfortunately it's gonna come up, it's gonna cause us to have to draw on reserves in order to meet that need. And so when we have funding available, we should start setting aside to be able to address those needs out in the future. If the way that you would do this is to pay you a signed fund in the general fund for a specific use. And this is getting into what's known as GAZE 54 of how we assign funds within the general fund reserve. If you're getting into a kind of a governmental accounting standard, I won't get into those weeks here, but basically what you would do is you develop policy for the use and the methodology for adding funds in you. That's what supports the assignment of the fund. And when they're assigned in the reserves, they can't be used for anything else. It comes outside of our normal reserve calculation and it just essentially becomes a bucket that is just accumulates funds and can't be used for any other purpose. It is, one of the things that was mentioned earlier is that, yes, when you see a surplus at the end, year end is a general fund, that is an opportunity to take some of that, whether whatever the methodology is and assign those to some of our designated reserves from that. And then the other thing that you can do is that when we, let's say if we, we can actually budget for capital replacement up in our normal budget, which is appropriate because it shows what the true operating cost of any department is, but then move those monies into those assigned reserves. Some of the other things that we also may wanna consider beside those three things, there are ways to offset, typically balances or vacation balances, anything like that that may have an impact. We kind of do this a little bit right now, but we would wanna analyze that more, especially if we get to certain times, certain points over the period where you have a number of people leaving the organization. I've been with the organization long enough to know that there are kind of generational ways and we tend to kind of all go right around the same time. So you wanna be able to possibly or see when that's gonna happen and save for that. Next slide, please. So what are the benefits of doing this? Well, it allows the city to plan practically that's something that you're gonna hear from me and from the finance staff for a while is that we really, that needs to become our mantra going forward. We wanna add transparency in terms of putting aside funds, pay for general fund operational and one-time risk. I think what that does is kind of along the lines of what Jeff was talking about earlier and going out and meeting with the employee groups. I sat on the labor table and we have some work to do to kind of build a good credibility with the employee groups and it's something that we're committed to do in the finance department. And I think wherever we can add transparency, wherever we can go and be very clear on how we are addressing these risks, especially the one-time and nature risks that those are very good things to do for the overall health of the organization. It also would distribute reserves fairly avoiding kind of a reactionary method to reserve spending. You know, again, looking for that proactive, having the methodology in place being able to stick to that and going forward and it's the way that we wanna look at all future budgets. I mentioned here, I kind of hedged a little bit saying that it was potentially favorable benefit for the city's overall credit rating. I was actually talking with our municipal advisor, our municipal financial advisor about the PODs and starting that analysis. And I talked about what we were this presentation and it absolutely is something that the rating agencies look for, how much of a benefit that they would give to our rating that we don't know, but these are the types of things that they wanna see us put in place that shows that we kind of are headed down a good path in terms of managing our fiscal health. And then, you know, the major potential risks specific to the city that are outlined. Again, I kind of mentioned them before of, you know, where we are just even in terms of the extreme events that hit us, you know, we all kind of know what they are now, you know. So anyway, this is what those would do. So let's go on to the methodology in the next thing. So, you know, the $40 million of fiscal stability funds are there and those can be used to initiate these reserves. I think that was what the attention of the council was to be able to at least use some of that to start establishing these things, establish a formula for allocating the un-stand appropriations going forward. So, you know, we will need to kind of see these funds, I think and then to figure out how much going forward we put into each one, identify the risks that are specific to the city, assess the likelihood of the risks occurring and the impact and use the knowledge of those risks. These are all types of things that the case study from GFOA in Colorado screen, these are the kind of the methodology that they use and that they have developed as a best practice from going forward. And it's one of the things that when we bring back to the committee of here's our plan going forward, it's gonna base largely on what those best practices are. But we do need not only from that analysis that has been done in the past, but also from future analysis of what we need to be going forward. So we kind of see it as two things. We understand what our risks are, develop the funds with that. So what we need is a good starting place to start those funds at and then figure out how much we should put into those on an annual basis. And so for instance, with say a pension stabilization fund what is the right number to use to either start it off or to put in? And should it be weighted higher than maybe some of the other funds in terms of putting money there because pension part is such a large number compared to some of the other things that we're dealing with. Those are things that we would wanna work with the folks that will ultimately be setting up the 115th to try to figure out how that would go. So those are part of the steps that we need to take moving forward in developing the... And so let's talk about the actual funds that we're thinking about now. So pension stabilization fund. So we've talked about this in terms of the section 115 and I think that would be ideal in how we would do it. We would develop a formal policy and that would be for all of these things we would I think we would go in and have one individual policy for each fund that comes up just to give it clarity. Develop that for funding the trust. Again, any significant balance that we would have in there we could use for our UAL payments on the highest years of the payoff schedule. I think the thing that works well with me that I think that is intriguing is to pair that with the potential of a pension obligation bond if we do in that going forward. And using the initial savings directed toward the trust is used to mitigate the risks of the POVs. If there is going to be a significant risk to the POVs it's usually around the initial period of issuance in case there is a significant change in interest rates. So you would want to mitigate that risk with some sort of a stabilization fund like a 115. However, regardless of the status of the POV I would absolutely suggest that we do the 115 it just makes a lot of sense to go in that direction to be able to gain put more growth in there. This is stuff that we've talked about before and I know that the council at least this committee sees that as a good idea. Next slide. So looking at capital replacement this is where we get into an area that we have large capital replacement items that just aren't in our normal equipment fund. And whether it's vehicles such as fire apparatus or it's large capital purchases non-vehicle like body warmth cameras like tasers I know in some areas we try to accumulate money over time and projects that would that allows us to go make say weapons purchases or things like that. This would be a way that you're actually doing it in a fund it's very transparent it's you know that you're doing that you can see it we can speak to it more directly and it's and it's governed by a policy. Fire requested in there in the PG&E funds to establish the funds with four million dollars. While that would be great to establish it with that amount we think that there would be a lot more needed on an annual basis to go toward it. And that would be great. Just some very rough numbers dealing with with fire apparatus. There's about 25 pieces of apparatus out there whether it's the engines or ladder trucks or wild land house now whatever those vehicles are. And if you figure that there anywhere from around seven hundred thousand dollars for an engine a million plus for a ladder truck depending on whatever if we fully enrolled that whole thing in there the annual replacement costs would be about three million dollars. Again those are very rough numbers and those are things that we would put into the analysis to come back to the committee and then ultimately to the council and come up with where we are with with where we would need to where we would need to be. Obviously if we put a little bit more in there to see the funds that would help out and would maybe allow us to kind of slowly build up to the full annual amount going in of three million dollars ish. But anyway that's about what we're looking at with that type of replacement. The other thing that we need to do is try to establish that budget to go in there and that's kind of an odd thought but we were already actually doing that. So we have in the past and we are looking to in the very near future to lease some fire apparatus coming up or two fire engines that we know that we need to replace but we also know that in the early 2022 I think it's in the January or February time frame the costs of those vehicles are going to go up by I think it's like seven percent. So it's a significant amount that they've kind of let us know that that's out there. So we did some you know the cost of the lease right now is pretty cheap. What we could do is actually lease those over seven years probably I'm thinking that for both of those I think that the lease payment would probably be about 500,000 and that's kind of off the top of my head but it's about that much of them for seven years what you would do is at the end of the seven years is that you would just keep budgeting that amount and then now that becomes your replacement amount that goes in. We've already do that we're currently doing that with with some leases that ran out in prior years. So fire is able to kind of accumulate some funds in a project or a future payment. They don't have enough to buy one outright or buy both of these outright but they are trying to accumulate funds. What we're saying by doing it in an actual replacement fund is that that again it takes it away from being kind of lost in a project somewhere in the department and now it's assigned in a fund and it's a lot more visible to us. Next slide please. So then looking at the extreme event again right now I think that we know that unfortunately in Sonoma County extreme events are going to happen and we should currently right now we just unbudgeted and then I come to you with a cleanup item it's so earlier this year that tries to you know write that I think it's probably time to start moving money aside to be able to kind of proactively put money for that payoff as we go forward. Does it need to be as much as the pension or the capital replacement? I don't know right now that's something that we would need to you know do further analysis from. I will say this it takes a phenomenal long time to get money back from FEMA and so that in the general fund operating you know we borrow from that and we hope for the reimbursement to come back in a timely manner that we can replace it so it would be nice to take the edge off of the operating reserves and actually be able to draw down from a FEMA extreme event reserve. We have a little bit of a setback there I thought we were going to get paid back rather quickly but FEMA has now put in another request for information so the way that goes I'm thinking that we probably have several months left before we start seeing cost reimbursements for stuff that we incurred back in March 2020. That ends this presentation and I can try to answer the questions that I know you're going to have. Thanks Alan. The first question that I had and maybe it's just I've misunderstood from previous budget conversations but I thought that there was a requirement with FEMA that if we had funds that were set aside and dedicated for responding to disasters as I don't want to say surprised but that might be the best word I can reach for at the moment to come up with it that we wouldn't be eligible for reimbursement of those funds. No I that's not my understanding of how they're reimbursed. What they do not want is when it comes down to a duplicate of that fund so in other words if you have another funding source such as say insurance that they're going to take the insurance off the top and they're not going to reimburse for that but for anything that's coming out of our general fund or out of an extreme event fund they would reimburse for that. Okay that'd just be the only thing that I'd be concerned about is that by setting aside what I thought we had talked about this specifically as it related to our unassigned fund balance I thought two budget cycles ago I thought we had less additional funds in the unassigned fund balance in order to draw from in the event of an emergency which we did end up meeting with the glass fire and I thought that we had specifically not earmarked a FEMA requirement but I can go back and I can check my notes from a couple of years ago on it as well and it's very likely I'm just misunderstanding or misremembering what happened. We can double check with FEMA as well. Okay that'd be just my biggest concern absent that I think that this is great this is exactly what we've been talking about is how do we create for the things that we know that we're going to have to spend money on investment in the set aside particularly for our capital apparatus we know that we have the same problem with our building building stock as well and I know I don't see Jason on via zoom but he might be watching from his office smiling because it is one of the things that we've talked a lot about is the need to start to look at what the city's infrastructure actually is doing to invest in it and divest from the things that are not appropriate so I'm very much in favor of this I'm very interested to see sort of where the prioritization comes back in terms of pension obligations versus capital expenditures versus investment in our building. Council Member Schwedhelm. Thanks Chris. So Alan regarding the capital replacement for the vehicle fire apparatus and you mentioned how many vehicles fit under that purview and is the threshold above a million dollars or what is the threshold that goes vehicle replacement versus capital replacement? That's a good question there's our normal vehicles so let's just say fire for instance they're like Italian cheap vehicles but those are all in the vehicle replacement fund the large those 25 or 26 specialty vehicles those are not so I don't know if it's a specific designation it's just I always look at it is that they're very specialized and they just I'm struggling to remember a time when they were in there and so with these large vehicles because I know if the vehicle the regular vehicles eventually you know one of the indicators are is when the maintenance costs are it's not cost effective is that the same threshold as let's say latter one or do we use the manufacturer suggested yeah it's going to last you 20 years and we're going to have to decide when you need to rotate out a million dollar fire truck so the way the way that I would think that we would do it is we would apply the same methodology that we use in our regular vehicle replacement fund and at least that as a base for what we would do for this and if we need to tweak it because it's more specialized we can do that but at least we have a fund methodology that's there for all of our vehicles and we would just apply it to the big one yeah and that's clearly my interest to be too and then let's say again using the bigger apparatus because I know there is a market out there so Santa Rosa fire no longer needs it I'm assuming we put that out to bid and sell it and then where do those funds go back would they go back into the capital replacement cost and since we don't have one now where does that money go now back to the general fund yeah we go into the general fund so instead of that it would go into the specific fund to allow it to keep perpetuating okay great yeah and again I'm trying to get context here and then the other two for the police department body worn cameras and tasers so yes it's 1.5 million but also they all don't go out at the same time and does the police department have a strategy to do it roughly 175 cops right now all of them need the body worn cameras we have detected what not but is there another methodology that's been discussed within the police department to do let's set aside 38 years I don't know what the life expectancy of a body worn camera or quite frankly a taser is right I think I think what we're seeing is body body worn cameras in particular that policy kind of came on you know four or five years ago and the bulk of these were bought all at the same time from the same vendor and they're anticipating that they're going to be starting to show wear and tear and break down and that the vendor is going to put out a new series of cameras and that they'll stop supporting the earlier version of the technology in the hardware ideally I think you're right councilmember Schwedhelm this would be a phase thing where they'd be able to replace 40 or 50 of them a year 20 or 30 of them a year whatever the correct number is and we'd be able to spread it out and that may be something that we can migrate to I would just be interested in seeing what are some of their options there when they I know they all don't go out at the same time again the truck is a great example I totally get having a capital replacement but when you have these individuals let's just use tasers they all don't go out at the same time and if we started gradually increasing the inventory and I'm not sure if the technology changes as quickly as probably the body worn cameras you know and I can see both sides and that's where I'd be interested in hearing from the police department because if you wait for a 20 25 or replacing everything well is that the cycle of the technology we're going to get the latest technology you know I'm just interested how that would work and is this the most efficient effective way of replacing this public safety equipment so we would we would absolutely work with the police department on that but I would I would say that we do have I think some precedent and kind of what you're talking about several years ago we recognize that we needed to create a PC replacement program city-wide and we did that and it's in the information technology fund and we kind of phased it in and it heard at first and then it became a routine cost in our budget and and now PCs are replaced on a normal they're it's cycled in cycled out and and it works well we would find whatever precedent that we have already in the city and apply those where appropriate to these types of funds and I think that's a great analogy because I know when the city went to that I think that's a great idea every five years because the rapid speed of technology five years is about that lifespan again with body worn cameras and tasers I'm not quite sure what the lifespan is but I actually for me I'd be in favor of modeling that whether that's included in the global capital replacement fund which I'm supportive of too or the way we're doing it I you know I think ongoing discussions would be helpful so thank you Thanks Mayor you know I agree with Tom Any anywhere where we can model our you know the and effective and efficient way of replacing our our vehicles the body worn cameras whatever it might be now we tend to there's the what happens in the normal business environment and what happens in government environment and I think that they tend to be a little more conservative than we are but I think that modeling our especially with fire and these large pieces of equipment I know Santa's a water when they have to replace a large piece of equipment like one of those big machines that clean all of the equipment so we're systems what was that Jeff? the vector trucks how much are the vector trucks those are not inexpensive pieces of equipment and being able to use part of what we normally use in our public safety machinery would be beneficial so the the private sector as opposed to the public sector anywhere we can model the private sector I think does make sense and I agree with Tom about effectiveness and efficiencies but it does make sense and I am very much supportive of moving in that direction wherever we can because it is even if the bucket if we have a bucket for these large purchases like we have buckets for other things that we're considering right now and potentially making a recommendation to the full council whether it be the trust or whether it be these vehicle replacement programs wherever we can model the private sector I think it makes sense and I think that seems to be the direction that we are moving in wherever we can but it does make sense so I appreciate the recommendations coming from you Jeff and Alan and moving forward with replacement programs that don't hit us all at once and where we are actually we are planning for the future because we know that they only have a certain life at least that is what we are told and we try to gain as much life out of this equipment as we can but ultimately they have to be replaced and if we are more prepared to replace those by having a bucket in which we have been putting money in over a period of time we are going to move to the general fund which is exactly where these funds come from I would move wherever we can into the direction of the private sector and being well prepared to replace the equipment that protects both our community and our employees I think it is much easier to make these decisions and adopt these policies when you do have good news to share and you are able to allocate a portion of that surplus into these reserve funds I also want to respect the council's need to fund some new priorities as well so I don't think either Alan or I would recommend that we take everything and put it into these reserves to start them off what you can anticipate coming back from us is something that creates the framework and the policy and recommends that maybe a portion of that surplus this year goes to start them and kind of jump start them and then we are going to move our analysis and recommend annual contributions into those funds there will be circumstances in some years where we have a really bad year where we may not be able to make those contributions but we will try to explain that as well thanks Jeff go to public comment for voice mail no e-mails were received great I will bring it back then any last thoughts John or Tom we have some really supportive of this these are going to be some challenging conversations but we have got to do this I am full support of this putting out those options this is an investment in our future councils to assist them so thank you for bringing this forward if I might just be clear when we go on the 7 it will be a presentation very similar to this high level and what we are beginning is to speak back from the full council as we go in to then start to develop those prioritizations and methodology as we go forward I just wanted to to defer your information I did run this yesterday we reported in a very summary fashion the results from last fiscal year she was very excited about that news and the next words out of her mouth we are going to talk about the stabilization and reserve policies you just made my day not that I am surprised it wasn't that long ago we were talking about buckets that was before the challenges we had with fire of late we are fully in support of planning for the future and having those buckets ultimately well filled to handle the unforeseen and if there is nothing that we leave behind as a council as a something that we can point to we are placing you in a good position to handle both foreseen and unforeseen challenges fiscal challenges I think this is a great place to start but I think it is important that the council be supportive of the recommendation coming out of this subcommittee it is prudent and responsible and I think necessary as we move into the future so good job on the recommendations and I am in full support of the recommendations and I think we will have an easier time with budgeting than what we have had in the last couple of years so thank you guys for your work on this one we will move on last item on the agenda is a discussion about next meetings agenda items Mr. City Manager did you have any thoughts I do not I do not have any thoughts on the committee process Alan may have some others I am not sure I really don't I think given that we have the holidays in December and we would do I think end of January we are scheduled to do the mid-year report out to you guys in December I think that is probably a good recommendation let's see if there is any public comment if there is anything that the public is interested in us hearing if you do have thoughts go ahead and hit the raise hand feature and I am not seeing any John or Tom are you good with that recommendation for Alan I am good you are always welcome in my meetings I appreciate that on that note we will go ahead and adjourn for the day we will bring it back after the holidays thanks everyone take care