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---_._-------------------------------- <br />From:Long,Thomas O.[tlong@nossaman.com] <br />Sent:Tuesday,July 03,2012 8:31 AM <br />To:cc@rpv.com <br />Subject:San Ramon and Borrowing <br />Dear Councilmembers: <br />As you know the city faces about a $20 million challenge with San Ramon canyon.Half <br />of this is addressed with a state grant if you act in time to fund the rest.Surely you will <br />do so because you will surely be called to account if you don't.The real question is how <br />to fund the remaining approximate $10 million.The popular method,of course,will be <br />another grant.That mayor may not happen.You must have a Plan B.It should be a <br />realistic Plan B,not something like depending on the good will of private donors,even <br />wealthy ones like Donald Trump.As a practical matter Plan B can be one of several <br />things:(1)use the city's reserves,(2)borrow,or (3)extend or increase taxes.You have <br />large enough reserves to fund the whole thing,but you will be left very short for any <br />subsequent emergency.You could borrow the whole thing with the city's AA rating.But <br />you will then need to come up with about $500,000 per year or so to amortize the <br />bonds.It may well be that anyone solution alone is not enough. <br />You may also find that when you go to borrow,the recent round of public agency <br />bankruptcies will make it harder for you to borrow without pledging security.Personally <br />I don't think you should pledge city land.You can pledge city general fund revenues, <br />but that may risk essential services.The best approach may be to pledge specialized <br />revenues such as the storm drain user fee.Unfortunately,that fee has a sunset making <br />it useless as security for a bond which extends beyond the sunset date in 2016.And <br />any bond for financing San Ramon canyon repairs will have to extend beyond 2016 to <br />be practical. <br />In sum,protecting residents'property values without risking city land and essential <br />services requires you to consider seeking to extend the storm drain user fee now or to <br />identify some other means of financing the San Ramon repair. <br />Rest assured that your public is watching closely to see how you handle this <br />issue.Good luck. <br />Tom Long <br />7/3/2012