Yesterday, Roy Moore, weighed in on the downtown parking structure and unfunded pension liabilities… tying them together in a most sensible way. With permission, here is the heart of Roy’s message.
BreaNet, Issue #708
If I may, I would like to comment on the proposed parking structure to be built behind the Tower Building on Super Block A. In January 1999 the City Council approved construction of the buildings on Super Blocks A and B. At that time I argued for a parking structure.
We could have built it for five million dollars with Redevelopment money without disruption to existing businesses. The Tower Building would not have been empty for nine years. I still support such a parking structure. The Council has approved the concept but still is struggling with how to pay for it. It is apparent that tapping city reserves will be necessary.
I would submit that before this decision is made the City Council first formulate how to fund Brea’s unfunded liabilities. This most likely would have to look to these same reserves for a possible solution. This is no small problem. CalPERS currently reports that as of June 30, 2013 Brea’s unfunded liabilities are $108 million.
Although much has been done in recent years requiring city employees to contribute toward their maximum to cover their pensions it does not appear that this will totally solve the problem over the next 25 years.
Here is my recommendation for a possible solution. Brea’s landfill is an asset that I believe will generate revenues until at least 2040. The determinant on when to close the landfill is the height of the “trash mountain”.
There are two reserve funds as a result of the landfill.
The Capital Mitigation Improvement Fund (560 Fund) currently has a balance of $5.16 million. This fund was created by the $10.5 million payment from the Orange County Waste Management for the eight year extension of the landfill. I believe there will be at least two more extensions.
The original amount has already been reduced by 50% to make improvements to Valencia Avenue (valid use of funds), pay two solar bond payments (supposed to be paid from electricity savings) and the Birch Street medians.
The second landfill fund is the Community and Economic Development Fund (140 Fund) which currently has a balance of $3.48 million and results from revenues received for out-of-county trash deposits in our landfill at $1.50/ton. This amounts to in excess of one million dollars a year.
I recommend placing a large percentage (at least 50%) of these two funds (current balances and future growth) into a special unfunded liabilities account to earn interest and be used to periodically pay down our unfunded liabilities.
So what does this leave to fund a new parking structure?
Assume a structure for parking only, no affordable housing and a not-to-exceed cost of $9.0 million: 560 Fund – $2.5 million, 140 Fund – $1.2 million, 110 Fund (General Fund) – $3.0 million, Redevelopment funds – $3.8 million.
This adds up to a healthy $10.5 million.
Note: the redevelopment funds may not be available and depends upon the State Legislature approval of Governor Brown’s trailer bill. Using long term financing could make up the shortage using the annual growth in the 140 Fund to make the payments.
The bottom line is that it is possible to put in place a plan to cover our unfunded liabilities and also provide a new parking structure in the Downtown. How the financing is structured and whether any of the funds are a loan to the Downtown is up to Council.
For what it is worth that is my two cents on the subject. – Roy Moore
As always, thanks Roy.