To: MAYOR AND CITY COUNCIL
From: LUKE SMUDE, ASSISTANT TO THE CITY MANAGER
STEPHANIE MEYER, INTERIM FINANCE DIRECTOR
PATRICK BUTLER, FIRE CHIEF
JOE HOFFMAN, POLICE CHIEF
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DISCUSSION AND POSSIBLE ACTION RELATED TO THE NEXT STEPS TO IMPLEMENT MEASURE FP, A VOTER-APPROVED $93,350,000 GENERAL OBLIGATION BOND MEASURE FUNDING THE REPLACEMENT AND RENOVATION OF CRITICAL PUBLIC SAFETY INFRASTRUCTURE IN THE CITY OF REDONDO BEACH
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EXECUTIVE SUMMARY
On November 7, 2024, Redondo Beach voters approved Measure FP, a General Obligation Bond in the amount of $93,350,000 to fund the reconstruction of Fire Station #1, Fire Station #2, and the Police Headquarters, and renovation of the Police Annex facility. The results of the election were certified by the City Clerk on December 10, 2024, with more than 71.4% of RB voters supporting the measure.
Following approval, staff from Departments throughout the City have begun efforts to ensure the approved bond measure can be executed in a timely and transparent manner. In the upcoming months, staff will form a bond implementation team, comprised of internal staff and external consulting resources, focused on project management, design and construction delivery, bond financing, citizens oversight, legal compliance, strategic temporary facility planning, and value engineering that will assist the City in developing both short and long-term plans to effectively sequence project implementation and bond issuance. This report summarizes upcoming actions/steps and provides a chance for the City Council to discuss the process and provide direction.
Staff plans to provide periodic updates to Council on the overall process and will return with proposed consulting services agreements, budgetary actions, and procedural items for consideration of approval as appropriate.
BACKGROUND
Voter approval of Measure FP, a $93,500,000 General Obligation Bond Measure, as part of the General Election held on November 5, 2024 was a historic moment for the City of Redondo Beach and will enable Fire Station #1, Fire Station #2, Police Headquarters, and the Police Annex to be significantly improved to support public safety in the City for decades to come. More than 71.4% of voters approved Measure FP, exceeding the 2/3 majority required for passage. Execution of a bond measure of this nature is unique among municipalities and requires a number of actions related to bond issuance, facility design, construction, and oversight. In order to ensure the process moves ahead smoothly, executive staff throughout the organization have been working to take the initial steps towards developing a cohesive plan that will guide the initial phases of the process.
These efforts touch a wide range of disciplines and will require extensive work with internal and external experts to ensure the bond issuance, and eventual construction, can be completed in a way that provides maximum benefit to the community. Some of the primary steps include the selection of a financial advisor, the engagement of a bond program/project management firm, the identification of temporary facilities, and the creation of a citizen’s oversight committee, among other tasks. Below is a list of the large categorical items associated with the implementation of Measure FP that staff are beginning to address.
Bond Financing
City staff have begun the process to engage a financial team of experts to assist with bond issuance. The team will include a Financial Advisor, Underwriter or Underwriters, Bond Counsel, Disclosure Counsel, a Trustee, and/or Fiscal Agent. Staff will also engage one or more national rating agencies to evaluate the City’s current credit rating and support bond issuance. A detailed listing of the entities involved, roles, qualifications, recommended solicitation process, and timing is included as an attachment with this report. While each entity has its specific role, the City ultimately makes the decisions that drive the process forward.
The first actions in this category involve the selection of a Financial Advisor and the engagement of Bond Counsel to advise the City regarding the timing and manner of bond issuance and to establish the legal foundation for all related financial actions. To this end, staff in the Finance Department, City Treasurer’s Office, and City Manager’s Office have drafted a request for qualifications/information (RFQ/I) that will be released this month to potential financial advisory firms with responses due in mid-January 2025. To assist in evaluating the responding firms, staff intend to ask the Budget and Finance Commission to designate a member representative to participate in the interview/evaluation process. The firm that is identified as best meeting the City’s needs will then be recommended to the City Council for consideration of contract approval.
Separately staff in these departments are working with the City Attorney’s Office to identify/engage Bond Counsel. Once the Financial Advisor and Bond Counsel firms are in place, a more detailed bond issuance schedule will be prepared that addresses the process to select a bond underwriter(s), the credit rating review, and the timing/strategy for procuring the bond funds. One of the other early action items in this process will be the preparation and approval of a reimbursement resolution that allows the City to recover all costs associated with Measure FP implementation before and after bond issuance.
Project Planning and Delivery
The project planning and delivery process will involve a number of internal staff and external consultants. Staff in the City Manager’s Office, Public Works, Fire, Police, Information Technology and Community Development Departments, and the City Attorney’s Office will all be involved. Given the existing demands on Public Works personnel and the need to continue to advance the City’s traditional CIP projects, it is critical that the City engage an experienced project/construction management firm to serve as the City’s Bond Program Manager and help guide the design, value engineering, and construction procurement process and assist the City in selecting and managing the engineering/architectural/construction firms and other service providers that will implement the various planning, design, temporary facility/equipment acquisition, and construction tasks for each of the four public safety facilities. It will also be necessary to hire an internal staff resource, working out of the City Manager’s Office, who is dedicated to overseeing the implementation of Measure FP, serving as the City’s day-to-day “owner’s representative,” and ensuring effective communication between City operating departments and the variety of outside firms needed to execute these transformative projects.
One of the tasks the Bond Program Management Firm and the City’s internal representative/team will need to evaluate is the cost effectiveness of the various construction procurement options. The City Charter allows for alternative delivery models (e.g., design-build) that can shorten project timelines. There are pros and cons associated with the different methods. As such, the RFQ/I that is being prepared by staff to competitively select a Bond Program Management firm will seek expertise in strategic project planning, along with experience in managing the successful construction of similar government buildings and facilities using diverse project delivery methods. Once selected, the City will work with the firm to prepare an overall bond program implementation schedule, evaluate the benefits of the various procurement methods, and make recommendations on the type/sequence of project design, engineering, and construction.
Staff anticipates releasing the RFQ to qualified Bond Program Management Firms in January 2025, and is already working to develop a comprehensive scope of work and project narrative that will serve as the basis for the solicitation. On a parallel course, staff is also evaluating the job specification and pay needed to attract a new internal staff member capable of serving as the City’s dedicated Measure FP project manager/owner’s representative. It is expected that the position would be paid through Bond funding.
Temporary Safety Facilities/Equipment
Another key area of the initial planning process is how to best maintain continuity of service for the Police and Fire Departments during the course of facility reconstruction. It will be important to identify appropriate locations and ensure the feasibility of temporary operational infrastructure, including structures, utilities, information technology and communications. This could come at a significant cost and options must be carefully considered to take advantage of available space and to minimize disruption to services. Subject-matter experts across several fields (i.e. Public Safety Radios, 911 Operations, Telephones, Data Communication, etc.) will be needed to coordinate this dynamic transition in order to maintain high levels of service delivery. Planning for these needs will also be a core function of the Bond Program Management Firm.
Bond Oversight Committee
Also included on California’s November 5, 2024 General Election ballot was Proposition 5, which sought to lower the approval threshold for General Obligation Bond measures that fund public infrastructure improvements from a 2/3rds majority to 55%. Proposition 5 included accountability requirements such as the establishment of a citizens’ oversight committee to ensure bond proceeds are used exclusively to fund appropriate expenditures related to public infrastructure projects. While Proposition 5 was ultimately voted down, Measure FP included language to meet these potential requirements and committed to establishing a citizens’ oversight committee to enhance transparency and increase community involvement in the City’s accounting process.
Initial research indicates that most cities do not establish citizen oversight committees for General Obligation Bond measures, though they are not unheard of. Typically, these bodies have an odd number of participants appointed from a cross-section of the community that have interest or expertise related to the specific bond issuance. They also have a clear, and narrow, scope of responsibilities that allow the advisory bodies to focus exclusively on the expenditure of funds and not on the project specifics, their prioritization, or decision-making related to bond issuance. Jurisdictions set limits on the number of times these groups can meet annually, establish an expected work product, and cement the committee as an advisory body, as opposed to an independent decision-making body with project authority. Attached is a sample resolution from the City of Piedmont establishing an Oversight Committee for the construction of a community pool.
With these efforts underway, staff is confident a great deal of progress can be made in the first quarter of 2025 towards building a team of experts that will assist the City in implementing Measure FP. Staff recommends the City Council receive and file this report and provide input on moving these items forward.
COORDINATION
The City Manager’s Office, City Treasurer’s Office, City Attorney’s Office, Community Development Department, Financial Services Department, Fire Department, Information Technology Department, Police Department, and Public Works Department contributed to this report.
FISCAL IMPACT
Issuing the bonds approved through Measure FP will provide financing for critical infrastructure upgrades to Fire and Police facilities.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
• Bond Financing Team Roles (Initial Draft)
• City of Piedmont Bond Oversight Committee Resolution