Yorba Linda's investment portfolio earns less cash but still outperforms comparison index; city updates accessory dwelling units regulations

 

While earnings on Yorba Linda's $49 million investment portfolio were lower for the past fiscal year, the earnings from the nine investment sectors “outperformed the index against which performance is measured,” according to a recent report from Finance Director Dianna Honeywell.

The city's portfolio is handled by PFM Asset Management, a nationwide firm that provides investment advice to public sector and non-profit institutions. The company's most recent report to the City Council noted a 0.53% “yield at market,” compared to 0.41% by the index.

Honeywell also noted in her March 1 report that the firm “continues to reposition the city's holdings in response to the current economic conditions in an effort to maximize earnings while ensuring that the city's funds remain invested in high-quality investments.”

Some $20.9 million or 42.7% of the city's portfolio is held in U.S. Treasury securities. Other sectors, in descending order, are federal agency securities, corporate notes, asset-backed securities, municipal obligations, negotiable certificates of deposit, supranationals, federal agency collateralized mortgage obligations and money market funds, all as permitted by law.

The portfolio's annualized returns: 0.24% for one year, 3.2% for three years and 2.43% since March 31, 2017, when PFM was hired, versus the custom index of -0.27%, 2.89% and 2.09%.

In other financial news, the city-owned Black Gold Golf Club “has seen an uptick in all categories (golf rounds, range visits, pro shop and food and beverage sales),” according to a March 15 report from Honeywell.

The increase will mean additional revenue of $1.1 million by the end of the fiscal year June 30, according to Honeywell's projection.

Financial staffers are recommending the council authorize payments totaling $476,790 from the Black Gold fund to the city's Master Plan of Drainage fund to repay a loan the latter fund made to Black Gold to eliminate the club's past negative cash flow.

And Honeywell is estimating a general fund budget surplus of $1.9 million at the end of the fiscal year June 30. That would put surplus operating reserves at 59.3% of general fund expenditures, more than exceeding the city's policy of keeping at least 50% in reserves.

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Yorba Linda processed 39 new permits for second units – often labeled accessory dwelling units or “granny flats” – in 2021, bringing the total to 86 since 2014, during the fifth cycle of the state-mandated Regional Housing Needs Assessment program.

The city also updated second unit ordinance regulations to comply with the most recent state law changes, including a temporary fee waiver pilot program for all plan check and permitting fees related to second units.

And the city reports assisting 120 lower-income households with financing for home repairs during the 2014-2021 housing cycyle, including five households helped with funds last year.

Yorba Linda's city finances weather pandemic

 

“Yorba Linda has weathered the COVID-19 pandemic to date exceptionally well in comparison to many neighboring jurisdictions.”

That's one of the key statements in a financial summary presented at a March 1 City Council meeting by Finance Director Dianna Honeywell.

The positive financial picture is due to “the majority of the city's revenues coming from property tax, the mix of retailers comprising the city's sales tax base and continued strong building construction activity,” according to Honeywell's eight-page report.

Property tax revenue, which was up $113,650 to some $21.6 million for the most recently completed fiscal year, was “directly related to the inventory of high-end residential and commercial properties in the city,” Honeywell stated.

And, while sales tax revenue was slightly lower than expected (down $5,941 to about $7.6 million), “the resiliency in the city's sales tax base was stronger than anticipated,” Honeywell noted.

A jump in real estate values led to a $266,000 increase in property transfer taxes; growth in building activity led to a $263,000 increase in building, planning and engineering fees; and an accounting change led to an $85,000 increase in business license taxes over projections.

Revenue declines were due to less tourism, leading to a $108,000 drop in transient occupancy taxes, and less participation in programs, leading to a $138,000 drop in parks and recreation income, although the latter was offset by lower labor costs.

Other income was $462,000 below expectations, primarily related to investment adjustments.

Notably, the city's hefty reserve balance has led to a sixth year of making extra payments to reduce the city's unfunded pension liability to amoritize the cost over a 20-year period, rather than 30 years.

For example, this year's regular pension payment to the Public Employees Retirement System for the fiscal year ending June 30 is about $1.76 million. An extra $280,000 payment brings the total contributed over the six-year period to more than $9 million.

The city also is making contributions to reduce the city's unfunded retiree medical liability. This year's total is $270,000, bringing contributions for the six-year period to some $1.5 million.

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The Placentia-Yorba Linda Unified School District's El Camino Real High School has earned honors as a 2022 Model Continuation High School, one of six in the county and named this year.

A peer review panel and on-site visitation preceded the award, the fifth for the campus that opened in 1976.

Principal Carey Aiello was recognized by the visiting team “for her attentive nature toward her staff and students, all while leading the school with a positive attitude that's reflected in the respect exchanged throughout the (school) community.”

Aiello began her career as an English teacher at Valencia High School and also served as principal at El Dorado High School.

Placentia-Yorba Linda Unified School District sends vaccine mandate resolution, parent and staff surveys to Gov. Gavin Newsom

 

A resolution and surveys regarding proposed student and staff vaccine mandates sent to Gov. Gavin Newsom by Placentia-Yorba Linda Unified School District officials recently contain some interesting opinions and data points.

A two-page resolution adopted by district trustees carries the lengthy title “Urgent Request to Governor Gavin Newsom to Reconsider or Rescind the COVID-19 Vaccine Mandate for Public and Private K-12 Students and Staff as a Requirement in K-12 School Settings.”

Vote was 4-1, with Marilyn Anderson, Leandra Blades, Carrie Buck and Scott Youngblood in favor and Karin Freeman opposed.

A key point in the resolution notes the district experienced a total enrollment decline of 571 students for the 2018-19 and 2019-20 school years, but the drop was 1,477 students since the beginning of the pandemic and mandated stay-at-home orders in March 2020.

The 259% increase in declining enrollment for the two time periods represents a $14.77 million reduction in state funding for the district's operations, according to the resolution.

The resolution also states, “Some parents, including COVID-19 vaccinated and pro-vaccination parents, are uncomfortable subjecting their young children to a vaccination for which there is no longitudinal data.”

Among the resolution's seven “resolves”: vaccine mandate is “ill-advised” and contrary to educational and social-emotional goals; individual choice “is crucial”; and trustees expect vaccination mandates to terminate March 31, with the slated end of the “state of emergency.”

Others: the district intends “to extend the right for families and staff to request personal and medical exemptions” and if the “state of emergency” is extended, “the district will challenge emergency protocols inconsistent with local conditions as far as the law allows.”

Surveys of families and staff showed that while families opposed the vaccine mandate for students (57.5% against, even with medical and personal exemptions, and 64% opposed, without exemptions allowed), staff supported the mandate for employees (54.1% to 38%).

Survey response rates were 12.6% from families (3,034 responses from 24,026 families) and 44.9% from staff (1,271 responses from 2,825 employees).

Interestingly, 62.1% of families said they'd keep their student in a district school if mandates allowed medical or personal exemptions, and 48.5% said they would if exemptions were not allowed.

With exemptions, 6.2% would choose the district's online or homeschool options, and without exemptions, 7.9% would choose those options. With exemptions, 31.7% would remove their students from district schools, and without exemptions, 43.7% would remove their students.

Staff responses: With exemptions, 73.6% would comply and continue in district schools, 21.1% would seek exemptions and 5.4% would seek employment elsewhere, and without exemptions, 75.8% would comply and 24.2% would seek employment elsewhere.