Huntington Beach City Council/Public Financing Authority Meeting - January 16, 2024

The City Council met on January 16, 2024, from 4:00 PM to adjournment, including a study session on water and sewer rate studies, a closed session, and a regular meeting from 6:00 PM. Key topics included proposed charter amendments (Measures A, B, and C) for the March 5, 2024 ballot, the 2024 celebration calendar program, litigation updates, a strategic plan progress update, and two council member items regarding a sewer easement dispute and an expedited plan check proposal. Public comment was extensive, with 48 speakers, each limited to two minutes, predominantly opposing the charter amendments.

Study Session: Water & Sewer Rate Study

• Deputy Director of Public Works Alvin Papa presented a five-year rate study, citing $180 million in water projects and $75 million in sewer projects over the next five years. Key infrastructure needs include replacing aging wells (6 of 9 are 50+ years old, each failure costing $2M/year in water purchases), replacing 6 miles of pipe per year (currently 1 mile), and upgrading lift stations.
• Proposed rate adjustments: For a typical single-family home, water bills would increase by about $6/month in the first year. The city currently has among the lowest rates in Orange County. The schedule includes a Prop 218 public hearing on April 16, 2024, with rates effective July 1, 2024, if approved.
• Council discussion touched on drought modeling, tiered rates (currently not used), commercial rate impacts, and reserve targets. Councilmember Kalmick raised concerns about drought revenue cycles and stormwater funding. No vote was taken; it was a study session.

Public Comments & Testimony

• 48 members of the public signed up to speak; time was reduced from 3 to 2 minutes due to volume.
• The overwhelming majority of speakers opposed Measures A (voter ID for municipal elections), B (restricting flags to government flags, requiring unanimous council vote to change), and C (mayor's authority to cancel meetings, two-year budgets). Arguments included: lack of voter fraud evidence, unknown and potentially millions in costs, violation of state law, risk of litigation, and that the measures are divisive political theater.
• Several speakers referenced the Orange County Registrar of Voters' integrity, the high cost of running independent elections (estimated $1.2M-$1.6M startup), and potential cuts to services (libraries, parks, roads) to pay for them.
• A few speakers supported the measures, arguing for election integrity and flag unity.
• Other comments concerned the city celebration calendar (absence of Pride Month, Black History Month recognition), parking pass restrictions, the city deficit, and the Rhone Lane easement issue.

City Manager's Report: 2024 Celebration Calendar Program

• Staff presented a proposed 2024 monthly celebration calendar with 12 overarching themes (e.g., January: Founder's Legacy, February: We Love Our Libraries) and secondary acknowledgments based on federal holidays, city events, and public safety messages. June is themed "History of Independence Day" with acknowledgments including Juneteenth and Alzheimer's Awareness, but no Pride Month mention.
• Councilmember Moser questioned why secondary acknowledgments were added beyond council direction. Councilmember McKeon clarified that the 12 overarching themes are the focus for 2024, and other heritage months could be considered in future years by a proposed resident committee. Councilmember Kalmick criticized the exclusion of state-recognized holidays and the delegation of approval authority to two council liaisons.
• The City Attorney confirmed the item was properly agendized and council could make a motion. A motion to receive and file the report passed 4-3 (McKeon, Burns, Van Der Mark, Strickland in favor; Moser, Bolton, Kalmick against).

City Attorney's Report

• Redevelopment Reimbursement Lawsuit: The city prevailed in a lawsuit against the State Department of Finance. The county oversight board approved a $30,464,000 reimbursement for the Waterfront loan (originally $22.4M plus interest). Total reimbursements from two loans now exceed $37M.
• RHNA Mandate Challenge: The city filed an appeal brief with the Ninth Circuit on January 11, 2024, arguing the lower court erred in dismissing the case because the city is a charter city. The state's response brief is due March 1, 2024.

Consent Calendar (Items 9-18)

• Items 10 and 11 were pulled for separate discussion.
• Item 10: Quarterly list of professional services contracts. Councilmember McKeon expressed concern about high consultant costs ($610K Q1, $621K Q2, $1.1M Q3) and urged reducing reliance. The item passed 7-0 after discussion.
• Item 11: Annual review of the City Code of Ethics. Councilmember McKeon moved to change the word "equity" to "equality" under the fairness section. A substitute motion to keep the original failed 3-3-1 (abstention: Van Der Mark). The original motion to receive and file passed 4-3.
• The remaining consent items (9, 12-18) were approved 7-0 en bloc. Item 9 (minutes) was amended via supplemental communication.

Administrative Items: FY 2023-2027 Strategic Plan – Biannual Progress Update #1

• Staff reported 32% of 99 tasks complete, 47% in progress, 19% upcoming, 2% on hold. Progress was summarized across 8 goals. Key achievements include an economic development summit, customer service training, homeless outreach, and infrastructure master plans.
• Councilmember Moser requested broader Key Performance Indicators (KPIs) for each goal to create a public-facing digital dashboard. A motion to receive and file the update and bring back expanded KPIs in July 2024 passed 7-0.

Council Member Items

• Item 20 & 21 (Combined): Rhone Lane/OC San Easement Issue – Councilmembers Burns, Bolton, Kalmick, and Moser addressed a dispute between OC San and homeowners over a 63-year-old easement for a 67-inch raw sewage pipe. Homeowners face a February 1, 2024 deadline to remove structures (walls, pools, sheds) encroaching on the easement, with OC San offering to pay for removal but no compensation for loss of use. Residents requested 120 days extension and city mediation.
• A motion passed 7-0 directing the City Manager and City Attorney to request OC San extend the deadline (preferably 120 days) and to assist in facilitating a solution, provided the city does not provide legal representation to residents.
• Item 22: Expedited Plan Check for Development – Councilmembers Bolton, Kalmick, and Moser proposed directing staff to negotiate with bargaining units to allow voluntary overtime for plan checkers, funded by applicant fees, to speed up plan approvals. The item was part of a larger one-stop shop initiative already in progress. The motion failed 3-4 (Moser, Bolton, Kalmick in favor; Burns, Van Der Mark, Strickland, McKeon against), with opponents citing redundancy with ongoing fee study.

Key Outcomes

• Water/Sewer Rate Study: No vote; staff will present Prop 218 notices and schedule a public hearing for April 16, 2024.
• Celebration Calendar: Received and filed (4-3). The 2024 themes and acknowledgments stand as presented; a resident committee will advise on future years.
• Consent Calendar: Items 9, 12-18 approved 7-0; Item 10 (contracts) and Item 11 (code of ethics) passed separately with amendment discussion.
• Strategic Plan Update: Received and filed with directive to develop broader KPIs (7-0).
• Rhone Lane Easement: Council requested OC San extend deadline and offered city facilitation (7-0).
• Expedited Plan Check: Motion failed (3-4).
• Next Regular Meeting: February 6, 2024.