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July 13, 2018

Desert Hot Springs City Council, June 5, 2018

STUDY SESSION

Cannabis

Ted Mayrhofen commented that the odor of cannabis in the industrial zone was noticeable.

James Velasquez of VetsLeaf said his business uses an enzyme system to prevent cannabis odors from entering the environment. He encouraged the city to focus on "infrastructure."

Greta Carter spoke next. She said that for a long time she recommended DHS as the place for cannabis developers to invest, but now there are other cities that are preferable. Some cities have committees to help cannabis businesses with their advertising, and to help them organize as trade organizations.

Ryan Fingerhut said that the hotel industry in the Coachella Valley did $5.5 billion in business in 2017. In 2016, the Coachella Valley hotel industry paid $24 million in TOT. He went on to say that DHS saw 2.6% of that TOT. Some of his numbers have got to be wrong. 2.6% of $24 million is $624,000. But we know from the previous City Council meeting that TOT revenue in DHS was more than $1.9 million this fiscal year. I suspect his total figure for the valley ($24 million) is too low. I learned from the recent Question C campaign in Palm Springs that single-family rentals alone bring in more than $6 million TOT to that city. Take that $6 million plus our own almost $2 million in TOT away from $24 million, and you're left with only $16 million TOT for all the hotels in Palm Springs plus all the hotels and single-family rentals for the rest of the valley (outside of DHS). The number is just too low. But, if we assume that the figure of 2.6% is correct, then the total TOT in the valley would be more than $73 million, which is a reasonable figure in my seat of the pants opinion.

Mr. Fingerhut's point was that DHS needs to develop something to attract more visitors here.

John Sclafani from Desert Land Ventures and chair of the Cannabis Advisory Board for DHS, said he had heard that DHS has authorized 11 million square feet of cultivation. He thinks demand needs to be created for this cannabis. He said we need a tax advantage here in order to make exporting cannabis to other parts of California profitable. Also, we must create reasons for people to visit DHS. He said the "advisory board" is open to everyone in the city, not just industry people. He wants to have a wellness R&D center, for example, that will be open to tourists.

Karl Baker spoke next. He said he has seen many plans in DHS fail due to poor planning. Representatives from the city's spas, the water district, the electric company, and long-time DHS residents need to help plan. We can be the Napa Valley of boutique cannabis, he said. DHS needs to create a brand with a well-coordinated plan.

Simone Sandoval from High Road Consulting group spoke in favor of tasting rooms at cultivation sites. She also spoke of Napa Valley and compared the development of micro brew brands with how cannabis could be developed.

Jocelyn Cane representing CV-Cann said the advisory council is in favor of expanding cannabis business in DHS.

Richard Cromwell (the younger) spoke about cannabis testing. He wants testing labs to be able to operate in commercial zones.

Mayor Matas said he would like to fund a strategic planner who understands the cannabis industry.

Councilmember Betts said DHS has had a plan since day one, despite the comments of some members of the public. He said he would be willing to reduce the current cultivation tax ($25 per square foot for the first 3,000 square feet and then $10 per square foot for the remaining space) to a simple $10/s.f. but he would want that to be a trade for jobs. IOW, local hires.

Councilmember McKee said the state is more screwed up on this subject than DHS is. He thinks testing should be okay in either commercial or industrial zones. He supports legalization of cannabis lounges. The city may need to create a special license for that, something similar to a brewpub. He supports sales in hotels & spas.

Mayor Pro Tem Zavala said the city council has been in a reactive position in relation to the cannabis industry. But she feels a strategic plan needs to be devised. She also does not oppose testing labs locating in the commercial zones. She believes, however, that cannabis lounges would be contrary to our push for pedestrian safety. But she's okay with tasting rooms in the cultivation facilities.

Mr. McKee moved to put together a study group of staff, industry and two council members. City Manager Maynard suggested that he put together a study group of staff and industry and present their findings to the city council. He revised that to call it a "task force" with "experts from the marijuana industry" who would sit down with staff to provide suggestions. Ms. Zavala wanted a moderated study session to make a strategic long-term plan for cannabis in DHS. Mr. McKee said the proposal needed an outside consultant. The final motion was for staff to work with the cannabis industry for input while also getting an expert outside consultant for strategic planning. Approved 5-0.


REGULAR SESSION

Farewell to Yvonne Parks

Scott Matas and the rest of the council honored Ms. Parks with a plaque. She moved here in 1994, became active in the Chamber of Commerce and Rotary, and was appointed to the Planning Commission in 1997 where she served for two years. She was reappointed as a Planning Commissioner in 2004 and '05, where she served as Vice Chair. She ran for City Council and won in 2005 — she had run before, but lost. In 2007, she ran for Mayor, won and held that seat until 2013, being re-elected twice. In 2015 she ran for city council again and was elected again as Scott Matas became Mayor, vacating a council seat.


Public Comments

Mike Picardi said the city should look at funding the library. Other cities in the valley fund their county libraries. He also said he agreed with revisions made in the Art in Public Places proposal that would be coming up later on the agenda...but he had to leave the meeting early.

Ted Mayrhofen said the previous mayor Sanchez and current mayor Matas both ignored the Public Safety Commission and started up a Human Rights Committee. He complained that the difference between the two has not been made clear. He claims his own human rights had been violated. He said the Public Safety Commission fell apart years ago and has done nothing. He is a Public Safety Commissioner.

Greta Carter thanks Mayor Matas and Richard Cromwell (the elder) for their support in setting up a cannabis certification program with College Of The Desert. One course will be "compliance," another will be HR, the third will be professional development. They will be offered in DHS. Also, High Road Consulting will be working to get out the vote in the November election. They will be hiring people qualified to take voter registrations.

Judy Shea suggested that COD use $3 million of its bond money to build a computer lab for the new DHS county library.


Replacement for Yvonne Parks

The city council had agreed to consider only candidates who had prior experience as a city council member. Jan Pye was the only person to submit an application. Mr. Betts suggested that city staff should have contacted other potential candidates to let them know of this opportunity. IMO, if a retired city council member didn't know that Ms. Parks was resigning and didn't know that the city council was looking for a replacement, then they would not be somebody I would want on the council. Ms. Zavala moved to approve Jan Pye for the position. Mr. Betts repeated his earlier opinion that someone who would be running for election in November should be appointed by the city council, and said he would abstain from this vote for that reason. Ms. Zavala's motion was approved 3-0-2 with Mr. Betts and Ms. Parks abstaining. Ms. Pye was immediately sworn in. This is the third time she has been appointed to the city council.


Budget 2018-19 and 2019-20

DHS Three Funds

The primary sources of income for the General Fund are...

  • Property Tax $3.2 million
  • Cannabis taxes $2.9 million (25% of which is sequestered into an emergency rainy day fund)
  • Development fees $2.3 million
  • Transient occupancy tax $1.9 million
  • Sales tax $1.6 million

Major sources of income to the Public Safety Fund are...

  • Public Safety Parcel tax $2.4 million
  • Utility Users tax $1.9 million
  • Prop 172 Sales tax $132,600
  • School Resource Officer reimbursement $121,000
  • Supplemental Law Enforcement Grant $100,000

The annual costs paid from the Public Safety Fund are...

  • Police $8.1 million
  • Animal Control $360,862
  • Fire $2 million

Danny Porras, Director of Community Development, described some upcoming city projects.

  • A bridge on Dillon Road to cross the Little Morongo wash. $431,000 in FY '19-'20.
  • Relocation of bus shelters. $86,400 each in both FY '18-'19 and '19-'20.
  • Pothole, street striping, sidewalk repairs. $69,120 in FY '18-'19 and $151,200 in '19-'20.
  • Palm Drive bicycle & pedestrian improvement project; new sidewalks, ADA ramps, new street lights, a median, bike lanes, all between Camino Aventura and Two Bunch Palms Trail. $700,000 in '18-'19 and $326,499 in '19-'20.
  • Palm Drive from Two Bunch Palms Trail to Pierson Boulevard. New street lights, new traffic lights, signal synchronization. $2.3 million in '18-'19; $1 million in '19-'20.
  • Desert View sidewalk project from Verbena to Palm Drive. $509,000 in FY '18-'19.
  • Indian Avenue widening project between I-10 and Dillon Road. Palm Springs, Riverside County and CVAG are involved with this one too. Our share, $291,6000 in '19-'20. Mr. McKee asked Mr. Porras to find out about the widening of the Indian Avenue bridge over the railroad, south of I-10.
  • Sidewalks on Palm Drive between 8th and 12th Streets. $108,000 in '19-'20.
  • Upgrade to Palm Drive at I-10 to include palm trees on both sides of Palm Drive (meaning some will be in Cathedral City), sidewalk on the west side and an improved median. $108,000 in '18-'19.
  • Restriping and slurry seal Mission Lakes Boulevard and Two Bunch Palms Trail. $30,000 in '18-'19.
  • Replacing overhead street name signs and traffic signal head casings at all 14 intersections with traffic lights. $81,000 in '18-'19.
  • New city directional signs. $30,000 in '18-'19.
  • Installation of median curbs on Palm Drive. $81,000 in '18-'19. Mr. McKee said that Mr. Betts told him that in China they sometimes put fences in the median to prevent jaywalking. He wondered if it were possible for us to do. Newsflash for Mr. McKee: cities in the U.S. also put fences in the medians to prevent jaywalking. I've seen it often and am of the opinion that it is the only thing that will put a stop to the slaughter of jaywalkers on Palm Drive.
  • Citywide asphalt overlay, paving and road reconstruction. $480,000 in '19-'20.
  • Upgrading sidewalk lights to LED on Palm Drive and Pierson Boulevard. $25,000 in '18-'19.
  • 8th Street storm drain. I'm amazed that this has been delayed this long. I thought everything had been cleared and financing arranged while Rick Daniels was City Manager, but here we are. $1,587,000 in '18-'19 and $1,575,000 in '19-'20. This will run from Mesquite to West. Mr. Porras said it is "in design."
  • Design (design mind you, not construction) of open channel for Big and Little Morongo Creeks between Pierson and Dillon. $45,000 in '19-'20 and again in '20-'21. The open channel will be designed to hold water. It can be used for recreation. Actually, I'm not really clear what this is.
  • New playground equipment and park improvements in Tedesco and Mission Springs Parks. $43,200 each in the three fiscal years '18-'19, '19-'20 and '20-'21.
  • Walking path on Mission Lakes Boulevard at Palm Drive. $212,867 in '18-'19.
  • Cabot's Museum administrative offices. $43,299 in '18-'19.
  • Design of a new park south of the city corporation yard. $209,110 in '19-'20.
  • Completion of the city solar system. Ultimately, these are funds from AQMD, meaning funds from the Sentinel power plant. The solar array is 90% complete now. $496,050 in '18-'19.
  • IT infrastructure upgrades. $324,000 in '19-'20. Mostly A/V in the new city hall.
  • City Hall construction. $4,745,000. '18-'19, '19-'20.
  • The will-it-ever-happen General Plan update. $200,000 in '18-'19 and $150,000 in '19-'20.

Mr. McKee said the marijuana tax set-aside was intended to create a cushion in the event that the city's cannabis revenue suddenly dropped or ended.

Mr. Betts moved to approve the budget as presented with the addition of a $100,000 "place holder" for repairs and upgrades at Wardman Park. The budget surplus, however, is only about $40,0000. Adding a $100,000 item to the budget puts the city in deficit. Mr. Betts argued that all the city needs to do is to reduce the amount of money spent on something else, but he had no suggestion for what should be cut. His motion died for lack of a second. Then Mr. McKee moved to approve the budget as presented. Approved 5-0.


Safety Enhancement Zone

This was proposed to be on Palm Drive between Two Bunch Palms Trail and Camino Aventura. Fines can be doubled for traffic violations in the safety enhancement zone. This item includes two parts: first an ordinance authorizing the city council to establish safety enhancement zones by resolution and, second, the resolution establishing this zone south of Two Bunch Palms Trail.

Mr. McKee noticed that in the paperwork the zone was sometimes described as between Two Bunch and Aventura and sometimes between Pierson and Aventura. Chief Mondary admitted it was his error, that his intention had been to cover the area from Pierson Boulevard to Camino Aventura. Mayor Matas asked if there was a reason not to extend it as far south as Dillon. Mr. Porras responded that it could be extended to Dillon, but they had only studied as far south as Camino Aventura. Mayor Pro Tem Zavala pointed out that the ordinance included more than traffic and pedestrian violations. It includes fireworks, noise, vandalism, littering, public consumption of alcohol, etc.

Ms. Zavala moved for approval with removal of those provisions that are not traffic safety related, and covering the distance from Camino Aventura to Pierson. Mayor Matas wanted the zone extended to Dillon, in order to more fully protect the intersection at Camino Aventura. Ms. Zavala suggested the city should study the stretch from Aventura to Dillon first.

Approved 5-0.

Mayor Matas allowed one public comment after the item closed. A bus driver said she thought the safety zone should start at Dillon Road.


Desert Valley Disposal Assessments

A public hearing to place the annual residential trash bills on the tax rolls. Approved 5-0.


Desert Valley Disposal Delinquent Accounts

This is to place delinquent accounts (not residential) on the tax roll. Approved 5-0.


Streamlining Additional Entitlement Process

This would allow already approved cultivation facilities that are in good standing with the city to add marijuana testing and/or distribution facility to their list of approved activities through administrative action, not city council action.

Mr. McKee expressed his opinion that the standards in the ordinance were not objective, so that any time a developer is excluded from the expedited process, he'll come complaining to the city council.

Mr. Betts moved that the standards in the ordinance be defined as no more than a 10% change, and that a report be made to the city council in 6 months on the results of this ordinance. Approved 5-0.


Amendments to Art In Public Places

The existing ordinance places a cap of $20,000 on the "in-lieu fee." The amendment would remove the cap. Secondly, the amendment would require developers in the industrial zones to ONLY pay in-lieu fees. No longer could they fulfill their AIPP requirement by building art on their property. Thirdly, lighting and landscaping costs would no longer count toward fulfilling the AIPP requirement. Fourthly, it clarified some of the procedures relating to the Cultural and Community Affairs Commission and AIPP.

Daniel Porras summarized the sources of fund in the AIPP to date: $109,662 from commercial development, $80,436 from industrial development, and $90,241 from residential development. Total AIPP revenue from 1/1/2014 to 4/23/2018 has been $280,338.22. He also provided a bit of a pie-in-the-sky estimate for future AIPP revenue IF all 62 cultivator CUPs are fully developed as planned. That would generate $5.2 million in AIPP fees at a rate of 0.75%, the current AIPP rate for industrial development.

No one from the public rose to comment in favor of these amendments. Ryan Fingerhut came to the podium to speak in opposition. He said that these amendments would single out developers in the industrial zone and not let them have a say in the art that is developed at their expense, while commercial and residential developers still get that choice. He pointed out that there are people in the industrial zone all day long, coming and going, eating lunch, entertaining investors, and those people will want to enjoy art as much as anyone else.

A gentleman who didn't identify himself commented that back in January the city council approved a first reading of an ordinance that set the AIPP rate at 0.25%, but there was never a second reading. Now we have this new ordinance. What gives?

Greta Carter cited the tale of the goose that laid the golden eggs.

Mr. Betts asked the city attorney to explain what happened to the earlier ordinance that set the rate at 0.25% and for an explanation of why now other, higher rates are being considered. Ms. Mizrahi explained there was no second reading and no requirement for a second reading...but the ordinance would not become law without approval at a second reading.

Mr. McKee said he supported the 0.25% rate, but only if industrial developers were required to pay the in-lieu fee. He revealed that an item for future city council consideration would be a policy that would allow the tax rate on cultivation to be cut in half in order to help with infrastructure development. City Manager Maynard said not all members of the city council had seen this proposal. Mr. McKee then criticized the art project at VetsLeaf, saying it would be hidden back in a corner away from anyone else. He said that if industrial developers wanted to be able to fulfill their AIPP obligation by building on their own site, then the rate should be more like 0.5%, not 0.25%.

Mayor Pro Tem Zavala said that see, too, thought some of the art was borderline. She said that art installed at industrial sites would not be seen by as many people as art in a median in the city. I don't believe one of the standards of the AIPP ordinance was that the art had to be seen by the maximum number of people. Her arguments could apply just as easily to commercial and residential developers paying an AIPP fee. More people would see their art if it were in the median of, say, Palm or Pierson. Ms. Zamora emphasized the "public" aspect of the art, saying it needed to be where it was easily accessible.

What I see here is a city council, every member of which has some property interest in a residential and/or commercial zone, and who are treating industrial developers as a "them." None of the city council have any financial interest in the industrial zone that I'm aware of. Mr. McKee and Ms. Zamora talk like the industrial zone is way out on the Aleutian Islands. I find myself passing through the industrial zone maybe half a dozen times a week. How do the city council members avoid going there?

Ms. Zamora continued her explanations, never explaining why her opinion would apply only to the industrial zone.

Both Mayor Matas and Mr. Betts cited the rocks that appear to have been just dumped in front of the new county building on Pierson Boulevard as an example of failed AIPP. There is supposed to be landscaping for those rocks.

Ms. Pye moved to approve the amendments as written with the tax at 0.75%. Mr. Betts tried to amend the motion to a tax rate of 0.5%. The motion failed with Ms. Zavala and Ms. Pye voting in favor. Mr. McKee moved to approve the amendments as written with a tax rate of 0.25%. Approved 3-2 with Ms. Zavala and Mayor Matas voting against.


Community Development On-Call Services

Business is picking up at City Hall and, despite new hires, the city is still understaffed and sometimes needs to call in outside help to deal with the volume. The city received statements of qualifications from three firms: PPM Group, Dudek and HCG. Staff recommended going with PPM Group up to $200,000 per year.

Mr. McKee clarified that any money spent on this will come solely from fees, not from tax revenue.

Approved 5-0.


City Council Meeting Schedule

There will be NO city council meetings on the following dates: July 17, August 7, December 18 and election day, November 6. Approved 5-0.

Filed under Coachella Valley,Desert Hot Springs | permalink | July 13, 2018 at 08:06 PM

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