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Petaluma city manager has more work to do


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John Brown has spent more than 10 years as Petaluma’s city manager, implementing policies and handling many of the day-to-day activities that help the city function.

By the time his contract ends in 2022, it will be the longest public service position he’s held in his 35 years working in government.

The Southern California native sat down with the Argus-Courier last week to reflect on the past decade, how the city is managing the pension crisis, and his approach to presenting controversial projects.

Here are the highlights of the interview.

Q: Looking back at your 10 years on the job, are there things you would’ve liked to have accomplished that might indicate your plans going forward?

Brown: “Well gosh, I would’ve liked to have been able to fix the roads primarily. When I got here, I felt like I had a pretty healthy budget … it looked like there was a $9 million reserve (in the general fund). When I got here, the council was very concerned about the quality and conditions of the roads. I’m thinking to myself, ‘Well, come on. Spend a little money out of the reserve.’ That’s a way to take care of some of this problem. And almost immediately we were into the recession, so that quickly went by the wayside.

So yeah, I would have loved to be able to do more with the roads than we have. For what we’ve had available to us and the way we’ve really had to rely on grant funding to try to make that happen over the years, and the weirdness that comes along with being able to qualify a particular piece of road for a grant … we’ve been able to do a few of the collectors over the years and stay up with it.

Probably what I’ve mainly accomplished since I’ve been here is to keep the place financially solvent, to rebuild the reserves from them having been drained down literally to nothing. We had a year, 2010-11, where we were showing $5,000 in reserves against a $32 million general fund budget. It was just a paper reserve, right? That’s less than a margin of error.

So we were able to rebuild that back up to now. When I tell you I have $9 million in the bank it’s actually more than that. But when I have $4.2 million that’s available for emergencies, that’s the most this city has had in my recollection – and when I say that I mean beyond me, back before me when I looked at finances coming into my administration.”

Q: How has the city been dealing with the constant issue of rising pension costs?

Brown: “We’ve done a number of things along the way … So the city started in a better situation than a lot of cities because our employees have always had to pay the employee share … and a lot of communities – communities that I’ve worked for before – they would pay your share. So that was equal to 7 percent of your salary and that much more the city was paying.

The city did enhance public safety back in ‘90s to get to the 3 percent (contribution), and the thinking on that was the state law enforcement went to the 3-percent program, and local law enforcement agencies were all concerned that they wouldn’t be able to recruit good employees. They would go to the state unless they were on an even playing field. Over time, local agencies all went to the 3 percent, and that’s really what’s driving the liability problem going forward, is that it’s a pretty rich program.

So as cities went to the 3 percent on the safety side, other cities went to the enhancements for their miscellaneous (employees). Some went to a 3 (percent) at 60 (years old). Some went to a 2.7 at 55. Some went to a two-and-a-half at 55. We’re at a baseline 2 here so we didn’t enhance. That’s been helpful in the run up to these rates.

The rates have gone up because PERS (California Public Employees’ Retirement System) had some bad investments in the recession that they’re trying to recover on distribution on forward rates. They went through an actuarial study to determine we’re all living longer so we’re all going to be collecting pensions longer, so they factored that into the formula and rates went up again. Then they have what they call an assumed rate of return which is we’re putting our PERS money, $3 billion being invested in PERS rate and PERS investments, and they were assuming a 7.5 percent rate of return on that. On good years they’ve exceeded that quite a bit. On bad years it was around one-point-something or 2 … so those three things together are what’s really driving this steep rate adjustment.

We went in 2012 to a second tier of negotiating … that saves a fair amount. Anyone who comes in after that, who has never been in PERS before or is lateraling over from another agency comes in at that rate. That saves money on the go-forward.

In 2013, then the state implemented what they call PEPRA (Public Employees’ Pension Reform Act), which was a less rich tier … so any new employee at this point is in PEPRA.

It’s interesting to me because one of the things I’m seeing is a lot of movement in my industry. At my level in the industry, I believe there were at least a dozen job openings last month. So guys are retiring out and it’s not like it’s attractive to go to a lot of other agencies because most of them have done something similar.

Along the way we’ve also bargained with almost all our employees to get them to pick up a larger share to take on a piece of the employer’s share on the employee. We’ve done that will all of our miscellaneous employees … so that keeps the city’s liability limited on the go-forward on that side.

Recently, in February, we borrowed against our own funds - $7.7 million against our own funds – to buy down specific PERS obligations. That’s probably the most important part of the history of the wheel here. What that’s allowed us to do then is to flatten out the steepness of that curve. It doesn’t keep it from happening, but it helps offset it.

Anyway, I think you can probably see where I’m going. If I’m financing it at 7 percent with PERS, if I can borrow the money at the same rate or slightly above from myself that I’m getting from the bank by investing it, I’m making the spread. So the spread pays for the debt service and it also gives me about $240,000 a year back. I’m applying that then against the problem. So the problem’s at $1.1 million a year, I’m able to knock a quarter million off of that through these savings, and that’ll go on for another 12 years … so we’ve done all those things and really I think that’s as much as a public agency can do without some change in the law.”

Q: Developing housing within the city’s urban growth boundary comes with public backlash every time a new project gets put forward. How do city officials manage that response when it’s likely to come up with every project?

Brown: “Well, I don’t want to jinx myself here but what I would say is I think the most successful approach to taking on any sort of a difference of opinion is to try not to pick a side, to try to develop and present the facts in a rational way … as a facilitator of a process.

I could very easily get myself in trouble with a city council by picking a side and, when I got here, there were very clearly defined sides. It was difficult, to say the least and, for me, it’s always been difficult to get consensus from people who are so fundamentally opposed to each other on certain issues. The council has done a good job of coming together to consensus and unanimity on a lot of things, but there’s still some fundamentals – and development I think is one of those – where there’s still differences of opinion that you will see. I try to navigate the middle on that … I treat each of the city council members equally in terms of the information I’m giving them. It seems pretty elemental, but what you give one you give all.

It’s very important to have trust, credibility, to be trustworthy. So telling the truth, correcting myself when I’ve made a mistake … following through on the things I’ve agreed or promised to do, those are all important elements to navigating that.

So that’s important to the process. I’m sure your question had more to do with the public, but the council is reflective of the public and they’re channeling a lot of what they’re hearing from the public when they’re up at the dais asking questions. So for me and the council to be on an even keel is important for navigating the larger question of how the community deals with this.

The same elements apply … when we recommend something, we’re not recommending it from an emotional perspective. We’re recommending it because it’s consistent with the rules and regulations and guidelines, and consistent with General Plan and best practices.

So we have to work a lot with the developer before it sees the light of day, but it’s very important, I think, for us and the developer to make sure the community is getting involved. So we’ve done some things like require there be workshops or open houses to talk about design with neighbors before something actually makes a planning commission meeting. That wasn’t happening before I got here. We have a development review team that I’ve put together … they all get together and, in some cases, triage a project. In other cases they’re offering somebody upfront advice about how you can be successful … encouraging them to do community outreach so the public has had its peace.

You’re not going to be able to eliminate the opposition to what’s going on in somebody’s backyard, but what I’ve found, is people are really pretty imminently fair when they’ve been informed. That’s kind of the key to the thing, to keep people informed.”