CITY OF SAN PABLO
BUDGET, FISCAL & LEGISLATIVE STANDING COMMITTEE
FINANCIAL HEALTH ASSESSMENT AND PROJECT OVERVIEW
SEPTEMBER 30, 2026
2 Table of Contents
1. Introduction and Executive Summary
2. Financial Health Discussion
3. Preliminary Findings and Next Steps
3 Introduction to Project Team
Eric Scriven
Principal
Craig Hill
Managing
Principal
Mike Meyer
Vice President
Matt DeFilippis
Associate
Experience
• Public finance professional
since 1990; 15 years
underwriting experience
• Advisor & fiduciary ethos
serving cities & special
districts; revenue/tax-backed
specialist
• Specialist in pension, utility,
energy, RDA & land-secured
• Strengths: educator,
translator, project manager,
client advocate
• Public finance professional
since 1989
• Technical expertise: Revenue
Measures, Capital Project
Planning, Fiscal Forecasting
• Advises on financial policy,
reserve levels, and capital
finance requirements
• Regular Speaker at Industry
Association conferences
• 22 years in public finance (8
years underwriting, 14 as MA)
• Manages NHA's Pension &
Fiscal Sustainability Group –
100+ agencies served
• All bond types: Lease/COPs,
Utility, Pension, RDA, Land-
Secured + parking &
broadband structures
• Featured speaker: CSMFO,
CDIAC, GovInvest
• Public finance professional
since 2021
• Experience with general fund
forecasting, CalPERS pension
cost management, and credit
rating analysis
• Has provided project
management and deal support
on California financings
totaling $880M+
Education
MBA, Haas School of Business;
B.S. Urban Land Economics &
Finance
U.C. Berkeley
B.S. Managerial Economics; B.S.
Agricultural Economics
U.C. Davis
B.S. Management Science
U.C. San Diego
B.A. Applied Mathematics
U.C. Berkeley
Licenses MSRB Series 50 & Series 54 MSRB Series 50 MSRB Series 50 MSRB Series 50
4 Executive Summary
City forecasts a recurring, growing structural budget deficit (currently $2.0-$2.5M) Sources: Casino (58% of revenues), Sales tax (9%) and Interest earnings (10%) [Total=77%] are each either stagnating or projected to decrease in the near-term Uses: Wages (38% of expenses), Benefits (21%), Operating (17%) and Contracted (11%) [Total=87%] each currently have inflationary pressures that are trending higher than revenue growth
Reserves: Recent budget balancing measures have relied upon reserves and one-time sources.
Reserves have been spent down by 36% ($77M → $49M) over past 3 years + 2-year forecast Risks: Potential competing casinos, expense volatility of CalPERS unfunded liability repayments and unforeseen “mission-critical” capital needs
Consideration of revenue enhancement and/or cost management strategies, as well as buttressing policies/practices related to core reserves and internal service funding is required to enhance fiscal resiliency
Revenue concentration from highly volatile or declining sources requires higher reserves 5 Project Overview – Tentative Timeline
Initial Financial Health
Due Diligence: (1)
Integrate 10 years of
City financial history, (2)
review policies, (3) staff
discussions, etc.
Dynamic Forecasting
Model development
Sept 30, 2026: Present
Initial Financial Health
Assessment & Findings
to BFLSC Committee
Summer 2026
Finalize Baseline long-
term forecast model
Scenario Modeling /
Stress Testing
Preliminary review and
analysis of cost
mitigation and revenue
enhancement policies
CalPERS Pension
education for
committee / council
Fall 2026
Present forecast and
dynamic forecasting
model to City Council
(after FY 2026 ACFR
completion)
Final recommendations
to reserve policies
Recommendations for
pension and debt
management strategies
Winter 2026-27
6 $40
$45
$50
$55
$60
$65
$70
$75
$80
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 Millions
Fiscal Resiliency Reserves Balance
Total Revenues
Total Expenses
General Fund Revenues, Expenses, & Fiscal Resiliency Reserves Persistent structural deficit
has reduced reserves from
$77M to $49M (projected
at FYE 2028) since FYE
2023
FY 2022-23 surplus due to
one-time federal stimulus
and sale of property
FY 2024-25 deficit inflated
due to large transfers out
for capital projects
One-time revenues /
reserves balancing the
recurring needs /
operating budget is not a
GFOA recommended /
sustainable long-term
financial strategy
Estimated
Deficit:
$2.7M
Deficit:
$2.7M
7 FY 2026-27 General Fund Revenue Sources
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
$60
FY 2026-27
Millions
Casino Contract Revenue
- 58% of Revenues
- Extremely high concentration + recent stagnation in
growth + competition risks (potential $7M-$10M drop
in revenue)
Use of Money & Property
- 10% of Revenues
- $3M investment income reliant on on strong reserve
levels & market dependent (interest rates)
Sales Taxes
- 9% of Revenues
- Measure S step down 10/1/2027; Measure R ballot
measure Nov. 2026 potentially provides $2M increase
8 $0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
$60
$65
FY 2026-27
Millions
FY 2026-27 General Fund Expenses
Wages
- 38% of Expenses
Benefits
- 21% of Expenses
Operating Expenses
- 17% of Expenses
Contracted Services
- 11% of Expenses
Transfers Out/Other
- 13% of Expenses
9 $13
$18
$23
$28
$33
$38
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
FY 2024
FY 2025
FY 2026
FY 2027
FY 2028
Millions
Casino Contract Revenues Wages + Benefits
Core Revenue vs. Expense Trends
Casino Contract Revenues vs. Wages + Benefits
Slowdown in Casino Revenues while
Wages + Benefits increase at a 4.4%
compound annual growth rate
First crossover point
upon COVID-19 impact
Prior to COVID-19, Casino Revenues
maintained a gap of as much as $10M
10 Debt
Outstanding
Principal (as of
June 30, 2026)
Final
Maturity
(FYE)
Source of
Repayment
Outstanding
Interest Rate
FY 2027 Annual
Debt Service (%
General Fund
Budget)
Redemption
Provisions
2022 Lease Revenue
Bonds (Public Safety
Training Center)
$28,460,000 2053 General Fund 3.000% -
4.000% $1.77M (2.9%) November 1, 2032 @
100%
2018 Lease Revenue
Bonds (City Hall Project) $13,780,000 2053 General Fund 3.250% -
5.000% $800K (1.3%) November 1, 2028 @
100%
2015A Lease Revenue
Bonds $3,595,000 2045 General Fund 3.625% $130K (0.2%) November 1, 2025 @ 100%
Total $45,835,000 -- -- -- 4.5% --
CalPERS Pension Liability
Unfunded Accrued
Liability (“UAL”)
$58,659,277
(latest actuarial
valuation)
2044 General
Fund/Special
Revenue Funds
6.800% $6.01M (10%)
$100M+ General Fund Debt Profile
$46M of Lease Revenue Bonds and $59M of CalPERS UAL
11 $0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
$11
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
Millions
Rising Pension Costs are a Key Driver to Structural Deficit Annual pension costs have nearly tripled
over last decade
Investment losses during and post Great
Recession
CalPERS assumption changes
Over $5M of cumulative increases above
FY2026 levels expected over next 4 years
($11M over next 8)
City maintains $2.2M in pension reserves
as of FYE 2025
Section 115 Pension Trust: $1.2M
Pension Liability Sustainability Reserve:
$1.0M (FRRP)
Future analysis will evaluate strategies to
mitigating future pension cost volatility
UAL Payments (6/30/2025
Actuarial Valuation)
Normal Cost Payments
12 City of San Pablo Credit Rating
“AA-” Lease Appropriations Credit Rating Assigned by S&P Global From 2022 Credit Rating Report:
Strengths:
Financial management
Very strong reserve position despite reliance on
a volatile revenue stream
Note: Reserves have decreased significantly since
2022 review
Very strong operating surpluses
Note: City has been operating under a structural
deficit since FY 2023
Weaknesses:
Below average income and wealth indicators
63% of County; 80% of State; 98% of National
Elevated debt burden
S&P includes tax allocation bonds in their
calculation; S&P expects improvement as the debt
amortizes over the next several years
S&P could lower the rating if the City’s reserves were to deteriorate to a level no longer considered very strong.
Downside Scenario
S&P could raise the rating if the City's income and wealth metrics rise, if debt levels moderate, and if the City's major revenue source diversifies away from gaming revenues.
Upside Scenario
“While this revenue stream is subject to high volatility and can fluctuate substantially due to the nature of gaming revenues, the city makes an effort to keep a very large general fund balance reserve to mitigate potential
disruption to this revenue stream.”
S&P Comment on Casino Revenue
13 Comparison to Other Cities with Casino & Cardroom Revenues Numerous California cities rely on
casino/cardroom revenues, thus
maintain robust reserve levels
GFOA recommends a minimum of
two months of unrestricted
budgetary fund balance, but
dependence on a volatile revenue
source may warrant the need to
maintain a higher unrestricted fund
balance
Competition Risk: Proposed Vallejo
casino could be an economic threat
to the City’s main (58%) revenue
source, with an estimated annual
revenue loss impact of $7–$10M*
Available General Fund + Casino Fund Balance ($)
% of General Fund + Casino Fund Expenditures
$52M
76%
$62M
92%
$159M
145%
5% 17% 25% 32% 35%
55% 59%
95% 83% 75% 68% 65%
45% 41%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Elk Grove Colma Rohnert
Park
Commerce Bell
Gardens
San Pablo Hawaiian
Gardens
Casino Revenues as % of General Fund + Casino Fund(s) Revenues June 30, 2025 Audited Financial Information
Casino Revenues Non-Casino Revenues
$128M
130%
$20M
35%
$29M
119%
$37M
174%
Cardroom Revenues
* The full-scale casino is currently blocked, and its development will depend on litigation over the next several years
14 Overview of Potential New Revenue Sources and Funding Tools
GENERAL
OBLIGATION
BONDS
PARCEL TAX SPECIAL TAX ASSESSMENT TRANSACTIONS
& USE TAX EIFD
Approval 2/3 voters 2/3 voters 2/3 voters Majority,
property owners
Majority, general
purpose
Local agency /
PFA approval
Tax Basis Ad valorem
property tax
Flat rate or
formula Custom formula Proportional
special benefit
Supplemental
sales tax
Property tax
increment
Eligible Uses Capital facilities
only
Capital +
operations
Capital +
operations
Capital +
operations
Any legal
purpose
Eligible capital
projects
Credit Profile Highest rating /
lowest rate
Limited tax;
below GO
Limited tax;
below GO
Limited tax;
below GO
Can support
lease bonds Tax increment
BEST FOR MAJOR
CAPITAL
UNIFORM
PROPERTY LEVY
FLEXIBLE CFD
STRUCTURE
BENEFIT-LINKED
FUNDING
BROAD GENERAL
FUND USE
CAPTURES FUTURE
AV GROWTH
15 NHA’s Financial Forecast Methodology
The baseline forecast is based on
historical growth trends and third-party
expert projections
The forecast uses the latest Biennial
Budget as the base years, and looks
forward 5-10 years
Additional scenarios will be evaluated
to stress test the City’s reserves and
overall fiscal health (e.g., casino
competition/ revenue loss, and
pension-related stress scenarios)
Review City’s General
Ledger Detail
Determine Key
Revenues/Expenses
Evaluate Historical
Growth Rates
Consult City Staff and
Third-Party Expert
Materials
Adjust
Revenues/Expenses for
One-Time Anomalies
and Structural Changes
Stress Test with
Alternative Scenarios
16 Initial Financial Assessment – Summary and Recommendation City’s use of reserves and one-time measures to pay for capital projects and maintain service levels has created urgent need to take near-term action to maintain financial resiliency
Reserves decreased $23M from FYE 2023 to FYE 2026; $28M projected decline through FYE 2028
Core casino revenue source has “flat-lined” and is at risk of significant reductions from competitor encroachments
Other key sources, Sales Tax and Use of Money (interest earnings), will be going down in near-term without extraordinary action taken (i.e. Measure R may reduce deficit in near-term, despite Measure S step down)
Structural deficit is present (and growing) despite previous cost mitigation efforts, such as hiring freezes, contract services reductions, and use of emergency reserves 17 BFLSC Recommendations
Recommendations to the BFLSC
1. Receive presentation
2. Continue to evaluate, perform modeling and schedule the Municipal Advisory Firm NHA Advisors to present on the following:
A. CalPERS Pension education; AND
B. Additional Fiscal Sustainability findings and recommendations following completion of year-end audit and completion of ACFR for period ending June 30, 2026.