Committee authorizes steps to front‑fund judgments with intent to reimburse by judgment-obligation bonds

The Budget and Finance Committee approved a resolution allowing the city to front‑fund certain judgments and settlements from the city’s reserve fund, with the stated intent to reimburse the reserve using proceeds from a future judgment‑obligation bond (JOB) issuance.

CAO staff described the typical timetable for a JOB issuance, including a court validation process that, absent objections, generally runs six to eight months and may take longer if objections or appeals are filed. The CAO advised that if timing requires it, the city may borrow from internal funds (the reserve fund) to pay obligations and later reimburse those expenditures with JOB proceeds; the council must declare the intent to reimburse within 18 months of the expenditures.

Office of the CAO staff estimated a target JOB issuance of $80,000,000 with projected interest costs of roughly $21,000,000 (based on current market conditions) and average annual debt service of about $9,300,000 over 10 years. Staff said market rates and timing will determine final costs. The city attorney's office noted that validation filings must be published and that any interested person may file an objection; the six- to eight-month estimate assumes no objections are filed.

Committee members asked procedural questions and sought options to accelerate or reduce litigation risk; members also noted the scale of liabilities so far in the fiscal year (staff reported roughly $120,000,000 in liabilities paid year-to-date against a budgeted $83,000,000).

The roll call vote to approve the item was Councilmember Yaroslavsky — yes; Councilmember Blumenfield — yes; Councilmember Hutt — yes; Councilmember McOsker — yes; Councilmember Hernandez — yes.