1. Budget Policy Issues for FY 2001-2002 and FY 2002-2003. (Evans)

2. 2001 Five-Year Financial Model. (McLean)

Recommendation: Review and file the 2001 Five-Year Financial Model.

3. Budget Policy Issues Identified by City Council Members. (Evans)

4. City Council Goals. (Evans)

1. Budget Policy Issues for FY 2001-2002 and FY 2002-2003. (Evans)

Discuss the budget policy issues and provide staff with direction regarding the inclusion of these items or others identified by Council in the proposed two-year budget for FY 01-02 and FY 02-03.

As in past years, staff has prepared a summary of possible policy issues to assist the City Council in the budget deliberation process. The purpose of this workshop is to allow the Council the opportunity to discuss the issues prior to the budget hearing in June. The Council should not feel limited by the items listed in this memorandum. Each Council member may have policy issues that they wish to discuss at this time. In addition, a decision to place any of these items in the draft two-year budget does not preclude their removal prior to the adoption budget resolution.

Each policy issue identifies whether the item is currently included in the 2001 Five-Year Financial Model. This is particularly relevant for items proposed to be funded by the General Fund. The General Fund unreserved balance is expected to be approximately $6.1 million at the end of FY 00-01 (June 30, 2001). With the inclusion of all of the items discussed in this report, the General Fund unreserved balance is projected to be approximately $5.8 million at the end of FY 01-02 and approximately $4.5 million at the end of FY 02-03 budget year (see attached Exhibit A). In comparison, without these additional expenditures, the General fund unreserved balance is projected to be approximately $6.4 million at the end of FY 01-02 and approximately $6.2 million at the end of FY 02-03.

The following is a list of the budget policy issues discussed in this report:

Policy Issue

1. City Grant Requests

2. Construction of a Sidewalk on Crest Road

3. Installation of New Bluff Top Fencing and Signage

4. Roadway Beautification

5. Increased Code Enforcement along Major Arterial Roadways

6. Undergrounding of Utilities

7. League of California Cities and California Coastal Coalition Memberships

8. Salary Range Adjustment

9. General Plan/Coastal Specific Plan/Conceptual Trails Plan Updates

10. City Hall Improvements

11. GASB 34

Respectfully submitted:

Carolynn Petru, Assistant City Manager

Reviewed,

Les Evans, City Manager

• $38,390 in the FY 01-02 budget and $37,390 in the FY 02-03 budget. Both amounts are included in the 2001 Five-Year Financial Model.

Over the past several years, the Council has provided grant funding to various non-profit agencies in the South Bay area. The following chart indicates the amounts that the City has provided for the last two fiscal years and the amounts requested to be included in the FY 00-01 and FY 01-02 budgets:

In addition, the proposed budget included a pool of $6,850 each fiscal year to be used at Council’s discretion for any additional grant requests that may come after the start of the fiscal year. For example, in November 2000, the City Council awarded a $1,000 grant to the South Bay Chamber Music Society. This group is now requesting to become one of the City’s annual grant recipients.

Three agencies (Palos Verdes Symphonic Band, South Bay Chamber Music Society and South Bay Youth Project) have requested the same funding levels for FY 01-02 and FY 02-03 as were previously funded in FY 00-01. As shown in the chart below, the remaining six agencies have all requested increases in FY 01-02 and FY 02-03. However, because the Peninsula Seniors’ grant request is based on the number of Rancho Palos Verdes residents who are members of this organization, the requested level of funding may be different when the Council considered adoption of the FY 02-03 budget this time next year. Peninsula Seniors typically requests a grant in an amount equivalent to $10 per Rancho Palos Verdes member. Currently, there are 804 members of Peninsula Seniors who are Rancho Palos Verdes residents.

The chart below indicated the amount of change between the requested funding levels for the next two fiscal years with the actual funding level for FY 00-01:

The requests for FY 01-02 represent an increase of $8,080 (about 27%) from what was funded in FY 00-01. The two largest increases, double their previous grants, came from the Harbor Free Clinic and the South Bay Family Healthcare Center (formerly South Bay Free Clinic). However, staff feels that both increases have merit, because the grant amounts in both cases are based on the number of Rancho Palos Verdes residents who receive services from these clinics. In addition, grant requests have come from two performing arts groups, Dance Peninsula Ballet and Shakespeare by the Sea, both of which have not previously requested funding from the City.

The requests for FY 02-03 represent a $1,000 decrease from what has been requested for the FY 01-02 budget because the grant request from Shakespeare by the Sea is for a one-time event that will take place in FY 01-02.

Recommendation: Staff recommends inclusion of the grant requests in the draft budget, as proposed by the various non-profit organizations.

Fiscal Impact: The General fund provides the source for all City grants.

• $200,000 proposed for the FY 01-02 budget, but not included in the 2001 Five-Year Financial Model.

There is an existing sidewalk along Crest Road from Ganado Drive to a point approximately midway between Ganado Drive and Avenida De Pino. Much of this sidewalk was constructed three years ago in response to a request from the Rancho Palos Verdes Estates Board of Directors. The sidewalk ends at the beginning of a trail, which provides assess to the tract. The Board of Directors is currently requesting that the sidewalk be extended an additional 3400 feet and connect to Avenida de Pino. The board believes the sidewalk is needed to improve safety for pedestrians, particularly children who walk to Mira Catalina Elementary School.

Extending the sidewalk along Crest Road will be costly. This is because just beyond the end of the sidewalk there is an outcropping of bedrock that would have to be removed to extend the sidewalk. In addition, two utility poles would have to be relocated. The cost for this option is estimated at approximately $200,000.

An alternative to the requested action is to construct a sidewalk that avoids the rock outcropping. Such a sidewalk would begin beyond the rock at the beginning of another trail, and then connect to Paseo de Pino. Pedestrians wishing to walk from Ganado Drive to Paseo de Pino, would have to leave the sidewalk and utilize the internal trail system on private property. This route would be longer and would require a pedestrian to climb a steep grade. The estimated cost of this alternative is $50,000.

A cost comparison of the two options is shown in the chart below:

Recommendation: Staff is seeking direction from the Council as to whether the Rancho Palos Verdes Estates Board of Directors’ request or staff’s alternative should be included in the draft budget.

Fiscal Impact: If the Council elects to proceed with the $50,000 alternative project identified by staff, this project would be small enough that it could be funded through the City’s Gas Tax fund without taking away funds from other annual maintenance projects. If the Council chooses to proceed with the $200,000 project requested by the homeowners association, the source of funds for this larger project would be the General fund.

• $45,000 proposed for FY 01-02 budget, but not included in the 2001 Five-Year Financial Model.

At the February 20, 2001 City Council meeting, Sarah Key-Marer addressed the Council regarding the death of her four-year old daughter, Lauren Key, at Inspiration Point on November 8, 2000. She noted that Portuguese Point has fencing along the bluff edge and warning signage, but that Inspiration Point, which is immediately adjacent, is not similarly improved. Ms. Key-Marer requested that the City take measures to prevent future tragedies on City-owned coastal property. In response to the issues raised by Ms. Key-Marer, staff visited each City-owned property along the coastline to determine which ones have bluff tops improved with warning signage and/or guardrail fencing. The chart below summarizes staff’s findings at the nine locations surveyed:

As shown on the chart above, four of the locations (Point Vicente Interpretive Center, Vanderlip Park, Abalone Cove Beach and Portuguese Point) are already improved with both guardrail fencing and warning signage along the bluff top. The guardrail fencing at these locations consists of wooden posts connected by two galvanized pipe cross-rails. The warning signs at these locations are all of the same design (approximately 1’ x 2’ in size) and are bolted onto the wooden posts at regular intervals along the length of the fence. Staff feels that no further bluff top improvements are necessary at these four locations.

The coastline at Ocean Front Estates has bluff top fencing, but no warning signage. Guardrail fencing on the seaward side of the bluff top trail at Ocean Front Estates consists of metal posts welded together with two metal cross-rails. The developer of the adjacent residential project, Capital Pacific Holdings, installed this fencing, as well as the wooden fencing surrounding the habitat restoration areas. Staff recommends that warning signage similar to what exists at the four park sites listed above be installed on the existing metal guardrail at Ocean Front Estates.

The last four locations (Sacred Cove, Inspiration Point, Archery Range and Shoreline Park) currently have no fencing or signage along the bluff top.

The City acquired ownership of Shoreline Park from the County in 1998. The configuration of the bluff top at Shoreline Park is similar to those at the other City-owned properties that are currently improved with fencing and signage. Although there is currently no fencing along the bluff top on this property, the developer of the adjacent Ocean Trails project has installed fencing and signage along some of the internal public trails to satisfy requirements of the California Coastal Commission and state and federal wildlife resource agencies. The fencing installed by the developer consists of wooden posts strung together with two steel cables. Because of an existing sewer easement access road on the property that runs parallel to the bluff top, the installation of fencing and signage would be relatively easy at this park site. Staff recommends that the fencing style match what has already been installed in the park by the Ocean Trails developer. The bluff top at this park site is approximately 1,200 feet in length. At $25 per linear foot, the cost to fence the bluff top would be approximately $30,000. Signage would be similar to what has been installed at the City’s other coastal park sites (Point Vicente Park, Vanderlip Park, etc.).

The three remaining sites (Sacred Cove, Inspiration Point and the Archery Range) are all located within the active Portuguese Bend landslide area. Sacred Cove and the Archery Range experience slow seaward land movement on an almost constant basis. In addition, the Archery Range often experiences sudden bluff top collapses due to wave erosion at the toe of the landslide. Fencing along the bluff top in these two areas would be ineffectual because of the deep fissures that exist between the roadway and the ocean. Further, any fencing would need to constantly repaired or replaced as it becomes distorted or destroyed by land movement. Given this situation, there are two options available to the City:

Given the maintenance issues and potential aesthetic impacts of installing fencing along the roadway, staff recommends that no fencing be installed at Sacred Cove and the Archery Range, but that warning signage be placed along the roadway at regular intervals. The signs could be combined with the "No Parking" signs that currently exist along Palos Verdes Drive South.

Despite its remote location (the closest public parking is located a ½ mile away at Abalone Cove Beach), Inspiration Point is an attractive destination to hikers in the area due to its scenic beauty and unique vistas. There is a beaten footpath that leads from Palos Verdes Drive South to the end of the point. However, unlike Portuguese Point, which has a level area on top that is approximately 200 to 400 feet wide, the flat portion of Inspiration Point is only 20 to 40 feet wide. Installing fencing at this location is particularly challenging because of this point’s narrow aspect, as well as the fact that the area between Palos Verdes Drive South and where the point extends into the ocean experiences nearly constant landslide movement. Rather than fencing Inspiration Point in a manner similar to Portuguese Point, staff recommends that a section of fence equipped with a swing gate and warning signage be installed across the footpath parallel to the roadway in the area where the point first narrows and extends out to sea. The Ocean Trails project has three similar swing gates with warning signs located at the top of steep and narrow trails leading from the bluff top down to the beach 150 to 200 feet below.

Although related to the Forrestal property, a copy of a letter prepared by City Attorney Carol Lynch is attached because it addresses the legal issues associated with installing fencing and signage on unimproved property with geologic hazards

Recommendation: Staff recommends that the City Council include $45,000 in the FY 01-02 budget to install the following bluff top improvements:

Fiscal Impact: The total cost for the project would be $45,000, which includes $30,000 for fencing, $10,000 for warning signage and $5,000 for engineering services. The source of funds for the project would be the General fund. However, the County recently informed staff that there are some residual Measure A funds that may be available for this type of park improvement project. Staff is currently investigating this possibility.

Landscape improvements along the City’s roadways will improve the appearance of the City. This is particularly true along Hawthorne Boulevard – the City’s ‘Main Street’ – which has concrete medians, unimproved parkways, and various mismatched walls and fencing along the edge of right of way. In 2000, the City Council established a Beautification Subcommittee, consisting of Mayor Lyon and Mayor Pro Tem McTaggart, and authorized the services of a landscape architect to propose landscaping options along Hawthorne Boulevard.

The Beautification Subcommittee is currently reviewing several landscape options and will soon be reviewing a comprehensive plan with cost estimates for both construction and maintenance. Once the subcommittee reviews the plan it will be brought to the City Council for review.

The total cost to improve Hawthorne Boulevard is estimated to be $ 3 - 4 million. The City’s five-year financial model currently identifies expenditures of $100,000 annually for median improvements. Funding sources are a combination of Recycling funds and General funds. At this current funding level, the completion of the entire project will take approximately 30 years. If the City wishes to complete the improvements along Hawthorne Boulevard in shorter time frame, additional funding sources will need to be identified.

Recommendation: Provide staff with direction.

Fiscal Impact: $100,000 per year from the General fund is currently included in the City’s five-year financial model for roadway beautification. In order to complete the Hawthorne Boulevard project in a 10-year period, this amount would need to be increased by $200,000 per year, for a total of $300,000 annually. Potential sources for this funding include reducing funding for the City’s Recycling Beautification Grant program to homeowners associations and reallocating the money to the arterial roadway beautification program. Otherwise, the source of the additional funds would be the General fund.

• $25,000 proposed in FY 01-02, but not included in the 2001 Five-Year Financial Model.

The City Council’s ad hoc committee on City Beautification, comprised of Mayor Lyon and Mayor Pro Tem McTaggart, has begun to look at improving the aesthetic appearance of the City’s major arterial roadways. Working with the Department of Public Works, the committee has focused its initial efforts on improving the visual appearance of Hawthorne Boulevard. Specifically, the Committee is considering improvements to the center median and the right-of way on both sides of the street through the use of landscaping and more uniform hardscape and wall designs.

To complement the City’s efforts to beautify the arterial, the committee has identified a need to instigate a more proactive code enforcement effort to get property owners of lots that abut Hawthorne Boulevard to repair or replace broken and unsightly fences/walls and clean up dead and unsightly vegetation. It is estimated that there are approximately 270 private lots that abut Hawthorne Boulevard located in the City of RPV. Although not all the lots will necessitate property maintenance action, it will take a substantial amount of staff time to initiate a proactive code enforcement program on the lots that need maintenance, in conjunction with any other city initiated beautification efforts.

Staff believes that the staff effort that will be necessary to inventory the problem lots, work with the property owners to correct property maintenance problems and, if necessary, force compliance is beyond the resources of the Department’s current code enforcement staffing. Currently, there is only one Senior Code Enforcement Officer that for the past 2 years has effectively handled the code enforcement duties that were previously performed by two officers. Therefore, Staff believes that in order to initiate and complete an effective and proactive code enforcement program, as a component of the City’s Hawthorne Boulevard beautification project, the hiring of a contract code enforcement officer will be necessary. Staff estimates that an effective code enforcement program could be administered by one individual over a 6-month period, working approximately 20 hours per week at a rate of approximately $50/hour.

Recommendation: Staff recommends budgeting $25,000 in FY 01-02 for the purpose of hiring a contract code enforcement officer to administer a proactive code enforcement program to assist in the City’s beautification efforts along Hawthorne Boulevard.

Fiscal Impact: The Department’s FY 01-02 budget would include a $25,000 increase in its Maintenance Services budget, which would be paid for from the City’s General fund.

• $300,000 - $500,000 per location from the General Fund, but not included in the 2001 Five-Year Financial Model.

Overhead utility lines along the City’s roadways take away from the natural beauty of the City. This is particularly true along the coastal roadways where overhead lines impact spectacular ocean views. The General Plan recognizes this when it states "overhead wires are an unsightly vestige of a necessary infrastructure component, and cause considerable disturbance to views". The General Plan goes further and states it should be a City policy to "Underground all new power lines and communication cables and implement programs to place existing lines and cables underground".

The City Council requested staff to develop a program for property owners to utilize to underground overhead utility lines in residential neighborhoods. Such a program would be funded by property owner assessments, with only minor costs for the City. Staff anticipates bringing that program to the City Council in May.

The undergrounding of overhead utility lines along the city’s arterial roadways is the responsibility of the City. In the past the City has used its share of Rule 20A to fund undergrounding projects. At this time there are no Rule 20A funds available. This is because the city’s past projects have consumed the city’s Rule 20A funds through Fiscal Year 2005 - 06. When last investigated, the City was told that we should expect to receive an annual allocation of approximately $ 150,000 in Rule 20A funds in FY 2006 – 07. If the City wishes to underground utility lines along the arterial roadways contribution of General fund monies are required.

Recommendation: Provide staff with direction.

Fiscal Impact: The cost to underground a single roadway crossing will vary greatly. Staff estimates a range of $300,000 - $500,000 per location. The source of funding would be the General fund.

• $11,590 proposed in FY 01-02 and FY 02-03, but not included in the 2001 Five-Year Financial Model.

The City of Rancho Palos Verdes is a member of the California League of Cities along with the majority of the 475 cities in California. The City Council has taken a much less active role in the League than they have in other organizations such as the California Contract Cities and the South Bay Cities Council of Governments. However, the Planning Commission (and View Restoration Commission) as well as certain city staff such as the City Manager and Public Works Director are active in the League and attend their respective annual Department meetings. The League also provides the city an excellent weekly report on pending legislation and provides California Cities their strongest voice in Sacramento.

Recently, the League has considered becoming a much stronger force in State politics and will probably propose a significant increase in staffing to support an aggressive legislative program. The formal presentation of the League proposal will go before their Board sometime this month. Since approval of the proposal by the board will create some policy issues for the City Council, staff is presenting the concept as a policy issue.

• The Grassroots coordinator Network proposed by the League staff would consist of 10 field offices staffed by 14 new and 3 existing staff who would serve as grassroots coordinators. Their job would be to work with city officials and the regional divisions of the League to aggressively promote key League legislative priorities with legislators, district staff, local media and other supporting community groups. The goal of the Grassroots Network is to focus on major issues of concern to all cities, such as fiscal reform, increased funding for transportation and local control. Cities will benefit from the increased visibility of city issues in local and statewide media, and by holding legislators accountable back home for the votes they cast in Sacramento. The Grassroots Coordinators would:

• Arrange meetings, plan news conferences, organize letter writing and media campaigns, and coordinate grassroots efforts with community groups with similar agendas.

• Support mayors, councilmembers and city managers in drafting sample letters from cities: and train city staff on understanding and accessing the legislative process.

• Provide regular presentations on legislative developments and insight into the political dynamics influencing legislative developments.

There are two policy issues for the Council to consider with regards to the League of California Cites membership:

1. Will the City Council support the proposed Grassroots Network Plan?
2. If the majority of the League cities approves the Grassroots Network Plan, will Rancho Palos Verdes remain a member of the League?

Recommendation: Provide staff with direction.

Fiscal Impact: The Grassroots Network Plan would increase the dues paid to the League of California Cities by Rancho Palos Verdes from $7,382 to approximately $11,590.

• $2,000 per year beginning in FY 01-02 and FY 02-03, but not included in the 2001 Five-Year Financial Model.

At the request of Councilmember John McTaggart, the Council is asked to consider becoming a member of the California Coastal Coalition (CalCoast). CalCoast, founded in 1998, is a non-profit advocacy group comprised of 28 coastal cities, six counties, regional planning groups, and allied interests committed to restoring California’s shoreline through sand replenishment, increasing the flow of natural sediment, wetlands recovery and improved water quality. The City is indirectly affiliated with CalCoast through Southern California Association of Governments’ membership.

Some of CalCoast’s notable accomplishments include the following:

Co-sponsorship of the CA Public Beach Restoration Act of 1999 (AB 64-Ducheny); lobbied for passage of Propositions 12 and 13, as well as legislation that would help cities deal with storm water runoff and other resource management efforts; formed legislative alliances with mainstream environmental groups; expanded focus to increase funding for water quality efforts, wetlands restoration and other coastal resource management challenges. The City of Rancho Palos Verdes would benefit from CalCoast membership in terms of water quality issues, such as storm water runoff, and coastline protection/restoration.

The Mission of CalCoast is as follows:

• Advocate coastal interests in Sacramento;
• Support policies and programs which promote the preservation, protection and restoration of California’s coastline;
• Spread awareness of the importance of well maintained beaches to State and local economies, habitats, and quality of life;
• Serve as a liaison with regional shoreline agencies such as SANDAG (San Diego Association of Governments), the L.A. County Beach Task Force and BEACON.
• Work with advocacy and technical organizations such as California Shore and Beach Preservation Association, American Coastal Coalition and the Surfrider Foundation.

Membership Benefits include:

• Legislative news and updates regarding current developments in Sacramento.
• Information about government policy and funding sources (State and Federal).
• Alerts on important legislation when immediate action is necessary.
• Clearinghouse for information on beach projects and new ideas being developed by coastal counties and cities.
• Access to membership database for improved communication among coastal communities and stakeholders.

General meetings are held throughout the State during the year and regional meetings are scheduled every other month at different locations. Most agencies are represented by elected officials at regional and general CalCoast meetings.

Recommendation: Provide staff with direction.

Fiscal Impact: Becoming a member of the California Coastal Coalition would cost $2,000 per year. The source of funds for both memberships would come from the General fund.

There are two issues regarding employee compensation that staff is asking the City Council to consider including in the draft budget. The first is adjusting the salary ranges established for each position in order to stay current with the marketplace and the second is determining the annual amount of the merit compensation pool.

Experts in the field of personnel, both in the private and public sector, report that the success of any compensation plan depends on keeping it updated to reflect market conditions. Rather than completely update the salary study each year, it is possible to make periodic adjustments to the ranges based upon the CPI or other factors. In the intervening years following salary range studies conducted in 1995 and 1998, the Council has made annual adjustments to the salary ranges based on the CPI at that time. For example, the City Council made a 1.5% change in FY 98-99, a 2% increase in FY 99-00 and a 3.4% change in FY 00-01. The CPI for the twelve-month period ending February 2001 is equal to 3.6%

It should be noted that any adjustment to the ranges does not immediately impact employee salaries. Actual salary increases are only granted at the time of an employee's annual review. Raises are based on performance and salaries cannot exceed the top of the salary range. Salary increases are also limited to funds available in the merit compensation pool.

Recommendation: Staff recommends including in the FY 01-02 a 3.6% adjustment to the City’s salary ranges, without adjusting any employee salaries

Fiscal Impact: An increase of 3.6% in the formal salary ranges would not have an immediate impact on any salaries. Any increases given to employees who are currently at the top of their salary range in FY 01-02 would be part of the merit pool.

• $125,000 in the FY 01-02 budget and $135,000 in the FY 02-03 budget. Both amounts are included in the 2001 Five-Year Financial Model.

In 1996, the City replaced the previous step compensation system with a merit pay plan. As part of the merit plan, employees are eligible to receive compensation increases based upon their performance during the previous review period. Each fiscal year, the City Council establishes a specific amount for the merit pool from which the City Manager determines the percentage increase that will be granted for each level of performance over the next year.

Recommendation: In FY 00-01, the merit pool was equivalent to 6% of the City’s payroll. Staff recommends including a merit pool that represents 6.2% of payroll, which translates to approximately $125,000 in the FY 01-02 budget and $135,000 in the FY 02-03 budget. The .2% increase is equivalent to the increase in the Consumer Price Index between March 2000 (3.4%) and February 2001 (3.6%).

Fiscal Impact: Although a total of $260,000 is included in the draft FY 01-02 and FY 02-03 budget, it is unlikely that this full amount will be expended within the next two fiscal years due to staff turn-over and the uncertainty of trying to predict future employee job performance levels.

• $25,000 in FY 01-02 and $350,000 in FY 02-03 to update all three plans, but not included in the 2001 Five-Year Financial Model.

A General Plan Update has been discussed several times in the past in conjunction with the budget process. In addition, at a joint meeting in August 1998, the City Council and Planning Commission discussed, among other things, updating the General Plan and Coastal Specific Plan but resolved not to initiate an update at that time. To date, funding has not been budgeted for this effort, and no action has been taken toward updating the Plan. The General Plan was originally adopted in June 1975. The last significant update occurred in 1984 with the Eastview Annexation. Although the document is old, and certain parts are in need of an update, the goals and policies are still applicable today just as they were in 1975 and 1984. The Coastal Specific Plan was adopted in 1978 and has not been significantly changed since that time. The content and policies are generally consistent with the ongoing vision of the City, however, since the document is 20 years old an update is also necessary.

The City’s Trails Network Plan is a combination of the City’s Conceptual Trails Plan (CTP) and the City’s Conceptual Bikeways Plan (CBP). The purpose of both plans is to identify the trail and bikeway opportunities within the community, so that the acquisition and development of new public trails, through new development proposals, public works projects and voluntary efforts can be integrated into the City’s existing public trails network. The CTP was last amended in 1993, while the CBP was last amended in 1996. Both plans necessitate minor amendments to incorporate trail changes that have occurred in the last few years. In addition, a discussion of Trail Classifications and Standards, which was not adopted as part of the 1993 CTP Amendments, needs to be added to the CTP.

An update of the General Plan and Coastal Specific Plan would likely begin with a review of both plans by Staff and the Planning Commission to identify the areas that are in need of update, and thereafter providing the Council with a report on those sections which require amendment or further study. An update of the Trails Network Plan would likely begin with a similar review by the Recreation and Parks Committee.

Recommendation: Staff recommends budgeting $25,000 in FY 01-02 to hire a consultant to assist Staff, primarily with graphics and document layout, for updating the Trails Network Plan. Staff also recommends budgeting $350,000 in FY 02-03 to hire a consultant to prepare an update of the City’s General Plan and Coastal Specific Plan, along with the necessary CEQA documentation.

Fiscal Impact: The proposed increase to the Department’s Professional/Technical Services budget would be paid for from the General fund.

• $30,000 for architectural services to design selected City Hall improvements, not currently included in the 2001 Five-Year Financial Model.

During the FY 2000-2001 budget process, the City Council considered various City Hall improvements, including a centralized public counter, permanent City Council Chamber and tenant improvements, like installing an elevator. The City Council postponed making a decision and authorized a Phase II soil assessment and seismic evaluation study of the existing City Hall complex.

Both studies have been completed and the City Hall complex has been determined to be adequately safe. The Source Group conducted the Phase II soil assessment that involved 16 borings in the parking lots, access road adjacent to the Planning Building, and grass areas between and adjacent to the Planning and City Administration Buildings. Selected soil samples were analyzed for total Hydrocarbons, volatile organic compounds, semi-volatile compounds, pesticides, and PCB’s, Perchlorate, nitrates and Title 22 metals. No anomalies were detected with the exception of high nitrate concentration found in two soil samples in the main parking lot. The Phase II assessment report is attached for further detail on the methodologies used for data collection, analytical results and findings of the investigation.

The seismic hazard evaluation study conducted by Breiholtz Qazi Engineering found that the existing City Hall buildings are expected to meet the current life-safety requirements under the Uniform Building Code during an earthquake. This means that in the case of an earthquake event, risk to life safety is low, although the buildings may experience extensive structural and non-structural damage at an estimated loss of up to 8% of the building’s replacement value. Since the City’s Emergency Operation Center (EOC) is housed in the Administration Building, the City may wish to improve the seismic performance level. The cost estimate for structural and non-structural retrofit work of the Administration Building is approximately $59,000. Structural retrofit work would address vulnerable roof-to-wall connections and non-structural work would address both furniture (anchor tall bookcases/filing cabinets) and utility life line components (anchor electrical and telephone panels).

In FY 99-00, the City Council created an Internal Service Fund for building replacement and/or major improvements of City facilities. Currently the balance is under $1 million, and each fiscal year the estimated annual depreciation of the buildings are transferred from the General Fund Reserve to the building replacement fund. By fiscal year 2003, the City will have accumulated over $1 million in its building replacement fund.

The City Council is asked to discuss and define its collective vision for City Hall. Since incorporation, the City has made various building improvements in attempt to maximize space utilization within the existing structural confines. In recent years, several building improvement suggestions have been raised, such as installing an elevator, permanent City Council Chamber, the visual blight of the public works yard from the residents’ view looking down on City Hall property, etc. Staff would like to pursue these improvements if they align with the Council’s vision. For Council’s convenience, staff grouped the following improvement options ranging from minimal, immediate development to optimum, long-range development:

Option A—Renovate Existing Buildings

Option B—Expansion for Centralized Public Counter and/or Council Chamber

Option C—Develop Master Plan for entire City Hall property, including a new City Hall

Basic tenant improvements listed below will address immediate needs. Council may select improvements a la carte or add some that are not on the menu.

The centralized public counter and permanent Council Chamber can be incorporated with the existing City Hall layout in various ways, such as a one-story (6,000 sq ft) addition between the two buildings, expand the existing community room for the Council Chamber, expand the main lobby to accommodate the public counter, new construction for a stand-alone Council Chamber (3,000 sq ft) at the northwest corner (end of Recreation wing), demolish the Planning Building for reconfigurations, etc. Both improvements can be achieved independently of each other or together, and both improvements are intended to enhance service delivery and customer service.

The "where and how much" expansion details can be determined later with the assistance of an architectural firm. City Council is asked to consider the concept of a centralized public counter and permanent Council Chamber for Rancho Palos Verdes.

The centralized "one-stop" service counter will provide easy public access to City representatives for common business transactions in a user-friendly environment. Hypothetically, a person can enter the clearly visible, main City Hall entrance to pick up a "no solicitation" sticker, pay building permit fees, speak to a planner about a pending plan check, and file a complaint about drainage improvements in one visit, at one centralized location. The one-stop counter would be located somewhere between the Planning and Administration Building so staff members when specifically called upon, can readily assist the public at the counter.

A permanent Council Chamber is proposed to increase the overall City Council meeting experience. The City would be able to custom design the Chamber to accommodate large audiences, take advantage of information technology for audio-visual presentations, provide additional meeting/event space, house the City’s Emergency Operation Center, and provide other amenities.

For long-term development of the City Hall property, Council may consider developing a Master Plan that includes additional park amenities, mixed-use facilities and new construction for a Civic Center. A new Civic Center designed to incorporate a centralized public counter, permanent Council Chamber and other improvements desired by the Council and residents of the City is estimated to require approximately 22,000 gross square feet. The estimated cost of new construction at $300/sqft is approximately $6,600,000.

Recommendation: Select City Hall improvement option(s) and authorize staff to solicit Request for Proposals for an architectural firm to design improvements.

Fiscal Impact: $30,000 for the architectural services will be funded from the Building Replacement Internal Service Fund.

• $15,000 during FY 01-02 and $15,000 during FY 02-03 for Public Works consultants to assist with the implementation of GASB 34, but not included in the 2001 Five-Year Financial Model.

In June 1999, the Government Accounting Standards Board (GASB) issued Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments (GASB 34). The City is required to implement GASB 34 in the City’s FY 02-03 comprehensive annual financial report (CAFR), and audited statements contain therein. Several of the financial reporting enhancements include:

• One consolidated financial statement of the City using the accrual basis of accounting, similar to SEC financial reporting of publicly traded companies;
• Presentation of individual fund financial information for each of the City’s significant funds (i.e. General fund, Gas Tax Fund, CIP fund);
• Presentation of budget vs. actual results for the major funds of the City, including comparison with the original budget and final amended budget; and
• Inclusion of the City’s infrastructure assets into the financial statements.

The City must choose to either (1) begin recording depreciation expense for infrastructure assets; or (2) use the "modified approach" for reporting infrastructure assets. The modified approach would require the City to:

• Perform an assessment of its entire infrastructure and determine its condition as of June 30, 2003 and each year thereafter;
• Prepare an annual estimate of the City’s cost to maintain each infrastructure asset system and subsystem (i.e. sewer system, median system, lighting system) at the level it was maintained as of June 30, 2003; and
• Document its findings whether or not the infrastructure systems are being maintained at the minimum condition level (at least as well as it was as of June 30, 2003).

The modified approach requires the City to establish a minimum standard of maintenance for the infrastructure assets. Under the modified approach, periodic engineer reviews of the condition of the infrastructure assets would be required to assure they are being maintained at the predetermined minimum standard.

Generally, the modified approach is being implemented only by large cities with the financial resources to satisfy the on-going requirements of the modified approach. Being a "contract city", the City would have to retain independent consultants to conduct an annual review, assess the condition of the infrastructure assets and provide verification thereof.

The depreciation basis simply requires the City to record and depreciate all the costs of infrastructure improvements. Each year the City would recognize depreciation expense for a portion of the capitalized infrastructure assets. Routine and recurring maintenance would be expensed annually and therefore not subject to depreciation.

Public Works staff has directed its consultants to conduct an initial review of the City’s infrastructure condition and maintenance reporting systems to enable its own assess whether to consider the "modified approach". Staff expects completion of the study on or before the beginning of the next fiscal year.

Recommendation: Upon completion of the initial review of the City’s infrastructure condition and maintenance reporting systems, staff will make a recommendation to the City Council whether to adopt the "modified approach" or not, and a request for a budget adjustment for additional services, if necessary.

Fiscal Impact: The FY 00-01 Public Works budget includes $15,000 for professional services to obtain an initial review of the City’s infrastructure condition and maintenance reporting systems (i.e. storm drain and pavement management systems) in anticipation of the implementation of GASB 34. The source of funds to implement GASB 34 is the General fund. The Public Work’s department budget for FY 01-02 and FY 02-03 would be increased $15,000 each year respectively.

Only the City Clerk’s archival records (e.g. City Council and Planning Commission minutes, resolutions and ordinances) are safely stored in the event of a disaster at City Hall. These records have been microfilmed and the original film is stored at the County Clerk’s facilities in downtown Los Angeles. All other City records are in paper form and stored in filing cabinets and boxes in various areas around City Hall. These records are in peril in the event of fire or water damage. In addition, retrieving archival records stored in cabinets and boxes is extremely time consuming.

Even though 1,500 square feet of City Hall space is used exclusively for storage of archived paper documents, staff has run out of storage space. This has occurred despite the fact that the City Clerk directs the annual purging of paper documents from storage. Except for permanent records (e.g. agreements and minutes), documents are stored for a period ranging from two to seven years.

In order to provide protection for City records and relieve storage constraints at City Hall, staff is proposing convert most of the City’s paper records to a CD-ROM format. Staff would first prioritize its archival needs prior to beginning the proposed electronic archival project. Upon developing a systematic plan, staff would deliver original copies of prior year records to the imaging vendor for scanning, conversion to an electronic format and archival on CD-ROM’s. Upon completion and delivery, the vendor would provide software to enable staff to view and print electronic documents from CD-ROM.

The preparation and maintenance of the inventory of the archival CD-ROM collection would be performed manually by staff. Because the documents will not be optical character recognizable (OCR), a key word "search and find" feature will not be possible. The retrieval of documents from the CD-ROM collection will require a good working knowledge of "what’s where". The search and find feature is an integral part of an on-site, dedicated document imaging system (imaging system) described below.

Several examples of documents that would be outsourced for document imaging and electronic archival include:

• Original documents from the meetings of the City Council, Planning Commission and other committees, including agendas, minutes, resolutions, staff reports and attachments (even large documents like site plans);
• Documents from Planning tract map files, geology files, address files and plan files;
• Accounting reports, purchase orders, invoices, delivery receipts and other documents not generated from the HTE accounting system; and
• Encroachment permits, capital project file data and traffic reports maintained by the Public Works department.

An imaging system would enable an internal system for document imaging with key word search and find retrieval of documents. The search for all staff reports, resolutions and ordinances regarding "solicitation" could be found using the single word "solicitation" as a search target. Staff estimates that an imaging system would cost approximately $90,000 initially, including a multi-user license for use at every workstation, a dedicated file server, one high-speed scanner, one large image scanner (e.g. for site plans) and a plotter printer. The annual cost to operate an imaging system would be about $80,000, including software and hardware support, as well as a technician to manage the imaging system. Staff is not recommending an imaging system at this time, although it is included in FY 03-04 of the 2001 Five Year IT Plan.

The management of the City’s IT system has been the responsibility of the Finance Department since early 1998. In conjunction with the replacement of the City Hall computer network in January 1999, the Finance Department retained Palos Verdes on the Net (PVNET) to perform daily administration. The IT responsibilities of Finance Department staff have included:

• Preparation of the annual Five Year IT Plan;
• Coordination of daily administration of the IT system with PVNET;
• Coordination of the purchase of computer equipment and software in accordance with the budget approved by the City Council;
• Troubleshooting simple computer user problems;
• Coordination of the City’s website hosted by PVNET; and
• Management of the budget of the Equipment Replacement fund – Computers.

The growth of the City’s IT system has necessitated the dedication of nearly 50% of the Finance Director’s time, as well as 5-25% of one other Finance Department staff member. Staff recommends the creation of an IT program under the direction of the Finance department and the transfer of the operating costs (only) to it. This will provide a more clear definition of the IT responsibility and budgetary accountability of IT operating costs within the General fund. Staff also suggests the change the title of the Finance Director’s position to Director of Finance & Information Technology position to more accurately reflect the duties currently performed.

Recommendation: Staff recommends that the City Council outsource document imaging and electronic archival of the City’s paper documents to CD-ROM and create and Information Technology Program as part of the Finance Department.

2. 2001 Five-Year Financial Model. (McLean)

Recommendation: Review and file the 2001 Five-Year Financial Model.

3. Budget Policy Issues Identified by City Council Members. (Evans)

4. City Council Goals. (Evans)