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HomeMy WebLinkAbout06/20/2002 B A K E R S F I E L D (~ ~ Mike Maggard, Chair Alan Tandy, City Manager Harold Hanson · Staff: John W. Stinson Mark Salvaggio AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Thursday, June 20, 2002, 4:00 p.m. City Manager's Conference Room, Suite 201 Second Floor, City Hall, 1501 Truxtun Avenue, Bakersfield, CA 1. ROLL CALL Called to Order at 4:05 p.m. Present: Councilmembers Mike Maggard, Chair; Harold Hanson and Mark Salvaggio 2. ADOPT MAY 16, 2002 AGENDA SUMMARY REPORT Adopted as submitted.' 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS 1. Discussion and Committee recommendation regarding application of the business license ordinance to commemial and residential rental property businesses (Committee Chair Maggard acquired a new client and may have a conflict of interest, so he excused himself and requested Committee Member Salvaggio to chair in his absence on this item.) Greg Hanvey, Bakersfield Board of Realtors, stated the Board is in agreement with the City on the proposal presented to them regarding the business license issue and the reference to the definition of Section 469 on the exemption form. ADOPTED AS SUB)I/~ ON JULY 18, 2002 AGENDA SUMMARY REpI~RT Budget and Finance Committee Meeting Thursday, June 20, 2002 Page - 2 - Chandler Wonderly, representing Bakersfield and Kern County Apartment Associations, stated they are also in agreement, but would like to make one clarification on the form. Where it reads, "Considered a passive investment in the rental of Real Property under Internal Revenue Code Section 469" add the wording: or, under California Revenue and Taxation Code Section 17551 or 17561. The Committee adjourned this issue at 4:15 p.m. to allow the City Attorney to research this section of the California Taxation Code. The Committee reopened this item at 5:18 p.m., with Committee Member Salvaggio as Chair in Committee Chair Maggard's absence on this item. City Attorney Thiltgen stated he reviewed Sections 17551 through 17561. His opinion was that Section 17561 was the only one applicable, but the intent of this section referring to hours of work/passive investment does not have the same intent as that of the Committee and he did not recommend changing the form. City Manager Alan Tandy explained the amendment to the ordinance and this form, if adopted, will allow those owners of rental properties considered to have a passive investment to be excluded from the business license tax. If the Committee does not take this action to amend the current ordinance, every owner of lease or rental units will pay the business license tax without exception. It was discussed this is not a new tax. It is being viewed as a new tax because the City did not enforce it due to the small license fee not being cost effective. New computer technology now provides the information and staff is aware of those owning rental and lease properties and subject to the tax under the current ordinance, which has been in place for years. The Committee unanimously voted to recommend to the City Council adoption of the amendment to the business license ordinance (which allows those who claim their real estate investment as a passive activity under Section 469 of the Internal Revenue code to fill out a form and be exempt from business license tax). The amended ordinance along with the form to file for the exemption will be forwarded to the City Council for adoption on July 10th. (Committee Chair Maggard absent). 5. NEW BUSINESS A. Discussion and Committee recommendation regarding request from Kern County for the City of Bakersfield to provide sewer services to the Rexland Acres neighborhood City Manager Alan Tandy explained the background for this request. Staff was working with another Council Committee to put together a program to rehabilitate two of the City's older pools (Jefferson Park and Martin Luther King, Jr. Center) and build a new aquatic center. As a part of putting together the budget estimates, it was AGENDA SUMMARY REP'~RT Budgetand Finance Commi~ee Meeting Thursday, June 20,2002 Page -3 - discussed that Jefferson Park pool is surrounded on three sides by the County. It is a Block Grant eligible neighborhood and at that Council Committee's direction, a letter was sent to the County asking for $300,000 financial assistance from the County's Community Development Block Grant funds for rehabilitation of Jefferson Park pool. The City has taken several past actions to assist County projects: $1.5 million for the Airport; $450,000 for Lake Ming Bike Path; budgeted $250,000, which is under design, but not yet constructed the streetscape in front of the Kern County Museum; and a pending budget application for $80,000 for Stramler Park. The City received a response from Kern County (included in the packet). Their position is they would like to help but would only be able to help if some of their block grant money now committed to pay the cost to get sewer service from Rexland Acres to their treatment plant were freed up. In essence, if they did not have to spend their block grant money for the Rexland sewer system, they could help us with the Jefferson Park pool project. The City has an ordinance that we will not provide sewer service outside the City limits unless there is annexation. The City Council has the power through an intergovernmental agreement to make an exception to that ordinance. We have one in the northwest called CSA 71. Staff outlined the set of circumstances if the Council were to make an exception and provided service to Rexland Acres, and it applies all normal and customary City fees and requires the County to obligate itself to the connection fees, trunk line fees, and to the annual operation and maintenance fees. County Administrative Officer Scott Jones had replied by letter the terms are acceptable to the County. There is a downside to taking this action. Even though the County agreed to the language, it establishes a precedent. It could be interpreted as being a potential trend and one that would make it less likely for other neighborhoods to annex in the future. County trunk lines and City trunks lines are somewhat different and, consequently, you reserve capacity for trunk lines and never get the revenue streams to reimburse the City for the reserve capacity. Many subdivisions in the County are going to have a saturation problem and this action would set a precedent. On the positive side, it would provide sewer service to a Iow-income neighborhood with severe sewer problems with saturation of the groundwater table. The County has been trying to do something for many years. They have grants committed to alleviate it. It is less expensive to tie in to the City plant than the County plant. If the City accommodates the County, out of their savings they would help the City with the Jefferson Pool rehabilitation. Dave Price, County of Kern, stated Mr. Tandy had explained the situation very clearly. There's a considerable amount of savings by going with the City's sewer service. When the County was first contacted about Jefferson Park pool, the Fifth District allocation for Community Development Block Grant funds was already obligated with a number of active projects. It will be 30 days before the County receives confirmation, but expects USDA assistance of grant money as well as some loan money. If the area would annex, that funding would be lost as cities are not eligible. AGENDA SUMMARY REPORT Budgetand Finance CommiEee Meeting Thursday, June 20,2002 Page -4- David Strong, County of Kern, spoke about public meetings that were held with the residents in the area who are very supportive about getting sewer service in Rexland Acres. Committee Member Hanson spoke regarding County islands and not wanting to set a precedent of providing services to unannexed areas adjacent or within the City limits but he noted, however, the City has assisted with other projects and there is danger to the groundwater table and health concerns for the residents of Rexland Acres. Committee Member Salvaggio provided examples of County islands needing sewer systems: Castro, which is the largest island in the City; Kern; and Old Stockdale. City Manager Alan Tandy stated the residents in Rexland Acres have sewage at ground level in their back yards, which is very compelling. Ideally, the Board of Supervisors would take the lesson learned from Rexland Acres and require sewer service (not dry lines) in all County subdivisions, so this does not reoccur. If this were done, the City would be more comfortable in helping. CSA 71 is a test area, but it is a small area. It is problematic to the City that this is going to happen again and again, until the County routinely requires installation of sewer service in all its subdivisions, not just dry lines, with trunk lines to connect the dry lines to treatment facilities. Committee Member Salvaggio requested staff to pr°vide a complete paper trail of the letters between the City Manager and the County on the Rexland sewer service/Jefferson Park issue. He also requested copies of the administrative reports and, if possible, a copy of a past memo outlining the reasons the Council adopted the ordinance, which provides that the City not provide sewer service to unincorporated areas. He felt without further study, he would not want to make a recommendation different from the current ordinance. Committee Chair Maggard stated that if there is no cost to the City to provide this service to Rexland Acres; if we are not using capacity that will have to be replaced and the cost passed on to City taxpayers; and if the County is paying for the capacity to be replaced, it is a somewhat compelling argument that the City should do this to improve the quality of life for residents of Rexland Acres. However, he would like further information from the City Manager whether this will create a scenario where we are doing a series of these in unincorporated areas. The Committee decided to discuss the issue further after staff has provided the paper trail documents requested by Committee Member Salvaggio. 6. COMMITTEE COMMENTS Committee Member Salvaggio spoke about a letter received from Vernon Strong regarding the Bakersfield Senior Center/Senior Housing Project on 4th Street. There was also a letter from HUD to the developer, Richard Washington, approving an extension for the project to November 30, 2002, with the requirement the project start within this time frame or will be subject to cancellation, or further extensions will require approval by HUD and progress on the project should be shown. The City AGENDA SUMMARY REI~T Budgetand Finance Committee Meeting Thumday, June 20,2002 Page -5- received a letter from Dr. Lark, Bakersfield Senior Center, regarding funding to close the purchase of needed properties. Committee Member Salvaggio requested the status of the project and if there were any concerns the Committee should address. The City Manager stated the City's part of the project is to buy the needed properties for the site through the federal grant process. Most of the other transactions are between the Senior Center and the developer. The City is negotiating for the properties and making acceptable progress. The final acquisitions will require movement of money between Federal grant categories New Home Funds Construction to this project due to adjustments to appraisals and relocation assistance not originally included for one property. This will be handled administratively and brought to the City Council for approval on the Consent Calendar. 7, ADJOURNMENT The meeting adjourned at 5:55 p.m. Staff present: City Manager Alan Tandy, City Attorney Bart Thiltgen; Assistant City Manager John Stinson; Assistant to the City Manager Darnell Haynes; Public Works Director Raul Rojas; Finance Director Gregory Klimko; Public Works Civil Engineer Derrill Whitten; and City Treasurer Bill Descary. Others present: County Administrative Officer Scott Jones; Esther Torres, David Strong, Dave Price and Charles Lackey from County of Kern; Chandler Wonderly, Bakersfield Apartment Association; Greg Hanvey, Board of Realtors; Cassie Daniel, Bakersfield Board of Realtors; Michael Freedman, Kern County Apartment Association; Stephanie Campbell, Cornerstone; and James Burger, reporter, The Bakersfield Californian. S:\Damell~.002Budand Fin\~bf02jun20summanj.doc