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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUCIL
FROM: DENNIS McLEAN, DIRECTOR OF FINANCE AND INFORMATION TECHNOLOGY
DATE: JUNE 17, 2003
SUBJECT: PROPOSED WORKSHOP REGARDING INFRASTRUCTURE FINANCING
BACKGROUND AND DISCUSSION
March 3, 2003 Ė Financing Alternatives Presentation to City Council
Finance Staff and the Finance Advisory Committee (the "FAC") presented a report to the City Council on March 4, 2003 regarding Financing Alternatives for the Cityís infrastructure needs. At the conclusion of its discussion, the City Council took the following action:
Proposed Retention Of A Financial Consultant To Assist Staff, Other Consultants, The FAC And The City Council
As described in the following Update sections of this staff report, the estimated cost of long-term (defined as approximately 20 years) infrastructure improvements and related maintenance is not known at this time. Public Works Staff and the Open Space Planning And Recreation and Parks Task Force (the "Task Force") have been working towards developing long-term plans, including estimates of their respective costs, for the storm drain system, the sewer system and recreational and park facilities and programs of the City. If considered separately, storm drain improvements, sewer system improvements and recreational and park facilities, programs and related maintenance each have unique long-term financing methods and timelines best suited for the City and its residents. Conversely, it may be cost-effective to develop a long-term financing plan for all, or a combination of storm drain improvements, sewer system improvements and recreational and park facilities, programs and related maintenance.
Accordingly, Staff believes itís prudent to retain a Financial Consultant to assist Staff, as well as other consultants that are assisting Staff (e.g. Joan Cox of Harris & Associates and the City Attorney), hereafter referred to as the "Infrastructure Financing Team", the FAC and the City Council in the formation of an infrastructure-financing plan. Among many other relevant financing issues, Staff would seek the advice of the Infrastructure Financing Team prior to making a recommendation to the City Council whether or not to wait until the estimated cost of storm drain improvements are known, prior to proceeding with the establishment of a storm drain user fee. Staff will also seek the Infrastructure Financing Teamís advice whether or not to consider a long-term financing plan for storm drain improvements, sewer system improvements and recreational and park facilities, programs and related maintenance in aggregate, individually, or a combination thereof.
The Infrastructure Financing Team could assist Staff, the FAC and the City Council with many technically complex issues and decisions that may have to be made in conjunction with the formation of an infrastructure-financing plan, including, but not limited to:
If retained, the Financial Consultant would work with Staff, the Infrastructure Financing Team and the FAC in the development and preparation of the infrastructure-financing workshops culminating in the presentation of a recommendation for an infrastructure-financing plan. The first workshop could be conducted while the update to the 1996 citywide storm plan, the evaluation of the condition of the citywide sewer system and the work of the Task Force is still underway. The proposed FY 2003-2004 budget includes an appropriation of $30,000 for the retention of a Financial Consultant.
The Open Space Planning And Recreation And Parks Task Force
Recreation and Parks Staff expects that the Task Force will make its final recommendation, including long-term improvements of recreational facilities, to the City Council during early 2004.
Update - 1996 Citywide Storm Drain Plan
Staff does not have sufficient information to determine the estimated cost of long-term storm drain improvements and related maintenance for the entire City. The Palos Verdes Drive East ("PVDE") storm drain plan, prepared in 2001, includes about thirty (30) projects with a total cost in excess of $10 Million. Public Works staff has issued a request for proposals for conducting the update to the 1996 citywide storm drain plan and expects that update to be completed in late 2003 or early 2004.
Staff believes it may be prudent to determine the total estimated cost range of long-term storm drain improvements and maintenance for the entire City prior to the consideration of establishing a user fee or other financing method. On the contrary, the number of active storm drain improvements projects would be limited by: (1) funding available from revenue measures and the use of borrowed funds; (2) the timeline associated with the process of environmental permitting; (3) weather; and (4) staffing available to manage such projects. Therefore, the Infrastructure Financing Team may recommend that the City can proceed with the formation of a storm financing drain plan prior to completion of the update of the 1996 citywide storm drain plan. Staff has postponed conducting an Engineerís Report for the possible formation of a storm drain user fee in order to seek the advice of the proposed Financial Consultant.
Update - Evaluation Of The Condition Of The Citywide Sewer System
Staff does not currently have a reliable estimate of what the total additional cost, if any, of long-term improvements to the citywide sewer system and related maintenance might be. Public Works has issued a request for proposals to conduct the partial cleaning and video filming of the Cityís sewer system. The results of that report are expected in late 2003 or early 2004. Staff believes it may be prudent to know the estimated cost range, if any, of long-term sewer system improvements and maintenance prior to consideration of establishing a user fee, if necessary.
Proposed First Workshop Regarding Infrastructure Financing
Staff suggests that the first infrastructure-financing workshop could be conducted near the end 2003, prior to completion of the pending storm drain and sewer studies, as well as the work of the Task Force. The attached Timeline For Development of Infrastructure-Financing Plan reflects a suggestion for conducting the first infrastructure-financing workshop during the month of November 2003. This would enable a sufficient amount of time for the Infrastructure Financing Team to prepare for it. The first workshop could include, but not be limited to, the following topics:
Staff would seek the advice of the proposed Infrastructure Financing Team regarding the purpose, timing and content of entire proposed workshop format leading to the formation of an infrastructure-financing plan.
Interim Workshop Regarding Infrastructure Financing
The City Council may elect to conduct an interim workshop, but not the final workshop, regarding infrastructure-financing to discuss necessary topics prior to forming a recommendation of an infrastructure-financing plan. Subject to the advice of the proposed Infrastructure Financing Team, Staff suggests that the interim workshop could be conducted during Winter 2004, prior to completion of the pending storm drain and sewer studies and submission of a recommendation by the Task Force. The attached Timeline For Development of Infrastructure-Financing Plan reflects a suggestion for conducting the interim infrastructure-financing workshop during the month of January 2004. The interim workshop could include, but not be limited to, the following topics:
Final Workshop Regarding Infrastructure Financing
Staff would expect that the final workshop would be proceeded by separate presentations to the City Council, including:
Finance Staff expects to present a draft infrastructure-financing plan to the FAC for its consideration prior to the final workshop with the City Council. Staff suggests that the final workshop could be conducted during the Summer of 2004, perhaps after the completion of the pending storm drain and sewer studies.
The working draft of the FY 2003-2004 budget includes an appropriation for $30,000 for the retention of a Financial Consultant in the General fund. Staff expects that $20,000 will be carried over from the FY 2002-2003 budget to pay for the other consultants participating in the Infrastructure Financing Team.
Director Of Finance And Information Technology
W:\Finance Advisory\Financing Alternatives Project\20030617_Infrastructure Financing Workshop staff report.doc