CC MINS 20050124 ADJMINUTES
RANCHO PALOS VERDES CITY COUNCIL
ADJOURNED REGULAR MEETING
JANUARY 24, 2005
The meeting was called to order at 7:04 p.m. by Mayor Clark at Fred Hesse Community
Park, 29301 Hawthorne Boulevard, Rancho Palos Verdes, notice having been given
with affidavit thereto on file.
Roll call was answered as follows:
PRESENT: Wolowicz, Long, Gardiner, Stern, Clark
ABSENT: None
Also present were City Manager Les Evans; Assistant City Manager /City Clerk Carolynn
Petru; City Attorney Carol Lynch; Director of Finance Dennis McLean; Director of
Planning, Building and Code Enforcement Joel Rojas; Director of Public Works Dean
Allison; Senior Planner Kit Fox; Accounting Manager Kathryn Downs; and, Minutes
Reporter Debra Presutti.
The Pledge of Allegiance was led by Mr. Ken Jenkins of Assemblywoman Betty
Ka rn ette's office.
MAYOR'S ANNOUNCEMENTS:
Mayor Clark informed the public that there is a growing compendium of "Did You Know
Facts" under the City Council tab on the City's website. He presented the latest
installment regarding the City's open space and parkland, saying the ratio of open
space per capita in RPV is approximately 22.88 acres per 1,000 residents.
RECYCLE DRAWING:
Mayor Clark announced Robert Marquez and Lena Priest as the recyclers of the month,
congratulating them and thanking them for their recycling efforts.
APPROVAL OF AGENDA:
Councilman Stern moved, seconded by Mayor Pro Tern Wolowicz, to approve the
Agenda. Hearing no objection, Mayor Clark so ordered.
PUBLIC COMMENTS:
Krista Yachechak, 2 Martingale Drive, indicated that on January 10th they experienced a
hill slippage at their residence, causing the house to be red tagged and trapping three
vehicles at the top of their driveway. She extended her appreciation to Mayor Clark,
Councilman Stern, and Director Allison for making a site visit to view their property and
to Mark Campbell and Assistant City Manager Petru for their assistance in trying to
resolve the situation. She requested Council's aid in expediting the recovery process,
working with them to get the necessary permits approved, and to see if there might be
some way to waive or reduce some of the associate costs. She noted that their
neighbors at No. 1 and No. 3 Martingale have also being affected by this slope failure.
Councilman Gardiner inquired if it would be possible to waive the permit fees to assist
the property owners with their situation and suggested someone be designated to work
with them directly as a point person.
City Attorney Lynch indicated the permit fees could be waived by City Council.
Director Rojas advised that at the moment the top priority is to make the driveway
accessible, saying staff is currently waiting for a geology report indicating whether
removal of the material from the driveway will cause further soil slippage. He noted that
the long -term solution of what to do with the hillside remains unresolved at this time.
Mayor Clark advised that a representative from Assemblywoman Karnette's office was
present and wished to speak to the Yachechak's to determine how their office might
assist them.
Scott Gobble, Southern California Edison, provided an update on two recent power
outages in RPV which affected over 700 homes in the community between Hawthorne
Boulevard, Crest Road and Crenshaw, saying the outage was caused by a cable failure
near the California Water Service office on Crest Road, combined with the fact that the
high voltage system servicing the area is approximately 50 years old and has served its
useful life. He advised that SCE plans to replace some components, install an
additional set of lines as a backup power source in the event future problems occur,
and replace the transformers. He indicated that power would be out from six to eight
hours when these modifications take place, saying residents will be notified in advance
by letter and again by postcard at least 72 hours before the planned outages.
Mayor Pro Tern Wolowicz queried if SCE has an overall plan that includes the tracts of
homes further down the hill and beyond Hawthorne Boulevard.
Mr. Gobble explained that SCE has approximately 26 high voltage grids servicing Palos
Verdes, saying the transformers are inspected every year or two and it has been
determined that the first grid is definitely in need of repair and portions of the second
grid, which also need repair, will be upgraded at the same time.
Councilman Long inquired if Edison makes a special effort to notify persons who are
using home medical equipment and might be seriously impacted by these outages.
Mr. Gobble answered that Edison receives information from physicians regarding
customers with medical concerns, saying a form is submitted which allows a discounted
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January 24, 2005
Page 2 of 22
rate and Edison includes those names on a list which identifies them as having a
medical problem and whenever there is a concern with the supply of power an attempt
is made to contact those customers in person or by phone. He added there are no
such medical customers on the two affected grids.
Jack Downhill, Rancho Palos Verdes, stated he recently came across an article in the
RPV City Newsletter which indicated the City requires that trash receptacles must be
stored out of sight of the public right -of -way and adjoining properties. He mentioned
this brought to mind the fact that on PV Drive South there are two dumpsters and a
portable toilet at Abalone Cove Shoreline Park that are not only visible but also very
haphazardly positioned and quite unsightly. He noted there are also approximately 20
bright blue trashcaR,s at the Abalone Cove Shoreline Park picnic area. He advised that
the trash receptacles at the adjacent scenic turn out are much more tasteful with a
wooden outer container covering the bin inside. He suggested something like this could
be used to replace the more obtrusive trash containers or perhaps the use of green
rather than bright blue would be more aesthetically pleasing and less visually intrusive.
CITY MANAGER REPORTS:
City Manager Evans provided an update on the status of Channel 33, saying Art Yoon,
the Cox Cable representative, had advised him that the fiber cable routing was nearly
complete, the electronic equipment should be delivered shortly, and the station should
be ready to begin broadcasting prior to March 1 St.
Mayor Clark complimented the Council Subcommittee, Councilman Stern and
particularly Councilman Gardiner, for their diligent efforts in making Channel 33 a
reality, saying this will certainly be one of Councilman Gardiner's greatest legacies.
Councilman Gardiner indicated that he and Councilman Stern would be bringing a set
of policies and procedures to Council in the very near future to help guide the operation
of the new channel.
City Manager Evans turned the discussion over to Director Allison for an update on the
situation on Western Avenue.
Director Allison advised that in the last three weeks the Public Works Department had
spent more time in the field, and particularly on Western Avenue, than they had in the
past two years. Using a slide show presentation for illustration, he provided an update
on the City's current situation with regard to its storm drains, beginning with the sinkhole
repair at Westmont Drive. He noted that a very important part of that project was the
two sewer lines beneath the roadway, saying costs have exceeded the initial estimate
because of complications caused by delays from additional rainfall and a trench failure.
He explained that it remained unclear what agency was responsible for the cost of
these repairs, saying it is staff's belief that it will ultimately be the State of California's
responsibility.
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January 24, 2005
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Director Allison explained there are 12 storm drains that cross under Western Avenue
which have all been video inspected and their conditions are as follows: one was being
reconstructed at Westmont/Delasonde, six were reinforced concrete and are in good
shape, five were corrugated metal and in poor condition, and there were two additional
locations where the roadway is dipping, the worst one being at Summerland. He
indicated the situation had necessitated the closure of the northbound lanes of Western
at Summerland, which had created significant traffic impacts.
Mayor Clark interjected that a number of residents in Mira Vista have experienced a
tremendous increase in the amount of traffic through their neighborhood and many
have inquired why traffic had been diverted to the driveway next to the condominium
complex at Summerland.
Director Allison explained that Caltrans took the lead on the road closure and did not
create a detour, but merely placed a road closure sign allowing traffic to access that
private driveway. He noted there were concerns about not allowing turns into the
driveway because there are businesses that would be significantly impacted. He stated
he is concerned that motorists are going to travel whichever way they believe is
quickest to reach their destination and, if a different action is taken, another route will
likely be chosen, disrupting a different neighborhood. He advised that Caltrans is in the
process of hiring an emergency contractor, adding the City has no control over this
situation other than to encourage Caltrans to move as quickly as possible. He indicated
the long -range plan is to repair the pipe in stages which will likely take one to two
months, saying the plan in the interim was to detour traffic, maintaining one lane in
each direction on the northbound side which would help relieve a significant amount of
the overflow traffic into the adjacent neighborhood.
Director Allison directed attention to a third location near the Smart & Final store
between Toscanini and Delasonde, just south of Westmont where there was another
corrugated metal pipe in very poor condition. He advised that once a contract has been
negotiated with Caltrans for the Summerland project, there were plans to begin dealing
with this third location.
Director Allison answered some of the questions he has received relating to what
impact all of this was having on the City's Storm Drain Master Plan (SDMP) as follows:
1) Did the SDMP include the cost of these repairs? Cost for these repairs were not
included because it was believed Caltrans was responsible for Western Avenue and the
storm drains beneath it.
2) Who is ultimately responsible for the repairs? It remains unclear who will bear
ultimate responsibility, but staff believes the State of California is responsible for the
roadway and the underground storm drains.
3) How does the SDMP evaluate aging corrugated metal pipes? He explained that
these pipes are evaluated by placing them into the following four categories of
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January 24, 2005
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deficiencies: 1) the pipe is too small; 2) the pipe has decayed; 3) there is an absence
of inlets; and, 4) the configuration is poor. He explained that a Type 1 deficiency, i.e.,
the existing pipe is 37 inches and a 48 -inch pipe is needed, creates problems during
heavy rains and can be corrected by reconstructing or rebuilding the pipe. Type 2
deficiencies, old corrugated metal pipes that collapse and cause sinkholes, can be
corrected by rehabilitating or reconstructing the pipe. Type 3.deficiencies, an absence
of inlets, which exists on much of PV Drive East and tend to flood the adjacent roadway
and spill onto adjacent private properties, can be resolved by positioning catch basins
to collect the water before it goes into residential property. Type 4 deficiencies, poorly
or inadequately configured pipes, usually go through private improvements and the
solution was to install new storm drain in the street to collect water from the smaller
pipes and delivers it to a canyon with no houses below.
Director Allison summarized his presentation by advising the Council that the City's 297
storm drain pipes have been evaluated, 156 of them were found to be deficient and 65
of those deficiencies are related to size, configuration, and missing inlets. He explained
that staff estimates that 91 are in poor condition and need to be relined, adding that
nearly all the corrugated metal pipes need reconstruction or relining. He indicated that
citywide priority assignments have been made as follows: There are 12 Priority 1
projects, inadequate pipes that flood private property; 21 Priority 2 projects —
inadequate drainage pipes that cause bluff or canyon erosion that could threaten
structures over time; and Priority 3 projects — which resulted in inconsequential street
flooding. He advised that all but 20 percent of the pipes have been video inspected but
priorities with respect to lining all pipes have yet to be determined. He concluded by
saying that the top priorities are those pipes under roadways or adjacent to structures,
adding that staff does not believe the SDMP needs to be revised based on recent
occurrences on Western Avenue.
Mayor Clark queried what the current situation was regarding Tarapaca Canyon.
Director Allison answered that staff considers Tarapaca a Priority 1 project; has
identified a cost of $1.5 million to complete the project; and is currently working with the
City of Los Angeles, saying the solution appears to be partly drainage and partly
geologic in nature.
Councilman Long asked what assurance can be provided with regard to the condition of
pipes that have not yet been inspected.
Director Allison responded that, based on the sample inspections performed, staff was
presuming that three quarters of all the corrugated metal pipes were in poor condition.
Councilman Long inquired if there was any allowance in the SDMP in case that figure
was wrong and the number was actually higher and, similarly, if any allowance had
been made in the event the City does not recover its costs on Western Avenue.
Director Allison indicated those allowances had not been made and the costs identified
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January 24, 2005
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for the corrugated metal pipes assumes they will be identified and relined before any
more road failures occur, noting it was much easier and less costly to reline pipe than
rebuild it.
Mayor Pro Tern Wolowicz queried if staff had identified and prioritized all the storm lines
that were in close proximity to sewer lines, saying he would certainly like to see those
placed at the top of the list.
Director Allison stated staff would certainly include that as a priority.
Councilman Stern commended Director Allison for an excellent and very informative
presentation. He indicated it would be helpful for RPV's residents to understand the
problem was being addressed but that it was quite enormous and the City was not
entirely in control of some of the associated problems, saying while he was very
sympathetic to residents' complaints about traffic, Caltrans was in control of Western
Avenue.
On behalf of the entire Council and community, Mayor Clark thanked Director Allison
and his staff for all the time and effort they have devoted to this crisis situation on
Western Avenue, saying it spoke to the commitment and professionalism of the City's
staff. He suggested making the current status and updates on the traffic situation
available on the Breaking News section of the City's website.
OLD BUSINESS:
Mayor Clark reminded the public that items previously discussed and continued to a
future meeting were posted on the City's website at www.palosverdes.com /rpv.
NEW BUSINESS:
Assistant City Manager /City Clerk Petru advised there was one speaker wishing to
address Item Nos. 11 and 12 on the Consent Calendar, Award of Professional Services
Contract for Engineering Services regarding Proposed Water Quality and Flood
Protection Program.
Jack Downhill, Rancho Palos Verdes, stated his belief that the possibility of a parcel tax
has been overlooked in the alternatives considered and suggested this would be a far
more equitable and simple way of financing the projects described and, since the
benefits derived were essentially "universal," it would ensure that everyone pays
equally. He opined that the system discussed at such great length and finally adopted
did not provide equitable distribution of costs and concluded by saying the amount of
money proposed to merely go through the process of having a user fee approved or
disapproved was outrageous.
Councilman Long remarked that he found Mr. Downhill's approach very interesting and,
if this were a perfect world, he would agree with more of what he was advocating. He
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January 24, 2005
Page 6 of 22
expressed concern that the school parcel tax passed by a mere four to five percentage
points and most likely only because seniors were exempted and the tax included a
sunset, adding that placing a sunset on this tax would impair the City's ability to borrow
to finance repairs in the future. He further noted his understanding there was
discussion pending in Sacramento to change the user fee requirement to a two- thirds
majority and, if a parcel tax fails and an attempt was then made to establish a user fee,
it was unlikely that would get a two - thirds vote either.
Mr. Downhill responded that equity among the City's residents was very important and
educating the citizens about this issue needed to occur. He indicated he had a
personal interest in this because he owned a 300,000 square foot lot that cannot be
built on or subdivided and the formula as currently proposed would consider that land in
determining his payment ratio. Recognizing he would have the ability to protest his
assessment, he opined the system was too complicated and protracted and too much
money was involved for a user tax that he did not believe would pass.
Mayor Clark advised that the City's Finance Director and the Finance Advisory
Committee had considered this matter very comprehensively and every alternative
method and tool available was contemplated as a potential mechanism for financing
infrastructure renewal, including a parcel tax. He indicated the City had not made a
decision to move towards the implementation of a storm drain user fee because there
were several preparatory steps that need to be taken first.
Mayor Pro Tern Wolowicz commented there was a report from March 2003 on the
City's website that includes 14 or 15 different alternatives explored by the FAC at the
time the user fee was discussed as well as subsequent and recent reports showing all
the merits and consequences identified on this issue. He indicated this would be a
useful place to see the amount of dialogue that has taken place on this topic.
Councilman Stern reiterated that Mr. Downhill had the option to protest the fee by
having an impermeability review performed for his property and noted that the fee
would be based on his specific situation. He noted that equities were measured in
different ways and, while there was truth to the fact that all the City's residents benefit
by having these systems fully operational, the impermeability standard attempted to
allocate burden based on the amount of load being placed on the system. He
remarked that equity was in the eye of the beholder, adding there was a good argument
that those people placing an additional load on the system should bear some of the
extra cost burden.
Councilman Gardiner expressed sympathy for the position articulated by Mr. Downhill,
saying, while he was not sure he favored the alternative, it was an alternative. He
indicated by the time this matter found its way to Council the options had been whittled
down to a very narrow set and he could not recall ever discussing the merits of a parcel
tax. He stated that often by the time policy issues reach the Council they have been
pre - filtered and focused in a particular direction leaving a very limited ability to discuss
alternatives and their associate pros and cons, adding that he believed Council was not
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January 24, 2005
Page 7 of 22
well served if they were not provided the full range of alternatives, including the pros
and cons of each, when making policy decisions.
APPROVAL OF CONSENT CALENDAR:
Councilman Stern moved, seconded by Councilman Long, to approve the Consent
Calendar.
Councilman Gardiner requested the option to vote separately on Items 11 and 12.
Councilman Long seconded the request, saying he always supports the ability to split a
question.
The motion to approve the Consent Calendar, absent Items 11 and 12, carried on the
following roll call vote:
AYES: Long, Gardiner, Wolowicz, Stern, Clark
NOES: None
Motion to waive full reading
Adopted a motion to waive reading in full of all ordinances presented at this meeting .
with consent of the waiver of reading deemed to be given by all Council Members after
the reading of the title.
Extension of the Affordable Housing Developer Fee Program for an Additional
Five (5) Years (701 X 1203)
ADOPTED RESOLUTION NO. 2005 -05, MAKING CERTAIN FINDINGS TO EXTEND
THE AFFORDABLE HOUSING DEVELOPER FEE PROGRAM AND RETAIN THE
FEES THAT WERE DEPOSITED INTO THE PROGRAM FOR AN ADDITIONAL FIVE
(5) YEARS.
Confirmation of the Appointment of a City Delegate and Alternates to the
Governing Board of the South Bay Cities Council of Governments (306)
ADOPTED RESOLUTION NO. 2005 -06, CONFIRMING THE APPOINTMENT OF A
DELEGATE, PRIMARY ALTERNATE AND SECONDARY ALTERNATES TO THE
GOVERNING BOARD OF THE SOUTH BAY CITIES COUNCIL OF GOVERNMENTS
(A JOINT POWERS AUTHORITY).
Claim Against the City by Jeffery Brown (303)
Rejected the claim and directed staff to notify the claimant.
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January 24, 2005
Page 8 of 22
Claim Against the City by Daniel Pantucci (303)
Rejected the claim and directed staff to notify the claimant.
Claim Against the City by Charles Brumbaugh (303)
Rejected the claim and directed staff to notify the claimant.
Claims Against the City by Indian Ridgecrest Gardens, LP (303)
Rejected the claims and directed staff to notify the claimant.
Repair of the Tarapaca Storm Drain (604 X 1204)
Reviewed and reconfirmed a four /fifths (4/5) vote, the Council's action on December 21,
2004, to authorize staff to conduct an informal bid process to repair the Tarapaca Storm
Drain.
Repair of the Western Avenue Storm Drain (604 X 1204)
Reviewed and reconfirmed a four /fifths (4/5) vote, the Council's action on January 4,
2005. An emergency exists which will not permit a delay from a competitive solicitation
for bids and that the actions taken are necessary to respond to the emergency.
On -Call Service Providers (1204)
1) Awarded a contract for on -call professional services for FY 04 -05, and FY 05 -06 to
RBF Consultants; Berryman and Henigar and Associates; Kleinfelder Consultants, Inc.;
Lenocker & Associates, Inc.; KEC Consultants, Inc.; Peter Gambino and Associates,
Inc.; and, David Volz Design; and, 2) Authorized the expenditures with these firms in
accordance with City Council established guidelines for on -call professional services
and the adopted budgets for FY 04 -05 and FY 05 -06.
Register of Demands
ADOPTED RESOL. NO. 2005 -07, A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF RANCHO PALOS VERDES ALLOWING CERTAIN CLAIMS AND DEMANDS
AND SPECIFYING FUNDS FROM WHICH THE SAME ARE TO BE PAID.
The motion to approve Items 11 and 12 carried on the following roll call vote:
AYES: Stern, Long, Wolowicz, Clark
NOES: Gardiner
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January 24, 2005
Page 9 of 22
Award of Professional Services Contract For Engineering Services Regarding
Proposed Water Quality And Flood Protection Program (604 X 602)
Approved the Professional Services Agreement for engineering services with Harris &
Associates for services associated with finalizing the rate analysis for the proposed
Water Quality and Flood Protection Program for an amount "not to exceed" $23,000.
Award of Professional Services Contract For Public Information Services
Regarding Proposed Water Quality And Flood Protection Program (604 X 602)
Approved the Professional Services Agreement with Moore lacofano Goltsman, Inc. for
public information consulting services regarding the proposed Water Quality and Flood
Protection Program and other de -minus services for an amount "not to exceed"
$61,500.
PUBLIC HEARINGS:
None.
CITY COUNCIL ORAL REPORTS:
Councilman Stern provided a slide show presentation to illustrate his report.
Councilman Stern attended the League of California Cities meeting on January 6th
where the guest speaker, Dan Hafferty, from the State of California Department
Homeland Security Civil Support Division, provided an explanation of what that entity
does; attended the West Vector Control District meeting on January 13th where a very
detailed report on the West Nile Virus was presented which he offered to share with
anyone interested; and, toured storm damage on a Saturday with Mayor Clark which
included the Martingale slope failure and Summerland Avenue.
He attended the Trump National residential development ground breaking ceremony
and a Trump Liaison Committee meeting beforehand, where he and Mayor Clark met
with representatives of the Trump organization and discussed the driving range, their
interest in building hotel villas, and proposed changes to a few of the residential
subterranean garages. He mentioned that Supervisor Knabe's office presented the City
and Mr. Trump with a plaque commemorating the groundbreaking event.
Councilman Stern indicated that during the annual Contract Cities meetings in
Sacramento, the Council members in attendance had the opportunity to meet with a
number of state representatives, including Assemblywoman Karnette and Senator
Lowenthal, and various staff members at the League of California Cities. He remarked
that Tom Campbell, Governor Schwa rzenegger's Finance Director, spoke at one of the
meetings, noting that during his tenure on Council this was the first time anyone from
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January 24, 2005
Page 10 of 22
the Governor's staff came to address the group, and indicated that everyone was eager
to see what would happen with the State's budget.
He indicated that he traveled with fellow Council and City staff members to Washington,
D.C. to attend the U.S. Supreme Court hearing on the Abrams case, as well as to lobby
Congress regarding telecommunications and FAA overflight issues.
He explained that most of the time in Washington D.C. was spent addressing a number
of different issues with congressional staff, including visits to the offices of Senator
Boxer, Senator Feinstein, and Senator Stevens, who oversees the Senate committee
charged with reviewing antenna - related issues. He remarked that in his conversations
he specifically addressed a legislative amendment to the Telecommunications Act in an
attempt to eliminate the ability of individuals to obtain antennas under very lenient
amateur standards and subsequently switch them to commercial use. He noted that
Director Rojas accompanied him on a number of meetings, most notably with Senator
Feinstein's staff and Congresswoman Harmon, to discuss the open space acquisition
efforts and federal funding opportunities.
Councilman Stern concluded his presentation by saying the trip to Washington D.C.
was a fascinating event. He recited a couple of he Supreme Court Justices' relevant
comments on the Abrams case and complimented the staff members who attended the
hearing for their interest and dedication to the City, noting all paid their own way.
Councilman Wolowicz indicated that he attended the Contract Cities meetings in
Sacramento on January 10th and 11 th; the Trump National ground breaking and a
meeting with Barbara Dye for an update on land acquisition activities on the 14th; the
Residential Standards Update Committee meeting on the 17th; had the honor of
representing RPV on the Mayor's behalf on the 19th at they Mayors' luncheon; and,
attended the PVPTA meeting on the 20th. He noted he was also privileged to attend a
recycling award presentation at Soleado School, saying he was pleased to see the
enthusiastic participation of the youngsters and recognized how important it was to
encourage environmental issues at the school level.
Councilman Long attended the Contract Cities Conference January 10th and 11 th,
noting he had the opportunity to meet with a number of State legislators and one of the
many interesting things he learned was how the District boundaries are drawn; attended
the LAX Round Table, chaired by former Mayor John McTaggart, on the12th, where the
overflight problems with respect to the FAA were discussed; attended the ground
breaking at Trump National on the 14th; also met with School Board members Gabriella
Holt on the 14th and Barbara Lucky the following week to discuss the challenges facing
the School District, saying his goal was to meet with each member of the School Board
to obtain their views on how the City can interrelate and assist them; and, toured the
drainage problems on Western Avenue on the 15th. He concluded by recounting that,
at the invitation of some representatives from CORBA, he attempted to mountain bike
some trails in the Forrestal Nature Preserve, noting he learned a great deal of respect
for mountain biking as it requires far more balance and the consequences of a fall are
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January 24, 2005
Page 11 of 22
considerably worse which were evidenced by the brace on his knee.
Councilman Gardiner attended the Trump National ground breaking and had a
telephone conversation with Rob Low to obtain information on the Long Point project.
Mayor Clark attended the California League of Cities L.A. Division Board of Directors
Retreat on January 8th, noting part of the focus was how to further the voice of the Los
Angeles Division and its role in the structure of the League; attended the California
Contract Cities Annual Legislative Tour on the 10th and 11 th, noting State Insurance
Commissioner John Garamendi spoke to the assemblage and mentioned that many
Californians do not realize that their homeowners insurance does not cover flood or
water damage but that there was reasonably priced flood insurance available. He also
indicated earthquake insurance had gone through a cycle and that reasonable
earthquake insurance was also now available. He requested staff pursue further
information from the Commissioner's office on this topic so it can be made available to
residents on the City's website.
He remarked that one of the benefits of the annual Contract Cities Tour, besides the
opportunity to interact with legislators and representatives, was the unveiling of the
Governor's budget for the year. He indicated that Governor Schwarzenegger's initial
budget reflected a $9 billion deficit and he had called a special session of the legislators
to attempt to deal with it and, if results were not satisfactory, the Governor planned to
bring ballot measures before the voters, noting it would be interesting to see how that
developed.
On the 14th, Mayor Clark attended the Trump Subcommittee meeting and the
subsequent ground breaking and ribbon cutting for the residential development
component of Trump National, noting the importance from the City's perspective as this
element of the project started to materialize was the property tax revenue and an
increase in the average price of residential real estate in RPV. He also attended the
South Bay Cities Council of Governments Executive Committee meeting later that day.
Mayor Clark indicated that a tremendous amount of headway was made on the trip to
Washington, saying a great deal of energy was expended in a short period trying to
convince key Congress members to support an amendment to the Telecommunications
Act which would address the issue of individuals applying for permits under amateur
provisions then converting to commercial without having to withstand the criteria and
standards of a commercial use. He thanked Councilman Gardiner for putting him in
contact with David Mandell, Chief of Staff at FAA Headquarters, saying he arranged a
meeting with other senior officials, including the Associate Administrator of U.S.
Airports, and a very productive interchange about overflight issues took place. He
indicated the end result was the participants agreed to do whatever they could in
conjunction with regional FAA leadership to advance solutions.
Mayor Clark chaired the first annual L.A. meeting of the League of California Cities
Revenue and Tax Policy Committee on January 21St
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January 24, 2005
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Recess and Reconvene: Mayor Clark recessed the meeting at 9:21 p.m. and
reconvened the meeting at 9:31 p.m.
REGULAR NEW BUSINESS:
City Manager Evans advised that two audience members were present waiting to
address Item No. 15, Portuguese Bend Nature Preserve Naming Opportunities, and
Item No. 16, Los Angeles Air Force Base Regional Alliance, and suggested those items
be moved ahead of the 2004 Five -Year Financial Model. The Mayor so ordered the
rearrangement of the agenda.
Portuguese Bend Nature Preserve Naming Opportunities (1201 X 1204)
Director Rojas presented the staff report, advising that staff was requesting the
concepts be approved so that the Palos Verdes Peninsula Land Conservancy could
move forward with the fundraising campaign.
Barbara Dye, Palos Verdes Peninsula Land Conservancy, invited the public to
participate in a fundraising kick off event on March 13th at a time and place to be
determined.
Councilman Gardiner moved, seconded by Mayor Pro Tern Wolowicz, to 1) Approve the
concept of allowing portions of the proposed City -owned Portuguese Bend Nature
Preserve to be named after donors who make monetary contributions toward
acquisition of the privately owned parcels that will make up the Preserve; and, 2)
Approve the concept of allowing a portion of Del Cerro Park to serve as a donor
recognition site.
Los Angeles Air Force Base Regional Alliance (1101)
Mayor Clark recused himself from discussion of this item.
Mayor Pro Tern Wolowicz reminded the audience that Council had taken action on this
item over several previous meeting. He indicated the matter spoke directly to the
economic base of the Peninsula because of the number of people in the community
who were employed both directly and indirectly by the L.A. Air Force Base, saying it
was most appropriate for the City to assist its residents and the local economy by
providing monetary assistance in the amount of $5,000 to help ensure the retention of
the Air Force Base in Los Angeles.
Barbara Dxe, Rancho Palos Verdes, advised that the local Chambers of Commerce
were deeply concerned about the future of the L.A. Air Force Base and were working
hard to retain it and supported Council's actions in this area.
Councilman Stern moved, seconded by Mayor Gardiner, to make a financial
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January 24, 2005
Page 13 of 22
contribution of $5,000 to the Los Angeles Air Force Base Regional Alliance.
The motion carried 4:0 on the following roll call vote:
AYES:
Gardiner, Long, Stern, Wolowicz
NOES:
None
ABSTAIN:
Clark
Recess and Reconvene: Mayor Pro Tern Wolowicz recessed the meeting at 9:48 p.m.
and reconvened the meeting at 10: 03 p.m.
Mayor Clark rejoined the meeting.
2004 Five -Year Financial Model — Revision 2 (602)
Director McLean provided a short overview of the updated Five -Year Financial Model.
Councilman Gardiner, assisted by a slide display, stated the purpose of his
presentation was to illustrate the use of models in the policy process. He indicated that,
as a part of its decision - making process, Council takes into consideration projections of
the future consequences of its decisions, noting those projections were based not on
facts but on assumptions. He noted that staff's five -year model's projections reflected
the General fund reserves going down, which was also based on a set of assumptions.
He explained that, by putting a different set of assumptions into play, such as including
the assumed Transient Occupancy Tax (TOT) revenues from the Long Point resort
project, a very different picture was presented, noting he was not saying one set of
assumptions was correct and one was not, but that there was a substantial difference.
He indicated that staff's job relative to the five -year model should be to develop
projections, indicate what assumptions were involved, and provide a series of "what -ifs"
or possible scenarios based on a set of assumptions and their projected consequences,
including alternative assumptions and the projected outcomes of those. He commented
he did not favor limiting the Council's and hence the public's view to a singular
perspective, saying Council's job was to review and understand the alternative budget
consequences for each set of assumptions, assess the risks, and use the five -year
model to assist financial decision making. He noted his major concern with the current
model was that it assumed only worst case revenues and expenditures, adding he did
not believe it was a good use of models in the policy process to illustrate only one set of
projections and the use of worst case projections was an implied policy which impacts
all decision making.
Councilman Gardiner opined that the model process should track projections with
actual expenditures overtime, and then update the assumptions and projections in
order to validate the model. He remarked that he would prefer to apply a number of
"what -ifs" rather than taking a singular view, then evaluate the risks and determine how
best to proceed, using that information to make policies. He indicated the Long Point
City Council Minutes
January 24, 2005
Page 14 of 22
project dwarfs everything else as far as prospective revenue for the City was concerned
and that everything possible should be done to expedite this project to completion.
Mayor Clark remarked that in his lexicon and experience what Councilman Gardiner
was advocating was called a "dynamic" model, noting the City had such a model, but it
was not at the level of dynamic interchange being described, including the integration of
multiple possible scenarios and risk analyses. He questioned whether Council was in
fact interested in attempting to entertain a public policy decision process by converting
the current financial model into a dynamic model. He reminded the Council that Long
Point had a lengthy history which included a number of owners, a bankruptcy, a failed
project entitlement, and now a Council- approved project that was moving forward, albeit
slowly. That being said, he noted he did not think there was a person on the Council
that did not grasp the potential importance of that project from an economic standpoint.
Councilman Gardiner responded that in the context of this discussion those
assumptions made an enormous difference in the assignment of probabilities.
Councilman Long concurred with Councilman Gardiner that the City's current financial
model is incomplete, noting his perspective was slightly different. He noted experience
had taught him that the unknown prevents one from ever having sufficient information
and, unfortunately, the unknown was typically something negative. He commented that
the City's history of financial "surprises" such as the San Ramon landslide abatement
project had more likely cost the City money than it provided revenue, adding the
positive things that bring money do not usually come as a surprise but, like Long Point,
were things that had been on the drawing board for a long period of time. He stated
that, if the real estate developers' yet untested projections come true, the City will gain
a great deal of extra revenue from this resort hotel project. He acknowledged there was
a very wide spread between that outcome and what staff was projecting, but noted it
was far from the worst case scenario. He reminded the Council that staff's model
assumed there would be no adverse outcome related to litigation or settlements, saying
the optimism that the City will be victorious in the case recently heard in Washington,
D.C., if unfounded, could cost millions which had not been accounted for, along with the
Tarapaca landslide and the very real possibility of more storm drain failures.
Councilman Long stated that, if one wanted to draw the outer boundaries of the
envelope, on one side was a developer's untested rosy picture of the City's projected
revenues and on the other was what the City might have to pay for landslides and
lawsuits. He remarked that he liked the idea of drawing all the outer bounds, but
believed that involved more than merely hoping the best comes to pass. He opined
that the model staff had provided was a good conservative mid -line, and was what he
preferred to see the budgeting based on.
Mayor Pro Tern Wolowicz indicated that Councilman Gardiner's points resonated with
him because the Council was involved with a great number of projections on an
ongoing basis. He opined that the City's concept of five -year modeling was a very
sophisticated process which actually was a dynamic model because it provided an
City Council Minutes
January 24, 2005
Page 15 of 22
opportunity to look at the horizon within a confine of ranges and the ability to prepare
budgets in two -year increments and refine them annually. He agreed the five -year
model should be as dynamic as Councilman Gardiner described, saying, ultimately,
numbers have to be chosen because the budget cannot necessarily be expressed in
ranges. He reminded that in the previous year close to a dozen items were excluded
from the budget because there were insufficient funds and a determination was made
not to fund certain things, saying that was an attempt to describe the budget within a
range by stating what was excluded. He noted, when it was subsequently discovered
there were additional funds, Council was able to reinstate some of those things that
were excluded which was as dynamic as things had gotten.
Mayor Pro Tern Wolowicz explained that in striving to develop a dynamic model for use
by the City it was discovered that neither the State of California nor any other
municipalities were utilizing dynamic modeling and it was extremely impractical to
attempt to add dynamics to the layers of the financial spreadsheets.
Councilman Gardiner inquired if the current model illustrates the ripple effect created by
changing the number in a particular cell, noting if, for example, the telecommunication
funding was lost and that cell was changed from a million dollars to zero, it would ripple
through and reflect year by year what that result would look like. He advised that he
had created a spreadsheet which wais a distilled version of the City's model and using
the golf course, Long Point, and all other revenues; storm drains, sewer repairs, and all
other expenses, if any number was changed it rippled through every cell.
Director McLean indicated the changing of figures certainly ripples through the
spreadsheet the same way and explained that, when the two -year budget document
was created, budgeted estimated revenues were developed based upon observing the
financial trends.
Mayor Pro Tern Wolowicz said, while there was an opportunity to put some of the things
Councilman Gardiner wanted to see addressed into the model, ultimately, staff was still
tasked with determining what set of numbers to present for decision making. He
indicated that approximately three years ago the Finance Advisory Committee, with
staff's assistance, identified the importance of Long Point and saw what the projected
dollar amounts were. He remarked that Councilman Gardiner's advocating to not act
precipitously to increase taxes by including Long Point revenue at this premature stage
was close to the antithesis of the line professional accountants walk. He indicated if
parcel taxes or user fees were adopted and the City ended up with a windfall of
revenues from the resort hotel, at that time the matter could be reassessed, but he
would be inclined not to include those revenues until that point.
Councilman Stern commended Councilman Gardiner for an excellent presentation,
saying he truly enjoyed it. He indicated, if the City's goal when it created the five -year
model as a tool had changed or the model is no longer meeting that goal, perhaps the
model should be altered, noting he was not adverse to staff's providing the ranges Dr.
Gardiner proposes, if possible. He stated he would never want to make a budget
City Council Minutes
January 24, 2005
Page 16 of 22
decision based on the assumption that the projected Long Point revenues were being
collected. He reminded his colleagues that in terms of meeting budget the current
model had generally done a very good job of slightly underestimating revenue and
staying below projected expenditures, saying, from his perspective and in the best
interest of the community, that was a good result. He opined that using historical data
and information that had been consistent over a period of time was a good basis on
which to make projections, adding that Long Point was admittedly an extraordinary
event and, while he was not opposed to having the model reflect it, he was reluctant to
look at all revenue as being equal. He noted that most of the revenues reflected were
within a very comfortable area, saying Long Point dramatically changed the picture but
it was also an amazingly speculative number at the present time.
Councilman Stern indicated there was value in having more information if staff can
come up with some clear projections as suggested, but noted he would never want the
City to stray too far from dealing with historical data because very bad decisions can be
made if dollars were counted before they were actually collected.
Councilman Gardiner voiced agreement with everything said, noting Councilman Stern
articulated an excellent point. He urged Council to consider the role of the model as
something that might be used to assist the framing and focusing of discussions for
policies and expenditures and, if so, perhaps a bit more time could be spent listing
assumptions systematically. He opined that most of the prior budgets were inertial, with
no surprises. He indicated the principal reason for the General fund reserve was to
provide for those things that were unanticipated, saying maybe the reserves should be
raised or lowered but it was unclear what was actually needed because the reserves
were basically a function of risk.
He concurred it was not appropriate to include Long Point at this time, saying, as
someone who revises probabilities year by year, inclusion of the Long Point project
would reflect that the probabilities were going up and, while it was not the time to bank
on those revenues, it provided an incentive to use it in a "what -if" scenario. He
explained if the developer intended to break ground in July and then October rolls
around with no progress, then the probabilities go down. He indicated that over a five -
year projection, the budget was authorized for the first year, tinkered with the second
year, and speculated on for years three, four, and five, and as time passes, the
numbers were observed and carefully tracked so that each subsequent year there was
more information and fewer surprises.
Councilman Gardiner opined that the real advantage of having a model was that it
provided an explicit picture rather than having to make calculations mentally, saying the
numbers can be plugged in, the crank turned, and projections can be made.
Mayor Clark commented that the Finance Directors within the League of California
Cities had all indicated they were not using this type of dynamic modeling in managing
their budgets. He stated he believes this topic had arisen out of Councilman Gardiner's
impression that the City's reserves were moving downward, noting he did not believe
City Council Minutes
January 24, 2005
Page 17 of 22
Council should make fiscal policy decisions based on the assumption that Long Point
revenues were in play because it was far too early. He remarked that despite
recognizing the potential of a significant impact on the City's finances there was a
tremendous amount of uncertainty and one of the overarching principles in budgeting
for public entities was applying prudent conservatism. He reminded his colleagues that
when he and Councilman Gardiner were elected, the General fund reserve was
approximately $8 million, saying it had grown dramatically to $14 million and the main
reason was because the Council had been prudent in budgeting. He concluded by
saying he would not mind seeing some of the suggested dynamic modeling scenarios
but he was not sure what direct impact they would have on the decisions Council was
charged with making in the coming fiscal year.
Councilman Long indicated he found the concept of dynamic modeling interesting, but
was unclear how it could exist without a dynamic reserve. He remarked that someone
else assuming risk on the City's behalf might look at things like the Abrams case and
Tarapaca canyon and say the City needed to reserve a good deal of money for those
things, saying once a deal was negotiated the reserve could be quantified. He noted
that the City had a reserve level that was static and arbitrary; one that represented a
guesstimate of risks being worth a certain percentage of the expenses for the year. He
opined that if the City quantified all the risks the way an insurance carrier would, things
might be looked at very differently. He presented the assumption that the five -year
model would be fairly close to the revenues and expenses and reflects a $5.7 million
decline in the existing reserves. He noted that, if the general direction was that of a
reduction in reserves, all the scenarios would speak of reducing the reserves and the
conclusion would be that the reserves were higher than necessary, saying that was
really an unknown. He concluded by saying the concept of the City's General fund
reserve was arbitrary and dynamic modeling without everything being dynamic,
including the evaluation of reserves, was incomplete.
Councilman Gardiner commented that he liked the idea of a dynamic reserve that goes
up and down depending on expected losses. He advised that he was addressing this in
response to a recent article in the Peninsula News which indicated, based on current
assumptions, that the City anticipated a drop in reserves to 8.3 million by 2009, saying
Council had not discussed this assumption nor agreed with it but there was an
opportunity to plug in the numbers and see what the results would look like because,
ultimately, what came out was a function of the assumptions made.
Recess and Reconvene: Mayor Clark recessed the meeting at 10:59 p.m. and
reconvened the meeting at 11:11 p.m.
Mayor Pro Tern Wolowicz indicated there was some merit in the concept of policies
within assumptions. He remarked that the five -year model contained a great volume of
material and can be rather daunting and confusing and suggested that his fellow
Councilmen look not at the numbers but at the general assumptions. He recommended
it might be useful to meet with City Manager Evans and Finance Director McLean after
reviewing the document to discuss with them the items of a policy nature and gather
City Council Minutes
January 24, 2005
Page 18 of 22
more information before embarking on the process that had been opened up of using
assumptions for policy issues.
Mayor Pro Tern Wolowicz asked staff to include in the `05 -'06 model his comments on
the list of items so his colleagues could provide their reactions. In response to the
magnitude of the City's legal fees, he recommended an analysis be performed of the
work taken on by the City Attorney in order to consider whether it would be beneficial to
bring at least one attorney in house to handle the mundane everyday items. Noting he
was not in favor of defined benefit pension plans in large organizations due to the high
cost in absolute dollars, he also recommended consideration of a 401 -K-type plan
being offered to new City employees effective July 1, 2005.
Mayor Clark asked for staff's reaction to the discussion.
City Manager Evans indicated that he was more concerned about the City's finances
than any other item, saying the five -year model was intended as a baseline and,
although it was not extremely sophisticated, it included many things. He explained that
the City's revenues had been fairly consistent and provided a good history on which to
base expectations. He advised that in the past few years, the State had occasionally
taken money away from cities and there had been some unexpected expenditures like
the San Ramon project, which had disrupted the model but, for the most part, the City
had a clear idea of what revenues and expenditures were going to be from year to year.
He noted some significant new revenues were expected from the collection of Transient
Occupancy Tax although it was unclear exactly when and how much, but that was
definitely on the horizon. On the expenditure side, he reminded the Council that the
infrastructure items, such as storm drains and sewers, were difficult numbers to
ascertain because these items were located underground, making them very complex
to assess.
City Manager Evans noted that very few cities had reserves anywhere near RPV's,
noting he would rather not spend a great amount of time trying to refine the model by
changing interest rate assumptions, revenue and expenditure increases, and potential
litigation costs because it is unclear how much more would actually be known by going
through this exercise. He stated staff needs direction from Council on how they would
like to handle the anticipated Long Point TOT revenues and how they would like to fund
infrastructure renewal projects.
Director McLean commented that he appreciates the concept of using "what -if'
scenarios, saying he welcomed the idea of examining the material assumptions such as
infrastructure renewal. He advised the one thing he would strongly discourage would
be using more than one model.
Accounting Manager Downs indicated she also appreciates Councilman Gardiner's
thoughts on dynamic modeling, saying the one concern she had about utilizing dynamic
modeling in the public sector was the possibility of making a mistake and having a
material decision made based on that mistake.
City Council Minutes
January 24, 2005
Page 19 of 22
Councilman Gardiner indicated that looking at the figures in the budget from a policy
perspective was not particularly interesting, but what was interesting to him was
considering what impact the Long Point TOT would have on the expenditure side and
what was happening with infrastructure renewal on the expenditure side, saying the
expenditures were controlled by policy.
Councilman Stern noted that was not necessarily true and reminded that the repair of
the Western Avenue sinkhole was an example of an expenditure that was not controlled
by policy.
Councilman Gardiner noted there were exceptions such as Western Avenue sinkhole,
but a good deal of what was being discussed had to do with policy, timing, and
amounts. He explained that the speculation on Long Point related to the timing and
amounts, noting one policy alternative was what the majority of Council had chosen — a
tax was being proposed so that spending on infrastructure renewal could begin, and, if
Long Point came in, consideration would be given to removing the tax and using that
new revenue source to continue to funding infrastructure. He said another policy option
would be to fund the infrastructure out of reserves, spending down to a predetermined
level and then funding the remainder out of Long Point revenues when they came in,
accelerating the projects as the money actually came into the City's coffers.
Councilman Stern commented that from his perspective the City's residents were better
served by having a user fee to fund such a long -term projects because it would, in
essence, provide them with the assurance that it would be funded year after year and
would not be subject to political whims if a future Council decided that more ball fields
or something else was needed. He explained when the revenue from Long Point was
realized and in the bank, residents could inform Council that they would like to devote a
portion or all of the TOT to off -set the user fee, saying he believes that was a more
sound way to see the project through.
Councilman Stern indicated he felt very strongly about the financial model because the
City had been extremely well served by what he would characterize as a very
conservative model, which under projects revenue and over projects expenditures,
saying the residents would be extremely displeased if those numbers started to reverse.
He remarked that he liked the conservative approach to the City's finances reflected by
the current model and would prefer to leave well enough alone and not do a lot of
tinkering with it.
Councilman Long indicated that the presentation and ensuing discussion had been a
very helpful learning experience for him.
Councilman Long moved, seconded by Councilman Wolowicz, to adopt staff's
recommendation with four additional instructions to staff as follows: Include the two
items outlined by Councilman Wolowicz, the evaluation of an in -house attorney and the
current employee pension plan for consideration as part of the next budget cycle; that
City Council Minutes
January 24, 2005
Page 20 of 22
the idea of a contingency based on past unknowns be built into the next budget; and, to
include a comparison of projected to actual costs based on past and current budgets.
Mayor Clark suggested Council be provided the budget versus actual expenditures by
City department for the last three years as part of the budget discussion.
Councilman Long noted that his idea to explore a contingency based on unknowns was
related more to budgets and could be addressed in the future and requested that this
particular item be removed from his motion.
City Manager Evans indicated that each of the staff instructions- requested by
Councilman Long were on the agenda to be discussed at the Saturday workshop
scheduled for January 29th.
Mayor Clark remarked it had been a very healthy discussion and, as Councilman
Gardiner suggested, there were a number of policy decision that Council must grapple
with as they adopted the budget and moved forward to implement some of their
initiatives for the year.
Councilman Long amended his motion, seconded by Councilman Wolowicz to:
1) Receive and filed the 2004 Five -Year Financial Model - Revision 2 (the "2004
Model "); and, 2) ADOPT RESOLUTION NO. 2005 -08, AMENDING RESOLUTION NO.
2004 -45, APPROVING THE CITY'S BUDGET FOR FY04 -05, TO INCREASE
GENERAL FUND REVENUES IN THE AMOUNT OF $2,214,677, BASED UPON AN
INCREASE OF $1,539,157 FOR PROPERTY TAX IN -LIEU OF VLF, A DECREASE OF
GENERAL FUND REVENUES IN THE AMOUNT OF $165,000 FOR GOLF TAX
REVENUE AND AN INCREASE IN GENERAL FUND REVENUES IN THE AMOUNT
OF $840,520 RESULTING FROM THE SALE OF THE TYLER PROPERTY.
The motion to carried on the following roll call vote:
AYES: Long, Stern, Wolowicz, Clark
NOES: Gardiner
Councilman Gardiner requested that his presentation be attached to minutes of this
meeting.
Blue Star Program (1101)
City Manager Evans provided a brief summary of the staff memorandum.
Mayor Clark advised that Mayor Judy Mitchell proposed the concept at a Mayors'
Luncheon last year that all the Peninsula City Councils seriously consider adopting this
program, which had been a tradition of recognizing the men and women serving this
country dating back to World War I. He voiced his support, saying there were a number
of residents in RPV who had family members serving abroad in the military in harm's
City Council Minutes
January 24, 2005
Page 21 of 22
way.
Councilman Gardiner moved, seconded by Councilman Stern, to adopt a program to
honor military families who live on the Peninsula. The motion passed by acclamation.
Budget Review Sessions and Community Leaders' Breakfast Schedule for 2005
(307)
The Council selected the following dates:
1) April 16, 2005 P.M. and May 7, 2005 for the Budget Review Sessions;
2) May 31, 2005 for the public hearing and adoption of the budget; and,
3) April 16, 2005 A.M. for the Community Leaders' Breakfast meeting.
COUNCIL DISCUSSION OF FUTURE AGENDA ITEMS & SUGGESTION OF FUTURE
AGENDA ITEMS:
None.
CLOSED SESSION REPORT:
City Attorney Lynch advised that reports and status updates were provided to Council
and no action was taken on any of the items.
ADJOURNMENT:
Mayor Clark formally adjourned the meeting at 11:58 p.m. to 10:00 a.m. Saturday,
January 29, 2005, for a Tactical Planning Workshop to be held at the City Hall
Community Room, 30940 Hawthorne Boulevard.
Attest:
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WACity Council Minutes \2005 \20050124 CC MINS ADJ MEETING.doc
Mayor
City Council Minutes
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