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HomeMy WebLinkAboutAgenda Report - March 30, 2000 B-02 SMCITY OF LODI COUNCIL COMMUNICATION AGENDA TITLE: Authorize Impact Fee Transfer of $2 Million to the General Fund and Appropriate $2 Million for Design and Interim Measures for the Public Safety Complex Project MEETING DATE: March 30, 2000 PREPARED BY: Public Works Director RECOMMENDED ACTION: That the City Council authorize the transfer of Development Impact Mitigation Fee funds as described below and appropriate $2,000,000 for the Public Safety Building Project Design and Acquisition Phase BACKGROUND INFORMATION: The City collects Development Impact Mitigation fees for a variety of municipal projects and, in accordance with State law, places the money in separate funds. Many projects utilize multiple funding sources and funds are typically transferred into the primary project funding source "fund". In addition, the impact fee funds can be used to "reimburse" other funds for previous expenditures which have been made prior to the funds being available in the impact fee fund. With that background, the following actions are recommended for the Public Safety Building project: • Transfer $1,000,000 from the Parks & Recreation Development Impact Mitigation Fee fund to the General Fund Capital fund as repayment for funds expended on the community center (Hutchins Street Square). When the impact mitigation fees were established in 1991, approximately $4,000,000 was included in the program for community facilities (Exhibit A). The Parks and Recreation Master Plan, adopted later, kept the same total fee program cost ($18,338,200) but reduced the amount for "Indoor Recreation Space" to $2,100,000 and indicated the allocation to the Square or other facilities would be determined later (Exhibit B). Since the Square has been completed using General Fund dollars, it is appropriate to reimburse the General Fund from the impact fee fund. City staff performed calculations supporting using up to the entire $2,100,000 for the Square, however given the need for other community facilities, at this time, staff is recommending that only $1,000,000 be transferred. The Parks IMF fund has over $2,000,000 in cash which will leave adequate funds to pursue other projects. APPROVED: H. Dixon Flynn -- City Manager CCIMFxfer.doc 03/23/00 Authorize Impact Fee Transfer of $2 Million to the General Fund and Appropriate $2 Million for Design and Interim Measures for the Public Safety Complex Project March 30, 2000 Page 2 • Transfer $1,000,000 from the General City Facilities Development Impact Mitigation Fee fund to the General Fund Capital fund toward the City Hall expansion project. This project was included in the fee program and is being accomplished in a number of phases, some completed and some still to come; the main ones being the renovation of the Carnegie Forum Basement, the lease and tenant improvements to the Beckman Building (City Hall Annex), City Hall remodel, and the future expansion of City Hall, which will consist of renovating the Public Safety Building for general government use. The fee program (Exhibit C) included just over $3,000,000 for the project. Approximately $900,000 have been charged to the IMF for this project to date. Although the "project' currently planned is not exactly the same as the one originally contemplated, an additional $1,000,000 is appropriate and justifiable. As the project becomes finalized, we may be justified in using additional IMF funding for debt service payments. The General City Facilities IMF has a balance of approximately $1,400,000 and can support the recommended transfer. • Appropriate $2,000,000 from the General Fund Capital fund for the design and acquisition phase of the Public Safety Building project. This phase of the project provides for final design of the new Police building and acquisition of the one remaining parcel needed for the project. Also included are funds for preliminary design of the remodeling of the old Public Safety Building to accommodate Fire Station 1 and other governmental office uses. It does not commit the City to a final financing method nor to actual construction. The design of the parking structure is not included and would be done at a later date. The City Council has also directed staff to pursue interim improvements to the heating/ventilating and air-conditioning (HVAC) systems at the existing Public Safety Building. Public Works staff has been working with the Electric Utility Department and their consultant, Energy Masters, Inc., on some innovative approaches to HVAC issues at this and our other Civic Center buildings and will be providing additional information at the Council meeting. FUNDING: $2,000,000 - General Fund Capital Funding Available:y._� M' Finance Director Richard C. Prima, Jr. Public Works Director Prepared by Richard Prima, Public Works Director RCP/pmf cc: Police Chief Electric Utility Director COMFxfer.doc TABLE 9-4 DEVELOPMENT RELATED CAPITAL COSTS AND PHASING PARKS AND RECREATION 21 -Aug -01 Project Description Program Impact Number Cost Fee 1991192 1092193 1993194 1904195 1005/08 1998/07 1997-2002 2002-2007 MPRO20 Zupo FloldUpgrado Electrical S $81,000 $0 $0 Sports Lighting $0 $0 MP11031 Halo Park General Improvements $298,000 $0 —" MPRO33 Community Buildings (City -Wide) $4,510,000 $4,329,600 MPRO34 Blakely Park Upgrade Lighting $22,000 $0 MPR035 Sales Park Protective Shade $51.000 $0 $1,443,200 Structures $o Co MP11038 Sales Park Fenced Diamond Area $0.000 $0 .p $0 $0 MP11037 Emerson Park Rostroom $178,000 $0 $0 Replacomont $0 $0 MP11038 Pixely Park (C - Basin) $465,000 $465,000 $0 General Improvements $0 $0 MPR039 Wos►gato Park Improvements $353,000 $353,000 MP11040 Area N1 Park (3ac.) $459,000 $459,000 MP11041 Area M3 Park d Pool (3ac.) $712,000 $712,000 MP11042 Area 04 Park $1,462,000 $1,462,000 MPR043 Area 06 Park Improvements $1,377,000 $1,377,000 MPR044 Area 05 Park Improvements $1,148,000 $1,148,000 MPR045 Area 47 Park Improvements $1,68,000 $1,660,000 MPR048 Eastsido Park General Park $307,000 $307,000 $0 Improvements. $0 $459,000 Pago 3 of 4 $0 $o $0 $0 $0 $0 $0 $0 $0 $o $0 $0 $0 $0 $0 $0 30 $288,640 $288,640 $288,640 $288,840 $288,640 $1,443,200 $1,443,200 $o $0 $0 $0 $o $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $o $0 $0 $0 $0 $0 $o $0 $0 $0 $0 $0 $0 $0 $0 SO $0 $0 $0 $465.000 SO $0 $0 $0 $0 $353.000 $0 $0 $0 $0 $0 $0 $0 $0 $459,000 $0 $0 $0 $0 $0 $0 $0 $0 $712.000 $0 $0 $0 $0 $0 $0 $0 $1,462,000 $0 $0 $0 $0 $9 $0 $688,500 $688,500 $0 $0 SO $400,000 $400,000 $35.000 $313,000 $0 $0 $0 $166,000 $0 $1.494,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $307,000 $0 , y EXHIBIT B City of Lodi Park and Recreation Plan Action Plan Table 34 Improvement Costs by Facility- 1992 Lodi Park and Recreation Plan 1 Lodi. Califomia — IX - 6 Total Park Impact Other Site No. Park/Facility Cast Fees Sources PARK UPGRADE/IMPROVEMENTS It -1 Candy Cane Park M-2 Century Park N-1 Lodi Lake Neighborhood Park 5155.300 is 155,300 N-2 Van Buskirk Park 93.300 93.300 N-5 Henry Glaves Park 61,300 61.300 N-6 Emerson Park 43,300 44,300 N-7 Hale Park 8,400 8,400 N-10 Vinewood Park 124.200 124.200 N-11 American Legion Park 1861800 186.800 N-12 John Blakely Park 142.300 142.100 N-16 Beckman Park 193.900 193.900 N-17 English Oaks Commons 11.400 11,400 C-2 Lodi Recreation Complex Armory Park 450.600 450.600 Softball Complex 119.200 119,200 Zupo Field 155,300 155,300 Lawrence Park 35.700 35.700 Grape Bowl C-3 Kotu Park 184,900 184.900 C-5 Salas Park 50,000 50.000 R-1 Lodi Lake Park (existing) 1,241,000 1,241,000 S-2 Maple Square S-3 Needham School OS -1 Lodi Lake Nature Area OS.2 Mokelumne River Greenway SUBTOTAL $3,277,900 53,277,900 NEW PARK/FACILITY DEVELOPMENT N-3 Millswood Park 1,023,000 1,023,000 N-4 Westgate Park 790,400 $785,000 5.000 N•8 Lincoln School Park 692.300 692,300 N-9 Cochran Park 1,683,400 1,683.400 - N-13 Rog'et Park 893,000 893,000 - N-14 Village Street Park 387,100 187,100 N-15 Century Meadows Park 850,000 850,000 - N-18 Eastside Park 1,715,300 1,715,300 - N-19 Southwest Park 568,000 568,000 - N-20 Woodbridge Park 1,545,500 1,$45,500 - C•4 DeBenedetti Park 2,923,000 2.174,000 749,000 R-1 Lodi Lake Park 1,816,000 1,816,000 S-4 Pixley Park 5.269.600 4,194.000 1,075,600 OS -3 Arnaiz Property • 50.000 14.000 36.000 Park -Maintenance Shops • 897,900 897,900 Indoor Recreation Space 13.892.200 2.100.000 11,792.200 Indoor Recreation Center - 3,892.200 S-1 Hutchins Street Square 10,000.000 Outdoor Swimming Pool • 1,800,000 11800.000 SUBTOTAL 536,796,700 518,333.200 $18.456,100 TOTAL $40.074,600 518,336.200 521,736.000 E;- ble ins intaacr lees except,,•or a small pomon atubwed ro ,,an -residents .allocation qr impacr fees ata adrer funds to dre atdoor recreant curter and Hutchins Streer Square are to be dercm,med at a taro care. 1 Lodi. Califomia — IX - 6 GCF1010 Library Expansion $2,000,000 TABLE 10 - 2 $0 $0 $0 21/08/91 $0 $0 $2,900,000 $0 DEVELOPMENT RELATED CAPITAL COSTS AND PHASING GENERAL CITY FACILITIES GCF1011 Public Works - Trucks $750,000 $750,000 Project Location Program Impact $48,875 $48,875 $234,375 $234.375 GCF1012 Public Works - Pickups and Sedans Number $715,000 CostsFee 1001/92 1902/93 1993194 1894/15 1995/98 1996!07 1907-2002 2002-2007 GCFI001 City Hall Remodel and Addition $4,215,000 $3,055,875 $o $700,000 $700,000 $0 $0 $0 $1,655,875 So GCF1002 Civic Center Parking Lot Expansion $141.000 $141,000 $0 SO $0 $0 $0 $141,000 $0 $0 $4,094 13 N. Church. $4,094 $20,469 $20.469 GCF1015 Finance - Misc. Office Equipment $181,700 $181,700 $11,350 GOF1008 Property acquisition, $213,000 $213.000 $0 $o $o $0 $o $o $0 $213.000 $72,000 217 E. Lockeford. $4,500 $4,500 $4,500 $4,500 $4,500 $22,500 $22.500 GCF1017 GCF1009 Parking Lot Improvements, $70,000 $70,000 $0 $0 $o $0 $0 $0 $0 $70.000 $800,000 NE corner of Lockeford and General Plan Update 1987 $411,109 $411,109 $411,109 $0 $0 $0 $0 $0 Stockton_ $0 CODVO02 General Plan Updato 1997 $250,000 $250.000 $0 $o $0 GCF1010 Library Expansion $2,000,000 $2,900,000 $0 $0 $0 $0 $0 $0 $2,900,000 $0 N GCF1011 Public Works - Trucks $750,000 $750,000 $46,875 $40.875 $46,075 $46,875 $48,875 $48,875 $234,375 $234.375 GCF1012 Public Works - Pickups and Sedans $715,000 $715,000 $44,688 $44,688 $44,688 $44.688 $44.688 $44,688 $223.438 $223.438 GCF1013 Public Works - Air Compressors $90,000 $90,000 $5,625 $5,625 $5.625 $5.625 $5,825 $5,625 $28,125 $28,125 GCFI014 Public Works - Misc.Olfico Equlpmoni $65,500 $65,500 $4,094 $4.094 $4,094 $4,094 $4,094 $4,094 $20,469 $20.469 GCF1015 Finance - Misc. Office Equipment $181,700 $181,700 $11,350 $11,350 $11,350 $11,356 $11,356 $11,356 $56,781 $56.781 GCF1018 Finance Computer (AS 400 Upgrade) $72,000 $72,000 $4.500 $4,500 $4,500 $4,500 $4,500 $4,500 $22,500 $22.500 GCF1017 Foo Program Monitoring $2,560,000 $2,560,000 $160,000 $160,000 $160,000 $160,000 $160,006 $160,000 $800,000 $800,000 C0DV001 General Plan Update 1987 $411,109 $411,109 $411,109 $0 $0 $0 $0 $0 $0 $0 CODVO02 General Plan Updato 1997 $250,000 $250.000 $0 $o $0 $0 $o $250,000 $0 $o CODVO03 General Plan Updato 2002 $250.000 $250,000 $0 $0 $0 $0 $0 $0 $250.000 $o TOTAL CITY FACILITIES $12,084,309 $11,725,104 [�',$G(if3,247 .$977,13© .�97j,138..::$277130' .:1277;130; ;36G8,139; .>;.$6191'5fi1 ::$T;G60;fifil3; n I Page 1 of 1 TN RESOLUTION NO. 2000-44 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING IMPACT FEE TRANSFER OF $2 MILLION TO THE GENERAL FUND AND APPROPRIATE $2 MILLION FOR DESIGN AND INTERIM MEASURES FOR THE PUBLIC SAFETY COMPLEX PROJECT -------------------------------------------------------------------- WHEREAS, the City collects Development Impact Mitigation Fees for a variety of municipal projects; and WHEREAS, many projects utilize multiple funding sources and funds are typically transferred into primary project funding source "fund," and WHEREAS, impact fee funds can be used to "reimburse" other funds for previous expenditures which have been made prior to the funds being available in the impact fee fund; and WHEREAS, staff recommends the following actions be taken for the Public Safety Building project: 1) Transfer $1,000,000 from the Parks & Recreation Development Impact Mitigation Fee fund to the General Fund Capital fund as repayment for funds expended on the community center; 2) Transfer $1,000,000 from the General City Facilities Development Impact Mitigation Fee fund to the General Fund Capital fund toward the City Hall expansion project; 3) Appropriate $2,000,000 from the General Fund Capital fund for the design and acquisition phase of the Public Safety Building project. WHEREAS, the City Council has also directed staff to pursue interim improvements to the heating/ventilating and air-conditioning (HVAC) systems at the existing Public Safety Building; and WHEREAS, staff has been working with the Electric Utility Department and their consultant, Energy Masters, Inc. on some innovative approaches to HVAC issues at this and our other Civic Center buildings. BE IT RESOLVED, that the Lodi City Council hereby authorizes the transfer of Development Impact Mitigation Fee funds as described above and appropriates $2,000,000 for the Public Safety Building Project Design and Acquisition Phase. Dated: March 30, 2000 -------------------------------------------------------------------- --------------------------------------------------------------------- I hereby certify that Resolution No. 2000-44 was passed and adopted by the City Council of the City of Lodi in a special meeting held March 30, 2000, by the following vote: AYES: COUNCIL MEMBERS — Land, Nakanishi, Pennino and Mann (Mayor) NOES: COUNCIL MEMBERS — Hitchcock ABSENT: COUNCIL MEMBERS — None ABSTAIN: COUNCIL MEMBERS — None L&M.IM it 2000-44 Consideration of the Public Safety Building Financing Plan and Revenue & Expenditure Assumptions Presented to the Lodi City Council by Susan Hitchcock Carnigie Forum Lodi, CA March 30, 2000 THREATS TO GENERAL FUND REVENUE * Reduction of 4% in Sales Tax Revenue due to growth in Internet Sales. "The long-term future of the sales tax as a vital source of support for local services is in serious jeopardy." National League of Cities 1999 * "California will lead the U.S. in Internet -commerce growth, both consumer purchases on the Net and business -to -business e- commerce." The California Kiplinger Letter (March 15, 2000) * "Bubble Money" economy - growth from capital gains in the stock market has resulted in reluctance by the State to do any- thing except give one-time money to cities. * Although sales and use tax has grown rapidly since 1993 it represents a recovery of lost revenue resulting from California's economic- downturn in the early 1990s. Since 1990, this revenue has a growth rate of only 1.9%. Valley towns were even harder hit. Reported by Keith Curry, Managing Director, Public Financial Management, Inc., Newport Beach * On going legal cost associated with TCE/PCE groundwater contamination clean up. * Binding arbitration costs to pay for arbitrator, attorney and expert witnesses (approx. $150,000 each bargaining group). Loss of Motor Vehicle In -Lieu Fees due to initative to appear on ballot (lost revenue $2-3,000,000 per year). Elimination of Motor Vehicle In -Lieu Fees DMV Fees Year Revenues 1993-94 $1,8851,180 1994-95 $290231,190 1995-96 $2,1431,507 1996-97 $2,2703423 1997-98 $27220,518 1998-99 $292703,423 1999-2000 $2,356,446 2000-01 $21,4451,729 2001-02 $2,538,395 2002-03 $2,634,571 2003-04 $2,734,392 2004-05 $2,8371994 2005-06 $299459522 2006-07 $3,057,124 2007-08 $311727955 2008-09 $31293,174 2009-10 $31417,948 Assemblyman McClintock is pushing a statewide initiative to eliminate Motor Vehicle In -Lieu Fees. Transfers To The General Fund From the Electric Utility Electric Utility General Fund Transfers in the Public Safety Finance Plan are not the same as those projected in the Elec- tric Utility Bond Financing Plan. Public Safety Electric Utility Year Finance Plan Bond Plan 1993-94 $3,218,690 1994-95 $4,160,000 1995-96 $4,174,800 1996-97 $41085,800 1997-98 $4,292,067 1998-99 $45275,047 1999-2000 $45317,797 $492209000 2000-01 $45360,975 $4,2209000 2001-02 $4,4045585 $41,220,000 2002-03 $45448,631 $4,220,000 2003-04. $43493,117 $432201,000 2004-05 $4,538,049 $4,220,000 2005-06 $49583,429 $4,220,000 2006-07 $4,629,263 $4,2205000 2007-08 $49675,556 $4,220,000 2008-09 $41722,312 $4,2205000 2009-10 $4,769,535 $47220,000 Electric Utility General Fund Transfers in the Public Safety Finance Plan are not the same as those projected in the Elec- tric Utility Bond Financing Plan. Comments By Standard & Poor's Bond Rating Agency "Rating on Lodi, CA electric system certificates, secured by net system revenues, reflect: the intent to continue subsidizing the general fund with electric revenues, about 10%" "Business plan is focused on rates and includes the fol- lowing efforts: Controlling the general fund transfer." "Also included in this rate model is an ongoing transfer to the general fund, changes in this policy could further ease rates." The City is committed to remaining competitive in a de- regulated, restructured Electric Utility market by main- taining low utility rates and reliable service. A $32,000,000 bond financing plan was predicated on this committment and investors expect us to uphold the plan. The electric utility system is no longer in a position to be a safety net for shortfalls in revenues or excessive expenditures. Other Sources and Uses or Soft Numbers Cushion or Funds which City Thinks will be Available, But Cannot Absolutely Count On Year Other Sources & Uses 1999-2000 $876,000 2000-01 $961,000 2001-02 $697,910 2002-03 $704,889 2003-04 $771,938 2004-05 $719,057 2005-06 $7261248 2006-07 $733,510 2007-08 $740,846 2008-09 $7841254 2009-10 $7559737 Salaries $191,000 (Step differential & vacant positions) PERS $500,000 (Miscellaneous category employees) Misc. $185,000 (Grant money, excess over budgeted) $961,000 • Providing 3% at 50 Retirement Benefit for Public Safety Fire employees will annually cost an additional $130,000 af- ter five years. • Providing 3% at 50 Retirement Benefit for Public Safety Police employees will annually cost an $330,594 immediately. Mid -Management Salary Increases Were Not Included in Public Safety Building Expenditures 1999-2000 Public Safety Plan: General Fund Expenses $29,544,208 Less Transfers Out Less Library 2,058,418 1,073,785 $26,4129005 Budget Document: General Fund Expenses 26,212,005 Difference Represents Mid -Management $ 200,000 Management Salary Increases 2000-2001 Public Safety Plan: General Fund Expenses $29,952,471 Less Transfers Out 210939141 Less Library 1.,086,285 $261,7733045 Public Safety Plan: General Fund Expenses $26,773,045 No Difference for Mid -Management Salaries$ 0 • Projected Expenditures reflect an annual shortfall of $200,000 plus growth at 3.5 % . • In 2010 the shortfall will be over $282,000. SELF-INSURED FUND (Dental, Chiropractic, Workers' Compensation, Liability & Unemployment Insurance) 1993-94 $1,546,085 1994-95 $1,536,326 1995-96 $2,016,347 1996-97 $1,337,846' 1998-99 $1,182,005 1999-2000 $ 669,485 *** 2000-01 $ 669,485 2001-02 $ 669,485 2002-03 $ 669,485 2003-04 $ 669,485 2004-05 $ 669,485 2005-06 $ 669,485 2006-07 $ 669,485 2007-08 $ 669,485 2008-09 $ 669,485 2009-10 $ 669,485 * $1,951,559 Fund Deficit - Auditor expressed concerns stating ` f t- ture adjustments may be necessary." KPMG Peat Marwick, Audited Annual Financial Report. ** $1,316,049 Fund Deficit - Again auditors expressed concerns and stated, "future adjustments may be necessary." KPMG reviewed actu- arial valuation and "determined the liability is reasonable." * * * Acuarial study recommended funding of $1,453,624 for 1999- 2000 and stated, "the recommended funding is the least amount that may be funded as to not diminish equity." The City did not budget the liability recommended by the actuary. FULL -EMPLOYMENT ECONOMY • 45% of the workforce is baby boomers retiring in the next 5 to 10 years. • Employees to replace baby -boomers will only account for 30% of the workforce (15% shortage). • The labor market will require a 25% growth in the workforce. • Therefore, a 40% workforce shortage is predicted. It will be more important than ever for cities to be competitive with salary and benefits in order to at- tract and retain a quality workforce. Bargaining Group Negotiations (Jan. 2001): • 15°Io Salary Survey implementation for Public Safety: Fire employees to bring them to the mean of comparable cities will annually cost an addi- tional $390,000. What Economists Are Saying About the Full -Employment Economy • "Wages will climb 4.2% in 2000 on average. Un- relenting labor tightness is one of the reasons." The Kiplinger Letter (March 3, 2000) • "On the labor market: Worker scarcity is a long- term problem. Labor may get even tighter in next few months. Today's job -generating economy just worsens the underlying shortage." The Kiplinger Letter (Feb. 11,2000) • "Second quarter statewide net hiring gain will come out to 29% for this year." The Kiplinger California Letter (March 1, 2000) • "Pay raises will average 4.2%. No sign that the tight job market will loosen anytime soon. More companies will use signing bonuses and stock op- tions to get workers. Recruitment costs will keep rising." The Kiplinger Letter (March 17, 2000) Debt Repayment as a Percentage of General Fund Revenues City- Em. Antioch 81,500 Ceres 32,378 Chico 54,093 Clovis 68,000 Davis 47,000 Fairfield 89,049 Lodi 559700 Manteca 50,000 Merced 60,000 Napa 70,000 Redding 75,518 Roseville 66,901 Stockton 243,700 Tracy 48,000 Vacaville 85,000 Visalia 92,000 Woodland 44,140 General General Annual Fund Revenue Fund Debt Payment $ 20,200,750 $ 8,961,370 $ 23,121,612 $ 27,203,075 $ 19,796,000 $ 36,682,000 $ 299117,049 $ 15,308,660 $ 19,457,170 $ 32,970,000 $ 37,166,000 $ 59,198,902 $116,098,420 $ 24,753,500 $ 34,800,000 $ 44,558,435 $ 19,553,480 $ 0 $ 0 $ 0 $ 3,100,000 $ 0 $ 0 $14,5009000 $ 1,738,000 $ 0 $ 695,000 $21,689,936 $ 0 $ 0 $15,875,000 $ 12,500,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 381,000 $ 0 $ 0 $1,282,309 $ 224,000 $ 0 $ 655,000 $1,154,356 $ 0 $ 0 $ 1,026,600 $1,100,000 $ 0 $ 0 Debt Ratio 1.40% 4.38% 1.46% 1.99% 3.11% 4.15% 3.16% The City of Lodi already has a higher Debt Ratio than other comparable cities. Lodi's Debt Ratio After Funding Public Safety Building General Fund Revenue $3492419783 General Fund Debt $3298509000 Debt Debt Payment Ratio $299469374 8.60% "Public Finance experts consider the 5% debt threshold crucial to maintain flexibility in a city's general fund budget. Anything above 5% and we become concerned." Zane Mann, Publisher of the California Municipal Bond Advisor Newsletter for Bond Investors "According to experts, Lodi may be taking a risky path. If the forecasts are overly optismistic taxpay- ers will notice. When push comes to shove, services will get cut because they have to service the debt. Most California cities have debt of about 3% of their general fund budgets." Robert Vincent, President of California Municipal Statistics Should the Citizens of Lodi Have an Opportunity To Vote on $18,000,000 in New Debt? "Certificates of Participation have become the debt in- strument of California cities. It is getting to be more and more common because it is a device that permits a governing body to issue bonds without anyone looking over their shoulder." "If this is something that is alleged to benefit the com- munity, why do you want to hide it from community in- put ? n -put. "Sounds as though Lodi officials are attempting to raise revenue in ways they can get away with instead of ask- ing voters to approve the project." Gary Galles Public Finance Professor, Pepperdine University & University of California Conclusions • Can we afford to hinge the ability to pay debt on soft money which is meant to provide a cushion for the City when changes occur? • Funding the public safety building will result in excessive dedica- tion of General Fund revenues to service debt -- 8.6%. This is far greater than any comparable city. • Anyway you slice it, this plan will eliminate funds which would otherwise go directly to services (Police, Fire, Parks & Recreation & Library). • Threats to Revenue: Internet sales reducing sales tax Elimination of Vehicle License In -Lieu Fees Correction in the Market/Economy Electric Utility Deregulation and Competition may Force Reduction in Transfers to General Fund • Expenditure Threats: Expecting Expenditures to not exceed 3.5% for the next 10 years is unrealistic. Cost of Binding Arbitration ($150,000 per arbitration) PCE/TCE Groundwater Contamination Legal Fees Mid -Management Salary Survey Implemented ($200,000) Under -Funded Self -Insurance Fund ($784,139) Increased Personnel Costs/Full-employment economy Increased Cost of PERS Benefits ($460,594) Firefighter Negotiations (15% = $390,000) • We have leveraged all our resources to the point we have a house of cards, if one folds, they all go. Very short-term thinking, "it will be someone else's problem" has created this situation An economic down turn within the next few years would devastate our city and force deep cuts in all services.