HomeMy WebLinkAboutcc min 1998/02/10MINUTES OF A REGULAR MEETING OF THE CITY COUNCIL
OF THE CITY OF CHULA VISTA
Tuesday, February 10, 1998
6:32 p.m.
1. ROLL CALL:
PRESENT:
CALL TO ORDER
Council Chambers
Public Services Building
Councilmembers: Moot, Padilla, Rindone, Salas, and
Mayor Norton
ABSENT: Councilmembers: None
ALSO PRESENT: City Manager, John D. Goss; City Attorney, John M.
Kaheny; and City Clerk, Beverly A. Authelet
2. PLEDGE OF ~SLLEGIANCE TO THE FLAG, MOMENT OF SILENCE
3. APPROVAL OF MINUTES: January 13, 1998.
MSUC (Moot/Padilla) to approve the January 13, 1998 minutes.
4. SPECIA/~ ORDERS OF THE DAY:
a. Oath of Office: Commission on Aging, Susan Carrillo; Cultural Arts
Commission, A1 Gore; and Otay Valley Road Project Area Committee, Raul Tellez.
Mr. Tellez had informed the Council that he could not accept the nomination
because of the FPPC filing requirements.
City Clerk Authelet administered the Oath to Susan Carrillo and A1 Gore.
b. Report on Super Bowl High School Football Game was presented by Robin
Wilner, Director of the Convention and Visitors Bureau.
c. Presentation by Gary Plantz, Managing Director, San Diego Business Journal,
of the 1997 Total Excellence in Management Award to Dr. Brand, Superintendent,
and Jim Cartmill, President of the Board, of Sweetwater Union High School
District. He also presented a Who's Who Award for 1997 to Mayor Horton.
Continued from the meeting of 1/13/98.
d. Presentation of the Connect-ory was made by Diana Weeks, President of the
East County Economic Development Council. Continued from the meeting of 1/13/98.
e. The 26th Annual Robert B. Botterman Humanitarian of the Year Award was
presented to Ignacio Valdovinos by Mayor Hotton.
CONSENT CALENDAR
(Items pulled: none.)
CONSENT C~ENDAR OFFERED BYMAYOR HORTON, headings read, texts waived, passed and
approved 5-0 with Rindone abstaining on Item No. 8 and Moot abstaining on Item
No. 12.
5. WRITTEN COM~3NICATIONS:
a. Letter from the City Attorney stating that to the best of his knowledge
from observance of actions taken in Closed Session on 1/20/98, that there were
no reportable actions which are required under the Brown Act to be reported. The
letter was received and filed.
Minutes
February 10, 1998
Page 2
b. Letter from Dianna Maria Kryjewski, Otay Sidewalk Petition Coordinator,
with petition of over 500 signatures from concerned citizens in the district,
requesting a sidewalk and pathway be created in the area surrounding and
adjoining Otay Elementary School. Per staff's recommendation, Council approved
5-0 that the item be discussed at the joint City Council/Chula Vista Elementary
School Board meeting on 2/18/98.
c. Letter from Juande Ragsdale-Blevins, Events Director/Founder, San Diego
Black Film Festival, requesting extra security for their black-tie Gala on
February 27, 1998. Per staff's recommendation, Council approved 5-0 that staff
work with Ms. Blevins to seek alternative ways to provide extra security without
incurring staff costs, e.g. using the Senior Volunteer Patrol, Explorer Scouts
etc.
d. Letter from Robert Eugene Clement, President, Chula Vista Art Guild,
expressing an interest in leasing Rohr Manor. Per staff's recommendation,
Council approved 5-0 to refer the request back to staff for review.
6. ORDINANCE 2718 AMMENDING, ADDING ~aND REPEALING VARIOUS CHAPTERS OF THE
MUNICIPAL CODE RELATING TO IMPROVING CITY-WIDE CODE ENFORCEMENT EFFECTIVENESS
(second reading and adoption) In response to Council referrals regarding the
need for more effective code enforcement, staff is recommending the Municipal
Code be revised. The proposed revisions are intended to expand the number of
enforcement methods available to City departments responsible for enforcing the
Municipal Code, and to create a standardized appeal procedure utilizing a hearing
examiner in lieu of hearings before Council. Numerous existing sections Of the
Municipal Code are proposed for modification to reference these new enforcement
methods and appeal procedures. Per staff recommendation, the ordinance was
placed on second reading and adopted 5-0. (Director of Building and Housing)
7. ORDINANCE 2719 ANENDING SECTION II, RESIDENTIAL DISTRICTS, AND LAND USE
DISTRICTS MAP OF THE EASTLAKE II PLANNED COMITY DISTRICT REGULATIONS (second
reading and adoption) The EastLake Company has requested the following
amendments to the EastLake Greens Sectional Planning Area (SPA) plan and EastLake
II Planned Community District Regulations: (1) Change EastLake Greens Parcel R-
10 Land Use District designation from RRP-8, Residential Planned Concept, to RC-
10, Residential Condominium (no increase in the permitted number of dwelling
units and density is proposed as part of this request); and (2) Establish a Guest
House Land Use District Overlay (GH) and corresponding development standards (to
allow Guest Houses as a permitted accessory use) for lots 01, 36-40, Tract 88-03
located within the EastLake Greens Parcel R-2. Per staff's recommendation the
ordinance was placed on second reading and adopted 5-0. (Director of Planning)
8. RESOLUTION 18881 REJECTING BIDS FOR THE "DELINEATOR REMOVAL PROGAM -
PHASE III AT FOURTH AVENUE AND "E" STREET AND ALONG OTAY LAKES ROAD NEAR BONITA
VISTA HIGH SCHOOL IN THE CITY" (TF239) - Funding for this project was budgeted
during the fiscal year 1997/98 Capital Improvement Program budget process. The
project is part of a program that was set up for the replacement of temporary
traffic control delineators that have been placed throughout the City. The
delineators are aesthetically unappealing and must be replaced on a regular basis
as they are run over by motorists. The raised medians would provide a more
permanent and attractive barrier that is virtually maintenance free. Per staff's
recommendation, the resolution was approved 5-0. (Director of Public Works)
9. RESOLUTION 18882 ACCEPTING BIDS AND AWARDING CONTRACT TO SIGNAL
MAINTENANCE, INCORPORATED, FOR THE INSTALLATION OF TRAFFIC SIGNAL EMERGENCY
VEHICLE PRE-EMPTION (EVPE) SYSTEM ALONG "H" STREET CORRIDOR IN THE CITY - The
EVPE system employs optical communication to identify the presence of designated
priority vehicles (i.e. firetrucks and ambulances) and causes the traffic signal
controller to advance to and/or hold a desired traffic signal display selected
from phases normally available. The work to be done includes the installation
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February 10, 1998
Page 3
of EVPE detectors, modules and other miscellaneous signal equipment necessary to
make the system operational. Per staff's recommendation, the resolution was
approved 5-0. (Director of Public Works)
10. RESOLUTION 18883 APPROVING FIRST AMENDMENT TO THE CONTRACTUAL AGREEMENT
WITH JEFF KATZ ARCHITECTURE FOR ARCHITECTURAL SERVICES ASSOCIATED WITH THE DESIGN
AND RELOCATION CONSTRUCTION OF CHULA VISTA FIRE STATION NUMBER 4 AND THE DESIGN
OF THE FIRE TRAINING CLASSROOM, AND APPROPRIATING FUNDS THEREFOR - Council-
approved Capital Improvement Program Project Number PS-120 provides for the
relocation and construction of Fire Station Number 4 from its current location
to the Fire Training Tower site in the Rancho del Rey development. Jeff Katz
Architecture has been hired to provide the architectural services for the fire
station. A Fire Training Classroom has been proposed for fiscal year 1998/99 to
complement the existing Training Tower. With the initial design of the fire
station in progress, it has become evident that coordination can be enhanced and
funds saved if the Fire Station architect completes the design work on the
classroom at the same time. Per staff's recommendation, the resolution was
approved 5-0. (Fire Chief) 4/5th's vote required.
11. RESOLUTION 18884 MAINTAINING THE EXISTING CITY INVESTMENT POLICY AND
GUIDELINES - The City has an existing Investment Policy and Guidelines to insure
the prudent management of idle cash. State law requires that the Investment
Policy and Guidelines be adopted by resolution on an annual basis after being
reviewed to ensure consistency with the overall objectives of preservation of
principal, liquidity and yield, and its relevance to current law and financial
and economic trends. Per staff's recommendation, the resolution was approved 5-
0. (Director of Finance)
12. RESOLUTION 18885 APPROVING AN AFFORDABLE HOUSING AGREEMENT WITH THE
MCMILLIN COMPANY RELATED TO MCMILLIN OTAY RANCH SPA ONE PLAN AND AUTHORIZING THE
MAYOR TO SIGN THE AGREEMENT - The City's Affordable Housing Policy requires that
residential development with 50 or more dwelling units provide a minimum of 10%
of the total units for low and moderate income households. Based on the total
of 1,877 residential housing units which are currently allowed to be constructed
within McMillin Otay Ranch SPA One, a total of 188 low and moderate income
housing units are required to be provided within the project, of which 94 will
be provided for low income and 94 for moderate income households. In order to
comply with this requirement the applicant, the McMillin Company, and staff have
prepared an Affordable Housing Agreement. Per staff's recommendation, the
resolution was approved 4-0-0-1 (Moot abstaining). (Director of Co[mmunity
Development)
13. RESOLUTION 18886 APPROVINGANAGREEMENT WITH BOB HOFFMAN VIDEO PRODUCTIONS
FOR VIDEOTAPING THE CITY COUNCIL MEETINGS FOR TELEVISING - The City entered into
its first contract for videotaping all Council meetings in 1988 after a six-month
trial period proved successful. With the term of the current contract expiring,
staff conducted a formal Request for Proposal process for video production of
Council meetings for televising. Staff has completed that process and negotiated
the proposed agreement for an initial five-year term with an option to extend the
agreement for two additional two-year terms. Per staff's recommendation, the
resolution was approved 5-0. (Public Information Coordinator)
* * * END OF CONSENT CALENDAR * * *
ORAL COMM[/NICATIONS
There were none.
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February 10, 1998
Page 4
PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES
14. PUBLIC HEARING GPA-97-05/PCZ-97-03 - (1) AMEND THE GENERAL PLAN FOR THE
PROPERTY LOCATED AT 675 OXFORD STREET TO CHANGE THE DESIGNATION FROM OPEN
SPACE/RESEARCH AND LIMITED MANUFACTURING TO PROFESSIONAL AND ADMINISTRATIVE
COMMERCIAL; AND (2) REZONE THE PROPERTY FROM R-1 (RES. SINGLE FAMILY) AND IL-P
(INDUSTRIAL LIMITED - PRECISE PLAN OVERLAy) TO CO-P (OFFICE COMMERCIAL) - PRECISE
PLAN) PALOMAR STATION, LLC - The applicant, Palomar Station, LLC, is requesting
an amendment to the General Plan and rezoning of property located at 675 Oxford
Street from residential and limited industrial to office commercial in order to
develop the property as office space or, with approval of a conditional use
permit, multi-family residential. The applicant has indicated that they have
tried unsuccessfully to market the property as industrial land. Per staff's
recommendation, the public hearing was continued to the meeting of 2/17/98.
(Director of Planning)
MSUC (Horton/Padilla) to continue the item to the meeting Of 2/17/98.
15. PUBLIC HEARING PCS-98-02 - CONSIDERATION OF A TENTATIVE SUBDIVISION MAP
KNOWN AS EASTLAKE GREENS UNIT 16, TRACT 98-02, INVOLVING 60 SINGLE FAMILY AND 3
OPEN SPACE LOTS ON 10.89 ACRES LOCATED ON THE NORTH SIDE OF SOUTH GREENSVIEW
DRIVE BETWEEN SILVERADO DRIVE AND HUNTE PARKWAY - The applicant has submitted a
tentative subdivision map known as EastLake South Greens Unit 16, Tract 98-02,
in order to subdivide 10.89 acres into 60 single family and 3 open space lots.
The project site is located on the north side of South Greensview Drive, between
Hunte Parkway and Silverado Drive. Per staff's recommendation, the resolution
was approved 5-0. (Director of Planning)
RESOLUTION 18887 APPROVING AND IMPOSING CONDITIONS ON THE TENTATIVE SUBDIVISION
MAP FOR EASTLAKE SOUTH GREENS UNIT 16, TRACT 98-02
This being the time and place as advertised, the public hearing was opened.
There being no one indicating a desire to address the Council, the public hearing
was closed.
RESOLUTION 18887 OFFERED BY COUNCILMEMBER RINDONE, heading read, text waived,
passed and approved unanimously 5-0.
16. PUBLIC HEARING PCS-98-03 - CONSIDERATION OF A TENTATIVE SUBDIVISION MAP
KNOWN AS SOUTH GREENSVIEW UNIT 10, TRACT 98-03, INVOLVING 231 SINGLE FAMILY AND
5 OPEN SPACE LOTS ON 34.28 ACRES LOCATED ON THE SOUTH SIDE OF SOUTH GREENSVIEW
DRIVE WEST OF BUNTE PARKWAY - The applicant has submitted a tentative subdivision
map known as EastLake South Greens Unit 10, Tract 98-03, in order to subdivide
34.28 acres into two separate neighborhoods containing a total of 231 single
family lots and 5 open space lots. Per staff's recommendation, the resolution
was approved 5-0. (Director of Planning)
RESOLUTION 18888 APPROVING~3qD IMPOSING CONDITIONS OF THE TENTATIVE SUBDIVISION
MAP FOR EASTLAKE SOUTH GREENS, TRACT 98-03
This being the time and placed as advertised, the public hearing was opened.
There being no one indicating a desire to address the Council, the public hearing
was closed.
RESOLUTION 18888 OFFERED BY COUNCILMEMBER RINDONE, heading read, text waived,
passed and approved unanimously 5-0.
17. PUBLIC HEARING ISSUANCE OF TAX EXEMPT OBLIGATIONS WITH RESPECT TO PROPOSED
MULTI-FAMILy HOUSING PROJECT LOCATED ON APPROXIMATELY 16 ACRES AT EAST PALOMAR
STREET AND LA MEDIA ROAD IN CHULA VISTA - Gateway Town Center, LP, is requesting
that the City consider its intent to issue a $45,000,000 tax exempt multi-family
revenue bond to assist in the financing of a 450 unit multi-family residential
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February 10, 1998
Page 5
development within the McMillin Otay Ranch SPA One. At this time, Council is
asked to hold a public hearing on the question whether the City should issue tax
exempt bonds for the financing of the proposed project and to adopt a resolution
expressing the City's preliminary intention to issue bonds. The requested action
does not commit the City to issue the bonds at this time. The issuance of said
bonds is in the public interest due to the reservation of 20% of the project
units as affordable housing for low income households. Per staff's
recommendation, the resolution was approved 5-0. (Director of Community
Development)
RESOLUTION 18889 REGARDING THE CITY'S INTENTION TO ISSUE TAX EXEMPT OBLIGATIONS
WITH RESPECT TO PROPOSED MULTI-FAMILY HOUSING PROJECT LOCATED ON APPROXIMATELY
16 ACRES AT EAST PALOMAR STREET AND LA MEDIA ROAD IN CHLrLA VISTA
Juan Arroyo, Housing Coordinator, indicated that staff recommends approval of the
Resolution because it will help to increase much needed affordable housing in the
eastern territory, and it will help to satisfy the McMillin Otay Ranch SPA One
affordable housing obligation. The bond proceeds will be used to help finance
the project that staff thinks is an excellent example of how affordable housing
can be integrated into a mixed income, upscale residential town center plan.
Councilmember Moot asked if the savings that they are having by using these tax
exempt bonds will all pour in to make the 90 units qualify as affordable. He
wanted to make sure that staff has looked at this carefully to make sure that the
savings that they will get are all going to make those 90 units affordable and
not in affect creating a windfall profit.
Mr. Arroyo stated that bond proceeds will substantially finance the project in
conjunction with 4% tax credits that the developer will be applying later on
along with some of their own equity. Staff has analyzed the pro formas, and the
proposal is very typical of tax exempt bond type of project which requires a 20%
of the units be affordable. Based upon the number that they presented and based
on the comparison with other similar projects throughout California, staff feels
confident that this project will work.
Councilmember Salas wanted to know what staff's feeling was on whether or not
this was going to be a successful project or one that can compete realistically
with the California Debt Limit Allocation Committee. Also, what efforts have we
made to ensure that the Committee sees this as a necessary project.
Mr. Arroyo responded that the majority of the bond allocations is set aside for
multi-family development. In the first round, $800 million was set aside for
multi-family developments. Only $400 million was allocated. It is a very
competitive process and the longer you wait, the less chances there are in terms
of competing.
Councilmember Salas asked if staff had developed any contingency plans if we do
not get the tax exempt approval for this project.
Mr. Arroyo stated that we have looked at other alternatives namely, the developer
will come in with additional sources of funding. They have already taken some
steps to identify additional partners. The City is looking at its resources.
We certainly will put this project in a high priority.
Councilmember Salas stated that the tax exempt funding of this project is of
great benefit to the developer and that he is dedicating 20% of the units for
affordable housing. She asked if there was some way that we could extend the
time that these units are guaranteed to be affordable. She asked if there was
some way that the 30 year term of the bond that the affordable housing component
can be guaranteed for longer than 30 years.
Glen Googins, Deputy City Attorney, stated that the duration of the affordability
covenant is a negotiable item between the issuer and the developer. The market
place for these kinds of projects is typically determining that the standard
affordability covenant is for the duration of the bonds with the notion being
February 10, 1998
Page 6
that the benefit of the tax exempt financing last for the duration of the bonds.
Therefore, the affordability covenant would run concurrently with that. But a
longer term could be negotiated that would be atypical, but we can certainly look
into that.
This being the time or place as advertized, the public hearing was opened.
Addressing Council was:
· James Schmidt, 215 South Highway 101, Solana Beach, 92075, representing
Chelsea Investments, stated they have done about 3,000 units like this in the
last six to eight years, and have a good record of being On time and within
budget. The rents are pegged at the 50% of AMI level as opposed to the 80% which
would be required of the developer under the agreement before Council tonight.
It was their idea to make the low income units the large family units because
that is what the need is in this community.
Councilmember Rindone asked what was the commercial component mentioned in the
staff report.
Mr. Schmidt responded that the plans for the area calls for a 20,000 to 30,000
foot commercial center. They have decided to create a separate parcel for that
portion of the development and to do it as Phase III. The commercial component
would still be in place for future planning by the trolley station. It will be
relatively imminent, but not financed as part of this project.
Mayor Horton stated that this project is very much a family-oriented project.
She asked if he was planning to have any type of day care facility.
Mr. Schmidt responded that they were hoping to add this as one of the amenities.
It probably will not be built into the residential units, but they were thinking
it was a prime candidate for one of the commercial uses.
There being no one else indicating a desire to address the Council, the public
hearing was closed.
RESOLUTION 18889 OFFERED BY COUNCILMEMBER RINDONE, heading read, text waived,
passed and approved unanimously 5-0.
18. PUBLIC HEARING FORMATION OF ASSESSMENT DISTRICT 97-2 (OTAY RANCH VILLAGE
ONE) - On 6/17/97, Council adopted the proposed Resolution of Intention, adopted
the boundary map and approved the form of the Acquisition/Financing agreement for
Assessment District Number 97-2. On 12/16/97, Council approved the Preliminary
Engineer's Report and set a public hearing for 2/3/98. Said Council meeting was
cancelled and the public hearing was continued to the meeting of 2/10/98. The
Amended Acquisition/Financing Agreement would include a lower construction cost
estimate, would add the construction of a right turn lane at Telegraph Canyon
Road to the list of improvements eligible for Assessment District 97-2 financing,
and provide that the acquisition price for certain improvements would be reduced
by an amount equal to the general benefit and/or special benefits to publicly
owned property for such improvements. Per staff's recommendation, the
resolutions were approved 5-0. (Director of Public Works)
A. RESOLUTION 18890 APPROVING THE FORM OF THE AMENDED ACQUISITION/FINANCING
AGREEMENT FOR ASSESSMENT DISTRICT NUMBER 97-2 (OTAY RANCH, VILLAGE ONE)
B. RESOLUTION 18891 APPROVING THE FORM OF CONTRACTS FOR OWNERSHIP OF UTILITY
IMPROVEMENTS IN ASSESSMENT DISTRICT NUMBER 97-2 (OTAY RANCH, VILLAGE ONE)
C. RESOLUTION 18892 ORDERING CERTAIN CHANGES AND MODIFICATIONS TO THE
ASSESSMENT ENGINEER'S REPORT IN ASSESSMENT DISTRICT NUMBER 97-2 (OTAY RANCH,
VILLAGE ONE)
D. RESOLUTION 18893 DECLARING THE RESULTS OF THE BALLOT TABULATION,
CONFIRMING THE ASSESSMENTS, ORDERING THE ACQUISITION OF IMPROVEMENTS, TOGETHER
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February 10, 1998
Page 7
WITM APPURTENANCES, AND APPROVING THE ASSESSMENT ENGINEER'S REPORT IN ASSESSMENT
DISTRICT NUMBER 97-2 (OTAY RANCH, VILLAGE ONE)
John Lippitt, Public Works Director, indicated that this is to provide the
backbone infrastructure for Village One of Otay Ranch. It is in conformance with
Proposition 218. There has been a ballot; the results will be announced after
the public hearing is closed.
This being the time and placed as advertised, the public hearing was Opened.
There being no one indicating a desire to address the Council, the public hearing
was closed.
Mr. Lippitt announced that the results of the election. It passed with one vote
yes which was 100% of the represented landowners.
RESOLUTIONS 18890, 18891, 18892, AND 18893 OFFERED BY COUNCILMEMBER RINDONE,
headings read, texts waived, passed and approved unanimously 5-0.
BOARD AND COMMISSION RECOMMENDATIONS
None submitted.
ACTION ITEMS
19. ORDINANCE 2720 ADDING A CHAPTER TO THE MUNICIPAL CODE RELATING TO
REGULATING THE DISTRIBUTION OF GASOLINE AND THE OPERATION OF GASOLINE SERVICE
STATIONS (first readinq) - In response to Councils' concern regarding the need
to protect the City's consumers from artificially high gasoline prices, the City
Attorney has drafted an ordinance to add to the Municipal Code. The proposed
ordinance maintains the following three strategies for lowering gasoline prices:
(1) a prohibition and phasing out of refiner operated (i.e. "company operated")
retail services stations (commonly referred as 'divorcement"); (2) a provision
to allow branded motor fuel franchisees to purchase branded motor fuel from any
location or through any vendor in a refiner's wholesale fuel network (commonly
referred to as "open supply" regulation, similar to the 1997 Peace Bill, Senate
Bill 404); and (3) prohibitions against price discrimination and overcharges by
refiners. If Council adopts the proposed ordinance, it is recommended that,
prior to the effective date of the ordinance, the City enter into a legally
binding agreement with the County of San Diego to defend and indemnify the City
from any legal challenges to the ordinance, or to share the cost of defense. Per
staff's recommendation, the ordinance was placed on first reading. (City
Attorney)
John Kaheny, City Attorney, stated that we will be discussing a further
recommendation on the implementation procedure when Council adjourned into Closed
Session due to the threat of pending litigation.
The following addressed Council:
· Tim Cohelan, attorney, 701 "C" Street, San Diego, spoke in favor of the
proposal. His involvement in this springs from some involvement in litigation
against the California refiners that refine and market the gasoline that has been
required in California since March 1996.
· Greg Cox, Supervisor, 647 Windsor Circle, Chula Vista, 91910, stated that
the rationale and reason for this is because the people in San Diego County pay
anywhere from 15 to 20 cents or more per gallon of gasoline than the people in
Los Angeles, Riverside, and Orange Counties pay for the same grade of gasoline.
It has been estimated that the cost to purchasers in San Diego County has been
about $163 million in the last two years that we have been overcharged in
comparison to the residents in the other counties. We have made every effort to
get an explanation from the oil companies, and yet we have not received a
reasonable explanation as to why there is a significant differential in cost.
We would like to have gas in San Diego available at a fair and competitive rate
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February 10, 1998
Page 8
that isn't artificially inflated. There are three components to the County's
ordinance: (1) remove price control mechanisms such as zone pricing; (2)
increase competition through a larger network of dealers; (3) create less company
operated stations. The Board of Supervisors was looking for a partner in this.
They would like to think that the cities which have come on board now have every
bit of the same concern in regards to potential litigation. The way their
ordinance is set up would dictate that unless we get 2/3s of the population in
the County of San Diego represented by their respective jurisdictions to pass
similar ordinances, we won't have an ordinance at all. There are legal reasons
why this is important. We can't have an ordinance that applies in the
unincorporated part of the County. There have been some discussions within the
last few days between the City and County of San Diego to come up with an
agreement in regards to a hold harmless so that if you pass this ordinance and
the oil companies chose to sue one of the cities, there would be a willingness
to come into the defense and aid of those cities. It was their anticipation that
if this has enough support in the region that we would seek a declaratory relief
and that would go a long way towards minimizing any potential litigation and
liability in the event the ordinance would be found to be unconstitutional. He
asked for Council's consideration to pass an ordinance similar to the ones which
have been passed by the County and City of San Diego, and cities of La Mesa, El
Cajon, Imperial Beach, Santee, and what is being contemplated for Del Mar,
Escondido, and Oceanside. These ordinances are substantially consistent with the
ordinance passed by the Board of Supervisors.
Councilmember Rindone asked that assuming Chula Vista takes a position of support
with the first reading of the ordinance, if all of those municipalities that have
done so to date, where are we on the percentage of territory as far as the 2/3s
relationship.
Supervisor Cox replied that based upon the population figures of January 1, 1997
with the County of San Diego and assuming that the City of San Diego and other
cities place their ordinances on second reading, that would represent about 68%
of the population in the region. With the three additional cities of Del Mar,
Escondido, and Oceanside, it would bring add another 10%. If Chula Vista passes
their ordinance, it would be almost 85%. The more cities who pass substantially
similar ordinances, the better their arguments will be in regards to the legality
of the ordinance.
Councilmember Rindone asked staff if there was anything provided to Council that
if this was adopted would allow the oil companies not to be impacted by the
proceedings? He wanted to insure that if these proceedings are adopted, there
would not be an escape clause.
Bart Meisfeld, Deputy City Attorney, responded that the ordinance as drafted does
not go to the wholesale level; it is more directed to the retail. Although the
Supervisor did indicate that there is one portion that will allow the dealers in
San Diego County to go to any type of refinery distribution system even to Los
Angeles to get their gasoline.
· Martin Calvo, 974 Paseo Entrada, Chula Vista, 91910, member Of the Economic
Development Commission and representing TQM Manufacturing, encouraged the Council
to go forward and implement this Ordinance.
· Salim Bettayed, 1671 Abalone Point Court, Chula Vista, field supervisor for
Arco PM. He was concerned about the divorcement issue since no one has come up
with a answer to the gasoline prices in San Diego. Everyone wants to resolve the
issue, but he did not feel divorcement was the answer to the problem.
· Penny Daoodi, 2489 Lacosta, EastLake, 91915, urged a no vote on the
divorcement issue.
· John Rak, 333 S. Hope Street, Los Angeles, Director of Government Issues
for Arco Products Co., stated that the dealer-price service stations were selling
gasoline at a higher price than the average Arco station in San Diego County
which are company-owned stations. The County ordinance is purporting to be a
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February 10, 1998
Page 9
cure-all for all of San Diego County's higher gasoline prices. This Ordinance
is not new and will not reduce prices. This ordinance has been introduced into
any environment that the dealer organizations can find that has a perceived price
problem where a political environment invites it. The people of San Diego do
have a legitimate concern that they pay more for gasoline than some other
geographic areas. The following differences between San Diego and Los Angeles
can account for about 5 cents for pipeline transportation costs, 2 cents per
gallon for a parent to dealer margin, and the higher costs for building service
stations and doing business in San Diego.
Councilmember Moot challenged Mr. Rak with the following questions: (1) Does
Arco dictate through zone pricing, the price by which the independent franchisees
purchase their gas through their leases? (2) Do you charge the same price for
the company owned stations or a different price? (3) Will they provide the price
that they charge company owned stations for the gasoline?
Mr. Rak stated that Mr. Moot was assuming that the price begins at the wholesale
level. Price starts from the retail side. Arco has different trade zones. San
Ysidro and Chula Vista are in the same trade zone. They would be willing to
provide the price they charge to company-owned stations. He stated that he had
a lessee-dealer station in San Ysidro that charges a $1.499 for gasoline and a
station in Chula Vista that is company-operated that charges $1.299, and both
were charged the same price by the company.
Councilmember Moot stated that if he could provide the City Attorney the
information by which Arco supplies gasoline to its company-owned stations; in
other words, what their company-owned station pays for that gasoline.
Mr. Rak responded that they would be happy to do that.
Councilmember Moot asked for an explanation as to why under zone pricing a
branded franchiser in Chula Vista would be required to buy gasoline, for example
at 74 cents per gallon without taxes and the same gasoline station in Escondido
would be able to buy at 66 cents. Why can't a station in Chula Vista buy its gas
for the same price as a gas station in Escondido.
Mr. Rak responded that these are different trade areas. Retail price is the
mechanism in which they determine their wholesale price to that dealer. They
want to keep their dealers happy. Their wholesale price is carried off the
retail price in that particular area. Since Escondido is more competitive and
has more service stations per population and per area, they are a more
competitive area. If we charged them the same price, it wouldn't be fair to the
dealers. They would not be able to match the competition in that area.
Councilmember Moot asked isn't it true the reason they are more competitive is
because they have more independent stations and less company-owned stations?
Mr. Rak stated that was not true.
Mayor Horton asked him to explain why Big Bear is that much cheaper than Chula
Vista and other areas in San Diego County.
Mr. Rak stated he was not an expert in the way those particular areas are priced,
but the alternative for people going up there, they can fuel up in San Bernardino
and drive up there; therefore, they have to keep the price competitive in order
for those stations in Big Bear to be able to sell the volumes that those dealers
need to make a reasonable profit for themselves.
Mayor Horton asked why didn't they keep the prices competitive in the San Diego
County region comparable to Los Angeles.
Mr. Rak stated that the retail prices are the things that are determined by the
dealers. There are 750 stations in this area and over 600 of them are
independent dealers. They are setting the street prices.
Minutes
February 10, 1998
Page 10
Councilmember Moot stated that he was misleading the public. The price that an
independent franchise branded station pays is dictated by their lease. The oil
company that they have their lease with tells them on any given day what they pay
for the price of gas delivered to them. Therefore, they control the price
through the lease with that independent station.
Mr. Rak responded that the Arco manager surveys the neighborhood stations to see
what he needs to post on his marquee so that he could sell the appropriate volume
and get a reasonable margin to be able to survive in this world. Their pricing
is geared to give him the ability to compete with that local market. It is the
retail price that determines the wholesale price.
Councilmember Moot stated that the only problem with what he was saying was that
he has talked with people personally who own franchise gas stations, and they all
tell him the same thing. The price that they buy their gas for under the terms
of their lease is dictated by the oil company that brands them. The oil
companies tell them through zone pricing what they can buy their gasoline for.
Isn't this true?
Mr. Rak stated that what is true is that they charge their dealers a price based
upon the competitive geographic area that they are in. To allow them to survive
and to be able to make a reasonable profit at their service station.
Councilmember Moot asked that same dealer is not free under the terms of their
lease to go to Los Angeles and buy from a different terminal, are they?
Mr. Rak responded that under the terms of that franchise that the dealer entered
into, he cannot go to Los Angeles to pick up that gasoline from our station.
Councilmember Moot asked if Arco Products had a problem with the dealer in Chula
Vista going up to Los Angeles and buying branded gasoline at a cheaper price and
trucking it down to San Diego.
Mr. Rak replied that the Council should have a problem with that because there
is nothing that says that if the dealer picks up gasoline cheaper and brings it
here that he has to give that to you. It is just as easy for him to put it in
his pocket. The retail price is setting what he puts on the marquee. There is
nothing in this law that will guarantee that any kind of price advantage will be
passed on to the consumer.
· Joseph Serchovich, 3426 Evergreen Road, Bonita, 91902, a franchise Arco
dealer, commented on the difference in price in Reno, Nevada. There was a time
that they had three or four months where they had to truck the gasoline from Los
Angeles because the pipeline was closed. That accounted for most of the high
prices. The gentleman from Arco mentioned that the gasoline sold for $1.49, but
the Arco stations in San Diego sold the gas for $1.32. That is still a lot
higher than $1.19 that the independent dealer had in Los Angeles. Arco always
says that they are the lowest price dealer, and they always bring examples from
San Francisco where they have only one company-owned station, and they still have
very high prices. If we have so many company-owned stations in San Diego, and
they are the cheapest price, why are we paying so much higher since their
reasoning is that many company-owned stations bring the price down, so why are
the prices so high. He stated that through the zone pricing and the control they
have on the pricing on the street, they do squeeze their margins. When it comes
time to renew a contract, they are told this is the contract; there are no
negotiations; take it or they will take over. He felt these things lead to
control of the market.
Michael D. St. Clair, 1523 Vista Grande Road, El Cajon, 92019, Arco gas
dealer in San Ysidro, he has watched the price zones over the years and compare
the differences. The zone pricing that has been presented is for no other
purpose but to control the regional market. In every hearing that he has been
to on this issue, the elected officials have asked the oil companies the one
question that they refuse to answer which is why are the gas prices in Los
Angeles 15 to 20 cents lower than they are in San Diego. The answer to the
Minutes
February 10, 1998
Page 11
question which they do not want to give is because of the amount of control that
they have over the market in the entire San Diego area, especially in the South
Bay area. The way they control it is through the zone pricing. These are zones
which they set up, and they are secretive. This is the first time in ten years
he has heard anyone from Arco that has actually stated that the zones with Chula
Vista and San Ysidro are the same. To suggest that the company-operated stations
are actually lower prices is false. In Chula Vista, there is one of the largest
concentrations of company operations with Arco, and Chula Vista has paid the
highest prices along with San Ysidro over the last ten to thirteen years. If it
were true that company operations lowers its prices, then Chula Vista should have
the lowest prices in San Diego County, but we have always had the highest.
Anita Mangels, 505 N. Brand, Glendale, representing Western States
Petroleum Association of California, which is a non-profit trade association
based in Glendale, California, stated that there are no company operated Shell
stations to divorce in San Diego. If you go forward with divorcement, you are
asking all the company operations to get out, and they can all raise their
prices. You are not going to impact the margins, no matter who owns the station,
they will charge whatever the market will bare. Everyone knows there is a price
differential. The question which has not been answered is how will divorcement
make that different. Even if every city in San Diego adopted a similar
ordinance, it is not going to have a positive impact on prices of gasoline
anywhere in the County. Council needs to be aware and consider closely that you
are putting jobs at stake, you're not going to make prices go down and you may
make them go up, and in the end, you may have to address the problem again.
· E.J. Burley, 6500 San Miguel Road, Chula Vista stated that all of a sudden
the action that we are taking in the County has done something to someone to make
prices drop, because recently the price of gasoline has dropped. He urged
Council to proceed.
· Michael Wickham, 1020 Surrey Court, Bonita, a 76 franchise dealer in Mira
Mesa. He informed Council that his father-in-law runs two Shell stations in San
Diego; they are not company-owned stations, but the company sets the retail price
through E-mail that he gets every day. The gentleman from Arco told Council that
retail prices is what sets prices. The Lundberg Survey is what the oil companies
use to find out prices. He gets called once a week by the Lundberg Survey. He
has never been asked what his retail price was. The question is, what is his
dealer tank wagon. Dealer tank wagon sets prices, not retail pricing. Chula
Vista is known as an area that has been red zoned by every oil company in San
Diego. In the last ten years, Chula Vista has paid more than National City,
Spring Valley, and El Cajon. He warned Council to listen very carefully when the
oil companies talk.
· Fred Tayco, 1160 Nevin Street, San Diego, Policy Advisor to Supervisor
Roberts, stated that Supervisor Roberts has been following this issue since April
1996 when he first raised questions at the California Air Resources Board. He
stated that the bottom line is that the oil industry has never been able to
answer why does San Diego pay 10 to 15 cents more than Orange, Los Angeles, and
Riverside Counties. He recommended that the Council listen to the dealers that
are within Chula Vista who have to pay the high wholesale prices. There are 722
stations in San Diego County. What would Council prefer? Seven hundred and
twenty-two stations actively competing to keep prices down or 6 major oil
companies dictating what price they pay?
· Safir Delgin, 2489 La Costa, Chula Vista, 91915, Arco Supervisor for the
Chula Vista area, stated he did a gas survey last week and the station in San
Ysidro was $1.49; his station which was about two miles away was $1.29. There
is a 20 cent difference between his station and most of the franchisees.
At 8:45 p.m. Council adjourned to Closed Session.
p.m. with all members of the Council present.
The meeting reconvened at 9:17
Minutes
February 10, 1998
Page 12
Councilmember Moot stated that he has spent some time with people who own
stations in Chula Vista who have experienced how this process works first hand.
In effect, company-owned stations are the vehicle by which prices are kept
artificially high. It is done through a fairly sophisticated method by which a
company-owned station does not get their price dictated to them by the oil
company. The oil company and the station are one in the same and that price is
supplied to that station at whatever the oil company wants to give to them. The
price with an independent branded station is done through their lease. They are
required to accept gas delivered to them by the oil company, and their prices are
dictated by zone pricing set by the oil company. They currently do not have the
ability to go into the open market and buy on the open market. It is this
problem that makes it, in conjunction with the large percentages of company-owned
gas stations in San Diego County, that allows them to in effect control the price
through the prices set by the company-owned stations. A company-owned station
can set their prices 2 to 4 cents a gallon less and still make just as much money
because they make up in volume for what they lose in price. When the oil company
dictates to the independent branded stations their price through zone pricing in
order to continue to operate at margins to make money, they have to raise their
prices. Then the company-owned stations follow suit and their prices go up
slightly, but somewhat less than the branded stations. He felt it would be very
interesting when the City Attorney writes the gentleman from Arco a letter and
asks for the information which indicates the price at which the company-owned
stations acquire gasoline from their particular oil company. He predicted that
we will never see that information, because they will never be able to show that
the price is the same as the price dictated under the zone market prices and that
are dictated to the independent branded stations.
Councilmember Salas stated that one of the things which bothered her were not
only the veiled threats of litigation, but also the threat that Arco would
withhold its funding of the Olympic Training Center if Council took this action.
She hoped this was not the position of Arco.
Councilmember Padilla stated that in looking at the difference in the price zone
in North San Diego County versus South San Diego County and for representatives
from the Association and the company-owned interests to indicate that the retail
end drives the wholesale market, this was reverse economics. The recent
attention to the issue has caused prices on both ends to incrementally fall
throughout the County just as the first steps toward unified action by
jurisdictions in the County began to take place. He felt it was interesting to
have some admission by representatives of the industry that the final solution
was going to be on the wholesale end, at the state and federal regulatory end.
This entire problem wasn't going to be solved until we have overcome those
obstacles in the legislature and in Washington and that we have the ability to
take action successfully at those levels to address what was going on at the
wholesale level. He did not think this particular ordinance was going to solve
the current market problem immediately, but that it would impact the
proliferation and continuation of a problem whereby the wholesalers could
practice market manipulation and, after a short period of time, the independents
would not be able to keep up and would go out of business. Unfortunately, the
San Diego region has maintained this, and the market has sustained this for a
short period of time, but he felt that it was time that big oil looked south and
realized that this wasn't going to continue without some action. Therefore, his
vote, although it was not a solution in its entirety, was going to have his
support.
Councilmember Rindone stated this may not be the panacea to solve all the
problem, but it was a step in the right direction. The issues of the wholesale
pricing and the distribution practices were issues to be dealt with, but he felt
it was obvious that within the last two weeks or so, in anticipation of this
measure coming before the Council, prices at the local service stations have
dropped significantly. He did not feel this would have occurred otherwise. He
was pleased to join his colleagues in support Of the ordinance in order to deal
with an issue that the constituents have been very concerned about for a long
time.
Minutes
February 10, 1998
Page 13
ORDINANCE 2720 PLACED ON FIRST READING BY COUNCILMEMBER MOOT, heading read, text
waived and approved unanimously 5-0.
20. RESOLUTION 18894 AUTHORIZING THE MAYOR TO EXECUTE THE SECTION 108
APPLICATION TO HOUSING AND URBAN DEVELOPMENT (HUD) TO AUTHORIZE $1 MILLION FOR
FUNDING THE A CHULA VISTA SMALL BUSINESS REVOLVING LOAN FUND PROGRAM - Council
previously approved hiring a consultant to assist staff to develop a HUD Section
108 Loan Program. On 8/5/97, Council approved the Consultant's Phase I
feasibility findings and directed staff and the consultant to proceed with
preparing a Section 108 Generic Application and developing a Small Business
Revolving Loan Fund Program. Staff is now recommending that Council approve
submission of the Generic Application to HUD for a $1 million in Section 108 loan
authorization, giving Chula Vista the option to access these funds in the future
for specific loans to private business. Per staff's recommendation, the
resolution was approved 5-0. (Director of Community Development)
Cheryl Dye, Economic Development, stated this project has been before Council on
several occasions. She introduced the consultant, Chuck Wolfe, of Clagget, Wolfe
and Associates, who has worked with staff in putting the application together.
RESOLUTION 18894 OFFERED BY COUNCILMEMBER MOOT, heading read, text waived, passed
and approved unanimously 5-0.
20.1A. ORDINANCE 2721 AMENDING SECTION 2.05.010 OF THE MUNICIPAL CODE TO
ESTABLISH THE POSITION OF ASSISTANT CHIEF OF POLICE IN THE UNCLASSIFIED SERVICE
(first readinq) - The Police Chief has recently promoted two lieutenants to the
rank of Police Captain, filling vacancies created by one recent retirement and
the "unfreezing" of a six month vacant position. The restructuring of the
Executive Management of the department (as a result of the long-term vacancy) has
proven beneficial and at the same time, highlighted the need for a "Number Two"
person. Per staff's recommendation, the ordinance on first reading and the
resolution was approved 5-0. (Chief of Police)
.1B. RESOLUTION 18895 AMENDING THE FISCAL YEAR 1997/98 BUDGET TO CREATE THE
POSITION OF ASSISTANT CHIEF OF POLICE, AMENDING RESOLUTION 18829 TO PLACE THIS
POSITION IN SALARY BAND E-2, AND AMENDING RESOLUTION 17468 TO ADD THIS POSITION
TO THE EXECUTIVE MANAGEMENT LIST OF CLASSIFICATIONS - 4/5th's vote required.
ORDINANCE 2721 PLACED ON FIRST READING AND RESOLUTION 18895 OFFERED BY MAYOR
HORTON, headings read, texts waived, passed and approved unanimously 5-0.
ITEMS PULLED FROM THE CONSENT CkLENDAR
No items were pulled.
OTHER BUSINESS
21. CITY MANAGER'S REPORT(S)
Stated there was a memo on the dais that explained the status of the
sinkhole at 1655 Malta Avenue. There wasn't a lot of damage which occurred in
terms Of property, and there was no injuries or loss of life. It was the
collapse of a 36 inch storm sewer line that clogged up the area which caused the
sinkhole. The problem has been fixed.
There will be a joint meeting with the Chula Vista Elementary School
District Board on Wednesday, February 18 at 5:30 p.m. in the Council Conference
Room.
22. MAYOR'S REPORT(S) - none.
Minutes
February 10, 1998
Page 14
23. COUNCIL COMMENTS
Councilmember Rindone
· Executive Management Salary Adjustment. This was a follow up from the last
meeting when Council discussed the executive management salary adjustments. That
information was not provided prior to a vote that evening. It was provided
subsequent after the meeting. He hoped his colleagues would continue to support
and respect the request of each Councilmember when seeking information on an
item, so that it would be provided prior to voting.
· Computers at Norman Park Center. He felt this was something that he would
like to refer to staff. Staff has indicated concern with the amount of
electricity available and costs of hardware and software. He felt these were
issues which we needed to work through because computers at Norman Park Center
would be very valuable. He felt this was an idea worth considering. He also
felt that we should encourage staff to write some grants for this.
ADJOURNMENT
The meeting adjourned at 9:59 p.m.
Respectfully submitted,
Beverly A. Authelet, CMC/AAE
City Clerk