Wake UP Grand Terrace!
Do You Need Your Vitamin C???
Measure C is on the November Ballot

Measure C is on the ballot this November Although Grand Terrace is a bedroom community, it is far from asleep; it has been awakened by the controversy of the abolishment of the RDA funds and the continued lack of revenue to provide services at current levels. On November 5th, Grand Terrace residents will be asked to make a crucial decision that could affect their way of life in the city, and the future of the city itself. Grand Terrace City News feels that you, the voters, should have the opportunity to make your own decisions, armed with all the facts and all the available information. In this and in the following editions we will be providing you with important information regarding real issues you need to know about to make an informed decision. Starting with Measure C: you can find it in its entirety at www.cngne.ws/MeasureC. The staff at City News Group has spent countless hours gathering reports and information from many sources. We have conducted several interviews with key people on both sides of this issue and we shall present this information to you so you can decide for yourselves and make an informed decision. History In 1962 the Grand Terrace Area Chamber of Commerce was organized and served as a strong supporter of obtaining the community’s cityhood, since its members shared an interest in preserving the local identity in the area as well as local control of land use. The Chamber contacted the Local Agency Formation Commission, known as LAFCO. LAFCO is an agency designed to ensure the establishment of sustainable municipal levels of government such as a city, and to ensure the structure is sound for the distribution of efficient and effective public services. At the LAFCO hearings to determine whether a proposed city was viable, the proponents who attended were at first discouraged. Lack of sufficient tax base was the main reason given. To generate taxes (sales and property), there had to be businesses selling things and people had to own valuable property that was taxed at a percentage of its value to generate the revenue required to maintain a city municipality. When the voters of Grand Terrace (after a heated battle) decided to move forward to become a city, LAFCO advised the residents of Grand Terrace that in order to ensure a sufficient tax base, a utility tax of 6% was necessary in addition to the expected sales tax, property tax, and miscellaneous other sources of funds (such as shared fuel tax revenue and fees for some services, like building permits). See www.cngne.ws/LAFCO for election in November 1978. Problem Darcy McNaboe, councilwoman for the City of Grand Terrace, business consultant, and past president of the Grand Terrace Foundation, shared, “In discussions most recently with [Kathleen Rollings-McDonald, Executive Officer of LAFCO], she is not saying that [the utility tax] was the only method for raising revenue but at the time that was the recommended 6% [utility tax]. At that time, there wasn’t a lot of build out in the city [and] there wasn’t a lot of property tax that came here. There was, I believe, very little sales tax—not that we have a whole lot now—but there wasn’t a lot of sales tax then.” Grand Terrace at that time was a bit of a rural area with abundant orange groves. There was plenty of opportunity to develop the land and increase property taxes, thereby increasing revenue to the fledgling city. And several local developers began to do just that: build houses. Doug Wilson, real estate development consultant and former Planning Commission Chairman, stated, “LAFCO actually discounted the concept of a 6% tax when they recommended that cityhood be voted on. What they suggested vigorously was that the city keep its budget as close and as tight as they possibly could, and that any capital improvements that were considered between County and cityhood be deferred.” Sylvia Robles, councilwoman for Grand Terrace, shared, “The RSG [Rosenow Spevacek Group] report states that the County supervisor urged LAFCO to approve cityhood even though the financial foundation was shaky. RSG reviewed the documents and said that the former county supervisor at the time, Dennis Hansberger, had recognized the revenues were not there … We were close, but we were not there.” Rosenow Spevacek Group, Inc. (RSG) is a consulting firm and serves as advisors who provide information and analyses to local governments. Solution By introduction of the redevelopment agency concept, California granted its municipalities the authority to operate redevelopment agencies in the late 1940s. The agencies were allowed to keep any increase in property tax revenue resulting from their improvements, rather than send the money to the State. Jeffrey McConnell, Developer and Real Estate Broker and spokesperson for Save Grand Terrace, said, “One of the old guys told me before he passed away years ago—in the Lions Club, he said, ‘Why would we want to go back to the voters after just going through this nasty vote to become a city, and then turn around and tell them, okay, now you’ve got to pay for it?’ On the other hand, we had the RDA, which was a whole lot more money and we didn’t have to go to the voters for it. The old-timers I spoke to said that Seth Armstrong was the initiator of that.” When asked which old timers? He replied, “Several.” Wilson said, “And of course, as we know, as history proves, that the RDA served for 35 years. The RDA was always a funding type of mechanism and what really took place when they talk about borrowing money from the RDA is that, if you figure you had maybe a $2 million chunk per year that was available—the expression was used with some of the former finance people and planning people and so on—was that they had to make sure that they used their allotment, or else that money would go away.” Recent Problem In 2010, Gov. Brown faced one of California’s recurring budget deficits. He argued that the money cities had dedicated towards redevelopment and the tax revenue from those projects should be used for public safety and schools instead—helping offset state funding of those activities. He proposed axing the RDAs, and the legislature approved the move. The City of Grand Terrace, as well as many other cities in the state of California, used redevelopment funds to maintain its operations. Predominantly, three vehicles were used to utilize the redevelopment agencies funds: (1) the originally intended use, which was to eradicate blight, (2) direct allocation of staff time, and (3) borrowing from the redevelopment agency fund. Grand Terrace has received many benefits from the RDA, including the fire station, the senior center, and City Hall, to name a few. Betsy Adams, Grand Terrace’s city manager, explained, “When the city first formed its redevelopment agency, the area covered was somewhat small, and then they went back soon after and made the redevelopment agency area cover the entire city. That’s not typical. There are only a few other cities in the state that have done that. The purpose of redevelopment is the elimination of blight—that is the true bottom-line purpose of redevelopment.” As far as the direct allocation of staff time is concerned, Steve Elam (from Wilden Financial Services, the contracted service for the finance department for the City of Grand Terrace and a contract service provider), explained, “There were also direct allocations of staff time, and that’s acceptable in redevelopment law, but the City did develop a dependence on those redevelopment funds for ongoing operations.” On the topic of direct allocations of staff time, McNaboe stated, “I understand there are certain members of staff whose salaries were split between redevelopment agency and general operations of the City, and probably the cleanest example of that would be the city manager. Part of their time was salary [charged] to the general [budget] of the city, and part of their time was charged through the redevelopment agency for whatever projects were going on there or whatever management … You’re splitting salaries all the way down your staff level when the redevelopment agency goes away and that source of revenue goes away. You can’t just say, ‘All right, we’ll lay off our redevelopment staff because that staff is also city staff.’” Lastly, Grand Terrace did in fact borrow from the Redevelopment Agency fund. Walt Stanckiewitz, Mayor of the City of Grand Terrace and business owner of the La Pasta Italia Restaurant, informed CNG: “Over the years, they borrowed money [from the RDA] to balance the budget. To date we have in excess of, I want to say, $4.5 million that we owe the former Redevelopment Agency from that borrowing.” He explained that during the redevelopment wind-down from Gov. Brown’s dissolution of redevelopment agencies, it was also brought to our attention through audits that City Hall was built with redevelopment funds. It was legal to do so back then. But more importantly, City Hall was then refinanced. “And then when the money came due, we used redevelopment money to make those payments and that was disallowed. It was a shock to everyone when the Department of Finance [of the state of California] said that this is not a redevelopment debt,” Stanckiewitz said. Current Problem Magnified Critics of the redevelopment agencies contend some cities used them as a financial crutch and not solely for their intended purpose. “The state did not conduct audits of redevelopment agencies; [it] never asked for any real financial details,” said McNaboe. “Money was also borrowed from the redevelopment agency and placed in the general fund. What was supposed to happen when the money was borrowed [is that] it is supposed to go back to the fund before the end of the fiscal year. And so the redevelopment agency, technically, when they borrowed the money, it should have been repaid within a year. Where I came in was a period of time where we looked at the need to pay that back and we already had a plan in place to annually pay a portion of it back before the dissolution of redevelopment. That was already in place before the redevelopment agencies were dissolved,” said McNaboe. Ryan Stephens serves on the planning Commission for the City of Grand Terrace. He is an entrepreneur, business consultant, and an importer of products from around the world. As a member of the Budget Committee, Stephens has immersed himself in the City of Grand Terrace finances. He shared, “When the state eliminated the redevelopment agency, they went through an unwind process, so there was a successor agency set up to unwind redevelopment, [whose members] are the same as our City Council, and the State Department of Finance went through and allows certain things and disallowed others.” With redevelopment funds for the next five years, we would have to make small adjustments to reach a balanced budget. Without redevelopment, the City’s general fund goes into the negative in late November of this fiscal year. Current solution options McConnell, who opposes Measure C, stated: “Here’s our viewpoint, the three of us—Doug Wilson, Mark Jolstead, and myself. We lived without the RDA before. We can do it again. We survived without the RDA money before. We can do it again. Closing the parks is just a fear tactic. We can go back to being a contract city” and tighten our belts more. Bernardo Sandoval, Mayor Pro Tem for the City of Grand Terrace and proponent of Measure C, provided the public information presentation on Measure C (visit www.cngne.ws/whatismeasurec). “Measure C is an ordinance approving a utility user tax that if passed in this next November election would increase the revenue to general fund required to maintain Grand Terrace at its current level of service,” according to the information he provided. “RSG did a study and a forecast—what they thought our city was going to go through—and the prediction was pretty dire. They told us without redevelopment that we were headed for a financial cliff,” said Stephens. View the PowerPoint presentation at www.cngne.ws/RSGreport. He continued, “This study was completed before the Redevelopment Agency was being dissolved. Without redevelopment, the city coffers for the general fund run dry within the next couple of months. There’s a little bit of additional funds that we can use to stave off things for a few months but it’s dire; it’s tight.” IN Coming weeks, the Grand Terrace City News will bring you coverage of what is a contract city, budget information, more about Measure C, what the City Council has already put in place, and more forecasts and information.