City Finances Subject to Nation’s Volatility

• Council Members to Consider Halting Optional Studies

BY BILL KOENEKER

While Malibu city officials questioned whether the taxpayers’ money was safe and secure given the financial news of the past few weeks, Councilmember Sharon Barovsky called on the council to consider halting spending money on discretionary studies until revenue from the Lumber Yard shopping center is collected.
“We are committed to so many future projects. I would like to talk about holding in abeyance all discretionary studies until the lumber yard is opened,” said Barovsky, who got council members to agree to put the matter on the next agenda for discussion.
Since the city depends on much of its revenue from property tax and given the volatile markets including real estate, according to Barovsky, that steady revenue stream could suddenly drop if payments decline in some kind of dramatic fashion because of a reduction in property values.
Earlier, council members had called on Reva Feldman, the city’s administrative services director, for a briefing on the status of the municipality’s money in terms of what kind of financial shape the city is in.
“We are in pretty good shape,” replied Feldman, who explained that the city banks with Bank of America where its checking account is located.
Banks are required to insure 100 percent of whatever amount that is deposited in public funds, according to Feldman. “It is different than personal funds,” she added.
The balance of funds are kept by the Local Agency Investment Fund, a state-run agency where public entities can invest funds. “The funds are invested, but are very diversified. There is very little risk to city funds,” Feldman said. “It is not an area where we are investing in the high risk kinds of activity you have been hearing about.”
The city has two investments it is currently holding in addition to its investments at the LAIF, according to Feldman. The first investment of $3 million with the Federal Home Loan Bank is set to mature on April 2, 2009 and will yield three percent. The second investment of $2 million with the FHLB is set to mature on June 24, 2009 and will also yield three percent.
Feldman indicated that while those investments are not collateralized, “it is implied that the FHLB is backed by the federal government and the risk of loss is minimal.”
The majority of the city’s funds are held at LAIF, which is part of the state’s pooled money investment account. As of Sept. 30, 2008 the balance of city funds at LAIF was $19,817,803. The yield is 2.779 percent.
In a staff report to subcommittee members, Feldman goes on to explain how PMIA money is invested by the state treasurer. The PMIA portfolio consists of loans, commercial paper, time deposits, CDs, mortgages and treasuries.
Councilmember John Sibert, who sits on the council’s Administrative and Finance Subcommittee with Barovsky, said, “Still there is a lot of uncertainty. True, we don’t depend on sales taxes from big box stores.”
RWQCB INVITE
The council agreed unanimously to form a stormwater and wastewater ad hoc committee comprised of Sibert and Barovsky to make overtures to the Regional Water Quality Control Board.
Mayor Pamela Conley Ulich, who brought the matter before the council, said at various municipal meetings some staffers suggested that city officials collaborate with them.
“I requested a meeting with board members, but the executive officer Tracy Egoscue said I could not speak to them because of ex parte communication rules,” she said.
The mayor indicated she thought it might facilitate matters to form an ad hoc committee to try to deal with the matter.
The city and RWQCB have been at odds lately, and the state agency is considering rescinding a memo of understanding with the city about oversight of discharge permits. Currently, the city oversees permits for residential septic system discharges, but the RWQCB still oversees commercial permitting.
City council members and others have hinted the arrival of Egoscue, formerly the head of Santa Monica Baykeeper, has helped create a rocky relationship with the board given her previous advocacy position.
APOLOGY
Councilmember Jefferson Wagner said he wanted to apologize to any one who might have taken offense at a remark he made that was recently published in a local newspaper.
After what many considered a grueling city council hearing, Wagner told reporters, “Tonight was just like Tammany Hall.” However, Wagner now says the comment was made in jest. “I said it as humor,” he told his colleagues and others this week.
Tammany Hall is the popular term for the historic influence the Democratic Party political machine had in dominating New York City politics in the late 19th and early 20th centuries. The expression is sometimes used as a derogatory term.
Barovsky said, with laughter, the mayor did not even know who or what it was. “I thought you meant me. I’m the only one that smokes,” she quipped, referring to the smoke-filled back rooms of Tammany Hall.