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HomeMy WebLinkAbout04/24/2007 - Study SessionCITY OF NEWPORT BEACH City Council Minutes Study Session April 24, 2007 — 3:30 p.m. ROLL CALL Present: Council Member Henn, Council Member Curry, Mayor Pro Tem Selich, Mayor Rosansky, Council Member Daigle, Council Member Gardner Excused: Council Member Webb CURRENT BUSINESS 1. CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR. Council Member Henn questioned how the consultants working on Items 6 and 8 (Integrated Regional Watershed Management Plan) relate to each other in the work being performed. City Manager Bludau stated staff would provide an answer during consideration of the items at tonight's meeting. In response to a question by Council Member Henn regarding Item 10, Assistant City Manager Wood stated this is not an extension of the moratorium. This is a report on what has taken place since the moratorium was put into effect and explaining that with Councirs adoption of Ordinance No. 2007 -4 (that the City will not approve uses prohibited by any other law), the issue has been taken care of. 2. INTERSECTION SIGHT DISTANCE AND CODE ENFORCEMENT. Code and Water Quality Enforcement. Division Manager Kappeler stated that Council Policy K -9, in existence since June 1995, requires compaints be made in writing, and he explained the process followed when a complaint is received. He noted staff has been proactive in enforcing certain areas of the Municipal Code, such as water quality, beach vendors, commercial photographers, nuisance matters, and signage,.while others have not been as strictly enforced. He suggested Council may want to amend the policy to provide. further enforcement guidelines. Assistant City Manager Wood added it would be helpful to staff to know if the items they are currently being proactive on are the correct ones, if some of the current items should be handled by complaint only, or if there are other items that Council would like them to be more proactive on. Mayor Rosansky advised that a letter was recently received from the West Newport Beach Association requesting enforcement of matters dealing with trash cans, lids, etc. He stated that enforcement seems to have waned. Division Manager Kappeler responded that, in the past, trash can/lid issues have, been handled on a complaint basis. Assistant City Manager Wood advised that General Services had an employee who dealt with these kinds of issues, however, the duties of this person may have expanded and the focus been lost on this issue. In the next week or so, staff will meet with code enforcement staff citywide to coordinate and determine who has the lead on certain issues. In response to questions by Council Member Henn, Division Manager Kappeler stated that Volume 58 — Page 113 City of Newport Beach Study Session Minutes April 24, 2007 residential occupancy issues are largely handled on a complaint basis, as violations are not readily visible from the street. They currently have approximately 20 illegal dwelling unit investigations, although he is certain more exist. However, if staff observes an illegal garage conversion while the garage door is open, staff will be proactive in those instances. In addition, Code Enforcement staff works weekends, so if they, observe construction activity during this time, they will also address those issues. He feels staff is as proactive as they can be, but welcomed any suggestions on how to become more proactive. Resources are currently adequate.to respond to complaints. However, with the establishment of the Intense Residential Occupancy Committee. (IROC), residents are becoming more knowledgeable of the code and permitted uses, which may result in additional complaints. Assistant City Manager Wood added that Mr. Kappeler is leading his staff to become more aggressive on tougher issues where property owners are not responding quickly. These types of issues take more preparation and desk time for the officers. Results are being seen with this approach, but if staff continues in this manner, additional resources may be necessary in the future. Council Member Daigle commended Code Enforcement staff on the handling of two enforcement activities in her District. In response to a question by Council Member Gardner, Division Manager Kappeler stated that landscaping is a very complicated issue. He read an excerpt from the Municipal Code requiring that all front yard setbacks be 40% open, which applies to the top part of the landscaping. This opacity requirement is a concern for him, as this is something officers cannot measure in the field. Property lines are civil issues that the owners need to resolve themselves. Council Member Gardner expressed concern that in Corona del Mar, there are many hedge violations, and select enforcement is the problem when one person gets cited for doing the same thing hundreds of others are doing. Allowing higher hedges in certain areas may need to be addressed as well as making an exception for landscape buffering, noting that sight distance issues need to be considered. Assistant City Manager Wood added that it may be something to also address in the new zoning ordinance. In response to a question by Council Member Daigle, Division Manager Kappeler stated that these issues aren't normally seen in Planned Communities, which may be a result of them having active homeowners' associations and regular landscape maintenance.. As these issues are prevalent in Corona del Mar, it may also be due to the area having more mature landscaping. Principal Civil Engineer Brine spoke to a PowerPoint slide show on intersection sight distance. He reviewed the department's existing Standard Plan 110 -L, which outlines requirements for providing a clear line of visibility for drivers, and states that any obstructions that could. restrict the view within the "limited use area" are not permitted. Line of sight can also be restricted by parked vehicles, which is not currently addressed in Standard Plan 110 -L. He showed pictures depicting landscaping and parked vehicle sight issues in residential areas. He stated that staff questions whether the existing Standard Plan is too conservative; whether a more realistic standard should be drafted based on the way residents approach, stop, and proceed at an intersection; and whether a new standard should include red curb recommendations to address parked vehicles. Volume 58 - Page 114 City of Newport Beach Study Session Minutes April 24, 2007 Mayor Pro Tem Selich stated that in Corona del Mar and Balboa Island, parking is not used efficiently and suggested striping the street for parking to gain additional sight distance at the intersections. Public Works Director Badum responded that when parking Ys are marked, they have to be done for the largest vehicle (22'). The negative effect is that some parking may be eliminated in those areas if marked, and this is the reason red curbs at intersections have been used. Council Member Henn stated that the parking site distance issue is very significant on the peninsula, and he would like it better addressed for safety reasons. He questioned how to balance the potential loss of parking by extending red curbs with the Coastal Commission and residents that don't want to lose the parking. Public Works Director Badum responded that typically the Coastal Commission will not fight the City on safety issues. If current sight distance standards are applied to the streets being discussed, we would have 200' of red curb. Staff is attempting to achieve a balance between safety and parking. If staff can come up with a reasonable standard, there may be some room for agreement. Council Member Curry stated it appears these are neighborhood specific issues, and staff needs to have dialogue with the homeowners and residents' associations to provide them alternatives. He cautioned that staff needs to be careful about techniques that will negatively impact parking in Corona del Mar and Balboa Island. Council Member Gardner concurred that something needs to be done, and as a resident of Corona del Mar, she would be in favor of additional red striping. She expressed concern that in one of the slides presented, there was a stone post that was clearly over 24" and questioned whether staff is being consistent when reviewing these issues. Mr. Brine stated that he could not answer questions about how it was permitted. Public Works Director Badum added that sometimes these things just appear, but some of these projects could be permitted if they are low enough. However, staff is also dealing with residents' creative solutions to their own beautification issues not realizing they are creating a hazard. Council Member Henn stated there is a large amount of red painted curbs, which much of it is safety related. He feels staff needs to be more consistent with the way red curb painting is approached. In response to a question by Mayor Pro Tem Selich, Public Works Director Badum stated that as long as we stay within the current standard, there is no need to go to the Coastal Commission. City Attorney Clauson concurred with Public Works Director Badum that since the plan is being done for safety reasons, it would not likely have to go before, the Coastal Commission, since the intent is not to simply reduce the parking supply. She added that having a standard plan for local streets would be beneficial to the City in.terms of liability. However, coordination of red curb painting with property improvements (i.e., fencing, landscaping) will be necessary so that visibility and parking are not impacted. Assistant City Manager. Wood added that safety concerens was the same position the City took successfully 8 -10 years ago while doing the parking management plan for the peninsula. Principal Civil Engineer Brine provided information on two line -of -sight alternatives: 1) driver's eye 7' back from the edge of parked vehicles, and 2) driver's eye 7' back from the curbline extension. He stated that although the current standard plan addresses both . arterial roadways and local streets, staff is looking to have a standard plan for local streets (not amending the standard for arterial roadways). Volume 58 - Page 115 City of Newport Beach Study Session Minutes April 24, 2007 Council Member Gardner expressed concern that the sidewalk be visible, since Corona del Mar is a very pedestrian - oriented community. She stated she would like to see, and the residents. would likely welcome, additional red safety striping in Corona del Mar since they are so pedestrian oriented. Principal Civil Engineer Brine questioned whether staff should continue to pursue a new residential/local standard plan for sight distance, which strikes a balance between safety needs and parking requirements. He noted that for new development projects on arterial roadways, staff will continue to review those per the requirements of existing Standard Plan 110 -L. Mayor Pro Tem Selich stated that one standard residential plan may not work, and it may be necessary to do separate standards for different areas as sight distance requirements vary. Public Works Director Badum agreed that staff will need to be sensitive to the uniqueness of different areas, and it may be possible to have several different standards. He added that the standard(s) will be brought to Council for final approval. Public Works Director Badum also requested Council direction on whether the 15' sight - distance triangle at street and alley intersections should be more strictly enforced for safety reasons or wheter staff should continue to handle those issues on a case -by -case basis. City Manager Bludau stated that in looking at the presented slides, problems with landscaping, fences, etc. do exist and when weighing the safety issue versus the parking issue, landscaping improvements that impact safety should be eliminated first. He questioned whether Council also feels it is a priority that at intersections where sight distance issues exist, the City needs to be tougher on landscaping and building that has been erected over the allowances. Council Member Gardner stated that many residents may not be aware of the sight distance requirements and suggested that residents be educated via a water bill insert or newsletter prior to enforcement activities. Principal Civil Engineer Brine stated that staff can look at landscaping issues in terms of a new standard and the zoning code and determine whether this is the way to proceed with enforcement of obstructions. W. R. Dilding requested that the Balboa Specific Plan area be included in enforcement. In his alley, 80% of the trash cans sit out day after day in the public right of way. He cited areas of sight distance concerns. He stated that if CC &Rs had been in place in the 19408, the city would not have these problems. He stated a concentrated enforcement effort and well planned program are needed in certain areas of the city. a. PERS ACTUARY. Administrative Services Director Danner explained that several months ago there was discussion on the City's unfunded pension liability and due to the various questions received, he thought it would be beneficial to have the Public Employees Retirement System (PERS) actuary explain how rates are set, what unfunded liability is, and the new PERS rate smoothing rules. He invited Rick Santos, Actuary, to speak to Council on these issues. Mr. Santos explained the rate setting process actuaries use annually to calculate the City's retirement contribution rate for its members until they and their beneficiaries pass. He noted it is difficult to predict the asset returns, since they often deviate from what the Volume 58 - Page 116 City of Newport Beach Study Session Minutes April 24, 2007 actuary anticipates the investments will earn. As such, annual adjustments to the City's rate are designed to get the City back to being 100% funded. When the investment returns fall below the assumed levels, it creates an unfunded liability. Currently, the City's miscellaneous and two safety plans have an unfunded liability, which is mostly attributed to the investment returns in the early 2000s. Approximately two years ago, PERS elected to go to rate stabilization whereby they take each year's investment gains and losses, and they only recognize 1/15th of that amount. This is incorporated into the City s rate and amortized over a rolling 30 -year period. In doing this, the principal balance of the City's unfunded liability never decreases. Theoretically, the unfunded liability continues to grow. However, the plan's funded status is improving and moving more towards being 100% funded. The magnitude of the unfunded liability relative to the size of the plan dwarfs the unfunded liability, and this unfunded liability becomes an inconsequential part of the overall plan. According to a report prepared by City staff on the funded status of the plan on a market value basis, the plans in total are 88% funded on a market value basis- - with the miscellaneous plan being 96% funded (as of June 30, 2005), and the safety plan at 83% funded on a market value basis. This has increased from two years ago when the safety plan was funded at 75% and the miscellaneous plan was funded at 87 %. The plans have come a long way to moving towards being 100% funded because of the good investment returns realized in the last two to three years. In response to a question by Mayor Rosansky, Mr. Santos stated that the rate will gradually go down over the next three to four years, however, not dramatically. Council Member Henn added that on a market value basis, the.City could have surplus funding but on actuarial reporting, it could show an unfunded liability. Mr. Santos noted that the report prepared by staff shows that on an actuarial basis, the plan is 85% funded and 88% funded on a market value basis. Council Member Curry said his understanding is that the unfunded liability will continue to grow because of the negative amortization factor built in, but the real number that affects the City's ability to pay the pension costs is the market value, and that number is getting smaller. In fact, the market value shows that the pensions are in much better shape than the unfunded liability suggests, and with a couple of more good years of PERS performance, the market value may get to 100% of that liability, even though there is an unfunded liability shown on the books. Mr, Santos confirmed that Council Member Curry's understanding is correct. He stated that the unfunded liability shown is on a smooth basis, which incorporates three years of good investment returns where 95% of those returns aren't embedded in that unfunded liability. The reason actuaries .smooth assets is to keep rates stable. If looking at the health of the pension plan, it should be looked at on a market value basis. In response to a question by Mayor Rosansky, Mr. Santos stated that compared to other cities, the City's miscellaneous plan is 96% funded on a market value basis, while others are in the low 90s. This is in the upper 50% percentile. The City's safety plan is 83% funded on a market value basis, which is still low relative to other cities. At the request of City Manager Bludau, Mr. Santos explained the two components - -annual premium and unfunded liability payment - -that PERS uses in determining rates. Mayor Rosansky stated he has heard some cities are going out to market and borrowing money to pay their unfunded liability. Mr. Santos stated that if the City were to send PERS $60 million to reduce the unfunded liability to zero, PERS would invest that amount into 60% equities, 25% fixed income, and the remainder to riskier assets. Consequently, the Volume 58 - Page 117 City of Newport Beach Study Session Minutes April 24, 2007 City's future rate would be more volatile, since more assets are exposed to PERS investments. However, this would be mitigated somewhat by rate stabilization. On the flip side, the City could end up being 120% funded on a market value basis if investment returns are good; however, the City would have this surplus sitting there of which only a portion could be used to offset the annual premium. Cities may be borrowing for public perception reasons to show they are acting responsibly in reducing their debt. Council Member Henn stated another reason could be to borrow money at a lower interest rate, so that the annual budgeting for PERS contribution costs can be benefically affected. Mr. Santos stated this may be a reason, but there are risks involved in doing this. Once Pension Obligation Bonds are issued, you are liable for the bonds for 30 years. If the City trusts the actuarial process, in the long run, the City will realize the investment returns and the fund will gravitate to being funded at 100 %. The rates today are comparable to what was being paid in the. mid to late 1980s and early 1990s. Chris Street, Orange County Treasurer, commended the City for paying attention to these very complicated issues. He spoke about Pension Obligation Bonds issued by the County in 1994. Actuaries have a sense of history and hopefully this history is not swayed by what is currently in vogue or fashion. PERS has a long -term investment strategy and has adopted a rather aggressive investment posture. Over time, this aggressive portfolio will be rewarded. The current system is structured so that the City's rate is consistent and avoids fluctuations. The PERS investment structure is appropriate. Based on what he has heard today, he feels the City is well positioned. The City's investment posture with PERS should provide good returns over time, and he thinks level funding for the City is in its best interest. As a citizen of the city, he appreciates the way Council is handling the matter. PUBLIC COMMENTS - None ADJOURNMENT - 5:09 p.m, The agenda for the Regular. Meeting was posted on April 20, 2007, at 2:20 p.m. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. City Clerk d Recording Secreary Mayor Volume 68 - Page 118