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HomeMy WebLinkAbout02.03.2021 Minutes @6:30MEASURE W CITIZENS’ OVERSIGHT COMMITTEE MEETING MINUTES February 3, 2021 PAGE 1 MINUTES MEASURE W CITIZENS’ OVERSIGHT COMMITTEE OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting to be held at: Via TELECONFERENCE PURSUANT TO THE PROVISIONS OF THE GOVERNOR’S EXECUTIVE ORDERS N-25-20 AND N-29-20 ALLOWING FOR DEVIATION OF TELECONFERENCE RULES REQUIRED BY THE BROWN ACT & PURSUANT TO THE ORDER OF THE HEALTH OFFICER OF SAN MATEO COUNTY DATED MARCH 31, 2020 AS THIS MEETING IS NECESSARY SO THAT THE CITY CAN CONDUCT NECESSARY BUSINESS AND IS PERMITTED UNDER THE ORDER AS AN ESSENTIAL GOVERNMENTAL FUNCTION Wednesday, February 3, 2021 6:30 p.m. Call to Order. Time: 6:31 p.m. Roll Call. PRESENT: Chair Wong, Committee Member Brosnan, Committee Member Zemke STAFF: City Manager Futrell, Director of Capital Projects Gilchrist, Assistant City Attorney Lai, Principal Engineer Ruble, Finance Director Salisbury Agenda Review. No changes to agenda. PUBLIC COMMENTS No public comments. MEASURE W CITIZENS’ OVERSIGHT COMMITTEE MEETING MINUTES February 3, 2021 PAGE 2 MATTERS FOR CONSIDERATION 1. Motion to approve the Minutes from the meeting of August 5, 2020. Committee Member Brosnan stated that he was unable to view the minutes. Chair Wong moved to continue this item to the next meeting. Committee Member Brosnan seconded the motion. Action: Approved by roll call vote (3-0-0) 2. Presentation on Financing the Civic Campus and Street-Paving Program (Janet Salisbury, Director of Finance) Finance Director Salisbury presented to the Committee regarding Financing the Civic Campus & Street Paving Program, which consisted of an overview of Measure W Funds, review of Civic Campus Financing, and a presentation of an Option for Streets Paving Program. Director Salisbury went over total revenues and expenditures in terms of Measure W Funds. She restated for the record that Measure W Funds are kept separate from the General Fund and accounted for specifically and intentionally so that every dollar is tracked. Director Salisbury shared the Measure W Fund Balance Summary, which showed all of the dollars that have been received by the City since the inception of Measure W, which goes back five years and ends at June 2020 as this is the current finalized CAFR. Director Salisbury stated that the finalized CAFR is going to Council on February 10, 2021. The Director of Finance stated that through December 2020, for fiscal year 2021, the City has received $4M in total revenues and that there have been no expenditures in terms of cash. Director Salisbury presented a Monthly Revenue Comparison and shared that the City accounts for funds on an accrual basis. Director Salisbury attributed a $1M decrease from FY 2019-2020 compared to FY 2018-2019 to COVID citing that Shelter-in-Place began in March. Director Salisbury stated that the current interest rates are near historic lows and presented the pricing of Phase I, Series 2020A Bonds in February 2020. She mentioned that the expectation is for the interest rates to remain low as the City evaluates the Phase II bonds. Committee Member Brosnan questioned when the City would start paying on the Phase I Bond. Finance Director Salisbury shared that the City has started paying bond interest. She stated that the bond interest is paid on a semi-annual basis. She referred to a $407,156 transfer to Gen’l Fund (9100) as debt service payment for the interest costs. She mentioned that the bonds closed in March and that the first interest payment was made in June, on a June to December basis; every six months. MEASURE W CITIZENS’ OVERSIGHT COMMITTEE MEETING MINUTES February 3, 2021 PAGE 3 Finance Director Salisbury stated that she would send out the Official Statement for the Phase I Bonds to the Committee Members as part of the next meeting. Finance Director Salisbury stated that the Official Statement contains the debt service; what we are going to pay back and the schedule on a semi-annual basis. Committee Member Brosnan asked when the City would begin paying on principal. Director Salisbury stated that the City will being paying towards principal in December. She stated that the bonds are structured to be level debt service, meaning the debt service annually is level. She mentioned that the average annual debt service is $2.7M and that will be paid for the life of the bond. Director Salisbury stated that the bonds sunset in 2046 that will go back to pay a par amount of about $47M and change. Committee Member Brosnan requested clarification in regards to Phase II payments and asked if there would be other phases beyond Phase II. Finance Director stated that this will be discussed. Director Salisbury shared funding sources related to estimated cost in regards to Pre-Construction, Phase I:Police Station and Phase II: Library, P&R, Council (LPR). Chair Wong asked if the fundraising $4.7M target is realistic. Director Salisbury responded that it is a realistic target based on discussions with the Library Foundation who is leading the fundraising efforts on behalf of the City. Committee Member Brosnan brought up a point regarding a fundraising consultant that was hired in the end of 2019 and mentioned that the fundraising number was much higher then and seemed very unrealistic. Committee Member Brosnan asked if that consultant was still around and asked if the consultant had viable ideas. City Manager Futrell said that the initial number was $10M and that it would have been achievable before COVID. City Manager Futrell mentioned that there will be a press release soon to announce a couple of large donations and hoping that will cause a little momentum and maybe raise a little more. Committee Member Brosnan stated that earlier in the last year Council did a proclamation to transfer funds from infrastructure and asked where on the presentation that is documented. City Manager Futrell stated that in June Council changed their decision. Due to COVID and the shutdown and the economic recession, Council decided to hold that money in reserves. Finance Director Salisbury went on to present a conservative estimate of Measure W Cashflow through to 2046. Committee Member Brosnan pointed out a discrepancy on the Cashflow slide related to Monies Already Spent and Total Expenditures on the Fund Balance Summary slide. MEASURE W CITIZENS’ OVERSIGHT COMMITTEE MEETING MINUTES February 3, 2021 PAGE 4 Finance Director Salisbury explained that the Fund Balance Summary contains monies that have been budgeted and unspent, where the Cashflow accounts for monies that have left the door. She explained that budgeted is different from actuals. She stated that monies that have been approved by Council and are tied up in encumbrances, makes up the difference. The Committee discussed how to present for clarification and consistency in the future. Finance Director Salisbury presented a plan to issue additional $24M for Street Paving Program to accelerate the street improvements and noted a significant savings component. Principal Engineer Ruble presented a representation of the current six-year rehabilitation program against a two year catch up project and a 5-year future maintenance surface seal by zone rehabilitation Bond Measure Project which would cover 7% more roads in 2 years and will cost approximately $2.5M less each year. Director Salisbury discussed the option to add $24M for streets program and its affordability. She went on to present the Bond Sale Assumptions with both options (LPR Only and LPR + Streets) and impact with 1% Interest Rate Move. Director Salisbury concluded the presentation with a slide regarding Projected Cash Flow Detail through 2030. Committee Member Brosnan asked for clarification regarding a statement made earlier in the presentation regarding Phase 1 $2.7M interest-only payments. Director Salisbury clarified that the $2.7M payment is not interest only. She stated that the $2.7M is the whole principal and interest. However, the first payment was interest. Chair Wong asked for clarification on the Projected Cash Flow slide regarding the streets paving program. Director Salisbury stated that the Phase II as presented is potential debt service that has not been issued for the Library, Park & Rec building. The streets paving program is presented as an “if Council approves” that is the potential debt service based on $24M. Committee Member Brosnan asked for clarification regarding the total debt issuance, he asked for clarification if it rose from $115M to $127M. Director Salisbury confirmed that the $127M is the total issuance, but reminded that that is not the par amount rather what we actually receive in cash. Committee Member Brosnan asked if there were fees related to closing costs that would be added to $127M. Director Salisbury responded that the numbers presented are all-in and have all been accounted for. She went over cost of issuance and the underwriters discount related to how much bonds are issued. MEASURE W CITIZENS’ OVERSIGHT COMMITTEE MEETING MINUTES February 3, 2021 PAGE 5 Committee Member Brosnan asked if it was like a mortgage, where the bottom line is how much you are borrowing and how much your mortgage payment is going to be every month. Director Salisbury stated that it is like a home loan where you will see annual average debt service. She stated that she could share the Official Statement at a future meeting. Committee Member Brosnan stated that the Principal and Interest Payments seem very small in terms of the amount. Director Salisbury pointed to the interest rate as the reason for this. She reiterated that the bonds have been structured at a historically low interest rate and that the bond is structured as a lease revenue bond. There were some assumptions made early on, one being that there would be one bond not broken up as it is currently structured. The debt service was initially based on $115M upfront, but that is not what happened. The City broke up the Police Campus and LPR Building. On the down side you are paying costs twice and cited the closing cost of $300,000 that becomes $600,000, but noted that in the relative scheme of things it actually saves the City millions. She also went over the structure of the bonds, which includes pledged assets. She stated that by doing this we do not have to borrow more than we need and have further dropped that debt service number. Committee Member Brosnan confirmed that they would be two separate notes. Director Salisbury stated that they would be two separate notes, Phase I which was issued last year and will go to 2046/2047 and Phase II which will be issued in May and will sunset in the same timeframe. Committee Member Zemke stated that the discussion was very informative and said that his only question was, “when do you expect to issue the second bond” which was just answered. Director Salisbury mentioned that the presentation will go to Council on February 10th where they will decide whether to go ahead on the street paving program for the $24M. Director Salisbury stated that she would present more information when the committee meets again. A discussion related to the timing of the next meeting ensued because of staffing time and budget. Chair Wong asked when the Committee could expect the Annual Audited Financial Statement for year 2020. Director Salisbury mentioned that the Comprehensive Annual Financial Report (CAFR) has been finalized and is going to Council on Feb 10 and can be presented by the next meeting. City Manager Futrell asked what the Committee expected to see out of the CAFR. Chair Wong stated that the responsibility to review the Annual Financial Statement is listed in the job responsibilities of the position. City Manager Futrell stated that he would pull out the portions relative to Measure W. MEASURE W CITIZENS’ OVERSIGHT COMMITTEE MEETING MINUTES February 3, 2021 PAGE 6 Committee Member Brosnan questioned the expectation of the group. City Manager Futrell reiterated the importance of the group and its purpose of holding Council accountable for Measure W funds. Committee Member Brosnan asked if there would be new members added. Director Salisbury stated that the City Clerk’s Office will be holding interviews. City Manager Futrell stated that we would check in with the Clerk. Director Salisbury shared that the Committee would do a reorg when new members are added and asked that the City Attorney present a refresh on authority of the Measure W COC. ADJOURNMENT At 8:01 p.m., Chair Wong adjourned the meeting. Submitted by: Approved by: Amanda Parker, Administrative Assistant II City of South San Francisco Christine Wong, Chair City of South San Francisco