 Your phone call after this meeting? Yeah. Depend upon how long it goes. I mean, the answer is yes, regardless. Chris has an FYI on the invite. I've got John as a question mark. I don't know if he accepted. I'm not sure either. He emailed me today and I sent him the updated link. So I believe he is planning on attending. Awesome, thank you. Well, let's go ahead, let's not wait for him. Let's get started. Madam recording secretary, if you could call the roll to establish the quorum, that'd be great. Chair Rogers. Here. Member Schwedhelm. Here. Member Sawyer. Let the order reflect that all subcommittee members are present with the exception of member Sawyer. All right, we'll go ahead and start with our public comment for non-agenda items. So folks in the public have a comment that's within the jurisdiction of our committee, but not on today's agenda. Go ahead and hit the raise hand feature on your Zoom. I'm not seeing any, so I'd keep going then. We have one set of minutes from our special meeting on January 27th. Tom, did you have any amendments to those minutes? Look good to me and it was a special meeting, thanks. Yeah, I'll see if there's anybody in the public who has any additions. All right, seeing them, we'll keep moving. Let's go on to our item for the day. It's item 4.1, our fiscal strategies presentation. Allen, I'll kick it over to you. Thank you, Chair, members of the committee. So yes, we, let's let the thing get up on the screen there. All right, so we are bringing forward an update to our fiscal policies or fiscal strategies in some case kind of working on the branding of that. In some cases, we do think a policy would be in order and others maybe just a strategy on going forward. So toying with titles here. So next slide, please. So as we've been come to you a couple of times with how to develop strategies for a more proactive and transparent approach to address significant known costs that affect the city's budget. Most of these are centered in the general fund, but I think that this also can help with in the enterprise funds as well. So the strategies that we've been looking at relate to pension stabilization, capital replacement, and deferred infrastructure maintenance and really focusing there on city facilities. So for this presentation today, we're addressing pension stabilization and capital replacement. We're still working on the deferred infrastructure maintenance and we'll come to you with that in April. Next slide, please. So as I mentioned, what we're looking at is developing these proactive long-term approaches and looking at our unfunded liability costs. Capital replacement, we have large items that are mainly in the fire department that are not part of our equipment replacement fund. We end up paying those costs, but they're not really shown in the budget in a way of reflecting the true cost of the operation. Instead, we come to you in an emergency saying we need to buy this truck because it's about to go out of service and we're trying to move away from that. And then we need to also look at our city facilities infrastructure in general, but our city facilities are really struggling. We have deferred maintenance on that for not even years, decades. And there's a whole slew of things that need to happen. We need to figure out a way to program that cost over a long period. So we have some funding mechanisms to be able to help us with this. Some of which are the fiscal stability funds that you've set aside out of the PG&E settlement money. There was $40 million of that. Some of these things I think also need to be addressed in the annual budget, not only to supplement the existing or the initial funding of it, but just to begin an annual budgeted practice for dealing with these costs. And then if available, any year in surplus money could go to those. And that's where we get into the talk of how much we're going to a particular budget or a bucket or into another one. And then for where it's appropriate, we need to finalize these with the council policy. What that does is it sets the strategies in place for the long-term in the future going forward. Next slide, please. So the way I'm going to try to lay this out is what our current practice is and then what we're proposing. So we pay the normal costs and we pay UAL payment, unfunded liability payment. When I'm talking about these things, I'm looking at it from combined costs of our three CalPERS contracts. So there's one for miscellaneous, one for police and one for fire. And I'm also including all funds. So the majority of the costs is in the general fund, but there are other enterprise funds that is like they have personnel costs and they reallocate the pension costs out to them. But for general terms, this is what we're trying to pay. So we have a normal cost payment that's roughly $20 million a year and we will always have a normal cost with PERS. So the strategies that we're dealing with is really looking at the UAL payment. Currently that's about $30 million, although we project it to grow in the next year or two, up to 34, but as I'll show you in a future slide, that has kind of leveled out. And then we have existing debt service on our, well, we have debt service on our existing pension obligation fund. That's roughly $3.7 million a year. Again, that's an all fund basis. And that will be paid off in 2024. So what we're proposing is again, we still pay the normal cost in the UAL and the debt service. So for the immediate future, we still make those payments. Going forward, we would still make the normal cost payment. We're still gonna have to make a UAL payment as well. But what we're trying to do is come up with a method for putting money aside that will help address the UAL payment. We use the trust to help keep down that unfunded liability. None of this is gonna happen overnight. You're talking very long-term plans on this and I'll get to that in the future slide as well. And again, as I mentioned earlier, we do have ways of being able to fund the trust both from an initial funding coming from the PG&E fiscal stabilization fund including in putting in an annual budgeted amount and then using a percentage of urine surplus and that will help enhance those funds going in, help augment the funds. We wanna set a goal of how much we wanna put into the trust that not only that, but when to actually use the money there. We think that our goal needs to be to achieve 100% funding status. The trust will help us get there. It'll be combined with our regular purse valuation but we'll be able to get to that funded status over time with the combination of those two funds. Next slide, please. So again, I mentioned the UAL payment. What this does is it shows the current projection pay down over time. You'll note, I don't have a pointer but I'll say that from the beginning of the chart in the fiscal year 21, going out about 14 years that would be amount, if you remember, to those POV presentations we gave where we were talking, it looked like a mountain. It went up from our base amount that we would pay and it just looked like a mountain top and the aggregate amount of that was about $110 million. So that's what we were coming to you to say that we could issue POV to help address that. Well, the return or the stock market performance for the CalCurse Fund, essentially leveled off that mountain. I guess that's what a 21% return will do for you. And so, which is great news, the means that that aggregated costs over that period was reduced down from $110 million to between $30 and $40 million. So that was a significant reduction. We still, like I said, we still have the UAL payment. It's still more than what our baseline amount was, but it's nowhere near as dire as it would. That said, you probably realize that the market is really taking a tumble right now and we don't know what effects that will be in the future. It may be that a couple of years out, we'll see that peak again, all the more reason to try to do something out from a local basis to be able to help wherever possible offset some of those additional costs that are coming in. Alan, if I can jump in and ask a question just for clarity. So when you talk about the return from CalPERS last year leveling off the peak, you also make comments about how the current slide means that we don't know what it'll really look like. Can you give me kind of a year, how many years out do we typically start to see the impact from the existing years stock market? So if this is a bad year, we'll start to see that in our projections five years from now? No, I mean, the great stock market returns happened last year, but typically we see things around in a three to five year period. So that's what we're looking at. It is a little bit forward facing. So let's go there around three to five years. And that was what the 110 million was based on a three year period? Yeah, it was our prior valuation that we had. And so that's had it when we started to factor in not only the stock market performance, but also the lower discount rate, that even the two of those combined in the discount rate is something that a lower discount rate actually needs a higher cost of us. But what that ended up doing was that's what you're seeing now is from CalPERS, their projections on that and showing how it leveled off. So that's taking all of that into account using their performance. Okay, and then one more quick thing. If we can get John promoted, just in case he wants to jump in with some questions instead of making him wait until the very end. Thanks, Alan. Sure, no problem. Okay, next slide, please. So this just shows the funded status where we are right now and it's historical. So it shows that at one point back in 0607, we were actually overfunded. That dropped down significantly when the recession happened and the huge losses that CalPERS took in that 2008 year. And then it shows us kind of where we are now. And we're right now around a 70, I think it's around 76, 77% funded. Again, that's a combined of all of the CalPERS contracts that we have. And next slide. And this one shows what our unfunded liability is. Again, it's over that same period. And we're looking at our, we're around, I think it's around 330 million dollars of unfunded liability. Next slide. So what are some strategies that we can do? And so again, as I mentioned earlier, the purpose of the trust is to build a balance that at least, or what we can use the trust for is to build a balance that is at least a year of the UAL payment. So in this case, it would be around $34 million for all funds. So why do we pick a year amount? And I should also mention that this is not only from staff, but this is also from PSM, we met with them to talk about these strategies to what would seem to make sense. A good target, one that we could put that's attainable and it's attainable in a reasonably short period would be to try to get enough money in the trust to equal one year of UAL payment. And we'll continue to build on that in future years, but there is a goal that's out there. You don't wanna, I don't think you want me to say, you know, our goal is to get, you know, all of that $300 million of unfunded liability into the trust. I mean, that's, I don't know if we'll ever see that, but what we wanted to do was to provide you with a reasonable goal to achieve one that we continue to build on, but at least you'll be able to have that. It'll get us closer to, again, as we combine our DAP fund with our regular CalPERS account to get us closer to that 100% funded status. It's gonna be very favorable to look down by the rating agency. And in the future, it will allow us to be able to, especially once we get that funded status to if there is a particularly negative years that's out there, we can target supplementing our normal cost statement with the balance that we built up in the trust. So there's a lot of benefits to go with it. Some of the risks, though, is that I don't think that we can just do that based on an initial amount coming in from the stability fund and then hoping for whatever type of surplus might be at the end of the year. I think the surplus should be looked at as a way to augment an annual payment towards this. The good news is, is I think that we have a way of doing this that is essentially budget neutral and the general fund, and I'll explain that in a minute, but one of the things that we'll have to look at is that if we go ahead and put that line item in there, at some point, if there's a significant downturn and we aren't able to, you know, if it comes to paying for this or to pay for other things that are paid for out of the general fund, this is a line item that we would suggest that can't be cut, it's one that's in there. And for all the reasons that I've mentioned early, let's go on to the next slide, please. So, and I apologize, some of this is a little bit redundant, but we'll actually, I think we could probably, let's move and talk about funding. So let's go to the next slide. So doing a funded model, what we're looking at is we built this trust that's using up to around the $34 million. And the way we would do that is, and the way that I think we can do it budget-neutrally is that if you recall, we are making debt service payments or we're making debt service payments in about 3.7 million, I think about 2.5 million of that is general funds. We think that we can go ahead and find the funds to be able to offset the, or to meet the minimum amount that PFM suggests that we put in, which is $500,000 a year. We think that we can find $500,000 a year on an annual basis that wouldn't be detrimental to the budget. After 2024, we would simply take the debt service payment and then lump that into what we have already established as a Y-9 in the funding. So if you look at that as $500,000 there, plus about two and a half million dollars from the general fund side that then goes into that, now you have your $3 million a year. If you look at it from just the standpoint of if we use $10 million, which is what we would recommend of initial funding that drops us down to $24 million that's needed, we think that we can achieve that in around eight years. It depends on performance in the trust itself, but it is an achievable goal that's relatively short in period. And then of course, to use surplus funds at the end of the year to go into it as well, that will also help bolster that amount. But you know that you would have at least $3 million a year that would just continue for imperfectivity that would go into this fund. And eventually what it would have is that it would create an actual pension stabilization fund, something that as staff we were talking about, again, it's looking in hindsight, but imagine if we would have done something like this, not only when prior to the recession, but when we were fully funded, but even when we recovered out of the recession and started to be able to, we were generating little bits of surplus on an annual basis. If we would have started doing that then, we would have gotten a lot quicker than where we are now. It's still a humongous amount of money that we can deal with with this, but at least it's these things that would have been able to reduce the burden of future taxpayers of the current pension costs, which again, I think is a very important thing to do. Chris, can I get a question in real quick? Sure. Go for it. You mentioned two and a half plus the 500K. Slide four, you talked about the existing POV debt service at 3.7 million a year. Yeah. Isn't that the figure that once that expires, wouldn't we have that 3.7 that we could apply towards this? We could. The 2.5 is a general fund only amount. So I haven't talked to the other funds to see if they would do it. And I do have a meeting with water funds tomorrow, which I believe the bulk of those costs would go for and to, but I don't want to commit them before we've already gone through this. So I've focused this on the general fund and where we are from now. So. Okay, great. Thanks for that clarification. Yeah. So yeah, so the next slide please. So, all right. I think so this, this is where I am. Somehow the slides I have are a little bit different than what's in the slide jack, but being adaptive here. So again, here's where I laid out. This kind of verbally shows it. We do have $40 million of this whole utility fund. We're proposing using 10 million of that, needing an additional 24, like it says, how would we get there? We would get with the, go a couple of years at the 500,000 plus whatever would be their year-end surplus, that could possibly make up the difference of the three million, it could be more than that or whatever. But we know that after 2024, we have a budgeted line item that we can just move from paying debt service to move for funding the trust and so there would be no increase of budget. We would just continue that payment out again in perpetuity. And then again, once we get to 100% funded, if we do notice that at certain points in the future that we are forecasting additional costs, we may be able to use the balance of there to supplement payments to helpers on that. So next slide please. And this just is a graphic representation of it. That's what happens when you start looking at all the graphics and PowerPoint and go, ooh, this looks nice. Anyway, just trying to figure out a different way other than to show this as we would go forward. But this basically lays out what our funding strategy and goal would be for. And so this is the end of the CalPERS part. So we can do questions or if you have, if you're okay with how we're going out strategy and both determining the annual payment, if you think that there should be an annual payment, the amount of the initial funding. And then we need to come back, I think to talk about the percentage of the year and surplus that might be able to go toward this. Because looming out ahead would be the infrastructure, the deferred infrastructure. And if we're going to be putting money towards that, you may want to have a higher percentage going for that. And then this, especially if you have an ongoing budgeted amount going into the trust fund, it's just that you can count on every year. But John, we can't hear you, John. Doesn't surprise me. Can you hear me now? Yep. Okay. Nothing has worked all day. So I like the, I mean, dedicating funds to lower this obligation. What I'm not clear on is what kind of narrative you're going to use to get future councils to understand the commitment, especially when you attach the word perpetuity to it. I like the word. I like the concept. But how do you, how does one impress on future councils unless you use, well, we could use the past like you mentioned earlier, had we started this before, you know, some time ago, we would be in a different place than we are now. But what I'm, what concerns me of course is, not of course, what concerns me is being able to convince future councils the value in not using these funds for projects, for anything other than getting this debt reduced. Now, one could, I guess if you mentioned the problem with the year-end surplus. You could come up with a range, I guess, and say this percentage to this percentage would be a reasonable range. They, there will be pushback on difficult years. They'll want, I would think that they're going to want to go to the minimum. But if we don't impress on councils in the future, the concept of a minimum and a ceiling or a floor and a ceiling, they're going, it's getting it spent in other ways. And I don't know what kind of strategy one uses to impress on future councils the need to be dedicated to this on an annual basis. So I thank you for that. I appreciate that. And I don't have a fully fleshed out narrative right now. But two things come to the top of my mind. So one, we're relying more heavily on annual budget than we are at the percentage at the end of the year. Also, in setting this up and even embarking on this, and I think I've mentioned this before, I'm very cognizant of tying not only this council but future council. So what I'm trying to do is leave something left over of one time money of surplus, which is for one time use, that could be used for those projects that aren't going to pension and that's not going to deferred maintenance, right? That's going for whatever other project that I can't foresee. The other thing that I would say is that one of the things that when we go out for a sales tax measure or for any type of revenue measure, usually the main, at least one of the main arguments against it is that pensions are at its hand and get all that. This is your way of addressing pensions. This is your way of getting those pensions in hand. Yeah, it's going to take a long time to do it, but you're making it, going down this route, you're making a conscious effort to address the pension problem that exists. And I think that that can be a very positive message. It doesn't go away overnight, but it's something that is headed down a path that maybe we could promote. I agree, I mean, it's vitally important and coming up with that narrative that speaks, because in 10 years, they're going to look back. Someone's going to look back and say, why did they do this? And why did they want to tie our hands? And having explanations like the one you just used that if you start getting rid of this debt that it will start to take away the argument against future sales taxes, et cetera. Anything that may resonate with future councils is the best we can do. We can't tie their hands. So unless we put it in the charter, so I'm not, I'm sure you can do that. So in any event, I like what you're selling and anything that we can do to help convince future councils to support this, what the structure and is will potentially work. The strategy is sound, it's just getting them to embrace it. Tom? Thanks, Mr. Mayor. Yeah, I really appreciate this, Alan. This is just what I was hoping we'd be seeing. We've been talking about it now to see in this, these are the next steps. And I'll start with just what John was talking about. For me, I think we should have something in concrete and if future councils wanna change it, it requires an affirmative vote. In other words, default is whatever we come up with. So that puts an aim. I'm making a motion that we take funding from reducing our pension obligation and put it to something else. Requires a second, put it out there and let them make the argument in front of the public at that point versus every year you can go either way. No, make them do affirmative. Because I'm with John, this is a strategy. And for me, alls we have to do is look at 2006 where over 100% funded to 2009 were barely above 60% funded. It can happen that quick. So that's the type of pressure that I think quite frankly, the community deserves to put the council under because a lot of members of the public are not following these funding challenges. It's really easy to say, yeah, you're just wasting your money. Let's make it challenging to change that. So for me, how do rating agencies, if we go to with this trust 115, how do rating agencies look at it? I would assume favorably. Very fair move. Okay, good. And are there costs to set this up? Yeah, there are. There is a fee structure that's based off of the amount that you have, have in. So the more that you have in, the lower the fee. I don't recall right off the top of my head what the firm that we're going with, TFM, what their fees were. I think it's pretty consistent. There's only really two groups that do this and the fees were very, very close. So there'll be a small amount that will come out of that and it just comes out of the fund. And then I know we set aside some of those dollars for the budget stabilization. I'm not sure if that's exact term and I'll do it. I also recognize though that with the decisions council made regarding the use of ARPA funds, we're funding things that we're doing a fund from the general fund anyway, namely homeless services, safe parking. And there's one other, oh, the in-response team. We had found some other funding, but now that's not being debited from the general fund. Could some of those funds be allocated so that we get closer to being 100% funded with the section 115 trust? Or have those dollars already been identified for other things? Well, I don't think they've been identified for other things, but what I would say is that for all of that, it's a short-term, it's a short-term release to the general fund. And ultimately, I'll have to pick that cost up. I think what you would wanna do is at the end of the year when we are looking at what we have returned back to the general fund, then to make that decision on whether we augment the amounts going into the trust. I think the important thing to set up is, initially is what can we consider an ongoing amount to go in there? And then look at anything that's in the end of year amount as just kind of cherry on the top, right? That's just gonna help us get there closer. You're absolutely right. But I think we just have to have a more nuanced discussion about that when we know exactly what all those funds are. So we'll say that we're in the process of developing our budget right now. We know that there are a lot of ongoing expenditures that are part of that budget as we continue to try to bounce back from the pandemic and get to our service expectations. So I think that you're right. Some of that could go for there. I think that we would want to take a good assessment of where we are both on an ongoing structural basis, but also on a one one one off each year basis and then use the funding for that. And like I said, in April, I'll be coming back and we'll be talking about deferred infrastructure. There may be that after seeing that, that it makes sense to start putting maybe more of those dollars into our facility infrastructure that's been neglected for a long time as well. Yeah, I get there because I was planning on bringing it up to our next topic, the replacement cost. And I was looking at those dollars as one time costs just to seed the funding of it. So we have something to start with versus started from zero. Absolutely. And like I said, at the 40, I'm saying 10. I think that when the council dedicated the 40, they had it, as I recall, this was the plan, was we need to try to stabilize our general fund budget on an ongoing basis. This provides us some time to do that. We also have the ability to pre-fund some areas that have long been not addressed. And so that's why I didn't take, I didn't suggest more than 10 of the 40s because I know we have those evidence to do. Great, thank you. Yeah. So Alan, I know it's probably pretty hard to predict, but obviously in the last 20 years, you've had the economic downturn in 2008, 2009, and then you obviously had a good year last year in terms of stock market returns. If we look at sort of what the average is over the last 20 or 30 years, if we were to hit average and go with it, how long do we think that this plan would take for us to get to 100% funded status? Like I said, I know there's a lot of guesswork, a lot of variables. Are we talking 20 years, 10 years? I would hope that it would be less than 20. I would hope that it would be closer in that shorter period. Here's the thing, and Scott and I were talking about this today. I anticipated this blessing coming. And unfortunately, we just don't have a good answer for it. What we'll end up happening with this is that once we fund the trust, we will have to do an annual actuary study of that. And that will be combined with what CalPERS is doing at their own actuary study for the CalPERS program and our particular portion of it. So it's the combination of the two. So I would hope that it would be closer to the 10-year period than the other, but I couldn't tell you one way or the other. Obviously once, and there's a lot of things that could happen that's outside of our control that could cause us to deviate further from 100% funded status. So I would say for right now, hopefully less than 20 years. I don't know for sure, but once we start getting this funded and the actuary report from that going and being able to compare that with CalPERS and then we can start giving you on an annual basis, just how we can say annually how what our funded status is overall, we'll be able to tell you that it'll be factored in. I just wanted to hear a bit. It's what I expected. I know how many different variables go into it. And I know that 100% funded is a tough goal. I get that. The other question that I had and it sounds like given everything that's happened over the last six months or so, the different variables that are in place, it sounds like we are not anticipating moving forward on a pension obligation bond as one of our primary strategies at this point. At this point, I would not recommend that. We continued with the validation process, which is still ongoing. Once that's complete, it's good for the future. So should things change? And there's a way that it made sense to do that type of an issuance. We would already have the validation process done and we could move forward with it. But right now, no, that's not the recommendation. Is that largely because of how well the stock market did last year compared to how it's doing now? Or is that because we've sort of missed the window on the low interest rates? No, it's really because, so we actually received the initial graph, not the one that I showed you, but one that was actually in hindsight, that would have been the better one to show you because it actually had a dashed line of what that peak that I was talking about. Yeah, I think it would have to have 42 million, I think was the original what we were looking at. Yeah, that was what the peak where we get to, but the aggregate of being over that base UAL payment was 110 million. And the effect of where we currently are, that aggregate amount is only about 30 to 40 million. So like I said, it took care of itself. And so what we do is we continue to watch it, if we have that as a potential, I would want to talk with you about all the risks that can come with that as well as whatever benefits that there may be and give you that type of a presentation. And if it made sense, that's a tool that we would have in our tool kit. Okay, John? Hey, it's Chris. Alan, you're gonna get asked that question is gonna come every year, is how long are we gonna have to do this? And I don't know how one comes up with some kind of strategy to deal with that question, but there's gonna be a time in the future when it's only gonna be a couple more years where the councils are gonna have to be, have dedicating these funds to deal with that obligation. And sooner or later, it's gonna become an asset to us. The information will be an asset. Right now, it sounds like a long time out, but the time goes by really quickly and we're gonna need to be able to answer that question with some, with a optimistic slant to it so that it doesn't sound like councils and forever are gonna have to be dealing with this obligation. So it can be a blessing and a curse is knowing how long we might have to deal with that obligation, but it's gonna come up every single year as councils deal with their budgets. And we're gonna have to be able to give them hope in a sense that if they stick to the recommendation of your recommendation and your successor, whomever that might be in the next 10 or 15 years, I mean, we're gonna, it's that kind of planning ahead is what's gonna make this strategy work. Right. And your point's very well taken and it's that we know we'll, we have to figure out a way to come up with something just right now at this point, I don't wanna set an expectation that we can't. So that's- I get that, believe me. Thank you. All right, Alan, let's keep moving through the presentation. Okay, next slide, please. All right, so this is, I need you to adjust my screen. Okay, capital replacement. So currently the way that the capital replacement fund works, the most city vehicles and equipment are included in there in the fund. There are some notable exceptions, fire apparatus, equipment that's under $5,000, generators, buses, special revenue, grant funded vehicles. So what we do is we figure out what the cost is to replace the asset over a period of time. We determine what that annual per rated amount would be and that goes into each department's budget. So, and then that money is then moved over into the Equipment Replacement Fund, which is a internal service fund. So when we go to council to purchase an item, a piece of equipment, a vehicle, and it's coming out of the fleet and we say that it's out of the replacement fund. So that is how that happens. We've already budgeted for it over a number of years, accumulated the fund in there and then we spend it out of that replacement fund. So what we are proposing to do is to, and this is, we still need a little bit of work on this and I'll get to that in a second, but what we are proposing to do is add the fire apparatus to the replacement fund. So in doing that, we would now have the budgeted cost on an annual basis of what it costs to operate that the fire function, the fire operation, including the cost to replace the vehicles whenever that should happen. And we're not asking for any additional vehicles. What this is is these are just, these are what we know it's gonna cost to eventually replace them. And so you would see that whenever you would develop their budget. Right now you don't because when we need to replace a vehicle, even though we know that we're gonna have to replace one at some point, we come to council and say, hey, we need a million dollars to do this. So this now is it's putting that million dollars actually more than that into a fund and you see it in the budget and you know that that is the cost to learn that operation. We unfortunately because of the number of apparatus that there are there and what we would need in order to get them up to speed it's gonna require a rather substantial initial funding point to bring those assets up to date in the replacement fund. What does substantial initial funding mean, Alan? You're gonna see that in the next slide. Let's just go to the next slide. So we're thinking that those costs are gonna be anywhere from around $67 million. We're still finalizing that number. It may actually be closer to the six. But what that will do is that it will basically assign a replacement value to each of the fire vehicles. They would then be in the fund. We are, you know, part of the problem is that you have some vehicles that are on that maybe once had a 25 year life or 20 year life and they're now shorter, that's oddly enough as things become more electronic and computerized, they need to be replaced a little bit quicker. And there would be, so we go through and the way this will work is there'll be an initial cost that would happen as we're proposing that we come from those fiscal facility funds or other funds that would be, you know, outside of the annual budget process. That gets them into alignment, but there will be an ongoing cost. There will be a cost increase to the fire department budget because now we have started the practice of putting money away each year for that. And we're estimating that additional ongoing costs would be 1.5 million. Next slide please. So that was basically it for that. So let me go into that a little bit more. We think that this could just be done more for the, from the budget process as opposed to anything policy related. Once you have the replacement cost that's part of a budget and tied to the equipment replacement fund, it's there and that's not one that we would touch. I would say that I do recall and I'm fuzzy on the details of it, but I do recall that back during the recession when we were looking at any way we could come up with a way to benefit or ease the impact on the general plan that I think we did do a equipment holiday at that point. I would never come to you and suggest that we do anything like that again. It's just what it ends up doing is it does more bad than it did good. So what you would have here is you had to have an ongoing cost, equipment cost in the fire department and it would be a little bit higher than what it is now, but there would be no need to develop a policy around it. It would just be the act of committing the initial funds in order to get them up to place. And we would come back to you at budget with what that actual cost is and request that action at that point. So, and then I'll just we're at the next step to let you know before we go into questions on the capital replacement. So we are working with the other departments to come up with a strategy on deferred maintenance for city facilities. I expect that to be a significant cost just in terms of HVAC units. I think we have a public safety building that literally has a crack running through the middle of it and other things like that. The strategy in the past has been, we've deferred a lot of that. A, because we didn't have money to spend on it, but B, we were hoping that these assets might be used in like a P3 or something like that. So we didn't wanna put money into fixing facilities if we were gonna turn around and give those up at a reasonably sooner date. I have no idea when we're gonna do anything like that. And meanwhile, we have facilities that are now crumbling even more. So there is something that needs to be done. Obviously there, we still have a lot more work to do from a staff level to be able to provide you with a good strategy moving forward on it. I'm just giving you the heads up that that's there and we'll return to April with a strategy very much like what you saw today. And then we are working, not only are we, we're working on all the documents to get the PFN in place for the trust management of that and getting the funding there, but we'll come back to the council or to the LC-PFA with a more of a direct policy on how we would go. It would address the year-end amounts, it will address the ongoing funding. You know, and we'll make it clear in there about the affirmative votes for council to change the policy. That's something that we've done before in other ones where we say that the council could change it via council action. And with that, I'm available for any questions. You have. John. Thanks, Chris. Thanks, Allen. I think I was probably around for that holiday vote and it probably seemed like the right thing to do at the time. We were, it was definitely a struggle, but if we ever think about doing that again, I hope you bring that up. I'm curious about the funding procedure and how that six to seven million initial funding, what could one have the possibility of taking the estimated ongoing additional cost and increasing that for a few years and then reducing it after a period of time and by not, the reason to do that would be to reduce that initial funding required from six to seven million to some other number. Is that, would that be a strategy that would work or are we expecting to need to replace some of this big equipment so quickly that we needed to get that initial funding up to that level faster? Yeah, I think, so I'm gonna be kind of general in my comments here because I haven't seen the, I know I was sent the replacement schedule. I think we're still working on it between the fleet folks and the fire folks and getting that aligned. But what I would say is that you know that you have a number of vehicles out there and they're gonna need to be replaced. They have needed to be then replaced. You're gonna, we just had to do two of them, right? They were like the council on that lease purchase back in December and that's in process. You know, we're gonna, I'm sure that there's one or two or maybe three that are ready to go real soon. I think you have the benefit of having not only the fiscal stability fund, but you have year-end surplus money to be able to make this right. And that's where I would, you know, in the past where we didn't have that in order to be able to get them up to speed or get them up to date in the replacement fund, then yeah, we would, I would, you know, try to find a way where we could, you know, stage it or somehow phase that in. But you actually have the funds there to be able to set that right and to get it moving forward. So that would be my recommendation on it. I think that would be the better course to go is it's a big full of advice, but it's one that is, I think needed and you have the ability to do that now. Okay, well, I appreciate that. Thanks for your candor. Tom? Yeah. Are you gonna finish something, Alan? No, I think I'm anticipating your question. I left it out, so. Now, your team up. Anyway, my question was because this is a capital expenditure and obviously with the different streams of funding that have been available through the state and the feds would measure O for this purpose, potentially be an option. I know it might require implementation change to what's there, and I know fires different than police, but they do some capital expenditures for their measure O, might that be a way to at least help or contribute to the initial funding required? So my recollection of how measure O works is that it would need to be a enhancement. And these are replacements of existing ones. So to use measure O money, that would be supplanting and wouldn't be allowed under the ordinance. I guess I'm just suggesting it is an enhancement to use a vehicle that is near its end of its life stage because I'm guessing not only do these new fire apparatus have more bells and whistles than the old one. I'm just wondering if it's been explored and they say, no, it's not an option, that's fine. I just would like consideration for it. Is that a possible funding stream? Not for all the six to seven, but again, we're cutting and pasting to come up with that figure and that is a revenue source that could be available. Right, I think also that they're using some of those dollars for facilities that they have for that building stations that are also part of it. If you know that they do also buy equipment, they have that ability where they've had the fund balancer to be able to support both of those tasks. What I'll do is I'll confer with the city attorney's office on this, but I do remember vaguely a lot of heartburn with the initial measure of COC when we were figuring out how we were gonna do the police vehicle. And the planting was a really big issue there. I just, yes, they're probably a more modern fire engine that we would get that I just don't think that we can stretch that definition that that being an enhancement. But I know what you're saying and absolutely, we'll give that every look. I've been involved with that for a number of years and that just raises the flag. Yeah, and I'm sure I'll have a wonderful conversation with Chief Westrop at the appropriate time. I'm just thinking more also with the community just thinking more also with the current administrations built back better, if there is infrastructure that may be coming, if it passes through federal legislation that could go for infrastructure, AKA fire stations, but it wouldn't be eligible for this type of use. And that's all I'm thinking if we can get creative. So thank you. I know you did and I appreciate that. Any other questions, John? All right, thanks, Alan. Let's go to public comment on this and see if anybody wants to provide comment. If you do hit the raise hand feature on your Zoom. I see no hands. That and recording secretary, did we have any voicemail or email public comment? No emails were received. All right, I'll bring it back. Thanks, Alan. You know, I speak for the other two council members as well that this is exactly the kind of thing that we have been trying to drive toward. And you're right. When we set aside $40 million, it was the intention of this group to make sure that we were stabilizing the organization in the short term and making sure that we had the funds available should haven't forbid another disaster happen while we got our fiscal health in order and looking at our long-term liabilities to try to provide options. I know John asked the question a lot and no, we can't tie the hands of future councils, but we can put in place the processes that we need today to be able to then 10 years, 20 years down the road, say we put the city in the best position and hopefully not, and I told you so. So I appreciate you and your team and all the work they've been doing on this. I look forward to us bringing this to council and I like your timeline of being able to implement this with the adoption of this next year's budget. I think that that would make the existing council very happy to get that across the finish line. Right. John, Tom, any additional comments? Which you said, I really appreciate Alan, because again, you're spot on, I really appreciate it. You're tackling the bear that we've been looking at for years and it's not easy, but it's the right thing to do. And I think this council will agree with that. It's hard to know what future councils will do, but if we make the case, we'll have a better chance of success in the future. All right, with that, let's go ahead and move on to our next item. That's the next meeting agenda item. Alan, do you want to give us a preview or do you want to hear from council members to see if there's anything compromise for them? Well, we have, so one, we'll need to move that meeting towards the end of the month because it'll be our quarterly budget performance thing. So I have two things that would be on the agenda. So one would be doing our third quarter budget performance to port out. We'll focus on the general fund again, although I think I'm also gonna bring the parking fund there so you can get a sense of where we are with that fund and moving forward there. And then the other item will be that third component of the fiscal strategy being the first payment. So that is probably gonna take the full two hours to do it. We'll send out a meeting thing, but generally when we do the quarterly report outs, we do it that last Thursday of the month. So that's what we'll try to target that and hopefully that'll work. Okay, and I will be out of town probably for that and that's fine if that's the best time for the rest of the committee. Let's just make sure that John and Tom can be there and I can get you questions ahead of time and I can watch the video after the fact. Yeah, just to understand with doing the quarterly reports, the first two weeks out of that month is takes just to get everything posted and to where it's report ready. And then it's a week for us to get the information together for you to do. So moving it up is really difficult for us to do. That's unfortunately where we are in those end of quarter end of year items. Yeah, understood. John, Tom, anything to add? No, I know if you're talking about April 28th, are you talking about the last Thursday in April? I think off the top of my head that's how hard it would be, yeah. Okay, I just have a 5.45, I would have a... Well, I could actually move into six o'clock if it's gonna take two hours. I can just tell the other board that I'll be a little bit late. Yeah, I'll try to go through it fast. But I do think that, you know, I thought we would be out under an hour today. And so again, we went a little bit longer, that's my bad. But we'll try to hone that down as quickly as we can. I wasn't gonna say that, so. You know, my only suggestion or thought would be for a few... And again, this is long term because we're having similar conversations with some members of the continuum of care. A lot of our efforts towards homelessness, like what we've done, housing focus, safe parking. That's very expensive as we know, but to sustain that effort with the wraparound services, what's that funding stream gonna look like? And whether we need to go to our federal lobbyist to find some other funding streams to keep up that effort. I would love to talk about, because right now we have the money, but I'm looking four or five years down the road that we're actually housing people. We're not to functional zero yet. What is the sustained funding? Because I'd hate for some of the efforts that this council has taken to have evidence-based approaches. We just haven't identified what are the funding streams quite yet. So I would like to, I think this might be the appropriate subcommittee to at least start those discussions. Unless Mr. Mayor, you have some other thoughts as to where we might want to do it for sustainability. Now that sounds good to me, Tom. Great. All right, let's go to public comment, see if anybody has anything to add for future agenda topic item. And I'm not seeing any. So I'll go ahead and bring it back again. Just thanks to Alan, thanks to the team. And with that, we will adjourn today's meeting. Thank you all. Bye-bye.