Agenda packet, regular meeting — Monterey City Council, March 1, 2022

Zoom Teleconference
Monterey, California
City Council Agenda
Council Regular Meeting
Tuesday, March 1, 2022
4:00 PM – 6:00 PM
7:00 PM – 11:00 PM
City Council
Clyde Roberson, Mayor
Dan Albert, Councilmember
Alan Haffa, Councilmember
Ed Smith, Councilmember
Tyller Williamson, Councilmember
City Manager
Hans Uslar
IMPORTANT NOTICE: Pursuant to California Government Code section 54953(e)(1)(A) and (C) and the Monterey City Council’s resolution authorizing virtual participation in public meetings given the COVID-19 pandemic, meetings of the Monterey City Council and its Boards, Commissions, and Committees are being conducted with virtual (electronic) participation in order to promote social distancing and protect the health and safety of attendees.

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o This meeting will also stream live for viewing only on youtube.com/cityofmonterey (10 second delay) and on Comcast Channel 25 (up to 90 second delay). ***Afternoon Session Agenda ***
4:00 p.m.

CALL TO ORDER
*** Adjourn to Closed Session (See additional agenda) *** RECESS

RECONVENE
*** Evening Session Agenda ***
7:00 - 11:00 p.m.

No discussion of a new item will be started after 10:30 p.m. 3/1/2022 4:00:00 PM
2 PLEDGE OF ALLEGIANCE

PUBLIC COMMENTS
PUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on any subject which is within the jurisdiction of the Monterey City Council and which is not on the agenda. Any person or group desiring to bring an item to the attention of the City Council may do so by addressing the Council during Public Comments or by addressing a letter of explanation to: City Clerk, City Hall, Monterey, CA 93940. The appropriate staff person will contact the sender concerning the details.

ANNOUNCEMENTS FROM CLOSED SESSION

CONSENT ITEMS
CONSENT AGENDA consists of those items which are routine and for which a staff recommendation has been prepared. A member of the public or a Councilmember may request that an item be placed on the regular agenda for further discussion.

Approval of Minutes

1. February 15, 2022 (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061); Aprobación de Actas - 15 de febrero de 2022 Reunión del Consejo Municipal de Monterey (no se trata de un proyecto sujeto a la CEQA según el artículo 20, sección 15378 y según la regla general, artículo 5, sección 15061)
Ordinances
ORDINANCES are legislative acts by the Council, are the most permanent and binding type of Council action as they modify the City Code, and may be replaced only by a subsequent ordinance. An ordinance requires legal advertisement when introduced, and two readings at separate Council meetings. An ordinance is considered "passed to print" when approved for a second reading, and is "passed and adopted" when given final approval by the Council.

2. 1st Reading by Title Only of an Ordinance to Amend Monterey City Code Section 28-14(d) to Add Services Performed by the State-Recognized Destination Marketing Organization for the Monterey Region as a Sole Source Exception to Competitive Procurement Requirements (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061) Resolutions
RESOLUTIONS are passed to express the policy of the Council on certain items or programs, or are passed to direct certain types of administrative action. A resolution may be changed by adoption of a subsequent resolution. Resolutions only require one reading and are approved when "passed and adopted."

3. Amend and Restate Resolution 22-010 to Establish Hourly Rates for Temporary / Seasonal Part-Time Positions and Establishing Hourly Rates (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)

4. Adopt Resolution Opposing the “Taxpayer Protection and Government Accountability Act” (Initiative 21-0042A1) (Not a Project Under CEQA Article 20, Section 15378 and Under General Rule Article 5, Section 15061) 3/1/2022 4:00:00 PM
3 *** End of Consent Agenda ***

PUBLIC APPEARANCE (EVE)
PUBLIC APPEARANCE items are reports on non-routine issues that might stimulate public discussion, but that do not require formal noticing as public hearings. You are welcome to offer your comments after being recognized by the Mayor. The Council may limit the time each speaker is allocated.

5. Amend Fiscal Year (FY) 2021-22 Budget to Increase General Fund Budget Revenues and Appropriations, Designate Funds into the Economic Uncertainty Reserve and Various Other Reserve Funds, Authorize Other Non-General Fund Changes, and Update the Position Control List (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)

COUNCIL COMMENTS
Councilmembers may ask a question for clarification or make a brief announcement or make a brief report on his or her activities. In addition, Council may provide a referral to staff or other resources for factual information, request staff to report back to the body at a subsequent meeting concerning any City matter (G.C. 54954.2).

CITY MANAGER REPORTS
The City Manager may make a brief report on his activities or a brief announcement. He may also ask for clarification or direction regarding scheduling of Council meetings and study sessions.

ADJOURNMENT
Members of the public have the right to address the City Council on any item on the Agenda, before or during its consideration [G.C. §54954.3(a)]. The Mayor will formally open the floor for public comment on items such as "Public Appearance" and "Public Hearings." Writings distributed for discussion or consideration on these matters within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, are available at: monterey.org/submitted-comments and in the City Manager’s Office at 580 Pacific St., Room 1, Monterey, CA 93940 during regular business hours.

Information distributed to the Council at the Council meeting becomes part of the public record. A copy of written material, pictures, etc. should be provided for this purpose.

City Council Meetings are cable cast live and recorded for replay on Monterey's Government Access Channel 25 by Access Media Productions (AMP).

CITY OF MONTEREY'S 24-HOUR SUGGESTION HOTLINES:

Voicemail: (831) 646-3799
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INTERPRETATION: The Monterey City Council invites and encourages public participation at its meetings. Requests for language interpretation may be made by contacting the City Clerk at [email protected] or 831-646-3935. The City Clerk will make every effort to accommodate requests for interpreter assistance. Requests should be made as soon as possible in advance of any meeting of the City Council. The City is committed to addressing language interpretation requests swiftly in order to maximize public participation.
3/1/2022 4:00:00 PM
4 ACCESSIBILITY: The City of Monterey is committed to including the disabled in all of its services, programs and activities. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at [email protected] or (831) 646-3935. Notification 30 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting [28 CFR 35.102-

35.104 ADA Title II]. Later requests will be accommodated to the extent feasible. For communicationrelated assistance, dial 711 to use the California Relay Service (CRS) to speak to City offices. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services 24 hours a day, 7 days a week. If you require a hearing amplification device to attend a meeting, dial 711 to use CRS to talk to the City Clerk's Office at (831) 646-3935 to coordinate use of a device.

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MINUTES

CITY COUNCIL REGULAR MEETING

CITY OF MONTEREY
Tuesday, February 15, 2022
7:00 PM

ZOOM TELECONFERENCE

MONTEREY, CALIFORNIA
Councilmembers

Present: Albert, Haffa, Smith, Williamson, Roberson

Absent: None
City Staff

Present:

City Manager, Assistant City Manager, City Attorney, Community Development Director, Public Works Director, Parks and Recreation Director, Finance Director, Library Director, City Clerk, Property Manager, Assistant Police Chief
This meeting was held with teleconference attendance, pursuant to the Ralph M. Brown Act, Calif. Government Code section 54953(e)(1)(C) and Resolution No. 22-008 C.S. *** Evening Session Agenda ***

CALL TO ORDER
Mayor Roberson called the meeting to order at 7:00 p.m. City Clerk Klein explained to the public how to participate in the meeting virtually.

PLEDGE OF ALLEGIANCE
Mayor Roberson led the Pledge. City Clerk Klein called the roll with all Councilmembers present by teleconference.

PUBLIC HEARING (EVE)

1. Fifth Public Hearing for the Transition from At-Large Elections to By-District Elections for Monterey City Council Members: Second Reading of an Ordinance Establishing and Implementing By-District Elections for Members of the City Council with an Elective Mayor (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061); Quinta Audiencia Pública para la Transición de las Elecciones Generales a las Elecciones por Distritos para los Miembros del Consejo Municipal de Monterey: Segunda lectura de una ordenanza que establece e implementa las elecciones por distritos para los miembros del Concejo Municipal con un Alcalde Electivo (no es un proyecto de acuerdo con la CEQA según el artículo 20, sección 15378 y según el artículo 5, sección 15061 del reglamento general)
Action: Adopted Ordinance No. 3646 C.S. (3-2, Councilmembers Haffa and Williamson voting no)
Assistant City Manager Rojanasathira gave a brief staff presentation, noting that the Council had previously selected the Dolphin map and an election sequence that would have Districts 1 and 2 on the 2022 ballot, and Districts 3 and 4 on the 2024 ballot.

Public comment was received from: Esther Malkin, who stressed to the Council that renters need to be heard by their elected officials and that policies and timely action are needed to protect renters; Tom Rowley, who complimented the City Council and staff for their work and Date: 3/1/2022
Item No.: 1.

Council Regular Meeting, 3/1/2022, Item No. 1., Item Page 1, Packet Page 5 City Council Minutes February 15, 2022
2 stated that the Fishermans Flats neighborhood had been included in a district that is not compact or contiguous; and Laura Pratt, who spoke on behalf of renters and said that the Council chose the wrong map.

The Council discussed the matter and reiterated comments that were made at the fourth public hearing. Assistant City Manager Rojanasathira was praised for his exemplary work on the districting process.

On a motion by Councilmember Albert, seconded by Councilmember Smith, and carried by the following vote, which was conducted by roll call, the City Council adopted Ordinance No. 3646 C.S. Establishing and Implementing By-District Elections for Members of the City Council with an Elective Mayor:

AYES: 3 COUNCILMEMBERS: Albert, Smith, Roberson
NOES: 2 COUNCILMEMBERS: Haffa, Williamson
ABSENT: 0 COUNCILMEMBERS: (None)
ABSTAIN: 0 COUNCILMEMBERS: (None)
RECUSED: 0 COUNCILMEMBERS: (None)

PUBLIC COMMENTS
Public comment on non-agendized matters was received from: Gabriella Schlesinger-James, Laura Pratt, Jean Rasch, Lorna Moffat, Brandon Naylor, Morgan Ivens-Duran, Jennifer Haydu, and Esther Malkin.

CONSENT ITEMS
On a motion by Councilmember Haffa, seconded by Mayor Roberson, and carried by the following vote, which was conducted by roll call, the City Council approved the CONSENT ITEMS:

AYES: 5 COUNCILMEMBERS: Albert, Haffa, Smith, Williamson, Roberson NOES: 0 COUNCILMEMBERS: (None)
ABSENT: 0 COUNCILMEMBERS: (None)
ABSTAIN: 0 COUNCILMEMBERS: (None)
RECUSED: 0 COUNCILMEMBERS: (None)
Approval of Minutes

2. January 26, 2022 Study Session (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
Action: Approved

3. January 26, 2022 Special Meeting (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
Action: Approved

4. February 1, 2022 (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061); Aprobación de Actas - 1 de febrero de 2022 Reunión del Consejo Municipal de Monterey (no se trata de un proyecto sujeto a la CEQA según el artículo 20, sección 15378 y según la regla general, artículo 5, sección 15061) Action: Approved
Council Regular Meeting, 3/1/2022, Item No. 1., Item Page 2, Packet Page 6 City Council Minutes February 15, 2022
3 Resolutions

5. Adopt a Resolution Ratifying the Order 22-1 of the Director of Emergency Services (Monterey City Manager) Temporarily Closing Beaches in the City of Monterey Due to Tsunami (Exempt from CEQA Per Article 18, Section 15269.c)
Action: Adopted Resolution No. 22-013 C.S.

6. Authorize an Agreement for Domestic Violence Response Team Services between the City of Monterey and the YWCA of Monterey County and Acceptance of YWCA of Monterey County Subaward Grant Funds in the Amount of $22,142 (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
Action: Adopted Resolution No. 22-014 C.S.

7. Authorize Remote Teleconference Meetings of the City Council and Boards, Commissions, and Committees for the Period February 18, 2022 through March 17, 2022 Pursuant to AB361 Ralph M. Brown Act Provisions (Not a project under CEQA per Article 20 Section 15378 and under General Rule Article 5 Section 15061)
Action: Adopted Resolution No. 22-015 C.S.

Other

8. Appoint Agency Negotiators for Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8; Property: 401 Camino El Estero (First French Consulate); Agency Negotiators: Kimberly Cole and Janna Aldrete; Negotiating Parties: Joaquin Sullivan (Big Sur Adventures, Inc.); Under Negotiation: Terms and Conditions for New Lease (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
Action: Appointed negotiators Kimberly Cole and Janna Aldrete

9. Receive Mayor’s Recommendation and Make Appointment to the Neighborhood and Community Improvement Program Committee (Not a Project under CEQA per Article 20, Section 15378 and Under General Rule Article 19, Section 15061) Action: Appointed Harry Nagel to the NCIP Committee as the Alternate representing the Del Monte Beach neighborhood, with a term expiring June 30, 2026 *** End of Consent Agenda ***

PUBLIC APPEARANCE (EVE)

10. 2nd Reading - Authorizing Amendment to the Contract between the City of Monterey and the Board of Administration of the California Public Employees' Retirement System (Not a Project under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061) Action: Adopted Ordinance No. 3647 C.S.

Human Resources Director Hauck gave a brief verbal presentation.

Public comment was not received on the matter.

On a motion by Mayor Roberson, seconded by Councilmember Haffa, and carried by the following vote, which was conducted by roll call, the City Council adopted Ordinance No. 3647 C.S. to authorize amendment to the contract between the City of Monterey and the Board of Administration of CalPERS:

Council Regular Meeting, 3/1/2022, Item No. 1., Item Page 3, Packet Page 7 City Council Minutes February 15, 2022
4 AYES: 5 COUNCILMEMBERS: Albert, Haffa, Smith, Williamson, Roberson NOES: 0 COUNCILMEMBERS: (None)
ABSENT: 0 COUNCILMEMBERS: (None)
ABSTAIN: 0 COUNCILMEMBERS: (None)
RECUSED: 0 COUNCILMEMBERS: (None)

11. City Manager’s Update on COVID-19 Response Efforts (Not a project under CEQA per Article 20 Section 15378 and under General Rule Article 5 Section 15061) Action: Received update
City Manager Uslar gave a brief verbal update highlighting lower case numbers of the Omicron variant and the new guidance that masks are required only for unvaccinated employees and Sports Center visitors.

Public comment was not received on the matter.

COUNCIL COMMENTS
Mayor Roberson reported on a recent meeting of neighborhood association presidents, which he said focused on engagement and information sharing methods.

Councilmember Albert clarified details of Monterey-Salinas Transit’s fare collection that he said had been reported on in the press, and said that when COVID-19 relief funds run out, it is hoped that ridership will return to higher levels. He reported on a recent neighborhood beautification project and thanked Kip Hudson, Pat Venza, Hans Jannasch, City staff, and DLI students Eva, Andrew, Chris, Christian, Savannah, and Tim, for all of their participation and hard work.

Councilmember Williamson asked all to be mindful of businesses and spaces that will continue to require masks, and announced an upcoming "Monterey as a Community" event that he said he would host with Councilmember Haffa and former Councilmembers Downey and Selfridge to explore issues that impact the community and work to identify possible solutions including housing, and government-community collaboration.

Councilmember Haffa assured members of the public who spoke about renter issues that the districting process did have to take precedence over other priorities temporarily due to the legal matter at stake, but that he looked forward to discussing rental registry and other ideas. He shared an update on Monterey Peninsula College’s burgeoning relationship with Monterey’s Sister City Lankaran, Azerbaijan. He spoke about having signed a recall petition for Monterey Peninsula Airport District Director Maryann Leffel, which he said was due to her role with the Airport District Board's having misled residents about the airport master plan, which he stated he considered unethical.

Councilmember Smith announced the upcoming Cutting Day event at Friendly Plaza, and a tree-planting event at Whispering Pines in conjunction with his Cannery Row Rotary Club.

CITY MANAGER REPORTS
City Manager Uslar announced upcoming events: the State of the City address hosted by the Monterey Commercial Property Owners Association (MCPOA), the Monterey Public Library’s chocolate and wine event, and a free family fun night at the Monterey Sports Center. *** Adjourn to Closed Session (See additional agenda) *** Council Regular Meeting, 3/1/2022, Item No. 1., Item Page 4, Packet Page 8 City Council Minutes February 15, 2022
5 Public comment on the closed session was not received. The Council adjourned to closed session at 8:03 p.m.

ANNOUNCEMENTS FROM CLOSED SESSION
cs1. Closed Session Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8
Property: 401 Camino El Estero (First French Consulate) Agency Negotiators: Kimberly Cole and Janna Aldrete
Negotiating Parties: Joaquin Sullivan (Big Sur Adventures, Inc.) Under Negotiation: Terms and Conditions for New Lease (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061) Action: On a unanimous roll-call vote, the Council gave confidential direction to its property negotiators
cs2. Conference with Legal Counsel, Existing Litigation Pursuant to Government Code section 54956.9(d)(1): Bonnie Gawf v. City of Monterey (Monterey County Superior Court Case No. 20CV003232 (Not a Project Under CEQA per Article 20, Section 15378, and Under General Rule Article 5, Section 15061)
Action: On a unanimous roll-call vote, the Council gave confidential direction to its legal counsel
cs3. Conference with Labor Negotiators Pursuant to Government Code Section 54957.6 Agency Negotiators: Allyson Hauck and Gina Russo; General Employees of Monterey (GEM), Management Employees' Association (MEA), Monterey Police Association (MPA), Police Lieutenants' Management Association (PLMA), Monterey Fire Fighters' Association (MFFA), Monterey Fire Chief Officers' Association (MFCOA), Monterey Executive Management Employees' Association (MEMEA) (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) Action: No reportable action was taken

ADJOURNMENT
Respectfully Submitted, Approved,
Clementine Bonner Klein Clyde Roberson
City Clerk Mayor
Council Regular Meeting, 3/1/2022, Item No. 1., Item Page 5, Packet Page 9

1. Quinta Audiencia Pública para la Transición de las Elecciones Generales a las Elecciones por Distritos para los Miembros del Consejo Municipal de Monterey: Segunda lectura de una ordenanza que establece e implementa las elecciones por distritos para los miembros del Concejo Municipal con un Alcalde Electivo (no es un proyecto de acuerdo con la CEQA según el artículo 20, sección 15378 y según el artículo 5, sección 15061 del reglamento general)
Acción: Ordenanza adoptada Núm. 3646 C.S. (3-2, los concejales Haffa y Williamson votaron no)
El administrador adjunto de la ciudad, Rojanasathira, hizo una breve presentación del personal y señaló que el Consejo había seleccionado previamente el mapa Dolphin y una secuencia electoral que pondría los Distritos 1 y 2 en la boleta electoral de 2022, y los Distritos 3 y 4 en la boleta electoral de 2024.

Se recibieron comentarios públicos de: Esther Malkin, quien enfatizó al Consejo que los inquilinos deben ser escuchados por sus funcionarios electos y que se necesitan políticas y acciones oportunas para proteger a los inquilinos; Tom Rowley, quien felicitó al Consejo Municipal y al personal por su trabajo y afirmó que el vecindario de Fishermans Flats había sido incluido en un distrito que no es compacto ni contiguo; y Laura Pratt, quien habló en nombre de los inquilinos y dijo que el Consejo eligió el mapa equivocado.

El Consejo discutió el asunto y reiteró los comentarios que se hicieron en la cuarta audiencia pública. El administrador adjunto de la ciudad, Rojanasathira, fue elogiado por su trabajo ejemplar en el proceso de creación de distritos.

Por moción del concejal Albert, secundada por el concejal Smith y aprobada por la siguiente votación, que se llevó a cabo por votación nominal, el Consejo Municipal adoptó la Ordenanza Núm. 3646 CS Establecimiento e Implementación de Elecciones Distritales para los Miembros del Consejo Municipal con un alcalde electivo:

SÍES: 3 COUNCILMEMBERS: Albert, Smith, Roberson
NOES: 2 COUNCILMEMBERS: Haffa, Williamson
AUSENTES: 0 COUNCILMEMBERS: (Ninguno)
ABSTENCIONES: 0 COUNCILMEMBERS: (Ninguno)
RECUSADOS: 0 COUNCILMEMBERS: (Ninguno)
Council Regular Meeting, 3/1/2022, Item No. 1., Item Page 6, Packet Page 10 Council
Agenda Report
№08/22
FROM: Karin Salameh, Assistant City Attorney
Nat Rojanasathira, Assistant City Manager
SUBJECT: 1st Reading by Title Only of an Ordinance to Amend Monterey City Code Section 28-14(d) to Add Services Performed by the State Recognized Destination Marketing Organization for the Monterey Region as a Sole Source Exception to Competitive Procurement Requirements (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061) RECOMMENDATION:

That the City Council introduce by title only, waive full reading, and pass a first reading of an ordinance to amend Monterey City Code section 28-14(d) to add services performed by the state-recognized Destination Marketing Organization for the Monterey region as a sole source exception to competitive procurement requirements.

VALUE DRIVER:

POLICY IMPLICATIONS:

Adoption of the proposed amendment has the potential to improve the efficiency of the City’s purchasing process as well as to foster the City’s partnerships with the State and local destination marketing organizations.

FISCAL IMPLICATIONS:

There is no fiscal impact to the City beyond the codification costs for this ordinance and an additional sole source exception may increase contracting efficiencies while maintaining high service levels.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (“CEQA Guidelines”) Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action has no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this Date: 3/1/2022
Item No.: 2.

Council Regular Meeting, 3/1/2022, Item No. 2., Item Page 1, Packet Page 11 matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

The City Council could choose not to add state-recognized destination marketing organizations as a sole source exception to competitive procurement requirements.

DISCUSSION:

City of Monterey purchasing rules are set forth in Chapter 28 of the City Code, with the goal of establishing efficient procedures for the purchase of equipment, supplies, materials, and services for the City at the lowest possible cost commensurate with quality needed, exercising positive financial control over purchases, and clearly defining authority for the purchasing function. Monterey City Code (MCC) section 28-14 sets forth the categories of purchases that are exempt from competitive procurement requirements. These include purchases through cooperative procurement contracts previously negotiated by another governmental agency or cooperative purchasing agency, emergency procurements, and sole source procurements.

The California Office of Tourism manages the Statewide Tourism Assessment Program and collects the funds for Visit California’s global marketing efforts. Visit California is the nonprofit tourism marketing board for the State of California and works with the destination marketing organizations (DMO) for the various regions in the State to run cooperative marketing campaigns and public relations initiatives. Visit California recognizes the Monterey County Destination Marketing Organization, doing business as the Monterey County Convention & Visitors Bureau (MCCVB) as the DMO for Monterey County and the jurisdictions within it.

The City contracts with the MCCVB to provide destination marketing for leisure travel as well as group sales services related to the Monterey Conference Center. The proposed amendment would allow contracts with the state-recognized DMO for this region to be procured under MCC section 28-14(d)’s sole source exception to standard competitive procurement requirements.

This has the potential to increase efficiency and allow staff greater time to focus on further promoting business and leisure travel to Monterey. If the ordinance amendment is adopted, contracts with state-recognized DMO’s for services over $75,000 per year would still require review and approval by the City Council.

NR/KKS
Attachments: 1. Ordinance
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Regular Meeting, 3/1/2022, Item No. 2., Item Page 2, Packet Page 12 ORDINANCE NO. ____ C.S.

AN ORDINANCE OF THE COUNCIL OF THE CITY OF MONTEREY
№07/19
AMENDING MONTEREY CITY CODE SECTION 28-14(d) TO ADD SERVICES PERFORMED

BY THE STATE RECOGNIZED DESTINATION MARKETING ORGANIZATION FOR THE

MONTEREY REGION AS A SOLE SOURCE EXCEPTION TO COMPETITIVE PROCUREMENT REQUIREMENTS.

THE COUNCIL OF THE CITY OF MONTEREY DOES ORDAIN, as follows:

SECTION 1:

WHEREAS, City purchasing rules are set forth in Chapter 28 of the City Code, with the goal of establishing efficient procedures for the purchase of equipment, supplies, materials, and services for the City at the lowest possible cost commensurate with quality needed, exercising positive financial control over purchases, and clearly defining authority for the purchasing function;
WHEREAS, Monterey City Code (MCC) section 28-14 sets forth the categories of purchases that are exempt from competitive procurement requirements. These include purchases through cooperative procurement contracts previously negotiated by another governmental agency or cooperative purchasing agency, emergency procurements, and sole source procurements;
WHEREAS, the California Office of Tourism manages the Statewide Tourism Assessment Program and collects the funds for Visit California’s global marketing efforts. Visit California is the nonprofit tourism marketing board for the State of California and works with the destination marketing organizations (DMO) for the various regions in the State to run cooperative marketing campaigns and public relations initiatives; WHEREAS, Visit California recognizes the Monterey County Destination Marketing Organization, doing business as the Monterey County Convention & Visitors Bureau (MCCVB) as the DMO for Monterey County and the jurisdictions within it; WHEREAS, the City of Monterey contracts with the MCCVB to provide destination marketing for leisure travel as well as group sales services related to the Monterey Conference Center and being able to directly contract with the recognized DMO for this region under MCC section 28-14’s sole source contract provisions will increase efficiency and allow staff greater time to focus on further promoting business and leisure travel to Monterey; and WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (“CEQA Guidelines”) Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no Council Regular Meeting, 3/1/2022, Item No. 2., Item Page 3, Packet Page 13 2 possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action has no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

NOW THEREFORE, the Monterey City Council declares as follows:

SECTION 2: Monterey City Code, Chapter 28, Section 14(d)(7) is hereby added to read as follows:
“7. By the destination marketing organization (DMO) for the Monterey County region that is recognized by the tourism marketing board for the State of California.” SECTION 3: All ordinances and parts of ordinances in conflict herewith are hereby repealed.

SECTION 4: This ordinance shall be in full force and effect thirty (30) days from and after its final passage and adoption.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 3/1/2022, Item No. 2., Item Page 4, Packet Page 14 Council
Agenda Report
№10/13
FROM: Allyson Hauck, Human Resources Director
Prepared By: Gina Russo, Deputy Human Resources Manager SUBJECT: Amend and Restate Resolution 22-010 to Establish Hourly Rates for Temporary / Seasonal Part-Time Positions and Establishing Hourly Rates (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
RECOMMENDATION:

On January 18, 2022, the City Council adopted a resolution to modify certain job classification titles for temporary/seasonal and part-time positions. This action will establish hourly rates for those positions.

VALUE DRIVER:

This action is consistent with the City’s value driver to “develop and retain a quality workforce” as well as “develop and retain a quality workforce strategic priorities.” POLICY IMPLICATIONS:

The Temporary / Seasonal Part-Time salary schedule is a fluid document that needs to be updated periodically to ensure it is current and accurate, as well as in accordance with State law. This is consistent with previous City practice.

FISCAL IMPLICATIONS:

There is no fiscal impact to adopting the salary schedule; the FY21/22 Adopted Biennial Budget included appropriations for part-time temporary seasonal salaries. Staff is not requesting any additional appropriations to cover the wage increases, as Departments will need to manage budgets for PTS employees to address these wage increases.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guideline section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

No alternatives.

Date: 3/1/2022
Item No.: 3.

Council Regular Meeting, 3/1/2022, Item No. 3., Item Page 1, Packet Page 15 DISCUSSION:

The Temporary / Seasonal Part-Time Salary Schedule reflects proposed rates for part-time (PTS) employees as defined by Section 25.241 of the City Code, who work no more than 1,000 hours per fiscal year and who are eligible only for those benefits required by applicable state and federal law. Part-time Temporary Seasonal (PTS) employees are paid on an hourly basis.

On January 18, 2022 and February 15, 2022, Council adopted an ordinance authorizing an amendment to the contract between the City Council to provide clarity regarding the PTS classification titles which are excluded from the City’s contract.

Effective the first pay period following ratification, the Temporary / Seasonal Part-Time classifications and salary schedule is as follows:

Old Classification Title
New Classification
Title
Starting
Hourly
Increments Ending
Hourly
Steps
Accounting Assistant;
Accounting Specialist Accounting Technician $21.02 5% $32.61 10 Office Assistant;
Administrative Assistant Administrative Clerk $21.02 5% $32.61 10 Same Aquatics Specialist $15.00 $.25 $18.50 15
Same Artifact Specialist $19.39 5% $23.57 5
Same Camp Cook $15.00 $.25 $18.50 15
Camp Director; Assistant
Camp Director; Playground
Director
Camp Director /
Assistant Camp Director
$16.00 $.25 $20.00 25
Same
Community Svc Officer
Intern
$15.00 $1.00 $24.00 10
Same Desk Attendant $15.00 $.25 $18.50 15
Same
Extra-Help Retired
Annuitant
$15.00 N/A $78.46 N/A
Facility Attendant; Parking
Facility Worker Facility Worker
$20.87 5% $25.37 5
Same Fire Inspector $32.19 5% $49.94 10
Same
Guest Services
Attendant
$23.36 5% $28.39 5
Harbor Security Worker Harbor Attendant $22.48 5% $27.32 5 Same
Human Resources
Technician
$25.81 5% $31.37 5
Same; Engineering Intern Intern $15.00 $1.00 $24.00 10
Custodian Janitorial Worker $17.76 5% $21.59 5
Library Assistant I; Library
Assistant II Library Clerk
$20.03 5% $31.07 10
Same; Senior Library Page Library Page $15.14 5% $18.40 5 Same Lifeguard $15.00 $.25 $18.50 15
Same Litter Control Worker $15.65 5% $19.02 5
Park, Parking, Streets,
Building Maintenance Worker,
Craftsworker, Senior
Craftsworker Maintenance Worker
$20.87 5% $32.38 10
Same
Military Affairs
Coordinator
$59.37 5% $72.16 5
Same; Museum Attendant II Museum Attendant $15.12 5% $$18.38 5 Park Attendant Park Assistant $22.46 5% $27.30 5
Council Regular Meeting, 3/1/2022, Item No. 3., Item Page 2, Packet Page 16 Parking Facility Worker
Parking Facility
Attendant
$16.33 5% $19.85 5
Parking Enforcement Officer
Parking Enforcement
Representative
$22.48 5% $27.32 5
N/A Personal Trainer $20.00 $1.00 $44.00 25
Same Police Officer Trainee $39.16 N/A N/A N/A
Lead Preschool Instructor Preschool Instructor $19.00 $.25 $21.25 10 Recreation Specialist Recreation Assistant $20.00 $1.00 $25.00 5 Librarian
Reference / Children’s
Librarian
$27.37 5% $33.27 5
Same
Senior Aquatics
Specialist
$34.35 5% $41.75 5
Same Senior Facility Specialist $34.35 5% $41.75 5
Same
Senior Human
Resources Technician
$28.63 5% $34.80 5
Same; Site Director /
Afterschool; Snack Bar
Attendant; Tot Activity Leader
Senior Recreation
Leader / Recreation
Leader
$15.00 $.25 $18.50 15
Same Senior Sports Specialist $34.35 5% $41.75 5
Same; Teaching Specialist
Specialty Class
Instructor
$20.00 $1.00 $44.00 25
Same Sports Official $17.00 $1.00 $31.00 15
Administrative Analyst;
Finance Analyst Support Analyst
$33.98 5% $41.30 5
Same
Support Preschool
Instructor
$17.00 $.25 $19.25 10
Attachments: 1. Resolution
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Regular Meeting, 3/1/2022, Item No. 3., Item Page 3, Packet Page 17 RESOLUTION NO. __- ___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№12/12
AMEND AND RESTATE RESOLUTION 22-010 TO ESTABLISH HOURLY RATES FOR

TEMPORARY / SEASONAL PART-TIME POSITIONS
WHEREAS, in agreement with the Amendment to the Contract between the City of Monterey and the Board of Administration of the California Public Employees’ Retirement System regarding the City’s status quo application of the “hourly exclusion” language in the CalPERS contract and additional transparency regarding classifications included and excluded from the City’s CalPERS benefit;
WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project.

Council Regular Meeting, 3/1/2022, Item No. 3., Item Page 4, Packet Page 18 2 Old Classification Title
New Classification
Title
Starting
Hourly
Increments Ending
Hourly
Steps
Accounting Assistant;
Accounting Specialist Accounting Technician $21.02 5% $32.61 10 Office Assistant;
Administrative Assistant Administrative Clerk $21.02 5% $32.61 10 Same Aquatics Specialist $15.00 $0.25 $18.50 15
Same Artifact Specialist $19.39 5% $23.57 5
Same Camp Cook $15.00 $0.25 $18.50 15
Camp Director; Assistant
Camp Director; Playground
Director
Camp Director /
Assistant Camp Director
$16.00 $0.25 $20.00 25
Same
Community Svc Officer
Intern
$15.00 $1.00 $24.00 10
Same Desk Attendant $15.00 $0.25 $18.50 15
Same
Extra-Help Retired
Annuitant
$15.00 N/A $78.46 N/A
Facility Attendant; Parking
Facility Worker Facility Worker
$20.87 5% $25.37 5
Same Fire Inspector $32.19 5% $49.94 10
Same
Guest Services
Attendant
$23.36 5% $28.39 5
Harbor Security Worker Harbor Attendant $22.48 5% $27.32 5 Same
Human Resources
Technician
$25.81 5% $31.37 5
Same; Engineering Intern Intern $15.00 $1.00 $24.00 10
Custodian Janitorial Worker $17.76 5% $21.59 5
Library Assistant I; Library
Assistant II Library Clerk
$20.03 5% $31.07 10
Same; Senior Library Page Library Page $15.14 5% $18.40 5 Same Lifeguard $15.00 $0.25 $18.50 15
Same Litter Control Worker $15.65 5% $19.02 5
Park, Parking, Streets,
Building Maintenance Worker,
Craftsworker, Senior
Craftsworker Maintenance Worker
$20.87 5% $32.38 10
Same
Military Affairs
Coordinator
$59.37 5% $72.16 5
Same; Museum Attendant II Museum Attendant $15.12 5% $18.38 5 Park Attendant Park Assistant $22.46 5% $27.30 5
Parking Facility Worker
Parking Facility
Attendant
$16.33 5% $19.85 5
Parking Enforcement Officer
Parking Enforcement
Representative
$22.48 5% $27.32 5
N/A Personal Trainer $20.00 $1.00 $44.00 25
Same Police Officer Trainee $39.16 N/A N/A N/A
Council Regular Meeting, 3/1/2022, Item No. 3., Item Page 5, Packet Page 19 3 Lead Preschool Instructor Preschool Instructor $19.00 $0.25 $21.25 10 Recreation Specialist Recreation Assistant $20.00 $1.00 $25.00 5 Librarian
Reference / Children’s
Librarian
$27.37 5% $33.27 5
Same
Senior Aquatics
Specialist
$34.35 5% $41.75 5
Same Senior Facility Specialist $34.35 5% $41.75 5
Same
Senior Human
Resources Technician
$28.63 5% $34.80 5
Same; Site Director /
Afterschool; Snack Bar
Attendant; Tot Activity Leader
Senior Recreation
Leader / Recreation
Leader
$15.00 $0.25 $18.50 15
Same Senior Sports Specialist $34.35 5% $41.75 5
Same; Teaching Specialist
Specialty Class
Instructor
$20.00 $1.00 $44.00 25
Same Sports Official $17.00 $1.00 $31.00 15
Administrative Analyst;
Finance Analyst Support Analyst
$33.98 5% $41.30 5
Same
Support Preschool
Instructor
$17.00 $0.25 $19.25 10
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that the CalPERS exempt Part-time Temporary Seasonal job classification titles and hourly rates are effective retroactively to February 16, 2022.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 20_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 3/1/2022, Item No. 3., Item Page 6, Packet Page 20 Council
Agenda Report
№07/19
FROM: Nat Rojanasathira, Assistant City Manager
SUBJECT: Adopt Resolution Opposing the “Taxpayer Protection and Government Accountability Act” (Initiative 21-0042A1) Not a Project Under CEQA Article 20, Section 15378 and Under General Rule Article 5, Section 15061) RECOMMENDATION:

That the City Council adopt a resolution opposing the “Taxpayer Protection and Government Accountability Act” (Initiative 21-0042A1). The proposed ballot initiative would negatively impact how the City initiates future revenue-generating measures.

VALUE DRIVER:

POLICY IMPLICATIONS:

The City of Monterey advocates on behalf of the community’s interests at the regional, state, and federal level. The City Council weighs in on proposed legislation and ballot initiatives on an as-needed basis. The “Taxpayer Protection and Government Accountability Act” would have drastic consequences to the fiscal health of the City of Monterey and communities throughout California. Although proponents of this ballot initiative will need to submit nearly one million signatures by April 29, 2022 to qualify for the November 2022 ballot, the consequences of this bill are so detrimental to cities that the League of California Cities are encouraging cities to take a hard stand against this proposed initiative before the California Secretary of State certifies it.

FISCAL IMPLICATIONS:

There are no costs incurred in connection with adopting this resolution.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, Date: 3/1/2022
Item No.: 4.

Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 1, Packet Page 21 this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

The City could choose not to oppose the “Taxpayer Protection and Government Accountability Act”. This is not recommended, as the City would not have the ability to place a tax measure on the ballot without a sunset date. This could result in the loss of millions of dollars in potential future revenue, affecting future general and special tax measures, bond measures, and potentially other revenues the City of Monterey depends on to provide services to the community.

DISCUSSION:

Overview of the Proposed Initiative
In 2018, the “Tax Fairness, Transparency and Accountability Act” (AG# 17-0050 Amdt. #1), was being circulated to qualify for the November 2018 ballot. This initiative would have drastically limited local revenue authority. Through the successful work and advocacy of the League of California Cities (which Monterey belongs to, along with California’s 482 cities) and its coalition partners, the measure’s proponents withdrew the initiative from the ballot in June 2018.

On January 4, 2022, the California Business Roundtable filed the Taxpayer Protection and Government Accountability Act (AG# 21-0042A1). This measure is far more detrimental to cities than the measure filed in 2018, because it would decimate vital local and state revenuegenerating methods.

During its December 2-3, 2021 meeting, the League of California Cities’ Board of Directors voted unanimously to oppose the initiative. Following the Board’s unanimous decision, a coalition of public safety, labor, local government and infrastructure advocates have joined together to fight against this potential measure. The Attorney General released the Title and Summary on February 3, 2022. The coalition announced its opposition in a media release. The proponents of the measure will need to submit nearly one million signatures in order to qualify for the November 2022 ballot and the Secretary of State’s recommended date to turn in signatures is April 29, 2022.

Statewide Impacts and Consequences
According to Michael Coleman, a local government finance expert and advisor to the League of California Cities, should Initiative 21-0042A1 be placed on the ballot and passed by voters, it would result in the following statewide consequences:
 Billions of local government fee and charge revenues placed at heightened legal peril.

Related public service reductions across virtually every aspect of city, county, special district, and school services especially for transportation, and public facility use.  Hundreds of millions of dollars of annual revenues from dozens of tax and bond measures approved by voters between January 1, 2022 and November 9, 2022 subject to additional voter approval if not in compliance with the initiative. This would not affect City of Monterey’s potential future renewal of the Measure S and Measure G sales tax, Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 2, Packet Page 22 and Measure Y hotel tax, since these taxes have had sunset dates. This would directly affect the City of Monterey if the City Council decides to place a Cannabis Tax on the ballot in November 2022. In addition, this is a statewide policy that disadvantages the ability of cities to generate revenue to provide core services.  Indeterminable legal and administrative burdens and costs on local government from new and more empowered legal challenges, and bureaucratic cost tracking requirements.
 The delay and deterrence of municipal annexations and associated impacts on housing and commercial development.
 Service and infrastructure impacts including in fire and emergency response, law enforcement, public health, drinking water, sewer sanitation, parks, libraries, public schools, affordable housing, homelessness prevention and mental health services.

Mr. Coleman estimates show the annualized tax revenues estimated to be approved by voters in 2022 and placed at risk by the initiative is at least $1.5 billion, including $1.0 billion from cities.

The amount of local government fee and charge revenue placed at risk, including those adopted since January 1, 2022 is approximately $1 billion each year, including $450 million for cities.

Additional costs for legal defense is anticipated, including risks to infrastructure financing. A summary and analysis of the initiative’s impact on cities is attached (Attachments 4 and 5).

Specifically, the Initiative:
 Prohibits advisory, non-binding measures as to use of tax proceeds on the same ballot.  Eliminates the ability of special tax measures proposed by citizen initiative to be enacted by majority voter approval.
 Requires that tax measures include a specific duration of time that the tax will be imposed. This seems to require that all tax increases or extensions contain a sunset (end date).
 Requires that a tax or bond measure adopted after January 1, 2022 and before the effective date of the initiative (November 9, 2022) that was not adopted in accordance with the measure be readopted in compliance with the measure or will be void twelve months after the effective date of the initiative (November 9, 2023) Impacts on Current and Future Revenue Generation in Monterey Measure S. On November 6, 2018, Monterey voters approved Measure S, authorizing the City to renew the local sales tax dedicated to funding repairs of streets, sidewalks, and sewers at the existing rate of 1 percent for eight years. This special tax measure required a two-thirds supermajority vote (82.09% voted in favor). Under the proposed statewide initiative, renewal of this measure, if presented to voters for approval in 2026, would need to be approved by a twothirds supermajority vote and contain a sunset date.

Measure G. On March 3, 2020, Monterey voters approved the Measure G sales tax measure, which imposes a ½-cent sales tax for nine years. This general tax measure required a majority vote (63.43% voted in favor). Under the proposed statewide initiative, renewal of this measure, if presented to voters for approval in 2029, would need to be approved by a majority vote and contain a sunset date.

Measure Y. On November 3, 2020, Monterey voters approved the Measure Y measure to increase the Transient Occupancy Tax (TOT), also known as hotel tax, from 10% to 12%. This Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 3, Packet Page 23 special tax required the approval of two-thirds supermajority vote (71.70% voted in favor).

There was no sunset date for this tax, and because it was approved before January 1, 2022, this measure would not need to be readopted under the statewide initiative.

Potential Future Cannabis Tax. City Council has expressed an interest to potentially place a cannabis tax on the ballot in November 2022. The statewide initiative would require the cannabis tax to comply with the new regulations, which includes establishing a sunset date for such a tax.

It is recommended that the City adopt a resolution opposing the Taxpayer Protection and Government Accountability Act (AG# 21-0042A1).

Attachments: 1. Draft Resolution

2. Initiative 21-0042A1

3. Title and Summary, Initiative 21-0042A1, California Attorney General’s Office

4. Fiscal and Program Effects of Initiative 21-0042A1 on Local Governments, CaliforniaCityFinance.com (Michael Coleman)

5. “Stop the Corporate Loopholes Scheme,” League of California Cities Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 4, Packet Page 24 RESOLUTION NO. __- ___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№07/19

OPPOSING THE
“TAXPAYER PROTECTION AND GOVERNMENT ACCOUNTABILITY ACT” (INITIATIVE 21-0042A1)
WHEREAS, the California Business Roundtable filed the Taxpayer Protection and Government Accountability Act (AG# 21-0042A1) to be considered for the November 2020 ballot, which would decimate vital local and state revenue-generating methods; WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project.

Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability; WHEREAS, the measure creates barriers for cities to maintain and generate revenue to provide services to communities, including local infrastructure, protecting our environment, water quality, air quality, and natural resources;
WHEREAS, the measure includes undemocratic provisions that would make it more difficult for local voters to pass measures needed to fund local services and infrastructure; WHEREAS, the League of California Cities’ Board of Directors voted unanimously to oppose the initiative. Following the Board’s unanimous decision, a coalition of public safety, labor, local government and infrastructure advocates have joined together to fight against this potential measure;
WHEREAS, according to Michael Coleman, a local government finance expert and advisor to the League of California Cities, should Initiative 21-0042A1 be placed on the ballot and passed by voters, billions of local government fee and charge revenues placed at heightened legal peril. Related public service reductions across virtually every aspect of city, county, special district, and school services especially for transportation, and public facility use; WHEREAS, hundreds of millions of dollars of annual revenues from dozens of tax and bond measures approved by voters between January 1, 2022 and November 9, 2022 subject to additional voter approval if not in compliance with the initiative; Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 5, Packet Page 25 2 WHEREAS, this initiative would not affect City of Monterey’s potential future renewal of the Measure S and Measure G sales tax, and Measure Y hotel tax, since these taxes have had sunset dates. However, the initiative would directly affect the City of Monterey if the City Council decides to place a Cannabis Tax on the ballot in November 2022. In addition, this is a statewide policy that disadvantages the ability of cities to generate revenue to provide core services;
WHEREAS, the measure puts billions of dollars currently dedicated to state and local services at risk, and could force cuts to fire and emergency response, law enforcement, public health, parks, libraries, harbors, affordable housing, services to support homeless residents, mental health services, and more.

NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby opposes Initiative 21-0042A1, deceivingly called the “Taxpayer Protection and Government Accountability Act,” and;
BE IT FURTHER RESOLVED that the City of Monterey will join the NO on Initiative 21- 0042A1 coalition, a growing coalition of public safety, labor, local government, infrastructure advocates, and other organizations throughout the state.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 6, Packet Page 26 BELL, McANDREWS & HILTACHK, LLP
Anabel Renteria
Initiative Coordinator
ATTORNEYS AND COUNSEL-ORS AT I.AW
455 C APITO L MALL, S UITE 600
SACRAMENTO, CALIFOE=INIA 95014
(916) 44;a-7757
FAX [916) 44-;a-77 59
www.bmhlaw.com
January 4, 2022
2 1 - 0 0 4 2

RECEIVED
JAN O 4 2022
Office of the Attorney General
State of California

INITIATIVE COORDINATOR

ATTORNEY GENERAL'S OFFICE
PO Box 994255
Sacramento, CA 94244-25550
Re: Initiative 21-0042 - Amendment Number One
Dear Initiative Coordinator:

Pursuant to subdivision (b) of Section 9002 of the Elections Code, enclosed please find Amendment #1 to Initiative No. 21-0042 "The Taxpayer Protection and Government Accountability Act." The amendments are reasonably germane to the theme, purpose or subject of the initiative measure as originally proposed.

I am the proponent of the measure and request that the Attorney General prepare a circulating title and summary of the measure as provided by law, using the amended language.

Thank you for your time and attention processing my request.

Sincerely,
Thomas W.
~ Hiltachk
ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 7, Packet Page 27 2 1 - 0 0 4 2 Arndt. # /
The Taxpayer Protection and Government Accountability Act [Deleted codified text is denoted in strikeout. Added codified text is denoted by italics and underline.] Section 1. Title
This Act shall be known, and may be cited as, the Taxpayer Protection and Government Accountability Act.

Section 2. Findings and Declarations
(a) Californians are overtaxed. We pay the nation's highest state income tax, sales tax, and gasoline tax. According to the U.S. Census Bureau, California's combined state and local tax burden is the highest in the nation. Despite this, and despite two consecutive years of obscene revenue surpluses, state politicians in 2021 alone introduced legislation to raise more than $234 billion in new and higher taxes and fees.
(b) Taxes are only part of the reason for California's rising cost-of-living crisis. Californians pay billions more in hidden "fees" passed through to consumers in the price they pay for products, services, food, fuel, utilities and housing. Since 2010, government revenue from state and local "fees" has more than doubled.
(c) California's high cost of living not only contributes to the state's skyrocketing rates of poverty and homelessness, they are the pushing working families and job-providing businesses out of the state. The most recent Census showed that California's population dropped for the first time in history, costing us a seat in Congress. In the past four years, nearly 300 major corporations relocated to other states, not counting thousands more small businesses that were forced to move, sell or close. (d) California voters have tried repeatedly, at great expense, to assert control over whether and how taxes and fees are raised. We have enacted a series of measures to make taxes more predictable, to limit what passes as a "fee," to require voter approval, and to guarantee transparency and accountability. These measures include Proposition 13 (1978), Proposition 62 (1986), Proposition 218 (1996), and Proposition 26 (2010).
(e) Contrary to the voters' intent, these measures that were designed to control taxes, spending and accountability, have been weakened and hamstrung by the Legislature, government lawyers, and the courts, making it necessary to pass yet another initiative to close loopholes and reverse hostile court decisions.

Section 3. Statement of Purpose
(a) In enacting this measure, the voters reassert their right to a voice and a vote on new and higher taxes by requiring any new or higher tax to be put before voters for approval. Voters also intend that all fees and other charges are passed or rejected by the voters themselves or a governing body elected by voters and not unelected and unaccountable bureaucrats.
(b) Furthermore, the purpose and intent of the voters in enacting this measure is to increase transparency and accountability over higher taxes and charges by requiring any tax measure placed on the ballot1 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 8, Packet Page 28 either at the state or local level-to clearly state the type and rate of any tax, how long it will be in effect, and the use of the revenue generated by the tax.
(c) Furthermore, the purpose and intent of the voters in enacting this measure is to clarify that any new or increased form of state government revenue, by any name or manner of extraction paid directly or indirectly by Californians, shall be authorized only by a vote of the Legislature and signature of the Governor to ensure that the purposes for such charges are broadly supported and transparently debated. (d) Furthermore, the purpose and intent of the voters in enacting this measure is also to ensure that taxpayers have the right and ability to effectively balance new or increased taxes and other charges with the rapidly increasing costs Californians are already paying for housing, food, childcare, gasoline, energy, healthcare, education, and other basic costs of living, and to further protect the existing constitutional limit on property taxes and ensure that the revenue from such taxes remains local, without changing or superseding existing constitutional provisions contained in Section 1{c) of Article XIII A. (e) In enacting this measure, the voters also additionally intend to reverse loopholes in the legislative twothirds vote and voter approval requirements for government revenue increases created by the courts including, but not limited to, Cannabis Coalition v. City of Upland, Chamber of Commerce v. Air Resources Board, Schmeer v. Los Angeles County, Johnson v. County of Mendocino, Citizens Assn. of Sunset Beach v.

Orange County Local Agency Formation Commission, and Wilde v. City of Dunsmuir.

Section 4. Section 3 of Article XIII A of the California Constitution is amended to read:

Sec. 3(a} Every levy, charge. or exaction of any kind imposed by state law is either a tax or an exempt charge.
illlJ1l ~ Any change in state statute Jaw which results in any taxpayer paying a new or higher tax must be imposed by an act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature, and submitted to the electorate and approved by a maiority vote, except that no new ad valorem taxes on real property, or sales or transaction taxes on the sales of real property, may be imposed. Each Act shall include:
(A) A specific duration of time that the tax will be imposed and an estimate of the annual amount expected to be derived from the tax.
(BJ A specific and legally binding and enforceable limitation on how the revenue from the tax can be spent.

If the revenue from the tax can be spent for unrestricted general revenue purposes. then a statement that the tax revenue can be spent for "unrestricted general revenue purposes" shall be included in a separate, stand-alone section. Any proposed change to the use of the revenue from the tax shall be adopted by a separate act that is passed by not less than two-thirds of all members elected to each of the two houses of the Legislature and submitted to the electorate and approved by a maiority vote. (2) The title and summary and ballot label or question required for a measure pursuant to the Elections Code shall. for each measure providing for the imposition of a tax, including a measure proposed by an elector pursuant to Article II, include:
{A) The type and amount or rate of the tax;
(BJ The duration of the tax: and
2 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 9, Packet Page 29 (CJ The use of the revenue derived from the tax.
(c} Any change in state law which results in any taxpayer paying a new or higher exempt charge must be imposed by an act passed by each of the two houses of the Legislature. Each act shall specify the type of exempt charge as provided in subdivision (e ), and the amount or rate of the exempt charge to be imposed.

Ml._fbt As used in this section and in Section 9 of Article II, "tax" means every aA1f levy, charge, or exaction of any kind imposed by the State state law that is not an exempt charge. e1<eept the follo•Ning:
(e) As used in this section. "exempt charge" means only the following:
(1) a el:iarge imposes fer a s1=1eeifie eenefit eonferreEl or pri'+'ilege granteEl aireetly to tl:ie 13ayor tl:iat is not 1=1ro>viaeEl to tl:iose not et:iargeEI, anEI whiel:i aoes not e1<ceeEl tl:ie reasonal3Ie costs to tl:ie State of eonferring the benefit or granting the pri¥ilege to the 1=1a¥OF.
ill {-2+ A reasonable charge irnposeEl for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the rnasonable actual costs to the State of providing the service or product to the payor. f.11 ~ A charge in,poseEl for the reasonable regulatory costs to the State incident to issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof. (3) A levy, charge. or exaction collected from local units of government. health care providers or health care service plans that is primarily used by the State of California for the purposes of increasing reimbursement rates or payments under the Medi-Cal program, and the revenues of which are primarily used to finance the non-federal portion of Medi-Cal medical assistance expenditures. (4) A reasonable charge iR'l13oseEl for entrance to or use of state property, or the purchase. rental, or lease of state property, except charges governed by Section 15 of Article XI. (5} A fine, or penalty, or other monetary el:large including any applicable interest for nonpayment thereot imposed by the judicial branch of government or the State, as a result of a state administrative enforcement agency pursuant to adiudicatorv due process, to punish a violation of law. (6} A levy, charge, assessment, or exaction collected for the promotion of California tourism pursuant to Chapter 1 (commencing with Section 13995) of Part 4.7 of Division 3 of Title 2 of the Government Code. flL~Any tax or exempt charge adopted after January 1, 2022 ~, but prior to the effective date of this act, that was not adopted in compliance with the requirements of this section is void 12 months after the effective date of this act unless the tax or exempt charge is reenacted B'l the begislatuFe anel signea into law ey tl:ie <iio¥ernoF in compliance with the requirements of this section. [gl[.JlJG:} The State bears the burden of proving by a preponEleranee oftl:le clear and convincing evidence that a levy, charge, or other exaction is an exempt charge and not a tax. The State bears the burden of proving by clear and convincing evidence that the amount of the exempt charge is reasonable and that the amount charged does not exceed the actual cost of providing the service or product to the payor. ,tR-a-t tl:ie amouRt is RO n,ore tl:ian neeessary to cover the reasonable costs of the go•.•emn,ental actii,•i:t>,• ane 3 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 10, Packet Page 30 that the manner in •Nhiel.:i these cests are allecated ts a pa·1er bear a fair er reasenable relatienshi13 ts the 13a·1or's b1:1relens on, or benefits reeei11eel from, the go•.ieFRmental actit.iit'( (2) The retention ofrevenue by, or the payment to. a non-governmental entity ofa levv. charge, or exaction of any kind imposed by state law, shall not be a factor in determining whether the levy. charge, or exaction is a tax or exempt charge.
(3) The characterization of a levy, charge, or exaction of any kind as being voluntary, or paid in exchange for a benefit, privilege, allowance, authorization, or asset, shall not be a factor in determining whether the levy, charge, or exaction is a tax or an exempt charge. /4} The use of revenue derived from the levy, charge or exaction shall be a factor in determining whether the levy, charge, or exaction is a tax or exempt charge. (h) As used in this section:
(1) "Actual cost" of providing a service or product means: (i) the minimum amount necessary to reimburse the government for the cost of providing the service or product to the payor, and {ii) where the amount charged is not used by the government for any purpose other than reimbursing that cost. In computing "actual cost" the maximum amount that may be imposed is the actual cost less all other sources of revenue including, but not limited to taxes, other exempt charges, grants, and state or federal funds received to provide such service or product.
(2) "Extend" includes, but is not limited to, doing any of the following with respect to a tax or exempt charge: lengthening its duration. delaying or eliminating its expiration, expanding its application to a new territory or class ofpayor, or expanding the base to which its rate is applied. (3) "Impose" means adopt, enact, reenact, create, establish, collect, increase or extend. (4) "State law" includes, but is not limited to. any state statute, state regulation, state executive order. state resolution, state ruling, state opinion Jetter, or other legal authority or interpretation adopted, enacted. enforced, issued, or implemented by the legislative or executive branches of state government. "State law" does not include actions taken by the Regents of the University of California, Trustees of the California State University, or the Board of Governors of the California Community Colleges.

Section 5. Section 1 of Article XIII C of the California Constitution is amended, to read:

Sec. 1. Definitions. As used in this article:
{a) "Actual cost" of providing a service or product means: (i) the minimum amount necessary to reimburse the government for the cost of providing the service or product to the payor. and {ii) where the amount charged is not used by the government for any purpose other than reimbursing that cost. In computing "actual cost" the maximum amount that may be imposed is the actual cost less all other sources of revenue including, but not limited to taxes. other exempt charges, grants, and state or federal funds received to provide such service or product.
(b) "Extend" includes, but is not limited to. doing any of the following with respect to a tax. exempt charge, or Article XIII D assessment. fee, or charge: lengthening its duration, delaying or eliminating its expiration. expanding its application to a new territory or class of payor, or expanding the base to which its rate is applied.
4 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 11, Packet Page 31 .lfl..W 11General tax" means any tax imposed for general governmental purposes. (d} "Impose" means adopt, enact, reenact, create, establish, collect, increase, or extend. {clJb} "Local government" means any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity, or an elector pursuant to Article fl or the initiative power provided by a charter or statute.
(f) "Local law" includes. but is not limited to, any ordinance, resolution, regulation. ruling, opinion letter, or other legal authority or interpretation adopted, enacted, enforced, issued, or implemented by a local government.
{gl_{t} "Special district" means an agency of the State, formed pursuant to general law or a special act, for the local performance of governmental or proprietary functions with limited geographic boundaries including, but not limited to, school districts and redevelopment agencies. f11L{d} "Special tax" means any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund.
111 i@} As used in this article, and in Section 9 of Article II, "tax" means every aRV-levy, charge, or exaction of any kind, imposed by a local go,;ernmeRt law that is not an exempt charge., exeept tl=le fellowiRg:
(i) As used in this section, "exempt charge" means only the following:
(1) A cl=large imposeel fer a speeifie beAefit eoAferreel or pri,;ilege graAteel eliFeetl')' to tl=le pa1,ior tl=lat is Rot pre1,•ieleel to these Rot ehargea, aA£l which £lees Rot exeeeel tl=le reaseAable costs to tl=le loeal gm,·ernFAeAt of conferriAg the beAefit or graAting tl:1e pri¥ilege.
ill R} A reasonable charge imposes for a specific local government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasoAable actual costs to the local government of providing the service or product. fl1 WA charge im13ose£l for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.

W {4t A reasonable charge imposeel for entrance to or use of local government property, or the purchase, rental, or lease of local government property.

Ml. fSt A fine, or penalty, or other FAOA@tar,· eharge including any applicable interest for nonpayment thereat imposed by the judicial branch of government or a local government administrative enforcement agency pursuant to adiudicatorv due process, as a res1,1lt of to punish a violation of law. ill -f6t A charge imposed as a condition of property development. No levv, charge, or exaction regulating or related to vehicle miles traveled may be imposed as a condition of property development or occupancy. f.i1 f7t An AssessFAeRts a Rel property relate el fees assessment. fee. or charge imJ;1oseel iA aeeoraanee witl=l the pro¥isio A5 of subject to Article XI 11 D, or an assessment imposed upon a business in a tourism marketing district, a parking and business improvement area, or a property and business improvement district. 5 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 12, Packet Page 32 (7) A charge imposed for a specific health care service provided directly to the payor and that is not provided to those not charged. and which does not exceed the reasonable costs to the local government of providing the health care service. As used in this paragraph, a "health care service" means a service licensed or exempt from licensure by the state pursuant to Chapters 1. 1.3, or 2 of Division 2 of the Health and Safety Code.

The local government bears the b1:1rden of proving by a preponderance of the e .. ·ielence that a lew, charge, or other exaction is not a ta1<, that the amo1:1nt is no more than necessaPJ' to cover the reasonable costs of the go•,ernfflental acti•.«ity anel that tJ:ie manner in which those costs are allocateel to a pa•ror bear a fair or reasonable relationship to the pa•ror's blslrdens on, or bene:fits receiveel from, the go1a1ernmental acfa•ity.

Section 6. Section 2 of Article XIII C of the California Constitution is amended to read:

Sec. 2. Local Government Tax Limitation. Notwithstanding any other provision of this Constitution:
(a) Every levy. charge. or exaction of any kind imposed by local law is either a tax or an exempt charge. All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. Special purpose districts or agencies, including school districts, shall have no power to levy general taxes. (b) No local Jaw go,.·ernment whether proposed by the governing body or by an elector, may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body. (c) An•r general tax imposed, el<tended, or increaseel, •.-.iitho1:1t •.·oter approval, lay any local go,.·ernment on or after Janlslary 1, 1995, ana prior ta the effecti,.·e date of this article, shall contin1:1e to be imposed only if appro,.·ea b1• a majority vote of the voters voting in an election OR the issye of the in:iposition, whicl::i election sl::iall be l::ield witl::iin t•Ne 1•ears ef the effectii.ie date of this article and in com13liance with slslbdi\·isien (b}. {El) No local law government. whether proposed by the governing body or by an elector. may impose, eMteRd, er increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote. A special tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. {d) The title and summary and ballot label or question required for a measure pursuant to the Elections Code shall. for each measure providing for the imposition of a tax, include:
(1) The type and amount or rate of the tax;
(2) the duration of the tax; and
(3) The use of the revenue derived from the tax. If the proposed tax is a general tax. the phrase "for general government use" shall be required, and no advisory measure may appear on the same ballot that would indicate that the revenue from the general tax will. could. or should be used for a specific purpose. (e) Only the governing body of a local government. other than an elector pursuant to Article II or the initiative power provided by a charter or statute. shall have the authority to impose any exempt charge.

The governing body shall impose an exempt charge by an ordinance specifying the type of exempt charge 6 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 13, Packet Page 33 as provided in Section l(i) and the amount or rate of the exempt charge to be imposed. and passed by the governing body. This subdivision shall not apply to charges specified in paragraph (7) of subdivision (i) of Section 1.
ff) No amendment to a Charter which provides for the imposition, extension, or increase of a tax or exempt charge shall be submitted to or approved by the electors. nor shall any such amendment to a Charter hereafter submitted to or approved by the electors become effective for any purpose. (q) Any tax or exempt charge adopted after January 1, 2022, but prior to the effective date of this act, that was not adopted in compliance with the requirements of this section is void 12 months after the effective date of this act unless the tax or exempt charge is reenacted in compliance with the requirements of this section.
{h)(1) The focal government bears the burden of proving by clear and convincing evidence that a levy, charge or exaction is an exempt charge and not a tax. The local government bears the burden of proving by clear and convincing evidence that the amount of the exempt charge is reasonable and that the amount charged does not exceed the actual cost of providing the service or product to the payor. (2} The retention of revenue by, or the payment to, a non-governmental entity of a levy. charge, or exaction of any kind imposed by a local law, shall not be a factor in determining whether the levy, charge, or exaction is a tax or exempt charge.
(3) The characterization of a levy. charge. or exaction of any kind imposed by a local law as being paid in exchange for a benefit. privilege, allowance, authorization, or asset, shall not be factors in determining whether the levy, charge, or exaction is a tax or an exempt charge. (4) The use of revenue derived from the levy, charge or exaction shall be a factor in determining whether the levy, charge, or exaction is a tax or exempt charge.

Section 7. Section 3 of Article XIII D of the California Constitution is amended, to read:

Sec. 3. Property Taxes, Assessments, Fees and Charges Limited (a) No tax, assessment, fee, 6f charge, or surcharge, including a surcharge based on the value ofpropertv, shall be assessed 13y a Ry ageRC'f upon any parcel of property or upon any person as an incident of property ownership except:
(1) The ad valorem property tax impeseEI p1::1rsYaRt te described in Section 1(a) of Article XIII and Section 1/a) of Article XIII A, and described and enacted pursuant to the voter approval requirement in Section 1/b) Q[Article XII I A.
(2) Any special non-ad valorem tax receiving a two-thirds vote of qualified electors pursuant to Section 4 of Article XIII A, or after receiving a two-thirds vote of those authorized to vote in a community facilities district by the Legislature pursuant to statute as it existed on December 31, 2021. (3) Assessments as provided by this article.
(4) Fees or charges for property related services as provided by this article. 7 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 14, Packet Page 34 (b) For purposes of this article, fees for the provision of electrical or gas service shall not be deemed charges or fees imposed as an incident of property ownership.

Section 8. Sections 1 and 14 of Article XIII are amended to read:

Sec. 1 Unless otherwise provided by this Constitution or the laws of the United States:
(a) All property is taxable and shall be assessed at the same percentage of fair market value. When a value standard other than fair market value is prescribed by this Constitution or by statute authorized by this Constitution, the same percentage shall be applied to determine the assessed value. The value to which the percentage is applied, whether it be the fair market value or not, shall be known for property tax purposes as the full value.
(b) All property so assessed shall be taxed in proportion to its full value. (c) All proceeds from the taxation of property shall be apportioned according to law to the districts within the counties.

Sec. 14. All property taxed by state or local government shall be assessed in the county, city, and district in which it is situated. Notwithstanding any other provision of/aw, such state or local property taxes shall be apportioned according to law to the districts within the counties.

Section 9. General Provisions
A. This Act shall be liberally construed in order to effectuate its purposes.

B. (1) In the event that this initiative measure and another initiative measure or measures relating to state or local requirements for the imposition, adoption, creation, or establishment of taxes, charges, and other revenue measures shall appear on the same statewide election ballot, the other initiative measure or measures shall be deemed to be in conflict with this measure. In the event that this initiative measure receives a greater number of affirmative votes, the provisions of this measure shall prevail in their entirety, and the provisions ofthe other initiative measure or measures shall be null and void. (2) In furtherance of this provision, the voters hereby declare that this measure conflicts with the provisions of the "Housing Affordability and Tax Cut Act of 2022" and "The Tax Cut and Housing Affordability Act," both of which would impose a new state property tax (called a "surcharge") on certain real property, and where the revenue derived from the tax is provided to the State, rather than retained in the county in which the property is situated and for the use of the county and cities and districts within the county, in direct violation of the provisions of this initiative. (3) If this initiative measure is approved by the voters, but superseded in whole or in part by any other conflicting initiative measure approved by the voters at the same election, and such conflicting initiative is later held invalid, this measure shall be self-executing and given full force and effect.

C. The provisions of this Act are severable. If any portion, section, subdivision, paragraph, clause, sentence, phrase, word, or application of this Act is for any reason held to be invalid by a decision of any court of competent jurisdiction, that decision shall not affect the validity of the remaining portions of this Act. The People of the State of California hereby declare that they would have adopted this Act and each and every portion, section, subdivision, paragraph, clause, sentence, phrase, word, and application not 8 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 15, Packet Page 35 declared invalid or unconstitutional without regard to whether any portion of this Act or application thereof would be subsequently declared invalid.

D. If this Act is approved by the voters of the State of California and thereafter subjected to a legal challenge alleging a violation of state or federal law, and both the Governor and Attorney General refuse to defend this Act, then the following actions shall be taken:
(1) Notwithstanding anything to the contrary contained in Chapter 6 of Part 2 of Division 3 ofTitle 2 of the Government Code or any other law, the Attorney General shall appoint independent counsel to faithfully and vigorously defend this Act on behalf of the State of California. (2) Before appointing or thereafter substituting independent counsel, the Attorney General shall exercise due diligence in determining the qualifications of independent counsel and shall obtain written affirmation from independent counsel that independent counsel will faithfully and vigorously defend this Act. The written affirmation shall be made publicly available upon request. (3) A continuous appropriation is hereby made from the General Fund to the Controller, without regard to fiscal years, in an amount necessary to cover the costs of retaining independent counsel to faithfully and vigorously defend this Act on behalf of the State of California. (4) Nothing in this section shall prohibit the proponents of this Act, or a bona fide taxpayers association, from intervening to defend this Act.
9 ATTACHMENT 2
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 16, Packet Page 36 February 3, 2022
Initiative 21-0042 (Amdt. 1)
The Attorney General of California has prepared the following title and summary of the chief purpose and points of the proposed measure:

LIMITS ABILITY OF VOTERS AND STATE AND LOCAL GOVERNMENTS TO RAISE REVENUES FOR GOVERNMENT SERVICES. INITIATIVE
CONSTITUTIONAL AMENDMENT. For new or increased state taxes currently enacted by two-thirds vote of Legislature, also requires statewide election and majority voter approval. Limits voters’ ability to pass voter-proposed local special taxes by raising vote requirement to two-thirds. Eliminates voters’ ability to advise how to spend revenues from proposed general tax on same ballot as the proposed tax. Expands definition of “taxes” to include certain regulatory fees, broadening application of tax approval requirements. Requires Legislature or local governing body set certain other fees. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Lower annual state and local revenues, potentially substantially lower, depending on future actions of the Legislature, local governing bodies, voters, and the courts. (21-0042A1.) ATTACHMENT 3
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 17, Packet Page 37 CaliforniaCityFinance.Com
Fiscal and Program Effects of
Initiative 21-0042A1 on Local Governments
If Initiative 21-0042A1 is placed on the ballot and passed by voters, it will result in:
 Billions of local government fee and charge revenues placed at heightened legal peril. Related public service reductions across virtually every aspect of city, county, special district, and school services especially for transportation, and public facility use.  Hundreds of millions of dollars of annual revenues from dozens of tax and bond measures approved by voters between January 1, 2022 and November 9, 2022 subject to additional voter approval if not in compliance with the initiative.
 Indeterminable legal and administrative burdens and costs on local government from new and more empowered legal challenges, and bureaucratic cost tracking requirements.  The delay and deterrence of municipal annexations and associated impacts on housing and commercial development.
 Service and infrastructure impacts including in fire and emergency response, law enforcement, public health, drinking water, sewer sanitation, parks, libraries, public schools, affordable housing, homelessness prevention and mental health services.

1. Local Government Taxes and Services Threatened
With regard to taxes, Initiative 21-0042A1:
 Prohibits advisory, non-binding measures as to use of tax proceeds on the same ballot. o Voters may be less informed and more likely to vote against measures.  Eliminates the ability of special tax measures proposed by citizen initiative to be enacted by majority voter approval (Upland).
o Because the case law regarding citizen initiative special taxes approved by majority vote (Upland) is so recent, it is unknown how common these sorts of measures might be in the future. This initiative would prohibit such measures after the effective date of the initiative. Any such measures adopted after January 1, 2022 through November 8, 2022 would be void after November 9, 2023.
 Requires that tax measures include a specific duration of time that the tax will be imposed. This seems to require that all tax increases or extensions contain a sunset (end date). o This would require additional tax measures to extend previously approved taxes at additional cost to taxpayers.
 Requires that a tax or bond measure adopted after January 1, 2022 and before the effective date of the initiative (November 9, 2022) that was not adopted in accordance with the measure be readopted in compliance with the measure or will be void twelve months after the effective date of the initiative (November 9, 2023).
o If past election patterns are an indication, dozens of tax and bond measures approving hundreds of millions of annual revenues may not be in compliance and would be subject to reenactment.

Most will be taxes without a specific end date. Because there is no regularly scheduled election within the 12 months following the effective date of the initiative, measures not in compliance would need to be placed on a special election ballot for approval before November 9, 2023 or the tax will be void after that date. General tax measures would require declaration of emergency and unanimous vote of the governing board.
2217 Isle Royale Lane • Davis, CA • 95616-6616
Phone: 530.758.3952 • Fax: 530.758.3952
Rev. January 7, 2022
ATTACHMENT 4
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 18, Packet Page 38 – 2 – rev January 7, 2022
CaliforniaCityFinance.com
 Requires voter approval to expand an existing tax to new territory (annexations). This would require additional tax measures and would deter annexations and land development in cities. o If a tax is "extended" to an annexed area without a vote after January 1, 2022, it will be void 12 months later until brought into compliance. Because there is no regularly scheduled election within the 12 months following the effective date of the initiative, such extensions for general taxes would, under current law, each require unanimous vote of the agency board to be placed on a special election ballot or would be void after November 9, 2023.

1.a. Number of Measures and Value of Local Taxes at Risk1 In 2020, voters in California approved 293 local tax and bond measures for cities, counties, special districts and schools (95 in March and 198 in November). The approved measures enacted $3.85 billion in new annual taxes including $1.3 billion for cities, $302 million for counties, $208 million for special districts (fire, wastewater, open space and transit districts), and $2.037 billion for schools (including for school bonds).

Most tax measures go to the ballot during a presidential or gubernatorial primary or general election in an even year. However, some tax measures are decided at other times. During 2019, there were 45 approved tax and bond measures (24 city, 14 special district, 7 school) adopting $154.0 million in new annual taxes ($124.0 million city, $10.5 million special district and $19.2 million school).

Most tax and bond measures comply with the new rules in Initiative 21-0042Amdt#1 except:
 Dozens of taxes would require end dates. This would require additional measures in future years to extend the taxes further. Very few extensions of existing local taxes fail.  Majority vote general tax measures could not be accompanied on the same ballot with an advisory, non-binding measure as to use of tax proceeds.  Special taxes placed on the ballot via citizen initiative would require two-thirds voter approval.

Bond measures have fixed terms. Historically, about 20 percent of other tax measures have included specific durations (i.e. sunsets). Advisory measures as to use of revenues are uncommon. I do not expect the provisions of 21-0042A1 to have any substantial effect on passage rates. However, some 2022 approved measures would likely have to put back on the ballot.

Based on history, a reasonable estimate of the annualized tax revenues estimated to be approved by 1 Source: Compilation and summary of data from County elections offices.

ATTACHMENT 4
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 19, Packet Page 39 – 3 – rev January 7, 2022
CaliforniaCityFinance.com
voters in 2022 and placed at risk by this initiative is at least $1.5 billion, including $1.0 billion from cities and $500 million from counties and special districts. 2 1.b. Additional Costs and Public Service Effects of the Tax Provisions In addition to service delays and disruption due to new tax revenues placed at greater legal risk, there will be substantial additional costs for legal defense. The deterrence of taxes for annexations will delay and deter municipal annexations.

2. “Exempt Charges” (fees and charges that are not taxes) and Services Threatened With regard to fees and charges adopted after January 1, 2022, Initiative 21-0042A1:
 Subjects new fees and charges for a product or service to a new "actual cost” test defined as “(i) the minimum amount necessary to reimburse the government for the cost of providing the service to the payor, and (ii) where the amount charged is not used by the government for any purpose other than reimbursing that cost. In addition, subjects these same charges to a new, undefined, “reasonable” standard.
 Subjects fees and charges for entrance to local government property; and rental and sale of local government property to a new, undefined, “reasonable” test.  Subjects a challenged fee or charge to new, higher burdens of proof if legally challenged.  Prohibits a levy, charge or exaction regulating or related to vehicle miles traveled, imposed as a condition of property development or occupancy.

2.a. Value on New Local Government Fees and Charges at Risk3 Virtually every city, county, and special district must regularly (e.g., annually) adopt increases to fee rates and charges and revise rate schedules to accommodate new users and activities. Most of these would be subject to new standards and limitations under threat of legal challenge. Based on the current volume of fees and charges imposed by local agencies and increases in those fees simply to accommodate inflation, the amount of local government fee and charge revenue placed at risk is about $1 billion per year including those adopted since January 1, 2022. Of this $1 billion, about $570 million is for special districts, $450 million is cities, and $260 million is counties.4
Major examples of affected fees and charges are:

1. Nuisance abatement charges - such as for weed, rubbish and general nuisance abatement to fund community safety, code enforcement, and neighborhood cleanup programs.

2. Commercial franchise fees.

3. Emergency response fees - such as in connection with DUI.

4. Advanced Life Support (ALS) transport charges.

5. Document processing and duplication fees.

6. Transit fees, tolls, parking fees, public airport and harbor use fees.

7. Facility use charges, fees for parks and recreation services, garbage disposal tipping fees.

In addition to fees and charges, the measure puts fines and penalties assessed for the violation of state and 2 This does not include citizen initiative special tax approved by majority but not two-thirds. Because this approach is new, the number of these measures and amount of revenue involved cannot be estimated. 3 Source: California State Controller Annual Reports of Financial Transactions concerning cities, counties and special districts, summarized with an assumed growth due to fee rate increases (not population) of 2 percent annually. 4 School fees are also affected but the amount is negligible by comparison.

ATTACHMENT 4
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 20, Packet Page 40 – 4 – rev January 7, 2022
CaliforniaCityFinance.com
local law at risk, making them taxes subject to voter approval under certain circumstances.

2.b. Additional Costs and Public Service Effects of the Fee/Charge Provisions In addition to service delays and disruptions due to fee and charge revenues placed at greater legal risk, there would be substantial additional costs for legal defense. The risk to fees and charges will make infrastructure financing more difficult and will deter new residential and commercial development. ***********
mc
ATTACHMENT 4
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 21, Packet Page 41 Stop the Corporate Loopholes Scheme
Deceptive Proposition Allows Major Corporations to Avoid Paying their Fair Share and Evade Enforcement when they Violate Environmental, Health & Safety Laws An association representing California’s wealthiest corporations — including oil, insurance, banks and drug companies — is behind a deceptive proposition aimed for the November 2022 statewide ballot. Their measure would create major new loopholes that allow corporations to avoid paying their fair share for the impacts they have on our communities; while also allowing corporations to evade enforcement when they violate environmental, health, safety and other state and local laws. Here’s why a broad coalition of local governments, labor and public safety leaders, infrastructure advocates, and businesses oppose the Corporate Loophole Scheme:

Gives Wealthy Corporations a Major Loophole to Avoid Paying their Fair Share - Forcing Local Residents and Taxpayers to Pay More • The measure creates new constitutional loopholes that allow corporations to pay far less than their fair share for the impacts they have on our communities, including local infrastructure, our environment, water quality, air quality, and natural resources – shifting the burden and making individual taxpayers pay more.

Allows Corporations to Dodge Enforcement When They Violate Environmental, Health, Public Safety and Other Laws
• The deceptive scheme creates new loopholes that makes it much more difficult for state and local regulators to issue fines and levies on corporations that violate laws intended to protect our environment, public health and safety, and our neighborhoods.

Jeopardizes Vital Local and State Services
• This far-reaching measure puts at risk billions of dollars currently dedicated to critical state and local services.
• It could force cuts to public schools, fire and emergency response, law enforcement, public health, parks, libraries, affordable housing, services to support homeless residents, mental health services and more. • It would also reduce funding for critical infrastructure like streets and roads, public transportation, drinking water, new schools, sanitation, utilities and more.

Opens the Door for Frivolous Lawsuits, Bureaucracy and Red Tape that Will Cost Taxpayers and Hurt Our Communities
• The measure will encourage frivolous lawsuits, bureaucracy and red tape that will cost local taxpayers millions — while significantly delaying and stopping investments in infrastructure and vital services.

ATTACHMENT 5
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 22, Packet Page 42 Undermines Voter Rights, Transparency, and Accountability • This misleading measure changes our constitution to make it more difficult for local voters to pass measures needed to fund local services and local infrastructure.
• It also includes a hidden provision that would retroactively cancel measures that were passed by local voters — effectively undermining the rights of voters to decide for themselves what their communities need.
• It would limit voter input by prohibiting local advisory measures, where voters provide direction to politicians on how they want their local tax dollars spent.

ATTACHMENT 5
Council Regular Meeting, 3/1/2022, Item No. 4., Item Page 23, Packet Page 43 Council
Agenda Report
№10/13
FROM: Rafaela T. King, CPA, MBA, Finance Director
SUBJECT: Amend Fiscal Year (FY) 2021-22 Budget to Increase General Fund Budget Revenues and Appropriations, Designate Funds into the Economic Uncertainty Reserve and Various Other Reserve Funds, Authorize Other Non-General Fund Changes, and Update the Position Control List (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) RECOMMENDATION:

That the City Council approve the attached resolution amending the Fiscal Year 2021-22 budget.

VALUE DRIVER:

Serve as stewards of the City’s financial resources through sound economic vitality efforts, streamlining operations, reasonable revenue enhancements, visionary long-term planning, fiscal transparency, and community partnerships. This agenda report addresses specifically the stated objectives of stewardship of the City’s financial resources and visionary long-term planning.

POLICY IMPLICATIONS:

It is good fiscal and budget policy to regularly review the financial results of City operations. In addition, governmental accounting standards require that the City Council be regularly updated as to the financial condition of the City.

FISCAL IMPLICATIONS:

The General Fund FY 21/22 estimated revenues and expenditures are $79.02M and $79.41M, respectively. Estimated FY 21/22 Net Transfer Out is $1.5M. The FY 21/22 budget adjustments for revenues and expenditures are $8.3M and $2.59M, respectively. There is no change to the Net Transfer Out.

The objective of this agenda report is to restore and establish City reserves at levels that provide much needed fiscal resiliency and increased ability to address various economic and natural disasters, fund various reserve funds for the City, and reinstitute two (2) full-time Sports Coordinator positions ($105K cost for the remainder of the fiscal year) which were laid off in June 2020 due to the pandemic and two (2) Police Officer positions ($182K cost for the remainder of the fiscal year).
 On the previously projected June 30, 2021, the unassigned fund balance was estimated to be $2.3M. The audited FY 20/21 unassigned fund balance is $6.47M.  The proposed Mid-Year budget amendments to the General Fund, provides for an estimated June 30, 2022, unassigned fund balance of $5.9M. This amount is inclusive of one-time funding and restoration of the various reserve funds.  The Economic Uncertainty Reserve as of 6/30/2021 is $12.2M (15.0% or less than 2 months of General Fund operations), which is below the policy funding of 16.6%. A Date: 3/1/2022
Item No.: 5.

Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 1, Packet Page 44 contribution of $2.51M during the Mid-Year budget amendments, will not only restore reserves to policy levels but will also increase the level to 18%.  With the one-time funding source from current and projected unassigned FY21/22 fund balance, staff wishes to establish or replenish the following reserve funds with the following amounts:
o Economic Uncertainty Reserve $2.51M,
o Pension Liability Reserve (New) $1M,
o Conference Center Facilities Reserve $750K,
o Sports Center Facilities Reserve $750K,
o Technology Infrastructure Fund (New) $1.5M
The establishment and funding of these reserve funds would occur in phases. The first phase would occur at the approval of the Mid-Year budget amendments and would include the Economic Uncertainty Reserve, the Pension Liability Reserve, and the Technology Infrastructure Reserve at 100% of recommended amounts. The second phase will take place in June and fund the Conference Center and Sports Center Facilities Reserves respectively.
 Consistent with Value Drivers, staff also wishes to establish a reserve for Sea Level Rise Resiliency Reserve Fund
o Funding for this reserve fund will come directly from the monies generated in the Tidelands Fund
o Sea Level Rise Resiliency Reserve in the Tidelands Fund (New) $500K Other Fund Mid-Year adjustment requests include an increase in appropriations to the Asset Seizure Fund of $10,000, an increase of $85,653 to the Tidelands Fund, an increase of $72,995 to the Marina Fund, and an increase of $94K to the Equipment Vehicle Replacement Fund as we receive reimbursements from the State for strike team deployments during the past fire season.

The Information Services Division (ISD) fund has a net increase in appropriations of $458,430. All of these adjustment requests will use existing Fund Balance in their respective funds to cover the cost.

Modifications in the Risk Management Fund are required to account for the change to move the portion of Risk Management functions and staff allocation from the Finance Department to the Human Resources Department at Mid-Year. There is also a net increase in the appropriation amounts of $1M to account for the increase in Court Cost as well as an increase in the liability insurance premium. The Library Trust Fund request adjustments to align with the budget adoption made by the Library Trust Fund Board for an increase in revenue of $98,100 and a modified increase in expenses of $3,746.

The Neighborhood Improvement Fund and the Street Infrastructure Rehab (Measure P & S) Fund will each see an increase in revenues of $534K and $1.5M, respectively due to expected increases in transient occupancy and sales and use taxes.

ENVIRONMENTAL DETERMINATION:

Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

The Council could choose to not approve budget adjustments or designated unassigned fund balance to the various reserve funds, but that is not recommended.

DISCUSSION:

Purpose and Value of Periodic Budget Updates
The City’s fiscal year spans July 1 to June 30 and currently uses the annual budget model.

Budgets are a compilation of estimates (i.e., about economics, programs, projects, service demands, emergencies, etc.) and such estimates are based upon information known at the time the budget is developed. A critical feature of effective governance, transparency, and financial management is budget monitoring and reporting. This FY21/22 update reflects information known about halfway through the fiscal year (from July 2021 to January 2022) and this helps plan for the upcoming FY22/23 budget and the five-year forecast.

City Manager’s Overview and Take-Away
This is a “good news” mid-year budget report. The City’s current unassigned balance has risen to $6,472,823. Our unassigned balance for June 30, 2022, based on present revenue projections will be $5,871,350. The main contributing factors for these surpluses are Hotel tax (Transient Occupancy Tax) and Sales Tax exceeding our budget projections, as well as continued underspending in our operational accounts.

The analogy to a rollercoaster ride comes to mind when reflecting on the City’s challenges caused by the current pandemic. Starting in March 2020, the area’s economy suffered devastating losses resulting in local business closures and layoffs of thousands of employees. Since then the State Auditor’s Office has publicly recognized the City of Monterey’s revenue losses as among the 11th hardest hit in the State of California1. The largest losses were in the hotel and restaurant sector – causing the City to lose about $32 million in revenues. The Monterey County Convention and Visitors Bureau reports that in 2020 countywide losses were around $1.9 billion and $1.8 billion in 2021 when compared to the pre-pandemic data from 2019. Through 2022 the cumulative losses are estimated to be about $2.9 billion.

The City Council’s timely decisions made during the early stages of the pandemic ensured that Monterey remained a fiscally solvent, safe, operational, and caring City. Measures included defunding of NCIP and CIP projects, elimination of 102 full-time positions including 72 full-time employees, general budget reductions, and the use of reserve funds. Additionally, the City allocated $1M of City funds toward non-reimbursable small business grants as well as funded an emergency rental assistance program, which was the first one in the County and also included a regional component. More than $950,000 in rental assistance was provided before other State1 “Impact of COVD-19 ON CITY REVENUES, http://www.auditor.ca.gov/local_high_risk/covid-19/impact.html Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 3, Packet Page 46 funded programs came online.

In June 2021, our Council approved budget message spoke about the “wisdom of our sales and hotel tax measures”,2 which passed with large voter approvals. The tax measures were necessary to address a projected multi-year budgetary deficit caused by a variety of factors including pension debts, the need to reinvest into our aging infrastructure, and costs to maintain existing service levels. Citizens voted with a wide margin to increase the sales tax and transient occupancy tax (hotel tax) to bridge the growing gap between revenues and expenses that were climbing each year.

While the economic recovery, specifically the hospitality industry, is starting to move forward, the City is beginning to see the benefits of decisions that were made that are helping to speed up Monterey’s recovery. Businesses across town are starting to see a strong return of residents and visitors while also facing higher costs in providing services and goods. For instance, the City’s data indicates that a majority of businesses on Fisherman’s Wharf have exceeded their gross sales from the pre-pandemic year in 2019. Similarly, restaurants in Old Monterey and Cannery Row have seen impressive revenues as residents and visitors enjoyed the outdoor dining opportunities provided by the City’s successful no-fee sidewalk dining policy. Hotels have benefitted from strong visitor numbers amplified by their current ability to charge (and receive) higher daily room rates.

The reopening of the Monterey Bay Aquarium has provided an additional significant boost for our economy.

Our sales tax analysis reveals that residents and visitors are enjoying shopping again in brick-andmortar stores – a statewide trend.

Yet, the City has not yet recovered from the devastating losses it suffered during the early stages of the pandemic. Funding from the American Rescue Plan Act for $6.5M only offset the City’s $32M in losses by less than 20%. The City allocated this funding into its revenue accounts to balance the budget in June 2021. Subsequently, the reopening of the library, senior center, sports center, and the restoration of other service levels can be retraced to this federal program, which remains unique in its recognition of not just private enterprises but also public employers.

Since the massive layoff of 72 full-time employees and the elimination of 102 positions, the City has rehired about 35 employees in various departments and divisions including Library, Recreation, Sports Center, Conference Center, Parking, and Housing.

The word ‘inflation’ has returned in our fiscal discussions and needs to be considered once again.

It is our view that the current inflation is caused by three main factors, which are shortages caused by the supply chain issues, higher labor costs due to a shortage of employees returning to previous places of work, and rising energy prices caused by our traditional suppliers, as well as Russia’s recent invasion of Ukraine.

Sound fiscal management practices suggest that unanticipated one-time revenues should be used for one-time uses rather than for recurring operational expenses. Furthermore, the City has not been able to adequately address its ballooning pension liability and the long-term needs of City facilities, technology, and infrastructure. As such, City staff is proposing to start funding pension liability and necessary facility/infrastructure funds, in addition to restoring the Fund for Economic Uncertainty.
2 City of Monterey Operating Budget for Fiscal Year Starting July 1st, 2021, page 11.

Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 4, Packet Page 47 Staff is proposing continuing on our path of achieving fiscal health by allocating $6.5M of the unassigned balance to fiscal reserves and reducing the encumbrances by $700K. Even after that allocation and, as part of continued economic recovery, we still expect an unassigned balance of $5.9M by June 30, 2022. These include:
 Fund for Economic Uncertainty: $2.51M
 Pension Reserve Fund: $1M
 Sports Center Reserve Fund: $750K
 Conference Center Reserve Fund: $750K
 Technology Infrastructure Fund: $1.5M
 Sea Level Rise Resiliency Reserve (Tidelands Fund):$500K Fund for Economic Uncertainty
The proposed mid-year budget adjustments include recommendations to restore or create new reserve funds addressing the needs expressed in our tax measures. We learned that our fund for economic uncertainty, while funded at the required level of 16.6% of the General Fund, did not provide us with sufficient cover to face a prolonged disaster such as the pandemic. We propose using $2.5 million of the unassigned balance to not just restore the fund, but to raise it to $14.76M (18% of the General Fund expenditures). This would take place in March 2022.

Pension Reserve Fund
New is the proposal to allocate funding to a new pension reserve fund. The council and public have many times suggested using opportunities such as this to get ahead of pension obligations by creating a funding stream in addition to the year-to-year allocations from our annual budgets. The City of Carmel-by-the-Sea did this and we propose to follow their example. We propose a starting capital of $1 million be allocated to this reserve, which is one small step towards addressing the City’s current Unfunded Actuarial Accrued Liabilities (UAAL) of $173 million. On March 15, 2022, our actuarial consultants at Bartel Associates will bring a presentation to provide more information on our overall unfunded pension liabilities and provide different options including the possibility of creating a funding option via a Section 115 fund. Staff will later return with a proposal on how to which option to employ to utilize the funding. This would take place in March 2022.

Facility Reserves for Sports Center and Conference Center The Sports Center and Conference Center require periodic and visionary reinvestments. A total of $1.5 million ($750K per facility) should be allocated to both facilities to replenish the reserves. This would take place in June 2022.

Technology Infrastructure Fund
The City’s success in remaining open and functioning during the COVID-19 pandemic was made possible through the City’s ability to provide technology solutions to our employees and residents.

Other cities in our county struggled to switch to telecommuting and remote operations, while the City managed to facilitate City staff working remotely based on its existing and new IT infrastructure is a costly and necessary tool for 21st-century city operations. The City’s projected technology replacement costs for the next fiscal year are at least $2.8 million. As part of this report, City staff propose to create a “Technology Infrastructure Fund” reserve and to fund it with $1.5 million. This would take place in March 2022.

Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 5, Packet Page 48 Sea Level Rise Resiliency Reserve (Tidelands Fund)
Sea level rise is a threat to Monterey’s economy and to our residents living in the coastal zone, which could be potentially wiped out in less than 30 years. Our flourishing businesses in the coastal zone, including our wharves, are contributing to the tideland funds. City staff proposes creating a new dedicated “Sea Level Rise Resiliency Reserve” within the Tidelands Fund using revenues from the tideland areas to help current and future City leaders to address necessary measures to respond to the changes in the tidelands caused by climate change. We propose to allocate $500,000 within the Tidelands Fund for the Sea Level Rise Resiliency Reserve. This would take place in March 2022.

Restoring Key Positions and Maintaining a High-Quality Workforce The most critical part of Monterey’s response to the challenges of the pandemic has been our workforce. Monterey’s employees stepped up to the challenges by continuing to serve our residents and businesses. Even through the massive layoffs, our team provided first-class and responsive services ranging from public safety to public works and from code compliance to community development. This mid-year proposal addresses some of the next necessary fiscal steps, which will allow us to remain a highly responsive and responsible workforce.

On the personnel side, Staff proposes to restore two key positions in the Parks and Recreation Department. These two (2) full-time positions (Sports Coordinators) and additional part-time positions are necessary to organize and restore many recreation programs. We know that our community enjoys and depends on meaningful programming during school breaks and throughout the year. Summer camps at the Sports Center, at Whispering Pines, and Camp Quien Sabe plus many other programs need to be offered and restored upon return of our customers/participants.

Bringing customers back to our recreational programs and Sports Center will further increase our ability to refill previously laid-off positions.

We propose to restore two (2) Police Officer positions. This funding is necessary to ensure that Monterey remains competitive in the recruiting markets for graduates coming from the police academies.

Lastly, the City’s bargaining agreement with all seven bargaining groups is up for renewal. The mid-year budget proposal addresses the one-time revenues as a starting point to fiscal health and solvency. Following the mid-year budget report and actions, staff will project future revenues including necessary investments into maintaining and retaining a high-quality city workforce as stated by one of the Council’s value drivers.

Audited financial statements versus budgetary reports.

Under generally accepted accounting principles (GAAP), certain transactions are accounted for differently in the audited financial statements than in the city budget (e.g., depreciation of fixed assets, payment of debt principal, the market value of investments, non-spendable fund balance, etc.). Therefore, there may be some differences between how the audited financial statement and the City budget document categorize and characterize certain revenues, expenditures, and fund balance.

Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 6, Packet Page 49 Second Quarter FY 21/22 Financial Update
In June 2021, Council adopted the FY 21/22 budget. That FY 21/22 approved budget estimated an operating surplus of $0.2M and 6/30/2021 estimated unassigned (“available”) fund balance of $2.3M. With budget monitoring and new information now known, the FY21/22 budget is updated and presented below. An important outcome is reaching the Economic Uncertainty Reserve goal of 16.6%, which is included in this proposal.

As shown in Table 1, the General Fund FY21/22 estimated revenue ($87.3M) is sufficient to pay for operating expenditures ($82.0M). Taking into consideration all expenditures and transfers (for debt service and capital improvement program), the FY21/22 estimated surplus is $3.81M, which is $5.06M greater than the adopted budget. One-time savings in the unassigned (“available”) fund balance will be used to fund various reserve funds.

Table 1 - FY21/22 General Fund Budget Update
General Fund ($ million) Amendments
FY21/22
Amended
Budget
Revenue $8.31 $87.3
Expenditure 2.60 82.0
Revenue Over/(Under) Expenditure 5.71 5.3
Transfer In 0.7
Transfer Out Other -0.1
Transfer Out Debt Service -0.5
Transfer Out Capital Improvement Program -1.5
Net Transfer (Use) 0 -1.5
FY21/22 Estimated Surplus/(Deficit) $5.71M $3.81M
Table 1A - FY21/22 General Fund Budget Update (Details) General Fund
FY21/22
Adopted
Budget Amendments
FY21/22
Amended
Budget @
12/31/2021
Proposed MidYear Budget
Amendments
FY21/22
Amended
Budget
Revenue

$79,019,196 $79,019,196

$8,306,524

$87,325,720
Expenditure $78,752,988 $652,181 $79,405,169

$2,595,339

$82,000,508
Revenue Over/(Under) Expenditure

$266,208 $(652,181)

$(385,973)

$5,711,185

$5,325,212
Transfer In

$658,715 $658,715

$658,715
Transfer Out Other

$(127,476)

$(127,476)
Transfer Out Debt Service

$(541,689)

$(541,689)
Transfer Out Capital Improvement
Program

$(1,500,000) $(1,500,000)

$(1,500,000)
Net Transfer (Use)

$(1,510,450) $0 $(1,510,450) $0

$(1,510,450)
FY21/22 Estimated
Surplus/(Deficit)

$(1,244,242) $(652,181) $(1,896,423)

$5,711,185

$3,814,762
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 7, Packet Page 50 For budgetary purposes, as shown in Table 2, the estimated budgetary fund balance as of 6/30/2021 is $26.7M with Economic Uncertainty Reserve at $12.2M or 15% of General Fund Expenditure or said differently, the reserve may provide less than 2 months of General Fund operations. The “capital project” balance of $2.0M is for current CIP projects, and “other designations” include $2.7M. “Encumbrances” represents the open purchase order commitments (e.g., for current contracts with balances). One-time prior year savings known as “Unassigned” is estimated to be $6.5M due to the positive results of tax measures put in place before the pandemic that are starting to show fruits.

Also shown in Table 2 is the estimated budgetary fund balance as of 6/30/2022 of $34.8M with Economic Uncertainty Reserve at $14.8M or 18% of General Fund Expenditure. The “capital project” balance of $2.0M is for current CIP projects and “other designations” include $2.5M. “Encumbrances” represents the open purchase order commitments (e.g., for current contracts with balances). This amount has been decreased to account for completed projects as well as closed purchase orders aged longer than two (2) years without any activity. Consistent with prior Council action, unassigned fund balance has been previously used for gap funding, unanticipated costs, and some capital projects. Also shown are the effects of the newly proposed special purpose reserve with one-time contributions to be implemented at the close of FY21/22. After the initial funding to these reserve funds, the unassigned fund balance is projected to have a balance of $5.9M to address any unanticipated costs.

Table 2 - Estimated Unaudited Fund Balance June 30
General Fund Balance Estimated June 30 ($ million)
6/30/2021
(Audited)
6/30/2022
(Estimated)
Non-spendable $4.5 $3.4
Committed, Assigned, Unassigned 26.5 31.5
Fund Balance - June 30 estimates 31.0 34.8
Budgetary Fund Balance" or Committed, Assigned, Unassigned Economic Uncertainty Reserve 12.2 14.8
Capital Projects (ongoing) 2.0 2.0
Other Designations 2.5 2.5
Encumbrances 3.3 2.1
Conference Center Facilities Reserve 0.1 0.8
Sports Center Facilities Reserve 0.1 0.9
Pension Reserve 0.0 1.0
Technology 0.0 1.5
Unassigned 6.5 5.9
Budgetary Fund Balance" or Committed, Assigned, Unassigned $26.7M $31.5M Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 8, Packet Page 51 FY21/22 Budget Adjustments
Overall as of the mid-year point at December 31, 2021, the General Fund revenues are performing well. There are some accounts that, as expected are underperforming but others that have already surpassed the projection by over 100% at mid-year. The sales tax and transient occupancy tax measures that were put in place before the pandemic are starting to show up in terms of increased revenue projections. With budget monitoring and new information known now, the FY 21/22 budget is updated and Staff requests the budget adjustments shown below.

General Fund Revenue adjustments of $8.3M are attributable to:
 Increase in Sales and Use Taxes of $2,758,246
 Increase in Transient Occupancy Tax of $2,803,500
 Increase in Franchise Fees of $210,000
 Increase in License and Permits of $74,000
 Increase in Fines and Forfeitures of $20,500
 Increase in Intergovernmental of $1,578,072 ($1,564,072 is Fire Service Reimbursements)  Decrease/Reclass in Interest Income to Other Revenue - Loan Repayment of $336,149  Increase in Fees and Charges of $429,717
 Increase in Other Revenues of $768,638 ($477,051 is loan repayment from the Parking Fund) TABLE 3 - GENERAL FUND FY 2021/2022 BUDGET

AMENDMENT
REVENUE ($ MILLION) Amendments
FY 21/22
Amended
Budget
1 Property Taxes $0.00 $12.99
2 Sales and Use Taxes 2.76 14.41
3 Transient Occupancy Taxes 2.80 20.36
4 Business License 3.45
5 Utility Users Taxes 3.61
6 Other Taxes 0.49
7 Franchise Fees 0.21 2.54
8 License and Permits 0.07 1.30
9 Fines and Forfeitures 0.02 0.23
10 Intergovernmental 1.58 9.32
11 Interest Income -0.34 0.45
12 Rents 2.38
13 Fees and Charges 0.43 13.88
14 Other Revenues 0.77 1.91
TOTAL REVENUES $8.31M $87.33M
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 9, Packet Page 52 TABLE 3A - GENERAL FUND FY 2021/2022 BUDGET AMENDMENT (DETAILS) REVENUE ($ MILLION) Amendments
FY 21/22 Amended
Budget
1 Property Taxes $0 $12,990,419
2 Sales and Use Taxes $2,758,246 $14,411,031
3 Transient Occupancy Taxes $2,803,500 $20,364,132
4 Business License $0 $3,451,367
5 Utility Users Taxes $0 $3,614,736
6 Other Taxes $0 $492,727
7 Franchise Fees $210,000 $2,541,103
8 License and Permits $74,000 $1,300,715
9 Fines and Forfeitures $20,500 $230,500
10 Intergovernmental $1,578,072 $9,317,764
11 Interest Income ($336,149) $450,255
12 Rents $0 $2,376,075
13 Fees and Charges $429,717 $13,877,352
14 Other Revenues $768,638 $1,907,544
TOTAL REVENUES $8,306,524 $87,325,720
General Fund Expenditure adjustments of $2.49M are attributable to:
 Increase in City Manager’s Office of $114,000 to account for the implementation of district-based elections and updates to the ADA Transition Plan
 Increase in Community Development of $5,000 to account for training  Increase in Finance of $15,000 to account for equipment (sealer) for check runs, $170,500 for Contractual services for Cannabis implementation consulting services, $50,000 for TOT Audit Administration, Records Destruction $9,000, Pension Liability Consultants $10,000 and Other $8,500  Increase in Fire of $1,054,695 for overtime, $244,589 for salaries and contractual services, $51,250 for other expenses, (This is offset by an increase of $1,564,072 in revenue)  Increase in Library of $30,000 for professional recruiters  Increase in Police of $187,220 to unfreeze two police officer positions. The cost is for the remainder of FY 21/22.
 Increase in Parks & Recreation of $185,372 to account for window replacements, printing, and part-time temporary salaries. These costs are offset by a $200,000 increase in fees collected for sports center programs. Increase in salaries and benefits of $105,101 for reclassification of two RPT positions into two Sports Coordinator positions. The cost is for the remainder of FY 21/22. Increase $25,000 for consulting services.
 Increase in Public Works of $204,148 to account for contracts, dehumidifier repair costs, and HVAC repairs. The majority of costs are offset by a reduction to other accounts  Increase in Non-Department of $20,000 for replacement of credit card processing service terminals Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 10, Packet Page 53 EXPENDITURES ($ MILLION) Amendments
FY 21/22
Amended
Budget
1 City Council/ Mayor 0.12
2 City Attorney 1.21
3 City Manager 0.11 1.19
4 City Clerk 0.46
5 Communications & Outreach 0.26
6 Community Development 0.01 3.75
7 Conference Center 3.86
8 Finance 0.26 3.37
9 Fire 1.45 24.65
10 Human Resources 0.92
11 Non-Dept. 0.02 0.72
12 Library 0.03 2.42
13 Police 0.19 19.75
14 Public Works- Engineering 0.20 7.27
15 Parks & Recreation 0.33 12.06
TOTAL EXPENDITURES $2.60M $82.00M
EXPENDITURES Amendments
FY 21/22
Amended
Budget
1 City Council/ Mayor $ - $ 118,650
2 City Attorney $ - $ 1,211,773
3 City Manager $ 114,000 $ 1,185,092
4 City Clerk $ - $ 462,333
5 Communications & Outreach $ - $ 259,261
6 Community Development $ 5,000 $ 3,754,273
7 Conference Center $ - $ 3,855,412
8 Finance $ 263,000 $ 3,371,107
9 Fire $ 1,446,498 $ 24,647,653
10 Human Resources $ - $ 920,451
11 Non-Dept. $ 20,000 $ 722,677
12 Library $ 30,000 $ 2,420,845
13 Police $ 187,220 $ 19,745,440
14 Public Works- Engineering $ 204,148 $ 7,268,934
15 Parks & Recreation $ 325,473 $ 12,056,606
TOTAL EXPENDITURES $ 2,595,339 $ 82,000,508
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 11, Packet Page 54 Department Name
Original Budget
FY 2021-2022
Budget
Amendments
Adjusted
Budget
FY 2021-2022
Proposed Mid-Year
Budget
Amendments
FY21/22 Amended
Budget
City Council/ Mayor $ 118,650 $ - $ 118,650 $ 118,650
City Attorney $ 1,212,072 $ (299) $ 1,211,773 $ 1,211,773 City Manager $ 1,071,391 $ (299) $ 1,071,092 $ 114,000 $ 1,185,092 City Clerk $ 473,968 $ (11,634) $ 462,333 $ 462,333
Communications
& Outreach $ 259,410 $ (150) $ 259,261 $ 259,261
Community
Development $ 3,565,798 $ 183,475 $ 3,749,273 $ 5,000 $ 3,754,273 Conference Center $ 3,669,482 $ 185,931 $ 3,855,412 $ 3,855,412 Finance $ 3,109,373 $ (1,266) $ 3,108,107 $ 263,000 $ 3,371,107 Fire $ 23,207,639 $ (6,485) $ 23,201,155 $ 1,446,498 $ 24,647,653 Human Resources $ 921,017 $ (566) $ 920,451 $ 920,451
Non-Dept. $ 702,677 $ - $ 702,677 $ 20,000 $ 722,677
Library $ 2,376,407 $ 14,438 $ 2,390,845 $ 30,000 $ 2,420,845 Police $ 19,560,159 $ (1,939) $ 19,558,220 $ 187,220 $ 19,745,440 Public WorksEngineering $ 6,762,549 $ 302,237 $ 7,064,786 $ 204,148 $ 7,268,934 Parks & Recreation $ 11,742,397 $ (11,263) $ 11,731,133 $ 325,473 $ 12,056,606 Total $ 78,752,988 $ 652,181 $ 79,405,169 $ 2,595,339 $ 82,000,508 Other Funds
 Risk Management Fund – Increase appropriations for the increase in costs of liability insurance premium ($714,662) and Court Costs & Litigation fees ($279,251). Make appropriate adjustments in the budget for the two divisions due to the transferring of all Risk Management duties from the Finance Department to Human Resources at the mid-year point. It is appropriate to adjust and transfer budget amounts to cover the expenses in Finance and provide increases moving forward in the HR accounts.
o Increase Expense accounts
 Account 110-4219 by $404,262
 Account 110-4411 by $1,731,124
o Decrease Expense accounts
 Account 060-4219 by $125,000
 Account 060-4411 by $1,016,462
 ISD - Technology Infrastructure Fund – Increase appropriations and revenues for ongoing projects as follows:
o Decrease Expense Accounts by $218,074
 Account 4201 by $300
 Account 4202 by $204,529
 Account 4203 by $365
 Account 4208 by $1,940
 Account 4222 by $8,300
 Account 4240 by $2,475
 Account 4274 by $165
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 12, Packet Page 55 o Increase Expense Accounts by $1,306,492
 Account 4205 by $1,105
 Account 4220 by $478,879
 Account 4238 by $6,401
 Account 4424 by $38,954
 Account 4505 by $781,153
o Taking into consideration there is an existing revenue surplus in the current year of $629,989, the net increase in appropriations is $458,430.  Library Trust Fund – Increase FY21/22 Revenues by $98,100 to account for Contributions and other fees. Net increase in expenses of $3,746.
 Asset Seizure Fund – Increase FY 21/22 Appropriation by $10,000 to purchase equipment.

Increase account 292-210-2120-4502. The offset will be to the Fund Balance.  Marina Fund – Increase FY 21/22 Appropriation by a total of $72,995 to account for:
o 600-310-3310-4268 for vessel abatement cost of $10,000, o 600-310-3320-4265 for Marina dredging cost of $12,567, o 600-310-3320-4263 for Harbor workboat O&M cost of $12,000, and o 600-310-3320-4505 for Water value/line & sidewalk repair cost of $38,428 o The offset will be to Fund Balance
 Tidelands Fund – Increase FY 21/22 Appropriation by $85,653 to account for:
o 807-310-3420-4250 for repairs to 3 storm damaged docks at a cost of $70,653 o 807-310-3420-4251 for crane service for piling repairs at a cost of $15,000 o The offset will be to Fund Balance
 Neighborhood Improvement Fund – Increase FY21/22 revenue by $534,000 for the expected increase in Transient Occupancy Tax.
 Street Infrastructure Rehab (Measure P & S) Fund – Increase FY21/22 revenue by $1,564,247 for the expected increase in Sales and Use Taxes.

Establishing and Maintaining City Reserve Funds
In alignment with the City’s Mission and Value statement. Restore and establish City reserves at levels that provide fiscal resiliency and the ability to address various economic and natural disasters. The City previously estimated the unassigned fund balance at June 30, 2021, to be $2.3M. The audited financial report for FY 2020/2021 reports the unassigned fund balance at $6.47M. With the loss of revenue from the pandemic, we recognize the need to have an adequate amount of reserve. Staff is recommending that Council take prior years’ one-time savings to increase this reserve to achieve the policy as well as establish other reserve funds to build safeguards for future fiscal challenges. The Economic Uncertainty Reserve, Pension Liability/OPEB Reserve, and Technology Infrastructure Reserve are expected to be funded at the approval of this amendment.

For fiscal prudence, other reserve funds will be established upon approval of this amendment, however, the funding dates and amounts will vary based on the balance in the unassigned fund balance at June 30, 2022. The implementation date for all approved reserved accounts is June 30, 2022.

Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 13, Packet Page 56 Economic Uncertainty Reserve
The City Economic Uncertainty Reserve policy targets a 16.6% reserve, which is a percentage of the General Fund operating budget. Staff recommends designating an additional $2.51M into the Economic Uncertainty Reserve, bringing the balance to $14.76M, which is 18.0%. This would thereby reduce the General Fund Unassigned fund balance to $4.0M as of the Mid-Year Review (March 2022).

Pension Liability/OPEB Reserve
Establish a Pension Reserve Fund to address the unfunded Pension Liabilities and Other Post Employment Benefit (OPEB) Liability. Each year, the city is required to pay contributions into the CalPERS retirement system. The contribution amount to be remitted is an actuarial-based calculation provided by CalPERS annually. The contributions to fund the pension are comprised of two components, (1) the normal cost and (2) and amortization of the Unfunded Accrued Liability (UAL). The Normal cost is a percentage of the total active payroll. The percentage in recent years ranging from 10% - 12%. The UAL is the present value of future employer contributions for service that has already been earned.

The contribution for the 2021-22 fiscal year is $13,643,792 and is projected to be $14,987,092 for the 2022-23 fiscal year.

The Pension Liability for the Miscellaneous group is $286,266,464 reduced by the Net Position in the Fiduciary Plan of $191,691,676, leaving an unfunded balance of $94,574,788. The Pension Liability for the Safety group is $213,929,917 reduced by the Net Position in the Fiduciary Plan of $143,295,880, leaving an unfunded balance of $70,634,037. The Other Post-Employment Benefits (OPEB) Liability is $13,520,043 reduced by the Net Position in the Fiduciary Plan of $5,034,811, leaving an unfunded balance of $8,485,232. The City’s total Pension and OPEB Liability is at $173,694,057 as of the last actuarial date of June 30, 2020. Staff proposes to start with an initial contribution of $1M to be implemented and funded at Mid-Year.

Technology Infrastructure Reserve
Establish a Technology Infrastructure Reserve Fund to begin fulfilling the City’s desire is to drive innovation through technology and business solutions that enhance productivity and effectiveness for staff, as well as customer service for the public. The City currently has more than $2.8M in technology projects that have to be implemented in the 2022-23 fiscal year. Further, we are estimating an additional $1.5M to replace the soon-to-be-obsolete and unsupported financial software system. The new system is anticipated to be acquired in FY 2023 and fully implemented within the next 18 months. Start with an initial contribution of $1.5M at Mid-Year with up to an additional $1M to be appropriated by June 2022 depending upon year-end actuals.

Sports Center Facilities Reserve
Replenish the existing Sports Center Facilities Reserve Fund. Create a policy to fund 10% annually of outstanding deferred facilities maintenance costs. Start with an initial contribution of $750K to be funded from the current Unassigned Fund Balance and implemented by June 2022.

Conference Center Facilities Reserve
Replenish the existing Conference Center Facilities Reserve Fund. The target is $10M over the next 8 years. Start with an initial contribution of $750K to be funded from the current Unassigned Fund Balance and implemented by June 2022.

Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 14, Packet Page 57 General Fund Capital Improvement Program Reserve
Contribute the existing Capital Improvement Program Projects Funds on an annual basis as part of the budget appropriations. Amounts will be determined and appropriated during the annual budget preparation.

Sea Level Rise Resiliency Reserve in the Tidelands Fund Establish a Sea Level Rise Resiliency Reserve (Tidelands Fund). Start with a Reserve level target of 25% of revenues collected. Start with an initial contribution of $500K to be implemented by June 2022 provided there are available unassigned funds within the Tidelands Fund. Will revisit amount annually at the close of the fiscal year and determine contribution level based on available fund balance.

Conclusion
This budget update report is an annual routine presentation and the Staff requests Council approve the resolution to authorize budget adjustments and designate portions of the unassigned fund balance to the Economic Uncertainty Fund, Conference Center Facilities Reserve Fund, Sports Center Facilities Reserve Fund, Pension Reserve, Sea Level Rise Resiliency Reserve in the Tidelands Fund, Capital Projects, Technology Infrastructure Reserve Fund as listed above.

Staff feels that these prudent actions will put the City in a stronger fiscal position and begin filling up savings. These actions would honor the citizen-approved tax measures added in 2019 and 2020 based on a fiscal emergency, pre-pandemic; and the council’s value driver of fiscal responsibility.

Attachments: 1. Resolution

2. Exhibit A: Details with account numbers of proposed changes Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 15, Packet Page 58 RESOLUTION NO. __- ___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№12/12
AMEND FISCAL YEAR (FY) 2021-22 BUDGET TO INCREASE GENERAL FUND BUDGET

REVENUES AND APPROPRIATIONS, DESIGNATE FUNDS INTO THE ECONOMIC

UNCERTAINTY RESERVE AND VARIOUS OTHER RESERVE FUNDS, AUTHORIZE OTHER

NON-GENERAL FUND CHANGES, AND UPDATE THE POSITION CONTROL LIST WHEREAS, on June 15, 2021, the City Council adopted Resolution 21-071 adopting the 2021/22 operating budget of the City of Monterey;
WHEREAS, fiscal year 2021/22 General Fund updates were summarized and presented to Council;
WHEREAS, budget adjustments are proposed to reflect information known since budget adoption; and
WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines”), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project.

NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby authorizes the Finance Director to:
1) Amend Resolution 21-071 authorizing changes to the Fiscal Year 2021-22 Budget with Exhibit A attached to this resolution and containing information as required in Section 6.3 of the Monterey City Charter, as amended by the City Council, 2) Make the following FY 21/22 General Fund budget adjustments to increase estimated revenue by $8,306,524 and appropriations by $2,499,375 as itemized in the Exhibit A (attached hereto):

Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 16, Packet Page 59 2 GENERAL FUND FY 2021/2022

BUDGET AMENDMENT
REVENUE ($ MILLION) Amendments
FY 21/22
Amended
Budget
1 Property Taxes $12.99
2 Sales and Use Taxes $2.76 $14.41
3 Transient Occupancy
Taxes 2.80 20.36
4 Business License 3.45
5 Utility Users Taxes 3.61
6 Other Taxes 0.49
7 Franchise Fees 0.21 2.54
8 License and Permits 0.07 1.30
9 Fines and Forfeitures 0.02 0.23
10 Intergovernmental 1.58 9.32
11 Interest Income -0.34 0.45
12 Rents 2.38
13 Fees and Charges 0.43 13.88
14 Other Revenues 0.77 1.91
TOTAL REVENUES $8.31 $87.33
EXPENDITURES ($ MILLION) Amendments
FY 21/22
Amended
Budget
1 City Council/ Mayor $0.12
2 City Attorney 1.21
3 City Manager $0.11 1.19
4 City Clerk 0.46
5 Communications &
Outreach 0.26
6 Community
Development 0.01 3.75
7 Conference Center 3.86
8 Finance 0.26 3.37
9 Fire 1.35 24.55
10 Human Resources 0.92
11 Non-Dept. 0.02 0.72
12 Library 0.03 2.42
13 Police 0.19 19.75
14 Public WorksEngineering 0.20 7.27
15 Parks & Recreation 0.33 12.06
TOTAL
EXPENDITURES $2.50 $81.90
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 17, Packet Page 60 3 3) Designate $2,510,000 into the Economic Uncertainty Reserve (March 2022)

4) Designate $1,000,000 into the Pension Liability Reserve (March 2022) 5) Designate $1,500,000 into the Technology Infrastructure Reserve (March 2022) 6) Designate $750,000 into the Conference Center Facilities Reserve (June 2022) 7) Designate $750,000 into the Sports Center Facilities Reserve (June 2022) 8) Add two (2) Sports Coordinators to the Position Control list 9) Unfreeze two (2) Police Officer positions
10) Make the following FY 21/22 Special Revenue and Internal Service Funds budget adjustments as itemized in the Exhibit A (attached hereto).

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of March, 2022, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 18, Packet Page 61

EXHIBIT A
Fund
Department/
Division Description Account # Revenue Expense
General Fund
City Manager's Office
Contractual Services 101-020-0210-0000-4220 $0 $114,000 Community Development
Training Services 101-400-4400-0000-4222 $0 $5,000
Finance
Contractual Services: 101-110-1110-0000-4220 $239,500
Office Supplies 101-110-1110-0000-4201 $4,000
Printing & Postage 101-110-1110-0000-4203 $3,000
Travel & Meetings 101-110-1110-0000-4209 $1,500
Equipment Outlay - Other 101-110-1110-0000-4505 $15,000 $0 $263,000
Fire Department
State Reimbursement 101-250-2530-3490 $1,564,072
Ficre Service Charges 101-250-2530-3640 $54,879
Overtime 101-250-2530-0000-4102 $1,054,695
Salaries - Full Time, Fire Operations 101-250-2530-0000-4101 $92,589 Travel & Meetings 101-250-2510-0000-4209 $8,250
Salaries - Part Time Temporary, Fire Admin
& Prevention 101-250-2510-0000-4103 $22,000
Contractual Services 101-250-2520-0000-4220 $130,000
Operating Supplies - Public Education 101-250-2520-PBED-4205 $3,000 Minor Fire Fighting Equipment 101-250-2530-EQMT-4229 $40,000 Equipment/Vehicle Replacement 101-250-2530-0000-4601 $95,964 $1,618,951 $1,446,498
Library
Contractual Services 101-550-5510-ADMN-4220 $0 $30,000
Non-Departmental/Other
Equipment Outlay - Other 101-900-9110-0000-4505 $20,000 Sales and Use Taxes 101-900-9110-3060 $1,958,635
Sales and Use Tax Measure G 101-900-9110-3063 $799,611
Transient Occupancy 101-900-9110-3071 $2,803,500
Sanitation Franchise 101-900-9110-3082 $210,000
Tree Permits 101-500-5230-3151 $4,000
Public Works Permits 101-400-4410-3654 $70,000
Other Court Fines 101-210-2110-3220 $12,500
Other Fines 101-110-1110-3290 $8,000
P O S T Reimbursement 101-210-2110-3491 $14,000
Interest Income - Loans 101-900-9110-3313 ($336,149)
Residential Inspection 101-400-4410-3131 $4,800
Room Rentals 101-600-6231-3341 $25,000
Electrical Services 101-600-6231-3347 $25,000
Conference Center 101-600-6231-3351 $85,000
Plan Checking Fees 101-400-4410-3650 $25,100
Other Current Services 101-900-9110-3790 $9,938
Miscellaneous Reimbursments 101-900-9110-3344 $253,587
Special Projects Reimbursments 100-600-6231-3658 ($100,000) Refunds 101-900-9110-3833 $8,000
Other Revenue 101-310-3110-3890 $4,500
Other Revenue 101-400-4400-3890 $92,400
Other Revenue 100-600-6231-3890 $40,900
Other Revenue 101-900-9110-3890 ($7,800)
Loan Repayments 101-900-9110-3898 $477,051
$6,487,573 $20,000
Parks & Recreation
Sports Center Programs 101-500-5180-3743 $200,000
Salaries - Full Time 101-500-5180-0000-4101 $105,101
Salaries - Part Time 101-500-5180-0000-4103 $160,372
Printing and Postage 101-500-5180-0000-4203 $10,000
Contractual Services 101-500-5189-0000-4220 $50,000
$200,000 $325,473
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 19, Packet Page 62 Police Department
Salaries 101-210-2120-0000-4101 $182,220
Investigations Special Sevices 101-210-2140-0000-4234 $5,000 $0 $187,220
Public Works
Contractual Services 101-310-3152-0000-4220 $25,000
Equipment Outlay 101-500-5189-0000-4504 $54,148
Equipment Outlay 101-600-6232-0000-4504 $125,000
$0 $204,148
TOTAL GENERAL FUND AMENDMENTS $8,306,524 $2,595,339

SPECIAL FUNDS, ENTERPRISE FUNDS, INTERNAL SERVICE FUNDS Neighborhood Improvement Fund (216)
Transient Occupancy 216-310-3140-3071 $534,000
Street Infracture Rehab (Measure P & S) (252)
Sales and Use Taxes 252-310-3151-3060 $1,564,247 $0
Asset Seizure Fund (292)
Police Equipment 292-210-2120-0000-4502 $0 $10,000
Marina Fund (600)
Vessel Abatement 600-310-3310-0000-4268 $10,000
Dredging 600-310-3320-0000-4265 $12,567
Harbor Boat Maintenance 600-310-3320-0000-4263 $12,000
Equipment Outlay - Other 600-310-3320-0000--4505 $38,428 $0 $72,995
Equipment Replacement (708)
Fire Equipment/Vehicle Replacement 708-310-3154-3325 $95,964 ISD Internal Service Fund (710)
Office Supplies 710-030-0340-0000-4201 ($300)
Office Equip Maintenance 710-030-0340-0000-4202 ($204,529) Printing & Postage 710-030-0340-0000-4203 ($365)
Operating Supplies 710-030-0340-0000-4205 $1,105
Dues & Publications 710-030-0340-0000-4208 ($1,940)
Contractual Services 710-030-0340-0000-4220 $478,879
Training Services 710-030-0340-0000-4222 ($8,300)
Service Contracts 710-030-0340-0000-4238 $6,401
Professional Services 710-030-0340-0000-4240 ($2,475)
Alarm Service Charges 710-030-0340-0000-4274 ($165)
Communications 710-030-0340-0000-4424 $38,954
Equipment Outlay - Other 710-030-0340-0000-4505 $781,153 $0 $1,088,418
Risk Management (716)
Court Costs & Litigation 716-060-1143-0000-4219 ($125,000) Court Costs & Litigation 716-110-1143-0000-4219 $404,262 Insurance Premiums 716-060-1143-0000-4411 ($1,016,462)
Insurance Premiums 716-110-1143-0000-4411 $1,731,124
$0 $993,924
Tidelands Fund (807)
Structural Repairs - Wharf #1 807-310-3420-0000-4250 $70,653 Structural Repairs - Wharf #2 807-310-3420-0000-4251 $15,000 $0 $85,653
Library Trust Fund (810)
Library Fees 810-550-5510-3720 $100
Contributions 810-550-5510-3870 $95,000
Library Fees 810-550-5550-3720 $2,000
Sale of Promotional Items 810-550-5550-3841 $1,000
Salaries - Part time temporary 810-550-5510-0000-4103 $14,040 Equipment Outlay - Office 810-550-5510-0000-4501 $13,788 Salaries - Part time temporary 810-550-5510-CHRM-4103 ($8,444) Salaries - Fringe Benefits 810-550-5510-CHRM-4150 $558
Salaries - Part time temporary 810-550-5530-REFE-4103 ($9,486) Salaries - Fringe Benefits 810-550-5530-REFE-4150 $540
Salaries - Part time temporary 810-550-5540-YOUT-4103 ($7,250) $98,100 $3,746
Council Regular Meeting, 3/1/2022, Item No. 5., Item Page 20, Packet Page 63

Monterey City CouncilMarch 1, 2022

Monterey City Council
March 1, 2022