“A nation of sheep will beget a government of wolves.”
Overall Financial Health of the City
Over the last twenty fiscal years (2003-2022) PVE has experienced economic and demographic trends that have negatively impacted the City’s financial picture (click on link here for a more detailed analysis). The important financial trends to be considered include the following:
Revenues
PVE has limited and fixed sources of revenue (primarily property & other taxes including Measure E and parcel tax revenues, concessions fees and other fees/permits/fines, and revenue from federal, state and county sources)
PVE enjoys only modest investment income on its reserves
Expenses (current actual and future potential)
Increasing “safety” costs to run the city including police & fire, fire/flood/earthquake mitigation, street & road maintenance, and ensuring reliability of Utilities and other Critical services
Debt service, primarily CalPERS for pension liabilities which have increased
Expenses related to maintaining “qualify of life” in our city (for example upkeep and maintenance of open space & parklands, beautification & improvements, view preservation, critter control, and other city services
Other unmet challenges such as increasing inflation, eroding infrastructure and pension debt unpredictability
In a nutshell, cash security is the City’s overarching financial priority. The latest version of the Long -Term Financial Forecast, presented at the June 6, 2022 City Budget Workshop (click on link here to Excel file on Long Term Financial Projections) shows our forecasted revenues falling short of projected expenses beginning in 2024, long before Measure E expires (FY 27-28). By FY 30-31, there will be an accumulated shortfall of roughly $18M, not counting possible future investment such as paying down our pension obligations, shoring up our infrastructure or further mitigating our fire risk through additional parklands maintenance.
Questions on Relevant Issues:
1. Untapped Revenue
Background: Residential and/or commercial development are an obvious potential source of revenue for the City but ones that would potentially impact “Quality of Life” priorities of some residents (e.g. low population density, open space, quiet/bucolic environment). Paid parking in locations such as Malaga Cove Plaza, Lunada Bay and Paseo del Mar is often cited as “low hanging fruit” for new sources of revenue.
Question: How do you view these options and how would you approach the possibility of allowing these sources of revenue? What other non-tax revenue ideas do you think the City should explore?
For responses by the four candidates, click here.
2. Appropriate Capital Structure for PVE
Background: CalPERS currently funds the City’s pension liabilities. Although we experience somewhat unpredictable ups and downs due to CalPERS “misses” on estimated returns and their considerably obtuse actuarial process, they ARE a source of funding by freeing up cash that we can use for other needs.
Question: Should we use our available cash to cover other pressing needs of the city rather than paying down pension debt? Are you in favor of using a pension funding strategy that some other cities, such as Manhattan Beach, have utilized by issuing Pension Obligation Bonds (POBs) to obtain more favorable terms for the City’s pension debt?
For responses by the four candidates, click here.
3. Taxes
Background: For roughly 40 years - except for one year (FY 18-19) when Measure D failed and Measure E had not yet been approved - PVE has relied on a Parcel Tax to fund a sizable portion of the City’s operations. The current Measure E Parcel Tax covers roughly 20% of the City’s expenses and approximately 70% of PVE PD costs (FY 22/23 budgeted cost of $7.1 million), not including $2.8 million in associated pension liability. It expires in FY 27-28. Together, the Parcel Tax and revenues from regular property taxes account for 60% of the city’s income. Using the average increase in regular property tax revenue over the past 20 years, it is doubtful that annual increases will exceed 5% going forward, and the increase may be lower if there is a decline in the housing market. Considering that taxes are generally the least palatable method of raising revenues in the eyes of residents, answer the following.
Question: What is your view of tax policy for the City and how tax revenues should be balanced among other sources of revenue such as those mentioned in question 1 above, most of which also engender some resident opposition?
How should the City prepare for the future loss of revenue from Measure E?
For responses by the four candidates, click here.
4. Cost Savings Opportunity - City Staffing
Background: While staffing is largely within the purview of the City Manager, he/she is constrained by decisions Council makes related to the addition of FTEs, salaries, etc. Take into account some of the following premises and considerations in answering a series of questions about City Staffing that follow.
In many cases, hiring more qualified people, or more FTEs in certain roles, can add directly to the revenue stream, e.g. code enforcement, procurement and grant writing personnel.
In other cases, hiring people who may be viewed as “overqualified” for the specific position may pay other dividends. If truly talented, they can absorb work requiring a higher level of competence in addition to handling routine tasks that are also needed, and these individuals often identify cost savings opportunities thus partially “paying” for themselves.
This could appear to residents as title inflation and overcompensation, and residents also cite pension obligations as a concern even though new employees that are not currently part of PEPRA (i.e. new hires from the private sector) are not adding significant pension debt.
Another consideration is that over the past 10 years there has been unusually significant turnover among City employees (not a good thing) coupled with hiring challenges resulting from a currently robust job market and the view that longer commutes makes PVE a less desirable work location.
One solution that has been offered is to outsource many of the City’s operations (thus alleviating management headaches), especially those that can be done remotely, such as accounting, payroll, IT, procurement, etc.
Question: What is your view of:
a) a hiring policy for the City?
b) the latitude Council should accord the City Manager in running his/her organization?
c) how to ensure the City’s ability to attract talented personnel who will be committed, long term to their employment with PVE?
d) how the City Council, without intruding on the City Manager’s prerogative, can foster a spirit of teamwork and positive morale?
e) outsourcing certain City support functions?
For responses by the four candidates, click here.
5. Resident Education
Background: Voters armed with facts make better decisions. Many of our residents care a great deal about the City but have limited time to truly understand the issues and challenges faced by Council and City staff. The City’s finances can appear arcane due to some of the peculiarities of municipal accounting without better information to make them intelligible. As an example, the annual Audit Report (previously the CAFR, now the ACFR) is over 100 pages in length and does not conform to accounting rules familiar to most business professionals.
Yet, PVE is not an extremely complex City compared to most. It is nowhere near as complicated as the typical public company in which residents might hold stock. Basically, PVE is an operating entity with roughly $20M in annual revenue and fewer than 60 employees. With some effort, it could be made very accessible to the average PVE voter.
Question: What would you do (or what are you doing) to make the City’s financial situation more comprehensible, and accessible, to the average (typically very intelligent and well educated) PVE constituent?
For responses by the four candidates, click here.
6. Long Term Planning and Infrastructure
Background: Some city capital assets (e.g., storm drains, buildings, etc.) have a life span of more than 30 years, but many cities (including PVE) have not set aside funds for the eventual capital replacement cost of these assets. Repairs and/or replacement eventually will cost millions of dollars.
Question: How important do you consider this issue? If an expensive capital asset does not need replacement in the next 4 years, how much priority should the Council place on developing and implementing a funding strategy for repair and/or future replacement of these expensive assets versus the city’s other competing spending priorities, including consideration of using debt to finance addressing points of failure in our infrastructure? Please explain your proposed funding strategy. If you are not in favor of implementing a funding strategy in the near term, please explain how you think the City should pay such repairs and replacements when they present in the future.
For responses by the four candidates, click here.
7. Fire Risk and Public Safety
Background: The entire City of PVE occupies the highest fire risk zone as determined by the State. Reducing the fire risk is a shared responsibility between private property owners and the City which manage significant parkland acreage. The City’s recent brush clearance activities have triggered opposition by some residents.
Question: What strategies do you recommend to reduce fire risk and increase public safety?
For responses by the four candidates, click here.
8. Malaga Cove Traffic Congestion & Two-Lane Roundabout Selection by City Council
Background: The City Council selected the two-lane roundabout alternative in March 2022 and submitted a request to Metro for construction funding in May 2022. Many PVE residents (see surveys posted on Nextdoor and by PVEadvocates.com) oppose the two-lane roundabout due to concerns relating to:
• Pedestrian/cycling/transportation safety
• Worse traffic for Via Corta, residents living on PVDW, and from Via Valmonte at the Triangle
• Loss of mature trees, green space, parking, and protected parkland
• Excessive dusk to dawn lighting and signage
• Loss of the bucolic character to our City Center
• Environmental/financial/legal risk to the City flowing from the roundabout design (including paying back the County for grant to create the park on corner as parkland)
Question: Given that significant segments of the City residents have expressed concern or opposition to the Roundabout, what are your recommendations about proceeding from this point on addressing traffic issues at PV Drive West and Via Corta and the reasons for your position?
For responses by the four candidates, click here.
9. Parkland Encroachment
Background: The City has about 600 acres of deed restricted parkland that, under the City CC&Rs, can only be used for “public recreational use.” In addition, there are about 90 paths, alleys or lanes (collectively called “rights-of-way”) between houses that are not deed restricted but are covered by Municipal Code, which mandates that they cannot be encroached upon. However, over the years, many homeowners have “annexed” adjacent public property for their own private purposes, including building structures and using dense vegetation to block public access and improve their privacy. Historically, the penalties for encroachments have been ineffective in deterring violations or forcing removal. Scores of such encroachments were reported in 2013 and most still exist today. In 2021, City Council passed a new policy with escalating and more significant fines, but still little has changed to remove or deter encroachments. Even parkland encroachments that were adjudicated by City Council as much as four years ago remain untouched.
Question: Are the City’s parklands and rights of way worthy of protection from encroachments? And if so, what specifically would you do as a City Council-member to more effectively remove and deter encroachments on parkland and rights of way?
For responses by the four candidates, click here.
10. Parkland Committee Role in Trees Disputes and Encroachments
Background: The City has historically had limited resources to manage trees on Parklands and many trees on Parklands have grown taller and wider than ever intended or expected. This circumstance presents potential hazards in terms of fire and falling limbs and pinecones. In addition, the tree growth has obscured ocean views for many long-time PVE residents who once enjoyed ocean views from their homes. On the subject of Parkland Encroachments, members of the Committee have asked to be involved in reviewing alleged parkland encroachments but so far, they have not been allowed to do so.
Question: How will you address this as a member of City Council? Please be specific in outlining your recommendations. Should the Committee also be responsible for reviewing alleged parkland encroachments and making recommendations to the City Council for enforcement?
For responses by the four candidates, click here.
11. State Laws and Housing Density
Background: PVE is a planned development community. All single family zoned lots in the City are subject to Conditions, Covenants & Restrictions (CC&Rs) that govern all individual parcels and are incorporated in all single-family lot deeds.
The State of California has enacted a series of laws to override local control over zoning, construction and density:
First is the State assessed Regional Housing Needs Allocation (RHNA), in which the State tells Palos Verdes Estates how many new moderate-and low-income housing units need to be constructed in the City, and requiring the City to rezone as necessary to allow for construction of such housing.
Next, the State of California has overruled local housing and construction regulations – and CC&Rs – governing single family zoned lots by requiring that, with limited exceptions, cities must ministerially approve homeowner applications to build one ADU plus one JADU on any zoned single-family lot in the City in accordance with specified limited objective design and construction criteria, including mere 4-ft. side yard and backyard setbacks.
In response, the Council added Section 18.45 in the Municipal Code codifying this ministerial (staff) approval process for ADUs and JADUs in the City, notwithstanding that such construction contravenes the CC&Rs that mandate single-family residence for most properties.
Effective January 1, 2022, the State of California has decreed that two dwellings can be built on any single family lot larger than 2400 sq. ft. in the City and any such single family lot can be split in two and two-housing units built on each new lot, thereby allowing up to four housing units to be built on each single family lot, again all subject to a ministerial (staff) approval process limiting review to specified objective design and construction criteria (height, setbacks, materials, etc.). Also effective January 1, 2022, new state law allows (but does not currently require) the City, in disregard of current local zoning restrictions, to re-zone neighborhoods near mass transit or urban infill areas to allow development of apartment complexes with up to 10 units per property, excluding parcels located in very high fire hazard zones (per Department of Forestry and Fire Protection map) and any publicly-owned land designated open-space land or for park or recreational purposes pursuant to an enacted local restriction or approved by a local initiative.
The recent PreservePVE.org Citizens’ Initiative that circulated for only 28 days dramatically underscored how concerned PVE homeowners are over Sacramento’s actions and how protective they feel of PVE’s CC&Rs.
Question: As a Council member, in specific terms, how would go about ensuring protection of PVE’s CC&Rs in view of State encroachment on local decision making and homeowner contractual rights?”
For responses by the four candidates, click here.
12. Your Agenda and Priorities
#12a) Past Campaign Promises
Question to be answered by Incumbents
Background: As all of us know, whether becoming a parent or serving on a city council, that it is one thing to have a theoretical knowledge of something and quite another to have direct experience with it. With that in mind, please respond to the following:
Question: What were your top 3 campaign promises and do you believe you made good on those promises? Please give specifics including whether there were difficulties to overcome in order to achieve your promised goals. If any of your campaign promises could not be achieved, what were the factors that kept you from accomplishing those promises including whether you changed your views in the interim?
For responses by the three incumbents, click here.
#12B) Issues and Challenges
Question to be answered by New Candidate
Background: The job of city council person is a challenging and complex one. Most tasks of this nature require a clear vision to be successful. In addition, politics is often defined as “the art of the possible”, which can require compromise and accommodation. With that in mind, please respond to the following:
Question: As you consider the issues you are running on currently or planning to include in your campaign as a Council candidate, what are the key challenges that you perceive in front of you and what is your plan for dealing with those challenges? What is your view of how to balance differing points of view in order to reach the best decisions for the City?
For responses by the new candidate, click here.
13. Decision Making, Transparency, & Engagement
Background: As a City Council member, you will read all staff memos, committee recommendations, and resident communications, ask questions, hear and participate in the discussion and debate around each issue. As such, you should be better informed on almost any issue than the average person in our community. Recent complex issues include the proposed roundabouts at Via Corta/PVDW and the triangle, zoning law issues raised by the operation of La Venta Inn, and appropriate structuring of city departments.
Question: If an issue comes up where you think the best decision for the City is “X", but your sense of the community is that the residents want “Y" (even if “Y” may not be affordable or may be otherwise ill-advised), what would you do? Do you believe that your role as a Council member is to make what you consider to be the best decision for the City or should you defer to the perceived or expressed “will of the people” impacted by the decision, even if you believe their position is based on limited knowledge or even misinformation? How will you ensure transparency when making such decisions in the face of vocal oppositions? How will you gauge community sentiment and how much will you try to engage and educate the community ahead of time in making these decisions?
For responses by the four candidates, click here.
14. City Staff Hours and Service Level
Background: In late 2021 PVE moved to a four-day work week (Monday - Thursday), and recently restricted office interactions with the public to only 8am - 10am each day. This dramatic reduction in service level was implemented without City Council consideration, discussion, and input from the public. It was also not posted online or in the City Newsletters since then.
Question: How do you feel about that? Should this have been discussed at City Council with the opportunity for public input?
For responses by the four candidates, click here.
15. Municipal Code Enforcement
Background: PVE is governed by a Municipal Code that defines rules and consequences for violating the Code. Residents have complained about the inconsistency of regulation of the Municipal Code on issues such as La Venta Inn operating outside of its permitted use in an R-1 Zone or the management of yard signs.
Question: When informed of code violations either by city staff or residents, what will you do as a Councilmember to ensure that there is consistency in Municipal Code regulation and enforcement?
For responses by the four candidates, click here.