The view of Scotts Valley from above. (Credit: City of Scotts Valley)
SCOTTS VALLEY — From pension funds to subdivisions to the use of city facilities by nonprofits, the Scotts Valley City Council on Wednesday tackled a number of issues at its last regular meeting before the start of its month-long summer break beginning in July.
The City Council began its ambitious agenda with a presentation regarding the implementation of a section 115 trust fund to combat the mounting and somewhat unpredictable debt with CalPERS, which is the state agency that manages pension and health benefits for public employees. When CalPERS investment portfolio doesn’t perform as well as planned, cities such as Scotts Valley make up the difference.
“As we talked about last year, at that point in time, the city’s UAL (unfunded accrued liability), that is, the city’s debt with CalPERS was about $16 million and that is expected to grow to $24 million when the reports come out this summer,” said Mike Meyer of NHA Advisors at the meeting. “Potentially, it could go a little higher if CalPERS does underperform this fiscal year.”
Meyer and others from NHA Advisors have worked in tandem with Scotts Valley city staff and a special committee for about 10 months to evaluate cost management strategies to deal with the accumulating debt. In addition to adopting a formal pension funding policy last December, the coalition decided the best way forward for the city is to establish a section 115 trust fund.
In years where CalPERS investment returns underperform and the city is faced with a higher annual payment, it will be able to withdraw money from the section 115 fund to soften the impact to the city’s general fund and make it easier for the city staff to plan for future budgets.
The consultants, committee and city staff deliberated over which firm they would choose to administer the trust and landed on Shuster Advisory Group, which the coalition found to have the lowest fees and best investment performance of the firms they considered, and had worked with cities of similar size to Scotts Valley.
“This is an attempt by our city to address a kind of silent but serious problem,” said Scotts Valley Vice Mayor Randy Johnson, “Moving forward, the slow and systematic approach and solution may take a while, but at least I think we’re on the right track.”
The City Council voted unanimously to adopt the section 115 trust fund administered by Shuster Advisory Group and to authorize a transfer of $2 million after all the paperwork is completed.
“I am excited how this is going to stabilize the city for the future,” said Scotts Valley City Councilmember Derek Timm. “I know it’s a big number. Two million dollars is a lot of our budget to put into it, but it’s really smart planning.”
Waiting on market
Next on the docket was the planned Bay Village Planned Development, on Erba Lane in Scotts Valley, across from the Scotts Valley Fire District, which was approved in June 2021 by the City Council.
Bay Photo CEO Larry Abitbol, developer of the 1.4 acre site, is set to build a 10-home subdivision, which consists of six single family homes and four duplexes, but requested a time extension of one year with the market in mind.
“The project approvals for entitlements are typically valid for a period of two years and a one-time, one-year time extension request is considered,” said Sarah Wikle, senior planner for the city of Scotts Valley at the meeting. “We did receive a time extension request application from the applicant to extend the entitlement approvals and allow for some additional time to prep the project site for development given the current market conditions.”
After the staff presentation, Timm suggested possibly extending the extension to two years, given the current interest rates and costs of building, but the city attorney pointed out that the applicant only requested the one-year extension.
“I want to see this project get started and housing get built and help the owner to do that,” said Timm. “I don’t see the clouds on the horizon getting any clearer in the next six months.”
During public comment, local planning consultant Charlie Eadie, who has worked with Abitbol to develop the project, seconded Timm’s comments and mentioned that the costs associated with development are currently so high that a two-year extension may be necessary.
“There’s two problems here: the cost of construction and the cost of money,” said Eadie. “I like the idea of extending the permit two years so we don’t have to come back in a year if there’s still problems in getting going on this.”
With that in mind, the council modified the language of the motion to extend the project two years instead of one, and approved the motion in a unanimous vote.
Not for profit
Before convening to a closed session, the council considered the collection of fees associated with the use of city-owned facilities by nonprofit organizations.
“Certainly the city values the public benefit of our local nonprofit organizations,” said Scotts Valley City Manager Mali LaGoe. “While at the same time, we have a fiduciary responsibility to our taxpayers to collect fees for the use of city facilities and to protect the city’s facilities so we can continue to maintain them at the level that the community expects.”
LaGoe mentioned at the meeting that, in the past, when a nonprofit requested not to pay the fees associated with the use of city facilities, the request would always have to brought before the City Council for consideration, which has been an onerous process for city staff and the council.
With that in mind, LaGoe suggested a new policy to the City Council to help streamline the process, wherein the city manager would take charge of determining whether an event was exempt from fees, with the option to send the decision to the council after consideration by the city manager or by the request of the applicant.
“It defines a process, which includes an application submitted by the organization to the city and reviewed by the city manager for consistency with the policy that applies,” said LaGoe. “As well as an option for the City Council to review an application either at the city manager’s request or if the city manager denies an application, the applicant could request an appeal to your City Council.”
In Scotts Valley, the events that are not eligible for the fee exemption include those that are not open to the public such as a board meeting, that benefit an organization outside of the city, an event hosted by a private party even if the event benefits a nonprofit organization and events that do not align with the city’s strategic goals
The proposed policy was commended by councilmembers such as Donna Lind, who mentioned delays in approving fee exemptions when all of the request have to be considered exclusively by the council.
“We’ve discussed this in the past, which I think is what led to the policy being created,” said Lind. “It eliminates every single request coming to council, and the staff time, and the delays in getting approval so thank you for that.”
After public comment, the council voted unanimously to approve the new policy.
The Scotts Valley City Council will hold a joint special meeting with the Scotts Valley Planning Commission at 6:30 p.m. Wednesday to discuss its housing element before submitting it to the state and will return to the council chambers for its next regular meeting at 6 p.m. Aug 2.
To watch the meeting, visit youtube.com/@cityofscottsvalley.
