Rancho Palos Verdes City Council
   

JANUARY 4, 2005 RANCHO PALOS VERDES CITY COUNCIL DRAFT MINUTES JANUARY 4, 2005 RANCHO PALOS VERDES CITY COUNCIL DRAFT MINUTES

DRAFT

MINUTES

RANCHO PALOS VERDES CITY COUNCIL

REGULAR MEETING

JANUARY 4, 2005

The meeting was called to order at 6:00 P.M. by Mayor Clark at Fred Hesse Community Park, 29301 Hawthorne Boulevard, and was immediately recessed to closed session. At 7:01 P.M., the meeting was reconvened for regular session.

Roll call was answered as follows:

PRESENT: Gardiner, Long, Stern, Wolowicz, Mayor Clark

ABSENT: None

Also present were City Manager Les Evans; Assistant City Manager/City Clerk Carolynn Petru; City Attorney Carol Lynch; Assistant City Attorney Robin Harris; Director of Public Works Dean Allison; Finance Director Dennis McLean; Senior Engineer Ron Dragoo; Senior Administrative Analyst Lauren Ramezani; and Recording Secretary Denise Bothe.

FLAG SALUTE

The flag salute was led by Finance Advisory Committee (FAC) Chair Becky Clark and Vice-Chair Gina McLeod.

MAYOR’S ANNOUNCEMENTS:

Mayor Clark welcomed everyone and wished all a happy, prosperous and healthy New Year.

Mayor Clark announced that there are two recycler winners for the month of November 2004 -- Rick Karp and Linda Arroyo -- and two recycler winners for the month of December 2004 -- Richard Crandall and Mrs. John Villovich. He stated that all winners will receive a check for $250, which represents a year of free refuse service; and he encouraged everyone to recycle. He mentioned that a new batch of cards had been placed inside the drawing container.

Mayor Clark commented on the Did You Know Facts for this evening: RPV’s Demographics and Population. With the aid of a Power Point presentation, he stated that according to the 1990 U.S. Census, RPV’s population was at 41,659 as compared to 41,145 in the 2000 U.S. Census – pointing out that in this 10-year period, RPV had experienced a stable population base. He observed that this stability in population was not typical in California. Mayor Clark advised that there was a fairly good distribution among the demographics by age, with the largest area of population being between 25 and 54 years of age according to the 2000 Census; stated that the average RPV household size in 1990 was 2.76; by 2000, the average RPV household size decreased to 2.66.

Mayor Clark stated that the Did You Know Facts would be routinely placed on the City’s website; and he noted his appreciation of staff and Assistant City Manager/City Clerk Petru for putting this information together.

On behalf of Council and the community, Mayor Clark welcomed Carolynn Petru into her dual capacity as the Assistant City Manager and the new City Clerk.

APPROVAL OF AGENDA:

City Manager Evans stated that staff is proposing to add Item No. 10 to the Agenda, a status report on the Repair of the Western Avenue Storm Drain and a request to authorize funding for the emergency repair; and advised of the likelihood of convening to closed session prior to discussing this matter.

Councilman Stern moved, seconded by Councilman Gardiner, to approve the amended Agenda. Without objection, Mayor Clark so ordered.

PUBLIC COMMENTS:

Lois Larue, Rancho Palos Verdes, stated that Mayor pro tem Wolowicz has been working with Remax realtor Sharon Nolan to gain support for a golf course tournament; and she expressed her belief that this is a conflict of interest. Ms. Larue noted her opposition to the City bringing suit against resident Mike Chiles and stated that she is not aware of the reason for that action.

Responding to Ms. Larue’s comment, Mayor pro tem Wolowicz advised that he is assisting Ms. Nolan with the Palos Verdes Land Conservancy’s Annual Golf Tournament, an event to raise funds for the acquisition of open space land on the Peninsula.

Mayor Clark stated that Ms. Nolan approached him approximately a year ago to help out with what was envisioned as the first annual Palos Verdes Land Conservancy Golf Tournament as part of that group’s fundraising effort towards their contribution on the Portuguese Bend Preserve; advised that his schedule did not permit any time to volunteer in that effort; and noted that he recommended at that time Ms. Nolan seek the assistance of Councilman Wolowicz. He stated that Councilman Wolowicz did a wonderful job last year.

Lenee Bilski, Rancho Palos Verdes, thanked Council for their response to the Seaview residents’ comments on the No. 2 Yacht Harbor Drive building project site and thanked Senior Planner Fox for notifying their spokesperson, Debbie Hansen, that the owner had implemented the direction given by Council at the December meeting to move the stone-cutting operation to an indoor/underground garage; and advised that this move and the recent heavy rains appear to have solved the purported health problems associated with the stone dust. Ms. Bilski stated that the Seaview residents are still unhappy with the apparent difference between the Yacht Harbor Drive Street elevation and the elevation of Palos Verdes Drive South (PVDS); and expressed her belief that it has been altered from the 10-foot level that was in the approved plan to a much higher level and that it is visible from PVDS road level. She advised that this condition had been communicated to the Planning Director and staff by email and phone since January 2003 with no response; stated that the residents are greatly concerned with the structure elevations; that the roof and chimney elevation, which appear to be the same height, were approved in the plans for 228 feet above sea level for the roof of this house and 230 for the chimney only; and she asked that staff investigate whether these changes were permitted. She added that these elevations result in a severe impact to the ocean views for 250 households and stated that this will have a negative impact upon their property values.

CITY MANAGER’S REPORT:

None.

OLD BUSINESS:

Mayor Clark advised that a list of the Council’s Old Business can be found on the City’s website.

NEW BUSINESS:

APPROVAL OF CONSENT CALENDAR:

Councilman Long asked that Item No. 2, Border Issues Status Report, and Item No. 4, Pilot 3-Cart Automated Program, be pulled from the Consent Calendar.

Motion to Waive Full Reading.

Adopted a motion to waive reading in full of all ordinances presented at this meeting with consent of the waiver of reading deemed to be given by all Council Members after the reading of the title.

Resol. No. 2005-01: Rubberized Asphalt Concrete Grant FY 04-05. (1301 x 602 x 1404)

(1) Authorized the submittal of a grant application to the California Integrated Waste Management Board for a rubberized asphalt concrete grant- FY 04-05; and (2) ADOPTED RESOLUTION 2005-01, AUTHORIZING THE DIRECTOR OF PUBLIC WORKS TO EXECUTE ALL NECESSARY APPLICATIONS, CONTRACTS, AGREEMENTS, AMENDMENTS, AND PAYMENT REQUESTS FOR THE PURPOSE OF SECURING GRANT FUNDS, AND IMPLEMENTING AND CARRYING OUT THE PROGRAMS.

November 2004 Treasurer’s Report. (602)

Received and filed.

Repair of Tarapaca Storm Drain. (604 x 1204)

Reviewed and reconfirmed a four-fifths (4/5’s) vote, the Council’s action on December 21, 2004, authorizing staff to conduct an informal bid process to repair the Tarapaca Storm Drain.

Resol. No. 2005-02: Register of Demands.

ADOPTED RESOLUTION NO. 2005-02, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES ALLOWING CERTAIN CLAIMS AND DEMANDS AND SPECIFYING FUNDS FROM WHICH THE SAME ARE TO BE PAID.

Councilman Stern moved, seconded by Mayor pro tem Wolowicz, to approve the Consent Calendar as amended, removing Item Nos. 2 and 4. Motion carried as follows:

AYES: Gardiner, Long, Stern, Wolowicz, Mayor Clark

NOES: None

ABSTAIN: None

ABSENT: None

# # # # # #

REMOVED FROM CONSENT CALENDAR:

Border Issues Status Report. (310)

Councilman Long stated that he saw no discussion of the Rolling Hills Estates Downtown Plan and related projects in the report and asked if there were any changes in status.

Director Rojas stated that it is his understanding there have been no changes on that matter since the last report.

Councilman Long asked that this matter be closely observed, noting that RPV has more residents close to that project than Rolling Hills Estates.

Director Rojas advised that staff has been attending the City of Rolling Hills Estates’ meetings on this topic and is closely watching for any changes.

Mayor Clark asked that if there was any development activity discussed, that it be placed in this report.

With regard to the former naval housing site, Mayor pro tem Wolowicz stated that the report referenced one group of 76 units for homeless housing and questioned whether two groups of 76 units is now being proposed.

Director Rojas stated that it was his understanding there have been no changes on that issue and that he will get clarification from Senior Planner Fox on this matter and report back to the Council.

Mayor pro tem Wolowicz stated that the residents are concerned with a second grouping.

Councilman Long moved, seconded by Councilman Stern, to receive and file the current Border Issues Status Report. There being no objection, Mayor Clark so ordered.

Pilot 3-Cart Automated Program. (1301)

Mayor pro tem Wolowicz questioned the reasoning for adopting this system, asking if it is designed for cost reduction or increased efficiency.

Director Allison explained that automated collection seems to be the trend within many communities; stated that Rolling Hills Estates recently put out its solid waste contract for open bids and has decided to change from twice-a-week collection to once-a-week automated collection. He noted that because RPV’s co-contract expires in three years, staff is requesting that other opportunities be investigated for trash pickup. Director Allison stated that an automated system improves recycling collection, increases diversion by reducing the amount of material going to the dump; and that residents will be encouraged to recycle because their fees will be based upon how much trash they generate.

Senior Administrative Analyst Ramezani stated that the City currently has a manual system, which is labor intensive; explained that with an automated system, the driver will stay inside the truck as mechanical/robotic arms picks up the containers and dumps it into the truck bin; and stated that special containers are necessary to accommodate this automated process. She advised that the residents would be able to choose containers in varying sizes, such as small containers for senior citizens versus large containers for households with children. She noted that this automated system allows the residents to "pay as they throw," with different sized containers and different fees, as opposed to a manual system where everyone pays the same rate whether a resident puts out one trash can or 10 trash cans. She advised that during this pilot program, the fees will not change, that everyone will pay the same fee; and that once the City goes out to bid, if the decision is to go for an automated system, at that time a rate structure will be applied for small, medium, and large containers.

Mayor pro tem Wolowicz Cost questioned what is meant by "increase diversion."

Senior Administrative Analyst Ramezani explained that increase diversion means to reduce trash and increase recycling, pointing out that studies indicate recycling increases in cities that implement automated trash systems.

Mayor pro tem Wolowicz asked if the City had received any input from the residents on this proposal.

Senior Administrative Analyst Ramezani explained that with the last survey, which was conducted approximately five years ago with the last trash contract, there was no remarkable difference in opinion. She indicated that residents were closely split between automation versus non-automation and one- or two-day pickup; and she noted the survey results were approximately 48 to 52 percent.

Councilman Long stated that his residence is located in one of the small, isolated pockets that will be in the test area, if approved; and noted his understanding that the twice-a-week pickup will remain during the pilot period and that the price will remain the same.

Senior Administrative Analyst Ramezani confirmed for Councilman Long that the twice-a-week pickup would remain during the pilot program; that the price will remain the same during this period; and that backyard service will still be available for those residents who pay an extra fee for this service.

Doug Falkenberg, Waste Management representative, public sector service manager, noted for Councilman Long that the current rubbish truck drivers would be working the automated trucks.

Councilman Long expressed his belief that the majority of the cost is not necessarily the amount of the waste, but the labor costs of going to each household and picking up the waste; and asked if there are any figures which reflect how much more it will cost to service larger households.

Mr. Falkenberg stated that he did not have in his possession the pro-rata statistics, but indicated the fees are not doubled. He explained that the idea behind the larger container is to try and encourage people to use a smaller trash container, to lower trash volumes and to increase recycling volumes; and that the goal of the increase is to be substantial enough to force people into giving some focused thought on obtaining a container that will meet their needs.

Councilman Long explained that he had a chance to talk to some Councilmembers in RHE about their switch-over to a once-a-week program; noted his understanding that RHE was not actually reaching the target of 50 percent of material going to recycling; and that part of the reason for this was a lot of residents were confused and put out their green waste and/or recyclables on the wrong day; and that the only reason RHE was reaching its 50-percent target is the commercial areas were doing a good job with their recycling efforts; and he questioned if RPV could face that same misunderstanding/problem.

Senior Administrative Analyst Ramezani explained that the last annual report indicated RPV was at 51 percent recycling; advised that RPV has joined the L.A. Regional Agency; and that the overall diversion rate for this group is in excess of 53 percent. She noted that staff had not prepared the latest annual report.

Mayor Clark pointed out that RPV, at least in one of the last three years, if not two, had been awarded for its diversion and green waste program.

Mr. Falkenberg added that there was validity to the concept of going to a more modern green waste approach.

Councilman Long highlighted the two pockets designated as test areas: the pocket at the Peninsula Center with approximately 390 homes and the pocket on the east side of the City with approximately 300 homes; and he suggested adding more streets in this pocket, such as Colt Road and Coral Ridge Road, making the two pockets more balanced in terms of size.

Councilman Gardiner stated that he did not see anything wrong with the current system; that it met his needs; noted that he did not want to be constrained by the size and quantity of trash cans; and questioned why a change was necessary if the City is meeting everything it needs to meet.

Mr. Falkenberg explained that the demands being placed upon municipalities by the California Integrated Waste Management Board are ever-changing and stated there was reason to believe at this point the bar for expectation of diversion levels would continue to go up; and expressed his belief they must stay ahead of the game. He added that just because the City is at a certain level now, efficiency of the program may be maxed out, and it would behoove everyone to stay ahead of the game and make the improvements in advance of future demands for increased diversion.

Councilman Gardiner stated that while he was supportive of being proactive, he did not see the necessity to change the current system.

Mr. Falkenberg pointed out that the City does not have to accept this pilot program, but expressed his belief that the fair thing to do is to give serious consideration to putting in place a pilot program, stating that this is fair to the residents and fair to Waste Management in its partnership with the City in attaining its recycling goals. Mr. Falkenberg stated that one improvement would be the aesthetics of the neighborhoods on trash days, noting that with one-day service, there are a lot fewer cans on the street during the week and fewer truck trips.

Councilman Gardiner expressed his belief that one-day service will result in foul smells.

Mayor Clark questioned why RPV can’t benchmark the program based upon RHE’s experience and feedback with their new program, suggesting that RPV surveil RHE’s experience for a while and then consider a pilot program for RPV, noting the contract does not end until June 2007.

Councilman Stern noted his support for the pilot program, stating that it was well worth the effort; advised that he disagreed with the vote on the present contract, believing that it was not the best for this City; and stated that if the City had gone to once-a-week trash pickup, it would have save the City approximately $3 million over the life of the contract. He stated that of the 88 cities in L.A. County, 8 have twice-a-week collection, noting that twice-a-week collection is an expensive luxury. He expressed his belief that obtaining input from RPV’s own residents on the pilot program was necessary rather than counting on input from another city’s residents.

Mayor pro tem Wolowicz stated that while he liked the twice-a-week pickup service, he was not opposed to implementing a pilot program so that he would get a chance to see what merits it has or does not have.

Councilman Gardiner stated that his trash bill is $19 a month, $59 for 3 months, and that he did not regard this as a luxury or exorbitant; and reiterated that RPV can learn from RHE’s input/feedback on its new contract with Waste Management.

Councilman Long stated that he was leaning in favor of the pilot test, expressing his desire to see the input of this City’s residents; reiterated that the pilot test would still include twice-a-week pickup, recognizing that it was a luxury worth paying for; and stated that the City should also consider the cost savings differential on the cost of the pickup, noting that the numerous truck trips places a significant burden on the City’s roads. He added that he would like to see staff look at compressed natural gas trucks for pickup; like to see recycling of food waste; and expressed his belief that staff and Waste Management were using good judgment on what they need to accomplish in order to stay ahead of the game in waste disposal. He stated that he would support the pilot program as long as significant data was collected regarding the desires of the residents and that backyard pickups continue for those residents who needed it.

Mayor Clark reiterated his preference to benchmark, at least for now, what RHE is experiencing.

City Manager Evans expressed his belief that RPV is the lead city on the hill and that it needs to do its own pilot test with its own citizens and make its own decisions.

Mayor Clark questioned why the pilot program could not start closer to the end of the contract date.

Senior Administrative Analyst Ramezani explained that it typically takes about one to one and a half years to get the necessary information, before the contract expires; stated that the City needed to find a consultant, prepare a request for proposals, validate those proposals, conduct community meetings and Council meetings/hearings; and noted that when a contract is awarded, the awarded company needs time to order trucks and containers. She pointed out that it takes quite a bit of time to put the process in place. She added that in actuality, even though the current contract expires in two and a half years, the City has to decide within a year whether to go out to bid and to get a consultant or not; and that the timing of the pilot program allows the City one year to test how an automated system will work in RPV before these other decisions need to be made. She mentioned that the City benefits when it is not rushed into a contract and has ample information to negotiate the terms.

Councilman Gardiner stated that if automated service is more cost-effective, he predicted that there would be enormous pressure to conform this City to what other cities were doing.

Councilman Long stated maybe that pressure would be present, but maybe there would be an incentive in terms of significant savings.

Councilman Long moved, seconded by Councilman Stern, to accept the staff recommendation; that backyard pickup continue to for those interested residents; that the rates remain the same throughout the pilot period; that twice-a-week pickup continue throughout the pilot period for both pilot areas; and to add to the pilot area Colt Road and the side streets off of Colt Road and Coral Ridge Road.

Councilman Stern stated that if there was going to be pressure for the City to conform to the system, he felt it made sense for the City to put this pilot program into use in this community and see if this community liked it as opposed to arriving at the renewal date and having to make a decision without any of this City’s residents having experienced the service. He pointed out that the last time Council considered the trash contract, it had a lead time of approximately a year and a half and expressed his belief that now was the time to get meaningful input as to how this system would work in RPV; and that if the input from the residents resulted in a dislike of the pilot program, this body would at least know that information before it entered into another 7- or 10-year contract.

Mayor Clark stated that everyone had made meaningful points this evening; noted that he was not opposed to a pilot program being conducted in RPV, but indicated that he was not particularly convinced a pilot program needed to start now. He noted that he would like to see what happens with the launching of RHE’s program, believing that this proposed program was similarly modeled; and stated that it would be useful to look at RHE’s input and that this did not have to be a two-year pilot program. He noted his desire to form a Council subcommittee to work with staff on an array of options and alternatives.

Noting that the pilot program looked like it would be approved, Councilman Gardiner asked that Council be involved in the instruments that would be used to collect the public’s reaction, clearly identifying the collected data and the residents’ desires.

Councilman Stern highlighted Mayor Clark’s suggestion to do a one-year pilot program, asking if that would be feasible.

Mr. Falkenberg stated that the time allotted was not all that large of a window for the entire process; and explained that it was important to see the changes in seasonal fluctuations.

Councilman Long stated that what persuaded him to support the pilot program at this point is that RPV will be facing a very important decision and that it was important for him to know what RPV’s residents want; advised that he would be mindful and closely watch how the data was collected; and noted that he would try to attend as many of the outreach meetings as he could.

Councilman Gardiner requested an amendment to the motion to include a provision for an evaluation, but rather than being done by conducting neighborhood meetings, it be done through written feedback which the Council can analyze.

Senior Administrative Analyst Ramezani advised that staff intended to conduct a write-in survey to all residents in the pilot program to measure its success.

Councilmen Long and Stern accepted the amendment to the motion.

The motion carried as follows:

AYES: Long, Stern, Wolowicz

NOES: Clark, Gardiner

ABSTAIN: None

ABSENT: None

Mayor Clark stated that he voted against the motion because he did not believe the timing was right.

RECESS AND RECONVENE:

Mayor Clark recessed the meeting at 8:03 P.M. and reconvened the meeting at 8:08 P.M.

# # # # # #

CITY COUNCIL ORAL REPORTS:

Councilman Long stated that he and Mayor pro tem Wolowicz had a conference call with Director McLean to discuss some of the infrastructure finance issues and address their questions.

Councilman Stern reported on the following events he attended:

  • He noted that this last year, the Vector District went through a full cycle of the West Nile Virus since this disease first emerged in California, stated that California managed well; and advised the December report indicated 737 cases, with most of the cases in Southern California being reported in San Bernardino and further inland. He stated that this year should be another problem year because of the rains and explained that the disease tends to wane as a population becomes essentially immunized to it. He stated that he would keep the City apprised of any new developments concerning West Nile Virus, Africanized bees, etc.;

  • December 31st, he and Mayor Clark met as the liaison subcommittee with Vinnie Stellio at Trump National Golf Course to get a brief update on where they were in terms of moving that project forward; and noted there was little change, but that the project was still moving forward;

Mayor Clark reported on the following events he attended:

  • With regard to the December 31st meeting, he added that they had some interaction on the draft geotechnical peer review report that was released over the holidays and that more information would be coming available; advised that Mr. Trump would be present for a ribbon-cutting event on January 14th for the housing component of the Trump National development; and stated that he would be meeting with Mr. Trump to discuss all activities associated with the original project and advised that he would be reporting back to Council on that meeting;

  • Advised that he received a letter from L.A. Councilwoman Janice Hahn, dated December 29th, addressed to him as Mayor of this City, wanting to form a task force to look at the prevention of catastrophic events relating to tsunamis; stated that a copy of this letter would be forwarded to Council members; and he requested that this meeting be adjourned in the memory of all those who lost their lives in the Southeast Asia tsunami.

Mayor pro tem Wolowicz stated that on January 3, 2005 he visited the site of the Western Avenue sinkhole.

REGULAR NEW BUSINESS:

Resol. No. 2005-03: Proposed Water Quality and Flood Protection Program – Additional Information. (604 x 602)

City Manager Evans highlighted the various municipalities he had worked for as a Public Works Director – stating that all have had the same problem with mud slides, flooding, and drainage problems whenever it rained hard because storm drains seem to be the very last thing that gets funded; he advised that what staff was recommending this evening was a follow-up to what was discussed at the workshop on November 30th, a series of alternatives for funding a storm drain renewal program, primarily; and advised that there were also some elements related to water quality. He stated that the alternatives presented would include the optimal program, as well as several alternatives that included the suggestions that Council made, escalating fee with inflation, modified programs, repayment of up-front loans, and the no-fee program that would rely on potential future revenues. City Manager Evans stated that what RPV needed and what staff hoped Council would act on is a plan so that next time it rains, there would be no emergency infrastructure conditions in the City. He explained that at the very minimum, the recommendations would be to proceed with the process or to stop the process; stated that the City’s consultants were the top people in their various fields; and advised that representatives from the Finance Advisory Committee (FAC) were present, a body which strongly believes the City needs a plan for financing storm drain improvements which should be implemented as soon as possible.

Director McLean advised that the Infrastructure Finance Team consisted of approximately 15 very skilled people and he introduced the individuals who were present including the following: Robin Harris, with Richard, Watson, and Gershon; Accounting Manager Kathryn Downs; Senior Engineer Ron Dragoo; Director Dean Allison; Assistant City Manager/City Clerk Carolynn Petru; Larry Rolapp and Jim Fabian from Fieldman, Rolapp & Associates; Patrick McLaughlin from MIG; and Joan Cox from Harris & Associates.

On behalf of Council, Mayor Clark welcomed the Infrastructure Finance Team.

Director McLean explained that the goal of the Team was to complete the initial information process for Council and the community; and to enable Council to make a decision whether to begin the process to establish this Water Quality and Flood Protection program and possibly begin the process to conduct a mail ballot election for a User Fee in August 2005. He pointed out that the staff report included a substantial amount of information, including some engineering information; and he presented the staff report and the recommendation to: (1) receive and file the staff report, including the preliminary Rate Model (formerly referred to as the Preliminary Financial Model), for the Water Quality and Flood Protection Program, the pro-forma calculations of the pro-forma user fee rate and "What If" Scenario Alternatives A-C, to be used solely for discussion and not to be considered "final" costs and the proposed user fee rate; (2) Authorize Staff to continue to develop a Water Quality and Flood Protection Program, including the development of a user fee system and the preparation for a mail ballot measure that would be conducted during Summer 2005 in accordance with Proposition 218 requirements; (3) Authorize Staff to proceed with the Community Education and Outreach Strategy regarding the proposed Water Quality and Flood Protection Program to be designed by Moore, Iacofano & Goltsman, Inc. ("MIG"), the City’s Public Information Consultant; (4) Adopt Resolution No. 2005-__, amending Resolution No. 2004-45, the budget appropriation for Fiscal Year 2004-2005, for a budget adjustment to the City’s General fund for an additional budget appropriation during FY 04-05 of $220,000 for services to be provided by MIG; Fieldman, Rolapp & Associates; and Harris & Associates, as well as postage, printing and other costs, in order to continue the development of the Water Quality and Flood Protection Program and the process to establish a user fee; and, (5) Provide the Team with direction to move forward with the preliminary Rate Model, Version 2, for the Water Quality and Flood Protection Program, including maintenance costs, a General Fund transfer of $2,000,000 to the proposed Enterprise Fund pending further input from staff, treating this transfer as equity rather than a loan, and specifying a 20-year timeline for the program.

Director McLean highlighted all four versions of the rate model include an initial transfer of $2 million from the General Fund to the proposed Enterprise Fund for the program; stated that each version includes $230,000 annually for storm drain lining; $85,000 annually for installation of catch basin filtration devices over the initial five years of the program; approximately $86,000 annually for the maintenance of catch basin filtration devices upon completion of their installation in the fifth year; the addition of one professional engineer to act as the project manager, approximately starting at $110,000 each year; engineering analysis costing about $14,000 annually, including annual rate determination and the update of the Drainage Master Plan; and each of the four versions of the model having numbers based upon debt financing and pay-as-you-go financing alternatives. He stated that each version of the model also assumes that City Council would always retain the right to decrease or eliminate the User Fee in the future.

Director McLean provided an overview of Version 1, the optimal version of the model; stated that it includes 56 Priority 1, 2 and 3 storm drain projects at the optimal pace; includes a flat user fee over 20 years, which incorporates an internal cost inflator for all program costs at the rate of 3 percent each year and includes maintenance costs starting at approximately $130,000 annually; he noted that the User Fee for Version 1, using debt financing, starts at approximately $142 per Equivalent Residential Unit (ERU), and using a pay-as-you-go financing alternative of approximately $152, intended to be a flat User Fee.

Director McLean advised that Versions 2, 3 and 4 include the deletion of all 18 Priority 3 projects, as well as deferral of several Priority 1 and 2 projects for several years; that it goes from a 20-year program to a 22-year program; that a key assumption of Priority 2, 3 and 4 is the deletion of maintenance costs from the Enterprise Fund; added that the budget for FY 04-05 includes $75,000 for storm drain projects; and that the 5-year model included $75,000 for each of the following 4 years.

Councilman Stern expressed his belief that page 4, line 4, for Version 2, had the pay-as-you-go number and debt number reversed. Director McLean stated that the error would be corrected.

Director McLean stated that a key distinction of the rate increase for inflationary costs would require a majority vote of City Council at a noticed public meeting annually. Director McLean advised that the matrix shown in the slide presentation was an updated version of the staff report and that the numbers in the staff report would not necessarily correspond to the slides.

Director McLean explained that the distinction between Version 1 and 2, which both incorporate flat fees, and Version 3 is the elimination of the 3-percent internal cost inflator as well as requiring Council to make an annual vote to increase the fee for inflationary costs. He stated that the only difference between Version 3 and 4, which both have an escalating fee, is the fact that in Version 4 the fee is adjusted upward to enable enough cash flow to repay the $2 million, in the event the City Council would elect to do so. If the Council chose Version 4, the initial $2 million transfer would be characterized as a loan from the General Fund to the Enterprise Fund and would be repaid in Fiscal Year 09-10.

Finance Manager Downs stated that Version 1, the optimal model, is a flat fee for the first 20 years of the program; and that Version 2, the costs have been reduced by pulling out Priority 3 projects and that maintenance costs are also a flatline version but a lower price because of a lower fee per ERU due to those reduced costs. She added that Version 3 and 4 also have the reduced costs and escalating fees based on a CPI increase each year, noting that Council would have to make a decision each year whether to increase that fee. She noted that Version 4 also includes the General Fund loan repayment of $2 million that is assumed will be transferred to the Enterprise Fund at the beginning of the program.

Finance Manager Downs explained that the program costs vary greatly from year to year due to the projects not all being equal in cost, sources into the Enterprise Fund, and the General Fund transfer and annual fee revenue. She stated that at the beginning of the program, the City would be collecting more revenue than what it is spending and that this excess is reserved for future projects.

Finance Manager Downs explained that Version 2 reduced the expenditures by pulling out Priority 3 projects and maintenance costs; and stretching the Priority 1 and 2 projects over a much longer timeline. She noted that in the optimal version, all 3 priority sets of projects were done over a period of 20 years so that one can assume Priority 1 and 2 projects were completed within the first 14 years, approximately. She noted that in Version 2, the Priority 1 and 2 projects have been stretched out over 22 years, therefore, the annual costs decrease; and because this is a reduced cost program, the fee revenue is reduced as well. Comparing Version 3, which includes an escalating fee, based on a CPI index, would require a Council decision annually. She noted that Version 4 assumes a repayment of the initial $2 million transfer into the Enterprise Fund from the General Fund, and that repayment of that loan would happen between years four and six of the model.

Finance Manager Downs stated that there are 18 Priority 3 projects, 22 Priority 2 projects, and 16 Priority 1 projects.

Finance Manager Downs noted for Councilman Long that the Western Avenue sinkhole was not on any priority project list.

Responding to a question from Mayor Clark, Senior Engineer Dragoo explained that Priority 1 projects are projects that have been identified as either having pipes that are too small to carry additional capacity or are in terrible condition and need to be addressed quickly; that Priority 2 projects are less severe than Priority 1 projects in terms of condition, but none the less were projects that needed to be looked at seriously and quickly, if possible; and that Priority 3 projects are projects that are a general nuisance, such as ponding, and projects that if not addressed would not have any detrimental effect on property or services.

Councilman Stern stated that it was very important to correctly classify the distinctions among the priority projects.

Director McLean stated that a detailed comparison of the four versions of the rate model could be found on circle page nos. 102 and 103 of the staff report.

Director McLean responded to Mayor pro tem Wolowicz’s request for clarification that with the inclusion of interest expense and debt issuance costs, which are based on 20 percent of borrowing costs, under Version 1 of the model, the total cost over the entire program, including total payoff of the debt, would be approximately $78 million; that using a pay-as-you-go methodology, that cost would be approximately $47 million, and noted the substantial long-term cost difference with the use of debt. He stated that the tradeoff is a reduction of the User Fee up front, matching debt issuance cost with the life of the storm drain infrastructure itself rather than pay-as-you-go up front; advised that Version 2 is excluding Priority 3 projects and excluding maintenance, and that the cost differential using debt is approximately $65 million versus $38 million, a substantial difference over the long-term with the use of debt. He stated that the length of the debt is 30 years.

In Version 1, Director McLean reemphasized that the General Fund reserves and Line B, per the 5-Year Financial Model, is inclusive of about $2.6 million of sewer cleaning, video-filming and some line segment replacement, which staff believes is a worst-case scenario over the next four years. He advised that all 3 What-If Scenarios are based upon Version 2 of the model; and they all included the timing and the estimate of transient occupancy tax (TOT) being received from the Long Point Resort project based upon the developer’s schedule without any determination of their feasibility by the Infrastructure Financing Team or staff. He stated that the scenarios included an initial transfer of $3 million from the General Fund to the proposed Enterprise Fund; that they’re all based upon the assumption that once the resort is operational, the program would be operated based upon the optimal spending plan, which would include Priority 1, 2 and 3 projects and maintenance.

RECESS AND RECONVENE

Mayor Clark recessed the meeting at 9:05 P.M. and reconvened the meeting at 9:12 P.M.

With regard to the What-If Scenarios, Director McLean advised that the Infrastructure Financing Team did not recommend Alternative A because 1) the timing and the amount of General Fund revenue is uncertain at this time; that transient occupancy tax (TOT) is uncertain, noting that it is not known when the Long Point Resort will be open; 2) a dedicated User Fee revenue source is needed to provide a secure source of collateral for lenders in the event the City would elect to use debt financing in the future; 3) the reliance of TOT without a User Fee would not provide a secure revenue source to lenders unless the City were willing to encumber its General Fund for any and all program debt; 4) a decision made today to rely on TOT to finance the proposed program entirely may limit the City Council’s ability to use TOT for other priorities in the future; 5) TOT collection will probably be cyclical due to the economic cycles and other factors that may impact the hospitality industry; and 6) the catch-up of past year’s program costs would cause the General Fund reserves to fall below the 50-percent reserve policy level during Fiscal Year 07-08.

Director McLean stated that subsequent to the November 30th meeting, the Infrastructure Financing Team discussed the project and the result of that discussion was that MIG believes the planning and preparation of information toward a community education program, the completion of the final rate analysis, and the phone and mail ballot survey must begin early 2005 to maintain the timeline for August 30, 2005 mail ballot election; that the public information process and community outreach process should begin now; and that it becomes very time critical as it interfaces with completion of the final rate analysis leading to the first noticing of the balloting procedure for the draft notice package.

Regarding whether the $2 million General Fund transfer should be a loan or whether it should be equity, Director McLean explained that, if it were to occur, the Team recommended that it be treated as a contribution of equity rather than a loan to begin the program because treated as equity it would reduce the User Fee slightly; more importantly, lenders would prefer that the $2 million be used as equity contribution, if there are lenders in the future; that it allows the first project to begin before the User Fees are collected; and he noted the fiscal impact indicates that if General Fund reserves would fall below the reserve level, expenditures for sewers, streets and roads could be altered in the future if necessary.

Mayor Clark thanked staff for an involved presentation.

Finance Advisory Committee Chair Clark stated that she and Vice-Chair McLeod have been working on this issue for quite some time, that they have been involved with infrastructure financing as a subcommittee for approximately 4 years and are deeply familiar with several of the items. She pointed out that with regard to this specific storm drain program, she and Vice-Chair McLeod are speaking as a subcommittee of the FAC, not for the entire FAC at this time. She expressed the subcommittee’s belief that it is prudent for City Council to act as soon as possible on this issue, either tonight or within the next few weeks – noting that the timeline will be substantially compromised if the City does not do so. She stated that the subcommittee believes the maintenance costs should be paid from the Enterprise Fund, if one is established, stating that in her experience, it is unusual for maintenance costs to be paid from the General Fund when an Enterprise Fund is set up for a specific program; and noted that she would not recommend doing so for a variety of reasons. She stated that if the City establishes an Enterprise Fund, the maintenance costs for that program should come out of that fund, not from the General Fund.

FAC Vice-Chair McLeod added that maintenance costs may not be completely accounted for in some of the What-If Scenarios; and that to have a program which has on-going infrastructure building allowances as part of the Enterprise Fund, but relies on transfers being made from the General Fund to accommodate those maintenance costs, is difficult to track, and also creates an issue where those ending reserve General Fund balances are not truly where the City would end up.

FAC Chair Clark also recommended that the City’s initial contribution of $2 million to the Enterprise Fund be characterized as equity and not as a loan because the lenders, whether or not someone would make a loan to the City, probably won’t look as favorably on the program if the City could pull that $2 million out at any time to transfer back to the General Fund; that it also would not viewed in good-faith by the property owners, who are soon to vote on this issue, to see that the City wasn’t willing to make the same commitment to the program that they were being asked to make. FAC Chair Clark stated that the subcommittee does not believe the City should use an escalating fee; that the flat fee versions are the best way to go; that going back to the City Council every year to raise the fee based on the CPI would be politicizing an on-going infrastructure program which might jeopardize the timely completion of certain scheduled projects if future Councils decided for whatever reason not to increase to the current CPI, which would jeopardize future projects. FAC Chair Clark advised that as the entire FAC stated in March 2003, they don’t believe it’s prudent to rely on revenues from an unknown venture or project, such as the Long Point resort – pointing out that it is not standard in financial models to rely on such projected revenues.

FAC Vice-Chair McLeod explained that in her experience with respect to projections and forecasts, conservatism is emphasized in projecting income for the public sector.

FAC Chair Clark stated that the subcommittee does not recommend Alternatives A through C, in particular Alternative A; that if Council decided to go with Alternative A, she stated that only one project would probably be completed within the next 4 to 5 years; that the subcommittee believes this is too great a risk considering the number of extensive projects that currently exist, noting the Priority 1 projects in particular.

FAC Vice-Chair McLeod noted that a $3 million dedication to an Enterprise Fund in the What-If Scenarios does not encompass the services of professional engineer being hired to manage that project; and that the City would not have full use of that $3 million, noting that the City might need to dedicate $200,000 for an outside consultant to manage the process to do the engineering analysis. She stated that Alternative A is placing the burden on future Councils to continue to view the priority of infrastructure financing as the place that the City must spend its Long Point revenues.

FAC Chair Clark re-emphasized the point that if no User Fee is established at this time, the City will not likely be able to obtain a State Water Resources Control Board loan and infrastructure bank loan; and stated that in her personal experience working with those entities, they all consider a User Fee as collateral, but not General Fund revenues. She added that the City would not get the best rate in an emergency without a User Fee.

FAC Vice-Chair McLeod stated that if the City establishes a User Fee, e.g., $100 per ERU, and if at some point in the future the City has Long Point revenues that the City decides to dedicate to this program, the City could draw that User Fee down to zero; that the User Fee would still be available to the City to pledge as collateral should there be a catastrophic event that would require the City to apply for a loan; and that while it might take a year to get a Water Resources Board loan approved, in that interim year, the City could re-implement the User Fee, and have funds to pledge as collateral to apply for that loan during that period of time. She stated that this not only provides the City with a source of revenue to the extent it doesn’t have Long Point revenues, it also provides the City with a safety net.

FAC Chair Clark, highlighting Attachment G, Circle Page 133, No. 4, the last item in the comments section, pros and cons, noted the 20 percent borrowing costs on $5 million issuance. Assuming that would be a standalone debt issuance, she advised that there are pooled programs available for small issuers who pull together and share transaction costs; that it is her belief that would not be a 20-percent level – noting that she is not advocating for a debt issuance at this time, but explained that the 20 percent is a little misleading knowing that there would be less as far as transaction costs that the City could get into a pooled program.

Mr. Fabian explained that they took a conservative approach in setting up the model; that they assumed, for example, the 20 percent borrowing cost accounted for a 10-percent reserve fund; that it accounted for all the fixed costs for an underwriter and all the consultants involved in the transaction; stated that the City will have fixed costs associated with that transaction; and that they estimated it would be a 20-percent fixed cost associated with that transaction, whether $6 million or $4 million.

Mr. Rolapp stated that with regard to transaction costs, they figured a 20-percent add-on; explained that when one does a bond issuance, one usually looks at the total amount of bonds and figures the percentages the other way, so it’s not a 20- percent load, it’s a 20-percent on top of the capital costs; and stated that they have assumed a fully funded bond reserve fund.

With regard to the pay-as-you-go versus debt financing and the annual fee, Councilman Stern asked what the numbers would look like if the City were in a pooled situation, a less costly financing mechanism.

Addressing Councilman Stern’s inquiry, Mr. Fabian stated that the difference would be marginally better if the City were in a pooled situation.

FAC Chair Clark stated that the subcommittee is recommending the pay-as-you-go method; that it is also recommending a modification of Version 2 where maintenance costs would be included in the Enterprise Fund, rather than paying it through the General Fund; that they also recommend dropping all Priority 3 projects for now; recommended trying to complete Priority 1 and 2 level projects within 20 years, not 22 years, based on the current need; and recommend looking at an initial $3 million transfer from the General Fund in order that the City keep the ERU as close to $100 as possible.

FAC Vice-Chair McLeod pointed out that the City has avoided many catastrophic public works expenditures as a result of its pavement management program; and explained that she has tried to treat this program in that same proactive and responsible manner in coming up with the subcommittee’s recommendation.

Councilman Stern thanked and commended staff, FAC and its subcommittee, and the rest of the Infrastructure Finance Team for their superb report and presentation; stated that he too does not wish to see the fee politicized at any point; noted his concurrence with the subcommittee that the flat fee is more reasonable; and asked if Council could adopt a fee that had the escalator in it so that each year, Council would not have to revisit this issue.

Assistant City Attorney Harris explained that the Council decision every year would be whether or not to increase the User Fee to the authorized 3 percent that the property owners had already voted on.

Mayor pro tem Wolowicz thanked and commended everyone involved in this effort and highlighted the talented pool of community residents willing to volunteer their time for the benefit of this City. With regard to adding back in the maintenance costs, he expressed concern that those maintenance costs will come up elsewhere, believing that the City won’t be able to avoid them; and asked if there is anything in the report about the deferral of these maintenance costs in the long-term project.

Director McLean explained that it was merely a matter of trying to fund a proposed alternative and get the User Fee less per year.

Director Allison stated that throughout all the options discussed, the Public Works Department would get $230,000 a year to do storm drain lining projects.

Mayor pro tem Wolowicz questioned if the Team would see any problem with the $2 million or $3 million being treated as subordinated debt, subordinated to the bank loan and ultimately being repaid to the General Fund or ultimately being earmarked for future maintenance costs.

Mr. Fabian stated that clearly, the repayment to the City is the best type of borrowing that the City could have because it dictates the terms for repayment of that debt; and that repayment to the Enterprise Fund would be after the repayment of any external borrowing that the City obtained.

Councilman Long mentioned that while Mayor pro tem Wolowicz was chair of the FAC, he helped identify the severity of the infrastructure issues the City is dealing with; and expressed his belief that the efforts by all have been extraordinary and high quality. Councilman Long noted his preference for an optimal solution that would have a sinking fund that will deal with the problem in a proper/responsible manner the way one would expect someone who is depreciating an asset to deal with the problem; and that as one depreciates an asset, one should pay for it. He expressed his belief that none of the options that have been discussed this evening are perfect; stated that he does not want to leave his successors in the same position that his predecessors left this Council in to finance the infrastructure repairs that are needed; and expressed his belief that Version 1 is minimally acceptable because it gets the City most of the way to its goal.

City Manager Evans explained that what has been presented was a snapshot of what staff and the Team think is needed; that they have identified deficient and aged drainage structures that need to be replaced immediately; explained that if these facilities are installed and built correctly with reinforced concrete pipe, thoroughly inspected and regularly maintained, they will last for many, many years; stated that a source of revenue needs to be developed to construct these important projects; and added that when TOT revenues increase in the future, the Council may want to consider a sinking fund or put more money towards each project. He reiterated for Mayor Clark that with reinforced concrete pipe, properly installed and with ongoing maintenance, these facilities should last for a very long time.

Councilman Stern noted his concurrence that the City should have been more proactive in working on its infrastructure facilities; but stated that the problems do exist and that the City needs to be proactive in addressing this situation. He stated that this program should be able to take care of the City’s infrastructure renewal needs in an orderly manner; and stated that establishing a sinking fund for the future is effectively creating a major wealth transfer from the generation that’s going to pay for this to provide for the next generation. While he is not opposed to doing things for the next generation, he stated that this would be doubling up on this generation’s share; and expressed his desire to condition this item so that nobody 20 years from now is looking at this same burden. He stated that hopefully with establishing a User Fee, he can anticipate that Council is setting it up so that fair and equitable decisions can be made in the next 50 years without a tremendous burden on those who will pay for it; and he noted that what staff is proposing is a good balance, all things considered.

With the aid of a presentation he prepared, Councilman Gardiner offered an alternative proposal for Council to consider, based on increases in TOT revenues; and asked what the range would be that property owners could expect to pay under the current optimal User Fee proposal.

Ms. Cox stated that she was not in possession of the range of fees.

Councilman Gardiner stated that he was not comfortable voting on this matter without knowing what the average property owner was going to be paying.

Councilman Stern stated that property owners can roughly figure out what their fees would be, taking into consideration the size of their lot, the impervious factor and the formula set forth on page nos. 37 and 38 of the rate analysis.

Ms. Cox stated that page 4 of the preliminary rate analysis, circle pages 154 and 155, provided sample calculations in the table showing various parcel areas and the corresponding ERU’s.

Mayor Clark pointed out that Council was not being asked to set a fee tonight, that Council was being asked whether or not it should proceed with the process that has a number of components to it, including a public education process.

City Manager Evans added that a report has to go out to each and every parcel owner that tells them what their fee will be before they vote.

Mayor Clark added that the property owners will have the final say on the User Fee issue.

Councilman Gardiner stated that when making a decision, he would like to see all the information.

Ms. Cox explained that Council has not yet selected a rate, and that this process is still in the very preliminary stages.

Councilman Gardiner stated that he would like to compare the best versions of all options; and added that he would like to present an option for consideration, which he believes, has not been made sufficiently available for Council to consider. He stated that the City should start doing something now and to avoid taxes and fees unless there is no other option. With regard to circle page 4, 2005-2010, he stated that the program cost from the modified program does not include maintenance and stated that he would recommend adding $130,000 annually for maintenance; and he suggested taking from the General Fund excess reserves for the first two years, transferring approximately $1.05 million to do some of the identified projects. He suggested from year 3 and on, that the City utilize the Long Point revenues, assuming there’s sufficient funding from the Long Point resort to more than cover what the funding costs are for the project each year; and he noted that the City will be in a better position to determine what, if any, revenues will be available from the Long Point project. He stated that the questions to ask tonight should be "can the City start right now on doing some of the projects and when does the City have to decide whether or not to go the tax or fee route as opposed to trying to go the Long Point route." He expressed his belief that given the urgency, the City could use its excess revenues in the General Fund for years 2005-2006; and noted his expectation that the City would need to decide sometime in 2006-2007 if the tax/fee route or Long Point revenue would be feasible. He stated that if Long Point is not going to work out, that the City will then have to put in place the User Fee/tax; but that it is a waste of time tonight to guess whether/when Long Point will generate revenues. He reiterated his suggestion to: 1) fund the startup with General Fund excess reserves for years 2005 and 2006; 2) review Long Point projections and progress in 2005-2006 and decide in 2006 or 2007 how to fund 2007 and beyond – expressing his belief that more information will be available to make a more informed decision as to whether a User Fee or tax is necessary.

Councilman Stern thanked Councilman Gardiner for an excellent presentation.

Mayor pro tem Wolowicz commended Councilman Gardiner for his presentation; noted that Council could discontinue the need for a User Fee if other funding becomes available; noted his support for building up some type of sinking fund; and stated that he was still concerned with the storm drain lining issues, noting that he was not convinced the lining will last forever.

Councilman Gardiner stated that the government’s record of turning back money to the public was dismal, noting that there would always be projects that require funding; and noted that he was opposed to asking the residents to pay more taxes unless there were no other options.

City Manager Evans stated that the City would always have projects, but not to the extent of needing to set aside $2 million a year; and he reiterated that properly installed, reinforced concrete pipe would last a lot longer than 50 years.

Councilman Long asked if at the end of 20 years, all of the City’s storm drains would be rebuilt with reinforced concrete.

Director Allison explained that at the end of 20 years, staff anticipated approximately two thirds of the storm drains would be rebuilt with reinforced concrete; and noted for Councilman Long that the net book value of the City’s storm drain facilities is approximately $6 million.

Finance Manager Downs stated that the figure is closer to $10 million if the San Ramon project is included.

Mayor Clark asked for staff’s input on Councilman Gardiner’s proposal.

Councilman Stern asked if the Council decided to move forward with the schedule as presented and the mail ballot was successful, when would the City begin to receive revenue from the Use Fee.

City Manager Evans estimated that the City would not see those dollars until December 2006; and further explained that the City could only do the mail ballot in May and August of each year.

Ms. Cox explained that this is an approximate 10-month process from this point on.

City Manager Evans stated that Council would need to make a decision by approximately summer of 2006.

Mayor Clark asked for an approximation on how many public entities have financed their infrastructure renewal comprehensive programs with a variable revenue stream, such as TOT.

Mr. Rolapp stated that most agencies form an Enterprise Revenue Fund and fund its projects out of that specific funding source; noted there are public agencies that do use contributions; advised that there are specific on-going revenue source of funds, enterprise type financing, in most cities in California; and added that this source of funding is usually a User Fee or assessment fee or financial program that puts the burden on users of a facility.

Mayor Clark asked Mr. Rolapp if he sees any downsides in Councilman Gardiner’s proposed approach.

Mr. Rolapp stated that this was more of a philosophical decision that Council needs to make.

Mayor pro tem Wolowicz questioned if it was possible to build a condition into a fee that reflects a sunset clause if revenues were determined to be of a certain level.

Mr. Rolapp replied yes.

City Attorney Lynch pointed out that annually, Council would have to review the fee; advised that if Long Point comes on line and the residents are unhappy with the fact that Council is not adjusting that fee, the residents can make their views known at the public meeting; explained that currently, staff knows what the legal landscape is as far as imposing this fee; that the legislature, or the voters through some additional change to Proposition 218, can further amend the process; and that if it did change, it may change how this fee can be imposed in the future.

Councilman Gardiner stated that Council could decide tonight to fund years 2005 and 2006 out of the General Fund with excess reserves; that Council could vote to start the process but withhold the final decision, which would get the 8-month process period out of the way, and that Council could reserve the final decision until May of 2007 to see if Long Point comes on line; and that if it does, Council could vote on that matter at that time.

Mayor Clark stated that there is some rationale to continue this process because the community would become educated on this issue, thereby empowering the community with respect to whether or not it understands, appreciates, and believes that it should be the contributory entity towards underwriting this program that will benefit them and those who come later.

Mayor pro tem Wolowicz stated that he views this program with a sense of urgency and noted the necessity to move along with the process and not to be faced with dipping below the General fund reserve balance.

Councilman Long stated that he has been persuaded by a lot of this evening’s discussion, with the end result of repairing/replacing approximately 75 percent of the facilities at the end of the project phase; noted that what he likes about Version 1, if it turns out that his assumption is wrong and Version 1 doesn’t do the job, there’s room to retreat without disaster, that the City can stretch things out a little further or cancel. He added that, as FAC pointed out, Item 3 will put in place a mechanism to borrow for emergency repairs that have to be accelerated – noting that emergency repairs end up costing more than going out for bid; that Version 1 allows the City that option to respond; and that none of the other options seem to allow the City that same flexibility. He noted that on the other hand, if Version 1 turns out to be too conservative to have raised more money than the City needs, then the City has the option to examine and lower the fee every year. He mentioned that if Long Point comes through, it would offer the City an opportunity to reexamine this decision based upon what the residents want, such as more recreational fields or more services; and that he is opposed to making the decision now for future Councils. He expressed his desire not to pass along the problems to the next generation.

City Manager Evans explained that the Infrastructure Financing Team recognized that Councilman Gardiner has provided a very persuasive argument that has a lot of merit; however, Mr. Evans advised that in his 30 years of government experience, what he has learned is that there are always many competing projects for General Fund money; and that because the use of that money is not restricted, the first thing that always gets pushed to the side is infrastructure improvements and that he believed the same thing would happen here if the proposed storm drain project did not have a dedicated source of funding.

Mayor Clark noted his concern with adopting Councilman Gardiner’s proposal and the possibility of being faced with 3, 4 or 5 simultaneous/concurrent catastrophic failures that would require dipping into the City’s reserves; and highlighted the possibility of not being able to obtain immediate debt financing at a reasonable cost.

Councilman Stern noted his appreciation of Councilman Gardiner’s analysis and logic; commented on the cyclical nature of luxury hotel revenues and his discomfort in relying on those volatile fluctuations as a revenue source for this program; stated that a User Fee would create a steady stream of dedicated funds to pay for the necessary improvements to the infrastructure; and noted his opposition to dictating to future Councils how the TOT had to be used because this Council was not willing to ask the residents to fund the infrastructure that maintains their city through this mechanism.

RECESS AND RECONVENE

Mayor Clark recessed the meeting at 11:05 P.M. and reconvened the meeting at 11:15 P.M.

Mayor pro tem Wolowicz moved, seconded by Councilman Long, to defer Item No. 9, the Five-Year Model, to another Council meeting. Without objection, Mayor Clark so ordered.

Councilman Gardiner stated that the essence of his proposal was not to change what the Council does, that it is simply to fund years 1 and 2 out of the General Fund and postpone the decision as to how to proceed from that point on; and expressed his belief that it is highly unlikely 5 simultaneous catastrophic events will occur. He stated that the City would be in a better position to get the residents’ support if the General Fund reserves paid for the projects the first two years and that the City waited as long as possible to implement a User Fee/tax.

Mayor pro tem Wolowicz asked if there had been any thought given to structuring this fee in such a way that it would meet the requirements/parameters established by the Federal tax law for a deduction.

In response to Mayor pro tem Wolowicz’s inquiry, Ms. Cox stated that residents should seek the advice of their tax consultants.

Mayor Clark asked if this matter would be coming back to Council for further consideration.

Staff indicated that this matter would be presented to Council at various stages during the process.

Councilman Long moved to concur with staff recommendation for Version 1. This motion died due to the lack of a second.

Mayor pro tem Wolowicz moved, seconded by Councilman Stern, to adopt Version 2 based on the recommendation made by the FAC subcommittee to include maintenance costs; to limit the transfer from the General Fund at $2 million, pending staff’s future return to seek the prospect of $3 million; to not seek the repayment of the $2 million and to treat it as equity; and to set a 20-year time limit.

Councilman Stern stated that the main point in Version 2 was that it deletes the Priority 3 projects.

Councilman Long stated that the motion leaves for the future those Priority 3 projects and noted that he was not persuaded that it was a good way to go. He noted that he was troubled with the motion because Version 2 would leave the City with a lot less latitude to respond to emergencies than Version 1.

Mayor Clark pointed out that the residents will have the final say; noted the necessity to start the public education process and get this challenging effort under way; and noted that Priority 3 projects would have no detrimental effect on residents’ properties.

Councilman Stern expressed his belief that this was a more balanced approach that would be accepted by the residents.

Councilman Long asked if the motion provided for the pay-as-you go basis.

Mayor Clark stated yes.

Councilman Long inquired that since the motion was on a pay-as-you-go basis, if the City gets to the end of the 20 years and all Priority 1’s and 2’s have been completed with no new emergencies, would the City then be free to use the Version 2 money to fund the Priority 3 items as well.

Staff stated yes.

Mayor Clark stated that Councilman Gardiner’s presentation was thought-provoking; noted that one of the underlying concerns was the uncertainty of the City’s excess reserves, noting that it can dramatically change; and stated that he was supportive of continuing the process that staff and the Team have collectively agreed upon.

The motion carried as follows:

AYES: Long, Stern, Wolowicz, Mayor Clark

NOES: Gardiner

ABSTAIN: None

ABSENT: None

City Clerk Petru noted that included in the approval of the motion was ADOPTIONO OF RESOLUTION NO. 2005-03, AMENDING RESOLUTION NO. 2004-45, THE BUDGET APPROPRIATION FOR FISCAL YEAR 2004-2005, FOR A BUDGET ADJUSTMENT TO THE CITY’S GENERAL FUND FOR AN ADDITIONAL BUDGET APPROPRIATION DURING FY 04-05 OF $220,000 FOR SERVICES TO BE PROVIDED BY MIG; FIELDMAN, ROLAPP & ASSOCIATES; AND HARRIS & ASSOCIATES, AS WELL AS POSTAGE, PRINTING AND OTHER COSTS, IN ORDER TO CONTINUE THE DEVELOPMENT OF THE WATER QUALITY AND FLOOD PROTECTION PROGRAM AND THE PROCESS TO ESTABLISH A USER FEE.

On behalf of Council, Mayor Clark thanked the Infrastructure Financing Team and staff for their work on this matter.

2004 Five-Year Financial Model – Revision 2 (602)

This item was continued to the next meeting.

RECESS AND RECONVENE

Mayor Clark recessed the meeting to closed session at 11:58 P.M. and reconvened the meeting at 12:15 A.M.

The following item was added to the Regular Business portion of the City Council Agenda:

Resol. No. 2005-04: Repair of the Western Avenue Storm Drain. (604 x 1204)

Director Allison presented photographs of the recent Western Avenue sinkhole and commented on the chronology of events that took place and staff’s participation in these events and the efforts to repair the damage.

City Manager Evans noted that no one was injured; stated that the repairs would continue on a 24-hour basis; and pointed out that the cost to do this emergency repair would be approximately 30 to 40 percent higher than if the project had been put out for an ordinary bid.

The staff report of January 4, 2005, recommended that Council: (1) Based on the facts set forth in the oral staff report, determine that an emergency exists which will not permit a delay from a competitive solicitation for bids, and that the actions taken below are necessary to respond to the emergency; (2) Approve plans to repair the Western Avenue Storm Drain; (3) Authorize the Director of Public Works to negotiate a contract to repair the Western Avenue Storm Drain; (4) Authorize the Mayor and City Clerk to execute a contract with Mladen Duntich Construction Incorporated to repair the Western Avenue Storm Drain; (5) Adopt the Notice of Exemption for the repair the Western Avenue Storm Drain, and direct staff to post notice of this action as required by law; (6) Authorize the Director of Public Works to obtain needed engineering and inspection services from Charles Abbott Associates, Inc., under an existing on call services agreement; (7) ADOPTION OF RESOLUTION NO. 2005-04, AMENDING RESOLUTION NO. 2004-45, APPROVING THE CITY’S BUDGET FOR FY 04-05, TO INCREASE THE CAPITAL IMPROVEMENT BUDGET FOR DRAINAGE IMPROVEMENTS IN THE AMOUNT OF $350,000.

Councilman Gardiner moved, seconded by Councilman Stern, to approve staff recommendation. The motion carried as follows:

AYES: Gardiner, Long, Stern, Wolowicz, Mayor Clark

NOES: None

ABSTAIN: None

ABSENT: None

COUNCIL DISCUSSION OF FUTURE AGENDA ITEMS & SUGGESTION OF FUTURE AGENDA ITEMS:

None.

CLOSED SESSION REPORT:

City Attorney Lynch stated that no action had been taken.

ADJOURNMENT:

The meeting was adjourned at 12:18 A.M. to Monday, January 24, 2005 at 7:00 P.M.

Adjourned in the memory of all those

who lost their lives

in the Southeast Asia tsunami

_____________________ Mayor

Attest:

____________________

City Clerk