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HomeMy WebLinkAbout05/16/2024 (3)Town of Los Altos Hills City Council Special Meeting Minutes- Study Session Thursday, May 16, 2024 at 1:00 PM Council Chambers, 26379 Fremont Road, Los Altos Hills, California Present: Mayor Stanley Q. Mok, Vice Mayor Lisa Schmidt, Council Member Linda Swan, Council Member Kavita Tankha Absent: Council Member George Tyson Staff: City Manager Peter Pirnejad, City Attorney Steve Mattas, City Clerk Arika Birdsong-Miller, Assistant to the City Manager Cody Einfalt, Community Development Director Bradley Evanson, Assistant Community Development Director Jay Bradford, and Public Works Director WooJae Kim 1. CALL TO ORDER (1:00 P.M.) Mayor Mok called the meeting to order at 1:00 P.M. 2. ROLL CALL Mayor Stanley Q. Mok, Vice Mayor Lisa Schmidt, Council Member Linda Swan, and Council Member Kavita Tankha were present. Council Member George Tyson was absent. 3. PUBLIC COMMENT (Public Comment is Limited to Items which are the subject of the Special Meeting) Mayor Mok made a motion to extend the time allowed for Public Comments from the current limit to 4 minutes. Vice Mayor Schmidt seconded the motion. Approved, Vote 4-0. AYES: Mok, Schmidt, Swan, Tankha NOES: None ABSTAIN: None RECUSE: None ABSENT: Tyson Public Comments will be noted after the conclusion of the Study Session presentation. 4. STUDY SESSION A. Study Session to Discuss the Potential Formation of a Charter and Potential Ballot Measure to Approve the Charter and Consider the Adoption of a Real Property Tax Transfer Tax for the November 2024 Ballot. City Manager Peter Pirnejad detailed that in recent years, the Town of Los Altos Hills has become aware of the potential of forming a Town Charter for the preservation of local land use control. In addition, the Town has seen an increase in residential burglaries which the City Council has addressed, in part, by approving significant additional funding for public safety. In addition, the Town has continued to prioritize the need to invest and enhance emergency preparedness efforts to prepare for and respond to natural disasters such as wildfires and earthquakes. In order to support these safety and emergency preparedness priorities, the Town would need to consider a new revenue stream that could be used to support public safety measures and enhance community disaster preparedness and resilience. In reviewing the options for a revenue measure the staff considered a number of options. Considering the Town has limited revenue sources based on the function of being an exclusively residential town with very little commercial activity that is subject to sales tax and given that the revenue that would be needed would be ongoing and not one-time, staff focused on tax revenue options that relate to aspects of property ownership. The tax measure that would affect the least number of people while likely still generating the necessary annual revenue is a form of Real Property Transfer Tax (RPTT). The RPTT could be structured so that it would only be collected upon sale of real property and would not apply to the transfer of real property through a trust when the property is transferred to a beneficiary of the trust. The process for approval of both a Town charter and a RPTT will require a series of public meetings and hearings to consider the proposed ballot measures, a decision by the City Council to place the ballot measure on either November 2024 or November 2026 general election ballots and ultimately voter approval for both items. There are some urgencies as well as some risks in placing the charter and RPTT on the 2024 ballot. With regards to urgencies, the Town is currently supporting the additional public safety costs through partial use of reserves and that is not likely to be sustainable in the long term. In addition, as the City Council is aware the state continues to enact housing laws that preempt local land use authority of general law cities such as the Town. While the state has attempted to apply some of those new housing laws to charter cities, a recent trial court decision in Southern California determined that SB9 interferes with local land use authority that charter cities have as it relates to local land use authority.1 This trial court is not binding case law authority throughout California and may, in fact, be appealed. On the other hand, given the limited time, the Town has to conduct a poll to better understand the level of public support for both a proposed charter and a proposed RPTT, a step that most often occurs when cities and Town propose ballot measures, there is the risk that the proposed ballot measures may not be successful or as successful as they may be if there was a longer period of time for community engagement and discussion on the proposed measures. Also, if the Town were to proceed with ballot measures this year, the ballot measure approving the formation of a charter and approval of charter city status would likely be narrowly tailored to the issues of local land use authority and authority to propose for voter approval a RPTT. To that end, the Town could propose a narrowly tailored charter at this time and then consider further modifications at a subsequent election. The purpose of this study session in limited to introducing these concepts to the City Council and the public and then seeking direction from the Council as to whether the Council desires to further consider the matters. There will be no final action at this study session unless the Council provides direction to stop any further consideration of either the charter city concept or the RPTT. Under current California law, only a charter city may propose and adopt with voter approval a RPTT. In addition, consideration of general tax such as a RPTT must occur at the same time as Council elections (i.e November 2024 or November 2026, except in very limited circumstances of financial crisis which likely does not apply to the current Town situation. Based on the last two years of public safety spending in response to the unprecedented and disturbing trend of residential burglaries and the anticipated sheriff’s contract increases, the Town has and is expecting to experience well over a million dollars of additional public safety spending each year. These additional fiscal impacts include the expense for additional overtime sheriff deputies, higher calls for services in response to unprecedented calls for service, additional private security spending, automatic license plate readers, and consulting efforts to study and support council priorities in addressing this troubling trend. In the future, the Town may want to consider additional tech, communication, and related safety enhancements that would prove to protect the Town further. In discussions with the Council during the last goal setting session in January 2024, disaster preparedness and response has been stressed. Given the fire-prone characteristics of the Town and the potential for earthquakes, the council has prioritized the need for a more robust mass communication tool, emergency evacuation and preparedness planning tools, and more focused staff attention on both preparation and response to a Town-wide emergency. Additional funding would be used for both additional staff, vendors, solutions, and equipment that would support this priority as well as leveraging both the Sheriff and the County Fire District. Given the magnitude of the expense the Town has been and is expecting to continue to need to use General Fund reserves to cover the additional financial burden associated with public safety and disaster preparedness and response. Although the Town has a robust General Fund reserve the long-term viability of using one-time savings for continuous and ongoing expenses is not conducive. It is just a matter of time before the Town would need to pursue additional revenue measure(s) or approve cuts to city services. Under normal circumstances the formation of a Charter and new RPTT would take well over a year before placing the measures on the ballot. In that time the staff would pursue polling, engage the community, conduct multiple community workshops and public hearings as well as possibly commission a more comprehensive analysis to consider all the options. However, given the perceived urgency for the formation of the charter and the significant and lasting fiscal implications of additional public safety and disaster preparedness and response, staff would recommend the council consider a 2024 Ballot measure. It should be noted that a ballot measure in 2024 under these circumstances is not ideal and could come with inherent risks and uncertainties. For that reason, if the council chooses to pursue the Charter and PRTT in for the November 2024 general election, the timeline would be extremely aggressive, and the community would need to be supportive of such action. On the pros side a 2024 ballot would be faster, cheaper and have the potential to protect the Town local land use control as well as introduce a new funding source at a time when we need it the most. On the other hand, targeting 2024 would mean that we do not have the polling data, necessary community engagement, and needed outreach to gain the support that would normally be done in advance of a charter and RPTT ballot measure. Mr. Pirnejad explained that staff is recommending that the Town Council and community consider proposing a real property transfer tax and transitioning to a Charter City status as prudent courses of action to address these pressing needs. However, we would suggest that at any point between now and the filing deadline of August 9th if the council and staff feel that the residents would be better served pushing the effort to 2026 we should reserve the option to do so. GENERAL LAW VS. CHARTER CITY Currently, Los Altos Hills is what is known as a General Law city. A General Law City has the authority to act locally but its acts must be consistent with the California Constitution, state statutes, and state administrative regulations. A Charter City adopts a Charter, which is a document that outlines how a city is governed. A Charter City has the additional authority to adopt laws regarding "municipal affairs" that are different from state statutes, while still being consistent with the US and California Constitutions. Municipal affairs may include the form of city government, elections, some aspects of zoning and land use, the process of contracting for public works, and the scope of authority related to taxes and assessments. A city may only become a Charter City with voter approval. In our area, local charter cities include Mountain View, Palo Alto, Redwood City, San Mateo, Santa Clara, Sunnyvale, Albany, Emeryville, Berkeley, Richmond, Oakland, Alameda, Piedmont, San Francisco, San Leandro, and San Rafael. WHY A CHARTER CITY The City of Los Altos Hills was incorporated as a general law city in 1956 by residents seeking the right to manage local affairs. Since then, the authority of general law cities over local affairs has diminished. Furthermore, the State has continually added mandates for cities that require local resources to address State concerns, increased its control over local matters, and redirected much-needed local revenue for its own purposes. Changes in State law have limited the ability of Los Altos Hills to decide how to make local land use decisions. The power of home rule, granted by the California Constitution, makes available to charter cities a variety of tools to use to construct local policy and address local concerns. The voters of each charter city get to decide which tools to put in their toolbox. With this Charter, Los Altos Hills will reclaim more local autonomy and expand the economic and fiscal independence of our City government to promote the health, safety, and welfare of all its residents. FREQUENTLY ASKED QUESTIONS ABOUT CHARTER CITIES AND RPPT Charter City formation and RPTT are not uncommon among cities to take steps to protect local rule and secure a funding source that does not impact property owners until they sell their homes. As stated earlier there are a number of cities in the Bay Area and a larger number statewide that have formed charters and passed RPPTs. Some of the most recent include El Cerrito formed in early 2019 and St. Helena that is scheduled for the ballot in 2024. 1. What is a Charter City? A Charter City adopts a Charter, which is a document that outlines how a city is governed. Becoming a charter city allows voters to determine how their city government is organized and, with respect to municipal affairs, enact legislation different than that adopted by the state. 2. Why is Los Altos Hills considering becoming a charter city? The Town of Los Altos Hills was incorporated as a general law city in 1956 by residents seeking the right to manage local affairs. Since then, the authority of general law cities over local affairs has diminished. Furthermore, the State has continually added mandates for cities that require local resources to address State concerns, increased its control over local matters, and redirected much-needed local revenue and land use authority for its own purposes. Changes in State law have limited the ability of Los Altos Hills to decide how to use local dollars for local needs as well as control local land use decisions. The power of home rule, granted by the California Constitution, makes available to charter cities a variety of tools to use to construct local policy and address local concerns. The voters of each charter city get to decide which tools to put in their tool box. With this Charter, Los Altos Hills will reclaim more local autonomy and expand the economic and fiscal independence of our City government to promote the health, safety, and welfare of all its residents. 3.How will Los Altos Hills become a charter city? To become a charter city, a city must adopt a charter. There are two ways to adopt a charter: The city’s voters elect a charter commission.21 The commission has the responsibility of drafting and debating the charter. The governing board of the city, on its own motion, drafts the charter.22 In either case, the charter is not adopted by the city until it is ratified by a majority vote of the city's voters.23 League of California Cities. http://www.cacities.org/Resources-Documents/Resources- Section/Charter-Cities/Charter-Cities-A-Quick-Summary-for-the-Press-and-R. 21Cal. Gov’t Code § 34451. 22Cal. Gov’t Code § 34458. 23Cal. Gov’t Code §§ 34457, 34462. 4.When will residents vote on this measure? On November 3, 2024. The City Council will hold public hearings on the Charter at the June 20th and July 18th Council meetings and file the ballot measure before the August 9th deadline for the November 3rd 2024, ballot. 5.What is a Real Property Transfer Tax or RPPT? A RPTT is a tax that is only paid upon the sale of property and is traditionally split between the buyer and seller. Charter cities may adopt—with voter approval—a Real Property Transfer Tax at any rate.2 The revenue could be used for: the primary and intended use of the funds is for public safety and disaster preparedness / response. As a general and not a special tax the Town is not obligated to use the money for that sole purpose in perpetuity if council and community priorities change in the future. 6.Are there other charter cities in the Bay Area? In our area, local charter cities include Mountain View, Palo Alto, Redwood City, San Mateo, Santa Clara, and Sunnyvale. In the greater Bay Area they include Albany, Emeryville, Berkeley, Richmond, Oakland, Alameda, Piedmont, San Francisco, San Leandro, and San Rafael. 7. As a homeowner, will I have to pay the RPTT every year? No. The RPTT is a one-time tax paid when a property is sold or otherwise transferred in return for a payment to the owner. It’s not an ongoing, annual tax. If you own a home and don’t sell it, you won’t pay the tax. If you sell your home, the tax measure allows you and the buyer to decide who should pay the tax. 8. Will I have to pay the Real Property Transfer Tax if I gift my home to a family member, place it in a Family Trust, or leave it to my children as an inheritance? A RPTT can be structured to plainly state that the tax is calculated based on the amount paid as part of a sale or other transfer. Depending on how the RPTT is structured if your home is transferred without any payment by the person or trust receiving it, there is no tax to pay. 9. What can the revenue be used for? Why is it not guaranteed for specific services or improvements? There are two ways to structure the RPTT, general or special. A special tax, which requires a majority vote of the Council to place the measure on the ballot and a 2/3 voter approval can only be used for the purposes specified in the tax measure. A general tax, which takes a higher percentage of council to place the measure on the ballot but only requires a simple majority of voters to approve can be used for general purposes as determined by the City Council. Like most of the City’s revenues, funds from the proposed RPTT, are intended to be general in nature and can be used for all the services the City provides. Each year, during the public budget process, the City Council adopts a budget based on the priorities of the community, which regularly change. As part of the City’s general funds, RPTT revenues can be allocated based on changing needs and priorities. The purpose that we see now and the foreseeable future is public safety and disaster preparedness and response. 10.Will we get any additional or increased services if the RPTT passes? Yes. Additional funds will be available for increased public safety and disaster preparedness and response and potentially other council priorities in amounts determined annually and publicly by the City Council to reflect community priorities and needs. 11.Will the Real Property Transfer Tax directly impact property values? Although the RPTT will affect the total cost of a new property purchase in Los Altos Hills it is unclear if this one tax will affect property values. There are many factors at play that affect property values and costs including realtor commissions, mortgage rates, and other costs that affect ultimate home affordability. What is clear, however, is that the revenue generated from the RPTT will be invested in public safety, disaster preparedness, response, and other Town amenities that enhance the overall quality of life in the community, it could bolster property values over the long term. 12.Will the Real Property Transfer Tax negatively impact the proceeds from a sale of a home in Los Altos Hills? Real Property Transfer Tax measured can be structured to allow buyers and sellers of property to decide who will pay the tax. Traditionally, it is split between the buyer and the seller. 13.Will being a Charter City increase the chances the City will go bankrupt? There is no documented causal connection between charter city status and bankruptcy. There are very few instances of California cities filing for bankruptcy. Both charter cities and general law cities have used bankruptcy proceedings. The proposed Los Altos Hills Charter authorizes the City to use additional tools to raise revenue for important services but makes no changes to existing local law that would alter how the City spends its funds. The City is audited annually by an independent auditor and has a Financial and Investment Committee made up of volunteers that looks at the City’s budget, audits, and financial policies. In 2014, voters in the City of Emeryville, El Cerrito and most recently St. Helena (in the process) similarly approved a limited charter that expanded their ability to raise revenue, including a RPTT. The proposed Los Altos Hills Charter leaves in place local law, other than to give the City more options for raising revenue and authorizing a RPTT. TIMELINE AND NEXT STEPS In order to post the RPPT and charter on the 2024 ballot we need to file our ballot language by August 9, 2024. In that time, we need two public hearings spaced 30 days apart. The tentative Los Altos Hills – Charter Adoption Timeline Pursuant to Gov. Code Section 34458 • May 29, 2024 – Deadline to provide notice of first of two public hearings o Notice of hearing must be provided at least 21 days before hearing by (1) posting a notice in three public places within the City and (2) Publishing a notice in a newspaper published once a week or oftener designated by city council and circulated throughout the city. Notice must be published twice once a week or more, with at least five days intervening between respective publication dates. (Gov. Code Sections 34458(b), 6066.) • June 19, 2024 – Last possible date to hold first of two public hearings o The two public hearings must be held at least 30 days apart (Gov. Code Section 34458(b).) • June 28, 2024 – Deadline to provide notice of second public hearing o Notice of hearing must be provided at least 21 days before hearing by (1) posting a notice in three public places within the City and (2) Publishing a notice in a newspaper published once a week or oftener designated by city council and circulated throughout the city. Notice must be published twice once a week or more, with at least five days intervening between respective publication dates. (Gov. Code Sections 34458(b), 6066.) • July 19, 2024 -– Last possible date to hold second public hearing o Second public hearing must be held at least 30 days after the first public hearing and at least 21 days before city council votes on whether to submit a proposal to adopt the charter to voters (Gov. Code Section 34458(b).) • August 9, 2024 – Deadline for city council to vote on whether to submit a proposal to adopt the charter to voters o City council vote must occur at least 88 days before the statewide general election (Gov. Code Section 34458(a).) • November 5, 2024 – Statewide general election - Voters vote on whether to adopt the charter (Gov. Code Section 34458(a).) Council Member Swan asked when the proposed Charter has to be completed to go to the ballot to ensure that certain provisions including being able to have horses in the Town of Los Altos Hills. City Attorney Mattas replied that the last day is August 9, 2024. Council Member Tankha would like the Finance and Investment Committee to look over the budget over the last few years to see if we can find cost savings before we increase taxes for residents. Council Member Tankha further stated that she would like more time to educate residents about the proposal because only 6 residents are in attendance. Vice Mayor Schmidt questioned what tools the RPTT will have on land use protections. Vice Mayor Schmidt questioned how much more the consultants would cost if we moved this measure to the 2026 ballot. Mayor Mok questioned if we could separate the RPTT from the Charter City. City Manager Pirnejad said yes, we can separate the two. Public Comment: 1. Allan Epstein, Los Altos Hills, unclear if this action will do anything to help with SB-9. Mr. Epstein stated that this issue has not been presented to the Finance and Investment Committee. He further stated that we are in the middle of completing the Town’s budget and doesn’t think now is the right time to present this item. Mr. Epstein is not in favor of this item at this time. 2. Carol Gottlieb, Los Altos Hills, wanted to see a revenue chart in the packet to support this item. Ms. Gottlieb stated that she is in favor of the City Charter, but is against the additional property tax. 3. Duffy Price, Los Altos Hills, stated that she hopes the state will stop overreaching and trying to control what is best for individual Towns. She explained that we can use the Home Rule Laws if we become a Charter City. Mrs. Price would like to see the Charter City and the RPTT separated. 4. Rajiv Bhateja, Los Altos Hills, presented a PowerPoint presentation on his budget analysis. Mr. Bhateja stated that the Public Safety cost only increased 4% when the Administration increased 41%. 5.Erica Imeri, Los Altos Hills, is in agreement with the comments and statements made by Rajiv Bhateja. Ms. Imeri would like to pause on voting to see more research before a decision is made. Council Member Swan made a motion to approve proceeding with the poll for Charter City and RPTT research with the items being separated on the ballot. Mayor Mok seconded the motion. Motion failed, Vote 2-2. AYES: Mok and Swan NOES: Schmidt and Tankha ABSENT: Tyson ABSTAIN: None The meeting adjourned at 3:34 PM. Respectfully submitted, Arika Birdsong-Miller