DECEMBER 10, 2003

Acting Chair McLeod called the meeting to order at 7:05 PM 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 (arrived at 7:28 PM), Curtis, McLeod, and Wallace

ABSENT: Smith (Excused)

Also present were Director of Finance and Information Technology McLean; Public Works Director Allison; Accounting Manager Downs; Senior Financial Analyst Gyves; Larry Rolapp and Jim Fabian, from the firm of Fieldman & Rolapp, the City’s Financial Advisor; Robin Harris of Richards, Watson & Gershon, LLP; and Joan Cox of Harris & Associates.


Acting Chair McLeod requested insertion of "Liaison Reports" as item 7 on the Agenda; and relocation of "Public Comments" and "Adjournment" to items 8 and 9, respectively. Member Butler motioned for approval of the agenda as amended, and Member Curtis seconded. Hearing no objection, Acting Chair McLeod so ordered approval of the Agenda as amended.


Member Curtis motioned to approve the draft minutes and Member Wallace seconded. Hearing no objection, Acting Chair McLeod so ordered approval of the draft minutes.


Director McLean introduced members of the Infrastructure Financing Team (the "Team") and stated the purpose of the Team’s work. The Team expects to make a formal presentation at the January 28, 2004 FAC meeting. Director McLean anticipates the City Council will schedule a February date for an Infrastructure Financing Workshop at their January 10, 2004 Tactical Planning Workshop. Director McLean also anticipates there will be multiple Infrastructure Financing Workshops conducted during 2004 before final recommendations are presented to the City Council.

Mr. Rolapp provided background information for his firm, Fieldman & Rolapp. Director McLean explained that Mr. Rolapp and Mr. Fabian control the flow of Team meetings.

Storm Drains

Director Allison provided an update of work associated with the Storm Drain Master Plan Update. Director Allison anticipates the Master Plan Update will be completed in April 2004. For the first time, the update will include looking inside storm-drain pipes and detailed inspection of pipes located on bluffs. The Storm Drain Master Plan will include: 1) Recommendations for building new storm drains where they are needed; 2) A plan for systematically lining existing pipes to extend the useful life; 3) Video documentation of 10-15% of the City’s 185 metal storm drains; and 4) A user-friendly report with recommended capital projects and on-going maintenance.

Mr. Rolapp asserted that the Team believes there is a large storm drain need. The City is already aware of needed projects totaling $10 million on Palos Verdes Drive East, as well as additional projects potentially totaling $10 million in the remainder of the City. Considering the City’s finances and reserves, there is a significant need for storm drain financing. Mr. Rolapp cannot yet determine if there is a necessity to issue debt as part of the financing; however, he can assert that the City’s current resources are not adequate to satisfy the City’s storm drain needs.

Mr. Rolapp provided a brief overview of infrastructure financing options for storm drains:

  • The State Revolving Loan Fund’s resources are extinguished. Mr. Rolapp described problems incurred at the City of La Canada Flintridge as a result of the State Revolving Loan Fund’s depletion.
  • Mr. Rolapp opined that an ad valorem tax is unfair between homeowner’s and requires a two-thirds majority vote.
  • The City’s resources are currently insufficient to fund a pay-as-you-go program.
  • Mello Roos financing requires a two-thirds majority vote.
  • Utility users tax is subject to volatility may not be available to use as a dedicated revenue source to issue bonds. Usually a secondary security source is required to issue debt with utility users tax.

Acting Chair McLeod inquired about Fieldman & Rolapp’s recommendation for proceeding with storm drain financing. Mr. Rolapp indicated that it might be appropriate to bifurcate storm drains from other infrastructure and move forward individually.

Mr. Rolapp opined that a storm drain user fee is the best option for financing storm drains. The fee is equitable and controlled by the majority. The next steps to moving forward include:

  1. Receive input from the FAC;
  2. Fieldman & Rolapp will provide a timeline for creating a storm drain user fee; and
  3. Retain a public relations firm to assist the Team.

Member Clark voiced her agreement with the recommendation to retain a public relations firm. She believes the recent community survey conducted in connection with work of the Open Space, Planning and Recreation & Parks Task Force (the "Task Force") was a step in the right direction. Member Clark recommended that staff inquire about the Palos Verdes Unified School District ("PVUSD") Board’s timing of hiring a public relations firm.

Mr. Rolapp explained that the methods employed by a public relations firm include polling, education, and outreach in the community.

Member Butler also agreed with Fieldman & Rolapp’s recommendation to retain a public relations firm. He believes retention should not wait until the City Council and the FAC have conducted numerous workshops. Member Butler expressed his strong belief that a public relations firm should be retained now for active participation in the Team.

Mr. Rolapp explained that a public information campaign could be conducted over a longer time period for less money, which may be the most effective method; or the campaign could be conducted over a shorter time period at a higher cost.

Acting Chair McLeod mentioned that a public relations firm would need time to learn about the community and recent events. Retaining a firm now will help to ensure the information campaign process is not delayed.

Member Curtis inquired about whether the storm drain timeline will focus on financing or construction. Director McLean explained that the timeline will integrate all facets of storm drain financing, including the construction period, and will be a moving target.

Member Wallace inquired about the timing of financing after receipt of the Storm Drain Master Plan Update in April 2004. Mr. Rolapp explained that the City would drive the progress of financing. He believes one year is a good starting point for establishment of a fee, if appropriate.

In response to Member Wallace’s inquiry about the ease of establishing a storm drain user fee, Ms. Cox explained that San Clemente is the only City in California to establish a storm drain user fee since Proposition 218. She further explained that the required two-step process is confusing. Community education is vitally important to the success of establishing a fee.


Director Allison anticipates the Sewer Master Plan will be completed in June 2004. The Sewer Master Plan is being prepared to specifically address compliance with the National Pollutant Discharge Elimination System (NPDES). Director Allison explained that when the Sewer Master Plan Update is completed, the City would commence negotiations with the County to add Rancho Palos Verdes ("RPV") sewer projects to the County’s capital plan. The County has no resources to investigate the condition of the City’s sewers, and there are currently no RPV sewer projects in the County’s capital plan.

After Director Allison answered detailed questions from the FAC, Acting Chair McLeod summarized Director Allison’s comments that the City does not appear to be in a position to discuss sewer financing for approximately one year.

Director McLean added that the City Manager is optimistic about the condition of the City’s sewers.

Open Space

Director McLean encouraged the FAC to view the December 16, 2003 City Council meeting. The Task Force is anticipated to make a presentation to the City Council including options under consideration. Director McLean added that Recreation and Parks Director Rosenfeld does not believe the Task Force will offer final recommendations until the end of 2004.


Director Allison asserted that the City has precise information about road needs, including accurate cost estimates. The City will complete a major arterial project, the Crest Road overlay, during 2004.

Ms. Cox mentioned that the Pavement Management System could be used to deliver various scenarios of cost requirements at differing levels of maintenance.

Acting Chair McLeod believes the Pavement Management System should be referred to as a success story. It is a program that saves the City money by defining maintenance to be funded on a consistent basis; thereby, avoiding costly unanticipated emergency projects. She believes a correlation should be drawn to future storm drain and sewer plans.

Public Comments

City Council Member Stefan Wolowicz, 27917 San Nicholas Drive, commented that community education is critical to the success of infrastructure financing. He agreed that a public relations firm should be retained as soon as possible. City Council Member Wolowicz believes an infrastructure financing timeline must be prepared with cost estimates included. He further believes that the City must conduct an exhaustive search of all possible funding sources and capitalize on opportunities to combine storm drain projects with road projects to minimize costs.

Tom Redfield, 31273 Ganado Drive, asserted that many people in the community want to know if a cost estimate of $30-50 million for storm drain needs is accurate. He believes the City should have accurate cost estimates before a public information campaign begins. Mr. Redfield also voiced concern about the equity of a storm drain user fee. Finally, he believes the City should work with the PVUSD to solve the shortage of ball fields in the community.

FAC Action

Member Clark moved a motion to recommend the City immediately retain a public relations firm. Member Butler seconded the motion. The motion passed unanimously.


Director McLean expects each FAC member, with a term expiring in 2004, will be contacted by the City Clerk’s office to schedule an interview appointment. There are four openings on the FAC; and to date, there have been four applications received.


Senior Financial Analyst Gyves provided a status update of the City’s Vehicle License Fee (VLF) revenue. The status update summarized a December 16, 2003 staff report to City Council on the same subject. Director McLean added that staff anticipates the excess of actual FY03-04 property tax revenue over the budgeted amount will be sufficient to offset the additional $140,000 loss of VLF anticipated for FY03-04. Director McLean expects the total FY03-04 loss of VLF will be approximately $2 million, when compared to VLF received in FY02-03.


Acting Chair McLeod attended a meeting of the Infrastructure Sub-Committee of the General Plan Update Steering Committee. During the meeting, Sub-Committee Members re-wrote several outdated infrastructure goals and policies and added goals for the City’s storm drain and sewer systems.


There were no additional public comments.


Member Curtis moved and Member Clark seconded a motion to adjourn the meeting at 9:07 PM.


Chair, Financial Advisory Committee



Kathryn Downs, Recording Secretary