CITY OF RANCHO PALOS VERDES
FINANCE ADVISORY COMMITTEE
AUGUST 25, 2004
Chair Clark called the meeting to order at 7:07 PM at the City Hall Community Room, 30940 Hawthorne Boulevard, for the purpose of conducting business pursuant to the Agenda.
Roll call was answered as follows:
PRESENT: Bouey (Arrived at 7:27p.m.), Clark, McLeod, Smith, and Zorn
ABSENT: Grimme and Wallace
Also present were Director of Finance and Information Technology McLean; Accounting Manager Downs; and Senior Financial Analyst Gyves.
APPROVAL OF AGENDA
Vice-Chair McLeod motioned for approval of the agenda, and Member Zorn seconded. Hearing no objection, Chair Clark ordered approval of the agenda.
APPROVAL OF DRAFT MINUTES FOR THE MEETING CONDUCTED JUNE 22, 2004
Member Smith motioned for approval of the minutes from the June 22, 2004 FAC meeting, and Vice-Chair McLeod seconded. Hearing no objection, Chair Clark ordered approval of the draft minutes.
FIRST REVISION OF THE 2004 FIVE-YEAR FINANCIAL MODEL
Director McLean provided the following update regarding the First Revision of the 2004 Five-Year Financial Model:
- The Cityís Five-Year Financial Model is updated annually at the time of budget preparation and when material changes could impact the Cityís financial position. The First Revision of the 2004 Five-Year Financial Model (2004 Model) is being completed due to the adoption of the Stateís FY04-05 Budget and to assess the fiscal impact of infrastructure needs and projects under consideration by the City Council.
- The potential projects under consideration by the City Council include Traffic Enforcement and Maintenance (TEAM) RPV and NCCP and Open Space Preserve Maintenance. Infrastructure renewal and maintenance needs currently facing the City include storm drains, sewers, streets, and park and recreational facilities.
- When Cityís FY04-05 Budget was adopted, VLF revenues were conservatively estimated to include only the "non backfill" portion.
The Stateís FY04-05 Budget eliminates the backfill portion of the VLF payment and replaces it dollar for dollar with property tax taken from the ERAF. The City will receive an estimated $1,539,157 that was not included in the FY04-05 Adopted Budget.
- When the 2004 Model is presented to City Council on September 7, 2004, Staff expects to include the following budget adjustments:
- A favorable General fund revenue budget adjustment in the amount of $1,539,157 for the aforementioned property tax in lieu of VLF component of the Statís FY04-05 Budget.
- An unfavorable General fund revenue budget adjustment for expected loss of golf tax revenue due to the temporary closing of Ocean Trails.
- An unfavorable General fund expenditure budget adjustment for additional City attorney services.
Director McLean provided the following update regarding the Stateís FY04-05 Adopted Budget:
- The Stateís FY04-05 Budget includes a $1.3 billion contribution of State shared revenues from cities, counties, special districts and redevelopment agencies in both FY04-05 and FY05-06. The City will lose approximately $348,000 in General fund property tax and as much as $60,000 in redevelopment agency property tax increment in both FY04-05 and FY05-06, for a total estimated loss to the City of as much as $816,000 over the two-year period.
Local governments agreed to help finance the Stateís deficit by contributing the $1.3 billion in exchange for constitutional protection of local government revenues. The Measure, Proposition 1A, will appear on the November 2, 2004 general election ballot. Proposition 1A provides varying levels of constitutional protection for state shared revenues, which includes sales tax, property tax and vehicle license fees.
- The State did not make VLF backfill payments to local governments for three months during FY03-04. The State Legislature has characterized the amount of VLF backfill revenues it failed to pay to cities and counties during this three-month period as a loan. The State Controllerís Office has estimated the Cityís VLF Backfill Gap loan at $726,000, which is scheduled to be repaid during FY06-07. City Staff has not included any expectation of its receipt in the 2004 Model because the State Legislative Analystís Office has estimated that the State Budget shortfall may exceed $10 billion over the next two years.
QUESTIONS RELATED TO THE FIRST REVISION OF THE 2004 FIVE-YEAR FINANCIAL MODEL
Chair Clark asked whether or not revenues from the proposed Long Point Resort Project were included in the 2004 Model. Director McLean informed the FAC that it would be inappropriate to include estimated revenues from the proposed Long Point Resort Project due to uncertainty and the accounting concept of conservatism.
Vice-Chair McLeod provided comments on how to improve the 2004 Model staff report.
PROPOSED NATURAL COMMUNITIES CONSERVATION PLAN (NCCP) AND PROPOSED PURCHASE OF APPROXIMATELY 700 ACRES OF OPEN SPACE
Director McLean provided the following update regarding the Proposed NCCP and the Proposed Purchase of Approximately 700 Acres of Open Space:
- Staff will present the FACís recommendation, detailed in the NCCP staff report presented to the FAC at the June 22, 2004 FAC meeting, to the City Council on August 31, 2004.
- The NCCP staff report presented to the City Council on August 31, 2004 will be identical to the staff report presented to the FAC at the June 22, 2004 meeting, with the exception of a request by Mayor Gardiner. Mayor Gardiner requested a five-year presentation of additional costs related to the NCCP and purchase of approximately 700 acres of open space be included in the presentation.
UPDATE Ė INFRASTRUCTURE RENEWAL AND MAINTENANCE PROJECT
Director McLean provided the following update regarding the infrastructure renewal and maintenance project:
- Jim Fabian from Fieldman, Rolapp & Associates and Finance staff are currently working on a storm drain financial model that will be used to assist the Infrastructure Financing Team in identifying pros and cons related to debt financing versus pay as you go financing.
- The storm drain financial model is based on the costs identified in the storm drain master plan prepared by the Public Works Department.
- Joan Cox from Harris & Associates has completed a first draft of the storm drain parcel analysis and preliminary rate analysis. The results of the analyses will provide the Infrastructure Financing Team with a range of potential storm drain user fees, which will be used in stakeholder interviews and phone surveys.
- The sewer system master plan update and storm drain financial model should be completed by the end of October.
- Based on the results of the sewer system master plan update, the Infrastructure Financing Team will decide if sewer related questions will be asked during stakeholder interviews and phone surveys.
General Plan Update Steering Committee
Vice-Chair McLeod informed the FAC that the General Plan Update Steering Committee is almost finished reviewing all General Plan goals and policies. Vice-Chair McLeod also informed the FAC that the General Plan Update Steering Committee is reviewing general plans from other cities to ensure nothing has been overlooked.
STATE BUDGET UPDATE
Analyst Gyves informed the FAC that Director McLean covered the State Budget update while discussing modifications to the 2004 Model.
No public comments were made.
Vice-Chair McLeod moved and Member Zorn seconded a motion to adjourn the meeting at 8:10 PM. Hearing no objection, Chair Clark ordered the meeting adjourned.
Chair, Financial Advisory Committee
Gary Gyves, Recording Secretary