MARTINEZ, Calif. – Martinez City Council will decide tonight whether to borrow $4 million to pay for retroactive costs stemming from the dissolution of the Pleasant Hill-Martinez Joint Facilities Agency, ending a long-standing dispute whether its employees worked for the city, and whether the agency existed at all.
In addition, the Council will take public comment tonight in a hearing before voting on amendments to its animal control ordinance.
Also on the consent agenda is the adoption of General Plan and Housing Element reports that will be sent on to Sacramento.
The five-year, $4 million loan agreement with US Bank is under consideration to cover three years of retroactive Social Security taxes incurred by Martinez employees that have been designated as working under the Joint Facilities Agency (JFA).
According to a report from Finance Director David Glasser, those employees need to be shifted to city employment if the JFA is to be dissolved. Not only is Martinez required to pay for three years of past Social Security taxes for its JFA employees, the city also is paying the employee share for the same period, Glasser wrote.
Those retroactive payments need to be processed by Aug. 1, because enrollment of the employees will start next month.
“The city will begin making the required 6.2 percent employer contribution (6.2 percent of the employees’ salary) and reimburse the 6.2 percent employee portion for the employees per the applicable MOU (Memorandum of Understanding) and Management Compensation Plan through Jan. 31, 2019,” Glasser wrote.
He has recommended obtaining the loan “to mitigate the impact on the city’s cash flow and reserves.” The loan rate would be 3.58 percent for five years.
Martinez and Pleasant Hill began talking about forming a joint facilities agency in1975, when an agreement was drafted that said the two cities wanted to develop and operate shared facilities and services under a public entity separate from the two cities themselves.
The JFA was authorized to enter into contracts, hire employees, to obtain property and to incur debts and other obligations to accomplish its purpose without binding either of those cities to those obligations.
The agency was to be administered by a board made up of the two mayors or their delegates and alternates, the two municipalities’ city managers and a fifth at-large member appointed by the other four. Pleasant Hill’s treasurer and auditor was designated as the agency’s treasurer and auditor. The panel was expected to meet at least monthly.
Martinez employees were allowed to decide if they worked for the city itself or for the JFA, with about three-quarters opting in. They were to be enrolled in the California Public Employees Retirement System (CalPERS) but were to be exempt from Social Security withholding. After Pleasant Hill withdrew from the agency, Martinez City Council has acted as the JFA board.
In recent years, CalPERS Office of Audit Services (OAS) began reviewing the agency, ultimately telling Martinez the city the JFA hadn’t actually existed for some time. The findings came after the OAS examined 13 public agencies chosen at random, according to information provided by CalPERS.
CalPERS sent the city a letter Sept. 4, 2015, containing the OAS findings, saying employees listed as working for the JFA should have been considered city employees all along.
CalPERS has had questions about the JFA as far back as Dec. 17, 2012, when the chief of its OAS, Margaret Junker, wrote a review that said non-reportable compensation had been reported, special compensation wasn’t included in a written labor agreement and had been reported incorrectly and eligible part-time employees had not been enrolled into the membership.
But her observation had a limited scope, and her opinion didn’t address whether employees should have been described as working for the city, not the JFA.
In July 22, 2014, attorney Michael D. Youril of Liebert, Cassidy, Whitmore of Fresno, replied, saying that the JFA had been cooperating with CalPERS and had supplied all the non-privileged information in its control, but that no additional documents could be found by Pleasant Hill employees. He argued that the JFA met the definition of a “public agency” under Public Employees’ Retirement Law.
During its 2015 examination, CalPERS had asked for documentation that the JFA had been operating as required since 1983, because the JFA had contracted with CalPERS beginning in February of that year.
“The Pleasant Hill Martinez JFA contracts with PERS for retirement benefits and is subject to periodic audit,” Assistant City Manager Anne Cardwell said Monday.
“In 2015, (CalPERS) released its audit findings of a multi-year audit of our agency. The determination by PERS is that the Pleasant Hill-Martinez JFA is not, nor ever was, a separate agency from the city of Martinez. PERS indicated all enrollment and earning records would need to be corrected to show the JFA employees in the city of Martinez,” she said.
“The PERS retirement plans are almost identical between the two agencies, except that the city of Martinez plan is modified to coordinate with Social Security,” she said. “In late 2015, the audit finding was appealed.”
Her description echoes statements made by former Assistant City Manager Alan Shear in 2015.
Cardwell said the Pleasant Hill Martinez JFA was founded in 1975 between Martinez and Pleasant Hill to pool resources on common expenses. “From the original agreement, we can see that the purpose was to develop and operate shared facilities and services,” she said.
“Through other records, we found that the agency provided information technology and transportation services. While there is some early record of these mutual services being performed, the agency currently provides services solely to the city of Martinez, and no record could be found to confirm when the city of Pleasant Hill withdrew,” she said.
Cardwell said that with new leadership, Martinez started a “proactive approach” to resolve the situation.
“In late 2017, the city began talks with PERS, Social Security and the IRS to reach a resolution that would lessen the impacts to retirees, employees, and the organization overall,” she said.
“The city began talks with PERS, Social Security and the IRS, and kept active employees notified on the progress,” she said. “We are happy to report that we have had notable success in our attempts to lessen the impacts of the dissolution of JFA on our retirees, active employees, and former employees.”
CalPERS agreed to adjust enrollment and earnings records rather than ask city staff to do the work, and agreed not to retroactively adjust any PERS pensions, she said. The effective date that all JFA employees will be under the City plan with PERS is Aug. 1, she said.
“Social Security has indicated they will accept corrected earnings records that will provide the reporting of Social Security earnings back to the dates of hire in the JFA,” she said. “This should allow for some retirees to gain new eligibility for a benefit and may increase a benefit for others.”
In addition, the IRS has said it would collect only retroactive contributions from the city for the “open years,” currently 2015 through July 31, she said.
To pay for the money due to the IRS, the city sought the bank loan, Cardwell said. “As David notes in his staff report, US Bank is able to offer better terms than the IRS can, in terms of the amount due for the open tax years.”
Also on the Council agenda is the public hearing on proposed amendments to the Municipal Code. Residents may weigh in on those changes, prompted by modifications made in Contra Costa County’s animal control ordinance.
When the county’s Board of Supervisors change the county law, Martinez needs to update its own codes or else County Animal Services can’t provide enforcement of the new county code within this city limits, he wrote. The amendment would incorporate the county’s changes.
The Council also will be asked to certify the results of the June 5 election, including the 5,452 of 10,507 votes for the grassroots Measure I that would require voter approval before any open space or recreation land within Martinez gets converted to a higher density use, and the 5,349 of 10,589 votes for the Council’s Measure F, which would have excluded privately-owned property from such referendums.
In other matters, Contract Planner Brian Millar and Community and Economic Development Director Christina Ratcliffe will ask the Council to accept the 2017 report on implementing the General Plan and Housing Element.
Once those reports are accepted, they will be sent to the State Department of Housing and Community Development as well as to the Metropolitan Transportation Commission/Association of Bay Area Governments (MTC/ABAG) so Martinez will remain eligible to receive One Bay Areea Grant money, the two wrote in a report to the Council.
Cities are required to submit annual progress reports to their governing bodies, the Governor’s Office of Planning and Research and the Department of Housing and Community Development, describing the implementation status of their General Plan.
The current General Plan progress report covers activity from Jan. 1 to Dec. 31, 2017, including land use decisions made by the city during that year as well as the goals, policies and implementation methods that are included in the General Plan, they wrote.
The Housing Element is a mandated part of the General Plan and must identify existing and projected housing needs, including the city’s share of regional needs. To comply, Martinez must inventory both resources that would help meet those needs as well as any relevant constraints, provide a five-year schedule of actions that would be taken to put the housing element in place and explain how Martinez expects to meet its share of regional housing needs.
Housing Elements are adopted in eight-year cycles, the pair wrote, and the current submission would be for the 2016-24 planning period, they wrote.
In 2017, California changed some portions of state housing law that is affecting Martinez.
The adoption of Senate Bill 35 requires cities and counties that are behind in meeting adopted housing production goals to use a streamlined entitlement review and approval process if a developer includes low-income housing as part of its project.
Assembly Bill 1397 requires cities to make zoning changes appropriate for their share of regional housing needs and to require “by-right” development at certain sites. Assembly Bill 879 applies to annual Housing Element implementation reports starting in 2019, and requires inclusion of all development applications in the prior year, as well as units approved and denied, and a list of sites rezoned to accommodate Martinez’s share of regional housing needs for each income level that couldn’t be accommodated on specific sites.
The Martinez Planning Commission recommended May 22 that the documents be accepted and sent to the state agencies.
City Engineer Tim Tucker will ask for revisions to consulting contracts with NV5 and Jacobs Engineers for additional construction support and management services in the construction of the Martinez Intermodal Facility Phase 3 Pedestrian Bridge, Ferry Street Enhancements and Trail Improvements project.
He wrote in his report that an additional $111,982 is needed by NV5 for construction phase support services and $50,000 more is needed by Jacob Engineers for construction management and support, because more effort has been required for reviewing and processing contractor submittals especially those requiring Union Pacific Railroad approval and field engineering associated with Pacific Gas and Electric than originally anticipated.
Tucker said there is enough money in Measure J funds to pay for these increases.
The city engineer also will ask Council approval for all-way stop signs at the intersection of Castro and Arreba streets at the request of residents. Tucker wrote his department also will be erecting yield signs on Robinson and Haven streets at their intersections with Castro Street, but those do not need Council approval. Cost of the signs is $1,200.
Michael Chandler, deputy director of Administrative Services, will ask the Council to authorize an agreement with the New Leaf Collaborative and Martinez Unified School District for recycling education services.
Should the Council approve, the city would authorized $18,500 from its 2018-19 budget for the contract. Of that amount, $7,161 would come from Martinez’s City-County Beverage Container Grant, which must be spent by June 29, 2019, the $5,000 from Republic Services and $6,339 from the Martinez Recycling Fund.
The Council also will vote whether to approve Mayor Rob Schroder as its delegate to the League of California Cities annual conference Sept. 12-14 in Long Beach, and choose an alternate voting delegate.
The Martinez City Council will meet at 6 p.m. today in a closed session to discuss personnel matters and litigation with Kerry Kilmer, Tim Platt, Mark Thomson and up to 25 others in Contra Costa County Superior Court. The regular meeting starts at 7 p.m. today in Martinez City Hall, 525 Henrietta St.