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Staff urges rebuilding cash reserves, flags PMPA payment obligation
Summary
Staff said days-of-cash have declined and recommended increasing reserves; they cited a PMPA-related obligation and plan to set aside $1.2 million over time to meet a $20.35 payment requirement.
City staff warned council that cash-on-hand has been decreasing and recommended policies to rebuild reserves and maintain covenant compliance.
"I need to increase cash on hand," Staff member (Speaker 2) told the council, noting accumulated depreciation, recent expenditures and an IT breach as contributing factors that reduce calculated days of cash. He reminded council of a combined utility system bond covenant requiring a set ratio and said the city must plan to meet a forthcoming PMPA payment obligation: "We have to have 1,200,000 set aside for that $20.35 payment," he said, and described plans to put $100,000 in the current fiscal year and again in 2027 to mitigate future rate shocks.
Staff also reviewed PMPA benchmarking metrics and cautioned that different accounting treatments (capital lease capitalization) can make Westminster look weaker in days-of-cash comparisons; he offered to share the full PMPA report and noted the city's recent FEMA reimbursements and disaster response stayed operational because of available cash.
Council asked about acceptable days-of-cash; staff suggested 90 days as a comfortable target. Staff will propose contingency funds, a planned 1-mill property tax reduction in the draft budget, and other measures to rebuild reserves.
