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HomeMy WebLinkAbout08.02.2023 SP Minutes @6:30CALL TO ORDER MINUTES SPECIAL MEETING MEASURE W CITIZENS' OVERSIGHT COMMITTEE CITY OF SOUTH SAN FRANCISCO Wednesday, August 2, 2023 6:30 p.m. IN -PERSON MEETING Chair Del Rosario called the meeting to order at 6:41 p.m. ROLL CALL Chair Del Rosario, present Vice Chair De Guzman, present Committee member Zemke, present Committee member Brosnan, present Committee member Rey, absent AGENDA REVIEW No changes. REMOTE PUBLIC COMMENTS No remote public comments made. WELCOME AND INTRODUCTIONS Finance Director Karen Chang provided a brief overview of the agenda for the evening. MATTERS FOR CONSIDERATION 1. Motion to approve the Minutes from the meeting June 7, 2023. Motion — Committee Member Brosnan/Second — Committee Member Zemke: To approve the minutes from June 7, 2023, by roll call vote: AYES Committee Member Zemke, Committee member Brosnan, Chair Del Rosario, and Vice Chair DeGuzman NAYS: Non; ABSENT - Committee member Rey; ABSTAIN: None. Motion passes unanimously. 2. The Elements of the Brown Act presentation by Assistant City Attorney Kimia Mahallati IN PERSON PUBLIC COMMENT: Mina Richardson asked how important is parliament procedure in the execution of understanding the Brown Act? Moreover, she stated that organizational training for meetings would be helpful. Assistant City Attorney Mahallati advised it would be taken into consideration. 3. Action minutes -Presentation and discussion on Measure W Financials. Director Chang provided a brief overview and update of financials. Director Chang stated that the budget as of last meeting in June, financials posted were as of April 30t'. There is a slight update on revenue, currently at $13 million. Reminder that there is a two -month lag on sales tax. We are still expecting May and June receipts to be recorded. The estimate for the year end will be roughly $15 million. We will also continue to post expenditures. The revenue less expenditure snapshot total was about $3.3 million, and estimated fund balance was $15 million. The fund balance is in "cash" at this point as there are pending projects. Summary of expenditures for current fiscal year 2022-23. The previous revenue estimate was $13 million, and expenditure was $9.7 million. The revenue less expenditure is about $3.3 million. $14 million was budgeted for the civic campus expenditure and currently have $13 million to go. The projected fund balance is estimated at $2 million. Director Chang paused for questions. Vice Chair De Guzman clarified revenues for June 30, 2021 was $13.3 million, June 30, 2022 was $15.4 million, and June 30, 2023 was $13.8 million, are these estimated or actual? Director Chang confirmed that the revenues are actual sales tax receipts through April 2023. We are still expecting May and June receipts to come in. We are estimating an additional $1 million each month with a projected year end total of $15 million. Vice Chair De Guzman proceeded to ask for clarification with the Civic Campus expenditure of $16 million for June 30, 2021, $3 million for June 30, 2022, and $1.4 million for June 30, 2023. Vice Chair De Guzman asked for clarification on the reduction of expenditure amount. Director Chang clarified that Civic Campus was composed of numerous funding sources, the majority being bond funding. Bonds were issued to fund the majority of the Civic Campus. Some funds were used to complete the paving project. Vice Chair De Guzman asked why the expenditures were being reduced from $17 million in 2021 to $3 million next year and $1 million in June 2023? Director Chang clarified that the City issued bonds to fund the majority of the project. The bond money was used first, then any donations received were used next and Measure W funds were used last. Director Chang will clarify that in 2021, more Measure W funds were used initially. Vice Chair De Guzman asked if $17 million in bonds were issued. Director Chang said no. Director Chang stated that the City issued three tranches of bonds. In 2020, we issued the first bond to fund the police station at $53.8 million, in 2021, $104 million for LPR and Street project, etc. In 2022, a 3ra bond of $65 million was issued mainly for sports field and aquatic center. We will use the Measure W money to pay down the bond debt service. Vice Chair De Guzman asked if the $2.7 million debt service was paid in 2020? Director Chang said the payment is coming from revenue generated from Measure W sales tax. The majority of Civic Campus expenditures are from bond funds. Vice Chair De Guzman asked if all of the bonds issued are done, is it closed? Director Chang said the City does not plan to issue additional bonds at this time. City Council will need to approve any future bond issuance. Vice Chair De Guzman asked if Measure W revenues are very specific to fund only Civic Campus, police department and street paving program? Director Chang replied no. Measure W is a general tax, it can be used for any general government purpose. MEASURE W COC SPECIAL MEETING MINUTES August 2, 2023 PAGE 2 Committee Member Brosnan, asked if debt service at $8.287 million and $8.289 million were fixed for many years. Karen advised that the $8.2 million were covered with the first two bonds. When the 3rd bond was issued, we included the first two years of debt service payments with the last bond. In 2025, the 3rd bond debt service payment will come out of Measure W. At this time, the $8.2 million, of Measure W only cover 2020 and 2021 bonds. Chair Del Rosario, asked if the debt service would then increase and if the first bond has a term? Director Chang clarified that all the bonds have a 30-year term, or final maturity of 2046 to line up with the expiration of the Measure W sale tax. Chair Del Rosario asked what the expected increase would be? Director Chang advised that the debt service payment is roughly $4.9 million each year. Chair Del Rosario asked $4.9 million on top of the $8.2 million? Director Chang said yes. Vice Chair De Guzman stated the total debt service will come very close to the total Measure W revenues of $15 million. Director Chang said that was the goal. Committee Member Brosnan asked about a line item reviewed two months ago called maintenance. Was this discussed over the last two months to see if some of the future excesses can be leveraged for ongoing maintenance over the next 30 years? Director Chang mentioned that either Measure W or general fund would cover the maintenance. Chair Del Rosario opened the meeting for public comment. Nina Richardson commented about the total amount given to the City to build the projects was limited to the collection of the tax. The projection was $7 million a year to collect until the end of the 30 years. Has the City issued all the bonds, $210 million? At what point are we going to be fmished paying? If the bonds were already issued, how are we funding the aquatics park? Director Chang clarified that the total bonds issued was roughly $190 million ($54 million, $104 million, and $65 million). Chair Del Rosario, clarified it was $223 million. Nina Richardson asked how much is left for the City to issue? Director Chang explained that when we issue the bonds, the City will need to present certain information to the bank to ensure the City has the ability to repay the bonds. Nina Richardson commented that the Committee could benefit by having someone explain to them how much is left that the banks are allowed to issue. Director Chang stated she does not have that information at this time. 4. Consider and Move to Approve Measure W Committee Regular Meeting Schedule Change to Quarterly Regular Meetings Chair Del Rosario moved to item 4 on agenda. Director Chang said Assistant City Attorney Ali Wolf has done some research in terms of the frequency of the meetings and results were inconclusive. It was found that most cities surveyed or that we are aware of have (1) one to (2) two meetings per year. Committee Member Zemke advised that when the committee initiated the meetings, it was set every other month. What works best for staff with the process? Director Chang said most cities have a meeting once or twice a year as it coincides with mid- year to provide more information. There are not a lot of updates or activities to report monthly. We can invite the auditors to provide updates on their internal control. Then at the end of the audit, when the books are closed and before it is finalized, it can be presented to the committee. Director Chang advised that a regular schedule is needed. The meetings can continue on a quarterly basis and if anything comes up, we can call a special meeting. If there is nothing to MEASURE W COC SPECIAL MEETING MINUTES August 2, 2023 PAGE 3 update, we can cancel and meet on the next scheduled date. The Brown Act requires us to have a regular meeting schedule. Vice Chair De Guzman asked if meetings were held on a quarterly basis, he would propose changing how the financial statements are presented. I would like to present it the same way the auditors present it on a quarterly basis. I want just the Measure W balance sheet, assets, liabilities, capital and surplus, statement of cash flow, management analysis and discussion and budgeting. I am in the field of financial analysis. I work in insurance regulations and deal with quarterly statements. We tell the insurance companies how we want to see the reports. We will ask for the assets, liabilities, and income statements of Measure W, so we can see the revenues and expenditures. Director Chang said that is how we are presenting it now and that you would also like to see the balance sheet. Vice Chair De Guzman said yes. Director Chang clarified that the revenue and expenditure were presented. Government funds work slightly differently from the private sector, we update on accrual basis. Vice Chair De Guzman asked if a balance sheet on cash basis was able to be produced. Director Chang advised that she would provide what is appropriate or available at the next meeting. The balance sheet is not available until we close the books. Vice Chair De Guzman clarified if it would be done on cash basis and not accrual basis. Director Chang said government funds work slightly differently than private sector. We operate by budget. If Measure W ended up with no funds, then the general fund would have to bail it out. A lot of government funds work on budget basis. During the budget process we make sure the revenues and expenditures are balanced. If it is not balanced, then we use fund balances to cover any deficit. The balance sheet requested would only have the cash and payables. Accrual revenue wouldn't be noted because we are on cash basis. A report may be produced, however, it will not have the information you are requesting. We can try to produce what you are asking for, but it will not be very meaningful. Committee member Brosnan asked if we knew what other committees are provided with in terms of finance statements? What other formats were found? Assistant City Attorney Wolf advised that the statement that Director Chang shared were inconclusive. The records being provided are similar to what this committee is receiving. Some were being provided with more of line item expenditures. What Director Chang was offering is if the city staff has the capacity to provide the expenditure list, based off of that inconclusive finding? Committee member Brosnan asked where are the expenditures to the Orange Park project documented in the slide presentation? Karen advised they were not on the slide because they are bond funded. The funds were borrowed already and are sitting on another fund that are funding the project. The Measure W sales taxes are used to pay the debt service. Committee Member Brosnan advised that before we had bonds, and Measure W cash was being used, updates were still being provided for those expenditures. Now we are going to have the combination of Measure W and the debt service. Do we have an oversight of the bond expenditures at all? Director Chang advised that staff could provide project expenditure however it may be a combination of the bond funds, Measure W funds, and other funds. Committee Member Brosnan advised that this was the first time we are not concerned yet on monies being spent on the bond issuance. He wants to ensure we do not have responsibility of oversight for that. MEASURE W COC SPECIAL MEETING MINUTES August 2, 2023 PAGE 4 Director Chang advised that when the bond was issued, it was very clear on what the funds were intended for. Committee member Brosnan advised that he is concerned in reference to Mrs. Richardson's question. Initially, it was projected to $7 million a year, it is now over $1 million a month. The $50 million overage that Mrs. Richardson spoke about, were the funds decided to be used towards Orange Park. It would make it clearer if there was a line item explaining Orange Park. Orange Park is a direct result of overages not expected. Director Chang advised that it would be taken into consideration for future bonds. Committee Member Brosnan advised that it was related to overage. $7 million projected and $15 million was the actual. Vice Chair De Guzman asked why the PD station was no longer noted. Director Chang clarified that the PD station is part of the Civic Campus. Committee Member Brosnan clarified how the projects were presented. Civic Campus A was PD, Civic Campus B was Library/P&R & City Council, and Civic Campus C 33 Arroyo/new fire station. Vice Chair De Guzman requested a breakdown of Civic Campus project. Director Chang advised she could go back to the records, however the breakdown was expanded through the bonds. Only a portion of Measure W is being used. Assistant City Attorney Wolf advised it was clear where the confusion or concerns are. In order to provide those expenditures, we can discuss them in meantime prior to next meeting and how that may be presented in a different manner to try and address concerns. Because of the agenda item we are on, she wanted to bring us back around the timeline. Do you prefer to meet every other month, then there could be effort in the next two months to bring back information that presents expenditures as requested? As Director Chang mentioned, a more purposeful schedule may be more on a quarterly basis at this point. Vice Chair De Guzman asked if we could have some type of foot notes of what is not included? Director Chang advised that she will review and try to put something together. Chair Del Rosario opened up meeting to public comment: Nina Richardson suggested meeting every other month. The meetings should be held every other month, however, they have not been. Director Chang clarified that meetings were in February, April, and June. Mrs. Richardson advised she did not receive a notice. Director Chang advised that the meetings are published on the website. Mrs. Richardson commented that there should be separate sheets for all expenditures as previously presented. Chair Del Rosario would like to review item. Chair Del Rosario moves motion to continue meetings every other month. Committee member Zemke second the motion. Committee member Zemke, yes, Committee member Brosnan, yes, Committee member Ray is absent, Vice Chair DeGuzman, yes, and Chair Del Rosario, yes. Chair Del Rosario moved to approve the meeting every other month. Committee member Zemke second the motion. ADJOURNMENT MEASURE W COC SPECIAL MEETING MINUTES August 2, 2023 PAGE 5 Being no further business, Chair Del Rosario adjourned the meeting at 8:05 p.m. Submitted by: Patty Gomez Secretary Approved by - Del Vsario Chair Approved by the Measure W Citizens' Oversight Committee: OX / O z- / Z.0 2-3 MEASURE W COC SPECIAL MEETING MINUTES August 2, 2023 PAGE 6