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HomeMy WebLinkAbout02/03/2024 - Special MeetingCity Council Meeting Minutes Special Meeting - Planning Session February 3, 2024 I. CALL THE MEETING TO ORDER — 9:00 a.m. Roll Call Present: Mayor Will O'Neill, Mayor Pro Tem Joe Stapleton, Councilmember Noah Blom, Councilmember Robyn Grant, Councilmember Lauren Kleiman, Councilmember Erik Weigand Absent: Councilmember Brad Avery Invocation — Councilmember Grant Pledge of Allegiance — Councilmember Blom Mayor O'Neill thanked everyone in attendance and City Manager Leung reviewed the meeting agenda. II. UPDATE ON FINANCIAL STATUS AND BUDGET DEVELOPMENT — REVENUES Finance Director Al -Imam utilized a presentation to review the fiscal year 2024-25 preliminary General Fund revenue outlook, property tax revenue over the years, revenue by category, residential sale trends, and sales tax revenue over the years for major industry groups. In response to Mayor O'Neill's question, Finance Director Al -Imam utilized the presentation to review the graph showing the sales tax revenue by year with trends and projections by major industry group. Mayor O'Neill noted that revenue was down in auto and transportation and flat for consumer goods. Finance Director Al -Imam continued with the presentation to review Transient Occupancy Tax (TOT) revenue over the years, commercial and residential TOT revenue with an 8% growth this year and about a 2.5% growth next year for hotels, the TOT revenue outlook, and other revenues. Mayor O'Neill relayed that the Finance Committee will use the references from the presentation as a base model for the upcoming budget, and in response to his questions, Finance Director Al -Imam stated that the second quarter will be discussed in February and revenues for the next fiscal year will be discussed in March. Mayor O'Neill indicated that the March discussion will also include how all the revenues are being projected, which will factor into how the budget will be created by the City Manager. In response to Councilmember Weigand's reference to the decline in commercial property tax, Finance Director Al -Imam explained that the data is received from the County Assessor's Office and preliminary data based on sales and valuation numbers through December 31, 2023 has been received and overall growth is projected. He indicated that he is not sure of the expected decline number to date. Councilmember Weigand noted that this market is struggling. City Manager Leung noted that residential property tax is the City's solid base revenue. In response to Mayor Pro Tem Stapleton's question, Finance Director Al -Imam noted short-term lodging (STL) increases in 2021-22, permit counts have been above the threshold for a couple of years, there was a dip below the threshold for the first time a few months ago, a reduction in permits by 200 in the last two years, and being at the cap now. City Manager Leung stated that data is received only once a year for individual STL permits which poses a challenge to determine the trend, and prop6sed a more frequent collection to assist with forecasting. Councilmember Grant noted the current 1,550 STL permit count is down from over 1,600. City Manager Leung indicated that the City Council set a cap at 1,550 STL permits, additional permits for mixed -use need to go to the California Coastal Commission, the count was over 1,600 then dipped below 1,550 which allowed permits on the waiting list to get in, and a waithst does exist. Volume 66 - Page 31 City of Newport Beach Planning Session February 3, 2024 III. LONG RANGE PLANNING — CAPITAL IMPROVEMENT PROGRAM (CIP) Public Works Director Webb utilized a presentation to discuss the CIP, how projects are selected, prior Council goals and priorities, and City planning documents; and highlighted the Pavement Management Plan and the asphalt pavement life cycle. In response to Mayor O'Neill's question, Public Works Director Webb clarified the funding for the slated and backlogged projects and noted that staff will be asking for an increase in the CIP budget to $8.5 million. Public Works Director Webb continued with the presentation to continue discussions about the Pavement Management Plan and to review the Facilities Financing Plan (FFP) and reserves. Mayor O'Neill stated that lately bids are higher than numbers in the FFP and asked if the FFP amounts need to be increased. Public Works Director Webb stated that all the costs per square foot in the presentation were adjusted, and the FFP is a planning document that is used to create a budget document. Mayor O'Neill expected more development in the airport area and thought it would be an appropriate action to begin transferring more money from the General Fund 'to the FFP to make sure costs are offset goingforward. City Manager Leung agreed and noted that very little is:building the reserves, the fund is reliant on development agreements, and staff is coming to Council in late March to discuss development impact fees. In response to Mayor O'Neill's questions, City Manager Leung confirmed that the Library Lecture Hall has already been backed out of the $25 million in FFP reserves. Public Works Director Webb stated that the Balboa Island Drainage Project is coming from the $6 million in the CIP, is about $20 million, will span multiple years, and is not included in the FFP. Finance Director Al -Imam noted that the Balboa Island Drainage project is anticipated to come out of the FFP fund even though it is not in the FFP. Public Works Director Webb continued with the presentation to review the Facilities Maintenance Master Plan, Harbor and Beaches Master Plan, and Park Maintenance Master Plan. City Manager Leung expressed concern for rising costs related to the Balboa Island Seawall Replacement in the Harbor and Beaches Master Plan. Public Works Director Webb noted that the increase in linear foot costs for walls is reflected in the table. City Manager Leung stated it was prudent to start including required contributions to ensure full funding. In response to Mayor O'Neill's question, Public Works Director 'Webb estimated the project to be a 10 to 15 year replacement period. Mayor O'Neill forecasted at least $13 million per year for the project and stated that setting aside funds would be helpful for future Councils. Public Works Director Webb continued with the presentation to review the Park Maintenance Master Plan. Mayor O'Neill stated he was not surprised that the City needed to do more in the Park Maintenance Master Plan, but was surprised about the amount and indicated that the amount needs to be increased over the next four years. Councilmember Kleiman commended the previous Council for doing the park audit and hoped audits can be included in the long-term plan. Mayor O'Neill agreed and noted the City has 250 acres of park space. Recreation and Senior Services Director Levin invited the public to participate in a survey and to a meeting on February 13, 2024, at 4:30 p.m. to discuss the San Miguel Park all-inclusive playground project. In response to Councilmember Kleiman's question, Recreation and Senior Services Director Levin shared that the neighbors wanted more lighting at Bob Henry Park, but while he thought redoing it would be nice, he did not feel there were safety concerns. In response to Mayor Pro Tem Stapleton's question, Recreation and Senior Services Director Levin relayed that the maintenance for Buck Gully is through a different contract. Public Works Director Webb continued with the presentation to review the building of the FY 2024-25 CIP budget pursuant to the estimates and suggested projects to focus on. Mayor Pro Tem Stapleton expressed an interest in looking into doing something at Lower Castaways and the feasibility of creating a West Newport Beach Community Center maybe in the area of the Avon Street parking lot, Newport Theater Arts Center, and John Wayne Park. Volume 66 - Page 32 City of Newport Beach Planning Session February 3, 2024 Mayor O'Neill stated that a fresh perspective for Lower Castaways would be helpful and suggested creating an ad hoc committee consisting of Mayor Pro Tem Stapleton, Councilmember Blom, and Councilmember Grant at an upcoming City Council meeting. Regarding a West Newport Beach Community Center, he indicated that this project would be a longer discussion but worth looking into. In response to Councilmember Kleiman's interest, City Manager Leung relayed that the City is not actively looking at acquiring land for centralized parking structures at this time. Councilmember Weigand suggested that the ad hoc committee pay close attention to the high traffic and egress at Lower Castaways. Public Comments Nancy Scarbrough asked if the tidelands report anticipates an increase in revenue due to mooring fee increases, noted that the Bicycle Master Plan has not been reviewed in 10 to 15 years and new mobilities are not in the plan that should be considered, such as, vertical takeoff vehicles at the airport, and stated that the Americans with Disabilities Act (ADA) is a law as is relates to the Parks Master Plan and asked if potential vulnerable areas have been considered. In response to Mayor O'Neill's question, Finance Director Al -Imam stated that no assumptions have been made on mooring rate increases. Mayor O'Neill noted that updating the Bicycle Master Plan would require that a Councilmember request a future agenda item to create an ad hoc committee. Public Works Director Webb noted the City meets current ADA compliance when it does upgrades. Recreation and Senior Services Director Levin confirmed that all playgrounds are ADA compliant. IV. BUDGET DEVELOPMENT — PROGRAMS AND SERVICES LEVELS Finance Director Al -Imam utilized a presentation to discuss the FY 2024-25 preliminary General Fund expenditure outlook and pension paydown strategy. Mayor O'Neill noted that the surplus amount was considered for the pension paydown strategy and would be discussed again in May or June. Councilmember Weigand noted the 6.5% target assumption for CalPERS and Finance Director Al -Imam relayed a 4% return through December and stated their outlook is not as bright as it should be. City Manager Leung indicated that the final rate of return is from June 30, 2023. Finance Director Al -Imam utilized a presentation to discuss the FY 2024-25 preliminary capital funding outlook. City Manager Leung noted that program enhancements are being reviewed, inflationary pressures are considered, and the importance of enhancing the capital infrastructure to build for the future. In response to Mayor O'Neill's question, City Manager Leung stated that the budget does not take into account increased technology uses at the Police Department, nor is staff ready for a discussion because work is in progress with the ad hoc committee. She noted that the idea is to meet with the ad hoc committee, hold a study session, and propose items into the budget which will have costs associated. In response to Councilmember Kleiman's questions, Finance Director Al -Imam explained that the 2% increase for salaries and benefits includes a one-time allocation that is not going to flow into the budget for police recruitments, and reported that, while the net increase is 2%, the reality is a 3% overall impact. City Manager Leung pointed out that the City only budgets for what is in the negotiated agreements and known increases. Assistant City Manager Jurjis and Code Enforcement Supervisor Murray utilized a presentation to discuss the Code Enforcement budget and staffing, the number of cases in 2023, and types of enforcement. In response to Councilmember Kleiman's question, Code Enforcement Supervisor Murray stated that the code cases are organized by Newport Beach Municipal Code (NBMC) Sections and Title 5 includes violations for STL properties and would show up in the STL section. Volume 66 - Page 33 City of Newport Beach Planning Session February 3, 2024 Assistant City Manager Jurjis and Code Enforcement Supervisor Murray continued with the presentation to discuss the two-tier fine schedule. In response to Council questions, Assistant City Manager Jurjis stated that general law cities are following State law and STL information is unknown; indicated that this applies strictly to Community Development enforcement and all the paperwork has been updated with the values; and confirmed that the Harbor Department code enforcement officer is not part of this discussion. Assistant City Manager Jurjis and Code Enforcement Supervisor Murray continued with the presentation to discuss the beach vending and enforcement challenges. Mayor Pro Tem Stapleton supported finding solutions to dealing with the beach vendors and noted that the companies that setup events on the beach should be included in this effort. In response to Councilmember Weigand's question, Assistant City Manager Jurjis agreed that as enforcement increases, vendors will eventually close, at which time the enforcement focus can shift to other projects and thought that more tools are available to have a more proactive enforcement program that will lead to a reduction of vendors. Mayor O'Neill supported the approach and noted concerns by surrounding businesses regarding the beach vendors and the impact on the livelihood of small business owners. Assistant City Manager Jurjis confirmed that staff will come back to Council before the upcoming summer season. Assistant City Manager Jurjis and Code Enforcement Supervisor Murray continued with the presentation to discuss refuse enforcement and refuse enhancement proposals. Mayor O'Neill relayed that CalRecycle is understaffed or unable to enforce regulations, suggested early efforts on education if the enforcement is transferred to the Community Development Department (CDD), and expressed his support for the transfer. He noted the staffing change proposal and questioned the amount of work. Assistant City Manager Jurjis clarified that the proposal is for a conversion of a part-time position to a full-time position and does not add more bodies to CDD. Mayor O'Neill expressed concern for full-time employees (FTEs) and there being enough work to justify going up from 1.5 to 2.0 FTEs. Assistant City Manager Jurjis anticipated a two-year period for education and outreach to meet the threshold before dropping off resources. Mayor O'Neill expressed the opinion that the person would not need to spend all their efforts to refuse and could do other code enforcement actions as well. City Manager Leung stated that resources could be reallocated after the initial two-year period. Councilmember Grant reconfirmed the refuse program goal, reviewed the scorecard, and thought it was pretty good and the education and outreach has been efficient, but the commercial side is behind. Public Director Webb noted that the City receives monthly reports from the State. Councilmember Grant suggested filtering to other information entities and campaigns that can assist with education. Mayor O'Neill noted the option of reminding commercial haulers that their franchise agreements can be pulled if they do not comply, stated that some of the hauler owners live in the City, and suggested reminding commercial haulers that a 28% compliance level is not acceptable when it comes time to renew their agreements. Councilmember Grant noted that the City has a different system for residential and commercial refuse collection, and suggested a conversation in the future about this and other issues. Councilmember Weigand noted that some commercial haulers are small businesses, expressed concerns for the impacts to local businesses when administering fines, and emphasized the importance of education and opportunities to work on franchise agreements with commercial haulers. Mayor O'Neill relayed that most of what is being addressed is Tier 1 haulers and stated that the City needs more compliant Tier 1 haulers. Councilmember Blom supported bringing this into CDD because it aligns with building codes and thought a lot of the City's issues are not with the haulers but with physical space limitations with the new system. He appreciated the education, suggested working with the haulers to seek efficient equipment, systems, and schedules, and noted that recycling organics for restaurants is hard and there should be a focus on infrastructure and receptacles with new construction. Volume 66 - Page 34 City of Newport Beach Planning Session February 3, 2024 Assistant City Manager Jurjis and Code Enforcement Supervisor Murray continued the presentation to discuss the commercial businesses in residential neighborhoods and the proactive enforcement proposal. Councilmember Kleiman expressed concern for an effective allocation of staff resources. Assistant City Manager Jurjis relayed that staff schedules are staggered for peak times and days, and Code Enforcement Supervisor Murray reviewed the employee scheduling and enforcement approach. Councilmember Weigand expressed concern that the City may be shifting to a proactive approach, noted his appreciation for the reactive approach, and expressed an interest in adding recovery residences. Assistant City Jurjis clarified that the majority of Code Enforcement's duties are reactive, and due to insufficient staffing, staff will focus on the areas noted in the proactive list. Assistant City Manager Jurjis collected a consensus for a proactive approach for STLs. Councilmember Weigand clarified his support for scouring the internet for illegal STLs. Assistant City Manager Jurjis and Code Enforcement Supervisor Murray continued the presentation and discussed resources to enforce issues related to beach vendors, refuse, and STLs, fee recovery options, and STL permit fee comparisons. Councilmember Kleiman supported changing fees to be market rate, raising the bar, and encouraging better operators. In response to her question, City Manager Leung indicated that TOT goes into the General Fund, is not a restricted fund, STL pays into the TOT, and staff will conduct a penalty fine survey with other cities. Mayor O'Neill expressed an interest in conducting a Proposition 187 analysis to ensure that the fees are in line and it makes sense. Councilmember Grant suggested phasing any fee increase and being considerate when raising enforcement fees. City Manager Leung relayed that the fee schedule goes to the Finance Committee and then to the City Council for adoption. Councilmember Kleiman asked if other Councilmembers have an interest in adding more police presence to address quality of life issues by expanding the Homeless Liaison Officer and Peninsula Enforcement Team programs to Corona del Mar and Newport Center. Councilmember Blom expressed support. Mayor O'Neill expressed interest in finding out if the Police Chief finds it warranted, stated this would be part of the budget discussion, and suggested a study session to discuss it. Library Services Director Hartson and Library Services Manager Lightfoot utilized a presentation to discuss cultural arts, current programs, funding sources, program expenditures, and proposed projects. Councilmember Grant noted that it is important to understand that the biggest part of the cultural arts budget is for the sculpture exhibition and the money budgeted for it is a pass -through amount and not part of the City Arts Commission's budget. She thought that the Council needs to decide if it will continue providing support because it technically is a City operation. Mayor O'Neill supported giving Council the discretion to determine the number of phases if the funds are a pass -through. Further, he stated there should be a holistic view of the City's needs, including Police Department and Code Enforcement needs, sculpture changes every two years, a budget that places emphasis on Citywide efforts, grant funding done by the private sector, and a sculpture garden every two or three years. He indicated he did not think the funding was a pass -through, pointed out that CIP projects are the priority, opposed a budget increase, supported decreasing the largest expenditure, and welcomed the opportunity to have the Council make the decisions. Councilmember Grant thought this is an important discussion to get feedback from the Council, noted that the pass -through represents the minimum amount of money to replace the sculptures and no discretion is in place, expressed a need to reevaluate the commitment to the sculpture garden, grant funding, and the vetting process for programming, and thought the sculpture collection at the Civic Center is a priority and the Arts Foundation should not be relied upon to supplement necessary programming, such as the sculpture collection and concerts. Volume 66 - Page 35 City of Newport Beach Planning Session February 3, 2024 In response to Councilmember Weigand's questions, Library Services Director Hartson stated that professional services fluctuate depending on the maintenance needs and timing, thought that there was an opportunity to look at lengthening the time that sculptures are in the park, discussed the impact on the sculptures from beach elements, and indicated there could be cost savings and guideline changes. Councilmember Weigand stated he opposes wrapping utility boxes and supported working with the private sector for an increased awareness of what the sculpture garden does for the community and donation opportunities. In response to City Manager Leung's suggestion to come back with options to move forward with the sculpture garden, Mayor O'Neill suggested that the City Arts Commission provide Council with options. Councilmember Grant suggested that the City Arts Commission offer opportunities for public funding and recognition of the sculpture garden as an incentive. Public Comments Nancy Gardner stated that she is not a fan of public funding for the arts and noted that the City is a wealthy community and only $10,000 is funded by the Newport Beach Arts Foundation. Nancy Scarbrough asked, who takes financial responsibility for the emergency services provided to residential care facilities, are the expenses for Fire and Police services eligible for reimbursement by the facility, and if the Fire Medics Program is billed to facilities as a business. Additionally, she questioned if other costs for employment are being considered when converting part-time positions to full-time. Jim Mosher noted that the pension liability paid down in the next eight years is dependent on Ca1PERS' results, questioned code enforcement efforts relative to gas leaf blowers; discussed the diversion rate in residential areas, the requirement not to contaminate the black carts with organic material, and refuse enforcement obligations, and questioned if the refuse working group is still meeting; and suggested reviewing and updating City Council Policy I-10, Financial Support for Culture and Arts. Mayor O'Neill clarified that he is not currently on the working group and it no longer exists. City Attorney Harp stated that State law requires the City to treat licensed six and under residential care facilities the same as any other residential use and Code Enforcement is in that context, including paramedic services and the Fire Medics Program which is a fee based service for transportation to the hospital and billed at the residential rate, not as a business. City Manager Leung acknowledged the additional costs associated with changing from part-time to full-time employee status, noted pension plan benefit requirements after 1,000 work hours, stated the pension formula is lower with PEPRA, employees are paying a considerable amount towards their contributions, and people are seeking full-time work so consistency and long term employees are factors in the discussion. V. PUBLIC COMMENTS ON NON -AGENDA ITEMS Nancy Gardner noted that the State certified the City's Housing Element which calls for twice the Regional Housing Needs Assessment (RHNA) numbers, encouraged the City to focus on affordable housing, such as workforce housing, senior housing, and starter homes, suggested considering inclusionary zoning, exploring employer incentives for employee -housing, and supporting the Housing Trust in the City that is focused on affordability. Jim Mosher suggested that the Council review what planning sessions were in the past and what other cities call them, and suggested holding another type of session that includes bigger priorities, such as the airport, homelessness, RHNA, and other issues. Charles Klobe stated that the Newport -Mesa Unified School District 7-11 Committee is tasked with determining what to do with the land near the City yard. He announced that the committee will meet on February 5, 2024, and encouraged the City to take an interest in what happens to the property. Volume 66 - Page 36 City of Newport Beach Planning Session February 3, 2024 Mayor O'Neill indicated that today's meeting did not cover every issue because that is done regularly at City Council meetings. He expressed appreciation to everyone in attendance. VI. ADJOURNMENT - 11:43 a.m. The special meeting agenda was posted on the City's website and on the City Hall electronic bulletin board located in the entrance of the City Council Chambers at 100 Civic Center Drive on February 1, 2024, at 10:00 a.m. Leilani I. Brown City Clerk Will O'Neill Mayor Volume 66 - Page 37