Tuesday is Dues-day. The dues are simply schooling yourself on how our local governance is organized, who are the players, what are the screw-ups, where is the money and what things get reported?
You’re a citizen, an advocate for democracy with this first step, paying attention.
Citizen Tip = Financing the Hall property park
The city has three choices to finance the Hall property park: borrowing money using General Obligation Bonds (requiring a public vote), borrowing money using Lease Revenue Bonds (requiring only a majority vote of the council), or using money from the General Fund.
Accurate figures are slippery, but estimated construction costs put out by the city are $12-18 million with $8.5-9.5 million in the construction fund. These figures keep changing with the cost going down and the fund going up. It's clear there's not enough on hand to build the park and private contributions have not materialized.
On that second choice, Lease Revenue Bonds, it's important to understand that these require a revenue stream to make the annual “lease” payment, otherwise the money has to come out of the General Fund. What are the revenue streams for the library, for instance, yet alone the Hall property park?
Lease Revenue Bonds have been abused by the state, counties and cities because they are often not self-supporting with a revenue stream, thus putting a strain on budgets and causing expenses to be cut in other areas. It was reported recently in the news that Los Angeles Mayor Villaraigosa is proposing an extension of a ½ cent temporary sales tax in the city in order to use the additional future revenue stream to borrow against. This would be legitimate, but would sacrifice guaranteed future income to meet current expenses -- the proverbial “kicking the can down the road.” This is what we want to avoid in Encinitas, especially for any project that is not an absolute necessity in these times of reduced tax revenues.
I don’t think Jerome Stocks has any real understanding of all of this because he only thinks of the short-term expediency. He denies that the city has already spent or committed to spend $46 million on the Hall property. If it’s not a line item expense in the annual budget, it doesn’t count for him, just like the pension obligation.
Bonds are usually issued to be repaid in 30 years. The repayment cost is roughly double the amount borrowed, and the bond consultant gets paid about $1 million. If the city borrows money for the Hall property park construction, it will probably be for the full construction cost. The city did this with the library and then shifted the money already set aside to fill other holes in the budget.
In his April 18th state of the city speech it sure sounded like Jerome Stocks was setting things up to borrow money. Sure enough, the next week brought Finance Director Jay Lembaugh to propose municipal bond refinancing for the Encinitas Ranch Public Improvements (CDF).
But is this all? He’s desperate to get something started on the Hall property before November. But rushing ahead on projects is how the city gets itself into trouble. The Public Works yard on the Mossy site is the prime example. It cost us an extra $3.5 million in “unforeseen” costs. We all love the library, but it went $6 million over budget, was finished behind schedule, and needs another $½ million to fix a defective heating and ventilation system.
