4/3 Exec Summary

FINANCE AND INFRASTRUCTURE COMMITTEE

Executive Summary

June 13, 2001

The meeting was convened at 2:45 P.M.

Item c was referred to the City Council meeting of June 19, 2001 and partial minutes were distributed earlier.

a. Consent Items:

1. Monthly Investment Report for April 2001 (Finance)

2. Investment Committee Minutes for May 29, 2001 (Finance)

Upon motion of Councilmember Reed, seconded by Councilmember Diquisto, the Committee approved the Consent Item.

b. Monthly Financial Report for April 2001 (Manager)

Upon motion of Councilmember Diquisto, seconded by Councilmember Campos, the Committee accepted the staff report.

d. Proposed Changes to Investment Policy (Finance)

Upon motion of Councilmember Diquisto, seconded by Councilmember Reed, the Committee accepted the staff report.

e. General Airport Revenue Bonds, Series 2001A – Plan of Finance (Finance)

[Finance & Infrastructure Committee Deferral from 5/23/01]

Upon motion of Councilmember Reed, seconded by Councilmember Diquisto, the Committee accepted the staff report.

f. Annual Capital Project Completion Status Report (Public Works)

[Recommended Deferral to September 26, 2001]

Upon motion of Councilmember Reed, seconded by Councilmember Campos, the Committee deferred the report to September 26, 2001.

g. Oral Petitions

Bill Garbett, Public spoke on airport runway construction.

h. Adjournment

The Committee was adjourned at 3:35 P.M.

Councilmember Pat Dando, Chair,

Finance and Infrastructure Committee

FINANCE AND INFRASTRUCTURE COMMITTEE

Meeting Report

June 13, 2001

PRESENT: Chair Pat Dando, Councilmember Chuck Reed, Councilmember John Diquisto, Councilmember Nora Campos

ABSENT: None

5 STAFF: Kay Winer, Bill Hughes, Jerry Silva, Scott Johnson, David Baum, Lisa Fedeli, Ralph Tonseth, Danielle Kenealley, Terri Gomes, Larry Lisenbee, Jessica Batinich, Mike Ryder

The meeting was convened at 2:45 P.M.

Item c was referred to the City Council meeting of June 19, 2001 and partial minutes were distributed earlier.

a. Consent Items:

3. Monthly Investment Report for April 2001 (Finance)

4. Investment Committee Minutes for May 29, 2001 (Finance)

Councilmember Reed asked why there is such a big difference between the actual and the variance amounts as shown in the fiscal year-to-date investment earnings budget.

Jessica Batinich, Finance Department answered that investment earnings are not budgeted for some of the funds. The one that staff concentrates on is the General Fund. Staff works with the Redevelopment Agency to estimate what the earnings will be for them. These projections are reviewed throughout the year.

Councilmember Reed asked if staff expects to see negative variances when the economy slows down.

Jessica answered that staff attempts to project conservatively and as a result, negative variances should not occur.

Upon motion of Councilmember Reed, seconded by Councilmember Diquisto, the Committee approved the Consent Item.

b. Monthly Financial Report for April 2001 (Manager)

Larry Lisenbee, Budget Director gave an overview of the report. He stated that this report is virtually the same as the report that was presented to the Finance Committee 2 weeks ago. The only revenues that seem to show an early indication of a slowdown are the TOT tax and the development fee revenue. Staff should have a better sense of what is happening in the economy by the middle of August.

Councilmember Campos asked what a slowdown in the economy would mean with regards to revenues from the State.

Larry answered the City’s biggest source from the State is the portion from the Motor Vehicle taxes. This is not a local tax and depends on what happens with new car sales.

Councilmember Campos asked how end of the year clean-up actions would affect Public Works.

Larry answered that staff was able to stay within budget for Public Works and there was no net problem.

Councilmember Campos asked how the Construction and Conveyance (C&C) tax would affect the upcoming projects.

Larry answered that staff will be raising the revenue estimate for this during the year-end clean up.

Chair Dando asked if the C&C fund would remain consistent with projections.

Larry answered that it has been a volatile fund in the past and is hard to predict.

Upon motion of Councilmember Diquisto, seconded by Councilmember Campos, the Committee accepted the staff report.

d. Proposed Changes to Investment Policy (Finance)

Jessica stated that the Statement of Investment Policy is brought before the Finance Committee and City Council annually. This year staff is only recommending that the policy be updated to reflect the acquisition of Thomson Bank Watch rating service and the Duff & Phelps rating service by Fitch, Inc. No other changes are being recommended.

Upon motion of Councilmember Diquisto, seconded by Councilmember Reed, the Committee accepted the staff report.

e. General Airport Revenue Bonds, Series 2001A – Plan of Finance (Finance)

[Finance & Infrastructure Committee Deferral from 5/23/01]

Scott Johnson presented an overview of the staff recommendations for the plan of finance and described the two Runway projects for the Committee.

Terri Gomes, Deputy Director of Aviation provided a description of the financing proposal for the Runway projects, the Financing Plan and the estimated Sources & Uses of funds.

Scott Johnson then gave an overview of the new Master Trust Agreement, the Guaranteed Investment Agreements options and the financing schedule.

Councilmember Reed asked how the intermittent receipt of funds from the Federal Government affects the City’s payment schedule.

Terri Gomes answered that payments are made over a 10-year period. There is a separate fund for grant money and debt payments are made from this fund.

Chair Dando asked if debt payments would ever come from the General Fund.

Terri Gomes answered that funds come first from the Airport Improvement Program (AIP), then the Passenger Facility Charges (PFC) and then from Airline Rates & Charges. No payments will be made from the General Fund.

Councilmember Reed asked if the PFC would cover the debt if the next City Administration decided it did not want to support the Runway project.

Terri answered yes, the PFC would cover the debt.