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HomeMy WebLinkAboutCC Min 1994-12-12 I I 1 Approved: Attest: 11-28-94 I 12-12-94 1h lerk and ex-offJ. of Seal Beach of the ,c;I~~"."/ a or 9'.'~ .. Seal Beach, California December 12, 1994 -. The reqular adjourned city council meetinq scheduled for 6:30 p.m. this date was cancelled due to a lack of items requirinq Closed Session discussion. '/~I " 1/ I Seal Beach, California December 12, 1994 f The City Council of the City of Seal Beach met in reqular session at 7:20 p.m. with Mayor Brown callinq the meetinq to order with the Salute to the Flaq. ROLL CALL Present: Absent: Mayor Brown Councilmembers Doane, Hast~nqs, Laszlo Councilmember Forsythe Laszlo moved, second by Doane, to excuse the absence of Councilmember Forsythe from this meetinq. AYES: NOES: ABSENT: Brown, Doane, Hastinqs, Laszlo None Forsythe Motion carried Also present: Mr. Bankston, city Manaqer Mr. Barrow, city Attorney Mr. Whittenberq, Director of Development Services Mrs. Yeo, city Clerk APPROVAL OF AGENDA Councilman Laszlo requested that Item "K" be removed from the Consent Calendar, and Councilman Doane requested Item "H" removed. Hastinqs moved, second by Laszlo, to approve the aqenda as presented, except items "H" and "K", to be considered separately. 12-12-94 AYES: NOES: ABSENT: Brown, Doane, Hastings, Laszlo None Forsythe Motion carried ORAL COMMUNICATIONS Mayor Brown declared Oral Communications open. Mr. John Stamps, 610 Coastline Drive, voiced a complaint regarding on-going problems as a result of persons feeding wild birds, including pigeons, on the pier. He objected also to persons plugging the newly installed drinking fountain to accommodate bird bathing. Mr. Stamps called for enforcement of the City'S ordinance that prohibits the feeding of wild birds and suggested that signs be posted on the pier to allow for subsequent issuance of citations. Councilman Doane offered that as an ornithologist to some degree, pigeons are not indigenous to beach areas, when the food is gone the pigeons will leave. The Council accepted the suggestion of Mr. Stamps with appreciation, and the City Manager offered that authorization for siqnage could be placed on a future agenda. Mr. Bruce Stark, Seal Beach, made reference to the Orange County fin~ncial situation, recalled a financial report of the City projecting a General Fund balance of $899,000 at the close of the 1991 fiscal year and an anticipated decline thereof, the report claiming the City to be in the midst of a grave financial crisis, after which the city raised the utility users tax. Mr. Stark questioned the source of City monies invested in the County fund as well as when the city hired a new finance director, which he claimed to have just learned of. He recalled a suggestion of last spring that a citizens committee be appointed to review the budget and fiscal condition of the City, which he said was not done, and charged that the Council and staff have speculated with City monies. Mayor Brown declared a recess at 7:31 p.m. The Council reconvened at 7:34 p.m. with Mayor Brown calling th~ meeting to order. Mr. Stark continued, asked how the Councilor the Board of Supervisors can now tell the citizens that they speculated with their money, a commodity venture of the'County Treasurer that was under investigation, of which there were warnings, and suggested that the City council and City Manager follow the lead of the County Treasurer and resign. Ms. Reva Olson, Seal Beach, said it was likely a surprise to many that Orange County would be bankrupt, yet not such a surprise to those looking for campaign reform. She referred to a news article that reported the County's investment firm earned about $80 million from fees and commissions, that firm having lobbied for years for State legislation that would make such investments possible, that firm also having contributed generously to political campaigns. She said the people are the government, they need to be involved as the system is dysfunctional, and lobbyists and their attorneys are writing the laws. There being no further comments, Mayor Brown declared Oral Communications closed. COUNCIL ITEMS APPOINTMENTS - REVIEW COMMITTEE - CAMPAIGN REFORM No further appointmen~s were made to the Ad Hoc Committee for Review of Campaign Reform Ordinance Number 1381. The Council requested that anyone interested in serving on this Committee contact the Mayor or their Council representative for future appointment. APPOINTMENT - ORANGE COUNTY VECTOR CONTROL DISTRICT Mayor Brown, with concurrence of the Council, appointed Councilman Laszlo as the City's representative to the Orange I I I I I I 12-12-94 County Vector Control District Board of Trustees for the term of two years commencing January, 1995. CONSENT CALENDAR - ITEMS "c" thru "L" Doane moved, second by Hastings, to approve the recommended action for items on the Consent Calendar as presented, except Items nHn and "K", removed for separate consideration. C. Approved the waiver of reading in full of all ordinances and resolutions and that consent to the waiver of reading shall be deemed to be given by all Councilmembers unless specific request is made at that time for the reading of such ordinance or resolution. D. Approved the minutes of the November 28, 1994 reqular meeting. E. Approved regular demands numbered 7410 through 7544 in the amount of $507,851.79, payroll demands numbered 9190 through 9668 in the amount of $501,389.16, and authorized warrants to be drawn on the Treasury for same. Approved second reading and adoption of Ordinance Number 1392 entitled '!AN ORDINANCE OF THE CITY OF SEAL BEACH AMENDING THE REDEVELOPMENT PLAN,. AS AMENDED, FOR THE RIVERFRONT REDEVELOPMENT PROJECT, AS AMENDED, OF THE REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH. By unanimous consent, full reading of Ordinance Number 1392 was waived. G. Approved second reading and adoption of Ordinance Number 1393 entitled '!AN ORDINANCE OF THE CITY OF SEAL BEACH AMENDING TH~ REDEVELOPMENT PLAN , FOR THE SURFSIDE REDEVELOPMENT PROJECT OF THE REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH." By unanimous consent, full reading of Ordinance Number 1393 was waived. F. I. Adopted Resolution Number 4354 entitled "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL BEACH ESTABLISHING HOURLY WAGES FOR PART-TIME EMPLOYEES AND REPEALING ON THE EFFECTIVE DATES SPECIFIED, ALL RESOLUTIONS IN CONFLICT THEREWITH." By unanimous consent, full reading of Resolution Number 4354 was waived. ~ J. Adopted Resolution Number 4355 entitled "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL BEACH, AUTHORIZING A JOINT USED OIL RECYCLING BLOCK GRANT APPLICATION." By unanimous consent, full reading.of Resolution Number 4355 was waived. . L. Adopted Resolution Number 4356 entitled "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL BEACH ADOPTING A CONFLICT OF INTEREST CO~E WHICH INCORPORATES BY REFERENCE THE STANDARD CONFLlcr OF INTEREST CODE PREPARED BY THE FAIR POLITICAL PRACTICES COMMISSION AND REPEALING RESOLUTION NUMBER 4206." By unanimous 12-12-94 consent, full reading of Resolution Number 4356 was waived. AYES: NOES: ABSENT: Brown, Doane, Hastings, Laszlo None Forsythe Motion carried ITEMS REMOVED FROM THE CONSENT CALENDAR I ITEM "H" - VACANCY - SEAL BEACH ADMINISTRATION BUILDING AUTHORITY Councilman Doane acknowledged the passing of Mr. Alfred Gray, who served as the District Five representative to the Seal Beach Administration Building Authority, also recognized the efforts of Mr. Gray on behalf of his mutual and the Golden Rain Foundation, as well as services to many Leisure World residents. Hastings moved, second by Laszlo, to declare the District Five position on the Building Authority to be vacant for the unexpired term ending July, 1996. AYES: NOES: ABSENT: Brown, Doane, Hastings, Laszlo None Forsythe Motion carried ITEM "K" - COUNTY STAFF RESPONSE - DRAFT ENVIRONMENTAL IMPACT REPORT - PROPOSED BOLSA CHICA PROJECT Councilmember Hastings expressed objection to the proposed Bolsa Chica Project and the ultimate impacts to be realized from increased traffic on Pacific Coast Highway and Seal Beach Boulevard, impact on the wetlands, potential costs to this city for street improvements, etc. She noted that this project I' recently received approval of the Orange County Planning Commission and will be considered by the Board of Supervisors on December 14th. Councilman Laszlo pointed out that the Response reflects this City's opposition to the impacts of the project and inadequacy of the Environmental Impact Report. Doane moved, second by Hastings, to receive and file the staff report and instructed that it be forwarded to the Environmental Quality Control Board, Archaeological Advisory Committee, and the Planning Commission for information purposes. AYES: NOES: ABSENT: Brown, Doane, Hastings, Laszlo None Forsythe Motion carried ORANGE COUNTY FISCAL ISSUES I MULTI-CITY AGREEMENT The city Manager presented an update relating to the recent financial losses of the County of Orange as a result of the investment program of the County Treasurer. The Manager reported that the City of Seal Beach has $2 million on deposit in the County pool for the purpose of investment, the $2 million a portion of the $1 billion on deposit from cities, that about twenty-seven percent of the total $8 billion from all agencies including school districts and special districts. The $2 million was placed on deposit with the condition of a stated withdrawal, and on November 18th, about three weeks in advance I of any knowledge of the County financial crisis, the Finance Director made a reque~t for the transfer of $1.5 million back to the City, such transfers requiring a four week advance request, the transfer was to occur on December 12th, and through conversation with County staff this date it is understood that the consultant acting in the capacity of interim County Treasurer is reviewing the City's request and will take into consideration the fact that the request was placed well in advance of the crisis and the draw date was consistent with the requirements of the plan. He noted that the City had been advised prior to the declaration of bankruptcy that the transfer I I 1 12-12-94 would occur, however additional information requested and forwarded to the County this date. is being reviewed, and it is likely the transfer may still occur. The Manager reported that the rating firms assigned a 'credit watch' to the city and Agency bonds, requested information has been forwarded to those firms, and as of this date it is understood that the Seal Beach 'credit watch' will likely be lifted by the end of the week. Making reference to the news article listing upcoming bond payments of various agencies, he noted the city's water bond payment was included however advised that that $44,000 payment is already on deposit, the Bank of America is the trustee for the Agency bonds, those monies are quaranteed and will be available for that payment, funds are also available for the TRAM payback at mid-year. The City Manager explained that the Orange County pool had a paper value of $20 billion based upon deposits of $8 billion, the investment programs in which the former Treasurer became involved were basically two, those programs are now known however had never been shown in previous reports, one being reverse repurchase agreements, which the Seal Beach investment policy does not allow, the other being derivatives, an extremely complex' investment program that includes commodities, too com~lex for County treasury services to adequately monitor. He said the loss to the pool and the potential loss to the city can not be specifically defined and will not be for some time, however added that one encouraging sign is that the bond holders are not disposing of the bonds even at eighty-five cents on the dollar, and noted that the loss that occurred initially, at the estimate of $1.5 billion, was the result of CS First Boston. The Manager explained that basically the procedure was. that the County Treasurer would use the $8 billion in deposits, including the city's $2 million, to acquire bonds, the bonds were used as collateral by the Treasurer's office to borrow money, that money then used to acquire additional bonds and/or other investments. He mentioned that traditionally bonds are a good investment, when interest rates are low the bond market yield is high, and conversely when interest rates are high the bond market drops, therefore in the case of Orange County, during the past year with six interest rate increases by the Federal Reserve, the interest the County was paying on the mon~es borrowed exceeded the interest yield of the bonds that the borrowed monies had acquired, secondly, bonds generally have a longer term maturity as compared to shorter term interest, thus the loan payments were accumulating faster, the interest was going up to reflect the market interest increases, and the bonds were declining in their yield value. He reported that the initial estimate of loss was approximately $1.5 billion, that largely stemming from the action of CS First Boston that was holding $1.2 billion in bonds as collateral for loans, which they sold at an extreme discount which, in essence, created the loss, whereby if the bonds had been held, and not sold, the value of the bonds would remain at their value at the time of purchase. He noted that the Boston sale occurred prior to the County's Chapter Nine declaration of bankruptcy, however within two hours of the notice of the sale by CS First Boston the County declared the bankruptcy, filing both as a county and the investment pool, the issue of the pool posing legal questions as to whether or not it is a separate entity and that will likely be resolv.nd only with a court ,determination. He reported that since the filing of the Chapter Nine bankruptcy there have been nine institutions, security holders, lender firms, etc. that have also sold the bonds, the County has since filed legal action against them, once that action was filed the sale has ceased by other holders, the question now is whether or not those collaterals could be sold out from under the declaration of Chapter Nine or whether they are protected, and if a court determines that they could not be sold, then the sellers of those securities will be obligated to pay back to the 12-12-94 County the value of the bonds, and in that case there would then be no loss other than that resulting from the Boston action. The Manager said that if the $1.5 billion holds as the loss, which is questionable at this point, the County itself may find it necessary to liquidate in order to meet cash flow obligations. . A loss of $1.5 billion would basically be an eight percent loss to the full value of the fund, to the City's $2 I million that would be a $160,000 loss, if there is acceptance, which there should be, of the city's $1.5 million transfer request which preceded the declaration of bankruptcy, then the City's loss would be eight percent of the remaining $500,000, again assuming the liquidation of pool assets by the County. He stated that short term the City will have no inability to meet its current obligations, at staff level certain budget restraints have been imposed, all purchase orders require City Manager review, the cash flow has been recalculated and it appears there will be no difficulty in meeting all bond, vendor, payroll and other account obligations, with regard to the next budget year it is unknown what to anticipate in relation to a TRAN rating and whether the interest would continue to make it reasonable and/or purposeful to secure a TRAN, this likely not known until spring. He noted that the investments placed with the County are less than thirty percent of the City's total investments, most of which is with the state, and state law as it applies to cities, yet not to counties, requires a monthly report for information of the Council and the public of the city's investments, the amount invested, the vehicles in which the funds are invested, and the yield, those reports being an agendized item in this city, and in turn, although the County Treasurer is required to prepare an annual report it is the responsibility of the Board of Supervisors to assure that such report is prepared and prese~ted, however it has now been found I' that no such report was prepared for two, possibly three, years. The Manager explained that when the City'S investment was made to the County pool a question was posed to the Treasurer's office as to the investment vehicles that the commingled deposits of the municipalities were being placed, the City was advised that it was in bonds,. the City was not advised of any reverse purchase agreement or derivative activity, and as it has now become known it a~pears that no one knew, other than possibly a few of the Treasurer's staff, Merrill Lynch, and those involved in packaging the investments. The City Manager stated that the $2 million invested by the City was the proceeds of the TRAN, the TRAN used for cash flow purposes during the first four to five months of the year pending the distribution of property tax proceeds and other revenues, to which he explained that monthly expenditures are calculated as one twelfth of the budget however revenues are received at varying times, the TRAN is then repaid from revenues at the end of the fiscal year. He again confirmed that the remainder, or about two-thirds, of the City'S funds are invested through the State Treasury investment pool, the one-third was placed in the County pool because of the interest yield which adds revenue to the Operations Fund which pays for city services. The Manager advised that funds are held in banking I institutions for the purpose of payroll and short term operational expenses, there are trust accounts for bond holdings ' and payments, while the bulk of investmenfs are with the State and County pools. He pointed out that the monies that are invested are monies that are unappropriated, undesignated, unallocated reserves, the remainder of monies for investment purposes come from funds that have been set aside or are being accumulated for capital projects, etc. and will not be commenced until some future tim~, therefore are placed in investments, they are not idle dollars. He confirmed that close to $4 million is invested with the State. As to the continued need I I 1 12-12-94 for the increase of utility users tax, the Manager cited as one example the water capital and replacement fund in which there is just a little more than $100,000, the water system in almost every portion of Seal Beach is twenty, thirty or more years of age, to recapitalize and replace water systems, as the need is anticipated, is multi-millions 'of dollars, and the city should not wait until the water mains break to look for repair/replacement monies, rather, those funds should be accumulated and set aside prior to. The Manager confirmed that the majority of reserve funds can not be used for general City operations, as examples Measure M funds, Housing/ Community Development funds, Quimby funds, etc. A suggestion was made that investment be made in federal treasury bills; clarified also that almost all State funds are in federal investment programs. The Manager noted that the State Treasurer's office has requested more detail as to the City's investments and the percentages, reminded that the city's investment policy is presented to the Council for consideration annually, and pointed out that repurchase agreements and other investments in which the County was involved are not allowed by that policy. He offered that a lesson learned is that a commingled pool of deposits needs to be analyzed in greater depth in that the last report from the County did not identify derivatives and repurchase agreements as investments, thus assumed they were not, and recalled that the City of San Jose realized a like experience some ten years ago as a result of repurchase agreement investments, after which the State passed legislation governing local government investment pOlicies, the policy of this City even more conservative than State law allows. He mentioned that this City, as well as all municipalities in California, are experiencing increasing costs to provide services and decreasing revenues to provide same, therefore cities try to maximize, as conservatively as possible, their investments to yield the highest amount of return, at present the State is generating about a one to one and a half percent yield over a federal treasury note. He also pointed out that there is no single vehicle, except Bankers Acceptance, in which this City can invest more than forty percent, therefore has a diversified investment program. The Manager stated that if the County were to liquidate the bonds for cash flow needs, they would go on the market for below value, worst case would likely be around 25 to 30 cents reduction. Noti~g ongoing meetings of city managers, city attorneys, and city treasurers, the Manager requested that Seal Beach become a member of a committee of all cities in Orange County, all having a primary concern to work through the bankruptcy, and explained that under Chapter Nine a committee will be formed to consist of twelve members, the largest depositors/claimants against the fund, Seal Beach will have no voice through that process however could have a voice through a collective effort of all of the cities. He offered that an agreement for such a committee is not as yet in draft form, noted the city manager would act as the representative, the city attorney would be the alternate member, there is no commitment on the part of the city at this time however it is anticipated that the committee will be looking to retain an attorney to represent the cities in the process to assure, as best one can, that the county does not liquidate at a value that is more detrimental to the cities than circumstances now present, also to argu~l for a trustee relationship on the part of the County Treasurer's office to accept deposits, etc. He said at this point the proposal is that each member city would have an obligation against the attorney cost by the same percentage as the city's deposits in the pool, in the case of Seal Beach that would be less than one percent based upon the $2 million deposit. The Manager confirmed that a draft of such agreement will be presented to the Council for consideration upon its completion. 12-12-94 It was the consensus of the Council to proceed in the direction as outline by the City Manager, the aforementioned agreement to be submitted to the Council at a future date. It was pointed out that some cities, agencies, and districts in fact borrowed money to participate to a greater degree in the Orange County pool; the City Manager explained that state law requires school districts and special districts to invest in the County pools administered by the County Treasurer's office; as an example, the County Treasurer is required to be the treasurer for water and sanitation districts unless those agencies specifically provide for their own treasurer. CITY COUNCIL MEETING - DECEMBER 27th The Manager noted the December 26th date of the next regular meeting is a legal holiday in that Christmas falls on Sunday, therefore the meeting would generally be held on the following day, Tuesday, December 27th. It was the consensus of the Council to cancel the December 27th meeting with the understanding that a meeting will be called if deemed necessary prior to the January 9th meeting. COUNCIL REPORTS Councilmember Hastings reintroduced Ms. Elizabeth Stoddard, Director of Administrative Services. Mayor Brown again mentioned that the city's request for transfer of funds held in the Orange County investment pool missed being processed by twenty-four hours before the declaration of bankruptcy. Councilman Laszlo made reference to the development plans that have been submitted t~ the City by the Bixby Ranch Company, to which he said upon reading the Environmental Impact Report he has found that the plans have been changed, on the hotel site they have now included another forty-three thousand square foot office building and there is an intent to give the City the tennis courts. He requested that staff make the councilmembers aware of such information upon it becoming known. He asked that a meeting of the Seal Beach Base Closure Committee be scheduled for the first Wednesday of January, that Commander Steadley of the Naval Weapons Station and his staff, and certain members of the city Councils of Cypress and Los Alamitos be invited to attend. Councilman Laszlo reported that at a recent meeting the Commander had said the Naval Weapons Station will not be closed, yet a prior Base Commander, involved in other closures, has a different closure schedule, and mentioned that interested persons are being invited to attend the meetings in the event a closure is recommended. Mayor Brown relayed a tale of jest that is said to have in fact occurred where a new resident indicated surprise that the Leisure World community would be referred to as "Old Town". Councilmember Hastings commended the recent Christmas gathering with Santa Clause at Heather Park. Members of the Council wished all a Happy Holiday. ORAL COMMUNICATIONS Mayor Brown declared Oral Communications open. Dr. Tony Dahlman, 1724 Crestview Avenue, referred to the annual TRAN issue and questioned why more was borrowed than was needed to be spent, then invested in the Orange County pool, also why legal action is being deferred to recover $1.5 million from the pool, the City having legal precedence at this time as its transfer request was the first. The City Manager responded that more money was not borrowed than was needed, the $2 million was necessary for cash flow, based upon cash projections, which are estimates of expenditures and anticipation of revenues, then as revenues are received they are held separately for the ultimate pay back of the TRAN, and he emphasized that Seal Beach did not borrow money in order to invest in the pool. To the second question, Mayor Brown noted that the County is afforded bankruptcy protection under Chapter Nine, the City will be in I' I I I I I 12-12-94 I 12-27-94 I 1-9-95 line with other agencies and creditors, the City is making every effort possible to obtain the $1.5 million transfer at this time, and the city's position is best served with the position it has taken. The City Manager stated that legal action has not been deferred, and explained that a request for transfer is a four week time frame, the four week period concluded this date, the request is under review by the County at this time, and the City's legal position has not been compromised by actions taken thus far. Ms. Sue Corbin, Seal Beach, indicated that comments made are contrary to what has been reported in an Orange County newspaper, the State Treasurer has called for stricter investment disclosure requirements, policies, etc., also said that the County is experiencing its problems because of greed. She demanded that city staff take responsibility for overseeing the investment fund. There being no further comments, Mayor Brown declared Oral Communications closed. ADJOURNMENT It was the order of the Chair, with consent of the council, to adjourn the meeting at 8:41 p.m. of the Approved, ~~../ ayor rJ Attest: ,. Seal Beach, California December 27, 1994 The Seal Beach city Council regular meeting that was to be held on Tuesday, December 27th, 1994 as a result of the Christmas holiday was cancelled due to lack of quorum pursuant to direction indicated by the City Council. "The December 27th regular meeting was adjourned to Monday, January 9th, 1995 at 6:30 p.m. to meet in Closed Session if deemed necessary. ,:/) / Seal Beach, California January 9, 1995 The City Council of the City of Seal Beach met in regular adjourned session at 6:30 p.m. with Mayor Brown calling the meeting to order.