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6/23/1976MINUTES OF THE ADJOURNED MEETING OF THE CITY COUNCIL CITY OF ROLLING HILLS, CALIFORNIA June 23, 1976 An adjourned meeting of the City Council was called to order by Mayor Rose at 7.30 P.M. Wednesday, June 23, 1976 at the Administration Building, 2 Portuguese Bend Road, Rolling Hills, California. ROLL CALL- PRESENT- Coun.cilmembers Crocker, Heinsheimer, Swanson Mayor Rose Councilman Pexnell arrived at 8.00 P.M. ALSO PRESENT. Teena Clifton City Manager William Kinley City Attorney Jack Davidson President, RHCA Board of Directors Dr. David Bray President, Rolling Hills Tennis Club Joe 011a, President, Caballeros Residents PUBLIC HEARING, REAL ESTATE TRANSFER TAX Councilman Crocker, Finance Officer for the City, explained that the source of the City's revenue has been property taxes, along with other miscellaneous taxes, and approximately $5,000 remitted annually to the City by the County as a portion of a County property transfer tax, collected upon sale of a property. Currently, the Council is con- sidering whether to attempt to raise its revenues and lower the tax rate by imposing a City tax on sales of property, which would be a percentage of the sales prices Figures have been developed using sales prices during the past year, and they indicate that a 1/4 of 1% transfer tax would raise $25,000 in revenues Using a projected 82e,� tax rate, adoption of a 1% transfer tax would lower the City's tax rate to 7206 with 9a4� coming from a transfer taxa If the transfer tax were set at 1/2 of 1%, the basic tax rate would drop to 63� and 19G would come from the transfer tax; 3/4 of 1% would be 53(,% basic tax and approximately 28(,,� transfer tax; 1% would be 44� basic tax and 38� transfer tax. I Because there are arguments on both sides of the question, Council- man Crocker asked the Mayor to ask members of the Council to comment. Councilman Heinsheimer°said that over the past few years the transfer of property has been at a fairly constant rate, and because the increased assessments impose a burden on people who have lived in the City for many years and do not anticipate selling their homes, he suggested that the Council consider a 1% transfer tax, which would make a significant im- pact on property tax rate, but would have an insignificant effect on the sale of a home, and which would generate 35-40% of the City's revenue. Further, Councilman Heinsheimer said the Council should keep in mind that a 10� difference in tax rate has an impact of $26,000 on the City's revenue. Councilwoman Swanson said she had mixed feelings on the matter. Because the City is on a "pay as you go" basis, with most facilities already paid for, and in view of the additional $33,000 which will be available to the City next year after purchase of the Maintenance Build- ing from the Association is completed, Councilwoman Swanson said she does not feel that there is a need to raise additional revenue through a real estate transfer tax, and further, she said it could be a burden on per- sons who are forced to sell their home because of inability to pay the taxes, even if they are reduced, or who must move because of a transfer, or personal necessity as a result of illness or death.° She said she would be opposed to such a tax at this time. June 23, 1976 Councilman Pernell said he had received several telephone calls on the matter, and had discussions with long-time residents. There has been concern expressed about the impact on residents who wish to sell their homes after many years in the City, and further, concern that the Council might act hastily, without due consideration of the full impact of such a tax. He said that it is the Council's responsi- bility to explore and fully consider any areas which could provide re- lief to the property tax, and he suggested that if all factors are positive and the Council does decide to adopt such a tax, consideration could be given to a graduated scale to be applied to residents who have lived in the City for a number of years. Councilman Crocker said it is important to find an equitable method of application of such a tax, and he agreed with Councilwoman Swanson that in many cases people move because of personal necessity as well as for financial reasons and job transfers, and if a resident has lived in the City for a short time and is forced to move because of such personal circumstances, it would not be equitable to grant relief to persons who have made the decision to move after having lived in the community for a long time, while taxing others who are forced to move due to other circumstances. Further, although the City is limited by law to a tax rate of $1000, as grants such as revenue sharing and CETA cease in the future and the cost of services continues to escalate, it may be necessary for the Council to look for other sources of revenue, and 'uch a tax may be more helpful at that time. Finally, he agreed with Councilwoman Swanson that it may not be fair to raise money to ease the financial burden of people who are going to remain in the City by taxing people who are leaving the community. In a year when real estate loans are difficult to obtain, depending on 35-40% of the City's revenue from a transfer tax could be risky, since the City's budget could be adversely affected by lack of sales of real estate, Councilman Crocker said. Mayor Rose asked the City Attorney to comment on whether a tax levied on persons who are selling their property and leaving the com- munity could be considered discrimination, and Mr. Kinley said it could not, since all sales would be treated equally if all people who sell are subject to the same formula, Mr. Kinley advised that in a tax court case, the Internal Revenue Service has ruled that such transfer taxes are not deductible from income tax, Mr. Kinley advised. Mayor Rose said he thinks the Council should try the tax for a few years, although he would not be willing to go as high as 1%. Adopting a 1/2 of 1% tax would leave enough flexibility for future increases if needed, the Mayor said, and Councilman Heinsheimer said he would agree to 1/2 of 1%, since in the event that real estate was not transferred at the expected rate, there would be enough flexibility to increase the transfer tax if needed. A letter dated .Tune 21, 1976 from Dr. Paul Saffo, 1 Crest Road East, stating that he wished to go on record as being in favor of the transfer tax was read into the record, Councilwoman Swanson said that although the Newsletter advised the community that the transfer tax would be an agenda item for the Council meeting, she felt that the residents did not receive sufficient inform- ation on the importance and impact of the Council's consideration. Councilwoman Swanson read the notice which was in the Newsletter. Mayor Rose opened the Public Hearing on the tax, and invited discussion by residents in attendance. Mr. Joe 011a, 41 Crest Road West, asked whether a real estate transfer tax would have any effect on the County tax, and was advised that it would not, as far as assessed valuation and County tax rate; only that portion of the tax collected by the County for the City would be reduced. Mr. To Jo Dykzeul, 17 Cabal- leros Road, said he has lived in Rolling Hills for 18 years, and is opposed to such a taxa He asked that residents be given an opportunity to vote on the matter. -2- June 23, 1976 Mr. Edward Tyle, 36 Portuguese Bend Road, said capital gain and tax deductions in connection with sale of property should be considered very carefully, and people should realize that it is possible to defer, but not evade paying taxes. Further, in answer to Mayor Rose's comment that the Council could try the tax for a year or two, Mr. Lyle urged that it not be adopted on a trial and error basis, but if adopted, it should be done after due consideration by the Council. Mr. Lyle said that at this time he is neither in favor of nor opposed to the tax. Councilman Crocker said said capital gain is not a major problem, since Cher is no gain when the money is re -invested in property of greater value, and there are rules which apply to persons over 62 years of age. Councilman Heinsheimer said he would recommend that if a transfer tax is adopted, a limit of $1.00 total tax rate, consisting of the combined City tax rate and the proposed real estate transfer tax, should be imposed by ordinance as a safeguard against continual increases in the transfer tax, and to insure that the new tax resulted in easing the burden of property taxes by raising a portion of the revenue currently received, rather than generate additional revenue. It is the Council's intent to change the source of the money collected rather than the amount, he said. Mr. John Gandzey, 16 Wideloop, said he would be in favor of a real estate transfer tax, since it would eventually be levied on all who sold their homes, and would continue to generate increase revenue as sales prices of property increase, Councilman Crocker asked how the tax would be collected, and the City Attorney said it would be done by the County, and would be an additional transfer tax, since a County transfer tax is currently collected, and a portion remitted to the City. Councilman Heinsheimer said the current tax is 505 per $100, and the tax being considered by the County would be approximately 50� per $100. If adopted, Mr. Kinley said the County Recorder should be advised that the City has levied a transfer tax, and be requested to collect the tax. Mr. Forrest Riegel, 2 Cinchring Road, said that the value of property in Rolling Hills is increasing approximately 5% annually, and he considered a 1% transfer tax fair, since it would still permit a profit on sale of a property. Mrs. Emily Schleissner, 77 Crest Road East, said the savings realized by the resident in the lowered property tax would be wiped out by the tax required when the property is even- tually sold. Mr. Ed Lyle said the tax relief given to senior citizens is a one-time deduction to people over 65 years of age. He suggested that the Council get more information before acting on the proposed tax. Mr. Robert Kerr, 10 Eastfield Drive, said he is in favor of any decrease in expenditures, and he sees the proposed transfer tax as an increase, unless the Council limits the combined tax as suggested by Councilman Heinsheimer. Councilman Crocker said that any Council that could change the tax rate would have the power to amend the ordinance to change the combined tax rate. Mayor Rose thereafter closed the Public Hearing, Councilman Heinsheimer moved that the Council adopt a 1/2 of 1% real estate transfer tax, and use the action as a basis for further budget discussions. Mayor Rose asked Councilman Heinsheimer to accept an amendment to the motion to state that the combined property tax and real estate transfer tax must not exceed $1.00, Councilman Heinsheimer said that action should be taken whether or not a transfer tax is adopted at this time. Councilman Crocker seconded the motion for purposes of discussion. Following a discussion of time limits, methods of implementation and effective date, a motion to adopt a transfer tax to be combined with property tax., not to exceed a total tax rate of $1000 was carried on the following roll call vote: AYES: Councilmembers Crocker, Heinsheimer, Pernell, Rose NOES: Councilwoman Swanson -3- June 23, 1976 The City Attorney was requested to prepare the appropri June 239 1975 Road, said she has nine utility poles surrounding herhome, and would like to have them removed, but it is too expensive. Mrs. Mokler said she does not expect the City to assume any of the expense, Councilman Crocker recommended that no charitable or civic con- tribution should be made from City revenues except where the activity is available to and affects all of the community, or is related to juvenile or other law enforcement preventive programs. Councilman Heinsheimer said he agreed with the policy in concept, but felt that Peninsula -wide activities such as the Peninsula Chamber of Commerce and 4-H Club were of merit to Rolling Hills, and individual consider- ation should be given to requests. Councilman Crocker said such con- tributions could be made from the Miscellaneous Non -Budgeted Expense fund of $2,000, and a similar amount would be carried in the new budget. Councilman Heinsheimer, Personnel Officer, said the staff recom- mendation for an increase in compensation was reviewed with the Asso- ciation, and the recommendation for a modest increase which limits the increase in compensation to a cost of living increase will not materially affect the Budget. Specifics submitted with the recommend- ation are available, Councilman Heinsheimer said, With regard to a capital budget for recreation, Councilman Crocker said the line item Equestrian Facility Maintenance is inap- propriately listed in the City's budget, as maintenance items are paid by the Association. He explained that capital improvements are made by the City and are leased by the Association, which also pays for maintenance. The Recreation Facilities Fund has been divided into two funds, one for tennis and one'for equestrian, and the monies were put into capital trust funds for recreation purposes. The allocation in the budget should not be shown as unspent funds, Councilman Crocker said, as the money has been spent by being allocated to the fund, and it is proposed to put the same amount into the funds for the coming p year. Dr. David Bray, 9 Quailridge Road, President of the Tennis Club advised the Council that the Recreation Questionnaire indicated that the majority of people who responded are in favor of additional tennis courts, and he said that last year the Tennis Club added $1,000 to the Council's $4,000 allocation, and it is their intention to take similar action this year, with the funds being accrued for capital improvements of tennis facilities. Dr. Richard Hoffman, 73 Portuguese Bend Road, said the Tennis program is one of the most successful programs for residents of all ages, and there is a need for more tennis facilities. Mrs. Betty Stern, 29 Crest Road East, said she approves of the Council's approach to the club's request for money by requesting data to substan- tiate the request for the allocation, since sound financial planning cannot be accomplished without such background informations For pur- poses of developing a. budget, Councilman Pernell said he would be in favor of making an allocation for recreational purposes in the budget, pending definite information from the Tennis Club and Caballeros. Mr. .Joe 011a, President of Caballeros, said that Caballeros would like to up -grade the equestrian facilities, and in an effort to develop the best plan, Caballeros looked into the feasibility of enlarging ,,and developing the existing Caballeros ring, rather than building another ring, and it was determiend that such a plan would not be entirely -prac- tical. However, Mr. 011a said that with the use of satellite rings throughout the City', some of the needs of equestrians could be satisfied and the existing ring would be a better ring. He said that the picnic facilities in the ring area should be developed, and would benefit the entire community, since many non -riders belong to Caballeros. Existing water and trees in the area are compatible with such development, if planting was done to keep the dust down and electricity installed. Further, Mr. 011a suggested that consideration be given to developing -5- June 23, 1976 a centralized recreation area for the community by putting additional tennis courts in that area. Anticipated capital improvements in 1977 include minimum expense for developing a facility on the site proposed to be given to the City by Mr. and Mrs. Clifton Hix, A conservative estimate of financial needs for the next fiscal year is $10,000 Mr. 011a said, as Caballeros hopes to develop satellite facilities by fencing some area and also by developing an exercise ring in the Gap area to relieve some of the pressures on Caballeros ring. Landscaping in the Gap area would cost about $2,500; relocation of a trail to permit development and landscaping of the picnic area, build a fire pit and fence the area would cost approximately $2,500, and would result in 60% more usable area in the picnic area; to re -surface the Caballeros ring would cost $7,500, and $10,000 would be required to develop satel- lite rings. Mr. 011a said, all the work possibly would not be taken care of in the coming year, but he wished to submit a tentative master plan and request an allocation of $22,500 for projected needs. Councilman Heinsheimer suggested that an Ad Hoc Committee consisting of Mayor Rose and representatives of the Tennis Club and Caballeros be formed to review and develop a five year master plan, and be asked to report to the Council by October 1 on projected needs, Further, he said he would recommend that until that is done, an allocation of $14,000 for recreation needs be made in the budgets Mayor Rose said he would be in favor of raising the allocation to $20,000. Mr. Forrest Riegel, a member of the Environmental Quality Board, said the Board is concerned about the quality of life in Rolling Hills and in preserving the things which contribute to it, He said that many members of Caballeros are not horse owners, and in the area where he lives the number of families who own horses has decreased in the past seven or eight years to 20-25%, although when he moved to Rolling Hills, approximately 40% of his neighbors owned horses. Three private rings in which lessons were once given have been lost to the Community through development or sale of property, and it is no longer possible to buy a horse or take lessons in Rolling Hills. As it becomes more difficult to enjoy horses,the community is changing, and Mr. Riegel said ownership of horses sh6u.,ld be encouraged to preserve the quality of life. Further, Mr. Riegel said that people who ride horses are vitally interested in retaining easements for trails, and preservation of easements is essen- tial in maintaining the character and openness of Rolling Hills. Coun- cilman Crocker agreed that horses contribute to the openness in the area and. --he said that properties which have horses in a field or in an en- closed area on the property do not have the brush problem that proper- ties without horses have. He said private tennis courts detract from the rural atmosphere of the City, and facilities should be provided to remove the pressure for private courts, and said allocations for capital improvement of recreational facilities should be included in the budget on a more equitable basis, since both the Tennis Club and Caballeros have plans for development, and he recommended that $20,000 be budgeted. Mrs, Betsy Raine, 71 Portuguese Bend Road, said she felt the picnic area should be developed with natural planting rather than landscaping, and she wished to be on the committee which decides how Caballeros money will be spent, since she feels that development of satellite rings could be done in a more natural manner, also, at lower costo Mrs. Ailsa Lyle said the young people in Rolling Hills, especially the boys, have active- ly participated in tennis activities, Mr. Jerry Zinman, Eastfield Drive, said he didn't think the response to the recreational questionnaire was conclusive, since only 305 families out of more than 600 responded, and although some are strongly in favor and some moderately in favor, forming a majority, a number of people are also opposed to additional facilities, and 164 families stated that they were in favor of the City's adoption of a policy to reduce taxes by not spending any amounts on additional recreational facilities. Mr. Zinman said he would be in favor of development of a five year plan before additional money is spent on additional recreational facilities. June 23, 1976 Councilman Crocker said that the questionnaire was not intended to be judged on a majority basis, and he considers 305 responses represent- ative of a good cross section of the community. Further, he said that an allocation is not an expenditure, but a provision that a certain amount'of money is appropriated for expenditure if the committee rec- ommends, subJect-to Council approval for specific expenditures. Councilman Heinsheimer said he would like a straw vote on his proposal that an appropriation of funds be made, but that no expenditure be made until the Committee reports tc the Councils Mrs. `hockie Leonard said she is in charge of junior tennis, and there is an acute need for additional facilities. She asked whether there is a way to finance additional courts other than with City funds, and she was advised to investigate alternatives for financing, such as private funding, as part of the study. Dr. Gordon Bernstein, 1 Ringbit Road West, said that,the survey indicates that the complexion of the community is changing and that tennis is becoming more popular than horses, and therefore the statement has been made that horse activities and ownership must be encouraged. Dr. Bernstein said he doesn't think it is proper that a stable could be built which can be seen by a neigh- bor, may be offensive because of odor, and may block ":he view, and such action would be condoned because it is horse -oriented, while a person who wishes to build a tennis court is discouraged from doing so because it is considered out of character with the community, Councilman Pernell suggested that the recommendations of the com- mittee consisting of representatives of theTennis Club and Caballeros, and Mayor Rose, who is City Council liaison with both organizations, should be presented to the Planning Commission, which is concerned with land use, for a recommendation to the City Council. Forrest Riegel, Planning Commission Chairman, agreed. Councilman Heinsheimer again suggested that $14,000 be allocated in the 1.976-77 Budget, to be added to funds already accrued on the same 'basis that the allocation was made last year. Mayor Rose said he thought $20,000 should be allocated, to be divided evenly between both groups, Other members of the Council agreed and it was so ordered, with the understanding that none of the money would be spent until the report of the committee had been received and considered. RECESS The meeting was recessed at 11000 P.M. and reconvened at 11°10 P.M. Councilman Crocker advised that by contractual arrangement with the Rolling Hills Community Association, the City of Rolling Hills pays 1/4 of the gate costs because of traffic safety, and further, the contract gives the City a voice in decisions pertaining to the gate system. He asked Mr. Jack Davidson, President of the Board of Directors, speak 'to the matter. Mr. Davidson said that Mr. Kin.ley, attorney for both the City and the Association, advised that it would be preferable for the Community Association to have complete jurisdiction over the gate system to guar- antee the private status of the community, but he said, further, that a partial subsidy by the City would not jeopardize the private status. Mr. Davidson said that the Board of Directors had hoped to reduce the Association tax from 80� to 66�., but if the Association assumes full cost of gate operation the reduction would not be possible, and he asked that the City's tax rate be reduced to reflect the change, if they decide not to subsidize gate operation. Mr. Kinley explained that laws governing cities have changed since Rolling Hills was incorporated, and the city is now subject to -7- June 23, 1976 liberal interpretations of laws which give people outside the area ingress and egress, but the Association is not bound by the same laws, therefore he recommended that the Association and City should be kept separate to preserve the status. Following discussion of the matter Mayor Rose moved that the Council not participate in the financial operation of the gates, and that the - funds previously allocated for gate operation be used to reduce the City`s tax rate. The motion was seconded by Councilman Crocker and carried by the following roll call vote: AYES,. Councilmembers Crocker, Heinsheimer, Pernell, Swanson Mayor Rose NOES- None ABSENT,, None Councilman Crocker asked the Manager whether extra funds should, be set aside for enforcement of the new dog ordinance. The Manager said no, the City should make money under the new agreement, Councilman Crocker said he is concerned about the City's emergency action program, and he wished to ask the Council to consider whether a consulting firm such as Envicom should be hired to assist in the pro- gram. Mrs, Clifton said she did not think it was necessary, as she has discussed the matter with the Sheriff, and it is her opinion that the program developed for the City is adequate. Councilman Crocker said he wished to include $1,000 for a consultant, which would go into the miscellaneous fund if not used, Councilwoman Swanson said she would recommend $2,000 which would be a more realistic figure for services of a consultant, The Manager reported that the new communications system will be in operation in mid to late August, Mayor Rose suggested that $1,000 be included for the Emergency Action Program, to be put into the General Fund if not used, further, there are miscellaneous funds which could be used in the event that more money is needed. Councilmembers agreed, Councilman Crocker said he feels that the money spent on newspaper advertising, although small, is an unnecessary expense. Mayor Rose said it is a good public relations gesture. In a straw vote of the Council, Councilman Crocker voted against such expenditure, Council - members Heinsheimer, Pernell, Swanson and Mayor Rose voted in favor of the allocation- . Councilman Crocker said there will be approximately a $20,000 increase in the cost of law enforcement, and he asked whether addition- al funds should be provided for additional services. The Manager re- ported that when discussions were begun with the Sheriff's Department, it was on a four -city basis, but Lomita and Rolling Hills Estates are no longer part of the general discussion, and deployment will be on a Rolling Hills -Rancho Palos Verdes basis, same as last year. The cost of five hours of service per day will be about $55,000, seven hours will be $79,000 approximately. Further, the Manager recommended that theCity participate in BAT, the Burglary Apprehension Team, at an additional cost of $6,000 per year, and she said she doesn't consider additional service beyond the present level is necessary. The Council agreed to allocate $61,000 for Sheriff's services, including $6,000 for participation in BAT, A motion to participate in the Burglary Apprehension Team at a cost not to exceed $7,000 was made by Councilman Heinsheimer, seconded by Councilman Pernell and carried by the following roll call vote: E 1 Pune 23, 1976 AYES- Councilmembers Crocker, Heinsheimer, Pernell, Swanson Mayor Rose NOES- None ABSENT: None In further discussion of the budget, Councilman Crocker asked that $10,000 allocated for Litigation be removed, since the funds were not spent during the past year, and there is money in the Reserve Fund should the need arise. With regard to $500 for mapping, Councilman Crocker asked that a map of the Clay be put on the wall of the Council Chamber. The Manager was directed to preceed with the project as soon as possible. The Mayor directed that Tree Trimming be moved to another location in the budget, preferably under Special Projects. Councilman Heinshei® mer asked that $2,000 be included for the tree watering project, and suggested that it be labeled Vegetation Preservation. ADJOURNMENT The meeting was adjourned at 11,-50 PoM. 2 0-Z I �� -- --- — t Mayos — -- -- - - - City Cler' ''KI