MINUTES

CITY OF RANCHO PALOS VERDES

FINANCE ADVISORY COMMITTEE

JUNE 28, 2006

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 business pursuant to the Agenda.

ROLL CALL

Roll call was answered as follows:

PRESENT: Clark, Emenhiser, Grimme, James, McLeod, Moon and Nelson
ABSENT: None

Also present were Deputy Director of Finance and Information Technology Kathryn Downs and Senior Administrative Analyst Gary Gyves.

APPOINTMENT OF NEW FAC MEMBER

Chair Clark introduced Amar Moon as the new FAC member. Chair Clark welcomed Member Moon and thanked him for volunteering.

APPROVAL OF AGENDA

Chair Clark requested a motion to approve the agenda. Member Emenhiser motioned for approval of the agenda and Vice-Chair Nelson seconded. Hearing no objection, Chair Clark ordered approval of the agenda.

APPROVAL OF DRAFT MINUTES FOR THE MEETING CONDUCTED APRIL 19, 2006

Chair Clark requested a motion to approve the minutes for the meeting conducted April 19, 2006. Vice-Chair Nelson motioned for approval of the minutes and Member McLeod seconded. Hearing no objection, Chair Clark ordered approval of the draft minutes.

PUBLIC USE MASTER PLAN (PUMP) COMMITTEE

Chair Clark explained to the FAC that the PUMP Committee will be addressing issues such as public access, mitigation and other land use issues in the Portuguese Bend Nature Preserve. Chair Clark informed the FAC that Member James has agreed to be a member of the PUMP. Chair Clark explained to the FAC that Member James will not be representing the FAC, but will be providing the FAC with periodic updates relating to the financial aspects of the PUMP.

2006 FIVE-YEAR FINANCIAL MODEL

Analyst Gyves informed the FAC that the 2006 Draft Five-Year Model was presented to the City Council along with the FAC’s recommendations at the Budget Policy Workshop on April 29, 2006. Analyst Gyves also informed the FAC that the City Council followed all of the FAC’s recommendations, which include:

 Funding the additional $2.3 million of additional storm drain projects recommended for FY06-07 using General Fund reserves;
 Funding the $1.6 million for the Residential Overlay budget for FY06-07 to maintain pavement at the current level of condition; and
 Assigning the FAC the task of studying alternative sources of revenue and funding to help fund infrastructure improvements.

Analyst Gyves also mentioned that the City Council also tasked the FAC with studying possible changes to the City's employee retirement plan and the potential for retiree health benefits.

Analyst Gyves informed the FAC that the Final 2006 Model being presented tonight includes changes made at the April 29, 2006 Budget Policy Workshop and any subsequent budget adjustments approved by the City Council. Analyst Gyves informed the FAC that the following changes have been incorporated into the Final 2006 Model since it was last presented to the FAC on April 19, 2006.

 An additional code enforcement officer was approved starting in FY06-07 at a cost of approximately $80,000 annually.
 A budget appropriation of $25,000 was approved from the City’s General fund for the retention of pension and benefit consultants to assist Staff and the FAC with the project assigned by the City Council to study possible changes to the City's employee retirement plan, as well as the possibility of providing post-retirement health insurance.
 A General fund transfer to the WQFP Program in the amount of $157,792 was approved for the Pontevedra emergency storm drain repairs. The initial estimated cost of repairs was $100,000. However, as work progressed the amount of work required to complete the repair exceeded this estimate. Staff is working with FEMA to secure reimbursement for the cost of the repairs.
 The City’s FY06-07 Budget contained a General fund transfer of $1.2 million to the WQFP Program for the purchase of privately owned property required for improvements to control drainage from McCarrell Canyon. The planned purchase of the property has been moved up to FY05-06 for the recently re-appraised value of $900,000. The purchase is reflected in FY05-06 as a General fund transfer of $900,000 to the WQFP Program.
QUESTIONS AND COMMENTS REGARDING THE 2006 FIVE-YEAR FINANCIAL MODEL

Chair Clark asked if the Western Avenue storm drain project was complete. Deputy Director Downs informed the FAC that the projects are complete.

Chair Clark asked if the City had received reimbursement from FEMA for the Western Avenue Storm Drain Projects. Deputy Director Downs informed the FAC that the drainage improvements cost the City approximately $639,000 and the City received FEMA reimbursements totaling approximately $586,000 that were booked in FY04-05.

Member James asked why an appropriation of $80,000 is necessary for consultant services related to the residential and commercial solid waste collection options study. Deputy Director Downs informed the FAC that the $80,000 is for the consultant to attend community meetings, prepare and analyze request for proposals and to perform customer surveys. Deputy Director Downs also informed the FAC that the residents of the City pay for trash services and that the City receives revenues in the form of franchise fees, AB939 fees and recycling fees.

Member McLeod asked if there were restricted funds that could be used to purchase the property required for the McCarrell Canyon improvements. Deputy Director Downs informed the FAC that there are no restricted funds available to fund the land purchase.

FAC ASSIGNMENT – PENSION AND POST RETIREMENT HEALTH CARE

Deputy Director Downs stated that the City Council assigned the FAC the task of studying possible changes to the City's employee retirement plan and the potential for retiree health benefits. Deputy Director Downs also stated that Director McLean presented a staff report to the City Council asking for direction and asking for $25,000 for a benefit consultant to perform actuarial work. Deputy Director Downs stated that the City Council approved the $25,000 request and gave Staff the following direction for the study.

 Study the possibility of requiring employees to make contributions to the existing pension plan;
 Study the possibility of providing post-retirement health insurance;
 Determine the impact any changes might have on employee retention and recruitment; and
 Compare the City’s retirement plan with other cities in California.

Deputy Director Downs informed the FAC that the City is currently in the process of negotiating pension consultant services from John Bartel of Bartel Associates. Deputy Director Downs informed the FAC that Staff has met with John Bartel to discuss the scope of services for the pension project. Deputy Director Downs also stated that the draft scope includes the analysis of:
 A two-tier retirement system with a different benefit level for future hires;
 Requiring current and future employees to pay a portion of the employee contribution rate;
 The feasibility of providing a healthcare subsidy to retirees; and
 The financial issues related to the City’s CalPERS Side Fund.

Deputy Director Downs informed the FAC that John Bartel is expected to present the study’s findings to the FAC no later than November 2006.

QUESTIONS AND COMMENTS RELATED TO THE PENSION AND POST RETIREMENT HEALTH CARE FAC ASSIGNMENT

Member Emenhiser asked if the pension consultant was planning on comparing the City’s benefits with other local cities. Deputy Director Downs informed the FAC that comparisons of compensation packages with other cities will be a part of the project’s Scope.

Vice-Chair Nelson asked when the City Council was expecting the FAC’s recommendation on the pension analysis. Deputy Director Downs informed the FAC that the City Council is expecting the FAC’s recommendation in time for the FY07-08 budget process, which starts in February of 2007.

Member McLeod requested that Staff or the pension consultant provide the FAC with an overview of the benefits that City employees receive.

PUBLIC COMMENTS

Tom Redfield suggested that the FAC members attend City Council meeting to stay appraised of major topics such as the new trash contract. Mr. Redfield also mentioned that the City Council meetings can also be viewed on television or online.

ADJOURNMENT

Member McLeod moved and Member Grimme seconded a motion to adjourn the meeting at 7:42 PM. Hearing no objection, Chair Clark ordered the meeting adjourned.

_____________________________
Chair, Financial Advisory Committee

ATTEST:

_____________________________
Gary Gyves, Recording Person