01 Attachment 7From: jvannada@gmail.com
Sent Sunday, January 20, 20191:00 PM
To: Laurel Prevetti
Cc Council
Subject Suggested Priority from Phil Koen (who is traveling)
Establish a IT steering committee of resident experts and Staff ( like the GP Committee) to develop a
5 year comprehensive IT plan.
Phil Koen (Posted by jvannada for PKoen)
1
ATTACHMENT 7
From: jvannada@gmail.com
Sent: Sunday, January 20, 2019 2:55 PM
To: Laurel Prevetti
Subject: Fwd: Resolution passed on May 15, 018
Attachments: motion to review reserves.mp4; Attachment_1_ _Draft_Comprehenl_year_Ended_June_30
_2018 (1) 48.pdf; Attachment_1_ _Draft_Comprehenl_year_Ended_June_30_2018 (1)
52.pdf
For 1-22-19 Town Council Meeting - Council and the FC have been
blind cc'd
One purpose of this email for the Council meeting is to remind the
Staff and the Council of the additional $ $6,539,465. A second
purpose is to recommend that the Pension and OPEB debt become
an annual priority until they are paid down.
I can't help but notice in the 1-22-19 Special Council Meeting agenda, that Staff only
addresses the $3.7 million in the Staff report. To keep the Council fully informed and the
data transparent, I am forwarding Mr. Koen's 1-11-19 email addressing
the commitment made by staff seven months ago.
To quote a portion of the email:
At the May 15, 2018 Council Meeting, the Council passed a
resolution (discussion captured in the attached video) to review the
current "waterfall reserve" policy, the resulting actual allocation of
the FY 2018 excess reserves and make to any changes, if
necessary, to both the underlying policy and the resulting
allocation. There was a commitment made by Staff to address this
in Q1 FY 2019 (October — November, 2018). The timeline to review
the above has long passed and the Town Council failed to comply
with the resolution as passed. Why this happened is not clear to
any of us. "
We're approaching the third month deadline of this resolution having not been
addressed as promised seven months ago. This is a another reminder that this needs to
1
be addressed, and probably be addressed before, or at worst, with the
Priority discussion. This $6,539,465 should affect decisions to be made by the
Council in the priority setting session.
After reviewing the Priorities, I notice that pension and OPEB debt are not addressed
individually as Priorities. However, if this huge debt is brought to the front of
mind, you may leave future Councils with little to no ability to address their
priorities. And though we think that the annual payments and the 115 plan have handled
the pension debt, I'll remind you of Mr. Tinsley's statement that CaIPERS understates the
real debt by the manipulation of the discount rate. I do not understand holding
so much cash while we watch our interest costs escalate.
No where in the pay down plan is the REAL debt addressed. It becomes the task of the
Staff and the Finance Committee to make the Council aware of this. If we continue to
pay high interest costs, and the increasing payments due CalPERS, there will only be debt
resting at the top of the Priority list.
We are not stating that the pension debt is the only Priority payment to be
considered. But to give you some context, just the interest on our pension debt cost
$2,000,000 more than you spent on the entire Parks and Public works budget for 2018.
Further into Mr. Koen's email, you will see his request that you address the excess
$6,539,465 in the Capital Reserve and consider that to pay down pension debt by at least
$10,000,000. Lack of addressing this $6,539,465 is a transparency
issue that if we don't continue to bring it up, the Council will never
have a chance to understand that this money exists. As it stands,
seven months later, this $6,539,465 is being left on the Resolution
dust trail, soon to be swept aside as so many monetary issues
seem to be.
To further quote:
"It appears there is $6,539,465, which is the difference between the estimated Capital
Reserve Balance of $7,881,738 shown on schedule A-9 and the actual Capital Reserve
Balance of $14,421,203 reported in the FY 2018 CAFR. The actual Capital Reserve
Balance was determined by applying the Town's current "waterfall reserve allocation"
policy. The ability to review the Capital Reserve and make a recommendation to reallocate
the $6,539,465 is also covered by the current Finance Committee Charter since it lies at
the intersection of the FY 2018 CAFR and the unfunded pension liability."
2
And the last quote:
To frame the magnitude of the problem, in FY 2014 the Town had $60.4m in cash and an
unfunded pension liability of $33.6m. Just 4 years later, the Town has $73.9m in cash and
an unfunded pension liability of $53.2m. Holding excessive levels of cash at a time when
the unfunded pension liability is exploding is not "conservative" but rather misguided. And
these numbers don't include the unfunded OPEB liability. The unarguable conclusion is
that the Town has not properly allocated capital and it is hurting the residents and
indirectly the town's employees.
Please comply with the resolution which was passed in May, 2018.
Please add the Pension Debt and OPEB on the Priority List to keep them at the front
of everyone's mind.
If you wish, you will find the entire email from Mr. Koen below:
Forwarded message
From: Phil Koen <pkoen@monteropartners.com>
Date: Fri, Jan 11, 2019 at 7:55 AM
Subject: Resolution passed on May 15, 018
To: Steven Leonardis <SLeonardis{losgatosca.gov>, Marico Sayoc <MSayoc@losgatosca.gov>, BSpector
<BSpector@losgatosca.gov>, Rob Rennie <RRennie@losgatosca.gov>, Marcia Jensen <MJensen@losgatosca.gov>, Rick
Tinsley <rnt97@yahoo.com>, tdurvea@AOL.COM <tduryea@aoi.com>
Cc: Laurel Prevetti <LPrevetti@losgatosca.gov>, Robert Schultz <RSchultz@losgatosca.gov>, ivannada@gmail.com
<ivannada@gmail.com>, Lee Fagot <Ieefagot@gmail.com>, Rick Van Hoesen (rick.vanhoesen@gmail.com)
<rick.vanhoesenfgmail.com>, Peter Hertan <phertan@alum.mit.edu>
Dear Town Council Members,
At the May 15, 2018 Council Meeting, the Council passed a resolution (discussion captured in the attached video) to
review the current "waterfall reserve" policy, the resulting actual allocation of the FY 2018 excess reserves and make to
any changes, if necessary, to both the underlying policy and the resulting allocation. There was a commitment made by
Staff to address this in Q1 FY 2019 (October — November, 2018). The timeline to review the above has long passed and
the Town Council failed to comply with the resolution as passed. Why this happened is not clear to any of us.
3
To refresh everyone's memory, the intent of the resolution was to address a very real concern of many residents that
the Staff had dramatically understated the FY 2018 General Fund surplus (seen on schedule A-9 as $3,670,447) and as a
result there was materially more money available to the Town to pay down the growing unfunded pension liabilities.
The attached budget vs actual schedule from the FY 2018 CAFR shows that there was $5.6m improvement between the
final budget and the actuals for the General Fund. The Staff will characterize this as "conservative planning". Many of us
don't view this as being "conservative", rather to us this represents a material error in the Towns forecasting model
which deprived the Town Council the opportunity to fund other critical needs such as investing more in street
maintenance or paying down our growing unfunded pension liabilities or incurring more overtime pay for the Town's
police department to police summer cut through traffic or even funding civic minded activities such as the summer
music program. The list of "missed" opportunities to fund is long and troubling. This is not an issue of opinion, it is fact.
I am requesting that the Town Council comply with the resolution which was unanimously passed in May, 2018 before
taking up any action regarding the Town Finance Committee. The Finance Committee needs to fulfill its existing charter,
which specifically included addressing the growing unfunded pension liability. Many residents believe there is at least
$10m of funds available to the Town to pay down the unfunded pension liability, which the Town Finance Committee
needs to address. I have met with a number of you and provided the financial information which substantiates the
statement that there is at least $10m in cash freely available to the Town, today.
Secondly, the Town Finance Committee needs to determine the amount of funds that are available to be reallocated
from the FY 2018 Capital Reserve balance to other areas of need. It appears there is $6,539,465, which is the difference
between the estimated Capital Reserve Balance of $7,881,738 shown on schedule A-9 and the actual Capital Reserve
Balance of $14,421,203 reported in the FY 2018 CAFR. The actual Capital Reserve Balance was determined by applying
the Town's current "waterfall reserve allocation" policy. The ability to review the Capital Reserve and make a
recommendation to reallocate the $6,539,465 is also covered by the current Finance Committee Charter since it lies at
the intersection of the FY 2018 CAFR and the unfunded pension liability.
To frame the magnitude of the problem, in FY 2014 the Town had $60.4m in cash and an unfunded pension liability of
$33.6m. Just 4 years later, the Town has $73.9m in cash and an unfunded pension liability of $53.2m. Holding excessive
levels of cash at a time when the unfunded pension liability is exploding is not "conservative" but rather misguided. And
these numbers don't include the unfunded OPEB liability. The unarguable conclusion is that the Town has not properly
allocated capital and it is hurting the residents and indirectly the town's employees.
Please comply with the resolution which was passed in May, 2018.
Phil Koen
4
Jak VanNada
Los Gatos Community Alliance
5
TOWN OF LOS GATOS
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2018
ASSETS
Cash & Investments
Receivables:
Accounts
Interest
Intergovernmental
Due from Other Funds
Long term notes
Total Assets
LIABILITIES
Accounts Payable
Accrued Payroll and Benefits
Due to other governments
Unearned revenue
Deposits
Due to Other Funds
Compensated Absences
Total Liabilities
FUND BALANCE
Restricted for:
Capital Outlay
Repairs and Maintenance
Committed to:
Budget Stabilization
Catastrophic
CaIPERS/OPEB
Almond Grove Street Project
Assigned to:
Open Space
Parking
Sustainability
Strategic Planning
Capital Projects
Carryover Encumbrances
Comcast PEG
Compensated Absences
Special Revenue Funds
Total Fund Balances
Total Liabilities, Deferred Inflow of Resources and
Fund Balances
General
Appropriated
Reserves
Other
Nonmajor
Governmental
Funds
Total
Governmental
Funds
$ 37,907,933 $ 18,042,657 $ 7,239,621 $ 63,190,211
1,096,925
231,743
1,496,784
68,569
159,000
52,579
$ 40,960,954
$ 786,001
1,424,228
25,992
1,151,197
6,822,127
322,725
10,532,270
145,406
125,050
78,752
18,095,236 $ 7,588,829
$ 2,518,749
3,275,055
1,294,910
231,743
1,621,834
68,569
237,752
66,645,019
827,718 $ 4,132,468
3,882 1,428,110
25,992
64,855 4,491,107
6,822,127
68,569 68,569
322,725
5,793,804
5,037,243
5,037,243
2,878,913
562,000
140,553
129,090
14,421,203
99,927
2,122,512
606,933
5,571,087
1,460,210
4,613,202
50,000
30,428,684 12,301,432
965,024 17,291,098
6,187,130
198,684
237,991
6,623,805
6,794,063
198,684
5,037,243
5,037,243
2,878,913
5,571,087
562,000
1,460,210
140,553
129,090
19,034,405
99,927
50,000
2,122,512
237,991
49,353,921
$ 40,960,954 $ 18,095,236 $ 7,588,829 $ 66,645,019
The notes to the financial statements are anintegral part of this statement.
38
TOWN OF LOS GATOS
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL (GAAP)
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
REVENUES
Property Taxes
Sales Taxes
Other Taxes
Franchise Fees
Licenses & Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Interest
Use of Property
Other
Total Revenues
EXPENDITURES
Current:
General Government:
Town Council'
Town Attorney
Administrative Services
Non -Departmental
Total General Government
Public Safety
Community Development
Parks & Public Works
Library Services
Total Expenditures
EXCESS (DEFICIT) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Proceeds from sale of assets
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
NET CHANGES IN FUND BALANCES
BEGINNING FUND BALANCE
ENDING FUND BALANCE
Original
Budget
$ 14,652,443
7,972,195
2,067,000
2,287,390
4,483,829
716,081
3,138,297
695,400
270,723
31,959
554,711
Final
Budget
$ 15,370,934
7,681,546
2,257,000
2,317,390
4,558,829
738,281
3,288,645
695,400
270,723
31,959
392,153
36,870,028
37,602,860
Actual
$ 15,958,406
7,592,206
2,636,002
2,474,814
4,697,560
1,010,166
4,625,136
676,212
244,762
32,206
581,946
Variance With
Final Budget
Positive
(Negative)
$ 587,472
(89,340)
379,002
157,424
138,731
271,885
1,336,491
(19,188)
(25,961)
247
189,793
40,529,416
2,926,556
205,092 205,092 192,183
353,383 426,466 354,205
3,562,823 3,580,561 3,193,995
3,992,490 5,148,232 5,029,699
8,113,788 9,360,351 8,770,082
15,455,232 15,505,674 14,423,554
4,376,673 4,520,505 4,192,165
7,117,324 7,184,147 7,099,527
2,781,018 2,803,545 2,529,017
37,844,035 39,374,222 37,014,345
(974,007)
1,000
538,536
(3,082,227)
(1,771,362)
1,000
538,536
(3,243,595)
(2,543,691)
(2,705,059)
$ (3,517,698) $ (4,476,421)
3,515,071
378,219
538,536
(3,243,595)
(2,326,840)
1,188,231
29,240,453
$ 30,428,684
The notes to the financial statements are an integral part of this statement.
12,909
72,261
386,566
118,533
590,269
1,082,120
328,340
84,620
274,528
2,359,877
5,286,433
377,219
377,219
5,663,652
42
From:
Sent:
To:
Cc:
Subject:
Phil Koen <pkoen@monteropartners.com>
Sunday, January 20, 2019 7:49 PM
Steven Leonardis; Marcia Jensen; maricosayoc@gmail.com; BSpector; Rob Rennie
Laurel Prevetti; jvannada@gmail.com; tduryea@aol.com; rnt97@yahoo.com
Re -allocation of $6.2m increase in Capital Projects Reserve - Agenda Item #1 of TC
meeting January 22, 2019
Dear Members of the Town Council,
In the Staffs memo dated January 18, 2019, the second recommendation is for the Town Council to identify strategic
priorities for "the potential reallocation of the $3.7m FY 2018 budget surplus".
Later in the memo, Staff reports that "there is $14.4m in the General Fund Capital Projects Reserve including the $3.7m
surplus". It is important to point out that the Capital Projects Reserve increased by $6.2m over the prior year balance
of $8.2m.
I would like to make 2 very important points:
1. Since none of the $6.2m increase in the Capital Projects Reserve has been programmed, the Town Council should
consider reallocating the full $6.2m not just the $3.7m budget surplus. In fact, the Town Council passed a resolution in
May, 2018 to evaluate the FY 2018 year end Capital Projects Reserve by November, 2018. This has not occurred.
2. Staff needs to explain how the Capital Projects Reserve increased $6.2m over the prior year balance of $8.2m. Staff
has explained $3.7m of the increase represents the budget surplus for FY 2018. Where did the additional $2.5m come
from? I am not aware of any action taken by the Town Council to increase the Capital Projects Reserve above the $3.7m
FY 2018 budget surplus. How did this happen and who approved this increase?
In closing, the total $6.2m increase in the Capital Projects Reserve is freely available for reallocation. I would
recommend that this $6.2m, combined with other funds I have previously identified, be combined to make a $10m
payment to CALPERS to reduce the unfunded pension liabilities. This is the same recommendation that the Town's
consultant, Bartel Associates, made this past year to the Town Council.
Thank you.
Phil Koen
Sent from my iPad
1
From: jvannada@gmail.com
Sent: Monday, January 21, 2019 11:01 AM
To: Laurel Prevetti
Cc: Stephen Conway; Arn Andrews
Subject: Priority Setting Meeting 1-22-19
For the Priority Setting Meeting 1-22-19 - a couple of questions and a comment:
With a quick review of the 2019 CIP Budget needs, there appears to be a mixture of items that
would "normally" be expensed, not capitalized. For instance, maintenance of trees; turf
upgrades; vegetation management, etc. etc. Would it not be more proper to identify these as
"Capital Improvements" rather than maintenance items? Where the problem comes in the eyes
of this laymen is that the need for the CIP may be artificially high with maintenance and
consultants included.
I would suggest that in setting the Priorities, and then establishing the budget for 2020, that
before approving more capital projects, Staff and the Finance Committee should review the
$19,000,000 of existing open projects that constantly roll forward, with many (?) never being
completed. Who knows? Is there a way to tell? Does the town reevaluate projects every
year? IE, sort of a 0-based Capital Improvement Project budgeting method?
If you measure the projects that get completed each year vs. all the open projects, it is clear there
are many years of capital projects that are approved and then remain open. Since
forecasted completion dates aren't reported for any capital projects, it is impossible to hold Staff
accountable for completing projects on time. Staff should be held accountable for delivering
projects on budget, on time and meeting quality specs. This is a practice from the private sector
that could be adopted in Los Gatos to improve overall reporting, quality control and cash
management. As things stand currently, some capital projects simply slide forward and as a result
become more costly to complete, and others fall to the wayside, no longer of use.
Before the TC approves any new capital projects, every open and approved project should
be re-evaluated as to its priority; have a target completion date set; and then measured. I
would like to see Los Gatos become the measurement standard not only for California, but
for the rest of the US. It has to start with one town to create a national movement. I don't
want to see us following the old adage of "good enough for government work". We have
so much talent and creativity available that I think, as a progressive community, we could
set much higher aspirations.
Jak VanNada
1
Los Gatos Community Alliance
2
Subject:
Attachments:
FW: letter to town council for BID
Letter to Town Council for BID.pdf
From: Jim Foley<iimfoleyPpennantproperties.com>
Sent: Tuesday, January 22, 2019 10:35 AM
To: Monica Renn <mrenn@losgatosca.gov>
Subject: letter to town council for BID
Attached.
Jim Foley
Principal
(408) 813-7490
ienlant
roperties
1
January 22, 2019
Town Council
110 E. Main St.
Los Gatos, CA
95030
Dear Mr. Mayor and Honorable Town Council,
I continue to applaud you on the efforts the Town Staff, with your guidance, have undertaken and
accomplished to effect much needed change in our beloved downtown/commercial core. As many have
discussed over the past 3-5 years, Los Gatos continues to face stiff competition from surrounding cities
when it comes to attracting new and exciting businesses, preserving existing business, and creating and
maintaining a vibrant and thriving downtown.
In December and January, I participated in two steering committee meetings to discuss the creation of a
Business Improvement District in the downtown area. This would be an officially organized and
recognized body that would facilitate much needed discussion and direction from business and property
owners in the downtown and would guide the mutually agreed upon priorities that are needed to
rejuvenate the area.
Please include resources from the Town Staff in the 2019 workplan for this effort, so they can assist the
steering committee to continue to explore and ultimately facilitate the formation of a formal Business
Improvement District. It has proven successful in many other cities in the Bay Area and greater
California. Los Gatos should embrace this tool as well.
Thank you,
Jim Foley
siness Owner/Property Owner/Resident
Subject: FW: Mills Act info for Council Priorities meeting tonight
From: Vicki < elf@me.com>
Sent: Tuesday, January 22, 2019 10:59 AM
To: Sally Zarnowitz <SZarnowitz@Iosgatosca.gov>
Cc: Stuart Huizinga <smhuizinga@me.com>
Subject: Mills Act info for Council Priorities meeting tonight
Hi Sally-
Here is info from the State of CA Office of Historic Preservation on the Mills Act Program:
http://ohp.pa rks.ca.gov/pages11069/files/ 12%20m ills%20act.pdf
Here is a list of Mills Act Contacts by locality from the State of CA Office of Historic Preservation website:
http://www.ohp.parks.ca.Rovjpages11U74/files/MillsAct ContactsList.pdf
Here is info from the City of Campbell's website about their program:
https://www.ci.ca mpbell.ca.usJDocumentCenter/View/7339/M ills-Act-H istoric-Property-Tax-Incentive-Progra m-
Application-
Thank you,
Vicki Huizinga
(408)646-3817
1