Citizen Red Alert on the Budget at June 1, Council Meeting

5/31/21

To: Ashland City Council & Mayor Akins

Subject: Control of Budget- CIP Reimbursement Resolution No. 2021-04

Hi Neighbors.  You are, like me, a concerned citizen of Ashland. But unlike the other citizens of Ashland, you have been elected to make the decisions that affect all the citizens of Ashland. Thank you for your service. This letter will cover several issues of concern I have for this subject document:

  1. Our City finances are in “Distress”
  2. There is a lack of specificity as to what projects the reimbursement resolution will cover.
  3. There is a lack of allocating, reporting and cost control in a timely manner included.
  4. Section 3: Use of debt allocations for expenditures already made is not clearly detailed.
  5. Section 6: Future declarations of intent to reimburse with City Council approval not  included.
  6. Listing of CIP projects covered by 2021-2023 Biennial Budget are not provided
  7. Reimbursement Resolution2021-04 should be returned to the City Council for Amendments.
  1. Ashland City Budget is in”Distress”.

As my citizen representative, I would like you to address my concern that the City finances are in  “Distress”. Your recent Budget Committee process and subsequent vote on a Capital Improvements Reimbursement Resolution  May 18, 2021) seem to indicate that a majority of you are OK with Ashland employing a resolution to borrow which results in higher costs/debt for the public ( all of us) to pay. This Reimbursement Resolution will add significant costs and if left unamended will to be even more expensive. You can’t afford an unclear Resolution. The City can’t adequately control costs without the specificity in advance of what the City will spend the proceeds.

  • Specificity Issue:

There is no specific project listing that these funds are designated to cover. This resolution just states: “the City Council of the City of Ashland , Oregon ( The Issuer) desires to finance the costs of the CIP projects for water, waste water and streets division.” NO specific CIP is cited. This resolution should reference the current approved CIP ( See Approval of 2021-2040 Capital Improvement Program , 3/16/2021 City Council ). Many other cities use a Reimbursement Resolution ATTACHMENT with the specific  project list that the Reimbursement Resolution can be applied to or refer to a specific part of the year of their “current” approved CIP. The Ashland resolution has NO specificity.  City Council should require specificity as many other cities do. Resolution No 2021-04 [line 7] says “ projects”  but [line 20]  under Section 1 says “the project”.  The document is ambiguous as to the number of funded projects.

  • Allocating, reporting and controlling cost: Use of funds timing is open ended and makes use of funds control unclear:

Section 4 [line 28 pg1] of the the Ashland Resolution cites the standard “18 month rule” used by many cities but is just that, a standard. Allocations reporting can be more frequent if you choose them to be. I would expect the City Staff to control cost allocations and report to the City Council on a quarterly basis ( at a minimum). The “18 month rule” for these general resolution terms is just a maximum amount of time  before allocations from the resolution must be legally reported. The resolution terms actually allows , by the “ after the latter date” clause, a maximum of three years from the date of expenditure for allocations to be made and reported! This also makes this resolution open ended. I would recommend  you, the City Council, to REQUIRE earlier allocation reporting the 18 months to 3 years. (Quarterly at a minimum) . Additionally, the City Council must add language the “no allocation from this resolution can be made later than the Mayor’s current  term end”. Otherwise , unless I missed something, this appears to be a ‘Blank check’ Resolution that can still be in force into future council administrations, indefinitely until the $16,800,000.00 is used up.

  • There is no ‘SUNSET’ date:

In Section 3 [line 24 pg 1], the resolution allows proceeds to pay for allocations made up to 60 days BACK in time. This is a deficit spending credit tool, but it is debt NOT revenue and has to be paid back. I strongly suggest the City Council request specifically what expenditures have already been made by Staff in the last 60 days and which expenditures the Staff intends to use proceeds from this resolution to reimburse and incur DEBT. As Councilors, you should want to know what expended costs Staff has already made, if any, against this resolution, I do. Section 3 is a standard resolution clause also so there may not be any 60 day old costs. If not, the 60 day period could be reduced or eliminated and the allocations would be ONLY for future transactions. The City Council needs to know NOW specifically what old costs are intended to be reimbursed or if there aren’t any old costs.

  • Section 6: Control of approvals

Section 6 [line 7 pg 2], as currently written,  puts future use of this resolution to reimburse costs SOLELY in the hands of the Finance Director. These reimburse costs’ declarations do have to be put in the public record, but as written DO NOT require City Council prior approval. This language should be amended to require City Council PRIOR approval of all declarations.

  • CIP projects list covered by the 2021-2023 Biennial Budget:

I followed some of the Ashland Budget Committee work. It was a lot of work. THANK YOU!

During one meeting, Dave Runkel asked Adam Hanks if he or Scott Fleury could provide the Budget Committee a list of specific CIP projects. This was important information for the Budget Committee members (including all of you) to have prior to being asked to consider any CIP Reimbursement Resolution.    I don’t believe Staff can expect to adequately control the budgeted costs without knowing the specifics of the listing.  Furthermore, it is baffling as to why this Capital Improvements Reimbursement Resolution was brought forward for Council approval WITHOUT  projects specificity of what the $16,800,000.00 would be spent on. Only general categories are listed in Resolution No. 2021-04:  “The City Council of the City of Ashland, Oregon ( the “Issuer”) desires to finance the costs of Capital Improvement Projects for the water, wastewater, and street divisions projects; “ It is imperative the City Council require the list of specific projects in the FY 22-27 CIP that this Reimbursement Resolution  will be spent on AND what is the planned ‘Cash Flow Draw Down’.

  • City Council action must include Reimbursement Resolution Amendments:

In the Agenda item document titled “Approval Capital Improvements Reimbursement Resolution No. 2021-04 dated May 18, 2021, there were two potential motions listed.

  1. I move to approve the Reimbursement Resolution No. 2021-04
  2. I move to amend the Reimbursement Resolution ( insert amendment).

I strongly recommended the Mayor return the previously passed Reimbursement Resolution No. 2021-04 to the City Council to be amended to incorporate the points I have outlined here.

Thank You,

Ted Hall,  Ashland

//inserted by Sharon