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HomeMy WebLinkAboutcc min 1997/06/17MINUTES OF A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA Tuesday, June 17, 1997 6:00 p.m. 1. ROLL CALL: PRESENT: ABSENT: ALSO PRESENT: CALL TO ORDER Council Chambers Public Services Building Councilmembers: Moot, Padilia (arrived at 6:05 p.m.), Rindone, Salas, and Mayor Horton. Councihnembers: None City Manager, John D. Goss: City Attorney, John M. Kaheny; and City Clerk, Beverly A. Anthelet. 2. PLEDGE OF ALLEGIANCE TO THE FLAG. MOMENT OF SILENCE 3. APPROVAL OF MINUTES: April 29, 1997 (special joint meeting ~vith Planning Commission and Growth Management Oversight Commission); May 20, 1997 (regular meeting); and May 27, 1997 (regular meeting). MSC (Moot/Salas) to approve the minutes of April 29, 1997; May 20, 1997; and May 27, 1997. Motion approved 3-0-1-1 (Councihnember Padilia absent and Councihnember Rindone abstaining on April 29, 1997 because he was not in attendance). 4. SPECIAL ORDERS OF TIlE DAY: None submitted. CONSENT CALENDAR (Items pulled: 6 and 12) BALANCE OF CONSENT CALENDAR OFFERED BY MAYOR HORTON, headings read, texts waived, passed and approved 5-0. WRITTEN COMMUNICATIONS: a. Letter from the City Attorney stating that the City Council did not meet in Closed Session on 6/10/97. It is recommended that the letter be received and tiled. 6. ORDINANCE 2709 APPROVING AN AMENDMENT TO THE OTAY RANCH SECTIONAL PLANNING AREA (SPA) ONE PLANNED COMMUNITY DISTRICT REGULATIONS (first readinl~) - McMillin has snl3mitted an amendment tier Villages One and Five. The SPA Amendment proposes changes to the Planned Community District regulations concerning design standards in Neighborhood R-11 of Village One. Staff recommends Council place the ordinance on first reading. (Director of Planning) Continued from the meeting of 6/10/97. Item was pulled trom the Consent Calendar. · Kent Aden, representing Village Development, 11975 El Camino Real, Suite 200, San Diego, 92130, stated that he wrote the planned community district regulations for Otay Ranch, and he strongly supported the Hollywood Minutes June 17, 1997 Page 2 driveway concept. There are five parcels within SPA One that meet the criteria under the proposed language. What is a mystery to him is why would Council be adopting a standard that would single out one of those five parcels. If this is a good policy tbr one of the parcels, then it seems like it wonld be a good phiicy lbr all of the parcels. He felt the concept to have the Hollywood driveway be market driven was a valid one within the entire SPA. He requested that the new standard be applied, regardless of ownership, in SPA One. Councihnember Salas stated that during the discussion on the Hollywood driveways, she wanted to see that concept because it was an "old/new" look and it really creates a sense of neighborhood rather than the monolithic kind of houses that we see where the l~,~cal point is the garage. When she was asking her qnestions as to why there weren't more parcels being considered, the response that she got was that this particular parcel was about the only one that had lots wide enough to support it. Mr. Aden stated that was correct within the West Coast Land Fund ownership. There are four additional parcels that would be within the Village Development ownership which wonld also meet that criteria. Not only the future but the present. He believed we will actually be the first phase of SPA One developed and in that phase they have a parcel that meets the 60 x 110 foot criteria, so the builder that will be building there will be incorporating Hollywood driveways. What he qnestinns is why that builder will be held to a 30% standard whereas the future builder in the West Coast Land Fund property would be held to a market-driven standard. All he was asking is that we apply the market-driven standard across the board. Mayor Horton asked shouldn't we address this issue-by-issue when the pn~ject comes beti3re Conncil. Mr. Aden responded that he did not believe so. This is the zoning ordinance that you are amending and the entire SPA One, including their ownership, is snhject to this zoning ordinance, the planned community district regulations. It was not dear to him why we're singling out a parcel to exe~npt from a policy. Mr. Goss stated that Council was fi~cusing on specific policy and took an action on it. He suggested that instead of extending that policy to other properties on an ad-hoc basis, if you have an interest at all in pursuing the issue, then refer this to staff lbr further analysis to see what the impacts would be on such an extension. Mr. Rosaler, Senior Planner, stated that there was one neighborhood in Village Development's first phase that would be afli~cted by this. Staff has had initial discussions with that builder about this concept on his property. We could have a report back to Council at a meeting in Jnly. Assistant City Attorney, Ann Moore, stated the reason why this proposal applies only to McMillin's property is because this is pursuant to their application for an amendment to the SPA One plan. The evidence that was presented at the last public hearing was based upon their prc~ject. Ms. Moore clarified her statement by saying there was a public hearing held on the ordinance itself and evidence was presented by the planning staff as well as developers and whoever else wanted to be present to make a presentation regarding that ordinance. Therefore, it could be adopted by Council tonight if they wanted to. Councilmember Rindone stated that it talks about Hollywood driveways tbr lots that are at least 60 feet wide. He suggested that staff look at some of the oIder neighborhoods that have the Hollywood driveway on 50 foot wide lots that does have the garage in the back, and it does work. ORDINANCE 2709 OFFERED BY MAYOR HORTON, heading read, text waived, passed and approved 4-0- 0-1 (Moot abstaining). 7.A. RESOLUTION 18679 MAKING FINDINGS ON THE PETITION FOR THE OTAY RANCH VILLAGE ONE ASSESSMENT DISTRICT NUMBER 97-2 - Village Development has ti~rmally petitioned the City to use assessment district financing fi~r certain public improvement to be located in Village One of the Otay Minutes June 17, 1997 Page 3 Ranch. Staff recommends approval of the resolutions. (Director of Public Works) Continued from the meeting of 6/10/97. B. RESOLUTION 18680 MAKING APPOINTMENTS IN THE OTAY RANCH VILLAGE ONE ASSESSMENT DISTRICT NUMBER 97-2 AND APPROVING THE FORM OF THE ACQUISITION/FINANCING AGREEMENT THEREFOR C. RESOLUTION 18681 ADOPTING A MAP SHOWING THE PROPOSED BOUNDARIES OF THE OTAY RANCH VILLAGE ONE ASSESSMENT DISTRICT NUMBER 97-2 D. RESOLUTION 18682 DECLARING INTENTION TO ORDER THE ACQUISITION OF CERTAIN IMPROVEMENTS IN A PROPOSED ASSESSMENT DISTRICT; DECLARING THE WORK TO BE DONE TO BE OF MORE THAN LOCAL OR ORDINARY BENEFIT; DESCRIBING THE DISTRICT TO BE ASSESSED TO PAY THE COST AND EXPENSES THEREOF; AND PROVIDING FOR THE ISSUANCE OF BONDS FOR THE OTAY RANCH VILLAGE ONE ASSESSMENT DISTRICT NUMBER 97-2 Councilmember Salas stated that Council is being asked to make findings on the Otay Ranch Village Assessment District 97-2. One of the things which cnncerned her was that this will require some bonding; she wanted to know if the credit rating of Village 1 Development has any at't~ct on the bond rating and whether or not they will be able to get completion bonds. Public Works Director, John Lippitt, respnnded that assessment bonds have first rights on the equity behind property taxes. We have a requirement that there be a debt to lien ratio of 3:1 when the District goes in. Finance Director, Robert Powell, stated that would definitely be an issue in marketing the bonds. That may require the bonds to carry insnrance. It is not typical to rate bonds fi~r assessment districts, but we may be forced to see a bond rating to enable us to market them at a reasnnable rate because of the latest financial difficulties. * * * Councihnember Padilia arrived at 6:05 p.m. * * * 8. RESOLUTION 18697 FINDING COMPENSATION OF UNREPRESENTED CITY EMPLOYEES UNFIXED AND UNCERTAIN - Constitutional constraints surrounding the City's ability to alter compensation of its emplnyees after service has been rendered requires Council to make the finding that compensation fix unrepresented City officers and employees is directly or indirectly tied to compensation of represented employees. As such, salaries of those represented employees may not be fixed and det~nite on, or perhaps even sometime after 7/1/97. Staff recommends approval ot the resolntion. (City Manager) 9. RESOLUTION 18698 ACCEPTING THE CALIFORNIA ALCOHOLIC BEVERAGE CONTROL (ABC) GRANT IN THE AMOUNT OF $80,000 FOR AN ADDITIONAL PEACE OFFICER, OVERTIME, TRAINING, TRAVEL AND RELATED EQUIPMENT AND AUTHORIZING THE POLICE CHIEF TO WORK WITH THE DEPARTMENT OF ABC TO ESTABLISH THE ABC PROGRAM - During the fiscal year 1997/98 bridget d~liberations, Council appr,,>ved Supplemental Budget Report Number 7, accepting the ABC Grant in the amonnt of $80,000. Adoptinn of the resnluti,.m is necessary tbr implementation Ii>r the program to occur. The prc~ject is proposed to begin 7/1/97 and end 6/30/98. Staff recommends approval of the resolution. (Chief of Police) 10. RESOLUTION 18699 ESTABLISHING THE APPROPRIATIONS LIMIT FOR THE CITY FOR FISCAL YEAR 1997/98 PURSUANT TO ARTICLE XlllB OF THE CALIFORNIA CONSTITUTION - Article XIIB of the California Constitution approvcd by the voters in 1979, and commonly retorted to as the Gann Initiative, requires each local government to estabIish an appropriations limit by resolution each year at a regularly Minutes June 17, I997 Page 4 scheduled meeting or noticed special meeting. The pnrpose {if the limit is to restrict spending uf certain types of revenues to a level predicated on a base year amount increased annually by an inflation thctor. Staff recommends approval of the resolution. (Director of Finance) 11. RESOLUTION 18700 APPROVING THE APPLICATION OF CYCLE NINE PROJECTS FOR FUNDING BY THE STATE/LOCAL TRANSPORTATION PARTNERSHIP PROGRAM (SLTPP) - Senate Bill 300 created the SLTPP to identify and construct locally supported projects with a minimum of State planning and review in order to encourage local agencies to use funding sources other than Gas Tax tier these projects. Staff has prepared the application lbr 9th Cycle funding under this program. Staff recommends approval of the resolution. (Director of Public Works) 12.A. RESOLUTION 18701 APPROVING FINAL MAPS OF TRACT NUMBER 92-02, SALT CREEK RANCH, NEIGHBORHOOD 3, UNITS 1 THROUGH 6, NEIGHBORHOOD 3A, AND NEIGHBORHOOD 6, UNITS 1 THROUGH 5, ACCEPTING ON BEHALF OF THE CITY PUBLIC STREETS AND EASEMENTS GRANTED ON SAID MAPS WITHIN SAID SUBDIVISIONS, REJECTING ON BEHALF OF THE CITY ALL OPEN SPACE LOTS GRANTED ON SAID MAPS WITHIN SAID SUBDIVISIONS, AND APPROVING SUBDIVISION IMPROVEMENT AGREEMENTS FOR THE COMPLETION OF IMPROVEMENTS REQUIRED BY SAID SUBDIVISIONS, AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENTS - On 10/6/92, Council approved the Tentative Subdivision Map for Tract 92- 02, Salt Creek Ranch. One condition of approval ti3r the Tentative Subdivision Map required that the developer enter into an agreement with the City to guarantee the construction and delivery of low and moderate income housing units in a timely manner. To comply with this condition, Pacific Bay Homes has prepared an Affordable Housing Agreement tier the Salt Creek Planned Community. Staff recommends approval of the resolutions. (Director nf Community Development and Directur nf Public Wnrks) B. RESOLUTION 18702 APPROVING SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT FOR TRACT 92-02, SALT CREEK RANCH, NEIGHBORHOOD 3, UNITS 1 THROUGH 6, NEIGHBORHOOD 3A, AND NEIGHBORHOOD 6, UNITS 1 THROUGH 5 C. RESOLUTION 18703 APPROVING AN AFFORDABLE HOUSING AGREEMENT RELATED TO SALT CREEK RANCH AND AUTHORIZING THE MAYOR TO SIGN THE AGREEMENT Item was discussed in coniunction with Item 18. Fnr discussinn see Item 18. Relnlutiuns were offered bv Councilmember Moot and a0proved unanimuuslv 5-0. * * * END OF CONSENT C4LENDAR * * * ORAL COMMUNICATIONS · Brit Berrett, 1125 Carlos Canyon, Chula Vista, 91910, CEO of Chula Vista Medical Center, stated they waj~ted to share with the Council some information regarding a survey which was just completed in April. Every year, five to six thousand hospitals are surveyed by the Joint Commission of Accreditation. They received a score of 92 which was a significant score and they were very proud of it. This comes with a renewed commitment on behalf of Sharp Chula Vista Medical Center that they will share with the City Council information regarding the hospital, health care issues, and establish better communications in the tinure. They had about 500 standards in the evaluation of which they had received 12 minor comments and achieved a three year accreditation which is a significant achievement in this day and age of health care reform. ® Bill Ayers, 44 E. Mankato Street, Chula Vista, 91910, stated how appreciative he was fi>r the Council's Certificate of Appreciation. Minutes June 17, 1997 Page 5 PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES 13. PUBLIC HEARING CONSIDERING TESTIMONY ON THE FISCAL YEAR 1997/98 LEVY OF ASSESSMENTS FOR OPEN SPACE DISTRICTS 1-9, 11, 14, 15, 17, 18, 20, 23, 24, 26, 31, 33, BAY BOULEVARD, AND TOWN CENTER - The City administers 25 open space districts established over the last 25 years. The districts provide the mechanism to finance the maintenance of common open space areas (canyons, trails, medians, etc.) associated with and benefitring that particular development. As part of this process, a levy of an annual assessment is necessary to enable the City to collect funds ti~r the proposed open space maintenance. On 5/20/97, Council approved the open space reports on assessments fur all existing open space districts and set this date for a public hearing. A second public hearing is scheduled Ii~r 7/15/97. Staff recommends the public hearing be opened. testimony taken, and the public hearing closed. (Director of Public Works) John Lippitt. Public Works Director, stated this is the first hearing. Staff wanted to indicate, because of Proposition 218, that there are no collectibles that will be higher than Fast year's assessment. So in effect, there will not be an increase above last year's assessment. One prt~iect that was in the Engineer's Report last time, the Broadway Business Homes, was supposed to have an assessment of $1,072. However. staff is recomanending that the collection fur that be zero fur next year because it is not anticipated that they will be ready tbr any work to be done by the District during the next fiscal year. Councihnember Rindone stated that in District 18, the collection fi~r the current year is $228 and the proposed collection fbr 97/98 is $270, so it appeared that the collection is greater than last year. Mr. Lippitt stated that the collection does not exceed last ycar's assessment. The assessment tbr last year was $299.74 even though the collection was only $288. So there were reserves which allowed us to collect less than what the assessment was. This being the time and place as advertised, the public hearing was opened. Addressing Council were: · Robin Schmitt. the Certe Group, 4660 La Jolla Village Drive No. 10080, San Diego, 92122, representing Sunbow Villa Apartments in District 18, stated that they had received a letter stating that their assessment which was $22,800 for the apartments was guing to gu up tua maximnm of CPI of 4.2. Her question was would this be happening or not. Mr. Lippitt stated that this was the one that Councilmember Rindone just clarified. The collection will go fi'om $228 to $270. The CPI ,,rill allow the assessment to go to $312, but the amount that they are collecting will be $270 per EDU. Ms. Schmitt wanted to point out that property owners of multi family property have had a tough time, especially over the past couple years. There has not been any rent increases to their residents, in fact there have been some large concessions just to be able to keep the rental property tilled. At the same time, they have undergone the usnal increases and other expenses. So although they understand the need fur increases and the need t;3r the open space, they wanted to gu on record of asking the Council to be kind and to make that increase as minimum as possible. · Ken Huffner, address not given, submitted a letter of protest. There being no further public conm~ents, the public hearing was closed. The second public hearing will be held on July 15, 1997. 14. PUBLIC HEARING CONSIDERING TESTIMONY ON THE FISCAL YEAR 1997/98 LEVY OF ASSESSMENTS FOR OPEN SPACE DISTR1CT NUMBER 10 - Based on the advice of the City Attorney, the item has been separated dtte tu conflict of interest concerns since a Conneilmember owns property subject to the Minutes June 17, 1997 Page 6 proposed assessment in this district. Staff recommends the public hearing be opened, testimony taken, and the public hearing closed. (Director of Public Works) John Lippitt, Public Works Director~ stated that District 10 assessments remain the same as last year. This being the time and place as advertised. the public hearing was opened. There being no one wishing to address Council, the public hearing was closed. The second public hearing will be held on July 15, 1997. 15. PUBLIC HEARING CONSIDERING TESTIMONY ON THE FISCAL YEAR 1997/98 LEVY OF ASSESSMENTS FOR EASTLAKE MAINTENANCE DISTRICT NUMBER 1 - Based on the advice of the City Attorney, the item has been separated due to conflict of interest concerns since a Councihnember owns property subject to the proposed assessment in this district. Staff recommends the public hearing be opened, testimony taken, and the public hearing closed. (Director of Public Works) Public Works Director, John Lippitt, stated that the assessment remained the same as last year in the EastLake Maintenance District No. 1. This being the time and place as advertised. the public hearing was opened. There being no one wishing to address Council, the public hearing was clnsed. The second public hearing will be held nn Jnly 15, 1997. 16. PUBLIC HEARING ANNUAL RATE REVIEW FOR SOLID WASTE AND RECYCLING SERVICES AND CONSIDERATION OF A RATE DECREASE FOR COMMERCIAL REFUSE COLLECTION - The report describes the proposed changes to the existing rates charged by Laidlaw Waste Systems, the City's franchised hauler Although some of the components of each solid waste service may be proposed to increase and some to decrease, the overall et't~ct on the final rates recommended by staff represent a significant decrease tbr commercial customers and no change for residential customers. Staff recorrm~ends approval of the resolution. (Conservation Coordinator) - This item was trailed until after cnnsideration of Item 17. RESOLUTION 18704 APPROVING RATE SCHEDULES PRESENTED BY THE CITY'S PRIVATE WASTE FRANCHISEE FOR SOLID WASTE AND RECYCLING SERVICES Michael Meacham, Conservation Coordinatnr, stated that Conncil made a ret~rral to staff requesting that we review the commercial rates. Although we eBjoy the lowest residential rates in the County, we did not have the most favorable commercial rates. This annual rate review gives us the opportnnity to address this issue. With regard to the issues discussed earlier, we have not rexommcnded an increase in any particnlar program or an increase to any operating components in Laidlaw Waste Systems rates. In fact, we have been able to reduce a number nfthe operating components in the residential and commercial rates throughout the City. Staff has created an additional option which will help a number of smaller businesses move tYom the three-yard bin standard collection system to one of the cheaper, manual collection options and could rednce their rates by as much as 75 percent. This being the time and place as advertised. the public hearing was opened. Addressing Council were: · Dan Higgins, General Manager of Laidlaw, 881 Energy Way, Chula Vista, stated the rates involve a number of components, principally a decrease in the County rate is now based on the volumes of tons that the haulers bring to the landfill. The City will be able to er[ioy the lowest rate available in the County. The a~justments do not reflect an operating cost component. Councilmember Rindone stated that in his calculations, Proposal 2 which is beti~re Council, maintains the residential single family rate at $13.09 per month. It is also his understanding that one of the major components to the cost factor is the landfill tipping fees. What we see betbre us is a m~:jor decrease in the landfill tipping fees from $47.50 Minutes June 17, 1997 Page 7 per ton to $32 per ton which is approximately a 33 % decrease in the tipping fees. He asked why is it, if there is a 33 % reduction in the tipping fee cost, there is a zero reduction in the single family residential rate. Mr. Higgins stated that the decrease in the last twelve months has been from $40 per ton to $32 per ton. and Laidlaw is prqjecting that we can cut those costs further by July I to $30 per ton. The big dift~rence in the rates is that we are currently paying each resident in the City $2.35 for unlimited curbside recycling. They have been paying this since 1995. That is because they had some great rates that were very high two years ago. The market rates li3r what they can sell recyclables has lhllen dramatically. The landfill decreases more than offset by the amount of recyclable proceeds that are now available. The big impact here is the material sales of recyclables. Some cities have cancelled programs within the last two years and thinking about starting them back up because of the fall in recyclables. Councilmember Rindone stated that when there is a significant component of the rate which is the tipping fee and there is a precipitous drop of nearly 33%, then he felt is was incumbent upon staff to let Council know this inti~rmation. He flirther stated that staff has made a recommendation that all rates be established as maximum rates. What does this mean. Glen Googins, Deputy City Attorney, stated that in the wake of the passage of Proposition 218, there has been much debate as to its breadth and the type of fees that it covers. It is staff's opinion that Proposition 218 will apply to the rates that are charged by service providers lbr trash disposal. Staff is advising that there will be a clarifying ordinance presented to Council to this eft~ct and in order to distance the City t~om ti~rmally setting a specific rate, the City should engage in the practice of setting a maximum rate. The ultimate result will be the same to the extent that the operator will not be allowed to charge any greater than the maximum rate that is set, but in efl~,ct it will place the operator technically in the position of setting the rates themselves. Mr. Meacham stated there was another purpose tier establishing the maximum rates. Because we have not e~joyed the lowest rates in commercial refuse and because refuse rates are based on an average throughout the City, we wanted to provide Laidlaw and staff the opportunity to work with individual generators that have special or unique opportunities. People who participate in recycling programs, people who make it easier fi,r collection, people who have a company business who make an etfi~rt to reduce operating costs and reduce the disposal and encourage diversion, we have established them as maximum so we can have the opportnnity to negotiate with companies that are in those special circumstances. Councilmember Salas stated that what she was understanding was that Laidlaw consistently subsidizes the rate payer to the tune of $2.35 per mnnth no matter how luw the price of the recyclables go. Has the reduction in the tipping fees been proportionate to the drop in the recyclable market and therefi~re, there is no realized profit to Laidlaw because of that. Mr. Higgins responded that there is no additional realized profit to Laidlaw in any case. It is just about proportional. Part of the disposal rates went down on December 13 and went down by $2.00 more on March 12. The contracts read that every year we set the rates. We try to prqiect what the recyclable values are going to be, what the quantity will be, and what the participation is going to be. About two years ago. there was a big surplus of money, abont $700,000. So they thonght, lets give the money back and supplement the rates. About a year ago, he came to Council, and they were in the deficit of about $250,000. and they proposed a rate increase. Council said no, lets hold the line. Because of the landfill decrease and because of snme of the cost savings they instituted, they have moved from a deficit of $250,000 a year ago to about $50,000 today. They think that in about a month, it will be cleared out. Mr. Meacham stated that each of the five program areas that we have has an established balance sheet that is reported to the City on an annual basis. That balance sheet includes the histnrical perspective of all of the recycling programs and any of the rate component changes flit the disposal component. If there are revenues above and beyond the cost, those are not kept by Laidlaw but are applied as a credit in future rate reviews. Minutes June 17, 1997 Page 8 RESOLUTION 18704 OFFERED BY COUNCILMEMBER MOOT, heading reud, text waived, passed and approved 5-0. BOARD AND COMMISSION RECOMMENDATIONS None submitted. ACTION ITEMS 17. REPORT REQUIREMENTS FOR DETERMINING VIABLE SOLID WASTE DISPOSAL CONTRACT COLLECTION OPTIONS - On I/1/97, Allied Waste Industries of Scottsdale, Arizona purchased Laidlaw Waste Systems Inc., the City's solid waste system collection franchise. The Franchise requires compliance with the Municipal Code which allows the City to cancel a contract where there is a change of ownership unless City approval was obtained. Staff recommends approval of the resolution. (Deputy City Manager Krempl) RESOLUTION 18705 APPROVING CONDITIONALLY THE ASSIGNMENT OF THE CURRENT CITY OF CHULA VISTA SOLID WASTE FRANCHISE BY LAIDLAW WASTE SYSTEMS INC. TO ALLIED WASTE INDUSTRIES OF ARIZONA, INC. George Krempl, Deputy City Manager, presented the staff report. He stated that there was a transaction that occurred in January that required City approval. That approval has not yet occurred and that is the reason tier the issue betbre Council. Staff is presenting Council three alternatives: ( 1 ) To approve the assignment of the franchise, thus maintaining the status quo. (2) Disapproval and issuance of an RFP for solid waste collection services. (3) To approve the assignment with conditions. StaWs recommendation was Alternative 3 to approve the assignment with conditions. One of those conditions is to direct staff to enter into negotiations with Laidlaw/Allied between now and September on those varions issues, and the second condition is fi:,r Allied to aclomwledge in writing their agreement that they are bound by the terms and conditions of the existing franchise including without limitation the Municipal Code Section 8.24.110 regarding termination and that all futnre assignments or changes of ownership shall require written approval of the City prior to any assignment of the franchise or change of ownership of the operating company. Councilmember Rindone asked the Ibllowing questions: 1) If the agreement between the City and Laidlaw was considered a contract. 2) If it is a contract and if one party does not ti>llow the provisions in the contract, then is this considered a breach of contract. 3) It has been shared with Cormoil in the staff report, that staff on more than one occasion both verbally and in writing, reminded the Franchisee. Laidlaw, of those provisions. Was that true? 4) According to the information, it indicates that on November 20. 1996 staff again inquired about the issue and was advised by Laidlaw that there was no City approval required. What was stafCs response to that. Deputy City Attorney, Glen Googins, responded that it was a franchise which is a rather uniqne; it is both legislation and its a contract. The franchise provisions do function in many respects as a contract between the City and the Franchisee with respect to their obligations. Yes, it is a contract. It would tbllow that where you have a contract and an agreement between parties to perform on certain terms, that a breach of those terms would constitute a breach of contract. Mr. Krempl responded that there was an oral conversation between Mr. Meacham, Mr. Higgins, and himself when he inquired about where they were with regard to the franchise and getting City approval. Verbally Mr. Higgins indicated that it was his belief that Allied did not feel they needed City approval for the sale in that was an exchange of stock and did not fall under the purview of the City's necessary approval. He told Mr. Higgins that the City disagreed with that, and we would be reviewing it further with the City Attorney's office. That led to our December 3 letter where we reaffirmed in writing that, in thct, it did require City approval. Councilmember Rindone asked if staff was making an eftbrt to find evidence of the qualification of Allied by trying to ascertain its success in operating in cities that they currently are operating in. Minutes June 17, 1997 Page 9 Mr. Krempl stated that this was done subsequently. The transaction took place on or around January lst; it was not until February that the staff sent them a subsequent detailed letter with a dozen or so questions and asked tier information on other service areas and providers. The infi~rmation we asked for prior to the sale related more to the financial transaction itself than it did to getting additional infbrmation about Allied's intent and their services in other jurisdictinns. Councilmember Salas stated that Allied is one of the companies that is cunsidering purchasing the landfill. The analysis of the staff says that with Allied being both the owner of the landfill and the provider of services that it could work out to our advantage. She also sees where it could work to our disadvantage in that it would be a double monopoly. Did staff think about this when making the analysis. Mr. Krempl stated that staff felt it would put us in a very advantageous position, because if they are successful in the pnrchase of the landfill then there would be every reason fur them to want to be able to continue the franchise and the collection within Chula Vista. It was tier that reason that staff thought from the timing perspective and the events which are nnfidding that we would be poised to negotiate a good transaction with them in light of the fact that they would want to keep us as waste collection. Councilmember Salas stated that when looking at the alternatives and options which are presented, it stated that ideally any disapproval of the continuation of the franchise should be based upon the qnalifications and track record. She felt there was more that went into a track record than the financial statement and the health of Allied, she did not find any indication in the report where it talked about the cost of service to residents. Also. we have had a lot of prior testimony and letters about what a good corporate citizen Laidlaw has been in the past. What kind of a commitment to the community does Allied have. These are also things which we have to consider. Mr. Krempl stated that in answer to our questions, Allied did make affirmative statements in writing as to their intent to continue to provide the lowest cost to the community, continue to be innovative on recycling, and to be willing to explore some of the newer programs that the City is interested in, etc. We suspect that if we entered into negotiations we would really get into some discussions of some real tangible issues and some specifics on where we think their shortf:alls have been, where we have seen customer complaints, and how they have or haven't addressed those. At the present time, all we have is Laidlaw's track record and Allied's track record on paper and what they have done in other communities. Councilmember Moot stated that he did not understand the structure of Allied's purchase of Laidlaw that was based on a stock transfer. In part of that transfer, Laidlaw was to hold 20% nf Allied's voting stock. But there was a contradictory statement in the staff report that makes reference to a report from a Periodical that states "the result of which is that Laidlaw appears to no longer have any ownership interest in the business". He wanted to know what that means. Mr. Meacham stated it was our understanding that in the original transaction that was reported in the staff report that Laidlaw Waste Systems did hold a certain interest and have two board members on the Allied Board. However, subsequently, they have purchased those stocks from Laidlaw Waste Systems, so Laidlaw no longer has a financial interest in the company. The two board members who previously served on the Allied Board from Laidlaw are also no longer on that board. Staff has done some preliminary checking with other cities with regards to the qualitative and quantitative services provided by those cities. We have talked to elected officials and staff persons responsible fbr the contracts. There is still not enough intilrmation to give to Council yet. To date, however, all comments received have been positive in terms of the quality of service. Mr. Googins stated that it was statics position in terms of whether or nnt a change of ownership has occurred ur whether or not an assignment of the franchise has occurred that not withstanding whether or not Laidlaw subsequently transferred their stock interest, the language of the ordinance clearly contemplates any change of ownership whatsoever of the operating company. It would be staft~s position that given the very material nature of the transaction in introducing a new entity as the corporate parent of the organization that was operating the franchise that indeed a change of ownership did occur. Minutes June 17, 1997 Page 10 The meeting was opened to the fi~llowing to speak: · Dan Higgins, 881 Energy Way, Chula Vista, 91911, General Manager of Laidlaw Waste Systems, asked Council to approve the assignment of a solid waste franchise from Laidlaw Waste Systems to Allied Waste Industries. Laidlaw's position is that the assignment from Laidlaw to Allied should be approved. In September, Laidlaw notified City staff of the pending transaction between Laidlaw Waste Systems and Allied Waste Industries. At that time, it was their understanding that approval was not needed because Laidlaw, the company who owns the operating franchise with the City of Chula Vista, was not going tn change; it continues today as Laidlaw Waste Systems. Their understanding was that the only change in the transaction was that their only share holder, Laidlaw Inc., a separate company, was going to sell its shares to Allied Waste Industries. Changes of shares in companies change every day in the open market. They had some discussions with staff up through November, and staff was not clear in what their position was. In early December, once the new City Attorney joined the staff, a determination was made that approval by Council was necessary. Immediately thereafter, they asked that they get approval prior to the transaction. For a number of reasons, approval could not be considered by the City prior to the actual closing of the transaction. Staff requested approval prior m the closing of the transaction, and Laidlaw responded to all the intbrmation requested of them. While the franchise was an important part of this transaction, this was a multi-state, international deal by two public companies that came togetha very quickly. Laidlaw Systems and Allied, their new parent company, have provided written acknowledgment to the City Manager in response to the staff report agreeing to abide by the terms of the contract as interpreted. · Donald Slager, 7585 E. Redfield Road, Scottsdale, Arizona. Regional Vice President of Allied Waste Industries West Region, stated that Allied Waste Industries was dittOrent Ii~om Laidlaw fi'om the standpoint that they believe in support in a decentralized management philosophy. They pnt a great deal more responsibility, authority, and also accountability on their local management and operating staff. Questions regarding the commitment of Allied since the acquisition of the company should be directed more to the local people than to himself fi'om the standpoint that it has been obvious that the dedication has not changed since the merger in December. They believed that their style of management will offer the City a more responsive approach to our needs and concerns. Councilmember Rindone asked that since the merger of the two companies in December, do you see the operation of the waste hauler in the City as Laidlaw or is it Allied: how would you describe that relationship. Mr. SIager responded that they did not operate any of their local entities as Allied Waste Industries. The company will remain and operate as Laidlaw Waste Industries ti>r a time. It will never operate as Allied. They try to put that local lbcus on their managers. They believe in the local identity and the commitment and the achievements of their Iocal staff. Councilmember Rindone stated that the bottom line is the thct that a franchise lbr a waste hauler is a monopoly; it is a regulated monopoly which is regulated by the city council who serves as the governmental agency to regulate that monopoly. While there has been a good working relationship in a number of areas, the ongoing concern for years has been an attempt to understand a reasonable rate of return. The last time there was a rate hearing, staff was not able to support the recommendation by Laidlaw fi~r an adjustment in the rates because that was not able to be ascertained. Will there be assistance on the part of Allied to reach that understanding so staff will be able to appropriately review that prior to any reconunendation in the future. Mr. SIager stated that they were aware that this is a two-way street. They will do everything they can to address the City's concerns and ofl~r the City answers and resolntions to the issues that they can. Mr. Higgins can probably speak to this issue more adequately than he can. He knew that this was an issue at some point and some of the inti~rmation had been provided in the past. Councilmember Moot asked what kind of philosophy did Allied have toward recycling and does Allied have the ability to overrule Laidlaw Waste Systems if Allied feels this isn't affecting positively our profit situation if we don't want to continue these very aggressive and progressive recycling programs. His concern that kind of change in philosophy and direction might concern the City and might cause us to want to have a provider that shares Laidlaw's traditional commitment to recycling. Minutes June 17, 1997 Page 11 Mr. Slager stated that Laidlaw's efl'orts to date are admirable. It is not only a service they carry out diligently, hut something they believe in. Mr. Higgins is his best gauge as to what is needed by the City. It would be detrimental tbr them to go against the wishes and needs of their customer base. If it is important to Chula Vista, it is important to Laidlaw and Allied. Their mode of operaboa is globally the same and that is to provide the services that are needed by our customers, to provide them with long-term disposal capacity, and also offer them some rate stability and insurance that we will be there ti~r them in the future. Councilmember Salas stated that Allied being the big company that it is, must have some corporate policies that the local people wnuld have to follow. There must be some point where the discretion of the local people is overridden by your company policies. Mr. Slager stated that their company policies dictate accounting transactions and functions, safety and compliance issues, human resources issues, issues that are a matter of thct of law, and operational integrity. They have invested a great deal of money in other markets in recycling, in building MERFS, etc. and they have done it as Allied previous to the Laidlaw transaction. They are currently doing that. Its market specific. Councilmember Rindone stated it was represented that the reasonable rate of return was presented to staff prior to discussion. Was that staft~s understanding that it occurred. Mr. Powell responded that a couple of years ago we did receive data and we also received a letter from Laidlaw's outside CPA firm. The letter indicated that since Laidlaw did not break out their operating data specifically for the City of Chula Vista that they relied on schedules prepared by management which were unaudited schedules but that they l~lt the internal rate of return appeared reasonable. Councilmember Rindone asked if this was the basis of why staff did not recommend adjustment in the rate because it was unaudited data and that the basis of staff opposing any rate adjustment was because they still did not have clarity when it was betbre Cormoil the last time. Mr. Powell responded that staft~s recommendation at the time was against a rate increase because the specific operating data for Laidlaw at the time did not justify an operating expense increase; their operating expenses had not increased, theretbre, staff recommended against a rate increase. Laidlaw's position was that since the CPI increased and the general structure of the contract was to grant increases based on CPI increases, they should receive an increase. It was not based on the rate of return intilrmation. Councihnember Rindone asked if we have ever received inli3rmation that would satisl~ staff in understanding a reasonable rate of return to be able to make recommendations. Mr. Powell stated that he did not believe we had reached that point. Laidlaw has committed to ask their auditors to give us a specific opinion as to a rate of return. We have yet to receive that inti~rmation. Councilmember Rindone stated that statl has presented three alternatives. However, it has been several years where the one remaining issue that has not been able to get resolution is an understanding and clarification of a reasonable rate of return. What has been represented here tonight that there was very clear evidence that this was a provision in the contract and that this City Council has the right as a contract provision to be able to review and approve or disapprove the assignment of that franchise. What he would like to see is to get resolution of the only central issue that has always been the heart of the disagreement between this City and Laidlaw and that is understanding and insuring that we are protecting those who elect us that there is a reasonable rate of return and not excessive. We need to get that clarification. If it was not Ii~r the fact that this is up Ibr review in September 1997, he would be prone to look at alternative 2 because he f~lt the evidence of qualifications that has been requested for hasn't been validated to the satisfaction of staff, they have ignored the assignment of the apprnval process or even said it was not applicable. As of today, we have received a letter validating that was true. Minutes June 17, 1997 Page 12 M (Rindone) to approve Alternative 3 with the direction that staff, in addition to Alternative 3, indicate that any pntential extension of the franchise agreement would first have to provide full clarification as to a reasonable rate of return in which staff could repnrt to the Council that it is in place. Mayor Horton asked if the motion could be bifurcated. Mr. Rindone stated yes as long as the last part would be considered first. He stated he would not support even going to September 1997 if we cannot get this issue resolved. Mayor Horton stated that her concern was the rate payers, the amount that they pay, and the quality of service. She did not feel comfortable getting into a private company's rate of return. It is the Council's responsibility to work toward negotiating an agreement that we libel comti3rtable with, where we know we are protecting our rate payers, and that we are protecting the quality of services that they will receive. Councilmember Moot expressed that Option 3 was clearly the one that makes the most sense because, while Allied has acknowledged and will abide by the terms of the existing agreement, this period of time will give us an opportunity to talk with Allied about issues that are i~nportant to the City, maybe give us an opportunity to see whether they are going to give us any commitments in writing, to staying with the recycling programs, and give us a period of time as to what the City's relationship with Allied might be. Councilmember Salas stated that she was in support of Option 3. Some of the discussion which has taken place in regard to the reasonable rate of return was a valid discussion and when you are talking about a free market and a franchise, the free market doesn't come into play here. Even though we have some of the lowest rates in San Diego County, she believed that there should be a fairness to the consumer. If there is any opportunity f~.~r the rates to be dropped even lower, based on a reasonable rate of return, then we should be able to explore. RESTATEMENT OF MOTION: Councilmember Rindone stated that the intent of the motion was to adopt Option 3 which is to approve the assignment of the franchise until the review of Septe~nber 1997 and to direct staff to request infi~rmation from the applicant regarding the reasonable rate of return. SECOND TO MOTION: Motion seconded by Padilia. Councilmember Moot stated he will be supporting this, but he did not want to be misunderstood that he necessarily agrees that an agreement should be tied to a reasonable rate of return. He hoped that when staff comes back in September that they will analyze how this issue is handled in other franchise agreements, but difl~rent corporate philosophies and dit~i~rent businesses have made determinations to survive on different rates of returns ti>r diffi~rent reasons. A rate of return isn't necessarily the single fhctor that a company always looks at in deciding their prices. Mayor Horton stated that she will be voting no although she supports the first part of the motion. She has a problem and that we have discussed befi~re. Staff tried to look into it. The City spent money on this which did not help us one way or another in making a decision because we didn't have enough infi>rmation in order to use that intbrmation to make a decision. VOTE ON MOTION: Motion passed 4-1 (Horton voting no). 18. RESOLUTION 18706 AUTHORIZING PACIFIC BAY HOMES TO CONSTRUCT HUNTE PARKWAY FROM PROCTOR VALLEY ROAD TO OTAY LAKES ROAD AND A PORTION OF PROCTOR VALLEY ROAD FROM MT. MIGUEL ROAD TO HUNTE PARKWAY AND RECEIVE CREDIT AGAINST DEVELOPMENT IMPACT FEES - The City Engineer has received a letter fi-om Pacific Minutes June 17, 1997 Page 13 Bay Homes requesting authorization to begin construction of two roadway facilities identified in the City's Transportation Development lmpact Fee (TDIF) Capital Improvements Projects list and begin the DIF credit process. The grading and improvement plans have been submitted and approved by the City Engineer as of 5/20/97. Staff recommends approval of the resolution. (Director of Public Works) Councilmember Moot wanted to discuss this item in conjunction with Item 12A because his question in 12A was an educational question which is when we approve our final maps, we set in bonding and other requirements to ensure the public improvements. He f~lt this would be an appropriate project ti3r staff to explain exactly how we arrive at those agreements, how we figure the appropriate amount of money to bond and insure, what are we actually bonding and insuring and what we are not bonding and insuring. There tends to be some confusion on this issue. Exactly how does this process work. Cliff Swanson, City Engineer, stated there are a lot of items that go into to answer that question. When a tentative map is approved. all of the public improvements that have to be constructed are laid out during that process. When we get down to the final map process, the engineer Ii~r the developer prepares the plans and estimates for those public facilities. That includes not only the off site thcilities, or major thcilities such as Proctor Valley and Hunte Parkway which are going to be constructed under the DIF program, but it also requires all of the internal streets. water systems, sewer systems, and other public ti~cilities that have to be constructed with those subdivisions that are going to be constructed. At the same time~ thc engineer is preparing grading plans presumably before the improvement plans are prepared. With each of those sets of plans, the engineer of record has to prepare estimates of the work to be done. The City staff, while they are checking the grading plans to make sure it meets our ordinance criteria and improvement plans tier the same reason, also goes through and checks the engineer's estimates. The bonds are based on those figures. If a subdivision is ready ti~r approval, but the actual plans for some of the needed backbone facilities, i.e. are to be constructed but not irmnediately and the engineer has not prepared plans fi~r it, we bond at the rate of 200% of their engineer's estimate which is approved by the City staff. If plans are prepared, bnt not yet approved by City staff, the bonding goes down to 150% and if the plans are already fully approved which means there are fewer unknowns in the process the bonding goes down to approximately 100 % of the estimated cost. Councilmember Moot asked what if the Cl~uncil had some concerns over a particular person's ability to complete the development. What act would the Council do or not do if we had a concern over a particular entities ability to build ac[jacent to these public improvements that we bonded fi>r. Is this something which government can't or traditionally doesn't get involved with. As a matter of public policy, do we get involved in the decision of deciding which particular builder may not be able to li~lh~w through and build the homes, or is this an area which government is not allowed to get into. Mr. Swanson responded that in the example of the Telegraph Canyon Estates where the City comes in, we have to make sure public improvements are taken care of. Then if certain homes are left in a certain state, then the agency gets inw~lved in the fire aspects of it and the building and housing aspects of it. Kenneth Larsen, Director of Building and Housing, stated that regarding differential standards per master builder has not been exercised by policy by this Cnnncil. Staff would be prepared to come back with a reconm~endation. However, it is not a common practice within Califiornia or any other state to place differing standards on certain builders tier lack of per~i~rmance. Traditionally, it is more of an enforcement action such as an abatement of a nuisance. more than selecting a bond upfront. John Lippitt. Director of Public Works, stated that the whole issue that we have to have bonds in the first place is for the public improvements. What happens, and the reason we only do it at the final map stage, is that once the final map is signed and approved and is recorded, those are legal lots and so the City has to have protection Ii'lr itself and for the public that the improvements will be installed. Minutes June 17, 1997 Page 14 RESOLUTIONS 18701, 18702, 18703, AND 18706 OFFERED BY COUNCILI~!EMBER MOOT, heading read, text waived, passed and approved 5-0. (Note: Resolutions 18701, 18702, and 18703 are from Consent Calendar Item No. 12). 19. RESOLUTION 18707 APPROVING ADMINISTERING AGENCY STATE MASTER AGREEMENT FOR FEDERAL AID PROJECTS, NUMBER 11-5203 AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT - Prior to the receipt of' Federal funds for any local Federal Aid highway- oriented project, the City and the State are required to enter into a master agreement relative to prosecution of said prqjects and maintenance of the completed thcilities. The previous master agreement was approved in 1978. The updated master agreement now befBre Council sets fi~rth the conditions fbr Federal Aid project improvements, right of way, fiscal provisions, miscellaneous provisions, and maintenance. This agreement is similar to the previously approved agreement which was modified to reflect the new provisions of the Intermodal Surface Transportation Efficiency Act and re-engineered Local Assistance procedures. The State has requested that all agencies sign the updated master agreement. Staff recommends approval of the resolution. (Director of Public Works) Staff had no additional comments and there was no one from the public wishing to address the item. RESOLUTION 18707 OFFERED BY COUNCILMEMBER RINDONE, heading read, text waived, passed and approved 5-0. 20. REPORT CONSIDERATION OF AN INCREASE IN SEWER SERVICE CHARGES - The City's last sewer service rate increase was passed in July 1992. Annual expenditures have increased t~om $8.62 million in fiscal year 1992/93 to an estimated $14.12 million in fiscal year 1997/98. Expenditures have exceeded revenues by a total of approximately $4.5 million between fiscal years 1994/95 and 1996/97. In order to continue to meet expenses related to the sewage transportation and treatment system, the sewer service rates must be increased. Staff recmmnends that Council accept the report and set a public hearing ti~r 8/5/97, time certain tbr 6:00 p.m., to consider raising the sewer service charge. (Director of Public Works) John Lippitt, Director of Public Works, stated that the sewer costs are going up and the primary reason fbr this is the requirement of the federal government on the City of San Diego to clean up the sewer treatment system which is currently at the Point Loma Treatment Plant. All of the agencies in the Southern San Diego area are contracted with the City of San Diego fi~r sewerage treatment. Since 1987~ they have been working on a plan to increase their system and to upgrade their treatment facilities for putting sewage into the ocean. In 1992, they had cost estimates at approximately $2.5 billion tier that thcifity. Cost estimates have now revised, and they were able to get a waiver of the secondary treatment so the cost estimates have been reduced down to about $1.5 billion. It is staffs recommendation that we do increase the rates about $2.30 per month per average household for next year. Councilmember Rindone stated there were questions in the Chamber's letter that he would like to see addressed, and he requested staff to either give Council a memo to provide a response as soon as it is feasible so that Council will be able to respond to any constituents who may have similar questions. MSUC (Horton/Salas) to set the public hearing for August 5, 1997. ITEMS PULLED FROM THE CONSENT CALENDAR Items pulled were No. 6 and 12. However, the minutes reflect the published agenda order. Minutes June 17, 1997 Page 15 21. OTHER BUSINESS CITY MANAGER'S REPORT{S} - none. 22. MAYOR'S REPORT{S} - none. 23. COUNCIL COMMENTS Councilmember Moot stated that the President was at the University of San Diego over the weekend, and he asked whether we as a nation, and indirectly we as a community, were interested in participating in a dialog about race. He made a cmranent that sometime next century there will be no majority ethnic race in the United States. Mr. Moot pointed out that in the City of Chula Vista, there is no mjority race or ethnic background currently. The Hispanic population is 41%, there is 15% Asian, we are the City that President Clinton is talking about as to what the rest of the Country will be in the future. It has always been his perception that the City of Chula Vista has been one of the most racially balanced and harmonious communities that he has ever lived in. TheretBre, if there are any members of this community that wonld like to participate in a national dialog, he would be willing to organize something in the City so that we could participate and offer some of the insights as to how it has worked in this City. The meeting adjourned at 9:05 p.m. ADJOURNMENT Respectfully submitted, ~tlthelet, CMC/AAE City Clerk