M I N U T E S
RANCHO PALOS VERDES CITY COUNCIL
AND FINANCE ADVISORY COMMITTEE
JOINT ADJOURNED REGULAR MEETING
APRIL 30, 2002
The meeting was called to order at 7:00 P.M. by Mayor McTaggart at Fred Hesse Community Park, 29301 Hawthorne Boulevard, notice having been given with affidavit thereto on file.
PRESENT: Clark, Gardiner, Stern, Mayor McTaggart
FAC PRESENT: Butler, Clark,
Curtis, McLeod, Smith, Wallace,
Also present were: City Manager Les Evans; City Attorney Carol Lynch; Director of Public Works Dean Allison; Director of Finance Dennis McLean; Counselor Mark Mandell, from Richards, Watson & Gershon; City Clerk/Administrative Services Director Jo Purcell; and Recording Secretary Denise Bothe.
Finance Advisory Committee Chairman Wolowicz led the Salute to the Flag.
APPROVAL OF AGENDA:
Mayor pro tem Stern moved, seconded by Councilman Gardiner, to approve the agenda as submitted. Motion carried.
2002 Five-Year Financial Model
City Manager Evans commented on the busy schedule of the FAC and City staff to discuss and study the City's financial situation and to fine-tune the City's 5-Year Financial Model, helping to provide a clear picture on the outlook of the City's financial position for the next five years. In addition, he explained that the FAC has been studying/investigating various alternatives for meeting revenue demands.
By way of a Power Point presentation, Director McLean presented the staff report of April 30, 2002, and the recommendation to review and file the 2002 Five-Year Financial Model.
Director McLean highlighted the key places in the General Fund that transfers are made to; he stated that looking forward, the 2002 Five-Year Financial Model indicates that the transfers from the General Fund and the CIP Fund will be approximately $2.5 million per year; and advised that the second largest amount that will be transferred from the General Fund will be the Gas Tax Fund, with an average of $800,000 annually.
Director McLean highlighted the following projects that are not included in the 2002 Five-Year Financial Model: preliminary Citywide Sewer Maintenance Plan;
Citywide Storm Drain Plan; transfers from the General Fund for the Utility Undergrounding Fund; transfers to the Roadway Beautification Fund; salary range adjustments and request of additional full-time staff; infrastructure wishlist, such as athletic fields, park and trail improvements, equestrian park, civic center; TOT or sales tax revenue from the proposed Long Point Resort project; the menu of infrastructure financing alternatives; the purchase and financing of 722 acres of open space along PVDS; and several one-time or possibly over two-year period type policy issue costs, such as Building and Safety Division Personnel Study, purchase of ergonomic furniture, consulting and advisory services, and additional City grants to community organizations. Director McLean mentioned that the model does include reduced transfers to the Building Replacement Fund, explaining that it ultimately will be reduced to $100,000 annually.
Director McLean stated that the expenditure assumptions have generally been set at a 3-percent increase annually; noted that the model includes increased costs for the City Attorney services as a result of increased litigation; and that the model includes provisions for a cost-based fee study to be performed next year, at an approximate charge of $25,000 -- pointing out that staff believes fee revenue will increase by $100,000 a year, perhaps more, if the cost-based fee study is performed.
Believing that these fees were based on a study that is approximately a decade old, Mayor pro tem Stern questioned if the City has a policy for updating this study.
In response, Director McLean stated that there currently is no set policy to update this study, but noted that the fees are based upon the actual costs incurred.
Mayor pro tem Stern questioned whether it is possible to build in some type of inflator, such as CPI.
City Manager Evans stated for Mayor pro tem Stern that a CPI-type inflator could be built into any of the expenditure assumptions, including lighting and landscaping.
It was the consensus of the City Council that staff investigate how to build in an inflator into this study.
Director McLean stated that with the approval of the cost-based fee study, one thing that can be done with the implementation of it is to create automatic indexing; and mentioned that some of the fees and some of the taxes, such as business license tax, already have an indexing feature.
Councilman Gardiner questioned whether a baseline model is available, indicating where the City has not exercised any discretion if it chooses to do nothing; and stated that it would be helpful to have external influences put into the model so that the City Council can then see the impact of actually making its decisions.
City Manager Evans explained that staff is looking for direction from the City Council as to what it believes should remain and what should be deleted from the figures.
Councilman Gardiner suggested, for example, to include all the inflators, put in all the things the City has no control over; and that the City start with a commitment baseline in order to help the City Council make a clear assessment of where they want additional revenues and expenditures to go.
In response to Councilman Gardiner's request, Director McLean stated that staff could take the model that exists today and bring it back to a baseline model, doing things such as excluding the cost of Master Planning, excluding the cost of the cost-based fee study.
In response to Mayor pro tem Stern's question, Director McLean stated that the model includes a traffic signal project every other year at a cost of $450,000.
City Manager Evans stated that the City Council had previously agreed to study the traffic signals throughout the entire City; and advised that the way things appear to staff, there will be the need for additional traffic signals over the next five years.
Councilman Gardiner stated that the traffic signal issue is an example of one item he would not include in the baseline, that it is a policy decision.
With regard to the sewer program and the current sewer infrastructure, Councilman Clark expressed his desire to get a clear understanding of where the City is assessing its responsibility versus the County's responsibility.
Addressing Councilman Clark's inquiry, City Manager Evans explained that currently, the County will respond if there is a break in the system, an emergency repair on the sewer; that the County will continue to do that into the future; and explained that the City was not aware that the County had no preventative maintenance program.
Councilman Clark noted his desire that this body look at the projects with staff and decide from a risk management standpoint where these projects have to be done and which ones can be deferred.
Mayor McTaggart highlighted the mandate by the EPA to reduce debris flowing into the ocean; and noted his preference that the City do all it can to comply with this law, suggesting that those areas be dealt with first which have the greatest potential to create a problem.
Director Allison noted for Mayor McTaggart that this City is in compliance with the EPA law more so than most cities as far as already having put debris catchers into the drains; and further stated that staff has been methodical in the placement of these basin catchers, generally placing them in high commercial traffic areas and parking lots.
Councilman Clark suggested that this City enlist the assistance of COG to help this City sort out how to most effectively reach compliance with the EPA and NPDES program.
Responding to Councilman Clark's comment, FAC Chairman Wolowicz explained that FAC has had several discussions regarding the uniqueness of being a coastal community and FAC's continuing investigations into financial opportunities related to coastal communities -- pointing out that information is still being sought in this area.
Councilman Clark suggested that FAC contact the California League of Cities to obtain related information as to its Environmental Policy Committee -- noting that FAC should be able to ferret out some of the needed information from that Committee's databases.
Addressing Mayor McTaggart's inquiry, City Manager Evans stated that the City had applied for a storm drain grant from the Coastal Conservancy but that the request was denied.
With regard to storm drain projects, Director Allison noted for Councilman Clark that the Sunnyside Drive Storm Drain Project rated Priority No. 2 out of 30 projects in the study.
Councilman Clark noted his interest in understanding the risk of tradeoff with deferring that kind of project, particularly with it already being prioritized as the No. 2 project in terms of the need for action.
Director McLean explained that the 2002 Model indicates that this City needs to increase its revenue sources in the future to adequately maintain its infrastructure, to improve its park facilities, to act on a wishlist of improvements, and that it needs revenue sources to get its cash flow to a break-even level so that the City can put itself in a position to take out long-term debt if the City chooses to do so.
Mayor pro tem Stern noted his preference for non-volatile revenue streams that are very predictable year-in and year-out.
Director McLean provided input concerning the Comprehensive Citywide Sewer Maintenance Plan and a possible sewer user fee plan -- pointing out that the Citywide Sewer Maintenance Plan will be a supplement to the limited effort provided by the County of Los Angeles.
With regard to a Citywide Sewer Maintenance Plan, Mayor McTaggart noted his preference that cul-de-sacs, hillsides and those areas that have exhibited problems in the past be addressed first for storm drain improvements -- stating that he is not certain whether it's necessary to study the entire City.
Councilman Gardiner expressed his preference that ultimately, the City accomplish a mix of the necessary projects and some of the interesting proposals.
FAC Member Butler explained that after much study and deliberation, the FAC is close to coming back to the City Council with recommendations for alternative financing vehicles to address for the City's storm drains, roadways and sewer projects.
Addressing financing alternatives, Director McLean noted that a Citywide Storm Drain User Fee would provide a revenue stream, and he commented on the possibility of the City sharing this fee with the property owners.
RECESS & RECONVENE:
At 8:45 P.M., Mayor McTaggart declared a recess. The meeting was reconvened at 8:56 P.M.
Karen Carr, 320 Knobhill, Redondo Beach, representing the South Bay Youth Project, expressed the agency's appreciation of the City's past support; noted that this agency has been providing youth counseling services to the youth from Rancho Palos Verdes; advised that in 2001, the agency served 153 children from RPV, 23 percent of the agency's clientele; and explained that the agency also assists with family counseling.
Highlighting the Requests for City Grants, City Manager Evans advised that all three groups have requested grants from RPV; advised that Shakespeare by the Sea has changed its request to $1,200 and that Peninsula Seniors has submitted a letter requesting a grant increase from $8,040 to $11,256.
Mayor McTaggart expressed his strong opposition to this City subsidizing the participation of residents from Palos Verdes Estates in the Peninsula Seniors program and PVE not offering any support.
Bill Baumann, representing Peninsula Seniors, advised that this agency has incurred a 37-percent increase in its anticipated budget from last October; explained that as a result of the recommendations in a needs assessment study, a lot of activities have been increased; commented on the agency's various activities; stated that one additional employee has been hired to work with the travel section; and noted that the rent has significantly increased.
Responding to Councilman Clark's inquiry, Mr. Baumann stated that the agency receives grants from Rolling Hills Estates, Rolling Hills, RPV, and none from Palos Verdes Estates; advised that the agency has approximately 301 members from Palos Verdes Estates; 922 from RPV; 244 from Rolling Hills Estates; 31 from Rolling Hills, for a total membership of 1,942.
Reiterating his objection to subsidizing agency membership from PVE, Mayor McTaggart suggested that residents from PVE be charged more membership dues.
Addressing Mayor pro tem Stern's inquiry in regard to increasing the dues to make up for the increased fees and rent, Mr. Baumann stated that a number of seniors have dropped out of the program because of the increase; noted that the annual dues are $25 per individual and $45 dollars per couple; and stated that repeated requests for assistance from PVE have been denied. Mr. Baumann stated that this agency provides beneficial service to the seniors.
Councilman Clark stated that this City Council should take direct action once again to urge PVE to support its seniors in this program; that the PVE City Manager should be encouraged to discuss this matter with the City Council to cease their ignoring these groups; and he encouraged constructive action by the seniors themselves to take this message back to the senior leadership.
In response to the needs assessment survey, the City Council suggested raising the fees for various services.
In exchange for amending the grant to Shakespeare by the Sea, City Manager Evans stated that the group will put on a performance at the Civic Center.
(Resumed discussion concerning the 2002 Five-Year Financial Model)
Director McLean explained that the City could substantially reduce a storm drain user fee with the use of long-term debt.
Councilman Clark stated that where the current residents are making improvements to the City's infrastructure that will last decades, the costs shouldn't be borne just by the current residents, but borne over a longer period of time with the residents who will benefit from it.
Councilman Gardiner stated that as a general principle, he'd prefer long-term projects have long-term money and short-term projects have short-term money, that the money and project ought to have similar timelines.
Director McLean noted for Mayor pro tem Stern that revenue derived from the Citywide Park Benefit Assessment could offset approximately 50 percent of existing park maintenance costs; stated that the Park Benefit Assessment would be ongoing, year after year; that the assessment would be added to the property tax roll; that it would not be a deductible expense to the residents; and that it would require a ballot process requiring a majority vote.
Councilman Clark, echoed by the City Council, commended staff and FAC for an excellent presentation.
Councilman Clark stated that he did not see in the conclusion or recommendations anything on the expenditure side, nothing to suggest that this City needs to look closely at the expenditure side of the equation; and stated that he would like to look at the expenditure side and see where the City is spending the money and where there may be belt-tightening possibilities.
Mayor McTaggart stated that at some point in time, consideration needs to be given to increasing staff as opposed to having a continual turnover of consultants.
The FAC expressed its support for additional staff to alleviate the increasing workload that staff has been undertaking -- noting that the FAC members have taken on various assignments to help alleviate the charges placed upon staff.
Responding to Councilman Gardiner's inquiry, City Manager Evans explained that the increasing responsibilities and tasks being placed upon various staff and Commissions/Committees will most likely last throughout the next five years and that it is his opinion that more staff will be needed, whether permanent or temporary.
Councilman Clark highlighted the fact that this City has less staff than it had a decade ago.
FAC Member McLeod stated that studying this matter for the last six weeks while serving on the FAC has indicated to her that there is some urgency to some of these CIP projects; and expressed her opinion that even if Long Point would generate a larger sum of money for the City, it would still be a sound fiscal policy to have in place some type of user fee for putting these CIP projects in place -- pointing out that this City is most likely not in line with what other cities are doing with respect to assessing those fees for their CIP projects.
Mayor pro tem Stern noted his concurrence with FAC Member McLeod's comment; stated that philosophically, he is concerned with taking present residents' money and putting it in the bank, raising millions of dollars to purchase something years later -- noting that the current residents would never derive the benefit of those fees.
Mayor McTaggart stated that the City should not use the proposed resort as a funding source and that it should proceed with the infrastructure improvements that are needed.
Given the uncertainty of when and if the hotel will be built, FAC Member Clark agreed with Mayor McTaggart's comment that the City should ignore counting on the hotel as a funding source at this point, stating that there are too many uncertainties.
Councilman Gardiner expressed his preference to see a matrix, reflecting various columns with projects, some way to highlight sources of dollars and timing.
FAC Chairman Wolowicz stated that the FAC has placed a strong emphasis on alternative funding to be addressed at each FAC meeting.
Councilman Clark stated that as a new City Council, they are open philosophically in looking at a shift from the past philosophies of pay as you go to one that supports debt financing in certain categories with understandable logic and rationale.
In terms of pursuing the financial model for the future, City Manager Evans noted for Councilman Clark that additional staff will be needed to support the FAC and/or working the day-to-day financial operations of the City.
RECESS & RECONVENE:
At 10:28 P.M., Mayor McTaggart declared a recess. The meeting reconvened at 10:36 P.M.
BUDGET POLICY ISSUES FOR FY 2002-2003
City Manager Evans presented staff report; commented on the request for additional employees within various departments due to increasing workloads; and stated that in some cases, it would be more cost-effective to hire on a full-time basis rather than an hourly contract basis.
It was the consensus of the City Council to go ahead with the 30th anniversary celebration. Councilman Gardiner suggested that corporate donations be sought.
Mayor McTaggart suggested that the City consider hiring a retired County senior building official who is looking for additional income.
Councilman Clark questioned if the City has looked at a combination of in-house and contracting out for its legal services, whether financial alternatives have been studied; and suggested that the City consider hiring an in-house City attorney to handle the basic and customary business and that the City contract out for specialized support.
City Manager Evans explained that a cursory study had been done in the past and that the result of the study indicated it would cost more than what the City is currently paying for its legal services.
Mayor McTaggart commented on the current firm's good track record, noting that it has been extremely successful for this City.
City Manager Evans noted for Councilman Clark that he would check with the city of San Juan Capistrano as to what it pays for its in-house counsel.
Mayor pro tem Stern stated that an economic analysis versus a qualitative analysis should be included.
City Manager Evans stated that he will get some preliminary information and present it to City Council.
Mayor McTaggart suggested that consideration be given to retractable camera mounts in Council Chambers.
City Manager Evans summarized the City Council's input concerning the Budget Policy Issues:
Issues to be included in the budget:
Issues to be excluded from the budget:
City Council Chambers screen and the Power Point improvement
Issues to be brought back to City Council for further consideration:
REVISIONS TO PROPOSED BUDGET FOR FY 02-03
City Manager Evans stated that the most significant increase is in the City Attorney's Office because of the litigation costs beyond what was originally estimated; and explained that the City Attorney's budget needs to be increased by $451,000.
At 11:24 P.M. the meeting was formally adjourned to Monday, May 6, 2002, 6:00 P.M., at Hesse Park for interviews of Emergency Preparedness Committee applicants.