HomeMy WebLinkAbout04/12/2005 - Study SessionCITY OF NEWPORT BEACH
City Council Minutes
Study Session
April 12, 2005 - 4:00 p.m.
ROLL CALL
Present: Rosansky, Webb, Ridgeway, Daigle, Nichols (arrived at 4:05 p.m.), Mayor
Bromberg
Absent: Heffernan (excused)
CURRENT BUSINESS
1. CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR - None.
2. JUNIOR LIFEGUARD PROGRAM REPORT.
City Manager Bludau reported that this item is being discussed because the
Junior Lifeguard Program was closed to non - residents about a month ago since
there were 1,207 Newport Beach participants in the program.
Lifeguard Captain Boyer utilized a PowerPoint presentation and displayed a
photo from 1984 when there were 50 participants and from 2004 when there were
1,200 participants. She reported that, from the 1984 class, ten people are
currently ocean lifeguards, one is a fireman, and one is a paramedic for the City.
She indicated that the Junior Lifeguard Program is an eight week, Monday to
Thursday summer program; the morning session is from 9 am to noon and the
afternoon session is from 1 pm to 4 pm; they meet at the south side of the Balboa
Pier at the triple -wide trailer; participants are 9 to 15 years old; they learn about
ocean safety; and all the instructors are Newport Beach ocean lifeguards who have
at least two years of tower lifeguard experience and passed an interview and
background check. She indicated that many of the instructors are college
students, teachers, and principals /vice principals. She believed that their program
is so successful because safety is their 41, #2, and #3 priorities to have a quality
program. She reviewed the yearly calendar and reported that the participants are
required to pass a swim test every year which consists of swimming 100 yards in a
pool within a certain time depending on their age and treading in the pool for
three minutes. She noted that the participants have seven test dates in which
they could pass the test and there are 35 to 38 lifeguards on duty to make sure the
testing is safe.
Captain Boyer explained that, once someone passes the test, the registration
process is explained orally and provided in writing at the swim test. She reported
that registration for City residents lasts two weeks prior to open enrollment to
non - residents, and noted that this policy was set by Council in 1999. She
indicated that they verify three forms of residency identification in order to
register. She noted that no P -O. boxes or business addresses are accepted, only a
parent or guardian can register for the child, and residency is considered where
the participant lives. She reported that, after open registration, there is one week
for non- resident enrollment if there is space available. She stated that payment is
required in full at the time of registration and they also select their uniform.
Captain Boyer reported that from 1984 to 1997, the program grew from 50 to
1,000 participants; and, from 1998 to 2005, the program was expanded to have
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1,200 participants. She noted that the number of kids passing the swim test has
been consistently around 1,300, but 1,523 kids passed the test this year. She
reported that the program costs $495 for residents and $575 for non - residents.
She stated that, in 2003, there were 216 open enrollment spaces available and, in
2004, there were 185 spaces; however, in 2005, there were no spaces available.
Captain Boyer reported that the program this year is full with 1,207 participants
at the completion of Newport Beach registration; every resident that registered on
time is currently enrolled in the 2005 program; and having a maximum number
for participation is for the safety of the junior lifeguards. She pointed out that,
since there are very few drop -outs, they decided not to have a waiting list and
cancelled open enrollment due to lack of space.
Captain Boyer reviewed questions and answers that have been brought up
recently. She indicated that they could conduct the 2005 program for the 1,200
Newport Beach participants as planned which maintains the safety and quality of
the program or they could add the 100 to 200 non - resident participants; however,
she believed there would be safety and quality concerns, they would not be able to
get the same uniforms for them prior to the start of the program, additional staff
and equipment would be needed, and this affects beach operations.
Captain Boyer indicated that options for the future of the Junior Lifeguard
Program include remaining the same; privatizing, but this is not recommended;
adding space short term, but reiterated the safety and quality concerns; or adding
satellite locations which would maintain the safety and quality of the program.
She stated that programs could be located at the Balboa Pier, Newport Pier, and
either Corona del Mar or Crystal Cove. She believed that this could initially
accommodate about 1,600 participants with room for growth at every location.
She pointed out that a satellite program would create additional expenses, require
personnel changes, and most likely increase program fees to offset the new costs.
Captain Boyer displayed photos of children participating in the program and of
the 2004 Monster Mile Event. She reported that the summer culmination activity
is the junior lifeguard graduation where all 1,200 participants are honored for
their accomplishments.
In response to Council questions, Chief Riley confirmed that any fee -based
program is designed to offset costs and that the law states that they cannot make
any money from fee -based programs. Captain Boyer indicated that they cannot
let someone register if they only have one or two proof of residency forms since
they require three. She stated that, if they're missing proof of residency, they
generally leave and return with the necessary proof. Chief Riley reported that the
triple -wide trailer is not in great shape, is a rental trailer, and will probably need
to be replaced soon, but the space adequately serves their needs. He noted that all
the instructors and 1,200 kids use the trailer and the equipment is stored there.
He pointed out that they will need to fill more Junior Lifeguard Instructor spots
this year than they have in the past and also evaluate what the impacts of
changing the program would be on the quality of instructors and on beach
operations. He reported that they want to look at this year's program to get an
idea about whether the program can or cannot be expanded, and possibly come
back in October with a recommendation. Chief Riley stated that, if they put a
trailer at Newport Pier, it would be a smaller trailer to accommodate equipment
and small offices, and noted that they couldn't use the Lifeguard Headquarters
because it would impact beach operations. He indicated that they could possibly
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use Newport Elementary School instead of the pier, but emphasized that they're
just formulating ideas at this time. Chief Riley stated that they thought they had
a little time before this type of situation happened, noting that the non - residency
enrollment went from 185 to 0 in one year. He indicated that they may be able to
increase the size of the program if they increase the size of the afternoon session;
however, some of the morning session instructors are assigned ancillary duties in
the afternoon, like working on the Monster Mile, the regional and national junior
guard competition, graduation, etc.
In response to Mayor Pro Tern Webb's questions, Captain Boyer believed that each
of the three satellite locations would grow into their own identity, even though
there would still be one Junior Lifeguard Program. She explained that graduation
and social activities would be at one location for everyone, but events like the
Monster Mile would only be for the Balboa Pier participants due to safety and the
other locations would create their own events. Regarding the beach in front of the
elementary school, Chief Riley indicated that it's steep and there are onshore
breaks from there to Balboa Pier, so they're already learning in that environment.
Jamie Arnold stated that she lives in Costa Mesa and that her granddaughter and
a lot of her friends are very disappointed not to be availed of the program this
year. She asked if the annexation of Newport Coast and Santa Ana Heights have
made an impact on the number of children in the program.
Council Member Ridgeway stated that he agrees with evaluating the program
after this summer. He indicated that the City cannot afford to have any type of
accident or safety issue if it tried to quickly modify the program for this summer.
Council Member Rosansky agreed that safety is of paramount importance. He
believed that the program should be expanded next year because the City has a
valuable resource and should share it with children from neighboring cities.
Mayor Bromberg stated that this was a good presentation and that he appreciated
the questions and answers because those are the questions that people ask
Council. He noted that Newport Coast and Santa Ana Heights had already been
annexed last year so they weren't factors. He stated that he knows a lot of Costa
Mesa families whose kids weren't let into the program, even though they've
participated for years.
Council Member Ridgeway stated that he also knows many Costa Mesa parents
and it is very difficult for the kids, especially if they're in the final years of the
program. He indicated that he hopes the City can try to accommodate them, but
not at the expense of safety and quality. He stated that his preference is to
pursue using Newport Elementary School rather than the Newport Pier.
In response to Council Member Nichols' question, Captain Boyer stated that there
would probably be about 300 more participants this year and that their program
traditionally, consists of half new and half returning participants.
DESIGN OF SANTA ANA HEIGHTS FIRE STATION/ TRAINING TOWER.
Chief Riley reported that the fire station will be. located in Santa Ana Heights on
the corner of Mesa and Acacia Drive. He stated that they've been working with
RRM Design Group to look at the needs and design considerations, and have also
been working with the Santa Ana Heights Project Area Committee (PAC) and its
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Design Development Subcommittee. He noted that the PAC gave its unanimous
support of the project and design of the fire station. In designing the fire station,
Chief Riley indicated that they requested that RRM use an acre of the land for the
fire station and an acre for the training tower; build a fire station that can
accommodate two companies and up to eight people; make the building last 50
years; be sensitive to the environment and water quality; and reflect the pride of
the community. He stated that RRM is in San Juan Capistrano and that in
attendance is Project Architect Don Iler and Project Manager Rubio Medina.
Don Iler, RRM Design Group, utilized a PowerPoint presentation and displayed
the site plan. He noted that there is a grade difference along Mesa Drive to about
halfway into Acacia, so they adjusted the access points further along Acacia. He
stated that the burn tower will be tucked in the corner of the lot and pointed out
where public parking and the training classroom /community room are located on
the site. He stated that they didn't want to put a public entrance on Mesa Drive
because of the grade differences and the speed, traffic, and visibility issues. Chief
Riley added that the City traffic engineer discouraged putting even limited access
on Mesa Drive because of the traffic patterns and speed, the visibility around that
curb, and the grade separation. Mr. Iler reported that the fire station will consist
of a community /training entry with restrooms; training classroom /community
room with storage; apparatus bays; a storage room, turnout room, and
decontamination room; crew restrooms, lockers, and dormitories; a
telecommunications room; janitor room; workout room; kitchen, dining, and day
area; electrical room; and a patio. He indicated that the entire fire station is about
11,300 square feet, the training wing is about 3,500 square feet, and the classroom
is about 1,200 square feet.
Mr. Iler displayed a burn/drill tower from Rancho Santa Fe that is a pre -
engineered, pre- designed building. He indicated that a separate contractor will be
responsible for erecting the tower.
Mr. Iler noted that the roots of Santa Ana Heights is equestrian. He displayed the
exterior elevations and artist rendering, and indicated that they're also thinking
about putting up split rail fences, a monument sign, and entry elements off the
patio area. He indicated that each fire station should look different than any
other station and emphasized that designing fire stations is all RRM does. He
reported that the fire station is an "essential facility" which means that it has to
stand up in earthquakes when other buildings don't. He indicated that they
picked materials that will last, noting that the metal roof will last 75 years
without maintenance and the manufactured cultured stone will need no
maintenance.
Chief Riley believed that, after design approval, the construction documents will
be completed in October 2005, they will generate an RFP and award the contract
by the end of 2005, and the fire station will be opened in December 2006. He
reported that the fire station will cost about $3,208,000; the fire station site
improvements will be about $1 million; the furnishings and fixtures will be about
$136,000; the training facility construction will be about $635,000; and the
training site improvements will be about $853,000. He stated that the total
project will cost about $5,995,000. He noted that the County Redevelopment
Agency has committed $1.6 million, the current budget has $635,000 set aside for
training delivery, and there is $350,000 in bond proceeds that are being shared
with Santa Ana College. He stated that everything beyond this the City would
pay for until it receives the rest of the redevelopment agency money from the
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In response to Council Member Ridgeway's questions, City 'Manager Bludau
indicated that the fire station is a qualified project for redevelopment agency
funding regardless if the City annexes the rest of the redevelopment area. He
confirmed that it is the City's intent to get control of the redevelopment agency.
Chief Riley indicated that they have a legal opinion that allows the City to repay
itself once it receives redevelopment money.
Council Member Ridgeway noted that this project is a benefit and amenity to that
community that they've been lacking. City Manager Bludau noted that the fire
station and the YMCA are the two major redevelopment projects that the
community has been looking forward to for a long time. He stated that there is
quite a bit of money that is unallocated in the redevelopment agency which will
keep coming in for a number of years. Council Member Daigle stated that she
appreciated the outreach done with the community and that there is a high level
of community acceptance for this project. She indicated that Santa Ana Heights
recognizes that the City has staff that has the ability to implement projects.
Regarding the YMCA, she reported that there is a County- overlay in terms of
funding. She added that Supervisor Silva has told the Board of Supervisors that
he envisions that the YMCA will be a 50,000 square foot regional recreation center
with aquatics components because most of the parks and facilities are going into
South County. She noted that, since the contract was authorized, construction
costs have risen and Supervisor Silva is willing to obtain more funding for the
City. She clarified that the redevelopment agency would develop and fund the
project, but the City would assume ownership of the land and the community
center.
In response to Council Member Rosansky's questions, Chief Riley stated that a
majority of the Fire Department classroom training will occur during the day, so
community access will be available in the evenings. He indicated that the public
can call and make arrangements to use the room. He indicated that the number
of people attending will dictate the type of access controls they will have. He
reported that the meeting room can hold 85 people in theater -style seating and 35
in classroom seating. He noted that the Council Chambers conference room, the
Friends Room at the Central Library, and the Fire Department conference room
are always busy and undersized.
Mayor Pro Tern Webb asked if it was possible to get more redevelopment money
from the County to fund more of the project now rather than later. City Manager
Bludau stated that Supervisor Silva is reluctant to go back to the Board because
there are some members who don't hold redevelopment agencies in high regard.
Further, Supervisor Silva is worried that opening this issue and discussions about
the agreements that are already in place with the City could create ramifications.
He indicated that the County understands that construction costs have gone up
considerably. He added that the sphere issues related to the redevelopment
agency might be resolved by the end of this calendar year. Council Member
Ridgeway asked if things would go easier if the remainder of Santa Ana Heights
were annexed. City Manager Bludau stated that annexation alone does not take
the redevelopment agency from the County, but a transfer is needed and then the
City would become the redevelopment agency.
City Manager Bludau confirmed for Council Member Nichols that the fire station
and YMCA are supposed to serve the entire Santa Ana Heights community.
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Council Member Daigle reiterated that Supervisor Silva wants the YMCA to be a
regional recreation center and the funding will be in excess of $15 million. She
added that the City will assume ownership of the land and the improvements.
4. BUSINESS LICENSE DATA GATHERING.
Revenue Manager Everroad utilized a PowerPoint presentation and reported that
the Revenue Division maintains a number of databases that have information that
is confidential either in its entirety or in part. He reported that Revenue and
Taxation Code §7056, 19542, and 19552 require limited access to municipality
business tax officials. He indicated that only he and two license inspectors have
access to this data in the City and added that they are required to execute and
maintain confidentiality statements that basically state that the data is only to be
used in the performance of their official duties, there will be no disclosure or
discussion of confidential information with anyone other than those authorized to
access the data, the data must be maintained only in approved work locations, and
FTB files are to be destroyed annually. He stated that there are safeguard audits
performed by the FTB Disclosure Office to ensure compliance and noted that the
City assisted the Disclosure Office in developing the questionnaire for California
cities that access FTB data. He added that unauthorized inspection or disclosure
of FTB data is a felony.
Revenue Manager Everroad stated that cities have authorization to obtain FTB
data exclusively for city tax purposes (Revenue and Taxation Code §19551.1) and
Newport Beach is 1 of 89 cities currently using this data for business tax
compliance purposes. Further. State law limits what information FTB can
provide cities about taxpayers who have reported business income or expenses
using a Newport Beach address. He clarified that the information includes the
taxpayer's name, address, identification number, and principal business activity
code. He reported that the program is new and only 2001 and 2003 tax years are
provided to municipalities.
Revenue Manager Everroad indicated that the City received about 18,000 records
in the 2001 data from FTB and discovered that about half of those were not in the
City's business tax record. He noted that there were 19,000 records in the 2003
data, but the City only needed to contact about 6,000 accounts regarding business
license requirements. He reported that, of the notices mailed, 39% were
dismissed, 20% secured the required business license, 21% responded but are
pending, and 20% needed to be noticed. He reviewed Newport Beach Municipal
Code (NBMC) §5.04.040 and Business and Professions Code §16300. He clarified
that, for a commercially -based business that maintains a seller's permit, the
business license base rate is $128 plus a $6 per employee charge.
Revenue Manager Everroad stated that the City taxes almost all businesses and
regulates a few of them, i.e. massage establishments. He indicated that the
business tax is not a regulatory exercise and is solely for the purpose of generating
revenue. He stated that the State, not the City, regulates real estate businesses
and requires that there be a written agreement that explains the nature of the
relationship between the broker and salespeople operating under the broker's
license. He clarified that, if the real estate broker represents to the City that the
individual salespeople are employees, then the broker is taxed per employee. He
stated that, when the broker files a return with the FTB representing that they
are a business based in Newport 'Beach and they represented that they don't have
any employees, the City's assumption is that the salesperson is a separate
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business from the broker and, therefore, subject to a business license.
In response to Council Member Nichols' questions, Revenue Manager Everroad
indicated that the two License Inspectors act on 1.6,000 leads every year. He
stated that if a company, like Avon, identified individuals who are distributing
and taking orders as an employee, the City would apply the $6 per employee
charge. However, if the individual distributor represented to the FTB or State
Board of Equalization that they're an individual seller, the City would apply the
business license to them. He reported that they are very rarely made aware of
those kinds of individuals. Council Member Nichols asked how the City handles
an employee that's treated as a contractor. Revenue Manager Everroad stated
that, if the employer compensates the individual as a W -2 employee, the employee
isn't subject to the business tax. However, if the employer elects to compensate
the individual on a 1099, represents to the FTB and the Internal Revenue Service
(IRS) that the person isn't an employee, and the employee files with the IRS or
FTB as a business entity, then the employee is subject to the license requirement.
Revenue Manager Everroad reviewed the slide of the appeals process and noted
that there is no charge for an appeals hearing. He stated that it's through this
process that they gather additional information to determine if it's a business, the
nature of the business, and whether it's significant.
Council Member Ridgeway asked what happens when a brokerage company
conducts trades with his children's trust and he files a tax return for his children.
He asked if the City will see him as a business since he's overseeing the
management of those investment funds that he actually delegates to a third party.
Revenue Manager Everroad stated that they have discovered that people who
have created trusts or some other investment account were filing partnership
returns with the FTB. He indicated that the only business aspect of the trusts is
the management of the accounts and the City is not subjecting those to business
license requirements.
Council '.Member Ridgeway noted that every LLC that forms in California has a
presumption that they're a business in the City. Revenue Manager Everroad
clarified that LLC information comes from the Secretary of State. However, if the
LLC reports business income or expenses to the FTB, they will be listed on the
FTB data. He stated that reporting business income or expenses is better
evidence of business conduct than if they were only maintaining the LLC.
Mayor Pro Tem Webb asked how investment clubs are handled. Revenue
Manager Everroad indicated that they have found that there is oftentimes
misfiling of tax returns with the FTB. However, when the investment club
consciously files a tax return with the FTB as an investment partnership instead
of an investment club, that becomes one of the distinguishing characteristics.
Council Member Daigle asked about the safeguards the City has with regard to
people's identities on the internet. Revenue Manager Everroad indicated that
they collect 29 fields of data in the business tax registration process that are
confidential. He stated that the business information on the internet only
contains the business license name, address, mailing address, type of business,
start date, etc. that are deemed non - confidential by the NBMC.
Council Member Nichols stated that his kids work for him, have their own
insurance, and make business filings because they received money from him. He
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asked if his kids are now required to have a business license. Revenue Manager
Everroad clarified that the manner in which the kids report the income and he
reports expenses may dictate how the FTB identifies whether that was a business
or an employee wage that was earned. He likened this to people paying children
on a 1099 for babysitting and then the babysitter files a tax return reporting that
business income. He indicated that the City won't impose a business license on
the babysitter that has incidental business conduct in the City. However, if the
babysitter filed a fictitious business name statement, becomes a corporation with
the Secretary of State, has a seller's permit, is a member of the Chamber of
Commerce, registers with the utility billing system as a business entity, and files
an FTB statement as a business entity, the babysitter will be higher on the
investigation list. He emphasized that the City does not act on a single field of
information, but takes the 11,000 annual tax filings and compiles and overlays all
the information they receive from the FTB, sales tax registration, the State Board
of Equalization, the Department of Corporations, and information they gather in
the field and from commercial lessees.
Council Member Ridgeway asked what the recommendation is for the people
writing letters to Council. Revenue Manager Everroad stated that the simplest
thing to do is to have them contact him. He indicated that there's not enough
awareness about the appeals and review process, and that the ultimate
determination is not made by a City employee. He reiterated that about 80% of
these people will not be held subject to the business license requirement, but they
need to bear with the City because there's a lot of data to process. He indicated
that Council will probably get fewer calls next year because they will be better at
identifying the targets.
PUBLIC COMMENTS - None.
ADJOURNMENT - at 6:00 p.m. to Closed Session to conference with legal
counsel regarding litigation and to conference with the City's real property
negotiator.
The agenda for the Study Session was posted on April 6, 2005, at 1:55 p.m. on the
City Hall Bulletin Board located outside of the City of Newport Beach
Administration Building.
Recording Secretary
City Clerk
M y or
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