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HomeMy WebLinkAbout2008-07-16; City Council; MinutesCITY OF CARLSBAD CITY COUNCIL WORKSHOP SPECIAL MEETING Faraday Administration Offices 1635 Faraday Avenue Room173A Carlsbad, CA 92008 Wednesday, July 16, 2008 11 a.m. to conclusion of business at approximately 1 p.m. MINUTES CALL TO ORDER: The Mayor called the meeting to order at 11:00 a.m. ROLL CALL: Lewis, Kulchin, Hall, Nygaard present, Packard absent. 1. Council discussion on Council Member reports on regional roles and assignments, as necessary, including: There were no reports from Council Members on their regional roles and assignments. Nygaard Buena Vista Lagoon JPA City/School Committee LOSSAN Corridor Board of Directors North County Dispatch Joint Powers Authority (alternate) North County Transit District Board of Directors North County Transit District Planning Committee Packard Buena Vista Lagoon JPA City/School Committee EFJPA Encina Joint Powers (JAC) Encina Wastewater Authority League of California Cities - SD Division League of California Cities Transportation, Communication & Public Works Committee North County Dispatch Joint Powers Authority Hall Chamber of Commerce Liaison League of California Cities Revenue and Taxation Committee SAN DAG Board of Directors SANDAG Public Safety Committee SANDAG Executive Committee Kulchin American Coastal Coalition Board of Directors American Shore & Beach Preservation Association, Board of Directors CalCoast Board of Directors Carlsbad ConVis (alternate) Encina Joint Powers (JAC) Encina Wastewater Authority (EWA) North County Transit District (alternate) *San Diego Authority for Freeway Emergencies (SAFE) City Council Workshop Special Meeting, July 16, 2008 SANDAG Board of Directors (2nd alternate) *SANDAG Shoreline Preservation Committee Lewis Chamber of Commerce Liaison LAFCO Cities Advisory Committee North County Mayors and Managers SANDAG (1st alternate) San Diego County Water Authority Board of Directors Requests to Speak on a listed item: A total of 15 minutes is provided. Please submit a speaker card indicating the item you wish to address. Comments/speakers are limited to three (3) minutes each. There was no public comment. 2. Review and discuss economic update and forecast. Manager of Economic Development and Real Estate Cynthia Haas and Director of Finance Lisa Irvine gave a presentation entitled Carlsbad Economic Overview, July 16, 2008. (This presentation and the Economic Primer handout are on file in the Office of the City Clerk.) Council concurred that an economic update agenda item should be placed on each Workshop agenda. Ms. Irvine began her presentation by discussing the numerous sources she has used in researching the current economic climate. Ms. Irvine noted that economic analysis becomes more difficult when the impacts on Carlsbad are more and more global in nature. She discussed the Federal, State and County economies. Council discussion ensued regarding the cuts in local budgets by the State government. Ms. Haas gave an in depth look at San Diego County jobs, consumer confidence, and expenditures. She also discussed the calculations used to determine inflation numbers. Ms. Haas gave examples of food and gasoline prices in comparison to previous years. In addition, Ms. Haas discussed the foreclosure activity for property owners located in North County. She also reviewed local property tax and permitting numbers. In response to Council, Ms. Irvine noted that because of the slow down in construction and development City employees who work in these areas can be redeployed to other areas/tasks. Ms. Irvine continued the analysis by discussing the Carlsbad sales tax revenues, transient occupancy tax and property tax. She then discussed the ten year forecast and the ten year forecast with the addition of maintenance and operation of the Alga Norte Park and Swim Complex. The Mayor called a recess at 12:10 p.m. and Mayor and the three Council Members returned to the meeting at 12:20 p.m. Council asked that Ms. Irvine and Ms. Haas bring a shortened version of this presentation to a Regular Council meeting. City Council Workshop Special Meeting, July 16, 2008 3 3. Discussion of the Sister City Program and direction to the City Manager or City Attorney as appropriate. Arts Manager Peter Gordon discussed a memo issued to the City Manager entitled "Background Information to Sister City Committee's Request to Add a Third City", July 9, 2008. (This memo is on file in the Office of the City Clerk). In response to Council, Mr. Gordon noted that the additional cost to the City, for this proposal, was estimated to be between $20,000 and $50,000. Jacquie Thye and Peter Yin, members of the Sister City Committee, spoke in favor of the proposal. Colleen Finnegan, City Liaison to the Sister City Committee, noted that staff is working on a goal regarding the Committee and the proposal. Council stated that staff should pursue the goal, that the committee look beyond the City for resources, be sensitive to the economic factors facing the City and report at a future date regarding their progress. Items 4, 5, 6 and 7 were not discussed. 4. Discussion and demonstration of Fire Department equipment and apparatuses. 5. Discussion of Council efficiency and effectiveness including impact of regional assignments with regard to contact with other Council members, decision and policymaking, serving the community and effective methods of feedback. 6. City Manager review of goal and major project tracking report and update discussion of Council goal setting process and discussion of capacity and effectiveness in the delivery of City processes and services. 7. Discussion of feedback, communications or correspondence on issues for the good of the community, including directions to the City Manager or City Attorney, as appropriate, for the scheduling of items for future agendas, workshops or study sessions. Requests to Speak: Continuation of Requests to Speak (if necessary) ADJOURNMENT The Mayor adjourned the meeting at 1:02 p.m. . Wood, CMC City Clerk Economics Primer Increased media coverage of the nation's economic condition is inundating readers and listeners with a tremendous amount of economic data. Economic terms like GDP and CPI are frequently misinterpreted, and at a minimum can be confusing. The purpose of this "primer" is to shed some light on what these terms mean, and to put some of the current economic trends into a context which may be useful to the Carlsbad City Council as they navigate a rapidly changing economic environment and set policies to manage the fiscal health of the City. U.S. GROSS DOMESTIC PRODUCT (GDP) The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period of time in the U.S. - you can think of it in basic terms as the "size" of the U.S. economy. Most of GDP is attributed to households in the form of ordinary consumption. The food, the clothes, the medical check up, and the gasoline you buy are all consumption expenditures. The next largest use of output is by the government, including state and local governments in addition to the federal government. This category of government spending includes items such as purchases of military goods, payments to public workers, teachers, elected officials, infrastructure expenditures, etc. The third category, investment, includes construction of new factories and the purchase of new machines by businesses. It also includes changes in inventories held by business and the purchase of new homes by consumers. New homes are considered investment spending because they are a long-lived assets that will yield services for many years. On the other hand, purchases of appliances and vehicles by consumers are considered consumption, though these items also have lifetimes much longer than a year. The last group that receives the output that our economy produces is foreigners. To take this group into account, we add exports to consumption, investment, and government spending. GDP is important for three reasons: 1. Most importantly, it is used to determine if the U.S. economy is growing more quickly or more slowly than the quarter before, or the same quarter the year before. 2. It is also used to compare the size of economies throughout the world. 3. It is used to compare the relative growth rate of economies throughout the world. Investors look at GDP growth to see if the economy is changing rapidly so they can adjust their asset allocation. In addition, investors compare country GDP growth rates to decide where the best investment opportunities are. Most investors like to purchase shares of companies that are in rapidly growing countries. The Federal Reserve (Fed) Economic Development 7/16/2008 uses the GDP growth rate as one of the indications of whether the economy needs to be restrained or stimulated, typically managed through adjustments to the federal funds rate . GDP affects consumers in the following way; if the GDP growth rate is speeding up, the Fed may raise interest rates to stem inflation. In this case, if you were purchasing or refinancing a home you would want to lock in a fixed-rate mortgage, because you would know that an adjustable-rate mortgage will start charging higher rates next year. You could also use the GDP report to look at which sectors of the economy are growing and which are declining. This would help you determine whether you should invest in, say, a tech-specific mutual fund vs. a fund that focuses on some other sector(s). Basic Economic Model Households "Demand" In this model, the business sector needs to receive labor inputs from the household sector in order to produce. Production generates income for the household sector, which spends the income on goods and services supplied by the business sector. CONSUMER CONFIDENCE Consumer confidence is a measure that tracks the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. In the United States consumer confidence is issued monthly in the form of a Consumer Confidence Index or CCI, by the U.S. Conference Board, an independent economic research organization, and is based on 5,000 households. Such measurement is indicative of consumption component level of the gross domestic product (GDP). The Federal Reserve looks at the CCI when determining interest rate changes, and it also affects stock market prices. Manufacturers, retailers, banks and the government monitor changes in the CCI in order to factor in the data in their decision-making processes. Economic Development 7/16/2008 CONSUMER SPENDING Consumer spending (or consumer demand) makes up the largest part of total demand for goods and services in the U.S and is responsible for about 2/3rds of GDP. The level of consumer spending in the U.S is driven by many factors including personal income, interest rates, availability of credit, and personal debt level. It is the goods and services bought by households in the satisfaction of their needs and wants. It includes non- durables such as food, semi-durables such as clothing, and durables such as major appliances. CONSUMER PRICE INDEX The Consumer Price Index (CPI) measures the price of consumer goods and evaluates price changes of commonly purchased goods and services. CPI looks at an established "basket" of goods on a periodic basis and looks for changes in prices. The CPI implements a weighting system that looks at the fraction of spending that typical consumers spend on each type of goods. It is one of several price indices calculated by national statistical agencies. The percent change in the CPI is one measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices. The CPI is one of the most closely watched national economic statistics. INFLATION Inflation is a rise in general level of prices of goods and services over time. In the simplest possible case, if the price of a 10 oz. can of corn changes from $0.90 to $1.00 over the course of a year, with no change in quality, then this price change represents inflation. CORE INFLATION Core inflation is a measure of inflation which excludes certain items that face volatile price movements e.g. food products and energy. Core inflation is thus intended to be an indicator and predictor of underlying long-term inflation. UNEMPLOYMENT RATE Unemployment is the state in which a person is without work, available to work, and is currently seeking work. The unemployment rate is used in economic studies and economic indexes such as the United States' Conference Board's Index of Leading Indicators. The rate is determined as the percentage of those in the labor force without jobs. FEDERAL FUNDS RATE Interbank borrowing is essentially a way for banks to quickly raise capital. For example, a bank may want to finance a major industrial effort but not have the time to wait for deposits or interest (on loan payments) to come in. In such cases the bank will quickly Economic Development 7/16/2008 raise this amount from other banks at an interest rate equal to or higher than the Federal funds rate. The federal funds rate is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other d epository institutions, usually overnight. Raising the Federal funds rate will dissuade banks from taking out such inter-bank loans, which in turn will make cash that much harder to procure. Conversely, dropping the interest rates will encourage banks to borrow money and therefore invest more freely. 10 YEAR TREASURY NOTE The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. government is seen as a risk-free borrower, investors use the 10- year Treasury Note as a benchmark for the long-term bond market. A 10-year Treasury Note is issued with a defined rate of interest, or coupon rate (for example 5% of the note's face value). Every year, holders of the 10-year Treasury Note receive the coupon rate from the Treasury. After ten years, the 10-year Treasury Note matures and the owner is paid the face value. TRUSTEE SALE Foreclosure sale conducted by a trustee under the stipulations of a Deed of Trust. When a deed of trust is exercised, a specific trustee is designated. Upon default, the trustee is authorized to foreclose the mortgage and put the property up for a trustee's sale. The proceeds of the sale are distributed by the trustee according to the priorities listed in the deed of trust. DURABLE GOODS Products which are not consumed quickly and which are not easily disposed of and can be used for several years. Examples of durable goods include cars, appliances, business equipment, electronic equipment, home furnishings and fixtures, houseware and accessories, photographic equipment, recreational goods, sporting goods, toys and games. NONDURABLE GOODS Products that are used up quickly (after one use) or that are used up in less than 3 years. Examples of nondurable goods include cosmetics, food, cleaning products, fuel, office supplies, packaging and containers, paper and paper products, personal products, rubber, plastics, textiles, clothing and footwear. Economic Development 7/16/2008 July 9, 2008 TO: CITY MANAGER VIA: LIBRARY DIRECTOR FROM: CULTURAL ARTS MANAGER BACKGROUND INFORMATION TO SISTER CITY COMMITTEE'S REQUEST TO ADD A THIRD CITY Short History Carlsbad currently has two sister cities: • Futtsu, Japan (since 1988) • Karlovy Vary, Czech Republic (since 1990) The program began in 1988. Originally a committee of community volunteers (from Chamber of Commerce, Boys & Girls Club, etc) was formed to manage the program. Funding was provided by the City, but the Committee was encouraged to raise additional funds. The Library Director and staff from CM and CC offices were also involved. After two years, the Committee asked the City to take the program over completely, and in 1990, the City Council created the Sister City Committee and assigned the program to the Arts Office. Current Request There is now a request being made by the Sister City Committee (SCC) to add a third sister city to Carlsbad's roster. Sister City Committee position The SCC is currently very energized and eager to expand its outreach. They would like to involve the community in efforts to identify a potential third sister city for Carlsbad. Committee members have developed a "contest" plan that invites students, local businesses, and the non-profit community to participate, and they hope to begin roll-out of the contest in late summer. Upon completion of the contest, the SCC would bring the recommendation for the third sister city to the City Council. Staffs position Committee members rely heavily on staff to carry out most of the program planning and implementation; related administrative tasks and correspondence; budget development and management; and publicity and community outreach for the current Sister City program, which includes: > homestays and delegation visits > cultural programs (Carlsbad-to-Karlovy Vary Vocal Competition, recent student photo exhibition with KV, Multicultural Festival) > educational programs ("Japan in a Suitcase" visits to school classrooms) > publicity and community outreach Increasingly, the Arts Office staff feels it can not meet the demands for staff time currently being made by the Committee. And we're sure the Committee feels the same way. (Note: In response to this ongoing dilemna, in FY 08/09, Arts Office staff has a. goal - # 9038 - that is designed to investigate possible alternatives for administering the entire Sister City program.) At this time, the addition of a third sister city would be a 50% increase in the current sister city program, once it was established. And the establishment of the relationship - taking place in the first year or two - would be an even more labor-intensive activity. Staffs Conclusion Adding a third sister city at this time is only feasible if: > additional staff (or FTE) were assigned to the Arts Office, or > the Arts Office cut some of its current programs and services, or > the Sister City Committee were re-assigned to a department that has more staff available, or > the Sister City Committee acquired other resources (non-City or contractual) that could take on the entire management of a third sister city. Peter Gordon