Steve Stewart, Dana Point

Councilman Muller’s opinion article in the latest Dana Point Times deserves comment.

Residents who have studied the city’s financials understand that since 2008 the city has burned through millions in funds due to years of deficit spending. Successive councils since 2008 either did not understand or ignored the reality that the city was spending its “net worth” at an alarming rate—total worth down $34 million from 2008 to 2017. The data is available online from the city’s annual financial reports. That spending pattern is unsustainable and will lead to dire financial straits. In fact, that outcome is coming into view right now and Muller’s optimistic comment comparing reserves to projected income is largely irrelevant to the underlying situation.

Muller uses his opportunity for an opinion article to find fault with Mayor Debra Lewis when she wants to explore further cost cutting options in a budget meeting. He takes exception to the cost cutting approach and instead argues we can largely keep our current spending levels just by increasing revenue. He thinks the Lantern District can generate up to $1 million annually in property and sales tax revenue, enough to sustain us until more hotels come on line. If only that were true.

Fact—the city’s own consultants, Keysor Marsden, estimated in 2015 that it would take up to 10 years to build out the Lantern District. When fully built out, a decade in the future, they estimated annual revenue then, from sales and property tax, would be about $600,000. Not $1 million ever or anytime soon.

Consider that our total policing bill from the OC Sheriff is now $12 million and goes up every year by about $600,000 / (five percent) annually. The annual police bill consumes everything we collect yearly from hotels in occupancy tax. That annual cost increase will consume everything we would get from the Lantern District, when it is fully built in 10 years, in just one year. How is any of that sustainable? The Lantern District is clearly a revenue pipe dream but always fodder for useless political arguments about Measure H. Could Mayor Lewis be onto something? Maybe it really is time to look at city expenses very seriously.

For readers who want to understand our city overhead better, use the following link to look at city employee salaries http://www.danapoint.org/home/showdocument?id=21921. Read that, consider the Sheriff’s bill and then ask whose priorities are out of order here? Councilman Muller needs to spend more time absorbing valid economic information and less time trying to politicize our city government.

To submit a letter to the editor, email editorial@danapointtimes.com.

About The Author DP Times

comments (22)

  • Steve,

    Let me guess, you live behind the gates and likely don’t have to deal with the types of issues we see in the Lantern District or in Capo Beach. You and Mayor Lewis decry police spending but offer no solutions. If we are our over spending on police services what are you proving we do about it?

    You act like $600K a year lost due to Measure H is a drop in the bucket. How do you and Mayor Lewis expect to make up for this downfall? You claimed in other posts that vacation rentals would destroy our communities, but offered no plan to make up for the TOT revenue we lost. My guess is you, the Mayor and Wyatt will have serious issues with the new hotels being proposed at the the Headlands. “Not enough parking” “Does our city need more tourists?” “We should reject and cut more beloved city programs instead!” “Developers are evil.”

    I don’t often agree with Muller, but I agree that if our city isn’t progressing it is dying. Measure H and the referendum have sucked much needed tax dollars from our city. It’s a viscous circle, as we cut more programs our city becomes less attractive. Our revenue gap will continue to grow. People like you will continue to point fingers, offer no solutions, all while sitting behind your pretty little gates.

    • Jeremy, to clarify, the city’s financial issues predate Measure H, and the term of Mayor Lewis.

      The point is that our legacy councilmen Viczorek, Muller, and Tomlinson, and their predecessors allowed expenses to outstrip revenue, and spent down most of our reserves. Then they arbitrarily changed the Town Center plan to give away major concessions to out of town developers. Measure H was just an attempt to enforce the original Town Center plan. Measure H is not the reason for the budget shortfall.

      The $600K that the city’s consultants say Town Center will generate when fully built out in ten years could be more than offset by a careful review of expenses, without putting the interests of developers ahead of the interests of our residents.

      As well, a careful reading of the letter reveals that it does not advocate cutting police services, just a careful review of the contract, which our legacy councilmen voted against. Reviewing contracts, especially major ones, is just prudent financial management. It boggles the mind that Councilman Muller would criticize Mayor Lewis for voting to review a $12 million contract before approving it. That’s how Muller helped get us into the financial position we’re in now.

      Our city must continue to progress, as you say, but we can do that without giveaways to out of town developers at the expense of our own citizens.

  • Jeremy, there are solutions.

    Too many events,, 50 a year The police are used at all of these events. The police are spread too thinly during these events. What to do, cut down on events. Very simple. Give the DP back to the residents. Okay, I can hear the 34% says, “not my event”. The people who make the most money from these events are the are mostly the restaurant Where do the restaurant owners and the developers who build these places live? Mostly investors who do not live anywhere near DP.

    Jeremy, start thinking, and stop criticizing people who are trying to find solutions. Look for ways to save, not give it away to investors who only care about their return. Most have too much money anyway, and do not need our help to make more.

  • Yet again it’s the same small group of people writing letters to the editor to criticize the city staff and three council members. Capo Cares, Save Dana Point, citizens for responsible development–whatever they go by, they are the same small group of people using the same phrases to scare people into thinking any change or opinion not condoned by them means the sky is falling.

    Yes, changes need to be made but not by viciously attacking staff and residents who have a different opinion. Measure H gets passed and now the city is seeing potential new projects heading for the hills when they realize it’s impossible to make three numbers work. Save Dana Point cries not enough money in the budget but what did they expect now we are seeing no growth. Any projects currently being built got in under Measure H and anything else is sure to be opposed by a handful of vocal citizens.

    Wake up Dana Point. Your city is being held hostage by a few not-in-my-backyard residents. Let’s hope they don’t turn their focus on you next.

    • No Jay, you are wrong, but I know you always think you are “right” Nothing will change your mind. You are one of the 34% Nationwide who will not see facts. Why do you call the older council members “legacy” members? This is what I understand legacy to mean legacy

      noun
      1.
      an amount of money or property left to someone in a will.
      synonyms: bequest, inheritance, heritage, endowment, gift, patrimony, settlement, birthright; formal benefaction.

      Are you a Trust attorney??? You do not make ant sense to me.

  • FACT CHECKER

    The City Council, Mayor Lewis and Mayor Pro Tem Wyatt especially, should be commended for undertaking the difficult task of attempting to restore fiscal responsibility to Dana Point’s city government. Additional revenue and spending cuts will be required to produce a balanced budget.

    The new city manager will have the especially difficult task of increasing efficiency and of holding every city department accountable for their performance and costs. Accounting measures need to be implemented to track the city’s results in a timely manner so better decisions affecting the budget can be made.

    The real goal is not to just have balanced budgets but to produce budget surpluses that can fund more city services or capital improvements. New development projects that could eventually increase revenue are underway in both Town Center and other Dana Point properties. It should be noted that multiple projects adjacent to Town Center have lower height limits than Town Center (35 vs 40 feet) and use the existing parking requirements in the municipal code for their restaurants, as does the original Town Center Plan contained in Measure H.

    It was hard enough for the council to come up with the significant reductions without addressing the police contract that encompasses approx. 33% of the city’s budget and shows an increase of over $600,000 in one year in the FY 2018-2019 budget. It would have been prudent to review the contract as proposed by Mayor Lewis and ask for an explanation of the huge increase. Perhaps a cost savings could have been found without affecting ongoing services. or improving them by adjusting priorities. Personnel costs and fixed contracts are other major areas of the budget not subject to cuts. What remains are steeper cuts to city services and events that residents enjoy.

  • Come on Dana Point Times! It’s the same small group of people in every issue who lob insults at each other and nothing new gets actually reported. Do your job! Residents want to know the facts not just a few peoples opinions.

    Please please please focus on the real issues and not more flufff. Help us understand the issued on both sides. I, for one, am tired of of hearing from the same people bicker in public. Facts not opinions please!!

    • Paula, you asked the editors to ” Help us understand the issues on both sides.” If you’ve been reading the articles/Letters and clicked on the links provided (like the one in the letter above), along with the comments on those articles/Letters by other readers, then I would hope you’d be able to come to an understanding of what’s happening in the city, with regards to the differing views of the City Council’s performance, It’s not the job of the editors of The Dana Point Times to tell you what to think.

      • Thank you Jim and here is my reply to Paula.

        People in other countries think Americans are stupid. Just so you nasty people know. I am an American ,white and own a home. However I was bought up in another English speaking country. .

        98% of my friends are white American’s, and we all agree on one fact, people from other countries think a lot of Americans are stupid, dumb and have more money than sense and buy stuff and spend more money on junk, including food than any other country in the world. More, more, more give me more We spend more on health care and get lesser results than any other country.. We have more guns than people. these are hard facts. So—–

        People form other countries as a general rule think we are money hungry and only think of ways to make money have little or no regard for the consequences.

        Having said all that, my friends are the opposite to the negative views of others, but they all read and think. They do not ask others to do their thinking.

        Read, and make up your own mind, do not let headlines sway you. the only people who will spoon feed you are the politicians and some news media outlets.

        • Corrine, thank you for representing the world. It is an honor to have been enlightened by your insights. The net loss in the number of U.S. citizens to other countries every year certainly supports your positions that the rest of the world does not respect the American way of life. Again, thank you.

  • Long-Time Resident Reply

    Your statement that ‘the city was spending its “net worth” at an alarming rate—total worth down $34 million from 2008 to 2017.‘ isn’t right. I’m not sure where you’re getting your figures, and don’t really want to know, but the correct current net worth of the city in FY 2016 is on page 18 and shows $197.3m rounded. Figures for some of the previous years are:

    FY 2006. $147.6m
    FY 2007. $167.9m
    FY 2008. $173.9m
    FY 2009. $171.2m

    (I realize you said 2017 and not 2016. But FY 2017 financials aren’t available yet. In order for your $34 million number to be correct, net worth from FY 2016 to FY 2017 would have to drop over $52 million. Not bloody likely.)

    • LTR
      In your reply to my letter you are confusing the asset base of the city with the funds balance. The asset base is the fixed investment the city has in roads, roofs, computers and door knobs. It is money already spent, like the planters in the middle of the Lantern District streets. It is capital investment.
      Funds are what we pay our bills with. The funds balances cited in my letter are from the CAFR – Comrehensive Annual Financial Report. I think you and Joe have something in common. You do not understand the financial reports that describe our city’s shrinking economic resources. With out funds in excess of operating expense we cannot pay for capital projects or make repairs to or replace our depreciating assets Those funds are dwindling relatively rapidly. That is what my letter is about.

      • Long-Time Resident Reply

        Mr Stewart:

        “Net worth” is defined as “the amount by which assets exceed liabilities” (look it up).

        So you are apparently saying that by your statement,

        “Successive councils since 2008 either did not understand or ignored the reality that the city was spending its “net worth” at an alarming rate—total worth down $34 million from 2008 to 2017.”

        you meant,

        “Successive councils since 2008 either did not understand or ignored the reality that the city was spending its funds balance at an alarming rate—total balance down $34 million from 2008 to 2017.”

        That’s fine, but don’t blame me for confusion caused by your non-conventional use of terms.

      • Steve, you wrote that the City is spending its net worth. Did you mean to say something else?

  • Shawn:
    To be more precise I should have said the city is spending the liquid portion of its net worth. If present trends continue we will be functionally insolvent.

  • Steve, there is a significant difference between net worth and liquidity. So are you saying the city is running out of cash?

  • My response to LTR and to you adequately describes the situation. LTR brought net worth into the discussion, but in this instance net cash is the real measure of health because the other component of net worth, fixed assets, is not fungible.

  • Thanks Steve. You spoke of your concern about the city spending its net worth in your Letter to the Editor and whoever LTR responded to your letter.

    I’m struggling to get a clear picture of what you think the size of financial problem is that the city currently faces. You say net cash is important, what is your definition of net cash, how much does the city have, and how much do you think it should have?

  • Steve, did you see my question?

    • A protracted conversation about the details of city finances is not suited to this forum. If you want to know more go to the Financial Review Committee meeting. To LTR’s point, I used the phrase net worth because we are not having a conversation among municipal accounting mavens.

      • Thank you. Some people are like dogs with a bone. Dana Point has to face up to some facts quickly.

      • A detailed and accurate conversation isn’t acceptable for this forum? that’s junk.

        To be honest, I don’t mind your overall perspective and general direction on reviewing citywide costs, and that is fantastic, but Steve- if you use financial terms you either need to make sure they are accurate or identify that you are not sure if they are accurate. Seriously, is that too much to ask?

        In reality- your argument is that we spend too much and soon our estimated revenues will fall short of our estimated operating expenses. I believe that is an accurate statement, but for you to lay out terms and such as “net worth” or “reserves” requires for you to be accurate. Clearly, in order to bring increased attention to your argument you try and apply some of these terms, So don’t you have a responsibility to be accurate?

        One other item- honestly not trying to be a jerk here- but there is no such thing as “functionally insolvent” and frankly please stop saying “insolvent” as it relates to the city finances. Go look at the current balance sheet. (and if you don’t believe me- go ask anyone on the FRC). We are not even close to being “insolvent”. But again- I understand your overall point.

        Sorry- I have to work so I cant attend the FRC, I would actually love to review the concepts that are discussed. Perhaps they are very intelligent people- except all I know is when it came down to producing something tangible (a long term financial strategy) we had to immediately subcontract out the work to some consultant.

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