HomeMy WebLinkAboutMarch 2Finance and Investment Committee Special Meeting
Town of Los Altos Hills
Town Hall, Monday, March 2, 2015
The meeting was called to order at 4:30 pm by Chairman Epstein.
Members present: Courtenay Corrigan, Allan Epstein, John Harpootlian, Kjell Karlsson, Jim Lai,
Stan Mok, Bill Silver, Roddy Sloss and Chris Welborn.
Member absent: Frank Lloyd and Susan Mason,
Staff present: Carl Cahill, City Manager, Yulia Carter, Administrative Services Director; Richard
Chiu, City Engineer, Pak Lin, Finance Manager
Guests present: Tom Pavletic, Consultant, Municipal Financial Services
Public present: None
Approval of minutes
The prior meeting minutes were approved by members attending the prior meeting.
Presentation from Tom Pavletic – Preliminary Sewer Service Charge Evaluation Findings
Mr. Pavletic reviewed slides on the subject matter distributed before the meeting and took questions. The
presentation forecasts future sewer costs through Fiscal Year 2026, proposes alternatives for rate increases to cover
future costs and reserves, and considers rates for non residential sewer system users. The current level of spending
for repairs and maintenance is significantly higher than historical averages reflecting remedial steps to address
recent experience with a higher level of sanitary sewer overflows and are forecasted to continue. Also, estimated
costs provided by the City of Palo Alto for a new Biosolids plant and a Long Range Facility Plan are included in
the forecast. Mr. Chiu believes Town sewer rates are higher than neighboring communities, in part, because of
larger lot sizes and fewer commercial users. Missing data includes estimated future capital spending prepared by
the City Engineer, review of methodology for calculating Service Units for nonresidential users, estimated service
units presently used by the Town, and confirmation of the City of Palo Alto plans and related dates for billing its
users for the Bio Solids and Long Range Facility Plans. The Town’s Council can propose new rates for sewer rate
payer approval for up to five years. The FIC voted in favor of proposing rate increases of minimum amounts
needed to maintain a reserve level between 150 and 270 days of forecast spending with the exception of Mr. Sloss
who favored larger annual increases every few years that would obviate the need for continuing smaller annual rate
increases. A calendar of future accomplishments and meetings to facilitate a rate increase for FY 2016 was
included in the presentation. Messrs. Cahill and Pavletic excused themselves from the meeting at this point.
Report on Council Activities of Interest by Courtenay Corrigan
Ms. Corrigan reported that the Council’s new committee membership minimum requirements call for attendance
satisfactory to the Committee Chairperson and completion of Brown Act training by July 1, 2015 by full
Committee members. Incomplete training will result in membership status changing to Associate (non voting).
Regarding resident requests to convert private roads to public (Town maintained) roads, an ad hoc Council
subcommittee comprising Mr. Waldeck and Ms. Corrigan was formed and is meeting with interested parties.
March 2, 2015 FIC meeting minutes, con’d. page 2.
Report on Finance department activities of interest by Yulia Carter
Ms. Carter reported that the Town, for the first time, received the Government Finance Officers Association
Distinguished Budget Presentation Award for the June 30 2015 budget. A similar award for the Town’s 2014
Financial Statements is under review.
Report on midyear Budget Review for FY 2015 by Yulia Carter
Ms. Carter distributed an eight page Excel style report and a three page memorandum prior to the meeting and
presented ten pages of slides in the meeting related to the subject matter. Budget revisions were made for revenue
and expenditure categories where changes were larger than $10,000 and 5% of the related line item. Also,
estimated annual results were presented. Governmental (non Sewer) major revenue changes included higher fees
from Community Service activities, higher property and other taxes, and higher grants offset by spending increases
due to previously approved Council actions and the addition of an El Monte roadway repair project, and to a lesser
extent on Community Service activities (related to revenue increases) and storm drain engineering work. Sewer
spending increased as a result of budget adjustment for the Root Foaming project previously approved by City
Council. Also, included in the foregoing accounting, are accounting changes related to overhead allocations
totaling approximately $175,000 and that benefit the Sewer Fund by $96,000. While adopted Governmental budget
changes reduce reserves substantially, offsetting related future period revenue and estimated but unbudgeted items
are expected to restore budgeted reserve changes. Projected ending reserve levels will be substantially in excess of
the Adopted Budget due to higher FY’14 ending balances than originally estimated in the Adopted Budget.
Westwind Barn preliminary financial results by Allan Epstein
Mr. Epstein prepared seven slides related to the subject matter distributed before the meeting which he presented to
the Committee. Highlights include: Financial operating information for the Town’s new concessionaire, VDE, for
its first twelve months of operation ending January 31, 2015 as well as for the Town during the same period. For
the Town, out of pocket costs for subsidies and utilities (excluding capital and allocated costs) were $16,534
compared to VDE’s estimate for the same period of $38,082 and compared to the Town’s same costs for the year
ended June 30, 2013 of $156,383. The Town’s projection for these costs for the year ending June 30, 2015 has
been revised to $66,400. The projection includes the addition of directly allocated compensation costs, security
costs, and audit costs partially offset by its share of riding lesson proceeds. VDE’s experience for its first twelve
months of operation is believed to be profitable although all of the related costs have not been measured by the
Town or Mr. Epstein. Overall, Mr. Epstein reports that results are significantly better than initial estimates, barn
occupancy is good, users’ comments have been favorable and VDE appears satisfied with its experience.
Presentations from the Floor
None.
Proposed topics and dates for future meetings
The next FIC meeting date is Monday, April 6, 2015 at 4:30 pm. There are no scheduled topics at this time and
members expressed a preference for meeting on Monday, April 13, 2015, if a meeting is needed. Topics for future
meetings include reviews of written Town policies, procedures and practices; and accounting and reporting for
insurance grants. The annual FIC presentation to Council is scheduled for April 20, 2015.
Adjournment - The meeting adjourned at 6:45 pm.
Respectfully submitted by Roddy Sloss, Committee Secretary