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Per my earlier post above- this past November was yet another uncontested BSD board election:
Personally, my impression is that the two new board members were handpicked, behind-the-scenes, by the BSD powers-that-be when the former two board members decided to not seek re-election. I realize this is probably par for the course as far as these things go, and please know I have nothing against the two new members, nor the ones they replaced. But frankly, this "process" come across as un-democratic and leaves a bad taste in my mouth. Bottom line, I wish the public would be broadly informed whenever a BSD board member announces his/her intention to step down to the board/Superintendent, so that there's potentially a broader pool of candidates to fill the vacancy, who can then be appropriately vetted by the community they are serving.
Well, this is certainly interesting:
Thanks for the heads-up re: Jeff DeMartini’s wonderful initiative- my family just donated. Per the immortal words of my favorite band: “Don’t tell me this town ain’t got no heart.” :)
FYI, it was subsequently confirmed that the approximate $600,000 I estimated for the temporary rec facility is included in (not in addition to) the base total project (construction & labor) cost of $52 million. This brings the total estimated cost (including bond interest, bond issuance and underwriting fees) to $80.8 million, instead of $81.4 million. Still in the range of $81 million, as indicated above.
Toggle Commented Dec 18, 2019 on Rec Center: $58.3 Million at The Burlingame Voice
Barking Dog- Don’t forget to include bond interest and temporary facility costs. The current price tag is closer to $81 million as I detailed here:
Toggle Commented Dec 16, 2019 on Rec Center: $58.3 Million at The Burlingame Voice
Per my post above, here’s the link to the community center bond prospectus in case the other one doesn’t work:
Toggle Commented Dec 14, 2019 on B'game Fiscal Risk: Yellow! at The Burlingame Voice
The bond prospectus for the new community center project is now available, so we have more clarity about the bond interest cost: $28.5 million (see page #9: Along with the current estimated construction cost of $52 million, this brings the total project cost to $80.5 million. However, the $80.5 million figure does not include $212 thousand in bond issuance costs, plus $91 thousand in bond underwriting fees (page #4 of the prospectus). Moreover, per this coming Monday’s council meeting, a temporary rec facility (while the new center is being constructed) is estimated to cost $183 thousand for installation, with an additional monthly cost of $15 thousand. The new center is expected to be completed in April 2022, so assuming the monthly payments start in Jan. 2020, the aggregate of the monthly payments is $420 thousand. Adding everything together brings the grand total for the new center closer to $81.4 million. Let’s hope this level of spending is worth it.
Toggle Commented Dec 14, 2019 on B'game Fiscal Risk: Yellow! at The Burlingame Voice
Just for broader context, for what it's worth, here is a 3 page excerpt from a recent Burlingame School District bond prospectus. It summarizes BSD's current debt structure and details prior voter-approved bond issues. The last page of the document also shows their current annual debt service.
Re: the new rec center, the above posts/figures do not include the cost of a temporary facility while the new building is being constructed. Here are some initial, additional costs per the agenda for this coming Monday's Council meeting (this is just for power service; not sure what the other associated costs are/will be): "Adoption of a Resolution Authorizing the City Manager to Execute an Agreement with S.R. Bray, LLC. DBA Power Plus for the Power Service to the Temporary Recreation Facilities During the Construction of the New Community Center at an Installation Cost of $75,880.20, a Monthly Cost of $405.00, and an Add-alternate Cost of $7,546.96, City Project No. 83240" Also on the consent agenda is an item related to a change regarding city properties that will be pledged as collateral for the forthcoming approx. $40 million bond issue. Originally, the library and its adjacent parking structure were being pledged, but it was subsequently discovered that they are already pledged against other outstanding debt. So, the city has to substitute them for other city-owned property (which are apparently yet to be identified): Adoption of a Resolution of the City Council of the City of Burlingame " Authorizing the Substitution of Facilities Subject to the Facility Lease and Sublease Associated With the Lease Revenue Refunding Bonds, Series 2010, and Approving the Taking of All Necessary or Desirable Actions in Connection Therewith"
Toggle Commented Nov 16, 2019 on B'game Fiscal Risk: Yellow! at The Burlingame Voice
Joe- Just to clarify, the current estimated construction cost for the new rec center is $52 million (it was $58 million at one point, but the city council has been trying to value engineer it down- originally to a cap of $50 million, but they recently approved another $2 million of staff recommended add-ons. I mentioned this in a recent comment in the second link you posted above). With regard to debt financing to help pay for new center, the Council just approved a $40 million bond issue, with a 30 year term (which was previously assumed to be a 20 year term, per an earlier report by the city's financial advisory firm). The advisory firm is estimating a 3.5% interest rate. 3.5% seems kind of high in the context of current yields for 30-year AA-AAA rated municipal bonds. That said, perhaps rates are higher for lease revenue bonds, which are what the city will be issuing. If the rate turns out to be in the 3.5% range, that translates to a total interest cost of approximately $25 million. So, therefore, the total project cost estimate would be $77 million ($52 million construction cost plus $25 million of debt interest cost). Again, keep in mind this is just for the upfront capital costs, i.e., it doesn't include the ongoing operating costs of the new rec center.
Toggle Commented Oct 26, 2019 on B'game Fiscal Risk: Yellow! at The Burlingame Voice
Thank you both, Jen and Cathy. I appreciate your respective responses and perspective (and your civility, as always:)). Just for the record, Cathy, I'm not suggesting the city should have paid cash. Rather, I'm drawing attention to the scale and scope - and consequent all-in cost- of the project. Just four years ago, Jen, the estimated cost was $37MM.. now its $52MM (that's quite a jump in construction costs, etc, over a relatively short period of time). Plus, I think its worthwhile to make Burlingame residents aware of the the additional cost of debt financing, as usually just the aforementioned construction costs ($37MM and $52MM) are cited by city officials. Bond interest is a real cost, too. And finally, these are just the upfront capital costs we're talking about; I have yet to see any estimates of ongoing operating costs for the new center. Either way, as I said earlier, hopefully the approximate $70 million of capital costs will be worth it.
During this Monday’s Council meeting, the Finance Director confirmed the forthcoming bonds have yet to be rated by the credit rating agencies (AAA upgrade was for the city’s outstanding pension obligation bonds, and any general obligation bonds- for which the city has currently has nothing outstanding). The city’s financial advisory firm is assuming a 3.5% interest rate; this seems a tad conservative given AA to AAA 30 year muni bonds are currently yielding closer to 2-2.5%. That said, we won’t know what the actual interest rate will be until the bonds are issued next month. But, assuming a 2-2.5% rate, the total interest on a $40MM bond issue would be about $14 million. So now getting closer to a total project cost of $70 million. Hope the magnitude and scale of this project/spending level will be worth it.
The city council is set to approve a $40 million bond issue this evening for the new rec center. The estimated interest/financing costs are $12 million. So, along with the estimated $52 million of construction costs, this brings the estimated total project cost to $64 million. The bonds will be lease revenue bonds, using the library and its adjacent parking structure as collateral.
Actually, the assumed interest cost would be closer to $6 million in my example above. My apologies.
Toggle Commented Oct 3, 2019 on Rec Center: $58.3 Million at The Burlingame Voice
Just an update: The City Council has been trying to “value engineer” the overall project cost to a max of $50 million. However, during the most recent council discussion on July 1, an additional $2 million of staff-recommended add-ons were approved, bringing the new total estimate to $52 million. Coincidentally, it was announced at the council meeting that a capital campaign committee has been formed to raise $2-$2.5 million in private donations. Importantly, the above $52 million estimate does not include the interest cost of an eventual $30 million bond issue to partially pay for this project (this is the max capacity the city has to debt finance using $ from the Measure I sales tax and additional contributions from the general fund). Assuming an average 20 year bond issue (consistent with a previous assumption by the city’s financial advisory firm, PFM) and a 2% interest rate (in-line with current investment grade municipal bond rates), the interest cost could be about $7 million, bringing the total project cost closer to $60 million. Of course, we won’t know what the interest cost will be until bonds are actually issued, as it will depend on the interest rate environment at the time. Finally, all of the above relates only to the upfront capital cost. I don’t believe I have ever seen estimates of what the ongoing operating costs of the new center will be. Here’s the most recent project budget that was presented at the July meeting:
Toggle Commented Oct 3, 2019 on Rec Center: $58.3 Million at The Burlingame Voice
FYI, from today's Wall Street Journal: Bull Market Isn’t Helping Pensions BY HEATHER GILLERS Maine’s public pension fund earned double-digit returns in six of the past nine years. Yet the Maine Public Employees Retirement System is still $2.9 billion short of what it needs to afford all future benefits to all retirees. “If the market is doing better, where’s the money?” said one of these retirees, former game warden Daniel Tourtelotte. The same pressures Maine faces are plaguing public retirement systems around the country. The pressures are coming from a slate of problems, and the longest bull market in U.S. history has failed to solve many of them. There is a simple reason why pensions are in such rough shape: The amount owed to retirees is accelerating faster than assets on hand to pay those future obligations. Liabilities of major U.S. public pensions are up 64% since 2007 while assets are up 30%, according to the most recent data from Boston College’s Center for Retirement Research. Public pension funds have to pay benefits—their liabilities. They hold assets, which grow or shrink through a combination of investment gains or losses and contributions from employers and workers. Those assets generally rose faster than liabilities for five decades starting in the 1950s because government was expanding and the number of retirees was smaller.In the 1980s and 1990s, double-digit stock and bond returns convinced governments they could afford widespread benefit increases. But the value of their holdings— their assets—began to fall in the aftermath of the dot-com bust in the 2000s, and the 2008 financial crisis followed soon after. State and local retirement systems lost 28% in 2008 and 2009, according to the Boston College data. “The first thing you have to do is make up what you lost,” said Sandy Matheson, executive director of the Maine Public Employees Retirement System. “And it takes years. And then you have to make up what you didn’t earn on what you didn’t have. It’s a pretty steep climb.” Cities and states set out to ramp up their yearly contributions to public pension funds as a way of making up for their investment losses. Some were able to keep up with those payments. But others weren’t as they struggled with lower tax revenue and increased demand for government services in the aftermath of the 2008 crisis. New Jersey made less than 15% of its recommended pension payment from 2009 through 2012. It now has a little more than one-third of the cash it needs to pay future benefits— despite robust investment returns in recent years. State Treasurer Elizabeth Maher Muoio said New Jersey is on “the long road to addressing our unfunded liability after years of neglect.” “Some of the states allowed themselves to get so underfunded that the higher returns aren’t helping them enough,” said Michael Cembalest, chairman of market and investment strategy for the asset-management arm of JPMorgan Chase & Co. Mr. Cembalest is the author of an annual study on the financial health of cities and states. Some states, including New York, Wisconsin, Tennessee and South Dakota managed to keep assets roughly in line with liabilities through funding discipline, benefit cuts, or both. Many states and cities reduced benefits for new employees after 2008. But deeper cuts often met resistance from judges, unions and angry constituents— even in some of the most indebted states. The Illinois Supreme Court in 2015 threw out cuts by the legislature that were expected to save tens of billions of dollars. Kentucky’s legislature last year declined to approve the governor’s proposed cuts to cost-of-living increases for retired teachers after protests brought thousands to the state capitol and forced cancellations of classes in several school districts. Maine, which has made more progress than many plans in addressing its unfunded liability, did cut cost-of living increases for both retired and active state workers. They earn a median pension of $27,000 after 25 or more years’ service and don’t receive Social Security. But that cut shaved only $1.6 billion off the fund’s unfunded liability, which now stands at $2.9 billion. Demographics became another problem as baby boomers aged. The number of pensioners jumped thanks to longer lifespans and a wave ofretirees over the past decade, while the number of active workers remained relatively stable. Maine’s fund serves about the same number of active workers that it did in 2008—a little more than 51,000—while the number of retirees has jumped 32% to about 45,000. Many funds are experiencing the same trend. That pattern contributes to an increasing gap between pension fund inflows and outflows— before the funds earn a dollar on investments. Maine’s pension fund paid $982 million in benefits in 2018, $394 million more than the contributions it took in. For a plan trying to improve its funding status, that type of gap makes it harder to recover from investment losses. Many public pension funds have benefited from the 10year-long bull market. But now many are lowering their predictions of what they can earn in the future. That accounting change makes their liabilities look even larger, portending more strain in the coming decades. The Maine pension fund, which back in the early 1980s assumed a long-term investment return of 10%, now assumes a rate of 6.75%. If that rate were just 1 percentage point higher—where it was about 10 years ago—the projected $2.9 billion shortfall, most of which must be paid off over the next decade, would drop by more than half to $1.1 billion. The decision to lower the rate was based on discussions with the fund’s actuarial and investment consultants and a goal of keeping costs predictable, said Ms. Matheson, the system’s executive director. “There’s also an element of better safe than sorry.”
Thanks for sharing your experience, Steve. I can only imagine how much worse it could’ve potentially been if you were riding an electric scooter. E-scooters seem to be Lime’s and other dockless bike sharing operators newfound focus:
Toggle Commented Feb 19, 2019 on Lime Scooter Economics at The Burlingame Voice
Doesn’t look like we’ll be getting scooters to replace the Lime bikes that are on their way out. See comments under item 10b (starting on page 4) from the minutes of this December city council meeting:
Toggle Commented Feb 18, 2019 on Lime Scooter Economics at The Burlingame Voice
What happened to Yaprak Doner, the relatively new Middle Eastern restaurant on B’way? Did it permanently close?
Toggle Commented Dec 28, 2018 on Dine Broadway at The Burlingame Voice
The City Council will be deciding this coming Monday whether to extend Burlingame’s contract with Limebike for another 6 months. Below is a link to the associated staff report, which includes the results from a recent community survey. One major complaint among respondents, not surprisingly, is safety related - specifically, folks riding Limebikes without helmets. Indeed, a staggering 75.4% of the respondents admitted that they do NOT wear a helmet when riding a Limebike (see point #4 on page 4)!! And the way point #7 is worded can be a bit misleading - in that it states that “most Lime riders (69.7%) are adults.” Instead, what that really means is that 69.7% of the SURVEY RESPONDENTS (607 total) were adults. I’ve seen a lot of teens riding Limebikes around town, and I doubt many are signed up for the city's email list-serve and participated in the survey. Most importantly, I can’t recall seeing any kid wearing a helmet when riding a Limebike. And presumably its impossible for Limebike, itself, to know whether a teen is riding one of their bikes, as the teen is most likely using their parents' - not their own- credit card to activate the ride. I do like the notion of bike sharing in theory, but I don’t know how a city or bike sharing company can realistically address this safety concern - particularly with teens. I don’t think our own city should be facilitating their (or anyone’s, for that matter) ability to ride bikes around Burlingame without wearing a helmet. Public saftey should take top priority.
Toggle Commented Nov 30, 2018 on Scooter Dangers at The Burlingame Voice
Congrats on the 15th anniversary, and thank you for continuing to provide a valuable resource for our community!
Here is the San Mateo County Grand Jury report on local cities’ pension obligations, which was highlighted/referenced in today’s SM Daily Journal cover story. Interesting to compare data for Burlingame vs. other local municipalities:
Measure I sales tax, which is being used in large part to help fund the new rec center, goes into effect this Sunday, April 1. It's actually a sales and USE tax - which means online purchases of goods delivered to/consumed in Burlingame are theoretically subject to the tax, as well (i.e., Amazon). See the actual ordinance, sections 10.060 and 10.070 (on the 7th page of this 13 page PDF):
FYI, it appears the current estimate for a new rec center, as currently envisioned/designed, has risen to $51.5-$56.7 million (see link below to staff report for this coming Monday's Council study session). The city is exploring two options/modifications to bring the overall project cost down; this would entail additional consulting/design work costing between $50,000-$100,000.