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2011/01/25ANAHEIM CITY COUNCIL REGULAR MEETING OF JANUARY 25, 2011 The regular City Council regular session of January 25, 2011 was called to order at 3:04 P.M. in the Chambers of Anaheim City Hall located at 200 South Anaheim Boulevard. A copy of the agenda was posted on January 21, 2011 on the kiosk outside City Hall. PRESENT: Mayor Tom Tait and Council Members: Gail Eastman, Lorri Galloway, Kris Murray and Harry Sidhu. STAFF PRESENT: City Manager Tom Wood, City Attorney Cristina Talley, and City Clerk Linda Andal FY 2011/12 BUDGET WORKSHOP Bob Wingenroth, Finance Director, began his presentation discussing the City's financial picture as a whole, focusing on the General Fund (GF) and specifically the GF's structural deficit. He remarked that one of the most important points that has helped maintain the City's financial strength was due to the modest debt loads issued over the years to invest in assets that would bring economic vitality to Anaheim. He reported the 2010/11 adopted City budget was $1.3 billion with the largest component at 46 percent reflecting the Enterprise Funds comprised of: electric, water, sanitation, golf and the convention center. The General Fund reflected 19 percent of that budget with the next largest shown as the Internal Service budget of 14 percent made up of facilities, fleet, information technical services and the employee benefits fund. Special revenues of 11 percent consisted of the Redevelopment Agency, Housing Authority and Gas Tax funds. A comparison of total full - time positions over a 20 year period illustrated a continuing decline in employees. In 1990/91, there were over 2,200 full -time budgeted positions while in 2010/11, this figure reflected 1,975 positions of which 100 currently remained vacant as a cost saving measure. Of these, he pointed out, Police at 543, Fire at 276, Public Utilities at 377 and Public Works at 244 made up the bulk of 1,975 employees. Focusing on the GF operating revenues versus expenditures, he reported the first three years beginning FY 03/04 revenues exceeded expenditures and deposits were made into reserves. In year 06/07, expenditures began to exceed revenues, a trend which continued into the current year where there was now a structural deficit projected at $10 million. Along the way, he pointed out; the City reduced positions, tightened spending, and used other reserve funds when available in addition to drawing down reserves to help balance the budget. In 06/07, GF reserves were nearly $45 million, however, as the recession progressed, those funds were used, and if there were no additional reoccurring expenditure reductions made at this point in time, the reserve would be exhausted in 2011/12. REVENUES: Discussing Transient Occupancy Tax (TOT), Mr. Wingenroth explained this tax was paid by those who stayed in the 144 hotels in Anaheim, almost 20,000 rooms available in the City. Those revenues had substantially increased over the years and in FY 07/08, peaked at $87.2 million, until the recession hit. He projected TOT to finish this year at approximately $81 million. To predict these revenues, he explained, the department used UCLA/Chapman data and talked to all partners involved from hotels to the Visitors and Convention Bureau as well as contracting with EKF, a consulting firm focused on tourism industry. Council Meeting Minutes of January 25, 2011 Page 2 of 9 SALES TAX: Mr. Wingenroth indicated there were 7,000 Anaheim businesses contributing to the sales tax base, with one percent collected by the State and forwarded to the City after a three month time lag. In 1999/2000, sales tax revenue was $46 million, peaking at $65.7 million in 2006/07. He noted tax revenues dropped about $18 million in three years, largely due to the recession, although the 911 event had some impact as well. For prediction analysis, the Department used national information, UCLA/Chapman research data and discussed impacts with other Orange County agencies. He projected a finish this year of $50.7 million from Anaheim's diverse sales tax base. PROPERTY TAX REVENUES: A 20 year comparison of Property Tax revenues, he reported, showed a significant increase in year 2004/05 as a result of the State trying to balance its budget and taking municipalities vehicle license fees (VLF), which had been received separately and were now a part of property taxes. Once that adjustment was made, property tax rose to a peak of about $60 million and had dropped down slightly. He reported the VLF swap amount was projected to be $25,156 for FY 2010/11. A chart depicting General Fund Special Revenues reflected receipt of the vehicle license taxes and showed a decline in FY 03/04 of $67.4 million dropping down to $53 million when the VLF fees were reduced. He also pointed out that building permits pointed to a decline in Other Revenue category, as well, also due to the recession. EXPENDITURES: On the expenditure side of the General Fund, Mr. Wingenroth remarked the Police Department was apportioned $98 million; the Fire Department received $45 million and Community Services at $24.6 million, with smaller segments delivered to the rest of the departments. He added that about 73 percent of these costs went toward employee salaries and benefits and the remaining towards operating costs. He pointed out that in 1999/2000, total GF expenses had gone up from $154 million to $257 million in 2007/08 and employee costs had increased from $107.8 million, peaking out in 2008/09 at $186 million and then dropping off last year to $184.6 million, a reflection of the loss of personnel. REVENUE PROJECTIONS: To illustrate the gravity of the financial situation, he offered the following scenario assuming no further ongoing reductions were made (other than the $5.7 million reduction implemented this January). The projected end -of -year budget for the adopted $233.5 million was $233 million. In FY 2011/12, that figure was projected to be $240.9 million. Expenditures adopted for 2010/11 was $252.1 million, projected to end at $246.9 million and in 2011/12 -were predicted to be $252.4 million. The net impact on reserves as a result of this scenario would be a loss of $13.9 million at the end of this current fiscal year leaving a balance of 4.6 percent in reserves (a figure below Council's goal of a five percent reserve fund and a loss of $11.4 million in 2011/12, leaving a zero percent balance at the end of that year, depleting the City's reserves. ZERO BASED BUDGETING: Mr. Wingenroth outlined the steps staff proposed to take to put the City in a position to close this gap. For years, he remarked the City had implemented program reviews to look at programs and to make and process improvements. This year, that program review would be included in the budget process, called zero based budgeting. All programs the City delivered to residents would be identified, a narrative on how those services were delivered would be provided by the departments including techniques and resources used and any alternatives that were available. The last step in this process was costing out each of those services delivered. In his closing remarks, Mr. Wingenroth emphasized if the City was able to make further reductions this year and reduce GF expenses by another $2 million, the next year, reserves should be slightly above the 5 percent mark with the goal to stop drawing on reserves and start Council Meeting Minutes of January 25, 2011 Page 3 of 9 building them back. He added no projections were made beyond FY 2011/12 because of uncertainties with the CalPers pension and how the State would balance its budget and the depth of the economic recovery. Staff would closely watch those issues and recommend responses as more information was gathered. The budget calendar would have staff working on pulling this together for a formal Council review in May, budget workshops in June along with final adoption at the end of the fiscal year. Throughout this process, he emphasized, staff would be working with Council to provide information and receive guidance. Council Member Sidhu asked if the recommended $2 million in reductions had been identified and Mr. Wingenroth responded that staff would be working with the City Manager and City Council to identify needed reductions. Timing was extremely important as every day the City delayed action, $38,000 would come out of reserves. After some discussion on the urgency in taking action, Council Member Sidhu anticipated reduction suggestions would be identified and shared with Council. Council Member Murray remarked this was a very telling presentation in that Anaheim was at the lowest level of authorized personnel since 1991 with those employees doing more with less and yet employee costs continued to rise. Mr. Wingenroth responded pension costs and medical costs continued to climb and while salary costs had increased, salaries were not outpacing revenue. Council Member Murray inquired about health care increases for next year. Kristine Ridge, Human Resources Director responded health care was on a calendar basis and rates had been implemented for 2011. Staff was looking at 2012 and anticipated an 18 percent increase. She added that over the past 10 years, medical costs did not follow CPI and the City experienced anything from a slight reduction to health care increases of over 30 percent. She added the new health care legislation already had an impact with dependent coverage being extended, no pre - existing conditions and a few other drivers of employer costs. Many of these impacts would not be seen until 2014 and the full impacts were not yet known. In today's dollars, she stated, the City was obligated for $1.7 billion in retiree benefits, however, when paid out in future years, that number would be greater. Specifically, the $1.7 billion reflected pension costs of all retired employees as well as active employees as of June 30, 2009 Council Member Murray responded that the needed $10 million in reduced expenditures was 1 /70 of Anaheim's pension costs which almost tripled in three years while employee numbers dropped during that time. She stated the only way the City delivered services was through its employees so services might have to drop which was why pension costs were such a contributing factor to budget issues. Mayor Pro Tern Sidhu encouraged the unions to work with staff to determine how the City could meet its obligations. The City Manager remarked City staff was doing all the things possible during this difficult economy: by not hiring, controlling costs, and looking for economies; a strategy that had been going on for the last couple of years and very aggressively for the last six months. Over the next few weeks, he added, staff would be having further discussion with Council as to what potential options and constraints were available. Reducing overtime and closing facilities were other options available to staff; however, he wanted to ensure there was a full discussion with Council before those actions were taken. He added staff would work incrementally and logistically over the next two months to solve immediate problems and also to consider the next fiscal year. The budget process was beginning early this year according to the calendar outlined by the Finance Director with the goal of potential changes to take place July 1. Mayor Tait asked for another workshop to be scheduled regarding pensions to keep the momentum going. Council Member Eastman felt it would be helpful for her to have more detailed information on the pension system and employee benefits. Mr. Wood indicated that would be done and may include presentations from experts in the public pension system. Council Meeting Minutes of January 25, 2011 Page 4 of 9 Council Member Galloway asked for bargaining unit's contract ending dates. Ms. Ridge replied the first two contracts to roll off were the teamsters and SEIU in July 2011, Fire in July 2012 and the remaining full -time agreements scheduled for January 2013. ADDITIONS /DELETIONS TO CLOSED SESSION: None PUBLIC COMMENTS ON CLOSED SESSION: None At 3:58 P.M., Mayor Tait moved to closed session for the following item. Council Member Murray declared a conflict regarding closed session Item No. 1 and excused herself from the discussion. CLOSED SESSION CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION (Subdivision (a) of Section 5496.9 of the Government Code) Name of Case: Mepco v. City of Anaheim, Orange County Superior Court, Case No. 30 -2010- 0038299 At 5:06 P.M., Council session was reconvened. Invocation: Pastor Jeffrey Slipp, Saddleback Church Anaheim Flag Salute: Council Member Lorri Galloway Presentation: Recognizing long term City retirees with more than 20 years of service Walt Jerz, Human Resources, introduced and recognized those City retirees providing many years of service to the community. Acceptance of Other Recognitions (To be presented at a later date): Recognizing the Youth Leadership America graduates Daniel Vargas thanked Council for recognizing this organization and for their continued support remarking this week would honor 63 graduates. At 5:15 P.M., Mayor Tait called to order the Anaheim Redevelopment Agency and Anaheim Housing Authority (in joint session with the Anaheim City Council). ADDITIONS /DELETIONS TO THE AGENDAS: PUBLIC COMMENTS (all agenda items): James Robert Reade, resident, objected to the power of Anaheim gangs, offering remedies. Cecil Jordan Corcoran, outreach ministries, offered his viewpoint on gang problems within the city. Enrique Chavez, Chestnut resident, felt the urgency moratorium on medical marijuana dispensaries recently approved by Council would not address the 27 dispensaries operating within the City and specifically to the site located on his residential street. He urged further quick action to shut down these operations causing distress to residents. Council Meeting Minutes of January 25, 2011 Page 5 of 9 Marie Kay Keuter, Chestnut resident, alerted the City to the threat and wellbeing of Chestnut Street residents and urged immediate action. Maribel Fernandez, Chestnut resident, expressed her concern over an armed security guard's presence in her neighborhood and the safety of the children on that street. Six children residing on Chestnut Street: Joshua, Sophie, Tristan, Colin, Crystal and Adrian, each voiced their concerns over not being able to play outside and fear of those using the dispensary and its resulting impacts on them. They individually asked for Council's assistance in ridding their neighborhood of the dispensary operation. William Fitzgerald, resident, expressed his opinion on the impacts of nightly Disney firework impacts and why Council allowed its continuation. Mayor Pro Tern Sidhu asked for an update by the City Attorney on medical marijuana dispensaries. Ms. Cristina Talley, City Attorney, reported Code Enforcement staff had been gathering information and the City Attorney's staff would be meeting with them on January 26 to discuss options. Juan Santos and Ms. Arbriarto, students, explained he and other AUHS students were planning and producing a concert to help frontline soldiers by shipping care packages. In conjunction with Operation Interdependence, the students aspired to raise funds to help support the troops. He asked for Council's funding support towards renting equipment related to the proposed concert. Ron Kusher, resident, urged Council's immediate action on medical marijuana dispensaries without licenses or permits. Ken Chin, resident and retired Deputy District Attorney in Orange County, believed medical dispensaries were a law enforcement issue and that the City had the tools at its disposal to take care of this problem. Mayor Tait invited Mr. Chin to discuss his ideas with Chief Welter. Maya Chavez, resident, remarked that the lives of Chestnut Street residents had changed since a medical dispensary took up operation there, again urging Council's assistance in finding a resolution. Beatrice, a new mother, living upstairs from the dispensary, talked about her concerns and the direct impacts of second hand smoke from this establishment. Carol Latham, Anaheim Arts Council and Alone Larsen, Arts Commission, invited Council and the community to launch the downtown Arts District first art crawl, a free event featuring music, food tasting, art in public places and gallery sites. Juan, Chestnut Street youth, was disturbed that children were afraid of outside play on his street, asking Council to take quick action. Charmane Foster, Chestnut resident, was disheartened at having drugs dispensed on her street and seeing the immediate impacts on her family and neighbors. Council Meeting Minutes of January 25, 2011 Page 6 of 9 Mayor Tait emphasized that Council heard the real concerns raised and were working towards a solution. He added it was rare to see so many residents coming together on this issue, thanking them, as well as the children for their statements. CONSENT CALENDAR: At 6:03 P.M., Mayor Pro Tern Sidhu removed Item No's. 19 and 23 from the consent calendar for further discussion. Mayor Pro Tern Sidhu then moved to waive reading in full of all ordinances and resolutions and to adopt the balance of consent calendar in accordance with the reports, certifications and recommendations furnished each council member and as listed on the balance of the consent calendar, seconded by Council Member Galloway. Roll Call Vote: Ayes — 5: Mayor Tait and Council Members: Galloway, Eastman, Murray and Sidhu. Noes — 0. Motion Carried D117 14. Approve the Investment Portfolio Report for December 2010. 15. Waive the sealed bid requirement of Council Policy 4.0 and execute an Agreement with 3M Cogent, Inc., in an amount not to exceed $710,125 (including taxes), for a three year AGR -6655 lease of an automated biometric identification system and the purchase of related accessories with up to five one -year renewal options, and authorize the Purchasing Agent to exercise the renewal options in accordance with the Police Department's needs and approved budget appropriations. C350 16. Approve the Initial Study /Negative Declaration for the Miraloma Park and Community Center project. 17. Rescind the City Council action of November 16, 2010, to rename Ross Park and D150 approve the renaming of a City park in honor of President Ronald Reagan. 18. Ratify and approve the action taken by the Director of Public Works to execute a letter AGR - 6656.0.1 giving 60 days written notice of termination of an Agreement with the City of Fullerton dated January 7, 1964, for maintenance and /or construction costs within boundary streets. 20. Approve a Grant Deed and Purchase and Sale Agreement with Mostafa Niknafs, in the AGR -6302 amount of $23,440, for the sale of City -owned surplus property located at 1051 North Patt Street. 21. Approve and authorize the City Manager to execute and administer a Cooperation AGR -6650 Agreement with the Anaheim Redevelopment Agency for management and operation of six parking structures and two surface parking lots in the downtown area (related to Agency Item No. 03). 22. Approve and authorize the City Manager to execute and administer a Cooperation AGR -6651 Agreement with the Anaheim Redevelopment Agency to ensure continued funding for Historic Preservation Program (related to Agency Item No. 04). 24. Approve an Electrical Utility Agreement with Rossi Expositions, Inc., to provide various AGR -6659 electrical services, on a non - exclusive basis, to persons at the Convention Center who require such services in connection with events. 25. Approve a Licensed User Agreement with Ticketmaster, LLC for ticket sales to public AGR -6660 events held at the Anaheim Convention Center. Council Meeting Minutes of January 25, 2011 Page 7of9 26. Approve and authorize the Public Utilities Department General Manager to execute, AGR- 5793.0.1 implement and administer the Termination Agreement which terminates the Power Purchase Agreement with Shoshone Preston, LLC. 27. RESOLUTION NO. 2011 -010 A RESOLUTION OF THE CITY COUNCIL OF R100 THE CITY OF ANAHEIM authorizing the destruction of certain city records more than two years old (Anaheim Fire Department Hazardous Materials Section). 28. RESOLUTION NO. 2011 -011 A RESOLUTION OF THE CITY COUNCIL OF D175 THE CITY OF ANAHEIM rescinding Permit - Eligible Parking District No. 4 (Lakedale Drive, Starling Way, Cal De Sac Avenue, Starfire Street and Beauty Drive) 29. RESOLUTION NO. 2011 -012 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM approving and authorizing the execution of Cooperation AGR -6654 Agreement (Commercial /Industrial Business Attraction, Rehabilitation and Retrofit Program) by and between the Anaheim Redevelopment Agency and the City of Anaheim and making certain findings in connection therewith (related to Agency Item No. 08). 30. ORDINANCE NO. 6203 (INTRODUCTION) AN ORDINANCE OF THE CITY OF M142 ANAHEIM establishing the campaign contribution limit for the election cycle commencing January 1, 2011, pursuant to Anaheim Municipal Code Section 1.09.050. 31. ORDINANCE NO. 6200 (ADOPTION) AN ORDINANCE OF THE CITY OF ANAHEIM amending the zoning map referred to in Title 18 of the Anaheim Municipal C280 Code relating to zoning (Reclassification No. 2010- 00241; DEV2010- 00155; Area A: 1200 - 1320 South Anaheim Blvd. and 1207 South Claudina St.; Area B: 1601 South Anaheim Blvd. and northwest corner of Anaheim Blvd. and Anaheim Way; Introduced at Council meeting of January 11, 2011, Item No. 09). 32. ORDINANCE NO. 6201 (ADOPTION) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ANAHEIM amending various sections of Chapter 10.06 of Title 10 of M142 the Anaheim Municipal Code to establish a design -build procurement process for Public Works projects in furtherance of Section 1212 of the City Charter (Introduced at Council meeting of January 11, 2011, Item No. 10). 33. Approve minutes of the Council meeting of January 11, 2011. END OF CONSENT: 19. Approve two Memoranda of Understanding with the Orange County Transportation AGR -6657 Authority (OCTA) for coordinating Harbor and State College Boulevards as part of AGR -6658 OCTA's Traffic Light Synchronization Program. Mark Vukojevic, City Engineer, reported this item was to approve two memoranda of understandings with OCTA to allow OCTA to synchronize traffic signals on both Harbor and State College Boulevards. He added this would be a multi jurisdictional signal coordination from Garden Grove to Fountain Valley and north to Brea and would move the flow of traffic more efficiently. In 2007, he added, the Euclid Street synchronization was completed to successfully relieve traffic congestion. Mayor Pro Tern Sidhu remarked he had been strongly supportive of this type of project for several years and looked forward to improving additional Anaheim Streets. Responding to the question as which cities were involved in this project, Mr. Vukojevic replied that for the Harbor Boulevard project, Anaheim, Costa Mesa, Fountain Valley, Fullerton, Council Meeting Minutes of January 25, 2011 Page 8 of 9 Garden Grove and Santa Ana participated. For State College Boulevard, the cities of Anaheim, Brea, Costa Mesa, Fullerton, Orange and Santa Ana were involved. He also pointed out traffic signals in Anaheim were currently synchronized and this action would further upgrade and tie those signals north and south of the City. Public Works Director Natalie Meeks added that the extension of Measure M provided funds specifically for synchronization and staff would be working with adjoining cities to make application for funding to provide for more synchronization as well as for maintenance as the signals needed retiming every few years to insure their operation was efficient. She added staff had vehicles equipped with timing devices and performed a pre - synchronization run and a post run to measure traffic flow change and would continue to monitor those signals in the future to determine whether adjustments were needed. . Council Member Murray moved to approve Item No. 19, seconded by Mayor Pro Tern Sidhu. Roll Call Vote: Ayes — 5: Mayor Tait and Council Members: Eastman, Galloway, Murray and Sidhu. Noes — 0. Motion Carried. 23. Authorize the City Manager to execute a Notice of Establishment related to Quiet Zone implementation at the four Canyon and ten Downtown rail- highway grade crossings D175 (Canyon rail- highway grade crossings of Jefferson Street, Miraloma Avenue, Tustin Avenue, and La Palma Avenue; Downtown rail- highway grade crossings of State College Boulevard, Cerritos Avenue, Ball Road, Vermont Avenue, South Street, Santa Ana Street, Broadway, Sycamore Street, La Palma Avenue, and Orangethorpe Avenue). City Engineer Mark Vukojevic reported this item would approve the City Manager signing a Notice of Establishment for quiet zones being implemented in the City. There were 14 railroad crossings on the Los Angeles San Diego (LOSAN) Rail Corridor and staff had been working with OCTA for the last few years to implement quiet zones so that trains no longer needed to blow their horns when crossing in Anaheim. This project would be accomplished in two phases, he explained, with the Canyon area to be completed in March and the next segment in the downtown areas to be completed later this spring. Mayor Pro Tern Sidhu asked how this project worked in conjunction with railroad operations. Mr. Vukojevic explained that the City, along with OCTA, implemented various safety measures at each one of the crossing. There were enhanced safety features, longer raised medians, pedestrian gates, additional signage and signal upgrades. After these enhancements were in place, the City would file a petition to the Public Utilities Commission to obtain quiet zone status. He added this was the next step in the process pointing out Anaheim had received about $10 million to fund those safety enhancements. Council Member Eastman moved to approve Item No. 23, seconded by Council Member Galloway. Roll Call Vote: Ayes — 5: Mayor Tait and Council Members: Eastman, Galloway, Murray and Sidhu. Noes — 0. Motion Carried. Report on Closed Session Actions: None Council Communications: Council Member Eastman remarked she was moved by the comments made this evening and by what the families on Chestnut Street were facing. She indicated this was a top priority issue with her and that action was needed quickly and she hoped to be involved in providing answers back to the community. Council Meeting Minutes of January 25, 2011 Page 9 of 9 Mayor Pro Tern Sidhu requested staff to look into any potential violations at medical marijuana dispensary sites including whether it was a violation having an armed guard in a residential neighborhood. He urged monitoring of these sights and strict enforcement of any and all regulations. He also congratulated the Mayor on his State of the City address and announced the celebration of Ronald Reagan's 100 birthday on February 61h. Council Member Galloway addressed the citizens of Chestnut neighborhood stating that Council would exhaust every resource to address the issue of the marijuana dispensaries. She was personally familiar with the Chestnut neighborhood and assured the residents that Council took their concerns very seriously. She congratulated the Mayor on his State of the City Address and asked staff to look into rehabilitating Edison Park and renaming it Kindness Park. She reported this was a park in a needy area of the City and that parents did not allow the children to use it because of gang activity. She envisioned this as a safe haven where people could gather and community groups could support. Council Member Murray remarked she wanted those families and children who spoke during public comments to know that Council cared about their situation and that she would ask City management to exhaust every resource in solving this problem. Because the law governing these dispensaries was broad, she stated it provided little regulation and had these unintended consequences. She believed there was little evidence at the local level that the dispensaries were being used for medicinal purposes. She asked that a legislative policy be placed on the next agenda to address the issue of marijuana dispensaries on the State level, remarking that Anaheim should take the lead in crafting this legislation. She announced the Central District Neighborhood Council meeting scheduled for January 26 and congratulated the Mayor on his State of the City. Mayor Tait thanked the Chamber of Commerce and all who attended the State of the City and looked forward to address the challenges identified in the budget. Adjournment: At 6:32 P.M., Mayor Tait adjourned the January 25, 2011 meeting. Re ec Ily submitted, Linda N. Andal, CIVIC City Clerk