Hermiston presents June financials, capital project updates and July investment report

Hermiston — At its July 28 meeting the City Council received the June 30 fiscal report, capital-project updates and the city’s first quarterly investment report in the current presentation format. Finance Director Palacios reported monthly revenues exceeded budgeted projections by roughly $1 million (about 5 percent) for the fiscal year through June 30, driven by higher building-permit revenue, franchise fees and some grant receipts. On a budgetary basis, monthly expenditures were under projection by about $1.6 million. Utility funds showed a one-time septic-related receipt from AWS still partially outstanding. Palacios said the Transient Room Tax (TRT) transfers are technically over budget because collections exceeded the year’s estimate; ordinance obligations require distributing the funds to designated recipients and projects as collected. He noted some reimbursements tied to projects would post in period 13 as part of the closing process. On capital projects, staff reported progress across multiple items: right-of-way appraisals for North Hermiston Urban Renewal are complete and bidding was moved from summer to winter to seek better prices; the Harper realignment design is proceeding after delays tied to railroad review and staff directed the consultant to proceed with full design; North First sidewalk and other projects await some railroad right-of-way responses; regional water system generator designs are underway and well number 4 control work is being deferred to lower-demand months. The aquifer storage and recovery drilling reached the target aquifer and the contractor will begin the lower borehole and planned pump tests in August. The hangar replacement kit arrived at the airport and erection is expected soon; library interior work continues and remains on track for a mid-to-late fall opening. On investments, Palacios said the city’s portfolio at June 30 included roughly $16 million (about 63 percent) in the Oregon Local Government Investment Pool (LGIP) and $9.8 million (37 percent) in other securities including corporate and municipal bonds; the portfolio’s quarterly interest earnings were about $380,000 with roughly $114,000 earned from investments outside the pool. A timing issue left some maturities temporarily held in a money-market account; Palacios noted the city redeemed about $9.5 million from the LGIP for ongoing cash needs on capital projects. He said the portfolio’s weighted average yield was about 2.6 percent and that as bonds purchased during low-rate periods mature, yields should trend above 3.5 percent, though future Federal Reserve rate changes could lower returns. Councilors asked for clarification on the miscellaneous revenue variance (Palacios confirmed the AWS reimbursement timing) and about bond and loan proceeds used for capital projects; staff said the city borrowed $20 million for multiple projects and invested proceeds until they were needed to pay contractors. Council accepted the June 2025 financial report and approved the quarterly investment report unanimously.