Hi. Good. On the last, I went on the YouTube, because they got the last one. I noticed that there was a pan, and then it stopped on Jim while someone else was talking, and Jim brought it to my attention. So I don't know if you kind of stopped to do something, but he was kind of like a little sensitive to this. Okay, thank you. I'll be more cognizant of that. No, no, no problem. And then I did shoot Victor and e-mails with one of his consultants to support if you wanted to put a comment. Thank you for in here, because I can just see them once they realize that they're on the air. That they're not really sure if you have a switcher or something like that. So that might be a future conversation for us and we're going to talk about it. Okay. I could just see that comment. Okay. Right, because they just have to get used to that actually now that people are going to be paying attention. Right. So what they're saying could be a game changer. We do have pickpockets for that, so that would be helpful. Okay, thanks for the heads up. No, I appreciate all that. Oh, no, absolutely. No, thank you. Well, we're glad you're here. Okay, so two things. Is it something that's on an agenda item? Okay, then they'll say if anyone has something to bring to the attention that's not on the agenda, then you would get up, go around and go to the microphone over there. The podium. The podium, and then if you're representing yourself, you have, I think it's like two minutes, three minutes, and then if you're representing an organization, you get a little bit more. Okay. And you're being recorded. Okay. Sure.  I can't stand up. And usually they'll want them after you. Yeah, unless you want them to, okay. Then you would just come, I have some handouts that I'll share with you, you know. Should I say that at the end? I would say that in the beginning. Oh, say it in the beginning or the end? Yeah, yeah, yeah. Say it at the end, and they'll say, we'll come on up and then hand these ones. Good luck. There we go. So, as we get down, we'll see what we can do. I said, open up. And so, if you have time, I'm going to take a picture from there. I'm going to take a picture from there. And I'll put it on the table. Oh, okay. Go, go, go, go. So, we'll have to set this up. Okay. That's going to mess me up. Okay. Okay. Okay. Okay. Okay. Okay. Okay. Okay. Okay. Okay. Okay. Okay. Okay, okay. Okay. Okay, okay. Okay. Okay, okay. Okay. Okay. All right, thank you. Good evening. I'd like to call this meeting of the city council to order. Would you please rise and we'll have a moment of pleasure to be followed by a moment of silence. To the flag of the United States of America and to the republic of which it stands, one nation under God, indivisible, with liberty and justice for all. May I have roll call please. Mayor Dillis. Here. Vice Mayor Johnson. Here. Council Member Lind. Here. Council Member Tim. Here. Council Member Reed. I should point out Council Member Reed contacted me earlier today and said he'd likely be 15 minutes late. That will move to committee reports and I'll start with Council Member Lee. It's a heavy metro board meeting and we're dealing with budget issues and a 10 year strategic budget plan update on that and some employee negotiations and had some new board members sworn in and one of our most senior long term board members, a real special person that we said goodbye to, but other than that, that and as an alternate this time, even though I accidentally voted, on the Santa Margarita groundwater sustainability action. I'm sure Mayor Dillis will mention the upcoming workshop Saturday. Vice Mayor Johnson. I'm not here to report, Mayor. Council Member Tim. We're attending the housing solution forums with our mayor and we were able to go to the Silicon Valley leadership group. They didn't put on a really good forum focused on some of the coming changes from the state and housing. They had the heads of all the various transit groups there as well as the CASA group and the Senator Wiener and Senator Chu who are going over to Senate Bill 50 is the impact. So I don't know if you want to expand on that at all but that was something we got to attend this last week. I forgot one thing that does apply. We had a LAFCO meeting this morning and it was part of approval of an annexation on Coombray here in the city of Scotts Valley that's been in the process for a period of time. And real motivation for that annexation was to protect the forest land and protect the environment around the end of Coombray. So nice for the homeowner, nice for the city as well. Great, thank you. My reports I did attend the Santa Margarita Groundwater Agency meeting and as has been indicated there are a couple more informational workshops coming up put on by the Santa Margarita Groundwater Agency at the Felton Community Hall. One is on February 9th, no I'm sorry, February 9th and one is on March 9th and the first one is on water budgets. How do we balance all our needs? And second is on managing groundwater, how do we prepare for an uncertain future? And I attended, we both attended the last session and it was excellent and even though it was several hours long it went by very quickly because we were engaged and we were getting great information. So I encourage folks to attend those workshops if you are able. I did also attend the Silicon Valley Leadership Group session on housing that Council Member Tim mentioned. And I found it very informational, good group, great presentations. I was somewhat disturbed by the presentations by Senator Wiener and Assembly Member Chu about SB 50 which is a follow-up to a bill that was proposed last year that failed. This one isn't about putting 10 story, allowing 10 story apartment buildings near transit centers, but they've got it down to 55 feet or five stories. So there's some other egregious language in there. So basically I'm concerned about, even though we need housing, concerned about the takeaway of local control. And so I know we're talking with the city manager, we're looking forward to hearing what guidance we can get when we do California cities to get the biggest bang for our opinion. So I'll be watching that to see what that goes. I also attended what's called the City Select Committee. It's a monthly meeting of the mayors, the County Administrative Officer and city managers. And we'll just let you know that our appointments to the Monterey Bay Community Power Policy and Operations Board were confirmed. The Select Committee makes those appointments to the Monterey Bay Power Community Power. And I also attended the Monterey Bay Community Power Policy Board meeting. We're basically, we were giving feedback to the negotiating team about the compensation that the CEO of this organization would get. So it was an interesting meeting for me, my first meeting. And that ends my committee report. And we want the city manager's report. All right. Well, thank you, Mayor. Just have four items for you this evening. Wanted to remind the community that the Town Center developers will be holding two community meetings tomorrow, Thursday, February 7th, one at 1.30, the other at 8 o'clock. And both meetings will be held at the community center. There is also a police sheriff and security job fair that's going to be held this weekend. City of Scotts Valley Police Department along with other area law enforcement will be participating in a job expo. And it will be from noon to five this Saturday, February 9th at the Kaiser Permanente Arena and Santa Cruz. And so applicants are going to have an opportunity to learn more about the oral interview process, required background investigations, the academy experience, field training, et cetera. And there will also be a live non-lethal force and keen eye demonstration. So that should be very interesting. Also the Scotts Valley Middle School, Ribbon Cutting and Gym Dedication is scheduled for this Sunday, February 10th at 3.15. And there will also going to be an open house held between 3 and 4. So if people want to come out and take a tour of the new facility, they can do that. I would encourage them to do so. It's absolutely phenomenal. So glad it's finally done. And then finally we have a general plan advisory committee. What we call G-PAC meeting will be held on Monday, February 11th from 6 to 8 in the City Hall of Council Chambers. And this agenda is going to be about mobility issues. So we'll kind of do a mobility 101 talking about mobility is just beyond just vehicles, right? It's about pedestrian and how we move around throughout the city. So it should be a very interesting transition as we get into the meat of the G-PAC. It will be focused on mobility and land use over the next six months. That concludes my report. Thank you. Thank you. We move on to public comment time. This is an opportunity for anyone to speak to us about anything that's not on the agenda. And you are limited to three minutes. Would anyone like to speak to us? Please come forward. I'm Rabia Barkinson. I wonder how many of you would do anything for advanced technology even if the chances of getting cancer could skyrocket? How many of you would trade sound sleep, memory or brain function for cellular technology? That is exactly what you are doing if you are supporting 5G that's fifth generation cellular wireless technology in your city. I've been a health professional for over 35 years and I am concerned. The guidelines for 5G don't allow the local governments to make decisions based on health risks. Telecom companies and the federal communication commissions, FCC sweep the health risks under the rug. 5G has never been tested on humans or the environment. We will be getting pigs as part of the largest experiment on Earth. Five cell radiation will be aimed right into your house with cell antennas located every one to eight houses on light poles, utility poles and traffic light poles. There is no way to get away from the hazardous radiation. The FCC and telecom companies state the cell tower radiation is safe based on the outdated 1996 FCC guidelines which measured thermal heat damage to the body. Over a thousand peer reviewed studies have shown non-thermal biological damage with the current cell radiation ranging from cancer to brain damage. We don't feel these actual effects with 3G and 4G because most people are not next to cell towers. Did you know fire stations are exempt from having cell towers on the rooftops because firemen who stayed in the station became non-functional? Do you think 5G with 90 GHz stronger current than 3G to 4G might damage human health? Children and elderly are much more susceptible to biological damage especially the brain and we have 55 plus communities and schools in Scott's Valley. City Council and citizens, please take this seriously and learn about 5G cellular technology to protect yourself and have a workshop. The County of Marin had a workshop last night to discuss taking control locally. You can view it online. Now listen, if you have questions you can also go to www.ehtrust.org that's environmentalhealthtrust.org. Thank you. Usually, to be honest with you, I look at scants sometimes at the issues that she just brought up but I have been hearing things about 5G that are a little bit concerning so I'm not saying that we would explore that as a counselor or whatever but it's gotten my attention a little bit so I'm going to learn more about it so thank you. Thank you. Would anyone else like to speak to us about something on the engine? Just to be clear, when the light gets red then that's a few three minutes or so but please tell us which one you might. Thank you very much City Council for this opportunity to speak and I'd also like to add to Robya's comments about 5G. 5G will be a spectrum of waves called millimeter wave frequency. Right now we're about 3G. 3G, just to give you some numbers so you can make relationships, 3G is 1.6 to 2.4 gigahertz. 5G will be 24 to 90 some scientist gigahertz or 24 to 100 gigahertz which it will be changeable by AI, artificial intelligence. At 60 gigahertz the human body cannot absorb oxygen from their hemoglobin. Millimeter wavelengths are considered militarized, weaponized by the military. They use them to crowd control if they want groups to break up because it heats up the skin. That frequency makes your cells like antennas and it absorbs the heat.  They also use it to control the minds of the enemy. It can alter brain frequencies. At the airports right now there are reports of security agents who are working with the provision security machines that scan airplane passengers. They are in the millimeter wavelength frequencies at some airports. At one of the airports most recently a woman who came, she came to a reporter and she explained what is going on with her group of NSA agents. She herself now has cancer. 38 in her group working around these millimeter wave machines either are passed away, have stage 3 and stage 4 cancer. That is terminal usually. The others have autoimmune. And what's interesting, like Rabia, I have been in the health field for many years, the autoimmune conditions are not on one tissue type because these are so high radiation, usually your brain, your thyroid and your heart and your sexual organs usually will radiate faster. But these are different autoimmune conditions that these agents have gotten into dealing with. We feel it's very dangerous technology to human biology and it damages heart, eyes, and I would like to thank you for letting me speak. I feel this is the apocalypse if we go to 5G and it is really something to be afraid of. Thank you very much. We'd also like to speak to us about an ignore on the agenda. Councilman, would you like to say something? Yeah, I just want to announce that this Saturday is our upcoming fallen officer foundation of all and several in this room are attending and we thank you for the support and it will be at the coconut grove from 5 to 11. The fallen officer board is comprised of volunteers so 99% of what we raise goes back to actually helping our local first responders, firefighters and police officers and we've had tremendous community support from our merchants and local businesses with sponsorships and donations and we look forward to a successful event and we want to thank the community for their ongoing support. Anyone else? We'll move on to alterations to consent agenda. City manager, do you have any adjustments? Here and then. Councilman, does anyone in the public are interested in discussing anything before something off the consent agenda? Seeing none, can I have a motion to... Approval? All in favor say aye. Aye. Motion passes unanimously and we move on to item one, economic development presentation from interwriter, the Lawmason Associates. Thank you, Mayor. I have invited Ken Norhoff from HDL and he will be giving us a presentation on sales tax and retail trends from a national law firm and he will be giving us a presentation on sales tax and retail trends from a national law firm and he will be giving us a presentation from a national law firm and he will be giving us a presentation on sales tax and retail trends from a national state and local perspective. Also very specific to Scotts Valley which I think you'll find very interesting. So Ken, the floor is yours. Mayor and city council, staff and community members, it's a pleasure to be here. My name is Ken Norhoff. I'm a principal with HDL companies and I'm going to spend a few minutes going through a lot of information centered around sales tax and I'm going to answer those for you. So I thought I would just start with some basics just to make sure everybody's understanding sales and use tax. We're talking about taxes that are paid on tangible personal property. Currently in California, real property and services are excluded. This tax started back in the 1930s and has evolved over a long period of time. It's an end user charge through a series of legislative processes. There are sizable amounts of money that are now exempt where we used to collect sales tax in California. We've got a fairly small number of businesses that are when you aggregate them are generating most of the tax that we see across California. This has become more complicated about where does the money go. So traditionally, you'd walk in a store and you'd pay a rate and the money would stay locally and that's still true today because we're tracking a sales office or where a transaction occurs but particularly with the advent of technology out of state ordering. Some of those orders are filled out of state. Some are filled in state that dictates where those sales tax dollars flow. We have some regulations that have come out of the state agency that oversees sales tax. That's the California Department of Tax and Fee Administration that distributes some of the money administratively for ease on what's called a pool basis. Some money gets pooled and rather than coming back directly to a formula each and every quarter. And then there are even some limits. The last bullet there is talking about out of state and it's typically equipment, telecom, energy utility at a certain price point over a half a million dollars, actually those dollars are directed back to a local agency rather than going into the pool. This chart which is probably going to be a little hard to read and frankly it's only a partial example is trying to highlight for you on the left where an item is ordered from in state or out of state and then secondarily where are the goods being shipped from in state or out of state and the column on the right is identifying whether the local jurisdiction or the county white pool is a recipient of those tax dollars. This is probably about half the length of the whole chart if you were to flow through all the variables in the ways that goods are ordered and shipped and delivered today. I want to point out a little bit of a question. This is particularly applicable because you have a local transaction tax measure you and so there are some nuances. Sales tax typically has been a point of sale that the dollars flow into the store or business where that goes. District or transaction taxes follow where those products are delivered. Automobiles are a good example of that. The dealership is getting the 1% Bradley Burns sales tax rate when a person goes as a car, but if there is a district tax based on where that vehicle is registered so your residents buying cars are paying that tax and money is coming back to you under measure you regardless of where they purchase that vehicle. So there are some nuances between these different types of sales taxes. The statewide rate so the current rate which is split really across the state general fund allocations for public safety health and welfare under realignment revenues but the aggregate rate there is 7.25%. The city gets 1% of that 7.25% that goes into your general fund as this which referred to Bradley Burns law when this was put into place. There is also a quarter percent in that local rate that goes to your county transportation authority or agency and they use that for transportation related purposes. In addition to the base rate there is the ability to have local voters impose transaction taxes but under state law there is a 2% cap that Charred is trying to show you there is a couple of counties or other areas that have exceptions but generally that cap rate is 9.25%. The rate here in Scots valley when we kind of pull out that data is currently 9%. So you have that 7.25% base rate. You have your local measure U rate at 1.5%. Santa Cruz metro has another 1.5% that is a rate that has been in existence dating back several decades. You have a county like library tax it is 1.25% and then you have an additional measure D transportation rate in there for another 1.5%. So when you stack all that together you are at a 9% rate leaving you 1.25% that 9.25% cap or 2% factor that you can have voters imposing locally. There are legislative processes that have been pursued by other agencies to go above that but absent that solution the rate here would cap out at 9.25%. Whether the city was to do something or whether another local government agency was to do something it is available to not just yourselves. So a tax base here in Scotts Valley. This is the sales tax distribution. We break all of your revenues down into 8 groups and you have got when we look at your base you are fairly dominant in that brown wedge which is food and drug. General consumer goods is kind of that orange wedge and then you have a fair number of restaurants which will include everything from casual dining to coffee shops in that blue pie wedge. I want to point out that the auto and transportation in yellow there is fairly small and that the gray wedge up at the top of the state and county pool is the distribution that comes back under the county white pool allocation. I put this slide in to contrast it with your measure U distribution where you will notice that your auto and transportation is a much more sizable part of that tax resource for you and the pools go away and most other pieces stay generally unchanged. So I want to talk about trends I am going to do that in a couple of ways. I am going to talk about some regional data here on the central coast and within the county but then I am also going to talk about things that are occurring just more broadly with where sales tax is trending. So there is a lot of ways to illustrate this but this is one chart that shows as this is looking back over 20 years at per capita household income and you can see that is rising there is a little bit of a recession period in there but then when you overlay that yellow line which is the sales tax per capita it is essentially flat so it is losing ground in terms of a resource that is keeping up with your cost of service delivery and capital needs etc. This is a chart again on a per capita basis looking at the central coast region so we take our statewide data we break that into regions and we have five counties here along the central coast. The Santa Cruz county is that dark green line this is a chart that looks back 13 years so you can kind of see the pre-recession lines on the left and then you obviously see the dip and there has been a fairly steady and reasonable recovery not just on the central coast but statewide charts are similar so that has been good. An area like San Benino county has been growing a lot and so that is also helping contribute to the results that look like they may be climbing faster than other counties within the central coast region. Here we are taking the same kind of per capital look but we are just looking at 13 quarters instead of 13 years so this is kind of taking the previous chart's right side and just giving you more of a sense of what is happening within the same counties over the last three plus years. It is a little sporadic kind of depending what is going on the bases in those fourth quarter columns tend to have a lot of general consumer goods and holiday spending and then they tend to dip off in the first quarter but again with some exception the lines are either kind of generally flat or trending upwards like. So these last two graphs are kind of I would say they are shocking but I don't quite understand the delta of the difference between Santa Cruz county and San Luis or San Luis Obispo county I mean one is kind of off the charts and the other one is like in the Dolphins helping understand a little bit why that is. So the math behind the line graphs are looking at on a quarter to quarter basis looking at the number of retailer retail counts that is what you see on the left under each of the five counties we are looking at the tax that those retailers generate each quarter and then we are dividing that by the population of those counties. So there is just a lot more stores and retail outlets in San Luis Obispo save them and would you say Santa Cruz county are you restricting that just to Scott's Valley? No I am saying county what? I am saying everybody within the county. The retail count is the number of retailers within the whole of each of those five counties. I have some more slides in a minute that will get more specific. I am trying to start wondering on that. I will narrow down a little bit. No that is okay it is a good question. So another way we assist your staff and try to look at the data is to take and this is just within Santa Cruz county now so I am getting a little narrower but trying to look at those eight segments I mentioned in the pie wedges earlier are the way that we group sales taxes so at the very top there you are going to see general consumer goods so this is malls, retail centers, women's apparel, men's apparel specialty stores, electronics are all in that top grouping and then right underneath that are restaurants and hotels and then you can kind of see the rest of the groupings that flow there it is not surprising in this chart to me not just unique to Santa Cruz county the general consumer goods are struggling and you probably already know that this is just visual evidence of that restaurants have generally been doing well because people are still favoring to eat out and I continue to point out where possible state and county pools so this is where we really weren't collecting out of state money there was some legislation AB 155 that started in 2012 where we started seeing money flowing in from Amazon at least from their products and some other online retailers has helped grow the county pool and then the recent Supreme Court decision the Wayfair decision is going to add money to that going forward where the state agency CDTFA is going to start collecting that in April so pools are becoming a more significant component of most agencies' taxes where they didn't exist 10 or 20 years ago your own chart here at Scotts Valley I looked at this a couple of times and I know this is a really interesting rainbow so things three or so years ago were generally kind of bundled together when you're looking at the same industries but you can see certainly probably where you've made some intentional investment you've seen some business investment in things like restaurants that's been trending up the pools are the same when you look at the fuel situation most of that is a function of price not consumption and so prices on gasoline and diesel have been rising over the last couple of years and then you can kind of go all the way to the bottom line there that kind of yellowish-light green color where you have auto and transportation which has generally been fairly flat so there's quite a bit of movement there but that is the trend and when we put these charts up we try to do that in a way where we're showing you the economic data meaning that where there were exceptions and the quarterly reports for late payments or missing payments we kind of take all that out of there so I was just trying to give you a picture of where some of your major sectors have been trending over the last three years yes so in you see state and county pools it bottoms out on first quarter of 2018 and it just takes a terrific rise yeah so there was a large correction not just the Scots Valley but state-wide that had to do with a supplier of a mail office and computer equipment and it was a 30 or 40 million dollar statewide adjustment that kind of showed up one quarter in a way so it's an aberration but it was a settlement between a couple of agencies the taxpayer and the state agency and so that adjustment internalized here as it did many other places so I'm going to shift off looking at charts and tables and graphs and talk a little bit about some other elements of what's changing or trending so one thing is certainly shopping happens and embedded in that there are a lot of things today so shoppers are more price conscious there's a lot of shared economy that doesn't generate sales tax revenue and there's a focus more on experiences and less about buying things that are subject to sales tax tangible personal property I like to use it as an example you might remember we used to go to the Wattbuster and buy things you know we buy DVDs and videos that generated sales tax in the downloading world no sales tax and there's lots of illustrations of that so it kind of highlights how the economy and the world has shifted our sales tax structure has not kept up with us so I have another question so first of all shared economy what is that right share, Uber and Lyft not generating revenue Airbnb not generating revenue and there's a range that are you could think of more as rentals or temporary uses as opposed to acquisition have an effect on sales tax I have a psychological question so so what you're describing is a shift say you mentioned blockbuster to digital networks and Hulu and so forth so to the consumer do they view that number one are they conscious of the fact that they're not paying the taxes anymore and secondly is there fairness or equity I guess equation in their mind that hey maybe we should be or when they would that they're not, does it register with them or is that really beyond your scope here no I don't think so I think generally consumers I don't think really pay a lot of attention to sales tax in any circumstance unless something they're buying or doing kind of promotes that thought so if I could use a personal illustration I was in Washington visiting my daughter and we went to a distillery and bought some whiskey and I knew there was a sales tax and I just assumed I'd pay it but it turned out I didn't know the tax rate on those kinds of beverages in Washington is 20% and I assumed it was like 6% of the risk so that's a personal illustration of where something caught my attention but by and large people aren't paying any attention to this stuff so probably if you have a 20% sales tax especially once you're going whiskey or alcohol or a beverage they're coupling the maybe the physical or effects of alcohol and they rationalize that higher number because it might have effect on the so-so effect they may redirect that into programs of mental health or other programs that are necessary to support that the state does yes, ma'am I have a question is aging a factor as our society ages as we age do we spend less and is that a factor in what's going on? I didn't say that but people particularly get retirement age probably acquired a lot of the things they feel like they need to acquire in their life and they're spending it on travel and experiences and less on things that generate sales tax absolutely and the other end of that is the millennial or younger generation that is just less prone to acquirement they're very comfortable in sharing and renting and using and turning it back over and so there's kind of both ends of the demographic so this won't surprise you but consumers are moving online so that might be a lot hard to read but we took the entire statewide sales tax the orange line at the top is what we call the point of sale revenue making what came out of the brick and mortar stores and that bottom blue line is the pools so pools back meaning online sales online sales back in 2000 were only 4% of the total of sales tax in California they ended in 2017 at 16% and they're continuing to move in that direction so even sales tax is growing a little bit you can see at the end there it's up about 10% over the last 5 years up through 2017 but it's not keeping pace with online activity it's definitely a shift we're overbuilt so if you compare the US to other parts of the world we have way too much retail and you've been watching as you see bankruptcies malls shrinking a lot of things going on and some of that contraction has been compensating for parts of our state and country that is just over retail relative to what we see in other parts of the world yes so in my remembering right with the transition the target tried to move into Canada and they I think they opened like 200 stores and like 2 years later they pulled out of Canada because they just excuse me they just could not compete and I see your Canada per capita has a lot fewer stores than the United States we have a national economy that's built on consumption or consumerism largely and so it's tied into what we see out there in terms of rips and mortar and score footage and we're going through a season now where it's recalibrating and where it's overbuilt it's being repurposed or reused and it might not be that the score footage shrinks but those buildings are being used differently and they're not generating the same remedy that they used to in their traditional model but the experiential sort of dynamic is still alive and well if you're talking about a wine tasting or a restaurant or a company there's definitely people want that they've got some information in here that supports that reasoning and so it's not that people don't want to go places they want to gather they want to eat, they want to shop but they're more selective and creative about how and when they do that so oh yes some countries tax services as well as products and do any of these countries do that and are those tax dollars included in here or not yeah they do maybe they're closer to home example I like to use our California economy from a sales tax perspective because we don't tax services in a number of things we're probably taxing every five or forty percent of our GDP at that seven and a quarter percent rate and then more for local taxes but why is a good example where they have a much broader base they tax about eighty eight percent of their GDP and their tax rate is four percent so there are examples even in the states where there's a much broader base and a lower rate and California frankly is behind on that conversion or discussion so I want to mention this order desk issue so all the convenience of delivery we get is having a smaller number of communities building out a lot of fulfillment and distribution centers particularly along transportation corridors in the central valley and an empire near airports so the way the sales tax law works today those order desks where they're located is where the sales tax flows so there tend to be smaller number of agencies generating a lot more revenue so out of our database the chart on the left is looking at fulfillment centers and how the revenue has been growing from those statewide over the last few years and then conversely looking at department stores as a category so this would be your Macy's Coles Sears Correspondingly dropping and so there's a heavier concentration of tax revenue going into a fewer number of agencies in California next you can't get away from the emergence of digital devices and how that's influencing how people shop you've probably seen people standing in stores with their smart phone looking at the shop price looking at something in their hand and making decisions all of that is influencing what's happening in retail Amazon I like to characterize them as world dominators I don't think there's anything they don't think they can take on including delivery systems like UPS and FedEx and they are helping disrupt that in a positive way but a lot of shift in retail so we're not beating clerks we're needing warehouse people and technicians that understand how to work in a facility like you see in the top slide a lot of technology investment artificial intelligence is going to influence this so we have to think through like if you're talking into one of your devices at home and ordering things we have to start thinking about where does that end user transaction where do those tax dollars flow and it's just a reminder again that we have an antiquated system that's not keeping up with the way we are buying and consuming things I've mentioned I think the Wayfair decision so that's going to start April 1st there's some legislative discussion going on about should the exemption levels remain that they were in South Dakota which was $100,000 a year annually of value or 200 transactions that exempts a taxpayer from complying but they're talking about raising the exemption so that's not necessarily that's working it on so we're trying to grow the tax base staying quiet and then I think lastly I would just tell you that the biggest challenge the biggest one is what you just were hitting at Mayors we've got a service economy a high rate we aren't taxing much and something needs to change that's why the rates keep getting higher because what we're able to tax keeps shrinking so in all that I want to just give you some things to think about opportunities as you deal with the challenges you have today and in the future so breaking borders are going white people want to show up they want experiences they're interested in stores that are unique there are trends going on in specialty stores they want beauty products breweries boutique wineries all kinds of things that people are interested in want to have experiences so they'll come out and show up it's done on smaller footprints it's not done on a grand wall stage anymore it's different main streets where you have them or you can reinvigorate them or create them are very appealing to people that creates a lot of really good downtown synergy and energy and industry we like to say industry is a new retail so a lot of this trending that's going on around industry has to be paid attention to so things that you might do could you expand a little bit on the industry as a new retail entrepreneur I was going to go through a little bit of it so let me see if I hit on it and if not I'll be glad to circle back and address your question so just some elements I think the council might want to consider as you're thinking about sales tax and what it means for your future having some really good understanding of your trade areas income levels education market trends or you've got surpluses meaning you might have an overabundance of a particular kind of use or where you have gaps where you have room to fill some of that and then really understanding what your community desires and what your community is willing to support I know you provide services to the city on an ordinary basis in terms of sharing sales tax dollars do you ever share with us what you just described as gap analysis or gaps or surpluses that would help us do we already have information that would help us at least identify what we're not getting that most cities would get there's a couple levels to that sharing of information so the more standard one we break all of your eight groups into business types so we can look at quick service restaurants building materials new auto dealers and we can run a very simple bar chart on a per capita basis and can show you where you have surplus and where you have gap and so I think your staff has seen that over time doesn't give away typically doesn't give away anything that's confidential we have confidentiality requirements and sales tax law there are some communities that will go through a more sophisticated approach to understanding that and so we have a separate group that does specific work on market trends and demographics and tries to help you I'm thinking of a client I'm just helping them work with where they wanted a real understanding of who's buying in their community so there's a lot of resident versus non-resident kind of information to understand where your tax dollars are coming from or where they're flowing to and so that's another level of detail that can't be provided but that's kind of above our basic scope so secondly from a retailer perspective understanding people that want to come here and be here and invest in your community what are the things that they're looking at through a developer or a business owner lens building size parking all those kinds of things densities and they're looking at tenant mix there's a lot of synergy around certain tenants liking to be with other tenants and they have figured that out over time and they know that those are successful but it's just that there's got to be figuring out a tenant mix has to have some kind of vision and a strategy about it and a way to communicate that in broadening these industry and business uses and when I say industrial uses there's a lot of kind of quiet sales tax generation that comes through and you have some of that here in your community that isn't the retail center utilities a variety of things that we would consider kind of business to business transactions they're also tax generating they're good job generating and it's important I think to think through where those might be appropriate or where they can be integrated into your community alongside more traditional retail and then lastly just suggesting that it's really still a personal relationship business brokers and your business community and all those folks the lending institutions is really helpful in terms of trying to succeed so I'm going to close with just this bottom line if things don't change sales tax is going to continue to grow and it's even going to go through cycles where we hit a slow down I don't think we're going to see a recession like we did ten years ago but at some point recovery will stop economic development is going to require some fairly sophisticated work at the local level and then our company looks at we do a lot of work all over the state and we in various ways have been part of statewide committees and lead participation etc about changing the way sales tax is structured and applied and it needs to broaden and it probably needs to go to a point where it's more of a destination model or a delivery model kind of stacked up in the traditional brick and mortar allocation so that is my presentation that's a map it's a heat map I guess of tax rates all over the United States surprisingly there's some higher rates in places like New Mexico and stuff that sometimes are surprising to people because we don't think that way I'm glad to answer any more questions Questions Council? Well I thought that was an excellent presentation I think you touched on some things that will make us think and I think it's a jumping off place really maybe for us to fashion our model are and we're going to deal with it maybe a little bit later in terms of how we approach our facing our revenue gaps and so forth because it's all important I mean this is friends I mean I think everybody's known we've the past mayor I've written about it in newspapers about the Amazon effect but Amazon Prime you have your phone and 13 hours later you have your product so that's good but it has its problems I think this is a really good food for thought for us how we fashion our policies moving forward so thank you Council Member Tim? I just had a question on the order desk fulfillment center model that's happening it's happening in the valley areas more so so is that something that we could tap into here or is that going to be challenging because based on your analysis what do you say they tend to do things on a much larger scale it's not uncommon to see a million or two million square feet so you need to deter a real estate but there are examples where it's getting closer into people and there's smaller footprints but there's still a demand for transportation orders and we have to think of the impacts of trucks and other things and where would that be placed I would suggest that any community ought to be open to thinking through where some of that could occur appropriately within your community because if we're still operating under the same rules absent kind of filling in here on the central coast or something it's going to stay out there and just come this way in the trucks but figuring out that last mile that's kind of the new cliche of how do you get there quicker faster I mean businesses are certainly open to that particularly for products that are commonly shipped Council Member Lee? Thank you Mayor and first of all Mayor I apologize to you and the council and to the public for being late I conveyed earlier I had a work commitment it was going to keep you late and I recorded this meeting and I'm going to watch the part that I missed when I got home so apologies for that following up Council Member Tim's point about distribution centers and what it does seem like the big players in this space are looking for a square feet in the millions so you got to have a lot of dirt to begin with but then isn't the downside even if you do have the dirt I agree with that there could only be 80 jobs tied up in that million square feet in the warehouse You're absolutely right because a lot of it is driven by technology so most of those centers the local jurisdiction gets a fairly nice kind of one time pop for the robotics related equipment and things that go into those buildings but it's not a lot of jobs and it's not typically a lot of well paying or high paying jobs so there are other reasons for having that there but that is not I looked over your presentation earlier today and I agree with everything Vice Mayor Johnson said very thorough and very valuable but grateful that you did this I know your crystal ball probably isn't better than anybody else's up here at the same time do you have a perspective on you know we've heard a lot of things potentially coming in Sacramento changes to prop 13 split role one of the things that's talked about is extending sales tax to service any feel for the likelihood of some of those scenarios that could have a significant change on how localities realize revenue in the next two years so in my former life I spent 26 years in city government and watched a number of these studies trying to figure out how to sales tax get modernized they came from state commissions they came from the league of cities and what's difficult is when you're trying to split up a pie and changing the rules you end up in a one loose scenario so not to be pessimistic but it's difficult unless there's some way to kind of hold harmless those that end up negative but having said that our company and I sat in with a group of 30 city managers over the last year through the league of cities we were providing a lot of the data trying to help them figure out state constitutional amendment 20 which was sponsored by Senator Glazer and his idea is we should just move everything to destination get rid of these old rules everything goes to where it's delivered and you can study that and realize quickly it's good for better communities it's going to be tough for these agencies that have big fulfillment centers or places like San City which have very low retail very low population right so so that constitutional amendment died in the appropriations committee but I'm pretty confident it's going to come back I know the governor we've got a new governor and legislature that's interested in seeing a lot of things getting done so it wouldn't surprise me that some types of reform will be part of the legislative discussion but I can't tell you exactly what it's going to look like. That was 8B20 the Glazer bill or the VSB right it was Glazer? SCA 20 it started out in the early bill 1466 but part of the history lesson on sales tax if you've been around local government long enough when the state kept rating money Prop. A got passed in 2004 that kind of protects the distribution formulas of sales tax property tax and vehicle license fees so the only way many people believe the only way those rules could get changed is through a constitutional amendment because that's what blocked it in to begin with so it's not just a bill it would have to go out to a vote of Californians in order to change it so thank you very much again it was a very helpful presentation and as others have said it's certainly a topic we've been concerned about watching and appreciate your input and the thoroughness of the report in your background that you've got a great resource thank you very much for bringing me forward and the thing that we all have hearing about the need for restructuring with the amazon factor the online sales the other thing is that we have had in the past prohibited Airbnb even though we did some research and realized we still have them but we're not collecting any Q&T so this area and sharing our areas that we definitely need to take a different look at and that was helpful thank you I have a few questions first you mentioned our rate being higher and we don't tax everything is it true that California if you ignore the states that don't have a sales tax that we tax the fewest items because we have so many exemptions for medical equipment and lots of other things we're at the high end of the exemption curve and we're taxing less merchandise I can't say we're number one we're definitely in the top 10 of the 50 states in the US so we definitely have a very narrow base and you can look at most states and you're going to find their taxing services and doing other things it makes our rate look artificially high because we're taxing few it's just math we're trying to get the same amount of money out of a smaller pool of stuff so the rates keep going north also I had a question about fulfillment centers I've heard that in some cities that have attracted large fulfillment centers that they have very large rebates back to the cities and basically they strike a deal with the cities to locate there and they'll get a lot of those tax dollars is that true? that is true but in many part of the draw and you've got typically a lot of infrastructure to build around those facilities so there's a discussion and an agreement that's reached about getting roads built the other things that are necessary to move the goods around and so some tax rebating is often put together in an agreement that ends up in front of a city council to memorialize that so when that happens on a large scale it's a piece of tax dollars collectively as far as I'm saying it's kind of a concentration of maybe a couple of dozen cities across the state because that's land is cheap, labor is cheap the freeways are there and so a lot of the coastal area is built out and so it's more challenging to figure out how to get that in those areas last question I'm rusty on the rule but there's a five million dollar rule of the county projects and as I recall it has to do with a very large building that built in Scotts Valley that there might be out of state supplies coming in and equipment and the tax dollars to the extent they come to this county they would go to the county pool and Scotts Valley, same as the Scotts Valley project Scotts Valley would only get a portion of those tax dollars because population wise if that's how it's done we're a five percent of the county population or something so the question is I understand that you can enter into a voluntary agreement with a developer or somebody that's building something and have them send a form in to the state which says all those tax dollars will completely go one percent of the way to the city and so confirm that for me and then ask me what we could apply that to let me know for instance we may be building a town center soon would not even though we're heavily involved in that would literally be built by a developer that would own the land, not us anymore and so the tax dollars for that is this the kind of rule that could apply to that because it would be a lot of dollars right it could my experience says often it does not and so let me just you're right about the rules so there are then California law if you've got construction related activity and valued at five million or more and I'm talking about products that are worth that so I'm talking about steel and concrete and all those kind of things not the cost of the whole job which is a lot of labor but actually the cost of product there is a process to go through the state but those developers slash contractors or their subs have got to go get what's called job site construction permits in advance of starting the work it's the only way the state will allow the money to be directly reported back to a local community so it takes a fair amount of front-end work and coordination often those are tied into agreements because maybe you've got other things in your agreement and this is a piece of what's in that agreement so a development agreement process of yeah that's one way to go about that it still doesn't compel them to do it so it's a question of working with probably with your city attorney and others to figure out how do you try to make that as tight as you can because it's still voluntary you can't compel them but typically what I see is there's kind of a minimum return related to sales tax as put in those agreements and so it's advantageous to them to try to do it through the system I just described or the fallback is they're just writing you a check in some other way and I do want to be clear the pools are discriminated based upon Scott's Valley share of sales tax relative to all the other agencies in the county it's not a good cap and so it's your base measured against all the other cities in the county on Incorporated Area that's how the pool is distributed but we might we could see we could be losing 90% of something oh yeah absolutely and I mentioned earlier on the equipment piece the half million that's even more common because the threshold is lower and so we find often you've got projects maybe got a medical facility here that's buying an imaging machine that would be eligible for direct reporting and so those are the things we try to track and monitor on the city's behalf to make sure that that comes back locally where it's appropriate so you watch out for that I imagine you can give us the reports thank you yes and a couple things you said made me think of the industry that we're you know Scott's Valley was one of the first areas where high tech started and but it at that time didn't generate the sales tax that you might think and I know you're addressing some of those changes but even something like we several of us were at the ribbon cutting for Dantel Genomics it's a nationwide company and I remember it being there at the time wondering how that might support services and thinking about the past being industry not those tax dollars not staying here so it sounds like there's some changes and some things that may help in that area but I'm not as clear on what that might mean well we're just working with the rules of the state as you know implemented and adopted over time so a business like that always thoughtful discussions with them of understanding their business model where do they order where do they ship from and your staff have information that can help you from a policy making perspective kind of know what can they do and so you can't typically unless you've got some form of agreement you can't bind them to something but if you understand how that works and who you're seeking and how they're operating their business I mean first of all they've got to be selling something that's taxable right so sometimes that's just not the case they're selling more services than they are products and so you don't see a lot of new but to the extent they are creating or manufacturing something where is that order desk and where is that product being shipped from are the two really big questions to understand where the taxes are going other questions from the council is there anyone in the public that would like to weigh in on this subject yes in backwards would you mind if the speaker comes in thank you want to come to the front please a couple of questions would you come to the podium please so we can hear maybe thank you our community Santa Cruz county is a very unique community in that our department stores don't do very well here case in point Sears is going out of business and Macy seems like they're constantly sending the sales sales people in this community in retail tend to like to support the small retailers I certainly do and particularly with pet supplies I make it a point to go to the local people in scott's valley versus the big box stores I want to see these people stay in business they're part of our community it's more emotional it's not really probably a fiscal thought but it is for the individual business owners the other thing is I am from the southwest originally in New Mexico and we have sales tax on everything doctors anything you buy any service you have your theater looked at there's a sales tax but I want to say property taxes are extremely low there and mortgages are considerably lower than here so we have to look at everything in balance we pay very high mortgages we pay very high property tax and we pay very high retail tax 9.2 percent depending on our community are on city and I think we need to look at that how much more retail tax could we pay if it was local I know they want we're talking about putting warehouses in and what would be the aesthetics of putting warehouses in Santa Cruz County we do have a number of them off of Mission Avenue but it's a different kind of district than scott's valley town Pacific Avenue, Santa Cruz so I just want people to think about the various aspects of the type of community we are it's real special thank you Mr. Reaver I'm Danny Reaver with the scott's valley chamber of commerce and I just wanted to make a couple little comments first up I just wanted to thank you Ken for giving such a great presentation and I wanted to thank Jenny Harriama for reaching out to the chamber and inviting myself and the board members to be here tonight just a tiny question I had as I was wondering if this was an available digital copy and if so if it's okay to even share some of these slides with chamber members would be one of my small questions and then just another one we're out of curiosity we're talking about industry in some of your graphs up there and I'm curious we have a lot of manufacturing in scott's valley like businesses like perfumers apprentice that do I think $150 million international business we got zero motorcycles I'm curious where some of those might fit into that pie was just sort of one of the little questions anyway those are my only small questions and yeah thank you again for the presentation so yes please so your first question everything that was presented tonight is public so however you want to get this through city staff or whatever I mean so there's nothing in there that it's currently online okay there you go I think those businesses that you mentioned and there's probably others the best way to really know if there's any potential for well some of those maybe generating sales tax you know we'd have to look at that specifically and there's always confidentiality around that under state law but the staff are aware of that and probably could help navigate that but absent well I guess with the confidentiality issue noted certainly going out and talking to those businesses and just understanding how they what they're doing in those locations and how it's really an ordering and transaction is kind of where does the contract get signed what does the order get fulfilled and where does the product get shipped from those are the real questions they're dictating when and the revenue stays local or whether it's going in a pool or whether it's going somewhere else so it could be they had a film and center in Tracy making that up and they had an order desk in Ohio it could be that the dollars are going back to Tracy even if you've got a D or a bunch of people working here in that kind of an industry because it's not linked into the right way of structuring in order to keep the taxable it does vary it's very business to business for sure and of course there are motorcycles I believe also as a Santa Cruz location so you know I don't have to have that play into it but I see the way to look at it and you have to even look at sales tax different than your local measure use so even if they were doing work here and they get the sales tax if they're shipping most of it out that's money that's going to end up in other jurisdictions it doesn't stay here so and the reverse is true so things come in to Scott's family Thanks, can anyone else in the audience want to make comment? Seeing none, thank you very much that was a great presentation and very informational we'll move on to item 2 adopt resolutions establishing project specific subcommittees I'll go ahead and take the staff report as you know at our last meeting the council approved their integers due to appointments and part of the direction of that meeting was to return resolutions to establish project specific council subcommittees there were two in particular one was a budget subcommittee the other was a council library facilities of great committee those resolutions are attached for your information just very briefly to be effective if council chooses to establish it this evening from today through the end of the calendar here and it's undetermined how much work we will continue to do on areas related to the FSP and the budget so I just took the liberty of making that recommendation for you for your consideration it would be comprised of the mayor and vice mayor for the council's direction and as I mentioned it would include recommendations and guidance with respect to the development of the 19-20 budget and also the update of the city's fiscal sustainability plan related to implementation strategies and the framework for the informational campaign to enhance the community's awareness of our fiscal outlook the other is the facilities upgrade subcommittee with respect to the library the same duration as recommended as you know this item will be coming before you on march 6 for further discussion so we'll see where that leads us and the representation on this committee is vice mayor Annie Johnson and councilmember Jen Reed and I won't go through at length the bullets before you in the staff report but the council is very specific of what the task was with the subcommittee last year when they directed the subcommittee to work on how to identify future capital needs as it relates to the library in the context of measure S and working on a market feasibility study and looking at costs for preliminary performing arts use and flexible space and then obviously the subcommittee would make recommendations with respect to the project and the funding and so that's it in a nutshell again you have options to take liberties to approve resolution number 1959 and 1959.1 that concludes my report thank you thank you city manager Harry council first these are the only two projects specific subcommittees at this point the only two that council directed council can establish projects specific subcommittees at any time thank you and then my other question looks like these are would be in place we say until December 31st and so my question is if there's still a need come December 31st what do we do at that point so each year you establish subcommittees so you would just go ahead and reestablish them for the subsequent year when your appointments come before you again and so if it were for the same purpose with a different timeline would that continue to qualify as a as an ad hoc committee I'll let the attorney answer that it may or may not it depends on what work is left to be done so in December we can visit those issues I would imagine by that time some of the issues that you may be looking at may change and so as long as there is some variation in the duties of the subcommittee we could create a new ad hoc subcommittee okay and knowing that we normally weigh in on subcommittee appointments in January after December 31st I guess what happens on December 31st when this expires do we have some latitude to continue in case we had to meet in early 2020 would we still have the ability to do that or would we have to wait until the council actually acts you would have to act either before December 31st or we would have a little gap there that's what we're reading thank you mayor Kirsten, city attorney Paul I know there are some folks have different interpretations of ad hoc and what public noticing requirements are allowed the rules for accessibility by the public are different for standing committees in ad hoc are you comfortable that the interpretation that we use here in the regularity with which these two temporary committees would meet are going to keep us well on the side of something that's defensible and generally accepted practice in California municipal law yes it's not the regularity with which they meet it's the duration of time that they're in existence so that's why we've limited this time period for approximately 10 months if you needed to meet every week for 10 months that's okay it's the period of time that the subcommittee exists thank you any comments from the audience mayor I would move if you're ready for a motion yes I would move resolution 1959 creation of a budget subcommittee and also move resolution 1959.1 the creation of a library facilities upgrade subcommittee and waive the reading there of I'll second that question is it okay to lump these two resolutions together into one motion two resolutions so two motions we'll take we did have a motion second on each so we'll take the first one resolution 1959 all those in favor say aye aye motion pass unanimously and then we'll take the resolution number of 1959.1 previously moved and seconded all those in favor say aye aye any post motion pass unanimously move on item 3 public hearing to consider a plan signed program for two new commercial buildings located at 260 Mount Herman Road APMs 022-231-27 and 28. Director of pavement. Okay thank you as you guys may recall on March 21st 2018 the city council approved the hangar commercial development project located at 226 Mount Herman Road just to give you a little refresher of that project consists of a 2,500 square foot drive-thru restaurant it's going to be occupied by Starbucks it also included a 13,000 square foot commercial building which would include retail space and restaurant use so on the slide here in front of us we have in the bottom left corner the Starbucks building at Long Mount Herman Road and then in the bottom right corner we have an aerial view above which is flipped so you can see both those buildings there the proposal tonight just to give you a little bit of a background it's for a plan signed program and it consists of a freestanding identification sign for the commercial center and then it also includes tenant identification signs for the hangar building and it also includes a third component which is tenant identification signs for the Starbucks building as you may recall the proposed project is located in the Scotts Valley Town Center specific plan area and these guidelines that are in place encourage the preparation of a plan signed program for commercial businesses there and in particular a plan signed program is the purpose of it is to facilitate the creation of a thorough and integrated sign system that encourages high quality sign designs which enhance the care turn value of the community so just diving a little bit deeper into the actual program itself here we see an aerial view of the freestanding sign along Mount Herman Road the top right corner is the sign and it's just showing the proximity to Mount Herman Road there so basically it's announcing that the center is here this next sign delves into a little bit more detail what the actual freestanding sign will look like it has a gray and black stone it has a beautiful style and it blends with the existing architecture of the Starbucks and the hangar the main portion of the sign is approximately 13 feet in height the column that announces the hangar there that's approximately 15 feet in height as far as the materials the center identification portion of the sign will utilize internally the metal box letters so you see that that's the hangar there the tenet identification signs will be black metal letters and they'll be located on metal panels and the tenet signs will be eliminated with ground mounted lightning so the hangar sign will be eliminated internally and there'll be a mix of lighting that will shine on the tenet identification there while reviewing this one of the things that we kind of fell back on was looking at the town center specific plan guidelines basically what that does is it establishes a framework for the development that establishes a place and a destination for the city of scott's valley and so while we're reviewing this this is basically one of the first buildings to go into our future town center and so we explore the opportunity of putting signage on this free standing sign that identified the scott's valley town center there's a project conditioning here right now that requires that who's in the audience tonight they have gone ahead and put forward a proposal it's not on this slide but I'll show you at the end so there's going to be some text in there announcing that this is a part of the scott's valley town center so we'll talk a little bit more about that I don't have it on this slide but I just wanted to let you know that that's in the proposal here for you tonight as well so moving through here a little bit these are some different views of it you can see the stone at the bottom the metal and the column elements as well and there for a little bit of perspective on the size again just another variation on that so the next component of this is the wall signs for the actual hangar building and what we see there there's going to be individual box letter signs and logos that are proposed to identify the hangar building and then also the tenets that are going to be within that building and briefly the signs will be constructed in black metal with translucent faces that are eternally illuminated the size and locations of the signs will vary on the tenet mix so this is a sign program that allows flexibility for future tenets out there this plan here specifies the types of locations the size and materials has a lot of detail in there that will be implemented over time as tenets occupy that space so that's that there's a few more you can get a little bit of a sense of the sign that should have occurred there there's a mix but also a similar theme running throughout that as well so moving on to the next component of the plan sign program is the wall and directional signs for the starbox facility so this is the commercial building that is located up near Mount Herb Road it consists of wall mounted signs on the side of the building logo signs on the front and rear and then there's also a number of directional signs and many boards for the drive through portion of the restaurant so essentially what you're going to see on that building is going to be internally illuminated white face lit single line channel letters that came out very smoothly and then proposed for the size of the building so that will be this component right here in the bottom you see the word starbox there and then we also see on the front of the building the top of the picture here the start of the standard starbox logo that we see on the world over essentially I guess and this is the other again too so on both sides of the building you see the starbox lettering and then you see the logo on the front and back of the building one thing that staff identified while reviewing the application was the letter sizing for the starbox they're currently 18 inch tall letters and we put in the staff reports a little brief mention of maybe possibly considering 12 inch lettering which would reduce the size of the sign and would maybe be a little more proportion to the building we've discussed that with the developer and the folks at starbox they feel as though the 18 inch is more suitable to their needs but it's just out there for a design consideration for the city council I don't think it's a big deal one way or another but it's just something to consider so with that Tracy could you bring up the other slide I want to just go back to the town center branding and the concept there so this is the revised slides here so we'll go straight to this one so you can see on this one we now have at the base the word scott's valley town center so what we're trying to do is create that brand that identity that sense of place that the town center specific plan calls for and this will be in basically their metal letters that are pin mounted and their halo lift so it's a kind of unique sign but it will stand out during the day as well but also at night too we have a condition in there that this be put in there one of the things is that well this is a very nice look we don't quite know what the shape and look of the town center is going to be so we may want to have some flexibility you know council can certainly approve this but maybe we make sure that there's some flexibility that we can alter that or change that in conjunction with the property depending on the final plan that we see with the town center town center there's a bit of a timing issue there ultimately we may have to put this up before the town center is approved but we want to have some flexibility in the interim time until the sign actually goes up this sign is probably maybe nine months away from being installed without the fair assessment so there's a bit of a timing thing that we want to just be able to leave the options open to staff developer as we move forward here so that's the component I wanted to talk to you guys about so with that staff is recommending approval of the plan sign program and available for questions we also have corporate right project developer here for questions as well I swear so what caught my attention you recommended 12 inch letters versus 18 what motivated you to make that recommendation sometimes when you look at the size and the mass of the building sometimes proportionally it can make the building look a little smaller by putting a bigger sign on it by making the sign smaller the building will look a little bigger and have a little more presence one of the other things I've just been looking at other Starbucks in the community the Starbucks that's down on ocean street they have lettering on there and they're utilizing a 12 inch lettering on that building it almost looks like it might be a little bit too small because that's a very big building as was pointed out by the developer they also utilize the words Starbucks coffee there so they actually have more signage there too so this is actually in some ways less wording so it's just something that kind of came up in the review process I don't know if it really makes that much of a difference but I just wanted to have that out there as a design consideration other questions from council maybe to follow up on the vice mayor's question there and does the applicant have a perspective on 12 versus 18 and vice mayor I don't want to it's not the time for him to come out we want you to get up here hold on one minute so I would be I'd be very interested in the applicant's perspective so first of all if you look at what Mr. Ryan has put together at his other commercial shopping centers I mean you see the type of quality you know stonework and other materials that are put into this so yes it'll be big at the same time it's going to look nice because Corbett puts a lot of emphasis on quality signage as you can see from other projects but you know the the thought on whether you want to have a little bit larger letter in here you know there's an argument we've we made a point the town center subcommittee of telling the developers show us plans that show the town green being right in front of the hanger make the hanger a vital part of the public and retail space that you're trying to create and when you're when you're looking to create that retail vibe you know there's larger signage that isn't appropriate most other places can really fit well there because you want to create an ambiance of this is where there's activity things are happening things are big and bright things are maybe but in a tasteful way and I've seen in some of the study mission trips that I've done over the hill to some other cities they they make a real point out of in their their highest commercial districts they want they want signs that cover two or three story buildings right they want big and bold and obviously we're not a place that's that's going to be like downtown Denver or downtown LA or anything like that at the same time I think the vice mayor's question is is one that's worth considering not only on this project but in the in the town center if there's this could be an opportunity for maybe a little bit more than we were looking at elsewhere other questions yes yeah I I tend to agree that you want your tenants to succeed and the signage is critical to that and this is going to be your pass through thoroughfare for that I'm only I may actually be concerned that the the small signage to get people to the back may not be large enough because that that building is going to be tucked back if we imagine large buildings that are built up front against the road I do have concerns about down the road whether people are going to know what's in the back and what's going to draw them in I'm also just a little concerned about I don't know what the timing is for the town town Scott Valley town center labeling on there and if that is it going to come later or go now you know we didn't again it was a project condition at the last minute the developers put forward a proposal for us here is something that we could definitely again this signage isn't going to be installed probably for another six to nine months is that correct and so you know the building will go first and then this will come along somewhere in the face so we have some time to think about that and play with that if we would like as to what that actually might look like other questions Mr. Wright please come on up thank you staff it was signage is incredibly important and we actually learned on the Scott Valley Corners project that we built what not to do because we had to amend that twice and so what we tried to do is not have to come back again so as we have tenants in a multi-tenant situation that change over time what we tried to do was stick within a specific architectural type of genre that they have to stick to but then allow staff to have enough flexibility so that everything doesn't have to come back to in this case Council Planning Commission so when we looked at the massing of this building I actually went over and measured like other other signage around the biggest one is the Safeway signage which is directly across the street it's set back about the same amount as ours is set back because we have the meandering sidewalk and this is actually smaller than that is we didn't think that it was appropriate to have it as big as what the Safeway was just because of the side of the sign itself so it didn't work quite well as with that the other thing is that the Safeway is actually the signage is set up on a mound so it's actually higher artificially because of that so I don't have a problem and I actually have this is part of the town center and so we as soon as I got the staff report and had the comment back we added the two things the address on the sign at the top and then also the the town center and I don't have a problem if we want to work with I feel done a great job working with the neighboring developers infrastructure extending to them et cetera across our site working with them and it's been a great relationship personally at least I think so and so if they wanted to do a different font if they wanted to do a different material we can get together with them I've sent them our plans and they like everything that we've done et cetera I also communicated with the props on the other side I'll come back to that in just a second the way that we differentiated I looked with with our architect trying to put Scott's Valley Town Center I wanted to put it at the top originally but the problem is it's a double-sided sign and so you can't do box lettering double-sided because from one way it's reversed and so we tried to do it with the board and do double-sided on that and it just looked weird and I put it at the top first so we put it at the bottom on the stone which is this and I'll point out the same materials that are on the Starbucks building so that stone is the same stone the standing metal seam on the hanger is the same the only thing that's not the same is the beams because there are no beams on the front building but there are on the back on the hanger so that's the same and it kind of ties the entire development together that way I think our architect did a great job but the point I wanted to differentiate and make the Scott's Valley Town Center part pop was to do the halo effect and I want to show you just how that works so this is a halo effect what you do is you stick the metal the metal individual letters on pins out farther and then do LED lighting behind it and that's the only halo effect portion that would be on the sign so what it does is visually it makes that pop out I couldn't really make it any larger because there's so many letters it doesn't really fit any other way so I wanted to put that out we did meet with the Prats we have, especially for the Starbucks put all the directional signage we added additional directional signage the point was that to encourage the flow of the drive through it doesn't work so what we did was we added additional directional arrows we were worried that people were going to try to cut through the K-Mart Center to get into the drive through that way so all of the directional signage shows as best we can we can't make people try to direct the flow and teach people that way so we've done that there was like three changes that Kevin asked us to do and so we did those and that's in this plan that you see with regard to the Starbucks lettering the one thing that I wanted to bring up was and we did go out and look at the lettering we actually thought about this before we put it out so we did have like an ocean avenue they do have the word Starbucks coffee and what happens is it becomes our building is actually narrower and longer than what that that's more cute and so what happens is even at 12 inches is over 16 feet long so it's really long on the building itself and it takes up most of the building so that's actually why Superior Science is here in the audience and they build all the signs for Starbucks and they said hey it would look better just to do the word Starbucks versus cutting the coffee and cutting the coffee because it actually masses on the building better those then when you do it just as 12 inch letters then it doesn't look right just to have Starbucks as because it's not tall enough the other thing I would point out and an example of that is like chubbies right next door it's a smaller word and so those letters are actually 2 feet tall so I think that we think in the massing and scale we thought 2 feet was too big and so that's why we did the 18 inches and things are good I am here to answer any other questions and then Superior can answer any other questions as well Any questions? Council? So I tend to agree with you kind of leave it to the professionals in some ways the size and scope like a photographer's eye what looks and what works and the rule of thirds or whatever is so I think 18 inches if that's in in regards to what the professionals think I think that's fabulous just kind of what people do all the time so I think it's in our interest to kind of go along with that and in general I think we should be pretty happy with that it looks pretty darn nice Council Member Lin? And I agree both things and when you mentioned the four corners it was a real reminder of what we all learned from that and you know you've been improved on it but I can look back and think gosh maybe we should have a decent giving notice as it should that's all of our faults from back then so it's not your fault or anyone things I just think we didn't realize the height and elevation and a lot of things that we've learned from so you made that point and it struck home with me and I agree we can look at other Starbucks, we can look at learn and not recreate the will of reliance of experts of the channel design thank you Any thoughts on me saw in the letters on the channel signs on the hanger sign where it says to be determined there's six inches is that going to fit the scale and do you think from the road to announce to people that there's something in the back I'm worried that that is from this view I'm worried it may actually be a little undersized but maybe we hear from the sign professional on it I don't know So this sign actually was designed by Superior with Lot C originally we actually took some of those and mass things off of and I have this in concern that if there was a way to build flexibility what if we only have two tenets and so can we use that same square footage and spread that massing out or what if you have four tenets in the same way what we tried to do was lead it enough paneling there to make it work but I would be I would love the discretion I think you have a great staff honestly and I think that they can look at what we put forth and say yeah that meets the intent of what so any discretion that's in there the only thing I would say is that the condition 9 I think is a little strange it's kind of a agree to agree with the future developer about buildings and signage and so it's just kind of a strange that's the only negative that I thought about the entire thing the only other thing I forgot to mention is that it was actually a mistake on the actual plan set itself the first word mark is actually 21.75 and I think there's a title on it on the original that said it was more than that it was 30 something or some wrong calculation the building inside is 20 it's 21.75 start works word mark like A1 it had a one of the prints it had an incorrect total store the sizing was wrong the calculation was wrong so I think in a long way to answer your question I would love to have staff to be able to have flexibility to approve what is appropriate for the final tenant mix that we determined so I don't know how we if you could add that into the questions we can certainly add a condition the developer work with staff to craft appropriate language on the plans that are before you because that's the document that's going to guide the future development so we'll have buildings to those plans some sort of flexibility with an maximum number of store footage or something to that effect so people in the future because this is something that will be in place for 10 to 20 years so we want to make sure that we build in that flexibility but we also have clarity as well I have a couple comments I really like the hangar sign and I drove around today and saw how similar it is to the sign across the street very nice at the same way and then I noticed some similarities to some of the building that's the transit center there's some similar what do I word slopes or angles to me it tied those pieces together and ideally we would know what the rest of the town center is going to look like and so it could blend in perfectly and sounds like we're going to be looking at that but from what we do see what I see it looks like it's a nice fit it's a pretty sign so I like it I do have a little different perspective on the Starbucks letters and I just point out I'm not a big size of general I recognize you need a sign probably of this size to make sure folks can find the hangar that they know where it is because you're set back so I see the need for it there and certainly folks know where you are in the businesses on Starbucks I feel a little differently about because it's very obvious it's a Starbucks so I actually prefer the 12 inch letters but I would certainly what the majority of the council wants in that regard but that would be my preference any other comments? yes? absolutely on comments I would like to move resolution 15 or 15 it's a public hearing so you just need to open the public hearing thank you yes in the public hearing anyone from public who might speak to us on this topic seeing none I'll close the public hearing thank you okay thank you so I would like to move resolution of 59258 resolution city of Scotts Valley of the city council of the city of Scotts Valley proving a planned sign program the hangar development at 216 Mount Herman Road APN 022-231-27 and 022-231-28 with the language that was suggested by the community public director regarding working with was that part of being motion intended or not? I think that's embedded in the so I can give you some language for a modified condition if you'd like so it would be to condition number 4 the material size location and design of the improvements shall match the approved plans however the tenant identification signs can be modified with the approval of the community development director provided the same square footage and design is utilized with one addition that we would say identification signs on the free stand sign because it's not to the building sometimes is that acceptable to the mayor in motion? so what she said was there a second? just a quick question on the I just feel it may be premature to have Scotts Valley town center on that signage while we're just building two buildings right now I'd love to see that added down the line when the town center is more fully formed but I don't know if that's just my concern or if other council members share that I have the same concern so the way condition number 7 is written is that it just basically is a portion of a free stand sign shall be used to identify the Scotts Valley town center to meet the town center specific plan goal of creating a sense of place and to ensure integration of this project into the Scotts Valley town center so there is no time mandated there so it could come at a later date we probably might want to refine that a little bit more how that might happen you definitely want to build your sign with the ability to add that flexibility in there having the appropriate electrical run in there or how that would work I don't know I'm not a signed person but I think that's definitely I think we might be getting a little ahead of ourselves with that I would agree with that so maybe to be revisited in two years or whatever we could incorporate 7 and 9 together so it would be a portion of the free standing sign shall be used to identify the Scotts Valley town center to meet the town center specific plan goal of creating a sense of place and to ensure integration of this project into the Scotts Valley town center such identification shall be provided in conjunction with the in conjunction with the future town center developers to integrate signage and structures as development occurs in the town center core area so what would be the trigger to do that specific trigger to make that happen so in that case it would be when the core of the town center gets built there may be circumstances under which you may want it sooner or we may not want it at all maybe we have signage already for the town center that's adequately covering it or maybe the developer might want to make sure that hey we're part of the town center too could be coming from different sources I think the flexibility is good to make sure the product of the council and staff or whatever is observed and like I say maybe two years or maybe the timetable is wrong but it's a little nebulous to say when the town center gets going because you don't really know when that is I just want to make sure that down the road if we want it all of a sudden it doesn't become doable because I'm not saying it would but sometimes things change and the developer may say well I don't think I'm going to put that there or whatever so I guess that's okay it's pretty much on the same page here I just want to make sure that it's not nebulous we have a some language for the city attorney and I think you've given us some direction to maybe try to find some timing mechanism in there we probably need to stew on that a little bit but I'm sure we can find something that allows us to have that at a certain time so what we could do is just add the line at the end of 7 that would be to ensure integration of this project into the Scotts Valley town center at the appropriate time determined by the and I would say the community development director the purpose of a signed plan plan signed program is that it doesn't come back to you for every little thing so that would be at the discretion of the CDD we would continue to add the language for number 9 we would just keep 9 as is so we'll put that language into the motion in the motion your second any other comments? discussion? all those in favor say aye can you close? motion passed unanimously thank you we look forward to seeing the hangers at a left co meeting this morning two board members came over and said this hangers still moving forward so when you go to left co at the county building and they're asking it's a good sign move on to item 4 adopted fiscal year 2019 20 council goals as you recall on January 23rd the council received a status update of the 1819 goals and discussed potential goals for their 1920 work plan for the most part the goals remained the same but the implementation action under each goal varied as reflected in the attached work plan that I have for your consideration I won't go through this in detail but do want to talk at a high level what we included and what I heard at the last meeting clearly we're going to continue on the path to ensure long term financial stability and one of the directions from council was to refine the FSP to include alternative budget strategies to address revenue needs there's a variety of check marks here on things that are to be included but it was very clear that both revenue and expenditure strategies that could include service staffing and reductions the other was to update the FSP implementation strategy and community engagement framework heard that loud and clear that it was very important to use the subcommittee to guide the framework as well as the recommended approaches for community engagement encourage business development and expand the economic base facilitating the completion of the general plan and one addition that I added into this was to communicate key changes from the updated plan to our clearly our development stakeholders and so we'll develop a communications plan as we get closer to the end of the general plan discussion the other is facilitate the development of the town center and other complimentary land uses we talked about having me engage additional economic development not only to support the town center but also to look at possible reuses of Kmart looking at the mirrored extended state hotel and what's happening there and in addition that was added that was not discussed at the last meeting was to take a look at putting together a measure as project scope to meet on proceed expenditure timelines there are triggers that will happen when you are looking at bond issuances there's another one coming up that we have to put a timeline together so it's going to be incumbent once we get council direction on March 6th on how to proceed with respect to the theater guild measure as that we move forward on this to meet the necessary timelines we have implementation of operational initiatives to enhance city services as you know we're working on the strategic technology plan we'll come back with some recommendations on next steps one item that council added was to look at opportunities to build organizational capacity and service delivery by looking at our city commissions and committee structures to see if there's a different way to be more effective with our time while getting accomplished various advisory goals the other last one is the maintain quality of life for residents I did hear the importance of maintaining our investment in parks and recreation and public safety of course to continue with the body camera purchase and implementation but more importantly to really be cognizant of those kind of low hanging fruit opportunities with respect to facility upgrades one great example that I think council member Johnson had mentioned was facilitating things like the backstop at siltanon and so I'm sure we'll hear about that as a part of next year's CIP but that's just an example of things that we can continue to do to provide amenities for the community the other is to continue the facilitation of the Glenwood open space and get those trails done as you know the next step is to work on the east side and so that's already underway and then the last is collaborate with water fire and other related agencies to explore grant funding opportunities this was originally directed at just fire but there was some feedback about hey you know what we have opportunities to work with some other agencies and let's have it a little bit open so there is an additional bullet mark there that says explore funding opportunities with scott's valley water district to one help them look at underground storage opportunities and two to help us find ways that we can leverage our resources collectively to upgrade our wastewater facility treatment plan so of course we don't have to limit it to just water but I think it's important that we keep our eye out for other opportunities as well that might include collaboration with other agencies in town very high level summary but be happy to hear additional feedback or how you would like this changed or modified thank you city manager questions from the council thank you mayor so I think this is a big ask in terms of what we want to do to be proactive and present not only to the city council but I think to the community at large there are lots of moving parts and I want to thank the city manager I think you did a good job in terms of refining and condensing and clarifying what some of the goals of the city council should be because it's not easy to distill in a couple of pages of what we want to do as a city council to benefit this community so thank you for that there probably are other things out there but I just just wouldn't have it in my heart to add more because I think we have enough on our plate here so from the standpoint of you know the goals and the priorities and the topics of discussion are pretty clear and I think at the top of the list I think you mentioned fiscal sustainability but at the same time how do we on a day-to-day basis improve the lives of our citizens in our community and to that end I think this is represents those tasks that we can do and I think it's incumbent on all of us to kind of see what we can do to be active as council members and as a city government to see that it happens council member reed thank you mayor I agree with council member Johnson's perspective I think this is all there's a lot on here at the same time there's not a lot that's there are some things that maybe don't involve too much staff time that aren't going to be overly onerous I would think but all worth doing in the coming year would seem to me I just wanted to address when we kicked this around last week and went back and forth on some of this was the the item about building design standards and city manager the example that I always use on that is parking you know we've had situations before where the developers met our parking requirements but our staff has said they think the developments under part and city managers pointed out that's going to be addressed through could be addressed through the general plan process but there are other elements of that as well I know when I brought this up I used just two examples I experienced in Sky Park we've got 18 and a half foot wide garages in Sky Park and virtually nobody has no city I know of has standards that are anything less than 21 or 22 feet and admittedly some cars are getting big nowadays but there are some driveways in Sky Park that are so short you can't park a truck in a driveway pickup truck so I think there are standards other than just parking that do need to be taken up at the same time given that this is going to be a lean and mean year until we until we get revenue and have staff resources I am comfortable with that dropping off the list on regarding quality of life until we're in a little bit better revenue situation but I do think that's something we should take up that. Let's put this to you. I feel like we do have enough on our plate there are a few things I know that we hope in the future but at this point I think our focus is exactly what's stated here so I'm comfortable with those goals and I appreciate the work that's been done to narrow them down and get them addressed in a very succinct way so physical challenges are certainly popular. Yeah I appreciate this as well but taking a lot of things together I also have a concern just about the resource that we have and getting all this done and so this is a great list and I just wouldn't be great I guess if City Manager could report back to us periodically about our progress and let us know if there's a resource issue or something that might cause something to take longer than we might otherwise think. Yes I did want to acknowledge that it is a it's a very ambitious list I do think that there is opportunity to make strides incrementally on several of these goals my recommendation would be that I come back to you quarterly to do a check in that would allow council to give direction on to what maybe areas I could pull back on and what areas you would see as more of a priority and that would be very helpful to receive that direction so I will work that through in our tentative schedule for the council meetings so that there's always a checkpoint and we don't want any surprises clearly so you know where everything is at so I hope that that works for you and you look forward to seeing something from us every three months. Sounds good I have a couple questions and a comment it mentions in here that if the council would like staff to explore legislative options that include exceeding the state sales tax cap that you'd like formal direction from the council so I'm wondering what that formal direction might look like if it were something we could give you tonight if it's something we need a resolution for if it's something we bring back to you after our budget committee it's quite simple it would be as basic as what the language is in the staff recommendation would be and just to direct me to do that. I would personally like that as an option right now but to keep our options open. Absolutely. Just to follow up on this to make sure I understand forgive me Mayor so if we approve this then you have the authority you need to contact our Sacramento representative. Yes that's exactly what I need. Okay great thanks Jim. Another question I have let's see under the the FSP the fiscal sustainability plan section the very first sentence reads identify additional revenue enhancement options including but not limited to increasing sales taxes measure you hotel taxes and modernizing you don't use this tax. I see it does say including but not limited to then this would give us the ability to consider other revenue measures as well. Yes this is exactly why I worded it this way so that the step committee could explore could direct staff to come back with a variety of options for council's future consideration. Okay thanks for bringing that up because I was viewing this there are two sections here under ensure long term financial stability. I pictured the second section as being tied into the role of the budget subcommittee based upon the other staff report we approved tonight in the formation because the language under the second subtitle FSP implementation strategy communication framework that I think those were the very words for the purpose of the subcommittee. I was thinking this first section would be council and second section would be budget subcommittee with your say budget subcommittee could weigh in on any of this. Yes ultimately the subcommittee is making recommendations that council would give direction so think of it as the subcommittee as a sounding board and to work through some of this before kind of the sausage making if you will and then get to council to further refine and to provide direction. Okay I bring this up because just today somebody raised a question that council member Tim touched on recently I think in the last council meeting about possibility of a marijuana tax, a cannabis tax and I'm not really being in that direction at all but since I'm hearing it maybe it's something we should at least consider. So that's just one example of the opposite of many other kind of revenue measures but those are the kind of things that we might look at and may not. Right and the FSP is designed to be very fluid so the council at any time could say hey you know let's time out move forward backwards whatever you want so this is nothing that's written in stone and again this is my assumption is why the council directed staff to come back with a resolution to establish the subcommittee to give that appropriate guidance. Okay and then my last question has to do with the maintain quality of life residents we have a lot of working with other jurisdictions to help ourselves and help them for the public purpose whether it's grant funding or firefighting whatever and I see Scott's way of water mentioned here I'm just wondering if there's a role somebody asked me this today also if there's a place for San Lorenzo County Water District to be one of our partners and I have nothing specific in mind but I presume that if an opportunity arose that we would reach out in that direction as well. Yes this would lock us in to not having conversations with them and certainly something that I could bring up with General Manager. Thank you any other comments or questions? Real quick Mayor I asked City Manager to consider adding that the Scott's Valley Water Outreach just on the the chance that there is an opportunity for us to partner with them on their underground recharge opportunity that they're trying to pursue with the city getting behind that lending our credibility saying that we're on board and are willing collaboratively to help make that happen if that could help make state grant money more likely that seems like a really good investment I'm sure. Great yeah more collaborative we can be the better okay we'll if there's no further discussion can we have any motion? Any more announcements? Go ahead. I move that we adopt the recommendation attached to your 2019 20 goals and direct the city manager to work with state representatives to prepare a legislative adjustment to the state sales tax cap to consider a possible fiscal sustainability option and is there anything else I have to adopt these formally adopt these goals as a city council? That's it and you need a second. I'll second that. Any further discussion? Seeing none all those in favor say aye. Aye. Any opposed? Motion passes unanimously. We'll move on to item 5 mid-year financial review for fiscal year 2019 and direction for preparation of the fiscal year 1920 annual budget on Mr. McFarland. Thank you. Thank you Mr. Mayor and meeting Mr. Mayor and members of council. Tonight I will be giving a progress update on the fiscal year 2018-19 budget and also asking for council direction and development of the 1920 budget. Including in my presentation tonight will be a very brief review of the fiscal year 2017-18 CAFR also a review of the 2018 acting general fund as of the 6 months ending December 31st with some updated projections. I will also have a recommended appropriation request for fiscal year 2018-19 and we will be moving on with budget assumptions for 1920 and a recap of budget direction and action taken by the council and a proposed 19-20 budget calendar. So the review of the 17-18 CAFR we did receive an unmodified opinion which is a clean opinion is the highest opinion we can get basically an unmodified opinion says that the financial statements present fairly in all material respects the financial position of the city. We closed fiscal year 17-18 with the general fund balance of 4.1 million and also wanted to add just for context we have a net pension liability of 17.1 million and a net OPEV liability of 14.1 million. The net OPEV liability is a new as a result of the gas we pronounce 1 million to effect for this fiscal year financial statements so they are now on our financial statements as a liability. Moving on to the general fund starting with revenues chart on the screen is the revenues are broken down into categories, taxes, franchise fees, fines and foreachers, charges for services, investments and other revenue. The first two columns represent the last two fiscal years 16-17 and 17-18. The middle column is the budget for 18-19 we are projecting 11.4 million in revenue currently as of December 31st we have $5.3 million in revenue so a little bit below 50% and the last column is the estimated revenue for your end and we are projecting 11.3 million so although revenues increased over the prior total general fund revenue is estimated to be 1% below projection of 11.4 million among the top three revenue categories property tax is estimated to be 2% below projections and sales tax be 4% below projections. On a positive note TOT revenue is estimated to exceed projections by 9% with 1440 multiversity TOT revenue significantly exceeding projections. Moving on to general fund expenses charts in a very similar format expenses are broken down by category there are salaries and benefits, operations maintenance, contributions debt service and capital again the first two columns are the last few fiscal year 16-17 the results the middle column is the budget we budgeted 11.9 million in the general fund this year the fourth column is expenses as of December 31st with 5.8 million which is a little bit below 50% and we are projecting revenue to be significantly below budget expectations and I'll go into that a little bit later I wanted also to point out that we have included the transfers categories well transfers are unique to fund accounting in the financial accounting world you can have you can have discrete components different operations and they all roll up into one general ledger with fund accounting you have separate general ledgers with several funds and if you need to move cash from one fund to another you have to improve the transfer process and that's why I've included the transfers in this slide so for the general fund significantly under budget due to turnovers in staff new hires lower salary steps and positions have resulted in salaries and benefits coming in under budget by approximately $225,000 and also within the building department we budgeted over $600,000 for the chief building official and for building inspection services through contract and although development revenue as is increased and there is activity we're not going to come close to the $600,000 we're going to have about $300,000 to $400,000 in savings just there so it sounds like the move to share a position with capital rather instead of having the consulting service provide building professional services save that significant money is that true statement? Yes, what we budgeted for the chief building official was $125,000 I think what we below that with sharing our services with the city of capitol the remaining amount was for contract building inspectors and we're not going to have the activity to get up to that amount that we budgeted for it so with the revised projections we did budget the 1819 budget was adopted with a deficit a projected deficit of 1.39 with revenue almost at projections and expenses coming in below budget we're going to have this will be good news we're not going to be as much of a deficit as we are when we're projecting we're looking at right now just a little bit under $600,000 in deficit for 1819 that's a positive note the message is revenue is at projections expenditures are below projections and fund balance we'll have a little bit more fund balance at the end of the year going into 1920 that we were anticipating now at this time during the year this is appropriate for departments to review their budgets and to make some corrections or requests based on some of the information that may have come across post adoption of the 1819 budget we do have some appropriation requests the funds that are impact will be the general fund the gas tax fund the affordable housing fund the STP exchange projects fund and the transportation measure D fund and it's most of these are the result of a roadway improvement project in Green Hills that was was approved last year's budget was anticipated to be completed before the 1819 budget was adopted there was a delay the bids came in higher than what the funding was but it didn't get carried over into the 1819 budget so we do have an appropriation request to fund the cost that we spent on this project this year but the overall impact of this increase of appropriation is $24,000 for our dollars and for administrative services we have a request of $20,000 $7,000 is for staffing we do currently have two vacant positions based on retirement one position is being currently filled by a retired unitant the other position was an accounting assistant we need to upgrade that position to an accountant level just for the needs of the department and also to take some of the workload off of our senior accountant who is pretty much handling everything right now we're anticipating that cost to be $7,000 for the rest of the fiscal year we're also our auditing services contract expired at the end of the 1718 audit so we're going to be issuing an RFP for new auditing services there could be potential costs in this fiscal year because some auditing firms like to do them work prior to the end of the fiscal year so we may have some costs so the total cost for administrative services is $20,000 the police are requesting $34,500 $10,600 is for the Multidisciplinary Interview Center this was an amount that we received in January they seem to have their calendars level off from the fiscal year they do their budget request calendar year so the chief has let me know the message has been sent to them to get their funding requests to the city center also their RIMS system which is their operating system for police dispatching and records management the annual support was not included in the 1819 budget which is that cost is $23,500 in order to pay for the additional requests in the general fund we're recommending to reduce the building budget by $55,000 in that zero or $500 difference in the general fund in regards to the Green Hills Railway approval project I'm going to turn it over to public director Darrell Jordan who will give you a brief overview of that project in regards to the Green Hills Railway preservation project the council approved this project last May the 16th of 2018 this project consisted of 1.3 miles of pavement rehabilitation and striking the approved expenditure was a total of $989,000 the majority of this funding was from the regional transportation improvement program the arch of funding during construction additional concerns of pavement conditions were brought to the attention of staff the area of concern was at the end of the project extends along the Green Hills Road beginning on south Navarro Drive and terminating at Granite Creek Road this consisted of approximately 0.6 miles of additional roadway involving digouts and repairs slurring and providing new stride lead along that roadway although cost savings were made by having the contractor on site and performing the same scope of work the total construction costs did exceed project approvals however additional dollars are available measure D funding is cited by the finance director and in conclusion I will ensure that public works will be working closely with financing event of any cost overruns in the future and that they are processed by the city protocols any questions so as a result the recommendation is to the funding sources for this project were the gas tax fund the exchange projects fund and the measure D fund so we will be asking for additional appropriations in the gas tax fund of $80,109 the exchange projects fund of $811,000 offset by revenue appropriations we received grant revenue of $705,000 and additional appropriations in measure D funds which are $154,619 those funds are available in measure D even though there has been appropriations in this year also in the affordable housing fund we received notice from the county in regards to the homeless action partnership regarding consulting services that they will be performing that our cost is $5,150 and also on the revenue side we did receive a loan repayment of $210,000 and impact fees of $111,000 those were not anticipated in the 18-19 budget so we have received those funds but we need to increase the appropriations so we can't receive them so overall the impact and the increase appropriations is a little bit over $24,000 to the budget before I move on are there any questions well being the 1920 I looked at the budget assumptions that were included in the 18-19 budget in context with the EFSP the 17% general fund reserve target I'm recommending no change to that there's a 2% inflation index for supplies and services I'm also recommending no change we did have a health benefit increase of 3% assumed in the budget health benefits did actually the cost of health benefits did actually increase by more than 3% so I'm actually recommending an increase to 4% for the budget and also the first contribution rate increase we're keeping that at 2% and at this moment I'm recommending no changes to the revenue assumptions but I'm reserving the right to make any changes in the development if something comes up in the development of this budget which I will be reviewing with the budget supplement so in anticipation of the 19-20 budget and also keeping in mind of ensuring long-range financial sustainability we do have a couple of options that I would like to bring to council's attention one is our UAL prepayment last year was the first year that we did the UAL prepayment and generated about $36,000 in savings this year our UAL balance as of 17-18 is $16.5 million and that's represented in the first column on the slide I've broken it down by the four per plans that we have we have two classic plans one for miscellaneous, one for safety and we have two pepper plans safety and miscellaneous total is $16.5 million our UAL payment for this year is $1.15 million if we do a prepayment it's going to be $1.1 million in savings however I would like to recommend to council that we take some of those savings and apply it to the UAL and pepper plans which right now is a balance of $26,000 between the two and keep the UAL close to zero in those two plans as we transition out of classic miscellaneous and classic safety and more new hires are coming into pepper I would like to keep a lid on the UAL payments for pepper safety and miscellaneous so it has an ongoing practice that we continue doing the prepayment but completely pay the UALs for the pepper plans I think that will help keep those UALs in check for the pepper plans and the classic plans are I mean we just do not have enough funding to invest those at this time but kind of think of these as credit cards we have four credit cards and we need to pay down the balances as we go so that's we need budget direction from council or some proof to adopt this as a policy the second item is we have three COPs one is a 1997 issue of $5.3 million we have a 2003 issue that has a remaining balance of $954 million and a 2013 COP and it's a total of $14.2 million what I have on the chart right now is payments from 2020 to 2027 and in 2027 we have a significant increase of almost $500,000 or $1.5 million and it's a balloon payment related to the 1997 capital appreciation month there was a refunding done at some point and there was a reserve in this capital appreciation month that was cashed out for the refunding so as a result of the refunding that $500,000 reserve was added to the last payment in 2026, 2027 we've been approached by NHA advisors, they've advised us that we have two COP refunding opportunities the total measure is $14 million in the remaining debt service if we refund we can refund at $12.8 million the other one is almost $13 million my recommendation would be to refund at $12.8 million and then the savings that we have for each year that we bank in a reserve fund in order to build up a reserve level to address the balloon payment in 2027, 2028 or 2026, 2027 if you look at the last column that's the cumulative savings we could be resaving about $50,000 per year with this refunding but by 2025, 2026 the POB will expire and that will reduce our debt service payment by $440,000 I would recommend that we transfer that payment in 2025, 2026 into the reserve by 2026, 2027 the reserve would have $1.5 million and that would cover the debt service this would reduce the strain on the general fund over the years and so that is my recommendation that we have the transaction put the pieces together you mentioned something about saving $50,000 a year by refinancing are you suggesting now that we not refinance that we take the money to arrive later and use that? I'm suggesting that if we look at what's currently under debt service with the refunding there's going to be a reduction of $50,000 so each year there's $50,000 so we still budget for what the original debt service is for but we pay the debt service based on the refunding schedule and take the savings of putting in a reserve fund that builds up a balance each year until we get to the last year we need that payment may I tactfully suggest for the future that we never have the loan payments that we have nice payments I totally agree don't like those kinds of surprises anyway, thank you that's my recommendation for a COP refunding strategy so the recount council action is required for the following to approve the recommended appropriation requests which are on resolution 630.38.3 and also to approve the recommended UAL prepayment and debt service refunding strategies if there are any questions council I have a couple first you showed us one of the first charts you showed us showed the OPEP liability and as I recall what we're doing is we're paying as you go for a long time just paying the current help bills for retirees and not paying anything against this unfunded criminal liability but now I believe we're paying 25% of some member each year I'm not sure that's the increase in the liability of what it is but we're starting to put money aside I believe to take care of part of that but that tells but it reminds me that I just want to mention that we're highlighting the fact that that means while we're doing a good job when we start to pay part of that unfunded liability we'll continue to grow I believe from an understanding of right just like your pendulum and so to the extent we can think about ways and I love some of your other suggestions but I think we can do to maybe increase what we're paying against well because it costs us a lot of money and my other question is thinking back to when we saw previous projections I think when we first did the fiscal sustainability plan and looked at our projections I believe we were going to hit our minimum reserve balance in general fund that we adopted as a policy 17% and I believe we were going to hit that number in June of 19 if I remember the numbers right and now that's being pushed back because we cut the for a number of reasons but one of which you're showing us that instead of having a deficit this year 1.2 million it's only 5,000 so that is as you pointed out giving us a little more breathing room moving down the road and so and I'm trying to remember you showed us some numbers I think at the last council meeting but I believe that we're now we hit the 17% in June of 2020 does that sound right? yes okay I bring that up because I know if we're seeing it coming I know we're adopting plans we're going to talk about what strategies we take but I'll be uncomfortable when we dip under that 17% minimum reserve because I consider that 17% as a council we agreed that was a reasonable number but ultimately I like to get to a higher number but I recognize we can't take on all of our issues at one time so for me that really is a minimum so I just wanted to remind myself and everyone else that we're nearing that point where that's a real issue when we're under a minimum reserve yeah the forecast will be updated quite a bit it's a fluid document other comments or questions? I entertain a motion or two before you do the motion can I make a clarification on your direction so obviously you need to accept the tax reports regarding the mid-year but with respect to the providing direction on the UAL and the refunding if we want to embed this as a budget policy with respect to the UAL I would recommend that you give us direction that you'd like us to proceed with a policy document that we would return to you as a part of the 1920 budget so you can codify that practice and then we would just need regular direction if you agree with the refunding to say please move forward with that everyone on the first list would be clear if I understood it right I know this year we did pay off we paid early some of our unfunded liability that we would do anyway but if I understood the Minister of Service Director correctly we're talking about paying the full capital unfunded liability each year or the bounties the full amount of the UAL for the pepper as a first cut and perhaps still prepaying the rest of it early in the year yeah we'll prepay everything in the beginning of the year whatever the prepay amount is for the classic plan but for the pepper plans there is a prepayment amount I'm saying no we'll pay the UAL I like that I would caution that as our jobs that cash flow wise we need to be careful that we have that million dollars in the bank to be able to pay even though I like to prepay I want to make sure we have enough cash to be able to do that that's the only caveat I have before you do motion I still have to finish just have to go with the budget calendar this is the proposed budget calendar beginning with tonight we have a major financial report in budget direction March and this is proposed this is not set in stone March 13th it's our first budget subcommittee meeting and here the budget subcommittee will review the five year CIP plan and the FSB framework in budget direction March 20th is a regular meeting where we will present the five year CIP plan for council direction April 10th is another budget subcommittee meeting where they will review the fee schedule and also update FSB strategy in budget direction April 17th is a regular meeting this will be the adoption of the fee schedule May 1st is a regular meeting where there will be a review the non-profit funding proposals May 8th will be a budget subcommi