Council sets up $1.2-million revolving fund to help school district pay loans

4-year agreement will cover downturn in developer fees used to fund annual debt service

The City Council agreed Tuesday to loan up to $1.2 million to the Pleasanton Unified School District.

The revolving line of credit agreement was approved in a 4-0 vote, with Councilman Matt Sullivan recusing himself from the discussion and council vote because his wife is a school teacher in the district.

Emily Wagner, the city's fiscal officer, said the loan amount will come from excess funds currently invested in the city's investment portfolio. The agreement with the Pleasanton school district calls for these funds to continue to earn interest throughout the four-year duration of the revolving line of credit agreement.

She said that in 2002 and 2003, the school district issued approximately $20 million in certificates of participation for the acquisition and construction of land and school improvements "for the betterment of the PUSD school facilities."

The annual debt payments for these COPs are approximately $1.2 million, and funds collected from development impact fees are used to fund the annual debt service on them.

"Over the past year, a downturn in the economy has impacted the amount of funds collected by the PUSD," Wagner said in a report to the council.

Former City Councilwoman Kay Ayala objected to the loan, arguing that the district's shortfall is the result of poor financial planning. She said that when money was coming into the district, it chose to build new facilities instead of paying off the certificates of participation.

Ayala was the only speaker at the council's public hearing on its loan proposal.

The school district recently put an initiative on the June 2 ballot, now called Measure G, that would bring in just over $4.5 million to the school district. The funds collected from the parcel tax, however, would not be able to pay off the debt service.

Instead, the ballot language states that only the following would be funded by a $233 per parcel tax: class size reduction, reading and math support programs, libraries, music, counselors, technology instruction, music, and maintaining safe and clean schools.

Mayor Jennifer Hosterman said the loan would not negatively affect city services and offerings.

"It's one-time monies that the council identified and can be made available without dipping into city coffers," she said. "It's the city's opportunity to show people that we want to be supportive of our school district."

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Like this comment
Posted by Peter Miller
a resident of Las Positas
on Apr 15, 2009 at 7:56 pm

Referencing the comments from Mayor Hosterman, "The loan is not a tremendous amount" that comment provides me a better perspective with understanding the Kottinger Park Renovation cost in relationship to how Mayor Hosterman thinks.
Referencing the next comment "if we were in position to loan them 10 million,then it would have an impact on Measure G." Negative or positive? I don't understand.
Considering that $1.2 million is not very much, wouldn't it be more cost effective to provide legal advice from within our City resources to assist PUSD in any attempt to balance their budget toward a positive solution? $1.2 million, what could that provide? Would that be outlined at the council meeting?
My family is leaning toward voting for the Measure G with the idea that all alternatives will be considered to resolve our PUSD budget crisis but also to lighten the tension between citizens within our Community of Pleasanton.
On the ice rink... it is a way to formalize the relationship that the Staples Ranch development might have on Pleasanton but please locate the outdoor ice rink with the greatest benefit to our downtown.

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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Apr 16, 2009 at 9:32 am

Stacey is a registered user.

Let me get this straight. The District will borrow money from the City to pay off another loan? I'm assuming that the City's interest rate is lower than that of the current loan which would make this a desirable trade, but why doesn't the District just sell off the Neal property if they're not going to build a school there?

Sounds like the City has extra money! How about a little local stimulus? *laugh*

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Posted by Terry
a resident of Highland Oaks
on Apr 16, 2009 at 11:31 am

Spending money for a Downtown outdoor ice rink is not the way that we should be spending money.

If the City has extra money, then reduce the Garbage charges

In these times, we cannot afford it !!

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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Apr 16, 2009 at 11:50 am

Stacey is a registered user.

Maybe the City should take that $1.2MM (if legal) and use it as seed money to start a local currency instead. Residents can purchase the local currency and use it only at participating businesses and banks in Pleasanton. That encourages the tax receipts to stay in Pleasanton. That helps out our local businesses.

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Posted by frank
a resident of Pleasanton Heights
on Apr 16, 2009 at 6:40 pm

I am interested in understanding more about the legality of loaning funds from one taxpayer supported governmental entity to another. To me, it smacks of gaming a hole in the system, if it is truly permitted. Why does not the school district not simply obtain a loan in the private market if this is such a good thing?

On a side note, I find it interesting that the city is so flush with money that it can engage in the banking business. I think city finances are the next area taxpayers should scrutinize. Clearly too much money is flowing into city coffers. It seems to me this money should go to city services and its availability should not be "time-shifted" by loaning it out.

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Posted by Einstein
a resident of Mohr Elementary School
on Apr 17, 2009 at 3:03 pm

Einstein is a registered user.

The whole issue is answered by simple economics. State chases out all business and less tax revenue. State taxes high wage earners to make up for loss of business tax. High wage earners move out of state. Bottom line is its not a sustainable model and has been going this way for some time. School district must now be run like a business and must live within its means. How many staff or members at the district office per teacher and how many $125,000+ jobs at the district? Why do Pleasanton and Livermore each have a district office when they are only a few miles apart............seems to me like there is opportunity for cost reduction before going to the voters. I am still waiting for Mayor Hostermann to fix the traffic she promised to resolve years ago. As it currently stands is is hard to believe that measure G will pass without further cost reductions.

Like this comment
Posted by Tom Gallagher
a resident of Pleasanton Heights
on Apr 20, 2009 at 11:24 am

Be grateful that our pass and current Council had the foresight to maintain reserves for the states failure to manage your taxes. The City Manager and Council have taken necessary actions to reduce expenses with its reorganization of staff. Also the city is maintaining its high quality service to the residents , without job layoffs. Keep up the good work Nelson and Council.

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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Apr 20, 2009 at 11:51 am

Stacey is a registered user.

Maybe a better way to share City resources with the District is to loan out the City's award-winning accounting group to PUSD.

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Posted by Lisa
a resident of Another Pleasanton neighborhood
on Apr 20, 2009 at 9:39 pm

I am sick of this robbing peter to pay paul.
We need to cut spending and freeze salaries.

Like this comment
Posted by Just say NO!
a resident of Bordeaux Estates
on Apr 21, 2009 at 3:31 pm

Wasn't Cindy McGovern on the school board when some of these COPS were taken out(which can't be paid back apparently)?
Isn't she now on the city council?
Isn't she supporting Measure G the parcel tax for the school district?

Isn't there a saying that goes.....two wrongs don't make a right?

Won't the city be touched by the same downturn in building as well as potential loss of $$ due to property reassessments, and decreases in sales tax when more businesses go out of P town? And, like the district, isn't the city obligated to it's (retired) employees for millions of dollars?

Sounds to me like good money is being thrown after bad. Who will the city cry to when the coffers run dry? Right, the taxpayers again!

Sorry, but further commenting on this topic has been closed.

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