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2019-03-11253 REGULAR MEETING CYPRESS CITY COUNCIL March 11, 2019 5:30 P.M. A regular meeting of the Cypress City Council was called to order at 5:30 p.m. by Mayor Berry in the Executive Board Room, 5275 Orange Avenue, Cypress, California. ROLL CALL Cypress City Council, also acting as the Ex -Officio Governing Board of Directors of the Cypress Recreation and Park District Mayor Stacy Berry Mayor Pro Tem Rob Johnson Council Member Paulo Morales Council Member Jon Peat Council Member Mariellen Yarc STAFF PRESENT City Manager Peter Grant City Attorney Anthony Taylor Director of Finance and Administrative Services Matt Burton Director of Community Development Doug Dancs Director of Recreation and Community Services Cameron Harding Assistant Director of Finance and Administrative Services Donna Mullally Recreation Supervisor Jeff Draper Recreation Supervisor Shelly Myers Recreation Supervisor Jenni Worsham Senior Management Analyst Jason Machado Senior Management Analyst Alisha Farnell City Clerk Denise Basham ORAL COMMUNICATIONS (Limited to 30 minutes — three minutes per speaker, unless extended by the City Council) None. WORKSHOP SESSION The City Manager thanked the Recreation and Community Services and Finance staffs for their work on the fee analysis. He stated this would be the last fee workshop with recommendations to the City Council coming in a few months. He indicated fees have not been updated in more than 10 years, the Cost Allocation Plan is complete, and staff will be developing fee recommendations for City Council approval. The City Manager spoke regarding the user fee impacts to the Recreation and Park District and the District's financial forecast. He stated staff recommendations would aide in assuring the financial sustainability of the Recreation and Park District. The City Manager reviewed District property tax revenues and the status of capital project funding. He stated approximately $8 million is available for capital projects with a need of $16 million within the next 10 years. He stated additional facility rehabilitation and additions could cost approximately $40 million and funding options are limited. The City Manager stated options to improve the financial condition include fee adjustments, partnerships, creating a recreation parcel tax, and issuing a park bond. He indicated the fee adjustments may be approved by the City Council and provide significant medium term benefit to the District and allow more time to determine permanent financial stability. The City Manager reviewed the District's current financial projection in which the District relies heavily (approximately 80 percent) on property taxes. 254 CITY COUNCIL MINUTES MARCH 11, 2019 The Director of Finance and Administrative Services stated recreation fees are more complicated than the previous analysis and have been categorized into three main areas. He stated the presentation would be a big -picture overview. The Director of Recreation and Community Services stated the three main fee areas include facility/field rentals, contract classes, and district programs. Council Member Peat asked about the new aquatics program agreement with the North Orange County Community College District (NOCCCD). The City Manager responded aquatics had been provided by the District and the fee would now be charged by the NOCCCD. The Director of Finance and Administrative Services stated the NOCCCD agreement would essentially be a fourth fee category. The Director of Finance and Administrative Services reviewed the 10 criteria for establishing fees and stated approximately 8 of the 10 are heavily considered when developing recommendations for Recreation fees. He stated full cost recovery is typically not realistic for recreation fees. The Director of Recreation and Community Services informed of revenue from facility rental fees funds operations, maintenance, and equipment replacement costs, and there are no legal restrictions on what can be charged. He stated the key fee recommendation criteria include market, facility quality and size, and type of customer renting facility and their willingness to pay. The Director of Recreation and Community Services indicated rental fees for the Community Center were compared with the City of Brea Community Center based on its capacity and quality. He stated peak rental rates, Friday through Sunday, and off-peak rental rates would be recommended, with lower rental rates for residents. He indicated no rental rate changes would be recommended for the Senior Center at this time because the rates are currently in-line with surrounding senior centers and the facility is in low demand. Mayor Pro Tem Johnson asked about primary rental events. The Director of Recreation and Community Services responded most rentals are weddings and birthday parties. Mayor Berry asked if resident rentals and non-resident rentals have been tracked. The Director of Recreation and Community Services responded in the affirmative. Mayor Berry asked if the recommended increase would deter facility rentals. The Director of Recreation and Community Services responded no, and stated the recommended rental rates are competitive with surrounding cities. Council Member Yarc asked if facility rental rates are hourly or daily. The Director of Recreation and Community Services responded facility rental rates are hourly. The City Manager clarified Community Center facility rentals must be a minimum of six hours. The Director of Finance and Administrative Services stated the Community Center Grand Ballroom is fee in the example presented. Mayor Pro Tem Johnson asked if rental fees include extras such as uniformed security for alcohol -serving events and tables and chair. The City Manager clarified that rental fees include set-up, tables, and chairs. 255 CITY COUNCIL MINUTES MARCH 11, 2019 Council Member Yarc asked about the decreased Sunday rental fee for the City of Brea. The Director of Recreation and Community Services responded the lower rental fee is likely due to low demand. Council Member Morales asked about Sunday rental demands. The Director of Recreation and Community Services stated Friday and Saturday are peak rentals and Sunday rental demand is higher than Monday through Thursday. Mayor Berry asked if a six -hour minimum rental is required of surrounding cities. The Director of Recreation and Community Services responded he is unsure, however there likely is some type of minimum hour requirement. Recreation Supervisor Myers commented that the majority of Saturday facility rentals are eight hours. Mayor Berry asked about the low demand of the Senior Center and if the facility is empty on the weekends. The Director of Recreation and Community Services responded no, and stated there are a few weekend programs. Council Member Yarc asked about the Senior Center rental fee. Recreation Supervisor Worsham indicated the Senior Center rental fee is $140 per hour with a six -hour minimum and a room capacity of 280 persons. The Director of Recreation and Community Services reviewed the facility and field rental current revenue, current costs, annual subsidy, and additional revenue recommended. He stated the fee recommendations would generate an additional $30,000 in revenues. The Director of Recreation and Community Services stated revenue from contract class fees includes pay for facility operations, maintenance and replacement, marketing, registration, and administrative costs. He stated the District receives approximately 35 percent of contract class fees, and contract instructor costs are not keeping pace with District costs such as rising administrative costs, minimum wage increases, and rising equipment costs. He indicated 34 percent of contract class participants are non- residents. Council Member Morales asked how contract class participants are tracked. The Director of Recreation and Community Services responded participant registration is handled by the District. Council Member Morales asked about contract class participation monitoring. The City Manager asked if instructors take cash payments at class time. Recreation Supervisor Worsham indicated instructors are given the class registration roster and unaccounted class participants have not been an issue of concern. The Director of Recreation and Community Services stated contractors set class pricing so other areas such as registration fee, facility replacement fee, an increase to the non- resident fee, credit card fee, and an increase to the refund processing fee are recommended for cost recovery. Council Member Morales clarified the breakdown would reflect resident versus non- resident fees. Council Member Yarc stated the credit card fee would be reflected. 3 256 CITY COUNCIL MINUTES MARCH 11, 2019 The City Manager stated the credit card processing fee is consistent with the policy adopted by the City Council. The Director of Finance and Administrative Services stated the contract class fee recommendations would increase revenues by approximately $100,000. The Director of Recreation and Community Services reviewed the District program fees that pay for program costs, facility operations, maintenance and replacement, marketing, registration, and administrative costs. He stated key criteria includes customer, supply and demand, and community benefit. He indicated 34 percent of District program participants are non-residents. The Director of Finance and Administrative Services stated nine program categories have been identified for a range of fee recommendations. The Director of Recreation and Community Services stated approximately 13,500 customers are served per year of which 43 percent are non-residents, with a revenue of $419,000. He indicated program costs are $993,000 annually with a $574,000 annual subsidy, which is a cost recovery rate of 42 percent. He stated the recommended cost recovery is 60 percent by establishing new fee ranges which allows flexibility in adjusting class costs and the ability to keep up with activity trends. The Director of Finance and Administrative Services indicated the fee adjustment recommendations would increase District program fees by approximately $200,000 and generate additional fees of approximately $65,000. Council Member Morales asked if the $200,000 increased revenues would reduce the annual subsidy to approximately $375,000. The Director of Finance and Administrative Services responded in the affirmative, and clarified the other $65,000 in revenues would further reduce the subsidy. The Director of Recreation and Community Services spoke regarding Senior Center fees and stated the facility has approximately 3,000 users annually and its net operating costs exceed $600,000 annually. He indicated the majority of Senior Center programs are county -funded and stipulate no charge for the classes and activities. He stated the future goal would be the establishment of a Senior Center membership program. Mayor Berry spoke regarding seniors on fixed incomes and her hesitancy to charge fees for fixed-rate membership. Council Member Yarc spoke in support of charging a non-resident fee. The Director of Recreation and Community Services stated a resident and non-resident membership fee could be implemented, and a survey of surrounding communities would be conducted. Council Member Yarc spoke in support of higher fees and no membership fees for Cypress residents. Council Member Morales recommended a zero membership fee for residents. Mayor Pro Tem Johnson concurred with Council Member Morales, and spoke regarding Advisory Committee on Use of Athletic Facilities (ACUAF) participant financial hardship cases. Council Member Yarc asked for clarification on membership benefits. The Director of Recreation and Community Services responded membership would likely be an annual fee. Mayor Berry asked about membership restrictions. 257 CITY COUNCIL MINUTES MARCH 11, 2019 The Director of Recreation and Community Services indicated membership restrictions would be consistent with surrounding cities. The Director of Finance and Administrative Services clarified a senior center membership program was not part of the fee study. The City Manager stated a range of membership options would be presented to the City Council and senior center membership trends are increasing. Council Member Yarc suggested a nominal membership fee for residents and one that is significantly higher for non-residents. The Director of Finance and Administrative Services stated the next steps in the fee recommendation process include consensus of the City Council and presentation to the City Commissions and ACUAF. Council Member Yarc asked when individual fee recommendations should be made. The City Manager responded City Council would meet individually with staff to refine the consensus. Mayor Pro Tem Johnson asked about the increased fee recommendation for the 5K/10K Run and 5K Walk registration fees. The Director of Finance and Administrative Services responded the 5K/10K Run and 5K Walk registration fees listed were outdated and had been updated after the start of the fee study. Recreation Supervisor Worsham clarified 5K Walk registration is $30, 5K/10K Run registration is $35, and late registration is $45. She indicated registration fees are in-line with the City of Seal Beach, and preregistration includes a t -shirt and participation medals. Mayor Pro Tem Johnson spoke regarding a decline in some class registrations and if the Boys and Girls Club of Cypress could offer the classes. Council Member Yarc asked about District provided fees and the recovery of costs. The City Manager responded the discrepancy is a function of the fees unchanged for approximately 10 to 12 years and current fees will evolve with City finances. Mayor Pro Tem Johnson asked if the recommended fee would be implemented next fiscal year. The City Manager responded most fees would be implemented next fiscal year, and the City Council would recommend their implementation. The Director of Finance and Administrative Services stated that at least three to six months is necessary before the proposed fees go into effect due to advertising in the quarterly brochure. It was the consensus of the City Council to proceed with the staff recommendation. CLOSED SESSION The City Attorney reported that the City Council would be meeting in Closed Session regarding Conference with Real Property Negotiators, pursuant to Government Code Section 54956.8, Real Property Identified by APN Numbers 241-091-22 through 26, Inclusive, 13.329 Acres Located at the Northwest Corner of Katella Avenue and Winners Circle, Parties Negotiating with: Lewis Land Developers, LLC and Province Group, LLC, Blackridge Group, and Shea Properties, Negotiating Party: City Manager, Under Negotiation: Price and Terms of Payment. 5 258 CITY COUNCIL MINUTES MARCH 11, 2019 The City Attorney reported that the City Council would be meeting in Closed Session regarding Conference with Labor Negotiator, pursuant to Government Code Section 54957.6, Agency Negotiators: City Manager and Director of Finance and Administrative Services, Employee Groups: Cypress Police Officers' Association. The City Attorney reported that the City Council would be meeting in Closed Session regarding Conference with Legal Counsel — Existing Litigation, pursuant to Government Code Section 54956.9(a) & (d)(1), Orange County Catholic Worker et al. v. Orange County, et al., Case No. SA CV 18 -0155 -DOC (JDEx), U.S. District Court, Central District. The City Attorney reported that the City Council would be meeting in Closed Session regarding Public Employee Performance Evaluation, pursuant to Government Code Section 54957, Title: City Manager. At 6:30 p.m., the Mayor recessed the meeting. At 9:07 p.m., the Mayor reconvened the meeting. Council Member Morales left the meeting at 8:15 p.m. REPORT OF CLOSED SESSION Mayor Berry asked for the report of the Closed Session Agenda items discussed earlier in the evening. The City Attorney reported that the City Council met in Closed Session regarding Conference with Real Property Negotiators, pursuant to Government Code Section 54956.8, Real Property Identified by APN Numbers 241-091-22 through 26, Inclusive, 13.329 Acres Located at the Northwest Corner of Katella Avenue and Winners Circle, Parties Negotiating with: Lewis Land Developers, LLC and Province Group, LLC, Blackridge Group, and Shea Properties, Negotiating Party: City Manager, Under Negotiation: Price and Terms of Payment. He stated that no reportable action was taken. The City Attorney reported that the City Council met in Closed Session regarding Conference with Labor Negotiator, pursuant to Government Code Section 54957.6, Agency Negotiators: City Manager and Director of Finance and Administrative Services, Employee Groups: Cypress Police Officers' Association. He stated that no reportable action was taken. The City Attorney reported that the City Council met in Closed Session regarding Conference with Legal Counsel — Existing Litigation, pursuant to Government Code Section 54956.9(a) & (d)(1), Orange County Catholic Worker et al. v. Orange County, et al., Case No. SA CV 18 -0155 -DOC (JDEx), U.S. District Court, Central District. He stated that no reportable action was taken. The City Attorney reported that the City Council met in Closed Session regarding Public Employee Performance Evaluation, pursuant to Government Code Section 54957, Title: City Manager. He stated that no reportable action was taken. No other action was taken in Closed Session, nor was any solicited. ADJOURNMENT Mayor Berry adjourned the meeting at 9:07 p.m. to an adjourned Regular Meeting, to be held on Monday, March 25, 2019, beginning at 5:30 p.m. in the Executive Board Room. {CA - ATTEST: CITY CLERK OF THE CITY OF CYPRESS 6 MAYOR OF HE CITY CYPRESS