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HomeMy WebLinkAboutMin - CC - 2020.10.19CITY O� BURLINGAME �awreo �uNe". BURLINGAME CITY COUNCIL Approved Minutes Regular Meeting on October 19, 2020 6:00 P.M. STUDY SESSION a. STUDY SESSION: REVIEW OF THE CITY'S PENSION AND OTHER POST - EMPLOYMENT LIABILITIES AND CURRENT PRE -FUNDING STRATEGIES Finance Director Augustine stated that the purpose of the Study Session was to review and update the Council on the City's current funding strategies for its long-term employee benefits obligations. She noted that the staff report provides a background of the City's efforts in this area. She reviewed the City's Section 115 Funds that were set up to assist in paying off the unfunded accrued liability ("UAL"). She added that the City has two Section 115 Funds: • OPEB (retiree medical fund) is intended to prefund a closed system of benefits by lowering the unfunded liability in approximately 14 years • Pension Trust is being used to ensure that the City can afford the cost increases that are coming from Ca1PERS in the next ten years GovInvest Senior Public Finance Consultant Ira Summer led the presentation concerning the City's pension and other post -employment liabilities and current pre -funding strategies. Mr. Summer began by reviewing Ca1PERS' fiscal year that ended June 30, 2020. He explained that Ca1PERS earned a 4.7% return for fiscal year 2019-20. He stated that normally this return would be disappointing, but because of COVID and other issues, people are satisfied with this number. He noted that in March 2020, Ca1PERS was down 10%, but as a result of the federal stimulus, numbers started going back UP. Mr. Summer stated that Ca1PERS' return of 4.7% is the highest that GovInvest has seen for any large government plan across the country with a year ending June 30, 2020. However, he noted that this is down from Ca1PERS' assumption of 7%. Mr. Summer explained that he was going to review Ca1PERS' 4.7% rate of return as a one-time event and as something that may continue. He stated that this would help the Council understand the different scenarios and funding levels that could be required. Mr. Summer first reviewed the 4.7% return as if the lower return was a one-time event. He stated that under Burlingame City Council October 19, 2020 Approved Minutes the projected 7% return, the City's miscellaneous plan would be 74.2% funded and the safety plan would be 7 1. 1 % funded. However, because the return was 4.7%, the funded levels went down to 72.6% for miscellaneous and 69.6% for safety. He stated that if CalPERS had achieved a 7% return, the City's UAL would be $65.66 million, but because of the smaller return, the City's UAL is $69.72 million. Mr. Summer stated that the City would receive a report from CalPERS about the smaller return in August 2021. He explained that the smaller return would affect the City's contributions beginning July 1, 2022. Mr. Summer reviewed Ca1PERS' new amortization methodology that was established last year. He explained that under the new methodology investment return gains and losses that are above or below the assumption (7%) will be phased in over a five-year period. Therefore, the City won't feel the full impact of this year until FY 2025-26. He added that over a 25-year period (2019 to 2043), the City will have to pay an additional $9.15 million. Mr. Summer next discussed what would happen if the 4.7% rate of return was not a one-time event and instead continued. He stated that if this happens, each year the City's UAL will grow at a faster rate than the City's payments increase. He added that the City's UAL will continue to grow until approximately 2030, when it levels off. He noted that the UAL would grow from approximately $60 million to $80 million in the next ten years under this scenario. He added that under this scenario, the City's contributions would continue to increase. He stated that over a 25-year period, the City would pay an additional $110.73 million. He added that the City's current UAL payment is approximately $4 million. He stated that this amount would more than double by 2030 under this scenario. Mr. Summer discussed the Federal Reserve dropping its interest rate down to almost zero. He noted that this means that the fixed income portion of Ca1PERS' investment, which is a third of its portfolio, will earn approximately zero percent for the foreseeable future. Therefore, it will be difficult for CalPERS to have an annual return of 7%. Mr. Summer stated that towards the end of Ca1PERS' FY 2019-20, its Chief Investment Officer resigned. He explained that the new Chief Investment Officer would likely have a different strategy for CalPERS. He stated that in 2021, CalPERS is scheduled to have its regularly scheduled review of its asset allocations and assumptions. He explained that the chance of CalPERS lowering its risk and going to a lower discount rate is high. He added that he didn't believe that CalPERS would drop its discount rate to 6%. He explained that it took CalPERS 20 years to go from 8% to 7%. Mr. Summer discussed the impact of CalPERS deciding to drop the discount rate to 6%. He stated that the City's UAL would increase from $69.72 million to $103.46 million. He added that over the next 25 years, the City would pay an additional $89.02 million. Councilmember Colson asked about the former CalPERS Chief Investment Officer's decision to leverage $80 billion. She asked if this was distributed throughout the portfolio and if the new Chief Investment Officer decides to unwind this decision, how would it be done. Mr. Summer stated that he believed it was primarily on the equity side. He added that CalPERS may already be unwinding this leverage. 2 Burlingame City Council October 19, 2020 Approved Minutes Mayor Beach asked if she was correct that Mr. Summer had stated that if the 4.7% rate of return continued, that the City would owe $110 million over the next 25 years. Mr. Summer replied in the affirmative and emphasized that this is in addition to what the City is already paying. Vice Mayor O'Brien Keighran asked if cities would be on the verge of bankruptcy due to the second scenario where the 4.7% rate of return continued. Mr. Summer stated that it was important to keep in mind that these are hypotheticals. He noted that if 4.7% return becomes the new normal, it says a lot about the state of the economy. He added that the weakest prolonged period of investment return occurred from 1966 to 1981. Councilmember Ortiz asked if Mr. Summer expected the discount rate to be lowered to 6% at some point in the future. Mr. Summer stated that he was unsure. Councilmember Brownrigg stated that Ca1PERS' discount rate could go down to 6%, or it could increase to 8%. He noted that the market has averaged 10% over the past 50 years. Therefore, he explained that he felt comfortable at 7%. He added that the City has been investing ahead of schedule. Mr. Summer stated that the City has a funding policy that included establishing a Section 115 Trust for the City's UAL. He noted that GovInvest has spent the past few years urging cities and jurisdictions to do exactly what the City did. He stated that the Section 115 Trust is a way of letting rating agencies and people in Burlingame know that the City is being responsible. He added that it also gives guidance to future Councils. Mr. Summer stated that the City is utilizing the Section 115 Trust to smooth out the future contribution rate increases. He explained that staff determined that the threshold contribution rates should be 37.7% for miscellaneous and 76.9% for safety. He noted that as of June 30, 2020, the City had $12.56 million in the Section 115 Trust. Mr. Summer noted that the City's Section 115 Trust had a conservative rate of return. He explained that this was good because the funds would not be in there for a long period of time. He reviewed the annual returns of the City's Section 115 Trust: • FY 2017-18: 1.66% (this was a nine -month period) • FY 2018-19: 7.29% • FY 2019-20: 4.63% Mr. Summer reviewed the City's Section 115 Trust asset allocation: • Equities — 51 % • Fixed Income — 45% • Cash Equivalents — 2% • Real Estate — 1 % • Other — 1 % Finance Director Augustine noted that the City doesn't have a pooled PARS fund; instead, it is an individual Burlingame City Council October 19, 2020 Approved Minutes Section 115 Trust Fund. Councilmember Colson voiced concern about the zero percent interest rate on fixed income when 45% of the City's asset allocation in its Section 115 Trust is in fixed income. Mr. Summer stated that he isn't here to make a recommendation but noted that it is a tough time to invest. Mr. Summer stated that 2021 is not a year where cities are thinking about putting additional funds aside for UAL. However, he explained that it was important to discuss what the City should do in the future to assist with paying down its UAL. He stated that one option is to make additional discretionary payments to Ca1PERS. He reviewed the advantages and disadvantages of doing this Advantages Disadvantages Offset GASB Net Pension Liability on CAFR Loss of flexibility with investment Ability to pay off select amortization bases Contribution is irreversible He noted that additional discretionary payments would lower the City's required contribution. Mr. Summer stated that another option for the City is Section 115 Trusts. He noted that once contributions are placed into a Section 115 Trust, assets may only be used for retirement plan purposes. He added that funds can be invested to get a better return than the City's internal reserves. Finance Director Augustine reviewed what the City's current threshold rate is versus what it would be if the City forecast a 6% rate of return: Plan Prior Threshold Rate Recalculated Threshold Rate Miscellaneous 37.7% 32.6% Safety 176.9% 75.5% Mr. Summer stated that another option is a Ca1PERS "Fresh Start". He explained that a full fresh start would be to re -amortize the entire UAL over a shortened time period. Once the payment schedule with Ca1PERS is implemented, it cannot be reversed. He stated that a soft fresh start would simulate an accelerated payment schedule without formally adopting a new payment schedule with Ca1PERS. Mr. Summer reviewed the City's retiree medical benefits. He explained that the City has 282 current retirees/surviving spouses. He stated that the City has been pre -funding its liabilities since 2013. Currently, the City has $22 million set aside in a Section 115 Trust for OPEB. He noted that the City is about 40% funded and projected to be 100% funded in FY 2033-34. Mr. Summer reviewed the City's contributions to the OPEB plan. He noted that the City's current annual contribution is $4.4 million and that it will grow to $5.25 million over the next 15 years. He stated that this will grow at the same rate as payroll. He added that once OPEB is fully funded, the City's contribution will be less than $1 million a year. Mr. Summer stated that Ca1PERS has three investment strategies for OPEB: 4 Burlingame City Council October 19, 2020 Approved Minutes Strategy Investment Targeted Rate of Return Strategy 1 — Current 7.59% Strategy 2 7.01 % Strategy 3 6.22% Finance Director Augustine stated that the City's recommendation would be to stay the course and watch carefully what happens over the next year while continuing to review different scenarios. She noted that all changes will be brought to Council for discussion and approval. Councilmember Colson stated that every city and jurisdiction is impacted by Ca1PERS' rate of return. She explained that Council's current discussion was in a vacuum that didn't consider wages, capital infrastructure, and other matters. She stated that the analysis has to expand beyond what was discussed and take a broader perspective of the City's finances and needs. She added that at some point, it is reasonable to have some of the workforce weigh in on this conversation. She noted that if pensions begin to cannibalize the City's budget, it will be the active workforce that bears the brunt. Councilmember Ortiz stated that he was glad the City began pre -funding the UAL. CALL TO ORDER A duly noticed meeting of the Burlingame City Council was held on the above date online at 7:05 p.m. 2. PLEDGE OF ALLEGIANCE TO THE FLAG The pledge of allegiance was led by Mayor Beach. 3. ROLL CALL MEMBERS PRESENT: Beach, Brownrigg, Colson, O'Brien Keighran, Ortiz MEMBERS ABSENT: None 4. REPORT OUT FROM CLOSED SESSION There was no closed session. 5. UPCOMING EVENTS Mayor Beach reviewed the upcoming events taking place in the city. 6. PRESENTATIONS There were no presentations. 5 Burlingame City Council October 19, 2020 Approved Minutes 7. PUBLIC COMMENT There were no public comments. 8. CONSENT CALENDAR Mayor Beach asked her colleagues and members of the public if they would like to pull any item off the Consent Calendar. Councilmember Colson pulled 8d and 8f. Councilmember Brownrigg pulled 8c. Councilmember Ortiz made a motion to adopt 8a, 8b, and 8e; seconded by Councilmember Brownrigg. The motion passed unanimously by roll call vote, 5-0. a. APPROVAL OF CITY COUNCIL MEETING MINUTES FOR OCTOBER 5, 2020 City Clerk Hassel -Shearer requested Council approve of the City Council Meeting Minutes for October 5, 2020. b. ADOPTION OF ORDINANCE TO REMOVE AN EXEMPTION FOR COLLECTIVE BARGAINING AGREEMENTS FROM THE BURLINGAME MINIMUM WAGE ORDINANCE City Attorney Kane requested Council adopt Ordinance Number 1984. c. ADOPTION OF A RESOLUTIONS SUPPORTING THE SUBMISSION OF GRANT APPLICATIONS FOR THE CALIFORNIA DRIVE BICYCLE FACILITY PROJECT AND THE BURLINGAME STATION PEDESTRIAN IMPROVEMENTS PROJECT UNDER THE SAN MATEO COUNTY TRANSPORTATION AUTHORITY MEASURE A & W PEDESTRIAN AND BICYCLE PROGRAMS Councilmember Brownrigg stated that he had a hard time understanding the California Drive bicycle proposal. He explained that he believed that staff was trying to construct a Class 2 bike lane on California Drive. He noted that he was supportive of this recommendation; however, he didn't see any renderings of this proposal attached to the grant application. He asked if Council would be asked to review different proposals if the City obtains the grant. DPW Murtuza stated that the grant is for design and construction of the bike lane. He explained that staff s recommendation is to design a minimum Class 2 bike lane on California Drive between Broadway and Oak Grove. Mayor Beach stated that these grants only happen every two or three years, and therefore she expressed gratitude that staff took the initiative to apply for the grant. Mayor Beach opened the item up for public comment. No one spoke. Councilmember Brownrigg made a motion to adopt Resolution Number 128-2020 and Resolution Number 129-2020; seconded by Councilmember Ortiz. The motion was approved unanimously by roll call vote, 5-0. 6 Burlingame City Council October 19, 2020 Approved Minutes d. ADOPTION OF A RESOLUTION AUTHORIZING THE CITY MANAGER TO PROCURE LANDSCAPE STRUCTURES PLAYGROUND EQUIPMENT AND INSTALLATION FOR THE PROPOSITION 68 PER CAPITA GRANT J-LOT PLAYGROUND RENOVATION IN THE AMOUNT OF $148,544.09, CITY PROJECT NUMBER 79450 AND TO CHANGE PLAYGROUND'S NAME FROM J-LOT PLAYGROUND TO PRIMROSE PLAYGROUND Councilmember Colson thanked Parks and Recreation Director Glomstad and the Parks and Recreation Commissioners for their work on this project. She noted that the J Lot Playground, which is being renamed to Primrose Playground, packs a lot of fun in a small spot. She thanked staff for reviewing the City's parks and renovating them to ensure they are accessible to all. Councilmember Brownrigg concurred. He wondered if because the park gets so much use if there was any way to make it bigger. Councilmember Colson suggested a second location in a different lot near the downtown area. Mayor Beach opened the item up for public comment. Commissioner Milne stated that the most commonly used method for naming parks in Burlingame is naming them after the street. He explained that it makes it very clear where the park is located. Mayor Beach closed public comment. Councilmember Colson made a motion to adopt Resolution Number 130-2020; seconded by Vice Mayor O'Brien Keighran. The motion was approved unanimously by roll call, 5-0. e. ADOPTION OF A RESOLUTION APPROVING THE VESTING TENTATIVE AND FINAL PARCEL MAP (PM 20-01), LOT SPLIT OF 3,195 ACRE PORTION OF PARCEL A AS FILED IN BOOK 68 OF PARCEL MAPS, PAGES 5-6, OFFICE OF THE SAN MATEO COUNTY RECORDER AT 30 INGOLD ROAD DPW Murtuza requested Council adopt Resolution Number 131-2020. f. INFORMATIONAL REPORT REGARDING MINIMUM WAGE IMPACTS ON RECREATION PROGRAMMING Councilmember Colson thanked Parks and Recreation Director Glomstad and City Manager Goldman for putting this analysis on the agenda. She suggested that the City absorb as much of the increased cost as possible. She noted that a lot of families utilize the recreation programs as child care and she wanted to ensure that they would be able to afford it. She added that she would like to discuss utilizing some of the Parks and Recreation Foundation funds to assist families with being able to pay for recreation programs. Councilmember Brownrigg concurred with Councilmember Colson. He noted that in these times of economic instability, the City should help to underwrite recreation programs. 7 Burlingame City Council October 19, 2020 Approved Minutes Vice Mayor O'Brien Keighran asked if the scholarship fund is fully utilized every year. Parks and Recreation Director Glomstad replied in the negative. She noted that they are considering moving towards a tiered scholarship program to allow for further assistance. Mayor Beach wondered if there was a way to publish that scholarships are available when an individual is signing up for recreation programs. She noted that this could assist getting the word out. Mayor Beach opened the item up for public comment. No one spoke. Vice Mayor O'Brien Keighran made a motion to accept the informational report regarding minimum wage impacts on recreation programming; seconded by Councilmember Brownrigg. The motion was approved unanimously by roll call vote, 5-0. 9. PUBLIC HEARING a. INTRODUCTION OF AN ORDINANCE AMENDING THE ZONING CODE (OFF-STREET PARKING) TO REDUCE THE OFFICE PARKING RATIO FOR PROPERTIES LOCATED IN THE NORTH BURLINGAME MIXED USE (NBMU) ZONE; MITIGATED NEGATIVE DECLARATION PURSUANT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA), DESIGN REVIEW, AND CONDITIONAL USE PERMIT FOR MECHANICAL PARKING STACKERS FOR A NEW SEVEN -STORY, MIXED -USE DEVELOPMENT WITH RETAIL, OFFICE AND 60 RESIDENTIAL UNITS WITH BELOW GRADE PARKING AT 1766 EL CAMINO REAL CDD Gardiner stated that an application was submitted for construction of a new seven -story mixed use commercial/residential development at 1776 El Camino Real. The project site is zoned North Burlingame Mixed Use ("NBMU") and is located at the southeastern corner of El Camino Real and Trousdale Drive. He noted that it is approximately one-half mile from the Millbrae multimodal station. He explained that the application is being reviewed by the City Council because the application includes a request for a zoning code amendment to alter the office parking ratio in the NBMU. He stated that code amendments cannot be specific to a particular property, so the amendment would be applicable to all properties within the NBMU. CDD Gardiner explained that while the code amendment is the reason for the City Council review, the Council is asked to act on the full application including the requested development entitlements. He stated that currently in the NBMU, the office parking ratio is one space per 300 square feet. The applicant is proposing changing this ratio to one space per 400 square feet. He noted that the project would also contain a Transportation Demand Management ("TDM") plan that includes: retaining a transportation coordinator, providing transit subsidies, maintaining an emergency ride home program, providing bicycle sharing, and unbundled on -site parking. CDD Gardiner stated that the project consists of 7,588 square feet of retail space on the ground floor, four floors of office space totaling 148,057 square feet, and two floors of residential units (60 units). He explained that 5% of the residential units would be below market rate and would be affordable to the low- income category, which is 80% of median income or below. He noted that the provision to provide 5% of 8 Burlingame City Council October 19, 2020 Approved Minutes below market rate units is an aspect of the NBMU zoning that was adopted prior to the passage of the residential impact fee ordinance. He explained that the fee ordinance requires 10% moderate income units in lieu of fees. CDD Gardiner stated that the office space is subject to commercial linkage fees that total $2,317,820. CDD Gardiner stated that the applicant is requesting the following: • Mitigated Negative Declaration — a determination that with mitigated measures there will be no significant environmental effects as a result of the project • Amendment to the Off -Street Parking Code to reduce office parking requirement in the NMBU District — to change the office parking ratio from one space per 300 square feet to one space per 400 square feet for office uses in the NBMU District • Design Review — for construction of a new seven -story, mixed use commercial/residential building with retail, office, and 60 residential units with below -grade parking including • Approval of Community Benefits Bonuses for a Tier 3 project, which the Planning Commission and City Council may approve if they determine that a project includes at least three community benefits • Conditional Use Permit — for mechanical parking stackers Vice Mayor O'Brien Keighran stated that by providing the TDM plan, the applicant receives a 20% parking reduction. She asked if the City would conduct an annual audit of the applicant's TDM plan to ensure their compliance. CDD Gardiner replied that the City does not currently have a Transportation Demand Management ordinance. Therefore, He was unsure if the City would be unable to conduct an annual audit of the applicant's TDM plan. Vice Mayor O'Brien Keighran stated that if the applicant is asking for a change in the parking ratio in addition to a 20% parking decrease, then their TDM should be monitored and audited every year. She added that there should be a penalty if they fail the audit. CDD Gardiner stated that staff could look into inserting monitoring requirements as a condition of the application's approval. Councilmember Brownrigg asked why the City needs to amend the zoning code versus the applicant seeking a variance. CDD Gardiner stated that for the applicant to obtain a variance, there has to be findings of hardship and unique circumstances. Therefore, given that this is a newly constructed project, it is harder to make those findings. Councilmember Brownrigg asked if the zoning amendment would be workable for the rest of the NBMU District. CDD Gardiner replied in the affirmative. He explained that staff had been discussing the parking ratio for a few years and were persuaded that the reduction would work because of the district's close proximity to public transportation. Councilmember Brownrigg stated that this approach means that the City is giving a benefit to several property owners without getting anything in return. He asked about the bonuses being claimed because of benefits being provided by the applicant. He asked what the bonuses are that the applicant would receive. CDD Gardiner stated that the more benefits that are included in the project, the more bonuses that are 9 Burlingame City Council October 19, 2020 Approved Minutes available. He stated that the applicant's bonuses are increased building height and floor area ratio for the office space. Councilmember Brownrigg asked if the bonus equated to an extra floor. CDD Gardiner stated that it is probably an extra two floors. Mayor Beach asked if the community benefit that the City is receiving is 5% low income housing, the public plaza, and a TDM plan. CDD Gardiner replied in the affirmative. Mayor Beach asked the City Clerk to read the title of the ordinance. City Clerk Hassel -Shearer read the title of the ordinance. Vice Mayor O'Brien Keighran made a motion to waive further reading and introduce the ordinance; seconded by Councilmember Ortiz. The motion passed unanimously by roll call vote, 5-0. Mayor Beach opened the public hearing. Mario Muzzi, representing the applicant, stated that he was excited about the project. He noted that what they came up with is in harmony with the historical use of the area and the City's vision for the NBMU District. The architect for the project, Bill Higgins, gave a brief presentation on the proposed project. He reviewed the following elements of the project: • 148,057 square feet of office space • 7,588 square feet of commercial/retail space • 83,870 square feet of residential space equating to 60 units Mr. Higgins also stated that the project would provide 385 parking spaces. Mr. Higgins showed several pictures that depicted the location of the project, height variances, materials being used, and site plans. Councilmember Colson asked how long the covenant runs on the affordable housing units. CDD Gardiner replied that it is for 55 years. Councilmember Brownrigg stated that a few years ago he asked Mr. Muzzi why the ratio on the proposed project wasn't three floors of residential and three floors of office space. He asked Mr. Muzzi to answer that question again. Mr. Muzzi stated that his answer has changed since the first conversation. He explained that when he answered Councilmember Brownrigg a few years ago, his answer was based solely on construction costs. Councilmember Brownrigg asked about the plaza in front of the building being a public benefit. Mr. Higgins stated that the City's code requires that the plaza be a minimum of 2,000 square feet, and the proposed plaza 10 Burlingame City Council October 19, 2020 Approved Minutes is three times that size. Therefore, he explained that it adds value to the City by creating a mini park and facilitates pedestrian movement. Councilmember Ortiz asked about the trees and concerns that have been raised about their ability to grow. Mr. Higgins stated that the landscape architect has been looking into this concern. He noted that some of the trees are being put into pots. He added that they are making changes to ensure that the trees are able to grow. Dale Young stated that he opposed a reduction in the parking ratio. He expressed concern about the effects of this project on residential parking. (comment submitted via publiccomment(a�,burlirn ag me.org). Mayor Beach closed the public hearing. CDD Gardiner stated that the City's Climate Action Plan has policies and procedures included in which TDM Coordinators have to report metrics to the City on an annual basis. Therefore, he thought the Council's concern would be covered. Mayor Beach asked if the applicant's transportation and traffic consultant, Hexagon, would be kept on board to conduct the annual reviews. Mr. Muzzi stated that he wasn't sure they would keep Hexagon on indefinitely. However, he explained that the idea of monitoring and making sure that they are complying is agreeable to the applicant. Councilmember Ortiz stated that this is in his neighborhood. He explained that while he is concerned about the traffic, the applicant's project fit with the City's vision for the NBMU District. He noted that he believed that TDM monitoring would be very important. Councilmember Colson thanked Councilmember Brownrigg and Vice Mayor O'Brien Keighran for their expertise on this complicated project. She noted that the location of the project is unique and thought that the Muzzi family had done a great job designing the project and making it fit in with the neighborhood. She added that she was okay with the parking reduction because the data shows that the project still might not use all the parking. Councilmember Brownrigg stated that he appreciated the quality of the project and the two floors of housing. He explained that it troubles him that the project doesn't have more housing. He discussed the Council's commitment to obtaining more housing for the community. He stated that the City is receiving three affordable units and a plaza that is not large enough to be considered a gathering place. He questioned trading two floors for these benefits. Therefore, he thought the City needed to look at the balance of benefits and bonuses in order to tilt it in favor of affordable housing. Councilmember Brownrigg stated that he hadn't realized that the City only allows residential permit parking programs near the commercial districts. He explained that he thought it should be broadened to allow more neighborhoods to participate. 11 Burlingame City Council October 19, 2020 Approved Minutes Vice Mayor O'Brien Keighran voiced her appreciation that TDM monitoring is included in the City's Climate Action Plan. However, she asked that the approval of the application include some penalties if the applicant doesn't maintain what is outlined in the TDM plan. Vice Mayor O'Brien Keighran stated that she isn't concerned that there are only two floors of housing included in the project. She explained that across the street from this project at Peninsula Hospital, there will be 400 units built with 258 being affordable. She noted that there are a lot of units in the pipeline. Additionally, she discussed the effects the pandemic has had on the rental market. She stated that there is close to a 10% vacancy on the Peninsula, and in San Francisco there has been a 3 1 % rent decrease. Mayor Beach stated that there is a lot of conversation at the County level about the importance of having TDM policies. She asked if it was possible to enforce a TDM plan without a TDM ordinance. City Attorney Kane stated that it is important to distinguish entitlements from later ordinances enacted. She added that the City shouldn't impose substantive requirements that didn't exist at the time the application was made and processed. However, she noted that staff could review what can be done and what recommendations they may have in the future. City Attorney Kane stated that she was hearing an interest to put teeth into this TDM plan and also for staff to research how to go forward with future projects. Council agreed. Councilmember Colson asked about compliance and enforcement. She stated that if there were to be punitive enforcement action, she would want to know what that is. She added that she is always worried about applying monetary fines as it might mean nothing to some of the larger office buildings. Mayor Beach stated that she believed this was a good project and that the applicant followed the rules. She appreciated that the applicant had a TDM plan, and that the City has some requirements in place to make sure that the project stays in compliance. Mayor Beach asked if this would be brought back at the next meeting or if Council's concerns about TDM enforcement would require more time. City Attorney Kane stated that staff has heard Council's discussion and that staff will review their points to bring back recommendations at the next meeting. Mayor Beach noted that she agreed with Councilmember Colson that the data shows there is enough parking in this area. Therefore, she felt comfortable with that reduction. Vice Mayor O'Brien Keighran stated that in regards to future penalty fees, she would want it to be a tiered system so that the last resort is penalties. 12 Burlingame City Council October 19, 2020 Approved Minutes b. INTRODUCTION OF AN ORDINANCE AMENDING BURLINGAME MUNICIPAL CODE SECTION 18.07.110 TO MODIFY CONSTRUCTION HOURS AND THE EXCEPTION PROCESS FOR WORK CONDUCTED OUTSIDE OF LEGAL HOURS CDD Gardiner explained that at the October 5 meeting, Council provided direction to staff to amend a portion of the ordinance relating to the modified hours of construction in the Bayfront Commercial, Innovative Industrial, and Rollins Road Mixed Use zones. He stated that a majority of the Council agreed to allow construction to start one hour earlier in these zones but desired more clarity in what specific activities would be prohibited during that hour. CDD Gardiner stated that rather than using the term "excessive construction noise," which could be subjective, the revised ordinance prohibits specific activities during that first hour. He noted that staff is recommending prohibiting the use of chainsaws, jackhammers, piledrivers, and pneumatic impact wrenches during the 7:00 a.m. hour. He explained that these are all comparatively loud and disruptive. CDD Gardiner stated that the rest of the ordinance is unchanged from the October 5 meeting, including some provisions that allow for exceptions for time -sensitive operations such as concrete pours. He noted that the amendment also includes provisions to allow work outside of construction hours if it is within fully enclosed buildings. Mayor Beach asked the City Clerk to read the title of the ordinance. City Clerk Hassel -Shearer read the title of the ordinance. Councilmember Ortiz made a motion to waive further reading and introduce the ordinance; seconded by Vice Mayor O'Brien Keighran. The motion passed unanimously by roll call vote, 5-0. Mayor Beach opened the public hearing. No one spoke. Mayor Beach closed the public hearing. Council agreed to bring back the ordinance for adoption. c. INTRODUCTION OF AN ORDINANCE TO AMEND THE SAN MATEO COUNTY TOURISM BUSINESS IMPROVEMENT DISTRICT TO REMOVE THE CITY OF PALO ALTO FROM THE DISTRICT, AND REMOVE THE PALO ALTO REPRESENTATIVE SEAT TO THE DISTRICT ADVISORY BOARD Finance Director Augustine stated that the San Mateo County Tourism Business Improvement District was established in 2001. The City acted as the lead agency in the formation of the district and continues to administer the process each year by collecting assessments and forwarding them to the district. Finance Director Augustine stated that in 2010, the City of Palo Alto joined the district. However, late last year, some of the hotels in Palo Alto asked their City Council to withdrawal from the TBID. She explained 13 Burlingame City Council October 19, 2020 Approved Minutes that the Palo Alto City Council tabled the discussion last year to make sure that the voices of other hotels were heard. Finance Director Augustine stated that in September 2020, the Palo Alto City Council adopted a resolution to initiate a request for withdrawal from the TBID effective January 2021. She noted that withdrawal from the TBID requires an amendment to the ordinance. Vice Mayor O'Brien Keighran asked if Palo Alto is removed, will there be any increases in assessments for Burlingame. Finance Director Augustine replied that the San Mateo County/Silicon Valley Convention and Visitors Bureau took a lot of things into account when reviewing the TBID assessments. She noted that because of the pandemic, a lot of costs were cut. Vice Mayor O'Brien Keighran stated that hypothetically if another city left would the City's assessment increase. Finance Director Augustine stated that she didn't believe so. Mayor Beach asked the City Clerk to read the title of the proposed ordinance. City Clerk Hassel -Shearer read the title of the proposed ordinance. Councilmember Brownrigg made a motion to waive further reading and introduce the proposed ordinance; seconded by Councilmember Colson. The motion passed unanimously by roll call vote, 5-0. Mayor Beach opened the public hearing. No one spoke. Mayor Beach closed the public hearing. The Council agreed to bring this ordinance back for adoption. 10 STAFF REPORTS a. CONSIDERATION OF TWO APPOINTMENTS TO THE PARKS AND RECREATION COMMISSION City Manager Goldman stated that there are two vacancies on the Parks and Recreation Commission due to the expiring terms of Commissioners Shari Lewis and Emily Matthews. She noted that the City received 13 applications as of the deadline in September. The Council interviewed the following 13 applicants via Zoom on October 13, 2020: Robert Cannone, Emily Matthews, Karen Andreacchi, John Brunello, Shari Lewis, Dale Chang, Dan DeWitt, Ray Larios, Patricia Stark, Perry Mizota, Dilyana Dimova, Jacqueline Haggarty, and Sophia Chen. She added that the appointee terms would be three years, ending October 7, 2023. Mayor Beach stated that she was excited by the number of applicants for the vacancies. Councilmember Brownrigg stated that he was impressed with the quantity and quality of applicants. He added that he had asked staff if Council could expand the number of commissioners because there were so many qualified candidates. However, he learned that this is not an option as it was not agendized. 14 Burlingame City Council October 19, 2020 Approved Minutes Councilmember Brownrigg noted that while he was unable to attend the interviews as it was his 30cn wedding anniversary (congratulations!), he was able to watch all the interviews via the Zoom recording. Mayor Beach opened the item up for public comment. No one spoke. City Clerk Hassel -Shearer asked that the Council Zoom chat her their choices. City Clerk Hassel -Shearer read the ballots. Emily Matthews was unanimously chosen for one of the vacancies, but no second candidate received a majority. Accordingly, the City Clerk asked that the Council discuss the candidates and then vote on a second ballot. The Council discussed the different candidates and the possibility of enacting term limits for commissioners. City Clerk Hassel -Shearer read the second round of ballots, and Dale Chang was unanimously selected. Congratulations to Emily Matthews on her reappointment and congratulations to Dale Chang on his appointment. Thank you to Shari Lewis for her service to the City, and thank you to all the candidates that applied. b. APPROVAL OF ADDITIONAL FUNDING IN THE AMOUNT OF $59,000 TO COMMISSION AN INDEPENDENT ARBORIST TO INSPECT CITY PARK TREES AND LARGE STATURE EUCALYPTUS TREES Parks and Recreation Director Glomstad stated that a tragic accident occurred in Washington Park when a limb fell from an Atlas cedar tree. She explained that while the City has a robust tree program, staff would like to augment the program with a systematic inspection, by an independent arborist, of City park trees that are over 48 inches in circumference and the large stature Eucalyptus trees. She stated that staff is looking to undertake this project in two phases: • Phase 1: conduct a level two assessment of each tree and develop an overall hazard assessment, maintenance recommendations, and determine whether a level three assessment is warranted. Additionally, during this phase, the arborist will determine whether a tree poses an imminent danger and if it does, the tree and surrounding area will be caution taped off until the tree can be removed. • Phase 2: conduct a level three assessment as needed; this includes a drill test, mallet test, and entry inspections. Parks and Recreation Director Glomstad stated that the cost for the level two assessments is $15 per tree. She explained that staff is anticipating about 1,926 trees will need level two assessments. She added that the cost for the level three assessment is $300 per tree. She noted that staff doesn't know how many trees will need the level three assessment. However, staff is estimating 5% of the trees will need that assessment. Accordingly, staff is requesting $59,000 to undertake this project. Mayor Beach opened the item up for public comment. No one spoke. 15 Burlingame City Council October 19, 2020 Approved Minutes Councilmember Ortiz made a motion to adopt Resolution Number 132-2020: seconded by Vice Mayor O'Brien Keighran. The motion passed unanimously by roll call vote, 5-0. c. ADOPTION OF A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A MEMORANDUM OF UNDERSTANDING WITH THE CITY OF SARATOGA TO PURCHASE RULE 20A CREDITS FOR UTILITY UNDERGROUNDING WORK ON EL CAMINO REAL City Manager Goldman stated that for several years, the City has worked collaboratively with Caltrans on a project to renew and rehabilitate El Camino Real. She explained that Caltrans is in the process of conducting studies for the environmental phase of the El Camino Real Renewal Project to address safety and infrastructure rehabilitation needs, while considering traffic, pedestrian, utilities, drainage, and the historic Eucalyptus Grove preservation concerns. She stated that undergrounding overhead utilities in conjunction with Caltrans' work will be a critical component of the overall project. City Manager Goldman stated that Council identified undergrounding the overhead power lines along El Camino Real as a high -priority project. She explained that on June 17, 2019, the Council established the El Camino Real Underground Utility District 2019-1 to initiate proceedings to implement the project. She noted that the establishment of this district qualified the City to utilize available Rule 20A credits to fund a portion of the undergrounding project. City Manager Goldman stated that the City obtains Rule 20A credits from PG&E. She explained that the credits are provided to cities and counties on an annual basis to use for undergrounding utilities. If a jurisdiction does not use them in a given year, they are banked for future use. The credits can only be used to underground PG&E overhead utilities. City Manager Goldman explained that the preliminary cost estimate to underground overhead utilities is in the range of $25 million to $30 million. She stated that the City currently has approximately $6.5 million in work credits through the PG&E Rule 20A program. However, she noted that the remaining $18.5 million to $23.5 million is unfunded at this time. City Manager Goldman stated that at the June 1, 2020 Council meeting, staff discussed the various funding mechanisms available to implement the undergrounding of overhead utilities. She noted that this included forming an assessment district, General Fund appropriation, and the purchase of Rule 20A credits from another community. She explained that purchasing Rule 20A work credits from another community is a common practice. She stated that the practice benefits both communities as credits are often purchased at a discount rate, while the selling community receives compensation for credits that may not be used because there is no appropriate project to fund. City Manager Goldman stated that at the June 1 meeting, staff asked the City Council about its willingness to purchase Rule 20A credits at a discounted price of $.50 per credit, or half the cost of the credits, which are valued at $1 per credit. She noted that at the time, the Council was concerned about paying that price for these credits, particularly since there is a risk that the El Camino Real Renewal Project won't move forward or will be changed in a way that makes undergrounding infeasible. 16 Burlingame City Council October 19, 2020 Approved Minutes City Manager Goldman stated that the California Public Utilities Commission ("CPUC") is currently reviewing recommendations to reform the Rule 20 undergrounding program statewide. She explained that the final ruling, which is expected in early 2021, is likely to include the elimination of the practice of trading Rule 20A credits. The proposed ruling also includes languages such that the accumulated and/or acquired credits as of that time will expire in ten years unless used for qualified projects. City Manager Goldman stated that after the June 1 Council meeting, staff discussed options with the subcommittee composed of Councilmember Brownrigg and Mayor Beach. She explained that the City was able to obtain a list from PG&E of all the agencies with Rule 20A credits. She stated that the City sent letters to all agencies with credits valued at $2 million and above asking if those agencies were willing to sell their credits at a cost of $.25 per credit. She noted that things are changing, budget wise, for a lot of communities, and therefore the City felt that some of the agencies would be hungrier for incoming funds. She added that no agencies were amenable to that price. However, the City of Saratoga's City Manager and Finance Committee discussed selling Saratoga's $4,027,766 in credits at a price of $1,208,330, or $.30 per credit. She stated that this is a savings of just over $800,000 from the $.50 per credit price that the City was contemplating offering other jurisdictions in June. City Manager Goldman stated that in order for the City to undertake this transfer with Saratoga, each City would need to adopt an MOU, which was attached to the staff report. She noted that the Saratoga City Council would be considering the MOU at its meeting on October 21. City Manager Goldman stated that she and DPW Murtuza were on a Zoom call last week with a County that has credits it is interested in selling. City Manager Goldman stated that one of the questions that arose at the June 1 Council meeting was what would happen if the El Camino Real Renewal Project did not come to fruition. She explained that staff believes there are a number of other streets in the city that could qualify for the use of Rule 20A funds. She noted that the credits can't be used on local residential streets. City Manager Goldman reviewed other questions that arose at the June 1 Council meeting: • Does the PG&E bankruptcy filing pose any risks to the Rule 20A credits? She explained that it does not. She stated that staff heard from PG&E that Rule 20A credits are unaffected by their bankruptcy filing. She noted that this has been independently confirmed by CPUC staff. • Can Caltrans financially contribute towards the undergrounding work? She explained that Caltrans has no legal obligation to contribute funds towards the undergrounding work. She added that staff will continue to request this, but Caltrans doesn't have any funding source that would pay for undergrounding. 17 Burlingame City Council October 19, 2020 Approved Minutes • How will the City make up the funding gap? She explained that there are a number of other ways to close the funding gap, including using City General Fund dollars and creating an assessment district. She stated that one of the recommendations that CPUC staff made is to allow certain large projects to receive an allocation of unused Rule 20A credits after the new rule goes into effect. The protocols for qualifying for unused system wide credits will be established upon CPUC's approval of the new rules in early 2021. She added that the City may be able to borrow ten years of credits from the calculated future PG&E allocation in order to implement the project. City Manager Goldman noted that the county that she and DPW Murtuza had talked to hase about $7 million in credits that they may be willing to sell to the City. However, the county is looking for a higher price. City Manager Goldman stated that staff is asking Council if they are okay with purchasing Saratoga's credits for $.30 per credit for a total of $1,208,330. She noted that there is approximately $24.6 million in the City's Capital Improvement Reserve Fund after the Community Center is funded. She added that the City will also need approximately $15 million for the Broadway Grade Separation Project, which would leave approximately $9.7 million remaining the reserve. City Manager Goldman noted that the City isn't planning any additional funding to the Capital Investment Reserve right now. However, she stated that the City will see how they do financially when they close the books on this fiscal year. Vice Mayor O'Brien Keighran asked if staff knew of any other cities that are trying to purchase Rule 20A credits. City Manager Goldman replied that there are several cities that are working on obtaining credits. Vice Mayor O'Brien Keighran asked what price the county that has $7 million in credits is looking to obtain. City Manager Goldman stated that they tossed around $.35 per credit. The staff for the county were hoping to receive a higher price because of the large number of credits. City Manager Goldman stated that she wouldn't recommend that the City go up to S.40 per credit as staff was able to negotiate better prices. Vice Mayor O'Brien Keighran concurred with the City Manager. Councilmember Brownrigg thanked staff for getting the price of $.30 per credit. He added that he believed it was critical to El Camino Real to underground the utilities. Mayor Beach opened the item up for public comment. El Camino Real Task Force member Jennifer Pfaff enthusiastically endorsed the undergrounding of the utilities on El Camino Real. Mayor Beach closed public comment. 18 Burlingame City Council October 19, 2020 Approved Minutes Mayor Beach asked about borrowing future credits from the PG&E allocation. DPW Murtuza stated that it took the City 30 years to accumulate $6.5 million in Rule 20A credits. Councilmember Colson thanked staff and the subcommittee for getting a better deal. She noted that once the City has set a price of $.30 per credit, she believed that this new "market" number would dictate what cities will be willing to pay. She agreed with Jennifer Pfaff on the importance of this project. Councilmember Ortiz noted that while the City is going through some hard economic times, it is hard to pass up this good of a deal. Therefore, he stated that he agreed with purchasing the Saratoga credits. Vice Mayor O'Brien Keighran thanked staff and the subcommittee for negotiating the lower price. Mayor Beach thanked her colleagues for the discussion on this item. She noted that because of the pushback at the June 1 meeting, Council was able to save the community $800,000. Mayor Beach stated that she would be open to exploring another opportunity to purchase Rule 20A credits for $.30 per credit. However, she explained that she would feel more comfortable if the City maintained at least $5 million in the Capital Investment Reserve. Councilmember Colson discussed potentially utilizing Measure I funds towards this project. Councilmember Colson made a motion to adopt Resolution Number 133-2020; seconded by Councilmember Brownrigg. The motion passed unanimously by roll call vote, 5-0. 11. COUNCIL COMMITTEE AND ACTIVITIES REPORTS AND ANNOUNCEMENTS a. COUNCILMEMBER COLSON'S COMMITTEE REPORT 12. FUTURE AGENDA ITEMS Councilmember Brownrigg asked that the Council review the City's Commissions including: whether there should be more members, term -limits, and repurposing commissions. Council agreed to agendize this item. Councilmember Brownrigg asked for the Mayor's COVID Collaborative to be agendized so that the Council could learn more about it. The Council agreed to agendize this item. 13. ACKNOWLEDGEMENTS The agendas, packets, and meeting minutes for the Planning Commission, Traffic, Safety & Parking Commission, Beautification Commission, Parks and Recreation Commission, and Library Board of Trustees are available online at www.burlinaame.org. 19 Burlingame City Council October 19, 2020 Approved Minutes 14. ADJOURNMENT Mayor Beach adjourned the meeting at 10:03 p.m. in memory of Doug Friedman, Doug Bacchi and Justice Ruth Bader Ginsburg. Respectfully submitted, /s/ Meaghan Hassel -Shearer City Clerk 20 Burlingame City Council October 19, 2020 Approved Minutes