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20000502 IA SR Agreement with Abalone Cove Landslide Abatement District (ACLAD) MEMORANDUM RANCHO PALOS VERDES TO: CHAIRPERSON AND MEMBERS OF THE COMMISSION FROM: CHIEF ADMINISTRATIVE OFFICER DATE: MAY 2, 2000 SUBJECT: AGREEMENT WITH THE ABALONE COVE LANDSLIDE ABATEMENT DISTRICT (ACLAD) FOR FUNDING A PORTION OF THE DISTRiCT'S MAINTENANCE COSTS RECOMMENDATION: Approve the Agreement between the Rancho Palos Verdes Improvement Authority and the Abalone Cove Landslide Abatement District for funding a portion of the District's Maintenance Costs. BACKGROUND: The 1987 Reimbursement and Settlement Agreement between the City of Rancho Palos Verdes, the Rancho Palos Verdes Redevelopment Agency and the County of Los Angeles directed the creation of a Joint Powers Maintenance Authority (JPMA) to oversee the on-going maintenance of capital improvements constructed by the Redevelopment Agency with the bond proceeds. The Agreement further stipulated that $1 million of the bond proceeds be set aside in a separate maintenance trust fund. The accrued interest on this fund can be used only for maintenance purposes. The original principal amount of$1 million cannot be expended. The interest earnings are to be used to maintain the landslide abatement improvements constructed by the RDA pursuant to the Reimbursement and Settlement Agreement, with the exception of sewer systems. Sewer systems were specifically excluded from the use of maintenance funds in the Agreement. In addition, the funds generated by the maintenance trust fund may also be used, to the extent not otherwise used for the maintenance of improvements constructed pursuant to the Settlement Agreement, to maintain public landslide abatement improvements that were not constructed with the proceeds of the assessment bonds. The relevant section of the Landslide Settlement Agreement is attached (Section 2. J). On September 19, 1996, the City Manager received the attached letter from Mr. David Whitmore, the chairman of the Abalone Cove Landslide Abatement District (ACLAD), requesting that the JPMA Board authorize the use of a portion of the investment ` a ACLAD Agreement May 2, 2000 Page 2 in existence prior to the Reimbursement and Settlement Agreement. Currently, ACLAD charges property owners an annual assessment for the operation and maintenance of these wells as well as for other ACLAD administrative costs. Some property owners within ACLAD believe that the operation and maintenance costs should be paid for by the JPMA, rather than through ACLAD assessments on their properties. ACLAD's budget is approximately $140,000, of which approximately $60,000 is for the operation and maintenance costs associated with the wells. ACLAD's request was considered by the Board at their November 25, 1996 meeting. According to the minutes of that meeting (attached), the Board approved the request in concept subject to being provided more detailed data. Apparently, due to changes in ACLAD leadership and City staff no additional data was ever provided and the request was never pursued. Recently, the new Chair of ACLAD, Mr. Robert Douglas, approached City staff and asked that the matter be reopened. The ACLAD Board is requesting that the JPMA Board consider their request that all, or a portion of, their$60,000 expenditures be reimbursed by the JPMA. The ACLAD Board recognizes that the JPMA may be able to reimburse only a portion of their total expenditures, and is appreciative of any assistance that may be possible. ANALYSIS: The law firm of Richards, Watson, and Gershon serves as the legal advisor to ACLAD, as well as to the City, RDA, and JPMA. At ACLAD's request, the firm provided the attached opinion regarding the possible use of the maintenance trust fund monies. Staff believes that it is important to note that, as indicated in the attorney's letter, the maintenance funds MAY be used for the maintenance of improvements, which were not constructed with bond proceeds. However, the first sentences of Section 2.J. indicate that this may be done only if the funds are available AFTER maintaining the improvements, which were, constructed with bond proceeds. The ending balance in the maintenance trust fund on June 30, 1999, was $1,390,323, of which $1 million cannot be expended. The FY99-00 and FY 00-01 budgets for the maintenance trust fund includes income earnings of$75,000. It also includes expenditures of$45,600 for utility services, maintenance services, and professional services associated with the operation and maintenance of dewatering wells that have become operational in the past two years. The projected ending fund balance on June 30, 2001, is $1,426,614. No funds were budgeted for the operation or maintenance of the wells or improvements constructed in the past by ACLAD. Assuming additional improvements are constructed with the remaining bond proceeds, it is likely that the maintenance trust fund's annual earnings will be required for the maintenance of these new improvements. New improvements may include major Les/rda20000502 staffreport ACLAD . ACLAD Agreement May 2, 2000 Page 3 drainage facilities in Altamira Canyon. Other improvements may be constructed as well. The maintenance and operation of these improvements would likely require the use of additional maintenance trust fund earnings. Staff believes that there are currently adequate funds in the maintenance accounts to honor ACLAD's request for a maximum allocation of$60,000 in FY 2000-01. During the budget period for FY 2001- 02, the availability of funds in the maintenance accounts will be re-analyzed and an allocation for ACLAD considered. ACLAD has submitted their FY 1999-2000 Budget and monthly record of expenditures. This information is attached. Staff believes that ACLAD should not reduce their assessment to reflect financial contributions from the Improvement Authority. Once reduced, the assessment would be very difficult to increase and the City may find itself asked to subsidize ACLAD forever. ACLAD has assured the City that their intention is to utilize any unobligated ACLAD funds that may be available due to Improvement Authority participation, to construct additional dewatering facilities or other capital improvements. ALTERNATIVE: Deny the request from the ACLAD Board for the use of investment earnings in the maintenance trust fund for the operation and maintenance of ACLAD dewatering wells and improvements. This would allow the maintenance trust fund to accumulate additional earnings for the eventual operation and maintenance of improvements constructed with bond proceeds. FISCAL IMPACT: The fiscal impact is contingent upon the amount the Board decides to establish as a reimbursement to ACLAD. As stated above, ACLAD's operating and maintenance expenses are budgeted at approximately $60,000. Resp tfully submitted, Les Evans Chief Administrative Officer Attachments: Landslide Settlement Agreement— Section 2.J ACLAD letter to Paul Bussey of September 19, 1996 Letter from Richards, Watson & Gershon of September 10, 1996 Excerpt from Improvement Authority Minutes of November 25, 1996 Les✓rda20000502 staffreport ACLAD . ACLAD Agreement May 2, 2000 Page 4 FY 1999-2000 ACLAD Budget and Expenditure Report Proposed Agreement between Improvement Authority and ACLAD Les/rda20000502 staffreport ACLAD H. County agrees to credit payment by Agency from any of ources to reduce the amounts owing on the deb truments. I. Agency will utilize all tax incremen nues deferred by County in any one year purs o Section 8-C to reduce the amount of inter and principal due andY a - P able during said y on the bonds still outstanding issued pursu (action 2-E. J. The maintenance fund shall be used to maintain the landslide abatement improvements con- structed by Agency pursuant to this Agreement, except P that no such funds may be utilized to maintain sanitary sewers. Such sanitary sewers as are constructed pur- suant to this Agreement shall be maintained in the same manner as are other sewers in the City. The Rancho Palos Verdes Maintenance Authority shall create sepa- rate accounts for funds to maintain the Abalone Cove area and Portuguese Bend area improvements , respec- tively, and maintenance funds raisedP ursuant to Sections 2-A and B shall not be utilized to maintain Portuguese Bend improvements and maintenance funds raised pursuant to Section 2-0 shall not be utilized to maintain the Abalone Cove Improvements. Funds qen- erated by the maintenance fund may also be used, to the -13- 870a04 pt AOZO.$L0(4) extent not otherwise used pursuant to this Section 2-J, to maintain public landslide abatement improvements presently constructed or to be constructed (except sewers) but not constructed with the proceeds of the assessment bonds. K. Nothing herein s 11 be construed as preventing the C . y from forming n improvement district fo the installati. n of sanitary s ers in all or any po on of the prof = t area. L. Nothing . erein shall pre ent the Abalone Cove Pane of Experts fr- exercising its independent judgment t- order utilizat •n of assessmen proceeds for installation •f sewers, hous connections, s war district • • •nnection cha qes, and any o er sewer-relat work to th extent permi ted by law. action 3 . La -slide Abateme word. The to 1 obligation - .perform land lids abatement ork, or to hav such w rk perform..., shall be th Agency' s; next er City nor Co ty ha any obliga , on with respe•t to the contem.lated work exc t to a sure format •n of the asse sment district - and to assure sale the debt i ,struments as i - set forth her- in. Agency express acknowled =s that neithe City nor Count shall have any l iabi ity arising from the perfo - nce of, or f- lure to per- form, abat ent work b Agency. -14- "701104 a7o1104 pt AO80.11LOC4) • . . Abalone Landslide Abaterwt Brn Y000-t 5t• Perrin P&om Vtdr,Cai!romie 9) ro 27330) r77-4087 • r . C , September 19, 1996 Mr. Paul Bussey, City Manager City of Rancho Palos Verdes 30940 HAWTHORNE BOULEVARD Rancho Palos Verdes, Ca. 90275 Dear Mr. Bussey: During the past several months, several ACLAD property owners have attended Board Meetings and have repeatedly raised the question of why they are continuing .to be required to pay the annual assessment to ACLAD for maintenance of the ACLAD wells, pumps and pipeline, when to them it was clear that the REIMBURSEMENT AND SETTLEMENT AGREEMENT provided that this expense was to be paid from the HORAN SETTLEMENT. Finally, the Board of Directors of ACLAD referred this matter to our Legal Counsel, William L. Strausz for interpretation. A copy of letter dated September 10, 1996 (which was copied to you by Mr. Strausz) is enclosed.for your information. Mr. Strausz clearly states that the last sentence of Section 2-J of the SETTLEMENT AGREEMENT appears to authorize use of the investment earnings on the maintenance fund for maintenance of the prior existing 13 dewatering wells in ACLAD. It seems appropriate at this time that you and I should meet to discuss this matter in preparation for presenting the issue to the Redevelopment Agency Board for their consideration. I would appreciate if you .would call me to arrange an appointment at an early time. You may call me any time at my home 377-0042 Very ours • Davi. C. Whitmore, Chairman ABALONE COVE LANDSLIDE ABATEMENT DISTRICT DCCT/ad Enclosure 4 . . . RICHARDS, WATSON & GERSHON ATT PINIEVs AT LAW AMOOMMMAft.001WWWWW SIMMOLWATOCW AOMM/0 AOMAAOe 000001,L SOYOALv 40001 J.~PM PM�'r L*ION MAN Mir (1010.11.0. OOLAILAS W.MAWS AOM MAIMS • ~X L LAMAS. AML rAIAOA MIAOW&MOM LMIONNO!S w1O A.% T,WITVAMMVIIILMM WMsd a AO«R WIDASO w.OAm mDAaRJmOLDaOm.mPAeaMrry% '`wm September 10, 1996 LO, ""°` '"°MOR'�' `* .,. MISR M.WoOeumoAs waaIw L.aIwas o�ewJ4 w.+ Ir IAM 4.1.41111.1 AIS TWOMV a OwSwwI 1.TLOM!IoM PACOIMA OM 0804rra Mn5HSL L Acorn SSw a wwuew ilemmo►L immum.O WIMM T.Mm/Mtwr► ----- 0wMOwr W. I�wvrw e.SWAM OPeDW�a AOOIADJA 11010wI01 SAUL dAPAS WMiIAwA K IO MWI MMOM_L._IM CORIA%MOM MAMAS �..�.� WILLIAM S.*JDSL SAMS A�a 0~4 Y.SWAM T.AMR AMOO CAROL W LW S SIIMMAIN A■ .v A— TOMMM ra�A o�2t�sf rw i wa Y..IMAM M ML L MMO ouw RIs NUMMI C. A0030-00001„ =AL GAISAINRID UM SONS Mrls WOAVOR RONMAINI M.DIAZ OTOW11 K Anna M. Davis, District Clerk Abalone Cove Landslide Abatement District Post Office Box 7000-169 Rancho Palos Verdes, California 90275 Dear Ms. Davis: You have asked whether or not the investment earnings on the maintenance fund created by the Reimbursement and Settlement Agreement among the City of Rancho Palos Verdes, the Rancho Palos Verdes Redevelopment Agency and the County of Los Angeles, could be used to pay for maintenance costs associated with the 13 dewatering wells previously installed by the Abalone Cove Landslide Abatement District. The last sentence of Section 2-3 of the Agreement appears to authorize such use: "Funds generated by the maintenance fund may also be used, to the extent not otherwise used pursuant to this Section 2-J, to maintain public landslide abatement improvements presently constructed or to be constructed (except sewers) but not constructed with the proceeds of the assessment bonds [assessment bonds in this context refers to the County assessment bonds provided for in the Agreement] . ” Of course, the determination of whether sufficient funds are available and the approval of the use or allocation of the investment earnings on the maintenance fund for this or any other purpose are within the sole discretion of the Rancho Palos Verdes Maintenance Authority. .. • 411 111 RICHT RDS, WAT MON Ir,GE. -MON September 10, 1996 Page 2 Because we are city attorney to the City and general counsel to both the Redevelopment Agency and the Maintenance Authority and because we are also general counsel to ACLAD, if any dispute arose between ACLAD and any of the foregoing entities over this or any other matter we could not represent ACLAD or any of the ent it iter involved in such a dispute. If you have any further questions, please do not hesitate to contact me. Very ly yours, Willia L. sz WLS:a lr cc: Paul D. Bussey 03213111 ABSENT: Holliervorth REGULAR BUSINESS: Approval of Professional Services Agreement with Daphne (CarriedE. Clarke. over from the November 6, 1996, meeting.) (1204 X 2200) Public Works Director Les Evans summarized Staffs report Approve p r't and the following recommendation: A pp a the Professional Services Agreement with Daphne E. Clarke for the monitoring and maintenance of dewaterin wells P execute the Agreement on behalfg and authorize the Chair to 9 of the Authority. Commissioner Byrd moved, seconded byCommissioner McTaggart, to approve Staffs recommendation. Motion carried (absent Commissioner Hollingsworth.) 9 ) Lois Larue, 3136 Barkentine, addressed Ms. Clarke' issues. fees and subcontracting Request from ACLAD Board for Fundingfrom the. Joint Powers Maintenance Authority (Maintenance Trust Fund) for the Operation and Maintenance Costs Associated with ACLAD's Dewatering Wells. (1101 X 2200) Executive Director Paul Bussey supplied information following recommendation: If the Board concerning Staffs report and the desires to use Maintenance Trust Fund earnings to pay for all or a portion of the ACLAD operatingand maintenance9 Staff to prepare an agreement between expenditures, direct 9 t een the Joint Powers Maintenance Authontyand ACLAD. The Commission addressed its desire to obtain more specific information as to the appropriation of the money and legal/financial liability issues It was the consensus of the Commission to approve beingprovidedPP a the request in its concept subject to more detailed data. • AUDIENCE COMMENTS: None ADJOURNMENT: Hearing no objection, the meeting was adjourned at 11:25 P.M. CHAIR Attest: L,EL-_sl,QIZLklrzAGGART- 1 S/ JT ) PTT1?r'ET_T Commission Secretary 112596mac.ntiin Maint. Authority Comm. Minutes November 25, 1996 2 As of Apo,1 1,20001 Abalone Cove Landslide Abatement District IIIIIIIIIMMII Account No. Description Adopted Budget Expenditures by Month /999 2000 Current I Administration 1999-00 July August Sept Oct Nov Dec Jan Feb Mar April May June Budget Balance 010 'Exec.Director 16,800.00 1,400.00 1,400.00 1,400.00 1,400.00 1,400.00 1,400.00 1,400.00 1,400.00 _ 1,400.00 1,400.00 2,80'0.00 011 Legal Service 2,000.00 _ 241.00 144.80 28.00 1,586.20 -- ----- 012 Maim.Admin. X 7 800.00 _ 650.00 _ 650.00 6 .00 650.00 650.00 650.00 650.00 650.00 650.00 650.00 1,300.00 - 013 'Board Eapense 200.00 200.00 -- -- - -- 2 014 Election Expense ,000.00 264.82 30.44 1,704.74 _ _ 015 Consulting Services 1,500.00 1,500.00 Total Administration 30 11.00 2 314.82 2 050.00 2 050.00 2 080.44 2 91.00 2 050.00 2 194.80 2 050.00 2 78.00 2 050.00 - - 8 890.94 Maintenance&Operations 201 Utilities A .12,500.00 789.78 747.93 664.00 635.97 614.51 610.23 703.72 725.46_ 537.70 452.81 6,017.89 202 Insurance 10,000.Q6 3,375.00 6,625.00 203 !Office Expense 3,000.00 83.00 96.00 2,821.00 _ 208 1Consulting Services 1,000.00MI 1,000.00 209 IMaint.&Repairs X ' 4( 1,128.92 ,000.00' 1,973.86 204.00 555.94 3,804.53 11111 32,332.75 210 ;Easement Pmts 1- 2,100.00 2,100.00 -- 212 iAltamira Canyon Culvert _ -- --- _ i(Reserve Allocation) 25,000.00 - - .60- -i'otal Maintenance&Operations 93,600.00 2,763.64- 1,959.85 664.00 935.97 614.51 610.23 703.72 4,656.40 6,442.23 452.81 - - .64 . Reserves&Contingency 213 'Extraordinary Repairs 15,000.00 - 15,000.00 410 ,Contingency Fund(5%) . 6,945.00 Mil 6,945.00 Total Reserves&Contingencies 21,945.00 21,945.00 Total Warrants 1 145,845.00 1 5,078.46 4,009.85 2,714.00 3,016.41 2,905.51 2,660.23 2,898.52 6,706.40 8,720.23 2,502.81 - - I 104,632.58 1998-1999 Assignments Approximate Cash Position 1999-2000 Total Approved Budget 145,845.00 BofA Checking 429.51 Prepaid Assessments Deposited 32,911.38 Less do credit&allocated reserves 85.845.00 BofA Savings 14.365.25 Net Assessment 60,000.00 Total BofA 14,794.76 Prepaid Assessments 32.911.38 LAI Fund Balance 96.118.38 Assessment to Tax Col. 27,088.62 Total 110,913.14 Assessment Receipts Balance Due 27,088.62 0 S • ., •