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CC SR 20221220 04 - City Donor Program CITY COUNCIL MEETING DATE: 12/20/2022 AGENDA REPORT AGENDA HEADING: Regular Business AGENDA TITLE: Consideration and possible action to establish a program to accept and distribute donation funds. RECOMMENDED COUNCIL ACTION: (1) Review the following options for the City to accept and distribute donation funds: A. Authorizing Staff, working with the City Attorney’s Office, to form a nonprofit foundation, meeting the qualifications for tax-exempt status under Internal Revenue Code § 501(c)(3) (Staff preferred option); B. Creating a new City Council policy or amending existing City Council Policy No. 37, Naming of Public Facilities and Placing of Monuments and Other Memorials, to include donation guidelines; or C. Developing, as a stand-alone document, guidelines for donations. (2) Select a preferred option and direct Staff to return at later date with detailed information, inclusive of a fiscal impact, for City Council consideration. FISCAL IMPACT: None Amount Budgeted: N/A Additional Appropriation: N/A Account Number(s): N/A ORIGINATED BY: Karina Bañales, Deputy City Manager Ramzi Awwad, Director of Public Works Cory Linder, Director of Recreation and Parks Trang Nguyen, Director of Finance REVIEWED BY: Same as above APPROVED BY: Ara Mihranian, AICP, City Manager ATTACHED SUPPORTING DOCUMENTS: A. City Council Policy No. 37 (page A-1) BACKGROUND: In 2021, the Finance Advisory Committee (FAC) presented its Fiscal Year 2021-22 Work Plan, which included the FAC’s interest in creating a philanthropic program as a way to alleviate costs burdened by the City to build new facilities, improve roads, support 1 recreation programming, and other special projects. Over the past six months, Staff has explored concepts for both accepting donations and making donations to nonprofit organizations, such as in-kind services or monetary contributions. Staff believes creating a donor program that encourages philanthropy may enhance Citywide services, advance the maintenance/repair schedule for facilities and infrastructure, and support major capital projects. Furthermore, the City can assist other agencies or community organizations by providing in-kind services (for example, shuttle services, RPVtv production services, donations to the Los Angeles County Sheriff’s Department Explorer Program for traffic control at the annual Whale of a Day celebration, etc.). This evening, Staff is presenting options for establishing a donor program to help fund significant projects such as capital improvement projects, street medians, road maintenance, or smaller-scale projects such as tree removal or tree planting requests and recreational programming. Establishing a program may also encourage public and private partnerships and an opportunity to enhance and advance projects that the City may not necessarily have the resources to begin immediately. DISCUSSION: Several municipalities have established donor programs that are operated either by the City Council, a committee appointed by the City Council and administered by Staff, an outside organization that facilitates the management of funds, or a private entity that raises funds the City requests for projects and uses. For example, the City of Rollings Hills Estates established its Pepper Tree Foundation in 1982. The Pepper Tree Foundation was created to promote citizen contributions and donations to enrich the quality of life in Rolling Hills Estates. Through this unique approach, individuals, companies, school classes, religious groups, and service clubs can make tax-deductible donations to enhance the aesthetics and services of the City. The mission of the Pepper Tree Foundation is to use tax-deductible donations to maintain and develop City-owned parks, trails, open spaces, and recreation facilities to make the community a better place to live, work, and play. City councilmembers are board members of this foundation, and the mayor serves as chair of the foundation. Similarly, the Los Alamitos Community Foundation was established by the Los Alamitos City Council in 2021. The Los Alamitos Community Foundation provides support to enhance services beyond the capabilities of local tax revenues. There are nine board members consisting of two city councilmembers, two members representing the business community, and five representing city districts. An example of another model is the Palos Verdes Estates Foundation, which was established in 2020 by a group of community members committed to assisting the city complete projects that might not be in the budget or immediate timetable of the city. The board consists of five members – one of whom is currently a seated city council member but does not act on behalf of the city council. 2 Based on some of these examples, the City Council is being asked to consider one of the following options below for the City to both accept and distribute donor funds: A. Forming a tax-exempt nonprofit foundation (Staff preferred option); B. Adopting a new City Council policy or expanding Policy No. 37, Naming of Public Facilities and Placing of Monuments and Other Memorials, to include donor guidelines; or C. Developing stand-alone donor guidelines The discussion below includes a brief description on the three options including both receiving and distributing donor funds or in-kind services, as well as the pros and cons and proposed structure. Option A. Forming a tax-exempt nonprofit foundation for accepting donations and distributing donor funds Establishing a nonprofit foundation would allow the City to accept and manage funds donated for the benefit of the entire City, not for general City operations. A foundation is a useful means to accept tax-deductible donations and could be organized exclusively for charitable purposes. A City nonprofit foundation could also engage in soliciting, receiving, investing, and making grants of funds, property, or other resources, or providing direct charitable services to aid, sponsor, promote, advance, and assist worthy activities, programs, and services. Additionally, the City nonprofit foundation could provide donations to a nonprofit organization or municipality either in a monetary contribution or in-kind service. Pros: Offers the City an opportunity to have a structured and transparent decision-making process that pertains to funding special projects or programs and allows for distributing funds or providing in-kind services. Cons: Operating as a foundation would entail the processes associated with nonprofits and Brown Act-governed meetings, which could result in time delays. Staff would be required to post agendas, draft minutes, and assign a staff liaison, which may require additional funds. If the City Council decides to appoint members of the community, it would require creating a resolution and conducting recruitment s. Structure: If formed, the foundation would be led by a board of directors. The board could consist of the seated City Council or could be an appointed committee whose initial functions and responsibilities would be as follows: • Adopt governing bylaws • Abide by the Brown Act • Apply for nonprofit status 3 • Establish goals • Assist worthy activities, programs, and services • Develop a budget and establish bank accounts • Develop marketing to attract financial support • File with both federal and state agencies • Manage assets Staff prefers this option, with the City Council acting as the board, similar to the City of Rolling Hills Estates’ Pepper Tree Foundation. This model allows for internal control and flexibility on where to assign donations and which organizations to donate or offer in-kind services to. Option B. Adopting a new City Council policy or expanding Policy No. 37, Naming of Public Facilities and Placing of Monuments and Other Memorials Creating a new policy would establish a new uniform process that defines objectives and eligibility criteria for accepting and distributing funds. The new policy would prohibit certain conduct, such as misuse of donated funds, ensure coordinated compliance with applicable laws and regulations, promote operational efficiency, and/or reduce risk and liability. The City Council can also consider expanding existing City Council Policy No. 37, Naming of Public Facilities and Placing of Monuments and Other Memorials (Attachment A). This policy was created to enable a process for the naming of City facilities and the permitting of monuments, benches, and trees in an equitable, objective, and consistent manner. The policy could be amended to include guidelines for accepting and distributing donor funds or offering in-kind services. Pros: A new policy would allow the City Council to create a new process for accepting and distributing donor funds. Alternatively, since City Council Policy No. 37 already exists, the City Council could amend it to create a new section establishing guidelines for which donations could be made for a specific project or how a recipient nonprofit or municipality could be eligible for a City monetary contribution or in-kind service. Cons: Should the City Council choose to create a new City Council policy; it would require administrative involvement on behalf of Staff to establish a process and define objectives for accepting donations. Furthermore, it would need specific language identifying the donation as tax-deductible and how a donation or in-kind service can be awarded. Structure: Creating a new policy or expanding Policy No. 37 does not require appointing a board of directors or seeking nonprofit status. It would expand the process that exists now, which is to seek City Council consideration and approval for donation s as they become available. 4 Option C. Developing donor guidelines Creating donor guidelines would allow for recommendations, interpretations, administrative instructions, best practice guidance, or a framework in which to operate. Like procedures, guidelines may change depending on the organization’s needs. Guidelines are documents that seek to simplify a set of processes with regard to an established practice but would not be a formal City Council policy. Pros: Guidelines are flexible and allow for adjustments based on organizational needs. Additionally, a guideline is a procedure that stipulates how a donation or distribution of funds or in-kind service should be administered. Guidelines do not require a board of directors but would be administered by a staff designee. Cons: Establishing guidelines is less formal and is not a City Council policy but rather an Administrative Instruction. Therefore, the City Council would be deferring approval at the staff level or designee as appointed by the City Council. Structure: Guidelines can be administered by Staff as designated by City Council. The guidelines would define processes, accountability measures, and transparency protocols. For example, as applications are submitted to donate toward a City project or requests are made for the distribution of funds or in-kind services, Staff would review and consider the application. Based on the City Councils’ decision, Staff will return at a later date with additional information, including a refined program, for consideration. ADDITIONAL INFORMATION: It is important to note that the City of Rancho Palos Verdes has an existing program, Gifts to Parks, that allows the public to donate, at any time, to the Recreation and Parks Department, in general, or to support a specific park location or recreation program. Examples include books for the Point Vicente Interpretive Center Library, REACH program operations, park benches, or sponsoring events. Notably, this program is not geared toward buildings or Capital Improvement Program projects. Donations are categorized and approved by the City Council on a periodic basis, and the donors are thanked via a letter from the Mayor. These donations are tax-deductible once a value is determined. Staff does not intend to replace this program but rather, create a new program that allows for opportunities to receive significant monetary donations for constructing a building, beautification of street medians, or enhancing arterial walls and fences. Additionally, the intent is to enable the City to distribute donated funds to nonprofit organizations or other municipalities in the form of monetary contributions or in-kind services. 5 CONCLUSION: Establishing a City donor program would promote citizen contributions and donations to enrich their City’s quality of life and provide an opportunity to leave behind their legacy. Furthermore, it would allow for a unique approach for interested parties to make a tax - deductible donation to enhance the environment of the City. Therefore, Staff recommends the City Council consider the Staff-preferred option and pursue creating a nonprofit foundation that accepts donations and distributes funds or in- kind services to nonprofit organizations or municipalities. Staff would return at a future Council meeting with a refined program for consideration and implementation inclusive of fiscal impacts. ALTERNATIVES: In addition to the Staff recommendation, the following alternative actions are available for the City Council’s consideration: 1. Direct Staff not to pursue establishing a program to accept or distribute donor funds. 2. Return with additional information on one or more of the recommended options. 3. Take other action, as deemed appropriate. 6 CITY COUNCIL POLICY NUMBER: 37 DATE ADOPTED/AMENDED: 01/07/03 (Amended 9/15/09, 12/20/11, and 4/20/21) SUBJECT: Naming of Public Facilities and Placing of Monuments and Other Memorials ________________________________________________________________ POLICY: I. City Facilities It shall be the policy of the City Council to name City facilities in the following manner: ƒGeneral The policy of the City is to name facilities in a manner that will provide an easy and recognizable reference to the City’s residents and visitors. ƒGeographic Location Whenever possible, City facilities will be named for their geographic location. The geographic location may be based on the identification of the facility with a specific place, neighborhood, street, topographic or other natural feature, such as a drainage course, tree or plant species, or historical precedent. ƒIndividual/Organizational Recognition The naming of City facilities in honor of individuals or community organizations will be a rare event, and will be considered under the following conditions: 1. The individual, a family or a community organization has made exceptional contributions to the City, including one or more of the following: a) financial gifts, b) public service as an elected official, c) public service as a community volunteer, or d) long term sponsorship agreements. 2. There should be a well-defined connection between the contributions of the individual or community organization and the City facility. 3. The significance of the contribution from the individual/organization needs to be evaluated in relation to the impact of the City facility. Individuals and organizations that have made contributions of regional or community-wide significance may be considered for A-1 City Council Policy No. 37 for Naming Public Facilities Last Amendment: December 20, 2011 Page 2 of 4 naming of facilities that serve the entire City. Individuals and organizations that have made significant contributions to a particular area or neighborhood may be considered for the naming of facilities that serve these areas or neighborhoods within the City, including recreational and other amenities within City parks. 4. When considering naming a City facility after an individual, a period of at least three (3) years shall have passed following the death of such person to allow perspective and an appropriate period of reflection. 5. Only a current Mayor or City Council Member may nominate an individual to have a City facility named in his or her honor, and the determination will be made by the City Council. City policy does not preclude additional opportunities for recognition that may be created in the future. For instance, the Point Vicente Interpretive Center is planned to include exhibits that may be funded by individual or corporate donations. Recognition of such donations may include a donor wall within the Interpretive Center, or recognition of a contributor’s sponsorship of a specific exhibit. II. Monuments and Other Memorials It shall be the policy of the City Council to allow the placing of monuments and other memorials on City properties under the following guidelines: ƒMonuments Monuments in honor or in memory of persons may be permitted, in rare cases, on City property with permission of the City Council under the following conditions: 1. The person memorialized is closely associated with the area where the monument will be located. The person memorialized is known to, and revered, by a significant number of City residents. 2. The monument design is discreet and unobtrusive and designed to blend into the surrounding area. A small plaque on a large rock (4 cubic feet) would be appropriate. The location of the monument will be determined by City staff with approval of the City Council. 3. Costs of design, installation and maintenance of the monument will be determined by the City and borne by the requestor at the discretion of the City. Only City personnel or City contractors may perform work on City property. 4. The monument is only a marker and is not a place of worship, a cemetery or official gathering place. Flowers, and other memorabilia are not permitted and will be removed by maintenance personnel. A-2 City Council Policy No. 37 for Naming Public Facilities Last Amendment: December 20, 2011 Page 3 of 4 5. The City is not responsible for damage or deterioration of the monument and may remove it at any time for any reason with permission of the City Council. ƒBenches or Trees Benches or trees in honor or in memory of deceased persons may be placed in City parks, or other City spaces, at the discretion of the City Manager under the following conditions: 1. The bench design, or tree species, will be determined by the City and the location of the bench or tree will be selected by the City. 2.A relatively small plaque (5” x 8”), with inscription or other written memorial information may be placed on the bench or near the tree. 3. Costs of design, installation and maintenance of the bench or tree will be determined by the City and borne by the requestor at the discretion of the City. Only City personnel or City contractors may perform work on City property. 4. The bench, or tree, is only a marker and is not a place of worship, a cemetery or official gathering place. Flowers, and other memorabilia are not permitted and will be removed by maintenance personnel. 5. The City is not responsible for damage or deterioration of the bench or tree and may remove it at any time for any reason without replacement. III. Wall of Honor It shall be the policy of the City Council to establish a “Wall of Honor” under the following guidelines: ƒWall of Honor The Wall of Honor will memorialize the names of distinguished community leaders who have made substantial contributions to the City of Rancho Palos Verdes under the following conditions: 1. Persons nominated for the “Wall of Honor” shall have been dedicated community leaders who have contributed significantly to the quality of life offered by the City and realization of the vision expressed in the original General Plan. The honoree must have had a significant presence in the community throughout a good portion of their life and should have made notable impacts on sustaining the quality of life of the residents of Rancho Palos Verdes. A-3 City Council Policy No. 37 for Naming Public Facilities Last Amendment: December 20, 2011 Page 4 of 4 2.Persons nominated for inclusion on the “Wall of Honor” will be deceased and will not have been previously honored by other actions of the City such as facilities named in their honor or other memorial. 3.When a person is nominated for inclusion on the “Wall of Honor” staff should consult with the Palos Verdes Peninsula Library District, local historical society or other appropriate sources to determine the significance of the individual’s contributions to the community and report these findings to the City Council. 4. Only a current Mayor or City Councilmember may nominate a citizen to be included on the “Wall of Honor.” The determination of the persons who will be included will be made by the City Council. 5.The location of the “Wall” and the format of names and inscriptions shall be established by the City Council. BACKGROUND The City of Rancho Palos Verdes has lacked a uniform policy to assist the City Council and to guide staff in the naming of City facilities, including parks and open space areas, buildings, streets and other public amenities. In addition, there have been no formal policies or guidelines for honoring City leaders, nor for memorializing persons whose loved ones simply want to provide a remembrance in the form of a bench or tree. Although the City has had no formal policy for naming public facilities and sites in honor of persons, there are precedents. Fred Hesse Park and Community Center is named for a City founder, Robert Ryan Park is named for a former Mayor and Councilmember and Vanderlip Park is named for an original Peninsula landowner. There is a GPS monument at Portuguese Point named in honor of Dr. Perry Ehlig. There is a trail below Ocean Terrace Drive known as the McBride Trail in honor of the man who constructed it. There are also three small memorials, one near Ladera Linda Community Center, one at the Point Vicente Interpretive Center and the other near Inspiration Point that honor persons who died prematurely. Finally, there have been numerous requests from individuals to install park benches or plant trees in memory of deceased loved ones, many of which have been granted. The development of a Policy to guide the naming of City facilities, the permitting of monuments, benches and trees is intended to enable these processes to be conducted in an equitable, objective and consistent manner. In addition, the establishment of a “Wall of Honor” will offer a new formal opportunity for honoring community leaders. A-4