Director McLean informed the FAC that Staff presented a report titled "Water Quality and Flood Protection Program – Proposed Storm Drain User Fee" to the City Council on April 19, 2005. Director McLean also informed the FAC the following regarding the Water Quality and Flood Protection Program and the April 19, 2005 City Council meeting:

• The City Council, on a 4 to 1 vote, decided to move forward with the Water Quality and Flood Protection Program by setting June 21, 2005 as the date for the Public Hearing.

• At the June 21, 2005 Public Hearing, a determination will be made if a majority protest has occurred. If a majority protest has occurred, the City Council cannot move forward with the establishment of the proposed Storm Drain User Fee. If a majority protest has not occurred, assuming the City Council elects to proceed, ballots would be mailed on/about the end of June 2005 and tabulated on/about August 30, 2005. If a majority of the returned ballots are in favor of the proposed Storm Drain User Fee, the ballot measure will pass.

• The Notice of Public Hearing, mailed on May 6, 2005, contained a contact phone number and email address to help residents get answers to questions about the proposed Storm Drain User Fee and Water Quality and Flood Protection Program. Many of the questions residents had were related to how the proposed Storm Drain User Fee was calculated.

QUESTIONS AND COMMENTS RELATED TO THE WATER QUALITY AND FLOOD PROTECTION PROGRAM:

Vice Chair Clark asked if any of the FAC members would be willing to assist City Council members with community presentations related to the Water Quality and Flood Protection Program and proposed Storm Drain User Fee. All of the FAC members expressed their willingness to assist the City Council members with the presentations.

2005 FIVE-YEAR FINANCIAL MODEL

Director McLean provided the FAC with the following overview regarding the 2005 Five-Year Financial Model (2005 Model):

• The 2005 Model will be presented to the City Council in conjunction with the FY2005-06 City Budget on May 31, 2005

• The Los Angeles County Auditor Controller has provided FY04-05 Property Tax revenue estimates for the City totaling $4,296,095. Staff has increased the County’s estimates by 6.5% for property tax revenues in the FY2005-06 City Budget.

• The 2004 Model included expenditures for sewers based on a "worst-case scenario" approach. Based on conversations with staff from Los Angeles County, no expenditures have been included in the 2005 Model for sewer cleaning, video filming, or line segment reconstruction.

• The 2005 Model does not include revenues related to the proposed Storm Drain User Fee. However, the 2005 Model does include the 16-month expenditure plan totaling $3.05 million approved by the City Council on March 15, 2005. The City Council authorized the expenditure of $2 million from the Enterprise Fund, as well as $1.05 million from the Capital Improvement Fund, which will be funded with a General Fund transfer.

• The 2005 Model includes Capital expenditures associated with the residential pavement management program totaling about $6.9 million for FY05-06 through FY09-10.

• Based upon the assumptions contained in the 2005 Model, General Fund Reserves will decrease by about $4 million through FY09-10. At June 30, 2010, General Fund Reserves are estimated to be $7.3 million. The General Fund Reserve Policy Level (50% of Estimated Annual General Fund Revenue) is expected to be about $8.1 million at that time.

QUESTIONS AND COMMENTS RELATED TO THE 2005 FIVE-YEAR FINANCIAL MODEL:

Member Bouey asked if there is a certain action, based on City policy, the City Council must take if General fund reserves fall below the policy level. Director McLean informed the FAC that there is no written policy detailing certain actions that must be taken if General fund reserves fall below policy reserve levels.

Member Nelson mentioned that the City Council must annually determine if any modifications to the Utility Users Tax (UUT) rate is necessary. Member Nelson asked what Staff’s recommendation to the City Council will be regarding the UUT rate. Director McLean informed the FAC that Staff’s recommendation will be to maintain the Current rate of 3%.

Member Nelson asked if the Federal Emergency Management Agency (FEMA) is going to reimburse the City for expenses incurred during the 2005 winter storms. Director McLean informed the FAC that the FEMA reimbursement application is still being processed by the City Manager’s Office.

Member Grimme asked if 1911 Act revenues could be used for expenditures related to any other fund. Director McLean informed the FAC that 1911 Act revenues cannot be used for anything other than 1911 Act expenditures.

Vice Chair Clark asked if the Interfund Charge for Services revenue line item detailed in the Employee Benefits fund was a transfer from the General fund. Accounting Manager Downs informed the FAC that the Interfund Charge for Service is an expenditure of the General fund.

Vice Chair Clark asked if expenditures for the City Clerk program included the salary for the vacant City Clerk position. Accounting Manager Downs informed the FAC that the Assistant City Manager has taken over the duties of the City Clerk and a portion of her salary is being funded out of the City Clerk program.

PUBLIC COMMENTS

No public comments were made.

ADJOURNMENT

Member Smith motion to adjourn the meeting at 8:45 PM, and Member Grimme seconded. Hearing no objection, Vice Chair Clark ordered the meeting adjourned.

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Chair, Financial Advisory Committee

ATTEST:

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Gary Gyves, Recording Secretary