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Home My WebLink AboutSupplemental Agenda Packet No. 2 2023-03-23CITY OF PALM DESERT CITY MANAGER’S OFFICE INTEROFFICE MEMORANDUM Date: March 23, 2023 To: Honorable Mayor and Councilmembers From: Anthony J. Mejia, City Clerk Subject: City Council Meeting of March 23, 2023 Below you will find questions received from the Mayor or Councilmembers and answers provided by City staff regarding tonight’s City Council meeting: ITEM 1G: UPDATE ON UNITE PALM DESERT FORGIVABLE LOANS AND REQUEST TO FORGIVE LOAN REPAYMENT FOR RECIPIENTS IN DEFAULT DUE TO UNFORESEEN CIRCUMSTANCES Q1: Did the three loan recipients who left Palm Desert respond to the inquiry? A1: All three businesses responded to the inquiry and either informed the City of their relocation or presented a business license with a business address outside of Palm Desert. Q2: Table on 1G-2 shows that of the $971,600 issued in loans, $41,750 reflect declined, and the table on 1G-3 shows declined forgiveness in the amount of $20,750. Is this the balance for the businesses sold and/or relocated outside of Palm Desert? A2: The balance between $41,750 and $20,750 are the loans for the three businesses that relocated outside of Palm Desert ($18,000) and the two businesses that sold ($3,000). Q3: Loan recipients listed on 1G 6-8 reflect mostly businesses and two individual names Michael Riley and Rommel Lopez. What business services do they offer? A3: Michael Riley provides specialized sound engineering and audio-visual services for live events and conferences. Rommel Lopez is an independent contractor barber. ITEM 1K: APPROVAL OF EXPENDITURES FOR THE PALM DESERT 2023 INDEPENDENCE DAY CELEBRATION Q1: Can we explore drone displays for future Independence Day celebrations? A1: If requested as a future agenda item, staff will certainly research and present drone display options to the City Council prior to the 2024 Independence Day Celebration. ITEM 1M: CONSIDER REQUEST BY JULEEN MCELGUNN TO APPROVE FEE WAIVER REQUEST FOR HISTORICAL SOCIETY ANNUAL PICNIC Q1: Has the Historical Society submitted ideas of how they will recognize or participate in the 50th Anniversary Celebrations? A1: The Historical Society formed a committee that worked with staff on the City Calendar but no other events are in the queue at this time. Supplemental No. 2 Page1 03/23/2023 Question & Answer Memo Page 2 of 2 ITEM 1O: APPROVE AMENDMENT NO. 4 TO CONTRACT NO. C40520 WITH MICHAEL BAKER INTERNATIONAL, INC., OF PALM DESERT, CALIFORNIA, IN AN AMOUNT NOT TO EXCEED $495,500 Q1: Have there been quality applicants to fill the City Engineer vacancy? A1: Yes, we are currently in the background process to fill the position. The tentative start date for the City Engineer is April 10. Q2: How much is it costing the city per day to use external engineering contracts? A2: In 2021-2022, the City spent $1.67 million in general engineering services. This does not include design work for projects and other specialty services like traffic. However, with the addition of the in-house City Engineer the objective is to reduce the consultant spend and have a City Engineer who is proactively managing those contracts. The City has also issued an RFP, which is set to close tomorrow, with the aim of consolidating all the various contract engineers into one firm and achieve greater cost savings. Should we not be successful in finding one firm that can perform all the functions, we will look to add additional in-house engineers. Q3: Should we consider increasing the salary range to attract qualified candidates to fill a position vacant since February 2021? A3: Since we are in the background process, and there is a signed contingent offer, the salary range does not need to increase. Supplemental No. 2 Page2 PALM DESERT AQUATIC CENTER FEE ANALYSIS Potential Fee Adjustment & Cost Recovery Discussion Supplemental No. 2 Page3 PDAC FEE HISTORYThe Palm Desert Aquatic Center (PDAC) fees were established in 2011 and have not been adjusted since inception. Rising operational costs and future capital project plans prompted a fee analysis Supplemental No. 2 Page4 YMCA INVOLVEMENT •YMCA partners with health insurance providers to offer cost relief for those with fixed incomes •City receives all revenue, including concession sales •YMCA receives administration & management fees The Family YMCA of the Desert has been the operator of the Aquatic Center since its opening in 2011. Started in 1982, this 501(c)3 charitable community service organization has provided excellent service to the city in daily management and operation. The YMCA also offers a variety of aquatics programs for patrons of the facility. Award of a new contract with YMCA is anticipated in February 2023. Supplemental No. 2 Page5 REGIONAL COST & AMENITY COMPARISON The Cove, Riverside The Drop Zone, Perris Supplemental No. 2 Page6 REGIONAL COST & AMENITY COMPARISON $4 $6 $25 $25 $33 8 4 8 9 5 $0 $5 $10 $15 $20 $25 $30 $35 PDAC Jurupa Park The Cove Water Park The Drop Zone Splash Kingdom Resident Adult Day Pass Number of Amenities Supplemental No. 2 Page7 LOCAL COST & AMENITY COMPARISON Fritz Burns Pool, La Quinta Palm Springs Swim Center Supplemental No. 2 Page8 LOCAL COST & AMENITY COMPARISON $4 $5 $3 $4 8 2 2 3 $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 PDAC Palm Springs Swim Center Fritz Burns La Quinta Pawley Pool, Indio Resident Adult Day Pass Number of Amenities Supplemental No. 2 Page9 PDAC ADMISSION HISTORY 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Resident Adult Resident Youth/Senior Resident Junior Non-Resident Adult Non-Resident Youth/Senior Non-Resident Junior •Majority of admissions have been from non-residents since 2011 •Admissions expected to return to pre-pandemic levels in 2023 •5-year pre-pandemic average used to project future attendance Supplemental No. 2 Page10 CURRENT FEE BREAKDOWN Admission Type Resident Non-Resident 30% 70% Resident Non-Resident •Fees were established to achieve a 60% cost recovery rate (Reso. 2011-32) •Cost recovery is down to 33% at end of FY 21/22 due to increased operational costs •All costs not recovered through fees are subsidized by General Fund ($1.8M budgeted for FY 22/23) Supplemental No. 2 Page11 GENERAL FUND SUBSIDY Fiscal Year 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 General Fund Subsidy $503,641 $683,341 $613,833 $657,877 $709,937 $794,884 $1,026,000 $1,400,500 $1,805,294 (budgeted) Cost Recovery %63%56%59%59%58%40%26%33%32% (estimated) 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 General Fund Subsidy to PDAC 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 Costs not covered by admission fees must be subsidized by General Fund dollars Main Cost Drivers: •Facility repairs and maintenance •Upcoming expenditures to keep facility attractive and competitive Supplemental No. 2 Page12 Assumptions for Analysis Attendance in 2023 and beyond will return to pre-pandemic levels (5-year average) Capital costs will be covered by the General Fund Operating expenditures will increase 4% per year Other program/food/retail revenues will level out to pre-pandemic averages (fees not set by city) Supplemental No. 2 Page13 TO ALIGN WITH CURRENT RESOLUTION 60% Cost Recovery Supplemental No. 2 Page14 OPTIONS ANALYZED BY STAFF Option Impact to Patron Experience Impact to Fees Impact to Cost Recovery 1. Fees remain the same No impact No impact •Cost recovery increases slightly in 2023 due to increased attendance •30% cost recovery range by end of year 5 2. Immediate increase to 60% cost recovery Largest immediate impact on fees Increase by approx. 250% immediately, no additional increases for 5 years •Initial increase to 60% cost recovery •Reduced cost recovery by end of year 5 due to rising expenses 3. Set fee at 60% recovery, gradual increase to get there Gradual impact on fees through annual increases Increase an average of 25% per year over next 5 years, with greatest increase in initial year and softer increases to follow •Fees are set using 60% cost recovery rate at current-year costs •Incremental increases year-over-year to reach fee amount •Overall recovery rate levels around 40% due to increasing costs, 5-yr GF subsidy approx. $7.2M for opsSupplemental No. 2 Page15 IMPACT ON FEES Fee Options Analyzed Option 1 (Fees remain same) Option 2 (Immediate increase to 60% recovery)** Option 3 (Gradual increase of fees, average recovery rate of 40%)*** Admission Type Year 1 Year 1 Year 1 Year 2 Year 3 Year 4 Year 5 Resident Adult 4.00 13.00 5.50 7.50 9.00 11.00 13.00 Resident Youth/Senior 3.00 9.75 4.25 5.50 7.00 8.50 9.75 Resident Junior 2.50 8.25 3.50 4.50 5.50 6.50 8.25 Non-Resident Adult 6.00 19.75 9.00 12.00 15.00 17.00 19.75 Non-Resident Youth/Senior 4.50 14.75 7.00 9.00 11.00 12.50 14.75 Non-Resident Junior 3.75 12.25 5.75 7.75 9.75 11.75 12.25 **Option 2 cost recovery % would drop below 60% after year 1 unless an inflator is built in ***Option 3 spreads the increase over 5 years, ultimately averages out to 40% recovery rate Supplemental No. 2 Page16 GENERAL FUND SUBSIDY 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 General Fund Subsidy to PDAC 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 Assuming a 5-year ramp up of fees to 60% cost recovery GF Subsidy $1.4M in FY 27/28 Current fiscal year Supplemental No. 2 Page17 ADDITIONAL CONSIDERATIONS Raising Non- Resident Fees more than Resident Fees •Shifts the cost increase burden from residents to non-residents •May affect attendance due to heavy non- resident usage Raising Fees on Annual Passes & Punch Passes •Consider increasing punch passes and annual passes proportionately •25-punch passes & 3- month passes are the most popular options •Annual passes rarely sold (less than 10 per year) Other Options •Establish a different recovery rate (not 60%) •Decreased recovery rate would increase GF subsidy •Increase promotional programs or incentives Supplemental No. 2 Page18 TO SELECT A DIFFERENT RECOVERY RATE Other than 60% Supplemental No. 2 Page19 SENSITIVITY ANALYSIS 1) What would high/low fee levels look like in each 10% recovery rate bracket? 2) How much General Fund subsidy would be required at each level? •Full analysis included in supplementary documentation •Cost recovery %’s maintained year-over-year Supplemental No. 2 Page20 PARKS AND RECREATION COMMITTEE Presentations given to Committee on 8/2/2022 and 2/7/2023 Committee provided recommendation to City Council Fees for Aquatic Center should be increased New amenities should be considered to increase cost recovery Additional discussion scheduled for April 4 Committee meeting Supplemental No. 2 Page21 POLICY CONSIDERATIONS 1) Should PDAC fees be increased? If so, what model should be used (immediate or ramp-up)? 2) Should the designated recovery rate be changed from 60% to a new rate? 3) Should the recovery rate include only operations & maintenance, or include capital improvements as well? Supplemental No. 2 Page22 QUESTIONS? THANK YOU! Supplemental No. 2 Page23 Supplemental No. 2 Page24 Sales Tax Ballot Measure Consideration Discussion •Identified Need •Best Option •Next Steps •Timeline Supplemental No. 2 Page25 Why are we considering a Sales Tax Measure? 8/05/20XX SOURCES 2022/23 REV 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Structural Fire Tax (includes PT from County)$ 7,000,000 $ 7,000,000 $ 7,140,000 $ 7,282,800 $ 7,428,456 $ 7,577,025 $ 7,728,566 $ 7,883,137 Reimbursement for Ladder Truck $ 1,100,000 $ 1,100,000 $ 1,100,000 $ 1,100,000 $ 1,100,000 $ 1,100,000 $ 1,100,000 $ 1,100,000 Prop A Fire Tax $ 2,200,000 $ 2,200,000 $ 2,200,000 $ 2,244,000 $ 2,288,880 $ 2,334,658 $ 2,381,351 $ 2,428,978 EMS Cost Recovery $ 2,400,000 $ 2,400,000 $ 2,400,000 $ 2,424,000 $ 2,448,240 $ 2,472,722 $ 2,497,450 $ 2,522,424 Misc Fees (Permits, Fireworks,etc.)/Interest $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 Vehicles Paid by General Fund $ 504,000 $ 504,000 $ 208,000 $ 235,000 $ 225,000 Total Revenue:$ 13,224,000 $ 13,224,000 $ 13,068,000 $ 13,070,800 $ 13,520,576 $ 13,504,405 $ 13,727,366 $ 14,179,539 USES 2022/23 REV 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Fire/EMS Cooperative Services Agreement $ 16,145,375 $ 17,198,285 $ 19,267,535 $ 20,852,398 $ 25,293,143 $ 26,535,791 $ 27,840,570 $ 29,216,299 Wittman Billing Services $ 385,000 $ 385,000 $ 385,000 $ 385,000 $ 473,550 $ 497,228 $ 522,089 $ 548,193 Federal Quality Assurance Fee $ 235,000 $ 235,000 $ 235,000 $ 235,000 $ 289,050 $ 303,503 $ 318,678 $ 334,612 Contingency Fund $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 61,500 $ 64,575 $ 67,804 $ 71,194 Other (admin fees,utilities, R/M bldgs,etc.)$ 242,500 $ 242,500 $ 249,775 $ 262,264 $ 322,584 $ 338,714 $ 355,649 $ 373,432 Capital Projects $ 530,000 $ 530,000 $ 293,000 $ 125,000 $ 179,000 $ 125,000 $ 125,001 $ 125,002 Capital Office Equipment $ 108,400 $ 108,400 Capital Vehicles $ 504,000 $ 504,000 $ 208,000 $ 235,000 $ 225,000 Total Expenditures:$ 18,200,275 $ 19,253,185 $ 20,688,310 $ 21,909,662 $ 26,853,828 $ 27,864,809 $ 29,229,791 $ 30,893,731 Surplus/(Deficit)-Transfer Needed $ (4,976,275)$ (6,029,185)$ (7,620,310)$ (8,838,862)$ (13,333,252)$ (14,360,404)$ (15,502,425)$ (16,714,192) Transfer in from the General Fund $ 4,600,000 $ 4,600,000 $ 5,300,000 $ 8,900,000 $ 13,500,000 $ 14,500,000 $ 15,500,000 $ 16,500,000 Fire Fund Balance @ FY End (Fund 230)$ 3,759,199 $ 2,706,289 $ 385,979 $ 447,117 $ 613,865 $ 753,461 $ 751,036 $ 536,844 *Adds Ops for 102 (keeping 71 operational)and excludes operation costs for Arena truck anticipated at $3.5M/year. 23% increase in ops costs for 102 applied to Wittman, FQAF, other and contingency Supplemental No. 2 Page26 Projected Impact to Forecast/Reserve Future Costs Approved from Reserve: -NS Park -$15M -Fire Station 33 Renovation $1.3M -Lupine Plaza $3.5M -Portola Community Center $700k -Traffic Op’s and Capacity $8M -El Paseo Mid-Block Crossing $450k -PD Link $4.95M Supplemental No. 2 Page27 Options Discussed to Cover Anticipated Shortfall 8/05/20XX OPTIONS/POTENTIAL FUNDING SOURCES ASSOCIATED INITIAL CHALLENGS ESTIMATED 1ST YEAR REVENUE GENERATION ADDITIONAL CHALLENGES MEETS CURRENT REVENUE NEEDS IDENTIFIED Increase to Prop A Fire Tax (Special) Requires 2/3rds approval of votes –ours does not sunset based on how it was approved. 70% failure rating in CA in 2022 If the current $60 rate was doubled, an increase would generate approximately $2.2M The burden is carried by property owners and revenue restricted to fire related services. NO Increase to Transient Occupancy Tax (General) Requires majority (50% +1) of registered voters. 88% approval rating in CA in 2022 If the current 11% rate was increased 1%, an increase would generate approximately $2.1M At 11% the City is currently in the middle of the rates charged throughout the Valley (9%-13.5%). NO Increase to Sales Tax (District Tax) General Requires majority (50% + 1) of registered voters. 88% approval rating in CA in 2022 A sales tax increase of 1% would generate $26.1M Sales tax ballot may be proposed by City Council, subject to County/City limit of 2% max. YES Create a Community Facilities District (CFD for City Services)* Typically involves new development owners to opt in prior to entitlement Could deter desired development A Services CFD with the remaining undeveloped properties may generate an additional $5M District typically formed when entitlements are issued. Funds are limited to project listed in district documents. NO Impose a Utility Users Tax (General)* Requires majority (50% + 1) of registered voters 68% failure rating in CA in 2022 UUT of 15% would generate approximately $10M Residents carry the burden at an est cost of $30/month.NO Supplemental No. 2 Page28 Next Steps •Conduct Public Opinion Research to gauge resident sentiment •Finalize Timetable for potential measure on November 5, 2024 •Initiate Stakeholder Outreach and Public Education •Conduct Surveys prior to final decision •Final round of Outreach and Public Education •Finalize Measure Language/Refer to Ballot •CDTFA Review of Resolution/Ordinance •Adopt Resolution at least 88 days prior to election •Conclude Public Education •Vote Conducted •November approval results: •County provides results December 5, 2024 •City Certifies Election December, 2024 (Potential Special Meeting) •Tax Collection in April, 2025 •First remittance received by July, 2025 Supplemental No. 2 Page29 Supplemental No. 2 Page30 Supplemental No. 2 Page31 Supplemental No. 2 Page32 Market Study with Streetsense Consulting, LLC for Desert Willow Golf Resort Supplemental Item 2B-1Supplemental No. 2 Page33 2023 City Council Goal – “Develop a strategy for the disposition and development of the remaining Desert Willow properties” Four (4) vacant parcels remain (approximately 58+ acres) Properties sales must comply with Surplus Land Act and SARDA requirements Market Study will help identify demand for desired uses and market potential Support from Economic Development Subcommittee Supplemental Item 2B-2Supplemental No. 2 Page34 Market assessment to analyze: -Retail -Hospitality and Short-Term -Rental (STR) c -Residential $68,000 contract that is reimbursable through property sales Receive a market report with findings on how demand and the absorption rate for each use Supplemental Item 2B-3Supplemental No. 2 Page35