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HomeMy WebLinkAbout04/28/2014 B A K E R S F I E L D Staff: Committee members: Steven Teglia, Assistant to the City Manager Willie Rivera, Chair Ken Weir Terry Maxwell REGULAR MEETING OF THE BUDGET AND FINANCE COMMITTEE of the City Council - City of Bakersfield Monday, April 28, 2014 12:00 p.m. City Hall North 1600 Truxtun Avenue, Bakersfield, CA 93301 First Floor, Conference Room A A G E N D A 1. ROLL CALL 2. ADOPT JANUARY 27, 2014 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Discussion regarding the Open Gov Budget Data Sharing Website – Smith 5. DEFERRED BUSINESS A. Update on Validation Action – Gennaro B. Continued Discussion regarding Funding for TRIP Projects – Tandy/Smith 6. COMMITTEE COMMENTS 7. ADJOURNMENT B A K E R S F I E L D /s/ Steven Teglia Committee Members: Staff: Steven Teglia Willie Rivera, Chair Assistant to the City Manager Ken Weir Terry Maxwell AGENDA SUMMARY REPORT SPECIAL MEETING OF THE BUDGET AND FINANCE COMMITTEE Wednesday, February 26, 2014 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue, Bakersfield, CA 93301 The meeting was called to order at 12:04 p.m. 1. ROLL CALL Committee members: Councilmember Willie Rivera, Chair Vice Mayor Ken Weir Councilmember Terry Maxwell City Staff: Alan Tandy, City Manager Steven Teglia, Assistant to the City Manager Chris Huot, Assistant to the City Manager Caleb Blaschke, Management Assistant-City Manager’s Office Virginia Gennaro, City Attorney Josh Rudnick, Deputy City Attorney Andrew Heglund, Deputy City Attorney Nelson Smith, Finance Director Sandra Jimenez, Assistant Finance Director Doug McIsaac, Community Development Director Ryan Bland, Community Development Coordinator Nina Carter, Associate Planner Lyle Martin, Assistant Chief of Police Others present: Dustin Reilich, HERO Members of the Media 2. ADOPT JANUARY 27, 2014 AGENDA SUMMARY REPORT The Report was unanimously adopted as submitted. 3. PUBLIC STATEMENTS None AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Wednesday, February 26, 2014 Page 2 4. DEFERRED BUSINESS A. Continued Discussion and Committee Recommendation regarding the Public Safety Component of the Proposed FY 2014-15 CDBG Action Plan City Manager Tandy provided a review of the actions taken on this item at the last Committee meeting. The CDBG Action Plan was forwarded to the City Council for consideration, minus the current component to fund two Police Officers. Committee Chair Rivera had asked that that component be removed and replaced with additional curb, gutter, sidewalks and streets construction. He had directed staff to come back with options to continue to fund the officers through alternative means. Mr. Tandy said funding the officers from the Council Contingency fund could be considered. The preliminary budget outlook is that General Fund revenues will remain static; however City staff has only just begun the budget review process, so it is too early to have certainty whether or not that will change. The CDBG amount now allocated towards the officers is $230,000, and there is $250,000 in Council Contingency, which is a fund rarely used. Vice Mayor Weir said he would support the suggestion; however the remaining Councilmembers would have to be cautioned that only $20,000 would remain in the fund for unforeseen expenses. Committee member Maxwell asked if there was a funding source that could be used as an alternative to the Council Contingency fund. City Manager Tandy said that as staff gets further into the budget process, another source may become available. Committee Chair Rivera reiterated his direction from the previous meeting that more than one option was to be presented. He continues to be interested in finding a revenue source other than CDBG to fund the two officers. He requested that staff address this issue when the Police Department’s proposed budget is presented to the City Council, although he asked if it was necessary to address it sooner. Community Development Director McIsaac said that the funding for the officers has already been removed from the CDBG Action Plan and reallocated towards street projects. That draft plan will be discussed by the City Council in April and then submitted to HUD. If a decision is made later in the process to reverse the action, an amendment can be submitted to HUD. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Wednesday, February 26, 2014 Page 3 Committee Chair Rivera made a motion to refer the item back to the City Council for discussion when the departmental budget proposals are presented. The goal is to retain the two officers, but use a funding source different than CDBG. He is not certain that using Council Contingency would be his preference. Committee member Weir asked about the current status of the two officers. Finance Director Smith said that they are currently budgeted with CDBG funds within the Police Department’s General Fund, and the funding extends until October. As the budget process is in the early stages of review, and the amount of revenue that can be projected from property and sales taxes is uncertain, staff will require additional time to formulate alternative funding options for the two officers that would not then reduce the amount of the General Fund for safety positions that have already been approved. City Manager Tandy assured the Committee that the Police Safety compliment will not be reduced; however, it is not possible at this point to present clear options for funding the officers from a source other than CDBG. A motion to continue the item for review by the full Council during the budget process was unanimously approved. 5. NEW BUSINESS A. Discussion and Committee Recommendation regarding the Possibility of Participating in the PACE/HERO Program Assistant to the City Manager Teglia provided an overview of the information that had been included in the meeting packet. He introduced Mr. Reilich from the HERO program, who was available to answer questions. A slide show was presented. Property Assessed Clean Energy (PACE) is a financing option for commercial and residential energy and water efficiency projects. It is an assessment that allows property owners to finance up-front capital costs for such projects and repay the debt through contractual assessments on property taxes over a period of 5-25 years. The property is used as collateral. Participation in the program is voluntary. In California, these liens supersede mortgages. Home Energy Renovation Opportunity (HERO), is a similar program that is sponsored by the Western Riverside Council of Governments, and it includes a residential property component. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Wednesday, February 26, 2014 Page 4 In 2012, the Federal Housing and Finance Agency (FHFA) issued a directive to Fannie Mae and Freddie Mac to adjust the loan/value ratio to reflect the maximum PACE loan that is available, and to reduce the borrowed debt/income ratio to account for additional obligations associated with possible future residential loans. While this information caused ambiguity for residential property owners, commercial, industrial and multi-family property owners who wished to take advantage of the program have been able to do so. In response to the concerns by FHFA, Governor Brown signed SB-96 into law. This legislation allows for the creation of a loss reserve fund, which will provide reimbursement to a PACE program provider or lender for potential losses that may be incurred with a forced sale or foreclosure of a residential property. Two PACE programs are currently offered to Bakersfield commercial, industrial and multi-family property owners, California First and Figtree. Due to possible impacts to residential property owners from the FHFA ruling, City staff determined that the best course of action is to refrain from offering the program to them until clarity is obtained. Mr. Reilich reported that 122 cities in California have opted into the HERO program and offered it to homeowners. The assessment is attached to the property; so when the residence is sold, the new homeowner would then be responsible for the assessment. SB-96 secures the position of the lender under any circumstance. PACE providers are required to pay into the fund, which has a starting balance of $10 million. Once the program is approved by the City Council, there is a judicial validation process that takes 3-5 months before it can be offered to homeowners. Letters have been sent to FHFA asking for feedback on their directive. To date, no response has been received. Full disclosure is provided to homeowners that their lender may require that the assessment be paid off before the home can be sold. Assistant to the City Manager Teglia stated that staff has been following this issue since 2008. A wait-and-see stance has been taken on the residential component based on the directive by FHFA. Now that the loss reserve fund has been signed into law, it may provide the opportunity to launch that component; however, more clarity is still desired. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Wednesday, February 26, 2014 Page 5 Community Development Director McIsaac agreed with the analysis and believes that the program is beneficial. He said that having the loss revenue fund in place might allow for a homeowner to qualify for a loan that might otherwise have been denied. Committee member Maxwell asked about the term of the loan. Mr. Reilich said that it is typically based on the useful life of the product; however, the homeowner can specify the term, from 5-25 years. Assistant to the City Manager Teglia stated that each PACE program provider has their own qualification requirements; but if a mortgagee is upside down on their mortgage, they would not qualify for a PACE loan. The initial funding of the loss reserve fund in the amount of $10 million is projected by the Governor’s office to last 10 years. The requirement for all PACE providers to contribute towards the fund is an attempt to lengthen the duration of availability. This fund is a security measure, with a goal to provide temporary relief to the lender, and ultimately to avoid foreclosure. Committee Chair Rivera asked if staff anticipates a response from FHFA. Assistant to the City Manager Teglia said that they may not respond to staff, but may choose to communicate with the Governor’s office. Staff should know more in the next few months, at which time the item can be agendized for continued discussion. Mr. Reilich suggested that when additional information is received, the item be referred directly to the City Council for discussion rather than bringing it back to Committee. City Manager Tandy said that if there is clarity, staff can forward it to the full Council; however, if it continues to be vague, further Committee discussion may be required. Committee Chair Rivera approved the recommendation, and made a motion to that affect. The motion was unanimously approved. 6. COMMITTEE COMMENTS None 7. ADJOURNMENT The meeting adjourned at 1:08 p.m.