APRIL 28, 2004 FINANCE ADVISORY COMMITTEE MINUTES

MINUTES

CITY OF RANCHO PALOS VERDES

FINANCE ADVISORY COMMITTEE

APRIL 28, 2004

Chair Clark called the meeting to order at 7:04 PM at the City Hall Community Room, 30940 Hawthorne Boulevard, for the purpose of conducting the business pursuant to the Agenda.

ROLL CALL

Roll call was answered as follows:

PRESENT: Bouey (Arrived at 7:35pm), Clark, Grimme, Smith, Wallace, and Zorn

ABSENT: McLeod

Also present were Director of Finance and Information Technology McLean; Accounting Manager Downs; and Senior Financial Analyst Gyves.

APPROVAL OF AGENDA

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

APPROVAL OF DRAFT MINUTES FOR THE MEETING CONDUCTED MARCH 24, 2004

Member Wallace motioned for approval of the minutes from the March 24, 2004 FAC meeting, and Member Zorn seconded. Hearing no objection, Chair Clark ordered approval of the draft minutes.

PROPOSED NATURAL COMMUNITIES CONSERVATION PLAN (NCCP) AND PROPOSED PURCHASE OF APPROXIMATELY 700 ACRES OF OPEN SPACE

Director McLean informed the FAC that the Open Space Ad Hoc Committee (Mayor Pro Tem Clark and Council Member Stern) asked Staff, with the help of Barbara Dye, the Director of the Palos Verdes Peninsula Land Conservancy, to provide the FAC with an overview regarding the proposed purchase of approximately 700 acres of open space and the related NCCP. Director McLean introduced Barbara Dye. Barbara Dye gave an extensive Power Point Presentation on the proposed purchase of approximately 700 acres of open space and the related NCCP.

After the conclusion of Barbara Dye’s presentation, Director McLean informed the FAC that the City has paid its open space lobbyist $15,000 during FY2002-03 and expects to pay an additional $60,000 during FY2003-04 for services associated with securing state Proposition 50 grant funds, which, if obtained, will be used for the purchase of open space. Director McLean also informed the FAC that a budget adjustment would be necessary in the near future so the City can pay approximately $17,000 for a necessary second appraisal of the open space. Director McLean informed the FAC that future costs associated with the open space will be discussed at the May 26, 2004 FAC meeting.

Director McLean informed the FAC that the City received a federal NCCP grant of $275,000 during FY1997-98 and FY1999-00 to match the City’s cost for developing the NCCP. Director McLean informed the FAC that it is anticipated that the balance of the grant funds will be completely expended during FY2003-04 and that the monies have been used for consultants who have assisted staff with the development of the NCCP Subarea Plan and the draft environmental impact report documents. The grant monies were also expended for the development of aerial photographs of the proposed open space.

Director McLean informed the FAC that the NCCP Subarea Plan includes a City funding commitment for ongoing habitat restoration and reserve maintenance and monitoring in the amount of $100,000 annually, which is partially funded by an annual General fund transfer.

Director McLean stated that the role of the FAC, based on information provided by the Open Space Ad Hoc Committee, is to be briefed on the proposed open space purchase and related NCCP, and not to opine on the Palos Verdes Peninsula Land Conservancy’s financial or operational ability to fulfill its obligations under the NCCP Subarea Plan. Director McLean also stated that the Open Space Ad Hoc Committee would like to hear from the FAC if they find significant issues that warrant disclosure.

REVENUE DERIVED FROM FRANCHISING RIGHTS OF CITY OWNED FACILITIES AND OTHER ASSETS

Director McLean informed the FAC that, based on the City Attorney’s opinion, a conflict of interest does not arise from the City accepting revenue derived from franchising rights of City owned property from business located within the City’s boundaries.

Director McLean stated that, prior to taking a staff report to the City Council designed to seek direction on the franchising issue, the Finance Department staff would like to complete the following tasks:

  • Perform a California Society of Municipal Finance Officers survey asking for policies other cities have adopted regarding franchising issues;
  • Work with Member Grimme and his associate regarding the work Member Grimme’s associate does with cable advertising in other cities; and
  • Review the City’s policy regarding naming rights for exhibits located at the Point Vicente Interpretive Center to ensure no conflicts occur.

Director McLean informed the FAC that the staff report may go to City Council on June 1st and would contain information such as:

  • What other cities are doing related to franchising rights of city owned property;
  • The pros and cons of implementing a franchising program; and
  • Background and history on how the idea was fostered.

QUESTIONS RELATED TO FRANCHISING RIGHTS

Member Bouey asked whether or not a cost/benefit analysis was ever done to determine if the potential revenues from a franchising rights program would outweigh the cost to implement such a program. Director McLean stated that a cost/benefit analysis has not been completed and that this is the type of information the Finance Department would attempt to compile from other cities that have franchising programs. Chair Clark added, and Director McLean agreed, that the initial research phase related to determining potential revenues and costs of implementing a franchising program would be negligible.

UPDATE – INFRASTRUCTURE RENEWAL AND MAINTENANCE PROJECT

Director McLean provided the following summary of what was reported at the March 24, 2004 FAC meeting regarding the infrastructure renewal and maintenance project.

  • Joan Cox from Harris & Associates was retained to conduct the storm drain rate study. The storm drain rate study kickoff meeting, which will include Director McLean, Analyst Gyves, Dean Alison and Joan Cox, is scheduled for April 29, 2004.
  • The Infrastructure Financing Team, including the City’s newly hired public information consultants from Moore Iacofano Goltsman Inc. ("MIG"), determined that a survey designed to determine residents willingness to pay a storm drain user fee could not be initiated until a range of possible storm drain fees, which will be determined based on the rate study, are known.
  • The Public Works Department has received a draft of the citywide storm drain study, which includes estimates of the costs to rehabilitate the City’s storm drains. Based on this information, the Public Works Director, Finance Staff and the City’s Financial Advisor will begin the preparation of a storm drain financial model. The model will consider what-if scenarios based upon variable assumptions including, pay-as-you-go versus the use of bond financing, how many renewal projects could be performed at once, increased staff demands to manage the renewal projects, and inclusion of current "on-going" storm drain maintenance costs.
  • It is anticipated that a range of potential storm drain user fees will be calculated for each parcel by late summer. After this is completed, MIG can start the process of determining the receptiveness of a storm drain user fee.

WESTERN AVENUE COMMERCIAL VACANCIES

Analyst Gyves informed the FAC that he went out and did a survey of the commercial areas on Western Avenue to determine the number of vacancies. Analyst Gyves informed the FAC that the Palos Verdes Plaza Shopping Center (two vacancies) and The Terraces Shopping Center (five vacancies) had a total of seven vacancies.

Analyst Gyves also informed the FAC that he had a conversation with the property owner of The Terraces. The property owner of the Terraces informed Analyst Gyves that:

  • The normal vacancy rate for the shopping center is 5% and the current vacancy rate is about 6% to 7%. When he bought the shopping center 2½ years ago the vacancy rate was approximately 20%. The shopping center does not have much turnover and approximately 80% of the businesses in the shopping center have been there for over five years.
  • Employee parking is an internal issue and they have security working with the businesses to get the employees to park on the third level.
  • The Planning department developed a parking matrix that determines how much of each business use is allowed in the shopping center based on available parking.

Director McLean informed the FAC that since the vacancy rate is at a normal level the City is not losing any sales tax revenue from excessive vacancies. Analyst Gyves informed the FAC that the City would receive approximately $10,000 to $20,000 in additional sales tax revenue annually if the Terraces were 100% leased. This aforementioned revenue estimate was based on the following:

  • 10,800 vacant square feet at $150 per square foot equals $16,200 in sales tax to the City (10,800 * 150 * .01); and
  • Confidential sales tax records for businesses currently located in the Terraces.

LIASON REPORTS

General Plan Steering Committee

Director McLean stated, based on conversations with Vice-Chair McLeod, that the fiscal element subcommittee of the General Plan Steering Committee will meet next week to discuss revisions to the fiscal element of the General Plan.

STATE BUDGET UPDATE

Analyst Gyves informed the FAC that there is nothing new to report on the State Budget at this time. Analyst Gyves reminded the FAC that the Governor will release the State’s FY2004-05 Budget revision in early May and the FAC will be updated on the topic next month.

Director McLean informed the FAC that Sheriff Baca’s public safety sales tax initiative is planned for the November 2004 election and would raise $500 million annually by increasing the sales tax in Los Angeles County by a half-cent. Director McLean informed the FAC that the funds would be dispersed as follows:

  • One-third to the Los Angeles Police Department.
  • One-third to cities in Los Angeles County that do not contract with the Sheriff’s Department.
  • One-third to the Sheriff’s Department and cities that contract with the Sheriff’s Dept. RPV’s share is estimated to be approximately $2.3 million.

Director McLean informed the FAC, based on the Sheriff’s proposal, it appears that this revenue could not be used to pay for services the City currently contracts for. The additional funds would have to be for services in addition to what the Sheriff’s Department is currently providing the City.

PUBLIC COMMENTS

Tom Redfield, 31273 Ganado Drive, asked that the City’s funding sources that are currently dedicated to the purchase of the open space be made available to the general public. Director McLean informed Mr. Redfield that the ongoing costs, as well as the committed funding sources, will be discussed at the next meeting of the FAC and subsequently be posted on the City’s website.

ADJOURNMENT

Member Wallace moved and Member Bouey seconded a motion to adjourn the meeting at 9:40 PM. Hearing no objection, Chair Clark ordered the meeting adjourned.

_____________________________

Chair, Financial Advisory Committee

ATTEST:

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Gary Gyves, Recording Secretary