DHS City Council - January 18

The audio recording of this meeting of the Desert Hot Springs City Council is available here.

Closed Session Report

There was one item on the closed session agenda: "CONFERENCE WITH LEGAL COUNSEL – INITIATION OF LITIGATION; Significant exposure to litigation pursuant to subdivision (c) of Section 54956.9: (1 potential case)" The Desert Sun reports that this is about the Wellness & World Music Festival, and that's probably right, but unless somebody is telling tales they shouldn't be, then the Desert Sun doesn't really know.

Attorney Duran said he updated the council and the council provided "partial direction," but "no reportable action" was taken. The session was adjourned, to be continued on "January 24 at 4 PM in City Hall Building 'C'." The agenda for that meeting is available here.

Desert Valley Disposal Update

Bob Kuznick from DVD got up first to say that they are in the process of converting monthly billing to an annual tax roll billing. Future reports from DVD will provide more information about this. Their recycling manager, Chris Cunningham, came to the podium next. Next week, Monday, January 24 through Friday, January 28 is the quarterly bulky item clean-up week. Clean out your house and garage and get the stuff to the curb Monday morning. DVD will take it. No hazardous waste, please.

He said that "the event that's held on Saturdays on Hacienda" is no longer being done. I have no idea what that is, but if you do, it's done with.

Commercial customers can call Mr. Cunningham for a waste audit. He will go through the trash to see if any of it could be recycled, and to make suggestions for waste reduction and bill reduction.

There will be twice-a-year document shredding. The first one will be in April. They haven't settled on a location for that yet, but the details will be in an upcoming newsletter.

They are planning education programs for the elementary schools beginning in the 2011-12 school year.

A food waste collection 6-month pilot program will be organized for some restaurants and large hotels that want to volunteer.

Councilmember Pye asked what was the best way to assure that yard waste is picked up. "32 gallon cans," was the complete answer. After a moment of silence, someone volunteered the explanation "regular size trash cans." Ms. Pye said she tried that, and it didn't get picked up, but she would try again. I have used the 32-gallon can method for yard waste a lot, and it almost always works. Contrary to what one would expect, during the big-item-pickup weeks, yard waste collection can be completely overlooked, it seems, but in other weeks its pretty reliable.

Public Comments

Ed Smith (retired Police Commander Ed Smith) came to the podium. He said he had been honored to work with the city council and staff and that he leaves with mixed emotions. He said he has been part of a winning team for his entire adult life. "I have accepted the invitation to join and work alongside Tresed Ventures on the Wellness & World Music Festival and other future projects," he said. He will work for a quality project here in DHS. He will continue to reside locally. He was involved in the Monterey Jazz Festival, Cannery Row Days, Big Sur Half Marathon, motorcycle events, numerous community gatherings, and festivals "with attendance of a thousand to fifty-thousand." As Police Commander he worked on the logistical, site, traffic, public safety, community partnership plans for the Wellness & World Music Festival. He wants to see a successful event. He's been brought on to Tresed Ventures to close some of the gaps, have some messages delivered, and to be very visible in the Coachella Valley to make the festival work.

George Fisher spoke on behalf of the Emergency Preparedness Committee. The Earthquake Expo will take place February 26 at DHS High School, 10 AM to 2 PM. It will be free for vendors, exhibitors and attendees. For more info call Mr. Fisher at 760-329-2809.

Also, the committee is looking for any CERT-certified people. If you are CERT-certified please call Mr. Fisher at 760-329-2809 or come to the committee meetings on the last Tuesday of every month at 5:30 PM in the Senior Center. CERT classes will be starting in the spring.

Mike Platt, Chief Umpire for DHS Little League, said they are doing signups every Saturday at K-Mart from 10 AM to 3 PM. They are looking for volunteers and sponsors. They are also looking for players for girls softball, ages 9-12. For more info call him at 760-408-4452.

Dot Reed said she was sad to see Ed Smith leave the Police Department, but knowing that he would still be in our community is a great thing. She's very happy about that. January 27 at 6 PM in the Lozano Center in Tedesco Park will be the next DHS Historical Society Soup Supper. The speaker will the sculptor Roger Hopkins. Cost is $15. Soup, salad and bread will be served. Call 760-251-4549 to make reservations.

Cathy Romero and Yolanda Rustad came up to announce plans for Earth Day at Cabot's. It will be April 23. Some of the funds raised at Earth Day will go for restoration of Cabot's and some for the DHS Community Gardens program. They are "strongly considering" adding internationally known recording artists to the event this year. They have partnered with two experienced event producers [this is code for "not Tony Clarke"] who are already communicating with major artists. The partners include Mariah Hanson who has produced the Dinah Shore Women's Party for 20 years. Another partner is Lisa Davis who is a former personal assistant to Diana Ross and Louis Gossett, Jr. She requests a city title sponsorship that will be used to secure an internationally known artist, produce a one-day Earth Day festival, coordinate and secure all logistics, including staging, security, communication, marketing, travel for musicians, and production costs. An attendance of about 2,000 is anticipated. Last year there were 1,400 attendees at Earth Day.

Queen Scheherazade

The Queen and her court were there to introduce themselves and announce the upcoming Riverside County Fair & National Date Festival. They did neglect to remind us when and where it would take place until asked by Mayor Parks, but they probably correctly assumed that we all already knew. It will be February 18 through 27. Ticket prices vary, according to whether you buy in advance or not. But at the gate, simple admission is $5 for kids ages 5-12, $8 for those age 13-54, and $7 for those age 55 and older. OMG! I qualify for the senior rate! The ladies did say that on the first day, February 18, admission is free before 3 PM. The Blessing Of The Dates takes place at 9:30 AM that day. I've never seen that. I wonder if it's as good as the Blessing Of The Fishing Fleet in Provincetown.

Establishing A Fee For City Services - For Drug Incineration

Chief Williams is proposing to acquire the equipment to do proper, legal drug incineration. There are no drug incinerators in Coachella Valley. He said there is one in Long Beach. The security requirements to transport seized drugs to an incinerator are burdensome. The DHS Police would make the drug incinerator available to other proper authorities, so that all of Coachella Valley would be served. But before money can be spent on this, a system of fees has to be established. The fees will be $178 for the first (minimum) 2 hours. Each additional quarter hour costs another $22.25.

Councilmember Matas asked how much the system would cost to purchase. Chief Williams said there is a sole source vendor and the cost is around $4,000. That seems oddly inexpensive to me. At that price, why hasn't some other agency in Coachella Valley done this before? Chief Williams said no agency in Riverside County has one of these!

Approved 5-0.

City Manager's Contract

Mayor Parks started by explaining that there was a committee that looked at City Manager Rick Daniels' old contract and decided a new contract should be written. She said that initially they had proposed a 1% increase in salary for each of the three years he had worked for the city. However, Mr. Daniels said he would not accept an increase. Mr. Daniels verified Mayor Parks' summary, saying that this is certainly not the time for any salary increases.

Councilmember Karl Baker listed many of the city's accomplishments under Rick Daniels' administration. We should already be familiar with all of them. He mentioned the street paving, the park improvements, the Lozano Community Center, fire station upgrades, remodeling the police station, new police computer system, security cameras throughout the city, the SIRE system for agendas and minutes, new sidewalks, emergency generators, improvements to the Senior Center, improvements at Cabot's Museum, the graffiti program.

Mr. Baker said he has received some venomous mail about mistakes. He said that when you hire a new coach for a team with a long losing streak, the new coach may stumble once or twice, "but we have a winner with Mr. Daniels."

Florence Martin came to the podium. She said Karl Baker had stolen her thunder. She spoke in favor of the contract. She described the progress the city has made since she moved here about five years ago: the downtown has a fresh new look, a medical center is under construction, businesses are looking to invest, the police department has expanded. Some credit goes to staff, she said. Some goes to city council. And a lot goes to Rick Daniels. She said some people are saying heads should roll due to a few missteps. "Those people have short memories," she said. "It's easy to avoid mistakes. Just don't do anything." The road to success will have potholes, she said, focus on the good, learn from the bad, and move forward. "Keep Rick Daniels for as long as you can."

Jim Provance came up next. He thanked Rick Daniels for "all the work, effort and dreaming he has given the city." But...he was concerned about the length of this new contract. Due to the economy, we all have to look at our decisions every quarter or six months or every year if we are lucky. The contract "binds the city for over three years." It also commits the next council to what is decided now. The provisions about the City Manager's termination are all one sided, he said. Everything is to Mr. Daniels' benefit. He said that if Mr. Daniels decided to quit, the contract does not require him to pay for the cost to find his replacement.

Carson Parlen said he was opposed to the contract for these reasons: the timing for a long term commitment couldn't be worse, especially with the severance clause. Some of Mr. Daniels' initiatives have cost us significant amounts of money. The results of the downtown redevelopment plan have not yet been determined, he said. The prudent course would be to wait and see how this turn out. Mr. Daniels is already "well compensated" and has a strong incentive to stay and see his projects through. It's not fair to impose any city manager on the next council. The severance clause is particularly problematic. "Desert Hot Springs has a dismal record of losing money when city managers leave." He invoked the name of Jerry Hanson. There is no justification for the severance clause or such a long contract.

I want to editorialize about this "problem" of imposing a city manager on future city councils with a "long" contract. The only solution to this problem, in those critics eyes, would be contracts that never exceed two years. The position of city manager would become politicized, as his job security depended on re-electing the incumbents; transforming him into little more than a lackey of the current city council. Some city councils that want to micromanage city staff like to have city managers who are mere servants. Contracts that extend longer than two years increase the stability of city government and avoid the politicization of the city manager's position.

Next up, Gabriel King. He concurred with Mr. Parlen. He said he considers Mr. Daniels a friend. The contract is too long. "The golden parachute is pretty golden." There are a lot of mistakes made in the past that have cost the city enormously. Taking a cue from Robert Bentley, perhaps, Mr. King said it would be nice if the Mayor looked at him as he spoke, but she didn't have to. He cited the Pink Flamingo. "Money given to a P O Box." "$9 million given in bonds returned for pretty much worthless liens on the Skyborne project." The half of the temple building that has not been torn down hasn't been inspected but it is structurally unsafe. "We need to slow this thing down." He said this is being rushed through. He invoked the name of Jerry Hanson. "We can make this thing equitable. We can make it more incremental." "It's fair to everybody that we can give Rick something that will save face for him and that he'll be happy with, but the same time not tie us down for such a long time." There are more egregious errors this time than last time. He asked the city council to continue the item.

Donn Sholty said Mr. Daniels is very easy to get ahold of, easy to work with, and he listens to everything you say. And he hopes he serves for many more years. He has a problem with severance packages, however. He has not really heard about this contract. [I have posted information on the contract itself here.] His assistant [Laura Green] left with a lot of money, and that has bothered Mr. Sholty. He would really want to understand the severance package before this is approved.

Councilmember Matas said this had not been a rushed process. The city manager contract has been a 6-month long process. It was released to the public as soon as possible, which was the Thursday before the city council meeting.

He recalled how he and Mary Stephens knew that Rick Daniels was the man for Desert Hot Springs when they were part of the search committee more than three years ago. "If you can say - if you can really stand at that podium and say today Desert Hot Springs is not a better place in the last almost four years that he's been here, then shame on you. Shame on you."

Mayor Parks asked Mayor Pro Tem Betts if he had any comments. Mr. Betts said he would wait until there's a motion on the floor.

Councilmember Pye explained the severance clause. She said that she and the Mayor (as the subcommittee) approached writing the new contract as "What type of contract would we present to a person who is applying for the position of City Manager?" If we lose Mr. Daniels, what kind of contract would we offer to whet the appetite of the next applicant?

The City Manager cannot spend more than $30,000 without approval of the city council, Ms. Pye went on to explain. So, with respect to the Flamingo, the former temple, and the Wellness festival, City Manager Rick Daniels was following the policy established by the city council. So if you think those decisions are wrong, the finger needs to be pointed at the city council.

She also pointed out that according to the contract Mr. Daniels can make himself head of more than one department in the city, but he doesn't get any more money for doing so.

His old contract required the city to provide him an administrative assistant. That's not in the new contract.

Rick Daniels has not received a raise since he began with the city, Ms. Pye said. She said that the provisions in the new contract for a possible raise and a possible bonus are both contingent upon the availability of funds. Any increase or bonus would have to be discussed and approved by the city council in open session.

Some person who may want to be our city manager in the future would not likely find a one-year contract to be attractive.

I don't think that at any time during the council session the provisions of the severance clause were made 100% brilliantly clear, although many people talked about them. So here's my attempt:

HOW IT ENDS	SEVERANCE PAY?	OTHER DETAILS
C.M. Resigns	NO severance pay	He has to give 60 days notice.
C.M. is fired "without cause"	Severance pay of 1 year salary plus health benefits	No explanation is required. The ballot box is the only recourse for the citizens.
C.M. is fired "with cause"	NO severance pay	The C.M. gets a public hearing before the City Council. Here is the list of reasons for which the C.M. may be fired: Willful violation of administrative policies and procedures; Failure to properly perform assigned duties; Theft of City property; Insubordination; Conviction of a felony, or conviction of a misdemeanor relating to Daniels' fitness to perform assigned duties; Unauthorized absence from employment; Failure to maintain satisfactory working relationships with other employees or the public as directed by the City Council; Reporting for work, or being at work, under the influence of or in possession of alcohol or non-prescribed controlled substances; Improper use of City funds; Unauthorized use of City property; Willful misconduct or malfeasance; Other failure of good behavior either during or outside of employment such that the employee's conduct causes substantial discredit to the City. Other.
Conclusion of contract	NO severance pay	Gets a hearty handshake.

What reasons might a city council have for firing a city manager "without cause?" Personality conflicts, maybe. Or perhaps some god-like figure appears who wants to be our city manager and whose political and management stature is so overwhelming we simply can't say no. I'm thinking of a situation where somebody like Abraham Lincoln rises from the grave and wants to run the City of Desert Hot Springs. Could we say no? Otherwise, any substantial reason to fire a city manager should fit into that list of defined criteria above, unless the city council has a 3-coward majority that is willing to spend city money to hide their cowardice. That's what it would come down to. Would we ever again (I'm sure we've done it in the past) elect a city council that wouldn't have the fortitude to stand up and state the reasons for firing a city manager? Maybe we can seek that promise from candidates in the upcoming elections: "I will not vote to fire Rick Daniels 'without cause.'"

Councilmember Baker said he forgot to list Operation Falling Sun among the accomplishments of City Manager Daniels. He said we've had balanced budgets, and we still have a balanced budget. Staff has been reduced, but the police department has grown. "Now, these missteps," he said, "the opera ain't over 'til the fat lady sings." We don't know yet if any of these are truly missteps. The only time the severance pay kicks in is if the city council dismisses him "without cause." He wishes that the city weren't saddled with some of the things it's saddled with. PERS is an example of that. But as long as it exists, it must be offered to the employees in order to retain them. Reforms need to be looked at.

Mr. Baker moved to accept the contract as written. Mr. Matas seconded that.

Mayor Pro Tem Betts offered an amendment to strike item "e" on page 6. That's the item dealing with a possible bonus:

e. The City Council shall, within 60 days of entering into this Agreement, provide Daniels with a list of goals and objectives for Daniels to work towards during the first twelve (12) months of this Agreement. Once the City Council has established the goals and objectives, this Agreement shall be amended to set forth the goals and objectives. Upon conclusion of the twelve (12) month period, the City Council shall review ("Annual Review"), with Daniels, Daniels' performance and progress with respect to the agreed-upon goals and objectives. Daniels may be eligible for a bonus based upon Daniels' achievement of those goals and objectives. Following each Annual Review, City Council shall update the list of goals and objectives for Daniels' subsequent twelve-month period, amend this Agreement, and conduct the Annual Review of Daniels as set forth above.

He said this represents an undefined step. He said it wasn't consistent with what had been previously discussed. He said that the goals and objectives mentioned in item "e" need to be "hammered down and settled upon and that we need to know exactly what those goals and objectives are going to be." He said it was not his recollection that this "contingent" would be in this contract. He said the amount of money paid in the contract is more than sufficient. There should be no discussion of remuneration in achieving the goals and objectives.

Mayor Parks said she remembers it exactly as written. She said that after setting the goals and objectives, the city council may, at the end of the year, decide to pay a bonus. That decision would have to be approved in an open, public session of the council.

Mr. Baker said he would not accept Mr. Betts's amendment. He said there is no obligation at all in item "e."

Ms. Pye said it will not be hard to deal with the 60 days to establish the goals and objectives. The council already has its strategic plan, we just need to fine tune it. She said we need to think past this contract. She doesn't want to set up bonus that is not contingent upon measurable goals. Someday, she said, times will be better and the city could have plenty of money. She doesn't want the city to spend foolishly then.

Mayor Parks said she and Ms. Pye reviewed past goals set for City Manager Daniels. She said that every year Mr. Daniels met those goals "boomity, boomity, boom." But since the old contract didn't permit any bonuses, none were paid. If the goals are all met and if the city is financially able then the city council may consider a bonus.

Mr. Matas said that at one point during negotiations there was a structure in the contract to pay a bonus, but it was taken because the current state of the economy wouldn't allow the city to be tied to that. This was vetted in multiple closed sessions over multiple months.

Ms. Pye explained that the "negotiations" referred to by Mr. Matas were negotiations between the members of the city council. The council spoke to Attorney Duran, who then negotiated directly with Mr. Daniels.

Mr. Betts asked if his amendment to the motion had died. Mayor Parks said it had.

Attorney Duran had a correction for "EXHIBIT B," the last page in the contract. In the first bullet point it says "Daniels shall receive the same health, vision, dental, retirement and other benefits, including PERS, that are provided to management employees." Mr. Duran said that should say "There will be no change from Mr. Daniels' prior contract with respect to his PERS benefits." He said there is a difference between Mr. Daniels' benefits and those of other management employees.

Mayor Pro Tem Betts said he has gotten used to being the dissenting vote on several key issues, "but this one isn't going to come easy." In his previous life, he said, this sort of discussion would take place behind closed doors. He said he vote not to renew the contract. It's not just because of one clause. "I've lost confidence in our City Manager," he said, "and his ability to manage the affairs of our city." He has seen the progress, but won't characterize some of the missteps as just missteps. He said he has to live with himself and what his gut tells him, which is based not on recent events, but he's been working with the City Manager for three years and he's had "some profound differences over some issues." He doesn't lay the blame for synagogue purchase on the city council. As for the release of Skyborne bonds he thinks it is inexcusable that issue came before the council with the staff's recommendation for approval. [one hand clapping].

I want to point out the difference between the opinion of Mr. Betts and those offered by other critics. The pattern from other critics was like this: "I love Rick Daniels, but I have an issue with this or that provision in the contract." Mr. Betts's opinion, is that he's had profound differences with Mr. Daniels and he doesn't want to approve the contract. Plain and simple, he'd like to see him gone.

He may be in a minority of one there. If others are in close agreement with Mr. Betts, they've kept quiet. Dean Gray, just to pull a name out of the hat, was at the council meeting, but didn't speak.

Al Schmidt had filled out a speaker card a little late, and Mayor Parks said she didn't want to deny anyone the opportunity to speak on such an important issue.

Mr. Schmidt said he had a problem with one thing on this contract, the severance pay. He thought that was "absolutely nutty." Laura Green got too much money, he said. A person who was not a moral person could cause the council to fire him, if he wanted to leave. "For someone to walk away and be paid for a year $250,000 [sic - the correct amount is $217,000] or whatever it is, to me just is not right." "He's done a great job," he said. He suggested making the severance pay one or two months. Personally, he said he doesn't believe in severance pay. He reminded the council that when he ran along with Karl Baker and Russell Betts, the three of them raised hell about what the prior council had done.

Mayor Parks repeated that severance pay is paid only if the city council lets the city manager go "without cause." If he gives a reason to be fired, he does not get severance pay. If he completes the contract, he does not get severance pay.

Attorney Duran said that the severance clause is just as Mayor Parks described it. If some morning the council woke up and decided they didn't like his hair and voted to let go of him [Mr. Daniels stroked his hair at this point], then a severance benefit would be paid. Or, if the November election changes the make up of the city council, and the new council just decides to sweep out Mr. Daniels "for no good reason," then severance would be payable.

Mr. Duran went on to say that the severance provides Mr. Daniels a buffer to go out and find a new job. In the world of city managers, a change of politics in a city can mean the city manager finds himself put out on the street. He said every city manager contract he has seen has a severance pay clause. It isn't always a year. In some cities it's more, in others less. There are something like 482 cities in the state. So that's the potential market for city managers [are all California cities run by city managers, I ask?]. It's a hard job to land and to do, Mr. Duran said.

Councilmember Baker said that a new city council certainly may replace the city manager. If they have cause to do so, then there is no severance benefit. He said the only reason the severance would kick in is "if the council is chicken and won't say why they are changing" city managers.

During Mr. Schmidt's comment, Camille Linde had filled out a speaker card. Mayor Parks called her up to the podium, saying there would be no more comments permitted.

Madam Mayor, Council, staff, ladies and gentlemen. You get what you pay for. It's just that simple. I defy anybody in this audience, in this city, in this valley, to find a city manager who has done more for a city than Mr. Daniels. I defy anybody. And what you're talking about, the employment, I mean he could have asked for a whole lot more because he's worth a whole lot more. This is not a physician. He's not a mechanic. He runs a city! He runs a city! You have to give him more. You have to give him greater responsibility; greater respect. You have to give him more money. It's just that simple.

I am just stunned by the comments. Severance package? Of course, he's going to have a severance package. A month? Two months? Are you kidding?! Who would come to this city for that? Who would come to this... I am quite shocked he didn't have anything in for bonuses in his first three years. I'm quite stunned that he has foregone any raise for all the work he has done. You want to talk about synagogue, we can die on that one. The health thing's going to happen. I don't know. Things happen and it's collective responsibility. It's collective responsibility. We have a planning and cultural commission. And we've got a City Council and we have lots of people here. Not just one person. This city - I've been here since December first, 1996. We've had to fire a city manager for urinating in public. Fire a city manager for taking us for all we were worth. Fire people who were not able to function effectively in this city and throughout the valley. And we have someone here who has done so much for this city. The credibility he has brought to this city is comparable - and I'm going to compare him with Chief Williams. We have gold in these two gentlemen. I can't apologize to you for others and how they think, because that's their responsibility. But I just have to tell you... well I won't tell you. I'll simply say thank you so much for the service you've provided this city, and I hope that for as long as I'm here and as long as you're having a good time, you are here too. Thank you.

Approved 4-1 with Mayor Pro Tem Betts voting no.

City Manager Daniels asked for an opportunity to speak. He said he has never been prouder of a place to work, never worked harder in his life. Often the blame or credit goes unnecessarily to one person. He wants everyone to understand his commitment to the city. He works 24/7/365; on-call at any time to deal with any problem that arises, as one would expect. He does it with optimism because of the council members he works with and the management and staff of the city. He feels blessed and honored to be in his position. He had promised that no one would work harder and no one would work with more commitment than he would. He couldn't be happier, he said. He thanked the council for the vote of confidence. "It's not the first 4 to 1 vote I've received." He thanked his management team, singling out Mr. Simpson, Mr. Acosta, Chief Veik and "particularly, Chief Williams." This was a vote of confidence in every single city employee, much as the citizens re-electing their city council last year. The city and the city council's credibility have risen over the last 3½ years. In answer to "Do you believe the city is going in the right direction" on the survey for the parcel tax last year, the answer was 83% yes. He takes the city council's goals "deathly serious." He thinks the council has exhibited leadership in making public safety the top priority. "Your goals are my goals." The reason he is here now is the same reason he asked for the position three years ago. That is, "I believe the best days of this city are ahead of it." There's a lot of work to do clean up a lot of problems, but we are headed in the right direction. He said that with 80% of the city undeveloped, the new General Plan, the new medical clinic that will go into the site the of the former Jewish temple, the recently opened medical clinic, the new Boys & girls Club, are the next pages to be written in this city and they will be significant events that will change the culture of this city and continue its progress.

He thanked the council and the people who had commented.

Housing Authority

This is a proposal to create a Housing Authority because Governor Brown has proposed getting rid of all Redevelopment Agencies. The Governor's proposal would not affect any projects that are currently underway. No new RDA projects could be begun, however. The current state budget proposal is incomplete, but it is important to the city to preserve its funds. Desert Hot Springs could lose about $3.4 million.

The creation of the Housing Authority will assure that the portion of the tax increment that is now going to the Housing Set-aside fund will stay here in Desert Hot Springs.

Carson Parlen got up to comment. He opposes the creation of a public housing authority. We don't need any more affordable housing. The city's vacancy rate is at an all-time high. The housing authority will attract more low income residents. The city's track record on RDA spending has been dismal. He said that according to the California League of Cities we've got 2 to 3 months to react to the Governor's plans.

Councilmember Baker moved staff recommendation, seconded by Councilmember Matas. Mr. Baker said this protects existing requirements. The money came to the city for affordable housing, it's earmarked for affordable housing, and we want to be able to direct how it is spent. He went on to say that he wholeheartedly disagreed with Mr. Parlen about the RDA not spending money wisely. He cited NRP and NSP, the downtown facades, the street paving.

Mayor Pro Tem Betts asked if the Governor's action would also take away our RDA reserves. Jason Simpson said the next two agenda items would address that question. Mr. Betts repeated his question. Mr. Simpson said that there are funds in RDA that have not been committed or obligated. Those are at risk, Mr. Simpson said. Staff is acting quickly based on the information available. The intent of these items is to maintain control in order to have more time to see what happens in Sacramento.

Mr. Betts asked if the state would also take RDA debt. Mr. Simpson said the current increment that is obligated to pay off the debt is going to be used to pay the debt. It doesn't matter if the payments are made by the State of California or the Desert Hot Springs RDA. The debt is tied to the local revenues. Mr. Betts said the debt wouldn't stay on our books. He said he would like to see the numbers projected for the next 10 years to see if it might be good for the city to forego the tax increment if the state took care of the debt.

Mr. Betts also wanted to know how long the city council has to make this decision. He's heard there may be a deadline next week, so we should have at least until Monday to decide.

The motivation here is not to create a housing authority on its face - what's stated here and the purpose here. We're creating a housing authority to do something different than what the intent of a housing authority is. The findings say that we have housing standards. I don't know what findings that we've done where we've actually gone out and done these kinds of studies to get what's considered legally a finding that's contained in this resolution that we have substandard housing.

The resolution has several "whereas's" but only one finding labeled "Finding," and that's this: "Section 1. Findings, The City Council finds that there exist in the City both unsanitary and unsafe inhabited dwelling accommodations and a shortage of decent, safe, sanitary and affordable dwelling accommodations in the City which are available to persons of low income." Mr. Betts was suggesting that perhaps we need more study to justify that finding.

City Manager Daniels said that the housing authority would have no more nor less power than the existing RDA. Desert Hot Springs remains obligated to meet the state housing requirements, whether we have an RDA or not. "Second of all, it doesn't take much to drive around this community and identify blighted areas and substandard housing." The state will take the RDA debt, Mr. Daniels continued, but they're going to turn around and pay it with the money that we would have generated anyway. The state is also taking all of the new revenue. There will be a loss of #130 million in new RDA revenue (over some number of years) that cannot be made up from our general fund. The obligation to provide for housing is not contingent upon having an RDA. "We have some of the worst housing in Coachella Valley." Our very popular NRP is based on RDA money. If that money is lost, that's the end of NRP.

Mr. Betts repeated his question about how long the council has to take action. "Do we have until Monday?" Mr. Daniels said Cathedral City, Palm Springs, and Palm Desert took similar action on the day before this council meeting. All called special meetings to do so. DHS did not call a special meeting because our policies & procedures do not permit any meetings on holidays. In November voters overwhelmingly rejected the state's ability to take funds from local agencies. There's nothing that prevents the city council from going back and undoing this action if conditions change in the future.

Approved 4-0-1 with Mr. Betts abstaining because he didn't have enough information.

Agreement Between The City and The RDA

There were four pages of handouts available at the city council meeting. You can download them here as a PDF.

This is not the first time there's been a cooperation and repayment agreement between the city and RDA. It's been part of the budget for the last two years, Mr. Simpson said. It reimburses the city for expenses incurred for the RDA. This agreement takes a 6-year period and obligating all remaining reserves of the RDA. This would allow us to retain control of those funds. Mr. Simpson that although Assemblyman Perez has been excellent for us, he doesn't trust the legislature.

Mr. Simpson referred to Exhibit A in the agreement, which is page 2 in the PDF. It lays out the General Fund costs that are reimbursed by the RDA. For example, the City Manager is also the Executive Director of the RDA. but he gets only one pay check, which is paid from the General Fund. The RDA then reimburses the General Fund for 55% of that salary.

Exhibit B (page 3 in the PDF) are the projects that have been committed or funded already. For example, the Health & Wellness Center, Carl May Center improvements, the facade improvements. The total for all of the listed projects through the end of fiscal year 2015-16 is #13,951,800.

Exhibit C (page 4 in the PDF) lists all of the affordable housing programs: NRP, Brisas de Paz, NSP, First time Homebuyer Program, and a Rehabilitation Program. Through the end of fiscal year 2015-16, the total amount of funds allocated for those projects is $11,600.000.

Mr. Betts asked for clarification that this would be obligating funds from the RDA for specific projects. Mr. Simpson said that was correct. Many of these are projects that have already been approved. A couple examples of items that have not yet been approved (I think) that are on that list are $700,000 for the Hacienda Realty building (at Palm & Pierson, northeast corner) and $7,971,800 for a "Public Safety Facility Center," which I think would be the new permanent east side fire station, which Mr. Simpson has put in for FY 2015-16.

Mr. Baker moved staff recommendation, seconded by Mr. Matas.

Mr. Matas said that when the Governor wants to do something, he doesn't just go and do it, he leaks it first to see how it will go over. The Governor is looking for feedback, Mr. Matas said. Many cities and Riverside County have taken similar actions. "We are being prudent and pro-active," Mr. Matas said.

Attorney Duran added that the reason for tying up the funds is based on the U.S. Constitutional provision that "makes it illegal to impair contracts." This is in Article I, Section 10: "No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

Mr. Duran said he is obliged to informed the council that there is some risk in the action they are taking. It's a very fluid environment. He doesn't know that this is a guaranteed way to protect these funds.

Ms. Pye pointed out that the housing funds did not go solely for purchasing low-income housing. A representative from the California League Of Cities advised the city on January 10 to take these steps.

In response to a question from Mr. Betts, Mr. Simpson said this does not relate to the housing authority. This does not fund the housing authority.

Approved 5-0.

Agreement Between The RDA and The City

This is the very same thing as above, but now the city council as acting as the redevelopment agency board to approve the contract.

Moved by Mr. Matas, seconded by Mr. Baker.

Approved 5-0 with no more discussion.

Consent Calendar

Approved 5-0 without discussion were...

1. Staff succeeded in getting a four year advance in Community Development Block Grants which is going to go to the new Health & Wellness Center. The block grant allocations now are
   • Food Now - $8,807
   • Family Services of the Desert - $8,906
   • Carl May Center - $109,422
   • Health & Wellness Center - $500,000
2. Adopted a full cost allocation plan which allows the city to identify the true costs of each department/division and function in the city.

Status Report On The Bond Tender of RDA Tax Allocation Bonds

Through the combined powers of a bad economy and the watchfulness of Jason Simpson, the RDA has been able to buy back $985,000 of its bonds at a cost of only $730,180.60; thereby saving us $254,189.44. Mr. Simpson said that came about because Standard & Poor's changed their policies on rating bonds for all agencies. They ended up downgrading most bonds, including ours. A lot of market confusion resulted. Discounts of 20% to 25% could be had. In addition, Mr. Simpson has been notified that there is a bondholder that wants to tender another $200,000 in bonds at a discount of 24%. Both debt and future interest payments are eliminated.

Approved 5-0.

Officers of the Housing Authority

The City Council adjourned and reconvened as the Housing Authority. They approved (5-0) one item without discussion which designated the officers of the Housing Authority:

City Position	Housing Authority Position
City Manager	Executive Director
Assistant City Manager	Assistant Executive Director & Finance Officer
Redevelopment Director	Deputy Executive Director
City Attorney	Housing Authority Counsel
Deputy City Clerk	Deputy Housing Authority Secretary

Reports

The Housing Authority adjourned and they reconvened as the City Council to give their reports.

Councilmember Baker said that at a recent Mountain Conservancy meeting they purchased all of the land west of 62 that at one time would have been part of Palmwood.

He has been re-elected Vice President of the Vector Control District and elected Vice Chair of the Animal Campus.

Councilmember Pye told George Fisher that she is a member of the CERT community for Desert Hot Springs and they meet the first Thursday of every month 6 o'clock at the Carl May.

Councilmember Matas met with John Gray, one of the developers of Glen Ivy, to discuss the Miracle Hill plans.

Mayor Pro Tem Betts asked about a provisions in the release of the Skyborne bonds to pay some of the saved interest to the city and to put the final life on the streets there. There was also discussion about the bonds required for dust control. City Manager Daniels said he would provide the information in writing to Mr. Betts the next day.

Mayor Parks will be meeting with the PSUSD on February 4 to discuss what sort of "consolidation of funds" can be achieved to pay for safety improvements at Hacienda & Verbena.

City Manager Daniels said work continues at the Village at Mission Lakes. Mesquite Avenue paving should be complete by now. Skyborne has been notified of the requirement to put in the final street lift.