City Council spending money to make money
Editor’s note: This story is part of an ongoing series that tracks the city’s expenditures appearing on upcoming Santa Monica City Council consent agendas. Consent agenda items are routinely passed by the City Council with little or no discussion from elected officials or the public. However, many of the items have been part of public discussion in the past.
CITY HALL — The City Council tonight is expected to approve a series of measures that will cut costs and increase revenues, all while providing summer programs for youth and affordable housing for families seeking home ownership.
While the exact amount is yet to be determined because of a pending real estate deal and uncertainty regarding federal grant funding and commercial development, the City Council’s actions could save residents as much as $86,000 and generate over $16.4 million this year alone.
Much of that money, around $14.2 million, would come from a Los Angeles County sales tax used to fund public transportation, including Santa Monica’s Big Blue Bus, according to a city staff report.
The remainder of the revenues and cost savings will come in the form of new lease agreements with businesses at the Santa Monica Airport; a less-expensive advertising contract with the Santa Monica Daily Press newspaper; federal grant funding for affordable housing construction; and summer programs for youth.
To reap the benefits of free money for mass transit, the City Council must annually instruct the City Manager to file the city’s short-range transit plan with the Los Angeles County Metropolitan Transportation Authority, or MTA. This allows the city to qualify for millions in local, state and federal funding, including grants and sales tax revenues.
Along with the transit plan, the City Manager must also file a federally-mandated alcohol and anti-drug policy that all “safety sensitive” employees of Big Blue Bus must be subject to. The policy, in place since 1988, includes random drug testing of mechanics and bus drivers, as well as alcohol screenings, said Dan Dawson, public information officer for Big Blue Bus.
By filing, Big Blue Bus stands to receive at least $14.2 million, which helps the city’s public transit system remain self-sufficient and not draw money from City Hall’s general fund, Dawson said.
The City Council is expected to order the filings tonight.
As grants — both state and federal — play a major role in funding affordable housing projects in the city, the Council is expected tonight to ask the City Manager to apply for $1.3 million from the state to offset costs for the construction of a 45-unit, affordable housing project at 1943 High Place near Edison Elementary School, according to a city staff report.
Over the next two to four years, the Community Corp. of Santa Monica (CCSM), a non-profit dedicated to developing and managing affordable housing, will use a combination of city money, grants and private funds to build the housing project, which will allow buyers to receive a low-interest, 30-year mortgage at 1 to 3 percent deferred interest, By applying for the Building Equity and Growth in Neighborhoods funds from the state, City Hall can expect to see a subsidy savings of up to $30,000 per unit, according to city staff.
Like any landlord-tenant relationship, there comes a time when the lease needs to be renewed.
The City Council tonight is expected to authorize the City Manager to enter into three lease agreements with existing tenants at the Santa Monica Airport who were displaced by the development of the Airport Park. The businesses include Santa Monica Acura, the Santa Monica Antique and Collectibles Market, and Spitfire Grill.
Santa Monica Acura is seeking to lease 1 acre for vehicle storage. Santa Monica Antiques and Collectibles is looking to lease 1.2 acres for parking, and the Spitfire Grill proposes to lease over 3,000 square feet of interior restaurant space and 3,000 square feet of outdoor patio space, according to a city staff report.
The three leases are expected to generate $598,880 a year in revenue, plus more than $500,000 in improvements to buildings at two locations.
The proposed lease for Santa Monica Acura, which also operates Santa Monica Lincoln-Mercury, would be for nine years, generating $72,000 a year for the city’s airport fund. The leases will also include $100,000 for improvements, including new pavement, exterior lighting and a 275-foot wall to run along the south property line, intended to enhance security at the airport, a city staff report said.
The lease for the Market would be for a three-year period, generating $30,000 a year for the airport fund.
For the Spitfire Grill, the lease would be for nine years, generating $56,500 a year, according to a city staff report. Owners of the Spitfire would be required to make $491,000 in improvements to the site, including new restrooms, an outdoor dining area, new facade and landscaping, as well as an expanded kitchen area.
In exchange for the improvements, City Hall is offering a rental credit in the amount of $1.390 per month for 108 months, or $150,120.
The City Council is looking to change the way it advertises public notices by switching from the more expensive Los Angeles Times to the Santa Monica Daily Press for a potential cost savings of $86,000 a year.
According to a city staff report, City Hall has advertised with the Times since The Outlook newspaper folded in 1998. At a reduced rate, City Hall pays $44.95 per column inch in the Times. The Daily Press is offering an ad rate of $10.75 a column inch. The city currently places 2,500 column inches annually.
City Hall received two bids for the contract, one from the Daily Press and another from the Santa Monica Observer.
In a recent appellate court decision involving a lawsuit between the Observer and City Hall, the court ruled that the Observer was not adjudicated, or allowed to run legal notices, which primarily deal with public bidding and land use matters, according to a city staff report. The Daily Press was adjudicated in December 2005.
Under law, City Hall is required to publish the legal notices to inform the public.
The Daily Press was selected by city staff because it is the only adjudicated paper published locally and will provide “a substantial cost savings to the city,” a city staff report said.
If the council approves the contract, the city expects to spend more than $27,100 with the Daily Press over the next fiscal year, plus another $25,000 for a previous advertising contract with the Times, which expires in January 2007.
With summer quickly approaching, the City Council is expected to contract with three private companies to run programs for youth, including surf camps, beach sports and soccer classes.
The programs should cost an estimated $488,000, but the investment will pay for itself in registration fees expected to hit $630,000, for a profit of $252,000.
Surf Academy will run the surf camp, which attracted nearly 900 youth and 275 adults last year. In addition, Surf Academy also provided surf lessons to 780 kids participating in other city camps and programs, such as Rosie’s Girls, Sports Experience and the Police Activities league, at no additional cost, according to city staff.
The Surf Academy contract is expected to cost $180,000, with offsetting revenue of $230,000.
Because the academy was so popular, the council wants to bring on Beach Sports, which will offer more activities in the surf and sand. That contract is valued at $154,000, with an offsetting revenue of $220,000.
Socceropolis will be in charge of administering the soccer camps at a cost of $144,000, with offsetting revenue estimated at $180,000, according to a city staff report.
The camps and classes will be published in Seascape — the summer youth camps and classes brochure — community classes fliers and the city’s Web site. Those interested can register online, by mail, fax or can in person.
To generate more revenue, the council is looking to sell a 1,034-square-foot piece of property located at 2101 Pico Boulevard, which is Virginia Avenue Park.
A number of parcels were purchased to create Virginia Avenue Park. The land for sale is a parcel that could not be incorporated into the park and offers no use, except to a homeowner living adjacent to the parcel, a city staff report states.
When negotiations are complete and a sale offer is presented to the council for consideration, the sale price will be disclosed to the public, according to city staff. Proceeds will go to fund community development grants.
In keeping with the theme of cost savings and investments, the council tonight will also consider approving of a permanent formula to calculate fees developers pay to help construct affordable housing.
The affordable housing fee, charged to developers constructing market-rate housing, is adjusted at the beginning of each fiscal year, which starts July 1.
Last fall, the council adopted a law modifying the fee based on a formula that takes into account changes in construction and land costs. The new formula will use the Engineering News Records Construction Cost Index, the annual change in median condominium sales prices by zip code, and the current development costs for completed affordable housing developments or those currently in-progress.
There is no fiscal impact on the city’s general fund, and it is too early to say what the new fee would generate as private development fluctuates annually, city staff said.
Originally published in the Santa Monica Daily Press print edition on May 9, 2006. Read the original PDF.