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Council might look at actions taken over three years and look at the impact of those. But, there is an underlying basis that the numbers will likely grow, despite the fact that you want to not have negative amortization. Councilmember McGovern said the number heard tonight is $180 million in unfunded liability. Mr. Fialho stated this is market value. He said the City is required to post $120 million in its accounting documents. Councilmember McGovern said 10% of that is a $12 million or $18 million reduction, and not that great of a percent of overall debt, which worries her. She suggested it be on the premise that the unfunded liability does not grow. Mr. Fialho stated the unfunded liability will grow regardless of all things that are done, whether it is the 2-tier, or having employees pick up 100% of the cost. The City must use that 10% in context and the context of things the Council is doing and will do over the next five years, will costs have been higher than 10% or lower based on the strategic initiatives employed. To Councilmember Sullivan's point, he likes the idea of"guidance" which provides some flexibility and options for the Council because it is short of something set in stone, while providing direction to staff. Councilmember McGovern said she is very uncomfortable in setting goals that say the unfunded liability will grow. She has no control over CaIPERS, has no idea what the numbers will be in 5 years, and does not know if projections are adequate. They have a very aggressive policy for investments and causes extreme stress for cities that must pay for their failures, and they have not changed those policies. She is also not comfortable with the State's economic instability and amount of debt, and does not want to be sitting on a Council that is not cognizant of trying to be as sustainable as it can be. She is willing to enter into negotiations to do the best they can to make reductions, but is interested in making significant impact rather than just passing them on in a slight manner. She can support this as guidance and hopes more can be done with benchmarks. She also suggested maintaining the jobs people have and the police department, and recognized them as premier employees. Mayor Hosterman said there are many unknowns and moving parts and she felt this provides a platform with which the Council can start on for discussion and collect additional data as it moves through negotiations in the coming months and years. Councilmember Sullivan clarified that the motion provides guidance and not policy. Mr. Fialho suggested specifying in the motion that the City return back to the pre-2001 retirement formulas, which is what they have been attempting to negotiate with labor groups. MOTION: It was m/s by Hosterman/Cook-Kallio to adopt the League of California Cities pension reform paper as a guidance document, and add the three benchmarks that staff has included in the staff report to eliminate negative amortization; reduce the City's overall pension by at least 10%, and reduce personnel costs as a percentage of the total operating budget to 70%, and for the City to return back to the pre-2001 retirement formulas. Motion carried by the following vote: Ayes: Councilmembers Cook-Kallio, McGovern, Sullivan, Thorne, Mayor Hosterman Noes: None Absent: None Abstain: None 24. Sia Hashemi — Consider a request for a Preannexation Agreement and for water and sewer connections at 364 Linden Way, in Unincorporated Alameda County Mr. Dolan stated the applicant has requested dividing his property into three parcels. Staff indicated it could not support the request for water and sewer, given there is a history of Council's interest in keeping the area consistent with the R-1-10,000 zoning district regulations. The property is in the County and the County would be processing the subdivision. The proposal would generate lots that are over 10,000 square feet in the range of 12,000+ square feet and one does not meet the lot width requirement. Those are 80 feet for interior lots, 85 feet for corner lots, and one is 5 feet short. Mr. Dolan then gave a short PowerPoint presentation of the proposal and noted staff found one exception approved in 2006 for a three lot application. There was no neighborhood opposition and the application was approved. He noted the County has approved the subdivision; however, the applicant needs the City approval for sewer and water. There is a fair amount of support in the neighborhood based on the petition City Council Minutes Page 13 of 18 August 16,2011