Fresno Bee Newsroom Blog

Lots to do at next council meeting

The Fresno City Council meets on Nov. 29. The agenda is epic. Let’s chew on it a bit.

1.) A $200,000 grant to fight human trafficking is here. The money comes from the Edward Byrne Memorial Justice Assistance Grant Program. The council must amend this year’s budget to spend $150,000 by June 30.

The money goes toward work to be done by the Police Department, Marjaree Mason Center, Family Healing Center and Fresno County Economic Opportunity Commission. The goal: Identify and help human trafficking victims in Fresno.

This is an issue near and dear to the heart of City Council President Clint Olivier.

2.) From the “better late than never” department, the council will give its blessing to results from the June 5 primary election.

That was the one where Mayor Ashley Swearengin routed a handful of under-funded candidates to easily win a second term; Lee Brand ran unopposed to win a another four years representing Council District 6; and Paul Caprioglio edged Susan Good to win the District 4 seat.

Steve Brandau beat Pat Di Cicco to win the District 2 seat in the Nov. 6 general election.

Apparently no one is in a hurry to take the oath of office. Oaths are usually administered on the first Thursday in January. That would be Jan. 3, 2013 this time around. However, a staff report says the big day will be Jan. 10.

3.) The controller’s office will ask the council to OK a five-year deal with money experts at KNN Public Finance, an arm of Zions First National Bank. The cost depends on how much work the firm does in a year. According to the staff report, the amount should be no more than $25,000 annually (it’s not clear in the report, but I think we’re dealing with General Fund dough).

KNN would get more for seeing bond deals through to completion, but payments would come from bond proceeds.

A couple of snippets from the report sound interesting.

KNN will help with “coordinating bond financing/refinancing strategies as well as ongoing financial consulting services on an as-needed basis.”

It is expected that City Hall “will access the bond market over the next few years for financing upcoming major utility projects and possibly to refinance existing City Bonds.”

KNN will help the city with rebuilding its credit ratings, which in recent months have been heading toward junk territory. KNN will help with new bond deals in enterprise departments, which are funded by customer fees and grants. Last but not least, “KNN and the City will continue to monitor the debt portfolio for refinancing opportunities in order to reduce ongoing debt service.”

Refinance, refinance, refinance.

As readers will recall, Fresno finds itself in a huge financial mess in part because it has a habit of refinancing general fund bond deals to fix short-term budget woes. City Hall likes to kick the can down the road.

For example, the City Council in 2002 refinanced $200 million of pension obligation bonds to improve the immediate cash-flow. If the council hadn’t done that, the POBs would’ve been paid off in 2014.

Instead, the city will be paying $16.2 million a year on the POBs until 2029. I’m guessing more than half of that $16.2 million comes from the general fund. That kind of money could solve a lot of short-term cash-flow problems.

4.) The proposed Universally Accessible Park must be snake-bitten. Assistant City Manager/Interim Parks Director Bruce Rudd will ask the council to reject all bids for building the $7.2 million park on Gettysburg Avenue, near Polk Avenue, west of Highway 99.

The problem: The city has about $6.4 million in the bank after spending $800,000 on design and engineering costs. It anticipates another $650,000 in “soft” costs such as project management and development fees. That leaves about $5.8 million for construction. But the four construction bids recently submitted range from $8.3 million to $9.3 million.

Council Member Blong Xiong, who represents the Gettysburg/Polk area, has been trying for nearly six years to get the park up and running. The big hangup so far has been ensuring an outside source of funding to maintain the park. But it looks like that has been settled, thanks in large part to Resources for Independence Central Valley.

Now it turns out the park as designed has too many features (many of them for the disabled) to fit into the budget. City officials said they’ll go back to the drawing board.

(NOTE: These first four items are on the council’s consent calendar. That means none will be discussed by the council unless a council member pulls it.)

5.) The council plumbers will be out in force. It seems someone is leaking information from the council’s closed-door meetings. The City Attorney’s Office has come up with a long list of bureaucratic safeguards to ensure the secrets don’t get into the public domain.

For example, important closed-door papers must be stored in file cabinets marked “CONFIDENTIAL.”

The council will be asked to reprimand itself.

The staff report under the subtitle “Fiscal Impact” says: “Implementation of these new safeguards will require minimal additional costs, save and except those circumstances where the City will need to enforce the Confidentiality Agreement.”

There are a lot of interesting questions secreted away in that sentence.

6.) The council will be asked to add several additional census tracts to the federal neighborhood stabilization program (NSP). The city also plans to spend another $3.3 million in NSP funds on improving neighborhoods devastated by the home foreclosure crisis.

7.) Fresno may take another step toward ridding itself of the Valley’s ugliest building. We’re talking about the Droge Building, the once-storied downtown structure that is now nothing but a shell held up by long and highly visible steel poles.

The Housing Authority wants to issue about $8 million in bonds to turn the Droge into 45 apartments and some commercial space. The council will be asked to pass a resolution giving its OK.

Says the staff report: “The development is targeted for workforce housing …. The appeal may be to single residents, couples, roommates, young urban professionals or seniors. The variety of bedroom sizes and unit types will allow for a diverse tenant population.”

8.) The council at 5 p.m. will hold the first of what is expected to be three straight hearings on the Swearengin Administration’s effort to outsource the city’s residential trash service.

Nov. 29 — a resolution declaring the city’s intention to outsource.

Dec. 6 — if the resolution passes, then the council votes on introduction of an ordinance awarding the service to a private trash-hauler.

Dec. 13 — if the introduction passes, then the council votes on adoption of the ordinance.

It’s hard to tell if this complex issue resonates with the broad Fresno public. Remember Mayor Alan Autry’s Truancy Ordinance early in his first term? That one hit a nerve with Fresnans from every background.

The residential trash issue, on the other hand, seems to be largely a union vs. administration fight. Maybe it’s because of all the county islands within Fresno. Those islands have been served for years by private haulers.

No need here to go into all the pros and cons of the proposal. Let me raise just two points that stump me.

* The residential solid waste division apparently has a reserve in the $16 million range. That seems pretty big. I don’t understand how it got to that size, what will become of it if outsourcing is approved, and why the city apparently can borrow from some enterprise reserve funds but not from the residential solid waste reserve.

* Mid Valley Disposal is the administration’s pick to get the outsourcing deal. Outsourcing opponents are very upset that Mid Valley is a for-profit company. City officials say Mid Valley’s profit margin is capped at 5%. Residential solid waste employees have a defined benefit pension plan based on a guaranteed 8% return. No triple-A rated bonds anywhere in the world pay 8%. That means the City of Fresno pension system must invest in the equities of for-profit companies if it hopes to get the minimum 8% return. If the pension system’s investments don’t hit their 8% goal, then City Hall must make up the difference. Since residential solid waste is an enterprise department receiving no general fund money, it’s the ratepayer’s pocketbook that fills the gap. Ultimately, the ratepayer/taxpayer has no money to fill the gap unless he has a job with a company that makes enough profit to pay salaries that fund all that city government everyone wants and all those City of Fresno defined benefit pensions that city employees desperately want to keep. Bottom line: I don’t understand why profit is a dirty word when Mid Valley Disposal is in the public spotlight but profit is loved when it stays in the dark so it can continue to fund government defined benefit pensions without causing anyone any guilt.

Perhaps answers will come Nov. 29.

Responses

David Newton says:

“Residential solid waste employees have a defined benefit pension plan based on a guaranteed 8% return.”

The return is variable – based on actual returns. There is no guaranteed return. Please contact the City of Fresno Retirement System for the right information.

Jared says:

It sounds like City Hall could use the left over residential waste reserve to just about cover the difference on the pension obligation bonds’ lifetime cost. Another problem solved by privatization.

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