[00:00:02]
OCTOBER TO ORDER. NORMALLY WE DO A ROLL CALL.
WE'LL DO THAT SAME THING NOW, BUT THERE WAS A SUGGESTION THAT AS WE DO THE ROLL CALL WE WANT TO.
WE HAVE TWO NEW MEMBERS TONIGHT. ONE WHO'S BEEN HERE ONE TIME, AND IT WOULD BE HELPFUL TO SHARE INFORMATION ABOUT OUR BACKGROUNDS, WHAT WE'VE DONE EDUCATION, WORK EXPERIENCE AND SO FORTH.
SO LET'S MODIFY THE ROLL CALL. WE'LL DO THE ROLL CALL, GIVE EACH PERSON AFTER THEY SAY, PRESENT A CHANCE TO GO THROUGH A TWO-MINUTE BIO OF THEIR BACKGROUND AND WHAT THEY'VE DONE.
OKAY? OKAY. COMMISSIONER MARIN. I'LL HAVE TO GO FIRST, OKAY.
HERE. DAMIAN MARIN LIVE IN NORTH REDONDO BEEN HERE SINCE 2013, WORKING ENTERTAINMENT, SELLING MOVIES AND TV SHOWS TO DIFFERENT DIGITAL PLATFORMS AND HAVE BEEN ON THE PUBLIC SAFETY COMMITTEE PREVIOUSLY AND NOW DOING MY SECOND TERM ON THE BUDGET AND FINANCE COMMITTEE. COMMISSIONER COYE. JOSH COYE, I'VE BEEN IN REDONDO BEACH SINCE ABOUT 2008.
WIFE AND TWO KIDS IN SCHOOL HERE AND THIS IS MY FIRST TIME ON A ON A BOARD.
SO EXCITED. THANK YOU. COMMISSIONER ALLEN.
OKAY. I'M JASMINE ALLEN. I BEEN ON A COMMISSION, I WANT TO SAY ALMOST THREE YEARS.
I WORK FOR ANOTHER CITY DOING SIMILAR STUFF. THAT'S ALL.
THANK YOU. COMMISSIONER SHERBIN. NICK SHERBIN.
KIND OF A REDONDO AND TORRANCE RESIDENT FOR THE LAST 35 YEARS OR SO.
I'VE GRADUATED FROM SC WENT INTO THE ENTERTAINMENT BUSINESS, WORKED FOR TELEVISION PRODUCTION COMPANIES AND EVENTUALLY ASSISTANT CONTROLLER AT COLUMBIA PICTURES FOR A STUDIO OPERATIONS, HOME ENTERTAINMENT AND AUDIT ON THE BURBANK STUDIO AUDIT COMMITTEE. MADE A TRANSITION INTO MANUFACTURING.
WORKED AS AN OPERATIONS MANAGER, PLANNING MANAGER, AND NOW CONTROLLER OF A AEROSPACE MANUFACTURING COMPANY. THIS IS MY SECOND YEAR ON THE COMMISSION.
COMMISSIONER FAHMY. MY NAME IS MICHAEL FAHMY.
I GREW UP IN TORRANCE AND I MOVED TO REDONDO BEACH ABOUT FIVE YEARS AGO.
I'M A CPA AND TAX ATTORNEY. I GOT MY BACHELOR'S FROM UC SAN DIEGO.
I RUN A LAW FIRM HERE IN TORRANCE, WHICH I'VE BEEN RUNNING FOR THE LAST TEN YEARS. COMMISSIONER.
SORRY. COMMISSIONER WEISS. I'M ERIC WEISS, AND THIS IS MY SECOND MONTH HERE.
I HAVE A BACKGROUND IN FINANCE AND SALES AND ENTERTAINMENT INDUSTRY.
ALSO GRADUATED FROM USC ALSO. AND I'VE LIVED IN REDONDO FOR 20 YEARS.
TWO DAUGHTERS, ONE IN HIGH SCHOOL AND ONE AT PARIS.
CHAIR WOODHAM. HERE. I'M A TRANSPLANTED MIDWESTERNER MOVED HERE ABOUT 11 YEARS AGO TO BE CLOSE TO MY THREE DAUGHTERS AND SEVEN GRANDKIDS IN THE AREA.
AND I'VE LIVED IN REDONDO THE ENTIRE 11 YEARS I'VE BEEN HERE.
RETIRED FROM AN INVESTMENT CONSULTANT BACKGROUND WITH CHIEF INVESTMENT OFFICER FOR A COUPLE OF ORGANIZATIONS AND THEN CONSULTANT FOR THE LAST 15 YEARS OF MY CAREER. SO WELCOME TO THE NEW MEMBERS AND WELCOME TO THE OLD MEMBERS.
LET'S STAND AND SALUTE THE FLAG. I PLEDGE ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA AND TO THE REPUBLIC FOR WHICH IT STANDS.
ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY AND JUSTICE FOR ALL.
[D. APPROVE ORDER OF AGENDA]
[00:05:02]
COULD I GET A MOTION TO APPROVE THE ORDER OF AGENDA? MOTION TO APPROVE. SECOND. ALL IN FAVOR? AYE.ANY OPPOSED? BLUE FOLDER ITEMS. THE LIST IS LONG.
[E. BLUE FOLDER ITEMS - ADDITIONAL BACK UP MATERIALS]
AND I, I DON'T I DON'T HAVE THE LIST IN FRONT OF ME TO GO OVER, BUT WE HAVE SEVERAL BLUE FOLDER ITEMS. JACOB, CAN YOU DO YOU HAVE A LIST OF THOSE? YOU COULD TELL US EXACTLY WHAT WE'VE RECEIVED.YES, I DO. WE HAVE SEVEN BLUE FOLDER ITEMS TONIGHT.
FIRST ONE IS FOR ITEM J.2. IT'S AN ADMINISTRATIVE REPORT REVISION FOR THE MEASURE FP ITEM.
THEN WE HAVE STAFF SUPPLIED SUPPLEMENTAL MATERIAL FOR THE PROCUREMENT ITEM J.4.
ALSO, STAFF SUPPLIED SUPPLEMENTAL MATERIAL FOR ITEM J.5 ON CIP PROCESS.
AND THEN WE HAVE SUPPLEMENTAL MATERIAL FROM THE PUBLIC FOR ITEM J.4 ON THE PROCUREMENT ITEM AGAIN, J.4. AND SUPPLEMENTAL MATERIAL FOR THE PRESENTATION ON THE TREASURER'S ITEM, J.3.
AND A, THE LETTER ITSELF TO THE COUNCIL FOR THE PROCUREMENT ITEM J.4.
AND THE LETTER ITSELF TO THE COUNCIL FOR THE CIP ITEM J.5.
OKAY, MOVING ON TO ITEM F CONSENT CALENDAR. DOES ANYONE.
[F. CONSENT CALENDAR]
WE HAVE TWO ITEMS ON THIS THE MINUTES AND THE POSTING FOR THE REGULAR BUDGET AND FINANCE COMMISSION MEETING.DOES ANYONE WANT TO PULL AN ITEM FOR DISCUSSION? IF NOT, ANY PUBLIC COMMENTS ON THE CONSENT CALENDAR? NO ONE IN THE PUBLIC HERE KNOWN ON ZOOM AND NO ECOMMENTS.
THEN CAN I HAVE A MOTION TO APPROVE THE CONSENT CALENDAR? MOTION. SECOND. ALL IN FAVOR? AYE. NO EXCLUDED CONSENT CALENDAR ITEMS. PUBLIC PARTICIPATION ON NON-AGENDA ITEMS. WE CAN ALLOW PUBLIC AND, PUBLIC INDIVIDUALS CAN SPEAK FOR A THREE-MINUTE
[H. PUBLIC PARTICIPATION ON NON-AGENDA ITEMS]
PERIOD ON ANY SUBJECT AS LONG AS IT'S NOT ON THE AGENDA.I HAVE ONE JIM MUELLER A FAMILIAR FACE WITH THE BUDGET AND FINANCE COMMISSION.
A WELCOME, FAMILIAR FACE. THANK YOU. MY NAME IS JIM MUELLER.
I LIVE IN DISTRICT FIVE. MY CONCERN HAS BEEN SINCE I'VE BEEN LOOKING INTO MANY ISSUES HAVING TO DO WITH THE FINANCES OF THE CITY. THERE IS A CONCERN OF TRANSPARENCY.
THEY DON'T GIVE ANY DETAILS. THEY DON'T REALLY EXPLAIN EXACTLY WHAT THEY MEAN, BUT THERE'S AN UNDERCURRENT OF, OF THE FEELING THAT THERE IS A LACK OF TRANSPARENCY IN THE CITY.
AND OF COURSE, WHAT THAT SLOPS OVER INTO SOMETHING MUST BE GOING ON.
AND IT DOESN'T HELP WHEN THE CITY ITSELF PARTICIPATES IN LACK OF TRANSPARENCY.
FOR EXAMPLE THE ANNUAL COMPREHENSIVE FINANCIAL REPORT WAS BEHIND FOR ABOUT TWO YEARS, AND I KEPT ASKING THE FINANCE DIRECTOR WHY THAT WAS.
WELL I DON'T KNOW WHY IT WAS YET, BUT THERE WAS AN ARTICLE IN THE PAPER ABOUT A SERIOUS AUDIT ITEM THAT WAS FOUND IN THE BOOKS OF REDONDO BEACH AND THAT THAT COULD HAVE BEEN THE REASON THESE NUMBERS WERE DELAYED. NOW, THERE'S ANOTHER ISSUE WITH THE CONSENT CALENDAR OF THE COUNCIL.
FOR EXAMPLE, THEY PAY ALL OF THE INVOICES THROUGH THE CONSENT CALENDAR, WHICH IF YOU'RE FAMILIAR WITH THE CONSENT CALENDAR IN THE COUNCIL MEETING, IT'S A LIST OF MAYBE 18 OR 19 ITEMS, ALL KINDS OF DIFFERENT THINGS.
AND BURIED IN THERE IS SOMETHING CALLED PAYROLL DEMANDS.
NOW, YOU MAY THINK THAT THAT'S YOU KNOW, PAYCHECKS FOR THE EMPLOYEES.
NO, IT IS THE INVOICE AMOUNTS AND THE PAYMENTS TO, THAT WAS MADE TO EVERY VENDOR DURING THE MONTH, THAT PARTICULAR MONTH, SO. AND IT'S ALL DONE BLANKET.
[00:10:03]
AS TO WHY THESE ARE. SO MY INTEREST HAS BEEN IN INCREASING THE TRANSPARENCY OF THE OPERATIONS, PARTICULARLY THE FINANCES OF REDONDO BEACH TO THE PUBLIC SO THAT THEY CAN MAKE DECISIONS.AND YOU MAY HAVE NOTICED THAT, PARTICULARLY IN DISTRICT FIVE, WE HAVE A RECORD OF LOW VOTER TURNOUT AND UNOPPOSED CANDIDATES. AND THE REASON FOR THAT IS I BELIEVE THAT PEOPLE NEED TO BE MORE AWARE OF WHAT'S GOING ON IN THE CITY, AND THE FINANCES COVER EVERY ASPECT OF CITY OPERATIONS.
I DID WANT TO MENTION THAT ONE OF YOUR COMMISSION MEMBERS, MR. JESTE, FOUND SOME CONSIDERABLE CHANGE ORDER THINGS IN THE PUBLIC SERVICE CONTRACTS.
SO THAT'S ANOTHER AREA OF TRANSPARENCY THAT YOU DIDN'T INVESTIGATE, AND I'M NOT SURE WHAT THE OUTCOME OF THAT WAS BUT THANK YOU. THANKS. ANYONE ONLINE? NO ECOMMENTS, NO ONE ON ZOOM. ANYONE ELSE IN PERSON WANT TO SPEAK? ONE OF THE CHANGES WITH THE NEW BROWN ACT ISSUE IS THAT IN A SITUATION LIKE THIS, WE HAVE TO SWITCH BACK AND FORTH BETWEEN IN-PERSON AND ONLINE. THE FEELING BEING, I SUPPOSE THAT IF YOU CAN WEED THE RESPONSES OR THE COMMENTS TO ONE OR THE OTHER AND SOMEHOW INFLUENCE THE OUTCOME OF THE DECISION.
SO AT ANY RATE, WE HAVE TO GO BACK AND FORTH.
SINCE WE ONLY HAVE ONE, THERE'S NO ISSUE. OKAY, ITEMS CONTINUED FROM PREVIOUS AGENDA.
[I. ITEMS CONTINUED FROM PREVIOUS AGENDAS]
WE HAVE TWO OF THOSE ON THE LETTERS AND THE LETTERS OF THE LAST PART OF OUR AGENDA.SO WE'LL SKIP OVER THAT. THEN MOVING ON TO SECTION J.
[J. ITEMS FOR DISCUSSION PRIOR TO ACTION]
THE FIRST ITEM ON THE AGENDA IS TO ELECT A CHAIR AND A VICE CHAIR FOR THE NEXT YEAR.A LITTLE HISTORY FOR THE NEW MEMBERS OF THE COMMISSION.
WE'VE GONE TWO DIFFERENT WAYS IN SELECTING THE CHAIR IN THE PAST, THERE WAS A PERIOD OF TIME WHICH LASTED UNTIL MAYBE 2 OR 3 YEARS AGO. IT WAS FAIRLY RECENTLY THAT THE CHAIR ALWAYS WENT TO THE NEWEST PERSON ON THE ON THE COMMISSION.
AND THERE'S SOME PROS AND CONS TO THIS. THE PRO IS THAT IT IMMEDIATELY PUTS A NEW PERSON IN A POSITION OF DEATH BY FIRE HOSE BECAUSE YOU HAVE TO LEARN EVERYTHING VERY QUICKLY. THE DISADVANTAGE IS THAT THERE IS SOME, THERE ARE SOME BENEFITS TO HAVING A LITTLE BIT OF EXPERIENCE BEFORE YOU BECOME CHAIR.
SO YOU CAN ARGUE THIS BOTH WAYS. SO WITH THAT AS A BACKGROUND WE'LL OPEN THE FLOOR FOR NOMINATIONS. AND I WOULD LIKE TO START THIS BY NOMINATING ARA WEISS FOR CHAIR. I WOULD SECOND THAT NOMINATION. PARDON? I WOULD SECOND THAT NOMINATION. OTHER. PLUSES OF NEWER PEOPLE DO, IT IS.
I. GREAT EXAMPLE OF, I GUESS AGAIN, GETTING EVERYONE INVOLVED IN THE GROUP AND AGAIN, HAVING THREE NEW MEMBERS DOES MAKE IT A LITTLE A LITTLE DIFFERENT, BUT ARA BEING HERE FOR ONE PRIOR MEETING I THINK IS PERFECT.
I WANT TO NOMINATE DAMIEN MARIN. COMMISSIONER MARIN.
THANK YOU. BUT. YOU WILL BE DECLINING. I WILL BE DECLINING.
SO ARA WEISS HAS BEEN NOMINATED. DAMIEN MARIN HAS BEEN NOMINATED, AND HE DECLINED THE NOMINATION.
RESPECTFULLY. ARE THERE OTHER NOMINATIONS? SURE.
COMMISSIONER SHERBIN. ARE YOU CALLING ON ME TO MAKE A NOMINATION? NO, THAT WOULD BE THE NEXT NOMINATION. OH, NO.
I RESPECTFULLY DECLINE, BUT THANK YOU VERY MUCH FOR YOUR CONFIDENCE.
APPARENTLY. I THINK THAT JERRY WOODHAM HAS DONE A SPECTACULAR JOB THIS LAST ROUND.
AND I WOULD LIKE TO NOMINATE HIM FOR A SECOND GO IF.
THIS IS HIS SECOND TERM, HE CAN'T GO ANYMORE.
HE'S TURNED OUT TWICE BEFORE. YEAH, THIS IS MY SECOND TERM.
[00:15:03]
HIS TERMED OUT. WELL, WITH ALL DUE RESPECT. I STILL THINK YOU DID A WONDERFUL JOB.YOU DID. YOU DID A WONDERFUL JOB. WELL, THANK YOU.
OKAY. AND WE'RE LOOKING FORWARD TO A NEW FACE THEN.
SO WE'RE GOING QUICKLY THROUGH THE LIST OF POSSIBLE CANDIDATES.
ANY OTHER NOMINATIONS? IF THERE ARE NO OTHER NOMINATIONS, DO I HEAR A MOTION THAT NOMINATION CEASE? NOMINATIONS CEASE. SECOND. ALL IN FAVOR? AYE.
AYE. YOU ARE THEN ELECTED BY ACCLAMATION AS THE ONLY CANDIDATE.
NOW, THE NEXT PART OF THE OF THE EQUATION FOR TONIGHT IS THAT THE NEW CHAIR TAKES OVER.
TRIAL BY FIRE. SO. DO WE NEED TO NOMINATE A VICE CHAIR OR NO? OH, THAT'S RIGHT, VICE CHAIR. LET'S DO THAT. WE NEED A VICE CHAIR WHO CAN SERVE IN THE ABSENCE OF THE CHAIR.
DO I HEAR A NOMINATION? SOMEONE WOULD LIKE TO NOMINATE ONE OF THE COMMISSIONERS FOR VICE CHAIR? COMMISSIONER MARIN. ALSO, EVEN BEYOND NOMINATIONS, IF SOMEONE WANTS TO VOLUNTEER ANY OF THE NEW MEMBERS, IF YOU'RE OPEN TO IT. WOULD YOU LIKE A NEW MEMBER ALSO TO BE PART OF THE CONSIDERATION FOR THE VICE CHAIR? CERTAINLY. ANYONE INTERESTED IN STEPPING UP. I PERSONALLY PREFER TO WAIT A YEAR FIRST, GET THE EXPERIENCE, AND THEN I'LL BE HAPPY TO BE MORE ACTIVE. TOTALLY UNDERSTAND.
WHAT ABOUT JOSH? I THINK I'M IN THE SAME CAMP.
OKAY. YEAH. THEN I WOULD BE. IT LOOKS LIKE WE'VE GOT.
I WOULD BE WILLING TO SERVE AS VICE CHAIR AND CHAIRMAN WISSE.
OKAY. YES. THERE ARE NO OTHER NOMINATIONS? DO I HEAR A MOTION THAT NOMINATIONS BE CLOSED? MOTION. OKAY, THEN YOU ARE ELECTED BY ACCLAMATION ALSO AS VICE CHAIR.
OKAY. NOW, WOULD YOU LIKE TO MOVE OVER TO THE THRONE AND? CAN THEY CHANGE THE NAMES? I'D LIKE TO CONTINUE THIS MEETING WITH THIS EXISTING STRUCTURE AND THEN HAVE YOU START OFF FRESH NEXT WEEK. YOU KNOW, WHATEVER, WHATEVER, WHATEVER THE PROTOCOL IS.
WE CAN'T HAVE THEM START NOW. I THINK ACCORDING TO THE RULES, HE'S SUPPOSED TO START.
YEAH. ALL RIGHT. I THINK WE'D GET IN TROUBLE WITH THE AUTHORITIES IF WE, IF WE PASS THIS.
VERY GOOD. OKAY. DO WE NEED TO CHANGE SEATS OR.
IT WOULD BE BETTER FOR YOU TO JUST SIT IN THE MIDDLE, I THINK.
OKAY. WE'VE HEARD FROM OUR IT DIRECTOR THAT IT'S NOT SAFE TO CHANGE THE NAMES DURING A MEETING, SO WE'LL FIX THAT FOR NEXT TIME. SOUNDS GOOD.
OKAY. LOTS OF LUCK. THANKS, JERRY.
OKAY, THANKS FOR NOMINATING ME. AND YOU KNOW, I'LL DO MY BEST HERE BUT I WILL DEFINITELY LEAN ON ALL OF YOU WITH EXPERIENCE HERE FOR ADVICE AND HELP OR, YOU KNOW, SO FEEL FREE TO TELL ME WHEN I'M MESSING UP.
OKAY? DO WE MOVE ON TO THE NEXT? OKAY, SO THE NEXT AGENDA ITEM LOOKS LIKE IT IS. ARE WE ON J.2? YES. DISCUSSION REGARDING MEASURE FP GENERAL OBLIGATION BOND ISSUANCE.
ALL RIGHT, THANK YOU. I WELCOME AGAIN TO THE NEW MEMBERS.
HE HAS SERVED AS OUR FINANCIAL ADVISOR, BUILDING UP TO THIS BOND ISSUANCE.
AND HE'LL BE SHARING THE PRESENTATION FOR YOU THIS EVENING.
IF YOU CAN HEAR ME. AND THAT'S THE HARD COPY PACKET THAT YOU HAVE.
DOES THAT GO ON THE SCREEN NOW? YES. YEAH. THANK YOU.
[00:20:05]
I SERVE AS THE MUNICIPAL ADVISOR TO THE CITY OF REDONDO BEACH.I'M ALSO A PROUD RESIDENT OF THE CITY. I'VE BEEN HERE.
HOW LONG HAVE I BEEN HERE? SINCE 2010. WHATEVER THAT MATH WORKS OUT TO BE.
AND I'M VERY HAPPY TO HAVE RAISED TWO KIDS IN THIS COMMUNITY.
IT'S BEEN WONDERFUL, AND IT'S BEEN A PLEASURE TO BE ABLE TO SERVE THE COMMUNITY THAT I LIVE IN.
AND TURNING TO NEXT SLIDE. AND WE'VE LAID OUT FOR AGENDA BASICALLY SOME OF THE THINGS, JUST AS A REMINDER ABOUT THE MEASURE ITSELF, ABOUT THE PROJECT, AND THEN A BIT MORE DETAIL ABOUT THE BONDS, ABOUT THE BONDS THEMSELVES.
THE PROCESS OF ISSUING THEM. THE MARKET. WHAT THEY'LL LOOK LIKE, AND THEN THE NEXT STEPS AFTER THAT.
IT WAS TO AUTHORIZE THE ISSUANCE OF $93,350,000 OF GENERAL OBLIGATION BONDS.
THEY WERE ISSUED FOR THE PURPOSE OF REPLACING FIRE STATIONS 1 AND 2.
AS WELL AS REPLACE THE MAIN POLICE HEADQUARTERS RIGHT ON THIS CIVIC CAMPUS HERE, AS WELL AS TO RENOVATE THE POLICE ANNEX BUILDING OVER ON VINCENT. NEXT SLIDE. AND CURRENTLY THE PROJECT HAS, THE CITY HAS BEGUN, EVEN THOUGH THE BONDS THEMSELVES HAVEN'T BEEN ISSUED YET TO REALLY PURSUE MAKING POSSIBLE THE DELIVERY OF THOSE PROJECTS ON A TIMELY BASIS.
AND BACK IN JULY OF 25, THAT'S LAST YEAR, THE CITY ENGAGED GRIFFIN STRUCTURES TO SERVE AS THE OWNER'S REPRESENTATIVE AS WELL AS THE PROGRAM MANAGER FOR THAT FOR THESE PROJECTS. AND IN DECEMBER AND THROUGH THEIR GUIDANCE AND SO FORTH, IN DECEMBER OF 25 THE CITY SELECTED USING A PROGRESSIVE DESIGN BUILD DELIVERY METHODOLOGY. AND UNDER THAT, AS EVERYBODY HEARS ABOUT THE NIGHTMARES ABOUT LIKE CONSTRUCTION AND CONTRACTORS AND SO FORTH, RIGHT? AND UNDER THIS PARTICULAR METHOD, THERE'S GOING TO BE ONE DESIGN BUILD TEAM THAT WILL HAVE FULL RESPONSIBILITY FOR THE PROJECTS.
AND REALLY, THE CITY AND THE TEAM WORKS TOGETHER TO REALLY DEFINE THE SCOPE AND TO SET A GUARANTEED MAXIMUM PRICE ON HOW MUCH THE PROJECT WILL COST TO KIND OF KEEP THINGS ON BUDGET AND ON TIME. AND IN JULY OF THIS YEAR THROUGH A COMPETITIVE PROCESS USING THIS PROGRESSIVE DESIGN BUILD PROCUREMENT METHOD THE CITY ENGAGED SWINERTON BUILDINGS & LPA DESIGN STUDIOS TO DELIVER THE PROJECTS.
AND MORE RECENTLY THAN THAT THE CITY ESTABLISHED ITS CITIZENS' OVERSIGHT COMMITTEE TO OVERSEE THE MAKE SURE THAT THE EXPENDITURE OF THE BOND PROCEEDS WHEN THEY'RE DELIVERED IS INDEED GOING TO THE PURPOSES LAID OUT IN THE MEASURE FP ITSELF.
THE DESIGN PROCESS IS SUPPOSED TO LAST THROUGH Q1 OF 2029, TO 2027.
AFTER DURING WHICH THE GMP WILL ALSO BE ARRIVED AT.
GO AHEAD. QUESTION. WHEN DO YOU THINK CONSTRUCTION WILL START? WHEN'S THE FIRST SPADE OF EARTH? THAT IS SUPPOSED TO HAPPEN Q3 OF 2027.
THAT IS THE EXPECTATION. AND THERE'S A LOT OF THINGS THAT NEEDS TO HAPPEN BEFORE THAT HAPPENS, INCLUDING NOT ONLY OF ALL OF THESE DESIGN ELEMENTS DURING THE CONSTRUCTION DRAWINGS, BUT ALSO TEMPORARY RELOCATION AND OTHER THINGS FOR THE FACILITIES THEMSELVES AND THE PERSONNEL AND THE OPERATIONS INSIDE. SO THAT'S WHY IT TAKES A WHILE.
I DON'T QUITE UNDERSTAND WHAT A GUARANTEED MAXIMUM PRICE DYNAMIC IS.
OH, OKAY. I AM NOT A PERFECT EXPERT ON THE PROCUREMENT STRATEGY.
BUT I HAVE WORKED ON A NUMBER OF TRANSACTIONS USING THIS PARTICULAR DELIVERY METHOD.
BUT ESSENTIALLY WHAT IT IS IS THAT WITH A GUARANTEED MAXIMUM PRICE AND THE PROGRESSIVE DESIGN BUILD MODEL YOU, THE CITY COMES OR WHOEVER THE SPONSORING AGENCY IS, COMES TO AN AGREEMENT WITH
[00:25:04]
ITS PARTICULAR DESIGN BUILD TEAM BASED ON THEIR EXPERIENCE WITH DOING THINGS BASED ON THEIR VISION OF DOING THINGS AND COME TO HAVE AN ENGAGEMENT IN THE FIRST PLACE. AND AFTER THAT, THEY WOULD DO DESIGN WORK TOGETHER WITH THE SPONSORING AGENCY, IN THIS CASE, THE CITY'S INPUT ON WHAT EXACTLY WILL BE DELIVERED FOR THE PARTICULAR PROJECT ONLY AFTER THEN, AND IT'S A VERY OPEN BOOK PROCESS FOR DOING THAT, WHERE THE DESIGN DECISIONS AT EVERY STEP, BASICALLY, THE CITY IS KIND OF TOLD THIS IS GOING TO COST THIS MUCH MONEY ABOUT.THAT'S OUR GUESS, RIGHT? AND AFTER THAT ENTIRE PROCESS IS DONE, AND REALLY IN THIS PARTICULAR CASE, BECAUSE WE ARE FUNDING THIS PROJECT, OR THE INTENTION IS REALLY TO FUND THE ENTIRE PROJECT FROM THE $93,350,000 OF PROCEEDS.
AND THAT'S, AFTER THEY COME TO AN AGREEMENT, AND THIS IS APPROXIMATELY WHAT THE DESIGN WILL LOOK LIKE, THAT WILL GIVE THEM EXACTLY USING UP. THEY'RE NOT REALLY TRYING TO USE UP ALL THE DOLLARS, BUT GETTING ALL AS MANY FEATURES AS THEY CAN POSSIBLY FIT UNDER THAT AMOUNT.
THEY WILL GET INTO A CONTRACT FOR THAT GUARANTEED MAXIMUM PRICE.
MAYBE YOU COULD EXPLAIN THIS THEN TO ME. IF AT ONE PHASE YOU HAVE A PARTICULAR A PHASE ELEMENT THAT EXCEEDS WHAT THE PROJECTED COST AND BUDGETED COST WAS. DOES THAT MEAN THAT SUBSEQUENT STAGES THEN ARE REDUCED IN TERMS OF THE DESIGN? BUT BY THE TIME THE GUARANTEED MAXIMUM PRICE IS ARRIVED AT, UNLESS SOME OF THE UNFORESEEN CONDITIONS EXIST, THE RISK FALLS ALMOST ENTIRELY ON THE DESIGN BUILD TEAM.
IT IS THEIR RESPONSIBILITY TO STAY WITHIN THAT BUDGET.
THERE IS STILL CONTINGENCY WITHIN SORT OF THE BUDGET, THE PLANNING AND THINGS OF THAT SORT.
AND THEY WILL NEED SOME LEVEL OF PERMISSION TO TAP INTO THOSE CONTINGENCY AMOUNTS.
OFTENTIMES THERE'S DIFFERENT STAGES OF CONTINGENCY.
SOME OF IT MORE UNDER THE CONTROL OF THE OWNER THAN OTHER ONES.
THANK YOU. ANY OTHER QUESTIONS ON THAT? OKAY, TURNING TO THE NEXT SLIDE.
SO THIS IS THE CURRENT ESTIMATED PROJECT COST ON THIS SLIDE.
THE INITIAL PLANNING EXPECTS TO USE THE FULL AMOUNT.
AND PART OF THIS IS BECAUSE OF THE WAY THIS IS BEING CONCEIVED, RIGHT? THE CITY HAS AUTHORIZATION FROM THE VOTERS TO ISSUE UP TO THIS AMOUNT.
AND THAT WAS REALLY INFORMED INITIALLY THIS IS QUITE A FEW YEARS AGO, HONESTLY, BY WHAT THEY THOUGHT WOULD IT WOULD COST TO DELIVER THESE PROJECTS AND THIS PROGRESSIVE DESIGN BUILD, GUARANTEED MAXIMUM PRICE APPROACH, MAXIMIZES VALUE AND TRIES TO KEEP THINGS ON BUDGET AND ON TIME.
AND YOU CAN SEE THE FIRE AND THE POLICE ASPECTS OF IT.
ROUGHLY EACH IS ABOUT HALF THE COST OF THAT 93,350.
NEXT SLIDE. AND THESE ARE SOME PRELIMINARY CONCEPTUAL DESIGNS.
ON THE LEFT HAND SIDE, THERE'S THE FIRE STATION 2 THAT'S ON GRANT WHAT IT COULD LOOK LIKE.
AND THEN THE POLICE HEADQUARTERS WHAT IT COULD LOOK LIKE ON THE CIVIC CENTER CAMPUS.
OKAY, TURNING TO PAGE TWO THE MEASURE FP GO BONDS.
THE INTENT IS TO ISSUE THE FULL 93,350,000 AUTHORIZATION AND TO SELL IT COMPETITIVELY THROUGH A PUBLIC AUCTION IN THE MUNICIPAL BOND MARKET AND TO STRUCTURE IT WITH LEVEL ANNUAL PAYMENTS AND TO PAY THE DEBT SERVICE FROM REDONDO BEACH PROPERTY TAXES TO BE LEVIED.
AND WE'LL GO THROUGH EACH OF THESE THINGS IN GREAT DETAIL IN A MOMENT.
SO THIS WILL BE A TAX EXEMPT BOND ISSUE, RIGHT? THAT IS CORRECT. OKAY. AND I KNOW YOU'RE NOT MIGHT NOT BE PREPARED TO GIVE AN ESTIMATE OF THE INTEREST RATE, BUT COULD YOU GIVE AN ESTIMATE OF THE INTEREST RATE.
THAT WILL BE IN A LATER SLIDE? BUT YES, WE'RE PREPARED TO DO THAT.
OKAY. NEXT SLIDE. SO JUST A LITTLE BIT ABOUT THE MUNICIPAL BOND MARKET AS A COMMISSIONER WOODHAM KIND OF INDICATED LIKE MOST MUNICIPAL BONDS ARE EXEMPT FROM FEDERAL AND STATE INCOME TAX PROVIDED IT'S, YOU'RE LIVE IN THE SAME STATE THAT YOU'RE, THAT THE MUNICIPALITY IS A SUBSIDIARY OF THAT IS ISSUING THE BONDS AND THAT KIND OF SETS IT APART FROM THE REST OF THE MARKETS.
[00:30:01]
THAT MUNICIPAL BOND MARKET IS ABOUT $4 TRILLION, THAT'S THE SIZE OF IT.THE U.S. STOCK MARKET IS ABOUT $75 TRILLION. THAT'S PROBABLY AN ESTIMATE THAT IS A LITTLE LOW AT THIS POINT BECAUSE IT SEEMS KEEPS RALLYING, RIGHT? U.S. TREASURIES, AS EVERYBODY KNOWS BECAUSE IT'S ON THE NEWS LATELY IS ABOUT $40 TRILLION.
U.S. BANK LOANS IS ABOUT 14. CORPORATE BONDS IS ABOUT 12.
AND MUNIS IS ABOUT 4 BILLION, $4 TRILLION, THAT'S HOW ROUGHLY HOW LARGE IT IS.
TREASURIES, AGENCIES AND CORPORATES. MOST, ONE OF THE OTHER BIG DIFFERENCES BETWEEN MUNI BONDS AND THESE OTHER BOND MARKETS IS THAT MUNI BONDS TEND TO BE STRUCTURED IN A FULLY AMORTIZING MANNER, MUCH LIKE PEOPLE'S MORTGAGES ARE.
THEY'RE PAID BACK OVER TIME CONSISTENTLY AS OPPOSED TO ROLLED AT MATURITY.
MOST OF THEM BECAUSE MUNICIPAL GOVERNMENTS REALLY ARE ALWAYS GOING TO KIND OF BE AROUND, RIGHT.
AND THEY HAVE VERY HIGH CREDIT RATINGS. THEY TEND TO DO THINGS VERY CONSERVATIVELY.
AND IN PARTICULAR SINCE 2020, SINCE THE BEGINNING OF THE YEAR, IT'S BEEN ON THE RISE, ESPECIALLY SINCE JULY OF THIS YEAR FOR MUNICIPAL BOND RATES. DRIVERS ARE VARIED. BUT THE FEDERAL RESERVE AND OTHER CENTRAL BANKS AND ACTIONS THEY'VE TAKEN CERTAINLY HAS MADE A DIFFERENCE.
THIS YEAR HAS BEEN A YEAR OF RECORD AMOUNT OF ISSUANCE FOR MUNICIPAL BONDS.
OVER $600 $1 BILLION IS THE EXPECTATION. AND THERE'S ALSO BEEN COMPETING DEMAND FOR BORROWING, BOTH BECAUSE THE US ITSELF AND ALSO BECAUSE OF DATA CENTERS AND OTHER THINGS THAT YOU'VE ALSO HEARD ABOUT ON THE NEWS.
SO DO YOU KNOW WHEN THE, WHEN THIS WAS BOND ISSUANCE WAS PASSED TWO YEARS AGO WAS THERE AN ESTIMATE MADE AT THAT TIME OF WHAT THE COST OF THE BONDS WOULD HAVE BEEN? THERE WAS, THERE WAS NOT AN ESTIMATE, EXPLICIT ESTIMATE ABOUT THE RATE BECAUSE IT WASN'T REQUIRED, BUT THEY DID HAVE AN ESTIMATE FOR HOW MUCH THE TOTAL COST WOULD BE.
AND I'LL HAVE TO SAY, UNFORTUNATELY, BECAUSE OF THE RUN UP IN RATES, WE'VE KIND OF BURNED THROUGH THAT CAN TIRE CUSHION, AND IT'LL PROBABLY SLIGHTLY HIGHER THAN WHERE THE ESTIMATES SAT BACK.
SO THAT HAS THAT AFFECTED THE SCOPE OF THE PROJECT, THE THAT THE COST HAS GONE UP? NO, THE APPROVAL BY THE VOTERS IS ONLY TO SET A LIMIT ON THE PAR AMOUNT OF THE BONDS TO BE ISSUED, THAT 93,350,000. IT DOES NOT SET A LIMIT IN ANY WAY ON THE RATE OR ON HOW MUCH THE TOTAL DEBT SERVICE WOULD BE. THE ONLY LIMITS ON THOSE IS REALLY BUILT INTO THE STATE CONSTITUTION, AND THAT RATE IS 12%, WHICH CLEARLY IS MUCH HIGHER THAN THESE RATES, RIGHT? AND THERE'S ALSO A LIMIT ON THE MAXIMUM MATURITY OF THE BONDS, WHICH IS I THINK I BELIEVE IT'S 40 YEARS IS WHAT IT ACTUALLY IS.
BUT AGAIN, THAT IS THE EXTREME WE'RE NOT GOING TO BORROW FOR THAT KIND OF TERM.
TEN-YEAR TREASURY IS A LITTLE LESS THAN THIS NOW.
IS THAT HOW YOU COME UP WITH AN ESTIMATE? THIS ESTIMATE THAT IT IS BEAR SOME RELATIONSHIP TO THE TEN-YEAR TREASURY? WE ACTUALLY BUILD IT OFF OF WHAT IS THE MARKET CONDITIONS FOR MUNICIPAL BONDS THAT ARE BEING ISSUED AT THE MOMENT.
FOR EXAMPLE, THIS PAST TUESDAY SAN DIEGO UNIFIED SCHOOL DISTRICT ISSUED GENERAL OBLIGATION BONDS.
AND THEIR CREDIT RATING IS NOT IDENTICAL TO WHAT IT IS FOR THE CITY, BUT IT'S CLOSE.
AND FROM THOSE KIND OF BENCHMARKS, AS WELL AS A NUMBER OF OTHER SCHOOL DISTRICTS, MORE SCHOOL DISTRICTS AND CITIES, QUITE HONESTLY, THAT ISSUE CALIFORNIA GENERAL OBLIGATION BONDS.
[00:35:02]
THAT'S ELAPSED SINCE TUESDAY. DO WE DO WE HAVE ANY EXPECTATION ON THE DIRECTION OF INTEREST RATES? BECAUSE I'M ASSUMING LIKE IF YOU ISSUE THEM ALL NOW AT THIS RATE, AND THEN A YEAR FROM NOW THEY'VE FALLEN BACK IN HALF, THERE'S I MEAN, IS THERE ANY ROOM? I WILL HAVE TO SAY THAT IT'S VERY HARD TO ESTIMATE OR PREDICT WHERE FUTURE INTEREST RATES ARE. AND I THINK I SEE A LITTLE BIT OF A NODDING OF THE HEADS OF OTHER FOLKS TOO, OF THAT. AND GENERALLY THE PRACTICE IS TO REALLY GET THE FUNDING WHEN PEOPLE NEED IT.AND ONE OF THE COSTS FOR DELAYING THE PROJECTS IS, AS WE ALL KNOW, INFLATION AND IN PARTICULAR, CONSTRUCTION INFLATION COSTS. SO THERE'S A MANY FACTORS TO CONSIDER IN WEIGHING WHETHER OR NOT TO ACTUALLY GO FORTH WITH A FINANCING. AND SOME FOLKS MAY CONSIDER INTEREST RATES TO BE ONE OF THEM.
AND CERTAINLY IF RATES WERE SUDDENLY TO RISE A LOT THERE MAY BE MORE DISCUSSION ABOUT THAT, BUT AT THIS MOMENT IN TIME, I DON'T THINK PEOPLE ARE NECESSARILY THINKING WE WILL TRY TO TAKE ADVANTAGE OF THE, THE, THE MOST OPPORTUNE TIME. IT'S VERY DIFFICULT.
AND IN TERMS OF LIKE THE MARKET OUTLOOK ITSELF, THE CURRENT EXPECTATION IS FOR RATES FOR THERE TO AT LEAST BE ONE MORE RATE HIKE ON THE PART OF THE FEDERAL RESERVE, THAT'S KIND OF THE CONSENSUS IN THE NEXT TWO MEETINGS AND MAYBE, POSSIBLY EVEN ONE MORE INTO THE NEXT YEAR. SO IT DOESN'T SEEM LIKE IT'S WAITING LIKE A WEEK OR TWO WEEKS WILL BE A DECLINE IN INTEREST RATES. THERE ARE ALL THESE PRESSURES THAT KIND OF INDICATE IT'S EITHER HERE OR SLIGHTLY HIGHER IN THE NEAR TERM.
YES. I THINK ABOUT THE OPPOSITE ISSUE. WHAT HAPPENS IF RATES DROP? LIKE SUPPOSE THESE BONDS ARE ISSUED AT 5% AND RATES GO DOWN TO 3%, LIKE WHAT HAPPENED IN 2020 AND 2021, WILL THE CITY HAVE RECOURSE TO REFINANCE THOSE OBLIGATIONS AT A BETTER RATE, OR ARE THEY STUCK AT THAT 5% RATE THAT YOU'RE PROJECTING? THE TYPICAL MUNICIPAL BOND IS STRUCTURED WITH A TEN-YEAR PARK HALL WHERE IN TEN YEARS TIME, THE CITY IS FREE TO REFINANCE THE, ITS PARTICULAR BONDS AT WHATEVER PREVAILING MARKET RATES IT IS AT THAT TIME, BUT IT IS A TRUE OPTION IN THE SENSE THAT AFTER THE SALE, WE WILL HAVE LOCKED IN A FIXED RATE.
SO IF RATES WERE TO RISE MORE, YOU'RE NOT COMPELLED TO REFINANCE AT THAT TEN YEAR MARK.
YOU'RE JUST GOING TO PAY WHATEVER YOU MANAGE TO LOCK IN.
BUT IF RATES WERE LOWER AT THE TEN YEAR MARK, YOU WOULD BE ABLE TO REFINANCE AT A LOWER RATE.
THE OTHER THING. AND I MENTIONED THIS TEN YEAR, IT'S RELEVANT BECAUSE CURRENT LAW PROHIBITS THE ISSUANCE OF TAX EXEMPT BONDS TO REFUND EXISTING TAX EXEMPT BONDS FOR MORE IF YOU CANNOT REDEEM THE BONDS WITHIN 90 DAYS.
BUT IF RATES WERE TO FALL TO WHERE IT WAS IN 2020, WHEN RATES, WHEN TREASURIES WERE ONE POINT WHATEVER PERCENT THEY WERE, YOU COULD STILL PROBABLY REFINANCE IT AND WITH TAXABLE BONDS AND STILL SAVE MONEY.
BUT IT WOULD TAKE A PRECIPITOUS DIVE FOR THAT TO KIND OF WORK.
THE MORE NATURAL PLACE OF REFINANCING IS PROBABLY TEN YEARS FROM NOW WHEN THE OPTIONAL REDEMPTION PROVISION KICKS IN AND THE CITY CAN REFINANCE AT THAT TIME. THANK YOU. ANY OTHER QUESTIONS BEFORE I CONTINUE? OKAY, SO I ALSO MENTIONED THE FACT THAT THIS IS GOING TO BE THROUGH A COMPETITIVE BID PROCESS.
THIS IS ONE OF TWO COMMON WAYS TO SELL MUNICIPAL BONDS.
I'VE KIND OF SHOWED WHAT IT IS IN 2006 YEAR TO DATE AS WELL AS 2025.
AND IN A COMPETITIVE PROCESS, THE CITY SETS THE TERMS OF THE SALE, THE PARAMETERS, THE AMOUNT WE'RE SELLING, WHAT WE'RE SELLING, THE AMORTIZATION, WHAT IT KIND OF LOOKS LIKE, AND INVESTMENT BANKS THEN SUBMIT SEALED BIDS TO BUY ALL THE BONDS.
ONE BANK WILL BE THE WINNER, AND THAT THEY WOULD GO FORTH AND RESELL IT AFTER BEING AWARDED.
AND THIS IS CONSIDERED AN INDUSTRY BEST PRACTICE FOR SELLING BONDS LIKE THE MEASURED FP GOS, WHICH ARE HIGHLY RATED AND RELATIVELY EASY TO UNDERSTAND, WHICH IS WHY WE'RE UNDERTAKING THIS PARTICULAR APPROACH TO SELLING THE BONDS.
[00:40:12]
NEXT SLIDE. I'VE MENTIONED THIS BEFORE, WHICH IS THE BOND STRUCTURE WILL BE REPAID IN EQUAL ANNUAL PAYMENTS OR WHAT'S KNOWN AS LEVEL DEBT SERVICE.THE ESTIMATED ANNUAL REPAYMENT AMOUNT IS APPROXIMATELY $6.6 MILLION PER YEAR.
PRINCIPAL WILL BE REPAID OUT TO 30 YEARS, 2056.
AND SO FOR THE INTEREST THAT IS DUE IN 2027, WE'RE GOING TO HAVE TO PAY THAT FROM SALE PROCEEDS WHAT'S KNOWN AS CAPITALIZED INTEREST UNTIL TAXES CAN BE LEVIED STARTING THE FOLLOWING YEAR.
SO WE REALLY HAVE 29 REPAYMENT PERIODS, EVEN THOUGH THIS IS A 30 YEAR ISSUE, IF YOU WILL.
AND THE 30 YEAR TERM IS REALLY REFLECTIVE OF MARKET CONVENTION, THERE'S A LOT MORE PEOPLE WILLING TO PURCHASE BONDS IF WE ONLY SELL UP TO 30 YEARS AS OPPOSED TO IF WE SOLD IT WITH 31 YEARS AND 30 YEARS PERIODS OF REPAYMENT, JUST THAT ADDITIONAL AMOUNT JUST VIOLATES SOME INVESTMENT GUIDELINES AND OTHER THINGS FOR A NUMBER OF INVESTORS, AND THEY WOULD NOT PARTICIPATE. BACK TO ONE OF YOUR EARLIER CHARTS.
WHAT ARE WE EXPECTING THE CONSTRUCTION PERIOD TO BE? HOW LONG DO WE THINK IT WILL TAKE TO COMPLETE? APPROXIMATELY TWO YEARS STARTING IN Q3 OF 27.
YOU SAID THREE YEARS? YEAH, PROBABLY APPROXIMATELY THREE YEARS FROM NOW.
EXPLAIN THE HOW YOU CAME UP WITH THE IDEA OF DOING JUST ONE BOND OR DOING A TOTAL IN ONE BOND ISSUE VERSUS DOING 2 OR 3 OVER THE LIFE OF THAT CONSTRUCTION PERIOD.
AND THE SORT OF THERE'S A VARIETY OF REASONS, BUT THE AMONG THINGS LIKE OUR, BASICALLY SCALING COSTS. THERE'S A LOT OF FIXED COSTS TO DO THESE FINANCINGS AND THE ABILITY TO HAVE AGGREGATE AMOUNT OF SORT OF EFFORT AND COST MANAGEMENT, THAT WAS A MOTIVATOR.
THERE'S ALSO THE UNDERSTANDING AT THE TIME THE DECISION WAS MADE THAT INVESTMENT RATES ARE HIGH.
YES, WE ARE BORROWING RIGHT AWAY AT THIS 5.19%, BUT WE CAN ALSO INVEST AT QUITE A HEALTHY LEVEL, RIGHT? AS COMMISSIONER WOODHAM PULLED OUT POINTED OUT TEN-YEAR TREASURY IS AROUND THAT SAME LEVEL AND THERE'S A NUMBER OF ATTRACTIVE INVESTMENT OPTIONS THAT WILL BASICALLY ALLOW US TO CARRY THOSE DOLLARS FORWARD AND GET A GOOD RATE OF RETURN IN THE MEANTIME, WHICH WILL HELP PAY FOR THE OVERALL PROJECT. CAN WE EARN MORE THAN THE 5.19% IF WE FIND AN INVESTMENT? I WOULD LIKE TO DEFER TO THE TREASURY TEAM FOR THAT.
THANK YOU, LOUIS. THANK YOU, COMMISSIONER WOODHAM. THE CITY CAN EARN A RATE THAT IS MORE THAN WHAT IS THE PUBLISHED RATE OR THE ISSUED RATE, BUT IT'S DISCOURAGED. WE WOULD HAVE TO THEN ENGAGE IN AN ARBITRAGE REBATE PROGRAMING TO AVOID HAVING TO GIVE THAT MONEY BACK THAT WE EARNED IN EXCESS OF THAT NUMBER. THE POWERS THAT BE DON'T WANT YOU TO ISSUE BONDS AND THEN SIT ON THAT MONEY FOR A PROJECT AND EARN A RATE HIGHER THAN WHAT YOU WERE ISSUING OUT AT. SO THERE'S REQUIREMENTS WITHIN THE GUIDELINES OF CDIAC THAT YOU SPEND UP TO 85% OF YOUR BOND PROCEEDS WITHIN THE FIRST THREE YEARS.
AND IF YOU DO EARN A RATE, IF THE INTEREST RATES GO UP AND YOU EARN A RATE THAT'S GREATER THAN WHAT YOU ISSUED OUT AT, THEN YOU'LL HAVE TO GO THROUGH A PROCESS WITH CDIAC OF REPORTING IN ORDER TO BE ABLE TO TRY AND RETAIN THAT NUMBER YOU EARNED IN EXCESS OF THE RATE.
DOES THAT ANSWER THE QUESTION? YEAH. OKAY. THANK YOU.
THANK YOU. ANY OTHER QUESTIONS? OKAY, SO ONE OF THE THINGS I ALSO MENTIONED WAS THAT THE PAYMENT OF THESE BONDS IS GOING TO COME FROM PROPERTY TAXES.
[00:45:04]
YOU'VE SEEN THIS THING CALLED ASSESSED VALUE, AND THAT CAN VARY GREATLY BETWEEN ADJACENT PROPERTIES AND THINGS OF THAT SORT BECAUSE OF HOW CALIFORNIA LAW KIND OF WORKS. AND EACH OWNER WILL PAY THEIR FAIR SHARE BASED ON THAT ASSESSED VALUATION.AND THE LEVIES WILL BE ADJUSTED ANNUALLY FOR AVE CHANGES.
THE AVERAGE RATE FOR OVER THE LIFE OF THE BONDS IS ESTIMATED AT $17.40 PER $100,000 OF AV. THAT'S VERSUS IT'S ALMOST ON THE NOSE.
WHAT WAS ON THE BALLOT WHICH WAS $17.45. AND THIS, OF COURSE, YOU KNOW, I MADE SOME ASSUMPTIONS ABOUT WHAT AV GROWTH WOULD LOOK LIKE AND ULTIMATELY HOW MUCH EACH PROPERTY OWNER HAS TO PAY REALLY DEPENDS ON THE AV AS WELL AS THE FACT HOW LONG THEY HOLD THE PROPERTIES FOR AND THINGS OF THAT SORT, BECAUSE PROP 13 HAS LIMITS ON HOW MUCH YOUR AV CAN GROW EACH YEAR IF YOU ARE THE OWNER OF THAT PROPERTY.
SO WHAT DO YOU MEAN BY THE AVERAGE RATE OVER THE BOND LIFE? SO YOU'RE TALKING JUST OVER 30 YEARS? OVER 30 YEARS.
OVER 30 YEARS. THE 17.40, IS THAT THE TOTAL OVER THE 30 YEARS OR THAT'S THE ANNUAL OVER THE.
THAT'S THE ANNUAL. THAT'S THE AVERAGE ANNUAL.
SO AT THE BEGINNING, BECAUSE YOU SAW THAT THE DEBT SERVICE LEVEL, THE EXPECTATION IS THAT THE OVERALL ASSESSED VALUE AT THE CITY WILL GROW JUST OVER TIME. AND AS A RESULT OF THAT, WHEN YOU DO THAT MATH, EACH PERSON'S SHARE OF THE SAME AMOUNT WILL GO DOWN.
THAT'S HOW. SO IT ACTUALLY WON'T BE FIXED FOR THE HOMEOWNERS FOR THE PROPERTY TAX? NO, IT WILL CHANGE BASED ON THEIR OWN AV CHANGE.
SO IF THEY GENERALLY SPEAKING, IF WE HAVE STEADY GROWTH IN REAL ESTATE VALUES GENERALLY THE COUNTY BECAUSE OF PROP 13 WILL BE LIMITED IN REASSESSED TO REASSESS YOUR PROPERTY, PROBABLY AT A 2% RATE GROWTH PER YEAR IN TERMS OF YOUR AV.
AND BECAUSE THE CITY ITSELF TENDS TO HAVE PEOPLE BUYING AND SELLING HOMES, IT TENDS TO HAVE NEW BUILDINGS BEING PUT UP AND THINGS OF THAT SORT WHERE THE BASE AMOUNT OF AVI IS GOING TO GROW MORE THAN THE 2%.
CHANCES ARE YOUR PARTICULAR, THE CITY WIDE AV WILL GROW FASTER THAN 2%.
I THINK THE TEN YEAR CUMULATIVE AVERAGE IS SOMETHING LIKE 4, 4.6% OR SOMETHING LIKE THAT.
AND I DON'T THINK IN ANY YEAR IN THE LAST TEN YEARS HAS IT BEEN LESS THAN THREE AND A HALF, WHICH IS WHY I PICKED THREE AND A HALF HERE. OKAY.
IT'S KIND OF A CONSERVATIVE ESTIMATE. AND SO YOUR PARTICULAR SHARE, BECAUSE YOU'RE, IF YOU HOLD YOUR PROPERTY IS GROWING AT 2%, WHILE THE OVERALL AGGREGATE SHARE IS GROWING AT 4.6%.
SO YOUR OVERALL AMOUNT SHARE OF IT ACTUALLY GOES DOWN OVER TIME.
AND THAT'S, THAT'S WHAT WILL END UP HAPPENING WITH ALL OF THAT.
SO THIS 17.40 WILL COVER THE TOTAL COST, WHICH IS 182 INCLUDING INTEREST? YES. OKAY. YES. IT PROVIDED WE'RE USING THE RIGHT UNITS, RIGHT? THE 17.40 IS FOR $100,000 OF AV. IT'S AN ANNUAL NUMBER AND YOU HAVE TO COLLECT THAT FOR 29 TIMES.
BUT YES, YES, IT IS COMPREHENSIVE IN TERMS OF COVERING THE COSTS.
DO YOU KNOW ARE THERE OTHER ARE THERE CURRENTLY OTHER ASSESSMENTS FROM PREVIOUS BOND MEASURES THAT ARE THE HOMEOWNERS ARE CURRENTLY THAT ARE GOING TO EXPIRE, YOU KNOW, SOON THAT ARE GOING TO BE OFFSET BY THIS OR? NO, I MEAN, THE CITY ITSELF HAS NO LEVIES OF, FOR BONDS, RIGHT? THERE'S THE GENERAL LEVY OF 1% AND SO FORTH, THAT'S THE GENERAL AMOUNT THAT GETS COLLECTED ON PROPERTY TAXES THAT GO INTO RUNNING OF THE CITY IN THE GENERAL FUND AND EVERYTHING ELSE. OTHER THINGS THAT MOST LIKELY ALMOST ALL HOMEOWNERS IN AND PROPERTY OWNERS IN REDONDO BEACH ALSO PAYING FOR ARE TWO SCHOOL DISTRICTS, RIGHT? BECAUSE WE'RE COTERMINOUS WITH THEM AND THEY RECENTLY PASSED MEASURE S, RIGHT. THEY ALSO HAVE PREVIOUSLY, I FORGET WHEN THAT WAS PROBABLY, I WANT TO SAY LIKE 13 YEARS AGO OR 12 YEARS AGO OR SOME SUCH.
THEY PASSED MEASURE E, RIGHT. THERE'S ALSO ADDITIONAL AUTHORIZATIONS THAT HAVE BEEN ISSUED FOR EL CAMINO A COMMUNITY COLLEGE DISTRICT. AND THEN THERE'S A VARIETY OF OTHER ENTITIES THAT HAVE PASSED A VARIETY OF DIFFERENT MEASURES TO DIFFERENT AMOUNTS, BUT THOSE ARE THE ONES THAT PROBABLY ARE THE LARGEST ONES THAT APPEAR IN PEOPLE'S PROPERTY TAX STATEMENTS AT THIS POINT FOR MOST PEOPLE.
[00:50:04]
ANY QUESTIONS ON THIS? OKAY, NEXT STEPS. WHAT IS EXPECTED TO HAPPEN IS THAT THE CITY COUNCIL WILL MEET AND CONSIDER APPROVAL OF THIS FINANCING NEXT TUESDAY THE 13TH.PROVIDED THEY APPROVE, WE WOULD EXPECT TO DISTRIBUTE THE PROSPECTUS, ALSO KNOWN AS THE PRELIMINARY OFFICIAL STATEMENT RELATED TO THIS PARTICULAR ISSUE A COUPLE DAYS AFTER THAT, AND THE OPEN BIDS ON THE 27TH WITH A CLOSING OF THE ISSUE JUST BEFORE VETERANS DAY ON NOVEMBER 10TH. YES. SO THE CITY COUNCIL IS TO CONSIDER APPROVAL OF WHAT, WHAT EXACTLY? THE SALE AND ISSUANCE OF THE BONDS. THAT IS WHAT THEY WILL BE ASKING THEM TO CONSIDER APPROVAL OF.
AND. AND WHAT WILL THE OTHER OPTION BE? TO NOT APPROVE, I SUPPOSE.
RIGHT, BUT AND IF THEY DON'T APPROVE, WHAT WOULD OTHER OPTIONS BE? IT MIGHT BE TREASURER QUESTION. BUT IF WE DON'T DO IT THIS WAY, WHAT OTHER WAY.
THEY COULD JUST NOT PURSUE IT. THAT'S WHAT IT WOULD BE.
OTHERWISE THEY WOULD HAVE TO FIND RESOURCES FROM THE CITY GENERAL FUNDS, WHICH WOULD BE SUBSTANTIAL, QUITE HONESTLY. THE REASON I ASK IS BECAUSE, WELL, OBVIOUSLY THEY'VE APPROVED.
THAT'S WHY IT WENT TO THE VOTERS AND VOTERS SAID YES.
YES. SO WHAT IS, HOW IS THIS DIFFERENT THAN WHAT WAS ALREADY VOTED ON? BECAUSE. IT'S ACTUALLY A COMPLICATED QUESTION.
SOME OF IT HAS TO DO WITH THE FACT THAT THE CITY WILL ENTER INTO A NUMBER OF CONTRACTS RELATED TO THIS PARTICULAR ISSUANCE, RIGHT? AND THEY NEED TO DELEGATE THAT AUTHORITY TO SOMEBODY TO ACTUALLY SIGN THAT CONTRACT TO BE ABLE TO ISSUE THE BONDS, RIGHT? BECAUSE THERE IS NO CURRENTLY LEGAL BINDING AGREEMENT IN ANY WAY FOR THE CITY TO HAVE TO LEVY THESE TAXES, TO HAVE TO PAY OUT THIS MONEY TO BONDHOLDERS.
THEY NEED TO AUTHORIZE SOMEBODY TO EXECUTE THOSE CONTRACTS ON THE BEHALF OF THE CITY.
SO THERE IS, IT'S REASONABLE TO THINK THAT THE CITY COUNCIL WILL PROBABLY APPROVE IT, GIVEN THAT THE VOTERS APPROVED IT AND THINGS OF THAT SORT, BUT THAT'S WHY THEY ARE LOOKING FOR.
ARE THEY APPROVING THE ADVISOR, THE UNDERWRITER, OR ARE THEY JUST SIMPLY SAYING, YES, LET'S USE THESE FUNDS AND BUILD THE FIRE STATION AND THE PD STATION? THEY ARE APPROVING THE METHOD OF SALE. NORMALLY IF YOU HAD TO CHOSEN WHAT'S KNOWN AS A NEGOTIATED SALE, THAT IS WHEN THEY WOULD BE APPROVING THE PARTICULAR BANK THEY WOULD BE WORKING WITH AND NEGOTIATING TO GET THE FINAL PRICING WITH.
COME ONE, COME ALL. AS LONG AS YOU MEET ALL THE RULES, YOU CAN COME AND TRY TO BUY THESE FROM US.
AND IF YOU GIVE US THE BEST RATE, WE WILL SELL UNTO YOU.
THAT IS WHAT ALSO THEY ARE PROVING. IT'S PROBABLY TRUE THAT BOND COUNCIL WOULD REQUIRE THE APPROVAL OF BOARD OF DIRECTORS IF THIS WERE A CORPORATION OR CITY COUNCIL IF IT. THAT IS CORRECT, THAT IS PART OF THE APPROVAL.
AND THEN ANOTHER PART OF THE APPROVAL IS REALLY HAS TO DO WITH SECURITIES LAW, BECAUSE IN ORDER TO SELL THESE BONDS, WHICH ARE SECURITIES TO THE EVENTUALLY TO THE PUBLIC, RIGHT? THERE NEEDS TO BE DISCLOSURE ABOUT THE FINANCES OF THE CITY, ABOUT THE ABILITY TO COLLECT THESE TAXES AND THINGS OF THAT SORT.
SO THOSE ARE ALL OF THE REASONS WE HAVE TO DO THE APPROVAL.
BUT THAT'S A VERY FAIR QUESTION, GIVEN THAT, YOU KNOW, THE CITIZENRY HAVE ALREADY VOTED YES ON THIS.
WHAT IS IT THAT WE'RE ASKING THEM TO REALLY APPROVE? SO A QUESTION TO OR SUGGESTION TO THE TREASURER, WOULD IT BE POSSIBLE SO FOR INSTEAD OF CITY COUNCIL MEETING TO CONSIDER APPROVAL AND THEN BULLET POINTS WHAT THAT APPROVAL IS IN LIKE, YOU KNOW, I THINK HE MENTIONED THAT THERE ARE LITTLE OTHER THINGS, YOU KNOW, WHETHER IT'S THE METHOD OF SALE THEY'RE APPROVING OR ALL OF THE ABOVE.
AND THEN TO LIST EXACTLY WHAT IT IS THEY'RE ACTUALLY APPROVING.
YEAH, WELL, THE FINANCE DIRECTOR WILL HAVE A PRESENTATION FOR THE COUNCIL WITH THE ADMINISTRATIVE REPORT AND THE RELEVANT ATTACHED DOCUMENTS FOR THE CITY COUNCIL TO SEE WHAT THEY'RE CONSIDERING AND THE RECOMMENDATION OF THE MUNICIPAL ADVISORY GROUP AND OF THE STAFF CITY STAFF WOULD BE.
[00:55:03]
IS THAT THE ANSWER? IS THAT THE QUESTION YOU'RE ASKING? WILL THAT REPORT INDICATE LIKE THIS IS THE METHOD YOU'RE APPROVING, OR IS IT JUST GOING TO BE ONE BIG PRESENTATION AND THEN RECOMMEND TO APPROVE, JUST LIKE THIS ONE? THE PRESENTATION IS VERY SIMILAR TO THE PRESENTATION TO COUNCIL WILL BE VERY SIMILAR TO THIS ONE.THE REPORT THAT WE PRESENTED TO THE COMMISSION WILL BE VERY SIMILAR AS WELL.
IT GOES INTO SOME DETAIL ABOUT THE METHOD OF SALE.
OKAY, BUT THEY WON'T NECESSARILY UNDERSTAND. ARE THEY JUST APPROVING THE 93 MILLION OR ARE THEY APPROVING THE METHOD IT IS USED? AND INSTEAD OF USING COMPETITIVE, FOR EXAMPLE, THEY CAN CHOOSE NEGOTIATED METHOD.
THAT WOULD BE THAT WOULD BE THEIR OPTION TO DECIDE.
YES. RIGHT, RIGHT. THAT'S, BUT I MEAN, THAT'S WHAT I WAS ASKING IF IT CAN BE SPELLED OUT.
SO OUR RECOMMENDATION TO THEM IS TO ADOPT THE RESOLUTION AUTHORIZING BOND ISSUANCE, AND THEY ARE THEN APPROVING ALL OF THOSE OTHER ITEMS. WE'RE NOT ACTUALLY ASKING THEM SPECIFICALLY TO SAY, DO YOU WANT US TO DO A COMPETITIVE VERSUS NEGOTIATED SALE AND LAYING OUT THOSE TWO OPTIONS? ONE OF THE EXAMPLES I USED THAT THIS CONTAINS.
SURE, BUT I THINK WE DO DESCRIBE WHAT IS THE PROCESS AND WHAT IS PART OF WHAT, WHAT IS INCLUDED IN WHAT THEY'RE APPROVING. AND IT'S, YOU KNOW, UP TO THEM IF THEY WANT TO LOOK AT IT AND SAY, WELL, HEY, WE DON'T AGREE WITH THE COMPETITIVE SALE.
WE THINK IT SHOULD BE A NEGOTIATED SALE OR, YOU KNOW, ANOTHER I DON'T I'M NOT SURE WHAT ELSE THEY WOULD DISAGREE WITH IN THERE, BUT THEY ARE ABLE TO DO THAT. BECAUSE WHEN I WAS INITIALLY ASKING THE QUESTION, YOU KNOW, YOU SAID THEY EITHER APPROVE OR THEY DON'T APPROVE AND WE DON'T BUILD THE BUILDINGS.
SO THAT'S, THAT WAS MY REASON, BECAUSE IF THEY DON'T, JUST FOR THEM TO UNDERSTAND THAT THEY HAVE A CHOICE, NOT JUST BUILD OR DON'T BUILD, BUT THEY HAVE A CHOICE HOW THE METHOD IS SELECTED OR WHATEVER ELSE IS SELECTED.
SO THAT'S, I DON'T KNOW IF THAT MAKES SENSE WHAT I'M TRYING TO SAY.
THEY'RE NOT GOING TO, YOU KNOW, LIKE, RIGHT, YOU NEED TO KIND OF SPELL IT OUT FOR THEM, SO THEY UNDERSTAND WHAT IT IS THEY HAVE AN OPTION ON AND THEY DON'T HAVE AN OPTION ON. I THINK MUCH LIKE YOU'VE SEEN HERE TONIGHT, WHERE THERE'S A BREAKDOWN OF THE DIFFERENT TYPES OF SALES AND THE WAY THAT THE PROCESS WILL WORK.
THEN THEY'LL, AS YOU ALL ARE HERE TONIGHT, HAVE THE OPPORTUNITY TO ASK THOSE QUESTIONS, THE RELATIVE PROS AND CONS OF A COMPETITIVE VERSUS A NEGOTIATED SALE AND SOME OF THE QUESTIONS THAT YOU'VE ASKED HERE TONIGHT, I'M CERTAIN THE COUNCIL WILL HAVE THAT, THEY'RE GOING TO HAVE THAT OPPORTUNITY AS WELL.
BEYOND THAT, IN THE PACKET THAT YOU'VE RECEIVED AND THAT THEY'LL RECEIVE IN ANTICIPATION OF THE MEETING, WE'LL HAVE ALL OF THE VARIOUS DOCUMENTS THAT MR. CHOI HAS REFERENCED WITH REGARD TO THE OFFICIAL STATEMENTS AND OTHER ATTACHMENTS THAT HAVE BEEN WORKED ON OVER THE LAST SEVERAL MONTHS BY THE STAFF, THE MUNICIPAL ADVISORY GROUP, DISCLOSURE COUNSEL, BOND COUNSEL, EVERYBODY THAT'S BEEN WORKING BEHIND THE SCENES TO CREATE THIS PACKET. AND I WILL SAY ON SOME OF THESE, I MEAN, AT LEAST THIS PARTICULAR ISSUE, YOU KNOW, WE'VE BEEN WORKING ON THIS FOR SEVERAL YEARS NOW.
OH, IT'S ON PAGE SEVEN. I THINK WHAT I WAS ASKING FOR.
YES. OKAY. OKAY. SO THAT'S THE, THAT'S WHAT THEY'RE APPROVING IS PAGE SEVEN. YES. THAT CONCLUDES MY FORMAL PRESENTATION.
SO HAPPY TO ANSWER ANY MORE. ONE ADDITIONAL QUESTION.
WHAT IS OUR BOND RATING NOW AND WHAT'S THE PROCESS? I'M HAPPY TO REPORT THAT WE JUST TODAY IT WAS JUST THIS AFTERNOON RECEIVED, WE'VE BEEN WORKING WITH A STANDARD & POOR'S TO OBTAIN A RATING.
AND WE WERE ABLE TO OBTAIN A AA+. AA+? YES. OKAY.
THAT IS THE SAME RATING. IS THAT AN INCREASE OR DID WE HAVE THE AA?
[01:00:03]
IT'S THE SAME. WELL, THE LEASE REVENUE BONDS ARE MARKED AT A LOWER LEVEL, A LOWER RATING, BECAUSE IT IS A DIFFERENT CREDIT STRUCTURE AND THAT HAS A DOUBLE A RATING.SO THESE GOS HAVE A AA+, WHICH IS THE SAME. I THINK THEY CALL IT A ISSUER CREDIT RATING ICR.
THAT'S WHAT THE CITY HAS PREVIOUSLY RECEIVED.
AND WE RECEIVED THAT TODAY WITH A STABLE OUTLOOK.
IT WAS JUST TODAY. AND THEY AFFIRMED OUR LEASE REVENUE BOND RATING.
AS WELL AS AA, YES, EXACTLY. GOOD. DO YOU DO YOU KNOW WHAT THE CREDIT RATING IS FOR NEIGHBORING CITIES? IS THAT PUBLIC INFORMATION? THAT IS PUBLIC INFORMATION. MANHATTAN BEACH, I BELIEVE HAS A AAA CREDIT RATING.
LOS ANGELES IS AA-. AND OTHER CITIES HAVE OTHER RATINGS, AS YOU CAN IMAGINE, SANTA MONICA, I BELIEVE IS AT AA+ AT THIS POINT. SO, IT VARIES DEPENDING ON THE FINANCES OF THE CITY AND SO FORTH, HOW THEY'RE DOING. AND THAT WAS A LOT OF THE BASIS OF OUR DISCUSSION WITH STANDARD & POOR'S AND HAVING WORKING WITH THEM AND APPLYING FOR RATING.
HAVE YOU BEEN DRAWING ON YOUR RESERVES? HOW IS THE PENSION FUNDING GOING? AND THINGS OF THAT SORT. ANY OTHER QUESTIONS? SO FOR THE COMPETITIVE BONDS, CAN YOU DO COMPETITIVE BONDS AND THEN NEGOTIATED SALE.
IS THAT THE NORMAL PRACTICE JUST LIKE? IT'S ONE OR THE OTHER, BASICALLY.
ONE OR THE OTHER. IT'S DIGITAL, RIGHT? SO FOR EXAMPLE, IF I'M AND I KNOW THIS IS NOT SOMETHING YOU DO, BUT IF I HAVE A CONTRACT OUT AND THEN I GET THE CHEAPEST ONE OR THE SECOND CHEAPEST OFFER.
I CAN GO AND NEGOTIATE AND NEGOTIATE WITH THEM SOME ON SOME TERMS. I DON'T KNOW IF THAT CASE APPLIES HERE. THE PLATFORM AND THE STANDARDS FOR THE HOW COMPETITIVE SALES ARE RUN FOR THE MUNICIPAL BOND MARKET.
IT IS BASICALLY EVERYBODY ONLY HAS A BLIND BID.
AND AS LONG AS THEY MEET ALL OF THE CONDITIONS THAT IS IN SPECIFIED IN THE NOTICE OF SALE, WE ARE PICKING SHEERLY ONLY ON THAT RATE. SO AS RESULT OF THAT, THAT IS ALL IT IS.
AND WHAT WE OBSERVE IS THAT PEOPLE HOLD BACK.
IN FACT, THEY HOLD A LOT BACK. IN FACT, THEY HOLD REALLY FAR BACK AND REALLY FAR BACK TO START.
OVERALL, IT DOES FEEL LIKE JUST ASKING PEOPLE WITHOUT THE ABILITY TO KNOW WHAT ANYBODY ELSE IS DOING TO TAKE, GIVE, PUT YOUR BEST FOOT FORWARD. ONE SHOT IS TENDS TO RESULT IN THE BEST PERFORMANCE.
THAT'S WHAT IT IS. AND THERE'S A VARIETY OF LITERATURE THAT TALKS ABOUT HOW FOR GENERAL OBLIGATION BONDS THAT ARE HIGHLY RATED, WHICH A DOUBLE A PLUS CERTAINLY FITS IN THAT CATEGORY IS THAT THE COMPETITIVE SALE METHOD OF SALE IS THE MOST COST-EFFECTIVE WAY OF DOING IT.
THANK YOU. THANKS. ANY OTHER QUESTIONS? I'M JUST GONNA MAKE A COMMENT.
SO I THINK WHAT YOU WERE SAYING EARLIER IS THAT RATES ARE EXPECTED TO GO UP.
I THINK IT IS MUCH MORE THAT THE CITY NEEDS THE MONEY NOW AND WE CANNOT PREDICT.
IN THE ABSENCE OF, BUT AT THE SAME TIME, I WOULD SAY IN THE ABSENCE OF THE ABILITY FOR ME TO PREDICT THAT RATES WILL COME DOWN IN THE SHORT ORDER GIVEN THE FACT THAT THERE IS CONSTRUCTION INFLATION, GIVEN WHERE THE CITY IS AT THIS MOMENT IN TIME, IN TERMS OF ITS PROCESS FOR MOVING FORWARD WITH THE DESIGN, HAVING TO PAY ITS BILLS AND THINGS OF THAT SORT.
[01:05:05]
GIVEN WHERE THE CITY CAN BE IN TERMS OF ITS INVESTMENTS, TO LARGELY BE ABLE TO COVER ANY BORROWED AMOUNTS, THAT IT MAKES A LOT OF SENSE TO DO THE ISSUANCE NOW, GIVEN THOSE FACTORS.BUT I WOULD NOT CHARACTERIZE IT AS I'M PREDICTING RATES ARE GOING UP, UNFORTUNATELY.
IT'S A SUBTLE DIFFERENCE, BUT IT IS A LITTLE BIT OF A DIFFERENCE.
ANYTHING ELSE? THANK YOU. THANKS. THANK YOU VERY MUCH.
CAN WE MOVE ON TO THE NEXT AGENDA ITEM? I'LL TAKE PUBLIC COMMENT FIRST.
OH, AND JACOB, WE SHOULD VOTE TO RECEIVE AND FILE THE PRESENTATION.
YES, I WILL NEED A MOTION TO RECEIVE AND FILE THE PRESENTATION.
I MOVE, WE RECEIVE AND FILE. SECOND. MOTION APPROVED.
AYE. ALL IN FAVOR? ALL IN FAVOR? AYE. AYE. GREAT.
NOW WE GO ON TO THE. OKAY, SO NEXT UP IS J.3.
THANK YOU, MR. CHAIRMAN. LADIES AND GENTLEMEN.
I'M EUGENE SOLOMAN REDONDO BEACH, CITY TREASURER.
WHAT WE'RE BRINGING TO YOU TONIGHT IS OUR ANNUAL UPDATE OF OUR INVESTMENT POLICY.
I'M JUST GOING TO MAKE ONE QUICK NOTE FOR HOUSEKEEPING FOR YOU ALL.
IF YOU'RE NEWER, YOU HAVE SOME BUTTONS THERE ON THE DAIS.
ONE SAYS PRESENT AND ONE SAYS PC. IF YOU HIT THE PRESENT BUTTON, THEN YOU'LL BE ABLE TO SEE WHAT'S APPEARING ON THE SCREEN BEHIND YOU, SO YOU'LL BE ABLE TO FOLLOW ALONG WITH THE PRESENTATIONS.
IT TAKES A LITTLE MINUTE, SO JUST GIVE IT A HARD PUSH AND YOU'LL BE READY TO GO.
THANK YOU FOR YOUR TIME TONIGHT. WE'RE OUR INVESTMENT POLICY.
WE BRING THIS TO YOU ONCE A YEAR, AT LEAST ONCE A YEAR.
WE CAN BRING IT TO YOU MORE OFTEN. WE HAVE SOME CHANGES TO OUR INVESTMENT POLICY THIS YEAR.
I HAVE WITH ME TONIGHT OUR DEPUTY CHIEF, DEPUTY CITY TREASURER, SARAH MEACHAM.
WITH THE INVESTMENT POLICY CHANGES THAT WE'RE SUGGESTING THIS YEAR.
ONE PART OF IT OF A THREE-PRONGED VIEW, IN MY OPINION, IS A CLEANUP, WE'RE TRYING TO REMOVE SOME EXPOSITION AND MORE ALIGN OURSELVES WITH GOVERNMENT CODE GOVERNMENT CODE SECTION THAT CONTROLS FOR ALL OF US.
AND COMMISSIONER ALLEN KNOWS THIS VERY WELL IS 53600 AND IT'S EXCEEDING NUMBERS.
THE SECOND PART, THAT IS A KEY TO WHAT WE'RE BRINGING TO YOU TONIGHT IS THE ADDITION OF AN INVESTMENT OPTION, WHICH IS ABS ASSET BACKED SECURITIES. AND THE THIRD PART OF THE PRONG THAT WE'RE PRESENTING TO YOU TONIGHT TIES INTO THE PRESENTATION.
YOU'VE JUST SEEN WHERE WE'RE MAKING A TACTICAL ADJUSTMENT TO OUR ABILITIES WITHIN OUR INVESTMENT POLICY TO INVEST, MEASURE FP FUNDS AS THEY BECOME AVAILABLE. AND WE'LL GO INTO SOME MORE DETAIL ABOUT THAT AS WE GO THROUGH THE PRESENTATION.
SHE SERVED AS A PROGRAM ADMINISTRATOR FOR THE CALIFORNIA ASSET MANAGEMENT PROGRAM CAMP, WHICH YOU'RE GOING TO HEAR A LOT MORE ABOUT IN THE BEGINNING FROM 2017 TO 2023, AND GREW THEIR POOL ASSETS BY 15 BILLION AND LAUNCHED CAMPS TERM PRODUCTS IN 2023.
SARAH VOLUNTEERS FOR OUR CALIFORNIA PUBLIC FINANCE COMMUNITY AS A PUBLIC REVIEWER OF CMTA, WHICH IS THE CALIFORNIA MUNICIPAL TREASURERS ASSOCIATION INVESTMENT POLICY CERTIFICATION COMMITTEE.
SO WE'RE VERY LUCKY TO HAVE SARAH WORKING ON OUR INVESTMENT POLICIES. AND AS TREASURER, INVESTMENT EXPERT ON THE CF, CSMFOS PROFESSIONAL STANDARDS COMMUNITY COMMITTEE.
SO I'M GOING TO TURN THIS OVER TO SARAH AND SHE'LL GO THROUGH THIS PRESENTATION.
SARAH. THANK YOU. THAT'S A LOT OF ACRONYMS. SO AS TREASURER SOLOMAN MENTIONED OUR 2026 REVIEW FOCUSED ON UPDATES TO THE POLICY TO ALLOW FOR US TO USE THE POLICY AS THE TOOL FOR MANAGING THE MEASURE FP BOND ISSUE.
[01:10:01]
SO ALL OF THE BOND DOCUMENTS ARE GOING TO REFER BACK TO THE POLICY AS THE GOVERNING DOCUMENT FOR THE INVESTMENTS FOR THE BOND PROCEEDS.WE HAVE MADE SOME CHANGES TO THE POLICY. I ADDED A SECTION THAT ADDRESSES JUST BONDS.
AND IT JUST GIVES US THE FLEXIBILITY THAT WE NEED TO MANAGE THE BOND PROCEEDS IN AN APPROPRIATE WAY AND SORT OF SEPARATE PERMISSIONS FOR BOND PROCEEDS FROM THE OPERATING FUNDS. I THINK I'LL TALK MORE ABOUT THOSE SPECIFICS ON ANOTHER PAGE.
WE'VE INCORPORATED SOME UPDATES TO THE CALIFORNIA GOVERNMENT CODE. THERE ARE ALMOST ANNUALLY OMNIBUS BILLS THAT HAPPEN GET SIGNED AROUND OCTOBER, BECOME LAW JANUARY 1ST, AND THEY UPDATE VARIOUS THINGS IN THE CODE.
SOMETIMES THEY'RE BIGGER, SOMETIMES THEY'RE SMALLER. THIS YEAR, ONE OF THE ONES WAS AN EXTENSION OF THE MATURITY OF COMMERCIAL PAPER, JUST AS AN EXAMPLE, AGAIN, KIND OF A MINOR THING BECAUSE IT'S ALREADY EXISTING PERMITTED INVESTMENT.
WE ALSO MODERNIZE THE LANGUAGE TO BETTER ALIGN WITH THE CALIFORNIA GOVERNMENT CODE.
MY SPECIFIC EXAMPLE OF THIS IS RELATED TO CREDIT RATING AGENCIES.
IN THE PAST, HISTORICALLY POLICIES USED TO MENTION S&P AND MOODY'S AND FITCH SPECIFICALLY, BUT CALIFORNIA GOVERNMENT CODE REFERS TO NRSROS.
AND I'LL DEFINE THAT IN A MOMENT. AND SO WE'RE JUST GOING WITH THE BROAD LANGUAGE THAT MATCHES CODE.
MY PERSONAL PHILOSOPHY IS THAT IF YOU USE CODE LANGUAGE, YOU AVOID INTERPRETATION DIFFERENCES BETWEEN OUR POLICY AND CODE WHERE THEY DON'T NEED TO EXIST. SO THESE ARE THE SPECIFIC CHANGES THAT WE MADE TO HELP WITH MANAGING THE MEASURE FP BOND PROCEEDS.
SO THAT SECTION I ADDED 14.Q. ADDRESSES INVESTMENT OF BOND PROCEEDS ONLY.
PERMITTED INVESTMENTS FOR BOND PROCEEDS ARE SLIGHTLY DIFFERENT.
THERE IS 53601 I BELIEVE M THAT RELIEVES BOND PROCEEDS OF FOLLOWING 53601 ESSENTIALLY, SO YOU DON'T HAVE TO FOLLOW THEIR SPECIFIC LIST OF PERMITTED INVESTMENTS. SO THAT'S REALLY HELPFUL.
I BELIEVE THE PERCENTAGE LIMITS ON THE CASH MANAGEMENT TOOL.
SO LEAF CAMP AND MONEY MARKET FUNDS THERE IS A STATUTORY 20% LIMIT ON MONEY MARKET FUNDS.
WE HAVE PUT A LIMIT ON OURSELVES FOR CAMP AND LAIF HAS SOME LIMITS.
IT WILL BE 100% CASH. AND I DON'T WANT TO BE IN VIOLATION OF THE POLICY JUST BECAUSE OF THE, YOU KNOW, TECHNICALITY. SO THAT'S HELPFUL. I ALSO ADDED THAT RESERVE FUNDS WILL NOT HAVE TO FOLLOW THE MAXIMUM MATURITY LIMITS OF THE POLICY BECAUSE RESERVE FUNDS ARE NO LONGER MATCHING A LONGER LIABILITY TO BACK UP A SECURITY FOR A BOND.
GO BONDS DON'T NECESSARILY HAVE RESERVE FUNDS, SO THIS IS NOT AN ISSUE FOR MEASURE FP, BUT MORE THINKING AHEAD AND SORT OF ANY ISSUE THAT WE MIGHT COME UP AGAINST. SARAH, COULD YOU DISCUSS THAT A LITTLE BIT MORE? YEAH. THE, AS I UNDERSTAND IT, THE REASON FOR A FIVE YEAR MAX IN THE PORTFOLIO THAT THE TREASURER HAS MANAGED FOREVER IS THAT LONGER THAN THAT INTEREST RATE CHANGES, PARTICULARLY INTEREST RATE INCREASES, WOULD RESULT IN IN A DECREASED VALUE OF THE PROCEEDS. I DON'T UNDERSTAND WHY WE WOULD HAVE A DIFFERENT POLICY FOR THE BOND PROCEEDS, WHICH ARE, ARE GOING TO BE AROUND FOR ONLY THREE YEARS, SO.
SO A RESERVE FUND IS ACTUALLY SECURITY ON THE BOND PAYMENTS.
SO IT'S SECURITY FOR THE INVESTORS NOT ON IT'S NOT FOR THE PROCEEDS THAT WE'RE SPENDING.
IF YOU HAVE A RESERVE FUND ATTACHED TO A BOND ISSUE, IT'S LIKE AN INSURANCE POLICY BASICALLY, IT'S EXTRA MONEY THAT YOU HAVE TO SET ASIDE THAT YOU HAVE TO KEEP AT A CERTAIN VALUATION THAT JUST PROVIDES EXTRA BACKUP FOR PAYMENTS TO THE INVESTORS.
I'M NOT FOLLOWING YOU AT ALL. SO THEY'RE CALLED DEBT SERVICE RESERVE FUNDS.
AND IT'S JUST ANOTHER TYPE OF USE OF FUNDS OF BOND PROCEEDS THAT BUT YOU MAY BE REQUIRED FOR CERTAIN TYPE OF BOND ISSUANCES, NOT GO. AND SO IT'S THERE AGAIN TO MATCH THE LIABILITY OF NEEDING TO PAY BACK THE INVESTORS. SO IT'S A, IT'S AN ASSET MATCHING A LONGER LIABILITY.
IT'S NOT AN ASSET FOR THE CONSTRUCTION. BUT, OKAY, STILL NOT FOLLOWING YOU.
WE'RE TALKING ABOUT THE INVESTMENT OF THE $93.5 MILLION BOND ISSUE, RIGHT? ADDING RESERVE FUNDS IN IS NOT FOR MEASURE FP, IT'S SORT OF A BIGGER CONCEPTUAL ISSUE OF INVESTING BOND PROCEEDS.
YOU'LL, EXCUSE ME IF I STILL DON'T EXACTLY FOLLOW YOU.
[01:15:03]
YOU'RE, YOU'RE ASKING YOU'RE SAYING IN THIS POLICY CHANGE THAT YOU'RE NOT GOING, YOU'RE INCREASING THE MAXIMUM MATURITY LIMIT FOR THE INVESTMENT OF THE $93.5 MILLION, RIGHT? IT'S NOT RELATED TO MEASURE FP BECAUSE MEASURE FP DOESN'T HAVE RESERVE FUNDS.SO THIS IS FOR SOME FUTURE HYPOTHETICAL BOND ISSUE THAT MAY HAVE A RESERVE FUND, WHERE IT WOULD BE MORE APPROPRIATE TO INVEST THE FUNDS IN THE RESERVE FUND, POTENTIALLY LONGER TERM, SO THAT THEY ALIGN WITH THE POTENTIAL LIABILITY OF PAYING BACK THE INVESTORS.
ON A GO BOND THE INSURANCE POLICY OR THE SECURITY IS THE ASSESSED VALUE OF THE PROPERTY TAXES.
SO GENERAL OBLIGATION BONDS DON'T HAVE A RESERVE FUND BECAUSE ESSENTIALLY THAT RESERVE OR THAT INSURANCE POLICY IS ATTACHED TO THE SECURITY OF THE PROPERTY TAXES. YEAH. IT'S JUST A FEATURE OF CERTAIN TYPES OF BOND ISSUES. OKAY, LET ME ASK YOU THIS QUESTION. HOW ARE YOU GOING TO INVEST THE $83.5 MILLION UNTIL WE USE IT? WHAT KIND OF ASSETS WILL YOU INVEST THAT IN? THE PLAN FOR MEASURE FP, VERY BROADLY, BECAUSE WE DON'T HAVE A DRAW SCHEDULE YET IS TO MATCH INVESTMENTS TO THE DRAW SCHEDULE, ONCE WE GET ONE. HOPEFULLY THAT ONLY SHOULD GO OUT THREE YEARS.
SO THE CONSTRUCTION PROCEEDS WILL ONLY BE INVESTED I ANTICIPATE OUT TO 36 MONTHS.
OKAY. CERTAINLY, YOU KNOW, A THIRD PROBABLY IN THE FIRST YEAR BETWEEN INVESTMENTS AND LIQUIDITY VEHICLES, AND THEN THE REMAINDER WILL BE LADDERED IN, I IMAGINE TREASURIES AND AGENCIES.
I DON'T KNOW THAT WE'RE GOING TO PLAN TO. USE CREDIT FOR THE INVESTMENT OF THE BOND PROCEEDS.
OKAY, I MISUNDERSTOOD WHAT THAT NEXT TO LAST BULLET MEANT THEN.
OKAY. WELL, HAVE WE SATISFIED YOU? ARE YOU? OKAY/ THANK YOU.
AND THEN I ADDED PERMISSION FOR US TO USE INVESTMENT CONTRACTS IF WE THINK THOSE ARE APPROPRIATE IN, AGAIN, FUTURE BOND ISSUES. I DON'T HAVE ANY PLANS TO USE THEM FOR MEASURE FP.
SO JUST AGAIN, SORT OF THINKING ABOUT FUTURE OPTIONS WE MIGHT NEED FOR FUTURE BOND ISSUES.
ANY OTHER QUESTIONS ON THIS PAGE? UPDATES TO THE AUTHORIZED INVESTMENTS.
SO INCORPORATING ADDITIONAL CRITERIA FROM CODE.
I JUST LIKE TO SPECIFY IN THE POLICY. IT JUST GIVES THE RULES AROUND SEEKING THAT PERMISSION.
CLARIFYING THAT WE ARE APPLYING PERCENTAGE LIMITS AND CREDIT MINIMUMS AT THE TIME OF PURCHASE.
THIS HAS ALWAYS BEEN THE APPROACH, BUT I JUST WANTED TO MAKE SURE IT WAS CLEAR.
THIS IS HOW CODE APPLIES THESE SPECIFICALLY. WE UPDATED THE LANGUAGE REGARDING HANDLING OF SUBSEQUENT CHANGES OF ALLOCATION PERCENTAGES OR CREDIT RATINGS THAT HAVE FALLEN BELOW THE MINIMUM. THE LANGUAGE THAT WAS IN THE POLICY BEFORE SORT OF FORCED OUR DEPARTMENT'S HAND.
AND THAT MAY OR MAY NOT BE THE RIGHT APPROACH.
YOU KNOW, HAVING A CORPORATE CREDIT GO OVER 5%, ESPECIALLY LIKE AFTER WE PURCHASE IT.
THAT'S NOT A, THAT'S NOT A COMPLIANCE ISSUE. WE WILL MONITOR IT.
IF WE THINK IT'S NOT DIVERSE ENOUGH, WE WILL, YOU KNOW, RECTIFY THAT.
IF A CREDIT RATING FALLS BELOW WHAT WE REQUIRE IN THE POLICY, WE WOULD ABSOLUTELY BE TAKING A VERY HARD LOOK AT THAT, PARTICULARLY PAIRED UP WITH OUR INVESTMENT ADVISOR, WHO DOES ALL THE CREDIT WORK BEHIND THOSE THINGS.
TO EXPAND ON THAT A LITTLE BIT. YOU MIGHT HAVE A CORPORATE THAT DROPS FROM AN A TO A BBB, AND IN THE CURRENT CODE, IT MIGHT COMPEL US TO GO AHEAD AND SELL THAT EVEN IF WE WERE SELLING IT AT A LOSS.
YEAH, WE WANT TO GO AHEAD AND ANALYZE THE APPROPRIATENESS OR HAVE THE OPPORTUNITY TO ANALYZE THE APPROPRIATENESS OF SELLING OUT OF THAT SECURITY AT THAT TIME AND MEASURING THAT AGAINST THE OTHER PROS AND CONS THAT MIGHT BE AVAILABLE.
SO WOULD IT MAKE SENSE TO SELL IT AND TAKE A LOSS AT THAT POINT? YOU WANT TO HAVE THE ABILITY TO ANALYZE THAT AND MAKE THE BEST DECISION.
DO YOU HAVE A RED LINE FOR THESE CHANGES? YES.
SURE. WE CAN SEND THAT TO YOU. YEAH. I CAN PROBABLY SEND IT AROUND.
I JUST WANT TO SAY I WILL NOT BE ABLE TO APPROVE AND NOTHING AGAINST ANYTHING UNTIL I SEE WHAT THE LANGUAGE WAS AND HOW THE LANGUAGE WAS CHANGED. OKAY, WE'LL GET THAT TO YOU. WE APPLIED THE 5% OR A 5% ISSUER MAXIMUM ACROSS ALL CREDIT SECTORS.
[01:20:07]
SO, IT DOESN'T APPLY TO EVERY SECTOR. IT DOESN'T APPLY TO TREASURIES OR AGENCIES OR SUPER NATIONALS BECAUSE THOSE ARE ALL GOVERNMENTAL DEBT.BUT IT WILL APPLY TO CORPORATE NOTES, CDS, COMMERCIAL PAPER, ETC.
SO THIS IS WHAT THAT IS REALLY MEANT TO ACHIEVE.
SO IT HELPS WITH DIVERSIFICATION BECAUSE IT KIND OF FORCES YOU AGAIN TO KEEP LOOKING AROUND, IF YOU FILLED UP YOUR BUCKET ON ONE PARTICULAR ISSUER.
I MENTIONED THE CHANGE TO THE RATING AGENCY REFERENCES, YOU CAN SEE THAT HERE.
SO IT'S CHANGED NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS.
THAT INCLUDES S&P, MOODY'S AND FITCH, BUT THERE ARE OTHERS.
AND THIS IS AGAIN THE LANGUAGE THAT CODE USES.
I HAVE A QUESTION. YES. WHY WAS ASSET BACKED SECURITIES NOT INCLUDED BEFORE, BUT NOW IT'S PERMITTED? IT'S A RECOMMENDATION FROM OUR INVESTMENT ADVISOR THAT WE TOOK UNDER CONSIDERATION AND THEN DECIDED, YOU KNOW, THAT WE WERE COMFORTABLE ADDING IT. WE HAVE NOT INVESTED IN ANY ABS AND ADDING IT TO THE POLICY DOES NOT MEAN WE HAVE TO BUY IT, BUT IT MEANS IT'S AN OPTION. SO WE'RE JUST EXPANDING OUR OPTIONS GOING FORWARD.
BUT WE DON'T KNOW WHY THE ADVISOR RECOMMENDED IT.
IT'S AN ADDITIONAL VERY HIGH-QUALITY CORPORATE OPTION.
GENERALLY WHEN YOU BUY ASSET BACKED SECURITIES OF THE TYPE THAT WE WOULD BE LOOKING AT, WHICH WOULD BE AUTO LEASE OR LOAN BACK, MOST LIKELY FOR THE MOST PART, MAYBE SOME CREDIT CARD BACKED IS WHAT WE TALKED ABOUT WITH METERS SO FAR.
THE U.S. TREASURY IS NOT AAA RATED ANYMORE. SO IT'S KIND OF FUNNY WHEN YOU GO TO BUY TREASURIES AND SUPERNATIONALS OR SORRY, WHEN YOU GO TO BUY ABS AND SUPERNATIONALS, THOSE ARE AAA RATED, BUT YOUR TREASURIES AND YOUR AGENCIES AND, YOU KNOW, A LOT OF THE CORPORATES YOU BUY ARE NOT ANYMORE. SO IT'S A VERY HIGH QUALITY ASSET CLASS.
IT'S A COMPLEX ASSET CLASS. BUT, YOU KNOW, WE WOULD BE BUYING IT WITH OUR INVESTMENT PARTNER WHO WILL BE DOING ALL OF THE DUE DILIGENCE, YOU KNOW, REVIEWING THE PROGRAM DOCUMENTS AND ALL OF THE UNDERLYING RECEIVABLES.
THERE WERE LOTS OF AAA RATED ASSET BACKED SECURITIES THAT WENT DOWN THE TUBE A FEW YEARS AGO.
WHEN DID THE ASSET, WHEN DID THE ADVISOR RECOMMEND DROPPING ASSET BACKED FROM THE POSSIBLE LIST? HE RECOMMENDED ADDING IT. ADDING IT OR DROPPING IT? DROPPING IT. INITIALLY. WE'VE NEVER HAD IT BEFORE, I DON'T THINK IN THE POLICY.
WE DID NOT HAVE ASSET BACKED SECURITIES AS AN OPTION WITHIN THE INVESTMENT PORTFOLIO.
OKAY. IS THERE A LIMIT SET NOW? WITH REGARD TO PERCENTAGE? YEAH, 20% IS ALLOWED BY CODE AND WE MATCH THE CODE.
IF YOU WANTED TO MAKE THOSE SUGGESTIONS AND REFER THEM TO THE CITY COUNCIL, WE CAN DO THAT.
THE CITY COUNCIL IS THE ONE WHO APPROVES ARE THE ONES WHO APPROVE THE INVESTMENT POLICY.
SO WE'RE LOOKING FOR COMMENTS, SUGGESTIONS THAT YOU ALL MIGHT LIKE TO MAKE THAT WE CAN INCORPORATE AND PROVIDE TO COUNCIL BEYOND THAT, THEN TO RECEIVE AND FILE THIS ITEM. SO I'M NOT SAYING THAT THESE ARE BAD AT ALL.
THAT'S NOT WHAT I'M TRYING TO SAY. BUT I PERSONALLY NEED TO LOOK AT THE RED LINE AND SEE WHAT, HOW THE LANGUAGE WAS CHANGED. SO FOR EXAMPLE, THE ONE THAT ABILITY TO INVEST BEYOND FIVE YEARS WITH COUNCIL APPROVAL.
I WANT TO MAKE SURE THAT YOU CAN'T JUST GO TO COUNCIL AND SAY ONE DAY, OKAY, GIVE US THE, THE RIGHT TO BE ABLE TO INVEST OVER FIVE YEARS.
AND BECAUSE THIS IS HOW IT'S WORDED IN A POLICY, THEY'RE AUTOMATICALLY GOING TO SAY, OKAY, YOU CAN INVEST UP TO TEN YEARS. THERE NEEDS TO SOMEBODY NEEDS TO CHECK THE BUDGET, PUT LIMITS ON IT.
[01:25:04]
SO I WANT TO SEE THAT WHAT LANGUAGE WAS. THERE AREN'T LIMITS ON THAT IN THE POLICY, BUT IN CODE THERE'S A 90-DAY WAITING PERIOD AND THAT IS WRITTEN INTO THE POLICY.FOR THE APPROVAL, ONCE YOU GET APPROVAL FOR BEYOND FIVE YEARS, CODE REQUIRES A THREE-MONTH WAITING PERIOD, AND I BELIEVE THE INTENTION OF THAT IS SO THAT WE CAN'T SAY, HEY, WE HAVE A HOT INVESTMENT, THAT'S 10%. WE NEED TO BUY IT TODAY. CAN'T DO THAT.
AND THERE IS A LIST OF SPECIFIC INVESTMENT TYPES THAT ARE ALLOWED TO BE BEYOND FIVE YEARS, AND IT IS ONLY TREASURIES, AGENCIES, CDS, MAYBE IT'S REALLY JUST THE GOVERNMENT TYPES.
YOU CANNOT INVEST ANY OF THE CORPORATES BEYOND FIVE YEARS.
SO THEY HAVE A HARD AND FAST FINAL FIVE YEAR MATURITY IN THE CODE AND IN OUR POLICY.
AND THAT'S EXACTLY WHY I WANT TO SEE THE LANGUAGE.
YEAH. THE RED LINE. YEAH. AND THAT'S THE DUAL CONTROL.
THAT'S EXACTLY WHY. IT'S NOT JUST WITHIN THE DISCRETION OF THE TREASURER TO DO SO, IT WOULD HAVE TO GO TO COUNCIL, AND THEN THERE ARE THE OTHER GUIDELINES TO BE ON THERE. BUT REMEMBER, JUST BECAUSE COUNCIL APPROVES, THEY ARE NOT KNOWLEDGEABLE. THEY DEPEND ON YOU GUYS AND ON THE.
WE WOULD HAVE TO JUSTIFY. WE WOULD DEFINITELY HAVE TO JUSTIFY THAT.
YEAH. SO WE CAN WE CAN SEND YOU THE RED LINE.
IT'S UP TO YOU ALL TO MAKE A DECISION TONIGHT WHETHER OR NOT YOU WANT TO MAKE NO RECOMMENDATION OR TO HAVE THIS ITEM COME BACK AFTER YOU SEE THE RED LINE, MAKE RECOMMENDATIONS TONIGHT AND NOT HAVE THE RED LINE OR TO HAVE THE DISCUSSION ANOTHER TIME.
IT'S UP TO YOU ALL. I WOULD. I WOULD LIKE TO SEE THE RED LINE BEFORE.
ABSOLUTELY. IS THIS ALREADY SCHEDULED FOR WHEN YOU'RE GOING TO PRESENT IT TO COUNCIL? CITY COUNCIL? WE PRESENTED TO COUNCIL, BUT THIS IS A LIVING, BREATHING DOCUMENT.
SO IF YOU HAVE SUGGESTIONS AFTER THIS REVIEW, WE COME BACK AND VISIT WITH YOU ANOTHER TIME AFTER THE RED LINE WAS PRESENTED AND HAVE ANOTHER MEETING TO DISCUSS THIS. THOSE COMMENTS CAN GO TO COUNCIL.
WE COULD GO BACK TO COUNCIL AND SAY BUDGET AND FINANCE HAS RECOMMENDED X, Y, Z AND THEY ARE, IF YOU WOULD LIKE TO UPDATE THE INVESTMENT POLICY AND INCORPORATE THOSE COMMENTS AND HAVE THAT MEETING WITH THE COUNCIL.
AND I THINK WE'LL REALLY HAVE AN OPPORTUNITY TO DO THAT, BECAUSE PART OF WHAT WE'RE DOING FOR MEASURE FP IS WE ARE SEEKING TO ESTABLISH RELATIONSHIPS WITH BROKER DEALERS. I HAVE THAT INFORMATION COMING IN TO ME TOMORROW, AND WE'RE GOING TO HAVE TO TAKE THE POLICY BACK TO COUNCIL TO POPULATE THE BROKER DEALER LIST. SO WE WILL HAVE AN OPPORTUNITY TO INCORPORATE YOUR COMMENTS IN THE SHORT TERM, IF YOU KNOW. YEAH, I THINK THIS IS A GOOD TIME TO ELABORATE A LITTLE BIT ABOUT HOW OUR INVESTMENTS WORK.
SO WE HAVE CURRENTLY AN EXTERNAL INVESTMENT ADVISOR, THE MATHER GROUP, AND THEY ASSIST US IN THE MANAGEMENT OF OUR CORE PORTFOLIO. SO WE HAVE MONTHLY MEETINGS WITH THEM.
THEY PRESENT REPORTS TO US. EACH OF YOU IS GOING TO RECEIVE A MONTHLY EMAIL THAT'S GOING TO HAVE A MARKET UPDATE, ALONG WITH A DETAIL OF ALL OF OUR PORTFOLIO. SO EACH MONTH AS WE HAVE SECURITIES MATURING OR AS THINGS COME FORWARD, WE HAVE A MEETING WITH OUR INVESTMENT ADVISORY GROUP. WE SAY THERE'S $3 MILLION THAT ARE COMING TO BE MATURED THIS THIS MONTH, THE SECURITIES MATURING. WHAT WOULD WE LIKE TO GO AHEAD AND INVEST IN, HAVE THAT DISCUSSION WITH THEM AND HAVE THIS DISCUSSION INTERNALLY.
AND THEN WE WOULD ASK THEM FOR OPTIONS. WE MIGHT SAY, LET US LOOK AT A THREE YEAR CORPORATE.
MEASURE FP IS GOING TO BE DIFFERENT. THE MEASURE F P FUNDS ARE GOING TO BE HANDLED BY OUR TEAM.
SO AS THOSE FUNDS BECOME AVAILABLE AFTER THE SALE OF THE BOND.
THIS IS, THESE ARE PART OF THE REASONS WHY WE'RE MAKING THESE TACTICAL DECISIONS WITHIN OUR INVESTMENT POLICY, TO BE ABLE TO MANAGE THAT MONEY INTERNALLY WITH THE TREASURY TEAM, NOT WITH THE MATHER TEAM.
SO THERE'S TWO DIFFERENT TRACKS THAT ARE GOING TO BE LAID HERE WITH OUR INVESTMENT POLICY.
SO THE CITY COUNCIL HAS ALREADY APPROVED THIS? THEY DISCUSSED IT AND APPROVED IT AT THE CURRENT AS TO FORM.
BUT THAT IS, THIS IS A LIVING DOCUMENT. WE CAN BRING THEM YOUR COMMENTS.
[01:30:02]
WE CAN BRING. THERE'S GOING TO BE ADDITIONS, AS SARAH EXPLAINED IN THE NEAR FUTURE, TO HAVE THEM MAKE ADJUSTMENTS TO IT.WHY EVEN BOTHER TO BRING IT TO US IF THEY'VE ALREADY APPROVED IT? BUT AGAIN, IF IT CAN STILL BE CHANGED THIS IS NOT SOMETHING THAT'S DEFINITIVE.
THEN SHOULDN'T IT? YOU KNOW, SHOULDN'T IT BE THAT, WE LOOK AT IT FIRST BEFORE THE COUNCIL LOOKS AT IT? IDEALLY WE'RE GOING TO BRING THAT TO YOU IF YOU HAD YOUR MEETING AT THE END OF SEPTEMBER. WE BROUGHT IT SOONER BECAUSE OF THE IMPORTANCE OF THE CHANGES WITH REGARD TO THE MEASURE FP FUNDS. SO THE TIMING DIDN'T ALIGN FOR THAT.
WE EXPECT TO BE RECEIVING THOSE FUNDS HERE IN NOVEMBER, MAYBE BEFORE OUR NEXT MEETING.
AND WE WANTED TO HAVE TO MAKE SURE THAT WE WERE GOING TO BE IN COMPLIANCE WHEN THOSE FUNDS ARE RECEIVED, DEPENDING UPON WHAT WE DID WITH THEM. SO IT SOUNDS LIKE, DOES ANYONE ELSE HAVE ANY COMMENTS ON THIS? OR DO WE NEED A MOTION IF WE'RE GOING TO WAIT FOR THE RED LINE? SINCE IT'S ALREADY BEEN APPROVED TO, BUY THE COUNCIL THERE'S NO.
WE DON'T HAVE TO WORRY. AGAIN. YOU CAN MAKE SUGGESTIONS FOR CHANGES.
WOODHAM CAN PROBABLY, YOU KNOW, MAYBE EXPLAIN BETTER, BUT I THINK YOU CAN.
WE CAN WE HAVE TO RECEIVE AND FILE BECAUSE WE'VE RECEIVED IT. BUT WE CAN SAY THAT, YOU KNOW, ON REQUEST, WE WOULD LIKE TO HAVE THE RED LINES. YOU CAN CONTINUE THE ITEM IF YOU LIKE YOU CAN GO AHEAD AND CONTINUE THIS ITEM TO ANOTHER TO A FUTURE MEETING AFTER YOU'VE RECEIVED THE RED LINES TO PROVIDE COMMENTS TO THE COUNCIL.
I LIKE THAT MOTION TO CONTINUE. SORRY, JUST BEFORE YOUR MOTION, WE DO NEED TO TAKE PUBLIC COMMENT.
OKAY. I CAN WE, ANY PUBLIC COMMENTS? NO ONE PRESENT, NO ONE ON ZOOM AND NO ECOMMENTS.
OKAY. I WANT TO MAKE A COMMENT IF THAT'S OKAY.
IT'S JUST GIVING THEM FLEXIBILITY. SO I JUST WANT TO MAKE SURE EVERYBODY'S AWARE OF THAT, THAT IT'S NOT BINDING THEM TO ACTUALLY INVEST 20% OF THEIR FUNDS INTO ASSET BACKED, ASSET BACKED SECURITIES. IT JUST GIVES THEM THE FLEXIBILITY TO DO THOSE THINGS. SO AS LONG AS EVERYBODY UNDERSTANDS THAT, I THINK IT'LL BE HELPFUL TO VOTE. TO VOTE. SO I, OH, SORRY.
OKAY, A MOTION TO RECEIVE THE FILE? DO WE NEED IF THAT WAS OUR MOTION, DO WE HAVE DO WE NEED ANOTHER MOTION? THAT WAS OUR MOTION. IT'S JUST A TECHNICALITY.
I DON'T KNOW IF WE NEED TO DO THAT, IF WE ARE WE MADE A DIFFERENT MOTION.
YOU WOULD STILL RECEIVE AND FILE THE DOCUMENTS THAT WERE PRESENTED TONIGHT.
AND THEN YOUR NEXT MEETING WHEN YOU HAVE THE DISCUSSION.
SO WHAT HAPPENED? OKAY THEN. YOU WOULDN'T NEED TO RECEIVE A FILE WITH THEM AGAIN.
BECAUSE WE ALREADY GOT THEM. OKAY. WELL, I'M GOING TO SAY NO, I DON'T WANT TO RECEIVE, AND THEN WHAT HAPPENS? OR I DON'T WANT TO FILE. AND THEY'LL BRING IT BACK NEXT MEETING.
WELL, I MEAN, THAT'S WHAT I'M GOING TO SAY, SO OKAY.
SO RECEIVING AND, RECEIVING AND FILING THEN DOES NOT MEAN THAT WE APPROVE EVERYTHING.
CORRECT, IT DOES NOT PRECLUDE IT DOES NOT IT'S NOT AN APPROVAL OF THE INVESTMENT POLICY.
AND ONE THING THAT SHE REMINDED US OF IS TO MAKE SURE THAT WE ARE DOING THE RECEIVE AND FILE AND THEN SAID, WILL SEND IT OUT AFTER THE MEETING AS A BLUE FOLDER TO OFFICIALLY MAKE IT PART OF THE PUBLIC INFORMATION OF THE RECORD.
OKAY. WHAT HAPPENS IF WE SAY NO, WE DON'T RECEIVE ANY FILE.
AND THEN WHAT HAPPENS? WE'RE NOT FOLLOWING THE PROCESS.
OKAY. AND THEN WHAT HAPPENS? TECHNICALLY, I THINK AT SOME POINT IT BECOMES A VIOLATION OF THE BROWN ACT BECAUSE YOU'RE DISCUSSING ITEMS IN THE PUBLIC THAT WE'RE THEN NOT ASSOCIATED.
SO. SO ALL THIS IS GOING TO DO JUST TO JUST TO CLARIFY IS.
WELL I'M JUST CURIOUS WHAT HAPPENS IF. WHATEVER PRESENTATION MATERIALS WILL UPLOAD THEM. IT DOESN'T PRECLUDE YOU FROM SPEAKING ABOUT IT AGAIN OR OTHERWISE HAVING INPUT ON THIS ITEM. IS THIS ALWAYS THE ORDER OR SHOULD WE HAVE A MOTION TO RECEIVE THE FILE BEFORE THE PRESENTATION?
[01:35:01]
IT'S A GOOD QUESTION. I'LL PROBABLY HAVE TO CLARIFY THAT WITH THE CITY CLERK. I THINK THAT'S USUALLY TOWARDS THE END OF THE ITEM. DID YOU RECEIVE AND FILE? IF IN AN IDEAL WORLD, YOU WOULD HAVE MADE THE, ALL AS PART OF ONE MOTION, THAT THE MOTION WOULD HAVE BEEN TO RECEIVE AND FILE THIS ITEM AND CONTINUE THIS ITEM TO THE NEXT MEETING. OKAY, THAT MAKES SENSE. THERE YOU GO.BECAUSE YOU DON'T HAVE TWO MOTIONS FOR. OKAY.
OKAY. SO. AND YOU COULD, IF YOU WANTED TECHNICALLY, THEN SINCE THE MOTION SUCCEEDED TO CONTINUE THE ITEM, YOU CAN HAVE A MOTION TO RECONSIDER THAT MOTION SINCE IT PASSED MADE BY ONE OF THE MEMBERS WHO VOTED YES.
THEN YOU COULD RECONSIDER, HAVE A RECONSIDERATION OF THAT DECISION, VOTE ON THAT, AND THEN MAKE THE MOTION, MAKE THE MOTION ALL AT ONCE. IF YOU WANTED TO DO IT IN THE MOST TECHNICAL WAY POSSIBLE.
TO RECEIVE AND. OKAY. SO IS THERE A MOTION TO RECONSIDER? SO MOVED. SECOND. OKAY. ALL IN FAVOR? AYE. IS THERE A NEW MOTION? IF SOMEONE ELSE CAN SAY TO. MOVE THAT WE RECEIVE AND FILE AND.
CONTINUE THE ITEM. HAYE A DISCUSSION, YEAH. AND CONTINUE THE ITEM.
FOR FUTURE DISCUSSION. WITH RED LINES. WITH THE RED LINES.
WITH THE RED LINE. SECOND. ALL IN FAVOR? AYE.
MR. ROBERTS WILL BE IN FRONT OF US. PARLIAMENTARY PROCEDURE.
OKAY. NEXT ITEM J.4, DISCUSSION ON SENDING A LETTER REGARDING THE PROFESSIONAL SERVICES PROCUREMENT.
SO THAT IS WITH COMMISSIONER WOODHAM RIGHT NOW.
OKAY. THE TWO LETTERS. FROM LAST MEETING? YES.
YEAH, WE LOOKED AT THIS LETTER LAST TIME, AND, I'M OF THE VIEW THAT I LIKE BOTH LETTERS BOTH FOR CAPITAL IMPROVEMENT AND PROFESSIONAL SERVICES.
THE PROFESSIONAL SERVICES, CAPITAL IMPROVEMENT SUGGESTS REFERRING THIS TO STAFF FOR STAFF TO REVIEW IT AND COME BACK WITH RECOMMENDATIONS.
I WOULD SUGGEST THAT THAT'S WHAT WE SHOULD DO WITH BOTH OF THESE.
NO ONE, CITY COUNCIL IS NOT GOING TO APPROVE RECOMMENDATIONS THAT WE MAKE WITHOUT DOING SOME FURTHER ANALYSIS, AND THAT FURTHER ANALYSIS IS GOING TO BE REFERRED TO STAFF.
I WOULD SUGGEST THAT BE ADDED TO IT, AND THEN WE SEND IT.
OKAY. I'M NOT ARGUING. NO. ANY OTHER FEEDBACK? SO JUST TO CLARIFY, I THINK PROBABLY WE SHOULD DISCUSS THE PROCUREMENT ONE FIRST, FOLLOWED BY THE CAPITAL BECAUSE THERE ARE TWO SEPARATE ITEMS. YEAH. SO RIGHT NOW WE'RE ON THE PROFESSIONAL SERVICES PROCUREMENT LETTER ONLY.
AND THEN NEXT WE CAN MOVE ON TO THE. NOT NEXT WEEK, TODAY.
NO, NOT NEXT MEETING, BUT NEXT ITEM. I HAVE A QUESTION.
DO WE REALLY DO WE HAVE A DEFINITION OF WHAT DIFFERENTIATES A PROFESSIONAL SERVICE TYPE OF AGREEMENT WITH FROM ANOTHER TYPE OF AGREEMENT? WHAT SETS IT APART AS BEING A SPECIAL TYPE OF AGREEMENT.
PROFESSIONAL SERVICE VERSUS A CONTRACTUAL AGREEMENT.
RIGHT. VERSUS CAPITAL. THEY HAVE A DEFINITION FOR IT.
THEY KNOW WHAT IT IS. SO THERE IS ONE. OKAY. YEAH, THEY KNOW WHAT IT IS THERE, I'M SURE.
OKAY. BUT THEY MAY KNOW, BUT I DON'T. WE DO HAVE A DEFINITION.
I'LL LOOK IT UP WHILE THE COMMISSION CONTINUES.
YEAH, IF I COULD COMMENT. THE DEFINITION IS COVERING PRETTY MUCH PROFESSIONALS SUCH AS LAWYERS, ACCOUNTANTS, INVESTMENT ADVISORS, THOSE TYPES OF PROFESSIONALS. THERE'S A DEFINITION IN THE CODE.
WELL, VERSUS THE OTHER ONE IS CAPITAL LIKE PHYSICAL CAPITAL IMPROVEMENTS, RIGHT? WELL, THE DELIVERABLES THEN WOULD BE VERY DIFFERENT FROM A PROFESSIONAL SERVICES TYPE OF AGREEMENT VERSUS A, ANOTHER TYPE OF AGREEMENT. WELL, THE PROFESSIONAL WOULD BE THE CONSULTANTS.
GOTCHA. WELL, ONE QUESTION THAT I HAVE THEN IS THAT THERE'S AN ELEMENT, AN IMPORTANT ELEMENT IN THAT KIND OF PROCUREMENT THAT DEALS WITH A LEGACY KNOWLEDGE THAT SOME OF THE PAST CONTRACTORS WOULD HAVE.
AND I'M CONCERNED ABOUT NOT BEING ABLE TO TAKE THAT INTO CONSIDERATION.
[01:40:04]
IF YOU'VE GOT, SAY, A LEAST COST KIND OF A CRITERIA WHEN YOU'RE GOING OUT TO BID FOR SOMETHING.SO LET'S JUST SAY YOU'RE GOING OUT FOR PROFESSIONAL SERVICES, YOU NEED, IT'S THE AES ISSUE.
AND SO YOU GO OUT FOR BIDS. AND ONE OF THE BIDS THAT YOU MIGHT GET BACK WOULD BE FROM A PROFESSIONAL GROUP THAT HAS NO EXPERIENCE WHATSOEVER IN TERMS OF THE LEGACY KNOWLEDGE. AND BY, I WANT TO BE SURE THAT WE'RE NOT SETTING IN MOTION SOMETHING THAT THEN LIMITS THAT THAT DECISION FOR WHAT THE SELECTION PROCESS IS TO EXCLUDE PERHAPS A MORE EXPENSIVE BID, BUT FOR THAT GROUP THAT HAS THAT LEGACY KNOWLEDGE OF WHO DID WHAT TO WHO, AND.
I DON'T HAVE THE LETTER IN FRONT OF ME, BUT I THOUGHT I HAD A LANGUAGE THERE THAT SAID THE BEST VALUE, NOT THE BEST PRICE. IT DOESN'T. YEAH. IT DOESN'T.
YOUR LETTER DOESN'T REQUIRE THE LOWEST BID. NO, IT DOES.
YEAH, THAT THAT WAS MY CONCERN THAT THAT WE DON'T INVALIDATE THAT LEGACY KNOWLEDGE FROM BEING A CONSIDERATION FOR THE PROFESSIONAL SERVICES. YES. I DON'T THINK IT PRECLUDES THAT.
OH. YEAH, TO SHOW CONSISTENCY, FAIRNESS AND FINANCIAL RESPONSIBILITY.
IT'S REALLY JUST ABOUT GETTING QUOTES MORE THAN HAVING TO.
JUST SO THAT THEY KNOW THEY'RE GOING TO BE COMPARED TO OTHERS.
THEY'RE NOT, JUST WE'RE NOT GOING TO DO EVERYTHING THEY TELL US, THAT'S.
I THINK THE PROBLEM WITH THE DEFINITION WAS THAT CONSULTANTS IS A VERY BROAD TERM.
SO I DON'T KNOW IF THAT SHOULD BE NARROWLY TAILORED. I DON'T THINK THAT THE WORD ITSELF HAS, IS A PROBLEM. BUT THE GOOGLE, THE WAY IT SAYS IS IT'S PROFESSIONAL SERVICES CONTRACT GOVERNS INTELLECTUAL, SPECIALIZED TECHNICAL WORK PROVIDED BY AN INDEPENDENT EXPERT OR FIRM SUCH AS CONSULTING, AUDITING, SOFTWARE DEVELOPMENT. WHEREAS CONTRACTS, STANDARD EMPLOYMENT, CONSTRUCTION, GENERAL VENDOR AGREEMENTS HANDLE DIFFERENT OPERATIONAL LABOR OR TRANSACTIONAL RELATIONSHIPS. THAT'S, I DON'T, THE CITY DOESN'T HAVE A PROBLEM WITH DEFINING THE TYPES OF CONTRACTS.
I DON'T THINK WE SHOULD SPEND OUR TIME ON THAT.
THEY KNOW WHAT THE DIFFERENCE IS BETWEEN THE TWO.
ANY OTHER COMMENTS OR SHOULD WE MOVE ON TO PUBLIC? YEAH, PUBLIC. OKAY, OPEN. THAT WE CAN COME BACK TO US AGAIN.
OKAY, IS THERE ANY PUBLIC COMMENTS? YES. THANK YOU.
I SORT OF. IT SEEMS TO ME IN THE CODE IS VERY BROAD AS TO WHAT A PROFESSIONAL SERVICE IS, AND IT LEAVES IT UP TO THE PERSON WHO'S DOING THE PURCHASING, WHO MAKES THE PURCHASING DECISION.
AND I DON'T HAVE A PROBLEM WITH THE CITY PEOPLE USING THEIR JUDGMENT, BECAUSE I TRUST THE CITY'S PEOPLE TO JUDGE PROPERLY. WHAT I HAVE A PROBLEM WITH IS, IS THAT THERE ARE SO MANY THINGS CONNECTED WITH IT.
NUMBER ONE, YOU GET TO USE THE SAME GUY OVER AND OVER.
AND BECAUSE IT'S EASY AND THAT ACTUALLY HARMS THE COMMUNITY BECAUSE THERE ARE OTHER PEOPLE PERHAPS IN THIS PROFESSION WHO COULD BENEFIT FROM HAVING A CONTRACT AND THE CITY COULD BENEFIT FROM HAVING A CONTRACT.
YOU ALSO GET TO THE POINT WHERE THE CONTRACT HAS LED TO THE SAME GUY OVER AND OVER AND OVER AGAIN, AND WHAT YOU TEND TO FIND IS BALLOONING OF THE HOURLY RATE OR THE PRICE.
SO THAT'S WHY PROCUREMENT IN GENERAL, COMPANIES DO COMPETITIVE BIDDING OR PROPOSING FOR THEIR ALL THEIR CONTRACTS. THE OTHER THING THAT'S NEEDED HERE IS A SOLE SOURCE JUSTIFICATION.
IF YOU DECIDE TO GO WITH JOE THE ACCOUNTANT OR THE LAWYER DEFINE IN A SHORT STATEMENT DOESN'T HAVE TO BE COMPLICATED BY THIS PERSON'S EXPERTISE IS THE SOUL.
THIS PERSON OWNS THE SOUL EXPERTISE, SOLELY OWNS THE EXPERTISE THAT YOU NEED.
THOSE ARE THE ONLY THINGS THAT I THINK WOULD BE PROPER PROCUREMENT FOR THE CITY TO JUST BLANKET, YOU KNOW, ALLOW ANYBODY IN THE CITY WHO CAN CONTRACT FOR SERVICES TO CHOOSE A GUY BECAUSE HE SAYS HE'S A LAWYER.
[01:45:07]
WHAT HAVE YOU OR HAPPENS TO BE A FRIEND OR WHAT HAVE YOU? I THINK THAT OPENS THE DOOR FOR ABUSE. THAT'S WHY I BROUGHT UP THE ITEM.THANK YOU. THANK YOU. THANK YOU. ANY ON, ANY OTHER PUBLIC COMMENTS? NO ONE ON ZOOM AND NO ECOMMENTS. THANKS. ANY MORE DISCUSSION? I JUST HAVE A QUESTION FOR THE COMMISSIONERS.
WHERE DID THE $50,000 FIGURE THRESHOLD COME FROM? WHAT ANALYSIS WAS DONE TO COME UP WITH THAT FIGURE? I LOOKED AT OTHER CITIES.
OKAY. THANK YOU. WELL, I WOULD ASSUME THEN IF IT GETS REFERRED TO STAFF, THEN THAT WOULD BE ONE OF THE ITEMS THAT THEY WOULD LOOK AT AND COME BACK WITH WHATEVER THEIR PERSONAL RECOMMENDATION WAS.
YES, YES. AND JUST TO CLARIFY THAT STATEMENT, AT THE END OF THE CIP LETTER IS A TWO LINER.
IT SAYS THE COMMISSION RESPECTFULLY RECOMMENDS THAT THE CITY COUNCIL DIRECT STAFF TO REVIEW THE CURRENT CIP PROCESS AND RETURN WITH PROPOSED POLICIES ADDRESSING THESE CONCERNS. THAT'S THE STATEMENT THAT I WAS SUGGESTING.
GO IN THE PROFESSIONAL SERVICES AS WELL OR SOMETHING SIMILAR TO THAT.
SO ONE OF THE RECOMMENDATIONS IS TO ADD A LINE AT THE END OF THE PROFESSIONAL SERVICE.
COPY. COPY AND PASTE THAT EXACTLY. WHAT, NEXT STEPS, I MEAN, THE NEXT STEPS WE, WE DELAYED THIS FROM LAST MONTH.
SO, SO. WE WANT TO LIKE. THE COMMISSION, I THINK YOU GUYS CAN YOU WANTED TO APPROVE BY EVERYONE FORMALLY? YOU WON'T APPROVE IT WITH THAT EDIT? YES. OKAY.
IS THAT WHAT WE. I THINK THAT'S WHAT WE DISCUSSED LAST TIME, RIGHT? YEAH. COMMISSIONER WOODHAM, I THINK THAT'S WHAT YOU WANTED TO DO. COMMISSIONER, RIGHT.
OKAY, SO WE VOTE ON IT. SO. SEPARATELY FROM THE LETTERS.
AND THEN WELL, YOU CAN ALSO SEND IT DIRECTLY TO THE MAYOR AND COUNCIL MEMBERS.
YEAH, THAT'S, THAT WOULD BE THE RECOMMENDATION. THAT WOULD BE THE RECOMMENDATION. SO I MAKE A MOTION THAT THE CHAIR SENDS THIS LETTER TO MAYOR AND COUNCIL MEMBERS. OKAY, IS THERE A IS THERE A MOTION? THAT WAS MY SECOND. ALL IN FAVOR? AYE. MOTION PASSES.
OKAY, SO YOU'LL DO YOU HAVE THE LETTER? OR MAYBE COMMISSIONER WOODHAM WILL BE PASSING ALL THE INFORMATION TO YOU, I GUESS. YEAH. I'M SORRY. YOU WANT TO FORWARD THAT LETTER TO THE NEW CHAIR? ELECTRONIC COPY OF THE LETTER SO I CAN. AGAIN, YEAH.
OKAY. THANK YOU. AND WHAT I. AND I WILL GIVE YOU A SAMPLE OF HOW I DID IT BEFORE.
I'LL SEND IT TO YOU. ALL RIGHT. GREAT. I JUST NEED TO GET YOUR EMAIL ADDRESS.
I'LL GIVE THAT TO YOU. OKAY. YOU'RE GOING TO SEND, YOU'LL SEND THE LETTER TO HIM? NO, NO, YOU GO AHEAD WITH YOUR CHANGES. OKAY.
MAKE THE CHANGES AND THEN SEND IT TO HIM. YEAH.
OKAY. I'M GOING TO JUST SHOW HIM AN EXAMPLE OF WHAT I DID BEFORE.
OKAY. LIKE, YOU KNOW, LIKE A YEAR AGO. OKAY, MOVING ON.
SO THE NEXT ITEM IS THE, THE CIP PROCESS LETTER.
OH, I'M SO SORRY ABOUT J.4. THERE WAS A BLUE FOLDER ITEM FOR J.4.
I DON'T KNOW IF ANYONE WAS ABLE TO TAKE A LOOK AT IT.
I'M ONLY SAYING THIS NOW BECAUSE WE'RE ON J.4, BUT LATER WHEN WE GET TO K I'M GOING TO ASK FOR US TO BRING BACK THIS J.4 FOR ANOTHER MEETING. SO DO WE DO THAT NOW OR DO I WAIT.
OKAY. YEAH, WE, WE'LL WAIT TILL K BUT UNLESS ANYONE ELSE WANTS.
I WASN'T ABLE TO REVIEW IT. OKAY, OKAY, THEN LET'S BRING IT BACK.
GREAT. OKAY, WE'LL DO IT DURING THE. OKAY. SOUNDS GREAT.
THANK YOU. YEAH. OKAY, SO WE'RE ON J.5 THEN? YES.
OKAY. SO THIS IS NOW J.5 IS THE LETTER ON THE CAPITAL IMPROVEMENT PROGRAM PROCESS.
ANY COMMENTS ON THAT? JUST HAD A QUICK ONE HERE AGAIN.
[01:50:01]
IF IT, IT SPECIFIES HERE THE COMMISSION RECOMMENDS ESTABLISHING A POLICY UNDER WHICH CUMULATIVE CHANGE ORDERS GENERALLY MAY NOT EXCEED 10% OF THE ORIGINAL CONTRACT AMOUNT.I JUST DON'T KNOW WHERE THAT NUMBER CAME FROM.
OKAY. THAT'S TOTALLY FINE IF THEY CHANGE THAT NUMBER.
BUT THAT'S. I APPRECIATE THE REASON FOR DOING IT.
IT JUST IT WOULD, IT JUST CONCERNS ME, SAY YOU'VE GOT A ROAD CONSTRUCTION GOING ON.
YOU'VE GOT ALL THIS CONSTRUCTION EQUIPMENT OUT HERE FOR THE CONTRACTOR, AND NOW YOU'RE GOING TO GO OUT FOR BID TO SEE WHO'S GOING TO TAKE OUT THAT, YOU KNOW, THAT OTHER SECTION. SO I THINK YOU HAVE YOU KIND OF PUT IN THE WORDING OF THE LETTER, IT DOES SAY UNLESS SPECIFICALLY JUSTIFIED UNDER DEFINED CRITERIA.
SO MAYBE WHAT WOULD IT JUST MAKING IT'S MAKING IT CLEAR THAT THAT THERE ARE EXCEPTIONS TO THIS, RIGHT? YEAH. YEAH. I THINK THE OTHER THING IS YOU MAY WANT TO THINK ABOUT, OR SOMEBODY MAY WANT TO THINK ABOUT HAVING A THRESHOLD, LIKE A MINIMUM THRESHOLD, RIGHT? BECAUSE I DON'T THINK YOU WANT TO BE HAVING TO GO INTO CITY COUNCIL FOR CHANGE ORDERS THAT ARE $1,000.
10% IS A THING. SOME NUMBER, I DON'T KNOW WHAT THE THRESHOLD IS, BUT.
THEY DO HAVE A 10% THRESHOLD CURRENTLY. NO BUT WHAT IF THE WHAT IF THE CHANGE OR.
WHAT IF THE ORIGINAL CHANGE ORDER WAS, YOU KNOW, $1,000? I DON'T, I'M JUST SAYING JUST IN CASE. DOLLAR AMOUNT AS WELL AS A PERCENTAGE CHANGE.
LIKE THE DETAILS, WE CAN'T DICTATE THE DETAILS OR WE CAN'T JUST LIKE GIVING THEM A BIG PICTURE.
LIKE THE CRITERIA, JUST WONDERING ABOUT WHAT, WHAT MAGIC PERCENTAGE MIGHT BE APPROPRIATE FOR THIS, THIS CASE? SO THEY'RE THE EXPERTS. THEY CAN DO A BETTER JOB THAN WE DO.
REMEMBER THAT THESE CHANGE ORDERS AND THEY CAN PUT THAT IN PERSPECTIVE.
YEAH. I JUST WANTED TO MAKE ONE COMMENT ON THIS ONE, IF I MAY.
AND WE SENT OUT TO THE GROUP IN EXCEL, I BELIEVE COMMISSIONER JESTE GOT THIS 80% FROM COMPARING INITIAL APPROPRIATION, INITIAL APPROPRIATED AMOUNT TO FINAL PROJECT COST.
SO I JUST WANT TO EXPLAIN TO THIS GROUP WHAT THOSE TWO NUMBERS ARE.
THE INITIAL APPROPRIATED AMOUNT FREQUENTLY, IF NOT ALWAYS, IS A VERY INITIAL ATTEMPT AT EITHER THE FIRST PHASE OF A PROJECT OR IN SOME CASES IT'S JUST COUNCIL HAS $200,000 AND THEY REALLY WANT TO DO A PROJECT AND THEY SAY, YOU KNOW WHAT? WE DON'T KNOW IF THIS IS FEASIBLE.
THEN WE DO RESEARCH. IT'S A $2 MILLION PROJECT.
SO, IN SOME CASES THAT INITIAL APPROPRIATION IS $200,000 AND THE FINAL COST IS 2 MILLION.
AND THAT'S JUST, IT'S NOT THE CASE. SO, I JUST WANTED TO CLARIFY THAT BECAUSE I THINK THE 80% DOES NOT REFLECT CHANGE ORDERS. IT REFLECTS CHANGES TO THE PROJECT BUDGET SINCE THE INITIAL APPROPRIATION.
SO, IT SAYS 80% OF THE EXPENDITURES, NOT PROJECTS.
80% OF THE TOTAL. EXPENDITURES. TOTAL EXPENDITURES.
I WOULD HAVE TO LOOK AT THE SHEET AGAIN, BECAUSE I JUST LOOKED AT THE TOTAL PROJECT COST AND THE TOTAL CHANGE ORDER COST IN THOSE COLUMNS, AND THE TOTAL THE CHANGE ORDERS, THAT IS ABOUT 11% OF THAT TOTAL.
GOOD. COULD WE JUST MODIFY AND JUST SAY THAT A SUBSTANTIAL AMOUNT OF THE EXPENDITURES EXCEED THE BUDGET WITHOUT ACTUALLY PUTTING IN A PERCENTAGE? COMMISSIONER JESTE HAD DONE A LOT OF WORK, AND I DON'T WANT TO UNDERMINE ALL THE WORK HE'S DONE, BECAUSE AT THE TIME WE HAD SO MANY MEETINGS AND WE DISCUSSED IT AND HE EXPLAINED IT, AND WE ALL NODDED OUR HEADS, AND WE AGREE WITH HIM, BUT MY QUESTION IS, IS IT 80%?
[01:55:02]
IS IT 81%? IS IT 79%? I DON'T KNOW THAT THAT'S THE ISSUE.SO, I DON'T WANT TO UNDERMINE. 7 OR 8 HOURS, BUT WE NEED TO MAKE A DECISION.
BUT WHAT I WAS GOING TO SAY IS, WHEN I'M SAYING, BASED ON RESEARCH PRESENTED TO THE COMMISSION, WE CAN SAY BASED ON RESEARCH PRESENTED BY AT THE TIME COMMISSIONER JESTE TO THE COMMISSION.
CAN I COMMENT ON THAT? SO I ACTUALLY TOOK THE TIME TO RESEARCH THE LAST 12 MEETINGS.
SO I THINK IF THE COMMISSION WAS ANALYZING THE ENGINEER'S ESTIMATE, COMPARING THE ACTUAL CHANGE ORDERS, THAT WOULD MAKE SENSE BECAUSE APPROPRIATIONS, JUST HOW MUCH THE STATES ARE SETTING ASIDE FOR SOMETHING.
SO IF THEY SET ASIDE $200,000 FOR ONE MOMENT, THEN LATER THEY ADD ANOTHER 1.8 MILLION.
THEY'RE GOING TO SAY, WELL, COSTS SKYROCKETED, BUT THAT'S NOT WHAT'S ACTUALLY GOING ON HERE. SO THE FRAME OF REFERENCE SHOULD BE STARTING FROM THE ENGINEER'S ESTIMATE. AND THEN YOU SEE FROM THERE, DID IT CHANGE 10, 20 OR 30%? THAT'S WHAT I THOUGHT. THAT'S WHAT HE DID. MINE ALSO SUGGESTED THAT MAYBE THERE WAS SOME KIND OF CONFUSION THERE.
SO I WOULD JUST ENCOURAGE EVERYONE TO JUST THINK ABOUT THAT WHEN THEY'RE LOOKING AT THE DATA. BUT I.
OKAY, AGAIN, I FEEL STRONGLY ABOUT THE FACT THAT WE DON'T NEED TO COME UP WITH AN EXACT PERCENTAGE.
THAT'S THE BEST INTEREST OF JUST ALL OF US TO COME UP WITH A NUMBER.
I MEAN, TO COME UP WITH AN APPROACH HERE. I WILL SAY, WHEN I SEE THE NUMBERS MYSELF, IT WASN'T 80%, IT WAS MUCH LESS, BUT IN SOME CASES IT WAS GREATER THAN 10%.
SO THERE WAS A MIDDLE GROUND, BUT IT WAS I THINK 80% WAS OVERSHOOTING IT BASED OFF MY OWN ANALYSIS.
DID YOU DO IT FOR ALL OF THEM? IT MIGHT HAVE BEEN JUST FOR SOME, MAYBE HE DID THE CALCULATION FOR.
WHEN YOU WERE CALCULATING, DID YOU DO FOR ALL? BECAUSE I DID NOT CALCULATE MYSELF, SO I CAN'T.
ONE OF THE BLUE FOLDER ITEMS THAT WE RECEIVED SHOWED FOR FISCAL 25 ALL OF THE COMPLETED PROJECTS.
YEAH. AND IT SHOWED THE INITIAL AMOUNT THAT WAS APPROVED AND THE FINAL AMOUNT THAT WAS BOOKED.
EXCLUDING THAT ONE, THEY ALL AVERAGED ABOUT 76%.
SO I REMEMBER THAT DISCUSSION. YEAH. SORRY, JUST, I WANT TO GO BACK STEPHANIE, CAN WE JUST WALK THROUGH THIS ONE MORE TIME BECAUSE I THINK WE HAVE THE BLUE FOLDER ITEM ON. I HAVE IT PULLED UP HERE ON MY COMPUTER AND THERE'S DIFFERENT COLUMNS.
SO THE FIRST COLUMN IS INITIAL APPROPRIATED AMOUNT.
YEAH. SO WHAT IS THIS 80% IS, WAS THE CALCULATION THAT THE PREVIOUS COMMISSIONER BASED THIS 80% ON.
WHAT WHICH COLUMNS ARE WE TALKING ABOUT? SO I HAVE TO SAY, I'M NOT ENTIRELY SURE.
I WAS LOOKING AT IT AND TRYING TO FIGURE OUT WHERE THE 80% CAME FROM.
IT'S IT MOVES ON AND THEN THERE'S LIKE A BID, THERE'S THE BID SECTION.
THEN YOU HAVE THE ENGINEER'S ESTIMATE, THEN YOU HAVE SOME CHANGES. YOU HAVE THE ACTUAL CHANGE ORDERS. AND THEN. I SEE THAT. FINAL COST. YEAH. SO, IF YOU TAKE THAT FINAL COST NUMBER ON THE VERY FAR RIGHT, AND YOU COMPARE THAT TO THE INITIAL APPROPRIATION, THE INITIAL APPROPRIATION IS ABOUT IT'S ABOUT 84% OR SORRY THAT I SAID THAT INCORRECTLY.
BUT YEAH, THE DIFFERENCE IS ABOUT THAT 84%. AND YOUR POINT WAS THAT THE APPROPRIATION SHOULD NOT BE, IS NOT A, IS NOT A NUMBER THAT SHOULD BE COMPARED TO.
YES, EXACTLY. I MEAN, I THINK THAT'S WHAT. COMMISSIONER FAHMY YOU SAID THE SAME THING THAT OUR CAPITAL PROJECTS MANAGER HAD SAID, WHICH IS WHY WE PUT IN SOME OF THE ENGINEER'S ESTIMATES IN THERE TO REALLY GET TO.
THAT'S REALLY WHAT THE CITY THOUGHT IT WOULD COST AND WHAT OUR BEST ESTIMATE TOLD US IT WOULD COST.
AND THE CHANGE ORDERS MAKE MORE SENSE TO COMPARE AGAINST THAT.
SO MICHAEL, WHEN YOU DID THE COMPARISON, YOU DID BASED ON THE ENGINEER'S ESTIMATE COMPARED TO THE FINAL PROJECT COST? YEAH, SO I COMPLETELY IGNORED PAGES TWO THROUGH FOUR BECAUSE I REALIZED THAT THAT'S NOT A HELPFUL ANALYSIS TO DO IN THIS CASE.
YEAH. IT ACTUALLY STARTS ON PAGE, IF I RECALL CORRECTLY, LOOKING AT THIS YESTERDAY OR THIS MORNING, IT WAS AROUND PAGE FIVE THAT YOU ACTUALLY SEE THE ENGINEER'S ESTIMATE. AND THEN YOU KIND OF DO LIKE A MEANINGFUL COMPARISON.
BUT IF YOU LOOK AT JUST THE ANITA PCH PROJECT, YOU GUYS ARE THERE.
ENGINEER'S ESTIMATE WAS 280,000. AND THEN LATER ON THERE WAS 198,000 OF CHANGE ORDERS.
SO I MEAN, THAT IS A PRETTY BIG DIFFERENCE IN MY OPINION, BUT.
[02:00:10]
SO THAT WAS A BIG PART OF THE DISCUSSION, TOO.YEAH, I MEAN, IF YOU LOOK AT THE NEXT PROJECT, HIS ESTIMATE WAS 600,000 FOR THE CITYWIDE PROJECT.
AND THEN THE FINAL COST WAS 468,000. SO I MEAN, IT'S NOT MY PLACE TO SAY THE ENGINEER SHOULD GIVE BETTER ESTIMATES BECAUSE SOMETIMES IT COULD BE VERY DIFFICULT. BUT MAYBE IT'S LIKE A RANGE IS PROVIDED THEN MAYBE IT'LL BE MORE, LIKE IT'LL BE EASIER TO STAY WITHIN EXPECTATIONS.
AND THEN IF THERE'S A 10 OR 20% DEVIATION FROM THAT ESTIMATE, THEN MAYBE THERE COULD BE SOME KIND OF REVIEW PROCESS WHERE THE ENGINEER SAYS, YEAH, I DIDN'T COUNT FOR THIS BECAUSE OF A, B AND C REASON.
BUT I JUST WANT TO MAKE SURE THAT YOU GUYS WERE NOT LIKE LOOKING AT THE APPROPRIATIONS AND DOING SOME KIND OF COMPARISON BECAUSE. SO ON THE VERY BOTTOM, I'M, I HOPE I'M LOOKING AT THE TOTAL PROJECT SPENDING WAS 2 MILLION.
IS THAT THE. OH, THERE IS NO TOTAL APPROPRIATIONS.
THERE'S NO TOTAL FOR IT, RIGHT? NO. WHAT PAGE ARE YOU ON? I HOPE I'M LOOKING AT THE RIGHT NUMBER. YEAH.
OKAY. PAGE, STARTING ON PAGE FIVE. YEAH. THEY DIDN'T.
I'M NOT CALLING THEM DOWN. THERE'S A TOTAL FOR TOTAL PROJECT COST, THAT'S AN ON PAGE SIX.
I DON'T SEE ANY PAGES ON MINE. OH YOU GOT TO LOOK UP HERE.
SEE THAT? OH, THERE IT IS. YEAH. OKAY. THE VERY.
I THINK THAT'S PROBABLY THE MOST USEFUL INFORMATION, I THINK, TO.
I'M TRYING TO FIGURE OUT IF IT GOT CUT OFF OF THE PDF AND I REALLY.
OH IT DID. I REALLY APOLOGIZE FOR THIS PDF FORMAT.
WE HAVE TO USE IT TO SHARE THE AGENDA ITEMS AND IT IS VERY DIFFICULT WITH EXCEL.
BUT IF YOU LOOK STARTING ON PAGE EIGHT AT THE COMMENTS.
SO I MEAN, I THINK THE COMMISSION IS CORRECT.
AND IN ALL OF THOSE CASES, WE'VE HAD TO GO BACK TO COUNCIL TO EXPLAIN THE.
SHOULDN'T THE LETTER ACKNOWLEDGE WHAT STEPHANIE, THE POINT STEPHANIE MADE EARLIER AND THAT THERE ARE SOME PROJECTS WHERE A SMALL AMOUNT OF MONEY IS ALLOCATED INITIALLY JUST AS A PLACEHOLDER, AND THEN EVERYTHING FALLS INTO PLACE.
THAT'S NOT WHAT WE'RE TALKING ABOUT. WE'RE TALKING ABOUT A PROJECT THAT HAS THE BEST GUESS GOING INITIALLY, AND SUBSTANTIAL CHANGES ARE MADE TO THAT. THOSE ARE TWO TOTALLY DIFFERENT KINDS OF SITUATIONS, ONE OF WHICH WE'RE NOT CRITICIZING, THE OTHER OF WHICH WE'RE SAYING HAS THE POTENTIAL TO COST US MONEY.
SO IT'S THAT SECOND TYPE OF SITUATION THAT WE'RE REALLY CONCERNED ABOUT, AND WE SHOULD MAKE THE LETTER SHOULD MAKE CLEAR THAT WE RECOGNIZE THERE ARE AT LEAST TWO DIFFERENT KINDS OF SITUATIONS.
AND THERE'S ONE THAT WE'RE NOT CRITICIZING, ONE THAT WE ARE.
OKAY. AND I DON'T KNOW EXACTLY HOW TO SAY THAT, BUT THAT'S IF I'M A CITY COUNCILMAN AND I SEE THIS COMING IN AND I'M CRITICIZING EVERYTHING, AND I KNOW THAT THERE ARE SOME, I KNOW THE BACKGROUND OF SOME OF THESE, THEN I THE COMMENT IS MEANINGLESS. SO WE NEED TO MAKE THAT CLEAR.
OKAY. YOU CAN'T. DO YOU WANT TO ADD IT? YEAH, I CAN TAKE A STAB AT IT.
BECAUSE YOU MAY NOT LIKE THE CHANGES I MAKE. I'M OKAY WITH IT.
I MEAN, YOU'RE GOING TO JUST ADD A SENTENCE, I TRUST YOU.
I DON'T, I DON'T, I, I'M OKAY IF ANYONE ELSE IS, THAT'S FINE.
ANY ARE THERE ANY PUBLIC COMMENTS? WELL, I WAS JUST GOING TO SAY IF I COULD JUST ADD TWO THINGS.
SO IF YOU'RE MAKING, IF YOU'RE PURPOSELY UNDERBIDDING AND THEN YOU'RE DOING A WHOLE BUNCH OF CHANGE ORDERS, I FEEL LIKE THERE SHOULD BE SOME KIND OF REVIEW PROCESS WHERE THAT CONTRACTOR IS PENALIZED.
MAYBE LIKE YOU GIVE THEM SOME KIND OF GRADING SCALE, YOU KNOW, IF THEY ARE CONSTANTLY DOING SOMETHING TO CHANGE ORDERS, WE SHOULD NOT PRIORITIZE THAT VENDOR COMPARED TO SOMEBODY ELSE WHO'S NOT DOING AS MANY IN THAT WAY.
THEY'LL DISINCENTIVIZE CONTRACTORS FROM PURPOSELY UNDERBIDDING AND THEN DOING A WHOLE BUNCH OF CHANGE ORDERS LATER ON. SO I THINK THAT WAS A GREAT SUGGESTION MADE BACK IN DECEMBER, IF I'M NOT MISTAKEN. AND I DON'T SEE THERE WAS NO MENTION OF THAT IN THIS IN THIS LETTER THAT I THINK WOULD BE USEFUL TO INCORPORATE.
[02:05:08]
SO THAT WAS ONE THING THAT I NOTICED. THE SECOND THING THAT I NOTICED WAS LET ME TAKE A LOOK.IT WAS JUST KIND OF A NOTE. I BELIEVE THE THRESHOLD THERE WAS 50,000, IF I'M NOT MISTAKEN.
THEY'RE VERY DIFFERENT PRICES. WE'RE TALKING ABOUT MILLIONS VERSUS THOUSANDS.
RIGHT. I JUST WANT TO CLARIFY, IF THERE WAS THAT $50,000 THRESHOLD FOR THE CIPS AS WELL BEFORE THEY.
MAKE SENSE. OKAY, THAT'S IT FOR ME. THANK YOU.
SO IF YOU, I THINK THE REASON OF THIS 80% WAS THAT THIS IS A SERIOUS ISSUE.
I THINK THAT'S REALLY THE POINT THAT AT THE TIME WE WERE TRYING TO MAKE.
SO IF YOU WANT TO CHANGE THAT 80% TO SOMETHING ELSE, I MEAN, YOU WILL PROBABLY BE ABLE TO WORD IT BETTER, BUT THAT, YOU KNOW, IT DOESN'T HAVE TO SAY EIGHT ZERO, BUT IT'S STILL SIGNIFIES THAT THIS IS SOMETHING.
THE POINT THAT NEEDS TO BE MADE, THAT IT'S A SIGNIFICANT AMOUNT.
I THINK WE, I THINK THE 80% IS REFERRING TO THE NUMBER.
IF YOU TAKE THE TOTAL NUMBER OF PROJECTS ON HERE, WHICH THERE'S LIKE.
IS THAT THIS IS. MAYBE THERE'S 14 OR SOMETHING ON HERE, I DON'T KNOW, I CAN'T DO THE MATH.
AND OF THOSE 14, 80% OF THOSE 14 HAD HAD CHANGE ORDERS.
THAT'S HOW I READ THIS. IT'S NOT IT'S NOT REFERRING TO A DOLLAR AMOUNT.
WE COULD SIMPLY. EXPENDITURES. BACK AT MY NOTES.
THAT'S HOW I READ. I THINK THAT'S WHERE. WE COULD SIMPLY SAY THAT THAT A REVIEW OF PROJECTS FOR FISCAL 25 SHOWED THAT A SUBSTANTIAL NUMBER OF THOSE PROJECTS HAD PICK A FIGURE 50 TO 75% OF THEIR COST IN 50 TO 70, 50 TO 75% OF THE TOTAL COST WAS ADDED.
ATTRIBUTED TO CHANGE. SO SOME FIGURE LIKE THAT, WE'RE SIMPLY SHOWING THAT A LARGE NUMBER HAVE A LARGE PERCENTAGE OF WORK ORDERS CHANGE ORDERS THAT HAVE BEEN, HAVE BEEN PUT INTO PLACE.
AND WE DON'T NEED TO GO TO THE MAT OVER WHAT THAT NUMBER EXACTLY IS, BUT THERE WERE A SUBSTANTIAL NUMBER OF THEM THAT HAD A LARGE PERCENTAGE THAT WAS QUESTIONABLE OR POTENTIALLY QUESTIONABLE. YEAH, I THINK THAT'S A GOOD RESOLUTION.
YEAH. THAT'S FINE. JUST TO BE CLEAR, THERE'S ACTUALLY I JUST COUNT THERE'S ONLY EIGHT ON HERE.
I MEAN, ON PAGE FIVE AND SIX, I'M ASSUMING THIS IS COMPREHENSIVE.
THERE'S REALLY ONLY EIGHT ITEMS. SOME OF THEM HAVE SUBITEMS. AND OF THOSE EIGHT ITEMS SEVEN OF THEM HAD CHANGE ORDERS.
SO 7, 7, 8 HAD CHANGE ORDERS. I THINK THAT'S WHAT WE JUST CHANGE 80% TO, IT HAD APPROXIMATELY SIGNIFICANT OF EXPENDITURES. YEAH. I WANT TO CLARIFY, SO I BELIEVE IT WAS ALSO BACK IN LIKE NOVEMBER, DECEMBER WHERE ONE OF THE COMMISSIONERS REQUESTED LIKE 4 TO 5 YEARS OF DATA FOR VENDORS.
YEAH. WE WENT THROUGH THAT RATHER THAN THIS ONE.
YEAH, WELL, THE POINT, THE POINT CAN BE MADE WITHOUT GETTING FIVE YEARS OF DATA.
AND WE'VE HAD ENOUGH DATA TO SUGGEST THERE ARE POTENTIAL ISSUES AND WE DON'T.
WE DON'T NEED TO GO ANY FURTHER THAN THAT. YEAH.
HE WENT HE LOOKED AT ALL THE PROJECTS. HE WENT THROUGH ALL THE PROJECTS.
AND THAT'S WHY I DON'T WANT TO DIMINISH THE WORK THAT HE DID, BUT IF BUT IF YOU'RE COMFORTABLE CHANGING THE 80% TO, YOU KNOW, AWARD SIGNIFICANT OR SOMETHING SIMILAR.
POINT ACROSS. YEAH, I AGREE. SO, COMMISSIONER WOODHAM.
YOU'RE GOING TO MAKE THOSE CHANGES AND SEND IT TO OUR NEW CHAIR? I'M SORRY. AND SEND IT TO. TO THE NEW CHAIR. YOU'LL MAKE THOSE CHANGES AND MAKE THEM TO THE NEW CHAIR.
OKAY. SO I GUESS WHAT WE NEED TO DECIDE IS DO WE NEED TO REVIEW THIS LETTER AGAIN NEXT MEETING, OR ONCE I GET THE CHANGES FROM JERRY, THEN YOU'RE FINE WITH ME SENDING BOTH OF THESE LETTERS OUT? I'M FINE. IF, I MEAN, WE ONLY ASK FOR A COUPLE OF CHANGES.
I'M FINE, UNLESS EVERYONE ELSE IS UNCOMFORTABLE.
I TRUST JERRY. I'M COMFORTABLE DOING IT, BUT I HATE TO.
I MEAN, REVIEW AND IF. YOU CALLED ON THE CARPET LATER TO SAY, NO, WE DIDN'T WE DIDN'T REALLY CARE.
[02:10:05]
YOU'RE THE CHAIR, YOU MAKE THE JUDGMENT CALL. I TRUST THE CHAIR TO MAKE THE JUDGMENT CALL. OKAY.OKAY. BECAUSE THREE OF YOU CAN, LIKE, MAKE A SUBGROUP AND COMMUNICATE.
AS LONG AS IT'S NOT MORE THAN THREE, YOU'RE OKAY.
YEAH. IF YOU WANT TO. OKAY. PERFECT. AND THEN ONE FOR PUBLIC COMMENT BEFORE YOUR MOTION.
YEAH. ANY PUBLIC COMMENTS? NO ONE ON ZOOM, NO ECOMMENTS.
OKAY. SO THEN I GUESS WE MAKE A MOTION THEN TO.
MAKE A MOTION TO MAKE THE CHANGES, SEND IT TO THE CHAIR, AND THEN CHAIR SENDS IT TO US.
MAYOR AND COUNCIL. SECOND. SECOND. OKAY. ALL IN FAVOR? AYE. MOTION APPROVED. OKAY.
I LOST MY PLACE. OKAY, HERE WE GO. SO ITEM J.6.
OKAY. WE HAVE A MEETING SCHEDULED FOR NOVEMBER 12TH.
ANY DISCUSSION ON THAT, OR ARE WE GOING TO HAVE THE MEETING ON DECEMBER 12TH OR. NO. I'M SORRY, NOVEMBER 12TH? YES, SO THIS LAST ITEM WE PUT ON HERE I THINK WE DISCUSSED THIS A LITTLE BIT LAST MEETING, BUT THE PURPOSE IS TO IDENTIFY POTENTIAL TOPICS FOR THE NEXT MEETING AND THEN POTENTIALLY ALSO IDENTIFY IF A LARGE NUMBER OF COMMISSIONERS ARE NOT ABLE, GOING TO BE ABLE TO ATTEND, THEN POTENTIALLY MOVING THE MEETING OR CANCELING FOR LACK OF QUORUM.
AND THEN THE COMMISSION MEMBERS WOULD NOT BE CHARGED IN ABSENCE IF IT TURNS OUT THAT THERE'S NO ONE, NO ONE IS ABLE TO MAKE IT. SO THAT'S THE PURPOSE OF THIS ITEM.
I'LL SHARE FROM STAFF SIDE, WE'LL HAVE OUR 25-26 YEAR-END REPORT AND OUR Q1 2627 REPORT FOR YOU AT THE NOVEMBER MEETING. WE WERE SCHEDULED TO HAVE AT THIS MEETING, WE ARE STILL CLOSING THE BOOKS, SO WE'RE MOVING IT TO THE NEXT MEETING. ALSO SHORTEN THIS MEETING FOR EVERYONE, SO.
THANKFULLY, SO IT SOUNDS LIKE WE SHOULD HAVE A MEETING ON NOVEMBER 12TH, ASSUMING EVERYONE.
OKAY. SO DOES ANYONE HAVE ANY ISSUES WITH. I WANTED TO REMIND EVERYONE I'M LOOKING AT MY CALENDAR ON 11TH IS A VETERANS DAY, AND THEN IT'S OUR MEETING AND THEN IT'S THE WEEKEND.
SO ESPECIALLY PEOPLE WITH KIDS, JUST BE AWARE.
I DON'T HAVE ANY PLANS WITH THE KIDS YET, BUT.
ALL GOOD. I'M FINE. ALL RIGHT. DO WE NEED TO DO PUBLIC COMMENTS ON THIS ALSO? IS THIS IT? YEAH. SO J.4 ALSO IS GOING TO BE DISCUSSED AT THIS.
THE ONE THAT HE WROTE AND SENT US FROM THE BLUE FOLDER I THINK.
BUDGET AND FINANCE. WHEN WE GET TO K, RIGHT? WE'RE NOT ON K YET.
DISCUSSION POSSIBLE ACTION PERTAINING TO NOVEMBER.
YEAH. THIS WOULD BE A BETTER PLACE. OKAY. SO WHAT IS THIS TITLE CALLED? HANG ON. OH, THIS IS WAIT. OH, P-CARDS. LET'S NAME IT P-CARDS.
PURCHASING AND CONTRACT REVIEW. OKAY, SO THIS IS TO ADD AN AGENDA ITEM TO NEXT MEETING'S AGENDA.
OKAY. SO I THINK FIRST, DO WE NEED A MOTION TO HAVE TO SAY THAT THERE'S GOING, OKAY.
SO THERE'S GOING TO BE A MEETING ON NOVEMBER 12TH.
AND IS THERE A MOTION TO ADD AN AGENDA ITEM TO.
SORRY, PUBLIC COMMENT BEFORE THE MOTION? OKAY.
YEAH. NO, BECAUSE HE WANTS TO. YES. OKAY. YEAH.
YEAH. THE REASON I PUT THIS DOCUMENT IN THE BLUE FOLDER IS BECAUSE I WAS ABLE TO GET AN EXCEL DOCUMENT OF ALL OF THE PAYROLL, QUOTE UNQUOTE TRANSACTIONS.
AND I WAS ABLE TO DO SOME ANALYSIS OF IT AND ALSO TO DO SOME RESEARCH.
NOW, I DON'T SAY THAT EVERYTHING IN HERE IS BACKED AND EVERYTHING THAT YOU SHOULD MAKE POLICY ON IT.
WHAT I'M SAYING IS THESE ARE AREAS TO FOR YOU TO THINK ABOUT AND TO INVESTIGATE.
FOR EXAMPLE, THE USE OF THE CAL-CARD, WHICH JASMINE CALLS P-CARDS.
[02:15:04]
AND ALSO THERE ARE SEVERAL ITEMS, SEVERAL LARGE CONTRACTS THAT IT'S QUESTIONABLE WHAT THE, WHAT THE PROCESS WAS ON THE BASIS OF THOSE AWARDS AND ALSO ON EXTENSIONS OF THOSE CONTRACTS.SO THIS DOCUMENT IS JUST FOR YOU TO USE AS YOU SEE FIT.
THANK YOU. THANK YOU. THANKS. THANK YOU. WE'LL CALL IT A PURCHASING CARD.
WELL. SOMETHING OR WHATEVER YOU WANT TO NAME IT.
PROCUREMENT PROGRAMS. I THINK WHAT DO YOU WANT TO NAME IT? WELL, BEFORE WE DO THAT SO HE PROVIDED THIS TO US AS A, AS HAVE OTHER COMMISSIONERS HAD A CHANCE TO REVIEW THIS BLUE FOLDER ITEM? NO, BECAUSE WE'RE DISCUSSING IT. I HAVE NOT.
I SKIMMED THROUGH IT, BUT IT WAS A LOT OF DATA.
I WAS ACTUALLY VERY SURPRISED HOW MUCH DATA IT WAS, TO BE HONEST.
YEAH. SO I WAS PLEASED AND THANKFUL AND GRATEFUL.
YEAH. SO WHY DON'T WE WHY DON'T WE JUST REVIEW IT BETWEEN NOW AND THE NEXT MEETING? EVERYONE TAKE A CHANCE TO LOOK IT OVER. AND WE BRING IT BACK AS AN ITEM.
ANY QUESTIONS? YEAH. YEAH. OKAY. ALL RIGHT. SO WE'LL HAVE THIS AS A PURCHASING CARD.
JIM, WHAT TITLE DID YOU WANT? IT'S NOT JUST PURCHASING, I KNOW, THAT'S WHY I WANT.
WHAT TITLE DO YOU WANT TO GIVE IT? IT'S JUST CALLED PURCHASING A CONTRACT REVIEW.
OKAY. OKAY. OKAY. PURCHASING AND CONTRACT REVIEW.
WHATEVER YOU WANT TO. BLUE FOLDER ITEM. OKAY.
ALL RIGHT, CAN WE MOVE ON TO K OR IS THERE SOMETHING ELSE WE NEED? WE NEED TO APPROVE. DID YOU MAKE A MOTION? WE WANT TO HAVE THIS ITEM ON THE AGENDA.
BUT THIS IS THIS J.6 IS SOMETHING WE NEVER HAD BEFORE.
IT'S RELATIVELY NEW BECAUSE WE WERE WORRIED ABOUT ABSENCES AND THINGS OF THAT NATURE. JUST SAYING, DO WE HAVE ENOUGH TO TALK ABOUT THE ORDER? MAYBE WE CAN EVEN JUST DO IT INSIDE OF L. MAYBE WE DON'T NEED IT AS A SEPARATE TOPIC.
JUST WHEN WE'RE TALKING ABOUT L, WE DON'T HAVE ENOUGH OF AN AGENDA, WE PUNT IT TO THE NEXT TIME.
YEAH, WE JUST KEEP ADDING COMMISSIONER. COULD WE ADD SOMETHING TO THE NEXT AGENDA? COULD I PROPOSE SOMETHING? I THINK THAT'S IN L.
I THINK THAT'S WHAT WE JUST SAID. WELL WE CAN. OH, I DIDN'T EVEN SEE L.
I WAS JUST I WAS JUST LOOKING AT. OKAY, SO WHEN WE GET TO IT, THEN WE'LL TALK ABOUT THAT.
BECAUSE IT WAS ALL ADDED LATER. OKAY, GOOD. ALL RIGHT.
SO MY FAULT. DO WE HAVE TO DO WE HAVE TO DO ANYTHING BEFORE WE CAN MOVE ON FROM J.6.
MOTION TO CLOSE J.6. OKAY, MOTION. SECOND. ALL IN FAVOR? AYE. AYE. OKAY. NOW WE CAN GO TO. NOW WE CAN GO TO K STAFF LIAISON ITEMS.
[K. STAFF LIAISON ITEMS]
GOOD QUESTION. THE ONLY STAFF LIAISON ITEM I CAN THINK OF IS THAT WE DID HAVE A NEW COMMISSIONER TRAINING.IT WAS VERY COMPREHENSIVE. SAW SEVERAL PEOPLE THERE.
GREAT. THANK YOU. IS THAT DIFFERENT THAN THE ONE THAT WAS EMAILED OUT WITH? OH, DID THEY EMAIL IT OUT? YEAH, AFTER. I THINK.
GREAT. BOOK OR SOMETHING. THEN I HAVE NOTHING ELSE TO SEND YOU. I THINK IT WAS PART OF THE.
TRAINING. SCHEDULER. OH, GOT IT. OKAY. SHE HAD AN ATTACHMENT.
IT WAS VERY HELPFUL. I THINK THERE IS A NEW ATTENTION FROM COUNCIL FROM THE CITY MANAGER ON THESE.
AND SO JUST ENCOURAGE YOU TO REVIEW THOSE. THANK YOU.
[L. COMMISSION MEMBER ITEMS AND FUTURE COMMISSION AGENDA TOPICS]
THE RIGHT WAY. SO THIS IS WHERE THE. TO ADD FUTURE COMMISSION AGENDA TOPICS? YES. SO THIS IS WHERE THE. SO A MOTION TO ADD THE.SECOND. MOTION AND A SECOND. ALL IN FAVOR? AYE.
AYE. MOTION PASSES. THANK YOU. OKAY. AND, MICHAEL, YOU.
DO YOU HAVE. COMMISSIONER FAHMY YOU SAID YOU HAD A RECOMMENDATION.
YEAH. YEAH. THAT'S. ONE THING I THINK IS AN AREA OF INTEREST.
[02:20:02]
I WAS REVIEWING THE STRATEGIC PLAN, THE FIVE PRIORITIES.ONE OF THE BIGGEST ITEMS THAT I THINK MIGHT BE USEFUL FOR COUNCIL MEMBERS TO LOOK AT, AS WELL AS THIS COMMISSION TO LOOK INTO, IS UNDERPERFORMING ASSETS THAT THE CITY MIGHT HAVE.
LIKE, FOR EXAMPLE, LOOKING AT LEASES OF THE LIKE THE WATERFRONT AREA OR LOOKING AT THE REDONDO BEACH PERFORMING ARTS CENTER, THAT MIGHT NOT BE FULLY UTILIZED OR ANY OTHER CITY FACILITIES, I THINK IT MIGHT BE USEFUL TO KIND OF LOOK AT THOSE AND LOOK FOR REVENUE GENERATING OPPORTUNITIES FOR PROFITABILITY OPPORTUNITIES. I THINK THAT WOULD BE A REALLY BIG TICKET ITEM.
I DON'T KNOW IF YOU GUYS ARE INTERESTED IN DOING THAT KIND OF ANALYSIS. I, JUST ON THE WATERFRONT, I BELIEVE THAT'S MANAGED BY A SEPARATE DEPARTMENT, LIKE A, LIKE A SELF-CONTAINED DEPARTMENT THAT'S OUTSIDE OF.
BUT I DON'T KNOW THAT THAT PRECLUDES THE COMMISSION FROM, FOR EXAMPLE, RECOMMENDING THAT AS A TOPIC. I COULD DISCUSS WITH MY COLLEAGUES AND JUST MAKE SURE THERE ISN'T, YOU KNOW, I GUESS ANOTHER COMMISSION THAT WOULD BE MORE APPROPRIATE TO LOOK INTO IT. BUT I THINK AS A REVENUE GENERATOR, YOU KNOW, I THINK THAT FITS WITHIN THE FINANCE PURVIEW, BUT. I THINK IT'S A GOOD IDEA, BUT I JUST WANT TO CLARIFY BEFORE WE ADD IT IS ONE THERE'S ALREADY A HARBOR COMMISSION.
TWO, THE OTHER THING IS, SOUNDS LIKE WE HAVE A ROBUST AGENDA NEXT MEETING.
I. SO I DON'T KNOW HOW MUCH TIME YOU EXPECT TO SPEND ON YOUR ITEMS, BUT THAT MIGHT BE, YOU KNOW, IT MIGHT BE A BETTER AGENDA ITEM THAN FOR A LIGHTER, A LIGHTER MEETING RATHER THAN EXTENDING A LONG ONE IF WE GET THERE.
SO WE CAN ALWAYS PUT IT ON THE AGENDA, AND IF WE CAN GET TO IT, WE WILL TABLE IT FOR THE NEXT TIME.
OKAY, AND THAT WAY WE DON'T LOSE TRACK OF IT. YEAH.
THAT'S. YEAH, I THINK THE ISSUE TOO, IS THAT SOMETIMES THESE TAKE MORE THAN 2 OR 3 MEETINGS.
IT'D BE GOOD TO HAVE A CONVERSATION SO THAT WE CAN PREPARE FOR DECEMBER OR JANUARY OR FEBRUARY.
OKAY, GREAT. OKAY. MOTION TO ADD. WHAT DO YOU WANT TO CALL IT? MOTION TO ADD THE ANALYSIS OF THE UNDERUTILIZATION OF CITY ASSETS TO THE AGENDA.
SECOND. ALL IN FAVOR? AYE. MOTION PASSES. YAY.
THAT'S IT. ANYTHING ELSE? NO. OKAY. ANYONE. MOTION TO ADJOURN? MOTION TO ADJOURN. SECOND. SECOND. ALL IN FAVOR? AYE. MOTION PASSES. GOOD JOB. GOOD.
* This transcript was compiled from uncorrected Closed Captioning.