HomeMy WebLinkAboutBOARD STANDING COMMITTEES - 12162019 - Finance Cte Agenda Pkt
FINANCE COMMITTEE
December 16, 2019
2:00 P.M.
651 Pine Street, Room 101, Martinez
Supervisor Karen Mitchoff, Chair
Supervisor John Gioia, Vice Chair
Agenda
Items:
Items may be taken out of order based on the business of the day and preference
of the Committee
1.Introductions
2.Public comment on any item under the jurisdiction of the Committee and not on this
agenda (speakers may be limited to three minutes).
3. CONSIDER approving the Record of Action for the November 4, 2019, Finance
Committee meeting (Lisa Driscoll, County Finance Director)
4. CONSIDER recommending to the Board of Supervisors refunding of the County's 2010
Lease Revenue Bonds Series A and B for cost savings and take related actions. (Timothy
Ewell, Chief Assistant County Administrator)
5. ACCEPT an informational report from the Animal Services Department on a study of
the contracted city services and fees for animal control; and DIRECT the Animal
Services Department to discuss proposed changes to contract fees with the cities and
prepare a new contract and fee schedule for contract cities for consideration by the Board
of Supervisors at a noted public hearing. (Eric Angstadt, Chief Assistant County
Administrator)
6.Adjourn
The Finance Committee will provide reasonable accommodations for persons with disabilities
planning to attend Finance Committee meetings. Contact the staff person listed below at least 72
hours before the meeting.
Any disclosable public records related to an open session item on a regular meeting agenda and
distributed by the County to a majority of members of the Finance Committee less than 96 hours
prior to that meeting are available for public inspection at 651 Pine Street, 10th floor, during
normal business hours.
Public comment may be submitted via electronic mail on agenda items at least one full work day
prior to the published meeting time.
For Additional Information Contact:
Lisa Driscoll, Committee Staff
Phone (925) 335-1021, Fax (925) 646-1353
lisa.driscoll@cao.cccounty.us
FINANCE COMMITTEE 3.
Meeting Date:12/16/2019
Subject:Record of Action for November 4, 2019 Finance Committee Meeting
Submitted For: FINANCE COMMITTEE,
Department:County Administrator
Referral No.: N/A
Referral Name: Record of Action
Presenter: Lisa Driscoll, County Finance Director Contact: Lisa Driscoll (925) 335-1023
Referral History:
County Ordinance requires that each County body keep a record of its meetings. Though the
record need not be verbatim, it must accurately reflect the agenda and the discussions made in the
meetings.
Referral Update:
Attached for the Committee's consideration is the Record of Action for its November 4, 2019
meeting.
Recommendation(s)/Next Step(s):
Staff recommends approval of the Record of Action for the November 4, 2019 meeting.
Fiscal Impact (if any):
No fiscal impact.
Attachments
Draft Record of Action November 4, 2019
FINANCE COMMITTEE 4.
Meeting Date:12/16/2019
Subject:2020 LEASE REVENUE BOND REFUNDING
Submitted For: David Twa, County Administrator
Department:County Administrator
Referral No.: N/A
Referral Name: 2020 LEASE REVENUE BOND REFUNDING
Presenter: Timothy M. Ewell Contact: Timothy M. Ewell
Referral History:
Issuance of 2010 Lease Revenue Bonds
On October 12, 2010 the Board of Supervisors authorized the issuance and sale of $58,055,000 millin in lease revenue bonds to fund a portion
of the construction and acquisition costs of the West County Health Center and refunding bonds issued in prior years for a cost savings. The
bonds were issued using a combination of traditional tax-exempt and taxable financing, including Build America Bonds (BABs) and Recovery
Zone Economic Development Bonds (RZEDBs) (together the "2010 Bonds") with a true interest cost ("TIC") of 4.15% and 3.84% for the
Series A and Series B bonds, respectively.
The BAB and RZEDB portions of the 2010 Bonds were special financing vehicles authorized by the American Recovery and Reinvestment
Act ("ARRA"), signed by President Obama in February 2009, which offered a direct subsidy for interest payments made on taxable bonds in
the amounts of 35% and 45%, respectively. The direct subsidy payments are paid on a semi-annual basis upon claim by the County to the
Internal Revenue Service (IRS). This was to incentivize state and local governments to invest in infrastructure as a means of stimulating the
local economy and creating jobs while the country continued to battle the effects of the Great Recession. Taxable bonds typically demand a
higher interest rate by investors compared to tax-exempt bonds because investors are required to pay taxes on the interest earnings that accrue
from owning taxable bonds. This is the reason for the County's Series A TIC being 4.15% compared to the Series B TIC being 3.84% as
outlined above; however, the higher interest rate is mitigated by the direct subsidies received from by IRS.
A summary of the 2010 Bonds, including principal, interest, anticipated direct subsidy receipts and total debt service by series is included in
the table below for reference:
Sequestration
The Budget Control Act of 2011 (Public Law 112-25) (the "Act") included anticipated budget caps (usually referred to as "Sequestration") on discretionary
spending through federal FY 2021. Each year the Congressional Budget Office (CBO) produces a report identifying the impact to certain discretionary federal
programs by sequestration. The BAB and RZEBD direct subsidy bond programs are considered discretionary have been impacted by sequestration since the
passage of the Act, including those revenue receipts anticipated by the County to mitigate the costs of taxable interest payments described above. A summary of
the County's negative impact from reduced subsidies, including anticipated impacts for CY 2020 is included below for reference:
Although the impacts of sequestration are relatively small annually, over time these impacts will have accreted to approximately $524,162 by the end of CY
2020. This impact was not anticipated in the original plan of finance in 2010.
Referral Update:
In May 2019, the County Administrator released a Request for Proposals (RFP) to the County's underwriter pool seeking proposals to refund
(or refinance) the 2010 Bonds. The 2010 Bonds are eligible for current refunding on June 1, 2020 because at the time of issuance, the County
purchased a 10-year call option. A call option is a financial instrument that allows the County to repay the principal amount of a bond plus any
accrued interest to the bondholder prior to the scheduled maturity date. This allows for flexability during the life of the bonds to restructure a
debt portfolio, refund the bonds for cost savings or address other structural issues related to the bonds. Federal regulations allow the County to
price refunding bonds 90 days prior to the call date making March 2020 the earliest possible time to bring a current refunding of the 2010
Bonds to the market.
May 2019 RFP Results
The County received six responses from underwriters, which all resulted in a net present value (NPV) savings to the County from refunding of
the 2010 Bonds. NPV savings reflects the amount of money saved in current year dollars and is the preferred measure to assist in the
determination wherher or not to move forward with a bond refunding. The County's Debt Management Policy (Resolution No. 2019/37)
stipulates that initiation of a refunding for cost savings must result in a minimum 4% savings overall. This is measured by the applying the
estimated NPV of a refunding to the NPV of the current stream of debt service payments with any resulting savings at or above 4% triggering
staff to review the feasability of refunding the debt.
Each of the six RFP responses anticipated NPV savings greater than 4% and most suggested the use of a forward delivery contract as part of
the refunding. A forward delivery contract allows for bonds to be issued in advance of the call date by paying a forward delivery premium on
the bonds for the additional interest rate risk that the bondholder takes on by issuing the bonds early. In return, the County is able to lock in
current market rates (plus the premium). This premium is measured in basis points (bps), which are equivelent to 1/100th of a percent. For
example, 1 bps = 0.01%. The average premium quoted by underwriters was 5-6 bps per month leading up to the pricing date in March 2020 (in
advance of the call date of June 1, 2020).
Review by the Debt Affordability Advisory Committee
The Debt Affordability Advisory Committee (DAAC) composed of the County Treasurer-Tax Collector, the Auditor-Controller, the County
Finance Director and the Director of Conservation and Development reviewed the results of the May 2019 RFP at their June 4, 2019 meeting.
At that time, the DAAC determined that it would be best to wait until the Fall to review proposals further for two reasons: 1) Market forecasts
projected further interest rate reductions in the municipal bond market; and 2) by waiting, the County would not have to pay a forward
premium on the bonds.
October 2019 RFP Results
On October 2, 2019, the County Administrator released a second RFP to respondents from the May 2019 RFP, requesting updated financial
projections to reflect current market conditions. The recommendation of the DAAC to hold off on pursuing a refunding of the bonds was
correct based on market analysis of rates as of June 3, 2019 and September 30, 2019. In summary, rates had fallen by 25-29 bps (or
0.25%-0.29%). The chart below shows this change in market conditions between that timeframe for a 15-20 year maturity:
The DAAC met on November 8, 2019 to review the updated RFP responses. After reviewing proposals received with the assistance of the
County's independant registered municipal advisor (IRMA), Montague DeRose Associates, the DAAC determined the proposal from Barclay's
was the most advantageous to the County. Barclays proposed the lowest takedown rate of all respondents at $1.50 per bond. The takedown rate
is similar to a commission and reflects the amount paid to the underwriter for services assisting with bringing bonds to the market. In addition,
Barclay's provided a favorable marketing approach for the bonds, including ideas to assist the County with a retail sales pilot project. Retail
outreach in municipal bond transactions is a way to enlist interest from a jurisdiction's own residents to invest in local infrastructure through
investment in bonds. The County included a section in the October 2019 RFP soliciting feedback on how to structure a retail engagement
strategy as part of the 2020 refunding bonds.
Barclays' proposal resulted in an estimated NPV savings to the County of $6,174,390, or 14.97% with a TIC of 2.42%. The NPV savings is
well above the minimum included in the County Debt Management Policy. A summary of the estimated refunding results is included below
for reference:
Conclusion
Ultimately, the DAAC directed staff to recommend the following: 1) proceed with a current refunding of the 2010 Bonds; 2) select Barclays to
serve as senior managing underwriter of the bonds; and 3) authorize a retail sales pilot project as part of this bond transaction.
Recommendation(s)/Next Step(s):
1. PROCEED with a current refunding of the 2010 Bonds;
2. SELECT Barclays to serve as senior managing underwriter of the bonds; and
3. AUTHORIZE a retail sales pilot project as part of this bond transaction.
Attachments
No file(s) attached.
FINANCE COMMITTEE 5.
Meeting Date:12/16/2019
Subject:Animal Services City Fees
Submitted For: FINANCE COMMITTEE,
Department:County Administrator
Referral No.: 6/18/19 C.120
Referral Name: Animal Services City Fees
Presenter: Eric Angstadt, Chief Deputy County
Administrator
Contact: Beth Ward (925)
608-8470
Referral History:
On June 18, 2019, the Board of Supervisors referred a review of city contract fees for Animal
Services to the Finance Committee.
Referral Update:
Purpose: Department Services Cost Analysis
In the fall of 2017, Contra Costa Animal Services (CCAS) hired the firm City Gate Associates,
LLC. (City Gate) to perform a cost analysis of the County's animal services operations for animal
control services to contracted cities. The County's primary purpose in conducting this analysis was
to develop a factual and analytical study upon which the Department could make critical decisions
for financial sustainability. The analysis was necessary to identify and begin financial recovery
steps and processes for the Department, strengthen its operational and financial foundation to
position itself for success, both short and long-term, and enhance its services for the future to
adequately serve our community residents and care for our animals.
The report of the analysis was provided in early 2018 and action steps were already in place to
address operational efficiencies and to create clear and realistic budget recommendations for FY
2018/19. The efforts to strengthen core financial and operational activities included working with
the County Administrator’s Office (CAO) on our budget and forecasting, updating the current
Department fee schedule, developing Standard Operating Procedures (SOP’s), increasing staff
training, evaluating key programs to improve efficiencies (examples: phone services, customer
wait times, field service response times, etc), and filling funded vacant positions.
The next phase was to address the impacts of population growth in Contra Costa County and the
service demands of the residents we serve. Contra Costa County population has increased by
nearly 10% since 2010 in the contracted cities and unincorporated areas that we serve. The
analysis contained research and comparison of services provided by other similar animal control
agencies by assessing these agencies’ costs and revenues, including, but not limited to, personnel,
operations, and service delivery models. Bay area traffic has grown over 80% since 2010, which
has created more challenges for Animal Service Officers to respond to calls in a timely manner for
dangerous, sick and injured animals and for members of the public trying to reach our shelters to
search for their lost animals, bring in strays and use our services. Another key factor impacting
the cost of providing field and shelter services is the state mandate to accept stray animals and the
community’s desire to have a place to safely surrender a pet that they no longer have the ability
keep. This resulted in the Department receiving many challenging animals that are impounded
into Contra Costa County shelters. These animals can require extensive resources to get them to
an adoptable state as defined by the California Food and Agricultural Code 17005 (established in
1998) which reads:
“Adoptable animals include only those animals eight weeks of age or older that, at or subsequent
to the time the animal is impounded or otherwise taken back into possession, have manifested no
sign of a behavioral or temperamental defect that could pose a health or safety risk or otherwise
make the animal unsuitable for placement as a pet, and have manifested no signs of disease,
injury, or congenital or hereditary condition that adversely affects the health of the animal or that
is likely to adversely affect the animal’s health in the future .”
Other key factors included the need of the community to retrieve stray animals, responding to
injured animals, picking up deceased animals, supporting families who may have been at risk due
to a biting animal, investigating animal cruelty, etc.
Our current contract fee structure does not allow CCAS to keep up with the services the residents
we serve desire to have available. Based on the Department’s current staffing levels and response
times to our communities, CCAS needs to increase the levels of staffing to appropriately care for
the animals and to serve our community in a timely manner. As described in the City Gate report,
the County has the authority to charge user fees for animal control services, such as those services
provided by CCAS to the 18 contracted cities and unincorporated County areas per capita based
on the population of each jurisdiction. The fees charged by the County must not be more than the
estimated cost that the County incurs to provide the services for which the fees are charged. The
main cost the County incurs providing animal control, husbandry and veterinary care and services
is the cost of County staff time.
Summary of Key Findings
CCAS city contracts were established in 1985. The contract stipulates services for mandated
programs and the enforcement of all animal related laws. The fees were based on Department
costs at that time and on a city’s population (per capita). In May of 2005, the Board of
Supervisors granted approval for the Animal Services Department to increase city contracts each
fiscal year based on the municipality’s population growth and the Consumer Price Index (CPI)
percentage. There was no adjustment for the drastic increase in costs for providing services as a
baseline. These annual increases at approximately 3.5% per year have not generated sufficient
revenue allocations to cover the increased expenses for providing animal control services
throughout Contra Costa County. Personnel costs account for over 72% of the Department’s
budget. City Contract revenues remained flat from FY2010/11 to FY2014/15 due to the Board
waiving the annual CPI increases during the economic downturn, while operational and personnel
expenses continued to rise.
In the City Gate, LLC. report, it highlights in Section 1.2.2 “Post-Great-Recession Rebuild” that
the Department has suffered a significant turnover in leadership, budget cuts, and had difficulty
with personnel retention and recruitment. In parallel, the demand from the public and animal
advocates around the “No Kill” movement increased the Department’s expectations to provide a
higher level of veterinary care, which increased the operational cost for medical services for
shelter animals. The City Gate report indicates the public expectation has become that shelters
can achieve a goal of saving 90% of all sheltered dogs and cats. In FY 2015/16, the Department
began to assess its cost for services to the contract cities. The internal financial analysis
determined that the cost for services are far greater to provide contracted animal control services
to the 18 Cities, which is discussed in the City Gate report in Section 4.2.2.
In FY 2017/18, the Department implemented strong financial strategies with the support of the
County Administrator’s Office that were discussed in Section 5 of the City Gate, LLC. Report.
The action items that were implemented have provided the Department a financial baseline on
what the personnel, operational and community service levels are, and what they must be to
provide adequate care for our animals and the staffing levels needed to provide public safety for
our community members.
Recommendations
In order for the Department to sustain current services levels, along with the County’s population
growth, the Department recommends the formula for city contract fees would be current per
capita fee ($6.38) multiplied by the Bay Area CPI, which is estimated at 3.5% plus $1.00 for five
(5) years as a method for spreading the fee increase out over time to ease the impact on the
contract cities:
FY 20/21 $7.60
FY 21/22 $8.87
FY 22/23 $10.18
FY 23/24 $11.54
FY 24/25 $12.94
Consequence of Negative Action:
If these actions are not implemented the Department will not have the adequate resources to
sustain its current service levels. The gap between the Department’s budget revenues and actual
expenses will negatively impact the communities and animals in Contra Costa County.
The immediate impact if the Department recommendations are not approved will be:
Minimize public shelter service hours1.
After hours Field Operation Services will need to be eliminated2.
Eliminate deceased animal pickups, which would have to become the responsibility of each
City and the County‘s Public Works Departments.
3.
The population of sheltered animals would have to be controlled significantly through
euthanasia for animals with treatable conditions outside of the Department’s veterinary
scope of services and financial resources.
4.
Additionally, if cities decline to agree to new contracts and fee structures then CCAS would stop
providing services other than those required by State statute to those cities. The cities who may
choose not to contract with the County would then be responsible for enforcement of their own
animal control ordinances, management of stray animals in their jurisdictions similar to how the
City of Antioch currently operates independent of the County.
Recommendation(s)/Next Step(s):
ACCEPT an informational report from the Animal Services Department on a study of the
contracted city services and fees for animal control.
1.
DIRECT the Animal Services Department to discuss proposed changes to contract fees with
the cities and prepare a new contract and fee schedule for contract cities for consideration by
the Board of Supervisors at a noted public hearing on a date to be determined.
2.
Fiscal Impact (if any):
No fiscal impact at this time. If additional department revenues are not secured from contracted
cities service levels to contract cities will be reduced.
Attachments
City Revenue Increase Allocation Details
CONTRA COSTA ANIMAL SERVICES
FY 2020/21CITY CONTRACTS PROPOSAL
NOVEMBER 4, 2019
1
City Contract History
CCAS city contracts were established in 1985. The contracts stipulate services for
mandated programs and the enforcement of all animal related laws. The fees were
based on Department costs at that time and on a city’s population (per capita).
In May of 2005, the Board of Supervisors granted approval, and the Cities agreed,
that Animal Services Department would increase city contract fees each fiscal year
based on the municipality’s population growth and the Consumer Price Index (CPI)
percentage.
2
CCAS Department Revenues
$5,515,000
$2,325,000
$4,500,000
CCAS FY 19/20 Revenue Sources
City Revenue
User Fee
Revenue
General Fund
3
2018 Contra Costa County Incorporated
(excluding the City of Antioch)& Unincorporated Population
863,789
172,082
Incorp.
Unincorp.
4
City Contract Challenges
Beginning in FY 2014/15 to present the annual CPI increases have averaged 3.5%, which have not
generated sufficient revenue allocations to cover operational expenses, which have increased on
averaged at just under 7% per year for providing animal control services throughout Contra Costa
County.
Contra Costa population has increased by nearly 10% since 2010 in the contracted cities that the
department serves.
Since 2010 Bay Area traffic has grown over 80%, which has created more challenges for Animal
Services Officers to respond to calls in a timely manner for dangerous, sick and injured animals.
5
CCAS Operational & Personnel Expenses
FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19
Personnel $7,234,652 $7,405,941 $7,096,075 $7,856,106 $7,950,358
Operations $3,242,056 $3,902,953 $4,298,537 $4,279,836 $3,585,519
Total:$10,476,708 $11,308,894 $11,394,613 $12,135,942 $11,535,877
6
CCAS Personnel & Operations
Along with operational expenses, the other major increase for the Department each fiscal year are
personnel costs, which account for over 72% of the Department’s budget.
This has significantly affect the Department’s operational expenses and services levels, which has
required the Department to eliminate positions.
The Animal Services Department’s past budget practices have affected the Department’s ability to
prepare for and assess its financial sustainability per the City Gate Associates, LLC report. The
following charts, provide an overview on how the Department utilized personnel cost savings (not
filling vacancies) to support its rising operational expenses, which have significantly increased over the
past five years.
For FY 2017/18, the Department instituted new financial controls to better manage its operation
expenses, although the Department has not been able to recover from these past budget practices.
7
Length of Stay (LOS)
0
2
4
6
8
10
12
14
16
18
20
Avg # of days for dogs Avg # of days for cats
2010 2018
44% increase in LOS for cats from
2010 to 2018
100% increase in LOS for dogs from
2010 to 2018
In 2010 the Live Release Rate was 59%
for dogs and cats
In 2018 the Live Release Rate was 88%
for dogs and cats
8
City Contract Fees & Revenues
First Animal Services Agreement 9/2/1969
-No costs to cities.
June 1981 Contra Costa County adopted a
Comprehensive Animal Services Ordinance
at no cost to cities.
NOTE:
*FY 85/86 First contract with 18 Cities to begin
reimbursement for services provided.
**Per Capita plus CPI added
*** Spring 2005 Board approved
recommendation of increases on top of CPI to
close the gap of cost of services for the new
Martinez and Pinole animal shelters and
programs.
Per Capita Fee CPI
FY 85/86 *$1.25 n/a
FY 86/87 $1.22 n/a
FY 87/88 $1.25 n/a
FY 88/89 **$1.31 5.00%
FY 89/90 $1.37 4.40%
FY 90/91 $1.42 3.90%
FY 91/92 $1.51 6.06%
FY 92/93 $1.56 3.47%
FY 93/94 $1.61 3.23%
FY 94/95 $1.64 1.90%
FY 95/96 $1.67 1.70%
FY 96/97 $1.70 1.70%
FY 97/98 $1.74 2.54%
FY 98/99 $1.81 4.20%
FY 99/00 $1.86 2.94%
FY 00/01 $1.94 4.30%
FY 01/02 $2.05 5.46%
FY 02/03 $2.11 3.57%
FY 03/04 $2.14 1.35%
FY 04/05 $2.16 0.93%
FY05/06 ***$2.46 2.13%
9
City Contract Fees & Revenues (continued)
FY 06/07 ****$3.61 CPI dropped to reach actual cost for expenses
FY 07/08 $4.20 .59 increase
FY 08/09 $4.76 .56 increase
FY 09/10 $5.26 .50 increase
FY 10/11 $5.31 .05 increase
FY 11/12 $5.31 no increase
FY 12/13 $5.31 no increase
FY 13/14 $5.31 no increase
FY 14/15 $5.31 no increase
FY 15/16 $5.56
.25 increase since no increase due to economy down turn since FY
10/11
FY 16/17 $5.74 CPI reinstituted, CPI at 3.2%
FY 17/18 $5.94 CPI at 3.5%
FY 18/19 $6.11 CPI at 2.9%
FY 19/20 $6.38 CPI at 4.5%
****FY 10/11 to FY 14/15,
no CPI increases only per capita.
NOTE:
The fees for services have increased by $5.13 within the last 34 years at an average $.15 cents
per year.
10
Animal Care Agency Comparisons
Municipal Shelter:
FY 19/20
Rate Per Capita
City of Antioch $13.30
City of Oakland $10.82
Solano County $11.81
Sacramento County $14.57
Contra Costa County $6.38
In comparison to other municipal shelters,
Contra Costa Animal Services ranks low
on cost per capita.
The City of Antioch will be proposing a
19% increase for their animal services
rates for FY 2020/21, which will bring
them to $15.77 per capita.
11
CCAS Mandated Personnel & Services Levels
CCAS Department Budget Projections
CCAS Personnel:
FY 1998/99
Prior SB 1785 FY 2019/20
To meet current
Service/Care
Guidelines
Field Services 30 26 38
Center Operations Shelter Services 9 16 22
Center Operations Medical Services 4 13 18
Administration 24 20 27
Community Services 2 2 4
Total # of Positions:69 77 109
Total Personnel Expenses:$3,630,000 $8,872,475 $11,755,048
Total Operations Expenses:$476,550 $2,973,760 $4,241,338
Department Budget:$4,106,550 $11,846,235 $15,996,386
In July 1999, the State of California passed SB
1785 known as the Hayden Bill. This legislation
significantly increased the cost of animal services
throughout the State. No additional funding was
provided to local jurisdictions to sustain the new
mandates.
12
Recommendations:
In order for the Department to meet expected services levels, along with the County’s population growth, the
Department recommends the following:
1.Formula for city contract fees would be current per capita fee ($6.38) multiplied by the Bay Area CPI, which is
estimated at 3.5% plus $1.00 for five (5 years):
FY 20/21 $7.60
FY 21/22 $8.87
FY 22/23 $10.18
FY 23/24 $11.54
FY 24/25 $12.94
13
Consequence of Negative Action
The immediate impact if the Department recommendations are not
approved will be:
1.Minimize public shelter service hours
2.Afterhours Field Operation Services will need to be eliminated
3.Eliminate deceased animal pickups, which would have to become the
responsibility of each City and the County‘s Public Works
Departments.
4.The population of sheltered animals would have to be controlled
significantly through euthanasia for animals with treatable conditions
outside of the Department’s veterinary scope of services and
financial resources.
14
Questions & Answers
15