M I N U T E S
RANCHO PALOS VERDES CITY COUNCIL
JANUARY 24, 2005
The meeting was called to order at 7:04 p.m. by Mayor Clark at Fred Hesse Community Park, 29301 Hawthorne Boulevard, Rancho Palos Verdes.
Roll call was answered as follows:
PRESENT: Wolowicz, Long, Gardiner, Stern, Clark
Also present were City Manager Les Evans; Assistant City Manager/City Clerk Carolynn Petru; City Attorney Carol Lynch; Director of Finance Dennis McLean; Director of Planning, Building and Code Enforcement Joel Rojas; Director of Public Works Dean Allison; Senior Planner Kit Fox; Accounting Manager Kathryn Downs; and, Minutes Reporter Debra Presutti.
The Pledge of Allegiance was led by Mr. Ken Jenkins of Assemblywoman Betty Karnette’s office.
Mayor Clark informed the public that there is a growing compendium of "Did You Know Facts" under the City Council tab on the City’s website. He presented the latest installment regarding the City’s open space and parkland, saying the ratio of open space per capita in RPV is approximately 22.88 acres per 1,000 residents.
Mayor Clark announced Robert Marquez and Lena Priest as the recyclers of the month, congratulating them and thanking them for their recycling efforts.
APPROVAL OF AGENDA:
Councilman Stern moved, seconded by Mayor Pro Tem Wolowicz, to approve the Agenda. Hearing no objection, Mayor Clark so ordered.
Krista Yachechak, 2 Martingale Drive, indicated that on January 10th they experienced a hill slippage at their residence, causing the house to be red tagged and trapping three vehicles at the top of their driveway. She extended her appreciation to Mayor Clark, Councilman Stern, and Director Allison for making a site visit to view their property and to Mark Campbell and Assistant City Manager Petru for their assistance in trying to resolve the situation. She requested Council’s aid in expediting the recovery process, working with them to get the necessary permits approved, and to see if there might be some way to waive or reduce some of the associate costs. She noted that their neighbors at No. 1 and No. 3 Martingale have also being affected by this slope failure.
Councilman Gardiner inquired if it would be possible to waive the permit fees to assist the property owners with their situation and suggested someone be designated to work with them directly as a point person.
City Attorney Lynch indicated the permit fees could be waived by City Council.
Director Rojas advised that at the moment the top priority is to make the driveway accessible, saying staff is currently waiting for a geology report indicating whether removal of the material from the driveway will cause further soil slippage. He noted that the long-term solution of what to do with the hillside remains unresolved at this time.
Mayor Clark advised that a representative from Assemblywoman Karnette’s office was present and wished to speak to the Yachechak’s to determine how their office might assist them.
Scott Gobble, Southern California Edison, provided an update on two recent power outages in RPV which affected over 700 homes in the community between Hawthorne Boulevard, Crest Road and Crenshaw, saying the outage was caused by a cable failure near the California Water Service office on Crest Road, combined with the fact that the high voltage system servicing the area is approximately 50 years old and has served its useful life. He advised that SCE plans to replace some components, install an additional set of lines as a backup power source in the event future problems occur, and replace the transformers. He indicated that power would be out from six to eight hours when these modifications take place, saying residents will be notified in advance by letter and again by postcard at least 72 hours before the planned outages.
Mayor Pro Tem Wolowicz queried if SCE has an overall plan that includes the tracts of homes further down the hill and beyond Hawthorne Boulevard.
Mr. Gobble explained that SCE has approximately 26 high voltage grids servicing Palos Verdes, saying the transformers are inspected every year or two and it has been determined that the first grid is definitely in need of repair and portions of the second grid, which also need repair, will be upgraded at the same time.
Councilman Long inquired if Edison makes a special effort to notify persons who are using home medical equipment and might be seriously impacted by these outages.
Mr. Gobble answered that Edison receives information from physicians regarding customers with medical concerns, saying a form is submitted which allows a discounted rate and Edison includes those names on a list which identifies them as having a medical problem and whenever there is a concern with the supply of power an attempt is made to contact those customers in person or by phone. He added there are no such medical customers on the two affected grids.
Jack Downhill, Rancho Palos Verdes, stated he recently came across an article in the RPV City Newsletter which indicated the City requires that trash receptacles must be stored out of sight of the public right-of-way and adjoining properties. He mentioned this brought to mind the fact that on PV Drive South there are two dumpsters and a portable toilet at Abalone Cove Shoreline Park that are not only visible but also very haphazardly positioned and quite unsightly. He noted there are also approximately 20 bright blue trashcans at the Abalone Cove Shoreline Park picnic area. He advised that the trash receptacles at the adjacent scenic turn out are much more tasteful with a wooden outer container covering the bin inside. He suggested something like this could be used to replace the more obtrusive trash containers or perhaps the use of green rather than bright blue would be more aesthetically pleasing and less visually intrusive.
CITY MANAGER REPORTS:
City Manager Evans provided an update on the status of Channel 33, saying Art Yoon, the Cox Cable representative, had advised him that the fiber cable routing was nearly complete, the electronic equipment should be delivered shortly, and the station should be ready to begin broadcasting prior to March 1st.
Mayor Clark complimented the Council Subcommittee, Councilman Stern and particularly Councilman Gardiner, for their diligent efforts in making Channel 33 a reality, saying this will certainly be one of Councilman Gardiner’s greatest legacies.
Councilman Gardiner indicated that he and Councilman Stern would be bringing a set of policies and procedures to Council in the very near future to help guide the operation of the new channel.
City Manager Evans turned the discussion over to Director Allison for an update on the situation on Western Avenue.
Director Allison advised that in the last three weeks the Public Works Department had spent more time in the field, and particularly on Western Avenue, than they had in the past two years. Using a slide show presentation for illustration, he provided an update on the City’s current situation with regard to its storm drains, beginning with the sinkhole repair at Westmont Drive. He noted that a very important part of that project was the two sewer lines beneath the roadway, saying costs have exceeded the initial estimate because of complications caused by delays from additional rainfall and a trench failure. He explained that it remained unclear what agency was responsible for the cost of these repairs, saying it is staff’s belief that it will ultimately be the State of California’s responsibility.
Director Allison explained there are 12 storm drains that cross under Western Avenue which have all been video inspected and their conditions are as follows: one was being reconstructed at Westmont/Delasonde, six were reinforced concrete and are in good shape, five were corrugated metal and in poor condition, and there were two additional locations where the roadway is dipping, the worst one being at Summerland. He indicated the situation had necessitated the closure of the northbound lanes of Western at Summerland, which had created significant traffic impacts.
Mayor Clark interjected that a number of residents in Mira Vista have experienced a tremendous increase in the amount of traffic through their neighborhood and many have inquired why traffic had been diverted to the driveway next to the condominium complex at Summerland.
Director Allison explained that Caltrans took the lead on the road closure and did not create a detour, but merely placed a road closure sign allowing traffic to access that private driveway. He noted there were concerns about not allowing turns into the driveway because there are businesses that would be significantly impacted. He stated he is concerned that motorists are going to travel whichever way they believe is quickest to reach their destination and, if a different action is taken, another route will likely be chosen, disrupting a different neighborhood. He advised that Caltrans is in the process of hiring an emergency contractor, adding the City has no control over this situation other than to encourage Caltrans to move as quickly as possible. He indicated the long-range plan is to repair the pipe in stages which will likely take one to two months, saying the plan in the interim was to detour traffic, maintaining one lane in each direction on the northbound side which would help relieve a significant amount of the overflow traffic into the adjacent neighborhood.
Director Allison directed attention to a third location near the Smart & Final store between Toscanini and Delasonde, just south of Westmont where there was another corrugated metal pipe in very poor condition. He advised that once a contract has been negotiated with Caltrans for the Summerland project, there were plans to begin dealing with this third location.
Director Allison answered some of the questions he has received relating to what impact all of this was having on the City’s Storm Drain Master Plan (SDMP) as follows:
1) Did the SDMP include the cost of these repairs? Cost for these repairs were not included because it was believed Caltrans was responsible for Western Avenue and the storm drains beneath it.
2) Who is ultimately responsible for the repairs? It remains unclear who will bear ultimate responsibility, but staff believes the State of California is responsible for the roadway and the underground storm drains.
3) How does the SDMP evaluate aging corrugated metal pipes? He explained that these pipes are evaluated by placing them into the following four categories of deficiencies: 1) the pipe is too small; 2) the pipe has decayed; 3) there is an absence of inlets; and, 4) the configuration is poor. He explained that a Type 1 deficiency, i.e., the existing pipe is 37 inches and a 48-inch pipe is needed, creates problems during heavy rains and can be corrected by reconstructing or rebuilding the pipe. Type 2 deficiencies, old corrugated metal pipes that collapse and cause sinkholes, can be corrected by rehabilitating or reconstructing the pipe. Type 3 deficiencies, an absence of inlets, which exists on much of PV Drive East and tend to flood the adjacent roadway and spill onto adjacent private properties, can be resolved by positioning catch basins to collect the water before it goes into residential property. Type 4 deficiencies, poorly or inadequately configured pipes, usually go through private improvements and the solution was to install new storm drain in the street to collect water from the smaller pipes and delivers it to a canyon with no houses below.
Director Allison summarized his presentation by advising the Council that the City’s 297 storm drain pipes have been evaluated, 156 of them were found to be deficient and 65 of those deficiencies are related to size, configuration, and missing inlets. He explained that staff estimates that 91 are in poor condition and need to be relined, adding that nearly all the corrugated metal pipes need reconstruction or relining. He indicated that citywide priority assignments have been made as follows: There are 12 Priority 1 projects, inadequate pipes that flood private property; 21 Priority 2 projects – inadequate drainage pipes that cause bluff or canyon erosion that could threaten structures over time; and Priority 3 projects – which resulted in inconsequential street flooding. He advised that all but 20 percent of the pipes have been video inspected but priorities with respect to lining all pipes have yet to be determined. He concluded by saying that the top priorities are those pipes under roadways or adjacent to structures, adding that staff does not believe the SDMP needs to be revised based on recent occurrences on Western Avenue.
Mayor Clark queried what the current situation was regarding Tarapaca Canyon.
Director Allison answered that staff considers Tarapaca a Priority 1 project; has identified a cost of $1.5 million to complete the project; and is currently working with the City of Los Angeles, saying the solution appears to be partly drainage and partly geologic in nature.
Councilman Long asked what assurance can be provided with regard to the condition of pipes that have not yet been inspected.
Director Allison responded that, based on the sample inspections performed, staff was presuming that three quarters of all the corrugated metal pipes were in poor condition.
Councilman Long inquired if there was any allowance in the SDMP in case that figure was wrong and the number was actually higher and, similarly, if any allowance had been made in the event the City does not recover its costs on Western Avenue.
Director Allison indicated those allowances had not been made and the costs identified for the corrugated metal pipes assumes they will be identified and relined before any more road failures occur, noting it was much easier and less costly to reline pipe than rebuild it.
Mayor Pro Tem Wolowicz queried if staff had identified and prioritized all the storm lines that were in close proximity to sewer lines, saying he would certainly like to see those placed at the top of the list.
Director Allison stated staff would certainly include that as a priority.
Councilman Stern commended Director Allison for an excellent and very informative presentation. He indicated it would be helpful for RPV’s residents to understand the problem was being addressed but that it was quite enormous and the City was not entirely in control of some of the associated problems, saying while he was very sympathetic to residents’ complaints about traffic, Caltrans was in control of Western Avenue.
On behalf of the entire Council and community, Mayor Clark thanked Director Allison and his staff for all the time and effort they have devoted to this crisis situation on Western Avenue, saying it spoke to the commitment and professionalism of the City’s staff. He suggested making the current status and updates on the traffic situation available on the Breaking News section of the City’s website.
Mayor Clark reminded the public that items previously discussed and continued to a future meeting were posted on the City’s website at www.palosverdes.com/rpv.
Assistant City Manager/City Clerk Petru advised there was one speaker wishing to address Item Nos. 11 and 12 on the Consent Calendar, Award of Professional Services Contract for Engineering Services regarding Proposed Water Quality and Flood Protection Program.
Jack Downhill, Rancho Palos Verdes, stated his belief that the possibility of a parcel tax has been overlooked in the alternatives considered and suggested this would be a far more equitable and simple way of financing the projects described and, since the benefits derived were essentially "universal," it would ensure that everyone pays equally. He opined that the system discussed at such great length and finally adopted did not provide equitable distribution of costs and concluded by saying the amount of money proposed to merely go through the process of having a user fee approved or disapproved was outrageous.
Councilman Long remarked that he found Mr. Downhill’s approach very interesting and, if this were a perfect world, he would agree with more of what he was advocating. He expressed concern that the school parcel tax passed by a mere four to five percentage points and most likely only because seniors were exempted and the tax included a sunset, adding that placing a sunset on this tax would impair the City’s ability to borrow to finance repairs in the future. He further noted his understanding there was discussion pending in Sacramento to change the user fee requirement to a two-thirds majority and, if a parcel tax fails and an attempt was then made to establish a user fee, it was unlikely that would get a two-thirds vote either.
Mr. Downhill responded that equity among the City’s residents was very important and educating the citizens about this issue needed to occur. He indicated he had a personal interest in this because he owned a 300,000 square foot lot that cannot be built on or subdivided and the formula as currently proposed would consider that land in determining his payment ratio. Recognizing he would have the ability to protest his assessment, he opined the system was too complicated and protracted and too much money was involved for a user tax that he did not believe would pass.
Mayor Clark advised that the City’s Finance Director and the Finance Advisory Committee had considered this matter very comprehensively and every alternative method and tool available was contemplated as a potential mechanism for financing infrastructure renewal, including a parcel tax. He indicated the City had not made a decision to move towards the implementation of a storm drain user fee because there were several preparatory steps that need to be taken first.
Mayor Pro Tem Wolowicz commented there was a report from March 2003 on the City’s website that includes 14 or 15 different alternatives explored by the FAC at the time the user fee was discussed as well as subsequent and recent reports showing all the merits and consequences identified on this issue. He indicated this would be a useful place to see the amount of dialogue that has taken place on this topic.
Councilman Stern reiterated that Mr. Downhill had the option to protest the fee by having an impermeability review performed for his property and noted that the fee would be based on his specific situation. He noted that equities were measured in different ways and, while there was truth to the fact that all the City’s residents benefit by having these systems fully operational, the impermeability standard attempted to allocate burden based on the amount of load being placed on the system. He remarked that equity was in the eye of the beholder, adding there was a good argument that those people placing an additional load on the system should bear some of the extra cost burden.
Councilman Gardiner expressed sympathy for the position articulated by Mr. Downhill, saying, while he was not sure he favored the alternative, it was an alternative. He indicated by the time this matter found its way to Council the options had been whittled down to a very narrow set and he could not recall ever discussing the merits of a parcel tax. He stated that often by the time policy issues reach the Council they have been pre-filtered and focused in a particular direction leaving a very limited ability to discuss alternatives and their associate pros and cons, adding that he believed Council was not well served if they were not provided the full range of alternatives, including the pros and cons of each, when making policy decisions.
APPROVAL OF CONSENT CALENDAR:
Councilman Stern moved, seconded by Councilman Long, to approve the Consent Calendar.
Councilman Gardiner requested the option to vote separately on Items 11 and 12.
Councilman Long seconded the request, saying he always supports the ability to split a question.
The motion to approve the Consent Calendar, absent Items 11 and 12, carried on the following roll call vote:
AYES: Long, Gardiner, Wolowicz, Stern, Clark
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.
Extension of the Affordable Housing Developer Fee Program for an Additional Five (5) Years
ADOPTED RESOLUTION NO. 2005-05, MAKING CERTAIN FINDINGS TO EXTEND THE AFFORDABLE HOUSING DEVELOPER FEE PROGRAM AND RETAIN THE FEES THAT WERE DEPOSITED INTO THE PROGRAM FOR AN ADDITIONAL FIVE (5) YEARS.
Confirmation of the Appointment of a City Delegate and Alternates to the Governing Board of the South Bay Cities Council of Governments
ADOPTED RESOLUTION NO. 2005-06, CONFIRMING THE APPOINTMENT OF A DELEGATE, PRIMARY ALTERNATE AND SECONDARY ALTERNATES TO THE GOVERNING BOARD OF THE SOUTH BAY CITIES COUNCIL OF GOVERNMENTS (A JOINT POWERS AUTHORITY).
Claim Against the City by Jeffery Brown
Rejected the claim and directed staff to notify the claimant.
Claim Against the City by Daniel Pantucci
Rejected the claim and directed staff to notify the claimant.
Claim Against the City by Charles Brumbaugh
Rejected the claim and directed staff to notify the claimant.
Claims Against the City by Indian Ridgecrest Gardens, LP
Rejected the claims and directed staff to notify the claimant.
Repair of the Tarapaca Storm Drain
Reviewed and reconfirmed a four/fifths (4/5) vote, the Council’s action on December 21, 2004, to authorize staff to conduct an informal bid process to repair the Tarapaca Storm Drain.
Repair of the Western Avenue Storm Drain
Reviewed and reconfirmed a four/fifths (4/5) vote, the Council’s action on January 4, 2005. An emergency exists which will not permit a delay from a competitive solicitation for bids and that the actions taken are necessary to respond to the emergency.
On-Call Service Providers
1) Awarded a contract for on-call professional services for FY 04–05, and FY 05–06 to RBF Consultants; Berryman and Henigar and Associates; Kleinfelder Consultants, Inc.; Lenocker & Associates, Inc.; KEC Consultants, Inc.; Peter Gambino and Associates, Inc.; and, David Volz Design; and, 2) Authorized the expenditures with these firms in accordance with City Council established guidelines for on-call professional services and the adopted budgets for FY 04–05 and FY 05–06.
Register of Demands
ADOPTED RESOL. NO. 2005-07, 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.
The motion to approve Items 11 and 12 carried on the following roll call vote:
AYES: Stern, Long, Wolowicz, Clark
Item No. 11: Award of Professional Services Contract For Engineering Services Regarding Proposed Water Quality And Flood Protection Program.
Approved the Professional Services Agreement for engineering services with Harris & Associates for services associated with finalizing the rate analysis for the proposed Water Quality and Flood Protection Program for an amount "not to exceed" $23,000.
Item No. 12: Award of Professional Services Contract For Public Information Services Regarding Proposed Water Quality And Flood Protection Program.
Approved the Professional Services Agreement with Moore Iacofano Goltsman, Inc. for public information consulting services regarding the proposed Water Quality and Flood Protection Program and other de-minus services for an amount "not to exceed" $61,500.
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CITY COUNCIL ORAL REPORTS:
Councilman Stern provided a slide show presentation to illustrate his report.
Councilman Stern attended the League of California Cities meeting on January 6th where the guest speaker, Dan Hafferty, from the State of California Department Homeland Security Civil Support Division, provided an explanation of what that entity does; attended the West Vector Control District meeting on January 13th where a very detailed report on the West Nile Virus was presented which he offered to share with anyone interested; and, toured storm damage on a Saturday with Mayor Clark which included the Martingale slope failure and Summerland Avenue.
He attended the Trump National residential development ground breaking ceremony and a Trump Liaison Committee meeting beforehand, where he and Mayor Clark met with representatives of the Trump organization and discussed the driving range, their interest in building hotel villas, and proposed changes to a few of the residential subterranean garages. He mentioned that Supervisor Knabe’s office presented the City and Mr. Trump with a plaque commemorating the ground breaking event.
Councilman Stern indicated that during the annual Contract Cities meetings in Sacramento, the Council members in attendance had the opportunity to meet with a number of state representatives, including Assemblywoman Karnette and Senator Lowenthal, and various staff members at the League of California Cities. He remarked that Tom Campbell, Governor Schwarzenegger’s Finance Director, spoke at one of the meetings, noting that during his tenure on Council this was the first time anyone from the Governor’s staff came to address the group, and indicated that everyone was eager to see what would happen with the State’s budget.
He indicated that he traveled with fellow Council and City staff members to Washington, D.C. to attend the U.S. Supreme Court hearing on the Abrams case, as well as to lobby Congress regarding telecommunications and FAA overflight issues.
He explained that most of the time in Washington D.C. was spent addressing a number of different issues with congressional staff, including visits to the offices of Senator Boxer, Senator Feinstein, and Senator Stevens, who oversees the Senate committee charged with reviewing antenna-related issues. He remarked that in his conversations he specifically addressed a legislative amendment to the Telecommunications Act in an attempt to eliminate the ability of individuals to obtain antennas under very lenient amateur standards and subsequently switch them to commercial use. He noted that Director Rojas accompanied him on a number of meetings, most notably with Senator Feinstein’s staff and Congresswoman Harmon, to discuss the open space acquisition efforts and federal funding opportunities.
Councilman Stern concluded his presentation by saying the trip to Washington D.C. was a fascinating event. He recited a couple of he Supreme Court Justices’ relevant comments on the Abrams case and complimented the staff members who attended the hearing for their interest and dedication to the City, noting all paid their own way.
Councilman Wolowicz indicated that he attended the Contract Cities meetings in Sacramento on January 10th and 11th; the Trump National ground breaking and a meeting with Barbara Dye for an update on land acquisition activities on the 14th; the Residential Standards Update Committee meeting on the 17th; had the honor of representing RPV on the Mayor’s behalf on the 19th at they Mayors’ luncheon; and, attended the PVPTA meeting on the 20th. He noted he was also privileged to attend a recycling award presentation at Soleano School, saying he was pleased to see the enthusiastic participation of the youngsters and recognized how important it was to encourage environmental issues at the school level.
Councilman Long attended the Contract Cities Conference January 10th and 11th, noting he had the opportunity to meet with a number of State legislators and one of the many interesting things he learned was how the District boundaries are drawn; attended the LAX Round Table, chaired by former Mayor John McTaggart, on the12th, where the overflight problems with respect to the FAA were discussed; attended the ground breaking at Trump National on the 14th; also met with School Board members Gabriella Holt on the 14th and Barbara Lucky the following week to discuss the challenges facing the School District, saying his goal was to meet with each member of the School Board to obtain their views on how the City can interrelate and assist them; and, toured the drainage problems on Western Avenue on the 15th. He concluded by recounting that, at the invitation of some representatives from CORBA, he attempted to mountain bike some trails in the Forrestal Nature Preserve, noting he learned a great deal of respect for mountain biking as it requires far more balance and the consequences of a fall are considerably worse which were evidenced by the brace on his knee.
Councilman Gardiner attended the Trump National ground breaking and had a telephone conversation with Rob Low to obtain information on the Long Point project.
Mayor Clark attended the California League of Cities L.A. Division Board of Directors Retreat on January 8th, noting part of the focus was how to further the voice of the Los Angeles Division and its role in the structure of the League; attended the California Contract Cities Annual Legislative Tour on the 10th and 11th, noting State Insurance Commissioner John Garamendi spoke to the assemblage and mentioned that many Californians do not realize that their homeowners insurance does not cover flood or water damage but that there was reasonably priced flood insurance available. He also indicated earthquake insurance had gone through a cycle and that reasonable earthquake insurance was also now available. He requested staff pursue further information from the Commissioner’s office on this topic so it can be made available to residents on the City’s website.
He remarked that one of the benefits of the annual Contract Cities Tour, besides the opportunity to interact with legislators and representatives, was the unveiling of the Governor’s budget for the year. He indicated that Governor Schwarzenegger’s initial budget reflected a $9 billion deficit and he had called a special session of the legislators to attempt to deal with it and, if results were not satisfactory, the Governor planned to bring ballot measures before the voters, noting it would be interesting to see how that developed.
On the 14th, Mayor Clark attended the Trump Subcommittee meeting and the subsequent ground breaking and ribbon cutting for the residential development component of Trump National, noting the importance from the City’s perspective as this element of the project started to materialize was the property tax revenue and an increase in the average price of residential real estate in RPV. He also attended the South Bay Cities Council of Governments Executive Committee meeting later that day.
Mayor Clark indicated that a tremendous amount of headway was made on the trip to Washington, saying a great deal of energy was expended in a short period trying to convince key Congress members to support an amendment to the Telecommunications Act which would address the issue of individuals applying for permits under amateur provisions then converting to commercial without having to withstand the criteria and standards of a commercial use. He thanked Councilman Gardiner for putting him in contact with David Mandell, Chief of Staff at FAA Headquarters, saying he arranged a meeting with other senior officials, including the Associate Administrator of U.S. Airports, and a very productive interchange about overflight issues took place. He indicated the end result was the participants agreed to do whatever they could in conjunction with regional FAA leadership to advance solutions.
Mayor Clark chaired the first annual L.A. meeting of the League of California Cities Revenue and Tax Policy Committee on January 21st
Recess and Reconvene: Mayor Clark recessed the meeting at 9:21 p.m. and reconvened the meeting at 9:31 p.m.
REGULAR NEW BUSINESS:
City Manager Evans advised that two audience members were present waiting to address Item No. 15, Portuguese Bend Nature Preserve Naming Opportunities, and Item No. 16, Los Angeles Air Force Base Regional Alliance, and suggested those items be moved ahead of the 2004 Five-Year Financial Model. The Mayor so ordered the rearrangement of the agenda.
Portuguese Bend Nature Preserve Naming Opportunities
Director Rojas presented the staff report, advising that staff was requesting the concepts be approved so that the Palos Verdes Peninsula Land Conservancy could move forward with the fundraising campaign.
Barbara Dye, Palos Verdes Peninsula Land Conservancy, invited the public to participate in a fundraising kick off event on March 13th at a time and place to be determined.
Councilman Gardiner moved, seconded by Mayor Pro Tem Wolowicz, to 1) Approve the concept of allowing portions of the proposed City-owned Portuguese Bend Nature Preserve to be named after donors who make monetary contributions toward acquisition of the privately owned parcels that will make up the Preserve; and, 2) Approve the concept of allowing a portion of Del Cerro Park to serve as a donor recognition site.
Los Angeles Air Force Base Regional Alliance
Mayor Clark recused himself from discussion of this item.
Mayor Pro Tem Wolowicz reminded the audience that Council had taken action on this item over several previous meeting. He indicated the matter spoke directly to the economic base of the Peninsula because of the number of people in the community who were employed both directly and indirectly by the L.A. Air Force Base, saying it was most appropriate for the City to assist its residents and the local economy by providing monetary assistance in the amount of $5,000 to help ensure the retention of the Air Force Base in Los Angeles.
Barbara Dye, Rancho Palos Verdes, advised that the local Chambers of Commerce were deeply concerned about the future of the L.A. Air Force Base and were working hard to retain it and supported Council’s actions in this area.
Councilman Stern moved, seconded by Mayor Gardiner, to make a financial contribution of $5,000 to the Los Angeles Air Force Base Regional Alliance.
The motion carried 4:0 on the following roll call vote:
AYES: Gardiner, Long, Stern, Wolowicz
Recess and Reconvene: Mayor Pro Tem Wolowicz recessed the meeting at 9:48 p.m. and reconvened the meeting at 10: 03 p.m.
Mayor Clark rejoined the meeting.
2004 Five-Year Financial Model – Revision 2
Director McLean provided a short overview of the updated Five-Year Financial Model.
Councilman Gardiner, assisted by a slide display, stated the purpose of his presentation was to illustrate the use of models in the policy process. He indicated that, as a part of its decision-making process, Council takes into consideration projections of the future consequences of its decisions, noting those projections were based not on facts but on assumptions. He noted that staff’s five-year model’s projections reflected the General fund reserves going down, which was also based on a set of assumptions. He explained that, by putting a different set of assumptions into play, such as including the assumed Transient Occupancy Tax (TOT) revenues from the Long Point resort project, a very different picture was presented, noting he was not saying one set of assumptions was correct and one was not, but that there was a substantial difference.
He indicated that staff’s job relative to the five-year model should be to develop projections, indicate what assumptions were involved, and provide a series of "what-ifs" or possible scenarios based on a set of assumptions and their projected consequences, including alternative assumptions and the projected outcomes of those. He commented he did not favor limiting the Council’s and hence the public’s view to a singular perspective, saying Council’s job was to review and understand the alternative budget consequences for each set of assumptions, assess the risks, and use the five-year model to assist financial decision making. He noted his major concern with the current model was that it assumed only worst case revenues and expenditures, adding he did not believe it was a good use of models in the policy process to illustrate only one set of projections and the use of worst case projections was an implied policy which impacts all decision making.
Councilman Gardiner opined that the model process should track projections with actual expenditures over time, and then update the assumptions and projections in order to validate the model. He remarked that he would prefer to apply a number of "what-ifs" rather than taking a singular view, then evaluate the risks and determine how best to proceed, using that information to make policies. He indicated the Long Point project dwarfs everything else as far as prospective revenue for the City was concerned and that everything possible should be done to expedite this project to completion.
Mayor Clark remarked that in his lexicon and experience what Councilman Gardiner was advocating was called a "dynamic" model, noting the City had such a model, but it was not at the level of dynamic interchange being described, including the integration of multiple possible scenarios and risk analyses. He questioned whether Council was in fact interested in attempting to entertain a public policy decision process by converting the current financial model into a dynamic model. He reminded the Council that Long Point had a lengthy history which included a number of owners, a bankruptcy, a failed project entitlement, and now a Council-approved project that was moving forward, albeit slowly. That being said, he noted he did not think there was a person on the Council that did not grasp the potential importance of that project from an economic standpoint.
Councilman Gardiner responded that in the context of this discussion those assumptions made an enormous difference in the assignment of probabilities.
Councilman Long concurred with Councilman Gardiner that the City’s current financial model is incomplete, noting his perspective was slightly different. He noted experience had taught him that the unknown prevents one from ever having sufficient information and, unfortunately, the unknown was typically something negative. He commented that the City’s history of financial "surprises" such as the San Ramon landslide abatement project had more likely cost the City money than it provided revenue, adding the positive things that bring money do not usually come as a surprise but, like Long Point, were things that had been on the drawing board for a long period of time. He stated that, if the real estate developers’ yet untested projections come true, the City will gain a great deal of extra revenue from this resort hotel project. He acknowledged there was a very wide spread between that outcome and what staff was projecting, but noted it was far from the worst case scenario. He reminded the Council that staff’s model assumed there would be no adverse outcome related to litigation or settlements, saying the optimism that the City will be victorious in the case recently heard in Washington, D.C., if unfounded, could cost millions which had not been accounted for, along with the Tarapaca landslide and the very real possibility of more storm drain failures.
Councilman Long stated that, if one wanted to draw the outer boundaries of the envelope, on one side was a developer’s untested rosy picture of the City’s projected revenues and on the other was what the City might have to pay for landslides and lawsuits. He remarked that he liked the idea of drawing all the outer bounds, but believed that involved more than merely hoping the best comes to pass. He opined that the model staff had provided was a good conservative mid-line, and was what he preferred to see the budgeting based on.
Mayor Pro Tem Wolowicz indicated that Councilman Gardiner’s points resonated with him because the Council was involved with a great number of projections on an ongoing basis. He opined that the City’s concept of five-year modeling was a very sophisticated process which actually was a dynamic model because it provided an opportunity to look at the horizon within a confine of ranges and the ability to prepare budgets in two-year increments and refine them annually. He agreed the five-year model should be as dynamic as Councilman Gardiner described, saying, ultimately, numbers have to be chosen because the budget cannot necessarily be expressed in ranges. He reminded that in the previous year close to a dozen items were excluded from the budget because there were insufficient funds and a determination was made not to fund certain things, saying that was an attempt to describe the budget within a range by stating what was excluded. He noted, when it was subsequently discovered there were additional funds, Council was able to reinstate some of those things that were excluded which was as dynamic as things had gotten.
Mayor Pro Tem Wolowicz explained that in striving to develop a dynamic model for use by the City it was discovered that neither the State of California nor any other municipalities were utilizing dynamic modeling and it was extremely impractical to attempt to add dynamics to the layers of the financial spreadsheets.
Councilman Gardiner inquired if the current model illustrates the ripple effect created by changing the number in a particular cell, noting if, for example, the telecommunication funding was lost and that cell was changed from a million dollars to zero, it would ripple through and reflect year by year what that result would look like. He advised that he had created a spreadsheet which wais a distilled version of the City’s model and using the golf course, Long Point, and all other revenues; storm drains, sewer repairs, and all other expenses, if any number was changed it rippled through every cell.
Director McLean indicated the changing of figures certainly ripples through the spreadsheet the same way and explained that, when the two-year budget document was created, budgeted estimated revenues were developed based upon observing the financial trends.
Mayor Pro Tem Wolowicz said, while there was an opportunity to put some of the things Councilman Gardiner wanted to see addressed into the model, ultimately, staff was still tasked with determining what set of numbers to present for decision making. He indicated that approximately three years ago the Finance Advisory Committee, with staff’s assistance, identified the importance of Long Point and saw what the projected dollar amounts were. He remarked that Councilman Gardiner’s advocating to not act precipitously to increase taxes by including Long Point revenue at this premature stage was close to the antithesis of the line professional accountants walk. He indicated if parcel taxes or user fees were adopted and the City ended up with a windfall of revenues from the resort hotel, at that time the matter could be reassessed, but he would be inclined not to include those revenues until that point.
Councilman Stern commended Councilman Gardiner for an excellent presentation, saying he truly enjoyed it. He indicated, if the City’s goal when it created the five-year model as a tool had changed or the model is no longer meeting that goal, perhaps the model should be altered, noting he was not adverse to staff’s providing the ranges Dr. Gardiner proposes, if possible. He stated he would never want to make a budget decision based on the assumption that the projected Long Point revenues were being collected. He reminded his colleagues that in terms of meeting budget the current model had generally done a very good job of slightly underestimating revenue and staying below projected expenditures, saying, from his perspective and in the best interest of the community, that was a good result. He opined that using historical data and information that had been consistent over a period of time was a good basis on which to make projections, adding that Long Point was admittedly an extraordinary event and, while he was not opposed to having the model reflect it, he was reluctant to look at all revenue as being equal. He noted that most of the revenues reflected were within a very comfortable area, saying Long Point dramatically changed the picture but it was also an amazingly speculative number at the present time.
Councilman Stern indicated there was value in having more information if staff can come up with some clear projections as suggested, but noted he would never want the City to stray too far from dealing with historical data because very bad decisions can be made if dollars were counted before they were actually collected.
Councilman Gardiner voiced agreement with everything said, noting Councilman Stern articulated an excellent point. He urged Council to consider the role of the model as something that might be used to assist the framing and focusing of discussions for policies and expenditures and, if so, perhaps a bit more time could be spent listing assumptions systematically. He opined that most of the prior budgets were inertial, with no surprises. He indicated the principal reason for the General fund reserve was to provide for those things that were unanticipated, saying maybe the reserves should be raised or lowered but it was unclear what was actually needed because the reserves were basically a function of risk.
He concurred it was not appropriate to include Long Point at this time, saying, as someone who revises probabilities year by year, inclusion of the Long Point project would reflect that the probabilities were going up and, while it was not the time to bank on those revenues, it provided an incentive to use it in a "what-if" scenario. He explained if the developer intended to break ground in July and then October rolls around with no progress, then the probabilities go down. He indicated that over a five-year projection, the budget was authorized for the first year, tinkered with the second year, and speculated on for years three, four, and five, and as time passes, the numbers were observed and carefully tracked so that each subsequent year there was more information and fewer surprises.
Councilman Gardiner opined that the real advantage of having a model was that it provided an explicit picture rather than having to make calculations mentally, saying the numbers can be plugged in, the crank turned, and projections can be made.
Mayor Clark commented that the Finance Directors within the League of California Cities had all indicated they were not using this type of dynamic modeling in managing their budgets. He stated he believes this topic had arisen out of Councilman Gardiner’s impression that the City’s reserves were moving downward, noting he did not believe Council should make fiscal policy decisions based on the assumption that Long Point revenues were in play because it was far too early. He remarked that despite recognizing the potential of a significant impact on the City’s finances there was a tremendous amount of uncertainty and one of the overarching principles in budgeting for public entities was applying prudent conservatism. He reminded his colleagues that when he and Councilman Gardiner were elected, the General fund reserve was approximately $8 million, saying it had grown dramatically to $14 million and the main reason was because the Council had been prudent in budgeting. He concluded by saying he would not mind seeing some of the suggested dynamic modeling scenarios but he was not sure what direct impact they would have on the decisions Council was charged with making in the coming fiscal year.
Councilman Long indicated he found the concept of dynamic modeling interesting, but was unclear how it could exist without a dynamic reserve. He remarked that someone else assuming risk on the City’s behalf might look at things like the Abrams case and Tarapaca canyon and say the City needed to reserve a good deal of money for those things, saying once a deal was negotiated the reserve could be quantified. He noted that the City had a reserve level that was static and arbitrary; one that represented a guesstimate of risks being worth a certain percentage of the expenses for the year. He opined that if the City quantified all the risks the way an insurance carrier would, things might be looked at very differently. He presented the assumption that the five-year model would be fairly close to the revenues and expenses and reflects a $5.7 million decline in the existing reserves. He noted that, if the general direction was that of a reduction in reserves, all the scenarios would speak of reducing the reserves and the conclusion would be that the reserves were higher than necessary, saying that was really an unknown. He concluded by saying the concept of the City’s General fund reserve was arbitrary and dynamic modeling without everything being dynamic, including the evaluation of reserves, was incomplete.
Councilman Gardiner commented that he liked the idea of a dynamic reserve that goes up and down depending on expected losses. He advised that he was addressing this in response to a recent article in the Peninsula News which indicated, based on current assumptions, that the City anticipated a drop in reserves to 8.3 million by 2009, saying Council had not discussed this assumption nor agreed with it but there was an opportunity to plug in the numbers and see what the results would look like because, ultimately, what came out was a function of the assumptions made.
Recess and Reconvene: Mayor Clark recessed the meeting at 10:59 p.m. and reconvened the meeting at 11:11 p.m.
Mayor Pro Tem Wolowicz indicated there was some merit in the concept of policies within assumptions. He remarked that the five-year model contained a great volume of material and can be rather daunting and confusing and suggested that his fellow Councilmen look not at the numbers but at the general assumptions. He recommended it might be useful to meet with City Manager Evans and Finance Director McLean after reviewing the document to discuss with them the items of a policy nature and gather more information before embarking on the process that had been opened up of using assumptions for policy issues.
Mayor Pro Tem Wolowicz asked staff to include in the ‘05-’06 model his comments on the list of items so his colleagues could provide their reactions. In response to the magnitude of the City’s legal fees, he recommended an analysis be performed of the work taken on by the City Attorney in order to consider whether it would be beneficial to bring at least one attorney in house to handle the mundane everyday items. Noting he was not in favor of defined benefit pension plans in large organizations due to the high cost in absolute dollars, he also recommended consideration of a 401-K-type plan being offered to new City employees effective July 1, 2005.
Mayor Clark asked for staff’s reaction to the discussion.
City Manager Evans indicated that he was more concerned about the City’s finances than any other item, saying the five-year model was intended as a baseline and, although it was not extremely sophisticated, it included many things. He explained that the City’s revenues had been fairly consistent and provided a good history on which to base expectations. He advised that in the past few years, the State had occasionally taken money away from cities and there had been some unexpected expenditures like the San Ramon project, which had disrupted the model but, for the most part, the City had a clear idea of what revenues and expenditures were going to be from year to year. He noted some significant new revenues were expected from the collection of Transient Occupancy Tax although it was unclear exactly when and how much, but that was definitely on the horizon. On the expenditure side, he reminded the Council that the infrastructure items, such as storm drains and sewers, were difficult numbers to ascertain because these items were located underground, making them very complex to assess.
City Manager Evans noted that very few cities had reserves anywhere near RPV’s, noting he would rather not spend a great amount of time trying to refine the model by changing interest rate assumptions, revenue and expenditure increases, and potential litigation costs because it is unclear how much more would actually be known by going through this exercise. He stated staff needs direction from Council on how they would like to handle the anticipated Long Point TOT revenues and how they would like to fund infrastructure renewal projects.
Director McLean commented that he appreciates the concept of using "what-if" scenarios, saying he welcomed the idea of examining the material assumptions such as infrastructure renewal. He advised the one thing he would strongly discourage would be using more than one model.
Accounting Manager Downs indicated she also appreciates Councilman Gardiner’s thoughts on dynamic modeling, saying the one concern she had about utilizing dynamic modeling in the public sector was the possibility of making a mistake and having a material decision made based on that mistake.
Councilman Gardiner indicated that looking at the figures in the budget from a policy perspective was not particularly interesting, but what was interesting to him was considering what impact the Long Point TOT would have on the expenditure side and what was happening with infrastructure renewal on the expenditure side, saying the expenditures were controlled by policy.
Councilman Stern noted that was not necessarily true and reminded that the repair of the Western Avenue sinkhole was an example of an expenditure that was not controlled by policy.
Councilman Gardiner noted there were exceptions such as Western Avenue sinkhole, but a good deal of what was being discussed had to do with policy, timing, and amounts. He explained that the speculation on Long Point related to the timing and amounts, noting one policy alternative was what the majority of Council had chosen – a tax was being proposed so that spending on infrastructure renewal could begin, and, if Long Point came in, consideration would be given to removing the tax and using that new revenue source to continue to funding infrastructure. He said another policy option would be to fund the infrastructure out of reserves, spending down to a predetermined level and then funding the remainder out of Long Point revenues when they came in, accelerating the projects as the money actually came into the City’s coffers.
Councilman Stern commented that from his perspective the City’s residents were better served by having a user fee to fund such a long-term projects because it would, in essence, provide them with the assurance that it would be funded year after year and would not be subject to political whims if a future Council decided that more ball fields or something else was needed. He explained when the revenue from Long Point was realized and in the bank, residents could inform Council that they would like to devote a portion or all of the TOT to off-set the user fee, saying he believes that was a more sound way to see the project through.
Councilman Stern indicated he felt very strongly about the financial model because the City had been extremely well served by what he would characterize as a very conservative model, which under projects revenue and over projects expenditures, saying the residents would be extremely displeased if those numbers started to reverse. He remarked that he liked the conservative approach to the City’s finances reflected by the current model and would prefer to leave well enough alone and not do a lot of tinkering with it.
Councilman Long indicated that the presentation and ensuing discussion had been a very helpful learning experience for him.
Councilman Long moved, seconded by Councilman Wolowicz, to adopt staff’s recommendation with four additional instructions to staff as follows: Include the two items outlined by Councilman Wolowicz, the evaluation of an in-house attorney and the current employee pension plan for consideration as part of the next budget cycle; that the idea of a contingency based on past unknowns be built into the next budget; and, to include a comparison of projected to actual costs based on past and current budgets.
Mayor Clark suggested Council be provided the budget versus actual expenditures by City department for the last three years as part of the budget discussion.
Councilman Long noted that his idea to explore a contingency based on unknowns was related more to budgets and could be addressed in the future and requested that this particular item be removed from his motion.
City Manager Evans indicated that each of the staff instructions requested by Councilman Long were on the agenda to be discussed at the Saturday workshop scheduled for January 29th.
Mayor Clark remarked it had been a very healthy discussion and, as Councilman Gardiner suggested, there were a number of policy decision that Council must grapple with as they adopted the budget and moved forward to implement some of their initiatives for the year.
Councilman Long amended his motion, seconded by Councilman Wolowicz to: 1) Receive and filed the 2004 Five-Year Financial Model - Revision 2 (the "2004 Model"); and, 2) ADOPT RESOLUTION NO. 2005-08, AMENDING RESOLUTION NO. 2004-45, APPROVING THE CITY’S BUDGET FOR FY04-05, TO INCREASE GENERAL FUND REVENUES IN THE AMOUNT OF $2,214,677, BASED UPON AN INCREASE OF $1,539,157 FOR PROPERTY TAX IN-LIEU OF VLF, A DECREASE OF GENERAL FUND REVENUES IN THE AMOUNT OF $165,000 FOR GOLF TAX REVENUE AND AN INCREASE IN GENERAL FUND REVENUES IN THE AMOUNT OF $840,520 RESULTING FROM THE SALE OF THE TYLER PROPERTY.
The motion to carried on the following roll call vote:
AYES: Long, Stern, Wolowicz, Clark
Councilman Gardiner requested that his presentation be attached to minutes of this meeting.
Portuguese Bend Nature Preserve Naming Opportunities
Discussed prior to the Five-Year Financial Model above.
Los Angeles Air Force Base Regional Alliance
Discussed prior to the Five-Year Financial Model above.
Blue Star Program
City Manager Evans provided a brief summary of the staff memorandum.
Mayor Clark advised that Mayor Judy Mitchell proposed the concept at a Mayors’ Luncheon last year that all the Peninsula City Councils seriously consider adopting this program, which had been a tradition of recognizing the men and women serving this country dating back to World War I. He voiced his support, saying there were a number of residents in RPV who had family members serving abroad in the military in harm’s way.
Councilman Gardiner moved, seconded by Councilman Stern, to adopt a program to honor military families who live on the Peninsula. The motion passed by acclamation.
Budget Review Sessions and Community Leaders’ Breakfast Schedule for 2005
The Council selected the following dates:
COUNCIL DISCUSSION OF FUTURE AGENDA ITEMS & SUGGESTION OF FUTURE AGENDA ITEMS:
CLOSED SESSION REPORT:
City Attorney Lynch advised that reports and status updates were provided to Council and no action was taken on any of the items.
Mayor Clark formally adjourned the meeting at 11:58 p.m. to 10:00 a.m. Saturday, January 29, 2005, for a Tactical Planning Workshop to be held at the City Hall Community Room, 30940 Hawthorne Boulevard.