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2012/01/24ANAHEIM CITY COUNCIL REGULAR MEETING OF JANUARY 24, 2012 The January 24, 2012 regular meeting of the Anaheim City Council was called to order at 3:06 P.M. by Mayor Tait in the Chambers of Anaheim City Hall located at 200 South Anaheim Boulevard. PRESENT: Mayor Tom Tait, Council Members Gail Eastman, Lord Galloway, Kris Murray and Harry Sidhu STAFF PRESENT: Acting City Manager Bob Wingenroth, City Attorney Cristina Talley, and City Clerk Linda Andal CALPERS PENSION WORKSHOP: Human Resources Director Kristine Ridge explained the CaIPERS Pension Workshop was to provide Council with a clearer understanding of Anaheim's complex pension plans. She would provide an overview from an historical perspective with Kerry Worgan, California Public Employees Retirement System (CaIPERS) clarifying the most recent valuation results and Catherine MacLeod, Bickmore Risk Services, offering an independent analysis of the retirement plans. BACKGROUND: Ms. Ridge reported Anaheim had decided on a defined benefit pension plan as part of its total compensation package in 1950 by contracting with CaIPERS to manage those plans. She added that the City, as an employer, did not participate in Social Security and any employee's tenure with the City did not qualify them for social security benefits. Anaheim had three separate pension plans: 1) Miscellaneous, which included all eligible employees excluding public safety personnel, 2) Fire Safety and 3) Police Safety. A common way to describe a defined benefit plan was through its benefit formula; she explained the formula for the Miscellaneous group, was 2.7% @ 55, and for both Police and Fire Safety, the benefit formulas reflected 3% @ 50. This meant, for example, an employee eligible to retire at 55 years old and with 30 years of service, would receive 2.7 percent times 30 years of service resulting in 81 percent of their annual salary. Similarly, for police and fire safety personnel, an individual with 30 years of service and retiring at age 50 would receive 3 percent time 30 years or 90 percent of their annual salary. The contributions required to fund the pension plans were always shown as two different contribution rates: the employee rate and the employer rate. The employee contribution rate, she noted, was set based on the benefit formula and those rates did not change from year to year unless the benefit formula was amended. The employer contribution rate was the rate which changed every year based on a valuation performed by CaIPERS. AVERAGE PENSION BENEFITS: The Miscellaneous group had a total of 1,594 retirees currently receiving benefits with an average pension of $25,358. The most recent retirees, 114 in year 2010, retired with an average pension benefit of $40,860. Fire Safety with a smaller total of 249 retirees, had an average pension benefit of $57,033 and of the 15 retirements occurring in 2010, the average pension reflected $86,196. Police Safety with a total of 437 retirees, had an average pension benefit of $51,885 and of the 17 retirements occurring in 2010, the average pension was $85,056. Council Meeting Minutes of January 24, 2012 Page 2 of 22 Over a ten year time period, Ms. Ridge pointed out, in 199912000, the total pension costs were slightly under $10 million and today were in excess of $50 million. She added that last year's actual pension contributions dropped down in 2010 from 2009 due to Anaheim's shrinking employee base. To put those numbers in another context, as a percentage of operating expenses (not including capital expenses), in year 2000, those costs represented three percent of operating expenses and today reflected approximately 11 percent. MOST RECENT PERS VALUATION — 6/30/2010: Kerry Morgan, CalPERS Sr. Pension Actuary, updated Council on the most recent valuation of Anaheim's pension plans. He explained CalPERS performed valuations every year to determine the past, present, and future status of the plans through analyzing previous experience and using that data to project benefits into the future as much as 30, 40 and 50 years. A chart showing Anaheim's accrued liability cost for the Miscellaneous group showed a slow steady accrual going forward as members earned service, salaries rose, and liabilities increased. The market value of assets on that same chart fluctuated up and down and in 2007, he pointed out, those two indicators touched which meant at that point of time, the plan was fully funded. In 2008 and again in 2009, the markets had serious corrections and the market value of assets dropped significantly in 2009, increasing slightly in 2010. The actuarial valuation of assets was used to determine the employer rate, the "smooth" value as CalPERS attempted to take out the volatility in the market value fluctuations. The assumption was made that funds would earn at 7.75 percent and then were adjusted down or up based on what the market value actually was so the greater disparity between the market value and the actuarial value, the more the actuarial value changed. The funded ratio was used to determine how the plan was performing. In 2007, the Miscellaneous group's funded ratio was 100.6 percent and the plan was in a good position. Since then it dropped down to 59 percent in 2009 and in 2010 with the market returned 14 percent on investments, the funded ratio crept back up to a projected 72 percent in 2011. He pointed out these charts were using current assumptions and there had been discussion among the CalPERS Board members to consider whether the actuarial assumptions would decrease to 7.5 or 7.25 percent. If that were to happen, he stated, the liabilities of the City would increase, since the projected investment earnings would be less. Another chart on the Miscellaneous plan showed employer rates that tied into the funded positions. The normal cost for the most recent six fiscal years showed the value of the benefit accruals for members was fairly stable. The unfunded accrued liability was the figure that wavered based on market fluctuations and in 2011/12 right after the market dropped significantly, CalPERS had to increase the unfunded accrued liability rates to make up for those market losses. The employer contribution rate mirrored the activity of the unfunded accrued liabilities. As the markets did well, the rates declined and if the markets reacted poorly, the contribution rates increased. In 2011/12, employer rates were 20.389 percent for this plan. For Police Safety, in year 2000, the plan was 100 percent funded and everything looked good. The market correction in 2008/09 saw the plan funding drop down to about 60 percent, coming back slightly in 2010 and projected to be approximately 74 percent Council Meeting Minutes of January 24, 2012 Page 3 of 22 funded. The normal costs for Police Safety were relatively stable other than a blip in 2009 when some cost sharing was removed and it jumped up 2.5 percent. The Unfunded Liability rate was also fairly stable with one increase in 2011/12 when CalPERS updated its actuarial assumptions. Mr. Morgan pointed out that every three or four years CalPERS did a study based on experience under the plan, looking at salary increases, mortality rates, and early retirement rates. If significant changes were required, the assumptions were modified going forward and in 2009, as retirees lived longer which signified the need for more money to fund those longer benefits, a slight increase in the rates was then reflected in 2011/12. The current 2012/13 employer contribution rate for Police was 30.86 percent. Mayor Tait asked what the investment return was for 2011 with Mr. Morgan responding for the fiscal year ending June 30, 2011, the return was 21.7 percent. Mayor Tait asked how the 2011 calendar year fared with Mr. Morgan replying it was approximately 1.2 percent. Mr. Morgan added that what was important was how the market was doing on June 30 which would drive the contribution rate going forward two years. Over a long period of time, he added, those ups and downs would smooth themselves out. Safety Fire, he commented was similar to the Police Safety plan, fully funded in 2007, dropping down to 60 percent funded in 2008/09 and projecting to be 73.2 percent funded through 2011. For the current 2012/13 year, the employer rate was 29.7 percent. Catherine MacLeod, Bickmore Risk Services, presented her analysis on Anaheim's pension plans, indicating her goal was to provide information, explain what options exist both potentially and legally, and offer Council possibilities from this point on. DEFINITIONS AND GENERAL BACKGROUND: Ms. MacLeod began her presentation with differences between common retirement plans. A defined benefit plan, such as Anaheim's, defined the benefits to be paid and required a benefit formula for calculating benefit amounts such as a flat amount or percentage of salary times years of service. The plan makes a specific promise defining the benefit to be eventually paid with the employer picking up the cost; the cost is unknown since it depended on the markets, how much the employee or employer contributed, and how old the employee was when retiring. In a defined contribution plan, the cost was generally known and rarely unfunded. A hybrid plan could combine elements of both the defined benefit and defined contribution plans. PROS AND CONS Income replacement, the ability to provide lifetime benefits, experts investing the assets, pooling reducing risks and improving past benefits were strengths of defined benefit plans. The negatives were unpredictable costs, volatile costs, and some manipulation of benefits, such as salary spiking. The City would also retain the risks associated with employees living longer than expected or retiring earlier than expected or fewer employees terminating and forfeiting benefits. For the Defined Contribution plans, the advantages were that costs were known, benefits were portable, no actuarial valuation was needed, employees had investment control at all times, and employees took all the risks. The disadvantages were that assets at the time of retirement were unknown, there was no lifetime guaranty, investment returns were generally less, benefits could decrease if asset returns were poor, and there are increased administrative costs and few incentive options. Council Meeting Minutes of January 24, 2012 Page 4 of 22 ANAHEIM'S PENSION OBLIGATIONS The City's pension obligations are: the Present Value of Future Benefits, Actuarial Accrued Liability and Normal Cost. The Present Value of Future Benefits, Ms. MacLeod reported, was today's liability in dollars for all future benefit payments expected to be paid to current members, including anyone who was terminated and entitled to future benefits and did not include anything for future employees. She explained the actuary's first step was to estimate the present value of those future benefits and allocate the cost of those benefits to the past, present and the future. The cost of benefits allocated to the past was referred to as the Actuarial Accrued Liability and reflected the cost of future benefits owed to service already worked. For retired employees, their accrued liability was the entire amount of their benefit because they were no longer working and that cost was assigned to the past. For active employees, based on their age and number of years of service worked so far and number of years of anticipated future service before retirement, a portion of the cost of benefits would be found in accrued liability with the remaining assigned to future years. The portion assigned to this particular year, she explained, was called the Normal Cost. The Discount Rate, she emphasized, was also important to discussions on the Present Value of Benefits, because of the anticipated asset earnings that would be realized over many years, which were then discounted back so the City would only be required to fund what was left over. If the discount rate was 7.75 percent, that would determine how much the City would not need to contribute. If the discount rate were decreased to five percent, which meant the assumption was being made for five percent earnings in the future, a bigger gap would be seen and the contribution numbers would increase. ASSET DEFINITIONS Ms. MacLeod indicated the Market Value of Assets was what the assets could trade in for today's market. For purposes of stabilization, if a 1.2 percent return was realized instead of 2 1. 1 percent, the contribution number would fluctuate dramatically. In trying to smooth these events, this retirement plan must be a long term program where there were 50 to 70 more years to smooth out the bumps. The Expected Value of Assets reflected whatever last year's assets were, increased by what the assumed investment return was. Ms. MacLeod noted the expected market value of assets next year would be the current market value of assets increased by 7.75 percent; the expected actuarial value of assets was last year's actuarial value or smoothed value increased by 7.75 percent. The actuarial accrued liability was the cost of benefits assigned to the past which did not necessarily mean, she pointed out, the City was fully funded. There were two separate tracks; i.e., the cost being assigned and the money on hand. Currently Anaheim had 72 to 74 percent of assets on hand to match up against the Accrued Actuarial Liability and the difference between those two numbers was the Unfunded Liability. Ideally, she added, if those numbers matched, the plan would be 100 percent funded. She further clarified, 100 percent funded did not mean that the cost of all future benefits were fully funded, only the cost assigned to the past. The last terminology was ARC, the Annual Required Contribution which was the number that was calculated in the valuation and what establishes the contribution rate. This is the number Anaheim would fund each year and was comprised of the Normal Cost (the cost assigned to the current year) plus some part to amortize off in the unfunded liability. Council Meeting Minutes of January 24, 2012 Page 5 of 22 Putting all the costs and funding components together, the amounts to contribute annually included the Normal Costs, Payment on the Unfunded Actuarial Accrued Liability, and Current Costs. If the assets were greater than the liability, the Normal Cost would be fully covered for that year and Anaheim could have a situation where there was nothing unfunded and no need to cover Normal Costs. She added it would be very advisable to consider contributing something for both the employee and employer even in those years when plans were fully covered as a preventative measure for future market declines. FACTORS AFFECTING PENSION LIABILITIES were listed as age, gender, years of benefit service, benefit formula, pay used in formula, eligible retirement age, early retirement age, early retirement benefits, spouse benefits, longevity, COLA's, investment risk, discount ratesM, and California contract laws. Some of those items were not under the City's control, however, some areas could be modified such as changing the benefit formula, the age at which a person could retire, and elimination of COLA's and spousal benefits. TARGET FUNDING within the context of existing plans were identified by Ms. MacLeod. The first target was for a funding status of 90 -110 percent or higher. The second was for an 80 percent minimum funding ratio meaning if the City's funding ratio fell to 80 percent or below, every effort to increase that funding ratio should be taken. Ms. MacLeod pointed out that private sector funded ratios falling below 80 percent had negative connotations and the law required corrective actions and restrictions to be put in place. The T target was for the Actuarial Valuation of Assets to be reasonably close to the Market Value of Assets. The goal of the actuarial value of assets was to smooth things out but not to divert so far from the market value of assets. The 4th was for annual contributions (ARC) to equal the normal cost which meant that assets equaled Accrued Actuarial Liability and prior costs were fully funded. Target 5 related to stability in contributions. Mayor Tait asked if the City of Anaheim met any of these proposed targets with Ms. MacLeod responding at the current time, it did not. For Targets 1 and 2, Ms. MacLeod stated Anaheim was heading in the right direction and part of the future would be to try and manage by adjusting contributions or making other changes to the pension plan so Anaheim was better positioned even if a significant asset loss occurred in the future. Retroactive benefit improvements also had a role to play for the Miscellaneous group and for the Police. The benefit formulas for safety employees increased by 50 percent in 2001 and were retroactive, which had a cost impact. There was no change to prior years or service, the change was to increase the past service cost by 50 percent for active employees. Compensation increases were given and since retirement was based on salary, the cost went up. Retirees were living longer than originally projected and employees retired earlier than expected and those kinds of things led to assumption changes that took place in 2009 along with a decrease in total payroll. If payroll decreased and the benefits did not, there was now a past liability and fewer dollars to spread that cost over. She illustrated examples of final year compensation increases and how the impacts of a higher than expected final pay impacted contribution costs. Those costs now created an unfunded liability. She explained if a five year average salary base was used rather than the single highest compensation year, the effects of a Council Meeting Minutes of January 24, 2012 Page 6 of 22 10 percent final year increase in pay would translate to a two percent increase in the benefit. HOW TO IMPROVE RESULTS Ms. MacLeod stressed that the main mechanism to improve the City's situation was to contribute more to the pension plan. In good years especially, she recommended the City continue contributing (both for the employer and the employee). The City could also consider implementing a policy to restrict retroactive benefit increases as these types of increases had an immediate and permanent impact on the costs and was an action that could not be reversed in the future. She explained if a benefit changed seemed worthwhile and was affordable, the City should leave a cushion in the assets and make sure the funded ratio did not go below 100 percent. Target 4 and 5, she commented were related to stability in contributions and the annual contributions equaling normal cost. The primary way that occurred would be by not having an unfunded liability and the only way to control that was to contribute more funds to the plan. She added the best action for all these issues that come up was to take to contribute to the plan, even during great investment return years. SHOCKS TO SYSTEM If CaIPERS decreased the discount rate of 7.75 percent to 7.25 or 7.5 percent, the contribution rates for all plans would immediately increase and with the downsizing of City personnel, the cost of providing benefits would rise. Mayor Tait asked if adding new employees would make Anaheim's pension problems better or worse. Ms. MacLeod responded that hiring new employees would not change the problem, assuming there was not two retirement tiers. In theory, those new people did not have an unfunded liability, and their costs would be the normal costs and paid and as long as that was paid and the assets performed as expected, nothing would change. IMPACT OF GASBY CHANGES Ms. MacLeod remarked there were changes coming in on how to account for the cost of benefits such as shortening the quarter for the Actuarial Value of Assets and amortization periods. Overall those changes would not impact the cost of the plan but would be reflected differently in the City's financial statement. STATE IMPACTS Ms. MacLeod reported the two most significant areas of concern were California statutes which required that a benefit be retroactive for all service. California contract laws also seemed to support that benefits could not be decreased for future service for people already hired, and that once a benefit was provided, the interpretation was it could not be taken away, only increased. She remarked options were open for all new hires, but for retirees and active employees, there were many legal roadblocks that must be researched to determine whether it's feasible to change existing benefits in the state of California. STEPS TO CONSIDER The numbers of years of service on which benefits were defined could be changed, the 2.7 percent @55 formula could be used for up to 20 or 25 years rather than 30 years of service; the formula could be reduced to 2.5 percent or 2 percent @ 55 rather than 2.7 percent; and instead of using a single final year of pay, a five year career average could be used. The age of retirement could also be shifted up to 60 or 65 years which would shorten the number of years in which the benefit would be paid. Early retirement benefits, using a second tier of benefits for new hires, changes to reduce Council Meeting Minutes of January 24, 2012 Page 7 of 22 factors, changes to freeze COLAS, and putting some benefits into a defined contribution plan were all options that could be considered. Mayor Tait then opened the discussion up for public comments. A member of the audience representing a labor organization remarked that at the time the retirement formulas were increased for Safety and Miscellaneous employees, CalPERS did advise the City there was an accrued liability amortized over a 20 year period as a result of those benefits. Mr. Morgan responded in the affirmative, indicating that information was available in the amortization payment schedule. Mayor Tait appreciated the detailed information provided on the pension plans remarking if nothing was done, increased contribution rates were projected for the years ahead while the numbers of employees dropped from 2200 to 1,880. Revenues had remained the same but with increased pension costs, and no action taken to remedy these increases, the number of employees would continue to shrink and he believed it was in everyone's best interest to solve this issue. John Makeda, a member of the audience, remarked a better understanding of mutual funds was seen when it was reviewed over a longer period, such as 20 years. Today's presentation began with 2007 when the market began its downturn and currently the market was leveling off and expected to do better. Rather than take actions now which would impact employees further, he recommended waiting a year, following the market trends and then consider what actions were necessary. ADDITIONS /DELETIONS TO CLOSED SESSION: None PUBLIC COMMENTS ON CLOSED SESSION ITEMS: None At 4:32 P.M., Council recessed to closed session to consider the following items: CLOSED SESSION 1. PUBLIC EMPLOYEE APPOINTMENT (Government Code Section 54957) Title: City Manager 2. CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION Initiation of litigation pursuant to subdivision (c) of Government Code Section 54956.9: Approximately 35 potential cases 3. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION (Subdivision (a) of Section 54956.9 of the Government Code) Name of Case: Whitehouse v. The City of Anaheim, et al., OCSC Case No. 30- 2008 00109274- CV- PO -CJC 4. CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION Initiation of litigation pursuant to subdivision (c) of Government Code Section 54956.9: One case Council session was reconvened at 5:16 P.M. Council Meeting Minutes of January 24, 2012 Page 8 of 22 Invocation: Pastor Ed Bartel, Sunkist Community Church Flag Salute: Council Member Kris Murray Presentations: Recognizing long term City retirees with more than 20 years of service Walter Jerz, Human Resources, recognized 56 employees who had retired in 2011 with more than 20 years of services, introducing several of those retirees present, some with over 35 years of service to the City. Acceptance of Other Recognitions (To be presented at a later date): Recognizing Youth Leadership America graduates Recognizing the recipients of the Women's Division, Anaheim Chamber of Commerce, Educator Spotlight Awards Proclaiming February 2012, as Make Kindness Contagious Month Proclaiming February 2012, as Career and Technical Education Month Recognizing Century 21 Award on their Grand Opening Recognizing the YWCA North Orange County Man and Woman of the Year Laura Parris, Chamber of Commerce, Women's Division, thanked the City for recognizing the Educator Spotlight Awards for the teachers and staff of Anaheim Union High School, Anaheim City School District, and Centralia School District. She announced the Women's Division of the Chamber included those from all walks of life united in support of promoting Anaheim's economic growth. Jordon Brandman, representing North Orange County Regional Occupational Programs, thanked Council for recognizing career and technical education month on behalf of the 23,000 students utilizing their services. Mayor Tait remarked Anaheim had been celebrating "Make Kindness Contagious" for several years to draw awareness as to how an act of kindness could transform the giver and the receiver. In memory of Natasha Jaievsky who inspired this proclamation, he called on residents, businesses, and guests to build a culture of kindness in Anaheim throughout the year. At 5:30 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: None Council Meeting Minutes of January 24, 2012 Page 9 of 22 PUBLIC COMMENTS (all agenda items, except public hearing): William Fitzgerald, Anaheim Home, offered his point of view on recent shootings which had occurred in the City. Charles Ahlers, Anaheim /Orange County Visitors & Convention Bureau, updated Council on the recent NAM trade show held at the Convention Center; the largest trade show hosted in Anaheim, with 97,000 attendees, filling hotels and restaurants and using every available exhibit space and bringing in an estimated $70 million to the economy over the past four days. He pointed out this success was an indicator of the strength of the visitor industry and thanked Council for its investment in the enhanced Convention Center which helped draw one of the largest trade shows. Doug Elderbush, resident, complained of the endless parade of ice cream trucks on a daily basis on his street in the downtown area. Mayor Tait requested the City Manager look into this complaint and report back to Council. Reverend Karen Stoyanoff, Unitarian Universalist Church, urged Council to consider the plight of homelessness and the need for a multi - service center to find ways for the homeless to become productive members of the city. Council Member Eastman indicated she had recently met with Orange County Supervisor from the 4 th District to help put together a summit to address this issue and to find solutions. Sandy Day, resident/SOAR Committee member, addressed her comments in support of Item No. 23, remarking that the SOAR coalition was looking forward to the construction of two four star hotels in the City which would attract new markets to the Convention Center and generate much needed revenues at GardenWalk. Jeff Farano, Chamber of Commerce, encouraged Council's support for Item No. 16, the Anaheim Enterprise Zone. This program had been a long time coming and the Chamber had worked actively to get it adopted and looked forward to marketing this program in partnership with the City. Ryan Lederman, DLA Piper, remarked the retailers in GardenWalk expressed their full support for Item No. 23 and looked forward to the construction of hotels that would be a real asset to the City and crucial to the economic health of the retail center. William O'Connell, developer, stated he had been in business in Anaheim for over 45 years and in 2006 had purchased land to build two hotels in GardenWalk and as a result of the economic downturn, it became impossible to find commercial lenders to fulfill his vision. With GardenWalk now owned by the banks, he requested Council to help realize his efforts to create two four -star hotels on the GardenWalk site, generate a number of temporary construction jobs and full -time positions in the hotel industry and once built, to attract larger, up -scale trade shows to the Convention Center. Mr. O'Connell urged Council's approval of Item No. 23. William Schulz, Madison Company, indicated he had been committed to Anaheim's economic growth since 1959 and urged support for Item No. 23 citing the need for new jobs and retail traffic that would directly benefit GardenWalk. Council Meeting Minutes of January 24, 2012 Page 10 of 22 Tom Smith, certified arborist and licensed contractor, announced the materials used on the job across from the Anaheim Canyon Metrolink pedestrian improvement project were substandard materials. He had brought this to the attention of the Public Works superintendent who followed up on the complaint; however, he pointed out the contractor continued to use substandard materials. Mr. Smith's concern was that a contractor using cheaper materials and not what was specified in the contract had an unfair advantage in his bid submittal and should not be allowed to use materials not called for in the contract. Mayor Tait requested Public Works Director Natalie Meeks look into Mr. Smith's concerns. Craig Farrell, spoke on behalf of the hotel development proposed in Item No. 23, and the chance to revitalize GardenWalk retail which had not lived up to expectations. Paul Kott, resident, also spoke in favor of the two hotels proposed for development. He had submitted a letter of support for the record, remarking that anything the City could do to stimulate the economy should be considered and that this project would infuse life into GardenWalk. Bill O'Connell, developer, emphasized the proposed hotel project would create over 3,000 temporary construction jobs and 1,300 hospitality- related full -time positions for the community. He remarked his project had been on hold for four years due to lack of institutional lending and he believed it was now time to offset the cost of development by requesting the City to partner with him in moving this project forward. Reed Royalty, Orange County Taxpayers Association, discussed his organizations long- term relationship with Anaheim, supporting various issues to increase tourism and revenues for the City. The Taxpayers Association was again advocating for tourism and increased revenues for the City as well as generating private sector jobs by supporting the approval of the GardenWalk hotels to accomplish this goal. Kate Klimow, Orange County Business Council (OCBC), in support of Item No. 23, stated encouraging tourism was consistent with OCBC's leading industry which accounted for 10 percent of the County's employment. The GardenWalk hotel project would provide additional momentum to the Convention Center and other tourist attractions along with the generation of new jobs and she recommended approval of the project. Peter Agarwal, Citizens Business Bank, remarked that commercial financing was no longer available at this point in time and for any developer with a project of this size, an equity partner was necessary. He added Mr. O'Connell was pursuing this avenue as the only method to develop his property which would attract upscale clientele, entice high end trade shows to the Convention Center, and bring in much needed hospitality revenues while giving much needed support to the GardenWalk retail. In his capacity as a commercial lender, he recommended Council approve Item No. 23. Patrick Pepper, resident, recognized the City's concern with setting a precedent with the economic assistance agreement requested by the GardenWalk Hotel developer, however, he believed the uniqueness of the site justified developing the property and would not apply to any other future development. Council Meeting Minutes of January 24, 2012 Page 11 of 22 Jim Adams, Building and Construction Trade Council, remarked his membership exceeded 140,000 men and women who were in full support for construction of the proposed hotels. Building trade crafts and construction industry was suffering from 40 to 60 percent unemployment and with few exceptions, projects today were generally publicly funded. With builders unable to get construction loans and bankers waiting to see if the economy would bounce back, without the proposed economic assistance agreement, this project would not get built. He added that the construction industry had led every economic recovery in the nation and urged Council to approve this project. Carl Riddala, Plumbers Local 582, was acutely aware of the need for construction jobs in Anaheim and urged Council to approve the amended agreement to bring jobs and foot traffic to Gardenwalk, a planned development not able to meet visitor and revenue expectations. Doug Clark, Operating Engineers, Local 12, supported the proposed hotel development and as a 30 year resident of Anaheim, requested Council's approval as well. Doug Mangione stated International Brotherhood of Electrical Workers stood in support of Item No. 23. Unemployment in the construction industry was at record highs with no relief in sight and he believed if this project was approved and constructed, it would have a significant positive impact on the resort area and future revenues. Bill Quisenberry, Painters and LA Trade, Council 86, supported Item No. 23, for the stimulus it would give to the local economy. Ernesto Lopez, Iron Workers, Local 433, stated his 5,500 members fully supported the hotel project and recommended its approval. Patrick Kelly, Teamers 952, remarked 9,000 Orange County members were in support of Item No. 23. He added by partnering with business and the labor community, Anaheim would be sending a message that it was open for business and could help move this City forward. Jordon Brandman, AUHSD, recommended approval of Item No. 23. As a representative of one of the largest school districts in the region that educated youths in the building trades, culinary, hospital, and transportation services, this project was important to move forward to create future job opportunities. Todd Ament, Anaheim Chamber of Commerce, also supported Item No. 23. He added it was the first time he had seen an issue of this magnitude and no single speaker spoke against the project. The proposed hotel project would commit $284 million construction dollars into a great project that would stimulate the Resort and GardenWalk site and he urged Council to secure the future of Anaheim by approving this item. Jill Kanzler representing SOAR, remarked this broad coalition of business owners, community leaders and Anaheim residents were in support of the Resort District and the critical services it funded. SOAR believed the economic impact of the proposed hotel project would equal $4.4 billion over the next 20 years and urged Council's approval of the amendment. Council Meeting Minutes of January 24, 2012 Page 12 of 22 David Rose, on a personal level, explained his mother operated a candy store in the GardenWalk retail site and urged Council's approval of Item No. 23. He added without the hotels and its patrons, GardenWalk retail would continue to decline. CONSENT CALENDAR: At 6:32 P.M., the Consent Calendar was considered. Council Member Murray requested Item Nos. 7 and 8 be removed from the consent calendar for further discussion and Mayor Tait pulled Item No. 16. Mayor Tait indicated he would record an abstention on Item Nos. 7, 8, 10 and 12 as his firm had done business with the firms identified in those items. Council Member Murray then moved to waive reading in full of all ordinances and resolutions and to adopt the balance of the consent calendar in accordance with the reports, certifications and recommendations furnished each council member and as listed on the consent calendar; seconded by Mayor Pro Tern Galloway. Roll Call Vote: Ayes — 5: (Mayor Tait and Council Members: Eastman, Galloway, Murray and Sidhu. Noes — 0. Motion Carried) D117 6. Approve the Investment Portfolio Report for December 2011. 9. Determine, on the basis of the evidence submitted by Prologis, that the property owner has complied in good faith with the terms and conditions of Development AGR -4829 Agreement No. 2006 -00004 for the 2010 -2011 review period for the Experience at Gene Autry Way project in the Platinum Triangle. 10. Award the contract to the lowest responsible bidder, RJ Noble Company, in the AGR -7106 amount of $688,374.08, for the Anaheim Boulevard Improvements project from Cypress Street to 125 feet south of La Palma Avenue and authorize the Finance Director to execute the Escrow Agreement pertaining to contract retentions. Abstention by Mayor Tait due to a potential conflict of interest. Roll Call Vote: Ayes — 4: (Council Members: Eastman, Galloway, Murray and Sidhu. Noes — 0. Abstention — 1: Mayor Tait). 11. Accept the bid of Mercury Fuels, in the amount of $318,400 (plus sales tax), for the as- needed purchase of Jet A Turbine helicopter fuel for the Police Department for a one year period, with four one -year optional renewals and authorize the D128 Purchasing Agent to execute the renewal options, in accordance with Bid #7573. 12. Accept an award of funds by the County of Orange Board of Supervisors and approve and authorize the City Manager, or his designee, to execute and AGR -7107 administer an agreement, and any amendments, with County of Orange for the provision of vocational training activities. Abstention by Mayor Tait due to a potential conflict of interest. Roll Call Vote: Ayes — 4: (Council Members: Eastman, Galloway, Murray and Sidhu. Noes — 0. Abstention — 1: Mayor Tait). 13. Approve Amendment No. 1 of Agreement C -9 -0622 with the Orange County Transportation Authority (OCTA) for coordinating Brookhurst Street as part of AGR- 6519.1 OCTA's Traffic Light Synchronization Program. Council Meeting Minutes of January 24, 2012 Page 13 of 22 14. Approve and authorize the Public Utilities General Manager to execute and to take such actions as necessary or advisable to implement the Second Amended and AGR- 3712.2 Restated Metered Subsystem Agreement, and any related documents, with California Independent System Operator Corporation. 15. Approve and authorize the Human Resources Director to implement and offer an accelerated separation program for full -time employees in classifications assigned to the Confidential, Professional/Technical, Middle Management, Supervisory, and D154.1 Administrative Management units employed within the Community Development Department. RESOLUTION NO. 2012 -006 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM approving a Letter of Understanding between the Anaheim Municipal Employees Association, General and Clerical Units and the City of Anaheim (Accelerated Separation Program). 17. RESOLUTION NO. 2012 -008 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM electing under part 1.85 of Division 24 of the California Health and Safety Code not to retain the Housing assets and functions R100 previously performed by the Anaheim Redevelopment Agency upon dissolution of the Anaheim Redevelopment Agency. 18. RESOLUTION NO. 2012 -009 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM declaring its intention to amend the non- exclusive taxicab franchises of Yellow Cab of Greater Orange County, Inc., Cabco Inc. dba F130.2 California Yellow Cab, and A White and Yellow Cab, Inc. dba A -Taxi Cab to extend the terms thereof until May 15, 2012, and establishing the date, hour and place when and where any persons having any interest therein or any objection thereto may appear and be heard thereon (public hearing scheduled for February 28, 2012). 19. Approve minutes of the Council meeting of January 10, 2012. 20. ORDINANCE NO. 6230 (ADOPTION) AN ORDINANCE OF THE CITY OF ANAHEIM amending the zoning map referred to in Title 18 of the Anaheim C280 Municipal Code relating to zoning (Reclassification No. 2011 - 00245; DEV2011- 00083; 1102 and 1160 North Homer Street; Introduced at the Council meeting of January 10, 2012, Item No. 10). 21. ORDINANCE NO. 6232 (INTRODUCTION) AN ORDINANCE OF THE CITY OF ANAHEIM amending the zoning map referred to in Title 18 of the C290 Anaheim Municipal Code relating to zoning (Reclassification No. 2011 - 00244; DEV2011- 00070; 2201 East Cerritos Avenue). Council Meeting Minutes of January 24, 2012 Page 14 of 22 END OF CONSENT CALENDAR: At 6:34 P.M., Mayor Tait declared a conflict on Item Nos. 7 and 8 and excused himself from the dais during discussion of both items. 7. Determine, on the basis of the evidence submitted by Lennar Platinum Triangle Partners, LLC, that the property owner has complied in good faith with the terms AGR -3750 and conditions of Development Agreement No. 2005 -00008 for the 2010 -2011 review period for the A -Town Metro project in the Platinum Triangle, Sheri Vander Dussen, Planning Director, explained that when Council approved a development agreement, state law required an annual review. In the Platinum Triangle there were two developer agreements, A -Town and A -Town Stadium. She indicated those agreements set certain thresholds by which time developers were required to complete or start construction and with regard to Item Nos. 7 and No. 8, staff was recommending Council find the developers in compliance with the terms of their development agreements. Council Member Murray moved to approve Item No. 7, seconded by Council Member Sidhu. Roll Call Vote: Ayes — 4 (Council Members Eastman, Galloway, Murray and Sidhu). Noes — 0. Abstention — 1: Mayor Tait. Motion Approved. 8. Determine, on the basis of the evidence submitted by LNR Platinum Stadium, LLC, that the property owner has complied in good faith with the terms and conditions of AGR -5026 Development Agreement No. 2006 -00002 for the 2010 -2011 review period for the A -Town Stadium project in the Platinum Triangle. Sheri Vander Dussen, Planning Director, explained that when Council approved a development agreement, state law required an annual review. In the Platinum Triangle there were two developer agreements, A -Town and A -Town Stadium. She indicated those agreements set certain thresholds by which time developers were required to complete or start construction and with regard to Item No. 7 and No. 8, staff was recommending Council find the developers in compliance with the terms of their development agreements. Council Member Murray moved to approve Item No. 7, seconded by Council Member Sidhu, Roll Call Vote: Ayes — 4 (Council Members Eastman, Galloway, Murray and Sidhu). Noes — 0. Abstention — 1: Mayor Tait. Motion Approved. Mayor Tait returned to the dais at 6:39 P.M. 16. Waive compliance with Council Policy 4. 1, approve an agreement with the Anaheim Chamber of Commerce, in the total not -to- exceed amount of $1,766,500, AGR -7108 with up to $50,000 in additional payments for processing vouchers, to implement the Anaheim Enterprise Zone program and approve a Hiring Tax Credit Voucher Application Fee, in the amount of $100. Council Meeting Minutes of January 24, 2012 Page 15 of 22 RESOLUTION NO. 2012 -007 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM approving the boundaries and identifying the census tracts comprising the targeted employment area for the City of Anaheim. Planning Director Sheri Vander Dussen, reported that earlier this month the City had received final designation to the Anaheim Enterprise Zone (AZE) and since the State did not provide funding for the zone, the City committed to operating and marketing the program. She indicated the City had the option of implementing the program with current staff or to contract all or portions of the AEZ administration effective February 1 The goal of this zone was to create new jobs and increase employment by creating tax credits; she added the two primary elements for implementation of the program was marketing and vouchering. Marketing involved education, direct outreach, and partnerships with businesses, etc. to inform the community of the benefits of the program and to provide access to resources for financing, job creation, employment, and entrepreneurial support. The vouchering component involved review of tax credit vouchers worth up to $38,000 per qualified employees and were distributed over a five year period. Businesses within the AEZ would also have access to other benefits, such as sales and use tax credits, increased expense deductions, and the AEZ would complement existing City programs and make Anaheim more competitive in attracting new businesses. The Memorandum of Operation (MOU) with the State required the City to fulfill certain obligations in the first five years and the State would monitor the project and perform a detailed audit within the first two years. Ms. Vander Dussen remarked staff was proposing to contract with the Chamber of Commerce to administer the program due to ongoing budget reductions which made it difficult to devote a primary staff person to administer the AEZ. She added that even if the AEZ administration was handled by a contractor, there were many tasks that could only be performed by city staff, such as providing assistance to businesses in obtaining incentives, permits, licenses, and other approvals. A contract of this magnitude, she explained, required the City to solicit proposals to at least five firms with both staff and the state agreeing there was not a private sector need for these types of highly specialized services. The Chamber, she added, was well positioned in the business community to effectively and efficiently market the EZ and allow the zone to become operational in a very short period of time. With their experience in marketing and community outreach to promote Anaheim to the business community, the Chamber's ability to promote Anaheim and the AEZ to prospective Anaheim businesses would be enhanced. The term of the contract she stated was for five years, with obligations during the remaining ten years of the EZ designation not yet defined. The City would have the ability to modify the contract if necessary to respond to any state proposed reforms and could also renew the contract for an additional five year term upon approval of an updated scope of services and terms of compensation by Council. The value of the contract over the five years, she added, could not exceed $1,766,500 with up to $50,000 in additional payments for processing vouchers. Staff believed the compensation to be fair and appropriate and based on projections, believed the City would ultimately be reimbursed for funding this contract through tax credit voucher revenue. Council Member Murray acknowledged the years of work that went into getting this designation and with the right mix of leadership, community support, and partners to grow Council Meeting Minutes of January 24, 2012 Page 16 of 22 jobs in the city, this zone designation was an essential component in a state largely hostile in its regulatory standpoint towards business. She added that the Orange County Business Council in a recent meeting talked about the professionalism of Anaheim's Chamber of Commerce staff. She had personally advocated for this zone and looked forward to its results. Council Member Galloway also voiced her congratulations to the Chamber for collaborating with City staff and going to Sacramento to advocate on behalf of this program. She indicated she had been working on a faith -based initiative on a particular area in Anaheim and she recognized the investment that would be made for this area. Council Member Sidhu and Mayor Tait also thanked staff, the State of California and the Chamber for their partnership and believing the program was a true job engine for the City. Council Member Murray moved to approve Item No. 16, seconded by Mayor Pro Tern Galloway. Roll Call Vote: Ayes — 5(Mayor Tait and Council Members: Eastman, Galloway, Murray and Sidhu). Noes — 0. Motion Carried. D116 22• Discussion relating to record management practices and policies. Mayor Tait explained he had requested this item be placed on the agenda to allow for a discussion and review of Anaheim's current records retention policies. Providing a brief report, Acting City Manager Bob Wingenroth stated that under California law, public records must be retained for at least two years and could not be destroyed unless first approved by council by resolution. A separate set of statutes known as the Public Records Acts governed the disclosure of public records under the law and unless expressly exempted, all public records of agencies were subject to disclosure if requested by any member of the public. He also indicated Anaheim recognized that access to information regarding any City business was a right of the public and that there were rules, regulations and policies in place that protected the integrity of city records in any form, consistent with state law. He added Council had approved a records retention schedule for each city department which established a retention period for various categories of records maintained by that department. In addition to the city's retention schedules and municipal code, the city's internal Administrative Regulation 155 further addressed and reinforced the City's rules regarding electronic communication and retention and was intended to help manage the 8,000,000 emails the City received and sent each year. He added Anaheim's email system was intended to function as a convenient and efficient method of communicating transitory information in electronic format and was not designed to store and maintain city records. As such, employees were encouraged to preserve email messages that constituted city records in a separate hard copy folder or electronic folder. If an employee believed it was more efficient to maintain documents in email format, the regulation contained provisions to allow for that. Since the last Council meeting, Mr. Wingenroth reported the City Attorney, City Clerk and City Manager's office studied existing regulations and reported back to Council that at all times the City retained records in accordance with California law and made available for copying and inspection all records in its care, custody, and control that were subject to disclosure under the Public Records Act. He added staff was committed to improvement and intended to strive to achieve a reputation of transparency and openness. Over the next six months and continually thereafter, the offices of the City Attorney and City Clerk C Council Meeting Minutes of January 24, 2012 Page 17 of 22 would coordinate and put into effect city wide training sessions. He further stated the City Clerk's office was also working with all city departments to review and revise each department's retention schedule as well as develop a citywide master retention schedule. Any revisions to a department's retention schedules would then be presented to the Council for approval. Additionally, staff would also review city policies in an effort to enhance current records management practices and would specifically review extending maintenance of email messages on city servers beyond the current 30 days. For comparison purposes, he noted, there were a number of California cities electing to archive email periods ranging from 30 days to two years and staff planned to research the full implications and costs associated with improving records management practices and return to Council for recommendations for improvement. While Mayor Tait understood Anaheim was in compliance with State law, he felt what was best for the City may be to go beyond compliance. He believed staff should be proud on all levels for what was said, written or done on behalf of the City of Anaheim and when mistakes occurred, they should be recognized and corrected. He added that was the overall policy he would like staff to go forward with and asked that recommendations to further improve the City's records management practices return to Council for consideration. 23. Discussion to consider an amendment to an existing economic assistance AGR -7111 agreement and provide direction to staff to develop an agreement with the developer (GardenWalk Hotel Project). Acting City Manager Bob Wingenroth introduced the item explaining the existing economic assistance agreement between the City and GardenWalk Hotel Project (Developer) had been originally approved by Council in May of 2009 and later amended in August, 2010. The agreement provided economic assistance for the single phased development of 866 hotel rooms and equaled 100 percent of the Transient Occupancy Tax (TOT) above a threshold equivalent to the TOT generated by three -star hotel room rates with an annual cap and an aggregate cap of $40 million in net present value terms over a 15 year period. The Developer was requesting the City to amend the terms of the existing agreement, projecting a cost of $283 million, including a $20 million parking structure for a total of 866 four -star equivalent high end hotel rooms to be constructed in two towers. Specifically, the Developer requested 80 percent of the TOT for 15 years. He further explained if the hotel towers were built at the same time, the Developer would be eligible for a combined rebate of up to $158 million over the 15 years, equivalent to $75 million in net present value terms. Although the Developer intended to construct both hotels simultaneously, he requested the flexibility to phase the development; and if the hotels were to be built in phases, groundbreaking on the first hotel would occur by May 26, 2013 with a 30 month construction period. The second hotel would break ground no later than November 26, 2015 with its opening occurring no later than May 26, 2018. If the hotels were developed utilizing phased construction, the Developer requested 80 percent of the generated TOT on each hotel with a combined cap of $158 million. He would agree to provide proof of financing to the City for at least one hotel by December 31, 2012. Council Meeting Minutes of January 24, 2012 Page 18 of 22 Mr. Wingenroth remarked that the successful development of the GardenWalk hotels was anticipated to have a number of positive benefits to the City and to the greater hospitality community. These potential benefits included the creation of 1,300 permanent jobs annually, as well as 3,000 temporary construction jobs. In addition, with the opening of the hotels, it was anticipated there would be increases in sales tax, as those hotel guests would patronize GardenWalk's retail center given its unique location. The proposed GardenWalk hotels were also anticipated to improve the quality of the overall supply in the market place and allow existing hotels to increase their average room rate during peak demand periods. He added it was projected that nearly all the room revenue generated by the GardenWalk Hotel would be "net new" to the City of Anaheim and there would be significant increase in TOT and TID, sales and property tax, including increased property tax collections as a result of the projected increase in surrounding property values attributable to the GardenWalk Hotel development. In summary, he stated, the proposed project was a good one; however, in order to induce investor support, the developer was requesting 80 percent of the TOT from the project. By providing 80 percent TOT support, Mr. Wingenroth pointed out, the City would be contributing over 25 percent of the $283 million in funds necessary to build the project. He also pointed out that due to prior agreements associated with TOT, the remaining 20 percent would not immediately benefit the City's general fund until the cap of $158 million was achieved by the developer or 15 years after the opening of the hotels, whichever came first. He ended his presentation commenting while staff supported incentivizing positive development in Anaheim, there was no desire to set a precedent that 80 percent level of TOT support was appropriate for this or future projects. For this reason, he added, staff was not recommending amendment of the existing economic assistance agreement as requested by the Developer. Mayor Tait offered the following comments. He recognized the developer, Bill O'Connell, had given much to the City over the years and was one of the icons in the Resort District. He added that many of those speaking in support of this amendment he also admired, but no matter how unpopular a decision was, he felt his job was to do the right thing for the City of Anaheim. Because 80 percent of the TOT would be used to subsidize this development and since the remaining 20 percent TOT was earmarked for debt service for 15 years, he felt that approving this economic assistance agreement was unprecedented in the state and unparalleled in the City, and for those reasons, would vote no on the request. Council Member Murray remarked she felt strongly that with limited resources available at a local level, and at a time when there was almost no commercial lending going on in this country and when redevelopment agencies had been eliminated which now restricted the City's ability to develop new jobs and enhance City revenues, this project was an opportunity to develop a public /private partnership that was extraordinary but not in the context of the current economic climate. She added the GardenWalk was envisioned as an asset flanked by two four -star equivalent hotels and those retailers who had already invested in the GardenWalk center had been hanging on hoping this economic assistance agreement drafted in 2008 would come to pass. She added the City would be amending the terms of the original agreement to accommodate a developer group willing to come in and assume a great deal of risk in a time when hotels were not being developed anywhere. She added, to complete that vision, 1,300 permanent jobs and 3,000 well paid temporary jobs would be created. Other jobs would be created as well if the retail blossomed under this program and if the convention business brought in the caliber of Council Meeting Minutes of January 24, 2012 Page 19 of 22 conventioneer that would stay in Anaheim and the surrounding tourism areas. She had taken much time to think this project through and while it was an extraordinary commitment, she looked to create a climate to grow jobs, pool resources, work with the business community and labor organizations as well as neighborhood leaders to make Anaheim a vibrant place where jobs grow and the unemployment rate goes down. She pointed out the Disneyland Hotel opened in 1955 and from 1970 on, had generated millions of dollars in revenue for the city, an economic engine that fostered growth and development around it. Mayor Pro Tern Galloway thanked all those who offered their points of view on this issue, remarking she had heard their concerns loud and clear. She had discussed the agreement with Mr. O'Connell a few days ago who understood she had not been in favor of this type of incentive before. For her, the decision was based on her belief in the role of government, to serve the people, safeguard funds and make sure those monies were used for public safety, infrastructure improvements, maintenance, and partnerships with other agencies. She felt residents and businesses should have the least amount of government intrusion of regulations as possible and to what extent Council could help businesses succeed and provide needed jobs, she was supportive. She added the request before Council would forever change and reduce one of the most significant and vital revenue streams the City has, transient occupancy tax, and the door would be opened for every other hotelier in the future to request a similar subsidy. Today TOT accounts for the majority of Anaheim's general fund revenue and historically had been the one funding stream that kept the City strong in prior recessions and through the 1994 Orange County bankruptcy. She also remarked for the reasons she stated earlier and the fact staff did not believe this project was in the best interests of Anaheim's citizens also weighed heavily on her decision to not support this project. Council Member Eastman thanked the speakers for coming out, remarking she could not remember when the chambers contained such a cross section of people from all walks of life, none of whom had a negative comment to make on the project. Believing she was elected to represent the people of Anaheim and feeling that the positives outweighed the negatives, she would support the amendment. Council Member Sidhu inquired what the projected sales or property tax was for the first year. Mr. Wingenroth estimated the ATID would be in the vicinity of $1 million and the sales and property tax around the $350,000 range. The ATID would support the hospitality industry and the property and sales tax would go to the general fund. Council Member Sidhu recognized the overwhelming need for jobs, and because this project would enhance the Resort District, promote retail growth in the GardenWalk retail center, would generate temporary and full -time jobs, and since he had not seen any other developers seeking to invest $283 million in the city, he would support this amendment. Council Member Murray moved to direct staff to prepare an amendment consistent with developer's proposal and authorize the City Manager, or his designee, to execute the amendment, seconded by Council Member Murray. Roll Call Vote: Ayes — 3(Council Members Eastman, Murray and Sidhu). Noes — 2 (Mayor Tait and Council Member Galloway. Motion Carried. Council Meeting Minutes of January 24, 2012 Page 20 of 22 PUBLIC HEARINGS: 24. This is a public hearing to introduce an ordinance approving the Sixth Amended and Restated Franchise Agreement with Republic Waste Services of Southern F130.3 California, LLC, dba Anaheim Disposal for the collection, handling, processing, recycling, transportation and disposal of solid waste within the city. ORDINANCE NO. 6233 (INTRODUCTION) AN UNCODIFIED ORDINANCE OF THE CITY OF ANAHEIM approving the Sixth Amended and Restated Franchise Agreement for the collection, handling, processing, recycling, transportation and disposal of solid waste within the city limits of Anaheim for Republic Waste Services of Southern California, LLC, dba Anaheim Disposal. Natalie Meeks, Public works Director, reported this public hearing was for an amendment to the Republic Waste Services contract. Last year, Republic Services unveiled its proposal to expand and modernize its Regional Materials Recovery Facility (MRF). This $40 million investment would provide a state -of -the art facility in Anaheim that would set the standard for materials recovery and recycling. In exchange, Republic requested an amendment to their existing waste hauling agreement to extend their franchise to a minimum of 20 years and extend their seven year evergreen clause to 13 years. She indicated staff had worked with Republic for almost a year to negotiate an amendment to the contract and to bring what the department felt was in the best interests of the City forward in exchange for this extension of their contract. The amendment would provide Anaheim with a number of benefits, including guarantying the City a minimum annual host fee payment of $1.25 million to increase annually by 90 percent of CPI. The City would also receive a one -time compensation of $2.5 million for infrastructure improvements and would continue to receive the lowest rate guaranty for comparable services among current transfer facility customers. The City would also have a five percent cap on annual increases to the service component of the rates and trash diversion would be increased to meet new state recycling mandates. In addition, automated residential trucks and trash cart purchases would be transferred to Republic Services for the remainder of the term, and certain free trash collection services for OCTA bus stops and City facilities would be offered. She remarked there were other minor adjustments to the agreement to benefit residents and that staff believed this amendment would provide a financial benefit and rate guarantees for the City. Mayor Tait opened the public hearing for comment. William Fitzgerald, Anaheim Home, objected to this amendment stating it was a tax on the residents of Anaheim and voiced his reasons in support of that statement. With no other comments offered, Mayor Tait closed the hearing. Council Member Murray stated Republic Services had a long history of environmental stewardship and leadership and creating innovative programs for Anaheim to meet population growth to exceed state mandates for recycling. She had recently toured their facility and discussed plans to keep that level of stewardship in place while accommodating future growth for residents, resort areas and other commercial interests to Council Meeting Minutes of January 24, 2012 Page 21 of 22 achieve zero waste. She was supportive of this amendment stating it would be a benefit to all. Council Member Eastman remarked she had also met with Republic at their facility to tour their new facilities and was impressed by infrastructure investment made by this company, thanking them for their continued service to the City. Mayor Tait requested clarification on how the annual host fee was derived. Ms. Meeks responded it was based on how much trash was process through the MRF facility and the payment to the City would not fall below $1.25 million, but could be higher as the additional trash was processed through the facility from other cities. Mayor Pro Tern Galloway moved to introduce ORDINANCE NO. 6233 AN UNCODIFIED ORDINANCE OF THE CITY OF ANAHEIM approving the Sixth Amended and Restated Franchise Agreement for the collection, handling, processing, recycling, transportation and disposal of solid waste within the city limits of Anaheim for Republic Waste Services of Southern California, LLC, dba Anaheim Disposal, seconded by Council Member Murray. 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 spoke of her attendance at a non - profit community group meeting regarding moving forward with a plan to create community gardens in different locations in the City. She looked forward to this prospect and looking for ways to enfold this initiative into the Mayor's "Hi Neighbor Program." She thanked Bob Wingenroth, Acting City Manager, for his analysis of the GardenWalk agreement and understood his recommendation to deny the project, however, she believed it was a unique development seeking to be built in an economic time that was also unique, and believed it could stand on its own and be successful. Council Member Sidhu announced the Youth Leadership America's 10 Anniversary and graduation ceremony to be held on January 27 at the Hilton Anaheim and encouraged the community to support this meaningful organization. He also recognized Iry Pickier, former Council Member and Orange County Water District representative, who was retiring from public service at the age of 90. He indicated there would be a reception on January 25 to celebrate Mr. Pickier's year of service to the City. Mayor Pro Tern Galloway announced the birth of her first grandson, Shane Galloway Bradford. She then reported on the East Street Community Renewal Initiative, a faith based initiative in one of the neediest areas of the city, hard hit by gang activity. She read a letter from a nine year old girl who attended a recent town hall meeting asking for the City's help because she was afraid to play outside in her neighborhood. Council Member Murray announced the following upcoming City events: Iry Pickier's retirement reception to be held on January 25, Anaheim West Tower, Orange County Black History Month parade and cultural festivities on February 4th on Center Street Council Meeting Minutes of January 24, 2012 Page 22 of 22 Promenade, and the Anaheim Family Justice Center 4 Annual Comedy Club fundraiser at the Brea Improv on February 26. She spoke of her work with Orange County regarding the Homeless and Poverty Taskforce and had met with them to discuss their vision of ending homelessness. She would follow up with meetings with Orange County supervisors on how to collaborate with the county and achieve efficiencies of programs and build upon those and expand their efforts. For the next budgetary planning session, Council Member Murray requested staff to take a strategic focus on how the city could develop programs that specifically address neighborhood concerns. She also asked that the same effort be put forth to enhance the resort area to revitalize communities across the city. She wanted the budget to consider how to strategically address the concerns of all the neighborhoods, especially those dealing with specific problem issues. Regarding the outsourcing of graffiti abatement program, she asked that an expedited process that looks at a qualitative approach as how to get that level of service in place be done and that staff address graffiti removal concerns. Mayor Tait commended the Police Department and citizens involved in apprehending the suspect involved in the homeless killings. He spoke of the town hall meeting at the East Street community meeting and requested staff to focus on ways to revitalize these communities. He urged citizens to participate in the community gardening group and to contact Council Member Eastman for more information and commended and congratulated Iry Pickier on his retirement and requested the meeting adjourn in honor of his service to the City. ADJOURMENT: At 8:19 P.M., the January 24, 2011 Council meeting adjourned in honor of Iry Pickier for his contributions to the City. Next regular City Council meeting is scheduled for February 7, 2012. Res Ily submitted, �0 Linda N. Andal, CIVIC City Clerk