| Time | Speaker | Text |
|---|---|---|
| 00:00:00.03 | Mayor Theodore | for March 17, 2015. St. Patrick's Day. Debbie, would you take the role, please? |
| 00:00:08.21 | Unknown | Councilmember Weiner? Present. Councilmember Pfeiffer? Here. Councilmember Whitty? Here. Vice Mayor Hoffman? Present. Mayor Theodore? Present. |
| 00:00:09.35 | Mayor Theodore | President. here. present. Yeah. So can we have Aaron Singer lead us in the Pledge of Allegiance? |
| 00:00:25.39 | Unknown | and allegiance to the flag of the United States of America. and it's true that we're probably like What did you say? One nation. I'm your God, indivisible. with liberty and justice for all. We'll keep it practicing. |
| 00:00:43.67 | Unknown | Thank you. |
| 00:00:43.69 | Mayor Theodore | you |
| 00:00:43.87 | Unknown | Thank you. |
| 00:00:43.97 | Mayor Theodore | Yeah. Thank you. So we met in closed session on the pending litigation, Golden versus Sausalito. Is there any public comment on the closed session item? Jay. Seeing none, we move on to approval of agenda. We have a motion to approve the agenda. So moved. |
| 00:01:06.38 | Herb | Don't move. |
| 00:01:07.11 | Mayor Theodore | you |
| 00:01:07.14 | Herb | SECOND. |
| 00:01:07.63 | Mayor Theodore | you All in favor? Bye. |
| 00:01:10.05 | Herb | Bye. MAKING A LITTLE BIT OF MAKING A LITTLE BIT OF |
| 00:01:10.47 | Unknown | you |
| 00:01:12.00 | Mayor Theodore | Tonight we have no Special presentations or announcements. We move on to communications. This is the time for the City Council to hear from citizens regarding matters that are not on the agenda. Except in very limited situations, state law precludes the council from taking action on or engaging in discussions concerning items of business that are not on the agenda. However, the council may refer matters not on the agenda to city staff. Tom. Anyone have any comments to make on a matter not on the agenda? All right. Seeing none, moving along. Okay, item 3A, minutes of the regular City Council meeting for March 3rd, 2015. Do we have a motion? |
| 00:01:58.86 | Councilmember Withy | Don't move. proof. |
| 00:02:00.70 | Mayor Theodore | Thank you. |
| 00:02:01.65 | Councilmember Withy | Thank you. |
| 00:02:01.67 | Mayor Theodore | Thank you. |
| 00:02:01.68 | Councilmember Withy | Second. |
| 00:02:02.71 | Mayor Theodore | Okay, all in favor? Thank you. |
| 00:02:04.21 | Jeff Sears | Thank you. |
| 00:02:04.23 | Councilmember Withy | All right. |
| 00:02:04.40 | Mayor Theodore | Bye. |
| 00:02:04.62 | Jeff Sears | Bye. |
| 00:02:04.87 | Councilmember Withy | you |
| 00:02:06.68 | Mayor Theodore | All right, moving on to the consent calendar. Matters listed under the consent calendar are considered routine and non-controversial, require no discussion, are expected to have unanimous counsel support, and may be enacted by the counsel in one motion in the form listed below, unless anyone objects. So, do we have any public comment on matters on the consent calendar? Again, seeing none, we have a motion to approve the consent calendar. |
| 00:02:35.72 | Councilmember Withy | I move to approve the consent calendar item 4A. |
| 00:02:41.42 | Herb | Exactly. |
| 00:02:41.86 | Councilmember Withy | Thank you. |
| 00:02:41.88 | Herb | Thank you. |
| 00:02:42.94 | Mayor Theodore | All in favor? Bye. |
| 00:02:43.87 | Councilmember Withy | Thank you. |
| 00:02:43.97 | Herb | Thank you. |
| 00:02:44.07 | Unknown | I'm sorry. |
| 00:02:44.14 | Herb | Bye. |
| 00:02:44.53 | Unknown | you |
| 00:02:47.62 | Mayor Theodore | Okay, now we move on to – we have no public hearings tonight, but we move on to our business items, the Business Advisory Committee presentation. And the presentation – Cheryl Popp, please. |
| 00:03:19.43 | Herb | Okay, shovel, time's up. |
| 00:03:23.97 | Cheryl Popp | you get done. . This is my IT specialist here. |
| 00:03:36.55 | Cheryl Popp | No, okay. |
| 00:03:39.96 | Unknown | Thank you. |
| 00:03:41.25 | Cheryl Popp | If we use this, will this work? |
| 00:03:51.52 | Cheryl Popp | Good evening and happy St. Patty's Day. We're delighted to be so early on the agenda. Thank you for accommodating us. I'm Cheryl Popp and I chair our Business Advisory Committee and have served on that auspicious body for six years now. And I'm As some of you probably know, we are a very dedicated group of volunteers, and we have been working with the Hospitality Committee, which also serves the city. I've listed everybody on BAC and on hospitality, many of whom you're going to hear from this evening. We have been meeting. jointly the last few months to put together a report on sort of the state of the economy or the state of business in the city of Sausalito. And we've got a wide range of representation on our board and Our mission, according to Resolution 5426, is basically to evaluate the Sausalito economy and advise civic leaders and city council on how we can promote economic sustainability and the health of our community. You are going to – and that's what we're here for tonight. You're going to hear from Tom Gangitano, who's going to talk about the retail industries on Bridgeway and Caledonia, Jeff Shiroz about restaurants, Mark Flaherty, who's within Above Tide, will cover lodging. And then we have a Herculean effort from Bruce Huff who's going to cover marine professional services, residential and commercial real estate. So without further ado, I'd like to introduce Tom. |
| 00:05:40.50 | Tom Gangitano | Good evening. My name is Tom Gangitano. I've been an active member of the Sausalito business community for the past 39 years as the vice president of Gene Hiller Menswear. I am the co-founder of the Downtown Merchants Committee, which is now the BizX. which meets once a month with city leaders and business owners. In my years, I have witnessed a positive trend of individual business ownership in Sausalito. in which many have been honored with local and national acclaim. This includes Caledonia Street and Bridgeway. These businesses have built a reputation for quality, service, and creativity. They have attracted a more affluent and quality-minded consumer. This consumer is shared by these businesses and continues to support them. Caledonia Street. has had a revival. Driver's Market, Lisa LeBeau, And Giordano? have all made a commitment to Caledonia Street and Sausalito. They are new businesses with young owners, with creativity. I am proud to refer clients to them. They work in tandem with the chamber. and other long-term Caledonia businesses, such as Sushi Ron, Cafe Divino, and Studio 333 to create wonderful Caledonia events. If the city of Sausalito would like them to continue and also attract other businesses to Caledonia Street Thank you. then the support of a combined marketing plan is needed. More consumer traffic is needed. but it has to be marketed towards the right consumer. The same marketing partnership with the city is needed for downtown Sausalito, Bridgeway, and Princess Street. Quality businesses like Sausalito Jeweler, Poggio, the Inn Above the Tide, Casa Madrona Hotel and Spa, and Jean Hiller Menswear, to name a few, spend in excess of $100,000 a year in marketing their own businesses. In the past three years, Our businesses have hardly grown. There are numerous theories on why growth has been stagnant. the slowing, rebounding economy, the lack of the appropriate marketing plan for a town overall. The bicycle control issue during high season. We need to reinvest in our business community with the programs that tackle these issues, especially in a comprehensive and intricate marketing plan from October through March. you Our small businesses cannot afford a marketing budget on their own. They need help from all of us, including the city. Now we know information is important. Our downtown kiosk is our gateway to our town. They refer businesses and act as a concierge for our town. They too. need mutual combined support from our chamber and city. Morin County and its surrounding Bay areas house the most affluent consumers in California. The Bay Area is a virtual gold mine, and we as a town are not grasping the opportunity to put ourselves in front of them. especially in the months of October through March, which experience minimal tourism and virtually is a ghost town void of local consumers. The days of opening up a business and waiting for your customer to walk in are over. You must go after them, give them a reason to come in, and then you must nurture them to get them to come back. The modern day marketing plan is information and events. As I have seen over the years, Caledonia and downtown Sausalito have become one. Our businesses are not in competition with each other. We are instead marketing together and referring clients to each other. However, We are in competition with other Bay Area towns. It is very important that we market ourselves as a town, not as individual businesses. One example of this is the Gene Hiller magazine. that we publish twice a year. It not only promotes our store, but it promotes our town with articles on quality businesses in our town. Every day I hear marketing ads for Sonoma, Napa Novato, and other surrounding Bay Area towns. I hear them on Pandora Radio, local radio stations, and cable TV. I do not hear or see anything from Sausalito. And we were one of the first Bay Area towns to initiate a TV cable program back in 2001. We frankly should be ashamed of ourselves for not taking pride in our town and promoting it. I ask the city, as a representative of my dedicated fellow merchants, to join with us in help marketing our wonderful town. Respectfully. Now, if you have any questions. . I'd be more than happy. |
| 00:11:00.53 | Mayor Theodore | Now, is this the entire BAC presentation? Male Speaker 1 |
| 00:11:02.90 | Tom Gangitano | I don't know. Thank you. |
| 00:11:08.03 | Tom Gangitano | Thank you for your time. |
| 00:11:10.09 | Cheryl Popp | And I wanted to note that you will get a copy of this PowerPoint and all of the presentations that are being made this evening. I'll pass these out. Give them to staff at the end. Jeff Shirash, Spinnaker Restaurant. Thank you. Thank you. |
| 00:11:21.90 | Jeff Shirash | Thank you, Cheryl. my greatest cheerleader here. I want to talk a little bit about some emerging trends we're seeing in the restaurant sector right now, restaurant and hotels. Mark's, of course, going to go really into the hotel side of it. But in some ways they go hand in hand as far as the events side. But also some alarming factors that could happen to us in the near future. Definitely we're seeing a stronger customer base in the restaurant field right now in the fourth quarter. We're definitely seeing a lot of guests with the lower gas prices, except if you go on Bridgeway, but overall |
| 00:11:57.89 | Unknown | I'm not. |
| 00:11:59.18 | Jeff Shirash | Yeah. Sorry, I had to throw that one. But aside from Bridgeway, definitely lower gas prices overall in the Bay Area here. So it's attracting a lot more people to travel more, do more things, and also the warmer weather. Definitely people are doing a lot more outside. And of course it's helping a lot of our different restaurants and event facilities here locally. So definitely a strong fourth quarter, and of course the first quarter we're seeing 2015. Definitely, we've had a steady growth of visitors here in town, over 2 million visitors in 2014. And, of course, normally we have a slower time of year, November through January. Definitely was up a little bit this last year as far as people coming to town in our typical slower months of November through January. So definitely things were a little bit changing. I mean, Sushi Ron had the best January ever in 2015, so I know a number of other restaurants follow suit with that as well, which is a great sign moving forward. Definitely still a lot of work to do, but we're on the right track in many ways. We're also seeing a little change as far as our demographic on our customer base, our event facilities. A lot of high tech and social media companies are coming over here to do events, to do pottery classes, to do a lot of team building with painting or whatever it might be. So we're seeing a lot of different high tech industries come over to us for the creative side of it. Similar to where people came years ago for the artist community, we're seeing a lot over here, the creative side coming over just to join us for the day or possibly a team building conference for a couple days. So definitely something great for the town in general. As far as strengthening leisure market, also we're seeing a lot of leisure, meaning wedding anniversaries, bar mitzvahs, and so forth, booking further out now. So people are comfortable to spend not just six, eight months from now, a year, year and a half, two years out, which is definitely helping for planning for a lot of our different event facilities. At the same time, with Cass Madrona fully on board now, we're seeing, of course, that really work together with our other event facilities as well. They have some great event space, working with Poggio, but it's helping where they might have the wedding at Cass Madrona and the rehearsal dinner might be at Trident or the Sunday brunch at Spinnaker, whatever it might be. All those different things are working in synergy throughout town here, as Tom mentioned earlier, as far as the retail trade as well, which is a great thing to see. But with anything, of course, we do have some restrictions in the marketplace. We definitely have transportation issues. We've got ferry services winds end way too early in the evening, so we don't have late-night ferry in town, which definitely would be a big help. There is an on-demand service that has just started. We're seeing, of course, how that's going to work. But overall, we definitely need some late-night services. Also, taxi cabs. Late at night, we're not getting very many taxi cabs. Staying in town during the day, there's plenty out to take a lot of the bikes back. But unfortunately, at nighttime, we're not seeing as many around. We do have Uber now in Marin County, which is great, and that is helping a little bit fill the void. But it still is a problem as far as bringing people to Sausalito late night, which Sausalito right now rolls its door, you know, the carpets up at, you know, 9 o'clock. So it's great to have a little more. going on late at night in Sausalito. Not until maybe two in the morning, but it's a little bit later, which of course helps sales tax and many other things as well. Another thing to look at, of course, is looking at how we can retain higher level visitors. And one thing right now we're able to provide is a great kiosk downtown in Sausalito, answering a lot of different questions from the parking to where to go eat, where to shop, all these different questions as a point person that we can really allow that traveler and guide that person and have a great stay with us and which is a great opportunity to make sure that they don't leave just with you know just an ice cream and then go home and it is about the visitor experience and having a great time enjoyable experience where they feel welcome and they come back retaining attractingaining and attracting a higher level visitor requires more hospitality and investment, but will lead to a higher return, a very loyal, customer, and generally with a higher discretionary income. And they'll come back year after year. But those that don't have a positive experience won't be back, and they'll leave earlier than they should have because of the chaos, inability to find information on what to do in town, or possibly anyone who really hates to say it, but gives a damn. You'll be left with a visitor who, when he wears a San Francisco sweatshirt, buys an ice cream cone the size of the leaf. We're not fully contributing to the Sausalito economy and what Sausalito has to really, truly offer. You may ask where I'm getting this information and kind of where this little analogy came from. And unfortunately, I hate to say, I live this daily with one of our sister restaurants. The sister restaurant comes in an area in San Francisco, Tarantino's, which is located in Fisherman's Wharf. And to look back to history of things that went wrong down there, They really forgot about what they were about. They forgot to grab an opportunity to retain the great stores that they had, retain the great restaurants, retain the streets. They let it go. You can go to Hooters down there. You can go to a lot of things you don't want to go to that are not true about what San Francisco has to offer, at the same time not true what Sausalito could offer. So not providing true hospitality to your guests, not fertilizing your current high and eclectic retail shops, restaurants and hotels, then you may be the reason Saucelida became Fisherman's Wharf five or ten years from now. But what I'm asking is for you to invest in this town. Carmel, for example, spends $120,000 on marketing the town. through print and online advertising. In addition, the chamber manages a 250,000 marketing BID The city also contributes $142,000 to the Carmel County CBB. Novato, closer to home here. pays the Chamber $120,000, which is 10% of their $1.2 million T.O.T. Very similar to Sausalito here. to run the visitor center and produce a visitor brochure. 80,000 is money spent on advertising. The city has also hired a full-time economic development director in 2013, where they're spending $250,000 to $300,000 in marketing efforts to attract life science businesses to town. And let me tell you, these guys are on fire, and they're doing a great job at that, too. The city of Nevada also spent $75,000 on a shop local campaign with website, postcard mailings and advertising. And that stuff was everywhere. And I found it even in our backyard here near Sausalito. Kielsberg spent $320,000 on a visitor center in tourism marketing and an additional $300,000 on economic development. By comparison, unfortunately, our town of Sausalito pays $30,000 in hospitality, which is 2.5 percent of our $1.2 million CO2 to cover the entire marking of the town. Compare this to Novato, where the city pays $120,000, or 10% of the exact same $1.2 million to CO2. Over the past 10 years, our TOT has increased 77 percent, from $675,000 in 2005 to $1.2 million in 2014. But the city's contribution, fortunately, has stayed the same at $30,000. So what I'm asking you today is nurture what we have here in Sausalito. Let's continue to let our great restaurant retail shops thrive and let's see them for the future so we can continue to have this incredible town that we do. Thank you. |
| 00:20:13.38 | Cheryl Popp | Now Mark Flaherty, who is with N Above Tide. |
| 00:20:23.15 | Mark Flaherty | THE END OF THE END OF THE So I'm Mark Flaherty, the general manager of the Inabubtide. I'm also the co-chair for the hospitality business development committee along with Yoshie Tilme. And the four hotels in the downtown Sausalito have experienced both a steady and a dramatic increase in their revenues and occupancy rates over the last five to six years. transient occupancy tax, which is 12% in Sausalito, which every hotel guest pays, has grown from, in 2009, approximately 780,000 to this last year, 2014, ending at $1.2 million. So we've definitely seen a dramatic improvement in both revenues and in occupancies of our existing hotel rooms. And in the last quarter of last year and the first quarter of this year, we've had a dramatic improvement in occupancy and revenue over what we normally experience in the offseason. off-season. As Jeff alluded to, certainly gas prices and the warm weather has not hurt and the lack of snow also has not hurt in driving business to the Bay Area instead of maybe to the slopes. But broadly in the region occupancy rates and revenues have been improved not only because of increased demand for the San Francisco Bay Area, but also because of a limited number of new hotel rooms that have come online in both San Francisco and in the region. And in Marin County for the first nine months of 2014, occupancies sat at about 82 percent. In San Francisco for that same period, occupancy rates were at 87 percent. So it's a booming hotel environment, at least at this point in time. Revenues also have average rates have increased about 13 percent in San Francisco and about 8 or 9 percent in Marin County in general. And most of that has occurred in the southern Marin region and in Sausalito especially. Locally both the Casa Madrona hotels improvements to their rooms and new inventory coming online and event space as well as improvements that we have made at the Inn above Tide and construction of new suites have both driven interest in the region, have provided us with a new vehicle for public relations outreach for press nationally and internationally. And so the city has certainly gained the benefit of that in greater transient occupancy tax receipts. Thank you. The hospitality industry has a few challenges, as do many businesses in Marin County especially. Keeping, gaining, and retaining quality employees, having the transportation available for them to get to work, accommodation for them to live nearby is always a challenge. The hospitality business development committee is charged with enhancing the visitor experience to Sausalito. We're given $30,000. That's been the budget every year, a static budget for that purpose, which a lot of it is spoken for in staffing for the Ice House and then also the visitor kiosk at the ferry landing. And we are challenged mostly with just managing the visitors that come to Sausalito. There are only so many hotel rooms here in this town. It's really not that many. But effectively and efficiently and hospitably welcoming and dealing with the people that we have that come to the city not only as a day-tripper but as an overnight guest is really our biggest challenge and concern. And the visitor kiosk plays perhaps the most important role in managing that huge population of people. I know that we're located right at the ferry landing. We live it every day, the number of people that come in and move about that area. And the kiosk provides a key component in effectively managing those folks. And funding for that particular entity is very limited, certainly not fulfilled by the $30,000 that we have to manage or make recommendations for the city. So that, as well as a few other projects that we've been working on to try to market a little bit more in the off-season, in the shoulder season, mid-week, to use the existing hotel rooms, not to drive more visitors necessarily to us, but higher quality visitors, longer staying, and using the existing rooms that we have to offer here |
| 00:25:47.28 | Unknown | and, you know, |
| 00:26:13.07 | Mark Flaherty | you |
| 00:26:13.12 | Unknown | you |
| 00:26:13.27 | Mark Flaherty | you |
| 00:26:13.56 | Unknown | Thank you. |
| 00:26:13.61 | Mark Flaherty | make the revenue streams and occupancies more stable. So thank you very much for your time. Appreciate it. |
| 00:26:27.88 | Cheryl Popp | hear from the inimitable Mr. Bruce Hough. |
| 00:26:35.06 | Bruce Hough | Little traveling music. Maybe the other shoe will drop tonight. Who knows? |
| 00:26:35.49 | Cheryl Popp | traveling there |
| 00:26:36.52 | Jeff Shirash | Thank you. |
| 00:26:40.37 | Bruce Hough | I've been asked to give actually four presentations Um, all of which I'm exposed to, but some of which I don't have any expertise in. So I'll start out with the marine industry. This was written by Paul Dines, and he basically put up some highlights and some issues. Obviously, the Sea Trek move to the Bay model was a stroke of genius on behalf of Chris Gallagher, who I envy now. Um... The Matthew Turner Tall Ship, educational tall ships, very successful. Bayside, Richardson Bay, boat yards have upgraded, and Spalding Center launched the freight up. On the flip side of that coin, Saucelito lost West Marine. The fishing industry is suffering. And my favorite issue, we have maintenance and infrastructure issues, which I won't bore you with at this point. You want to do the next slide? Yes. Thank you. Um... Christine Scarpino really, really, really tried to find some data on professional services in Sausalito, which with the data that's available from the city is very difficult to do. But there are some interesting Points. in there One of which that the professional services or the services and professional category of your business licenses Uh, account for well over 50 percent of the revenues generated by the business licenses. It indicates that Sausalito office in professional space is in high demand. And This segment of Saucyutu's economy has been trending upwards at over 5% a year since 2003. the which indicates that we're getting a lot more professionals in the city, and services over manufacturing is certainly the trend. You want to go to the next one? This is the real estate sector, which I do have some. limited expertise in. In the residential sector, and Joe Burns was the one who produced the data on the residential sector it can, the best word for the residential sector is to say it's, you know, recovered. It's the... the sales price per square foot has returned to the 2,000 levels of $700 a square foot plus. And the mid-price market has been particularly active that's attributed uh... too kind of a family-friendly environment that's occurred in Sausalito with the advent of several quality schools, Willow Creek Academy, the New Horizons School, and recently Lycee Francais. Um, |
| 00:30:26.60 | Bruce Hough | The downside... to the residential market has been that the for sale side page. fully recovered. And it's been my experience over the last 40 some odd years in the business that the rental market and the for sale market are inverse. So when the down occurred in 2008 in the for sale market. it put a lot of pressure on the rental market. Since the recovery, that hasn't really changed. So what you've seen is an exponential growth in rents. to the point where moderate income people are probably being priced out of the city in the rental market. and I don't really know of any solution to that. because the only real solution to that is to produce more you units and we don't see that happening in Sausalito. Anyway, that's the residential market, so everybody can be happy about that. You want to go to the next one? Oh. Yeah, you're right. in the commercial market I think the best word that characterizes the commercial market, even during the downturn, is that it's been stable. in Sausalito. which is very unusual. Um, the Thank you. you know marine county has approximately seven and a half million square feet of commercial space with 904,000 square feet in Southern Marin and about 525,000 square feet in Sausalito. So we actually have less than 10% of the Marine County market The, you know, most large companies will locate in San Rafael or Novato. because they're very price sensitive. But Sausalito is a boutique market and has always been a boutique market. Our tenant, we've seen a huge growth in the commercial arts tenants, advertising agencies, branding agencies, people of that ilk. and they pay a premium price for the ambiance of the waterfront basically, the access to restaurants and shops, and the proximity to San Francisco and the airports. the The vacancy rate at the fourth quarter of 2014 was 19.5% in and 15.6 percent in Sausalito. But the bulk of that vacancy rate was in several buildings, and my understanding that probably in the second and third quarter of 2015, that vacancy rate will drop like a rock. Um, |
| 00:33:32.49 | Bruce Hough | I think – oh, and I'll give you the square foot costs of what the fourth quarter's produced. Marine County produces about $2.60 per square foot average Class A and Class B space, while Sausalito enjoys a rate of $3.71 per square foot for Class A space and $2.75 per square foot for Class B space. So obviously we're way ahead of the county averages. To our knowledge, that there's no significant buildings being planned in the county. and certainly not in Sausalito, so those rates will probably continue to remain stable and increase. our greatest concern uh... which is my personal concern, is the state of the infrastructure where most of our large buildings are located. And I'm about to go into that. |
| 00:34:42.09 | Bruce Hough | Thank you. Okay, good. I can... Oh, okay, I can wing this one. Um, In looking at the city's statistics, the largest single source of revenue for the city of Sausalito is their real estate taxes. According to the 2013-2014 Statement of Revenues published by the city, Close to 35%. the city's revenues come from real estate. That's over twice as much as you collect from sales taxes. a review of the principal property taxpayers in the city of Sausalito shows that the top 25% taxpayers represent approximately 10% of the city's collections of sale taxes. A closer look indicates that approximately 45 percent of the top 25 taxpayers are located in the marine ship. which coincidentally half of the marine ship has no public circulation system. So they don't receive the same benefits as the other residents or the other taxpayers. In closing, I like to make an observation or two uh... first you I've been in Sausalito. I've been doing business in Sausalito for about 35 years, 35 years in October of this year. I lived in the city for over 20 years, and the Kimber Companies, which I own, has just celebrated 24 years in business in the city. I'm also a kind of an active participant. I'm a founder of Willow Creek Academy. I was one of the people that brought you, you know, Lyce Francais. So... I'm very vested in this community, so what I say comes from Um, both common sense and my heart. As we all know... Any successful business |
| 00:36:57.34 | Bruce Hough | that grows and thrives will do so because they reinvest portion of their revenues back into their business Successful owners of income property are consistently investing in maintenance and improvement of their buildings, adding technologies. and improving their tenants' experience. Successful retailers are always upgrading their inventory and fixtures. to make shopping experience more and more inviting for their customers. Restauranteurs invest in new cuisines and the appearance of their establishment to make a first-class dining experience. And hotels, in my experience, invest a huge portion of their revenues to provide truly unique and memorable travel experiences. This list goes on and on. But why do all successful businesses reinvest? in their revenues because they don't take those revenues for granted. All of us in business, all of us in the business world know that if you do not continually Reinvest. improve on your product or services, Your competitors will. I think the common theme you've heard from the business community tonight is, deals with the city's lack of reinvestment in the future of their revenues. whether it's a flat hospitality expenditure or TOT taxes that have not increased even though, or TOT expenditures that have not increased even though the taxes have exponentially increased. or a modest investment in a visitor's kiosk or addressing infrastructure issues in the marine ships. The city of Sausalito takes for granted their revenues. that pay the employees... salaries and benefits, and thinks it will always be there. This is evidenced by the fact that the city had to pass an increase in the sales tax to pay for infrastructure improvements because they did not reinvest in these improvements over the years. And I don't think there's any single city council member here that's to blame for that. This is something that just goes on. and by not reinvesting You allow decay and you allow, in my opinion, blight to occur. It's my opinion that the revenues will not always be there for the city. unless public officials take the steps necessary to reinvest a portion of their revenues in the areas that generate their tax dollars. neglect this reinvestment is to deny the future generations of the services we enjoy. My closing is I would like you to accept these comments in the spirit in which they are given. as a partner in continued prosperity, somebody who is vested and I don't know what the word is, but who really loves this city. And I would like to see it continue in my son's generation. I would love to see the business environment improve, be able to serve, not only the visitor but the resident And to have a waterfront that we could be proud of. as opposed to hiding and looking down from a view. So thank you. I don't want any applause. Thank you very much. |
| 00:40:53.74 | Cheryl Popp | So I guess we will entertain questions from Council right now. Before we do that, I just want to thank everyone on these committees that you saw. They all played a role in putting this together, as well as some people, Larry Mendel, Joe Burns, people who aren't on our committee but very active in the business community. Hopefully it's provided you with a great overview, and I think there are some common messages and a strong call for reinvesting. So. Questions? Thank you. So we'll open it up to – can we – Please direct them to my colleagues as well. |
| 00:41:23.07 | Mayor Theodore | Okay. Thank you. So we'll open it up to... Please direct them to my... All right, so can we – we'll take – handle the questions from here, and then we'll call up individual ones. So can we – who would like to start on questions? Right. you |
| 00:41:41.92 | Cheryl Popp | Um... |
| 00:41:42.39 | Mayor Theodore | Thank you. By the way, thank you for an excellent presentation. |
| 00:41:45.72 | Cheryl Popp | We didn't want too many talking heads or too many slides, so we tried to really condense it. But there's a lot more information in the packet that you're going to get. |
| 00:41:53.73 | Mayor Theodore | Thank you. |
| 00:41:53.75 | Cheryl Popp | Thank you. |
| 00:41:53.76 | Mayor Theodore | I appreciate it. Okay? |
| 00:41:56.08 | Councilmember Withy | Yeah, I sort of have two general areas of questions. The first relates to the overall tourism industry and to start thinking about that and how to parse that in particular. And then the second relates to infrastructure. Let's talk about the tourist industry first. um... As you know, a lot of people are worried that if you in any way attempt to market Sausalito in a more integrated way, which is I think the message you're indicating, and that because of that it would be helpful to have some city help with that. People fear that there's already way too many tourists here, that we've obviously got layered on and related to that bicycle issue of course. But that anything we do will increase the problem and not decrease it. Thank you. Could you sort of address that issue and see who might design you? |
| 00:43:06.99 | Cheryl Popp | and see who might pass. Yeah, I think it's not about more people, but more quality people. One of our slides even talks about. |
| 00:43:17.23 | Councilmember Withy | So explain that, if you could. |
| 00:43:19.03 | Cheryl Popp | Thank you. whoops, growing the dollars each person spends, not the number of people in town, and managing managing the existing people, as well as targeting people. And we've had several ideas and proposals on how We can do research to find out who those people are, and we can do advertising and marketing that targets them. It's not, we would agree, we don't necessarily want more people, it's a different caliber. Thank you. |
| 00:43:46.76 | Tom Gangitano | It's also in the calendar year, there are months that you can shoot a cannon off downtown Bridgeway. And they are the most critical months of the year for many, many retailers. And they are November, December, and January, and February, and March even. So this is the emphasis we want to market. We don't want more people during the summer. We want a better quality of consumer during the summer, of course. But if we market ourselves properly in the down months, we can have a town that is prosperous for the whole year, not just concentrated in that particular high season. |
| 00:44:31.09 | Cheryl Popp | I'll toss out a statistic too that they've proven that the corporate business traveler spends 15 percent versus the leisure traveler. So if we can work with destination management companies and corporations and bring in – we don't have huge meeting facilities, but we do have small meeting facilities that can accommodate 100, 150 people, and that's a tremendous source of revenue for the hospitality industry. |
| 00:44:56.72 | Jeff Shirash | And we're looking to market to groups that we can do business with, as Cheryl mentioned, that we don't have the biggest spaces, but we do work with quite a few groups now that already do some events. For example, at Spinnaker, but they stay at Caspadrona, Inn above Tide, Hotel Sausalito, and eat at Poggio. So definitely it's throughout the town. So not just one event venue is getting the business, but it's given to multiple businesses directly. And there's a lot of indirect revenues coming as well in town as far as whether it be gas and. event venue is getting the business, but it's given to multiple businesses directly, and there's a lot of indirect revenues coming as well in town as far as whether it be gas and you know shopping and other things too that we don't see, but it's really looking for that corporate traveler and that corporate entity that's going to be really not on the street every day, that's going to be in a meeting room, it's not going to be riding bicycles, that's going to be behind the walls and walking to and from, So they're going to be in town for five, six days at one time. That's what we're looking to market to. |
| 00:45:51.64 | Councilmember Pfeiffer | Mr. Mayor, I have a question. Yeah, so I guess my question is I haven't heard folks concern about the tourists and the quantity of tourists. I have heard folks concerned about the quantity of rental bikes, I mean the structure of the impact of the rental bikes in terms of parking and congestion downtown. So I think at least that's what I've heard in terms of the congestion. So my question is, though, that we didn't get this in our packets beforehand, and you're referring to some sort of a packet, a document that you've published. Is there a reason, I feel, is there a reason we didn't get this before the presentation? |
| 00:46:39.07 | Cheryl Popp | I didn't have all the material. You didn't have it all? Okay. Yeah, we had people who were traveling and out of town. |
| 00:46:39.09 | Councilmember Pfeiffer | I didn't have all the material. You didn't have it all? |
| 00:46:45.65 | Cheryl Popp | the presentation Jeff gave, Tom gave verbatim, okay? And then there's some backup documentation as well. And Linda, I think we would agree that most businesses would agree with you the bicycles are a huge issue that needs to be managed, and I think that's why you have the bicycle pedestrian committee which is addressing that. So and I know we've worked with them. The Chamber's worked with them. We're not trying to get more bicyclists in town. That's not the goal. |
| 00:47:12.21 | Amy Wilson | I had. you. |
| 00:47:14.20 | Councilmember Pfeiffer | Thank you. Yeah, no, I wasn't suggesting otherwise. I was just clarifying the comment that, you know, I've heard the concern was not about the tourists but about the rental bikes and the wish that I'd had this before to prepare to review that background material. |
| 00:47:31.37 | Jill Hoffman | Review that background material. Thank you. |
| 00:47:34.64 | Councilmember Pfeiffer | Thank you. |
| 00:47:34.67 | Jill Hoffman | Thank you. |
| 00:47:34.78 | Councilmember Pfeiffer | you |
| 00:47:34.86 | Jill Hoffman | you I have a follow-up question, Cheryl. Thanks. And all the presenters, great presentation. I think all of us here are excited about the business community and we want to see you succeed and what we can do to help you succeed here in Sausalito. I have a question that does tell us what Ashley and Ray just talked about. Do you have, and Tom or Jeff, you may have the numbers on this, I don't know. Do you have any specific numbers on businesses who believe that they're their numbers have fallen off over the summer months, particularly the last two summer months, sorry, the last two years of summer months with regard to our inability to manage the congestion downtown. I know anecdotally, one restaurant told me that's located right down that strip, they had the worst August And my husband's boss, anecdotally, was here this summer and, you know, as one of you said, kind of threw his hands up after an hour and left. I mean, and that's before, you know, Before he was part of my husband's company, we didn't even know him. And when my husband said, oh, you live in Sausalito, he's like, ah, we were there this summer. So anyway, sorry, that was a long question. |
| 00:48:37.06 | Tom Gangitano | So that's the gist of it right there. What happens is in the summertime, the town is so crowded that it creates a connotation for the rest of the year. Every person who's been and has experienced Sausalito in the summer thinks it's that way every month of the year, and it's not. We work very hard at promoting our store and trying to make people understand that it's the best kept secret in November, December, January, February, and March. And we need help. We need help in creating and telling people, |
| 00:48:58.04 | Bob Freeman | We were. |
| 00:49:13.61 | Tom Gangitano | to come in those months. because the summer months, we don't want them. Our business goes down in the summer. Our worst months are June and July. our best months are May and September and October and it's because we get a better quality consumer at that time because we have told them to come at that time. |
| 00:49:37.44 | Cheryl Popp | I think it's even a bigger impact to some of the smaller retailers. They also struggle in the summer months, which is ironic. But unless you're selling, you know, T-shirts or ice cream cones, it's more of a challenge. |
| 00:49:52.29 | Herb | you Have you gone in the direction of Communicating with the cruise ships, we spoke about this before. You know, at one time there was, I think you go back three years ago, there was, I think, 45 cruise ships. Then 2013 there were 67. 2014 there was 76. And I believe it's projected to be about 81. Mm-hmm. |
| 00:50:05.25 | Unknown | I don't know. |
| 00:50:19.14 | Herb | John |
| 00:50:19.47 | Cheryl Popp | John Cox actually did some research. A member of our committee did research on that. And we are all volunteers, and we haven't had the resources to market that aggressively, but it's certainly a good idea, particularly the higher-end cruise ships, I think. |
| 00:50:37.63 | Mayor Theodore | I have a question. The... who, I appreciate. Thank you. The idea that you're looking for quality in what we have and certainly looking at the other months so that we can maximize what we do and that we keep with the character of Sausalito, and we don't want to, you know, T-shirt shops are certainly things that we can be proud of. Now, who do you look at as kind of cities or towns that we would aspire to in that regard? what they get from the city council part of it. I don't think we want to be Novato, but I mean, I'm sure there are certain towns, and that's a separate issue, of course. But what kind of towns do you think are doing it right in terms of what kind of businesses they've attracted, how they've integrated with the residents and really helped the businesses? |
| 00:51:26.74 | Cheryl Popp | You know, Sausalito is so unique. It's kind of always apples and oranges, but I think Healdsburg, Yontville, I think, you know, Carmel, I was going to say Carmel. I mean, we're all a little different. |
| 00:51:38.53 | Unknown | I was going to say, |
| 00:51:38.94 | Unknown | Thank you. |
| 00:51:44.96 | Peggy Day | you |
| 00:51:45.03 | Unknown | Thank you. |
| 00:51:45.98 | Peggy Day | Hey. |
| 00:51:50.31 | Jeff Shirash | Yeah. you And I think These towns have been great at really protecting their brand and building their brand. And I think that's what we're trying to really talk about tonight is we have an incredible brand. Let's not lose that brand. Let's build off of what we already have here. Tom Emily did that, of course Bruce did as well. Because other towns are coming at us. There is competition in the marketplace. Whether you want to believe it or not, there is. We can rest our laurels and say, well we're Sausalito. We're not San Francisco, who cares? Well, guys, things are changing. People are going different places. They can go to Carmel. Maybe they may go to Novato. They have a charming little downtown now. So it's not just all about Sausalito. If we don't do the right thing, we will lose the shops because we won't have a light visitor to attract and to spend money in their shops. And Tom is correct. June and July are not the best months, because it is a different type of visitor during those months as well. But we can do something to change that visitor and who comes into town at the same time. |
| 00:52:55.87 | Councilmember Pfeiffer | I have another follow-up question, which is, so I was recently on the ferry, I think it was like January, February timeframe, and there seemed to be more of the clientele, I mean more of the rental bike traffic than, you know, in the past. And I'm just wondering what reassurances do we have that the kind of clientele we currently get in June and July with the people who are in the past. 1,000, 1,500, 2,000 rental bikes a day won't increase and, you know, spill into the rest of the year? Because I seem to see those trends, and I was just wondering if you considered that. |
| 00:53:36.62 | Tom Gangitano | On certain holidays, you will have that trend. The summer will be revisited. During the Valentine's Day, President Day weekend, we experienced a revisited, we revisited the summer traffic. It just happened to be beautiful weather, and everybody was out, and people were visiting for the long weekend. What I do say is that, you know, I want to first thank Herb for participating downtown and creating a traffic flow downtown. But we also, by accumulating so many people in the summertime, we are turning people off because we don't have the service people available to direct. We have one man there volunteering his time. Now, when we do market for those off months, we will be marketing towards a more affluent, quality-oriented consumer. We won't be marketing to the travel agents to create and bring people over the bridge with my bicycles. So it will be marketed correctly. |
| 00:54:41.64 | Cheryl Popp | I think we've also talked a lot about creating events and reasons for people to come to downtown Sausalito and to our waterfront during those slower off-season months. So I don't know ebb the flow of people here in the summer, but we can certainly try and get more of those people, more people here in the off-season months and not those months necessarily. Fourth of July is always going to be Fourth of July. We can't do anything about it. |
| 00:55:12.16 | Mayor Theodore | Okay, if there are no other questions, I'd suggest we open to public comment. Okay. All right. Anyone from the public like to comment on this issue? |
| 00:55:24.61 | Una | Happy St. Patrick's Day. I can think of no better place to celebrate St. Patrick's Day than here at City Council. |
| 00:55:36.59 | Una | But I believe... Oh, I am very. But I believe what we're talking about today is very important. And you've heard over and over again about the kiosk. And the important issue I want to talk to you about is the issue of funding for that kiosk. The chaos is a vital and important resource. for this city. and for our visitors. It's located in the main arrival and departure area of this town. Four bikes, four ferries, four pedestrians, four cars, four buses. Everyone goes to that point at some stage. And our kiosk staff. are usually the first person they see. In 2012 and 2013, we saw a big increase in the number of visitors coming to our town. and to the point that it was starting to cause issues back then. And those issues were crowd control, confusion, and frustration between the visitors, the residents, Thank you. and our volunteers down at the kiosk. At the time, The Chamber took it upon ourselves to start a task force to look at the situation. We spoke with Adam Pollitzer, City Manager, Chief Tejada, And we all decided that our lovely volunteers who'd been there for many years just could not cope with the pressure of the cyclists, the visitors. It just was not working. So the chamber stepped up. And... took over the management of the chaos and we hired eight. full-time person to work at the kiosk. Peggy Day, she's here in the audience. That was back in 2013, May 2013. I just wanted to mention funding, right? |
| 00:57:23.46 | Unknown | I just wanted |
| 00:57:26.34 | Una | So, We have a full-paid member of staff down there. We receive zero funding from the city. the, Ice House. has some volunteers. and they receive $900 a month from the city, that's $10,800 a year, In addition, they came here two weeks ago and got another $4,500. That's $15,300. They do a good job, but they are not in the firing line, as our kiosk staff are. Just to give you an idea, of the statistics of the people we're talking to every day. We keep a track. of all the visitors. The kiosk staff talk to 10,000 visitors a month. That's 2,500 visitors a week. That's 350 to 400 people a day. I'll tell you, I wouldn't work down there. I worked down there for an hour. It's a nightmare. an absolute nightmare. And Peggy Day and Marcia Smith deserve a medal. right? I'm sorry, I'm going to go over. because it's important. I want you to know that in year one, the city went out, and I personally raised $35,000 to finance the staffing of that kiosk, and that was no easy job. I got $10,000, $5,000 from Golden Gate Transit, and $5,000 from the hospitality. Then I got 15 sponsors from our small businesses here in town who put in $1,000 each. into that kiosk. So in the first year, I was able to cover the costs of it, but that was no easy feat. And we did it. The chamber did it. We received no funding from the city whatsoever. In year two, 2014, we all know this figure, because Herb's been telling us for the last three months, two million visitors came to town. So if you think we had a problem in 2012, now we have a big problem. the natives are revolting. The residents are up in arms. What are you gonna do about the bikes? What are you gonna do about the visitors? And again, who stepped up? The chamber. We met with the bike companies, we met with the chief of police, we met with the Golden Gate, and again, we looked at what we needed to do. So we decided we needed to hire another person down at our kiosk because we needed to be open longer. We needed to be open seven days a week. We also negotiated a contract with the bike rental companies, and they gave $55,000 last year to provide temporary bike staff down there. I know they did, because I was responsible for getting the money from them. And again, the chamber administered it. So. Basically, we'll open longer The issues that we're facing now is we had no winter. The visitors are still coming. They're still coming. and when the temporary bike staff finished in October Who was going to be down there to look after them? Peggy and Marcia, so he kept the kiosk open. But I'm here to tell you that we are now, the Chamber is at a loss of $6,298 as of the end of February. on that funding. We are a Chamber of Commerce not a visitor center. Other cities as you've heard earlier They pay their chambers. They have a contract with their chambers to run visitor centres. We receive nothing from the city of Sausalito. Hospitality give us funds, but that's supposed to be for hospitality to improve marketing. So what I'm saying to you is I know I'm being a very fighting Irish today and the day that's in it, but I mean it. The Sausalito residents are telling you, the Sausalito business are telling you, they want the city to do something about the crowds and hordes of visitors and bikes you have down there on your ferry landing. We're aware there's some plans with your ambassador program through Ed Foch doing a great job. But right now, there's no one down there except for Marcia and Peggy. They've been trained. They know what they're doing. They've kept their calm. The amount of complaints I've had since the two of them have been running that compared to the amount of complaints I had back in 2012 when we had 10 volunteers down there, and Adam can speak for that, you had plenty of people screaming down the phone at you. So what I'm saying to you is we need a contribution from our city. Because our merchants have come up with the goods. Fifteen grand. Our Golden Gate has come up with the funds, 10 grand. Hospitality has come up with funds. and the city has given us nothing. And I'm here to say that we need, we need at least 10 grand to even stay open any longer. And worst possible scenario, and I don't mean this, you as a threat I'm not going to carry out because I will. I'll close that kiosk and you'll have no one down there. and my staff are doing a great job. I manage them every day. I'm a chamber of commerce. I'm not a visitor center. If you want me to run a visitor center, I'm bloody good at it. But you better put some funds into it. So that's my call to action tonight. Thank you. |
| 01:03:18.46 | Mayor Theodore | Okay. Anyone else from the public who'd like to comment? |
| 01:03:26.42 | Aaron Singer | Thank you all. Aaron Singer with Seaplane Adventures at the north end of town. We're also a sponsor down at the kiosk |
| 01:03:36.82 | Unknown | Excuse me. |
| 01:03:37.80 | Aaron Singer | And we have noticed that there has been tremendous improvements over the last couple of years because of the work that Peggy and Marcia are doing down there. We pay quite a bit of money to have a presence down there, and despite the what a lot of people think. We actually do get a lot of those bicyclists that are directed up north. We're all the way on the north end of town and we get Uh, a quite a good group of people to come up and spend money to fly in our seaplanes, which not exactly a cheap date. as some of you might know. So the quality of those folks, some of them are quite good, the kiosk is such a critical part of maintaining at least the level of management that we've had down there in the last two years, I can't imagine what would happen if that went away. We would be extremely disappointed as a sponsor. And we feel like it's an important contribution to the city, an important contribution to the tourist industry, which is, of course, our bread and butter. And we would like to see it maintained, and we would like to see everyone step up and make sure that that kiosk continues to be a service to the city. Thank you. |
| 01:05:15.86 | Mayor Theodore | Thank you. Yoshi. |
| 01:05:19.13 | Yoshitome | Thank you. |
| 01:05:24.38 | Yoshitome | Good evening Yoshitome from Sushiram. I'm Japanese, I'd like to give you a compliment first. Sorry. Ah, I'm not Irish, go menasai. |
| 01:05:39.20 | Unknown | Yeah. Yeah. |
| 01:05:41.91 | Yoshitome | I think at this meeting it's great to have a city hosting business people point of view. Myself, I said I'm a resident, I'm a business person. In a sense, I live here. Only thing I don't do in town is I'm not sleeping here. I do everything else. So also my business will be celebrating 30 years next year. I'd like to invite them all next year. And we have a great situation to be compared with over the years. I think a business community and the city staff is working better than ever. Isn't it true? At least we have a positive, better communication. And it used to be, I did chair for a business meeting, people, city staff, officer come to the meeting. People give all kind of language I don't want to use for. not proper English, some French word, something else. I asked at the meeting, said, please use for proper English or Japanese, or no finger, no suggestions. It's true, and yet we have a much more communicative way to promoting Sassariro business together. I think we cannot blame on people come to Sassariro because we are living such a paradise. Beautiful sunny weather, Valentine's weekend. Who doesn't want to come to Sassariro? Of course everybody will. Issue is we have such a wonderful city. Hotelier has done a great job, more rooms available. I think retail and restaurant has done a great job job. More people want to come to Sausalito. We have to manage a better way to do it. So how we can do this? I think we generate enough TOT tax, some other budget coming to the city. We need proactivity before summer comes. Let's figure out, spend a little more money to crowd control, not just kiosk. I know police chiefs spend a lot of time, energy, hobby spending, trying to manage bike riders or the tourists, everybody else. It's not enough. We live in such a beautiful place. Let's spend a little more time and effort. San Siro could be better place to live, better place to visit, enjoyable place to come. We can do better than where we are. You know, guys, forget about don't put your fingers on anybody else. We can do better job with that. And I think we have the funds, even though the recession, city of Sassaray had more money to spend, we are better pressed to come. So let's spend money and let's take care of those crowd control, work with pedestrians and police and the chamber, everybody else. Thank you. |
| 01:08:42.41 | Peter Van Meter | Peter Van Meter on the board of the Chamber of Commerce. My comment is very simple. You have a budget. You have priorities of decisions within that budget. and you need to think about what is your return on investment of this item. If you picked up the entire kiosk, 35,000 as an example. and you spent maybe 35,000 less on one particular street. We all want our potholes prepared, taken care of, but think of your return on investment for our visitors. generating business the referrals that come from this, the problem solving. I mean, I was down there on President's Day, and I saw our staff running out of the booth to tell people how to move their bicycles around. Without those volunteers, you've got even more chaos. I'm talking about their day-to-day activity. to support the business community here. You're going to get more in terms of hard dollars, in my opinion, out of sales tax if you just look at a change of priority. carve a little bit, a few bucks out of something else. to promote this business community. Thank you. |
| 01:10:00.96 | Jeff Sears | Hello, Jeff Sears from Blazing Saddles. I just want to say there seems to be a lot of recent negativity on the bicycle issue and I want to really reinforce what Una, Erin, Yoshi and that last gentleman said that things really are getting better. We made huge progress last year with Herb's leadership over the last several years. It's been a continuing progress every year. And I think if we keep working together and put our energy in a positive way rather than going the negative, working against each other, I think we'll really get to our goal a lot sooner. And I look forward to this summer, you know, doing a much better job than we did last year. Thank you. |
| 01:10:50.10 | Mayor Theodore | Anyone else from the public like to comment? |
| 01:10:56.55 | Jill Giordano | Hi, I'm Jill Giordano. I am a 15-year resident here in Sausalito. And I also am a two-year business owner here. I take a lot of pride in this town, which is why I moved my business from the city two years ago. AND I KIND OF JUST ASKED THE CITY TO TAKE PRIDE IN YOUR TOWN AS WELL AND THE COMMUNITY. contributing to the kiosk, contributing to marketing, CREATE SOME BRANDING. A POINT WAS BROUGHT UP ABOUT, WELL, if we market more people will come well if you don't market at all you're gonna get the wrong kind of people and they're not gonna go away they're still gonna come We still have the tourist problem to deal with. So why not focus our efforts create a really positive view of Sausalito and get the kind of customers that we want. you know, create a better city for everyone. |
| 01:11:49.92 | Mayor Theodore | Thank you. |
| 01:11:58.18 | Christopher Holbrook | Hi there, Christopher Holbrook. Tam two, Marine Catholic one today. Thank you. That's good. Just so we got that. I was born and raised here in Sausalito. I have two businesses in Sausalito. I'm on the hospitality committee and the chamber board. And like a lot of other people out here in the audience that are dedicated, I love this city. Sausalito is its own brand, and it's a business, and it should be treated that way. There is no other – one of the questions earlier, what other city can you compare it to? There is no other city in California that Sausalito can be compared to. With the way that – the bridge and the ferry and the cars, there is no other city that the way that people come into the city and how many come in. One of the things that's just been kind of disappointing to me over the years is not having the increase in TOT dollars, and really not having the support of the chamber and the city putting in the money to do so. Like a couple other people have said, you get a return on your investment. Many of you have been business owners. You also live here. If you see that you are making money somewhere, you usually reinvest in that and you get more money back. Sausalito as a city should not be treated any differently. You'll get the return on the investment. Everybody has said that in their different ways. Thank you. |
| 01:13:38.65 | Mayor Theodore | Anyone else? |
| 01:13:42.94 | Ines Ponyay | Hello, my name's Ines Ponyay and I own two businesses in town, Jewelry by the Bay and Sox Alito. I've been in business since Sausalito for 30 years. You know, there's really not much we could do about the busyness we have in the summertime. You know, it's either the people are going to come no matter what. It's been 30 years like this, whether, you know, it's bicycles or ice cream eaters or whatever. we can't control that kind of customer, but what we can't control by marketing is local. of tourists that come from, as Tom said, from September, October, till March because without marketing we don't get those people in town I personally for Sox Alito have been putting ads in Marin magazine and I have people coming in local people from San Rafael from Novato from Corte Madera from Santa Rosa, coming in with my ads. quality people that spend money, local people that spend money. I And I also have events to bring in local visitors. So I think I know a lot of other business people in town are wanting to do the same. It'd be nice if we haven't partnered with the city of Sausalito to do the same, to get quality local visitors that spend money here. Thank you. I forgot. And we need to have that kiosk to control the chaos that comes down. that is in town because there is nobody except Peggy and Marcia that are telling our people what to do. It's not just driving people to our businesses, but controlling the chaos, and we need that. Thank you. |
| 01:15:37.99 | Bob Freeman | Bob Freeman, the Trident, and Vince Ondine, I second everything that the folks have said. Not a lot more to driving no more nails to drive into this coffin. |
| 01:15:48.91 | Unknown | into this coffee. |
| 01:15:50.27 | Bob Freeman | I think you have to put the money out in the front here, and it will come back in spades. Thank you very much. |
| 01:16:07.42 | Peggy Day | Hi, my name is Peggy Day. I've worked down at the kiosk for three years. I just wanted to emphasize the point that everyone's trying to make about this coming in the wintertime for a more well-heeled tourist, a well-heeled visitor. It makes common sense. Most families come in the summertime. Most of your well-heeled travelers travel in the fall and the spring and the wintertime to avoid the crowds. It's just common sense. We're having problems now with the bicyclists. I've noticed this since last year. |
| 01:16:08.90 | Unknown | and the Kia. |
| 01:16:37.96 | Peggy Day | October, November, they come around the corner. They don't even want to stop for ice cream anymore. They've heard about the mess of getting your bike on the ferry. They don't even stop anymore. They don't even park their bikes. You can come down and watch. And that's during the week and during the weekend. About three weeks ago, four weeks ago, I had to call Una and ask her to call the chief of police to get more bicycle racks in. It was a Thursday or a Friday at 1230 and we were overflowing already. That was in February. So I just wanted to emphasize that point. Thank you. |
| 01:17:15.83 | Lorna Newland | Oops. I broke my ankle two days ago, and I'm getting used to crutches, which isn't easy. |
| 01:17:28.45 | Lorna Newland | Hello, my name's Lorna Newland. I've been a homeowner in Sausalito for 21 years, and I was a commuter to the city. I worked for 17 years at Levi Strauss, I fully understand big business. I ran a department that had $160 million in sales. And then I decided to open a pottery studio 12 years ago. So I'm one of these people, like many in this room, who are residents and believe in the town and we want everything Lovely. But it's the businesses in town and sales tax and parking revenue and hotel tax that help pay and property tax that help keep the city in the black when so many others were going bankrupt. I'm very involved in my community. When I started my business, I joined the Chamber of Commerce. And now I've been on the board for several years. And actually, I'm starting my third year as treasurer. And we're working through our budget right now. And believe me, I will back up every item that Una said. It's very hard for a chamber of 330 members, two paid staff, and many, many volunteers to do all the things that we do contribute to the city. We have a website that probably more people visit than the city website or anything else, and they find out what's going on in our lovely town. We provide a directory to help get our locals to shop locally. But unfortunately, a lot of small businesses go out of business. I don't have to tell you how long it took. to get signage done. And there are some of us, like I'm at the north end of town, Erin's at the north end of town. When there's congestion downtown, it would be great to let people know there are restaurants all over. It's not just a two-block street or two-block city. All this revitalization and a lot of it is grassroots from the Caledonia merchants and service that have helped that street get more vibrant. And besides the locals' directory to get locals to shop, You know, our visitors are not just single-day European tourists. A lot of them are. A lot of our visitors are from San Francisco, Mill Valley, all around. And the more positive experience they have, they're going to come back. And you don't want a visitor to come here and have an unfortunate experience because that goes like wildflower, too. You want to have Anyway, I did volunteer one day at the kiosk, so I know firsthand what was happening. And another thing that has not – the only other thing that hasn't been mentioned is the fact that there's no parking attendant in the city lots. And so all of those parking questions are also coming to the kiosk. Thank you very much. |
| 01:20:23.11 | Unknown | I mean, I- |
| 01:20:41.67 | Mayor Theodore | Thank you. Anyone else? |
| 01:20:46.13 | Unknown | Thank you. you |
| 01:20:49.30 | Mayor Theodore | Yeah. Okay, we'll now close public comment and we'll bring it back up here. So, if you'd like to start. |
| 01:20:51.56 | Unknown | It was so good. |
| 01:20:58.36 | Mayor Theodore | Thank you. |
| 01:20:58.39 | Jill Hoffman | Oh, sure. I'll go. Well, people are going to get tired of me saying this, but this is going to be my mantra for about the next six months, is that. |
| 01:20:58.44 | Mayor Theodore | Okay. |
| 01:21:09.41 | Jill Hoffman | you know, We have a budget crisis in Sausalito, and we have a $2.6 million unfunded pension for our side funds for our police. And so we talked about this at the last... the last City Council meeting and our finance director told us that if we paid off that $2.6 million this year, then we would save almost a million in interest over the next nine years. So that's going to be my mantra pretty much going forward for the rest of this year, is that every cent that we have from every... every pot, every flower pot that we can look under should go to fund to pay off that unfunded pension debt. When we get that paid off, then you come back and start coming back to me with your plan about what we can do to fund the city, what we can do to market, what we can do with a, with a marketing director for Sausalito because I think that that is sorely needed for our merchants. And I completely agree with you. But I think the priority and the handoff is that we have almost another million dollars back into our budget if we pay that off first. So what I'd like to see is I'm not necessarily saying no right now, but I'm saying, I'm going to be looking at every ask that comes to us from this point forward until the end of the year with a very sharp eye and a very compelling argument about why that should go to anything other than paying down that pension debt and saving this city a million dollars over nine years. So that's, you know, succinctly, that's my thoughts. I love the Chamber of Commerce. I love the merchants in town. I love the way you guys support each other. I read in Marin Magazine where they interview the restauranteurs and the restauranteurs in Sausalito when they say, what's your favorite burger restaurant if you're not a burger guy? And they say a restaurant in Sausalito. I think that's brilliant. The other guys weren't doing that. And so I think that's fantastic. What I'd like to see, what I'd really like to do is to, I WOULD LIKE TO TELL ME IN A MONTH THAT YOU HAVE GONE BACK TO THE BRIDGE DISTRICT, THAT YOU HAVE GONE BACK TO THE BICYCLE GUYS. and said we need another $10,000 to manage the traffic downtown to further help our business is successful. If you make the ask and they say no, then come back. And we'd like to hear that. Somebody that's operating in our town and we need some help due to the congestion in our town. And so then at that point, then I would reassess it. But at this point, that's my That's my thought. At the end of this year, when we're talking about next year and our budget next year and how we're going to allocate funds to support the Chamber of Commerce, I invite you, I hope that you come back, and I hope that we can talk about this more specifically about how we can more effectively help the Chamber of Commerce, because I want you to be successful. |
| 01:24:01.49 | Tom Gangitano | We're going to leave. Okay. But if you invest in us, we'll pay off it. Thank you. |
| 01:24:04.07 | Mayor Theodore | Thank you. Thank you. Thanks, Tom. |
| 01:24:08.19 | Councilmember Pfeiffer | Thank you. |
| 01:24:08.20 | Tom Gangitano | Thank you. |
| 01:24:08.22 | Councilmember Pfeiffer | Thank you. |
| 01:24:09.55 | Unknown | Thank you. |
| 01:24:09.57 | Mayor Theodore | Thank you. |
| 01:24:09.59 | Unknown | you |
| 01:24:09.67 | Mayor Theodore | you |
| 01:24:09.72 | Councilmember Pfeiffer | Thank you. |
| 01:24:09.76 | Unknown | you |
| 01:24:09.82 | Herb | Yeah. |
| 01:24:09.84 | Unknown | Thank you. |
| 01:24:09.86 | Councilmember Pfeiffer | Yeah. |
| 01:24:09.93 | Unknown | Thank you. |
| 01:24:09.94 | Mayor Theodore | Thank you. |
| 01:24:09.99 | Unknown | Thank you. |
| 01:24:10.01 | Mayor Theodore | Thank you. |
| 01:24:10.03 | Unknown | Thank you. |
| 01:24:10.04 | Unknown | Thank you. |
| 01:24:10.25 | Unknown | Thank you. |
| 01:24:10.25 | Mayor Theodore | Thank you. |
| 01:24:10.28 | Unknown | Okay. |
| 01:24:10.50 | Herb | Thank you. |
| 01:24:11.26 | Councilmember Pfeiffer | Thank you. |
| 01:24:11.29 | Unknown | Yeah. |
| 01:24:11.70 | Unknown | Thank you. |
| 01:24:14.16 | Herb | A little background, I think you all know that I was in business here for over 30 years. I was a little more fortunate than most because I dealt in the gasoline business, which means that you have a captivated audience. You have to come in for gas. So I learned at an early point that That was an advantage to me that saved a fortune for me on marketing. But nonetheless, I learned in business that if you don't grow and you don't stay up in the present, then what will happen is you will fall behind, and usually negative things happen the same way. You have two different... phases that I see here. First of all, your kiosk There's no question in my mind, you have to have that maintained every day. It's the first line of defense. that you have there. Hopefully by April 15th when they close down Tracy Way, it will alleviate a little of people not panicking and knowing that they can come in and make a reservation and be able to go back on a designated ferry without having to wait an hour or an hour and a half in line. But there's no question that that kiosk has almost outgrown itself. It really has. If you really look at it, one of the reasons that we attempted to divide the bicycles and put a little kiosk of their own down on Tracy Way was just to relieve a little bit of that kiosk from people coming up, the amount of bikes that just came up alone. to just ask you questions. So as far as supporting the kiosk, that's a must. I think we have That's something that we have to do. The other thing is that's a little different, and that is between the months of November and March, That's where your marketing We don't need any more people coming in to Sausalito in the summertime. We know that we're saturated. And as long as more and more people come into San Francisco and they have more conventions and more cruise ships, we know this is their, at least for an afternoon or morning, this is their destination, is Sausalito. We know that. Um, Once again, and I always say it, you can't see San Francisco from San Francisco. You have to come over here to see San Francisco. And that's why they come. They don't come to look at the nice homes up in the hills. They come over to look at that view. and that's how it's advertised. So I think that aspect of the kiosk, that's a must, and I hope you do get the funding. The other is, as I said, the five months. I'll finish it up. The other five months, that's where some of these revenues or marketing should be geared higher end or the better customer or the customer that really doesn't come in in the wintertime. And I think that's where your marketing dollars should also go. two aspects of that. And I thought, to say we do not. zero. It was the worst thing. that we as a city can do to a town where So many visitors come in. And. The worst thing we want to do is let them leave with a bad taste in their mouth. All right. because it doesn't take much. to do that. just once bad experience where they weren't answered to because today You could put that on the internet. and Yelp or any of them and give a report That's poison. I mean, and a quick example of that is the The Richardson Bay, where you have the anchor routes, there's articles in Yelp telling them, don't come into Sausalito with your boat because it's too dangerous. Well, we don't want that to spill over into our town, our downtown, saying don't come into Sausalito because there's so many people that it's dangerous. So I think that we have to put our money where our mouth is also in this city. So I hope that we can work together and get it done properly. |
| 01:28:59.82 | Councilmember Pfeiffer | Thank you. So I've got an interesting perspective on this. I think most of you know I was on the board of the Chamber of Commerce for two terms, elected for two terms. And so... You know, I've been there and I know how challenging it can be. I recall this was back in the early 2000s. We heard nothing but compliments about the volunteers at the visitor kiosk. There were glowing reports from tourists as well as just feedback from the volunteers. I'm sad to hear that there were some challenges in 2012. I'm not going to make any judgments on this, but I do know that if I In my history, if I'm managing a group and I'm having problems with that's a personnel issue, that's not necessarily a business model issue. We have excellent volunteers in Sausalito. As you know, the Ice House is manned by volunteers. They sell product at the Ice House, and they do vet a lot of tourists in the Ice House. I know. I frequent there often. And before I was elected to the chamber, I was a volunteer at the visitor kiosk. So I know how hectic it can be. Whenever I'm downtown, I stop by the visitor kiosk and I thank Peggy Day because I know how much work that involves. But as Vice Mayor Hoffman mentioned, I'm not sure if it's well known in the community that our cash reserves are, in my opinion, not at a good level right now. In addition to the $2.8 million in police side fund debt we have, we've got $18 million in unfunded pension liability. You know that we just passed a sales tax because we couldn't afford to fix storm drains. We are spending in this budget right now over 400K with projections of beyond 700K for ADA alone. We're looking at we just passed last year a sewer tax that increased for residents from 65 to 90% increase. There are people, renters, that's filtering down. They can't afford to live here because of that tax. And that's the second tax in five years. So I guess my point here is that every council member up here supports the businesses and we hear you and we support you. I think the challenges here are far more complex than perhaps you recognize with respect to the balance sheet we're looking at right now. It would have helped me tremendously to get this material beforehand. I think it also would have helped the public as well, because there are people watching this who want to follow along. I heard a lot of things here that, gave me cause for concern. I'll wrap up. I heard, quote, we need well-heeled travelers, a higher quality of travelers. They were responding to comments about the rental bikes and the fact that the rental bikes are not quite perhaps giving back economically in terms of investment the way we would like that to happen. I do not see that model unless we. provide leadership and pioneering vision in terms of creative ways to regulate, not stop, but regulate those numbers. I see that those numbers are something that will not be able to be mitigated by just ambassadors in VEST standing downtown directing traffic. We've got a serious problem here, and it's increasing 8% each year. So I look forward to hearing more about this as we go into the budget season. I hope to get the materials from you so I can do the homework that I'd like to do to review the materials. But I think this situation in terms of how we can best help downtown and bring those well-tealed travelers and a different clientele is a little bit more complex than, you know, what I'm hearing tonight. And certainly what we're facing in terms of finances are very complex with the pension debt. |
| 01:33:27.78 | Councilmember Withy | Thanks. There were a lot of issues covered tonight. I'd first of all like to thank the Business Advisory Group and the Hospitality Committee for their work. Let's not remember – let's remember they're volunteers. So I think the – there's a number of issues that have come up here. Peter van Meter is absolutely correct this is an investment decision and it's investment decision we've got to make in the context of other our other budget line items we've got to ask the question in the upcoming budget process whether we're going to work how much we're going to invest if anything in economic development versus how much we're going to invest in storm drains versus how much we're going to invest in planning to maintain our long-term revenue stream. These are decisions we've got to make, and we've got to understand that there's going to be trade-offs. |
| 01:34:12.77 | Unknown | Thank you. |
| 01:34:30.99 | Councilmember Withy | I'm sorry, Vice Mayor, but I think it is both irresponsible and quite frankly wrong to say we have a budget crisis. To everybody here and everybody at home, we do not have a budget crisis. I repeat that again. We do not have a budget crisis. What we have is some very tough decisions to make, some very tough decisions as to where we invest limited resources. The extent to which we invest in capital improvements or we pay but down debt. That's an investment decision. It's a financial management decision. It is not a crisis. The other thing that has not really been discussed much was raised by Bruce, and that is our lack of Investment over many years in the past from people who are no longer on this council, a lack of investment in infrastructure, particularly in the marine ship. It's been pointed out here before, Sausalito's strength is the diversity of its revenue stream. Our responsibility is not just to look this far ahead, but to look 10 years ahead. Because we could create a situation where unless we invest in infrastructure, there will be no revenue streams off of the marineship in 10 years' time. So let's not confuse a whole bunch of issues here. We've got investment decisions to make. We've got debt decisions to make. And that we'll do in the process of the budget. Senator, we actually time ourselves up here. And I've got 22 more seconds. The final thing is the kiosk. The kiosk is an essential city function. It needs to be funded. staff there that are actually paid, who have a boss, and if they don't do a good job, need to be fired. Basically, we need to have good staff with a boss. And that, you can't fire volunteers very well. |
| 01:36:42.33 | Mayor Theodore | Well, thank you all for coming. Excellent presentations by everyone. And I think it really points out that we need the Business Advisory Committee to come up and advise us more so that we can plan ahead. I mean, being on the Business Advisory Committee for two years is a lot of good work. But this was a particularly good report, and it's important to see it in this context so other issues are raised so the entire council can be there. We need that. And to educate us. I generally agree with most of the council members with these concerns. We're not in a budget crisis, and each decision we make is an investment. We have returns on investment. I do agree that every penny in the budget is important. It's accounted for this year. We've made our mid-year budget adjustments, so they're very important. In terms of the kiosk, we're going to take that at the Finance Committee. I look at it as not only a smaller amount, but certainly a health and safety and traffic issue and things that we need to take care of. I mean, everyone realizes that downtown is right now, you know, is probably our highest priority to get that under control. So tonight it's not on the agenda. We can't make a decision on it, but we will take it to the next Finance Committee meeting and we will bring it back to the council at the very next meeting. |
| 01:38:07.87 | Councilmember Pfeiffer | Yes, I have a rebuttal. Thank you, Tom. So I just want to comment that every single council member up here was elected on various platforms and various beliefs and views. And to have an opinion based on all the data before us, we have different opinions up here. Having a different opinion, a difference of opinion does not make someone irresponsible. It means they have a difference of opinion. When I look in and I echo Vice Mayor Hoffman's concern about the pension debt and what we're looking at right now. To have a town of 7,200 with an $18 million unfunded pension liability, I think that's a crisis in my book. So respectfully, we all have different opinions. We respect each other's opinions and that's how we work together as a council. |
| 01:39:06.09 | Jill Hoffman | I just have a quick, you know, I don't disagree. AND I THINK THAT'S A PERHAPS A I wrote it down, tough decisions and very limited resources. I'm okay with that, with the characterization of how we're looking at our budget. I view it, you know, I said crisis, I stand by it, but I also think that you're within the wheelhouse when you save test decisions. I think we're not in disagreement on that. And I think we're all looking very, very closely at how every dollar is spent. And, you know, I just keep going back to we can pay. And you guys are all welcome to stay because we're having a pension presentation right after. It's going to be between the hours of 10.30 and 11, I think. But it's going to be scintillating. But, yeah, no, I mean, I stand by that. |
| 01:39:40.56 | Unknown | THE END OF THE END OF THE |
| 01:39:44.26 | Unknown | But... |
| 01:39:44.77 | Unknown | you |
| 01:39:50.42 | Jill Hoffman | Saving almost a million in interest over the next nine years, I think, is the focus of what I'm going to be looking at. |
| 01:39:58.23 | Herb | By the way, my background, I mentioned to you that I started in 1980 with the Chamber of Commerce. I was president of the Chamber of Commerce in 1993. And eight years ago, I sold all my eight operations that I had here in Marin, Sonoma. and down in the peninsula. It's interesting to listen to people that don't have a business background because they don't know how important it is to really invest Never mind in the city, but your business. to sit here and push it down the road and say, you know, we have a problem here. WE CAN'T AFFORD We can't afford to help the Chamber of Commerce on their kiosk, which is a benefit to the city. It's kicking the can down the road. It's not even good business sense. Cities for years. The problem that they had was they never ran a city like a business. Well, now it's time to start running the city like a business. and to support the business. |
| 01:41:06.48 | Mayor Theodore | I want to thank everybody. I think we need to close this now. We're – and wonderful presentation. We now are going to have a presentation. We're going to take a short break. We do have our Senator Mike McGuire here, so we – I think we should all be honored. Sorry to keep you waiting. Can we take a – we'll take a very short break and five minutes, and we'll come right |
| 01:41:25.14 | Unknown | And, |
| 01:41:39.25 | Tom Gangitano | All right. Are we? |
| 01:41:49.07 | Mayor Theodore | Okay. We're moving on to item 6B, short-term vacation rentals. And we have our community development director, Danny Castro, first. |
| 01:42:01.66 | Danny | Theodore S. Good evening, Mayor Theodore, members of the Council. I will be making a presentation regarding short-term vacation rentals, and it is in a number of parts to the – in terms of an overview. Let me get to the next slide here. The presentation, I'll begin with an introduction as to the issues and the challenges that are in Sausalito in terms of short-term vacation rentals. Also discuss the code enforcement challenges and the issues that are faced in Sausalito. We'll also look at some other cities. Staff has looked at some other cities and how they are addressing the issues relating to short-term vacation rentals. We are also fortunate to have Senator Mike McGuire. other cities and how they are addressing the issues relating to short-term vacation rentals. We are also fortunate to have Senator Mike McGuire attending this evening, and I will introduce at this point in the presentation – at that point in the presentation, Senator Mike McGuire. He will be making a presentation on the proposed amendments to Senate Bill 593, which is the Thriving Communities and Sharing Act. And also, and then at the end, I will conclude with the options for the City Council to consider. I should also say that in the code enforcement portion of the presentation, Mary Wagner will also have a segment of that to discuss. |
| 01:43:28.72 | Danny | Sharing economy businesses, it's an emerging issue that many cities are facing. It is defined as shared creation, production, distribution, trade, and consumption of goods and services by different people and organizations. Examples of shared economy, sharing economy businesses are some examples, Airbnb, Airbnb, VRBO. That's vacation rental by owner. HomeAway is another type of sharing economy business. Others related to travel and for transportation is Lyft and Uber. |
| 01:44:17.16 | Danny | Short-term vacation rentals are commonly defined as renting for less than 30 days occupancy in a dwelling. |
| 01:44:29.62 | Danny | Sausalito does not permit short-term vacation rentals. Currently in our code, the transient occupancy is defined as occupancy of residential structures, hotel rooms, or dwelling units on a temporary period of less than 30 days. In our municipal code, section 10-22030, and as referred to in our table 10.221, it is not listed as a permitted use in the residential districts. It further in the table refers to another section of our code in terms of accessory uses that are permitted, and it clearly states that renting rooms for long-term, more than 30 days, is allowed in all districts. So as such, the renting for less than 30 days is not permitted. So there are issues that we have learned through our research as well as some of the complaints that we currently face in terms of short-term rental uses. One is the change in the neighborhood character, concern about the change in neighborhood character. Increased noise, parking difficulties, the transiency of people coming and going, and the tying up of the rental market with what is termed can be lucrative in terms of short-term rentals. Landlords are looking at that and finding that it may be more lucrative to do a short-term rental than it is for a long-term tenant. And as such, there's competition. Lastly, no collection of transient occupancy tax. With short-term rentals, you are looking at potentially increased activity in the neighborhood and there's concern for the impact of our public safety in the community, And the avoidance of a collection or payment of transient occupancy tax is an issue. Code enforcement is a challenge when facing and addressing and regulating short-term rentals. Our code enforcement in the city is our practice is complaint-driven versus proactive. Right now, we have an assistant planner that spends a portion of his work duties on responding to complaints, among other duties of public counter and processing permit applications and responding to inquiries on a day-to-day basis. We frequently receive anecdotal evidence in terms of alleged short-term rental activity in the city, and what that entails is for us to gather the sufficient research to determine an evidence to prove that rentals are on a short-term basis. And that is difficult when we do have the Internet, but when we do look at the Internet, the types of online businesses do not include addresses. So it's really difficult to to research and verify, but that is one way to at least identify that they're occurring in the city. Also, cooperation from homeowners or renters who operate as short-term rental uses. There's clearly an avoidance of willing to cooperate, and that has been proven difficult, as we've learned from other cities, as well as some of our own experiences. |
| 01:48:27.98 | Danny | the How code enforcement is practiced is we follow the procedures in terms of responding to complaints. We follow procedures that are set forth in our municipal code, Chapter 1.10, for administrative code enforcement. There is a process in which we send letters to gain compliance. We have compliance orders, so there's a process of informing an alleged issue of the complaint, of the issue of the code violation. And should they not comply, we can take the next steps of enforcing through administrative citations of starting at 100 up to 500 based on the first, second, and third violations. And what our attempt is, is to collect the TOT, which we can rightfully collect, and it is allowed in our code, for the time period that the short-term rental is operated. But again, the challenge is, is knowing how long they've in fact rented their short-term rental, proving that they're a short-term rental. And that, again, is just the difficulties that we face in terms of enforcement. With that, I'm gonna have Mary Wagner discuss a component of our code enforcement. |
| 01:49:51.12 | Mary Wagner | Thank you, Danny. Mr. Mayor, members of the City Council, as Danny indicated, I'm going to speak to you a little bit more about the challenges related to code enforcement as it applies to short-term vacation rentals. Those are challenges we've experienced firsthand here in Sausalito and challenges that we've heard echoed by other cities as we've participated, particularly in the League of California Cities kind of working group that they've put together recently on this issue, and they've held a number of conference calls for cities to be able to discuss the challenges that they're facing. I'm going to specifically use a 2013 code enforcement related to a short-term vacation rental as an example. As Danny indicated, the administrative code enforcement provisions are set forth in Chapter 1.10 of the SOS of the Demiscible Code. And those are for all administrative code enforcement in the city, whether it's for something that might seem relatively minor to something that's more major, whether it's, you know, an encroachment that they didn't receive a permit for. a sign that didn't have a permit or isn't located in the location it's supposed to be. to things like short-term vacation rentals. So this particular issue started, as they all do, with a code, with a complaint-driven system with a neighbor complaint. They cited the types of issues that Danny identified, noise, traffic, photos of people going in and out of properties that had suitcases. Staff then investigated and that took time. That resulted in a compliance order to the owner of the property, an administrative citation actually being issued, and then that was appealed. And in accordance with Chapter 1.10, there was a hearing set in front of an independent hearing officer and that's somebody who's paid directly by the city. We have a contract with a particular hearing officer to handle those matters for us. We had a lot of anecdotal evidence. We had the type of evidence Danny was referring to and that I alluded to, you know, photos by the neighbor of somebody coming in and out of the house dragging a suitcase, neighbor emails about noise and about traffic and taking photos of maybe different license plates from out of state at the property. And then we also had evidence of listing on Airbnb. And it was listed at a daily rate, at a weekly rate, and at a monthly rate. And then there were testimonials, if you will, of people who had stayed in the property saying, you know, we were there for four days, we were there for a week, we were there for an overnight, and loved it. So in this particular instance, the property owner didn't dispute that the property had been rented, but disputed the length of time. So that led us to be able to successfully show that in this instance, for this one snapshot in time that the property had been rented for less than 30 days. I think that that's unusual. But even when we were successful, that resulted in a $100 fine, because that's the fine structure that's set out in our municipal code. We spent more than $1,000 on the hearing officer alone, in addition to staff time and city attorney time. putting this case together. Your administrative code fines are, as Danny indicates, $100 for the first offense, $200 for each offense thereafter, $500 for another offense within the same 12-month period. But you have to prove each event. So one week rental is one event. Another week rental is another event. And it's not enough just to say it was listed. You have to show that it was actually rented. And you're also up against. another week rental is another event. And it's not enough just to say it was listed. You have to show that it was actually rented. And you're also up against situations where an owner will say, |
| 01:53:23.88 | Unknown | Thank you. |
| 01:53:24.05 | Unknown | Thank you. |
| 01:53:24.06 | Unknown | Thank you. |
| 01:53:42.78 | Mary Wagner | That photo is of my father. He was coming to visit, or I let my family members use that house. So you're up against a difficult burden of proof to show that this is actually occurring And in the situation that we have, where we have a half-time code enforcement person, who's looking at all code enforcement issues in the city it becomes very labor intensive and |
| 01:54:03.50 | Danny | Thank you. |
| 01:54:05.36 | Mary Wagner | costly. Thank you. |
| 01:54:07.89 | Danny | Thank you. Thank you, Mary. So in our research, we looked at other cities and we found that there are cities that utilize their existing ordinance which prohibits short-term rentals and actively enforces by their code enforcement personnel, and in some cases are able to collect IoT, and other cases do not. We looked at Healdsburg as one city, and its short-term rentals are prohibited except in downtown commercial area. Illegal short-term rentals, they estimated to be about 25 in 2012, and mainly complaints were generated about the noise and about the disruptions in the neighborhood. Concern that the change in the neighborhood character was occurring. that there was also concern that by allowing them, they would would not be able to maintain the housing that's available for long term use. Code enforcement, they found, was difficult with the current staffing levels and that the city council in 2012 agreed to hire a code enforcement officer, I'm sorry, in August 2014, so it was a couple years, but they did hire a code enforcement officer to proactively enforce the prohibition. Speaking to the hearing officer in Healdsburg, he said to me that it's very time intensive. Often it requires undercover operation to pose as a customer who – in order to really, again, have a valid complaint regarding short-term rental. St. Helena is another city. They are a city in which they amended their zoning code to allow short-term rentals. They limited it to 25. Again, this is one example of a city that actually amended their code to allow it. It had a valid for two years, so it had to revisit once you had one permit. They had a list of variety, a list of eligibility requirements in terms of parking that an owner must be owned by a person who resides at the space. It's only limited to single family. They required a fire inspection, a business license, and that noticing for an application required that you notice within a certain distance, I think it was 300 feet radius, and if less than 30 percent objected and it was handled administratively to be approved by staff or considered for approval by staff, And if more than 30% objected, then it went to the Planning Commission. Again, several restrictions were imposed with the effort to preserve the quality of life and ensure safety. They had provisions that limited the number of bedrooms and the number of guests in a short-term rental. The policies were posted in the interior door of a short-term rental. Quiet hours were also instituted. All parking on site, no amplified sound, and limit on group gatherings, and including no commercial activity. |
| 01:57:39.52 | Danny | In terms of the fiscal impact for collection of TOT revenue, again that's transient occupancy tax revenue, for example if Sausalito had 100 listings and they offered a short-term rental for two nights a week, that averages 150 a night. In one year the the gross receipts would amount to 1.5 million, and that's with the 12 percent application of the 12 percent TOT. That would, with 12% TOT, would generate $190,000 in TOT revenue to the city, again, in one year. The increased code enforcement will result in additional cost to enforce this, and if we were to prohibit short-term rentals. The cost of the code enforcement officer at approximately $50,000 to $70,000 would be absorbed by that TOT revenue. So it would pay for that service to be able to, again, enforce the rules. |
| 01:58:46.01 | Danny | With that, I'm gonna pause here and introduce Senator Mike McGuire, who will make a presentation on the proposed amendments to a Senate bill. that is of interest in the subject. |
| 01:58:58.88 | Unknown | Thank you. |
| 01:59:01.85 | Senator Mike McGuire | Well, good evening, Mayor and Councilmembers, and very grateful to be here. Thank you so much, and Mr. City Manager and distinguished staff. Honored to be with you this evening and grateful for the opportunity to join this important conversation that you're having. And I just want to start out by saying thank you for your fantastic work. It is not easy in the job that you are in, and many times thankless, and very grateful to have the opportunity to be able to work with you. And I know I'm here to talk about vacation rental platforms tonight. A future opportunity would love to be able to come back and talk with you about state update and get your feedback as well. Would like to be able to speak with you about Senate Bill 593, the Thriving Community and Sharing Economy Act. Just a little bit of background, and I think that we can all agree, the hospitality community is forever changed with the advent of online vacation rental platforms such as VRBO or Airbnb. It's an issue, as we're hearing about tonight, that's important not just to your council but to the entire state of California, in particular coastal communities up and down the great state of California. And living in a beautiful town like all of you, I've seen the positive and, frankly, at times negative impacts that rental platforms can have on neighborhoods, culture of our communities, and the services that we offer. And in fact was just speaking with David McKaylee, the city manager in the city of Healdsburg, and that's where I live. And the city of Healdsburg since last August has spent $47,500 on trying to enforce BRBO and Airbnbs within the community. And that's not including the additional staff time that was needed for their now full-time code enforcement officer. |
| 01:59:48.38 | Unknown | Thank you. |
| 01:59:48.43 | Unknown | Yeah. |
| 01:59:48.49 | Unknown | Yeah. |
| 01:59:48.53 | Unknown | Thank you. |
| 01:59:48.56 | Unknown | Bye. |
| 02:00:57.55 | Senator Mike McGuire | And I want to tell you, the reason that I'm here tonight is because of conversations that I had with you earlier this year. And I want to say thank you. And Mayor, really appreciated your feedback as well. as the mayor was very passionate related to the issues of VRBO and Airbnbs within Sausalito. and Seeing the impacts directly as a former mayor in Healdsburg and on the Board of Supervisors in Sonoma County, I think this bill is extremely important. And it's going to provide for full local control. It's going to empower cities and our counties. and frankly help our state thrive. by generating in cities that allow it we believe well over $100 million a year for local jurisdictions. So this legislation is really simple, and I know that we hear that a lot, but it really does two things. It. where vacation rentals are legal, The bill will assist local jurisdictions in their regulation and collection of bed taxes. So that's number one. Almost got it. There we go. Number two. where vacation rentals are illegal by local ordinance. Karen Sausalito. The bill will prohibit online vacation rental platforms from making a rental. We'll talk a little bit about that. on how we see that progressing. In addition, SB 593 will empower communities to protect the quality of life that all of you are here serving and working so hard for by upholding local ordinances that protect against degradation in neighborhoods, or in some cases, not allowing vacation rentals based off of local ordinance. And it also reinforces Again, local ordinances. And so many times, I think that we can all agree, the state is on the opposite side of cities and counties. And the state needs to be an active and engaged partner on this important issue, which is why we believe that Vacation rental platforms must disclose to the Department of Finance and Cities, as well as tax collectors at counties. The host rental address is The amount of nights stayed, and amount paid by the visitors. or in the case of Sausalito, The home address. in which is listed within the visitor-serving platform. So it gets to the point of rather having rather than having a complaint-driven process, when you have a whole neighborhood stirred up after a loud party. Thank you. drinking and driving. or a band playing until 3 a.m. you will then know Every home. every unit within the community because there would be a mandatory disclosure of the home address. just to the Department of Finance as they handle. all financial and confidential, and the tax collector, because they handle all tax collection within the county. And to ensure compliance, there needs to be a financial enforcement action built into this law. which is why we would bring forward, one, a 30-day notice that would put the individual on notice that they are operating illegally in Sausalito. Or if, for example, you have a community or a county that allows a vacation rental. that they have 30 days to remit payment. If they fail to comply or respond, it would be not to exceed 1,000 per day violation on the first violation. And that violation would go to BRBO or Airbnb. and not the homeowners. On the second day, there would be up to a $2,000 violation. On the third request, it would be a $5,000 per day violation. And here's the other piece. is that this would provide full flexibility for cities to opt in and opt out. So also within the legislation, it would provide a 90-day opt-in So if Sausalito decided If all of you said, we want to be able to provide short-term rentals, you would have 90 days to be able to let each of the visitor platforms know that you're opting in and that they're going to need to be able to provide you with the necessary technology to work with it. Or if you decide you ever want to opt out, you need to be able to give 90 days notice. So again, local control. two goals. If you don't allow vacation rentals, It becomes a state law that backs you up and it makes it illegal with fining ability. And then two, if you do allow vacation rentals, it's a mandatory payment of taxes to the Department of Finance within a city tax collector and accountant. I'd be happy to take any questions, and again, I'm really grateful to be here, and I would be honored to have your council support what I believe is this important legislation. Thank you again for this amazing opportunity. |
| 02:06:16.10 | Mayor Theodore | And what I suggest, I think we should bring it up at this point to council questions and council comments on SB 595 since we have Senator McGuire here. And then we can move on. But let's take this opportunity. Thank you. |
| 02:06:30.31 | Unknown | Thank you. |
| 02:06:30.98 | Mayor Theodore | who would like to start. Thank you. |
| 02:06:34.00 | Councilmember Pfeiffer | Thank you. Right. |
| 02:06:35.28 | Mayor Theodore | Okay. |
| 02:06:35.60 | Councilmember Pfeiffer | I could start. |
| 02:06:36.33 | Mayor Theodore | Let's start with questions and then we'll move into comments. If that's okay, Senator? |
| 02:06:40.11 | Senator Mike McGuire | Thank you. |
| 02:06:40.28 | Mayor Theodore | you. |
| 02:06:41.53 | Councilmember Pfeiffer | So you mentioned you're fining the lister, like Airbnb or the agency. Is it that you're not fining the homeowner because that's more of a local kind of ordinance issue if they're illegal? Or can you explain that a little bit more? No, great. |
| 02:07:00.07 | Senator Mike McGuire | No, great question. It's because in most cities and counties, you already have a local ability to find the homeowner. And quite frankly, Airbnb, VRBO, whatever the visitor platform may be, keeps talking about how they want to be partners with local cities. to ensure that there's going to be action. by your partner within the visitor platform. There needs to be an ability for a city to be able to find them since you're already working with your local homeowner. So it's essentially you have a two-prong approach. You're already dealing through your ordinance with the local homeowner, and now this brings in the visitor platform as well. |
| 02:07:43.61 | Councilmember Pfeiffer | A follow-up question? What percentage of the fine goes to – does a percentage of the fine go to the local you |
| 02:07:51.96 | Senator Mike McGuire | 100%. |
| 02:07:52.00 | Councilmember Pfeiffer | 100%. To the city. Okay. So you said like if it's 1,000, for the first day of 2000 and then 5,000. Is it that the You mentioned that some of the tax goes to the county and some to the Department of Finance. I was a little confused about that. |
| 02:08:08.40 | Senator Mike McGuire | Oh, no, I apologize. So the way it would work is, let's just use Sausalito, for example, in a home here in town. |
| 02:08:09.31 | Councilmember Pfeiffer | on |
| 02:08:16.06 | Senator Mike McGuire | and you find that individual is renting out. You would go through your code enforcement action and your own local fine structure. In addition, you would send a letter out to VRBO and Airbnb. And frankly, in the very beginning, you're going to have to send a letter out to all of those residences that are acting illegally per your local ordinance. You would say you have 30 days to be able to cease and desist. since you have the addresses now of the homeowners because they would have to turn it over. You would then have the ability to be able to send your code enforcement officer out. and it's found. that they're still operating as a vacation rental. You would send a second notice out. with a one, up to a $1,000 fund. 100% of that proceeds. and comes back to the city to be able to recoup costs. All your bed tax stays within the city. The state won't touch it. 100%. goes back to Sausalito. What I meant, and I apologize I was not clear, is in cities, all those addresses would be sent to the Department of Finance within the city itself, because you're already dealing with sensitive information like water, sewer, at times electric, which is why we do that in cities, and the tax collector if it's in unincorporated residence. |
| 02:09:35.81 | Tom Gangitano | Thank you. |
| 02:09:39.03 | Senator Mike McGuire | that cleared up. Thank you. And thank you for allowing me to be here. |
| 02:09:44.30 | Herb | I'll just use a question. I don't mean to put you on the spot, but Hilsburg, what's the percent? Do you know what the percentage of rentals are in Hilsburg? |
| 02:09:46.81 | Senator Mike McGuire | No, please. |
| 02:09:52.52 | Senator Mike McGuire | You know, I don't know the percentage, but I will tell you this, when you go on to VRBO, there are several hundred. And if you look at the 95448 zip code, it's that in the Sonoma Valley that has a few thousands. And if we use San Francisco as an example, they had 6.6, they allow now, vacation rentals, 6.6% remittance. Arrest, we're not paying. not pain. |
| 02:10:25.68 | Herb | not faith. |
| 02:10:26.40 | Senator Mike McGuire | And the vast majority in what I always share with you in the county of Sonoma, Uh, We know the vast majority of units are not paying. Now, the homeowners many times simply don't know, right? But what we're now starting to see are individuals building homes with suites inside of them. So they'll go and buy a house. at times rebuild the house completely with individual suites So you have a small hotel. that is in the middle of an unincorporated neighborhood. Now, that's the extreme, but what we do have a significant number of complaints on are loud noises, wedding parties, drinking, bands, et cetera. |
| 02:11:09.96 | Herb | Just so you know, Sausalito is almost 49% renters. It's one of the highest in the state. Thank you. |
| 02:11:17.79 | Unknown | Thank you. |
| 02:11:20.52 | Jill Hoffman | Mike, thanks for coming. Absolutely. |
| 02:11:21.55 | Unknown | Thank you. |
| 02:11:21.58 | Herb | Thank you. |
| 02:11:21.60 | Unknown | Absolutely. |
| 02:11:22.83 | Jill Hoffman | THE END OF THE END OF THE So the percentage that the tax that we would, the proposal, the result of the tax and the ordinance would be, we would set the tax or the state would set the tax or what, |
| 02:11:37.33 | Senator Mike McGuire | It's all you. So it's 100%. |
| 02:11:38.21 | Jill Hoffman | So it's actually... |
| 02:11:40.37 | Senator Mike McGuire | local control. So what we do is we take your bad tax assessment now, your 12 percent, 12%. you and If you choose to impose, that all sticks with you. for the first time, I think, in many years, the state won't take those dollars. Yet. No, no. And the reason being is because you're providing the local service. This empowers local control. |
| 02:12:00.21 | Herb | yet. Thank you. |
| 02:12:12.97 | Unknown | you |
| 02:12:13.91 | Jill Hoffman | you |
| 02:12:13.98 | Unknown | Thank you. |
| 02:12:14.40 | Jill Hoffman | Thank you. |
| 02:12:15.11 | Senator Mike McGuire | And that's why I think on the piece is why it's just so simple. You don't allow, this backs you up, and then provides a second finding structure if you do allow mandates payments. |
| 02:12:25.32 | Jill Hoffman | What... What do you see the schedule for this, for it being implemented through the state? |
| 02:12:32.38 | Senator Mike McGuire | Great question. It's going to go through the committee process. It was formally introduced. So here's the process that will happen. You'll see the go through the state senate here in the next four to six weeks. It will go through the committee process. It will then be referred to the state assembly. It has to be passed through committee. They will go through the same committee process in the State Assembly. then it has to then pass both houses, state senate, state assembly. We have the ability to do that. It then goes up to the governor for signature. We – if all goes as planned, it would be signed sometime in September. And in the legislation, it would go into effect January 1. |
| 02:13:26.41 | Mayor Theodore | Senator, thank you. As we said, this is exactly what we were looking for in our enforcement. process and many features of it, including local control, and the opt-in or opt-out issue, I mean, so it allows communities to make their own decisions. The question I have on the opt-in and opt-out, of course, we do not allow short-term rentals. Correct. But we want to have the information sent to us from the VRBOs and the other agencies so that we can police whether they're doing that. And I just want to make sure that it's clear because obviously we can opt-in if have them collect and we allow it, but if we continue to ban short-term rentals, we'd also want to have that information because as we know, we ban them now and we have 100 on there as it is similar to what Healdsburg has. |
| 02:14:15.89 | Senator Mike McGuire | you would also receive those addresses. |
| 02:14:22.50 | Mayor Theodore | Senator, in interest of your time, and I know we started late, and our apologies. |
| 02:14:24.27 | Senator Mike McGuire | We started late in our book. |
| 02:14:26.99 | Mayor Theodore | OF would do normally is to have questions. We could have questions from the public on this part of it. Would you like to do that? I'll scoot, yes. I think that would be helpful. Thank you very much, Mayor. And you can, you know, they do. |
| 02:14:31.66 | Unknown | Oh, my God. |
| 02:14:31.75 | Senator Mike McGuire | as part of it, would you like to do that? Thank you very much, Mayor. I'll just step to this. |
| 02:14:40.02 | Mayor Theodore | And then maybe we'll ask a question you'll answer one at a time. We'll just go back and forth. Can we do that? |
| 02:14:40.05 | Senator Mike McGuire | And then maybe Yeah. And I have plenty of time for you. And again, Mayor, I just want to say thank you in all sincerity is because yourself and the council really why we're here tonight. And I do want to say thank you for your advocacy. |
| 02:14:45.82 | Mayor Theodore | THE FAMILY. |
| 02:14:54.24 | Mayor Theodore | All right, so questions from the public. And I would recommend that we limit it to the SB 593 at this point. We will go back to... Short-term rentals in general will allow you to have comments at that point when we finish that, but I'd like to keep it to this now. Anyone have any questions on SB 593? Would you please come up to the podium? |
| 02:15:17.02 | Russ | Amen. No, I read you If I understand this, Airbnb, for example, we have this ban on shorts and rentals. They'd be Avery and B and VRB, everybody else. legally prohibited from offering this. But we think they would send us the addresses of the offerings that were here anyway, which would then give us the ability to fine them I mean, if I'm the guy at Airbnb, you know. I'm not going to send you those addresses because it just invites a $5,000 a day fine, right? So how do you go after – I mean, who's the – are we going to – all the communities are going to get together and then take – Airbnb to court and say, hey, you're in violation of state law or is the attorney general going to do that or |
| 02:16:07.06 | Senator Mike McGuire | It's a great question. So if they're in violation of state law, the state will then enforce it through state attorney's office and the attorney general's office. I will agree with you, and I'm paraphrasing, I'm not sure they're going to be too excited about this. At the same time though, if I'm a visitor serving business, So for example, if I'm a hotel, I go through the entitlement process in Sausalito. and I'm expected to be able to pay my taxes. And particularly these days, cities, counties need that revenue for storm drains, good roads, parks, and safe neighborhoods. So they are going to have to be able to remit their payments, or they'll be in violation of state law. Uh, and It is frankly, against the law. Currently, to go against the local ordinance. That's the bottom line. So right now, these visitor platforms are going against local law, by one. allowing their online platform to even provide for rentals in Sausalito. And there's technically a disclosure form on the website that says you have to disclose your address to the city or the county. |
| 02:17:39.53 | Senator Mike McGuire | And that's why I say this bill is simple. It enforces the current local laws that are currently on the books. If you don't allow short-term rentals, It becomes state law. and it's illegal. If you allow short-term rentals, You have to pay your tax. I can't think of anything more American. More simple. that. |
| 02:18:04.71 | Mayor Theodore | Any other questions from the public on SB 593? Thanks. Right, seeing none, and we will come back to the rest of the discussion. Any other questions or comments from the council? |
| 02:18:18.16 | Councilmember Withy | Well, thank you. you |
| 02:18:22.30 | Mayor Theodore | Yeah, I would suggest let's do that, and we can handle that part of it, and then we'll move to the other discussion. So, Herb, you want to start off? |
| 02:18:35.39 | Herb | Thank you. Airbnb in these We're not really a resort town. And like I stated, that 49% of them are renters. But it's a few other things that kind of mix with it in this community. Number one, first of all, Rentals are in great demand in this town, and I think this almost promotes a good businessman to say, hey, I can make as much money in three months than I can the whole year. unless we're not here on my my dwelling. The other thing that it creates, in my opinion, and I usually am very open and want to be in the present of business, but the other thing that really hits me is a couple of things. Number one, if a person rents it for Monday and Tuesday, now puts the, The garbage can's out on a Wednesday, and their pickup was Tuesday. That'll sit there for the whole week. And that is not a healthy. condition The other thing is because we are a very, very small community, We're used of, in many, many cases, of looking down the street And we almost know if someone's coming up the street, whether they're a local and live here. No, they don't. And we just went through a process for a while of really pushing on our citizens. If you see something that looks out of sync, please call the police. Well, you keep on having these Airbnbs, and before you know it, The norm will be, well, I'm not going to cry wolf because the very idea is these people will keep on moving in, and it creates that kind of a situation. I know the money looks good, $190,000 less than $70,000, but I really think that in this community I really wouldn't want to hurt the housing stock that we have. and all of a sudden have people not renting on a year basis, and that's what we want. So that's my point. |
| 02:21:13.42 | Councilmember Pfeiffer | So my understanding of Senate Bill 593 is that it empowers local governments to enforce their codes regarding short-term rentals. whether they allow short-term rentals or don't allow short-term rentals. I'm looking for a downside on this and I can't find one. And I can't imagine why we would not support this, because it my understanding of this is that it you know, it empowers, it gives cities the tools to to enforce their vision of how they would like to manage the whole short-term rental situation, be it open arms or closed doors. So that's my 10 cents. Yeah. |
| 02:22:23.07 | Councilmember Withy | I agree completely with Councilmember Pfeiffer's assessment of 593. We don't always agree on things, but on this one, we definitely do. Mike thanks for coming you know when we met last year and our whole conversation was about tourism right and the problems that Sausalito had I think this is a I've been tracking this this is a good bill it's a bill that actually our legislature and our Senate taking the lead and you taking the lead here on this is actually what we need Sacramento be doing which is providing tools for us at local jurisdictions that we can use so that what this does is really put the power really strongly the power of state law behind us. So that we can have a conversation about whether long term we want to let short term rentals in under some circumstances or not. It doesn't matter which way we go. The point is this bill provides some really useful tools. I'm personally very supportive of this and as you know supportive of you. |
| 02:23:42.48 | Jill Hoffman | Thanks, Mike. Let me ask one follow-up question. I know it's comments. IS THE THE POINT OF THE PROCESS THAT WE'RE AT, DO WE HAVE A FINAL BILL THAT WE'RE GOING TO OR WE'RE AT THE PROCESS WHERE BOTH HOUSES ARE LOOKING AT IT AND THERE WILL BE CHANGES AND ET CETERA. |
| 02:23:58.24 | Senator Mike McGuire | Yes, ma'am. So we do have final. and we'd be happy to be able to provide you with a final copy of the legislation. We do not have a hearing date for our first hearing in the Senate. But that should be coming up within the next three weeks. |
| 02:24:13.70 | Jill Hoffman | Thanks. Okay, so that was my, you know, In principle, I am in favor of this effort, especially because the money that's collected will be kept in Sausalito. We have two issues that we're talking about tonight, and I'm not speaking to the second issue about whether or not we want to allow short-term rentals. That's going to be after you. Okay. This effort to sort of figure out a way that we can more effectively regulate, I think, is a good one. I would like to have a copy of the bill to read it. and to reserve any comment that I have for and against until I've actually read the whole thing. But I think it's important. I hope it's broad enough so that you know, that we can enforce against any type of website that offers this type of sharing economy, not simply the ones that are operating now, because as you know, as soon as we get people find out that VRBO or Airbnb is turning over, that they're gonna move on to the next sort of pop-up site, and then it's going to be on and on and on. And so, It's really important for us as a city and our enforcement to have that information from operating so that that cuts down on our enforcement. that we have to put into it. We just had the report and said, here's the report. You have no argument. pay the fine. I think that will cut down a lot on the abuses and the nuisance. So anyway, thank you and thank you for your work. |
| 02:25:30.65 | Mayor Theodore | Again, thank you, Senator, for coming, but also, more importantly, bringing forward this bill. And we've been struggling with this enforcement issue. Short-term rentals are illegal. We're here tonight because, you know, council was asked because a lot of the problems to bring forward our enforcement, and it's been very difficult to find a reasonable way to do that without incurring a lot of costs that may or may not be successful. It's wonderful. I also echo the comment of bringing this back to local control, giving us the tools. And, uh, I'm not sure. Thank you. I'll venture out and say we just got our housing element certified, and that was really the reverse of, you know, the state helping us. imposing rules that are very difficult for us and costly and not productive for us. So I'll just put that out. But this is exactly what we want. And to give us these tools, we would have been very difficult. We don't have the power to go against Airbnb or all these others. The state does. It's collective power. It's really good. Of course, we'll see the final details of the bill. We know as it goes back and forth. I think it's really wonderful. And I also really appreciate you |
| 02:26:21.09 | Unknown | This is fair. |
| 02:26:42.64 | Mayor Theodore | coming here tonight, and we also want you back to give us a legislative report and maybe open it to the public question as well on things. We're closed with public comment right now, so sorry. Any other comments? I think that's it. We will now move to the other portion, and you're welcome to say – No. Late show. We'll move into our general discussions. just |
| 02:27:08.03 | Senator Mike McGuire | I want to say thank you. |
| 02:27:08.09 | Mayor Theodore | I'm going to say, I think it's pretty clear that We're supportive of SB 593 and your efforts. |
| 02:27:16.25 | Senator Mike McGuire | We'll get you a final copy so you could, if you'd like to be able to take formal action here in the future, you can. And we'll make sure you have a final copy of the bill here tomorrow. So we'll distribute that through the city manager. And again, I just want to say thank you for the opportunity. I'm looking forward to working with you on this piece of legislation as it advances for local control and empowerment. Thank you. |
| 02:27:40.91 | Mayor Theodore | And now you have more to present and then we go into other. Okay, so let's pick up the presentation from there. |
| 02:27:44.45 | Danny | Yes, just to pick up. Thank you, guys. Just to conclude, I just wanted to state what the options are this evening for the City Council to consider. There's a number of options, and one is to amend the zoning ordinance to expressly prohibit short-term rental uses in all residential zoning districts. Staff can create handouts to explain the rules, so it's community education and outreach. Number two, maintain the current prohibition of short-term rental uses. Number three, prepare a draft ordinance that establishes a permitting program to allow short-term rentals with direction on the permitting standards. For options one, two, and three, it does require that – in either case, it does have to go to the Planning Commission for review and consideration and then recommendation to the City Council. I would also ask for one, two, and three, if any of those choices or options are looked at, that staff can also be directed to prepare a code enforcement program. I think that's an essential component to any of these options that we could present to the Planning Commission and to the City Council that identifies how we would in fact tackle the code enforcement issues that were related to this. And then lastly, number four is continue the matter and provide any further direction you wish to have and staff can look into and come back. And that concludes my report. |
| 02:29:12.52 | Mayor Theodore | Thank you. So now we'll bring it back to council for questions on Danny's portion of the – okay. |
| 02:29:19.76 | Councilmember Withy | Thanks, Danny. I'm a little... fuzzy on what you want in option one versus two because we currently maintain the current prohibition of short-term rental uses. I don't know what you're trying to get to in one. Is it just simply clarifying our ordinance to or what is it? |
| 02:29:47.37 | Danny | It would be. It would put additional teeth into the ordinance that expressly prohibits it. You are correct. It is prohibited today. However, again, the option is to amend it such that it's clearly and explicitly prohibited at any other – at any other – provision you wish to provide as well. |
| 02:30:15.67 | Mary Wagner | And Mr. Mayor, if I may, in response to Councilmember Withy's question, we did have an opportunity to discuss this a little bit today. And, you know, Right now, there's no question that short-term rentals are prohibited, 30 days or less. What we were talking about is making it more clear to somebody who's picking up your municipal that it's prohibited. So we talked about potentially having an amendment that would define short-term rentals and listing them as a prohibited use in the tables in the zoning districts for residential zoning districts. So it's not a change in substance, but it's a change perhaps in usability or clarity. |
| 02:30:56.51 | Councilmember Withy | I understand. Thanks. |
| 02:31:05.84 | Mayor Theodore | I do have a question. If we were, and I'm not suggesting we do, to allow them, do we have to go to the rezoning process? And I guess that's for the city attorney. |
| 02:31:16.25 | Mary Wagner | You wouldn't have to technically rezone the property. They'd still be, I believe, residential zones, but you would allow a new permitted use. So you'd be amending the zoning ordinance to allow a use in a residential zoning district that is a rental of less than 30 days. |
| 02:31:16.59 | Mayor Theodore | Right. |
| 02:31:35.33 | Mary Wagner | And there's all kinds of examples out there of other criteria and restrictions and quantities that we could look at if you're interested in seeing some of those. And the city manager just asked me the question of those zoning ordinance modifications would have to go through the planning commission, just like any other modification to your zoning code. |
| 02:32:00.29 | Mayor Theodore | Okay, so assuming that we I'm, stick with me because we've gone through There have been a lot of discussions about short-term rentals over time, including heated ones over just allowing it for a short-term basis for America's Cup. So we've been through this quite a bit, and Sausalito's opted to have a ban on short-term rentals. We got here because we were having trouble enforcement. we love SB 593 but Actually, I believe the targeted effective date would be January of 2016. Is that correct? So in the interim. and for some reason it didn't happen, what would be our enforcement mechanism on the ban of short-term rentals? Do we have some ideas what we would do? |
| 02:32:46.85 | Danny | of what we do? We have our current practice of code enforcement. We're complaint driven. We're not proactive. We do realize that there is a concern that, you know, we perhaps may not be able to catch up with the amount of potential illegal Airbnb rentals or any other platform, housing platform. And you know, we seek some direction in terms of that, because we know it could be time-intensive as well as costly And that's a concern we have if we were to maintain prohibiting them. |
| 02:33:26.56 | Councilmember Withy | in the absence of SB 593 on the statute books. So we don't have that tool yet. |
| 02:33:37.19 | Unknown | Thank you. |
| 02:33:38.67 | Councilmember Withy | To follow up on the Mayor's question, How can we proactively enforce if it costs us $1,000 or more than $1,000 and all we can do is recover a hundred. |
| 02:33:54.50 | Unknown | Thank you. How can we, that's not a sustainable model, right? So what do we do? |
| 02:34:03.40 | Mary Wagner | Council Member Withey. One additional... option is to collect TOT. I mean, if you if we have a proven short term vacation rental, We know that we have the ability under our existing regulations to collect TOT. And the applicable statute of limitations lets you look back in time, probably three years, to collect TOT for other rentals that you can prove. The provisions in the code give the – I'm not going to use the right term, the tax collector or the finance director essentially, the ability to even estimate what those revenues are and to collect them. That too has a cost though, you know, both the staff cost and a dollar cost of going seeking those funds from a resident. There's also a business license component, but that's probably relatively small in comparison to the TOT. |
| 02:35:09.50 | Mary Wagner | Thank you. |
| 02:35:09.51 | Herb | I'm you What are the fines? Go over the fines that we have right now. If you're in violation. |
| 02:35:17.66 | Danny | The fines are administrative citation fines begin at 100 for a first violation, then a second violation within the same year is 200, and then 500 for a third violation within the same year. |
| 02:35:31.99 | Herb | Can we change that? |
| 02:35:39.80 | Danny | I think, isn't that by statute? |
| 02:35:42.15 | Herb | Well, if the state's willing to turn around and whack you for $1,000 or $5,000. I'm looking at Mary for some direction because. I'm sitting here saying, well, you know, let's have our own little baseball bat. |
| 02:35:43.45 | Danny | Two in a minute. Thank you. Yeah. |
| 02:35:52.10 | Unknown | you |
| 02:35:52.16 | Mary Wagner | Thank you. |
| 02:35:52.21 | Unknown | So, |
| 02:35:52.22 | Mary Wagner | Thank you. |
| 02:35:52.26 | Unknown | Yeah. |
| 02:35:52.27 | Mary Wagner | Thank you. |
| 02:35:52.38 | Unknown | Thank you. |
| 02:35:52.41 | Mary Wagner | Thank you. |
| 02:35:52.44 | Unknown | Thank you. Thank you. |
| 02:35:57.67 | Mary Wagner | Mr. Mayor, the fines that we currently have in your administrative code enforcement ordinance apply to all code violations. In this instance, you may wish to impose a higher fine, but if you're also looking at imposing that against someone who unwittingly put up a sign not knowing that they needed a sign permit. You know, there's a wide variety of infractions that we use that administrative code enforcement policy to to remedy. We can look into it for you if there's an ability to carve out a short-term vacation rental. That's something I'd have to look into. And the community development director is correct that, you know, statutorily there are limits on fines that we can impose depending upon what the nature of the violation is. So that's something we could look into for you. |
| 02:36:48.28 | Mayor Theodore | Can I make a follow up? But I understand that that's option one. I mean, if we had an additional ordinance, then we could have higher fines, correct? |
| 02:36:56.92 | Mary Wagner | No, option one is saying You currently have the prohibition, but people might not understand it. So we were suggesting that you amend the zoning ordinance to make it |
| 02:37:03.07 | Unknown | Thank you. |
| 02:37:06.62 | Mary Wagner | more clear. that a short-term rentals are not allowed in residential zoning districts. |
| 02:37:11.79 | Mayor Theodore | I mean, but even in that process, if we were going to go through that, couldn't we just |
| 02:37:17.07 | Mary Wagner | Thank you. |
| 02:37:18.42 | Mayor Theodore | But I mean, if we're going to go through that process, wouldn't we just... |
| 02:37:18.61 | Mary Wagner | Thank you. |
| 02:37:21.49 | Mayor Theodore | have the ability to add higher fines for that particular |
| 02:37:24.65 | Mary Wagner | We would look at that and be able to report back to you on whether that would be It'd be the same type of violation. So regardless of whether you amend your zoning ordinance to define a short-term rental or you use your existing provisions, it's the same violation. So as I was indicating in response to Council Member Withy's question, we need to go back and look at carving out that short-term rental piece, and we'd be happy to do that and report back to you. |
| 02:37:51.21 | Jill Hoffman | Yeah, I have a question for Mary. With regard to our enforcement measures, did we ask Airbnb or VRBO for their records regarding what our property we were looking at? |
| 02:38:02.09 | Mary Wagner | We have not. No, we did that. Your code enforcement officer did that independently, just did his own. |
| 02:38:07.68 | Jill Hoffman | And did that? |
| 02:38:08.10 | Mary Wagner | research. |
| 02:38:08.12 | Jill Hoffman | you and did they, oh, so he just went online? He went online. Yeah. Okay, so I would say, and do we know Danny or Mary, |
| 02:38:10.38 | Mary Wagner | He went online. He just went online and looked at her. |
| 02:38:15.86 | Mary Wagner | I'm sorry, Vice Mayor Hoffman, if I can add a little bit to that. And these conversations we've had through the League of California Cities, some of the larger jurisdictions have been engaged in conversations with Airbnb, |
| 02:38:19.48 | Jill Hoffman | CONVERSATION. |
| 02:38:27.17 | Mary Wagner | and VRBO, the actual entities are escaping me at the moment. um, But they had some success, but they weren't completely successful in getting Airbnb, VRBO, all the other online platforms to provide the information that they were seeking. So we were kind of tearing off of what the larger jurisdictions were reporting to us, that they weren't having much traction with those discussions. |
| 02:38:55.89 | Jill Hoffman | I would, you know, with regard to other cities and with regard to a policy from our city, I would like to see us coordinate with those other cities that we think are also being subjected to the same sort of violations and non-culture. COOPERATION FROM VRBO AND AIRBNB AND SEND A DEMAND LETTER TO THEM ON BEHALF OF THE CITIES WHO HAVE BANDED TOGETHER AS THE FIRST STEP IN SOME SORT OF ENFORCEMENT ACTION. AND WE MIGHT LOOK TO THE STATE, SENATOR REGUIRE, TO JOIN US IN THAT EFFORT BECAUSE I THINK THAT'S REALLY THE NUMBER ONE ISSUE WHEN YOU'RE TALKING ABOUT ENFORCEMENT IS GETTING THE RECORDS FROM AIRBNB BECAUSE THEN THERE'S NO DISCUSSION. IT'S LIKE, WELL, YOU HAVE A, YOU KNOW, WE HAVE A RECEIPT FROM SOMEONE IN NEW ZEALAND AND THEY STAYED IN YOUR HOUSE. you know, you're violating and then you get the back taxes and you get the TOT if we want, you know, to do that even though they've violated our current ordinance, we may still be able to get that money. So, I mean, that would be... a damages claim, possibly. against VRBO or Airbnb. you know, that might be a direction to staff to sort of reach out to other cities and municipalities, especially the League of California Cities. we want to band together and we want this information quickly. |
| 02:40:04.17 | Mary Wagner | And Vice Mayor Hoffman, I know that the League has been in conversations with those entities as well. I believe, and we'll have to go back and verify this with these jurisdictions, there's a – the mechanism by which the monies are collected and remitted to the owner. Airbnb has taken the position, I believe, that that's not their responsibility. That it's the TOT, any taxes are the property owner's responsibility and not the online platform, which is where something like SB 593 really helps us because it creates that automatic fine provision where then you still have the ability to go to the individual property owners with the information that it provides to collect the other revenues that we may be entitled to. |
| 02:40:52.24 | Jill Hoffman | Right. Well, I think the first step is to get them to give us the information. And if they're not answering our phone calls, then the League of California Cities should get |
| 02:41:01.36 | Mary Wagner | And they are engaged in those. The league is engaged already in those types of conversations, I believe. |
| 02:41:03.03 | Jill Hoffman | Thank you. Great. Well, That's good. Thank you. |
| 02:41:13.83 | Adam Politzer | Thank you. |
| 02:41:13.86 | Jill Hoffman | Thank you. |
| 02:41:13.90 | Adam Politzer | Thank you. |
| 02:41:14.03 | Mayor Theodore | you Let's now bring it up for public comment. |
| 02:41:24.17 | John Cox | Hi, John Cox from 62 Marin. I was always curious about what happened, what kind of results did we get from what Mayor Theodorus mentioned as the America's Cup? Because we put some kind of a waiver on the ordinance and said for the next three months we can do that. I think that would be something valuable to look into is how did that go? What was the results of that? Did we have any problems? Did we gain any revenue from it? Was it beneficial to anyone besides the homeowner? Because we've done that, we had to develop a draft ordinance, if you will, for something like that. So number three, I think, would be a good place to start. if we feel that that was beneficial for the town, because who knows what's going to come up in the future, such as another America's Cup or something where we expect an influx of people and it would help establish I think one of the things we have to consider is the owners moving into trying to purchase a place in Sausalito in the future. We are a town that has a very senior population. And part of that makes it difficult for young people, people with families, to move here. Something like this might provide them with a little bit of income that would help support their move to Sausalito. Thank you. |
| 02:43:04.21 | Margaret Badger | Good evening, Mayor Theodoris and council members. I'm Margaret Badger, 625 Locust Street. I'm speaking in favor of retaining the ban on short-term rentals in Sausalito. Upper Locust Street, where I live, is a narrow, Dead End Street on a Steep Hill. Many of the homes were built more than 100 years ago. and were not designed with garages. Just managing the parking on our street. among the permanent residents. is a challenge. Defining one's parking place on the public street is an issue. But thoughtful neighbors can... and do work it out. But add to this one but add to this one short term. RENTAL. owned by a prophet motivated owner. as we have experienced on Locust Street. who tries to convert his duplex to a triplex, keeps his own cars, and rents the other two units on weekends to tourists with their own cars. That has been the mess on upper locust recently. until the neighbors complained so loudly and consistently. retroactive. that the city staff had to respond. I believe that neighborhoods working with city staff must cooperate together to eliminate illegal short-term rentals. and monitor the compliance of longer term rentals. especially on certain streets already over parked. and incidentally not passable for fire trucks at many times of the day. These are not compatible with residential character of most of our streets. The solution is not to make the illegal rentals legal. from what I've read, trying to monitor such legalized units would be a much more difficult task. FOR STAFF. and prohibiting them. and thank you for this upcoming bill. that may give some backing to prohibiting them altogether. There may be a way for neighborhoods like my own that are old, lack parking, and located on steep, sometimes problematic hills, to continue to ban rentals less than 30 days, while other more spacious streets with parking There are a few of them. allow them if a designated percentage of the neighborhood really wants them. |
| 02:46:11.67 | Margaret Badger | In short, This town is not geographically Historically, or from a safety perspective suitable. for in and out tourist rentals in our narrow intimate neighborhoods. Don't encourage commercialization of our neighborhoods. Please don't let the genie out of the bottle. This isn't primarily about money. It's about protecting. our community and neighborhoods. Thank you. |
| 02:46:48.49 | Mayor Theodore | Thank you. |
| 02:46:52.04 | Mayor Theodore | Who else? |
| 02:47:02.45 | Unknown | Hi, everybody. Hello. Thank you for holding this discussion tonight. It was also great that it was paired with the hospitality discussions earlier today because I think there's a lot of themes that go across them. My name's Melanie Maharshan. I'm a Sausalito resident, 24 Arana Circle, We've been living back in Sausalito for a year. My husband and I with our young daughter, nine years before. moved out of Sausalito because we couldn't afford a house when we had a second child. move to Tara Linda. we're back. We came back because my kids were at the Lycée Francais and I loved being here every day again. Thank you. I am an Airbnb host. We're lucky enough to have a vacation home in Lake Tahoe. and a modest vacation home in Lake Tahoe. And so that's where my experience comes from. And I'm a member of the Marin Host Group, So I've been having discussions with other hosts who are local in the area. And I think there's an important distinction to make between A lot of the hosts that I've met, I attended the conference in San Francisco, there's a big distinction I think between people who are hosting in their homes that they reside in. This is something like they're leveraging a room that's in their house or an extra room in a bathroom that's in their house, but they're staying there at the same time that the people are staying there because that should not be taking a housing stock off of the market for other people. That is actually helping them to pay their taxes, to maintain their house, to make improvements, and to stay in their house. I've met a lot of people who are artists, they're teachers, they're musicians, they're people who may not earn, you know, a high salary, but they're able to still maintain their residence, partly because of the sharing arrangement. So I think it's important to make a distinction between that and people who are landlords, who are businesses, and who really should be going through a zoning process if they want to set up a small hotel in a neighborhood. I think there's a big distinction between that type of business person and a sole proprietor type of Airbnb person. So I want to make that distinction clear here as you're continuing to look at this issue because there's a lot of nuance to it that has to come into play. And I think a lot of what I'm hearing in this bill here, I don't think that most Airbnb hosts that I've spoken to. would be against that. I don't think they want to make their neighbors angry. Most people that I know are so cautious about how their neighbors are, and there's also a component of people screening who's going to be living in their house, because when it's your own house that people are living in, you're very careful about who you let into your house. You know, it's the more Um, the removed landlords who are not living in the home, who I don't think they would have necessarily as much invested in the type of people that they're having stay. So I think there's a lot of nuance to it. I wrote a letter and I'd be happy to be a resource more. I hope there are more discussions. I'm speaking also on behalf of some others who were not able to be here tonight, but Marin hosts are interested in this issue and I think would be interested in contributing to the discussion. Thank you. |
| 02:50:21.61 | Mayor Theodore | Thank you. |
| 02:50:29.22 | Amy Wilson | Good evening, Mayor Theodores and the council members. My name is Amy Wilson. I am a homeowner of 15 years on 3rd Street down in Old Town. And I am here not to register my support or opposition yet to whether or not we allow short-term rentals, but to definitely give my perspective as someone who has had to live immediately adjacent to an Airbnb rental and the next one down. So the two homes right next to my home have been Airbnb rentals for a couple of years. And the thing that really concerns me about it was things you've heard tonight already the immediately adjacent one we've experienced a lot of noise on the deck usually it's people who are like here for a wedding and like the whole family is there having a party um I've had people knock on my door at 11 o'clock at night saying, like, do you know where the key is? Because, like, we're here now. And I'm like, I don't, this is not, that's not my home. I had someone revving their engine right outside my daughter's bedroom. |
| 02:51:39.05 | Unknown | my |
| 02:51:40.58 | Amy Wilson | late at night, and another person parking on the sidewalk on the wrong side of the street, et cetera. And so in all of those cases, I emailed the owner of the house who lives down in the peninsula to try to mitigate these issues. The thing that's really concerning about the next door down is that used to be a three-unit building with long-term tenants. And the owners of that building said, hey, we can make a lot more money if we evict everyone and convert it into an Airbnb rental. And they've played cat and mouse with the city. I filed a complaint, another neighbor has. But they've taken their address off the they're hiding. So my concern is that if we ban it, we won't have the resources to enforce what we need to enforce. And in some ways, maybe if the state, I like the bill, I support the bill, I think it would give us the teeth we need to do enforcement. But I wonder if we admit to ourselves that this isn't going away on its own and that we actually need to have policies in place and enforcement and infrastructure and collect the transient occupancy tax to fund the enforcement, we actually might come out ahead of not being able to enforce it because we don't have the resources to enforce it. So I also have a vacation home in Tahoe I rent out on Airbnb, and VRBO allows you to collect transient occupancy tax and they facilitate that. Airbnb doesn't even let you collect it. And Placer County reached out to me in 2006 when I first registered on VRBO and said, hey, we see your listing. You might not realize, but you need to be submitting transient occupancy tax. And I filed for my permit, and I hang it in, and I submit it quarterly and all of that. So we need to have the power to do what it takes to make sure our neighborhoods are preserved. And if that means that we have to, like, go with the flow a little in order to collect the resources we need to enforce it, I think I'm in favor of that. |
| 02:54:04.83 | Mayor Theodore | Thank you. Russ? |
| 02:54:10.95 | Russ | I'm firmly against changing the – lifting the ban for three reasons. First of all, in the absence of SB 593, we have no more ability to collect this revenue if it's legal than if it's illegal. nobody's gonna like pony up here. Now they're not gonna have to pay a fine Why are they going to pay the tax? We couldn't find them before, we're not going to find them later. So in the absence of that bill legalizing it, would not generate more revenue for the city because we have no more ability to More pernicious is really the point that Herb brought up, which is that It will affect real estate values, which if you own a house right now, that's great. You're going to sell for more. If you want to bring new people into the community, it's not going to help. This happened to me next door. The house next door had changed hands last year. Four months later, while he's fixing it up, gets grandfathered in. There's three rentals in an R2 area. He's approached by a real estate agent from San Francisco who says, I can get a million dollars more than you paid for this place. turning it into a short-term rental. Will you let me list it for you? He did list it, fortunately he didn't sell it, and it didn't come to pass. But there's real estate guys out there with that in their head. And if we legalized it and made it happen, there would be a land grab because this is desirable short-term rental property. And it's worth a hell of a lot more running it by the week than by the month. And the third and most important, I'm glad everybody likes Tahoe, I lived there for six years. That community is completely dependent on the TOT, and it's a completely transient community. You're all volunteers and you've all volunteered on lots of other commissions, boards, committees, everything in the city before this. These people are probably mostly residency. There's no transient short-term tenants showing up. not last night for the PBAC, not tonight for this. They're not gonna wanna be on the Planning Commission. They're not going to volunteer for anything. There's only 7,000 people here and that counts everybody. we do this, we undermine the limited staff that we have to do all these things. because it's fundamentally a sum zero gain. If it's a legal rental, it can be a short-term rental. or it can be a long-term winter. The long-term rental, as we know, about half of our residents are long-term renters. You're involved in the community. You sure to murder. You're involved. you know, for four days. or weep when you're out of here. So the nature of our community would change significantly. And I lived through this in Tahoe. the only stable workforce up there |
| 02:57:00.14 | Unknown | THE FAMILY. |
| 02:57:01.56 | Russ | was PG&E. Placer County employees, in what I call the peritrable visualizy, people, and you could count them on a couple of hands, who actually own the businesses Everybody else is in and out. |
| 02:57:16.16 | Mayor Theodore | Thank you. Anyone else from the public like to comment? |
| 02:57:26.52 | Alex Kacheff | Good evening, City Council members. Alex Kacheff and Ava Kacheff are our newest member of Sausalito, 504 Sausalito Boulevard. The last time you saw her, she was in Hany's belly. And we joked that maybe we should go to meetings to put her to sleep because she's used to all your voices. So thank you for the opportunity to be here. You know, I started this process three years ago with Valhalla in On the Bay, and it was very clear that the immediate neighbors did not want hotel in their residential neighborhood. That project uh, vehemently killed. Then when we proposed residential, it moved ahead very nicely. Still some obstacles, but we were able to maneuver that, and it was quite a feat to get it approved, and I think it made the neighborhood happy. I came here thinking that we're going to approve this and I could start renting these out on Airbnb and have my hotel. But, You know, financially that would be wonderful, but as a member of this community, that is the worst thing I could do to my neighborhood in my eyes. As a family member, I do not want transient people coming and going. The Valhalla parking lot has become a parking lot for those Airbnb people because a lot of the houses in that area are Airbnb. And a lot of my time goes into sharing with them very politely that they're not allowed to park there. They get upset with me. They don't realize it's the fourth time I've done it that week. It's enough. The other thing that we have to consider is residential zoning is residential zoning. If you want to change your zoning for a business, you have to go through the process like I did. It's a very labor-intensive and expensive process, and it's there for a reason. It's only done when needed. putting a business next to a house is not favorable. We're going to have people coming and going. You know, as starting a new family, I want to be a member of this community. I don't want to see suitcases coming and going. I want to see more kids moving in. I want to see neighborhoods starting here and more young families starting because it's a great place to be. You know, I know we have option one, but I hope we can find option half. more young families starting because it's a great place to be. I know we have option one, but I hope we can find option half that we find a way to find this, and not ten times like the state. I recommend we find it 20 times, take that money and use it for control. For somebody who's making money off of this and owns a million dollar, two million dollar, that's a minimal fine for doing something illegal. And as an oral surgeon, I always support more teeth. All right. Thank you for your time. And Ava says thank you. |
| 02:59:58.82 | Mayor Theodore | Thank you. |
| 02:59:58.90 | Unknown | I'm sorry. |
| 02:59:58.92 | Mayor Theodore | Thank you. |
| 03:00:03.20 | Mayor Theodore | Anyone else like to speak on this? Okay, so we'll close public comment, and we'll bring it up here for our comment. |
| 03:00:17.33 | Councilmember Pfeiffer | Well, I'm so saddened to hear we lost an apartment complex to Airbnb. I mean in a town where we had a lot of people We recently made second units, legal to provide affordable housing integrated into the neighborhood, the thought that those could turn into Airbnb. It's so sad. I hear this and I hear about loud parties, I hear about congested parking and I hear about I get the impression that, you know, there are two scenarios here. We've got the scenario that we heard earlier where you have someone who is just renting a room in their home and they're under the radar and they're conscientious and they're quiet and they're just trying to make ends meet financially. Unfortunately, we have the other group and they seem to be gaining ground and they seem to be the ones who are really latching onto this and creating business models in our town. And this is of great concern And I I share the concerns that I heard tonight. And, um... I... I think that moving forward, looking at the fine structure You know, we're the council, we can We can look at that. we have the power to look at that. Because I heard that even with the towns that did legalize short-term rentals, I heard one town only six 0.6% or something complied with that and it's very, very hard to track that. You know, so perhaps the folks that are doing this in a conscientious way will continue to be under the radar, but we'll be able to have the resources to go after the people who have, who are converting our, you know, rental apartment complexes and second units into short-term rentals and really having loud parties and obnoxious behavior and not really caring anything about it with the community. |
| 03:02:44.16 | Councilmember Withy | Yeah, I don't really have much to add to that. |
| 03:02:51.30 | Councilmember Withy | These platforms are probably okay for some areas, and some areas in some towns, but I just don't see that it's at all appropriate for Sausalito, for a number of reasons. Each of our small little communities, micro communities, are very tight, finely tuned. It doesn't take much. to actually distort and have an impact on a neighborhood if you're not careful. And my sense is that increasingly these short-term rentals are having a negative distorting effect on our neighborhoods, and we actually just need to find a way to stop that happening. is that I'm very worried about the fact that that On the one hand, we're trying to encourage, you know, we've got ADUs to try and help with affordable housing, among other things. We also are trying to encourage families, and therefore we need houses that people can come in and rent. it seems just counter policy to on the one hand encourage on this on one side and on the other hand allowing short term rentals don't make sense. But You know, Amy, you've got a point. There may very well be a situation where you know, down the road. You might need to allow something in order to gain revenue. We're not ready for that yet, though, in my view. We're not ready for that. So I would say we need to explore how to beef up enforcement. I think it's going to be – we're going to be banging our heads against brick wall because it's tough. Hence SB 593, that sort of legislation giving us tools. But I do think that by when we do enforce we should have a policy of trying to collect the TOT. Because even though you could say it's a counterargument that, you know, we made them illegal, but we're still willing to collect the TOT. Well, yeah, that's right, because it's just another tool for financial resources to be able to allow us to enforce just that little bit harder. So that's all I've got. |
| 03:05:25.04 | Unknown | Thank you. |
| 03:05:39.47 | Jill Hoffman | I think that's a good question. if we're thinking about actually changing our zoning to get a lot more input from the residents on this issue. you know, for me there's two really areas to look at this. One is the enforcement, which I think we all agree we need to be able to enforce the ordinance, the nuisance ordinance. So if you have a problem, we want to be able to effectively deal with that quickly, you know, and effectively so that that stops the burden on the neighborhood. So that's one issue. That's the biggest issue in my mind at this point. The second issue is that, you know, this ability for homeowners to, you know, reap the benefit of their investment and if they want to share their living space with somebody and host somebody from out of town, I think that might be a right of them to be able to do that, but not in a way that it creates a nuisance or burden on the rest of their community. So I think this economy that's evolved you know, it's something new. It's not really a commercial enterprise or at least in the homeowners that are hosting people. So I think we might need to look at that differently. For people that are just buying these places and kicking people out and there's no homeowner on the residence, they're clearly not. Clearly it's a commercial enterprise. Then I think ability to look at that differently and we need to define that, that we're looking at that differently and maybe we need to come up with a new word for that different kind of commercial enterprise in our town and whether or not we want to have that. My sense is that we don't want to have that kind of commercial enterprise in our town for less than 30 days. But as I said, I'd like to hear more from the residents and listening to them. So that's kind of where I'm thinking. I'm thinking, too, I don't think we're ready to really give direction. I think we need to have a lot more information from our residents about, you know, their thoughts on this. And especially I want to see the final version of the state bill. And I think if we do have an ordinance that it would mirror the final version of the state bill. So I think in whatever mechanisms are in there, we want to mirror that in our ordinance for enforcement. So that's kind of how I think we're going forward. |
| 03:07:38.90 | Unknown | And I asked. |
| 03:08:06.84 | Herb | Well, there's no question it would have a great effect on our community if we went through with having these Airbnbs. and how it affects our neighborhoods. where we live that you can add one automobile onto the street and it makes an effect. It's hard to believe, but it is. We end up driving, pulling into our driveways and things like that just to use it because all of a sudden someone's visiting, and it does affect our street. On the other hand, I still, maybe the idea that if a person owns the property and lives there. There you might have a little flexibility. because like we heard tonight. If you're having a person that's renting a room in your, you're certainly, and especially if you have children, you're going to be very, very cautious on who you have in there and most likely are willing to abide by the rules, which is the TOT. That to me is the only possibility that I look at of having... a rental under that condition. but to just rent it. We already know in this town how many people build homes, and they'll stand up and say, I'm going to live here for the rest of my life. One year later, it's sold. It's a common thing. So That's the only place that I see the flexibility is if you own your home, and you're living in your home and you want to then rent out a room. And we did, we're proposing that I believe with with the junior accessory dwelling, we wanted to do that. Is that correct? Thank you. |
| 03:10:00.21 | Unknown | Okay. Yeah. |
| 03:10:03.19 | Herb | That's home sharing. |
| 03:10:05.30 | Unknown | Okay. |
| 03:10:06.62 | Herb | That's all my fun. And by the way, thank you very much for coming tonight. You got a little taste of Sausalito. |
| 03:10:14.80 | Mayor Theodore | Well, I think everyone up here ran on retaining our small-town character, and I think it's the greatest threat that we have to our small-town character. I think it changes the neighborhoods. It reduces the housing stock that we work so hard to – I mean, we don't have much development and we can't lose our housing stock. |
| 03:10:23.29 | Unknown | Thank you. the neighborhoods. |
| 03:10:32.98 | Mayor Theodore | I think it drives the prices up. I think what will happen, and we have these stories, people buy them and they remodel them to be able to do. rent them out and we lose the, uh, the, the housing stock and prices go up and then people that we want to have move in here. It's already expensive. Can't move in here. I am interested, I mean, the lady who talked about the Moran and the In Your House and home sharing, hosting, but a couple of things. If we can't stop them with a very simple prohibition, how are we going to make this nuance? I think it's impossible. Secondly, we have the opportunity. You can bring a roommate in. You can have home sharing. Actually, I think it threatens our home sharing I think project because there's going to be no availability. If you can rent it out for three times more to somebody who goes in and out, you're not going to rent it to our senior or someone else who needs it. I think it's a real threat on that basis. So while it's logical, I just don't think we're going to make that distinction. The other thing, and I appreciate Amy's comment, but I don't think we want to give in because we can't enforce. I think we just have to make it work. We go in for fines. We can raise the fines and TOT. But I can't see us changing a policy that affects our inherent character of our town just because we're having trouble enforcing it. We just have to make sure that it gets enforced. So I think times of the essence, I think we should direct staff to look at enforcement. We should certainly support SB 593, but I think we should move forth with on everything else. I think we should probably clarify, I've looked at the ordinance and I to expressly prohibit if it looks like it's helpful, but I'd also include higher fines in that. And we should look at other ways that we could maybe enforce, including having neighbors help with the police. And I don't know what there is. There are issues with that. I mean, but it's an important issue. And the problem is it gets greater every day. When we looked at it in 2012 on the America's Cup, I think we looked at 50. And now when you look at it, there's 100. And I mean, those are just rough numbers. It's like building 100. room hotel in the city. So I think what I would say is to staff, go back, look at enforcement mechanisms, what we can do, support SB 593, and go with the ordinance. That's what I would say. Thank you. be at this point, do we need a motion or can we, are we just giving staff. Any other comments? |
| 03:13:19.00 | Mayor Theodore | Thank you. |
| 03:13:19.01 | Adam Politzer | All right. |
| 03:13:19.16 | Mayor Theodore | All right. |
| 03:13:19.85 | Adam Politzer | Hold on, Mr. Mayor. You know, if there's consensus, you know, there's been several folks that have said, you know, one or two or a combination, half, and the enforcement, I think there was definitely consensus that you wanted us to look at how we could beef up enforcement, what the cost associated with that would be, and then the TOT, regardless if it's illegal or illegal, you know, looking at how do we pay for it through collecting TOT on that use. So if there's consensus, then we'd like that direction. MS. Yeah. MS. MS. MS. |
| 03:13:20.23 | Mayor Theodore | Hold on, Mr. Mayor. |
| 03:13:35.72 | Unknown | Thank you. |
| 03:13:35.74 | Unknown | Thank you. |
| 03:13:54.75 | Mayor Theodore | then we Yeah. look at that and bring it back, of course, to us. Is that any issue? MS. Yeah, and increasing the |
| 03:13:59.21 | Councilmember Pfeiffer | THE FAMILY. |
| 03:13:59.48 | Adam Politzer | Thank you. |
| 03:14:00.96 | Councilmember Pfeiffer | Yeah, and increasing the fines. |
| 03:14:03.39 | Mayor Theodore | Yeah, increasing the fine. Okay. So is that clear? And can we do that? Or Danny, I'm sorry, I'm looking at the wrong person. |
| 03:14:10.16 | Danny | Male Speaker 1 of the White House |
| 03:14:18.70 | Mayor Theodore | No, no. No? You need to come back, and I would say options on enforcement. Okay? That's what I'd say, not the other type. |
| 03:14:24.17 | Danny | Thank you. But not going through a code amendment then? |
| 03:14:26.44 | Mayor Theodore | We're looking at. Right. And I think what we need to do, I think we need another level of conceptual looking at this, and then we would have it drafted. Once we did that, then we could send it to the Planning Commission, I would think. Again, any other? Because we have more work to do on it, but I think that's the general direction. |
| 03:14:43.69 | Jill Hoffman | I'd just like to add that perhaps when we come back and talk about enforcement that we also notice it, you know, for the public. a lot of notice that if people are in favor of the home sharing idea that they come because I've had many people come and approach me in the last you know, month, and especially since the agenda came out, that they, you know, that they're people, that they want to host people from New Zealand or whatever in their home, and so they like being able to do that. So I don't know. I think I'd like to have some public input on that aspect of it, but that certainly shouldn't hold us up from the enforcement |
| 03:15:15.89 | Councilmember Pfeiffer | All right. Yeah, just a comment on that too. Going back to I concur. I mean, I heard from a lot of people as well. regarding that aspect of it. And I guess for me it also goes back to the issue that we've got, these two different scenarios where some people are so conscientious and all they want to do is make in meet financially and maybe rent out a little room but then we've got the other people who are just you know building business models and destroying our affordable housing stocks. So you know. I guess I concur. more outreach, but at the same time pursue the fines and code enforcement. And I'm – I'm – hoping that we wind up with something that gives us the teeth to go after the folks who are really not being conscientious, who are really exploiting, you know, the situation, and we can go after those folks, the ones – the parking congestion and the loud parties you know. |
| 03:16:24.74 | Herb | Well, in order to enforce that, we If you want to hurt someone, you hurt them in their pocketbook. And that's what you have to do. $100, $200, fine. They won't even bat an eyelash. Okay. We have consensus. We have consensus. |
| 03:16:41.48 | Mayor Theodore | Okay. We have consensus. We have consensus on that. And so, all right, so we're done with this. We'll take a five-minute break. And... Thank you. Thank Senator McGuire and Carol. We need private air breaks every two hours here. |
| 03:16:50.96 | Herb | We need 500 breaks every two hours here, just so you know. |
| 03:17:06.50 | Unknown | How much do I love you? |
| 03:17:08.85 | Unknown | Thank you. |
| 03:17:10.18 | Unknown | I'll tell you. |
| 03:17:20.98 | Mayor Theodore | Okay. Now we'll move on to... Item... 6C, Study and Analysis of the City of Sausalito's CalPERS Pension Plans 2013 Actuarial Reports. Charlie Francis. And we've been waiting all night for this. |
| 03:17:36.54 | Charlie Francis | We've been waiting all night for this. Mayor, vice mayor, members of the council. Annually, CalPERS prepares an actuarial study for all its members that have their individual plans, as well as members who are in pools. That annual actuarial study is always a year behind. So this year's actuarial study is as of June 30, 2013. It takes them a year to prepare it. We received it november 2014 and uh tonight we're asking john bartell president bartell and associates our city actuary to do what he does does best is not only tell us what it meant for us back in 2013 but more importantly what it means for us today and optimally what it means for us going forward and what we can expect going forward with some of the great reforms that the City Council has undertook so with that I'll just introduce John Bartel and turn the presentation over to him and at the end of his presentation staff and John are ready to answer your questions |
| 03:18:41.71 | Unknown | Thank you very much, honorable mayor, members of the council. As I hope I always remember to say what a pleasure it is to and honor to speak to you. So even at this time? |
| 03:18:53.37 | Herb | Wow. |
| 03:18:54.92 | Unknown | Well, so in the interest – no, no. In the interest of full disclosure, normally I do a very nice job of putting people to sleep. Now it'll be at your normal bedtime. |
| 03:18:55.03 | Herb | Well, so when the |
| 03:19:08.09 | Herb | Well, you don't have much of an audience, so you won't put them to sleep. |
| 03:19:14.06 | Unknown | So I'm going to go through some of these slides with your permission relatively quickly. So the definition of terms, slides one and two, I'm going to leave that until we really get to some of the information. But what I do want to take a minute or two to talk about are the CalPERS changes. So there really are three things that are going on. Thing number one is what I refer to as the contribution policy change. This is way more technical, but what I've tried to do is to distill it down to the really important aspects. Number one is they are no longer calculating your unfunded liability using smooth asset values. So they're gonna calculate your unfunded liability on a market value basis, determine the contribution on that basis, and then step into that rate over a five-year period. So CalPERS refers to this as five-year direct rate smoothing. If you just think of it like this, if your rate currently is 15% of pay, and then on a market value basis, they have a 20%, they just step into that over a five-year period, 16, 17, 18, 19, 20. It is not any more complicated than that. That's in the June 30, 13 valuation. Full impact will be 19, 20. First impact is 15, 16. So your June 30, 13 valuation determines your 15-16 contribution rates. Second important change is assumption changes. So that's plural, but there is one assumption change that has by far the biggest impact and that CalPERS now is assuming that mortality will continue to improve. That's only happened for the last several centuries. So it's good to see that CalPERS and everybody else is on that bandwagon. So that will not hit your rates until the June 30, 14 valuation. And again, that will be phased in over a five-year period, first impact 16, 17, full impact 2021. And then the third change is they are making changes to their risk pools. All of your plans are in a risk pool. So any agency with fewer than 100 active members in a particular classification, so for example, miscellaneous, is in a risk pool. What they're doing is combining the risk pools into two pools. Pool number one is for non-safety. Pool number two is for safety. And they're determining the contribution no longer based on a percentage of pay. They're determining the contribution relative to your own unfunded liability. So some agencies are going to see a steep rise in the contribution rates. You'll see a modest rise, but not particularly steep. They also are not going to ask you to, or actually not going to let you make a contribution on the unfunded liability as a percentage of pay. It's a dollar amount. So they'll give you that dollar amount, and you need to make that dollar amount as opposed to a percentage of pay. Slide four looks at historical CalPERS investment return. In particular, what you really see is a swing two, three, four years of good return, two, three, four years of poor return. The past two years have been exceptionally good, 3.2, and an 18.4 percent return compared to the 7.5 percent expected return. This current fiscal year not likely to be very good. So through the end of January they are at about minus half a percent. So if they earn an annualized rate of return of 7.5 for the last five months we we expect them to get to about a 2.2 Could be higher or lower than that, certainly the past month or so has been good, so who knows. Slide five looks at your non-safety, your miscellaneous plan. So number of active employees, 63 back in 2002, 51 in 2013, large number of folks receiving benefit payments compared to your active employees. And then slide six, you might remember this. This really looks at your unfunded liability, that what I referred to as above the line only applies to June 3012. That's the smooth asset value, actuarial value of assets. So in the June 3012 valuation, your contribution was calculated by and large with a $4.1 million unfunded liability. You really had a market value unfunded liability of 7.7? And then in the June 30, 2013 valuation, that 7.7 is actually reduced to 6.6. So your contribution determined based on the $6.6 million unfunded liability, and you're stepping into that over a five-year period. You'll see that step up, if you will, when we look at the contribution rates. Slide seven really just looks at the, this is your, if you look at that left-hand column, they actually, CalPERS gave you results for your three different tiers, your tier one, two and a half at 55, your tier two, two at 55, and then the PEPRA, I refer to it as two and a half at 67, everybody else in the state calls it 2% at 62. So aggregate rate of about 16.5 percent, total dollar contribution of about 700,000. Whoops, my apologies. If you look at the June 30, 2013 valuation, your total employer rate, 18.3 for all three tiers combined, 779,000 contribution. And then slide nine is the assumptions that we're using to project the contribution rate. What you see is we're using as an expected return for June 30, 15, that 2.2 that we looked at before, but we are projecting into the future not just the expected return, but volatility. In other words, what happens if investment return is good or poor? Definition of good or poor on a long-term basis is, by and large, good is low double-digit. Poor is very low single-digit returns. And we are taking into account the hiring of folks into Tier 2 or into the PEPRA formulas. So slide 11 shows on a contribution rate basis, your contribution split into two pieces. That solid green line is where we think your rate will go, assuming that CalPERS earns the expected return. So you can see for 14, 15, your rate was, or is 16 and a half, growing to about 23%, going up very slightly after that, but then gradually starting to come down. You see two other lines on this graph. The other two lines, that light orange line, if you will, is the normal cost rate. The normal cost is the value of benefits being earned by active employees. And then that Darker orange color is the payment on the unfunded liability. When you add those two orange lines together, you get to the green line, and then you see squares above and below the green line. That's the volatility, potential volatility. So if CalPERS investment return is consistently poor in 22-23, your rate could easily be 31%. You should not think of that as worst case scenario, because it certainly investment return could be worse than low single digit. Similarly, if investment return is a good 14% in 22-23, again, that's not best case scenario. It certainly could be better than that. We showed on 11 the contribution rate on slide 12, the dollar contributions. So you can see the dollar contribution for 15, 16. That's the 779. And you're really projecting that to be about 1.2 million, slightly higher than that, off into the future. Slide 13 begins your police safety plan. Again, 21 employees back in 2002, 17, and 2013. uh Same analysis on the unfunded liability, June 30-12, $5.4 million on an actuarial value basis. And then that number on a market value basis, really $9 million. That $9 million decreasing to a $7.8 million market value unfunded liability. Maybe before I go any further, the one thing I will just kind of mention to you that everybody should have in their head, and that is the unfunded liability will be volatile from one year to the next. So you should not expect that that 7.8 necessarily is gonna remain at 7.8. In fact, we have a slide towards the end where we are projecting the impact of GASB 68, so we're projecting that 7.8 to be lower, and similarly, the market value on funded liability will be lower for all three plans at June 30, 14. Slide 15, the contribution rate for your police safety, 41.7% in total, and then $770,000. And then when you look at June 30, 2013, 46.7925,000. Again, a little higher because CalPERS risk pool changes. And then the same assumptions, and if we look at slide 19, your contribution rate, you can see that 41.7 really going to slightly below 60% if CalPERS gets that 7.5% for the expected return on a go-forward basis. dollar amounts, you see the dollar contribution growing to about $1.4 million, a substantial increase over the 925,000 for 2015-2016, certainly substantial over the current fiscal year, 2014-2015. But again, split into the two pieces, the normal cost and the payment on the unfunded liability. For your fire safety plan at June 30, 13, you had two active employees. When we project the numbers, we're assuming you're going to keep those same two active employees, but you look at your unfunded liability, $3.2 million on an actuarial value basis. On a market value basis at June 30, 12, $5.9 million, and then projected to, excuse me, at June 30, 13, that 5.9 dropped to $4.1 million. |
| 03:32:05.05 | Unknown | June 30, 2012, contribution rate for fire safety, 23.9%, $64,000, and then what I want you to do is look at this carefully, your contribution rate. goes from 23.9 to 128.6. Why? Because they are no longer asking you to make that unfunded liability payment. It's no longer being allocated based on pay. Your allocation of pay in the risk pool, it's now based on your unfunded liability. So your payment goes from 64,000 to 226,000. And then when we project your rates into the future, you're ending up with very high payments relative to pay, but that's because we've got the presumption that you have two employees in there. And when you look at the dollar payments for 15, 16, 228,000, increasing to slightly over half a million dollars in 21, 22. And then the new accounting policy, GASB 68, we'll get to CalPERS, you'll get this information from CalPERS, you should think of this as sort of a peak as to what we think CalPERS is going to provide you. This unfunded liability for each of the three plans, lower than the numbers we just looked. In fact, gets to a total of about $12.5 million. That's about $6 million or so lower than at June 30, 2013. Primary reason for that is CalPERS investment return at June 30, 2014 exceptionally good. Of course, if the investment return June 30, 2015 is not so good when you go a year farther, the unfunded liability is going to go up. |
| 03:34:22.43 | Unknown | So slide 31 and 32, look at one thing we've looked at historically for you all, and that is the cost sharing component of PEPRA, looking at your tier one, tier two, and tier three for miscellaneous. Total normal cost for tier one, 18.6. Members pay 8%, 50 percent target would be 9.3. It is a target in PEPRA for both your Tier 1 and Tier 2. Tier 3, mandatory that the new members pay 50 percent of the normal cost. Similarly for police safety, your tier one, total normal cost 27.2, member rate 9%, 50% target 13.6. Similarly for tier two, 24.4, 12.2, members paying 9%, and then you see the members paying 50% but the rule is 50% rounded to the nearest quarter of a percent so that's why they are paying slightly less than the 50% rate. I actually think the next couple of slides are – this is, in my opinion, where the excitement is for public agencies, and that is what can you do, if anything, to pay down the unfunded liability or to mitigate rate volatility. There's actually good news here. There's something relatively new. The slide 33 talks about a couple of things that are sort of arguably old, pension obligation bonds. I – well, let me just mention GFOA has relatively recently issued a white paper that is basically Thank you. Let me just mention GFOA has relatively recently issued a white paper that is basically recommending that agencies do not issue pension obligation bonds. My comment to agencies is not that you should not issue them, but you should be very careful about issuing them. You should only issue them if you really fully understand the consequences. So let me just give you an example of two agencies that issued pension obligation bonds in 2007. Does anybody know what those agencies were? Stockton and San Bernardino. They did it primarily because of short-term cash, but they happened to do it at the time when the market was, by and large, at the peak. Neither one was very far from where the peak was. It would be accurate to say that both of those agencies are underwater relative to their pension obligation bonds. Having said that, we certainly have clients that have issued bonds at different times and have different results, but you need to understand if you do that, that there is a risk associated with doing that. So my personal opinion is if I had the opportunity to do this with my own money, I probably would do this. Having said this, this is not my money, it's not your money, it's taxpayer money. And that makes it much harder to justify issuing pension obligation bonds. So thing number one is pension obligation bonds. Thing number two is borrow, if you will, from the general fund, pay the general fund back. So to the extent that you had extra money sitting in the general fund, you take that. It's earning maybe 50 basis points, and you pay your unfunded liability that way. Way number three is you request CalPERS to tell you to contribute more, and you do that by shortening your amortization period with CalPERS. This is not a perfect analogy. A home mortgage is not a – it kind of works as an analogy. It's not exactly the same. But if you think of this, if you take out a home mortgage, pay it over 30 years, your payment is a lot lower, but you pay a lot more in interest. If you do that over a 15-year period, you pay a lot more in the short run, but you pay a lot less in interest in the long run. And that's really what that third bullet is doing. It's asking CalPERS to tell you to pay more in the short run, which gets you to a lower contribution in the long run. The other fourth option is what I refer to as kind of a, you end up at the end of the year with a budget surplus. You have a resolution that says, we're going to take half a third, whatever that is, of that surplus, and we're going to use it to pay down unfunded liability. The remainder we're going to use for one-time projects or something of that sort. We certainly have clients who have such resolutions. Having said that, The next two items, which really are sub-bullets of either setting up an internal service fund or establishing an irrevocable supplemental trust, the internal service fund is something a fair number of agencies are doing. What you do is you take money, put it into an internal service fund, assets are restricted. You likely are getting 50 basis points on that money, but people use that to mitigate CalPERS volatility. That works, but it does not work anywhere near as well as a relatively new concept, which is the supplemental 115 trust. That particular methodology has, it's, again, relatively new. Irvine Ranch Water District was really in California the leader in that sort of a trust. Solano County, you all are certainly looking at that. We've done some analysis for clients on these trusts. I kind of wish I could get a commission from this because I'm actually becoming a fan of them. We have a large client that has established a relatively small amount of assets for their size, And've done some modeling and that modeling has resulted in a very nice rate mitigation, rate volatility strategy. So I think it works extremely well in that case. It's a way to set money aside. that can be counted against your GASB 68 unfunded liability. So it reduces your GASB 68 liability. CalPERS will not know about it, so your CalPERS rate will not take it into account. But what you can do is use it to either supplement the payment that you're making to CalPERS or the strategy that I like a lot is to set a contribution rate for budget purposes and then if CalPERS says we want you to contribute more than that rate you pull those funds out of your supplemental trust to make that payment or if CalPERS says contribute less than that, you put that difference into the trust. So you have to have the discipline to really do both of those things. But if you have that discipline, you can end up in a very nice place. The big disadvantage to a 115 trust is when investment return is good you will almost certainly not earn the rate of return that CalPERS will earn. A big advantage of course is that when investment return is poor you almost certainly will get a higher rate of return than CalPERS and you have a fair amount of flexibility on the money that is in those trusts. There are, I could probably go on about the advantages. Every time we've looked at that, done the analysis, it has come out much better than I think people expected them. But number one, you should not set up a trust like this and expect to out-earn CalPERS. That almost certainly will not happen. If that's why you're setting it up, then you ought to just give the money to CalPERS. The problem with giving the money to CalPERS is once you give it to them, you don't have control over the investment mix. You don't have any control over how they're going to apply it to your contribution. So this gives you substantially more control over the process, if you will. So I'd be happy to answer any questions. |
| 03:44:30.11 | Charlie Francis | Mr. Mayor. |
| 03:44:30.82 | Mayor Theodore | Are we ready for questions or do you have more? |
| 03:44:30.84 | Charlie Francis | I'm sorry. I'd just like to follow up and ask John a couple questions first. Sure. And then, John, if we can go back to slide six real quick. |
| 03:44:34.47 | Unknown | Thank you. |
| 03:44:34.48 | Mayor Theodore | Okay. our presentations. |
| 03:44:46.40 | Charlie Francis | And then. I'd just like to... There we go. Slide six, we're seeing in the miscellaneous fund on June 30, 2012, $7.7 million. And then on June 30, 2013, $6.6 million. Let's just hold that in our memory and go to slide 14. Slide 14, 9 million to 7.8. And slide 22, 5.9 to 4.1. When I add those up, is this right? Is this the way I'm supposed to look at it? And June 30, 2012, our unfunded liability was 22.6. That's right. And June 30, 2013, it's 18.5. And on June 30, 2014, it will be 12.5. |
| 03:45:30.41 | Bruce Hough | That's right. |
| 03:45:40.24 | Unknown | Yeah, we're projecting it to be it might be a little higher, it might be a little lower, but that's right. |
| 03:45:43.77 | Charlie Francis | And we've been setting aside $600,000, $200,000 plus a year for our fire because we don't have any more fire employees. Those two that existed in 2013 are no longer employees. So if we applied that against this 12.5, we'd be around 11.9. Is that right? So I would say in two years, we probably cut in half our unfunded pension liability. |
| 03:46:13.03 | Unknown | Yeah, let's be clear though. Let's be clear why it's lower. |
| 03:46:17.25 | Unknown | Thank you. Thank you. |
| 03:46:18.21 | Unknown | it's really because CalPERS investment return has done that. I'm not saying that you haven't done anything, but I am saying that's really what it's costing. |
| 03:46:27.00 | Charlie Francis | That's a large component. The unfunded liability did not grow as fast as it would have because of our two lower pension tiers. Is that correct? That's also true. |
| 03:46:28.98 | Unknown | Yeah, yeah. |
| 03:46:34.99 | Unknown | Is that correct? Okay. |
| 03:46:38.72 | Charlie Francis | Also, I wanted to ask you, based on the projections, I noticed that even in the worst case scenario on slides like 11 and Well... We'll just look at 11. There we go. And that one too. There we go. when I look at the difference between the 16.5 and the 31, which is the worst-case scenario in 22-23, that's a doubling of triple rates. And if we tripled our rates in our long-term fiscal forecast and we still show sustainability, regardless of the funded status of the program, does we – you are in good financial position. |
| 03:47:28.33 | Unknown | Yeah, so just to be clear, I'm an actuary, not an accountant, so I don't know that I'm really qualified to say whether you are or not, but what I try to tell people is that |
| 03:47:38.71 | Unknown | Yeah. |
| 03:47:38.98 | Unknown | THE END OF |
| 03:47:43.18 | Unknown | they, um, the unfunded liability or funded ratio, all of that is much less important than whether or not you have the financial wherewithal to make your contribution. |
| 03:47:56.24 | Unknown | Thank you. Thank you. you |
| 03:47:56.54 | Unknown | And so on that measure, I think the answer would be yes, but again, I'm not really qualified to say whether or not you are or not. you |
| 03:48:05.96 | Charlie Francis | Okay. |
| 03:48:06.30 | Unknown | Thank you. |
| 03:48:06.43 | Charlie Francis | Thank you. All right. Well, I just wanted to bring those points up because those are things that we've been talking about at the council meeting, and I wanted to make sure John covered that and affirmed those things. So with that, we'll just turn it over to questions to the council. Thank you. |
| 03:48:21.87 | Councilmember Withy | I want to start off with just a clarifying question about what was included in the projections. Did you include the required payments to pay down the police side fund in these projections or is that not included? |
| 03:48:42.63 | Unknown | Well, so we are – I want to make sure that I'm understanding terminology. We have not assumed that you have made any payment other than the regular amortization payment for the side fund. You're talking about safety police, right? Yeah. Yeah, we have not assumed you're paying that off. |
| 03:49:02.49 | Councilmember Withy | Thank you. |
| 03:49:02.51 | Unknown | Thank you. |
| 03:49:08.50 | Unknown | Thank you. |
| 03:49:08.51 | Unknown | No, we're not. |
| 03:49:08.84 | Unknown | But we're assuming you're making the regular – what I'll refer to as the regular amortization payment on the side fund. |
| 03:49:08.94 | Unknown | You're right. |
| 03:49:17.21 | Councilmember Withy | Okay, and what is the amortization schedule for the side fund? |
| 03:49:21.78 | Unknown | compared to |
| 03:49:22.28 | Councilmember Withy | compared to the general unfunded liability. |
| 03:49:25.90 | Unknown | So I need to look that up, so bear with me a second here. So if we go to, hang on. Let's go to... |
| 03:49:42.08 | Unknown | Sorry. |
| 03:49:50.91 | Unknown | So if you look at slide 16, for the tier one rate, or really in total your, your, |
| 03:50:07.95 | Unknown | So I'm |
| 03:50:14.34 | Unknown | So I'm going to apologize. I think this 28, the 28.5 includes the side fund. We showed zero on the side fund, but the side fund really is 17.3 of the 28.7. So we should have broken out the side fund separately, but we did not. But it is in there. Okay. |
| 03:50:41.65 | Councilmember Withy | But what about the relative fermetization schedules? |
| 03:50:45.34 | Unknown | I think the payment schedule is nine years, nine years beginning in 15, 16, nine years left. So it's a short amortization. |
| 03:50:54.84 | Councilmember Withy | So it's... Compared to the – Remainder. The overall pay down of the unfunded liability. That's correct. |
| 03:51:00.08 | Unknown | Remain. |
| 03:51:04.73 | Unknown | That's correct. So do you mind if I – you didn't ask this question, but do you mind if I – |
| 03:51:06.10 | Councilmember Withy | Okay. |
| 03:51:12.09 | Unknown | expand a little bit. There is a website. that looks at folks' contributions relative to overall tax – sort of total revenue, if you will. One of the comments that I have about that particular website is that you all are, particularly for safety, relatively high on that list. And if you take a step back and look at the analogy of the 15 versus a 30-year mortgage, if you have an individual that has a 30-year mortgage, relative to their budget. it will be a lower percentage than an individual who has a 15-year budget or a 9-year budget. So that particular website, while it does a nice job for what it does, it does not reflect the fact that some agencies are paying their unfunded liability off over a shorter rather than a longer period of time. So I know you didn't ask that question, but I feel pretty strongly about that particular issue. |
| 03:52:38.51 | Councilmember Withy | I'll yield for now. |
| 03:52:42.34 | Jill Hoffman | I do have some questions and my apologies, we all know math is not my strong suit. So all right, let's go back to 16 then. So we were talking about the unfunded liability for the police safety. So we're talking about right now the risk pool is 28.5 percent. So and of the unfunded liability I believe Charlie had a slide on that last time, and it was as of June – 30th. It was $2,526, sorry, $25,600,000. And that paying that off would save us $960,364 in interest payments over nine years. And so when we look at paying of the 28.5 percent That to me looks substantial. What I would be interested in then is carrying that forward And if you look at |
| 03:53:40.49 | Unknown | you |
| 03:53:41.43 | Jill Hoffman | Slide number 19. which shows the projections |
| 03:53:47.24 | Unknown | Thank you. |
| 03:53:47.26 | Jill Hoffman | You know, I know that you haven't done that calculation, but, you know, if we made that the top priority this fiscal year and paying that off, however we do it, |
| 03:53:47.27 | Unknown | You know, I don't. I know that you have |
| 03:53:57.80 | Jill Hoffman | you know, those percentages come down. most concerning to me is on slide 19 where we're looking at 41 percent, 41.7 percent But then you look how that grows over the next eight years to 58.7 percent in a pretty good scenario. So. And that's kind of a good case. In a bad case, we're looking at 73.9%. which is a very, very troubling number. And so for our police safety pension number, And then you look at, on the next page, which is page 20, the one $1,799,000. Thousands. A year. for police safety pensions. Call it a crisis or call it a tough decision on limited resources, call it what you will, I think that's something very serious that we have to look at. So, you know, my apologies, I would have liked to have seen that calculation. as well. |
| 03:55:06.49 | Jill Hoffman | I'm assuming you won't be able to do that in your head. |
| 03:55:09.76 | Unknown | Well, you're – It's fine. I actually can come pretty close. |
| 03:55:12.00 | Jill Hoffman | It's fine. |
| 03:55:12.69 | Ines Ponyay | you |
| 03:55:12.78 | Jill Hoffman | Thank you. |
| 03:55:12.90 | Ines Ponyay | Thank you. |
| 03:55:13.30 | Jill Hoffman | Thank you. |
| 03:55:13.32 | Ines Ponyay | you Thank you. |
| 03:55:13.89 | Jill Hoffman | you |
| 03:55:14.03 | Ines Ponyay | Thank you. |
| 03:55:14.30 | Jill Hoffman | Thank you. |
| 03:55:14.38 | Ines Ponyay | Thank you. Okay, what's happening? |
| 03:55:18.04 | Unknown | So, but before I do so, one thing that I would caution the city about is |
| 03:55:18.45 | Ines Ponyay | But before I do so, |
| 03:55:28.67 | Unknown | one of the changes that CalPERS made to their risk pool is how they apply money when you pay down your side fund. the, under the old methodology, so in the June 3012 evaluation, and by the way, this is relatively new. We did not find this out until about six, five, four weeks ago, something like that. CalPERS risk pool methodology change under the old method, payment on the unfunded liability was allocated based on payroll. So if you paid your side fund off, the bottom line is it was really a fixed – so that side fund was a 7.5% fixed rate note, if you will. Under the new methodology, they have changed the way they're applying the assets to the side fund, and your rate will be volatile. So let me say that differently. Let's pretend for a moment you have, you know, you borrow at 5% to pay your side fund off or to pay any now, any component of your unfunded liability. What that is, is that is an interest arbitrage. between what CalPERS is earning and what you're paying to pay that off. So interest arbitrage meaning that if you borrow at five and you give it to CalPERS, whether you're paying your side fund off or any other component, if CalPERS earns more than five, you win that arbitrage. If they earn less than five, you lose that arbitrage. sounds like a certainty that CalPERS will earn more than five. It's not. All you have to do is go to San Bernardino and Stockton and ask them whether or not when they borrowed the money and gave it to CalPERS in October of 2007, whether or not they're ahead of the game or not. And the answer is clear. So timing becomes particularly important. That is true now whether you're paying your side fund off or not. Let's go back to the $900,000 number. I think that it would be fair to say That would be an expected savings. The actual savings could be zero or loss, or it could be more than 900,000. So that I wanted to, I kind of wanted to make sure that everybody understands. We did not know this. We've been trying to tell people to hold off paying the side fund until we understood this. The information was unfortunately not available publicly until early February. We actually didn't get our hands on it until probably the second week or so of February. So this is relatively new information. So that's kind of background. So having said that. if CalPERS earned seven and a half, you'll get your – that savings will be there. It'll be at $900,000 over the next nine years. So that certainly would be true. It just is not a guaranteed savings. So now, if we go to that slide 20, my very rough estimate is that your – bear with me a second. |
| 03:59:46.76 | Unknown | is that your payment, if you look at sort of that dark orange line or whatever color that is, the side fund component of that amortization in 15-16 is $343,000. I think that number would grow to about in the neighborhood of a little less than $400,000 when we're talking $22,000, $23,000. One of the things I would encourage the city to consider is mitigating that investment return volatility of putting a single large amount into CalPERS by considering putting that amount into the supplemental 115 trust. That will mitigate the volatility, and you can then take it out of there and then sort of gradually move it into CalPERS. You will have the full 900,000 savings if you do it that way, but you will get yourself to a more comfortable position that you're not gonna lose that money. So you increase your chances of success, but you decrease the expected amount of your success, if that makes sense. |
| 04:01:20.64 | Jill Hoffman | It does. It does. And you're assuming, though, that we would borrow the money with some sort of interest? |
| 04:01:25.21 | Unknown | Well, I'm assuming you would either borrow or what you would do is you would take it out of a – you, I think, have money set aside in an interagency fund with a 5 percent note on it. So I think it doesn't matter whether you're borrowing or taking it out of there. If you pulled it out of the general fund, assets earning 50 basis points or thereabout, then you get to a much higher probability of success, if you will. |
| 04:02:04.44 | Jill Hoffman | And have you done the calculation of the actual return from On slide number four, you can see kind of how the volatility in the return. Have you done an actual rate? Like, what – if you average all of these, like, you know, it's high and it's low and it's high and low. Have you done the actual calculation? |
| 04:02:23.83 | Unknown | Thank you. So the answer is yes. I'm going to give you a caution again, though, that you have to be careful about averages when you're talking about investment return. Let me give you – because this is – let me give you a very extreme example. I'm not suggesting CalPERS return will be this way, but let's just pretend for a moment |
| 04:02:37.77 | Charlie Francis | I'm sorry. Thank you. |
| 04:02:38.62 | Unknown | Thank you. |
| 04:02:51.85 | Unknown | that you have $100 in the bank. And in year one, you have a negative 50% return. So your 100 goes to $50. And then in year two, you have a positive 50% return. So when you look at those two years, you go, gee, I earned zero on average. But if you do the math, you go from 100 to $50, and then you get a 50% return, you have $75 at the end of the second year. So the compounding of numbers has to be sort of weighted in terms of the value of the numbers. Having said that, When you look at CalPERS investment return over the last five years, they probably – if we include, you know, June 39 through June 30, 14, If we do that period of time, which is a six-year period, you probably get to a 12 or 11 percent average. If you go back to 10, 10 years, you probably are at seven and a half. If you did that on a time-weighted value basis, though, you're probably much lower than a 7.5. If you go back over 20 years, their average – CalPERS average return is probably eight. So it sounds like – It sounds like things are rosy. Unfortunately, not quite to the degree of the 50 plus and minus 50 percent, but that investment return at June 38 and June 39 were particularly bad, really drug down the average, and that unfunded liability is really still there, even though recent investment return looks extremely good. I know that was way longer of an answer than you were looking for, but you have to be careful with averages. Averages are, they're, They're easy to get pulled into thinking one thing when it's not quite that. |
| 04:05:19.27 | Councilmember Pfeiffer | Can I jump in? Okay. So, yeah, if you go back to slide eight, since we're on the topic, this is why I used to argue with a – or debate with a former council member on this, is that the impact of compounding – I'm sorry, slide four. is you've got and this is what I find really interesting about this slide is from 94 to what, 2014 or so, that's like what, a 22-year stretch. And you see these, this volatility And I think the average the cumulative average rate of return there is like roughly around 8 percent. Yeah, I think that's right. And CalPERS was claiming, well, if you get 7.5 percent, |
| 04:05:58.03 | Unknown | Yeah, I think that's right. |
| 04:06:03.63 | Councilmember Pfeiffer | you know, why do we have such a huge, what, in June it will be 12.5 million, still substantial, very substantial considering in 2005 it was 5 million. when we've been actually performing higher than what CalPERS has projected, if you look at the cumulative you know, average. |
| 04:06:27.12 | Unknown | The answer goes back to my very simple example. |
| 04:06:30.38 | Councilmember Pfeiffer | Thank you. I know. |
| 04:06:31.05 | Unknown | of the – it's very hard to catch up with those negative returns. And the negative in this case is really, generally speaking, anything below 7.5%. So it would be great, but it's because the 6.5 followed by an 8.5 does not really get you to a 7.5 average. |
| 04:06:31.09 | Councilmember Pfeiffer | Thank you. of, That's a ton. |
| 04:06:32.86 | Unknown | Thank you. |
| 04:06:55.50 | Unknown | Oh, yeah. |
| 04:06:56.03 | Unknown | And so even though when you add those together it looks like it does, it just unfortunately the math does not get you there. |
| 04:07:03.25 | Councilmember Pfeiffer | Okay. Yeah, and I think that's what I've been saying for a number of years when this topic came up with the higher, the last five years, the higher returns. So I'm – and speaking of which, in the past, I've read articles and I've heard you say that a minimum funding level of 80 percent is considered respectable. We're at 76 percent. So just so – And then you said – So just – So just – |
| 04:07:21.00 | Unknown | you |
| 04:07:21.05 | Unknown | Thank you. |
| 04:07:21.22 | Unknown | Thank you. |
| 04:07:26.76 | Unknown | So just so – And you said – So just – I hope you have not heard me say that. |
| 04:07:32.97 | Councilmember Pfeiffer | Okay. |
| 04:07:33.76 | Unknown | because I don't happen to believe that. |
| 04:07:36.21 | Councilmember Pfeiffer | Okay. |
| 04:07:36.71 | Unknown | What I hope you've heard me say is that What is less important, so I don't want to tell you that a funded ratio of 80 percent is not better than 70. It is, having said that. What matters more is whether or not you have the fiscal ability to make the payment. All actuaries want you to move towards a 100 percent funded ratio. We want you – that's really the target. The CalPERS target, it's our target, it's any actuaries target. I can absolutely give you an example where a very low funded ratio is okay and a very high funded ratio is not okay. The difference between those two is the agency's ability to make that payment on the unfunded liability. |
| 04:08:43.13 | Councilmember Pfeiffer | Well, you have the taxpayers are on the hook for this. So, you know. Whereas in private pension funds, it's my understanding, their bar has to be much higher, correct? |
| 04:08:57.88 | Unknown | Well, uh... |
| 04:09:00.01 | Councilmember Pfeiffer | Or they strive to be. at least 80%, is that a fair statement? |
| 04:09:05.56 | Unknown | Well, so there's a big difference between private sector and public sector that it is correct. |
| 04:09:07.35 | Councilmember Pfeiffer | Thank you. |
| 04:09:13.42 | Unknown | that there are additional contributions that are required for private sector plans when they fall below 80%. We could talk for a long time about whether or not the regulatory environment for private sector plans has served people well. But, but. That. additional contribution requirement is not there for public sector plans. That is certainly true. But that. does not mean – so, for example, let me give you – I could certainly give you the site. There is a American Academy of Actuaries white paper that is titled The Myth of the 80% Funding Target, and it is a myth. It's not a – you should not think of that as a standard. You absolutely should not. You should think of whether or not You have the ability to make the payment. on whatever your unfunded liability is. |
| 04:10:28.13 | Councilmember Pfeiffer | Okay, so I have a follow-up question on slide three. |
| 04:10:37.63 | Councilmember Pfeiffer | under the risk pool three. |
| 04:10:42.12 | Unknown | Oh, I'm sorry. I went the wrong way. |
| 04:10:45.58 | Councilmember Pfeiffer | Yeah. And under the risk pool changes, the collect payment on the unfunded actuarial liability is dollar amount, not as percentage of pay. Is this going to impact the contributions of our former firefighters, given they're no longer on the payroll, but we have that liability? |
| 04:11:08.34 | Unknown | The words that I would use would be a little bit different than what – so I don't know that it impacts the firefighters. It does impact what the city will pay for fire services. I believe the city anticipated that. So I believe – I would leave this up to the finance director, but I think the city anticipated that this sort of change was likely to happen and has built that into the budget. But you can absolutely see that when you go to the budget. |
| 04:11:55.39 | Unknown | When you look at slide 23, CalPERS for the 14-15 fiscal year was asking the city to pay $64,000. And then in 15-16, $226,000. So that extra 160,000 is absolutely related to the dollar contribution requirement. |
| 04:12:24.42 | Councilmember Pfeiffer | So if you go back to the prior slide 23, |
| 04:12:27.59 | Unknown | Yep. |
| 04:12:27.60 | Councilmember Pfeiffer | you. Um... CalPERS, I think they forgot to bill the city for the fire pension because there's no fire payroll anymore. When is CalPERS going |
| 04:12:41.00 | Unknown | They're going to recognize that as soon as they get to a June 30 when there is no payroll. |
| 04:12:41.34 | Councilmember Pfeiffer | Thank you. |
| 04:12:52.68 | Unknown | But in the meantime, so if you look at 1415, they were they were. saying contributed as a percentage of pay, There was no pay, so there really was no contribution, if you will. So now they're asking for that payment as a dollar amount so that they will be certain to catch that payment on the unfunded. |
| 04:13:17.35 | Councilmember Pfeiffer | Okay, I have another question, but I don't. Okay. So... I think that, I know PEPRA, I think, has given the city some more tools to mitigate pension costs and pension debt. And I know that you were doing the line of things that we could do. Does PEPRA allow the city, in terms of the tools that it gives us, Does it allow us to kind of work with employees where employees can actually pay towards the unfunded pension liability as well? |
| 04:14:05.90 | Unknown | Yes, so just to be clear, you've always had the ability to negotiate with employees to pay more. didn't really give you that. What PEPRA did was two things. It said you can, beginning in January 1 of 18, you can impose non-safety paying up to 8 percent. Well, I don't think of that as a particularly big enhancement for the miscellaneous folks, but when you go to safety, they would give you the ability to impose up to 12 percent for I am not an expert on what agencies will or will not do on imposing additional contributions. My sense is that is a – it's not something that any council would do lightly So it did give you the ability to impose, but it's not clear to me that you didn't already have that ability. That's number one. And number two, that it's valuable to have that ability. |
| 04:15:33.67 | Councilmember Pfeiffer | Well, that leads me to the prior slide 31. which may be my last question, which is the – under the PEPRA cost sharing, So employer, the fourth bullet, employer may impose current employees pay 50 percent of total normal costs if not agreed through collect. So that's not just the PEPRA employees, is it? That's correct. It's everyone, right? |
| 04:16:06.49 | Unknown | That's correct. So first of all, PEPRA mandated that PEPRA employees pay 50 percent of the normal cost. What PEPRA allows you to do after January 1 of 18 is to impose employees pay that amount capped at 8% for miscellaneous. |
| 04:16:29.09 | Councilmember Pfeiffer | Okay, thank you. |
| 04:16:30.08 | Unknown | Okay. |
| 04:16:33.78 | Councilmember Withy | Uh, John, we got into some pretty complicated stuff here, and we have people listening at home, some probably not live anymore, but maybe later tomorrow or whenever. I wanted to just ask a couple of really sort of simple questions, and then I got a question for Charlie, if I may. In the projections you're showing, I just want to make sure I'm clear so that people out there listening are also clear. That in the current projections, understanding we've got this volatility for because of the nature of the whole thing. We are through those annual contributions Over time. paying off are unfunded liability. Is that correct? |
| 04:17:28.30 | Unknown | Categorically, yes. So under CalPERS old methodology, I could not have said that. Under their new methodology, absolutely. Now, of course, actual investment return. |
| 04:17:31.05 | Councilmember Withy | Right. |
| 04:17:45.77 | Unknown | may get in the way of that, but assuming CalPERS earns 7.5, my expectation is it might be a long time, but you will have your unfunded liability paid off. |
| 04:17:58.14 | Councilmember Withy | Okay. So now, You know, we're going about to go into a budget process that's going to last three months or so. And we're going to have to be making some investment decisions, some decisions. You know, do we invest this amount in capital improvement projects? Do we invest this amount in, you know, whatever? You know? go above and beyond these contributions the sort of thing that the Vice Mayor has been getting at too. she's been focusing on the site fund, you know, and last year we were all focusing on if we could find the cash flow to pay down the site fund, it made sense. We have introduced and we have been Just authorize the formation of the trust, the section 115. 115. Okay. |
| 04:18:57.37 | Unknown | it. One. |
| 04:19:03.51 | Councilmember Withy | What we are going to need a sense of moving forward as we go into the budget process is what sort of level of funding should we put into that trust fund so that we can really take the benefit of the hedging strategy to help try and mitigate the volatility. |
| 04:19:14.09 | Unknown | So, |
| 04:19:23.39 | Unknown | you |
| 04:19:24.13 | Councilmember Withy | Because it seems to me the risk is more with the volatility than with the actual payment. |
| 04:19:29.02 | Unknown | I happen to agree with that. So that sort of an analysis is I think everybody who sets up a trust like this should do. trade-off of the money that you have, what is the best use of that money, what are the financial advantages of moving it into a trust versus not? And that's absolutely, in my opinion, the analysis you ought to be doing. |
| 04:20:03.79 | Councilmember Withy | thought on that say it again Do you have a thought on that in terms of what, I mean, based on our, looking at our fundamentals, would you give some, would you be able to at this stage give us any guidance as to the level of funding into the trust fund? |
| 04:20:20.16 | Unknown | Well, so provided we get some parameters. So if you turn us loose without any guidance, You should not pay attention to anything we say, seriously. But if you give us some guidance, so for example, guidance would be along the lines of Um, we would like to target being 90% funded in 10 years. I'm just using that as an example. or we'd like to have our miscellaneous contribution rate be flat for budget purposes at 20% for the next five years, something like that. Then what we can do is say, if you do that, If your target is 20 percent, if that's what you want to include in the budget, than this amount of money in a trust has a high degree of probability of success. I'm being a little fast and loose with terminology because we can't do any of that without talking about what sort of degree of probability are you looking for. Do you want 100% certainty? I don't think you should. But maybe you want a 60% certainty or something like that. Maybe you don't want a 20% rate. Maybe you want an 18 or you want a 22. Maybe you want your safety rate, your police safety, to be 35. What do you need to do to get it there? But as long as we understand, as long as we know what your parameters are, what your goals are, then absolutely we can help you with that. It's not particularly difficult. The math is not particularly difficult. We can kind of look at scenarios, good investment return, bad investment return, say here's what happens if we have the following scenarios. So that was a very long-winded yes, provided we understand where you want to go. We can't really do, we could do it. But I don't think it would be very valuable unless we know where it is you want to go. And that direction could come from finance director. It could come with finance director in conjunction with the finance committee, for example. It could come from any of that combination of city manager and the finance director, whatever you really wanted, whatever method of giving us direction, as long as we have that direction, we can steer you and we can tell you, with this direction, this is what you need to do, you can then look at those numbers and say, yeah, that's good use of money, or no, it's not a good use of money. |
| 04:23:35.75 | Councilmember Withy | And again, these are the sort of tough decisions we're going to have to make in the budget process. My question for Charlie as a follow-up to that was, in the long-term financial forecast that we've, or at least the current scenario of the long-term financial forecast, because after all it's a model, so we can change variables, right? What did we project about the growth of pension costs? I know we were going to be quite conservative, meaning a high number in a sense for budget for projection purposes. How does the growth that you put in as a preliminary assumption in your model compared to these growth rates that John has been talking about? |
| 04:23:54.26 | Unknown | Thank you. |
| 04:24:23.46 | Charlie Francis | The growth rates that John put in this scenario here, it's a curve, where it grows about 10 percent annually until it reaches the level period of amortization. You remember that chart I grew. In the fiscal model, I used 10 percent all the way through the 10 years, and it grows greater than the worst-case scenario in John's graph. out by the words case. |
| 04:24:53.78 | Tom Gangitano | Thank you. |
| 04:24:54.34 | Charlie Francis | Bad scenario. Okay. Yeah. Thank you. Right. So it was more conservative than the bad case scenario here. Okay. And we still showed fiscal sustainability. |
| 04:25:05.73 | Councilmember Withy | Thank you. |
| 04:25:06.46 | Charlie Francis | I had a couple more follow-up to that. You know, on June 30, our first GASB project, It has to be 68 where we actually put it in our financial statements. Whether or not the 80% number is a good number or not, we will be at 85%. So for the first year. So, you know, that's a good thing. The second thing I'd like to point out is on the fire safety, whereas you saw that several years ago it was at 64, now it's at 226. Well, we were doing the right thing. We were putting into the Internal Services Fund the equivalent of a level period of amortization. In other words, $215,000 has been put away every year for the past three years and is budgeted also for next year until CalPERS then says, this is your this is what your amortization payment will be. So we have been funding that. And then lastly, as John mentioned, we have had the ability to do cost sharing with our employees. And the last labor agreement in 2012, for the past three years, we have been cost sharing with both miscellaneous and safety. And as we move into this next period of negotiations, we'll certainly be looking at more cost sharing. |
| 04:26:27.05 | Charlie Francis | ANY OTHER? |
| 04:26:30.17 | Unknown | I WANT TO TALK ABOUT IT. |
| 04:26:30.90 | Charlie Francis | Oh, I did want to follow up on Vice Mayor Hoffman's. The email that I sent out about the 900-some thousand on the, that was categorically correct under the old methodology because it was a 7.5% interest rate. What John just has explained is that that 7.5% fixed rate just went to a variable rate a month ago. So more than likely, we'd still have that equivalent amount of savings. It's just not as certain as it was under the old methodology. |
| 04:26:33.23 | Unknown | Thank you. |
| 04:27:05.29 | Charlie Francis | Thank you. |
| 04:27:05.31 | Jill Hoffman | Right. |
| 04:27:05.75 | Charlie Francis | Thank you. |
| 04:27:05.78 | Jill Hoffman | Thank you. So with regard to the side fund, that's the only fund that we can pay off early. Is that – did I have that right or no? No. No. |
| 04:27:13.88 | Unknown | No. Yeah, you can CalPERS, the other change that CalPERS has now made is you can actually pay any component of your unfunded liability off. But again, you have that volatility on what you give them. |
| 04:27:28.95 | Unknown | Okay. |
| 04:27:29.41 | Jill Hoffman | Thank you. |
| 04:27:29.44 | Unknown | Thank you. |
| 04:27:29.57 | Jill Hoffman | you |
| 04:27:29.64 | Unknown | Interesting. |
| 04:27:30.03 | Jill Hoffman | Thanks. |
| 04:27:32.26 | Charlie Francis | But we can pay it into the irrevocable trust and we get credit on the gas v68 Financial statements for paying it off because it did go into a trust for just that purpose So it's like paying it off only it's paying it off to ourselves We have control and we have less volatility and in there |
| 04:27:58.40 | Mayor Theodore | I have a question on this slide and it relates to the others as well. In from 1415 to 2223 it goes up. I'm sorry. Obviously 8% there. But my understanding is when you project it out, it flattens and goes down at the end. Which is the group. |
| 04:28:15.31 | Charlie Francis | Which is the green line there. |
| 04:28:16.70 | Mayor Theodore | Yeah. It comes down and flattens, and then at the last five years it'll come down. And if we can go to 12. I think it's on 12. Okay. So we go up, and this is miscellaneous. These are the actual numbers from 700,000 to 1,002, right? Well, actual. And then projected. Projected, yeah, actual and projected. Now, do we have that for a combination? Do we have a chart with all of them on there in terms |
| 04:28:41.90 | Charlie Francis | Thank you. Thank you. Thank you. |
| 04:28:44.30 | Mayor Theodore | How that moves are |
| 04:28:45.04 | Charlie Francis | We have to just. Not in this presentation. I have in the OpenGov site a combination is this line here. You take all three and the projection goes right up this model and even higher. |
| 04:29:06.35 | Charlie Francis | Yeah. |
| 04:29:11.11 | Jill Hoffman | John, I do have a question. Just sort of a general question. Are there any other methods that we could be doing as a city to further mitigate our future pension liabilities? |
| 04:29:25.15 | Unknown | Other than the half a dozen that we have at the end of the presentation, I wish there |
| 04:29:30.50 | Jill Hoffman | Yeah. |
| 04:29:32.96 | Unknown | but I don't know what they would be. |
| 04:29:37.18 | Jill Hoffman | Has there, oh go ahead. |
| 04:29:37.62 | Unknown | It's... I mean, what we're not including in there is what Charlie already talked about, and that is negotiating with employees to have them pay a share of contribution increases. So that certainly is a mitigation strategy. I don't really think of that as something that you can unilaterally do, if you will. |
| 04:30:07.00 | Jill Hoffman | Is there any way, I mean, have there been any municipalities that have, you know, left CalPERS or gotten out of CalPERS in the pension business with CalPERS? |
| 04:30:17.43 | Unknown | How much time do you guys have? Thank you. |
| 04:30:24.26 | Unknown | 30 seconds? Maybe that's another night. Yep. |
| 04:30:24.43 | Unknown | 30 seconds? Maybe that's another night. So to the best of my knowledge, I'm not aware of a single city. There have been a very small number of special purpose districts, so I think of water districts as having a little bit more cash. I'm Uh, paying the termination liability and walking away. I'm not aware of a single city that has done that. We could talk about the order of magnitude of the numbers. We could talk about even if that order of magnitude of that withdrawal liability was not there, whether it would be prudent to pull from pull away from CalPERS I am on record as saying that to the extent that you ever did pull away from CalPERS Bartell Associates to the extent that you hired us to help, would make a lot of money in that. I don't, however, think it would be remotely prudent for you to go down that path. That's my 30 second answer. |
| 04:31:42.63 | Councilmember Pfeiffer | Smile. I have a follow-up question to that, which is if in June our unfunded actuarial liability is going to be $12.5 million, what is the termination, the market rate? Because the $12.5 million is assuming CalPERS rosy picture of investment returns. What is the market rate? Yeah. |
| 04:32:10.14 | Unknown | Thank you. So. |
| 04:32:11.83 | Councilmember Pfeiffer | which I view as real unfunded liability. |
| 04:32:11.94 | Unknown | Thank you. because the real unfunded liability. So first of all, I don't know what a June 3014 number would be. I can give you the June 3013 number. That's in the actuarial report, but I don't know June 30, 14. |
| 04:32:24.36 | Margaret Badger | That's. |
| 04:32:24.83 | Unknown | Thank you. |
| 04:32:24.85 | Councilmember Pfeiffer | Thank you. |
| 04:32:24.95 | Unknown | in the action. Thank you. |
| 04:32:26.20 | Councilmember Pfeiffer | Okay. |
| 04:32:30.47 | Councilmember Pfeiffer | So you can't translate the 12.5 to the termination rate? |
| 04:32:35.30 | Unknown | I cannot. |
| 04:32:36.09 | Councilmember Pfeiffer | Okay. |
| 04:32:36.75 | Unknown | It's not – it's unfortunately, it's not related to the 12.5. There's two – the big component is the June 30th withdrawal liability calculation would be based on discount rates on a 30-year treasury note at that point in time and I'm sorry I can't do that calculation in my head. What I can tell you is June 30, 13, but I have to go and look at that number for each one of the plans. |
| 04:32:37.91 | Councilmember Pfeiffer | But never mind. |
| 04:33:05.86 | Unknown | Sorry, I can't. in my head. What I can do. |
| 04:33:15.87 | Unknown | Thank you. |
| 04:33:15.90 | Councilmember Pfeiffer | Uh-huh. |
| 04:33:16.39 | Unknown | And so it would take me a minute to do that. |
| 04:33:19.12 | Councilmember Pfeiffer | That's okay. I was just curious about the new figure we're coming up with. So that's |
| 04:33:24.13 | Unknown | I mean it would probably be lower I just I mean not lower than 12.5 no lower than the June 3013 number but it would be a |
| 04:33:29.30 | Unknown | Thank you. |
| 04:33:29.33 | Councilmember Pfeiffer | No. Lower than the. |
| 04:33:31.51 | Unknown | Thank you. |
| 04:33:31.53 | Councilmember Pfeiffer | number. |
| 04:33:34.33 | Unknown | very, very big number. |
| 04:33:37.09 | Councilmember Pfeiffer | Yeah. Well, I remember when it was $22 million, the termination was $49 million because they |
| 04:33:41.92 | Unknown | Yeah. |
| 04:33:43.76 | Councilmember Pfeiffer | evidently when you want to leave CalPERS, then CalPERS doesn't want to take on the risk. And so then they, at least that's my interpretation, is they apply the more conservative interest rates. |
| 04:33:54.15 | Unknown | conservative interest rate. What I would say is CalPERS doesn't – CalPERS is not an insurance company, so they don't the wherewithal to take on that risk, and other agencies don't want to take on your risk, and so what they do is charge a no-risk cost, meaning if you want to walk away, you have to take that no-risk cost. You could argue whether or not they should be doing that. We could have a very long conversation about that, but that's their policy. They're sticking to it. |
| 04:34:35.82 | Councilmember Pfeiffer | They didn't used to have that policy that was just put in place. I'm sorry, say it again, please. They didn't used to have that termination. It used to be the same. I mean, back in, what, 2012, I think it was, you could leave without that. That's right. And they changed that. |
| 04:34:38.87 | Unknown | I'm sorry, say it again, please. |
| 04:34:47.36 | Unknown | without that. That's correct. |
| 04:34:53.18 | Charlie Francis | I'M I think that's a good question. Wouldn't that get any agency out? |
| 04:35:11.07 | Unknown | Well, so Charlie, that would be an interesting conversation with CalPERS. I have to tell you I think their position is no. Oh, okay. I think their position would be you contracted with us to make the benefit payments. We don't really care if you think you can make them from someplace else. We have the legal responsibility to make those, so I think the answer is no. But I've never raised that question of CalPERS. |
| 04:35:23.10 | Charlie Francis | Thank you. |
| 04:35:23.22 | Unknown | Thank you. |
| 04:35:23.58 | Charlie Francis | . |
| 04:35:47.83 | Councilmember Withy | Yeah. John, last year when you were here, I asked you a sort of like generalized question of perhaps a little unfair question, which was to sort of try, I know you can't do this quantitatively, but to sort of try and give our residents a sense of where we really stand compared to other jurisdictions. Last year I think we all agreed pensions this thing you know especially unfunded liability is a serious issue. We need to have plans for it etc. But you were quite positive about the actions we've taken and our general situation. Have things changed dramatically for the worse, for the better? Are we on the right track? Could you give us an overall sense of what you said? |
| 04:36:16.55 | Unknown | Thank you. |
| 04:36:36.51 | Unknown | Worse. |
| 04:36:41.81 | Unknown | Yeah, so let me give you sort of a two-comment response to that. I still would make the exact same comment that changes you all have made, the second tier followed by the state PEPRA mandate has moved you in a very positive direction. The investment return at CalPERS has been a little better. than I expected, maybe even arguably a lot better than I expected. If I were you, I wouldn't hold my breath for that continuing. I wouldn't expect it to continue if I were you. And so if I'm right and it does not continue, those unfunded liability numbers will go up but I think I still feel the I think I still feel the same way I don't I've seen nothing that would that would cause me to be concerned about your numbers. |
| 04:37:56.58 | Jill Hoffman | I have a question. This is going to be an easy question. It may not be you. On slide 13, we're talking about the police safety. |
| 04:38:00.06 | Unknown | I mean, I'm not. |
| 04:38:04.75 | Jill Hoffman | Um, and under the total number there counts. 17. Is that 17 gun carrying, you know, the police, or does that include all the police administrative Thank you. |
| 04:38:19.58 | Unknown | These are sworn safety. I can't tell you that I know who does and who does not carry a gun. But these would be sworn safety as opposed to administrative staff. So administrative staff would be in the miscellaneous group, but anybody who is sworn – I mean, I think of having a badge as sworn. And so that's, I think, what the 17 – and it's bodies, by the way. It's not budgeted positions. |
| 04:38:53.77 | Charlie Francis | This isn't tier one or all tiers? |
| 04:38:57.21 | Unknown | So Charlie, I thought that was all tears. I thought it was all tears, but I can check. The very fact that you asked that question gives, Yeah. The purpose is that it's all tears. |
| 04:39:19.57 | Unknown | Any other questions? |
| 04:39:20.35 | Herb | Thank you. This time you'll get any answer. All right. Public comment? |
| 04:39:22.73 | Unknown | Okay. Thank you. |
| 04:39:24.53 | Mayor Theodore | All right, public comment? Seeing none. |
| 04:39:27.13 | Herb | Thank you. . |
| 04:39:29.66 | Mayor Theodore | Now we're moving into council comment. |
| 04:39:31.89 | Herb | We're moving it to the next day. Yeah, I know. So, who would like to |
| 04:39:37.97 | Tom Gangitano | Thank you. |
| 04:39:38.03 | Bob Freeman | Thank you. |
| 04:39:42.52 | Jill Hoffman | I believe Ray doesn't yell at me. You know, my position, I think we can, I want to pay off the side fund. I mean, that's clear. I've made statements. I think, you know, the savings to the city, to the extent that we can do it, makes sense to me. If we can do it and we don't jeopardize, you know, other essential services, that that is a priority. That's, I mean, the savings to me is substantial. So that's the only comment I make. We're not taking any action tonight. This was just informational. |
| 04:40:14.03 | Charlie Francis | Thank you. |
| 04:40:16.05 | Jill Hoffman | Okay. |
| 04:40:18.96 | Councilmember Pfeiffer | So yeah, so |
| 04:40:24.61 | Councilmember Pfeiffer | When I look at, I completely agree with Vice Mayor Hoffman, we need to pay off the police side fund. That's, I think we're all in agreement on that and I think it's a really good point. We're going to save money by doing that and making that a priority. I look at this and I see that PEPRA has given us some tools that as a city council, we can look at when we go into negotiations with our employees and I think it would be good to explore that and pursue that. I see this as an unsustainable model. I know that – I mean, when we have people who are Uh... are retiring at 55 with six digit salaries for, you know, and full medical, it's very difficult to cover all of those costs. I understand that that's not representative of all of the employees, but the employees who are retiring under CalPERS with more modest pensions, mid-range pensions, that's not the problem. The problem are the the high-end uh, early retirees with six digits. That's what's really getting us all in trouble. And so I think that, you know, moving forward, we have to keep that in mind, that this is an unsustainable pension at certain levels, and we need to look to our employees to collaborate with us to make this sustainable so that we can keep our promises in the future. I don't look at this as can we make the payment. I'm looking at it not only as can we make the payment. I mean, like you could put something on your charge card you know and make that monthly payment but to me it's you have to look at the whole debt we're incurring. We have to consider Uh... you know, just the sustainability of the system over time? And is it really fair to future generations to be saddling them with this debt you know, going forward. They will be paying for the services that we are enjoying today. So I want to thank Bartel for the good presentation and for answering all of her questions. I appreciate it and I want to thank everyone who's watching and who's You know, coming up to speed on the pension debt, I consider it a crisis. And I'm happy to see that we're at 12.5 million, but considering We were $5 million in 2005. You know, it's still an untenable amount of money for a small town of $7,200. |
| 04:43:27.16 | Councilmember Withy | Our pension liabilities are very serious, as are lots of other things, such as our infrastructure deficit. And we are coming to our budget process where we're going to have to make some tough decisions. I don't call tough decisions a crisis. I call tough decisions where you actually got to show some leadership and make some tough decisions. The decisions that we got to make regard level of investment in various buckets. And I think that's a good question. |
| 04:44:05.23 | Jeff Shirash | If... |
| 04:44:06.40 | Councilmember Withy | Up until recently, I was actually thinking if the cash flow was available, we should definitely pay down the police site fund because, you know, I'd borrow money at 2% to pay down the site fund if you could do it. You just can't do it. But we are paying down the site fund. The question is, are we going to accelerate paying down the site fund? And if we accelerate paying down the side fund, we won't have the money to put in the trust fund. And to me, putting money into these trust funds are far more important than paying down the side fund. It's far more important because of the flexibility that it gets. But we can have that discussion in the budget. context because We've got to find some money to put in the trust funds to fund it, so we're going to have that discussion anyway. If you wanted to accelerate paying down the side fund, then some capital investment projects are going to have to go by the wayside. It's that simple. Budget's not that complex. Or shut a department down. That's the sort of things you're going to be sort of deciding. Um, To say this is unsustainable is inaccurate. It's not the same thing as saying it would be good if we could've lowered the liability and reduce the cash flow out. That's different than saying it's unsustainable. Our long-term financial model is said it is sustainable. But we'd still like to reduce the expense, the cost. That doesn't mean that there's a difference between sustainability and would we prefer it to be a lower number? And then what dollars do we use to pay it down and what are we sacrificing to do so? Those are the things in play. And those are the things as a community we're going to have to have a conversation about over the next few months. And thanks, John, for coming here. Thank you. |
| 04:46:04.54 | Mayor Theodore | And thank you, John, for... for coming, staying late, and for an excellent presentation. I think obviously pensions are important. We have to make sure that we are on a sustainable course. But I think the difference that we've done with some of these new plans is that we've made it sustainable. If you look at some of these that we look at where we are, and that's why I asked about the chart, it goes up, flattens out, and goes down. We know where this is going. have the ability to pay this. And I think one thing, and I do think it's important to look at our language. I think these are important things, but when you say things are a crisis and you get people worried about them unnecessarily, and as our expert, Mr. Bartel said, nothing causes him to be concerned about our numbers on this. It's important, and we have to take a look at it. In terms of paying down these signed funds, the things that we have to realize is we have a very tight budget. We have to look ahead. We have this capital improvement project crisis now, or one could call it a crisis, because council after council is going to be able to do that. We have to look ahead. We have to look ahead. We have this capital improvement project crisis now, or one could call it a crisis, put the dot put money into it and if we don't and many would say that when you let that go you end up paying more there's interest on everything if you don't pay if you don't use it for one thing that's making money and it's an investment decision as we've talked about are we are we going to be better off financially paying down the fight side fund or doing these other projects we're gonna have to talk about it the budgets I do recommend Vice Mayor Hoffman, that if you have, you should probably get your list of things because there's not fat in our budget. So if we're going to have to start cutting, we're going to have to start looking at hard things. And it's probably good for us to know ahead of time what we're looking at rather than doing it ad hoc so that we could say, you know, this is where we're going because it's not one of these things that we're going to. not do the kiosk, not do this, not do the other thing. We should, you know, probably have a plan ahead of time. It'd make our budgeting process a lot easier. So thank you. |
| 04:48:06.46 | Councilmember Pfeiffer | Yeah, and I'd like to make a quick counter. So a few years ago, MCCMC had the Marin City Council, you know, and mayors had a pension reform committee. It was chaired by then Larkspur Mayor Larry Chu, Mayor Larry Chu, and representatives from cities across Marin. And they published a white paper and I'm I'm on that white paper. And on the first page, it says, you know, the one thing that all of those council members and mayors agreed on on that committee was that the current system is unsustainable. So I hear that there are different opinions on this council regarding is it a crisis, is it unsustainable, is it sustainable. It's my opinion that the current pension system is unsustainable. and I recommend that you get a question. I think that's a good question. white paper on pension reform and take a look at that because I think it might introduce some other opinions that might be some, you know, give some insight as to a different perspective. |
| 04:49:23.17 | Mayor Theodore | Well, and we've made changes since that time. Everyone should know that that group's being reconstituted, and Council Member Withey will be representing us on that group. |
| 04:49:34.23 | Councilmember Pfeiffer | And just as a side note, I was never appointed on that group. Mayor Herb Weiner, well, You'll recall I wanted to be, but you would not appoint me, so I contributed as a private resident, and that's how I was, my name wound up as a private resident through my contributions. |
| 04:49:54.39 | Jill Hoffman | the So to comment on some things you said, Tom, was that, yeah, we may be making some tough decisions in the next year. And we may be prioritizing, but as Ray said, that's our job. And if we have things that can wait a year, then I think we have things that can wait a year when you look at the volatility in the side funds and the pension and the health of our city going forward and the savings that we have that we can use for those projects in the next year or two. So that's my perspective and my policy going forward. |
| 04:50:22.47 | Mayor Theodore | And we'll be talking about that soon. Are we? Yeah. Okay. Can we move on? Can we move on? |
| 04:50:25.16 | Herb | Yeah. Okay. All right. |
| 04:50:26.44 | Unknown | on. |
| 04:50:26.86 | Herb | Thank you. Thank you. |
| 04:50:28.21 | Mayor Theodore | Thank you. |
| 04:50:28.31 | Herb | you I want to thank John, and I really especially want to thank Charlie Francis, because your guidance and City Manager Adam Palatzi, your guidance still has put us in a position right now where we are meeting our obligations. We're not panicking. And I want to thank you for not putting us in that position. So moving on, in closing, thanks so much. Thank you both. That was great. See you next year. |
| 04:51:02.92 | Mayor Theodore | Okay. |
| 04:51:03.36 | Herb | . |
| 04:51:03.77 | Mayor Theodore | Thank you. |
| 04:51:03.88 | Herb | Thank you. |
| 04:51:03.92 | Unknown | I'm not. |
| 04:51:04.12 | Mayor Theodore | Thank you. Thank you. So we're moving on to something that was scheduled for 10 o'clock. We'll move on to item 7A, city manager's report. |
| 04:51:16.39 | Adam Politzer | I have a few items that I'm going to talk about and a few items on the skit and see if you want me to talk about it. |
| 04:51:23.71 | Herb | So you're saying we'll call you Skip from now on? Yeah. |
| 04:51:24.39 | Adam Politzer | Thank you. I want to. Yeah, I think that'd be good. So, the agenda setting committee has some work to do. We obviously missed the target tonight and I'll take responsibility for that. since I am helping them with the predictions of time. um, But on the upcoming meeting on April 7th, that will be our next council meeting, I've asked Danny to come forward and talk about the discussion. There is a new draft EIS on the Alcatraz embarkation study that is out there for the National Park Service how they're dealing with the Alcatraz service. And you've seen some of that in the news and in the newspapers mostly related to the San Francisco side. But there are things in the EIS that has a little concern. It's things that we were concerned about back in 2012, things that we were concerned about in 2014, and the city has put letters forward during those periods of time with our comments. The draft EIS comments are due back by May 20th of this year. They are having a workshop in the city and we'll make sure that's posted in the current and on the website at the end of this month in March. But they'll come, Danny will come and just kind of give an overview to the council and to the public of what's in the draft EIS, things that we are specifically concerned about, get some initial feedback from the council. We've asked the Park Service to come to the meeting. I'm not in a position, not asking them to come and do a presentation. but come and be able to answer specific questions that we may have. And then as we get closer to that May 20th deadline, ask the Park Service to come and have a more formal presentation to the council. And then for us to actually get your direction based on our recommendations on the comments that we think we should submit as part of the comment period. So that's a big item that will probably take some time on the 7th and then obviously take a significant amount of time in the future. The mayor and I will continue to reach out to the Park Service and we have a Fort Baker Task Force with a meeting on a different matter on the Horseshoe Gold and the Travis buildings there, the buildings that were part of their original discussion where the Fort Baker Task Force will continue to meet and get updates from the Park Service. So at some point there may be a combination presentation from them on all the moving parts. So that's a big item. It's probably too late for Council Member Weiner to give a report on the RBRA workshop but that was a significant attendance at the meeting, a pretty broad and potentially controversial discussion item. So we're going to ask Ben Berto who's staffed to RBRA to actually come and give us a summary of that meeting and then give us a summary. a preview of what may be coming down on the line. And we may ask Kate Sears or Leslie Alden to join Ben. Kate is the chair of RBRA. So either Kate come and join Ben and kind of tell us what's going on and where it's heading or Leslie may be able to fill that role. So that's something that I think will also come forward, you know, within the next two or three council meetings as we find time. The last item is Golden Gate Ferry. You folks are all aware. I think all of you or most of you were here in the building in one of the two rooms. But I think overall that the process that the city council outlined got off to a good start, obviously well attended. I was surprised. I had another engagement that evening at the Citizens Academy for the police department. But when I got home and watched it from the comfort of my couch, that I was actually pleased to see that the public was able to be heard and I noted that around 10 past 9 they were done with public comment and then now moving on to the discussion between the members of the board with questions and comments from the district and then general direction. So that project is moving forward to the April 1st next meeting. And so they are now putting their application together. It's my understanding from talking to Lily. that they have taken seriously the comments of the HLB and Planning Commission and in the areas where they can make modifications they are doing so. In the areas that they can't make modifications or the modifications that they make are not as great as what was being recommended either by the public or by the board, they'll continue to have those discussions at the April 1st meeting and then again come back with additional modifications if necessary on April 15th. There's been requests from the public to move the location because of the challenges of our capacity. The Bay Model is not available on either of those dates, but even if it was, it creates a bigger concern. that we can't web stream or put this on live. And so we are talking to the community media center to see if we can do a live coverage of this on TV. So it's also on Comcast 27. Right now there's a conflict with another city council meeting that evening. So we're still working with them on how quickly can it be. shown on Channel 27 and not just on the Webstream. What Rhett is doing will upgrade this room so it's live, the conference room will be live versus the 11-second delay that people were experiencing in there. And then you've seen the amount on the outside of this wall in the hallway where they plan by April 1st to have a large TV probably larger than that one on that wall and also have it live so there's no 11 second delay so we'll be able to set up both of these rooms as overflow and then the library we're going to use the screen in the library like they do for their speaker series or their movies. We don't anticipate by the first that that will be live, we still anticipate that having the 11 second delay But that would be the overflow of the overflow room. So we think that that would give us plenty of capacity here at City Hall if we have a similar turnout. Rhett's objective is trying to get the library also live by the first, but it's probably not going to happen. But by the 15th, he feels more confident by the 15th that all three of these locations would be real time, no 11 second delay. So that's what we're working on and we'll again continue to communicate to the public and as soon as the application is available that will be posted and made available again at the library and at the other counters as we go forward. The application is available that will be posted and made available again at the library and at the other counters as we go forward. The last item that I have on my list is MCCMC. Not only do we have our monthly in San Rafael next Wednesday, but the month of April we host, and so we are still looking. We've talked – Debbie and I have talked about a variety of potential speakers, but we are always interested to hear from our council members if there's people that you think that we should approach. It's an opportunity to look at, you know, we have some very interesting people here in our, that are residents in our community that have amazing stories to share, but the key ingredient here is that it's relevant to all the other cities that come, and so looking for a broad speaker is really important. So if you have ideas or suggestions, Please get that to either Debbie or I. That's my report at 1225 on Wednesday morning. Questions? |
| 05:01:01.19 | Councilmember Pfeiffer | Yeah, I got an idea for a speaker. What about the senator on his bill? because it's a hot topic with all the cities. I did have just a couple questions, Adam. I personally think a larger venue for the next ferry meeting would make sense. I don't know if... like the Spinnaker or something? I know we – I mean, could they set up cameras to broadcast it from there or no? Would it have to be just videotaped? |
| 05:01:35.43 | Adam Politzer | It wouldn't be live. So just like when we had a meeting, we've had other offsite meetings, we record it, and then it gets replayed the next day. |
| 05:01:42.40 | Councilmember Pfeiffer | Good morning. And then replayed the next day. |
| 05:01:45.24 | Adam Politzer | So we would lose that capability. |
| 05:01:45.57 | Councilmember Pfeiffer | Yeah. Okay. Yeah. I don't know. I kind of like the idea of everybody being able to be in one room together. You know, it was very, very difficult. Not only the overflow, but, you know, people were in the hallways. And if we were going to have another overflow room, you know, anyway, my preference. The other quick question I had was, The EIS with the Alcatraz in Barcatay, can you give us the highlights on that with Sausalito's impact? |
| 05:02:18.77 | Adam Politzer | The highlight that we have and it's consistent to the letter that we sent back in August and the letter that we sent in 2012, they're once again looking at putting a ferry in the landing at the fishing pier that exists there now. rehabilitating the fishing pier so that it can have the, they're saying the occasional Um... |
| 05:02:46.61 | Councilmember Pfeiffer | Female Speaker 1 001 001 00 |
| 05:02:47.13 | Adam Politzer | Fair of service. Yes. Yes. Yeah. No. No, the EIS is proposing a ferry landing not to go to Alcatraz but to take people back and forth to San Francisco. One of the alternatives is Fort Mason. So they are looking at the occasional special event ferry service at Fort Baker. And we have – Female Speaker 1 Oh, I see. Okay, got you now. I understand now. Okay. Male Speaker 1 We have consistently objected to that. |
| 05:03:19.92 | Councilmember Pfeiffer | Oh, I see. And we have – Okay, gotcha now. I understand now. |
| 05:03:27.36 | Councilmember Pfeiffer | Yeah. |
| 05:03:27.70 | Adam Politzer | And we consistently continue to object. |
| 05:03:29.00 | Councilmember Pfeiffer | Yeah. Yeah. Right. Okay. Gotcha. So we're talking about Fort Baker. The ferry would go between Fort Baker and Alcatraz. I'm not recommending that the council |
| 05:03:34.37 | Adam Politzer | That's right. in Alcatraz. Okay, gotcha. I'm not recommending that the council |
| 05:03:39.07 | Councilmember Pfeiffer | Not for Baker? |
| 05:03:40.58 | Mayor Theodore | or Baker and Mason. It is confusing because it's that. |
| 05:03:40.63 | Councilmember Pfeiffer | THE CITY IS A |
| 05:03:43.99 | Councilmember Pfeiffer | Fort Mason in Alcatraz. |
| 05:03:46.65 | Mayor Theodore | Yeah, it would not |
| 05:03:46.72 | Councilmember Pfeiffer | Thank you. no no no at all it's only a very very go |
| 05:03:49.67 | Adam Politzer | We're going to go. |
| 05:03:49.97 | Unknown | Thank you. |
| 05:03:50.03 | Adam Politzer | What is this? |
| 05:03:50.40 | Mayor Theodore | Theory going. |
| 05:03:54.03 | Adam Politzer | Thank you. |
| 05:03:54.06 | Councilmember Pfeiffer | Thank you. |
| 05:03:54.08 | Adam Politzer | Thank you. |
| 05:03:54.18 | Councilmember Pfeiffer | Thank you. It would go from Fort Baker to |
| 05:03:57.06 | Adam Politzer | San Francisco. |
| 05:03:58.08 | Councilmember Pfeiffer | Thank you. San Francisco. |
| 05:04:00.49 | Mayor Theodore | This is good. Thank you. |
| 05:04:03.04 | Adam Politzer | And I'm not recommending that the council weigh in on which peer the Alcatraz Ferry run from the city you know I'm just talking about protecting our interests at Fort Baker |
| 05:04:16.00 | Councilmember Pfeiffer | Oh yeah, yeah, yeah, thanks. |
| 05:04:20.65 | Adam Politzer | Thank you. |
| 05:04:20.67 | Mayor Theodore | We'll have no public comment on any of these. Councilmember, committee reports. |
| 05:04:29.46 | Councilmember Pfeiffer | So the Butte Task Force, again, is looking forward to getting on the agenda on April 7th. |
| 05:04:38.29 | Mayor Theodore | And I have one, the Bicycle and Ped Committee met yesterday, and among other, and they meet, they're now meeting third Mondays of the month in this council chamber, and they're meetings are on the web so you can take a look at them. But the thing I wanted to point out, the ambassador program, which was referred to at the BAC presentation today, will be rolling out. the Ambassador Program over the next four weekends of spring break, which I assume starts this weekend. And so, first of all, everyone should be, you'll see people invest. So when they're all walking around, aside from Herbie, although Herbie is, you know, up there, are all these. And more importantly, and this is for the public, whoever may want to say this later, and for us, if you're interested in volunteering during this developmental period, They're taking all volunteers. |
| 05:05:32.64 | Councilmember Pfeiffer | And are they still going to take money from the preferred parking and use that to pay some of the ambassadors? Is that still happening? |
| 05:05:45.59 | Adam Politzer | I object to that. So I think what Dr. Fudge reported when he spoke on this at the last meeting |
| 05:05:45.94 | Councilmember Pfeiffer | I object to that. |
| 05:05:53.96 | Adam Politzer | was that during this period of time, the development of the Ambassador Program, they don't have an audience yet for the So they are planning on launching a concierge program. Um, probably closer to the summer. period of time. And then that money that they collect would then go and pay for the ambassadors that are managing the bicyclists. |
| 05:06:22.21 | Councilmember Pfeiffer | Can I make a motion to direct that money to pedestrian infrastructure instead? |
| 05:06:31.13 | Mayor Theodore | It's not on the agenda. We could talk about that on future agenda items, and we could talk about it. It's not agendized. I was giving it a committee. |
| 05:06:34.10 | Councilmember Pfeiffer | We can talk about that. |
| 05:06:38.56 | Councilmember Pfeiffer | I would like to have a future agenda item where we revisit the this parking Taking bicycle parking and charging, I like the idea of charging for bicycle parking. I don't like the idea of taking that money and using it to pay Um, I think it should be going back into pedestrian infrastructure. |
| 05:07:05.67 | Mayor Theodore | Okay. |
| 05:07:08.81 | Jill Hoffman | Thank you. |
| 05:07:09.29 | Mayor Theodore | Okay. So any other committee? |
| 05:07:10.55 | Jill Hoffman | and he's... Yeah, the Homeless Task Force, we have another meeting on March 25th, so that's it. Yeah, I'm sorry, the Emergency Shelter Task Force. Sorry. I'm on mute. Thank you. Thank you. Thank you. Yeah. |
| 05:07:25.57 | Mayor Theodore | Thank you. And I missed that. What was the date? I'm sorry, I interrupted March 25th. |
| 05:07:26.43 | Jill Hoffman | I missed you. |
| 05:07:32.10 | Jill Hoffman | March 25th. |
| 05:07:33.26 | Mayor Theodore | Right. |
| 05:07:33.65 | Councilmember Pfeiffer | Thank you. |
| 05:07:35.05 | Mayor Theodore | Anything else? Can we report? |
| 05:07:36.46 | Councilmember Pfeiffer | I'm just curious, is that open to the public or is it... Can people attend? Is it Browne? |
| 05:07:42.24 | Jill Hoffman | That task force, is that open to the public? Thank you. |
| 05:07:44.35 | Councilmember Pfeiffer | Is it a Brown Act? It's not a Brown Act committee? You guys could make it a brown activity if you want to. Anyway, something to think about. |
| 05:07:52.89 | Mayor Theodore | Anyway, somebody's thinking. you |
| 05:07:57.43 | Councilmember Withy | The whole goal is to try and efficiently get through this so that we can come back and have a meeting to get public comments. So I think we'd be better off going along the path we're going |
| 05:08:06.90 | Mayor Theodore | Okay, so moving on, future agenda items. Herbie's half out the door, so we have to. Any future agenda comments on future agenda items? Okay. |
| 05:08:15.99 | Councilmember Pfeiffer | Thank you. |
| 05:08:16.03 | Councilmember Withy | Not beyond what I've already said. |
| 05:08:16.72 | Councilmember Pfeiffer | already said. |
| 05:08:17.68 | Councilmember Withy | I just wanted to confirm that the Marine Rails is going to be on April 7th. |
| 05:08:27.55 | Councilmember Withy | Because I think that's what you have on the future agenda items. And I just wondered whether the agenda-setting committee was so sort of stacked up that that might get – Well, it's not – I've had a lot of people ask me about that. |
| 05:08:38.54 | Adam Politzer | Well, it's not a lot of people. The agenda setting committee is definitely going to be stacked up. But the other two people that are impacted are both Danny and Lily. And because of their involvement with the ferry landing and a few other things, I don't know where they are on that. But that's when we circled April 7th. That was their goal to come back on April 7th and give an update. |
| 05:09:01.64 | Councilmember Pfeiffer | And the Butte Task Force, of course, April 7th. |
| 05:09:01.67 | Adam Politzer | Thank you. |
| 05:09:04.44 | Mayor Theodore | All right, any other reports of significance? I see none. I think we're adjourned. Okay, second, third, 1233. |
Aaron Singer — In Favor: Seaplane Adventures owner and kiosk sponsor. Stressed the kiosk's critical role in managing visitors and directing quality customers to businesses. Expressed strong support for continued funding to maintain the service. ▶ 📄
Yoshitome — In Favor: Sushi Ran owner. Emphasized improved city-business communication and the need for proactive crowd control funding. Argued the city has the funds from increased TOT and should spend to manage visitors better. ▶ 📄
Peter Van Meter — In Favor: Chamber of Commerce board member. Framed kiosk funding as a return-on-investment decision for the city, suggesting reallocating funds from other budget areas to support business promotion and visitor management. ▶ 📄
Jeff Sears — Neutral: Blazing Saddles representative. Acknowledged progress on bicycle issues and encouraged positive collaboration between the city and businesses to improve the visitor experience. ▶ 📄
Jill Giordano — In Favor: Resident and business owner. Urged the city to take pride and invest in marketing and branding to attract the right kind of customers and improve the city for everyone. ▶ 📄
Christopher Holbrook — In Favor: Business owner and chamber/hospitality committee member. Called Sausalito a unique brand that should be treated like a business. Expressed disappointment at the lack of increased TOT investment and stressed the need for a return-on-investment approach from the city. ▶ 📄
Ines Ponyay — In Favor: Business owner of 30 years. Supported marketing to attract local, quality visitors during off-peak months and emphasized the kiosk's role in controlling chaos, not just directing business. ▶ 📄
Bob Freeman — In Favor: The Trident restaurant. Concurred with previous speakers, stating that city investment upfront will yield significant returns. ▶ 📄
Peggy Day — In Favor: Kiosk staff member. Provided firsthand observations that well-heeled travelers visit in off-peak seasons and that bicycle congestion problems are now occurring year-round, underscoring the kiosk's constant need. ▶ 📄
Lorna Newland — In Favor: Resident, business owner, and Chamber treasurer. Highlighted the Chamber's financial strain and broad contributions (website, directory). Supported kiosk funding and noted the additional burden on kiosk staff due to lack of parking attendants. ▶ 📄