2-19-19 Van Nada #12.Using Amortization Bases finalUsing Amortization Bases
Strategically Paying Down the Rising Unfunded Liabilities
While Gaining Budget Flexibility
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Using an Amortization Base to Accomplish Our
Goal
•The ‘challenge’ is at the beginning of the upward swing of the curve that reduces the money needed for BID and other priorities
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2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Los Gatos Total UAL payments
Will increase 252% from 2018 to 2029
An Additional Discretionary Payment Will
Reduce Annual Debt Payment.
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What Can We Do?
•Assuming that we can agree on the facts, we would suggest-
•Pay $10,895,099 today to save paying $8,000,000 in interest over 26 years
•Payment Efficiency Ratio of 1.74, or you get back $1.74 for every dollar spent
•The Council did this in 2014 with the “sidecar” payment of $4,500,000 when our cash available was $64,900,000
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•As of 6/30/18, four years later, we have $73,900,000 of cash or a $9,000,000 increase.
•If we paid UAL down by $10,895,099, we would still have $2,700,000 more cash than we had in 2014 after the sidecar payment.
•By the 15th year, we have recovered all of the $10,895,099
•The Council will have $729,061 per year for whatever is needed for 26 years
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“Cash” Accumulation over 26 years
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What’s Next?
•We are pointing out what we think to be a good option, though there
are many.
•Ultimately, it is a Council decision with Staff’s advice
•Ours is only one option of many; however, with the potential of even
larger increases to Unfunded Liabilities over and above what you see
on these graphs, we need to do something before mid-May to have
an affect on the next fiscal year.
•Jak VanNada -Los Gatos Community Alliance
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