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HomeMy WebLinkAbout02/04/2019 City Council - Regular Meeting Packet January 30, 2019 5:34 PM City Council Regular Meeting Agenda Page1 MAYOR Mayor Roland Velasco COUNCIL MEMBERS Marie Blankley Dion Bracco Peter Leroe-Muñoz Carol Marques Fred Tovar Cat Tucker CITY COUNCIL AGENDA CITY OF GILROY CITY COUNCIL CHAMBERS, CITY HALL 7351 ROSANNA STREET GILROY, CA 95020 SPECIAL MEETING 5:30 P.M. REGULAR MEETING 6:00 P.M. MONDAY, FEBRUARY 4, 2019 CITY COUNCIL PACKET MATERIALS ARE AVAILABLE ONLINE AT www.cityofgilroy.org AGENDA CLOSING TIME IS 5:00 P.M. THE TUESDAY PRIOR TO THE MEETING COMMENTS BY THE PUBLIC WILL BE TAKEN ON AGENDA ITEMS BEFORE ACTION IS TAKEN BY THE CITY COUNCIL. Persons wishing to address the Council are requested, but not required, to complete a Speaker’s Card located at the entrances. Public testimony is subject to reasonable regulations, including but not limited to time restrictions for each individual speaker. A minim um of 12 copies of materials should be provided to the City Clerk for distribution to the Council and Staff. Please limit your comments to 3 minutes. In compliance with the Americans with Disabilities Act, the City will make reasonable arrangements to ensure accessibility to this meeting. If you need special assistance to participate in this meeting, please contact the City Clerk a minimum of 72 hours prior to the meeting at (408) 846-0204. A sound enhancement system is also available for use in the City Council Chambers. If you challenge any planning or land use decision made at this meeting in court, you may be limited to raising only those issues you or someone else raised at the public hearing held at this meeting, or in written correspondence delivered to the City Council at, or prior to, the public hearing. Please take notice that the time within which to seek judicial review of any final administrative determination reached at this meeting is governed by Section 1094.6 of the California Code of Civil Procedure. A Closed Session may be called during this meeting pursuant to Government Code Section 54956.9 (d)(2) if a point has been reached where, in the opinion of the legislative body of the City on the advice of its legal counsel, based on existing facts and circumstances, there is a significant exposure to litigation against the City. Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packet are available for public inspection with the agen da packet in the lobby of Administration at City Hall, 7351 Rosanna Street during normal business hours. These materials are also available with the agenda packet on the City website at www.cityofgilroy.org subject to Staff’s ability to post the documents before the meeting. The City Council meets regularly on the first and third Monday of each month, at 6:00 p.m. If a holiday, the meeting will be rescheduled to the following Monday, with the exception of the s ingle meeting in July which lands on the first day of the month not a holiday, Friday, Saturday or Sunday. City Council Regular Meeting Agenda 02/4/2019 Page2 KNOW YOUR RIGHTS UNDER THE GILROY OPEN GOVERNMENT ORDINANCE Government's duty is to serve the public, reaching its decisions in full view of the public. Commissions, task forces, councils and other agencies of the City exist to conduct the people's business. This ordinance assures that deliberations are conducted before the people and that City operations are open to the people's review. FOR MORE INFORMATION ON YOUR RIGHTS UNDER THE OPEN GOVERNMENT ORDINANCE, TO RECEIVE A FREE COPY OF THE ORDINANCE OR TO REPORT A VIOLATION OF THE ORDINANCE, CONTACT THE OPEN GOVERNMENT COMMISSION STAFF AT (408) 846-0204 or shawna.freels@cityofgilroy.org SPECIAL MEETING - 5:30 P.M. A. Call to Order and Roll Call INTERVIEWS Interviews for Open Seats on Boards, Commissions and Committees with Terms Expired or Vacant as of December 31, 2018 Special Meeting Adjournment REGULAR MEETING - 6:00 P.M. I. OPENING A. Call to Order 1. Pledge of Allegiance 2. Invocation 3. City Clerk's Report on Posting the Agenda 4. Roll Call B. Orders of the Day C. Employee Introductions II. CEREMONIAL ITEMS A. Proclamations, Awards, and Presentations 1. Certificates of Appreciation to Outgoing Board, Commission and Committee Members III. PRESENTATIONS TO THE COUNCIL PUBLIC COMMENT BY MEMBERS OF THE PUBLIC ON ITEMS NOT ON THE AGENDA BUT WITHIN THE SUBJECT MATTER JURISDICTION OF THE CITY COUNCIL (This portion of the meeting is reserved for persons desiring to address the Council on matters not on this agenda. The law does not permit Council action or extended discussion of any item not on the agenda except under special circumstances. If Council action is requested, the Council may place the matter on a future agenda. Written material provided by public members for Council agenda item “public comment by Members of the Public on items not on the agenda” will be limited to 10 pages in hard copy. An unlimited amount of material may be provided electronically.) City Council Regular Meeting Agenda 02/4/2019 Page3 IV. REPORTS OF COUNCIL MEMBERS Council Member Bracco – Gilroy Downtown Business Association Board (alternate), Gilroy Sister Cities Association (alternate), Santa Clara Co. Library JPA, SCVWD Joint Council-SCRWA-Board Water Resources Committee, South County Joint Planning Advisory Committee (alternate), South County Regional Wastewater Authority, South County Youth Task Force Policy Team (alternate), Street Naming Committee Council Member Tucker –CalTrain Policy Group, General Plan Advisory Committee, Santa Clara Valley Habitat Agency Governing Board, Santa Clara Valley Habitat Agency Implementation Board, Street Naming Committee, Visit Gilroy Board Council Member Blankley - ABAG, Cities Association of Santa Clara Co. Board of Directors (alternate), Economic Development Corporation Board, Gilroy Sister Cities Association, Gilroy Youth Task Force (alternate), SCVWD Joint Council-SCRWA-Board Water Resources Committee, South County Regional Wastewater Authority, VTA Board of Directors Alternate, VTA Policy Advisory Committee, VTA South County City Group Council Member Marques - Gilroy Downtown Business Association Board, Santa Clara Valley Habitat Agency Governing Board (alternate), Santa Clara Valley Habitat Agency Implementation Board (alternate), Silicon Valley Clean Energy JPA Board (alternate), URM Task Force Sub-Committee, VTA Committee for Transit Accessibility (alternate) Council Member Tovar –Santa Clara Co. Expressway Plan 2040 Policy Advisory Board, Santa Clara Co. Library JPA (alternate), Santa Clara Valley Habitat Agency Governing Board, Santa Clara Valley Habitat Agency Implementation Board, SCVWD Water Committee (alternate), Silicon Valley Clean Energy JPA Board, South Coun ty Regional Wastewater Authority, South County United for Health, Street Naming Committee, VTA Committee for Transit Accessibility, VTA Policy Advisory Committee (alternate) Council Member Leroe-Muñoz - ABAG (alternate), CalTrain Policy Group (alternate), Gilroy Youth Task Force, Historic Heritage Committee, SCVWD Water Committee, Silicon Valley Regional Interoperability Authority Board, South County Youth Task Force Policy Team, VTA Mobility Partnership Mayor Velasco - Cities Association of Santa Clara Co. Board of Directors, Economic Development Corporation Board, General Plan Advisory Committee, Gilroy Gardens Board of Directors, Historic Heritage Committee (alternate), South County Joint Planning Advisory Committee, South County Regional Wastewater Aut hority (alternate), URM Task Force Sub-Committee, VTA Mobility Partnership, VTA South County City Group (alternate) V. FUTURE COUNCIL INITIATED AGENDA ITEMS VI. CONSENT CALENDAR (ROLL CALL VOTE) All matters listed under the Consent Calendar are considered by the City Council to be routine and will be enacted by one motion. There will be no separate discussion of these items unless a request is made by a member of the City Council or a member of the public. Any person desiring to speak on any item on the consent calendar should ask to have that item removed from the consent calendar prior to the time the Council votes to approve. If removed, the item will be discussed in the order in which it appears. City Council Regular Meeting Agenda 02/4/2019 Page4 A. Reduction of the Faithful Performance and Payment Security Bonds for In- Tract and Cohansey Avenue Improvements, Property Improvement Agreement No. 2015-06, Harvest Park II Tract 10276 VII. BIDS AND PROPOSALS VIII. PUBLIC HEARINGS A. Funding Priorities for Community Development Block Grant (CDBG) and Housing Trust Funds (HTF) for Fiscal Years 2019-2020 and 2020-2021 1. Staff Report: Sue O'Strander, Deputy Director of Community Development 2. Disclosure of Ex-Parte Communications 3. Open Public Hearing 4. Close Public Hearing 5. Possible Action: Provide direction regarding funding priorities for Community Development Block Grant (CDBG) and Housing Trust Funds (HTF) for fiscal years 2019-2020 and 2020-2021. IX. UNFINISHED BUSINESS A. Appointments to City Boards, Commissions and Committees With Seats Vacant or Expired as of December 31, 2018 1. Staff Report: Shawna Freels, City Clerk 2. Public Comment 3. Possible Action: Appoint Members to the Arts and Culture Commission, Community and Neighborhood Revitalization Committee, Historic Heritage Committee, Housing Advisory Committee and Personnel Commission. B. Report on Interim Urgency Ordinance Prohibiting the Approval of Any Multi-Family Residential Development Projects in the City of Gilroy for a Period of Forty-Five (45) Days City Council Regular Meeting Agenda 02/4/2019 Page5 1. Staff Report: Stan Ketchum, Senior Planner 2. Public Comment 3. Possible Action: a) Approve and issue the report pursuant to Government Code Section 65858(d); and b) Direct staff to conduct further analysis of the current Residential Development Ordinance restrictions and their conformance to state legislation and develop optional actions to resolve any inconsistencies for presentation to the City Council; and c) Direct staff to prepare a Request for Proposals to engage a consultant to work with staff, the development industry and the public to update and/or replace the city’s current residential design guidelines and zoning provisions to ensure conformance with current state legislation; and d) Direct staff to coordinate with the Santa Clara County Office of Supportive Housing to schedule a presentation for the City Council regarding the Affordable Housing Bond Program. X. INTRODUCTION OF NEW BUSINESS A. Fiscal Year 2018-19 First Quarter Budget Update 1. Staff Report: Jimmy Forbis, Finance Director 2. Public Comment 3. Possible Action: Receive report. B. Report on Economic Climate and Updated Ten-Year Financial Forecast 1. Staff Report: Jimmy Forbis, Finance Director 2. Public Comment 3. Possible Action: Receive report. C. California Public Employees' Retirement System (CalPERS) Status Report 1. Staff Report: Jimmy Forbis, Finance Director 2. Public Comment 3. Possible Action: Receive report and discuss options to address the City's unfunded pension liabilities. D. Proposed Budget Direction and Budget Development Study Sessions Schedule City Council Regular Meeting Agenda 02/4/2019 Page6 1. Staff Report: Gabriel Gonzalez, City Administrator 2. Public Comment 3. Possible Action: Receive report and provide direction to staff to begin the budget development process for a “status-quo” operating budget FY 2019-2020 and FY 2020-2021; consideration for one-time department budget request for individual items not to exceed $50,000; and, consideration to appropriate funding for City Council initiatives of the City’s Strategic Plan. XI. CITY ADMINISTRATOR'S REPORTS XII. CITY ATTORNEY'S REPORTS XIII. CLOSED SESSION A. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Pursuant to Government Code Section 54956.8 and Gilroy City Code Section 17A.8 (a) (2) Property:7070 Chestnut Street, Gilroy (Gilroy Fire Station), APN 841 66 012; Negotiators: Gabriel Gonzalez, City Administrator; Other Party to Negotiations:Rogg Collins of Evergreen;Under Negotiations: Price and Terms of Payment B. PUBLIC EMPLOYEE PERFORMANCE EVALUATION Pursuant to Government Code Section 54957 and Gilroy City Code Section 17A.11(2); Employee Name/Title: Shawna Freels, City Clerk 1. Public Comment on Closed Session Items 2. Adjourn to Closed Session ADJOURN TO OPEN SESSION Report of any action taken in Closed Session and vote or abstention of each Councilmember if required by Government Code Section 54957.1 and Gilroy Code Section 17A.13 (a); Public Report of the vote to continue in closed session if required under Gilroy Code Section 17A.11 (5) ADJOURNMENT FUTURE MEETING DATES City of Gilroy STAFF REPORT Agenda Item Title: Interviews for Open Seats on Boards, Commissions and Committees with Terms Expired or Vacant as of December 31, 2018 Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: City Clerk Submitted By: Shawna Freels Prepared By: Shawna Freels Suzanne Guzzetta Strategic Plan Goals ☐ Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION Interview candidates for open seats on Boards, Commissions and Committees with terms expired or vacant as of December 31, 2018. BACKGROUND The City Council opened the annual recruitment period on October 1, 2018 for a 10 - week period ending December 4, 2018 to fill seats on 13 Boards, Commissions, and Committees with member terms vacant or expiring as of December 31, 2018. The City Council opened recruitment for the position of City Historian on October 15, 2018 through December 4, 2018. Additionally, seats on the Arts and Culture Commission, Community and Neighborhood Revitalization Committee, Housing Advisory Committee, and Parks and Recreation Commission were vacated during this time. The Council interviewed candidates on December 17, 2018 and January 7, 2019, and made several appointments. A recruitment effort for Arts and Culture Commission, Community and Neighborhood Revitalization Committee, Historic Heritage Committee, Packet Pg. 7 Housing Advisory Committee and Personnel Commission was extended until January 29, 2019, as there were insufficient applicants to fill vacancies. At the close of this extended application period the following applications have been submitted: Board/Commission # of seats open # of applications Arts & Culture Commission 1 seat 1 1) Sally Armendariz* Historic Heritage Committee 1 seat 1 1) Joseph Robinson Housing Advisory Committee 3 seats 2 1) Bruce Morasca 2) Carlos Pineda Personnel Commission 1 seat 1 1) Brian Glass 2) Sholly Nicholson Public Art Committee 1 seat 1 1) Otmar Alvarado *incumbent CONCLUSION Interviews of these applicants are scheduled at the opening of this evening’s meeting, and appointments will take place later in the meeting. Attachments: 1. Applications 2. 2018 Attendance Log Packet Pg. 8 Board/Commission # of seats open # of applications Arts & Culture Commission 3 seats 1 1) Sally Armendariz Historic Heritage Committee 1 seat 1 1) Joseph Robinson Housing Advisory Committee 3 seats 2 1) Bruce Morasca 2) Carlos Pineda Personnel Commission 1 seat 1 1) Brian Glass 2) Sholly Nicholson Public Art Committee 1 seat 1 1) Otmar Alvarado a Packet Pg. 9 Attachment: Applications (2007 : Board and Commission Interviews) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Arts & Culture Commission Name: Sally ARMENDARIZ Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: Native of Gilroy. I have served on various Gilroy City Commissions and Santa Clara County Commissions. Have been active in my community since the 1960's. List any service to the community including any prior appointments: I have been on this Commission before and am very interested in continuing representing my community, with great concern about art projects that will reflect the entire community. Gilroy has great history and I believe some of the art projects should reflect its history. What are your goals while serving on this Board/Commission/Committee?: See that the art/murals represent our diverse community. Why are you the most qualified to serve on this Board/Commission/Committee? I have served on this commission before, I am a native of Gilroy with great interest in my community. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/22/2019 2:52:42 PMa Packet Pg. 10 Attachment: Applications (2007 : Board and Commission Interviews) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Historic Heritage Committee Name: Joseph Robinson Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I was recommended to this position after not being chosen as City Historian. My qualifications for this position are minimal, but I am eager to learn and will serve with integrity. List any service to the community including any prior appointments: I have been volunteering at the Historical Museum and helping with classroom presentations on the Ohlone Indians. What are your goals while serving on this Board/Commission/Committee?: I would want to make decisions based on the interests of the community, and would have an interest in preserving Gilroy's history as expressed in its building and architecture. Gilroy is likely to continue to grow and authors new histories everyday, so I would not be too dogmatic about things needing to stay the same. To consider Gilroy's history is to assume that it is a long- standing community, not just a random juxtaposition of private interests, and so I would see myself as working in the public interest, alert to the needs of the city as a whole. Why are you the most qualified to serve on this Board/Commission/Committee? There would have to be another candidate for the comparison to be meaningful. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/20/2019 9:11:05 AMa Packet Pg. 11 Attachment: Applications (2007 : Board and Commission Interviews) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Housing Advisory Committee Name: Bruce Morasca Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I am a City of Gilroy resident who has lived in Gilroy for 40 years as a involved member of the Community. I have served on a City Commission &/or Board for over 16 years. I am up to date with City happenings by attending &/or watching City Council mtgs, attending the Mayors Coffees and reading the City newsletter. List any service to the community including any prior appointments: I served on the City of Gilroy Public Art Committe for 16 years and the Arts & Culture Commission for 8 years. I was a founding member of the Gilroy Arts Alliance. I served on the Board of the South Valley Symphony for 8 years & have volunteered at the Garlic Festival the past 20 years. What are your goals while serving on this Board/Commission/Committee?: To be an engaged member of the Committee and support staff in accomplishing the Committee goals. Why are you the most qualified to serve on this Board/Commission/Committee? I am applying for the ‘resident seat’ and feel my City service and long residency qualifies me. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/22/2019 10:32:37 AMa Packet Pg. 12 Attachment: Applications (2007 : Board and Commission Interviews) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Housing Advisory Committee Name: carlos pineda Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: My name is Chef Carlos Pineda I am the Program Manager and Executive Chef at the Culinary Academy and Kneaded Catering Company at Rebekah Children’s Services which has been around for over 125 years. I am born and raised in Gilroy, my parents are retired and live here locally. I have 3 older brothers that all also live in Gilroy. The oldest is a leader in security for NASA in the bay area, the other is an engineer technician at Tesla in the bay area and lastly my other brother is a detective with the Gilroy Police Dept. After graduating from Gilroy High School in 2006 I attended and graduated with Honors from the Professional Culinary Institute in Campbell in 2007. After my experience interning at the Inn at Spanish Bay with the Pebble Beach Company, I went on to work as Chef in Monterey, Los Angeles, Morgan Hill and now have been back home in Gilroy for the last 10 years. I am also a confirmed and cleared substitute teacher with the Gilroy Unified School District. In 2010 I transitioned into our local Rebekah Children’s Services where I helped develop their Culinary Academy. This program allows disadvantaged youth ages 15-25 learn hands-on culinary skills in a commercial kitchen. In addition, students develop job-readiness skills in a safe, structured, and caring environment that will prepare students for the demands and responsibilities of adult-hood, independent living including housing and financial literacy, and the real work world. In 2014 I completed the requirements to receive my California Teaching Credential for Vocational Education and I am currently working towards a master’s in education. List any service to the community including any prior appointments: I believe I am a huge contributor to various community and service organizations such as being a Board of Director for the Gilroy Chamber of Commerce, South County Young Professional’s Network, Gilroy Exchange Club, EL Cajon Project, Leadership Gilroy, Gilroy Foundation and I am also the current President for the Gilroy Sunrise Rotary Club. In June 2017 I received the Nob Hill Award for outstanding community service from the Gilroy Chamber of Commerce, I was highlighted as Gilroy and Morgan Hill Today’s 2018 People to watch, in 2018 I received the Gavilan College Community Spirit Award and lastly in 2017 and 2018 I won the Garlic Festival Showdown in which I donated my earnings to the Gilroy Foundation and Rebekah Children’s Services . I am passionate about the community and I enjoy learning how we can help make Gilroy a better place. What are your goals while serving on this Board/Commission/Committee?: My goal for serving on this committee is to learn more about what our city has planned for future housing needs and also learn how I can help be the voice to our community. Which will allow us to learn what the community is thinking or hearing in hopes that it builds a better bridge between the people and the City of Gilroy. City Council members can only do so much with streaming the information in or hearing the needs, I believe that is why we have commissions and committees 1/22/2019 10:38:08 AMa Packet Pg. 13 Attachment: Applications (2007 : Board and Commission Interviews) to help then filter the information into the City of Gilroy as well as filtering it out to the people. I believe with all of my partnerships with other service agencies and community Boards that I sit on I am able to be that voice to our community. I am excited to have the opportunity to get involved at the city level and be able to share my ideas and knowledge with the committee. I am a Millennial and I want to ensure we have a say in what our future holds. I myself am a current renter in the area and one of my goals is to buy a home or land here in the future. Why are you the most qualified to serve on this Board/Commission/Committee? While working at a service agency and volunteering or partnering with other service agencies in the Gilroy community that work with children and families we have realized that the number of homeless youth and families is increasing. I have began partnering with the Santa Clara County Office of Education and the California Coalition for youth where we meet yearly and bring housing needs and ideas to our state capitol to help streamline the stress and difficulties our children and families are facing when it comes to housing needs. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. a Packet Pg. 14 Attachment: Applications (2007 : Board and Commission Interviews) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Personnel Commission Name: Brian Glass Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I have lived in the city of Gilroy since 2013. I have served as a public servant in the fire service since I was 16 years old. Totaling over 25 years of public service I have held the ranks of Fire Explorer, Paid Call Firefighter, Firefighter 1, Firefighter Engineer, Firefighter Engineer Paramedic, Fire Captain, Fire Battalion Chief, E.M.S. Chief, and currently as Deputy Chief of Operations. I have an AS in Fire Science from Monterey Peninsula College, a BS in Occupational Studies from CSULB and an MS in Emergency Services Administration also from CSULB. My overall experience and education make me a well suited candidate for the Personnel Commission. List any service to the community including any prior appointments: I have had no public appointments to boards or commissions. What are your goals while serving on this Board/Commission/Committee?: I am happy to give back to the community that I live in and where I am raising my family. My goals is to provide fair, transparent and respectful service to the board as it relates to personnel issues, challenges and progress within the city. Why are you the most qualified to serve on this Board/Commission/Committee? My entire adult life has been seeing the public working with in the community. I understand the public service and local government rules, regulations, policies and procedures. While I recognize my scope of work is limited to the fire service, I have served on many committees through out the county, tackling significant projects. Including local hazard mitigation, community wildfire preparedness, and continuity of operations. These projects included diverse community issues as well as a varied social economic and geo-political issues. I look forward to participating in the selection process. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/24/2019 9:20:53 PMa Packet Pg. 15 Attachment: Applications (2007 : Board and Commission Interviews) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Personnel Commission Name: Sholly Nicholson Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I'm presently the Director of Human Resources for a regional CPA firm and have 15 years of relevant HR related experience. I have my Professional in Human Resources (PHR) certification which is awarded to those who have proven technical skills and knowledge of Human Resources practices. List any service to the community including any prior appointments: I'm a member of Surfrider and perform regular beach clean-ups and I regularly donate my time and money to charitable causes individually or though my employer. What are your goals while serving on this Board/Commission/Committee?: To serve my local community by sharing human resources expertise with the Personnel Commission and those it serves. Why are you the most qualified to serve on this Board/Commission/Committee? 15 years of relevant working experience and knowledge as well as my current Human Resources certification. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/22/2019 4:57:21 PMa Packet Pg. 16 Attachment: Applications (2007 : Board and Commission Interviews) 1/17/2019 10:10:54 PM City of Gilroy Application for Public Art Committee Appointment note: applicants will be interviewed by the Arts and Culture Commission, with recommendation to the City Council for final interview and appointment) Name: Otmar Alvarado Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I am an avid patron of the arts, who has a keen eye for emerging artists. I am a photographer with an understanding of the history of art and how a variety of mediums, both traditional and not, can be used to show the individuality of the artist and evoke emotions from the viewer. List any service to the community including any prior appointments: I have worked the Garlic Festival a few years nonconsecutively, and being a full-time student I haven't had as much time as I would have liked to do more. I am hoping that this could give me an opportunity to serve my community. What are your goals while serving on this committee and how would you contribute to enhance the visual environment within the city and provide our residents with the opportunity to live with Public Art? I would make sure that I keep an eye out for artists. I believe that public art should embrace not only the future but also the past. It's essential to bring together a community through art that transcends boundaries. I think Gilroy could create an artistic atmosphere that could rival even larger cities. For example, through the organization of local artistic events perhaps each one catering to a specific age demographic. Why are you the most qualified to serve on this Committee? I have a passion for art and understand the value of the emotion it can evoke. I also love my community and would want to see it expand culturally and progress to a point where Gilroy could be considered an artistic mecca. All Committee applications are a public record. Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. a Packet Pg. 17 Attachment: Applications (2007 : Board and Commission Interviews) MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sally Armendariz P P A P P C C -A A A - Barbara Bottini P P P P P C C -P E P - Bruce Morasca P P P E P C C -P p P - Amanda Rudeen N/A P P P P C C -P P P - Maricela Andrade N/A N/A N/A N/A N/A N/A N/A N/A P P P - Nancy Fierro N/A N/A N/A N/A N/A N/A N/A N/A P P P - Marika Somorjai N/A N/A N/A N/A N/A N/A N/A N/A P P P - MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chad Reeder P P P P P P C P E P P C Sean Reedy P P P P P P C P P P P C Leonardo Gonzalez P P P A P P C P E E P C Lionel Gonzalez P P P E P E C E P P P C Zachary Hilton P P P E P P C P P P P C MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec John Almash - - - - - - - - - - - - Neil Beman - - - - - - - - - - - - Patricia Giordano - - - - - - - - - - - - Moe McHenry - - - - - - - - - - - - Metra Valle - - - - - - - - - - - - MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sally Armendariz P C P A P C C C C P C - Marisela Castro P C P E A C C C C E C - Jesiah Dueñas P C P P P C C C C P C - Kris Schlenker P C E P P C C C C P C - Dr. George Vanecek P C P P P C C C C P C - William "Joey" Weitz E C P P P C C C C P C - Linda Williams P C P P P C C C C P C - MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Steve Ashford (Planning C R) C P C C P C C P C P C C Mayor Roland Velasco (City Council Rep)N/A N/A C C P C C P C A C C Fabian Morales Medina C P C C P C C E C P C C Almendra Perez C P C C P C C A C P C C Steve Seebart C P C C P C C P C P C C MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Rebeca Armendariz C C C A P P E E C C C C Elizabeth Bertolone C C C E P E P P C N/A N/A N/A Jerrod Coddington C C C P P P P P C N/A N/A N/A Toby Echelberry C C C P P P P P C E C C David Fissel C C C P P A P P C E C C Reid Lerner C C C P P P A P C C C C Lucille Reyes C C C E P P E E C C C C Jaime Rosso C C C P A P P P C C C C VACANT BOARD/COMMISSION/COMMITTEE ATTENDANCE 2018 ARTS AND CULTURE COMMISSION (7 members meets 2nd Tues/5:30) BICYCLE/PEDESTRIAN COMMISSION (5 members meets 4th Tues/6:00) BUILDING BOARD OF APPEALS (5 members meet as needed) COMMUNITY & NEIGHBORHOOD REVITALIZATION COMMITTEE (7 members meets 3rd Wed/6:45) HISTORIC HERITAGE COMMITTEE (5 members meets monthly) HOUSING ADVISORY COMMITTEE (9 members meets 2nd Wed/6:00) b Packet Pg. 18 Attachment: 2018 Attendance Log (2007 : Board and Commission Interviews) MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Rashmi Beman A P C C P A c P P P E c Michaela Gonzalez P P C C P P c A P A P c Sumana Reddy P P C C P A c P P A P c Kathy Souza N/A P C C P P c P P P P c Candice Whitney P P C C E P c P E P P c MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Alison Beach -A --E --P P Robert Esposito -P --P --P P Jon Paul Newland -A --P --P P Amanda Rudeen N/A N/A N/A -P --P P James Weaver -A --A --P A MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec John Almash P E P E E P P -A P E - Terrie Berry P P P P P P P -P P P - Julie Garcia P E E P P E P -P E P - Ermelindo Puente P P E E P P P -P P P - Troy Trede P P E P E P N/A N/A N/A N/A N/A N/A Patricia Bentson P P P P P P E -P P P - Carol Marques P E P E P P P -P P P - MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct 8 RM/Oct 15 Special Mtg Nov Dec Thomas Brewer P P E C P P E P C C/P P C Nita Edde-Mitchell E P P C P P P E C C/P P C Annie Tomasello P P E C E P P E C C/P P C Catherine Cummins P P P C P P P P C C/P A C Linda Weick P P P C E E P P C C/P A C MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct. Nov Dec Martha Johanson -P C P Stephanie Okada-McCabe -A C P Domingo Chavez -P C P Marco Machado -P C P Mercy Mollinedo Goold -P C A MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Rebeca Armendariz P E P A P P C C P P P P Steve Ashford P P P P P P C C P P P E Casey Estorga P P P P P P C C P P P P Tom Fischer P P P P P P C C P P P P Sam Kim N/A N/A P E E P C C P P P P Susan Rodriguez P P P P P E C C P P P P Rebecca Scheel P P P P P P C C P P E P MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Bruce Morasca (A&C rep)E P P P P E P -P P P - Sam Bozzo P E P P E P P -P P A - Armando Franco P P P E P P E -P P A - Melanie Reynisson P P P P P p E -P A P - Sally Armendariz P A A A A A P -A A - Judy Bozzo P P P P P p P -P P P - Camille McCormack N/A P P E P p P -P P P - PARKS & RECREATION COMMISSION (7 members meets 3rd Tues/6:00) PERSONNEL COMMISSION (5 members meets 2nd Mon/5:30) PHYSICALLY CHALLENGED BOARD OF APPEALS (5 members meets 2nd Tues/10:00am-Jan/April/July/Oct) PLANNING COMMISSION (7 members meets 1st Thurs/6:30) PUBLIC ART COMMITTEE (7 members meets 4th Wed/5:30) LIBRARY COMMISSION (5 members meets 2nd Wed/7:00) OPEN GOVERNMENT COMMISSION (5 members meets quarterly) b Packet Pg. 19 Attachment: 2018 Attendance Log (2007 : Board and Commission Interviews) City of Gilroy STAFF REPORT Agenda Item Title: Reduction of the Faithful Performance and Payment Security Bonds for In-Tract and Cohansey Avenue Improvements, Property Improvement Agreement No. 2015-06, Harvest Park II Tract 10276 Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: Public Works Department Submitted By: Girum Awoke Prepared By: Girum Awoke Jorge Duran Strategic Plan Goals ☐ Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION Approve the reduction of the faithful performance and payment security bonds for the Harvest Park II Tract No. 10276 In-Tract and Cohansey Ave improvements, Property Improvement Agreement No. 2015-06. BACKGROUND The City of Gilroy currently has several land development projects at various stages of development. In an effort to allow the opening and utilization of completed public areas and amenities, Gilroy City Code Chapter 21, Article 3 , Section 21.81, allows the City Council to authorize a reduction of bonds/funds equal to the estimated cost of the completed portion of the improvements. 6.A Packet Pg. 20 In 2014, The James Group obtained Council approval for a Tentative Map (TM 13-06) and Architectural and Site review approvals to subdivide approximately 17 acres into 57 single-family residential lots, 1 multi-family lot, 1 commercial lot, and 3+/- acres of common area located west of Monterey Street and north and south of Cohansey Avenue. [Reference: Resolution No. 2014-02, TM 13-06; and Resolution No. 2014-03, A/S-PUD 13-26]. This project was originally scheduled for Council approval on 2016. However, the Developer requested revisions to the draft Property Improvement Agreement (PIA) presented to Council. Staff worked with the Developer and The James Group to negotiate the pending issues on the PIA. On spring of 2016 James Group sold the project to Meritage Homes of California. In October 2016, Meritage Homes of California obtained Council approval f or the Tract 10276, Property Improvement Agreement (PIA) no. 2015 -06 and project final map. The Final Map designates 55 single-family residential lots (instead of the 57 lots per the tentative map). Aside from the tract improvements, this project is constructing a bridge on Cohansey Avenue over Llagas Creek and intersection improvements, including a traffic signal at the intersection of Cohansey Avenue and Monterey Road. Tract 10276 included three major areas of improvements, each with separate bonds, as shown on the Table below. DISCUSSION Chapter 21, Article III, Section 21.81 of the City Code allows the City Council to authorize the reduction in the payment and performance bonds the builder provided prior to the Property Improvement Agreements being accepted by Council. The amount of the bond reduction is consistent with the amount of work completed at the time of request. A maintenance bond in the amount of 10% of the construction cost ensures that defective work or repair needs will be addressed during the one-year maintenance warranty period. The developer, Meritage Homes of California, Inc., a California corporation, requests a reduction of the In-Tract and Cohansey Ave improvements portion of Tract 10276 Faithful Performance and Payment Bonds to a Maintenance Bond which is 10% of the bond value for the In-Tract and Cohansey Ave improvements bond, reducing it from the original $5,884,640.41 to $588,464.00. The original security provided for 100% of the estimated construction cost and payment for In-Tract and Cohansey Ave improvements. The In-Tract and Cohansey Ave improvements consist of new streets, grading, curb, gutter, sidewalk, utilities, landscape, median islands, paint striping, and electrical lighting. The Tract 10276, Property Improvement Agreement (PIA) No. 2016-05, included this bond requirement along with two other bond requirements, as shown in Table A below. 6.A Packet Pg. 21 The project is currently asking for acceptance of improvements and bond reduction for the In-Tract and Cohansey Ave improvements (Item 1 in Table A below). The following improvements listed in the table below were required under Property Improvements Agreement No. 2016-05: Item No. Table A – Improvements for Tract 10276 Bond Amount Complete Y/N* 1. In-Tract & Cohansey Ave improvements (item for this council approval) $5,884,640.41 Y 2. Cohansey at Llagas Creek Bridge Improvements $3,665,199.00 N 3. Off-Site improvements, Cohansey/Monterey intersection $2,699,239.28 N The In-Tract and Cohansey Ave improvements have been completed and inspections were conducted by the City of Gilroy. All punch list items have been completed and City inspectors have approved the construction. Currently, the developer is working on completing the remainder of the improvements required b y PIA No. 2016-05. ALTERNATIVES Should Council decide not to approve the bond reduction, the Builder will be required to maintain full bonding in the amount of 100% of the Construction Cost for payment and 100% of the Construction Cost for Performance. FISCAL IMPACT/FUNDING SOURCE There are no financial impacts with this action. Attachments: 1. Vicinity Map 2. PIA_RECORDED 23599187 REC ALL 6.A Packet Pg. 22 V Tract 10 V ICIN 0276 – H N ITY M Harvest P M AP Park Phaase II 6.A.a Packet Pg. 23 Attachment: Vicinity Map (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 24 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 25 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 26 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 27 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 28 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 29 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 30 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 31 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 32 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 33 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 34 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 35 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 36 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 37 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 38 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 39 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 40 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 41 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 42 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 43 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 44 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 45 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 46 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 47 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) 6.A.b Packet Pg. 48 Attachment: PIA_RECORDED 23599187 REC ALL (1974 : Partial Acceptance Tract 10276 Harvest Park II In-Tract and Cohansey Ave) City of Gilroy STAFF REPORT Agenda Item Title: Funding Priorities for Community Development Block Grant (CDBG) and Housing Trust Funds (HTF) for Fiscal Years 2019- 2020 and 2020-2021 Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: Community Development Department Submitted By: Kristi Abrams Prepared By: Sue O'Strander Jim Carney Strategic Plan Goals  Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION Provide direction regarding funding priorities for Community Development Block Grant (CDBG) and Housing Trust Funds (HTF) for fiscal years 2019-2020 and 2020-2021. POLICY DISCUSSION Council is asked to: 1. Conduct the Public Hearing that was continued from the Council meeting of January 28, 2019 regarding amendments of Community Development Block Grant (CDBG) Annual Action Plans. 2. After public comments, close the Public Hearing regarding amendments of CDBG Annual Action Plans. 3. Provide direction establishing the funding priorities for the use of the CDBG and Housing Trust Fund (HTF) dollars for FY 2019-2020 and FY 2020-2021. 8.A Packet Pg. 49 BACKGROUND Notice of Public Hearing On December 28, 2018, a Public Hearing Notice was published in the Gilr oy Dispatch regarding two proposed possible actions by the City Council: 1. Proposed amendments of prior and current years CDBG Annual Action Plans for fiscal years 2014, 2016, 2017 and 2018 to allow potential allocation of available CDBG funds for the rehabilitation of the city-owned downtown Cherry Blossom Building. After the publication of that Notice of Public Hearing, staff identified other potential uses of the CDBG funds for critical community needs and the possible availability of non-CDBG for the rehabilitation of the Cherry Blossom building. Consequently, staff requested Council to not consider the proposed amendments of CDBG on January 28, 2019 and thus allow staff time to explore other projects needing CDBG funds and determine if other non-CDBG could be available for the rehabilitation of the Cherry Blossom building. Since the Public Notice had been published staff requested Council to open the public hearing and continue the hearing to February 4, 2019. After the Council meeting on January 28, 2019, staff determined that more time is needed to explore the possible funding options for Cherry Blossom as well as to identify a project that can move forward with CDBG funds. It must be noted federal rules for the CDBG program requires that proposed Council action to amend CDBG Action Plans have published Notice of Public Hearing thirty days prior to such Council action. The Notice was published on December 28, 2018. Moving forward to the Council meeting on February 4, 2019, since the Public Hearing was continued from January 28, 2019 to February 4, 2019, staff recommends to hold the public hearing, take public comments and then close that Public Hearing. As discussed below, there is no federal CDBG rule that requires the City to conduct a Public Hearing to establish CDBG and HTF priorities for future fiscal years. 2. Provide direction establishing the funding priorities for the future use of the Community Development Block Grant (CDBG) and Housing Trust Fund (HTF) dollars for FY 2019-2020 and FY 2020-2021. The Council is recommended to take public comments about potential priorities for the use of CDBG and HTF funds and establish the funding priorities. That information will be communicated to potential applicants, primarily local non-profit agencies, so they will be aware of the Council priorities for this next round of CDBG and HTF revenue. The Notice of Public hearing of December 28, 2018, did include a reference to the need for Council to set CDBG and HTF funding priorities. While there is no federal rule that requires the City to first publish a thirty day (30) Notice of Public Hearing for the Council to take public comment and establish priorities for CDBG and HTF funding, staff included that information in the Notice of Public Hearing in order to give community members and non-profit agencies the information that the Council may establish CDBG and HTF funding priorities for FY 2019-2020 8.A Packet Pg. 50 and FY 2020-2021. Including the topic of funding priorities in the Notice of Public Hearing was done more as courtesy. Clearly, including the two recommended Council actions in one Public Notice was confusing. Following Council direction establishing funding priorities, staff will follow a schedule for conducting a community meetings/ workshop and acting applicatio ns for CDBG and HTF funding for the next two fiscal years. The Community Neighborhood Revitalization Committee (CDBG) will interview applicants and then recommend funding amounts to the Council. This effort is planned from February to April, 2019. Based upon Council funding approvals, staff will finalize the Annual Action Plan for FY 2019-2020 that must be submitted to Housing and Urban Development by May 15, 2019. CDBG and HTF Funding Priorities Every other year, based on the City of Gilroy’s two year cycle budget planning process, City Housing and Community Development (HCD) staff projects potential funding amounts from the federal Community Development Block Grant (CDBG) and the local Housing Trust Fund (HTF). A key step in that process is for the Council to establish priorities of the CDBG and HTF programs for the upcoming fiscal years (FY 2019 -2020 and FY 2020-2021.) The first step in that process as a federal requirement of the City’s acceptance of CDBG annual allocations to develop the five year Conso lidated Plan for fiscal years 2015 to 2020. In 2014, Council adopted that Plan. In creating the Consolidated Plan Gilroy partnered with the other cities and Santa Clara County. That effort included preparation of an extensive low-income community needs assessment. Also, that process involved holding several community meetings to receive input from low-income and other community participants concerning unmet critical affordable housing and community development needs in the City of Gilroy. As a result of that public outreach process, there were identified twenty-two (22) goals that were included in the Consolidated Plan and approved by the Council to address the use of CDBG funds, including: 1. Support for affordable housing 2. Housing Element implementation 3. Affordable homeownership support 4. Homebuyer education 5. Housing rehabilitation 6. Housing for the homeless 7. Services to the homeless 8. Emergency rental assistance 9. Homeless job training 8.A Packet Pg. 51 10. Support basic need services 11. Support for supportive services 12. Support youth services 13. Code Enforcement services 14. Tenant- Landlord mediation 15. Capital improvements in the Neighborhood Revitalization Strategy Area (NRSA) 16. Mitigate lead-based paint hazards 17. Promote fair housing choice 18. Fair housing zoning 19. Analysis of Impediments to housing choice 20. Workforce development 21. Small business development 22. Neighborhood Revitalization Strategy Following adoption of the Consolidated Plan, the next step is for the City was to adopt the Annual Action Plans (AAP) for each of the five Consolidated Plan years in order to program the use of federal dollars over each single fiscal year. The City of Gilroy also elects to include the use of Housing Trust Fund (HTF) dollars in its AAP. Prior to the award of said funds, the City Council reviews and determines priorities based on the list of goals shown above, and discussed in this staff report. Public services and capital projects funded by CDBG and HTF are estimated for the upcoming two fiscal years. The public service funds are distributed through a competitive grant process. Staff plans to release a Request for Proposals (RFP) that will seek applications for a two year funding cycle starting in FY 2019 -2020 and ending in FY 2020-2021. Staff will retain the ability to recommend funding selected projects with either CDBG or HTF funds. The priorities approved through this action will determine the funding strategy over the two year cycle. The budget figures in this staff report are estimates based on current information. The amount of funding available could change between now and the later stages of the development of the Annual Action Plans. The final CDBG allocation amount for FY 2019-2020 typically is announced by Housing and Urban Development (HUD) prior to July 1, 2019. The draft AAP for FY 2019-20120 is scheduled for presentation to the City Council in early May. HUD requires submission of the draft AAP not later than May 15, 2019. DISCUSSION Funding restrictions 8.A Packet Pg. 52 The CDBG program requires statutory caps for public service and administrative activities. The City can only use 15% and 20% of its CDBG funds plus any program income for public service and administrative activities, respectively. Public services provided by community based development organizations (CBDOs), capital projects and staffing time for rehabilitation projects do not have percentage caps. The Housing Trust Fund has spending limits based upon a Council review of the fund in July of 2011. The proposed funding strategy takes these restrictions into consideration. Public Services Similar to the last cycle, staff recommends the award of public service contracts for the upcoming cycle on an initial year basis plus an additional year based on acceptable performance and continued funding from HUD. This arrangement continues to work well by reducing staff hours involved in this process for both city staff and for the nonprofit agencies. Staff will evaluate a modest cost of living adjustment in the second year if the City’s CDBG grant and the HTF revenues increase. Conversely, staff could recommend a funding reduction in the second year should these revenues decreased by HUD. Public services must primarily benefit low and very low- income people or areas with low and very low-income concentration. Within these parameters, Council may propose funding priorities. Given the limited availability of CDBG and HTF funds to support some of the identified low-income needs in Gilroy, the City is unable to fund all of the goals listed above. However, there exists an opportunity to identify categories of funding that will cover many of the ideas gathered through the public input process and, at a minimum, address the top five broad categories supported through the “HUD Bucks” exercise. These recommended categories are: Basic Needs: Includes such services as food, shelter, clothing, transportation and job readiness. These services would serve the most vulnerable populations to include the homeless, seniors, the disabled and victims of domestic violence. Supportive Services: Includes such services as case management, housing location assistance and mental health services. This category would also include the Homeless Management Information System which is a countywide database all homeless providers in the county use to track the supportive services homeless individuals currently receive or have received in the past. Youth Services: Includes services directed toward at-risk youth that addresses crime prevention, gang intervention, recreational activities and youth empowerment. 8.A Packet Pg. 53 Capital improvement projects within the low-income Neighborhood Revitalization Strategy Area (NRSA) that include the downtown area. Housing Services: Includes only fair housing, tenant-landlord counseling and homebuyer education. CDBG Capital Improvement Projects Staff estimates that CDBG can allocate approximately $172,640 for capital improvement projects in year one of the two year cycle - FY 2019-2020, and is seeking Council direction regarding priorities for possible projects. The primary challenges associated with these funds are the numerous requirements associated with its use. Given the relatively small amount available each year, the CDBG program can only allocate so much funds to a project that, regardless of the amount or percentage of overall funding, will require the entire project to comply with the myriad of federal requirements. An option could be to carry over these funds for a city capital project and bundle them with funds available in the following year, but this could prevent the City from meeting HUD timeliness requirements which limit how much and how long funds can remain unspent. Nonetheless, one option for the City Council to approve is the use of funds within the NRSA that includes downtown. Another option could be the use of funds that support economic development. This could include capital improvements to downtown businesses. However, this too must follow prescribed federal guidelines to include the procurement of a contractor to complete the work and a requirement that the improved businesses create jobs as a result of completing the improvements. Further, the improvements could only go to support exterior improvements or the abatement of code violations. Staff’s experience has shown the challenges with these requirements; however this remains an option for the City Council to consider. Additionally, by way of disclosure, the use of federal funding may also require prevailing wage for other aspects of these projects based on California law. These requirements should be fully understood by private parties prior to acceptance and use of CDBG funds. Another option could be to issue a RFP for a local nonprofit(s) to come forward with projects that would rehabilitate their facilities. This could include a nonprofit seeking funding to install accessibility improvements to allow for improved client access. It could also include the improvement of an existing space to allow for additional provisions of services. The nonprofit would still have to comply with all federal requirements, however the improvements generally allow for the agency to improve their delivery of services. Alternatively, CDBG funds can go toward a more robust housing rehabilitation program that provides loans and/or grants to low-moderate income residents. This program would allow these individuals to 8.A Packet Pg. 54 complete more significant home improvements (i.e. furnace replacements, roof repairs, kitchen remodeling) in addition to the current accessibility improvements funded through the existing Home Access Program. Based on these options, staff recommends that the City Council support either use of the funds for a capital improvement project(s) within the NRSA or the establishment of a more robust housing rehabilitation program. Staff further recommends that should the City Council support a housing rehabilitation program that the CDBG program targets the funds toward properties within the NRSA. All of the above noted options are subject to the federal timeliness of expenditure requirements for use of CDBG funds. Rehabilitation Program Staff recommends housing rehabilitation as a priority and the allocation of $150,000 in CDBG funds for that activity. That program can provide accessibility retrofits to the homes of low income disabled residents. This is a program that is run by staff and the construction is done by licensed contractors. The program was funded at $120,000 for each of the last two fiscal years, and has shown an increase in demand for a range of needed repairs of low-income homes. Code Enforcement Staff also recommends the allocation of $10,000 from HTF budget for emergency abatement of housing code hazards. This funding is set aside for use in situations in which other funds for abatement are not readily available. Following is the staff recommended budget estimated CDBG and HTF amounts for FY 2019-2020: CDBG $ 99,274 Administration (20% statutory limit) - includes staffing, advertising, internal services, committee support, audits, legal services $ 150,000 Rehabilitation Program - includes non-profit staffing for program delivery and grants for accessibility retrofit and other health and safety needed repairs to low-income homes. $172,640 Capital projects in the Neighborhood Revitalization Strategy Area (NRSA) that includes the downtown. (Projects to be determined) $ 74,455 Public service activities provided by local non-profit agencies 8.A Packet Pg. 55 $496,369 Total CDBG Allocation for FY 2019-2020 Housing Trust Fund $ 200,000 Administration and program staffing, advertising, legal services, committee support $ 10,000 Emergency and hazard abatement loans or grants $ 136,000 Housing-related public services $ 346,000 Total Housing Trust Fund for FY 2019-2020 As noted, all budget amounts are estimates and could be reduced or increased as sta ff continues to refine its budget and receive the next allocation from HUD. ALTERNATIVES 1. The City Council approval of the staff recommendations priorities for use of CDBG and HTF funds will help determine projects, programs and services that will assist low and very-low income households in Gilroy. This action is recommended 2. Should the City Council decline to proceed with the proposed staff recommendations regarding priorities for use of CDBG and HTF funds, potential projects, programs and services for low and very-low income households in Gilroy will not be made with CDBG and HTF funds. This action is not recommended. FISCAL IMPACT The priority activities are planned to be funded by the annual federal CDBG entitlement grant from HUD, CDBG rehabilitation loan payments, local Housing Trust Fund rehabilitation loan payments, home buyer loan repayments, fund interest and equity shares from Below Market Rate units. Adequate staff is available to issue the RFP, manage, the grantee selection process and manage contracts. NEXT STEPS Should the City Council approve the recommended CDBG and HTF priorities for use of those funds for the projects and activities outlined herein, City HCD staff will work with finance staff to make the necessary adjustments to the City budget, as well as develop and manage associated CDBG and HTF contracts for delivery of funded programs and services. 8.A Packet Pg. 56 City of Gilroy STAFF REPORT Agenda Item Title: Appointments to City Boards, Commissions and Committees With Seats Vacant or Expired as of December 31, 2018 Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: City Clerk Submitted By: Shawna Freels Prepared By: Shawna Freels Suzanne Guzzetta Strategic Plan Goals ☐ Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION Appoint Members to the Arts and Culture Commission, Community and Neighborhood Revitalization Committee, Historic Heritage Committee, Housing Advisory Committee and Personnel Commission. BACKGROUND Thirteen (13) Boards, Commissions and Committees have seats vacant as of December 31, 2018. The City held a recruitment period for a total of 13 weeks and the Council interviewed applicants at your December 10, 2018 and January 7, 2019 meetings, and subsequently made several appointments. As an insufficient number of applications were submitted for a few of the City Boards and Commissions, and recruitment efforts were extended from January 7, 2019 to January 29, 2019 for the Arts and Culture Commission, Community and Neighborhood Revitalization Committee, Historic Heritage Committee, Housing Advisory Committee and Personnel Commission. 9.A Packet Pg. 57 The Council is now asked to consider the appointment of members to the following open seats: • Arts & Culture Commission – 3 seats (1 4-year term ending 12/31/2022, 1 3-year term ending 12/31/2021, and 1 1-year term ending 12/31/2019) Applicant(s): Sally Armendariz*  Historic Heritage Committee – 1 seat Applicant(s): Joseph Robinson • Housing Advisory Committee – 3 seats (1 2-year term ending 9/30/2020, 1 1-year term ending 9/30/2019, and 1 1-year term ending 12/31/2019); One (1) renter; One (1) resident seat; and One (1) Local Property Owner seat Applicant(s): Bruce Morasca and Carlos Pineda • Personnel Commission – 1 seat (4-year term ending 12/31/2022) Applicant(s): Brian Glass and Sholly Nicholson *incumbent All applications and the 2018 attendance log are included with this staff report. Attachments: 1. Applications 2. 2018 Attendance Log 9.A Packet Pg. 58 Board/Commission # of seats open # of applications Arts & Culture Commission 3 seats 1 1) Sally Armendariz Historic Heritage Committee 1 seat 1 1) Joseph Robinson Housing Advisory Committee 3 seats 2 1) Bruce Morasca 2) Carlos Pineda Personnel Commission 1 seat 1 1) Brian Glass 2) Sholly Nicholson Public Art Committee 1 seat 1 1) Otmar Alvarado 9.A.a Packet Pg. 59 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Arts & Culture Commission Name: Sally ARMENDARIZ Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: Native of Gilroy. I have served on various Gilroy City Commissions and Santa Clara County Commissions. Have been active in my community since the 1960's. List any service to the community including any prior appointments: I have been on this Commission before and am very interested in continuing representing my community, with great concern about art projects that will reflect the entire community. Gilroy has great history and I believe some of the art projects should reflect its history. What are your goals while serving on this Board/Commission/Committee?: See that the art/murals represent our diverse community. Why are you the most qualified to serve on this Board/Commission/Committee? I have served on this commission before, I am a native of Gilroy with great interest in my community. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/22/2019 2:52:42 PM9.A.a Packet Pg. 60 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Historic Heritage Committee Name: Joseph Robinson Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I was recommended to this position after not being chosen as City Historian. My qualifications for this position are minimal, but I am eager to learn and will serve with integrity. List any service to the community including any prior appointments: I have been volunteering at the Historical Museum and helping with classroom presentations on the Ohlone Indians. What are your goals while serving on this Board/Commission/Committee?: I would want to make decisions based on the interests of the community, and would have an interest in preserving Gilroy's history as expressed in its building and architecture. Gilroy is likely to continue to grow and authors new histories everyday, so I would not be too dogmatic about things needing to stay the same. To consider Gilroy's history is to assume that it is a long- standing community, not just a random juxtaposition of private interests, and so I would see myself as working in the public interest, alert to the needs of the city as a whole. Why are you the most qualified to serve on this Board/Commission/Committee? There would have to be another candidate for the comparison to be meaningful. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/20/2019 9:11:05 AM9.A.a Packet Pg. 61 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Housing Advisory Committee Name: Bruce Morasca Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I am a City of Gilroy resident who has lived in Gilroy for 40 years as a involved member of the Community. I have served on a City Commission &/or Board for over 16 years. I am up to date with City happenings by attending &/or watching City Council mtgs, attending the Mayors Coffees and reading the City newsletter. List any service to the community including any prior appointments: I served on the City of Gilroy Public Art Committe for 16 years and the Arts & Culture Commission for 8 years. I was a founding member of the Gilroy Arts Alliance. I served on the Board of the South Valley Symphony for 8 years & have volunteered at the Garlic Festival the past 20 years. What are your goals while serving on this Board/Commission/Committee?: To be an engaged member of the Committee and support staff in accomplishing the Committee goals. Why are you the most qualified to serve on this Board/Commission/Committee? I am applying for the ‘resident seat’ and feel my City service and long residency qualifies me. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/22/2019 10:32:37 AM9.A.a Packet Pg. 62 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Housing Advisory Committee Name: carlos pineda Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: My name is Chef Carlos Pineda I am the Program Manager and Executive Chef at the Culinary Academy and Kneaded Catering Company at Rebekah Children’s Services which has been around for over 125 years. I am born and raised in Gilroy, my parents are retired and live here locally. I have 3 older brothers that all also live in Gilroy. The oldest is a leader in security for NASA in the bay area, the other is an engineer technician at Tesla in the bay area and lastly my other brother is a detective with the Gilroy Police Dept. After graduating from Gilroy High School in 2006 I attended and graduated with Honors from the Professional Culinary Institute in Campbell in 2007. After my experience interning at the Inn at Spanish Bay with the Pebble Beach Company, I went on to work as Chef in Monterey, Los Angeles, Morgan Hill and now have been back home in Gilroy for the last 10 years. I am also a confirmed and cleared substitute teacher with the Gilroy Unified School District. In 2010 I transitioned into our local Rebekah Children’s Services where I helped develop their Culinary Academy. This program allows disadvantaged youth ages 15-25 learn hands-on culinary skills in a commercial kitchen. In addition, students develop job-readiness skills in a safe, structured, and caring environment that will prepare students for the demands and responsibilities of adult-hood, independent living including housing and financial literacy, and the real work world. In 2014 I completed the requirements to receive my California Teaching Credential for Vocational Education and I am currently working towards a master’s in education. List any service to the community including any prior appointments: I believe I am a huge contributor to various community and service organizations such as being a Board of Director for the Gilroy Chamber of Commerce, South County Young Professional’s Network, Gilroy Exchange Club, EL Cajon Project, Leadership Gilroy, Gilroy Foundation and I am also the current President for the Gilroy Sunrise Rotary Club. In June 2017 I received the Nob Hill Award for outstanding community service from the Gilroy Chamber of Commerce, I was highlighted as Gilroy and Morgan Hill Today’s 2018 People to watch, in 2018 I received the Gavilan College Community Spirit Award and lastly in 2017 and 2018 I won the Garlic Festival Showdown in which I donated my earnings to the Gilroy Foundation and Rebekah Children’s Services . I am passionate about the community and I enjoy learning how we can help make Gilroy a better place. What are your goals while serving on this Board/Commission/Committee?: My goal for serving on this committee is to learn more about what our city has planned for future housing needs and also learn how I can help be the voice to our community. Which will allow us to learn what the community is thinking or hearing in hopes that it builds a better bridge between the people and the City of Gilroy. City Council members can only do so much with streaming the information in or hearing the needs, I believe that is why we have commissions and committees 1/22/2019 10:38:08 AM9.A.a Packet Pg. 63 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) to help then filter the information into the City of Gilroy as well as filtering it out to the people. I believe with all of my partnerships with other service agencies and community Boards that I sit on I am able to be that voice to our community. I am excited to have the opportunity to get involved at the city level and be able to share my ideas and knowledge with the committee. I am a Millennial and I want to ensure we have a say in what our future holds. I myself am a current renter in the area and one of my goals is to buy a home or land here in the future. Why are you the most qualified to serve on this Board/Commission/Committee? While working at a service agency and volunteering or partnering with other service agencies in the Gilroy community that work with children and families we have realized that the number of homeless youth and families is increasing. I have began partnering with the Santa Clara County Office of Education and the California Coalition for youth where we meet yearly and bring housing needs and ideas to our state capitol to help streamline the stress and difficulties our children and families are facing when it comes to housing needs. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 9.A.a Packet Pg. 64 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Personnel Commission Name: Brian Glass Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I have lived in the city of Gilroy since 2013. I have served as a public servant in the fire service since I was 16 years old. Totaling over 25 years of public service I have held the ranks of Fire Explorer, Paid Call Firefighter, Firefighter 1, Firefighter Engineer, Firefighter Engineer Paramedic, Fire Captain, Fire Battalion Chief, E.M.S. Chief, and currently as Deputy Chief of Operations. I have an AS in Fire Science from Monterey Peninsula College, a BS in Occupational Studies from CSULB and an MS in Emergency Services Administration also from CSULB. My overall experience and education make me a well suited candidate for the Personnel Commission. List any service to the community including any prior appointments: I have had no public appointments to boards or commissions. What are your goals while serving on this Board/Commission/Committee?: I am happy to give back to the community that I live in and where I am raising my family. My goals is to provide fair, transparent and respectful service to the board as it relates to personnel issues, challenges and progress within the city. Why are you the most qualified to serve on this Board/Commission/Committee? My entire adult life has been seeing the public working with in the community. I understand the public service and local government rules, regulations, policies and procedures. While I recognize my scope of work is limited to the fire service, I have served on many committees through out the county, tackling significant projects. Including local hazard mitigation, community wildfire preparedness, and continuity of operations. These projects included diverse community issues as well as a varied social economic and geo-political issues. I look forward to participating in the selection process. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/24/2019 9:20:53 PM9.A.a Packet Pg. 65 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) City of Gilroy Application for Board, Committee and Commission Appointment Board/Committee/Commission of Interest: Personnel Commission Name: Sholly Nicholson Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I'm presently the Director of Human Resources for a regional CPA firm and have 15 years of relevant HR related experience. I have my Professional in Human Resources (PHR) certification which is awarded to those who have proven technical skills and knowledge of Human Resources practices. List any service to the community including any prior appointments: I'm a member of Surfrider and perform regular beach clean-ups and I regularly donate my time and money to charitable causes individually or though my employer. What are your goals while serving on this Board/Commission/Committee?: To serve my local community by sharing human resources expertise with the Personnel Commission and those it serves. Why are you the most qualified to serve on this Board/Commission/Committee? 15 years of relevant working experience and knowledge as well as my current Human Resources certification. All Commission, Board and Committee applications are a public record Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 1/22/2019 4:57:21 PM9.A.a Packet Pg. 66 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) 1/17/2019 10:10:54 PM City of Gilroy Application for Public Art Committee Appointment note: applicants will be interviewed by the Arts and Culture Commission, with recommendation to the City Council for final interview and appointment) Name: Otmar Alvarado Phone number(s): email address*: Are you a registered voter within the City limits? Yes Physical Address*: List your qualifications for this appointment: I am an avid patron of the arts, who has a keen eye for emerging artists. I am a photographer with an understanding of the history of art and how a variety of mediums, both traditional and not, can be used to show the individuality of the artist and evoke emotions from the viewer. List any service to the community including any prior appointments: I have worked the Garlic Festival a few years nonconsecutively, and being a full-time student I haven't had as much time as I would have liked to do more. I am hoping that this could give me an opportunity to serve my community. What are your goals while serving on this committee and how would you contribute to enhance the visual environment within the city and provide our residents with the opportunity to live with Public Art? I would make sure that I keep an eye out for artists. I believe that public art should embrace not only the future but also the past. It's essential to bring together a community through art that transcends boundaries. I think Gilroy could create an artistic atmosphere that could rival even larger cities. For example, through the organization of local artistic events perhaps each one catering to a specific age demographic. Why are you the most qualified to serve on this Committee? I have a passion for art and understand the value of the emotion it can evoke. I also love my community and would want to see it expand culturally and progress to a point where Gilroy could be considered an artistic mecca. All Committee applications are a public record. Mail or email your application to: Shawna Freels, City Clerk City of Gilroy 7351 Rosanna Street, Gilroy, CA 95020 shawna.freels@ci.gilroy.ca.us The City of Gilroy accepts applications at any time and will keep them on file for one year. 9.A.a Packet Pg. 67 Attachment: Applications (2008 : Appointments to City Boards, Commissions and Committees) MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sally Armendariz P P A P P C C -A A A - Barbara Bottini P P P P P C C -P E P - Bruce Morasca P P P E P C C -P p P - Amanda Rudeen N/A P P P P C C -P P P - Maricela Andrade N/A N/A N/A N/A N/A N/A N/A N/A P P P - Nancy Fierro N/A N/A N/A N/A N/A N/A N/A N/A P P P - Marika Somorjai N/A N/A N/A N/A N/A N/A N/A N/A P P P - MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chad Reeder P P P P P P C P E P P C Sean Reedy P P P P P P C P P P P C Leonardo Gonzalez P P P A P P C P E E P C Lionel Gonzalez P P P E P E C E P P P C Zachary Hilton P P P E P P C P P P P C MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec John Almash - - - - - - - - - - - - Neil Beman - - - - - - - - - - - - Patricia Giordano - - - - - - - - - - - - Moe McHenry - - - - - - - - - - - - Metra Valle - - - - - - - - - - - - MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sally Armendariz P C P A P C C C C P C - Marisela Castro P C P E A C C C C E C - Jesiah Dueñas P C P P P C C C C P C - Kris Schlenker P C E P P C C C C P C - Dr. George Vanecek P C P P P C C C C P C - William "Joey" Weitz E C P P P C C C C P C - Linda Williams P C P P P C C C C P C - MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Steve Ashford (Planning C R) C P C C P C C P C P C C Mayor Roland Velasco (City Council Rep)N/A N/A C C P C C P C A C C Fabian Morales Medina C P C C P C C E C P C C Almendra Perez C P C C P C C A C P C C Steve Seebart C P C C P C C P C P C C MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Rebeca Armendariz C C C A P P E E C C C C Elizabeth Bertolone C C C E P E P P C N/A N/A N/A Jerrod Coddington C C C P P P P P C N/A N/A N/A Toby Echelberry C C C P P P P P C E C C David Fissel C C C P P A P P C E C C Reid Lerner C C C P P P A P C C C C Lucille Reyes C C C E P P E E C C C C Jaime Rosso C C C P A P P P C C C C VACANT BOARD/COMMISSION/COMMITTEE ATTENDANCE 2018 ARTS AND CULTURE COMMISSION (7 members meets 2nd Tues/5:30) BICYCLE/PEDESTRIAN COMMISSION (5 members meets 4th Tues/6:00) BUILDING BOARD OF APPEALS (5 members meet as needed) COMMUNITY & NEIGHBORHOOD REVITALIZATION COMMITTEE (7 members meets 3rd Wed/6:45) HISTORIC HERITAGE COMMITTEE (5 members meets monthly) HOUSING ADVISORY COMMITTEE (9 members meets 2nd Wed/6:00) 9.A.b Packet Pg. 68 Attachment: 2018 Attendance Log (2008 : Appointments to City Boards, Commissions and Committees) MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Rashmi Beman A P C C P A c P P P E c Michaela Gonzalez P P C C P P c A P A P c Sumana Reddy P P C C P A c P P A P c Kathy Souza N/A P C C P P c P P P P c Candice Whitney P P C C E P c P E P P c MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Alison Beach -A --E --P P Robert Esposito -P --P --P P Jon Paul Newland -A --P --P P Amanda Rudeen N/A N/A N/A -P --P P James Weaver -A --A --P A MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec John Almash P E P E E P P -A P E - Terrie Berry P P P P P P P -P P P - Julie Garcia P E E P P E P -P E P - Ermelindo Puente P P E E P P P -P P P - Troy Trede P P E P E P N/A N/A N/A N/A N/A N/A Patricia Bentson P P P P P P E -P P P - Carol Marques P E P E P P P -P P P - MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct 8 RM/Oct 15 Special Mtg Nov Dec Thomas Brewer P P E C P P E P C C/P P C Nita Edde-Mitchell E P P C P P P E C C/P P C Annie Tomasello P P E C E P P E C C/P P C Catherine Cummins P P P C P P P P C C/P A C Linda Weick P P P C E E P P C C/P A C MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct. Nov Dec Martha Johanson -P C P Stephanie Okada-McCabe -A C P Domingo Chavez -P C P Marco Machado -P C P Mercy Mollinedo Goold -P C A MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Rebeca Armendariz P E P A P P C C P P P P Steve Ashford P P P P P P C C P P P E Casey Estorga P P P P P P C C P P P P Tom Fischer P P P P P P C C P P P P Sam Kim N/A N/A P E E P C C P P P P Susan Rodriguez P P P P P E C C P P P P Rebecca Scheel P P P P P P C C P P E P MEMBER Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Bruce Morasca (A&C rep)E P P P P E P -P P P - Sam Bozzo P E P P E P P -P P A - Armando Franco P P P E P P E -P P A - Melanie Reynisson P P P P P p E -P A P - Sally Armendariz P A A A A A P -A A - Judy Bozzo P P P P P p P -P P P - Camille McCormack N/A P P E P p P -P P P - PARKS & RECREATION COMMISSION (7 members meets 3rd Tues/6:00) PERSONNEL COMMISSION (5 members meets 2nd Mon/5:30) PHYSICALLY CHALLENGED BOARD OF APPEALS (5 members meets 2nd Tues/10:00am-Jan/April/July/Oct) PLANNING COMMISSION (7 members meets 1st Thurs/6:30) PUBLIC ART COMMITTEE (7 members meets 4th Wed/5:30) LIBRARY COMMISSION (5 members meets 2nd Wed/7:00) OPEN GOVERNMENT COMMISSION (5 members meets quarterly) 9.A.b Packet Pg. 69 Attachment: 2018 Attendance Log (2008 : Appointments to City Boards, Commissions and Committees) City of Gilroy STAFF REPORT Agenda Item Title: Report on Interim Urgency Ordinance Prohibiting the Approval of Any Multi-Family Residential Development Projects in the City of Gilroy for a Period of Forty-Five (45) Days Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: Community Development Department Submitted By: Kristi Abrams Prepared By: Stan Ketchum Stan Ketchum Strategic Plan Goals ☐ Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION a) Approve and issue the report pursuant to Government Code Section 65858(d); and b) Direct staff to conduct further analysis of the current Residential Development Ordinance restrictions and their conformance to state legislation and develop optional actions to resolve any inconsistencies for presentation to the City Council; and c) Direct staff to prepare a Request for Proposals to engage a consultant to work with staff, the development industry and the public to update and/or replace the city’s current residential design guidelines and zoning provisions to ensure conformance with current state legislation; and d) Direct staff to coordinate with the Santa Clara County Office of Supportive Housing to schedule a presentation for the City Council regarding the Affordable Housing Bond Program. 9.B Packet Pg. 70 EXECUTIVE SUMMARY A series of conclusions and recommendations regarding the current and future development of multi-family housing are presented in this report for City Council consideration. Specifically, an analysis of topics identified in the Interim Urgency Ordinance (Ordinance No. 2019-01), regarding the type, density, and location of future multi-family residential development are presented in more detail, together with additional related topics, to present a comprehensive analysis of multi -family residential development in Gilroy. The topics addressed include the: (1) on-going Gilroy 2040 General Plan process, (2) recommendations of the Gilroy Place-Based Economic Development Strategy Report, (3) City’s remaining Regional Housing Needs Allocation (RHNA) and pending formation of the Santa Clara County RHNA Sub-region, (4) recommendations of the CASA Compact, (5) current and future housing affordability in Gilroy, (6) inventory of land planned for multi-family residential development, (7) implementation of the Santa Clara County Affordable Housing Bond Program in Gilroy, (8) state legislation effecting the residential approval process, (9) Residential Development Ordinance, and (10) need for more specific conditions of approval defining the housing type, density and affordability of new multi-family residential developments. BACKGROUND On January 7, 2019, the City Council passed Interim Urgency Ordinance No. 2019-01, prohibiting approval of any multi-family residential development entitlements, such as tentative maps, zoning amendments, use permits, variances or building permits, for 45 days. The original staff report and Interim Urgency Ordinance are attached for reference. The Interim Urgency Ordinance states that continued approval of multi-family residential development entitlements may conflict with the City’s planned evaluation of the following activities and circumstances currently in progress that may af fect the location, type, density and timing of future multi-family housing in Gilroy. Specifically, (1) the city’s remaining Regional Housing Needs Allocation (RHNA) allocation, (2) pending formation of the Santa Clara County RHNA Sub-region, (3) on-going Gilroy 2040 General Plan process, (4) recommendations of the Gilroy Place -Based Economic Development Strategy Report, (5) need for more specific conditions of approval defining the housing type, density and affordability of new multi-family residential developments, (6) implementation of the Santa Clara County Affordable Housing Bond Program in Gilroy, and (7) effect of State Legislation, including the Housing Accountability Act. Government Code provisions regarding such ordinances state that “ten days prior to the expiration of that interim ordinance or any extension, the legislative body shall issue a 9.B Packet Pg. 71 written report describing the measures taken to alleviate the condition which led to the adoption of the ordinance. This report satisfies that requirement. ANALYSIS 1. The Status of the Gilroy 2040 General Plan Update Process The 2040 General Plan Update process was suspended in April 2018, pending the completion of an economic development strategy report prepared by Economic and Planning Systems (EPS). See Section 2, below, regarding the results of the EPS report. Prior to April 2018, the General Plan Advisory Committee (GPAC) had completed selection of three land use alternatives for analysis and comparison. The next step would have been for the GPAC to develop a preferred land use alternative from the three identified alternatives. As described below, some information and recommendations contained in the EPS Report may prompt consideration of further analysis and discussion by the GPAC, prior to completing the land use alternatives phase of the General Plan Update. Staff will prepare recommendations regarding next steps in the General Plan process for review and direction from City Council. 2. Recommendations of the Gilroy Place-Based Economic Development Strategy Report (EPS Report) The EPS Report was commissioned jointly by the City of Gilroy and the Gilroy Economic Development Corporation (EDC) with the stated intent to “take stock of past economic development and the current General Plan analysis to bring additional perspective to the City of Gilroy approach toward improving its competitive position for growth and development, with an overarching goal of improving economic growth and diversity while building revenue base for both the short and long term .” That report was completed and presented to the City Council in December 2018, with a second Study Session delving further into the report recommendations held on January 14, 2019. A key finding of the report is that new housing, in conjunction with de velopment of new employment can be a valuable component to the economic development strategy of the city. Such housing, if strategically placed, can provide diversified options for younger workers, reduce commute costs, strengthen the desirability of the community for its workforce and provide financial support to the pro forma of the new employment uses. The report identifies a number of topics directly relevant to, and appropriately addressed by, the General Plan Advisory Committee through the General Plan Update. These include possible changes to the planned land uses on individual sites, consideration of revised land use policies, including allowing mixed use employment and residential uses on the east side of Highway 101, focused planning on the Downtown and surrounding area, and revising the city’s transportation policies to reduce the traffic mitigation and financing burden on economic development projects. The report studied 12 opportunity sites throughout the city and the three major commercial corridors, along First Street, Tenth Street and Monterey Road. The EPS Report will be presented to the 9.B Packet Pg. 72 GPAC in conjunction with the resumption of the General Plan process, anticipated within the next two to three months. 3. Status of the City’s Regional Housing Needs Allocation (RHNA) The City is currently beginning the fifth year of the current eight -year RHNA cycle (2015 – 2022). Table 1, below, summarizes the City’s accomplishments to-date through December 2018 and allocations remaining in the current cycle. In addition, the table includes a subtotal of the Affordable Housing (i.e. Very Low, Low, and Moderate) units for convenience. This information, which is not part of the RHNA requirement, is provided in italics. Table 1 Regional Housing Needs Assessment (RHNA) Progress 2015 – 2022 Income Level RHNA Allocation Units Permitted through December 2018 Units Remaining Very Low (0 – 50% AMI*) 236 80 (34%) 156 Low (51 – 80% AMI) 160 480 (300%) 0 Moderate (81 – 120%AMI) 217 7 (3%) 210 Affordable Housing Subtotals 613 567 Above Moderate (Above 120% AMI) 475 1,263 (266%) 0 Total 1,088 1,705 Remaining Need 366 *AMI – Area Median Income in Santa Clara County The city has produced a significant amount of new housing in the Low Income range, completing 480 dwelling units (300% of the RHNA target). Not included in Table 1 is another 158 affordable units (90% Low Income, 10% Very Low Income) in the Glen Loma Ranch project, and nine Low Income units in a recently-approved project on Monterey Road, which have recently received Architectural and Site approvals. The schedule for construction of these units is not yet known. The city has also continued to exceed the RHNA target for Above Moderate income (market-rate) housing, with a total of 1,263 (266%) constructed since 2015. Housing development in this income range is almost exclusively single-family residential, including the completion of the Hecker Pass Specific Plan and significant progress in the Glen Loma Ranch Specific Plan area. Deficits remain in the Very Low- (156 units 9.B Packet Pg. 73 remaining) and Moderate- (210 units remaining) RHNA income categories. There are roughly four years remaining in the current RHNA cycle within which to issue building permits for such housing to contribute towards achieving the 2015 – 2022 RHNA targets. The Association of Bay Area Governments (ABAG) is in early stages of planning for the next RHNA cycle, for 2023 – 2031. A common assumption is that housing targets in the next RHNA cycle are likely to consist of larger allocations for most jurisdictions, especially those in urban areas. Key factors driving this impression include the critical need for increased housing production to support the booming economy and ease the housing crisis, and the increasing pressure from new state legislation for cities to fully achieve the required housing production targets. Santa Clara County RHNA Sub-region As part of the Regional Housing Needs Allocation (RHNA) process, Government Code Section 65584.03 allows local jurisdictions within a county to form a sub-region to conduct an allocation process that parallels, but is separate from, the regional process conducted by the Association of Bay Area Governments (ABAG). On September 10, 2018, the City Council approved Gilroy’s participation in the Santa Clara County RHNA Sub-region, including the three following recommendations:  It is important for cities in the County to participate in the sub -region to provide opportunities for greater local control of the RHNA process.  The Sub-regional RHNA allocation methodology should be based on the goals of Plan Bay Area to locate new housing in proximity to employment centers and transportation and transit infrastructure.  All cities must accept equitable shares of the regional RHNA allocation and no city should be forced to accept a disproportionately greater allocation. On October 11, 2018, the Board of Directors of the Cities Association of Santa Clara County voted to proceed with formation of the Santa Clara County RHNA Sub -region. There is no schedule for the activities necessary for form the sub-region and initiate development of sub-region partner housing allocations. The tentative schedule established by ABAG in February 2017 assumes sub-regions are formed by September 2020, and that ABAG and sub-regions work throughout 2021 to establish sub-region draft RHNA allocations. 4. The Recommendations of the CASA Compact CASA, the Spanish word for “house”’ is the name of a blue -ribbon task force of elected and civic leaders convened by the Association of Ba y Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC) in mid-2017. The product of this effort is the CASA Compact, a series of proposed policy reforms intended to “allow the Bay Area to build more housing at all income levels while protecting tenants and low- income communities from unjust evictions and displacement.” The CASA Compact 9.B Packet Pg. 74 includes ten policy recommendations and five calls for action, intended to confront the region’s housing crisis. The recommendations primarily consist of proposed changes to state law, to be promoted by the CASA Compact partner organizations. Of the ten recommendations, the following would most directly affect the local government process for approval and construction of new housing:  Remove Regulatory Barriers to Accessory Dwelling Units (ADU’s) – 1) extend current best practices regarding Accessory Dwelling Units (ADU’s) to every jurisdiction in the region, 2) amend existing state ADU law to remove regulatory barriers including requiring ministerial approval for ADU’s and Junior ADU’s in residential zones, 3) allow multiple ADU’s in multi-family zones, 4) and create a small homes building code.  Minimum Zoning Near Transit – 1) establish minimum zoning in all residential, commercial and institutional zones to allow “missing middle” housing up to 36 feet tall in neighborhoods served by high quality bus service, 2) establish minimum zoning in neighborhoods surrounding major transit stops (rail stations, ferry terminals) to allow mid-rise housing up to 55’ tall (75 feet tall with a density bonus) , 3) allow sensitive communities to defer rezoning above 36 feet while they develop context-sensitive plans, 4) make housing an allowable use on large commercial-zoned parcels located near job centers, and 5) requ ire inclusion of affordable units in projects with 20 units or more.  Good Government Reforms to Housing Approval Process – establish “good government” standards for the entitlement and permitting of zoning-compliant residential projects, including the following proposed changes to state law: 1) standards for processing zoning-compliant residential applications with fewer than 500 units, 2) uniform standards and requirements for Bay Area jurisdictions to follow when imposing impact fees on new residential development, 3) standards for inclusionary zoning, and 4) standards that govern the circumstances in which local governments downzone or impose building moratoria in existing or planned residential neighborhoods.  Expedited Approvals and Financial Incentives for Select Housing Types – ensure timely approval of zoning-compliant housing projects and create financial incentives for enabling on-site affordability and prevailing wages. 5. Gilroy Current and Future Housing Affordability Table 2, below shows the income limits (% required for persons to qualify for affordable housing), as specified by the California Housing and Community Development Department (HCD), and compares them to the maximum rental cost or purchase price that persons with that income would be able to afford, assuming they spend a maximum of 30% of their income on housing. The table shows the data for a family of four 9.B Packet Pg. 75 persons. For example, a family of four, earning up to $94,450 (low income) would be expected to afford a maximum rent of $2,361 or a purchase price of $357,000. A family of four earning up to $150,250 (the upper limit of the moderate income range) would qualify for a house purchase price of up to $576,250. Clearly, these limits are far below the available price levels in Gilroy and throughout the Bay Area. The reality is that many families, especially lower income, spend far more than 30% on housing in the Bay Area, or, increasingly more common, are forced to seek housing outside the Bay Area and commute long distance to jobs. The 2013 – 2017 American Community Survey, prepared by the U.S. Census Bureau, defines households that pay thirty percent (30%) or more of their income on housing costs as cost-burdened. In 2013 – 2017, cost- burdened households in Gilroy accounted for 34% of home owners and 61% of renters. 9.B Packet Pg. 76 Table 2 Housing Affordability - Family of Four (4) Persons Income Categories Annual Income Limit Max Rent/ Max Purch. Price Extremely Low (ELI) 0% to 30% AMI* $39,900 $998/mo $156,000 Very Low (VLI) 31% to 50% AMI $66,500 $1,663/mo $261,000 Low (LI) 51% to 80% $94,450 $2,361/mo $357,000 Median AMI 100% AMI $125,200 $3,130/mo $477,000 Moderate (MOD) 81% to 120% AMI $150,250 $3,756/mo $576,000 Above Moderate 121% to 150% AMI $187,800 $4,695/mo $721,000 *2018 HCD State Income Limits Santa Clara County Area Median Income (AMI) $125,200 According to Zillow, a real estate website, as of August 31, 2018, the median home value in Gilroy was $784,200. The median price of homes listed for sale in Gilroy in August 2018 was $834,900, while the median price of homes sold was $765,100. For rental housing in Gilroy, as of August 31, 2018, the median rent per unit was $3,200. Rents ranged from $1,850/month for a one bedroom unit to $3,395/month for four bedrooms. It should be noted that these are median rents – middle of the range for all rental housing, including both single-family homes and apartments. While slightly lower than the prices in the rest of Silicon Valley, housing costs in Gilroy are a significant impediment to many families desiring to live in Gilroy and to locate closer to their jobs to the north, resulting in the extreme commutes so common today. The statistics shown above are based on the Santa Clara Area Median Income (AMI), currently at $125,200. The median income in Gilroy in 2018 was $81,694, which makes the housing cost/income disparity that much worse. Comparison of Gilroy Area Incomes to Housing Affordability Another measure of housing affordability can be illustrated by comparing incomes of typical Gilroy jobs to the RHNA affordability categories. Table 3, below, compares a variety of city and school district jobs and salaries to the RHNA income levels. The salaries of all of these job classifications qualify workers for either Very Low or Low 9.B Packet Pg. 77 Income Housing assistance, based on the very high Santa Clara County Area Median Income (AMI), of $125,200. This underscores the importance of providing new housing at all income levels. Table 3 Job Classifications and Housing Assistance Eligibility RHNA Range Job Class Starting Annual Salary City of Gilroy Very Low Income (up to $66,500 for family of four) Office Assistant $45,000 Custodian $48,000 Recreation Coordinator $61,600 Account Technician $63,500 Senior Maintenance Worker $65,400 Low Income (up to $94,450 for family of four) Building Inspector $79,000 Fire Fighter $80,000 Police Officer $90,000 Gilroy Unified School District Very Low Income (up to $66,500 for family of four) School Office Clerk $29,500 Bus Driver $34,200 Account Technician $39,700 Teacher -1st year $52,800 Teacher - 10th year $63,000 6. Inventory of Land Planned for Multi-family Residential Development The primary factor in evaluating Gilroy’s capacity to accommodate future multi-family housing is the amount of land with current residential Zoning and General Plan designations. Parcels with existing R-3 and R-4 zoning, within the Downtown Specific Plan (DTSP), or in Neighborhood Districts are eligible for development of multi -family residential development through the discretionary Architectural and Site Approval process (based on current City Council direction, new development applications outside the DTSP are only being accepted for projects of four units or less). R-3 & R-4 Residential Zoned Sites Figure 1, below shows the locations of the nine sites within the city zoned R-3 and R-4 Residential. Table 4, below, describes the current status and development capacity of 9.B Packet Pg. 78 these sites. Five of the sites comprising 22 acres were rezoned to R-4, allowing between 20 – 30 DU/AC, in compliance with California Housing and Community Development (HCD) requirements tied to certification of the General Plan Housing Element in 2014. Two sites have approved Architectural and Site Permits, one for 202 townhouse units, and one for a 78-unit apartment development containing 69 market- rate units and 9 affordable units. A third site has a pending Architectural and Site Permit for a 119-unit development originally proposed as market rate. That application has been on-hold while the original applicant attempted to sell the project to a new developer. At a City Council Study Session on January 14, 2019, a prospective new developer informed the Council that he was intending to develop120 apartments comprising 90%Low Income and 10% Very Low Income units, using California Tax credit financing. Figure 1 Map of R-3 and R-4 Zoned Sites 9.B Packet Pg. 79 Table 4 Inventory of R-3 & R-4 Zoned Sites Map Ref. Zoning Size (ac.) Available Development Capacity (units) Status 1 R-3 3.6 60 No current activity 2 R-3 3.8 65 No current activity 3 R-3 2.4 55 No current activity 4 R-4 7.2 140 No current activity (Housing Element Rezone site) 5 R-4 7.2 ___ Approved Arch. & Site Permit for 202 townhouse units – Building Permits Submitted 6 R-4 3.9 120 Pending Arch. & Site Permit (Housing Element Rezone site) 7 R-4 4.4 80 No current activity (Housing Element Rezone site) 8 R-4 3.5 55 Arch & Site Permit for 78 apts on 2.0 ac. approved by City Council 1.5 ac. in two parcels available (Housing Element Rezone site) 9 1.1 22 No current activity (Housing Element Rezone site) Total 597 If the pending 120-unit project on Site No. 6 is approved, the remaining capacity of R - 3/R-4 zoned parcels will be reduced to 477 units. Downtown Specific Plan The Downtown Specific Plan has a residential capacity of 1,576 units, most of which is assumed to occur through the redevelopment of sites with other existing uses. Past projects resulted in 225 units. Three recent projects have been approved and are either complete or under construction, including Alexander Station (263 units), The Cannery (104 units) and Gilroy Gateway (75 units). These projects comprise a total of 667 units, resulting in 909 units of remaining capacity in the Downtown Specific Plan Area. Neighborhood Districts In addition to sites with current multi-family zoning, the existing 2020 General Plan includes the North and South Neighborhood District areas, located primarily outside the 9.B Packet Pg. 80 Urban Service Area (USA). The Neighborhood District designation requires primarily single-family residential uses, with a minimum of 15% multi-family densities (10% R-3 and 5% R-4). Fifteen percent (15%) of the units in Neighborhood Districts are required to be affordable housing. Up to approximately 600 affordable units may be developed in the Neighborhood Districts, as currently designated in the General Plan. However, approximately 400 of these units are planned on lands outside the Urban Service Area. As a result, future development could be many years away, and thei r contribution towards achieving affordable housing goals in the upcoming 2023 – 2031 RHNA cycle is unclear. 7. Implementation of the Santa Clara County Affordable Housing Bond Program In November 2016, Santa Clara County voters passed Measure A, a $950 million general obligation bond intended to create significant new affordable rental and home ownership housing opportunities. The bond program is described in the initial Implementation Report to the Santa Clara County Board of Supervisors, dated February 17, 2017 as “part of an on-going effort to: 1) increase affordable housing opportunities for our community’s most vulnerable and poorest residents and: 2) to prevent and reduce homelessness throughout Santa Clara County.” The bond funds will be allocated as follows:  $700 million to be used for Extremely (ELI) and supportive rental housing  $100 million to be used for Very Low Income (VLI) housing, and  Up to $150 million for rental housing affordable to households earning up to 120% of AMI. The report outlines the following seven objectives intended to establish countywide housing goals over the next ten years: Objective 1 – Construct at least 4,800 new housing units affordable to ELI and VLI renters, comprised of the following:  1,800 units for use as Permanent Supportive Housing (PSH) for homeless persons with disabling conditions  1,600 units for use as Rapid Rehousing (RRH) for homeless persons  800 units for ELI individuals and families  600 units for use as PSH for persons with disabling conditions RRH provides residents with temporary housing assistance and supportive services. Residents stay in their housing units for three to 12 months and then take over the full lease rent. PSH provides deeply subsidized housing and ongoing supportive services for persons with disabling conditions. Residents typically have an annual income of $12,000 and are required to pay 30% of their income towards rent of their unit. 9.B Packet Pg. 81 Objective 2 – Construct or approve at least 800 new housing units affordable to renters earning between 31% and 50% of AMI (Very Low Income). Objective 3 – Construct or approve an as yet undetermined amount of new housing units affordable to renters earning between 51% and 120% of AMI. (Low and Moderate Income). Objective 4 – Assist at least 1,000 first-time homebuyers earning up to 120% of AMI. Objective 5 – Fund and implement Tenant-Based Rental Assistance (TBRA) programs as follows:  200 new PSH programs using TBRA; and,  600 new RRH programs using TBRA Objective 6 – Create capacity to prevent homelessness for up to 1,000 households annually. It is estimated that approximately 4,300 individuals per year experience homelessness for the first time. The County Office of Supportive Housing estimates that one-time emergency financial assistance and services could prevent homelessness for up to 23% of those individuals. Objective 7 – Ensure that new housing development and utilization of TBRA programs occur in cities and communities in a pattern that approximate RHNA allocations while taking into account public transportation hubs and corridors. At the end of 2018, the Housing Bond Program completed its second year of implementation, allocating $205,000,000 in funding for a total of 16 new housing developments in six cities producing 1,437 new units. Three add itional projects in San Jose received $29.15 million for renovation of 484 existing units. Table 5, below, provides further information on the location, number of projects and units, and funding in each of the six cities. Table 5 County Affordable Housing Bond Progress as of December, 2018 City No. of Projects Total Units Supportive Housing Funding ($Million) San Jose 10 891 508 122.15 Santa Clara 2 311 134 52.55 Milpitas 1 102 40 16.0 Gilroy 1 75 37 7.5 Morgan Hill 1 39 20 5.8 Cupertino 1 19 6 1.0 Totals 16 1,437 745 205 9.B Packet Pg. 82 Staff has been in communication with representatives of the County Office of Supportive Housing (OSH), the agency operating the Housing Bond Program. The following is a summary of information received. A Notice of Funding Availability (NOFA) was issued for County funding of affordable housing which establishes the process, requirements, and funding award criteria for parties interested in applying for bond funding for a project. Projects are approved based on their conformity to the NOFA criteria. Project location is not considered in the award of bond funding. OSH staff encourages coordination with local jurisdiction staff to discuss potential projects and have committed to notify staff of any possible projects in Gilroy. Only one such inquiry was received by OSH staff which did not specify a location. OSH staff has offered to coordinate with City Administration to schedule an opportunity for them to make a presentation to the City Council, if desired. 8. State Legislation Effecting the Residential Development Approval Process State legislation addressing the housing crisis has significantly influenced the level of decision-making and discretion available to local jurisdictions reviewing proposed new housing development, especially affordable housing. The two pieces of legislation most directly relevant to the local government residential development review process are the Housing Accountability Act (HAA) and Senate Bill (SB) 35. Housing Accountability Act (HAA) – The HAA has been in effect for many years. It requires that jurisdictions that have general planned and zoned land for housing at any density must approve development applications that meet the objective requirements of the general plan and applicable zoning standards. Such projects can only be denied or approved at a lower density if the city makes very specific findings based on public health and safety criteria. The HAA is applicable to the existing R-3 and R-4 sites available for development described above. SB 35 – This bill, passed in 2016, and strengthened in 2017, establishes a streamlined ministerial approval process available to residential developers in jurisdictions that HCD has determined have not met their RHNA targets for production of affordable housing in all four of the specified income levels. Guidelines published by HCD include Gilroy in a list of 199 jurisdictions statewide that are deemed to have made “insufficient progress” toward the Very Low Income RHNA category (based on the pro rata share of completion of the target of 236 units over the first three years of the 8-year RHNA period). Such jurisdictions are subject to the SB 35 streamlined ministerial review processing requirements for projects containing 50% or more of “lower income” (defined as combined Very Low and Low) housing. To qualify for the SB 35 streamlining process, a project must:  consist of two or more units and be located on a legal parcel or parcels in an area with at least 75% of the site perimeter developed with urban uses;  be on a site that is zoned for residential use or residential mixed use or has a General Plan designation that allows residential use or residential mixed use; 9.B Packet Pg. 83  be consistent with the current zoning ordinance and all objective zoning standards and objective design standards in effect at the time of the application The definition of “objective zoning standard” and objective design standard”, means “standards that involve no personal or subjective judgement by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable to both the development applicant or proponent and the public official prior to submittal. “Objective design review standards” means only objective design standards published and adopted by ordinance or resolution by a local jurisdiction before submission of a development application, which are broadly applicable to development within the jurisdiction.” A recommendation in this report will be for the City Council to direct staff to prepare a Request for Proposals (RFP) to engage a consultant to work with staff, the development industry and the public to update and/or replace the city’s current residential design guidelines and zoning provisions to ensure conformance with current state legislation. Table 6, below, describes timeframes required for the SB 35 Streamlined Ministerial Approval Process. Table 6 SB 35 Streamlined Ministerial Approval Process Project Size Timeframe Requirements Up to 150 du’s 60 calendar days from submittal  Confirm SB 35 Applicability  Provide applicant list of any inconsistencies with objective standards 90 calendar days from submittal  Complete ministerial process for approval of the project 151 units or more 90 calendar days from submittal  Confirm SB 35 Applicability  Provide applicant list of any inconsistencies with objective standards 180 calendar days from submittal  Complete ministerial process for approval of the project The legislation further states that:  Any ministerial design review or public oversight of the application may be conducted by the local government’s Planning Commission or City Council 9.B Packet Pg. 84  The ministerial approval process shall be non-discretionary and cannot require a conditional use permit or other discretionary local government review or approval  Ministerial design review or public oversight shall be objective and be strictly focused on addressing compliance with criteria required for streamlined projects, as well as any reasonable objective design standards published and adopted by ordinance or resolution by a local government before submission of the development application, and shall be broadly applicable to development within the locality  Design review or public oversight shall not in any way inhibit, chill, stall, delay, or preclude the ministerial approval provided by these guidelines. A developer intending to qualify for the SB 35 Streamlined Ministerial Approval Process must submit a request to the local jurisdiction certifying conformance to all provisions of the law, and including commitments regarding payment of prevailing wages and use of a skilled and trained workforce in the construction of the development. State Funding Sources for Affordable Housing – In addition to the Santa Clara County Affordable Housing Bond Program, significant new sources of funding for affordable housing were approved by the voters in the November, 2018 election. Two state bond measures will provide $3 - $5 billion dollars in new bond funding for construction of new housing for low-income and homeless residents. Recently, Governor Newsom announced proposed multi-billion dollar funding plans for new housing statewide. Such programs will continue to offer financial support to new, primarily affordable housing projects, consistent with the recent state legislation designed specifically to achieve such housing development. 9. Residential Development Ordinance On November 6, 2017 the City Council took action declining to extend the Residential Development Ordinance (RDO) Interim Exemption allocations until after adoption of the Gilroy 2040 General Plan. As a result of this, new applications for residential development projects cannot be accepted, with the exception of those consisting of four or fewer residential units and those located within the Downtown Specific Plan area. The 2040 General Plan Update was suspended in April, 2018, and is expected to resume within the next two to three months. Based on this assumption, the adoption of the 2040 General Plan is currently anticipated in late 2020. Previously, the City Council has indicated that the Residential Development Ordinance (RDO) will be evaluated based on the adopted 2040 General Plan for potential changes to implement the General Plan Housing Element and other related policies. As a resul t, barring any changes, the current direction limiting acceptance of new residential development applications will continue until late 2020, at the earliest. As described above, the Housing Accountability Act and SB 35 impose strict requirements limiting local jurisdiction discretion to modify or deny residential development applications that satisfy objective zoning and design standards. 9.B Packet Pg. 85 The SB 35 Guidelines also contain a provision that may limit the ability of a jurisdiction to apply a growth or development control that restricts the number of units allowed or restricts the timing of new development. In a recent case in Morgan Hill, a Santa Clara County Superior Court Judge declared portions of the Residential Development Control System (RDCS), a voter-approved growth management system, in conflict with the HAA because the implementation of the RDCS had rendered a proposed affordable housing project infeasible to finance. Based on staff review of these statutes, the current restriction on acceptanc e and processing of new residential development applications other than those consisting of four or fewer residential units and those located within the Downtown Specific Plan area may be interpreted as inconsistent with the referenced state laws. Staff will be including a recommendation that the City Council direct staff to conduct further evaluation of this issue and provide recommendations at a future Council meeting. Ability of RDO Interim Exemptions to Transfer from One Project Design to Another on the Same Site In conjunction with review of the RDO process, staff analyzed whether RDO Interim Exemption units could transfer from one project to a redesigned project on the same site. Staff undertook this analysis in relation to the proposed 120 -unit, 100% affordable apartment project located adjacent to the northeast corner of First Street and Kern Avenue (AS 17-24), reviewed by the City Council at a Study Session on January 14, 2019. The last RDO cycle ended in 2013. The City Council decided not to establish a new RDO cycle until after the city adopted the 2040 General Plan and potentially considered changes to the RDO process. To allow housing to develop in the interim period between the end of the last RDO cycle and the beginning of the new RDO cycl e, the City Council created the RDO Interim Exemption in 2013. The RDO Interim Exemption was also intended as a means to facilitate development of the sites rezoned to R -4 in conformance with Housing Element requirements. The results of staff’s review include the following: A. RDO Interim Exemption allocations do not require separate City Council approval and are approved in conjunction with the project entitlement (e.g., Tentative Map, Architectural and Site approval). B. RDO Section 30.50.60 (b) (2) l. RDO Interim Exemption for Projects on Properties Without Previously-awarded Allocations states that all discretionary approvals for projects on properties that have a residential zoning of R -4 High Density Residential shall be reviewed by the Planning Commission and approved by the City Council. C. Application AS 17-24 received a reservation of 119 Interim Exemption allocations when it was filed. D. The application for AS 17-24 was found complete on November 2, 2017, and, as such was deemed eligible to continue processing (and retain it’s RDO Interim 9.B Packet Pg. 86 Exemption allocation) after the City Council action on November 7, 2017, restricting the processing of applications outside of downtown. E. Changes in project description or design, including Housing affordability level, do not affect the issuance or retention of an RDO Interim Exemption allocation. F. The RDO Interim Exemption allocation for AS 17 -24 shall remain in effect for the proposed revised project design. 10. Approval Condition to Define Housing Type, Density and Affordability of New Multi-Family Residential Developments On December 10, 2018, the City Council directed staff to develop a standard condition to be included in all future multi-family residential developments to define the housing type, density and affordability level incorporated in each project. The following is the version of this condition included in the approval of the 78-unit project on North Monterey Road: “Project Scope: Five-story mixed-use development that includes approximately 4,435 square feet of commercial space facing Monterey Road that can occupy up to four (4) businesses. 78 apartments units ranging from 1 to 4 bedrooms are located over ground floor commercial. Of the 78 residential units, 69 units are at market-rate and no more than 9 units will be available to lower-income households (low, very-low and extremely-low income) for a minimum of 55 years, as required by the State Density Bonus law. Any modification to the total number of affordable units provided on-site is subject to City Council approval. The development includes a Density Bonus request, for a 27.5% increase above the R-4 density standards to achieve the total of 78 units. Nine of the units would be maintained as low-income affordable units. As part of the Density Bonus request, the applicant requests allowance for compact parking spaces as the project concession.” A similar condition will be included in all future multi-family residential developments. Conclusions The following are the key conclusions from each topic discussed in this report. 1. The Status of the Gilroy 2040 General Plan Process A. The 2040 General Plan process is expected to resume in the near future, pending direction from the City Council regarding the inclusion of recommendations of the EPS Report and other issues related to the recent almost one-year delay in the process. 9.B Packet Pg. 87 2. Recommendations of the Gilroy Place-Based Economic Development Strategy Report (EPS Report) A. The EPS report contains a number of recommendations relevant to the General Plan Update process, including consideration of revised mix of land uses, revised land use policies, focus on Downtown planning and updating transportation mitigation polices to reduce the financial burden of new economic development projects. B. New housing, in conjunction with development of new employment can be a valuable component to the economic development strategy of the city. 3. Status of the City’s Regional Housing Needs Allocation (RHNA) and Santa Clara County RHNA Sub-region A. The City has far exceeded the 2015 - 2022 RHNA allocations for production of Low Income and Above-Moderate Income housing and retains a deficit of 156 Very Low Income and 210 Moderate Income units. B. RHNA allocations in the upcoming 2023-2031 RHNA cycle are likely to be greater due to the on-going strong economy, the on-going housing crisis and increasing pressure from new state legislation for cities to fully achieve the required housing production targets. C. The Santa Clara County RHNA Sub-region will bring all cities and the County together to create a “customized” RHNA allocation for each jurisdiction. D. The process to develop the Sub-region RHNA allocation is expected to occur in 2021. 4. The Recommendations of the CASA Compact A. The CASA Compact consists of a series of housing-related policy reforms intended to promote new state legislation to continue to strengthen housing production at all income levels. B. The recommendations focused on changes to local government development review process include removing barriers to Accessory Dwelling Units, requiring minimum zoning and development standards near transit, establishing good government reforms to the housing approval process and financial incentive s for select housing types 5. Gilroy Current and Future Housing Affordability A. Gilroy residents with incomes that qualify for various levels of affordable housing are still unable to obtain such housing due to the inflated costs of available housing. B. The 2013 – 2017 American Community Survey defines as cost-burdened households that pay thirty percent (30%) or more of their income towards 9.B Packet Pg. 88 housing costs. In 2013 – 2017, cost-burdened households in Gilroy accounted for 34% of home owners and 61% of renters. C. The salaries of many City and Gilroy Unified School District job classifications qualify employees for Very Low Income or Low Income affordable housing. 6. Inventory of Land Planned for Multi-family Residential Development A. The nine sites zoned R-3 and R-4 are eligible for development of multi-family residential uses in the near-term, through approval of Site and Architectural Permits. B. The nine sites have an approximate development capacity of 597 multi-family dwelling units. Approval of a pending 120-unit project would reduce the capacity to 477 units. C. The Downtown Specific Plan has a remaining capacity of approximately 900 units. Downtown sites often have greater challenges to development, including parcel aggregation, parking requirements and the need to incorporate ground floor commercial, resulting in fewer future projects. D. The remaining Neighborhood District areas have an approximate capacity of 600 affordable units, although 400 of these units are on lands outside the Urban Service Area and potentially not developable in the near term. E. The sites zoned R-3 and R-4 are the best candidates for development of housing to support the city achieving its remaining RHNA targets of 156 Very Low Income and 210 Moderate-Income units. There is no requirement that the sites develop with affordable housing. F. Addition of more market rate multi-family housing is also desirable and consistent with housing Element goals to provide housing for all income levels. 7. Implementation of the Santa Clara County Affordable Housing Bond Program A. The $950 million bond program will be allocated as follows: 74% to Extremely Low Income (Below 30% of AMI), $100 million to Very Low Income (31-50% of AMI), and $150 million to Moderate Income (51-120% of AMI). B. To-date, $205,000,000 have been allocated to 16 projects in six cities, totaling 1,437 new affordable housing units. Of these, one Gilroy project, Gilroy Gateway, was awarded $7.5 million towards a 75-unit development comprising 37 Permanent Supportive Housing units and 38 senior affordable units. C. Funding allocations are awarded based on criteria in the Notice of Funding Availability (NOFA). Project location is not considered in funding award decisions. 8. State Legislation Effecting the Residential Development Approval Process A. The Housing Accountability Act (HAA) requires that jurisdictions must approve residential development applications of any density or housing type that meet the objective requirements of the general plan and applicable zoning criteria. Such projects can only be denied or approved at a lower density if the city makes very specific findings based on public health and safety standards. 9.B Packet Pg. 89 B. SB 35 establishes a streamlined ministerial approval process available to residential developers in jurisdictions that HCD has determined have not met their RHNA targets for production of affordable housing in all four of the specified income levels. Projects in Gilroy may be subject to this process if an applicant meets all eligibility requirements. Developments must be consistent with all objective zoning standards and objective design standards in effect at the time of the application. The objective design review or public oversight process shall not in any way inhibit, delay, or preclude the ministerial approval of the project. C. Recent state legislation will begin supplying at least $3 billion - $5 billion towards production of new housing in California. Such programs will continue to offer financial support to new, primarily affordable housing projects, consistent with the recent state legislation designed specifically to achieve such housing development. 9. Residential Development Ordinance A. Based on staff review of the HAA and SB 35, the current restriction on acceptance and processing of new residential development applications other than those consisting of four or fewer units and those located within the Downtown Specific Plan area may be interpreted as inconsistent with the referenced state laws. B. The RDO Interim Exemption ordinance provisions were added in 2013 to allow continued residential development, while the City Council considered revisions to the RDO. They were also intended as a means to facilitate development of the sites concurrently being rezoned to R-4 in conformance with the Housing Element update. C. Changes in project description or design, including housing affordability level, do not affect the issuance or retention of an RDO Interim Exemption allocation. D. The RDO Interim Exemption allocation for AS 17 -24 shall remain in effect for the proposed revised project design. 10. Approval Condition to Define Housing Type, Density and Affordability of New Multi - Family Residential Developments Staff has prepared a standard condition to be included in all future multi-family residential developments to define the housing type, density and affordability level incorporated in each project ALTERNATIVES 1. The City Council may elect to accept staff recommendations for the next steps regarding analysis of future multi-family residential development. This action is recommended. 9.B Packet Pg. 90 2. The City Council may elect to not accept the recommendations proposed by staff. This action is not recommended. FISCAL IMPACT/FUNDING SOURCE Adequate funding was available for the preparation of this report. The staff recommendation regarding hiring a consultant to work with staff to update and/or replace the city’s current residential design guidelines and zonin g provisions will require funding from the Long-Range Planning Surcharge fund. NEXT STEPS Staff will proceed with future work based on City Council direction from the recommendations proposed in this report. PUBLIC OUTREACH A brief summary of the City Council action adopting the Interim Urgency Ordinance was included in the January 11, 2019 E-mail Express published on the City’s social media outlets. An article about the Interim Urgency Ordinance was published in the January 24, 2019 edition of the Gilroy Dispatch. Attachments: 1. Urgency Ordinance CC Staff Report and Ordinance 9.B Packet Pg. 91 9.B.a Packet Pg. 92 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 93 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 94 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 95 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 96 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 97 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 98 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 99 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 100 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 101 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 102 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) 9.B.a Packet Pg. 103 Attachment: Urgency Ordinance CC Staff Report and Ordinance (1992 : Report on Interim Urgency Ordinance) City of Gilroy STAFF REPORT Agenda Item Title: Fiscal Year 2018-19 First Quarter Budget Update Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: Finance Department Submitted By: Jimmy Forbis Prepared By: Jimmy Forbis Bryce Atkins Strategic Plan Goals  Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION Receive report. BACKGROUND Each quarter, the Finance Department prepares and presents to Council an update on the revenues and expenditures of the City’s fiscal year performance. The below report identifies the revenues and expenditures for Fiscal Year (FY) 2019, for the period from July 1, 2018 through September 30, 2018. It is important to note that the City’s internal service funds (IT, Fleet, Facilities, Fringe Benefits, Worker’s Compensation and Liability Funds) are not provided in this report. As these funds receive their revenue from charges to the other departments and funds in the City, it would essentially be double counting revenues and expenditures if they were to be included in the calculations below. Overall, the revenues of the City are showing below anticipated levels. This is due to the lag between when the economic transaction occurs and when the City’s revenues are 10.A Packet Pg. 104 actually received. This is typical in the first quarter of each fiscal year and is no indication that the City will not receive its expected revenues as were budgeted. Overall expenditures are trending close to the prorated budget target for this quarter. ANALYSIS FY19 1st Quarter Revenue General Fund The current budget for FY19 identified General Fund revenue totaling $53.5 million. As of September 30, 2018, $7.0 million in revenue was received, approximately 13.1% of the annual amount budgeted. As discussed above, this is mainly due to the lag in receiving Property, Sales, and Transient Occupancy Taxes, as can be seen below (Figure 1). Figure 1: FY19 General Fund Revenues through September 30, 2018 General Fund Revenues By Type Amended Budget 1st Quarter Total Percentage Property Tax 13,650,657$ 114,839$ 0.84% Sales Tax 18,659,503$ 1,818,870$ 9.75% Utility Users Tax 4,332,645$ 923,555$ 21.32% Transient Occupancy Tax 1,812,861$ -$ 0.00% Business License 634,228$ 373,809$ 58.94% Other General Fund 14,444,750$ 3,800,567$ 26.31% Total 53,534,644$ 7,031,639$ 13.13%  Property Tax The City’s property tax revenues are received in various intervals from Santa Clara County, and are not distributed in even amounts. As of the end of the reporting period, slightly less than 1% of the annual am ount was collected. Disbursements were received after the reporting period and will be included in future quarterly reports.  Sales Tax The City receives its sales tax revenue approximately t wo months after funds are collected by the California Department of Tax and Fee Administration (formerly the State Board of Equalization). This collection amount represents only the first month’s distribution, bringing in nearly 10% of the total annual sales tax revenue .  Utility Users Tax (UUT) The City’s UUT revenues are trending below target for this period of the fiscal year, but only slightly. These revenues are levied as a percentage of water, 10.A Packet Pg. 105 sewer, gas, electricity, steam, cable, and phone charges. These revenues typically increase gradually over the course of the fiscal year.  Transient Occupancy Tax (TOT) The City’s TOT revenue comes from a 9% tax on hotel room rentals under 30 days, as well as from some of the RV parks in the City. As anticipated, no payments have been received as of the close of the reporting p eriod. The hotels make their payment within one month after their quarter ends , thus there has not been any revenue received as of the close of the 1st quarter. These revenues typically lag behind the City’s fiscal reporting periods.  Business License As of the 1st quarter, business license revenue has reached 59% of total revenues projected. The cause for this revenue level is tied to annual payments for business licenses that span across two fiscal years. Business license applicants are charged for a full year. Depending upon the timing of the business license application, the business license may cross over two different City fiscal years. When this happens, revenue staff apportions the amounts to each fiscal year, depending upon where the split between f iscal years lands in their annual billing amount.  Other General Fund These revenues are comprised mostly of service charges and other, smaller revenue sources. This aggregate revenue category has received 26.3% of its revenues budgeted for the year. Non-General Fund For the non-General Fund revenues, below is a table identifying revenues received for FY19, as well as a discussion of each category. Figure 2: FY19 Non-General Fund Revenue through September 30, 2018 Non-General Fund Revenues by Type Amended Budget 1st Quarter Total Percentage Water Fund 11,513,652$ 2,912,523$ 25.30% Sewer Fund 13,713,534$ 2,518,836$ 18.37% Recreation 3,608,182$ 1,137,873$ 31.54% Gas Tax 1,226,233$ 200,115$ 16.32% Development/Impact Fees 15,878,794$ 4,406,538$ 27.75% All Other Special Revenues 8,393,512$ 1,477,000$ 17.60% Total 54,333,907$ 12,652,885$ 23.29%  Water Fund 10.A Packet Pg. 106 The City’s Water fund is performing consistent with budget targets for this reporting period.  Sewer Fund The Sewer Fund is generating revenue slightly below the quarterly target, approximately 18.4% of the annual amount expected. Sewer Fund revenue is based on fixed rates, which allows for more certainty in estimating revenues for budget purposes than the Water Fund, which has a usage driven component to the rates charged.  Recreation Recreation has received 31.5% of the revenue for the fiscal year. The revenue is acquired from charges for services (cost recovery) related to recreation programs, and some grant funding. The services provided by Recreation are seasonal, and therefore so are most of their revenues.  Gas Tax Gas tax revenue received is 16.3% of the annual projected total at the end of the reporting period. Gas tax is based on the amount and price of gasoline purchases made state-wide, and allocated to communities through formulas developed by the State.  Development/Impact Fees Development and Impact Fees are 27.8% of annual budget estimates. These revenues are collected as a result of new development approval and the required contributions to development impact funds to offset infrastructure impacts and needed infrastructure service expansions.  All Other Special Revenue All remaining special revenue funds, as an aggregate, are at 17.6% of the target for this reporting period. The specific funds that comprise this aggregate are at varying levels of revenues above and below budgeted levels. FY19 1st Quarter Expenditures General Fund Overall, the General Fund has expended slightly below its target for this quarter. Figure 3 identifies each department’s use of General Fund resources. Every department is within or below its target for the quarter. Figure 3: FY19 General Fund Expenditures through September 30, 2018 10.A Packet Pg. 107 General Fund Expenditures By Department Amended Budget 1st Quarter Total Percentage Administration 7,824,129$ 1,744,711$ 22.30% Finance 921,669$ 166,126$ 18.02% Human Resources 1,198,402$ 223,229$ 18.63% Police 23,633,578$ 5,842,581$ 24.72% Fire 11,071,645$ 2,781,879$ 25.13% Public Works 4,906,069$ 996,919$ 20.32% Community Development 4,688,721$ 857,562$ 18.29% Total 54,244,213$ 12,613,006$ 23.25% Non-General Fund Overall, planned expenditures of funding sources aside from the General Fund are near or below their quarter target, with the exception of the Sewer Fund. Below is Figure 4 which identifies the other funding by select categories. Following the table is a brief description of the fund performance. Figure 4: FY19 Non-General Fund Expenditures through September 30, 2018 Non-General Fund Expenditures by Type Amended Budget 1st Quarter Total Percent Difference Water Fund 11,159,993$ 1,412,946$ 12.66% Sewer Fund 13,337,995$ 4,578,082$ 34.32% Recreation 3,608,182$ 834,488$ 23.13% Gas Tax 1,503,460$ 45,629$ 3.03% Development/Impact Fees 13,859,281$ 1,367,357$ 9.87% All Other Special Revenues 9,596,571$ 2,539,976$ 26.47% Total 53,065,482$ 10,778,478$ 20.31%  Water Fund The City’s Water Fund has expended 12.7% of its annual budget this quarter, below target level. A few projects have not begun billing against the Fund.  Sewer Fund This fund has expended over a third of its annual budget in the first quarter. This is due to a $2 million debt service payment which is the annual total for that appropriation. This has skewed the expenditures to be dis-proportionately larger in the first quarter, and the expenditures are anticipated to level out in comparison with quarterly targets as the fiscal year progresses.  Recreation 10.A Packet Pg. 108 Recreation is performing slightly below the target for the quarter, at 23.1% of the annual appropriation for the year. The work of the department is seasonal, and expenditures are typically not consistent in amo unts across quarters.  Gas Tax Gas tax expenditures are significantly below targeted levels, only expending 3% of the annual appropriations this quarter. Many of the projects and contracts in the budget have yet to be billed against.  Development/Impact Fees Development and Impact Fees expended a total 9.9% of the annual amount. The below target spending is a result of low utilization of contract services, improvement projects, and reimbursement line items within the quarter.  All Other Special Revenue All remaining special revenue funds, as an aggregate, are trending close to target levels of expenditure. CONCLUSION Overall, Citywide revenues as of the end of the 1st quarter were 18.2% of the annual budgeted levels, while expenditures were 21.8% of the annual budgeted level. For the General Fund, revenues are at 13.1% and expenditures at 23.3%. However, as expressed previously, several of the General Fund’s revenue sources lag between receipt and report period hard cutoff timeframes. In summary, the City’s revenue and expenditure activities are healthy. A further analysis of the mid-year totals will be presented to Council in March. 10.A Packet Pg. 109 City of Gilroy STAFF REPORT Agenda Item Title: Report on Economic Climate and Updated Ten-Year Financial Forecast Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: Finance Department Submitted By: Jimmy Forbis Prepared By: Jimmy Forbis Bryce Atkins Strategic Plan Goals  Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION Receive report. EXECUTIVE SUMMARY As the City progresses on its path to develop the operating budget for Fiscal Years (FY) 2020 and 2021, the economic climate is healthy, but with potential challenges in the mid-near term. Most key indicators of economic health are trending up, with an exception being the recent softening of the housing market. Additionally, the challenges referenced to earlier are predominately sourced from federal policy issues (for example, lending rates) that have impacts on City revenues. Even with the positive economic climate, the updated 10-year financial forecast shows that after FY20, there is a steep increase in expenditures relating to pension costs, and this causes a forecasted structural imbalance in future years between operating costs and revenues. BACKGROUND 10.B Packet Pg. 110 The City receives most of its General Fund revenue from five key sources which include sales tax, property tax, transient occupancy (hotel) tax, utility user tax, and business license fees. Each of these revenue sources are directly affected by the health of the economy. As such, staff has prepared this update on the status of the economic climate to illustrate general trends that will affect the City’s revenues over the next two fiscal years. ANALYSIS Gross Domestic Product (GDP) A measure of the total economic value of all final goods and services produced, the GDP identifies a holistic measure for a nation and/or region. The Bureau of Economic Analysis (“BEA”) maintains an index on GDP for the nation and each state on a quarterly basis, and Metropolitan Service Areas (“MSA”) on an annual basis. Additionally, they have initiated a prototype GDP index at the county level. Data at the county level is only available from 2012 to 2015. The standard county GDP data is anticipated to be released in a final version in December 2019. Below is Figure 1 which identifies the average annual GDP growth or decline over three time periods: three-year average, five-year average, and ten-year average. As the recession and recovery periods may produce statistical outliers, reviewing multip le time ranges provide a more robust picture of the changes in GDP at each level. Figure 1: GDP Annual Average Growth Rates by Geography Years National State Bay Area MSA 3 Years (2015 to 2018) 3.60% 5.37% 9.35% 5 Years (2013 to 2018) 3.93% 5.50% 8.77% 10 Years (2008 to 2018) 3.07% 3.71% 5.95% Consumer Price Index CPI is a measurement tool to assess the change in prices over time, paid by urban consumers for goods and services. This measure is both useful to help project potential increases in sales tax revenue (assuming the tax base doesn’t contract or expand in a consequential amount) and helps to judge potential cost increases in City expenditures for goods and services to meet the community’s service demand. Overall, CPI is anticipated to continue its growth trend. Below is Figure 2, a table demonstrating the month-to-month CPI changes. As the Bay Area MSA (“BAMSA”) data is not reported for the months of July, data is compared between the August data points. Overall, CPI has been increasing each August compared to previous years by 10.B Packet Pg. 111 an average of 2.64%. This is consistent with the projections staff is using in the financial forecast, though trends would indicate over the next two years a more aggressive rate of increase may be experienced, between three and five percent. Figure 2: CPI Month-to-Month Year Federal BAMSA August-08 5.37%4.24% August-09 -1.48%0.17% August-10 1.15%0.95% August-11 3.77%2.92% August-12 1.69%2.80% August-13 1.52%2.03% August-14 1.70%2.96% August-15 0.20%2.59% August-16 1.06%3.05% August-17 1.94%3.00% August-18 2.70%4.27% 3 Year Average 1.90%3.44% 5 Year Average 1.52%3.17% 10 Year Average 1.78%2.64% Unemployment Trend The City’s rate of unemployment has been on a lowering trajectory over the past 10 years. The current unemployment rate for the city as of November 2018 is 2.4%. December 2018 rates and January 2019 rate are not available yet due to the federal government shutdown. The rate has been steadily decreasing over the past 10 years, from 7.1% in November of 2008. Below is Figure 3, which shows the history of unemployment rates for the City, BAMSA, and the State. Figure 3: Unemployment Rates 10.B Packet Pg. 112 As can be seen in Figure 3, the rate of improvement is slowing as the rate lowers. However, it is lower than 2008 pre-recession levels. The unemployment rate indicates a healthy local economy. Housing Market Indicators Over the past year, the local housing market has started to soften. Below is Figure 4, median housing prices in Santa Clara County. As can be seen, from November 2017 to November 2018, the median home price fell by 2.5%. Each year before, with the exception of the recession, home prices had been increasing. Figure 4: Santa Clara County Median Home Prices Year-to-Year Median Home Price Percent Change 11/1/2008 $515,000 N/A 11/1/2009 $605,000 17.48% 11/1/2010 $575,000 -4.96% 11/1/2011 $560,000 -2.61% 11/1/2012 $679,000 21.25% 11/1/2013 $785,000 15.61% 11/1/2014 $850,000 8.28% 11/1/2015 $965,000 13.53% 11/1/2016 $1,010,000 4.66% 11/1/2017 $1,282,500 26.98% 11/1/2018 $1,250,000 -2.53% This trend is also impacting Gilroy as the Building Division has reported that the local market is starting to soften with lower single family home prices dropping. Additionally, January 2019 data from The Urban Group, which compiles housing transaction data into real estate reports, indicates Gilroy has had an 8% decline in average home price, with houses being on the market longer by 11% in 2018. The Building Division is further 10.B Packet Pg. 113 reporting that developers are working to obtain permits, construct, and sell as fast as possible to sell their homes at the highest amount before further market softening happens. Below is Figure 5, showing the new residential permits completed by calendar year for the City of Gilroy. Figure 5: Single Family Residential Homes Completed Calendar Year Single Family Residential Homes Completed Difference 2013 251 2014 165 -34.3% 2015 400 142.4% 2016 302 -24.5% 2017 213 -29.5% 2018 154 -27.7% Tourism Industry The tourism industry has seen fluctuations over the past few years. Below is Figure 6, identifying the number of walk-in and unique website visitors over the past few years as provided by Visit Gilroy (formerly known as the Gilroy Welcome Center). Figure 6: Visit Gilroy Website and Walk-In Visitors Fiscal Year Website Walk-In 2016 96,472 N/A 2017 134,616 37,477 20181 118,830 26,910 1) includes 3 additional months, a total of 15 months Number of Visitors Even with the additional three months of website visitors, the total number of visitors to Visit Gilroy are down. Hotel activity is also a good measure of tourism and generates the City’s transient occupancy tax (TOT). Below is Figure 7, identifying several measures of hotel activity provided by Visit Gilroy. Figure 7: Hotel Activity Measures 10.B Packet Pg. 114 Fiscal Year Hotel Occupancy Rate RevPAR TOT Generated 2014 60.53%$51.25 $1.23 2015 68.28%$63.15 $1.50 2016 71.06%$75.26 $1.68 2017 69.09%$75.89 $1.71 2018 67.94%$77.95 $1.72 White hotel occupancy is down some since 2016, the revenue per available room (RevPAR) has increased each year. Additionally, Transient Occupancy Tax (TOT) has also increased steadily. TOT revenue continues to increase each year, which is healthy economic growth for the City. Retail Trends Since 1998, retail sales nationally have steadily increased, with the exception of the recession in calendar year 2008 and 2009. By 2011, the national sales trend recovered to pre-recession levels, and has been growing ever since. The trend over the last three years has seen the rate of increase grow each calendar year. Figure 8: National Retail Sales Trend (in trillions of dollars) The figures for 2018 are not complete yet due to the federal government shutdown . Based on the 11 months of data, and the trends each year over the past years, 2018 will have higher sales than 2017. As the rate of increase is continuing to gain momentum as opposed to slowing or stagnating, this measure is also indicative of a healthy economy. Our local retail sales continue to gain strength. Below is Figure 9, showing local sales tax revenues for the past 10 fiscal years. Fiscal year 2016 shows a significant increase 10.B Packet Pg. 115 attributable to the unwinding of the State’s sales tax triple flip, a true-up payment, and a quarterly payment at 100% (non-triple flip). This adjustment skewed the data to show a much higher revenue in FY16, however, overall sales tax revenue is growing. The increasing sales tax is an indicator that retail activity in Gilroy continues to increase, a sign of a healthy economy. Figure 9: Gilroy Fiscal Year Sales Tax Amounts Fiscal Year Total Sales Tax Revenue Percent Change 2009 11,650,354.77$ 2010 11,539,468.33$ -0.95% 2011 12,820,171.74$ 11.10% 2012 13,833,561.18$ 7.90% 2013 14,114,276.79$ 2.03% 2014 14,423,130.45$ 2.19% 2015 15,858,910.48$ 9.95% 2016 17,884,734.78$ 12.77% 2017 17,768,468.88$ -0.65% 2018 18,827,189.44$ 5.96% Federal Policies There are a few recent federal policies that may have the potential to weaken the economy and impact City revenues and expenditures. Trade War The increasing tariffs placed on Chinese goods, combined with their counter tariffs, present a threat of increasing cost to operations. The first tariffs went into effect in January 2018, and have ramped up monthly since. In December, there was a negotiated deferral of further threatened tariff increases for 90 days. During this period, U.S. and Chinese negotiators will meet, but if no agreement is in place, the additional tariffs will go into effect in March of 2019. The City is already experiencing fiscal impacts of the trade war. As an example, the Fire Department has reported that the cost estimate for a new fire engine is increasing as a result of steel tariffs. The vendor is cited as saying that the ir price quotes are now only good for 24 hours. These impacts are likely to increase in frequency and intensity as the economic conflict continues. Government Shutdown The current federal government shutdown has now lasted longer than any previous shutdowns. The impact of this shutdown on the City’s economy is often indirect, but no less potent. As the region has significant farming operations in the area, the United States Department of Agriculture (USDA) Farm Service division which provides support and financing of agricultural activities, has been closed due to the federal government 10.B Packet Pg. 116 shutdown. This has been an impact to our local agricultural companies and families, and will trickle down through potential job and pay impacts, which will then impact discretionary purchases, a significant source of the City’s sales tax. Additionally, there are questions about certain funding that the City rece ives, such as community development block grants, as the U.S. Department of Housing and Urban Development is also shut down. This creates uncertainty for funding local non -profits that provide housing services, including agencies that assist in dealing with the increase in homelessness. It is unknown how long the shutdown will continue and changes to how the shutdown is being managed/implemented seems to be occurring weekly. At this time no end to the shutdown is in sight. As the shutdown continues, more impacts may be felt by the community as a whole, in addition to the City’s revenues to pay for essential services. Federal Interest Rates In December 2018, the Federal Open Market Committee increased the Federal Funds rate to 2.5%. The Federal Reserve signaled that it would raise rates to 3 percent in 2019. Forecasts indicate that 2019 will experience subdued growth, but a recession is unlikely. This will impact personal and consumer borrowing, including home loans, business loans and lines of credit, and bonds, to name a few. Each of these will have an impact on the economy. FINANCIAL FORECAST UPDATE The model utilized in the forecast was created by a team comprised of the City’s Finance Director and his staff, with technical assistance from a financial consultant. The forecast operates based on assumptions, and applies those assumptions to the base - year data, which is the current fiscal year budget, and extrapolates what will happen to both revenues and expenditures over the following nine years for a total of ten years. The forecast is a three-prong tool meant to be used proactively to 1) identify current financial challenges; 2) assist to prioritize allocation of resources; and 3) identify and troubleshoot long-range financial challenges. The forecast is also useful in several other ways. It allows the City to make more informed decisions by identifying what the immediate and future costs are of a proposed action, program, or project so that they may be considered in the decision to proceed or reject the proposal. It also drives policy, knowing future cost projections allows for financial policies to be developed to better manage the City’s short-and-long term financial position. Updated Ten-Year Financial Forecast The chart below is the updated financial forecast for the City of Gilroy’s General Fund Balance. Figures on the vertical axis are dollars represented in Millions, while figures on the horizontal axis are fiscal years. 10.B Packet Pg. 117 The forecast shows the City’s General Fund Balance reaching a high in FY20 followed by a relatively precipitous decline. If nothing changes, beginning FY21, the model indicates a budget shortfall of approximately $600,000, requiring the use of fund balance/reserves. The amount of shortfall will increase each year. By FY29, the annual shortfall will be $3.7 million. The reserve percentages on the chart are indicative of the new reserve policy adopted by the Council in 2017 via Resolution 2017-24. The City’s general fund reserve policy is 30% of annual operating expenditures; including 20% for operations and 10% for economic uncertainty. The forecast does not consider changes in the PERS discount rate nor the effects of a recession. It also assumes current staffing stays the same and that operational expenditures only increase based on inflationary rates at an average of 2.87%. The largest impact is due to increases in employer-paid PERS contributions. CalPERS has predicted that the City will see contributions increase of almost $6 million a nnually to $13.5 million in FY25. The specific increases are discussed in another agenda item. CONCLUSION Forecasts indicate that 2019 will experience subdued growth, but recession is unlikely. Some economists continue to project a probable recession two to three years out. It should be noted that this has been the projection for at least the last four years, if not longer. Current economic indicators, with the exception of the housing market, show signs of continued improvement. It is unlikely that an economic slowdown will occur during the next biennial budget. 10.B Packet Pg. 118 Even with the continued health of the economy, the financial forecast currently shows the “fiscal cliff” beginning in FY21. As mentioned previously, this is predominately due to CalPERS increases. 10.B Packet Pg. 119 City of Gilroy STAFF REPORT Agenda Item Title: California Public Employees' Retirement System (CalPERS) Status Report Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: Finance Department Submitted By: Irma Navarro Prepared By: Jimmy Forbis Strategic Plan Goals  Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION Receive report and discuss options to address the City's unfunded pension liabilities. BACKGROUND Like most cities in California, the City of Gilroy has experienced significant increases in its annual payments to the California Public Employee Retirement System (CalPERS). Since 2003, the total cost to state and local governments has more than tripled. This coupled with significant plan assumption changes have not only increased the annual payments that the City makes to fund current pension obligations, it has also increased the amount of unfunded liabilities that the City will have to address in the future. The City’s most current actuarial valuation of pension assets and liabilities has identified approximately $82 million in unfunded pension liabilities. This liability is amortized over 20 to 30 years (much like a mortgage) and is at the mercy of several factors including investment returns and plan assumptions – neither of which the City can control. State of CalPERS Policy 10.C Packet Pg. 120 In the last several years, the CalPERS Board has made significant policy changes which have resulted in increased employer contributions. In 2013, the Board approved a change to its amortization and smoothing policy which spread investment returns over a 15-year period with gains and losses paid for over a rolling 30-year period (i.e. the amortization period remains the same each year, rather than declining). With the new policy changes, gains and losses were to be over a fixed 30-year period, with increases or decreases in the rate spread directly over a 5 -year period. The changes were first used in the June 30, 2013 actuarial valuations issued by CalPERS in fall 2014. In 2018, to improve the funding levels of plans, the CalPERS Board (Board) approved a change to its amortization and smoothing policy which spread investment returns (both gains and losses) over a 20-year period beginning June 30, 2019. This is the second modification in amortization and smoothing policy in the last five years. Changes in Actuarial Assumptions Mortality The second notable change related to actuarial assumptions used to determine employer contribution rates and unfunded liabilities. In February 2014, the CalPERS Board adopted updated actuarial assumptions regarding the mortality rate applied to the plans of state and local employers, after completing a study focused on recent patterns of termination, death, disability, retirement, and salary increases. The findings from national mortality studies show that due to advances in medicine, nutrition, personal fitness, and other factors people are living longer than the previously developed mortality rates reflected. In addition, the study showed higher rates of service retirement for certain member groups and lower rates of disability for all groups. These outcomes have a financial impact on employer related CalPERS rates because plans are not currently funded to cover the payment of retirement benefits for a longer life time. In November 2017, CalPERS made a second adjustment for longer life expectancy. Instead of updating static tables every four years that make fixed projections of life expectancy, CalPERS has moved to a model that approximates generational mortality assumptions, which reflect continual expected improvements in life expectancies. This information is consistently updated and has, without exception, resulted in increased costs to employers. Assumed Rate of Return (Yield) Since Fiscal Year 2017-18 (FY18), PERS has reduced the assumed rate of investment return from 7.5% to 7.0% over the next three years, as outlined below: FY18 – 7.375% FY19 – 7.25% 10.C Packet Pg. 121 FY20 – 7.00% It is generally assumed that CalPERS will continue to lower the assumed rate of investment return. As the fund relies heavily on investment returns to fund pension obligations, any reduction in the assumed rate of return re sults in higher employer contributions. Unfunded Liabilities Funding Status Due to CalPERS’ changes in mortality assumptions, changes in smoothing periods for gains and losses to the investment portfolio, and a lowered assumed rate of return, CalPERS has reported the City’s unfunded liability – that is the ratio of assets to liabilities – that the fund currently possesses now exceeds $82 million. As of 6/30/17 Safety Plan Misc. Plan UFL (market value of assets) $51.9 million $30.2 million Funded Status 68.2% 71.1% By comparison, the chart below shows the unfunded liability and funded status just two years ago: As of 6/30/15 Safety Plan Misc. Plan UFL (market value of assets) $35.1 million $22.3 million Funded Status 73.4% 75.4% The overall CalPERS average funded status as of July 2018 was approximately 71%, a 3% increase from the prior fiscal year. There is no overall consensus among experts, or even among actuaries, as to what a healthy funded level is for pensions. The Government Finance Officers Association (GFOA) which provides governmental entities with “Best Practices” has adopted the following recommendation: Adopt a funding policy with a target funded ratio of 100 percent or more (full funding). The funding policy should provide for a stable amortization period over time, with parameters provided for making changes based on specific circumstances. The amortization period for the unfunded actuarial accrued liability should be consistent with the funding policy. There are very few entities that can afford to fund their pension plans at the 100% level (it would cost Gilroy approximately $82 million), however within the financial industry, there are different opinions concerning the definition of a “healthy” funding ratio :  Standard and Poor’s (rating agency) considers 80% to be an adequately funded level 10.C Packet Pg. 122  Fitch (rating agency) suggests 70% is adequate  The Government Accountability Office states that: “a funded ratio of 80% or more is within the range that many public sector experts, union officials, and advocates view as a healthy pension system.” CalPERS Employer Rates CalPERS’s amortization and smoothing policy changes impacted the City of Gilroy’s employer rates starting this current fiscal year and the new actuarial assumptions will increase the City’s employer contribution rates next fiscal year. Both changes will increase the City’s unfunded liability for the miscellaneous and safety retirement plans. The City’s estimated employer rates are as follows: Figure 1: City of Gilroy’s PERS Employer Contribution Rates Presented as a Percentage of Employee Payroll by Fiscal Year (FY) and Employee Group Employee Group FY15 Actual FY16 Actual FY17 Actual FY18 Actual FY19 Estimate FY20 Estimate FY21 Estimate FY22 Estimate Safety 31.89% 33.06% 36.58% 37.89% 41.33% 45.67% 49.15% 51.82% Misc. 20.78% 22.24% 22.63% 24.20% 25.80% 27.30% 27.70% 28.20% FINANCIAL IMPACT ON GILROY FROM CALPERS CHANGES In FY19, the City budgeted approximately $7.5 million in PERS costs – funds that address both the normal costs and unfunded actuarial liabilities. As a result of the policy changes noted above, CalPERS has predicted that the City will see contributions increase by almost $6 million annually to $13.5 million by FY25. 10.C Packet Pg. 123 OPTIONS Prior Options CalPERS Prepayments The City currently uses the CalPERS prepayment program which allow agencies to prepay the entire annual employer retirement contribution on July 1 versus making monthly payments, thus saving on interest charges. The estimated an nual savings from prepaying was approximately $200,000. Gilroy’s Pension Cost Reduction Efforts The City has made cost reductions in PERS including having all employee units now paying the employee portion of retirement cost and establishing lower retirem ent benefit formulas for new public safety employees (new tiers) and implementation of the Public Employee Pension Reform Act (PEPRA) which was effective January 2013, which reduced retirement benefit formulas for all new members of the pension system. Although PEPRA reforms will reduce pension costs over time, it will take years before those reforms will generate savings as the majority of employees participate at the Classic CalPERS benefit level. Current Options At a minimum, the City ought to continue funding its pension liabilities according the CalPERS pension amortization schedule. This is required by the City’s contract with CalPERS. Given that a large portion of the City’s pension costs are from accrued unfunded liabilities (reflecting prior years’ costs) an argument can be made that the City should consider a faster payment than CalPERS requires, thus realizing significant interests savings on those liability balances. If the Council provides direction to explore pre-funding CalPERS contributions, the City can explore numerous options to pay down its pension liabilities: 1. Pension Obligation Bonds - Some cities have decided to issue pension obligation bonds to pay off CalPERS liabilities. However, there are risks associated with this, which are articulated well by the Government Finance Officers’ Association (GFOA). They state: “Pension obligation bonds (POBs) are taxable bonds that some state and local governments have issued as part of an overall strategy to fund the unfunded portion of their pension liabilities by creating debt. The use of POBs rests on the assumption that the bond proceeds, when invested with pension assets in higher-yielding asset classes, will be able to achieve a rate of return that is greater than the interest rate owed over the 10.C Packet Pg. 124 term of the bonds. However, POBs involve considerable investment risk, making this goal very speculative.” This option is not recommended as it would only pay down the CalPERS liability by creating a debt service obligation – another type of liability. 2. Pension Trust - The City can create a trust to help pay down its unfunded liability; funds can be accessed at any time so long as it is used to pay the employer’s pension obligation. The assets placed in the trust reduce an agency’s net pension liability without having additional City funds go to CalPERS. The City can fund the trust as it wishes and use those funds to either smooth CalPERS contributions or pay down unfunded liabilities. 3. Additional Investment in CalPERS- another option would be to increase the City’s payments to CalPERS over what it is currently making. 4. Investment in Alternative Retirement System - working with an entity like the Public Agency Retirement System (PARS), the City can choose one of several different investment options, while CalPERS does not allow investment choices. An option or options that could be selected through an entity like PARS could result in less rate volatility, but may provide less return. For example, the City could direct PARS to set up an investment vehicle that excludes real estate holdings, or which reduces the amount of foreign equities. Funding Options 1. Year End Savings - Use a portion or all of year-end budget savings or revenue overages to make additional payments to CalPERS or into a dedicated t rust with an entity such as PARS. 2. General Fund Reserve Designation - Another option is to set aside funds from the City’s reserve that would be earmarked as a CalPERS reserve that would unofficially serve to offset the liabilities with PERS (for financial reporting purposes the designation would not reduce the liability). However, the City does not have the option of investment in stocks, as CalPERS and PARS have, meaning that investment growth over time would be less in this option. This option is attractive in one regard, in that the cash is still held and managed by the City, meaning the Council would have the flexibility of tapping those reserves if an unforeseen other need arose. This option is similar to using year-end savings (immediately above), and the two options could be considered together. CONCLUSION The impact of prefunding the City’s CalPERS contributions (regardless of method) can provide significant savings due to the City not being charged interest on the unfunded liability portion of the City’s pension obligations. For example, a one-time $5 million prepayment contribution would save the City almost $2 million if applied to its 10 -year amortization base and approximately $4.7 million over a 20 year base. If funds are 10.C Packet Pg. 125 deposited in CalPERS, this approach carries the same risk that the City encounters with regular CalPERS contributions – market results can either lower or increase return yields. Funds deposited in other methods (for example, a trust arrangement with PARS) provides more investment options, and gives the City the flexibility to use trust funds to either make the City’s required annual contributions or pay down the City’s unfunded liability. Figure 2 is an example of an amortization schedule to pay down the City’s unfunded obiligation: Figure 2: Gilroy’s PERS Amortization Schedule with a $5 Million Pay Down 2020 373,561$ 619,629$ 2021 383,367 635,895 2022 393,430 652,587 2023 403,758 669,717 2024 414,357 687,297 2025 425,234 705,339 2026 436,396 723,854 2027 447,851 742,855 2028 459,607 762,355 2029 471,672 782,367 2030 484,053 2031 496,760 2032 509,800 2033 523,182 2034 536,916 2035 551,010 2036 565,474 2037 580,317 2038 595,551 2039 611,184 Reduced Payments 9,663,480$ 6,981,895$ Initial Deposit (5,000,000) (5,000,000) Net Savings 4,663,480$ 1,981,895$ 20-Year Amortization 10-Year Amortization Reduced Payments from $5 million Pay Down Fiscal Year 10.C Packet Pg. 126 City of Gilroy STAFF REPORT Agenda Item Title: Proposed Budget Direction and Budget Development Study Sessions Schedule Meeting Date: February 4, 2019 From: Gabriel Gonzalez, City Administrator Department: Administration Submitted By: Gabriel Gonzalez Prepared By: Gabriel Gonzalez Gabriel Gonzalez Strategic Plan Goals ☐ Fiscal Stability ☐ Downtown Revitalization ☐ Economic Development ☐ Customer Service ☐ Enhanced Public Safety RECOMMENDATION Receive report and provide direction to staff to begin the budget development process for a “status-quo” operating budget FY 2019-2020 and FY 2020-2021; consideration for one-time department budget request for individual items not to exceed $50,000; and, consideration to appropriate funding for City Council initiatives of the City’s Strategic Plan. EXECUTIVE SUMMARY During today’s meeting staff reported on the current economic climate and provided an Updated Ten-Year Financial Forecast. The results of which show signs of stable revenue for the near-term with challenges in the mid-near term. The City is still in the midst of an operational capacity deficit, which was exacerbated by the Great Recession. (A full report and discussion on operational capacity per department is scheduled for a later date, although the problem will be generally described herein below.) 10.D Packet Pg. 127 Given these two factors, staff is recommending that the City Council begin the budget development process with a “status-quo” mindset in order to continue previous efforts to close the deficit while helping create a foundation for long-term fiscal stability. Because of the persistent operational capacity deficit the City Council may want to give special consideration to budget requests for: (a) Fixing the Operational Capacity Deficit: Necessary operational changes to maintain adequate levels of service; (b) Small, One-time Requests: Less than $50,000, one-time capital requests for equipment and systems; and (c) Strategic Goals and Revenue Inducing Economic Development: Funding for Council’s strategic goals and special projects that have community-wide benefit or revenue inducing effects, like Economic Development. POLICY DISCUSSION Given the results of the economic climate and updated forecast, the question before council is: For the upcoming biennial budget cycle, fiscal years (FY) 2020 and 2021, should the city generally pursue a “status-quo” budget, keeping department budgets in line with previous years, continuing previous efforts to close the operational capacity deficit, and helping create a foundation for long-term fiscal stability? BACKGROUND During 2009, annual General Fund revenues decreased by 14%, or $4M. This decrease in revenue resulted in a significant reduction to staffing levels across all departments. The City, during the recession, went into self -preservation mode resulting in severe layoffs and sustained non-investment in technology, equipment, staff development, and business models, all of which increased the gap between what the community demands for services and what the City can provide. Staff downsizing, cuts in investments for information technology, equipment, and training lowered the amount of workload that was possible for the City to execute per employee. Although there has been some recovery, th e City’s staff, technology, equipment, and training has not yet returned to the levels that were present before the recession. Despite this, the City’s population has continued to increase, resulting in higher workload demand for services. Delivery of services is constrained, and future additions are restricted, unless this workload imbalance is addressed. ANALYSIS Operational Capacity Generally, “operational capacity” is the maximum level of output that the city can sustain to provide a service. By “service” staff means all of the things the City currently does for 10.D Packet Pg. 128 the community, such as police, fire, road maintenance, parks, etc. The City is currently faced with a gap between the operational capacity of the city and the demand for services, such as more cops, more firefighters, more street crews, etc. The status of the City’s operating capacity by department will be explored in more detail during the next Pre-Budget Study Session. In the meantime, consider the chart and graph below showing the budgeted staffing levels of the entire City compared to population. Gilroy’s population figures are depicted in blue and counted on the primary axis (left). The number of budgeted full-time city staff is depicted in red and counted on the secondary axis (right). City services are primarily people driven; meaning that when there are more people there is a corresponding increase in traffic, water meters, sewer lines, calls for service, etc. And, therefore, population statistics serve as an adequate proxy measure for demand for services. Population estimates from 2008 and 2018 were acquired from the California Department of Finance Demographics – City Estimates Schedule E-4 while population figures for 2019 and beyond are based on extrapolations from Community Development data on planned housing development. The City is projecting an additional 2,870 housing units over the next three to five years. If each additional housing unit maintains the current average of three and four-tenths occupants then the city can expect a population increase of about 9,758 or approximately 17% by 2021 to 2023. This rate of growth is similar to some of the City’s highest previous growth years. Staff anticipates that this trend will damper slightly after a few years, but will ultimately remain high due to changes in State policy regarding housing development. STATE INITIATIVES WHICH CAN IMPACT OR ACCELERATE GROWTH Housing growth may soon accelerate beyond current growth trends due to the Governor’s aggressive policies to strip local authority in regulating housing development. Governor Newsom has promised to facilitate the construction of 3.5 million housing units by 2025. To put that figure into perspective, o ver the last ten years, an average of less than 80,000 homes have been built in Cal ifornia annually, according to the state’s housing department. Since 1954, developers have constructed more than 10.D Packet Pg. 129 300,000 units in a year only twice. To reach three and a half million housing units by 2025, California would have to build at a rate unmatched even in boom years. It may seem like three and a half million units is unlikely to come to fruition, however, to encourage construction of new housing, Governor Newsom has pledged to make more tax credits available for affordable housing developments and to support voter-approved bond measures that finance housing construction. He’s also promised to hold cities accountable when they fail to meet housing goals established by the state. According to Newsom’s proposal, cities will have reduced agency to block an affordable housing development and cities that don’t meet regional housing goals could lose out on state dollars for transportation projects. CITY STAFFING LEVELS As shown in Figure 1, staffing cuts were particularly severe during the recession between years 2008 and 2010. Budget cuts were followed by a slow and incremental recuperation. However, the City has not yet returned to the staffing levels of 2008. If nothing changes, staff is anticipating a further increase in the capacity deficit heading into 2019 and beyond, as depicted by Figure 1. Figure 2 below contains the numbers used in Figure 1 as well as an additional calculation for population per staff. The calculation of population per staff is a particularly useful ratio to consider. The descriptive statistic reveals a general trend in staffing levels: population growth is out pacing growth in the number of full-time staff. Figure 2: City of Gilroy Budgeted Staff Compared to Population Fiscal Year Gilroy Population Budgeted City Staff Population Per Staff Ratio 2008 48,353 298 162 2009 48,627 277 176 2010 48,821 226 216 2011 49,122 228 215 2012 50,248 236 213 2013 51,755 233 222 2014 52,582 245 215 2015 53,654 248 216 2016 54,422 257 212 2017 55,336 265 209 2018 55,615 270 206 2019 56,727 273 208 2020 59,564 275 217 2021 62,542 275 227 2022 63,793 275 232 2023 65,069 275 237 10.D Packet Pg. 130 2024 66,370 275 241 2025 67,697 275 246 Gilroy continues to face financial challenges while meeting the constantly evolving service demands of a developing city. In the previous biennial budget, FY18 and FY19, the city council adopted a strategy to regain some of the lost operational capacity from the recession. The city can continue this momentum in FY20 and FY21, while also helping create a foundation for long-term stability, by focusing on developing a “status- quo” budget. Below is a chart summarizing the general fund budget by department for FY19. Please note there are several budget amendments authorized for FY19 but have not been entered into the financial system, therefore a baseline budget for FY20 and FY21 will be higher than the figures presented below. Maintaining a budget close to these levels of funding for FY20 and FY21 would represent a “status-quo” budget and help create a foundation for long-term fiscal stability. Figure 3: City of Gilroy’s Fiscal Year 2019 General Fund Budget by Department Department Amended Budget Percent of Total Administration $ 7,824,129 14% Finance 921,669 2% Human Resources 1,198,402 2% Police 23,633,578 44% Fire 11,071,645 20% Public Works 4,906,069 9% Community Development 4,688,721 9% Total 54,244,213 100% Given the stable economic climate for the near term there may be some permissible exceptions to a “status-quo” budget that Council may want to consider during the budget development process. These exceptions can be broken down into three distinct categories (1) Fixing the Operational Capacity Deficit, (2) Small, One-time Requests, and (3) Strategic Goals and Revenue Inducing Economic Development: 1) Fixing the Operational Capacity Deficit: As briefly discussed in this report, the City is in the midst of an operational capacity deficit. As population grows so too does demand for services, like police and fire. In order to maintain the City Council’s progress in closing this deficit and maintaining adequate levels of service, the City Council may want to consider operational changes. Particular attention should be made to any changes needed for emergency safety and succession planning. Available operational capacity per department will be explored in detail during the next pre-budget study session. 10.D Packet Pg. 131 2) Small, One-time Requests: In the previous biennial budget the City Council identified that the City’s information technology systems are outdated and inadequate to ensure that a maximized workload capacity can be met with current staffing. While staff is making considerable progress addressing internal technology needs, small (<$50,000), one-time requests for capital equipment and systems will be necessary to continue work on this objective. 3) Strategic Goals and Revenue Inducing Economic Development: During previous study sessions on economic development the City Council adopted new guiding principles as well as a strategic goal for pursuing revenue enhancing development projects. There are also pending proposals for a façade improvement program, a fee reduction or deferral on developments within key commercial corridors, as well as incentives for priority business attraction and expansion. Each of these initiatives were not included in the FY18 and FY19 budget and would not be included as part of a “status-quo” budget. The City Council may want to consider additional funding for Council’s strategic goals and special projects that have community-wide benefit or revenue inducing effects, like economic development. FISCAL IMPACT/FUNDING SOURCE None; this report is an informational/discussion item only. NEXT STEPS Budget Development Study Sessions Schedule The biennial budget is one of the most important policy documents for the City. To that end, the City has established a rigorous six-month budget planning process to make sure we get it right. The proposed Budget Development Study Session is attached to this report. The schedule culminates in May and June with proceedings for the Budget Adoption. Capital Improvement Plan The Capital Improvement Plan (CIP) primarily consists of multi-year projects funded through grants. The CIP provides a six-year window of projects to be completed within the CIP horizon. The CIP is evaluated and adopted on alternate years as the City’s budget. This schedule allows leadership ample time to consider each policy document fully. Alternating the adoption of the CIP and biennial budget is being introduced as an option due to the couple of reasons 1) staff is still revamping the CIP document; and 2) the amount of time associated with creation of the CIP it puts additional strain on City resources to create both the operating budget and the CIP. PUBLIC OUTREACH 10.D Packet Pg. 132 Council agendas are publicly advertised in advance of each of the meetings and study sessions. The proposed Budget Development Stud y Sessions Schedule includes a “Budget Information Session for the Community” on May 14, 2019. Attachments: 1. Budget Development Study Sessions Schedule - 2019 10.D Packet Pg. 133 Budget Study Sessions Schedule - 2019 Regular Meeting = (R) Special Study Session = (S) January: (R) January 7, 2019 – CAFR Presentation (S) January 14, 2019 – Planning Study Session (R) January 28, 2019 – No Budget Items February: (R) February 4, 2019 – Current Budget Climate 1. Discuss Budgeting Climate 2. PERS Status 3. Preliminary Budget Direction (S) February 11, 2019 – Pre-Budget Study Session #1 1. Operational Capacity Assessment 2. Proposed Staffing (S) February 19, 2019 – Pre-Budget Study Session #2 1. Economic Development initiatives 2. Proposed Sales Tax Measure (S) February 22 and 23, 2019 – Strategic Plan Retreat (R) February 25, 2019 – No Special Budget Items March: (R) March 4, 2019 – No Special Budget Items (S) March 11, 2019 – Pre-Budget Study Session #3 1. Cost Recovery - Overview 1. Cost Allocation Plan Update 2. Cost Recovery - Recreation (R) March 18, 2019 – No Special Budget Items April: (R) April 1, 2019 – No Special Budget Items 10.D.a Packet Pg. 134 Attachment: Budget Development Study Sessions Schedule - 2019 (1989 : Budget Direction) (S) April 8, 2019 – Pre-Budget Study Session #4 1. Recap of Previous Study Sessions 2. Strategic Plan Goals 3. Fire Services – Standards of Response Coverage (R) April 15, 2019 – No Special Budget Items May: (R) May 6, 2019 – No Special Budget Topics (S) May 7, 2019 - Budget Session #1 1. Budget Overview 2. Departmental Presentations 3. Additional Funding Request Proposals * May 14, 2019 - Budget Information Session for the Community 1. Current Economic Climate 2. Present Preliminary Budget “as is” (R) May 20, 2019 – Includes Budget Study Session #2 (Potential Budget Adoption) 1. Present Follow-Up Information as Requested by Council 2. Present Input from Community Information Session 3. Adoption, if Council is Ready 4. Receive Additional Feedback or Inquiry June: (R) June 3, 2019 – Budget Study Session #3 (Backup Adoption Date) 1. Gann Limit Adoption 2. Operating Budget Adoption 3. Authorized Position Resolution 4. CIP Update Adoption ----- END ----- 10.D.a Packet Pg. 135 Attachment: Budget Development Study Sessions Schedule - 2019 (1989 : Budget Direction)