Grand Terrace Heats Up and Tempers Fly!

Everyone in Grand Terrace agrees that we have a fiscal problem. However, they don’t agree on a solution. The proponents for yes on Measure C have suggested that if Measure C does not pass, the threat of disincorporation is a possibility. As a viable city, we are required to provide “mandated” minimum services such as law enforcement, animal control, and land use; but there’s no mandate as to the degree or level of service. According to Bernardo Sandoval, Mayor Pro Tem, “What we do know is that the level of service that the City provides (if Measures C does not pass) will be below what the County can provide as a disincorporated area.” “LAFCO will take a look at us and say, ‘Oh well. You guys should really think about coming back to the County. But in order to do that, your $3.8 million debt to the RDA needs to be repaid, and future liabilities toward the present and past employees [legacy costs] become due within 20 years and that dollar amount is approximately $9 million,” according to Sandoval. “So if you want to disincorporate, we’re going to tax property owners to pay back that dollar amount over 20 years.” “Disincorporation is an option that the people of Grand Terrace will never vote for,” according to Jeffery McConnell, real estate broker and developer. “LAFCO’s (Local Area Formation Committee) has made it eminently clear in the April 2013 Council meeting that no city has ever been disincorporated unwillingly in California’s history. LAFCO also made clear in the September 24, 2013 Council meeting that it is a couple of years’ process and that it must go before the voters, with a two-thirds vote needed to disincorporate. Plus, disincorporation does not wipe out our debt. We must also, at the same time that we are voting to disincorporate, vote to tax ourselves to pay off our long-term debt that our previous politicians and bureaucrats have so graciously left us with. So stop telling the people that we are going to disincorporate!” As of 2012, Grand Terrace has a 62.7% homeownership rate compared to 54.3% in other areas of San Bernardino County, according to SCAG, the Southern California Association of Governments. “The likelihood of a two-thirds vote to disincorporate getting past all of these homeowners and commercial property owners is not likely to happen,” said Councilwoman Sylvia Robles. What are the options? Measure C, contract city, budget cuts, or a combination of these? “Measure C is a 5% Utility Users Tax (UUT) proposed on this November 5, 2013 ballot to maintain existing services. Measure C is proposed as a ‘temporary emergency measure’ that will be in effect for six years. Measure C will raise approximately $1.1 million per year. Measure C applies to all utilities including cell phones; one exception is satellite. Without Measure C, the City will have no choice but to further reduce services currently provided to the residents.” Information provided from a letter sent out by the City of Grand Terrace signed by the City Council dated August 12, 2013. A comprehensive review of the City’s fiscal condition was completed by a community-based budget advisory committee. Members of that committee are stepping forward with various opinions. Ryan Stephens, a current member of the Planning Commission, states: “What we have are really two competing visions for the future of our community. Look, I am not normally a proponent of taxes, but after reviewing the City’s budget and the deep cuts that have already been implemented at City Hall, we don’t have many options left.” Jeff McConnell, another member of the budget advisory committee, states: “At the third or fourth meeting I was starting to realize that the staff recommendations accomplish one major thing: they save staff jobs, they save their benefits, the status quo at City Hall is kept with high salaries and high benefits.” McConnell has been criticized for changing his mind: first supporting the Measure C tax and then recanting. He explains, “I felt we were being guided … Here’s a stabilization plan, here’s the staff recommendations, now vote. So I decided I’m going to go for the lowest staff proposal of a tax, and nobody seconded it. That’s when I decided, ‘Hey, I’m not going to vote for the recommendation.’ So when you hear that Jeff voted for the tax, that’s not the whole truth—that’s maybe a half-truth at best.” To get Measure C on the ballot, the City Council had to vote unanimously that there was a fiscal crisis. (See Resolution number 2013–28) Although unpopular with fellow Council Members, Councilwoman Darcy McNaboe stood her ground and required her fellow Council Members and staff to provide a balanced budget. If Measure C does not pass, this general fund balancing plan will be implemented according to Resolution 2013–26. The City Council will assume the duties of the Planning Commission and will only meet once a month. According to Doug Wilson, the past Planning Commissioner, “Maybe 20% of the Planning Commission meetings over the past year have actually taken place because there are no cases to work on. Why are we paying 12¼ times what was originally envisioned for the Planning Department? Why are we spending 10 times the amount for police protection?” “The people of Grand Terrace need to know that currently our annual law enforcement cost is approximately $1.8 million annually, which represents about 50% of our entire general budget. Whenever you hear our politicians trying to scare you by saying they will cut a sheriff from the budget you also need to know that it really means only one Sheriff’s shift (8) hours not all day. The savings from that one shift is more than $257,000 for the year,” said McConnell. “But the largest reduction is in city administration personnel. Basically it was pensions and health care. I started doing more research on contract cities and saw this video about Sandy Springs, Georgia. That’s a city that privatized everything: 90,000 people and they have five employees. This is amazing; no unfunded liabilities (pension debt), and they’re flush with cash.” Adams agrees: “Grand Terrace is a contract city and currently contracts out parks maintenance, finance department, law enforcement, animal control, legal services, etc.” Steve Elam of Wildan Financial Services, a contract service provider, shared: “I don’t think that you could make the conclusion that a contractor is going to be more responsive or have a bigger stake in the community than an actual employee. The ability to administer the City in a professional manner, to get information to the council to make informed decisions is going to really be impacted by outsourcing.” According to Jeffrey McConnell: “Grand Terrace started out as a contract city, with minimal employees. I contacted www.contractcities.org and spoke to the president and found there are over 160 contract cities in California, and Grand Terrace used to be a member of their association.” “The proposed budget for fiscal year 2013–14 projected a general fund deficit of $674,713. Why is Measure C asking for $1.1 million? Have the current Council and Staff been good stewards of our tax dollars?” asked Mark Jolstead. “With the hundreds of thousands of dollars being spent on studies, reports, and marketing materials to cram this Measure C down our throats, have they considered the impact on the loss of local businesses and possible effects on our sales tax dollars? Many local businesses feel the Grand Terrace Area Chamber of Commerce is not representing them regarding this issue.” In a letter from the Chamber of Commerce President Stacey West to its members, the Chamber is directing business owners who feel they may be impacted by Measure C to contact Betsy Adams, the Grand Terrace City Manager. There could be caps on maximum utility taxes as approved by the City Council. “The other thing of concern is that the City has no reserves. When you look at the budget that we have cobbled together, even if the tax fails and we do all the cuts the Council approved for December and January, we end the year with just a little bit under $300,000—that’s all the general fund has. We don’t have reserves set aside to repair or fix buildings, vehicles, streets—there’s none of those reserves you would typically expect a city that’s more than 30 years old to have,” said Betsy Adams, City Manager. “So that, to me, is the real concern. We not only need a utility tax to cover the structural shortfall, we also have to begin to create some reserves or something serious. It’s going to happen, and the City is not going to be in a position to in any way deal with it, and we’re not going to be in the position to be able to borrow any money to deal with it.” Adams said, “The nice things and the things that make a community special are unfortunately things that are not mandated but those are usually reasons why you incorporate as a city.” Elam said, “The things that have set [Grand Terrace] apart in this area will no longer be there. That has to impact property values and the City’s reputation. I’m convinced they’ll drop. I think they’ll have to. The amenities in the community will be impacted with park closures, and law enforcement response will diminish. The 5% would give us about $1.1 million. So it’s a little less than what we had identified as the structural deficit. But even at $1.1 million it could largely stabilize the City’s budget, and I think—probably not immediately, but over a period of a few years—it would get that general fund reserve to where it should be,” said Adams. “Measure C is a 5% utility tax that ensures we can preserve our quality of life.” If Measure C does not pass, there may be a silver lining, according to Councilwoman Sylvia Robles, who provided information from the San Bernardino County Office of the Assessor who recently reported a 3% increase in assessed values that will increase revenue to Grand Terrace. Robles contacted the Assessor’s office Tuesday afternoon for more detailed information and the assessor’s office responded quickly. We will have more on that next week.