The current city council has continued prior councils' practice of not providing written summary minutes of council discussion, but only "action minutes" which state the outcomes. Encinitas Undercover will provide a forum for observers to record what occurs at each council meeting.
Please use the comments to record your observations.
On tonight's agenda: more budget and planning stuff, including the impact of Pacific View. Pacific View's debt service, without even building anything on it to make it usable, will be more than a half million dollars per year, even as the city plans to continue underfunding road maintenance and pension liabilities by a few million dollars per year. And they've zeroed out all budget allocation to capital improvement projects for the next five years.
Hey, here's an idea: how about a temporary hiring freeze until somebody figures out where all this money is supposed to come from?
A hiring freeze is absolutely necessary at this point.
ReplyDeleteThe new debt payment would be $733,643 per year.
ReplyDeletebut Barth Shaffer Kranz Gaspar and Muir could afford $5,000 to file an injunction to compell EUSD to follow the Naylor act - Barth should be ashamed of herself.
ReplyDeleteWill GASbag want to look at the BIG PICTURE tonight? Such a phony.
ReplyDeleteIs the big picture found in the Macy's makeup mirror?
Deletenew debt payment of $700K a year ! insane! we are now running a deficit- but the papers are too chicken and corrupt to report on it!
ReplyDeleteArchitect to get $282,000 for drawing a lifeguard tower!
ReplyDeleteStructure it like Vons - they'll feel at home.
DeleteIf it's the same here as in other cities, fire crews buy and cook their own meals while on duty. Since shifts are for 24 hours, each shift is responsible for their own food. So when they need to buy food, they take a fire truck and the whole truck crew. After all, they are on duty and will respond from their current location. Since I'm not a fire person and don't know Encinitas procedures in detail, any Encinitas fire person can correct me.
DeleteHowever, 9:56 PM, maybe you'd rather they sent just one person to Vons. That way, if your house catches fire, they can wait until the person returns before responding. Sure it will impact response time but at least you won't be upset seeing them all in Vons.
Gaspar making the point that we need another $1 million per year out of the general fund just to maintain current road quality
ReplyDeleteFixing a road doesn't get Barth 's name on a brass plaque.
DeleteEncinitas has worse road quality than Chula Vista!
ReplyDeleteBut not worse than San Diego, try Friar's Road...
ReplyDeleteHiring freeze - Muir tried that, didn't work!
ReplyDeleteDid the city hit the lottery and didn't tell us???
ReplyDeletewonky questions:
ReplyDeleteLast night, Council considered boosting the City component of the Traffic Mitigation Fee, which is a fee charged to developers per residential unit. It's put into a fund which can be used to offset the negative impacts of added traffic resulting from development. Logically, additional traffic causes streets to degrade faster, so we should be able to use that fund on pavement maintenance, right? From the Council discussion, I understand that the mitigation fee money can only be used on Arterials--our largest category of roads. However, money is fungible. If we used the new mitigation fee revenue to maintain the arterials, then we should be able to redirect funds previously used for that purpose to fund maintenance on the smaller streets, right? My main questions are, is this legal? why didn't Council connect the two issues last night? and how much money is estimated to come from the boosted mitigation fee--is it big enough to put a dent in the street maintenance funding gap?
The city has admitted that we'd need another $1 million per year out of the general fund just to maintain the current road quality for a few years. Watchdogs suggest even this figure only stabilizes the decline in the near term, and would cause a steep decline in road conditions after a few years.
DeleteThe Traffic Mitigation Fee is on the order of $3000 per unit, so unless we're talking about hundreds of new units every year, it wouldn't do much.
Anybody know what the recent annual run rate has been on housing units? If it's a hundred, that's 1/3 of the gap, which is material.
DeleteIf we have a population of 60,000 and an average household of 4, that would be 15,000 units total. Assuming no growth, if houses are scraped and rebuilt on average every 60 years, that would be 250 units/year.
Except most of the housing is way less than 60 years old -- and in the older coastal areas where they are 60 years old, the owners often retain enough of the original frame to avoid the Coastal Commission and city fees and permits for new development.
DeleteWC, I understand. But don't assume the Traffic Mitigation Fee is immaterial without actual data. We are debating in the abstract and we don't need to--the data exists.
DeleteDoes anyone out there have the actual 2013, or official 2014 estimate on housing unit construction? Is it somewhere on the City website? Where should I look?
Cities, municipalities, governments are all subject to Fund Accounting and adhere to principles set forth by the Government Accounting Standards Board. The basic premise is that cash is NOT fungible. A city will break up its activities among different funds (general, capital improvement, investment, etc.) and set budgets. When the budget is approved, the cash stays there until the budget is spent, or the year is over. It's set up this way to make sure that projects get finished, roads get fixed, pensions get paid, etc. It's really working well, isn't it!!!! OK - hahah....but as you can see, one way around this is to keep the least accountable fund, the general fund, as large as possible and starve the other funds that are more restrictive. If you do a little research, you'll find the healthiest cities have well funded funds and smaller general funds than less healthy cities.
DeletePlease keep in mind that my explanation is very simple. This is a very complex area of accounting that is, at times, more form than substance, and can be very prone to foot faults and unintended consequences. And since it is difficult to explain to the general public, any missteps are quickly categorized as malfeasance, fraud, negligence or other criminal attribute.
- The Sculpin
Thanks, Sculpin.
DeleteI don't think that's inconsistent with the point of the question: TMF is restricted to arterials, so use TMF for arterials and General Fund for other streets.
But there is a larger point being missed. What is the difference between a road repair and a road improvement? A repair would be paid for out of the general fund, but an improvement should be paid out of a capital improvements fund. In our case, has the city allowed the roads to degrade to the point that they really aren't repairs anymore, but rather much larger capital projects. In other words, if it's not a repair, it can't be paid out of the general fund. It would take a vote of Council to move funds from the General to the Cap, and do the work there. This is why the darn road condition report years ago was so important. I have no specifics here, but you can see how quickly a city can get in trouble here. By the way, it's also HOA's. Look at the typical HOA's capital reserve budget and compare it to the work that needs to be done and it will take your breath away!
Delete- The Sculpin
Just to clarify, the general fund, in a sense, refers to the source of funds. Property and sales tax being the major component of the general fund. These funds are unrestricted and the city can use them however they please. Putting general fund revenues into a CIP project does not legally restrain the city from subsequently deciding to move the funds somewhere else.
DeleteSpecial funds often have restrictions as to what they can be spent on. TransNet funds from SANDAG can only be used on transportation related items. However, the city may shift these funds around transportation projects. Other funds may be even more restrictive. The State grant money for Beacon beach was project specific and was a "use it or lose it" situation as there was a deadline attached to it as well. The city had to get State approval to shift the funds from Beacon to Moonlight.
Also, last night even the council had to make note of the difference between the amounts in an annual budget and city liquidity. Funds that have previously been allocated for a project but as yet unspent may not be obvious in the budget. That's why when the council shifted unspent project funds for Moonlight people were surprised. The funds were previously allocated but the funds were sitting in a bank.
It's important to distinguish between restricted funds and committed funds. The Contingency Fund and Budget Stabilization Fund are restricted funds and drawing on them can have repercussions on the city's financial rating. CIP Funds are committed funds and usually allocated on a yearly basis with council approval of the budget. These funds can be shifted around as needed and only have repercussions on the projects. This was done for many years on the Hall property construction fund. At one time it was $12 million, but was reduced by one third when it actually came time to spend the money to build the park. The fund had been tapped for other expenses, the biggest a $2 million shortfall in pension funding.
DeleteTransNet money is usually project specific. SANDAG approves the project before funding and expects cities to do normal street maintenance using other money. This is how the city of San Diego got into trouble.
Los Angeles is even worse. It is so bad that the city has admitted that only a Sales Tax increase will allow the city to catch up on deferred street maintenance.
YAY!
DeleteEncinitas Undercover does the unthinkable and becomes a government accounting blog! Now we're getting somewhere!!!!
- The Sculpin
1:11 PM
DeleteThe contingency fund and stabilization fund are general revenue funds that have been set aside by the council. They are restricted only by council policy which they can change. But you are correct in that reducing (or increasing) those funds effect the city's financial rating.
If you want to really get in the weeds, Sculpin, technically, the council has to reappropriate all funds each year but for ongoing CIP projects and other on going funds it's an automatic process.
Gus mentioned $34 million as the amount set aside for current capital improvement projects. Maybe yes or maybe no for that amount because -
DeleteGus has not provided as information on how much money the city actually has in total.
TransNet funds may be used for some street maintenance. It just can't replace existing city funding. The city has to demonstrate that they continue to apply the same funding level over the last few years. The formula, if you can call it that, was laid out in the ballot initiative.
DeleteEncinitas does list some TransNet funds in their pavement management CIP.
Unsaid about these fees in Encinitas is the fact that this money has traditionally gone into the General Fund and there is no money currently to 'offset' any impacts.
DeleteIts like 'free' money to the council. Like when Congress plunders the US Post Office income and then complains that they are constantly being asked for more funding by P.O. officers: then Congress complains about it; but its $ already earned bt the P.O., besides with Prop A, no homes will ever be built, except through Density Bonus, so attempting to squeeze people you find undesirable will not work. Nice try.
4:07 PM
DeleteWithout looking it up, I'm pretty sure that's incorrect. Any monies collected as a fee must be used for the purpose used to justify imposing a fee. Otherwise, it's considered a tax and you know what the means, there has to be vote.
4:07 PM Continued
DeleteNot sure where you got the idea that Prop A shuts down housing. For the most part, the height restriction imposed by Prop A was already used in most single family residential zoning so its impact is nil. Density bonus is attractive to developers for other reasons.
Affordable housing in lieu developer fees were used by the City to help fund MIG's failed attempt at a General Plan Update.
DeleteOpen Space and Habitat fees were "defunded," or as Gus Vina now calls it "scrubbed," to help fund the Hall Property Park Construction and the Moonlight Beach improvements.
Many other funds were completely defunded, including flooding funds, for the scrubbing that was part of funding the Encinitas Sports Park and Moonlight Beach improvements. So COMMITTED funds can be "scrubbed," which is, essentially robbing Peter to pay Paul.
Thanks for your comment, 8:26, but you are incorrect in stating:
"Any monies collected as a fee must be used for the purpose used to justify imposing a fee." Because policy can be changed, and "committed" funds are being counted as part of City reserves, because committed funds can be "scrubbed," then these funds are hidden taxes.
Standard & Poors, which is notoriously lax in giving good credit ratings to non-credit worthy entities, does NOT consider either restricted or committed funds as part of a public agency's reserves. City Manager Gus Vina, Finance Director Tim Nash, and the City of Encinitas do count committed funds as funds that can be scrubbed and funds that can be counted as part of our City reserves.
To me, that's cooking the books.
11:54 PM
DeleteCommitting funds to a project doesn't mean they're cast in stone, especially if a number of years are required to build up to the amount required. It's technically an accounting function. The council has the latitude to change their minds, either cancelling the project altogether or, in the case with the community park, deciding to redirect some of the funds which has the practical effect of delaying those projects losing money.
I heard no outcry here when Bob Bondi proposed to utilize TOT taxes to pay for PV. Bondi didn't even bother to scrub the city budget to come up with the funds as they were currently being used. He just acted like he found new money.
You make assertions that fees were improperly used as general revenue tax, yet you don't back them up. If you really believe the city has utilized a fee improperly, take it to a lawyer to sue the city. The courts have taken a dim view on these types of mishandlings and a lawyer would be able to tell you if you have a good case. But my suspicion is you won't, as a court case requires more than just assertions. I'm sure you'll plead the costs involved.
Standard & Poors?? Really?
For all the effort you put in here and at council, why don't you run? I wouldn't be surprised if being on the council requires less time then what you now spend. However, being on the council means that you would be on the hook for your statements and decisions. That would mean you would be in everyone's cross-hairs here on this blog. I just don't see you stepping up to the plate.
One other thing. While no one mentioned trade-offs, don't think that the projected annual bond payment for PV (mostly) and the Moonlight lifeguard tower didn't have an impact on other projects. The council was sounding a lot more aggressive during their February strategic planning session on roads to spend the money to bring the pavement condition index up for all local streets. While they did raise the annual amount, it was much less than the number kicked around in February. That's a trade-off and I'm sure financing $10M for PV played a role.
DeleteThank you Sculpin you are the only voice of reason now on this blog.
ReplyDeleteDon't wait for the money in the road fund to go up anytime soon. Meanwhile, Carlsbad is repaving La Costa and 101 as we speak. Then again, they have huge companies in C-bad as part of their tax base and so much traffic on Palomar, it backs up the right lane of the freeway. Hey Carlsbad, get with Caltrans and add another exit lane....
ReplyDeleteAgain, lonely ducks GASbag and Muir. They may as well not even show up for the meetings. Muir doesn't understand finances PERIOD. He only understands how much he gets per month. GASbag sounds financially capable, but her words and actions differ. It's easy to run a small therapy organization where you don't have hundreds of staff and your husband is a senior partner. I bet she does most of her work at home (nice gig). I suggest she stay home and play "mommy" and stay away from politics which is way over her head. She talks big talk, but we need action. Words from her are nothing more than words.
ReplyDeleteGuess you are trying to fool folks who don't have time to watch these meetings: or, you are one of those Frencies who thinks Jerry Lewis is Paul Newman. Or, your just effed up in the head 3:04!
Delete"It's easy to run a small therapy organization where you don't have hundreds of staff and your husband is a senior partner."
Jealousy and envy are aflame in your posts: and the rest of us pity you. Get help. So far, you haven't really been successful at posting here: much less running a business or a home/household.
Living in an unmobile mobile home up on bricks in Grandma's driveway, are we? How much longer before your Mom's unemployment checks run out?
Or living in your car? Which is it exactly?
isn't it kranz who is living on his mother in laws land? just saying
DeleteKristin, the cfo with the journalism degree who married the boss
Oh 4:15 you are trying to bob for apples. Sorry, bubbles, but it isn't working for you.
Delete5:29 Love your post. Right on with both comments.
Gaspar and Muir were the only sane and fiscally responsible council members last night when they voted no on Vina's recommendations. Let's see how they vote on the final budget package on June 11.
ReplyDelete3:29 The had no choice but to vote no on Scenario 5 because that includes PV. But, you did hear GASbag say however it turns out they will all be working together. Hmmmm....politics at play.
DeleteA couple more observations about the meeting last night:
ReplyDeleteFirst, notice that in the budget planning, the exact revenues are not known. Much depends on the real estate market and the economy, and no one knows for sure what either will do in the two-year budget frame. But Gus is comfortable inserting best estimates--fine. However, when it comes to costs that are not known with precision, he is not comfortable inserting any number for those. He balked when Council asked why his five scenarios did not include the building maintenance or pavement maintenance costs. Further, there is no placeholder or estimate of project costs for Pacific View.(buildings, landscaping, etc.). If you are going to estimate one side of the balance sheet, you should estimate the other--perhaps not in the formally adopted budget, but at least as an exercise with ranges to see if there could be trouble. Your budget will always look good if you are willing to give full credit for assumptions on the revenue side, while insisting that spend-side line items are assumed to be zero until the precise cost is known. I've been directly involved in business planning for a Fortune 50 company, and this would never pass.
Kristen was not correct about her insistence that annual debt load was less important than total debt. She said a bank loan officer is more concerned with your total debt, and she's flat wrong. Municipal bond rating is a little different, but bank loan approvals look very closely at two standard calculations: LtV and DtI. LtV is Loan to Value ratio--the ratio between the loan amount and the actual assessed value of the asset securing the loan. The bank wants the buyer to own 20% equity. DtI is Debt to Income. Not total debt, but debt service as a share of your income. You should not have more than 20-30% of your income each month going to debt service in total (student loans, auto, credit card, mortgage). If the requested loan would put you over the DtI limits, the bank is less likely to approve the loan. DtI is the way Gus was analyzing our debt burden, with a Council policy not to exceed 20% and a practice of not exceeding 10%. These are good conservative limits, but I would like to see the analysis using range estimates for spending items that Gus excluded from the scenarios.
We all know that the spending items mentioned above will not be zero. It makes little sense to pass a budget where they are effectively assumed to be zero.
Sounds like Kristin does not know her stuff. You would think the CFO would have a better handle on the ins and outs of a balance sheet. Thanks for the analysis for those of who couldn't attend. Sounds like you (the poster) should be handling the balance sheet, not Gus.
ReplyDeletePersonally, I don't think any of our 5 council members are as well versed as we need them to be on financial matters, or in lieu of that, asking tough questions...
These council persons are clueless about running a municipality, which is not unexpected considering their backgrounds. They rubber stamp Vina's decisions because they don't want to look "dumb" or uninformed. Empty rhetoric fills the air, but they all are being fed directives by some special interest. I've seen this at corporate board meetings, where the level of business experience is mixed - discuss things in as obscure a manner as possible and watch the board members' heads fry. If you are able to silence them, lest they think that they look "stupid", all the better. These people are deer in the headlights.
ReplyDeleteI agree. We have ourselves a bunch of pansies who are afraid to ask questions and educate themselves. Pathetic. They should all step down.
ReplyDelete