City Council Preview | Budget Issues Addressed on Agenda

South Pasadena, according to a city report, is facing a $3.5 million shortfall in the next fiscal year due to loss of revenue from the pandemic shut down. The council will address the issue Wednesday night

FILE PHOTO: Eric Fabbro | News | (L-R): City Manager Stephanie DeWolfe; Mayor Pro Tem Diana Mahmud; Mayor Robert S. Joe

The City Council will review the draft budget as presented, hear public comments, and provide direction to staff as part of the July 10 Zoom meeting, held over one week due to a LA County curfew as a result of the protests in a wake of the May 25 death of George Floyd.

Floyd, a 46-year-old black man, was killed in Minneapolis, Minnesota, when white police officer Derek Chauvin knelt on his neck for almost nine minutes while Floyd was handcuffed and lying face down on the street.

The city’s final budget is slated for final adoption on June 17.

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The draft budget was reviewed by the Finance Commission on May 26. The commission voted to unanimously recommend approval to the City Council.

South Pasadena, according to a city’s finance report, claims it is facing a $3.5 million shortfall in the next fiscal year due to loss of revenue from the pandemic shut down. They say three of the city’s top revenue sources are predicted to experiences significant shortfalls in future years, including property tax, sales tax, and user fees.

According to the city finance department, these losses, noted in the report, are the result of businesses being closed for several months, anticipated slow recovery of shopping and dining patterns, mandated cancellation of programs and facility rentals, and state regulations allowing deferral of payment of property tax and sales taxes. With no immediate opportunities for new revenue, reduction in expenditures is the only available option to balance the budget at this time. This report proposes a draft balanced budget and discusses assumptions and strategies used to achieve that goal, as well as alternatives for consideration.

Reducing expenditures by $3.5 million, or 12% of the General Fund, could require difficult trade-offs if their numbers are accurate.

True North Agreement

The City Council will be asked to authorize City Manager Stephanie DeWolfe to execute the first amendment to the Professional Services Agreement (PSA) with True North Research, Inc. to expand the scope of services and modify the timeline to conduct a professional poll for a total not-to-exceed amount of $24,950.

The City Council approved the contract with True North on May 6. The first amendment to the contract will expand the scope of work to allow for polling on additional ballot measures and readjust the schedule for conducting the poll.

Since the initial contract was approved, additional questions have been raised by Council members and the public regarding testing community interest in for a Transient Occupancy Tax and amendment to the city’s height limits to accommodate State housing mandates. In addition, adjustments to schedule are proposed in response to ongoing changes in County health orders and appropriate timing for community engagement.

Creating ballot measures that are ultimately approved by the necessary percentage of voters is difficult, according to a city report, especially in the State of California. Successful measures require insightful research and sound, strategic advice. A professional poll will produce an unbiased, statistically reliable evaluation of voters’ interest in extending the existing UUT, approving a TOT, or amending height limits, as well as identify how best to align the measures with community priorities.

Commonly known as a “bed tax” or “hotel tax,” a Transient Occupancy Tax (TOT) is a tax of 12-14% of the rent charged to transient guests (staying less than 30 days), including properties rented through home sharing services like Airbnb. A TOT would need to be placed on the ballot for approval by residents. TOTs are levied by most cities including Pasadena and Los Angeles.

Last year, in anticipation of community conversation regarding potential revenue enhancement measures, staff assembled a list of frequently discussed options. During the months of March and April 2019, seven meetings were held with residents and three with staff to present the budget forecast and obtain feedback on potential solutions. The options presented to residents included land use considerations and potential new taxes.

The survey queried response to a sales tax measure (Measure A), which was later polled and ultimately placed on the November 2019 ballot. Among the other options presented to the community, development of a small hotel and implementation of a TOT scored the highest, with over 83% support. The revenue to the City from a hotel would include sales tax on restaurant and bar services, plus the revenue from the hotel tax (or bed tax). Although it is unclear how the economy will recover after the crisis and what the market will look like to attract interested development, establishing a hotel tax would better prepare the city should these opportunities arise.

Furthermore, the bed tax could also be applied to short-term rentals of housing units for durations less than 30-days. The legalization and taxation of short-term rentals was another popular new revenue option in the 2019 budget survey, with 71% support. Short-term rentals are currently prohibited in South Pasadena, however as with most cities who chose to prohibit them, they proliferate anyway. It is extremely difficult and expensive to enforce against them and most cities do not have the resources to do so.

Many cities have chosen instead to regulate and tax them, allowing potential negative impacts to be mitigated through zoning code requirements, as well as generating revenue to the city. City staff has estimated there may be more than 50 sites in South Pasadena based on a search of sites like AirBnB.

Although due to the immediate crisis these activities have decreased, the ability to legally rent rooms or second units on a short-term basis is desirable for many property owners who could benefit from the additional income during difficult economic times.

The City Council will be asked to approve discretionary fund requests by Mayor Robert Joe in the amount of $2,000, Mayor Pro Tem Diana Mahmud in the amount of $3,000, and Councilmember Marina Khubesrian in the amount of $3,000, for a combined total of $8,000 for the True North Polling Survey Professional Services Agreement.

Water Conservation Rebate Program

The City Council will be asked to  approve the Fiscal Year (FY) 2020-21 water conservation rebates and programs in the amount of $115,000 funded from the existing Water Efficiency Fund.

Commission Review and Recommendation This matter was reviewed by the Natural Resources and Environmental Commission (NREC) at their May 14 meeting. The Commission approved the proposed Water Conservation Rebates and Programs. Executive Summary Annually, the City Council adopts a water conservation program funded through a water efficiency fee billed to all City of South Pasadena (City) water customers.

The program includes rebates, education/outreach, water conservation materials, and projects to promote water conservation throughout the city. From July 1, 2019 to March 31, 2020, the program paid out approximately $14,899.00 in incentives to South Pasadena residents and businesses.

These efforts helped the city reduce its water usage by 23% since 2013. The previous year’s program focused on incentivizing and promoting outdoor water conservation efforts including upgrading irrigation systems, removing turf, and converting impervious surfaces.

However, according to a city report, this past year, participation in water conservation programs has significantly declined in the City, as well as throughout the region. This decline is likely caused by the perception of a lack of a drought condition and more relaxed views on water availability.

In addition, promotion and outreach of the new rebates was paused for the most part of the fiscal year due to several factors including long processing times for MWD rebate updates, revisions to the outdated rebate applications, the reconstruction of the environmental programs website, and the Covid-19 pandemic.

110 Loop On-Ramp Sketch

A $6,000 discretionary fund request has been by Councilmember Richard Schneider for a first cut scaled drawing sketch of the 110 Freeway loop on-ramp from northbound Fair Oaks Avenue to southbound Arroyo Drive.

Fair Oaks Avenue near the Arroyo Seco Parkway ramps has long been recognized as a congested location (pre-COVID-19 pandemic) in the city and a bottleneck to north-south traffic flow. One of the reasons why the location is congested is that the signal time has to be allocated to many exclusive movements.

As a result, there is often insufficient signal time to adequately serve traffic on Fair Oaks Avenue. These exclusive movements serve traffic on the northbound off ramp, Grevelia Street, State Street, and the northbound left turn to the southbound on ramp. During peak periods pedestrian waiting time may be excessive, and there are driver delays due to southbound traffic queues to Columbia Street.

Over the years there have been several proposals to address this problem. A long-standing proposal was to construct a southbound “hook” on ramp on State Street adjacent to the existing southbound off ramp near the City limit. The attached sketch is a conceptual drawing of a

proposal to convert the northbound left turn to a right turn “loop” movement where drivers wound enter southbound Arroyo Seco Parkway from northbound Fair Oaks Avenue to eastbound State Street, to a loop on ramp located opposite of the parking lot of the Ace Hardware retail area. In the sketch, the loop on ramp would be separated from State Street by a raised island and wall and would start its descent at a point just east of Fair Oaks Avenue.

The proposed drawing of the loop on ramp illustrates utilizing the existing right of way from the southbound off-ramp that was closed in the 1950’s when State Street was built to serve the second phase of the development in the Raymond Hill community. The end of the loop on ramp traffic would enter the southbound Arroyo Seco Parkway as the beginning of third southbound lane. This discretionary fund request is to proceed with a first cut scaled drawing of the conceptual Loop on-Ramp.

The final drawing will be selected through a request for proposal process.

All Band Portable Radios

The City Council will be asked to authorize purchase of the Motorola All Band portable radios in the amount of $25,050.

The City of South Pasadena ability to effectively respond to emergencies and recover from a disaster has been presented and discussed during previous annual Community Budget Forums. During these forums, emergency preparedness has been identified as a top priority.

The purchase of the Motorola APX 8500 All Band Mobile Radios has been identified by the local fire department as a necessary equipment replacement in order to maintain continuity of operations and to function during daily operations as well as during disasters.

Historic Properties Recognized

A public hearing will be held to adopt a resolution for properties in a Craftsman Cluster, including 1500, 1506, 1507, 1510, and 1512 Rollin Street, for designation of a historic district.

The five homes in the proposed district were built before World War I with a significant gap of over 10 years before adjacent houses were built. The immediate neighbors to the west and to the east were built starting from the mid-1920s.