CITY OF RANCHO PALOS VERDES
FINANCE ADVISORY COMMITTEE
JUNE 25, 2003
The meeting was called to order at 7:07 P.M. by Chairman Wolowicz at the City Hall Community Room, 30940 Hawthorne Boulevard, for the purpose of conducting the business pursuant to the Agenda. Roll call was answered as follows:
PRESENT: Butler, Clark, Curtis, McLeod, Smith, Wallace, Wolowicz
Also present were Finance Director McLean; Accounting Manager Downs; and Recording Secretary Bothe.
APPROVAL OF AGENDA
Hearing no objection, Chairman Wolowicz so ordered the approval of the Agenda as submitted.
APPROVAL OF MINUTES – APRIL 23, 2003
Hearing no objection, Chairman Wolowicz so ordered the approval of the April 23, 2003 Minutes as submitted.
2003 FINANCIAL MODEL
Director McLean stated that the 2003 Financial Model has been updated since the City Council’s adoption of the FY03-04 budget; and that it includes the proposed budget for FY04-05, which has not yet been adopted by the City Council – pointing out that those are the significant differences from when the FAC last saw this model. He advised that the City Council reduced the General Fund contribution for the Residential Overlay Program from approximately $1.3 million to $525,000; that the merit increases for City employees were reduced from 5 percent to 3.9 percent; that the bonus pool was reduced from $41,000 to $27,000 for FY03-04; and that the grant program for nonprofit organizations was reduced from approximately $34,000 to $30,000.
Responding to Member Butler’s inquiry with regard to the grant program, staff explained that although there were FY03-04 grant requests from non-profit organizations totaling more than $80,000, the FY03-04 budget was adopted with a $30,000 grant allocation, resulting in a $4,000 decrease from the FY02-03 allocation of $34,000.
Director McLean noted that the amount budgeted for a financing alternative consultant was reduced from $50,000 to $30,000 – highlighting his belief that staff will be able to accomplish their goals with this reduction. Director McLean also indicated that the City Council allocated $75,000 for miscellaneous drainage improvements.
Director McLean answered an inquiry made by Chairman Wolowicz that the $350,000 set aside for the sewer cleaning and filming and the $40,000 set aside for the storm drain update are in the budget for FY02-03; and noted that he anticipates Public Works staff will be presenting project Requests for Proposals to City Council for approval in the near future.
Manager Downs explained that the miscellaneous drainage improvements allocation is basically set aside for small emergency repairs; and clarified for Member Clark that with City Council’s reduction of this allocation from $100,000 to $75,000, each of the five years of the 2003 Financial Model has been adjusted to reflect the reduction.
Director McLean explained that because staff now believes the Altamira Canyon Storm Drain project would be impossible to execute, the proposed project has been withdrawn; and advised that Public Works staff has revised its spending plan for the $900,000 of CDBG monies to be used for this project. He stated that on June 17th, Public Works staff presented to City Council their revised spending plan, including termination of the Altamira Canyon Storm Drain project; and that the revised spending plan now includes projects that will improve access for those who are disabled, such as an elevator for City Hall and a few other minor projects. He noted that the City has approximately $1.5 million of CDBG money that needs to be allocated within its eligible timeline; advised that approximately $600,000 will be left over with the revised spending plan; and that the City would like to sell these leftover funds for about 50 cents on the dollar. Director McLean stated that the FY03-04 budget, as well as the FY04-05 proposed budget, does not include any transfers from the General Fund to the Building Replacement Fund, but that the model does include a resumption of the $100,000 transfer in the final three years.
Director McLean explained that in the following years of this model as the City goes forward, General Fund revenues are estimated to flat-line, and expenditures are expected to increase by 3 percent; and that, therefore, the General Fund reserves are expected to be reduced from approximately $8 million to $7 million. He pointed out that the reason the General Fund reserves are over $8 million is due to the City cutting its project spending by approximately $1.2 million during FY02-03.
Responding to Member Curtis’ question regarding the filming and cleaning of the sewer systems, Director McLean stated that the funding would be carried over from FY02-03 to FY03-04.
INFRASTRUCTURE FINANCING UPDATE
Director McLean stated that he anticipates two or more workshops associated with infrastructure financing, the first being as early as December/January and the second in June 2004; and noted his intention to present to the FAC a draft infrastructure financing plan prior to it being presented to the City Council in June. He indicated that a financial plan is anticipated to be ready for the June workshop depending on the receipt of the Open Space, Planning and Recreational Task Force report; the preparation of the Storm Drain Master Plan update; and the preparation of a report following the cleaning and video-filming of the sewer system.
Chairman Wolowicz requested that if a City Council workshop is scheduled for December 2003, that the FAC review these issues at its November FAC meeting. Member Curtis expressed his hope that the sewer inspection project commence as soon as possible and that focus be maintained on this project.
STATE BUDGET UPDATE
Director McLean stated that this past week the VLF tax trigger was pulled; that its effective date is October 1, 2003; that staff does not anticipate that the State will fund the backfill between July 1, 2003 and October 1, 2003; explained that once it becomes effective, it will probably take between 30 to 60 days to see the increased VLF fees; and stated that this impact to the City next year is expected to be approximately $500,000 to $600,000.
Manager Downs stated that staff does expect the State to continue making the non-backfill payments starting July 1st, 2003.
In response to Member Wallace’s inquiry, Director McLean explained that it is likely various groups will challenge the legality of the reduced VLF’s.
Manager Downs explained that just recently, AB 1769, a Senate budget proposal, was defeated; and noted that although it failed, this iteration may be a proposal that closely resembles what may ultimately be adopted by the state. She indicated that the League of California Cities has calculated that the VLF reduction to the City would be approximately $522,000; stated that the City’s CORE deputy program could suffer a reduction of $28,000; that the Senate discussed eliminating the law enforcement high technology grants, which would mean a $22,000 reduction to the City; that discussion ensued with regard to deferring until 2009 the Traffic Congestion Relief funds to the City of approximately $110,000; and that consideration is being given to suspending or deferring the State mandate cost reimbursements, which would mean a $16,000 hit to the City. Manager Downs concluded that these items could result in an approximate revenue reduction to the City of $750,000 for FY03-04.
Reports by Liaisons
With regard to Member Butler’s assignment relating to a possible reallocation of the property taxes, he explained that the City Attorney has advised that this proposal is not possible at this time. Director McLean added that the City Attorney had communicated with County officials and stated that the reaction of the County was that whatever was agreed to when this City was incorporated is what will stand; and he stated that altering the allocation of the property taxes would ultimately require legislative action.
Director McLean stated that a future FAC agenda would include an update regarding assessment loans for utility undergrounding assessment districts. Chairman Wolowicz asked that a brief history of this subject be provided at that future meeting for those FAC members who were not on the Committee when this matter was previously addressed.
At 9:07 P.M. the meeting was formally adjourned.
Chair, Financial Advisory Committee
Denise Bothe, Recording Secretary