Alright. Hello everyone. Good evening. I'm Cindy Darling, mayor of Walnut Creek and
welcome to the Tuesday, March 18th, 2025 regular meeting of the Walnut Creek
City Council. The City Council is conducting the meeting for the from the
City Council chambers and this meeting is being video streamed and can be
viewed later or live. I am. You guys not hearing this? I'll just glare over the
The AV guy the meeting is being streamed and can be viewed late live or later on the city's websites as
Some attendees may be participating in their first Walnut Creek City Council meeting
I wanted to welcome everyone and talk briefly about the agenda and the public comment process
For each agenda item there will be an opportunity for public comment on the item thus if you desire to speak on an item
That is on the agenda this evening. Please hold your comments until the council considers that item
Additionally we have a section on the agenda titled public communication, which is for public comments on items not on the agenda
any comments during public communications should not relate to an item that's on the agenda this evening and
Consistent with section nine point five of the City Council handbook thirty minutes will be initially allocated for public communication for items
Not on the agenda
additional time for public communications
for items not on the agenda will be provided at the end of the meeting if necessary and if you
Sorry, I just got back from vacation. My brain is still
functional if you desire to provide a public comment
Please compete this complete a speaker identification card and line up behind the lectern at the appropriate time wait your turn
And then when you approach the lectern state your name and city of residence and you'll have two minutes to address the council
Now please keep in mind that this is a city business meeting the City Council has adopted rules of decorum to ensure that the meetings
are conducted efficiently and effectively and that all members of the public have a full fair and equal opportunity to be heard
The City Council handbook outlines decorum expected in the council chambers and can be found on our website
All remarks should be addressed to the City Council
Please do not use threatening profane or abusive language which disrupts disturbs or otherwise impedes the orderly conduct of the council meeting
Again, everybody's going to have their two minutes to make their remarks and written
comments have been submitted that were submitted and received up to two hours before the meeting
have been posted to the city's website for public review and are included in the meeting
record but will not be read separately into the record.
So that's the disclaimer part.
And with that, please join me in the Pledge of Allegiance.
Thank you.
City Clerk Martinez, could you please call the roll?
Council Member Davini.
Here.
Council Member Francois.
there you go here here councilmember FranC'ois here councilmember Silva here
Mayor Pro Tem Wilt here Mayor Darlene here okay next on the agenda is
proclamation declaring March 31st as International Transgender Day of
Visibility and this is a one that I wanted to make sure we had this year
International Transgender Day of Visibility was founded in 2009 and it's
It's celebrated as a way to celebrate the accomplishments
and the victories of transgender
and gender nonconforming people
while raising awareness of the work
that is still needed to address
the discrimination they face
and the safe, basically safe transgender lives.
And I think that's something
that we all support here on the council.
We all wanna make sure Walnut Creek is a place
where everybody feels welcome
and everybody can see themselves in our city
and feel safe and comfortable and can prosper here.
So, I see we have a very large contingent here
from the Rossmore LGBTQ Plus Alliance,
and I'm gonna invite Alex Pacaro to come up
and help me with this proclamation.
Oh, who's doing the picture?
Oh.
You're doing a picture?
I forgot to tell Matt that he's gonna get a picture.
Behind us, they're all doing a picture.
Oh, they're doing their picture.
Anyway, I just wanted to present this to you guys and thank you for all of the work you
do out at Rossmore and for everything you do for our community.
And if you wanted to say a couple words.
Great.
Thank you so much.
Thank you.
I'm really honored to be here.
My name is Alex Picaro and I am a proud transgender man.
I'm 69 years old, and I came out as transgender at the age of 65.
And I lived my life as a lesbian since I was in my 20s.
I asked a friend of mine to come today.
This is Sue Gragas.
And the reason I asked Sue is because she was married for 55 years to another proud
transgender man.
They started their life together as a lesbian couple.
But in 1981, he transitioned, which was very early.
And she brought his picture because, unfortunately, John
can't be here today because he passed away six weeks ago.
And he was a really wonderful guy.
Their relationship says so much about love and commitment
to one another, has due so many of the lives of transgender
people across this country, across this world,
And, of course, all of our LGBT brothers and sisters.
And I would like to accept this, not just for me,
but for John and me, and for all transgender people
in this world, and for all of the LGBT people
in the Rossmore community.
And we have several allies that are here
that came to celebrate this day.
And I'd like you all to stand up and be recognized.
Thank you very much.
Thank you very much, and thank you so much
for everybody coming out today.
Does anybody else wanna weigh in on this one?
I think we're good.
Thank you guys so much, and thank you for everything
that you do out at Rossmore.
You may excuse yourself, there's a nice cocktail
down the road, thank you so much.
No, you may not, you must stay here.
Next on the agenda is the consent calendar.
Does any council member wish to pull any item
discussion oh we have another presentation item I am so sorry I'm
still on Fiji time okay where are we bottom of the front page presentation
city city communications update I've got it now all right thank you mayor Dan
buckshite city manager and I'll introduce this item and invite Liz
Payne up here in just a moment but as you noted we have a presentation about
the city's communication program and activities. We have a fairly extensive
program in place in which we try to keep a strong connection with all of our
residents and visitors. As you know, Betsy Burkhart oversees our communications
program which includes the quarterly in a nutshell, a hard copy publication that
is mailed out, electronic newsletters, multiple newsletters on a variety of
topics, and also works with the media who cover Walnut Creek and she deals a lot
with resident inquiries as well.
I think you're all very familiar with our two other members
of our team, one being Matt Bolander,
who is behind the magic door there, who keeps this meeting
as well as many of our video productions going.
And we have Liz Payne, who come on up, Liz,
and have you take over here in just a second,
who manages many of our digital services
and digital activities.
She also oversees our social media and website,
And she's here to share what we've been up to really
over the last couple of years
as there's been a significant focus on digital services
since the pandemic,
since more folks are accessing services remotely.
With that, welcome Liz and take it away.
All right, well, thank you, Dan, for the introduction.
Good evening, Madam Mayor, members of the city council,
members of the community and staff.
I'm Liz Payne, the city's digital services manager.
And as Dan mentioned, I help oversee the city's websites,
main city social media channels,
and help with outreach campaigns.
And today I'm here to give you an update
on the 2024 website redesign one year later.
Talk about how our approach to digital services has evolved
and share some exciting initiatives
that we have for the future.
And let's see, yep, okay.
And give me just a second to bring up our slides right here.
Here we go.
All right.
Traditionally, the city's communications
has focused on informing and engaging residents
through updates.
But today, residents expect more access
to services and information online at any time.
In response, we've enhanced our websites
to help residents find what they need
and complete tasks more efficiently.
And we've also prioritized customer feedback
to continuously improve outreach and the customer experience.
One of our core responsibilities
is ensuring that customers stay informed.
For digital communications,
we achieve this by meeting them where they are,
their email, and social media.
The city maintains a strong newsletter distribution list,
allowing customers to describe to the updates
that they choose.
This may include the city manager's update,
meeting agendas and project specific updates.
The city has over 24,000 subscribers
who annually open over 126,000 emails,
demonstrating a strong community engagement
to our updates.
Our social media presence continues to expand.
This slide shows our platforms ranked by their growth rate.
Instagram and YouTube are leading the way with a 17%
growth annually.
It's reflecting a strong trend towards video content.
And thanks to the creativity of our social media teams
across police, city, and arts and rec,
we're seeing short-form video content
making a significant impact.
Individual videos are sometimes reaching,
organically, audiences of up to 50 or 100,000 viewers,
and that's covering content, everything from public safety,
to city events, to public art.
Collectively, the city's social media channels
have over 194,000 followers, and they show active engagement
across all the channels, accumulating with over 3,000
views per year.
But we're doing more than just keeping our residents
and customers informed.
We're creating an online presence
that empowers customers with tools
they need to access services and information effectively.
With that goal in mind, in 2024, we set out
to redesign four of the city's key websites.
This included the main city website,
police, arts and rec, and economic development.
When we started, as you can see here,
each site had a slightly different user experience.
This sometimes led to a disconnected
and inconsistent journeys for our customers.
While the sites were performing adequately,
there was room for improvement in usability and reliability
of the content.
This slide shows major benchmarks
from our site improve analytics platform.
Quality assurance refers to the accuracy of our content.
The accessibility score reflects how accessible
the design of the website is for audiences of diverse needs.
And SEO reflects how well the content
is being ranked in search engines.
For the redesign, we took a customer-centered
and data-driven approach.
We looked at content analytics.
We did user testing.
We looked at user journeys to tell us how and what paths
our customers were taking to find their content.
And then finally, we spoke to staff
to ask them, how are the sites working for you,
and what are you hearing directly from our customers?
The goal was to create a more intuitive experience
across all our sites.
And in 2024, we launched our four redesign sites
built with customers in mind to deliver a more cohesive
and customer-friendly experience.
So improvements that were made to all our sites
included a streamlined navigation.
We surfaced the most commonly requested tasks
as called to action buttons on our front page.
And we also added an accessibility and expanded
translation widget to make our content more
accessible to all users.
And we also worked to simplify the content
on the interior of the site to make government information
easier to understand.
This is one example from our housing division.
And after simplifying their content
and increasing their search engine optimization,
the housing division saw a 38% increase in visitors
accessing information and services for housing.
We also streamlined the customer experience
by replacing PDFs with online forms.
For more complex processes,
such as Community Development's ADU Rebate Program,
we implemented automated notifications
that keep customers informed about every step of the process.
Also, staff now has access to a centralized database
that helps them track every step,
rather than manually entering information into spreadsheets.
The impact of these improvements has been significant.
After one year after the redesign, website traffic has increased by 26%.
Today, the total reach of all city websites averages 2.7 million views a year.
More people are engaging in our services, and they're finding what they need more efficiently.
Our work doesn't stop here.
We continue to innovate and improve
to meet the evolving needs of our customers.
And coming up next, we're looking
to continue to enhance the mobile experience.
Two out of three of our visitors are coming to our sites
on their mobile devices.
And we're going to be expanding the use of online forms
to make our interactions more seamless.
We've also launched a digital accessibility initiative
with a focus on making reports and PDFs more accessible
to screen readers so that everybody can access
the information they need.
And information technology will be implementing a chatbot.
This will help improve response times
and enhance customer support.
A year after the redesign, I'm happy to report
that our commitment to continuous improvement
has paid off.
The numbers at the top show where we started
and the numbers below reflect where we are now.
The circles with the check marks
note the government benchmark scores,
which you can see that we're exceeding
in all three categories.
Our work in digital services
is more than just about numbers.
It's about informing, empowering,
and improving the way we connect with our community.
As we move forward,
focus remains on innovation inclusivity and customer service design.
And with that, I'm happy to answer any questions.
Thank you.
Excellent.
And looks like you guys have done some great work this year.
Questions on the part of the council?
Craig?
Yeah.
Councilmember Definney.
Thank you.
Thank you for the presentation.
That was very informative.
I was wondering, I noticed that with the redesign, the quality assurance went from 79 to 97.
97, what do you because you described that as being the
Like the factual contents of the site what during the process led to such an I think if I'm correct in that
What would lead to such an improvement in that category? That's really impressive to go that far
well, one of the main things that the
analytics measures for quality assurance is
Links on the site. So verifying that information is linking correctly
and so what we have in place now is we're able to much more closely monitor
that and our teams are updating regularly so that is improving the
experience and accuracy of what people are reading. So it's the accuracy of what
they're reading and where they're being directed to it wasn't necessarily
accuracy of the content prior. Correct it's more ensuring that where they're
being directed to and then of course you know our content contributors are
reviewing the content regularly to make sure that that is accurate and up-to-date.
Other questions? Councilmember Silva. Thank you very much and the numbers are
truly impressive and having run a couple of websites with thousands of
pages it's really hard to keep that those linkages and that content
accurate and pointing in the right direction so bravo that is excellent.
What's next?
Well, I think next is our commitment to expanding accessibility and really also looking, as
I mentioned, finding those tools where we can sort of automate self-service.
So the chatbot will hopefully find, it's another way of people being able to search.
It'll help people find content that they want more easily.
It'll also be another tool to help staff flag
if something needs to be updated.
So I think keeping in mind our commitment to accessibility,
streamlining the experience for the customer,
and giving staff the tools they need to keep
the site in good shape.
And congratulations on convincing the subject matter
experts that long narrative paragraphs are not necessarily
the best way to present information.
Thank you.
And I just want to say thank you
for the work on accessibility.
I know I had heard that from one of the,
actually City Council candidates a while ago
and she pointed out to me some of the ways
that our old website was not that,
was not as accessible for people
who see information in different ways.
So I really appreciate the work you guys have done
on that accessibility part of the puzzle.
That's great to hear.
Thank you.
Anything else?
All right, thank you very much.
Thank you.
Thanks for the update.
Now, I want the consent calendar.
Does any council member wish to pull an item
for discussion or staff?
Yes, please.
I would like to pull items two E and two F for a comment.
Okay, anybody else?
Two C.
Two C.
And I'm gonna pull two G just because Heather's here.
So I wanted to recognize her when we get to that one.
So that leaves A, B, D, H, and I.
So, move to adopt the consent calendar.
I was gonna do the public comment thing for you.
Is there any public comment on A, B, D, H, or I?
This is not the general public comment.
This is just on the consent count,
those items on the consent count.
Sorry for all the confusion.
Anyway, seeing no public comment,
I will close that and bring it back here
for Council Member Silva to make a motion.
Move to approve consent calendar items to A, B, D, H, and I.
Second.
Roll call vote please.
Council Member Silva.
Aye.
Council Member Davini.
Aye.
Council Member Francois.
Aye.
Mayor Pro Tem Wilk.
Aye.
Mayor Darling.
Aye.
All right, we'll go to item two C,
the adoption of the flood control storm water utility
area fee.
So I thought this, the information on the,
this program is quite complex,
the cost, the funding mechanisms.
I think it might warrant or my suggestion would be
to have this on the open agenda,
have a presentation from the city on this topic
and sometime in the future.
Did you have questions today for staff?
No questions today, no.
Okay, the city manager and I will work on this
to find an appropriate point.
So 2C, any public comment on 2C stormwater fees?
I'll look for a motion.
A motion to approve 2C?
Yeah.
But if we're approving it,
that means it wouldn't appear in a...
I just want to understand what we're doing here.
So I had questions about it
and I brought it to the city manager's attention
and the timeline with the county is such that we should go
ahead, in my opinion, and approve it today.
but I thought the content was sufficiently complex
that we would benefit from hearing about the subject
in more detail at some point in the future.
Yes, and I had heard that from the city manager.
We will work to find a time in the council calendar
where it's appropriate to look at.
There's a lot of complexity,
there is a lot of complexity to the issue.
We don't really have a substantive matter ahead
in front of us today,
but there will be a lot of work happening.
And as that work happens,
we will look to bring it back to the council.
And so we are just-
With that, I will make the motion to approve.
Second.
All right, roll call vote, please.
Mayor Pro Tem Wilk.
Aye.
Council Member Silva.
Aye.
Council Member Davini.
Aye.
Council Member Francois.
Aye.
Mayor Darlene.
Aye.
Okay, to E and F, do you wanna do those together?
Yes, I can do them together.
Thank you very much, Mayor.
To E is an item where we're accepting
the completion of a contract by Public Works
on the Downtown Fiber Optic Network phase two,
which was specifically the Civic Park buildings,
and then 2F is the acceptance of the contract completion
of the 2024 Slurry Seal Roadway Project.
And I just wanted to thank our public work staff
for doing all of this,
what seemingly seems rote work on time and under budget.
Thank you.
All right, anybody else have anything else on 2E and F?
With that, would you like public comments?
No, Council Member Silva, do you wanna make the motion?
Move to approve items two E and F
from the consent calendar.
Second.
Roll call vote, please.
Council Member Silva.
Aye.
Council Member Francois.
Aye.
Council Member Davini.
Aye.
Mayor Pro Tem, well.
Aye.
Mayor Darling.
Aye.
And last but not least is 2G.
And this is the appointment of Heather Lervy
to take over as the full-time Library Commission person.
I both wanna welcome Heather to that full-time position.
thank you for taking up the efforts
and thank Jason Molinari for his work through the years
and welcome you to the commission.
And if there's nobody here that wants
to publicly comment upon it,
I will move that we appoint Heather Lervie
as the city's primary representative
on the County Library Commission.
Second, and I just wanna thank Heather
for her dedicated service,
taking the alternate role very seriously
attending all the meetings last year and at some point either by email or
however I'd love to get some book recommendations from you for this year.
Mayor Darlene? Aye. Councilmember Francois? Aye. Councilmember Davini? Aye. Councilmember Silva? Aye.
Mayor Pro Tem Wilk? Aye and thank you very much and I guess we'll see you at the
author's gala. Thank you very much and now I'm working I'm getting there. Next
on the agenda, this is the public communications
and this is the portion of the meeting
that is reserved for comment on items not on the agenda.
Under the Brown Act, the council cannot act
on items raised during public communications
but may respond briefly to statements made
or questions posed.
We could request clarification
or refer the item to staff.
Consistent with section 9.5 of the city council handbook,
30 minutes will be allocated at this time
for public communications for items not on the agenda.
Additional time for public communications
for items not on the agenda will be provided
at the end of the meeting if necessary.
So now those of you that wish to can please step forward
to the podium and line up along the wall
with your speaker cards in your hand.
Once you're up, please introduce yourself
to city of residence for the record
and we'll give everybody the two minutes for their remarks
and two written comments submitted have been posted
to the city's website for public review
and are included in the meeting record
but are not separately read.
At this time I note that the time is 6 27.
So we will go for 30 minutes
and welcome our first commenter.
Thank you.
Good evening.
I'm M.D. Rose.
I'm from Rossmoor, Walnut Creek and I need your help.
Deed was recorded and you will be getting
that in a little packet that changes
and clouds the open space boundaries in Rossmoor.
For almost 50 years, we have had this map,
which is a ordinance that has the land use plan.
And there's three characterizations of that land use.
One down here, it says the clubhouse area.
There's regular open space and there's residential.
Within that ordinance, there's very specific language
saying you must do this, this, this,
if you do anything to change those boundaries.
Okay, there is an application for a Rossmore for pickleball, $4 million, 600 pickleball
people, over 9,000 pickleball that are non-pickleball.
So these are seniors that have $4 million at stake, and it could be considered elder
financial abuse if proper procedures aren't followed.
This deed was recorded, and you'll see it in your packet, without a public hearing,
with no Brown Act notice.
There's another law in your city ordinances that says the city engineer, if he's going
to record something and it has significant impact or something along that line, he needs
to go to the Planning Commission.
That did not happen.
And no going after the fact, please.
We need a public hearing, three-carat.
So our zoning map is in danger.
Also in here is you have what's called the general plan, which is super important.
And there's a map in there.
Our open space is a golf course.
Well, we can't climb Lime Ridge, or we can't climb, you know, the other places.
But we can use our open space.
Uh-oh.
Thank you very much.
I will have this staff look at this and be in touch with you if they need additional
information.
Can I make one more comment?
No, I'm sorry.
I'm talking to our...
We have to stick to our two minutes.
Thank you very much for coming.
Thank you.
Thank you for listening.
And please, somebody help us.
Thank you.
Good evening, Mayor Darling and City Council members and staff.
My name is Ellen Osminson.
I live in Walnut Creek.
I came before you last November introducing to you about
a Walnut Creek Village that I was working on.
Today we are renamed, we have been renamed
Mount Diablo Village because there was another project
in Baltimore, Ohio with the exact same name,
Walnut Creek Village, and because they are established
and we didn't want to step on their toes.
So Mount Diablo Village, if you look at this chart,
it will tell you that it is a table supported by
socialization, learning, exercising,
and supporting our seniors.
This is a non-profit organization for seniors.
And I also wanna thank those City Council members
who have given us the word of encouragement, support,
and even attended some of our events in the past.
And we are very energized, and back then,
all the programs and events were primitive,
And now we are getting very close to launching,
and we even have a brochure.
And so as we continue to launch,
and I would be, and maybe, reaching out to all of you
to come speak before us about what the city programs
are like, are like, because we want our seniors
to continue to learn and continue to be engaged members,
engaging members in the community.
And so what is a village?
A village is part of a nationwide movement
of more than 260 other villages in this country.
And in the Bay Area alone, there are 30 villages
and Mount Diablo Village is only one of the 30
that we are putting together.
And as I said, Mount Diablo Village
offer programs that include learning, socializing,
exercising, and supporting.
And we know in our brains that socialization is a very important component.
So we want to continue to develop that.
Thank you, Ellen.
Hi, my name is Keith Firing.
Probably you're a little bit taller than Ellen, so there you go.
OK, now start.
OK, my name's Keith Firing, and I have lived in Walnut Creek for 45 years.
I had a store, downtown Walnut Creek, for some of the older people here.
It was called Price Right Cheese.
I built it up, I sold it.
I was an English teacher in the Mount Diablo school district,
and I bought my little house in Bancroft Village
when I was 37 years old in 1984.
Hard to believe, I am 77 right now.
And I and my wife, we love Walnut Creek.
I am here following up with Ellen
regarding the village movement
and what we're working at creating here in Walnut Creek,
the same as La Marinda has, Clayton has,
Marin has, San Francisco has,
Petaluma and other places have.
What it is, it's a community of volunteers
helping seniors to be able to remain in our homes,
which is something that I wanna do.
And I don't want to, I can't move to a Rossmoor
into a community like that or do some other things.
I am a member of the Walnut Creek master swim team,
the Benetikva, I forget a few other things too,
but they're great.
But this village provides a support of volunteers,
of seniors helping others, let's say younger seniors,
helping older seniors and people volunteering
work with each other and that's what I just hope to make you aware of it
because it's I want to stay here and I don't want to have to move into some
place we love living in Bankroll Village we love Walnut Creek so nice seeing
everyone here and you as well. Thank you very much. I think it's interesting to
hear about the change from Walnut Creek Village to Mount Diablo if anybody is
is concerned about confusing names being the same.
It's gotta be Baltimore, Ohio.
So I'm sure they appreciate that.
Thank you.
Next.
Good evening, Madam Mayor, councilmen, members.
My name is Jack Dudem,
and I'm the property owner of 1515 North Main Street,
which is the location of my son and my restaurant
at the same address of 1515.
I'm here to address the letter we received
regarding our patio.
We had a 10 year lease given to us
by the city of Walnut Creek 10 years ago,
excuse me, 18 years ago,
and it expired eight years ago.
And we never heard a word concerning a letter
that has to do with the charge for the patio.
The letter is requesting us to pay $3,600 a year
for the use of the patio,
which is the only way you get through our front door.
Since we need the patio to get to our front door entrance,
it also allows us more seating area,
which we appreciate the help in our business.
We saw fit to enhance it and keep it in good shape.
We spent over $200,000 when we had the lease
over a 10-year period, and we put cement.
We did cement work, fencing, electrical.
We did drainage work.
We did fireplace, gate enclosure,
along with cleaning a daily.
The reason we got the lease for 10 years
had no charge from the city of Walnut Creek
was because we kept it clean.
That was the request upon the city,
keep it clean, you have the lease.
We recently spent another $50,000 in the patio for furniture,
safe cleaning, updated work done on the fireplace,
and this helped during the COVID time.
We were given no warning about our previous conversation
or notice about the upcoming requirements to have a permit
and the expenses to keep on the patio.
Our patio was enjoyed by a bunch of customers, and especially for our lunch and our late
dinners when people come after a performance at Lesher Theatre, 1515 is the only restaurant
that serves dinner up to 12 midnight in the city of Walnut Creek.
We're enjoying watching sports throughout the day.
We also have permission to serve alcohol until 1 a.m. inside the restaurants.
Thank you very much, Mr. Dubuque.
I know this is a difficult issue, and I think we'll expect you to continue to work with
staff on it.
Thank you very much.
anyone else at this time thought I saw somebody else trust okay thank you all
for coming tonight and we'll go ahead and is there anything that any of buddy
feels inclined to say after that we will move on then next on the agenda is
councilmember and staff announcements reports on activities or requests and
and city attorney, any closed session?
Madam Mayor, no closed session announcements.
We'll move to the city manager report.
I do not have an update this evening.
You do not, okay.
We will go to city council member reports
on AB 1234 activities.
I think I will start on my right with Mayor Pro Tem.
Wilk.
Wilk, I am learning.
You'll be back on track, I'm sure.
Great, thank you, Mayor.
The first is that I now am a liaison to Transpac as well,
which is part of the transportation arena.
And at our last meeting we talked about
what the Transpac mission was,
which is basically moving vehicles along
through the 2050 countywide transportation plan.
We received a report on safe streets and recent studies show
and I'm sure that our own transportation,
or I should say former transportation engineer
would appreciate these as well.
But the 23 miles an hour, if there's a collision,
means it's 90% survivable in that collision.
At 42 miles an hour, it's a 50% survivable.
And at 50 miles an hour, it's only 25%.
So the whole idea is what we can do
to move traffic efficiently, but also safely.
And that is the entire TransPak mission.
We also received an update on
Street Smart's Diablo Walk and Roll program.
Now we don't have this program in Walnut Creek,
but we all were interested in it.
It's essentially a school trip reduction initiative designed to promote active transportation
among families in Contra Costa County by promoting families to walk, bike, or carpool to school,
thereby reducing traffic congestion and improving air quality.
So for more information, or if a school or a principal hears this, or a parent faculty
club, please contact the CCTA, the Contra Costa Transportation Authority.
They would love to get you involved.
I also had a tour with the Contra Costa Animal, the Animal, oh my gosh, now I'm forgetting
what it's called, the, thank you, Animal Control Tour with Supervisor Ken Carlson, essentially
being able to see how the county handles the animals and prepare for adoptions.
It's really fascinating.
They have so much work with so many of the cities in Contra Costa.
It's the second time that I've been there over my tenure and I recommend that if any
councilmember hasn't had a tour of that facility yet, work through Supervisor
Carlson's office, they'll set you up with the tours. It's fascinating to hear
about and just for those interested, Joy Bound, formerly ARF here, they get the
first pick of the cats and dogs that are up for adoption so they go first and
and but the county still does a lot of adoption so check it out, go through
Supervisor Carlson's office. I also attended the East Bay leadership
program with Rob Bonta, where we heard him speak about having a special hate crimes unit
within the state. I certainly was interested to hear that throughout all local areas in
the state. He talked about also having a state having its own retail crime task force, which
our chief may be familiar with, to help local jurisdictions combat the organized retail
thefts that have occurred in communities. So he was very, very proactive in discussing
this and really wanted to make sure that this got out to all the communities. I
attended the Chamber Civic Affairs on the history of Walnut Creek. We had the
mayor talking about the future of Walnut Creek. This was the history of
Walnut Creek with three former elected officials including two mayors and
former chairperson. That's on the city website and last but absolutely not least
I attended the Walnut Creek employee recognition event and that is just
terrific to see. We've got just about 300 staff that work in Walnut Creek
Creek, keeping everybody not just safe,
but enjoying Walnut Creek to work, to live, to play.
And we had recognitions from people that celebrated
their five year, ten year, 25 year,
30 year anniversary with the city.
And I do want to call out specifically Vanessa Sendejas
from the Arts and Rec Department,
who was named the Rosie Cohen Employee of the Year
for the city, from all the very deserving nominees,
and the building maintenance team,
headed by our own Rich Payne, one for team of the year.
And so what I think is wonderful about Walnut Creek
is that everybody expects our buildings
and our city to be in great shape.
And that's because we have a terrific team
that's dedicated to making sure
that everybody feels that way.
That's not the case in every city.
And we hold our team to a high standard.
More importantly, they hold their own selves
to high standards.
and I can validate this by one of the first things
that I did when I was first on council in 2016,
I went on ride alongs with several different departments.
And what impressed me over and over and over again
is everybody from those departments who I talked to,
they loved Walnut Creek.
They wanted to make sure that Walnut Creek
was the best city possible for anybody
that lived here or came here to visit.
Even a lot of these staff
didn't necessarily live in this city.
They might have lived nearby.
They really were dedicated
making sure Walnut Creek was the best place
to live, work, and play.
And so thank you to all of our staff
and congratulations to those who were recognized
for truly above and beyond as well.
That's my report.
Thank you.
Council Member Dafini.
Thank you.
So I had the pleasure of attending
the National League of Cities Conference
in Washington, D.C. this past week
with Council Member Silva.
was a really great experience.
I'll try to just touch on a few of the highlights
and some of the issues that we talked about.
It was primarily advocacy-oriented,
so it was taking issues that are important to the city
and advocating for those policies at a national level.
We met with a number of our local congressmen and senators.
So one of the things that was eye-opening to me
was the housing crisis that we talk about here in California
really is the number one issue for most cities
around the country.
I thought perhaps we, with our higher home values,
were experiencing something maybe more unique
than some other states, but it turns out
that's really the number one issue
around the country right now.
And it was interesting to hear from other city leaders
about how they're solving or how they're tackling,
trying to tackle those problems in their area.
For example, someone, a representative from Washington State,
talked about incentivizing affordable building
by waiving property taxes.
In Alaska, they're using land trusts.
But one of the issues that's come up
is with the cuts that are going on right now
at the federal government, we may not
see the same investment in affordable housing
that we've seen in the past from private developers.
And part of that is due to the uncertainty
of federal funds at this time.
And so with that uncertainty, the interest or the appetite
for private investors to invest in projects
that require funding from so many different areas.
We're concerned about that.
On the workforce front, it was interesting to hear
that the Pell Grants that are passed out
to those who are of high academic achievement
and high need may be extended to trade schools.
On the tech front, we've heard about
our fiber optic plans here at the city.
There was a discussion about why fiber optic,
what about satellite, and we discussed the benefits
of fiber in that it's more dependable,
and over the long term, cheaper.
The satellites don't have the longest lifespan,
need to be replaced, and there's signal degradation
that takes place with satellites, with increased usage,
or weather patterns, things like that.
So that was interesting discussion.
Municipal bonds, another big one.
Council member Silva brought that up
at one of our last meetings.
And that's municipal bonds are tax free.
They go back to 1913 during our first tax code.
And what they do is they make financing
for large scale projects financially feasible
for smaller governments.
Allowing cities to issue bonds where the profit
that those who invest is interest free,
or tax free interest.
There's an estimated three trillion dollars
going into infrastructure projects financed
by tax-free municipal bonds by the year 2031,
so over these next six years.
And it was estimated that about three quarters
of the infrastructure in the country
has been built by municipal bonds.
If the municipal bond tax-free status was revoked,
it would save the federal government.
It's estimated about $300 billion over the next 10 years.
but it would cost the cities about $820 billion
to then borrow and finance that same amount.
So that winds up being a $6,500 per person charge
for that move.
And that would have an immediate impact
if we didn't have that tax-free status to cities
around the country.
And it may even impact our ability
to finance projects here in Walnut Creek,
and we've got some big projects coming out.
And then we talked about Medicaid funding.
That's also an area of concern.
I know as an ER doctor, when we cut Medicaid
and we cut poor folks' opportunity
to seek medical care in the community through clinics,
it does not save the community money.
In addition to depriving the poorest among us
from accessing medical care, it drives them to the ERs
and it drives them into the hospitals.
And it actually costs us a lot more
to provide the same care.
So that was the experience there.
It was also great to see the government and work.
In addition, I had the pleasure of attending a film that
was put on by the Contra Costa JCC Jewish Community
Center at the Lafayette Library.
The film was Blind Spot.
It was a documentary about anti-Semitism
on college campuses, both before and after the attacks
of October 7.
And then they had students there who have experienced,
have had those experience.
And they spoke about what's going on.
and it was a very powerful experience.
I met with a new business here in town
called Behavioral Fitness.
It is located over by, it's on Ignacio Valley
near the hospital.
It's run by Dr. Alison Mayo and nurse Terry della Montaña.
And what they're focusing on is what the NIH describes
as the eight mutually interdependent dimensions
of wellness.
So physical, intellectual, emotional, social,
spiritual, vocational, financial, and environmental.
The concept that attention must be given
to all of the dimensions, and if we neglect
one of those areas, it impacts the others.
In addition, yesterday I was online
for a legislative update at the state level,
and I wanna remind everyone that tomorrow
is taste and toast downtown.
It's being put on, I believe it's a collaboration
between our Walnut Creek Education Foundation
and the Downtown Association.
So that should be a fun event
and I hope that you will all be able to attend.
Starts at, I think, 5.30.
Thank you.
Council Member Silva.
Thank you very much, Mayor, and welcome back.
I'm glad you had a nice time on your holiday.
Back to work, right?
Recycle Smart, which Council Member Francois and I
represent the city on the Recycle Smart network,
which handles trash, recycling and organics reduction.
We met on our legislative committee yesterday
and we reviewed nine bills, all designed.
These are state of California bills
that are proposed to help reduce,
reuse and recycle materials.
And the committee made recommendations to the full board,
but among the bills that I think universally we can support.
So just flag these two, AB 337.
This is related to food waste reduction and recovery
and edible food, such as what is being provided,
the services being provided by White Pony Express
in partnership with Recycle Smart.
Up to this point in time, it's been unclear
that the state has a grant program
to help support that work.
And it has been unclear if transportation costs
and software costs are included.
And then this bill, if approved by the legislature
and signed by the governor, would clarify
that those funds are available.
transportation, if you're going to pick up edible food from restaurants and grocery
stores and other establishments around a community, your transportation costs are going to be
very high, particularly if the trucks have to be refrigerated, which many of them do.
So that's one we might want to lean in and support.
Also Senate Bill 45, and I brought a prop.
So in California right now, these plastic bottles are made of one different material
from the plastic cap, but both the cap and the bottle are recyclable.
The unfortunate thing is we have a tendency to try to recycle the cap separately from
the bottle, and these caps end up in the landfill or they end up in storm drains because they
float and they don't go through the equipment, so there is a bill proposed in the legislature
that would align California's beverage container manufacturing industry to align with what's
happening in Europe, wherein the cap is attached to the bottle, so it can't it
basically stays with it. I'm not sure if this will go forward, Recycle Smart, the
proposal is that Recycle Smart support it, but I will say this, in the
meantime, as long as these caps are separated, put the cap back on the bottle
before you put it in the recycle bin. If I can just say, I love that idea, I can't
believe we haven't done it before, considering that what 30, 40 years ago we had the cans,
remember the old pull tab cans, that was more about waste and just throwing those away,
but it's obviously possible to do easily. I can't believe we haven't done it already.
It just is a good excuse to bring a bottle in.
Well, as it may be, I like the idea.
I also visit, we're continuing to a waste characterization study, which is basically
were collecting samples of people's black, green, and blue bins and doing sample studies
of what's in which bins and went out to watch it being done.
Fortunately, the transfer station is not as smelly as one might think it is, but we'll
be looking forward to finding out what are the results and where we can help to communicate,
you know, keep the cap on,
where how we can help communicate
things like that with the public.
The webinar yesterday, sponsored by Cal Cities,
was about legislative key bills in the legislature
and they went through 60 bills in about an hour
in about 90 minutes and it was like the speed of light,
but I'll give you some highlights.
There were about nine or 10 bills
that are before the state legislature
related to wildfires in this state
and this is particularly important,
I fell into a number of categories.
One is CEQA streamlining where for certain things
such as vegetation management,
CEQA would be exempt from CEQA
for those types of activities,
undergrounding of power lines, things like that.
Fire insurance was up there, disaster response,
including the proposal to create a state fund
for individual assistance for those homeowners
and businesses that experience disasters.
The way the federal emergency management system
and formulas work across the nation is you have a threshold
that you, a minimum threshold you have to meet
in a community before you can secure FEMA assistance
and that formula is based on your economic wealth.
And so in the state of California,
Southern California, LA Basin, and Silicon Valley drive up the base level and the formula
so that small communities like Rio del, which has about 1,500 people in it, they can lose
a third of their housing stock from an earthquake and it will, there's no assistance from FEMA.
They can't declare a natural, a FEMA disaster.
So while we work on it at the federal level, this would create an individual assistance
program.
important. In the arts arena Senate Bill 456 and I didn't pass this on to the
city manager, it turns out that this is related to murals. It turns out that
under the contractors building construction building code contractors
building regs, so this isn't state regs it's the builders. A muralist has to have
have a contractor's license, not a permit, a license, which is an expensive proposition
and requires passing a test in order to paint a mural.
So art murals are getting shut down, projects across the state.
The deadline for letters is March 31.
Particularly we want to emphasize that those murals are not affecting the constructability
or the construction integrity.
they're just paint over paint, so go figure.
Housing Assembly Bill 650 is about the,
it's a reform bill on the arena process,
the regional housing needs assessment process.
It's being sponsored by Cal Cities.
The sponsor carrying the bill is Assembly Member Gina Pappan,
long time supervisor in San Mateo County.
And what this, if adopted by the legislature,
and we're gonna have to probably argue
pretty vociferously about this,
it would allow cities to start earlier,
so basically it would push the process back
so that we have more time to answer
and create our housing elements.
It would give us credit for a good faith effort.
If we're making good faith progress,
then we would be protected from penalties.
And the third element is that if adopted,
it would be requiring the Housing Community
and Economic Development Department,
or HCD Housing Community Development Department
to be clear and specific the first try at its feedback
and not keep moving the goalposts.
And so if we have every city that has an example
of watching the goalposts move
the last cycle is asked to provide information on that and another item
that I thought was interesting this is SB 346 it would require short term rental
platforms to provide information to local government on who in their
jurisdiction is in on their platform currently that is not required and it's
not necessarily confidential information but if we had that information we could
then assess whether there is an advantage
to actually pushing on a TOT ordinance
to expand our TOT base
for those who are on short-term rentals.
And there's a bit of an urgency across the state
because of Olympics, World Cup and other big activities
and events coming soon to a theater near you.
And as Council Member Davini mentioned,
I also was at the National League of Cities Conference.
It is really an opportunity every year in March
for cities to come together and advocate with one message,
not their own individual messages,
but one message that is consistent across
all cities across the nation.
There were 3,000 people at the conference.
It was primarily an advocacy conference.
I think the, I'm on the vice chair
of the National League of Cities housing,
community and economic development policy committee.
And during that meeting,
we had a lot of information on housing,
but three representatives of the Canadian government came in.
They flew in from Canada to tell us
how tariffs were going to affect housing.
And Canada is all about where we get most of our lumber.
And so the expectation is that if we,
these tariffs go through and how they work,
it could increase the cost to build these houses,
the housing we need significantly.
And then they talked about autos,
the price of food, pharmaceuticals,
and the electricity, the stability of the electrical grid.
We also talked about the impact
of the loss of tax exempt unity bonds.
And also the impact to our community development
block grant funding and what is about to happen.
There is a pressure point to basically shutter 85%
of the regional and local offices
of the Department of Housing and Urban Development,
which is where our information and funds come through
is those local agencies.
And finally, while we were there,
the House did pass the continuing resolution
and the Senate on Friday adopted it.
it looks like our funds will stay flat at the 2024 levels
whereas ordinarily they would go up at least
by the 3% CPI.
I will finally close by saying
that evidently according to the vice president
who came to speak to us on Monday afternoon,
the solution to our housing problem we can all get behind
is the deportation of 20 million illegal immigrants.
Thank you for that entertaining report.
What do you got for me?
Well, Madam Mayor, I am going to look like a slacker
in comparison because I was on spring break
with my son and his friends, King and Tahoe last week.
But I'm making up for it in the next two days.
I have four city meetings that I will report on
at our next council meeting.
Thank you for all that you've done representing our city.
I appreciate it.
Thank you, and I too was a slacker.
So I have very little to report in the rear view mirror,
other than I did talk to the TK at Buena Vista,
I read to them for Read Across America,
and unlike Mayor Pro Tem Wilkes' experience
with the fourth graders,
they didn't wanna ask me questions,
they just wanted to tell me what the rules are in TK.
And so I know not to spit, not to push in line,
and to not jump the line.
So that was really useful.
Two things coming up, it is the start of poppy season.
I did talk to Supervisor Carlson,
and the city and the county have worked together
with the neighbors along the Sutherland area
to try to modify some of the parking conflicts
that we had last year.
And so we are hoping that all works
and so people can enjoy the poppies
without overwhelming the neighborhood.
And then when we approved the stormwater fee today,
one of the things in that report that notes,
it's the community cleanup crew that is a huge part
of our ability to meet the standards
that we have to on trash collection.
And there is a chance to clean up this Saturday morning
at 8.30, come to the park and ride at Red Gear.
You don't even need to bring your own picker.
There'll be vests and pickers,
and you too can have that strangely satisfying experience
of picking up garbage around Walnut Creek.
And that is it for my report.
I will have more as council member Francois next time,
because I really do have four more meetings this week.
So next on the agenda is a consideration item titled
the approval of assessment report and annual levy
of assessments for the Downtown Walnut Creek
Business Improvement District
and Downtown Walnut Creek South Business Improvement District
for FY2425 and setting the public hearings.
So I invite the staff to come forward
and provide the staff presentation.
And I will note that we have received an addendum
since the distribution in the agenda report.
Good evening, Mayor.
I'm gonna kick things off here.
Again, Dan Buckshi, city manager,
and I'm gonna kick it off a little unconventionally
in that we received an unsolicited email
from some visitors to the area just on Friday evening
that'll be coming forward into the mayor
and council members inbox.
And I thought it was really highlighted, Walnut Creek.
And the beginning part,
I'm going to make a little more generic
and then I will read verbatim.
It says, my wife and I recently visited the Bay Area
And we were very disturbed by what we saw near the airport
in which we flew into and a shopping district
in a nearby very large city in which they went shopping.
And that they were really taken aback
by the amount of crime, the number of vacant stores,
and the general conditions of the city.
And then I will now read more specifically
about their trip here.
On the last day of our trip,
we visited Fleming's in your city, in Walnut Creek.
After our lunch, we walked around shopping
and enjoying the sunshine.
We were both in shock at how beautiful and safe your city is.
It really shows the leadership team you oversee
cares about their citizens, business owners, visitors,
and workers.
Please keep up your great efforts.
Walnut Creek is a wonderful town thanks to public servants
like you.
As you know, it's not very often that we
receive unsolicited positive feedback from the community.
And while many of us spend a lot of time focusing on ways
to make our city better, and we highlight the areas
in which we can improve.
I think it's important once in a while to take a step back
at just how nice Walnut Creek is, and that is a result
of not just the work that the city government is doing,
but the many partnerships we have with not-for-profits,
with other businesses and organizations,
one of which is Walnut Creek downtown
who we're going to hear from tonight.
So with that, I would like to introduce
our relatively new Economic Development Manager,
Mike Nieman, who's going to kick us off.
Welcome, Mike.
Thank you, City Manager Bakshi.
I'm Mike Nieman.
I am your Economic Development Manager.
Hello, Mayor.
Hello, Pro Tem and City Council members.
Today, we will be talking about the annual assessments
for the Business Improvement District.
And as you know, our downtown is unique.
It really is the heart of the community
and it's ground zero for economic development
that starts in the city.
There is a unique ecosystem of businesses.
We have nearly 700 businesses in downtown.
And the city was visionary in 2005
when it was first formed the business improvement district.
And subsequently in 2010 it formed
a south business improvement district
that I will refer to as BID and as BID.
These improvement districts are a common tool
for assessments across the state to generate revenue for districts to do various promotional
marketing, tourism attraction activities that ultimately enhance their performance and the
quality of life in communities that they exist in.
So it's our downtown, both the Business Improvement District and the South Business Improvement
district are managed by Walnut Creek downtown WCD which is our the city's
partner. In 2002 Council authorized an annual increase of three percent to
assessments that have been levied since and the presentation tonight in front of
you is of the annual assessment report by WCD and it's part of the two-step
process that requires an annual renew. The first step today will be to set the
public hearing date which would be on April 1st and then we will have the
April 1st public hearing with the goal that should there be any protests to
the assessments that are being levied. We will be sending out the forms tomorrow
for these businesses in downtown and they will have until the council hearing
on April 1st to submit their protests and if there is a threshold of 51 percent being
reached then there could be some challenges and historically this has not happened here
in Walnut Creek.
With this I would like to introduce Kathy Hemingway who is the executive director of
WCD and she will present the subsequent slides.
Good evening
Thank you very much for the kind words for kicking it off on a positive note to the manager bucks I appreciate that
So good evening mayor darling city council members and city staff
I'm Kathy Hemingway executive director with the Walnut Creek downtown Association, and I'm here this evening to share a
Recap of the past year and then also share the the year ahead as we go through the presentation
And I just want to share a quick reminder
that our fiscal year does run April 1 through March 31.
So we have a couple more weeks left
in our current fiscal year.
So the Walnut Creek Downtown Association
is comprised of over 680 businesses,
and we operate both a nonprofit C6 and C3,
newly added C3 organization.
And the bid boundary itself encompasses 29 blocks
representing those 680 businesses
within the downtown district.
The new C3 entity, the community partnership
for Walnut Creek Downtown,
joined the organization in 2024.
And acting as an advocate for our organization
and the downtown businesses,
WCD supports these initiatives
through beautification projects,
special events, marketing efforts, and professional development for our business members.
We currently operate two board of directors for WCD and the C3.
And the new C3 board includes eight board of directors.
And then we also have the same treasurer, Gary Skrull, that is the treasurer for the
C3 as we offer consistency or to offer consistency to the new C3 entity as we
bring that online this year. We currently operate with three full-time
staff members and three part-time staff members and we've added a part-time
marketing assistant to bring graphic design, weekly newsletters, website and
overall marketing in-house and our newest employee is an event assistant
and that we'll be managing our utility box program,
the pain of pianos, and the increased calendar
of public events.
The team manages a variety of boards and committees,
excuse me, a variety of committees,
as we strive to become a stronger working board
and also involve more community volunteers
and business members to join those committees and alliances.
We've also managed a lot of internal change
within our organization to streamline
our administrative work by consolidating
and elevating some of the software programs we've used.
We are slowly moving out of those Excel spreadsheets
and moving into the 21st century.
So we are excited about the efficiencies
that these new programs will bring.
Member advocacy is at the core of our efforts
And we're conducting a membership outreach campaign
that is new to us this year.
We are foregoing a social event that we've had
over the last couple of years.
Instead, we're focusing on an opportunity
to have more touch points with our members.
We're creating a packet that will share membership benefits
and a new window cling that will have our logo
to go on all of our member window business storefronts.
and be able to just set up meetings so that we can have some one-on-one conversations.
So we're looking forward to a lot of more brand awareness and also opportunities to
learn more about our businesses.
The vision plan kicked off in 2024 with a facilitator that conducted a SWOT analysis
with our executive board committee as well as our WCD staff.
And then we're moving into in-person conversations with additional board members as well as surveys
for business members, community partners, and residents.
So the vision plan itself will provide a three to five year roadmap for the organization
and the downtown district.
The downtown construction, we are pleased to say that the Locust Street project is completed.
And so our team helped assist with Public Works and East Bay MUD and Central San by
providing access to our businesses, conducting Zoom meetings and e-newsletters and website
updates, and then hosted reception at the end of the project to celebrate that two-year
project.
Then on the state and national level, as members of the California Downtown Association and
the International Downtown Association, our team participates in conferences and webinars
and to develop stronger programs.
This last week, three of our staff members attended the CDA West Coast Urban District
Forum in San Francisco, along with Mike and Kisaba from the Economic Development Department,
And we joined over 300 executives and bid partners, vendors and city staff at that conference.
And then last spring attended a couple of lobby days on behalf of the downtown businesses
meeting with our representatives and a committee session on the downtown recovery that is being
led by Assemblyman Matt Haney.
And then we also had a couple of meetings with Congressman Desongye and Mayor, or at
at that time, Mayor Haskew and Mayor Pro Tem Darling
to move around or exactly visit some of the restaurants
with Congress and Mark Desolnier.
Moving into our programs, our summer arts program
launched a summer three month program in June of 24.
We collaborated through the Arts Alliance Organization
Arts Elias Task Force with 15 organizations, including the city of Walnut Creek, creating
15 programs and events, and encouraging the culinary and visual and performing arts within
the downtown.
Those large-scale events brought thousands of people through the downtown, through festivals
and concerts and festival cultural opera and movie nights.
So we're looking forward to hosting that again this upcoming summer.
Painted Pianos was back for the sixth season.
We had over 90 volunteers that were downtown on Earth Day painting those pianos for folks
to be able to enjoy throughout the downtown.
And then our holiday decorations, we were able to expand the program on its second year
by adding banners to the Mount Diablo corridor and then also additional lamppost snowflakes
throughout the south bed.
The downtown stages, there's three that are located within the downtown at the Cypress
Mini Plaza, Waterlight Public Plaza and Plaza Escuela.
We coordinated a variety of live entertainment with some of our partners to promote their
programs as well as utilize some of the space for our own events.
And then we're excited to move into completing the Big Belly art rap project that we've been
working on with public arts manager, Bedford Gallery and Public Works and Recycle Smart.
We selected artists or artwork from 36 artists and then we hope to make those installations
within this month.
So we're marketing efforts. This is just a little snapshot of our highlights
our website itself
had over
74,000 visitors and we're very proud to continue the
Success of the weekly e-newsletter for our members as well as the public
50.7 open rate percent open rate, which is hugely
It's a great improvement of versus the industry average at 30%
And that proves to be a very important benefit to help promote our businesses brands and to our over
6,000 subscribers
And just a little highlight in regards to tick-tock we added tick-tock to Walnut Creek downtown's social media platform
through the ice rink this year
and
We brought in 1.9 million views
Mostly through around the ice rink, so we are excited to be able to to grow that platform itself
Walnut Creek downtown also assisted with the production of what head west marketplace on North Main Street
And this was a pilot program that was in response to those businesses
Requesting more activity on their blocks to increase much-needed foot traffic
We're working with head west and city staff to explore
Options to bring them back for May July September and December of this year and then our annual uncorked event brought
750 visitors to the downtown
We started at Redney Plaza and guests were able to enjoy
And step into 39 businesses throughout the downtown
on that particular evening
We continue to have one of our main fundraisers as being this
providing beverage service for the summer Broadway Plaza summer concert series and
our first Wednesday event
expanded from
One event the previous year to two and we also expanded the footprint on to Locust Street
With about three to five thousand visitors attending each evening
first and then the holiday tree lighting
event continues to grow this was the second year back after a bit of a hiatus and
We enjoyed hot cocoa and visits from frosty and friends and mayor darling flipping the switch for the holiday
season and then there was Oktoberfest we moved into a
Two-day event so we were able to launch an evening Friday evening
Program and then all day on Saturday our increase our guest increase went from
12,500 to over 20,000 attendees this past year and
we were thrilled to be able to accommodate as a very long day with long weekend, but with a lot of
Many ages and a lot of smiling faces within the East Civic Park
We also featured a new community stage that had a lot of our local entertainers
being that and schools that participated on that stage and
Then the Broadway Plaza parade of lights
we were able to
offer a concession stand and also coordinated the
Zamboni from Walnut Creek on ice to help promote that event and
The 19th season of Walnut Creek on ice kicked off
for seven and a half weeks season,
three weeks longer than the previous year.
This year's Festive Experience
featured a three lane ice slide
sponsored by Mechanics Bank.
Cozy rinkside fire pits
sponsored by Zebra Tattoo and Piercings,
which brought two additional fire pits and ice hockey.
Our extensive marketing campaign
included a digital billboard
on the coming off of the Bay Bridge on Highway 80.
So we were happy to be able to continue
to share Walnut Creek with our visitors
throughout the region just through that particular effort.
This spreadsheet shows the year-to-date budget,
which closes again on March 31st,
as well as next year's proposed budget.
And in your report, you have the full budget
in front of you.
This is a consolidated slide of our budget.
And also, let's see, just to show the net.
I think I'm on my wrong page.
I did want to just share, point out one thing that is on this.
I think I'm on the wrong page here.
So I'm just going to keep going.
I wanted to point out the administration, via the costs in that particular line, are
due to a new interactive website that we'll be launching by the end of this month, increased
insurance costs, and then the addition of the Measure O expenditures, which was in 2023,
the first year that we received those funds.
And then this graph shows our programs where the net profit loss for each program that
we produce, overall the majority of our programs are showing a positive.
This is the assessment chart for both the bid and the south bid, including the 3% increase
that the annual increase that we'll be proposing for this coming year.
And then our events schedule for 25 is here with all of the programs, the beautification
projects as well as the special events for the public.
And then our initiatives for the year ahead.
We for the vision plan will continue to work with the facilitator to conduct those focus
groups and member survey.
And then outdoor dining, we hope to see more outdoor dining within the downtown, focusing
on sidewalk dining, the structures, and patio activations.
Our team has had extensive meetings with the city staff, architectures, and businesses
to review the current guidelines and how we can successfully realize 10 to 12 dining structures
within the downtown.
So we're hosting, in fact, co-hosting a meeting on Thursday with the city to relaunch the
the program to the downtown business community.
And then the 501c3 will be continuing to focus
on marketing the addition of the c3 entity,
work with the new board of directors on partnerships
and enhancing the events and programs that it supports.
Data is definitely something
that we'd like to improve upon.
We'll be seeking out software programs
to help source data for our programs and events
to provide metrics for our team as they program,
as well as the board of directors,
business members, and partners.
Our volunteers are a very important part
of our organization.
A concerted effort to develop stronger volunteers
is a focus for the year ahead.
We hosted a volunteer open house,
which had about 80 people show up
to be able to learn more about opportunities
with Walnut Creek downtown.
And we'll be updating our website.
The new platform will seamlessly integrate
the current website to a new program featuring
a business directory, interactive map, event calendar,
merchant spotlight, job postings, blog posts, and more.
The new website will be higher performing
and will increase the site speed,
prioritize the mobile friendly viewer,
and meet accessibility standards.
and overall this program will result in a savings
of approximately $10,000 for the marketing
and payroll budget items.
Budget continues to be obviously a priority.
We continue to strive to reduce our expenses
through multi-event contracts, partnerships,
consolidating software that will streamline
our staffing efforts and continue to pay down
our SBA loan secured during the COVID.
and advocacy, as I mentioned before,
is at the core of what we do.
And Walnut Creek Downtown and our team is privileged
to work with the downtown business community
by aligning our efforts to ensure economic vitality
and an engaging and innovative downtown district.
So I appreciate your time.
Thank you for having me this evening
and I'm here to answer any questions.
Thank you, Kathy.
Thank you for the partnership
for all of Walnut Creek Downtown.
appreciate your work.
Thank you Kathy and with this you have four recommended resolutions for approval.
The first two are for the annual assessment report that you just heard the presentation
of and one is for the Business Improvement District and the other one is for the SBID
and the last two resolutions are the intention of levy assessments for fiscal year 2026 for
for the upcoming year.
One for the business improvement district
and one for SBID.
This completes our presentation
and we are happy to take questions.
Thank you very much.
Okay, questions for staff?
Council Member Davenne.
Thank you for the presentation.
I was curious the vision plan that's exciting.
When do you think that will be completed?
I'm hoping by midsummer at the latest.
Yeah, look forward to just seeing
what that vision plan is.
And then I just wanted to compliment you the events.
I mean, $550 plus $1,000 off of these events.
And it looks like the expenses were only around $220.
So that's still pretty impressive.
And definitely looking forward to hearing more
about the upcoming meetings for outdoor dining and the relaunch
that should be looking forward to seeing that as well.
And also just looking forward to in general,
collaborating with the downtown community
in the future and continuing to.
And then, thanks.
I had a question for Mike on the proposal,
there's a 10% administrative fee that the city charges.
Can you just elaborate on what all goes into that
and how we arrived at that number.
Yeah, absolutely.
I'd be happy to Council Member Davini.
So this fee was first established in 2011,
and it was meant to be a cost recovery fee
to reimburse staff time for the city
for things like economic development,
staff time and collaboration, different departments,
legal, others.
Some of those services have subsequently shifted
from staff to HDL, which is the city's consultant,
that provides a broader slew of services,
but they're now providing some of that service
when it comes to annual assessments.
Things along that nature,
they track the list of businesses
based on the business license.
And the next, and this has been part of the agreement
between the city and WCD,
which was agreed upon for the 10% charge through 2027.
Thank you.
Anybody else?
Council Member Francois.
Thanks, Mike.
I think my questions are mostly for Kathy.
Hey, Kathy.
First of all, thank you for all that you and your team do
to enliven and enrich our downtown.
We heard the compliments of that earlier tonight,
so thank you.
Yes, sir.
On the vision plan,
following up on Council Member Davini's question.
I know it's still a work in progress,
a three to five year plan.
Can you share any of the preliminary findings
from the SWOT analysis or what you envision
kind of the three to five year plan might contain?
So it's for both the organization,
but then also for the downtown.
So I wanna just make sure that it's gonna be wrapped up
into both of those.
really still in the early stages,
I'm gonna be very curious to see
what our member surveys bring back.
We're also going to be offering a survey
to residents and visitors.
So right now, it's a lot of streamlining
that we're needing to do,
and then also looking at the amount of events
that we produce, which are the community events.
We often talk about that.
Some of the events we don't need to actually,
you know, make a profit on,
but we need to be able to provide that activity
to the downtown and for our residents.
Holiday tree lighting, you know, comes to mind
where, you know, we're getting a couple of hundred people out
just for, on a rainy day.
So lots more to come, but still very much still
in the beginning stages of gathering that information.
That's helpful, and I appreciate that.
Do you envision it being kind of more of an action plan,
kind of looking at the events,
maybe adding a marquee event like Oktoberfest
or Walnut Creek on ice?
Yeah, no, I think, I mean, and that's the other thing,
one of the other major things that we're talking about
is we are so event heavy.
That does take time away from our advocacy
and our membership engagement.
So that's something that I personally wanna kind of see,
where can we see that balance?
Obviously the residents and they enjoy having these big events.
Sometimes that doesn't always translate over to our businesses.
The street closures can be difficult for them.
So it's kind of working through some of those and finding out,
do we continue to produce 12 to 15 events each year?
And is that really what our membership and our business community needs?
or do they need more time from our staff
to be able to focus on marketing the downtown
and they're supporting them?
That's a good point.
I imagine that's kind of a fine line and a careful balancing
act that you need to do between those two.
Are there any new member businesses
you want to highlight?
New that are coming online, too.
That are coming online or that have recently opened?
Yes, well Model Bakery obviously has been a huge hit.
Pin Stripes was definitely something
that everyone's been looking forward to.
We are anxiously awaiting original Joe's,
so we are seeing quite a few in the,
some of the larger national or regional restaurants
coming into the south bid,
between original Joe's and Broadway Plaza
is continuing to be very successful.
They are rotating some of theirs through.
Louis Vuitton was a pop-up,
and so many people were concerned about that closure,
but that was a scheduled closure,
but with more retailers coming online,
they're at almost like 98, 99% occupied,
so they continue to definitely be a strong support
for the downtown business community.
great a lot of activity happening which is which is every day and then just
finally on the summer arts program are there any I know there were about 15
programs events last year are some of those being carried forward again this
year to any that you want to highlight that we can look forward to yeah festival
cultural is definitely one of the larger ones that will be taking place in June
And I've also heard that the festival opera will be having a full-scale opera in Civic Park.
So we're excited to be able to produce that.
And then our events, the Leisure Center is full of events every single month that summer or in this upcoming summer.
So those are probably just a few highlights, but definitely.
And then also, I didn't really mention as much with the first Wednesdays, we have rebranded that particular program to be called the Locust Street Festival.
So we will be moving from two programs to four. So May will begin that series, and we're looking forward to activating the full footprint on Locust Street.
Terrific. Thank you.
Thank you. And just so people understand how good Kathy is, when we did the tree
lighting, she not only had to get us all there to get it lit, but she had to get
it unlit before we could light it because it was already lit. And she
figured that one out. So thank goodness for Mike Vickers and cell phones.
My question really is about the Measure O funding. I know we've had a lot of
discussion about the partnership on Measure O and I see the number is 126,000
for next year. Is that kind of a number that we're moving forward with on an
annual basis or do we know what we're what we're looking at there? Yeah with
Measure O funds it's a little tricky because it's straddling to fiscal years
so in December we had approval for some of the programs that were actually we
received reimbursements and we received funding for. Some of the other ones are
going to be taking place so for instance like the ice rink and then we've got the utility
boxes and some and then Oktoberfest so some of those fundings will be realized in 25-26
fiscal year.
Okay that explains the difference.
That's the difference between the two.
That makes a lot of sense.
I was like why are we cutting that back?
But I knew where it was.
No we have not we have not nothing has been budgeted beyond what has been approved.
Okay and then have you guys are you looking at your vision plan on what else you might
want to do downtown in partnership with the city or you know is that going to be
one of the products coming out of the vision plan? Yeah I think and it's a side
conversation to the vision plan so that's yeah something more that we're
talking about I'm probably it will not probably be event related as much as it
will be a little bit more programming maybe outdoor dining depending on how
the conversations go over the next couple of months but yeah nothing decided
yet. Okay, any more questions? Councilmember Silva. Thank you so much. I
appreciate the report every year. So if you had to only if you were only able to
say three things that have gone really well that you're really holding on to
and then three opportunities or areas where you want to do it differently or
better, what would those be? I would for as far as successes I would
definitely say the continued increase in attendance at our public events and
watching Oktoberfest double. So that just speaks to our marketing, hopefully some
of our brand awareness and people wanting, knowing that their quality
events. And then a strong team that's been around for the last couple of years.
Since COVID we've got, we have a team that continues to grow that can produce
these events and then the partnerships that we've developed. We've developed a
much stronger partnership over the years with the Chamber of Commerce and with
the addition of Visit Walnut Creek. They are one of our they are our largest
sponsor to the tune of $90,000 so we're very grateful for not only their belief
in us and their financial support but also that that daily partnership that we
have with the chamber as well as our other community partners.
And then as far as challenges or improvements,
I'd like to see data definitely trying
to increase just our knowledge and being
able to source platforms that can provide those metrics
so that we're programming correctly
and we're doing, you know, the will of our members.
And additional improvements is probably,
I'd say I'm spending more time with our businesses
to be more engaged with them and getting out
and actually walking through the downtown more often.
We tend to, you know, often get sucked into the computers
and so I'd love to be able to spend
as much time as we can, so spending more time
with those members and hearing what they have to say.
We're out there a lot, but you can always improve to do more.
So I appreciate the comment you made about,
it could be that your members really would like you
less event-focused because they do distract,
sometimes there's a lot of people downtown,
but they haven't entered any particular,
they're very transactional in nature sometimes,
and it doesn't seem like they're getting business,
but if you had to pivot more to a marketing of downtown,
what would that look like in your mind
as opposed to marketing Oktoberfest or the, I see.
Right, right.
So we're always talking about, you know,
Walnut Creek downtown is a regional destination and beyond.
So how can we put that into words
and create a marketing plan that, you know,
is something that kind of piggybacks off
of what Visit Walnut Creek is doing,
but more centered to the downtown
and showcasing not only our shopping and our dining
but the arts piggybacking again with the Lesher Center
and really being able to tout
that we do have this regional arts center
within our 29 blocks.
And also Broadway Plaza is an amazing partner
and we are fortunate to be able to have
a May search property within the downtown.
but then how can we also showcase the traditional downtown
and get folks to walk across the street
beyond Mount Diablo and come into the downtown,
which then will also drive hopefully interested businesses
and economic development overall.
So lots of ideas on that one.
Lots of ideas, great.
You mentioned that you have an SBA loan from COVID era.
Is that the liability that's on the books?
Yeah.
Do you have a prescribed repayment plan
or they didn't forget, some were forgiven.
This one was not?
No, this one was not forgiven.
And that is one of our priorities
for our budgets initiative this year is to,
we've been paying it down,
but it's been on a interest that had been accruing.
So it is definitely one of our initiatives
to pay closer attention to and start ticking away at that.
So more to come on that.
Finally, can you explain the 501C3?
Is that the, you gotta be careful
that you can't mix two types of entities for tax purposes.
How are you keeping the,
what are the funds that you're collecting
and are those the 25,000 in perspective donations
that are listed on the books?
Right.
And then what costs can you cover
with those charitable contributions?
Right, so we're, we, first of all,
we opened a separate bank account.
We hired a CPA that is dedicated to just working
with C3s to help advise us.
And then we have shifted all of the events
and most of the, all of the public facing events
into the C3.
So, and then we've also added additional accounting
categories so that everything is completely separate
as much as possible, as well as getting advisement
from some of our partners, including the Chamber
and DRAA who operate the C3 because it is a different
entity, but it's not unusual for bids to operate
both the C6 and the C3.
So it's a little bit of the reason why we have had
a slow role in bringing the C3 online is just to make sure that we are abiding by the rules
and looking at what benefits our donors can receive legally and making sure that we get
that correct.
And there was one other thing, I was going to say escapes me now, but that is how we're
dealing with the C-3 right now, but we're excited about the opportunity.
What is the benefit to the organization if it's about events?
How does that?
So it's different having it operated by a nonprofit versus a still a 501, but the C-6.
Right.
So the C-6 is supposed to be all a business facing, business funds and programs that remain
in that bucket.
And then the C3 is all public facing.
And so the benefit to being able to create the C3, which has been on the to-do list
for the organization for over 15 years, was to be able to enhance those public facing
events, and then programs, and then also be able to provide our donors with the benefit
and with the tax benefit that they may be seeking.
But we've been very fortunate to have the support that we have had over the last 30
years.
So we're looking to be able to just kind of enhance what we have with that C3 through
sponsorships and donors.
And the $25,000 donor or donation line item, that was just something, an amount that we
feel that we could attain with the addition of the C3 with the donations.
Thank you Mayor. Thank you very much. Thank you guys and now I will open it up
for public comment. Is there any member of the public interested in commenting
on this agenda item? No, so I will bring it back up here. We have four recommended
actions. Do people want to? I have a question for staff. You have a question
for staff. Go ahead and ask that question. So the question about the bid assessment
fee that we take, I was part of the conversation in 2011. Correct me if I'm wrong and boy,
I should have, do we not do the same thing for all of the other bids and PBIDS?
Yes, that's correct, Councilmember Silva. We do charge a cost recovery fee. The rates
are different but the spirit and idea and the justification is the same okay
so this is not abnormal correct thank you and thank you for making the year
these are your first report to council and I was cleaning out some files today
and I found those EPS files with your name on the cover we're all going in
questions we'll start with councilmember Silva what's your do you have any
comments. I'm just I'm just so glad that we've had this great partnership with
Walnut Creek downtown over the years and I remember distinctly the
conversations in 2005 and 2011. COVID could have been the end but you have
helped us keep Walnut Creek downtown Walnut Creek vibrant and active and made
our community a better place so thank you and I can't think of a better
organization it's our choice as to who the representative is and I can't think
of a better organization so thank you councilmember Francois any comments yeah
I just want to thank Kathy personally for your leadership of the organization
you mentioned bringing on the 501c3 which was a 15 year effort and you
brought it over the goal line. It kind of reminds me of Measure O, how long
that that had been lingering, and what a sense of accomplishment that was. So thank
you for your leadership there. I know that there are challenges ahead for all
of us, and probably most likely for Walnut Creek downtown on the financial
issues with the administrative costs. We'll have that contract coming up in
two years that we can look at the, you know, right size to the extent we need in
in terms of the percentage for that.
And also for outdoor dining,
that the relaunch of that program
I think is going to be a big deal
and we'll need to be nimble and flexible
to make sure that the program is really delivering
the results that we wanna see through that program,
which was so popular during the pandemic.
And because of the Locust Street closure,
we had to sideline some of the businesses,
put it on pause before coming back.
So thank you for all you're doing.
Keep up the good work.
we look forward to the continued partnership.
Thank you.
Well, thanks, Kathy.
My colleagues have really said it all.
I look forward to the events.
They're terrific every year.
I look forward to being part of them and going to,
I think every one of them, like I did this last year.
And it's just, it's a great partnership.
I mean, we heard it from the one letter into the city.
People come here, they talk about how great
Downtown Walnut Creek is and all the events
and things like that.
And I'm proud to represent Walnut Creek.
So, thank you so much.
Any comments?
Made most of my comments previously,
but certainly enjoyed speaking with you
and hearing more about what Walnut Creek Downtown is doing
and your goals as well as the other board members.
It's just a really great group of folks as well
as being strong business leadership.
So, we're really looking forward to working with you
and being creative and trying to, you know,
advance the downtown the best that we can.
And my only comment is Walnut Creek downtown
made it to the discussion around the bar in Fiji.
And people were like,
oh, you're the mayor of Walnut Creek.
Ooh, that's really cool, you know.
So you guys are known far and wide.
And with that, I'll go ahead and move
to adopt the resolution approving the Walnut Creek.
Downtown Walnut Creek Business
the Improvement District Annual Assessment Report
for FY2426, the Resolution Approving
Downtown Walnut Creek South Business
Improvement District Annual Assessment Report for FY2426,
the Resolution of Intention to Levy Assessments
for Fiscal Year 26 for the bid
and set in the public hearing for April 1st, 2025,
and adopt the Resolution of Intention to Levy
the Assessments for FY2526 for the S-BID
and set the public hearing for April 1st, 2025.
second we'll call vote mayor darling aye mayor pro tem all
hi council member diviny aye council member françois
aye council member solda aye okay and with that we will take a 10
minute break to come back and finish up our next agenda item thank you
all right and we are back next on the agenda is a
consideration item titled adoption of a resolution establishing pension trust
and reserve use policy.
And I look for a staff presentation.
Good evening, Mayor Darling, Mayor Pro Tem Wilk,
and members of council, Kirsten Lacasse,
Administrative Services Director.
And tonight, we're going to be talking about the pension trust
and reserve analysis and proposed use policy.
And before we get started, I just
want to remind everyone that when
we brought our 10-year general fund financial forecast back
in January, we talked about the rising pension
costs and the budgetary impact on that.
and then also talked about bringing a strategy back
to your council in order to see what we can do
to mitigate those increasing costs.
And so that's what we're gonna be talking about tonight.
And as part of this process,
we worked in conjunction with NHA Advisors,
and so we have Mike from NHA here with us tonight
who will also be sharing with you
some information about pension.
So this evening, we're gonna start off
by providing some key considerations
for you to think about as we're going
through the presentation and then we'll turn it over to the NHA team to talk
about the pension program review including historical and projected
CalPERS costs followed by a cost management strategy overview which will
include the analysis of the section 115 trust and reserve as well as some
scenarios for consideration as we look at using the pension resources going
forward and then we will bring it back to staff to talk about some takeaways
and recommendations including proposed policy language for your consideration.
So what we're asking of you this evening is to provide feedback and accept the report
and adopt a resolution establishing the pension trust and reserve use policy.
So some of the areas we're asking you to think about as you hear the information this evening
from both staff and NHA is when do we use our pension resources and under what circumstances?
How much do we use, which could include whether or not we exhaust the trust entirely?
How much we would use annually, and then how long do we want to make it last?
What latitude should the policy provide?
Keeping in mind some things could change over time, like economic conditions.
How can we be mindful of using one-time dollars for ongoing costs, and consider using the
pension resources as a bridge until costs begin to decrease?
And lastly, how do we balance the use of these resources with our other reserves?
So in times of economic challenge that could trigger the use of some of our other reserves,
how do we manage the pension resources in that context?
So next I'll briefly introduce the team that we worked with throughout this process.
So Mike Myers, who's the vice president and also the pension group manager is here with
us this evening.
Craig Hill is a managing principal and their analyst, Matt DePhillips and Adrian Gonzales.
And now I will turn it over to Mike for the next portion of our presentation.
Good evening Mayor Darlene, honorable council members,
Mike Meyer with NHA.
As Kirsten mentioned,
we had a large team working on this project.
Craig Hill's been working with the city
for I think 15 years now in various capital funding projects.
I run our fiscal sustainability and pension group.
So that's why I'm here speaking tonight.
This is the same slide deck
that we presented a finance committee.
Just wanna make that known.
There was no changes to the content.
We just moved around a few slides
just in case anyone tuned in.
We're gonna talk a little bit about CalPERS in general,
how it works, talk a little bit about the history
of historical costs and projected cost trends
based on what we know from CalPERS.
I'll probably stop there and open it up for questions
and then we'll get into more
of the quantitative subject matter,
which is how the city can leverage the 115 trust assets
moving forward to help mitigate rising pension costs.
So the city of Walnut Creek currently has
a $155 million unfunded accrued liability with CalPERS.
This is a debt that you have with CalPERS
and we'll define what an unfunded accrued liability is
in a couple of slides.
It's pretty evenly split between the safety police plan,
which is 73 million in miscellaneous plan
which covers non-safety employees,
which currently stands at 82 million.
The city has been extremely proactive
in setting aside funds over the last eight years,
primarily in 2018 and 19,
contributing close to 19 million into the trust,
combined with investment earning,
since then that trust currently sits at about 29 million,
and there's gonna be a very helpful asset moving forward
to mitigate some of the cost increases
we're gonna look at.
City also has a $2 million internally held reserve as well.
So just a few slides on CalPERS basics.
The city makes two types of payments each year to CalPERS.
The first is the normal cost.
And the normal cost is the amount needed
to fund future retirement benefits
based on various calculations.
So they're meant to keep up with current employees.
There's lots of calculations that go into it,
future investment return expectations,
mortality rates, inflation rates,
employee contributions fund part of it
and the city kicks in the rest.
And so all of that goes into
what's called a normal cost calculation.
And in a perfect world,
if CalPERS were to meet all of their expectations,
that's all you would pay.
The challenge is is that over the last couple of decades,
those expectations haven't been met.
And what develops is the second component
of what you pay to CalPERS each year,
which is known as the unfunded accrued liability or the UAL.
And the UAL is statewide the largest debt
on nearly every city's books in terms of debt.
And defining the UAL,
I think the graphic on the right side is very helpful.
It's the difference between what the city would need to have
in assets to be 100% funded,
which is shown in that navy blue bar, that's 521 million,
versus what you actually have in assets,
which is 367 million.
So that difference there, that shortfall,
is the unfunded accrued liability.
Based on investment returns through last fiscal year,
that stands at 155 million.
That's a large number.
CalPERS doesn't require you to pay that back all at once,
so similar to any sort of mortgage loan,
they amortized that over 20 years.
And we'll get into what that repayment shape looks like
because that's one of the very unique aspects of the UAL.
It's not like a 30 year mortgage
where you pay the same number every year,
which makes budgeting quite easy.
It's actually an aggregation of 30 to 40 different layers,
little mortgages, all at different terms.
And when you add them all together,
you're gonna see that there's a huge bottleneck
a big increase in payments over the next 10 years.
We'll refer to that as the mountain peak in payments
before things start to drop off after that.
On the bottom left there is a calculation
of the plans funded ratio, 70.3%,
very much in line with most agencies statewide.
So just to define a couple key terms
that will be used in the presentation tonight,
number one is the discount rate.
And you could think of the discount rate
in two different ways.
The first being it's CalPERS assumed rate of return.
So it's what they expect to earn on their investments
over the next 20, 30 years.
It's also, when you think of that UAL debt
that you have with them, that 155 million,
that's what they're charging you in interest on that debt
because they expect they can take that money
and go earn that in the market.
The asset liability management,
This is a study that happens every four years.
It's when they reassess all of their different plan assumptions.
So investment returns, demographic data, and they make changes, and those changes will
impact the UAL within the next year or two.
So it's a direct impact to the budget.
The reason we bring it up right now is because that study is in progress, and we will get
the results of that later this summer, this fall.
So one takeaway from a lot of this project, you can say,
is that the CalPERS challenge isn't going away.
The city, as we'll get into, has a lot of money saved
that is gonna help put you in a better position,
but reassessing this every year,
at least once a year, is helpful,
just given that things are always changing with assumptions.
So why are we even talking about UALs?
Because they were essentially non-existent
in the early 2000s, that's because stock market was earning double digit returns.
Most plans were overfunded at that time, meaning there was too much money in the accounts,
and this is about the time when a lot of the benefit packages were being put together.
Over the last 20 years, we've seen sluggish investment returns, so if you look at the
top right of the slide, that shows the 5, 10, 20, and 30-year averages for CalPERS returns.
You can see that the 5, 10, and 20 are all between 6 and 7 percent.
Sounds relatively healthy, but when CalPERS was assuming 8 and a quarter percent in the
early 2000s, that's a big difference.
So that's one big factor is that their investment returns aren't meeting their goals, and then
on the bottom right there, we note that they're changing their assumptions as well.
So that discount rate that I defined earlier, that's moved down on four or five different
and occasions over the last 20 years,
down from eight and a quarter,
it's currently at 6.8%.
So every time they ratchet down
what they think they can earn in the market,
it means they're expecting less in investment earnings,
meaning that the city has to kick in more
and that UAL debt goes up higher.
Other assumptions that have been changing
that are driving costs higher are inflation
as well as mortality rates.
And then lastly, there, I think important to note
from a budgetary perspective, about six or seven years ago,
it also got more challenging for public agencies
because CalPERS used to amortize the UAL over 30 years,
meaning that the annual payment was lower.
Now they force it over 20 years, so it's a higher payment.
Think just like a mortgage,
if you have a shorter term, your payments,
you're going to pay less in interest over time,
but it means that the budget impact is larger
in the near term.
So this chart is the CalPERS returns over the last 20 years or so really meant to show how
volatile these returns are. You can see that the worst year they had was in 2009,
negative 23.6 percent. They just had one of their best years ever a few years ago in fiscal year 21
at 21.3 percent and just important to note that every year CalPERS looks at how they did relative
to their target discount rate.
If they didn't meet it, they increase your UAL
and then that UAL gets amortized.
If they beat their mark, you actually get an offset
to your debt, so when they have a good year,
your debt, your UAL goes down, which is helpful.
But I bring that up because you're at the whim a little bit
of CalPERS returns, they don't force you to pay that change
in the very next fiscal year, they do give you some time.
So most of these impacts are there's a two year lag
and then they get phased in over five years.
So it's kind of a seven year process for you
to actually feel the full burden
if CalPERS does have a year where they don't meet their mark.
And as we'll see, the city is starting to face large increases
from that down year, from fiscal year 22,
which was negative 6.1%, which doesn't sound that bad,
but it's 14 percentage points off their target rate of return.
Can I ask a question on that slide?
Yeah, I got one, too.
I'm trying to wrap my head around it.
How is it that in 2021, it could be 21.3% return
and then negative 6.1?
Isn't it invested like we invest our monies kind of conservatively
and something that's pretty stable?
You can equate it to a 401k plan,
although CalPERS has one plan.
Right now, it's about 50-50 in terms of equity allocation,
fixed income, they have some private equity,
but I think if you look back at the stock market trends
from 21, it was way up.
And then in 22, there was a crash.
You also had inflation kicking in, bond,
you know, fixed income didn't do as well.
So I don't think this is out of the ordinary
if you look across, you know,
various types of investment funds during that time period.
And so even though we're up in 24, they're up in 24,
not quite there in 23,
you said we're still recovering from 22.
You're gonna start because of the two year lag
and then they start to phase in the impact.
So the poor year that they had in 22
is just now hitting your actuarial reports.
And then you're gonna start to see the increases
in your bill to CalPERS each year starting next fiscal year.
And then those will ramp up over five years.
But you're right, in 24, they beat their mark.
And we're gonna get to a slide to show what that does
to the UAL, because it did come down.
And that benefit will, you'll start to see that benefit
in about three to four years.
I can go deeper.
Just one more question on, isn't the 21.3,
wouldn't that have offset the 6.1
and give us a cushion going forward
for three, four, five years.
How come that's not the case?
Yeah, and I don't mean to skip ahead,
but I think this chart right here,
if you look at the bottom,
those CalPERS returns are very similar to what you just saw.
They're slightly different and I don't wanna get into why,
but that 21 year is where they earned 22% returns.
And you can see that gray bar, that's your UAL.
It dropped from 138 million in 2020 down to 102 million
just in one year from their good returns.
But then you see that it bounced back up
to 159 million the next year
because they lost negative 7.5.
So that's kind of the yo-yo effect of CalPERS returns
and the impact on the UAL debt.
And I have a question about the discount rate.
You're saying that as the discount rate goes down,
we're getting less return on the money that's been put aside
so the UAL goes up.
But we're also calculating our payments
based on an interest rate that's the discount rate.
And when that's lower, that also would drop your payment.
What's that relationship like?
Yeah, great question.
So you're right, it's a lower interest rate.
So you would think it's a lower payment.
but because essentially what's happening
is the accrued liability is going up a lot more.
So all these packages are defined benefits.
So all the benefits are guaranteed,
but the fact that CalPERS is assuming
less is coming from interest over time,
you need a lot more to get there.
And so that gap just widens
and that UAL calculation goes up.
And we're gonna get to a slide
that shows the sensitivity to those changes
because this year they're looking at those assumptions.
Four years ago they were talking about moving
all the way down to 6.5 from seven.
They only went to 6.8.
If they go to 6.5 from 6.8,
that's an immediate increase of $20 million
for the city of Walnut Creek.
So from 155 million to 175 million.
So that's-
Why don't we keep going through the presentation?
Because I know having seen this in finance,
a lot of these questions will get to the answers.
So I'm gonna, this is a graphic that I think is helpful too.
It's pulled from the CalPERS website
and it just shows how CalPERS benefits get funded.
And on the left side shows the CalPERS investment earnings
showing about 55% of benefits being funded
from investment earnings.
The city or the employer picking up about a third
and then CalPERS members, city employees
paying about 11 cents on the dollar.
And I think the interesting thing to note
that we have in some of the bullets on the left
is that if you looked at this chart 15 years ago
before the great recession,
70% was coming from investment earnings,
meaning that cities, CalPERS participants,
were only paying 20% or 20 cents on the dollar.
So that's anytime CalPERS,
as investment earnings go down
and it makes up a smaller share of this dollar,
it means that CalPERS employers,
City of Walnut Creek has to kick in the difference.
And that's, we're gonna start getting
to direct impacts on the budget,
because right now we're talking very high level,
but we'll start to see how this works
into the actual numbers you will be seeing
over the next decade, 20 years.
The city does have two plans.
I think I mentioned that before.
Safety police plan as well as a miscellaneous plan.
There's a little over 1,600 covered members.
about a quarter of those are active employees.
There has been new legislation that was enacted in 2013
that anyone hired after that date,
they're part of these PEPRA benefit packages.
So they're slightly lower benefit levels,
also cheaper for cities as well.
So I think in the long term,
hopefully we won't be in this situation
20 years down the road.
But it's important to note as we bolded
in the bottom bullet there that the UAL is almost 100%
attributable to the classic plan.
So it's not, the PEPRA plans are gonna be helpful
hopefully long-term to be more sustainable,
but this $155 million unfunded liability
has is a output of things that have happened
over the last 20 years and they're attributable
to the classic plans.
Mike, if we could, I just want to add something
if you could just go back one slide.
I just didn't want to highlight something
And you may want to speak to this in a little more detail.
Just a point that's worth noting, there's been a lot of discussion about the different
pension plans.
There was a lot of focus on the public safety pension plans, and that cost is really highlighted
here.
If you look at the miscellaneous, so that's all non-public safety, you know, is about 82
million, roughly half, you know, at 73 million is safety.
It's about one-fifth of the employees equate to about half of the cost.
That just gives you a sense of the magnitude
of the cost difference between the more expensive
public safety retirement plans compared
to the lesser benefit for the miscellaneous employees.
That's a helpful point.
I think that point you could also translate that
into percentage of payroll where the miscellaneous plans,
I think it's 10% about for the city,
10% for the employee.
Safety plans are more like 30% of payroll
that the city's kicking in versus 10% for the employees.
So higher cost plans for the safety.
Quick slide here, just showing the transition
from classic to pepra.
I think a couple things to highlight.
This fiscal year 25, you can see that you're already
over half of the employees are covered by the pepra plans.
And as folks from the classic plans retire,
then it would be close to 100% over the next 10 years
in terms of the number of employees
that will be covered under the PEPRA plans.
This is a slide that we just went through
but shows the UAL fluctuations over the last eight years
as well as the funded ratio.
So I think that the big takeaway from this slide
is that it is directly tied to CalPERS returns.
other assumption changes as well, but you can see that anytime CalPERS has a good year,
you'll see a reduction in the UAL, and when they have a down year, you'll see an increase
in the UAL, and of course the funded ratio is tracking that as well.
You'll see in 2024, those reports aren't out yet, but CalPERS does have a good transparent
model on their website where you can model things out, so we do have a pretty good estimate
they're based on them beating their mark last year,
they earned 9.3%.
And that funded ratio there just to note of 75.9%
does include the assets that the city does have
in the 115 trust.
Just, sorry, I don't know that you'll answer this one
or not, but just on that,
try not to be too esoteric in the question,
but how do you plan when these numbers
are all over the place?
Last year was 155, and the year before was 164.
In 2021, it was 102, and Caltrans has some sort of model
on their, but I don't think they really know either.
Well, maybe they do, but how do, or CalPERS,
how do you make sense of these numbers and go,
that's the number that we should, or UAL is 155,
we can bank on that,
and that's what we should be planning for.
It's why you you plan for potentially more pessimistic scenarios
Calpers not meeting their mark we're gonna get into some analysis that you know assumes that there's changes made to some of their assumptions
You know, it isn't a direct one-to-one. They have a bad year and all of a sudden your payments double the very next year
That's why I talked about there's a two-year lag. There's a five-year phase in
So when you start to factor in good and bad years, it's not as as impactful
it's not as extreme to the budget,
but as we'll get into in a couple of slides,
you'll see that the way the UAL is amortized,
there's a large bottleneck over the next 10 years or so
in terms of budget payments.
So that's what we're gonna get to.
And that's really what the city's trying to navigate.
And in some ways, you're in it.
Other than your fluctuations,
but this bottleneck that's coming over the next year.
Yeah, what's gonna hit your budget?
What you're paying annually on these numbers,
because yeah, it's a big movement,
50 million's a big movement,
but then when you stretch that payment out over 20 years
and then you layer it on to all the other debt
that you're already paying,
it's not a, it's a little more manageable.
But to your point, all agencies right now
are getting to the point where they're climbing up
this mountain peak in payments that you've been climbing
and it's gonna just keep getting higher
for the next six, seven years.
And that's already baked in.
Those are from things that have already happened.
As we'll get to, the nice thing is,
relative to other agencies,
you're in a good position with the 115 Trust,
which is what we'll get into,
because you can use some of those assets
to mitigate a lot of this volatility
that we're gonna look at.
Just a quick comparison to some neighbors.
The low 70% range is, I think, statewide.
you're in line with most agencies.
It's hard to compare every agency apples to apples,
special districts to cities,
cities without fire, without police, things like that.
But this is just to show that the city is in line
with statewide averages.
So this is the chart, I think,
that's gonna be most eye-opening
when it comes to the budget impact.
And two colors here.
The bottom color in orange is the normal cost.
This grows in a more linear fashion,
mostly tied to payroll growth.
Obviously, a lot of other assumptions go into that,
but you're not gonna see kind of the ups and downs
on the normal cost that you do on the UAL.
The UAL in blue, so this is, as I mentioned earlier,
a combination of 30 to 40 different layers of the debt.
So you can think of that 155 million broken up
into all these different loans.
These different loans have different remaining terms on them.
Some some are seven years, some are 10, some are 13.
The bulk of them are kind of in that middle period,
which is why you see this mountain peak in payments.
So the big takeaway from a budget perspective,
if you look at 2018, the city's paying
a little under 10 million.
Next fiscal year, you're close to 20 million.
And the bulk of that is in the light blue, it's the UAL,
which has essentially doubled over that time period.
And then it's projected to get closer to that $23 million
level by 2030, 2031.
And then you start to see a lot of these layers being paid off,
and you start to see those payments drop.
And then you don't see really anything after 20 years.
Should note that this is a snapshot in time.
So every year, they're going to add or subtract a layer.
So this this kind of mountain peak is going to shift up and down each year,
and it's going to get pushed out based on based on CalPERS returns,
based on different assumption changes.
But, you know, for the next five, six, seven years,
this is what the city should be planning for.
And as we'll get into planning for probably even, you know,
some more pessimistic scenarios as well.
So before we get to the cost management strategy
and kind of the analysis behind the using the 115 trust to deal with this mountain peak it's are
there any other questions in this background section the decision to amortize over 20 years
versus 30 years that was a state legislative move i assume or who did that it was calpers
and essentially their you know their funded ratio was too low i mean at some point there
you got to have money to pay retirees and they said we need to be repaid faster on this debt
So, you know, 30 years, I haven't seen it done.
There's some agencies who can talk to CalPERS about that
if they're in a financial hardship, but for the most part,
everyone's on the new 20-year amortization.
I can just add to that, if I may, and feel free to jump in,
Mike, if my memory is not correct.
After the great recession, CalPERS was flirting
in the low 60s in terms of funded ratio.
And if a pension falls below 60%,
and it falls into what's called the death spiral,
where it's effectively too costly to catch back up
and you just can't do it.
And so CalPERS really was in a state of emergency
in terms of what to do and to fund
and they needed to shore up.
And as you can see, costs have gone up dramatically
and the great recession during that timeframe
with the losses that were incurred
and all the pension enhancements
that had occurred in the late 90s and early 2000s
all came together and resulted in what we're looking at.
So they made numerous changes to their approach
order to shore up the pension and get it up back into the 70s. Overall calpers I
think is in the low to mid 70s with funded ratio and which is obviously a
much healthier position in the low 60s so it's working but it's a there there
is a lot of work yet to be done. And then one other question on this just because
this is something that when we were looking at it legislative committee or
in the finance committee that the returns going forward you're just
just assuming that they get their discount rate, 6.8,
and they're gonna have 10% years
and they're gonna have negative 10% years in there.
So this is a snapshot in time based on an average.
Correct, it assumes they earn 6.8 every year.
And with staff, we've run some more analysis
and sensitivity, but I think for this meeting,
we wanted to keep it, we didn't wanna go for two hours,
but you're right, it's a snapshot.
So every, you know, they're gonna come out with stuff
this fall that's gonna change this chart.
And most likely there's more pressure
that it's gonna be to the detriment of the city
than helping the city, you know,
in terms of they're not gonna raise the discount rate
and say, hey, we're good, we're good now.
Inflation is a challenge.
So, you know.
Any other questions at this point?
Matt's over here still scratching, but okay,
let's go ahead.
go on. Yep. So just just a handful more slides. In terms of cost management strategies that are
popular ones that have been used by other agencies and all these are, you know, being used by Walnut
Creek, number one, prepaying the UAL early in the fiscal year. This is a strategy that's been done.
There's been enough cash to do that. You do get a nice discount negotiating and cost sharing with
employees. Obviously, as I already mentioned, new employees are already governed by the lower cost
pepper plants and then really the primary vehicles for managing rising
pension costs are using reserves and surplus to pay extra so above and beyond
your the bill that you get from CalPERS each year and that's something that the
city's been doing through the use of the 115 trust so I'll define what that
trust is in the next slide the other option is to just pay CalPERS directly
in the form of what's called an ADP or an additional discretionary payment this
This would just directly reduce the UAL and reduce some of those amortization payments.
You can also do that through the 115 Trust at a later time.
As you are aware from some of the forecasting discussions, there are some challenges ahead
with projected deficits potentially.
So as you'll see, the 115 Trust offers a lot of flexibility in how you can use it.
So I think it's a good strategy to keep going with, based on our review.
So a 115 Trust, as you may know, it's a restricted account.
Once the monies are put in there, they must be used for pension expenses.
And I think there was a question earlier, kind of trying to equate CalPERS portfolio
to 401K and all that.
The nice thing about the 115 Trust option is you have more options in terms of what
kind of portfolios you want to be in.
you want to be in a higher equity kind of risky or long-term portfolio or a
very conservative one. The city's currently in a moderate 50-51. It's
managed by PARS. It's done quite well over the last six or seven years. And then
really the the biggest benefit is the flexibility on how and when to use it. So
you can use that at any time during a challenging budget year just to make
your annual payments. You can use it to smooth that mountain peak in payments,
which is what we're gonna get into in some of the analysis.
You could even just let it grow over time,
and at some point it's gonna be at the level of your UAL
and you could extinguish your UAL theoretically.
So really just another shock absorber
at the city's disposal to help manage
this volatility going forward.
As I mentioned, city's core objectives
with the 115 trust, mitigating volatility,
lowering that mountain peak in payments.
So when I say lowering that mountain peak
or smoothing that mountain peak,
it's not that CalPERS is necessarily changing
their bill to you.
It's that as you get into those years
where those payments are higher,
you're using some of the 115 Trust to cover
what's above a more level and affordable payment
for the general fund.
So really, the idea is the charts
will be a little bit more descriptive,
but you have a trust that's $29 million
that's gonna continue earning interest
and you can use that strategically
in those years of higher payments
to help make that CalPERS bill
and that way from a budgeting perspective,
you're keeping the general fund at a more,
a less volatile level, not bobbing up and down each year.
And then of course, liquidity.
A lot of our analysis does assume
that the trust is depleted over a 13, 14 year period.
five, six years down the road, you know, there may be reasons why, you know, there's minimum
balances that should be kept, probably, but for the purposes of this initial analysis
where we're trying to see how big of a benefit is this trust heading into these challenging
years, we did assume it gets fully depleted.
So, again, the city has close to 29 million of assets in the trust, came from large contributions
in 18 and 19, totaling close to 20 million.
There's been a lot of investment earnings growth since then.
And as Kirsten mentioned earlier,
some of the key considerations were is it time
to stop growing the trust?
And if so, when should the city start to pull out money?
How much and how would some
of these other variables change those decisions?
What if we head into a recession?
What if there are discount rate changes?
So those are the things that were driving this initial analysis.
So we did build out a model that we will be, you know,
periodically working on with staff to update.
And we ran three scenarios for the purpose of this project,
number one being no changes at CalPERS.
So just assuming they continue to meet all their different goals
with their investments and no changes to assumptions.
Number two, which I think is timely
because we do know they are talking about the discount rate right now is that if they do lower their discount rate from six point eight to six point five and in both of those as you'll see from the graphics we look at kind of smoothing that peak and payments whereas number three here we took a more tailored approach to seeing how could those assets be used to solve the projected deficits that the city presented as part of their forecasting discussion.
So slide 29, this is a graphic can I ask a question about the last one sir, but
the trust yeah the the 115 trust what's if that has a narrow purpose which is it
can only be used to pay for a pension what's the advantage of putting the
money in said trust versus just investing it on our own in a like free
market type of scenario. Yeah you're you're limited in your investment
options with your your current general fund reserves you can't just go
investing in the stock market so once you put it into the 115 trust it opens
the door to more investment options okay yeah and then what I saw that we had you
know 2019 we got six percent last year we got ten percent how do we expect our
trust to perform in relationship to the discount rate and if it would be higher
than that what would be the advantage of putting that money into the paying down
on the UAL with it.
Yeah, well, I wish I had a crystal ball.
Currently, the vehicle that it's in now with PARS
is in a 50-50 allocation, so very similar to CalPERS.
We aren't investment advisors,
but the city can work with PARS and its investment advisor
based on risk tolerance, as well as projected withdrawals
to figure out, do you wanna go for more return
and have 70% inequities, 30% fixed income,
or do you wanna be more conservative?
Do you wanna have maybe two portfolios?
So that's a little bit out of our lane.
If you look at the 115 trust providers
versus CalPERS year to year,
you're gonna see some years that CalPERS beats them,
other years, CalPERS maybe underperforms.
So there's no, in some ways to your first question,
the big benefit is investment returns.
you're able to access the market,
which you can't do with your general fund reserves,
and you're essentially tying that money up
to be used for pension.
Thanks.
Mm-hmm.
So this is the first status quo scenario.
These blue bars are the same blue bars
we looked at on the previous page of the UAL,
and basically the orange dotted line under this scenario
is what the general fund would be paying each year.
So essentially trying to have a level payment
for the general fund.
And in this scenario, it's at 12.1 million.
Anything above that orange dotted line
assumes that you're withdrawing money from the trust
and you're using a portion of that
to make your CalPERS bill each year.
And then after 2037, that money is,
that trust is exhausted.
And we looked at the 10-year historical returns
for the current portfolio that the money's in.
It was a 5.28%, so we thought that was a fair assumption
to use for future investment earnings.
Obviously we could be more conservative, more aggressive,
but this really, I think this graphic is a good way
to look at how you can use that trust
to stabilize payments for the general fund.
And if we move to scenario two, essentially it's the same,
similar graphic, but things have moved up. So from the previous page where payments are
spiking at around 16 million, this scenario again is if CalPERS changes their discount
rate to 6.5, theoretically very possible this year. As I mentioned before, that would be
a UAL increase of 20 million, so the UAL would go to 175 million. And now instead of those
those payments spiking at 16 million, it would now be 18 million.
So that just gives you a sense of how impactful a change like that could be.
The trust would still come in, it would still be very beneficial.
It just means that you probably wouldn't want to dip into that trust next fiscal year.
You'd want to push it out a year, wait until 2027.
And those payments you could stabilize at around the $13.7 million level.
So a lot of this analysis too from our perspective was,
when should the city be dipping into that trust
and are there reasons why you might want to push pause
on that and I think looking at what could happen
as a result of the ALM study this year
and knowing that it would push off maybe the timing
of when to prudently dip into the trust,
it may be something that you reassess later this year
once a lot of these assumptions are ironed out
because it would change the analysis.
Could you go back a minute and just toggle back and forth
between scenario one and scenario two
as to what's different.
The discount rate went from 6.8 to 6.5.
The CalPERS investment returns did the same thing
and the rest of the four other assumptions are the same.
Yeah, and this, I should, now as I scroll back and forth,
we should have used the same $20 million horizon
on the axis so you can see the step up in payments,
but basically the blue bars jumped up
to the $18 million level in this discount rate
lowering scenario two.
So it's at 18, and if I go back a slide,
they're at about 16 million.
So that's a $2 million annual impact
if they were to reduce the discount rate.
But the assumption is that we start with 28.7 million
and we have a rate of return, an actual interest rate
of return in our investment of 5.28%.
So it's the same bucket of money.
It's the same bucket of money.
Spread differently to smooth.
It's just being spread upon a higher amount of debt.
Okay, great, thank you, I appreciate that.
Yeah.
I was trying to figure out the math on this then too.
So it increased by 20 million, you said, in scenario two.
So more of that two million each year
is coming from the general fund.
that's not coming from the trust,
because the trust hasn't gotten any bigger.
Pretty close to that.
Yeah, and that's why we're showing,
we're highlighting the orange dotted,
which you could think about that as what you would budget
from the general fund.
So that's 13.7 million.
Up from 12.1.
Up from 12.1.
So you're close, yeah, 1.5 million.
Okay.
Yep.
That's 12.
And that?
Or 11.
Yeah, so nothing's changing in the trust.
We're assuming that just grows at 5.28%.
No more contributions.
It just means that, you know, that trust doesn't provide as much benefit if things happen with
CalPERS.
And scenario one and two, it's really what happens on the CalPERS side, not what the
city does.
Correct.
That really changes.
Correct.
And so the third option, you won't see a chart like that because we kind of looked at it
from a different perspective because all of this is planning, right?
you don't really know what's gonna happen.
You're not setting a plan in place on exactly how to use it,
but part of our project was to figure out how meaningful
and how much benefit this trust could provide
at its current level.
So our third scenario looked at the projected deficits
over the next 10 years using the city staff's
moderate recession financial forecast.
You can see a lot of the deficits are larger in 27, 28, 29.
The assumptions are listed to the right.
And then a few years of surplus.
And then again, some deficits in the back end.
And really the summary is that the current level of 115 assets could absorb all of those
deficits through 2034 and a little bit of 2035.
I don't think as a financial advisor, we're recommending that you depend solely on the
115 trust to solve all the budget deficits, but it gives you a good understanding of the
magnitude of that trust and how helpful it could be for some of these projected benefits.
And so this comparison, these three columns here are the projected withdrawals or the
expected withdrawals under each of these scenarios.
So scenario one and two, you can see those, it's a little bit more linear and they get
get a little bigger during those mountain peak years,
and then they start to come down.
Whereas in the third option, if you
use it for purely the deficit mitigation,
more money is getting pulled out in those tough budget years.
And this really goes back to what I mentioned before,
which is the main benefit of the trust, which
is flexibility on how to use it.
You don't have to decide right now,
we're going to use X million in this year,
but you know that you have it,
and I think this is leading into the policy
that staff's gonna talk more about after this.
Can I ask a question?
Yeah.
So your, when I look at option scenario three,
what you're really doing is burning through it.
Earlier, yes.
And a hybrid approach would be some burn,
some budgetary, structural budgetary changes.
Yeah, that sounds like a hybrid approach to me.
And I think we weren't involved too much with the forecasting,
but I know one of the drivers of some of the deficits
is rising pension costs.
So there is overlap there.
Obviously, there's other sales tax assumptions
being that are part of that.
Thank you.
So, if any?
The deficit mitigation strategy is
paying both the chopping off the top of the peak
as well as covering our deficit or just using it for deficit?
It's just using it for these deficits right here,
so these deficits line up with the withdrawals
from the trust.
But if you go back to the previous slide,
so we're seeing, oh, I see these deficits here, OK.
Let me speak to, it's different ways of applying.
What we're trying to do is just share
a few different scenarios to ultimately get
to where we're headed as a policy
for how to apply the trust.
We're not picking a scenario,
we're not saying anyone's going to be accurate,
but a little different way of looking at this,
it's how do you apply the money over this period of time?
So in this scenario of using it to address the gaps,
if you can go back when Mike to the mountain curve
there or a couple back, if I remember right,
the scenarios one and two take us out to like 2037,
Addressing and getting us through this curve scenario three only got us to 2034 and addressing the mountaintop
So it's still addressing the mountaintop of UAL payment and a different way of applying the money
but it lasts for a shorter period of time and if you look at this one of the keys of what we're trying to get at
is
We want to start using that if we're going to use the trust we want to start using a point
We're addressing pension benefits that when we stop using it, the pension costs are the
same or less as when we started using it, and we'll speak to that in the policy.
Otherwise, we're going to be left holding the bag with a gap in our budget that was
funded by the pension.
So that's really what this is getting at, is chopping off that mountaintop so that the
starting and the end, ending pension costs are roughly the same after we've used the
trust and we'll speak to that again as we go through the policy here in just a
few moments. I'd like to ask another question but you can say I'm getting to
that. I'd like to see the next two years of what the growth in the UAL is versus
how the moderate recession, in other words what portion of the negative
below the line.
So the, it's a little bit separate, I think, from the forecast for the UAL where this is,
these are the numbers I believe that staff was using for the, the deficit forecast.
Are they anywhere close?
I mean, for example, the moderate recession says 3.1 million underwater in 26 and 6.8
million in 27.
I'm wondering what the growth in the UAL is for the same two years versus 25.
So the UAL payment for fiscal year 26 is just over 13 million.
And for 27 it goes up to 14.2 million.
So it is growing from 26 to 27.
But it's less than, so there's more involved in our budgetary problem than just rising
pension costs.
Correct.
Well I just want to make sure I was following, tracking this.
All right and we've got a lot to get, why don't we go back and raise our hands if you
have a question and let's see if we can get through the presentation and then we
can kind of dig into everything, okay? So now I'm going to talk about some
key takeaways from the information that we have heard this evening and so the
first one is really that the trust is intended to be used. So when it was
established it was decided by your counsel that it wouldn't be used before
for 2023 but the intent was always to use it to offset or help mitigate the
rising pension costs. Pension costs are projected to increase through 2033 with
the decrease beginning in 2034. The City's trust and reserve balances can be
leveraged over the next 10 to 12 years and finally staff is recommending
adopting a policy for the use of the pension resources in order to have a
clear framework to ensure that the resources are used effectively and the
city is balancing short-term budget relief with long-term financial
sustainability. And so just wanted to go through some of the key provisions in
the policy, the first being only using the pension resources during deficit
years to maintain service levels so not to expand services and withdrawals would
be based on actual financial needs. So what would happen is we would look at
the year-end results and determine how much we would need from the trust if any
or we would use the amount budgeted whichever is less. As I mentioned earlier
balancing the use of resources with other reserves in times of economic
challenge. Avoid relying on one-time funds for ongoing expenses while also
being mindful of the concept of using these resources over a period of time
until our pension costs begin to decline systemically. General fund surpluses may
be deposited into the trust at year-end where appropriate so this could allow
the city to continue to grow or reinvest in that trust. Continue prepaying pension
liabilities when feasible to achieve the cost savings. The cost savings is
typically 50% of the discount rate so right now it's around 3.3 3.4% of our
annual UAL payment. So for example in fiscal year 25 by prepaying we saved
approximately $440,000. Take steps to ensure that the pension
resources last until at least fiscal year 2034 when those pension costs are
projected to decline based on what we know today and ideally making sure the
trust will last those ten years so the city really is using those funds as a
bridge to get through that mountain peak of those rising costs. So again what
we're asking of you today is to provide feedback and accept the report and
adopt a resolution establishing the pension trust and reserve use policy and
And so we are available for any additional questions questions
Do all of you have questions?
Okay, we're gonna start with Daphne customer Daphne
the the prepaying is
I guess paying at the beginning of the fiscal year correct and you said it drops the discount rate in half
Well it the amount of savings that we achieve that they provide us for prepaying is half of the discount rate
That's how they determine how much we can save for that one year.
So it's really because we're paying them up front,
they have the advantage of being able to invest that money longer.
Yeah, so that's sort of where my question was going.
So if we pay up front and we take the money out of the trust,
we've also lost our own interest in the trust.
Is that still a $450,000 savings?
Am I understanding this right correctly?
Well, the UAL, we would pay out of the general fund.
And so we would budget for that amount to pay out of the general fund.
We would take advantage of the discount so that we would be paying less.
However, we wouldn't utilize the trust until year-end when we determined, based on our
actual revenue and expenditures, whether or not we needed additional funds to close the
gap if we had more expenditures and revenues.
So we would still be-we would leave those resources in the trust to continue earning
interest throughout the year.
Thank you very much for the presentation.
When we established the pension trust in 2018, it was with the understanding, and Dan, you
may remember on this as well, the understanding that as needed, we would be using the pension
trust after the five years had gone past for this exact scenario.
I mean, obviously, we didn't know what the exact scenario was going to be, but to reduce
the budget impacts that would otherwise be experienced from general operating procedures.
Is that correct?
Yes, that is correct.
Okay.
Yeah.
I mean, if you want me to expound upon that.
When the trust was established in fiscal year 2018, at the time, the direction from Council,
we started to debate this very issue about how to apply the trust.
And frankly, it was fairly complicated, and we knew we didn't want to use it for a while.
The direction from council was to continue to invest and not to use the trust until at
least fiscal year 23, five years later.
So we're heading into fiscal year 26, three years after that minimum date with the expectation
that we would start to use it.
And that is one thing that this trust is very different than some of our other reserves
such as our fiscal reserve or emergency reserve.
Those we hope to never use because it means there's some type of emergency.
We use some during COVID as an example.
If there was some other type of disaster, we may have to use it.
This trust was always intended to be used in order to address this growing pension debt
and to do so in a very methodical manner, which is what we're obviously trying to discuss
today.
All right.
Okay.
Thank you.
Thanks.
Councilmember Silva?
Can you go back to the chart that has the six policy provisions?
So the first one, I think, is probably one of the most critical because it says only
use it during deficit years to maintain service levels. And this is, Mr. Berkshire, this is
where the phrase that I feel needs to be reiterated is missing. I finally found it again. What
we're really saying, I believe, is use the pension during deficit years to offset pension
costs that would otherwise reduce the level of service, greatly reduce the level of services.
existing levels yes correct so in all cases we're using it to offset the
pension costs not to actually maintain programming that's correct that's paid
for by the General Fund okay thank you and just to add to that if I may I mean
the fund is the trust is legally restricted to use to pay for pension
costs but you know maybe we can slow down the argument from the public who
doesn't understand the provisions of the pension trust I appreciate that I get
that too, I guess the scenario 3 then is kind of a false choice because it's not, you can't
really use it for anything but addressing the pension liability.
Correct, but if you were to play that out, the pension liability is much greater than
any of those deficits in any year, so it would be applied to pension in theory.
But again, we're not recommending scenario 3, we used as one of three scenarios just
to outline different considerations in the policy, but we're paying nearly 20 million
dollars a year in pension costs. So in theory we could use up to 20 million a
year of the trust and still be applying it legally. Again, not recommending that.
And then the problem would still exist? Correct. Again, not recommending it.
And then another question had to do with, and I appreciate Mike, your
presentation, which was very thorough, but are we missing a piece of this in
terms of the investment advice, that before we come up with the policy, have we gotten
the feedback from our-
Oh, yeah.
Yeah.
It's thoroughly vetted.
In fact, we included in the quarterly investment earnings update to council.
I don't-we probably have one coming up, and you may want to speak to that a little more
detail in terms of our investment mix and what we'd be doing going forward.
Greg, let's let Matt finish his questions.
Did the investment advise, it factored into this policy, and if so, if you could just
kind of elaborate on that?
So we're actually working with our investment advisors for the pension trust.
So they're aware that we're bringing this forward, and they're aware of the information.
And so we're working with them to determine what the investment strategy should be for
the trust, based on whatever is decided in terms of the policy and how we're going to
use it.
they would look at do we need to move some of the trust investments into more
stable or more lower interest rates with less risk knowing that we're going to be
withdrawing from it. Was there a thought that they should be engaged in terms of
developing the policy though because it kind of seems like cart before the horse?
Really what their their focus is is the investment and how to get the most
investment return right now and then adjusting based on whether or not we're
going to start using the trust.
So that's mostly what they're focused on.
But we will provide them with all of the information
that we brought forward.
And that's going to help inform the decisions in terms
of whether we make changes to it going forward.
You know, you could almost think of it as, if you think about it
as, say, a target mutual fund, you know,
where the target is a retirement and, I don't know,
pick a year 2040 or something.
You know, as you get closer to that date,
the investments become more conservative
because you're likely to use those funds.
And so we have been having ongoing discussions,
but what the investment advisors need to know is
what's your intention in terms of using the fund.
If they were to say you're not going to use it
for another 10, 15 years,
it would be a much more aggressive strategy.
If they're anticipating that we're going to use it here
in the near term and intend to effectively use it
over the next 10 to 12 years,
which is more or less being recommended,
then over time they're going to move
to a more conservative investment portfolio.
And I know, this presentation has demonstrated to me
that things are fluid in this area.
What were our projections or estimates?
The word is liquid.
Liquid.
And with the pension trust fund, has it
reached the amount that we thought it would?
Has it exceeded our expectations?
I would say it's exceeded our expectations by quite a bit.
We initially invested $19.9 million in the trust.
and so now we have close to just over 28 million.
So it's done quite well in the last five years.
In the one chart that Mike showed with the percentages
where we compare with other cities,
we were higher which was a good thing,
which meant we were more funded.
Correct.
And how are other cities dealing with this?
Are they also doing the pension trust fund or?
So, and Mike can probably speak to that more than I can,
But my understanding is, is we are actually ahead
of a lot of most cities in terms of how much we have
in our pension trust and the fact that we even have
the pension trust out there.
Is that about right?
Yeah, that's right.
And I mean, we've, don't know what every city
and public agency is doing.
We've worked with probably 100, 125 CalPERS members.
And I would say the 115 trust, ADPs,
there was about 100 agencies that did pension bonds
and 21 and 22, which that's a different,
it's apples and oranges
cause they did fund their accounts closer to a hundred percent
but now they also have debt.
So it's kind of a separate conversation.
But I will say that for most,
I don't want to throw anyone under the bus
in terms of other cities, but I'd say for the most part,
agencies are looking, you know,
their policies are centered around
how can we get things funded in a trust right now
because they're staring at the same peak.
If you're in a position, this is probably one of our first or second times, where we're
working with a client that feasibly you could start withdrawing money.
You've socked away a lot, and that's not the case for most agencies.
They're looking for ways to actually start a trust now, to put more money into the trust,
because you can see that the dent you're making in that peak is big.
if you don't have money in there,
you can't really chop off that mountain peak.
So I would say the city's in a good position,
but you're not, you're still facing the same challenge
that, you know, that others are.
Just last question then.
There's no advantage to just putting it all in at once,
paying it because it doesn't deal with the budget shortfalls.
It just grows.
I mean, if CalPERS, you can, when you give them an ADP, you can select which layers of
those blue bars you exterminate.
You basically take away those layers, you reduce, let's say you give them $30 million,
your UAL drops from $155 million to $125 million, and you're going to see all the payments associated
with that $30 million go away.
So you can, you're not gonna be able to level out the peak,
but you can really ratchet it down.
The challenge is, is that you're not,
one is you don't have that rainy day fund anymore,
which is right now you get to pick and choose
when you use the trust.
So once you send that money to CalPERS,
you can never claw it back.
And it doesn't mean that UAL is not gonna come right back.
So you're, I mean, no matter, you're,
you're extinguishing that in a snapshot in time,
but then each year moving forward,
you're still gonna be at the whim of CalPERS.
So there is benefit, I wasn't saying the ADP.
And that's something I think as time goes on.
What is the ADP again?
The additional payment to CalPERS,
where they say, you've given me 30 million,
we'll give you credit for that,
and we'll take away the interest payments at 6.8%.
So there is benefit, but now you're left
with no rainy day fun and shock absorber
to deal with the unknowns moving forward, so.
I may just add to that.
I mean, your question's spot on.
So that very dynamic is why Pension 115 Trust came about
about maybe 10 years ago, give or take,
because previously organizations,
cities, counties, districts, and so forth,
were doing just that.
They had some extra budget money.
They said, let's give it to CalPERS to pay down
the liability just as you noted.
And then lo and behold,
CalPERS has a poor investment year
and that money bounces around and is down
and the payments are back to where they were,
didn't seem like a good use of money.
So the idea of the 115 trust really gained fashion
of still put the money aside to help pay for it,
but the city controls it and controls how it's used
as opposed to giving that control to CalPERS
and not knowing how it's going to ultimately play out.
Let me ask my questions first and then we'll see if we...
Thanks.
So go back to the one where it has
what our pension policy draft is, there we go.
So, and I'm looking at this
and I'm seeing it as saying a couple key things.
One is we're gonna keep the control within ourselves,
what we do with our pension trust.
We are going to look on an annual basis and say,
is this a year where we are able to cover
our existing service obligations with our existing budget?
and it's a really good year, lots of sales tax.
So we're okay this year,
so we're not going to use our pension reserve this year.
And then we get to a poor year and we say,
well, this is a year where we wanna maintain
our service level, and so we are going to use
our pension trust only in those years,
rather than just a set it and forget it.
So it's kind of an adaptive management
of the pension trust based on what's going on.
correct yes and and as councilmember Silva mentioned earlier it would the
intent would be a sort of a hybrid approach because we wouldn't want to
necessarily say every time we have a deficit the pension trust will cover the
full deficit by offsetting those pension costs and so really would be an analysis
each time to determine what we would do in terms of do we need to take reductions
in addition to using some of the pension trust so it would be very thought out as
as what our approach would be.
And one of the other things that we do in here is we don't,
at the beginning of the year, we say,
we're anticipating we're gonna use, say,
three million of our pension reserve this year.
We don't actually do that until the end of the year
when we're closing the books,
because sometimes we end up with unallocated fund balances
at the end of the year.
And if we said we were gonna use three million,
but we end up with an unallocated fund balance of 800,000,
we only put 2.2 million out of the pension reserve
into the paying for that.
Correct, correct.
We wouldn't want to create an additional surplus
by using that pension trust to offset the pension costs.
And so it would be very intentional to look at
the actual revenues and actual expenditures.
Because as you know, when we bring forward
our quarterly reports and our year-end report,
we do sometimes have that surplus.
And because we have salary savings or O&M savings,
excuse me, and sometimes we have additional revenues
that we don't anticipate as well.
And so what we're doing here
is we're just saying we're going to manage this adaptively.
We are planning on starting to use it,
but our decision each year will be based
on the circumstances of that year
and we'll be guided by the idea
that we want this to last through the hump
and not shoot our waddle in the first couple of years.
That's correct.
Okay, additional questions, Cindy.
So a technical question about that last point,
we still have to adopt a balanced budget.
So we would have to show that we're using it.
We just don't go and do it until the very end.
Yes, that's correct.
Okay, I just wanna, we don't sit around waiting
and adopt a fake budget that, you know,
doesn't show the gap.
Correct.
Okay, so we show the gap.
The intent would be, at the time of budget adoption,
that we would need those funds.
those funds are what we're using okay thank you did you have additional
questions go ahead I had a different question but now I have another one so
are we making that decision today as to where like the different scenarios or is
this where are we trying to get to at the end we're trying to come up with
general policy provisions that they can then use with the investment advisors and
use in their budgeting process and which would then come back to finance
committee which would then come back to say yeah and more specifically what
we're asking is exhibit a in the staff report that you adopt that via the
resolution and to council member to mayor pro tem Wilkes point that the
actual dollar amount would be reviewed with finance committee would be reviewed
with council and it would be pursuant to the policy does that answer your
questions? Councilmember Definney? Mayor Pro Tem? Folks on my left? No I'm just
getting through our questions and now it's time for public comment. Anyone?
Anyone? Seeing nobody. I'll bring it back up here for discussion. Who wants to go
first? I didn't have a lot of questions because we asked the questions when we
were at the Finance Committee and I appreciate all the work that you've put
into this it I remember when we talked about this at City Council and this was
the exact scenario we're looking at we were hoping that we were going to be
having no deficit or potential deficits on the budget for a few more years but
this is the time to do it especially when when the residents want to make
sure that we continue to operate the city as we as we currently have and so
the fact that we've got this pension reserve and made the prudent decision
when we had $13 million in one-time uses
and literally saved it away for that rainy day
rather than put it toward the pool fund, for example,
or put it toward other things we wanted to do,
it was because of this, and it was prudent,
and so I support the recommendation.
I'll go ahead as the second finance committee member.
I look at this, you guys have done a tremendous amount
work helping us see the coming challenge and then coming up with these policies
I think of this as like our one-time money goes for one-time uses. These are
guiding principles that our council and future councils will use on an annual
basis to meet the objective of shaving the top off the mountain and making sure
that we keep looking ahead at the mountain because the mountain could grow
the mountain could shrink but making sure we keep looking ahead at the
making sure we're still making prudent decisions that continue to use the fund
in a way that helps us maintain the services that people expect, but not use
it in ways that increase expenditures on things above and beyond the baseline and
not use it as a way to allow people to spend a lot of money on other things in
good years. They wanted, you know, we need to continue to use our fiscal
Discipline that the city is known for as a way to use this money as effectively over a period of time
But give direction to staff that we do intend to use the money
And so I'm supportive of these policies
Thank you very much for the presentation and for making CalPERS
Seemingly understandable of course once we go through that door it'll all go out my I
I support the policy, I particularly support if we remember that this is not to ensure
that there are no general fund cuts, this is to ensure that we can reduce the pain during
deficit years by absorbing the truly rising UAL costs or pension costs absorb it with
these funds, which they were intended for.
I really want to think long this has been come about for 10 12 15 years this
conversation of how are we going to manage this because you could see it
coming you could see it coming particularly after the 2009 recession
and I just want to say Mountain House because CalPERS was invested in property
and they were empty homes and the mortgage industry I mean that's what
part of that negative number is, as I recall. I also want to complement our
predecessors because many of the communities that were you were
comparing not only are sitting with these retirement problems but also
retiree health that has a same or bigger problem of funding gaps and so they're
significantly in a challenging times so thank you thank you for the work and
hopefully we will be able to provide this as guidance to looking forward to
seeing what the budget recommendations are. I agree I don't have a lot more to
add I'm appreciative of my predecessors I think two of them were on the council
that made the decision to fund the pension trust still stuck a little bit on
maintaining the service levels but I'll let it go I know it can only be used for
pension liabilities. Obviously we're going to be facing some other budget, hard
budget decisions it looks like in the next five to ten years. I guess the only
other point of caution I would make and given how fluid everything's been in
this area is maybe we don't want to get too far ahead of the curve on this
because who knows if a lot if all the cities in the state are dealing with it
and they don't have a pension trust fund one would think there may be some
changes like switch back to 30 years or some other legislative fix that we're
not thinking about that I'm not sure we want to be the a student on this I we
already are because we have the pension trust fund but maybe if that can just
factor into our real-world application of it and I know that we will we'll be
watching kind of what the state's doing on this and not and making sure that
we're in sync with kind of those changes in policy.
Council Member Definney.
I'd like to echo Council Member Francois' comments
about thanking our predecessors for putting the money aside.
And also, I think that's a good point,
that if all these cities are yet to,
if they're not prepared for this,
then there may be legislation down the road that
makes this a little easier on us.
So not jumping right out to start the curve as soon
as possible but maybe holding off for as long as we can balance the budget but
thank you all right thank you does anybody want to make a motion we need to
adopt it and adopt the resolution well as member of the Finance Committee I
moved to accept the report and adopt the resolution establishing the pension
trust and reserve use policy as recommended by the Finance Committee
second call the roll please mayor pro tem will aye council member Silva aye
Councilmember Davenny. Aye. Councilmember Francois. Aye. And Mayor Darling. Aye. And thank you
guys so much. This is a tremendous amount of work here. Thank you. And I think with
that we are adjourned.