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HomeMy WebLinkAbout11/08/1999 - Study SessionE CITY OF NEWPORT BEACH City Council Minutes Study Session November 8, 1999 - 4:00 p.m. ROLL CALL Present: Adams, Glover, Thomson, Debay, Ridgeway, Noyes, Mayor O'Neil Absent: None CURRENT BUSINESS 1. CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR. Council Member Debay indicated that she will be pulling Agenda Item 18 (Balboa Yacht Basin) tonight. She pointed out that there are alternatives listed in the staff report, but that more discussion needs to be conducted prior to any action occurring. Council Member Ridgeway agreed with Council Member Debay. He added that he will be pulling Agenda Item 16 (Marinapark Request for Proposals). Regarding Agenda Item 4 (Hoag Hospital Variable Rate Demand Revenue • Bonds), Council Member Ridgeway questioned how this could have no obligation to the City. City Manager Bludau noted that this will be discussed during Study Session Item 3. 2. CONFERENCE AND VISITOR'S BUREAU STATUS PRESENTATION. Rosalind Williams of the Conference and Visitor's Bureau (CVB) reported on their Rose Bowl Campaign. She stated that all of the Pac 10 and Big 10 Alumni Directors received a dozen red roses at the beginning of the football season. Further, the CVB developed a City puzzle in which a piece of the puzzle and a poem of the City's amenities and attributes were sent to the Directors each week. She stated that the CVB has also been flying banners at the games, which read "Think Rose Bowl, Think Newport Beach ", to better familiarize them with the City. Ms. Williams stated that the CVB also conducted sales trips to Los Angeles, San Francisco, and Chicago to meet with 87 clients; attended six trade shows; conducted four familiarization trips for 68 meeting planners, tour operators, and travel writers; and presented the City as a destination of choice to media in New York City, London, Hamburg, Frankfurt, and Munich. She also displayed three articles from Sunset Magazine regarding Corona del Mar, Newport Beach, and the Environmental Nature Center; and an article from the L.A. Tunes about Orange County. Ms. Williams indicated that the CVB is working on two national campaigns, • one is designed for meeting planners and one for consumers. She reported that the CVB has had 750,000 hits to their web site in the last three months; they placed print ads in 10 publications; secured the inclusion of the City for the Wheel of Fortune game show; and worked to reestablish the Film Volume 53 - Page 57 INDEX No report City of Newport Beach Study Session Minutes November 8, 1999 INDEX Festival. In December, the CVB will appear on national television when the Masters/Diners Club Golf Tournament plays at Pelican Hills. She reported that the Board voted to buy a 30 second spot on the Sunday broadcast, in addition to the two hours each day of visibility they will have on ABC. Ms. Williams noted that the CVB will be lighting America's tallest Christmas tree on November 19 at Fashion Island and that they will also be promoting the Christmas Boat Parade. Ms. Williams reported that she has been working with Deputy City Manager Kiff on the concept of a Citywide kiosk system and added that grant funds may be used to develop this project. Ms. Williams stated that 3,000 requests for information were filled during the Summer Rewards Program. She indicated that, although it is difficult to track the amount of business that was related to this campaign, the hotels are still wanting to move forward with a similar campaign for next summer. She reported that the hotel occupancy for the first quarter was 74.7 percent with an average room rate of $143.39. She compared that to the current occupancy of 75.3 percent at a rate of $135.69, and noted that, with an .8 percent drop in occupancy and a $7.70 increase in the average rate, there is still a 28 percent overall increase over the first quarter. In response to Council Member Noyes' questions, Ms. Williams indicated that it is not possible to determine if the web site hits are coming from the City link because the CVB is also linked to a number of travel - related web • sites. She stated that, even though they are unable to download the personal information of those viewing their web site, names, addresses, and pertinent information given to them in order to fill requests are maintained in a database. She noted that all the information that is on their visitors guide is also on the web site. In response to Council Member Glover's questions regarding the kiosk program, Ms. Williams stated that the CVB has an Info- Center, and that the company who maintains their kiosk alerted her to the grant fund opportunity. She indicated that the new free - standing kiosk would be eligible to receive grant funds because it will also have tourist, transportation, and employment information. She stated that the kiosk program will probably be a cooperative effort between the City and the CVB. Council Member Glover suggested placing the kiosk at Fashion Island rather than on the Peninsula. City Manager Bludau stated that placing the kiosk at the beach was suggested because it was reported that the lifeguard tower receives a number of calls requesting dining suggestions or general information. Deputy City Manager Kiff reported that there would be a cooperative link to the CVB system; the system would allow the user to make a number of choices from the screen and print out hard copies. Council Member Glover expressed the opinion that the City needs to be thinking about where the high -end visitor frequents. Ms. Williams explained that a kiosk at McFadden Square was suggested because that structure already exists and is not being used. However, in terms of usage and the • marketplace, she agreed that Fashion Island would be an appropriate location. She added that she was not sure if the kiosk location has been finalized. Volume 53 - Page 58 City of Newport Beach Study Session Minutes November 8, 1999 • In response to Council Member Debay's questions regarding the Boat Parade, Ms. Williams explained that the CVB does a fair amount of marketing but that the hotels generally handle their own weekend packages. Council Member Ridgeway indicated that the kiosk concept was brought to the Promote the Revitalization of the Balboa Peninsula (PROP) Ad Hoc Committee for review, but they agreed that placing a kiosk at the pier is not the most affective location. He stated that more analysis should be conducted regarding where it should be located. 3. HOAG HOSPITAL VARIABLE RATE DEMAND REVENUE BONDS BACKGROUND. City Manager Bludau indicated that it was appropriate to have this item discussed at both the study session and during the regular meeting. He reported that the City has provided backup for the sale of bonds for Hoag Hospital on three previous occasions, starting in 1984, and indicated that the wording in the bonds provides protection that the City is not going to be held responsible for the bonds in the future. Administrative Services Director Danner reported that this is the fourth time the City is talking about entering into this type of transaction. He stated that the four principals involved, Pete Foulke, Jennifer Mitzner, Kurt Yeager, and Charles Plimpton, are present to answer any questions. • Pete Foulke, Executive Vice President of Hoag Hospital, stated that the $125 million bond will be used to fund part of the hospital's ongoing capital improvement program. He reported that the hospital is going through a complete renovation of all its infrastructure and constructing a major addition, noting that State legislation is now requiring all hospitals to be brought up to a new seismic standard. He explained that the main hospital's power source is 25 years old, and that the air conditioning and power plant boilers need replacing. He indicated that they conducted a cost analysis on whether to build a new hospital or upgrade the infrastructure, and that the analysis determined that upgrading the infrastructure would be half the cost of building a new hospital. He reported that the biggest cost involves replacing the four -story building as they cannot bring the old structure up to the new standards. Mr. Foulke stated that the emergency generators have been replaced and that the new generators are much quieter. In response to Council Member Ridgeway's questions regarding the four - story building, Mr. Foulke stated that the seven -story building will be an addition to the four -story building. The clinical functions will go into the new building and the old building can be used for support -type services, not patient care. He indicated that the new building has already been approved, as part of the master plan. In response to Mayor Pro Tem Thomson's questions, Mr. Foulke clarified that the $125 million will be in addition to the current outstanding debt • amount. He confirmed that none of the previous issues have been retired and that the total aggregate amount will be $316 million. He assured that the hospital's assets are available to stand up for this if a problem occurred. Additionally, the hospital goes through a rating process and currently has a Volume 53 - Page 59 INDEX Hoag Hospital/ Revenue Bonds (40) E City of Newport Beach Study Session Minutes November 8, 1999 INDEX AA rating. He indicated that they do not anticipate purchasing any insurance in case of default, but assured that there is no liability on the part of the City even if the hospital reserves became inadequate since the bonds are backed strictly by the hospital's assets and revenues. In response to Council Member Debay's question regarding the fee, Mr. Foulke noted that the City will receive $200,000, and that Council decides how that fee is spent. Mayor O'Neil reported that he represents Hoag Hospital on a number of legal matters and that he will not be voting on the item tonight. However, since this is a discussion item at this time, he feels he currently does not have a conflict of interest. In response to Mayor O'Neil's question regarding how the $200,000 will be used, Mr. Bludau indicated that this decision will not be decided tonight. Council Member Ridgeway asked if the hospital has anticipated the changing environment of the medical profession and health care. Mr. Foulke indicated that it has and that the rating agencies have also taken that into consideration. He reported that the hospital has substantial investment assets to back the bonds and confirmed that Hoag Memorial Hospital is a non - profit organization (501 -C3) and that its reserve is about $500 million. Kurt Yeager of Stradling, Yocca, Carlson & Rauth, stated that the real borrower is the hospital, with the City acting as a conduit. The bonds will • have a tax exempt status and the hospital will enjoy a tax exempt rate. He indicated that the City would not be acting any differently than many jurisdictions in California, noting that multi - family housing, education facilities, and healthcare facilities are typically financed this way. Mr. Yeager reported that the bonds are sold pursuant to an official statement. He indicated that the following will be stated on the face of the official statement and within the document: "The bonds are not the obligation of the City with any constitutional debt limit or payable solely from the revenues; and are not at General Fund responsibility of the City ". He stated that the bond proceeds are made available to the City, which then loans the proceeds to the hospital. He assured Council that Hoag Hospital promises to repay the amount in the form of a loan agreement which is pledged to the repayment of the bonds. It is the essence of the obligation that is the sole security for repayment of the bond. He emphasized that the City has absolutely no responsibility or obligation with respect to payment of principal and interest on the bond. He noted that the City is acting as the issuer of municipal securities and that it is important that legal requirements have been met. The City's bond counsel is responsible for drafting the offering document, and the underwriters are responsible for marketing the bonds. Mr. Yeager indicated that this credit will receive a AA rating, which is the rating of all but a few of the large banks, and stated that this is a reflection of Hoag's financial ability to manage this level of debt. • Council Member Ridgeway asked why the hospital would be borrowing if it has substantial reserves. Mr. Yeager stated that the hospital conducted an evaluation of its assets and resources, and determined that this is an attractive way to manage it. He pointed out that the interest rate is low; Volume 53 - Page 60 City of Newport Beach Study Session Minutes November S, 1999 • that this is better than going to a bank for a conventional loan; and that variable interest rate bonds will trade at 3.5 percent interest. Regarding being a non - profit organization, Council Member Ridgeway asked if this loan jeopardizes the hospital's category and disqualifies them since they make too much money. Mr. Foulke indicated that charitable institutions can jeopardize their status if they accumulate an exorbitant amount of money and do not spend it on their charitable purpose. However, he believed that the hospital is not close to doing that since they spend a great deal on their charitable purpose. In response to Council Member Adams' questions, Mr. Bludau reported that there is no cost to the City and that any cost incurred would be a part of the bond issuance amount. He stated that the $200,000 fee was an offer made by Hoag Hospital and was not negotiated by staff. Mr. Yeager reported that the City has bond counsel on this issue and that the hospital is also paying all of the costs associated with this. He stated that the City's bond counsel is responsible solely to the City and is engaged to render an opinion that the bonds are valid and tax free and to draft the official statement. Mr. Bludau added that Mr. Danner is the staff member to discuss bond issues with. Mr. Yeager stated that the issuance of bonds in this nature is generally approved at a public hearing and that the proposed resolution recites the conduct of a public hearing. He believed that a public hearing notice has been duly published in the newspaper; however, he pointed out that this is • not cited as a public hearing on the agenda. He indicated that Council may want to move this to the public hearing section. Mayor O'Neil requested that City Attorney Burnham review this and advise Council for tonight's meeting. 4. STATUS REPORT ON TIDELANDS ADMINISTRATION REALIGNMENT OF RESPONSIBILITIES. Mayor O'Neil left the meeting at 4:50 p.m. City Manager Bludau reported that Council previously identified improving tidelands administration as one of its goals for the calendar year, noting that there is no comprehensive understanding of how the tidelands properties are handled. He explained that the first organizational chart (Attachment A) shows the current organization and indicated that he worked with staff to try to consolidate and refine some responsibilities that make more sense. He reported that Attachment B is a proposed organizational chart but can be refined and brought back if needed. Deputy City Manager Kiff stated that the hash marks in Attachment B show the suggested changes to the tidelands administration. He reported that a significant change involves how the City deals with leases. He indicated that it is suggested that the negotiations occur in the City Manager's office, and have the Fire and Marine Department handle enforcement and follow - up. Pointing out that that the Fire and Marine Department conduct a lot of • harbor plan reviews associated with permits, he expressed the opinion that this expertise arguably lies in the Building Department. He indicated that he would be handling more of the environmental mitigation activities in cooperation with the Public Works Department. Volume 53 - Page 61 INDEX Tidelands Administration (51) • u • City of Newport Beach Study Session Minutes November S, 1999 In response to Council Member Glover's questions regarding the NPDES and Countywide storm water management, Mr. Kiff indicated that the proposed change reflects the slow focus that is occurring at the County level which is changing the problem of urban runoff from a Public Works focus to a County /City administration function so that the City Manager would have more of a role in NPDES education. He stated that he expects that Public Works would maintain the support that they currently give and believed that the City would have more oversight over urban runoff throughout the County. Council Member Glover agreed that the City needs someone to oversee this issue better. Mr. Bludau stated that the City is looking at some major capital outlays in the future and some cost - sharing responsibilities with the other agencies in the watershed. He indicated that it makes sense to move some responsibilities into the City Manager's office so that a long term view can be taken about the City's possible cost consequences in the future. With regard to the nuts and bolts of the project, Mr. Bludau indicated that Engineering and Public Works would be involved with this and will also attend meetings. Additionally, the City is actually talking about policy issues when cutting edge regulations and how the City is going to try to limit the amount of contaminants flowing into the Back Bay are being discussed. Regarding the mooring issue, Mr. Kiff stated that the proposed functions of the Orange County Sheriffs Department will not be changed much. He indicated that the City has received a number of complaints from County mooring owners and that the City is proposing to take a more active role. Council Member Glover requested a copy of the minutes that clarify a City Manager letter which discussed recognizing a location where the City can erect a building on one of the tidelands. Mr. Kiff indicated that this could have something to do with a site to remove pilings for commercial dredging operations or about examining the possibility of placing a marine education center on Shellmaker. Council Member Ridgeway indicated that he is the Chairman of the Harbor Quality Committee and is also on the Harbor Committee that is looking at the Master General Plan. Regarding the environmental issues, he agreed that the intergovernmental contact needs to be coordinated through the City Manager's office. Council Member Ridgeway believed that the Fire and Marine Department are actually two different concepts and that much of the tidelands issue relates to business and not safety. He expressed the opinion that the lifeguards and junior lifeguards are the only box that is properly under the Fire Department, and that the City should probably establish a separate Marine Department again. He stated that separating the Fire and Marine Department should be discussed. Mr. Bludau highlighted the proposed change to annually conduct lease and permit enforcement and inspection. Council Member Ridgeway added that the Harbor Committee will be recommending that a Harbor Commission be formed and that a separate department head would probably be needed to oversee this. Volume 53 - Page 62 110103 City of Newport Beach Study Session Minutes November 8, 1999 • Mr. Bludau requested and received confirmation that Council feels comfortable with the proposed organization, but that the overall organization should be looked at. 5. ESTABLISHMENT OF A PUBLIC INFORMATION FUNCTION. City Manager Bludau reported that the responsibility of distributing accurate information to the populous was discussed at a retreat on September 18. He indicated that a number of alternatives were discussed but that he recommends that the City establish a public information function and place this function under the City Manager. He noted that it is envisioned that the position be able to disseminate quality, readable information that will regularly go out to the residents; coordinate any press relations; liaison to community and homeowner associations; and help investigate and respond to citizen complaints and requests for information. Mr. Bludau believed that, for what the City wants to do and the number of issues that are occurring, the City needs someone who is vested with the responsibility of helping put out newsletters so that the public has the opportunity to hear what the City is doing and provide feedback. Council Member Debay expressed her support and reported that the Environmental Qualities Affairs Citizens Advisory Committee (EQAC) struggled to contact the homeowners' associations. She stated that the City needs someone to concentrate on producing a newsletter. Mr. Bludau stated • that it is difficult for staff to put out a regular newsletter because of the daily workload and because it is a major undertaking. Mr. Bludau corrected the Executive Summary which states that the estimated budget for this function is $125,650 when it is actually $168,500. He reported that, in order to help underwrite the publication, staff tried to incorporate coupons or get a buy -in from businesses. However, he recommended waiting until the newsletter is established, responsive, and well-read before seeking any kind of financial support from businesses. Council Member Glover stated that she would not want businesses to fund a newsletter that is put out by the City under any circumstance. Regarding press coordination, she envisioned the public information person to be someone who has been a newspaper reporter. She expressed concern about how the City presents accurate information and how one person could handle all the listed functions. She also expressed concern regarding an article about the Mayor race in the Daily Pilot in which "City staff' relayed information. She questioned who City staff is and stated that Council would know who this person was if there was a public information officer. Mr. Bludau stated that the article's author told him that the information did not come from any City staff member. Council Member Ridgeway asked if this position would be an in -house person who interfaces with the homeowners' associations and EQAC. Mr. Bludau explained that he tried to provide Council with as close to a job • description as possible, knowing that it may be beyond the capabilities of any one person. He stated that the amount of time that is spent with the homeowners' associations would depend on the issue, but that this position would be a point of contact for the associations and the City. He believed Volume 53 - Page 63 INDEX Public Information Function (66) City of Newport Beach Study Session Minutes November 8, 1999 INDEX • that the most important aspect of this position is making sure that regular newsletters are produced that provide information relative to the status of City issues. Mr. Bludau indicated that the reporters will probably always want to go directly to Council in order to get a quote; however, internally, the position will allow staff to coordinate and establish policies about who speaks to reporters. Motion by Council Member Debav to direct the City Manager to return to the City Council with a Budget Amendment to fund a Public Information function within the City Manager's Office. Paul Gerst, 2028 Vista Cajon, read comments he provided Council on the criteria for a successful ombudsman program. He stated that most of the associations do not need a public relations person attending their meetings. He stated that the associations would like to have meaningful information and a mechanism to research materials about projects in the community. Tom Hyans, resident and member of EQAC, hoped that Council takes a close look at the proposal since EQAC is intending on doing a lot of what is being proposed for this position and EQAC is a volunteer committee. He expressed concern regarding the amount of salary and benefits this position would receive and reported that 64 percent of the City's operating budget goes toward salaries and benefits for City employees. He stated that the City did produce a newsletter but there was concern about the cost. He expressed the opinion that he does not need this position and that he knows what is going • on in the City because he pays attention to Council meetings. He noted that there are a lot of ways to get information. Mayor Pro Tem Thomson believed that the motion entails considerable rethinking of this issue and that the report is not the only guideline for establishing the person's functions. Mr. Bludau emphasized that this will not be an ombudsman position since it would facilitate public information. He reiterated that public information would go out on a regular basis and be an additional source for the citizens. He indicated that he is looking for direction if Council accepts the concept. In response to Council Member Adams questions, Mr. Bludau stated that he has considered utilizing a contract employee, but that there are some legal standards that must be met for a contract position as opposed to a staff position. Council Member Adams indicated that he is ambivalent about this, noting that he likes the objectives but does not like the price tag, and is unsure about the effectiveness of this position. He pointed out that the advantage of having a contract employee would be that the position could be let go in a year if it was not working out. He emphasized that he supports providing information to the public so that they can participate in issues; however, questioned whether frequent and less expensive press releases would be more beneficial over newsletters. Mr. Bludau stated that he could look into • the legal standards of making this position a contract employee. Council Member Noyes reviewed the many attempts at doing something like this. He believed this should be done but questioned how it should be done. Volume 53 - Page 64 City of Newport Beach Study Session Minutes November 8, 1999 INDEX is He expressed support of Mr. Bludau wanting this position, but expressed concern relative to its cost. He suggested that Mr. Bludau meet with EQAC's communication subcommittee. Council Member Ridgeway stated that he thought this position sounded terrific until he looked at its budget. He expressed the opinion that the local newspaper is more adversarial than friendly and that the City is setting itself up to waste a monumental amount of money. Regarding the press releases, Council Member Noyes hoped that they carry the same weight and keep the community informed of issues in a neutral manner. He noted that a press agent works well for the Police Department. Mr. Bludau clarified that this position would not be used in the Police or Fire Departments. Noting that the City is currently spending $72,000 in publications, Mr. Bludau stated that the cost of the newsletter publication and design is $166,000 without salary. Council Member Ridgeway stated that he would support having this position be a contract position. Council Member Glover stated that she still is not sold on newsletters, but supports the idea of having this be a contract employee. She believed that this was initially envisioned to be a former reporter who handles press releases and not a liaison with the homeowners' associations or someone who handles resident complaints, inquiries, and • issues. Mayor Pro Tern Thomson stated that there is clearly a need to provide better information. He indicated that he asked Council Member Debay to head a Council Ad Hoc Committee to study this, along with the City Manager, to clarify the job functions and report back at a future study session. Council Member Ridgeway suggested reminding the public at the beginning of every meeting that the City has a web page. He believed that the City should use its resources better, noting that it has access to cable television. Council Member Adams agreed that there are a lot of opportunities to get information, and stated that the press receives the same agenda packets that Council receives. He stated that some of the sensitive issues might be more appropriately handled by higher level staff members and that a contract employee that just writes press releases, has more mechanical duties, and serves as a single contact point makes more sense. Council Member Debay amended the motion such that she will head a Council Ad Hoc Committee to study this matter for 60 days with the City Manager and bring a report back at a future study session. The amended motion carried by the following roll call vote: Ayes: Adams, Glover, Thomson, Debay, Ridgeway, Noyes • Noes: None Abstain: None Absent: Mayor O'Neil Volume 53 - Page 65 • 0 • City of Newport Beach Study Session Minutes November 8, 1999 PUBLIC COMMENTS - None ADJOURNMENT - 5:40 p.m. The agenda for the Study Session was posted on November 3, 1999, at 3:00 p.m. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. City Clerk Recording Secretary Volume 53 - Page 66 INDEX