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Home My WebLink AboutSS1 - Amending the City Charter Regarding Majority Voter Approval of Certain DebtTO: FROM: CITY OF NEWPORT BEACH City Council Staff Report PREPARED BY: PHONE: TITLE: ABSTRACT: June 26, 2018 Study Session Agenda Item No. SS1 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL Dave Kiff, City Manager - 949-644-3001, dkiff@newportbeachca.gov Dave Kiff, City Manager 949-644-3001 Discussion Relating to Amending the City Charter Regarding Majority Voter Approval of Certain Debt Council members have discussed placing a measure before the Newport Beach electorate that would ask to amend the City Charter with language that prohibits the issuance of certain amounts of lease -revenue bonds, such as Certificates of Participation (COPs), without majority voter approval. This Study Session item and staff report should be used as background information to a companion item from the City Clerk on the evening's Regular Session agenda. The Clerk's item would, if adopted by the Council, place a ballot measure on the November 2018 General Election ballot. Readers should review both items. RECOMMENDATION: (a) Discuss a proposed City Charter amendment relating to voter -approval of certain types of lease -revenue bond or COP debt. (b) If Council desires to place an item on the November 2018 ballot, Council should "straw vote" the dollar amount threshold as well as any other text in the proposed measure during Study Session to allow staff a brief period to make necessary edits to the June 26, 2018 Regular Session's companion item. FUNDING REQUIREMENTS: Should the Council place this item on the ballot, some costs (TBD) would be incurred associated with ballot text (the measure itself, arguments for and against, and more) as a reimbursement to the Orange County Registrar of Voters. SSI -1 Discussion Relating to Amending the City Charter Regarding Majority Voter Approval of Certain Debt June 26, 2018 Page 2 DISCUSSION: The City Charter is a document dating back to the 1950s, and sets forth how the operations of Newport Beach's municipal government may legally vary from the "general laws" of the State of California. A case in point is the number of Council Members — with seven Council members, Newport Beach is different from most General Law cities who have five. The "Greenlight" measure relating to traffic and density is also part of the City's Charter. Just as the voters of Newport Beach approved the Charter, the voters can be asked to amend the Charter, and have done so multiple times since the Charter's initial adoption. Following the completion of the Newport Beach Civic Center and Park Project, a number of residents and others expressed concern about the cost of the project along with its financing method. The approximately $140 million Project included a library expansion, a pedestrian bridge, a new city hall, a park, and a parking structure. Table 1 shows how the Civic Center was funded: Table 1 — Civic Center and Park Funding Certificates of Participation Series A (tax-exempt) Issuance $ Nov Balance 2010 20,085,000 $ Year of (est) Final 6-30-2019 Payment 410,000 2041 Series B (taxable & has BABs subsidy) $ 106,575,000 $ 103,595,000 2041 Less refunding of Library COPS $ (3,900,000) N/A N/A Cash $ 17,240,000 Totals (Issuance, Debt Remaining) $ 140,000,000 1 $ 104,005,000 The COPs were issued in November 2010, using a combination of tax-exempt (the Series A bonds) and taxable (Series B). At the time (and continuing today), the US Government was offering a subsidy to assist in reducing interest costs for the taxable bonds, associated with the Build America Bond recovery program. This "BABs subsidy" today reduces the City's cost on the Series B bonds by about $2.3M/year. The overall cost of servicing the debt today, net of the BABs subsidy, is about $8.2M/year. The Civic Center and Park Project was the largest capital project ever done by the City. The project was controversial from the beginning, as the voters in February 2008 eventually narrowly (53%-47%) approved a charter amendment changing the location of City Hall to its current site off of Avocado. In the 2-3 years preceding the Measure B effort, the City Council, city staff and others had been planning to renovate and expand the "old city hall" at 3300 Newport Boulevard. Over $500,000 in design work had been spent by February 2008 to do the renovation at 3300 Newport Boulevard. By the time City staffers moved into the new Civic Center in April 2013, the final costs for the Civic Center and Park Project had expanded significantly from materials provided by the "pro" Measure B campaign. The Project had become more than a City Hall, and involved a full design competition that eventually resulted in the design we see today at 100 Civic Center Drive. SSI -2 Discussion Relating to Amending the City Charter Regarding Majority Voter Approval of Certain Debt June 26, 2018 Page 3 But many in the community did not believe that the Project warranted that level of expense. Others wondered if, had the financing instrument used to fund it had gone before the voters, the project could have been scaled back or rejected. The Civic Center's funding mechanism is common, but complex and controversial to some. In laypersons' terms, it involves a lease -revenue arrangement known as Certificates of Participation or COPs. To fund the debt repayments for the COPs, a public agency creates a lease stream by leasing its own facilities back to itself (in actuality, a different public facilities corporation is created to hold the facilities). The facilities themselves are offered as collateral to the bondholders, and eventually when the debt is repaid, the facilities revert to the public agency unencumbered by the lease. Because there is no "general obligation" made to the taxpayers of the organization to pay back the debt, voter approval has not been required (as would be the case with with General Obligation Bonds, which are a "general obligation" of the city government and result in an increase in local property taxes). Newport Beach's history of debt. Newport Beach has used various types of debt to accomplish projects. Rather than fill up this staff report, a summary (admittedly incomplete) of related debt is shown as Attachment B. About this Proposal. Moving to 2018 and reflective of the Civic Center's cost and financing, members of the Newport Beach City Council recently asked staff to bring forward City Charter language that could be placed before the voters in November 2018 relating to voter -approval before lease -revenue instruments like COPs could be issued. Staff from the Finance Department, the City Manager's office, the City Attorney's Office, and others worked on the attached language (Attachment A). In summary, the new City Charter language would say that, if placed on the November 2018 ballot and if adopted by a majority of the Newport Beach voters: • Majority -voter approval would be required were the City to issue COPs or related lease -revenue debt if the amount of the issuance was over $ million. • The limitation reflects a specific project's debt issuance, versus a cumulative limit reflecting multiple separate projects where debt is used. • Policy makers cannot piecemeal a project to avoid going before the voters. • In the event of a national, state, or local emergency where public infrastructure was damaged, COPs or other lease -revenue debt of any amount could be issued to repair damaged public infrastructure without going before the voters for approval. • The refinancing or refunding of existing lease -revenue or COP debt would be exempt from voter approval. SSI -3 Discussion Relating to Amending the City Charter Regarding Majority Voter Approval of Certain Debt June 26, 2018 Page 4 What should be the appropriate dollar threshold? The dollar amount in the proposed measure is specifically left blank for the Council to discuss it, should the Council wish to place this on the ballot. The history of our City's debt, and the history of our capital projects, gives us some indication as to what projects could be subject to majority voter approval. What's Already Done (or in Process). In Table 2, readers can see a summary of the costs of various projects that have been completed in recent years, are nearing bidding today, or are on the near horizon. Table 2 — Selected Large Capital Projects since 1990 1 Capital • •0Newport -Large Project Project Included Year Completed TBD Total Cost Funding Source(s) Fire Station #2 (Lido) Replacement Fire Station & Land Purchase $13M (est) Cash (proposed) Fire Station #5, w/Library Replacement Fire Station & Library in CdM 2019 (est) $8.8 M (est) Cash Balboa Island Sea Wall Cap Sea wall cap around Balboa Island (9" to 6") 2018 $2.5M Cash Balboa Island/Park Ave Bride Bridge and utilities between Little and BI 2017 $9.OM Cash from US Gov't grant Marina Park Park, Sailing Center, Community Center, 2014 $36.5M Cash Marina City Hall, Library Expansion, Park, Parking COPS: $122,760,000 Newport Beach Civic Center Lot, Pedestrian Bridge, Dog Park 2013 $140M Cash: $17,200,000 Sunset Ridge Park Active Park w/Ballfields 2012 $13.3M Cash OASIS Center Reconstruction Senior Center, parking, gardens, Events 2010 $15.58M Cash, donations from Center HOAG and The Irvine Co Fire Station #7 - SAH Fire Station, Training Facility, Training Room 2007 $11.9M County RDA funds Mariner's Library Library, Community Room 2006 $7.3M Cash, State Grant, Donations Back Bay Science Center Educational space, OC HCA Water Testing 2003 $5.8M Cash, partner grants lab, CDF&W wing Newport Coast Community Center Community Center, Gymnasium 2003 $7.OM Cash from IRWD agreement Bonita Canyon Sports Park Active Park w/Ballfields 2002 $7.SM CFD Issuance Potable Water Delivery System Reservoirs, pipes, pumps, wells in FV 1995 $17.1M Water Revenue Bonds Central Library Library facility, Friends Room - value 1992 $14.OM COPS: $7,500,000 included land swap Donations: $61500,000 (est) What's in the Medium- and Long -Term Horizon. In the nearby tables, readers can see that a,>$10M threshold might include fire station construction, if land is included and if no cash is used. A >$50M threshold would likely exclude all projects in the relatively near horizon except possibly the replacement of the Newport Beach Police Headquarters. Table 3 shows items from the current Facilities Financing Plan, which has these projects on the medium-term and long-term horizon that could involve debt issuances (but may not have to, depending on resources) - SSI -4 Discussion Relating to Amending the City Charter Regarding Majority Voter Approval of Certain Debt June 26, 2018 Page 5 Table 3 — Projects on the Facilities Financing Plan Project Police Station New v. Replacement? Replacement Est Yearw/inflation $ Cost @ Start 76,735,000 Design Start Year 2032 Lifeguard HQ Replacement $ 8,000,000 2038 IS #8 -Newport Coast Replacement $ 18,000,000 2042 Central Library Replacement $ 90,916,000 2049 FS #7 - SAH Replacement $ 14,311,000 2054 Newport Coast Community Center Replacement $ 26,600,000 2054 OASIS Sr Center Replacement $ 73,675,000 1 2057 Similarly, the Harbors and Beaches Master Plan has these projects on the horizon (Table 4) that are of significant dollar amounts: Table 4 — Projects on the Harbors and Beaches Master Plan Project Balboa Yacht Basin slips New v. Replacement Est $ Cost @ Start 7,155,000 Est Sta 2022 Balboa Island Sea Walls Replacement $ 69,800,000 26237 -- Part 1 Replacement $ 20,300,000 2026 -= Part 2 Replacement $ 22,900,000 2031 -- Part'3 Replacement $ 26,600,000 2037 Dredge Upper Bay Catch Basins Dredge Existing $ 20,173,000 2030 Dredge Upper Bay Channels Dredge Existing $ 11,133,000 2030 Bulkheads - West Newport Replacement $ 11,500,000 2041 Bulkheads - Promontory Bay Replacement $ 8,570,000 2045 Bulkheads -Peninsula Bulkheads - BYB Bulkheads - Marina Park Replacement Replacement Replacement $ $ $ 21,530,000 16,600,000 21,800,000 2056 2065 2095 Given that the dollars in the two project charts reflect estimated costs at the time when construction would start, it is important to consider the voter threshold as inflated as well. Table 5 assumes 2.5% inflation annually: SSI -5 Discussion Relating to Amending the City Charter Regarding Majority Voter Approval of Certain Debt June 26, 2018 Page 6 Table 5 - Cost -of -Living Related Adjustments to the Threshold Over Time What Supporters and Opponents of Voter -Approved COP Debt Say. Supporters of measures such as this one may say: • Certificates of Participation appear to be an "end -around" seeking voter approval for debt, which would otherwise be required if this was "General Obligation" debt applied to the property tax rolls. • Having the voters weigh in on new debt better ensures that a large capital project has widespread community support. • In the case of the Civic Center and Park project, had the debt gone before the voters, it is possible that the project itself would have been scaled back. Opponents of measures such as this one may say: • COPs are a typical debt instrument used by many municipalities, and voter approval is not required there, given that the levy is not applied to the property tax base. • Elected representatives can make a proper analysis as to a municipality's ability to take on debt and then act on behalf of the electorate in this instance. • If a specific improvement proposed to be funded by debt benefits a limited portion of the electorate in a more significant way than the larger electorate - such as a neighborhood fire station's construction - the larger electorate may not be as likely to approve it. Finally, there was an assertion recently that this subject has been to the Finance Committee, and not acted upon for a period of time. This matter has not been before the Finance Committee for discussion except for within the last two weeks. At its meeting of June 14, 2018, the Finance Committee was advised by the City Attorney's Office not to discuss the concept so as to avoid a potential Brown Act violation. Should the City Council wish to pursue placing this measure on the ballot for November, it must do so no later than 88 days prior to the November 6th, 2018 General Election (88 days prior is August 10, 2018). A companion agenda item from the City Clerk on the Tuesday, June 26th, 2018 Regular Session agenda contains the elements required to place the measure on the ballot. SSI -6 Amount Inflation Assumption $ 25, 000,000 $ 36, 207, 454 $ 52, 439,189 $ 85, 927, 718 $ 40, 000,000 $ 57, 931, 927 $ 83, 902, 703 $ 137, 484, 349 $ 50, 000, 000 $ 72, 414, 908 $ 104, 878, 379 $ 171, 855, 436 $ 60, 000, 000 $ 86, 897, 890 $ 125, 854, 055 $ 206, 226, 523 What Supporters and Opponents of Voter -Approved COP Debt Say. Supporters of measures such as this one may say: • Certificates of Participation appear to be an "end -around" seeking voter approval for debt, which would otherwise be required if this was "General Obligation" debt applied to the property tax rolls. • Having the voters weigh in on new debt better ensures that a large capital project has widespread community support. • In the case of the Civic Center and Park project, had the debt gone before the voters, it is possible that the project itself would have been scaled back. Opponents of measures such as this one may say: • COPs are a typical debt instrument used by many municipalities, and voter approval is not required there, given that the levy is not applied to the property tax base. • Elected representatives can make a proper analysis as to a municipality's ability to take on debt and then act on behalf of the electorate in this instance. • If a specific improvement proposed to be funded by debt benefits a limited portion of the electorate in a more significant way than the larger electorate - such as a neighborhood fire station's construction - the larger electorate may not be as likely to approve it. Finally, there was an assertion recently that this subject has been to the Finance Committee, and not acted upon for a period of time. This matter has not been before the Finance Committee for discussion except for within the last two weeks. At its meeting of June 14, 2018, the Finance Committee was advised by the City Attorney's Office not to discuss the concept so as to avoid a potential Brown Act violation. Should the City Council wish to pursue placing this measure on the ballot for November, it must do so no later than 88 days prior to the November 6th, 2018 General Election (88 days prior is August 10, 2018). A companion agenda item from the City Clerk on the Tuesday, June 26th, 2018 Regular Session agenda contains the elements required to place the measure on the ballot. SSI -6 Discussion Relating to Amending the City Charter Regarding Majority Voter Approval of Certain Debt June 26, 2018 Page 7 ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). ATTACHMENTS: Attachment A - Redline of Proposed Charter Amendment Attachment B — Short History of Debt in Newport Beach SSI -7 Attachment A Text of Proposed Charter Amendment NOTE: Proposed new text is underlined, and proposed deletions are in "stKikeeHt" Section 1109 Limitations on Debt, Voter Approval (a) General Obligation Bonds. The City shall not incur an indebtedness evidenced by general obligation bonds which shall in the aggregate exceed the sum of fifteen percent 1(5 of the total assessed valuation, for purposes of City taxation, of all the real and personal property within the City. No bonded indebtedness which shall constitute a general obligation of the City may be created unless authorized by the affirmative votes of two-thirds (2/3) of the electors voting on such proposition at any election at which the question is submitted to the electors and unless in full compliance with the provisions of the State Constitution and of this Charter. (b) Debt Issuance Limit on Certificates of Participation or Lease -Revenue Bonds. On or after January 1, 2019, the City may not issue Certificates of Participation or Lease -Revenue Bonds funded via a leaseback arrangement at an amount over million dollars ($)(- 000,000.00), adjusted annually beginning January 1, 2019 by the US Bureau of Labor Statistics' Final Demand—Construction Index (WPUFD43 or its successor), to fund a Single Capital Project unless the debt issuance is first authorized by majority voter approval of the electors voting on such question at any election at which the question is submitted to the electors. A Single Capital Prosect shall not be piecemealed to circumvent this voter -approved debt requirement. (1) If Lease -Revenue Bonds are issued for a Single Capital Project in an amount less than million dollars ($XX 000,000.00, as adjusted annually per this Subsection), and further Lease -Revenue Bonds are proposed for a separate Single Capital Project, the subsequent issuance is not subject to the voter approval requirement unless the subsequent issuance alone exceeds million dollars ($XX,000,000.00, as adjusted annually per this Subsection). (2) For purposes of this section, the following terms shall be defined as follows: (i) "City" shall mean the City Council or any entity created, controlled, or managed by the City of Newport Beach or City Council: (ii) "Certificate of Participation" shall mean a financial instrument that provides an investor a share of, or interest in, lease revenue: (iii) "Lease -Revenue Bond" shall mean a bond, note or other financial instrument secured by lease payments: and (iv) "Single Capital Project" shall mean a project where all project elements are analyzed under a single California Environmental Quality Act review. (c) Disaster Exemption. The voter -approval requirement in Subsection "b" above shall not apply to Certificates of Participation or Lease -Revenue Bonds that fund design, replacement, construction, and/or repairs to public infrastructure damaged by a disaster that also includes: (1) a declaration by the President of the United States of a national SSI -8 emergency: (2) a declaration by the Governor of a State emergency: or (3) a declaration by the City Council of a local emergency. (d) Refinancing Exemption. The voter approval requirement in Subsection "b" above shall not apply to the refinancing of existing General Obligation Bonds, Certificates of Participation, Lease -Revenue Bonds, or any other debt. SSI -9 Attachment B A Brief (and Incomplete) History of Debt in Newport Beach Bonds of $5,000 were used in 1905 to build a school house. $40,000 in water bonds purchased Newport Beach's first water system in 1909. Water bonds of $25,000 were issued in 1923 to bring potable water to Balboa Island. The Balboa Island sewer system was funded with $145,000 in bonds in 1923. Newport harbor's jetties were funded by $700,000 in bonds in 1927 and 1928. $1.16 million from FDR's "New Deal" National Recovery Act of 1930 helped dredge the harbor, but another $640,000 in local bonds matched it. In 1949, the City's "old" City Hall building was paid for by selling property acquired by tax defaults - hundreds of them in Corona del Mar. At the time, furnishings were $100,000 while construction was $269,000. Up until the November 2010 Civic Center project, the City had managed its finances with limited issuances of COPS, but with fairly frequent use of other debt that the City officially classified in its financial statements (including the Comprehensive Annual Financial Reports or CAFRs and their predecessors) as long-term debt. To get a sense of our more recent past, staff reviewed the City's financial reports since 1990, giving slightly more than 27 years of debt and loan history for the City: 1990, 1991 - In the 1990 General Purpose Financial Statements (GPFS), the predecessor to the CAFR, we report the 1988 issuance of about $535,000 in COPS "to fund, in part, the acquisition of the Cannery Village parking facility" ($535K in 1988 = $1.16M in 2018). That same year, we also reported "Capitalized Leases" whereby "the City entered into lease purchase agreements (of $820,427) for computers and a fire dispatch system. Annual lease payments approximate $81,200.00." That amount expanded slightly in 1991 (to $958,456) for "several lease purchase agreements .... of a geo-base information and mapping system and upgrades to (our) financial management system software and equipment to upgrade the City's data processing system. The terms of the leases are three and five years which are payable monthly. The interest rates on these obligations range from 7-9%." Many of the GPFSs in the late 1980s and beyond report a Note Payable to the California Department of Boating and Waterways starting in 1987 for a loan (generally to construct improvements at the Balboa Yacht Basin) of $3,300,000. The note was payable over thirty years at 4.5% interest, and is now paid off. 1992 — In 1992, the "Newport Beach Public Facilities Corporation" issued $7,500,000 of COPS to finance the construction of the Central Library ($7.5M in 1992 = $13.66M in 2018). Lease payments began in May 1994 and were expected to continue through June 2019 with interest rates at the time ranging from 6% to 6.2%. The remaining roughly $3.9M in Library COPS were refinanced as a part of the 2010 Civic Center COP financing (Series A). 1995 — In this CAFR, the City discusses the issuance of $4,300,000 of Tax Revenue Anticipation Notes (TRANS) ($4.3M in 1995 = $7.2M in 2018). During this period, the City and many other California municipalities had cash flow problems following the recession, the Orange County bankruptcy, and State -directed shifts of property tax allocations from counties and cities to schools (ERAF). The CAFR reports that "the notes were issued October 15, 1994 to supplement the City's pooled cash and investments used to fund the (FY) 1994-95 (City) General Fund SSI -10 current, capital and debt service expenditures. The notes bear an interest rate of 5%. The notes were retired on October 15, 1995, including interest paid of $215,000." 1996 - In this CAFR, the City notes the issuance in 1995 of $17,100,000 of Water Revenue Bonds "to finance the construction and acquisition of water storage and transmission facilities." ($17.1 M in 1995 = $28.6M in 2018) This is the project that allowed the City to use the Orange County Water District's (OCWD's) groundwater basin by establishing four well sites in Fountain Valley, the transmission lines from the wells to 16th Street, and the underground reservoir and related water treatment facilities at the 16th Street Corporate Yard. The bonds were issued at 5.375-5.4%, and projected 15 years of annual principal payments. 1997 —In this CAFR, the City notes "Rolling Stock Leases. In current and prior fiscal years, the City entered into five lease -purchase agreements, payable annually, .... for the acquisition of a fire truck, heavy duty pumper fire apparatus, two air sweepers, a street sweeper, a crane and two trucks. The term of each lease is five years and each is payable annually. The interest rate for each lease is between 4.98% and 6.98%. The lease agreements qualify as capital leases for accounting purposes .... The assets acquired, totaling $2,394,942, were classified as equipment in the Equipment Maintenance Internal Service Fund (ISF)." 1998 — In this CAFR, the City discusses a Lease Agreement on November 26, 1996 in the amount of $1,759,561 "for each phase of (a) police information equipment (Computer -Aided Dispatch) installation. The equipment is pledged as collateral. The lease is payable in five annual installments of $411,144 ending in July 2001. The lease bears interest at the rate of 5.33%." That same year, the City added assets of $667,215 to its Rolling Stock Leases for "financing the acquisition of a heavy duty street maintenance vehicles." The term of each lease was 5 years with interest set at between 4.98% and 6.98%. 1999 — In this CAFR, the City notes a Lease Agreement of January 7, 1999 of $1,950,944 to "finance a public safety communication system connecting with other participating public safety agencies to provide dispatch and other mobile equipment.... the equipment is pledged as collateral." Lease payable in four annual installments of $546,870 ending July 1, 2002 at an interest rate of 4.6%. "This lease qualifies as a capital lease for accounting purposes ... and has been recorded in the General Fixed Assets Account Group." Additionally, the 1992 Library COPS were refunded in FY 1998-99 to "reduce total debt service payments over the next 20 years by $690,228 and resulted in an economic gain of $495,745." In 1998-99, the City refunded the 1996 Water Revenue Bonds by issuing $14,225,000 in Refunding Water Revenue Bonds. This "reduced total debt service payments over a ten-year period by $481,153 and resulted in an economic gain of $418,469. Interest was at 3.6% to 4.5%. These bonds and all water -related debt was retired by 2010. 2002 — In this CAFR, the City lists a new item under Long Term Debt Transactions — that being "Pre -Annexation Agreement." This was booked as a long-term debt but was a receipt of funds from the Irvine Ranch Water District (IRWD) of $25,000,000 that the City divided up into $18,000,000 for modest relief of Newport Coast residents' Mello -Roos tax payments over 18 years plus $7,000,000 to construct the Newport Coast Community Center. These payments ended in 2017. 2003 — In this CAFR, the City lists a new long-term debt of $2,400,000 for a Section 108 "CDBG Loan" (Community Development Block Grant). This was structured as a loan made to ourselves from future CDBG allocations and was used to construct capital improvements (such as improved SSI -11 hardscape and landscaping) in the Balboa Village area. The loan was set at an interest rate of 6.5% with principal payments through June 30, 2023. This Loan was subsequently refinanced in 2015 with an average are of 1.5% and an economic benefit of $194,436. More rolling stock equipment leases were entered into in 2003, and later CAFRs note that this was for the purpose of "heavy duty street maintenance vehicles and fire trucks" with lease terms of five years at 2.72%. At this point in time, assets acquired through capital leases totaled $6,754,827. As of today (2018) we no longer have rolling stock equipment leases, and instead cash -fund vehicle purchases using funds saved for that purpose in the Equipment Replacement Internal Service Fund (ISF). 2004 — In this CAFR, no new long-term financings were added, but readers can get a sense of the items and amounts spoken to above. In the below list, the first item is the Library COP, then the Balboa Yacht Basin note, then the Newport Coast Mello -Roos relief allocation, then the Balboa Village CDBG loan, then capital leases such as equipment and rolling stock, then other items we would not classify as debt (but still long-term liabilities). Finally, the 1998-99 Refunding Water Revenue Bonds are listed at an ending balance of $8,535,000. (6) Long -Term Debt Changes in Lono-Term Liabilities Long-term liability for the year ended June 30, 2004, was as follows: Amounts Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental activities Certificates of participation payable $ 6,110,000 $ - $ (265,000) $ 5,845,000 $ 275,000 Note payable 2,082,483 - (143,350) 1,939,133 149,801 Pre -annexation agreement 16,800,000 - (1,200,000) 15,600,000 1,200,000 CDBG Loan 2,400,000 - (60,000) 2,340,000 64,000 Capital leases payable 1,293,586 - (430,611) 862,975 442,202 Workers compensations payable 7,326,000 5,433,852 (4,366,625) 8,393,227 2,499,547 Claims and judgements payable 4,285,236 416,109 (1,862,345) 2,839,000 2,350,383 Compensated absences 8,139,727 574,941 (918,644) 7,796,024 1,200,000 Total governmental activities 48,437,032 6,424,902 (9246,575) 45,615,359 8,180,933 Business -type activities: Water Revenue Bonds payable 9,765,000 - (1230.000) 8,535,000 1.280, Total $ 58.202.032 $ 6,424.902 $ (10,476.575) $ 54,150,359 $ 9,460,9 2007 — In this CAFR, the City lists a Purchase Agreement Payable with Caltrans for the purchase of the 15.05 -acre site now known as Sunset Ridge Park. The purchase price was $5M, to be paid in three annual installments at 4.75% interest. This is now paid off. 2010 — The 2010 CAFR's section on Long -Term Debt is noteworthy for the final payment and retirement of debt on the Refunding Water Revenue Bonds. It also includes notations about the Early Retirement Incentive Program (ERIP), which was authorized following significant reductions in operations resulting from the 2008-2010 recession. The ERIP involved 51 personnel and established an estimated $3,449,437 liability. The ERIP was not financed but funded over SSI -12 five annual installments of $950,000 from the savings associated with the salary reductions of the personnel no longer employed. 2011 — In this CAFR, the 2010 Civic Center COPS are listed in the Long -Term Debt section. The CAFR notes that the City issued "$20,085,000 of Series 2010A (Tax Exempt) and $106,575,000 of Series 2010B (Federally Taxable Direct Pay "Build America Bonds") COPs. The Series 2010A COPS were used to prepay the $3,990,000 principal outstanding on the 1998 Library COPS. This refunding was undertaken to reduce total debt service payments over the next nine years by $1,084,556 and resulted in an NPV savings of $429,500. Accordingly, the 1998 Library COPS have been defeased...." The Series 2010A COPS have interest rates of "2.00 to 4.00%, while the Series 2010B COPS rates range from 4.45% to 7.17%. ... The Series 2010B COPS are designated as Build America Bonds (BABs) under the provisions of the American Recovery and Reinvestment Act of 2009, and involved interest subsidy of up to 35% of the interest payable on the BABs totaling $53,292,850." Net of the interest subsidy, the 2010 COPS have an all -in total interest cost of 4.44%. Still in the 2011 CAFR, the Long -Term Debt section notes a Purchase Agreement Payable for the purchase of "two adjacent parcels of land located at 608 East Balboa Boulevard and 209 Washington Street" (aka the old Balboa Market and now called the Palm Street Parking Lot) at a purchase price of $3.5 million. The City paid $2 million at close of escrow with the remaining $1.5 million paid in two annual installments with a 2% interest. The Purchase Agreement was paid in full the following year and the 2012 CAFR notes "no outstanding balance at June 30, 2012." 2013 — In this CAFR, the second retirement -related incentive appears under Long -Term Debt as the Voluntary Separation Incentive Program (VSIP). In FY 2012-13, the City approved and implemented the VSIP for an additional reduction of staff and continued review/restructure of the City's workforce. A total of 21 employees participated in the VSIP. Note: These debt or loan or lease examples do not include or address "Limited Obligation Bonds" that are listed on the City's CAFR over the years, including multiple Utility Undergrounding Assessment District bonds, Hoag Hospital health facilities construction bonds, or the 1995 -era Circulation Improvement and Open Space Agreement (CIOSA) bonds which are similar to Community Facilities District (CFD) bonds. The CIOSA gave the City $14,395,572 in a loan to be used only for certain transportation and circulation improvements associated with or caused by the new development. The City agreed to match the contribution (without interest) by pledging 50% of future Fair Share Fees (developer impact fees). SSI -13