City Council - Regular Meeting

so Thank you. Thank you.

Good afternoon, this is June 16th, 2026, regular meeting of the Santa Barbara City Council. Would you please join us in the Pledge of Allegiance?

I pledge allegiance to the flag of the United States of America, to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.

Okay, Madam Clerk, would you call the roll, please?

Certainly. Council Member Friedman? Here. Council Member Santamaria, not yet present. Council Member Gutierrez? Present. Mayor Ross? Here. Mayor Pro Tempston? Here. Council Member Harmon, not yet present. And Council Member Jordan?

Here. All right, very good. Madam Administrator, are there changes to the agenda?

Just consistent with the past few weeks, Mayor, for the consent calendar, we will change pulled consent calendar items off. They will come before general public comment. All right.

Thank you. Very good. Madam Clerk, on the consent calendar, you have some items to read.

I do, Mr. Mayor. Item 2, an ordinance extending the transient occupancy tax, TOT, monthly remittance to the Director of Finance from 10 days to 15 days, ordinance adoption. Recommendation of Council adopt by reading of title only. An ordinance of the Council of the City of Santa Barbara amending the Santa Barbara Municipal Code Section 4.08070 by extending the transient occupancy tax, TOT, monthly remittance to the Director of Finance from 10 days to 15 days after the close of the calendar month. Item three, introduction of an ordinance approving a lease agreement with the United States Department of Commerce, National Oceanic and Atmospheric Administration at the airport ordinance introduction agreement. Recommendation that council introduce and subsequently adopt by reading of title only an ordinance at the council of the city of Santa Barbara approving and authorizing the airport director to execute a lease agreement with the United States Department of Commerce, National Oceanic and Atmospheric Administration commencing upon the effective date of the enabling ordinance. Item four, introduction of an ordinance authorizing utility easement to Southern California Edison for the installation of electric vehicle charging facilities at the Harbor Main parking lot At 401 Shoreline Drive, ordinance introduction, recommendation that council introduce and subsequently adopt by reading of title only. An ordinance of the Council of the City of Santa Barbara approving and authorizing the Public Works Director to execute a public utility easement deed to Southern California Edison on City of Santa Barbara property located at the Harbor Main parking lot. Item five, intent to levy parking and business improvement area assessment rates. An annual assessment report for fiscal year 2027 resolution. Recommendation of the Council, A, adopt by reading of title only a resolution of the Council of the City of Santa Barbara declaring Council's intention to levy parking and business improvement area assessment rates for fiscal year 2027 at a public hearing to be held on June 30th, 2026 at 2 p.m. Item 6, Gibraltar Reservoir Caretakers Residence Rehabilitation Project Resolution Agreement. Recommendation that Council C adopt by reading of title only a resolution of the Council of the City of Santa Barbara amending resolution number 25066, adopting the budget for fiscal year 2026 to appropriate 1,302,672 for the Gibraltar Reservoir Caretakers Residence Rehabilitation Project. And that's all, Mr. Mayor.

All right, thank you very much. Are there any items that anyone from council needs to pull off for separate vote or discussion? I have no public comments. Speaker slips on a particular item for consent calendar. Are there any comments online for that?

There are no raised hands, Mr. Mayor.

Very good. I will entertain a motion on the consent calendar then, please. So moved. Moved by Friedman. Second. Second by Sneddon. May we have the vote, please? And do you have to do something with Ms. Harmon in terms of, oh, actually.

Yes, before we vote, I'm just going to retake attendance in the system.

Okay, very good.

And before we do that, I would say this is items one through 14. I have to open a consent public hearing on item 15, so.

And what's showing here is just attendance. Sorry.

We'll do that one more time.

We're still missing Ms. Harmon. One moment. We'll do attendance real quick. Hold this.

Yeah, the machine age is a real time saver. All right, very good. That's the attendance. And we have a motion and a second on the floor for items 1 through 14 of the consent calendar.

Correct. This is a motion by Council Member Friedman, seconded by Mayor Brett Homestead. As stated, go ahead and vote, please.

Thank you. Passes five to two with Ms. Santa Maria abstaining and Ms. Harmon not present. Okay, I'll open the consent public hearing on item 15. Would you read that into the record, please?

Yes. Item 15, urban water management plan and water storage contingency plan, public hearing and adoption.

Thank you. Are there any council members who wish to make a comment on item 15? If not, I will entertain a motion for the passage of that.

I'll move item 15.

Moved by Friedman. Second. Second by Harmon. Harmon said. One of these people.

Do we open a public comment?

Very good. And there's no online public comment.

There's no public comment on this. I'm sorry.

Thank you for asking. And this is for item 15. We have a motion by Council Member Friedman, seconded by Mayor Brutensen. For item 15, please go ahead and vote.

Passes 6 to 1, Harmon not present. Thank you. Okay, with that we will move to, there are no poll consent items then. We will close the consent calendar and close the hearing for item 15 and move on to public comment. General public comment is three minutes at the dais for any item that is not on today's agenda but within the purview of this body. And we'll start out with Mark Redman.

Hey, you honorable mayor and all you hardworking council members, Eric, Wendy, Oscar, Kristen, Megan's hardworking.

She probably got caught in traffic.

Mike, I am going to be Spider-Man at the Solstice Parade come next Saturday in four days. Right there at Ortega Street and Santa Barbara all the way to Alameda Park. Have a good time. I'll be right in front of those ostrich feather ladies called Lobo. He dances. Teresa canute. See, she says, Mark, don't go in front of us on roller skates. I said, I'll be on Elvis shoes this year and I won't trip into your dancers.

Like one year, one of them got in front of me.

Okay. So I am an honest person and I'll do everything in my being to work hard to be the people's mayor. I'm running for mayor. Megan knows that. Hi Megan. And, uh, we will have a Midwestern Pope Leo the 14th congratulate me. He's Catholic too. And, uh, I'm working hard cause these college kids said, don't give it up and run for Megan's seat cause she's termed out. And that's my district downtown Santa Barbara, but I am going to do it and give it a college try. Cause they put me on the side of a bus this month, all of June and it's ears on Santa Barbara. You can't have political, but I do a podcast, get kids off of drugs. Excessive drinking and I go to the meetings and I tell him don't be like my nephew died 25 of an overdose in San Francisco And then my sister-in-law screams on the phone. He's dead. I said a car wreck No, it was at a party where he took a pill one pill kills and now everybody knows not only on my podcast but on TV and radio one pill kills and that's drug world org And Nancy Reagan was right. Don't do drugs. Anyway, so I also have a song in this next podcast of mine, 60. Late night down on State Street, people worried every day talking about the future and the price we have to pay gas. That war's got to end and work out agreement with Iran. There's a man with a handshake that's made. Laughter in my eyes. I'm here for everybody. No more divide. I'll listen to the workers and the businessmen alike. Independent voices, red and blue, independence, whatever. I want to bring everybody together. I'm tired of the fighting. I'm tired of what Trump's done to our nation over the last eight years, tore it apart. I like the Republican policies. I can't stand the man. Don't vote for him anymore. He wants to change the constitution. It's not happening. Okay. So I got a lot of drive. I've got the old school drive. I'll fight for this city and keep the dream alive. Santa barbarians are holding out for a man or a woman to fill the morning light till the evening sets. She or he has got to stand for every side, Republican, Democrat, unify. I am going to be the spirit of the city. by God.

Thank you. Steven Meade.

Hi guys. Did you get my emails? Everybody coming? Show of hands. You know where the, yeah, okay. So you know where the parade is. Hey, thanks for everything that you do. Thanks for funding the thing to begin with. Thank you for keeping me honest and emailing me first. I'm talking about solstice, of course. My name is Steven Meade. I'm one of the advisory board members on the staff. It's a lot of fun. Always has been, 52 years this year. And we couldn't do it without you. So thank you again for all of your participation. And we still have a costume for you if you want one as well. Solstice is a little bit of a force, you know that? Because I've been looking at all the media that comes from San Francisco, San Diego, New York. Everywhere seems to be talking about solstice. And Santa Barbara gets mentioned quite a bit because it is unique. And that unique moment that we bring, we celebrate across the world. But who has a parade for it? We do. That's it. That's how unique it is. And it's something that puts a smile on everybody's face for at least three days and doesn't cost you anything. So that kind of works with a lot of the budgets that we have today, don't you think? Hotels full. A lot of the good press. That social media, very robust. We can take a message from Carpinteria. They had an idea about 40 years ago. And it was to put on a little bake sale for people called the Avocado Festival. grown 40 years into an economic impact that's really easy to see. The problem with solstice is maybe it's not so easy to see because we're in peak season, and we're right here in the middle of Dad's grads and Fourth of July. Well, if we didn't do it, would Santa Barbara be as cool as it is today? Not a chance. So I thank you again for all that you do. We'll see you on Saturday, noontime, and I'll buy it, Jills. Okay, take care. Thanks. Karina Ballantyne.

Hello, good afternoon. My name is Karina Ballantyne. I'm a Mesa resident and a voter and a mom, so I'm a regular at many of the city parks. And I've been compelled to attend here today to let you know that there is magic happening at one of our parks. It is Plaza Vera Cruz, and it's with the Santa Barbara Trapeze Co. This is worth highlighting. Each time I'm there, I notice people of all ages and different backgrounds collecting and connecting safely off screens, off e-bikes, happily brought together by the Trapeze Co. I've met a front-flipping grandma, a young man who found his love of trapeze while battling brain cancer through their work in partnership with the Teddy Bear Cancer Foundation, and witnessed many teenage boys socializing there independent of the class time, making it a safe third space in our community. The Trapeze Co is a business that is also a conduit for the productive, mutually beneficial use of Plaza Veracruz. And I've recently come to learn that their lease is not being renewed next year by Parks and Rec. I don't know why, so I'm here to help find some answers. And so why this park though? Well, one of the owners told me they're looking into other options for their business, but none would be as easily accessible, especially to the scholarship campers and flyers, of which there are many. I'll also note that many weekend attendees travel from LA or San Luis Obispo to attend classes. Trapezco is a unique draw of downtown Santa Barbara that brings in tourists and delights the passerbys. It's also a part of what makes downtown Santa Barbara cool and unique, kind of like solstice. So how can we keep this awesome community strong in Plaza Veracruz? And what can the raving fans like myself do to restore the symbiosis between the city of Santa Barbara and a trapeze co? And that's what I would like some help with. Thank you all.

Thank you. Michael Hernandez.

Good afternoon, Mayor and Council Members. My name is Michael Hernandez. I am the South Coast Youth Safety Program Manager. I want to take a moment and thank City Council, City Staff, and all our community partners that are attending our South Coast Youth Safety Partnership Youth Summit May 20th. The Youth Summit brought together young people from across Santa Barbara, Goleta, Carpinteria, with local leaders, educators, service providers, law enforcement, and community organizations. What made this event unique, it flipped the script. From the traditional format, instead of adults speaking to youth, youth were given the opportunity to ask questions directly to those. This event was grounded in positive youth development and the Annie Casey Foundation, a framework that focuses on recognizing the strengths, talents, and leadership potential of young people. When youth feel connected, valued, and heard, they are more likely to academically, socially, and emotionally build safer and stronger communities. We were inspired by this thoughtful conversation that took place by the willingness of the community leaders to listen. The message from our youth was clear. They want safe communities, meaningful opportunities, supportive relationships, and a voice in decisions that impacts their lives. This summit was not intended to be a one-time thing. Based on the success of the gathering and the feedback that we received from the youth, we plan to continue to host youth summits across South County, including Santa Barbara, Goleta, and Carpinteria. Our goal is to ensure that youth voices are heard in every community and the local leaders have ongoing opportunities to engage directly with the young people they serve. On behalf of the South Coast Youth Safety Partnership, thank you for your continued partnership and support. Together, we can continue to create spaces where youth feel valued, empowered, connected to the future of their communities. Thank you for your time and your commitment to the youth. Thank you. Brian Cornell.

Mr. Mayor, members of council. My name is Brian Cornell. I've lived in Santa Barbara 44 and a half years, and I have never spoken at general public comment. But I've been troubled for quite a while. My office is in the 500 block about State Street. So last week, I took a walk up State Street from my office with my dogs all the way up to Victoria and then walked back. And I observed a very vibrant sidewalk with lots of pedestrians. And there were 11 parklets. I didn't think there were that few, but that's the number. Some of them were empty. None of them are aesthetically very pleasing. And State Street, which was basically a sea of e-bikes and doing wheelies and swerving all around. And it frankly just looks terrible. What concerns me is that we obviously, as you know, have budget issues. And I don't think anything is going to happen, even if we get grants to proceed with some of the engineering, as I have been told. Nothing's going to happen for four or five years. So I challenge each of you to take the walk I took from the 400 or 500 block on up to Victoria and back. When I was doing that, there were maybe five pedestrians walking on State Street. Everybody was on the sidewalk. I just don't think we can stand to have it look the way it does for the next four or five years. So I implore you to consider when you meet on this, I think in two weeks, to consider opening up State Street, not necessarily to lanes in both directions, but maybe just one direction. to narrow the bike lanes and to give us a chance to just settle in, raise the money. I want to assure you I am a ardent supporter of the State Street Master Plan. I think it's awesome. I believe in its principles. So instead of living with State Street for another four or five years, I think we need to put our emphasis on achieving the housing goals that are in the State Street Master Plan and doing what we can to incentivize developers to build more housing because we know that that Master Plan is not going to work if we don't have the residential units. So take the walk, observe it. I'm sure you have done it, but it's really good to take the whole walk up and back and really feel it because it needs to change. It just can't stay the way it is. for another four or five years. Thank you. Thank you.

Colleen Macy, and you are having time donated by Cassandra Ensberg. And so that will be, Madam Clerk, that will be four minutes, please.

Okay. Good afternoon, Mayor and Council and community. My name is Colleen Macy and I am a local business owner on Santa Barbara interiors on Figueroa Street. And I am speaking today on behalf of the State Street Business Alliance, which represents over 500 business owners, property owners, residents and tourists who are directly affected by State Street's closure. We recently emailed the council a comprehensive list of petition signatures and personal testimonials from business owners and residents who support reopening State Street to vehicles. These voices represent people who live, work, invest, and operate businesses here every day. They believe in and help to create vibrancy and a unique character of downtown Santa Barbara. They represent the people who visit who have noticed how things have changed and hope that we can restore what has been lost. In just one month, we have collected 500 signatures and comments, and we know this number will continue to grow. I would also like to point out about this petition, which you have all received, that there is an active link on it. And anyone can go on it, and you can read every single testimonial. I implore you to do this. I think it's so critical that you know what people are saying in order to make the right decisions for your community. And it's an up-to-the-minute interactive link. Okay, so State Street was never a failed street waiting to be saved. It has long been the economic and social heart of our community. Restaurants, retailers, offices, hotels, cultural institutions, and thousands of people depend on it every day. For years we have debated concepts, plans, studies, and future visions, yet we still have no final design, final approval, no committed funding, and no clear timeline for implementation. Meanwhile, downtown businesses, property owners, employees, and residents continue to bear the consequences of that uncertainty. The question before us is not what State Street should look like 10 years from now. The question we are asking is why does the heart of our city remain closed today as businesses and community members suffer? What are we waiting for? If a future design is eventually approved and funded that can work and proceed, that works can proceed, but until then you must reopen State Street and give our community a chance to thrive as it was before COVID and before the closure. Reopening State Street to vehicles does not mean abandoning outdoor dining, pedestrians, bicycles, community events, or future improvements. Successful downtowns throughout California have found ways to accommodate all of these uses together. Our goal should be to restore a vibrant, accessible, economically successful downtown that serves everyone. A downtown where businesses can thrive, customers can easily access shops and restaurants, families can enjoy community events, and Santa Barbara can once again celebrate the traditions that bring us together. Parades, festivals, and the many activities that have historically made State Street the heart of our city. Our ambivalence is destroying one of the most beloved parts of Santa Barbara. Take action today to support local businesses and residents. Please open State Street to vehicles. We are begging you. And I agree that everyone should take a walk downtown and start talking to some of the people who are in the trenches down there trying to make their businesses work.

Thank you.

Okay.

Pfizer Dean.

Okay, good afternoon, Mayor and member of the City Council. My name is Faye Jardine. I'm a US Army veteran, a sole corporate officer, a certified heavy machine operator, a lineman, and an accountant. I stand here today to demand that this council immediately shut down the non-compliant closed door loop operating between municipal homeless funds and local service providers and mandate strict internal financial controls as an absolute condition for receiving public capital. Right now, under the guise of the coordinated entry system, contracted entities like New Beginning, Second Story Associates, are utilizing their corporate position to shield the housing authority of the city of Santa Barbara from federal liability. While my lower court housing dispute is under an active pending appeal, and statutorily masked under California Code of Civil Procedures section 1161.2. These providers are trading my private metrics via cross-agency informants to launch an extraditional judicial voucher termination timeline. Furthermore, these agencies are executing a deliberate campaign of physical and digital starvation. Supervisors are utilizing falsified contracts to intentionally withhold federal SSVF emergency financial assistance checks, forcing my commercial Verizon business line into a $4,000 collection default, withholding my storage keys, issuing text messages denial, refusing to fund mandatory trade safety vision, PPE, and commercial driver's license updates. They're actively trying to force a highly trained disabled veteran into a communal shelter bed to trigger a default in her active litigation. My civil rights and fraud action is now officially live on the unlimited civil calendar of the Santa Barbara Superior Court under case number 26CV03882 before Judge Donna Geck. I have formally issued a demand for immediate termination of contract and notice of material breach to your desk. I am demanding that this council execute an immediate executive internal audit to dismantle these unconstitutional data sharing loops and restore structural transparency to our city's veteran programs. Thank you.

Thank you. Brenton Phillips.

I'd like to correct the artificial intelligence. My name is spelled B-R-E-T-O-N. B-R-E-T-O-N.

There we go. All right, very good. Are there any public commenters online?

No, Mr. Mayor.

Okay, very good. With that, we will move on to item 16. Would you please read that into the record?

Yes, Mr. Mayor. Item 16, approval of development and disposition agreements and related agreements for the Paseo Nuevo Redevelopment Project Ordinance Introduction Agreement Recommendation that Council be approved. Introduce and subsequently adopt by reading of title only in ordinance with the City of Santa Barbara approving and authorizing execution of the one Paseo Nuevo Redevelopment Project Development and Disposition Agreement between the City of Santa Barbara and PNSP Real Estate LLC. Two, Paseo Nuevo Redevelopment Project Development and Disposition Agreement between the City of Santa Barbara and DSP Santa Barbara Sub LLC. and three related agreements necessary or convenient for implementation of the projects described therein, including transfer of fee title to exempt surplus city-owned property, APN 037-400-001, 037-400-002, 037-400-003, 037-400-004, 037-400-005, 037-400-006 and 037-400-019. And a D, the title of the ordinance and or resolution has been read. If there is no objection from any council member present, further reading is waived pursuant to Santa Barbara City Charter 511.

All right, very good. And I'll announce at this point in time that we'll accept new speaker slips and or hands raised online until... Uh, 20 of three for 10 more minutes. At that point, we will cut off recent submissions for public speakers on this.

And with that, thank you, mayor and council, uh, city administrator, Kelly McAdoo, uh, pleased to be back before you this afternoon to present, uh, the development and disposition agreements for the Paseo Nueva redevelopment project. We did come to council on June 2nd to present the terms of these agreements and to receive feedback from the council and the public and have continued to receive feedback. The documents were all released publicly I believe on June 5th for review and so we are now back before you for considerations.

Next slide.

And I wanted to just say I will, myself and Ms. Tess Harris will be presenting most of the information in the PowerPoint today but All members of the Yardi Systems and DSP team are here to answer other questions that the council may have as we go through this agenda item. So we'll go briefly through some background from Paseo Nuevo. Again, I would reference individuals back to June 2nd, that meeting where we went into a lot more depth on the background and the history of where we've been. So I'll do a high level today and we'll go through a summary of the terms of the agreements. the California Environmental Quality Act recommendations, next steps, and the staff recommendation. So just by way of background, the Paseo Nuevo Mall was developed in the late 80s, early 90s under the former redevelopment agency for the city. The city currently holds fee titles to the parcels making up the shopping center. And although the city owns the land under the buildings the ground leases that currently encumber the property assign ownership rights of all the buildings to the current lessees. And the uses in these buildings are currently controlled by what we call the reciprocal easement agreement, which dictates what can and cannot be developed on the site. And even though the city redevelopment agency entered into these ground leases, we have never received any annual lease revenue as a result of those leases.

Next slide.

So just to refresh everyone's memory on the current ground lease interest, Paseo Prop Co. holds the lease for the former Macy's building, the inline retail shops which run basically from State Street through to Cannon Perdido through the middle of the mall area. DSP Partners has the Nordstrom ground lease and an easement in parking lot one for parking. And parking lots one, two, and 10, so parking lot one is underneath the mall property, Parking lot 2 is at the corner of Chapala and Cannon Perdido, and parking lot 10 is at the corner of Ortega and Anacapa Street. They were built to serve the mall and many have been serving the mall since its construction. As we mentioned, the city owns the land but has no ownership or control of the buildings on top of the land, and Paseo Prop Co. and DSP currently have complete operating control but within the confines of the reciprocal easement, which basically says those two buildings will maintain as anchor department stores. And so those limitations have prevented the redevelopment of this site. Next slide. And just as a refresher, Macy's vacated the property in 2017 and Nordstrom's vacated the property in 2020, leaving a large gap and a large retail vacancy and large vacancy just generally on State Street. And now I'm going to turn it over to Ms. Harris, who will walk us through a summary of the terms of the agreements. Thank you. Ms. Harris.

Thank you, Ms. McAdoo. So again, on June 2nd of this year, staff presented the deal framework for the Yardi systems and DSP projects before council. And at that hearing, city council directed staff to return with the development and disposition agreements and related agreements. And so I'm gonna walk through each of those briefly with you. There are six agreements that the city is a party to and they're all interrelated, meaning that all agreements must be executed for any of them to be effective. They fall into two deals that would close concurrently that are each conditioned on the other. The documents are two development and disposition agreements, two parking agreements, and for the housing portion of the project, an affordability control covenant and a residential use covenant. So we'll start off with the development and disposition agreement for DSP. And DSP includes the former Nordstrom building, which is addressed as 817 State Street. The city would convey fee title to the former Nordstrom parcel to DSP. And in exchange for the fee title, DSP commits to a residential project of at least 80 residential units under the adaptive reuse ordinance, with 10% of those units deed restricted as affordable. to moderate income households, which would be at 80% to 120% of AMI, or average median income. And DSP would obtain the right to up to 80% overnight permits in lot two and they would contribute $1.7 million in public benefits and that's divided up into $1 million that the city could direct to downtown improvements and services as well as $700,000 that would go towards the local housing trust fund. So moving into the affordability control covenant, that covenant locks in the affordable units for a 90-year term limit with an annual compliance reporting requirement and city enforcement remedies. And the affordability control covenant would run with the land. The DSP portion of the project also contains a residential use covenant. And that requires that the units are primary residences. It prohibits short term rentals under 30 days. And this covenant also runs with the land as well. And then there's a parking agreement for DSP and the agreement is between the city and DSP that would be executed concurrently with the development and disposition agreement. And it supports the project of at least 80 rental units. The city would agree to make available up to 80 parking permits in city lot two to accommodate overnight parking for residents of the DSP project. The permits are 24 seven access permits, which would mean that, uh, those permit holders would have access at all times. And then as part of the deal, the city and DSP would terminate the original agreements from 1989 for Paseo lot one, lot two and lot 10, the parking covenants, um, at that time. So next I'll talk about the Yardi Systems portion of the project, the development and disposition agreement for Yardi. The city would convey fee title to the remainder of the property at Paseo Nuevo, which includes the former Macy's parcel, the inline retail, and lot one. And then Yardi would convert the Macy's building into its downtown corporate offices and preserve the community benefit uses in the mall. Yardi gets up to 250 parking permits across Lots 2 and Lots 10 and would contribute $5.7 million in public benefits for the city, including $5 million to the Local Housing Trust Fund and $700,000 to the Downtown Parking Fund. For the yardie parking agreement the city would agree to make available up to 250 parking permits in total across city lots 2 and 10 and they would be allocated As follows so they would be 50 24 7 permits in lot 2 up to 50 standard commuter permits in lot 2 and up to 150 standard commuter permits in lot 10 Under the development and disposition agreement for as long as that agreement is in effect You already systems would need to continue to allow public parking within the former lot one So public parking would remain as part of this agreement Before we actually go on, I wanted to also mention attachment four that's in your packet. It's the restated non-vacated De La Guerra easement. That agreement is between the city and Yardi, and it would be executed concurrently with the development and disposition agreement. And that easement covers the non-vacated portion of De La Guerra Street. And it would continue to limit that area to pedestrian and service vehicle use. And it grants Yardi non-exclusive easements for pedestrian access and service vehicles and other activities in that area. With that, I'll pass it back to Ms. McAdoo.

Thank you. Um, wanted to take a moment to just respond to some of the council comments that we heard on June 2nd. Also, um, you know, the representatives, I think most of the comments were related to the yard systems development disposition agreement. And, and so they are also able to answer council questions, uh, and provide additional commentary. Um, there was a request for an additional contribution to the local housing trust fund. Yardi Systems has considered that, and given the financial terms of the deal, respectfully, cannot make that additional contribution at this time. And so that, just wanted to share that feedback. Yardi Systems definitely open to a Chumash cultural presence in the Paseo Nuevo Shopping Center, and will engage in further conversations with the appropriate groups. Again, not necessarily to be a term of the development disposition agreement, but a commitment to have that conversation and continue to engage in that. There was a request to translate the various agreements into Spanish, which was done and completed, and those were posted on the city's website with the Paseo Nuevo page. And then some concerns were expressed about the need for ground floor retail and or state street activation in the Macy's building and also a desire to potentially have a local business leasing preference in the mall and so definitely an acknowledgement of both of those concerns and a commitment on Yardi Systems part to partner with the downtown Santa Barbara Improvement Association, the Chamber of Commerce and Visit Santa Barbara to work on those elements and then also to increase overall visits to downtown. I also wanted to just share some of the public engagement that has, has gone on with respect to the project to ensure that we have, we've tried to reach out, uh, and share news of this proposal, uh, for, uh, making sure that there's appropriate opportunity for public comment. Um, on May 28th, the city sent a press release to local media, which resulted in extensive coverage of the revised, uh, deal points, the new deal points, uh, with yard systems and DSP partners. Yardi Systems themselves emailed a release to more than 500 community stakeholders, city commissioners, appointed officials, businesses, and other community organizations outlining the proposal. We've held dozens of meetings and briefings and direct communications with a variety of stakeholders, board and commission members, businesses, downtown businesses, and other stakeholders. The finalized, as I mentioned, the finalized disposition and development agreements and associated agreements were posted publicly on June 5th on the city's website in English and Spanish on the project webpage. And then we also announced a link in the documents to our weekly city news and brief article. And then as part of the council agenda posting, there have been a number of meetings with active organizations. I'm not going to read them all out, but you can see them up on the screen. to engage in a conversation about impacts of this project and or benefits to the stakeholders that are part of those organizations. And obviously significant news coverage through most of our local media outlets and a lot of engagement with reporters answering questions. And with that I'll turn it back to Ms. Harris for discussion of the environmental review for the project.

So I'm going to walk through the CEQA review. The project was reviewed under CEQA guidelines section 15183, which streamlines review for projects that are consistent with a general plan for which a program environmental impact report has already been certified. And in this case, that was the planned Santa Barbara general plan program EIR. The project is consistent with the general plan in zoning as it is adaptive reuse of existing buildings. It includes interior modifications and minor exterior work with no subsurface excavation and no grading contemplated. And based on that, staff prepared a section 15183 environmental checklist that's attached to your council report as attachment one, which allows projects consistent with an adopted general plan's density to proceed without further review. except for any effects that are peculiar to the site or that weren't analyzed in the prior program EIR, which we did not find. The checklist evaluated every CEQA topic and found no project specific impacts, no substantially more severe impacts, and no new significant effects beyond the program EIR. And recommend recommendation a in the council report asked that council make the finding and direct the filing of a notice of determination for CEQA. I'm going to move now into next steps for this project. Um, as we've talked about, this is a really defining moment for downtown Santa Barbara and for state street. And at the center of State Street sits two long, vacant anchor buildings that have generated no activity and no jobs and no revenue for years, since 2017 in one case and since 2020 in another. This action today turns them back into significant anchors of downtown and of State Street. The project is funded entirely with private capital. It triggers more than $100 million in reinvestment into downtown and shifts construction and leasing risk off of the city and onto private investment. And there's no cash outlay for the city, or from the city, excuse me. The project also generates significant annual revenue, more than $700,000 a year in transient occupancy tax, sales tax, and the city's share of property tax. And public parking also stays accessible with parking revenue increasing significantly. If council introduces the ordinance today, the ordinance would return for adoption on June 30th. And then if the ordinance becomes effective, escrow would be scheduled to close on July 30th, which is also when the ordinance would become effective. The city would transfer the fee title on July 30th as well. From there, DSP would continue its adaptive reuse entitlement application, and Yardi Systems would submit its formal application, and both projects would go before the Historic Landmarks Commission for design review. and construction for both projects would be targeted to begin in 2027, which is a really just exciting moment for downtown.

So last, just wanted to share what the staff recommendation is. Next slide. So before you this afternoon, once we hear public comment and answer any questions, staff would recommend that the council find the project exempt from environmental review pursuant to CEQA guidelines section 15183, that you introduce and adopt the ordinance approving the execution of the two development and disposition agreements and authorize the city administrator and city attorney to take further actions and execute the agreements to close escrow and implement those agreements. So with that, we will turn it back over to the council for the start of public comment. Thanks very much.

With that, we will go to public comment on this issue before we come back to council for questions and deliberation. So the first speaker would be Joanne Olenek. Yes. Followed by Cassandra Ensberg.

Good afternoon, members of the council. The ink is barely dry on the June election. Voters just passed measure A2026, trusting the city's promise to manage our property contracts with care. But let's be honest, that campaign was never properly transparent about what was actually coming next. Because the very first thing this council does with its new power under agenda item 16 is retreat into the shadows. Today you are using a loophole to declare our downtown public parcels as exempt surplus property. You are rushing a single vote to completely bypass open competitive bidding and permanently hand over seven prime public parcels to private entities. Worse, yesterday was a strict legal deadline under the Public Records Act for the city to answer requests seeking the internal emails, alternative bids, and backroom negotiations behind this Paseo Nuevo deal. the city chose to let that deadline pass in silence. You generated a massive 742-page packet detailing everything the city wants us to see while withholding the actual public records until after you vote. This is happening at the exact same time our finance department admits we are breaking our own emergency reserve policies. Our fiscal safety net is facing a real crisis, yet this council acts as a rubber stamp, doing nothing to stop the bleeding. In this post-measure A2026, our new reality? Disregard our emergency reserves, mislead the public on the ballot, and then liquidate our downtown land wealth in total darkness? The public has a right to see these background records before you sign away our public land. I ask this council to honor the public trust, enforce real fiscal discipline, and delay this vote until the outstanding records are transparently disclosed. Thank you.

Thank you. Cassandra Ensberg.

Thank you. Good afternoon, Mayor and Council. It's good to see you all and staff and our consultants here today. I was here for the earlier public comment and since I was here I wanted to stay and just give a comment about this project because I am very, very in support of it. And I did speak about it before when it came to, was it at Council or was it Planning Commission? losing track. Anyway, I did express appreciation and support, and I continue to have that. I didn't introduce myself. I'm Cassandra Ensberg. And I am an advocate for architecture and art in our community and in our downtown, and I am extremely grateful for the Yardies who have come through with what I see as being an excellent proposal. It addresses many things, the least of which is not the complication of all the encumbrances on this property. So I applaud them in coming forward with a proposal such as this that I think will be very, very successful. And I especially, as an architect, am very appreciative of the adaptive reuse. for both of these buildings. As was said earlier, they're both, I guess it was Ms. Harris said, you know, these are two large buildings and the Nordstrom's building is beautiful. It has been designed really well. The HLC is totally, you know, have expressed support for it. It's beautifully done and the Macy's building has more technical problems with it. It can't really work well to be housing. So this is a really great solution for that building. And I think that it brings balance to the whole development there by having the offices and then having the housing on the other side. And then, of course, the other parts will be addressed as well. But I'm just really grateful. And thank you to the yardies, our friends and neighbors who have proposed this project. And so I just wanted to express that support and I'll just stop there and thank you very much.

Thank you. Lisa Sands.

Good afternoon, council.

Thank you so much for hearing this. As you know, I am very upset about this deal. Why is that? Is because no affordable housing is even mentioned. That's just number one. It's worth knowing that the city spent two years negotiating a housing deal with AB Commercial that included 80 to 500 affordable units on that same land valued at $32 to $39 million. That project was rejected. I don't know all the features of it, but it was rejected. Now we have a deal presented by Yardi, nice people, but they're walking away with this for $7.4 million. I don't get that. I urge this council to have a feasibility study, which I don't think has been done, about this deal. And more importantly, here's what really bugs me. Why are we giving away these land rights, parking rights, infrastructure to a corporation regardless of what they do? They pass it to their heirs. They can sell it. later if they change their mind. And the Nordstrom's building is just waiting to be affordable housing. So I want you to really consider this deal. This is the heart of our city. We do not have to give it away. There are many, many aspects of this project that are good. Using those buildings, great, but what do we get out of this? And that, CEQA, you cannot exempt anything. That's insane to even suggest that. We have to all go by these rules. We have to do a feasibility study. We can't rush this. And please, I'm begging you not to give it away. Keep it and do the deal. Thank you.

Kristen Miller.

Good afternoon, Mayor Rouse and Santa Barbara City Council members. I'm Kristen Miller, President and CEO of the Santa Barbara South Coast Chamber of Commerce, representing 800 members and 75,000 jobs in the region. I'm here today to express the Chamber's support and excitement for the approval of the DDA for the Paseo Nuevo redevelopment. Our organization has consistently advocated for solutions to bring activity and economic vitality back to the downtown corridor. We believe this redevelopment agreement is the best opportunity for the city to bring this vision to life. The added bonus is this is with a trusted community business. We're pleased to support this significant investment in downtown being led by Yardi Systems, a local employer that has demonstrated integrity and a strong commitment to our region for decades. Yardi's offices will bring 600 employees downtown daily, creating year-round foot traffic and economic activity at restaurants, retailers, and service businesses. This major private sector investment signals confidence and certainty in Santa Barbara's downtown future. We like the combination of housing and commercial activity, the donations to the local housing trust fund and downtown parking fund. This project is a clear win for the city and all community members. Thank you to the city staff, council members, Yardi Systems, DSP, and community partners for all your hard work and deliberations that make this project possible. The Chamber looks forward to continuing collaboration with you, downtown businesses, and the community for economic vitality in our community.

Thank you. Thank you. Dr. Lee Heller.

Good afternoon, Mayor and Council. I am back today because of the remarkable discussion two weeks ago and what it means for the future of downtown. Here is what we have, a local developer, a trusted business with deep roots in the community who doesn't need to do this. This is an expensive project. It already is in effect bailing us out after the Alliance Bernstein plan fell through without our city money having to be part of the project, with large infusions of money going to the city. The Yardies truly are local heroes, they're certainly mine. Although we desperately need more housing, and I had hoped that would happen, this deal does have immediate benefits since the other is not going to happen. Adaptive reuse, meaning faster completion, instead of a four to five year period of new housing construction, imagining a dead central core where everything is dusty and loud, and those businesses are really impacted. Hundreds of daily workers, residents and visitors using State Street daily because they're living and working down there. And a part of the street that we have really struggled to figure out how we're going to revive. Now we have the mechanism for doing it and doing it pretty quickly. If some businesses owners feel that State Street is not meeting their need for human presence, this will address that need. Imagine hundreds of local workers and visitors flooding the promenade at lunch and at the end of the day. That will provide opportunities for businesses to open and current businesses to thrive. This truly feels like the Hail Mary pass that we have needed, with carefully developed agreements to protect the community, bring resources to the city, minimize the city's own infusion of resources at a time when we're struggling, and I am so excited by this and I hope you are too. Thank you.

Stacy Espana? Stacy? Oh, here we are.

Good afternoon, Mayor and Council Members. Thanks for the opportunity to speak today. I believe the most powerful thing a community can do is build and preserve community wealth, resources that belong to the community and that we can draw on to meet the challenges we face, housing affordability, for example. Having community wealth is how we stay capable of creating and implementing solutions. I want to be clear, I'm not here to oppose this project. Adaptive reuse, new housing, Yardi headquarters downtown, I think this is a good direction. I'm here because the community deserves to understand the complete value of what we're contributing before a decision this permanent is made. Between 1987 and 89, the city assembled and prepared seven acres of prime downtown land at a cost of roughly $42 million, which is about $105 million of today's dollars. That investment is the foundation of this property's value. What we hold and what we are now being asked to give up permanently is that land. The buildings on the land are a different story. A series of private investors brought underperforming business models to this property. The latest business model ended in a $120 million loan default in 2022. The primary value lost was in these private investments, not in the land the community assembled. The location is still prime. The infrastructure is still there. But looking at the numbers presented, it can appear that the community is being asked to absorb the consequences of private business decisions that didn't work out by discounting the value of the land. This is exactly why I think the underlying analyses need to be public. My records requests focus on seven questions. I have not yet received the requested documents, so my comment today just highlights a few of the questions. What is the city's land actually worth? The 32 to $39 million figure and the State Department of Finance's zero value ruling have not been reconciled publicly. Neither appears to account for the value of the buildings that would revert to the city in 2065. What portions of the $100 million in private investment are expected to result in public benefit, and what specific forms will the community see for those benefits? Was a ground lease or community land trust option ever evaluated? Measure A-2026 removed the legal barrier to long-term leases, but nothing in the public record shows that such an option was considered. How is property tax assessed for this project? The 120,000 annual property tax estimate is difficult to reconcile with standard Prop 13 reassessment math. The community is being offered real benefits. I don't minimize them. But there's a difference between community benefits and community wealth. Benefits are one time. Wealth is ongoing. Before escrow closes on July 30th, I'm asking the council to release the appraisal and fiscal analysis underlying this deal and to confirm whether a ground lease alternative was evaluated in light of Measure A-2026. I want to see Paseo Nuevo become a vibrant place. I also want this city to carefully steward the wealth we've built as a community so ours and future generations have resources to draw on. Thank you.

Thank you. Online speakers, please, Madam Clerk.

We have two hands raised in time, and that is Marge Caffarelli and Kevin Heim. Marge Caffarelli, please go ahead.

Good afternoon, Mayor Rouse, council members, and staff. My name is Marge Caffarelli. I developed the Santa Barbara Public Market in Alma del Pueblo, and I'm here today to share my perspective and experience as a former downtown business owner and as someone who has done development in our downtown. What Yardi Systems is bringing to the table is a huge investment and a generational promise to the city that provided the backdrop for Yardi to build a global company. From a straight, profit-driven perspective, it is genuinely hard to see how this deal makes sense for them. But that is precisely the point. This project should be seen for what it is, a profound commitment by Yardi to the city of Santa Barbara. It solves one of the most intractable problems this city has faced at the single most important property for downtown redevelopment. And it does everything a city could ask for, provides housing, jobs, activation, and public benefit, all entirely with private funding. The city stands to gain a tremendous amount here. Beyond the millions committed by both Yardi and DSP, think of all the small businesses lifted up and the ripple effects that will spread across our entire downtown. As council member Harmon said at the last meeting on this project, I quote, this is a miracle. This is a real chance for city to actually do something. And finally, I want to reiterate something that was raised at the last meeting. I serve on the board of Good Samaritan Shelter, the largest provider of homeless services in this county and a major provider in the city. Yardi Systems has been there for us and for dozens upon dozens of nonprofits across our community. Over many years, they have proven to be exactly the kind of neighbor and good employer we should be desperate to have in Santa Barbara. In everything they do, they have proven that they can be trusted. This is a tremendous commitment to the city. Please, let's get this deal done. Thank you.

Thank you. Next speaker, please.

Our final speaker is Kevin Heim. Kevin Heim, please go ahead.

Thank you for the opportunity to speak, Mayor Rouse and council members. My name is Kevin Heim, and I'm making these comments on behalf of Strongtown Santa Barbara. Paseo Nuevo's adaptive reuse is a major opportunity for downtown, and we strongly support bringing new housing and jobs to State Street. Paseo Nuevo cannot go on as is, and this plan provides a strong plan to jumpstart our vision for a vibrant, livable State Street. But the agreements before you still miss three critical protections that could make this project an absolute slam dunk. First, Yardi is asking the city to substantially subsidize employee parking without committing to our investing in our city's public transit network. Under the agreement, Yardi can receive up to 250 permits in lots two and 10, including the right to purchase 200 commuter permits at a 25% discount in perpetuity forever. At current parking rates, these discounts would cost the city $45,000 per year with no way for the city to end this discount. This subsidy of what will primarily be single occupancy vehicle traffic is out of line with our sustainability goals and places a permanent financial burden on the downtown parking program at a time when the budget is barely balanced. Please direct staff to remove the discounts on commuter permits or add in a reasonable 10 to 15 year sunset provision for the discount. second there's no requirement that yardy or dsp purchase transit monthly passes for employees tenants or residents on a prime transit serve downtown property that's backwards and out of alignment with our stated goals around reducing vehicle miles traveled and greenhouse gas emissions third the enforcement structure is too weak given that the city is conveying prime state street lots at a deeply discounted price after closing in the event either yardy or dsp fail to complete their project as promised Our only recourse of the city would be to take them to court and force them to complete the project, a process that would take years to resolve and cost the city millions of dollars. What's worse is that the agreement waives the city's rights to be reimbursed for our legal expenses in the event we prevail. That means that even if the city wins, Santa Barbara residents would still be left paying large legal bills just to get what was promised. Ideally, those provisions are never used. We love Yardie. We trust Yardie. But if they are, the public should not bear the entire cost of enforcing the benefit of this bargain. We urge you to direct staff to return to the negotiating table to revise the agreement so that one, discounted commuter permits are removed or time limited. Two, MCD pass funding is required. And three, the city must receive the ability to recover its reasonable attorney fees and costs in the event it has to enforce specific performance. These adjustments will not kill the deal. They're reasonable, small asks that will simply align it better with our climate goals and protect the public's investment in this very important piece of downtown. Please ask staff to spend one more afternoon at the negotiating table in order to make this project an absolute winner for Santa Barbara. Regardless of your decision on these suggestions, we feel strongly that this project is the right project at the right time in the right place, and we're excited to see it move forward with some simple adjustments. Thank you.

Thank you. Other first speakers? Madam Clerk?

No, Mr. Mayor.

Okay, with that, we'll come back to council. We'll go through, and if anybody has questions, let's ask those now, and then we'll go back for another round of deliberations. Questions from council members? There we go. Ms. Harmon? Or is that from the old? Okay, thank you. Did you just push a button, Ms. Snowden? I thought you did, yeah? I think Mr. Gutierrez and Mr. Jordan haven't pushed buttons yet. You did. Okay. And Mr. Gutierrez, did you push a button? Okay. Go right ahead then.

Thank you, Mr. Mayor. Can staff comment at all at some of those comments made by the public about whether or not some of this information was made public?

So the terms of the deal were all made public. So those have been public. There have been Public Records Act requests submitted and we are in the process of preparing those responses. In this case, I can respond that there was not a formal request for proposals because after the council declined to move forward with the deal in December, you already approached the city with this and AB with this proposal and so at that point, we negotiated. I know early on in the process before I came to the city, I understand Alliance Bernstein did attempt to market the property for sale, but there was not a formal request for proposal process. And I will say that the city did receive an exemption from the Surplus Land Act, and that is as a result of the encumbrances that are on the property that make it a unique circumstance. And so the Surplus Land Act, the State Housing and Community Development Department did determine that this is exempt from the State Surplus Land Act.

Okay. And so do we know how many actual physical employees are going to be operating out of this building? Because some people have asked me, you know, is it really worth having just a few dozen employees that are showing up in person when the rest are working remotely?

I will ask if a representative from Yardi Systems want to, my understanding is that there will be a substantial number of employees in the building, so I will let them respond on that question.

Mr. Yardi. Sure, yeah, Kevin Yardi here. Thanks for the question. We have 610 employees anchored to our Santa Barbara office. Our expectation is all of our employees are in the office some number of days per week, depending on the role. Our numbers suggest it's several hundred per day, and if you look at the first 41 years of Yardi's history, We were in the office five days a week. COVID hit. We moved to a little bit more of a remote situation, and we are slowly kind of coming back into the office. So the notion of several dozen is a little bit foreign to us. It would be many hundreds per day, and all 600 would be expected to be in the office on any given week.

So do you allow them to work remotely, or is it mandatory for them to be there in person?

There's mandatory in office, but not five days a week.

How many days?

Those are subject by role, and it's a little hard to share on average, but our data suggests in Goleta we have several hundred per day.

Okay.

Yeah.

All right. Thanks. My other question is, so leasing the land to them is not possible? We have to sell it or give it to them?

So we are transferring the parcels to Yardi Systems and DSP. That was part of the deal that was brought to us. The deal was contingent on that, so that was the element that was brought to the city for approval. And so we did ask about the ground lease possibility, and I think both parties declined to move forward with the ground lease. Okay, thank you.

Mr. Jordan.

Thank you, Mr. Mayor. Just a couple questions. I keep hearing these over and over again, and I don't know if it's the same people or if they're just people who haven't been part of this for a couple of years. So you had a slide on the ground leases, if it's still slide four. So it was referenced that we're giving the land away and $32 million. Could you talk a little bit about our role as one of the three partners in the deal and How did we come to the determination that our land, to us, in this particular situation, was worth zero or even less than zero in today's world?

So I have a number of folks who can probably also help me respond to that. There's a ton of you over there. Yes. with the current encumbrances on the property, the ground leases, the restrictions, the current value of the property is zero. That is also why we received the Surplus Land Act exemption. It was part of that determination. The $32 million number that has been thrown around, that was a projection of what future land value might be under the other development scenario. It is not relevant for this conversation. That is not a number that is sufficient part of the economics of this deal. And it was a future value based on releasing all of the encumbrances on the land, which all parties had to agree to. And so it's not the current value of the land. And I don't know if Mr. Henchke wants to...

I was just shaking my head yes.

So noted. I mean, I'll just keep asking a couple more questions that I already know the answers to. Did we come up with those numbers in-house or did we use people who do this for a living and have been all over the rest of California in the last four or five years when we've seen the demise of resources like this?

Yes, so Ms. Patricia Flynn with the Maxima Group and Dina Beltzer with Strategic Economics, who have been real estate consultants and experts in ground leases for many decades in California, did advise the city on the economics of these projects.

And these are people who have been in the same situation with city properties with developments on them in the past, too, correct? Correct. And then... Somebody used the phrase, it's probably my words, that it's just a bailout of private investment. And I guess I just feel compelled to say there were not two parties, in the deal back in the early 1990s. There were three parties. One of them was the city. And I know we've all been in the room, so I'll just ask the question I already know the answer to. Would a deal like this be done today in today's world again? Or was the deal done then just so could not see the future and was so bad that it put all three parties in the situation they're in now?

I obviously wasn't there. I cannot stand in someone's shoes. for the decision makers or the council members who voted to do this deal. I think restricting the uses like this, where you basically say these buildings have to remain as department stores, it very much limits the flexibility that could have happened on the project. I think the staff team that is here now understands the nuances and changes that happen in the development world over time. And I think you don't want to create situations where you bind the hands of future policy makers and basically are so restrictive to limit development. So that's how I would respond to that question.

And my last question just has to do with the parking. I know the devil's in the detail on that, but much of the parking that we're talking about for either building, either the Yardi building or the Shopoff building, Those parking spaces already existed to them by right on the existing Which started out as a requirement for their parking but a contribution on their part your decades ago They they have a right to those parking spaces in the city process already that we're talking about making deals with them and though and so first part of my question the second part is those are actually going to drive revenue to us and

discount or not for for spaces that are mostly vacant right now correct correct and under the current agreement current parking agreements the current reciprocal easement agreement they are guaranteed those parking spaces without payment to the city and so this actually changes that agreement and now they are paying the city for parking spaces i understand there's a concern about the discount The parking permits that are being issued would be limited to the upper floors of the parking garages, so less desirable parking spaces. The ground floor parking would be reserved for retail and more commercial uses. So currently we don't receive any revenue from those reserved parking spaces, and this would convert that into a permit situation.

Thank you. Thank you, Mr. Mayor.

Ms. Nedden.

Thank you, Mayor Rouse. So again, I agree with all the positive impacts, but I have some questions about the deal itself. So the $1 million to city to revitalize downtown, do we have more clarity on what fund that will go into or what it would be available for? Is it earmarked?

It's not earmarked, and we would come back to council for direction, future direction, once we receive the funds, as to where it will be spent and how it will be spent.

Okay, so that's for a future decision of what we want to do with that. And then the discounted use for the parking permits, I don't think I saw it in the DDA which floors those would be designated to. I think we had some discussion that they should be on the upper floors. Is that part of the agreement? Mm-hmm.

The way that the parking agreements are structured right now, these are parking permits. There are no reserve spaces. And so they would simply use the parking lot in the discounted situation. It's as a commuter. So these are commuter spaces, and they would be coming in and out and going like any other. The discount applies to the Yardie. And remember, they're making a $750,000 discount contribution to downtown parking to kind of account for the discount. So there's a little bit of a trade off there, but they're not, originally there was a concept of having reserved spaces. Now it's just permits and our parking system doesn't account for places within the lots where permits are used.

But we could paint these ones colored and you have a permit in your window and you park on the upper floors.

Councilmember said and if I could chime in so with the parking permit that DSP and Yardi systems would receive our permit agreements stipulate that Those permits would need to be on upper floors It doesn't assign it doesn't assign a certain floor But they wouldn't be parking on the ground level So that's in that is in the agreement because I thought that's what we discussed about

It's in the rules that they have to comply with. So the agreement, refers to the rules. The rules restrict where the areas are. So if you were to look, I didn't want to say, if you look at the agreement, it says they got to park upstairs. It doesn't say that. But if I look at the rules, it will say, okay. It is what the rules, the city sets the rules and establishes where they go. If I look somewhere, I will find, okay.

So, and you just mentioned something, and this is my other question, is I don't really understand why we're discounting them. Why would we do that?

It was part of the negotiation for the overall transaction. They asked for, Yardi asked for a discount against the normal parking rate with regard to the commuter permits within the Yardi lot. And part of the negotiation, as we talked about, was they would make a $750,000 contribution to downtown parking. And so that is part of the negotiation.

I guess I thought the $750,000 was like a contribution. I didn't think it was buying down a permit discount.

It goes, they're not directly tied. You asked why. And so part of the negotiation, they asked for a discount against the commuter permits. That was agreed to as part of the negotiation. And it's a 25% discount on the permits. And the contribution to the downtown parking was $750,000. Does that equate directly across the board? I don't know. Okay.

I guess I'll make the comment that I don't agree at all with giving discounted permits to employees of one private business when we're charging other commuters who work for the police station, who work for the fire department. We don't give them discounted commuter passes. So this isn't something I conceptually understand at all, why we would do that.

Mr. Yardi.

It's a great question. If okay, I jump in.

Kevin Yardi again. Yeah, so as part of the overall negotiations, there are about 750 spots in lot one. And I think as council knows, lot one has always been operated privately. So there's 1,500 spots total. Lot two is 500 roughly. Lot 10 is 500 roughly. And sorry, I misspoke. Lot one is 570 spots. So as part of our negotiations with city and with DSP, we are committed to keeping lot one open to the public, much like it is today, even though it's a private parking lot. And part of the negotiation of leaving lot one open to the public was a discounted number of spots for our employees such that our employees aren't consuming the entirety of lot one. When we look at our parking needs for about 600 employees, or to think otherwise, when the parking lots were built in the late 80s, you know, it's about a half million square feet of space. And you can kind of think of a third being allocated to Nordstrom's, a third being allocated to Macy's, a third being allocated Allocated to inline and so we feel that the Macy's structure the Macy's building requires some five to six hundred spots and Feedback we got from I think the community was best not to shut down lot one for our private use so as to keep it open to the public one of the negotiations was a Relatively minor concession to these otherwise Sort of underutilized lots

Thank you, and I appreciate with very much respect. I just don't think we should agree to that I think it's a hard that's a hard one for me just because it seems like a business decision with your own employees if you want to Subsidize their commuter parking passes. That's a business perk for working for you I Have my hard time squaring it with everybody else and this isn't for you. This is for our staff I have a hard time squaring that with charging full rate to everybody else because I I mean, it will be private parking lot and it will transfer over, but it isn't now. So I don't agree with that part, respectfully. The refuse handling agreement with Marburg, I think I understand right now that they don't charge us, we don't pay it, but they could tomorrow decide, oh, hey, you've pointed out now that you haven't been paying, and we would like to start charging you for that. And with the residential use, there will be more refuse. This is another one of those where I don't really understand why we would hold on to that part of the responsibility when we have absolutely no ownership anymore of the land or the building or anything. Why would we pay for their trash?

Again, negotiated deal point. And I think, you know, if in the future Marburg came back and, you know, was going to charge more or charge the city for that, we could go back and have a conversation with the ownership at the time, you know, Yardi Systems and DSP partners to see if there was some flexibility to amend that. But at this point, because of the current structure, that was how we structured the deal.

I just think we should do it now. If nobody's paying for it and something has to be negotiated later, it just seems like something we should do now. And this is, just to be fair, none of us saw the dispensation agreement, or maybe some of you did. I didn't before the last meeting, so I think it's fair to bring... Questions that weren't apparent before I just want to make sure we would not be paying for any of like the the Transaction fees for the title company or the escrow or any of those things because those could be considerable We're not paying those not paying those. Thank you. That's great I think and and again, this is no disrespect What happens if they go bankrupt?

At what point?

Any point.

What are you asking?

Does it revert to the bank if it's owned outright? Does it can be held? What are the, and maybe there is no answer to that that's not of our business anymore because it's not ours, but. Just a question.

Well, it would depend on what the circumstances were in terms of the nature of the bankruptcy. But let's assume they go bankrupt 20 years in the future. It would be the same impact on the city as any other privately owned land. At that point, the land is privately owned and managed. And so the impact to us would be the same as any other bankrupt property within the city. If what you're asking is, does the agreement have provisions in it that say that it binds future successors to the property? Yes, it does. Okay.

For those particular uses? Yes. Okay. And these, again, these are questions that have come to me also from the public, too. So could you say more about the De La Guerra... It used to be a street, and then that.

The city has a portion of De La Guerra Street that was un-vacated. Part of the original Paseo Nuevo transaction, there was an easement grant. It's called the non-vacated De La Guerra Street easement. That easement basically gives to the Paseo Nuevo Shopping Center Control and maintenance responsibilities with regard to the closed port The closed portion, but non vacated portion of the street daily Gary used to go all the way through remember the part that is over by California Pizza Kitchen that area has been completely vacated the portion kind of from the middle of the Daily gara over towards State Street. That is a closed closed street. No vehicular traffic and but it has not been a completely vacated. There is an easement over that area to the shopping center that allows them to basically manage that area, keeping it open for public pedestrian traffic and such, but prohibiting vehicular traffic and other kinds of activities in there. This easement basically just continues the existing restrictions but changes the easement holder to Yardi.

So forevermore, it has to be open for pedestrian traffic?

The easement goes along with the property and keeps it open for access to Paseo. It's basically the entrance to Paseo Nuevo. So yeah, it's... And the... In this case, Yardi, as the owner of the surrounding property, is required to maintain it.

As open.

As open. They keep it open. The uses would basically be what you see now. There are access rights that are retained for the private businesses on either side of the sale. Like the Balboa building and the theater building, they have the ability to get their people in and out Nordstrom's will have the ability to get its people in and out through that area.

Will we be able to walk through?

Yeah, the public rights are not impinged.

And that's what I'm asking. And that's forever. So they decide to turn it into something else, something else. That Paseo through there that allows you to walk along De La Guerra and cross all the way through to Chapala stays open forevermore.

Yes, the public rights... to the street, essentially the pedestrian access, are retained in perpetuity. The city has never vacated that interest. It could come back to the council, but the council would have to vacate it.

We don't want to vacate it.

The property owner has no control over that.

That's my question. Thank you. Mr. Henschke, I think I don't ask questions the right way to get, but we're getting there. Okay. We'll work through it. Thank you. And then... Well, I think those were my main, and you've answered it before. Well, this may be a different way, but I actually have a couple questions. One, so if it's parkland, this isn't parkland, but if something is parkland, we have to take it to the voters to decide to transfer it away. Why is this different, or how is this different?

It's different because it's not parkland. And the charter provision vests in the city council the ability to convey public property, except for parkland and any conveyance or encumbrance of parkland requires a vote. That's because it's in the charter of the city. But in other jurisdictions that don't have that kind of restriction, the power to dispose of the public property is vested in the city council. And so that's, you have the ultimate decision making authority on this particular transaction.

Okay. Thank you. And then I guess I really, how is the property tax going to be calculated?

So that goes, the county will, once the property improvements are done, there will likely be a reassessment of the value of the property and the improvements. And at that point, they will be issued a property tax bill consistent with other commercial property owners in the city.

Okay. And we're making an estimate. of what that will be?

Correct. Based on what we believe, and that would, our economic consultants, based on the construction value and then future land value, and that was where that property tax estimate came from. Okay.

And then we hear the number that $100 million will be invested in the property. Can you just kind of give me an idea of what that is? Like, what is the $100 million? It's like...

It's the, well, sorry, Ms. Harris was just saying, it's what Yardi will invest in construction. You know, both DSP and Yardi Systems will invest in construction, the tenant improvements, improvements to the property. That's what is estimated at the value of that. That is where the $100 million came from.

Okay, so it will be actual money investments into... The building. The building itself. And so even if we were saying everything together was worth $35 million, the investment into it is... three times that.

Correct. One thing about this, there's a lot of conversation been floating around about the 30 to 35 million dollars. It's important, I think, to go back to what Ms. McAdoo talked about earlier, and that was a projected estimate based upon an unencumbered piece of property in the future. And that's not a real number. And it's unfortunate that we've been talking about it because when we look at the property now, you have to look at the legal encumbrances that are placed on the property. You can't ignore them. And legally, that property is constrained for the next 40 years, approximately 40 years, and in a condition that results in basically no economic value coming to the city. And when you take and present value something, if you were to take the extreme restrictions away 40 years down the road and present that value that back to now, you get the same result that you got from the Cochran report back when we were talking about getting this property back from the successor agency, and that is the property is worth basically zero in economic value. If you were to put it on the market, it would come back with a zero value because of those. So I think it's really important that we not lose that in the context of this agreement. Because the agreements are predicated upon obtaining value to the community that's that's different from what you would see in most real estate transactions. The other thing that I think is really important to remember is that this was originally a redevelopment project. Redevelopment was intended to eliminate blight. So the city council in the late 80s, early 90s determined that we needed to exercise our redevelopment authority in order to eliminate a blighted condition downtown. And blight was an economic consideration that basically said private enterprise alone cannot make this work. So we need to engage the redevelopment authority in order to assemble the property, put together a piece of property, and do a redevelopment deal which was based upon the economic projections at the time, and you ended up with the Paseo Nuevo development that you have now. It turned out that economics changed, and it wasn't good, but we can't ignore the legal constraints. A couple of years ago, when you declared the property to be exempt surplus land, you did so on the basis that the property is so encumbered by the existing legal agreements that that going through the surplus land process, which would have required you to put it out to bid, make it available to housing developers and others, that process didn't apply. Why? Because this deal cannot come together unless all three parties agree to it. AB, Yardy, one party, nor the shop off, DSP another party in the city so without the three parties coming together the deal doesn't work Okay, thank you.

That's really helpful. I'm framing with the redevelopment, so I guess the bottom line for me is I just want once this deal is done I don't want to still be on the hook for anything and I see the Marburg and refuse agreement as being on the hook and I also see giving a subsidy for discounted commuter permits being still on the hook. And this whole thing has been very complicated agreement, and these seem like two very small things. And I'll mention it here too, and I know this is going to be extremely annoying, but I do think it'd be so nice to just have right of first refusal if the whole thing ever sold again. And we'd never be able to pay for it, we would never be able to buy it, but I sure would like the public to have the opportunity to take that to a vote. At that time, do you want to buy it? And have there be some way that it doesn't happen again, and other than, you know, trust and appreciation and all of that, which I have. but things happen, and I just, that's the one thing that still nags at me is that we just would just love to have that, but definitely the Marburg and the discounted parking permits, especially that I realize that the 750 I thought was like addition, so thank you.

Ms. San Maria.

Thank you, Mayor Rouse. I want to highlight what some of my colleagues have mentioned in the public about the great benefits of this project. But like some of my colleagues here, and thank you all who have asked questions, this is our time to do due diligence. So I've been trying to compile questions that I've been getting from the public. My colleagues have already asked quite a few of them, so I get to skip a lot of these. But let's first talk about the, since we just left off on the parking. This is for our city staff. So just so that everybody's clear, the discount is in perpetuity. It's forever. Is it Yardi and DSP or just Yardi?

It's both.

It's both, right? Okay. And that'll be in perpetuity forever. They have that discount with the city, correct?

No. Okay. So there are perpetual discounts. for the parking. They're slightly different between Yardi and DSP. They're in the packet. The DSP has 80 parking permits. They're 24-7. They pay according to the parking schedule that the city council determines from time to time. The Yardi has 24-7 permits and it also has commuter permits. The commuter permits have a discount attached to them. They both said that they are perpetual licenses, which basically means that they continue to go on as long as they continue to buy the permits. So it's a right to buy permits. It's not anything other than a right to buy permits. With respect to Yardi, if they ever convert Lot 1 to private parking, the parking permits in Lots 2 and 10 go away. In other words, as Mr. Yardy indicated, they're a way for Yardy to provide parking for its guests, its invitees, and its employees in local city lots, but then they pay a price. As we talked about, there's a 25% discount on some of the permits.

Okay.

Thank you so much. If I could add as well, the permits for lots 2 and 10 are only... Yardi would need to keep lot one open and available to the public in order for permits and lots two and 10 to still exist.

Okay, thank you. And I know the $750,000 contribution was sort of mentioned. It's not necessarily a causation thing, but it was just something that Yardi's contributing because they're opening up lot one. Is that what I'm hearing? Or what was the reasoning behind that contribution?

It was in consideration for both the parking permits and the discount and for keeping lot one, you know, for basically the acquisition of lot one. So it's basically just a deal point as part of the negotiation. But it's not for anything in specific. Got it.

One thing I think we need to put into context here, currently lot one has public parking but no revenue to the city. all of the revenue from the third amendment to the lease with what is now Prop Co leased lot one to the Paseo Nuevo developer and with it all of the revenue goes to Paseo Nuevo and that's part of the current lease.

And that's going to be the case going forward if we're transferring land. They still keep all of the revenue from that parking, correct?

They have agreed to keep it open as a public lot, but essentially it would become a private parking lot that's open to the public on the same terms and conditions as other city lots. So, yeah, they keep it open. They run it and let the public park there.

Okay. This is for our staff. How much of a discount did you already ask for initially? Did it start at 25% or...? Was it, were they asking?

No, it was more.

It was more, okay. And how did we get to the $750,000 contribution?

It was simply a negotiated number. There was not a calculation that was done. There was not a value placed on it. It was simply a back and forth discussion with the Yardi Systems team. And that was the number that we landed on.

And how much did the city ask for initially?

Those were, you know, I don't, I want to be careful because those were part of a negotiation that, you know, it's not the deal that's here in front of us and so I just want to be thoughtful about the confidentiality of some of those conversations and, you know, this is the deal that's here in front of us. There was a back and forth in terms of what Yardi Systems initially asked for and then what we have brought forward as the negotiated deal with council.

Okay, thank you, Ms. McAdoo. I do wanna be careful with the sensitivity of the issues, but I also have an obligation to ask for context for how we got to these numbers. So I'm gonna move on to the property tax estimate. I know, was it about 100 and something thousand that we estimated in revenue per year? Because I know we're only getting a fraction of it. Could you remind us what that number is again?

I think it's 120,000 and that is the city's share. So the overall property tax revenue annually will be much more than that. The city receives about 11% or 12% of every dollar of property tax that comes in. And that's where that $120,000 a year came from. The rest of the property tax revenue goes to the county, the school district, the other taxing entities.

Yeah, that makes sense. OK. I'm going to ask really quickly about the contribution to the Local Housing Trust Fund. It's $5 million. I think, again, it's a great start. How did we get that number? Did Yardi offer less? Did the city ask for more? How did we get to that number? Was that just what Yardi offered right up front and you all were like, this is wonderful, let's take it? How did we get to that number?

No, there was a back and forth conversation in the context of the whole deal. And so Yardi had offered less, we went back. Same with DSP partners. They had offered less, we went back. And so that was how the negotiation worked.

Was that started by an initial proposal of the city that, hey, in order to do this, you would contribute something?

No, both... both Yardi Systems and DSP Partners had initial proposals to the city and then we went back to them with revised negotiations and deal points.

Okay. Just a couple more questions stay with me. The lease of, or leasing the land, I know that's been mentioned multiple times. I heard that it was pitched to Yardi and DSP and they said that it was contingent on us transferring the land that they were going to go through with this deal. Did we ever get as far as figuring out how much that lease revenue would have been per month? How did they determine that that was not feasible for their project?

I mean, there would be, we didn't even go down that route because it was just a non-starter in the negotiation. So we asked if there would be interest in negotiating a ground lease. Both parties said no. And so at that point, there was not a conversation about, you know, negotiating that ground lease. And I think a lot of it has to do with the financing potential of the properties. And, you know, both of these partners have outside financing partners and probably were looking at calculations with their financing partners, and that was the determination. So there wasn't further negotiations about what if any lease revenue. I will point out that the city has never received any lease revenue from this property since the property was constructed in the 90s.

Okay, final question. We heard a bit, and I've been hearing actually a lot about this from constituents, establishing a community land trust. I never heard that be discussed in the conversation. So I'm seeing Ms. McAdoo shake her head. It doesn't look like it was ever considered. I want to say, I think most of us in this room, we want to see the housing get developed. We want to see downtown revitalized. But also what I'm hearing from the public is that we want a balance where the public can still have some sort of say and stewardship on this land. This is community land, city land, but it's really the communities. So if that wasn't ever considered, why not? Why did we never even think about establishing community land trust and allow the community to have a say in this in perpetuity?

Well, because it really doesn't work that way. You're talking about establishing a community land trust for what purpose? And that would be a disposition in conveyance of the property. So you would still have to go through the same process of declaring the land to be surplus land or exempt surplus land and then go through a process and then have a... conveyance to the trust for some purpose. And so in this particular context, if you were to convey the land into a trust, it would still be subject to the same legal restrictions that would exist. And what you would essentially do is divest this body of control over the ultimate decisions of what's done with the property and give it to somebody else.

Well, isn't that what we're doing by transferring the land over? We're no longer having a say as a city.

I would also just point out that I think given the restrictions in the ground leases, I mean, both SAO PropCo and DSP Partners would have to agree to a conveyance of the land to a land trust, so it's actually legally, I don't think it's even technically possible given the current restrictions on the property.

Not possible because all three parties would have to agree.

Agree to it, correct.

Right, that's... That's why I say this doesn't work.

I want to be very clear the reason it doesn't work is not because legally it doesn't work but because we would need to have three parties agree and the three parties wouldn't agree to this.

There is a legal agreement that requires the three parties.

There's legal restrictions that would apply to creating this. Normally community land trusts are done with things like open space properties and those kinds of areas where you're maintaining it for a specific purpose for a long period of time and you transfer land the management of the property to something else. In this context, the city council ultimately has the responsibility for managing the city's property. That's what you do as essentially the trustees of the city.

And then once we transfer the land, we are no longer trustees, we no longer have any say or responsibility with that.

That's true. Whenever you transfer title to the property, you transfer title to the property. I would say, for example, if you were gonna do a long-term lease, which we did in the past, the redevelopment agency did a 75-year lease, they basically transferred ownership of the property for 75 years. And so it's the same kind of consideration.

But it's not permanent, right? We're not transferring the land for 75 years, it's a long lease. That's what I'm hearing from the community.

And I will say the city does, even with the transfer of the property, the city still retains land use control over the property through our zoning ordinance and general plan. So while we don't own the property anymore, we still have land use control over the property. So if there is a change of use or a proposed change of use, that would have to come back through the city's processes.

Okay. I just want to be very clear, my final question. So we did not even explore any long-term lease options. None of that was discussed because it was a non-starter in the negotiations.

Okay. That's correct. Okay. Thank you. Ms. Herman.

Thank you, Mr. Mayor. Just one brief question and then comments if that's appropriate. Comments after.

We're going to do a round of questions first and then come back to comments.

I'll just have one. And I guess it'll hopefully make sense in the context of my comments. But were we to pass a bond to, say, purchase back some piece of land or project, how long would that take? I mean, floating a bond is like a year plus minimum, right?

Well, it'd have to go on a November general election, and so we'd have, that, I mean, that would have to, you'd have to put the measure on the ballot in August for a November election, and then again, the... And then go to the bond market. And not only that, you would have to, because it was for a specific purpose, it would be a two-thirds majority vote required, and then if that did in fact pass, we would then have to structure the bond issuance, which is not, that doesn't take maybe, it's a few months, but I think the bigger hurdle is getting the two-thirds passage of a bond to fund the project.

Okay, so I think we could just say at an absolute minimum, if timing and every single thing was in our favor, it would be one to two years for that process, probably. Okay, thank you. And then a quick follow-up, Mr. Henschke, and this is related to the right of, first refusal which I think is important to think through. I have never seen in my experience a right of first refusal that is longer than like 90 days at the absolute maximum. I can't imagine a right of first refusal would be indefinite or would stay open for two, three, four, five years, right? Yes.

My experience is similar to yours, that if you are going to have a trigger for essentially a reverter going on into the future, those are very, very rare.

And time limited. Certainly not half a decade.

This agreement, I think, has significant remedies that are available to the city. The covenants are to basically use the property for the intended purpose. Those covenants exist. The affordability covenants are recorded. The city's regulatory authority over the property can never be contracted away. So we are not contracting away your ability to Control the uses of the property into the future through our traditional land use powers.

Thank you Mr. Doris, I just want to thank you honorable mayor I did want to follow up on that point because I understand the policy implication of a right of first refusal But as you said councilman Harmon, you do not see those things very long You see it a 30-day period because the effects it has right in terms of the investment, you know It really holds and stops a project And just looking at the city's mechanisms of how we process things, there is no way we could get together the mechanisms to even act. I mean, it would really be a stretch to even be able to fulfill and come to an answer back on a first right of refusal. I just also did want to add to some main points. Obviously, coming new into this deal, some of the main critical junctures. Again, one of the most important things is the valuation. We've heard that argument. over and over and looking at that. These encumbrances, again, I can't stress that enough, play such a huge role. And I understand the public looking at this, looking at it as a jewel of the city, looking at the location and understanding the impacts. But what does that really mean in reality? You know, a simple, probably very rudimentary, but fair analogy of someone saying, okay, we understand a very luxury vehicle. We can understand the blue book value of being $500,000, right? Okay, I'm ready to pay that. Except For the next 40 years, you can't drive it. You can't do anything with it. You can't even use a little cup holder and put anything in there, right? Is someone going to pay that money then for that? So what does that mean in terms of the value? And as far as the negotiations we've talked about, I mean, it's amazing that this came together in six months. But make no mistakes, it was a very, very complex negotiation because you have three different parties. dealing with them with each kind of having, we're talking about a legislative body, each having veto powers, each needing to basically come along swimming in one direction in that. And so that is an important aspect of that. And so the city obviously negotiating team tried to negotiate the best terms we can for the city, um, for the benefit of the city. We are entrusted with that duty. We have a legal obligation for that duty. So I just want to assure council that because I understand that concern. I understand the public raising those questions. I understand your responsibility to bring those questions to us, which are very fair. So we just wanted to assure that point. You know, we look at the numbers. Two of the most impactful numbers, too, we look at, too, when we're looking at this PowerPoint, is the numbers nine and six. And one of those numbers referenced is the nine years that Macy's was abandoned, six years that Nordstrom's abandoned, right? Those are also competing numbers because there's nothing been done with those properties. Just wanted to address those points. I want to leave with the staff We're doing a great job for presenting it But I just wanted to give one perspective on just the overall understanding the points the questions where they're coming from But the broader picture in terms of what we're dealing with here All right, mr. Friedman Thank you.

Most of my questions have been asked just a couple follow-up questions just Again, on the lot one, just for clarification, if we didn't go forward with the permit, they would have the option to just close lot one? So that's the trade-off right there. I just want to be crystal clear on that.

Correct. We're offering the permits because they are maintaining and they're not using all of Lot 1 for their employee parking and not having it be public.

And that would not affect whether or not they still contribute the $700,000? No. Correct. That's independent. Speaking of Lot 1 being open then, as the deal stands, is there any... requirement that the rate for the public to park there is tied to the public rates for the other lots? Is it the same? Is it different? Or is there a requirement that it stay the same so there's no difference to the public?

They're required to keep it available to the public at the same rates as the public is able to park in other public parking lots within the city.

Okay. Then last question. And we've talked about the... the Museum of Contemporary Art and Center Stage Theater, there are protections built in so that they remain there and that it's affordable for them to remain there so that their rent doesn't get skyrocketed so that they become priced out. And then the other part two of that question, just want to verify that, is should, going down the line a long time from now, ownership change, are there protections for those two facilities even with a change of ownership?

The answer is yes, but the protections extend for the next seven years. So there's a time limit on those to deal with changed circumstances that may exist. The yardies that we have expressed here publicly, their willingness to continue to work with them, but the agreements themselves have a time limit of seven years on the protections. We do specifically reference the art museum and the theater in the agreements.

So there's seven years, but then after that, what happens after the seven years?

It would be the same as any private landowner dealing with a community benefit asset like that. They would have to make their business decisions. We don't restrict it beyond the seven years in the agreement.

Okay. I'll save my comments for later. Those are my questions. Thank you.

All right. Very good. Question for Ms. Harris. On the significant new annual revenue for the city, around $700,000, is that inclusive or exclusive of the $300,000 now negative that we have that we pay out annually? In other words, is it $700,000 in new revenue plus the fact we do not have to pay 300,000, so in fact, net of a million. Is that more accurate?

Mayor Rouse, I think I'm following you in yes. So in the $700,000, it's $180,000 in TOT. It's the $120,000 mentioned in property tax. It's about $95,000 in annual sales tax and about $320,000 in parking permit revenue. Right. I will just note those numbers are also very conservative. Sure. And so I do anticipate that we're going to see more than $700,000 annually in investment into our community.

Right. Thank you. No, and I just... So quick clarification on parking, since I spent most of my adult career on the parking committee. And back in 1994, we had a consultant report. Imagine this, a consultant had a wrong projection. So after we bought lot six, we'd have 1,200, a deficit of 1,200 spaces still. Well, we don't. We have excess spaces. So the idea that we're going to use these even at a discount is revenue positive, is absolutely positive. And in fact, the parking system has been exploring different ways to create residential parking and other kinds of local parking permits at discounted rates as opposed to what we have now. We only have one lot in the entire system. That's Lot 9 that has dedicated This Is My Space lots. It's at the bottom of the basement of Lot 9. The rest of them that have parking permits are first come, first served. They're not restricted. The public can still use them. So if you have a parking permit and the lot's all full, which doesn't really happen, you still have a problem. It's like the harbor. You just don't use the parking space. So to clarify that and to put people at ease, this is a net positive for the parking system and for the city. So just so people know. All right, very good. With that, let's go to deliberations, and also we can entertain the recommendations if somebody's ready to make a motion. Mr. Jordan.

Thank you, Mr. Mayor. I'll be short. There's... That slide you had, slide 20, that just had all those bullet points on it, I find nothing to fault there. And in fact, after hearing the questions and the answers today, getting a little more between the lines on these things, I think I'm still convinced that each one of those are true. There was absolutely no joy in December when the original project just ran into the wall that it should have. I think when that was originally planned at whatever 600 plus units, we all appropriately fell all over ourselves to try and work that out. And I think real life intervened when they came back and said 250. It was clear because it was clear they couldn't do 600. And whether I'm right or wrong, I believe that there was no way they were going to be able to do 250. And I think when they went away after our December hearing, I think they looked at that some more and realized that too. Somebody, I don't know if it was one of us sitting up here or somebody out there characterized this now as being a Hail Mary. Absolutely not. This is just a normal, organic evolution from a project that wasn't going to work to something that does work. And my favorite, you know, a great embarrassment to myself, my favorite quote today is from Dan Henchke, who said, Write it down because I'm gonna use it for the rest of my life and that was This project rather than putting a dollar on the table Obtains value to the community and we've talked about this two weeks ago and we can talk about it all these through these things today What's missing on this this today is the actual impact to the downtown corridor in ways that we can't even imagine yet or anticipate but they are ways that it that are so contrary to what's out there right now that they are totally going to happen. You cannot put hundreds of employees downtown five days a week and you cannot put 100 or 120 residents in the 80 apartments there and not guarantee that there are positive impacts that radiate from this project in addition to those bullet points you see there. So I'm not gonna nitpick on the The details, I think staff has done a great job. I think the project partners have done a great job. All of that negotiation has taken place behind the scenes, and I have the utmost trust for all of our players involved and all of their players involved that we're getting the best project we're going to get as it exists today. So I'll be happy to support it as it is. Thank you, Mr. Mayor.

Thank you. Ms. Harmon.

Thank you very much, Mr. Mayor. While I concur wholeheartedly with Council Member Jordan's comments, I'm very excited to be at this point today. And I remain, as I was just a few weeks ago, strongly in favor of what's before us. I do want to take a few minutes to address some of the issues that came up in the conversation today, because I think it was a very worthwhile discussion. I think it's very important for all of us to be thinking through some of these questions. On the parking discount piece, Mayor Rouse mentioned this. Yardi Systems is going to be taking spots that are chronically underutilized and quite literally driving revenue that the city currently doesn't and wouldn't otherwise get. More to the point, as was raised, the totality of this deal that Yardi and DSP teams are investing, upwards of $100 million of private capital into our downtown, is really a key component here. I do want to acknowledge, of course, that they're both getting a lot out of this deal. I think we all know that. That's clear. But we shouldn't miss the forest for the trees when it comes to talking about a relatively minor discount on a small number of totally underutilized parking spaces. Um, I also want to address briefly the right of first refusal concept, because it's something that I also have thought a lot about, and I do think it's definitely worth discussing and sort of drilling down on. Um, to be clear, a right of first refusal in this context is essentially meaningless to us in the city. As was mentioned, we would never be able to afford the purchase price. And more to the point, we also wouldn't be able to float a bond or get our financing together in the timeframe that would be allowable under a ROFR. So while if we could theoretically suspend time, it would be awesome to be able to go to the voters and float a bond and get that money to buy this, that's not reality. No right of first refusal would be indefinite. And it simply just isn't a mechanism that allows one party to buy a parcel whenever that party happens to get their financing together. And given that, whether we're talking contracts or legislation, personally, I believe if a contract term or a rule or an ordinance doesn't do anything, and we know it doesn't do anything and we know that it can't do anything, I'm really not a fan of just putting it in there. And frankly, I think that approach of let's just put it in there and we'll see what happens and maybe we'll be able to utilize it is kind of how we ended up with the contractual mess that we're in in Paseo Nuevo in the first place. So I really think that it's worthwhile considering, it's worthwhile thinking through how that might play out, but the reality is it wouldn't serve us, it can't serve us, and throwing in additional complexity into an already complex deal certainly doesn't serve us now either. As to the documents themselves, our city attorney, Mr. Henschke, I know you've put your full focus and many resources into developing these documents and making sure that they work for us from a city perspective. I know you both to be excellent attorneys. I trust our city staff and you've done an excellent job putting it all together. I'm also a real estate finance lawyer in my professional life, and though I don't act in that capacity up here at all, my training does inform the way I think, it informs the way I review, it informs the way that I understand what comes before us. I have read the documents, and I've read them carefully, and I do find them to be entirely consistent with the deal points and the agreements that have been discussed publicly. And that was really important to me. And that's exactly what I saw in these documents. Um, what I expected on the basis of our last public conversation is indeed reflected in the agreements. Um, as far as I can tell. And so I, I very much appreciate that. Um, there has been tremendous excitement and tremendous community support for what's before us, both the DSP project and the Yardi systems project. I really believe that this is the best deal that there is. And respectfully, Council Member Jordan, I said this at the last meeting. I'll say it again today. We needed a miracle. This is our miracle. And I'm very excited to make it happen today. I'll be voting yes.

Thank you.

Mr. Friedman.

Thank you. This is a great day moving forward with this. It puts us on a timeline that 10 years ago, we saw the vacation of the Macy's building, and now we're finally gonna be going out of that vacated building next year when this project goes through. The timing is perfect because we have other critical investment that's going on as we speak with the Music Academy, the Film Festival, UCSB, and rather than trying to get another project that could come years from now, it puts these projects, housing, and hundreds of employees downtown that will support those new investments that are coming in in real time, not years from now, all in the same time, in addition to all the businesses that are going to be coming in there. It's transformative in its own right, but it complements everything else that's going on right now. I agree with my two colleagues on this. I'm prepared to support it as is. There was a lot of good questions raised but the time is to act and we don't want this getting caught up on points of minutiae. And then finally I'll say that the fact that this will be going forward next year, it also leads to jobs in the building trades. And those are very important because they're head of household jobs and those are jobs that are gonna come in right away It supports apprenticeship programs that are now growing and there's a resurgence in the building trades and that makes our downtown and these two projects a part of that. So I'll be supporting this for all the reasons that have been listed and appreciate the informed discussion today from my colleagues and look forward to this being another investment in downtown that's gonna really transform us and get us that, what we need to get the housing and get everybody downtown to revitalize it. So thank you and look forward to seeing it go to fruition. Ms. Santa Maria.

Thank you, Mayor Rouse. How about now? Okay, we're good. Yes, I mean, our staff, DSP, Yardi, you have all came an incredibly long way, and believe it or not, I am genuinely very grateful. Yardi, DSP, and especially Yardi, you know, coming forward and providing an option for us for what we could do moving forward when things didn't... GO AS WE MAY HAVE HOPED FOR BACK IN DECEMBER. I WANT TO BE VERY CLEAR THAT WHILE I AM SUPPORTIVE OF HOUSING AND ADDITIONAL ECONOMIC REVENUE AND ACTIVITY IN OUR DOWNTOWN, THE QUESTIONS WE ARE ASKING ABOUT THE THINGS THAT WERE CONSIDERED DURING THIS DEAL, RESPECTFULLY COUNCILMEMBER FREEDMAN, THEY'RE NOT POINTS OF MINUTIA, IT'S DUE DILIGENCE. we need to make sure that the community understands in context with Measure A that just passed, in the context of the questions of a long-term lease. And we're understanding that that wasn't doable, but these questions had to be asked because otherwise the community had been left in the dark for You know, it was a select information that went out. And, you know, the community doesn't have all the details, and understandably so, in negotiations you don't reveal everything to the public. I get that. But we have to, everybody in this room, we need to understand why there was those consistent emails that we were getting and people coming up doing public comment. I very much, while I see there are wonderful benefits to this project, I very much hesitate to call this a done deal, a miracle, a... It's a slam dunk, let's just do it. That for me raises red flags because we need to all be doing again our due diligence to make sure that it is the right project. And it's not about the people behind it, all of you are lovely, but it's about the project, the project itself. And so I do want to speak to a couple of the topics that were raised today. So I'll start off with the parking discount. I do agree with Mayor Pro Tem Sneddon that we need to just be equal in how we are treating our private enterprises. If we are giving a discount to one private employer, that's going to open the door for other employers who rightfully would wanna ask, well, what about us? We also bring a lot of employees downtown and we also need this and any one of them could make the argument that they too deserve DISCOUNTED PARKING. SO I'M HESITANT PERSONALLY ON GOING DOWN THAT ROUTE. I DON'T KNOW. I THINK COUNCIL MEMBER HARMON MENTIONED THIS IS QUITE A MINIMAL DISCOUNT. I THINK THAT IF IT'S SUCH A MINIMAL POINT, I THINK THAT IS A POINT THAT COULD BE IRONED OUT AND AT LEAST CONCEIVE THAT TO THE COMMUNITY TO BE LIKE, OKAY, WE'RE GOING TO PAY THE PRICE OF THE PARKING. WE'RE GOING TO BE LIKE EVERY OTHER BUSINESS. AND I JUST WANT FOLKS TO CONSIDER THAT. I THINK WHEN IT COMES TO THE, ON THE RIGHT OF FIRST REFUSAL, I DO AGREE WITH COUNCILMEMBER HARDMAN THAT IF IT'S NOT GOING TO DO ANYTHING, THEN MAYBE IT'S NOT WORTH TRYING TO GO BACK AND FORTH ABOUT IT. IF IT'S SOMETHING THAT WE ACTUALLY COULD USE, THEN I WOULD BE INTERESTED IN EXPLORING IT. BUT IT SOUNDS LIKE IT'S SOMETHING THAT WOULD ONLY BE ON FOR WHAT, LIKE 90 DAYS? AND IT'S NOT LIKE, Yardi and DSP are gonna acquire the land and then be like, just kidding, 89 days later. We wouldn't have the time to get finances to purchase it back. If it's not gonna really move the needle on anything, then I don't think there's a point in really moving it forward or... you know, we can talk about it, but I don't know that we'd really have to push for it. The one thing that I want to really highlight, though, is there was a singular line in our staff presentation. Wait, let me see the, let me check the, slide 16, no, wait, slide 15. Can we go to slide 15, please? So we talked about great DDAs are translated into Spanish. All of that is wonderful. There is a single sentence there, financial contribution, substantial and additional contribution not feasible. And with all due respect, I need to ask, according to who? Because financial contribution of, let's say, $5 million to the local housing trust fund, how much does it cost to build a housing unit these days? We've heard it from staff. We've heard it from my own colleagues on the dais. I mean, it's like a million dollars to build a unit. And yes, leverage with state funds, that could unlock more, but I never saw those numbers. And I asked for those numbers of, okay, if we're getting $5 million into the local housing trust fund, how much could that be leveraged into? I don't see any of that. And so it's difficult for me to just see that sentence and be like, okay. Because I don't necessarily feel that it is, it's substantial, that that's a subjective standard, really. Because, I mean, with all due respect for Yardi that has hundreds of millions of dollars in revenue, you are not paying what the projected value of this could be. We're not asking you for $40 million at all. But the contributions from both GSB and Yardi, they're all one-time things. And they're really great contributions, but... We are, this isn't a, we're not giving this away temporarily, this is a forever thing. And we are transferring this land never again to have say over what happens with it. And the thing that I keep hearing from folks is like a lot of them are, I guess a lot of them are really rooted in the nostalgia of, you know, they grew up going to Paso Nuevo and They want to see it revitalized, and we do want to see it revitalized. But again, if we are committed to making a substantial contribution, like it says there, I am a little bit concerned that that was, it doesn't feel like it was given that much consideration. In fact, I can't remember who, but I remember even when I made the comment of exploring this last meeting, I saw heads shaking immediately. And I mean, we needed to at least consider it. And I'm not sure that it was fully considered. And that's troubling, because I do think that the local housing trust fund, especially if that Macy's parcel will never be housing, that would have been the way to start offsetting that. So respectfully, I am very grateful for the contributions, and I'm not saying much about DSP, because quite honestly, I don't know how, I don't have the numbers on DSP's net worth and all that stuff, so I'm not even looking into that, but I mean, With Yardi, I have seen you be so generous in our community, and I wanted to carry that spirit with our housing trust fund. And again, I'm trying to look at how much that contribution could be leveraged into. I didn't see any numbers on that. And I'm not sure that it was fully considered. That being said, I am really looking forward to if this project is completed or when this project is completed. that we see more residents downtown, that we start to fill in that neighborhood that State Street is. But we also have to consider the impacts that this is going to have. If the majority, if there's not going to be housing built on Macy's and the majority of the housing on Nordstrom is market rate with some moderate income units, guess what? We didn't make any movement on our RENA numbers for the low and very low income. And right, this isn't the project for that. We have to think about this in the context of everything. And we are way behind on those RHNA numbers. And I don't know how this moves the needle very much. So I think the public made some fair questions on a lot of this. And I personally am very excited to see the redevelopment. But I'm also struggling with a lot of this just feels like we're saying, no, it's done. Take it as is. We're not amending anything. And if we're not going to consider an additional contribution to the Local Housing Trust Fund, if we're not going to consider a long-term lease, then we should at least consider the smaller objects, the smaller deal points, which can be the, you know, no discounts on the parking or, you know, I know somebody mentioned contributions to the public transit system because, yes, you are going to have local employees who would be able to use that public transit system and avoid additional congestion on our streets. So just some things to consider. Either way, I mean, I don't know if these things will actually fully be considered. If not, I'm still looking forward to supporting the project to completion if my colleagues are moving it forward. But again, I do think that the PR for this was wonderful. We really They'll put out a really good image of this project because it is a good project. There were a couple of details here that I do think we could have done better due diligence on really exploring long-term lease agreements, a community land trust. These are things that the community asked for, and I don't think we fully explored all that. So I will be abstaining from the vote. Thank you.

All righty then. Well, I think one thing everybody's got to remember is that within any kind of investment like this, there's risk. The city's risk is de minimis compared to what these people are putting in there. It's $100 million worth of investment, and that has to be considered. It doesn't mean everybody's going to have a moonshot out of this because anybody that's been around business long enough, and I own commercial real estate. I was in business in a couple of different states. There's risk, and there's loss, and there's potential. So if somebody's coming into the downtown from a building they own in Goleta to be downtown, have a presence downtown, I really appreciate that and think it's the best thing that could happen to us. Rather than talk this out more to death, I think I'm really ready for a motion and get her done. Mr. Jordan, is that you?

That would be me, Mr. Mayor. I'll just recommend the staff recommendations in regard to the exemption from SICA, the introduction of the ordinance, approving and authorizing execution of the development and disposition agreements, and authorizing the city administrator and city attorney to take those future actions on The agreements in closing escrow. Second.

Thank you. Ms. Sneddon? Oh, no?

Carmen, second.

Did you second? Okay, you had your light on. I did, because I have a question.

Yes, to the motion, yeah.

Ms. Sneddon?

I just, the one area that I still think, and I don't know if saying yes today makes it, but I just don't want to be on the hook for the trash. I just think that's one lingering, weird... thing to have to be connected on when we're, the whole point of this is unencumbering all of these weird connections. Um, so I, I'm going to vote yes and I'm very excited. I'm very excited. Um, but I just feel like it's, it's a little bit painful. I'll say that too. It's, it's hard to let go of, um, land and it is the heart of the city. And, um, Even though I'm excited about the outcome, I'm going to feel a little sad. I think a lot of people are. And I don't want a lingering bill to remind us. And honestly, sometimes trash bills, we're going to see it later today, sometimes they come back way higher than we thought. And I just don't want the sort of pain to still be dealing with something. And right now, nobody pays for it, which is And we don't understand that either, but I don't want to be the ones later being like oh wow That's a quarter million dollars. I didn't know that I just don't I don't I don't want that so but supporting the motion and very very excited that comments for the record Well, I'm hoping it can be maybe sorted out by the time we vote on this I'm it's such a small thing, but it's kind of maybe a big thing and I I don't want this lingering encumbrance.

I think the documents are what they are today. That is what the council is voting on. We can continue a conversation, but at this point, I don't want to recommend changes. It is a part of the deal that has come before the council. It would require a lot of discussion about the language and back and forth and attorneys. I'm happy to continue the conversation with Yardi Systems about that, but I think our recommendation today is that we can maintain the agreements as is and that we can continue the conversation.

We can't just delete the sentence that says... There's... Oh, there's no sentence, so we're not on the hook.

Well, it's...

I want to know we're not going to get a bill later.

I don't recall a place in the agreement where that sentence is there. We do have, there are ancillary agreements where the city did covenant to pay for trash within the system for others, but it's not in this agreement.

So outside of this agreement, we could take time on getting out of those covenants and it's not part of this agreement at all. Okay. Thank you.

All right. Very good. And Ms. San, ready to the motion?

No, not to the motion. Thank you, Mayor.

Okay. So we have a motion on the floor, first and a second. If there's no further discussion, we will entertain the vote on the motion.

And to confirm, this is a motion by Council Member Jordan, seconded by Council Member Harmon. For the staff recommendation? Correct. Okay. Go ahead and vote, please.

Passes six, two, one. Was Ms. Sanmory abstaining?

Okay.

Yes, sir. All right, very good. Thank you very much. Good job, staff. With that, we will move on to item 17.

Item 17, approval of amendment for one year extension of community workforce agreement with tri-counties building and construction trades council agreement.

All right. Good afternoon, Mayor Rouse, members of the City Council, Brian Damore, Public Works Director. I'm here today for what should be a pretty quick item, just looking for a one-year extension on the existing CWA, Community Workforce Agreement, that is currently in place and set to expire next month. A Community Workforce Agreement, it's a collectively bargained agreement in this particular case it's between the city of Santa Barbara and the tri-county building and construction trades council and it sets terms and conditions for specific construction projects so a little bit of history just additional background on this particular item this started back in 2018 when the council adopted an ordinance changing the municipal code 4.52, which requires a project labor agreement for all projects greater than $5 million. The language of that municipal code change is included on this slide, but the key thing really is the $5 million threshold. That's required per the city's municipal code for all projects as we move forward. And it's satisfied through the community workforce agreement. So you may have noted that it was in 2018 that the code changed. It wasn't until 2021 that we had negotiated between city and the trades council, uh, that particular agreement, the, the community workforce agreement. So it did take a little bit of time to negotiate the terms on that. Um, in the meantime, I don't think we had any $5 million. Projects. So it was kind of okay that it was taking some time to negotiate that. but it was executed back in July of 2021. So that it was for a five-year term and that period of time is coming up. It would be next month. Some of the key items that are included in the community workforce agreement include a local participation goal, which does focus on the tri-county area, Santa Barbara, Ventura, San Luis Obispo, also provision for no work stoppages, And then I also did want to point out there is an allowance for non-union or non-signatory contractors to participate. on a project even with the CWA in place. And this slide here, it just highlights the projects that we have moved forward under the CWA since it was put in place in 2021. Only one project that we've completed, so there hasn't been a lot of experience working under this yet. But the library project is one that was completed under the CWA. And then we have four that are currently in various stages of construction. The largest being the police station project, probably the largest and most visible right now. But also El Estero Electrical is a significant project. The Dwight Murphy field renovation, obviously that's a huge project. project that's highly visible and then cater reservoir resiliency that was recently awarded so construction is just kind of getting going on that one but it gives you a sense it's a large variety of projects and interesting just that five million dollar threshold these are all way above that threshold we haven't had too many that are closer to the 5 million range. There are a lot of projects that would be coming up that would qualify for this. I didn't list them here, but there are definitely a significant number of projects that are being lined up that would fall under the CWA. Yeah, and so the current status, the project labor agreement, that remains in effect. As I said, that's a municipal code requirement. So we really can't let the CWA expire because we need that as the means to satisfy the PLA requirement of the municipal code. And just given staff workloads, we would like to have a little bit more time. There's a few things we're interested in negotiating with the Trades Council. Probably nothing too significant, but it just takes some time to get through that, to work through that. And given other staff priorities, And just workload, the recommendation is that we extend this for one year. That would give us some time to sit down with the Trades Council and work out a longer-term extension to this agreement. So with that, that is the recommendation. I'm available if there are any questions. Okay, questions for Mr. Damore.

Ms. Sneddon.

Thank you, Mayor Rouse. Was Cabrillo Pavilion also?

That came before. Came before, okay.

And then I was just hoping there might be some data on how well it's accomplishing local participation. Do we get any kind of feedback like that so we can point to that this now, the local preference is working?

Mayor Rouse, Council Member Sneddon, so as part of these projects that fall under the CWA. We do hire a CWA administrator, and they do collect that information and compile reports. I don't have a summary of that information available, but that is something that we can bring to the council if they're interested.

And Council Member Shen, I would recommend, since this is simply just extending the current terms, I think as we come back to council to talk about some of the negotiating points later, that we could bring that data back to council.

That's great. You know, I fully support this today. I just was wondering if we talked so much about the circles and the radii, and it would be great as this unfolds to be able to sort of point to how well it worked.

Mr. Freeman.

Thank you. Just a couple quick questions. I'll have to save comments. But just on the El Estero project, Mr. DeMoore, That project was actually bid twice. Can you explain what happened there and when the second bid came in, the difference and which one was more, which one had more bidders, which one had fewer?

All right. Mayor Rouse, Council Member Friedman, that's correct. The El Estero project, that was bid twice. The first time we went out to bid, and I'm going to flip back just to the language of the municipal code here, where you can see it says, accept maintenance and repair. So it was staff's opinion that that project was exempt from the project labor agreement requirement due to being maintenance and repair. And we put it out to bid under that assumption. Bids came in. We actually received two bids. This was in 2023. The lowest bid was $34.0 million. And then there was a grievance filed by the Trades Council after we went out to bid, and they challenged our determination of that project being maintenance and repair. I'm not going to get into the details on that, but there was an arbitration process we went through, and staff did not prevail on that, and we were required to go back out to bid. and have the CWA provisions included in the rebid. So that took place about a year later in 2024, and we received three bids at that time, and the lowest bid was $33.7 million, so almost an identical end result about a year later.

Thank you. Just wanted to put that in there for the record that a year later, actual dollar-wise, it was slightly less, and there was more bidders on that project. And then the other question, because it did come up originally when this was going through, was whether or not non-signatory contractors would be able to compete. And can you talk just briefly about the police station, since it is our largest project, and whether or not the lead contractor is a signatory or non-signatory?

So on the police station project, we're contracting with ProWest, who is a general contractor, and they They contract with subcontractors, and some of those subcontractors are signatory contractors, and some of them are non-signatory. But they're all eligible to participate on a city project that has the CWA requirement.

But the Pro-West is a non-signatory? Correct. So there has been on the largest project that we've done, signatory and non-signatory have been able to participate. Yes. Thank you. That's all the questions I have.

All right. Very good. We'll go to public comment on this. Start out with Martin Rodriguez. You have three minutes.

Good afternoon, Honorable Mayor and Council. It's good to be here. I am in support of this extension. It is doing what it's supposed to do. It is increasing the skilled and trained construction workforce in Santa Barbara and surrounding areas. It is slow getting started. As you mentioned, it's the large cap projects that allow us to bring new blood into the trade are just now starting. And with that, we brought in, just in the ironworks, brought in about 75 new apprentices in the area. The city of Santa Barbara is a tough one to recruit from. Most of our recruits are coming from the northern Santa Barbara County. But that's good also because we're in dire need of skilled and trained craftsmen. There's been a construction boom, not only in the city of Santa Barbara, but now it's happening to Vandenberg Air Force Base. We have two large hangars, going to be a massive space launch complex built there. We have satellite complexes that are expanding. where they're going to actually build those there. And it all takes skilled and trained craftsmen. This is a perfect opportunity for the city, for the county. It does create a lot of jobs. It does create careers. These aren't jobs. These are careers that are sustainable where you can still buy a home. Maybe not here in the city, but outside areas, they're still doing it. So with that, unless you have any questions for me, I'm done. Thank you. Thank you. Joshua Medrano.

Okay, let's see, Danny Zaragoza.

Good afternoon, Mayor and Council.

My name is Danny Zaragoza. I'm with Labor's Local 220 here out of Santa Barbara and Santa Maria.

We're in favor of the extension of the CWA.

One, because it has been working as it was intended to. Speaking for the laborers, I can't speak on the other trades, but as for the laborers, I did a quick little test on two contractors, one for El Estereo and one for Dwight. El Estereo lead electric. They're one of our signatory contractors. They're still having to abide by the CWA. With Dwight Sports Field, it's oh no construction. Between both contractors, from June of last year to May of this year, They've comprised about close to a little bit over 12,000 hours that they've reported. Of those 12,000, 7,000, a little bit over 7,000 have been journeyman hours, and about close to 5,000 have been apprenticeable hours, which is great. That means that, and it's all local hire. It's all workers here from Santa Barbara. So it's really benefited. We've been able to, a couple of the guys that worked on the Dwight project, Apprentices have actually completed their apprenticeship program and graduated to become journeymen And that's allowed to us to bring in a couple of more apprentices to continue So yeah, it's been it's been working really well, and we hope to you know to continue it, and that's all thank you.

Thank you rich He's a knitter nightery rich can't quite read the last name I

Good afternoon, Mayor Rouse and council members. It's a night, eh, Randy?

Thank you.

You're welcome. I am in very favor of the extension of the CWA. Yes, it is a driving force to improve the local economy here in the city, as well as our county as well. To speak on behalf of the sheet metal workers, which I'm a representative of, which is the HVAC union. Those of you who are not aware, between the police station and the county probation headquarters, since April 1st, our union has brought in 25 new apprentices, and that's men and women too. So we are promoting our industry to not only the brothers, but also new sisters to get into this trade, to create a new career for themselves and their families. And again, this is a mechanism how we get to where we want to meet these goals. And again, thank you for your time, and I'm in much favor of this. Thank you.

Thank you. Are there any speakers online for this item? Madam Clerk?

No, Mr. Mayor.

All right, very good. With that, we'll go back to Council. Mr. Friedman.

Thank you, Mr. Mayor. I'll just keep this brief. This is just a one-year extension, and we will get more data as we go into next year. Fully support moving it forward. This took place, then Council Member Hart and I brought this forward, and it's hit many of our goals. We just heard that the apprentice programs are growing, and that sets us up for the future, especially with such a resurgence in the trades. We need to be setting ourselves up, and it's grown the apprentice programs, and that's very critical. There have been successes, as we just heard, with the El Estero project, and right now we do need more time for our staff because our staff resources are stretched thin to properly update the community workforce agreement, and a one-year extension gives us that time. And then as a reminder, the public comment today mentioned it, that this allows us to prioritize local residents, veterans, minority-owned businesses, and women as well into these projects. So fully support extending it for just this year and then working with the trades to come up with how we're going to improve it and meet our future goals. Thank you. Ms. Santa Maria.

Thank you Mayor Rouse. I agree with Council Member Friedman. Thank you so much to our building trades for coming out and if you know anything about me, I am union all the way. So I wholeheartedly support this. I am very encouraged to hear the success stories that come out. I would extend it for longer than a year if I could. But I think this is an adequate amount of time. Like Council Member Friedman said, it gives our staff ample time to really develop this further. Yeah, okay, out of all the items on the agenda, I'm gonna say this one. I know we're throwing around the words slam dunk and this, I don't see how we could vote against this. So fully supportive. Thank you so much to all of you who came out and thank you to our staff who's working diligently on making sure that our community workforce agreement is the strongest it can be and that we could have a strong local workforce.

Mr. Jordan. Thank you, Ms. Mayor. I don't have any problems supporting an extension. I'm probably not going to be too excited about the results of the extension, but my conversation seven years ago with some of the organizations sitting in the room was not that we'd have a goal for local hires, but we would actually have requirements to meet local hires. There are companies in town that are And I don't know the details, so that's the caveat. I don't know what I'm talking about, so what's new? But there are companies in town that are working some jobs totally union jobs and then other jobs not union jobs. So I know it's possible. But when I drive by major projects and see the signs, I don't see a name of a contractor that I recognize in town. So... You know, Pirates of the Caribbean, the code be more like guidelines, right? So having goals is not really what I wanted to see out of this agreement over the past five to seven years. I'd like to see requirements get built in with stepstones to that. And the other major thing I talked about back then, and I didn't hear it mentioned today, The real future of anything in the trades, whether it's changing a tire or fixing a washer and dryer, are the kids in high school or junior college and having programs for them. And everybody was all excited about that until they didn't need my vote. But I still think the erosion of historical shop classes at the local level is, geez, just for your, maybe not, what do I know? but just maybe for your own survival is something that at one of these times you really need to get involved with. I know guys personally that are auto body shop guys that make $150,000 a year working eight hours a day. And there's great livings to be made in the trades. And by policy and happenstance, we are not very supportive of that. We take over sites that house the trades and push them, if not to the outskirts of the city, from where they were traditionally in the city to Ventura. And you have repairmen or tradespeople now driving in from out of town where they used to be in the city. And what better way to start to remedy that than start at the high school and junior college level to build the next generation. So that's what I'd like to see when you come back after your negotiations. and some actual numbers, some real data on, if I'm just thinking this by myself, that there has been improvement in true local hires through this process. Thank you, Mr. Mayor.

Ms. Harmon?

Thank you, Mr. Mayor. I, too, am going to be voting yes on this extension today. A COUPLE OF THOUGHTS AS MY COLLEAGUES ARE TALKING. IT'S SO FUNNY, COUNCILMEMBER SANTAMARIA SAID HOW COULD WE VOTE, HOW COULD WE DO ANYTHING OTHER THAN VOTE YES ON THIS? AND WHILE OF COURSE I AGREE, I WOULD JUST SAY THIS WAS HUGELY CONTROVERSIAL AND HUGELY CHALLENGING AT THE TIME THAT IT FIRST CAME BEFORE US, AND IT WAS BY NO MEANS a foregone conclusion that this deal would be made. It was by no means, I mean I think up here even when some of us were on council it was a very divided conversation. There were real questions about whether it would work, how it would work, whether it would do what those of us who supported it, said that it would do. And I'm just so pleased. And I know what we are hearing today is anecdotal, but anecdotally, it has led to meaningful increases in good head of household jobs, training opportunities right here in Santa Barbara. That was its point, and that is what we were seeing. I'm excited to see the hard data. I'll be watching from afar. But even just the numbers we heard in public comment are meaningful. The sky has not fallen, and in fact, it is quite the opposite. I want to specifically acknowledge Councilmember Friedman in this conversation. It really wasn't until he invited me to the building and trades in in Buellton, and we spent a long afternoon not only going through the details of what a CWA is and what it means, but really seeing the training that goes into teaching our neighbors how to be skilled tradesmen that certainly opened up my perspective, and so I have a lot of gratitude for him in taking the time to really connect me with the folks who are doing this work, and I can't help but think It's my sort of closing thought here. In this age of AI where we're talking so much about what the future of work will look like, I can say with certainty that Claude cannot replace the skilled tradespeople who are the backbone of our community, who are literally building our community. And so I agree, this extension is necessary and the continued investment and what this deal will look like in the years to come will benefit all of us. Thank you.

Ms. Sneddon.

Thank you, Mayor Rouse. So, yes, I would say that this was difficult at the time and this is a great place to be and really happy that we'll be negotiating further. I mean, I'll share that my grandfather was a sheet metal worker and a younger member of my family just recently walked into the Union Hall and started classes and testing, and it was pretty amazing what a welcoming, inclusive environment that was, is, and starting that level of education, and this is a person who is highly, highly skilled in other ways, and really is interested in the hands-on learning that happens in the trades, and when the economy is so uncertain as it is, to know that there's a place you can go, get education, get job placement and that it will likely be local. Going to the trades games recently, there were three generations in a family who all had good experiences in the trades and were still working in trades and sort of celebrating that. So I think this is definitely one of those areas where the unknown of it raised a lot of questions. And now that it's been in place and the known of it is really working. And I would love to see the data to be able to back that up. I mean, we've seen it anyway. I don't need the data to prove that it's happening. I would need the data to celebrate how well it's working. and to see if we can have it work better for local preference too. To Council Member Jordan, this is education opportunity, and I'd really like to share that I work, I'll take off whichever hat I'm wearing right now, I work with the Ocean Collective and Blue Economy at City College, and building a trade program, basically, to repurpose the people who used to build oil platforms, to work on the skills of decommissioning oil platforms. And the conversation that came up in there is, well, let's work with the pipe fitter trades to make sure we're not competing against each other and that the education is building on each other. And I think those conversations are happening between welding happening at City College and working with pipe fitter trades to build that together. So I think there is Excitement and growing in the education and that I think we just haven't really seen it. I'm here at Council but that is that is happening and I think we'll see see more of that happening later. So I just support and keep working on it forward and this is Definitely one of those that I think it's it's it's working out for what it was intended and thank you

All right. Well, yeah, it was a problem when it was adopted. I was on council at that time. And the same reasons then are the same reasons today. You know, the Skipper, Allen, Cushman, you know, Bailey, a lot of the local contractors were precluded from betting on city jobs because there's just that high percentage of the trades. There's not that high in this town. And so we would have, and the classic example was our very first project, which was the library project. And, you know, the people that were having the mantra of on time and on budget, I was going, well, Wow, what has happened there? Now, since then, we've gone from lowest responsible bidder to best value, which has been a boon and a save. We've never precluded union labor. There's never been a problem with that. Took it when we could get it. We've also paid prevailing wage on all these public projects. But to exclude many of our local contractors, and what would happen was, is contractors would come up out of L.A., THINKING I KNOW THIS WORK, I KNOW THESE GUYS, AND THEY GET UP HERE AND REALIZE THE SUBS WEREN'T HERE, AND THEY GET IN TROUBLE, AND THAT WAS THE ONE AND ONLY TIME WE SAW THEM. AND ONCE AGAIN, I'M LOOKING AT MY LIBRARY LATER, THEY'RE GOING, OH, YEAH, WE REMEMBER THE LIBRARY PROJECT. SO I'M GOING TO LOSE THIS VOTE, NO BIG DEAL, BUT I CANNOT SUPPORT IT BECAUSE IT DOES PRECLUDE, IT DOESN'T INCLUDE, OUR SYSTEM BEFORE WAS NEVER EXCLUSIVE. WE DIDN'T SHUN UNION LABOR. THIS SHUNS NON-UNION LABOR FOR OUR PUBLIC PROJECTS. So, and I said it was unfortunate that the electrical contractor went to bid and was considered a project as opposed to a maintenance thing. That was also a project that had to be bid by a larger electrical firm outside because we didn't have the size firm to do it here. Skills, do apprenticeships, yeah. A lot of those guys, Skipper, Ford, all those guys also have those programs within their companies. So, and we are looking for skilled labor. There's no doubt about it. But I don't think this is particularly the method by doing it. Having to hire somebody to actually manage this on the outside is not the way to do it. So I won't be voting yes on it. Do you have something further, Ms. Santa Maria?

No, it was just to make a motion.

Okay, very good. Go right ahead.

Okay, I move staff recommendation. Second.

Okay, first by Santa Maria, second by Friedman. May we have the vote, please, Madam Clerk, unless there's further discussion. I don't think so.

This is for item 17. We have a motion by Councilmember Santamaria, seconded by Councilmember Friedman for the recommended action. Please go ahead and vote.

And that passes 6-1 with Rouse dissenting. Very good.

Madam Administrator, will she work into the next item? I think if we could take a 15-minute break before we start the next item, that would be great.

Okay, let's do that then. We will reconvene at quarter after.

Thank you. you Thank you. So, Thank you.

We'll get started here in just a sec. All right, very good. Ms. Grant, are you presenting? Or Mr. DeMoore?

Mayor Rouse, I'll just give a quick intro. Brian Demore, Public Works Director, here for this item. This is Safe Streets for All. This was a planning grant that we've put together now a draft plan, which just wanted to remind the council the item today, there's no council action needed. This is just to introduce this draft plan and receive any comments. And I can also assure the council that we've been working to keep this item pretty brief, given other items that are happening today. So with that, I will hand it off to Jessica Grant.

Good evening, Mayor and Council. Jessica Grant. I'm the supervising transportation planner with the city. So why this action plan matters is traffic collisions remain a major public safety issue with pedestrian cyclists and motorcyclists facing the highest risk of injury and death. This plan responds by prioritizing safety and recognizing that collisions are preventable through enhanced street design, policies, education, and enforcement. For background, this action plan is primarily funded with a federal grant from the Department of Transportation. And this planning effort is a two-year planning effort that we kicked off in fall of 2024. This plan is very focused through the lens of Vision Zero and Safe Systems approach. We became a Vision Zero city in 2018 to eliminate all fatalities and severe injuries in our roadways by 2030. The Safe Systems approach is very similar to Vision Zero. It's just the federal nomenclature. And if you were to review the principles on both, they're very similar. And basically, the principles are along the philosophy that human error is inevitable, but deaths and serious injuries are preventable. And safety is a shared responsibility among street design policies, education and enforcement, and not to rely just on individual behavior. As far as for the action plan chapters that are required for the grant are all outlined in the blue on the left-hand side of the slide. We were also allowed additional chapters which were the past and present. Approach to traffic safety because this action plan is not the first time we're thinking about traffic safety We're always thinking about traffic safety and so it really helped put context To what we have been and are currently doing and then our safe routes to school chapter it was originally from the 2006 pedestrian master plan that definitely needed some updating so that is now included and The big component of this plan is really data-driven safety analysis. We analyzed five years of data from 2020 to 2024 to understand where, how, and why severe and fatal collisions were happening. And we did put emphasis on fatal and severe injury collisions to guide safety investments. We found that our key findings were that vulnerable road users, so cyclists, pedestrians, and motorcyclists are disproportionately impacted by severe and fatal collisions. Intersections account for about 52% of severe and fatal collisions in our city, and collision frequency, while most collisions happen during the day, the severe and fatal happen in the mostly in the evening hours. And primary collision factors are unsafe speed, driving under the influence, improper turning, and failed to yield for right of way. Ultimately, with the safety analysis, we established a high injury network. Where you see the red and orange lines on this map represents 20% of our roadway miles. We have about 254 roadway miles in the city. So just 20% of these miles is where 88% of our severe injuries happen. So if we were to make a significant impact in trying to get to the Vision Zero, this is where we should be putting our investments. In addition to the data-driven analysis, we really depended upon community engagement and cross-departmental collaboration as well that also really helped shape our plan. Community engagement was multi-pronged with surveys, multiple surveys, webinars, in-person community workshops, and public hearings. where residents got to share their concerns about speeding, crossing safety, different stresses from walking and biking to work, and what's working well as well. All of those helped inform our strategies and project priorities. Equity is another very important component of the plan. And why that is because underserved communities often have a higher exposure to dangerous road conditions like poor street lighting, higher volume streets and speeds, and lack of sidewalks and biking infrastructure. Just in general, going across several academic sources, technical studies, there is a strong correlation between traffic collision severity and underserved communities. In this chapter as well we referenced we have been doing a lot of work in our underserved communities within the City of Santa Barbara, so all of those projects are documented in the chapter. And our Transportation Circulation Committee also had a great recommendation is to talk about equity in terms of transportation modes, too, because owning a vehicle is very expensive. It runs approximately about $10,000 by the time you think of upkeep, gas, and insurances, and all of that, versus walking, biking, and transit. So this chapter also closes with considerations to move forward with certain policies. Finally, another big component of the plan is, okay, given the data-driven, given outreach, what we've been hearing from the community, what are our strategies and what are the project selections? So we've outlined six strategies here that I'll go into right now. The first strategy again is to focus work whether from an engineering perspective, education enforcement on our high injury network where we believe given limited resources to focus our effort on for the most significant impacts in decreasing fatal and severe injuries. Also, the second strategy is to implement traffic safety countermeasures. These are some of the countermeasures up on your screen that we use most frequently and are priorities. We also have additional countermeasures in the appendices. But when you review the past and present safety chapter, we've had really good success in implementing a lot of these engineering design solutions and want to continue with that. The third strategy is to implement priority safety projects. I will not go through all of the corridors, but the big transformative projects that we're recommending are on the upper State Street area, Las Positas Road between State and Modoc, and Cayo Real. And then there's smaller scale corridor improvements in some of the segments in the downtown area. And also, we're proposing a pilot project on De La Vina at the next pavement maintenance plan to reduce the travel lane and add a bicycle lane similar to what we've done in the vicinity of Cottage Hospital and downtown De La Vina. All of these, again, would continue to have community outreach as if any of these projects move forward. In that chapter, this is one example of what a priority safety project would look like. Again, these are very conceptual, but in the case for Las Positas, for example, given the high volume roadway and speeds, we are recommending that we separate out the road users along this corridor, especially being a corridor that has an elementary school and Irwin Warren Showground, which has a lot of community programming. Strategy 4 is to implement the previously identified safety projects. What we heard from the community is just, well, what happened to such and such project? And we're continuing to work on a lot of great, really important community safety projects. For example, the Cliff Drive Vision Zero project and the Milpus Crosswalk safety project. So those are all funded efforts. Those make up our DAY-TO-DAY WORKLOAD FOR IMPLEMENTATION AND WE'RE GETTING CLOSER TO THE CONSTRUCTION PHASE. THE MAP ON YOUR RIGHT REPRESENT THE AREAS THAT WE'RE IN PLANNING EFFORTS ON OR JUST WRAPPED UP PLANNING EFFORTS AND AS YOU KNOW FROM RECENT COUNCIL MEETINGS, THANK YOU FOR YOUR APPROVALS. WE'RE MOVING FORWARD WITH GRANT APPLICATIONS ON THE EAST SIDE OVERCROSSING, THE CASTILLO STREET UNDERCROSSING AND DOWNTOWN STATE STREET. the remaining segment where you see where Shoreline Drive is, that's part of the waterfront adaptation plan. We anticipate some projects to come out of that that have pedestrian and bike connections and just overall roadway safety in the waterfront area. The next two strategies is just additional considerations related on some other corridors for analysis and also specific intersections to make improvements on. So Council Member Gutierrez, I know that you've had a lot of Westside residents talk about the need for a sidewalk on Carrillo Hill to have it on the south side as well. So that is in the plan. And Council Member Sneddon continues to come up time and time again for improvements on Foothill at the intersections that go to Peabody Elementary. So that is in the plan. We're planning to write a grant application for that shortly and some other sidewalk infill on APS. Just a short segue, we also wanted to tie in just our general land use planning and how that's an overlooked traffic safety tool. So when our general plan was adopted in 2011, it was very forward thinking to really have a lot of strategy and policies to incentivize growth in the downtown area, really putting housing near places of work. Why that's important from a traffic safety perspective is it minimizes new traffic congestion. And as we have to implement the 8,000 homes from the regional housing needs assessment, that becomes really critical. There's also, besides our local policies, state policies as well, incentivizing developments to make them cheaper in the downtown by not requiring parking requirements. Okay. So why is it safer to have housing centrally located? There's kind of four short ideas around that. And it's shorter travel distances reduce overall exposure to roadway risks. Fewer long distance commutes reduce congestion, lowering collision risk for everyone. Shorter travel distances make walking, biking, and transit more viable and safer. And reduced dependence on major arterials lowers exposure to corridors with higher severe injury rates. We overlaid the high injury network just in the context of where we're seeing the multi housing development. Again, it is most of what you're seeing is in our downtown area. And also with the high injury network in context to accessory dwelling units, most of them again are in the downtown area, but there is some in the outer lying areas beyond downtown that put higher stresses on the roadway network. In summary for the plan, there's one thing to just have a plan, but it's really to activate the plans, and we're going to continue to monitor the collision safety data. We do want to have yearly reporting before the Transportation Circulation Committee Police and Fire Commission as well as City Council. We're working on dashboards that will be available for the public to make sure that all of this data is transparent. Our next steps would be to just hear your comments today. We plan to go back next week to the Transportation Circulation Committee to review those comments. They did forward the draft plan that you're seeing here before you today. And then if we would like to return to City Council for the final action plan consideration on July 28th. That concludes our presentation.

Thank you very much. Prior to going back to council for comment and questions, we do have a few fewer slips. We'll begin with Laney, and I am not going to try your last name. But you've got to tell me. I've got to know.

Okay. Good evening, mayor and council members. My name is Laney Jai Kusuma. It's better phonetically. I'm a safe routes to school coordinator with move Santa Barbara County, where I work directly in our local schools as part of our contracted safe routes to school program. with the City of Santa Barbara. MOVE's been engaged in this planning process from the beginning. Our team participated in the Transportation and Circulation Committee hearings and public meetings on the draft chapters, and we contributed directly to the Safe Routes to School chapter. That kind of technical collaboration with our government partners is central to how we do our work. As part of our Safe Routes to School contract, we're responsible for keeping school traffic safety assessments current. So during this Safe Streets for All planning effort, we coordinated and updated assessments at Adams and Peabody elementary schools, and both of which sit on those high injury networks. So this connection between school safety and the broader injury network is the kind of thing that we're happy to say this plan gets right, and we're really glad that MOVE's expertise and the community's feedback are reflected in the final document. One other thing is we recently published an e-bike safety pamphlet that I believe you guys will have access to. And we have them in both English and Spanish. And we're happy to provide more to your offices upon request. And we as MOVE look forward to continuing as an implementation partner with the city as you guys move from planning to action. Thank you.

Thank you. Ian Bauke.

uh thank you mr mayor city council name is ian bauke chair of the city's transportation circulation committee today here in support of the safe streets for all action plan this is a voluminous document that kind of goes over comprehensively just about everything you can think of in terms of transportation safety in our city whether it's schools and e-bikes or specific projects that you know The data that we have post-COVID informs safety decisions. I really hope that, you know, I know you have some major items before and after this, but that you really take this opportunity to, you know, ask important questions and make your comments because this is a federal grant. It does have to be finally adopted this fall, and it's going to inform many, many years of ongoing discussions about specific projects. I'm very excited about Upper State Street, Las Positas, and Cayo Real. particular and really want to express appreciation to the staff over our over a year and a half of meetings on this and all the drafts they really did make a great effort to get community input and incorporate it you saw that on the slide talking about Foothill and La Cumbra as additional places to continue to look at especially as you're seeing housing development around La Cumbra I do want to you know just add my personal Additional comments, you know, some broader policy decisions that are more in your lane than our lane on the TCC. Included in the resolution, you'll see, I think it's section three, the complete streets policy. I think that's absolutely imperative that we have that city policy that says every time we're going to rip up a road, we're thinking about how can we make this the safest road possible when we put it back together. There's some language in there about, you know, when we... When it's not feasible, when we're gonna not do that. And I have total confidence and trust in the staff that we have today as to making those decisions on the bias of making roads as safe as possible. but I do wanna see that language strengthened a little bit more to be more ironclad. In my opinion, it should be, we're doing complete streets on every project, unless it's physically or legally not possible for fire code, or it would cost tens of millions of dollars or something like that. So that's been best practice in other cities as well, and I think with that one minor change, we could have the strongest possible policy implementation of this plan. I'll also just add, the staff report had a little line that, this is just something I've said over and over again about, this is public safety. It's actually the number one public safety issue in the city if you're talking about what is going to cause the highest risk of physical injury or death to a Santa Barbara on a daily basis. It is traffic accidents. And I think we need to, we wouldn't say that you have to go get a grant to build a new police station or a new fire station. So why are we saying that every project has to have a state or federal grant? Let's look for more opportunities where we can leverage our local dollars to advance local safety. Some of these projects cost too much money to do that, but some of them don't. So just want to put that out there and thank you all for your time. Thank you.

Hannah Cohen.

Hello Council and Mr. Mayor. Thank you so much for letting me speak today and thank you to staff for putting this together. This is a really comprehensive plan. I'm fully in support of moving forward with it. It's really important that we have a plan that can bring us forward to having safer streets. There are a couple areas that I think should be included in this. I would really like to see La Cumbra Road and Mission between Modoc and Castillo be considered as high priority areas for safety. I live on the other side of the freeway from almost all businesses and it's really difficult for me to be able to bike to almost any shopping that I need to do because it's just not safe for me to cross the freeway in those areas. So really making sure that we have connectivity in our safe streets plan is important. And we really should be prioritizing making streets safer for bicyclists and pedestrians because it is truly a sustainability issue. Having safe streets allows people who are maybe a little less comfortable walking or biking to actually start biking or walking instead of driving their car. Most car trips in America are less than three miles and that's something that could be moved to biking or walking trips if they are very safe. So that's just a really easy climate goal that we can have. And, yeah, I just want to say that this is a really great plan and would like you all to support it. Thank you.

Thank you. Madam Clerk, are there speakers online for this item?

We have one raised hand from Lily Heidger. Two raised hands. Lily Heidger and Tricelyn Nelson.

Lily higer, please go ahead Hello mayor and City Council, thank you so much for reviewing this plan Thank you so much to staff for all the hard work that was put into it. I attended the presentation to the Transportation Committee and the in-person presentation at the library as well and I'm just blown away by these thoughts and data and time put into this project and I want to speak in support of it and also just add how important the idea of adding additional traffic calming is. I know that it's not super feasible in all parts of the city but want to speak in favor of it. I was hit by a car while biking and in the Upper State Street area while actually not on Upper State Street but on the back roads on the dedicated bike route and the crash was a result really not of of us I mean the car was technically at fault because I had the right of way but it was more of a fault of the lack of visibility the high speeds and the speeds of which cars pass bicyclists like me and the lack of traffic calming measures like speed bumps that could really improve those different corridors so this plan again reiterating what everybody has said extremely important I know you all aren't voting on it today but I want to put it on your radar as something that's going to be really vital for our city in the future and again give it my full support thank you speaker please and our final speaker lowered their hand please

Raise your hand if you do wish. Trislyn Nelson, please go ahead.

Thank you so much. Hello, Mayor and Council, and thanks for having me. I am Trislyn Nelson. I'm a professor of geography at UCSB and associate dean of sciences there. I wanted to share that we have been awarded a supplemental grant in support of the City of Santa Barbara Safe Street for all action plan. This is a program for regional bike and pedestrian count data collection funded by the Department of Transportation. We are really excited to be able to partner with the city in providing data on pedestrian and bike volumes in particular. So it matters because when you're trying to track safety through time, it's important to understand if you have 10 crashes in association with a route that has 10 bicyclists, or 10 crashes and 1000 bicyclists. And we need to be able to answer questions like, is our biking and walking rates increasing over time? Do we see more people using this infrastructure? Is it making the rates of safety safer? So we are excited that we already have two state of the art counters installed at the State Street underpass and the Mitchell-Tullerian Bridge, and they're counting, at State Street, we're seeing an average of 4,200 pedestrians a day and 1,580 bicyclists a day. The Mitchell-Tullerian Bridge, we're seeing 625 pedestrians on average a day and 560 bicyclists on average per day. So all to say that we're really in support of this initiative and standing by to be a great partner in developing metrics and data that can .

Thank you. All right, very good. That was the final speaker.

Correct, Mr. Mayor.

Thank you very much. Okay, this is not an action item, so please go ahead and combine your questions and comments for the staff. Ms. Sneddon.

Thank you, Mayor Rouse. Thank you. Thank you for bringing this and presenting it. I have a couple questions. Really, thank you for working with the schools also and adding those few in there, too. So this isn't... Addressing all of our roads everywhere. This is just for this Particular grant that the focus is on the most heavily trafficked or the where the accidents are the most I just want to confirm that Just because district 4 is completely not on the list except for that one little squiggle of them And I and I know the answers to this of why but I just yeah Thank you.

My rose council members that and Yes, this is a data-driven And so the data is really pointing us towards which corridors have the biggest opportunity to make the biggest impact on reducing overall collisions. And so District 4 is light on streets that have higher collision rates. We did hear from the community there are certain community-desired features in the neighborhood. It may not be on a high-collision corridor, but sidewalk infill on APS has come up. Crosswalks on Foothill have come up even though they're not high collision corridors Thank you.

And so if residents don't see their streets in these Slides they shouldn't think they're not going to get any attention It's just not going to be with this grant how those would be addressed. Is that correct or no?

council members then Part of this effort is prioritization and So it is a recognition that the city does have limited resources. And how are we as a city going to be most effective reducing collisions? So it's not to say that we can't work on other streets. It's just that it's an acknowledgement that the biggest opportunity for collision reduction is on these higher collision corridors. Okay.

And I agree with that. I mean, focus on where it's most dangerous. So how do we prioritize paving or things on other streets that aren't highlighted in this figure? Is it just part of the streets maintenance program?

That is a separate effort because it is more maintenance driven. As far as safety improvements go, we are heavily reliant on grant funding. And by doing that strategy, it keeps as much money flowing towards critical street maintenance needs as possible. But we're also beholden to what grants will fund. And so the grant funding sources that we typically tap into have criteria. You know, they prioritize schools. Collision data often comes up so that really aligns with what we're seeing on our high collision corridors. Disadvantaged communities are also prioritized too. So some of our downtown east side, west side areas tend to be funded better through grants. So some of the areas that are not grant eligible, if the council would like those to be prioritized, that would have to be through the city's capital improvement plan. Okay.

That answers that, thank you, because clearly the priority needs to be where there are children going to school and where these collisions are the highest, but this has come up over the years that if that's always the highest priority, then some of the streets up on hillsides that do wear down quite a bit and steep, they're sort of much longer in the cycle, which I understand. I just wanted to sort of make sure that doesn't mean they're off the list. And I have to thank you, Mr. Bailey, for always meeting with neighborhood groups and explaining exactly this, that the priority of where the safety is is where the data shows on these maps. So I have a question about the data. What is the story with Hillcrest? Why is that little squiggle?

Over the five-year analysis period, there were two more severe collisions that happened on that. It's an anomaly. So if we look at snapshots in time, you know, every five years or so, we wouldn't expect to see hillside again. It's just that with this particular data set, there were two collisions that caused it to show up.

And then on slide 20, the multifamily housing, there's the blue dot around the mission. And I think we all know why there are collisions there. And what are the two blue dots on the upper state part? It's slide 20.

Council Member Sneddon, the blue dots actually represent housing developments.

OH, OKAY.

SO THE SIZE OF THOSE BLUE DOTS ARE IN PROPORTION TO THE NUMBER OF UNITS THAT ARE PROPOSED. SO THOSE TWO BLUE DOTS ARE THE TWO LARGER HOUSING PROJECTS THAT ARE PROPOSED THERE.

THANK YOU. PROPOSED, NOT EXISTING. I THINK THAT'S WHY I WAS CONFUSED. BECAUSE I SAW THE BLUE DOT AROUND THE MISSION AREA AND I

Okay, but that's proposed in that area. Thank you.

Yeah, those are my questions and just really thank you. And I guess I have one more question. So you get funding and for safety to do what? Like you get the grant, it's on the street here. What are you doing to address the safety?

Council Member Stanton, great question. So there's different reasons to pursue grant funding. Some reasons are strictly safety, data-driven collision reduction safety. Other reasons are trying to increase mobility. For example, a bike lane project or a sidewalk infill project. So we have a number of policies, bike master plan, pedestrian master plan, and now this is... specific to collision reduction, but there is some overlap. Some of the needs identified in the bicycle and pedestrian master plans can also be addressed through some of the projects that have been identified here. So we're really opportunistic. As a grant opportunity comes up, we're looking at our past policies and plans and seeing if it's a good fit that we can identify or we can implement anything that the community has identified in the past.

Thank you. Fantastic. You're a really great team at doing grants.

And just to add for this particular grant source, in order to apply for an implementation grant, you have to have an action plan approved first. Okay.

And so this is the action plan? Correct. Today. Okay. And do we need to make a motion for it or we just review and comment?

Just review and comment today. Tentative to return for final review is July 28th.

Thank you so much. Thank you.

Ms. Ann Maria.

Thank you, Mayor Rouse. Thank you so much to our staff. This is an incredible presentation and really looking forward to seeing these projects completed. I have one concern that's been raised by constituents in my district, in particular about the need for traffic calming devices to the high pedestrian area of Canyon Perdido and Quarantina Streets that's near the high school, downtown club, Providence School, the junior high. And I'm gonna be honest with you, I don't technically need glasses, but I can't really see on the presentation if that area is part of the of the areas that were noted as high pedestrian, the need for some improved safety measures. So I just wanted to ask if this area is being at all considered, given the high pedestrians. I'm just not sure that I, I don't know if I'm looking at this right. So first question is, is that area between, the area around Canyon Perdido and Quarantina Street, is it Quarantina? Yes. Is that included in this?

Mayor Rouse, Council Member Santamaria. Yes, Caneperdito is on our high injury network. But what this plan is not focusing on is traffic calming. And so there's a pretty complicated history of traffic calming in Santa Barbara. just with limited resources and the number of documented safety collision issues we have in the city. The city's strategy right now is to focus on collision reduction and not necessarily speed reduction. They're not always the same thing. Speed reduction, there can be complaints about speeds on streets that don't have collision problems. And that tends to bleed more into a quality of life issue than it does necessarily a collision reduction issue. So this plan is really focusing on just collision reduction.

Okay. But it seems like Canyon Perido is part of this. So under this grant, what type of improvements can we make to Canyon Perido? If it's not traffic calming measures, what else could we do?

So it would be looking at things like lighting, improvements specific to crosswalks, Those sorts of things. More features that are directly tied to addressing a specific collision pattern. For example, like putting in flashers at the high school entrance. That's something we'd like to implement through this grant at some point.

What would be the best way for the surrounding neighborhood around that area to give... feedback on what would be some of the most useful measures. Because I saw that there was a previous slide that has all of these wonderful different measures that we could implement. And I think, I mean, what I'm hearing from the public is, yes, traffic calming, and I know it's not necessarily always the cause of all these high collisions, but they are related. And so I think the bottom line is we just wanna ensure that children around the high schools and the junior highs and everything are able to get there safely. And especially with the downtown club, students are coming out right out from the high school, crossing the street. And so if we're not doing a traffic calming measure, I know the community has a lot of input on what else could be done. So what would be the best way for them to give input, you know, after we discuss this and this goes forward today?

Yeah, great question.

Yes, so we do have a project page related to this effort. So it's santabarbaraca.gov, the backslash safe streets. And it's also safestreets is the at santabarbaraca.gov for the email address that is also on our project webpage. And so we receive emails at any time and post planning effort too. We're always welcome for public feedback. And what always helps us the most is not necessarily somebody saying, oh, you need to put X traffic control measure there. What helps us is just their day-to-day experiences and, you know, what causes a mother to put out their arm when they're trying to get their child safely across the street to a school. Like, those are the... details that we need to understand and it again helps us affirm what we're seeing in our collision data. And then specific again to Can and Perdido, we do have a project sheet for that. We do have under analysis is the Can and Perdido Quarantina intersection that we, so we do have it on our radar already. So I just want to make sure that it is captured. We have a few more with our Always Stop study. That needs to be concluded first, but it is on our radar.

Thank you so much. I just wanted to make sure that it was on your radar, and I just so appreciate the staff's diligence on this. One final question. Do we have data about the collision rates on Canyon Perdida? Is that part of what can be found on the website, or where could folks find that?

Yes, it is part of our plan. So leading up, this is what you're seeing on the screen today is just the example of recommended improvements on Ken and Perdido Street. But the page before would actually have what the collision patterns are to that roadway. And so on this particular map where we're recommending improvements, where you see the little icons below in the narrative of what's recommended, those are the types of collisions with those traffic countermeasures would be addressing. So like the... stop sign icon as a vehicle pedestrian related measure. This black star is that we need some additional lighting to lower the nighttime collisions, that type of thing.

Thank you so much. Final question, Mr. Bailey, for the, let me take a look here. Actually, no, never mind. I had the question answered. I don't want to repeat myself. Thank you all again. I'm fully supportive of this. I'll just make really brief comments. The safety of our pedestrians as we are talking about increasing the THE ABILITY FOR PEDESTRIANS TO BIKE, WALK, ET CETERA. I KNOW SOMETIMES WE TALK ABOUT THE TRAFFIC CALMING MEASURES ARE NOT NECESSARILY ALWAYS WHAT WE GO FOR BECAUSE WE COULD IMPLEMENT OTHER THINGS TO PROMOTE PEDESTRIAN BICYCLE SAFETY. THERE ARE TIMES THOUGH WHEN WE USE THESE TRAFFIC CALMING MEASURES, RIGHT? IT'S NOT LIKE WE EXCLUDE THOSE.

COUNCIL MEMBER SANTA MARIA, THE There's big trade-offs with traffic calming, and our community has some really unique emergency response and evacuation needs. And so the challenge with traffic calming, in order to get traffic calming features that are effective, they slow everybody down every day. So it's the day-to-day, it's during an evacuation, it's when our emergency responders need to get somewhere quickly. We are quite selective when we choose to do those things. A recent example is Milpa Street at the very north end where it turns the corner and bends into Annapomo Street. There was a repeating pattern of drivers overshooting that curve. And so in response, we consulted with our partners in the police and fire departments and agreed that one single speed hump approaching that corner is in the best overall interest of public safety. But it's really drilling down into the specific issues like that and making really thoughtful decisions that's not going to impede their ability to do their jobs.

Thank you. That's really helpful because I do, because my district borders District 4 and the folks in the Riviera, I do hear often from folks who live up in the steeper parts of our city that, I mean, of course, they go through the east side to evacuate. And so I do want to be very sensitive about that, that we don't impede on evacuation routes, but also so the community understands we could implement traffic calming measures if they are what seems to be most appropriate, but there's so many other options that, you know, you have all done a great job at exploring and using those options. So, yeah, I'm fully in support of this and don't really have any other comments. Thank you all.

All right, very good. If there's no further questions or comments, this is not an action item, so thank you very much. Appreciate that. And we'll move on to the next item. If you could read that into the record, Madam Clerk.

Certainly, and this is item 19, fiscal year FY2027. operating and capital budget deliberations, ordinance introduction, recommendation that Council C introduce and subsequently adopt by reading of title only and ordinance of the Council of the City of Santa Barbara amending Santa Barbara Municipal Code section 4.24.190 to adjust the appropriations of funds from the utility services tax. E, the title of the ordinance and or resolution has been read. If there is no objection from any council member present, further reading is waived pursuant to Santa Barbara City Charter section 511.

All right, very good. Thank you. And for this item, if people want to submit speaker slips, new speaker slips other than the ones we have, we'll go to 615 for in-person and online. Also, 615, please raise your hands by then if you want to participate on this item. And with that, our finance director is under the table, for gosh sakes. What's he doing? Oh, there you are.

All right. Thank you. Honorable mayor, council members, members of the public. Thanks for sticking with us while we found power under the table. And we are here for final recommendations and adjustments, a continuation of our deliberations process for the fiscal year 2027 budget. Our requests today are that City Council approve certain adjustments to the fiscal year 2027 recommended budget identified by staff and detailed in the schedule of staff recommended adjustments. Excuse me. Provide final direction to staff based on Council's review of the fiscal year 2027 recommended budget over the past several weeks Introduced and subsequently docked by reading only an ordinance of the Council of the City of Santa Barbara amending Santa Barbara's municipal tax code section four point twenty four point one nine zero to adjust the appropriations of funds from the utility service tax provide direction to staff regarding uh resolution of the council of the city of santa barbara regarding the fiscal year 2027 budget being out of compliance with resolution number 23-124 the policies for reserves And the title of the ordinance and or resolution has been read. If there is no objection from any council member present, further reading is waived pursuant to Santa Barbara City Charter Section 511. Today's agenda is before you. We'll once again just look at the budget calendar and budget process. Oops, sorry about that. Follow up from prior budget hearings. And then look at the staff recommended adjustments and fee changes. Have a council discussion about some of the department budget hearings and look at the adjusted general fund overview. And then repeat our recommendations to council and open up for public comment questions and discussion. So first we have our... public meeting schedule. Again, we had a budget work session before the budget was produced on April 9th. This was the only special meeting. The rest of these were regularly stated, either finance or council meetings. On April 21st, we introduced the proposed budget to the public and to city council. On May 5th, we had a finance committee where we reviewed the budget recommendations. On May 12th, we had another budget hearing in full council going over all the general fund departments and supporting funds for those departments. On May 19th, we had a second budget hearing in front of full council for all of the other fund departments. And then last week on June 9th, we began deliberations. That brings us to today on June 16th. We are continuing budget deliberations and our next regularly scheduled council meeting is on June 30th for budget adoption. so let's have a little bit of follow-up from our prior budget hearings so this is from the prior deliberation meeting we've grouped a lot of the recommendations that we heard from Council we recorded those all and we've kind of grouped them by topic here so there are several slides as you can see on the title so we'll just walk through those so the first topic is the local housing trust fund there was a recommendation made to direct staff to transfer the one million dollars from the local housing trust fund to the back into general fund reserves. There was also a recommendation included in the city administrator's recommended budget is a transfer of $1 million into the local housing trust fund from general fund reserves. And that was reduced from the original $2 million that was suggested in the prior year. And so there was a recommendation to reduce further this transfer from general fund into the local housing trust fund as a strategy to reduce the reduce the shortfall of the general funds excuse me of the general fund reserve so this would just be deferring that amount until such time that the housing authority could approach staff during 2027 when they have a project that's actually ready to start work on There was also another suggestion that we direct staff to reinstate that $1 million deferral to transfer more of the general fund reserves into the local housing trust fund for a total of $2 million transfer. Staff has come back with an alternate recommendation. We can either reappropriate $1 million of the home funds to the local housing trust fund And this would come from projects that were previously allocated and are no longer moving forward. So this would result in a total appropriation of $2 million in 2027. Or alternatively, we could also reduce some projects in the Measure C capital fund by $1 million and appropriate these funds for the local housing trust fund. Again, bringing that up to the $2 million. Moving on to the city administrator's office, it was suggested that we do not approve the local government management fellow positions. This will result in a savings of $160,000 to the general fund. In the mayor and council's office, there was a request that we consider adding an office manager position to support mayor and council, which would result in an additional general fund expense of approximately $186,000. Alternately, staff recommends that council direct staff to explore alternate staffing model for the city administrator's office and the mayor and council jointly. Moving on to the police department, it was recommended to direct staff to freeze the three police officer positions that are currently vacant. I would also like to mention any of the positions that are being frozen or eliminated are not currently occupied. So that would result in a general fund savings of approximately $576,000. This next suggestion is not for the general fund. It is for the solid waste fund. And that recommendation was to direct staff to not utilize reserves to smooth rates increases over the next three years, which would result in a $600,000 savings to the solid waste enterprise fund. And Ms. Parentow, our sustainability and resilience director will guide through the next slides.

Good evening, mayor and council. So quickly before I go into the in place or backyard service fee, I want to ground this in the context of the overall solid waste franchise agreement. which in June of 2023, we did renegotiate a 10 year agreement. And the main goal of that renegotiation was to control rate payer costs for the coming agreement and to modernize the service. So a central part of modernizing that service and controlling those costs was moving to automated service, which requires a truck like you see on the slide in the middle there. And that truck transition does require a transition away from cans and to carts. So everyone in our service territory was transitioned to CARS at that time. The major benefit of this change is outlined in this graph. We were able to have Marburg keep their compensation flat for the first two years of the agreement, which resulted in a year-over-year savings to our ratepayers of over $2 million, with the cumulative effect being estimated at over $22 million in the 10-year agreement period. And that's assuming that Marburg wouldn't have requested increases on the 2013 agreement that it would have been status quo. So probably even higher, those savings. And this is really important because we did accomplish the goal of controlling rate payer costs. So moving on to the in place fee. Instead of eliminating the in place service, customers can continue to opt in and pay for that service. When we transitioned, we had 14,000 customers getting default in-place canned service. That was just the service we provided by default at the time. The vast majority of those have successfully transitioned to curbside carts. So what we're talking about today is just the little red portion of this graph, about 1,400 customers that continue to pay for in-place elective service. The issue is that in that new agreement, the city pays Marburg $25 per cart. That's just the flat fee that we pay them. But we charge a flat fee of $44.89, regardless of how many carts they have. And we have a customer, for example, that has 17 carts, which means that customer pays the city $44.89, and the city pays Marburg $425 per month. So clearly, this cannot continue to go on. And we have already proposed in this budget moving to a per cart fee. What we're discussing today is timing. Do we move in option A to immediately transfer that pass-through cost to the customers electing for in-place service, which would result in a $26.75 charge per cart, because that's this year's rate plus CPI? Or in option B, do we smooth that to prevent rate shock to that in-place service customer? and smooth it over three years using some solid waste reserves. To be clear, reserves would then be replenished by all rate payers. So previous meetings with the sustainability committee did vote two to one to go with option B to prevent some of that rate shock.

Next slide please.

This is just an overview of the budget impact of either option. So option A, this is the next three year proposed per cart fee and resulting in a zero dollar use of reserves. Option B, again, you'll see a much lower transition in fiscal year 27 to that per cart fee, but it does result in a $900,000 use of solid waste fund reserves getting to the same place in fiscal year 29. And that's it.

Ms. Parenteau, if I may. As I recall this conversation we started out, part of the problem was why this is a different route than the rest of the other territories Marburg has is because roads like APS and up on the Riviera where the cart wasn't going to be an option in terms of getting the truck there, getting the cans lined up, that kind of thing. I mean, this model seems to be saying everybody could convert to a cart, but I didn't think that was true, my first impression. Am I remembering that wrong?

Thank you, Mr. Merritt. Yes, you are. Everyone did transition to a cart, and I think the questions were around whether the carts would be feasible on the steeper hillsides, for example. In response to some feedback that we received at the Sustainability Committee, staff have done route audits with Marburg. We've ridden along to ensure that there is feasibility and have seen much success. So the drivers are seeing great success. We have been able to rectify some issues where there have been some. We even met with the Riviera Association and Council Member Sneddon and Heard some great feedback, and I think generally was very complimentary of the transition. We continue to broker solutions with customers and Marburg. So yes, everyone did transition away from .

So 100% of people could use cards. Okay. And then lastly, the thing about disabled or elderly, was there a dispensation for those folks?

Thank you so much. Yes, there is a waiver for eligible customers, whether it's a disability criteria that they meet or an age criteria. They simply call Marburg, say that they meet that criteria, and then they can get a waiver for free in place or backyard service.

Sorry for interrupting the presentation. Please go ahead.

Thank you so much, Ms. Parental. There's another suggestion that was brought up that is also not for the general fund, and this was to take funds from the – this affects the permanent local housing allocation program, which, again, is separate from the general fund. And that was to direct staff to extend the FIRO Center lease through the end of June 2027, which would result in an additional PLHA expense of $167,000. And now moving on to additional direction that is not going to have a direct effect on the budget. So all of those prior would cause a budget adjustment to the budget before we adopt it. These are more direction to staff. More generally, some will have a monetary impact, but they will not make us adjust the budget before adoption. So firstly, in regards to the reserve policy, there was a consideration to direct staff to schedule a finance committee meeting to consider revisions to the general fund reserve policy to be more in line with actual reserve levels and or to clarify reserve use and terminology. direct staff to just to schedule a finance committee meeting to clarify and further define the prioritization of reserve use during an emergency or disaster and there was an additional recommendation to direct staff to retain one million dollar transfer to the local housing trust fund and if at the end of the fiscal year actual transient occupancy tax or tax sales Sales tax revenue exceeded the budget the revenues of that surplus should be split between general fund reserves The pension section 115 trust and the local housing trust fund It's important to note that this will require an update to the City Council reserve policy Next in regard to our holiday parades there was a recommendation to direct staff to collaborate with the downtown Santa Barbara Association to reinstate the downtown holiday parade and identify $50,000 to contribute to the event, potentially from private sources outside of the city as an entity. There was also direction to staff to support the Memphis Holiday Parade and identify funding to contribute to that event and also direct staff to collaborate with organizers to reduce staff and other costs associated with that event. Moving on to revenue fees and taxes. It was suggested to direct staff to analyze an increase of in lieu fees as dedicated funding source for the local housing trust fund, direct staff to analyze the vacancy tax for behavior change, not revenue for an upcoming election, direct staff to research legalizing and taxing psilocybin as a potential revenue source, and also to direct staff to research legalization of card room gambling as a potential revenue source. Moving on to downtown parking, it was requested to add to direct staff to analyze the programmatic, economic, and budgetary impacts of free parking for locals at certain times, also to direct staff to analyze programmatic, economic, and budgetary impacts of citywide free parking, and also to direct staff to recommend a list of capital and infrastructure upgrades in the downtown parking to reduce or delay. And finally, we had some other programmatic items Those were included to direct staff to reduce funding for the sign program, to direct staff to reduce or delay any future pension fund contributions. The city administrator's budget for the fiscal year 2027 does not include any additional pension fund contribution, and the budget includes the required minimum contributions required by CalPERS. There was also requested to direct staff to identify drop-in center to address homelessness. direct staff to not appropriate funds for fencing or gating in parks. And it's important to note that there is no funding within the proposed fiscal year 2027 budget for any gating in the parks or recreation department. Also to direct staff to not add any new positions. And now we'll do an adjusted general fund overview. So we kind of broke down these slides and we're going to walk through a build of them. First, we're going to talk about the budgetary side, which is really more looking at a cash basis of the revenues that come in and the expenditures that go out. So if you look at the second to last column there, you'll see that our recommended budget, we are predicting that we'll have about $257 million of revenues coming in and expenditures of about $257 million. So we do have a balanced budget as an operating budget. precariously, yes, but it is balanced. And we do have about $100,000 of surplus. Building off of that, the staff recommended adjustments, which are part of the staff report, and these, again, are technical adjustments where, you know, we're all human. Maybe we allocated some of them online or we lifted something between when the budget came out in April and figured out how to improve it. So that had a net of effect of about $100,000. And so the adjusted surplus would be about $200,000. So we still have an operating budget that is balanced. We, um, agreed to some of the, the council recommendations and those things would be very simple for us to do. Those include denying the local government management fellow position, which would add about $160,000 back into our budget. and also the directing staff to freeze the three officer positions for a savings of about $570,000. So that's about $700,000 of additional from the council recommendations, so that would put us at an adjusted surplus of just shy of $1 million. Moving on to the reserve side of things, the reserves is more, that was more of the actions that happen on an annual basis, and this is more of the accrued Effect over time and I will pass that over to mr. De martini.

Thank you so much miss glue. So good afternoon Honorable mayor members of the City Council. Let's talk about general fund reserves And so this table here shows the trend of our general fund reserves The first line is our reserve policy target that is set by City Council resolution It is the 25% target 10% of which is contingency 15% of which is the disaster reserve and you can see that the reserve requirement is goes up every year that is because our expenditure budget goes up every year so that is why that target is growing the second line is our actual or projected reserve level and so it's not the target it's what we actually had in reserve at the end of fiscal year 2024 and fiscal year 2025 what we are projecting to have in reserves at the end of 2026 and what we are budgeting or forecasting to have in reserves at the end of fiscal year 27 and fiscal year 28. The third line is the difference. And you can see that this difference is, it compounds, right? So every year when we have deficits, we are dipping into our general fund reserves more and more. And that is what has happened over the last three fiscal years. And so we are projecting to be $25.2 million lower in our reserves by the end of this fiscal year compared to where we should be per city council resolution, the target. And so when you're looking at our actual reserve percent, it's 12.9%. So we're far below the 25% target level. So I just want us to have clarity as to how this table should be interpreted. There's additional information that staff wanted to provide to the city council and to members of the public. that will have a positive impact on our reserves. First, as council is aware, we were successful with recent litigation with the Disney Corporation for the applicability of our existing utility users tax on digital streaming services. We are now collecting ongoing utility user tax revenue from the Disney Corporation and other streaming service providers. And we are going after past due tax for the last three years, which is our statute of limitations for the state of California. And we are able to realize $2.2 million of past due tax that should have come to us during that time period. That's additional revenue that will benefit and have a positive impact on our reserves. and the ongoing UUT revenue from that effort. Also, if we assume that council is going to move forward with the approximate $736,000 recommended savings from the three police officer positions and the management fellow position, that will also have a positive impact on reserves. So if you go to the next slide. what we're trying to articulate here is what the revised actual and projected reserve levels will be and what the new percentages will be on that second to bottom line. And that last line shows what the actual improvement is projected to be in each of those fiscal years. So with the additional utility user tax revenue, With the additional savings from the positions, if council chooses to go that route, our reserve percent actually improves by 1.3% in fiscal year 2027. So with that, we just want to reiterate the recommendations to council. You have a number of items that you specifically requested to be included in today's presentation. Mayor Rouse, when you are ready, we will pull up each slide individually and we will do like we've done before. Our staff, Ms. Glusick, will document the motions and the actual voting on the individual items if you choose to do so. You may propose additional items that aren't currently on this list. You could also provide additional direction to staff in preparation for adopting the budget on June 30th. We will also ask that on this slide, the next slide please, that there are a couple of items here before you today which we are respectfully requesting your introduction of the ordinance, which is directly related to the budget, related to the utility user tax revenue. That one is item C. We really need that resolution introduced today. And then there's also the draft resolution that is before you today, which is stating that we are out of compliance with our existing reserve policy. And we welcome your feedback on adding additional specificity into that resolution so that we can be very clear about how we're going to either increase revenues and or reduce or control expenditures to help getting us on that track to replenishing our reserves to the 25% target level. That concludes our presentation. We'd be happy to take any questions you may have. Thank you very much.

Thank you, Mr. DeMartini. In addition, or included in the staff presentation, because of a couple of articles that came out last night after these articles were published for the agenda, I've asked the finance chair to address some of the articles and the specificity that came in during the op-eds. So before this, and this is to clarify for the public as well as the rest of council exactly what we're talking about. So, Mr. Friedman, if you would, please. All right.

Thank you, Mayor Rouse, for the opportunity to address the allegations of the finance committee and finance department have abdicated responsibility to solve the budget and not been transparent. I can assure all members of the public that nothing is further from the truth. The allegations to the extent are completely without merit. The department and the committee take this responsibility seriously. Balancing the budget and maintaining reserves takes commitment, diligence, and discipline. Going back to 2020, my colleagues and I on the finance committee and the finance department have repeatedly stepped up to meet the challenges and make solid data-driven recommendations in regard to the budget. Our recommendations have received unanimous council support. This includes our response to the global pandemic that decimated our finances, responsibly allocating a one-time surplus in 2022, and it includes looking at today's challenge to the emergency reserves. To start, When I first read there was an allegation that numbers aren't matching up and the example of discrepancies of between 187 million and 226 million was referenced, I immediately recognized this not as an inconsistency but rather the difference between measure C being counted or not. So I immediately contacted our finance director and he confirmed that this difference in number is measure C plus the reserve contribution and there are different data sets for different reports. It was a difference of measure C having to be counted in one report and in another we took it out so that we could look at it differently here. So when doubts are sowed as to the intent of the competencies of our finance director, it not only reflects upon him, it reflects upon the many members who spent countless hours working to ensure transparency, keep real-time data, and make it presentable to the public. That's the staff. It has a direct effect on morale. and this is avoidable. So what has the finance committee and the finance department been doing the past five years to protect our finances? Going back to COVID, when the city received $22 million in ARPA funding, the finance committee recommended to the council that the first $11 million be put right back into reserves. The council unanimously supported this recommendation because it was the responsible thing to do. In fiscal year 22, the city had a one-time surplus of $12 million due to the following factors. Increased travel after the pandemic led to a dramatic rise in hotel and sales tax that was unsustainable. So we knew it was going to be one time. The city had a high number of vacancies, which led to expenditure reductions, thereby creating a $12 million death surplus. So in response, the finance committee worked with the finance department and recommended the following to put $6 million back into the reserves. designate approximately $3 million to the newly created local housing trust fund, which led to a match from the state soon after that, and has led to a housing complex that is now under construction as we speak. This is all responsible by the finance department and the finance committee. We also put approximately $2 million, some from the general fund, about half, and half from enterprise funds into a newly created Pension 115 trust that our finance director had been pushing for And that Section 115 trust for pensions goes towards our unfunded pension liability. And to date, that $2 million in just a few years has generated over $700,000 in returns, making it the highest performing fund in the city's portfolio. And that $700,000 that didn't come from new taxes, it came from just properly investing in our city and our pension liability. In total, these measures put $17 million back into the general fund. And with the Section 115, $3 million, that's almost $20 million. And this was unanimously supported by council each time. All of these recommendations from the Finance Committee, again, were the responsible thing to do. And now the allegation that the Finance Committee and city staff have not come up with a plan to address the reserves in 2027 is blatantly false. In response to the current fiscal challenge and the undeniable fact that the city is now using emergency funds. The finance committee and city staff have worked diligently over the past year to implement a plan. This is all city staff, starting with the city administrator and the finance director, but touching every single department. Every department came up with over 200 recommendations to the finance committee for us to prioritize and recommend to council on how we're gonna solve the budget deficit. This included revenue enhancements, expenditure reductions, and operational efficiencies. The Finance Committee held two meetings, October 14th and October 21st of 2025, with the express purpose of providing recommendations to Council to address the operational deficit, and once that is addressed, how we then go and address the reserves deficit. It's budgeting 101. You can't fix the reserves if you haven't fixed your operational deficit. Due to the efforts of the Finance Department, finance committee and staff from all departments the committee made a series of recommendations to the full council in terms of prioritization in terms of expenditures that again brought up to the council and were unanimously supported moving forward on how to address the deficit this resulted in a reduction in spending as we just saw for the proposed fiscal year 27 budget of 10 million which tentatively eliminates the operations budget deficit so now we can focus on the reserves This was difficult and hard work by all involved and now gives us a path to focus on rebuilding the emergency reserves and for staff to continue its work on the numerous other recommendations that will get us back into the contingency but also give us the opportunity to see what other revenues are coming in and give us an opportunity to figure out how to fund the local housing trust fund that everybody wants. In addition, the Finance Committee supported having an independent audit of our financial modeling practices And the results of that audit are that the city has been implementing all the best practices for financial modeling and reporting. And the annual comprehensive financial report that has been talked about has received the government financial officers association highest award for best practices for the past 36 years and counting. All of this clearly demonstrates that our finance department, led by our director, Mr. Demartini and his staff, and the finance committee have taken our job seriously and acted responsibly in concern to the city's finances. I appreciate the time to set the record straight as to what the Finance Committee has done over the past year and look forward to a robust discussion tonight that will help us get very close to replenishing our emergency reserves and get us to a position where we can continue to fund the Local Housing Trust Fund and emergency and all the services we rely on and look forward to the discussion. Thank you for the time, Mr. Mayor.

Thank you, Mr. Friedman. We will move on to public comment now. Penn McCormick.

Good afternoon, Mayor Rouse, Mayor Pro Tem Sneddon, and city council members. My name is Penn McCormack.

It's good to see you again.

I'm here to speak on behalf of Habitat for Humanity of Southern Santa Barbara County. We recognize that reserve funds serve an important purpose. They position our community to respond responsibly and provide stability when disaster strikes. The fact of the matter is the disaster is already unfolding. Housing costs continue to skyrocket in our community. and multi-generation families of Santa Barbara are seeking opportunities elsewhere or facing homelessness. It is our moral imperative to act urgently. We want to ask one question. What do we want Santa Barbara to look like in 10 years? Housing resources are shrinking. Funding cuts are happening at both the state and federal levels. We have an opportunity to act locally. We urge you to make the necessary decision to continue funding the Local Housing Trust Fund. For organizations like Habitat for Humanity and other affordable housing providers, these funds are often the only source of local government investment available to create permanently affordable homeownership opportunities for low-income households. The choice before us is not simply about preserving resources for a future disaster. It is about deciding whether we will respond to the housing disaster unfolding in front of us today. Investing now can prevent the crisis from deepening, protecting vulnerable residents, and helping ensure that more members of our workforce and vibrant community can continue to call Santa Barbara home. At Habitat Santa Barbara, we are currently in the midst of a project on Cota Street that will provide five low-income families the opportunity to become first-time homebuyers. Work is happening, not anymore as I speak, but work was happening earlier today. We have been working with city staff to request funding for this project, and the funding we are seeking, if awarded, would come from the local housing trust fund. That is the strength of funding and having a local housing trust fund. We don't need to wait for state or federal funds. We can choose to invest in our own local housing today with our own local dollars. As always, we cannot thank you all enough for the work you do for our community and to the countless city employees who work tirelessly to make this community what it is. Habitat Santa Barbara, thanks to you.

Thank you. Larry Behrendt?

Good evening, Mayor Rouse. Council members, I'm Larry Barrett with Indivisible Santa Barbara. One of the problems you have when you give public comment is you write the public comment and then you come to the meetings and stuff gets presented at the meetings and you look at your comment and say, well, that's not what I want to say. One thing that you possibly don't know about me and Council Member Hartman, you and I should really have coffee because I'm a former banking and finance attorney. So I saw up close some of the worst financial crises of the last 45 years and had something to do with building some of them. I'm very proud of that, including the collapse of the savings and loan industry and the collateralized mortgage industry. I was a junior attorney at the table when the assets of DeLorean Motors was divvied up and saw John DeLorean spend that entire meeting flirting with a receptionist. So I'm not a rookie when it comes to complex financial situations. And I'm tempted just to skip to the last paragraph of what I wrote. In nearly every case where I saw a financial problem blow up in crisis, the crisis overtook those who prioritized the defense of its leadership over full understanding and disclosure of the problem. And I came here today to offer myself up. as somebody who knows something about this, who has seen these kind of situations move from small things to large things. I'm talking entirely off script now because I do not know what else to do with the seven of you. Most of you I've learned, I've gotten to know in the short time I've been in Santa Barbara. Professional staff, this is the best run local government I've ever been associated with. It's very discouraging to see what should be a deep analysis of where we are and how we got here turn into finger pointing among people who I think are capable of standing up and looking at this problem and solving it. I'm offering myself up. Can't I be of some help? These problems are always a matter of taking a snapshot of where we are, which is far more complicated than it would logically seem to be, and then developing a roadmap of how we got here. I'm hearing some stuff today that I didn't know. I'm gonna go back to my seat and I hope to hear more things today that I don't know. But for God's sake, Do not let this degenerate into finger-pointing and recrimination and blame assignment. We have people at this dais and people working for this government all of good faith. The problems that we face are generally problems of systems. They're not problems of people. We falsely rely on systems that Thank you, Mr. Barron.

That's actually time.

You probably stopped me at a good point.

I have Lisa Carlos, who's having time dedicated to her by Rob Frederick. So that's four minutes on this timer, please.

Good afternoon, Mayor Rouse and council members. Today I speak as former chair of the Measure I campaign and chair of the city's Housing Authority Commission. I want to spend a little extra time today and talk to you about a painter who I met on my street. He had spent the last two years meticulously painting for historic homes while working nights at the Rosewood Hotel. I'll call him Manuel, my father's name. Manuel graduated from Santa Barbara High School and his family is active in local soccer leagues. He is talented, hardworking, and contributes to making our city beautiful and keeping our multi-billion dollar tourist industry profitable. He is also on the Housing Authority's wait list. He joined that wait list more than four years ago when his young son was diagnosed with cancer and his family was struggling financially. The heartbreaking reality is that the Housing Authority is unlikely to meet his family's needs anytime soon. or the needs of the 10,000 other households on our wait list. We cannot issue more vouchers because we are in a funding shortfall. In September, we will lose federal subsidies for 83 emergency housing voucher households with another 150 mixed status families potentially losing support in the coming months. Backfilling those subsidies would cost $2.5 million annually, a daunting if not impossible challenge. And any backfilling of that amount will likely delay Parma and Monteria, two projects that will soon be shovel-ready, and on top of that will need significant city matching funds to compete for tax credit. That is why I continue to be relentless in advocating for a dedicated, consistent local source of revenue for affordable housing. In 2024, the Housing Authority supported pursuing a tax specifically earmarked for affordable housing, but when the city said it faced a structural deficit, we chose not to compete against them with a citizens-led initiative. I lent my name to Measure I and helped rally housing advocates behind it despite concerns this was a regressive sales tax on lower income residents. We acted in good faith, believing housing would be treated as a top priority, but that didn't happen. The allocation initially was only for 10% or 1.5 million for the local housing trust fund plus another 1.5 million for the flexible housing fund. After significant advocacy, the council approved another $2 million, but with a plan to replenish the reserves. Deferring from an unspecified future source is not a plan. Relying on uncertain developer donations is not a plan. And redirecting federal or state dollars already restricted to affordable housing, such as home funds, is double counting. Moving or swapping existing housing dollars around does not add to the trust fund. That is why the HCD does not allow federal funds to count as a local match for the state's program. Thankfully, the staff is now proposing a better approach, identifying measure C general fund dollars to help fulfill the city's 2 million commitment. I am happy for having that proposal on the table. Given the immediate voucher crisis, I would also support splitting some portion between the Trust Fund and the Housing Flex Fund. In the end, budgets do more than reflect our values. They can prevent harm. Right now, doing no harm means fulfilling our promise to give $5 million to housing for this year and help keep vulnerable residents housed while continuing to build permanently affordable housing for our workforce and for families like Manuel's. Thank you.

Thank you. Uh, Leo to cost us.

Good evening. Uh, mayor Rouse and city council. My name is Leo de Casals. I'm here on behalf of SEIU Local 620. I'm representing the hourly, treatment and patrol general, and now the supervisor's unit. Thank you for your work on the fiscal year 2027 budget. We recognize the difficult task of balancing fiscal responsibility, community priorities, and the long-term needs of the organization. And we appreciate the thoughtful approach taken throughout this whole process this year. As the council considers final budget decisions, we encourage continued focus on maintaining the high quality public services that residents expect and rely on every single day. whether it is maintaining infrastructure, protecting the health of the public, operating critical treatment facilities, supporting public safety functions, or assisting residents directly and visitors alike. The city's ability to deliver those services depend on having a stable workforce. With that in mind, I want to address some key, revisit some key priorities of SCIU Local 620 in this meeting. That's the implementation of the ongoing implementation of the city's classification and compensation studies. These studies were undertaken to ensure positions are appropriately classified. Compensation remains competitive and the city can effectively recruit and employees needed to perform essential public services. As these recommendations are ongoing and move forward, including new classifications, consolidation efforts, and updated pay structures, it is important that these budget decisions support this successful implementation. At the same time, We are concerned about the continued emphasis on limiting hiring and leaving vacancies unfilled. While vacancy savings may provide short term budget relief, prolonged vacancies often shift workloads onto existing employees, increasing burnout. We have already identified departments, work sites where this is actively happening now. This moment calls for thoughtful prioritization. Fiscal discipline is important, but so is maintaining the workforce to follow through on its own recommendations to staff in regard to this implementation of the class and comp plan to protect the staffing levels necessary to sustain reliable and high-quality services. Thank you for your time. Appreciate it.

Thank you. Are there any speakers online, Madam Clerk?

No, Mr. Mayor.

Okay, very good. We'll bring it back to Council. Ms. McAdoo. How do you suggest should we go through the questions as laid out categorically on the staff report or do you want to put up the matrix?

So I think going through the items that council had asked us to bring back and we have there's a number of those slides and we can just pull those up on the screen. I think maybe going all the way back to the local housing trust fund slide. And then I think it started there and then we can go through those and see if there are How the council wants to direct us on those items? and then Hopefully that can then lead us to preparing The final budget for adoption.

Okay, very good as we go through items one through seven. Are you looking for?

Motions and up or down or that would be helpful Okay done in the past and we have it we have a slide or we have the worksheet that finance has done previously and or we can keep track of those and what the motion is so that we have clear... Excellent.

So we'll just go through this as presented. Yes, Ms. Sneddon.

Can I ask a general question?

A general question. Go right ahead.

Thank you, Mayor Rouse, and thank you, Mr. DiMartini and Ms. Glusek, this morning for taking several hours with me, and I truly appreciate it. I do want to say, and I've said it before publicly, that I have every confidence in your integrity, that you have the knowledge about every number, every penny. I never have a question that there's any impropriety I have tremendous respect for both of you and at the same time I think it is okay to ask questions about why one set doesn't match another and it is clear after asking questions that for hours that measure C being in it or not, or the reserve fund contribution being in it or not, are easy numbers for you to know. And when you look at a chart or a graph, that those numbers are clear to you. And I think it's also okay to ask that there's consistency for the public and for us, and I'll say for myself, to be able to track numbers across presentations. And I'll leave it at that, that I think it is okay to ask the questions. And with the very big statement that it is in no way questioning your integrity or abilities. You far outshine all of us in your understanding of these complexities. So my question is, what do you recommend is the plan for us as a team to start addressing this reserve number falling off a cliff? How should we approach it? Before we go and we vote on which way we're going to approach it, how would you recommend that we do?

Council member said, and thank you so much for that question. There are multiple things that, um, staff recommends that we start doing immediately and we've already started doing them. It really starts with that list of over 200 recommendations that staff has already developed and proposed and presented at multiple public meetings. And we have already started implementing many of them and have actually already completed implementation. The financial impacts of some of them are already included in the city administrators recommended budget for fiscal year 27. We also need additional direction from the city council for very specific revenue generating options to direct staff to go back and research and bring forward for future. decision-making with the city council and specific expenditure control and reduction items. We need that. We are about $30 million below the reserve policy target. It is not a realistic that we will likely achieve a $30 million surplus in fiscal year 2027 without some pretty drastic actions. I'm not recommending that. I don't think the city administrator is either, but what we are recommending is that we start making progress immediately.

Thank you. So when we look at this slide here, given what's being recommended, the reserve level is still going down a million dollars from what's being recommended. So what's before us still has the reserve level being depleted.

Yes. And that was something we spoke about a little bit earlier. There's multiple categories of reserves. The city administrator's direction to departments has been to only bring forward budget requests for projects when we know we have high degree of confidence that we are going to actually implement and complete those projects. During COVID, as an example, with our high staff turnover, there were quite a number of projects that were approved by council and budgeted, but we weren't able to see them to completion. We didn't have the staffing. There were other supply chain issues and so on and so forth. And so one of the reserve categories is this carry forward appropriation and so we're assuming that that's gonna go down. And so there's an impact on the reserves because of that also. It's not just the 10% contingency and 15% disaster reserve categories.

And when we say a budget is balanced, we're not talking about the reserve balance being at policy targets. We're only talking about revenues and expenditures. Correct.

And I just want to jump in, Council Member Senn, because I just want to, yes, that we have stopped the bleeding. We are no longer eating into our reserve levels. So that is what we were able to accomplish with the recommended budget that came to the council. And if you recall, several months ago when we had the work session, over at the library, the deficit was projected to be $10 million, which would have gotten us even further in, you know, $40 million below our reserve policy target. And so the amazing work of the staff team to come forward with these recommendations, and we're continuing. That work is ongoing. And so I am optimistic that we will get there. But again, as I've said, you know, we need some time to start to implement these recommendations. at least gets us, it's a stop gap. It stops the bleeding. We're not using reserves this year. As Mr. Demartini pointed out, we have had some good news in the last couple of weeks where we are adding some money back to reserves, but we still have work to do.

Thank you. And then what is the term we want to use, do you suggest we use for the difference between this operating budget deficit and then sometimes the deficit is called the deficit but it includes the reserve contribution. And the terminology for what we say for deficit changes in different times. And can you help make one term that means the operating budget deficit and one term that means when you're taking into account how far below reserves we are in addition to whatever the surplus or deficit. Could we like settle on a term that would refer to that?

Yes, council member said I'd be happy to propose a term. So on this slide, the term, the correct accounting and budgeting term is surplus or deficit. When you're speaking to, looking at your revenues minus your expenditures. If your revenues are greater than your expenditures, it's a surplus. It's an annual operating fund surplus. If your revenues are less than your expenditure, go to the next slide, Ms. Glucic, thank you very much. You can see that in all five of these years, the actual and or projected reserves are below the reserve policy target. So it's a shortfall. We're not meeting our reserve policy target.

Thank you. And then one more question. And I think we spent a lot of time on this this morning, but I just want to ask you here again. So when we say operating budget, so the target reserve is say $50 million. And if you say that's 25% of what number, you come up with 201 or somewhere in that. But I can't find the number 201 anywhere. So what Is the operating, it's the revenue, I'm sorry, it just went off of there, the reserve target 25% of what? And how do we independently find that number?

Yes, Council Member Sutton. The reserve target is calculated as 25% of next year's annual operating budget. So the concept is that on day one, when fiscal year 2027 begins, we should have 25% of what that budget is in the bank as reserves because that new fiscal year is beginning there are some accounting adjustments that are required to occur with that reserve calculation for example we do not include transfers in the reserve calculation because a transfer is just taking money from the general fund and transferring it to another fund that's not an actual expense if we did include the 25% calculation on transfers, the reserve requirement would be, would be even higher and it would not be correct. The other thing we don't do is we don't include the measure C revenue and expenditure because measure C, um, per the ballot measure that the voters approved and the subsequent resolutions that the city council adopted prioritizing the use of measure C, um, has articulated that all measure C funding should go towards capital. And so it is a general purpose tax measure and it sits in the general fund, but it's all used for capital and capital accounting is different than operating accounting. And so, and measure C doesn't have a specific reserve policy target. That's not in the city council reserve policy. And so we have to make those accounting distinctions with the calculation of reserves.

And then you explained to me also the difference of sometimes including Measure C and sometimes not including Measure C in these totals. And could you explain a little bit more about that, I think for the public, why sometimes it'll say with Measure C, sometimes it's without, and what impact that has on reserves. So if we spend Measure C, does that impact our reserve target or not? Yes. Council member said I'd be happy to.

So, um, there are many reasons why we would, we would want to talk about measure C with the general fund. First and foremost, it is a general purpose tax measure. It was approved by a simple majority. It can be used for any governmental function that city council appropriates, but council has directed staff through resolution that it should be prioritized for capital. And so we talk about measure C with our capital budgeting, with our CIP plan, it's identified as funding sources in the CIP. We break out Measure C specifically when we produce the annual accountability report for the Measure C Citizens Oversight Committee, which also comes to council. We'll break it out separately there. In our financial statements, the ACVR, we have to include Measure C with the general fund because it is a general purpose tax. And so that is a requirement to do that. And so it really just depends on the purpose of the report, whether we include Measure C or not. during the budget presentations. Everywhere the measure C is in there or not, you'll see on this slide, there's a footnote. It includes measure C. So we try to articulate on every slide where it's included or where it's not.

And I think Mr. Demartini and I were discussing, you know, when we talk going forward, maybe pulling measure C out when we're talking about the general fund operating budget because we dedicate those funds to capital. So I think we will continue to work on CLARITY IN TERMS OF REPORTING AND ON THE SLIDES SO THAT IT'S CLEARER where it is or is not included and having it pulled out. So we'll work to improve that.

Thank you. And again, I'm so confident in your knowledge and abilities with each of these numbers to do the in your head and make them all match up. But for myself to request that either it has Measure C or it doesn't and through there too. And then one more question. Can you explain why the ACFER is different. Those actuals are different than what we see in the tables that are presented as actuals. And you explained it very well to me this morning and I'm hoping to hear it again.

Absolutely. So it has to do with how Measure C is reported. That is the reason. The details behind it are if you own a business in Santa Barbara and you collect sales tax when someone buys a sweater at your clothing store, You collect that sales tax from the customer. Every quarter, that business, or every month, will remit that sales tax to the California Department of Tax and Fee Administration, who collects all that money and then quarterly they will distribute that money to all the taxing entities throughout the state of California, which we are one of. So when that money comes to the city from the CDTFA, we had historically, which has been depositing into the general fund, and then we would transfer it out of the general fund into the separate Measure C fund where all of the Measure C expenses occur. But the problem with that from a reporting perspective is that it sort of inflated the total overall budget with these transfers ins and transfers outs. And so now what we are doing, and we brought this to council in a budget adjustments which you approved, instead of that money being put into the general fund and then being transferred to the Measure C fund, it's going directly into the Measure C fund. So it's much more clear. That is the reason for the distinction in the ACFER.

Okay. Thank you so much. And thank you for your patience always with this. And when it comes to that item, too, I do think we should have a concentrated time for just the words that we use on the tables so that it all just has the through line. Thank you so much.

All right. Very good. I only wish that you'd expressed that much confidence in the numbers and whatnot in your op-ed, Ms. Sneddon, because that was really unfortunate, damaging, and disrespectful to staff. I think that was damaging and why I had Mr. Freeman try to clarify some of those things today in the preamble. With that, let's move on to what we're going to do here. Do you have a question, Ms. Hamburger?

Yes, just briefly to your comment. I read what Ms. Sneddon wrote, and my understanding of that wasn't anything about our staff, but more of finance leadership. And as part of that finance committee leadership, I do think that it's important that we set the record straight. So I do look forward to that. Thank you, Mayor.

Okay. Well, we're not going to get into a debate up here. These statements were made. We're going to move on and try to get this budget settled. So with that, would you put up the – Yeah, Ms. Glusack, put them up in the order you'd like us to address them, please. Okay, item one?

So there was a couple of different options here. I think this is probably where most of the debate has centered around. The one option was to not... transfer the $2 million of reserves and to allow the housing authority coming to staff if there is a need during the year for a project and appropriating the $2 million at that time. I think on the next slide. And then there was also direct competing direction to reinstate the $1 million deferral transfer of general fund reserves and then staff is proposing two alternate staff recommendations. There is $1 million Already included of the two million dollars that was originally contemplated in the city administrators proposed budget So one option would be to reappropriate a million dollars of home funds to local housing trust fund that was from a previously approved project that's not moving forward or An alternative option would be to direct staff to figure out how to reduce the measure C capital budget by a million dollars and appropriate those funds to local housing trust fund so I think It's kind of, I think we have put the alternate staff recommendations up there as probably the preferred direction, one of those two, but obviously we'll take the direction from the majority of council.

And would you like us to go one through four up or down on each or nominate them or how do you want us to do that?

I think maybe if someone wants to try to make a motion and then see where, and then we can vote on a motion. I think this is complicated because there's four different items, so I think it'd be best if a council member tried to propose a motion. and see where it goes from there. Okay, very good. I'll entertain a motion if someone's got one.

I have a question before. Mr. Friedman, go ahead. Just an overall, and I appreciate the clarifications, and of course we should be asking questions at all times. Just in terms, before we start, because we are in emergency reserves, Mr. DeMartini, from that last week, can you just reconfirm that, and then what is the actual dollar amount that we spent of our emergency reserves?

Councilmember Friedman, we have fully depleted our general fund contingency reserves. We are already dipping into our general fund disaster reserves. We are approximately $6 million below our emergency disaster reserve, and that's on the slide that we have already reviewed on the reserves, which we could go to later, because we're at a 12.1% or 12.9% reserve level. So we're about 2.1% below. That 2.1% is approximately $6 million.

Six million dollars and then just two more because we need to have the full understanding of a couple other items too before we start going through these. We also have the self-insurance fund and could you talk to us about the self-insurance fund and whether it's funded or not to the level that it needs to be? I'm just trying to understand all the pressures that we have and why we need to watch every dollar that we're going to be talking about.

Yes, Council Member Friedman, thank you very much. The city's self-insurance fund is underfunded. The most recent actuarial report that we have gotten indicates that we should have $27.7 million in the self-insurance fund. The most recent projection is that we will only have $11 million in the self-insurance funds. So we are below the actuarial recommended level by more than $16 million.

And then just two more questions to give us the full perspective again. We have an unfunded pension liability. Could you say what that is and then what we have to pay into that every year?

Absolutely. So every year we get an actuarial report from CalPERS and that there are many things in that report. One thing that it indicates to us is what our unfunded actuarial liability is. So there are two components to our CalPERS payments. So every pay period, every two weeks, the employee, the city employees will put in a contribution for their own retirement into the CalPERS system. the city also pays a portion of the employee's retirement as well, and there are retirees that the city is also contributing for. Because people are living longer, because benefit rates and benefit requirements change, And most notably, CalPERS's investment returns fluctuate pretty significantly. They have a very aggressive investment strategy. They target a rate of return of 6.8%. There have been times over the last 15 years where they have posted a negative rate of return. And so when there's volatility with their investment strategy, it creates this liability. and that each member agency, each city, is responsible for paying off that liability over time. And so we are required to not only pay those biweekly CalPERS payments, but we are also required to make one annual Contribution that draws down that UAL amount going forward the UAL that we have to pay for for the city in fiscal year 2027 is just over 40 million dollars and we choose to pay that upfront all at once in July We have the option of paying it monthly over the entire fiscal year but the benefit of paying it upfront is is that we achieve a 3.4% discount, which equates to over a million dollars of savings just by paying it up front.

Thank you. Then my last question, and I appreciate Mr. DeCasaus talking about the class and comp and all of our statements up here that have said we want to become an employer of choice. So as we're working over the next few months going to implement that, the question is, and this is more for Ms. McAdoo, Is it likely that there would be additional expenses from that that are not part of the budget here that we would have to try to account for, or will that $100,000 surplus that we have remain the same? Or is it likely that we will have additional expenses that we're going to have to account for?

We have accounted in our salary increase projections for an increased level due to the anticipated implementation of classification compensation. We have not finalized all those numbers yet. There's also negotiation that is occurring with our bargaining groups on those numbers. So we're hopeful that we come within the current projections, but obviously as we get more details, we'll come to the council as soon as possible with those.

That's good news. So it's precariously balanced, and we are accounting for that. It came up in public comment. I wanted to make sure that our employees know we are planning for that. So thank you. Mr. Jordan. Thank you, Mr. Mayor.

All right. I'm the dumbest guy in the room, or these numbers really bug me. So one and three are opposites of each other, right?

Correct.

Okay.

But they're bracketing two, and so does the million that's being left in the budget right now represent the current balanced budget?

Correct.

Okay.

So the question is... We have $1 million.

So really only there's one question. Well, there could be other questions that aren't on the sheet. The question that's on the sheet is whether to bring another million into the current budget.

Correct. That could be... From some source.

That could be the one question. Yes. And then it's where do you get it, right? Correct. Yes. Okay. Thank you.

Ms. Harmon.

Thank you, Mr. Mayor. I'm going to pick up on that. I just have a couple questions about that other million. Okay. So one of the public commenters, and this has been brought up to me separately a few times and it continues to confuse me, has noted that the use of home funds, for example, is not appropriate because that can't be utilized as an ongoing source of funding for the purposes of state matching. Fair, that may very well be true, but whatever source of funds we use for this one million, it's not ongoing, am I correct? So it's irrelevant whether it can be categorized as matching funds for the purposes of state grant applicability, correct? Like this is a one-time allocation that we're talking about here, correct?

Yes, but the matching funds, and I'll let Ms. Payne also weigh in, the matching funds need to be present in the fund to qualify as match. So it doesn't matter if they're ongoing. When we apply for the state matching funds, we have to show evidence of the money in the fund as eligible matching. There's also an ongoing operating appropriation, but that is... And that's a separate requirement that is not related to this. It's $250,000. It's for administrative costs. That is met. That requirement has been fulfilled.

Okay, and that is in an ongoing way that we've already, okay, that's great. So I think I definitely had some confusion about that. So that's super helpful. So then I guess that begs the question, are there restrictions around this home using the home funds here that we should be aware of?

Good evening. Yes, the home funds are restricted for affordable housing. And so whether or not we put them into the local housing trust fund, they will be used for an affordable housing project.

Okay. They cannot be used for matching funds, for state funds.

Okay.

Okay. Thank you. That's helpful. And so then on to the next option. For the Measure C capital budget reduction, do we know specifically what we're giving up?

No, we could come back. I mean, again, as Mr. DiMartini said, there's a number of projects that are maybe delayed or not moving as quickly as we thought, so we can look at projects that might have money that is budgeted but has not been used yet. And we can report back on, there is money in the fund balance right now that we could utilize. We could report back on what some of those trade-offs might look like or where that million dollars came from. But I don't, at this point, I think we've got some flexibility where it wouldn't impact any projects that are underway.

It could delay projects, though.

Possibly, but we will look at it and we can come back and report on that. We're going to try to figure out how to do it without delaying projects. I will say we are not recommending to reduce the paving budget anymore. We have already significantly reduced that budget, and so it would come from another project within Measure C. Thank you.

I appreciate that. I mean, I just, I do have trouble. And I hear you that there's flexibility, but I have trouble going forward with that option, just not knowing what the trade-offs are going to be. Which leads me to my third and final question around the suggestion that I made last week or whenever we had that conversation. And I think it's on one of the slides here, but around using any surplus that may come in, a portion of it, going into the local housing trust fund to make up this delta between the 1 million that we're putting in and the 2 million that we had committed. And it doesn't seem like that idea is getting tons of traction. And I understand. To me, it seems like probably the most reasonable and certainly budget conscious approach. I'm wondering if staff can speak to maybe what concerns you might have about that idea and why it's not among the recommended approaches to solving this specific problem.

Thank you, Council Member Harmon. It actually is on there on slide 17. It's the additional direction for the reserve policy. The reason that we didn't add it on the top for actually adjusting the budget is because it would require an action to update the city council reserve policy, so we would have to make an adjustment at a later date to incorporate that.

Also, we do not have 1 million dollars in surplus at this juncture But if it does come in then we would need to make that action And council member Harmon the only thing I would add to that in section 8 of the reserve policy It does articulate when there is a surplus that it should be used towards Part of it staying in general fund reserves and the other part going to the section 115 trust so we would recommend amending that section of the reserve policy to state a you know, a portion of it should also go to the local housing trust fund. A word of caution, we should be just careful about how many requirements we put on that surplus, nor would I recommend a specific percent allocation because it really depends on where we are financially at that given time, what city council may want to do with it. And so I think my recommendation would be that city council retains the flexibility and the management discretion about that surplus when and if it occurs.

And I will say, if the council directs us to use the Measure C dollars and we are able to come back to adopt the budget on June 30th, we could, I'm sure within that time frame, identify what those potential impacts. I think that would give us enough time to do that.

Ms. Ann Maria?

I was ready to make a motion on the first one, but wondering if you wanted to take additional comments or can we just go into...

I was just asking Ms. McAdoo a bit.

I think go ahead and if you want to start making motions, that is appropriate.

That would be fine. But once again, one through four or the entire section or how do you want to?

Well, I think do one through four as a group and make a motion, see where we end up, since there are some competing directions here.

Are you prepared to do that, Ms. Henrien?

Yes. Thank you, Mr. Rouse. Okay, so we have one through four. I'll comment very, very quickly on these. Number two already came up at finance. We already said we appreciate the creativity, but this is just not the way that the local housing trust fund matching funds work. So no on two. I am interested in Council Member Harmon's suggestion for the additional tax revenues being included in the local housing trust fund. So I would be happy to entertain that in the future. But of course, I know that there's other steps that we need to take. So for now, I would move that we... I would move forward staff recommendation number four to reduce fiscal year 2027 measure C capital budget by a million and appropriate these funds to the local housing trust fund.

Okay, so there's a motion and a second on the floor for one through four. Yeah, comment by Ms. Sneddon to the motion.

Yeah, I think I'm agreeing that it should not come from streets fund or any paving That's already as far down and I just want to make the comment that this really should have come from measure I and we really I'll say it again. I just don't think we needed to be doing this dance with taking it from reserve putting it back in reserve and there there was you know when we did vote to move that from reserves the vote was to have a plan to not just a plan but to actually replenish it by the time we were here this year and I think that's my biggest objection is that we're here and It wasn't replenished and and I do appreciate all of staff's efforts in balancing the budget the operating budget balanced but But this was a very specific move from reserves that hasn't been replenished. And so it really should come from Measure I. And I wouldn't want this to be the usual place that this gets funded from. And I will say it again, we have to identify the recurring sustained funding source for the local housing trust fund that was the directive when we Passed the housing element update that was directive when we formed the local housing trust fund Otherwise, we're going to be in this position every year Trying to decide where are we trying to pull it from and that is I don't know what to do when it was already directed to do that last year.

What do we do with that? Obviously, we are in a very challenging budget time, and so we will continue to work on it. As I've mentioned, right now in Measure C, we are spending an amount of cash each year to pay to complete the police building because we did not issue debt large enough to cover the entire cost of that project. Those cash payments sunset in two fiscal years, And so we will have some additional measure C revenues that we can look at. So as I've said, you know, this concern about funding local housing trust fund, I think, is really over the next two years. But in the meantime, we need to be also balancing the general fund budget and replenishing a reserve. So all of those things. So we will continue to work on it. And, you know, the challenge of, you know, solving a $10 million deficit That was our challenge this year, and there was not the ability to replenish reserves because we were already trying to make those reductions to balance the budget.

Thank you. And then how much is that cash overage from what the bond amount was?

In the budget that's available on the website, I think it's around $16 million, and that includes appropriation from a prior fiscal year as well. I mean, staff has been working on that project for many, many years, right? And so emergency cash has been used for all the planning and design work.

I think in terms of the amount that we bonded versus what... Oh, yeah, the bond amount.

Sorry, yeah. The bond amount goes towards the construction contractor, and that is approximately $100 million. The total project budget, everything is around $120 million, I believe. Mm-hmm.

So then that is over the next two years, that's $10 million a year or so that will now be available in two years to be... For capital.

And so we will come back. Mr. DeMartini and I are working on the cash flow projections for Measure C, and we want to come back and have a robust conversation about how... But we wanted to get a little farther down police construction before we come back to the council and have that conversation.

And then when will the fire station be...

picked up won't that just sort of well so we are we're looking at both the parks and mecca raster plan and the fire station facilities assessment ways to fund that because those are going to vastly exceed the measure c resources and so we may need to explore an alternate funding source for those and the fire facilities assessment will be coming back to council this fall so you'll get the recommendations there and then we'll with that report make some recommendations for how to how to pursue and what we might do to look at financing options.

Okay. And then so this, just my last question here, if we take this second bullet point option, then we no longer need to be having that directive of finding a way to replenish those $2 million from the reserves. That goes away because we've taken it from Measure C. We put it back in the reserves and then we took it out of Measure C. And what we would need

I mean, we still need to replenish reserves. So I think the overall directive to continue to work to replenish our reserve levels remains. But that's a bigger task. That's a bigger task. Correct. Okay. Thank you.

Ms. Harmon.

Thanks, Mr. Mayor. Sorry, I just have a follow-up on item two. Because I know we've been talking a lot about the need to have funds in the local housing trust fund immediately specifically for matching in this grant program, but I'm recalling earlier today at our ledge committee meeting, we had the conversation where the local housing trust fund matching fund program won't exist unless trust funds get included in the housing bond, Ms. Anderson's here, and then that bond has to get passed by voters. So we're still multiple steps away from the matching opportunity even existing in the real world. Am I understanding that correctly?

Council Member Harmon, you're correct. And it goes back to staff recommendations in previous budget presentations. The California Local Housing Trust Fund grant program has been completely depleted. So there's actually no fund and no opportunity for matching funds at this time. We are advocating robustly to get that amended in the proposed housing bond. But so far, that has not been passed by the legislature. And again, it would still need voter approval in November if it makes the ballot. I want to add to from my previous role as acting housing and human services manager, We have funds. We have a fund balance in the Local Housing Trust Fund right now. We actually are holding funds for a project we committed to at a previous matching grant opportunity that we were awarded for people self-help housing. And we also continually get loans repaid through old RDA projects. So again, if we have the opportunity that that program is funded again and we have a proposed project to apply for, which would probably be eight to 12 months in advance, we could make shifts to make sure that there's matching funds available, again, per council direction. So we fully understand this is a one-year fix to really make sure that we're maintaining our commitment to the local housing trust fund, and we will continue to explore consistent revenue streams to be able to dedicate to affordable housing. But I think this year a lot of factors are in play, which is why the recommendation to use home funds is there.

Okay. Thank you, Ms. Anderson. That's extremely helpful. And I do want to acknowledge that was, you have brought this up multiple times, but it is, I think, challenging to keep all of these different inputs, as our colleagues have said, in our head at once. And it has become such an important talking point that we have to have the funds in so that we can get the matching grants. The matching grant doesn't exist. And when it does... we can make those changes. I mean, I think that there's something to be said for moving the money immediately into the trust fund, signifying our commitment to housing development. And I love what that says. I don't love what it says to do that in the context of being $30 million under our reserve target. So I personally, I have to admit, I'm leaning toward option two at this point. You know, I'm open to the Measure C, and I will support moving it forward to see what we're going to have to reduce or change. And if it turns out that the answer is nothing, I'm all in. Let's make the transfer. But sometimes we just have to live in the legislative reality that we are in. And if we are able to move the money, and when a project comes before us and the grants exist, we can still take advantage of that. Personally, it seems maybe I don't know, I won't say foolhardy, but to me it's maybe not the wisest decision to make that transfer when we have other options given the full context of our budget. So I say all that to say I'm inclined toward option two. I will support measure C for now with the caveat that it's important to me to see what changes as a result of that when it comes back next week, and I'll make my decision on that basis. Thank you.

Mr. Friedman. Thank you. So I would be supportive of number two for the following reason. It was just articulated is there is no match in the local housing trust fund right now from the state. One of the Senate side has funding in there for it. The Assembly side doesn't right now. So we don't even know if it's going to be included or not. And then once that goes to the vote of people, then it takes a long time for it to figure out how it's going to come down. So that's a long process. The other thing, and it was a very important point Ms. McAdoo talked about, is with the two fire stations that are functionally obsolete, the time is ticking on those for a lot of reasons. And we are going to have to have some type of measure potentially going to the voters for something for those. And we need today to show the voters that we are doing everything we can to get out of emergency reserves. The hard part over the last year was getting that $10 million operational deficit, and that's what we did, because you can't even begin to replenish the reserves until you get your operational under control. That's why we weren't able to have the plan that we were trying to get to. But we do have a plan and that is to look at that six million dollar deficit that was just mentioned a few minutes ago and do everything we can to get rid of that. And there is a path forward if we're prudent today to bridge about four million dollars of that. And then there's additional money coming in from the streamers and others that has been talked about that a year from now or even sooner we could be out of emergency reserves. And option two gives us that best shot to do that while also allowing us, if a project does come forward, to of course get that money to the project so it doesn't go away. We would obviously do that commitment. But to increase the reserve and not take that opportunity now, it puts us even further behind. So I'm supportive of option two. because it takes that 2 million, keeps it in the reserves, and then if a project does come forward in appropriate time, we can look at other options to do it. And right now with the pressure on Measure C that we're already taking for the overall budget, that's another hit to Measure C. And finally, with that, in two years from now, we're going to have a lot of pressure taken off. So it's just this two years, and I can't stress that enough. I know you are, Ms. McAdoo, that we just need to be prudent. And option two is the most prudent to get us through these next two years and get us closer to getting out of emergency reserves, hopefully within the next year.

Mr. San Maria.

Thank you, Mayor Rouse. To the motion, I just want to be very clear. Option two is something that after speaking with our housing authority, both our executive directors here, but also our housing authority commissions, this is not the preferred way to go. They are going to be requesting funds for shovel-ready projects. And again, I want to be very clear that in light of state and federal dollars dwindling, it is not the time for us locally to be retracting our commitments on this. And so, I mean, I do share the same concerns as council member Harmon that we need to be very careful about where in measure C that million dollars is coming from. So I'm going to reiterate the motion that there was a second for it. I just don't want us to get lost. It would be the measure C, reduce FY27 measure C capital budget by a million. And I do think it's important that we get a list of where we would be cutting things and where we wouldn't. And then yeah, we could decide then but I would much much rather provide that stability and security to our to our housing developers then to leave it up in the air to a Commitment that isn't really in writing. So I am moving Staff recommendation number four second bullet point.

I believe mayor Pro Tems then in second that mr. Jordan Thank You mr. Mayor Thank you for that reminder. I would have put that reminder on the grant status right at the top of that slide, maybe, just to remind us. You know, I don't see the difference between zero million, one million, or two million being a make or break for a non-match fund housing project coming up in the next year. So I'm fine with option two. I think there's always a million dollars available in Measure C somewhere. Projects that are lagging, projects that aren't starting, projects that are spanning multiple years, projects that are just accumulating dollars. So I'm okay with number two and then holding that Measure C question on the batting circle, on deck circle, just ready. And I just, you know, You can't be everything to everybody at all times. I'm happy the conversation has finally switched to find it instead of just go use it. But, you know, I can't imagine sitting here this time next year and not having five plus million dollars going to the housing trust fund from across the street. I mean, we haven't done our job with that project if that hasn't happened. We're supposed to be fast tracking that project. And we should have $5 million in the bank. And that is not too far away in the scheme of things. So I'm happy to just be patient, show a little patience in this, and try and weather the storm while we can. There's another slide there. People are already going to forget it. You turn the corner on the fiscal year after this, and we're back $7 million. in a deficit right away too. This isn't like a, oh, let's fix it and then it'll be better next year. And apparently the bar is being set now at just getting out of emergency and getting back into contingency realms. That's how we've lowered the bar. But I would not support the motion as made and I'd look for an alternative motion to just go with option two and hold the measure C in our pocket as extra needed dollars.

So are you making an alternative motion or are you? Okay, Ms. Sneddon.

Thank you, Mayor Rouse. This will be the last comment I say on it. I do find it. ironic that sometimes you say we're two years away from being out of emergency reserves and everything's going to be fine. And then sometimes you say if we don't act on every dollar, we're going to be destitute. And I agree that if we don't act on every dollar, we will be destitute. And again, the numbers on the tables, slide 27 shows not that we're out of emergency reserves. We go to 13.9% and then 13% and then 9.3% in that two years that you just mentioned that we're going to be fine. I'm not seeing that we're gonna be fine in two years. The move to using this money for Measure C does not impact the reserves, and that is the importance of that. And in another breath, you mentioned that we're going to go to the voters and ask for a bond for the fire stations. That's going to be critically important to our health, our safety, for the whole city. I don't feel that we've met our promise for Measure I. If we don't use the money for Measure I and be funding the local housing trust fund, whether it has matching funds or not, it's having it be in a place that we've made a commitment to. I don't see how the voters will trust us to do what we say we're going to do with money. And the same thing is using Measure C for this. This is not what people wanted Measure C to go for. So we've played this, we've played it out where we took it from reserves, we were supposed to replenish reserves, now we're going to take it from Measure C, and then maybe move it around to something else when we come up with a fund. It was supposed to come from Measure I, and now we're in this situation. But I think we need to make good on this promise, and it's a small amount out of the $15 million that Measure I brings in. So those seem to me to be contradictory statements that in two years we'll be fine and don't need to worry about being out of our emergency reserves, but we'll still be in contingency. So I'm still going to support option four from measure C with really the strong statement that it should be coming from measure I. Mr. Freeman.

Thank you, Council Member Sneddon. What I was referring to was that we have to be diligent to get out of there. That's what I was saying. And there is a path forward. And I laid it out and to get out of emergency reserves. Part of it is we have the project next door that could go towards the local housing, that's gonna go towards the local housing trust fund. When I talk about a bond for the fire station, we do have to go to the voters and we do need the voters trust. You and I both agree on that 100%. But if we have to do that and we haven't replenished our emergency reserves, I don't see how the voters trust us. And what I'm saying right now is, Let's wait and see. Let's not use Measure C because the voters are already saying that we're using Measure C for other purposes. Let's wait and see what the project is and where there's other funding coming in. There is a real potential that additional streaming services are going to come in in the time that we're waiting for the Housing Authority project. So it wouldn't require using Measure C, and it wouldn't require using Measure I, and it wouldn't require going into our reserves. That's what I was talking about. So I think if there is a way where we don't use Measure C or our emergency reserves, that's the preferred alternative, and option two gets us closer to doing that. That's what I was referring to. Sorry if it wasn't clear enough, but we need to, as you just pointed out, show that the reserves are six million in the hole. We can plug four million of that today, but that's up to us. It doesn't seem like we want to go that way. So I will be supporting option two. But we do need to vote on the motion that you put forward there. And I agree with Council Member Jordan. We should go forward with the motion and see if the votes are there to do it or not.

Okay. I'm going to comment before I call on you, Mr. Annemarie, on this. So we're going back and forth about the local housing trust fund, which is formed by Council Members Herman and Friedman, which was great. But it was about what we did with surpluses. That was the 115 trust and local housing trust fund. Measure I was passed in order that we could close the gap in our normal general fund budget to get us to the point where we could balance it, to get us to the point where we could generate the reserves that had now a place to go, which was at the LHTF and the 115 trust. So we're acting as if we have this overriding obligation to figure out a way to fill the local housing trust fund. I want to do that too. I think it's a great mechanism. However, it was meant as a repository initially for philanthropic funds, a million dollars of which is supposed to come from the right project. I don't know if that's still in question legally or not. Is it still in the middle of that? Okay. So we get a million dollars from that. We get the other $7 million from the other project. It's not happening tomorrow, but it is in fact happening. It's going to be a major windfall. In the meantime, we've got a gaping, sucking wound, which is our general fund budget and our reserves. And, you know, to me, the best option on that slide is option one. just return the extra million dollars back to the reserves. And like Mr. Freeman said, start building those back as quick as we can. If we don't take care of that, and then we try to approach the rest of the budget like libraries, police, fire, our employee contracts, we're just gonna be digging ourselves a deeper hole every year. We have to show some discipline right now. We have to show the kind of discipline and the kind of tough choice-making that our staff and the administration made to present us with what we have today. And we're just not doing it, and I really would like to see us do that from up here on the dais. So I would prefer actually just have item one as the option for this motion. Okay. Okay, well, we can make an alternative motion. Ms. Sanmarie has her light on.

Yeah, one quick question for our staff. I asked this last time, but I don't think we have the numbers for it. Our police station overrun fund, is that measure C?

Council Member Santamaria, just to be clear of the terminology, are you referring to the contingency of the project? The police project is not overspending its budget. It is on track and on target to be completion. So if you're talking about the contingency, which is a standard measure, amount of money related to the construction contract. There is a contingency fund that is specific to the construction contract. Uh, we have had to dip into that contingency reserve a little bit for some site specific, um, drainage and other work that things like that come up during any large construction contract or construction project. We are not projecting that we will need to come back to council to ask for additional contingency at this time. If we do not use all of the contingency on that project, the remaining amount will go back into Measure C, which can be used for appropriation for other projects going forward.

Okay. And how much is in that contingency fund right now? How much have we used of it since the fund was created?

Usually, we don't have the numbers right here in front of us, but it's typically about 15% of the construction contract budget. And I don't know exactly how much we've used of that. So 15% of the $100 million is usually how much is set aside. So we can report back to the council on that on June 30th.

Okay. That would be really helpful for us to go back to because I am in agreement with Council Member Harmon and others here who have mentioned we have to be very careful where from Measure C this would be pulled if we go forward with that. But also back to Mayor Pro Tem Sneddon's comment on you know how this all started yeah that's because we did not put housing as a priority for measure i it that's how it was sold to the voters but that's not how we voted we voted 42 for police 24 for fire 22 or something for housing and so now we are seeing the consequences of that. So I would love to see a report on those numbers for June 30th, because I do think that that opens up the conversation of money that is frankly just sitting there. And I think our staff, and it seems to be that y'all are doing an incredible job keeping the costs within that existing budget. So it is likely going to have some leftover funds, and I'd like to see that. So I'll bring us back to the motion for recommendation four. I also just wanna add really quickly the number two again. The suggestion for number two, that's because we have uncertainty in our budget and I don't think it's fair that we transfer our uncertainty in our budget to uncertainty for the housing authority in their funding for their project. So the housing crisis is one of the biggest crisis that we are facing. We have the duty to address that. That is what we should be addressing. So again, staff recommendation number four with measure C. coming from Measure C with the detail of where exactly we would have to cut projects or defer them.

Mr. Jordan? Sorry. I just have to go off on a tangent here because I'm not clear on something. So when we're talking take it from Measure I or take it from Measure C, particularly Measure I, when Measure I dollars come in, do we track them to their lifetime, to the destination? like when we started we said this will fund three policemen or this will, whatever all those things were, something to the housing trust fund, whatever. Was that just once or do we track that for the rest of their life as those dollars come in as a Measure I dollar and they get apportioned into those particular uses? Or do they just disappear in the general fund?

Council Member Jordan, Measure I sales tax is a general fund revenue. It pays for general fund expenditures. It pays for staff and there is these transfers that go into the Local Housing Trust Fund and the Flexible Fund. We are tracking the specific payroll related expenses for the over 30 staff that are funded through Measure I directly through our payroll and financial systems. And what we will do is at the end of each fiscal year we will just run reports and make sure that we are actually spending down all of that Measure I money.

And so when somebody would say next year, take a million dollars from Measure I, you would be taking money that's already, like staff, those are already staff positions, you would have to find some money somewhere else automatically to replace those losses, right? And probably similar other ones do. There's just not a pot of money there to take money from. It has a cascading effect to go find money to replace the money that you're supposedly removing from Measure I, correct?

Yes, Councilmember Jordan, there is no taking from some pot of Measure I money that may be sitting there from a prior fiscal year. That does not exist with Measure I. Measure I funds operating costs, people mostly. And so at the end of the day, if we don't spend all that money, it goes down to general fund reserves, right? And Measure C acts differently because Measure C funds capital.

Right, okay, thank you. And that was the whole idea was that Measure I would get us to the point where we could finally generate again as we did when we created the LHTF, create the surpluses and have a vehicle for them and attract hopefully outside funds like the in lieu fees and the different things we have going on today. So there was never ever a commitment to take money out of general fund, normal operating funds and pump it into the LHTF. That was a repository for surpluses and for ancillary funds that we would get from construction projects and whatnot. So that's kind of a general misunderstanding. So that's why I say we have to take care of ourselves first, you know, i.e. the general fund budget if we're going to do all the things that taxpayers expect us to do and provide the services before we get into the weeds on outside projects. So with that, I don't know if anybody wants to propose and if you want to act on this. We already have a motion on the floor.

Thank you.

Okay. Well, we could have an alternate if you wanted to have an alternate motion, but okay. We can vote on the motion. So what's the motion?

We have a motion by Council Member Santamaria, seconded by Council Member Seddon, to reduce fiscal year 2027 Measure C capital budget by $1 million and appropriate those funds to the LHTF, resulting in a total appropriation of $2.0 million in fiscal year 2027. Is that correct? Yes. Okay.

Okay.

And go ahead and vote, please.

Okay, the motion passes 4-3 with Jordan and Friedman dissenting. All right, let's move on.

So Mayor Rouse, the next item before you is the request from multiple council members to not approve of the local government management fellow position, which would result in general fund savings of approximately $160,000. Okay, Mr. Friedman.

Thank you, Mr. Mayor. One of the items that came up with this was that this position was going to do the ordinance audit that is critical to us making reforms in community development. But as we learned at the Long Range Development Oversight Committee last Friday, that we would not have to go out if we did not fund this position. We have the capacity to do it in-house rather than hiring a consultant. And it might take a little bit longer, but a little bit longer is definitely worth the savings of $160,000. So I would support the staff recommendation to not fund this position and put that back into the general fund.

Is that a motion? That's a motion I'll make. Okay. Anybody want to? Second by Sneddon. Ms. Santamaria.

Just a quick question for Ms. McAdoo. I know that this came from a position that was left vacant. I thought I saw a different number, so just please correct me if I'm wrong. But the position that was left vacant, how much did that position leave in the city administrator's budget?

So that position cost about $250,000. And so the savings was the $90,000. And then if you don't approve this management fellow, there would be a total savings of $250,000 because that position would not be filled.

Got it. OK. So then this would be?

An additional $100,000. So it's basically then this is an additional $160,000 above the authorized budget. OK. Or sorry, recommended budget.

Got it. Thank you. That's helpful. So for the recommended budget, the $90,000 in savings is already there? Correct. Okay.