City Council - Regular Meeting

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the time is 4 o'clock and I will now call the January 27th, 2026 regular city council meeting to order. Madame clerk, roll call, please. All C council members present. Now is the time for the invocation that will be led by Bishop G. Vincson of the East Bluff Ward of the Church of Jesus Christ of Latter-day Saints. Followed by the invocation. Council member Wan will lead us in the pledge. Our

Father in heaven, we're so grateful as we approach the be before the city council meeting for all the blessings that we have and all that comes from thy hand. We're so grateful for the beautiful world we live in and for the opportunities we have to grow and to progress and to learn, experience. We're grateful for the country we live in and the freedoms we enjoy and those who've come before us to make those freedoms possible. We're grateful for our great city and community and especially mindful of our leaders who serve us. Please bless them um in all that they do that they might be guided to make good decisions and do those things that will lift and strengthen them and bless um our community. Uh we ask blessing on all those present here today and uh again we love thee and are grateful for all that we have and we say this in the name of Jesus Christ. Amen.

Please remain standing as we salute our nation's flag. Ready? Begin. I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. Okay, we'll move right into our study session item, evaluation of investment options for pension surplus funds. I will now turn it over to city manager Jurgis.

Thank you, Madame Mayor. Um, good evening, city council members. Um, what we're going to present to you is really a discussion on our Kalpers pension and just a little bit of way of background. Um, our employees get a pension and that is through the state and the state's it has the largest pension plan, Kalpers. um we provide um contributions between the employer and the employee to pay for this pension plan. During the great recession back in 2009 um because of the market changes um Kalpers changed that discount rate. Therefore, our liabilities what we owe the pension plan went up dramatically. Since that time, the city council has had a policy of funding that liability and we use our normal costs of the pension plan plus surplus money that we put into that pension plan. So, in the sense that we super fund the pension plan to pay down that liability. Now, we're about 15 years post great recession. There is um some discussion of do we continue to do that? Do we continue to pay down our pension plan at the rate that we're going at today? Um, so that is the discussion for the city council. With that, we're going to have a presentation for you. Our finance director, Jason Alamman, will go ahead and make that presentation. And we do have a few speakers um to address the city council as far as continue the payown, change the payown, or provide some alternate um uh accounts to form. Right, I'll turn it over to Jason.

Good afternoon, mayor and members of the city council. Today we'll discuss investment options for pension surplus funds that exceed the required minimum KPERS contributions. The presentation will begin with a brief overview of the city's current pension funding status and progress to date. We'll then discuss the city's existing pension payown strategy, the legal and regulatory framework governing how pension related funds must may be invested, and how a section 115 pension trust differs from city- held funds. From there, we'll review how other Orange County cities have approached this issue, hear from independent subject matter experts, and conclude with specific questions for council consideration. This study session was requested by council members Weber and Wagan on December 9th. The purpose of the study session is to evaluate whether pension surplus funds above the CalPERS required level should be redirected into alternative investment options such as a section 115 pension trust. Before we dive into regulations and investment structures, it's important to ground the conversation in where we currently stand from an actuarial and funding perspective. Our most recent actuarial valuation shows a funded status of 75.9% as of June 30, 2024. The 2025 valuation will not be available until this summer. In the meantime, we use the Kalpers's pension outlook tool to project the city's liability, incorporating the 12.1% investment return for fiscal year 2425. Based on this projection, the city's funded status improves to 82.4% with an estimated pension liability of

235 million. That's a decrease of 77 million from the prior year. It's important to note that the unfunded acred liability or the UAL is adjusted annually based on whether Kalpers achieves its assumed rate of return 6.8%. As well as changes in actual assumptions. So for example, in 2022, Kalpers experienced a 7.5% investment loss which resulted in $124 million increase in the city's unfunded pension liability. This table illustrates how contributions and investment returns have affected the city's unfunded liability over time. Approximately 60 cents on every dollar paid to a retiree comes from investment earnings, which is why investment performance has a direct impact on the city's funded status and contribution requirements. With that context, let's take a closer look at Kalper's investment approach. Kalper's combined equity and real asset exposure totals approximately 69%. Which includes 19% in private equity. Uh n the 19% in private equity has doubled in value from 10 years ago when private equity was only 9% of the portfolio. Critics have argued that private equity is not clearly justified is not clearly justified considering the extra risk cost and complexity. So for example, returns over the past decade have not consistently outperformed public markets on a riskadjusted basis. Private equity valuations also carry additional risk because actual performance is not realized until an investment is sold, such as through an initial public offering. Interim valuations may rely on optimistic assumptions potentially masking losses for years. The portfolio

also uses 5% leverage which can amplify returns but increases market volatility and potential losses. And then ESG factors are integrated into investment decisions and may also influence long-term performance and risk. For example, Kalper's clean energy and technology fund lost roughly 71% of its capital, a 470 million commitment in 2007 declined by roughly 333 330 million last year. Overall, while while Kalpers seeks higher returns through private equity and leverage, these strategies can carry significant risk and cost that can directly affect the city's contributions, particularly if expected returns are not met or certain investments, including ESG focused funds, underperform. In November, the finance committee recommended that the city target a 95% funded status, which would require continuing to contribute 45 million annually to CalPERS through 2031. Even after reaching that target, the city would still be required to make its legally required contributions resulting in a projected 100% funded status by 2033. However, a question raised by council members Wagan and Weber asks whether the city should reconsider this approach and evaluate alternative investment options such as a section 115 pension trust rather than continuing to make additional discretionary contributions to Kalpers. To frame this discussion, it's important to understand what we are legally required to pay to CalPERS annually for the unfunded acred liability. This slide shows the legally required payments which correlate with the dark blue shaded area. The average minimum

required payment is approximately 36 million. We have historically targeted 45 million annually. However, if we only paid the required amount, we expect to reach 100% funded status in 2035, assuming Kalpers continues to earn 6.8% each year on average. This slide shows the city reaching 100% funded status in 2033 years earlier which assumes the city pays 45 million a year to Kalpers which is roughly 9 million more than what is required to be paid and is referred to as an additional discretionary payment. In order to explore alternative investment options other than sending ADPs to Kalpers, we need to understand the legal framework for governing how city surplus funds for pensions can be invested. Therefore, I'm going to turn this over to Marcus Woo, an attorney with Pillsbury to discuss the statutory and regulatory framework for handling surplus funds. Okay, what um Jason was mentioning there is this uh extra money that you're contributing to PERS. What if you don't contribute that to PERS? What if you keep it in your general assets and um sort of ear market for um PERS liabilities down the road? If you do that, those funds will be subject to the normal restrictions on public agency investments. So here you'll see here from the slide that there's GA there are California government code provisions restricting what your general assets can be invested in. And general assets includes things that are earmarked for certain purposes. Okay? And they're not in a trust by the way. And you'll see that the peritive investments tend to be conservative cash US Treasury securities

other high quality fixed income investments. Those monies cannot be invested by law in equities. They cannot be placed with private investment managers or alternative investment strategies. But the key takeaway here is that again if you res retain those excess contributions you've been making to PERS but merely keep those monies in a public agency general account then they will be subject to the same restrictions as your general other general assets and again legally constrained to lowrisk fixed income statements income investments. Next slide. So there is a way to access those more aggressive investments and it's by placing those funds in what we call a 115 trust and just a little bit about nomenclature here. Anybody any agency or any person can adopt a trust. Okay. So if you adopted it but you have the trust when you adopt a trust you adopt a trust and include provisions that restrict it to certain purposes, right? What's the purpose of this trust? So here the concept is you have a trust and you putting money in it and the monies in those in that trust are reserved for a singular purpose which is funding your future pers contributions. You already have a trust a 115 trust an oped trust. So the money in that trust is reserved for singular purpose which is funding retirey health benefits. This is very similar to that except its purpose is instead to fund PERS contributions in the future. And again, just one last word about nomenclature here. The section 115 that just means that you have a trust and its income is exempt from taxes under section 115 of the Internal Revenue Code. So that's all

section 115 means. Section 115 trust. You have a trust you've established. For its singular purpose, it's exempt from income taxes. Now, what does the trust give you um versus keeping the funds in a general reserve account and earmarked for pensions? Well, under California law, once you put that money in the trust and it's reserved for retirement uh purposes, funding helpers contributions, that money can access any investment. There are rules under the California code and the California constitutions which basically say well now the only restriction you have is that those assets have to be invested prudently and they have to be invested in a diversified using a diversified strategy. So you can access equities, you can access alternative investment management and so forth. And here just moving to the last bullet uh repeating what I just said which is there are fiduciary duties that apply just like as with any trust the trustee of that trust has to observe the purpose of the trust can't be used for any other purpose the funds and the trustee has a responsibility to act prudently with a loy with loyalty to the ultimate beneficiaries which in this case would be your retire your current employees and retirees you were covered by ers. Um, some best practices which would include formal investment policy if you had one of these trusts and having an oversight committee to manage trust investments. Any questions so far?

Can I ask a question? Does that conclude the presentation? No, we have more to add. We'll move to the next. Do you want to ask your question now?

Go ahead. Right. We'll go ahead and conclude and then open it up for questions. So, now that we've kind of discussed what a 115 trust is, we thought it would be helpful if we surveyed Orange County cities to determine whether section 115 trusts are commonly used for pension funding purposes. Based on a survey survey of all 34 cities in Orange County, 22 cities, which is roughly 2/3 of the cities in Orange County, have a section 115 pension trust. And then when we looked at those agencies that actually have the 115 pension trust, over 3/4 of these trusts are administered by public agency retirement services or PARS. Other trust administrators include Schustster and Kalpers and one city in Orange County has its own self-governed pension trust. There are really three primary benefits of a 115 pension trust. The primary benefit is rate stabilization. So trust assets may be used to offset unexpected increases in employer contributions driven by Kalpers's investment volatility. What that basically means is if you know if CalPurns earns 6% this year the expected rate of return is 6.8%. That difference the shortfall would be considered a loss from an actuarial perspective. and our rates would go up. If we had monies in a 115 pension trust, the increase in those contributions could be offset by pulling money out of the 115 trust to then stabilize our rate contributions to Kalpers. A secondary benefit is diversification, which allows the city to invest a portion of its pension assets in a portfolio that is separate from and potentially structured differently than Kalpers. And then a

third benefit is local control, giving the city direct authority over contribution timing, investment strategy, and risk tolerance. Of course, within the balance of its fiduciary responsibilities because PARS and PFM oversee pension trust for more than three quarters of the section 115 trust in Orange County. I invited Dennis Hugh from PARS and Keith Stribbling from PFM to talk about their program offerings. I did want to note that the city currently maintains a section 115 trust for other postemployment benefits or OPEB which is actually overfunded. The city has approximately 5 million in surplus funds in the OPE trust that will need to be drawn down. Those funds could be potentially redirected to establish a section 115 pension trust allowing the city to do so without interfering with this aggressive pension payown plan. And with that, I'll turn it over to Dennis Yu.

All right. Uh, good afternoon, Madame Mayor, members of the council. Uh, my name again is Dennis Yu, executive vice president with PARS. I'm pleased this afternoon to present information about um potentially using a 115 trust to deal with your um Kalpers's pension liabilities. Um, if you can flip to the next slide. I just have actually it's a little bit out of order from Okay. Or I don't know if you skipped um if you can go page 16. Yep. Okay. So, just a little bit quick background on our company. Um so, our company um was founded over 40 years ago to provide retirement plan services for local governments. Um we've actually provided 12 different retirement plans for the city of Newport Beach uh during that time um over the past 38 years. Um, in fact, we are a Newport Beachb-based company, um, as well. Um, so PARS, um, back in 2015, um, we worked with our attorney, um, uh, Mr. Woo behind me, uh, with the IRS to develop a 115 trust program where we did submit it to the IRS and received a private letter ruling that deemed that or trust was in fact uh, qualified under section 115 and was in fact uh, taxexempt. And so um since then we've worked with over 500 um public agencies nationwide and have accumulated probably more than $9 billion of assets or or so to um deal with either OPE or pension liabilities. Um so or trust programs are overseen by our trustee US bank and managed by PFM asset management. Um so the um the city um within these this trust program would be able to dictate the risk tolerance level for investments whether you want to be aggressive or conservative with respect to investments and then PFM AM would then manage the investments um accordingly uh to to that specific

strategy. Um as Mr. Alim mentioned um the city back in March of 2024 um established a 115 trust through PARS for specifically to deal with your um OPED liabilities. You had previously used Kalpers to manage your trust fund. um you did transfer it to PARS in order to try to provide greater administrative flexibility and um be able to um potentially um enhance investment performance and and also lower overall um investment volatility by using a um a PARS 115 uh trust program. Um the fortunate aspect of this trust program that the city has already adopted is the fact that uh again within that same trust program, you're able to preund both pension and OPED liabilities within that um program. So your city has approximately $52.5 million in on the OPED side. Um you've yet to activate the pension account, so it is available to be accessed and funded, but the city has yet uh to do that. Um, so as M Mr. Ali Mom mentioned um back in the um finance comm uh committee meeting from two weeks ago, your city is currently in a good status in that you're overfunded on your OPED uh liability, meaning that you have more assets than liabilities that you're you've promised to pay out for your retired healthcare benefits. So, as a result, there is the potential that the city can withdraw a portion of the assets in that trust to help fund um a 115 trust program on the pension side or potentially the city could also take the funds out and then send it straight to Kalpers. So, that those would be some of the options that the city would have going forward and um we'll be here to answer any questions you may have about the flexibilities that you do have uh with respect to your 115 trust plan. Okay. And then if you want to go to the

next slide. Um and then this is where I will bring my um associate from PFM asset management Keith Stribbling to talk about some of the investment strategies that are available within the 115 trust program. Thanks.

Good evening everybody. My name is Keith Stribbling. I'm portfolio manager, senior institutional portfolio manager with PFM Asset Management. I've um been working there and its predecessor companies for 30 years. Um and I've managed PAR's clients for the last 10 years. I managed a lot of PARs clients in Orange County, Riverside County, the Coachella Valley, and parts of LA. And I live here in Orange County. Um, these are uh the five uh standard investment strategies. Um, and they are all different risk tolerances. The conservative and moderately conservative are kind of like inflation fighting portfolios. mostly fixed income with some growth to offset the effects of inflation on fixed income. The moderate and the balanced are 5050 and 6040 mix of stocks and bonds. Those are more uh traditional pension-like um asset allocations. And then the capital appreciation strategy is what we would um say is most similar to uh the Kalpers. And uh whatever strategy is picked is usually dictated by time horizon. So the longer the time horizon, the more risks one can take because time is the thing that sort of smooths volatility in and financial markets. Um and then on this slide we you can see our asset allocations. I would note that they're quite different than uh Kalpers. Uh there's no private equity or or um private real estate. Uh a lot of that has to do with the fact, you know, it's not that we don't have access to that. It's just that these um 115 trusts are really to provide financial flexibility for uh our agencies and so we need to be able to be liquid whenever the money is needed. So if uh if uh Jason calls me and says we need to move $2 million, I can't say well it's stuck in private

equity for three years. So um our strategy will look a little different than Kalpers. Here you can see some of the returns for the different strategies over the 135 and 10-year period. Um compared to Kalpers, uh Kalpers had a good one-year period. Our balance strategy up 10 and a half. Kalpers up 12. Our capital appreciation is up was up 1380 versus 12% for Kalpers. Um and then uh the volatility of our strategies will typically be lower because um the private equity stuff can be you know in times of volatility can be hard to price.

That's it. Yeah. Okay. Yep. That's all I have. I'm glad to answer any questions. Thank you.

Yep. Thank you. So, um, the final slide outlines specific questions for council consideration. The first question, does the city council concur with the finance committee's recommendation to continue targeting a 95% funded status while committing $45 million per year towards the pension liability? Second, does the council wish to establish a section 115 pension trust and initially fund it using the $5 million in surplus funds currently available in the OPIP trust? And then third, does the council wish to make additional contributions to a pension trust beyond the initial funding or would the council prefer to revisit that question in in a year? That concludes our presentation.

Thank you for the thorough presentation. Okay, bringing it up here. Council member Stapleton. Yeah, just a couple quick questions. Uh, as it goes to, uh, council input and requested, I'm I'm all in in keeping the aggressive pension payown plan. And I think the $45 million to have this in theory paid off by 2031 makes a lot of sense. Uh the gentleman from Pillsbury, the attorney, uh first name was Marcus.

Marcus. Uh thank you Marcus for being here. Uh my question to um to Jason, I guess we'd have to be mindful if we took money out, let's say the 9 million in additional funding, right? If we took that out, we didn't put it PERS, we put it in the PARS, uh, section 115 trust, um, if the markets did not participate at 6.8%. We missed that mark, we'd still be accountable for that 6.8%. So, we'd be almost money didn't go to PERS, we missed that, and we missed it on the OPED pars most likely. Right. Right. So, yeah, I think what you're saying is if we took the 9 million instead of sending it to CalPERS, we put it into a 115 pension trust.

Yeah. and then Kalpers fails to hit that 6.8% return, then yes, the city's contributions would go up. But then going back to that rate stabilization concept, we could use the 115 trust to then fund the the incremental increase associated with those cost increases for not hitting that 6.8% return. And what would that do with the government rating agencies if we did not put that 9 million or deterred from that track?

So the credit agencies, the rating agencies look at it holistically. So they look at your assets and your liabilities. So you know when you put money into a 115 pension trust, it does not directly reduce your your liability. But they do look at the asset side of the balance sheet and they would look at your 115 pension trust because they're legally restricted. They have to be used for pension related purposes. They would factor that in. So it would not have a negative effect if you just took the monies instead of making an ADP payment to Kalpers and instead you put that in into a 115 trust. Okay. And what are we paying PFM right now

for the uh the OPED trust in fees? And fees is about 28 basis points on 52 million. And we'd be afforded the similar in section 115 be the same pricing 28 basis points. And since we're since we're in PERS, there are no fees. We don't get charged a fee for that. There are fees, but the 6.8% return is net of those fees. Net of fees. Yep.

Okay. Um, okay. Well, yeah. So, for my opinion, we can come back to it, but I would certainly continue to aggressively pay down the 45 million, the 9 minute 9 million in additional to uh PERS. And I see this as an opportunity, a one-time opportunity for now, given that we're 126% funded, overfunded uh in OPED to take that 5 million additional as a one-time into a section 115, put it in a more aggressive portfolio. maybe the you had a couple options, the 6040 or the 7030. Uh see if we can't make a decent return on that. Uh and then see what OPED looks like a year from now if there's additional resources. But that would be my perspective.

Thank you, Council Member Wagan.

Yeah. Uh thanks, Jason, for for the presentation and the hard work digging into this. It's it's very nuanced for most people. Um, I really appreciate those that supported the A1 to have this discussion because as somebody who's not on the finance committee, I don't get an opportunity to have these discussions in that sense. And for the general public who might not understand is three of us get to be on the finance committee and council member Blom or Mayor Promlam used to be on it, but he moved over. Council member Grant is on it. Um, council member Stapleton's been on it for a really long time, I think, as a private citizen as well. And now councelor Weber, council member Weber's on it too. So for me, I don't get to have those discussions. Um I see uh the finance committee come to us as a joint meeting for our budget once a year, but this uh gives us an opportunity to kind of discuss it amongst ourselves what we have in these assets. And um you know, I kind of look at a three-legged stool approach to investment as I do for my own personal self. And you can't always rely on you know, one entity. And so for me coming into this role as a council member, I fully agree with the pay down policies that we have. But looking to it a little bit more, I get concerned that we rest all of our um eggs in the Kalpers basket, which by law we have to do, but kind of looking outside the box, do we have some opportunities to make some other investments that can help us? Um my problem with Kalpers is they can always change the rules. They could always move the goal line. And so we're giving all this money, all this money, all this money every year and someday they can come back say, "Hey, thanks for playing Newport, but uh we're changing these uh measurements here and you're going to have to give us some more." So I just really wanted to have an educational discussion, a conversation with us here on the council because we don't get to do that uh when you're not on the finance committee. So I can't talk to council member Barto about that. I have to do that here. And so I thought this would be a good opportunity to kind

of see, you know, where we are. um one of the slides on I think page four um that shows you know traje trajectory where we would be in these investments from Kalpers you we we went in 2020 to 69.2% 2% funded and then Kalpers had an amazing year of 21 21.3% investment to get us then to bump us up to 79% funded and then they lose 7 and a half and then it drops us down nearly 10 percentage points and then we take us back to getting us back. So then you go to the slide deck on page seven and it's showing this that we're going to continue to pay it off, pay it off, pay it off. But what it's not showing is well what happens when you get a negative 7% 75% dip then that totally alters this in structure. So you know highlighting that Kalpers isn't anything like when you pay your bills in a normal sense you know you you set up a 30-year mortgage for your home. You know you pay everything every year the exact same. This has this variable of well Kalpers didn't perform. So what I was looking at it is is there another structure that we could put into this and say hey we've got we're overpaying because we have to pay them in what's the minimum amount that we have to pay every year

it's roughly 36 million a year

and then but we're paying 40 or some change. So I'm looking at just that difference to say hey is there another investment strategy that backs us up to say hey one day we're going to hit 100% because these charts show that we're going to hit 100%. But then when you dip any percentage often deviate from the 6.8% that the KPERS estimates that we're supposed to hit. Then we owe money. So we could be 100% funded in the year 2030. Let's say in 2031 they have a horrible year of investments and then now we're 90% and we are now 10% less funded. So, what I'm thinking of is finding this pot of money that we have invested in a 115 trust that says, "Hey, we can backfill that 10% loss and that dollar amount to get us to 100% funding." So, this just is an additional leg on that stool that prevents us from being in a position where we're now sending money to Kalpers. They lost the money, they want more money, and now we can backfill it by having this 115. So, I I think these are all really good discussions. We This is a study session. We don't have to take action on anything tonight. So, we just have to um talk about it, think what's good. Council member um Stapleton brings up a good point. We have this 5 million overfunded in OPED. We already do it with PARS. Um it sounds like we can get 28 basis points for it. I'm wondering as that if we were to start with five and we continue to do well on OPED, is there a point where the basis points come down because we have more and more money? I'm I'm not sure. Maybe Par has an answer to that. Um, but I I think that's a good opportunity to to have this nest egg to help back us up when Kalpers uh fails us cuz at some point they're they're not going to return 6.8 and we know that. But and maybe you guys at PARS can't do that either. I I understand. Um but but that chart that you guys showed um somewhere near the back says in a couple of those

measurements you're actually beating uh PERS in a few opportunities, a few maybe was a threeyear or five year. I forget what it was, but you guys are doing better than PERS. So, you know, I like to invest my money in somewhere local, and that's Newport Beach, and you guys are in Newport Beach. So, that's that's pretty darn convenient, I think. Um, I don't know, maybe I'm rambling on here a bit, but I know staff met with Irvine Ranch Water District, who has a 115 trust, and there was some interesting conversations that came out of it that they're so overfunded that they can't find a place to spend that money now because they've invested and it's done so well in their portfolio. because at some point, you know, you maybe you need it. Well, they their projections show they may never need it. So, now they're looking to pull out of their 115 because they've done so well with it. Um, and Jason, you've done really well with our one our oped account from switching it from Kalpers to PARs. Um, you're now uh pulling in a significant amount of money to the fact that we now have 5 million that were overfunded in in how many years? When did we switch? So in 2024, we pulled the money from Kalpers into PARS and in the last two years in 24 months, we've earned $8 million in investment income. That's pushed us over that 100% funded status threshold into the point actually in including the gains that we're seeing this fiscal year through January, we're we're actually about 14 million um overfunded. 14 million potentially I think after

including the current year of gains. So I mean that that's that's amazing. Thank you for doing that because

that's that's a huge amount. Now we have some additional money that we potentially can invest with and and and have that as an additional rainy day account to help us cover these um Kalpers um uh potential for loss. Um, look, I I brought this item forward not to be a change agent, but just to to say, you know, are we doing things the right way? Again, I can't do anything at the finance committee because I don't sit on the finance committee. So, I think this is a good opportunity for us to have these open discussions. And uh I'm not trying to do anything nefarious with with the city's money. I'm trying just to figure out how do we get to this goal that a council member Stapleton had said. This is something we all I think campaigned on. we want to pay off these unfunded pension liabilities the easiest and most proper way. Um, I'm just trying to say, is there a better way to do it? I I don't know. If there isn't, then we just pat ourselves on the back and say, great, we've been doing it. We're on course. We we keep the status quo. But to me, this sounds like uh a good opportunity to potentially uh chart our own course and in 15 years, maybe another council looks at it and says, "Hey, thank you for setting this one up, too." So, um, you know, maybe I've talked too much, but I'm happy for other council members to to kind of jump in on

Council Member Weber.

Thank you. Uh, thank you, Jason. Um, that was a great presentation and I know this issue is so complex, so I appreciate how clearly the information was presented. Um, to echo a lot of what council member Stapleton and Wigan said, you know, my interest in the section 115 trust is is definitely not about taking on more risk with taxpayer dollars. It's it's actually the opposite. Um, in my opinion, it's about managing risk more responsibly. Kalpers, when I look at this slide, carries structural volatility that is completely outside of the city's control. So while the city has no control over Kalper's investment strategy, timing, actuarial reports, the city is fully responsible for absorbing the results. So I look at a section 115 trust as a tool to mitigate the exposure and retain local control over funds that are already designated as pension law obligations. So again, I don't look at that as reckless. I look at that as deliberate risk management. And to further Council Member Stapleton's point and Wan's point, um, you know, I I support the payment plan and the aggressive payown plan. I think I would absolutely support um transferring that $5 million to from the OPED trust to a 115 trust. And then I think we should absolutely relook at this in a year, even six months, and just kind of evaluate the performance and the outcomes. So, thank you. Mayor Promble Blum.

Thank you. And I want to thank the two members for bringing this forward and uh for Mayor Stapleton and all the work he's done on finance. I got to sit on that committee for a long time and often said it was one of the most boring committees we have in this city because we have good financial responsibility which um is great when we can look at something like this. And I just echo my colleagues uh thoughts up here. You know, Newport has always remained pragmatic, which is part of our strength and our success over the years. And sometimes when I look at local control and what's being forced upon us, um you know, I we can deal with it in a political way, but when we have to start having to deal with it in a financial way, it it really irks me. And um having investments based on politics is just unacceptable. And so I'm 100% on board with an aggressive payown to our pension liabilities. Um I've supported it non-stop as I do now. But there's a way and if there is a better way then we owe it to all the constituents to figure out what that way is. Um and so by investing in something else that's still earmarked perfectly for pensions. Great. It's just another avenue that we can do something. And um thank you uh council member Stapleton for clarifying the variant on our credit rating because you know in business we look at assets and liabilities. We don't just look at what we've paid down. And I think this is a perfect example of that. Also sometimes when you're looking at a chart and you see $124 million loss, you have to scratch your head and ask if you would still keep that same financial advisor um if they told you that's what you just lost. So, you know, I'm 100% on board. I thank my colleagues so much for bringing this forward.

Council member Grant,

thank you. I appreciate this opportunity as well and and uh my council me my colleagues who have brought the conversation forward. I do have the luxury of sitting on the finance committee. So I have um a bit more experience maybe with these issues as opposed to them just coming to me today. And I definitely appreciate staff and our consultants for coming forward with some very important information. Um it is very seductive to look year by year because there can be significant gains and significant losses yearbyear. But looking at it in the long term is really what we need to be doing. This is not a year-by-year decision. We don't we don't gamble with um our uh taxpayer money in that way. We make sure that we make very uh stable and longstanding decisions financially. We've been doing that for a very long time in this city to our credit. Um, I agree that um, while there's potential benefits, the financial upside is limited um, if we're talking about taking away from our existing policy of prepaying the debt. And um I'm not I wouldn't support that additional risk. But as my colleagues have said, if we have some extra money that is earning at a very high rate and we can use that to sort of um make a test case, that's you know, again a very um easy option to make some changes without potentially taking too much risk. Um so I support the middle ground option of using the 5 million surplus in a 115. um as long as we don't take away any of the existing prepayment. I'm glad to hear my colleagues perspectives. It sounds like we're all on the same page and ultimately we all do share the same goal of safeguarding the city's financial health today and in the future. Not just for residents today or for employees today or for um the council or staff to you know have a certain position but looking at you know having a really secure foundation for our future. Past councils have looked at this many times. Past finance committees

have looked at this many times that prepayment has always been supportive supported and I continue to support it but I like this option. I like an alternative too. Thank you. Council member Barto. I just wanted to thank staff for their time. I don't have a lot to add. I agree with much of what my colleagues have said. Um although I did want to say that when and I was in my previous position um my previous agency we did have a similar um scenario where we had a surplus we were able to reinvest it and that worked out very very well. So I like the idea of mitigating risk in that way with a surplus although I'm in favor of continuing to aggressively um pay down what we're already paying down. Thank you.

Okay, we'll go ahead and go out for public comment at this time. Are there any members from the public that would like to speak on this item?

Good afternoon, evening. I really appreciate this conversation. Um, I consider myself pretty financially astute and a lot of what I hear is common sense. Uh, wagon, don't put all your eggs in one basket. Wholeheartedly agree with that. reducing or eliminating debt, um having no or very low investment fees, and then managing risk. The a standard for the 115 trust said a prudent and diversified strategy. Just be careful who defines what prudent is. And as far as being diversified, it needs to be kept an eye on that if there's a big downturn in Kalpers, you're not sometimes you have investments at different firms, but they're kind of parallel. And then I think at least three times over the past about year on agendas. You've heard me speak about uh memorandums of understanding and contracts that have come up with unions in the city where you're reducing what they have to pay to their pension. The number that sticks in my head is like two or two and a half percent. And and you've heard this from me before. This is a great place to be a civil servant. I've done a lot of research on pay and benefits. With all this talk about unfunded liabilities and $45 million a year and eliminating it, I don't understand why it's not logical to have people with such good fortune to continue to contribute what they are to their own pensions like members of the public have to. Thank you. Are there any other public comments?

Good evening, George Lesley. I have a question. If PFM manages funds, how there how do their management fees change the picture? I didn't hear anything about management fees expense. Uh, Mayor Kleman, members of the council, my name is Jim Moer and I am one of many who do not feel that they are financially astute. Uh, but I did have one point that I did not quite understand. We we heard early on that a 115 trust is strictly limited to the stated purpose for which it was created. And on page 16, we're told that the current OPE trust was create is it is dedicated to the retiree medical benefits. That is its stated purpose. So from what we heard earlier, I'm having trouble understanding if that's its purpose. and it's strictly limited to that. How we can redirect money that is dedicated to that purpose to a different purpose of creating a new fund for general pension obligations. And I'm asking that in part because we're told this is a surplus. It's that trust is currently overfunded. But as uh council member Wagan pointed out, the Kalpers trust fund that we have goes up and down in funded status. So is this being currently overfunded? Is that a permanent condition? Can we count on it forever being overfunded or will it fluctuate? And it it just it didn't make sense to me that if that it had a specific purpose, it can be used for a different

one unless there's some loophole that we weren't told about. Thank you. Thank you. Next speaker, please.

Hi, council members. My name is WDE WAC. Thank you for the opportunity to speak. Just a couple notes here. Um, thank you for all your fiscal conservativeness and really trying to keep an eye on our budget. It's greatly appreciated. Um, I think we went went through a lot of pain 20 years ago in one of the uh recessions and trying to keep the PERS in line is is is great. I mean, in reality, we're we are married to PERS and that doesn't go away. Okay. But the good news is when we do those payowns, if they underperform and they don't hit their bogey, then the pain to the city is less. So while it's frustrating thinking, hey, we might make advanced payments, pay it down, and if they don't hit their 6.9 or what have you rate of return, then we're going to have to pay a lot more. Well, guess what? If we didn't pay that down, we would have had to pay even more. So, um, I think what you're doing is great. I'm consistent with, uh, Mr. closure is concerned. If the I forget what you called it, OPED, the account that you might move 5 million over, if that's a health insurance fund, trust account, then if those health insurance fees go up, does that all of a sudden run short? So, if you do uh move the money from that account over to the 115, is it possible to move it back if if if there's some more liability there? So, um, my thought is keep it simple. I don't, it seems kind of incidental to do the 5 million account. Um, complicate things. We're already complicated enough. Keep your eye on paying down PERS and and do what you do. Keep our budget in aligned and and keep at it. But anyway, really appreciate it. Thank you.

Thank you. Any other speakers? My name is Kathy Gilbert and I'm glad to be here before city council and the mayor, but my comment is about the budget, but it's not about the study session. May I make it? Uh, we will have an opportunity for non-aggenda items coming up. Yeah. Thank you. Anyone else on this item? Okay, we'll go ahead and bring it back up here. Are there any other comments? Um, Council Member Stapleton, I

I just want to make it clear. I I have had the pleasure of serving on the finance committee for eight years and we've had a lot of incredible leaders and a a legacy of fiscal responsibility in the community and I'm just so blessed that we've had that. We've got great partners, great staff. Um this is unique for those who haven't been on the finance committee before. We have discussed this a lot. Uh the reality is we haven't been 100% funded in Kalpers or OPED in quite a long time. So the fact that we made that move in 2024, we've had a couple incredible years in the market which has helped with performance and created the surplus. So I think this is a conversation that is worth having um given that things have changed. Though again, I would just want to make it crystal clear that I would be supportive of continuing with our aggressive payown strategy with the 45 million with the 9 million included in that going above and beyond going to continue to go to PERS for the time being uh and then taking 5 million from the surplus from OPEB into a section 115 trust as a one-time contribution from the surplus and continue to see how that goes maybe on a six-month or an annual basis to see what the kind of returns are. Um but continue aggressive pay down into PERS, take the surplus that we have afforded with the market returns and oped um and reevaluate.

Council member Wan.

Yeah. Jason, would you be able to answer the couple of the public's questions about the ones they had? I think there was a OPED. Could it get underfunded? Um a couple other comments that were made I think were important for this discussion just to to come out. So for the OPED trust, we if we pull money out of the OPED trust, which is superfunded, it's overfunded, we cannot we have to spend those funds on OPED related expenditures and we have eligible expenditures to spend them on which were budgeted expenditures. So what that means is if we withdraw 5 million from the OP trust and reimburse ourselves for those expenditures, it creates budgetary savings which then frees up budget dollars. then that could be then used to fund the pension trust. So there is a line of separation between the OPE trust and the pension trust, but there is a way to free up funds that could be used to fund the pension trust.

And because I take that as far as if the CalPER does take a loss and we have this additional amount in the 115, then that could supplement that loss. So I I I see it as a benefit to have and with with limited risk because we have this now pot of reserve that we can backfill any potential loss at Kalpers with.

Yes. And there are limits on what we can withdraw from the OPIP trust because it has to be for eligible expenditures to the point that you know our balance is currently at 52 million and our liability is at 38. We are $14 million overfunded. we're actually more at risk of having what's called trapped assets, funds that you cannot access because you can't spend it quick enough and you're earning investment earnings at a faster rate than you're spending it. So that's why it's recommended that we take the 5 million out, which is the maximum that we can take out in addition to what we've already budgeted in the current year so that we're we don't end up with dropped assets in the OPED trust. And that's what IRWD is faced with. It is exactly.

And so that 5 million is that an annual amount that can be withdrawn? It's it's actually 8 million, but we'd already budgeted for three. So it's the 5 million is sort of like free freed up funds that are not budgetarily budgeted in the current year. Um each year we have an actual valuation that's done and PARS and the city look at the valuation report and determine how much eligible expenditures we have and that's what drives how much we can draw from the trust. Got it. And so in your estimation, you know, being our finance director, do you think that this 5 million set up into a 115 trust puts the city at any risk or does it do you see it as a as a potential for uh future use in a positive way?

I don't see any risk. In fact, I think there's risk if we leave it in the OPIP trust of having trapped assets. And then I guess the other question to play devil's advocate would be like, why don't you just put that into Kalpers instead of putting that into u the 115 trust? Would you have an argument one way or the other on that? So the benefit of sending it to CalPERS would be that it would directly result in a reduction to our net pension liability. The value and that reduction is 0.4%. I would argue that there's more value in having $5 million in a pension trust that you have control over than a 0.4% reduction in your net pension liability.

Right. Okay. Thank you. I appreciate that. Um, if there's no other council comment, I I think I'd like to see this come back as an agenda item to move um the 5 million that's in overfunded um from the OPED and and put it on an agenda item to then move it into a 115 trust. But I'd like to have some options for us as far as that investment strategy goes. I don't think I'm in a position to say I want it in, you know, conservative in 160 and aggressive in 40 or whatever that combination would be. I kind of want to see some options for us as a council to then have that discussion to choose with some studying with some some data as far as you know the experts to say which is our best means to invest in you know based on what what what you feel Jason maybe and what you know the outside uh entities are are are seeing in the market because I I think it's important for us to to invest it correctly and not look at something on haste and so I I kind of want to see that in this um agenda item. I don't know if my colleagues have any thoughts on that.

I would just like to add, would you be willing to also in that language continue the $45 million aggressive pay down into Kalpers going forward?

I mean, I'd like to see an annual discussion on uh this because again, I can't see this at finance committee. I don't get a vote. I don't get a say because I don't sit on it. So, I I think we should come back annually and and discuss, you know, the overfunded OPED to see if we continue adding to this 115 trust. Um, I think it's important to look at our options down the road as well. If for some reason this 115 trust is just doing really well and we're actually in a better position by increasing that number, I think it's a fair discussion for us to have outside of finance committee that are we paying too much to Kalpers above and I know you probably won't want to hear that council member Stapleton, but above the amount that's required is it better to siphon off 20% 50% um a certain percentage of it and give Calpers their over that we we would do but maybe uh reserve a bit to add to the 115 trust depending on performance. I think it's fair for us here to have that discussion and maybe you have a sub discussion at finance committee with our experts. I think our finance committee is stacked with experts too. So I I value their opinion. I just I think I get a chance to talk about it here with you versus just watching it online. I can't I can't even be a member of the public and comment at finance committee uh because it's a Brown Act uh violation. So this is my only chance to talk finance is is in this setting. So I I think it's important for us to come back and continuously look at it because it's uh it's an important discussion.

Nothing would make me happier than to have this conversation on an annual basis. I think this is one of the most important things that are facing municipalities today. Uh and unfortunately too many municipalities are not taking it seriously enough. And I think it's the 800 lb gorilla in the room at all times when you talk about potential liabilities for communities in the future. So, I would support an annual review of this, no doubt, coming to council and having these conversations. For sure.

Yeah, that's a fair argument because we learned in this discussion and Jason had said that Santa Ana took a loan out to pay for their unfunded liabilities and then the market tanked and then they were funded 100% then they dropped down to whatever percentage they're underfunded and then they took a loan out to pay for that money and then now they have to pay that as well. So, um, these are really important discussions and I think Newport Beach has sets the standard when it comes to this and finance committees of years have, uh, kept us on that trajectory and council member Stapleton, you were a big part of that, uh, a long time ago. So, um, I appreciate this dialogue and this, uh, this conversation.

Okay, seeing no further comments up here, this is um, not an item that we need a motion on, but I think staff would like a straw vote. So, sounds like from what I've heard, the consensus is to go ahead and allocate the 5 million from surplus into the 115 pension trust and re-evaluate in 6 to 12 months from now. Can I get a straw vote, please? With the continued aggressively paid on the 45 million. I I don't think we we have consensus on that particular piece. Can't vote on this though. I I think I think that we got to come back in a year to discuss it. So I think we're staying on the status quo. And I think that's what council member stapleton's saying. Status quo.

If we're if we're good to pay down the additional 45 million into Kalpers and take this 5 million OPED surplus and put it into section 115 and reevaluate in 12 months, I fully support that. Yeah, I don't think there's really any any debate on that. Um I I think we come back in a year and we talk about the OPED. Um, we talk about the 115 and then we say, is is is the 115 the right path to go and should it be 45 million then? And we can have a further discussion about opening up that discussion. I think I think that's fair.

I didn't hear anybody say that they were looking to not continue to fully fund um our pension and uh continue to pay it down. So, I think we're all saying the same thing. Can we go ahead and get a straw vote, please? It passed by 70 straw vote. Thank you guys. Okay, Madame Clerk, please read the notice regarding public comments on agenda and non-aggenda items.

The city council of Newport Beach welcomes and encourages community participation. Public comments are invited on items listed on the agenda and non-aggenda items. Speakers must limit comments to three minutes per person to allow everyone to speak. Written comments are encouraged as well. The city council has a discretion to extend or shorten the time limit on agenda and non-aggenda items. We will now proceed with public comments on all agenda and non-aggenda items. Please note that members of the public will still have an opportunity to comment on agenda items under consent, public hearing, and current business later in the meeting, provided that they do not offer comments on those items at this time. Apologize for coming up sooner, but uh again, my name is Kathy Gilbert and um I'm grateful to address the mayor and city council and staff. And the reason I'm here is because I want to thank you for putting in your budget um the TIP trauma intervention program on behalf of our first responders, the fire department, our police department, and our community. And one of the reasons I am particularly grateful is I just graduated. I have my badge. I am now an official TIP volunteer. And just to um note, one of my call outs, my first in Newport Beach, was I was on the nighttime shift, which is a 7:00 p.m. to 7:00 a.m. called to 15th Street in Monrovia to a community that their beloved neighbor had died suddenly, an older woman, and Tip comes in on behalf of the police department, on behalf of the community because the community needed to process their grief. They also needed help in explaining what happens

when the coroner comes. And that's what TIP does. And um so I wanted to just read something really quick that grabbed my heart in appreciation for TIP. And this is what it is. What does TIP OC do? We step into the silence, into the shock, into the space where heartbreak has just happened and simply be there. tip is made up of everyday volunteers trained to respond 247 to scenes of tragedy at the request of first responders. So, thank you Newport Beach Police and fire. When the unimaginable happens, we often calm we offer calm care and connection in the middle of their chaos. We are not there to fix it. We are there to stand beside those who never expected to need us. We are not professionals in uniform. We are people in vests. We are trained volunteers offering human kindness when it is needed most. From sudden deaths to devastating losses, TIP OC provides in-person emotional support in real time. No scripts, no judgment, just heart. Why do we show up? Because compassion should never be delayed and one should never face trauma alone. Thank you for letting Tip come to Newport Beach.

Thank you so much. Good evening, Mayor and Council members. Thank you for the opportunity to share a few words about the important work of Orange County United Way and the impact being made right here in Newport Beach and across the county. My name is Nancy Lions and I'm a resident of Newport Beach. Orange County United Way's mission is to improve lives and strengthen our community by focusing on education, financial stability, health, and housing. These are the building blocks of a good community and good quality of life. 211 OC operated by Orange County United Way is our county's 247 resource and referral line, serving as the front door for community support across the county. Last year, 1474 Newport Beach residents reached out to 211 seeking for help with essentials like housing, food assistance, and family support. And according to United Way's real cost measure, 23% of the households in Newport Beach, Aliso, Viejo, and Lagona Woods areas, that's nearly 16,000 families, are struggling to make ends meet. Through programs like United to End Homelessness, we're working to change that reality. Since 2019, this initiative has helped more than 12,200 individuals move into stable housing. Another critical United Way program adjusting financial stability is OC free tax prep. This initiative provides free IRS certi certified tax preparation services for thousands of hardworking Orange County residents each year, ensuring that they maximize their refunds and access valuable tax credits.

By putting more money back into the hands of families, the program streng strengthens financial stability and fuels economic growth in local communities. Now, here in Newport Beach alone, 75 households receive free tax preparation last year. This resulted in more than $140,000 in total refunds, credits, and savings. And that's money that's spent right here on rent, groceries, child care. So, as we prepare for the upcoming tax season, we're actively recruiting volunteers to support this program. Volunteers can serve as tax preparers, greeters, or translators. All training is provided and no prior experience is required. It's a rewarding and impactful way to help local families achieve financial stability. I brought some flyers for you and I'll hand them to staff so that you each get one and you can each sign up know you can pass them on to others who might be interested. So to learn more about how to get involved with local volunteer opportunities in our community such as food drives, back to school donation drives, or other things, please visit unitedwayocc.org. Together we can continue building a stronger, more resilient Orange County, one family, one success story at a time.

Thank you so much. Any other comments on agenda and non-aggenda items? Mr. Moer.

Uh, Mayor Klyman, members of the council, my name again is Jim Moer. Uh, the study session that we just concluded was the result of an what you call city council policy A1 vote that was taken on December 9th. Um, I I I made a written comment about the minutes from that December 9th meeting, maybe not correctly indicating the vote, and I just want to clarify. I checked a few minutes ago, and I think the city clerk has corrected those comments. So, it shows the vote from December 9th. But the point I wanted to make is, as you know, we hear a lot about council policy A1, but there are many other council policies. And in fact there is a council policy A2 and one of the in council policy A2 one of the functions that past councils have placed on the mayor is to make appointments to the various committees and uh both within the city such as the water quality committee, the finance committee and the environmental quality affairs committee and various bodies outside of the city like the sanitation district, the uh uh transportation corridor agencies and things of that sort. And council policy A2 says that the mayor is supposed to make those appointments subject to confirmation by the entire council. And it's customary on the first agenda of the year to see the list of those appointments. And so it was surprising not to see it on the first agenda. It's even more surprising not to see the appointments on the second agenda. So the other council members may be wondering what they're going to be appointed to this year and if their

former appointments were still valid. But anyway, that that is a obvious non-aggenda item that I think needs to be on the agenda. Thank you. Any other speakers?

Hello. Uh, my name is Jim Mains. I am resident of Newport Coast for the last 26 years. I emailed a couple of you guys about uh my situation. I haven't heard back, so I thought this would be a good venue. I feel unsafe driving in Newport Beach. I have suggestions for improvement. on October 16th, 5:12 p.m. I was a victim of a sixc car crash involving a hit-and- run driver that fled the scene. This occurred on MacArthur Boulevard near Newport um near the airport. My car was demolished and I suffered a concussion and other issues. I learned through Newport uh Beach Police traffic collision report that a witness called the Newport Beach Dispatch and reported an erratic and unsafe driver in the area of MacArthur Boulevard and Coast Highway near Fashion Island. The witness reported the driver almost collided with her and she said the driver uh de seemed intoxicated and was swerving. This was around 15 to 30 minutes prior to the conclusion collision based on Google maps and traffic estimations at the time of the at this location. The witness followed the driver and saw the crash and continued to follow the driver for a few more miles. She was on the phone with Newport uh dispatch the entire time. uh police officers showed up around 10 minutes after the crash or approximately 25 to 40 minutes after the witness called. I've seen since since learned that the flock cameras capture the hit-and- run vehicle's license plate, but the driver was not identified. Also, I've learned that the flock systems do not capture live video. My suggestions to improve uh driving safety in Newport Beach is for the city to look at the feasibility of upgrading the flock systems to capture live video so police could perhaps respond faster and could possibly have prevented this incident. I understand there is a thought of integrating existing systems but from my experience this is Frankenstein approach that seldom a lot of fingerprinting of what what happens when the cost update the flock system I contacted contacted

them is around $500 per year per device or if you want the pan and tilt ones they're a little bit more they're like 3,000 per year or maybe there's something you can do with more uh funds to go since all this money $5 million found someplace to tra to support the police department with more uh traffic officers or some other uh resource so people don't have to feel unsafe driving in Newport Beach. Thank you. Thank you. Are there any other speakers? Okay. Now is the time for council announcements oral reports from council members on committee activities and the time for council members to request an item be placed on a future agenda. Council member Wan, do you have any announcements or reports?

None tonight. I I sit on our vector control board for the county and uh I was going to do a little slide, but I I think I talked a little too much tonight, so I'll save it for our next meeting. Council member Barto,

um I only wanted to add that uh Rob and Council Member Grant and I did a video for the ad hoc refuge committee regarding our compost. Um we're we're going to spare you showing you that video here, but you're welcome to find it online. But um it is something that we've made an effort to do. It helps the city meet a requirement that they have, which is to provide compost and it also helps uh gardeners in the city. So, it's available at Bonita Creek Park and we're working on having a schedule posted so people um know when to show up to go get it. Council member Grant, actually to add to that, it's available at four locations in the city. Bonita Creek Park, Avon parking lot, um h I forgot the other two. Maybe um we can get one of the Dave Webb to chime in. Somebody Anyway, there's two other locations in the city. You can go online and and find those locations. My announcement is to congratulate Haime Mario on his appointment to the per as the permanent community development director. Um we all appreciate Haime's demonstration of his deep institutional knowledge and a clear commitment to thoughtful and responsible planning. and I particularly appreciate working with him. His dedication to the city and his work guiding our community has been exemplary as far as um what I've um experienced and I know that he'll continue to protect our neighborhoods and the residential character of our city in a way that has been preceded by our now city manager. And um wish you good luck,

Council Member Weber. Uh so this past weekend, Mayor Klyman and I and Council Member Wagan uh attended the annual lifeguard tryyouts. Uh Mayor Kimman and I cheered from the sidelines and watched uh Council Member Wagan actually jump right in and complete the tryyout. So he did the thousand meter ocean swim and the thousand meter runswim run. uh pretty sure his willingness to experience the process firsthand was a highlight for both the candidates and everyone in attendance. My children asked me later that day why I don't do it and I said I don't like to get my hair wet for starters. Uh special thank you to our city manager Simone for coming out and being part of the morning. We had 96 candidates start the physical assessment and 84 successfully completed both portions. uh those numbers closely reflect the pre-andemic participation levels. So moving forward, the top 55 candidates will advance to the interview phase and then those who ultimately pass will begin the basic lifeguard academy on March 18th. So thank you to everyone from the Newport Beach Fire Department, Police Department, and our lifeguards for your support and assistance throughout the triyouts that morning. And then thank you to all of the participants who brave the cold water to pursue a role with the Newport Beach Fire Department. I can certainly say that Mayor Klyman and myself are still defrosting.

Council member Stapleton. Uh, no report. Thank you. Mayor Proan Blum.

Nothing to report. Uh just quickly for me, I um attended our monthly OKG board meeting where we began discussing the population and employment projections that will serve as the basis for the next Renaycle, which if you can believe it is right around the corner. Um we also had a very productive aviation committee meeting last night with a presentation from one of the VTOL operators, Archer, here in council chambers. Um, and I will echo the congratulations to Haime. Welldeserved promotion. Okay. Madame Clerk, would you please read the notice regarding public comments on the consent calendar? This is a time in which council members may pull items from the consent calendar for discussion. Items 1 through 14. Public comments are also invited on consent calendar items. Speakers must limit comments to three minutes. Before speaking, please state your name for the record. If any item is removed from the consent calendar by a council member, members of the public are invited to speak on each item for up to three minutes per item. All matters listed under consent calendar are considered to be routine and will be enacted by one motion in the form listed below. Council members have received detailed staff reports on each of the items recommending action. There will be no separate discussion of these items. prior to the time the city council votes on the motion unless member of the city council requests specific items to be discussed and or removed from the consent calendar for separate action.

Council member Wagan, do you have any items to pull? No, but I would like to thank uh a couple items on that. Uh Council Member uh Barto and Grant serve on the ad hoc refuge committee. So, thanks for your service on that. It's a dirty job, but somebody's got to do it. Council member Barto, any items to pull or conflicts to announce? No. Nothing. Council member Grant, none. Council member Weber, none. Council member Stapleton, none. Mayor Boden Blum, and I have none.

I also have none. Are there any members of the public who would like to speak on this item? Mayor Kleman, members of the council, my name is Jim Moer. On the consent calendar, I would like first to call your attention to item number one, which doesn't get a whole lot of attention. It's called reading of ordinances. It says that you are waving the reading in full of all ordinances under consideration and directing the city clerk to read them by title only. At some past meeting to relieve some of the duties of our current city clerk. I had pointed out that our city charter only requires the reading of the titles of ordinances on the night that they're being adopted. But if you look at this, it is telling her to read the title of all ordinances under consideration, whether they're being introduced or adopted. So I would just suggest if you want them only on the night they're being adopted, you should actually tell her to do that. Not what you're saying here. As the one ordinance that is under consideration tonight, which is an ordinance for consideration, con being considered for introduction is item number three on the consent calendar, which among other things, it says, is amending chapter 12.62 of our municipal code. And it's attempting both to do that by an ordinance and to show you what the changes are by a red line. And when I look at the ordinance, I see that it's amending two sections. And when I look at the red line, I see it's a red line of one section that is neither of those two. So, it appears staff's intent is to ask you to amend

three different sections, but the ordinance is only amending two, and I'm not quite sure what changes it's making to those two. I looked carefully outside. I didn't see any last minute changes to that ordinance. So, I'm really not sure you want to introduce it in its current form. It seems not to be doing what the intent was. If there is a last minute change, maybe we'll hear that in the motion, but I I didn't see a copy of it outside. Um and the other item I wanted to comment on which usually doesn't get much attention is item number 14 which is the report from the planning commission. Uh after the original agenda comes out you get an additional handout which is telling you the the first one is telling you what's planned at the planning commission meeting. Second one actually shows you what happened there. And attached to that report on what actually happened at the planning commission meeting. If you looked at that is a tenative agenda of what is scheduled from the community development department uh for the foreseeable future. And one thing I noticed on there is it says that you, the city council, on February 24th are scheduled to be asked to adopt a resolution declaring the lower Castaways Park to be exempt surplus land. And I think people reading that in the public are going to think there's going to be a resolution declaring we no longer have any use for that park and want to get rid of it, sell it, whatever. I didn't hear any discussion of that kind at the lower castways park committee meeting. So you might want to clarify what that is about. So do we no longer have an interest in lower castaways? Thank you.

Thank you. Mr. Harp, would you mind speaking to that? Just briefly uh regarding the ordinance. Um we took a look at that uh comment that Mr. Mosher made earlier today and the ordinance is correct. Um, apparently the red line we sent over uh wasn't the correct red line. It was a previous um draft that was generated. So, um the red line is wrong, but the ordinance is correct. Thank you.

Good evening, Adam Levers. Again, I'm talking about uh consent item five, which is a resolution authorizing the filing of an application for $50,000 uh from the coastal commission from whale tale funds for what is called the FIN program, which is an acronym for fostering interest in nature. Um I'm not as knowledgeable about this as I would like to be. Um the staff report indicates that this is uh in lie fees for some sort of development that happened at Leo House and it indicates that $1.4 million was set aside for this in 2016 and about 203,000 in 2024. It's indicated or I learned from staff that about 259 students have been through this program and they get a a two night stay and three days being out in nature around the harbor. And doing the math that works out to $778 per student. Um the goal is to get 3,000 students through this. So there's over 900 left. And I I was unable to glean from the staff report if that uh $1.6 million has been spent or like it looks like the city and the Leo House maybe put the money in. Does the money go back to the Leo House to pay for the rooms? Like just reading it, it it it isn't clear to me if these are inloo fees for some sort of mitigation for development that they're actually being paid. If you have a student come stay free at a hotel and the city and the business are paying themselves back. And I just hope to learn more about that. And if there's 900 students left and all the money's

gone, $50,000 at $700 a pop isn't going to go very far. And I just have a whole lot of questions. Thank you. Any other speakers on consent? Okay. Do we have a motion? I have a motion, Madame Mayor. Uh moving the balance of consent with adjustments to the minutes. Do we have a second? Council member Weber seconds. Let's vote.

Motion carried by unanimous W. We will now move on to public hearings. Item number 15, resolution number 2026-06, revising certain fee notations within schedule of rents, fines, and fees. Mr. Jurges, do we have a staff report? Uh,

we do. Um, go ahead. Yeah. Good evening, honorable mayor, members of the city council. This portion of the agenda will discuss building and plan check fee corrections. On April 23rd, 2024, the schedule rents fe fines and fees, also known as the SRFF, were presented to the city council and included a layout and presentation of the schedule designed to improve readability, usability due to the density of the information in the prior versions. Since the date, the new formatting of the document has been in use for yearly review of certain departments and updates in the consumer price index. The consolidation effort, which intended to improve usability, resulted in the loss of some key information and clarifying language. On April 29th, 2025, the SRFF was updated and included Scrivener's errors that list the building and plan check fees as flat rate fees rather than variable rate fees. At this time, it is recommended that the city council consider approving the recommendations reflected in the staff report to correct the identified scriveners errors by reclassifying certain building and planch check fees from flate from flat rate to variable rate which is consistent with their intended methodology and reinstating omitted descriptive notes to clarify fee applications. And that concludes this presentation. Thank you. Are there any council members have any questions at this time? Okay, seeing none, we will now open the public hearing. Are there any comments from the public on this item?

Uh, Mayor Climate, uh, my name is Jim Moer. I I think the requirement to have a public hearing usually is when you're changing or increasing fees. And this I think is a technical correction to uh repair a previous oversight. And I think it's very commendable that the staff is uh bringing that to you at this hearing rather than just quietly making the changes themselves. I have a I guess maybe three comments about it. Number one, are we sure now that all of when this was first changed to the streamlined format, it was not entirely clear what was supposed to be included and what was not. The old schedule, for instance, cited the municipal code section that justified the charging of the fee that apparently was intentionally left off. These notes apparently were meant to be included, and that's what you're doing tonight. That's good. uh but people may have downloaded the schedule and they will be looking at the new one. Is there going to be any notation on the schedule and what's proposed to you? It doesn't have like a date or anything. So how are people to know when they see the 25 26 schedule whether they're seeing the revised one or the current one? I think staff should perhaps be putting a date on it so people will know. And then secondly, the new schedule will already be a little bit out of date because it's organized by department and fees associated with a department. And as you know, we're reorganizing the department. So in about two weeks from now, what was a municipal operations department under public works is now going to be a separate department. So, are you authorizing staff to rearrange that as part of what's before you tonight? Are

they going to do that on their own or just add these notes? Thank you. Thank you. Any other public comments on this item? Seeing none, I'll go ahead and close the public hearing. Are there any comments up here? Do I have a motion? Happy to make a motion, Madame Mayor. Um approving staff recommendation on this and thanking staff for the work and the transparency on this one. Do I have a second? I'll second that. Seconded by council member Stapleton. Let's go ahead and vote.

Motion carried by unanimous vote. We'll now move on to current business. Appointments to fill two unscheduled vacancies on the water quality coastal tidelands committee. Assuming we do not need a staff report, but let's go ahead and open it up for public comments. Sorry, Adam Le one more time. I I want to extend appreciation to the four members who applied for this. I've attended a number of these meetings. It's a lot of really important issues. Uh looking over the applications though, to me, Aeros Billyu, his education and work history makes him look incredibly qualified to be on this committee. And then, as you've heard me before, uh last time there was appointments to the Harbor Commission, I may be idealistic, but I think having an attorney around that you're not paying for is good. And Daniel Gazerki appears to have a law degree. So, that's my input on that. Thank you. Any other public comments? Okay, bringing it back up here. Just a reminder for procedure, we all have ballots here. Um, each council member will choose two nominees. If one nominee receives more votes in any round of voting, that nominee will be appointed to the June 30th, 2029 term. If both nominees receive the same number of votes, we will choose the terms for appointees after they are selected. Finally, applicants must receive four votes to be appointed. Let's go ahead and vote.

Council member Weber, Yulan, Erys, and Bernham Timothy. Same for Council Member Stapleton. The same selection. Same for council member Blom Climman Grant, Barto and Wagant. Seven votes for both candidates. Okay. So, sounds like we have to determine the candidates or the candidate that gets the or rather the um those selected. We need to select the terms. Um any preference since this is your committee. Um I think we we'll go with um Aeros for one ending in 27 and hopefully he'll renew um come back for that and then uh Tim Bernham for 29 would be my preference just based on the conversations I had with um the individuals.

Okay. Do I have a second? Oh second by council member Stapleton. Um, Madame Mayor, I just when this usually happens, do they is that the process? I just curious historically like has it been a coin toss or has it been a um council decision? Yeah. Motion. It's just simply the decision up here. I just I'm going back to my dated years of being on the planning commission. I think um there was another commissioner that was chosen. We had the same votes and then I forget how that was decided. City clerk, you have a I just just for a point of clarification.

Yeah. So, so traditionally uh it was very rare that that both candidates get the same vote. So, usually the higher vote getter is the one who gets the longer term. But I think in this instance, the best way to go about is via a motion. Um and so we have a motion and a second. I think probably about that works for me. I I just was curious. Do I need additional public comments on that motion? No. Okay, let's go ahead and vote.

This motion carried by seven. Yes.

Fantastic. Congratulations to our new committee members. It is now time to move on to resolution number 2026-05 establishing the fiscal transparency ad hoc committee. Do any council members need a staff report? Seeing none, we will go out to public comment on this item. Uh, Mayor Kleman, it sounds like you are about to appoint this committee which the public will not have much chance to provide input to, I think, for the year that it will exist and it will be coming back with some sort of recommendation. So, I I just want to clarify one thing in the staff report that is being provided to the committee. It did a survey of finance committees in other cities in Orange County. And one that stood out to me was the city of Brea, which on the chart, I don't have paper copies of the agenda items anymore, but my recollection is the city of Brea, it said that it had which has a council of five people said that it had five council members serving on its finance committee, which sounded to me like an interesting model. It would mean that the council sometimes meets as the council and sometimes holds meeting as the finance committee. But I actually looked at the city of Breao website. That is not how their finance committee is set up. They actually have a finance committee of two council members. And those two council members, the other three on the council are alternates. And what that finance committee does is the week before the council meeting, they review the agenda items that have financial impact so that when the meeting is held the next week, they can

inform the whole council of their opinion about the merit of those items for discussion by the whole council. And that actually is what our finance committee in Newport Beach used to do when I first started attending their meetings in 2011. At that time it consists of three council members, no citizens on it. And the three council members would review upcoming agenda items for the next uh meeting and get briefed on those by the staff and be more informed when the items came before the whole council. So I I think that's kind of a a model that might be considered. It's been a little awkward when we added citizen and council members to it. And then the other thing I wanted to point out about the Brea, while they have the committee that previews agenda items for the whole council consisting of council members, what our staff overlooked is the city of Brea also has something called an investment advisory committee and that consists of one council member overseeing four community appointees. So it is rather like our finance committee that we have. So I I just wanted to clarify what was going on in the city of Brea and also tell you a little bit about how our finance committee worked before its current configuration and it was very much like what they're doing currently in Brea. Thank you.

Thank you, Mr. Measure.

Good evening, Mayor Klyman. My name is Wade Welmck. I'm a Newport Beach resident. Thank you again for the opportunity to speak. I just wanted to make a couple thoughts. First of all, I'm uh appreciative of working on transparency in our city. It's just the most important thing we can do. So, the fact that you're forming this committee or ad hoc or what have you uh to improve transparency, um I'm greatly appreciative. I'm also grateful. I saw the original draft uh was going to suspend the finance committee until further notice kind of thing. Um, so I'm glad that the one you're looking at tonight, um, is not suspending the finance committee. That is I'm gratefully appreciative of that as well. Um, couple thoughts that from looking at the spreadsheet that was in the staff report, all the cities that have finance committees that I saw do have citizens. I think it's just a great opportunity for um citizen oversight on our budget and our fiscal uh making sure we stay conservative as we have been that you know little reminder 20 years ago or what have you maybe it was 25 years ago but we had some bad uh embezzlement problems. So just getting eyes and ears all over our finances is is always really important and having we have great citizens here that could do a really good job it as long as they get to part participate in these committees. Um in terms of this one that you're looking at passing I see it's set up as an ad hoc which is the resolution says that it's going to be um exempt from the Brown Act. And so my thought is if we're working on transparency, would it make any sense to make this a special committee that is subject to the Brown

Act so that as this committee that's going to occur tonight likely um their meetings are in public so we can all see what's happening, how this committee is being formed and just if we're going to work on transparency, can we do that in a transparent fashion? So my suggestion would be to scratch the resolution language stating that this committee is going to be exempt from the Brown Act and instead rather than ad hoc which can be exempt at times, declare this a special committee so that as the committee works forward towards potentially tweaking uh transparency on our finance committee that those proceedings are held in public so that we can participate and and really just make sure we have the most transparent city possible. Anyway, I greatly appreciate all your efforts and thank you very much.

Thank you. Any other comments on this item? Okay, seeing none, I'll bring it back up to the dis. Council member Grant.

Uh, yes. Thank you. So, Mr. Wack kind of got ahead of me on my comments, but I'll just restate. I think that this is an important opportunity. I'm um glad to see that we have um an ad hoc of three council members that's that are going to take a look at the finance committee. It's a healthy exercise. We at the finance committee, I sit on the finance committee and we are constantly on a monthly basis looking at our policies and procedures and it doesn't hurt to have extra eyes on and take a look at that. Um I'm also um relieved to say that we are not suspending the finance committee in the short term because we are about to enter a very important process the budget process in this city. It takes quite a while and it would interfere with um that orderly process. So, I think we've kind of hit the sweet spot with this that we are going to have a broad overview of the policies and procedures of the finance committee, but we're going to be able to continue business as usual while we do that. So, thank you for amending the resolution, and I look forward to our vote.

Thank you, Council Member Grant. Council member Wagan.

Yes, I'd like to uh thank the mayor for bringing this item up. Um I'm supportive of the item as uh written in the staff report. Um, I would like to just offer a friendly suggestion that uh whatever decisions come out of the ad hoc uh that just go straight to a public hearing or get to the part where we have open discussions so that we avoid any um you know thought out there that we're just approving something off the consent calendar. Um you know we have ad hoc committees that meet. Uh a good example was the last uh three items on our consent calendar that was on the refuge committee that just went straight to consent calendar. I think it's appropriate that those did go to the consent calendar, but this is just such a meaty uh topic that I think it's really good for us to have this open dialogue as you saw during our study session that gave us a really good uh feedback and and back and forth between council. We got to go talk to the public. We got to hear from uh folks in the industry. Uh we had a really robust discussion. So I think that that was very successful in my opinion what we just did. And I think that this ad hoc will be successful. I think you kind of hammer out the nuts and bolts of it. come back to the council. Um, if it's not ready for prime time, we have the opportunity to say, you know what, go back to the drawing board, readjust this. Let's modify that. I think the makeup of the ad hoc is good. We have a um two council members who currently sit on there. Council member Stapleton's got a long track record and history of being on the finance committee. Um, so I think this is a well balanced uh ad hoc that can come back to the council and have that full-on discussion in the public, hear feedback. If it doesn't quite fit the bill, we send it back uh to the drawing board, come back again. But I I think this is appropriate step. It gives us an opportunity to deep dive with staff. Jason's been doing Omen's job over there and I think can can carry the water for us. Uh and the questions ad hoc has come back and then discuss it up in the public go from there. So I think it's fine as is.

Thank you. Any other comments up here on the dis? Okay, seeing none, do I have a motion? Do I have a second?

Council member Weber seconds. And let's vote. Motion passed by 70 vote. Moving on to item number 18. Certification of referendum petition on resolution number 2025-71 approving a general plan amendment for the Snug Harbor Surf Park project located at 3100 Irvine Avenue, Newport Beach, California, and consideration of council action options. Do any council members have a conflict on this item?

Thank you, Madame Mayor. I'm going to recuse myself on this to avoid an appearance of conflict uh due to a business partner I have and a separate venture uh that has a financial interest in the proposed project.

Madam clerk, do we have a staff report? On December 4th, 2025, Newport Beach resident Steve Vickers filed a referendum petition challenges the general plan amendment to increase the allowable development limit. And um the petition started like before that on October 28, 2025, the Newport Beach City Council approved the redevelopment of a portion of the privatelyowned Newport Beach Golf Coast to allow construction of the Snack Harbor Surf Park. As part of the approval, the city council adopted resolution 25 uh7-71, amending the city's general plan to increase the allowable development limit on the site from 20,000 square ft to 59772 square ft. And so on December 4th, um we received a referendum petition challenging general plan amendment uh to increase the allowable development limit. The referendum only challenged the increase in allowable density approved by resolution 2025-71 and did not challenge the other resolutions and approvals adopted by the city council in connection with the project that included the override of the airport land use commission's determination of inconsistency uh environmental impact report approval and conditional use permit on November 20th, 2020. 26, the Orange County Register of Voters confirmed that the petition contained the required number of valid signatures. I'm so sorry, like on November 20th, we submitted for the signature verification. And in January, uh, we received the confirmation that the petition contains the required number of valid signatures of city electors to qualify the referendum for placement on a ballot and certify the results. So at this point uh the council actions will include first uh accept the certification of the Orange County register of voters as to the

verification of signatures on the referendum petition and also uh um again we have options as the council have the options to decide and the first option is adopt a resolution repealing resolution number 2025-71 which approved the general plan amendment for the Snug Harbor Surf Park project. The second option is go to and bring this initiative uh to the voters at either the general municipal election on November 3rd, 2026 or a special election ordered for that purpose um not less than 88 days after the order and no more than 103 days and measure could be consolidated with the June 2nd, 2026 statewide primary election. and I will go over the cost um related to those um choices. So if we repeal resolution, the city council decides repeal resolution 2025-71, there will be no cost um um for um this referendum petition. Second option um if it's consolidated with a general municipal election of November 3rd, 2026, the cost will be 8,500 or 17,000 for this measure because we already have scheduled election for four seats on the council and one measure. That's why it's like just an additional cost. If we do the special election on June 2nd, 2026, the cost will be ranging between 113,000 to 143,000 um depending on the number of pages that go on a ballot. So these are the options um and a cost associated and I'm available for questions and also hire me if you have questions.

Okay. Thank you, Madame Clerk. Council member Wan, that was a hold over from the previous item. It stayed on the screen. Sorry. Are there any questions or comments up here before we go out to the public?

Seeing none, we'll now take public comments on this item. Uh, Mayor Kleman, members of the council, my name again is Jim Moer. Uh those of us in the audience don't have any clue as to which option you may be leaning towards. If you choose one of the options to put this on a ballot, I would point out that the proposed ballot title seems unnecessarily obscure. Uh I'm reading what it says here. The the measure that people will see on the ballot says, "Shall Newport Beach City resolution number 2025-71 approving an amendment to the general plan to increase the allowable development a limit parenthesis for anomaly number 58 in table LU2 of the general plan land use element in parenthesis from 20,000 square ft to 59,772 ft be adopted. Very few people in Newport Beach are going to have any clue what anomaly number 58 in table LU2 means. Wouldn't you at least identify by address or something what property you're talking about? Wh why would you as a council be wanting to present so obscure a measure on our ballot? And then secondly, I admit that it's been a very, very long time since I went to grammar school. But in a sentence, when you have something in parentheses, we learned back then, as I recall, a parenthesis means kind of something optional. And if you leave it out, the

sentence will still make sense. If you leave out the part that's in parenthesis here, the sense doesn't really make sense. You try to read without the parenthesis, it's saying it will increase the allowable development from 20,000 to allowable development of what. So even if you want to be obscure, I don't think you should put the obscure part in parenthesis, but I think you should identify what it's about. Thank you.

Thank you, Mr. Moer. Mayor Kleman and members of the city council. My name is Benny Hollock. I am the volunteer chairman of Save Newport Beach Golf Course effort. Thank you for the opportunity to speak tonight. In just 21 days, volunteers collected over 9,600 signatures to referend Wave Poolool approval. Nearly 60% more than what was required. That does not happen by accident. Dozens of volunteers gathered signatures throughout the city. They did it through 4 in of rain over Thanksgiving weekend. And despite the developer paying people to interfere with voters attempting to sign the petition, we still did it. Our coalition of golfers, veterans, local businesses, surfers, and families soldiers on. I can tell you plainly, the wave pool is about as popular as a brute canal. You have two options before you tonight. Repeal the wave pool approval. Second, set it to election. One of the two that you choose to decide. You seven decide. Six here. If you choose not to repeal, the election should be set for November 26th when four of the council members who are approved who approve this project are going to be on the same ballot. This gives you the opportunity to explain to voters why replacing a public golf course with a 15 acre, 10 million gallon wave pool located 10 minutes away from worldclass beaches in California is a good idea. You could also explain to the the public what happens to the pool when the pool goes broke cuz they all do. What will you do with an abandoned 10 million gallon 10 million gallon swimming pool at the front door of our city? That's the equivalent of 15 Olympic size pools, which we just did in Newport. Wave pools are trendy, shiny objects that fail under financial reliability. The technology is glitchy and unproven, even though I've heard this technology should be better than the others. Do you really want Newport Beach to be the guinea pig for that? Your unanimous vote on October 28th approved suggests confidence in this

project's finances. You should have no problem answering voters questions, including this one. How many surfers are going to pay $200 per hour rumored for artificial waves when free worldclass waves are 3 miles away? Yet, the developer projects 70 paying surfers per hour from 7:00 a.m. to 10 p.m. 360 days a year. In closing, council, we respect property rights. We respect the the land owners as longstanding community-minded members of Newport Beach. We also acknowledge that the golf course needs revitalization as an 18hole public golf course. We all know know it. Leases are in the way of that. We want to work with you and the land owners to find a solution that makes them whole by preserving and improving our public golf course for future generations to enjoy here in Newport Beach. Thank you.

Thank you. Any other comments on this item? Hi council members. My name is WDE WAC. Thank you for the opportunity. Mayor Kleman, um boy, I hope you will rescend the surf park. Some thoughts that I just haven't heard much in open discussion is I believe when the city annexed Sana Heights, they agreed to keep the specific plan there, which is our code specifically calls for it to be a golf course. That's the title, the head title in SP7 or what have you. So, I think it was a promise made to the people that live over in that area. Number one, the property owners knew it was restricted to a golf course. So, this isn't totally a property rights thing. Um, for instance, I live in Harborview Homes and I'm interested in going up five stories. So, do my property rights work there? You would say, "No, it's not zoned correctly." And by the same account, that area is not zoned. The zoning specifically calls for a golf course. Uh thirdly, this wouldn't I haven't heard many people talk about it, but it concerns me. The back nine is owned by the Orange County Airport, and by the grace of the goodwill of former council members and what have you, that has been extended as part of this this golf golf course, it's been uh remains open space. The Orange County Airport has talked about expanding the runway. they could go right over the 73 or turning it into other expansions of John Wayne Airport. So in my mind, I would cancel this thing, preserve the golf course. It's assurances that were made to residents over there, open space, green grass, trees, an

opportunity for lowcost golfing. That's what it was zoned for. That was the intention. and to convert the main parcel to surf park clearly wipes out the golf course and then you don't know what you're going to get on the back nine. Is it jets? Is it more airport noise? Is it private jets? Is it uh other expansions of John Wayne Airport? I think we'd all preserve prefer to see green grass and trees rather than a builtup years of construction cement pool water park thing. Thank you.

Thank you. Any other speakers on this item? Okay, seeing none, I will bring it back up here. Council member Wan. Yes. I I just had some questions to ask our city manager, uh, Mr. Jurgis. Um, does uh repealing the general plan amendment eliminate or kill the surf park project? So, the wave pool component? No, the general plan amendment was for square footage does not kill the wave the surf project. So, as the clerk showed, bullet number two, it was a 20,000 allowable square feet to be developed on the site.

That that's what their rights are. They asked the city council for 40 an additional 40,000 square feet through the general plan amendment. So that was what we voted on as a council for the general plan amendment. But all previous discussion either a planning commission or just allowable right because it's a recreational use zoning. Correct. Allows for a surf park, a BMX track, disc golf, you know, any type of use on there as long as it's recreational. Correct. It's outdoor recreational.

Gotcha. And then so is there an outcome that differs if we choose to resend or have a general or special election is is is the decision to resend the exact same as having an election? That's correct. So there's no difference if we just simply go to resend our decision on the general plan uh additional square footage for buildable area around the SER part. There's no difference.

No difference. Okay. Thank you. I'm before I finish I I would say just resend because the signatures were collected. Um there's no there's no difference in our decision and the cost savings to the city will you know it's not a tremendous amount for a general. It's this extreme amount for a special but you know there it's a simple decision I think tonight we just rescend it. So I would make that motion when it's appropriate. Council member

Thank you. Um, thank you to staff for all of your work on this. I know it's been a very complex project from the very beginning and you guys have done an excellent job communicating to both my colleagues and the public uh throughout the entire process. And also, thank you to the public, both uh supporters and opposition. I know this project has brought out some strong feelings in our community. Um, I do think it's unfortunate we're here. Um, I do believe Newport has an opportunity to see a once-in-a-lifetime investment in an amenity in our community. Yet, I completely understand and appreciate um the love for the golf course of so many residents. You know, at the same time, my job as a council member is not to tell an applicant what I want them to do with their private property. uh they have a right to pursue a project and our job is to evaluate it fairly under the rules, the general plan, the law and definitely not my personal preference. Nonetheless, here we are. The community has spoken. So, I would absolutely support rescending the general plan amendment and I do believe that it's probably the most responsible way to respect the referendum process. I certainly don't want to spend any money on an election and I'm going to hope that this reduces any further division within the community. So, thank you. And I'll make a note uh that the public hearing is closed. Are there any other comments up here or a motion?

I'll make that motion to resent. Do I need to add the other part to accepting the certification? So if the motion would be move staff recommendation A through C and D1 if you're intending to repeal the resend rescend I'm sorry resend. Yeah, that would be my motion. I'll go ahead and second. Okay, we have a motion and a second. Let's go ahead and vote. Motion motion carried by um six. Yes. and council member Blam abstain. Accused.

Madame clerk, please read the statement on motions for reconsideration. A motion to reconsider the vote on any action taken by the city council at either this meeting on the previous meeting may be made only by one of the council members who voted with the prevailing side. Are there any motions for reconsideration? Hearing none, we will move on to our adjournment before we proceed. Close session. Council member Wand um will give us a presentation on memory of Carol Katherine McDonald.

Yes. Thank you, Mayor. Um, I received an updated uh adjournment uh script here from um Carol's uh daughter and uh uh son-in-law uh Walt Howell and Karen Howold. So, I'll read that one and then I'll just add a personal touch to it. Um Newport City Council, Newport Beach City Council will adjourn its meeting tonight in memory of longtime resident and volunteer Carol McDonald. She passed away at 83 with her family in Arizona on December 24th, 2025. She was very active in the Newport in Newport Beach as a volunteer and provided important leadership to the police department volunteers, the friends of Oasis Library and the Newport Beach Animal Shelter. She was also well known in her Newport Shores neighborhood and active with her family, especially her children and grandchildren. Her children are Mark Yard, Karen McDonald, uh, Howell, and Mike McDonald have very, uh, a lot of memories um, of Camp McDonald and important holidays, including her as Mrs. clause during police holiday events. Newport Beach will miss Carol McDonald's many contributions. Uh just I asked my mom who was a volunteer uh with or worked at the police department and when Carol was a volunteer for some um additional stuff to just add, but when the PD created the volunteer program, Carol was one of the first uh group to become a volunteer. She was a volunteer for many, many years. Um, Carol earned a big thank you with her assistance with the Newport Beach animal control events, the pick a pet show. Council member um, uh, Grant's uh, brother uh, held lead that with our, uh, lead acco, animal control officer at the time, but Carol was a lot of behind the scenes um, work behind that. So, they did a lot of successful pet adoptions. Um, she provided tours at the police department for different organizations and during our open houses, annual open houses. Uh she assisted with keeping the police vehicle trunk stocked with all the necessary emergency supplies and as mentioned earlier for the holiday season she was Mrs. Santa Claus um and flew in

the helicopter to all the local elementary schools in Newport Beach. That's when we owned our own helicopter. So we used to have that privilege of letting uh Santa come out at our elementary schools. It was pretty neat and as a student I got to witness that a lot of times. So um Carol will be missed and uh she's an important part of our history and legacy here in Newport Beach. So, thank you for that time. Thank you, Council Member Wagand. Okay. Before we go to close session, are there any public comments on our close session items? Mr. HARP, can you please announce our close session?

Thank you, mayor. The city council will journ to close session to meet with legal council regarding the initiation of litigation in regard to one matter and to meet with the city's labor negotiators regarding negotiations with the Newport Beach professional and technical employees and the city employee association. And all that's on the agenda under numbers items 7 A and B. Thank you. We are now recess to close session.

Mr. Harp, do you have a close session report for us? Uh, thank you, Mayor. There's nothing to report this evening. And we are adjourned.