'MINUTES' for Four Noteworthy 1 February 2011 City Council Agenda Items

“MINUTES”
REGULAR CITY COUNCIL MEETING
CITY OF CARMEL-BY-THE-SEA
Tuesday, February 1, 2011

Archived Video Streaming

City Hall
East side of Monte Verde Street between Ocean and Seventh Avenues

V. Announcements from Closed Session, from City Council Members and the City Administrator.

B. Announcements from City Council members (Council members may ask a question for clarification, make a brief announcement or report on his or her activities).
1. Receive Mayor’s Annual Report
(Video 40:10 – 53:45)

State of the City 2011
ACHIEVING COUNCIL OBJECTIVES

January 2011

This eighth Annual Report, prepared by the Mayor and the Vice Mayor, covers calendar year 2010 and thus provides perspective for upcoming work on next year’s budget.

Revenue context for this report: For the Fiscal Year (FY) ending June 30, 2010, the City of Carmel-by-the-Sea had an operating deficit of approximately $155,000, which was covered by monies in our reserves totaling at that time about $9.4 million. Of the City’s top three revenue sources, Property Tax exceeded the previous FY by almost $125,000 and was the top revenue producer, followed by Transient Occupancy Tax (TOT) which exceeded the previous year by about $45,000. In addition, the City was awarded grants of more than $184,000 and received donations of about $55,000. These latter monies, totaling almost $240,000, supplemented revenues in that projects they funded were financed with non-City funds.

For the period July through December of the current FY, as compared to the previous year, Property Tax is up over $175,000. TOT for July through October 2010 is up about $103,000 over the same period last year (receipts for November and December are not yet available). Our third highest revenue producer, Sales Tax, is to date available only for the five month period July through November 2010, and exceeds the same period in the previous year by over $30,000. With the data received to date, there is a welcome up-tick in all three major revenue categories.

Following are the six priority goals established by Council:

1. Explore Fire Department options:

Progress: This exploration has zig-zagged through a variety of options. As was reported in the last Annual Report, we had a Pacific Grove fire chief until they merged with Monterey. Under Monterey’s management, Carmel has continued training with the combined Pacific Grove and Monterey Fire departments. Toward the end of the year, it was clear that a consolidation of the seven Peninsula fire services was not viable. We are now looking at a possible tri-city model (Monterey, Pacific Grove and Carmel) as well as a variety of other options, including retaining our own independent fire department. It is hoped that this will be resolved by the end of March 2011.

2. Manage the City’s challenging financial picture:

Progress: One of the elephants in the room in the expense column is what might be the City’s pay-in and over what period to CalPERS, the state retirement program. We have established an ad hoc Citizens’ Committee to study this issue and report back, as well as answer CalPERS questions raised with each jurisdiction by the January 2011 Civil Grand Jury report.

We continue to budget conservatively, reduce expenses, seek ways to share
services with our neighboring municipalities, obtain grants, and delay projects in order to minimize draws on our reserves. We also look for ways to increase our revenue streams. As recommended in last year’s budget discussions, we will review paid parking as an option, as we have done well with the limited paid parking on the north lot of Sunset and bus parking at the Plaza. Technology that has come on line in the past 10 years offers many new parking management options. Early in the new year, the committee will report on their findings at several workshops and seek public input.

A new agreement has been reached with the Carmel Public Library Foundation, where they will be increasing their fundraising to avoid library staff reductions. At the Sacramento level, the City participated in the effort to pass Prop. 26 that would block the State from raiding fees raised by cities.

3. Concentrate on short-term marketing and economic development:

Progress: Our mantra is “heads on beds”. This translates into short-term events that draw overnight visitors or events that will entice day-trippers to return for a longer stay. New lights for the median on Ocean Avenue are being illuminated until daylight savings time, so that the town looks more inviting at night. We have been fortunate in receiving coverage at no cost to us in national media. The November issue of “Conde Nast Traveler” listed Carmel as one of the 10 places to visit in the U.S.; “Architectural Digest” in January featured a home on Scenic Road, which included photos of our beach and comments on Carmel; a TV program on “Animal Planet” included shots of Carmel; and the radio program “Dining Around with Gene Burns” Saturdays on KGO was broadcast from the Carmel Plaza. The MST free trolley ran its circular route through Carmel during the summer and Christmas holidays.

4. Monitor the storm water run-off program and address requirements for
Areas of Special Biological Significance (ASBS):

Progress: The storm water program was approved in its entirety and execution of the contract with the State is expected shortly. The project is slated to commence in March. Five storms drains were replaced.

5. Plan for the phased renovation of the Forest Theater and develop
funding options:

Progress: We are working with a project manager to phase the work planned for the Forest Theater. ADA improvements would be addressed in the first phase. Sufficient funding is not yet available so that we can bring a specific proposal forward to Council.

6. Implement programs and projects that protect and enhance Carmel
beach:

Progress: The San Antonio walkway from 4th Avenue to the Pebble Beach Carmel Gate was completed in time for the U.S. Open. The North Dunes project (including the boardwalk and new stairs to the beach for improved public access) also has been completed. Two beach rakes were examined and one underwent an extended test of its operation. A final determination on the beach rake’s effectiveness will be made by the Forest and Beach Commission which will make a recommendation to Council. The 13th Avenue seawall foundation and beach stairs were repaired, sand replenishment is ongoing, and the Del Mar project readied for bid. Permanent beach restrooms designed to replace the porta-potties at Santa Lucia and Scenic lack funds and potable water to proceed. Staff continues to work with a contractor to remove charcoal from the beach (3,500 pounds last year).

CAPITAL PROJECTS AND IMPROVEMENTS

1. A new restroom at Scenic and Santa Lucia and the storm water program are discussed above.

2. Street Projects: The Del Mar and Junipero from Ocean to 8th Street
projects were postponed until the spring of 2011 to eliminate any conflict
with the 2010 U.S. Open. Del Mar includes a new and larger underground water tank for non-potable water use, while the Junipero project will resurface and realign the median so that it starts farther north at the crosswalk to make the crossing safer for pedestrians.

OTHER PROJECTS:

1. The “Greening of Carmel”: Carmel has increased its trash recycling
rate from 69% in the previous year to 73% last year. This past year,
Carmel recycled 1,700 pounds of batteries, compared to 1,400 pounds last year. With the City’s ban on polystyrene in place, we are working with the
Waste Management District’s Litter Task Force for a similar County and Peninsula-wide ban on plastic bags. Green building guidelines and incentives are under review by the Planning Commission.

2. Emergency Preparedness: The Police and Fire departments continue to
work cooperatively to improve the functionality of the City’s Emergency
Operations Center (EOC). Emergency preparedness “Quick Guides” are in preparation for publication and distribution to the public. One tabletop exercise was held for key EOC managers. An emergency generator was installed at the Fire Department and another is in design that would service both the Police Department and the Carmel Youth Center (the latter as a possible safe haven).

The Next Generation (NGEN) Radio Project is a countywide effort to replace the old emergency communications infrastructure to ensure reliability and enable interoperability among public safety agencies. A request for proposal has been circulated to vendors for the purchase of the radios.

3. Forest and Beach: For the sixth year, the City has received a Tree City USA Award. Students from various Carmel schools and volunteers from the Church of Latter-day Saints removed approximately 18,000 square feet of non-native plants as part of a beach dunes restoration effort. A grant application is in process to fund landscaping for the south side of Ocean Avenue between Carpenter and Junipero Streets.

4. Water: The cities of the Water District began working together in mid-
2009 to meet the challenge of a new water supply. This effort intensified
dramatically a year later. Since mid-2010, there have been many meetings (sometimes two or three per week resulting in reams of paper) with the six Peninsula mayors and city managers. This culminated in the December 2010 Public Utilities Commission decision to approve the Regional Water Project (desalination in Marina). Peninsula mayors selected the Monterey and Carmel mayors to represent them on the Advisory Committee for the project, which includes CalAm, the Marina Coast Water District, the Monterey County Water Resources Agency and RMC Water. Some of these meetings are out of town and last the better part of a day, so it is clear that this is a significant commitment of resources. This Committee will oversee project funding, testing of wells, construction and placing this desal project into operation around 2014. There are still legal and technical issues that could delay this date.

In closing, these are challenging times. It is too early to tell whether the glimmer of an up-tick early in this FY year will hold. It is also too soon to tell what the impact of changes and reorganizations bruited about in Sacramento will be on local governments. By staying focused and with all of us working with mutual understanding and respect toward our agreed-on goals, we are confident that we will meet these challenges.

Sue McCloud
Mayor

Paula Hazdovac
Vice Mayor

C. Announcements from City Administrator.
1. Present FY 2009-10 Draft Audited Financial Statements by Ralph Marcello, Marcello & Company CPAs.
(Video 54:00 – 1:32:30)

Ralph Marcello, Marcello & Company CPAs, presented an overview of the draft audited financial statements. Marcello addressed the economy, city revenues (top three revenue sources - 78% of total city revenue - declined $400,000 or 4% from previous year) and expenditures ($425,000 less than original budget), CalPERS, defined benefit pension plan and fraud prevention. Methods to reduce expenditures with reducing revenues implemented by some governments include 50%:50% cost sharing arrangement for benefits, second tier program for new employees and contract employees for new employees. The auditor’s opinion is an opinion on the reliability of the city’s financial statements, not on the performance of the city or city personnel. The opinion on the City is an “unqualified opinion,” the highest rating.

Mayor McCloud clarified that the City is in the process of studying restructuring the pension plan.

Council Member Ken Talmage expressed concerns about PERS issue; a study stated that in July 2008 retirees health care cost $2.4 million, a liability not on the balance sheet, and suggested $1 million reserve account transfer to trust account. He stated there would have been a $1.1 million deficit if the City spent capital money it should have spent, but the City deferred. He articulated the belief that the City needs $1 million - $1.25 million in more revenues to accomplish deferred capital projects and the city cannot cut expenditures.

Marcello responded that the City has unreserved money designated, not legally committed, including $2.2 million operating reserves, $2.4 million designated for capital improvements and $1 million designated for retirement benefits. He advised that a city can continue to raise TOT to the point people do not come or install parking meters and people will decide to shop elsewhere. He emphazied that he believes we are through the worst part of the recession. He stated that he did not see any “negative aspect” of using part of reserves to supplement the budget, that is why you set it aside during the good years.

City Council Member Burnett asked about the treatment of unfunded CalPERS and other liabilities. Pacific Grove’s estimated CalPERS share of $2 billion was $28 million – $35 million and assumed Carmel’s unfunded liabilities comparable. He stated that CalPERS not adequately addressed in audit.

Marcello responded that there is no reason for the City to be 100% funded. He stated that he expected CalPERS rate of return to be between 2% - 7%. He did not see more information that could be reported and disclosed in the audit.

City Council Member Talmage stated that the City paid $1.55 million to CalPERS last year, spending $1 of $8 - $9 of the City budget to CalPERS and expressed concern about magnitude and growth rate of amounts to CalPERS.

City Council Member Burnett stated he wanted better disclosure and wanted CalPERS numbers in the audit next year in order to get the complete financial picture of the City.

Marcello responded that if the true goal is a complete picture of unfunded liabilities, then there are other unfunded liabilities the City is responsible for; for example, he stated that the Public Works Director probably has a paving maintenance program for all city streets, including estimated age, estimated life remaining and estimated cost to repave streets. Is it prudent to spend money on a study or is it more prudent to spend the money on paving?

Note: The City does not have a Public Works Director.

XI. Orders of Council
A. Receive report, provide policy direction on circulating a Request for Proposal (RFP) for the management and operation of the Children’s Experimental Theater, or ratify the direction provided to the City Administrator at the November 2, 2010 City Council meeting to negotiate a lease with Pacific Repertory Theater.
(Video 2:39:25 – 3:21:00)

City Attorney Don Freeman stated that he recommended the agenda item be placed back on the agenda for RFP or to ratify previous council direction.

City Council Member Ken Talmage expressed concern about whether the City should lease the Indoor Forest Theatre space due to safety issues, ADA accessibility and up-to-date issues.

Mayor McCloud stated that the safety issued has been addressed with the installation of a sprinkler system, it is ADA accessible but not to the extent it should be and therefore "there is no problem on that score."

Mayor McCloud opened the meeting to public comment.

Rebecca Barrymore, President of the Forest Theater Guild Board of Directors, read from a letter written by Herbert Heron about history of Theatre whereby the Forest Theatre is a “true community enterprise.” And the FTG is the “founding community theater group.” She expressed support for their year round Children’s Art Program, Academy of Theatre Arts Program proposal for the Indoor Forest Theatre.

Barbara Brooks, resident, expressed support for PacRep Theatre; she stated Marcia Hovick gave SoDA her “blessing” to continue to operate the Children’s Experimental Theatre (CET).

Megan Terry read a statement from Donna Greenfield regarding FTG and SLAM (Students of Life, Arts and Media) program. Terry argued for FTG’s “historic connection” of community theatre under the aegis of FTG. She stated that historic preservation is not glorifying the past after it has been destroyed.

Adam Moniz, resident, commended the city attorney and city council for bringing the item back onto the agenda to ensure proper procedures are followed.

Bob Mulford, PacRep Theatre Board President, expressed support for PacRep Theatre’s proposal. He stated that PacRep Theatre has already had two events at the Theatre and both events were “sold out.” He stated that the Board is “stable” and “we all contribute.”

Safwat Malek, FTG, expressed concern for inclusivity. FTG does not have a venue and the Inddor Forest Theatre is a good venue for them. He requested that the council look at FTG’s proposal submitted in November 2010.

Jim Bennett, PacRep Theatre’s Director of the Capital Initiative, focused on “duplication of services” and that PacRep had received the “blessing” of Marcia Hovick for SoDA to operate in the Indoor Forest Theatre space. Bennett urged consideration of PacRep’s proposal; PacRep has a reputation and track record for solid training for young people and SoDA is not a professional theatre and it is “community theater.”

Stephen Moorer, PacRep Theatre Executive Director, rebutted certain of FTG’s claims.

Mike Brown, resident and business owner, stated that he felt both groups could share the facility; FTG one half of the year and PacRep one half of the year.

Barbara Livingston, resident, asked whether or not SoDA children could audition for FTG productions.

A father with four children in PacRep past performances, stated that the PacRep instructors are exceptional, they are a tremendous asset to community and they are a community theatre.

Mayor McCloud closed the meeting to public comment.

City Council Member Paula Hazdovac stated that SoDA is a proven program in place, whereas FTG sounds like a new program and therefore she preferred PacRep.

Mayor Sue McCloud stated that she would prefer FTG have a functioning board and a solid financial base.

City Council Member Jason Burnett stated his preference to ratify direction to city administrator and negotiate a lease with PacRep because PacRep is ready to hit the ground running.

City Council Member Talmage stated that he may be a minority of one; he expressed his belief that the most equitable way to proceed is for the City to solicit proposals for fair and open purposes.

City Council Member Karen Sharp stated that she was disappointed that FTG did not appear at the meeting and that did not show “good faith" and money was owed and therefore she favored PacRep.

Assistant City Administrator/City Clerk Heidi Burch stated soliciting proposals would take about two months.

Council Member HAZDOVAC moved to ratify the direction provided by the city administrator at the November 2, 2010 City Council meeting to negotiate a lease with Pacific Repertory Theatre, seconded by Council Member SHARP and carried by the following roll call vote:

AYES: COUNCIL MEMBERS: BURNETT; HAZDOVAC; SHARP; & McCLOUD
NOES: COUNCIL MEMBERS: TALMAGE
ABSENT: COUNCIL MEMBERS: NONE
ABSTAIN: COUNCIL MEMBERS: NONE

D. Approve amendments to City’s revised Harassment Prevention Policy.

Mayor McCloud announced agenda item “pulled to a later date.”

Note: MCW reported, as follows:

“One potential flaw in the new proposal the council might discuss: The city's personnel officer is charged with receiving harassment complaints, but the city has no personnel officer; it has not hired a replacement for Miller since she left her job in 2009.”

Source: News Blog
Carmel Discuss Harassment-Prevention Policies
By Robin.Urevich
January 28, 2011

ADDENDUM:
V. Announcements from Closed Session, from City Council Members and the City Administrator.

C. Announcements from City Administrator.

3. Receive SCC Inc.’s FY 2010-2011 2nd Quarter Financial Report.

Chairman Jim Price stated that SCC’s newly selected managing director, “who will be confirmed within the next couple of weeks,” will be introduced at the March City Council meeting.

Note: Adam Moniz asked what the public aspect of the managing director selection process was, where the job posting was posted, number of resumes received, geographical diversity of applicants and number of people interviewed during Appearances. Post-Appearances, no answers were forthcoming.