FEBRUARY 25, 2004

Chair Clark 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: Bouey, Clark, Grimme, McLeod, Smith, Wallace, and Zorn


Also present were Director of Finance and Information Technology McLean; Accounting Manager Downs; Senior Financial Analyst Gyves; and City Attorney Carol Lynch of Richards, Watson & Gershon.


Member Wallace motioned for approval of the agenda, and Member McLeod seconded. Hearing no objection, Chair Clark ordered approval of the agenda.


Director McLean welcomed the new members to the FAC. Member Bouey, Member Grimme, and Member Zorn introduced themselves to the other members of the FAC.


City Attorney Lynch distributed a handbook titled "City of Rancho Palos Verdes Finance Advisory Committee Handbook: An Orientation Manual" and provided an overview of Brown Act provisions.

In anticipation of future Brown Act inquiries by FAC members, Director McLean informed the FAC that he would email City Attorney Lynch’s contact information to the FAC.


Chair Clark explained that the Chair is appointed by City Council typically for a one-year term. Chair Clark nominated Member McLeod for the position of Vice-Chair, and Member Wallace seconded. Chair Clark ordered an oral vote of the FAC. The Aye votes were unanimous. Member McLeod was elected to the position of Vice-Chair.


Vice-Chair McLeod requested an amendment to the draft minutes. Within the UPDATE – INFRASTRUCTURE FINANCING section on page 4, Vice-Chair McLeod requested that "Director Allison’s comments" be inserted between "Acting Chair McLeod summarized" and "that the City does not appear…" to read:

"Acting Chair McLeod summarized Director Allison’s comments that the City does not appear…"

Vice-Chair McLeod motioned for approval of the draft minutes as amended, and Member Wallace seconded. Hearing no objection, Chair Clark ordered approval of the draft minutes as amended.

Regarding the statement made by the City’s financial consultant, Mr. Rolapp, on page 2 of the draft minutes, Chair Clark informed the FAC that the State Infrastructure Bank would issue $50 million of bonds during March 2004.


Director McLean provided a brief history of this project for the new FAC members, including identification of the Infrastructure Renewal and Maintenance Team comprised of City Staff and consultants (the "Team").

Storm Drains

Director McLean informed the FAC that City Staff anticipates the Storm Drain Master Plan Update will be completed within the next several months. Director McLean noted that the Team has agreed that a storm drain user fee is a potential option to finance rehabilitation of the City’s storm drains. The City’s financial advisor, the firm of Fieldman, Rolapp & Associates, has opined that a storm drain user fee appears to be the best option for financing the City’s storm drain needs.

Parks & Open Space

Director McLean noted that the City’s Open Space Planning, Recreation and Parks Task Force is currently in process of considering recommendations to City Council regarding the City’s recreational needs.


Director McLean explained that the County maintains the City’s sewers, and that no funding mechanism is in place for the systematic replacement of aged sewer lines. Director McLean noted that the City’s sewer evaluation is currently underway, and staff anticipates completion during the summer of 2004.

Director McLean explained that there appear to be at least two options for initiating a sewer rehabilitation program: 1) The City could leave the County sewer maintenance district and assume responsibility for maintenance of the City’s sewers; or 2) The County could continue to maintain the City’s sewers, but the City would develop an internal plan to replace aged sewer lines.


Director McLean called the City’s Pavement Management Plan ("PMP") a success story. Systematic maintenance recommended by the PMP has saved the City money. If roadways are not systematically maintained, the future cost of replacing those roadways is far greater than present-day maintenance costs.

Director McLean noted that the City has reduced roadway maintenance expenditures since FY02-03 due to the uncertainty of State shared revenue sources. Per Staff recommendations, the City Council has chosen to conservatively budget expenditures in anticipation that State shared revenues may be reduced.

General Discussion

Director McLean mentioned that the City might need new revenue sources to pay for infrastructure renewal and maintenance. If so, the City must consider whether to approach residents to finance one infrastructure system at a time, or combine the City’s infrastructure needs and ask residents to select from a menu of options.

At the December 10, 2003 meeting, the FAC recommended hiring a public relations firm to help the City develop a strategic approach to this project. At a January 10, 2004 workshop, the City Council instructed staff to investigate public relations firms and make a recommendation to City Council.

Vice-Chair McLeod added that a public information consultant is important for two reasons: 1) It will be difficult to disseminate to the public the large amount of information analyzed by the FAC over a two-year period; and 2) To avoid a failure similar to the Palos Verdes Estates packaged UUT and sewer measure.

Member Bouey inquired about whether the City shares infrastructure systems with neighboring cities. Director McLean answered that the sewer systems are connected; however, each peninsula city’s system is unique. For example, Palos Verdes Estates has more trees and older sewers, yet Rolling Hills Estates has less trees and newer sewers. Due to the perception of inequity between the infrastructure systems, it does not appear that the peninsula cities are interested in sharing renewal and maintenance costs.

Director McLean informed the FAC that the Team has interviewed two Public Information Consulting firms and has a clear recommendation to hire one firm. Staff is currently negotiating the fee and will make a recommendation to City Council as early as March 2, 2004.

Director McLean provided an overview of the Public Information Consultant’s process, which includes community stakeholder interviews, a resident survey, and prioritizing the community’s infrastructure and recreational needs.

Director McLean offered to provide recurring project updates to the FAC, and added that the City Council may ask the FAC to review recommendations from the Public Information Consultant in the future.

Member Grimme inquired if litigation is contributing to increased costs of infrastructure renewal. Director McLean answered that in the early 90’s the City had little General fund reserves. Since then, the City has been building reserves. As such, there have been no excess discretionary monies to address long-term infrastructure maintenance.

Chair Clark mentioned that there has been very little infrastructure maintenance in the last twenty years, and that it is time for the City to address infrastructure renewal to prevent future costly problems. Vice-Chair McLeod added that the City is responsible for compliance with laws enacted to protect the environment, such as the National Pollution Discharge Elimination System or NPDES.

Member Wallace reminded the FAC that the storm drains on the east side of the City are made of corrugated metal pipe and have rotted-out bottoms. A large amount of drainage water could wash out the foundation ground below the pipes and result in a system failure.

Chair Clark pointed out that RPV residents pay much less for sewer maintenance than other communities. Director McLean added that the RPV sewer fee is approximately $22 annually versus other local cities with fees of more than $200 annually.

Chair Clark offered that the new FAC members should review the Financing Alternatives Matrix. Director McLean added that he would distribute the matrix by email to the new FAC members.

Member Bouey inquired whether residents would continue to pay the annual $22 fee to the County if RPV withdrew from the County sewer maintenance district. Director McLean answered that residents would no longer pay a fee to the County, but would begin paying a fee to the City.

Director McLean explained that in July 2003 the City conducted a global needs survey and, with a couple of exceptions, infrastructure questions were excluded from the survey. Vice-Chair McLeod added that with no public education, the infrastructure questions would likely have generated "no" responses.

Director McLean mentioned that as Public Works Staff obtains information about the cost of potential storm drain and sewer rehabilitation, the Team would work together to model various fiscal impact scenarios.

Public Comments

Tom Redfield, 31273 Ganado Drive, suggested that new FAC members view the PowerPoint presentation that provides an overview of the city’s storm drains. Director McLean mentioned that the PowerPoint presentation could be viewed on the City’s Website.


General Plan Steering Committee

Vice-Chair McLeod gave a brief overview of the General Plan Steering Committee efforts, and explained that the City’s General Plan is a 30 year-old list of goals and policies. The Committee’s recommendations for changes to the plan will likely be presented to City Council in September 2004.

Open Space Acquisition Monitoring

Member Wallace gave a brief overview of the informal group that monitors progress on the potential open space purchase. Director McLean explained that the group is no longer active, and that City Council is currently negotiating the potential purchase in closed session.

Member Bouey inquired if the property owners have an alternative to develop the open space. Director McLean explained that much of the property includes geologically unstable areas and steep slopes.

Infrastructure Financing Subcommittee

Chair Clark explained that the Infrastructure Financing subcommittee of the FAC completed their task, and may be called upon in the future.


Analyst Gyves informed the FAC that the Governor released his proposed FY04-05 budget. The Legislative Analyst’s Office has opined that there is an un-funded budget gap of $17 billion, which is an accumulation of 3 years’ deficit.

Analyst Gyves explained that Proposition 57 on the March 2004 ballot is a $15 billion bond measure that will help close the $17 billion gap. He added that the Governor’s proposed FY04-05 budget includes an Educational Revenue Augmentation Fund (ERAF) shift that would have a negative impact on the City’s revenues.

At the request of Chair Clark, Analyst Gyves provided a brief history of the Vehicle License Fee (VLF), which is a State shared revenue. Analyst Gyves added that if the City continues to receive VLF backfill for the remainder of the year, total FY03-04 VLF revenue for the City could reach $1.7 million.


Tom Redfield, 31273 Ganado Drive, explained that the Renaissance Coalition has two goals: 1) Maintain and improve the quality of life in RPV; and 2) Continue to upgrade the quality of city government by electing proactive City Council members.

Mr. Redfield noted that the Coalition’s current issues include open space acquisition, infrastructure needs, and speeding motorists.

Mr. Redfield welcomed the new members of the FAC and congratulated the Chair and Vice-Chair.


Vice-Chair McLeod moved and Member Zorn seconded a motion to adjourn the meeting at 9:18 PM. Hearing no objection, Chair Clark ordered the meeting adjourned.


Chair, Financial Advisory Committee



Kathryn Downs, Recording Secretary