Dec 16, 2025 City Council

>> I APPRECIATE YOU CLARIFYING GO IN WITH THE BROAD SCOPE BECAUSE THAT WAS MY CONCERN.

I THINK WITH THAT INFORMATION, IT'S DEFINITELY SOMETHING I SUPPORT.

I JUST HAVE ONE QUESTION AS I RECALL THIS WOULD BE LIKE AN EXCLUSIVE CONTRACT TO KERN COUNTY.

YOU GUYS WOULDN'T BE CONTRACTING SHAFT OR MCFARLAND AND [OVERLAPPING]

>> CORRECT.

>> OKAY. YES. THANK YOU.

THANK YOU GUYS FOR THE PRESENTATION, TAKING THE TIME TO COME DOWN AND SEE US.

>>MEMBER RYAN?

>> YEAH. I WAS JUST GOING THROUGH THE REPORT ALSO AND I'D LIKE TO SAY ADVOCACY GRANT WRITING, ECONOMIC DEVELOPMENT SERVICES TOO.

RETAIL, FAST FOOD, EVERYTHING. THAT'S GREAT.

SAYS HERE THAT YOU GUYS WILL TEAM UP WITH WILL WORK WITH THE CITY TO PRIORITIZE

[00:40:02]

A LIST OF THINGS THAT PROJECTS THAT GO IN WHAT ORDER THEY WANT YOU GUYS TO FOLLOW.

IT'S GREAT. I THINK IT'S A WONDERFUL IDEA FOR THE CITY.

THE CITY NEEDS IT BECAUSE WE HAVE A LOT OF PROJECTS UP IN THE AIR TO FULFILL AND YOU GUYS WILL PROVIDE A VERY USEFUL SERVICE FOR EVERYONE HERE. THANK YOU.

>> MEMBER MEDINA.

>> MEMBER MARTINEZ TOOK MY QUESTION THAT I HAD JUST IN TERMS OF THE EXCLUSIVITY.

SEEMS YOU GUYS ARE WELL CONNECTED, IN SACRAMENTO AND DC AND WHAT NOT.

WE WANT OUR CITY TO BE WELL REPRESENTED.

SEEMS LIKE YOU GUYS WILL BE DOING THAT BECAUSE AT THE END OF THE DAY THAT'S WHAT WE HAVE IN TERMS OF THE INTEREST, THAT THE FOLKS THAT WE'RE PARTNERING UP WITH HAVE THE SAME INTEREST THAT WE DO.

WE JUST WANT TO MAKE SURE THAT THERE'S NO BUTT IN THE WATER, ESSENTIALLY.

I THINK THAT CLEARS IT UP FOR US IN THE SENSE THAT YOU GUYS ARE JUST GOING TO BE REPRESENTING OUR CITY.

WE REALLY LOOK FORWARD TO WHAT YOU GUYS BRING BACK TO US AND I LOOK FORWARD TO WORKING WITH YOU GUYS.

IT LOOKS LIKE HE HAS ALREADY HAVE GOOD CONNECTIONS WITH THE STAFF.

HOPEFULLY WE CONTINUE TO BUILD ON THAT. THANK YOU FOR BEING HERE.

WE DEFINITELY APPRECIATE YOU TAKING THE TIME TO BE HERE.

WE HAD A LOT OF QUESTIONS LAST TIME SO THE FACT THAT THE THREE OF YOU ARE HERE, I WAS ONE OF THE MEMBERS THAT GOT TO MEET YOU GUYS AT THE CONFERENCE, THANK YOU FOR BEING HERE.

>> AS A CEO SAID ABOUT HIS GROUP, NORMALLY, THE PERSON SPEAKING AT THE END.

THE MAJORITY OF MEMBERS ALREADY TOOK MY QUESTIONS.

[LAUGHTER] BUT THANK YOU GUYS FOR BEING HERE ALSO, AND THAT MEANS A LOT TO US.

I WOULD LIKE TO ENTERTAIN A MOTION TO APPROVE.

>> MOVE TO APPROVE, MAN.

>> I'LL SECOND.

>> MADAM CLERK, ROW BY ROW CALL.

>> SECONDED BY MARTINEZ. MAYOR SALDANA.

>> MAYOR PRO TEM REINA.

>> COUNCIL MEMBER MARTINEZ?

>> COUNCIL MEMBER MEDINA?

>>AYE.

>> COUNCIL MEMBER RAYA.

AYE.

>> MOTION BY MAYOR PRO TEM REINA, SECONDED BY COUNCIL MEMBER MARTINEZ, TO ADOPT THE RESOLUTION.

MOTION IS UNANIMOUSLY APPROVED.

>> THANK YOU. I'LL GO TO ITEM 15-B.

[15.b. Presentation of a Capital Project Direct Lending Model by Holman Capital. (Hurlbert) ]

PRESENTATIONS OF A CAPITAL PROJECT DIRECT RENDING MODEL BY HOLMAN CAPITAL, MR. HORBERT.

>> YES, HONORABLE MAYOR, MEMBERS OF THE COUNCIL.

ALSO LAST WEEK, ONE OF THE TOPICS WE DISCUSSED IN THE CONTEXT OF OUR CAPITAL PROJECTS WAS OPTIONS FOR ADDITIONAL FINANCING, AND WE SPOKE ABOUT THAT.

ONE OF THE SPECIFIC OPPORTUNITIES WE HAVE IS THROUGH A MODEL CALLED DIRECT LENDING WHERE THE FINANCING IS SECURED BY THE PROJECT ITSELF.

I'VE KNOWN THE ONE OF THE PRINCIPLES OF HOME AND CAPITAL FOR PROBABLY CLOSE TO A DECADE, MAYBE MORE AND NEVER REALLY HAD AN OPPORTUNITY TO USE THEIR SERVICES.

BUT THEY'RE HERE TONIGHT TO EXPLAIN A LITTLE BIT MORE ABOUT THAT DIRECT FINANCING OPTION AND WHAT THAT MODEL LOOKS LIKE, WHAT THE PROS AND CONS ARE VERSUS BONDING, AND WHAT THE FLEXIBILITY OF THEIR PARTICULAR IMPLEMENTATION OF THIS MODEL MIGHT MEAN FOR THE CITY.

TONIGHT, WE'VE GOT REPRESENTATIVES FROM HOMAN HERE TO DO THAT PRESENTATION, AND WE'LL HAVE YOU BEGIN BY PUSHING THE BUTTON TO MAKE SURE HE PICKED UP ON THE MIC THERE.

>> ON THE TIMER.

>> YOU'RE GOOD.

>> AMAZING. WELL, HONORABLE MAYOR, MEMBERS OF THE COUNCIL, FIRST OFF I WANT TO THANK YOU ALL, SCOTT, FOR THE OPPORTUNITY TO PRESENT HERE IN PERSON.

ME AND SCOTT HAVE BEEN TALKING ABOUT THIS PROJECT FOR THE LAST COUPLE OF YEARS NOW AND FINALLY, WE GET TO COME HERE IN PERSON AND MAKE A PRESENTATION.

I WANT TO THANK YOU ALL FOR THAT.

MY NAME IS JAMES LOTT.

I'M THE DIRECTOR OF PUBLIC SECTOR FINANCE FOR HOLMAN CAPITAL.

I OVERSEE THE STATE OF CALIFORNIA WITH MY COLLEAGUE BRENT WHO WILL INTRODUCE HIMSELF SHORTLY.

I ALSO OVERSEE THE STATE OF ARIZONA, NEVADA, ALASKA, AND HAWAII.

>> BRENT KHUN, I'M GLAD TO BE HERE.

I JOINED HOLMAN JUST RECENTLY.

I ALSO MANAGED THE PACIFIC NORTHWEST, WHICH INCLUDES OREGON, WASHINGTON, AND IDAHO.

PRIOR TO HOLMAN, I ACTUALLY WORKED IN MUNICIPAL FINANCE ON THE OPERATING SIDE, INTERIM FINANCE DIRECTOR AND ASSISTANT CITY MANAGER.

BUT NOW I'M ON THIS SIDE, HELPING MUNICIPALITIES FIND CAPITAL FOR THEIR PROJECTS.

>> WE'LL GO THROUGH JUST A REALLY QUICK OVERVIEW OF WHO WE ARE AND WHAT WE DO, HOPE THAT IT BRINGS VALUE TO YOU ALL.

THEN BRENT WILL JUMP INTO SOME SCENARIOS AND GIVE YOU SOME SPECIFICATIONS BETWEEN BONDS AND DIRECT LENDING, WHICH IS WHAT WE OFFER.

[00:45:01]

WHAT IS IT THAT WE FINANCE? WE FINANCE THE FULL GAMUT OF ASSETS FOR PUBLIC AGENCIES IN 16 DIFFERENT STATES.

WE FINANCE ALL OF YOUR SOLAR ASSETS, ALL OF YOUR ENERGY CONSERVATION, YOUR WIND FARMS, YOUR BOILERS, YOUR CHILLERS, HVAC SYSTEMS, ON THE EQUIPMENT SIDE, FIRE APPARATUSES, POLICE CARS, SCHOOL BUSES, ON THE INFRASTRUCTURE SIDE, WATER TREATMENT FACILITIES, WATER METERS, WELLS, BRIDGES, AND THEN ON THE REAL PROPERTY SIDE, POLICE STATIONS, FIRE STATIONS, CITY HALL BUILDINGS, YOU NAME IT, WE FINANCE IT.

SCROLL. WE ENDEAVOR TO BRING TO OUR CLIENTS PUBLIC SECTOR EXPERTISE.

WE ONLY FOCUS ON THE PUBLIC SECTOR.

WE PROVIDE FINANCINGS ANYWHERE FROM $250,000 FOR YOUR SMALLER ASSETS ALL THE WAY TO $200 MILLION FOR YOUR BIGGER INFRASTRUCTURE PROJECTS.

THEN FINANCING FOR UP TO 30 YEARS.

THEN THIS IS WHERE WE REALLY DIFFERENTIATE OURSELVES.

WE'RE VERY CUSTOMIZED, SO WE CAN ALWAYS DO THE TYPICAL 20-30 YEAR LOAN.

BUT WE REALLY LOOK AT YOUR BUDGET THE FINANCES TO MAKE SURE THAT WHATEVER STRUCTURE WE CREATE MAKES SENSE FOR THE CITY.

THEN AS I MENTIONED, WE FUND ALL MUNICIPAL ASSET CLASSES, AND THEN WE SIMPLIFY THE DOCUMENTATION PROCESS, WHAT'S CALLED THE MASTER FINANCING AGREEMENT, AND BRENT WILL GO INTO A LITTLE BIT MORE DETAIL WITH THAT.

THEN QUICK FUNDING, WHAT'S QUICK, TYPICALLY 30-45 DAYS FROM THE TIME WE IS A PROPOSAL TO WE DROP THE FUNDS FROM ESCROW ACCOUNT AND FUND THE TRANSACTION.

WHEN YOU'RE LOOKING AT BUYING AN ASSET OR BUILDING A PROJECT, YOU CAN EITHER USE SOME FORM OF CASH OR USE CASH OR USE A FORM OF FINANCING.

WITH CASH, IT CAN BE DIFFICULT TO ESTIMATE THE PROJECT COST.

AS YOU WAIT TO EXECUTE ON THE PROJECT, YOU HAVE RISING LABOR AND MATERIAL COSTS.

THEN YOU HAVE AN ASSET ON YOUR BALANCE SHEET FOR A LONGER PERIOD OF TIME, YOU HAVE HIGHER OPERATING AND MAINTENANCE COSTS ASSOCIATED WITH THAT ASSET.

THEN WHEN THERE'S CHANGES TO THE GOVERNING BODY LEADERSHIP, THERE CAN BE INTERNAL COMPETITION FOR CASH RESOURCES.

NOW, WITH GOVERNMENT GRANTS OR ANY TYPE OF GRANTS, WE'RE BIG SUPPORTER SAY, PLEASE GO GET AS MUCH FREE MONEY AS YOU CAN.

BUT AS YOU'RE WAITING ON THAT GRANT, THE COST OF THE PROJECT CAN TENDS TO INCREASE.

THE NET BENEFIT OF THAT GRANT CAN LESSEN.

THEN THE BIGGEST ISSUE WITH USING CASH AND THE PHASE FINANCING STRATEGY IS RESERVE DEPLETION AND RESERVES ARE YOUR LIFELINE.

THIS IS AN EXAMPLE OF A CLIENT THAT WAS LOOKING TO BUILD A $10 MILLION PROJECT.

THEY WANTED TO JUST USE CASH AND DECIDED TO WAIT.

THEY WAITED SEVERAL YEARS.

BY THE TIME THEY GOT TO EXECUTING THE PROJECT, THE COSTS WENT UP FROM $10 MILLION ALL THE WAY TO $13.4 MILLION.

WHEN INSTEAD, THEY COULD HAVE JUST BORROWED THE $10 MILLION AT TODAY'S PRICE, LOCK IN THE COST OF THE INTEREST AND THEN IMPROVE THEIR CASH FLOW AND GENERATE RATE SOME SAVINGS IN THIS EXAMPLE OF $13.4 MILLION.

WHY CONSIDER FINANCING YOUR PROJECT, WHERE YOU GET 100% PROJECT FUNDING, SO THAT INCLUDES YOUR INSPECTIONS, DESIGN, EVERYTHING ROLLED INTO ONE.

YOU HAVE TO OFFER COMPETITIVE INTEREST RATES.

THEN YOU'RE ABLE TO OPTIMIZE YOUR BUDGET.

WE BELIEVE THAT THIS WILL INCREASE YOUR SAVINGS, AND THEN FOR CONTROL PURPOSES, WE DROP THE FUNDS INTO AN ESCROW ACCOUNT AND YOU DEPLETE THE FUNDS AS YOU MOVE TOWARDS FINISHING THE PROJECT.

WE BELIEVE THAT THIS WILL ENHANCE THE OVERALL EFFICIENCY IN THE CITY AND [INAUDIBLE]

>> THIS SLIDE ILLUSTRATES THE DIFFERENCES BETWEEN BONDS AND WHAT WE DO, WHICH IS DIRECT LENDING.

THE BONDS MAY REQUIRE VOTER APPROVAL, IN SOME CASES, DIRECT LENDING DOES NOT.

BONDS HAVE EARLY PAYOFF LOCKOUT PERIODS, SO THEY HAVE CALL PROVISIONS OR PROVISIONS THAT DON'T ALLOW YOU TO REFINANCE OR PAY THESE OFF EARLY.

WHEREAS DIRECT LENDING ALLOWS YOU TO PAY IT OFF AT ANY SCHEDULED PAYMENT DATE FOR A BUYOUT AMOUNT.

WE BOTH OFFER COMPETITIVE INTEREST RATES.

HOWEVER, BONDS, THE INTEREST RATE ISN'T LOCKED UNTIL THE DAY OF THE FUNDING.

THEY HAVE TO GO OUT TO THE PUBLIC AND PRICE THESE AND YOU REALLY DON'T KNOW WHAT INTEREST YOU'RE GOING TO BE CHARGED UNTIL THE DAY THAT IT'S FUNDED.

WE ACTUALLY CAN LOCK YOUR RATE FOR 30-45 DAYS.

BONDS REQUIRE A TEAM OF FINANCIAL PROFESSIONALS TO UNDERWRITE AND SELL THESE TO THE PUBLIC.

WE HAVE NO RATING AGENCIES, NO TRUSTEES, NO BOND INSURANCE, AND NO INVESTMENT BANKING FEES.

WE ACTUALLY HAVE A LOW FEE, WHICH IS $5,000 FOR AN EQUIPMENT PURCHASE,

[00:50:04]

$10,000 IF YOU'RE DOING ENTERPRISE OBLIGATIONS, AND THEN $20,000 FOR REAL PROPERTY ACQUISITION.

THOSE ARE SET, WHETHER YOU BORROW 250,000 OR 250 MILLION.

ON THE OTHER SIDE, BONDS HAVE HIGH FEES.

THEIR FEES ARE ALL PREDICATED OFF OF THE AMOUNT THAT YOU BORROW.

ALSO, THEIR FINANCES ARE TYPICALLY 30 YEARS.

THEY DON'T REALLY STRUCTURE THESE FOR VARIETY OF TERMS. THIS IS WHERE WE REALLY TAILOR YOUR ANALIZATION FOR WHAT CASH FLOW YOU REQUIRE OR WHETHER OR NOT YOU WANT TO DO SOME COST MITIGATION OR ANY TYPE OF BUDGET.

ALSO IN BONDS, PRINCIPAL ISN'T PAID OFF UNTIL MATURITY.

YOU COULD HAVE A BOND THAT ACTUALLY DOESN'T MATURE FOR 10 YEARS AND YOU'RE ONLY PAYING INTEREST WHEREAS WITH DIRECT LENDING [NOISE] OPERATES AS A MORTGAGE, WHERE YOU HAVE PRINCIPAL AND INTEREST THAT ARE PAID AT EACH [NOISE] PAYMENT.

ALSO BONDS TAKE A MUCH LONGER FUNDING CYCLE.

AT THE MINIMUM, EIGHT MONTHS, TYPICALLY AT LEAST THE YEAR TO 14 MONTHS.

WE CAN DO FUNDING WITHIN 30-45 DAYS. NEXT SLIDE.

THIS ILLUSTRATES THE TRUE COST OF FUNDING BETWEEN BONDS AND DIRECT LENDING.

IN THIS ILLUSTRATION, THE FIVE MILLION WAS THE FINANCING AMOUNT FROM BONDS.

AS YOU CAN SEE, THE BONDS HAVE A STATED INTEREST RATE OF 5.5%, WHEREAS DIRECT LENDING HAS A STATED INTEREST RATE OF 5.7%.

THE FINANCING TERMS ARE THE SAME, THE PAYMENTS ARE THE SAME.

AS YOU CAN SEE THE PERIODIC PAYMENTS AND THE ANNUAL PAYMENTS ARE FAIRLY CLOSE IN TERMS OF CASH FLOW.

BUT WHAT IS NOT SHOWN ON THE BOND SIDE IS THE COST OF THE ISSUANCE.

YOU HAVE THE UNDERWRITING FEE, THE LEGAL FEE.

YOU HAVE RATING AGENTS TRUSTEE FEES.

IN SOME CASES, THESE ARE ONGOING ANNUAL FEES, DISCLOSURE, AND USUALLY YOU HAVE TO HAVE AN FA.

IN THIS MODEL, THIS WAS AN EQUIPMENT FINANCING, SO IT WAS ONLY 5,000, BUT AS YOU CAN SEE, IF YOU ADVERTISE OFF OF THE NET PROCEEDS OF THE METHOD YOU ACTUALLY GOT FROM THE OFFERING, THE COST OF THE BONDS ARE ACTUALLY HIGHER THAN THE COST OF DIRECT LENDING.

IN THIS CASE, 5.86-, 5.72%.

WHEN YOU'RE DOING A REAL PROPERTY FINANCING, WE OFFER WHAT'S CALLED A LEASE/LEASEBACK FINANCING.

IN THE NEXT ONE.

WHAT THIS IS IS BASICALLY YOU ENTER INTO A GROUND LEASE WITH HOLMAN, AND THEN HOLMAN LEASES BACK THE PROPERTY TO YOU FOR THE COST OF THE PROJECT.

YOU'RE BASICALLY MAKING RENTAL PAYMENTS TO THIS.

NOW, THE REASON FOR THAT IS IT'S TREATED AS A LEASE AND NOT AS PART OF YOUR DEBT LIMIT.

THAT'S ONE OF THE FACTORS HERE.

THE SECURITY WILL BE THAT HOLMAN WILL HAVE A LEASEHOLD INTEREST IN THE PROPERTY AND THE BUILDING.

THERE WILL BE INSURANCE THAT WILL BE FACTORED INTO THIS, AND BASICALLY, THIS WILL BE AN UNCONDITIONAL OBLIGATION TO PAY FOR THE CAPITAL THAT WE PROVIDED FOR THE PROJECT.

>> HOWEVER, ONCE THE PROJECT IS PAID OFF, BOTH THE LEASE AND THE LEASE BACK AGREEMENTS, BOTH TERMINATE.

THERE'S THERE'S NOT AN EXISTING GROUND LEASE THAT THAT'S SITTING OUT THERE.

BECAUSE TYPICALLY WHAT WE DO IS WE GROUND LEASE THESE FOR LET'S SAY 30 YEAR TERM, AND YOU IF YOU TOOK A 20 YEAR TERM.

USUALLY THERE'S A SPREAD OF ABOUT TEN YEARS, BUT IT'S MOSTLY JUST A PROCESS THAT ALLOWS FOR THIS TO BE CONSIDERED A LEASE VERSUS VERSUS A DEBT.

THIS IS WE START WITH A MASTER FINANCING AGREEMENT TO SIMPLIFY YOUR CAPITAL PROJECT FINANCINGS, THAT NEXT.

WE HAVE THREE DIFFERENT TYPES OF MASTER FINANCING AGREEMENTS.

WE HAVE A MASTER LEASE PURCHASE AGREEMENT, WHICH IS USUALLY FOR OUR GOVERNMENTAL FUND OBLIGATIONS.

THIS IS SECURED BY COLLATERAL.

WE DO A MASTER INSTALLMENT PURCHASE AGREEMENT.

THIS IS ENTER PRICE FUND OBLIGATIONS, SO THE RATE PAYER OF REVENUE IS OBLIGATED FOR THE PAYMENT OF THIS.

WE REQUIRE A DEBT SERVICE COVERED RATIO COVENANT.

THAT'S 1.25% OF THE DEBT SERVICE AND THEN WE ALSO LASTLY DO A MASTER FULL FAITH AND CREDIT AGREEMENT.

[00:55:04]

THIS IS BASICALLY A TAX PLEDGE.

IF YOU HAVE PROPERTY TAX FOR PLEDGING A SALES TAX TO THIS.

WE BASICALLY IN OUR DUE DILIGENCE, LOOK TO SEE THAT THE MUNICIPALITY CAN AFFORD THE PAYMENTS.

THIS ILLUSTRATES HOW THE MASTER FINANCING AGREEMENT WORKS.

BASICALLY, WE GO THROUGH AND WE WORK TO PUT TOGETHER THIS FINANCING AGREEMENT AND GET APPROVED THROUGH A CERTAIN GUIDANCE.

WE GO THROUGH DURING OUR DUE DILIGENCE AND WE SEE WHAT YOU NEED IN TOTAL.

IF YOU'RE WANTING TO DO MULTIPLE PROJECTS, YOU CAN YOU IN THIS EXAMPLE, LET'S SAY YOU QUALIFY FOR A $20 MILLION LINE OF CREDIT, YOU WANT TO DO A PIPELINE PROJECT, THAT PIPELINE PROJECT WILL HAVE ITS OWN TERM IN THIS CASE, IT'S 5 MILLION, I'LL HAVE ITS OWN TERM AND STATED INTEREST.

THEN SAY DOWN THE ROAD, YOU WANT TO DO AN ENERGY PROJECT.

YOU DON'T HAVE TO GO THROUGH THE WHOLE PROCESS OF PUTTING AN AGREEMENT TOGETHER, WE HAVE AGREEMENT.

WE JUST PUT A NEW TERM TOGETHER, WHICH WOULD HAVE ITS OWN PAYMENT SCHEDULE AND AMORTIZATION WITH STATED INTEREST.

IN THIS EXAMPLE, THERE'S ANOTHER BUILDING PROJECT THAT IS 7 MILLION THAT WOULD HAVE ITS OWN TERM AND STATED INTEREST.

THE ONLY THING THAT WOULD BE REQUIRED IS THAT EACH PROJECT AND AMORTIZATION AND INTEREST WOULD BE APPROVED BY THE COUNCIL.

THIS IS OUR PROCESS.

WE HAVE PROJECT DISCOVERY.

WE DO OUR DUE DILIGENCE.

OUR DUE DILIGENCE IS TO LOOK AT FEASIBILITY, SO WE LOOK AT THREE YEARS OF AUDITED FINANCIALS.

WE ALSO DO SOME PROFORMA STUFF TO PROJECT OUT FEASIBILITY OVER THE TERM OF THE LOAN.

AT THAT POINT, WE SUBMIT FINANCING PROPOSAL.

THAT FINANCING PROPOSAL WILL HAVE ALL BASICALLY THE TERMS OF THE CREDIT FACILITY IN THAT.

AT THIS POINT, CREDIT APPROVAL, WE SUBMIT THIS TO OUR INVESTOR FOR CREDIT APPROVAL, BUT AT THIS POINT IT'S ABOUT 99% ASSURED THAT THE CREDIT WILL BE APPROVED.

WE DO ALL OF THE CONTRACT MANAGEMENT, SO WE DO ALL OF YOUR DOCUMENTATION, EVERYTHING.

IT'S VERY, VERY STAFF FRIENDLY.

WE DON'T INUNDATE YOUR STAFF AT ALL, THAT WE HANDLE THIS COMPLETELY IN HOUSE.

THEN ONCE WE'RE DONE WITH THAT, WE BRING THIS TO THE COUNCIL FOR YOUR APPROVAL, THE ONLY THING THAT WE REQUEST THAT DURING THAT APPROVAL IS THAT A REIMBURSEMENT RESOLUTION IS APPROVED DURING THAT TIME PERIOD.

AT THAT POINT, WE CAN FULLY FUND THE LOAN AND THAT GOES INTO ITS INDIVIDUAL ESCROW.

ONCE IT'S IN ESCROW, THAT MONEY IS THERE FOR YOU TO DRAW FROM.

USUALLY WHAT THAT MEANS IS THAT YOU'LL HAVE YOUR CONTRACTOR, YOUR CONTRACTOR WILL SUBMIT THE INVOICES TO THE CITY.

THE CITY WILL GO TO MAKE SURE THAT THAT WORK WAS PERFORMED, THAT WILL BE THEN SUBMITTED TO ESCROW AND THEN REIMBURSED, AND THAT TYPICALLY TAKES ONE TO TWO BUSINESS DAYS.

THIS IS JUST AN EXAMPLE.

>> YOU MIGHT WANT TO HIT THAT MICROPHONE AGAIN. THANK YOU.

>> THIS IS JUST A QUICK EXAMPLE OF THE PROJECT THAT WE HAD DISCUSSED.

SURE, SO THIS IS JUST A QUICK EXAMPLE OF A PROJECT AND I KNOW THAT SCOTT HAD SHOW A SIMILAR VERSION OF THIS AT THE LAST MEETING.

BUT IN THIS, WE'RE LOOKING AT A $20 MILLION PROJECT, A $5 MILLION EQUITY CONTRIBUTION, WHICH IS BASICALLY LIKE A DOWN PAYMENT, AND THEN YOUR TOTAL FINANCING AMOUNT IS $15 MILLION.

THESE RATES ARE AS OF LAST NIGHT FOR THESE DIFFERENT TERMS. YOU HAVE A TEN YEAR, 15 YEAR, 20 YEAR, AND 30.

YOU CAN SEE THE ARROW POINTING OVER TO THE YELLOW AREA SHOWS THAT THE LONGER YOUR TERM IS, THE MORE EXCESS CASH FLOW YOU'RE GETTING EVERY SINGLE YEAR TO ALLOCATE TOWARDS YOUR BUDGET TO PAY FOR OTHER NEEDS THAT YOU MIGHT NEED BECAUSE WE ALL KNOW THAT THE CITY HAS MULTIPLE NEEDS AT THIS POINT.

THAT'S JUST A QUICK OVERVIEW OF WHAT THAT MIGHT LOOK LIKE.

YOU SCROLL TO THE NEXT.

THAT'S JUST A EXPLANATION OF THAT.

NOW, THIS IS AN EXAMPLE OF A RATE RESET SOLUTION THAT A LOT OF CLIENTS TEND TO USE FOR REAL ESTATE ACQUISITIONS AND FACILITIES.

IN THIS EXAMPLE ON THE LEFT WHERE IT SAYS FULLY AMORTIZED, YOU SEE A $20 MILLION PROJECT.

THE INTEREST RATE IS 6.5%, AND IT'S A 30 YEAR TERM, WHICH IS STANDARD, SO YOU'LL SEE IF YOU LOOK DOWN, THE INTEREST EXPENSE IS $25.7 MILLION TOTAL.

BETWEEN PRINCIPAL AND INTEREST, YOU'RE PAYING $47 MILLION FOR 30 YEAR AMORTIZATION.

BUT WHERE WE DIFFERENTIATE OURSELVES, WE MIGHT COME TO YOU AND SAY, HEY, LOOK,

[01:00:01]

INSTEAD OF DOING A 30 YEAR LOAN, WHY DON'T YOU LOOK AT RESETTING THE RATE EVERY TEN YEARS.

HERE, UNDER STAGE ONE, YOU SEE THE $20 MILLION LOAN, EXCUSE ME.

YOU'RE ONLY DOING A TEN YEAR TERM, SO THE RATE IS GOING TO BE LOWER, BUT WE KEEP THE PAYMENTS EXACTLY THE SAME AS THE 30 YEAR OPTION.

BUT BECAUSE MORE OF YOUR PAYMENT IS GOING TOWARDS PRINCIPAL, YOU'RE PAYING IT DOWN MUCH QUICKER.

YOU GO FROM $20 MILLION DOWN TO $13.8 MILLION IN THE FIRST STAGE.

THEN AT THE END OF THAT TEN YEARS, YOU HAVE TO RESET IT.

YOU'RE SHOWING WE'RE SHOWING YOU WHAT HAPPENS IF THE RATES DON'T CHANGE, I'LL SHOW YOU WHAT HAPPENS WHEN RATES DO CHANGE, BUT AT THE SECOND STAGE, YOU GO TO $13.8 MILLION, PAY DOWN TO $3.5 MILLION IN THE SECOND TEN YEARS, SO THAT'S 20 YEARS TOTAL.

NOW YOU GO TO THE THIRD STAGE.

THE RATE STAYS THE SAME, BUT INSTEAD OF TEN YEARS, IT'S ONLY TAKING YOU THREE YEARS TO PAY OFF THE REST OF THE LOAN.

A COUPLE OF DIFFERENT TAKEAWAYS.

IN THE FIRST 30 YEAR OPTION, IT'S TAKING YOU 30 YEARS TO PAY OFF A LOAN.

THE RATE RESET OPTION IS TAKING YOU 10, 10 AND THREE, THAT'S SEVEN YEARS SOONER.

NOW, THE SECOND TAKEAWAY IS THE INTEREST EXPENSE.

IF YOU LOOK UNDER THE SAVINGS ANALYSIS WHERE IT SAYS STRUCTURED FINANCE, YOU SEE IN THE FIRST STAGE YOU'RE PAYING $9.1 MILLION IN INTEREST EXPENSE.

IN THE SECOND STAGE, YOU'RE PAYING $4.9 MILLION.

THEN IN THE LAST STAGE 300 WHAT IS A 56 MILLION? THE TOTAL IS FOUR ALMOST $14.4 MILLION.

WHEN YOU LOOK AT THE DIFFERENCE BETWEEN THE 30 YEAR OPTION AND THE RATE RESET OPTION, YOU'RE ACTUALLY SAVING $11.3 MILLION IN TOTAL. IF YOU SCROLL DOWN.

THIS IS AN EXAMPLE OF WHAT HAPPENS IF RATES CHANGE IN THOSE OTHER YEARS.

IN STAGE 2, YOU SEE THE RATE WENT UP TO 6.5%, IN STAGE 2, THE RATE WENT UP TO 8%.

BUT IF YOU LOOK DOWN TO THE BUDGET SAVINGS, YOU STILL SAVE $9.1 MILLION IN INTEREST EXPENSE, AND THAT'S BECAUSE YOU'RE PAYING THE LOAN OFF MUCH QUICKER.

THIS IS JUST A QUICK EXPLANATION OF OF THE RATE RESET AND THAT CONCLUDES THE OUR PRESENTATION.

WE'D LOVE TO ANSWER ANY QUESTIONS.

>> ACTUALLY, REALLY QUICKLY, THE ONE THING ON THE RATE RESET, ALSO IS IS THAT IS THAT YOU CAN SET THE PAYMENT TO REALLY MIRROR YOUR CASH FLOW NEEDS.

IF WE GET TO A POINT WHERE YOU'RE LIKE, THIS IS THE AMOUNT THAT WE NEED TO FINANCE, WE CAN BACK INTO A CASH FLOW REQUIREMENT THAT MEETS THE CITY'S BUDGET NEEDS AND THEN WORK THIS INTO THIS KIND OF SOLUTION.

>> ARE THERE ANY PUBLIC COMMENTS AT THIS TIME? I SEE NONE. ANY COMMENTS FROM THE MEMBERS? MAY I PRO TEM RENA?

>> ALLOW TO DIGEST?

>> I THINK IT'S IMPORTANT TO HAVE THIS OVERVIEW AND FAMILIARITY, GET TO KNOW SOME OF THE JARGON THAT GOES ALONG WITH THIS TYPE OF FINANCING.

OBVIOUSLY, WE'RE A LONG WAYS FROM ACTUALLY EXECUTING ONE OF THESE AGREEMENTS.

THERE WOULD BE A LOT OF TIME FOR OUR SPECIFIC EXAMPLES WHEN IT COMES TIME TO MOVE FORWARD.

>> I DO HAVE A REQUEST AND THAT IS THAT YOU SEND THIS TO US, SEND IT TO ME.

I'M CERTAIN THE OTHER MEMBERS WILL WANT IT TO SO I CAN GO THROUGH IT AGAIN AND HAVE A BETTER UNDERSTANDING.

THIS SOUNDS SIMPLE, THE WAY YOU EXPLAIN IT.

BUT IT'S A LITTLE BIT MORE COMPLICATED THAN IT APPEARS AT LEAST TO ME AND I WANT TO MAKE SURE THAT I UNDERSTAND IT FULLY.

I DO A VERY GOOD JOB ABOUT EXPLAINING IT, BY THE WAY.

>> THAT WAS A CONDENSED VERSION OF THE PRESENTATION.

>> FOR ME, THERE ARE QUESTIONS IN MY MIND, BUT I'M NOT SURE WHETHER I CAN EVEN FORMULATE THOSE QUESTIONS AT THIS TIME BECAUSE IT IS SO COMPLEX.

YOU KNOW, SOMETHING TOTALLY NEW FOR ME.

THANK YOU SO MUCH FOR YOUR PRESENTATION.

>> THANK YOU FOR YOUR PRESENTATION.

IT IT WAS REALLY GOOD.

CAN YOU GO BACK UP TO THE RATE RESET THING? I'M A LITTLE CONFUSED ON IT.

IT'S SOMETHING THAT'S NEW TO ME.

WE START WITH A 30 YEAR TERM.

IN ESSENCE AND THEN AFTER TEN YEARS, WE WOULD REFINANCE BASICALLY AND GO TO THE STAGE STAGE ONE. AM I UNDERSTANDING THAT.

>> THIS IS GIVING YOU A EXAMPLE OF A FULLY AMORTIZED TERM OVER 30 YEARS.

IN THE RATE RESET, WHAT WE DO IS YOU IN ESSENCE ARE GETTING A TEN YEAR TERM WITH A BALLOON PAYMENT AT THE END OF IT, AND THEN THAT IS THEN REFINANCED OR FINANCED TO THE SECOND? WHAT IT DOES IS IT ALLOWS FOR LIKE THE LONGER YOU GO OUT DURATIONALLY,

[01:05:06]

THE RISK IS HIGHER, SO THE INTEREST RATES ARE GOING TO BE HIGHER.

IF WE CAN CONDENSE THAT TERM FOR A TEN YEAR TERM, YOU'RE GOING TO GET OPTIMAL RATES FOR THAT TEN YEAR TERM.

>> I GOT YOU. I JUST MISSED THE PART ABOUT THE BALLOON PAYMENT.

THAT'S WHERE I WAS CONFUSED ON IT.

>> THAT'S A KEY POINT THAT IT SHOWS, THAT THAT'S GOING UP IN THAT STAGE 2.

THEN BASICALLY THE UNDERSTANDING IS, THIS IS GOING AND THEN AT THAT POINT, THE RATES ARE STATED AND WE GO THROUGH ANOTHER 10 YEAR TERM.

THIS IS TO REALLY MAXIMIZE DURATIONAL RISK IN A WAY THAT IT REALLY REDUCES THE INTEREST CONSIDERABLY.

YOU'RE PAYING IT OFF, LIKE, YOU CAN YOU COULD DO STRAIGHT TERMS ON A 20, BUT THAT MIGHT NOT WORK WITHIN YOUR CASH FLOW REQUIREMENTS OR YOUR BUDGET REQUIREMENTS.

THERE'S A LOT OF THINGS THAT WE DO ON THE DUE DILIGENCE SIDE OF THESE IN WORKING WITH THE CITY MANAGEMENT AND FINANCE TO SAY, LOOK, WHAT ARE WHAT ARE YOUR GOALS ON YOUR SIDE ON YOUR OPERATIONAL SIDE OR YOUR OPERATIONAL BUDGET? HOW CAN WE THEN FIT THIS IN SO THAT WE CAN HELP YOU BUILD YOUR FACILITY? IT'S BASICALLY TO MAXIMIZE THE EFFICIENCY OF EXECUTING YOUR CAPITAL IMPROVEMENT PLAN.

>> NO, I APPRECIATE THAT THAT CLARIFIES IT FOR ME.

THANK YOU GUYS FOR THE PRESENTATION.

>> REMEMBER. EXCELLENT PRESENTATION, BUT YEAH, IT'S A LOT OF INFORMATION TO THE EST, BUT ONE OF THE THINGS THAT STAND OUT HERE WAS LIKE WE CAN HAVE MULTIPLE PROJECTS UNDER AGREEMENT.

>> YES. IN SOME CASES, IF MUNICIPALITY HAS THIS KIND OF FACILITY, BUT THEN THEY ALSO HAVE A SPORTS PARK THAT THEY WANT BUT IN TOTAL, WE WOULD LOOK AT THAT AND SAY, YOU'VE IDENTIFIED, FOUR DIFFERENT PROJECT.

WE'LL GO THROUGH THE PROCESS OF IDENTIFYING WHAT THIS CITY'S DEBT CAPACITY IS FROM A BUDGETARY STANDPOINT, FROM AN ANNUL BUDGET STANDPOINT, AND THEN SAY, OKAY, THIS IS WHAT WE HAVE, AND THEN GO THROUGH THAT PROCESS.

THEN HOW YOU IDENTIFY THOSE PROJECTS IS UP TO YOUR MAN.

>> THANK YOU. MEMBER MEDINA.

>> YEAH, IT'S A LOT OF NUMBERS, A LOT OF INFORMATION TO DIGEST, I AGREE WITH THAT.

I THINK IF YOU'RE ABLE TO SEND THAT THE DECK TO US AND WE CAN PROVE A LITTLE BIT MORE.

I'M SURE IF WE HAVE MORE QUESTIONS, WE CAN DIRECT THEM TO YOU SCOTT AND YOU CAN GET US FOLLOW FOLLOW.

BUT, I DEFINITELY APPRECIATE YOU GUYS BEING HERE.

DEFINITELY A GOOD OPTION FOR US FOR THE FUTURE AND WHAT WE'RE TRYING TO DO.

JUST TAKING THE TIME TO BE HERE AND EXPLAIN TO US OR GOING THROUGH THE PROCESS WAS GOOD.

>> BEFORE YOU GO, I DO WANT TO ASK YOU A QUESTION.

YOU MENTIONED THE BALLOON PAYMENT.

A BALLOON PAYMENT USUALLY IS THE LOAN BECOMING DUE AT THAT POINT, YOU HAVE TO PAY AT ALL.

BUT WHAT YOU'RE IN ESSENCE DOING IS REFINANCING IT AT A HIGHER RATE, IS THAT CORRECT?

>> NOT NECESSARILY. YOU'RE STILL KEEPING WITHIN THE TERMS. YOU WOULD BE SUBJECT TO SOME INTEREST RATE VARIABILITY IN TERMS OF 10 YEARS DOWN THE ROAD.

BUT AS AM IS SHOWING THAT IT WOULD TAKE A PRETTY CATASTROPHIC INCREASE IN THAT RATE RESET TO NOT MAKE THIS A SAVINGS FOR YOU TO UTILIZE THIS OPERATE.

IN THE ENVIRONMENT WHERE YOU HAVE INTEREST RATES THAT ARE STABLE AMOUNTING TO A STABLE AMOUNT BECAUSE I THINK THAT'S WHERE WE'RE GOING TO BE.

WE'RE GOING TO GET TO THIS FOUR ISH ON THE FED RATES.

ANYWAY, I DON'T WANT TO BELABOR THE POINT, BUT YES, THAT BLOOM PAYMENT AT TEN YEARS DOWN THE LINE WOULD BE SUBJECT TO A DIFFERENT INTEREST.

I WOULD STILL BE UNDER THE SAME DURATIONAL RATE.

>> YOU DID MENTION AND THE QUESTIONS ARE COMING UP NOW.

YOU DID MENTION THAT AS YOU MOVE FROM THE FIRST TEN YEAR PERIOD TO THE SECOND YEAR TEN YEAR PERIOD, THAT YOU ARE BECAUSE YOU'RE ASSUMING A BIGGER RISK, SO THERE'S A LARGER INTEREST RATE. YOU DID MENTION THAT?

>> I THINK YOU SO IF YOU WERE TO FULLY ADVERTISE THIS OVER A 30 YEAR PERIOD.

THE INTEREST RATE WOULD BE HIGHER BECAUSE IT GOES OUT FARTHER.

THE FARTHER IT GOES OUT, THAT THAT IMPACTS IN THIS CASE, THE THE STRUCTURE IS A 10 YEAR TERM.

INSTEAD OF FULLY ADVERTISING OVER TEN YEARS, YOU'RE DOING A 10 YEAR TERM WITH WHAT'S CALLED A BULLET OR BALLOON PAYMENT AT THE END.

THAT THEN GETS RESET THE RATE THE REASON WHY IT'S CALLED A RATE RESET IS BECAUSE AT THAT 10 YEAR, WE GO THROUGH AND FINANCE THAT PIECE WITH WHATEVER THAT BALLOON PAYMENT IS GOING TO BE,

[01:10:03]

BUT THE RATE RESETS TO WHATEVER THAT PERIOD IS BECAUSE INTEREST RATES MOVE VARIABLY.

>> THE QUESTION THAT I HAVE, IS IT POSSIBLE THAT INSTEAD OF HAVING A HIGHER RATE THAT YOU WILL HAVE A LESSER RATE?

>> YES.

>> IF INTEREST RATES DROP FROM THE FIRST 10 YEAR PERIOD TO THE SECOND TEN YEAR PERIOD?

>> YES. REALLY WHAT WE WERE TRYING TO SHOW IS THAT THAT IS THE BENEFIT.

BUT IN ORDER FOR THAT NOT TO GIVE YOU SAVINGS, THE RATE WOULD HAVE TO RESET, LIKE INCREDIBLY HIGH FOR THAT TO BECOME A PROBLEM.

IS REALLY IS A REALLY SOUND PRODUCT IN TERMS OF MATCHING BOTH YOUR CASH FLOW REQUIREMENTS WITH THE OVERALL INTEREST COST REDUCTION?

>> YOU'RE CALLING IT A RESIT, BUT THE WAY I'M UNDERSTANDING IT, IS ACTUALLY REFINANCING OF THE ORIGINAL LOAN EVERY TEN YEARS, IS THAT CORRECT?

>> EXACTLY. YES. THAT'S WHY THAT'S WHY THERE'S BASICALLY THE TRANCHES ARE SET UP IN STAGE 1, STAGE 2, STAGE 3.

>> THANK YOU. IF I CAN ADD TO THAT BRIEFLY, AND STOP ME IF I AND GIVING OUT DISINFORMATION.

IF WE GO BACK UP A COUPLE OF SLIDES, ONE MORE THAT ONE RIGHT THERE.

IF YOU NOTICE IN THE MIDDLE, JUST TO PUT AN EXCLAMATION PART ON THIS.

THE FINANCING DURATION THERE IN THE MIDDLE LONG BOX, 10 YEARS, 15, 20.

>> SEE HOW THE INTEREST RATE GOES UP? THIS SPEAKS EXACTLY TO WHAT HE WAS MENTIONING IS I'M AN INVESTOR AND I'M GOING TO HAND YOU MY $20 MILLION FOR 30 YEARS, I CAN SEE THIS OVER 30 YEARS.

IF IT'S ONLY FOR 10 YEARS, WELL, I'VE GOT A LOT BETTER MORE CONFIDENCE THAT I KNOW IT'S TRENDING DOWN, OR IT'S GOING TO BE SABLE, SO I DON'T NEED TO BUILD AS MUCH RISK INTO MY FINANCE RATE.

BY TAKING IT IN 10 YEAR CHUNKS, EVERY TIME THE INVESTORS LOOK AT IT AND THEY SAY, IT'S ONLY FOR 10 YEARS, THIS RATE, I DON'T NEED A VARIABILITY AND THERE I KNOW WHAT IT'S GOING TO BE FOR 10 YEARS.

THAT'S AN ADVANTAGE.

>> I DON'T OBJECT TO IT.

I THINK I'M UNDERSTANDING IT NOW.

THAT'S WHAT I'M ALLUDING TO THAT, YOU KNOW, THE TERM THAT YOU WERE USING A RESET, YOU KNOW, IT'S ACTUALLY A REFINANCE THEN.

THAT'S BASICALLY WHAT I UNDERSTAND.

BUT AGAIN, I WANT TO LEARN MORE ABOUT IT AND I WOULD LIKE TO HAVE THIS INFORMATION.

I DID GO INTO YOUR WEBSITE, BUT I DID NOT FIND THIS THERE.

>> WE DID THIS FOR YOU SPECIFICALLY.

>> SO IT WOULDN'T BE ON OUR WEBSITE..

>>. THANK YOU. THANK YOU FOR THE PRESENTATION.

I THOUGHT I DIDN'T HAVE QUESTIONS, BUT I DID.

>> THANK YOU, GENTLEMEN FOR THE PRESENTATION. ARE THERE QUESTIONS.

>> THANKS.

>> THANK YOU. ANYTHING ELSE, WE ARE GOOD TO GO.

THANK YOU FOR COMING UP. WE REALLY DO APPRECIATE IT.

>> GOING ON TO ITEM 15C.

[15.c. Council finds this action is not a “project” as defined under section 15378 of the CEQA Guidelines; Presentation of SGMA Update and Authorize Letter of Support for Shafter-Wasco Irrigation District project. (Hurlbert) ]

CITY COUNCIL FINDS THAT THIS ACTION IS NOT IN THE PROJECT AS DEFINED UNDER SECTION 15378 OF THE SQL GUIDELINES PRESENTATION OF THE SIGMA UPDATE AND AUTHORIZED LETTER OF SUPPORT FOR SHAFTER WASCO IRRIGATION DISTRICT PROJECT, MR. HERBERT.

>> YES. HONORABLE MAYOR AND MEMBERS OF THE COUNCIL.

ON PREVIOUS UPDATES WITH THE SIGMA PROJECT, SO THERE ARE TWO PIECES TO THIS ITEM.

ONE IS THAT OUR LOCAL GSA HAD SUBMITTED PLANS TO THE STATE.

THEY DIDN'T LIKE ANYTHING THAT WAS GOING ON DOWN HERE IN KERN COUNTY.

I WAS KICKED BACK AND THERE WAS THIS THREAT OF BEING ON A PROBATIONARY BASIS WITH THE STATE.

YOU MIGHT RECALL THAT YOU HAD AUTHORIZED ALBERTO OR DEPUTY PUBLIC WORKS DIRECTOR TO GO UP AND SPEAK BEFORE THE BOARD IN SACRAMENTO.

WHICH THEY DID AND IN THIS LAST ROUND SUCCESSFULLY.

SO THE BOARD HAS FOUND THAT THE PLAN HERE IN KERN COUNTY, SPECIFICALLY, OUR GSA HERE FOR WASCO SHAFTER, NORTH KERN, AND SWID IS NOW PART OF AN ACCEPTED PLAN.

IT WON'T BE ON PROBATION, WILL BE SENT BACK TO THE WATER BOARD TO MANAGE THAT.

>> MAYOR.

>> THIS IS RIGHT IN THE MIDDLE OF YOUR FACE.

WELL, I WANT TO BE ABLE TO SEE YOU.

>> MIGHT BE AN ADVANTAGE.

>> AT ANY RATE, SO THAT'S GOOD NEWS.

ALBERTO HAS DONE A GREAT JOB TAKING THIS OVER AND REALLY IS DOING A GREAT JOB FOR THE CITY AND FOR OUR GROUP.

ALONG WITH THAT, THE FOLKS AT SWID ARE BEING VERY AGGRESSIVE IN

[01:15:03]

TRYING TO COME UP WITH LONGER TERM SOLUTIONS TO THE WATER SITUATION HERE IN THEIR DISTRICT, SPECIFICALLY, BUT WITH OUR SURROUNDING DISTRICTS AS WELL.

ONE OF THOSE IS TO USE EXCESS SURFACE WATER PRIMARILY FROM THE FRIANT-KERN DURING HIGH WATER YEARS.

WE'VE TALKED ABOUT THIS BEFORE.

THERE JUST AREN'T ENOUGH RECHARGE PONDS OR ENOUGH CONVEYANCE CANALS TO GET THAT WATER DELIVERED AND PUT BACK INTO THE GROUNDWATER.

CHRIS IS WORKING ON A PROJECT NOW THAT WOULD ESSENTIALLY BE DESIGNED TO BE ABLE TO CAPTURE AND TAKE DELIVERY OF AND RECHARGE AN AMOUNT OF WATER EQUIVALENT TO BOTH SHAFTER AND WASCO'S ENTIRE NON AGRICULTURAL USE, SO ENTIRE MNI USE, AS THEY CALL IT.

IT'S AN AGGRESSIVE PLAN, BUT THE AMOUNT OF MONEY THAT IS FLOATING AROUND IN WATER CIRCLES AND SOME OF THIS INFRASTRUCTURE FUNDING THAT IS AVAILABLE RIGHT NOW, HE'S MAKING A VERY GOOD CASE THAT PROJECTS LIKE THIS ARE MUCH MORE RESPONSIBLE BECAUSE IT CAN CREATE A PERMANENT SUSTAINABLE SOLUTION.

THE AMOUNT OF WATER THAT'S BEING USED WITHIN THE DISTRICT BOUNDARY TODAY, THE COMBINATION OF CROPS AND HOUSES, WILL PROBABLY NEVER BE HIGHER.

CROP EFFICIENCIES CONTINUE TO GET BETTER WHEN HOUSING REPLACES CROPS, AT LEAST MOST OF THE TYPES OF CROPS THAT ARE GROWN HERE NOW, ALMONDS AND OTHER ORCHARDS, A NEIGHBORHOOD USES LESS WATER PER ACRE THAN AN EQUIVALENT ACREAGE OF ALMONDS.

AS CITIES GROW, THE NET WATER USAGE MAY ACTUALLY FALL, COMBINED WITH MORE EFFICIENCIES IN HOUSEHOLD USE AND MORE LEGISLATION, AND MANDATES FROM THE STATE DEMANDING THAT THAT WATER USE DROPS.

THIS LETTER THAT YOU'RE BEING REQUESTED TO AUTHORIZE TONIGHT IS AN INTRODUCTORY LETTER FOR THAT TYPE OF PROJECT FOR CONSTRUCTION OF A CANAL TO FACILITIES THAT SWID IS ALREADY WORKING ON THAT WOULD HAVE THE CAPACITY TO TAKE THOSE DELIVERIES WHEN THEY'RE AVAILABLE.

WE'VE LOOKED AT IT. WE WENT THROUGH THE DRAFT TODAY.

WE HAVE A COPY OF THE DRAFT LETTER AVAILABLE.

IT WASN'T AVAILABLE AT THE TIME WE PUBLISHED THE AGENDA, BUT I CAN CERTAINLY SEND THE COUNCIL A COPY OF IT.

I DON'T SEE ANY PROBLEMS WITH IT AT ALL AND I WOULD RECOMMEND AUTHORIZING US TO BECOME AN ENDORSER OF THAT LETTER.

IF THERE ARE ANY QUESTIONS, I'M HAPPY TO ANSWER.

>> DO YOU HAVE THE LETTER?

>> I THINK IT WAS EMAILED.

>> IT WAS EMAILED,

>> ARE THERE ANY PUBLIC COMMENTS AT THIS TIME? I SEE NONE. ANY COMMENTS FROM THE MEMBERS, MAYOR PRO TEM REYNA?

>> THANK YOU, MAYOR. IN ESSENCE, WHAT IS BEING PROPOSED IS TO BUILD A PERCOLATING POND?

>> A LARGE ONE, A VERY LARGE ONE.

>> THE DISTRICT'S PROJECT, THEY'RE SEEKING FUNDING FOR THAT, AND THIS IS A LETTER THAT MAKES THE IMPORTANT CONNECTION BETWEEN THE DISADVANTAGED COMMUNITIES ALONG WITH THE AGRICULTURAL NEEDS, AND THAT THEY BOTH CAN COEXIST UNDER THE SIGMA PLAN.

>> THAT WAS MY NEXT QUESTION.

YOU MENTIONED THE FINANCIAL PART OF IT, IS THIS SOMETHING THAT WE AS A CITY WOULD HAVE TO CONTRIBUTE TO?

>> NO. THEY'RE SEEKING GRANT FUNDING FOR THE PROJECT ITSELF, AND IF THE GRANT FUNDING WASN'T SUFFICIENT, THEN IT WOULD PROBABLY BE FUNDED THROUGH SWID'S ASSESSMENTS, AND WE WOULD HAVE A SAY IN THAT.

I DON'T THINK THAT THAT'S THEIR GOAL AT ALL.

I THINK THEY'RE LOOKING TO GET THIS FINANCED.

>> THERE'S NO TERM SIGHTING IN PROVIDING THIS SUPPORT LETTER.

> NO COST OR EXPOSURE FOR US TO SUPPORT THIS PROJECT AT ALL AT THIS TIME.

>> THANK YOU. NOTHING.

>> MAYOR MARTINEZ.

>> IF WE DON'T HAVE TO PAY FOR IT, LET'S SIGN THE LETTER.

>> MEMBER RAYA.

>> JUST CONGRATULATE SITTING THE GROUP FOR GETTING US OF THE PROBATION.

>> NOW LOOKING FOR A PERMANENT SOLUTION FOR THE HOUSING AND CROSS. GOOD JOB.

>> MEMBER MEDINA.

>> I DON'T KNOW IF I MISSED IT, BUT IS THERE ALREADY AN IDEA OF WHERE THIS WOULD BE BUILT?

>> I'M SURE IT'S IN CHRIS'S HEAD.

I DON'T KNOW.

I HAVEN'T SEEN A SKETCH OR ANYTHING OF WHAT HE'S GOT IN MIND,

[01:20:03]

BUT THERE'S LIMITED FRONTAGE ON THE FRIANT, SO I'M I'M ASSUMING IT WOULD EITHER BE AN EXPANSION OF ONE OF THEIR EXISTING TAKEOUTS OR PERHAPS A NEW ONE.

>> YOU SAID THIS LETTER OF SUPPORT, WHERE IS IT GOING? IT'S GOING TO THE STATE OR JUST TO GO AND SEEK THE GRANT FUNDED OR THE GRANT FUNDS?

>> IT'S GOING TO THE STATE AS A FIRST VOLLEY OF, HEY, HERE'S SOMETHING YOU SHOULD CONSIDER.

WE'RE GOING TO BE APPLYING AND HERE'S WHY A PROJECT LIKE OURS HAS MERIT VERSUS OTHERS THAT JUST WANT TO DO SOMETHING ELSE, BUILD A PIPE.

>>> BASICALLY THEY HAVE A PROPOSAL OR I DON'T KNOW IF THEY HAVE IT DRAFTED YET OR THEY HAVE AN IDEA OF IT.

>> YES.

>> BUT THEY'RE LOOKING FOR LETTER SUPPORT TO THAT THAT AT SOME POINT IT IS GOING TO GO AND SEND THAT?

>> COMPANY IT WITH PROPOSAL FOR GRANTS, YES.

>> GOT YOU. YES. THEN WHEN YOU WERE TALKING ABOUT COEXISTING BETWEEN AG AND HOMES AND WHATNOT.

THIS ISN'T DIRECTLY SAYING LIKE AG IS BAD. WE NEED NEW HOMES?

>> NO. IN FACT, IT'S THE OPPOSITE OF THAT.

IT'S A RECOGNITION THAT SWID IN PARTICULAR HAS THIS RELATIONSHIP WITH THE COMMUNITY, AND IT'S NOT AN ANTI GROWTH, IT'S NOT PRO GROWTH, IT'S NOT ANTI AG OR PRO AG NECESSARILY.

HERE'S A SOLUTION THAT CAN SATISFY THE NEEDS OF BOTH WHILE NATURAL GROWTH AND DEVELOPMENT TAKES PLACE.

OVER POTENTIALLY, I MEAN, THAT'S THE LIGHT THAT WENT ON WITH ME TODAY WHILE WE WERE TALKING THROUGH THIS WAS, IF YOU HAVE A CONVEYANCE SYSTEM THAT'S CAPABLE OF BRINGING IN THE ENTIRE SHORTAGE THAT'S CAUSING THE GROUNDWATER DEPLETION NOW, IF YOU CAN HAVE THE CAPABILITY OF BRINGING THAT VOLUME OF WATER IN WHEN IT'S AVAILABLE, THEN YOU CAN ESSENTIALLY, AS LONG AS THERE'S WATER COMING DOWN THE CANAL FROM TIME TO TIME, YOU COULD SOLVE THE PROBLEM FOREVER.

>> THIS IS ASSUMING THAT OVERSUPPLY, RIGHT? IT'S BASICALLY WE'RE BUILDING INFRASTRUCTURE FOR WHAT SENSE BECAUSE WE HAVE A DROUGHT, IT'S NOT GOING TO GET USED?

>> CORRECT.

>> I JUST WANT TO UNDERSTAND.

>> YES.

>> I'LL ADD TO THAT BECAUSE I JUST HAD A CONVERSATION WITH SOMEBODY THAT DEALS IN WATER.

THERE'S ALWAYS EXCESS WATER AVAILABLE, BUT IT'S WHEN THEY RELEASE IT, THAT IS THE PROBLEM.

WATER USUALLY GETS RELEASED WHEN IT'S NOT NEEDED.

>> THAT'S PARTIALLY TRUE.

SOMETIMES THERE'S JUST SO MUCH WATER THAT IT'S THEY THEY CAN'T FIND WAYS TO GET RID OF IT FASTER.

>> EXACTLY. THEY'RE SENDING WATER VIA THE FRIANT CANAL, AND THERE'S NO NEED FOR IT IN FARMING.

THERE'S REALLY NO PLACE FOR THAT WATER TO GO.

THIS WILL ALLOW THIS EXCESS WATER TO BE PUMPED INTO THIS PERCOLATING POND?

>> CORRECT.

>> THEN MAKE IT TO THE WATER TABLE.

>> WHICH BENEFITS EVERYONE.

IT BENEFITS THE AG INDUSTRY IN THE DRY YEARS TOO WHEN THEY ARE PUMPING.

IF THE WATER TABLE IS COMING UP AND THEY'RE COMPLIANT WITH SIGMA, THAT'S A BENEFIT FOR EVERYBODY.

>> TOTALLY AGREE WITH YOU,

>> I'D LIKE TO ENTERTAIN A MOTION TO APPROVE.

>> I'LL SECOND. MADAM CLERK, CALL THE ROLL CALL.

>> COUNCILMEMBER MARTINEZ.

>> COUNCILMEMBER MEDINA?

>> COUNCILMEMBER RAYA.

>> A MOTION BY COUNCILMEMBER MARTINEZ, SECONDED BY MAYOR SALDANA, TO APPROVE THE LETTER OF SUPPORT.

MOTION IS UNANIMOUSLY APPROVED.

>> MOVE ON TO ITEM 15D.

[15.d. Council finds this action is not a “project” as defined under section 15378 of the CEQA Guidelines; Adopt a Resolution Authorizing the City Manager or designee to finalize and endorse a Task Order with Teter Architects & Engineers Connected for Professional Architectural Services. (Hurlbert)]

COUNCIL FINDS THE ACTION IS NOT A PROJECT AS DEFINED UNDER SECTION 153-78 OF THE SQA GUIDELINES ADOPTED RESOLUTION AUTHORIZING THE CITY MANAGER OR DESIGNEE TO FINALIZE AND ENDORSE A TASK ORDER WITH TATER ARCHITECTS AND ENGINEERS CONNECTED WITH PROFESSIONAL ARCHITECTURAL SERVICES, MR. HERBERT.

>> YES, HONORABLE MAYOR AND MEMBERS OF THE COUNCIL.

WE DISCUSSED THIS IN SOME DETAIL AT OUR LAST MEETING AS WELL AND YOU SAW THE RENDERINGS OF THE SITE PLAN FOR THE MUNICIPAL COMPLEX.

WE NEED TO START DEVELOPING SIMILAR TYPES OF SITE PLANS, CONCEPTUAL SITE PLANS, AND SPACE REQUIREMENT NEEDS FOR THE FILBURN AND CENTRAL PUBLIC WORKS COMPLEX THAT'S BEING CONSIDERED AS WELL.

[01:25:06]

OUR RELATIONSHIP WITH TATER ARCHITECTS HAS BEEN A GOOD ONE.

THE RESULTS OF THEIR WORK HAS BEEN GOOD AND THEY ARE STILL FINISHING UP THE MUNICIPAL CAMPUS WORK RIGHT NOW.

I ASKED THEM FOR A TASK ORDER ESTIMATE FOR DOING THE SIMILAR TYPE OF WORK AT THAT OTHER PROJECT.

AS YOU SEE IN YOUR STAFF REPORT, THE ESTIMATE THERE WAS NOT TO EXCEED 100,000, BUT THE ESTIMATE WAS 85 AND 100,000.

THEY BILL AGAINST THIS ESTIMATE ON A TIME OF MATERIALS BASIS AND THEY'VE BEEN A LITTLE UNDER THE ESTIMATE SO FAR.

IF THERE ARE ANY QUESTIONS, I'D BE HAPPY TO ANSWER THOSE.

>> ARE THERE ANY PUBLIC COMMENTS AT THIS TIME? I SEE NONE. ANY COMMENTS FROM THE MEMBERS, MAYOR PRO TEM REYNA?

>> NO, QUESTIONS.

>> GO AHEAD TO SEE US MOVING FORWARD ON ALL THESE PROJECTS.

>> I WOULD LIKE TO ENTERTAIN A MOTION TO APPROVE.

>> SO MOVED.

>> I'LL SECOND.

>> MADAM CLERK, CALL THAT ROLL CALL, PLEASE.

>> I'M SORRY. I WAS DESTRUCTED. AYE.

>> RENA.

>> COUNCILMEMBER MARTINEZ?

>> COUNCILMEMBER MEDINA?

>> COUNCILMEMBER RAYA.

>> MOTION BY MAYOR PRO TEM REYNA, SECONDED BY COUNCILMEMBER MEDINA TO ADOPT THE RESOLUTION.

MOTION IS UNANIMOUSLY APPROVED.

>> TO ITEM 15E.

[15.e. Council finds this action is not a “project” as defined under section 15378 of the CEQA Guidelines; Adopt a Resolution Approving the Amended Salary Schedule for the Fiscal Year 2025-2026 in Compliance with the California Public Employees’ Retirement System (CalPERS) Requirement for Publicly Available Pay Schedules. (Hurlbert) ]

COUNCIL FINDS THE ACTION IS NOT A PROJECT AS DEFINED UNDER THE SECTION 15378 OF THE SQL GUIDELINES.

ADOPT A RESOLUTION APPROVING THE AMENDED SALARY SCHEDULE FOR THE FISCAL YEAR 2025, 2026, IN COMPLIANCE WITH THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM, CALPERS REQUIREMENT BY PUBLICLY AVAILABLE PAY SCHEDULES. MR. HERBERT.

>> YES, HONORABLE MAYOR AND MEMBERS OF THE COUNCIL.

THIS ITEM, BECAUSE OF THE PERS REQUIREMENTS, ANYTIME WE MAKE A CHANGE OF AND THE SALARY SCHEDULE REQUIRES THIS FORMAT.

IN PARTICULAR, THIS IS RESPONSE TO JUST THE MATURING OF THE OPERATION AT THE POLICE DEPARTMENT.

THE RECORD KEEPING BURDEN IN THE POLICE DEPARTMENT IS SIGNIFICANT AND THE CHIEF HAS RECOMMENDED AND SO HAS THE OTHER ADMINISTRATIVE STAFF HAS RECOMMENDED CREATING A CLERK TWO POSITION, AND THIS WOULD ELEVATE OR PROMOTE ONE OF OUR CLERKS TO A MORE SENIOR POSITION IN RECOGNITION OF THE ADDITIONAL RESPONSIBILITY AND COMPLEXITY OF THAT WORK OVER THERE.

WE'VE LOOKED AT THIS WITHIN OUR CURRENT BUDGET, THERE WOULD BE NO NEED FOR ANY KIND OF AMENDMENT FOR ADDITIONAL PAYROLL FUNDS.

THIS WOULD CREATE THE TWO POSITION AND AMEND THE SALARY SCHEDULE TO AN EXISTING RANGE 40 PAY SCALE.

IF THERE ARE QUESTIONS, I'D BE HAPPY TO ANSWER THOSE.

>> ARE THERE ANY PUBLIC COMMENTS AT THIS TIME? I SEE NONE. ANY COMMENTS FROM THE MEMBERS, MAYOR PRO TEM REYNA?

>> THANK YOU, MAYOR. IN ESSENCE, WHAT WE'RE DOING IS WE'RE GIVEN AN OPPORTUNITY TO PROMOTE SOMEBODY THAT IS IN THAT POSITION.

WE'RE NOT FILLING THE POSITION ONCE THIS INDIVIDUAL MOVES UP TO THAT NEW?

>> NOT NOT AT THIS TIME.

>> NOT AT THIS TIME.. VERY GOOD. NO FURTHER QUESTIONS.

>> NO COMMENTS. I'D LIKE TO ENTERTAIN A MOTION FOR APPROVAL.

>> SO MOVED.

>> I'LL SECOND.

>> MADAM CLERK, CALL THE ROLL CALL.

>> COUNCIL MEMBER MARTINEZ.

>> COUNCIL MEMBER MEDINA.

>> COUNCIL MEMBER RAYA.

>> MOTION BY COUNCIL MEMBER MARTINEZ, SECONDED BY MAYOR SALDANA TO ADOPT THE RESOLUTION.

MOTION'S UNANIMOUSLY APPROVED.

>> NOW WE MOVE ON TO ITEM 15 F. COUNCIL FINDS THE ACTION IS NOT A PROJECT AS

[15.f. Council finds this action is not a “project” as defined under section 15378 of the CEQA Guidelines; Adopt a Resolution Approving an Application for Funding and the Execution of a Grant Agreement, Budget Appropriations, and any Amendments Thereto for the San Joaquin Valley Air Pollution Control District’s New Alternative Fuel Vehicle Purchase Program, and amend the FY2025-2026 Capital Improvement Program (CIP). (Lara)]

DEFINED UNDER SECTION 15378 OF THE CEQA GUIDELINES, ADOPT A RESOLUTION APPROVING AN APPLICATION FOR FUNDING AND THE EXECUTION OF A GRANT AGREEMENT, BUDGET APPROPRIATIONS.

ANY AMENDMENTS, THEREFORE, THE SAN JOAQUIN VALLEY AIR POLLUTION CENTRAL DISTRICTS, NO ALTERNATIVE FUEL VEHICLE PURCHASE PROGRAM,

[01:30:02]

AND AMEND THE PY, I DON'T KNOW.

FISCAL YEAR 2025, 2026 CAPITAL IMPROVEMENT PROGRAM, CAP. MR. HURLBERT?

>> YES, HONORABLE MAYOR AND MEMBERS OF THE COUNCIL.

ON OUR EXISTING CIP WAS THE ACQUISITION OF A SINGLE VEHICLE, AND IT WAS SET UP THERE AS A PLACEHOLDER.

DURING THE INTERVENING TIME, A PROGRAM BECAME AVAILABLE THAT COULD SUPPLY UP TO $40,000 OR NEARLY THE COST OF ONE OF THE TYPE OF VEHICLE IF WE CHOSE TO GO WITH A HYBRID.

WHILE WE'VE NOT BEEN READY TO JUMP INTO ALL ELECTRIC POLICE VEHICLES, THERE JUST HAVE JUST BEEN TOO MANY REPORTS AND FEEDBACK FROM OTHERS THAT HAVE HAD ISSUES WITH THAT.

THE HYBRID TECHNOLOGY SEEMS TO BE MUCH MORE STABLE.

THIS GIVES US AN OPPORTUNITY TO LEVERAGE THAT 40,000 IN REBATES OR GRANT FUNDS, I GUESS I SHOULD CALL THEM, TO ACQUIRE TWO VEHICLES INSTEAD OF JUST THE ONE, AND IT GIVES US AN OPPORTUNITY ON A LIMITED SCALE TO TRY OUT THE HYBRID PLATFORM AND SEE IF IT'S AS STABLE AND RELIABLE AS THE GASOLINE ENGINES.

>> IS THERE ANY PUBLIC COMMENTS AT THIS TIME? I SEE NONE. ANY COMMENTS FROM THE MEMBERS.

MAYOR PRO TEM REYNA.

>> I'LL JUST SAY, WHY SHOULDN'T WE?

>> IT SEEMS LIKE THE SMART THING TO DO.

>> I AGREE.

>> I KNOW OUR OFFICERS ARE HAPPY WITH THE LAST BATCH OF CARS WE GOT.

IF WE CAN MATCH THAT AND KEEP THEM HAPPY, IT'S A GOOD THING.

>> I DON'T KNOW ABOUT THE COOL FACTOR.

>> WE'RE NOT TALKING ABOUT PRIUSES

>> NO. THESE ARE THE SAME PLATFORM FROM WHAT I UNDERSTAND.

IT'S JUST GOT THE HYBRID.

>> I WOULD LIKE TO ENTERTAIN A MOTION FOR APPROVAL.

>> SO MOVED.

>> I'LL SECOND IT. MA'AM, VOTE BY ROLL CALL.

>> AYE

>> COUNCIL MEMBER MARTINEZ.

>> COUNCIL MEMBER MEDINA.

>> COUNCIL MEMBER RAYA.