In the News

Santa Cruz council OKs local business preference; leaders also finalize rule on desal vote

By J.M. BROWN
Santa Cruz Sentinel, 3/14/12

SANTA CRUZ - The City Council on Tuesday passed a local business preference for city contracts with providers of goods and services costing more than $10,000.

Locally owned businesses, those with at least one employee in town, will receive a 2 percent advantage over lower bidders from out of town. Locally owned businesses will get an additional 4 percent advantage.

The way the policy works is that if the lowest bidder is from out of town, the city would choose a local business or locally owned business at their original bid price if the difference is within 2 percent for local businesses or 6 percent for locally owned businesses. The city would absorb the difference in cost, an estimate for which was not available Tuesday because of the varying price of bids.

City staff originally proposed a 3 percent advantage for local businesses, but the council pushed for the two-tier policy. The ordinance, which excludes construction contracts because of their potentially high cost, was also changed in consultation with the advocacy group Think Local First to define a locally owned business as one in which at least half of the owners reside within the county.

Also Tuesday, the council unanimously denied an appeal from the primary lien holders of the Torch Lite Inn, whose previous owners are undergoing bankruptcy proceedings, to discharge nearly $780,000 in unpaid hotel occupancy tax that accumulated from 2005-2010. Hotels are required to collect the tax from guests.

Barbara Choi, the city's risk manager, said the company was warned that if it took ownership, it would be liable for the unpaid tax. Nearly $780,000 is equivalent to about 70 percent of the library's annual budget or the average annual cost of at least four police officers.

But a lawyer for Pacifica L33, which foreclosed on the Riverside Avenue property, argued the company shouldn't have to repay the tax burden because it will either be wiped out by the bankruptcy court or paid by the previous owner through a reorganization plan.

"I don't think there is going to be anything left for us to owe," attorney Laura Palazzolo said.

Also Tuesday, the council took a second and final vote on a new ordinance requiring voter approval before the city constructs a seawater desalination plant. There were no objections from the public at the meeting, but desal opponents have expressed past concern that a future council could simply undo the ordinance.

The Right to Vote on Desal Coalition is gathering signatures for a charter change amendment that would appear on November's ballot. The amendment, which requires verified signatures of 15 percent of registered city voters, would give voters the right to weigh in at a future election.

City officials argue their ordinance does the same thing and have urged the desal opponents to drop their measure, saying it will cause the city to unnecessarily fund two elections for the same purpose.

"In light of what we are doing today, it's not a prudent use of the city's money," Mayor Don Lane said.

The earliest the plant could come up for a vote in any event would be June 2014.

The desalination facility, estimated to cost at least $115 million, is undergoing an environmental analysis that isn't expected to be completed until this summer at the earliest. If approved by the council and put to voters, the Westside facility must still get the OK of the state Coastal Commission.

Also Tuesday, the council also honored Carol Scurich, the city's recreation superintendent, for 25 years of service.

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