Planning Commission - Special Meeting

Town Council and the Finance Commission to order. Good evening everyone. Um clerk, can we have a large roll? Commissioner Rogers here. Commissioner Rener here. Commissioner K absent. Comm. Uh, Chair Fischer, Vice Chair Fischer here, Chair Monk here, council member here, council member Hudis here, council member Odami here, Vice Mayor Risto here, Mayor Moore

here. Uh, thank you. So, we'll begin this meeting with verbal communication, which is the time for members uh of the public to address the town council and finance commission uh on items that are not on the agenda. Uh I don't have any speaker cards at this time. Um is anyone here to speak on verbal communications? Um, okay. Because this is a special meeting, you know, the rules. So, uh, uh, please, uh, keep your comments to things that are pertinent to our agenda item this evening, which is item one. Doesn't sound like it. One sec. You got it.

Okay. Verbal communications. Members of the public are welcome to address this town and finance commission only on the matters listed on the agenda. I'm just reading this off. Towns resources may not be used. You know the audio and the video which I wish we could do um because it does help any when we look at things. Each speaker is limited to three minutes. Okay. Is I'm trying to keep this short. Um, this is a special I heard about I mean I saw this on uh on Saturday. I don't know when you guys posted it, but it was you you know I'm I'm so you know like these are special meetings. Uh this is a you the the special meeting should be coming in and advertising. This one's for the planning commission. It it should be publicized. There's only a couple people here. One, two, you know. Uh so and then uh I want to put that up there because it's it's it's important. There's the bottom line is uh you know couple 285 million.7 million to 300.2 million that we're talking about and I think more you know 33,000 people you know rough roughly in the town. I think more people would are concerned on how we how the town is looking at this. And uh I I just want to know like the 10day rule if you know why why wasn't this posted and is this like an emergency thing because I think it should be even tonight's meeting should have been brought up um in a normal schedule because this this is again this this is a matter of town you know finances and I think more people are interested in especially the way you're doing it. seems a little sneaky to me. Thank you.

Thank you. I have no other cards for verbal communication. Oh, mayor, if you're interested, I can speak to the noticing requirements that apply. Sure. Whenever you're Okay. Um, so for special meetings, which this is tonight, um, the Brown Act requires 24 hours posted notice and so the agenda was posted 24 hours in advance of this meeting. Um, the 10-day publication requirement applies to land use decisions and so the town does place ads in the newspaper whenever there'll be a land use decision coming before the planning commission or the town council. Thank you for the clarification. Um, with no other public comments, um, did you have a question?

No, I wanted to jump in before the presentations get started though.

Okay, sure. Yeah. Um we'll we'll move to item one which is to receive presentation on potential revenue options and provide feedback. And it sounds like council member Hudis has a question. Uh yeah, per our new um agenda policy and our minutes policy um there would be only action minutes from this uh meeting because um however it's a study session. So by definition no actions can get taken. So per our new policy we have the option to request uh different kinds of records of this meeting and you know I think with all of the people who are here the time that's being invested the time that's invested in staff I think it would be of benefit to the community to uh record the FAQs of this meeting the questions um that staff thinks are pertinent um and the answers to them. I understand we have a presentation um but there will also be important questions I think that come up. So I move to uh have FAQs uh for this meeting.

Council member Renie second. Okay. Is there any discussion? Yes. To the clerk. Um I just wanted to clarify um what you mean by FAQs, if there's any guidelines or anything so that we know how to prepare them.

Um I'm not sure I want to wing it. I mean, we had the opportunity to do that in our policy that we adopted recently. In my mind, um, an FAQ is a question of, uh, general interest. So, um, pertinent to the topic. Uh so I think that staff could use discretion in identifying what are those questions not to have to do a verbatim you know back and forth or anything but to uh use judgment about what are sort of important questions that come up and particularly since we have an expert here um I think it'd be useful to have the answers to what I would call important questions. We adopted the term FAQ in the policy, but for me it's um important questions without going to the detail of either summary minutes or verbatim minutes or you know other things. I hope that helps.

Okay. So to clarify, it would be up to the discretion of staff to determine and then those would be posted as supplemental to the minutes. That would be my understanding. Yeah. Okay. Any other questions? None. Okay, I will call the question. All those in favor? I. Any opposed? None. Any abstensions? Passes unanimously. Okay, great. Um, I will now turn uh us over to staff to begin the presentation. Thank you.

Thank you. Good evening, Town Council Finance Commission. Christine Al Farro, administrative services director here introduced to introduce the item this evening. Uh next to me you'll see uh Wy Fox and then online we also have um Jim Morris with Urban Futures Inc. or UFI who will be taking you through uh the presentation this evening. Uh before we uh jump into that presentation, just wanted to take you through the agenda before you this evening. If just trying to get our clicker to function here. Uh there has been an update to the presentation. So you will see uh new copies um uh before you this evening and we will get the updated presentation posted after the meeting this evening. So here we go. The presentation outline for this evening is really to go over uh both revenue tax options and analysis along with capital financing options as well and then wrapping it up uh taking you through uh potential next steps. With that, we wanted to give a bit of a lay of the land on uh town finances. Um the focus this evening again is to provide additional information for the finance commission and the town council on revenue options. The focus is still to preserve revenue options uh not necessarily selecting revenue options for the November 2026 ballot. Um the charts that you see before you on this uh slide are ones that were presented as part of the midyear financial report uh with the updated forecast numbers for 2627. Uh additionally uh the table to the right on unfunded needs was presented to both the finance commission and the town council town council earlier uh this calendar year and those numbers have not changed since the last time we showed them. I did want to provide a little bit of perspective for the unfunded needs. These are based on tier three capital

improvement or CIP projects uh from 2004 that were escalated to 2005 numbers using a 4% escalator. Um I do want to reiterate as I have in the past uh there is uh no immediate financial crisis. The town is fiscally sound. Um we are simply bringing uh different variety of options to the uh council and the commission uh because we do foresee in the future potentially having uh a structural or having a structural deficit and we want to get ahead of it uh before it gets too far uh down the road. With that, I will turn it over uh to Wy Fox who will take you through the rest of the presentation.

Good evening, Mayor, Vice Mayor, members of the council as well as the commission. It's a pleasure to be with you this this evening and really do commend the town for looking in advance of potential revenue options. Um we were engaged to provide a little bit more detail of various uh revenue measure options as well as get a sense of what type of tax rate might be needed to generate a $5 million in revenue to fill a potential operating gap as well as what it would look like potentially uh for financing 100 million worth of capital. This is just to have a number so that you can compare and contrast the different options. It's in no way saying that we recommend putting X, Y, or Z on the November ballot or that $5 million is the right number for operating needs or that 100 million is the right number for capital needs. It is to provide more information and to get some more feedback. It's actually it's going too fast. I was told that it wasn't going to work and I had some standup jokes in my head, but it's actually moving too fast. Okay, the perfect uh perfect background sound for this. So, when we present uh revenue enhancement options uh for local governments, we do look at four factors because how do you compare? These are different types of taxes even if you're looking at generating one level of revenue. So there are four basic considerations that we consider. Um that is one the adequacy and certainty of the revenue stream. So does the tax generate say here again we picked the $5 million. Are you able to generate the $5 million

consistently uh or is it a volatile revenue stream year in and year out? We also consider equity and competitiveness. That is how is the fiscal burden uh spread? Is it spread appropriately? Um who bears the tax burden? And then how would you compare against surrounding commu communities uh with that adopted tax rate to generate the revenue stream? Is it transparent uh easy to find information? Um structure is easy to understand. Is there a likelihood of voter approval? So, we'll look at uh past voter approval on different revenue measures and simplicity. Is it simple enough to understand for the public or does it cause confusion because there's potentially multiple ballot measures that need to be adopted? Um, and that the tax is not highly burdensome. So there are a variety of revenue enhancement options available to local governments. Uh we did not select for further evaluation at this time. Uh a couple of the taxes that you see on the bottom uh for for example utility user tax the voter approval rate in California is low um and can be considered regressive. That's a tax on utilities um within this the town. The toot or trans t transex and occupancy tax. Uh the town already has a 12% TOT um and so to generate enough revenue again we're looking at that $5 million target would put the town well beyond um any surrounding communities. Uh there's also an option of vacancy tax uh that has been a quite of a hot topic. Uh but this is a type of tax uh that isn't as appropriate for generating a goal or target of a revenue stream. It really is

meant to be uh for behavior modification, disincentivizing vacancy uh rather than again generating revenue, consistent revenue u for operations for benefit assessment. Um I know the town is potentially interested in that. Uh we do have a slide later on to talk a little bit more about what that is. Um and it is very specific uh to benefits within with the properties within that district versus again creating a revenue stream for general operations. So we'll start with the TUT or the transaction and use tax. Uh this is functionally very similar to the state sales tax and it is a tax on sale or use of goods that does exclude necessities of life uh including most food and medicines. On the right we have some data on the current total sales tax within the town. You have the 6% state sales tax, the 1.25% 25% Bradley Burns local share and then there this 2% total cap for the region. Uh right now the town does have measure G which is a 1/8 or.125% TUT that expires in 2038. Generally speaking, U TUT voter approval is very strong specifically for a general purpose TUT, which would require a majority vote. And you can also uh structure the TUT as a special purpose tax for specific uses and purposes that would require the twothirds voter threshold. do want to point out that uh there is a special legislation within the county that adds a 1/8 uh% uh that's the peninsula corridor JPA retail TUT uh and very recently in November 2025 the

county adopted a temporary measure uh through 2031 which added a 625% um for fiscal emergency. So the current total uh sales tax in the town is 9.875% or 9 and 78%. Um and under the 2% cap uh given uh all of the additional taxes that uh mentioned in the prior slide, the town has additional 1/8 or.125% left under the cap. That.125% would not generate a target of 5 million in revenue. uh that would be closer to the half cent or 0.50% TUT. Um and for that uh the town would need to pursue special legislation again to get up to that half a cent uh additional TUT. As you can see here, uh, based on the town's already existing measure D, we can estimate that that additional halfsent, uh, tax would generate approximately 5.3 million annually starting in the fourth quarter of fiscal year 2027. This would put the town at a 10.375% uh, sales tax rate, at least until uh, 2031 um, when the the special measure, the temporary measure that the county adopted uh, goes away. We also provide some voter approval statistics here. Again, very strong voter approval for general purpose uh sales tax. Uh this is within the region and the Bay Area. However, the 10 uh 375% would put the town at the high end um of the T sales tax rate. So in summary, uh just some pros and cons on TUT. Uh as I mentioned, vote

approval is very strong for especially for general purpose sales tax. Uh that half a cent would generate this again $5 million target in revenue. And while it's it is more volatile as you can see um on the con side than parcel tax or a UUT um it is we've been surprised even through co that sales tax remains strong. So again there is the adequacy uh aspect of this sales tax. Um and in terms of spread of the tax burden uh this does spread the tax across businesses, residents and also visitors that come into the town. So tax burden isn't just on town residents. As I mentioned before, uh the flip side is that the town would be at the high end at that 10 and 38% sales tax rate. Um the town would need to uh pursue special legislation um to go beyond that 1/8 uh cent that it's under. Having said that, you know, having some differential in sales tax rates doesn't tend to drive consumer behavior that much.

We move on to personal tax, please. Um, I had some questions just on the sales tax, but just to be considerate, do we want to have them now or wait till the end? I think now is a good time to ask a couple questions on the sales tax. Yeah. Okay, perfect. Um, so a couple comments or or questions I have when I looked at this is what percentage of that sales tax stays local. Um,

the transaction in use tax uh that the town already has that measure G that stays local. Um, I'll go back to the structure of so here's where the current rate is at that 9.875. 87 5% 6% is the state sales tax and then there's the Bradley Burns which has the allocation through the county pool. Um and then that 2% cap you can see the various other agencies that have a TUT in place that var that benefit um those districts or special districts. Um and then the 0.125% again the measure G is what comes back if the town puts anywhere from you know that uses the 1/8 cap or seek special legislation to get the extra half cent that would come back to the town. And then my my second question was, have you looked at the town of Los Gatus and the breakdown for um percentages that make up that sales tax revenue from a business standpoint and just who makes up the majority of it and the potential impact?

I think we have had a visual of it before. or I've seen a budget at a glance online that has it, but we are looking to include it as part of the budget as well this year to see that breakdown for the town when you're talking about both property and sales tax so we can see where the percentages are going and that would be helpful and then maybe some economic sensitivity. Um, if that can be included as well. Thanks. Town manager.

Yeah, the last time we spoke with our consultants, 25 businesses made up 50% of our revenue. Thank you. Okay, go ahead. Great. So, with the parcel tax, uh this is a property tax. Um it is a special purpose tax that requires a twothirds voter threshold. It is different from an ad valorum tax uh because it is a tax um on the property u either a fixed or flat amount or it can be based on square footage tiered with that within that um or the same tax rate by square footage. Here you can see on the right hand side some statewide facts uh about parcel tax. So really the restriction here is that it can't the structure cannot be arbitrary. has got to be done on a reasonable basis. And we're going to show you a few examples um of how a parcel tax could be structured. Currently, there is no parcel tax um in the town of Lascatos. Um there are a few, we show some examples in Sanelo County as well as Santa Clara County. Uh Santa Cruz County as well as the city also have um some small parcel taxes in place. Um the voter threshold is is fairly strong for parcel taxes. Our voter approval rate is fairly strong even given the two-thirds voter threshold. So we're providing three alternatives here. And again, this is just for information so you can get a sense of what these different structures, what the tax rate would look like to produce

that target $5 million in annual revenue. Here is the starting point um that some other communities use, which is just a flat per parcel tax. So to generate approximately 5 million in estimated annual revenue, the per parcel tax would be $445 per parcel. And then below that to incorporate um some equity into the methodology, we looked at a tiered based on parcel size. So you can see five tiers here on that bottom table. Um the amount is based on the average parcel size here for the estimates um to get to that $5 million target. Um but you can see here that the tax amount instead of being $445 per parcel, no matter the land use or the size, um the tax ranges from $250 uh to $3,000 annually. This is a a tax that can have an inflator on it as well. We're just showing you first year what that would look like. And then as mentioned um can be structured as a tax rate per square foot. Um and so looking at the various uh parcel types or land uses as well as size, you can see a range here um of what this tax would look like. Um it's not per parcel, right? So if you have a parcel, um uh whatever that size is is how it would be calculated based on that 6 cents per square foot. because of the um because of the distribution of parcels within the town, the unique characteristics, we did here introduce a cap. Um otherwise, the very very large parcels would skew those parcels would pay a really large share of the total parcel tax revenue. Again, this is just an example. Uh we're not saying this is the right cap um or that

there needs to be a cap of if not desired, but we looked at a cap of $750 so that no parcel um would get more than $750 bill for that year. And that would require um about 2500 parcels being capped at that $750. So to summarize uh parcel tax uh it is a a very certain revenue stream really not subject to market volatility. um you can introduce uh an inflator as well. Um in terms of equity, you can see the different ways it can be structured to introduce more equity um rather than just the flat per parcel structure. Um voter approval, as I mentioned, is is fairly strong even given the 2/3 voter threshold, but it is a higher threshold than a general purpose uh TUT, for example. um at the 6 cents per square foot with a cap of $750, uh the town would be towards the upper end of parcel tax amounts. Um in compared to surrounding communities that we showed on an earlier slide on parcel tax, do you have a question on this?

Uh yeah, I did have a question. Although you had something about exemptions. I know nonprofits don't pay or um yeah, some nonprofits don't pay property tax. Do they pay parcel taxes? So the exemptions um are the agency can decide on the exemptions for parcel tax. It's different than an advalorum, say a general obligation bond measure that we'll go over a little bit later, but there are examples of policies with certain exemptions. And I don't know, Jim, if you want to provide any more detail on that,

but yeah, so this would be policy driven though. Okay. Thank you.

Other qu Yeah, please. Council member Hudus. Um on page 18, which is the more complex uh revenue alternative, um the table there, um it looks like other residential of uh 16,000 square ft would be 5 20 ft. Uh 523. Um but single family residential of the same size would be 750. Why why is that? And what is other residential um that uh that might have that much lower rate

on slide 18 uh page 18 of the packet 13 on the slides. 13.

Yeah. I don't know if uh Jim is able to speak as well cuz he's in he's kneedeep on the numbers but yeah we looked at the different types there's condominiums single family residential and other which can be town homes um mobile homes that we look at in other categories but so in a town home the parcel size of a town home that doesn't make sense um to me Um

I'm trying to understand what is other residential and why is it so much lower than single multif family if it's includes if there's multif family so it could be any number of units on a parcel um one parcel um right okay for the conomin minions and mobile homes and the single family than all other I see. So it could be 100 units um if it's one parcel. Okay.

Again and I believe we do have uh Jim Morris maybe available to speak if he wants to add anything to this. Go ahead Jim. and we can provide very specific detail. We have the the spreadsheet. I just don't have it in front of me, but it would be, you know, town home two plus or multif family. Maybe we can have Jim come back to that when he when we figure out the technical difficulties. I think is a question from council member Badami.

Yes. Thank you, mayor. So how do um ADUs figure in because you could have two dwelling units on one parcel? Yeah. So it would it depends on which structure. If it's the structure is per square footage, it's the square footage of the acreage. There is also you can look at square footage of the building improvements. It's another option. Little bit more difficult to get the data for that. Easier to get a parcel acreage data. So here it's purely based on the parcel size.

Okay. So even if it's a fixed rate per parcel and you've got two residences, dwelling units, it still would just be on a fixed flat rate 445. Yes, with that structure. Okay. Thank you. Uh yes, I saw Jim. Have we figured it out? Can you hear me, mayor? Yes, we can. Did you hear the question, Jim? They wanted more detail on the other residential.

Yeah. So, uh, other residential is a mix. It's multif family. Uh, and as Wingsy said, it can include mobile home parks. So, you you really get kind of a a bit of a mashup. Although, we we took mobile home parks and put it in with condominiums. So, so really what you're seeing is is uh parcels that have multiple uh units on them, but it's one parcel. Um, and so the the metric here is simply parcel size. Uh, so I know one of the council members or one of the commissioners asked uh you know what happens if you have multiple units. It's just it's based upon the actual size of the parcel. So you could have multiple units on a fairly small parcel if they're stacked.

Thank you. Don't know if that got at the question of the the prior council member about about other residential. Yes, it did. Thank you. Uhhuh. Okay, Commissioner Monk. Thanks. My question is about the cap and the to me a cap like this feels regressive, which was noted in the prior um slides about for us not pursuing one of the options. And I'm just curious if the cap is shifted, how much does it change the cost per square foot? And if it was removed entirely, what would the cost per square foot be?

Yes, we did look at those scenarios and Jim can provide more detail. And again, this is just an example to show and we've have a model that staff can use just to run different scenarios. Um, as and Jim, we ran it without the cap.

Yeah. Essentially cuts it about half in terms of a rate. So you'd come in at about three cents without the cap. Um but then the range of of that annual uh tax or assessment on on each parcel widens significantly. Um, and you can get a uh the tax that some might pay up to I think uh the height of it or the the uh upper end was somewhere around uh three $30,000 uh to it might have been a little bit higher than that. Um so understandable uh that that that may be a concern in terms of the uh the equity in terms of of a cap but uh when we've looked at this with other communities uh the counterargument goes well um everybody who has an active or inuse parcel uh is receiving benefits from the city services that are provided to make that a functional parcel and to provide the uh the services uh that the community needs to function. Um, and you know, does that scale at size of the parcel? Uh, there's an argument that it could, there's an argument that it couldn't. Uh, uh, and so I, you know, it's it's an alternative where that consideration has some some equity to it. I'll give you an example where we see it the most is you might apply a cap just to single family residential. Um because you have quite large differentials between a small residential parcel uh and a uh a large residential parcel. Both are a use of that. Um and uh they're the same type of use with theoretically somewhat the same burden. Maybe not quite. Um, but does it just scale one for one uh based upon the square footage of the parcel? Uh, even though you just have one dwelling unit on that parcel, uh, you could you could

make an argument that that carries a bit of of of a of an inequity to it. It, you know, equity is is is a lens that has a lot of different uh, viewsheds on it. So uh we just want to simply present it as an option that other towns and other cities have done uh where they felt that that has enhanced that for the community.

Thank you. Other questions? Can can I make just one other point that I wanted to show on that on that on that graph because again it'll give you some insight into how you can structure a parcel tax to make it feel like it best suits the uh the needs both in terms of revenue generation but also the burden in terms of how that's spread. Um you'll see uh in that particular table there um that there's agricultural and vacant land. Um and so you may want to establish a a different rate for that uh where there's being where there's no use made. Um and we put in there as an example, you could just establish a flat rate uh for those those types based upon the size of that. Uh don't have to uh you can scale those uh and let those just simply be on a per square foot basis. But again, you'll get some fairly large parcel taxes paid by folks with either vacant large lots or agricultural large lots.

Yeah, Commissioner Fischer. So, there there's a number of ways that that this can go, it seems. Does your firm help with narrowing down options for the council and for the town just to zero in so we don't necessarily anchor to these numbers in sales tax and these number in the parcel tax? Yeah. Oh, go ahead. Go ahead, Winkxy. No, please.

So, if the council or the commission wanted to further study a parcel tax, for example, we do think that an important piece is community input and information um and doing a survey to really understand each community is very different and that lens with which you see equity. Um and then we certainly again have this model where we can run an infinite number of scenarios. This is what the rest of the per square footage tax rate would look like if you increase the cap, for example, to a thousand or didn't have a cap. Jim, did you want to add?

Oh, yeah. Simply that that makes the point, right? Yes, we can customize this and it really is an iterative process with uh either the community input or leadership input about what feels and fits right for that particular community. We just wanted to give you an example that showed the various ways in which that could be done so that you can think about that because it really does require your input uh so that we can help design that.

Great. And then I wanted to ask uh you know you talked about and I know we're not to that point yet. This would be a later conversation but one of the pieces that is is within this obviously is feasibility. Um and a twothirds is a much higher barrier than a you know 50% 50 plus one. Uh and and I don't know if you did any looking at past elections in Los Scatos, but just for reference, the high school district uh in the last election or yeah, the last election passed a 128 per parcel annual tax. Um and I think it passed by like less than 10 votes. Um and my assessment, and I'm curious if this is yours, is that school districts are more popular than than cities and towns. Um, and so I wanted to see, you know, your reaction to that and sort of how you are thinking the town could or couldn't be different in a meaningful way.

Yes. And so I'll go back to slide 11. I'm absolutely correct. We do a lot of work with school districts on both general obligation side as well as parcel tax. The reason why school districts use parcel tax is for operations for all of their capital. they have a much lower voter threshold uh for general obligation bonds which is an advantage as well. Um so we do tend to focus our statistics and we'll also have some on general obligation bonds on non-school parcel taxes but you can see here um that since 2008 20 non-school parcel taxes. So there aren't as many that come to the ballot as say state sales or TUT the sales tax. Um, but when you look at the ones that do come, specifically ones that uh give more detail about the special purpose, it's still a fairly strong uh voter approval rate. And again, we do think a key piece is a scientific survey. And so you can get very specific about structuring of the parcel tax. At what threshold um would it likely pass? And then your uh comfort, what margin of error are you comfortable in proceeding?

Thank you. Great. Please proceed.

So, in terms of again looking at that $5 million uh target uh for general fund operations, um we were asked to look at a benefit assessment. And the reason why we um put separate this from our analysis um that you just saw in parallel tax and TUT is because this is a different type of tool. Um you know benefit assessment also called a special assessment is it's not for funding current operations current services or um current uh capital projects in your CIP that benefit the general community. This is for specific benefit to those properties within the special district. Um and so the process is very different. you do need to commission an engineers report um that gives a detail regarding what are the benefits what are the added benefits um that are differentiated these special benefits from a general benefit um and then even within that district the proportionate share um of each parcel's benefit um then they get a proportionate share of that tax and then the process is a mail ballot process it's a protest vote um so you have to have a majority protest test um and it is weighted by that uh proportionate share um of the benefit that I mentioned before. Examples of benefit assessments are prevent new fire prevention or mitigation services, new open space acquisition or restoration, storm water system um again specific to those properties within the district. Any questions in general about benefit assessment district?

I I did have one question on that which was um so we were I think the idea here is probably something like wildfire prevention is I think our our thought on this. Um, and one of the examples I think we've learned from and looked to is Truckucky, which has a very sophisticated wildfire prevention um, program. And they ended up doing a parcel tax, but it was for a district within Truckucky. It was for a a special wildfire district. And so my question is can we and I I this is imprecise but can you make up the the you know where you choose to uh go forward with this. What are the boundaries the restrictions on boundaries?

Yes. So so you would set the boundaries similar to community facilities district you would set the boundaries. You just have to have that evidence of that special benefit to those properties within that district. Okay, that's helpful. Thank you.

Great. So, shifting a little bit in terms of looking at that $5 million operating target. Uh the town separately has discussed uh capital needs or deferred capital needs. Um we did select again just looking at what options the town might have to generate say a hundred million um in proceeds. So we do understand that there's potentially more potentially less. Again just so that you can compare and contrast um we're looking at generating a hundred million in project proceeds. So with the different revenue streams that we just discussed um like parcel tax or TUT or one that we didn't look too much into depth UUT or you name you know TOT any revenue enhancement option um that does come into the general fund. Um you you cannot securitize that revenue stream to issue bonds. You could however issue lease revenue bonds, right? So you go to the voters for that revenue, but you don't need to go to voters to issue bonds against the general fund because you've gone to voters for the revenue stream. Um, and you wouldn't be increasing any taxes with the issuance of lease revenue bonds. Separately, there is the option of general obligation bonds and that does go to the ballot. uh for towns and cities u counties the voter threshold is twothirds. Um and this general obligation bonds can only be used for specific capital projects um that and you know is included in the tax rate statement and again cannot be used for operations. So just looking at the lease revenue bond structure um and and many communities, cities, agencies use this structure. Uh the security for this type of bond is general fund available legally available general fund revenues

and it is a lease lease back structure. um where you would take town assets uh lease it to a financing authority for example um that would lease it back to the town and then in turn the town makes lease payments that need to be appropriated every year. Those lease payments um match debt service on lease revenue bonds. We believe the town's credit would be very very strong. Um and so just making an assumption that the town would be in the double A category for a rating. Um and you could issue lease revenue bonds for 30 years that would generate uh 100 million in project proceeds um resulting in a little over $6 million annually in debt service. Again, separately you could go to the voters uh with a general obligation bond ballot measure. This is unlike parcel tax. This is an ad valorum property tax um which some may view as less regressive because it is based on assessed value not market value but the assessed value which is similar to how your property tax is calculated. Um again this requires a twothirds voter threshold. Um, and where this can be appropriate is where there's broad-based community support for the specific basket or list of projects uh that these bonds would be issued for. And what you would do is go to the voters with a maximum authorization amount. So that say 100 million was authorized, you could issue those bonds over time, multiple series um but you can never go above that 100 million. Um, and then we try to structure it so that it's a level tax rate. Again, depending on the assumptions, if you don't likely won't spend the full 100 million authorization in one series, you can issue them every

year, every other year. Um, again, with that goal of keeping the tax rate the same. So, mayors, you mentioned school districts uh before. school districts pass these very regularly um in general elections and have extremely high success rates. Uh they also, as I mentioned, have the advantage of having a 55% voter threshold um unlike the town would have a twothirds voter threshold. Having said that, um we did look at um the last elections, general elections going back to 2018. So you can see the success rate for non-school geo bond ballot measures both in the Bay Area um as well as statewide. Are you done with this part or are you still going?

Yes. uh the one we just talked about. I was just curious on terms of data um if you have any um information about if a um what whether we're talking about a go or even a parcel tax or sales tax if it goes to ballot and it fails and a second attempt is made you know some point in the near future to try again what's the success rate on a second try?

We don't have that particular data. I I have to I do know though that many many school districts and towns and cities try again and sometimes it's for the same purpose sometimes they'll survey and it's for a more specific set of projects for example or services or things change um there are very specific purposes and thresholds that should be surveyed um you know we do feel that that taxes geo bonds parcel tax can pass anywhere uh but it is a matter of how much and for What? Commissioner Fischer, for the difference between the revenue bond and the general obligation, is the debt servicing payment the same?

Meaning, so your example with the lease bond is that on $100 million, your debt service is 66.1 million. Is that the same by issuing a general obligation bond or is it cheaper?

The general obligation bonds have a stronger rating than lease revenue bonds. Um, so if the town's issuer credit rating is a double A+, that's where your general obligation bonds would be rated because lease revenue bonds are an appropriation credit. Again, the town council would need to appropriate those lease payments every year. It's rated one notch lower. So it would be a double A rated lease revenue bonds. Spreads between double A and double A plus range. You know, right now we're in a market environment where the spreads are fairly tight, but yes, uh, we would expect a general obligation bond to price better. And so it would be a little bit below that 6.1 million.

Go ahead.

This is information um on the town's historical assessed value going back to 2017. So you can see the average uh growth rate of about 6 and a.5% over the last 10 years. And right now the town is at 19.9 billion assessed value. So, how we structure or give you estimates in terms of general obligation bonds is we take the total town's assessed value and we make some assumptions about um what the tax rate would need to be in order to generate x amount of bond proceeds. Again, this is an example of okay, we don't think you would spend the full 100 million to 300 million in one bond issuance. Um so, our example has the town issuing every two years. um just to give you a sense of what the tax rate would be. So for a hundred million in project proceeds across three bond issuances, the tax rate per 100,000 assessed value would be $18. Uh getting up to that 300 million would be $54 per 100,000 assessed value. We're assuming here a conservative 3% assessed value growth within this structuring as well as 30-year bonds as you saw in the least revenue bonds. So the way that uh this tax is structured is per 100,000 AV. So just to give a sense because some of us uh may not be able to do the math in our heads. Um and we looked at median assessed value within single family residents uh in Lascatos uh which is over one and a just over one and a half million. So, for example, you take that assessed value um divide it by 100,000 because this tax rate is per 100,000 um and then multiply that by the 18 all the way up to $54 per 100,000 assessed value. And

to the right would be that first year's levy uh for for each of the tax rates going from 282 to 847. questions on general obligation. Last slide here is just some information again on a timeline if council um were to pursue a ballot measure. Um this is not a recommendation just so you get a sense of what the schedule and process is for a ballot measure. Um again we recommend scientific surveys, opinion research, um more study, talking to stakeholders. Um and in any given election year, really June is when you would want to decide um on a revenue measure if you were to put one on uh the November ballot. Um and this is an ordinance process that would require the two meetings in July if the council meets in July because there is a deadline um for submission of a ballot measure to the register of voters. Um for this year it be August 7th 2026 for the November 3rd election. I will take any questions.

Thank you very much. Yes, Council Member Hudis. Um yeah, so the July 7 uh we actually I don't believe have a a regular council meeting in July. So it would be June I believe. Is that correct? Backwards from the August. Okay. So that would be like mid June. And would it um would this have to be considered at a regular meeting or could this be done at a special meeting?

Um I can uh look it up. My recollection is it's at a regular meeting, not a special meeting. So that would be like June 16th or something like that. Yes. Yes. Council member, thank you. follow-up question um for staff. So, although council doesn't meet in July, it's conceivable that we could still have a special meeting in July regardless if necessary. Um I while you're asking other questions, I will look up whether it needs to be a regularly scheduled meeting rather than a special meeting. Okay. Thank you.

Yep. Um, let me suggest that we I think we do it is we have a scheduled meeting in July that we've cancelled. So, it is I would think that might be a regularly scheduled meeting. We just uncanc it.

Okay. Thank you. May I also mention and I know alluded to it as the option you the lease rev bonds um versus general obligation bonds. Um, there is an option for a parcel tax, for example, to be at a rate in which you could accomplish both the option of plugging your gap, whether that's a $5 million or less, as well as have a revenue stream again for those least revenue bonds. Obviously, it would just be at a a much higher parcel tax rate. Again, with the general obligation bonds, there is not that option. It has to go to uh capital projects. Commissioner Fischer,

do we have an estimate of the cost to bring like the sales tax, the parcel tax? What's what's it going to cost to bring that to the ballot? And then the followup is if we need a legislative approval, is that already in the works or is that something that um we're still waiting on? I can cover the legis actually I think we have assistant town manager Katie Namura who'll handle the question on the legislative slide. Thank you Katie Namura assistant town manager. Uh we did receive direction from the council to pursue this legislation. So we are actively doing that now. It is in the works and in progress. just expectation on timing and is is there

so if I I'm just to kind of anticipate what your your line of questioning is leading us to if if there is a desire to go forward then we can we would make it contingent on the legislation passing but we would still put forward by the deadlines in August then the cost I don't currently have that information something we can look into for Okay.

Based on last year, I think it would be around I think we estimated was it 80,000 to put it put the measure on, but we would need updated numbers, but that's where we were at last year. And that's not including, you know, costs for polling and other other consulting services. Please. So, I'm have had issues, I guess, trying to understand the the timing on this in terms of the urgency associated with trying to get this on a ballot in November. Um, and if just to make sure I got it right, if we aren't on the ballot in November 26, we wait till 28. Is that right?

That's correct.

Okay. Um it just it just strikes me that um one of the things that's missing is information to make our case if we were going to go to the voters associated with what the real clear need is for the whatever number you want to end up in. We're plugging numbers right now, but I don't think you could go forward with those numbers and make a clear case to the voters that that's a a clear defined need. Um so I'm struggling a little bit why why the rush. Um, and I I know last year we went through a pretty hairy budget conversation because we were projecting a deficit for this year and that deficit is now a 4.3 surplus. So, I think we bought ourselves a little bit of time that we can both really get our arms around what our current fiscal situation is, what the studies will yield in terms of what our future may look like. Um, so maybe help me a little bit with why this kind of feeling of pressure that we need to get on this year's ballot.

Uh, we are not meaning to cause a um an emphasis on a rush to get this on the 2026 ballot. We simply wanted to bring information. So should the council decide that that is something they want to pursue in 2026, they understand the timeline um to get there. uh in terms of the additional studies that we're waiting for that additional information. I did meet with the consultants uh today. So we will be bringing the uh base forecast and the housing element numbers sorry back on um um April 14th and then our plan is to be before council on the following meeting which I believe is the um the 26th.

Yeah. So, so I actually really appreciate all the information. I've sure learned an awful lot that I had no idea um about revenue generation in in a town of our size. Um, I I think part of this is if you want to go forward with a successful campaign, having a very clear and defined need that voters can be communicated with and have input to, as you mentioned, um, but really believe that's a need. And and I think one of our, you know, maybe it's fortunate, in some regards it might be unfortunate, is we've been very successful at facing deficits and turning to surpluses for the at least since I've been on the council, which is great news, but I think it undermines a case that says we are about to go from a 4.3 surplus to a minus 3.1 next year deficit without a lot more information. So I think part of this is how would you, you know, really approach the public in a way that would be a successful campaign if in fact we can arrive at what our real need is.

Tan manager, did you want to jump in or council member Renie? Um, I I might suggest that maybe some input from the finance commission members about which do you think is more important, trying to plug an operational hole that doesn't seem to quite be there yet or to go after money to deal with some of our infrastructure needs, which is a I think a different solution possibly. Um, and I kind of feel like that's where we're we know we have a hole that's not going to easily get filled.

Please

continue with my my opinions. Um, I I think that um until we really understand what the effect of the change in the town is going to have, I my gut says capital to be honest. I think infrastructure has been um not necessarily maintained in a way that's going to continue in our best interest in the future, but until we know more specifically, I think it's just hard to um put a put a number on that yet. Um, and I and I also think, you know, as an example in the operating side, we've got to build some credibility around what that really is going to look like in the future and that the that we've taken the steps necessary and um to be as an efficient organization. I think the town's made great strides this I think a lot's happened this year, but um I don't think we're done yet. Um so I think we got to finish that work, quantify that work, and then present that work to the town. Okay, great. Um, I'll go to Commissioner Fischer and then I'll open up public comment and then we can have more of a a broad discussion about this. Um just a followup to that question on what it would for the commission to be helpful for the capital and for um the operating I would think on the the capital needs a breakdown and maybe this has already been done but with these you know street roads public safety town facilities a breakdown into urgency uh maintenance um you know what is an immediate that needs to to needs to happen um because if we have costs of you know 285 to 300 00 million. I got to believe that not all of that is, you know, in the near term, right? It's things that is is we need to build towards. So, I think that would be helpful. And then on the operation side, on the left side of that chart, we have a pretty good idea that those deficit numbers are are probably underestimated um for a variety of reasons. And so

until we kind of get clarity, it's hard to recommend or come back and say that we're going to have debt servicing of 6.1 million on top of um maybe some of this unknown deficits. So we we definitely want to get clarity and we're working towards that and I think, you know, the hope is that we'll have that shortly, right? And and for the benefit of the public, there's a study occurring right now that'll be done in the next month or so um that that will help answer that question. And then I'll just say one other thing before I go to um Council Member Renie and then open up to the public. Um but I think it might be helpful for staff to consider bringing the wildfire presentation that the council got um from emergency manager Todd uh to the finance commission at some point because that the council had the benefit of of hearing a a robust presentation from our emergency manager that basically outlined three different scenarios of investments in wildfire preparedness. was very helpful um and sort of ended with and we can't do any of this right now. Um uh and so I think that that might be helpful context for the finance commission.

So I just wanted to add on a little bit to um Commissioner Fiser um he brought the thoughts to mind. One of the things I think would be useful to think about is often times aging infrastructure costs a lot more maintenance. So if we hurry up and fix some major piece of infrastructure, what is the return back in savings for for maintenance? Basically, I think that should be part of our equation. Great. Um I'll go to the public. I just have one speaker card from Gus who I don't know if you remember me. I was uh came before you. things for the three sporting events. Uh, Super Bowl, March Madness, which is now. So, hey, March Madness and and the World Cup, but um, you know, I I was married to a accountant, so I and she was, you know, she was super smart. Um, I'd like to point out that uh uh there's only six people here from the public. Um, I think there would be a lot more. Um, the most people don't want new taxes. You're to fight Well, I'm I'll be one of your bigger persons that you're you're to fight against for no new taxes representing the the public. Um, again, this is a lot of money that you're the the amount of money, 285 to 307 we're talking about, and it's just a rush job. you know, the Brown Act. I I have filed class actions in

federal court, not in state court. And this is something that is under I would say under color of law because you're you're not it's not being publicized. Um, also, uh, I'd like to point out, uh, the you're talking about wildfires, the the operation. I I already pointed this out to town council, but uh you know 14% 14 cents out of property taxes go to the county for the fire and and uh that's what other cities and states are doing. You don't have to have a a a fire guy cuz you know bunch of people here are in the newspaper doing the fire stuff that you get on front page newses and this Chris Chris you know it's a million dollars for three years and you know it's three million he saved you know three million right there. One of the things that I want to bring up is soccer. You know the the it shows 22 and a half million to do a replacement on the astroturf and that's If you look it up online, it's a million dollars. So, a lot of this, you know, again, accounting, you you can save this $5 million just by looking at um the what's what they're they're saying they're charging two and a half mil uh two and a half million to replace a soccer field is insane. Another thing was like uh the drainage on you know the streets and roads 172 million. You can find more than that because I pointed out Loma Street train and that's a million dollars to fix something that was a a a plugged up um tour train three years ago and three people spoke on it and it's not it doesn't need I used to live in that area. I have more you know I have more to say but I only have three seconds or five seconds. Thanks for your consideration.

Thank you. And we'll go to Jack Venetta and then Heidi Owens. Mr. Mayor, Vice Mayor, Council, and Finance Commission. Uh, thank you for the time. It's been a while since I've been here. So, um, my request is that we put in the same amount of effort into looking at, um, cost cutting or efficiencies of the costs and the expenditures that we have. And because it's been a long time, my next statement is uh maybe out ofdated, but out of date, but the last I remembered, we bought a very expensive uh add-on to our accounting program. The last I knew, it was about a year behind schedule. I don't know how that is progressing, but I do know that it wasn't producing the reports that we needed. So again, and just to repeat, I'd like to see an equal amount of effort put into studying our costs rather than just revenues. Thank you.

Thank you, Heidi Owens. I don't think I'm allowed to ask questions, so maybe I can relay them through you. Um,

um, as a fellow renter, I'm concerned that any new partial tax could, um, make my rent go up higher. I think that's not allowed. Um so I was hoping to get some comments from someone um from the consultants to assure that renters won't have their rents increased um because of higher partial taxes. But similarly I'm concerned about small businesses having um the taxes passed on to their u tenants or small businesses as tenants getting the triple net triple net lease um expense passed on to them and I think our small businesses already struggle mightily um to operate in the town. So, I was just curious about information about those two things, the the unintended consequences of taxes. And I do appreciate um Commissioner Reiner's comments about slow rolling. I think these are really big decisions and I do agree with some of the public comment here that nobody really knew about this meeting. Um so I it's every two years we can do this. So I think this is the type of issue that should be really um you know given proper time, public comment, public notice, input from the community. Um I just heard about it because I went to democracy 10 today and I subscribed to every single alert. So um that's it. Thanks for letting me share.

Thank you. We have any comments on Zoom? There are no hands raised on Zoom. Great. Thank you. Um then that concludes public comment and we will go back to um the council and financial comm commission. Yes, council member Hudis. Uh thank you. I wonder if um someone could comment on how this might impact uh rents uh renters. Um I don't have that information tonight, but I could get back to the council and the finance commission with that information.

Okay. is information on the tables that were presented and how um that relates to rent rentals. No, if I could Lucy, can you hear me? Please go ahead.

Yeah. So, generally, uh there's that that's going to be largely governed by the terms of a renters's lease uh with their uh landlord. Uh there's nothing in law that prevents uh adjustments uh being made by a landlord based upon uh an increase to their costs of owning the land. Um that would be dictated by when and how much they're able to do that based upon the the the rental lease or the rental terms uh or the lease terms.

Thank you. Um, do we have other comments from finance commissioners about sort of the waiting question that that um, council member asked? It's okay if not or anything else. Oh, yeah. Uh, Vice Mayor Risto and then, uh, Commissioner Reiner,

thank you. I mean, I think we are not in a position right now to know if we want to go forward this fall and I think that would be pretty big lift, but that said, given that staff and um, you know, there's work being done right now to look at the legislative fix, I think that that is important to keep in mind. And even if we don't need it this fall and we need it in two years, I think time is of the essence. We want to make sure that that work continues. Um I we have a lot of options in front of us. I don't know where we'll end up. I don't feel a sense of urgency, but I do appreciate the opportunity to think about this for whether we want to pursue it in the fall if that were something that suddenly became very clear. And it's hard to say what can happen in a few months when we get information back from the consultant when the finance commission sees the information on wildfire preparation. Um you know one of the things I think about is this last year a deficit um did not materialize but we had no control over that. That was not based on anything we knew. It was a surprise increase in sales tax and an unanticipated um uh vacancy rate that did not necessarily serve us well, but it did save money. And so there's so much uncertainty on certain things that we can't control that each year, you know, what we do know is that we cannot we are not going to operate in the black unless something else changes. So I would be hesitant to just say, okay, forget about this. let's talk about it in two years. I think it doesn't hurt to keep the process going and have continued conversation about what our options might be and especially to get that legislative fix put in with created so that we have the opportunity for a sales tax if and when we want to pursue it. Um looks like the town

manager actually wants to either correct me or add something.

Go ahead. No, I just wanted to answer the question about the uh renters. Uh the tenant protection act of 2019 places a cap on certain types of properties. Uh generally uh apartment type rentals greater than 15 years could be capped at 5% plus the local inflation or 10% whichever is lower. Um and certain jurisdictions have other requirements that can actually impact that cap. However, to Jim's point, nothing stops uh rent increase from being passed on to a tenant through a lease or through a vacancy when a new tenant is brought into the apartment. Um, overall, I just want to make really clear part of the reason why staff has brought this forward has been years where we're projecting future deficits. It's incumbent upon us to have the conversations that we're having today. Whether or not we proceed is a choice of the council. We're not going to push the council into that. Years of prudent finances have given us some cushion. Um so did the $7.2 million that we received under the ARPA funding as well as the significant sales tax that was generated by a local business uh that went away for which we placed half of that sales tax into our capital fund and we've been living off that capital fund with minimal contributions to continue it. Our situation today, and we'll see this when NHA's reports come out, which will show the projections being better than what we've seen in our five-year forecast, is that the operating cost increases exceed the revenues. It is assured that we will cross and be unable to continue it. Whether it's the cost of people with a heavy leaning towards the pension cost associated with it or just

the general operating environment on the capital side. We are not contributing enough to the basic deferred maintenance and we are not contributing enough to the largecale capital especially when you consider any of the rehabilitation that may be necessary which includes this facility as well as what one of the public members spoke to a soccer field that has a seven figure improvement as well as $29 million of storm water and a whole litany of list that we provided to on top of that we also cannot contribute to new activities that are important. Wildfire prevention. Our last report we presented in December of last year showed approximately 40 to 42 million in need over the course of the next 10 years. And so when you add all that together, the big question that occurs is what do we want to look like in the future? What do we want to provide? And how are we going to pay for it? And you can have a choice not to contribute more, but then the decisions have to be then what do we cut and reduce and do less of and divest ourselves of to be able to bring our cost framework in line with the revenue. And so irrespective of the decision, it's very important that you're doing your due diligence, that we're having the conversations, and that these con conversations continue with public input and input on the priorities of the town. With that, I'll turn it back to you, Mr. Mayor.

Thank you. Please.

Um, I couldn't agree more. I I think what I'm urging is let's let's do the work and let's get our our understanding of what our future looks like comprehensively integrated and completed and communicated so that we will have a plan moving forward. And I think that's exactly what you're saying, Chris. I'm fully on board. I thought it might be helpful though I'm older so I forget dates. Um the next several steps, we've got budget meetings coming up. We've got consultant reports coming in which I think are going to kick off a whole bunch more questions that we'll need to get answered. You're not going to get a a finished product um coming out of the gate there. We're going to have scenarios. We're going to want to talk how we what we do, what our priorities are along those are. So maybe for the benefit of maybe myself and even the public, the things that are coming up in the next two months or so that will provide information that um will help us formulate that plan. As I mentioned earlier, be back at finance commission uh with the reports from NHA on the 14th to town council on the 21st with the input from finance commission. Uh the budget will print on November 20th and at that point will be the operating and the capital budget. I'm sorry, did I say April 20th? Sorry, thank you. April 20th and then subsequent to that we'll have meetings uh in late April and early May with the finance commission and then with the town council subsequent to that.

Great. Thank you. Um we'll go to commissioner Rogers and then chair Monk and then council member. Council member Hudis.

Let me turn it on. Couple of you know I'm trying to absorb uh all the information that we received in what three days ago. uh and you look at the amount of data that's presented but the but I I also look at the accuracy of forecast and what we're actually doing. I mean, here we're looking at uh fiscal 25 and fiscal 2026. We had a a positive number of 4.3 million and yet we dropped down the next year to a loss of 3.1 million and then for the next five years, I've got to have some confidence in the the reporting. Uh how could you be that far off yeartoyear? Uh and and I asked again are we is this different methods of reporting? Are we doing it government accounting? Is it doing it with generally accepted accounting principles or is it a a modified that's some hybrid uh of both uh cash basis versus acrruel? And so I'm I'm looking and trying to figure out I I have no confidence and if there were online betting I' I've got a bet I want to make uh the accuracy of five years forecast and how did what did we forecast for last year versus what it actually turned out and let's get current reporting where it's more reasonably accurate. This is too much of a gap. I mean it it combined is 7.4 million swing in terms of the results. How do you make decisions about what projects you're going to fund when

you've got that kind of disparity? So that that's one thing. Another is that I want to go back to is we've got a a lot of question about um reasonable housing for unformed median income and I did take the effort to um to look on the internet and um there's a a very large building that's similar to some of those that are being proposed that's on Coleman Avenue. I encourage everybody to take a look at what that looks like. And I wanted to know what was the price of a onebedroom versus and a two-bedroom uh monthly rental on that. And uh the onebedroom was $3,400. Now, is that affordable? How in the world can you get to affordable housing when it's going to be that expensive? A two-bedroom was uh a studio was 2,800. A twobedroom was uh 3,900. I mean, where's the where's the affordability of this? and and what is the target of what we think is the uh affordable housing that we're trying to provide people in Lasatas and that applies to uh the north 40. Uh what are we talking about rents for that one? So this is and the building is on is called Alba Alba. It's on Coleman Avenue. You could look it up on Google uh just for confirmation, but it's right adjacent to the airport. I mean, that can't be that desirable of a place with

all the noise. Uh so my two cents, I think we're not prepared to make a decision based on these forecast. I think there's more work that needs to be done and I would suggest that we move out the timing of uh we spend more time looking at what is uh and and uh the what we vote on talk about um something in three or four weeks out u after we have an opportunity really to you know we we've only had four days to look at 135 pages of reports. Uh hardly u a lot of time to do study and research. Thank you.

Thank you, Chair Monk.

Thank you. Thought I would just um make a comment as the chair of the finance commission. I'm into my third month of my third year and I'm excited to say that next month's commission meeting will finally get three studies presented that go to the core I think of what the the verbal commentary raised which was how do we get a handle on the assets and liabilities of the town. The three studies we're going to be receiving from NHA are our fiscal condition analysis, a five-year and long-term forecast, and a fiscal impact analysis. Um, we've been asking for an asset liability matching since the moment I've been on this commission, and I think we're about to get it, which will really put us in a strong position to understand what is the revenue base and what is the liability base of the city. To give staff credit, staff has urged that we be patient as a finance commission. Uh that is the recurring theme coming from the town manager and we have been patient except in making a motion to start to pay down our unfunded liabilities twice in the last 12 months. The last motion was passed unanimously last week to begin to make additional discretionary payments on what is basically a liability that is not going to get smaller. Outside of that, our hope is that starting next month, we can start to make more recommendations to cut cost as much as potentially raise revenue or optimize revenue. So, I thought I'd just give that context that my tenure sort of lines up with next week's, sorry, next month's meeting and then we'll have a lot of information to make plans and make recommendations to the council.

Thank you, Council Member Badami. Thank you. So, I appreciate the financial wisdom of our finance commissions. You guys are invaluable to us. Um, that being said, um, is it worthy of keeping the process moving for potential revenue options for this election cycle? Um, I'm kind of hearing no, you know, especially from Chair Monk just now. Let's wait till we get these studies maybe next month. I mean, there's a time and expense that's involved in exploring potential revenue options for in such a short time span. So unless I hear otherwise, um I'd like to hear it from a finance commissioner.

We have been urged patience by staff and we have listened. And so as it relates to whether or not we need to move towards a ballot item, you that's a political decision. We're trying to get to the bottom of the town's finances for your benefit. That's the way I see it. Thank you. And I I think I heard that let's um let's not rush things so that we can make a wise decision as politicians and financial stewards of the town.

Council member Hudis. Um yeah, I think you know we were presented with uh some options on doing a sales tax in I think it was 2024 and um you know at that time I felt that we had two main issues with moving that forward. Number one was the accuracy of our 5-year forecast. Um, I don't think we've fixed that at this point, but we're hopeful that we will. Um, the the other was uh how much revenue would actually be generated through that sales tax measure and um the that was without the the legislative fix. Um and if I recall that was about a million dollars a year uh that was projected through that. Now since that time um the uh county has uh passed um a an additional sales tax of a half percent. Um and um I did want to reflect on that a little bit that I think one of the keys for that passing was that there was emphasis not only on how much revenue that tax would raise but also on a three-pronged approach where the county would identify savings uh that could be had. And so to come back to uh Mr. Vanetta's comments. I think that if we are going to move something forward with a revenue measure, we have to put efforts into understanding how uh from a quantitative perspective we can actually be more efficient um with the money that we

have. There are all kinds of options and technologies and AI and uh other things and as well as um really the motivation of our own uh terrific employees to come forward with ideas about how to be uh more effective um operationally effective as well. So I think that needs to be part of any uh comprehensive view on fixing uh the financial issues we have. And so I would also like to see you know effort put into that side as well.

The town manager.

No, I really appreciate all the comments of the council. There's a couple of things that are happening at the same time we're experiencing and having to talk and make decisions about the financial future at the same time when we're looking at the data and how dated some of the data is from our current systems uh to be able to utilize that for decision-m fortunately the town has implemented its new ERP system was a little over a million dollars. There are still modules to be implemented and we still are improving upon our chart of accounts which would allow us to get to those monthly monitoring statements for the budget which is something that we've committed to do. Um also looking at tracking our capital projects and ensuring that we're following where are we on those projects and how much we're spending. It sounds from the discussions that in April we will be getting the preliminary information on the assumptions related to those NHA reports. the three studies on both the housing element implementation and our financial outlook and 10-year forecast and I think and with those you'll see the numbers that NHA is projecting for us that look a little bit better. Our reserves are healthy so a decision today is not necessarily something that is required. we can continue the conversation is what I'm hearing from the council and the commission uh and circle back after those studies to be able to determine what course of action we want to take going forward. Um I know the council is going to be meeting here at 7:00 to give us some formal direction which I imagine it will be a relatively shorter meeting but I will say the commission has done a wonderful job asking the right questions. They've identified the areas of weakness that we've needed to address to be able to demonstrate the numbers on a more timely basis. The council has been very

diligent and thoughtful in how we proceed um in trying to protect the services of the town. And on the revenue side, we're already moving forward with with some significant initiatives that could lead to potentially additional revenue. On the expenditure side, our new administrative services director has implemented a process that we're we've been reooking at the expenditures, the actual expenditures of the last three years and resetting department budgets to what is more realistic and adjusting those to where an appropriate base should be and then having departments justify the addition above that. So, that should help. And we've been very cautious as it comes to our capital budgets, knowing that we're dwindling that funding and have pulled back on funding to ensure that we have the capacity and funding to perform, but also make decisions that could benefit what's critical for us today. So, I think we're well positioned and the council and the commission does not have to feel that we have to hurry without doing proper discussion and research.

Thank you. Yes. this to the town attorney. I wanted to circle back on the question of regular meeting versus special meeting. And I don't have the answer to that question just yet, but I can follow up. Um but I will say I think it's muted because um council member Renie is correct uh per the town code. Um the regular meetings are set by the code for every month and it just happens that the council has canceled its July meetings in the past and so there would be two uh regular meeting dates in the month of July. Thank you.

Okay. No other questions for our experts while they're here. Great. Well, thank you very much for the thorough presentation. Very helpful. Um, and without any other comments, this meeting is adjourned. Thank you.