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HomeMy WebLinkAbout05/24/2005 - Study SessionCITY OF NEWPORT BEACH City Council Minutes Study Session May 24, 2005 - 3:30 p.m. ROLL CALL Present: Heffernan (arrived at 4:33 p.m.), Rosansky, Ridgeway, Daigle, Nichols, Mayor Bromberg Absent: Webb (excused) CURRENT BUSINESS 1. CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR. Council Member Nichols stated that be would be pulling Item No. 3, Newport Lexus Automobile Dealership, and Item No. 9, Sunset Ridge Park, at the evening meeting, and that he has objections to the 75 -foot tower and the 50 -foot parking structure for the automobile dealership. 2. NEWPORT BEACH AND CONTRACTING OUT. Using a PowerPoint presentation, Assistant City Manager Kiff displayed the definitions of "privatize ", "outsource" and "contract out ". He explained that some cities, such as Newport Beach, are "full service" cities. Others are "contract" cities, which means that they rely on other agencies or private sector companies to provide essential services. Still other cities are somewhere in between the two, and even full service cities can vary in the services they provide. Most contract cities don't have a choice on whether some of their services are contracted out. Assistant City Manager Kiff displayed a chart showing a comparison of full service, contract and "in- between" cities in Orange County. He pointed out that in nearly all cases, the services that are contracted out are still performed by a government agency. He then displayed a list of the services provided by the City of Newport Beach that other cities may not provide and the size of the staffing for each of the services. He noted that of the 548 employees that provide these services, only 38 are located at City Hall, which speaks against contracting out to avoid building a new City Hall. Assistant City Manager Kiff stated that the Orange County League of Cities puts out an annual City Directory, which some in the community have referred to when making comparisons. It lists Newport Beach as having no major services contracted out. He explained that the 2006 directory will be corrected to list the sixteen services that Newport Beach does actually contract out for. He displayed the list and noted that it is more than any other city. He additionally pointed out that using the League's directory to draw general conclusions about contracting out isn't very useful, because the extent of the services isn't quantified. Volume 57 - Page 237 INDEX (100 -2005) City of Newport Beach Study Session Minutes May 24, 2005 100 �1/ At the request of Council Member Ridgeway, Assistant City Manager Kiff read the list of the sixteen major services that the City contracts out for. The first on the list was trash pick -up and he explained that approximately 18% of the community receives residential trash collection from the private sector and all of the multi - family and commercial trash pick -up is contracted out. He continued with the list, which included specialized legal services, tree trimming, overflow building plan check, median and parkway landscape maintenance, park maintenance, building maintenance and custodial services, storm drain cleaning, investment management, municipal billing services, property management, oil field management, school crossing guards, animal shelter, alley sweeping and engineering services. In response to Council Member Rosansky's question, Assistant City Manager Kiff confirmed that grease trap inspections are outsourced, but that he doesn't consider them to be a major service so they weren't included on the list. They are included on a list of services by department. He then displayed this list of the services that the City contracts out for by department. It totaled 119 services. Assistant City Manager Kiff displayed a list of what is paid by the typical Newport Beach resident for City operations. He then displayed a list of what Newport Beach residents do not pay for that is paid for by residents in other cities, and pointed out that Newport Beach residents do not pay for some of the top rated services they receive. He further noted that Newport Beach residents get their services for a local tax burden that is in the midrange of the other Orange County cities. In response to Council Member Daigle's question, Assistant City Manager Kiff stated that the local tax burden is the total of those taxes that are administered locally. It does not include property taxes, which cities have no control over. In conclusion, he stated that the information presented at the current meeting will be available on the City's website. Council Member Daigle asked if the trend towards privatization is increasing the costs or decreasing the costs of government. City Manager Bludau stated that in some cases, the services cost more to contract out. Additionally, recent State legislation makes contracting out for certain services more expensive because prevailing wages must be paid. He stated that other services might cost less to contract out. Council Member Daigle asked if an increase in privatization results in a decrease in government administration. City Manager Bludau stated that in most cases, employees have not been lost when a service has been contracted out. In response to Council Member Nichols' question, City Manager Bludau stated that prevailing wages are established on a regional level and the State establishes those services that must be paid for at prevailing wages. Council Member Nichols asked if the prevailing wages are the union wages prevailing in the area. Public Works Director Badum stated that the State establishes the wages, and he would guess that the unions have an influence. Council Member Ridgeway stated that in the construction industry, it probably Volume 57 - Page 238 City of Newport Beach Study Session Minutes May 24, 2005 INDEX is the union wage. He further noted that the State law was established to comply with Federal government mandates on prevailing wages. Council Member Rosansky asked what the theory is behind paying the prevailing wage. Mayor Bromberg stated that the intent of the State legislation, as written, would have to be looked at. City Attorney Clausen added that it may be a way to equalize pay to public sector employees and union negotiated wages. Philip Arst provided a handout and stated that the private sector is more efficient than the government sector, yet Newport Beach does all of its services itself. Additionally, he referred to the Study Session of November 13, 2001, and stated that there is no way to numerically compare the information presented at that meeting with the information presented at the current meeting. He stated that there is also no proof that the City is providing better or more efficient services than private enterprise. Mr. Arst stated that his handout includes a contracting out report prepared by the City of Huntington Beach and requested that Newport Beach prepare a similar report. He stated that a City services analysis is needed before a new $100 million City Hall is considered. Assistant City Manager Kiff stated that he isn't aware of the City claiming that it is operating at maximum efficiency, and noted that extra care is given in the services provided, which may not be the most efficient way to provide the services. Additionally, he stated that the new City Hall being considered is projected to cost approximately $41.5 million. City Manager Bludau challenged Mr. Arst to prove that the private sector is more efficient than the public sector in every service that is provided. He agreed with Assistant City Manager Kiff and stated that when discussing efficiency, it needs to be clarified if just cost is being considered or if quality of service is also being considered. Council Member Ridgeway stated that all government entities are unique in the services that they provide and there isn't a clear way to make comparisons. He stated that efficiency is an overused word, and that the City's Management Information Systems (MIS) function, for example, can not be duplicated because of the integrated nature of the components in every department. He stated that the City is at the forefront in applying new technologies. Council Member Ridgeway cautioned Mr. Arst that his comments could be construed as supporting an increase in taxes in the City, since privatizing could cost more. Council Member Nichols noted that the City made the effort to have the Bayview senior housing project built without paying prevailing wages, and asked why this couldn't be done with City services. City Attorney Clausen stated that there are long established cases that say that Charter cities do not have to pay prevailing wages for projects, which are a local municipal affair. The State later changed legislation impacting the ability of Charter cities to determine if a project is a local municipal affair, causing many projects to be considered regional. New laws also came into effect pertaining to projects paid for by cities, determining that they are public projects even though the private sector might be doing the work. A case out of Long Beach resulted in the Appellate Court determining that Charter cities should no longer be exempt from prevailing wages. The Senate adopted a resolution making a similar determination. The Supreme Court overturned the Long Beach decision. As a cautionary move, the City of Newport Beach paid prevailing wages for recent Volume 57 - Page 239 City of Newport Beach Study Session Minutes May 24, 2005 IN111%.4 steam cleaning of the streets. The State's Director of Industrial Relations rescinded his prior decisions and determined that steam cleaning is subject to prevailing wages. Not knowing how the State might interpret future issues, City Attorney Clauson suggested that the City Council consider adopting an ordinance to require that when a project is determined as a local municipal affair and is under $30,000, prevailing wages will not be paid. In conclusion, she stated that it's a very complicated issue. Assistant City Manager Wood further clarified that with the Bayview senior housing project, the City wasn't fighting the determination that prevailing wages should be paid, it was attempting to meet the deadline for the expiration of an exemption to affordable housing projects. Council Member Ridgeway added that when redevelopment agencies provide assistance, it is considered a public project and subject to prevailing wages. Referring to Mr. Arst's comments, Mayor Bromberg stated that he didn't know how to prove that the City provides better service, but that he hasn't heard complaints and feels that the City does a good job. He recalled a previous conversation when he asked Mr. Arst why he opposed the City providing the best service possible even if it may cost more. Mr. Arst's response was that privatization will provide adequate service. Mayor Bromberg stated that the people of Newport Beach won't, and shouldn't, accept adequate services. Council Member Nichols stated that it costs $138,000 annually to steam clean the new pavement in Balboa Village. He expressed his disagreement with installing pavement that requires such costly maintenance. Council Member Daigle stated that the City is well run and stable, and that it's important to residents to have consistency in the services provided. She stated that privatization doesn't necessarily save money, and asked if there's a correlation between an expansion of privatization and an expansion of government. She suggested that when privatization of a service is done, the cost of administration for that service also be examined. City Attorney Clausen added that local government is partly expanding as the result of State legislation requiring more and more mandated duties. Council Member Ridgeway stated that the City is a large organization, and does a good job of utilizing outsourcing and automation. 3. POSITION COST ANALYSIS. (100 -2005) Using a PowerPoint presentation, City Manager Bludau stated that there are eight new full -time positions being recommended in the 2005 -2006 budget, with some full -time positions and some part -time positions being deleted. He listed the positions by department. These included the deletion of a part -time department assistant and a part -time dock assistant in the City Manager's department, and the increase in the use of contract attorneys in the City Attorney's office. In the Administrative Services Department, a full -time fiscal clerk position, a full-time budget analyst position and a part -time student aide position are being added. In the Police Department, a full -time MIS specialist position is being added and the part -time MIS technician position is being Volume 57 - Page 240 City of Newport Beach Study Session Minutes May 24, 2005 4. deleted. In the Planning Department, a full -time office assistant is being added and the part -time office assistant position is being deleted. In General Services, a part -time student laborer position is being deleted. In the Library Services Department, three full-time library assistants are being added and the hours for the part -time marketing specialist are being increased. Additionally, a full -time librarian position, a part -time librarian position and a part -time library page position are being deleted. City Manager Bludau stated that in the Recreation & Senior Services Department, a part -time recreation maintenance worker position is being deleted and a full-time groundsworker position is being added. Additionally, the hours of several part -time positions are being increased. These include pool lifeguard, swim instructor, marketing specialist, office assistant, recreation clerk and recreation leader. City Manager Bludau noted that the increase in hours will be offset by increased revenues. Lastly, in the Public Works Department, a full -time public works construction inspector is being added. This position is being funded through the assessment districts. City Manager Bludau displayed a summary of the proposed position changes and noted that the total cost of the positions and hours that would be added is $451,800. This would be offset by the deleted positions and hours, which total $84,000, making the net total increase $367,000. This net total figure does not include the increased revenues or the assessment district funding. BUDGET REVIEW PRESENTATIONS. City Manager Bludau stated that PowerPoint presentations would be utilized by each of the departments. City Council Assistant City Manager Kiff displayed the City Council budget for the 2005 -06 fiscal year and noted that it is slightly lower than the 2004 -05 budget. He further noted that a large majority of the expenses are for consultant services, and City Manager Bludau added that the 2005 -06 budget should be the last to include such large expenditures for consultant services for sphere and airport issues. City Clerk City Clerk Harkless stated that the City Clerk's budget is status quo with no significant changes. City Manager Assistant City Manager Kiff announced that the Resource Allocation Plan (RAP) also includes service indicators for each of the departments. Regarding the City Manager's budget, he stated that it totals approximately $3.4 million for the 2005 -06 budget. The increase from the 2004 -05 budget is primarily due to an increase in water quality regulations. In response to Council Member Nichols' question, Assistant City Manager Kiff explained that there's a problem with too much selenium in the San Diego Creek. All of the partners involved in the watershed are being required to fund a study to try to reduce the selenium. Volume 57 - Page 241 INDEX (100 -2005) City of Newport Beach Study Session Minutes May 24, 2005 INDEX Assistant City Manager Kiff listed the divisions in the City Manager's office and stated that the Harbor Resources Division is being reorganized to allow for more time to be spent on policy. Human Resources Human Resources Director Axley stated that the department's budget is status quo, and includes the personnel and risk management divisions. It is expected that there will be 70 recruitments in the 2005 -06 fiscal year, which is one of the department's most important functions and takes up a large portion of the department's time. At the request of Council Member Ridgeway, Human Resources Director Axley stated that other significant duties performed by the department include unemployment, classification and compensation studies, benefits, trainings, retiree benefits, new employee orientations, and liability and workers compensation claims. City Attorney City Attorney Clausen stated that there is a reduction in the City Attorney's budget due to an anticipated reduction in the amount of outside special counsel that will be needed. City Manager Bludau noted the 5,500 in -house requests for opinions and advice that the City Attorney's office receives annually and pointed out that the department is a support function for the other departments. He stated that Administrative Services, Human Resources and the City Manager's office also serve as support functions for the other departments on a daily basis, which supports the need to keep the departments together at City Hall. Council Member Rosansky asked what types of cases make up the litigation caseload and why it is estimated to decrease from 150 to 50 annually. City Attorney Clausen stated that the caseload is usually a mix of tort claims and litigation resulting from City Council, Planning Commission or personnel decisions. She stated that she'd like to think that the decrease is the result of the City Attorney's office getting on top of issues prior to litigation. Administrative Services Department Administrative Services Director Danner stated that the Administrative Services budget is increasing from approximately $6 million to $6.5 million due to two new positions and the Public Employees Retirement System (PERS) increase. He stated that this will be true of all the departments as the PERS rates continue to increase. He stated that Administrative Services has five divisions and 52 employees proposed for the 2005 -06 fiscal year. He displayed and listed the main functions of each of the divisions, which included resource management, fiscal services, management information systems, revenue and accounting. A new full-time fiscal clerk is being proposed in the Revenue Division and a new full -time budget analyst is being proposed in the Accounting Division. Administrative Services Director Danner stated that Administrative Services also handles all of the debt service. He displayed the list of debt service estimates for the 2005 -06 fiscal year. He then displayed the list of significant revenue handled by the department, as well as the four major taxes Volume 57 - Page 242 City of Newport Beach Study Session Minutes May 24, 2005 INDEX administered by the department. These included property tax, sales tax, transient occupancy tax and business license tax, which together represent almost 52.3% of the City's total estimated revenue of approximately $162 million. Lastly, Administrative Services Director Danner displayed the list of major charges and fines handled by the department. Council Member Heffernan asked what else is contributing to the increase in the department's budget in addition to the two new positions. Administrative Services Director Danner stated that it can also be attributed to the large increase in the pension costs for the existing staff. He stated that the PERS rate is increasing fractionally for the safety personnel, but it is doubling from 5% to 10% for miscellaneous employees. Council Member Heffernan confirmed that the existing employees are costing more even without a salary increase. Police Department Police Chief McDonell stated that the Police Department budget is increasing by 2.3% to approximately $35.8 million. Over 85% of the budget is for personnel related costs, with the PERS rate increase representing the substantial increase to the entire budget. The maintenance and operations budget is increasing by approximately $67,000, which is partly due to an increase in vehicle fuel costs. Police Chief McDonell reported that only $16,000 is being proposed for capital outlay, which is a significant decrease from the 2004 -05 fiscal year. He explained that the 2004 -05 budget included the purchase of three costly items. Police Chief McDonell displayed the breakdown of the budget by division and noted that 70% of the department's budget is applied directly to frontline operations. The proposed budget includes the upgrade of one part -time MIS technical position in support services to full-time. He explained that the department is reliant on technology to do its job. Police Chief McDonell displayed the breakdown of responsibilities by division. The divisions of the department include the Police Chiefs office, support services, patrol, traffic, detective and fleet maintenance. Police Chief McDonell stated that the department's total estimated annual revenue is approximately $5 million. He listed the significant revenue sources. Additionally, he listed the significant grants that the department receives, and noted that Newport Beach has taken a leadership role and is managing the grant funds on behalf of all of the County criminal justice agencies. Council Member Heffernan asked how Newport Beach compares in age of personnel to other police departments, and if retirement changes have had an effect on turnover in the department. Police Chief McDonell agreed that there has been an acceleration of retirements in the State, but noted that a younger police force can be beneficial in frontline operations. Police Chief McDonell noted that Newport Beach is viewed as a premier city to work in and turnover is less than it might be in other cities. Council Member Heffernan expressed his concern that experienced personnel are leaving the force. Council Member Ridgeway asked if the overview presentations by each of the departments was replacing a line by line look at the proposed budget. City Manager Bludau stated that this process has been followed for several years, but can be changed. At the study session on June 14, 2005, a presentation on the Volume 57 - Page 243 City of Newport Beach Study Session Minutes May 24, 2005 11241171.1 Capital Improvement Program (CIP) would be given, and on June 28, 2005, any remaining questions would be answered. Fire Department Fire Chief Riley displayed the department's mission and stated that detailed information on how the department's responsibilities are carried out is covered in the RAP. He displayed a summary of the department's proposed budget, and noted that it's a 2.23% increase over the 2004 -05 fiscal year budget. The proposed budget totals $26,334,497, with approximately 85% of it in salaries. He displayed a breakdown of the budget by division. The divisions include administration, fire operations, prevention, emergency medical services, training and lifeguard operations. Fire Chief Riley noted that the emergency medical services division budget only includes those costs for advanced life support and emergency transportation. The fire operations budget includes the first response to emergency medical calls. Fire Chief Riley listed the revenue categories for the department. Significant program issues for the 2005 -06 fiscal year include the design and construction of the fire station and training center in Santa Ana Heights, completing a comprehensive survey of all public safety facilities, and completing the wildland fire prevention and response plan. Council Member Daigle asked what the status is of the facility survey. Fire Chief Riley stated that it's currently listed as a project for the Public Works Department. The buildings that will be surveyed have been identified, but the survey itself has not begun. Fire Chief Riley continued listing the significant program issues, which included an upgrade to the payroll software program to enable the department to do a complete and comprehensive management of the staffing system. Other significant issues included continued emphasis on emergency preparation and professional competency. He noted that 62% of the department's personnel have less than four years experience in their current positions. Council Member Heffernan asked why the department is experiencing such a huge turnover and why the labor costs aren't less if the personnel is newer and at the lower end of the pay ranges. Fire Chief Riley stated that the costs are less and noted the PERS increase experienced by all of the departments. Additionally, he stated that the turnover is the result of the large growth of public service agencies in the 1970's and the enhancement to retirement benefits. In response to Council Member Heffernan's additional question, Fire Chief Riley stated that the recruits have the ability to aspire to the higher levels, but that it's a question of motivation and the desire to deal with the different challenges. Council Member Heffernan noted that the enhanced retirement doesn't encourage personnel to work longer. Planning Department Assistant City Manager Wood displayed a comparison of the 2004 -05 and 2005 -06 budgets. She noted that the increase in salary and benefits is due to the PERS rate increase and the upgrade of a part -time office assistant to full -time. The significant decrease in maintenance and operations is due to the cost of the general plan update in the 2004 -05 budget. She listed the major functions of, Volume 57 - Page 244 City of Newport Beach Study Session Minutes May 24, 2005 INDEX the administration and economic development divisions, and noted the increase in citizen committees and the increased workload associated with them. Council Member Daigle asked if the Planning Department is adequately staffed. Assistant City Manager Wood stated that an additional person could be used to perform plan checks, but that the intent is to continue to utilize outside consultants until the zoning code is revised in such a manner as to decrease the time needed to perform the work. Additionally, contract planners are being used for development review of the larger projects. Council Member Ridgeway confirmed that the plan check position would be revenue neutral because the costs are charged to the applicant. He agreed with Council Member Daigle that the City Council should be made aware of additional staffing needs in the Planning Department. Assistant City Manager Wood listed the department's workload indicators and the large projects currently underway. Revenue in the 2005 -06 fiscal year is expected to meet or exceed the current year's revenue. She listed significant special projects being worked on by the department. Building Department Building Director Elbettar displayed the department mission. He stated that the current year's budget is approximately $3 million and the proposed budget for the 2005 -06 fiscal year is $3.3 million. The increase is partly due to the new record specialist position approved in February of 2005, and the reclassification of a building inspector to a plan check engineer. He displayed a revenue worksheet showing actual and projected revenues by account type from fiscal years 2002 -03 to 2005 -06, and noted that his department is revenue neutral. Building Director Elbettar displayed a construction activity report showing year to date figures as of March 2005, and noted that the 2004 -05 fiscal year will represent the highest year in Newport Beach history in terms of valuation. Council Member Ridgeway stated that in his observations, he hasn't seen a neighborhood in the city that doesn't have some type of significant construction going on. City Manager Bludau added that it's primarily residential construction that is taking place which means increased staff involvement because the volume is so great. Building Director Elbettar additionally noted that the residential construction has become more complex as residents are striving to maximize their property values. Building Director Elbettar listed the future programs and service enhancements planned for the department. In response to Council Member Heffernan's question, Building Director Elbettar stated that he expects the combination permit program to be implemented by the end of the year. The program would combine four applications into one, but would not eliminate the need to review separate plans for building, electrical, plumbing and mechanical. Building Director Elbettar stated that other goals of the department are to increase counter plan review and permit issuance services, implement a record Volume 57 - Page 245 City of Newport Beach Study Session Minutes May 24, 2005 INDEX management plan and streamline the plan check process. Council Member Rosansky asked how long the integration of the County records for Newport Coast would take. Building Director Elbettar stated that the City doesn't have control over when the County sends the records and that they will continue sending records until the entitlement for the area is built out. He guessed that it would take less than five years. Library Services Library Services Director Katsouleas began by showing a photo of the Central Library and acknowledging Urban Forester Conway and The Irvine Company for working together on replacing the palms. She displayed the seven divisions in the department and stated that the proposed budget totals approximately $5.4 million. The divisions include the Central Library, the three branch libraries, administration, literacy services, and arts and cultural services. She displayed the funding by division, and noted that over one million items are circulated each year. Library Services Director Katsouleas displayed the staffing of the department by division, and noted that 1.5 librarian positions will be replaced with 2 library assistant positions at the Central Library and staffing will be added for the Mariners Branch Library. Council Member Rosansky asked how the Balboa and Corona del Mar branch libraries are utilized by the public. Library Services Director Katsouleas stated that the Balboa Branch Library serves as a community center for the area and is very popular. Council Member Ridgeway added that the Balboa library probably has the largest maritime and seamanship collection on the West Coast. Library Services Director Katsouleas stated that the Corona del Mar library is less than a mile from the Central Library and is not used heavily, but is a sentimental favorite of the local community. Council Member Nichols asked if the concept of combining the Mariners library with the elementary school is new. Library Services Director Katsouleas stated that there are several joint use libraries throughout the country. She felt that the Mariners library would be a success. Council Member Nichols asked if the program would be expanded with the school district to other locations. Library Services Director Katsouleas stated that it is unique to the Mariners community and that she didn't see it being done in other areas in the City. City Manager Bludau noted that there was already a library and an elementary school in close proximity at the location. Library Services Director Katsouleas displayed the revenue projections for the department, and noted that the fees for service category is going down because the library is sending out e -mail prenotifications when library items are due, which has resulted in more books being returned on time. Intergovernmental reimbursements are increasing as the result of the City having a better idea of the reimbursements that will be received from the State. She noted that the miscellaneous revenues category is listed as zero because many of the library Volume 57 - Page 246 City of Newport Beach Study Session Minutes May 24, 2005 supporters and donors don't want their gifts to be considered as an integral part of the library budget. Library Services Director Katsouleas listed the major expenditure areas, and noted that capital outlay and equipment is increasing because the library is assuming responsibility for its computers. She displayed the budget breakdown by expenditure area and noted that approximately 75% of the budget goes towards staffing. She listed the arts and cultural services division budget breakdown separately, and displayed what the department accomplished in the 2004 -05 fiscal year, and what it hopes to accomplish in the 2005 -06 fiscal year. At the request of Council Member Daigle, Library Services Director Katsouleas confirmed that Newport Beach was recently recognized as having the best library in the state and the fourth best in the nation, for a city of its size. Council Member Rosansky asked if library services for Newport Coast had been budgeted. Library Services Director Katsouleas stated that the costs are expected to be incorporated in the proposed budget if the services come to fruition, and the costs are expected to be minimal. Council Member Heffernan asked what was being done to deal with the parking problems at the Central Library. Library Services Director Katsouleas stated that a Board of Library Trustees member is serving on the fundraising committee for the proposed park and a study is being conducted on how much the library's parking lot is being used by visitors to the nearby- shopping center. City Manager Bludau stated that any capital improvement projects would occur after the 2005 -06 fiscal year. PUBLIC COMMENTS - None ADJOURNMENT- at 6:13 p.m. The agenda for the Study Session was posted on May 18, 2005, at 3:00 p.m on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. Recording S6sietary �-In-A44-A City Clerk Volume 57 - Page 247 INDEX City of Newport Beach Study Session Minutes May 24, 2005 INDEX THIS PAGE LEFT BLANK INTENTIONALLY Volume 57 - Page 248