UPDATE FROM COSTA MESA FIRST FOR MARCH 2025

The City Council had three meetings in March. Both Planning Commission meetings were cancelled. We also attended a meeting for a proposed 🚦traffic signal🚦 on Fairview Road at Belfast Avenue.

MARCH 4 CITY COUNCIL MEETING.  Just because the Agenda is short, it doesn’t mean the meeting will be short. This meeting ran about two and three-quarters hours. All members of the City Council were present except for Andrea Marr (District 3). The City Attorney reported on the Closed Session with her usual no report. Following that was a presentation of a proclamation for Women’s History Month to the Costa Mesa Women’s Club, an organization that has existed for more than 110 years, and was represented by Gay Royer, its President. She spoke about the history of the club and all the good deeds it and its members do, including volunteer work, donations, and the scholarships that it awards.

Public Comment (Non-Agenda Items).  Seventeen members of the public made their thoughts known. They brought up a variety of issues, but the first one was about public safety and it calls for some attention by the City. Resident Flo Martin has been reporting on her social media pages the incidents between cars and cyclists and pedestrians for several years now. These reports keep her followers aware of where the most crashes occur so that they can take care at those places. The City removed the crime incidents page from its website and has never (to date) brought it back up. The alternative site suggested by the City is an old webpage that is slow and almost useless, according to Flo. I agree! It isn’t just that crime log isn’t available after the reports have been filed, but the City isn’t notifying residents of police or fire activity while the calls are in progress, so residents can avoid the area, as is done in Newport and Laguna. To be clear, this isn’t the fault of our police and fire personnel. The City needs to improve its communications with citizens so they are aware of crime and emergency activities.

Other speakers spoke about the need for additional road striping on 18th Street near Lions Park; complaint about parking issues in the Monticello community due to event parking for Vanguard University; complaint about TESSA and suggestion the City give back an award it received for it; complaint about City committees not working because they aren’t allowed to play a role in decision-making; complaint that the agenda was too light and that the City isn’t getting work done; a representative from Majestic Cycling Events spoke about the Taylor Elizabeth Clifford Grand Prix that was held two days before but received no publicity from the City (there will be a second event on August 10), and he thanked police and fire for their support; a speaker voiced concern that the City was not providing financial disclosure as required by State law; and comment about Little League Opening Day and enforcement of anticamping laws.

Many of the speakers spoke in support of a TNR (trap, neuter and release) program for feral cats in Costa Mesa, that the City’s shelter had been euthanizing cats, despite it reporting that there were no euthanasias, that there is a volunteer effort to TNR or euthanize cats is happening outside of the City’s oversight, and the City needs to adopt its own program. It was mentioned that Staff isn’t bringing this to the City Council because the item requires more than four hours of work by a City employee, yet the Animal Services Committee, or its individual members, have written an ordinance, only to have it linger somewhere on a shelf in City Hall. As it stands, residents are taking matters into their own hands and trapping feral cats, paying for their neutering and related care, and releasing them.

Councilmember Comments.  Jeff Pettis (District 6) was first up. After thanking the public for their comments, he spoke about attending the event at which the award was given to the City for TESSA and wondered how that happened, given all the complaints; spoke about getting updates on park issues; and issues with potholes after the recent rain.

Mike Buley (District 1) spoke about attending meetings of the South Coast Metro Alliance and the Orange County Business Council; acknowledged that some people are unhappy with TESSA, but he senses it is complicated software, and Staff will work to improve it. He then spoke about his concern that the imposition of new laws about housing and parking on the City takes away the ability of the City to control those planning issues. He asked that the City Attorney be prepared for the day when the State overreaches to the point of unconstitutionality. He feels that if the City can’t control what it looks like, then it will need to consider taking action, perhaps litigation, to defend its ability to control local planning. He cited a recent case of the cities of Redondo Beach, Carson, Torrance, and Whittier suing Rob Bonta, the California Attorney General, over SB 9. Senate Bill 9 was signed into law in 2021, but took effect on January 1, 2025, and allows for building up to four units on the same lot area typically used for a single-family home. The State initially lost the suit against it by the cities but is appealing. Buley also spoke about the Agenda process and gave some suggestions to Staff about involving the City Council earlier.

Loren Gameros (District 2) talked about the speaker who had issues with TESSA and requested that he meet with Staff to talk about the issues and corrections that are needed. He said he doesn’t want the resident to come in with a “government is broken” and “Staff is broken” mentality. Sorry, that ship already sailed. He then defended his wife, who is the manager of Priceless Pets, the City’s animal shelter, over the issue of TNR.

Arlis Reynolds (District 5) acknowledged the speakers who spoke about TNR and the work that volunteers are doing; said that if there was disagreement between the Animal Services Committee and Staff on an ordinance, that is an indication that it needs to be moved up to the City Council level and that it shouldn’t “spin” at the Committee level for the reason it would take up Staff time; told Raja Sethuramen, Public Works Director, that the issue on 18th Street mentioned by a speaker should be something that his department could resolve; requested information on the crime log and an update on the information available; reminded Staff to provide an update on the parking permit program; spoke on the possible disruption to funding associated with federal programs should those programs be stopped, and requested a list of what programs are at risk and which ones are City funded; and asked Staff about making seniors aware of the services the City provides.

Manuel Chavez (District 4) requested that at the next Council meeting there be a vote about studying the TNR issue; said that if there is any way the City could improve transparency so that the residents can access data, it should do that; repeated the request by Reynolds for and update on the permit parking program; directed Staff to speak to the resident who complained about the parking in the Monticello community; commented that people who live on Maple Street near the Bank of America on 19th Street had complained about activity in the parking lot and requested that the police up patrols there; spoke on attending the South Coast Alliance meeting; and then turned his comments to TESSA. He said he has concerns about efficiency when it comes to the permitting process being inefficient and that he spoke with the head of the Chamber of Commerce, who said that Santa Ana has its own permitting program that the City of Costa Mesa might consider using. I’m not sure if he meant to dump TESSA entirely, but it wasn’t clear. He tried to tie the need for efficiency to Housing Element compliance and rezoning, but it was somewhat of non sequitur because housing projects larger than a few units always take extra steps required by things like variances and deviations.

John Stephens (Mayor) remarked that making information available to the public is important; talked about wanting to move forward with a first-time homebuyer’s program that would be funded by cannabis taxes; also spoke about the arts funding that originates from cannabis taxes and that he would like a report on that item. He said that Staff gives the Agendas to the Mayor and Mayor Pro Tem for review, but any City Council member can request that an item be put on the agenda. Stephens then addressed negative comments by some members of the public and explained that the City Council has to listen and not be defensive. He then gave a pitch for his law firm and the principles under which it operates.

He left the issue of TNR until last. Stephens is the liaison to the Animal Services Committee, so he has the most knowledge about what happened to the ordinance it drafted. The Committee had done a lot of work, but he stopped the work until the matter could be brought to the City Council because any continuing work would require more than four hours of Staff time. He said that he wrote an Agenda Report that was ready to go on an Agenda until the Police Chief brought up an issue that required rewriting the Agenda Report. He didn’t say when that happened. It may have been a while, since the last minutes on the City’s website are from July 2024. Stephens cautioned it may be months before the item could come to the City Council for a hearing on exceeding the four-hour rule on the project (not on the ordinance itself).

City Manager Comments.  Lori Ann Farrell Harrison announced it was Women in Construction Week and recognized all the female Staff members who work in construction related positions; acknowledged the team that received the award for TESSA; defended the implementation of TESSA and stated that the system is new and that any new system has hiccups, that the City spent $3.5 million across four departments and 50 personnel using it and the City is working to fix glitches as quickly as it can; said the prior system was 25 years old and could not be updated; compared TESSA to Santa Ana’s system and said that Costa Mesa has more instant permits in its system, so we are ahead of that city. She then spoke about the Let’s Go Costa Mesa free ride service that is available on the Westside and at some places on the Eastside. She also said that the City will be expanding its use of Nixle. HOORAY! However, she says that both she and the Chief of Police were able to see the crime log on their phones, that it isn’t down and they don’t see any change. I can tell you for certain it is down and a Google search won’t bring it up. She said that the City will be addressing the changes to funding by the federal government when the budget rolls around.

City Attorney Comments.  It was a rare occasion when she had comments. A lawsuit against the City, Milton v. Costa Mesa, a “trip and fall case,” was dismissed without the City having to pay any funds. In an auto accident case, a Motion for Summary Judgment (which is basically asking the judge to cut to the chase and end the case) against the City was denied. She told Buley she is monitoring the SB 9 case he mentioned. She reminded him that the cities in that lawsuit are charter cities, and Costa Mesa is not, and the charter city argument was a focus of one of the arguments. She also said that lawsuits have been filed over the threat to withdraw funding by the federal government.

CONSENT CALENDAR.  It was almost an hour and 45 minutes into the meeting when the Council got to the Consent Calendar items. Two items were pulled by members of the public. Neither of the pulled items was given a presentation by Staff.

The first item was acceptance of the Adams Avenue pavement rehabilitation project. This project involved street pavement rehabilitation improvements from Royal Palm Drive to the Santa Ana River. The cost was $2,133,537.64. Jenn Tenaka was first to speak. She began by talking about the TeWinkle Park lakes, which have been leaking for about as long as I can remember. More than a year ago the City got a bid to fix the leaks, but that bid was more than twice what was anticipated. That bid had to be rejected because there were no others. The City later tried again to get bids but had the same results. She cited the Community Workforce Agreement (CWA), which was used on the Adams project for the first time, as the reason why the lakes project has failed to come to fruition. She also spoke about the evaluation that was required by the CWA which cost the City about $40,000. Yikes! What is worse, she stated that none of the workers on the project were Costa Mesa residents, Costa Mesa high school graduates, or veterans from Costa Mesa, so the CWA didn’t do what it was supposed to do. Only part of the workers were from Orange County. There were other CWA measurements of success that weren’t met either. Tanaka claimed that the CWA is preventing the City from doing critical infrastructure repairs. The CWA will be renewed in 2026. Tanaka asked the Council to start looking at what it is costing the City and what can be done to improve it.

There was a motion to approve by Gameros, who wouldn’t speak to his motion, and a second by Stephens. That passed by a 5-1 vote, with Pettis voting “No.”

I’m disappointed that none of the Council Members said anything about this, particularly Gameros, who works for a union and was a big supporter of the CWA. Yes, this is the first time the CWA had been used, but at a minimum the Council should have voiced concern at the numbers that were presented.

The second pulled Consent Calendar item was replacement of chiller units at City Hall. The estimated cost of the project is $573,000, which includes purchase of the equipment, design and installation. Of three existing units, only one is currently operational. This was pulled by Jim Fitzpatrick, former Planning Commissioner and Righeimer sycophant. He complained that the 24-week lead time would mean installation would be at the end of summer. He then tried to tie it into the City’s processing time for approving private sector projects. He also pointed out that this seemed like an emergency project and that it isn’t in the 2024-2025 budget. That’s true. The working unit is one that was replaced as part of the 2023-2024 budget. Why did the City not anticipate having to replace the others? The second speaker was James Peters, former mayoral candidate. He advocated for not approving it because of the unfunded pension liability debt. He also complained that the City isn’t purchasing vehicles from Costa Mesa car dealers.

Reynolds made the motion to approve, which was seconded by Chavez. Reynolds spoke to her motion by reminding the public that the City was working on a Facilities Master Plan that would help anticipate these unexpected costs, but that there would be an “ad hoc” approach to facilities until that Plan is complete. Buley then defended the project. On a unanimous vote, the motion was passed.

NEW BUSINESS:  There was only one New Business Item, Information Technology Strategic Plan Phase II and Roadmap.  This is a $125,014 contract, plus a 10% contingency, with Third Wave Corporation (TWC). TWC would provide consulting services in connection with the next phase of IT upgrades. The contract will run through the end of 2025. Three of the goals of the Information Technology Strategic Plan are to (a)  connect technology resources, innovation, and initiatives to the City’s core values and mission critical services; (b) serve as an effective framework for how IT services are delivered throughout the City; and (c) define a clear set of goals, guiding principles, and strategic priorities for accomplishing the City’s ITSP, principles, and implementation. TWC will only be providing consulting services; the actual purchasing of equipment and software, and the hiring of personnel once the needs are assessed, will be another budget item.

Steve Ely, Information Technology Manager, gave a presentation. He explained the prior Phase and what was accomplished or is in progress. Ely listed the improvements that would come with Phase II and plans to upgrade and fund future improvements.

Councilmember Comments. Reynolds asked about getting input from the public about what it would like to see in terms of new or upgraded technology for services. Ely indicated that was done in Phase I and it would be done in Phase II as well. There was some confusion as to whether community engagement was included as part of the scope of work. Because the scope of work (SOW) for the contract was written about a year ago, some of the items on the SOW have been done and the funds will have to be reallocated to other items. The contract, despite having a 10% contingency, is a flat fee contract.

Buley asked about the possibility that when the City upgrades technology, there is the risk that in a short time that technology will be obsolete. The consultant explained that it tries to anticipate future needs in making its recommendations, and so the City won’t be purchasing software or equipment that immediately doesn’t suit its future needs. TWC spends about 25% of its time researching emerging technologies so its recommendations can accommodate future needs.

Stephens asked Ely about the use of artificial intelligence in the City’s technology programs. Stephens is impressed with chatbots, such as ChatGPT, that can perform tasks, such as what he had one do with writing an Agenda Report. He wants this to be considered in the upcoming budget.

Public Comments.  Jim Peters said he thinks this is a case of where experts are running the City versus the Council or the people. He seemed to think that a committee of residents would be better equipped to make decisions better than, in his own words, “team of experts” would be. He also cited the fact that the City wants to go paperless and that would take a large effort to scan in old documents and would cost the City a lot of money. Keep in mind his singular focus seems to be the unfunded pension liability. The City already has been using technology to electronically store some of the more recent documents, and the older documents could be done over a period of years. It would save a lot of manpower to store everything electronically. In terms of an advisory committee, that works where policy is being determined, but leave the technology to the nerds.

Next up was Ralph Taboada, who spoke about his support of the item. He asked about interim status reports on Phase I.  He also asked about what the budget versus actual costs for Phase I and if Phase I was on schedule. The Agenda Report didn’t contain that information. He suggested that, at a minimum, there be annual reports to the City Council.

Jim Fitzpatrick came up to complain that the City has too many employees. The IT department has expanded by nine employees since 2021, according to him. He calls that a burden to the taxpayer. He said that the City should be hiring more consultants. He complained he hasn’t seen any reports about TESSA. He reiterated his complaints about not being able to find documents on TESSA and being forced to put in a public records request. Having to put in a PRR is kind of dumb, I have to say, but it keeps track of Staff time on these items.

An unidentified speaker said he supports updating the IT system. He was concerned that the equipment and software were monitored closely to avoid downtime.

Motion and More Councilmember Comments. Reynolds made the motion to follow Staff recommendations with the addition that Staff work with the contractor to change the scope and funding allocation to replace any work that has already been completed with activities to collect information and comments from residents and businesses. That was seconded by Gameros. Reynolds acknowledged that in the four years since Phase I began there had been so many upgrades to software and equipment that basically brought the City out of the dark ages, but there is still work to be done. She commented that one thing to consider is what sort of performance metrics the City should be looking at in the future.

That motion was carried by a vote of 4-2, with Buley and Pettis voting “No.” With that, the meeting adjourned.

MARCH 11, 2025, CITY COUNCIL STUDY SESSION.  All Councilmembers were present. The only item on the Agenda was the Fiscal Year 2024-25 Mid-Year Budget Update. From the Agenda Report we could see that the City, as was alluded to in a meeting in February, had a revenue deficit to the tune of $3.6 million to date. At that February meeting, Councilmember Andrea Marr (District 3) told Staff to look at cutting Capital Improvement Projects.

Public Comments.  Because this was a Study Session, the public comments were limited to two minutes and Mayor John Stephens required that they be made before the presentation by Staff. I find that procedure to be an attempt to hobble the public because we have to comment before any presentation by Staff, which presentation often has supplemental material. By preventing commenters to have information that the City Council already has (they get a copy of the Staff’s presentation with their binders), it puts the public at a disadvantage.

California Government Code Section 54957.5 (b)(1) provides “If a writing is a public record related to an agenda item for an open session of a regular meeting of the legislative body of a local agency and is distributed to all, or a majority of all, of the members of a legislative body of a local agency by a person in connection with a matter subject to discussion or consideration at an open meeting of the body less than 72 hours before that meeting, the writing shall be made available for public inspection pursuant to paragraph (2) at the time the writing is distributed to all, or a majority of all, of the members of the body. The public is supposed to be getting all the material provided to the City Council, which is often a printout of the presentation associated with an item.

Four members of the public offered their thoughts. First up to comment was Ralph Taboada, who sent an excellent email to the City Council about the item. Emails and letters sent to the City Council that are received prior to the meeting are posted to the City’s website and are always an interesting read. Taboada made the observation that the Agenda Report was offering one option, whereas there could be many more and the City Council wasn’t being presented those. He requested that the City Council ask Staff to present more options before making a decision. He also requested that more information be provided, such as a breakdown of expenditures. He also mentioned that there are 103 projects on the Capital Improvement Projects list and they need to be prioritized. He also mentioned moving gas tax money to projects that could be completed now, versus applying that money to projects that are waiting for another source of funds to commence the project. Finally, he advocated for having public comments after the Staff presentation.

Stephens then asked if there were other commenters who wanted to comment after the presentation, but the next speaker said No, they wanted to go now. He didn’t ask the members of the public on Zoom or phone if they felt the same way, so he decided to take comments then.

Next up was former Planning Commissioner turned gadfly Jim Fitzpatrick who said the Agenda Report was deficient and didn’t have enough information to determine if this is a one-time event or a continuing trend. There wasn’t information about how auto dealerships and malls are performing, no property tax information, or how all taxes are performing across key economic sectors. He also wanted to know why the information on other cities and other malls wasn’t included. Fitzpatrick also wanted to know there was no analysis of the federal funding cuts. He has his private “GOAT” group that is working on this, but they have had to put in public record requests to get the information. He disagreed with Staff’s proposal to move the gas tax out of the CIP funds to pay for street sweeping when it would compromise the City’s ability to fill potholes. He proposed cutting the Climate Action Plan and plans for bike lanes, but then noted that the Council needs a better Agenda Report with better options.

James Peters noted that there should be more detail on expenditures. He also noted that there is a $7 million downfall for the current year if the trend continues. He wanted to know why the Council and the citizens weren’t get full disclosure.  Peters worries that bankruptcy will be in future for the City.

The last speaker was me. I remarked how I dislike making comments before Staff’s presentation, particularly in this case because the Agenda Report lacked substance. There was only one option in the Report and no other options were presented. I also remarked that the City of Los Angeles projected a reduction in cannabis revenue this year. I don’t think cannabis taxes are going to be a tremendous help to the City’s revenue problems, but given problems with cannabis sales, such as testing deficiencies and bankruptcies, I think even less of that business sector now.

Presentation.  Carol Molina, the City’s Finance Director, started the presentation, which can be found here: https://costamesa.legistar.com/View.ashx?M=E2&ID=1283755&GUID=C74473FD-71BA-4931-9341-C8B820A7E95D She reviewed the Adopted Budget and General Fund and then the suggested modifications to the Budget. Most of the funding goes towards the Police and Fire Departments. The revenue slide is interesting because of the timing of the receipt of Sales Tax. The City just received the Sales Tax revenue for the holiday season.

The Budget projections on revenue are done 15-18 months in advance. That seems to be much further out than it needs to be.

Peter Diminich, Economic Officer, took over the presentation. He spoke about the high consumer confidence of 2023 and 2024, despite having the deal with inflation and high interest rates. Sales tax was already showing signs of a slowdown, but the experts the City listened to were predicting year over year growth. Despite that, the City’s budget assumed a $1.1 million reduction for FY 2024-2025 over the previous year. The City’s theory for why it has the revenue deficit is that businesses and consumers are feeling the impacts from immigration policies, high interest rates, inflation, and policy shifts (such as tariffs). My theory is that there is so much instability with the new administration, that it is decimating business and consumer confidence, which creates volatility. I expect to see a lot of businesses hunkering down for a recession.

This slide gives a good overview of the revenue for FY 2024-2025:

The biggest drop is in Sales Tax, followed by the hotel tax. The cannabis tax and other revenues are offsetting some of the decrease, but if the economy weakens, expect to see those categories to taper off too. The total drop in revenue is $6.4 million, but there are expenditures that have not been made (yet?), which offset the revenue loss. Molina cited open positions as savings, but the City just advertised for a second Planning and Sustainable Development Manager, which pays $146,292 to $196,056 annually, with a guaranteed 3.75% bump in July 2025. Filling that position is going to impact some of those savings.

Molina told the Council that there is about $1 million set aside for Fire Station No. 2 bond, and while it won’t impact the 2024-2025 budget, the payment is likely to be made by December 2025.

The good news in all of this is that the reserve fund has a balance of $60.4 million (32.8% of General Fund revenues). The recommendation by the Government Finance Officers Association is 16% to 17%.

In order to try not to dip into those reserves, Staff recommended that a transfer of $.7 million of General Fund monies to the Gas Tax Fund to pay for street sweeping costs, and the deferral of 2.9 million in Capital Improvement Projects. In addition, there would be a hiring freeze tentatively starting on April 1 on all nonsworn (not Police and Fire) personnel. Well, except for the planning position. And maybe the 11 positions that are advertised on the City’s website. The frozen positions would be determined on a department-by-department basis.

The projects that would be funded by the General Fund (versus grants) that have not started, would have minimal impact and could be deferred are:

So that would cover the $3.6 million, but what happens if the revenues for the remainder of the fiscal year follow this trend? This is when Molina dropped the other shoe and offered to cut even more projects (some projects are on both lists):

Option A3 was to use the General Fund Reserves. Within the General Fund Reserve account, there is a subaccount called the “Economic Reserves Category,” that has $9 million in it, and is established specifically for the purpose of revenue shortfalls. Using those funds would drop the balance down to $5.4 million, which is still in a safe range according to Molina. That was described as a “third rail” that we don’t want to touch.

This slide shows the dilemma (see photo 5):

City Council Questions/Comments. At this point, there was a break in the presentation and Councilmembers asked questions. Andrea Marr (District 3) asked questions about the HVAC at the Senior Center, bond funding of projects, and then said she needed a refresher on the projects in the CIP. She requested that the Public Works Director, Raja Sethuramen, provide a prioritized list (his priorities, mind you). Marr requested information about the taxes collected from online sales. Molina responded that those taxes go into a County pool and they are allocated to the City based on our brick-and-mortar sales. Shop local!

Jeff Pettis (District 6) asked about the hiring freeze. The City Manager, Lori Ann Farrell Harrison, explained that she needs to have conversations with the Department heads and that the extent of the hiring freeze won’t be determined until April when the federal government gives a report on the Gross Domestic Product. Pettis also asked if we are looking at a “blip” or a sustained reduction in revenue. Molina responded that she is continuing to see a reduction in Sales Taxes moving forward. According to Molina, HDL, the City’s consultant, has prepared letters on this subject that are on the City’s website.

Arlis Reynolds (District 5) inquired about bringing street sweeping in house because the costs had increased in recent years. Sethuramen responded that the costs had gone up, but there was no plan to return sweeping to City personnel and equipment. She asked Sethuramen to include in his prioritized CIP list to include the criteria of which projects are most vulnerable to price increases. Reynolds commented that she also wanted to see the areas where hiring was essential, such as the Planning Department, and areas where supporting growth makes sense so the City isn’t so dependent on South Coast Plaza’s sales taxes. She also reminded Staff that the City was supposed to be putting together an economic development plan. Carrie Tai, the Director of Economic and Development Services, responded that the plan had been put on hold while the City worked on other projects.

Mike Buley (District 1) thanked Staff for bringing the shortfall to the attention of the City Council now when steps could be taken to reduce future deficits. He also asked about timing for decision-making, given the fact that he and Pettis are new to the City Council, they need time to become acquainted with the CIP before considering cuts/deferrals. City Manager Farrell Harrison said within the next 30 days.

Farrell Harrison and Molina then led a discussion about the preferred option (A1) would not involve staffing cuts, which would lead to diminished service to the public.

Manuel Chavez (District 4) cited the fact that cannabis receipts were outperforming (by $100,000) and that helped offset the dip in Sales Tax revenue. I would caution him that that could change very quickly in an economic downturn, when people tend to cut out unnecessary expenses.

Loren Gameros (District 2) was next up and reiterated Marr’s and Reynold’s request for more information. He made a somewhat muddled statement about the fact that since the street sweeping service isn’t covering all the street because there are cars parked in the way, that the City shouldn’t be paying the contractor as much as it does.  Hmm . . . that’s not the contractor’s fault. Perhaps all streets should have “No Parking on Street Sweeping Day” signs posted.

Stephens asked about the projects that had savings. Those are projects completed under budget. He then asked Sethuramen to explain the slide with the CIP Deferrals and how much of the money is available, given that the projects have not commenced, or would those funds be spent between now and the end of June, or would those funds not be spent anyway. Stephens finally got Sethuraman to agree that the funds weren’t going to be spent anyway in this fiscal year (which happens a lot, by the way).  Sethuraman then pointed out that he still needed to know if the City should defer the project. He also asked Sethuraman about the cost of projects increasing due to material costs increasing. Sethuraman seemed unworried about that. The City Manager stepped in to clarify that if a project is deferred, the funds for that project go back to the General Fund and the funds would have to be reappropriated at a later date.

Stephens said he disagrees with Staff’s assessment of the revenue shortage. He also commented that there are projects that are ongoing for years and there has never been a review of those projects. He then went on a long wandering speech where I thought I was watching the gears in his head slowly turn. The gist of what he said was that the City can be its own worst enemy when it comes to moving projects through the pipeline, especially revenue generating projects. He asked for a report from Staff, with the focus of whether processing or service times could be reducing revenue to the City. Stephens said that the City risks being perceived as one that isn’t friendly to businesses.  He then said for the next budget he wants Staff to consider whether full-time positions with the City are working out. He pointed out that the City isn’t considering layoffs like other cities. Stephens requested that Staff look at the upping the TOT (hotel tax) but noted that an increase would have to go to a vote of the citizens. See the report on the March 18 meeting below for more on the TOT.

Molina then gave a presentation on how the City could be impacted by federal funding cuts.  At this point, President Trump had frozen all federal funding, which action was being litigated. The City gets funds from the US Department of Housing and Urban Development that are used to pay for a little more than four full-time positions, among other things, such as replacing the roof on the Senior Center and grants to public service organizations.  There are also some federal grants that are used for capital improvements, such as roadways, and for updating our Safe Routes to School plan. All the various federal funds that are at risk total about $15 million, however, since some of the projects are near completion, the City will receive those funds.

Molina indicated that Costa Mesa’s revenue base is solid, but that cutbacks/deferrals in Capital Improvement Projects may be necessary, along with using gas tax money differently. Of course, she said this before the latest tariffs imposed by President Trump, which will likely impact car sales, one of Costa Mesa’s traditional revenue streams.

Once again, the City Council was able to pose questions or comments. Marr took the opportunity to interview the City Manager about the years of surplus budgets and the building of reserves. She never said what her point was (it would have been faster if she’d just done that), other than to be defensive. She called the revenue deficit a blip.

Pettis stated that one of the responsibilities of the Council is to ensure infrastructure is maintained/improved. As far as cuts to staffing are concerned, he wants all the information before considering anything, including how efficient the current staffing is.

Stephens asked about the sales tax deficit. Molina explained that there was a shortfall from June to December, and while the holiday season revenues were large, they weren’t enough to cover the prior losses. And we don’t know what January through June will look like.

Reynolds asked about the potential loss of federal funds in terms of the employees the City pays out of those funds. Molina said the City can retain those employees for now, but the City is still reviewing that for FY 2025-2026.

Chavez repeated Marr’s defensive statements about the previous balanced budgets and reserves. He then advocated for taking the time to examine the processes of the City and seeing if there could be improvement in the way it deals with the community and business partners. He also said that he wants to (1) look at the full-time positions in the budget that continually go unfilled and see if the City can go without filling them (but not police or fire); (2) look at using technology to improve efficiency in the City, such as TESSA; (3) look at any revenue stream that doesn’t maximize cost recovery, such as TOT (hotel tax), City fees; (4) look at raising user fees for amenities, such as at the Costa Mesa Tennis Center and the City golf courses; and (5) get a line-by-line review of the CIP because thinks there are old projects left over from prior Councils. He thinks the City should maximize its revenue streams.

City Manager Farrell Harrison stated that the CIP would be brought back to the City Council on April 22. The recommendation on departmental positions will be delivered sometime in May and will include suggested cuts for the 2025-2026 budget. Reynolds requested that she get suggestions from various City Commissions and Committees, including the Finance and Pension Advisory Committee. At this point, Stephens adjourned the meeting.

While it may be disturbing that Costa Mesa is having a revenue shortfall, we aren’t alone. Laguna Beach had to make budget modifications because it had a $3 million shortfall due to a decrease in sales taxes and TOT. That TOT decrease has a lot to do with the Surf and Sand Hotel, which has been closed for remodeling for the past year. Staff for that city suggested, among other things, a transfer from its capital improvement fund, using salary savings from unfilled positions, and imposing a hiring freeze to cover the shortfall. Sound familiar? On the other hand, Laguna intends to make up for the shortfall by doing a better job of enforcing its short-term rental ordinance and parking regulations.

MARCH 18, 2025, CITY COUNCIL MEETING.  Mayor John Stephens, Jeff Pettis (District 6), Manuel Chavez (District 4), Andrea Marr (District 3), and Loren Gameros (District 2) were physically present; Councilmembers Arlis Reynolds (District 5) and Mike Buley (District 6) attended telephonically. There was no Closed Session, so there was no report by the City Attorney.

Presentation. A representative of Travel Costa Mesa, Paulette Lombardi-Fries, presented an economic report about tourism in Costa Mesa. Unfortunately, this report was for FY 2023, so we are behind a year. However, Travel Costa Mesa hasn’t commissioned the report for over seven years, so I guess they felt it was about time. The bottom line is that since the pandemic in 2020, tourism has steadily increased each year and is a major contributor to the economy in Costa Mesa. Visitors are spending more money than they did before the pandemic. When questioned about 2024, Lombardi-Fries said she thought the receipts were not totally flat, but slightly up by about 0.3%. She said that some of the hotels in 2025 may be undergoing renovation, so the TOT may be down, but until she has more information from hotels, etc., she can’t provide an accurate projection. After the Council finished asking questions, the Mayor failed to open the item for public comment. This was an agendized item for which the City Council could ask questions and make comments, so the public should have been given the opportunity to do the same. Would the public comment on this? One did in his public comment (see next), so it would have been nice (and legal) to offer.

Public Comment (Non-Agenda Items). Comments included issues with maintenance of the Tanager Bike Trail, including those pesky palms that like to catch fire; abuse/violence against grocery workers and customers by persons committing theft, mostly at self-checkout lines, and a request for an ordinance to protect workers (two speakers); complaints of layoffs and anti-collective bargaining activities by a grocery store; cannabis shop owner thanked City Staff for cracking down on smoke shops that are selling cannabis products; mental health volunteer provided information about where to obtain Narcan and also concern that police (in general) aren’t transporting patients that need transport to a psychiatric facility for a 5150 hold and that policies need to include that; complaints about cut-through traffic and speeding on the Towne street (two speakers); comment about the earlier presentation by Travel Costa Mesa being inaccurate; comments about bills pending in the California legislature that could be supported by the City; and a question about a closed police case for assault with a deadly weapon that is not being prosecuted.

Councilmember Comments.  Buley requested the City Manager assist the last speaker from the public; thanked the Fire Chief Dan Stefano and Director of Parks and Community Services Brian Gruner for meeting with him and Pettis; requested that Staff going forward include any comments or suggestions by the Finance and Pension Advisory Committee in any Agenda Report about budget issues.

Gameros thanked the grocery workers union members that commented during public comment about problems with self-checkout; reminded the public about the police helicopter crash that occurred in 1987 that killed two officers; mentioned that the Fire Department is prepared when we have storms; notified the public of a meeting the following evening for a proposed additional traffic signal on Fairview Road at Belfast Road (more on that below).

Marr spoke about the new Goodwill donation center at the OC Fairgrounds on Thursdays during the Farmers Market; talked about attending the Women Veterans Symposium at Orange Coast College; said she attended the skatepark expansion meeting; and asked that the meeting be closed in the honor of Officers Ketchen and Liebolt and for Huey Pham.

Reynolds acknowledged the speakers who spoke about speeding issues on Towne Street and reported that she had talked to Staff about vehicle counts and speeds and that the City is looking into different traffic calming mechanisms in that area; spoke about the speaker events at the Costa Mesa Historical Society; requested that Staff give an update on the parking program; asked that Staff provide clarification about the Council supporting bills in the State legislature.

Pettis said he had a meeting that Friday with Public Works Director Raja Sethuramen about Brentwood Park. He also has a meeting scheduled with Brian Gruner, the Director of Parks and Community Services and Jason Komala, Parks and Community Services Commissioner to discuss Harper Park; acknowledged the comments by a member of the public about issues with transporting patients for a 5150 hold; and spoke of the passing of a homeless individual on the Eastside.

Chavez acknowledged the grocery store workers that spoke during public comment, mentioned a proposed ordinance in Long Beach (see https://lbpost.com/news/city/self-checkout-lanes-minimum-staffing-mandate-long-beach/), and spoke about the loss of revenue and sales tax to the City when items are stolen from our grocery stores; reiterated what Marr said about the Goodwill donation center at the Fairgrounds; remarked about the closing of Sidewalk Café; spoke about upcoming events, such as a Fair Housing Workshop; a “Rise and Shine” meeting with Fire Chief Dan Stefano; and the Spring Bark Fest at the dog park in TeWinkle Park. If you miss any events, make sure you sign up for notifications from the City at https://www.costamesaca.gov/government/departments-and-divisions/communications-and-marketing/sign-up-for-e-notifications , or check the City Calendar at https://www.costamesaca.gov/community/city-calendar/-curm-4/-cury-2025.

Stephens thanked the members of the grocery store workers union that spoke and that following up on the Long Beach ordinance is a good idea; he also mentioned the earlier skatepark expansion meeting; he also spoke on the passing of Fran Ursini of Newport Rib Company fame and who also a great supporter of local youth sports teams.

City Manager Comments.  Lori Ann Farrell Harrison announced the hiring of Paul Martin, as the Transportation Services Manager. Paul will be a great addition to the Transportation Department as he has extensive experience in the active transportation area. She addressed some of the public comments: the City Attorney will address the closed police case; she will work with the Public Works Director to bring back the parking permit ordinance for review; she will look at the Long Beach ordinance regarding grocery stores; the tree maintenance program may be expanded in the 2025-2026 CIP budget to address the palm trees on the Tanager Bike Trails (Ahem! Those palms are a fire hazard now!); the Public Works Department and the police department will work on a traffic study for Towne Street; the legislative review committee will meet the following day to discuss various pending bills (Stephens, Chavez, Farrell Harrison and other staff members comprise that committee, including with Jay Barkman, the Government Affairs Manager); she will work Carol Molina, Finance Director, on getting input from the Finance and Pension Advisory Committee on the upcoming budget.

City Attorney Comments.  Kimberly Hall Barlow responded to the question about the closed police case by stating there are many reasons why charges may not be filed, despite the incident occurring, such as a lack of evidence or the DA’s office deciding not to file charges.

CONSENT CALENDAR.  Nearly hour and one-half had passed.  Just a reminder, Public Hearings are supposed to start at 7:00 p.m., so the City Council missed its mark again.

Pettis pulled Item 7, the 2024 6th Cycle Housing Element Annual Progress Report. This is the report that is required to be filed with the California Department of Housing and Community Development by April 1. The City is required to plan for 11,760 total units -- 6,801 lower income units (2,919 very-low, 1,794 low and 2,088 moderate-income units) and 4,959 above moderate-income units. Are those being permitted and built? According to the Agenda Report, “From October 15, 2021 (start of the 6th Housing Element Cycle) to December 31, 2024, the City issued building permits for a total of 373 residential units, including 312 affordable units and 60 above moderate-income units.” Most of those were accessory dwelling units (ADUs), with 58 ADUs in the very low-income category, 162 in the low-income category, and 32 in the moderate-income category. There were also 40 extremely low-income units added by Phase I of the Mesa Vista Homekey development.

Pettis asked, “What is a very low-income ADU?” Anna McGill, Planning and Sustainable Development Manager, responded that the County dictates that to mean 51%-80% of area median income, which translates to $51,000 to $82,000. McGill did not have any information on the rental amount but stated that in years going forward, the City will ask for that information when an applicant submits information for an ADU building permit. Pettis, who seems to like free association, then went on a stream of consciousness ramble about his thoughts on Regional Housing Needs Allocation (RHNA) and State-imposed housing mandates. He wanted to know what the City had done to push back on the mandates. Carrie Tai, Director of Economic and Development Services, took on Pettis’s question and answered that the City had taken a number of steps, but there are laws that the City has to follow with respect to these required reports. She also indicated that City Staff belongs to professional organizations that review pending legislation and provides comments through those organizations and the City. Pettis stated he is just trying to be an advocate for the public and trying to get the community’s voice heard.

Stephens then remarked that over 78% of the housing permits in the past three years were comprised of ADUS and a nonprofit organization’s housing project, but he is disappointed at the rest of the housing. He then asked about whether ADUs are deed restricted, to which McGill told him, “No, they are not deed restricted. He then responded “Good.” He didn’t elaborate on why that is good, but it is important to note that without a deed restriction, the rental price can be market rate, versus something that might fall in the affordable housing categories of low- and very low-incomes.

Stephens then informed Pettis of the RHNA process he missed out on a few years back when the numbers were assigned and the California League of Cities, of which the City is a member, litigated the high numbers and lost to the State.

I will caution that Stephens’s observation of the report is based on a measure of permits, and not a measure of units, and that some of the really big housing projects, such as One Metro West and the Hive Live, have not pulled permits yet, so to think that no housing is in the works is omitting a whole bunch of units that are waiting in the wings.

All the Consent Calendar items were unanimously approved.

PUBLIC HEARINGS: 

1.     First Reading of Ordinance to Amend the Municipal Code Regarding ADUs to conform to Revisions to State Law.  This item relates to bringing the City’s Municipal Code in alignment with State law. Note that the City does not want to make changes requested by the State to allow short-term rentals of ADUs and is offering the State an explanation. In late January, the City received a letter from the California Housing Defense Fund requesting that the City fully comply with State law. This group has sued cities, including La Canada-Flintridge over an 80-unit builder’s remedy project.

Chris Yeager, Senior Planner gave a presentation which gave a little history about State mandates and the history of ADUS in Costa Mesa, along with the proposed changes to the ordinance. The changes are designed to provide more flexibility for developers in terms of the number of ADUS that can be built on a lot and the development standards imposed on ADUs. The changes also allow for the legalization of unpermitted ADUs that were built prior to 2020. Here is what the new ordinance will allow:

• Any single-family property would be allowed to have

  • 1 conversion ADU within the building,

  • 1 detached or attached ADU, and

  • 1 Junior ADU (JADU)

• Multi-family properties would be allowed

  • Up to 8 detached ADUs, provided that the number of ADUs does not exceed the number of existing units; 1 ADU can be attached

  • 1 ADU within a new construction multi-family dwelling

  • Conversion of non-livable space into up to 25% of the existing units

  
  

• Multi-family properties square footage maximums

  • 850 sf for detached ADUS and,

  • 1,000 sf for an ADUs with more than one bedroom

    
    

Of course, all of this changes if an ADU is exempted from local standards under California law. At this point my head was spinning, so I’m not going to go there, but exempted ADUs are basically converted ADUs, such as a garage that was turned into an ADU. And by the way, garages and carports can be removed to build an ADU, as can any parking space on the property. Now all of this would be fine if we only had a totally walkable town with lots of park space and great public transportation so we didn’t all have to have at least one car. The problem is we don’t.

The City is trying to get the State to allow the City to prohibit the use of ADUs are short term rentals. In addition, the City is coming up with preapproved plans for ADUs so an applicant can have faster processing for plans. There are currently eight plans for ADUs that are in the process of getting approved for this program.

Councilmember Comments. Gameros asked about if preapproved ADU designs will be limited to the eight that are currently under review, or if more can be approved. Yeager responded that more can be submitted, however, since the Building Code changes every three years, the design will have to undergo additional review at that time. If the State has preapproved the State, then those would be fast tracked through the City.

Reynolds asked about whether feedback from residents or builders on their projects has been incorporated into the ordinance. McGill replied that will be happening on the preapproved ADUs. She also asked about whether ADUS in mixed-use overlay zones would be allowed, but Staff didn’t have a clear answer. Reynolds then asked about reducing fees for processing units that are affordable units. Tai responded that only happens with deed restricted units. She also had some specific questions about balconies, exterior stairways, etc. Yeager responded that there is little pushback on these items, as those restrictions are for privacy issues.

Public Comments. The first commenter asked about whether a separate address would be assigned to an ADU, specifically for emergency situations. The second commenter remarked that the State seems to be in control of this and not the City Council. He opined there is no housing crisis and then proceeded to rant against those in power in Sacramento. The final speaker said there is a housing crisis and that ADUs are one way to solve it.

Motion and Vote. Reynolds made a motion to approve Staff’s recommendation, with the addition for the City Attorney to follow up on ADU opportunities in mixed-use overlay zones, along with some cleanup of the language in the ordinance to make it clear that some of what is permissive isn’t mandatory. Chavez seconded the motion. It was passed unanimously. The item will return for a second hearing in April.

2.     Affordable Housing/Disposition and Development Agreement and Ground Lease, Subdivision Of The Subject Property Into Two Parcels, and Master Plan With Density Bonus, for Development of 70-Unit Senior Affordable Multi-Family Residential Project at Senior Center.  This item was to approve the agreements associated with the project, so that the applicant, Jamboree Housing Corporation (JHC)can proceed with getting its financing and plans submitted. This is a very complicated transaction that involves a development agreement that binds the City and JHC to the terms of their agreement, including the potential to make a loan of $1.5 million to JHC to cover fees; the granting of density bonuses so the project would have more units than what would ordinarily be allowed; a ground lease that enables the City to retain ownership of the land under the building; the subdivision of the parcel into two lots, and more.

Councilmember Comments. Stephens asked about the loaned money and what happens when it is paid back. City Attorney Barlow stated the money, once it is paid back, would be used for another project or a grant.

Buley reiterated all the reasons why this project is beneficial to Costa Mesa. He then delved into questions about the documents, such as why the lease of the land is for $1.00 per year, and why not just sell the property to a private developer (I guess the City would lease back the Senior Center?)? His reasoning revolved around his perception that the City is distressed financially (Um . . . not that distressed. We’ve got $60 million in reserves). City Attorney Barlow explained that the governments are restricted on how they can dispose of property and the limitations upon uses of the property. Most of the time governments dispose of surplus property, such as what the State is doing with Fairview Developmental Center. In this case, this isn’t surplus property and the City wants to control the use and have the right to take back the project, if necessary.

Buley then asked about what would happen should JHC refinance the property and pull money out–would the City have the ability to partake in some of those proceeds? He later answered his own questions by reading the promissory note which states that the City would be 50% of net proceeds, but after the limited partners of JHC received payment. Barlow explained that there is revenue sharing in all of the pertinent documents. At this point the representatives of JHC came to the podium and gave a very nice summary of how public-private partnerships in the real estate world work, and how their organization is structured and funded. The discussion went on, but I’m not going to memorialize discussion about the tax code, formulaic buyouts and the such. As I wrote above, this is a very complicated transaction.

Reynolds had questions about the physical aspects of the project, including landscaping, bicycle parking and sidewalks. One question concerned the encroachment of vehicles in the parking lot into the sidewalk space. I’ve encountered this with large trucks that back in and the beds extend past the wheel stop. Staff agreed to make certain that encroachment would not happen.

Public Comments. Ten members of the public commented, including Supervisor and former Mayor Katrina Foley, who spoke about the $13.5 million dollars that the County is contributing to this project. One speaker asked about the bus that used to transport seniors to and from the senior center. Another speaker complained that the number of parking spots were too many and that having a driveway on 19th Street was unneeded. Only one speaker opposed the project.

Motion. Stephens moved to approve the project as recommended by Staff, which was seconded by Chavez. Chavez asked Staff, in preparation for requesting an amendment to the motion, about the bus stop on 19th Street conflicting with the driveway for the Senior Center. Public Works Director Raja Sethuramen indicated they would look at moving the driveway. Scott Drapkin, Assistant Director of Economic and Development Services, told Chavez that is something that Staff could look at, and if feasible, that change could be made at a Staff level (meaning it wouldn’t require City Council approval). The motion was amended to add that Staff would work to eliminate all blind spots from the 19th Street driveway.

Are we done? No. Reynolds wanted some changes: remove palm tree requirement and replace with canopy tree; protect sidewalk from vehicle encroachment; include that bike lockers and more bike racks could be added to the project if the applicant desires; bike racks cannot conflict with sidewalk circulation. Both Stephens and Chavez agreed to these changes.

The motion passed unanimously.

MARCH 19 FAIRVIEW ROAD AND BELFAST AVENUE SIGNAL PROJECT MEETING. this meeting was attended by about 30 members of the community, along with a handful of Staff, including Public Works Director Raja Sethuramen, Paul Martin, Transportation Services Manager, and Senior Engineer Ramin Nikoui, along with Councilmember Loren Gameros. There was a short presentation (mostly introductions) by Staff and then we were told to disperse to posters to ask questions. But the audience was having none of that! We are smart enough to know we want to hear each other’s questions and demanded an open question and answer period, and Sethuramen had to give in.

The noticing of the meeting was mailed to those within a 500-foot radius of the project, which means people in the Killybrooke neighborhood received notice, but only a few residents in the Mesa North Neighborhood across Fairview Road received notification, hence the poor turnout. I believe that was intentional, since Mesa North will get nothing from this project.

The project proposes a new traffic signal and crosswalk on Fairview at Belfast Road, the third signal between Baker and the 405 freeway (just a few short blocks)), along with traffic calming humps on Belfast. There will not be a signal at Augusta Street just across Fairview Road. The traffic signal allegedly would make turning from Belfast onto Fairview safer and easier. It is important to note that the City estimates that the signal cycle times will be between two minutes and two minutes and twenty seconds, so waiting to turn will take longer in some cases.

Currently, there are signals on either side of Belfast. One is at McCormack Lane and the other is at Paularino Avenue. Those two signals are synchronized to stop traffic on Fairview to allow left and right turns out of Belfast and a right turn out of Augusta Street. Since the Belfast signal would stop traffic after Augusta Street, traffic stopping at that signal would block anyone trying to turn right from Augusta onto Fairview.

This is Gamero’s pet project. He lives in the Killybrooke neighborhood and has pushed for the signal since he got on the City Council. His neighbors have been asking for speed humps on Belfast as a method to control speeding for years now. However, not all the residents of the Killybrooke neighborhood want the traffic signal. In fact, two of the residents who live on Belfast were very upset when they were told parking in front of their homes would be removed. Another attendee, a former City employee, was very vocal about her distaste. One gentleman, when told this is basically a done deal, got angry and stomped to the back of the room.

The City cited safety as the reason for the signal. According to the presentation, there have been 11 collisions, 6 broadsides, 2 rear-enders, and 3 others in the period from 2014 to through 2024. However, checking with the police department, there are other intersections on Fairview Road that have more accidents:

McCormack = 42

Paularino = 15

Dorset = 15

Belfast = 12 (yes, that’s one more than what we were told at the meeting)

Augusta = 6

It is astounding that McCormack Lane, which has had a signal since before 2014, has so many accidents, but then Fairview Road has more than its share of speeding vehicles, day and night. At any rate, the argument that the signal is needed for safety at the Belfast intersection is not supported by this data.

The bottom line is that the signal at Belfast is not needed. The City needs to fix whatever is wrong at McCormack Lane that is contributing to so many collisions at that intersection. As far as the speed humps go, what has taken the City so long to take care of such a minor item for these residents?

Why didn’t I take photos of the two posters? I did. However, since the City officials said the depiction of the traffic signal was incorrect, I didn’t want anyone to think that poster was worthy of your time. The other poster was of the proposed speed humps. If you want to see those, then drive down Royal Palm Drive. You’ll get a feel for how they slow traffic.

Why should you care? This is a completely car-oriented project that benefits only a small part of the Costa Mesa. Many of you use Fairview Road, a main arterial, for your daily trips to and from your job, school, shopping, athletic events, etc. Do you want to add another two minutes and twenty seconds to your travel time? Over the course of a year, that time adds up.

There is a two-year timeline on this project. Given the tightness of the City budget at this time, this is a project that needs to be deferred. Or better yet, the signal concept can just go away.