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CC SR 20260707 03 - Status Update on Forming New GHADCITY COUNCIL MEETING DATE: 07/07/2026 AGENDA REPORT AGENDA HEADING: Regular Business AGENDA TITLE: Consider a status update on the process to establish a new third Geologic Hazard Abatement District in the Greater Portuguese Bend Landslide Complex. RECOMMENDED COUNCIL ACTION: (1)Receive and file a status update, including the estimated cost, on forming a new third Geologic Hazard Abatement District (GHAD), referred to as the Portuguese Bend Landslide Abatement District (PBLAD), not currently part of an existing GHAD within the Greater Portuguese Bend Landslide Complex (Landslide Complex); and, (2)Provide Staff direction on whether to: a.Stop working on forming a new third GHAD referred to as the PBLAD; b.Continue with forming a new third GHAD, referred to as the PBLAD, and return with a Professional Services Agreement (PSA) to engage with a consultant to begin proceedings; or c.Pursue dissolving ACLAD and KCLAD and forming one large global GHAD and return with additional information on next steps. FISCAL IMPACT: Tonight’s recommendations to receive and file a status update and provide direction on a future GHAD will not have a fiscal impact. However, there is a fiscal impact on the City that is dependent on the direction provided by the City Council and will be presented as part of future actions pursuant to that direction, as noted in the discussion of this report. VR Amount Budgeted: N/A Additional Appropriation: N/A Account Number(s): N/A ORIGINATED BY: Darius Vitkus, Associate Engineer DV REVIEWED BY: Ramzi Awwad, Public Works Director APPROVED BY: Ara Mihranian, AICP, City Manager ATTACHED SUPPORTING DOCUMENTS: A.Senate Bill No. 1195, California State Statute, Public Resources Code, Sections 26500-26654 (Linked) 1 B. Proposition 218 Notice and Protest Procedures (Linked) BACKGROUND: control of a “geologic hazard,” which is defined as an actual or threatened landslide, land et seq.), authored by the City’s anyone. “Improvement” means any activity that is necessary or incidental to the Proposition 218’s notice and protest procedures for new or increased property related 2 The first two GHADs formed in California were the Abalone Cove Landslide Abatement District (ACLAD) and Klondike Canyon Landslide Abatement District (KCLAD). There are now some 55 GHADs organized and functioning in California. ACLAD was formed by the City Council in 1981 through Resolution No. 81-4 (Attachments C) in response to the Abalone Cove Landslide (ACL). KCLAD was formed by the City Council in 1982 through Resolution No. 82-17 (Attachment D) in response to the Klondike Canyon Landslide (KCL). During the July 1, 2025 City Council meeting, Councilmember Perestam requested, and the Council concurred, that staff bring forward a future report for the City Council’s consideration to form a third GHAD encompassing the properties, including possible private and public properties, that are not part of an existing GHAD within the Landslide Complex. On August 5, 2025; Staff presented a report on the advantages and procedures of forming a new third GHAD and requested direction on initiating the formal process to form the third GHAD, to be called the PBLAD (Attachment F). Below is a summary of the information presented regarding formation of a GHAD. Advantages of Forming a GHAD Staff presented the following advantages to forming a GHAD: • GHADs Have Borrowing Authority: A GHAD is authorized to levy and collect assessments on each property within its district to pay for the cost of maintenance and operation of any improvements. A GHAD is also authorized to use the Improvement Act of 1911, Municipal Improvement Act of 1913, or the Improvement Bond Act of 1915 to pay for the costs of improvements made pursuant to GHAD Law. Neither ACLAD nor KCLAD have opted to utilize this financing mechanism which, if utilized, could require substantial annual debt service. • Immunity from Liability for Damages: A GHAD is provided a degree of immunity from liability for damages caused by injury to persons or property as a result of gradual earth movement or actions taken to abate such hazard provided that the board has (1) found the existence of such hazard on the basis of adequate evidence; (2) determined appropriate remedial action to abate such hazard; and (3) undertaken to implement such remedial action. This degree of limited liability encourages the formation of GHADs and undertaking of remedial action to aba te the hazard. • GHADs Are Exempt from the California Environmental Quality Act (“CEQA”): Improvements or other remediation efforts caused to be undertaken under the GHAD Law and all activities in connection therewith are exempt from CEQA. This statutory exemption is broad as these improvements and activities are deemed to be specific actions necessary to prevent or mitigate an emergency as defined by 3 Section 21080(b), a section of CEQA that expressly exempts certain activities from CEQA. • GHADs Are Exempt from the Requirements of the Public Contract Code : Public Resources Code § 26600 provides that “the board of directors may negotiate improvement contracts or may award such contracts by competitive bidding pursuant to procedures adopted by the board of directors.” Part 3 of Division 2 of the Public Contract Code establishes competitive bidding requirements for local agencies but does not include requirements for GHADs. Disadvantages of Forming a GHAD Staff presented the following disadvantages to forming a GHAD: • Potential Blurred Boundaries between City and GHAD: Although a GHAD is a subdivision of the state and technically would not be part of the City, if the City Council serves as the board of directors of a GHAD , and there is the potential for this GHAD to enter into agreements with the City to utilize certain personnel and equipment; then there is the risk of blurring the boundaries of actions taken by the GHAD and actions taken by an agent or representative of the City that could potentially expose City assets to liability claims. As such, it is imperative that strict lines of separation be maintained between the City and a GHAD. Other Information on Forming a GHAD The following is considered by Staff to be neither an advantage nor disadvantage of forming a GHAD because it does not add or remove requirements otherwise expected of a government agency or special district; however it is notable: • GHADs are Likely Subject to the State’s Prevailing Wage Laws: A GHAD is not explicitly exempted from the State's prevailing wage requirements under the Labor Code. Whether GHADs must comply with prevailing wage laws depends on the nature of the work performed and whether it qualifies as "public works" under California Labor Code §§ 1720 et seq. Broadly speaking, prevailing wage requirements can increase overall project costs by approximately 25% or more. In addition, the administrative and compliance obligations associated with prevailing wage may limit participation from some contractors or firm s. • Without a detailed fiscal analysis, the cost impact of a new GHAD is unknown. A new GHAD may result in a higher cost to the City because more City-owned properties could be included in the new GHAD, therefore increasing City assessments. However; the cost of activities performed by the GHAD could be spread amongst more property owners, therefore potentially reducing the City’s share and total cost. GHAD Formation Procedures Following are the recommended procedural steps for the formation of a GHAD, which are exempt from the Local Agency Formation Commission (LAFCO) under State law: 4 1. Retain a certified engineering geologist to prepare an engineer’s report which would lead to the development of a “Plan of Control” describing the landslide hazards and a plan for the abatement or mitigation thereof. 2. Conduct a town hall to receive community input on forming a new third GHAD and to present the draft engineer’s report including the draft plan of control. 3. Conduct a public meeting for the City Council to receive information on the plan of control and to determine that public health, safety, and welfare require formation of a GHAD. After receiving the report, the Council would be asked to first adopt a resolution declaring that it is subject to the GHAD Law and forward a copy of this resolution to the State Controller. The City Council may then adopt a resolution to initiate proceedings for the formation of a GHAD. The resolution must contain the following: a) A statement that the resolution is made pursuant to the GHAD Law. b) A statement that the City Council has been presented with and has reviewed a plan of control and has determined that the health, safety, and welfare require formation of a GHAD. c) The setting of a public hearing on such determination and directing that notice be mailed to all owners of real property included within the proposed GHAD. 4. Conduct a public hearing with at least 20 days of notice to each property owner within the proposed GHAD, as well as information on the where the plan of control may be reviewed or duplicated. Property owners may make a written objection to the formation in accordance with Proposition 218 (Attachment B). The City Council will be presented with all objections at the public hearing. 5. Enact a resolution of the City Council at the close of the hearing, or within 60 days thereafter, ordering the formation of the proposed GHAD and appointing five property owners within the GHAD to the initial board of directors for terms not to exceed four years. Alternatively, the City Council may appoint itself to act as the board of directors or a combination of City Council members and property owners with a preference that the board of directors is not comprised of a quorum of City Council. If property owners are appointed to the initial board of directors, then following the initial term, the board of directors shall consist of five elected directors as provided by Section 26583. 6. Direct that the formation proceedings be abandoned if it appears at the hearing that property owners of more than 50% of the assessed valuation of the proposed GHAD object to the formation. Levy & Collection of Assessments In order to levy and collect assessments to pay for costs and expenses of maintenance and operation of any improvements, the GHAD must first prepare a n engineer’s report that sets forth the yearly estimated budget, the proposed estimated assessments to be levied each year against each parcel of property, and a description of the method used in formulating the estimated assessments. 5 Next, the GHAD board shall adopt a resolution declaring its intention to order that the costs and expenses of maintaining and operating improvements be assessed against property within the GHAD and consider all protests at a duly noticed public hearing. At the conclusion of the hearing, the board may adopt, reduce, or modify any assessment and shall make its determination upon each assessment described in the engineer’s report. Thereafter, the board may confirm the assessments and order the levy and collection thereof by resolution. If assessments are proposed to increase from the maximum amount levied in any previous year, the board is required to comply with Proposition 218 notice, protest, and hearing procedures with respect to that increase (Attachment B). This means that a 50% protest vote blocks such proposed increase. City Council Direction on Forming a Third GHAD At the August 5, 2025 City Council meeting, Staff were directed to initiate the formal process to form a third GHAD to be called the PBLAD. The lands for the PBLAD are proposed to consist primarily of the Portuguese Bend Landslide (PBL) in between the ACL and KCL (Attachment E). Out of the 113 properties within the proposed PBLAD, 90 are privately owned. Furthermore, 23 properties are owned by the City and exceed 50% of the assessed valuation of land within the proposed GHAD. These properties currently do not engage in any landslide abatement efforts, and forming a new GHAD would contribute towards the overall efforts in the Landslide Complex to prevent damage, mitigate, abate, and control the landslide. DISCUSSION: Status Update on forming a Third GHAD In response to City Council direction to initiate the formal process to form a third GHAD, Staff advertised a Request for Qualifications (RFQ) for the creation of a proposed PBLAD on January 23, 2026, on the PlanetBids platform. The scope of work included preparing a Plan of Control and Engineer’s Report, as well as providing technical and administrative support to the City throughout the process of the formation of a new GHAD. The following key deliverables were requested as part of the RFQ: • Initial Assessment / Baseline Hazards Report • Plan of Control • Resolutions of Intention and Formation • Engineer’s Report • Community Outreach Materials (Optional Task) • Support for Formation Process & Hearings (Optional Task) • CEQA Documents (Optional Task) 6 Proposals were received from two firms by the RFQ deadline, and an evaluation panel of three Staff members scored the proposals and determined that one proposal demonstrated the necessary skills and experience to perform the scope of work whereas the other proposal did not. A fee proposal was received from the top firm with a cost in the range of approximately $500,000. Considering the higher-than-expected cost, fee negotiations were put on hold pending City Council direction on whether or not to proceed. Potential Paths Forward Staff envision multiple paths forward, each with their own advantages and disadvantages, and therefore seek City Council direction based on the following discussion. 1. Stop working on forming a third GHAD considering the high cost of forming and administering the third GHAD (with continuing future administrative costs). a. Advantages: i. No City funds are expended on formation and administration of a GHAD. b. Disadvantages: i. Could expose the City to an argument that work in the PBL is not exempt from CEQA requirements, which can add many hundreds of thousands of dollars in cost and potentially years in additional time . Staff notes that certain federal permitting and regulatory requirements still apply; such as the National Environmental Policy Act (NEPA), the Clean Water Act (CWA), and the Endangered Species Act (ESA). However, compliance with these requirements is significantly less time consuming and less costly in the case of the City’s landslide mitigation activities. ii. Does not exempt work in the PBL from the Public Contract Code requirements, which can add cost and months of additional time to work that does not use state or federal funds. Should the City Council direct Staff to stop formation of a new third GHAD, no further action will be taken. 2. Proceed with forming the third GHAD despite the high cost of forming and administering the third GHAD (with continuing future administrative costs). a. Advantages: i. Exempts work in the PBL from CEQA requirements, which can add many hundreds of thousands of dollars in cost and potentially years in additional time, resulting in a net savings despite the cost of forming and administering a third GHAD. Staff notes that certain federal permitting and regulatory requirements still apply; such as NEPA, CWA, and the ESA. However, compliance with these requirements is significantly less time consuming and less costly in the case of the City’s landslide mitigation activities. 7 ii. Exempts work in the PBL from the Public Contract Code requirements, which can add cost and months of additional time to work that does not use state or federal funds. b. Disadvantages: i. Should consolidation of multiple GHADs be considered in the future, the cost will be greater than dissolving existing GHADs and reforming them into one new larger GHAD at the same time. ii. There would three separate GHADs adjacent to one another with different, but perhaps similar, plans of controls and engineer’s reports that may require coordination and collaboration. Should the City Council direct Staff to continue with formation of a new third GHAD, Staff will negotiate the fee for formation of the third GHAD and return with a PSA for City Council approval. Staff notes that this is the first step of forming a new GHAD and additional direction from the City Council as well as public input will be needed during future steps. 3. Dissolve ACLAD and KCLAD and form one large global GHAD encompassing, at a minimum, the ACL, PBL, KCL, and potentially other properties within the Landslide Complex. The process for dissolving existing GHADs and forming a larger GHAD is described in the Additional Information section of this report. a. Advantages: i. Exempts work in the PBL from CEQA requirements, which can add many hundreds of thousands of dollars in cost and potentially years in additional time, resulting in a net savings despite the cost of forming and administering a third GHAD. Staff notes that certain federal permitting and regulatory requirements still apply; such as NEPA, CWA, and ESA. However, compliance with these requirements is significantly less time consuming and less costly in the case of the City’s landslide mitigation activities. ii. Exempts work in the PBL from the Public Contract Code requirements, which can add cost and months of additional time to work that does not use state or federal funds. iii. Reduced overall cost should consolidation of multiple GHADs be considered in the future. iv. Simplifies use of federal grants secured by the City on projects in ACLAD or KCLAD, and potentially a third GHAD. v. Allows for a unified and coordinated response to land movement remediation and response. vi. Allows boundaries to be drawn based on the most current data including properties that may now be considered benefiting from the GHAD’s activities. vii. Increased levies may be collected to be used toward land movement remediation or responses based on the boundary limits of the GHAD. 8 b. Disadvantages: i. Impact on existing litigation needs to be determined, which requires a detailed legal analysis. The City’s attorneys recommend that no dissolution of ACLAD or KCLAD proceed without this detailed legal analysis. ii. Constituents of ACLAD and KCLAD will have reduced local control because a board elected by constituents made up of a larger area will make decisions affecting constituents currently represented by more local boards. Such decisions include the amount to levy property owners. iii. Depending on the Engineer’s Report, levies contributed by constituents could be applied more broadly to landslide solutions whereas levies are now applied more locally because each district is independent of another district. iv. Depending on the Engineer’s Report, a larger global GHAD may increase the overall financial obligation for the City through higher assessments. v. A larger GHAD will require professional administration as compared to the current volunteer administration of ACLAD and KCLAD. This will be more costly and could result in the loss of some specialized knowledge the volunteers have. vi. Dissolution and reformation is a lengthy and complicated process, with no guarantee of success. However, considering that the City is the largest property owner, the City has a significant influence on the outcome. Should the City Council direct Staff to pursue dissolving ACLAD and KCLAD and forming one large global GHAD; Staff will begin the process of doing so, which will require a revised RFQ be issued, additional research followed by additional direction from the City Council as well as public input. Although the City Council previously directed staff to start the process of forming a third GHAD in the PBL, considering the higher-than-expected initial cost of forming a GHAD; Staff believe that the City Council may want to re-assess their previous direction to Staff. Accordingly, Staff presented the aforementioned range of options and are requesting that the City Council reiterate previous direction or provide new direction to staff. ADDITIONAL INFORMATION: Dissolving a GHAD The City Council may, by resolution, order the dissolution of a particular GHAD pursuant to the Public Resources Code. The resolution is only valid if the City Council, based on substantial evidence, makes one or more of the following findings: (a) The corporate powers have not been used, there is a reasonable probability that those powers will not be used in the future, and the district holds no significant liquid assets. 9 (b) The board of directors, by resolution passed by unanimous vote of the directors, or by a vote of the owners of more than 50% of the assessed valuation of the real property in the district, approval of the dissolution of the GHAD. (c) The GHAD has not levied or collected any assessments and holds no significant liquid assets. (d) The GHAD has not substantially complied with a material condition of the resolution of formation adopted by the legislative body. If the City obtained a dissolution, then the City Council or GHAD’s board of directors would need to adopt a resolution setting a noticed public hearing on the proposed dissolution. If a GHAD were dissolved, the City Council would be required to assume all remaining liabilities and obligations, and to fulfill certain statutory requirements regarding the GHAD’s assets. Since the City is a property owner, the City can offer an alternative plan than what is provided for in the statutes for the distribution of ownership of a GHAD’s assets. The City could propose to transfer the assets to the re-formed GHAD. The City Council could then reform the GHAD with the Council as the board of directors, but if more than 50% of the assessed valuation of the real property in the proposed GHAD object, the formation must be abandoned. Initiating Re-Formation of a GHAD The re-formation of a GHAD may be initiated by resolution of the City Council. Note that if it appears at the public hearing that owners of more than 50% of the assessed valuation of the proposed GHAD object to the re-formation, the City Council must close the hearing and direct that proceedings for the re-formation of the GHAD be abandoned. If not more than 50% of the property owners object to the re-formation of the GHAD, at the close of the hearing or within 60 days thereafter, the Council may proceed by resolution to order the re-formation of the proposed GHAD with the Council as the board of directors. (Pub. Res. Code § 26567) A potential drawback to this approach is that ACLAD could successfully be dissolved, but the City might not be able to successfully re-form the GHAD. This would leave the City with all of the liabilities and obligations of the GHAD. Apply to LAFCO for a Reorganization of a GHAD. The City Council could apply for the reorganization of a GHAD by Los Angeles County Local Agency Formation Commission (“LAFCO”). LAFCO has the power to review and approve with or without amendment, wholly, partially, or conditionally, or disapprove proposals for changes of organization or reorganization, consistent with LAFCO’s written policies, procedures, and guidelines. LAFCO may initiate a proposal by resolution of application for the dissolution of a district, a merger, the establishment of a subsidiary district, or the formation of a new district. However, LAFCO may only initiate a proposal if the change in organization or reorganization is consistent with a recommendation or conclusion of a study prepared under LAFCO’s authority. 10 Applications for a reorganization or dissolution done under LAFCO can be found on their website: http://www.lalafco.org. If the City attempts to change the organization of the Board through LAFCO, then the special reorganization filing fee is $10,000. If the GHAD decides to dissolve through LAFCO instead of reorganizing, then a district dissolution is $5,000. The City can initiate proceedings as a landowner or affected agency. This approach is more costly than dissolving under the Public Resources Code and requires studies supporting the City’s proposal. Additionally, a dissolution under LAFCO runs the same risk of transferring all the liabilities and obligations to the City if a new GHAD is not formed. However, instead of applying for a dissolution, the City can apply for a reorganization under LAFCO which is not accompanied by that risk. Another benefit of reorganization under LAFCO is the City would not have to ensure all the liabilities and obligations were successfully transferred to the new GHAD since the district would not be dissolved. LAFCO does not always accept the proposal exactly as submitted and may choose to make alterations, but LAFCO cannot continue a project without the applicant so if the City does not agree with the direction LAFCO’s proposal is headed, they can withdraw the application. CONCLUSION: Although the City Council previously directed staff to start the process of forming a third GHAD in the PBL, considering the higher-than-expected initial cost of forming a GHAD; Staff seek direction from the City Council on whether to stop pursing formation of a new GHAD, continue as previously directed, or begin the process of dissolving ACLAD and KCLAD and forming one larger GHAD. ALTERNATIVES: In addition to Staff’s potential paths forward, the following alternative action is available for the City Council’s consideration: 1. Take other action as deemed appropriate. 11 RESOLUTION NO. 81-4 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES ORDERING THE FORMATION OF THE ABALONE COVE LANDSLIDE ABATEMENT DISTRICT The City Council of the City of Rancho Palos Verdes hereby resolves as follows: Section 1: The City Council of the City of Rancho Palos Verdes passed Resolution No. 80-76 on December 2, 1980, initiating proceedings for the forma- tion of a landslide abatement district. Said resolution established January 6, III1981 as the date for a public hearing on formation of the landslide abatement district. The City Council finds and determines that notice of said hearing was properly sent out to all property owners in compliance with Section 26561, et seq. , of the Public Resources Code. Section 2: The City Council of the City of Rancho Palos Verdes held a public hearing on the formation of the landslide abatement district on January 6, 1981 and received objections to the proposed formation from all owners of real property within the proposed district wishing to make objections. After reviewing all said objections the City Council hereby finds and determines that objections were re- ceived from owners of less than 50% of the assessed valuation of property within the proposed district. Since such objections were received from owners of less than 50% of the assessed valuation, the City Council may proceed with the formation of a landslide abatement district. Section 3: The City Council hereby orders the formation of the Abalone Cove landslide abatement district pursuant with boundaries as shown on Exhibit "A" attached hereto, to the provisions of Division 17 of the Public Resources Code of the State of California. Section 4: The following five owners of real property within the. proposed district are hereby named to the initial Board of Directors of the Abalone Cove landslide abatement district for the terms indicated: 1. James Stewart 2 years 2. John Tretheway 2 years 3. Harriet Medve 4 years 4. Ken Dyda 4 years 5. Seymour Warner 4 years After the initial term, each term will be for a four (4) year period. PASSED, APPROVED AND ADOPTED this 6th day of January, 1981. c.- c=lzf3srutitaiL)t.d MAYOR aRlk__ ___ III ATTEST: DONALD F. GULUZZY, CITY CLERK & EX OFFICIO CLERK OF THE COUNCIL dIL IF.; . . 7" L. . 1:' . 0( / TY CL I HEREBY CERTIFY that the foregoing is a true and correct copy of Resolution No. 81-4 approved and adopted by the City Council of the City of Rancho Palos Verdes at a meeting thereof held on the 6th day of January, 1981. All,t• / Ty C' RK C-1 cligitillikWa 4 Eir.e.-...V.: N4,,A,.. 4-' s--"`" r—,"7""\-. 4.. 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