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20140819 Late CorrespondenceRECEIVED FROM n AND MADE A PART OFT E RECORD A T Tf COUNCIL MEETING OF�(.�- 5f- c OFFICE OF THE CITY CLERK Below is RPV City Code for Issuing a CUP: CARLA MORREALE, CITY CLERK 17.60.050 Findings and conditions. A. The planning commission, may grant a conditional use permit, only if it finds. 1. That the site is adequate in size and shape to accommodate the proposed use and for all of the yards, setbacks, walls, fences, landscaping and other features required by this title or by conditions imposed under this section to integrate said use with those on adjacent land and within the neighborhood; 2. That the site for the proposed use relates to streets and highways sufficient to carry the type and quantity o traffic generated by the subject use; 3. That, in approving the subject use at the specific location, there will be no significant adverse effect on adjacent property or the permitted use thereof; 4. That the proposed use is not contrary to the general plan; 5. That, if the site of the proposed use is within any of the overlay control districts established by Chapter 17.40 (Overlay Control Districts) of this title, the proposed use complies with all applicable requirements of that chapter; and 6. That conditions regarding any of the requirements listed in this paragraph, which the planning commission finds to be necessary to protect the health, safety and general welfare, have been imposed: a. Setbacks and buffers; b. Fences or walls; c. Lighting; d. Vehicular ingress and egress; e. Noise, vibration, odors and similar emissions; f. Landscaping; g. Maintenance of structures, grounds or signs; h. Service roads or alleys; and i. Such other conditions as will make possible development of the city in an orderly and efficient manner and in conformity with the intent and purposes set forth in this title. B. Conditional use permits may be granted for such period of time and upon such conditions and limitations as may be required to protect the health, safety and general welfare. Such conditions shall take precedence over development standards otherwise required by the underlying zoning of the subject site. C. For multiple use developments under a conditional use permit, where the uses permitted in the development are specified in the conditional use permit resolution, the uses permitted in the zoning district shall not apply unless such uses are among those permitted by the conditional use permit. D. When deemed desirable, the planning commission may add conditions requiring future review or updating of maintenance, development plans and activities. E. Any change which substantially intensifies occupancy or land coverage on the site shall require an amendment to the conditional use permit pursuant to the amendment procedures set forth in Chapter 17.78(Miscellaneous) of this title. F. When required, the findings, recommendations and notices thereof shall be filed in conformity with the provisions set forth in Section 17.60.050 of this chapter. The following statements were made in the 2/27/07 Staff Report in regard to the Master Plan Revision's Compliance with this code: Section (A)1: "With approval of the original Master Plan, adequate setbacks for mausoleum buildings and ground interments were established. These setbacks will not be modified or reduced with the additional mausoleum buildings. The additional buildings requested through the revision include additions to the already approved buildings, thereby making them larger buildings. However, they will continue to be located with sufficient setback within the cemetery site, rather than along its perimeter." "Thus, the setbacks and heights of all proposed improvements will be consistent with the requirements established by the prior Master Plan as approved through Resolution No. 91-7 (attached), and the conditions contained therein will remain in full force and effect unless specifically modified by this Master Plan Revision." "Thus, this Revision provides clarification in regards to the areas dedicated to ground burials, while ensuring that these areas continue maintaining the 8 -foot setback requirement for ground burials from the north and south property lines. " "With regards to existing conditions, however, the applicant is of a different opinion regarding condition no. 2b, which states "Setbacks for above ground structures, including but not limited to mausoleums (except the Pacifica Mausoleum) and crypts shall be as follows: North — 80' or no closer than the northern perimeter road..." The applicant believes that 30 -inch garden walls are not structures, and has proposed a series of family estates with 30 -inch high decorative garden walls that would be located in the area between the northern perimeter road to the 8 -foot setback from the north property line (Area 4 of the proposed Master Plan Revision). When the City Council considered the Master Plan on appeal (excerpt Minutes of the October 16, 1990 and the February 19, 1991 meeting are attached), the applicant objected to a 40 -foot setback for structures and ground interments since it resulted in a large area of the cemetery that could not be utilized for the burials. As a result, the City Council allowed ground interments up to 8 - feet from the north and south property lines, and included condition no. 2b to ensure no above ground structures were to be located in this area. Although the applicant believes that the garden walls do not constitute a structure, Staff believes that such walls constitute a structure. According to Development Code section 17.96.2040, a structure is defined as "...anything constructed or built, any edifice or building of any kind, or any piece of work artificially built up or composed of parts joined together in some definite manner, which is located on or on top of the ground". As such, Staff believes that the condition should remain and that no structures, including garden walls, should continue to be prohibited within the area specified in the condition. " (30 inch walls aren't allowed but 25' tall Mausoleum is?) Section(A)3: "the additional mausoleum buildings will continue to be located within the interior of the cemetery site and will not reduce established setbacks or be located along the perimeter of the cemetery site. " "As indicated in the attached Initial Study, it was identified that the project may create potentially significant impacts to Aesthetics, Air Quality, Geology and Soils, Hazards and Hazardous Materials, Hydrology and Water Quality, and Noise. However, an environmental assessment of the proposal found that the proposed project would not create significant adverse affects with appropriate mitigation measures. As such, for these reasons, there will be no significant effect on adjacent property or the permitted use thereof, and this finding can be made and adopted. " Section(A)6: "With regards to the items listed within this finding, Staff believes that the proposed project has been designed and conditioned through appropriate mitigation measures incorporated in the Mitigation Monitoring Program (see attached Draft Mitigation Monitoring Program), and through appropriate conditions incorporated in conditions of approval (see attached Draft Conditions of Approval). Said mitigation measures and conditions have been based upon the requirements listed above so that the proposed project will not cause an impact to the health, safety and general welfare of the site nor surrounding residents. For these reasons, Staff believes that this finding can be made and adopted. " tcrdcs Pl arming Comission http ; /www palosverdes cortdrpv/planning/AGENDAS_-_Ctarent_Afge .. d;d not quality for a CEQA exemption and since a Mitigated Negative Declaration was prepared for the the original Master Pan As a result of the Initial Study, Staff determined that the proposed project would not have a signifoaml effect on the ertwon ment it appropriate mitigation measures were incorporated. resulting in the preparation of a Mitigated Negative Declarahon The Mitigated Negative Declaration was circulated to all applicable public agencies on °ebruary 6. 2007 As indicated above the document was forwaidec to the County Recorder on February 14 2007, for a posting and corrirment period of at least twenty days prior to action on the Mia (as required oy CEQAi Since Staff is recommending adoption of a formal Resoutton at a future date the minimum posting period will rave been met Nonetheless, a pubitc notice was also mailed to the 339 property owners within a 500 -foot radius from the subject property. and a notice was published in the Peninsula News on February B. 7007 Further Staff sent an eiectronic nail to all partes registered on the City's `Irstserver- for the Green Hills Master Plan Revision project which contains 71 registered recipients, informing them of the proposed Master Plan Revision and the pending public nearing In response to the Mtlgatee Negative Declaration and Notice, on February 12 2007 Staff met with several resderts from the Peninsula Verde neighborhood community, which is located to the north of the cemetery site As snown in the attached Initial Study the protea will not result in or create any s�grvfcart impactsor have less than significant impacts to Agnculi Resources Biological and Cut:ral Resources, Lard Use and Planning, Mineral Resources, Popuiatin and Housing, Public Services, Recreation, Transportation and Circulation, and LI11ntes and Service Systems However, t was identified tfwt the project may create potentially significant impacts to Aesthetics Air Quaity, Geology and Soils. Hazards and Hazardous Materials, Hydrology and Water Quality and Noise unless mitigated wtn appropriate measures These potential impacts and the associated mitigation measures are discussed below Aesthetxs It was identified that the project may result in an aesthetic impact with iegares to creating a new source of IgM or glare. Tne potentoi aesthetc impacts have led Staff to incorporate mitigation measures that prohibit lighting of the roadways within the cemetery, and require that buld,ng-mounted fighting be arranged and shielded as to prevent direct diumi aton of the surrounding property and prevent visibility of the light source Incorporation of these mtgation measures wig result it a less than significant impact upon aesthetics Ain Quality It was identified that the protect may result in an air quality impact with regards to exposing sensitive receptors to pollutants Residences are identified as a seneitre receptor and exposure to dust and exhaust ertrssiors from construction activities was identified as an inpact However this potential impact has led Staff to .ncorpoiate nritgalin measures that require regular watering of construction areas. discontinuing certain activities during high winds to prevent dust clouds, and confining fig to certain areas of the cemetery As sucnby incorporahnq these mitigation measures, there will be no significant adverse impacts upon air quality. Geology and Sods tit was dentihed that the project may result in an Impact with regards to soil liquefaction since expansive sou is common or the peninsula Although mausoleum buildings are not habitable structures, there will be visitors to these buildings Such potential impact has led Staff to Incorporate mitigation measures that require submittal of a geotechucal report that must be reviewed and approved by the City Geologist prior to lssuence of a building permit, unless the City Geologist deems t not necessary Further any recommender! Pons or conditions resulting from the geolachnical and sous reports mat be incorporated into the building design of the structure Incorporation of these rrrtigatnon measures will result in a less than significant impact to geology and Soils Hazards and Hazardous Matenas It was identified that the project, may result in a potentially significant impact with regards to the release of hazardous materials into the enyironmeht, specifically in regards to the southern portion of the site due to its previus contaminated sod However, a remediation effort was cort.Vleted in 1099 that resulted in the site being removed from the California Department of Toxic Substances Control's Cortese List Nonetheless to ensure that the proposed mausoleum bwidigs In Area 6 do not dstwb the previously rernedated area a mitigation measure has been included requiring review and approval by the State of California's Department of Toxic Substances Control, prior to obtaining a buldug permit Incorporation of the mtgatdr measure will result in a less then significant impact Hydrology and Water Quality It was identified that the project may result in an impact with regards to wastewater discharge and drainage patterns The potential Impact has led Staff to Incorporate a mitigation measure that (equres preparation and approval of a Standard Urban Stormwater Mitigation Plan ISUSMP) prior to issuance of a grading andror bwidtng permit for any mausoleum. Incorporation of the megaton measure will result in a less than signifrant impact upon hydrology and water quality Noise It was dentlf ect that the project troy result In impacts with Increased noise leve- as a result of construction activity The potential has led Staff to incorporate ningahon rneasures that lime hours of construction and the queuing of comtruclion vehicles Incorporatxtn of these meganon measures wtl esuit In a less than significant impact upon nose As such, Staff has concluded that a Mitigated Negative Declaration can be approved for this project since mtgauon measures have beer incorporated to !esult in a project with less than significant impacts COND4TION4L USE PERMIT The purpose of the Cemetery Zoning district Is to provide for the permanent Interment of human rem inni; All new uses within the district are subject to approval through a conditional use permit Since the original Master Plan was approved through a conditional use permit (CUP No. 155). a revisit s necessary since miodificatnrs are being proposed to the master plan that includes addlinat mausoleum area and grading. In considering a conditional use permit application or a revision to a previously approved cordtinal use permit application. Development Code Section 17.60.05C requires the Planting Commsson to adopt the following ser findings n reference 10 the property and uses oder consideration The Code also allows the Planning Commssior the discretion to grant a conditional use pennit (or revisionj with conditions aril Irtnlat o -s as necessary to protect the health, safety aro general welfare (Developmert Code findings are shown in bold text, followed by Staff s analysis In normal text ) 1. The site is adequate in size and shape to accommodate sad use and for all of the yards setbacks, walls or fences, landscaping arid other features required by this title [Tete 17'Zontng] or by condrtirs Imposed under this section ISectdn 17.60 0501 to adjust said use to those on abutting land and wr inn the neighborhood The subject property measures approximately 121 -acres in area and cu iently operates as a cemetery. The cemetery was established pr nor to annexation of the area to the City. and Inas been in continual operation since then Since societal, cultural and ernnronmental changes raturally occur over time and with land berg scarce, the efhciert use of existing lard and demand has steered the cemetery industry in the direction to provide mausoleurrs as an alternative to ground ounals Although there were mausoleum bindings constructed at Green Fitts prior to annexation, Green Hilts had plans to Ultimately construct additional mausoleum buildings throughout the cemetery site To ensure an orderly deveioprrerrt of !rte cemetery site over tee, Staff requested that Gree❑ Hips develop a master plan tot all development throughout the cemetery site for consideration through a conditional use permit which led to the approval of a Master Plan m 1991 to regulate development of the site over the next 100 years With approval of the amgnel Master Plan, adequate selibacus for rreusoleurn buidngs and ground reerr»rts were lestabitsheo Thaw setbacks yin/ not be modi/ed of reduced with the addtiorat mrusdevn buildings T he addeonrl buildings requested though this revision include eddrtotts t0 the rt'Ndy approM I oPy 8/6/2014 3 38 PM Verdes PlanningCorrission Mtp./fwww.palosverdes coniVrpv/planninWAGENDAS_-_CtareM_ALx. buildings. thereby take them larger bulddngs. Fbwevo, they will continue, to be locoed with stinuert setback within the comiriery see, rather than abrg its perimeter Futter, the herglla of that buildings will not be tales Tie Mausoleum buildings in the southern portion of the site (in Area 6) wig have a better Design than the cnginat Master Plan since there will be 5 buidings oistnbuted irroughout the area that will be one story above grads and oro -story oeiuw grade Flintier since the mprovemeres will be conducted over a period of y3- to 50 -years, the irribacts will be mmtrrced. Thus, the silbaaks sand had" or sit proposed nnpnovertents wit be conwNnt with the requremsrtts estabb~ by this prior Master tiers as approved through Reaoktion No 21-7 (attached). and the coMitgrs centered therein will fortune In ftA force and affect uiess specthaBy modified by this Mester Pen Rai isfors With regares to the ground interments igro::nd burials;, tris keviston clarifies the areas and acreages by specrfyrg the areas for ground interments Alhoug^ the original Master Plan (attached) illustrated general areas and acreages tne acreage areas devoted to ground burials was not clear or property calculated Thus, this Revision provides clarification in regards to the areas dedicated to ground burials, while ensuring that these areas continue maintaining the 8 foot setback requirement for ground burials from the north and south property lines Through this re'vtsidn Staff has incorporated a number of new mitigation measures and conditions as a res,dt of the initial Study to megate potential noadts The Muting corielitidns contained in Resolution No 21.7 (attached) wet rermen in Matt ant Mie been added to Pat Revision for ease or rrepbmentaton Whth1 regards to existing conditions, howeverthe oppicart is of a different opinion regarding condition no. 2b, which states'Setbscks for above grand structures, nrJudrig but not Incited to mausoleums (except the Pacifica Mausoleum) and crypts shad be as follows North — BO' or no closer then the northern perimeter road ' The applicant believes that 30 -rich garden wail are not structures, and has proposed a serves of famiy estates with 30 -inch high decorative garden wets that would be kxxRed in the area between the rorthem perimeter load to the &foot setback from the north property It* (Mea 4 of the proposed Master Plan RevnroN vNten the City Council considered the Master Plan on appeal (excerpt Minutes of the October 16, 1220 and the February 12, 1991 rmeeti g are attached), the eppicare obieded to a 40 -foot setback for structures and ground irtermefts since a resulted in a large area of the cemetery that could rot oe utdaed for the burals As a tenure, the City Council altowed ground eiternents up to 8 -feat from the north and south property Yeas, and recsrded condition no 2b to enure no above ground strictures were to be located in tis area Although the applicant believes that the garden walk do rot constitute a structure, Staff believes fiat such waft constitute a structure. According to Development Code sec0on 17.96.2(40, a structure t behead as'..anything constructed or bul. any edifice or building of any kiwi, or any piece of work artificially bust up or conposed of parts joined together in soma defnte merrier, which a located on or on top of the ground' As such, Staff bekavec that the condition should ramoin and that no stniclures, ncwding garden wags, should continue to be prohibited within the area specified in the condition Therefore. Staff finds that the see is adequate in size and configuration to support and accommodate the proposed project For these reasons, Staff believes tis finding can be made and adopted 2 The site for the proposed use relates to streets and highways sufficient to carry the type and quardey of traffic generated by the subject use Access to the site is provided directly via Western Avenue I State Highway 213), where there are two points of ingressiegress. one that is a controlled traffic signal. The City's Public Works Department has reviewed the plans for the proposed project and concluded that the proposed project did not necessitate a traffic impact study since Western Avenue is a State higtsvay and the project is a long-term venture Staff also forwarded tri information to the California Department of Transportation (CalTransl and subsequently forwarded the initial study to them for comments Both requests for input resulted in no response from CafTrans. Lastly, according to the 1993 International Traffic Engineers (ITE) data. Cemetery land use produces a maximum 4 73 weekday average daily trips (ADT) and a maximum 7 62 weekend AOI per acro The Master Plan Revision does not include a larger physical cemetery site. however, a calls for 2 17 -acres of additional mausoleum area. which could be considered additional acres per the calculation of traffic impacts per the ITE Based upon the ADT figures from ITE. Staff estmates that upon buil-our, the additional 2 17 acres of mausoleum will result in up to 10 26 additional trips per weekday and up to 16 54 additional trips per weekend The resutbng increase In trip generation is less than significant since bued-out of the cemetery would occur over the next 30- to 50 -years As such, t is corcduded that the trips generated by the project will have negligible impacts to roadways within the City and the project see relates to the streets and highways sufficient to carry the type of traffic generated by the proposed project Therefore this finding can be made and adopted 3 In approving the subject use at the specific location, there will be no significant adverse effect on adjacent property or the permitted use thereof The proposed project does not include new uses to the cemetery see or changes to the existing cemetery operations Stag believes that the uses and operations are consistent with the, lard use designation and zoning, and continues to be a compatible land use. Further, the additional mausoleum Moldings we continue, to be located within the interior of the cemetery see and will not reduce established setbacks or be located along tie perimeter of the cemetery see As indicated in the attached Initial Study. R was identified that the project :nay create potentially significant impacts to Aesthetics At Quality. Geology and Soils. Hazards and Hazardous Materials. f tydrology and Water Quality. and Nozse t iowever an environmental assessment of the proposal found that the proposed project would not create significant adverse affects with appropriate mtigaton measures As such, for these reasons there will be no significant effect on adjacent property or the permitted use thereof, and this finding can be made and adopted 4 The proposed use is not contrary to the General Plan. The proposed Revision includes additions to the approved mausoleum buildings in the Master Plan and additional grading and import to accommodate all uses on the site, which are consistent with the General Plan's Commercial Retail land use designation of the siteand with tree types of land uses permitted within the Devekaprnent Code Cemetery Zoning Dslricl According to the General Plan, corrmercal zrnies are designated to accommodate services white preserving tri@ c aracier of the Peninsula The General Plan states that commercial activities comprise approximately 1. 7% of the total land area within the City Although the subject property s net a traditional commercial activity, the cemetery will continue to operate with m apparent retail activity The site will also cordirue to have an open space amoence due to the size of the see and the location. proximity, architectural design color, and other improvements associated with the mausoleum buildings and the Master Plan Revision Therefore. Staff believes that the proposed project is consistent with the intent of the General Plan, and this finding can be made and adopted 5 If the see of the proposed use Is wdhin any of the overlay control districts established by Chapter 17 40 (Overlay Control Districts) of Nis the (Tele 1 r 'Zoning'j, the proposed use complies with all applicable requirements of that chapter Tie subject property is not within an overlay control distict Therefore, this finding is not applicable to the project 5 Conditions regarding any of the requirements listed in this paragraph which the Planning Comnssian finds to be necessary to protect the health safety and general welfare have been reposed [including but not limited to] setbacks and buffers, fences or wags, lighting, vehicular ingress and egressnoise, vibration odors and sever emissions, landscapingmaintenance of structures, grounds or signsservice roads or alleys and such other condition as will make possible development of the Cay in an orderly and efficient manner and in conformity with the Intent and purposes set forth in this title iTRle 17 ZonngJ of 9 8/6/2014 3:38 Ph1 Verdes Plattnintg Conussiun hitp//www.palosverdesconi/i-pv;plaruiitgiAGENDAS_- CurrefirsAge . With regards to the items listed wrllrn this finding, Staff believes that the proposed project has been designed and conditioned though appropriate rtitgatior measures incorporated in the Mitigation Monitoring Program (see attached Draft Mitigation Monitoring Program), and though appropriate conditions incorporated in conditions of approval (see attached Draft Conditions of Approval). Said mitigation measures and conditions have been based upon the requirements listed above so that the proposed protect w.l not cause an impact to the health, safety and general welfare of the site nor surrounding residents For these reasons. Staff believes that this finding can oe made and adopted 1 herefore, Staff beaeves that all relevant conditional rise permit findings can ne made in a positive canner to warrant approval tot the proposed Master Pan Revision GRADIfJG PERMIT The purpose of a grading permit s to promote the public health, safety and general welfare while preserving the natural character of an area consistent with reasonable econortic development A grading permit is to ensure that development occurs in a manner that is harmonious with adjacent and so as to ammize problems of flooding drainageerosion. earth movement and similar hazards, while maintaining the visual continuity of the hills and valeys of the City Pursuant to Section 17.76.040 of the Development Code, the City requires a major gradntg permit, for grad,ng activity that will involve the following. excavation, fill, or both. in excess of 50 cubic yards .n a two year period. or aft or fill more than 5' in depth or height, or excavation or fill encroaching or or altering a natural drainage course'. or excavation or fill on an extreme slope (35% or more)' 'notwithstanding exemptions in Section -17 713 040 C The proposed Master Plan Revision clarifies the grading quantity necessary for development of the cemetery site, and proposes import fill for construction of the mausoleum buildings. A major Grading Permit is required since the Master Plan Revision includes 643,259 cubic yards of grading This quantity includes 91.964 cubic yards of myon for the proposed mausoleu rn buildings, and all cu and fit associated with ground burials throughout the cemetery site for the ide of thio Master Plan, which is projected out to ce at year 2057 The imported fill material will be conducted in phases as each mausoleum building is constructed over an extended period of time over the next 30- to 50years Since the total grading quantity is over 1 000 cubic yards and dart of a Master Plan Revision, the proposal is subject to review by the Prannrig Commission Secnon 17 76 040 E of ire Development Code establishes criteria that the Planing Commission is to use to evaluateto~ and act on major grading permit applications The following Development Code caenis are discussed below (Development Code criteria are indicated in told tett followed by Staffs analysis it normal text. E 1 The grading does not exceed that which is necessary for the permitted primary use of the lot The subject property is located in an area designated by the City's Zoning Map as a CEM (Cemetery) zoning district According to the City s General Plan and the Development Code, the propose of the cemetery district provides for the permanent interment of human rarrains Further the Development Code conditionally permits as a primary use of the properly, interments and mausoleums, The original Master Plan proposed to balance ail on-sse grading, so no import or export was required However, it was realized that the amount of backfill necessary for the rnaursokurn buildings could not be obtained within a reasonable time home from only ground spoils. arc that import is necessary for usirete bud -out of the site with ground interments and n-ousoleuin buildings As indicated above, construction of the mausoleum buildings will be conducted in phases, and the related grading and any necessary import will be conducted at the time each mausoleun is constructed which would be conducted over the course of up to 50 -years Further the daily cemetery operations include ground burials (a k a lawn crypts), however, these areas must first be graded and prepared for such uses NfMre some grouno Dura areas will be created by the backfill adjacent to the mausoleum buildings some areas in the Master Plan Revision cal -our for grounc burgs only The ground buals may include family estates that are evident by low garden wails around their perimeters to enclose these burial estates or more elaborate tombstones that are Wit above -grout It is approxsrafed that 137 000 cubic yards of fill will be necessary for these areas to rase the grade by uq to 35 -feet in some area to accommodate m1asoleum buildings and ground burials. and provide for appropriate drainage to the roadways. This quantity ndudes ground spas from throughout the ceinetery site, excess cut material from mausoleum project and import of additional fir material Therefore. Staff believes that the proposed grading quantity is necessary for the permitted primary use of the lot, and is necessary for the ultimate development of the mausoleum buildings throughout the cemetery site and site preparation for ground interments over the next 30- to 50 -years, on a cemetery site that encompasses over 120 -acres n area As such, the proposed Master Pan Revision complies with this criterior E 2. The proposed grading andlon related construction does rot significantly adversely affect the visual relationships with, nor the views from the 'viewing area' of neighboring properties In cases where grading s proposed for a new residence or an addition to an existing residence, this finding stall be satisfied when the proposed grading results in a lower finished grade under the bu9ding footprint such that the height of the proposed structure, as measured pursuant to 17 02 040(8) of this !life. is lower than the structure that could have been bust nn"same locationn on the lot it treasured from preconstruction lextsttN i grade In regards to signrfrcart erpacts to views from neighboring properties, Staff Delrwa that ttar grading writ of adversely impact any views from surroundnq properties since the tequested earth movement will prepare the site for mausolaum budings and ground ritermants The locations of the mausoleum soleum buildings and the associated backfe continue to be within the sternal portions of the cemetery she. and no mausoleum buildings are proposed along the perimeters of the cemetery the abut it* residences to the north and south The mausoleum buidrtgs are proposed on sloped areas of the cemetery site thisr, can facitate buldsgs by excsvetiig into the slope, rather than mausoburrs being corialncted on knots or hilltops within the cemetery sea Further, wish the exception of tfla Inspiaton Slope :nraioleun building, the existing Master Pan Imsed the heights of Dudrrgs, and this Revision does not rnodify no; requests to modify, the previously approved frights The residences to the south of the cemetery are at the same grade eeval on as. or sloghely iower than. the cemetery and do not contain views over the cemetery site The residences to the north, in the Peninsula Verde area, are at higher elevations that allow for views of the harbor oven the cemetery she Although the origins! Master Pan proposed mausoleum buildings at Inspiration Slope ;Area 2 on the Master Plan Revision) the exact configuration and rieight were rot known, thereby resulting in a condition (condition no 34, in Resolution No 914) to not impair views from Pertnsula verde Modification to this corrosion is not part of this Revision and Staff will continue to work will, Green Hills to ensue that the mausoleum on Inspiration Slope toes not impair views from Peninsula Verde With regards to the grading being conducted for ground >nterrneots, the proposal calls to retain the existing topography The exception is in Areas 5 and 6, 6 of 9 81612014 3 38 PM Mendes PIanningCorynssion httpWwwwpal oserdescorn'rpv planting/AGENDAS_-_CtarerM _Aye . which must be tried due to the existing concaved topography of these areas Nonetheless these are areas along the southern portion of the cemetery site, where there are no views over or through this portion of the cemetery from nearby residences Therefore, Staff believes that the grading will not significantly adversely affect the visual relatorship nor the views from nehghtionrng properties, and tie Master Phan Revrsbn compiles with this criterion E 3 The nature of grading mirlm¢es disturbance to the natural concurs and finished Contours are reasonably natural As previously rrrentroned the grading is M prepare the subject property for the construction of mausoleum buildings and ground rndetments throughout the cermtery site This 1,90 allows for excavations Into slopes and backil l to extend the slopes to the mausoleum structures. thereby blending the structure Into the natural contours of the property Further, the preparation and sd;Wuers grading for ground rnermarts will retain the existing topography and we not raise these areas with the exception of Areas 5 and 6. which will be Med to raise the grade to be similar to the adjacent grade However these areas upon completion will retain a naturally sloping topography common to the other areas of the cemetery site Thus, Staff behaves that the Master Plan Revision has been oesgned to account for Ura necessary grading, mrfrues disturbance to the natural contours of the property, and arnuea that finished contour are reasonably natural As such, Staff bakevas that the Master Plan complies with this criterion E.4 The grading takes into account the preservation: of ratural topographic features and appearances by means of land sculpturing so as to blend any man-made or manufactured slope Into natural topography As noted in the previous finding the majority of the grading is proposec to blend the mausoleum buildings .no the natural slopes that exist throughout tine cemetery site Furthermore, the Master Plan Revision uses land-scutpirng techniques to blend the proposed slopes and grading into the existing topography Thus the protect ties beer designed to respect the natural concurs of the site to the greatest extent posstNe Therefore, Staff believes that the Master Plan Revision complies with this criterion E.5 For new single -lamely, residences, the grading andlor related construction is compatible with the immediate neighborhood character The proposed project does not urrolve a new residence. thus. thus criterion does not apply. E6 In new residential tracts the grading includes provisions for the preservation and introduction of plan materials so as to protect slopes from soil erosion and slippage and mnmnze the visual effects of grading and construction on hillside areas The proposed project does not Involve a new tract thus this criterion does not apply E 7 The grading trtxkzes street designs and improvements which serve to Ranurme grading allernatives and harmonize wah the natural contours and character of the hillside The proposed project does not involve street constructon thus, this crteron does not appy E.8 The grading would not cause excessive and unnecessary disturbance of the natural landscape or wildlife nabtat through removal of • egetaton No wildlife habitats have beery identified on the subject property thus, this criterion does not apply E 9 The grading conforms to the following standards for grading on slopes height of cuilhi and retaining walls According to the City's Development Codegrading and construction on sages over thirty-five (35%1 percent is not permitted d the lot was recorded and legality subdivided after November 25 1975 Further no finish slopes greater than 35% shat be created no fill or cut shall occur on a slope exceeding fifty f.50%) percent, ail that exposed tpsbpe and downslope retalr ng wase can i axmaed 6-0' and 3'a' high respactrmly Lastly except for the excavation for a basemen or cellar a fil'or cut shall not exceed a depic of 5 -feet at any poet except where the Planning Commission determines that unusual topography soul conditions, previous grading or other circurnstances make su17r giadi g reasonable and necessary Staff has reviewed the proposed Master Phan Revision and has foul It to be consistent with the aforementioned cntena, with the exception that the depth of cit and height of fa will exceed 5 -feet for construction of the mausoleum buildings However, these are Issues that were reviewed during the original Master Plan and the Revision inctudes making some of these buldi gs larger Staff believes there continues to be circumstances that make such grading reasonable and necessary Development Code Section 11 76 040 states 'the purpose of the chapter is to provide reasonable devewprnant of land, ensure the maximum preservation of the scenic character of the area, ensure that the development of properties occurs in a manner harmonious to adjoining properties and that the project c ornpkes wth the goals and polices of the General Plan' Due to the operations and 121 -acre size of the cemetery the amount of grading and related cut and fie is necessary to accommodate the proposed blue -ort of the cemetery site, which Staff believes is not an excesswe amount of grading, is consisted( will) the owsui and Continuous use of the property, the gradYtg and rabRW matfsoUtm buildup do not atpir vlawa; erd the axcenfel does not sgrwkarftly s0eci the apart appaannca of the slope nom the public rights-ot-way or from other rnjdienota Lastly the proposed grading activlty wN not be detrimental to the public safety or to the suroularlg properties since appropriate measures and conditions are proposed to mitigate pctenral impacts to less than significant For these reasons Staff believes that the Master Pan Revision complies with this crter,on As noted in the preceding discussion staff bekeves that the Master Plan Revision complies with all Grading Permit criteria As such. it is staff s opinion that the Grading Permit can be approved for the Master Plan Rennsnn ADDITIONAL INFORMATION During December 2006, the applkart conducted two neyhborhood outreach meetings at Green fins to present the proposed Master Plan Revision and to solicit input from adjacent neighborhoods invitations were sen to the homes located within a 500radius. and the meetings were conducted at 7 OOpm on the evenings of December 11 and 18 2006 Staff attended one of the rneetings to hear the presentation and hear the issues raised by the public Following these meetsgs. the apphcen provided Staff with a list of items and issued raised by the neighbors. and a response to each. The issues are as follows (issues are Itahc¢ed, followed by Green Hills' response In normal type 1 The dirt movement throughout the cemetery was questioned with regards to the locations of the ft( the fintsh grades of the till, and the dust that is created by the dirt movement The digging of graves and the subsequent surplus of dirt is Inherent to the nature of cemetery operations and so while the apalKan acknowledges that there will continue to be drat movement wthin its borders, Green Fits has formulated a plan to mitigate some of the adverse effects of the excavation and 01`9 8/6/2014 3 38 PM CITY of iRANCHO PALOS VERDES TO: HONORABLE MAYOR & CITY COUNCIL MEMBERS FROM: CITY CLERK DATE: AUGUST 19, 2014 SUBJECT: ADDITIONS/REVISIONS AND AMENDMENTS TO AGENDA** Attached are revisions/additions and/or amendments to the agenda material presented for tonight's meeting: Item No. Description of Material L Email from Herb Stark 2 Emails from: Marty Redfield; Mr. and Mrs. Tony Teng and Pamela Evans Respectfully submitted, Carla Morreale ** PLEASE NOTE: Materials attached after the color page(s) were submitted through Monday, August 18, 2014**. W:WGENDA\2014 Additions Revisions to agendas\20140819 additions revisions to agenda.doc From: ptl7stearman@gmail.com on behalf of Herb Stark <herbertstark@cox.net> Sent: Tuesday, August 19, 2014 2:36 PM To: CityClerk Cc: CC Subject: City Council Meeting 8-19-2014 Subject: Item L. Termination of Palos Verdes on the Net Office and Storage Space Lease Dear Mayor and City Council, I would like to comment on item L on the agenda, Termination of Palos Verdes on the Net Office and Storage Space Lease. First, I'm pleased to see that the Staff report recognizes the wide ranging benefits to the residents of RPV and the peninsula that PVNET provides by "not recommending the termination of the ground lease for the Annex building as PVNET will continue its use of this facility to support its community non-profit activities and programs." Unfortunately the Staff report only states that "No City fiscal impacts have been identified at this time." What is missing is the rest of the story on the non -City financial impacts. Although there might be no direct financial impact to the City, I believe that the loss of this physical space for the operational needs results in a major impact directly to many nonprofit organizations and home owner associations supported by PVNET and therefore indirectly to the City. PVNET's telecom connections, servers, and support areas are presently located in the existing City owned portable and will be eliminated with the termination. This space in that building has made it possible over these past 20 years to provide the free hosting of virtually every non-profit, religious, educational, municipal, and community service organizations websites at no cost. Typical of the organizations who depend on PVNET's free services include Los Serenos, RPV PVAN, Palos Verdes Amateur Radio Club, Peninsula Winds, Rancho Palos Verdes Council of Home Owners Associations, the Palos Verdes Peninsula Coordinating Council, and CERT, just to name a few. Assuming that the City intends to agree with staff to terminate the PVNET facility lease that provides the City's IT services, I would highly recommend that the City also agree to allow PVNET to expand the Annex facility to include two offices, a server room and a storage room. In doing so the City will enable PVNET to continue offer these free services. Herb Stark 32306 Phantom Dr. Rancho Palos Verdes From: Marty <martyredfield@cox.net> Sent: Saturday, August 16, 2014 4:55 PM To: Nicole Jules Subject: Re: Neighborhood Traffic Calming Presentation Nicole,we are in Maine until the end of sept.. And so excited to see something will be done about these out of control drivers. I am sorry I won't be there but darrenmaddern will be there to state his case and we both agree only humps will slow there crazy drivers down. They have no regard for anyone but themselves. I hope something will be done. Darren and I both agree you can put them in front of our houses. Anything to stop the speeding. Thank you. Marty redfield Sent from my iPad On Aug 15, 2014, at 8:01 PM, Nicole Jules <NicoleJ@rpv.com> wrote: Greetings Interested Individuals, On Tuesday, August 19, 2014, the City Council will hear a presentation on the Neighborhood Traffic Calming Program where the discussion of speed humps and other traffic control devices may occur. The City encourages your participation since you have expressed an interest in traffic calming in your neighborhood. The staff report can be found on the City's website at htto://www.Dalosverdes.com/rr)v/citvcouncil/agendas/2014 Agendas/MeetinRDate-2014-08- 19/RPVCCA CC SR 2014 08 19 02 Neighborhood Traffic Calming Program.pdf Feel free to contact the Public Works Department if you have questions. Nicole Jules, Deputy Director <image001.jpg> City of Rancho Palos Verdes Department of Public Works 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 nicolei@rpv.com (310) 544-5275 — (310) 544-5292 f From: Teng, Tony <tony.teng@psd.toshiba.com> Sent: Monday, August 18, 2014 4:44 PM To: Nicole Jules; PublicWorks; Michael Throne Subject: RE: Neighborhood Traffic Calming Presentation Dear Ms. Jules, Thank you for notifying us about the upcoming City Council meeting where this subject matter will be discussed. Unfortunately we are in Toronto, Canada at the moment and will not be able to attend. Nevertheless, this issue is still a very high concern for us and many of our neighbors living on Verde Ridge Rd. We hope the potential remedies being considered will not be limited to speed humps, since there are some obvious drawbacks such as emergency vehicle response times, etc. However, it should be quite easy for the city traffic engineers to see that a stop sign placed on Verde Ridge at the intersections with Whites Point Dr. and EI Rodeo Rd. can also be quite effective. Currently there are frequent near misses for people pulling out of these side streets onto Verde Ridge who are caught off guard by the speed of the traffic on Verde Ridge. Please help us regain the peaceful and tranquil living in the Pacific View neighborhood. Thanks & Best Regards, Mr. & Mrs. Tony Teng & Pamela Evans 6615 Verde Ridge Rd. Rancho Palos Verdes, CA 90275 (310) 541-7893 From: Nicole Jules [mailto:NicoleJ@rpv.com] Sent: Friday, August 15, 2014 5:02 PM To: Nicole Jules Subject: Neighborhood Traffic Calming Presentation Greetings Interested Individuals, On Tuesday, August 19, 2014, the City Council will hear a presentation on the Neighborhood Traffic Calming Program where the discussion of speed humps and other traffic control devices may occur. The City encourages your participation since you have expressed an interest in traffic calming in your neighborhood. The staff report can be found on the City's website at htto://www.r)alosverdes.com/rr)v/citvcouncil/aeendas/2014 Aeendas/MeetineDate-2014-08- 19/RPVCCA CC SR 2014 08 19 02 Neighborhood Traffic Calming Program.pdf Feel free to contact the Public Works Department if you have questions. Nicole Jules, Deputy Director City of Rancho Palos Verdes Department of Public Works 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 nicolei@rpv.com a It CfTY OF RANCHO PALOS TO: HONORABLE MAYOR & CITY COUNCIL MEMBERS FROM: CITY CLERK DATE: AUGUST 18, 2014 SUBJECT: ADDITIONS/REVISIONS AND AMENDMENTS TO AGENDA Attached 'are revisions/additions and/or amendments to the agenda material received through Monday afternoon for the Tuesday, August 19, 2014 City Council meeting: Item No. 3 4 5 6 7 Respectfully submitted, Carla Morreale Description of Materials Email exchange between Staff and Stuart Miller Email update from Staff regarding LA-RICS Email from Sunshine Emails from: Chris Del Moro; Gary Randall Emails from: April L. Sandell; Bill and Sandy Patton; Email Exchange between Sharon Yarber and Staff W:\AGENDA\2014 Additions Revisions to agendas\20140819 additions revisions to agenda through Monday afternoon.doc From: Sent: To: Cc: Subject: Attachments: Hi Teri: Late Correspondence for Item 3. Kit Fox, Aicp cit,g of Rancho Palos Verdes (310) 544-5226 kitf@r}ay.com From: Kit Fox Kit Fox Monday, August 18, 2014 8:44 AM Teresa Takaoka Carla Morreale FW: Lien Release Request for August 19th Agenda About chabad of palos verdes.pdf, Budget.pdf Sent: Thursday, August 14, 2014 4:10 PM To: 'Stuart Miller' Cc: Carolynn Petru; Carol Lynch <clynch@rwglaw.com> Subject: RE: Lien Release Request for August 19th Agenda Hi Stuart: The Staff report for this item is already complete. This reply, your original e-mail, Rabbi Fradkin's additional comments and the attachments from Rabbi Magalnic will be provided to the City Council as "Late Correspondence" at next Tuesday night's meeting. The City is aware that Chabad claims that it did not know about the lien at the time that it accepted the donation of the property. The purpose of recording the lien to the title of the property is to provide notice to a subsequent property owner of the obligation to repay the lien. Typically, when a property is purchased, a preliminary title report (PTR) would be prepared by/for the buyer that identifies (among other things) any exceptions to the title of the property, such as liens or easements. The City is not aware if Chabad obtained at PTR for the property or not when it accepted the donation of the property. The City was under no obligation to notify Chabad about the liens' existence since the recorded liens themselves served as such notice. Furthermore, the City is not notified when private property in the City changes ownership, so the City would not have been aware that the property was donated to Chabad at the time that the transfer occurred. With respect to Rabbi Fradkin's additional comments, the annual property tax bill and the annual weed abatement notices are generated by agencies of the County of Los Angeles, not the City of Rancho Palos Verdes. The City does not receive copies of these bills and notices, and (to the City's knowledge) the County agencies that generate them would not be aware of any other liens that might encumber the property. Regarding the possible acquisition of the Chabad property last year with Federal grant funds, if this had occurred, the City's liens could have been effectively re -paid by the fact of the City acquiring title to the property. As you will see discussed in the August 19th Staff report, this is precisely what happened when the City acquired the South Windport `� 3 Canyon property through a tax sale in 2010; when the City acquired that property, it effectively re -paid itself the outstanding lien amount. Feel free to contact me if you have further questions. I will be out of the office on Friday, August 15th. For a preview of next week's Staff report, you can review the previous July 15' Staff report at http://www.palosverdes.com/rpv/citycouncil/agendas/2014 Agendas/MeetingDate-2014-07- 15/RPVCCA CC SR 2014 07 15 05 Release Liens North Windport Canyon Properties.pdf. We expect that the August 191h Staff report will be posted on the City's website later today or on Friday, August 15tH Sincerely, Kit For, .AICD Senior Administrative Analtjst City Manager's Office City of Rancho Palos Verdes 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 T.(310)544-5226 E (310) 5445291 5 kitf@ruv.com LRAIV40 l SNI LM WRMS From: Stuart Miller [ma ilto:StuartMiIler@earthlink. net] Sent: Thursday, August 14, 20141:50 PM To: Kit Fox Subject: FW: Lien Release Request for August 19th Agenda Dear Kit: I am fowarding Rabbi Fradkin's comments regarding my latest message to you. Please consider my message amended to include his amendment. Thank you. Stuart From: Yonah Fradkin [mailto:ryf@chabadsd.org] Sent: Thursday, August 14, 2014 1:45 PM To: Stuart Miller Subject: Re: Lien Release Request for August 19th Agenda The City of RPV never notified us about this lien. The Escrow company notified us. We pay taxes every year, the city notifies us about Weed abatements every year. When the City wanted to buy the property for Open Space they confirmed at our recent meeting with the City Manager and City Attorney that they would have not collected the Lien and thus forgiven the lien as well. Everything else sounds great. On Aug 14, 2014, at 1:31 PM, Stuart Miller <StuartMillerna,earthlink.net> wrote: From: Stuart Miller [mailto:StuartMlller earthlink.net] Sent: Thursday, August 14, 2014 1:31 PM To: 'Kit Fox' Subject: RE: Lien Release Request for August 19th Agenda D J Hi Kit. I am out of the office today and Rabbi Migalnic is on vacation, but I was able to obtain the two attached documents from him via Rabbi Fradkin. "About Chabad of Rancho Palos Verdes" explains the nature and mission of Chabad of Rancho Palos Verdes and lists some of its activities. "Budget" breaks down the organization's annual expenses. There is a lot more to some of Chabad's activities than is apparent from the list. For example, "Mommy and Me" includes classes for new mothers, playtime activities, yoga classes, and distribution of car seats. The "Rabbi Salary" covers far more than religious duties, encompassing such services as crisis intervention, grievance counseling, hospital visits, and prison visits. Rabbi Fradkin made an important point to me today. Chabad did not know of the lien on the property when the property was donated to it. Had it known, it would have asked the donor to remove the lien himself. Rabbi Fradkin says the City did not inform Chabad of the lien and augmenting interest until the potential sale of the property arose. Chabad does not deny that it is responsible for the lien, but if your records confirm that the City did not raise it until recently, I think it would be a powerful equitable factor in Chabad's favor in seeking relief from its obligation. Please let me know if you need more information. I will be in tomorrow and can also contact Rabbi Fradkin to answer any of your questions. Regards, Stuart From: Kit Fox [mailto:KitF@rpv.com] Sent: Tuesday, August 12, 2014 5:00 PM To: Stuart Miller Cc: Yonah Fradkin Subject: RE: Lien Release Request for August 19th Agenda Thanks, Stuart. Kilt Fox, AICP Citty of Rancho Palos Verdes (310) 544-5226 kitf@ v.com From: Stuart Miller [mailto:StuartMiller earthlink.netj Sent: Tuesday, August 12, 2014 3:14 PM To: Kit Fox Cc: Yonah Fradkin Subject: RE: Lien Release Request for August 19th Agenda Hi Kit. The answer to the first half of your first question as well as your second question is found at the Chabad of California website: www.chabad.com. Then click on "Centers," then click on "Chabad-Lubavitch of Rancho Palos Verdes" or "Chabad of San Diego." You will see that Chabad-Lubavitch of Rancho Palos Verdes and Chabad of San Diego (the one at Pomerado Road) are among the 24 centers run by Chabad of California. My understanding is that the parent organization, Chabad of California, has authority to direct money among the centers to where it is needed. (I may have been unclear about this before as I am still familiarizing myself with this organizational structure. I do not believe there is a direct relationship between the loan and the RPV facility, but both centers are part of one larger organization serving the entire state.) 03 As for your other question, Rabbi Magalnic, who directs the RPV center, gave this information to Rabbi Fradkin, who gave it to me. Rabbi Fradkin is seeking documentation from Rabbi Magalnic now. Regards, Stuart From: Kit Fox [mailto:KitF r v.com] Sent: Tuesday, August 12, 2014 1:49 PM To: Stuart Miller Cc: Carol Lynch <clynchCr Mlaw.com>; Carolynn Petru Subject: RE: Lien Release Request for August 19th Agenda Hi Stuart: I have a couple of questions for clarification: 1. Can you provide any evidence of the financial, organizational or other linkage(s) between Friends of Chabad Lubavitch San Diego, Inc. and Chabad of Palos Verdes that documents the direct "flow" of funds to the Rancho Palos Verdes community? Similarly, can you provide documentation of the $500,000 in annual community services provided by Chabad of Palos Verdes, including financial, organizational or other linkage(s) for these services back to Friends of Chabad Lubavitch San Diego, Inc.? 2. Our understanding of the $11,874,000 loan from Comerica Bank --secured by the Windport Canyon property in Rancho Palos Verdes and other properties owned by Friends of Chabad Lubavitch San Diego, Inc.—was that it was intended to fund the development of an educational center located in San Diego. Again, can you provide any evidence that the facility and/or programs offered at Chabad of Palos Verdes are the direct result of funding provided by Friends of Chabad Lubavitch San Diego, Inc. that originated from the Comerica Bank loan secured (in part) by the Windport Canyon property? Thanks! Kit Fox, AtCP City of Rancho Palos Verdes (310} 544.-5226 kitf@rpv.com From: Stuart Miller [mailto:StuartMil!er@earthlink.net) Sent: Tuesday, August 12, 201412:10 PM To: Kit Fox Cc: Carol Lynch <cl nch rw law.com>; Carolynn Petru Subject: RE: Lien Release Request for August 19th Agenda Hi Kit. A letter for the City Council's consideration is attached. Please attach it to the Staff Report. Thank you. Regards, Stuart From: Kit Fox [mailto:KitF@rpv.com] Sent: Thursday, August 07, 2014 4:32 PM To: Stuart Miller Cc: Carolynn Petru Subject: RE: Lien Release Request for August 19th Agenda 0 Hi Stuart: If I get it by Tuesday, it will be attached to the Staff report but we may not have time to address any new issues that it raises in the report itself. I'll be in the office tomorrow but at off-site training on Monday. Kxt Fox, AICP City of Rancho Palos Verdes (310) 544-5226 kitf@r v.com From: Stuart Miller [mailto:StuartMiller earthlink.net] Sent: Thursday, August 07, 2014 4:16 PM To: Kit Fox Subject: RE: Lien Release Request for August 19th Agenda Hi Kit. I'm very sorry I could not get this to you in time. I had to devote too much time to the Zone 2 EIR hearing two days ago. Can I get you this information early next week? Best regards, Stuart From: Kit Fox [mailto:KitF r v.com] Sent: Monday, July 28, 2014 1:55 PM To: stuartmiller(a-)earthlink.net Cc: Yonah Fradkin; Carolynn Petru; Carol Lynch <clynch@rwgiaw.com> Subject: Lien Release Request for August 19th Agenda Hi Stuart: As you are aware, Rabbi Fradkin's request was pulled from tomorrow night's City Council agenda. He had indicated last week that he believed that you would have enough time to prepare for this matter to be heard on the August 19th agenda. In order to do so, I would ask that you provide any additional information related to this request to me no later than next Wednesday, August 6th so that I can include it with the August 19th Staff report. Thank you very much. Sincerely, Kut Fox, AZCP Senior Administrative Analyst City Manager's Office City of Rancho Palos Verdes 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 T: (310) 544.-5226 F. (310) 5445291 E kitf@Mv.com <image001.jpg> E) <About chabad of palos verdes. pdf>< Budget. pdf> 06 Chabad of Palos Verdes 28041 Hawthorne Blvd #202-203 Rancho Palos Verdes, CA 90275 310-544-5544 • www.jewishpv.com Chabad of Palos Verdes was founded in 1990 by Rabbi Yitzie & Rochie Magalnic with the guidance and blessing of the Lubavitcher Rebbe. At Chabad we are dedicated to making the beauty and joy of Judaism accessible to all. Chabad serves the Palos Verdes Peninsula community through a wide variety of services and programs. At Chabad of Palos Verdes great emphasis is put on the mystical experience behind the "rituals and traditions" of Judaism. Our goal is to penetrate beyond the world that appears to our physical senses and to be absorbed in a higher, spiritual realm. The spiritual realm is regarded as true and real. The awareness and experience of it is priceless. The word "Chabad" is a Hebrew acronym for the three intellectual faculties of chochmah—wisdom, binah—comprehensionand da'at—knowl edge. The above three stages lay at the core of Chabad's philosophy. The uniqueness of the human condition is in the possibility to grow through knowledge. Each of us arrives in this world with unique circumstances, yet we are united by for we have the ability to grow internally and learn from each other. By accepting that our current knowledge is limited, we become open to the possibility that there is knowledge positioned higher than the prism through which we currently experience life. To live is to grow. We grow though the constant renewal of our conception, the ensuing development, and most importantly, the application of our new realization to our daily lives. Chabad-Lubavitch is the most dynamic force in Jewish life today. With over 4,000 centers throughout the world, Chabad is dedicated to the welfare of the Jewish people worldwide. Chabad of Palos Verdes serves the cities of Rancho Palos Verdes, Palos Verdes Estates, Rolling Hills Estates & Rolling Hills. The Annual Budget is $500,000. Currently we rent Office space at 28041 Hawthorne Blvd. in the City of Rancho 70 Palos Verdes. Many of our programs are held at local facilities such as the Norris Pavilion, Hesse Park Community room and the Point Vicente Interpretive Center. Some of the programs at Chabad of Palos Verdes: Synagogue Jewish Learning Institute Marc Jacobowitz Library . Norman Katz Jewish Academy . Jewish Woman's Circle Jewish Community Art Calendar Mommy & Me Parenting Classes Hebrew School Tzivos Hashem — Children's Youth group CTeeN Jr. Congregation Hebrew High Bar/Bat Mitzvah . Holiday Programs . Hospital Visitation Crisis Intervention . Counseling U Shabbat & Holiday Celebrations Adult Education Recreational and Social Activity D? -1"03 August 13, 2014 Dear Rabbi Fradkin, The following is itemized budget of Chabad of Palos Verdes. Rabbi Salary - $125,000 Secretary - $ 25,000 Office Rent - $ 48,000 Rabbis Residence Mortgage - $ 32,000 Teachers - $175,000 JLI Adult Education - $ 18,000 Office Supplies - $ 4,500 Travel - $ 2,900 Website - $ 4,200 Phone - $ 4,789 Synagogue kidush expense $ 9,600 Printing - $ 7,900 Insurance - $ 2,800 Medical insurance - $ 13,800 Chaplaincy - $ 5,800 Car payments - $ 6,240 Cleaning and custodian - $ 28,000 Utilities - $ 3,560 Total $517,089 Thank you, Rabbi Yitzie Magalnic (310) 544-5544 Chabad Jewish Center of Palos Verdes 28041 Hawthorne Blvd. #202-203 Rancho Palos Verdes, CA 90275 28041 S. Hawthorne Blvd. #202-203 • Rancho Palos Verdes, CA 90275 • 310-544-5544 • Fax 310-544-7138 www.chabadpv.com • e-mail: jewishpv@gmail.com L/ 0D From: Kit Fox Sent: Monday, August 18, 2014 4:12 PM To: CC Subject: Update regarding LA-RICS on August 19th agenda (Item 4) Dear Mayor Duhovic and Members of the City Council: This afternoon we received late -breaking news from LA-RICS. The LA-RICS Board will be meeting in special session this Thursday afternoon to consider extending the "opt out" period for a year or more, with the intention of providing participating jurisdictions the opportunity to see how the LTE (i.e., wireless broadband) system works before fully committing to it (the LTE component is supposed to be operational by September 2015). In addition, LA-RICS has worked with the Federal agency providing grant funds for the LTE component, and they now believe that the County has sufficient "soft" and "hard" match resources in hand such that participating jurisdictions may not have to contribute this match funding, as is currently anticipated in the approved funding plan. Staff plans to attend this Thursday's LA-RICS Board meeting and will provide an update in next week's Weekly Administrative Report. Sincerely, Kit Fox, AICD Senior Administrative Analyst City Manager's Office City of Rancho Palos Verdes 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 T: (310) 544-5226 F. (310) 544-5291 E: kitf@rvv.com From: SunshineRPV@aol.com Sent: Sunday, August 17, 2014 9:05 AM To: CC; Carolynn Petru; Ara Mihranian Subject: August 19, 2014 Council Meeting Agenda Item 5 MEMO from SUNSHINE TO: RPV City Council, Staff and interested parties RE: Proposed property purchases and General Plan Land Use Map amendment. August 19, 2014 Council Meeting Agenda Item 5 and September 2, 2014 noticed City Council hearing about 10 Chaparral, respectively. I strongly encourage the Council to direct Staff to assist the PVPLC with purchasing the Cake property on their own. The existing side slope and foliage make it unlikely that CTP trail SECTION 5, F1 will ever be implemented. This trail connection really is conceptual. There is no other reason for the City to burden tax payers with maintaining this "open space". Spoke #2 is viable. The F2 trail exists. That involves 10 Chaparral. have been encouraging Staff to keep an eye on the Crownview lots for decades. I even brought them up as a possible "conversion" site to lift the deed restrictions on Point Vicente Park. The Cake property, this Crownview lot and this Cherryhill area lot have no impact on the PV Loop Trail nor the Peninsula Wheel Trails Network. 5 From: Chris Del Moro <collectic@gmail.com> Sent: Monday, August 18, 2014 2:01 PM To: CC; Parks Subject: Fwd: Concerned Citizens of RPV - Abalone Cove safety recommendations Attachments: Screen shot 2014-08-18 at 9.53.12 AM.png; Screen shot 2014-08-18 at 9.52.13 AM.png; Screen shot 2014-08-18 at 10.00.06 AM.png Dear RPV City Hall and council members, it has come to the community's attention that we are in desperate need of many revisions/vision to the current planning regarding the Abalone Cove project as well as the proposed Gateway Project. The decisions made now have a heavy impact on these lands and it is absolutely crucial we do our best to best manage these lands and those who enjoy them. We have been warned of these hazards for the last few years with the fear of events such as the July 4th weekend accruing. Now it is time to change our direction and make this location safe and well organized for the future of our local community and visitors alike. Unfortunately these coves, Sacred's, Abalone and Inspiration Point as logistically near -impossible to properly monitor without 24 hour watch, which is not realistic. There are blind points around every corner, which has allowed them to become refuge to nudist, drug runners, adventure seekers and squatters for many decades. Over the course of the last few years the social media push to expose these locations has hit a fever pitch, alluring inexperienced sea goers into a location that is a black diamond for even experienced swimmers. The hazards of access along PV Dr south, falling rocks, landslide fissures, sharp barnacles, purple sea urchins, lava rock, surging tides and deep ocean sea caves make this an extremely dangerous place for all visitors! This summer has seen more people visiting the coves than ever before, all of which are parking at Abalone Cove and making the walk into Sacred's cove. Even with more Lifeguard supervision, signs etc... the city will not be able to keep an eye on all the people visiting these remote locations, that is why in our opinion limited access is the only way to keep crowds, potential accidents, drownings, trash, rising graffiti and so forth to a minimum. This is a sensitive land, one that is not suited for the groups of unsupervised online hike groups (upwards of 100) walking the area on weekends... Below are a few recommendations of how to keep this land safe and pristine in these trying times. 1. Maintain Abalone Cove as a natural preserve and urge visitors to treat with respect. Currently the Abalone Cove area and cave faces at Sacred's are being graffitied and trash is becoming a major issue. We also advice not to add any vending machines to the park, all this will do is bring more trash to the water, tide pools and preserve lands. 2. Limited access - Reduce or keep Abalone Cove parking numbers low. The current parking spaces seem to be too much for the parks to handle or for the city and Lifeguards to control. We strongly urge bringing the parking spaces down a bit. 3. NO GATEWAY PARK - Against the community's warnings you put a test lot up at Gateway location to help with overflow Abalone Cove construction issues. In it's 2nd or 3rd weekend up the $5 parking coincided with the many accidents and death at the caves. This location is just adding fuel to the fire and opening another D � large amount of dangers in people's quest to get to the sea caves. Landslides, crossing PV DR South, high cliffs etc... 3. Raise the Abalone Cove entry rates from $5 to $20- Currently cars are $5 and Buses are $20. If you use San Onofre state beach in San Clemente as a reference (they charge $15 for day use) and Redondo Beach harbor parking is $20 a day. By raising this entry to $20 it will help fund the daily operations of the preserve and also account for some vehicles that arriving with upwards of 8 people inside. At $5 we are devaluing these sacred lands and will only continue to see graffiti, trash and dangerous behaviors grow for years to come. Plus we have so much more to offer than even San Onofre and our reef s/ tide pool's deserve to be protected not trampled. 4. Signage - In Hawaii they have a tally of injuries and deaths at dangerous places that are not watched. I also believe that something to the effects of the city not being liable for expenses acquired for rescue or helicopter lift, will help people think twice before risking their life's for a cheap thrill. 5. Fences or More towers will not solve the problem - Fences will be jumped and Lifeguard towers will be destroyed and vandalized. A simple deck or umbrella with a guard on the point for weekend summer month's will go a long way to help protect the area. 6. Registered Hiking groups - We have documented groups of 100 plus walking the landslide, Sacred's, top of Inspiration point etc... We suggest that groups of 12 plus have to register with city or Rangers and must be led by a CPR certified leader. The current free for all will end tragically when someone gets a little to close to the surging water or cliffs edge. 7. Creating a safety warning video - Having a video that shows the safety issues/reality's might help people make better decisions about their time in these coastal waters... Please consider all these revisions and remember we do not live in the South bay, you cannot sugar coat these lands to be mimic the strand. This is and has always been a dangerous place that must be respected. Please listen to the community and slow the progress down. This is some of the last untouched area in Southern California, it's a world class location and we should treat it as such Thank you, concerned citizens of RPV C z C5� From: Gary Randall <grapecon@cox.net> Sent: Monday, August 18, 2014 3:00 PM To: CC; Parks Subject: Abalone Cove Safety Task Force Dear RPV City Councilmembers, I am writing to you regarding agenda item #6 for the upcoming August 19th City Council meeting, specifically a review of recommendations from the Abalone Cove Safety Task Force. I would like you to consider the following as you work with the task force on further improvements: 1. Abalone Cove and surrounding coves are environmentally sensitive habitats and cannot handle large crowds. As such, I would encourage the city to only offer limited parking with access to these areas. I propose the Abalone Cove parking lot be reduced in size, and the proposed parking area at Gateway Park should be eliminated (note: a temporary parking lot near the Gateway Park area was set up in late June this year and it was a disaster.... numerous pedestrians were hiking along the slide area of PV Drive South where there are no sidewalks, they must cross busy PVDS without crosswalks, and there are large fissures and other problems due to the land movement... this is a recipe for legal trouble for the city if someone gets injured!). 2. Within Abalone Cove parking lot, parking fees should be increased to help cover the cost of increased ranger patrols, lifeguard resources, Surf and Saddle activity, installation and maintenance of warning signs, maintenance of trash receptacles, etc. It is not fair for the residents of the City to solely bear the costs of these resources thru our taxes... rather, active users of the area should be expected to contribute a larger share. Daily parking for automobiles at Abalone Cove Park should be in the range of $15 to $20/day, higher for vehicles carrying more than 8 people. 3. The recent increase in signage warning of dangers is commendable. I would further propose that the main entrance to the Abalone Cove Parking area (when it is reopened), as well as the lifeguard station on the beach, have clearly posted current ocean conditions, including: water temp, swell/rip current risk, times of high/low tides, time of sunset, etc. I would also propose that signage include language indicating visitors are responsible for their own actions and any costs associated with a rescue will be their responsibility (legally, I am not sure how enforceable this is, but at least lets get people thinking they will have to pay the cost of being rescued). 4. Larger groups (perhaps 12 or more) should be required to obtain a permit for hiking, tide pooling, etc. in these areas or in any of the preserves located in our city. Permits could come thru the rangers or RPV City Hall and require the applicant to sign stating that he/she, and everyone in their group, will follow a set of attached rules and regulations (I am very involved with my sons in Boy Scouts and it is normal practice for us to need to obtain backcountry permits (from either local or federal agencies) when we hike. Rangers should be tasked with enforcing this system by asking large groups to present their permit when asked. Thank you for your consideration of these items. Respectfully, Gary Randall Ladera Linda Resident 6 From: April Sandell <hvybags@cox.net> Sent: Friday, August 15, 2014 7:06 PM To: cc Cc: sharon yarber; Ken DeLong; chateau4us@att.net Lacombe Subject: Fwd: Norwalk utility tax question goes on ballot - Los Angeles Wave: News Dear Mayor and city council members, I read today's news reporting Ms. Yarber's claim against the city. In the Daily Breeze article, Ms. Yarber's quote is spot on! "I think we just need to have an open discussion about the needs of the tax at all. " Hopefully, the "open discussion" will not cause RPV residents to think this matter of does not include all of the same issues mentioned in the link to the NORWALK found below. I urge a full and open public discussion regarding all issues within the scope of this subject. As you are probably aware, several years have passed since the Federal law changed forcing cities to adjust tax collections in this regard. The so called "special meeting" of the RPV city council on July 4, 2014 seemed to me the point at which the RPV agenda of deception began. I could be wrong about that but in any event it would be most beneficial to your residents not to drag this matter through the courts. Simply tell it like it is and I think most residents would be happy to cut their losses in the best interest of the city as a whole. Thanks for your time and consideration. April L. Sandell Begin forwarded message: From: April Sandell <hvyba. s a.cox.net> Subject: Norwalk utility tax question goes on ballot - Los Angeles Wave: News Date: August 15, 2014 6:37:29 PM PDT To: "HvybagsCa)-cox.net Sandell" <HvYbags a_cox.net> http://wavenewspgpers.com/news/article a3e6375c-113b-11e4-a816-0017a43b2370.htm1 0 Norwalk utility tax question goes on ballot - Los Angeles Wave: News Page 1 of 2 Norwalk utility tax question goes on ballot By Arnold Adler, Staff Writer ( Posted: Monday, July 21, 2014 6:00 pm NORWALK — A ballot measure on the Nov. 4 ballot would not raise the city's 5.5 percent utility tax rate but could safeguard current revenue from the wireless communications part of the levy, city officials said. The utility tax is on monthly electric, natural gas and telephone bills. Senior citizens and low- income or disabled residents would be exempt, the ballot proposal states. The City Council approved placing the measure on the ballot on a 5-0 vote Tuesday night. City Manager Mike Egan and City Attorney Steve Dorsey told The Wave that while they and a number of cities believe it is legal to tax wireless communication, a definite vote of taxpayers would protect the current funds from uncertain legal decisions. Two local men have threatened a lawsuit on the issue and a San Diego law firm has reportedly submitted a complaint to the city, which the city has rejected. Egan said Monday that a number of cities, including Bellflower when he was the city manager there in 2009, have updated their utility tax to include wireless communications based on an Internal Revenue Service ruling in 2006. That ruling stated that a utility tax cannot apply to toll telephone services where the "charge varies only by time and not by distance." Egan said the Bellflower action, approved by voters, and the one he proposes in Norwalk is in line with the 2006 ruling and "has nothing to do with the Internet." Dorsey said the IRS action in 2006 merely deleted a reference and that those officials said at the time it was not meant to affect city ordinances on wireless communications. That will be outlined in a legal analysis he will prepare for voters as part of the election plan. The updated communication tax ordinance is part of the Norwalk budget approved June 17 under the assumption that voters would approve the change. At that time, Egan said the city would face a fiscal emergency if the tax was rejected and would have to make about $2 million in cuts to city services. Only two spoke at Monday's public hearing. Dave Lauderdale strongly opposed the action, saying residents are "taxed out." Jerry Ori noted that the Howard Jarvis Taxpayers Association will be examining the issue to make sure legal requirements are met. l_:/ http://wavenewspapers.com/news/article_a3e6375c-113b-11 e4-a816-0017a43b2370.htm1?... 8/18/2014 Norwalk utility tax question goes on ballot - Los Angeles Wave: News Page 2 of 2 Lauderdale said the action was an attempt "to get more revenue from hard-working residents and said declaring a fiscal emergency was a means to get the issue on the ballot. He said $24,500 for a consultant to survey residents was "ill spent" and that only 377 calls were made. City officials said most residents surveyed support the measure. Lauderdale said the $2 million loss could be made up by dropping some recreation programs. Egan acknowledged that the fiscal emergency declaration was needed to put the item on the ballot and loss of the $2 million was a fiscal emergency as it would require cuts and job losses. "There is no lawsuit yet," said Ori, noting that one is expected and if the court rules against the city it would have to refund affected wireless tax revenue collected since 2006. City Councilman Luigi Vernola was the only one to comment on the ballot issue, saying "the people will make the decision, not us." Steve Schultz of the San Diego law firm of Marks Finch Thornton and Baird said Wednesday morning he has no comment on the issue. City Clerk Theresa Devoy said the estimated cost of the special election is $80,000. Egan said the action seeks to update the city's 22 -year-old utility tax by including modern technology. A simple majority of votes would be required to decide the issue. Assistant City Manager Ernie Hernandez explained that the city programs listed in the proposal are the ones that would be cut. In a report to the council, Devoy said deadline to file ballot arguments for or against the measure is Aug. 15. Aug. 16-25 is the time for public examination of the argument, Aug. 25 is the deadline to file a rebuttal argument and Aug. 26 -Sept. 4 is for public examination of the rebuttals. 0 http://wavenewspapers.com/news/article_a3e6375c-113b-1 l e4-a816-0017a43b2370.html?... 8/18/2014 From: Bill Patton <bpatton@gores.com> Sent: Saturday, August 16, 2014 2:36 PM To: CC Cc: 'Sandy Patton ' Subject: Item No. 7 for August 19, 2014 Council Agenda Attachments: Untitled attachment 00007.pdf Mayor Duhovic and Council Members: Subject: Item No. 7 (attached) for the August 19, 2014 City Council Agenda. As residents of RPV we respectfully add our suggestions to our council to demonstrate good governance and pass the agenda Item No. 7 of the August 19, 2014 City Council Agenda submitted to the agenda by Carolyn Petru, Acting City Manger, unanimously! While this would stop the future collection of the unapproved tax we also want to also comment on the other situation; the past illegal collection of the tax. As was -made very clear by Carolyn in the agenda item document that RPV, among many Cities has been illegally collecting the City's Utility Users Tax ("Tax" or "UUT") of 3%. She went on to clarify this situation further by providing the following information to the council. "Most important in response to litigation, in 2006, the Internal Revenue Service issued a ruling stating that the FET does not apply to most common telephone billing plans. This invalidated the basis for the City's Tax as applied to telephone service. In response to these events, some cities, including Rancho Palos Verdes, amended their ordinances without voter approval to delete the reference to the FET and replaced it with other terms to cover telephone services that had been subject to the FET. Other cities placed their UUT measures on the ballot, and some cities took no action. Subsequent litigation and court rulings clarified that such changes to the UUT ordinances require voter approval. Since 2006, many changes have occurred with respect to telephone services that have caused the definitions in the UUT to become outdated. Some types of telephone services currently are not subject to the tax, while others are. This inequity cannot be corrected without placing revisions to the Tax on the ballot for approval by the voters". We respectfully submit the following for guidance to the council as an opportunity for actions that will satisfy the clear need for excellent and appropriate governance: • Stop the illegal collection now as such monies will clearly have to be refunded to residents in the future. • Stop the fallacious hopes that we would win a law suit already filed by spending millions of dollars to defend an indefensible position. • Do not believe that an argument of a "statute of limitation" will apply as that will be argued in vain as pursuant to the facts the collection of the tax since 2006 was fraud and there is no "statute of limitation" regarding fraud. 0 • Let's not argue something that is not arguable as the staff and council members during these years were certainly aware, or were responsible to have been aware, of the rulings and litigations. Thus not taking action to comply has no defensible basis in law as it is patently obvious that any depositions would substantiate such knowledge thus any argument to a "statute of limitation" to minimize refunds would seem not only weak but possibly an attempt to cover fraud. • Let's be responsible members of the council and representatives for the residents and refund to the residents all taxes collected illegally. Bill & Sandy Patton C[TYOF RANCHO PALOS VERDES MEMORANDUM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: CAROL W. LYNCH, CITY ATTORNEY AND DENNIS MCLEAN, DIRECTOR OF FINANCE DATE: AUGUST 19, 2014 SUBJECT: ADOPT A RESOLUTION AUTHORIZING THE INDEFINITE SUSPENSION OF COLLECTION OF UTILITY USERS TAX BY TELECOMMUNICATION PROVIDERS FROM THE CITY'S TAXPAYERS REVIEWED: CAROLYNN PETRO, ACTING CITY MANAGER RECOMMENDATIONS: 1) ADOPT RESOLUTION NO. 2014- : A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES AUTHORIZING THE INDEFINITE SUSPENSION OF COLLECTION OF UTILITY USERS TAX BY TELECOMMUNICATION PROVIDERS FROM THE CITY'S TAXPAYERS UNTIL SUCH TIME AS REVISIONS TO THE CITY'S UTILITY USERS TAX ARE APPROVED BY THE CITY'S VOTERS AND CREATING A SEPARATE ACCOUNT COMMITMENT ENCUMBRANCE OF THE GENERAL FUND REFERRED TO AS THE "UTILITY USERS TAX TELECOMMUNICATION CLAIM ACCOUNT"; 2) If the City Council adopts the Resolution described above, direct Staff to timely send notification letters to all telecommunication providers that serve taxpayers in the City directing them to immediately discontinue collecting 3% Utility Users Tax on telecommunication services; 3) Direct Staff to determine an estimate of the total Utility Users Tax collected by telecommunication providers from taxpayers in the City during the twelve 7-1 (12) month period beginning August 13, 2013, transfer such amount, as well as all Utility Users Tax received from telecommunication providers thereafter and deposit such amounts in the Commitment encumbrance of the General Fund referred to as the "Utility Users Tax Telecommunication Claim Account"; and 4) Direct Staff to return with proposed budget adjustments in the General Fund for FY14-15 totaling the estimated amount of the expected reduction of Utility Users Tax revenue from telecommunication providers in order to maintain a balanced budget in accordance with the City Council Reserve Policies 41 and 45. BACKGROUND: The following Background was included in the Staff Report to the City Council, dated July 15, 2014, July 29, 2014 and August 5, 2014: A In 1993, the City Council adopted the City's Utility Users Tax ("Tax" or "UUT"). The amount of the Tax is 3%. It is imposed on City residents who use telephone service, electricity, co -generated electricity, natural gas, and water. ➢ Subsequently, the voters of the State of California adopted Proposition 218. ➢ To comply with Proposition 218, in 2004, the City Council placed the Tax on the ballot, and the voters ratified the existing Tax at the same 3% rate. A The City's Tax originally was imposed upon all telephone services that were subject to the Federal Excise Tax ("FET"). In response to litigation, in 2006, the Internal Revenue Service issued a ruling stating that the FET does not apply to most common telephone billing plans. This invalidated the basis for the City's Tax as applied to telephone service. ➢ In response to these events, some cities, including Rancho Palos Verdes, amended their ordinances without voter approval to delete the reference to the FET and replaced it with other terms to cover telephone services that had been subject to the FET. Other cities placed their UUT measures on the ballot, and some cities took no action. Subsequent litigation and court rulings clarified that such changes to the UUT ordinances require voter approval. ➢ Since 2006, many changes have occurred with respect to telephone services that have caused the definitions in the UUT to become outdated. Some types of telephone services currently are not subject to the tax, while 2 7-2 others are. This inequity cannot be corrected without placing revisions to the Tax on the ballot for approval by the voters. ➢ Recently, new legal challenges and claims have been filed against other cities that did not place their amended utility user taxes on the ballot. Attorneys in those cases have claimed damages and substantial attorney's fees. (We understand that Chula Vista paid $2 million in attorneys' fees to the attorneys who fled a lawsuit challenging that city's utility user tax.) Staff presented a recommendation to the City Council over several meetings to place an ordinance on the November 2014 ballot to protect future UUT revenues from legal challenge and to modernize the UUT. The Council did not cast the unanimous vote necessary to place an ordinance before the voters on either the November 2014 or on the March 2015 ballots. Afterwards, the Mayor requested that the possible indefinite suspension of collection of Utility Users Tax for telecommunication services provided to the City's taxpayers be agendized for consideration at this Council meeting. On August 13, 2014, the City received the attached Claim For Refund And Other Relief Regarding Certain Telephone Services from the law firm of Marks Finch, on behalf of City resident Sharon Yarber. Prior to completion of this Staff Report, Mayor Duhovic advised Staff that he would like to explore the mechanics of providing refunds to City residents for the UUT that was collected on telecommunications services over the twelve month period preceding the date of the claim. Staff agrees with the Mayor's idea and would like to promptly investigate several UUT refund methods described immediately above and provide additional information to the City Council at tonight's meeting or at a subsequent City Council meeting. DISCUSSION: Utility Users Tax Telecommunication Claim Account Under Section 3.24.030 of the City's Municipal Code, a claim for refund of a tax that has been improperly collected or paid to the City must be presented to the City within one year of the date of the accrual of the claim. In light of the claim filed August 13, 2014, and subject to approval of the proposed Resolution by the City Council, Staff will determine an estimate of the total Utility Users Tax collected by telecommunication providers from taxpayers in the City and remitted to the City during the twelve (12) month period beginning August 13, 2013. Once the total is determined, Staff would transfer such amount, as well as all Utility Users Tax received from telecommunication providers thereafter, and deposit such amounts in the Commitment encumbrance of the General Fund referred to as the "Utility Users Tax Telecommunication Claim Account" (the ""UUT Claim Account"). 7-3 In late 2011, the City Council unanimously approved a settlement brought by the Sipple class action lawsuit regarding collection of UUT by AT&T on telecommunication services they provided City taxpayers. Although the claim was for nearly five (5) years, the settlement included refunds for one year of UUT collected for AT&T services in accordance with the Municipal Code 3.24.030. As a part of the settlement, AT&T and the plaintiff agreed to continued collection of a portion of telecommunication services billed by AT&T going forward. If the City Council decides to indefinitely suspend UUT on all telecommunication services, it should suspend UUT that is being collected by AT&T as well, notwithstanding the terms of the previous settlement. To create the UUT Claim Account, the City Council would pass the attached Resolution that will encumber (set-aside) the monies for payment using one of the following methods: (1) future claims for refund by the City's taxpayers (the method used by the City of Chula Vista to pay similar claims); or (2) providing credits as refunds to City taxpayers directly by the telecommunication providers on future bills; or (3) coordinating refund checks to the City taxpayers of record with telecommunication providers or any other efficient and fair combination of the three refund methods. Staff also would like to timely research the merits of outsourcing the refund process to an independent third party with industry experience. If the City Council adopts the attached Resolution to establish a UUT Claim Account, the funds would not be available for use for any other purpose until taxpayer claims for refunds are paid and the subsequent approval of another resolution by the Council to transfer any remaining funds back to General Fund reserves. The commitment to set aside of monies in the UUT Claim Account for taxpayer refunds by resolution of the City Council is the highest form of reservation of funds in accordance with generally accepted accounting principles. It is the same process that would be followed by the City Council to establish a fiduciary fund (e.g. for a pension plan or a special assessment district). This proposed accounting methodology was discussed with the audit partner of Vavrinek, Trine & Day, LLP, the City's independent auditors, who validated this proposed accounting treatment. FY14-15 Budget Decreases The discontinuance of the collection of the UUT on telecommunication services indefinitely would lead to a significant, annual loss of about $700,000 of UUT revenue to the General Fund — about 3-4% of the total annual General Fund operating budget. If the City Council adopts the proposed Resolution, it would be prudent for the City Council to immediately direct Staff to promptly develop revisions to the FY14-15 Budget to restore a balanced budget in accordance with City Council Policy No. 45 — Balanced Operating Budget. There are two City Council policies to consider when making the adjustments. 4 7-4 Policy No. 41 — Reserve Policies requires Transient Occupancy Tax (TOT, a recurring revenue) be transferred to the Capital Improvement Projects (CIP) Fund. Policy No. 41 also requires the prior year General Fund expenditure variance be transferred to the CIP Fund. Therefore, General Fund money that has been transferred to the CIP Fund pursuant to this policy and has been used to fund one-time FY14-15 appropriations should not be considered to balance the structural budget. However, these resources, as well as the General Fund Reserve (rainy day fund) may be considered by the City Council to provide a one-time emergency stop -gap for either a temporary loss of UUT or claims for past collections of UUT. 2. Policy No. 45 Balanced Operating Budget requires that recurring expenditures do not exceed recurring revenues. Therefore, reducing one- time FY14-15 appropriations should not be considered to balance the structural budget. Again, these one-time resources may be considered to provide a one-time emergency stop -gap. The City Council could elect to set-aside City Council Policy No. 45. However, the City's former Financial Advisor previously expressed caution that setting aside newly established fiscal policies could be viewed unfavorably by municipal debt rating agencies, if and when the City's initial debt rating is pursued. With City Council direction, Staff will promptly prepare a Staff Report with a menu of potential FY14-15 budget adjustments, including revenue proposals, such as a possible increase of facility -use fees. As reported with the 2014 Five -Year Financial Model and on July 15, 2014, Staff anticipates a number of challenges associated with balancing the structural budget in the future. The challenges include increasing costs to comply with clean water law, increasing costs of residential street rehabilitation, anticipated subsidies for right-of-way maintenance, sunset of the storm drain user fee, and the increased contribution to the Los Angeles County Sheriff's liability trust fund. Nothing has been included in the structural budget for any future adjustments to employee compensation and benefits. The Staff Report could also include a review of 2014 City Council Goals including programs and services that are not funded in the FY14-15 budget for the General Fund. Attachments: Draft Resolution Staff Report, Dated July 15, 2014 Staff Report, Dated July 29, 2014 Staff Report, Dated August 5, 2014 Claim For Refund And Other Relief Regarding Certain Telephone Services from the law firm of Marks Finch on behalf of City resident Sharon Yarber 5 7-5 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES AUTHORIZING THE INDEFINITE SUSPENSION OF COLLECTION OF UTILITY USER TAX BY TELECOMMUNICATION PROVIDERS FROM THE CITY'S TAXPAYERS UNTIL SUCH TIME AS REVISIONS TO THE CITY'S UTILITY USER TAX ARE APPROVED BY THE CITY'S VOTERS AND CREATING A SEPARATE ACCOUNT COMMITMENT ENCUMBRANCE OF THE GENERAL FUND REFERRED TO AS THE "UTILITY USERS TAX TELECOMMUNICATION CLAIM ACCOUNT" WHEREAS, in 1993, the City Council adopted the City's Utility Users Tax ("Tax" or "UUT"). The amount of the Tax is 3%. It is imposed on City residents who use telephone service, electricity, co -generated electricity, natural gas, and water; and WHEREAS, subsequently, the voters of the State of California adopted Proposition 218; and WHEREAS, to comply with Proposition 218, in 2004, the City Council placed the Tax on the ballot, and the voters ratified the existing Tax at the same 3% rate; and WHEREAS, the City's Tax originally was imposed upon all telephone services that were subject to the Federal Excise Tax ("FET"). In response to litigation, in 2006, the Internal Revenue Service issued a ruling stating that the FET does not apply to most common telephone billing plans. This invalidated the basis for the City's Tax as applied to telephone service; and WHEREAS, in response to these events, some cities, including Rancho Palos Verdes, amended their ordinances without voter approval to delete the reference to the FET and replaced it with other terms to cover telephone services that had been subject to the FET. Other cities placed their UUT measures on the ballot, and some cities took no action. Subsequent litigation and court rulings clarified that such changes to the UUT ordinances require voter approval; and WHEREAS, since 2006, many changes have occurred with respect to telephone services that have caused the definitions in the UUT to become outdated. Some types of telephone services currently are not subject to the tax, while others are. This inequity cannot be corrected without placing revisions to the Tax on the ballot for approval by the voters; and WHEREAS, recently, new legal challenges and claims have been filed against other cities that did not place their amended utility user taxes on the ballot. Attorneys in those cases have claimed damages and substantial attorney's fees; and WHEREAS, on August 13, 2014, City resident Sharon Yarber filed a claim against the City in the amount of $5 million regarding UUT that the City has collected since 2006; 7-6 WHEREAS, Section 3.24.030 of the City's Municipal Code states: a claim for refund of a tax that has been improperly collected or paid to the City must be presented to the City within one year of the date of the accrual of the claim. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES DOES HEREBY FIND, RESOLVE AND ORDER AS FOLLOWS: SECTION 1. The City Council hereby orders City Staff to notify providers of telecommunications services within the City to cease collecting the City's Utility User Tax from the City's taxpayers until such time as revisions to the City's Utility User Tax are approved by a majority of the City's voters. SECTION 2. The City Council hereby orders City Staff to establish a separate Commitment encumbrance of the City's General Fund, which shall be referred to as the "Utility User Tax Telecommunication Claim Account or "UUT Claim Account." City Staff is directed to determine an estimate of the total Utility User Tax collected by telecommunication providers from taxpayers in the City and remitted to the City during the twelve (12) month period beginning August 13, 2013. Once the total is determined, Staff shall transfer such amount, as well as all Utility User Tax received from telecommunication providers after August 19, 2014, into the "UUT Claim Account." SECTION 3. The City Council hereby orders that funds that are held in the UUT Claim account shall only be available for payment of claims or refunds relating to Utility User Tax payments that were paid previously to the City; said funds shall not be available for use for any other purpose until taxpayer claims for refunds are paid and until another resolution is approved by the City Council authorizing the transfer of any remaining funds back to General Fund reserves. PASSED, APPROVED and ADOPTED this day of August 2014. ATTEST: CITY CLERK Mayor -2- 7-7 STATE OF CALIFORNIA COUNTY OF LOS ANGELES )ss CITY OF RANCHO PALOS VERDES ) I, Carla Morreale, City Clerk of the City of Rancho Palos Verdes, hereby certify that the above Resolution No. was duly and regularly passed and adopted by the said City Council at a regular meeting held on _, 2014. -3- 7_8 CFFYOFe!1RANCH0 PALOS VERDES MEMORANDUM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: CAROL W. LYNCH, CITY ATTORNEY DATE: JULY 15, 2014 SUBJECT: ORDINANCE REDUCING THE UTILITY USER TAX RATE FROM 3% TO 2.75% AND MODERNIZING THE CITY'S UTILITY USER TAX AND EMERGENCY RESOLUTION AUTHORIZING THE CITY COUNCIL TO CALL AN ELECTION ON NOVEMBER 4, 2014 TO REQUEST THE VOTERS TO APPROVE THE ORDINANCE REVIEWED BY: CAROLYNN PETRO, ACTING CITY MANAGER RECOMMENDATIONS 1. ADOPT RESOLUTION NO. 2014 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES, UNANIMOUSLY DECLARING AN EMERGENCY IN CONNECTION WITH THE PLACEMENT OF A MEASURE THAT MODERNIZES THE CITY'S UTILITY USER TAX AND DECREASES THE RATE OF THE TAX ON THE BALLOT FOR A SPECIAL MUNICIPAL ELECTION TO BE CONSOLIDATED WITH THE NOVEMBER 4, 2014 ELECTION 2. INTRODUCE ORDINANCE NO. AN ORDINANCE OF THE PEOPLE OF THE CITY OF RANCHO PALOS VERDES, REDUCING THE RATE OF THE CITY'S UTILITY USER TAX FROM 3% TO 2.75% AND MODERNIZING THE CITY'S UTILITY USER TAX BACKGROUND In 1993, the City Council adopted the City's Utility Users Tax ("Tax" or "UUT"). The amount of the Tax is 3%. It is imposed on City residents who use telephone service, electricity, co -generated electricity, natural gas, and water. Subsequently, the voters of the State of California adopted Proposition 218, Even though the City's Tax had been in effect prior to the adoption of Proposition 218, in order for the City to continue to collect the Tax legally, voter approval was required. Accordingly, in 2004, the City Council placed the Tax on the ballot, and the voters ratified the existing Tax at the same 3% rate that had been adopted by the City Council. Like many utility users taxes, the telephone portion of the City's Tax originally was imposed upon telephone service that was subject to the Federal Excise Tax ("FET"), because, at that time, it was believed that the FET could be imposed upon the broadest categories of telephone services. The FET was used routinely by municipalities as the basis for imposing a utility user tax, so those local taxes also would be imposed on the broadest range of telephone services. However, a decision by a federal court invalidated a portion of the methodology that was used in the FET. Subsequently, In 2006, the Internal Revenue Service issued a ruling stating that the FET does not apply to most common telephone billing plans, such as one -rate plans that charge a flat rate for all calls. (The California Munici al Low Handtook Section 5.50.) Thus, like most utility users taxes in the state, the basis of the imposition of the City's Tax, as applied to telephone service, was no longer valid. In response to these events, some cities put their utility taxes on the ballot for voter approval of new definitions of telephone services upon which to impose the utility users tax; others did not amend their ordinances, which still contain the reference to the FET; and others, like Rancho Palos Verdes, amended their ordinances without voter approval to delete the reference to the FET and added a different definition of the telephone services upon which the UUT would be imposed. In taking this latter approach in 2006, the City Council made findings that the intent of the changes to the Tax was not to expand the Tax to any new categories -of telephone service that had not been taxed previously, so that voter approval should not be required. The City Council took this action, rather than placing the Tax on the ballot again, because the City's voters had ratified the City's Tax fairly recently, and it was unclear whether changing the definition of the telephone service upon which the Tax could be imposed would require voter approval. Subsequent cases have addressed that issue and have clarified that the option that clearly is legally defensible is to place any definition changes and updates to the UUT on the ballot for approval. Since 2006, many changes have occurred with respect to telephone services that have caused the definitions .in the UUT to become somewhat outdated. Accordingly, some types of telephone services currently are not subject to the tax, while others are. This is not completely fair to City residents who use telephone services and currently are subject to the City's UUT. Accordingly, Staff proposes placing an ordinance on an upcoming ballot that will modernize the UUT. In addition, at the June 17, 2014 City Council meeting, Council Member Campbell suggested that the City Council should consider reducing the R6876.0001/1720561v2 2 7-10 rate of the City's UUT. The ordinance that modernizes the UUT also could reduce the rate of the City's UUT below the current rate of 3%. The Ordinance that is attached to this staff report proposes a reduction of the current tax rate of 3% to 2.75%.' Of course, another tax rate also could be selected by the City Council and presented to the voters. History of UUT Approximately $2.6 million of UUT is deposited into the City's General Fund annually. About $0.7 million of this amount is based upon telecommunications services (telephone land line, long distance, and cellular service), and the remainder is based upon electricity, gas and water service. A five-year history of UUT follows: Loss of UUT — Budget Imaaat The FY14-15 General Fund revenue budget is $26.5 million. A net expenditure of about $19.2 million represents the City's operating budget; and $7.3 million will be transferred to the Capital Improvement Projects (CIP)'Fund for infrastructure repair, replacement and improvement. Based upon the operating and capital needs of the City, the City Council has determined that the UUT rate of 3% continues to be a necessary General Fund revenue source. The FY14-15 General Fund budget is balanced by a thin margin. If the General Fund were to lose a revenue source such as UUT, the impact to the current level of service would be significant. Even if there is no loss of UUT, Staff expects that the General Fund budget will become more difficult to balance in future years. As reported with the 2014 Five -Year Financial Model, Staff expects that the accumulated Street Maintenance Fund balance will be depleted, and R6876,0001/1720561 v2 7-11 the General Fund will be required to resume large subsidies for right-of- way maintenance beginning in FY15-16. The Los Angeles County Sheriffs Department has notified the City to expect additional increases to the required liability trust fund contribution in FYI 5-16. Staff expects, that expenditures will increase over the next couple of years to keep pace with the latest storm water quality mandates from the state and federal governments. Due to conservative budget management, the City's General Fund does have a history of favorable expenditure variances, which have averaged about $1.0 million annual over the last 10 years. However, due to the increased need to improve the City's aged infrastructure and the limited availability of restricted revenue dedicated to infrastructure, the City Council recently modified its Policy No. 41 — Reserve Policies to transfer favorable General Fund expenditure variances to the CIP Fund for additional infrastructure funding. There are currently 3 components of infrastructure subsidies from the General Fund: 1. Annual transfer for the residential street rehabilitation program (FY14-15 budget of $3 million); 2. Annual transfer equivalent to the City's transient occupancy tax revenue (FY14-15 budget of $4 million; and 3. Annual transfer of the prior year expenditure variance (most recent was $1.7 million FYI 2-13 variance transferred in FYI 3-14). Over 10 years through FY14-15, General Fund transfers total more than $16.7 million for street improvements and $18.4 million for storm drain improvements. However, even with the large General Fund subsidies for infrastructure, projects with estimated costs totaling at least $28 million have been identified in the 2014 Five -Year Capital Improvement Plan that remain unfunded over the next five years. Fiscal Impact of Rate Reduction As part of a potential UUT modernization ballot measure, the City Council may consider a proposed reduction to the UUT rate, as suggested by Councilmember Campbell. The annual fiscal impact of the proposed quarter -percent reduction (from 3% to 2.75%) is a revenue decrease of about $221,675. FY14-15 Budgeted UUT 3% T $2,660,100 0.15% Reduction from 336 to 2.85% $ 133,005 0.25% Reduction from 336 to 2.759'0 $ 221,675 0.51% Reduction from 3% to 2.5% $ !H3,350. The fiscal impact of the City Council's alternatives are as follows: R6876.0001/1720561 v2 4 7-12 1. If the City Council takes no action to propose a UUT modernization ballot measure, the City could lose up to $0.7 million of annual UUT based upon telecommunications service, until a measure is brought before the voters for approval. 2. If the City Council proposes a UUT modernization ballot measure, the following outcomes are possible: a. The ballot measure fails, and the City loses about $0.7 million of annual UUT revenue; b. A ballot measure with no proposed rate reduction prevails, and the City's UUT revenue remains Intact; or c. A ballot measure prevails with a proposed rate reduction of a quarter -percent, and the City loses an estimated $221,675 of annual UUT. Staff recommends that the City Council include a reduction of the rate of the UUT from 3% to 2.75% in the ordinance that is presented to the voters because that reduction will benefit the residents while still providing the majority of the current revenue stream from the UUT to the City to fund City services. DISCUSSION The benefit to the City's residents of placing the City's UUT on the upcoming November ballot is obvious. If the voters were to approve an ordinance that modernizes the City's UUT at a reduced rate, such as. 2.75%, the residents will receive the benefit of the reduction of the rate of the UUT. In addition, by modernizing the UUT, newer telephone -related services will be treated the same, so that telephone users in the City are treated alike. In addition, by placing the measure on the ballot at the earliest possible election date, which is November 2014, any dispute about the UUT on telephone services will be resolved a year earlier than if the City waits to place such a measure on the ballot in November 2015, when the next regular City Municipal election will occur. If the City Council wishes to place the UUT on the November 2014 ballot, the City Council must adopt a resolution setting forth an emergency that justifies the election being held prior to an election date that is different from the date of the City's regular municipal elections in November of odd numbered years. Staff believes that there are facts upon which the City Council may rely in declaring an emergency and calling the election in November 2014, instead of waiting until November 2015. Those facts are set forth in the attached resolution and are reiterated here: 1. Continuous State takeaways over the last few years, including the state's recent elimination of redevelopment agencies, have resulted in significant 86876.0001 / 1720561 r2 7-13 reductions in revenues that the City intended would be used to repay the City for loans made previously to the Rancho Palos Verdes Redevelopment Agency for expenditures to address landslide damage and increase land stability within former Redevelopment Project Area No. 1. 2. The Portuguese Bend Landslide is a large active landslide that continues to move and adversely affects public infrastructure, including Palos Verdes Drive South, a major arterial street in the City. The constant damage caused by the landslide requires constant and increased City expenditures to maintain PVDS as a viable arterial street. 3. During the recession, the State took money monies that previously were allocated to cities to reduce the State's budget deficit, and it is expected that similar actions will occur again In the future in response to downturns In the economy. 4. The cost to the City of complying with state and federal clean water rules continues to increase each year. 5. The City has many unfunded important infrastructure projects, which are discussed above, totaling more than $28 million, including unfunded projects to improve City streets ($4.7 million), and storm drains ($9.4 million). 6. The City of Rancho Palos Verdes seeks to maintain current levels of public safety and police services within the City, even though the cost of such services continues to increase, including the City's contribution to the County. liability trust fund for law enforcement services, which the City has been notified will increase again in fiscal year 15-16. 7. The cost saving measures the City has employed in recent years to maintain a balanced City budget will not be sufficient to avoid future cuts to services provided by the City to the community, which. would have a negative impact upon public safety and the character of the community in Rancho Palos Verdes. If the City Council concurs with the above findings and that the ordinance reducing the rate of the UUT and modernizing its provisions should be placed on the ballot for the upcoming election in November 2014, instead of having to wait until the next regular City election in November 2015, then the City Council should adopt the attached resolution; the adoption of the resolution requires a unanimous vote. CONCLUSION In addition to adopting the attached resolution, the City Council should review the attached ordinance and determine if the City Council agrees with Staffs recommendation that the current rate of the UUT should be reduced from 3% to 2.75% or if another rate should be chosen instead. Attachments: Draft Resolution Draft Ordinance Public Correspondence R6876.0001 /1720561 v2 6 7-14 CITY OF LAIRANCHO PALOS VERDES MEMORANDUM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: CAROL W. LYNCH, CITY ATTORNEY DATE: JULY 28, 2014 SUBJECT: ORDINANCE REDUCING THE UTILITY USER TAX RATE FROM 3% TO 2.75% AND MODERNIZING THE CITY'S UTILITY USER TAX AND EMERGENCY RESOLUTION AUTHORIZING THE CITY COUNCIL TO CALL AN ELECTION ON NOVEMBER 4, 2014 TO REQUEST THE VOTERS TO APPROVE THE ORDINANCE REVIEWED: CAROLYNN PETRO, ACTING CITY MANAGE RECOMMENDATIONS: 1) ADOPT THE ATTACHED RESOLUTION: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES UNANIMOUSLY DECLARING AN EMERGENCY IN CONNECTION WITH THE PLACEMENT OF A MEASURE THAT DECREASES THE RATE OF THE CITY'S UTILITY USER TAX FROM 3% TO 2.75% AND MODERNIZES THE TAX ON THE BALLOT FOR A SPECIAL MUNICIPAL ELECTION TO BE CONSOLIDATED WITH THE NOVEMBER 4, 2014 ELECTION, AND 2) INTRODUCE THE ATTACHED ORDINANCE: AN ORDINANCE OF THE PEOPLE OF THE CITY OF RANCHO PALOS VERDES REDUCING THE RATE OF THE CITY'S UTILITY USER TAX FROM 3% TO 2.75% AND MODERNIZING THE • CITY'S UTILITY USER TAX. INTRODUCTION: The purpose of this report is to augment the report that was provided to the City Council on July 16th, based on the discussion that occurred at that meeting. A copy of that report is attached to this report for ease of reference. BACKGROUND: 9 In 1993, the City Council adopted the City's Utility Users Tax ("Tax" or "UUT"). The amount of the Tax is 3%. It is imposed on City residents who use telephone service, electricity, co -generated electricity, natural gas, and water. ➢ Subsequently, the voters of the State of California adopted Proposition 218. ➢ To comply with Proposition 218, in 2004, the City Council placed the Tax on the ballot, and the voters ratified the existing Tax at the same 3% rate. ➢ The City's Tax originally was imposed upon all telephone services that were subject to the Federal Excise Tax ("FET"). In response to litigation, In 2006, the Internal Revenue Service Issued a ruling stating that the FET does not apply to most common telephone billing plans. This invalidated the basis for the City's Tax as applied to telephone service. ➢ In response to these events, some cities, including Rancho Palos Verdes, amended their ordinances without voter approval to delete the reference to the FET and replaced it with other terms to cover telephone services that had been subject to the FET. ➢ Since 2006, many changes have occurred with respect to telephone services that have caused the definitions in the UUT to become outdated. Some types of telephone services currently are not subject to the tax, while others are. This inequity cannot be corrected without placing revisions to the Tax on the ballot for approval by the voters. ➢ Recently, new legal challenges and claims have been filed against other cities that did not place their amended utility user taxes on the ballot. Attorneys in those cases have claimed damages and substantial attorney's fees. (We understand that Chula Vista paid $2 million in attorneys' fees to the attorneys who filed a lawsuit challenging that city's utility user tax.) ➢ Staff proposes placing an ordinance on the November 2014 ballot, to protect future UUT revenues from legal challenge and to modernize the UUT so that it will apply to new and formerly undefined types of telephone services, such as prepaid mobile telephones. R6876.0001/1732852v2 7-16 The proposed ordinance does not increase the UUT or expand the Tax to other types of utilities, and does not afford the City Council ability to do so in the future. Thus, video, cable and trash services, for example, still would not be subject to the City's UUT. A Staff recommends that the City Council include a reduction of the rate of the UUT from 3% to 2.75% in the ordinance that is presented to the voters because that reduction will benefit the residents while still preserving the majority of the current revenue stream from the UUT to the City to fund City services. If the Ordinance is approved by the City Council and the City's voters, pursuant to the State Constitution, the Tax cannot be increased, and the utilities and services that are subject to the Tax cannot be expanded Without voter approval of those changes. DISCUSSION: By placing the measure on the ballot at the earliest possible election date, which is November 2014, any dispute about the City's ability to collect the UUT on telephone services will be resolved a year earlier than if the City waits to place such a measure on the ballot in November 2015, when the next regular City Municipal election will occur. In other words, if approved by the City Council and the voters, the ordinance will protect future UUT revenues from a successful legal challenge. In addition, if the voters were to approve an ordinance that modernizes the City's UUT at the reduced rate of 2.75%, the residents will receive the monetary benefit of the reduction of the rate of the UUT. In addition, by modernizing the UUT, newer types of telephone -related services will be treated the same, so that telephone users in the City are treated alike. If the City Council wishes to place the UUT on the November 2014 ballot, the City Council must unanimously adopt a resolution setting forth an emergency that justifies the election being held prior to an election date that is different from the date of the City's regular municipal elections in November of odd numbered years. Staff believes that there are facts upon which the City Council may rely in declaring an emergency and calling the election in November 2014, instead of waiting until November 2015. Those facts are set forth in the attached resolution and are reiterated here: 1. litigation and claims have been filed against other cities that have not placed their UUT ordinances on the ballot for voter approval, specifically R6876,0001/1732852v2 3 7-17 addressing the elimination of the Federal Excise Tax on telephone services, causing the loss of that important revenue stream and the payment of a significant amount of attorney's fees. The City of Rancho Palos Verdes seeks to protect future revenues from its UUT from such claims and lawsuits and avoid unnecessary legal expenses and exposure. 2. Continuous State takeaways over the last few years, including the state's recent elimination of redevelopment agencies, have resulted in significant reductions in revenues that the City intended to be used to repay the City for loans made previously to the Rancho Palos Verdes Redevelopment Agency for expenditures to address landslide damage and increase land stability within former Redevelopment Project Area No. 1. 3. The Portuguese Bend Landslide is a large active landslide that continues to move and adversely affects public infrastructure, including Palos Verdes Drive South, a major arterial street in the City. The constant damage caused by the landslide requires constant and increased City expenditures to more than $500,000 annually to maintain PVDS as a viable arterial street. 4. During the recession, the State took monies that previously were allocated to cities to reduce the State's budget deficit It .is expected that similar actions will likely occur again in the future in response to downturns in the economy. 5. The cost to the City of complying with state and federal clean water rules continues to increase significantly each year. 6. The City has many unfunded important infrastructure projects, which are discussed above, totaling more than $28 million, including unfunded projects to improve City streets ($4.7 million), and storm drains ($9.4 million). 7. The City of Rancho Palos Verdes seeks to maintain current levels of public safety and police services within the City, even though the cost of such services continues to increase, including the City's contribution to the County liability trust fund for law enforcement services, which the City has been noted will increase again in fiscal year 15-16. 8. The City has made cost reductions to the City's Capital Improvement (infrastructure) Program in recent years in order to maintain a balanced budget. However, similar cost reductions alone will not be sufficient to avoid future cuts to services if future revenue from the UUT is lost due to legal challenges. Therefore, the loss of significant future revenue from R6876.0001/1732852v2 4 ME; UUT would have a negative impact upon public safety and the character of the community In Rancho Palos Verdes. CONCLUSION: If the City Council concurs with the above findings and that the ordinance reducing the rate of the UUT from 3% to 2.75% and modernizing its provisions should be placed on the ballot for the upcoming election In November 2014, then the City Council should adopt the attached resolution and vote to approve the ordinance. The adoption of the resolution requires a unanimous vote by the Members of the City Council, and the proposed ordinance requires an affirmative vote by four Members of the City Council. Attachments: Draft Resolution Draft Ordinance July 15, 2014 Staff report Public Correspondence R6876.0001/1732852v2 5 7-19 CffYOF LiRANCHOPALOSVERDES MEMORANDUM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: CAROL W. LYNCH, CITY ATTORNEY AND DENNIS MCLEAN, DIRECTOR OF FINANCE DATE: AUGUST 5, 2014 SUBJECT: ORDINANCE REDUCING THE UTILITY USER TAX RATE FROM 3% TO 2.75% AND MODERNIZING THE CITY'S UTILITY USER TAX AND EMERGENCY RESOLUTION AUTHORIZING THE CITY COUNCIL TO CALL AN ELECTION ON NOVEMBER 4, 2014 TO REQUEST THE VOTERS TO APPROVE THE ORDINANCE REVIEWED: CAROLYNN PETRO, ACTING CITY MANAGER' RECOMMENDATIONS: 1) ADOPT RESOLUTION NO. 2014-_: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES UNANIMOUSLY DECLARING AN EMERGENCY IN CONNECTION WITH THE PLACEMENT OF A MEASURE THAT DECREASES THE RATE OF THE CITY'S UTILITY USER TAX FROM 3% TO 2.75% AND MODERNIZES THE TAX ON THE BALLOT FOR A SPECIAL MUNICIPAL ELECTION TO BE CONSOLIDATED WITH THE NOVEMBER 4, 2014 ELECTION, AND 2) INTRODUCE ORDINANCE NO ____: AN ORDINANCE OF THE PEOPLE OF THE CITY OF RANCHO PALOS VERDES REDUCING THE RATE OF THE CITY'S UTILITY USER TAX FROM 3% TO 2.75% AND MODERNIZING THE CITY'S UTILITY USER TAX. INTRODUCTION: The purpose of this report is to augment the reports that were provided to the City Council on July 15, 2014 and July 29, 2014, based on the discussion that occurred at both meetings. Copies of both reports are attached to this report for ease of reference. Although time was limited since the Council meeting conducted on July 29, 2014, and publishing the report for this meeting, staff has provided the following additional information requested by Council member Campbell: ✓ A red -line version of the proposed Ordinance comparing it to the current provisions in the Municipal Code; ✓ The complaint in the litigation involving Chula Vista's UUT; ✓ Sample UUT modernization ballot measures and ordinances of other • California cities; and ✓ Recent UUT modernization ballot results. BACKGROUND: The following Background was included in the Staff Report to the City Council, dated July 29, 2014: ➢ In 1993, the City Council adopted the City's Utility Users Tax ("Tax" or "UUT"). The amount of the Tax is 3%. It is imposed on City residents who use telephone service, electricity, co -generated electricity, natural gas, and water. ➢ Subsequently, the voters of the State of California adopted Proposition 218. ➢ To comply with Proposition 218, in 2004, the City Council placed the Tax on the ballot, and the voters ratified the existing Tax at the same 3% rate. > The City's Tax originally was imposed upon all telephone services that were subject to the Federal Excise Tax ("FET"). In response to litigation, in 2006, the Internal Revenue Service issued a ruling stating that the FET does not apply to most common telephone billing plans. This invalidated the basis for the City's Tax as applied to telephone service. ➢ In response to these events, some cities, including Rancho Palos Verdes, amended their ordinances without voter approval to delete the reference to the FET and replaced it with other terms to cover telephone services that had been subject to the FET. Since 2006, many changes have occurred with respect to telephone services that have caused the definitions in the UUT to become outdated. Some types of telephone services currently are not subject to the tax, while R6876,0001/1732852v2 2 7-21 others are. This inequity cannot be corrected without placing revisions to the Tax on the ballot for approval by the voters. ➢ Recently, new legal challenges and claims have been filed against other cities that did not place their amended utility user taxes on the ballot. Attorneys in those cases have claimed damages and substantial attorney's fees. (We understand that Chula Vista paid $2 million in attorneys' fees to the attorneys who filed a lawsuit challenging that city's utility user tax.) ➢ Staff proposes placing an ordinance. on the November 2014 ballot, to protect future UUT revenues from legal challenge and to modernize the UUT so that it will apply to new and formerly undefined types of telephone services, such as prepaid mobile telephones. ➢ The proposed ordinance does not increase the UUT or expand the Tax to other types of utilities, and does not afford the City Council ability to do so in the future. Thus, video, cable and trash services, for example, still would not be subject to the City's UUT. ➢ Staff recommends that the City Council include a reduction of the rate of the UUT from 3% to 2.75% in the ordinance that is presented to the voters because that reduction will benefit the residents while still preserving the majority of the current revenue stream from the UUT to the City to fund City services. A If the Ordinance is approved by the City Council and the City's voters, pursuant to the State Constitution, the Tax cannot be increased, and the utilities and services that are subject to the Tax cannot be expanded without voter approval of those changes. DISCUSSION: The recommended action and the proposed Resolution are identical to the recommendation and Resolution presented to the City Council on July 29, 2014. By placing the proposed measure on the ballot at the earliest possible election date, which is November 2014, any dispute about the City's ability to collect the UUT on telecommunication services will be resolved a year earlier than if the City waits to place such a measure on the ballot in November 2015, when the next regular City Municipal election will occur. In other words, if approved by the City Council and the voters, the ordinance will protect future UUT revenues from a successful legal challenge. R6876.0001/1732852v2 In addition, if the voters were to approve an ordinance that modernizes the City's UUT at the reduced rate of 2.75%, the residents will receive the monetary benefit of the reduction of the rate of the UUT a year earlier. In addition, by modernizing the UUT, newer types of telephone -related services will be treated the same, so that telephone users in the City are treated alike. If the City Council wishes to place the UUT on the November 2014 ballot, the City Council must unanimously adopt a resolution setting forth an emergency that justifies the election being held prior to an election date that is different from the date of the City's regular municipal elections in November of odd numbered years. In its Staff Report, dated July 29, 2014 (copy attached), Staff outlined the facts upon which the City Council may rely in declaring an emergency and calling the election in November 2014, instead of waiting until November 2015. Those facts are set forth in the attached resolution and are reiterated here: 1. Litigation and claims have been filed against other cities that have not placed their UUT ordinances on the ballot for voter approval, specifically addressing the elimination of the Federal Excise Tax on telephone services, causing the loss of that important revenue stream and the payment of a significant amount of attorney's fees. The City of Rancho Palos Verdes seeks to protect future revenues from its UUT from such claims and lawsuits and avoid unnecessary legal expenses and exposure. 2. On May 28, 2014, the City received a Public Records Act request from a law firm seeking records relating to the City's Utility User Tax. 3. Continuous State takeaways over the last few years, including the state's recent elimination of redevelopment agencies, have resulted in significant reductions in revenues that the City intended to be used to repay the City for loans made previously to the Rancho Palos Verdes Redevelopment Agency for expenditures to address landslide damage and increase land stability within former Redevelopment Project Area No. 1, 4. The Portuguese Bend Landslide is a large active landslide that continues to move and adversely affects public infrastructure, including Palos Verdes Drive South, a major arterial street in the City. The constant damage caused by the landslide requires constant and increased City expenditures of more than $500,000 annually to maintain PVDS as a viable arterial street. 5. During the recession, the State took monies that previously were allocated to cities to reduce the State's budget deficit. It is expected that similar actions will likely occur again in the future in response to downturns in the economy. R6876.0001/1732852v2 4 7-23 6. The cost to the City of complying with state and federal clean water rules continues to increase significantly each year. 7. The City has many unfunded important infrastructure projects, which are discussed above, totaling more than $28 million, including unfunded projects to improve City streets ($4.7 million), and storm drains ($9.4 million). 8. The City of Rancho Palos Verdes seeks to maintain current levels of public safety and police services within the City, even though the cost of such services continues to increase, including the City's contribution to the County liability trust fund for law enforcement services, which the City has been notified will increase again in FY15-16. 9. The City has made cost reductions to the City's Capital Improvement (infrastructure) Program in recent years in order to maintain a balanced budget. However, similar cost reductions alone will not be sufficient to avoid future cuts to services if future revenue from the UUT is lost due to legal challenges. Therefore, the loss of significant future revenue from UUT would have a negative impact upon public safety and the character of the community in Rancho Palos Verdes. Several Questions and/or Ideas Regarding Staffs Recommended Action Discussion Regarding the Conduct of an Election In March 2015 or June 2015 Election At the City Council meeting on July 29, 2014, the City Council discussed the possibility of conducting a municipal election in March 2015, or June 2015, to enable the voters to decide whether to approve the proposed reduction of the rate of the UUT, as well the modernization of the UUT ordinance, as an alternative to the proposed November 2014 election. In response to an inquiry made by staff, the County responded that it will not be conducting an election in either March or June of 2015. However, the City of Los Angeles will conduct an election in March 2015. Although the City could utilize the election resources of the City of Los Angeles, the cost of conducting a special election in March 2015 would be approximately $20,000 more than the cost estimated by the County to conduct the consolidated election in November 2014. Furthermore, the March 2015 election relates to open seats on the LAUSD and EI Camino College District Boards. If broad voter participation is desired, unfortunately, voter turn -out is typically very low city-wide for this election. R6876.0001/1732852v2 7-24 Discussion Regarding the Conduct of an Election to Modernize the Utility User Tax Ordinance While Maintaining the Current 3% Utility User Tax Rate Several Council Members questioned whether the proposed ballot measure should only modemize the UUT ordinance and continue to maintain the 3% UUT rate. Staff subsequently discussed this alternative with Tim McLarney of True - North, the City's polling advisor, who expressed a caution about the possibility of failure of the ballot measure without a reduction of the UUT rate. Only one recent UUT modernization ballot measure with a rate reduction failed before voters. As of June 2013, four other modernization ballot measures that attempted to maintain the same UUT rate failed over the last several years. During the most recent election cycle that included UUT modernization ballot measures (November 2013), the ballot measure that included a rate reduction passed, and the modernization ballot measure that attempted to maintain the same UUT rate failed. Staff has attached a report prepared by Michael Coleman a/k/a CaliforniaCityFinance.com, the League of California Cities expert, titled UUT Facts, the source of recent UUT ballot results. The voters' decision is more straightforward when asked about a rate reduction, rather than focusing solely upon the legalistic terms and conditions of the modernization of the telecommunication provisions of the ordinance. Questions Regarding Tax Administrator's Powers Included in Current and Proposed Modernization UUT Ordinance To the best of Staff's knowledge, neither the current Director of Finance, nor any of his predecessors, (acting as the Tax Administrator), have ever made any administrative tax rulings. None would be made without the knowledge of the City Manager, City Attorney, or the City Council. Likewise, there have never been any appeals to the City Council of a determination by the Tax Administrator. Alternatives — If the Resolution to Declare Emergency Not Adopted by City Council Alternative 1 — Continue Collection of UUT by Telecommunication Providers Escrow Such Collections Reconsider UUT Modernization Ballot Measure in November 2015 If the City Council does not place the ballot measure on the November 2014 ballot, it could direct Staff to prepare a resolution whereby the future UUT that is collected by telecommunication service providers would be segregated ("escrowed") from all other UUT revenues and other unrestricted General Fund monies, into a "Committed" Reserve of the General Fund (or a similar restriction), thus prohibiting the use, encumbrance or appropriation of such collections without further action of the City Council. Such future collections of UUT by telecommunication providers would be set-aside for payment of any future claims, or cost thereof. Alternative 1 R6876.0001/1732852v2 6 7-25 is intended to include reconsideration of placing a UUT modernization ballot measure before the voters as early as November 2015. Alternative 2 — Temporarily Suspend Collection of UUT by Telecommunications Providers - Reconsider UUT Modernization Ballot Measure in November 2015 Instead of "escrowing" UUT funds collected going forward, the City Council could immediately suspend the collection of the UUT from telecommunication services (a "tax holiday") until an election to modernize the UUT ordinance is conducted in November 2015, while maintaining the current 3% UUT rate. However, based upon a discussion with the City's polling advisor, the voters would likely consider the "tax holiday" as a tax reduction, and if soon followed by a ballot measure to approve the modernization of the UUT tax for telecommunications (possibly November 2015), to allow the City resume collection of the tax, it would be perceived as a tax increase and would likely fail. Alternative 3 Indefinitely Suspend Collection of UUT by Telecommunications Providers Suspend the collection of the UUT on telecommunication services indefinitely. Alternative 3 provides the City's UUT taxpayers with a tax decrease, but would likely lead to a significant, permanent loss of about $700,000 of UUT revenue to the General Fund annually — about 3-4% of the total annual General Fund operating budget. Alternatives 1-3 Require FY14-15 Budget Decreases Alternatives 1-3 would require Staff to promptly develop revisions to the FY14-15 Budget in lieu of the proposed "escrow of or suspension of the City's UUT collected from telecommunication services to restore a balanced budget for FY14- 15 in accordance with City Council Policy No, 45 — Balanced Operating Budget. If adopted, any of the three Alternatives 1-3 would have an impact on the future structural budget and will necessitate the City Council to make decisions regarding what immediate adjustments should be made to FY14-15 General fund budget for on-going programs, services and operating expenditures. There are two City Council policies to consider when making the adjustments. Policy No. 41 — Reserve Policies requires Transient Occupancy Tax (TOT, a recurring revenue) be transferred to the Capital Improvement Projects (CIP) Fund. Policy No. 41 also requires the prior year General Fund expenditure variance be transferred to the CIP Fund. Therefore, General Fund money that has been transferred to the CIP Fund pursuant to this policy and has been used to fund one-time FY14-15 appropriations should not be considered to balance the structural budget. However, these resources, as well as the General Fund Reserve (rainy day fund) may be R6876.0001 /1732852x2 7 7-26 considered by the City Council to provide a one-time emergency stop -gap for either a temporary loss of UUT or claims for past collections of UUT. 2. Policy No. 45 — Balanced Operating Budget requires that recurring expenditures do not exceed recurring revenues. Therefore, reducing one- time FY14-15 appropriations should not be considered to balance the structural budget, Again, these one-time resources may be considered to provide a one-time emergency stop -gap. The City Council could elect to set-aside City Council Policy No. 45. However, the City's Financial Advisor previously expressed caution that setting aside newly established fiscal policies could be viewed unfavorably by municipal debt rating agencies, if and when the City's initial debt rating Is pursued. With City Council direction, Staff will prepare a list of potential FY14-15 appropriations to adjust. The list may include one-time items to allow for an emergency stop -gap, as well as recurring items to allow for a rebalancing of the structural budget. Items for consideration may include: ➢ The one-time general liability insurance refund in the amount of $231,306 that was transferred to the CIP Fund (and may be transferred back to the General Fund); ➢ Recurring budget programs and services (e.g. dewatering well rehabilitation, park and facility maintenance); ➢ Recurring new services that were added to the FY14-15 budget, including the City Council Liaison employee position, and additional part-time Recreation hours to staff park sites such as Abalone Cove Beach and the open gym program at Miraleste Intermediate School; and ➢ Potential proposals to increase facility -use fees, such as temporary - use parking at Point Vicente Park/Civic Center and park -site rentals. As reported with the 2014 Five -Year Financial Model and on July 15, 2014, Staff anticipates a number of challenges associated with balancing the structural budget in the future. The challenges include increasing costs to comply with clean water law, increasing costs of residential street rehabilitation, anticipated subsidies for right-of-way maintenance, sunset of the storm drain user fee, and the increased contribution to the Los Angeles County Sheriff's liability trust fund. Finally, nothing has been included in the structural budget for any future adjustments to employee compensation and benefits. Additionally, the City has considered other programs and services as a part of the 2014 City Council Goals and the FY14-15 budget process that are not funded in the FY14-15 budget for the General Fund, including: Creation of a joint powers agency for emergency management for the Peninsula; R6876.0001/1732852v2 7-27 ➢ Placement of surveillance cameras at City entrances and/or purchase of additional Automated License Plate Recognition (ALPR) technology; ➢ Programmed maintenance and rehabilitation of dewatering wells for Portuguese Bend and Abalone Cove Landslide areas; ➢ Community workshops for issues such as safe school routes, cross- walks, updates to the Parks Master Plan & Coast Vision Plan, park/preserve improvements, etc.; and ➢ Expansion of public outreach programs to familiarize residents and businesses about City services, etc. (citizen survey, town hall meetings, leadership academy, etc.). In summary, a loss of approximately $700,000 of UUT revenue annually, either in the short term or long term, will have a significant impact on the City's ability to provide a desired level of service and maintain a structurally balanced budget. CONCLUSION: If the City Council concurs with the above findings and that the ordinance reducing the rate of the UUT from 3% to 2.75% and modernizing its provisions should be placed on the ballot for the upcoming election in November 2014, then the City Council should adopt the attached resolution calling for the special election in November 2014 and vote to approve the ordinance. The adoption of the resolution requires a unanimous vote by the Members of the City Council, and the proposed ordinance requires an affirmative vote by four Members of the City Council. If the City Council does not adopt the resolution placing the measure decreasing the rate of the City's Utility User Tax from 3% to 2.75% and modernizing the tax on the November 4, 2014 ballot, then the City Council should decide whether to select among Alternatives 1-3 and direct Staff to promptly return with proposed adjustments should be made to the FYI 4-15 General fund budget and/or on-going programs, services and operating expenditures. Attachments: Draft Resolution Draft Ordinance Redline of Draft Ordinance revision July 15, 2014 Staff report July 29, 2014 Staff report Public Correspondence Utility Users Tax Facts by Cal iforniaCityFinance.com, August 2013 Sample UUT modernization ballot measures of other California cities Chula Vista complaint R6876,0001/1732852v2 x±2.1 Marks Finch Attorneys at law August 13, 2014 VIA NORCO OVERNITE CERTIFIED AND ELECTRONIC MAIL Stephen I Schultz sschultz®marksfinch.com VIA NORCO OVERNITE CERTIF�E� AND ELECTRONIC MAIL Clerk of the City Council Director of Finance / Tax Administrator City of Rancho Palos Verdes City of Rancho Palos Verdes 30940 Hawthorne Boulevard 30940 Hawthorne Boulevard Rancho Palos Verdes, California 90275 Rancho Palos Verdes, California 90275 cityclerk@rpv.com dennism@rpv.com Re: Rancho Palos Verdes Utility Users Tax On Certain Telephone Services: Claim for Re fiend And Other Bellef To the City Clerk of the City Council of Rancho Palos Verdes: Name And Address Of Claimants File 2044,002 Our client, Sharon Yarber, a resident of Rancho Palos Verdes, California 90275, on behalf of herself and all similarly situated taxpayers (whether individuals or any entity of any form) in the City of Rancho Palos Verdes ("City"), respectfully requests the immediate cessation of the collection of the Utility Users Tax ("UUT") on telephone services, described below, and the return of all monies to her and the persons and entities from whom the UUT was collected on those services. Notices Or Correspondence Concerning This Matter Should Be Sent To: Stephen J. Schultz, of Counsel Marks, Finch, Thornton & Baird, LLP 4747 Executive Drive — Suite 700 San Diego, California 92121-3107 Circumstances Giving Rise To Claim In 1993 the City imposed a 3% tax upon telephone services as defined in the City's Municipal Code section 3.30.020 (hereafter RPVM § ._.) The "tax imposed ... shall be collected from the service user by the service supplier." RPVM§ 3.30.100,A, The amount of the tax collected in one month shall be remitted to the City in the next month. Id. The UUT is automatically added to the monthly mobile phone bill of City taxpayers and because the UTT is embedded in billing statements of service providers, most taxpayers are unaware of the UUT or the fact that it has been illegally collected. Marks, Finch, Thornton & Baird uu 4747 Executive Drive, Suite 700 San Diego, CA 92121 T 858.737.3100 F 858.737.3101 marksfinch,com 7-29 City of Rancho Palos Verdes August 13, 2014 Page 2 of 5 The Federal Excise Tax is imposed upon, among other services, "toll telephone service," which is defined, in relevant part, as telephone communications "for which ... there is a toll charge which varies in amount with the distance and elapsed transmission time of each individual communication. I.R.C. § 4252(b)(1)(A). Telephonic communications that are billed at rates that do not vary with both distance and transmission time, therefore, both fall outside of the Federal Excise Tax, and hence, the UUT. The City by incorporation adopted the Federal Excise Tax definition. On May 25, 2006, the Internal Revenue Service ("IRS") announced in Notice 2006-50 that it would cease collecting the Federal Excise Tax on amounts paid for time only service after July 31, 2006 and that it would refund taxes improperly collected from February 28, 2003 through July 31, 2006, the date by which service providers were required to cease collecting the tax on non-taxable service. The services that the IRS acknowledges are non-taxable included bundled service, where local and long distance are not separately billed (including landline and cellular telephone service), and all long distance service. As the City adopted the Federal Excise Tax definition, any charges for telephone services that are not taxable under the Federal Excise Tax cannot be taxed by the City. After July 31, 2006, the City's UUT imposed upon telephone services not based on time and distance was illegal and unlawful. Thus, the IRS's position that such services are not taxable under the Federal Excise Tax is conclusive as to the applicability of the City UUT here. However, the IRS's statement is not necessarily a prerequisite to a finding that the City UUT is inapplicable to telephone service charged by time only. Under the plain language of the Federal Excise Tax, charges for telephone services that do not vary by time and distance have never been taxable. Thus, it is no defense that the UUT only became improperly applied subsequent to the issuance of IRS Notice 2006-50. In fact, even the IRS acknowledges that the Federal Excise Tax was never properly applied to time -only service by granting taxpayers a refund of all taxes improperly collected since February 2003. Accordingly, the City UUT, by its terms, does not apply to (1) mobile phone services; (2) services which include long distance telephone service where the charge varies only by time; and (3) charges for "bundled service." "Bundled service" is service that combines local and long distance and is provided under a plan that does not separately state the charge for the telephone service and can include cellular service, landline service, prepaid telephone card service, and voice-over internet protocol service. See IRS Notice 2006-501. There is no question that the City UUT has been improperly applied and collected. Claimant and all other taxpayers are entitled to a refund of all UUTs improperly collected from at least August 1, 2006 to the present, together with interest. The California Government Code § 53723 ("Government Code § 53723') prevents the application of a tax without voter approval. Specifically, Government Code § 53723 provides that "[n]o local government, or district, whether or not authorized to levy a property tax, may impose any general tax unless and until such general tax is submitted to the electorate of the local government, or district and approved by a majority vote of the voters voting in an election on the issue." Marks, Finch, Thornton & Baird w 4747 Executive Drive, Suite 700 San Diego, CA 92121 T 858.737.3100 F 858.737.3101 markatinch.com 7-30 City of Rancho Palos Verdes August 13, 2014 Page 3 of 5 In support of this principle, in November 1996, California voters passed Proposition 218, the "Right to Vote on Taxes Act." California Constitution, Article XIII, § C. This constitutional amendment protects taxpayers by limiting the methods by which local governments can impose, extend, or increase taxes, fees and charges without taxpayer consent. Proposition 218 requires voter approval prior to an imposition, increase, or extension of general taxes, assessments, and certain user fees. In or about September, 2006, the City, in an attempt to cover up the unlawful continued imposition of the UUT, passed Ordinance No. 443. This Ordinance was an attempt to confuse and misrepresent the status of UUT charges on telephone services not based on time and distance, which includes cell phone and landline services. Ordinance No. 443 amended RPVMC § 3.30.020.1 by striking the incorporation of the Federal Excise Tax reference contained in RPVMC § 3.30.010. The effect of this amendment thereby constituted a tax by a local government that was "imposed, extended or increased" without voter approval as is .required by the California Constitution Article XIII, § C, Government Code § 53723, and Proposition 218. The implementation of Ordinance No. 443 and its continued application to Claimant and the City's taxpayers violated and continues to violate, the Government Code § 53723, the California Constitution Article XIII, § C, and Proposition 218 whereby voters should have had the opportunity to vote upon the implementation of the changes to the UUT. No such vote has taken place. Therefore, since the implementation, the UUT has been unlawfully assessed against Claimant and all other similarly situated regarding the telephone services described herein. The City's continued imposition and collection of the UUT on said telephone services is an ongoing violation, constituting a new violation upon each collection. On July 15, 2014, and thereafter, the City Attorney recommended that the City Council adopt a Resolution to call a special municipal election to be held on November 4, 2014 to consider a proposed ordinance. The proposed ordinance seeks to amend the telephone UUT to "modernize" the language of the UUT. This was an extremely belated attempt to repair the faulty ordinance and to come into compliance, for the first time, with Government Code § 53723, the California Constitution Article XIII, § C, and Proposition 218. In the words of the City Attorney, after the IRS 2006 Notice, "the basis for the imposition of the City's [UU] Tax, as applied to telephone services, was no longer valid." See July 15, 2014 Memorandum of City Attorney to the Mayor and City Council. Despite this acknowledgment by the City that the UUT is out of compliance with Government Code § 53723, the California Constitution Article XIII, § C, and Proposition 218, the City Council in August, 2014 voted against a Prop 218 election in November, 2014, and the City continues to assess and collect the UUT from Claimant and all others similarly situated. 4. General Description Of Damages Claimant and all other similarly situated taxpayers have paid and continue to pay, the telephone UUT imposed, extended or increased in violation of Proposition 218, Article XIII C, § 2 (b) of the California Constitution and Government Code § 53723. Marks, Finch, Thornton & Baird w 4747 Executive Drive, Suite 700 San Diego, CA 92121 T 858.737.3100 F 858.737.3101 marksfinch.com 7-31 City of Rancho Palos Verdes August 13, 2014 Page 4 of 5 Thus, the City is in the position of a bailee or trustee with respect to these specific monies and would be unjustly enriched by retaining them. Claimant, on behalf of herself and all similarly situated taxpayers in the City, hereby respectfully requests the immediate return of these monies. 5. Names Of Public Employees Causing The Damages The City's public employees causing the damage include the City Tax Collector and/or Administor, the Mayor and members of the City Council responsible for adopting Ordinance 443 amending the UUT and the current City Council for the continuing collection of the UUT on telephone service. 6, Amount Claimed The City is able to determine the identities of all relevant taxpayers and the specific monies due to each of them; however, upon information and belief the total amount exceeds $5,000,000. As to the amount claimed for the Claimant and all others similarly situated, the documents supporting the amount include the July 15, 2014 Memorandum of the City Attorney stating at page 5 that the annual amount is "up to" $700,000 per year. Further, upon information and belief, this claim, if filed as a civil action, would not be a limited civil case as that term is defined in California Code of Civil Procedure § 86. The violations specified above commenced in at least 2006 and are continuing to date. (Attached as Exhibit 1 are the oldest and most recent billings paid by Claimant herself; attached as Exhibit 2 is the July 15, 2014 Memorandum of the City Attorney.) The billings back to 2006 for the Claimant are available from provider(s). All the billings in Claimant's possession are submitted as hard copy by separate mailing. 7. Conclusion Accordingly, Claimant, on behalf of herself and all similarly situated taxpayers in the City, further respectfully requests the immediate cessation of collection of the illegal and unlawful UUT on these services and return of all monies to the persons and entities from whom the UUT was illegally collected on those services from August 1, 2006 to the present. Claimant has been a customer of AT&T and Verizon. She has been charged UUT's on those services. By filing this claim, our clients do not admit or concede that California Government Code, Sections 910 et seq. apply to this claim or that said Sections 910 et seq. are the exclusive remedy for these claims. Marks, Finch, Thornton & Baird ur 4747 Executive Drive, Suite 700 San Diego, CA 92121 T 858.737.3100 r 858.737.3101 marksfmch.com 7-32 City of Rancho Palos Verdes August 13, 2014 Page 5 of 5 If you do not respond within the time allowed by law, we will assume that you have denied these claims. Enclosures SJS.axm/3785832.DOCX Very truly yours, Louis J. Blum, Partner Stephen J. Schultz, of Counsel Marks, Finch, Thornton & Baird, LLP Attorneys for Sharon Yarber YEW-MATIQN 1, Sharon Yarber, have read the facts regarding my cell phon s cc d ate under penalty of perjury under the laws of California, that they are true and corral ept t e ted on information and belief, l believe them to be tru . Dated: `a V By. Charon arhwr Marko, Finch. Thornton &8atrdw 47476x.cutivoDrive, Suite 7003anDie$o,CA4212% 7858.73732001858.737.3101 matkefinah,com FILE WITH: CLAIM FOR DAMAGES CITY CLERK'S OFFICE City of Rancho Palos Verdes T 30940 Hawthorne Blvd, O PERSON OR PROPERTY Rancho Palos Verdes, CA 90276 INSTRUCTIONS 1. Claims for death, Injury to person or to personal property must be filed not later than six months afterthe occurrence. (Gov. Code Sec. 911,2.) 2. Claims for damages to real property must be filed not later than 1 year after the occurrence. (Gov. Code Sec. 911.2.) 3. Read entire claim form before filing. 4. See Page 2 for diagram upon which to locate place of accident, 6, THIS CLAIM FORM MUST BE SIGNED ON PAGE 2 AT BOTTOM. 6. Attach separate shoats, if necessary, to give full details. SIGN EACH SHEET. Sharon Yarber to be sent regarding this claim: When did DAMAGE or INJURY occurs Date August 1, 20(18 to data Time NA If claim Is for Equitable Indemnity, give date claimant served with the complaint: Date Where did DAMAGE or INJURY occur? Describe fully, street names and address and measurements from IaI any RESERVE FOR FILING STAMP CLAIM NO. a01+J— C8 RECEIVED CITY OF RANCHO PALOS VERDES AUG 13 2014 CITY CLERK'S OFFICE Not Applicable Not Applicable or See Claim letter dated August 13, 2014. on alagram on See Claim Letter dated August 13, 2014 submitted herewith. 10 Describe in detail how the DAMAGE or INJURY occurred. See Claim Letter dated August 13, 2014 submitted herewith. Why do you claim the city Is responslble? See Claim Letter dated August 13, 2014 submitted herewith. Describe In detail each INJURY or DAMAGE, See Claim Letter dated August 13, 2014 submitted herewith. This Claim Must Be Signed on Page 2 7-34 The amount claimed, as of the date of presentation of this clalm; Is computed as follows, Damages Incurred to date (exact): Estimated prospective damages as for as known: Damage to property .................... $ Future expenses for medical and hospital cars, $ Expenses foamedloal. and•hospiial.care ... $ Future -loss of pamings, , ................. $ Loss of earnings ..............1.—.41 t)tirar prospective special damages .......... $ Special damages for ......... . ......... $ prospective general damages ...... I , ...... , $ Total estimate prospective damages....... 5 General damages ...................... 414M -mm Total damages incurred tc data. , . , .. , 445690 sem 2 rLP—b n Total amount claimed as of date of presentation of this claim: S &,WO Aoc plug Intarast and attomays' face Was damage andlor Injury Investigated by ponce? +b if so, what oW t" Were paramedics or ambulance called9 m If so, name city or smbulance wA If injured, state date, time, name and address of doctor of your first visit WA WITNESSES to DAMAGE or INJURY: List all persons and addresses of persons known to have information; DOCTORS and HOSPITALS: Hospital WA Address Date Hospitalized Doctor wA ddress Date of Treatment Doctor - wA Address Date of Treatment READ CAREFULLY For an accident claims place on following diagram names of streets, including North, Bast, South, and West; Indicate place of accident by "X" and by showing house numbers or distances to street corners. If City Vehicle was Involved, designate by letter "A" location of City Vehicle when you first saw It, and by "S" location of yourself or his your vehicle when you first saw City vehicle; location of City vehicle at time of accident by "A-7" and location of youniOlf or your vehicle at the time of the sccldsnt by "B-9" and tljs point of Impact by "K;' NOTE: If diagrams below do "V fit the situation, attach hereto a proper diagram signed by the claimant. CSIDEWALK or person mmg on to CURB PARKWAY SIDEWAUf Stephen J. Schurz, Esq. August, 2014 7-35 C� 0 EXHIBIT "I" EXHIBIT "I" 7-36 tN'•. C invoice Number Account Number Date Due Page 00/10/14 401`5 , Monthly -Charges, continued varimn Wlt+eWw surcharges+ Regulatory Charge AdmWsbdw Charge CA state PUC Fee Taxes, Governmental surcharges and Fees+ _...... .. , 21 .a8 .08 $2.44 CA State gl l Fee .24 CA Teleconned Fund Su" .14 CA State Higb Cost Fund (A) .04 Lf lne Surcharge +- CA .29 CAAdvanced Biwa Fund (CASF) .11 CA Relay Srvc/Comm Device Fund Rancho Palos Verdes City UUT 1.09 $1.90 Total Current Chargea torte +P0=nlag4-b8sed VM tees, and urchargesapply to chaWs tar ift line, Im W rq over W ctrrrgae, plus thls dne'9 eisare 8t%Atid charges Summary for Sharon Yarber:� Your Plan MORE EVERY UNL TLQTXT i69 (see pg 3) Have more quwAons about your charges? Get details for usage charges at www.verizonwireless.com. Sign into My Verizon to Vow Online Bill and dick on Calls, Messages & Data. Monthly Charges Tablet Una Access 07116— 08115 10.00 $10.00 Usage and Purchase Charges Valla IAilowanoe Uaed I Billable L Coat Unbilled Usage f0m Previous Months Megabyte Usage megabytes .332 --- -- Currow Data usage Megabyte usage =98WW,l 1024.000 1 M217 -- -- (ahared) Total Data $.00 Total Usage and Purchase Charges $a varizon Wireless` sumhnn+ Regulatory Charge 02 Administrative Charge A8 $.08 Total Current Charges 1011401� $10.08 +Parcerdaga—based taxes, lees, and wdorges apply to charges for this line, Iraudhrg overage chew% plus 1h1s lWs ahara of account charges. 7-37 kwoice Number Account Number Page _. _ _...._.__ _.... _ ..a+D8 344 Summary for Sharon Yarber. Your Calling Plan America's Choloe 11900 My Unita N&W and UnM IN Cal" $MM OW $59.99 rr ONY Mese r imp 900 monthly general alloomoe minutes $.40 per minte after allowence KATI. IN C49109 -MIM Unlimited IN Callhig minutes Uni Night & Weekend I& Unlimited OFFPEAK Charges Ma�talyAc�ae Charges QM* CWHng Plan 04n6 — 05M5 59.99 5" U=P charges Affawancel Ueed Voice 5.96 aNnures 900 456 55.96 Verizon wbelesa' Surcharges mutes uniknifed 237 Fed UnMmal service Charge 1.46 Regulatory Charge .07 Administrative Cham .70 CA state PAC. In .12 . Sz.35 Tartar, Governmental surcharges and Fees CA Slate 911 Fee .94 CA Stitt High Cast Fund (B) .16 CA Teleconnect Fund Surchg ,09 CA State High Cost Fund (A) .09 Uterine surge — CA .76 CA Advanced Swcs Fund (CASF) .16 CA Relay Srvc/Comm Device Fund .13 RWOD Palm Valles city Uut . 544 Total Cuffent charges SM74 Usage Charges vol" Affawancel Ueed SMeble I COM Calling Plan aNnures 900 456 -- IN Calling mutes uniknifed 237 -- -- NightNYeakend mrhates 123 --- -- 411 Connect CaN8 -- 4 4 5.96 Total voice $5.96 Total Usage Charges 56.96 brew yaw bio etd cell detft online for FFM Log irdo My Awnd at wwwvertiarwirdemap. VOA:] m EXHIBIT "2" EXHIBIT "2" 7-39 PALOS VERDES MEMORANDUM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: CAROL W. LYNCH, CITY ATTORNEY DATE: JULY 15, 2014 SUBJECT: ORDINANCE REDUCING THE UTILITY USER TAX RATE FROM 3% TO 2.75% AND MODERNIZING THE CITY'S UTILITY USER TAX AND EMERGENCY RESOLUTION AUTHORIZING THE CITY COUNCIL TO CALL AN ELECTION ON NOVEMBER 41 2014 TO REQUEST THE VOTERS TO APPROVE THE ORDINANCE REVIEWED BY: CAROLYNN PETRU, ACTING CITY MANAGERO 1. ADOPT RESOLUTION NO. 2014_„_; A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES, UNANIMOUSLY DECLARING AN EMERGENCY IN CONNECTION WITH THE PLACEMENT OF A MEASURE THAT MODERNIZES THE CITY'S UTILITY USER TAX AND DECREASES THE RATE OF THE TAX ON THE BALLOT FOR A SPECIAL MUNICIPAL ELECTION TO BE CONSOLIDATED WITH THE NOVEMBER 4, 20'14 ELECTION 2. INTRODUCE ORDINANCE NO. _; AN ORDINANCE OF THE PEOPLE OF THE CITY OF RANCHO PALOS VERDES, REDUCING THE RATE OF THE CITY'S UTILITY USER TAX FROM 3% TO 2.75% AND MODERNIZING THE CITY'S UTILITY USER TAX M_qXcj_[*jFjjU* In 1883, the City Council adopted the City's Utility Users Tax ("Tax" or "UUT). The amount of the Tax is 3%. It Is imposed on City residents who use telephone service, electricity, co -generated elecirioity, natural gas, and water. Subsequently, the voters of the State of California adopted Proposition 218. Even though the City's Tax had been In effect prior to the adoption of Proposition 218, In order for the City to continue to collect the Tax legally, voter approval was 6-1 7-40 required. Accordingly, In 2004, the City Council placed the Tax on the ballot, and the voters ratified the eft ing Tax at the same 3% rate that had beerr adopted by the City Council. Like many utility users taxes, the telephone portion of the City's Tax originally was imposed upon telephone service that was subject to the Federal Excise Tax ("FET"), because, at that time, it was believed that the FET could be Imposed upon the broadest categories of telephone services. The FET was used routinely by municipalities as the basis for imposing a utility user tax, so those local taxes also would be Imposed on the broadest range of telephone services. However, a decision by a federal court Invalidated a portion of the methodology that was used in the FET. Subsequently, In 2006, the Internal Revenue Service Issued a ruling stating that the FET dome not apply to most common telephone billing plans, such as one -rate plans that charge a flat rate for all calls. (DR gAfto3le MuniWoet LU HaGabook Section 5,50.) Thus, Ike most utility users taxes In the state, the basis of the imposition of the City's Tax, as applied to telephone service, was no longer valid. In response to these events, some cities put their utility taxes on the ballot for voter approval of new definitions of telephone services upon which to impose the utility users tax; others did not amend their ordinances, which still contain the reference to the FET; and others, like Rancho Palos Verdes, amended their ordinances without voter approval to delete the referenoe to the FET and added a different definition of the telephone services upon which the UUT would be Imposed. In taking this latter approach In 2006, the City Council made findings that the intent of the changes to the Tax was not to expand the Tax to any new categories of telephone service that had not been taxed previously, so that voter approval should not be required. The City Council took this action, nether than placing the Tax on the ballot again, because the City's voters had ratified the City's Tax fairly recently, and it was unclear whether changing the definition of the telephone service upon which the Tax could be Imposed would require voter approval. Subsequent cases have addressed that issue and have clarified that the option that clearly Is legally defensible is to place any definition changes and updates to the UUT on the ballot for approval. Since 2006, many changes have occurred with respect to telephone services that have caused the definitions in the UUT to become somewhat outdated. Accordingly, some types of telephone services currently are not subject to the tax, while others are. This is not completely fair to City residents who use telephone services and currently are subject to the City's UUT. Accordingly, Staff proposes placing an ordinance on an upcoming ballot that will modernize the UUT. In , addition, at the June 17, 2014 City Council meeting, Council Member Campbell suggested. that the City Council should consider reducing the R6876A001/1720561v2 2 6-2 7-41 rate of the City's UUT. The ordinance that modernizes the UUT also could reduce the rate of the City's UUT below the current raga of 3%. The Ordinance that is attached to this staff= report proposes a reduction of the current tax rate of 30A to 2.75%. Of course, another tax rate also could be selected by to City Council and presented to the voters. His W Approximately $2.6 million of UUT is deposited into the City's General Fund annually. About $0.7 million of this amount is based upon telecommunications services (telephone land line, long distance, and cellular service), and the remainder is based upon electricity, gas and water service. A five-year history of UUT follows: Utility Users' Tax $3,000,000 } $ OW I t i FY00-10 FY20,11 F u -n "U-13 RU -14 t i r nt EIaCWcitY, res water n Telecommrm&�kions f The FY14.15 General Fund revenue budget is $26.5 million. A net expenditure of about $19.2 million represents the City's operating budget; and $7.3 million will be transferred to the Capital Improvement Projects (CIP) Fund for infrastructure repair, replacement and improvement. Based upon the operating and capital needs of the City, the City Council has determined that the UUT nate of 3% continues to be a necessary General Fund revenue source. The FY14-15 General Fund budget is balanced by a thin margin. ff the General Fund were to lose a revenue source such as UUT, the Impact to the current level of service would be significant Even if there is no loss of UUT, Staff expects that the General Fund budget will become more difficult to balance In future years. • As reported with the 2014 Five -Year Financial Model, Staff expects that the accumulated Street Maintenance Fund balance will be depleted, and R.6876.00011172056iV2 3 6-3 the General Fund will be required to resume large subsidies for right-of- way maintenance beginning In FY15-18. The Los Angeles County Sheriffs Department has notified the City to expect additional increases to the required liability trust fund contribution in FYI 5-16, • Staff expects that expenditures %Ill Increase over the next couple of years to keep pace with the latest storm water quality mandates from the state and. federal governments. Due to conservative budget management, the City's General Fund does have a history of favorable expenditure variances, which have averaged about $1.0 million annual over the last 10 years. However, due to the increased need to .improve the City's aged Infrastructure and the limited availability of restricted revenue dedicated to Infrastructure, the City Council recently modified its Policy No. 41 — Reserve Pblicies to transfer favorable General Fund expenditure variances to the CIP Fund for additional infrastructure funding. There are currently 3 components of infrastructure subsidies from the General Fund; 1. Annual transfer for the residential street rehabilitation program (FY14-15 budget of $3 million); 2. Annual transfer equivalent to the City's transient occupancy tax revenue (FY14-16 budget of $4 million; and 3. Annual transfer of the prior year expenditure variance (most recent was $1.7 million FYI 2-13 variance transferred in FYI 3-14). Over 10 years through FY14-16, General Fund transfers total more than $16.7 million for street Improvements and $18.4 million for storm drain improvements. However, even with the large General Fund subsidies for Infrastructure, projects with estimated costs totaling at least $26 million have been Identified in the 2014 Five -Year Capital Improvement Plan that remain unfunded over the next five years. As part of a potential UUT modernization ballot measure, the City Council may consider a proposed reduction to the UUT rate, as suggested by Counciimember Campbell. The annual fiscal impact of the proposed quarter=peroent reduction (from 3% to 2.75%) is a revenue decrease of about $221,676. FY14-15 Bud ted UUT 3% $21M,100 0.15% Reduction from 3% to 2.8596 W,005 0.25% Reduction from 3% to 2.75% $ Z21675 0.5% Reduction from 3% to 2495 $ 44%35a The fiscal Impact of the City Council's alternatives are as follows: R6876.0001/1720561v2 M 7-43 1. if the City Council takes no action to propose a UUT modernization ballot measure, the City could lose up to $0.7 million of annual UUT based upon telecommunications service, until a measure is brought before the voters for approval. 2. if the City Council proposes a UUT modernization ballot measure, the following outcomes are possible. a. The ballot measure fails, and the City loses about $0.7 million of annual UUT revenue; b. A ballot measure with no proposed rate reduction prevails, and the City's UUT revenue remains intact; or c. A ballot measure prevails with a proposed rate reduction of a quarter -percent, and the City loses an estimated $221,675 of annual UUT. Staff recommends that the City Council Include a reduction of the rate of the UUT from 3% to 2.75% in the ordinance that is presented to the voters because that reduction will benefit the residents while still providing the majority of the current revenue stream from the UUT to the City to fund City services. DIjCUj j The benefit to the City's residents of placing the City's UUT on the upcoming November ballot It obvious. If the voters were to approve an ordinance that modernizes the Clty's UUT at a reduced rate, such as 2.75%, the residents will receivethe benefit of the reduction of the rate of the UUT. in addition, by modemizing the UUT, newer telephon"lated services will be treated the some, so that telephone users in the City are treated alike. In addition, by placing the measure on the ballot at the earliest possible election date, which is November 2014, any dispute about the UUT on telephone services will be resolved a year earlier than if the City waits to place such a measure on the ballot in November 2015, when the next regular City Municipal election will occur. If the City Council wishes to place the UUT on the November 2014 ballot, the City Council must adopt a resolution setting forth an emergency that justifies the election being held prior to -an election date that is different from the date of the City's regular municipal elections in November of odd numbered years. Staff believes that there are facts upon which the City Council may rely in declaring an emergency and calling the election in November 2014, Instead of waiting until November 201 S. Those facts are set forth in the attached resolution and are reiterated here: 1. Continuous State takeaways over the fast few years, including the state's recent elimination of redevelopment agencies, have resulted in significant 86876.0001 / 1720561 Y2 6-5 7-44 reductions In revenues that the City intended would be used to repay the City far loans made previously to the Rancho Palos Verdes Redevelopment Agency for expenditures to address landslide damage and Increase land stability within former Redevelopment Project Area No. 1. 2, The Portuguese Bend Landslide is a large active landslide that continues to move and adversely affects public infrastructure, including Palos Verdes Drive South, a major arterial street in the City. The constant damage caused by the landslide requires constant and increased City expenditures to maintain PVDS as a viable arterial street. 3. During the reoesston, the State took money monies that previously were allocated to cities to reduce the State's budget deficit, and it is expected that similar actions will occur again in the future in response to downturns In the economy. 4. • The cost to the City of complying with state and federal clean water rules continues to increase each year. S. The City has many unfunded important infrast acture projects, which are discussed above, totaling more than $28 million, including unfunded projects to improve City streets ($4.7 million), and storm drains ($9.4 million). S. The City of Rancho Palos Verdes seeks to maintain current levels of public safety and police services within the City, even though the cost of such services continues to Increase, including the City's contribution to the County liability trust fund for law enforcement services, which the City has been notified will increase again In fiscal year 15-16. 7, The cost saving measures the City has employed In recent years to maintain a balanced City budget will not be sufficient to avoid future cats to services provided by the City to the community, which would have a negative Impact upon public safety and the character of the community in Rancho Palos Verdes. If the City Council concurs with the. above findings and that the ordinance reducing the rete of the UUT and modemizing Its provisions should be placed on the ballot for the upcoming election In November 2014, instead of having to wait until the next regular City election In November 2015, then the City Council should adopt the attached resolution; the adoption of the resolution requires a unanimous vote. In addition to adopfing the attached resolution, the City Council should review the attached ordinance and determine if the City Council agrees with Staffs recommendation that the current rate of the UUT should be reduced from 3% to 2.75% or if another rate should be chosen instead. Attachments: Draft Resolution Draft Ordinance Public Correspondence 126876.0001 / 1720561 v2 From: Carla Morreale Sent: Monday, August 18, 2014 2:50 PM To: sharon yarber; CC Cc: Carolynn Petru; Carol Lynch <clynch@rwglaw.com>; Gena Stinnett (gstinnett@rwglaw.com) Subject: RE: Settlement of case entitled Sipple v. City of RPV re:AT&T UUT charges Attachments: 20111115 Agreement of Settlement & Release Between New Cingular Wireless PCS LLC & the City of RPV.pdf Hi Sharon, Please see the following link on the website to the September 6, 2011 Agenda: http://www.palosverdes.com/rpv/citvcouncil/agendas/2011 Age ndas/MeetingDate-2011-09-06/ The Sipple etal case is listed under Existing Litigation under the Closed Session Agenda Checklist. The following link is to the Minutes on the website for that same date, September 6, 2011: http://www.palosverdes.com/rpv/citvcouncil/minutes/2011 Minutes/city council/20110906 CC MINS.pdf See page 10 for the Closed Session Report. And I have attached a copy of the Settlement Agreement between New Cingular Wireless PCS LLC and the City of Rancho Palos Verdes. We will be providing other information in response to your Public Records Act request, received by the City via email on Monday, August 18, 2014, in accordance with the requirements of the Act. Regards, Carla Morreale, CMC, City Clerk CCTV OF L!ANGFIO PALOS VERDES City Clerk's Office 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 Phone: (310) 544-5208 Fax: (310) 544-5291 From: sharon yarber [mailto:momofyago@gmail.com] Sent: Friday, August 15, 2014 11:51 PM To: Carla Morreale; CC Subject: Settlement of case entitled Sipple v. City of RPV re:AT&T UUT charges Hi Carla, I have gone back through the agendas since mid -2011 and find nothing regarding a settlement of litigation wherein Sipple is the plaintiff against RPV in an action apparently concerning the collection of UUT on AT&T charges, as mentioned in the latest staff report. There is nothing on any agenda re: approving the settlement agreement and there is no mention of it on any closed session agenda that I can find since June 2011. Please provide me with all documentation concerning this claim, when it was filed, by whom, a copy of all pleadings (if any) served on the City, the settlement agreement and all records that reflect when the CIty disclosed to the residents the pendency of that claim (e.g. on agendas for Council meetings or otherwise). Please consider this is a PRA request to the extent you will not release the information immediately and voluntarily upon request. Thank you. Sharon Yarber CITYOF RANCHO PALOS VERDES AGENDA RANCHO PALOS VERDES CITY COUNCIL REGULAR MEETING SEPTEMBER 6, 2011 FRED HESSE COMMUNITY PARK, 29301 HAWTHORNE BOULEVARD Time Estimates: The time noted next to an agenda item is only an estimate of the amount of time that will be spent during the meeting on that particular item. Accordingly, these estimates should not be relied on in determining when a matter will be heard, especially since agenda items are often re -ordered during a meeting and may be discussed at any time. 6:00 P.M. CLOSED SESSION: SEE ATTACHED BROWN ACT CHECK LIST FOR DETAILS 7:00 P.M. REGULAR SESSION (15 mins) CALL TO ORDER: ROLL CALL: FLAG SALUTE: NEXT RESOL. NO. 2011-65 NEXT ORDINANCE NO. 525 MAYOR'S ANNOUNCEMENTS: Recognition of the First Graduating Class of Junior Rangers; Prostate Cancer Awareness Month — September 2011 RECYCLE DRAWING: APPROVAL OF AGENDA: PUBLIC COMMENTS: (This section of the agenda is for audience comments for items NOT on the agenda.) CITY MANAGER REPORT: Employee Compensation Information on the City's website in accordance with the State Controller's Office Guidelines NEW BUSINESS: (5 mins) APPROVAL OF CONSENT CALENDAR: 30940 Hawthorne Boulevard / Rancho Palos Verdes, CA 902755391 / (310) 544-5208 / Fax (310) 544-5291 www.palosverdes.com/rpv A. Motion to Waive Full Reading Recommendation: Adopt a motion to waive reading in full of all ordinances presented at this meeting with consent of the waiver of reading deemed to be given by all Council Members after the reading of the title. B. Approval of Minutes (Morreale) Recommendation: Approve the Minutes of the August 16, 2011 Regular Meeting and August 24, 2011 Special Meeting. C. Notice of Completion — San Ramon Canyon Sewer Relocation (Dragoo) Recommendation: 1) Accept the work as complete and authorize the City Clerk to file a Notice of Completion with the County Recorder; 2) Authorize the Director of Public Works to release the 10% retention payment in the amount of $19,991.50 to Garcia Juarez Construction, Inc. 35 days after recordation of the Notice of Completion by the County Recorder contingent upon no claims being filed on the project, and the contractor posting an acceptable maintenance bond; and, 3) Authorize staff to notice the surety company to exonerate the Payment and Performance bonds following release of the retention. D. One -Year Extension of the Contract with Blais & Associates, Inc. for Grant Management and Support Services (Fox) Recommendation: Authorize the Mayor and City Clerk to sign the agreement with Blais & Associates, Inc. for a 1 -year extension to the existing Professional Services Agreement through FY 2011-12. E. July 2011 Monthly Report of Cash Balances (McLean) Recommendation: Receive and file the July 2011 Monthly Report of Cash Balances for the City of Rancho Palos Verdes. F. Agreement for Skate Park and Dog Park Site Community Outreach and Site Analysis (Howe) Recommendation: 1) Approve an agreement with Mia Lehrer & Associates in the amount of $24,400 for public outreach and site analysis to consider both a skate park and a dog park on the Peninsula; and, 2) Adopt Resolution No. 2011-_, a Resolution of the City Council of the City of Rancho Palos Verdes, amending Resolution No. 2011-44, the budget appropriation for FY11-12, to amend the General Fund and Capital Improvement Project Fund budgets. G. Award Contracts —Via Canada Storm Drain PD -478 Inlet Improvements Project (Winje) Recommendation: 1) Approve the plans and specifications for the Via Canada Storm Drain PD -478 Inlet Improvements Project; 2) Award a construction contract to HYM Engineering, Inc. and authorize the Mayor and City Clerk to execute a construction contract to HYM Engineering, Inc. in the amount of $41,048. Authorize a construction contingency of $8,000 for a total construction authorization of $49,048; and, 3) Award a professional services City Council Agenda September 6, 2011 Page 2 of 5 contract to Merit Civil Engineering, Inc. and authorize the Mayor and City Clerk to execute a professional services agreement to Merit Civil Engineering, Inc. in an amount not to exceed $15,000 for inspection services. H. Register of Demands (McLean) Recommendation: ADOPT RESOLUTION NO. 2011-_, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES, ALLOWING CERTAIN CLAIMS AND DEMANDS AND SPECIFYING FUNDS FROM WHICH THE SAME ARE TO BE PAID. Election for the City to Serve as the Successor Agency to the Rancho Palos Verdes Redevelopment Agency (Lynch) Recommendation: ADOPT RESOLUTION NO. 2011-_, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES, MAKING AN ELECTION FOR THE CITY TO SERVE AS A SUCCESSOR AGENCY UNDER PART 1.85 IN THE EVENT THE REDEVELOPMENT AGENCY IS DISSOLVED. J. Oversized Vehicle Parking Penalties (Petru) Recommendation: ADOPT RESOLUTION NO. 2011-_, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES, ESTABLISHING A PENALTY FOR PARKING VIOLATIONS ASSOCIATED WITH OVERSIZED VEHICLES WITHIN THE CITY OF RANCHO PALOS VERDES. REGULAR NEW BUSINESS: (1 hr) 1. Pension Revision (Mayor Long/Councilman Wolowicz) Recommendation: Approve the recommendations made by Management Partners, Inc./City Council Pension Revision Subcommittee regarding revisions to the City's pension program for current employees and new hires, and provide further direction to staff. (10 mins) 2. League of California Cities 2011 Annual Conference Resolutions (Fox) Recommendation: 1) Authorize the City Council's Voting Delegate to support the adoption of League of California Cities General Assembly Resolution No. 1 (Alternative Methods of Meeting Public Notice Requirements and to Advocate for Revisions to the Government Code Recognizing Alternative Methods as a Means to Meet Noticing Requirements); Resolution No. 2 (Tort Reform); Resolution No. 3 (Raising Public Awareness about the Imminent Health and Safety Concerns for Bullied Children); Resolution No. 4 (Prison Rape Elimination Act of 2003) and Resolution No. 6 (City of Bell); and, 2) Direct the Voting Delegate to take no position regarding League of California Cities General Assembly Resolution No. 5 (Replacement of the Death Penalty with City Council Agenda September 6, 2011 Page 3 of 5 the Sentence of Life Imprisonment without the Possibility of Parole). (10 mins) 3. Palos Verdes Peninsula Robotics Team Sponsorship Cover Letter (Petru) Recommendation: Authorize the Mayor to sign a cover letter to potential sponsors of the Palos Verdes Peninsula Robotics Team. (10 mins) 4. Right of Way Use Agreement with NextG Networks (Lynch) Recommendation: Approve the Right of Way Use Agreement with NextG Networks of California, Inc. (NextG), for the installation of radio and antenna equipment within public rights-of-way within the City of Rancho Palos Verdes. (10 mins) CITY COUNCIL ORAL REPORTS: (This section of the agenda is designated for oral reports from Council Members to report action taken at outside committee and association meetings.) CLOSED SESSION REPORT: ADJOURNMENT: Adjourn to Friday, September 9, 2011 at 2:00 P.M. for an Adjourned Regular Meeting/Campaign Leadership for Public Trust Workshop to be held at City Hall Community Room. CLOSED SESSION AGENDA CHECKLIST Based on Government Code Section 54954.5 (All Statutory References are to California Government Code Sections) Existing Litigation: G.C. 54956.9(a) Name of Case: Donald Sipple, John Simon, Karl Simonsen, and Christopher Jacobs, Settlement Class Representatives; New Cingular Wireless PCS LLC, a Delaware limited liability company v. City of Alameda, California, et al., and DOES 1 to 50, inclusive, Los Angeles County Superior Court, Central Division. Case No. BC462270. Potential Litigation: G.C. 54956.9(b) A point has been reached where, in the opinion of the City Council on the advice of its legal counsel, based on the below -described facts and circumstances, there is a significant exposure to litigation against the City: During a telephone conversation on August 24, 2011, between the Montessori School's Attorney Phil Toomey and City Attorney Carol Lynch, Mr. Toomey implied that litigation may result if the School and the City are not able to reach an agreement concerning the School's ability to remove certain items from the Ladera Linda site. A copy of the report from the City Attorney is on file with the City Clerk's Office. City Council Agenda September 6, 2011 Page 4 of 5 Number of Potential Cases (1) American with Disabilities Act: In compliance with the Americans with Disabilities Act of 1990, if you require a disability -related modification or accommodation to attend or participate in this meeting, including auxiliary aids or services, please call the City Clerk's Office at 310 544-5208 at least 48 hours prior to the meeting. NOTE: Staff reports are available for inspection at City Hall, 30940 Hawthorne Boulevard during regular business hours, 7:30 A.M. to 5:30 P.M. Monday — Thursday and 7:30 A.M. to 4:30 P.M. on Friday. The agenda and staff reports can also be viewed at Hesse Community Park, 29301 Hawthorne Boulevard during regular business hours: Monday — Friday from 9:00 A.M. until dusk; Saturday and Sunday from 10:00 A.M. until dusk. Written materials, including emails, submitted to the City are public records and may be posted on the City's website. In addition, City meetings may be televised and may be accessed through the City's website. Accordingly, you may wish to omit personal information from your oral presentation or written materials as it may become part of the public record regarding an agendized item. Materials related to an item on this Agenda submitted to the City Council after distribution of the agenda packet are available for public inspection at the front counter of the lobby of the City Hall Administration Building at 30940 Hawthorne Boulevard, Rancho Palos Verdes during normal business hours. You can also view the agenda and staff reports at the City's website www.palosverdes.com/RPV. WA2011 CITY COUNCIL AGENDA&20110906 CC AGENDA.doc City Council Agenda September 6, 2011 Page 5 of 5 were pending approval. She stated that she will be retur ng to Council in the near future with a more comprehensive ordinance regarding the i allation of radio and antenna equipment in the public rights-of-way. Discussion ensued between Council Members atA staff. Paul O'Boyle, Legal Counsel for applicant, N G Networks, San Diego, stated that he has been working with City Attorney Lynch r quite some time regarding the NextG Networks agreements. He reported that xtG Networks equipment was quite unobtrusive and precludes the need for a larger cell sites since NextG has fiber optic technology, while generating revenue r the City. Councilman Stern moved, s/'stallation by Mayor Pro Tem Misetich, to approve the staff recommendation to: Approvht of Way Use Agreement with NextG Networks of California,. Inc. (NextG), for tof radio and antenna equipment within public rights-of-way within the Cityo Palos Verdes. The motion passed on theZollowing roll call vote: AYES: Campbe , Misetich, Stern, Wolowicz, and Mayor Long NOES: None ABSENT: Non ABSTAIN: No CITY COUNCJt ORAL REPORTS: Councilmay(Stern moved, seconded by Councilman Campbell, to defer this item to the next mee a. Withoufobjection, Mayor Long so ordered. CLOSED SESSION: City Attorney Lynch reported on the following Closed Session items: 1) With respect to the Donald Sipple, John Simon, Karl Simonsen, and Christopher Jacobs, Settlement Class Representatives; New Cingular Wireless PCS LLC, a Delaware limited liability company v. City of Alameda, California, et al., Councilman Stern and Mayor Pro Tem Misetich were disqualified from voting on the item since they are AT&T customers. She reported that the remainder of the City Council voted (3-0) to give staff direction to negotiate a potential settlement with the AT&T class representatives, and also authorized a conflict of interest waiver; and, 2) With respect to the Potential Litigation item in Closed Session, staff was unable to get all of the information that was necessary to present the item to the City Council, therefore, that item would be coming back on a future agenda, potentially on September 20, 2011. 91�111 City Council Minutes ExceSeptember 6, 2011 V 1 Aittoes Page 10 of 11 AGREEMENT OF SETTLEMENT & RELEASE BETWEEN NEW CINGULAR WIRELESS PCS LLC AND THE CITY OF RANCHO PALOS VERDE, S, CALIFORNIA New Cingular Wireless PCS LLC and AT&T Mobility LLC (collectively "Claimant"), the Settlement Class as described below and the City of Rancho Palos Verdes, California ("Rancho Palos Verdes") enter into the following Agreement of Settlement and Release ("Agreement") with regard to the Claim described and defined below. WHEREAS, the Claimant and the Settlement Class submitted to Rancho Palos Verdes a claim dated on or about November 1, 2010 seeking the refund of $91,065.61 in Local Utility User Surcharge ("Tax"), which Tax had previously been collected by the Claimant from its customers on charges for data services between November 1, 2005 and September 30, 2010, and which the Claimant contends was previously remitted by the Claimant to Rancho Palos Verdes (the "Claim"); and WHEREAS, Rancho Palos Verdes has asserted various defenses to the Claim, including but not limited to an assertion that certain portions of the CIaim are outside the one year limitations period for which a refund of Tax is available; and WHEREAS, the Claimant contends it is a party -defendant to the Global Class Action Settlement Agreement approved by the United States District Court for the Northern District of Illinois in Case No. 10-CV02278, pursuant to which the Court certified for settlement purposes the Settlement Class (the "Settlement Class"); and WHEREAS, the Claimant contends that the Settlement Class includes but is not limited to customers from whom the Tax was collected, which Tax is sought in the Claim; and WHEREAS, the Claimant and Rancho Palos Verdes desire to resolve this matter fully and finally as between the Claimant, the Settlement Class and Rancho Palos Verdes. -i- RR87b-11 MI39223M.doc. NOW, THEREFORE, the parties hereto mutually agree: FIRST, the Claimant, the Settlement Class and Rancho Palos Verdes agree that this Agreement shall be final with regard to any liability for Tax sought in the Claim. SECOND, Rancho Palos Verdes agrees to grant Claimant a dollar for dollar credit against future Local Utility User Surcharge, commencing immediately after this Agreement is fully executed, in the amount of $38,979.56 in full satisfaction of any and all obligations with respect to the Claim. In exchange for this credit, the Claimant and Settlement Class agree to release Rancho Palos Verdes from any further liability with regard to the Claim. THIRD, Rancho Palos Verdes shall issue a letter reflecting such credit to Claimant and mail such letter within 15 days of the final execution of this Agreement to Thomas Giltner, Esq., AT&T Mobility, 2180 Lake Blvd., Room 121354, Atlanta, GA 30319. A copy of that letter shall simultaneously be mailed to James P. Frickleton, Bartimus, Frickleton, Robertson & Gorny, P.C., 11150 Overbrook Road, Suite 200, Leawood, KS 66211 and Margaret C. Wilson, McDermott Will & Emery LLP, 340 Madison Avenue, New York, NY 10173-1922. FOURTH, this Agreement sets forth the entire understanding between the Claimant, the Settlement Class and Rancho Palos Verdes with respect to the subject matter hereof and supersedes any prior negotiations, agreements, understandings or arrangements between them. FIFTH, this Agreement shall be binding .upon and inure to the benefit of the Claimant, the Settlement Class, and all of their respective former and current officers, employees and directors, and respective successors and assigns. SIXTH, With respect to any claims related to or arising out of the Claim, the Recitals to the Agreement, and/or the Agreement, the Agreeing Parties expressly waive the rights afforded under California Civil Code section 1542, which provides that: -2- P6876-111411392233v5.doc A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. The Agreeing Parties represent and warrant that they have had the opportunity to seek and receive the advice of an attorney with respect to the advisability of making the release provided for herein, and the meaning of California Civil Code section 1542 and released rights at law and in equity. Being aware of California Civil Code section 1542, as outlined above, the Parties hereby expressly waive and relinquish any benefits they may have pursuant to Civil Code section 1542, as well as under any other state or federal statutes or common law principles of similar effect. Provided, however, nothing in this Agreement or this waiver is intended to affect any claims not released hereunder. Nor is this Agreement or this waiver intended to affect Rancho Palos Verdes' right to collect tax pursuant to its utility users' tax ordinance or otherwise. SEVENTH, each of the undersigned represents and warrants that he or she is fully authorized to execute and deliver this Agreement on behalf of the party and in the capacity identified below. EIGHTH, this Agreement may be signed in one or more counterparts. NINTH, following the distribution procedures set forth in the Class Action settlement documents approved by the United District Court for the Northern District of Illinois, the escrow agent will return to Rancho Palos Verdes all funds not negotiated by class members within 94 days after the expiration of the stale check period set out in the Distribution Agreement. -3- R6876-1114\I392233v5.doc 9 0 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates shown below. Date: Dater Date: NEW CINGULAR WIRELESS PCS LLC By: Title,,Ctx . AT&T MOBILITY LLC By: Title:Qb• CITY OF RANCHO PALOS VERDES, CALIFORNIA ACKNOWLEDGMENT OF CONSENT TO AGREEMENT: Date: APPROVED AS TO FORM: , City Attorney ..q._ 86876-111 A113422330.doc , Mayor THE SETTLEMENT CLASS, BY AND THROUGH SETTLEMENT CLASS COUNSEL By: _ Title: ATTEST: City Clerk IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates shown below. Date: Date: Date: 11 15' -Za t; By: Title: AT&T MOBILITY LLC By: Title: CITY OF RANC.110 PALOS VERDES, ACKNOWLEDGMENT OF CONSENT TO AGREEMENT: THE SETTLEMENT CLASS, BY AND THROUGH SETTLEMENT CLASS COUNSEL Date: APPROVED AS TO FORM: , City Attorney R6876-1114\1392233v5.doe By: Title: ATTEST: City Clerk -4- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates shown below. NEW CINGULAR WIRELESS PCS LLC Date: By: Title: AT&T MOBILITY LLC Date: Date: L j ( � — �'Ov By: Title: C1TY'OF VERDES, ACKNOWLEDGMENT OF CONSENT TO AGREEMENT: THE SETTLEMENT CLASS, BY AND THROUGH SETTLEMENT CLASS COUNSEL Date: By: Title: APPROVED AS TO FORM: ATTEST:' gwef�Attorney , City Clerk _4 R65?b•11141i342233v5.doc IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates shown below. NEW CINGULAR WIRELESS PCS LLC Date• By: Title: AT&T MOBILITY LLC Date: By: Title-, CITY OF RANCHO PALOS VERDES, CALIFORNIA Data. Mayor ACKNOWLEDGMENT OF CONSENT TO AGREEMENT: THE SETTLEMENT CLASS, BY AND THROUGH SETTLEMENT CLASS COUNSEL Date: (L APPROVED AS TO FORM: City Attorney > City Clerk -4- R6876-11141392233 v5.doo 4- R6876-1IJA1392233v5.doo