Recording in progress.
Six, it is four o'clock in order of gathering from the Finance Committee meeting of the San Diego City Council.
Madam Clerk, would you please take roll to establish forum?
May I get the box?
Present.
Vice Mayor Caviello-Stolten?
Present.
Councilman Breguia?
Present.
Madam Clerk, would you please read your notes, then?
After each agenda item is presented, the mayor will ask for committee member comments and then take public comment.
You'll have two minutes for your comment.
The countdown timer will appear for the convenience of the speaker and attendees.
At this point in time, we have two discussion items for today.
First one, fleet fund policy analysis, and we have Finance Director Nicole Gonzalez here to present the items. Welcome.
Good afternoon, Mayor and committee member.
The item before you this afternoon is an update on the city's efforts around its fleet fund policy
and continuing analysis for appropriate funding models.
So maybe if I want to provide a little bit of background on where the city's been when it's slated.
It is something that is of high importance on the finance department and the organization as a whole.
A significant number of our fleet is related to public safety and public works.
with an emphasis on ensuring that we provide
core services to our community.
It's vital that we have the appropriate fleet
to support those efforts.
And so in August of 2024,
the city did complete a study with Bigger Tilly.
It took an inventory of the city's fleet
and looked at its current policy
and made some recommendations at that time.
In October of 2025, we continued that work
and expanded it to do a fleet fund analysis
as well as enhancements to our policy.
And that work was done by AMA's and incorporated
and we completed the initial work
with both the study and recommended policy changes
in April of 2026.
So over the last couple of months,
we spent some time looking at the funding forecast tool
that was developed, policy recommendations,
as well as ensuring that the inventory
that we have on file is complete and accurate.
And so that brings us to this meeting today
to talk about some of the initial steps
we would like to take to continue our efforts
to build a sustainable fleet fund.
So why don't we just make sure that we are under
understanding about what a fleet fund is and why it's important. A fleet fund is an
internal service fund. An internal service fund is a fund to account for
centralized services. That is provided by city departments. In this case, we have a
number of vehicles that support city services, so public safety, police, fire,
public works. We also have non-public safety. So we do have public work inspector
vehicles, we also have some recreation vehicles. We also have equipment so it's
not solely a fund that is for vehicles like trucks and cars but also equipment
that we operate as well within the public works department in particular. So why is
it important to have a fleet fund? It promotes cost recovery by charging
departments the actual cost of the vehicle including any maintenance and fuel and
replacement costs. It provides sustainable vehicle replacement funding by collecting
replacement costs over the use of the lights of the vehicle or equipment.
And so then in result, we'll reduce the number of large, long-time capital requests to support
those with expense. It promotes consistent replacement schedules before making the
costs become exorbitant and also it minimizes the potential for
destruction to the city and providing its core services to the community. So we
talked a little bit over the last year about sleep replacement challenges and
funding needs. So there's a couple of components that we look at. One is that
the city has ongoing sleep replacement needs. A significant portion of those to
support the city's efforts in providing core services to public safety, public
parks and public health. The fleet includes city fleet, police fleet, fire fleet, and
city equipment. So any type of city equipment that we have, bucket trucks, things like that,
those are also part of what we look at when we're looking at our full inventory of our
fleet equipment. We have ongoing procurement challenges as it relates to maintaining those
operational needs for our fleet. Like I said, there's some procurement challenges
specifically as it relates to public safety vehicles and even more specific
as it relates to fire apparatus and fire truck replacements. For example, the fleet
fire fleet, there is estimated lead time of anywhere from four to five years, so
from the moment that we purchase the vehicle to when we actually receive it
and outfit it, and it is back on the road for service.
So that is not necessarily incumbent on any practices
that the city does.
It just happens to be the amount of time
it takes the vendor to fully build and outfit
a fire vehicle apparatus and deliver to the customer.
And then another component is our funding challenges.
So we as a city and similar jurisdictions
are all facing budgetary challenges.
how we balance providing those core services and creating a sustainable general fund
fund and long term fiscal sustainability while also supporting and making sure that we are
funding infrastructure and assets in a way that allows us to provide those services to
the community.
Historic practice of been deferred fleet replacement so as the city has experienced financial
of all the regulatory challenges in past years.
It has balanced it by deferring
the replacement of vehicle and equipment.
What I will state is that is not an uncommon practice
that agencies, there are other agencies
that are experiencing the same type of budgetary
and oftentimes will look to ways to reduce
the contribution from the general fund to their fleet
by either extending the life of the fleet
and then therefore extending the life
of the replacement costs.
That has its pluses and its minuses.
When we are not replacing on a schedule as needed,
you do have potential higher costs for maintenance.
But as a vehicle ages, there are more things
that go wrong with a vehicle.
So there are some challenges with that as well.
The other piece is that historically,
the fleet fund or equipment fund
has been underfunded for future requirements.
So why is the sustainable fleet is needed?
Again, I've said it a couple of times
during this presentation,
but maintaining a reliable fleet
to ensure uninterrupted delivery
of the central city and public safety services,
replace vehicles and equipment on schedules,
reduce breakdowns, downtime and operational disruptions,
minimize maintenance and repair costs
By replacing aging assets before repair expenses,
escalate to a point where the data is either
decommissioned or we are in a position where we need
to make an immediate purchase and look
for a large one-time transfer.
So the general plan is to support those requests.
This also improves financial stability
through planning predictable funding rather than
reacting to emergency resistance, again,
reduce the need to defer those vehicles,
preventing the accumulation of aging
of high-cost vehicle and equipment replacement.
So some of the highlights that we wanna look at today
that we'll talk a little bit about
during this presentation are some changes to the policies.
The city's proposing to create new funds
for better accounting transparency.
Currently, we have one fleet and equipment fund,
And that includes all of our operating expenses
and capital acquisitions, so any replacement vehicle costs.
And so this will allow us to create two separate funds,
one for an operating maintenance fund
and then a fleet replacement capital fund.
Another component that we would like to include
in an update to our policy
is really setting reserve targets.
So similar to how the general fund
had a fund balance policy of 20%.
we would like to add into the policy to create reserve targets for a deep sleep maintenance
fund of 20%, so similar to the general fund, and then a 20% target for food replacement.
And then another component is really more of a policy but procedures approach to new
assets.
So requests for new assets would have to be provided to the IS director and the sleep
of the ISF administrator to be added to the ISF equipment inventory.
This will allow us to make sure that we have current every year new fleet that is coming
on to the city's fleet fund.
Those requests will be identified and approved with a dedicated funding source for the initial
acquisition and then we will also assess the costs for replacing that vehicle over time
and then any ongoing operational expenses related
with that new acquisition.
So as I mentioned, a common funding approach
is really a pay as you go model.
So during our research, we were unable to find
a local jurisdiction that easily showed
that they had set reserve targets.
I'm not saying there are agencies out there
that do have reserve targets for their fleet fund,
but during our research, we were unable to find
an agency locally that has one.
So what a pay-as-you-go model looks like is what we are doing currently, which is you sustain a minimal fund balance,
you evaluate and prioritize replacement fees during the budget process rather than based on schedule.
Replacement referral often occurs due to budget constraints,
Then, as I stated, we will often assess inter-fund transfer from operating funds to build the
reserves or fund the corporate facilities, and that often is a run-line upon a general
fund.
This is just a quick high-level comparison.
I'm not going to go through this entire slide, but I want you to just kind of compare the
difference between a pay-as-you-go model versus a sleep replacement reserve, and really
highlighting a little bit about how it works already but it does allow for a
stable and predictable annual contribution that's spread evenly across
times of looking at that annual budget impact because this is something that
we're faced with currently where we we often budget or predict the need for
replacements that require one-time contributions are significantly
impacting the general fund. And so going with a fleet replacement reserve will
help us both with sustaining the general fund long-term model because it will be
planning accordingly for the needs of the future for our fleet as well. So
this is one of the areas that we really want to focus on is making sure if we
transition from the pay as you go to a fleet placement reserve that really the
intent behind that reserve is to allow us to have funding available as the
replacements come due without reliance on the general fund. So this is a five
year fleet fund financial forecast looks very similar to the general fund which
we provide to you pretty regularly. Again this includes both operating and
fleet and so I do want to call up your time to do a couple things on here. So if
you look at line four, total revenue, you'll see there's a fluctuation in the
revenue starting in fiscal year, for example, we look between column B and C
which is 27 and 28, there's a $2 million difference. And really where we see
that change is in line 3. So line 3, you'll see the inter-plan transfers in fiscal year
2930. Those are for plan replacements of fire vehicles. So we put in our model that we
assume, because it is in the general fund model as well, that we will have a
transfer from the General Fund to the Fleet for fire vehicle apparatuses in
28-29-30. What I want to also call your attention to is line 10, which is the
operating. So again, you'll start to see kind of a minor growth in the operating,
which is much more stable. It's about 3% growth year-over-year. But then line 11
is the capital acquisitions, and you start to see fluctuations in those. And
and that's because those are the years of plan,
fleet, or vehicle, or equipment replacements,
and so those are the estimated costs that we have
as part of our financial model
that we're working with our consultant on.
And so further, if you look down to line 15,
the ending balance, you'll start to see,
and I should maybe start at line 13,
that change in that position is that we are drawing down
funds balance every year with the exception of fiscal year 2028 and so
you call your attention to line 15 which is the ending balance you know 2027 we
have an estimated ending balance of 2.2 million but by the time we get to fiscal
year 2032 if we fund all of our replacement needs we are in the deficit
of about 1.4 million dollars so next up song what we'd like to do over the
next several months is we as I mentioned the FLEET fund currently is in one fund
it will take some accounting efforts to pull apart the fund to segregate the
beginning of any balances and separate them from an operating capital. That's
coupled with the challenges of our new system that we launched on to the
RIFER so we need a few months to make sure that we can appropriately assess
what those funds should look like, and that will be August to September.
October to November, we would continue to develop and refine the financial forecast
tools for each of the new funds that we create and incorporate any reserve targets to determine
revenue needs, including any impacts that might have on the general funds.
And then in December, we would return to the committee with an update providing funding
plans that would incorporate those reserve targets.
And then January to March of 2027 we would utilize both the inventory, complete inventory
of our fleet, our capital replacement needs, and ongoing operational needs and incorporate
that into fiscal year 28-29 by a new budget process.
With that, I think we open up for discussion and feedback on the committee and we're really
looking for feedback and direction on reserve targets for both the Fleet Maintenance Fund
And then state categories based on funds, and then feedback will be used to help develop those funding models that I talked about and recommendations for funding plans that we bring forward to you in this hour.
Thank you for the presentation. At this point in time, we will take public comment if we have any.
We can.
Okay, so we'll close public comment.
We will come back to you after any members for discussion including questions in your multiple amounts.
Let's begin with Vice Mayor.
Thank you. Thank you for the presentation and for the team that contributed to the presentation.
I have three, four questions. I'll start off with a general question that I'll dig down into the financial forecast.
In terms of the maintenance, is that done in house or do we contract that out?
Do we have a vendor?
So I would say that it's a combination, so we do have insurance staff that are mechanics.
When we need to outsource because of available resources, we do have a contract with vendors
when we do send those vehicles offsite.
But we do have insurance staff that support on my maintenance.
I will say that the fire fleet is maintained throughout the county.
And do they charge that back?
It is part of the contract cost, so yes.
So it's included in the contract, or that's not an added?
Correct.
In terms of the vehicles that have been purchased or are planning to be purchased, what kind
vehicles and the percentage of vehicles that can be purchased within the San
Eandro ecosystem. So I do know that our police vehicles and a lot of our public works vehicles
I believe are purchased here within a local car dealership. The fire
vehicles are specialized, I believe it's somewhere back east, but the majority of
our fleet, we do try and purchase here in the city of San Francisco local as much as we can.
Is there a policy that guides those purchases or is it just a practice?
I think it's more of a practice, it is not a written part of our policy.
So now let's, I wanted to kind of dig into slide nine, which is the five-year fund financial forecast.
In terms of the salaries and benefits, what positions make that line item?
Thank you. I will defer to Public Works, who has staff that are assigned to this particular funding floor,
so I will have them contact me to do a special number of classifications or anything.
Good afternoon. This is Thomas. He's the Public Works Director.
We have a supervisor, a fleet supervisor, two equipment mechanics, and two mechanics aids that are charged to this fine.
Please repeat this for me.
Of course, a fleet supervisor, two equipment mechanics, and two mechanic aids.
Does that include the time of the finance director, or how does that.
This does not include timing of it from my position or any other position.
And my understanding is just the position of that brought by the assistant public works director.
And then, there's, I'm assuming materials and supplies are just kind of like tools and all that.
I'm a little bit unclear about what contractual and other services versus other operating costs.
They're very general terms, and I'm just trying to understand that that's probably $1 million right there.
Thank you for that question.
I do know that the contractual and other services line item does include a third-party contract with Priority 1,
which assists with management of the police fleet, and so that is included in that.
And I don't recall the official long talk on my head, but we do have staff from police who may be able to answer that question.
And then the other operating costs are related to internal service charges to other
other insurance service funds like IT. There's an insurance that goes in here as well.
So those are some of the other items that are shown in the other operating costs.
I don't understand.
Can you explain a different way of that?
For the other operating costs.
So we have internal service funds like I said.
One of them is services that are provided by IT.
There's also an allocation
for the city's liability insurance and risk fund.
And so there are staff that is supporting,
that is assigned to this fund, right?
So what we say is that the portion of insurance, allocation, or portion of the insurance is charged to this fund because this is where those employees are charged to.
Same way for IT services. There, for example, is five employees that have five computers.
We charge this fund for their five computers that are used by those employees.
well that is open a whole new I wasn't aware that the fleet included that type
of thing and so what other things are included in this that are not vehicles
those are the only two that are nonspecific so what also is included in
the other operating funds is the cost for the fuel that we have for all of our
vehicles as well. So the internal service charges are probably much smaller
because it is only five employees essentially that are supported by this fund
and so a big significant portion of that is the cost of fuel for all of our groups.
Okay, those are my questions for now. I think I've gone way over my time.
Can I ask a question for Victor?
Thank you for the presentation. My question is, in regards to you, can you explain the
the capital acquisition?
Sure, the capital acquisitions are the replacement costs of our, either our existing fleet or
any equipment that is planned for that fiscal year, or any planned new fleet or
equipment that we are planning for those just future years. I will say that in this
particular model, this represents a Cadillac position for replacement only
there are no planned new purchases at the same. So let's say line item B $610,000
would be about seven police vehicles. That sounds about right. There are other
police vehicle that are being purchased and that's really what that represents.
There are no non-public safety vehicles being purchased in 2020.
Gotcha. Okay, thank you. And then with regards to the... what's the lifespan? I mean there's either
fire engine, what's the lifespan of the vehicle? So it varies based on the type of
vehicle and so I will defer to Public Works but they can range anywhere from five
to 18 years depending on the vehicle but I don't know if I wanted to add anything
beyond kind of what those type of vehicles are and what the life span is for this.
Thank you for the question. The life span does vary based on use. Sedans we're
going to keep for maybe 12 years. Police vehicles for a shorter time maybe seven
years. Trailers and equipment like that can go 20 years. A factor truck, a piece of equipment
that the pollution control line uses, is also a very short lifespan piece of equipment.
We just this year changed to a condition-based replacement policy. So instead of a set number
of years, we now evaluate the vehicles each year and rank them and score them as to how
much life remains, so those replacement times are now less different.
I thought you were interested, thank you.
And with regards to, we mentioned, we talked about fuel costs, and I believe going in the
direction of electric vehicles, so did this account for cost savings on gas?
gas. So the model that we're working with is what we currently have and so it
doesn't include any planned replacement of maybe a fuel or vehicle versus a
replacement of an electric vehicle and electrification of our fleet. This is really
looking at what we have today and what those replacement needs will be in the
future. It is a dynamic model and so we're able to remove fleet as we need to
And we can add fleet and what those different costs impact will be
The cost of maintaining is you know saving some fueling. That's even for me. That's on electric vehicle
So as we start to move in this basic city chooses to do so move toward an electrified fleet
The mall could get it to reflect fishing in our house. It's all great. And I think yeah
a little lower earlier, do you have any concepts or any other cities that have used
this type of model with regards to the FOIA replacement and user event maintenance?
There are a number of cities that have inventory software that they use, some use Excel, but
it is typically cities have a replacement schedule, so a inventory of their fleet so
so that they do understand what the needs are,
is whether or not there's a policy set
that requires us to attempt to meet those reserve goals,
right, those target reserves.
And so agencies as a practice may be in a situation
where they meet those target reserves,
but there isn't that, well, our research field,
there wasn't a policy standard within agency scenarios.
Okay, thank you.
Those are my questions.
So, coming to some questions from me...
I heard that we're historically underfunded, which doesn't surprise me,
but how much are we historically underfunded?
We can provide some historical data when we come back in December
that shows the historical actuals over the last five years
and show you what that fund balance looks like.
It has been a challenge to look for it because it is included in one fund.
And so again, allowing us the rules of our J-2 separate funds will allow us to better
and more accurately determine what that funding level looks like, but because it is co-meagled
at this time, it is both operating and capital is a challenge to know how much of the fund
balance is related to capital replacement and how much underfunded we were as a result.
It's difficult if instead of replacing something we just keep an item that
should have been replaced. So it's hard to measure all the one underfunded as
and we didn't make a general fund transfer but the item should have been replaced.
So it's, I get there's a difficult question to answer but in many ways it
goes inherently to the target that would be set. And so having some sort of
I'll call it educated guess would be very useful so I'll just kind of put that up there for that.
Yes please, city manager. Thank you very much mayor and you made an excellent point because what comes to mind is for example
as the fire truck that we needed to purchase this fiscal year. This fiscal year?
Oh sorry, last year, last year. And fiscal year 27 as we sit here. But in fiscal year 26, there was a fire truck that should have been purchased by the city three years prior to that.
We didn't have it on our books to purchase. We didn't have the money to purchase it. The county advanced it. The person's force. But it came so far behind that the county said, if you take it or we keep it.
And so then we have to get the money to fund it.
But if you were to go back for years,
we wouldn't have reports saying at this date
you should have funded it, though we
should have funded that fund.
That's part of what I'm trying to figure out,
is we want to establish the correct level of funding.
Because we want our feedback on the targets.
We want our feedback on the targets,
but I don't really know how far off we were.
But the reserve target should be.
That's kind of, I'll get to the reserve target questions
a little bit, but I'm really struggling to get constructive feedback about
understanding how far underfunded we were recognizing the challenges that
you'll have in answering the question. So it's like, we're all in this together so let's do
the best that we can and achieve that. Part of what I am curious about in our
modeling is the difference between replacing a vehicle that we'd like to
replace and increasing, we've got a fancier piece of equipment or everybody
wants the machine that goes bing, and so we're gonna buy a new machine
because other cities have it and we're jealous. How does that fit into the
analysis that we're doing? So one of the things that we've looked at in the model
is to, we obviously look at presently value,
but we have added escalation factors
to determine the cost of it at the time of replacement.
So even if it was a replacement of exact and kind,
we are anticipating that the cost today
is not gonna be the same cost in five years.
If there is a piece of a focus that's being replaced
with something that's different,
that is considered a new asset, right?
And so understanding and departments will have to provide that funding source.
What is the gap?
What is the difference that we've put aside for the replacement of this vehicle versus
this new vehicle?
If there's a funding gap, what is the source for that?
And then we reassess the cost to replace it.
And if there's any change in operational costs, it may be the same to operate.
The cost may still be the same.
but really identifying where that funding comes from,
because one purchase is actually made.
So that's particularly useful, as perhaps it
could be the case that we don't have adequate equipment.
We don't have the adequate equipment,
because we've been deferring the purchase of the more complex
equipment and the more up-to-date equipment.
And at least what I'm hearing as a late person
is that the newer equipment is a little bit fancier,
more computerized, more things that can...
I thought it'd be great, but more expensive to fix as well.
Okay, let's talk a little bit about interest income
at line two.
I do not understand that number or its size.
So, the city does have our investment in income,
and it is spread across the various funds.
And so this is the portion that I can get with that amount
is the total I don't have on top of my head.
But it is a portion of the city's total earned income,
interest income in the portion that is assessed
and deposited into this particular fund.
So I can get what that apportionment is for you.
Let's revisit that number.
That number is quite large, relatively speaking.
So, if we can begin to that, please.
The 1.5 million,
when we worked on approving the budget
and we were looking forward,
can you remind me, was that 1.5 million dollars in there?
Yes, it was.
I just, I didn't remember, but thank you for that.
And then, if I'm understanding correctly,
Your objective is to set up, to take the current fund,
create two funds, and set some sort of funding target
as well as a reserve target.
And kind of two separate elements.
Funding target, reserve target.
Okay.
So to clarify, the funding target will be based on,
you know, us attempting to reset our reserve target,
that funding target may change based on the level of the reserve account I need to type.
Because I'm thinking about it differently, so to help you understand.
I think of this fleet fund as a pool of money to make sure that we have the money they're
going to need to buy a fire truck or replace the police or repair the police car or a pay
our bucket truck, right? So it's a pot of money that's sitting there. When I use the term
reserve percentage, I'm thinking about variability in that amount. So I'm going to put $2 million
there, but just in case, I'm going to put $2.4 million instead of $2. So are we using
the same terminology? Okay, so there's two questions. How much money should be in the
account plus what cushion should we have for that. Okay, we want to come back to Vice Mayor.
Thank you. In terms of the fleet that we currently have, do we own every single one of those vehicles?
I believe that we don't know we don't lease any vehicles but I will
The fire vehicles are owned, the general government vehicles, public works, etc. are owned and police lease is their vehicles.
Thank you, I have someone for you.
Good afternoon, I'm Lizzie. I'm the manager for the police department. Our police vehicles are all owned, including mortar stocks.
What was that last statement including...
The reason I'm asking is because I'm just wondering, there's a, particularly in IT, we've moved, or I don't know if we've moved, but the field in general has moved away from owning assets like laptops, copy machines, or to release them, to one, ensure that we're not kind of owning the asset and we're not kind of responsible for,
for replacing it.
I'm just wondering if part of the analysis included
a scenario in which we lease vehicles that we can lease.
I know there's some like the ones like the bucket trucks
like those you might have to own,
fire trucks, all that sort of stuff.
I'm just wondering if the modeling included
the cost differential between the vehicles
that could be leased versus ownership
and what that model looks like in those two various scenarios?
That's a great question.
I will answer that the model does not
include a scenario that looks at a leasing component.
It is something that we would consider.
There are challenges, or financial challenges with leasing,
because you often are paying a higher interest rate, right?
So looking at the differential of what
it costs the city to own a vehicle versus for an asset,
versus leasing an asset where you are paying
probably a higher yield in interest payments.
But we could potentially do just even a scenario
where we look at a couple of vehicles
and what that looks like and do a comparable.
If that's something that the committee
would like us to do.
City Manager, please.
Thank you, Mr. Mayor, thank you, Vice Mayor.
In my experience,
through your experience as a finance director,
finance manager and other agencies,
When the FL agencies, when we have these vehicles,
it's because we did not have a capitalized agency
to afford the vehicle that we needed.
And we were so far behind on getting the vehicle
that without leasing, we had to take on at an expense
of leasing so that we could operate the agency,
providing the services we need to the vehicles.
Once those agencies were able to then have a capital support,
the vehicles are probably moved to that model
because of the cost of leasing the tire.
Well, I would want to just have that scenario map out
to see if maintenance and staff costs to maintain,
I don't know, whatever the terms of the types of vehicles
that could be leased, what that would look like
in terms of a Delta, it would be,
anyway, I'm not going to throw out the variables
of the modeling, but I'm just wondering
if that's a possibility and whether my
Colleagues would be supportive of just doing my full-on analysis of the whole fleet
They're just understanding like the number of vehicles that could be leased and then what that cost would be and then the delta versus ownership
Yeah, that was my
last question
so in that spirit
Do we track mileage per vehicle per year
and I'm looking to the public director who is a guest we do track that information.
Okay so when I think about the city sedans I would think that that mileage is actually pretty low
because we're not that big a city we're not oftentimes driving far away so I'd be curious
Can someone give me, off the top of their head, some sort of approximate typical annual mileage for a sedan?
Typical annual mileage for a sedan would be 8,000 miles.
Okay. That's spot on to like what I drive, something like that, just to get the city driving around, attending events, etc.
So then that begs the question, coming back to the lease question, at 8,000 miles a year.
And we have some sort of benchmark that we can go against.
Maybe certain vehicles, we say are the peak service vehicles.
We only use these vehicles because mileage is really
expensive if we drive those vehicles.
I don't understand.
I think that it could be value to having some of these vehicles.
I am sensitive to the fact that leases can run right.
It can become very expensive.
And at the end, you have no asset.
Whereas here, at least, we have an asset.
but it is often tied to mileage.
The second point being that the typical lease owner,
I would think would pay a higher interest rate
than us as a city.
I'm not quite sure also,
but how that would potentially impact our credit rating.
So being able to address that question
when you come up with a scenario,
because I think you're getting at least two of us,
maybe it will be less than you'd like to know.
So if you've got the three of us who'd be interested
in understanding, someone will be single.
That could be what it would look like
in some circumstances.
I'm a big believer that part of how we compensate
our employees is the environment in which they work.
And one of those factors is the vehicles that they operate in.
as they have a torn-up vehicle that barely runs,
that their door doesn't really close well
because it's 25 years old.
It doesn't create the right vibe.
It doesn't give people pride in their job.
So I'm a big believer in having
an established maintenance schedule
that enables us to have an environment
where people feel like they're at a professional organization
that cares about them and that they in turn stand taller.
originally going to do the best that they can do. So I would hope that in what
you come back to us with, there is some sort of metric where we're trying to
measure like, when do we shut off a vehicle? And if that standard isn't when
the baling wire no longer holds it together, then we decide to terminate
a usable vehicle. That's kind of where I'm coming from. Probably three year old vehicles.
The 25 year old vehicle, the 20 year old vehicle, they tend to cause problems beyond just the
repair cost, more the impression that life is created with employees. I am still, when
perhaps even before you come back, we can have some offline discussions about this notion
of target versus reserve percentage and what the modeling looks like.
Because right now it's just ambiguous, but I think that yes, as a general principle,
I'm very supportive of having a breakout for acquisition, part and separate for maintenance,
and that we're modeling it, and we know the HR vehicles likely repair scenarios.
20% probability across 10 musicals means you won't be prepared this year, sort of thinking.
So I'm glad that you're breaking it out, as of right now I can't really give you meaningful
feedback on what those numbers should look like.
Council Member Buttigieg.
Thank you.
A question with regards to maybe sparks some interest and we've already seen some questions.
I know that in the past we had a city manager who said he provided a vehicle in San Francisco.
Do we track and do we have any vehicles that are released to city employees and I think
there was a police chief who has a on-mark vehicle, is that time practice to give a vehicle
to employees to be able to drive home.
So like a vehicle that's a city vehicle assigned to them
that they can drive between their home and the city?
Yes.
I would say that it is not uncommon practice
for certain positions.
It is my experience that for positions like police chiefs
and some of the higher level leadership positions
in the same positions like that that are our own call
That is not a common practice for any city vehicle to be operated by someone in that capacity and have the ability to get home and bring it back to the city when they return to their home.
Gotcha, so we don't have any, I mean, do we currently have city vehicles that employees use to take time?
I don't have a complete list of what vehicles those are all positioned on it, but we could look into that. I don't I don't have a specific list.
So you mentioned this. Thank you.
To answer your question. Yes, we do have vehicles.
I'm not saying they're at least or not.
We do have vehicles that are provided to employees beyond the police chief work for the city that they're able to take home.
Thank you.
Those are my questions.
I had to follow up on that question.
Do we have a policy on which vehicles can go to employers?
A policy was just developed this year
of vehicle use technology by the HR department.
And I don't think it's been rolled out.
I think it's finalized, but we're
developing procedures at this time.
Thank you.
I'm coming over to you, Vice Mayor.
Just another quick question.
Other than vehicles and those five computers,
are there any other assets that are included in here,
like drones?
No, the drones are not included.
And this is like vehicles and actual fleet and equipment,
like if we have home vacos and things of that nature,
but not equipment of that nature.
Any other thoughts on this item?
So do you feel like we haven't given you the guidance
that you requested?
But I think that based on the dialogue that has occurred,
you have guidance that you have, you can proceed, okay.
Seeing that the answer is yes, we will close this item
and move to 2B.
So we've had our 2026 calendar year, 2026 quarter 2,
we'll have trust and pension fund investment reports
through June 30th, 2026.
Our sister finance director Felicia Silva
presenting this item.
Felicia Silva, assistant finance director,
Director Gonzalez, members of the finance committee
here with the other post employment benefit,
otherwise known as OBED,
and our pension trust investment report
looking at calendar year 2026 for corner two,
which will be April through June.
Here with better news this quarter,
we are seeing an increase of about 1.1 million
in the OPEC trust or 4.72%.
Year over year, it's 9.69%.
And then inception today, we have a longterm average
of about 5%.
And looking at the pension trust,
Our value increased a little over 7%, I think a 7.24% and 2.6 million and our one-year return
is 13.44% and again looking at a long-term average of above 5% at 5.49% across inception
of the bond. With that I will ask that the finance committee, happy to answer any
questions, otherwise I'm asking the finance committee to recommend that the report be
forwarded to City Council farmer to acceptors.
Is there any public comment on the item?
No it's not.
So close one comment on the item. Is there any discussion, questions or discussion on the
Okay, seeing none, do we have unanimous agreement to recommend such an acceptance?
Yes.
Yes, and yes, you have the recommendation, we need unanimous with your recommendation.
Thank you.
At this point in time, we will move to our next item, which will come out on items that
are not on our agenda, but within such a matter of jurisdiction of this committee.
Do we have any such public comment?
Please, no.
We're closing public comment on item number three.
And for item number four, in favor of our comments?
No.
Okay, the only question I'd have, so I'd like to make sure and this may be out there to be happening.
Project Elevate update in September, which is like how it's going, challenges, etc.
Just the dimensions of this stuff.
Yes, mayor, it is on our schedule to come to the committee in September.
Perfect.
What else do we have coming down in the next quarter so we can begin to be thinking about
things if you don't mind?
Sure.
Sorry.
So, we'll bring an update on the area of how it's going.
We also have preliminary year-end balances for fiscal year 2026.
We'll also be bringing forward any carried forward requests
from unspent funds from just through 26 and 27
and that schedules for October.
And those are some of the things.
And then of course we talked about today,
we're gonna bring the fleet back to you in December.
And we also have a planned update from CalPERS
that we talked a little bit about
that we're hoping to schedule before the end of the CalPERS.
excellent and then the last just question comment topic of interest and
we'll keep talking about projects staying on schedule and on cost a lot of
times we think well it's the finance team so people who control the dollars
and make sure that that projects are on budget I am just curious about that
accurate? There's really the departments that own that. I would say it's definitely a collaborative effort, but it is the responsibility of the project managers to make sure that they're
operating within their appropriate budgets. But they work very closely with clients to make sure that we are monitoring those expenditures in their financial
and work together to support them so that we can complete the project on that.
So you think of yourself as a control?
They're responsible, but you're the checker and the checker balance?
Absolutely.
Okay, thank you.
So that's just this concept of monitoring costs
and making sure that somebody has their finger on that pulse beyond the department.
This is very useful.
So at this point in time, if there are no further comments,
We are going to move to adjournment.
Time is 4.55, we are in adjourned.
Thank you, Council Member.
Recording stopped.