AND VERY WELL, WE MAY BEGIN THE SPECIAL BUDGET WORKSHOP 
          [1) CALL TO ORDER]
          [00:00:10]
NEED TO ORDER IT IS NOW SIX OR SIX P.M. 
          THE MEETING IS BEING HELD PURSUANT TO SECTION THREE OF THE EXECUTIVE ORDER N-2920 ISSUED BY GOVERNOR NEWSOME ON MARCH 17TH OF 2020 AND ALL MEMBERS ARE JOINING US THIS EVENING REMOTELY ZOOM WEBINAR. 
          WE WILL NOW CALL THIS MEETING TO ORDER. 
          IF YOU ARE ABLE, PLEASE STAND FOR A FLIGHT. 
          SALUTE THE STEPS 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. 
          RIGHT. OK, MOVING ON, SINCE WE HAVE NO ONE SCHEDULED THIS EVENING, WE WILL OBSERVE A MOMENT OF SILENCE FOR THE. 
          IT'S REYNA. ALL RIGHT, WE'LL MOVE ON TO THE ROLL CALL. 
          MADAM CLERK, WOULD YOU PLEASE CALL THE ROLL? WELL, GARCIA. PRESIDENT. 
          MAYOR PRO TEM REYNA. 
          COUNCIL MEMBER MARTINEZ HERE. 
          COUNCIL MEMBER CORTEZ. 
          PRESENT. 
          COUNCIL MEMBER PALLARES. 
          PALLARES HERE. THANK YOU, MADAM CLERK. 
          WE WILL MOVE ON TO ITEM 16 THAT THERE ARE NO PRESENTATIONS THIS EVENING, PUBLIC COMMENTS. 
          THIS PORTION OF THE MEETING VARIED FROM PERSONS DESIRING TO THE PRESS, THE COUNCIL AND INCLUDING THE COUNCIL ACTING AS THE GOVERNING BOARD FOR THESE AGENCY ON ANY MATTER, NOT ON THIS AGENDA AND OVER WHICH THE COUNCIL AND SUCCESSOR AGENCY HAS JURISDICTION. 
          AUDIENCE PARTICIPATION IS LIMITED TO TWO MINUTES PER SPEAKER. 
          IF YOU WOULD LIKE TO MAKE A VERBAL COMMENT USING ZOOM, PLEASE USE THE RAISED HAND FEATURE TO SPEAK. IF YOU'RE USING A TELEPHONE, PLEASE DIAL STAR NINE ON YOUR TELEPHONE KEYPAD AND YOU WILL BE CALLED UPON BY THE NUMBER YOU ARE CALLING FROM WHEN IT IS YOUR TURN TO SPEAK. 
          PLEASE STATE YOUR NAME FOR THE RECORD BEFORE YOU BEGIN YOUR COMMENTS. 
          ONCE YOUR TIME HAS EXPIRED, YOU WILL BE MUTED. 
          ANYONE WILL NOT PROVIDE YOU THEIR COMMENTS BY THE CLOSE OF PUBLIC COMMENT. 
          PORTION OF THIS MEETING CAN EMAIL THEIR COMMENTS TO THE CITY CLERK AT CITY CLERK OF CITY OF WASCO, DOUG AND THEIR COMMENTS WILL BE INCLUDED IN THE FINAL RECORD. 
          THIS COUNCIL IS VERY INTERESTED IN YOUR COMMENTS. 
          HOWEVER, DUE TO THE BROWN ACT REQUIREMENTS, NO ACTION MAY BE TAKEN AT THIS TIME. 
          SHOULD YOUR COMMENTS REQUIRE FURTHER CONSIDERATION BY THIS COUNCIL OR ITS SUCCESSOR AGENCY? THE ITEM WILL BE AGENDA FOR A REPORT AND DISCUSSED AT A FUTURE COUNCIL MEETING AT THIS TIME. DO WE HAVE ANY PUBLIC COMMENTS FROM THE PUBLIC? MADAM CLERK. GARCIA, NO COMMENTS FROM PUBLIC CITIZEN. 
          [7a. Review, Discuss, and Possible Minute actions regarding Budget and Fiscal Policies.
(Perez-Hernandez)]
VERY WELL, THANK YOU. ALL RIGHT, MOVING INTO NEW BUSINESS, OUR FIRST ITEM IS ITEM SEVEN, A REVIEW DISCUSSED AND ACTION REGARDING BUDGET AND FISCAL POLICY. 
          THIS EVENING, WE HAVE MR. AND. WHO'S GOING TO TAKE IT FIRST? GOOD EVENING, HONORABLE, CAN YOU VIEW MY SCREEN? YES, WONDERFUL. 
          OK. GOOD EVENING, HONORABLE MAYOR, MEMBER, COUNCIL MEMBERS AND ZOUMA ATTENDEES, THIS IS ONE OF THREE ITEMS THAT WE'LL BE DISCUSSING, THE FIRST BE OF THE BUDGET AND FISCAL POLICIES ON FEBRUARY TWENTY SEVEN TWENTY TWENTY ONE CITY COUNCIL COUNCIL GOAL SETTING. 
          AND THERE ARE THREE THREE OVERARCHING PRIORITIES THAT ARISE FROM THE GOAL SETTING. 
          ONE OF THEM WAS SUSTAINABLE INFRASTRUCTURE AND NEIGHBORLY AND SAFE COMMUNITIES. 
          AND LASTLY, EFFICIENT AND EFFECTIVE GOVERNMENT. 
          AND WHEN THESE PRESENTATION WHERE WE'RE AIMING FOR. 
          TO TOUCH ON ALL THREE ALL THREE OF THESE OVERARCHING THEMES, AND MR. BILL BILSTEIN, A FINANCIAL CONSULTANT, WAS WAS BROUGHT ON BOARD TO TO ASSIST WITH THESE WOULD BE DINHAM. SO WITHOUT FURTHER ADO, TURN IT OVER TO MR. STATLER. MR. SETTLOR. 
          [00:05:10]
LET ME CHECK TO SEE IF I CAN WAIT A MOMENT. 
          THANK YOU, MARY. OK, I THINK MAYBE THE BATON HAS BEEN PASSED TO ME. 
          I WASN'T QUITE SURE ABOUT THAT. 
          GOOD EVENING, MAYOR AND COUNCIL MEMBERS. 
          THIS FIRST ITEM OF THREE IS ABOUT A PROPOSED BUDGET IN FISCAL POLICIES. 
          AND I JUST WANT TO PROVIDE A LITTLE BACKGROUND ABOUT WHAT I HAVE HERE. 
          IN MY EXPERIENCE, IS THE POWER OF FISCAL POLICIES WHEN CLEARLY ARTICULATED AND MOST IMPORTANTLY FOLLOWED, BUDGET AND FISCAL POLICIES REALLY PROVIDED AN ESSENTIAL FOUNDATION FOR EFFECTIVE FINANCIAL DECISION MAKING IN BOTH THE LONG AND THE SHORT TERM. 
          NEXT SLIDE, PLEASE. AND IN MY EXPERIENCE, PHYSICAL HEALTH IS A LOT LIKE YOUR PERSONAL HEALTH. IT'S NOT WHERE YOU LIVE FOR, BUT IT'S HARD TO ENJOY YOUR LIFE WITHOUT. 
          YOU KNOW, THE GOOD LIFE, IF YOU WILL, IS ABOUT POSITIVE RELATIONSHIPS WITH THE PEOPLE THAT ARE IMPORTANT TO YOU. 
          COULD BE, YOU KNOW, A SENSE OF SATISFACTION. 
          YOU GET OUT OF OUT OF YOUR WORK. 
          THERE ARE A NUMBER OF THINGS THAT GO INTO WHAT WHAT'S IMPORTANT TO YOU IN YOUR LIFE. 
          BUT PHYSICAL HEALTH ALONE IS PROBABLY NOT GOING TO GIVE YOU THE LIFE YOU WANT. 
          AND JUST LIKE YOUR PERSONALITIES DON'T EXIST TO BE PHYSICALLY HEALTHY. 
          NOW, I KNOW THE FINANCIAL PERSON. 
          I'M PROBABLY NOT SUPPOSED TO ADMIT THIS, BUT, YOU KNOW, CITIES DON'T EXIST TO BE FINANCIALLY HEALTHY. 
          THEY EXIST TO MAKE COMMUNITIES BETTER PLACES TO LIVE, WORK AND PLAY. 
          BUT DOING THAT REQUIRES THE FINANCIAL CAPACITY SO YOU CAN LINK GOALS THAT ARE IMPORTANT FOR YOUR COMMUNITY WITH THE RESOURCES YOU NEED TO ACHIEVE THEM. 
          SO IN SHORT, PHYSICAL HEALTH IS NOT AN END IN ITSELF, BUT IT'S AN IMPORTANT PART OF THAT TOOLKIT IN ACHIEVING THOSE THINGS. 
          IN MY PERSONAL HEALTH, PHYSICAL HEALTH IS RARELY LOCK. 
          NEXT SLIDE, PLEASE. IN MY EXPERIENCE, THE BEST WAY TO ENSURE YOUR LONG TERM FISCAL HEALTH IS TO HAVE KEY POLICIES THAT YOU FOLLOW. 
          YOU KNOW, THE LOCAL ECONOMY, OF COURSE, IS IMPORTANT, BUT NO ONE IS IMMUNE FROM ECONOMIC DOWNTURNS. AND IN FACT, THE INTERESTING THING IS, IN THIS LATEST SORT OF FINANCIAL FISCAL CRISIS, TWO OF THE THINGS THAT I MIGHT HAVE MADE UP AS A POSTER CHILDREN FOR BEING PHYSICALLY STRONG COMMUNITIES, AND THAT'S MONTEREY AND SANTA MONICA, THEY'VE PROBABLY BEEN MORE AFFECTED MORE DEEPLY AND HAD TO MAKE DEEPER CUTS THAN JUST ABOUT ANY OTHER CITY IN THE STATE OF CALIFORNIA. 
          THEIR TOURIST ECONOMIES WERE PRETTY DEVASTATED. 
          SO NO ONE IS IMMUNE FROM ECONOMIC DOWNTURNS. 
          AND IN MY EXPERIENCE, AGAIN, YOU KNOW, OBVIOUSLY, IF YOU HAVE A LOT OF ECONOMIC STRENGTH, THAT'S GOING TO HELP YOU. 
          BUT THE MOST CRITICAL FEATURE IN HOW CITIES HAVE BEEN SUCCESSFUL IN GOING THROUGH THIS COVID-19 EXPERIENCE OR IN GOING THROUGH THE GREAT RECESSION WAS THEIR FISCAL POLICIES AND HOW THEY FOLLOWED THOSE THROUGH. 
          BECAUSE IF YOU THINK ABOUT IT, WHEN THE FISCAL CHALLENGES ARISE, YOU KNOW THE ROOTS FOR MOST LOCAL GOVERNMENTS, THOSE CHALLENGES DON'T THOSE ROOTS TAKE HOLD IN THE GOOD TIMES BECAUSE THINGS ARE GOOD, SO THEY MAKE COMMITMENTS THAT AREN'T SUSTAINABLE. 
          NEXT COURT, PLEASE, REALLY IN THE BAD TIMES, BECAUSE MOST AGENCIES FOLLOW THE FIRST RULE OF HOLES, AND THAT IS WHEN YOU FIND YOURSELF IN ONE STOP, STOP DIGGING. 
          SO, YOU KNOW, IN FISCAL POLICIES CAN BE BOTH PREVENTATIVE AND CURATIVE, CLEARLY ARTICULATED POLICY. 
          SO PROBLEMS ARISING IN THE GOOD TIMES AND THAT HELP RESPOND WHEN THE INEVITABLE BAD TIMES DO OCCUR. AND IN MY EXPERIENCE, THEY TAKE ON A MOMENTUM OF THEIR OWN. 
          THAT'S QUICKLY IN PASSING THAT THE TIME STAFF CHANGES, COUNCIL MEMBERS CHANGE BECAUSE THEY PROVIDE CONTINUITY AND OF COURSE, THEIR MOST POWERFUL THIRD PUT IN PLACE BEFORE THE NEED FOR THEM RISE NEXT SLIDE. 
          AND SO HER POLICIES CAN REALLY BE HELPFUL IF THEY BECOME THE NORTH STAR IN GUIDING THE PREPARATION OF PLANS, THEY HELP YOU MAKE TOUGH DECISIONS EASIER BECAUSE WHEN THOSE TOUGH DECISIONS ARISE, YOU'VE ALREADY ARTICULATED WHAT YOUR VALUES ARE AND WHAT YOU THINK, HOW YOU SHOULD HANDLE THIS TYPE OF CIRCUMSTANCE BEFORE THEY'RE PLACED UNDER STRESS. 
          BY BY THOSE CIRCUMSTANCES, YOU MIGHT STILL DO SOMETHING ELSE. 
          CAN'T REALLY ANTICIPATE EVERYTHING THAT'S GOING TO COME YOUR WAY. 
          YOU KNOW, TO A CERTAIN DEGREE, I CAN SAY RECESSIONS ARE PREDICTABLE. 
          ABOUT EVERY FIVE TO TEN YEARS YOU'RE GOING TO HAVE SOME KIND OF ECONOMIC DOWNTURN. 
          [00:10:01]
YOU KNOW, THE PANDEMIC WE'RE GOING THROUGH NOW, HOPEFULLY WE'RE WRAPPING UP SHORTLY. 
          WE HAVEN'T HAD ANYTHING LIKE THIS IN A HUNDRED YEARS. 
          SO NOT ALL FISCAL POLICY IS NOT EVERYTHING CAN BE ANTICIPATED BASED ON WHAT YOU YOU KNOW, WHAT WHAT WHAT'S ON YOUR RADAR. 
          BUT THEY STILL PROVIDE A PRETTY POWERFUL STARTING POINT FOR BUT FOR THIS THIS THING I COULDN'T ANTICIPATE. 
          WHAT DID I THINK I WOULD DO IN THIS SITUATION ARISES? AND YOU'RE FORTUNATE THE CITY ALREADY HAS A NUMBER OF FISCAL POLICIES IN PLACE. 
          YOU HAVE POLICIES TO DEAL WITH A BALANCED BUDGET. 
          YOU HAVE A POLICY THAT DEALS WITH INVESTMENTS, VERY SHORT DEBT MANAGEMENT POLICY THAT BASICALLY SAYS YOU NEED TO DEVELOP A COMPREHENSIVE ONE. 
          YOU HAVE RESERVE A MINIMUM FUND, BALANCE POLICIES, SOME DISCUSSION OF BUDGET PROCEDURES, REVENUES, THE NEED TO HAVE A FIVE YEAR VIP AND COMPETITIVE COMPENSATION. 
          NONETHELESS, PART OF MY WORK, SKO. 
          I'VE BEEN LOOKING AT THOSE ITEMS WAS, YOU KNOW, WHERE ARE MAYBE SOME CHANGES OR IMPROVEMENTS NECESSARY WHERE YOU HAVE QUALITY, WHERE DO WE NEED TO AUGMENT THEM AND WHERE DO WE MAYBE NEED TO ADOPT NEW POLICIES OR WHERE WE DON'T HAVE THEM? AND SO REALLY, THE FOCUS OF TAKING A LOOK AT THE POLICIES THAT ARE IN PLACE NOW AND WHAT WE NEED TO HAVE IN PLACE REALLY FOCUSED AT THIS TIME ON THOSE POLICIES THAT WILL BE MOST APPLICABLE AND MOST HELPFUL IN PREPARING THE PULMONARY. 
          BUT. RECONSIDERING IN LATE MAY, EARLY JUNE, SO REALLY FOCUSED ON FOUR ITEMS, WHAT IS THE PURPOSE OF THE BUDGET AND HOW CAN IT BEST BE ORGANIZED? HOW SHOULD WE BEST MANAGE REVENUES? WHAT SHOULD OUR RESERVE TARGETS BE? AND THEN HOW ARE WE GOING TO DO FINANCE REPORTING IN THE ADMINISTRATIVE BUDGET AFTER IT'S ADOPTED? AND THERE'S A FIFTH WHAT WE'RE GOING TO TAKE A LOOK AT TONIGHT, EVEN THOUGH IT DOESN'T DIRECTLY RELATE TO BUDGET DEVELOPMENT. 
          AND REALLY IMPORTANT TO POINT OUT THAT AT THIS POINT YOU DON'T HAVE ANY LONG TERM DEBT BONDED INDEBTEDNESS EITHER IN YOUR GENERAL FUND OR IN ANY OF YOUR OTHER FUNDS. 
          SO NORMALLY THIS WOULD BE A POLICY, GIVEN THOSE CIRCUMSTANCES THAT I MIGHT SUGGEST WE CAN ADDRESS LATER. 
          BUT IN THIS CASE, YOU HAVE FILED AN APPLICATION FOR 25 MILLION DOLLARS IN LOAN PROCEEDS FROM THE STATE WATER RESOURCES CONTROL BOARD. 
          AND AS THE FINAL PIECE OF YOUR FINANCIAL APPLICATION, THEY WANT TO SEE THAT YOU HAVE A DEBT MANAGEMENT POLICY. 
          SO THAT'S SORT OF BROUGHT UP ITS SENSE OF URGENCY. 
          AND IN THE POLICIES WE'RE GOING TO BE DISCUSSING THIS EVENING, THEY ARE ALL COVERED IN ONE WAY OR ANOTHER, PERHAPS GOING TO MAKE SOME SMALL LANGUAGE TWEAKS, KIND OF ORGANIZE THEM DIFFERENTLY. 
          I THINK IN ORDER TO MAKE THEM A LITTLE BIT CLEARER, AVOID SOME REDUNDANCY WITHIN YOUR EXISTING POLICIES. 
          THEY ADDRESS EVERYTHING THAT'S IN YOUR EXISTING POLICIES WITH TWO EXCEPTIONS. 
          YOU HAVE AN INVESTMENT POLICY IDENTIFIED IN YOUR BUDGET POLICIES AND YOU ALSO DEAL WITH THE CITY MANAGER'S CONTRACT AMENDMENT AUTHORITY. 
          I'M NOT GOING TO ADDRESS THOSE, ASSUMING I DON'T RECOMMEND ANY CHANGES TO THEM. 
          THEY'LL CERTAINLY BE REFLECTED IN THE FINAL POLICIES THAT ARE GOING TO BE IN THE BUDGET DOCUMENT, BUT I'M NOT GOING TO ADDRESS THOSE TONIGHT. 
          AND THERE'S FOUR OTHER POLICIES THAT ARE KIND OF, IN MY WORDS, QUOTE, TO HELP YOU ADDRESS USER FEE COST RECOVERY, CITY MANAGEMENT, PURCHASING AND HUMAN RESOURCES MANAGEMENT. 
          WE'RE GOING TO TAKE CARE OF THOSE AND ADDRESS THOSE OVER THE NEXT SEVERAL MONTHS. 
          BUT AGAIN, WE'RE DEALING WITH THE ONES THAT ARE REALLY THE MOST IMPORTANT, EVEN FOR BUDGET DEVELOPMENT PURPOSES OR BECAUSE OF YOUR LOAN APPLICATION TO THE STATE WATER RESOURCES CONTROL BOARD. 
          SO LET'S DEAL WITH THE FIRST OF THOSE POLICIES THAT'S JUST HAVING A BALANCED BUDGET. 
          SURPRISINGLY ENOUGH, MOST CITIES HAVE A BALANCED BUDGET POLICY. 
          YOU HAVE A BALANCED BUDGET POLICY. 
          THEY DON'T NECESSARILY DISCUSS WHAT WHAT THAT MEANS, WHAT COMPONENTS OF THE POLICY DO NEED TO BE IN BALANCE. 
          AND SO HERE ARE THE ELEMENTS OF THE PROPOSED BALANCED BUDGET POLICY, OPERATING REVENUES. 
          THEY NEED TO COVER YOUR OPERATING EXPENSES PLUS PLUS DEBT SERVICE. 
          SO WHEN WE WANT REVENUES AND EXPENDITURES TO BE IN BALANCE, THAT'S NOT NECESSARILY ALL REVENUES AND ALL THE EXPENDITURES, BUT CERTAINLY OPERATING REVENUES AND EXPENDITURES SHOULD BE IN BALANCE. AND YOU'RE ENDING FUND BALANCE SHOULD MEET YOUR MINIMUM TARGET GOALS. SO THAT MEANS THAT YOU CAN USE BEGINNING FUND BALANCE IN FUNDING THE BUDGET. 
          TOTAL EXPENDITURES COULD EXCEED REVENUES, BUT REALLY ONLY FOR CITY PROJECTS OR OTHER ONETIME USES. 
          IN SOME CASES, YOU MAY BE SETTING MONEY ASIDE FOR A COUPLE OF YEARS IN ORDER TO DO SOMETHING DOWN THE ROAD. 
          BUT IF YOU THINK ABOUT IT, YOUR POLICY WAS EXPENDITURES AND REVENUES ALWAYS NEED TO BE IN BALANCE. IF YOU SET MONEY ASIDE FOR A CAPITAL PROJECT A COUPLE OF YEARS DOWN THE ROAD WHEN THAT DAY CAME, YOU WOULDN'T BE ABLE TO SPEND THAT MONEY BECAUSE YOU'D BE USING MONEY YOU PURPOSELY SET ASIDE IN YOUR SAVINGS, BUT YOU WILL BE OUT OF BALANCE IN THAT 
          [00:15:01]
PARTICULAR YEAR. 
          SO THE IMPORTANT THING IS IF YOU ARE GOING TO USE FUND BALANCE IN YOUR BUDGET, IT SHOULD TYPICALLY BE FOR ONE TIME THINGS BECAUSE YOU HAVE ONE TIME SAVINGS THAT YOU'RE GOING TO BE APPLYING TO THAT. 
          IN TERMS OF THE BUDGET PURPOSE, REALLY THE FUNDAMENTAL OVERARCHING PURPOSE OF THE BUDGET IS TO LINK RESOURCES WITH GOALS AND RESULTS. 
          YOU'RE NOT SPENDING MONEY ON ITS OWN. 
          YOU'RE SPENDING MONEY TO ACHIEVE IMPORTANT COMMUNITY GOALS. 
          AND SO THAT'S THE FUNDAMENTAL PURPOSE. 
          AND TO DO THAT, WE THINK WE SHOULD DO FIVE THINGS. 
          FIRST OFF, IDENTIFY THOSE SERVICES THAT ARE ESSENTIAL FOR THE CITY. 
          ORGANIZE YOUR PROGRAMS. IN ORDER TO DO THAT, THE BUDGET SHOULD DESCRIBE WHAT THOSE ACTIVITIES ARE THAT YOU'RE GOING TO USE IN DELIVERING SERVICES. 
          AND IMPORTANTLY, THERE SHOULD BE OBJECTIVES THAT ARE BEING PROPOSED ABOUT HOW YOU'RE GOING TO IMPROVE SERVICE DELIVERY AND THEN TO KIND OF TIE THAT TOGETHER. 
          IF THESE ARE THE THINGS WE'RE GOING TO DO, WHAT ARE THE RESOURCES WE NEED IN ORDER TO ACCOMPLISH THE NEXT LOG? AND AGAIN, SINCE THE PURPOSE OF THE RESOURCES TO ACCOMPLISH THINGS PERIODICALLY, THE STATUS OF THOSE GOALS AND HOW WE'RE DOING AND ACHIEVING IMPORTANT OBJECTIVES, THAT NEEDS TO BE REPORTED TO THE COUNCIL ON AN ONGOING PERIODIC BASIS. 
          AND AGAIN, AT LEAST WE SHOULD STEP BACK AT LEAST EVERY SIX MONTHS AT MIDYEAR. 
          TAKE A LOOK AT HOW WE SEEM TO BE DOING. 
          HOW DOES THAT COMPARE WITH THE BUDGET WE ADOPTED AND WHAT TYPE OF AMENDMENTS ARE NECESSARY IN ORDER TO MAKE THOSE COURSE CHANGES? AND THIS IS THESE THREE ITEMS. THEY'RE ACTUALLY REALLY STRONG COMPONENTS, BUT THEY'RE IN YOUR EXISTING POLICY AND WE'RE JUST GOING TO BRING THOSE FORWARD. 
          AND THAT'S WHY WE NEED TO BE FOCUSED ON ADEQUATELY MAINTAINING EXISTING ASSETS. 
          WE WANT TO MAINTAIN AND KEEP A FIVE YEAR CAPITAL IMPROVEMENT PLAN, AND WE WANT TO CONTINUE A COMMITMENT TO CUSTOMER SERVICE AND PRODUCTIVITY IMPROVEMENTS. 
          AGAIN, THIS IS REALLY A CARRY FORWARD OF WHAT'S ALREADY IN YOUR POLICY. 
          AGAIN, YOU HAVE A POLICY ON REVENUE MANAGEMENT. 
          WE'RE KEEPING MOST OF THOSE ELEMENTS IN PLACE HERE. 
          BUT THE MOST FUNDAMENTAL, REALLY IMPORTANT REVENUE MANAGEMENT POLICY THAT YOU WANT TO USE CURRENT REVENUES FOR CURRENT USES AND ONE TIME REVENUES FOR ONE TIME PURPOSES. 
          NOW, THERE WILL BE TIMES WHEN YOU MAYBE NEED TO DEVIATE FROM THIS GUIDELINE A LITTLE BIT. 
          BUT CONCEPTUALLY, WHAT ONGOING REVENUES FOR ONGOING PURPOSES, ONE TIME, REVENUES FOR ONE TIME PURPOSES WANT TO AVOID EARMARKING GENERAL-PURPOSE REVENUES. 
          AND IF YOU DO, YOU DON'T HAVE ANY GENERAL PURPOSE EARMARKING, BY THE WAY. 
          BUT IF YOU DO, THEN YOU JUST WANT TO BE CLEAR ABOUT WHAT THAT IS. 
          YOU CURRENTLY HAVE A VERY GOOD MANAGEMENT POLICY AND REALLY IT'S AN IMPORTANT COMPONENT TO AVOID MAKING ONGOING COMMITMENTS WITH REVENUES BECAUSE YOU DON'T WANT TO BE STUCK IN A POSITION WHERE YOU FUNDED A SIGNIFICANT EXPANSION OF OPERATING PROGRAMS. THE GRANT GOES AWAY AND NOW YOU DON'T HAVE ANY RESOURCES TO ADDRESS THAT. 
          CURRENT POLICY IS ENTERPRISE FUNDS NEED TO FULLY PAY THEIR OWN WAY AND SO DO THE INTERNAL SERVICE FUND. SO MOST OF THIS IS A CARRY FORWARD OF THE EXISTING POLICIES. 
          SO LET'S TALK ABOUT RESERVES. 
          THIS IS REALLY ONE OF THE MOST IMPORTANT POLICY DECISIONS THAT YOU HAVE AND THE OTHER CITY, COBB. AND SO WHY DOES FUND BALANCE IMPORTANT? NEXT, PLEASE. REALLY DEALS WITH RESILIENCY. 
          WATCH HOW MUCH ABILITY YOU HAVE TO DEAL WITH ECONOMIC UNCERTAINTIES, WHETHER THAT'S LOCAL DISASTERS, NEW WIND ON OUR RADAR, PUBLIC HEALTH CRISES, DOWNTURNS IN THE ECONOMY AND REVENUE TAKE AWAY. AS YOU KNOW, OVER THE LAST 30 YEARS, THE STATE OF CALIFORNIA HAS BEEN THE GREAT THREAT, THE CITIES AND WHAT THEY MIGHT TAKE AWAY. 
          AND SO THERE CAN BE ECONOMIC UNCERTAINTY DRIVEN BY ANY NUMBER OF FACTORS. 
          AND THEN YOU ALSO WANT TO MAKE SURE YOU HAVE CONTINGENCY SET ASIDE FOR UNFORESEEN OPERATING OR CAPITAL NEEDS. 
          THINGS THAT WEREN'T ON YOUR RADAR NOW, BUT SURFACE LATER, UNFUNDED LIABILITIES YOU HAVE, AS WELL AS MANY, MANY, MANY OTHER CITIES IN THE STATE OF CALIFORNIA, UNFUNDED LIABILITIES. THEY CAN HELP DEAL WITH THAT AND MOST IMPORTANTLY, DEALING WITH CASH FLOW. 
          DURING THE YEAR WHEN YOU PUT THE BUDGET TOGETHER, REVENUES AND EXPENDITURES MAY BE IN BALANCE, BUT HOW YOU RECEIVE THAT MONEY DURING THE YEAR CAN BE LOPSIDED, CAN BE LUMPY. 
          AND IN YOUR CASE, IT CERTAINLY IS. 
          WE'RE TALKING ABOUT A LITTLE BIT MORE IN A SECOND. 
          BUT JUST TAKING A LOOK AT A HIGH LEVEL CASH FLOW ANALYSIS, A SIGNIFICANT PORTION OF YOUR REVENUES, ALMOST A THIRD ARE PROPERTY TAX RELATED. 
          AND YOU ONLY GET THOSE TWICE A YEAR IN BIG CHUNKS IN DECEMBER AND JUNE. 
          SO FOR THAT PORTION OF YOUR CITY, JUST BASED ON THOSE IMPORTANT REVENUES, YOU HAVE TO GO SIX MONTHS BEFORE YOU ACTUALLY RECEIVE THEM. 
          SO YOU WANT TO MAKE SURE YOU HAVE ADEQUATE RESERVES TO DEAL WITH THAT. 
          AND SO THERE ARE FIVE IMPORTANT COMPONENTS OF THE PROPOSED RESERVE POLICY. 
          YOUR CURRENT POLICY DEALS WITH HOW MUCH. 
          BUT HERE ARE SOME OTHER ISSUES THAT SHOULD BE THERE. 
          FIRST, MAKING SURE WE DECIDE WHAT THE RESERVE IS. 
          [00:20:03]
WE IDENTIFY WHEN IT'S APPROPRIATE TO USE THOSE RESERVES, PROVIDE A STRATEGY FOR RESTORING THEM IF YOU DO HAVE TO DRAW THEM DOWN AND PRESENT SOME GUIDELINES FOR HOW TO ACCOUNT FOR THE RESERVE. AND THEN THIS IS AN IMPORTANT ASPECT AND WE'LL BE APPLYING THIS REALLY TO ALL OF THE POLICIES. 
          IT ISN'T JUST IMPORTANT TO SET THE STANDARD. 
          YOU WANT TO KNOW HOW YOU'RE DOING COMPARED TO THAT POLICY STANDARD. 
          AND SO WE'RE GOING TO COMPARE THE ACTUAL COMPARED WITH THE PROPOSED TARGET, MASLON. 
          SO THE BIG QUESTION THAT MOST CITIES AND THIS IS GOING TO INCLUDE WASCO WHEN YOU GO TO SET THAT TARGET RESERVE. 
          WHAT'S THE RIGHT AMOUNT? AND THE SHORT ANSWER IS IT DEPENDS ON WHAT THE KEY AGENCIES WILL GO BACK TO THE NEXT ONE. 
          IT DEPENDS REALLY ON WHAT THE AGENCY'S CAPACITY IS FOR RISK AND WHAT ARE THE RISKS THAT YOU'RE FACING IN YOUR COMMUNITY. 
          SO LET'S GO TO THE NEXT ONE. 
          IT'S REALLY A RISK MANAGEMENT TOOL. 
          HOW MUCH CAN THINGS DIFFERENTLY THAN YOU THOUGHT THEY WOULD BEFORE? YOU HAVE TO TAKE CORRECTIVE ACTION AND IT CAN BE A BRIDGE TO THE FUTURE IF YOU KNOW YOU HAVE SOME SYSTEMIC BIG CHALLENGES. 
          HOW ARE YOU GOING TO GET THERE? BUT SO REALLY, LET'S TALK ABOUT THAT CAPACITY FOR RISK FOR JUST A MOMENT. 
          IF YOU HAVE A HIGH CAPACITY FOR RISK, THINGS GO BAD. 
          YOU'RE GOING TO CUT YOUR COST, YOUR PUBLIC SAFETY CONTRACT AND THINGS GO BAD. 
          YOU'RE GOING TO LAY OFF HALF YOUR EMPLOYEES AND YOU'LL DO THAT WITHIN A WEEK OR TWO. 
          YOU CAN HAVE A VERY SMALL FINE BALANCE BECAUSE YOU CAN YOU MAKE SIGNIFICANT, CATASTROPHIC IN SOME WAY CHANGES IN THE DROP OF A DIME IF YOUR CAPACITY FOR RISK IS A LITTLE BIT LOWER. NO, NO, NO, NO. 
          IF THINGS GO BADLY LIKE COVID-19, WE WANT TO HAVE A LITTLE MORE TIME TO DEAL WITH THAT. 
          IN FACT, MORE IMPORTANTLY, IF THESE ARE SORT OF ONETIME DOWNTURNS, MAYBE WE JUST WANT TO USE ONE TIME RESOURCES TO DEAL WITH THAT AND NOT MAKE SIGNIFICANT REDUCTIONS. 
          AND SO WHAT I'VE USED IN EVALUATING HOW WHAT THE FUND BALANCE AND THE GENERAL FUND SHOULD BE FOR WASCO IS USING THE ASSESSMENT METHODOLOGY THAT'S BEEN DEVELOPED BY THE GOVERNMENT FINANCE OFFICERS ASSOCIATION AND ITS RESOURCE BASE. 
          IT LOOKS AT REALLY EIGHT KINDS OF RISK THAT YOU MIGHT NEED FUND BALANCE FOR. 
          WHAT'S YOUR VULNERABILITY TO EXTREME EVENTS AND PUBLIC SAFETY? YOU KNOW, HISTORICALLY, THIS HAS BEEN SO WHAT'S YOUR RISK OF FLOOD FIRE OR EARTHQUAKE RIOTS? UNFORTUNATELY, REALLY KIND OF ANOTHER ONE OF THE WORSE OVER THE LAST YEAR. 
          AND OF COURSE, THAT'S HOW DO WE RESPOND TO PUBLIC HEALTH CRISES? NOT REALLY ON OUR RADAR IN THE LAST 10, 15, 20, 30 YEARS AND HAVE BEEN ON OUR RADAR FOR 100 YEARS, WHICH MEANS THEY HAVEN'T BEEN ON OUR RADAR AT ALL. 
          WHAT'S YOUR REVENUE SOURCE? STABILITY. DO YOU HAVE A WIDE, DIVERSE RANGE OF REVENUES OR ARE YOU ONLY DEPENDENT ON A FEW? AND EVEN WITHIN THAT, ARE YOU DEPENDENT ON A FEW MAJOR TAX PAYERS? AND THE INDICATION HERE WOULD BE THE GREATER STABILITY YOU HAVE, THE MORE DIVERSITY YOU HAVE, THEN THE LESS RISK THOSE REVENUES ARE. 
          WHAT IS THE TOTAL? ON THE OTHER HAND, IF YOU'RE DEPENDENT ON A FEW LIMITED SOURCES AND THEY HAVE THE POTENTIAL TO BE UNSTABLE, THEN YOU NEED RESERVES TO DEAL WITH THAT. 
          AND THE FLIPSIDE OF THAT IS WHAT KIND OF EXPENDITURE VOLATILITY ARE YOU LOOKING AT? THE NEXT ONE, WHAT KIND OF UNFUNDED PENSION LIABILITIES OR ASSET MANAGEMENT ISSUES DO YOU HAVE OUT THERE? IMPORTANT ONE, CASH FLOW. 
          ARE THERE A LOT OF OTHER FUNDS THAT ARE DEPENDENT ON THE GENERAL FUND? THAT'S NOT REALLY THE CASE IN WASCO, BUT IT IS IN MANY OTHER CITIES. 
          THEY HAVE ALL THESE OTHER FUNDS THAT DEPEND ON THE GENERAL FUND AND THAT CAN BE IN SOME CITIES. I DON'T REALLY THAT WAS THEIR MAJOR CHALLENGE WAS THE FUNDS. 
          THEY'VE BEEN SUBSIDIZED. 
          WE'RE GOING TO CONTINUE TO NEED SUBSIDIES AND THOSE WERE GOING TO GROW. 
          WHAT KIND OF REVENUE OR EXPENDITURE ON BALANCE YOU POTENTIALLY HAVE IN TERMS OF NEW DEVELOPMENT? NOW, WE'RE KIND OF FORTUNATE IN CALIFORNIA BECAUSE OF NEW DEVELOPMENT COMES ONLINE, YOUR MAJOR SOURCES OF REVENUE, WIDE SALES TAX AND PROPERTY TAX, YOU KNOW, THOSE ARE GOING TO GET CAUGHT UP PRETTY IMMEDIATELY. 
          THEY DO SUPPLEMENTAL ASSESSMENTS FOR PROPERTY TAX SALES TAXES. 
          YOU'LL GET IT WITHIN 90 DAYS OF A NEW REVENUE COMING ON. 
          BUT THAT'S NOT TRUE IN OTHER PLACES. 
          SO THIS IS NOT A SIGNIFICANT FACTOR FOR WASCO. 
          AND THEN THE LAST ONE IS YOU HAVE A LOT OF HIGH PRIORITY CAPITAL PROJECTS THAT ARE UNFUNDED. NEXT SLIDE, PLEASE. 
          SO FOR THOSE OF YOU REMEMBER, THIS IS A LITTLE LIKE AMERICAN BANDSTAND, YOU KNOW, HAS A GOOD BEAT, I CAN DANCE TO IT. 
          I'LL GIVE IT AN EIGHT. THEY USE AN ASSESSMENT SCALE ON EACH OF THESE FACTORS IS FINE BALANCE AN IMPORTANT RISK MANAGEMENT TOOL AND YOU WOULD RANK AND FILE IF IT'S REALLY NOT A VERY IMPORTANT RISK. 
          AND WE DON'T NEED TO HAVE SOME BALANCE FOR THAT. 
          YOU'RE GIVEN ONE. SO ON THIS METHODOLOGY, TOTAL SCORES FOR EIGHT FACTORS ARE GOING TO 
          [00:25:05]
RISE SOMEWHERE BETWEEN EIGHT BECAUSE YOU'RE GETTING EVERYTHING. 
          ONE UP TO A FORTY WOULD BE KIND OF THE WORST CASE. 
          YOU GAVE EVERY ONE OF THESE FACTORS OF FIVE. 
          AND AFTER YOU DO THIS INITIAL ASSESSMENT, THREE OTHER FACTORS KIND OF COME INTO A CITY SIZE, SMALLER CITIES THAT YOU HAVE. 
          WAVERLY'S HAS LESS ABILITY TO TAKE ON A DIVERSIFIED ROLE. 
          SMALLER CITIES, NOT SO MUCH DIVERSITY, NOT SO MUCH STABILITY. 
          DO YOU HAVE A LOT OF OTHER RESERVES, CONTINGENCY FUNDS YOU CAN DRAW ON? AND THEN LASTLY, WHAT'S YOUR BORROWING CAPACITY? SO THAT'S AN ADJUSTMENT FACTOR AS WELL. 
          BUT THAT'S THE BASIC STRUCTURE FOR THE GIVE AWAY. 
          NEXT SLIDE, PLEASE. SO HERE'S HOW THIS KIND OF COMES OUT, IF YOU'VE GOT A SCORE BETWEEN AGES OF 16, WHICH WOULD BE THE RANGE OF THE BEST POSSIBLE SCORES, THEY STILL RECOMMEND THAT YOU HAVE AT LEAST TWO MONTHS, 60 DAYS OF CASH FLOW. 
          SO EVEN FOR THE STRONGEST, MOST PHYSICALLY RESILIENT CITIES, THEY RECOMMEND AT LEAST ABOUT A 16 PERCENT RESERVE TO SCORE SOMEWHERE BETWEEN 17 TO 24. 
          THEY THINK YOU HAVE A LOW TO MODERATE RISK, BUT YOU NEED TO RETAIN THE RESERVE. 
          SO THEY'RE RECOMMENDED TARGET IS SOMEWHERE BETWEEN 17 TO 25 PERCENT OF OPERATING COSTS. 
          THE NEXT CATEGORY IS YOUR SCORE IS SOMEWHERE BETWEEN 25 TO 30. 
          ONCE YOU HAVE A MODERATE TO HIGH LEVEL OF RISK CONSIDERED RESERVES SOMEWHERE BETWEEN 26 AND 35 PERCENT. 
          AND THEN, OF COURSE, IF YOU'RE IN THAT VERY UPPER END, BUT THEY THINK YOU PROBABLY NEED TO BE SETTING RESERVES EVEN HIGHER THAN 35 PERCENT. 
          SO THAT'S KIND OF HOW THESE NUMBERS PLAY OUT. 
          WHEN WE DID THIS ASSESSMENT FOR WASCO, YOUR SCORE WAS 30. 
          AND I'LL TALK ABOUT WHAT THE MAIN DRIVERS OF THAT. 
          BUT YOUR SCORE WAS CERTAIN. 
          AND SO THEIR RECOMMENDATION WOULD BE BETWEEN 26 TO 35 PERCENT. 
          YOUR CURRENT POLICY FALLS IN THAT RANGE. 
          YOUR CURRENT POLICY IS 30 PERCENT OF OPERATING COSTS. 
          NEXT COOK, PLEASE. WE'RE RECOMMENDING THAT WE SET THAT AT 35 PERCENT OF OPERATING AND SERVICE EXPENDITURES. 
          AND HERE'S WHY. 
          THREE FACTORS. IF YOU LOOK AT THIS YEAR, THE UPPER END OF THAT NUMERICAL RANGE, I THINK COMPARED TO WHEN THIS ANALYSIS WAS PREPARED, JUST CONSIDERING WHAT'S HAPPENED DURING COVID-19 AND TO KIND OF IGNORE PUBLIC PUBLIC HEALTH RISKS AT THIS POINT, PLEASE GO BACK TO PUBLIC HEALTH RISK AT THIS POINT WOULD BE IT WOULD BE A MISTAKE. 
          AND THE LAST ONE IS CASH FLOW. 
          AS WE LOOKED AT HOW YOUR CASH COMES IN DURING THE YEAR, THOSE POINTS OF TIME RIGHT BEFORE YOU GET YOUR PROPERTY TAX REVENUE. 
          SO YOU WOULD NEED TO HAVE AT LEAST A 15 PERCENT RESERVE IN NOVEMBER AND A 20 PERCENT RESERVE IN JUNE JUST TO TAKE CARE OF CASH FLOW. 
          NOW, NOT EVERYTHING IS GOING TO GO WRONG ALL AT THE SAME TIME, HOPEFULLY. 
          BUT GIVEN THAT YOU NEED 20 PERCENT JUST FOR CASH FLOW, WE FEEL THAT SORT OF WARRANTS TAKING IT UP TO 35. 
          BUT I DO WANT TO POINT OUT TO YOU THAT YOUR SCORE OF 30 PERCENT IS WITHIN THE RANGE OF THE GEOFFROY SCORE, BUT WE THINK WE COULD SET THAT TARGET JUST A LITTLE BIT HIGHER. 
          NEXT SLIDE. OTHER FUNDS ARE CURRENT POLICY IS 25 PERCENT OF OPERATING A DEBT SERVICE IN YOUR THREE BIG ENTERPRISE FUNDS FOR THE INTERNAL SERVICE FUND. 
          YOU SAY AT LEAST 60 DAYS CASH FLOW. 
          AND THESE ARE REASONABLE POLICIES THAT YOU HAVE IN PLACE TODAY. 
          THEY'RE REALLY IN THE MAINSTREAM OF OTHER CITY POLICIES AND ENTERPRISE FUND POLICIES. 
          SO WE'RE NOT MAKING ANY RECOMMENDATION TO THE POLICIES FOR YOUR ENTERPRISE AND INTERNAL SERVICE FUNDS. NEXT SLIDE, PLEASE. 
          DEFINING THE RESERVE. 
          SO WHAT PART OF YOUR FUND BALANCE THE RESERVES ARE APPLICABLE OR SHOULD BE TARGETED ON THE 30 OR 35 PERCENT NUMBER AND UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES? THERE'S FIVE COMPONENTS OF YOUR GENERAL FUND BALANCE. 
          THAT'S WHAT'S CALLED NON SPENDABLE. 
          IT'S AN ASSET YOU HAVE, BUT YOU CAN'T FUND ANYTHING WITH IT. 
          IN THE BEST EXAMPLE I CAN GIVE YOU NOW IS INVENTORY. 
          YEAH, THERE'S A VALUE IN THE INVENTORY IS WORTH WHAT IS WORTH, BUT YOU CAN'T PAY YOUR PUBLIC SAFETY CONTRACT WITH THE VALUE IN INVENTORY. 
          IT'S NOT SPENDABLE BY ITS NATURE. 
          THE SECOND COMPONENT RESTRICTED. 
          AN OUTSIDE AGENCY HAS RESTRICTED HOW YOU CAN USE THESE FUNDS SO THEY'RE NOT REALLY AVAILABLE IN THE EVENT OF AN ECONOMIC DOWNTURN. 
          THE INTENT OF A PANDEMIC OR IN THE BETTER THAN EXPECTED ON PURPOSE, BECAUSE THEY CAN ONLY BE USED FOR SPECIFIC PURPOSES. 
          THOSE ARE CALLED RESTRICTED. 
          [00:30:02]
AND THEN THE NEXT CATEGORY, THIS WOULD BE UNRESTRICTED. 
          THIS IS WHERE YOU WOULD WANT TO LOOK AT WHAT WOULD BE POTENTIALLY IN YOUR RESERVE POLICY. 
          IT COULD BE ALL OF YOUR RESTRICTED BALANCE. 
          IT COULD BE THE UNCOMMITTED BALANCE. 
          BUT THOSE CATEGORY THAT'S UNRESTRICTED, THERE'S THREE COMPONENTS COMMITMENTS AS DEFINED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, WHICH IS A HIGHER LEVEL OF USE POTENTIALLY THAN WHAT YOU MIGHT FIND FOR FUND BALANCE. 
          AND THEN THERE'S WHAT'S THE UNASSIGNED BALANCE? AND HERE'S THE CRITICAL COMPONENT OF THIS. 
          NESQUIK, PLEASE. YOUR RESERVES RESERVE TARGET THAT WE'RE RECOMMENDING THOSE APPLY TO THE UNASSIGNED BALANCE, YOU MAY HAVE OTHER COMMITMENTS, YOU MAY HAVE OTHER ASSIGNMENTS, BUT REALLY, IF YOU THINK ABOUT IT, YOU WANT IT TO BE THE UNASSIGNED BALANCE. 
          YOU WANT IT TO BE THAT PORTION THAT ISN'T RESTRICTED, THAT ISN'T COMMITTED FOR OTHER PURPOSES, SO THAT IF YOU DO HAVE AN ECONOMIC DOWNTURN, UNEXPECTED EXPENSE, THE CASH FLOW NEEDS, BUT THAT FUNDING IS AVAILABLE TO DEAL WITH THAT. 
          AND THAT'S CONSISTENT REALLY WITH WHAT THE GIVE-AWAY RECOMMENDS. 
          THEY RECOMMEND THAT WHATEVER HER MINIMUM TARGET IS, THAT SHOULD BE APPLIED TO THE UNSIGN BALANCE AND THE POLICY FOR ENTERPRISE AND INTERNAL SERVICE FUNDS. 
          IT'S VERY SIMILAR REGARDING COMMITMENTS AND ASSIGNMENTS. 
          NEXT ONE. AND WHAT ARE THOSE OTHER ASSIGNMENTS OR COMMITMENTS? WELL, YOU MIGHT HAVE FUTURE CAPITAL PROJECTS THAT YOU SPECIFICALLY WANT TO SET ASIDE MONEY FOR AND TARGET FOR THE FUTURE. 
          YOU MAY HAVE PURPOSES YOU WANT TO SET ASIDE FOR UNFUNDED LIABILITIES. 
          YOU MAY HAVE OTHER LONG TERM GOALS WHERE YOU'RE SPECIFICALLY SETTING MONEY ASIDE FOR A SPECIFIC FOR A SPECIFIC PURPOSE. 
          AND SO THIS TARGET WOULD BE OUTSIDE OF THESE OTHER NUMBERS YOU MAY HAVE SET ASIDE. 
          AND ANOTHER EXAMPLE OF THAT, QUITE FRANKLY, IS THE NINE POINT THREE MILLION THAT YOU RECENTLY SET ASIDE AS KIND OF A CONTINGENCY FOR THE LABOR HOUSING COMPLEX PROJECT. 
          YOU WANT TO SET THAT NINE POINT THREE MILLION DOLLARS ASIDE. 
          HOPEFULLY, AT THIS POINT, BASED ON YOUR LEGISLATIVE RECORDS, BASED ON YOUR LOBBYING EFFORTS, YOU'LL BE SUCCESSFUL IN GETTING THE STATE TO OFFSET THOSE COBB THEIR OBLIGATION TO DO SO. BUT THAT'S NOT A SURE THING. 
          AND SO YOU WANT TO MAKE SURE YOU HAVE ON BALANCE, IT'S AVAILABLE TO DEAL WITH THAT, ASIDE FROM YOUR NORMAL TARGET. 
          AND THEN THERE CAN BE OTHER COMMITMENTS AND ASSIGNMENTS YOU MAY HAVE CARRYOVERS. 
          YOU NEED TO MAKE FROM PRIOR COMMITMENTS, CAPITAL PROJECTS, YOU BUDGETED FOR IT AND SPEND ALL THE MONEY YOU NEED TO CARRY THAT FORWARD. 
          YOU MIGHT HAVE OUTSTANDING ENCUMBRANCES OR CONTRACT. 
          YOU DON'T HAVE THAT SERVICE. 
          BUT IF YOU DID AND AGAIN, THE PURPOSE OF THESE POLICIES IS TO DEAL WITH PROBLEMS BEFORE THEY ARISE, MAYBE A RESERVE COMMAND COMMITMENT FOR THAT AND RESERVE COMMITMENT FOR THAT. 
          AND THERE MIGHT BE OTHER COMMITMENTS. 
          SO THOSE ARE OTHER ASSIGNMENTS YOU MIGHT HAVE THAT ARE OUTSIDE OF THAT RECOMMENDED TARGET. NEXT SLIDE, PLEASE. 
          SO WHAT ARE THE CIRCUMSTANCES COME UP AND YOU NEED TO TAKE YOUR RESERVES BELOW POVERTY LEVELS. YOU KNOW, YOUR RESERVES ARE OFTEN REFERRED TO AS A RAINY DAY FUND. 
          SO IT SEEMS TO ME IT MUST BE APPROPRIATE TO USE THE WEATHER REYNA. 
          THAT'S WHAT. AND SO THERE ARE SOME GUIDELINES IN THE PROPOSED POLICY ABOUT WHEN IT MIGHT BE APPROPRIATE TO TAKE YOUR RESERVES DOWN BELOW POLICY LEVELS, IN ESSENCE WHEN IT RAINS, IF YOU CAN USE YOUR CURRENT RESERVES IN ORDER TO LOWER FUTURE COSTS. 
          THAT MAKES SENSE. 
          IF YOU HAVE A SHORT TERM REVENUE AND EXPENDITURE CAP, IT MAKES SENSE. 
          RATHER THAN DISRUPTING THE ORGANIZATION, LET'S USE OUR SAVINGS FOR THAT MIGHT HAVE THE CASH FLOW NEEDS. 
          AND IF YOU HAVE A FORECAST THAT SHOWS THAT YOU HAVE AN ONGOING STRUCTURAL GAP, THEN IT PROVIDES A STRATEGIC BRIDGE TO THE FUTURE. 
          AGAIN, THIS HELPS IDENTIFY, WE SAID RESERVES ASIDE FOR A PURPOSE AND WHEN ARE WE SEEING THAT PURPOSE? SO IT'S APPROPRIATE TO GO BELOW THAT POLICY. 
          NEXT SLIDE, PLEASE. 
          SO WHAT IF YOU DO DRAW DOWN ON RESERVES AND THE POLICY GIVES US SOME GUIDANCE THERE? WELL, LET'S TRY TO RESERVE OURSELVES BACK OR GET OURSELVES BACK TO THAT RESERVE LEVEL, AT LEAST WITHIN FIVE YEARS. 
          DON'T HAVE TO DO IT IMMEDIATELY. 
          AND IMPORTANTLY, AS REVENUES VERSUS EXPENDITURES GET BETTER, ALLOCATE AT LEAST HALF TO RESERVE RESTORATION. 
          IT DOESN'T MEAN THAT EVERYTHING THAT GETS BETTER HAS TO GO TO RESERVES FIRST. 
          YOU HAVE OTHER IMPORTANT MEANS. 
          YOU OBVIOUSLY LIVE WITH LESS THAN YOU KNOW. 
          IF YOU DREW DOWN A LOT LESS THAN THAT 30 PERCENT, 35 PERCENT POLICY FOR A WHILE, MAYBE YOU CAN DO THAT A LITTLE BIT LONGER. 
          AND THERE MAY BE SOME OTHER PRESSING NEEDS YOU WANT TO ADDRESS, BUT ALLOCATE AT LEAST HALF TO RESERVE RESTORATION AND THEN TRY AND DO THAT WITHIN FIVE YEARS, NOT FLOOD. 
          [00:35:06]
WELL, WHAT IF YOU HAVE RESERVES SIGNIFICANTLY ABOVE THE MINIMUM? WELL, THE POLICY DOESN'T PROVIDE FOR A MAXIMUM, BUT IT DOES PROVIDE SOME GUIDELINES. 
          IF YOU DO HAVE RESERVE THAT ARE ABOVE YOUR TARGET LEVEL, PROVIDE SOME GUIDELINES FOR HOW YOU MIGHT USE THOSE. BUT REALLY, THE IMPORTANT COMPONENT OF ALL OF THOSE GUIDELINES ARE YOU WANT TO USE IT FOR ONE TIME PURPOSES. 
          YOU ONLY HAVE THOSE RESERVES ONCE. 
          SO YOU WANT TO MAKE SURE YOU AVOID FUNDING ONGOING PROGRAMS WITH ONE TIME RESERVES, EVEN IF THEY'RE ABOVE YOUR TARGET, BECAUSE YOU NEED TO DO THAT FOR SUSTAINABILITY, BASICALLY ONE TIME PURPOSES. 
          AND THEN LASTLY, WHAT'S THE POLICY VERSUS ACTUAL HOW TO HAVE RESERVES ACTUALLY COMPARED TO POLICY? SO YOU KIND OF HAVE ONE OR TWO OPTIONS ON THIS. 
          AND I'M REALLY RECOMMENDING THIS FOR ALL OF YOUR POLICY, NOT JUST RESERVES. 
          YOU'RE EITHER IN COMPLIANCE WITH THAT POLICY OR IF WE'RE NOT FULLY THERE, WELL, WE'RE IN PROGRESS. AND WHAT'S OUR STRATEGY FOR GETTING BACK TO WHERE WE NEED TO WHERE WE NEED THOSE POLICY TARGETS TO BE NEXT WISELY? AND THEN THE FOURTH COMPONENT IS FINANCIAL REPORTING AND BUDGET ADMINISTRATION ON THE ANNUAL REPORTS. 
          YOU WANT TO STRIVE FOR QUALIFIED OTTER'S OPINION. 
          YOU'VE HISTORICALLY RECEIVED THAT. 
          IT'S A BIT OF A MISNOMER. 
          UNQUALIFIED MEANS THEY HAVEN'T PROVIDED ANY QUALIFICATIONS. 
          AND UNQUALIFIED OPINION IN THIS CASE MEANS A GOOD OPINION OR A POSITIVE OPINION. 
          YOU CAN'T GUARANTEE THAT BECAUSE YOU DON'T CONTROL THE OPINION YOUR EDITORS ARE GOING TO GIVE YOU. BUT YOU CERTAINLY WANT TO STRIVE FOR AN HONEST OPINION. 
          YOU WANT TO USE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND PREPARE YOUR OWN REPORTS. 
          YOU WANT TO STRIVE TO MEET YOUR WAY EXCELLENCE CRITERIA, AND YOU WANT TO ISSUE WITHIN 180 DAYS THIS LAST SET OF AUDITED FINANCIAL STATEMENTS FOR THE FIRST TIME IN A LONG TIME. 
          THEY WERE DELIVERED TO YOU WITHIN 180 DAYS. 
          SO YOU'RE ON A GOOD, GOOD TIME TRACK THERE. 
          AND THEN YOU HAVE INTERIM REPORTS. 
          YOU CAN'T RELY ON ANNUAL REPORTS, WHICH MIGHT COME OUT A YEAR AND A HALF AFTER THINGS MIGHT HAVE STARTED TAKING AN ADVERSE TERM. 
          SO YOU NEED TO BE FOCUSED ON INTERIM REPORTING AS WELL. 
          THEY NEED TO BE TIMELY TO PROVIDE ONLINE ACCESS. 
          AND THE KEY PEOPLE IN THE DEPARTMENT SHOULD ISSUE MONTHLY REPORTS, BUT MOSTLY, QUITE FRANKLY, JUST TO SAY THE MONTH IS OVER. 
          BUT YOU DO WANT TO BE FOCUSED ON ISSUING QUALITY QUARTERLY REPORTS AND FOCUS REPORTS ON SALES TAX AND CAPITAL INVESTMENTS. 
          AND YOU DO THOSE THEN YOU WANT TO DO MID-YEAR REVIEW. 
          AND OF COURSE, YOU WANT TO GET OUT AN INTERIM REPORT. 
          YOU DON'T WANT TO WAIT FOR 180 DAYS TO GET A REPORT. 
          AND HOW DID THE PRIOR YEAR END? YOU WANT TO STRIVE TO GET SOME KIND OF INTERIM REPORT OUT AS TIMELY AS POSSIBLE. 
          SO THE POLICY RECOGNIZES THAT DURING THE YEAR, HOW TO MANAGE THE BUDGET? WELL, THE COUNCIL, OF COURSE, HAS THE AUTHORITY TO AMEND THE BUDGET AT ANY TIME WITH MAJORITY APPROVAL. 
          AND THE MOST IMPORTANT THING IS COUNCIL APPROVAL SHOULD ALWAYS BE REQUIRED. 
          IF IT'S A NEW APPROPRIATION FROM FUND BALANCE, THE CITY MANAGER SHOULD HAVE THE AUTHORITY TO MAKE ADMINISTRATIVE ADJUSTMENTS TO THE BUDGET. 
          BUT THERE'S TWO IMPORTANT CRITERIA. 
          ONE, IT'S NOT GOING TO HAVE A SIGNIFICANT POLICY IMPACT AND FOLLOW SIGNIFICANT POLICY IMPACTS, MAYBE FROM ONE HUNDRED DOLLAR CHANGE, YOU KNOW, TO A MORE SIGNIFICANT DOLLAR AMOUNT. BUT THE KEY IS NO SIGNIFICANT POLICY IMPACT THAT SHOULD BE FOCUSED ON ADMINISTRATIVE ADJUSTMENTS AND MOST IMPORTANTLY. 
          IT SHOULDN'T AFFECT THE BUDGET IT INTO YOUR BALANCE, AND SO SHOULD THE CITY MANAGER HAVE THE AUTHORITY TO MAKE MYELINATED REVISIONS AS LONG AS THEY DON'T AFFECT FUND BALANCE AND DON'T HAVE SIGNIFICANT POLICY IMPACTS, THE PROPOSED POLICY SAYS. 
          AND THEN THE LAST POLICY TO DEAL WITH THIS CAPITAL FINANCING AND DEBT MANAGEMENT, IF YOU THINK ABOUT IT, THE CITY CONCEPTUALLY SHOULDN'T MANAGE LONG TERM DEBT ANY DIFFERENTLY THAN YOU MANAGE PERSONAL DEBT. 
          IT SHOULD BE FOR A LONG TERM NON-RECURRING COST. 
          IT SHOULD NEVER BE FOR RETURN DAY TO DAY. 
          THIS IS REALLY PART OF THAT BUDGET BALANCED POLICY. 
          YOU DON'T WANT TO USE THAT TO COVER OPERATING COSTS OR FROM A MORE PERSONAL PERSPECTIVE. 
          MORTGAGES ARE FINE FOR HOUSES, BUT YOU DON'T WANT TO TAKE OUT A 30 YEAR LOAN TO PAY FOR GROCERIES. NEEDS TO BE SOME LINKAGE BETWEEN THAT AND BETWEEN, WHETHER IT'S ONE TIME OR ONGOING PURPOSES. 
          AND REALLY THE CAPITAL FINANCING POLICY AND ABOUT SIX OR SEVEN PAGES IS REALLY JUST GOING TO BE AN EXTRAPOLATION OF THAT NOTION. 
          NEXT SLIDE, PLEASE. YOU MIGHT THINK THIS IS OBVIOUS, BUT NOT SO OBVIOUS TO THE STATE AND FEDERAL GOVERNMENT THAT THIS IS HOW WE MANAGE MEXICO. 
          AND OF COURSE, JUST LIKE IN YOUR OWN PERSONAL CASES, YOUR ABILITY TO TAKE ON DEBT IS LIMITED. I REALLY LIKE THIS QUOTE. 
          JOHN JOHN, FORMER CITY MANAGER IN SAN LUIS OBISPO, HIRED ME. 
          ONE OF THE INITIAL ADVICES TO ME WAS ANY IDIOT CAN BORROW MONEY. 
          THE GENIUS PART OF BEING ABLE TO PAY IT BACK. 
          SO THAT'S. THAT'S AN IMPORTANT ELEMENT OF THE PROPOSED POLICY AS WELL. 
          [00:40:03]
NEXT SLIDE. SO PURPOSE AND PREPARATION ARE WHEN YOU THINK ABOUT YOUR CURRENT POLICIES, YOU NEED ALL OF THE POLICY THAT YOU HAVE BECAUSE YOU NEED TO PREPARE A COMPREHENSIVE DEBT POLICY. SO WE'RE DOING THAT AT THIS TIME. 
          BUT MOST IMPORTANTLY, THE URGENCY DRIVER RIGHT NOW IS REQUIRED FOR THAT STATE WATER RESOURCES CONTROL BOARD LOG THAT YOU FILED FOR. 
          ONCE YOU'VE ADOPTED THAT POLICY, THEN YOUR FINANCIAL PORTION OF YOUR APPLICATION WILL BE COMPLETE. WHEN WE PREPARED THE DROUGHT POLICY, WE LOOKED AT OUR BEST PRACTICES, ARE LOOKED AT POLICIES AND A NUMBER OF OTHER CITIES THAT ARE RESPECTED. 
          BUT MOST IMPORTANTLY, THERE IS THE CALIFORNIA. 
          THIS IS A STATE AGENCY, CALIFORNIA ENDOWMENT INVESTMENT ADVISORY COMMITTEE, HAS PROMULGATED GUIDELINES FOR WHAT THEY THINK A GOOD CAPITAL FINANCING FINANCING POLICY SHOULD HAVE, AND WE CLOSELY FOLLOW THAT. 
          SO WE WOULD BE HIGHLY, HIGHLY CONFIDENT THAT THE POLICY YUSOFF WILL BE WILL BE ACCEPTABLE TO THE STATE WATER RESOURCES CONTROL BOARD AND IS COMPREHENSIVE AND INCLUDES A NUMBER OF PROVISIONS THAT AREN'T APPLICABLE TO THE CITY TODAY, BUT THEY MIGHT BE IN THE FUTURE. 
          IN FACT, NONE OF THESE PROVISIONS ARE APPLICABLE TO YOU RIGHT NOW BECAUSE YOU DON'T HAVE ANY LONG TERM BONDED INDEBTEDNESS. 
          BUT IF THE LOAN GOES THROUGH THE STATE WATER RESOURCES CONTROL BOARD, YOU WILL CLEARLY HAVE A LONG TERM INDEBTEDNESS OBLIGATION TO REPAY THEM. 
          AND THAT'S WHAT THE STATE WATER RESOURCES CONTROL BOARD IS INTERESTED IN. 
          CONCERNING YOUR POLICY. 
          NEXT SLIDE, PLEASE. JUST SOME GENERAL GUIDELINES, THERE'S A CLEAR BIAS HERE TOWARDS PAY AS YOU GO, IF YOU CAN USE AVAILABLE RESERVES AND AVAILABLE. 
          THAT'S WHAT YOU SHOULD DO. 
          YOU SHOULDN'T BORROW MONEY. 
          YOU DON'T NEED TO BORROW. 
          YOU SHOULD ONLY CONSIDER DEBT FINANCING WHEN IT'S A ONE TIME COST OR WHAT I WOULD CALL A LUMPY PROJECT OF THAT. 
          I MEAN, THAT MEANS IF WE TAKE A LOOK AT A FIVE OR 10 YEAR TIME HORIZON AND YOU LOOK AT HOW YOUR CAPITAL PROJECTS GO, IS THERE A POINT THERE THAT'S LUMPY IN THAT MEAN? WELL, THAT'S A CANDIDATE FOR FINANCING. 
          IT SHOULD BE A HIGH PRIORITY PROJECT. 
          YOU HAVE LIMITED ABILITY TO ISSUE DEBT. 
          SO IT SHOULD REALLY BE FOR THE MOST IMPORTANT PROJECTS. 
          AND YOU WANT TO MAKE SURE THAT THE AMOUNT OF DEBT, THE TERM, YOUR BORROWING THE MONEY FOR WILL LAST AS LONG AS THE PROJECT YOU DON'T WANT TO TAKE OUT OF YOUR FINANCING FOR AN ASSET THAT'S ONLY GOING TO LAST 10 YEARS. 
          AND YOU ALSO, MOST IMPORTANTLY, YOU TAKE ON NEW DEBT. 
          YOU WANT TO MAKE SURE YOU'RE AVAILABLE, YOUR ABILITY THAT YOU'RE ABLE TO PAY IT BACK. 
          AND AGAIN, REALLY, IT'S NOT FOR RECURRING PURPOSES OR ONGOING MAINTENANCE. 
          NEXT SLIDE, PLEASE. AND, YOU KNOW, ABRAHAM LINCOLN ONCE SAID, DON'T TAX, YOU KNOW, TAX ME, TAX THE MAN BEHIND THE TREE. 
          WELL, WHEN IT COMES TO RECOVERING LONG TERM DEBT AND AS YOU KIND OF FOLLOW THAT SAME PRINCIPLE, FIND OTHER SOURCES OF REPAYMENT BEFORE YOU BEFORE YOU COMMIT THE GENERAL FUND TO REPAYING THAT MONEY BACK. 
          NEXT SLIDE. SO THOSE ARE KIND OF THE FACTORS THAT FAVOR DEBT FINANCING. 
          WHAT ARE THE FACTORS THAT THEIR PAY AS YOU GO BECAUSE YOU HAVE THE MONEY TO DO IT, YOU HAVE ADEQUATE RESOURCES THAT ARE AVAILABLE TO DO WHAT YOU MIGHT BE IN THE SITUATION ROOM. 
          EXISTING DEBT IS TOO HIGH. 
          OF COURSE, THIS DOESN'T APPLY TO THE CITY, BUT YOU MAY NOT REALLY HAVE THAT CREDIT CAPACITY TO DO THAT. 
          AND MARKET CONDITIONS MAY NOT BE FAVORABLE TO DO THAT. 
          INTEREST RATES MAY BE ESPECIALLY HIGH. 
          AND IN ANOTHER THING, IT MAY BE A CAPITAL OUTLAY, BUT IT IS A LUMP. 
          YOU MAY SPEND A MILLION DOLLARS ON THIS ITEM THIS YEAR, NEXT YEAR OR THE YEAR AFTER YEAR AFTER YEAR AFTER YEAR. 
          IN THAT CASE, YOU NEED TO FIND YOURSELF A REVENUE SOURCE. 
          THAT'S A MILLION DOLLARS A YEAR. 
          IT'S NOT A CANDIDATE FOR DEBT FINANCING. 
          YOU WANT TO MAKE SURE IT'S NOT FUNDING SOMETHING. 
          THAT'S AN ONGOING. NEXT SLIDE, PLEASE. 
          SO THE FACT IS THAT THE MAIN THING THAT ALTHOUGH YOU MAY NOT HAVE ALL THE REVENUES YOU NEED TO PAY FOR THE ENTIRE PROJECT NOW AS YOU CONVERT THAT INTO AN ANNUAL DEBT SERVICE PAYMENT AND YOUR MORTGAGE PAYMENT, IF YOU WILL, YOU'RE GOING TO HAVE REVENUES IN THE FUTURE THAT CAN COVER THAT. 
          YOU WANT TO MAKE SURE THAT YOU'RE ISSUING DEBT AND YOU CAN GET AN INVESTMENT GRADE RATING. YOU KNOW, THE RATING AGENCIES LIKE MOODY'S AND STANDARD AND POOR'S THINK YOU'RE A POOR RISK. WELL, MAYBE YOU SHOULD TAKE THAT TO HEART. 
          MAYBE YOU AREN'T QUITE READY TO ISSUE DEBT AND THE MARKET AND THE FAVORABLE MARKET AND THE CONDITIONS ARE FAVORABLE. 
          IT MAY BE A PROJECT YOU DON'T REALLY HAVE A LOT OF CHOICE ON. 
          THIS IS SOMETHING THAT FEDERAL AND STATE GOVERNMENT IS FORCING YOU TO DO. 
          AND LASTLY, IT'S JUST A HIGH PRIORITY PROJECT. 
          YOU REALLY NEED IMMEDIATELY TO DEAL WITH SOME CRITICAL ISSUES. 
          AND CURRENT SOURCES AREN'T ADEQUATE, BUT YOU'RE CONFIDENT YOU'LL HAVE ENOUGH MONEY TO PAY FOR IT IN THE FUTURE. 
          NEXT, WHAT? YOU WANT TO AVOID OBLIGATING THE GENERAL FUND ON EVERY ITEM YOU WANT. 
          [00:45:02]
WE WANT TO LOOK AT YOUR POLICY. 
          YOU WANT TO TAKE A LOOK AT EVERY DEBT ISSUANCE ON ITS OWN MERITS. 
          THERE ARE TWO WAYS TO DO FINANCINGS. 
          YOU CAN DO THAT COMPETITIVE KIND OF LIKE YOU WOULD DO FOR CONSTRUCTION PROJECTS. 
          YOU TELL THE PEOPLE THAT ARE IN THE BUSINESS OF LETTING YOUR MONEY DOWN IN THE STATE, WE'RE GOING TO OPEN UP BIDS FOR FINANCING AND WE'LL BRING IT TO THE PERSON WHO IS GOING TO GIVE US THE LOWEST FINANCING POSSIBLE. 
          THERE ARE CASES, HOWEVER, WE'RE JUST DIRECTLY DEALING WITH ONE FINANCIAL INSTITUTION MAY MAKE MORE SENSE. 
          AND WHAT ARE THOSE DIFFERENCES? WELL, SOMETIMES YOU HAVE WHAT'S CALLED THE STORY BEHIND THAT. 
          IN ORDER TO UNDERSTAND THE BOND, YOU HAVE TO TELL A STORY ABOUT WHY IT'S IMPORTANT AND WHAT YOUR ABILITY IS TO PAY BACK. 
          THAT'S PROBABLY WHERE YOU NEED TO DO A NEGOTIATED SALE. 
          IF IT'S NOT, IF IT'S A PRETTY STRAIGHTFORWARD FINANCING IS FOR A NEW PUBLIC SAFETY BUILDING IS FOR CITY HALL. 
          YOU'RE USING CONVENTIONAL SOURCES TO PAY IT BACK. 
          THAT'S GOING TO LEND ITSELF TO A MORE COMPETITIVE SITUATION SEEKING INVESTMENT GRADE RATING. ALWAYS BE LOOKING AT WHAT YOUR DEBT IS, DILIGENTLY MONITOR COMPLIANCE REQUIREMENTS AND HOW MAINTAINED GOOD ONGOING COMMUNICATIONS WITH RATING AGENCIES IF SOMETHING HAS GONE SOUTH IN TERMS OF YOUR ABILITY TO PAY BACK A LOAN PAYMENT. 
          YOU DON'T WANT THE CREDIT RATING AGENCIES TO FIND OUT FROM THAT. 
          BY READING YOUR HEADLINE IN THE L.A. 
          TIMES, YOU WANT TO BE THE FIRST ONE TO COMMUNICATE BAD NEWS IF THAT HAPPENS WITH THE RATING AGENCIES. NEXT SLIDE, PLEASE. 
          AND JUST REMEMBER, YOUR DEBT CAPACITY IS LIMITED, FUNDS YOU BORROW FOR A PROJECT TODAY CAN'T BE USED FOR OTHER PROJECTS TOMORROW AND FUNDS YOU COMMITTED FOR DEBT REPAYMENT CAN BE USED TO FUND SERVICES TOMORROW. 
          YOU HAVE A HIGH MORAL AND LEGAL OBLIGATION. 
          AND ONCE YOU'VE ISSUED THE MOST IMPORTANT FIRST PRIORITY ON YOUR RESOURCES IS PAYING THAT DEBT BACK. THE GENIUS PART, AS JOHN DONE OR SAID IN THE PAST. 
          THAT'S WHAT. SO WHAT DOES THAT LOOK LIKE FOR THE GENERAL FUND WHERE WE'RE SEEING YOUR DEBT SERVICE PAYMENTS SHOULD NEVER EXCEED 10 PERCENT OF YOUR OPERATING REVENUES? NOW, RIGHT NOW, THAT RATIO WAS ZERO, BUT IF ANY, SHOULD ARISE IN THE FUTURE TO DO WITH THAT FINANCING SUPPORTED BY THE GENERAL FUND, YOU NEVER WANT TO SEE THAT EXCEEDING 10 PERCENT. THIS IS REALLY A REINFORCED BY THE CREDIT AGENCY. 
          THEY DON'T REALLY GET TOO WORRIED ABOUT YOUR DEPOSITION. 
          BUT IF YOU START TO EXCEED 10 PERCENT NOW, THEY GET CONCERNED BECAUSE THEY THINK YOU CROWDED OUT OTHER IMPORTANT COSTS FOR THE ENTERPRISE FUNDS. 
          IT'S REALLY NOT SO MUCH A RATIO AS MUCH AS IT IS BEING COMMITTED TO SETTING RATES THAT WHATEVER IS NECESSARY TO COVER OPERATING CAPITAL AND THAT SORT OF COST. 
          AND AS WE TALK ABOUT IN THE WATER FUND, THAT'S AN IMPORTANT, IMPORTANT CONSIDERATION. 
          OTHER UNIQUE CIRCUMSTANCES NOT APPLICABLE TO THE CITY TODAY, BUT MIGHT BE IN THE FUTURE. 
          ANY LAND BASED FINANCINGS YOU MIGHT DO CONDUIT FINANCINGS, FINANCE THE KIND OF PASSTHROUGH FINANCINGS YOU MIGHT DO ON BEHALF OF OTHERS. 
          THERE'S A NEW RELATIVELY NEW TOOL OUT THERE CALLED ENHANCED INFRASTRUCTURE FINANCING DISTRICTS. AND LASTLY, REFINANCINGS. 
          YOU'RE ALLOWED ONCE YOU RECEIVE TO REFINANCE THAT IF INTEREST RATES GO DOWN JUST LIKE YOU CAN WITH A MORTGAGE. 
          AND SO THE POLICY PROVIDES YOU WITH SOME BENCHMARKS AND SOME GUIDELINES ABOUT WHEN ITS CURRENT DEBT AMENABLE TO REFINANCING. 
          KEEPING IN MIND, I REALLY WANT TO EMPHASIZE YOU DON'T HAVE ANY DEBT RIGHT NOW. 
          AND THE ONLY THING THAT'S REALLY DRIVING THIS POLICY COMING FORWARD AT THIS TIME IS THAT STATE WATER RESOURCES CONTROL BOARD LOANS. 
          NEXT ONE. AND THEN AGAIN, REALLY ON ALL OF YOUR POLICIES AND YOU'LL SEE THIS IN THE POLICIES THAT HAVE BEEN PRESENTED TO YOU. 
          IMPORTANT TO ARTICULATE THE GOAL, YOU WANT TO CLEARLY STATE WHERE YOU WANT TO BE TO SIGNIFICANTLY ENHANCE YOUR ABILITY TO GET THERE. 
          THERE IS A TENDENCY ON SOME CITIES, PARKS TO SET THE POLICY AT WHERE THEY ARE AT THAT PARTICULAR POINT IN TIME. 
          BUT YOU REALLY WANT TO SET THE GOAL TO BE WHERE YOU WANT TO BE, EVEN IF THAT'S NOT WHERE YOU ARE RIGHT NOW. 
          LET'S QUICKLY. AND SO, AGAIN, EACH ONE OF THE POLICIES THAT WE BROUGHT FORWARD HERE IS FOLLOWED BY JUST A SHORT COMPLIANCE STATEMENT, MAYBE WE'RE IN COMPLIANCE WITH THIS POLICY OR MAYBE WE'RE NOT RIGHT NOW. 
          THIS MINUTE, IF WE'RE NOT, WHAT'S OUR PLAN? WHAT'S OUR PLAN FOR GETTING THERE? NEXT SLIDE, PLEASE. 
          AND SO HERE'S KIND OF WHAT WE RECOMMEND DOING WITH THE POLICIES THAT ARE IN FRONT OF YOU TO SEE. AND WE'RE NOT ASKING FOR THE BUDGET PURPOSE, REVENUE MANAGEMENT, MINIMUM ON BALANCE IN FINANCIAL REPORTING FOR UNIFORMALLY AS OPPOSED. 
          RIGHT NOW, THEY'LL BE AN INTEGRAL PART OF THE BUDGET DOCUMENT. 
          YOU'LL BE SAYING THEY'LL GET ADOPTED, IF YOU WILL, WHEN THE BUDGET GETS ADOPTED. 
          AND FROM THIS POINT GOING FORWARD, THE BUDGET POLICIES WILL ALWAYS BE IN THE BUDGET 
          [00:50:03]
DOCUMENT. SO WE KNOW EXACTLY WHAT YOUR POLICIES ARE AT ANY CURRENT POINT IN TIME AS WE PASS THAT BATON TO A NEW FINANCE DIRECTOR, NEW CITY MANAGER, THEY DON'T KNOW EXACTLY WHAT THE CITY'S POLICIES ARE. 
          IT'LL BE IN THE BUDGET DOCUMENT, AND IT ALSO GIVES US THAT OPPORTUNITY TO LOOK AT WHAT THE POLICY IS VERSUS ACTUAL BY AT LEAST VISITING THOSE POLICIES ONCE A YEAR. 
          WHAT ARE THOSE POLICIES AND HOW ARE WE DOING IN AND ACHIEVING A THAT'S NOT THE CASE. 
          THAT'S CORRECT. THAT'S NOT THE CASE WITH THE DEBT MANAGEMENT POLICY, BECAUSE WE WANT TO HAVE THAT FORMALLY APPROVED AND GET THAT TO THE STATE WATER RESOURCES CONTROL BOARD AS QUICKLY AS YOU CAN. YOU'RE GOING TO SEE THAT POLICY ON YOUR NEXT COUNCIL AGENDA ON MAY 4TH, PROBABLY ON THE CONSENT CALENDAR. 
          SO YOU CAN GET THAT ADOPTED AND THEN BARRY CAN SUBMIT THAT OFF TO THE STATE AND GET YOUR FINANCIAL APPLICATION CHECKED OFF AS BEING FULLY COMPLETED. 
          LAST SLIDE, I BELIEVE, WOULD BE ANY QUESTIONS THAT THE COUNCIL MAY HAVE ABOUT THE PROPOSED POLICIES. 
          THANK YOU, MR. PRESIDENT. 
          MARY COULDN'T QUITE CATCH THAT. 
          WHAT WAS THAT AGAIN, YOUR AUDIO BREAK NOW? I APOLOGIZE. I HAD ASKED. 
          YOU'RE ADDING TO THE PRESENTATION. 
          I HEARD YOU CRACK IN AND OUT. 
          OK, WELL, OK, FOR THE PRESENTATION, WE'RE GOING TO GO AHEAD AND INVITE THE AUDIENCE PARTICIPATION IS LIMITED TO TWO MINUTES PER SPEAKER. 
          IF YOU WOULD LIKE TO MAKE A VERBAL COMMENT USING ZOOM, PLEASE USE THE RAISED HAND FEATURE ON YOUR RESUME APPLICATION. 
          IF YOU ARE SPEAKING AND USING YOUR TELEPHONE, PLEASE START AT NINE ON YOUR TELEPHONE KEYPAD. YOU WILL BE CALLED UPON BY THE NUMBER YOU'RE CALLING FROM WHEN IT IS YOUR TURN TO SPEAK. PLEASE STATE YOUR NAME FOR THE RECORD BEFORE YOU BEGIN YOUR COMMENTS. 
          WHEN YOUR TIME HAS EXPIRED, YOU WILL BE MUTED AT THIS TIME. 
          DO WE HAVE ANY PUBLIC COMMENTS? RANDOM CLICK. VERA AT THIS TIME, WE HAVE NO COMMENTS FROM THEM. 
          THANK YOU, MADAM CLERK. ANY COMMENTS FROM THE MEMBERS QUESTIONS? AND FOR THE RECORD, LET'S. 
          I'D LIKE TO NOTE THAT COUNCIL MEMBER REYNA DID ANNOUNCE AT 6:00 P.M. 
          ANY COMMENTS OR QUESTIONS FROM MAYOR PUTIN? REYNA. THANK YOU, MAYOR. 
          THIS IS A LOT TO ASSIMILATE IN SUCH A SHORT TIME, AND I AM. 
          COMFORTED BY THE FACT THAT WE ARE NOT ADOPTING ANY OF THIS POLICY AT THIS TIME AND THAT WE WILL BE REVIEWING THEM DURING THE BUDGET PROCESS. 
          SO I DON'T REALLY HAVE ANY QUESTIONS AT THIS TIME. 
          I WOULD LIKE TO HAVE MORE TIME TO REVIEW EVERYTHING THAT WAS SAID. 
          THANK YOU. YOU'RE GOING TO REMAIN A MEMBER OF CORTEZ. 
          ANY QUESTIONS FOR THIS PRESENTATION? I KNOW IT'S A GOOD PRESENTATION OR MEAN JUST SOMETHING THAT NEEDS TO BE DONE TO GET GET US THROUGH THAT PROCESS OF APPLYING FOR THAT STATE REVOLVING LOAN. 
          SO THANK YOU FOR THE FOR THAT VERY INFORMATIVE PRESENTATION, BILL. 
          MARY MARTINEZ, CAN YOU EXPLAIN THE WHOLE PRESENTATION AGAIN? NO, I'M JUST KIDDING. THAT'S A LOT OF INFORMATION, BUT IT'S VERY WELL PUT TOGETHER. 
          THANK YOU. NOTHING FURTHER. 
          THANK YOU. REMEMBER, PALLARES ANYTHING THAT'S. 
          NO QUESTIONS AT THIS TIME. 
          THANK YOU. THANK YOU. 
          YES, I DO APPRECIATE THE PRELIMINARY PRESENTATION OF MR. TILO. I LOOK FORWARD TO THE NEXT TWO ITEMS AND AND MOVING FORWARD WITH THIS UPDATE, THIS LOAN APPLICATION SOON ENOUGH. 
          SO THANK YOU AGAIN FOR YOUR TIME FOR BEING HERE. 
          AND PLEASE DO CONTINUE. 
          DO YOU HAVE ANYTHING ELSE TO ADD BEFORE WE MOVE THE NEXT ITEM? MR. PEREZ OR MR. SETTLOR? I WOULD LIKE TO MAKE ONE CLARIFICATION THAT YOU GOING TO HAVE TIME TO THINK ABOUT THIS, AND HIS OFFICE IS IN JUNE WITH THE BUDGET, WITH THE EXCEPTION OF THE DEBT MANAGEMENT POLICY. 
          SO IF YOU'RE GOING TO PUT SOME FOCUS ON THIS IN TERMS OF HOW YOU REVIEW THEM, TAKE A CLOSER LOOK AT THAT, BECAUSE WE ARE GOING TO RETURN ON MAY 4TH FOR FORMAL COUNCIL APPROVAL OF JUST THAT POLICY SO WE CAN MOVE FORWARD AND COMPLETE YOUR APPLICATION TO THE STATE WATER RESOURCES CONTROL BOARD. 
          VERY WELL. I APPRECIATE THAT CLARIFICATION. 
          SO WE ARE DISCUSSING A VARIETY OF NEW POLICIES AND AND THAT ONE SPECIFICALLY FOR THAT 
          [7b. Review and Discuss the General Fund Five-Year Fiscal Forecast.(Perez-Hernandez)]
ACTION. THANK YOU FOR THAT CLARIFICATION. 
          ALL RIGHT. WE'LL GO AHEAD AND MOVE ON INTO THE NEXT PRESENTATION. 
          [00:55:03]
THAT IS ITEM SEVEN, REVIEW AND DISCUSS THE GENERAL FUND, FIVE YEAR FISCAL FORECAST, MR. PRESS AND KICK US OUT. 
          GOOD EVENING, HONORABLE MAYOR, COUNCIL MEMBERS ON ITEM SEVEN EIGHT. 
          THAT WAS THE THE HEAVIEST PRESENTATION, SO WE GOT THROUGH THE ONE. 
          SO THE NEXT TWO WILL BE A LITTLE SMOOTHER IN TERMS OF ITEM B. 
          THE REVIEW AND DISCUSS THE GENERAL FUND FOR YOUR FINANCIAL FORECAST. 
          WE'RE ATTEMPTING IS TO PRESENT THE COUNCIL AND ZOUMA ATTENDEES WITH THE HELP OF THE GENERAL FUND AND AND WHAT THEY'RE GOING TO LOOK LIKE IN THE NEXT FIVE YEARS IN TERMS OF FINANCING FOR PROJECTS, OVERCOMING ANY AND ANY CRISIS THAT MAY ARISE, WHETHER IT BE THROUGH HEALTH CRISES OR IF WE NEED TO GO OUT AND OR BOND FINANCING. 
          SO THAT'S WHAT WE'RE GOING TO BE DISCUSSING THROUGH THIS PRESENTATION. 
          SO I'LL BE TURNING IT OVER TO MR. STATLER AND. 
          SO HE THINKS THE NEXT SLIDE, PLEASE. 
          THERE WE GO. JUST A LITTLE OVERVIEW OF THIS PRESENTATION, GOING TO TALK ABOUT THE FINANCIAL PLANNING PURPOSE. 
          QUICKLY GET TO WHAT THE RESULTS WERE AS AN OVERVIEW SUMMARY AND THEN TALK ABOUT HOW THE FORECAST WAS PUT TOGETHER, WHERE THE CITY IS TODAY, WHERE IT'S BEEN AND BASED ON THAT, WHERE IT'S HEADED. TALK ABOUT WHAT THE KEY FACTORS ARE THAT DRIVE THE RESULTS, THE CONCLUSION, AND THEN ANY QUESTIONS THAT YOU MAY HAVE. 
          NEXT SLIDE, PLEASE. SO WHAT'S THE PURPOSE, REALLY, TO IDENTIFY THE GENERAL ORDER OF MAGNITUDE OF MILITARY FORCE, BIGGER OR SMALLER THAN A BREADBOX OVER THE NEXT FIVE YEARS TO CONTINUE FUNDING CURRENT SERVICES? NEXT SLIDE, PLEASE. THE APPROACH TO DOING THIS IS ACTUALLY PRETTY STRAIGHTFORWARD. 
          FIRST, WE'RE GOING TO DO OUR BEST JOB OF PROJECTING WHAT WE THINK REVENUES LOOK LIKE OVER THE NEXT FIVE YEARS, AND FROM THAT WE'RE GOING TO SUBTRACT OPERATING AND CIPA COSTS. 
          I MIGHT NORMALLY INCLUDE DEBT SERVICE COSTS IN THE SUMMARY, BUT YOU DON'T HAVE ANY NOW AND NONE ARE ANTICIPATED OVER THE NEXT FIVE YEARS IN THE GENERAL FUND IF WE SUBTRACT THOSE ABOVE ABOUT THE PREVIOUS FIVE. 
          IF WE SUBTRACT, THOSE IN THE BALANCE IS POSITIVE. 
          WELL, THAT'S WHAT'S AVAILABLE TO DO SOME NEW COPAKEN PROJECTS, TAKE CARE OF UNFUNDED LIABILITIES, IMPROVE SERVICE LEVEL. 
          IF IT'S POSITIVE, IF IT'S NEGATIVE, THEN THAT SHOWS THE FORECAST GAP THAT NEEDS TO BE CLOSED AND SOME OPTIONS FOR DOING NOW. 
          NEXT. NOW THE NEXT ONE. 
          REALLY WANT TO EMPHASIZE THAT THE FORECAST IS NOT THE BUDGET, THE BUDGET TO ADOPT, THOSE ARE BASED ON INDIVIDUAL PROGRAM REVIEWS, PRIORITIES AND AFFORDABILITY. 
          THE FORECAST DOESN'T DO MUCH. 
          THE FORECAST IS BASED ON ASSUMPTIONS, IT DOESN'T MAKE EXPENDITURE DECISIONS. 
          IT DOESN'T MAKE REVENUE EXPENDITURES. 
          IT DOESN'T EVEN REALLY ANSWER THE QUESTION, CAN WE AFFORD TO DO X? BECAUSE THAT AT THE END OF THE DAY, THAT'S A QUESTION OF PRIORITIES, NOT A FISCAL CAPACITY FOR, SAY, YOU HAVE ABOUT A 20 MILLION DOLLAR GENERAL FUND RIGHT NOW, SOMEWHERE IN 20 MILLION DOLLARS MUST BE THE RESOURCES TO DO THE MOST IMPORTANT HIGH PRIORITY THINGS. YOU KNOW, THE FACT OF THE MATTER IS THE CITY OF WASCO CAN AFFORD TO DO ANYTHING YOU CAN AFFORD TO DO IN TWO OR THREE THINGS WITH THE CITY OF WASCO CAN'T AFFORD TO DO IS EVERYTHING. SO AT SOME POINT IT COMES DOWN TO WHAT ARE OUR PRIORITIES? WHAT ARE THE MOST IMPORTANT THINGS TO US TO ACCOMPLISH NEXT ONE? SO WHAT DOES THE FORECAST DO IF IT DOESN'T DO THAT ONE AND IDENTIFIES THE KEY FACTORS THAT AFFECT YOUR FISCAL FUTURE, IS HOW DIFFICULT BALANCING THE BUDGET IS LIKELY TO BE. 
          AND THAT'S WHY IT'S USEFUL TO PRESENT THE FORECAST RESULTS BEFORE YOU LOOK AT THE BUDGET, BECAUSE IT HELPS SET THE FRAMEWORK FOR HOW DIFFICULT BALANCING THE BUDGET IS LIKELY TO BE. AND IT HELPS US BETTER UNDERSTAND THE FISCAL CHALLENGES IN MAKING TRADE OFFS BETWEEN FUNDING AND PRIORITY, WHICH IS WHAT THE BUDGET IS ULTIMATELY ALL ABOUT, DETERMINING THE HIGH PRIORITY USES OF THE LIMITED RESOURCES. 
          AND THAT'S GOING TO BE TRUE IN GOOD YEARS AND BAD BECAUSE THE CITY OF WASCO NOR ANY OTHER CITY IN THE STATE IS EVER GOING TO HAVE ALL THE MONEY IT NEEDS TO DO ALL THE THINGS IT 
          [01:00:03]
WANTS TO DO NEXT. 
          LORD. SO THE FORECAST RESULTS, THE SHORT STORY OF THE GENERAL FUND IS IN BETTER SHAPE IN FUNDING OPERATING COSTS AS WE LOOK OUT INTO THE NEXT FIVE YEARS, BUT THERE WILL BE SIGNIFICANT CHALLENGES AHEAD IN FUNDING CRITICAL OR IMPORTANT CIPA PROJECTS. 
          BECAUSE WHAT'S REFLECTED IN THE FORECAST IS A VERY, VERY MODEST CIPA THAT IS LESS IN YOUR MOST RECENT CAPITAL IMPROVEMENT PROGRAMS, BUT THOSE ARE THE SHORT STORY RESULTS. 
          THERE'S REALLY FIVE KEY FACTORS, IF YOU WILL, AND YOUR FISCAL STORY. 
          THE KEY RESULTS ARE DRIVEN BY ASSUMPTIONS ABOUT WHAT'S THE ECONOMIC OUTLOOK AND THE IMPACT ON REVENUES. 
          WHAT'S THE STATE'S BUDGET SITUATION IS? HOW IS THAT LIKELY TO AFFECT YOU? WHAT'S GOING TO BE HAPPENING WITH YOUR PUBLIC SAFETY CONTRACT COSTS? BECAUSE THAT'S OVER HALF OF YOUR GENERAL FUND GOES TO POLICE AND FIRE. 
          WHAT'S HAPPENING WITH YOUR CALIPERS? PENSION COSTS? THAT QUESTION IS RELATED TO YOUR UNFUNDED ACTUARIAL LIABILITY. 
          AND THEN CIPA PROJECTS, AGAIN, VERY MODEST ASSUMPTIONS IN THIS FORECAST FOR THOSE. 
          BUT THOSE ARE THE FIVE THINGS THAT MOSTLY AFFECT THE OUTCOME. 
          AND SO HERE'S JUST A SHORT PICTURE OF WHAT IS THE ANNUAL GAP LOOK LIKE IN SLUMPY THIS YEAR? COMING OFF IS THE WORST YEAR FROM A REVENUE PERSPECTIVE BECAUSE WE'RE STILL RECOVERING FROM COVID-19. 
          AND SO YOU'RE NOT GOING TO SEE REVENUES GET BACK, I THINK, TO PRE COVID-19 STATUS UNTIL ABOUT 22, 23 AND 23, 24. 
          AND THERE YOU SEE A SLIGHT POSITIVE GAP. 
          THE BIG GAP IN 2024 IS TOTALLY DRIVEN BY ONE LARGE LUMPY CIPA PROJECT. 
          AND SO REALLY, IF YOU WILL, KIND OF THE BASE YEAR TO CONSIDER WHAT'S HAPPENING OVER THE NEXT FIVE YEARS, WHAT IS 25, 26 LOOKS LIKE, BECAUSE THAT'S KIND OF WHERE ALL OF THE REVENUES ARE BACK. 
          EXPENDITURES ARE FULLY STABILIZED, INCLUDING YOUR PENSION COSTS. 
          IF YOU LOOK AT THAT, THAT'S ESSENTIALLY A BALANCED BUDGET. 
          THIS IS OFF BY TEN THOUSAND DOLLARS, WHICH I THINK YOUR FINANCE DIRECTOR COULD BALANCE TEN THOUSAND IN YOUR GENERAL FUND STANDING ON THE PAD. 
          SO, YOU KNOW, THE LONG STORY HERE OF THINGS THAT ARE GOING TO CAUSE YOU PROBLEMS IS REALLY FUNDING CAPITAL PROJECTS. 
          BUT YOU'RE OPERATING IN REVENUES. 
          THEY'RE IN PRETTY MUCH BALANCE OVER THE NEXT FIVE YEARS, ESPECIALLY BY THE MOST IMPORTANT YEAR IN THIS ANALYSIS. 
          AND THAT'S THE YEAR FIVE. 
          LOOK, WHY NOT FLOOD? SO THIS IS AN AVERAGE ANNUAL GAP, IF YOU WILL, OF ABOUT ONE HUNDRED AND THOUSAND A YEAR, BUT THAT'S WITH AN AVERAGE SIPI OF ABOUT ONE HUNDRED EIGHTY FOUR THOUSAND A YEAR. 
          NOT A GREAT CAIB COMPARED TO WHERE YOU'VE BEEN, BUT IT DOES SHOW REALLY ON AVERAGE IN EVERY ONE OF THESE YEARS, YOU'RE FUNDING OPERATING COSTS WITH A LITTLE LEFT OVER FOR CAPITAL IMPROVEMENT COSTS WHEN YOU'RE IN THE RESERVES LOOK LIKE AT THE END OF TWENTY FIVE. TWENTY SIX. WELL, THE IMPORTANT THING IS YOU STILL HAVE THEM, OF COURSE, BUT YOU'RE GOING TO BE ABLE ARE YOUR POLICY MINIMUM, YOU'RE GOING TO HAVE ABOUT ONE AND A HALF MILLION UNASSIGNED RESERVES. 
          BUT THAT EXCLUDES THE NINE POINT THREE MILLION ASSIGNMENT FOR THE LABOR HOUSING COMPLEX. 
          SO THE TOTAL RESERVES THERE ARE OVER 10 MILLION DOLLARS. 
          BUT AGAIN, YOU WANT TO SET THAT MONEY ASIDE UNTIL THIS ISSUE IS RESOLVED. 
          NOW IS ANY TIME OVER THE NEXT FIVE YEARS THIS GETS RESOLVED AND GETS RESOLVED FAVORABLY. 
          VENGER UNASSIGNED RESERVES ARE GOING TO GO UP BECAUSE WE WON'T HAVE THAT ASSIGNMENT. 
          BUT THE MOST CONSERVATIVE APPROACH TO TAKE IN THIS FORECAST WAS WHAT WE'VE GOT NINE POINT THREE DOLLARS MILLION ASSIGNMENT OUT THERE UNTIL WE KNOW HOW THAT GETS, UNTIL WE KNOW HOW THAT GETS RESOLVED. NEXT SLIDE, PLEASE. 
          SO LET'S TALK A LITTLE BIT ABOUT WHERE YOU ARE TODAY, WHERE YOU BEEN AND WHERE YOU SEEM TO BE HEADED. NEXT SLIDE, PLEASE. 
          SO WE LOOK AT WHERE YOU'RE AT TODAY. 
          THE TOTAL CITY BUDGET FOR 2021 IS CLOSE TO 50 MILLION DOLLARS, BUT THAT'S ALL FUNDS COMBINED. WHEN WE LOOK AT THE GENERAL FUND, IT'S ABOUT 36 PERCENT OF THAT. 
          AND IN THIS FORECAST, WE'RE REALLY LOOKING AT IT. 
          WE'RE FOCUSING ON THAT RED SLIDE, IF YOU WILL, OF THE CITY'S BUDGET PIE. 
          NEXT ONE. AND WHEN WE LOOK AT THAT, YOUR CURRENT 2021 BUDGET, IT'S ABOUT 17 MILLION DOLLARS. I WANT TO POINT OUT THIS EXCLUDES THE COVID-19 RELATED PROJECTS AND IT EXCLUDES THE LABOR HOUSING COMPLEX PROJECT. 
          WANT TO DO THAT ARE SO LARGE THEY WOULD OTHERWISE KIND OF SKEW YOUR PICTURE. 
          AND IN BOTH OF THOSE CASES, THE KAHRIZAK FUNDING AND THE LABOR HOUSING PROJECT, REVENUES AND EXPENDITURES ARE EXACTLY EQUAL. 
          SO SORT OF SETTING ASIDE REALLY DOESN'T AFFECT THE GENERAL FUND'S FINANCIAL CONDITION AT 
          [01:05:04]
ALL. AND UNLESS IT'S MORE FOCUSED ON KIND OF WHAT YOUR CORE RESOURCES ARE. 
          AND SO FOR RIGHT NOW, OBVIOUSLY, IF WE GO BACK TO THAT SLIGHTLY. 
          PUBLIC SAFETY, THE LARGEST SLICE THAT'S HERE, AND YOU'LL NOTICE THAT OPERATING COSTS ARE ABOUT 62 PERCENT OF THE TOTAL CITY IS 30 PERCENT. 
          YOU HAVE A MUCH BIGGER CAPITAL PROJECT FUNDING TODAY THAN THE FORECAST IS ASSUMING INTO THE FUTURE. BUT AGAIN, PUBLIC SAFETY, THE SINGLE LARGEST PIECE OF YOUR OPERATING BUDGET. 
          NEXT SLIDE, PLEASE. SO IF WE LOOK AT HOW YOU FUND THOSE RESOURCES. 
          PROPERTY TAX AND SALES TAX COMBINED, THEY'RE CLOSE TO 60 PERCENT EXCUSE ME, THEY'RE CLOSE TO 60 PERCENT OF THE TOTAL. 
          YOU CHARGE YOUR ENTERPRISE FUNDS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, THEIR FAIR SHARE. 
          CITY MANAGER COBB CITY CORTEZ, HUMAN RESOURCES FINANCE CORP. 
          AND SO ON. SERVICE CHARGES, IF YOU WILL, FROM THE ENTERPRISE FUND. 
          THAT'S A SIGNIFICANT PIECE OF THIS GRAPH IS A PIECE. 
          ALL OF YOUR OTHER REVENUES COMBINED ARE ONLY NINE PERCENT OF THE TOTAL AND YOU DO NOT TRANSFER THEM LARGELY TO FUND THOSE CAPITAL PROJECTS OF ABOUT 15 PERCENT. 
          NEXT SLIDE, PLEASE. LET'S TALK A LITTLE BIT ABOUT WHERE YOU'VE BEEN. 
          YOU KNOW, THE PAST DOES NOT DETERMINE THE FUTURE. 
          BUT THE QUESTION WE ASK OURSELVES, IF THE FUTURE IS GOING TO BE DIFFERENT THAN THE PAST, WHY SO ONE OF THESE TECHNOLOGIES WAS ADVANCED. 
          AND IF THAT'S WHAT THE PAST LOOKED LIKE, HOW IS THE FUTURE GOING TO BE DIFFERENT THAN THAT? AND WHERE THIS IS REALLY HELPFUL? I THINK IT'S BECAUSE COVID-19 IS A UNIQUE CIRCUMSTANCE. 
          AND SO WE WANT TO GO BACK TO WHEN THINGS WERE SORT OF PREPROGRAMED TRENDS TO TAKE A LOOK AT WHERE WE MOST LIKELY ARE GOING TO BE IN THE FUTURE. 
          NEXT SLIDE, PLEASE. SO WE TOOK A LOOK AT LONG AND SHORT TERM TRENDS AND SOME KEY ITEMS. WHAT'S HAPPENING AT THE NATIONAL AND STATE LEVEL IN TERMS OF ECONOMIC TRENDS, WHAT'S HAPPENED WITH YOUR POPULATION GROWTH, WHAT'S HAPPENED WITH INFLATION? AS WE LOOK AT YOUR OWN RISK FACTORS, WHAT'S HAPPENED WITH YOUR TOP FOUR REVENUES, WHICH ARE ABOUT 65 PERCENT OF THE TOTAL? WHAT'S HAPPENING WITH KEY TRENDS IN TERMS OF THE TOTAL OPERATING COST? MOST IMPORTANTLY, WHAT'S HAPPENED WITH PUBLIC SAFETY COBB WHAT'S HAPPENED WITH THAT SERVICE? AND OF COURSE, THE SHORT STORY THERE IS YOU DON'T HAVE ANY THAT SORT OF WHAT WE DO NEED TO TAKE A LOOK AT THAT FIRST TO CONFIRM THAT THAT'S TRUE AND THEN WHAT'S HAPPENED WITH YOUR FUND BALANCE OVER THAT PERIOD OF TIME. 
          NEXT SLIDE, PLEASE. AND THEN, OF COURSE, WE NEED TO TAKE A LOOK AT WHAT IMPACT COVID-19 HAS. SO WE'RE THINKING ABOUT WHERE YOU'RE HEADED. 
          WE REALLY TOOK A LOOK AT A NUMBER OF DIFFERENT SOURCES. 
          WE'VE TAKEN A LOOK AT YOUR BUDGET AND AUDITED FINANCIAL STATEMENT. 
          LONG AND SHORT TERM FISCAL TRENDS. 
          CALIPERS PROVIDES RATE PROJECTIONS FOR PENSION COSTS. 
          WHAT HAVE MAJOR FORECASTERS IN CALIFORNIA BEEN COPYING? THE LEGISLATIVE ANALYST'S OFFICE, DEPARTMENT OF FINANCE, THE COMPTROLLER'S OFFICE PROVIDE INFORMATION ON IN CALIFORNIA CITIES PROVIDES INFORMATION. 
          YOUR SALES TAX ADVISER, HGL, PROVIDED THE MAIN SOURCE OF INFORMATION ON SALES TAX REVENUE. BUT ULTIMATELY, I DON'T WANT TO PRETEND THAT THERE'S SOME SUPER SOPHISTICATED ECONOMETRIC MODEL OPERATING HERE. 
          TAKE A LOOK AT ALL OF THESE FACTORS, PLUS OUR KNOWLEDGE ABOUT THE COMMUNITY AND WHAT WE THINK IS LIKELY TO HAPPEN IN THE NEXT FIVE YEARS BASED ON THAT NEXT SLIDE, PLEASE. 
          SO WHAT ARE THE KEY FORECAST DRIVERS? AGAIN, THE KEY ASSUMPTIONS ARE WHAT DO WE THINK IS HAPPENING WITH THE ECONOMIC OUTLOOK, ESPECIALLY AS WE RECOVER FROM COVID-19? WHAT'S THE STATE'S BUDGET SITUATION? WHAT ARE YOUR KEY REVENUES? WHAT ARE THE KEY OPERATING DRIVERS AND WHAT'S HAPPENING WITH CAPITAL IMPROVEMENT PROJECTS? NEXT SLIDE, PLEASE. 
          ECONOMIC OUTLOOK. 
          I THINK IT'S IMPORTANT THAT REALLY STRUCK, ESPECIALLY WHEN YOU LOOK AT YOUR REVENUES OVER THE LAST TWO YEARS, THE PUBLIC HEALTH RELATED ECONOMIC AND FISCAL CHALLENGES FACING THE CITY, THOSE ARE REAL. 
          AND THE FACT IS, YOUR REVENUE OUTLOOK WON'T GET ANY BETTER UNTIL THE ECONOMIC OUTLOOK DOES AND THE ECONOMIC OUTLOOK ISN'T GOING TO GET ANY BETTER UNTIL THE PUBLIC HEALTH CRISIS IS OVER. 
          NEXT SLIDE, PLEASE. MOST ECONOMISTS THINK THAT ONCE THE PUBLIC HEALTH CRISIS IS OVER, THAT THE ECONOMY WILL COME BACK STRONG AND QUICKLY. 
          AND THE FORECAST REFLECT THIS CONSENSUS, ALTHOUGH IT ASSUMES THAT THE FISCAL ITEMS, WHICH OFTEN LAG WHAT'S HAPPENING WITH THE ECONOMY, THOSE ARE GOING TO BE MORE MODESTLY RECOVERING. NEXT SLIDE, PLEASE. 
          I THINK IT'S IMPORTANT BECAUSE WE'VE ONLY RELATIVELY RECENTLY GOT THROUGH THE GREAT RECESSION, AND THAT HAD SIGNIFICANT IMPACT ON ON CITY REVENUES THROUGHOUT THE STATE, IN 
          [01:10:04]
THE NATION TO KIND OF COMPARE AND CONTRAST HOW COVID-19 IS DIFFERENT THAN THE GREAT RECESSION. WITH COVID-19, WE HAD A STRONG ECONOMY BEFORE THE PUBLIC HEALTH CRISIS HIT, WHEREAS WITH THE GREAT RECESSION, THAT WAS DUE TO AN ECONOMIC MELTDOWN, SYSTEMIC FAILURE DUE TO THE HOUSING BUBBLE AND SUBPRIME MORTGAGES THAT COLLAPSED A HUGE HOUSE OF CARDS. 
          SO THAT'S A FUNDAMENTAL DIFFERENCE IN WHAT THE ECONOMY LOOKED LIKE BEFORE THE CRISIS HIT. 
          AND AGAIN, THE COVID-19, THE GENERAL ECONOMIC CONSENSUS IS WHEN THE PUBLIC HEALTH ISSUE RECOVERS, THE ECONOMY WILL RECOVER. 
          AND THE RECOVERY FROM THE GREAT RECESSION WAS SLOW, PAINFUL. 
          IT HAPPENED OVER A LONG PERIOD OF TIME, STATED SIMPLY, COVID-19, I BELIEVE THIS IS A ONE TIME PROBLEM. I CAN TELL YOU WHEN IT STARTED, STARTED IN MARCH OF 2012, I CAN'T TELL YOU WITH ANY CERTAINTY WHERE IT'S GOING TO END, BUT I'M CONFIDENT COMPARED TO THE GREAT RECESSION, THERE WILL BE AN ENDPOINT TO THOSE. 
          AND RESPONDING TO IT REALLY IS A ONE TIME PROBLEM OF HOW DO WE GET THROUGH THIS UNTIL OUR REVENUES RECOVER WITH THE GREAT RECESSION, FOLLOWING WAS A SYSTEMIC PROBLEM. 
          WE HAD TO WORK THROUGH MAJOR BANKRUPTCIES, MAJOR GOVERNMENT SUPPORT TO MAJOR INDUSTRIES. 
          WE HAD TO WAIT FOR THE FINANCIAL SYSTEM TO RESET ITSELF. 
          THAT WAS A SYSTEMIC PROBLEM THAT WASN'T GOING TO BE OVER AND FIXED UNTIL THOSE SYSTEMIC PROBLEMS WERE FIXED. 
          NEXT ONE. SO THE ECONOMY IS GOING TO GET BETTER AND COVID-19 IS OVER. 
          WE'RE THAT SURE WISH I KNEW. 
          AND SO DID EVERY OTHER ECONOMIST IN THE NATION, IN THE WORLD, BECAUSE WE COULD ALL MAKE A LOT OF MONEY IN THE STOCK MARKET IF WE DO EXACTLY WHEN THIS WAS GOING TO HAPPEN. 
          BUT WE CAN TAKE A LOOK AT WHAT'S HAPPENING WITH COVID-19 CASES. 
          AND ACTUALLY KERN COUNTY AND CALIFORNIA ARE BOTH PLANTED ON THIS MAP. 
          THE DARK LINE IS KERN COUNTY. 
          THE MORE LIGHT BLUE LINE IS CALIFORNIA. 
          BUT YOU'LL NOTICE THAT IT'S HARD TO DISTINGUISH BETWEEN THOSE TWO BECAUSE KERN COUNTY FOLLOWED SO CLOSELY WHAT'S HAPPENING IN THE STATE OF CALIFORNIA. 
          IN THE SHORT STORY NOW, FROM MARCH TO APRIL, FROM MARCH OF 2010 UNTIL APRIL 21, SLOWLY RAMPING UP A CASES THAT REALLY, REALLY PEAKED LAST SUMMER AND THEN THINGS GOT BETTER. 
          GO BACK TO THE LAST ONE. 
          AND THEN THINGS GOT BETTER AFTER THAT, BUT THEN WHEN THE WINNER OF 2020 CAME, MAN, HUGE SPIKE AGAIN, MUCH BIGGER THAN THE SUMMER INCREASE. 
          BUT THE POSITIVE NEWS HERE IS THIS SEEMS TO BE PLUMMETING ON A VERY LOW BATES'S AVERAGE DAY. THE CASES ARE WAY DOWN AND VACCINATIONS ARE WAY UP. 
          AT THIS POINT, OVER HALF THE STATE OF CALIFORNIA ADULTS HAVE BEEN VACCINATED. 
          SO WE'RE DOING MUCH BETTER. 
          AND THE HOPE IS, AS WE GET THROUGH THESE BETTER MONTHS, AS VACCINATIONS BECOME MORE PREVALENT, AS TRANSMISSION OF CASES DECLINES, MAYBE WE CAN SEE A GLIMMER OF HOPE HERE THAT THE ECONOMIC PROBLEMS MAY RESOLVE THEMSELVES. 
          CAN'T TELL YOU WHEN, BUT SOONER RATHER THAN LATER. 
          BECAUSE IF WE BELIEVE THAT THE ECONOMIC OUTLOOK IS TIED TO COVID-19, WE DO APPEAR TO BE ON HOPEFULLY ON THE WANE IN PART BY BEING PART OF THAT ISSUE. 
          NEXT SLIDE, PLEASE. AND WE CAN SEE THAT IN REVENUES IF WE JUST TAKE A LOOK AT THESE FOUR REVENUE SOURCES THAT ARE CLEARLY THE ONES THAT WERE MOST IMPACTED BY COVID-19 AND WE TAKE IT THE THREE YEAR BARRIER BETWEEN JUST WHAT THEY WERE IN 2018 19, EVEN ASSUMING THERE MIGHT HAVE BEEN GROWTH IN THESE REVENUES IN THAT PERIOD OF TIME, WHEN THERE PROBABLY WOULD HAVE BEEN. BUT IF WE JUST TAKE A LOOK AT THE VARIOUS YOUR GENERAL SALES TAXES BE DOWN OVER THREE YEARS BY 200000 MEASURE. 
          ROC'S BY ONE POINT TWO MILLION, YOUR TOTTI DOWN BY ALMOST 300000 AND BUSINESS LICENSE TAX ONLY 78000. 
          IT'S REALLY CLEAR TO ME THAT THE IMPACT FROM 20 TO 21, 22, ALMOST ONE POINT EIGHT DOLLARS MILLION IN REVENUE LOSSES THROUGH COVID-19. 
          SO IT'S BEEN SIGNIFICANT. 
          IT'S BEEN DEEP, BUT HOPEFULLY WE ARE ON THE CROSS PERHAPS OF BIT STARTING TO GET BETTER. 
          NEXT SLIDE, PLEASE. SO WE TAKE A LOOK AT INFLATION, WE TAKE A LOOK AT OVER THE LAST YEAR OR LAST TWO ABOUT WASCO MAN, IT'S PRETTY MUCH ON AVERAGE ABOUT TWO PERCENT. 
          SO FOR PROJECTED INFLATION FOR THE NEXT FIVE YEARS, WHICH COMES TO THE PLATE WITH SOME RATHER THAN COBB CONSUMPTION IS TWO PERCENT INFLATION. 
          [01:15:01]
NEXT ONE POPULATION'S BEEN VERY CONSISTENT, A LITTLE OVER TWENTY SIX THOUSAND TEN YEARS AGO HERE, ABOUT 28000 TODAY. 
          THE KEY HERE IS I DON'T SEE POPULATION GROWTH AS HAVING A BIG ROLE IN WHAT YOUR REVENUES AND COSTS ARE LIKELY TO LOOK LIKE OVER THE NEXT FIVE YEARS. 
          NEXT ONE STATE BUDGET SITUATION. 
          YOU ALLUDED TO THIS EARLIER. 
          OVER THE LAST 30 YEARS, THE STATE OF CALIFORNIA HAS BEEN THE GREATEST THREAT TO CITIES, HASN'T BEEN ECONOMIC DOWNTURN, HASN'T BEEN CORPORATE SCANDAL, HAS IT BEEN DOTCOM MELTDOWNS? BUT HOW THE STATE RESPONDED TO ITS PROBLEMS, WHAT IS DONE TO CITIES IN RESPONDING TO THAT NATURAL GAS CAUGHT WITH. 
          NO, NO, TAKE AWAY ON THE HORIZON, BUT THE AMAZING THING IS THAT THE STATE OF CALIFORNIA HAS DONE BETTER IN THE LAST THREE YEARS FOR THE STATE OF CALIFORNIA THAN SOME OF ITS BUT TOTALLY HEALTHY TIME. 
          NO ONE WAS TALKING ABOUT GIVING US BACK ANY OF THOSE REVENUES TO US. 
          SO THERE AREN'T ANY SUGGESTED RESTORATIONS. 
          THERE ARE SOME ADDED CONSTITUTIONAL PROVISIONS IN PLACE SINCE THE LAST STATE ROADS. 
          BUT IN LOOKING AT THE NEXT FIVE YEARS, IN MY EXPERIENCE, THAT'S A LONG TIME FOR THE STATE OF CALIFORNIA CITIES ALONG. 
          AND FROM MY PERSPECTIVE, ONE OF THE GREAT THINGS ABOUT THE STATE HAS RESPONDED TO THE CURRENT 19 ISSUE. 
          ITS FIRST LINE OF DEFENSE IS NOT TO TAKE MONEY AWAY FROM CITIES. 
          AND OVER THE PAST 20, 30 YEARS, THAT'S ABSOLUTELY FINE WITH THE STATE OF CALIFORNIA. 
          LOOK, LOOKS LIKE THEY'RE GOING TO AT LEAST FOLLOW THE HIPPOCRATIC OATH. 
          AND THAT'S DO NO HARM TO CITIES. 
          THAT'S WHAT. KIRAN, THE TOP FOUR COUNT FOR ABOUT 65 PERCENT OF CITY REVENUES, AND THAT'S FOR GENERAL PROPERTY TAX, THAT'S THE PROPERTY TAX YOU NOW HAVE DUE TO WHAT'S CALLED THE VEHICLE LICENSE FEE SWAP THROUGH GENERAL SALES TAX AND YOUR MEASURE OF SALES TAX. 
          THAT'S WHAT OTHER KEY REVENUES WE TOOK A LOOK AT YOUR GENERAL AND ADMINISTRATION ALLOCATIONS, YOUR PERMIT AND SERVICE CHARGES, YOUR FRANCHISE FEES AND YOUR BUSINESS LICENSE TAXES. THOSE ARE REALLY KIND OF YOUR TOP 10 REVENUES, IF YOU WILL, AND THEN ACCOUNT FOR WELL OVER 90 PERCENT OF YOUR TOTAL REVENUE. 
          SO WHEN WE PUT THE FORECAST TOGETHER, THIS IS WHAT WE FOCUSED ON, WHAT WE THOUGHT WAS GOING TO HAPPEN WITH THE NEXT SLIDE, PLEASE. 
          SO ON THE PROPERTY TAX ASSUMPTION, BOTH YOUR GENERAL PROPERTY TAXES AND THE PORTION YOU GET DUE TO THE BAILOUT SWAP, THEY'RE BOTH RELATED TO WHAT'S HAPPENING WITH VINCENT VALUATION. THERE ARE SOME FORMULAS THAT YOU DON'T CONTROL AND NO LOCAL GOVERNMENT IN CALIFORNIA CONTROLS ABOUT HOW THESE PROPERTY TAX APPORTIONMENT ARE MADE. 
          THAT'S DETERMINED BY THE STATE AND ADMINISTERED BY THE COUNTY OF KERN. 
          BUT WHAT'S UNDERLYING DRIVING THOSE RESULTS? WHAT'S HAPPENING TO YOUR ASSESSED VALUATION? BECAUSE WE CAN CITE THE APPORTIONMENT, EVERYONE, BUT THE THING THAT'S REALLY DETERMINING YOUR PIECE OF THE PIE IS WHAT'S HAPPENING WITH THAT VALUATION. 
          SO TAKING A LOOK AT THOSE 10 YEAR TRENDS, YOU CAN SEE THAT IN THE FIRST FIVE YEARS OF THIS FORECAST, PROPERTY TAX REVENUES STAYED PRETTY FLAT. 
          BUT STARTING IN 2016, 17, REALLY BEEN ON THE RISE. 
          AND SO WHEN WE LOOK AT THAT AND TRY AND FIGURE OUT THE FORECAST IN THE LAST YEAR, YOU HAVE ON AVERAGE ABOUT INCREASES THAT RANGE BETWEEN FIVE AND SEVEN PERCENT A YEAR. 
          ON AVERAGE, THIS LAST YEAR ONLY GREW BY ABOUT FOUR PERCENT. 
          SO FOR THE FORECAST FOR NEXT YEAR, BECAUSE THERE MIGHT BE SOME DELINQUENCIES. 
          THE BASIC VALUATION ITSELF, I SHOULD POINT, IS USUALLY VERY SLOW TO RESPOND TO THESE TYPES OF ITEMS, YOU MIGHT HAVE PEOPLE WHO CHOOSE TO NOT MAKE THEIR PROPERTY TAX PAYMENTS SO YOU COULD HAVE SOME DELINQUENCY. 
          WE SAW SOME SLOWING DOWN IN ASSET VALUATION IN 2001. 
          SO WE'RE LOOKING AT JUST A REALLY MODEST PROPOSITION. 
          218 TYPE ADJUSTMENT TOOK TWO PERCENT GROWTH NEXT YEAR. 
          BUT THEN ONCE THIS IS OVER, WHICH I EXPECT TO HAPPEN BY THE MIDDLE OF 21, 22, I THINK ASSET VALUATIONS WILL COME BACK AND WE'LL COME BACK STRONGLY AND WE'LL START TO REFLECT CHANGES THAT YOU SAW MORE BEFORE 19. 
          AND IN THIS CASE, I ACTUALLY SEE THEM GETTING STRONGER IMMEDIATELY AND THEN SORT OF TAPERING OFF THE 10 YEAR TREND. 
          SO FOR ONE OF YOUR MOST SIGNIFICANT REVENUE SOURCES, THIS IS A PRETTY POSITIVE OUTLOOK FOR WHAT WE SEE HAPPENING WITH PROPERTY TAX REVENUES. 
          NEXT SLIDE, PLEASE. YOUR GENERAL SALES TAX REBATES, YOU CAN SEE HERE, THIS HAS NOT BEEN CONSISTENT. THERE'S BEEN THIS IS KIND OF YO YO HAVE BEEN UP AND DOWN. 
          THE HIGHEST LEVEL OF REVENUES WAS IN 2018 19, RIGHT BEFORE COVID-19 HIT SAW A DECREASE IN 1920, LARGELY DUE TO COVID 19. 
          AND SO, AZEALIA SALES TAX ADVISOR, THESE ARE THE PERCENTAGE CHANGES THEY SEE. 
          [01:20:03]
THEY SEE CONTINUED DECREASES IN THE NEXT FISCAL YEAR, DOWN BY ABOUT TWO POINT SEVEN PERCENT. BUT ONCE COVID-19 IS BEHIND IT, THEY SEE ACTUALLY PRETTY STRONG GROWTH IN SALES TAX REVENUES AROUND THREE AND A HALF PERCENT FOR THE REST OF THE FORECAST PERIOD. 
          NEXT SLIDE WITH THIS REVENUE SOURCES TO DO FOR YOU TO HAVE TO HAVE ANY MEANINGFUL TRENDS. 
          BUT WE'RE TALKING ABOUT AIKAU BELIEVES, YOUR SALES TAX ADVISOR, THEY THINK THAT'S REVENUE BECAUSE IT IS A SLIGHTLY DIFFERENT BASE AND YOU'RE GENERALLY ONE PERCENT HAVING A SLIGHTLY DIFFERENT RECOVERY. 
          IT'S STILL GOING TO BE DOWN NEXT YEAR, THEY SAID, BUT ONLY BY ONE PERCENT COME BACK ABOUT TWO POINT FOUR PERCENT. 
          AND IN THE OUT YEARS, THE GROWTH THERE LOOKS PRETTY MUCH LIKE THE SAME AS GENERAL SALES TAX REVENUE. SO, AGAIN, ANOTHER YEAR DOWN COMPARED TO 2018 19, BUT THEN SOME RECOVERY IN THE OUT YEARS. NEXT SLIDE, PLEASE. 
          ALL OF THE OTHER REVENUES, GENERAL ADMINISTRATION ALLOCATIONS, WHICH IS BASED ON YOUR INDIRECT COST ALLOCATION PLAN, SHOULD GROW BY BY HOW OPERATING COSTS GROW ABOUT TWO PERCENT A YEAR FOR DEVELOPMENT REVIEW FEES. 
          WE JUST TOOK A LOOK AT THOSE CAN VARY FROM YEAR TO YEAR BASED ON, YOU KNOW, DEVELOPMENT ACTIVITY, ANYTHING THAT'S UNIQUE THAT MIGHT BE COMING UP. 
          SO IT TOOK THE AVERAGE OF THE LAST THREE YEARS AT THE PROJECTION FOR NEXT YEAR AND THEN SHOW THAT IT GROWS BY ABOUT TWO PERCENT THEREAFTER AND FOUR OTHER PERMANENT SERVICE CHARGES. THEY GROW BY ABOUT TWO PERCENT. 
          FRANCHISE FEES, AGAIN, SHOULD GROW BY ABOUT INFLATION IN YOUR COUNTY. 
          AND THIS IS WHY YOU DID SEE SIGNIFICANT DECREASES FROM 2018 19, YOUR BASE YEAR. 
          WE SEE THOSE RETURNING TO THE BASE YEAR LEVELS BY ABOUT 23, 24, AND THEN GROWING BY INFLATION THEREAFTER. 
          AND ALL OF THE OTHER REVENUE SOURCES, WHICH ARE VERY SMALL PIECE OF THE PIE, ABOUT FIVE PERCENT OF TOTAL, JUST PROJECTED THOSE TO BE FLAT THROUGH THE FORECAST PERIOD. 
          NEXT SLIDE TRANSFERS IN. 
          THOSE ARE BIG THIS FISCAL YEAR BECAUSE OF CAPITAL PROJECTS AND TRANSFERS FROM OTHER FUNDS TO HELP SUPPORT THEM. 
          BUT YOU DO HAVE ONE CONTINUING SOURCE OF TRANSFERS THEM AND NOT JUST YOUR GAS TAX, EXCLUDING ESPITIA ONE PORTION WHICH YOU USE FOR CAPITAL PROJECTS. 
          IT'S BIGGER CITY PROFITS TO TRANSFER THOSE TO THE GENERAL FUND TO OFFSET MAINTENANCE COSTS. AND THE FACT OF THE MATTER IS YOU SPEND FAR MORE ON GAS TAX ELIGIBLE MAINTENANCE COSTS THAN THE LIMITED AMOUNT OF REVENUE. 
          AND SO THIS PROCESS OF TRANSFERRING THOSE REVENUES TO HELP OFFSET THE GENERAL FUND, THAT'S A MAINSTREAM PRACTICE USED BY MANY, MANY OTHER CITIES IN CALIFORNIA. 
          THAT'S ABOUT FIVE HUNDRED TWENTY SEVEN THOUSAND LOOKING AT CURRENT YEAR PROJECTIONS. 
          AND WE'RE PROJECTING THAT TO STAY FLAT. 
          AS A PRACTICAL MATTER, GAS TAX REVENUES HAVEN'T GROWN IN MANY, MANY YEARS. 
          IN FACT, THERE'S A CHANCE THEY INCREASED SLIGHTLY BECAUSE IT'S BASED ON IT'S BASED ON SALES TAX REVENUES, BASED ON PER GALLON. 
          AND AS PEOPLE HAVE MORE ENERGY EFFICIENT CARS, WHETHER THAT'S, YOU KNOW, ELECTRIC OR JUST A MORE EFFICIENT GARCIA, JOHN, WELL, GALLONS GO DOWN. 
          THEY DON'T GO ON EVEN IF THE GAS PRICE GOES UP BECAUSE THE GAS TAX IS NOT AS A PERCENTAGE. IT'S JUST A FLAT 18 CENTS A GALLON GASOLINE. 
          SO WHEN WE LOOK AT OPERATING COSTS, BASICALLY WE'RE PROJECTING THAT THOSE RUN BY INFLATION, WITH TWO NOTABLE EXCEPTIONS, WHAT DO WE THINK IS HAPPENING WITH PUBLIC SAFETY CONTRACTS AND WHAT'S HAPPENING FOR CORPORATE CONTRIBUTIONS TO OFFSET YOUR UNFUNDED ACTUARIAL LIABILITY OR THE USUAL NEXT SLIDE, PLEASE. 
          SO JUST TO PUT THAT IN PERSPECTIVE, OPERATING TRENDS IN TOTAL OVER THE LAST 10 YEARS, VERY, VERY FLAT THROUGH 2016 17, YOU SEE A LITTLE BIT OF A BUMP FROM 2008 ON. 
          AND THAT'S REALLY DRIVEN BY YOUR MEASURE. 
          TAX REVENUES REDUCE SOME OF THOSE IN ORDER TO IMPROVE STREET MAINTENANCE COSTS, IMPROVE PUBLIC SAFETY. SO YOU DO SEE A BIT OF AN INCREASE THERE. 
          BUT THAT'S REALLY DRIVEN BY MEASURE, BY MEASURE TAX REVENUES. 
          I THINK WHEN I LOOK AT THIS SLIDE, YOUR CITY HAS DONE AN OUTSTANDING JOB OF TRYING TO CONTAIN ITS OPERATING COSTS INCREASES, ESPECIALLY IN LIGHT OF THE FACT THAT IN THESE MIDDLE YEARS, SIGNIFICANT COST INCREASES IN PAYING FOR YOUR CALIPERS PENSIONS. 
          SO THE FACT YOU'VE BEEN ABLE TO CONTAIN COSTS LIKE THE SPEECH WAS TO THE CITY IN ITS EFFORTS TO MITIGATE OPERATING COSTS INCREASES. 
          NEXT SLIDE, PLEASE. WE DO SEE A DIFFERENT STORY, OF COURSE, WITH PUBLIC SAFETY COSTS BOTH STAY PRETTY CONSTANT THROUGHOUT 2016 17, BUT NOW WE START TO SEE INCREASES IN THOSE 
          [01:25:01]
CERTAINLY ABOVE INFLATION, RAISING ABOUT FIVE TO SIX PERCENT A YEAR IN THE LAST THREE YEARS. NEXT SLIDE, PLEASE. 
          AND BEFORE I LEAVE HERE, I SHOULD POINT OUT THAT WHEN IT COMES TO POLICE AND FIRE, KERN COUNTY HAS BEEN FACING THE SAME KIND OF PENSION COST INCREASES THAT THE CITY HAD. 
          SO THESE ARE PUBLIC SAFETY COST ASSUMPTIONS FOR THE SHERIFF'S CONTRACT IN THE FIRE CONTRACT. IF YOU LOOK AT THE SHERIFF'S CONTRACT, IT'S ABOUT FOUR POINT NINE MILLION. 
          NOW, THESE COSTS ARE BASED ON THE CITY MANAGER'S PRESENTATION TO YOU IN GOAL SETTING BACK IN LATE FEBRUARY. 
          BUT THAT MAKES SENSE BASED ON HISTORIC TRENDS THIS YEAR, CONTRACT GOES UP IN THE FIRST THREE OR FOUR YEARS HERE BY ABOUT HISTORIC AMOUNTS, ABOUT FIVE TO SIX PERCENT A YEAR. 
          BUT IT DOES TAPER OFF TOWARDS THE END INCREASE FROM 24, 25 TO 25, 26. 
          THAT'S ONLY ABOUT THREE PERCENT, TWO OR THREE PERCENT ON THE FIRE CONTRACT. 
          THE CITY MANAGER RECEIVED A SIGNIFICANT INCREASE IN THAT, ALMOST DOUBLING NEXT FISCAL YEAR BASED ON INFORMATION THAT'S BEEN PROVIDED BY HIM. 
          BUT AFTER THAT, BIG GROWTH IN THE FORECAST BY TWO PERCENT A YEAR. 
          REALLY IMPORTANT HERE WHEN WE LOOK AT THE STATE DECIDE THIS IS NOT YOUR BUDGET, YOU'LL SEE THE BUDGET AT THE END OF MARCH. 
          THESE ARE JUST THE COST ASSUMPTIONS AT THIS POINT. 
          WELL, DON'T GET MORE REFINED OVER THE NEXT SEVERAL MONTHS. 
          OF COURSE THEY WILL. AND YOU'LL BE PRESENTED IN YOUR IN YOUR FIRST YEAR'S BUDGET IN 21 22 WITH THE BEST INFORMATION THE CITY HAS AVAILABLE AT THAT TIME. 
          JUST WANT TO EMPHASIZE, THESE ARE ASSUMPTIONS WE THINK ARE REASONABLE, BUT THAT'S ALL. 
          THEY ARE NOT FLAWED. 
          AND ON CALTRANS PENSION COSTS, JUST A LITTLE BIT OF BACKGROUND ABOUT YELPERS, FIRST OFF, THE CITY, BECAUSE YOU HAVE A RELATIVELY SMALL EMPLOYER, YOU COUNT YOUR POOL WITH OTHER AGENCIES THROUGHOUT THE STATE OF CALIFORNIA THAT HAVE A SIMILAR BENEFIT PROGRAM THAT ARE ABOUT YOUR SIZE. 
          AND AT THIS POINT, YOU HAVE FOUR DIFFERENT PLANS WITH CALIPERS. 
          YOU HAVE WHAT ARE REFERRED TO AS CLASSIC EMPLOYEES. 
          YOU MAY OR MAY NOT REMEMBER CLASSIC COKE AND NEW COKE, BUT THIS IS SORT OF THE TAKE OFF. 
          IMAP, YOUR CLASSIC EMPLOYEE, THEY WERE HIRED INTO THE CALIPERS SYSTEM AND HAVE HAD CONTINUOUS EMPLOYMENT SINCE THEN, BEFORE 2013. 
          WHAT'S REFERRED TO AS PROPRE, AND THAT'S PENSION LIABILITY, PENSION REFORM, THAT'S A FACTOR. LET ME TALK ABOUT YOUR CLASSIC EMPLOYEES FOR PEPLUM. 
          YOU WAS OFFERED A SECOND TIER WHERE YOU OFFERED, EVEN BEFORE KAPRE, LOWER RETIREMENT BENEFITS TO NEW EMPLOYEES. 
          THERE'S STILL CLASSIC EMPLOYEES AS FAR AS CALIPERS IS CONCERNED. 
          SECOND TIER, BUT THEY'RE NOT, QUOTE, PEPER EMPLOYEES, PEPER EMPLOYEES OF THOSE HIRED AFTER DECEMBER 2012. 
          AND THEY HAVE A MUCH LOWER LEVEL OF BENEFITS THAN ANY OF YOUR CLASSIC EMPLOYEES. 
          AND THEN YOU HAVE WHAT I CALL A LATAPY SAFETY PLAN. 
          YOU USED TO PROVIDE YOUR OWN POLICE DEPARTMENT SERVICES BEFORE YOU CONTRACTED WITH THE COUNTY FOR MANY, MANY YEARS AGO. 
          YOU STILL HAVE LIABILITIES FOR THOSE EMPLOYEES. 
          YOU HAVE ABOUT 16 EMPLOYEES USED TO BE EMPLOYED BY THE CITY AS PUBLIC SAFETY OFFICERS. 
          THAT IS STILL HAVE RETIREMENT BENEFITS WITH YOU. 
          SO THESE ARE THE FOUR PLANS AND THEY ALL HAVE DIFFERENT ACTUARIAL LIABILITIES. 
          THEY ALL HAVE DIFFERENT CONTRIBUTIONS YOU NEED TO MAKE. 
          NEXT SLIDE, PLEASE. AND IN FUNDING THOSE FOUR PLANS, YOU HAVE TWO COMPONENTS, YOU HAVE THE EMPLOYEE SHARE OF THAT COST, WHICH IS NOW MANDATED BY THE STATE OF CALIFORNIA, AND YOU HAVE THE EMPLOYER SHARE AND THE AND THE EMPLOYEE SHARE IS ORGANIZING THE TWO COMPONENTS, THE NORMAL COST. 
          THIS IS THE PERCENTAGE OF PAYROLL THAT YOU NEED TO CONTRIBUTE FOR EACH OF THE FOUR PLANS IN ORDER TO KEEP CURRENT ACTUARIAL BENEFITS AND COSTS IN LINE. 
          AND THEN YOU HAVE THAT ACCRUED OVER A LONG TERM PERIOD OF TIME, UNFUNDED LIABILITY, AND THAT'S THE EMPLOYER'S RESPONSIBILITY AS WELL. 
          BUT THEY SHOW THAT TO YOU AND THEY CALCULATE THOSE TWO THINGS SEPARATELY. 
          NEXT SLIDE, PLEASE. IT'S REALLY IMPORTANT THAT IN SETTING THOSE REGS, THE EMPLOYER PORTION IS SET BY STATUTE. 
          SO IF THINGS GET BETTER OR WORSE, MORE LIKELY WORSE WHEN IT COMES TO FUNDING COWBIRDS, THAT'S GOING TO SHOW UP IN THE EMPLOYER REYNA. 
          EITHER IN THE NORMAL COURSE OR THE UNFUNDED LIABILITY COSTS, ALL OF THE RISK, IF YOU WILL, ALL OF THE BENEFIT TO BUT ALL OF THE RISK LIES WITH THE EMPLOYER'S SHARE. 
          AND THERE ARE A NUMBER OF ASSUMPTIONS THAT FACTOR INTO HOW CALIPERS SETS THESE RATES, WHAT THEY THINK INFLATION WILL BE IN THE FUTURE, WHAT THEY THINK FUTURE EARNINGS WILL BE, LICENSE BACK. THIS IS A BIG FACTOR ONCE PEOPLE START TAKING THOSE BENEFITS. 
          HOW LONG ARE THEY GOING TO BE ELIGIBLE TO TAKE THOSE? 
          [01:30:03]
BUT OF ALL OF THESE, PROBABLY THE MOST SIGNIFICANT ASSUMPTION IS WHAT'S CALLED THE DISCOUNT RATE. AND THAT'S HOW MUCH DOES CALIPERS THINK THEY'RE GOING TO EARN ON THOSE INVESTMENTS BECAUSE THEY'RE TRYING TO TAKE IN CURRENT MONEY TO PAY FOR BENEFITS AND OUTFLOWS THAT ARE MANY, MANY YEARS IN THE FUTURE. 
          SO WHAT KIND OF INVESTMENT RETURN DO THEY THINK THEY'RE GOING TO GET ON THOSE ASSETS THEY RECEIVED TODAY, BUT THEY'RE NOT GOING TO HAVE TO PAY OUT FOR MANY, MANY YEARS. 
          NEXT SLIDE, PLEASE. OH, WAIT A MINUTE, LET'S GO BACK TO THE PREVIOUS SLIDE, TWO IMPORTANT POINTS ON THIS, THE CURRENT ASSUMPTION IS THAT CALTRANS WILL EARN OVER THE LONG TERM, NOT NEXT YEAR AND THE YEAR AFTER, BUT IN THE LONG TERM, THEY'LL EARN SEVEN PERCENT ON THEIR INVESTMENTS. AND HERE'S THE THING THAT SURPRISED THEM. 
          IF THEY MAKE SMALL CHANGES IN THIS ASSUMPTION, IF IT WAS SEVEN AND A HALF TO SEVEN OR IF IT WAS SIX AND A HALF OR FOUR OR FIVE INSTEAD OF SEVEN, SMALL DIFFERENCES MAKE A HUGE, HUGE DIFFERENCE IN THE ACTUARIAL LIABILITY BECAUSE IT GETS PROJECTED SO FAR INTO THE FUTURE. THAT'S WHAT. 
          SO HOW IS CALTRANS BEEN DOING ON THEIR ENDORSEMENTS? WELL, YOU LOOK AT THIS SLIDE OVER THE LAST 10 YEARS, IT'S A HUGE YO YO. 
          HEY, BACK IN 2011, THEY EARNED OVER TODAY AND 21 PERCENT YIELD, BUT THAT WAS FOLLOWED IMMEDIATELY IN THE NEXT YEAR BY ALMOST ZERO RETURNS. 
          DARKNESS FOLLOWED BY VERY STRONG YIELD, 12 PERCENT, ALMOST 20 PERCENT, AGAIN, FOLLOWED BY LOWER YIELDS. THE IMPORTANT THING HERE IS NOT TO FOCUS NECESSARILY ON ANY ONE YEAR PUT CALIPERS IS NOT A ONE YEAR INVESTOR, THEY'RE NOT A FIVE YEAR AND THEY'RE A 30 YEAR INVESTMENT. IN FACT, IN MANY WAYS, THEY'RE AN ORDINARY INVESTOR. 
          THEY'RE INVESTING MONEY FOR THE VERY, VERY LONG TERM. 
          SO LET'S TAKE A LOOK AT HOW THEY JOHN IN THE LONG TERM. 
          LAST YEAR, THEY WERE ABOUT FIVE PERCENT. 
          OVER THE LAST FIVE, THERE WERE SIX POINT THREE. 
          BUT IN THE LAST 10 YEARS, THEY EARNED EIGHT AND A HALF PERCENT ON THEIR INVESTMENTS. 
          SO THAT SEVEN PERCENT ASSUMPTION REALISTIC. 
          I THINK IT'S REASONABLE. 
          THEY CERTAINLY HAVE A TRACK RECORD OF BEING ABLE TO DO THAT NEXT. 
          QUICK, PLEASE. CALIPERS FACTORS, THEIR EARNINGS AND HOW THEY SET RATES ON A FISCAL YEAR BASIS, SO WE WON'T KNOW HOW THEY DID THIS FISCAL YEAR UNTIL THE END OF JUNE OR FOR THE CALENDAR YEAR, JANUARY, DECEMBER, THEY EARNED 12 PERCENT ON THEIR INVESTMENTS. 
          SO THAT, OF COURSE, WAS BEFORE COVID-19. 
          SO WE DON'T KNOW HOW THAT'S GOING TO AFFECT THE LAST SIX MONTHS OF THE YEAR, ONLY POINTING OUT A BIG FACTOR IN WHAT CALIPERS SAYS YOUR CONTRIBUTIONS ARE GOING TO BE NEXT YEAR OR THE YEAR AFTER REALLY HINGES ON HOW THEY'RE GOING TO DO ON THEIR INVESTMENTS. 
          THEY CERTAINLY GOT IN SEVEN PERCENT MANY, MANY TIMES BETTER. 
          AND ON AVERAGE OVER THE LAST YEAR, THEY'VE CERTAINLY BEEN WITHIN THAT RANGE. 
          SO IT'S REASONABLE, A REALISTIC ASSUMPTION, KEEPING IN MIND THAT IN THE LONG TERM, IF THEY START DOING SIGNIFICANTLY WORSE THAN SEVEN PERCENT, YOU'RE GOING TO SEE A SIGNIFICANT IMPACT ON THEIR NORMAL CONTRIBUTIONS. 
          AND YOUR THE NEXT SLIDE, PLEASE. 
          SO ABOUT YOUR EMPLOYER CONTRIBUTIONS, YOU KNOW, YOUR NORMAL COST DOESN'T STABILIZE BASED ON THE RATES THAT YOU PAID THIS YEAR, WHAT YOU'RE PROJECTED TO PAY NEXT YEAR AND FOR THE FOUR YEARS FOLLOWING ON YOUR UNFUNDED LIABILITY COST. 
          NOT QUITE YET, BUT I HAVE TO BE HONEST, I THOUGHT THIS WOULD BE A REALLY BIG FACTOR IN THE FORECAST. BUT OF COURSE, THAT'S WHAT YOU HAVE TO DO. 
          THE WORK IS A FACTOR, BUT IT'S NOT AS BIG AS I THOUGHT IT WOULD BE. 
          NOT SLIGHTLY. SO IF WE LOOK AT PROJECTED UNFUNDED LIABILITY COSTS, WHICH ARE NOT STATED AS A PERCENTAGE OF ANYTHING, RIGHT. 
          THOSE ARE YOUR OBLIGATIONS IF YOUR PAYROLL WAS ZERO. 
          YOU STILL HAVE THESE OBLIGATIONS BECAUSE YOU HAVE TO PAY TO LIQUIDATE THE PAST. 
          IF YOU LOOK HERE, YOU'RE TALKING TO YOUR EMPLOYEES, PEPER EMPLOYEES AND YOUR LEGACY PLAN. 
          THOSE ARE ONE, AT LEAST FOR THE SECOND TIER EMPLOYEES. 
          AND IT'S NOT EVEN A HUGE AMOUNT OF MONEY, ABOUT TWO THOUSAND DOLLARS A YEAR. 
          THE LEGACY PLANT, THAT'S FORTY NINE THOUSAND A YEAR, BUT IT STAYS REALLY, REALLY FLAT. 
          I CAN SHARE WITH YOU I'VE DONE A NUMBER OF FORECASTS FOR OTHER AGENCIES THAT HAVE PUBLIC SAFETY LEGACY PLANS. 
          AND THIS BECAME THE MOST EXPENSIVE PART, FASTEST GROWING PART OF THEIR CONTRIBUTIONS. 
          THAT'S JUST NOT YOUR CASE. 
          THAT'S A REALLY POSITIVE THING. 
          THAT'S A REALLY POSITIVE THING FOR YOU. 
          WE LOOK AT YOUR SECOND TIER EMPLOYEES AGAIN, THESE ARE FAIRLY SMALL DOLLAR AMOUNTS. 
          REALLY, THE BIG INCREASES ARE HAPPENING WITH THE CLASSIC EMPLOYEE. 
          [01:35:03]
THE BIGGEST INCREASE HAPPENS NEXT YEAR. 
          BUT IF YOU LOOK AT THIS, THEY TAPER OFF AFTER 23, 24. 
          THEY ONLY GROW BY ABOUT TWO OR THREE PERCENT AFTER THAT. 
          I DON'T WANT TO SAY THESE AREN'T SIGNIFICANT COSTS, BUT THEY AREN'T THE DRIVER, QUITE FRANKLY, THAT I THOUGHT THEY WOULD BE. 
          YOUR PUBLIC SAFETY CONTRACT COBB ARE MUCH MORE SIGNIFICANT FACTOR IN THE FORECAST THAT ARE CALIPERS COBB. THESE ARE DEFINITELY GROWING MORE THAN TWO PERCENT A YEAR, WHICH IS THE ASSUMPTION FOR THE OTHER COSTS, BUT NOT GREAT, QUITE FRANKLY, AS I THOUGHT THEY MIGHT BE NEXT COBB. 
          CAPITAL IMPROVEMENT PLAN. 
          THIS IS BASED ON YOUR CURRENT ADOPTED BUDGETS, 21 22. 
          IT HAS THE RESOURCES CIPA, SO I USE THAT AS THE BASIS FOR NEXT YEAR. 
          KEEPING IN MIND THIS ISN'T BASED ON THE BUDGET. 
          THIS IS BASED ON PROJECTS YOU'D LIKE TO SEE HAPPEN. 
          THIS ISN'T BASED ON MY ESSENTIAL NEEDS, BUT MAY SURFACE AS PART OF THIS BUDGET PROCESS. 
          IT JUST FOCUSES ON WHAT WERE THE NEXT FOUR YEARS ANY. 
          THE ADOPTED CIPA PROJECT FORECASTED AVERAGES ABOUT ONE HUNDRED EIGHTY FOUR THOUSAND A YEAR. IF THIS WAS IN MY PAYCHECK, THIS WOULD BE A SIGNIFICANT AMOUNT OF MONEY, BUT WHEN YOU COMPARE THIS TO WHAT WAS IN YOUR ADOPTED 21 22 VIP, THAT WAS ABOUT THREE POINT ONE MILLION. SO THIS IS AN ASSUMPTION, A SIGNIFICANTLY SMALLER NUMBER. 
          AND OBVIOUSLY THIS FORECAST GAP WOULD BE SIGNIFICANTLY BIGGER IF WE ASSUME SOMETHING LIKE THREE MILLION DOLLARS A YEAR GOING FORWARD. 
          NEXT SLIDE, PLEASE. SO THESE ARE THOSE PROJECTS THAT ARE REFLECTED IN THERE FOR THE FIFTH YEAR, WHICH OBVIOUSLY WASN'T INCLUDED IN LAST YEAR'S FIVE YEAR PLAN. 
          I JUST TOOK THE AVERAGE OF THE PREVIOUS FOUR YEARS. 
          YOU'LL SEE THIS HAS A FAIRLY NARROW RANGE OF INCREASES, WITH ONE EXCEPTION. 
          AND THIS IS WHAT IS REFLECTED IN THAT FORECAST HERE. 
          WE CALL 24 25 HAD A MUCH BIGGER GAP, AND THAT'S REALLY DRIVEN BY THE LEAST IN THE CURRENT CITY COURTHOUSE DEMOLITION AND FOUR HUNDRED THOUSAND. 
          THAT'S WHAT MAKES THAT BIG COST. 
          BUT IF YOU LOOK AT THE AVERAGE OF THOSE FOUR YEARS, IT'S ONE HUNDRED EIGHTY FOUR THOUSAND DOLLARS. NEXT SLIDE, PLEASE. 
          WHAT'S NOT CLEAR, I DON'T KNOW IF ANY OF YOU ARE DETECTIVE FICTION AFICIONADO. 
          I ACTUALLY AM. 
          YOU KNOW, SHERLOCK HOLMES IS SORT OF ONE OF THE GREAT DETECTIVE CHARACTERS IN FICTION. 
          AND SHERLOCK HOLMES, THE MOST IMPORTANT CLUE IS THE ONE THAT DOESN'T HAPPEN. 
          AND THIS IS KIND OF IN THE HANDS OF THE BASKERVILLES. 
          ONE OF THE IMPORTANT DEDUCTIONS THAT SHERLOCK HOLMES MAKES IS THAT THE WHOEVER THE MURDERER MUST HAVE BEEN KNOWN TO THE VICTIM. 
          AND THE REASON HE CONCLUDES THAT IS THE DOG DIDN'T BARK. 
          SO FOR HIM, THE MOST IMPORTANT CLUE WAS THE DOG THAT DIDN'T BARK. 
          AND SO ONE OF THE MOST IMPORTANT FACTORS IN THIS FORECAST IS PROBABLY WHAT THE REVENUES ARE HERE. YOU WILL UNDOUBTEDLY BE ELIGIBLE FOR COMPETITIVE GRANT REVENUES AT SOME POINT, BUT THEY DON'T NECESSARILY MEAN I GO BACK TO THE LIKELY THEY DON'T NECESSARILY MEAN YOUR PRIORITIES. IT DOESN'T EXCLUDE THE MOST RECENTLY ADOPTED ARPA PROCEEDS. 
          HOPEFULLY WE'LL BE ABLE TO TAKE A LOOK AT THOSE PRIORITIES IN LIGHT OF THE BUDGET PROCESS. BUT THAT'S REALLY GOING TO BE A DIFFERENT DECISION-MAKING PROCESS FOR YOU AS PART OF A BUDGET, BECAUSE, AGAIN, THOSE AREN'T THE FUNDS FROM THE FEDERAL GOVERNMENT WITHIN FEDERAL GOVERNMENT GUIDELINES. 
          BUT I DO WANT TO STRESS THAT'S NOT HERE. 
          SO FOR SOME OF THE CAPITAL PROJECTS YOU MAY WANT TO DO FOR SOME OF THE GAPS YOU MAY WANT TO FILL. THOSE ARE POTENTIALLY POTENTIALLY AVAILABLE. 
          OF COURSE, WHATEVER UNMET OPERATING IN CAPITAL MEANS, ANY UNMET OPERATING NEEDS IN YOUR CURRENT BUDGET, WHICH IS THE BASELINE FOR PROJECTIONS, ANY CAPITAL NEEDS THAT CAN'T BE MET WITHIN ONE HUNDRED EIGHTY FOUR THOUSAND DOLLARS. 
          THAT'S NOT A HUGE DEVELOPMENT IMPACT. 
          THESE ARE NOT HERE BECAUSE YOU CAN ONLY USE THOSE TO FUND NEW DEVELOPMENT SHARE OF CAPITAL FACILITIES. 
          SO THOSE ARE, AS YOU KNOW, FROM. 
          I THINK IT'S IMPORTANT TO KNOW IF THIS IS WHAT THE FORECAST LOOKS LIKE TODAY, HOW IS IT LIKELY TO LOOK DIFFERENT WHEN THE CITY MANAGER COMES BACK TO YOU WITH THE PARLIAMENTARY BUDGET FOR NEXT FISCAL YEAR? WELL, OBVIOUSLY, THOSE TOP FOUR REVENUE PROJECTIONS, THERE'S AN ASSUMPTION HERE FOR RECOVERY, AND THAT'S FAR FROM A SURE THING. 
          THE PUBLIC SAFETY CONTRACTS WITH BETTER INFORMATION. 
          DO WE HAVE, AT LEAST FOR NEXT FISCAL YEAR, PENSIONS COULD CHANGE? I THINK IT'S UNLIKELY, AT LEAST FOR NEXT FISCAL YEAR. 
          IT IS COBB IS ALREADY COMMITTED TO THOSE RATES. 
          AND THEN LASTLY, INSURANCE THAT DOESN'T APPEAR TO HAVE BEEN A BIG COST FACTOR IN THE PAST. BUT IN THE PAST, FOR MANY CITIES, WHAT'S HAPPENED TO INSURANCE COSTS, WORKERS COMP LIABILITY HAS BEEN A BIG, BIG FACTOR, NOT A FACTOR IN THIS FORECAST, BUT YOU'RE GOING TO GET PROPOSED RATES FROM YOUR INSURANCE DURING PALLARES AUTHORITY FOR NEXT FISCAL YEAR. 
          [01:40:05]
AND YOU JUST HAVE TO SEE WHAT THOSE WITH THOSE LOOK LIKE. 
          BOTH COULD EASILY BE DIFFERENT IN LATE MAY, EARLY JUNE THAN THEY WERE TODAY. 
          NEXT SLIDE. SO HERE'S A CONCLUSION. 
          YES, YOU HAVE CHALLENGES AHEAD, BUT EASY FOR ME TO SAY. 
          I'M A CONSULTANT, BUT THEY APPEAR TO ME TO BE MANAGEABLE. 
          YOUR OPERATING COSTS ARE GOING TO BE COVERED BASED ON A MODEL CITY, BUT THERE IS AT LEAST SOME DOLLARS IN THE FORECAST, OUR BUDGET FORECAST WHERE THEY HAVE THE PRODUCT AND THEY HAVE BIG GAPS AND THE ASSUMPTION FOR CAPITAL PROJECTS WAS ZERO. 
          SO CERTAINLY COMPARED TO MANY OTHER CITIES, YOUR CHALLENGES APPEAR TO BE MANAGEABLE. 
          NEXT. QUICK, PLEASE. BUT HERE'S ANOTHER THING, YOU HAVE AN ADVANTAGE OVER MANY OTHER CITIES IN CALIFORNIA, YOU'RE GOING TO MEET THOSE CHALLENGES WITH SOME KEY STRENGTHS. 
          YOU HAVE CLEAN AUDIT OPINION SO YOU CAN HAVE CONFIDENCE ON WHERE YOU'VE BEEN. 
          YOU DON'T HAVE ANY UNFUNDED RETIREE HEALTH CARE LIABILITIES FOR MANY CITIES. 
          THAT'S BIGGER THAN THEIR PENSION OBLIGATIONS IN THE STATE OF CALIFORNIA. 
          THEIR ANNUAL CONTRIBUTIONS FOR RETIREE HEALTH CARE ARE LARGER THAN THEIR PENSION COSTS. 
          YOU DON'T HAVE ANY GENERAL FUND DEBT OBLIGATIONS, SO YOU DON'T HAVE A CERTAIN PORTION OF YOUR GENERAL FUND THAT'S ALREADY CUT OFF BECAUSE OF THAT. 
          AND YOU HAVE A TRADITION WHICH IS REALLY REFLECTED IN THESE PAST TRENDS OF RESPONSIBLE STEWARDSHIP AND MANAGING THE COMMUNITY'S ASSETS. 
          AND THESE ARE, I THINK, IMPORTANT STRENGTHS THAT ARE REALLY THAT YOU HAVE IN MANY OTHER CITIES DON'T HAVE THAT ARE GOING TO HELP YOU GET THROUGH THE NEXT YEAR AND THE YEARS AFTER. I THINK WE HAVE THE LAST ONE WHICH IS OUT. 
          ANY QUESTIONS THAT YOU MAY HAVE? THANK YOU. WE HAD AN INVITE, THE AUDIENCE COMMENTS. 
          AUDIENCE PARTICIPATION IS LIMITED TO TWO MEN FOR SPEAKER. 
          IF YOU WOULD LIKE TO MAKE A VERBAL COMMENT USING ZOOM, PLEASE USE THE PHRASE TIME BY TO REQUEST TO SPEAK. IF YOU ARE USING YOUR TELEPHONE, PLEASE DIAL STAR NINE ON YOUR TELEPHONE KEYPAD. YOU WILL BE CALLED UPON BY THE NUMBER YOU ARE CALLING FROM WHEN IT IS YOUR TURN TO SPEAK. PLEASE STATE YOUR NAME FOR THE RECORD BEFORE YOU BEGIN YOUR COMMENTS. 
          ONCE TIME HAS EXPIRED, YOU WILL BE MUTED AT THIS TIME. 
          MADAM CLERK, DO WE HAVE ANY PUBLIC COMMENTS? QUESTIONS? MAY SON AND I HAVE NO COMMENTS FROM THE PUBLIC. 
          VERY WELL, THANK YOU FOR YOUR COMMENTS OR QUESTIONS FROM THE MEMBER OF THE TEAM, REYNA. 
          AND I DON'T HAVE QUESTIONS, A VERY DETAILED EXPLANATION. 
          THANK YOU, MR. STETLER. THANK YOU. 
          REMEMBER CORTEZ OF THE PORTION WHERE YOU REFERRED TO THE PROJECTED PROPERTY TAX REVENUES? ARE WE WE'RE NOT FORECAST FORECASTING A SIGNIFICANT. 
          BUT WE WERE JUST IT WAS A SMALL INFLATIONARY INCREASE, CORRECT? YEAH, AGAIN, YOU HAD A SMALL INCREASE IN THE CURRENT FISCAL YEAR, AND I'M PROJECTING AN EVEN SMALLER INCREASE NEXT FISCAL YEAR, AGAIN IN GENERAL. 
          THIS FORECAST SAYS YOU'RE GOING TO GET A RECOVERY, BUT IT'S PROBABLY NOT GOING TO HAPPEN MORE UNTIL THE MIDDLE OF THE FORECAST. 
          AND THAT'S JUST TO BE REALLY CAUTIOUS ABOUT WHAT POTENTIAL DELINQUENCIES MIGHT LOOK LIKE, WHAT A CONTINUOUS FALL TREND WOULD BE. 
          BUT I THINK ONCE WE GET PAST THE NEXT FISCAL YEAR, I THINK YOU'RE GOING TO START TO SEE MORE HISTORIC LEVELS OF GROWTH IN THIS IN THIS REVENUE SOURCE. 
          SO NEXT YEAR, A SMALL BUMP, BUT IN THE OUT YEARS, SOMETHING SIMILAR TO WHAT YOU'VE RECENTLY, WHAT YOU EXPERIENCED IN THE FIVE IN THE FOUR OR FIVE YEARS PRIOR TO COVID-19. 
          THANK YOU. THANK YOU, MR. CORTEZ MEMBER MARTINEZ, NO QUESTION, SIR. 
          THANK YOU, MEMBER PALLARES, NO QUESTIONS. 
          THANK YOU. THANK YOU AGAIN, MR. STATLER. WE DO APPRECIATE THAT PRESENTATION AND LOOKING FORWARD TO THE WATERFRONT FISCAL FORECAST, YOU MAY TAKE IT AWAY INTO THE NEXT ONE HERE SOON ENOUGH, MR. PEREZ. DO YOU HAVE ANYTHING TO ADD BEFORE WE MOVE ON TO ITEM 7C? ANYTHING ABOVE 70? I DON'T HAVE ANY THANK YOU, GARCIA. 
          [7c. Review and Discuss the Water Fund Five-Year Fiscal Forecast. (Perez-Hernandez)]
ALL RIGHT, THANK YOU. APPRECIATE IT. 
          OK, WELL, WE'LL MOVE ON RIGHT INTO ITEM SEVEN, SEEK REVIEW AND DISCUSS THE FIVE YEAR FISCAL FORECAST. 
          WE HAVE DIRECTOR PEREZ AND MR. STATLER AGAIN THIS EVENING. 
          WELL, WE'RE ON THE HOMESTRETCH OF THESE PRESENTATIONS, AND SO LET'S MOVE TO THE NEXT SLIDE. AGAIN, THE PURPOSE OF THIS IS THE HIGH LEVEL FORECASTS OF A WATERFRONT'S CONDITION OVER THE NEXT FIVE YEARS, LARGELY BASED ON CAPITAL IMPROVEMENT PLAN COBB. 
          [01:45:07]
AND REALLY THE KEY DRIVER HERE AND WHY THIS IS COMING FORWARD NOW RATHER THAN LATER. 
          YOU MADE IT RECENTLY. 
          BACK IN OCTOBER, YOU APPROVED AN APPLICATION TO THE STATE WATER RESOURCES CONTROL BOARD FOR A LOW COST, ONE POSSIBLE PARTIAL GRANT OF 25 MILLION DOLLARS. 
          WHEN YOU PUT THAT IN THE CONTEXT OF YOUR CURRENT WATER FUND REVENUES OR ABOUT THREE MILLION DOLLARS A YEAR. 
          THIS IS OBVIOUSLY GOING TO HAVE A SIGNIFICANT IMPACT ON YOU. 
          AND YOU HAVE SOME OTHER HIGH PRIORITY WATER PROJECTS THAT YOU ALSO PLAN ON PAYING OUT IN CASH RESERVES IN THE NEAR TERM. 
          SO THESE ARE REALLY THE TWO KEY DRIVERS ABOUT WHY THE CITY MANAGER FELT IT WAS IMPORTANT TO DO A FIVE YEAR SHORT TERM FORECAST. 
          NEXT SLIDE, PLEASE. IN THE LONGER TERM, YOU REALLY DO NEED TO PREPARE A LONGER TERM FINANCIAL PLAN 10 TO 20 YEARS OUT. 
          THAT INCLUDES A COMPREHENSIVE MASTER PLAN FOR WATER RATES, AND THAT'S GOING TO BE THE MOST IMPORTANT FACTOR AS IT IS IN THE SHORTER TERM. 
          LOOK, THAT'S WHAT'S REALLY GOING TO DRIVE YOUR RATE MEANS INTO THE FUTURE. 
          THE LAST MASTER PLAN IS 14 YEARS OLD, AND THAT CAN REALLY HARDLY EFFECTIVELY GUIDE WHAT YOU NEED TO DO OVER THE NEXT 10 TO 20 YEARS. 
          SO THE SHORT STORY I'M OUT FROM WHERE YOU ARE TODAY MEANS DEVELOPING A LONG TERM CAPITAL DRIVEN PLAN THAT'S GOING TO TAKE SIX TO 12 MONTHS TO PREPARE. 
          NEXT SLIDE. AND THE STAFF RIGHT NOW IS IN THE PROCESS OF PREPARING IN OUR HISTORY AND SELECTING CONSULTANTS TO PREPARE THIS TYPE OF ANALYSIS FOR BOTH YOUR WATER AND YOUR WASTEWATER FUNDS AND WHAT TYPE OF RATE MEANS YOU MIGHT HAVE AS A RESULT. 
          AND THAT SELECTION PROCESS ITSELF IS LIKELY TO TAKE THREE TO SIX MONTHS. 
          SO LONG STORY SHORT, HAVING A GOOD PICTURE OF YOUR LONG TERM CAPITAL NEEDS NOT JUST THE MOST RECENT ONES. YOU APPLY FOR A LOAN THAT'S 18 TO 24 MONTHS AWAY, AND YOU REALLY NEED TO ASSESS THE IMPACT OF THIS LOAN IF IT'S GARCIA SOONER THAN THE NEXT SLIDE. 
          SO SAME APPROACH AS THE AS THE GENERAL FUND, AS THE GENERAL FUND. 
          FIVE YEAR FORECAST. NEXT SLIDE, PLEASE. 
          SAME CAVEAT, THIS ISN'T THE BUDGET YOU'RE GOING TO TAKE A LOOK AT IN JUNE, THIS IS JUST A FORECAST BASED ON ASSUMPTIONS. 
          NEXT SLIDE, PLEASE. SO WHAT DOES IT DO? IT HELPS IDENTIFY THE NEAR-TERM REVENUE RATE INCREASES THAT ARE LIKELY IN FRONT OF YOU IS NOT GOING TO TELL YOU RIGHT NOW. 
          I DON'T RECOMMEND A RATE INCREASE NOW, AND I DON'T EVEN RECOMMEND A RATE INCREASE UNTIL NEXT JULY. WE'LL TAKE A LOOK AT WHY THAT'S OK. 
          SO YOU DON'T HAVE AN IMMEDIATE NEED FACING YOUR REVENUE NEEDS ARE GOING TO GET PHASED IN OVER TIME. A STRONG WORKING CAPITAL BALANCE IS IN THE WATER FUND. 
          SO YOU'RE GOING TO BE ABLE TO TAKE CARE OF THE NEXT YEAR WITHOUT A RATE INCREASE. 
          BUT WHAT I'M HOPING TO DO IS KIND OF LAY THE FOUNDATION, IF YOU WILL, FOR THE RATE INCREASES YOU WERE LIKELY TO FACE IN THE NEAR FUTURE. 
          NEXT SLIDE. THE KEY DRIVER ON THIS FORECAST IS THE STATE WATER RESOURCES CONTROL BOARD. 
          AND THERE ARE TWO POSSIBLE OUTCOMES FROM THE LOAN. 
          ONE OF THOSE IS ONLY 25 PERCENT OF THAT WILL BE CONSIDERED A LOAN THAT YOU HAVE TO PAY BACK. AND IT'S 75 PERCENT OF THAT WILL ACTUALLY BE WAIVED AND WILL BE CONSIDERED A GRANT AND YOU WON'T HAVE TO PAY IT BACK. 
          OBVIOUSLY, THE FINANCIAL IMPLICATIONS OF NOT HAVING TO PAY 75 PERCENT OF IT BACK ARE PRETTY SIGNIFICANT. 
          IF YOU CAN GET SOMETHING TO, SAY, 75 PERCENT OF YOUR MORTGAGE, YOU DON'T HAVE TO PAY BACK. THAT WOULD SIGNIFICANTLY LOWER YOUR PAYMENTS. 
          I THINK THIS IS IT'S THE MOST FAVORABLE OUTCOME. 
          AND BASED ON VERY INITIAL DISCUSSIONS WITH THE STATE FOLKS, IT'S LIKELY. 
          BUT THIS IS THE STATE OF CALIFORNIA WE'RE TALKING ABOUT SO THAT WE CAN SAY THIS LIGHTLY, BUT THERE ARE NO GUARANTEES, BUT THIS IS WHAT'S GOING TO HAPPEN. 
          OK, NOW GO BACK TO THE OTHER SLIGHTLY. 
          IF IT'S 100 PERCENT LOAN, THAT'S THE OTHER OPTION, THAT'S A MORE TRADITIONAL STATE WATER RESOURCES REVOLVING LOAN, YOU HAVE TO PAY IT BACK. 
          IT HAS LOWER INTEREST RATES. 
          THAT WOULD BE THE CASE IF YOU HAD TO GO OUT TO THE PRIVATE MARKET. 
          BUT IF THE LOAN. SO LET'S TAKE A LOOK AT WHAT THOSE TWO SCENARIOS, HOW THEY'RE DIFFERENT NOW. WE CAN GO TO THE NEXT ONE. 
          THE FIRST THING I WANT YOU TO FOCUS ON HERE, JUST AS WITH THE GENERAL FUND FORECAST, THE 
          [01:50:03]
IMPORTANT YEAR TO LOOK AT IS 25 26, BECAUSE THAT'S WHEN ALL OF YOUR CORE OPERATING CAPITAL AND DEBT SERVICE ARE KIND OF FULLY STABILIZED IN THIS FORECAST. 
          ALL OF THESE THINGS GET PHASED IN OVER TIME. 
          BUT WHEN WE TAKE A LOOK AT THAT, SEVERE WEATHER IS ONE OF THE FIVE YEAR FORECAST. 
          THIS IS WHEN YOU CAN SEE WHERE THINGS GET STABILIZED. 
          AND AS YOU CAN SEE IN THIS, IF 75 PERCENT OF THIS IS A GRANT AND YOU ONLY HAVE TO PAY BACK 25 PERCENT OF YOUR DEBT SERVICE, YOUR GAP IS GOING TO BE ABOUT FIVE HUNDRED THOUSAND DOLLARS A YEAR. 
          AND SO WHAT THIS TELLS ME, WHETHER IT'S NOW OR WHETHER IT'S LATER BY TWENTY FIVE, TWENTY SIX, YOU'RE GOING TO HAVE TO INCREASE WATER RATES BY FIVE HUNDRED THOUSAND DOLLARS. 
          AND WE'LL TALK ABOUT HOW TO SAVE THAT IN A MOMENT. 
          BUT THAT'S REALLY WHAT THIS SLIDE IS SUNG BY THE 50 YEAR FIVE HUNDRED THOUSAND DOLLAR GUY. AND BY THAT THIS YEAR YOU HAVE CUT RATES IN PLACE THAT CAN GIVE YOU FIVE HUNDRED THOUSAND DOLLARS MORE IF YOU'RE GOING TO HAVE A BALANCED BUDGET. 
          NEXT SLIDE, PLEASE. 
          SO THERE'S IS JUST A SHORTFALL, 25, 26, CLOSE TO FIVE HUNDRED THOUSAND FOUR HUNDRED SIXTY SIX THOUSAND. BUT THIS CAN BE PHASED IN OVER FOUR YEARS. 
          SO I'M NOT TALKING ABOUT THIS FISCAL YEAR. 
          YOU'RE TALKING ABOUT NEXT YEAR. IF YOU JUST DO MODEST ANNUAL INCREASES OF THREE POINT TWO, FIVE PERCENT STARTING IN JULY OF 2002, YOU HAVE THE RIGHT YOU WILL HAVE ADEQUATE RESOURCES BY 25, 26 TO MEET ALL OF YOUR OPERATING CAPITAL AND THAT SERVICE COST. 
          OK, WE DON'T HAVE TO DO IT NOW, BUT YOU SAY THAT YOU CAN HAVE SOME PRETTY MODEST COSTS OVER THAT PERIOD OF TIME. 
          NEXT SLIDE. IF YOU HAVE TO PAY IT ALL BACK AGAIN, FOCUSING ON TWENTY FIVE POINT SIX, IT'S A MUCH DIFFERENT STORY. 
          NOW YOU NEED ONE AND A HALF MILLION DOLLARS MORE. 
          AND I GOT SCHROETER. THIS IS COMPLETELY DRIVEN BY THE DIFFERENCES IN YOUR DEBT SERVICE OBLIGATIONS. YOU HAVE ABOUT A THREE HUNDRED THOUSAND DOLLAR DEBT SERVICE OBLIGATION IF 75 PERCENT OF THE GROUND, BUT IT'S ONE POINT THREE MILLION DOLLARS A YEAR. 
          IF YOU HAVE TO PAY IT ALL BACK, THAT'S A MILLION DOLLAR DIFFERENCE. 
          AND THAT'S WHY THIS FORECAST SHOWS YOU NEED A MILLION DOLLARS MORE IN REVENUES BY 25 26. 
          NEXT SLIDE, PLEASE. SO WHAT DOES THAT MEAN, THE SHORTFALL IS ONE AND A HALF MILLION, YOU SHOULD STILL PAY THAT THEN OVER FOUR YEARS, BUT IT WON'T BE THREE AND A QUARTER PERCENT EVERY YEAR. WILL BE NINE AND A HALF PERCENT EVERY YEAR. 
          BECAUSE YOU'RE TALKING ABOUT A SYSTEM. 
          THAT BRINGS IN THREE MILLION DOLLARS A YEAR NOW WITHOUT ANY DEBT SERVICE OBLIGATIONS. 
          SO YOU'RE SEEING ABOUT A 50 PERCENT INCREASE IN YOUR OBLIGATIONS ONCE YOU TAKE ON THAT SERVICE COBB. NOW, YOU WILL NOT HAVE THOSE DEBT SERVICE COSTS IMMEDIATELY. 
          IN FACT, THOSE DEBT SERVICE COSTS WON'T BE FULLY MATURED IN REAL TIME UNTIL THE FIFTH YEAR OF THIS FORECAST. 
          SO YOU HAVE SOME TIME TO GET READY FOR THE RATE INCREASES THAT ARE IN FRONT OF YOU. 
          BUT THEY ARE OBVIOUSLY SIGNIFICANTLY DIFFERENT TO PAY BACK 25 MILLION BETWEEN WHAT YOU HAVE TO PAY IT ALL BACK OR WHETHER YOU ONLY HAVE TO PAY 25 PERCENT OF THE NEXT SLIDE, PLEASE. SO HERE'S MY RECOMMENDATION, I THINK THAT 25 75 OPTION IS LIKELY, BUT I CAN'T STRESS THIS ENOUGH. 
          IT'S NOT GUARANTEED YOUR DEMOGRAPHIC FACTOR, THE STATE ELIGIBILITY REQUIREMENTS REALLY SHOULD INDICATE YOU WOULD BE A VERY STRONG CANDIDATE FOR THIS MORE FAVORABLE FINANCING. 
          BUT YOU DON'T KNOW WHO ELSE YOU'RE UP AGAINST. 
          YOU DON'T KNOW WHAT THE VALUE OF YOUR FUNDS LOOK. 
          WHAT? BUT YOU REALLY DON'T KNOW WHAT THE STATE'S INTERNAL DECISION-MAKING PROCESS LOOKS LIKE, AND I REALLY DON'T EVEN WANT TO THINK ABOUT THAT. 
          SO LIKELY EVERY INDICATION SAYS THIS IS WHAT YOU COULD OR SHOULD BE ELIGIBLE FOR, BUT IT'S NOT GUARANTEED AND YOU CAN'T PUT ALL YOUR EGGS IN ONE BASKET. 
          BUT GIVEN THAT, I DON'T RECOMMEND YOU MAKE ANY REYNA ADJUSTMENTS NOW. 
          BUT STARTING NEXT YEAR, YOU SHOULD DO SOME MODEST AVERAGE ANNUAL INCREASES. 
          SO YOU HAVE THE RIGHT REVENUES AND EXPENDITURES BY THE FIFTH YEAR AND YOU'RE GOING TO HAVE BETTER INFORMATION PRETTY SOON. 
          THE HOPE IS YOUR TOTAL PACKAGE. 
          IF WE GET THE POLICY TO THE TO THE BOARD AFTER ME FOR YOUR FINANCIAL COMPONENTS OF THE PACKAGE WILL BE COMPLETED. 
          YOU'LL HAVE SOME OTHER ELEMENTS, ENVIRONMENTAL REVIEW YOU STILL NEED TO DO. 
          THAT'S PROBABLY GOING TO TAKE SIX MONTHS. 
          SO ABOUT SIX MONTHS FROM NOW, LATE FALL, YOU SHOULD HAVE A MUCH BETTER IDEA OF WHAT'S 
          [01:55:02]
FACING THEM. SO LET'S NOT MAKE DECISIONS BASED ON PARTIAL INFORMATION. 
          LET'S MAKE DECISIONS, ESPECIALLY WHEN IT COMES TO RATE INCREASES. 
          BUT LET'S MAKE THOSE DECISIONS WHEN WE HAVE THE BEST POSSIBLE INFORMATION, WHEN WE HAVE TIME, WE HAVE STRONG ENOUGH WORKING CAPITAL TO GIVE US TO GIVE US THAT ROOM TO MAKE A BETTER DECISION. AND THAT'S WHY I BELIEVE. 
          SO, AGAIN, WHAT ARE THE FORECAST DRIVERS GETTING INTO THIS RESULT? TAKE A LOOK AT REVENUES, YOUR WATER SERVICE CHARGES, NOT SURPRISINGLY, THAT'S 90 PERCENT OF YOUR TOTAL REVENUE. SO WHEN WE FOCUS ON WHAT YOU NEED TO DO IN ORDER TO GET ENOUGH TOTAL REVENUES, WE'RE REALLY FOCUSED ON WHAT YOU NEED TO DO WITH WATER SERVICE CHARGES. 
          ALL OF YOUR OTHER REVENUES ONLY ACCOUNT FOR 10 PERCENT OF YOUR REVENUES. 
          NEXT, QUICK LOOK AT OPERATING CAPITAL PROJECTS. 
          AND THAT'S SORT OF NEXT. 
          NEXT SLIDE. SO THE MOST IMPORTANT COMPONENT IS THAT YOUR STATE WATER RESOURCES CONTROL BOARD ALONE. AGAIN, YOU HAVE FOUR BASIC PROJECTS THERE TO REPLACE FARELL. 
          YOU NEED TO DO TCP TREATMENT AROUND 12. 
          YOU NEED TO IMPROVE YOUR CONVERSATIVE STORAGE AND YOU HAVE FUNDING IN THERE TO DO ADVANCED METERING. 
          THAT'S YOUR TWENTY FIVE POINT EIGHT MILLION RELATED TO THE SAME PROJECT. 
          YOU NEED TO DO ENGINEERING. 
          YOU NEED TO DO THE PLANS AND SPECIFICATIONS THAT'S REQUIRED TO BUILD THESE PROJECTS AND YOU NEED TO ACQUIRE SOME LAND IN ORDER TO DO THESE PROJECTS. 
          YOU'RE PLANNING ON DOING THAT ON A PAY AS YOU GO COST BASIS, BASICALLY USING RESERVES IN ORDER TO FUND THESE COBB. 
          SO THE TOTAL COMMITMENT IN FRONT OF YOU EXCLUDING ANY OTHER COBB IS A 28 MILLION DOLLAR COMMITMENT TO DO THESE FOUR PROJECTS NEXT QUICKLY. 
          AND THAT'S IN ADDITION TO ABOUT FOUR POINT ONE MILLION IN OTHER PROJECT COSTS OVER THE NEXT FIVE YEARS BASED ON YOUR ALREADY ADOPTED BY YOUR VIP. 
          SO YOU HAVE SOME PRETTY SIGNIFICANT CAPITAL IMPROVEMENTS IN FRONT OF YOU. 
          THIS IS THE MAIN DRIVER FOR WHAT YOUR NEEDS ARE GOING TO BE IN THE SHORT TERM. 
          NEXT SLIDE, PLEASE. THERE ARE EVEN IF YOU HAVE TO PAY IT ALL BACK, THERE ARE SOME SIGNIFICANT VALUE TO THE LOAN PACKAGE. 
          YOU'RE GOING TO GET A LOWER MARKET INTEREST RATE BASED ON THEIR WEBSITE. 
          THE CURRENT RATE IS THREE PERCENT, BUT BASICALLY IT MAY EVEN BE BETTER THAN THAT. 
          I THINK THREE PERCENT IS PROBABLY THE HIGHEST RATE YOU MIGHT BE CONFRONTED WITH THE RATE THAT'S ASSUMED IN THE FORECAST. 
          BUT WHEN THE PACKAGE FINALLY SETTLED, THEN YOU JUST WORK OUT THE FINAL LONG TERM. 
          IT COULD BE LESS THAN LESS THAN THE THREE PERCENT. 
          AND AGAIN, AS WE MENTIONED, BASED ON YOUR DEMOGRAPHICS, YOU'RE ELIGIBLE FOR UP TO 75 PERCENT OF THIS LOAN TO BE FORGIVEN. 
          THERE ISN'T ANY MARKET FINANCING YOU'RE GOING TO DO. 
          GO TO BANK OF AMERICA MERRILL LYNCH, JP MORGAN. 
          THAT'S GOING TO FORGIVE 75 PERCENT OF THE THEY'RE GOING TO WANT IT ALL BACK AT A MUCH HIGHER INTEREST RATE THAN THREE PERCENT. 
          NEXT ONE. NEXT SLIDE, PLEASE. 
          WHEN YOU'RE GOING TO HAVE TO START PAYING THAT SERVICE, COBB IS ALL BASED ON THE SCHEDULE OF WHEN THESE THINGS HAPPEN. 
          AND SO HERE'S A HIGH LEVEL ASSESSMENT OF HOW LONG THINGS ARE GOING TO TAKE AND WHAT FISCAL YEAR THEY'RE GOING TO START IN. 
          THE FIRST THING YOU HAVE TO DO TO GET LOAN APPROVAL, AND THAT'S PROBABLY SIX MONTHS AHEAD. THAT'S GOING TO HAPPEN NEXT FISCAL YEAR, MAYBE AROUND NOVEMBER, DECEMBER. 
          IT WILL BE ANOTHER YEAR AFTER THEY APPROVED YOUR LOAN PACKAGE, BEFORE YOU WERE ABLE TO ACTUALLY START DRAWING THOSE FUNDS DOWN. 
          SO THAT'S A CUMULATIVE TIMEFRAME FROM NOW OF 18 MONTHS. 
          YOUR PLAN RIGHT NOW IS TO BE WORKING ON THOSE CONSTRUCTION DOCUMENTS NOW, AND THAT'S WHY THAT'S PAY AS YOU GO. 
          AND THE HOPE IS WITHIN 18 MONTHS, BY THE TIME YOU'RE ACTUALLY ABLE TO DRAW THOSE MONEY DOWN, YOU'LL HAVE, FOR WANT OF A BETTER TERM, SHOVEL READY PROJECTS THAT YOU CAN GO FORWARD AND ALMOST IMMEDIATELY START WORK ON AS SOON AS THE FUNDING IS AVAILABLE. 
          AND THE ESTIMATED CONSTRUCTION CREW OUT IS 18 MONTHS, SOME GOOD NEWS AND SOME BAD NEWS HERE. THE GOOD NEWS IS BASED ON INITIAL DISCUSSIONS WITH YOUR PUBLIC WORKS DIRECTOR, YOU SHOULD BE ABLE TO DO ALL OF THESE PROJECTS AT THE SAME TIME. 
          THAT'S NOT OFTEN THE CASE WITH A LOT OF THESE PROJECTS AFTER THIS ONE THAT ONE OF THESE I WANT FOR YOU TO DO THE NEXT ONE. 
          ALL OF THESE PROJECTS ARE PRETTY MUCH FREE-STANDING. 
          THEY ALL HAPPEN AT FIVE SPECIFIC SITES AND THEY DON'T DEPEND UPON DOING SOMETHING SEPARATELY IN ORDER TO MOVE FORWARD. 
          SO THAT'S THE GOOD NEWS. 
          18 MONTHS IS A REALISTIC CONSTRUCTION SCHEDULE TO BE DOING ALL OF THESE PROJECTS AT THE SAME TIME. OF COURSE, THE DOWNSIDE OF WHATEVER CONSTRUCTION IS CAUSING THE DISRUPTION IS GARCIA THE COMMUNITY AS YOU'RE DOING FIVE DIFFERENT MAJOR PROJECTS ADVISORY. 
          [02:00:01]
BUT AGAIN, THESE SITES ARE FAIRLY CONSTRAINED. 
          THEY'RE NOT LIKE ROAD PROJECTS THAT DISRUPT, YOU KNOW, RIGHT OF WAY. 
          THESE ARE ALL OFF EXISTING SITES THAT THE PUBLIC PRETTY MUCH DOESN'T USE. 
          SO IF YOU WERE DOING UNDERLYING PIPE PROJECTS, FOR EXAMPLE, THE CONSTRUCTION WOULD BE MUCH MORE SIGNIFICANT THAN IT'S LIKELY TO BE AT THESE SITES, SPECIFIC SITES THAT THE PUBLIC DOESN'T REALLY USE, LIKE A WEB SITE OR TREATMENT SITES. 
          SO THAT WILL MAKE US TO COMPLETE CONSTRUCTION, WHICH WILL START IN TWENTY TO TWENTY THREE, PROBABLY NOT BE DONE UNTIL 23, 24. 
          THAT'S THREE YEARS AWAY. 
          AND THIS IS TYPICALLY, AGAIN, THIS WILL DEPEND UPON THE FINAL LOAN APPLICATION AND DOCUMENTS AND AGREEMENT DOCUMENTS TO GET APPROVED. 
          BUT TYPICALLY THEY DON'T REQUIRE YOU TO MAKE YOUR FIRST STEPS, SERVICE PAYMENT UNTIL A YEAR AFTER YOU STARTED THROWDOWNS. 
          WHAT YOU CAN'T WAIT UNTIL THE WHOLE PROJECT IS DONE TO START MAKING THAT SERVICE PAYMENT, SO WHATEVER YOU SPEND IN THE FIRST YEAR, WHICH IN THIS POINT IS EXPECTED TO ONLY BE SIX MONTHS IN 24 OR 25, YOU'LL ONLY A YEAR LATER A THIRD OF THE DEBT SERVICE REQUIREMENTS. 
          BUT THEN A YEAR AFTER THAT, SIX MONTHS FROM THE DATE, YOU'LL HAVE TO PAY YOUR SECOND AND ONGOING PAYMENTS THAT ARE GOING TO LOOK LIKE THAT AMOUNT FOR THE NEXT 29 YEARS. 
          BUT THAT'S NOT GOING TO HAPPEN UNTIL 25, 26, AND THAT'S WHY THIS FORECAST REALLY FOCUSES ON WHAT HAPPENS IN TWENTY FIVE, TWENTY SIX, BECAUSE THAT'S WHEN YOU START MAKING THE FULL ANNUAL DEBT SERVICE PAYMENT YOU'RE GOING TO HAVE TO MAKE. 
          AND THAT GIVES YOU A LITTLE TIME TO PREPARE FOR THAT. 
          NEXT SLIDE, PLEASE. 
          SO HERE'S YOUR DEBT SERVICE PAYMENTS, IF IT'S 25 PERCENT LOAN, 75 PERCENT GRANT YOUR ANNUAL DEBT SERVICE REQUIREMENTS OR A LITTLE OVER 300000 A YEAR. 
          BUT IF IT'S 100 PERCENT LOAN, IT'S ABOUT ONE POINT THREE MILLION DOLLARS A YEAR. 
          THAT'S OBVIOUSLY A SIGNIFICANT DIFFERENCE. 
          SO YOU REALLY WANT TO HOPE YOU GET THE GRANT OPTION AGAIN? I THINK IT IS LIKELY BASED ON THE STATE'S CRITERIA, BUT THIS IS THE STATE OF CALIFORNIA. 
          AND AS YOU WELL KNOW, WHATEVER COMMITMENTS THE STATE MAY HAVE BEEN MAKING TO YOU, WHATEVER YOU THINK IS A REASONABLE THING FOR THE STATE TO DO MAY NOT BE WHAT THE STATE ELECTS TO DO. THE TERM ASSUMPTIONS, AGAIN, A THREE PERCENT RATE, I THINK THAT'S THE WORST IT COULD BE. I THINK THERE'S A GOOD CHANCE THE INTEREST RATE AT THE TIME YOU ACTUALLY FUND THIS LOAN COULD BE LESS THAN THIS. 
          BUT ALL OF THE SCENARIOS ASSUME 30 YEARS TO PAY IT BACK. 
          NEXT SLIDE, PLEASE. AGAIN, A NUMBER OF THINGS, THESE ARE ASSUMPTIONS, A NUMBER OF THINGS TO CHANGE. ONE OF THEM IN GOVERNMENT ADOPTED THE 21 22 YEAR BUDGET. 
          SO THE OPERATING COSTS THAT I PROJECTED ARE BASED ON YOUR CURRENT BUDGET. 
          AND THE 21 22 BUDGET MAY BE DIFFERENT THAN THAT. 
          IT'S BASED ON, YOU KNOW, WHATEVER YOUR FINAL APPLICATION AND WHATEVER THE AGREEMENT APPROVAL THAT THE STATE GIVES YOU SIX. 
          SO 12 MONTHS FROM NOW, THAT'S GOING TO BE A HUGE DETERMINER OF THESE COSTS. 
          WE DON'T KNOW THAT UNTIL THEN, OF COURSE. 
          SO WE MAKE THE BEST ASSUMPTIONS WE CAN. 
          PARTWAY THROUGH THIS PERIOD, YOU'RE GOING TO DO THIS MORE COMPREHENSIVE LONG TERM ANALYSIS, AND THAT COULD CHANGE WHAT THIS PICTURE LOOKS LIKE AS WELL. 
          AND THEN, OF COURSE, THERE'S WHAT THE ACTUAL COST AND THE ACTUAL PHASING OUT OF THESE BOARD RELATED PROJECTS AND THE RESULTING DEBT SERVICE ANNOUNCEMENT. 
          SO AND SOME OF THESE THINGS YOU WILL ACTUALLY HAVE A BETTER HANDLE ON WITHIN THE NEXT SIX MONTHS. AND THAT'S WHY INITIALLY WE CALLED THIS THE SHORT RANGE WATERFRONT PLAN, BECAUSE REALLY, YOU'RE GOING TO HAVE A BETTER IDEA OF WHAT THESE IMPLICATIONS ARE ABOUT SIX MONTHS FROM NOW. YOU WON'T REALLY KNOW WHAT IT IS UNTIL YOU GET FINAL FUNDING, UNTIL YOU WORK THE CONTRACTS FOR THESE PROJECTS. 
          BUT I THINK WE HAVE A PRETTY GOOD IDEA. 
          YOU CAN'T DO IT WITH THE RESOURCES YOU HAVE. 
          AND SOME SORT OF WATER RATE INCREASE IS GOING TO BE NECESSARY BECAUSE THE SMALLER LOAN AMOUNT, IF YOU START EARLY, THE INDIVIDUAL ANNUAL INCREASES CAN BE PRETTY MINOR. 
          AND KEEP IN MIND, YOU HAVEN'T GOT A WATER RATE INCREASE FOR FIVE YEARS AS IT IS. 
          THE LAST ONE WAS IN 2016 AND IT WAS PRETTY MODEST, ABOUT THREE PERCENT. 
          SO, YOU KNOW, YOU'RE A PRETTY WELL POSITIONED TO BE ABLE TO MAKE REASONABLE SAVINGS GOING FORWARD. NEXT SLIDE. 
          HEY, WE'RE UP TO THE MOST IMPORTANT, THE END, AND I'LL BE HAPPY TO ANSWER ANY QUESTIONS WE HAVE ABOUT WHETHER THE NEAR TERM WATER FUN SITUATION IN THIS SITUATION APPEARS TO BE. 
          THANK YOU, MR. STEPP, APPRECIATE THAT VERY, VERY GOOD PRESENTATION. 
          [02:05:06]
I'M DIVING RIGHT INTO THE COMMENTS. 
          AUDIENCE PARTICIPATION IS LIMITED TO TWO MINUTES PER SPEAKER, IF YOU WOULD LIKE TO MAKE A VERBAL COMMENT USING ZOOM, PLEASE USE THE AND FEATURE REQUEST TO SPEAK. 
          IF YOU'RE ON A TELEPHONE, PLEASE DIAL STAR NINE ON YOUR TELEPHONE KEYPAD. 
          YOU WILL BE CALLED UPON BY THE NUMBER YOU'RE CALLING FROM WHEN IT IS YOUR TURN TO SPEAK. 
          PLEASE STATE YOUR NAME FOR THE RECORD BEFORE YOU BEGIN YOUR COMMENTS. 
          ONCE YOUR TIME HAS EXPIRED, YOU WILL BE MUTED AT THIS TIME. 
          AND DO WE HAVE ANY PUBLIC COMMENTS OR QUESTIONS TO SEND? THERE ARE NO COMMENTS FROM THE PUBLIC. 
          WELL, AND COMMENTS FROM THE MEMBERS, QUESTIONS OR COMMENTS MADE AT THIS TIME, THERE ARE NO COMMENTS FROM THE PUBLIC. 
          GOT IT, GOT IT. ANY COMMENTS FROM THE MEMBERS MAY HAVE PUT SOME REYNA. 
          NO COMMENTS, THANK YOU. VERY WELL, THANK YOU. 
          A MEMBER OF CORTEZ. I DON'T TAKE GETTING INTO DEBT LIGHTLY, BUT I THINK THE THE POSSIBILITY AND THE RATE OF THE GRANT FUNDING FOR GETTING THAT ARE FORGIVEN WELL IS WELL WORTH THE EFFORT. OBVIOUSLY, WE NEED THE STRUCTURES AND IN SUPPORT OF THE PLAN. 
          GREAT PLAN. THANK YOU. A MEMBER OF MARTINEZ, YEAH, JUST A QUICK QUESTION, I'M NOT SURE IF I UNDERSTOOD THE CHART CORRECTLY, THE ONE WHERE IT SHOWED THE FIFTH YEAR, FIVE HUNDRED THOUSAND DOLLAR BUDGET SHORTFALL. 
          IF I IF I SAW IT CORRECTLY, THE FIRST YEAR SHOWS A THREE MILLION DOLLAR BUDGET SHORTFALL. 
          COULD YOU EXPLAIN THAT TO ME? WHY WE HAVE THE IN THE FIRST YEAR, THE THREE MILLION DOLLAR SHORTAGE, THAT ONE RIGHT THERE. 
          NOW, LET'S GO BACK TO THE TWO SLIDES BEFORE THIS ONE. 
          THIS ONE SHOWS THAT IF YOU GET A 75 PERCENT GRAB, YOUR REVENUE SHORTFALL IN THE 50 YEARS WILL BE ABOUT FIVE HUNDRED THOUSAND DOLLARS. 
          BUT IF YOU DON'T GET THE GRANT AND THIS IS BASED ON ABOUT A THREE HUNDRED AND THIRTY THOUSAND DOLLAR DEBT SERVICE OBLIGATION, SO THERE'S OTHER REASONS IN THE YEAR THAT YOU NEED TO DO A RATE INCREASE ANYWAY, BUT IT'S ONLY ABOUT 150000. 
          SO IT'S A SMALL PIECE OF THE RATE INCREASE YOU MAY NEED IN THAT YEAR ANYWAY. 
          BUT THAT SERVICE HERE IS 330000 OF THE FOUR HUNDRED AND SIXTY SIX THOUSAND SHORTFALL FOR THAT YEAR. SO IF YOU GO TO THE NEXT SLIDE OUT OF THIS ONE. 
          BUT MORE THAN 56000, AGAIN, ABOUT 330000 OF THIS SHORTFALL IS THE DEBT SERVICE PAYMENT, BUT NEXT FISCAL YEAR, NOT THIS FISCAL YEAR, IF YOU START DOING ABOUT A THREE PERCENT A YEAR RATE INCREASE OVER THE NEXT FOUR YEARS. 
          YOU'VE GOT THAT FORWARD. 
          AND SIXTY SIX THOUSAND DOLLARS WOULD BE BY YOUR THOUGHT. 
          SO, OK, THE NEXT ONE. 
          BUT IF YOU HAVE TO PAY IT ALL BACK, THEN REYNA, THAT SERVICE REQUIREMENT IS ONE POINT THREE MILLION, ABOUT A MILLION DOLLARS MORE A YEAR THAN IF IT'S A 75 PERCENT GRANT. 
          SO NEXT LOG. 
          THAT MEANS YOU HAVE A SHORTFALL OF ABOUT ONE POINT FIVE MILLION TO ONE POINT THREE MILLION OF THE COBB IS THE LOAN REPAYMENT. 
          SO AGAIN, THERE'S ABOUT ONE HUNDRED AND FIFTY THOUSAND DOLLARS IN HERE THAT'S NOT RELATED TO THIS PARTICULAR PROJECT. 
          AND THAT'S A PRETTY MODEST INCREASE. 
          BUT AGAIN, IN ORDER FOR YOU TO GET ONE POINT FIVE DOLLARS MILLION MORE A YEAR, YOU CAN STILL PHASE IT IN. BUT IT'S GOING TO BE A MUCH MORE EXPENSIVE RATE INCREASE THAN IF YOU CAN GET THE 75 PERCENT GRANT. 
          DOES THAT HELP CLARIFY THAT OR MAKE THAT CLEAR? WELL, I'M JUST CONFUSED ON SO ON THE TWENTY ONE YEAR IT'S SHOWING ABOUT A THREE MILLION DOLLAR BUDGET SHORTFALL. 
          AM I SEEING THAT CORRECTLY? YEAH. YEAH. 
          BUT AGAIN, I'M NOT. WHY DON'T WE GO BACK TO THAT SLIDE PLEASE. 
          YES, BUT THIS IS MOSTLY PAY AS YOU GO PROJECT, AS YOU RECALL, WE HAD ONE POINT THREE DOLLARS MILLION IN ENGINEERING COSTS, ONE POINT FIVE MILLION IN ACQUISITION COSTS, AND THAT'S REALLY WHAT'S REFLECTED HERE. 
          OK, DRAWING DOWN ON YOUR RESERVES IN ORDER TO FUND THOSE THAT THERE MAY BE SOME OTHER THINGS THERE, BUT THAT'S THE REALLY THE BIG ONE THAT'S DRIVING THAT DRAWDOWN. 
          THE PAY AS YOU GO COMPONENT OF THESE PROJECTS YOU HOPE TO GET A LOAN FOR. 
          THAT'S CLANDON THAT'S ALREADY KIND OF IN YOUR CURRENT BUDGET TO DRAW THOSE FUNDS, TO DRAW THOSE FUNDS DOWN. 
          AND SO THAT'S JUST REPRESENTING THAT PAY AS YOU GO CAUTION. 
          AND THAT'S WHY I'M SAYING THESE OTHER VIEWS WHERE THE GAP IS KIND OF SMALL, BECAUSE YOU'RE GOING TO DO THIS ONE BIG DRAW DOWN FOR, WHAT, ALMOST THREE MILLION DOLLARS JUST FOR THIS COMPONENT. 
          [02:10:02]
AND THEN YOU'RE ACTUALLY IN PRETTY GOOD BALANCE FOR THE NEXT THREE YEARS. 
          AND AGAIN, YOU'VE GOT SOME GAPS THERE THAT ARE POSITIVE. 
          BUT THE ONE BAD GUY, THAT'S A VERY SMALL NUMBER. 
          THAT'S WHY REALLY THE FOCUS OF THIS ANALYSIS IS TWENTY FIVE POINT SIX, BECAUSE THAT'S WHEN ALL OF YOUR COSTS AND REVENUES ARE KIND OF STABILIZED. 
          OK, THAT MAKES SENSE. 
          THANK YOU, MAYOR. 
          I HAVE A FOLLOW UP QUESTION, IF I CAN, THIS MORNING. 
          AND THIS IS, I THINK, JEFF ON THE SPOT, MAYBE ISRAEL OR SOME OF THIS THE WATER PORTION OF OUR STANDARD. 
          YOUR AVERAGE BILL IS ABOUT 27. 
          THE THIRTY DOLLARS IF I'M NOT CORRECT. 
          SO WHAT WE'RE LOOKING AT OVER THE NEXT. 
          THREE YEARS OR EXCUSE ME, FIVE, WE'RE LOOKING AT A 13 DOLLAR INCREASE PER HOUSEHOLD, IF WE WERE TO TAKE THE ENTIRE BRUNT OF THE DEBT OBLIGATION THAT MY FORECASTING CORRECTLY. 
          YEAH, AND THAT'S PROBABLY ABOUT RIGHT. 
          I HAVEN'T DONE EXACTLY THAT CALCULATION COUNCIL MEMBERS, I THINK I WAS CORTEZ WITHOUT THAT QUESTION, BUT THAT SOUNDS TO ME JUST ORDER OF MAGNITUDE ABOUT RIGHT. 
          THAT'S WHY I THINK IT'S SO IMPORTANT THAT YOU DO SMALLER, GRADUAL INCREASES. 
          IT WILL BE VERY HARD TO EXPLAIN TO YOUR COMMUNITY WHY THEY'RE GETTING A 15 PERCENT RATE INCREASE IN A TWO PERCENT INFLATION WORLD. 
          BUT IF YOU DO IT IN SMALLER INCREMENTS. 
          THEN I THINK IT BECOMES EASIER TO EXPLAIN WHY WE'RE DOING A THREE PERCENT INCREASE IN ANY ONE YEAR. AND HERE'S THE OTHER THING. 
          I THINK I MENTIONED THIS IN THE FULLER REPORT. 
          UNDER PROPOSITION 218, YOU HAVE TO DO A HERE THAT INVITES THE PUBLIC, BUT YOU CAN DO A FIVE YEAR RATE INCREASE IN ONE EAR AND. 
          SO WHEN YOU GET TO THAT POINT, I WOULD ACTUALLY BE MY RECOMMENDATION IN JULY OF 22 THAT WHATEVER BASED ON THE FINAL AND YOU HAVE BETTER NUMBERS ON THIS BECAUSE YOU WOULD FINALIZE YOUR LOAN APPLICATION WITH THE STATE, AND WHEN YOU CAN FIND HIM USING THIS EXACT SAME MODEL, WHICH YOUR STAFF WILL HAVE, THEN THEY CAN PUT IN THOSE COMPONENTS THAT WE ASSUME AND PUT IN THE ACTUAL COMPONENTS AND PRETTY READILY, QUICKLY SEE HOW THE NUMBERS CHANGE AND AND YOU'LL BE ABLE TO DO A RAGER. 
          AND YOU SAY, WELL, LOOK, FOR THE NEXT FOUR YEARS, WE PLAN ON DOING A THREE AND A HALF PERCENT RATE INCREASE EVERY YEAR. 
          YOU PUT THAT IN THE NOTICE, YOU SENT OUT THE NOTICE, ONCE YOU DO THE PUBLIC HEARING NOTICE AND YOU CAN COVER ALL FOUR YEARS IN ONE YEAR. 
          SO FOR YOU, YEAH, YOU WILL HAVE TO DEAL WITH THE IMPLICATIONS WITH THE PUBLIC ABOUT WHAT THIS MEANS TO THEM. 
          BUT YOU'LL BE DOING IT IN SMALLER BITES, AS YOUR STAFF ALREADY KNOWS. 
          ONE OF MY FAVORITE EXPRESSIONS, THERE'S ONLY ONE WAY TO EAT AN ELEPHANT, AND THAT'S ONE BITE AT A TIME. SO IF YOU CAN DO THIS RIGHT IN FRONT OF AN ELEPHANT, PROBABLY DON'T WANT TO HAVE TO EAT IT AT ALL. 
          IT'S VERY IMPORTANT THAT YOU WANT TO BE AN ELEPHANT BECAUSE, YOU KNOW, THIS IS GOING TO BE A PRETTY BIG DEAL. 
          BUT IF YOU CAN DO IT IN SMALLER BITES, IT'LL BE EASIER FOR EVERYONE TO DO. 
          AND YOU CAN DO ONE RIGHT IN HERE AND YOU EXPLAIN WHY YOU NEED TO DO THIS RATE INCREASE, HOW THESE PROJECTS ARE REALLY CRITICAL IN MEETING STATE WATER QUALITY NEEDS, IN TERMS OF MEETING CAPACITY NEEDS IN ORDER TO DELIVER HIGH QUALITY, RELIABLE WATER. 
          THESE ARE JUST THE THINGS YOU NEED TO DO AND AND HAVE ONE HEARING AND THEN THOSE NEXT RATE INCREASES. YOU ALREADY PROVEN THEY'LL BE AUTOMATIC. 
          THEY'LL GO IN. AND NO ONE RATEPAYER IS EVER LIKELY TO SEE A BIG INCREASE IN ANY ONE BILL BECAUSE YOU EAT THE ELEPHANT IN SMALLER BITES. 
          THANK YOU, ESTELLA. GREAT, THANK YOU FOR THAT POINT. 
          REMEMBER, CORTEZ AND I AGREE, I AGREE MR. SETTLOR STUFF. I LIKE THAT ANALOGY AND I'M ALL ON BOARD WITH THAT IDEA. 
          REMEMBER, PALLARES ANYTHING TO ADD OR ANY QUESTIONS? THERE'S NOTHING TO ADD. 
          THANK YOU. OK, WELL, THAT'S AND THAT'S PRESENTATION IS COMPLETE. 
          MR. PRESIDENT, DO YOU HAVE ANYTHING TO ADD ON THIS ITEM BEFORE WE GO IN ADJOURNMENT? NO MATTER GARCIA? I DON'T KNOW. ANY TIME. 
          VERY WELL, VERY, VERY WELL. 
          YES, WELL, WE APPRECIATE ALL YOUR WORK, OF COURSE, THE STAFF AT THE FINANCE DEPARTMENT AS WELL FOR PUTTING TOGETHER TODAY'S PRESENTATION. 
          AND THANK YOU FOR EVERYONE FOR BEING HERE TONIGHT FOR THIS SPECIAL WORKSHOP MEETING. 
          WITH THAT BEING SAID, I'LL GO AHEAD. 
          AND IS THERE ANYTHING ELSE YOU'D LIKE TO ADD? DO WE NEED ANYTHING ELSE AND NOTHING ELSE ON THE AGENDA? MR. CITY MANAGER, WE HAD A GOOD CHANCE. 
          HOLD ON JUST A MINUTE, MAYOR. 
          I THINK WE HAVE ESPITIA. 
          [02:15:02]
YEAH, I JUST WANTED TO MAKE A COMMENT, MR. STATLER DID STATE THAT WE WOULD BE ABLE TO DO ALL OF THE PROJECTS WITHIN 18 MONTHS, BUT THAT WAS A MISUNDERSTANDING. 
          WE WOULD BE ABLE TO DO TWO WELLS AT A TIME WITHIN AN 18 MONTH PERIOD. 
          SO IT WOULD BE A TWO PHASED WELL DEVELOPMENT PROJECT. 
          I JUST WANTED TO MAKE THAT CLARIFICATION. 
          I APPRECIATE THAT. 
          I THOUGHT THAT WAS REALLY FAST FOR FOR WELL, THANK YOU FOR THAT CLARIFICATION. 
          ALL RIGHT. WELL, IF THERE'S ANYTHING ELSE TO ADD, ANY OTHER BUSINESS, THERE'S NO OTHER BUSINESS ON THE CALENDAR OR THE AGENDA. 
          WE'LL GO AHEAD AND MOVE ON TO ITEM EIGHT AND MOVE TO ADJOURN. 
          THANK YOU ALL. HAVE A GOOD EVENING AGAIN, EVERYONE. 
          HAVE A GOOD NIGHT. WE'LL SEE YOU AT THE NEXT COUNCIL MEETING TONIGHT, EVERYONE.
* This transcript was compiled from uncorrected Closed Captioning.