By Steve Stewart, Dana Point
In his May 15 State of the City address to the Chamber of Commerce, Mayor Carlos Olvera was quoted as urging us all to “Catch the wave. Catch the wave we are on right now.” Exactly what wave is he thinking of? Could it be a wave of financial crisis that may be crashing on Dana Point?
Consider our city’s financial position. Three straight years of deficit spending (2011 through 2013), were followed in 2014 and 2015 by massive and reckless expenditures exceeding $20 million just for streets, sidewalks and landscaping in Town Center. Our general fund reserves, which were $45 million in 2008, are expected to be only $15 million at the end of this year. Where did that $30 million go? Most of it went to Town Center. Our city now has a small fraction of the millions in financial reserves held by better governed local cities, such as San Clemente and Laguna Niguel.
Mayor Olvera went on to say, “Let visitors pay for it while we enjoy it,” referring to room tax our hotel visitors pay. Sounds like the good times will never end, except our city has been spending much more than we take in, including room tax revenue, for a long time. Does the mayor understand how he is risking the city’s financial future by banking on the tourism industry to fund his reckless spending? Tourism revenue to the city dropped by millions in the 2008 recession and its aftermath. Does he really think that cannot happen again?
Does the mayor know there is almost no money (capital budget reserves) left to pay for the inevitable replacement of $200 million in city assets such as streets, vehicles, park fixtures, building interiors, computers, etc.? Those assets are aging and deteriorating as all infrastructure does. How are we going to replace them with such low reserves? San Clemente has $50 million reserved for such purposes. Laguna Niguel has $75 million. At the end of fiscal year 2015 Dana Point will have $15 million.
As if this story were not bad enough, there is now a proposal before the City Council (brought to you by some of the same people who pushed the Town Center project) to radically restructure property developer parking obligations in Town Center. The amount of required parking is reduced from the original code and developers will be given credit for their street parking spaces toward their obligation. Instead of developers paying $40,000 per required space to hand off their obligations to the city, which would use the funds to buy parking spaces, they are let off the hook and the taxpayers will cover that burden. The unfunded liability transferred to the city and the taxpayers by this proposal could exceed by a wide margin the $20 million we all just spent on PCH and Del Prado, including the nearly $600,000 arch being installed at the north end of the newly renamed Lantern District. Should a city with hugely underfunded reserves be spending $600,000 on a decorative arch?
Some people think we should just “catch the wave and let some visitors pay for it.”
Sounds pretty risky to me.