DRAFT MINUTES

MINUTES
CITY OF RANCHO PALOS VERDES
FINANCE ADVISORY COMMITTEE
OCTOBER 25, 2006


Vice-Chair Nelson 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

Roll call was answered as follows:

PRESENT: Emenhiser, Grimme, James, Moon and Nelson

ABSENT: Clark, McLeod

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

APPROVAL OF AGENDA

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

APPROVAL OF DRAFT MINUTES FOR THE MEETING CONDUCTED SEPTEMBER 27, 2006

Vice-Chair Nelson requested a motion to approve the minutes for the meeting conducted September 27, 2006. Member Grimme motioned for approval of the minutes and Member Emenhiser seconded. Hearing no objection, Vice-Chair Nelson ordered approval of the draft minutes.

FAC ASSIGNMENT – PENSION AND POST RETIREMENT HEALTH CARE

Director McLean informed the FAC that the compensation survey is in progress. Analyst Gyves informed the FAC the survey consultant has received 17 responses to date and is working on the completions of an additional five. Director McLean informed the FAC that Bartel & Associates has received the actuarial reports form the California State Employees Retirement System. Director McLean also stated that Staff has reviewed the framework of the information that will be presented to the FAC in the near future. Director McLean

FAC Minutes

October 25, 2006

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also stated that the presentation still needs a substantial amount of work before being presented to the FAC.

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

Member James asked when the information would be presented to the FAC. Director McLean stated that it should be ready to be presented to the FAC at the December meeting.

Vice-Chair Nelson stated that Staff was hoping to get 20 surveys back and asked if Staff will incorporate more than 20 if received. Analyst Gyves informed the FAC that Staff will incorporate all responses into the final report.

FAC ASSIGNMENT – ALTERNATIVE SOURCES OF REVENUE AND FUNDING

Director McLean stated that the City Council assigned the FAC the Alternative Sources of Revenue and Funding Project at the April 29, 2006 Budget Policy Workshop because of the steep decline in General fund reserves detailed in the 2006 Five-Year Model. Director McLean also stated that the Final 2006 Model that was presented to the FAC on June 28, 2006, indicated that General Fund Reserves might decrease by over $8 million during the five years ending June 30, 2011.

Director McLean informed the FAC the following significant facts have a bearing on the Alternative Sources of Revenue Project:

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Increased pavement management costs were the primary reason for the steep decline in General fund reserves detailed in the 2006 Five-Year Model. Staff is currently working with the City’s Pavement Management Consultant and expects to present a revised plan to the City Council before the end of 2006. If the five-year cost of the revised plan significantly decreases, Staff will prepare an update to the Final 2006 Model at that time.

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At its Budget Workshop on April 29, 2006, the City Council funded additional storm drain lining and reconstruction projects not previously included in the Water Quality and Flood Protection Program totaling $2.3 million for FY06-07 using General Fund reserves. The additional storm drain lining and reconstruction projects were subsequently included in the Final 2006 Model.

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Approximately $2.4 million of additional storm drain projects identified by Public Works Staff for FY07-08 through FY10-11 were not included in the 2006 Model presented at the Budget Workshop on April 29, 2006 or the Final 2006 Model presented to the FAC on June 28, 2006.

FAC Minutes

October 25, 2006

Page 3 of 4

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Due to the uncertainty of project timing and completion, potential tax revenue from the proposed Terranea Resort project was not included in the 2006 Model. The project developer has asserted that tax revenue may exceed $4 million annually once the resort is fully operational.

Director McLean informed the FAC that the project was assigned to identify alternative sources of revenue. Director McLean also informed the FAC that he feels it may be premature to assess the necessity of establishing alternative sources of revenue and funding at this time. Director McLean informed the FAC that the City will only collect the storm drain user fee for two years if it is repealed.

Director McLean informed the FAC that the City Attorney is currently researching the legal issues involving the sale or lease of Grandview Park. Director McLean also informed the FAC that the City Attorney, the Director of Planning and Finance Staff met to discuss the processing issues involved in building casitas at Trump National. Director McLean stated that Staff would provide the FAC with additional information on Grandview Park and Casitas at Trump National at the next FAC meeting that the matter is agendized.

Director McLean gave a Power Point Presentation of the Matrix of Revenue Enhancement Options attached to the Staff Report presented to the FAC.

QUESTIONS AND COMMENTS REGARDING THE FAC ASSIGNMENT – ALTERNATIVE SOURCES OF REVENUE AND FUNDING

Member Emenhiser asked Staff if the cost-based fees associated with building permits could be increased with the cost being passed on to contractors and developers. Analyst Gyves informed the FAC that it was Staff’s opinion that building permit fees collected from contractors was generally passed on to the homeowner. Analyst Gyves also informed the FAC that the City Council made it clear that they did not want homeowners over charged for simple home improvements, such as a water heater or garbage disposal permits.

Member Moon asked Staff if a predetermined cost recovery rate existed for cost-based fees. Director McLean informed the FAC that Planning fees had been increased 30% and Building and Safety fees had been increased 20% over the last two years. Director McLean also informed the FAC that, on average, the City recovers approximately 50% of the costs associated with cost-based fees.

Member James stated that residents remodeling their homes should be paying more than the 50% of costs the City is currently recovering because they are receiving the direct benefit. Vice-Chair Nelson agreed with the statement made by Member James that those receiving the benefit should be charged.

FAC Minutes

October 25, 2006

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DIRECTOR/MEMBER REPORTS

Director McLean informed the FAC that the City Council has agreed for Mayor Tom Long and Peter Gardiner to work together to formulate counter ballot ideas associated with the initiative to repeal the Storm Drain User Fee. Director McLean also informed the FAC that the City Council directed Staff to bring back a Staff Report related to the establishment of an oversight committee for the Water Quality and Flood Protection Program.

Member James informed the FAC the Public Use Master Plan (PUMP) Committee met and is moving forward with trail naming.

PUBLIC COMMENTS

Tom Redfield thanked the FAC for serving the City. Mr. Redfield stated that many residents do construction at night or on the weekends to avoid the cost of inspection services. Mr. Redfield also warned the FAC that there may be a major liability issue regarding Tarapaca.

ADJOURNMENT

Member Emenhiser moved and Member Grimme seconded a motion to adjourn the meeting at 9:17 PM. Hearing no objection, Vice-Chair Nelson ordered the meeting adjourned.

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Vice-Chair, Financial Advisory Committee

ATTEST:

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Gary Gyves, Recording Person