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HomeMy WebLinkAbout052119 - Minutes - Regular MeetingCITY OF DIAMOND BAR CITY COUNCIL STUDY SESSION May 21, 2019 STUDY SESSION: MfHerrera called the Study Session to order at 5:30 p.m. in Room CC -8 of the South Coast Air Quality Management District/Government Center, 21865 Copley Drive, Diamond Bar, CA 91765. ROLL CALL: Council Members Chou, Lyons, MPT/Tye, M/Herrera Absent: Council Member Low was excused. Staff Present: Dan Fox, City Manager; Ryan McLean, Assistant City Manager; David DeBerry, City Attorney; Ryan Wright, Parks and Recreation Director; Greg Gubman, Community Development Director; David Liu, Public Works Director; Anthony Jordan, Parks and Maintenance Superintendent; Dianna Honeywell, Finance Director, Marsha Roa, Public Information Director; Cecilia Arellano, Public Information Coordinator, and Tommye Cribbins, City Clerk. ® DRAFT FY 2019-20 DRAFT OPERATING BUDGET. CM/Fox introduced tonight's session and turned the presentation over to FD/Honeywell. FD/Honeywell stated that tonight's session focuses on the 201920 Draft Operating Budget, Special Revenue Funds, Internal Service Funds and Debt Service Funds. Staff began working on this budget right after the mid -year budget adjustments. Currently, the General Fund estimated resources amount to about $26.8 million and the estimated expenditures are about $26.5 million leaving the City in a positive position of about $350,000, including the use of reserves of nearly $900,000 for carryover CIP projects that were not completed in the current fiscal year, Staff is assuming that for the upcoming fiscal year there will be about a 3.4 percent increase in the property tax. revenue. Housing prices remain high; however, there is a slowdown in the sale of homes within the City. The parcels are expected to increase about 4.63 percent this year but only about 3.75 percent next year. Sales tax is projected to decline next year by about 2.9 percent (primarily from gas stations). In this budget, staff has proposed the sale of $250,000 of excess Prop A funds at a rate of 70 cents on the dollar, for a total of $175,000 that would go back into the General Fund or into a special fund, depending on the Council's decision. Current service charges, construction of the South Pointe project has ended and one-time planning and permit revenues are expected to decline as a result. May 21, 2019 PAGE 2 CC STUDY SESSION General Fund Expenditures are anticipated to be about $26.5 million and the City Administration (City Council, City Attorney and City Manager's office) will be lower in the. upcoming year because of increased costs for Tres Hermanos this current fiscal year. Admin support includes the Human Resources Department which is proposing to look at the March to March CPI on an annual basis to help guide the City to an annual proposed COLA. This year the March to March CPI was 2.7 percent. Staff is proposing a 2 percent COLA (benefit for full time employees) and a $50 increase in the Benefit Allotment. Included in this budget is an Alternative Retirement System for part time employees which sets aside money on a pre-tax basis that is put into a retirement budget Deferred Compensation 457 Plan. This plan is portable and fully funded when the employee leaves service with Diamond Bar and allows them to take advantage of the opportunity to continue paying into the fund should they become employed by another city that has a similar Deferred Compensation account. Additionally, this is a savings to Diamond Bar because currently, the City contributes 6.2 percent and the employee contributes 6.2 percent and by federal law, Diamond Bar would be required to provide 7.5 percent for retirement. Staff is proposing that the employee assume the entire 7.5 percent. In examples that staff has calculated, an average employee would still realize more money in their paycheck. C/Lyons asked if other cities were working under this plan. FD/Honeywell responded "quite a few cities." C/Lyons asked if it was working well. FD/Honeywell responded "yes." C/Lyons asked how many part timers Diamond Bar has. FD/Honeywell responded "about 60." CM/Fox said that most of the part timers are in the Parks and Rec Department. MPT/Tye asked if this was going forward only and not retroactive. FD/Honeywell responded "correct." Staff is proposing that this would apply to all current employees and commence October 1st In response to C/Lyons question regarding explaining the program to the part time employees, CM/Fox stated that assuming there is support from the Council, it will require further Council action that staff will bring back. Staff has included the savings that were estimated, based upon nine months with an implementation of October Ist and there will need to be outreach education for the employees. If something comes up in between and staff May 21, 2019 PAGE 3 CC STUDY SESSION decides it is not as great as staff thought it would be, staff will share that at the time of request for recommendation or modification. FD/Honeywell continued stating that another item to point out is that effective January 1, 2020 the minimum wage will go up to $13 per hour which will translate to a very minimal initial impact to the budget, but as it rises to $15 in the next couple of years, more consideration will have to be given to calculating how this will impact the organization because there will be classifications that will have to be looked at in more detail. Staff is also looking at a benefit allotment/staff alternative for prospective employees so thatthe benefit would change for new employees only and existing employees would have their benefit allotment swept into the 457 Plan. Going forward, the Council may want to look at placing some limits to the amount that is allowed to be put into the 457 Plan because this scenario is not currently built into the budget. One of the recommendations under the Fiscal Sustainability Plan presented by ACM/McLean a few meetings .back was to start paying down the CaIPERS unfunded pension liability. Each year there have been some rather large losses and those are being amortized over time ranging from 15 to 30 years. The City is required to make a UAL payment (payment toward that unfunded liability) related to those losses, and the minimum the City has to pay each year based on the 30 -year schedule is about $341,000. However, the City has chosen to make a higher payment of about $520,000 which would pay that unfunded liability in full in about 15 years for a saving to the City of about $1.9 million over the 15 -year period. MPT/Tye asked what losses the City suffered. FD/Honeywell responded that it was CaIPERS that suffered Investment losses which spread over all of the plans and Diamond Bar's portion had to be amortized over 30 years. At the same time, the expected return rate is down 7.25 percent which is causing the City's costs to go higher each year. The budget proposes some personnel changes, particularly in the Public Works Department where there has been some turnover with the loss of some great engineers and at this point, it has been difficult to fill the Senior Maintenance Worker position. So, staff is proposing some new job classifications to handle the vacancies. The proposal is that the City have a Public Works Manager and Assistant City Engineer come on board to help with CIP projects, and help manage the other associate engineers at the salary range 46E which is $170,000 to $243,000 plus benefits. Staff is also proposing to add an Engineering Technician which would replace the vacant assistant class associate engineer position that was vacated by John Beshay, The Engineering Technician would work the counter more which would provide greater coordination between Planning and Engineering. In addition, staff is proposing to add a Public Works Inspector. At this point the May 21, 2019 PAGE 4 CC STUDY SESSION City spends a lot of money on contractors for this service, and the City would have an in-house inspector which would save the City a significant amount of money on contract services. The Senior Civil Engineer position, recently vacated by Kimberly Young, would be adjusted down one level because the Public Works Manager would be assuming more of those duties. ClLyons asked if the Engineering Technician position would provide more customer service focus. FD/Honeywell responded "yes." PWD/Liu responded to C/Lyons that the position would provide more customer service and that person would be working more closely with Building and Safety. C/Lyons asked if the person would have an engineering background plus education or experience. PWD/Liu said a combination of, but not necessarily an engineering degree. FD/Honeywell continued that staff would also make some adjustments to other engineering positions by defunding one of the assistant class associate engineers and defunding one of the Senior Maintenance Worker positions. C/Chou asked if the positions staff intended to defund were currently vacant. FD/Honeywell responded "correct." No one is being laid off or demoted. FD/Honeywell summarized that this proposed reorganization would, in staff's opinion, reduce the City's contract services on CIP projects by about $250,000 annually. FD/Finance then spoke about Economic Development reporting that Restaurant Week was the City's most popular event so staff has allocated $22,500 for that event in the next fiscal year. With regard to Public Safety, FD/Honeywell stated that the increase to the contract this year was about 5 percent and the liability trust fund rate increased by 11 percent (about $350,000 increase over the current fiscal year). Staff is again proposing that $100,000 be allocated out of a Law Enforcement Reserve Fund for any kind of special controls, assignments, suppression controls, etc. C/Chou asked if $100,000 was enough. FD/Honeywell responded that this year staff believes it will use about $35,000. The $100,000 has been more than enough to allocate. And there May 21, 2019 PAGE 5 CC STUDY SESSION is plenty of money in the fund should it be determined at mid -year that a greater amount needs to be allocated. There has been an increase to the Crossing Guard costs by about $13,000 which means that Diamond Bar will be spending about $180,000. M/Herrera asked if the increase was due to adding more schools. FD/Honeywell said no, that it was just a contract increase. M/Herrera asked who the City contracts with for the crossing guard services. AE/Malpica answered American Crossing. FD/Honeywell reiterated that with respect to Community Development the City will have lower permit expectations since the South Pointe project is completed so there will be lower revenues and lower costs because the City will not be paying RKA as much for services. For Parks and Recreation this year there was the formation of the Special Events Subcommittee which looked at all of the programs and revamped the events, some of which was because certain venues were not available. With all of these changes and not having the City Birthday Party annually, to the extent it has been over the past years, costs will be reduced by about 2.7 percent in the Recreation department. C/Lyons felt 2.7 percent was too low because the Birthday Party alone costs how much. ACM/McLean responded that the birthday party costs $100,000, the 41h of July is about $70,000, and the new patriotic concert is another $5-7,000. Overall, estimates total about $165,000. FD/Honeywell pointed out that the 2.7 percentage figure is net because there will be increases in salary proposed for the 2 percent plus the higher PERS costs. C/Lyons said that those two events, the City Birthday Party and the 4th of July event, are the two biggest events the City has and she was hoping that the result of not having those events annually would drop costs off by at least 10 percent. FD/Honeywell said that the Recreation Department budget is about $2 million and in addition to increased salaries and benefits, costs of programs increase each year. May 21, 2019 PAGE 6 CC STUDY SESSION FD/Honeywell went on to discuss Public Works/Engineering reporting that the budget continues to include the $150,000 for the Safe Routes to School update as part of the strategic plan. Also, this year, staff was able to reprogram some of the costs that the City paid for with General Fund monies whereas, things such as the traffic signal contractor can now be paid with Prop C funds (nearly $200,000). PWD/Liu responded to C/Chou's request to explain the Safe Routes program which he did and Council discussed the details of the program. FD/Honeywell went on to explain that as in previous years, the General Fund will be subsidizing LLD's, a matter under consideration by the City Council. The costs are lower for the upcoming year because the current budget was higher due to additional tree trimming costs this fiscal year. This upcoming year it is proposed that the City will subsidize the LLD's with General Fund money by $429,000 without any changes to the current assessments. General Fund Reserves are carried over for the Capital Improvement Projects and for the Lighting and Landscape Districts for a total of about $897,000. The Community Organization Support Fund -- staff is suggesting to allocate $20,000 for all groups in the City (local non-profit organization); the Law Enforcement Reserve Fund — staff is proposing to allocate the $100,000 (current reserves about $1 million); the Technology Reserve Fund — money has been set aside in previous years to help fund the Recreation System, the new Client System and staff is now proposing to set money aside that is being collected through the City's Permit Fees specifically to replace the current Permit System; Fund 20 is the OPEC Fund where money was set aside a few years back to help fund the retirement health benefits and money continues to be transferred to the Trust Fund with CERT with a current balance of nearly $300,000. C/Chou said that for the Law Enforcement Reserve Fund the City is spending about $100,000 a year on potential overtime and suppression patrol booth and he wanted to know the rationale for maintaining that large of a balance. FD/Honeywell responded to C/Chou that when the City had unfunded positions in previous years, whatever savings the City had were taken from the Law Enforcement Contract and set aside in that fund for any future use where the City might have an increase that the City might not want to absorb with just the General Fund monies. It is kept in place just in case there is a significant increase. To date, the City has been able to absorb the increases and has left the balance there to use on special occasions for suppression patrols. May 21, 2019 PAGE 7 CC STUDY SESSION C/Chou suggest the City could use the excess to pay for the increased liability fund. Staff is requesting to set up a new fund during FY 2019.20 for Fund 107 which is for Measure W that was passed last election and will be used for the Storm WaterNVaste Water projects. This revenue will not be forthcoming until the second half of the fiscal year. CIP projects have been programmed for the SW/VVW projects; however, those projects will not commence until the City is certain it has the funds. Staff is awaiting the guidelines that will specify whether the money can be used for admin costs to offset salaries. C/Lyons asked what projects would fall under Measure W. PWD/Liu responded the Canyon Loop Trail project, the Diamond Bar Slope repair and the Groundwater Drainage Improvements. CM/Fox emphasized and reiterated FD/Honeywell's statement that these projects are subject to the ultimate approval of the County and what their guidelines will be. At this point, staff believes they will be eligible projects and if something changes this will be revisited midyear or sooner. INTEL SERVICE FUND (Insurance -- approximately $500,000 plus) This is a transfer from the General Fund. The City needs to purchase a new truck to replace a 2006 F150 during the. next fiscal year and accordingly, staff is requesting to transfer that money during the current fiscal year to cover both vehicles and additional equipment because the money is available. C/Lyons asked if it was in the budget to replace the City Hall copier. ACM/McLean responded yes; it is in the 530 Fund. FD/Honeywell explained that the money has been transferred to replace servers and the ERP and staff will be expensing these items over the next couple of years as staff works through the project beginning in the next couple of weeks. The debt service comes to approximately $158,000 each year and at the end of the upcoming fiscal year the balance will be about $8.6 million. The fixed interest rate is about 3.4 percent. C/Chou thanked staff for doing a great job on what he believes is a really good budget considering Arcadia, Claremont and other cities are running a $7-8 million deficit. May 21, 2019 PAGE 8 CC STUDY SESSION C/Chou reiterated his concerns about exchanging Prop A Funds. Because there is no current project, he feels that Council should hold off on exchanging the funds until staff has time to identify a project that can be funded. M/Herrera said that before anything can be done, there needs to be Council consensus. M/ Herrera said she disagreed with what C/Chou is suggesting. She does not believe it is a prudent action for this City Council. The City of Pomona is already taking action on this agenda item and there is a small window of time to complete the exchange. Council discussion ensued. Council concluded 3-1 (Chou, Lyons, MPT/Tye — Yes; M/Herrera -- No) to remove from the draft budget for 2019/20 the sale of Prop A Funds from consideration at this time. M/Herrera referred to Page 160, Tres Hermanos Conservation Authority Fund totaling $477,000. FD/Honeywell responded that this was an error and it should read $70,000, and that the item would be corrected in the next version of the budget, C/Lyons said she is still concerned about the 2.7 percent reduction for parks and does not believe it is correct. It would only be $54,000 and she would like for FD/Honeywell to pencil it out for her. C/Chou said he would be out of town on June 4th and to him this item is important enough that all Council Members should be present for the budget vote. He asked if the vote could be moved forward to the June 18th meeting when he would be present. MlHerrera said she believed that would be detrimental for the City because there are timelines to follow for auditing reasons. Therefore, she believes the Council should continue with the June 4th date and if staff finds a reason it needs to be deferred to June 18th, there is that opportunity. FD/Honeywell further explained that the City cannot legally spend one dollar if there is no approved budget by July 1st. While June 18th provides enough time, should there be an issue arise that defers approval of the budget, it would need to be continued to the first meeting in July and the City is then without a budget which puts it at risk. M/Herrera stated that with affirmative consensus the FY 2019-2020 budget item will be brought forth for consideration on June 4th, 2019. Public Comments: None. May 21, 2019 PAGE 9 CC STUDY SESSION ADJOURNMENT: With no further business to come before the City Council, MfHerrera recessed the Study Session at 6:23 p.m. to the Regular Meeting. TOMMY CRIBBINS, City Clerk The foregoing minutes are hereby approved this 4th day of June 2019. (�AdAmj-� CAROL HERRERA, Mayor MINUTES OF THE CITY COUNCIL REGULAR MEETING OF THE CITY OF DIAMOND BAR MAY 21, 2019 STUDY SESSION: 5:30 P.M., Room CC -8 FY 2019120 DRAFT OPERATING BUDGET Public Comments: None CALL TO ORDER: Mayor Herrera called the Regular City Council meeting to order at 6:32 p.m. in the South Coast Air Quality Management District/Government Center Auditorium, 21865 Copley Drive, Diamond Bar, CA. Staff Present: Dan Fox, City Manager; Ryan McLean, Assistant City Manager; David DeBerry, City Attorney; Ken Desforges, IS Director; David Liu, Public Works Director; Ryan Wright, Parks and Recreation Director; Dianna Honeywell, Finance Director; Greg Gubman, Community Development Director; Marsha Roa, Public Information Director; ; Anthony Jordan, Parks and Maintenance Superintendent; Cecilia Arellano, Public Information Coordinator, and Tommye Cribbins, City Clerk. CM/Fox reported that during tonight's Study Session, the City Council received staff's report on the Fiscal Year 2019120 Draft Operating Budget. Overall, the City is running about $26.9 million in revenue and $26.5 million in expenditures leaving a small surplus. There were Council comments and changes that will be incorporated into the budget that staff plans to have prepared for the June 4t' Regular meeting for Council adoption. PLEDGE OF ALLEGIANCE: Mayor Herrera led the Pledge of Allegiance. INVOCATION: Garrett Rice, Youth Pastor, Diamond Canyon Christian Church, provided the invocation. ROLL CALL: Council Members Chou, Lyons, Mayor Pro Tem Tye and Mayor Herrera. Absent: Council Member Low was excused. APPROVAL OF AGENDA: As presented. 1. SPECIAL PRESENTATIONS, CERTIFICATES, PROCLAMATIONS: 1.1 MPT/Tye stated that the owner of P.L. Bakery Cafe, 2767 S. Diamond Bar Boulevard was unable to attend and that the Certificate Plaque would be taken be delivered. 2. CITY MANAGER REPORTS AND RECOMMENDATIONS: None. MAY 21, 2019 PAGE 2 CITY COUNCIL 3. PUBLIC COMMENTS: Pui Ching Ho, Librarian, Diamond Bar Library, spoke about events and programs available through the library during the remainder of May and the first portion of June. Alien Wilson thanked C]Chou for posting information online. He believes that a COLA should not be automatically included as a guarantee for staff and that he is discouraged to see that the City Council is selling Prop A funds at a percentage on the dollar because it means Diamond Bar taxpayer dollars are being given away. He is generally concerned about the budget because it seems to him that the City is spending more than it is taking in. He appreciated the community meeting on the Sunset Crossing Park concept and he would like an update on the Contract Cities meeting that took place in Indian Wells. Mr. Harrison said he was concerned about the lack of African American teachers in the Walnut Valley Unified School District. Paul Sherwood was bothered that Mr. Harrison was not able to speak for five minutes. 4. RESPONSE TO PUBLIC COMMENTS: Responding to Mr. Sherwood and Mr. Harrison, M/Herrera stated that she spoke with Mr. Harrison at length and explained that the City Council is a separate legal entity and does not have authority over the Walnut Valley Unified School District. She knows that Mr. Harrison had spoken with administrators at the WVUSD office regarding his issue. With respect to Mr. Wilson's comments about Prop A funds, M/Herrera explained that this is a practice that the City has done for years, selling excess Prop A funds to other cities and by selling the surplus Prop A funds the City has the flexibility to spend those funds on items other than what they are restricted to under Prop A. She believes that it is in the City's best interest to have the most flexibility in how it can spend its funds. During tonight's budget study session however, the line item to sell Prop A funds was removed from consideration and those funds are now designated to be held in an account to see if there are projects that the City might want to pursue that are allowed under Prop A guidelines. MPT/Tye said he felt it was very unfortunate that a speaker would come forward and say that the City is "giving taxpayer dollars away" when in fact, the City is not giving money away. Instead, the City receives a certain dollar amount of Prop A funds that it is allowed to use in very, very specific ways. At the end of a certain period, if those funds are not used, the money will go back to Metro or, the City has an option to sell them to the highest bidder. This year it happened to be Pomona. There are 70 plus pages of information about Prop A and he would be MAY 21, 2019 PAGE 3 CITY COUNCIL .........: glad to supply a copy to anyone who wants to see for himself that indeed, the money goes back to Metro. To say that the roads are in bad condition and the money could be used for that, the roads are not in bad condition. The City keeps its roads updated and in good repair on a regular basis. PWD/Liu has provided information and how this is done on a regular basis and he could provide that, information again at this time to explain the pavement condition index and where Diamond Bar stands. He is glad that the City Council had an opportunity to look at the budget and consider Proposition A and realize the City is actually keeping as much money as the system allows. 5. SCHEDULE OF FUTURE EVENTS: 5.1 Parks and Recreation Commission Meeting -- May 23, 2019, 2019 -- 6:30 p.m., Windmill Community Room, 21810 Copley Drive. 5.2 Memorial Day Holiday — May 27, 2019 — City Offices closed in observance of Memorial Day and reopen Tuesday, May 28, 2019 at 7:30 a.m. 5.3 Planning Commission Meeting -- May 28, 2019 — 6:30 p.m., Windmill Community Room, 21810 Copley Drive (canceled). 5.4 City Council Meeting — June 4, 2019 — 6:30 p.m., AQMDIGovernment Center Auditorium, 21865 Copley Drive. 6. CONSENT CALENDAR: C/Lyons moved, C]Chou seconded, to approve the Consent Calendar as presented. Motion. carried by the following Roll Call vote: AYES: COUNCIL MEMBERS: Chou, Lyons, MPT/Tye, M/Herrera NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Low 6.1 APPROVED CITY COUNCIL MEETING MINUTES: 6.1a REGULAR MEETING OF May 7, 2019 —as presented. 6.2 RATIFIED CHECK REGISTER DATED MAY 2, 2019 THROUGH MAY 15, 2019 TOTALING $863,520.63. 6.3 LANDSCAPE ASSESSMENT DISTRICT NOS. 38, 39 & 41 FOR FISCAL YEAR 2019-20: 1, ADOPTED RESOLUTION NO. 2019-15 (NO. 38) DECLARING THE CITY'S INTENTION TO LEVY AND COLLECT ASSESSMENTS FOR LANDSCAPE ASSESSMENT DISTRICT NO. 38 AND DIRECTED THE CITY CLERK TO ADVERTISE THE PUBLIC HEARING TO BE SET FOR THE JUNE 18, 2019 REGULAR MEETING MAY 21, 2019 PAGE 4 CITY COUNCIL 2. ADOPTED RESOLUTION NO. 2019-16 (NO. 39) DECLARING THE CITY'S INTENTION TO LEVY AND COLLECT ASSESSMENTS FOR LANDSCAPE ASSESSMENT DISTRICT NO. 39 AND DIRECTED THE CITY CLERK TO ADVERTISE THE PUBLIC HEARING TO BE SET FOR THE JUNE 18, 2019 REGULAR MEETING; AND, 3. ADOPTED RESOLUTION NO. 2019-17 (NO. 41) DECLARING THE CITY'S INTENTION TO LEVY AND COLLECT ASSESSMENTS FOR LANDSCAPE ASSESSMENT DISTRICT NO. 41 AND DIRECTED - THE CITY CLERK TO ADVERTISE THE PUBLIC HEARING TO BE SET FOR THE JUNE 18, 2019 REGULAR MEETING. 7. PULIC HEARINGS: NONE. 8. COUNCIL CONSIDERATION: 8.1, PROPOSITION 218 ASSESSMENT BALLOT PROCEEDING PROCEDURES TO REPLACE EXISTING DISTRICT NOS. 39 AND 41. 8.2 FORMATION OF NEW LANDSCAPING ASSESSMENT DISTRICT NO. 41-2019 TO REPLACE EXISTING DISTRICT NO. 41. 8.3 FORMATION OF NEW LANDSCAPING ASSESSMENT DISTRICT NO. 39-2019 TO REPLACE EXISTING DISTRICT NO. 39. CM/Fox asked that the Council take Items 8.1, 8.2 and 8.3 together for purposes of staff's report. Item 8.1 is to describe and set in place the Proposition 218 Assessment balloting procedures; Item 8.2 and Item 8.3 talks about the Engineer's Reports and new proposed assessments for both LLD 41 and LLD No. 39, Much of the material is duplicative so staff's presentation will cover everything and at the end the Council will have the ability to take individual actions on each of the three items. PWD/Liu introduced John Bliss, President, SCI Consulting Group, who provided staff's presentation. Mr. Bliss stated that there are a couple of key factors and events as to how California has developed over time. Prior to Diamond Bar's incorporation, there were a number of subdivisions and with those subdivisions, there is often a need and interest to have landscaping and a variety of improvements. As California was developed, the model and challenge was "how do we sustainably pay for the maintenance of those improvements that go with typical subdivisions". Many cities up and down the state have had this same challenge and Diamond Bar is very typical. Before the City was incorporated, there were assessment districts formed under a set of rules that has subsequently changed. In 1985 these two developments were created with associated improvements. In 1989, the City MAY 21, 2019 PAGE 5 CITY COUNCIL incorporated and in 1996 was an important year for financing of local districts in California with the passage of Proposition 218. Proposition 218 was designed to protect taxpayers from runaway costs from local government and it was, like it's more famous cousin Prop 13, sponsored and promoted by the Jarvis Taxpayers Association. The philosophy of 218 is very solid and is that when there is any kind of improvement to a parcel those property owners ought to pay a fair -share in relationship to the special benefit that particular parcels receive. In the case of Landscaping Assessment District No. 39 and 41 these were created, designed and properly funded, and one of the unintended consequences of Prop 218 when it passed was it essentially eliminated the ability for a public agency to make an adjustment as costs went up. For these two assessment districts, the rate was frozen in time and as costs continued to increase, there was no ability for the City to raise the rates for those costs. As a result, the City looked at reducing services as well as, other types of budget cuts to compensate for the increase. In the end, the reason we are here this evening is because without an explicit balloting that created a CPI (Consumer Price Index) escalator, those rates are frozen in time. So, many cities and other governments up and down the state are faced with the same challenges. This left the City with three choices: 1) the City can reduce the services; 2) dissolve the districts and let the property owners create some alternative; or, (3) the decision that this City Council made is the one that is most typical which is to create a new assessment. This entails a mail -in ballot by property owners that will have two specific goals: 1) Make a correction in costs so that the rate goes up to generate additional revenue allowing the district to be self-sustaining; and, 2) add a much needed CPI mechanism allowing, with direction from Council each year based if and only if there is an increase in costs, to increase that rate limited by 3 percent of the local CPI. Thus, the decision was made to go with the mail -in ballot. There are essentially four steps that are part of any Prop 218 assessment --- an Engineer's Report (analysis) done by a Registered Civil Engineer. It is essentially an analysis that looks at the issue of proportionality (is every parcel assessed fair) and the concept of general benefit to ensure that if some of these benefits received and conferred onto other property owners or people traveling through, that the local property owners do not pay on that behalf. The study comes up with a rate and rate methodology which is what his firm has produced. Tonight, the City Council will be asked to consider a couple of resolutions, and if resolutions are approved for District No's 39 and 41, SCI will mail out ballots to the property owners in each district who will have 45 days to return those ballots. At the end of that 45 -day period, the City Council will conduct a Public Hearing and at the end of the public hearing, there will be a "last call" for ballots after which the ballots will be tabulated. If the "yes" votes are 50 percent plus 1 of the returned ballots weighted by their proposed assessment, the City Council is then empowered to pass another resolution and impose the assessment on those parcels. MAY 21, 2019 PAGE 6 CITY COUNCIL. Tabulation is a very important concept. Prop 218 requires an analysis that has different rates for different types of benefits. For example, a parcel that has a lot of benefit would be assessed more versus a parcel that had less benefit be assessed less. The voting consists of the same kind of structure. As an example, if he had an assessment of $1000 and his neighbor, for whatever reason, had a less benefit parcel or smaller parcel and did not get the same views and was assessed $500, he would get 1000 votes and his neighbor would get 500 votes. In this way, if one is assessed more that parcel/property owner gets more voting power. If the tabulation is in support, the City Council will be empowered to pass a resolution and put the assessment on the property taxes. SCI uses an unusual sized (5 Yz by 8 Yz) window envelope for sending out the ballots. It is much like a water bill and there are three documents inside the envelope: 1) the ballot itself which has a place for someone to indicate "yes" or "no" and sign their name, and lists the parcels on the back with the proposed assessment. Most of the property owners in both Districts 39 and 41 own one parcel. However, there are a couple that own more than one parcel which are all printed on the same ballot. The property owner can vote and return the ballot in the prepaid postage return envelope (contained in the packet). In addition, there is a document "Official Notice and Ballot Information Guide" printed on both sides and provides non -advocacy information about what the services are, what is the budget, what is the, proposed rate and describes the tabulation process and provides information to the property owner so that the property owner can make a decision as to whether they would like to vote "yes" or "no". It also serves another legal requirement which is that it is an invitation to the Public Hearing which is 45 days from the beginning of the balloting. That Public Hearing will be conducted here in the AQMD Auditorium during the Regular City Council meeting and that the ballot can be returned any time up until close of the Public Hearing. Ballots will be tabulated and results will be given on July 16th. Three key dates: On April 16th, 2019 the City Council adopted a Resolution that initiated these proceedings and directed SCI to write the Engineer's Report and conduct the study. Today the City Council makes its decision about moving forward to mail out the ballots. On July 16th, the end of the 45 -day balloting period, the balloting will be closed immediately at close of the Public Hearing and begirt the tabulation of the votes. Community Outreach and Education — The goal is to get the most participation possible. SCI's role, working closely with the engineer and staff, is to give information and get people to participate and embrace this concept. To that end, each and every property owner received an individual letter sent to them which contained a fact sheet and information similar to the notice. The notice is what is legally required, but the City took an extra step to get that information out in the form of a fact sheet infographic that explained the history, the budgeting history, why the CPI could not be done, what the City has done to reduce costs overtime and why the City is coming out at this time to ask for some additional information. In the letter was an invitation to a community meeting which, again, is above and MAY 21, 2019 PAGE 7 CITY COUNCIL beyond what cities do. Most cities rely on the ballot and the Public Hearing. In addition, Diamond Bar has a dedicated website Assessment Ballot Proceeding FAQ under www.diamondbarca.gov/faq.aspx. The City has gone out of its way to notify property owners because the goal is to get the information out to make sure everyone understands the budget challenges and to get people to participate in the process. The City conducted two very successful community meetings, one for each of the two districts. These were back-to-back community meetings. About 40-50 people attended the District 41 meeting which is less than half the size of District, 39 where 150 people attended with both meetings being very productive. The Engineer's Report goes into the establishment of these rates, on the budget side and with respect to abstract concept of "special benefit" and how "special benefit" can we quantified to make sure people pay their fair -share - not more and not less. District No. 41 has 554 parcels with an annual revenue of about $122,000. The proposed assessment is an increase of that, but the best way to help people get their arms around it is by a monthly rate. The annual rate is $461 to $501 per typical residence per year. The monthly rate is $20.04 to $23.38 per month depending on what the property yields. That would generate $281,703 and that would render the district self-sustaining, particularly with the CPI going forward. 40 percent would be the maintenance, 28 percent utility (primarily water, some electrical for limited lighting and some irrigation control systems), about 20 percent weed and pest abatement and the overhead at 12 percent. Proposition 218 requires that there be some specificity as to how a parcel is assessed commensurate to the benefit. District No. 41 is relatively small and the types of improvements actually are conferred pretty generally on all of the parcels. The perimeter brush clearance and landscaping can be seen from every street and therefore zones were not required. However, there are two different property types — single family homes and condos. Some of the condo building geometry receives less benefit with respect to view and access and condos tend to have fewer people and by looking at census information to determine the average number of people residing in a condo versus a single-family home. This information was blended with a slight reduction in the types of benefits a condo would receive. In this case, the single-family home rate is $401 and the condo rate is 92 percent or $461 annually. Proposition 218 benefit assessment requires separate quantification and separation of general benefit which is an abstract term, but the best way to think about this is if someone drove through the district and did not know anyone there, had no friends there or were not doing any yard work or any maintenance, they would enjoy the view, the landscaping, etc. The law is very clear that the property owners should not pay for the enjoyment of that particular person just described. This is called "general benefit" and not special to the property which was calculated that "general' benefit needs to be paid for directly by the City and that will continue and to that end, the City will contribute $10,314 annual as required by Proposition 218. MAY 21, 2019 PAGE 8 CITY COUNCIL District No. 39 has its own peculiarities and special aspects. It is a little bigger than District No. 41 with about 1245 parcels. The current annual rate is $236 and people will be balloted an annual rate of $358.34 up to $387.39, the range of rates depending on the zone. The additional amount is from $10.20 up to $12.62 per month, again with a CPI. Of this amount, 56 percent goes for maintenance, 29 percent for utilities, 9 percent for weed and pest control and 7 percent contract administration. In District 41, everyone got about the same improvements. In this case, District 39 is bigger and there are discernable different zones, areas that get a different type of benefit. Zones A, B and C were developed due to different types of improvements, different concentrations in brush clearing areas, mini parks and linear landscaping. Zone A on the south portion (green) has all three of those improvements in a very concentrated way and are conferred on all of the parcels. B & C zones have a different combination of those and the rates are slightly lower because they are associated with less special benefit. Zone A is the 100 percent rate of $387.39, Zone B is $377.70 and Zone C $358.34. The general benefit is $33,396. The unusual parcels in District No. 39 are looked sometimes they will contribute special benefit. interesting parcel in an assessment district that is One of the differences between an assessment ani were generated by the Jarvis Taxpayers Association parcels. An assessment is different by design Proposition 218 that requires public agencies properties such as churches, to pay that assessm parcel is looked at with the assumption it has However, there are some parcels that there will be A park is a aood examoie because it is one that r at very specifically because a park parcel is always an )aying for park maintenance. a special tax, both of which is that there are tax-exempt with specific language in and otherwise tax-exempt .nt. Therefore, every single some sort of assessment. finding of no special benefit. n be Innkpd at aq "if wR ara assessing these houses to pay for parks, the park is providing a benefit and is not receiving any special benefit from these services. There is a large parcel in the northeast corner, a large parcel with an elementary school, and it was. determined that most of the special benefits that the other parcels receive are not conferred on the school parcel which led to a very low assessment (a low estimate of single-family equivalence). In this instance, SCI worked closely with PWD/Liu and other staff members on this issue and looked at it in the area of safety and security in terms of lighting, fire retardant structures and proximity to fire and with the additional information he received from the City, he made a change on that parcel to indicate the school is receiving no special benefit which does not affect any of the other parcels. The school will not receive a ballot, it will not receive an assessment or property tax bill associated with this matter and it will not affect the other parcels within the zones. PWD/Liu recommended City Council approval of the Engineer's Report and authorization for mailing of the ballots. MPT/Tye asked when the ballots would be mailed. MAY 21, 2019 PAGE 9 CITY COUNCIL Mr. Bliss explained that the timeline calls for notices and ballots to be mailed on May 31St ClLyons asked what Mr. Bliss anticipated participation to be. Mr. Bliss responded that in a typical situation, he would see participation between 25 and 40 percent and the reaction to that typically is at the last election I know they got 50, 60, or 70 percent. The reason for that is, unfortunately in California, only about 50 percent of eligible adults register to vote. In a community like this it might be 60 percent. But using the example of 50 percent, when they say "50 percent of people voting" it is the 50 percent of the 50 percent that are registered which means it is 25 percent. In this instance, the 25-40 percent participation is very, very similar to a regular election. Furthermore, more than 50 percent of Californian's receive their ballots by mail or about 55 percent statewide. This mail ballot format was unusual 20 years ago but now is very common and expected which means his numbers may be low because Diamond Bar got a higher percentage in the community meeting or double what SCI would normally expect and Diamond Bar may get 40-50 percent on this ballot issue. ClLyons asked how many mailings to property owners came back as undeliverable. PWD/Liu said he did not have that information as yet but that it should be forthcoming. ClLyons asked if mail forwarding would be done. Mr. Bliss explained that they are obliged to use the County Assessor records which have a field called "mail address" which is where the property tax bills go. The LA County Assessor data is very good — one of the best in the state. Still, people move, there is change of ownership, etc. and we could expect to see a one to three percent return. When they come back there is a service that will be working with the City to determine a forwarding address so in this case, about 30 percent will be mailed a second time. MPT/Tye said using the assessor records means the property owner should be voting and not the property resident. Mr. Bliss said was correct. This is a "property owner" ballot and in a community like this, there are few renters. If someone owns the house and lives in Milwaukee, that ballot will go to Milwaukee and the property owner gets to. participate and the person who lives in the property does not. C/Chou asked if there was provision for drop-off ballots in addition to the mail -in ballot. Mr. Bliss responded the City is required to do that and there is a postage paid MAY 21, 2019 PAGE 10 CITY COUNCIL return envelope that will go on the ballot as well as instructions that they can drop the ballot off during the Public Hearing. In addition, there are protections in place for lost ballots to prevent double voting, especially if they request a replacement ballot late in the timeline. Those people will be encouraged to attend the Public Hearing where there will be a ballot box in which they can place their ballot. MlHerrera asked if property owners need to be registered voters to vote on this ballot issue. Mr. Bliss responded no, that this is a property -owner balloting issue only and there is no constitutional requirement that they be a registered voter. MlHerrera asked if anyone wished to speak on this matter. Seeing no one who wished to speak on this matter, MlHerrera closed public comments. Motion on Item 8.1: C/Chou moved, MPT/Tye seconded, to approve Item 8.1. Motion carried by the following Roll Call vote: AYES: COUNCIL MEMBERS: Chou, Lyons, MPT/Tye, MlHerrera NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Low Motion on Item 8.2: C/Lyons moved, C/Chou seconded, to approve Item 8.2, Motion carried by the following Roll Call vote: AYES: COUNCIL MEMBERS: Chou, Lyons, MPT/Tye, MlHerrera NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Low Motion on Item 8.3: MPT/Tye moved, C/Lyons seconded to approve Item 8.3 as amended. Motion carried by the following Roll Call vote: AYES: COUNCIL MEMBERS: Chou, Lyons, MPT/Tye, M/Herrera NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Low 9. COUNCIL SUBCOMMITTEE REPORTS AND MEETING ATTENDANCE REPORTSICOUNCIL MEMBER COMMENTS: C/Chou responded to comments made earlier that democracy is a beautiful thing and Council Members were elected as public servants to provide input and it is okay to disagree. He appreciates his colleagues voicing their opinions. As elected officials Council Members are held to a higher standard and must speak their minds because ultimately, elected officials are responsible to the people and not necessarily in agreement in all cases. C/Chou reported that on May 9th he. MAY 21, 2019 PAGE 11 CITY COUNCIL attended the Diamond Bar Corporate Showcase event at the Diamond Bar Center, one of the best facilities in the area. He attended both the assessment and community park workshops which were very well attended. It is great to have public workshops so that staff and Council can receive public input to learn what they need and want and proceed accordingly. MPT/Tye and M/Herrera and he attended the Contract Cities Municipal Update Conference. It was a great update from County Supervisors, State Senators, and State Assemblymen on a _ variety of things including Measure W, Measure H, several propositions and SB 50. It is our duty as elected officials to stay informed on what is happening. A hundred years ago the US passed the 19th Amendment to the Constitution which gave women the right to vote. The ultimate goal was not just to have the right to vote but give women the same freedoms as men. Although the work is never over, he believes as a nation, we have come a long way. C/Lyons attended one of the Landscape and Lighting District presentations for District No. 39 and as Mr. Bliss said, it was great to see so many residents there. The room was packed. She is hoping between those presentations and tonight's presentation and the two weeks they have to look into this matter prior to the ballots being mailed out, that each property owner will get the information they need to make an informed decision. That same night she attended the end of the Heritage Park meeting. Staff put together four design options for Heritage Park and received resident input. It was well done but there were very few people in attendance but there will be other opportunities for public input. Two nights later there was a Parks meeting to get input into the Sunset Crossing Park and that meeting was packed and full of energy. In this instance, staff also put out four different proposals for different amenities, price tags, etc. and everyone had an opportunity to rank the different options and provide additional input. She attended the Spring Showcase at the Diamond Bar Center and as CIChou said, it was very well done. She thinks residents tend to take for granted how nice the Diamond Bar Center is. She congratulated C/Low's son, Ryan Wei, who received his Medical Degree (MD) this weekend. MPT/Tye attended the 601h Annual California Contract Cities Association Municipal Seminar in Indian Wells. A lot of information was forthcoming from Sheriff Villanueva and Supervisors Hahn and Barger. Congratulations to Sandra Armenta,' the current Mayor of Rosemead as the incoming President of California Contract Cities. This afternoon he returned from ICSC in Las Vegas — he had two goals, one to talk to any restaurants that might be interested in coming to Diamond Bar and why it makes sense for them to come here and thank the people from Charles Company who have, in his opinion, led to a renaissance of the old Kmart facility, the new Sprouts Center. He talked with them about future occupants as well. He came away encouraged about the responses to Diamond Bar and the different retailers that are interested in talking with the City. Accordingly, ACM/McLean came back with a pocket full of business cards for follow up. The other goal MPT/Tye had was to talk with the folks at ROIC and ask what is the agenda here? Diamond Bar has lost the Whole Enchilada, a cleaner, and Rite-Aid (who intended to leave the facility anyway). The City will MAY 21, 2019 PAGE 12 CITY COUNCIL continue to see losses but he and others will keep doing their best to fill those locations and provide more amenities for Diamond Bar. MlHerrera said she appreciates MPTITye's attention to bringing more businesses to Diamond Bar. Contract Cities was interesting. There were many learning centers, one of which was fascinating to her was "what do you do when you encounter an active shooter?" which was a very interesting workshop with a focus on "do you know when you're in a room how many and where the exits are because one never knows when they might encounter an active shooter. It could be in a business meeting such as this evening's meeting, it could be in a restaurant and it could be at City Hall, So, it is important to remain vigilant about one's surroundings and take note of such things. It is always an instructional event and Contract Cities does their very best to provide learning opportunities for Council Members. ADJOURNMENT: With no further business to conduct, MlHerrera adjourned the Regular City Council Meeting at 7:44 p.m, TOMMYE CRIBBINS, CITY CLERK The foregoing minutes are hereby approved this 4th day of June , 2019. CAROL HERRERA, MAYOR