HomeMy WebLinkAboutMinutes - Finance Committee - 04/19/2010 -Ce Finance AdministrationI0215NMasonFortColLins7080522
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Council Audit &Finance Committee
Minutes
4/19/10
10:00 a.m.-12:00 p.m.
Council Attendees:Mayor Doug Hutchinson,Mayor Pro Tern Kelly
Ohtson,Ben Manvel
City Staff Attendees:Darin Atteberry,Chuck Seest,John Voss,Kraig
Ecton,Steve Mason,Megan Woodman,Joe Frank,
Heather Shepherd
Others:John Knezovich
Approval of the Minutes from the March 2010 meeting.
Ben Manvel moved to approve the March minutes and Doug Hutchinson seconded the motion.
The minutes were approved unanimously.
GERP annual Actuarial Update &Long Term Funding Options
Pat Kahie presented summary information on the actuarial report for 2009.This information
is available on the City website at http://www.fcgov.com/cityclerk/pdf/201 Oval.pdf
Chuck Seest and Pat Kahle also advised the Committee that there would be an upcoming
shortfall in GERP funding and reviewed some options to address this $10.7 million shortfall.
The GERP has struggled with funding during the past decade.It began the decade with an
unfunded ration of 96%.Following the economic downturn after 9/11/01,funded ratio slid to
less than 70%.
In 2005,a measured approach was agreed upon to provide supplemental funding in a phased
approach:
$200,000 for years 2006-07
$400,00 for years 2008-09
$700,000 for years 2010 and beyond
Due to the financial meltdown and credit crisis in 2008,the funded ratio fell from 89%to 62%.
It has since returned to 70 %.Given the budgetary and fiscal constraints facing the City,
options must be considered and then implemented to strengthen the funding of the plan.
CfF&t°CoLLins
Chuck Seest outlined the options for strengthening funding of the GERP amount and relayed
the various Pros and Cons for each of these scenarios.
Options are:
1.Status Quo --Price tag of $12 million in supplemental funding through 2050
2.Freeze and pay lump sums to active employees.
3.Freeze the Plan as of Year-end 2010 and allow for monthly benefit payments.
4.RealLocate the employer 3%contribution from the defined contribution plan (ICMA)to the
GERP to earn additional years of service credit after 12/31/2010.At the same time,the City
would also make an additional contribution equal to the reallocated amount.Price tag of
$9.2 million in supplemental funding through 2035.
The next step(s):
Get feedback from GERP members and bring back final plan to City Council regarding
alLocating the ER contribution of 3%retiree benefit contribution from the ICMA plan to the
GERP for future years of service credit beginning 1 /1/2011.
Section 108 Loan Program
Megan Bolin presented data on this topic for the purpose of determining whether the
Committee would support proceeding with a Section 108 Loan application.
The loan guarantees provision of the Community Development Block Grant (CDBG)Program.
The loan is the source of financing for economic development,housing rehabilitation,and
public facility projects.
Entitlement communities can Leverage up to five times their annual CDBG allocation.
Benefit
Additional economic development tool
Supplements CDBG entitlement grant
Risk
CDBG entitlement must be pledged as collateral.
Loan Criteria
•Consolidated Plan &Annual Action Plan objectives
•HUD national objectives
•CDBG eligible activity
•Public benefit
•Targeted areas
•Need for public assistance
•1.20:1 debt coverage ratio
•80%loan to value ratio
•Maximum 20-year loan term (flexible structure)
Interest rate =90-day LIBOR plus 20 basis points
r Cf
Fo7t°CoLLins
Committee does support proceeding with the appLication and stated that it is not necessary
to bring this topic to a CounciL Worksession.