MAY 26, 2004 MINUTES FINANCE ADVISORY COMMITTEE

MINUTES

CITY OF RANCHO PALOS VERDES

FINANCE ADVISORY COMMITTEE

MAY 26, 2004

Chair Clark called the meeting to order at 7:03 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: Clark, Grimme, McLeod, Smith (Departed at 9:24pm), Wallace, and Zorn

ABSENT: Bouey

Also present were Director of Finance and Information Technology McLean; Senior Financial Analyst Gyves; Director of Planning, Building and Code Enforcement, Joel Rojas; and the Director of the Palos Verdes Peninsula Land Conservancy, Barbara Dye.

APPROVAL OF AGENDA

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

APPROVAL OF DRAFT MINUTES FOR THE MEETING CONDUCTED APRIL 28, 2004

Member Smith motioned for approval of the minutes from the April 28, 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 reminded the FAC that at the April 28, 2004 FAC meeting, Barbara Dye, Executive Director of the Palos Verdes Peninsula Land Conservancy (PVPLC), presented an overview about the proposed NCCP and the proposed purchase of approximately 700 acres of open space.

Director McLean also reminded the FAC that subsequent to Ms. Dye’s presentation, Staff presented a verbal overview about the City’s cost to date for the development of the NCCP and the funding sources for the proposed open space purchase.

Director McLean introduced Joel Rojas, the Director of Planning, Building and Code Enforcement, to discuss the NCCP and the proposed purchase of open space. Director Rojas informed the FAC that:

  • The NCCP is essentially a citywide Habitat Conservation Plan that must be approved by the City Council, California Department of Fish and Game and the U.S. Fish and Wildlife Service (Resource Agencies).
  • In exchange for approving the City’s NCCP, the Resource Agencies would issue the City a permit, which gives the City the authority to ensure that all future uses and activities in the proposed preserve ("Preserve") are consistent with the NCCP.

Director Rojas also informed the FAC that the following three NCCP documents need to be prepared by the City and approved by the Resource Agencies:

  • Subarea Plan: Director Rojas informed the FAC that a draft of the Subarea Plan has been released to the public and that a revised version is scheduled to be released in June of 2004.
  • Implementation Agreements: Director Rojas informed the FAC that the Implementation Agreement is a legal document that is entered into by the City and the Resource Agencies that explains the legal obligations of both parties. Director Rojas also stated that the PVPLC will also be a party to this agreement.
  • Environmental Impact Report (EIR): Director Rojas informed the FAC that a draft EIR has been released to the public and that the City’s consultant is currently working on the final EIR.

Director Rojas informed the FAC the following related to the three NCCP documents:

  • The three documents are scheduled to be presented to the City Council in July of 2004.
  • If the documents are approved by the City Council, they will be forwarded to the U.S. Fish and Wildlife Service so the NCCP can go through the federal review process, which typically takes nine months to complete.
  • The proposed land acquisition, which is an integral component of the NCCP, can occur at any time. However, Staff has been notified by State officials that the State grant funds for the acquisition would likely not be approved until the State is satisfied that the City’s NCCP is sufficiently complete or making substantial progress. Staff believes that obtaining City Council approval of the three NCCP documents and forwarding them to the Resource Agencies would meet this criteria.

Director McLean informed the FAC the following regarding the estimated on-going operating and maintenance costs and potential cost savings of the proposed NCCP:

PAR ANALYSIS:

  • The revised PAR clarifies that start-up/one-time costs are included in total year one costs. The City will not experience both start-up/one time costs and additional on-going costs during year one.
  • The revised PAR represents that the City’s year one in-kind costs will be $90,355. Of this amount, staff has identified $58,836 of costs already being paid for by the City. Only the estimated increase to the City’s in-kind costs totaling $31,519 would have to be added to the operating budget of the General fund of the City.
  • The revised PAR estimates that subsequent years in-kind costs to the City would be $91,899. Similarly, staff has identified $59,781 of costs already being paid by the City. Therefore, the estimated increase to the City’s subsequent years in-kind costs within the General fund would be $32,118.

ABALONE COVE LANDSLIDE ASSESSMENT DISTRICT (ACLAD) AND THE KLONDIKE CANYON GEOLOGIC HAZARD ABATEMENT DISTRICT (Klondike AD)

  • Five of the open space parcels that are under consideration for purchase are within the boundaries of the ACLAD and the Klondike AD.
  • The City would be responsible to pay these assessments if the open space purchase is consummated. The total FY04-05 assessment for the open space parcels is $22,789 for ACLAD and $2,337 for Klondike AD, totaling $25,126.

REDEVELOPMENT PROJECT AREA AND TAX INCREMENT

  • Seven of the nine parcels for the proposed open space purchase are located within the City’s Redevelopment Project Area. The tax increment revenue expected from the seven parcels during FY03-04 is $30,708. Of this amount, $24,566 will be recorded as revenue within the RDA Debt Service fund and $6,142 will be deposited into the RDA Housing Set-Aside fund.
  • In accordance with the 1997 bond restructuring between the County of Los Angeles and the City of Rancho Palos Verdes, the tax increment attributable to the RDA Debt Service fund is entirely intercepted by the County to pay the 1997 RDA Bond Indebtedness issued by the RDA for the benefit of the County.
  • The scheduled 1997 RDA bond principle and interest for FY04-05 is $277,625. In the event the proposed open pace purchase is consummated during FY04-05, tax increment revenue to pay outstanding debt would decrease by about $25,000. Therefore, in the event the proposed open space is purchased during FY04-05, it appears as though there would still be a sufficient amount of tax increment revenue in excess of the scheduled bond indebtedness payments to satisfy the scheduled 1997 RDA Bond payments during FY04-05, and all years thereafter.
  • Over the life of the Redevelopment Project Area, the Redevelopment Agency would see a reduction of about $800,000 in tax increment from the open space parcels purchased.
  • On December 2, 2003, Staff presented a staff report to the City Council regarding various matters about the RDA, including its projection of future tax increment revenues. The projection indicated that upon the complete payment and satisfaction of the 1997 RDA Bonds (scheduled in FY27-28), about $7.7 Million of future tax increment revenue would be available to repay loans made by the RDA to the General fund of the City prior to FY34-35, the year the RDA is expected to terminate. In the event the proposed open space purchase is consummated, about $6.9 Million of future tax increment would be available to repay loans made by the RDA to the General fund of the City prior to FY34-35.

Director Rojas and Director McLean informed the FAC the following related to the potential mitigation savings to the City:

  • If it is determined that a City project will result in impacts to sensitive habitat, such as Coastal Sage Scrub (CSS), a State and/or federal permit must be obtained and the project’s habitat impacts mitigated by the City.
  • The City’s NCCP has been written in a manner to provide the required mitigation for past City projects that have impacted CSS since 1996 and future City projects that are anticipated to impact CSS.
  • The pending revision of the Draft NCCP Subarea Plan identifies 21 City projects that will be covered by the plan. The mitigation for these past and future losses is being provided by the dedication of 298.8 acres of City-owned land into the Preserve and 5.6 acres of re-vegetation, of which 2.1 acres has already been completed.
  • As a result of the mitigation that the NCCP is providing for City projects, the typical re-vegetation that would have been required for these past and future projects is not necessary. This is a substantial cost savings to the City. Using the consultant’s most conservative estimate of $25,000 per acre over five years, and applying it to the cost of CSS and grassland vegetation, would equate to a potential savings of $3,566,250 to the City ($25,000 x 142.65 acres (95.50 acres of CSS + 47.15 acres of grassland).
  • It should also be noted that in addition to the cost of planting new habitat and managing it for five years, there are associated costs that involve the preparation of a re-vegetation plan and the monitoring of the work by a biologist over the five-year period. Using an estimate of $75,000 per project, the costs for the 21 City projects would be approximately $1,575,000. This represents an additional potential cost savings to the City.

The FAC discussed the proposed NCCP and the proposed purchase of approximately 700 acres of open space. During the discussion, members of the FAC asked that the following observations be included in its report to the City Council:

  • The City’s costs associated with providing services to developed land are greater than costs associated with undeveloped land;
  • As noted in the April 28, 2004 staff report to the FAC, none of the grant sources are fully committed by the respective agencies at this time; and
  • Future grants (e.g. Measure A Park Maintenance monies) might be available to pay a portion of operating and maintenance costs of the proposed habitat preserve.

Upon conclusion of its discussion. Vice Chair McLeod motioned for approval of the FAC recommendation to City Council regarding the proposed NCCP and proposed purchase of approximately 700 acres of open space, and Member Zorn seconded. Hearing no objection, Chair Clark ordered approval of the following FAC recommendation to City Council.

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"Pursuant to direction from the City Council subcommittee, we have reviewed the financial information provided to us regarding the NCCP and have not noted anything problematic. Based on that review, we believe there may be savings to the City resulting from implementation of the NCCP. We recommend that the City Council move forward expeditiously with the completion of the NCCP and the related land acquisition."

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

Director McLean informed the FAC that, based on a conversation with the City Manager, staff believes proceeding with franchising rights of City owned property could interfere with the fund raising efforts of the Palos Verdes Peninsula Land Conservancy (PVPLC) for the purchase of the open space related to the NCCP. Director McLean and Chair Clark agreed that the FAC should defer the franchising rights project until the fund raising efforts of the PVPLC was complete.

UPDATE – INFRASTRUCTURE RENEWAL AND MAINTENANCE PROJECT

Director McLean provided the following update regarding the infrastructure renewal and maintenance project:

  • Jim Fabian from Fieldman & Rolapp and Finance staff conducted a storm drain model kickoff meeting to discuss the assumptions that will be used in the model.
  • The citywide storm drain master plan has not been finalized and will, at the earliest, be presented to the City Council on June 15, 2004.
  • Joan Cox from Harris & Associates is presently working on the storm drain parcel analysis and rate study. The results of the storm drain rate study will provide the Infrastructure Financing Team with a range of potential storm drain user fees.
  • The sewer system master plan update will be presented to the City Council sometime this year. The sewer system master plan update will detail the condition of the City’s sewer system.

LIAISON REPORTS

Open Space Acquisition

Member Wallace stated that there was nothing new to report.

General Plan Update Steering Committee

Vice-Chair McLeod informed the FAC that at the meeting of May 6, 2004 the fiscal element of the General Plan was adopted as the Fiscal Elements Subcommittee recommended.

STATE BUDGET UPDATE

Director McLean informed the FAC that the Governor and the League of California Cities reached a budget compromise. In exchange for a $350 million contribution from cities in FY2004-05 and FY2005-06 (RPV’s share is $350,000 per year), the Governor will support a constitutional amendment to protect local revenues.

As stated by Director McLean, the details of the agreement are as follows:

  • The Vehicle License Fee (VLF) tax rate reduction from 2% to 0.65% will continue, VLF backfill revenue to cities and counties would be eliminated, but would be replaced by a like amount of property taxes under the agreement. However, the two year contribution would be netted from the property tax payments for the agreed upon two years.
  • The constitutional amendment to protect local revenues that the Governor is supporting would:
    • Ensure no future tax raids of local revenues by the State.
    • Provide for the repayment of the VLF backfill gap cities experienced in FY03-04 ($800,000 to RPV) in FY 06-07.
    • Guarantee repayment of the property tax backfill used to replace the VLF backfill.
    • Ensure that when Proposition 57 bonds are retired that the local sales tax rate is returned to normal.
  • The two-year budget agreement can only take effect if the constitutional amendment is approved by the legislature and subsequently approved by voters.
  • The LOCAL ballot initiative will also be on the statewide November 2004 election as a backup in case the State legislature does not approve the FY04-05 budget.

PUBLIC COMMENTS

Don Reeves, 6424 Via Canada, asked if the questions provided by the public regarding the NCCP and Draft EIR have been provided to the FAC. Director Rojas informed Mr. Reeves that the comments on the NCCP and the Draft EIR have been given to the consultant and that the questions will be responded to in the Final EIR. Director Rojas also informed Mr. Reeves that the questions have not been provided to the FAC.

ADJOURNMENT

Member McLeod moved and Member Wallace seconded a motion to adjourn the meeting at 10:16 PM. Hearing no objection, Chair Clark ordered the meeting adjourned.

_____________________________

Chair, Financial Advisory Committee

ATTEST:

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Gary Gyves, Recording Secretary