Yorba Linda City Council reviews cybersecurity report; Placentia-Yorba Linda Unified School District refinances bonds to lower interest rate

 

Two topics merit attention this week: a cybersecurity assessment has been reviewed by the Yorba Linda City Council and a refunding of bonds previously issued by the Placentia-Yorba Linda Unified School District will save taxpayers some $71.5 million over the next 18 years.

The cybersecurity assessment, provided by a city-hired consultant, concluded that the city's “Network and security is strong within the organization. Based on the overall structure, as a grade, we would give it an A.” Cost of the assessment was $23,700.

In addition to the assessment, the consultant provided four recommendations for improvement, based on industry best practices and National Institute of Standards and Technology guidelines.

One recommendation is to periodically test the city's “incident response plan” by performing a “table-top exercise” and hire a forensic firm to provide on-call services to allow the city “to timely respond to a cyber attack, should one occur, to minimize vulnerability and loss.”

Other recommendations include providing oversight for risk management, compliance and internal controls; ensuring compliance with state requirements; and improving log management for storage for six months to two years, up from the current maximum 60 days.

Lower interest rates and a one-year sooner payoff date – 2039, instead of 2040 – on bonds refunded by the school district are responsible for the substantial $71.5 million in savings to taxpayers.

“The district refinanced the original par amount of $77.15 million at an existing 5.4% rate with $102.3 million of new debt at a 2.09% interest rate, which generated the large taxpayer savings,” stated officials. The difference in bond totals is due to accrued interest factors.

In 2019, the district also refunded previously sold bonds, notching $7.2 million in savings through a final payment scheduled for 2034. The new rate is 2.56% versus the old 6.61% rate.

The two refinancings represent about 43% of the district's outstanding general obligation bonds and included some of the bonds approved by district voters by Measure Y in 2002 and Measure A in 2008.

In a report to the district's elected trustees regarding this year's refunding, David Giordano, assistant superintendent, business services, stated: “By law, all benefits from the refunding will be delivered to the property owners in the district,” resulting in a lower tax rate for payers.

With the issue of the refunded bonds, the Wall Street bond rating agency Moody's Investors Service assigned a positive outlook with a rating of Aa2, up from Aa3 in 2019. The Standard and Poor's agency also assigned a positive outlook on its rating.

According to district officials, both firms have recognized the district “for strong financial management, particularly while the COVID-19 pandemic...and declining enrollment and increased cost pressures continue to be faced by school districts throughout California.”

Yorba Linda City Council reviews new two-year budget, sees property, sales tax revenue increase

 

Yorba Linda's City Council members have been reviewing budget and other financial reports as the governing panel prepares for the new fiscal year that begins July 1, with the city's five elected representatives seeing clear indications of an improving local economy.

The city's proposed two-year operating budget was presented to the council at a May 25 workshop session, and adoption of the $41 million spending plan for each of the next two fiscal years is expected at a June 15 meeting.

Increases in the city's two main sources of income are projected for the next two fiscal years. Property tax revenue is expected to increase to nearly $22.5 million for 2022 and up to $23.2 million for 2023, from the $21.5 million estimated by June 30 this year.

Those figures represent a growth rate of 4.6% for 2022 and 3.1% for 2023, “reflecting a continued increase in housing prices and adjusted assessed valuations as properties are sold,” and “the recent residential and retail construction activity in the city,” according to a report by Finance Director Dianna Honeywell.

And, in a sign of better local economic conditions, the city's sales tax revenue is expected to climb 4.7% to about $7.7 million in 2022 and 3.8% to about $8 million in 2023 from the $7.35 million estimated by June 30 this year.

Also expected to increase is income from the franchise taxes that residents pay on their gas, water, electric, cable and trash disposal bills that could total close to $2.3 million for the 2023 fiscal year, up from this year's $2 million.

Overall, total revenues are projected to increase 2% for fiscal year 2022 and 2.9% for fiscal year 2023. A $1 million-plus budget surplus is anticipated for fiscal year 2023, which would put operating reserves at 55.7% of a year's operating expenditures at the end of fiscal 2023.

Embedded in the proposed budget is a 4.46% increase in the cost of the city's contract with the Orange County Sheriff's Department for fiscal 2022, for a total of $12.9 million, up about $552,000 from this year. Existing service and staffing levels will be maintained.

This will be the city's ninth year for contracting law enforcement services with the county department. The first contract was negotiated in 2012 and implemented in 2013, after a 42-year association with Brea Police. The current county pact runs through June 30, 2023.

The city-owned Black Gold Golf Club is projecting a positive cash flow of $69,300 in fiscal 2022 and $70,700 in fiscal 2023. The recent fee increase for golf rounds and driving range use is expected to bring in an added $200,000 annually.

Green fees vary due to “dynamic pricing,” depending on weather, day-of-week, time-of-day and other factors. The average $57.91 cost to play will increase to $61.33.

Interestingly, this fiscal year's city income increased by $1.2 million, largely because of federal funds from the Coronavirus Aid, Relief and Economic Security Act.