Letter: Councilman defends city regarding concerns

This letter is in response to Marty Richman’s letter to the editor of July 20. Marty lists RDA bonds, sewer bonds, a $920,000 loan from the water fund to the general fund and Calpers payments as excessive debt which could destroy the City.
First, RDA bonds are secured by tax increment revenue. While it is true that RDAs have been dissolved, tax increment revenue continues and the first obligation for that revenue is bond payment. With some cities, the increment revenue either does not cover bond payments or leaves very little left over. In Hollister’s case the increment revenue covers bond payment, administrative costs and a healthy amount for schools and other taxing districts.
When we changed our 911 service from the County to Santa Cruz 911, we faced a problem in that the County billed for their service at the end of the fiscal year and Santa Cruz bills quarterly. We did (and still do) have sufficient reserves in the general fund to pay the $920,000 but the more prudent action was to borrow the cash from the water fund and make repayments with the money saved (~$260,000/year) by switching to Santa Cruz 911. This action is similar to what a well-run private business would do.
Yes, the new waste water treatment plant was financed by the sale of bonds. Yes, older bonds were rolled into the new financing to take advantage of lower interest rates. The sewer bonds are secured by everyone’s monthly payment and the fund includes a large cash rate stabilization amount to handle any unforeseen calamities.
Marty is correct when he says Calpers payments are a problem.  However, the last employer paid enhancements to any employee group occurred in 2002 and 2003 with the police and fire unions. There was an enhancement for other employees about five years ago, but employees agreed to pay both the employee and employer cost of that enhancement. The fact is that the current Council was able to get the fire and police unions to give up their enhanced benefit. The current Council recently successfully negotiated with all groups to have employees pick up a greater portion of their retirement costs.
It is true that many cities in California are facing bankruptcy, but Hollister is not in that group. Hollister provides no medical benefit for retirees and the General fund has no debt other than the one loan.
All of actions have been taken in open session and nothing has been hidden. As a matter of fact, Marty attends all of our sessions. He did not object to the loan and, in fact, he supported the sale of the sewer bonds.
Doug Emerson, Hollister