HomeMy WebLinkAboutAdopt Resolution No. 2017-23 authorizing the City to Levy th CITY OF HUNTINGTON BEACH
Finance Department
Lori Ann Farrell
Director of Finance
Via Email Frank.Davies(@-ac.ocgov.com
Original Via U.S. Priority Mail
June 26, 2017
Frank Davies, Auditor-Controller
County of Orange — Property Tax Unit
P.O. Box 567
Santa Ana, CA 92702-0567
SUBJECT: CITY OF HUNTINGTON BEACH TAX RATE— FISCAL YEAR 2017118
Dear Mr. Davies:
On June 19, 2017, the City of Huntington Beach adopted the Fiscal Year 201712018 Tax
Rate by Resolution Number 2017-23, which levies a retirement property tax for Fiscal Year
2017/2018 to pay for pre-1978 employee retirement benefits. Enclosed are the executed
Resolution and staff report.
Please note this rate has not changed from Fiscal Year 2016/2017. Please continue to
incorporate the retirement tax levy of Zero and 0.01500/1 00th Dollars ($0.01500) per $100
of assessed value for the City of Huntington Beach.
If you have any questions or need additional information, please do not hesitate to contact
my office.
Si
nce ly,
on Ann Farrell
Chief Financial Officer
Enclosures:
1) City of Huntington Beach Resolution Number 2017-23
2) Request for City Council Action Agenda dated June 19, 2017, Item 10
3) Action Agenda, Item 10
cc: Fred A. Wilson, City Manager
Robin Estanislau, City Clerk
Carol Molina-Espinoza, Finance Manager— Budget
LAF/MKUji
2000 Main Street, California 92648-2702 * Phone 714-536-5630 + Fax 714-374-5365
www.hurttinatonbeachca'gov
t
RESOLUTION NO, 2017-23
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF I-lUNTINGTON BEACH
LEVYING A RETIREMENT PROPERTY TAX FOR FISCAL YEAR 2017/2018
TO PAY FOR PRE-1978 EMPLOYEE RETIREMENT BENEFITS
WHEREAS, since 1948, the City has provided for employee pensions tluough a contract
with the California Public Employees Retirement System (CaIPERS). Pursuant to the 1966,
1978 and 2010 City Charters, the voters of the City authorized the City Council to pay for the
cost of employee pensions through a separate retirement property tax. Section 607(b)(2) of both
the 1978 and 2010 Charters provide that the City may impose a retirement tax"sufficient to meet
all obligations of the City for the retirement system in which the City participates;"and
Proposition 13 was added to the California Constitution in 1978. It limits the local
property tax to 1% of assessed value, except that the City may levy an override tax in excess of
1%to pay"any indebtedness approved by the voters prior to July 1, 1978"(Cal. Const. Art. 13A,
§I(b)); and
hi the case entitled Carman v. Alvord, 31 Cal.3d 318 (1982), the California Supreme
Court determined that-under Proposition 13, an override property tax in excess of 1%of assessed
value may be levied to pay for the employee pension benefits the voters approved prior to 1978.
Consequently, after Proposition 13, the Huntington Beach City Council continued to levy an
override tax to pay for employee pensions. Since 1983-84, Revenue and Taxation Code Section
96.31(a)(4) has limited the City to levying a maximum override tax of$0.04930 per $100 of
assessed value to pay for its retirement system; and
In 2003,the Court of Appeal in Howard Jarvis Taxpayers Assn v. County of Orange
(2003) 110 Cal.AppAth 1375 held that the City may levy a separate property tax to pay for
retirement benefits for all retired., current, and future city employees contracted for prior to July
1, 1978, but not enhancements to retirement benefits contracted for after July 1, 1978; and
Prior to July 1, 1978, the City entered into collective bargaining agreements with
employee associations representing its safety employees providing that, effective July 1, 1978,
they would be entitled to a CalPERS retirement benefit known as "2% @ 50." Subsequently, on
- June 30, 1999, pursuant to collective bargaining agreements the City had entered into with. its
safety employees, the City provided its safety employees with the CalPERS retirement benefit
known as 3% @ 50. Consequently, it is necessary to allocate the employer contribution to
CaIPERS for safety retirement between 2% @ 50 and 3% @ 50, because only the employer
contribution for 2% @ 50 may be paid through the override property tax; and
The City has received a report from John Bartel of Bartel Associates, a professional
actuary experienced in pension calculations, entitled, "City of Huntington Beach CaIPERS
Actuarial Issues—Cost of 3% @ 50," dated August 10, 2004, The Report identified tine additional
cost of 3% @ 50 as what CalPERS refers to as the"normal cost" of the benefit,which represents
the present value of future benefits employees earned during the current year. Under this
approach, the incremental cost of 3% @ 50 is 4.6% of safety payroll, and the remainder of the
employer contribution represents the cost of 2% @ 50;and
RLS 5/11/17/17-5800/158407/SF 1
RESOLUTION NO. 2017-23
In April 2004, then Assemblyman Harman formally asked the Attorney General
regarding the correct inethod of allocating the employer contribution to CalPERS between its
pre-1.978 and post-1978 components. In his February 7, 2005 Opinion (Opinion No. 04-413),
the Attorney General opined that "any reasonable accounting method may be used for purposes
of determining which costs are not subject to the 1% property tax limitation of the Constitution;"
and
The City Council has determined that the allocation approach presented in the Bartel
Report is a reasonable accounting method for determining which costs are not subject to the 1%
property tax limitation of the Constitution; and
For 2017/2018, Ca1PERS is requiring the City to contribute 45,701% of safety employee
payroll as the City's employer's contribution. In order to set the tax override, the City may
subtract the 4.6% normal cost of 3% @ 50 from the 45.701% to set the override tax at the
equivalent of 41,101% of safety employee payroll. The cost to the City of 41.10.1% of safety
employee payroll for 2017/2018 will be $19,486,901 and pursuant to Proposition 13 and
Revenue and Taxation Code Section 96.31(a)(4), the City could have set the override tax for
2017/2018 at$0,04930 per$100 of assessed value; and
In August 2012, the City Council added Chapter 3.07 to the Municipal Code which sets
the future retirement tax rate to the Fiscal Year 2012/13 rate of$0.01500 per $100 of assessed
value, which amount is less than the otherwise permitted retirement tax per Revenge and
Taxation Code Section 96.31(a)(4) of $0.04930 per $100 of assessed value. For Fiscal Year
2015/2016, the most recent year available, the levied retirement tax of $0.01500 per $100
assessed value generated$5,726,270.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Htultington
Beach that a retirement property tax levy of Zero and 0.01500/100th Dollars($0.01500)per$100
of assessed value shall be levied for employee retirement costs for Fiscal Year 2017/2018.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 1901 day of June 2017,
PUM
ay r
ww
REVIE APPROVED: INITIATED AND APPROVED;
-G a1�4
City 4her
Chief Financial Officer
APPROVED FORA:
I
City/ ttorney
RLS 6/30/16/16-5335/139429/PD 2
Res. No. 2017-23
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the.City Council of the City of
Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a Regular meeting thereof held on June 19, 2017 by the following vote:
AYES: O'Connell, Posey, Delgleize, Hardy, Brenden
NOES: Semeta, Peterson
ABSENT: None
RECUSE: None
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
Dept.ID FN17-011 Page 1 of 2
Meeting Date:611912017
a
CITY OF HUNTINGTON BEACH
REQUEST FOR, CITY COUNCIL ACTION
MEETING DATE: 6/19/2017
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Lori Ann Farrell Harrison, Chief Financial Officer
SUBJECT: Adopt Resolution No. 2017-23 authorizing the City to Levy the Annual
Retirement Property Tax for Fiscal Year 2017/18 to Pay for Pre-1978
Employee Retirement Benefit Levels
Statement of Issue:
The retirement property tax has been levied each year since 1966. The retirement property tax is
collected on all real property in the City of Huntington Beach to recover costs related to pre-1978
public employee retirement benefit levels. On July 16, 2012, the City Council adopted Chapter 3.07
of the Municipal Code, the Retirement Tax Cap. The Retirement Tax Cap states that the tax rate
"shall be set at the rate adopted for Fiscal Year 2012/13, which is $0.01500 per $100 of assessed
valuation."
Financial Impact:
Pursuant to Chapter 3.07 of the Municipal Code, the Proposed Budget for Fiscal Year 2016/17
assumes the continuation of the Retirement Tax Cap of $0.01500 per $100 of assessed value. As
of the most recent audited financial statements, this tax rate resulted in $5.7 million in General Fund
revenue in Fiscal Year 2015/16. This recurring revenue source is included in the Proposed FY
2017/18 Budget; hence, any reductions in the tax rate would potentially result in General Fund
budget reductions.
Recommended Action:
Adopt Resolution No. 2017-23, "A Resolution of the City Council of the City of Huntington Beach
Levying a Retirement Property Tax for Fiscal Year 2017/18 to Pay for Pre-1978 Public Employee
Retirement Benefits of $0.01500 per $100 of assessed valuation." The tax rate of $0.01500 would
continue the tax rate included in the current Fiscal Year 2016/17 Adopted Budget.
Alternative Action(s):
Do not approve the recommended action and direct staff accordingly.
Analysis:
On July 16, 2012, the City Council adopted an ordinance to permanently cap the tax rate at
$0.01500 per$100 of assessed valuation. Therefore, the requested tax levy for FY 2017/18 reflects
the same tax rate of $0.01500 per $100 of assessed valuation effective in FY 2012/13 pursuant to
Chapter 3.07 of the Municipal Code. Fiscal Year 2017/18 will represent the sixth year of the capped
rate.
As background, on June 25, 2012, the Registrar of Voters of the County of Orange certified a
Measure to be placed on the ballot to repeal the Employee Tax Override in its entirety. However,
Dept. ID FN17-011 Page 2 of 2
Meeting Date:6/19/2017
on November 6, 2012, the ballot measure, known as Measure Z, was defeated by a majority of
Huntington Beach voters.
The current capped Employee Tax Override results in an approximate $75 annual tax levy for a
property assessed at $500,000. Revenue generated from this property tax helps the City fund
employee pension costs associated with pre-1978 retirement benefit levels. As such, the tax can
only pay for the estimated costs associated with the pension benefit formulas in place prior to the
enactment of Proposition 13 on July 1, 1978. Hence, the tax can only pay for retirement benefits for
all retired, current, and future City employees that were contracted for prior to July 1, 1978 (namely
the "2% at 50" benefit formula for Safety employees in place before enactment of Proposition 13).
Please note that even before the adoption of a permanent cap, this assessment has not been
increased since Fiscal Year 2009/10, and can now only be modified by a vote of the electorate as
the adoption of the Retirement Tax Cap contained in Chapter 3.07 of the Municipal Code
established a permanent cap. Based on the most recent CalPERS actuarial valuations the cost of
pre-1978 retirement benefit levels for Safety personnel total $19.5 million. As such, the proposed
tax rate is recouping only 29 percent of eligible Safety personnel retirement costs.
Due to the County of Orange's timeline for approving the tax rate and the city's budget cycle, the
rate must be set before the City Council takes action on its annual budget. The recommended
assessment rate would maintain much needed revenue in the General Fund for Fiscal Year
2017/18.
Environmental Status:
N/A
I
Strategic Plan Goal:
Strengthen economic and financial sustainability
Enhance and maintain public safety
Attachment(s):
1. Resolution No. 2017-23 "A Resolution of the City Council of the City of Huntington Beach
Levying a Retirement Tax for Fiscal Year 2017/18 to Pay for Pre-1978 Public Employee
Retirement Benefits"
2. Ordinance No. 3954 "An Ordinance of the City of Huntington Beach Amending the
Huntington Beach Municipal Code by Adding Chapter 3.07 Relating to Capping the
Retirement Property Tax at Fiscal Year 2012/13 Rates"
�., ACTION AGENDA
MAYOR
Monday, June 19, 2017 AND
x;8> CITY COUNCIL
CITY COUNCIL/PUBLIC FINANCING
AUTHORITY
FRED A.WILSON BARBARA DELGLEIZE
City Manager CITY OF HUNTINGTON BEACH Mayor
MICHAEL E.GATES MIKE POSEY PATRICK BRENDEN
City Attorney 4:30 PM -Study Session Mayor Pro Tern Councilmember
ROBIN ESTANISLAU 6:00 PM - Regular Meeting JILL HARDY WILLIAM O'CONNELL
City Clerk Council Chambers - 2000 Main Street Councilmember Councilmember
ALISA CUTCHEN Huntington Beach, CA 92648 ERIK PETERSON LYN SEMETA
City Treasurer http://www.huntingtonbeachca.gov Councilmember Councilmember
Based on the limited amount of time needed to cover items in Study Session and
Closed Session, the meeting will be called to order at 4:30 PM
4:30 PM - COUNCIL CHAMBERS
CALL TO ORDER— 4:31 PM
ROLL CALL
O'Connell, Semeta, Posey, Delgleize, Hardy, Brenden, Peterson
All present
ANNOUNCEMENT OF SUPPLEMENTAL COMMUNICATIONS (Received After
Agenda Distribution)
City Clerk Robin Estanislau announced supplemental communications SS#1 (1)
PUBLIC COMMENTS PERTAINING TO STUDY SESSION / CLOSED SESSION
ITEMS (3 Minute Time Limit)
None
STUDY SESSION
1. City Regulation of Marijuana Sales and Distribution and Prop 64 Update
from City Attorney and Police Chief
RECESS TO CLOSED SESSION — 5:15 PM
Mayor Delgleize Announced: Pursuant to Government Code § 54957.6, the City
Council takes this opportunity to publicly introduce and identify designated
labor negotiator, City Manager Fred Wilson, who will be participating in today's
Closed Session discussions regarding labor negotiations with: Huntington
-1-
City Council/PFA Action Agenda—Monday, June 19, 2017
Beach Firefighters' Association (HBFA), Huntington Beach Police Officers'
Association (POA), and/or Surf City Lifeguard Employees' Association (SCLEA).
CLOSED SESSION
2. Pursuant to Government Code § 54956.9(d)(1), the City Council recessed
into Closed Session to confer with the City Attorney regarding the
following lawsuit: George and Kathleen Pickett v. City of Huntington
Beach/Steven Tilton, Orange County Superior Court Case No. 30-2014-
00754342.
3. Pursuant to Government Code § 54957.6, the City Council recessed into
Closed Session to meet with its designated labor negotiators and Fred
Wilson, City Manager regarding the following: Huntington Beach
Firefighters' Association (HBFA), Huntington Beach Police Officers'
Association (POA), and/or Surf City Lifeguard Employees' Association
(SCLEA).
4. Pursuant to Government Code § 54956.9(d)(1), the City Council recessed
into Closed Session to confer with the City Attorney regarding the
following lawsuit: Michael Johnson vs. City of Huntington Beach, WCAB
Case Nos. ADJ9771842; ADJ977184; ADJ9771638; ADJ9771698; &
ADJ9771844; Claim Nos. COHB-12-0277; 13-0178; 14-0052; 14-0108; & 14-
0302.
6:00 PM — COUNCIL CHAMBERS
RECONVENED CITY COUNCIL/PUBLIC FINANCING AUTHORITY MEETING
6:10 PM
ROLL CALL
O'Connell, Semeta, Posey, Delgleize, Hardy, Brenden, Peterson
All present
PLEDGE OF ALLEGIANCE — Led by Councilmember Brenden
INVOCATION - Rev. Kelly Frankiewicz of Leisure World Community Church, Seal
Beach and member of the Greater Huntington Beach Interfaith Council
In permitting a nonsectarian invocation, the City does not intend to proselytize or
advance any faith or belief. Neither the City nor the City Council endorses any
particular religious belief or form of invocation.
CLOSED SESSION REPORT BY CITY ATTORNEY - None
AWARDS AND PRESENTATIONS
Mayor Delgleize called on Victoria Alberty to present the Adoptable Pet of the
Month.
-2-
City Council/PFA Action Agenda—Monday, June 19, 2017
Mayor Delgleize presented commendation to Dr. Watt for his years of service at
Smith Middle School.
Mayor Delgleize presented commendation to Band Director Thomas Ridley of the
Huntington Beach Concert Band for his 40 years of leadership.
Mayor Delgleize called on representatives of Mothers Against Drunk Drivers
(MADD) who will honor members of the Huntington Beach Police Department
with the annual Law Enforcement Recognition and Deuce Awards for DUI
arrests.
Mayor Delgleize called on Community Services Commissioner and Committee
Chair Roy Miller to announce the Youth Sports Grants Awardees.
Mayor Delgleize presented commendations to Salome's Cleaning Services and
Ricos Tacos for their participation in the Sustainable Business Certification
Program.
Mayor Delgleize called on Community Services Director Janeen Laudenback to
present the Mayor's Award to Facilities, Development& Concessions Manager,
David Dominguez.
ANNOUNCEMENT OF SUPPLEMENTAL COMMUNICATIONS (Received After
Agenda Distribution) Consent Item No. 17(9)
PUBLIC COMMENTS (3 Minute Time Limit)
21 Speakers
COUNCIL COMMITTEE - APPOINTMENTS - LIAISON REPORTS, AB 1234
REPORTING, AND OPENNESS IN NEGOTIATIONS DISCLOSURES
O'Connell, Posey, Hardy, Brenden, Delgleize, reported
CITY MANAGER'S REPORT
1. Community Development Department, Building Division Overview
provided by Building Manager Mark Carnahan
CONSENT CALENDAR
2. Approved and adopted minutes
Recommended Action:
Review and adopt the City Council/Public Financing Authority regular meeting
minutes dated June 5, 2017, as written and on file in the office of the City Clerk.
Approved 7-0
3. Received and filed the City of Huntington Beach Strategic Plan Grid
Updates
Recommended Action:
Receive and file the Six-Month Strategic Objectives.
-3-
City Council/PFA Action Agenda—Monday, June 19, 2017
Approved 4-3 (O'Connell, Semeta, Peterson-No)
4. Received and filed City Clerk's Quarterly listing of Contracts filed in the
City Clerk's office between January 1, 2017, and March 31, 2017
Recommended Action:
Receive and file the "List of Contracts Approved by Department Heads and
Submitted to the Office of the City Clerk During the Period of January 1, 2017,
through March 31, 2017."
Approved 7-0
5. Approved reappointments to the Historic Resources Board (HRB) with
terms to expire July, 2021, as recommended by City Council liaisons to
the Board, Councilmembers Jill Hardy and Erik Peterson
Recommended Action:
Approve the reappointment of Kathie Schey, Ronald Knowles, and Duane
Wentworth to the Historic Resources Board as recommended by City Council
liaisons to the Board, Councilmembers Hardy and Peterson with terms to expire
on July 1, 2021.
Approved 7-0
6. Approved appointments and reappointments to the Huntington Beach
Youth Board (YB) with terms to expire June 2018, as recommended by the
City Council liaisons to the Board, Councilmembers Jill Hardy and Lyn
Semeta
Recommended Action:
A) As recommended by City Councilmember liaisons Jill Hardy and Lyn
Semeta, approve the appointment of the following students to a one-year term
on the Huntington Beach Youth Board with terms to expire June 2018:
Tatum Osborne — Marina High School
Amy Zeng — Huntington Beach High School
Vincent Tseng — Edison High School
Savannah Eljaouhari — Ocean View High School
Anthony Novelli — Edison High School
B) As recommended by City Councilmember liaisons Jill Hardy and Lyn
Semeta, approve the reappointment of the following students to a one-year
term on the Huntington Beach Youth Board with terms to expire June 2018:
Micayla Shook— Ocean View High School, Representative
Devin Hughes — Edison High School, Representative
Ella Thomas— Huntington Beach High School, Representative
Briana Spainhour— Marina High School, Representative
Approved 7-0
7. Approved the Infrastructure Fund Annual Report for Fiscal Year 2015-2016
Recommended Action:
-4-
City Council/PFA Action Agenda—Monday, June 19, 2017
Approve the Infrastructure Fund Annual Report for FY 2015-2016.
Approved 7-0
8. Received and filed the Commercial Solid Waste Rate Schedule Effective
July 1, 2017
Recommended Action:
Receive and file the rate sheet for Commercial Solid Waste collection and
disposal service effective July 1, 2017, which becomes the new Exhibit A of the
Revised and Restated Refuse Collection and Disposal Services Franchise
Agreement.
Approved 7-0
9. Adopted Resolution No. 2017-14 concerning the status and update of the
City's Circulation Element, Local Signal Synchronization Plan (LSSP), and
Mitigation Fee Program for the Measure M (M2) Program
Recommended Action:
Adopt Resolution No. 2017-14, "A Resolution of the City Council of the City of
Huntington Beach Concerning the Status and Update of the Circulation
Element, Local Signal Synchronization Plan, and Mitigation Fee Program, for
the Measure M (M2) Program."
Approved 7-0
10. Adopted Resolution No 2017 23 authorizing:=the�City.to°aev" the Ann°dal'
',Retirement Property Tax fbor Fiscal Year 2017t18 to'pay for'pre-1978
Employee,Retirement 13enefitLevels
Recommended Action:
Adopt Resolution No. 2017-23, "A Resolution of the City Council of the City of
Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2017/18
to Pay for Pre-1978 Public Employee Retirement Benefits of$0.01500 per $100
of assessed valuation." The tax rate of$0.01500 would continue the tax rate
included in the current Fiscal Year 2016/17 Adopted Budget.
Approved 5-2 (Semeta, Peterson-No)
11. Adopted Resolution No. 2017-24 authorizing certain City Employees and
Hinderliter, DeLlamas & Associates (HDL) access to Sales and Use Tax
Records
Recommended Action:
Adopt Resolution 2017-24, "A Resolution of the City Council of the City of
Huntington Beach Repealing Resolution No. 2014-27 and Authorizing Certain
City Employees and Hinderliter, de Llamas & Associates Access to Sales and
Use or Transactions and Use Tax Records Pursuant to Section 7056 of the
Revenue and Taxation Code."
Approved 7-0
12. CONTINUED TO A DATE UNCERTAIN - Adopt Resolution No. 2017-25
establishing its policy for the naming of City Parks, Park Features, and
Community Facilities and repealing conflicting resolutions
-5-
City Council/PFA Action Agenda—Monday, June 19, 2017
Recommended Action:
Continue to a date uncertain request to Adopt Resolution No. 2017-25, "A
Resolution of the City Council of the City of Huntington Beach establishing its
policy for the Naming of City Parks, Park Features and Community Facilities
and Repealing Conflicting Resolutions," amended to include language
indicating that if a park, or other community facility is to receive a name
with historical significance, the Historic Resources Board will be
consulted.
Approved as amended 7-0
13. Adopted Resolution No. 2017-28 amending Resolution No. 2016-59 which
established a Consolidated Comprehensive Citywide Master Fee and
Charges Schedule for parking rate modifications for the 2017 Fourth of
July weekend (Supplemental Fee Resolution No. 1)
Recommended Action:
Adopt Resolution 2017-28, "A Resolution of the City Council of the City of
Huntington Beach Amending Resolution No. 2016-59 Which Established a
Consolidated Comprehensive Citywide Master Fee and Charges Schedule
(Supplemental Fee Resolution No. 1)," related to temporary parking rates for
4th of July activities at the South Beach lots and Main Promenade Parking
Structure.
Approved 7-0
14. Approved and authorized execution of Contract Amendment No. 1 with
Rosenow Spevacek Group, Inc. (RSG) in the amount of$30,000 through
June 15, 2018, for Affordable Housing Compliance Monitoring of HOME
Projects
Recommended Action:
Approve and authorize the Mayor and City Clerk to execute "Amendment No. 1
to Professional Services Contract Between the City of Huntington Beach and
Rosenow Spevacek Group, Inc. for Affordable Housing Compliance Monitoring"
to June 15, 2018, in the amount not-to-exceed $30,000.
Approved 7-0
15. Approved and authorized execution of Amendment No. 1 to Professional
Services Contract with Jensen Hughes, Inc. in the amount of$175,000 for
Fire Prevention Inspection and Plan Review Services
Recommended Action:
Approve and authorize the Mayor and City Clerk to execute "Amendment No.1
to Professional Services Contract Between the City of Huntington Beach and
Jensen Hughes, Inc. for Fire Prevention Inspection and Plan Review Services;"
the recommended action will also increase the Fire Department's professional
services listing authority by a commensurate amount to ensure compliance with
Administrative Regulation No. 228.
Approved 7-0
16. Approved and authorized execution of Memorandum of Understandings
-6-
City Council/PFA Action Agenda—Monday, June 19, 2017
(MOUs) between the City of Huntington Beach and grant partners Peter's
Landing Marina and Huntington Harbour Marina for the installation and
maintenance of seven Marina Trash Skimmer (MTS) units in Huntington
Harbour
Recommended Action:
A) Approve and authorize the Mayor and City Clerk to execute "Memorandum
of Understanding Between the City of Huntington Beach and Peter's Landing
Marina for the Installation and Maintenance of Marina Trash Skimmer(s) in
Huntington Harbour," and,
B) Approve and authorize the Mayor and City Clerk to execute "Memorandum
of Understanding Between the City of Huntington Beach and Huntington
Harbour Marina for the Installation and Maintenance of Marina Trash
Skimmer(s) in Huntington Harbour."
Approved 7-0
17. Approved and authorized execution of a 3-year Professional Services
Contract with Psomas in the amount of$510,213 for preparation of the
Magnolia Tank Farm Environmental Impact Report; approved and
authorized execution of a Reimbursement Agreement with SLF - HB
Magnolia, LLC (Shopoff) in the amount of$510,213; approved an increase
in the Community Development Department's Professional Services
listing authority by $510,213; and appropriated funds to be fully
reimbursed
Recommended Action:
A) Approve and authorize the Mayor and City Clerk to execute a "Professional
Services Contract Between the City of Huntington Beach and Psomas for the
Magnolia Tank Farm Environmental Impact Report" in the amount of$510,213
as prepared by the City Attorney (Attachment No. 1); and,
B) Approve and authorize the Mayor and City Clerk to execute a
"Reimbursement - Planning -Agreement Between the City of Huntington Beach
and SLF - HB Magnolia, LLC for Costs Incurred for the Magnolia Tank Farm
Environmental Impact Report" in the amount of$510,213 as prepared by the
City Attorney (Attachment No. 2); and,
C) Approve an increase in the Community Development Department's
professional services listing authority by $510,213 for the preparation of the
Magnolia Tank Farm Environmental Impact Report to ensure compliance with
Administrative Regulation Number 228, Section 7.1; and,
D) Appropriate funds as revenues are received in the amount of $510,213 from
the General Fund to the Community Development Department Professional
Services Account 10060201.69365 for the Professional Services Contract
between the City and Psomas, which is funded by a reimbursement agreement.
Approved 5-2 (Semeta, Peterson-No)
ADMINISTRATIVE ITEMS
18. Approved Report submitted on Downtown Huntington Beach maintenance
-7-
City Council/PFA Action Agenda— Monday, June 19, 2017
and public improvements as directed by a Councilmember Item submitted
by Councilmember Patrick Brenden and Mayor Pro Tern Mike Posey
Recommended Action:
Receive and file the compiled report on maintenance and public improvement
efforts in Downtown Huntington Beach, and return to Council with an
updated report every 60 days for the next 6 months. City Manager will
direct staff to continue working with the Downtown BID to prioritize and
refine the list and the associated cost estimates. Future reports to include
recommendations for addressing unbudgeted funding needs.
Approved as amended 6-0-1 (O'Connell-Recuse)
COUNCILMEMBER ITEMS
19. Item submitted by Councilmember Erik Peterson approved - Direct staff to
initiate a Zoning Text Amendment to amend the Holly Seacliff Specific
Plan regarding Vehicle and RV storage
Recommended Action:
Direct staff to initiate a Zoning Text Amendment to amend the Holly Seacliff
Specific Plan so that vehicle and recreational vehicle storage is an allowable
interim use and minimize the required site improvements, as amended to
include language that provides for review every 5 years.
Approved as amended 6-1 (Delgleize-No)
COUNCILMEMBER COMMENTS (Not Agendized)
O'Connell, Semeta, Posey, Delgleize, Brenden, reported
ADJOURNMENT— 8:20 PM
The next regularly scheduled meeting of the Huntington Beach City Council/Public Financing
Authority is Monday, July 17, 2017, at 4:00 PM in the Civic Center Council Chambers, 2000
Main Street, Huntington Beach, California.
INTERNET ACCESS TO CITY COUNCIL/PUBLIC FINANCING AUTHORITY AGENDA
AND STAFF REPORT MATERIAL IS AVAILABLE PRIOR TO CITY COUNCIL
MEETINGS AT
http://www.huntin-qtonbeachca.qov
-8-
City Council/PFA Action Agenda—Monday, June 19, 2017
Dept. ID FN17-011 Page 1 of 2
Meeting Date: 6/19/2017
_ CITY OF HUNTINGTON BEACH
i,
REQUEST FOR. CITY COUNCIL ACTION
f
MEETING DATE: 6/19/2017
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Lori Ann Farrell Harrison, Chief Financial Officer
SUBJECT: Adopt Resolution No. 2017-23 authorizing the City to Levy the Annual
Retirement Property Tax for Fiscal Year 2017/18 to Pay for Pre-1978
Employee Retirement Benefit Levels
Statement of Issue:
The retirement property tax has been levied each year since 1966. The retirement property tax is
collected on all real property in the City of Huntington Beach to recover costs related to pre-1978
public employee retirement benefit levels. On July 16, 2012, the City Council adopted Chapter 3.07
of the Municipal Code, the Retirement Tax Cap. The Retirement Tax Cap states that the tax rate
"shall be set at the rate adopted for Fiscal Year 2012/13, which is $0.01500 per $100 of assessed
valuation."
Financial Impact:
Pursuant to Chapter 3.07 of the Municipal Code, the Proposed Budget for Fiscal Year 2016/17
assumes the continuation of the Retirement Tax Cap of $0.01500 per $100 of assessed value. As
of the most recent audited financial statements, this tax rate resulted in $5.7 million in General Fund
revenue in Fiscal Year 2015/16. This recurring revenue source is included in the Proposed FY
2017/18 Budget; hence, any reductions in the tax rate would potentially result in General Fund
budget reductions.
Recommended Action:
Adopt Resolution No. 2017-23, "A Resolution of the City Council of the City of Huntington Beach
Levying a Retirement Property Tax for Fiscal Year 2017/18 to Pay for Pre-1978 Public Employee
Retirement Benefits of $0.01500 per $100 of assessed valuation." The tax rate of $0.01500 would
continue the tax rate included in the current Fiscal Year 2016/17 Adopted Budget.
Alternative Action(s):
Do not approve the recommended action and direct staff accordingly.
Analysis:
On July 16, 2012, the City Council adopted an ordinance to permanently cap the tax rate at
$0.01500 per $100 of assessed valuation. Therefore, the requested tax levy for FY 2017/18 reflects
the same tax rate of $0.01500 per $100 of assessed valuation effective in FY 2012/13 pursuant to
Chapter 3.07 of the Municipal Code. Fiscal Year 2017/18 will represent the sixth year of the capped
rate.
As background, on June 25, 2012, the Registrar of Voters of the County of Orange certified a
Measure to be placed on the ballot to repeal the Employee Tax Override in its entirety. However,
HB -155- Item 10. - 1
Dept. ID FN17-011 Page 2 of 2
Meeting Date: 6/19/2017
on November 6, 2012, the ballot measure, known as Measure Z, was defeated by a majority of
Huntington Beach voters.
The current capped Employee Tax Override results in an approximate $75 annual tax levy for a
property assessed at $500,000. Revenue generated from this property tax helps the City fund
employee pension costs associated with pre-1978 retirement benefit levels. As such, the tax can
only pay for the estimated costs associated with the pension benefit formulas in place prior to the
enactment of Proposition 13 on July 1, 1978. Hence, the tax can only pay for retirement benefits for
all retired, current, and future City employees that were contracted for prior to July 1, 1978 (namely
the "2% at 50" benefit formula for Safety employees in place before enactment of Proposition 13).
Please note that even before the adoption of a permanent cap, this assessment has not been
increased since Fiscal Year 2009/10, and can now only be modified by a vote of the electorate as
the adoption of the Retirement Tax Cap contained in Chapter 3.07 of the Municipal Code
established a permanent cap. Based on the most recent CalPERS actuarial valuations the cost of
pre-1978 retirement benefit levels for Safety personnel total $19.5 million. As such, the proposed
tax rate is recouping only 29 percent of eligible Safety personnel retirement costs.
Due to the County of Orange's timeline for approving the tax rate and the city's budget cycle, the
rate must be set before the City Council takes action on its annual budget. The recommended
assessment rate would maintain much needed revenue in the General Fund for Fiscal Year
2017/18.
Environmental Status:
N/A
Strategic Plan Goal:
Strengthen economic and financial sustainability
Enhance and maintain public safety
Attachment(s):
1. Resolution No. 2017-23 "A Resolution of the City Council of the City of Huntington Beach
Levying a Retirement Tax for Fiscal Year 2017/18 to Pay for Pre-1978 Public Employee
Retirement Benefits"
2. Ordinance No. 3954 "An Ordinance of the City of Huntington Beach Amending the
Huntington Beach Municipal Code by Adding Chapter 3.07 Relating to Capping the
Retirement Property Tax at Fiscal Year 2012/13 Rates"
Item 10. - 2 HB -t56-
RESOLUTION NO. 2017-23
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
LEVYING A RETIREMENT PROPERTY TAX FOR FISCAL YEAR 2017/2018
TO PAY FOR PRE-1978 EMPLOYEE RETIREMENT BENEFITS
WHEREAS, since 1948, the City has provided for employee pensions through a contract
with the California Public Employees Retirement System (CalPERS). Pursuant to the 1966,
1978 and 2010 City Charters, the voters of the City authorized the City Council to pay for the
cost of employee pensions through a separate retirement property tax. Section 607(b)(2) of both
the 1978 and 2010 Charters provide that the City may impose a retirement tax "sufficient to meet
all obligations of the City for the retirement system in which the City participates;" and
Proposition 13 was added to the California Constitution in 1978. It limits the local
property tax to 1% of assessed value, except that the City may levy an override tax in excess of
1% to pay "any indebtedness approved by the voters prior to July 1, 1978" (Cal. Const. Art. 13A,
§1(b)); and
In the case entitled Carman v. Alvord, 31 Cal.3d 318 (1982), the California Supreme
Court determined that under Proposition 13, an override property tax in excess of 1% of assessed
value may be levied to pay for the employee pension benefits the voters approved prior to 1978.
Consequently, after Proposition 13, the Huntington Beach City Council continued to levy an
override tax to pay for employee pensions. Since 1983-84, Revenue and Taxation Code Section
96.31(a)(4) has limited the City to levying a maximum override tax of $0.04930 per $100 of
assessed value to pay for its retirement system; and
In 2003, the Court of Appeal in Howard Jarvis Taxpayers Assn v. County of Orange
(2003) 110 Cal.App.4th 1375 held that the City may levy a separate property tax to pay for
retirement benefits for all retired, current, and future city employees contracted for prior to July
1, 1978, but not enhancements to retirement benefits contracted for after July 1, 1978; and
Prior to July 1, 1978, the City entered into collective bargaining agreements with
employee associations representing its safety employees providing that, effective July 1, 1978,
they would be entitled to a CalPERS retirement benefit known as "2% @ 50." Subsequently, on
June 30, 1999, pursuant to collective bargaining agreements the City had entered into with its
safety employees, the City provided its safety employees with the CalPERS retirement benefit
known as 3% @ 50. Consequently, it is necessary to allocate the employer contribution to
CalPERS for safety retirement between 2% @ 50 and 3% @ 50, because only the employer
contribution for 2% @ 50 may be paid through the override property tax; and
The City has received a report from John Bartel of Bartel Associates, a professional
actuary experienced in pension calculations, entitled, "City of Huntington Beach CalPERS
Actuarial Issues—Cost of 3% @ 50," dated August 10, 2004. The Report identified the additional
cost of 3% @ 50 as what CalPERS refers to as the "normal cost" of the benefit, which represents
the present value of future benefits employees earned during the current year. Under this
approach, the incremental cost of 3% @ 50 is 4.6% of safety payroll, and the remainder of the
employer contribution represents the cost of 2% @ 50; and
RLS 5/11/17/17-5800/158407/SF 1
RESOLUTION NO. 2017-23
In April 2004, then Assemblyman Harman formally asked the Attorney General
regarding the correct method of allocating the employer contribution to Ca1PERS between its
pre-1978 and post-1978 components. In his February 7, 2005 Opinion (Opinion No. 04-413),
the Attorney General opined that "any reasonable accounting method may be used for purposes
of determining which costs are not subject to the 1% property tax limitation of the Constitution;"
and
The City Council has determined that the allocation approach presented in the Bartel
Report is a reasonable accounting method for determining which costs are not subject to the 1%
property tax limitation of the Constitution; and
For 2017/2018, CalPERS is requiring the City to contribute 45.701% of safety employee
payroll as the City's employer's contribution. In order to set the tax override, the City may
subtract the 4.6% normal cost of 3% @ 50 from the 45.701% to set the override tax at the
equivalent of 41.101% of safety employee payroll. The cost to the City of 41.101% of safety
employee payroll for 2017/2018 will be $19,486,901 and pursuant to Proposition 13 and
Revenue and Taxation Code Section 96.31(a)(4), the City could have set the override tax for
2017/2018 at $0.04930 per$100 of assessed value; and
In August 2012, the City Council added Chapter 3.07 to the Municipal Code which sets
the future retirement tax rate to the Fiscal Year 2012/13 rate of$0.01500 per $100 of assessed
value, which amount is less than the otherwise permitted retirement tax per Revenue and
Taxation Code Section 96.31(a)(4) of $0.04930 per $100 of assessed value. For Fiscal Year
2015/2016, the most recent year available, the levied retirement tax of $0.01500 per $100
assessed value generated $5,726,270.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington
Beach that a retirement property tax levy of Zero and 0.015001100th Dollars ($0.01500) per $100
of assessed value shall be levied for employee retirement costs for Fiscal Year 2017/2018.
PASSED AND ADOPTED by the City Council of the C*' of Huritir4gtOn. Beach at a
regular meeting thereof held on the 19th day of June , 2017.
.
ay r
vw (3- 0
REVIEW APPROVED: INITIATED AND APPROVED:
City n e Chief Financial Officer
APPROVED FORM:
Cit ttorney
RLS 6/30/16/16-5335/139429/PD 2
Res. No. 2017-23
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a Regular meeting thereof held on June 19, 2017 by the following vote:
AYES: O'Connell, Posey, Delgleize, Hardy, Brenden
NOES: Semeta, Peterson
ABSENT: None
RECUSE: None
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
ORDINANCE NO. 3954
AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH
AMENDING THE HUNTINGTON BEACH MUNICIPAL CODE BY
ADDING CHAPTER 3.07 RELATING TO CAPPING
THE RETIREMENT PROPERTY TAX AT
FISCAL YEAR 2012/13 RATES
The City Council of the City of Huntington Beach does hereby ordain as follows:
SECTION 1. The Huntington Beach Municipal Code is hereby amended by adding new
Chapter 3.07 thereto, to read as follows:
3.07 Retirement Tax Cap. The tax sufficient to meet all obligations of the City for the
retirement system in which the City participates, due and unpaid or to become due during the
ensuing fiscal year as provided in Huntington Beach Charter Section 607 (b) 2, shall be set at the
rate adopted for Fiscal Year 2012/13, which is $0.01500 per $100 of assessed valuation.
SECTION 2. In the event this ordinance is held invalid by a court of competent
jurisdiction, the tax shall automatically be reinstated as it existed prior to adoption of this
ordinance.
SECTION 3. This ordinance shall become effective 30 days after its adoption.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 20th day of Aijgiist 2012.
Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk City Attorney My— 7,10-h
INITIAT VIEWED AND APPROVED:
ty anager
12-3 407/8 1 68 7
ATTA HB -1-5g_NT 2 Item 10. - 5
Ord. No. 3954
STATE OF CALIFORNIA )
COUNTY OF ORANGE } ss:
CITY OF HUNTINGTON BEACH }
I, JOAN L. FLYNN, the duly elected, qualified City Clerk of the City of
Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby
certify that the whole number of members of the City Council of the City of Huntington
Beach is seven: that the foregoing ordinance was read to said City Council at a regular
meeting thereof held on July 16, 2012, and was again read to said City Council at a
regular meeting thereof held on August 20, 2012, and was passed and adopted by the
affirmative vote of at least a majority of all the members of said City Council.
AYES: Shaw, Carchio, Bohr, Boardman
NOES: Harper, Hansen
ABSENT: Dwyer
I
ABSTAIN: None
1,.loan L.Flynn,CITY CLERK of the City of Huntington
Beach and ex-officio Clerk of the City Council,do hereby
certify that a synopsis of this ordinance has been
published in the Huntington Beach Fountain Valley
Independent on August 30.2012.
In accordance with the City Charter of said City
Joan L. Flynn,City Clerk Cit Jerk and ex-officio C rk
senior Deputy City Clerk of the City Council of the City
of Huntington Beach, California
Item 10. - 6 ATTA H B -1 60-NT 2