LB Indy Letter To The Editor: Promenade Committee – Residents, Business owners

Promenade Committee Should Include Residents, Business Owners
LB Indy Letter To The Editor by Jerome Pudwill, Laguna Beach

Is the City Council majority tone-deaf? Or do they just not care about what residents want?

Mayor Sue Kempf has promoted the promenade since 2020 without giving residents an opportunity to provide meaningful input. This was repeatedly pointed out at the Jan. 23 city council meeting when 20 residents and business owners blasted councilmembers and railed against the two permanent city-defining promenade plans the council majority hoped to approve. Both plans called for removing virtually all existing Forest Avenue trees.

The promenade was imposed on residents, originally advanced without required public notification by Kempf and then-Assistant City Manager Shohreh Dupuis as a temporary fix for four restaurants during Covid.

Part of their justification was based on a survey they took of Forest Avenue businesses (no residents) – a survey never revealed. No mention of how many businesses were surveyed, whether interviewees were landlords, business owners or salespeople, or what questions were asked. In short, no data, proof or evidence – just their word.

Two public planning workshops were eventually conducted. The first consisted of condescending questions such as, “Which style of garbage cans do you prefer?” That workshop ended in infuriated chaos. In the second session, the consultants basically said, “Here are two plans – pick one.” This approach has resulted in wasting a quarter of a million dollars on two unacceptable plans rejected in part by the overpowering public rebuke at the council meeting. Please see those comments at the 3:15 point of the Jan. 23 meeting, which can be found on the City of Laguna Beach website.

Despite having mismanaged the process, the council majority has appointed Kempf to head a new committee to review future promenade development with direction that’s supposed to include residents and promenade retail business owners. Yet Kempf is already espousing her plans and denying others when the idea of the committee is to solicit all possible solutions.

For instance, in the OC Register, Kempf stated, “We want the whole street designated for (liquor sales), where restaurants can serve alcohol without having to rope areas off.” Do residents truly want to turn the promenade into one big bar?

Councilman Weiss said, “The promenade has been in place for three years, yet we have no truly independent data on how many residents versus visitors use it, how long they stay, and what they do – much less its impact on sales.” (So much for data-driven councilmember talk.)

There is no way this “committee” should exist without independent residents and promenade retailers permanently serving on it – not just pro-business councilmembers and cherry-picked city staff designees.

Contact all councilmembers at and tell them what you think.

Silence only encourages them to ignore you.

Pension Costs and Information (2023-2024 Adopted Budget)

Pension costs are expected to increase by about $670,000 next year. Strategies to address presented to the City Council in February 2023, including the issuance of pension obligation bonds. Additional information about pensions can be found immediately following this letter.


The City of Laguna Beach has contracted with the California Public Employee Retirement System (CalPERS) for pension benefits since 1945. The City has approximately 298 active and 406 retired employees (members) enrolled in the pension plan. In these plans, members earn service credit towards a lifetime retirement allowance after employment (defined benefit), calculated under a formula that accounts for the employee’s years of credited service, the employee’s “final compensation,” and age at retirement. For example, with 30 years of service, a “3 at 50” safety pension formula provides 90% of final compensation at age 50, and a “2.5 at 55” non-safety pension formula with 30 years of service provides 75% of final compensation at age 55. The CalPERS Board of Administration has absolute authority and fiduciary responsibility to ensure the System’s integrity, the investment of monies, and the overall administration of CalPERS.

An unfunded liability for pension benefits generally exists when the value of all projected benefits payable to members exceeds the projected value of assets available to pay those benefits. The amount can change over time due to changes in benefits, pay levels, demographics, actuarial assumptions, and return on investments. State and local governments, including Laguna Beach, typically reduce their unfunded liability over time as part of their annual required pension contributions.

Risk pooling was implemented by CalPERS effective with June 30, 2003, actuarial valuations to protect small employers (those with less than 100 active members in the plan) against large fluctuations in employer contribution rates caused by unexpected demographic events. Costs are allocated to Pooled plans on the actual increases or decreases to the individual plans. It is the policy of CalPERS to ensure equity within the risk pools by allocating the pool’s experience gains/losses and assumption changes in a manner that treats each employer equitably and maintains benefit security for the members of the System while minimizing substantial variations in employer contributions. If an agency voluntarily or involuntarily terminates its contract with CalPERS, the agency member benefits are adjusted in proportion to the amount the employer can pay, and the plan is moved into a Terminated Agency Pool. This mechanism is designed to protect other agencies by eliminating the unfunded liabilities of employers who cannot, or will not, pay pension obligations.

Several events have contributed to the increase in unfunded liabilities for agencies in the CalPERS system. In 1999, Senate Bill 400 (SB400) passed overwhelmingly permitting more generous pension benefits to employees, both prospectively and retroactively. CalPERS also incurred negative investment returns due to the “dotcom” bubble in 2000 and again in 2008 during the great recession. On December 21, 2016, based on the expectation of lower investment return rates over the next decade, the CalPERS Board voted to lower the discount rate (investment rate of return) from the current 7.5% to 7% over three years. The impact on the City’s budget is an increase in the normal cost by 1% to 3% as a percentage of payroll for the miscellaneous plan and 2% to 5% increase for safety plans. Additionally, the City is expected to experience a 30% to 40% increase in its required unfunded liability payment. These increases are phased in over five years, beginning, and were expected to add approximately $3.0 million to the budget by FY 2024-25.

City Council Actions to Address Pension Costs.

The Unfunded Accrued Liability (UAL) for Laguna Beach as of June 30, 2021 (the most recent information available) for all CalPERS pension plans is $51.2 million. This includes Police Safety of $17.4 million, Fire Safety of $14.4 million, Lifeguard Safety of $1.4 million, and Miscellaneous plan of $18.0 million. The City’s plans are currently 84.1% funded. The City is contractually obligated to enroll all full-time employees in theCalPERS system with few exceptions. If the City Council wanted to offer an alternative pension plan, CalPERS would require the City to terminate its contract at the cost of over $500 million, which is financially prohibitive.

Over the past ten years, the City Council has been proactive in addressing the City’s unfunded pension liability. In 2010, the City Council approved borrowing funds internally to pay off its $10 million CalPERS “Side Fund” for Police, Fire, and Lifeguard safety plans. In 2013, the City Council approved higher employee contributions ranging from 8% to 12% of their salary. In 2014, the City Council approved a strategy to pay approximately $10 million over five years to accelerate the City’s unfunded pension liability payoff. These strategies are expected to save the City $31 million over thirty years and significantly reduce the City’s unfunded liability over time. This is in addition to the State’s pension reform (PEPRA) legislation. CalPERS requires higher contribution rates toward unfunded liability and reduced retirement benefits for new employees intended to completely resolve the CalPERS unfunded liability (including Laguna Beach) in about twenty years.

In 2022, the City Council evaluated the opportunity to issue Pension Obligation Bonds to pay off the City’s unfunded liability. The City Council elected not to pursue this opportunity due to rising interest rates and unfavorable market conditions. There is some concerning news. Recently, CalPERS earned a -6.1% net return on investments for the 12 months ended June 30, 2022. This brings the total fund performance to an average investment return of 6.7% for five years, 7.7% for a 10-year period, and 6.9% for a 20-year period.

City of Laguna Beach Page 12/13 of 276 Adopted Budget.

For more on City Pension Costs, click here

Former City Manager Shohreh Dupuis – Gone But Not Forgotten

Dupuis leaves behind a trail of city government internal and external controversies. Not to mention reaping a retirement package many taxpayers do not support. Lots of questions still exist. An example is the public attention that continues to appear.

CLB Next City Manager Update. Its been reported that the Council starts City Manager interviews in mid-January.

Stay tuned. The public is watching closely to see if Council members Bob Whalen and Sue Kempf attempt to influence or control other members like they did in 2020.

Local Media Relevent to Shohreh Dupuis:
City of Laguna Beach City Manager Announces retirement
LB Indy – Retirement Details
Voice of OC – Retirement Details

City of Laguna Beach Investment Policy

It is the policy of the City to invest public funds based on compliance with state law and prudent investment practices. The primary goal of the City’s Investment Policy
is to invest in a manner that will provide the maximum security of the principal invested
with a secondary emphasis on providing adequate liquidity and finally to achieve a rate
of return within the parameters of prudent risk management while conforming to all
state statutes and local regulations governing the investment of public funds.

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