Del Mar City Council Meeting Agenda
Del Mar Town Hall
1050 Camino del Mar, Del Mar, California
July 8, 2024 City Council Meeting
INFORMATION RECEIVED
AFTER THE COUNCIL AGENDA
WAS DISTRIBUTED
(“Red Dots”)
JGS
150 6th St. • Del Mar, CA. • 92014
Del Mar City Council July 8, 2024
City of Del Mar
Attn: Sarah Krietor, Administrative Services Manager/City Clerk 1050 Camino del Mar
Del Mar, CA 92014
T. (858) 375-9558
F. (858) 755-2794
Re: Opposition to UUD 1A Agenda Item 14, July 8, 2024 City Council Meeting Dear Sarah and Honorable City Council,
I am respectfully submitting this letter in opposition to award the construction contract with Teichert Utilities for Utilities Undergrounding District 1A. My property is within the UUD 1A district, and I have met with John Stephenson the KCM Group project manager to discuss and plan for my utility connections.
Understanding the desire to move undergrounding forward in as timely fashion as possible, I am deeply concerned that the city does not have sufficient cost information regarding this project to make sound decisions. My recommendation is to defer entering this contract until there is greater granularity as to the cost drivers that are causing expenses to far exceed project estimates. Given that the prior total project cost estimate, approximately six months ago, has gone from $5.4 million to a current estimate of $10.03 million, it is prudent to make a full stop until the city accounts for a knows why, and how best to address course corrections. Staff’s report acknowledges that UPAC and the Finance Committee have not yet received detailed information from SDG&E, nor fully vetted the cash flow impact of this project and future undergrounding.
Please take the opportunity to pause, get useful data, and then evaluate how best to address undergrounding. These are huge expenses that will affect the city for decades.
Most sincerely,
Jeffrey G. Sturgis
1 July 8, 2024 Item 14
CITY COUNCIL AGENDA QUESTIONS
July 8, 2024
Item 8– Agreement for Financial Advisory Services – NHA Advisors, LLC
1. Shores Park. Is it clear that the analysis will take account of the financial needs for Shores Park? The documentation seems vague on that point. If so, what financial need will be evaluated for Shores Park given we don't have a projected cost to plan and build out Shores park? This is important so we don't gobble up all the Q money for undergrounding, while Shores Park has an equal claim on Q funds.
Response: Right now, we are evaluating Measure Q revenues and known expenditures (which are currently only related to Undergrounding). As directed by Council at the Goals & Priorities Workshop, staff will return to Council before the end of this calendar year with a recap on activities to date regarding renovation of Shores Park and seeking direction on next steps. Once we have more information about pre-construction/potential construction costs and timing, that will be figured into the financial planning and analysis.
2. Undergrounding costs. Recent information shows undergrounding costs dramatically increasing. Will this consultant evaluate what the likely cost of the whole project will be? If not, how can we (or they) prudently plan for financing, etc. if we don't have a good grip on what the total cost is expected to be? The scope for the proposed contract includes: "Conduct independent analysis of financing options and alternatives related to the City’s Measure Q fund (and/or other special projects as needed) and provide recommendations on specific financing strategies."
Response: Yes, they will based on expenditure estimates provided by staff.
3. With a price for undergrounding ranging from $50 million to $100 million and the cost for Shores Park buildout unknown, how can meaningful financing options be evaluated?
Response: The estimated price for the Undergrounding Program doesn’t have that big of a range. The total estimate at this time based on current costs is approximately $104M, and we will have viable financing options to consider.
4. Tasks 1 and 2 of the proposed contract seem limited to undergrounding-- doesn't the city also need to know what the needs and timing for Shores Park are?
Response: Once that information is known, the cost/financing models will be updated accordingly.
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5. Task 1 - For conducting independent analysis of financing options and alternatives related to the City’s Measure Q fund (and/or other special projects as needed) and providing recommendations on specific financing strategies for the Undergrounding Project,(emphasis added) Consultant shall be paid on an hourly basis in accordance with the rates described above. C) Task 2 - In the event the City makes a decision to proceed with one of the recommended financing options related to the City’s Measure Q fund financing for the Undergrounding Project, (emphasis added) the Consultant shall be paid on a contingent basis (paid from bond proceeds at the time of closing). For potential bond financing(s), a contingent fixed fee shall range from $37,500 to $67,500 depending on the financing structure, complexity, method of sale of the financing, the extent of Consultant’s tasking and, generally, how much time it will take to complete the financing. If fees have been invoiced for Task 1 services, a like amount will be credited against the financing fee. Is it legal to pay this consultant on a contingency basis?
Response: Yes, this is standard practice for bond issuance and payment of all consultants and counsel involved with issuance of bonds. We will have the opportunity to discuss and further consider those dynamics (if we issue bonds) once we complete Phase 1 financial analysis and determine how to proceed with financing.
Item 12 – First Amendment to Agreement with the Del Mar Village Association for Economic Development and Business Support Services
1. DMVA receives funds from two city sources (1) an annual % of TOT and (2) the fixed $50,000 annual amount. The amount of TOT going to DMVA has gone up as TOT has gone up. To evaluate the current request can we know (1) how much has DMVA's share of TOT increased since 2010 when this fixed amount was set? Is there some reason that DMVA's share of TOT can't be used to meet increasing costs?
Response: This contract for services and funding is totally different from the destination marketing work done by DMVA using TOT. This contract is for economic development and business support services and is funded by the General Fund. We’ve been engaging DMVA for these separate services since 2005, and we have not increased the amount provided to them in over 14 years. Their costs, like us, have gone up in that time and we have continued to expand the services provided under their contract, such as the recent grant they secured from the County and private donations for City water fountain/bottle filling stations totaling $90K. It’s a great partnership and DMVA supplements services that are typically provided by local governments, but that we have limited staffing/capacity to provide in house.
The percentage of TOT funding provided to DMVA for destination marketing is an investment in tourism/visitor attraction which is the very foundation of the funding source itself and critically important to ensure that our hotels and visitor serving businesses in 2 July 8, 2024 Items 8,12,15
the community remain viable and continue to thrive, as well as contributes to the economic vitality of the City a TOT is a top revenue source.
Item 15- Transient Occupancy Tax Ballot Measure Argument in Favor
1. The proposed measure states, in part: that it will "...require TOT from guests of all short-term vacation rentals..." Wouldn't this be better worded as: ...require TOT from all short term vacation rentals...?" The city will require payment of TOT, but the obligation will fall on the operator who will build it into the cost to the renter, no? The city doesn't contemplate a direct financial relationship with guests does it? If I'm wrong on this (always possible!) let me know.
Response: Guests are responsible for paying TOT and operators are responsible for collecting and remitting TOT to the City. The Council considered and voted to approve the ballot measure question for inclusion on the ballot on June 17, 2024. This agenda item is focused on the ballot measure argument to be drafted by Mayor Druker and Deputy Mayor Gaasterland, and related feedback from Council as to what to include in the argument.
3 July 8, 2024 Items 8,12,15