June 17, 2018
Desert Hot Springs City Council, May 15, 2018
Budgetary Adjustments For FY '17/'18
Revenues have been $2,825,404 higher than budgeted. Expenditures have increased $2,775,466 more than budgeted. Those increased expenses break down like this:
- $1,351,803 for 16 new job positions, job classification changes, salary and benefit increases.
- $424,500 for an increased use of contract labor, plus there was an increase in the CalFire services contract.
- $147,000 to improve the animal control shelter, to upgrade the animal control vehicle, and to buy a new vehicle for the Police Department.
- $64,451 for on-going general repairs and maintenance of city equipment and public facilities.
- $432,868 to cover costs for new equipment, new software, etc. required for the 16 new hires.
- $124,907 for general repairs and maintenance at the Health and Wellness Center and to make a final payment to the Coachella Valley Boys and Girls Club.
- $229,937 in transfers out of the General Fund into other funds: $155,000 to the Citywide Lighting and Maintenance Fund because the assessments being collected were not sufficient; $52,695 into the Cabot's Museum Fund for increased cost of insurance, Cabot's Sponsorship and maintenance; $22,242 to cover costs of a vehicle purchase.
- $141,280 in staffing costs were charged to the Citywide Lighting and Maintenance District Fund, the Gas Tax Fund and the Successor Agency Fund.
The $2,825,404 higher than expected revenue breaks out like this:
- $40,000 Property Tax Pass Thru;
- $175,000 Triple Flip VLF;
- $200,000 Dispensaries;
- $872,000 Cultivation;
- $350,000 Planning Fees;
- $415,000 Building Fees;
- $85,000 Grading Permits;
- $315,000 Engineering Fees;
- $208,000 Transient Occupancy Tax;
- $165,404 Other.
The 16 new hires were allocated thusly:
- Police 4 sworn, 3 non-sworn;
- Finance 1;
- HR 1;
- City Manager's office 3;
- Community Development department 2;
- Citywide LLMD/Streets 2.
At the end of this fiscal year (June 30, 2018) $2 million will be transferred from the General Fund to the City Hall Capital Improvement Project Fund. In the next two-year budget cycle, $1.2 million will be transferred. At least half of that money transferred from the General Fund to the City Hall Fund will be replenished by DIF fees "over time." The estimated total cost for the city hall project is $7.2 million. $4 million will come from bonds and restricted funds; $3.2 million will come from the General Fund, to be replenished over time via DIF fees.
Draft Two-Year Budget and Capital Improvement Projects for Fiscal Years 2018-2019 and 2019-2020
The budget will be brought before the City Council for approval at the June 5 meeting.
Mike Picardi announced the first "Jammin' In The Desert" concert. It will be Friday, June 15 at Tedesco Park, 5 to 9 PM. Subsequent concerts will be on the third Friday of July, August and September.
He also expressed his opinion on the new county library which is to be built in the space between Aqua Soleil and the County building on Palm Drive. He wants the city council to discuss making additional funds available for that library. The new 15,000 s.f. library will be the first one built in Desert Hot Springs in 46 years (that's 1972). Other county libraries in other cities have been remodeled and expanded over that time.
City Manager Report
Community Development Director Danny Porras reported new traffic signals will be installed at the following intersections:
- Pierson & Cholla
- Palm Drive & Desert View
- Palm Drive & Camino Aventura
The bus stop near Buena Vista on Palm Drive will be moved further south.
Fire Department Battalion Chief John Cortez was filling in for our Fire Chief this night.
City Council Comments
Mayor Pro Tem Zavala agreed with Mr. Picardi that she was disappointed that so long has gone by since the county spent any money on the library here. She was, however, more optimistic, saying "Progress is being made." She said the county is not telling us to "be happy." She favored looking at the city budget to see if there is money there to add to the library project.
Councilmember Betts said that the new DHS library is one of three new ones in the county. He said he got a call from a person he did not identify because some people in DHS had indicated they were unhappy with the proposal. Mr. Betts told the unidentified person that we are happy.
So, it would seem that it's important to the county that we say we are happy.
Annexation No. 29 to DHS Community Facilities District No. 2010-1
This would just be a routine thing, annexing a new business into CFD 2010-1, but in this case the developer of Blackstar Industrial Properties (one of the cannabis developments going in along Indian between I-10 and Dillon) came to the podium to express his thanks to city staff for their involvement and support. He said he has built over a billion dollars worth of assets in the western U.S. over the last 25 years, and in terms of complexity (on a scale of 1 to 10) this development was a 10. He identified individual city staffers, saying working with them was a breath of fresh air. He expects their business to be up and running before the end of the year. Their site is the one where you can see actual vertical construction happening now.
Marijuana Manufacturing Facilities Are Not Subject to DHS Cannabis Taxes
This has been previously discussed by the council, but this is the act to actually codify it into an ordinance. A couple of representatives from the cannabis industry spoke in favor of this. No one from the public expressed opposition.
Mayor Pro Tem Zavala said this was premature. She would prefer negotiating a lower level of tax rather than no tax. Councilmember Parks agreed with Ms. Zavala, pointing out that no other city in the valley has exempted cannabis manufacturing from special cannabis taxes. I would have thought that Ms. Parks, a Republican, would have recognized this no-tax measure as a way of attracting manufacturing to DHS - and that means more jobs and more occupied structures.
Councilmember Betts pointed out that the voters approved taxes on cultivation and dispensaries, not manufacturing, so the city council couldn't impose a manufacturing tax without returning to the voters. Mr. Betts is right about that. Here is Measure HH as voted on and approved by the voters in November 2014.
Shall an ordinance implementing an annual tax of twenty-five dollars ($25.00) per square foot for the first 3,000 square feet and then ten dollars ($10.00) per square foot for the remaining space utilized in connection with the cultivation of marijuana for medical or casual/recreational use, for the purpose of raising revenue to fund general municipal services, be adopted?
“Space utilized in connection with the cultivation of marijuana” means any space or ground, floor or other surface area which is used during the marijuana germination, seedling, vegetative, pre-flowering, flowering and harvesting phases, including any space used for growing, planting, seeding, germinating, lighting, warming, cooling, aerating, fertilizing, watering, irrigating, topping, pinching, cropping, curing or drying marijuana or any space used for storing related products, supplies or equipment, no matter where such storage may take place or be located.
The City Council may repeal the tax, but it may not increase the amount of the tax or broaden the scope of the tax, without voter approval.
Shall an ordinance implementing a monthly ten percent (10%) tax on the proceeds from the sale/provision of marijuana for medical or casual/recreational use for the purpose of raising revenue to fund general municipal services be adopted?
Both of these measures are written narrowly so that they pertain only to cultivation and selling. Manufacturing is not mentioned.
Ms. Zavala said that since the current ordinance did NOT say manufacturing is not taxable, the city can, therefore, tax it. I'd like to see the court case to resolve that nonsense! The ordinance also does not say the city can't impose a special tax on blogs written under the influence of cannabis; does that mean I should worry? The list of activities that are included as "cultivation" is long and specific. There is nothing in that list that sounds even remotely like manufacturing.
The city attorney is of the opinion that the word "provision" in Measure II (the dispensary tax) can be stretched enough to include manufacturing. IMO, if you're going to stretch it that far, you can consider every step of "providing" cannabis to be subject to the dispensary tax. And I mean everything from the cultivator all the way to the final retail sale. This would mean applying a 10% tax at every step of the process, resulting in a tax far higher than the 10% that voters intended.
The way the law is currently written, the city will get its 10% tax on manufacturing only once, when the manufactured items are sold at a dispensary.
Approved 3-2 with Ms. Parks and Ms. Zavala voting against.
Fire Services Contract
The proposed contract would be for three years, July 1, 2018, to June 30, 2021. The rates are:
- 2018-19 $1,994,479
- 2019-20 $2,130,752
- 2020-21 $2,270,152
June 1, 2018
U.S. Botanic Garden
Some photos from my visit there about a month ago.