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HomeMy WebLinkAbout2017 02-28 CC HA ADJ MINBook 99 / Page 37 02-28-2017 MINUTES OF THE ADJOURNED REGULAR MEETING OF THE CITY COUNCIL AND COMMUNITY DEVELOPMENT COMMISSION — HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY FISCAL YEAR 2018 BUDGET WORKSHOP February 28, 2017 The Adjourned Regular Meeting of the City Council and Community Development Commission — Housing Authority of the City of National City was called to order at 4:05 p.m. by Mayor / Chairman Ron Morrison. ROLL CALL Council / Board members present: Cano (4:09 pm), Mendivil, Morrison, Rios, Sotelo-Solis (4:09 pm). Administrative Officials present: Dalla, Deese, Eiser, Manganiello, Parra, Raulston, Roberts, Rodriguez, Stevenson, Vergara, Williams: Ybarra. PLEDGE OF ALLEGIANCE TO THE FLAG INTRODUCTION City Manager Leslie Deese gave an overview of the Workshop which is intended to focus on major financial and capital issues. Financial data will address long-term pension liability and other postemployment benefits (OPEB). Engineering data will support capital needs assessment. Funding options will be considered for both. City Manager Deese said that no formal recommendation is needed from the City Council at this point in the budget process. Next steps will be to present the proposed Preliminary Budget in April with recommendations. PRESENTATIONS BUDGET FY 2017-2018 (206-1-33) Staff Presentations were made on the below listed topics: • Proposed 2017-2022 Strategic Plan Staff Presenter: Deputy City Manager, Brad Raulston • Long -Term Pension Liability Staff Presenter: Finance Director,Mark Roberts • CALPERS Actuarials and Associated Issues Staff Presenter: Mary Beth Redding, VP Bartel Associates • Capital Needs Assessment Staff Presenter: City Engineer/Public Works Director, Steve Manganiello • Funding Sources and Options Staff Presenter: Financial Advisor Craig Hill, NHS Associates NOTE: All presentation materials are attached as Exhibit "A". Book 99 / Page 38 02-28-2017 PUBLIC COMMENT Roberto Garcia, National City, repeated the concerns he expressed at the last workshop regarding the pension issue, addressing the deficit by increasing revenues and bringing in more businesses and including funding for training for city boards and commissions. ADJOURNMENT Motion by Mendivil, seconded by Sotelo-Solis to adjourn the meeting to the next Regular Meeting of the City Council and Community Development Commission — Housing Authority of the City of National City to be held Tuesday, March 7, 2017 at 6:00 p.m. at the Council Chambers, National City, California. Carried by unanimous vote. The meeting closed at 6:12 p.m. The foregoing minutes were approved at the Regular Meeting of December 5, 2017. Mayor CALIFORNIA NKfl,OJNAL Cfl'y INCORPORATED City Council Budget Workshop Long-term Pension Liability and OPEB Capital improvement Program Needs Assessment & Funding Options February 28, 2017 Introduction Workshop to focus on major financial and capital issues. Financial data will address long-term pension liability and other postemployment benefits (OPEB). Engineering data will support capital needs assessment. Funding options will be considered for both. No formal recommendation at this point in the budget process. Next step will be to present proposed preliminary budget in April with recommendations. Presentation Team Finance Department and Actuary (Bartel Associates) Public Works/Engineering and Financial Advisor (NHAAdvisors) CALIFORNIA NATIONAL Cflm azia CALIFORNIA NKfl,OJNAL Cfl'y AVY INCORPORATED Proposed 2017-2022 Strategic Plan Objective #1 - Provide Quality Services a) Practice the five core values (Commitment, Customer Service, Courtesy, Communication, and Collaboration) with our diverse customer base. b) Align workforce with City's objectives and provide training and support necessary to fully develop employees, boards, commissions, and City Council. c) Expand public access to City services and information, by maintaining our website and making digital records accessible to the public. d) Pursue public safety goals and objectives and enhance disaster preparedness (Police, Fire, Emergency Medical Services, and Homeland Security). e) Analyze internal processes for efficiency and implement technology solutions where feasible. Continue efforts to automate and streamline work processes. CALIFORNIA NA ZONAL mit `� i'f f1RPUti AS1�• '�/ Objective #2 -Achieve Fiscal Sustainability a) Prepare effective budget, close deficit, accurately forecast funding sources, manage investments wisely, provide consistent financial reports, maintain clean audits, resolve findings/deficiencies in a timely manner, and update finance and budget policies. b) Continue labor/management partnerships with an emphasis on strategic deployment and total compensation issues. Address long-term pension liability and Other Postemployment Benefits (OPEB). c) Establish economic development programs to retain and attract businesses, stimulate new investments, and increase revenues. Evaluate and update fee schedules to promote development and recover costs. d) Continue to implement plans to fund replacement reserves and to finance the acquisition, replacement, and maintenance of the City's fleet, facilities, and other assets. e) Build cooperative and sustainable partnerships with community organizations, schools, and other public agencies in the efficient and cost effective delivery of services. �Vf\TIONAIACITy 1J'f Objective #3 - Improve Quality of Life a) Enhance crime prevention and emergency service through community outreach, procedural justice, critical incident response, City/regional partnerships, and employee development. b) Continue to pursue green initiatives and build a sustainable city through implementing the climate action plan and energy roadmap. c) Help organize community events and support social gatherings that benefit the total community. d) Implement updated sign ordinance to improve community character and draw attention to important gateways, corridors and intersections with improved signage and wayfinding. Build "Together We Can" campaign to make National City cleaner, safer, and healthier. e) Support the Balanced Plan and work with the San Diego Unified Port District and its tenants to fund public improvements in the Marina District. +6AC,Kif p NA.TIONA MCORP OAATFD Objective #4 - Enhance Housing and Community Assets a) Continue providing housing opportunities at all income levels and develop programs to improve existing conditions. Adopt a comprehensive long term strategy to address homelessness. b) Complete Paradise Creek Apartments and Educational Park. Continue to plan and build Transit - Oriented Developments/Districts. c) Maintain and improve City's infrastructure and find alternative funding to construct public facilities, park improvements, street maintenance, and other capital needs. Complete comprehensive needs assessment and establish priorities through funding options. d) Preserve and promote cultural assets and historic resources, such as Granger Music Hall, Kimball House, Stein Farm, and the Depot. Formalize a public art program that provides funding for art and culture through a "percent for art" program. e) Administer real property assets and property management plans to achieve the City's long term goals. NAL City .o.Po..z.o Objective #5 - Promote a Healthy Community a) Expand opportunities for walking and biking through the development of Community Corridors and Safe Routes to Schools consistent with the National City General Plan and Bicycle Master Plan. b) Continue to provide affordable City programs, activities and services that are accessible for all users, including individuals with disabilities (Americans with Disabilities Act). c) Enhance neighborhood services programs such as graffiti abatement, parking enforcement, and code enforcement and increase efficiency with new technology. Adopt a Parking Management Plan as part of an update to the Downtown Specific Plan. d) Implement Neighborhood Action Plans and continue amortization efforts by working with residents and businesses. e) Advance National City wellness programs for youth, families, seniors and City employees that encourage a healthy lifestyle and develop a workplace safety program. CALIFORNIA - NATIONAL CITy Objectives for Workshop Discussion 2a) Prepare effective budget, close deficit, accurately forecast funding sources, manage Investments wisely, provide consistent financial reports, maintain clean audits, resolve findings/deficiencies in a timely manner, and update finance and budget policies. 2b) Continue labor/management partnerships with an emphasis on strategic deployment and total compensation issues. Address long-term pension liability and OPEB. 4c) Maintain and improve City's infrastructure and find alternative funding to construct public facilities, park improvements, street maintenance, and other capital needs. Complete comprehensive facility needs assessment and establish priorities through funding options. 4d) Preserve and promote cultural assets and historic resources, such as Granger Music Hall, Kimball House, Stein Farm, and the Depot. Formalize a public art program that provides funding for art and culture through a "percent for art" program. 4e) Administer real property assets and property management plans to achieve the City's long term goals. - CALIFORNIA NATIONAL Clay !IVY Workshop Outline Finance Department and Actuary (Bartel Associates) a) Prepare effective budget, close deficit, and accurately forecast funding sources. b) Address long-term pension liability and OPEB. Public Works/Engineering and Financial Advisor (NHAAdvisors) c) Maintain and improve City's infrastructure and find alternative funding to construct public facilities, park improvements, street maintenance, and other capital needs. Complete comprehensive facility needs assessment and establish priorities through funding options. d) Preserve and promote cultural assets and historic resources, such as Granger Music Hall, Kimball House, Stein Farm, and the Depot. e) Administer real property assets and property management plans to achieve the City's long term goals. - CALIFORNIA NATIONAL Cflm :t k I �- CALIFORNIA, ;! NATIONAL anV INCORPORAT J I PrJ;JIJ), r J yin rY ! r;1ff-]�� I� rJTJ r Community Development Operations Public Safety Asset management & disposition Needs assessment Pension funding Fire/emergency medical deployment strategies Recreational program delivery Economic development Training & development Code conformance Homeless outreach Housing opportunities Long-range financial forecasting Training Parking management Historic resources preservation Technology infrastructure Technology Volunteerism nfrastructure L) E City i\Viji': .rJ • Each year, the City makes two types of payments to PERS • Normal Cost (NC) = Annual cost for current employees • Unfunded Accrued Liability (UAL): Actuarial Liability MINUS Actuarial Value of Assets • "How much we currently have vs. how much we should have" • This shortfall is not repaid all at once • Similar to a mortgage or piece of debt, the UAL is amortized over a longer period of time (typically 20 to 30 years) with the City paying down a portion each year (principal and interest) • Over the last decade, UAL has grown from $20M to over $80M Cityis) (JAL Gro\ivri $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 UAL History Safety Plan UAL Miscellaneous Plan UAL I • Over the last decade, annual pension costs have grown from about $4M to nearly $9M • Asa % of payroll, costs have grown from 22% to 38% 5 Jfflff ary Jr P?.f13JJf1 r JS r.") (2, J 0/ tfi D L1 11 2. J! -) $9,000,000 $8,000,000 $7,000,000 $6,000,000 `" $5,000,000 N $4,000,000 cc a $3,000,000 $2,000,000 $1,000, 000 $o 22% PERS Payment Trends (FY 2007 through FY 2018) 45% 40% 35% 0 30% a co Ta 10% 25% 20% 15% 5% o%o o°� o°� o°o oti° otiti otiti oti3 otiooti� ktio SI' � \ B o\� \� ti°°�`� ti°�`� ti°�o\� ti� ti°\� ti\� tit\� �o1h°moo tio1A =Normal Cost Payments Payments on UAL Total Payments as % of Payroll Note: Normal Costs shown only represent Employer portion (not Employee) vv i ri rri r cif \JV T;,1 • Pension costs will continue to increase over the next 20 years • City staff, Independent Actuary and Financial Advisor will be refining pension cost estimates and evaluating potential options to reduce long-term costs • Example: Section 115 Trust (alternative investment vehicle solely dedicated to pension/OPEB expenses) • City and team will return to Council in Spring 2017 to discuss pension matters in more detail • Planning for, and evaluating options to lower/manage, these rising costs are critical for enhancing fiscal sustainability of City and developing strategies to fund critical projects �-- CALI ORN14 ONAL `- ,ncOIct•ox ,rr-u CITY OF NATIONAL CITY B/'1 RT E I MISCELLAIVEOIIS AND SAFETY PLANS 1SS Es, LLI; alla Ca1PERS Actuarial Issues — 6/30/14 Valuation Preliminary Results Presented by Mary Beth Redding, Vice President Prepared by Bianca Lin, Assistant Vice President Kevin Yang, Actuarial Analyst Bartel Associates, LLC DEFINITIONS • Present Value • Value now of an amount to be paid in the future • Amount to be invested now that will grow to the needed amount • Higher interest rate/investment earnings means lower present value. • PVB - Present Value of all Projected Benefits: • Discounted value (at valuation date - 6/30/14), of all future expected benefit payments based on various (actuarial) assumptions • Actuarial Liability: • Discounted value (at valuation date) of benefits earned through valuation date [value of past service benefit] • Portion of PVB "earned" at measurement • Current Normal Cost: • Portion of PVB allocated to (or "earned" during) current year • Value of employee and employer current service benefit February 28, 2017 Actuarial Liability Present Value of Benefits June 30, 2014 Future Normal Costs Current Normal Cost wl-r1F- Cirr 17 DEFINITIONS Actuarial Liabilit} Present Value of Benefits June 30, 2014 1Unfunde Liability) Unfunded PVB • Target- Have money in the bank to cover Actuarial Liability (past service) • Unfunded Liability - Money short of target at valuation date • Excess Assets / Surplus: • Money over and above target at that point in time. • Doesn't mean you're done contributing. February 28, 2017 18 H ow W I . GOT HERE • Investment Losses • Enhanced Benefits • Ca1PERS Contribution Police r • Demographics rnn Febniary 28, 2017 DI NATIONAL CITY How WE GOT HERE — INVESTMENT RETURN 30.00% 22.50% 15.00% 7.50% -7.50% -22.50% -30.00% I-f-MVA ■ 1 1994 2,0% 1995 16.394 1996 1997 15.3%20.1 Sii 19.54�12.59S 1998 1999 2000 2001 10.594- 7.2% 200212003 3.7% 2004 16.6% 2005 2006 2007 2008 12.3' 41 1. 18.894.5.1 94 2009 -24.0 2010 2011 133S'a 1.73 Above assumes contributions, payments, etc. received evenly throughout year. n February 28, 2017 2012 0.1% 2013 13.294 2014 18.494 2015 2.4% 2016 0.6% 20 HOW WE GOT HERE — ENHANCED BENEFITS • At Ca1PERS, Enhanced Benefits implemented using all (future & prior) service • Typically not negotiated with cost sharing ■ National City ■ Tier 1 ■ Tier 2 ■ PEPRA • Miscellaneous 3%@60 2%@60 2%@62 • Safety 3%@50 3%@55 2.7%@57 Febniary 28, 2017 —e1111.aMK— NATIONAL CfTy 3 ,31 HOW WE GOT HERE —OLD CONTRIBUTION POLICY • Effective with 2003 valuations: • Slow (15 year) recognition of investment losses into funded status • Rolling 30 year amortization of all (primarily investment) losses • Designed to: • First smooth rates and • Second pay off UAL • Mitigated contribution volatility February 28, 2017 N.ATI 4TV 22 How WE GOT HERE -DEMOGRAPHICS • Around the State • Large retiree liability compared to actives • Declining active population • City percentage of liability belonging to retirees: • Miscellaneous 55% • Safety 64% • Mortality improvement (7) NATION L CITY February 28, 2017 CAPERS CHANGES • Contribution policy changes: • No asset smoothing • 5-year ramp up for all amortization payments • First impact 15/16 rates; full impact 19/20 • Assumption changes: • Anticipate future mortality improvement • First impact 16/17 rates; full impact 20/21 • Risk Mitigation Strategy • Move to more conservative investments over time • Only when investment return is better than expected • Lower discount rate in concert • Essentially use z50% of investment gains to pay for cost increases • Likely get to drop discount rate 1 % over 20 years • Study does not include 0.5% near -term discount rate drop • Phase -in from 18/19 to 24/25 rates. n February 28, 2017 ON NATIONAL CITY SUMMARY OF DEMOGRAPHIC INFORMATION - MISCELLANEOUS J 1994 2004 2013 2014 Actives ■ Counts 142 183 179 177 ■ Average • Age 41 43 48 47 • City Service 9 9 12 13 • PERSable Wages $36,300 S49.200 $53,400 $53,400 ■ Total PERSable Wages (millions) 5.6 9.9 10.5 10.3 Receiving Payments ■ Counts • Service 122 199 203 • Disablity 10 12 12 • Beneficiaries 34 42 42 • Total 141 167 253 257 • Average Annual City Provided Benefit' • Service $12,100 $20,300 $21,400 • Disability 6,400 6,300 6,400 • Service Retirements in last 5 years 21,800 24,300 28,700 Average City provided pensions are based on City service & City benefit formula, and are not representative of benefits for long service employees. I�. February 28, 2017 NATAIK-N-crirlf 25 PLAN FUNDED STATUS - MISCELLANEOUS Present Value of Benefits June 30. 21113 %ctuaci ld liability June 30, 2013 $ 34,800 000 52,500,000 12,000,000 99,300,000 73,900,000 (25,400.000) February 28, 2017 1 nfunded P�'R .tctuaria Liability' Active AAL Retiree AAL Inactive AAL Total AAL Market :Asset Value (Unfunded Liability) Present Value of Benefits June 30, 2014 \ Unfunded PVB (t'nf I.iuhilNv) June 30, 2014 $ 36,000,000 5 8, 900, 000 13,000,000 107,900.000 84, 600, 000 (23,300,000) 26 FUNDED STATUS (MILLIONS) - MISCELLANEOUS 120 22 •AfokctAsset Value 20 21 26 31 37 .11 4 } au 30 37 42 47 Sy 73 69 52 Si 7(1 67 74 S5 SS Anuuuu_v,t,itny 22 n February 28, 2017 :7 47 51 ao 71 76 s t a.. _ 94 99 I0s 'is 6/30/15 & 6/30/16 funded status estimated a.Ivaaina— NATIONAL CITY law 27 CONTRIBUTION RATES - MISCELLANEOtUS • Total Normal Cost • Employee Normal Cost • Employer Normal Cost • Amortization Bases • Total Employer Contribution Rate • Amortization Period • What Happened from 6/30/13 to 6/30/14: • 2015/ 16 Rate • Asset Method Change (2nd Year) • Assumption Change (1st Year) • (Gains)/Losses • 2016/17 Rate February 28, 2017 6/30/13 6/30/14 2015/2016 2016/2017 19.0% 19.2% 7.9% 7.8% 11.1% 11.4% 12.1% 14.4% 23.1% 25.8% Multiple Multiple 23.1% 1.7% 1.9% (0.9%) 25.8% _ e, 0 ..4 NATIONAAL CITy CONTRIBUTION PROJECTIONS - MISCELLANEOUS • Market Value Investment Return: • June30,2014 18.4% • June 30, 2015 2.4% • June 30, 2016 0.61%2 • Future returns based on stochastic analysis using 1,000 trials Single Year Returns at 25t" Percentile 50th Percentile 75t1i Percentile • 7.5% Investment Mix 0.6% 7.5% 15.3% • 6.5% Investment Mix 1.3% 6.5% 11.9% • No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements • Excludes Employer Paid Member Contributions (EPMC) • Tier 2 2@60 effective 3/22/2011 • New hire assumptions: • Assumes 50% of 2013 new hires will be Classic Members (2%@60) and 50% will be New Members with PEPRA benefits. • Assumes Classic Members will decrease from 50% to 0% of new hires over 20 years. 2 June 30, 2016 retum based on CaIPERS actual retum 0.61%. February 28, 2017 .naO.y - NATIONAL CITY► CONTRIBUTION PROJECTIONS - MISCELLANEOUS 50% 45% 40%• 35% 25% 20% 15% 10% 5% 0% O. ii4,°1° 160° iqa°1° �11°;. N•1• �E.h'1° 3b*°'° �' gp`9°�° • '�• ♦ ♦ ♦ ♦ • 75th Percentile ♦ 'b ti♦ -50th Percentile 1) tit '' 'b�' 25th Percentile 'btt: '1� February 28, 2017 30 CONTRIBUTION PROJECTIONS - MISCELLANEOUS 175% 150% 125% 100% 75% 50% 25% Funded Status With Risk Mitigation Ase ,40 ler ■ ■ ■ ■ ■ II iit^�;�1♦>*^♦1O,�y>'f' �b�.A5 .‘a b 0% • r • r T r • r rT r r r - • r • r r i r 44������b \'�4\�4%\�4 41'�44' �4ti`°\�b°\tip°K ��;►°�,eo �°��,�4^i�°�''� � �^`)° o���^�°0 t.� b. 0' 75th Percentile 50th Percentile 25th Percentile 1 February 28, 2017 31 CONTRIBUTION PROJECTIONS - MISCELLANEOUS • Estimated Impact of Discount Rate Change to 7.0% • Increase in ultimate projected rates for 2024/25 • Miscellaneous plans • Normal Cost 2.0% • UAL 5.5 • Total 7.5% • Standard Deviation 1 % February 28, 2017 tatiOrr 32 SUMMARY OF DEMOGRAPHIC INFORMATION — SAFETY 1994 2004 Actives • Counts • Average • Age • City Service • PERSable Wages • Total PERSable Wages (millions) Receiving Payments • Counts • Service • Disablity • Beneficiaries • Total • Average Annual City Provided Benefit' • Service • Disability • Service Retirements in last 5 years 104 38 11 $47,200 5.4 99 2013 2014 126 39 11 $68,500 9.5 44 77 16 138 $25,400 20,600 30,000 117 41 12 $90,600 11.6 122 41 12 $89,400 11.9 104 85 19 208 $41,100 32,800 48,700 104 85 20 209 $42,100 33,300 52,200 Average City provided pensions are based on City service & City benefit formula, and are not representative of benefits for long service employees. February 28, 2017 33 PLAN FUNDED STATUS — SAFETY n Actuarial I.laI Iill Present Value of Benefits June 30.2013 Unfunded PVB (Unfunded I.iahilih ) June 30, 2013 43,900,000 100,400,000 7,100,000 151.400,000 101,500,000 February 28, 2017 (49,900,000) Actuarial Liability Active AAL Retiree AAL Inactive AAL Total :tAL Market Asset Value (Unfunded Liability) Present Value of Benefits June 30. 2014 (Unfunded Liability) June 30, 2014 $ 50,300,000 104,900,000 8,700,000 163,900.000 116,400.000 (47,500,000) t nrun.le41 P\'R - NATIONAL CITY FUNDED STATUS (MILLIONS) — SAFETY 180 -4' 160 f 140 1 120 d 100 1 80 �" 60 6/30/15 & 6/30/16 funded status estimated February 28, 2017 NATIMIAL • ilMM01111M - CITT .1v.Irw1 35 CONTRIBUTION RATES — SAFETY • Total Normal Cost • Employee Normal Cost • Employer Normal Cost • Amortization Bases • Total Employer Contribution Rate • Amortization Period • What Happened from 6/30/13 to 6/30/14: • 2015/ 16 Rate • Asset Method Change (2"d year) • Assumption Change (1st year) • (Gain)/Losses • 2016/l 7 Rate February 28, 2017 6/30/13 6/30/14 2015/2016 2016/2017 29.0% 29.4% 9.0% 9.1% 20.0% 20.3% 23.0% 24.8% 43.0% 45.1% Multiple Multiple 43.0% l.7% 2.3% (1.9%) 45.1% e 400,1nd - NATIONAL CITY► CONTRIBUTION PROJECTIONS — SAFETY • Market Value Investment Return: • June30,2014 18.4% • June 30, 2015 2.4% • June 30, 2015 0.61 %4 • Future returns based on stochastic analysis using 1,000 trials Single Year Returns at 25t" Percentile 50th Percentile 75t1i Percentile • 7.5% Investment Mix 0.6% 7.5% 15.3% • 6.5% Investment Mix 1.3% 6.5% 11.9% • No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements • Excludes Employer Paid Member Contributions (EPMC) • Tier 2 3%@55 effective 3/ 18/ 10 for Police and 3/22/12 for Fire • New hire assumptions: • Assumes 50% of 2013 new hires will be Classic Members (3%@55) and 50% will be New Members with PEPRA benefits. • Assumes Classic Members will decrease from 50% to 0% of new hires over 10 years 4 June 30, 2016 return based on Ca1PERS actual return of 0.61 %. February 28, 2017 ex.w..,, — NATIONAL CITY 3 . a,�/ COVI K 113UTION PROJECTIONS — SAFETY 80% 70% 60% 50% 40% 30% 20% 10% 0% 1,30 °1' A9 T of° 0 0116 66 °.b 611* 69 6°1° • 50'0° 4\ cei` ‘)ti ti4ti tia 1, • 75th Percentile 50th Percentile 25th Percentile February 28, 2017 38 CONTRIBUTION PROJECTIONS — SAFETY 175% 150% Funded Status With Risk Mitigation o 100°'0� y 4 - I, 1 ri3 1 .104311.41. � y ♦1. ♦♦ ♦ ^ if l 1 ■ O 50% +P ,it ey� '., •'• 0• 6' t. 25°o I 1 T i 1 . r . . i . . TT , T 1 Z Tr i e.&•€)o ,& \ ee e,4*4ti>41':' o. tibo\f‘i? 4ti1o)q �-.P,$).•01.e.\-)t. m)bo�-4v a�,�a$1 a�Pd°�aatia°dotk 75th Percentile 50th Percentile 25th Percentile February 28, 2017 39 CONTRIBUTION PROJECTIONS — SAFETY Estimated Impact of Discount Rate Change to 7.0% n • Increase in ultimate projected rates for 2024/25 • Safety plans • Normal Cost 3.5% • UAL 9.5 • Total 13.0% • Standard Deviation 2.0% February 28, 2017 40 OPEB ESTIMATES • 6/30/2014 actuarial valuation by Nyhart • Actuarial assumptions reasonable, assuming premiums separately rated for actives and early retirees • Change to Entry Age cost method will be required for GASB 75 reporting. ■ Discount Rate 4% 7% ■ AAL @ 6/30/14 $ 4,030 $ 2,848 • Assets - - ■ Unfunded AAL 4,030 2,848 • Pre -funding means some benefits will be paid by investment earnings, not employer contributions • Higher discount rate, lower present value • 4% discount rate if not funded • 7% discount rate = expected long-term return on assets if full ARC is contributed February 28, 2017 41 O P E B ESTIMATES Prefunding Estimates — Based on Roll -Forward of 6/30/14 Results (Amounts in 000's) • Discount Rate 7% ■ AAL @ 6/30/16 $ 3. 157 ■ Assets5 500 ■ Unfunded AAL 2,657 ■ 2016/17 ARC - $ • Normal Cost $ 124 • UAAL Amortization`' 378 • Total ARC 502 • Projected Payroll 20,727 ■ 2016/17ARC-% • Normal Cost 0.6% • UAAL Amortization 1.8% • Total ARC 2.4% ■ 2016/17 Pay -Go 178 ' Assumes $500,000 contribution at 6/30/16 6 Level dollar amortization, 10-year fresh start from 2016/17 n February 28, 2017 42 PEPRA CosT SNARING • Target of 50% of total normal cost for everyone • New members (PEPRA members) must pay greater of 50% of total normal cost or bargained amount if higher • Employer cannot pay any part of new member required employee contributions • Employer may impose Classic employees pay 50% of total normal cost (limited to 8% Misc./12% Safety) if not agreed through collective bargaining by 1 / 1 / 18 • Miscellaneous Plan • Employer Normal Cost • Member Normal Cost • Total Normal Cost • 50% Target (1 February 28, 2017 Classic Tier 1 3%(i-e60 FAE1 11.8% 8.0% 19.8% 9.4% Members Tier 2 2%* 60 FAE1 7.0% 7.0% 14.0% 7.0% New Members Tier 3 2%@62 FAE3 5.906% 6.750% 12.656% 6.328% .414U01),14 - NATIONAL My 43 PEPRA CosT SNARING • Safety Plan • Employer Normal Cost • Member Normal Cost • Total Normal Cost • 50% Target February 28, 2017 Classic Members Tier 1 Tier 2 3%@50 3%(a755 FAEI FAEI 20.7% 9.0% 29.7% 14.85% 18.4% 9.0% 27.4% 13.7% New Members Tier 3 2.7%@57 FAE3 12.077% 12.250% 24.327% 12.164% NATIONAL CITY PAYING DOWN THE UNFUNDED LIABILITY • Pension Obligation Bond (POB) • Interest arbitrage between expected Ca1PERS earnings and rate paid on POB • Not guaranteed • Borrow from General Fund • Pay GF back like a loan • Payments come from all funds • Request shorter amortization period of Ca1PERS • Higher short term payments • Less interest and lower long term payments • One time payments • City resolution to use portion of one time money February 28, 2017 CNUO��Y - NATIONAL CITY PAYING DOWN THE UNFUNDED LIABILITY • Internal Service Fund • Restricted investments O Likely low (0.5% - 1.0%) investment returns O Short term/high quality O Designed for preservation of principal • Assets could be used by Council for other purposes • Irrevocable Supplemental (§ 115) Pension Trust • Investments significantly less restricted • Assets could not be used by Council for other purposes • Can only be used to O Reimburse City for Ca1PERS contributions O Make payments directly to Ca1PERS n February 28, 2017 tuai*ct- rr 46 1RIZEVOCA13I.E Si PPLEMENTAL 0115) PENSION TRUST • > 40 trusts established • PARS, PFM & Keenan • Investments significantly less restricted than City investment funds • Designed for long term returns • Likely much higher (5% - 7%) investment return, depending on investments selected • GASB will almost certainly weigh in on certain accounting issues • Can Supplemental Pension Trust assets be included in Fiduciary Net Position? Based on current GASB discussions, likely "No." • If assets can be included would inclusion impact discount rate? Based on current GASB discussions, likely "Yes." n February 28, 2017 — e•ura..La — NATIONAL CITY IRREVOCABLE St PPLEIIENTAL 0115) PENSION TRUST IN Parameters: • Initial seed money? • Additional amount contributed in future years? • Target budget rate? 0 How much of Ca1PERS rates paid from Supplemental Trust funds • Year target budget rate kicks in? ❑ Before or after Ca1PERS rate exceeds budgeted rate? • Comparison of additional $ to CaIPERS vs. to Supplemental Trust • $1 million in 2018/19 • 2.5% payroll starting 2019/20 • After 30 years, 111.1% funded @ Ca1PERS vs 110.6% with Supplemental Trust (50`'' percentile) (1 February 28, 2017 —.KuoIf— rl!►T! Ctly 48 IRREVOCABLE SUPPLENIEN•l.V. (§1 15) PENSION TRUST Initial 6/30/15 Fund Balance 15000) S1ab04ratnon und - Rate o1 Return S-0% Target Rate 0.0% End of Year Contrlbutlon MOM Additional Contnbutlon • % pay Budget • CafPERS Ratc Paylaudget•CaIPER 0 12.000 10.000 8.000 6.000 4.000 2.000 0 (2.000) Miscellaneous Plan Rate Stabilization Fund Balance 16/17 17/19 1 /19 19/20 20/21 2 22 - 393 - 0.0% 0.0% 2.5% 25% 25.55 27.5% 32.9% 3555 23j24 Z 2S 25/26 25% 2.5% 2.5% 7.5% 2.5% 2.5% 7.5% 37.4% 39.35 40.6% 41. 3% 41.9% 40.25 40.5% N N N N 11 It N Su • • IementalTrust Balance fial gisfik CIS • 751h Pa cntlk 4450th Pacentlk id b"94• - b • 41' b or• b \, 0 25th Paccnlilc 45% 40% 35% 3(l% 25% 20% '0 ib ♦ ER Contribution Rate Pro)ectlons - With EE Cost Sharing ♦q �• larga - 501h Pacenide b ' February 28, 2017 49 IRREVOCABLE SUPPLEMENTAL (§115) PENSION TRUST Inlbal 6/30/16 Fund Ralancc 11$000J Stabil,tatlon tuns! - Rate of Return SAS Target Rate QO% End of Year Contribution (5000) Additional Contnbubon • S oil par Budget - Ca1PERS Rate Pay Mudge t-CaMPERSS) Ton Frorn) Trust 14.000 12.000 10.000 8.000 6.000 4.000 2.000 0 (2.000) (4.000) Safety Plan Rate Stabilization Fund Balance 1r./17 17/16 1R/19 cr, 19/20 2a 23 22/22 22/23 23/24 SS 26/26 l'L,7 00 4. 2.5 % 2.5% 2.5% 2.55 25% Z5% 7.9% 2.5% 2.9% 0.0% 0.0% 0.09% Qox 0.0% 00% 0 0% 0.0% 0.0% 0.0% ✓ u N N N N N N N N SupplementalTrust Balance Ar4 1165 � A�0 15)41 70% 65% (.0% 55% 50% 45% 35% i0% 25% 20% Ca • 75th Pc►canuk ti 0".s b�vs.- 6�gh5 tmo140ih Pcacntdo 0 25th Percent k ER Contribution Rate Projections - With EE Cost Sharing 0;1- `b\ `^\ `�• \ •c+C'' •%. ry, Nj1 rys2fi' �atL ,Lt,(y •13b(1r - I r:-i such Perconbk L�. February 28, 2017 50 �- CALIFORNIA, ;! N10NAJLC'fl'V (-=-7;caolVATE-; Jl Capital Imp7rJ\iJriJli rPiJtissi Needs ASssi Jl� r 1J v rd I' v I ,L1 \_/ v objective Evaluate, prioritize and identify funding options for the repair, replacement and expansion of the City's physical infrastructure, facilities, parks and fleet. CIP Categories Infrastructure - streets, sidewalks and pedestrian curb ramps for Americans with Disabilities Act (ADA) compliance; street lights, traffic signals and communications; sewer and storm water systems Facilities - City offices, public works yard and support facilities, police and fire stations, community center, public library and information technology (public safety cameras, data storage and communications) Parks & Recreation - Community parks and amenities such as ball fields, restrooms, lighting, landscaping, walking paths and information technology; health and quality of life facilities such as recreation centers, municipal swimming pool and aquatic center Vehicle Fleet - consists of over 200 vehicles and associated equipment, valued at over $10 million; fleet management, replacement and modernization is required to provide essential services for the Community Major Maintenance (Deferred & Ongoing) Capital improvement projects that provide major maintenance and/or upgrades to existing infrastructure and/or facilities required to provide essential public services and maintain health and safety Examples - roadway rehab, roof replacement, HVAC system upgrades, removal and replacement of deteriorated metal storm drain pipes, etc. New Public Improvements Capital improvement projects that expand existing infrastructure and/or facilities, or construct new facilities, to address present and future needs of the Community Examples - new skate park, multi -purpose athletic field, municipal swimming pool, aquatic center, community corridors, etc. JvarYiY Project Prioritization Tier 1 - Annual/Ongoing Major Maintenance project Tier 2 - Near -term project (next 1 to 5 years) Tier 3 - Mid-term project (5 to 10 years) Tier 4 - Long-term project (10+ years) Evaluation Criteria Health and safety Community support Project costs and schedule Available funding Consistency with City General Plan and other long-range planning documents Ongoing maintenance costs � J J!Jr J1ia Infrastructure Needs Streets - Roadway Rehab, Sidewalks and Curb Ramps (ADA compliance) Streets - Traffic Calming, Pedestrian and Bike Enhancements Streets - Traffic Signals, Street Lights and Communications Storm Water - Conveyance and Treatment Sewer - Pipe Replacement and Upsizing Facilities, Parks & Recreation Major Maintenance Summary Historic and Cultural Assets Ongoing and Future Needs Assessments Vehicle Fleet * All summary tables include cost estimates and funding options that have not been budgeted, unless noted otherwise. Irr J ‘:•72 Streets - Roadway Rehab, Sidewalks and Curb Ramps (ADA Compliance) Completed pavement condition assessment for all City -maintained streets and alleys in 2011 Completed Citywide Walk Audits in 2011; started new Walk Audits in 2017 Identified over $50 million in roadway rehab and ADA needs Need to invest a minimum of $2.5 million annually to maintain a pavement condition index of 75 (scale of 0 to 100) and address ADA CIP Project Cost Estimate Funding Options Life Cycle Streets - Roadway Rehab, Sidewalks & Curb Ramps (ADA) General Fund Prop A TransNet Grants Other - TBD 7-15 yrs Tier 1(Annual/Ongoing) Tier 2 (1-5 years) Tier 3 (5-10years) Tier4(10+years) $2,500,000 $800,000 $1,000,000 $200,000 $500,000 Total* $50,000,000 $16,000,000 $20,000,000 $4,000,000 $10,000,000 * Total costs include Tier 1 annual costs over next 20 years J J IJ Streets - Traffic Calming, Pedestrian and Bike Enhancements Projects developed based on speeds surveys, collision data, walk audits, Safe Routes to School Program and consistency with City General Plan, Bicycle Master Plan and other long-range planning documents Averaged approximately $5 million per year in competitive transportation grant awards since 2012 . amount will likely decrease over time as high priority projects are completed CIP Project Cost Estimate Funding Options Life Cycle Streets - Traffic Calming, Ped and Bike Enhancements General Fund Prop A TransNet Grants Other - TBD 10-20 yrs Tier 1 (Annual/Ongoing) Tier 2 (1-5 years) Tier 3 (5-10 years) Tier 4 (10+ years) $19, 000, 000 $9, 000, 000 $18, 000, 000 $2,000,000 $2,000,000 $4,000,000 $2,000,000 $2,000,000 $4,000,000 $15, 000, 000 $5, 000, 000 $10, 000, 000 $0 $0 $0 Total* $46, 000, 000 $8,000,000 $8,000,000 $30, 000, 000 $0 * Total costs include funding for projects over next 20 years FT 1 J r' r' J J^' J Jeri Streets - Traffic Signals, Street Lights and Communications Completed assessment of all 75 City -maintained traffic signals in 2010 National City maintains approximately 800 street lights SDG&E maintains approximately 1,200 street lights; SDG&E will install new luminaries on existing utility poles in residential neighborhoods, when warranted, at no cost to the City National City received 11 competitive Highway Safety Improvement Program (HSIP) grants for over $4 million to upgrade traffic signals, install new street lights and expand the City's fiber optics communications system CIP Project Cost Estimate Funding Options Life Cycle Streets - Traffic Signals, Street Lights and Communications General Fund Prop A TransNet Grants Other - TBD 20-30 yrs Tier 1 (Annual/Ongoing) Tier 2 (1-5 years) Tier 3 (5-10 years) Tier 4 (10+years) $4,500,000 $3,500,000 $5, 000, 000 $0 $0 $0 $500,000 $500,000 $1, 000, 000 $4,000,000 $3,000,000 $4,000,000 $0 $0 $0 Total * $13,000,000 $0 $2,000,000 $11,000,000 $0 * Total costs include funding for projects over next 20 years r_r rJ-'� J -rj Storm Water - Conveyance and Treatment Completed inventory of Corrugated Metal Pipes (CMP) in 2016 Identified approximately $5 million in priority CMP replacement projects Remaining storm water conveyance system, which has a estimated replacement value of over $50 million, needs to be evaluated New storm water regulations for treatment will have fiscal impact (unfunded mandates) No reliable funding source CIP Project Cost Estimate Funding Options Life Cycle Storm Water - Conveyance and Treatment General Fund Grants Other - TBD 30-50 yrs Tier 1 (Annual/Ongoing) Tier 2 (1-5 years) Tier 3 (5-10 years) Tier 4 (10+ years) $7,000,000 $5,000,000 $2,000,000 $ 0 Total* $7,000,000 $5,000,000 $2,000,000 $0 * Total costs include Tier 2 priority projects and grant funded projects only; need to evaluate remaining system LI I' Sewer - Pipe Replacement and Upsizing Completed Citywide Sewer Master Plan in 2011 - identified over $30 million in sewer pipe replacement and upsizing needs FY 2017 "End of Year" projected Sewer Fund Balance of $14.9 million City of San Diego Metropolitan Wastewater Department (MWWD) sewage transportation and treatment costs projected to increase for National City from $6.1 million annually to $10.3 million annually over the next 3 years Need to plan for sewer rate increases to offset rate increases from MWWD and establish additional revenues to address capital needs National City residents pay 2nd-lowest sewer rates in San Diego County; last rate increase was in 2006 CIP Project Cost Estimate Funding Options Life Cycle Sewer- Pipe Replacement and Upsizing General Fund Sewer Fund' Grants Other - TBD 50-70 yrs Tier 1 (Annual/Ongoing) Tier 2 (1-5 years) Tier 3 (5-10years) Tier 4 (10+ years) $8,000,000 $12,000,000 $10,000,000 $0 $0 $0 $6,000,000 $0 $0 $0 $0 $0 $2,000,000 $12,000,000 $10,000,000 Total* $30,000,000 $0 $6,000,000 $0 $24,000,000 1 Estimated availability of Sewer Funds assumes no increase in current user rates for National City property owners * Total costs include funding for projects over next 20 years Infrastructure Needs 20,000,000 15,000,000 10,000,000 5,000,000 0 -5,000,000 Sewer Service Fund Revenue Projections vs Expenses (FY 2018 - FY 2027) FY18 FY19 FY20 FY21 FY22 Sewage Transport and Treatment (MWWD) National City Sewer CIP Projected Sewer Service Fund Balance FY23 FY24 FY25 FY26 FY27 National City Maintenance & Operations Projected Revenues (without rate increase) 62 f II trii r=1 ,e=1 LL) Metro Member Agencies Sewer Rate Comparison 7 Unit Water Use and 3/4" Residential Meter Sewer bill effective January 2016 $120 Blue bars denote water based sewer rates; purple denotes EDU based rates $100 42.7 r c 1 35.2 .2p 9'11IJmin ill (20 \f r.,:;J risi) Need to complete evaluation of remaining storm water conveyance system, which will result in additional capital costs City must contribute approximately $2 million per year in discretionary funds (General Fund) to meet TransNet Maintenance of Effort; leverage approximately $800,000 in General Fund expenditures for City staff engineering, project management, maintenance and operations Need to plan for sewer rate increases to offset rate increases from MWWD and establish additional revenues to address capital needs Infrastructure Summary Cost Estimate Funding Options General Fund Prop A TransNet Sewer Fund Grants Other- TBD Tier 1(Annual/Ongoing) $50,000,000 $16,000,000 $20,000,000 $0 $4,000,000 $10,000,000 Tier 2 (1- 5 years) $38, 500, 000 $7, 000, 000 $2,500,000 $6, 000, 000 $21, 000, 000 $2, 000, 000 Tier 3 (5-10 years) $24, 500, 000 $2, 000, 000 $2,500,000 $0 $8, 000, 000 $12, 000, 000 Tier 4 (10+ years) $33, 000, 000 $4,000,000 $5, 000, 000 $0 $14, 000, 000 $10,000,000 Total* $146, 000, 000 $29, 000, 000 $30, 000, 000 $6, 000, 000 $47, 000, 000 $34, 000, 000 * Total costs include funding for projects over next 20 years Facilities, arks & ecreation Needs .-. Major Maintenance Summary (20 Years) • Need to complete ADA assessments for several facilities (see next slide), which will result in additional capital costs • Prior General Fund appropriations will contribute approximately $1.5 million to facility improvements • Energy Savings Contract (ESCO) will provide funding plan to address approximately 1/3 of facility needs Major Maintenance Summary Cost Estimate Funding Options Facilities, Parks & Recreation General Fundl ESCO2 Grants Other - TBD Tier 1(Annual/Ongoing) $0 $0 $0 $0 $0 Tier 2 (1-5 years) $13,765,000 $1,450,000 $5,460,000 $0 $6,855,000 Tier 3 (5-10 years) $1,090,000 $0 $0 $0 $1,090,000 Tier 4 (10+ years) $175,000 $0 $0 $0 $175,000 Total* $15,030,000 $1,450,000 $5,460,000 $0 $8,120,000 1 General Fund - funding available through prior City Council appropriations 2 ESCO (Energy Savings Contract) - capital improvements funded up front, costs reimbursed over time through energy savings * Total costs include funding for projects over next 20 years; need to complete additional ADA assessments JJf.-J Jr. fir 1_7-AJJ91JIIJIJJ_-Jr f Major Maintenance Summary Cost Estimate Funding Options Project Prioritization Facilities, Parks & Recreation General Fundl ESCO2 Grants Other- TBD Tier1 (Ongoing) Tier2 (1-5 years) Tier3 (5-10 years) Tier4 (10+years) Civic Center (City Hall) $2,400,000 $0 $2,000,000 $0 $400,000 $0 $2,400,000 $0 $0 Fire Station 31* $50,000 $0 $30,000 $0 $20,000 $0 $50,000 $0 $0 Fire Station 34* $570,000 $0 $470,000 $0 $100,000 $0 $570,000 $0 $0 Police Dept Building* $2,680,000 $0 $1,000,000 $0 $1,680,000 $0 $1,910,000 $770,000 $0 Public Works (1726 Wilson Ave) $90,000 $0 $90,000 $0 $0 $0 $90,000 $0 $0 Public Works (726W. 19th St) $100,000 $0 $0 $0 $100,000 $0 $100,000 $0 $0 MLK Community Center $1,420,000 $0 $545,000 $0 $875,000 $0 $1,240,000 $180,000 $0 Public Library $910,000 $0 $790,000 $0 $120,000 $0 $910,000 $0 $0 Aquatic Center $80,000 $0 $0 $0 $80,000 $0 $80,000 $0 $0 ARTS Center* $510,000 $250,000 $260,000 $0 $0 $0 $510,000 $0 $0 Camacho Recreation Center* $300,000 $0 $0 $0 $300,000 $0 $250,000 $50,000 $0 Casa de Salud Youth Center $490,000 $0 $120,000 $0 $370,000 $0 $400,000 $90,000 $0 El Toyon Park Recreation Center* $250,000 $0 $0 $0 $250,000 $0 $250,000 $0 $0 Kimball Park Recreation Center* $350,000 $0 $0 $0 $350,000 $0 $350,000 $0 $0 Kimball SeniorCenter* $260,000 $0 $45,000 $0 $215,000 $0 $85,000 $0 $175,000 Municipal Pool* $900,000 $0 $0 $0 $900,000 $0 $900,000 $0 $0 Granger Music Hall $30,000 $0 $0 $0 $30,000 $0 $30,000 $0 $0 Historic Train Depot $20,000 $0 $0 $0 $20,000 $0 $20,000 $0 $0 Kimball House $30,000 $0 $0 $0 $30,000 $0 $30,000 $0 $0 Stein Farm $380,000 $0 $0 $0 $380,000 $0 $380,000 $0 $0 El Toyon Park $1,500,000 $500,000 $0 $0 $1,000,000 $0 $1,500,000 $0 $0 Kimball Park $240,000 $0 $40,000 $0 $200,000 $0 $240,000 $0 $0 Las Palmas Park $1,470,000 $700,000 $70,000 $0 $700,000 $0 $1,470,000 $0 $0 Total* $15,030,000 $1,450,000 $5,460,000 $0 $8,120,000 $0 $13,765,000 $1,090,000 $175,000 1 General Fund - funding available through prior City Council appropriations 2 ESCO (Energy Savings Contract) - capital improvements funded up front, costs reimbursed over time through energy savings * Total costs include funding for projects over next 20 years; need to complete additional ADA assessments El:91r��J Transferred to the City after the CDC -RDA Dissolution Need to complete new Maintenance and Operating Agreements (MOA) with Community Partners: National City Historic Society (Kimball House & Museum) San Diego Electric Railway Association (Historic Train Depot) Stein Farm Family Trust (Stein Farm) Capital needs and funding will be addressed in the MOAs Cost estimates are based on maintaining current operations Granger Music Hall needs complete restoration (assessment underway) Major Maintenance Summary Cost Estimate Funding Options Project Prioritization Facilities, Parks& Recreation General Fund Grants Other -TBD Tier 1 (Ongoing) Tier 2 (1-5years) Tier 3 (5-10years) Tier 4 (10+years) Granger Music Hall $30,000 $0 $0 $0 $30,000 $0 $30,000 $0 $0 Historic Train Depot $20,000 $0 $0 $0 $20,000 $0 $20,000 $0 $0 Kimball House $30,000 $0 $0 $0 $30,000 $0 $30,000 $0 $0 Stein Farm' $380,000 $0 $0 $0 $380,000 $0 $380,000 $0 $0 Total* $460,000 $0 $0 $0 $460,000 $0 $460,000 $0 $0 1 $300,000 cost estimate to replace barn * Total costs include funding for projects over next 5 years to maintain current facility operations Preliminary needs assessments for El Toyon and Las Palmas Parks are underway Inventory / inspection of existing facilities GIS-based data analysis Public surveys Need to complete additional assessments to determine whether or not to expand existing facilities, or construct new facilities, to address present and future needs of the Community Future needs assessments: Fire Dept Squad Substation at El Toyon Park New Multi -Purpose Facility at El Toyon Park (FD Squad/Community Room/Computer Lab) New Recreation Complex at Las Palmas Park r J']JJJ r,-_._1� Jr) :A k Las Palmas Park (Park footprint - 837,777 s.f.) Primary Use Ballfields Camacho Recreation Center Equipment Shed Meter Room Multipurpose Area Restrooms/Storage Municipal Pool - Concessions Municipal Pool - Pool Facility Parking Restrooms Tennis Courts Tot Lot Walkways Area (square feet) 66,366 12,523 482 16 405,578 871 388 57,366 61,721 15,646 31,357 )1 1 --,L1J Jt J J J J J J \S\ 4, Alt El Toyon Park (Park footprint - 1,045,381 s.f.) Primary Use Area (square feet) Basketball Court 8,005 Bocce Court 1,005 El Toyon Recreation Center - Ceramics/Sewing 1,446 El Toyon Recreation Center - Community Room 3,170 El Toyon Recreation Center - Kiln Room 237 Equipment Building 1,138 Athletic Field 67,786 Multipurpose Area 317,756 Parking 69,799 Restrooms 671 Tennis Courts 25,789 Tot Lot 11,035 Utility Shed 560 Walkways 46,681 Fcites7 Parks & Recreation Needs Assessments Park Community Garden Joint Use Agreement Facility Recreation/Community Center NATIONAL CITY S.D. COUNTY c 0 i 1 El Toyon Park 2 El Toyon Recreation Center 3 Morgan Square 4 Martin Luther King, Jr. Community Center 5 Kimball Park Recreation Center 6 Kimball Senior Center 7 Kimball Park 8 Boys & Girls Clubs of Greater San Diego 9 Casa de Salud Recreation Center 10 Paradise Creek Educational Park 11 Sweetwater Union High School 12 Olivewood Gardens and Learning Center 13 Butterfly Park 14 Las Palmas Park 15 Camacho Recreation Center 16 Pepper Park/Boat Launch/Acquatic Center 17 Sweetwater Regional Park 18 Sweetwater Heights Park L J 5-Minute Drive ▪ 5-Minute Walk - 10-Minute Walk 15-Minute Walk City Boundary Y I) 54I WILLOW S.D. COUNTY NI* MAI Pa rkAcres per 1,000 Residents (Target) 2014 Population * ParkAcres per 1,000 Residents (Existing) Existing Park Acreage Minimum Park Acreage Required Minimum Park Acreage Target(+/-) 2030 Population ParkAcres per 1,000 Residents Future Park Acreage (Golf Course Conversion & Paradise Creek Park) Minimum Park Acreage Re+ uired Minimum Park Acreage Tar; et + / - City of National City 4.75 58,302 1.9 County of San Diego 3.0 111 276.9 174.9 -165.9 -63.9 66,774 2.4 159 317.2 200.3 -158.2 -41.3 City of San Diego 2.8 163.2 -52.2 187.0 -28.0 SanDiego Association of Governments population data /forecasts Facilities, ' arks un 1',] Total Population Median Income Population density (per acre) Park Acreage Park land as% of city area Dog Parks per 100,000 Residents Playgrounds per 10,000 Recreation / Senior Centers per 20,000 Residents National City 58,302 $41K 10.6 163 Montebello (LA County) 63,648 Chula Vista 2 58, 641 1,343,525 $46K $65K $66 K 11.9 8.1 6.5 84 2,531 45,392 3% 2% 8% 22% 1.7 0 1.2 1.1 1.2 1.4 1.6 3.0 1.9 3.5 0.7 1 National City ( per 50,000 residents) Montebelb (per 50,000 residents) Tennis Courts Basketball Courts Baseball Fields Multipurpose Fields Skate Parks PicnicAreas/Shelters Playgrounds Swimming Pools Splash Pads Dog Parks Gymnasiums Co mmu nity/Rec Centers Senior Centers 10.3 3.4 5.2 5.2 0.9 7.8 6.0 0.9 0.0 0.9 0.9 2.6 0.9 1.5 5.3 6.1 4.6 0,8 8.4 7.6 1.5 1.5 0.0 0.8 8.4 1.5 Vehicle Fleet Summary • Current City fleet consists of over 200 vehicles and associated equipment, valued at over $10 million • Established Vehicle Replacement Reserve - combination of purchase and lease (internal service funds) for vehicle replacement and modernization • Approximately 1/3 of fleet has been replaced/modernized since FY 2015 • Remainder of fleet will be replaced/modernized over the next 5 years �- CALIFORNIA , ;! NATIoNAuenry NCORPORATE FL[_ rij c-jvrivj,\Jv • Funding Sources • Project Funding Options • Pay -as -you -Go • Project Financing • Advantages/Disadvantages of Financing • Matching Financial Resources to Capital Needs • Policy Approach • Fiscal Analysis • State/Federal Grants • Regional Matching Funds • Subsidized Loan Programs (State/Federal, Housing) • General Fund Operating Surplus • Enterprise Fund Net Revenues • One -Time Revenue Windfalls Funding "Free / Subsidized Funds" Existing Identified Revenues City Reserves Future Revenue Sources • General Fund • Enterprise Fund • Transportation Funds • Replacement Funds • Increased Property Tax Base • Residual Tax Increment (Successor Agency) • Hotel/Sales Tax • Voter -Approved Revenue Measures Pr rDjJJ'r FL]fiiifi prJJTJ� "Pay as You Go" • General Fund cannot support all capital needs • Major Maintenance Reserves take a long time to build-up • Heavily reliant on tax revenues and competitive grant awards Fee Programs • Development Impact Fees (DIFs) • Sewer Enterprise Fund Energy Savings Loans & Rebate Programs • Energy Savings Contracts (ESCOs) • Electric Vehicle Vouchers Debt Issuance (Bonds) • Ability to address major capital needs in a timely manner • Variety of options p�Jj� r r!if] �JJliJ Jp r�Jli • "Pay -as -you -Go" • Projects funded once cash is identified and already received • Project only completed as funds are available • Typical funding approach for incremental repair projects or smaller capital projects • Project Financing • Project funded from bond proceeds in an amount sufficient to cover entire project (typically more than what can be received in cash through budget process) • Financing can be used to meet "matching funds" commitment if higher than what is available through budget process • Repayment of Financing is made over extended period of time • Financing distributes the repayment obligation across future residents or rate payers that will benefit from project Staff's ability to effectively manage a greater number and dollar amount of projects should also be considered Friiii fig • Advantages • Distributes Project Cost Across Longer Period of Time • Locks In Project Cost — Avoids Inflation Risk • Enables Quicker Project Delivery • Cost of Capital May Be Lower in Current Market Conditions than Projected in Future • Disadvantages • Increases Project Cost (Financing Costs and Bond Interest) • Obligates Future City Budgets To Make Debt Service Payments — May Reduce Ability to Fund Future Projects • Overall Project Cost (including financing payments) Is Higher Than Pay -as -you -Go Approach (assuming no inflation) JY rl fJJJ� J $10M Project Fund from Bond $1, 500, 000 $1, 400, 000 $1, 300, 000 $1, 200, 000 $1,100,000 $1, 000, 00 0 $ 900, 000 $ 800, 000 $ 700, 000 $ 600, 000 $ 500, 000 $400,000 $ 300, 000 $ 200, 000 $100,000 $- $10 Million Bond Issue Annual Debt Payment (10, 20 and 30 Year Maturities) - Annual Debt Payment (10 Year Bond, 3.0%) Annual Debt Payment (20 Year Bond; 4.0%) - Annual Debt Payment (30 Year Bond, 4.5%) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 YEAR Types of Bonds/Revenue Sources Payment Source City Funds City Funds City Funds Property Owners Property Owners Property Owners Funding Structure Lease/COP Sales Tax Utility General Obligation Parcel Tax CFD/AD Facilities, Parks, Infrastructure Facilities, Parks, Infrastructure Water/Sewer Facilities, Parks, Infrastructure Facilities, Parks, Infrastructure Facilities, Parks, Infrastructure Repayment General Fund Sales Tax Revenues Utility Revenue Property Tax Parcel Tax Special Tax/Assessment Voter Approval No Police Station Yes Majority Sunset date (2035) Prop 218 $1M of net revenue (2016) could raise $15M Yes 2/3 Existing Library $10M cost to average homeowner = $59 Yes Majority $10M cost to property owner = $61 Yes Used for development - related improvements Matching Needs and Resources RESOURCES • Funds available • Current and New Annual Net Revenues • Financing Tools CIF' FUNDING PLAN NEEDS • Prioritize Projects • Identify Costs • Manage Timing of Construction Police 7\-JoIrq-.)-_,:i J'rJ 1. Prioritize Capital Projects 2. Identify Funding Sources and Amounts 3. Calculate Gap/Shortfall 4. Develop Financing Strategy to Fund Gap 5. Assess Cash Flow/Budget Impact 6. Consider Other Needs such as Pension/OPEB 7. Implement Appropriate Strategy and Funding Solutions • Develop 10-Year Operational Budget Analysis • Identified Recurring Revenue Sources • Projected Expenditures • Include Pension Payment Obligations and Non -Discretionary Capital Projects • Calculate Net Available Revenues • Develop Funding Options Based on Identified Net Revenues • Revenue Enhancement • Economic Development Opportunities • Public -Private Partnerships • Reduce expenditures where possible • Account for PERS changes/increases, put plan to address in place • Identify Cost Savings - enhance operational efficiencies, restructure high interest rate debt, eliminate subsidies • Present preliminary budget to City Council on April 25, 2017 to include: • Balanced budget • Funding strategy for pension and OPEB • Funding plan for CIP • Complete sewer analysis and fee study; present operating plan to make sewer fund sustainable • Continue ongoing needs assessments • Continue seeking grants and working on revenue enhancement (economic development) NIVTIONAL CITV j <1 3NCORPORATED Questions Public Comment Discussion and Direction Glossary of Terms Finance, Pension & Other Postemployment Benefits (Actuarial) accrued liability — the present value of benefits earned through the date of valuation of a pension or OPEB plan Actuarial gain or loss — the difference between the actuarial accrued liability at a valuation date, and the actuarial accrued liability that was previously projected to occur, due to assumptions made by the actuary not being met Amortization — the process of reducing an unfunded pension or OPEB liability over a period according to a plan Annual required contribution (ARC) (or actuarially determined contribution [ADC]) — the total contribution required by an employer to adequately fund its pension plan or OPEB plan; normal cost + unfunded liability contribution Contribution Rate — the total required pension or OPEB contribution divided by total payroll for the year Defined benefit — an employer -sponsored benefit plan, typically a pension or OPEB plan, where employee benefits are computed using a formula that considers factors, such as length of employment and salary history Defined contribution — an employer -sponsored benefit plan where a certain amount or percentage of money is set aside each year for the benefit of each employee (Employees receive only their account balances.) Discount rate — the rate of investment return assumed in discounting future pension or OPEB benefits owed to their present value Irrevocable supplemental pension (or OPEB) trust ("irrevocable trust") — a trust (plan) into which assets are deposited only for payment of a pension or OPEB liability Normal cost — the employer cost of future pension or OPEB benefits accrued (i.e., earned by employees) in the current year Other Postemployment Benefits (OPEB) — benefits (other than pensions) provided to retired employees, usually health care benefits. Pay-as-you-go — paying pension or OPEB benefits to retirees as they come due, from the employer's funds Prefunding — investing money for pension or OPEB benefits in advance of the benefits coming due Pension obligation bonds (POBs) — taxable bonds issued by a state or local government to pay its pension obligation Present Value — the current value of a future sum of money or stream of cash flows given a specified rate of return (i.e., the discount rate) (If money equal to the present value is invested now and earns interest at the assumed rate, it will grow to exactly the right amount to pay the required future payments.) Present value of all projected benefits (PVB) — the present value of all future expected benefit payments of a pension or OPEB plan at the date of valuation, based upon various (actuarial) assumptions Public Employees' Pension Reform Act (PEPRA) — California legislation which became effective in January 2013, reducing pension benefits and limiting pensionable compensation for new public employees Sales Tax Revenues — The sales and use taxes levied by the City on taxable sales transactions within the City which are collected by the State Board of Equalization and transmitted to the City periodically under Section 7204 of the Revenue and Taxation Code of the State of California, constituting the Bradley -Burns Uniform Local Sales and Use Tax Law. Section 115 trust — a trust that is exempt from taxation under Section 115 of the Internal Revenue Code set up to benefit from the same tax-exempt status of the governmental employer who establishes and adopts the trust Structural Deficit — Revenues less non -discretionary expenditures which typically include administration, operations, wages, mandatory capital replacement and depreciation. Unfunded (actuarial) accrued liability (UAL/UAAL) / net pension liability — the difference between an actuarial accrued liability and the actuarial value of assets accumulated to finance that obligation; (actuarial) accrued liability (AL/AAL) minus any assets that have been irrevocably set aside to fund future benefits Glossary of Terms Capital Improvement Program and Funding Options Bond — The issuance of debt by the City to fund capital projects and purchased by bondholders with the promise to make interest payments and principal repayment over time CREB — Clean and Renewable Energy Bond. A taxable municipal bond providing a "tax credit" to the purchaser of the bond. Tax credit portion of bond interest is submitted to issuer after each bond payment and is treated as credit against total bond debt service payment. CIP — Capital Improvement Program. The identified short and long-term projects associated with facilities and services provided by the City. Infrastructure — Capital projects including streets, curbs, gutters, utilities, treatment plants, storm drain systems and other critical components maintained by the City ESCO — Energy Service Company engaged by the City to audit, design and implement energy efficiency measures and renewable energy projects. ESCO agreements typically include energy savings guarantee to provide assurance to the City that measures are economically beneficial or cash flow neutral to the City's budget. ESCO serves as general contractor for project. Facilities — Structures such as the City Hall, Fire Stations, Police Station, Treatment Plants, Park Buildings and other structures. Financing Costs — The costs and expenses incurred in connection with the issuance and sale of bonds, including the initial fees and expenses of the Trustee, rating agency fees, fees and expenses of Bond Counsel and Disclosure Counsel, other legal fees and expenses relating to the approval of the Bonds, other related documents and certificates, and matters related thereto, costs of preparing the Bonds and printing the Official Statement, fees of financial consultants, bond insurance premium, if any, surety bond premium, if any, and other fees and expenses. Major Maintenance — Deferred and/or Ongoing CIP projects that provide major maintenance and/or upgrades to existing infrastructure and /or facilities required to provide essential public services and maintain health and safety. New Public Improvements — CIP projects that expand existing infrastructure and/or facilities, or construct new facilities, to address present and future needs of the community. "Pay as you Go" — Defined as the funding of identified projects through the normal budget process and paid from available revenues without the need to borrow from any other source (internal or external).