City of Pasadena Mayor Bill Bogaard delivered the “Spotlight on Performance” themed 2012 State of The City address last night to a theatre full of local residents, business owners and journalists.
After a performance given by Pasadena’s A Noise Within theatre, Mayor Bogaard went on to discuss the state of the city’s finances, the general plan as well as new plans for an economic development strategy task force, the streamlining of city boards and commissions and city redistricting. Bogaard also addressed the status of the Rose Bowl renovation, Metro Gold Line expansion, city’s relationship with the Pasadena Unified School District and more.
The Mayor did primarily address the city’s budget shortfall, saying, “Pasadena is preparing for its fourth budget year in a row with serious revenue shortfalls, and once again expense reductions will be necessary. Such reductions cannot be accomplished without cutting City services that our community will sorely miss, and without reducing our workforce”.
Bogaard also pointed out that the city has lost 11 dealerships in the last decade, resulting in 30% sales tax loss in that specific category, and that overall sales tax revenue stands at levels last seen in 2003. Because of the loss in incoming revenue, Bogaard also said city staff are projecting a nearly $6 million budget shortfall for the 2013 fiscal year.
Bogaard also discussed the recent success of a community task force which has provided useful and feasible recommendations for how to solve recent budget issues, including the city’s unfunded budget gap presented by the California Public Employee’s Retirement System, or CalPERS.
As part of the update, the Mayor also addressed the streamlining various city commissions and boards, saying as an example, “there are eight separate advisory bodies that consider issues related to recreation, parks and human services. One possible outcome would be to establish a new Human Services and Recreation Commission that would have standing committees related to accessibility and disability issues, senior citizens, recreation, human relations and status of women, and a Parks and Open Space Commission with standing committees related to urban forestry, open space and parks”.
In addition to giving an overview of the Rose Bowl renovation project’s status, Bogaard also said that, “if a strong likelihood emerges for such temporary use [of the Rose Bowl for NFL purposes] I believe it would not be responsible for the Council to reject such a possibility out of hand”. Bogaard also said that the new Gold Line Foothill Extension is, “of paramount importance”, to the City of Pasadena.
Bogaard finally updated the audience by addressing the recently task-force endorsed City Council redistricting plan and concluded by saying, “The spotlight shines brightly on Pasadena, and at no time have we been more committed to continuing the City’s tradition of excellence”.
Below is a full transcript of the Mayor’s speech:
SPOTLIGHT ON PERFORMANCE
To my colleagues on the Council, Mr. City Manager, members of our staff, City commissioners, distinguished guests, and all of Pasadena:
Good evening, and thank you for coming to this State of the City event. I am greatly honored by the presence of so many here tonight and hope that this report provides a good basis for our working together in the coming year.
It is great to be in this theater, where attendance tonight clearly is boosted by the opportunity to visit this new facility. This theater complex is a great tribute to Geoff Elliott and Julia Rodriguez-Elliott. I want to thank them for hosting us and for the scene from “Noises Off.”
This theater was recently completed and the inaugural performance took place in October. Founded 20 years ago, A Noise Within moved to Pasadena to share this vital complex with our community.
FISCAL AND FINANCIAL MATTERS
The City charter calls for the Mayor to present each year a “thematic budget message,” and I believe that responsibility has never been more important than now in the year 2012.
Pasadena is preparing for its fourth budget year in a row with serious revenue shortfalls, and once again expense reductions will be necessary. Such reductions cannot be accomplished without cutting City services that our community will sorely miss, and without reducing our workforce.
Some of the large economic factors that continue to impact the City are
● high unemployment, which in September in Pasadena was 9.4%; in California 11.4%; and in the United States 9.1%;
● national retail consolidation and the impact of internet sales on brick-and-mortar
● a soft housing market, intensified by tighter credit requirements for home loans;
● low consumer confidence, which is at recession 2008 levels;
● and instability in financial markets brought about by the European debt crisis.
In addition to these broad economic trends, Pasadena is contending with a shrinking sales tax base. Sales tax is one of the primary revenue sources for funding vital City services. During the last decade, the City has lost 11 auto dealerships, resulting in a 30% decrease in annual sales tax revenues in this category. Other large sales tax contributors have seen their sales diminish as the City faces increased competition from adjacent communities. Overall, sales tax revenue stands below Fiscal Year 2003 levels.
The General Fund’s other major revenue sources—property tax and utility users tax—are trending flat and down from prior years. On the expense side, the City is contending with ever increasing costs of employee benefits, most prominently CALPERS retirement and allowances to employees to purchase health insurance. It is worth remembering that personnel expenses represent over 75% of the General Fund Operating Budget. Current projections for the City’s operations through Fiscal Year 2013 indicate a $6 million shortfall in the General Fund.
Last November, the Council held a budget retreat and, with the able assistance of our staff, approved expense reductions and revenue enhancements of approximately $3.6 million, but the full $6 million gap has to be addressed. Further, the City’s fiscal picture suffered additional setbacks in recent weeks.
The first was the ferocious windstorm that swept through Pasadena on November 30 and December 1. The video gave us a good perspective on the effects of the windstorm. I want to thank our City leadership and staff for their dedicated response and recovery efforts.
City Hall anticipated that, with proper documentation, the damages suffered in the windstorm would be recovered from federal and state emergency relief programs.
To date, however, these losses do not appear to qualify for such relief, and the accrued costs of about $17 million in cleanup and repairs to infrastructure could ultimately fall to the City. You can be sure that our efforts to pursue emergency recovery relief have never faltered and they are continuing, but a favorable outcome is far from certain. This loss increases the City’s budgetary pressures.
The other major financial setback relates to California redevelopment—an economic development tool granted to cities in the California constitution 60 years ago and used extensively and responsibly by Pasadena over the years. Last month, the State Supreme Court upheld state legislative action eliminating redevelopment to help balance the California budget, and it approved an effective date of February first.
Pasadena’s success in becoming a regional economic center could not have been achieved without the use of redevelopment, and adapting to the new situation where state-supported incentives for investment are no longer available poses a major challenge.
For Pasadena, the elimination of redevelopment will result in lost revenues of more than $30 million per year. Of this, a portion would have been used for debt amortization or for investment of various kinds, such as affordable housing, parking structures and other infrastructure . The impact of redevelopment’s elimination is not immediate, but approximately $3 million would have been used for operating expenses to support the City’s ongoing economic development efforts. Under the court ruling, that funding is not available.
Let me assure you that I have great confidence that the City will not only survive current fiscal challenges, but will achieve new levels of success and prosperity. But this will not be accomplished without sacrifice and participation by all stakeholders, including residents, the business sector, and City employees. And such action needs to begin now.
The City has a huge stake in maintaining its current bond rating of AAA, which has allowed it to finance important projects at the most favorable interest rates. As the state and other agencies see their ratings decline, the fact that we have retained such a high rating for Pasadena is indicative of the City’s strong financial leadership.
TASK FORCE FOR ECONOMIC DEVELOPMENT STRATEGY
From time to time in Pasadena’s history, City Hall has called upon the community to help develop solutions for the needs of the future. Last year, for example, the Council approved major financing for the unfunded portion of the now-closed Fire & Police Retirement System. The financing was developed, along with staff, by a community task force established by the City Manager.
When that proposal came to the Council, there was no community opposition and the Council gave unanimous approval. This demonstrates how the talented people of Pasadena can help solve complicated issues.
The City Manager and I have considered whether such a task force has a role to play now in helping to define our economic development future. It would help create a balanced economic development strategy and a set of priorities to prepare our City for a new competitive economy. I am urging the City Manager to proceed with such action; I have pledged my full support to him in recruiting persons highly qualified to serve; and I am confident my colleagues on the Council will offer similar assistance.
Mr. Beck has been working with senior members of our staff on a draft Economic Development Strategic Plan, and that document can provide a head start to the work of the task force. My hope is that the Plan can come into focus this year at the same time that our General Plan update is completed.
This is a critical time in the history of Pasadena, and the challenges deserve the careful and complete attention of the Council, our staff and the community. Today is one of those rare and crucial defining moments for our great City. We can decide to be consumed by our numerous challenges, or we can place a spotlight on our performance and take actions that will set a positive course for the future. I urge you to follow the progress of these efforts and to help if called upon as Pasadena works to ensure its continued vitality, quality of life and leadership in the region.
CITY BOARDS & COMMISSIONS
My report on the City’s fiscal situation would not be complete if I did not refer to the City’s advisory boards and commissions. In light of the fiscal situation, the Council’s Legislative Policy Committee has started a discussion to assess the costs and benefits of more than 25 commissions, committees and boards, and to consider possible streamlining.
This effort will study which of these advisory bodies have similar or compatible purposes and might therefore be consolidated; which ones operate under legally required mandates; which may no longer be relevant to the Council’s original intent. This effort will also review the amount of staff time and funding required for supporting their work.
For example, there are eight separate advisory bodies that consider issues related to recreation, parks and human services. One possible outcome would be to establish a new Human Services and Recreation Commission that would have standing committees related to accessibility and disability issues, senior citizens, recreation, human relations and status of women, and a Parks and Open Space Commission with standing committees related to urban forestry, open space and parks.
I believe this assessment should be pursued by the full Council and with ample opportunities for public comment. I want to invite all in the community to be part of the process which is intended to be transparent and easily accessible.
GENERAL PLAN UPDATE
On Monday evening, the Council adopted the new Open Space and Conservation Element for the General Plan. This element, or chapter, sets goals and priorities for the future of our natural resources. This is an exciting culmination of a three-year community process, and I thank everyone who participated for their hard work.
The coming year will see continued progress on updates of the Land Use and Mobility Elements of the General Plan, the City’s blueprint for future growth.
The guiding principles reflect community priorities such as sustainability, historic preservation, urban design and public participation. We are hearing from the community that the core priorities have not changed, but that the language could be strengthened and clarified to highlight issues evolving in Pasadena, such as the role of education and the City’s commitment to being green.
The revised guidelines and a draft land use map will be presented to the community for further review and comment before being presented to City Council for adoption.
ROSE BOWL RENOVATION
Once Oregon won the Rose Bowl game on January second, construction began on the second phase of the three-year renovation of our world-famous stadium. The Rose Bowl is possibly our biggest economic generator, and its renovation is perhaps the biggest capital project in the City’s history.
The plan took several years to come together, requiring the creation of a unified vision for Pasadena and its Rose Bowl partners—UCLA and the Tournament of Roses. As a community, we made a decision to invest in our stadium’s future and to enable it to remain a showcase for generations to come. It was recognized that rehabilitating an 88-year-old structure was not going to be easy, and that prediction is turning out to be true.
A small financing gap at the beginning of the project increased first to $12 million and then to nearly $20 million, due to instability in the bond markets, high bids, employment costs, the cost of construction materials, and more. The Rose Bowl is a City asset and a City responsibility, so resolving the financing is a high priority.
As this year’s work begins, steps are being taken to overcome that gap. There are numerous ways to approach the issue, including scaling down some of the work and deferring other specific elements of the project. Legacy Partners, a philanthropic organization established to provide supplemental funding, is off to a great start with over $3 million raised and a goal of $25 million. They are working hard to secure additional donations from the many supporters of the Rose Bowl and from grant funding.
Last year there was discussion about possible temporary use of the Rose Bowl for professional football if an NFL team ultimately agrees to move to Los Angeles. There are no negotiations at this time, and none may ever occur, but if a strong likelihood emerges for such temporary use I believe it would not be responsible for the Council to reject such a possibility out of hand.
GOLD LINE FOOTHILL EXTENSION
I am happy to report that in 2011, ridership on the Gold Line continued to hit record highs. There were more than one million boardings last month alone, a record achievement. And daily, almost 40,000 people are served by the line – a 30% increase from just one year ago and 40% from two years ago.
The Gold Line Foothill Extension is of paramount importance to Pasadena. We made significant strides this past year to build the next 11.5 miles of the line, which will extend service east from Sierra Madre Villa through Arcadia, Monrovia, Duarte, Irwindale and Azusa. The $735 million project is underway, and is on time and on budget.
At the same time, the effort to extend the line farther east into the Pomona Valley is continuing. We anticipate the segment from Azusa to Montclair will be cleared environmentally this year and will be ready for detailed engineering and construction funding. This next phase will add another 12 miles to the line, and will connect Pasadena with cities from Glendora to Montclair.
The Council, our staff and I recognize the importance of public schools in our community. The City’s commitment with the school district to share public resources has been very effective and has resulted in several joint projects in which the City participates financially in exchange for an agreement that allows Pasadena residents to use those facilities during off-school hours.
Completed projects include tennis courts and playgrounds for joint community use, and other projects are in process. The most significant is the Washington Middle School Gymnasium, which has been designed and is awaiting clearance from Sacramento prior to construction.
Although the City has no operational control over PUSD, it is clear that a healthy, functioning school district is a vital element of a livable and successful Pasadena. As a result, the Fiscal Year 2012 City budget includes more than $4.4 million in services provided at no cost to the PUSD, and in Fiscal Year 2011, $4.6 million was provided.
To learn more about the needs of youths and their families, as well as older adults, the Human Services and Recreation Department and the Housing Department are conducting a community-wide needs assessment. PUSD is partnering with the City in this effort.
REDISTRICTING, DISTRICTING FOR PUSD
As highlighted in the video, when the results of each federal census become available, the City is required to examine changes in population and demographics to determine whether the current boundaries of the seven City Council voting districts conform to applicable law.
This time around, PUSD is also involved in a sub-districting process prompted by a California law adopted in 2004. This process, which is occurring for the first time, will apply to Pasadena, Sierra Madre and Altadena. By next year, the selection of PUSD Board members may change from the current at-large election method to sub-district-based elections. A PUSD task force is determining the geographic boundaries for the seven Board of Education seats while conducting a series of community meetings, and this process should be completed by the end of spring. Final approval of any change in the School Board’s election method would require a vote of the people.
With regard to the possible redrawing of some City Council District boundaries, the City of Pasadena Redistricting Task Force endorsed a proposal last week that will receive further public review in February prior to submittal of the plan to the City Council in March.
What I hope has come clear in my remarks tonight is that financial challenges will color every decision the Council makes this year. The goal is long-term fiscal stability and vitality for the City. Our efforts will be painful, but it would be irresponsible of me to sugar-coat the realities of our fiscal situation. At the same time, I am confident that our community will transition back to a level of success and prosperity. We are committed to being a model city with superior services and we will not waiver from that vision, but will deliver them in a very different way than before.
Pasadena’s success rests with our City staff, who have voluntarily deferred salary increases and shouldered greater workloads as workforce reductions and other budget cuts have been put in place. It rests with our residents, business owners and institutions that have articulated support for City Council priorities and provided their advice at public meetings. And it rests with the City Manager and the City Council, who have made difficult decisions on behalf of our organization and the community to help keep Pasadena on the right fiscal track.
As we continue on this journey together, I encourage everyone to recommit to Pasadena’s tradition of involvement in civic affairs. Volunteerism and proactive assistance have helped us through difficult times and made Pasadena a world-class City.
Aside from the obvious cultural benefits, our long-standing arts institutions, as well as innovative newcomers such as A Noise Within, the new orchestra Muse/ique, and LitFest Pasadena have one thing in common: They were founded by visionaries who saw need and opportunity and worked very hard to bring their institutions to fruition here in our community. The inaugural LitFest Pasadena will take place Saturday, March 17, at Central Park.
The spotlight shines brightly on Pasadena, and at no time have we been more committed to continuing the City’s tradition of excellence. The innovations and resources for achieving our goals are right here in our community. Let us all join together to renew our commitment to building a great, great future for Pasadena!