We're good. Welcome off to Santa Rosa City Council's May 21st Council meeting. We'll be starting off with our study session. And for members of the audience, the way today's going to work, we'll have a study session, we'll then recess the study session and continue it on tomorrow. We'll be having public comment on the study session starting tomorrow after we've heard the entire presentation. So for item 3.1, there won't be public comment because, again, we'll be recessing this item. Staff will make a presentation. Tell us when he's done with that presentation. We'll be recessing the study session. And then depending upon the time, we'll be reconvening for a four o'clock city council meeting. Okay. With that, I'll... Mr. Mayor, I'm sorry. Did you want to report out from closed session? If that's what you'd like to share, or if you want to wait until four o'clock, it's up to you. Yeah, normally we would do it at the four o'clock, but it is listed on the agenda as now. Oh, I'm sorry. I'm reading it wrong, completely wrong. I apologize. Just trying to test me, I'm sure. Mr. McClendon, you're not bleary eye now. Wait until tomorrow afternoon. Mr. Mayor, we'll talk about those signed up for public comment on this. 3.1. Is it working? As I mentioned, item 3.1, presentation from staff, we'll recess 3.1 until tomorrow. And then that's tomorrow, so if you would like to make comment on this item, this item will not be completed until tomorrow. And that's when I will receive public comment from item 3.1. I appreciate it. That's the way it's going to be doing it. I appreciate it. Go ahead, Mr. City Manager. Yes, item 3.1, financial sustainability and review of fiscal 2019-20 operations and maintenance budget and capital improvement program budgets. Chuck McBride, Chief Financial Officer, leading us off. Good afternoon, Honorable Mayor, Vice Mayor, members of the Council. Today we will be going through the... Yes, ma'am, can you hear me? Okay. So we will be going through the study session today and tomorrow for the 19-20 budget. We're kind of starting at the 30,000-foot level today. So what we're going to do here is we're... The Council set goals. One of their tier one goals was fiscal stability and sustainability. So we're going to spend a good portion of tonight talking about just those five areas. And then we're going to move into an organizational structure. There's a couple slides on that, the way the city managers propose to reorganize the city. We'll talk about those. And then we're planning on stopping at that point for tonight. And then we'll save the rest of these bullets for tomorrow. So when we reconvene tomorrow, we'll be talking about the proposed reductions. So if you remember, in January we came to the Council and asked for the elimination of a little over 49 FTEs, the savings of about $6 million in personnel costs. So we'll be opening that discussion back up first thing tomorrow. After that, we will move into the city-wise proposed budget overview. You kind of got a glimpse of that when we met in April at the workshop and you saw how our revenues were looking. But we'll revisit that tomorrow morning. And then we'll move into the general fund proposed budget overview, FTE staff summaries, and then we'll open it up in the department proposed budgets. In this year's budget presentation, we've kind of narrowed the scope of the discussion a little bit on the departments just because there was very little ask from the departments in this year's budget given our current financial situation. So there's a little bit less to talk about there. But we will have all of the department directors and subject matter experts here. So if you have questions on the operations, questions beyond the finances, they'll be here to address those. And then we'll end up with capital improvement programs and the city manager's comments. So as I mentioned, starting off tonight, we're kind of starting off at the high level, financial stability. One of our tier one goals. And one of the first things that we're tempted to do in this in the 1920 budget is to adopt a balanced budget without dipping into the reserves like we have last year and previous years. We also have some things that we want to talk with the council about to address long term sustainability from a financial standpoint. So one of the things that we have agreed to do is look at our general fund reserve policies and to come back to council in December with recommendation to changes to those policies. But we'll address those issues tonight. We also want to set aside some funding for infrastructure. So we do have some big infrastructure needs that have been outstanding for some time. So director Jason Nuts going to come up and give you a presentation on infrastructure, the needs there. And then we're going to talk a little bit about disaster recovery funding. So we do have projects from the disaster that still have not been addressed from a funding status. We may not be able to fund those all in this budget process. But it's a thing to keep your eye on that when we do have sources of one time funding come available, that might be a place where we want to put those. We're going to talk about the CalPERS unfunded liability. You know, that's a big issue for our city and for every city and agency in California. Our unfunded liabilities approaching $340 million is a very large number. I think we have identified a way to in the interim address this. And then we can discuss some kind of longer term solutions to that again as we as kind of one time funds become available in future years. The rainy day fund, we'll probably wind up talking about that as part of general fund reserves. I think we're probably going to table that discussion for December when we come back. So the first thing we want to talk about is the general fund reserves. The good news is that we are now funded at our policy reserve level. So we set a policy that City Council did that recommends that we set aside 15 to 17% of our general fund expenditures in reserves. That's unassigned fund balance. So that's just available cash. The reasons for that, you have two months of cash flow there basically to get you through a disaster. And we saw in the last disaster that we certainly had need to dip into that reserve to get us through that. We look to the government finance officer association for considerations. They have thoughts on the way that you should establish your reserve policies. So one of the first things that they say that you should look at is the predictability of revenues. Our revenues here were actually very well diversified. It's probably one of the very few cities I've seen that doesn't have over 50% property tax. But we are exposed to sales tax. And sales taxes I'll show you in a few slides here is very volatile. So the more volatile your revenues, the more that you should probably bump up the size of that reserve. The other thing that they say you should consider is your perceived exposure to one time outweighs, which I think is a very nice way of saying, do you have fires and earthquakes? And those, I think one of the things you'll see here when we show comparison cities is that some of the Southern California cities actually tend to have larger reserves than Northern California cities. And I think some of that's because of their experience with the Northridge earthquake. And then potential drain from other funds. So if you are supplement or subsidizing other funds out of the general fund, you may want to consider upping your reserves. And then one of the things they kind of throw in there is a potential additional cost of bonding. So if we at some point are thinking about going out for general obligation bonds that will be secured by the general fund of the city, we could have increased costs if we don't have adequate reserves. And then they recommend that you have within your policy the process by which you replenish those reserves and then what timeline you replenish those after you use them. So just some comparable cities that we looked at. This is from 2015. Mill Valley has got about a 15% targeted reserve level. So that's right in line with what we have. Mission Viejo, as I mentioned, a lot of the Southern California cities seem to have larger targeted reserves. They're 40 to 50%. And that's one way that you can write your policy is you can have a minimum and a maximum. So that's the way that they've done. There's actually a ban. Yorba Linda's at 50%. Hayward's at 25%. Auburn at 30%. Mountain View 25%. In kind of digging into these numbers a little bit, they can actually be kind of bifurcated. So some cities actually say we're going to set aside 30% reserve, but they set aside amounts for different pieces. So you may take 50% of that reserve and say that's for contingencies. So fires, whatever, something that goes wrong, that's there for one time uses. And then they may put the other 50% towards economic uncertainty or just kind of budget reserve so that when you hit an operating deficit where revenues have dipped down, you've taken a hit sales tax, you can dip into that part of the reserve for that. So there's kind of a multitude of ways to skin this cat. And again, we'll come back and make some recommendations in December. I would say right now, I think we're okay. We're actually over our 17% level and we're actually in this budget cycle. We're actually recommending taking some of that money by which we're over and applying it to some other one-time needs. So here's just a quick snapshot of what your major revenue sources look like. So occupancy tax surprisingly through the recession and even through the fire really didn't dip at all. So as we kind of explained to you when we met last month in April, occupancy tax was a little bit of a surprise to us from a forecasting standpoint because we really expected that to fall dramatically when we lost, I think, 25% of our hotel rooms. It didn't fall at all. We think occupancy probably went up to 100%, ADRs rose, and that just kind of caused us not to see any dip in that revenue source. You can see that blue line there in the middle. That's real and secure property tax.  But because of Proposition 13, the effects of an economic downturn get mitigated a bit. So property taxes really don't fall off that much, even in a pretty hefty recession, they don't fall off that much. And then you can see sales tax on the top. Sales tax during the recession absolutely fell off and the scaling there doesn't totally show it, but you lost about 20%, 25% of your revenue source there. So sales tax also, you know, it's got different components to it. Things like auto sales, which Santa Rosa depends on heavily for sales tax revenues. Those can be highly volatile when you hit a recession. That's one of the areas during the recession that we'd fall off precipitously. But as you can see, sales taxes have also come back very well and we've added that baseline with the new measure O or TEF funding source. So our general fund reserve recommendation right now, and this is just kind of the immediate step that'll take us to a longer discussion about the policy in December. But I don't think we need any immediate action. We've already met our 15, 17% target, so we're okay. It actually leaves us with about $6 to $7 million of additional one-time monies to address some of these other things we're going to talk about. We can use excess reserves for other priorities. We have some requirements on the infrastructure and the resiliency and recovery side, so maybe places where we can use those excess reserves to kind of plug our budget for 1920. And then again, we'll be examining those policy options to come back to council at the end of December. One of the things that we're looking at, and again kind of looking to the GFOA for their guidance on this, how we define reserve. And I don't want to turn this into a discussion of governmental accounting, but there is a little bit of wonkiness in how reserves define. So a lot of these cities I showed you that have anything from 15% to 50% of reserves, they kind of define those reserves the way the GFOA does. When we say a reserve, we say it's our unassigned fund balance. It is basically money that is not designated for any use at all. The way the GFOA and other cities often define the reserves is they include anything that's not restricted. So restricted money in your general fund is something that's restricted. It's legally restricted. However, we have things like assignments. So if you have money left over within your department that wasn't spent on a contract and that contract's carrying over into the next year, we will assign that money to you and you can use it in the next year. Under the GFOA criteria and what a lot of the other cities use is they include that in the reserve. So those set asides, they actually include as part of the reserve where we don't. So we are much more conservative in our view of reserves and that's why I'm very comfortable saying that I think our reserves are good. Because technically we could go into one of those assignments and we could unassign it. If we really needed the cash flow, we could actually go and do something like that. So I kind of want to look at the way that we're defining reserves. I also want to look at, as I talked about, maybe folding that rainy day fund or economic uncertainty reserve in with our general fund reserve and making it part of that. And then we want to also define allowable uses of reserve funds. So usually well-written policies define what you can use those for. So is it one time uses only or can you dip into that for other ongoing uses where you have revenue shortfalls and things like that? And then another place where I think we fall short a little bit in our current policy is our criteria for replenishment. So the speed at which we replenish these funds once we use them, you obviously have to have some room built in there for obviously, it depends on how badly you deplete the funds, what your economic environment's looking at, whether you're trying to replenish these things in an economic downturn or whatever, but we should have some sort of criteria around that. Can we pause real quick, just check for Council A each bullet point? So Councillor, are there any questions, Mr. Soyer? Thank you, Mayor. And this is probably going to be covered in our subsequent conversations, but I was curious about the timeline in establishing some of these higher reserves and how those cities, how much time they gave themselves to get up to 50% and even if they, and are they at 50% now or are they building to 50%? So it depends. Usually you'll set a target and that's why some of them set a range. So you have a minimum target that you have to meet. So if you're under that minimum, you want to replenish to that immediately. So you're going to take bigger steps to get that up to that minimum say 30% level. And then the 50% is usually a target that you may build to over a number of years and you may never even get to it. And it totally depends on the city. It depends on what their revenue sources are doing. It depends on what some of their restrictions are. So I mean, just to give you an example, the city that I came from, we had a restriction on how much money we could spend on capital improvement programs. So if we were going to spend over a million dollars, we had to have voter approval. What that meant is that we didn't do a lot of capital improvement programs through the general fund. So that money started to accumulate quicker. So there's things that will change that. But again, you usually want to have your minimum level met immediately and then maybe some target that you're kind of building towards a little more aspirational. And I don't see anything that we're talking about tonight. It's going to be covered in the immediate term. I think everything that we're talking about is at least a two-step process. And so it may take us years to build up these reserves if we go higher than the 15 to 17% and assuming that we don't get, that we don't have an event that causes us to deplete those reserves again. Same thing with infrastructure, with resiliency, with CalPERS. These are things that we can take immediate actions, but I don't think that we can hit higher levels in a single year. It's going to take us some time to build towards those. Thank you. Ms. Gomes. Thank you. And I think it is page six, slide six. Do these particular comparable cities bifurcate? Do any of these? So for example, does Mission Viejo bifurcate there? Can that information be included when this slide comes back to us on whether they bifurcate or not? Because I think that would be it. Otherwise, if we're applying our more conservative approach, it looks a little odd. Yeah, absolutely. So I think also there's going to be, I think what Chuck is also indicating is that we're going to look at some of the policies internally and how we revise those things. So there actually, to Chuck's point, there may be actually more reserve in place. It's how we categorize that reserve. And so we have to go through that process. This was just to give, I think, a scattershot across the state and to point out one of the things that I think is important is that Southern California cities actually have done much more work on creating reserves that are significant and that's probably again because of some of the events that we're experiencing right now. I believe I had heard that Malibu had 75% as a reserve. But how you talk about reserve is almost as important as what the reserve is. And I think there's a lot that we can go through to really talk about where resources lie, how we manage, how we check in on those resources and what constitutes, to your point, the targeted level of reserve. I'm just wanting to make sure that I'm comparing, as they terribly say apples to apples, in what's included in the reserve. In the same way that when we talk about salary and benefits, that we look at a package because those packages vary. And if you only look at direct salary or direct benefit, you often don't see the big picture. So I'm asking that what comes back to us is a clear apples to apples. The other question I have is some departments have reserves within the department. I think the water department has a number of places where they've saved money anticipating something in the future. Those aren't included in our 15% to 17% reserve here. So when we talk about the reserves, will we also be bringing back the information about all the reserves in the other departments? Please. That was a polite question. Yes, ma'am. So our discussion right here was just restricted to the general fund, but yeah, we can absolutely look at other departments. Particularly if any of these other folks reserves in some way are referencing other reserve funds that they may have. And I think what we're talking about is a clear understanding of a policy. I think that's one of the things that Mr. McBride is pointing to, is that there's assumptions built in instead of some clear policy directive of how we approach these problems. This is one of the challenges the long-term finance committee will be taking up over the fall is to bring some clarity to this conversation. It would also be useful to understand how these are comparable cities to us, as opposed to cities that we use as comparable cities in some other place. I think sometimes those terms of arts get misleading. I think this was probably a better choice here would have been sampling of cities instead of the comparables that we use around the Bay Area. And sometimes from my own concern about road maintenance, oddly enough, when I ran for office in what's a number of years ago, I thought I was going to be talking mostly about road maintenance. Not where I found myself, but I am keenly aware that the longer we don't maintain roads, the more costly it is. So at some point we need to talk about how do we balance that we put money in reserve versus that money actually saving us money in the future in, for example, maintenance issues. Thank you. Seeing no additional questions, please continue. Thank you. So the next area that we looked at was the recovery and resiliency. So there's a number of areas where we have an identified funding sources. So if we have one-time funds to put aside beyond this budget cycle even, then these are places where we're going to look to be funding. So we have a requirement for tree removal. The estimate was at $2.5 million for removal of dead and dying trees. And I want to emphasize that's on city-owned property only. For street light replacement, we have million dollars in need there that we haven't identified a need for. We're also looking at the Fire Station 5 rebuild. So we have identified a funding source for the purchase of the land, the additional development costs. We actually had received about $2.8 million in insurance proceeds from that fire station. So we have that assigned and we can use that for the initial phase of that project. But the Fire Station 5 rebuild, as you'll see here in another slide, could be substantial and we have not identified a funding source for that so far. We've also got disaster recovery public assistance projects. These are what we're requesting funding for through FEMA, but they do have a local match. All the categories that are listed here, bridges and roads, buildings and equipment and recreation and parks, these are all general fund only. So we don't have the waters portion of the PA, so that's why that number is so much lower than what you've seen before. But even on the general fund side, we've got $7 million plus that we've got to come up with a local match for. And again, that's something that we're going to have to wrestle with here within this budget is how we do that. The good news is that that $7.4 million doesn't need to be obligated immediately. These projects are going to go over a number of years. So we've got some time to deal with the cashfall on those. As I mentioned, though, we've got fire station number five, which we've seen estimates of $15 million for the rebuild on that. So we've got about $2.8 million that's set aside for that project, but the remainder of that is going to have to be something that we're going to either have to fund through the general fund through onetime monies. We are exploring ways to go after FEMA for some of this, for some of this money. But again, that hasn't been decided. So as of this budget, we don't know exactly how we're going to fund that. We have road and sidewalk repair. So this is something that was requested through FEMA, but I believe that was not obligated because they determined that the fire probably was not the cause of a lot of the road and sidewalk repair that we needed. So we have a $20 million of a $20 million need for funding there. And then we have hazard mitigation projects. So these are a lot of projects that were asked for funding through FEMA, but have not so far been obligated for the most part. So early alarm systems is one of the things that was talked about in there. We have a safety radio program of over $5 million of need. So some of that's been funded, you know, through the police and what they're bringing for in this budget. But we're still going to have some need for funding there. And the city's share estimated $2.1 million, even if that was approved by FEMA. So again, under resiliency and recovery, we're going to have a lot of need there in the coming budget cycles to set money aside for these things. I would only add that many of these projects are either in the developmental phase or under appeal. They actually have formally at this point, for example, roads and sidewalk have been denied by FEMA. So there are going to be significant cost centers around this. The teams worked really, really hard with the county to make some resources that folks have available to them, maybe through debris removal funds. The county's working on a process to maybe have some folks be able to access those funds to help with these. But unfortunately, these projects often trail and it's almost a daily occurrence if you read the national media funding for these trails, the actual needs in communities and we're starting to get really some real pinch points around delivery of these items for the community, although we're trying to make every effort to allow individuals to move forward and make resources available to them. And then we have some operating effects from recovery and resiliency. So one of the things that you'll see brought up in this when we get into the operating budget with the departments here is that we're going to have some asks for you in the operating budget. One's for emergency preparedness, so the fire department is going to be asking that we add two additional FTEs. One is a community outreach specialist and then one is an assistant for the director of the EOC. And then we also are trying to wrestle with this contract with Ernst and Young that expires actually this month and what's essentially going to have to happen is that the work that Ernst and Young has been doing which is pretty voluminous is going to have to transfer over to our staff and we're trying to wrestle with the best way to do that. What we've asked for and you'll see this in tomorrow morning's discussion is that originally in the finance department we'd given up an accountant as part of our savings plan we're going to ask that that accountant be reinstated within our budget and if we do that we think we can come up with at least an interim plan where we can start absorbing some of that work from Ernst and Young onto city staff. And we're also going to be bringing back the Ernst and Young contract to once again extend it. It is incredibly intensive work. I hate to be changing this deadline consistently. Our new deadline for separation will be at the end of September but these projects will grind to a halt if we don't continue to fund this. Again we estimate that a lot of the projects were calculating time spent. We believe that the 70 cents on each dollar expenditure against these types of consultant services is a reasonable rate of return. It's kept us moving forward but once again we're likely going to have to extend our contractual relationships with some of our consultants. They've been incredibly helpful. They bring the teams that help us get the paperwork in order. Okay questions on that last segment. Ms. Combs. Thank you. I don't want this to sound like it comes out of left field but it's called recovery and resilience and I'm aware that our fires had a considerable effect on setting back our climate action goals. Fires put carbon in the air. Is there a way within this process to recover the offsets for the carbon we put in the air? We can look more closely. That's been a general conversation about utilizing maybe potentially some funding to help address those issues. I mean what we're not, we're trying to be proactive. One of those things is you've heard me repeatedly refer to some steps that we're taking to try to move the disaster council working with the county and other cities to a more formal entity that would take on some of the preparedness alerting issues for county-wide and evacuation routes county-wide and vegetation management, all of which I think play into that. I think one of the real challenges is that there are more discrete avenues and floods and hurricanes to apply resources in the mitigation realm and that continues to be one of the things we experience as we go through this process that we're having to work with our partners to build those types of models. I think the mayor and council member Fleming saw some of that firsthand when we went to D.C. recently, but it is a iterative construction process. But we can look at that. I think there are things that we're trying to recover outside of this process that may have more direct relationship to that, but we are happy to investigate that request. Road and sidewalk repair isn't getting reimbursed, so I understand that it's a reach to ask for air and climate recovery repair funds, but just thought we should have that in our list. Thanks. Chuck, I had a question on the tree removal. It's just the terms I heard the city manager say tree removal on city-owned. Is city-owned in the term right-of-way trees in the right-of-way? Are those synonymous terms? Right-of-way is included in that. Yes. So that's inclusive. And I had also seen figures of 700 trees for the removal. Is that inaccurate? So 2.5 million for removal of approximately 700 trees in the right-of-way? Good afternoon, Mayor Schwedhelm, members of the council. Jason Nutt, director of transportation and public works. So we just recently opened bids on our tree removal contract. We're anticipating something on the order closer to about $250,000 to do removal of the 750 trees that are in the public right-of-way. The 2.5 million was an estimate. Our bid came in substantially under our estimate, but the 2.5 million also includes not just the road trees, but trees that may be on water property, maybe on parks properties, other open spaces and rights-of-way that are outside of the planter strips. So that's why that number looks larger than we had talked about previously. And does that 2.5 million include stump removal? Yes. At this point, we've incorporated all of those items. They will each be accounted for independently, just in case we run into additional discussions with FEMA. Great. Thank you. Just for a point of education, FEMA does not pay for the reason the question was asked, I believe, is that FEMA does not traditionally play for root ball removal. Root balls are considered to be not a hazard. The city staff has spent long hours and seen evidence that this is actually could lead to additional fire fuel with some of the creation of some of the micro-environments that we're seeing there, but this is a longer conversation, and I think that that's what's spurring the mayor's question on this topic. All right, so our next topic is CalPERS, and that's one, again, that I think is one of our probably most major problems, but it's one that I think we've got some pretty good solutions to, even in the short term. So just as a kind of a way of background here, we have a couple of components to our pensions. So we've got the normal cost, and if you remember, that's just what the cost is for an additional year of service by an employee. If everything goes right, the PERS makes its required rate of return and all of the actuarial modeling holds. And then if that doesn't happen, like if we have a loss in the fund, they don't meet their annual investment returns, they're going to break that off and amortize that cost over a number of years. So every year right now, if we have a loss in a single year, it gets spread over 20 years. So that adds to our cost. So that amortized cost is what you always hear referred to as the unfundal liability or the UAL. And here in the city, in the lump sum, that's $338 million between all three of our plans. So if you add those two annual components together, you get your annual required contribution. So the contribution for the city right now, we pay about $35 million a year to PERS. And about $15 million of that's in that normal cost. And then the remainder, or almost $20 million, is in that amortized cost. So that's something that is very concerning to us. And those normal costs range over, depending on which plan it is, from miscellaneous to fire to police, they range anywhere from 11% to 20%. And then those amortized costs range from anywhere from 14% to 24%. So those are, the amortized cost is something that really has our attention. Just kind of as a way of background with what CalPERS has done. And this is in the way of trying to fix their system. After their session, CalPERS lost over 25% of the assets in their plan. And they realized that they had a really, really big problem. Just because mathematically if you think about it, to come back from 25% loss, you got to make 50%. So the math when these get into the hundreds of billions of dollars gets difficult. So they implemented AB340, PEPRA. It was public employees pension. I'm blanking on the R, Reform Act, thank you. And they did a couple of things. They capped the maximum benefit. So for miscellaneous formulas, it was 2% at 62. And that's for all new statewide employees. And then it put a cap on safety also. And I think that was 2.7% at 57, as opposed to what the city has right now, 3% at 50. So those formulas came down quite a bit and reduced that benefit. They also got rid of the ability to buy more airtime, which was allowable under the classic plans. They eliminated that. And then they changed the way that they determined your final pay. It used to be based on your highest year in PERS, which led to some cases of spiking within the plan. Some employees would get into their last year, last couple of years, and suddenly they'd be thrown into a much higher position and that would spike their final formula. So PERS changed that. And now they use the average of your final three years. And then in that same year, again, when they were looking at funded status within the plan statewide, that were well under 70%, they realized that that was an unrecoverable position. So what they did was they ramped up everybody's arcs. And that led to an increase of 30 to 50% to paint on the agency within California over a five-year period. So those were really, really big increases in our annual required contributions. And then if you remember in 16, 17, CalPERS voted to reduce the discount rate to 7%. So was it 7.5%? And they voted to take that down to 7% over a number of three years. I think we're in the second year going into the 19-20 budget cycle. So they're taken down by an eighth of a percent, an eighth of a percent, and then a quarter percent. Doesn't sound like really big numbers. But if you remember, I told you, when you take it down by an eighth of a percent, that increases that unfunded liability of $330 million by $20 million. So you start to really have effects on these funds even with those small decreases. And we don't think that PERS has done yet. I don't think that 7% is the target. I think in future years, they're going to look to go lower. Just to give some perspective on that, the conversations that were floating around just two years ago were in the 6.25 to 6.5 range. So that's a lot of money at that point that the city would be on the hook for. So here, this is a snapshot of all the three different pension plans that we have within the city. And this is city-wide. This isn't restricted just to the general fund. But you can kind of see what those increases are doing there. And you can see the effect of that decrease in the discount rate. So you can see as a percentage, starting 2019-20, we go up by 13% in 2021, 13.7% in 21-22, almost 10% in 22-23. And then it flattens out as we get past that ramp-up period. And it flattens out at 5%. That sounds like good news, but PERS, they've got a risk mitigation policy in place. So if they have years where they do particularly well, they're going to lower that discount rate a little bit more. So I anticipate that although we don't have it built in here because we build this up of PERS valuation reports, I would anticipate in 23-24 and 24-25, we're going to see bigger increases than 5%. And if we kind of throw a line over all of those years from 1920 to 24-25, that's a 56% increase just in the unfundal liability annual costs that you have, not the normal cost, just that portion. So we want to look at any ways that we have available to us to start attacking that because that's probably the biggest driver within the benefit portion of our compensation. So just to give you a quick snapshot of the unfundal liability. So you can see if you look back there to fiscal year 0607, not that long ago, we were actually superfunded. We were funded at 108%. And that blue bar there is what the actual unfundal liability is. So you can see that was negative, which means we actually had an asset. And then over a number of years, especially you see when the recession hit there in 0809, you can see that unfundal liability went through the roof. It went up to $265 million. The funded status dropped down to 64%. And we've kind of, our funded status has improved over a number of years. The latest year we have 15-16 on the chart here. We're up to 70%. But you can see where you've had years of losses there between 13-14, 15-16, or where they've changed that discount rate. We've had effects on the plan where our funded status has actually fallen and our unfundal liability continues to grow. And that's something that is not only concerning to us here at Santa Rosa. That's something that has per's attention because they're seeing somewhat of the same experience statewide. And actually was at a conference some months ago put on by per's and they had John Bertel there who I think all of you are familiar with. He's an actuary. He's done a lot of work for Santa Rosa and for a lot of California cities. He's kind of the guru in this area. And what he cites is he said that the liability has been growing historically at 8% per year. So even if you're not a finance professional, if you have a liability that's growing at 8%, and you have an expected investment return at 7%, you've got a problem. You've got a long-term problem there. So this is part of the thought that is causing CalPERS to really, really start to address this problem. There are pension solutions. We actually had PFM come in I think in 2014 and they kind of looked at the city financially and they made a lot of recommendations and a lot of the recommendations are very similar to what we're talking to you tonight about. There aren't a really silver bullet solutions. These are just very basic financial things that we can do to get ourselves back into a sustainable model. And what they had recommended was setting inside 3% of the payroll into a stabilization fund. And stabilization funds, you can do one of several things. I don't know if anyone's spoken to you about Section 115 Trusts. That's one of the avenues you can go. And what stabilization funds are trying to do is they're trying to address that high volatility that you get in the annual payment. Because like I said, now if you have a loss in a certain year, that loss is going to immediately affect your annual required contribution. The way PERS used to do that is they had a smoothing model. So as long as you didn't lose over a certain amount, it didn't affect your annual payments. Now it affects you every single year. Even if you have a gain, it actually affects your payments to the positive. So a lot of cities now are trying to address that volatility by creating stabilization funds. And again, this is probably a longer term thing that we can do. I don't particularly like the Section 115 Trust because they're irrevocable. One of the things that cities like about these, however, is it allows you to invest in things like equities. So you can actually invest in places where you get higher returns. The other way that you can do that is just set aside city funds. So you can just sign these within your general fund and say this money is set aside when we have a certain percentage increase in our annual required contribution. We dip into this fund and we stabilize that. However, we're going to talk to you about a more immediate way that I think we can address this unfunded liability. So currently, right now, we collect from all the departments 4%. And we have this outset and impension obligation bond that we entered into a number of years ago. We're going to have to pay $4.2 of them. And so what was set up was this reimbursement so that the departments were paying for that pension obligation bond. So over the years, a number of things have happened. One of the bonds was actually a variable rate bond. Rates became, they moved advantageously for us. So the cost of those bonds actually went down a bit. So we actually wound up with a little bit of over-collection in there. At this time, we have a balance of about $4.2 million. So you've heard to me talk to you about that pension obligation bond fund that we have is $4 million. That's where that money has come from. So an annual surplus recently is about $700,000. So that gives us a little bit of money to go in and attack this unfunded liability. Now, I fully realize attacking $338 million with $4 million is kind of like holding back with the ocean with a spoon. So we can actually get some pretty good savings out of this. So what we'd like to do is use that money and pay down the unfunded liability. Now, here's the way that it breaks out with the way we've collected that $4.2 million. 65% of that has come from miscellaneous, about $2.7 million. About $840,000 has come from the police pension fund and 25% from fire. And again, we just broke this down based on what the budgeted payrolls are. So kind of in the sense of equity, we'd like to put this money into those plans at the rate that these different employees within these plans have actually, or their departments have actually paid into this fund. So then we worked with PERS to try to figure out how we can address this. So previously, when I've done this, we often went into just a single plan, chose a single one of those amortization lines. So if you had a year where you had a loss and that was amortized over 20 years, maybe you would just knock out that one line. So you wouldn't worry about whether it was miscellaneous, fire police, you just attack it as we're all in the same boat. It's not what we've done here. We actually went in and stuck to those allocations as they've been allocated out to the departments. And we used that amount of money that we've collected in the departments to go after the amortization lines within the independent plan. So we put $2.7 million into miscellaneous, we put $630,000 into fire, and we put $840,000 into the police fund. And we chose different amortization lines. You can see what year those all began. They vary depending on what they were.  So it might not be long-range savings, but it might just be an annual savings. And the idea is that we get that savings in the first year. Now we've got something to kind of do this again next year. So if we have any additional that we've collected for that pension obligation fund, that delta between what we collect and what we actually paid in debt service, and now we've got the savings of $685,000 in the first year, now we have something to do this again next year. And we can kind of continue doing this over years. It'll take some time, but over time you're getting yourself additional annual savings and then you can kind of plow that money back into PERS, and you can start to bring down the annual cost of PERS and you can bring down that unfunded amortized liability. And what you see there on the far right is the total savings. So if we invest $4.2 million, ADP is additional discretionary payment, and that actually saves us almost $6.2 million in interest over time. So we actually get that long-term savings, but what I'm more interested in is that first-year savings. And that first-year savings actually grows over years because PERS builds an escalator into their amortization. It's not just straight-line amortization like your mortgage. So our proposal is to do that and get that initial savings, and then again have this discussion with PERS or with the council in every coming budget cycle where we address where we're at with any XX funds that we have, any savings that we have from PERS, and then we look at what we do to go back and plow that money back into the unfunded liability, and over time we will bring that cost down. So again, back to the PFM recommendations, they wanted to establish a fund for volatility, targeting 3% of payroll. I'm not totally sure how they came up with 3% rationale for the payroll, but it's a good place to start. You have to have a number. They thought about phasing this over a number of years, so they didn't think we'd do this all at once. We'd begin with 1% in the first year and then build our way up to 3%. And then the idea was that once you got to 3%, that wasn't the end. At that point, we'd reevaluate and see how we were doing on the volatility side and see if we actually needed to put more money into that. So our recommendation is that we put that $4.2 million into PERS. Now, one thing about this is that I have to make the election to do this, or we as a city have to make the election to do this by June 30th. Actually, if we can in advance of June 30th, we have a June 18th adoption date, so this will be pretty tight. But I think we can make that happen. And then we're going to have to consider future actions. And that's, again, what we do at the Stability Reserve. It's hard to talk about a Stability Reserve right now when during this budget cycle, I'm going to be talking to you about how we plug our budget and we balance it for the next year. That's a challenge, so it's kind of hard to talk about these long-range things. But it does not prevent us from putting a policy into place that indicates where council wants to go in the long run, like PFM's recommendation, if we want to go with something like a 3% of payroll stabilization fund. And then, again, the UAL reductions, that plan that I'm proposing to you tonight is going to be something, it could be part of a council policy if you wanted it to be that. If you, you know, in a year where you have a certain amount of excess, you might want to put that back into the unfunded liability or it can be something that is kind of like we're doing now that's just discretionary. We come to you make a recommendation during the budget cycle. Mr. Vice Mayor, questions? Thank you. So if you could go back to page 24, just for a little bit of clarity that 6.16 million for total savings, is that, does that take into account the infusion of the 4.2 million or is that an additional 6.16 million in savings? That means you spend $4.2 million to get $6.1 million of benefit. So you net those two. Yeah, okay. That's what I was hoping for that clarity. Thank you. Ms. Combs. Thank you. I have to admit that I don't, I haven't heard this before. I'm a little confused about what I'm reading. On 24, slide 24, I can't help but look at the four going to six and wondering opportunity costs. Is that a good return? Is, why are we going to put the 4.2 into CalPERS in this way instead of immediately starting a PSF, a pension stability fund? That's a great question. I will tell you from a financial standpoint, so right now that 4.2 million sits in your investment pool, so roughly earning about 2%. Okay. The CalPERS fund is assuming a return of seven and a quarter right now. So you're basically investing 2% money to address a seven and a quarter percent problem. Even though they probably aren't getting seven and a quarter. Well, they actually have been doing very well the last few years. They did, two years ago, they did a little over 11%. Last year, I think they exceeded 8% of memory serves. This year, when we met with you in April, I think the city manager commented to you that they were down for the year, for the fiscal year. But remember that the investment environment between January and now is much different. I think already a lot of those investments have been made back, so they're probably at least at slack water by now, if not ahead a little bit. So you really can't factor those returns until the end of the fiscal year until June 30th when you know how they did. But we're putting our resources into their trust. You are. You are. You are putting... As opposed to whether we trust ourselves. And that's exactly right. And that's a lot of councils don't like it because the other thing is that you put that $4.2 million into them. The downside of that is that you are now invested in a more volatile investment plan. So you are at the vagaries of the equity market. So if the markets lose 20% more, you're right. You have $4.2 million more at risk. But, you know, that's, again, it just depends on how risk averse you are. Okay. I need to think on that. Thank you. Mr. Tivitz. Thank you, Mayor. That was actually going to be part of my question was, first just, I guess, in two parts, the ADP is on top of your base minimum. I think it was the youth. There was another three-letter acronym. ARC. The annual required contribution. So the ARC is like your minimum mortgage P&I, principal and interest. ADP is like me walking into the bank saying, I want to make another $200 against my principal. And then, okay. That's exactly what it is. And then over time that principal shrinks quicker. The interest charge, right? It's all going down. I see that value. But I've got to say, I think that the plan is interesting. I mean, I'm going to continue to just listen and understand the broader budget environment that we have. But I would definitely be a little bit reluctant on that $4.2 million, just given the fact that we're at 11-year historic high on the market. And historically speaking, let's not throw millions of dollars into a heavy equities portfolio. That's pretty risky to me. You know, looking at this too, I think Council Member Combs brought up a good point too, especially with that market environment being what we assume it to be, we might be better off throwing money into our roads and getting that deferred maintenance payment down. Yeah. And the only, the discussion on the risk, I absolutely agree. Now, I will say the $4.2 million has been collected for pension, so I'm not sure we could divert that money to other sources. Ms. Lemming. Thank you, Mr. Mayor. So, Council Member Combs and Tibbets clarified what I had, a misunderstanding that I had held, which is it's not as though if I want to go in and put money on my mortgage that I'm going to reduce the principle or the interest therein. This is us giving them money that we're really taking a risk on hoping that they're going to manage it well this time. Well, the first-year savings that I put up there, you're going to realize that immediately. In the long run, if there are downturns within their investment pool, then you're going to be at risk. So, there's no way to buy a portion of our liability, essentially, by ourselves. I mean, you said it's about $386 million. Yeah, to buy it by your way out of PERS? So, if I had $386 million, could I buy my way out of PERS and give you the money to invest? No. So, it's $338 million, the unfunded liability, but if you actually bought your way out of PERS, and I haven't looked at the numbers, I can look those up, but I will guarantee you it's in excess of half a million, or in excess of half a billion dollars. Yeah, it's much higher than the unfunded liability because essentially what you have to do if you get out of PERS is you have to put in place annuities for those in the plan at a very low rate. So, it's going to be very costly. I just want to be clear that we're assuming a liability there. Okay, my question was about the allocation of funding to the three categories of employees, miscellaneous, fire, and police. And if you turn to slide, let's see, 18, just back at the envelope math here, I got miscellaneous employees, unfunded liability, about 53%, fire at 20, and police at 26. And I certainly appreciate that the money comes from each of these different groups and in fairness ought to go back. However, what I'm really interested in is what is the most strategic investment for our city because when the city doesn't do well, fire, police, or miscellaneous employees all take a hit. And so the long-term financial stability of the city is dependent upon us making the wisest, not necessarily always the most fair. The fair thing will be the long-term financial stability. So is there any cost or benefit associated to how we allocate those funds based on their origination? So when we looked at the allocation, the slide that you were just looking at there, that's actually the unfunded liability. So that's not necessarily what we're looking at. We collect 4% from every department within the city to pay for that pension obligation bond. So we broke it down by payroll, by equitably what the plans are paying into it. The reason we did that wasn't really from an investment standpoint. It was from an equity standpoint. So that you don't necessarily, you wouldn't have police and fire maybe paying down the miscellaneous plan. And then you could kind of artificially make miscellaneous employees look like their pension plans were less expensive. So that's why we kind of allocated out the... I understand the logic there. And what I'm trying to get at here is does it cost us more or less to do it this way rather than to just attack the most financially beneficial or the most expensive or most costly in the long term? I'm asking is there a difference to us? There could be. And there was a little bit of a difference in the way that I looked at it. If you... One of the things where you will get... You will get more total savings if you invest in a longer amortization. So if you have something from last year where we had a loss just hypothetically and they amortized that over 20 years, if I bought down that line, I would get a lot more savings than if I had something with just a couple years left on it. However, the couple of years, what I looked for was where can we get the biggest annual savings? Because I'm trying to get kind of a wedge in underneath that so that I have savings for next year so I can continue attacking it. So in the long term, we may want to switch to a plan where we maybe go for the most savings. So maybe we go for the longer amortizations. But I'm trying to get cash flow immediately. I appreciate that. But what I'm trying to figure out here is what the cost benefit of that, what the opportunity cost is of that. And it's okay. We didn't discuss this before. And I don't need in any way to put you on the hot seat. But what I'm trying to understand is what is the inherent financial cost in doing it this way? And back to how we allocate the 60, 20, 20 or the 60, 20, 25 percentages of the contributions from miscellaneous fire and police. If there is a way that we can invest those funds, not based on their origination point, but based on the best investment. And perhaps it doesn't matter. And you can tell me that and I would accept it. I just don't know. We could look for ways to get a higher return again by going after some of this longer term. I would probably be more amenable to that if we were, say, taking another source of funding. So if we were just taking general fund one-time money that we had and we wanted to go after them, then maybe we could go in and just say where are we getting the absolute best return regardless of which plan it is and go after that. Is that what you're... Right. Well, what I'm reluctant to do is leave money on the table, especially when it's significant. If you're telling me it's a couple thousand bucks or if it's $2 million or $3 million over the course of 10 years, it's going to matter. I think that our different employee groups are going to benefit if we have financial stability more than they're going to benefit from the money being allocated exactly based on its origination point. Yeah. And what we did within each of these... So we just allocated between these different plans based on the way it was contributed. But once we looked at the individual plans, that is what we did. We tried to look at where we're going to get the most bang for our buck, which line we were going to go after. So those decisions happen within each of these plans. So maybe then... Okay, thank you. And we can continue to talk about it some more. Okay. Thank you. Any other questions? I just have a process question. So in this portion of your presentation, you have some recommendations. When do you want feedback on those? Will that be at the end of the day tomorrow, today, or... I mean, I'm not sure if that's for the city manager for you, Chuck, but you have some specific ones, unlike the other bulleted items. If possible, Mayor, I would like to have counsel guidance on this tomorrow because what I can do from a process standpoint is a prize purse that we are going this route and they can start doing what they have to do. Obviously, we won't, you know, pull the trigger on this until we have adoption on the 18th. Great. So then I would ask then tomorrow if you reframe the question for all of us, because I don't know if any of us are the math wizards, you know, it's making sense. And obviously there are some decision points here. But if you could reframe the question, then tomorrow we can give the feedback after we hear the entire presentation. Great. Is it possible? I would assume you're receiving guidance from our city attorney. This is a study session. So how we frame our response may make a difference. If we may need to... I just want to make sure we're asking the question and answering it in an appropriate manner. And if I may, at a study session, the Council may give general direction. So, and I think that's really what Mr. McBride is looking for at this point. Great. Continue. So at this point we're going to move into an infrastructure discussion, which Mr. Nutt is going to. All right. Chuck thought it would be a good idea if I broke up his discussion a little bit and talk for a little while, just to give you a break from him. Sorry. A little levity sometimes helps, right?  In particular, we're going to take a little trip through 10 different pieces of infrastructure that the city maintains. If I can... Just for counsel, it's the other presentation. You'll have to exit that one and enter the infrastructure presentation on your iLegislate. Yeah. Thank you for that. So, like I said, we're going to look at 10 different infrastructure components. This is not necessarily fully encapsulating but this covers probably our largest pieces of infrastructure that we maintain in the city. And I took somewhat of a little different take on this. I'm trying to compare somewhat what we're doing with the national standards and California standards where I can. And so what you see up here is you've got a couple of... You've got the 10 infrastructure components in the wheel. Those in red are Enterprise Fund and those in green are General Fund. The one in blue is Property. It's a little bit different. And Jill Scott will be coming back later this summer to give you a more detailed discussion about how our property infrastructure looks and what that means for our operation moving forward. So just to give you a snapshot of when I say we've done infrastructure evaluations, what types of evaluations are we doing? Well, we've done staff evaluated, consultant evaluated. We've looked at how computer models generate... Generate feedback and determine whether or not we're meeting a certain standard. We've utilized industry reports. We've utilized national and local feedback studies in order to determine if we're meeting a certain grade. When you look at the ASC report, it looks just like your standard school report, A, B, C, D and F. And when we decide what that might look like for us, this is somewhat of a roll-up of all of those infrastructure components and how they compare across both the nation, state and city. In general, you can see that we are ahead of the game nationally. That could be we're a little newer than some of the communities throughout the course of the country. But it also means that at certain points in our time, we have done a level of investment that's helped us stay in fair condition throughout our entire infrastructure. Some of the criteria that were used as we looked at this, things like condition of the facility, capacity of the facility, what kind of funding we're putting towards that, what the future need might be, what kind of operation and maintenance are we putting into it, how does public safety fit into that? What's resiliency mean when it comes to this infrastructure component? And then of course looking at innovation and how innovation can benefit each of those infrastructure pieces. So just starting off with some of those, with some of our enterprise funds, this was a presentation that was given to BPU back in 2017. And so I'm going to just move forward with this. I do know there are water staff in the audience. If there's more detailed questions than I can answer, they'll be here to help respond. So as you can see, we've got a number of services here when it comes to our drinking water supply. And as you recall, we are substantially better in our drinking water supply and delivery system than the national average. So the 5300 services, the 19 pump stations, the 6300 fire hydrants, and you work your way down, there's a lot of material and facilities that were responsible for doing. And they're not always the easiest to inspect in an effort to determine what quality and condition we're at. We had a little bit of experience during the fires. We got the opportunity to really see what some of those facilities are doing during the course of an event and how they're functioning because we were able to shut some of those services down in an effort to do a little more investigative evaluation. But even though we're standing at what we would consider a level of Service B, from a drinking water standpoint, we're probably investing about 50% of what we need to be investing in an effort to turn over, in order to turn over that 619 miles worth of pipe that we're responsible for. So we're currently budgeting about $13 million a year. The investigation, again, very light investigation that was done by Santa Rosa Water demonstrated that we probably have about a $13 million structural deficit there in an effort to figure out how we're going to turn over and keep those facilities in good condition. Now, I will say Santa Rosa Water hasn't done a comprehensive evaluation on that. That's actually on their list of things to talk with the BPU about, to begin to undertake over the next couple of years. So this really is very preliminary data that they utilize with the information that they have. Similarly, with the wastewater infrastructure, not quite as many miles of pipeline as you have with water, but you still are at 590 miles with 4,900 services. It is a big infrastructure that they're responsible for taking on. And when you look at the condition assessment of that, B-minus is pretty good, especially by comparison to the D-plus that you see nationwide. We've definitely done a better job of managing and maintaining those components for our wastewater system. Some of the terms that they use nationwide are a little different. We don't necessarily always call it wastewater here, but nonetheless, I'll do my best to try to make things level across the playing board. But again, what you'll see is we invest about $12 million a year. The rough estimate is that we have about an $11 million deficit to keep our facilities in good condition so we should be investing about $23 million a year. Also part of wastewater is the water reuse. And, you know, we've been sort of leading the nation historically on water reuse. I mean, the fact that we've been able to develop the geysers pipeline, we've been able to work with our agricultural community in an effort to irrigate their facilities. We really have done an excellent job of getting there. However, all of those things are very, very expensive. And it's been a difficult time for us to keep up with all of those. The geysers pipeline alone is a 40-mile pipeline, and we have 33 miles of irrigation lines. That's not insignificant when it comes to the work that needs to be done. And that's part of why we ultimately gave at a mediocre grade something that we feel we should be starting to invest more in. And I think the BP will begin to hear more and more details about things that Santa Rosa Water's interested in doing to begin to reinvest back in here. But as you can see, we feel that there's about a $14 million a year annual deficit relating to how we should be maintaining the system in an effort to continue to stay nationally significant and regionally confident that our system is going to continue to operate into the future. One of the enterprise funds is our transit. And transit seems like it's an odd thing to be considered infrastructure. But then there are a couple of different types of infrastructure that we have here. Transit actually owns and operates physical infrastructure. They manage the transit mall. They manage the Westside Transit Center. Those are our two major transit hub facilities. We've got the three on-street system facilities, which are Montgomery, Cottingtown, and the JC. Those are all physical assets that we're responsible for. In addition to some 400 bus stops that they have to maintain, plus we have facilities at the corporation yard, such as a bus wash, the transit operation building. So we have a number of facilities. But we also have our rubber-tired facilities, our buses, our facilities. We did not include fleet as a primary infrastructure type, mostly because there wasn't comparables across the country or within the state. And so we dropped that one out of the presentation. But that would also be another piece that we would want to talk about. So here what you see is we've got 29 fixed-route vehicles. We've got five that are currently past their useful life. I know that Yuri Kozlin came and presented to you kind of a plan for how we were going to change our method of being able to upgrade our rubber-tired facilities, our buses, and an effort to keep those in good condition. What it really builds down to, though, is we do a bus buy about every three years. And we purchase around four buses a year. We figure, based on the replacement needs of our operation, we should be buying five buses every year. So from a simplified standpoint of what our deficit is, we're basically short of bus every bus buy every time we go and do this. And we utilize grant funds to the best of our ability to supplement. And we've been successful here in the last two years by getting two grants through the Federal Transit Administration in an effort to buy electric buses. And we just heard earlier or late last week that the State's Cooperative Purchase Agreement is under its final review, which is exciting. That will allow us to actually begin to enter into the process of acquiring those four buses. Some of the other things that transit, as we talked about it, are not just rubber-tired. And what we're finding is in doing our inspection, we're having some roadbed issues in the Transit Mall. We actually have a section of concrete that's rocking underneath the buses' weights. So we're looking at doing some capital improvement projects this summer, that one in particular on a minor piece is about a $40,000 cost. But what we've also noticed is we started to expand our use of the kiosk. For many years, that kiosk laid empty. And about four years ago, we populated that with a customer service representative. And then we got Greyhound to come in, and Greyhound put a representative in there. Two people is tight in that spot. It doesn't have air conditioning and heating. It's open to the elements within the parking garage. So there are things within that kiosk that we need to evaluate and study and determine whether or not we need to enhance that for the long-term value of our public transit system. And we have been successful. We were awarded a grant about a year and a half ago that we're looking to start to implement. That will help us do some of those investigative studies to determine what actually may need to be done for our transit mall and some of the larger hubs that we have. The other piece of that infrastructure is the system itself. We went through a long reimagined city bus process. It's actually, at this point, we feel been very successful. We completed phase one, and we made an adjustment earlier this year. And we're very proud of what we've been able to accomplish. There is a second phase of that, which is further expansion of the bus system, increased frequencies throughout the network. We anticipate, based on our current cost, that that has about a $5 million a year cost to it in order for us to be able to expand our system to meet the needs of all of that program. And then there's a second component, which is enhancing our weekend service. That's about another million dollars a year. So when we think about the deficit that we're looking at from a transit operating, our long-term picture for what we expect that transit system to be, we're looking at about a $6 million total annual deficit for that infrastructure component. Then we talk about roadways, and you've heard us talk about roadways a lot. A lot of these infrastructure items, we don't come and talk about very often. Roadways is one you've heard about quite a bit. And things continue to change. So as you can see, we currently have about 509 miles worth of roadway. Our current PCI is 61. We actually recalculated this year, and what we were reporting last year was a degradation to about a 59. The level of investment that council put in by authorizing a $3 million one-time investment into local roads, the monies that have come in specifically to assist with the Roseland work, and the increase in SB1, we think have been instrumental in helping us bring that target, or that current PCI up those two points over the last couple of years. And that's a very exciting thing. It shows that we can actually make a move on our current target. Now, we don't, as a city, have an actual target PCI. There's no place that we're trying to achieve. All we have is a target provided by the Metropolitan Transportation Commission of 75. So when we say what our deficit is, that's part of what we're shooting for, is trying to achieve that. So over the last decade, what you've been hearing, because that's such a big number, and I'll get to that in a couple of slides, is we've been talking about how do we just simply sustain where we're at? How do we keep that 61 in place? So in doing that, we assume that that takes about $17.5 million a year. And you can see I've got it spread out for what different types of funding sources we have that we put directly into different types of pavement maintenance, anywhere from our slurry seal program to our pot holing, to our crack ceiling, to our overall reconstruction and repavement. We invest a substantial amount of money this year. We added the $3.5 million for SB1. And again, as you see with the $662,000 that the county is providing us for the next few years relating to Roseland. That still leaves about a $5.8 million shortfall just to sustain that 61. Again, we've been able to make some movements, some strategic investments. Our staff has tried their best to utilize these funds in as expansive a way as possible. But we still see that there are challenges ahead. When we talk about roadways, we're also discussing things like street lights, traffic signals, safety devices like guardrails, retaining walls that are within the street that are keeping the street in place. So those are all pieces that we've wrapped up as we talk about what our roadway condition is. And as you can see, federally, we're looking at a level or a D-grade. California also has a D-grade. We're exceeding that. In the Bay Area, I would say we're probably right on par. The average PCI in the Bay Area is somewhere and has been hovering around 66 for the last several years. We're just below that, but we're still in about the lower part of the Bay Area. We're still in the middle third of Bay Area cities. So when we think about how this involves, you've looked at a number of degradation curves over the years as to how pavement maintenance makes it difficult for us to catch up if we're not keeping up. And this is just an example of what happens if we stay on our current track. That degradation curve continues to work its way down the PCI range over the course of years, and it takes more and more money annually with that degradation. And so, like I said, I was going to talk about where our targets are. Right now, our target is just trying to keep up with what's currently existing at the 61. There's been a comment for many years about a worst-first type of approach. Let's fix all of the worst roads right off the bat, and that's where our investment should be, because the good roads, well, they're in good condition. Let's leave them alone. So you can see with our current system, we address any of those that have pavement condition indexes less than 25, which is an identification of failed. It would be about $171 million over a seven-year period just to try to fix all of those streets. We've sort of identified that potentially a target of 65 makes sense. That puts us in the middle range of good and gives us at least a feeling that we're making good progress. Now, we've talked about 17.5 million being our current just to keep it steady. It would take us about $23.5 million for 10 years to bring the system up to the 65, and then once we're there, our annual investment should be almost $22 million. If we're trying to achieve MTC's version of target at 75, it's about $33 million to bring it up to the 75 over a 10-year period and then an annual investment of $20 million. So this is sort of the crux of it right here, is why on earth would we invest in roads, aside from the public safety value of coming to, you know, maintaining those, where we actually have police in fire and their ability to be able to respond and keep their equipment from receiving the benefit of the potholes. But this is the average cost to statewide drivers. So this is based on an independent study that's done every year. There are a nonprofit group out of Washington, D.C. that publishes this for regions throughout the country. And for the San Francisco Oakland area, which is the closest area to us and we believe actually incorporates Santa Rosa, our average cost to drivers is about $843 annually for the current condition of the roadways that we have in our area. And so, you know, we're all paying that in an effort to drive on the current state of our roadways. The next area I'll... Can I pause and just reflect you about halfway through? Does there's any questions for Council on the five areas? Any questions? Great, continue. Oh, you, sorry. Ms. Monique. Thank you, Mr. Nutt. And you can tell me that this question would be better asked later on or might be better directed toward Mr. McBride. But what I'm curious about is on the PCI index, is there a sweet spot in terms of investment in terms of what is over a long period of time the number that is least expensive for us to maintain? That's been a debate for a long time. MTC believes 75 is the sweet spot. Once you get to that space, the cost of doing maintenance, basically keeping roads in good condition is at the optimal rate. It's very expensive for agencies to get there, however. Yeah, I see that it would be a huge investment for us to get here. What I'm wondering is what the cumulative cost or the delta would be at targeting, staying at 61 or targeting 65, between 65 and 75 over the long term and determining whether or not those costs are even or not. We could do a little more research into that specific question. Our belief is that somewhere between 65 and 70 is probably the optimal space for our city, where we're able to do preventative maintenance techniques like slurry seal and crack seal as a predominant way of keeping our roads in good condition. That would allow us to have a large percentage of our roads in that category of pavement conditions. I understand there's a cost to tying up funds by putting it in, and there's a cost to not putting it in by taking care of roads in poor condition. And I am assuming that you guys will take care of our financial interests on that count. The other question is about the funding sources that you mentioned, and I'm wondering if there's any fluctuations that we're going to foresee in gas tax as we move away from gas powered vehicles towards electric and how dependent we are on that part of our portfolio. It doesn't seem to be the largest portion, but I just want to know as we go forward. Yeah, gas tax is a very awkward source. You're hearing that nationally that we need to find a way of weaning ourselves off of the gas tax. There is a movement of foot nationwide to look at something akin to a vehicle miles traveled methodology. The state of California recently did a series of pilot studies in an effort to determine what could be a reasonable substitute for gas tax. In our city, we receive a little over $4 million a year of gas tax. About half of that goes into pay for staff resources. The other half gets split between pavement improvements and other on-street improvements, such as traffic signals, bike lanes, and sidewalk improvements. Okay. And then the expiration of Measure M, when will we be seeing that happen? So Measure M is set to expire in 2024. Okay. And I know that your representative, Vice Mayor Rogers, is currently working on a subcommittee talking about what that reauthorization plan could look like. Okay. And then just going down again, utility impact fee, what is the source of that income? So those are water funds, water and wastewater funds. It's a methodology that public works and water have worked together on to pay for the value of having underground infrastructure within the roadway and its impacts to those roadways. And so they provide an enhanced paving service which we call UIF or the utility impact fees that allow us to help restore roads where they're doing substantial maintenance improvement work. So you see that that revenue stream is fairly steady? That revenue stream is steady. As long as they're going through and replacing underground utilities, this revenue stream is fairly constant. Thank you. Ms. Collins. Thank you. Actually, I'm kind of delighted to, I'm looking at what page that is. It's not, I'm having trouble seeing slide numbers on my slides. Looks like there's not slide numbers. Under roadways, not this slide, the one with the troop report. Yes. I think this is a really neat idea. I'm really glad that there's an organization that's doing this. Can you clarify for me what PCI they used? Did they use like an average San Francisco Oakland PCI? Actually, in this case, I'm not sure they used a PCI as a gauge. I think they looked at their prominent, their predominant supporters are industry. And so they're looking at cost of, you know, the cost that us, that we drivers are spending to do auto maintenance. And so they're looking at receipts that are coming in from different types of maintenance and different challenges relating to the safety and congestion. And they're using some average dollars relating to our hourly wages to come up with congestion pricing and whatnot. Okay. So we can't know at this stage where, if we increase our PCI from this level to this level, we provide a cost savings to our residents. This is a very generalized study over a very large area. They use metropolitan areas of greater than a million in most cases in an effort just to get some idea of the cost of driving a car when you have roadway conditions that may be less than optimal. Okay. And on the roadway slide with cost to recover, the graph with the blue and red lines. Yeah. I actually think this is one of my, I find this to be a very informative graph because this is the graph that lets us know what it costs us to delay doing the maintenance. What's the rough PCI number where you have to completely rebuild the road? I'm remembering a number 40 to 60 but I don't remember where in the range. Yeah. We're very concerned about a particular road. It makes it very difficult for us to do our preventative maintenance. There are, we're learning newer and better ways of doing work and we're taking some risks. So recently, in the last two weeks, we just repaved a road in Roseland that had a PCI of near zero. How we did it was we determined that the base was actually in good condition that the pavement had been damaged over the course of decades due to weathering. So we did a leveling course and then a final pavement course. And we anticipate that that will last in its good condition state for about 10 years. And so we are trying to maximize how we invest our monies to the best, to the community's benefit. Thank you. And I appreciate that it can be difficult when looking at this. There would be a tendency to keep good roads good and let bad roads go because it costs so much. But there are some implications for equity within our community. And that's part of why we see, I mean, we routinely see articles when we do our slurry seal program because we come in slurry seal roads about every six years. And when we're up in Fountain Grove and we're doing our next program, generally what we hear is, well, we're investing in that community. But we do the same thing in the west side of Santa Rosa and in the southeast side of Santa Rosa. So if roads are in those pavement conditions of about 60 or better, we're utilizing these preventative maintenance techniques to the best of our ability to sustain the life of those roadways. Just so the public understands, some of the roads have what kind of looks like crocodile or alligator back. Roughly what level is a kind of alligator road? Is that above 50 or below 50? If you're starting to see alligator cracking along a large stretch of the roadway, you're probably at a 50 or below. Okay, and normally we have an experiment running now, I guess, but normally that road you wouldn't just resurface it with slurry seal. So what would normally do more? We would do a more invasive work. Depending upon the length and size of the damaged roadway, we would either do a dig out and then something lighter, slurry seal or a micro surface, or if it's more prominent throughout the entire roadway, we would just do a complete reconstruction. And what does it cost to do roughly a mile of road in each of the two ways, for rebuild? Roughly. For every dollar we would spend of slurry seal, we would be spending $12 on a reconstruct. Okay. Thank you. Any other questions? All right, now we talk about bridges. We have 63 vehicle bridges within the city that we would consider on-system bridges for a combination of on-system and off-system technical terms. On-system means that the Federal Highway Administration tracks it and Caltrans tracks it off-system means that they monitor it, but it's really an issue for us not on one of their roadways that they're tracking. And as you can see, our average age of our bridges is about 54 years. We have 11 that are in some level of distress, either they're functionally obsolete actually pretty good numbers all things being equal. We don't spend an awful lot of money managing our bridges partly because they're all in pretty good condition. About every few years Caltrans comes out and does an evaluation. In fact, every two years they come into an evaluation of each of the bridges and provide us feedback on what the status of those bridges are. We talk about sufficiency ratings. It's a big word so just to kind of give you some feedback a bridge sufficiency rating is calculated based on 55% structural and 30% obsolescence and 50% importance to the public. And so if you are a score of 80 or less you qualify for federal repair funding I'm sorry, 80 or less is required to qualify for federal repair funding and 50% or less is for replacement funding. So in our case we have a fairly good sufficiency rating in town. You can see the on system and off system bridges we're above 80 in both categories and we're doing our best to address some of the minor issues that we see from Caltrans such as Scour in the creek bed area along the abutments. We've been averaging about $85,000 a year of investment and over the last five years we've invested roughly $480,000. The level of investment fluctuates from year to year depending upon the type of bridge improvement that's needed, but we estimate our total deferred capital maintenance of about $4.4 million because there are some things we've deferred along the way. We've got a couple of bridges that require some fairly significant activities such as the E Street bridge. It is one of those that's functionally obsolete enough to be able to maintain the activities that need to happen on that particular bridge. This is one of those categories that we're keeping track of but we're not necessarily asking for substantial investment yet at this time. There are 127 minor public crossing so these are the culverts that are less than 20 feet long, not the pedestrian bridges these are actual roadway bridges and we don't really have any data on that. Caltrans doesn't do those inspections and at this point in time we haven't conducted inspections of those 128 or 127 crossings either. Now let's talk about recreation and parks. They have a ton of infrastructure. They are a huge operation. You can see they've got five different major recreational facilities. They've got 637 acres of general parks. They've got 277 acres of open space. You can see sort of how that breaks down within their inventory outlay. Some additional sample exist ideas of what their infrastructure are.  They have a huge amount of material that they're responsible for managing. We've identified that their general grade is about a C minus for our ability to be able to do that predominantly relating to our funding. It's very difficult for that team to turn around and maintain to the quality and level that we feel is necessary or that the public is requesting. Trying to do some comparatives to figure out where this department or where this activity is at. We look at the National Recreation and Parks Association. They just produced their comparative rating schedule. You can see in here where we're at relating to the NRPA average. All in all, it looks fairly good when we talk about investment or cost per parkland and cost per capita or investment per capita. When you start getting down a little bit further, you start seeing where things begin to demonstrate where we're at. Our revenue per capita is substantially lower than our national partners. Our percent of operating is substantially or revenue as a percent of operating is substantially lower than our national partners. Both our park acres per thousand residents and our FTEs per 10,000 population are substantially lower than our national partners. What we're seeing is this is likely a cost of living component. This is a cost of doing business in our area. It just cost more for us to manage our parks out here than it does in the rest of the country. When we look at our specific infrastructure components again, these are some key big samples. These are some of the deferred maintenance activities that we're seeing from our picnic areas. When we roll up all of those parks and we look at the amount of picnic areas and the facilities that are there, we feel we're about four million dollars worth of deferred maintenance. As you go down basketball courts, soccer fields, overall when we roll this up, it's about 50 million dollars total. We assume that that's about a ten-year average. If we pull that back, it's about five million dollars a year investment that's needed in order to keep our facilities in good operating and functioning condition. This is a very rough evaluation. One of the things that recreation and parks will likely come back and talk with you about later when we look at the new measure M, the recreation measure that was recently passed by the voters in 2018 is to actually fund a comprehensive study and evaluation of the infrastructure so that we actually know the numbers here rather than making some best assumptions based on the expertise that we have in the department. This is something that we expect we'll learn quite a bit more about over the course of the next year, but this is at least a guidance to see where it is that we're at today. We do have three dams that we're responsible for, all of which are owned by recreation and parks.  All of those are under the authority of the Department of Water Resources divisions of dams of safety of dams. And they come out and do an evaluation annually in effort to determine what the condition of those facilities are similar to the bridges they provide us with recommendations on things that we should do. Predominantly, our biggest issue is managing invasive or burrowing species and certain plant species that have a tendency to break apart those facilities. Again, we don't have a whole lot of information right now. It is something that we will be looking towards providing more information in the future and we will be actively working on our inundation maps, which is a requirement of the Department of Water Resources that determine what happens if a dam were to fail and what that challenges are. Water has their inundation maps up to date. Recreation and parks is in the process of working on their inundation maps for their three dams. Telecom and digital. This is one that we started talking about a few years ago. This is one of the things that we have been talking about. This is a new item that we have ever discussed from an infrastructure standpoint. But in talking with our chief information officer, this really is something that we need to start taking care of. When we look at our broadband needs and how we look as an attractive community to businesses and residences, we are living in a deficient world. We don't have the level of broadband and therefore when people look at having choices of where they want to position themselves, this is an area that we believe in Santa Rosa we are behind in. Now, from the standpoint of what's the city's investment, we haven't actually made that decision what the city's investment is. For the moment, this has traditionally been a private industry area of infrastructure. But more and more cities are starting to do city-wide city infrastructure. We are trying to decide from our standpoint whether this is an area that we want to get into and take some level of ownership of this type of infrastructure. And so I think over the course of the next year or two, we will start to hear more and more from Eric McHenry as to what it is we think is going to be important for us to invest in as we move into trying to compete with other cities for residents and business customers. All right. How about I ask for questions there before I go into buildings? Council, anything? Mr. Tiddits. Thank you, Mayor. So really quick since you brought up broadband, are we talking about actually laying conduit throughout the city and doing a public broadband type of operation are we looking at partnering with other cities and cities to provide the infrastructure that we are trying to do? So what are the factors to provide it? What is the concept behind that? So right now there isn't a concept what we are saying is when we look at the capabilities that currently exist in town from the private side or the public side, we are not in the same position as some of the other cities. So I think we are looking at the wireless infrastructure and 5G infrastructure and stating that we were 122 out of 125 communities and we were at the bottom of the list for communities that provided that type of service. Again, not necessarily city infrastructure but even private industries infrastructure. So what Jason just said, we are putting together a disaster economic development grant and disaster recovery which would and there would be a significant match requirement but if you don't ask then you are not in the conversation about even the match which would the emphasis of the program is to provide and support. So Fiber in the downtown, that is actually one of the things that the economic development agency for the federal government has funded in the past in a significant way in post disaster community so we are in the process of finalizing that grant application. And we continue to have conversations with partners as we go through this process specifically about providing a downtown that is in the process of being submitted. I have a question about the dams. I have a real strong interest in those. The inundation map, does that include earthquake stability or any kind of assessment with regard to how well they will hold up in an earthquake? I don't know. I don't know. I don't have a failure. The natural failure of the dam as opposed to an earthquake natural failure. It is actually looking at any failure. If this dam were to fail what would the inundation of water coming out of that reservoir would cause that dam to fail? That is a different study that would need to be done. We have not done that. I would be interested in us following up on that. I think those are things that over the last few years we are trying to build this as a way to track our assets and for council to make strategic decisions. Unfortunately we haven't done that work as a team. We are trying to build an organization that does that by not by reaction but proactively across the organization. When we get into the organizational conversation and realignment conversation I think that is one of the chief benefits of the realignment as we are asking these conversations. We are starting these conversations holistically and we are not going to leave anybody in the organization without having that addressed. I think you are hearing that that even when we did the facilities assessment a year ago what was painfully apparent is that our recon parks infrastructure if it wasn't a building was left not addressed in this process we would have a lot of information around this and we would have a lot of money, a lot of money and a lot of funds and actually assess those locations including these two areas which are dams for recreation they are not part of a water system which is a different type of water system which is not part of a larger infrastructure that is providing essential levees support or other things. As we go through it maybe we will learn some things but right now those are recreational facilities they are not part of a storm water plan or anything. We have work to do on that front as well as we are all around storm water. There is a lot of information about the dam and not the spring lake correct. Dam region that we are talking about. The spring lake is a different ownership entity. Is the department of water resources division of dams the same one that monitors the Orville dam? Yes, I believe they would be. So far over half a billion dollars over 10 years I just want to thank you for distracting from Mr. McBride's 338 million unfunded liability. I'm happy to help. I thought I would be able to break up and he's not done yet so just wanted to make sure we give you a little shift. I have one question for you. It's a new term for me and I'll be impressed if you know the answer . That's a technical term and I think Eric's here if he wants to describe what Internet of Things is. It's something that I believe has just become a catchphrase for all things that work through and around the Internet but Eric do you have a more detailed? It's infrastructure, correct? It is infrastructure, yes. Your refrigerator talks to your phone. I apologize for that term. I'm sorry to interrupt, but I don't have a lot of internet with me. Councilmember Combs was dead on though. In our homes and lives we have a lot of connected devices and we probably have 50 things around our homes that are reporting things back and forth that's called Internet of Things. The Internet used to be the Internet to us as people we talked to it, we emailed to on back and forth that needs to have the needs to have very low latency or delay right so that's what IOT is sensors all these things the roadbeds things in your vehicles in your house all over the place on your wrist all that stuff thank you sure you almost did it Jason but I tried I will say you know we just actually both the traffic engineering and transit team just had a meeting with a consultant that comes in talking to us about how we could implement a car to car and a car to vehicle or a car to signal type of communication system as part of the internet of things between you know that we're looking at from a transportation element so so it's definitely something that's building alright let's talk about building facilities and I'll do my best to be brief and concise but this probably has the most slides in it so we have about 122 general fund structures and I say structures structures can be anything from from an arbor to a shade structure to the city hall and public safety building it can be a lot of different things as you see we've got 29 of those that I consider civic meaning they're there for general administrative purposes or some type of government activity you've got 16 that are identified identified as public safety fire stations public safety building or ancillary structures associated with associated with those and you've got 77 that are that are recreation and parks related anywhere from public restrooms I said activity sites when I wrote that down my friends at Reckon Park said hey what the heck is that so what that is is it's like the railroad depot the animal barn the boat house those types of facilities that they're specifically for the benefit of activity within the park sites you can see in the general civic side we've got three facilities or we've got three libraries that are leased we've got a museum that's leased we've got a daycare that's leased and we've got a visitor center that's leased so we have leases with a number of different entities out there right now we're going to get into a little more detail toward the end of this we've got some buildings that are scheduled for demolition you know we've got 17 that are listed up here just between these sites and then we've talked about this p3 investment and looking at potentially divesting of certain properties and we'll talk more about that towards the end of this as well on the on the enterprise fund side water enterprise has 47 structures whether it's the office buildings or the pump stations and they've got other types of operation facilities such as the treatment plant and chemical building parking has the five parking garages and facilities within those garages and then transit has has three primary facilities the transit operation building which sits over by msc north the west side transit hub which is on the corner of sony point road and west college and then our wash station that sits inside of the corporation yard but I wanted to let you know that that these are all facilities that that we the city are ultimately responsible for whether it's general fund operation or whether it's an enterprise fund operation we the city are in charge of this when we look at when we look at what our assessment said so as as city manager mcglenn said you know we conducted an assessment back in 2017 and it came back with a number of pieces of information it pretty much stated that we had about a half about five and a half million dollars a year I'm sorry our total investment currently is about half a million five and a half million dollars a year relating to what our building maintenance section does and that's all of our employees that's the contract budgets associated with our HVAC systems with our janitorial contract our electrical for each of the buildings if we're buying water all of those pieces are wrapped in under that total budget as you can see we've got a couple of different sections under maintenance that take care of those buildings I showed the construction section that is not actually they they don't have a specific role they are caught they're basically an internal contractor that's what they do so if we've got a job we hire them to go do it but it's that maintenance section they're the ones that are doing your routine maintenance so we've got eight employees if we look at just the 113 structures that were surveyed within the assessment at about 650,000 square feet we're doing about one FTE per 80,000 square feet and the industry standard is about one per 50,000 square feet so we're we're running a little bit behind of what the industry standard is typically typically stated when we look at historical capital expenditures you know we're putting about 1.6 million dollars a year of additional historical investment into our buildings now this predominantly came out of about seven different buildings that we have around the city most structures were able to handle within our budgets but this is the above and beyond that need roof repairs or HVAC or ADA improvements just for a point of clarity we're not investing in only our historic buildings with that what the what director net means is that's our how over time we've treated our capital investments thank you so if we continue further into the assessment just to kind of remind you this was the criteria they used we talked about pavement condition index for the roadways here we're talking about facilities condition index they have a completely different scale pavement condition was 0 to 100 with 100 being the best facilities condition is 0 to 1 with 0 being the best why we can't be consistent I don't know but that's the way it is the facilities condition index is the deferred maintenance deficiencies that means the total calculated deficiencies of building divided by the replacement value so that's how they come up with with what the fci score is that's why 0 would be the best because if you have 0 deficiencies you get 0 and the life life is good so our average fci right now under our current 113 structures I know I said 122 previously there was a series of buildings that we didn't have evaluated because they were scheduled for demolition or we acquired product we acquired after the assessment was underway so the 113 our average is 0.07 and our five-year average at our current investment level is 0.18 against just a little bit of a recap when we look at our 25-year horizon we asked them to do a 25-year horizon because we wanted to see what we needed to invest into the out years year one was identified as 2017 it didn't include any of the parking lots in any of the facilities it was really the building facility itself and then so what they did is they identified five or six different priorities within those priority one being eminently critical we have to go in and take care of these immediately with priority five being well we'll think about it priority six or they show it as 0 here as being no action because because things are in good condition if we look at just the priority one the things that they said we should have taken care of in 2017 we had 7.5 million dollars of investment required predominantly fire system code upgrades roof repairs HVAC unit repairs and some electrical system issues if we roll that out over the 25-year period the way that that the consultant set up for us you can kind of see the different buckets of the priorities that they put these in and the type of funding that they recommend the difference between the direct and the project value are the soft costs the direct values the actual construction cost so the five-year total is about 89 million dollars but if we add the soft costs in roughly 50 above that you're about 133 million dollars if you take and and look at how that graphs over the course of that 25-year period under our current investment unfortunately that gap gets bigger and bigger and bigger and their proposal didn't incorporate inflation so you'll see I actually included a bar in there that talked about what a 3 percent annual inflation could look like with a 3 percent year-over-year at our current rate of investment of about $300,000 a year you can see where our our facilities turn to when we look at their facility condition index score from year one actually a lot of our buildings are in fairly good condition we have very few that are in the divestment side but at our current level if we don't make any substantial changes by year 10 we're completely the opposite direction and by year 25 we have no buildings in good condition everything has shifted towards critical and to divest so in working with our consultant and and I got to tell you a canon design has been fantastic our contract's been over for over a year and they continue to work with us why because we're making their product better we're asking critical questions we're making them devise new products that they can that they can utilize with other folks so they actually created a spreadsheet that allows us to calculate what type of investment we need to put in place in order to achieve a certain facility condition index score and they've given us a couple of different ways to be able to to query that it's it's actually a pretty impressive excel spreadsheet that they put together so as I mentioned we've got about a $300,000 per year current capital budget you can see with the red arrow where that puts us at our 20-year mark and we pretty much use that for for imminent things that break that we can't afford to have broken and that's and that's where we end up going if it's something larger we have to bring that to council for specific action as we were talking earlier that's where that $1.6 million a year of historical investment has come from because we've had to come to council outside of it unfortunately the evaluation company Canon Design utilizes zero they utilized perfect condition as their target probably a little outside of most normal criteria to choose perfection as it as your target and that resulted in about about a five million dollar a year over 20-year investment so staff determined we went through the process to try to establish a target similar to what we've done with roads how do what what should we be looking toward and we determined that somewhere in the better part of the fair category was probably what we should be looking at and that's what we should be looking to invest so we evaluated a 0.07 fci which is in the better part of the fair condition we ran a couple of different models the first being let's just put and say we want every year to have an fci of 0.07 and with that over those 20 years we need to invest about four and a half million dollars a year in order to bring all of our facilities up to that level and then sustain it from that point on during that 20-year period then we said well what if we just wanted to achieve 0.07 by year 20 and with that we've we determined through the calculation we need to invest about three and a half million dollars a year over that 20-year period and you'll see that as the blue mark on on the the the bar there I also wanted to kind of you know crystal ball what might happen if we did other activities such as repair Sam Jones Hall roof or if we were to invest in the p3 project and what the resulting would be for the buildings that remained and so you'll see there's a minor benefit to us by repairing the Sam Jones Hall roof we reduce our 20-year cost by about $200,000 a year but if we eliminate the six buildings that are in the in the p3 project for downtown we have we were about half of what our proposed investment would be and we'll go into a little more detail of those in a couple of slides and I'd also like to add that this is one of the things that rating agencies continue to look at is is actually newly look at is the health of your facilities to establish your bond overall bond rating so I would just remind council that this is it's a it's a direct concern for the for our citizens and our employees but it also has ultimately some financial implications for you all down the road so we did mention early on that we have some leased and licensed facilities we talked a little bit about that when we brought forward the hvac unit repair for the main library as we mentioned at that time we do not have a current lease with i and with the library with the library jpa there are three buildings that we maintain on behalf of the library they operate all of the facilities inside we worked with their team as they provided some feedback on what type of agreements we've had in the past the last agreement that we had was a 1996 agreement which talked about an annual contribution from the library we haven't seen that in a while it was part of a an mou that was identified as a 10-year mou and we we feel that that having some type of lease moving forward or some type of operating agreement could be a very good thing in the future as you can see a lot of investment has been put into the library in particular the main library over the last 15 years and all in all those facilities are in pretty good condition with the northwest library being the oldest facility and the one that probably will need the most work in coming years we currently have a lease with the sonoma county museum for the old post office site off of off of 7th street that particular lease says that the city is responsible for 100% of the operation and maintenance of that building the library has the luxury of being in the facility they're responsible for managing and maintaining their artwork as well as painting the walls to facilitate their needs for their displays outside of that the remainder of the work is done by the city we have a lease with the four c's at northwest community park this is one of the buildings that was identified as as needing some some fairly significant investment here in the near future in this particular case our lease agreement says that the tenant is responsible for 100 of the routine maintenance and they will come back to us if they're a major significant and we will probably talk about how we will invest mutually in that building moving forward similarly with a license agreement with land paths over at bear neighborhood park and garden they have a license to operate and maintain the gardens out there as well as the barn any capital improvement there needs the approval of city staff before they're able to proceed because we want to make sure that it's done appropriately into our standards and specifications and then lastly on this list is benet valley golf course and the restaurant and so there are two proprietors out there there's one that manages the golf course itself and there's one that manages the legends the restaurant in both cases the city is responsible for maintaining the building the exterior of the building and major building components and the operators are responsible for maintaining the interior of the building and to date that has that has seemingly gone fairly smooth as both buildings are actually in fairly new condition and in good shape the golf course itself everything outside of the buildings the the proprietor of the golf course is responsible for 100 of that activity so last june council provided direction to staff to look at the demolition of a series of buildings this is specifically resulting from the facility condition assessment and what it determined was that 25 structures would be set up to be removed from our from our infrastructure and all of those facilities are in failing or in failed condition currently and so we've made a decision to move forward with that all of these will be coming and addressed this summer and a contract is forthcoming to council for approval we've also been given the approval during that same session to look at having nine buildings on the divestment list relating to the public-private partnership program so recently we've had a lot of discussion about the p3 back in january director guin and myself provided some information to you about what a public-private partnership looked like and how that impacted the current state of our facilities what we identified was there were nine buildings that we were specifically interested in incorporating into that process and part of the rationale for in particular the city hall complex and wanting to move on from that is that the priority one the priority one items for these buildings were significant in the 8.3 million dollar range but we also had ada improvements and seismic improvements that were required the ada evaluation was done internally with staff following our our transition plan development we we've evaluated about 10 million dollars of investment needs on this particular property as well as the three properties across the street and we identified the need for seismic improvements on this building i've got a placeholder in here at 10 million dollars based on based on the nature of the type of seismic concerns that were raised in the evaluation and a detailed report is forthcoming as that contractor is just about to come on board so when we look at removing these structures from our or what the value of these structures are based on a facility condition index we evaluate that that our annual investment should be about 1.6 million dollars a year towards these properties and we would assume that as we move on to making further evaluations with our public private partnership technical advisor that they would utilize this 1.6 million dollars a year of investment that would be transferable into a new building relating to its ongoing maintenance and then the last item relates to homeless strategy this is sam jones hall and the re-roofing of sam jones hall so we've tried to present this in as close to current information as we can which is that housing community services has presented this as a grant proposal we are still evaluating that grant proposal as director mcbride and city manager mcglenn stated earlier with that we do have about 1.6 million dollars remaining of funds from a notice of funding availability that was presented back in 2017 that or 2016 that we believe would be an optimal option assuming we don't come to final resolution on the state heap funds that could help us to restore and rebuild the sam jones hall roof in an effort to keep that facility functional and operational into the into the future in addition council has also provided the housing community services department with the authorization to begin looking at how to put an rfp together for Bennett valley senior center and the and the adjacent recreation annex for the benefit of permanent support of an affordable housing the intent is that that will happen a little later this summer that that will be prepared and out on the street so we can look at additional housing first strategies so that's the last piece of the building facility component but it is a critical piece for us right now and then just summarizing all of those things because i know i've taken an hour of your time talking about infrastructure this is sort of the roll-up of what each of those deficiencies from a funding standpoint look like with what will likely be our our primary recommendation moving forward is to invest in building facilities to to figure out how to incorporate that 3.5 million dollars annually to be able to start bring up bringing up the facilities that not only we provide to the public to utilize but that we provide as civic facilities and for the employees of the city and so that will be our recommendation moving forward of all of these will be the building facilities component that we're going to be asking you to fund it also furthers our tier one investment in the downtown and we believe that is a strong starting point to help us move forward with that investment and as chuck and I have joked about we've got to start somewhere with investment that seems to be as good a spot as any to begin putting substantial effort to bringing our facilities up to good condition okay thank you for the presentation council any questions mr soyer thank you mayor uh mr now could you clarify on slide 34 and i think i might have asked about this the last time we talked about facilities the burbank residence is that burbank that is burbank avenue is it not the burbank residence um the burbank residence is i uh yes on this slide the burbank avenue residence is uh burbank avenue in southwest portion of town perhaps that slide should be corrected yes just so the community doesn't they know that we're not going to tear down that house thank you thank you do you mean the place across the street yeah the crowd the one thank you i utilize the consultants language and i probably should have corrected that i appreciate you bet miss combs looking at the summary and considering i fully understand the interest in uh starting with our building facilities um it's a little bit like the airplane analogy where you put your mask on and then you can help your other person get their mask on but i am concerned about understanding the impact it will have on our residents if we are not doing roads and parks and the impact on our economics if we don't do the telecom digital because i think those are significant um at what point do we talk with the community about what's going to happen if we're not doing parks roads and telecommunications so so one of the things as as i mean we i don't want to make it sound like we're not doing it as you heard we have a grand opportunity or especially around telecom and digital that we're going to try to fund i believe that that this is sort of the always the starting point in a conversation where do we start while we now go and do some of the things that council the council member is referencing is this gives us a starting point to start to do some of that engagement access exercise and ask some of those questions about this would also say that again it also sets up the park and recreation conversation in that there is a resource that now we can get into council in the community about how how do we plan to invest that resource because we know that there is this annual deficit around those those facilities but we actually do know that there is a resource to start to begin application in that on that event horizon i would say rowways and bridges continues to there are some resources that are being invested there but those are some things and i think there's there is some additional questioning we're going to need to do this is the starting point of that conversation um and you know we we're trying to fit that into the sort of tier one priorities and looking at downtown specifically as it relates to this is potentially with dr funding hang on the horizon this is a multifamily investment area um the council's already made significant investment so i think um this is sort of following council's directive about how do we approach this problem and present you with opportunities opportunities that we know exist around city assets that are going to be a evolving conversation this summer as we go through it and we've already started the work on the p3 process about how we can get more people living downtown how we can achieve those densities and present multifamily solutions and the corresponding infrastructure and i know that's one of the thing that that the um that is a topic for the renewal enterprise district is and we're closely following what's going on in sacramento is potentially an eif t which would support some of those other questions about especially in the downtown area about roadways and bridges but we have a long way to go and i think this is going to be a corresponding uh a conversation for the council to have about what do you want to do is there a desire to maybe look at these items and a question of the community that is about entire infrastructure investment as we go into the next two to four years and building a strategy around now that we know where the deficit is what are we going to do to address this to give this the give you the community you want to moving forward yeah my my thank you and my concern it has to do with the quality of life of the existing residents here because while they may not select parks as their top funding item i've seen over and over again when we pull them uh parks isn't listed at the top of the list but when you have a conversation with someone the park they use they love to death they they care deeply and they want it maintained um and roadways are very similar you know we get a lot of i personally i assume the others get a lot of comments about road quality quite often it is not city roads we discover but we still get comments about road quality um so i am i'm really interested in how we move forward these two quality of life issues for our residents i think they're very important also for attracting new businesses if we don't have that good quality of life to offer them um also i'm really aware when again when i was campaigning in 2012 i happened to talk with someone from 101 manufacturing and i asked him what his biggest concern was for our community he answered roads because we have such an infill it's such a in a a primary economic generator is our design of measurement instruments and if a measurement instrument goes down the road jiggling it doesn't arrive as a good measurement instrument so they were very keenly aware of the need for good roads for many of their manufacturing processes um so i just i i want to make sure we i hear you i'm excited about what we could do with downtown and with the infrastructure but i want to make sure that we are emphasizing quality of life for our residents too any other questions from council no thank you thank you very much so one more question thank you uh this uh you have a santa rosa's list is getting a great c on your slides i'm wondering if there was insufficient information from the united states or the state of california yeah i'm not sure that they actually evaluate those particulars because facilities can be calculated or it can be determined in so many different ways so that's why that's why i haven't seen anything from the state i haven't seen anything from the federal government you know we haven't necessarily seen anything from comparable cities at this point either so we're just looking at internally at our own and then gauging how we compare versus you know our maintenance aspect uh you know we heard that we should be setting aside three percent of our of our total value annually in an effort to do ongoing maintenance and repairs um you know we we gauge how many employees that we should have to be able to take care of the facilities once we've got the facility in good condition so those are the things that we've utilized instead to try to um to determine how we're doing by comparison to others thank you so that that concludes today's part of the presentation tomorrow we'll be focused on the organization we'll begin with realignment in that conversation and we'll take and we'll start to work through the budget and the very specific departmental asks so that'll be tomorrow so that will be from the first slide presentation starting with slide 28 just we're all in the same that is correct okay so we will be recessing this study session to be reconvened at nine o'clock tomorrow morning this chamber and we'll be taking a break until four o'clock for the start of our city council regular session thank you okay we'll open the may 21st city council regular session meeting uh madam deputy city clerk announce her the roll call please let the record show that all council members are present thank you very much uh madam city attorney uh report on the closed sessions yes mr mayor um the council met in closed session on items 2.1 well second listed 2.1 we have two listed as 2.1 and 2.2 so we did meet and discussed all three items that are on the agenda and on each of the items uh council did give direction to staff great thank you mr city manager who would you like to report on the study session only that it will continue tomorrow morning at 9 a.m. 9 a.m. thank you very much okay we've got a couple of proclamations councilmember combs you have the first one 6.1 national public works week oh this is a great one uh national public works week can i have jason nut thomas beckman christin lopez and john medibulus did you want to introduce who they are yeah if i can so tj beckman is with our with our public works side uh john medibulus is with is a utility service worker in in santa rosa water and christin lopez is a groundskeeper with our recon parks department thank you wonderful thank you for being here whereas on may 19th through 25th 2019 marks the 59th annual national public works week and whereas public works services are an essential part of our citizens everyday lives and whereas public works professionals build and maintain infrastructure and facilities that are vital of vital importance to sustainable and resilient communities as well as to public health high quality of life and to the well-being of the people of santa rosa and whereas these facilities and services could not be provided without the dedicated efforts of the public work professionals engineers managers and administrators all of whom serve as first responders who are responsible for rebuilding designing improving and protecting our transportation system streets water and sewer public buildings and other structures and facilities that are essential to serving our citizens and whereas each day public works personnel under challenging traffic circumstances to keep themselves motorcyclists bicyclists and pedestrians safe while necessary work is conducted to maintain and repair the public infrastructure and roadway system and whereas it is in the interest of citizens civic leaders and children in santa rosa to gain knowledge of and to maintain a progressive interest and understanding of the importance of public works and public works programs in our communities in our community and whereas we honor our public works professionals engineers and administrators alongside government agencies and the american public works association through activities and events to recognize the substantial contributions they make to protecting our health safety and quality of life now therefore be it resolved that tom schwedhelm mayor of the city of santa rosa on behalf of the entire city council proclaims may 19 through 25th 2019 as national public works week can can all the public works people here stand up thank you so i just want to express my appreciation of these three for coming down and being able to accept this proclamation on behalf of all public works departments there are there are many of us just because there's one department that has public works in the title doesn't mean we're the only ones that do public works that's why santa rosa water recreation and parks are here and we also have colleagues over and planning an economic development as well and so there's the public works professionals uh we're we're really here to support and you can see that so many of us are in the audience i want to take the opportunity to invite everybody to come out tomorrow evening we have a water smart expo as well as our city works expo uh out with the saturday with the wednesday night market and we're going to have a great time you'll get a chance to see some of the great works that we do you've got to climb aboard some of our equipment and see our employees in action as to what they do a