Bankruptcy looms for city of Lake Elsinore should Measure A pass

Lake Elsinore Assistant City Manager Jason Simpson addresses a question from the audience during a Lake Elsinore Citizens Committee Meeting while LECC Board Chairman Dan Baldwin looks on at the Lake Elsinore Cultural Center Wednesday, March 8. Kim Harris photo
Lake Elsinore Assistant City Manager Jason Simpson addresses a question from the audience during a Lake Elsinore Citizens Committee Meeting while LECC Board Chairman Dan Baldwin looks on at the Lake Elsinore Cultural Center Wednesday, March 8. Kim Harris photo

The city of Lake Elsinore faces bankruptcy should voters approve Measure A, a special initiative regarding Alberhill Villages, during the city’s May 2, special election, according to a presentation given by city leaders to the Lake Elsinore Citizens Committee Wednesday, May 2.

Measure A if it passes could cost the city more than $240 million should it pass and negate the recently approved amended agreement for the Alberhill Villages Specific Plan, an agreement between both the city of Lake Elsinore and Alberhill Villages Developer Castle & Cooke. The two parties have long been at odds over the issue until the Feb. 14 City Council meeting where the amended agreement was approved.

During the Lake Elsinore Citizens Committee meeting, City Treasurer Allen Baldwin addressed the crowd of about 50 people who had gathered to learn more about the initiative and how it would affect the city, resident’s taxes and a variety of other issues related to the project.

Baldwin explained that his position was an elected one and that residents had entrusted the city finances to him. He said it was great fun to be the city treasurer with the current team in place.

“The challenge to this specific city council is like a fast break on the Lakers Basketball team,” he said in reference to Alberhill Villages. “We have so much going on now and it’s important to know where we are now and where we are going.”

During his presentation, Assistant City Manager Jason Simpson explained how the city budget works.

“I think to understand what Measure A really means you have to have a basic understanding in order to really kind of evaluate that,” he said.

Simpson told the crowd the fiscal year 2017/2018 budget process is currently underway and is expected to be presented to the city council in May or June of this year. Things that are taken into consideration are internal impacts that affect the community, including the state’s taking $1.25 million in property tax dollars that it uses for the budget. Other factors include county decisions on things such as police and fire. Expenditures for the city are prioritized as well. Once the budget is adopted by council in May, city staff monitors expenditures in an ongoing basis.

Simpson said that currently the city is experiencing unheard of growth. Current population of the city is hovering just over 61,000, nearly doubling since 2004. Unemployment has improved now at 5.7 percent as compared to July 2010 when the city was at 14.8 percent. The city’s sales tax numbers are currently recovering from the effects of the Great Recession and property values are on the rise, thanks to the new developments, he said.

The city’s general fund currently shows the main two income streams as sales tax and property tax which make up almost 50 percent of the city’s revenues. Other income sources include special assessments, fines and forfeitures. Total income for the city annually is just over $41 million.

Expenditures for the city are about $42.3 million, showing a deficit.

“We are reinvesting the resources we have back into the community,” he said, adding that maintaining public safety levels were a priority for city leaders. “The byproduct of that is you are going to see a lot of development.”

Right now, the city has 94 active development projects that are non-residential, an unprecedented number that continues to grow, he said.

Public safety costs continue to grow, something all cities that contract with the county are facing, Simpson said. Almost half of the city’s budget goes to police and fire costs. Currently the cost for police protection is about $12 million or 34 percent while fire is costing the city $7.5 million or 10.2 percent of the budget. The city has $7.4 million in its economic uncertainty reserves and $11 to $12 million in total reserves, mostly in cash and very liquid.

“The city is in a good position financially,” Simpson said. “There’s a lot of good things happening in the city. The goal is to not have a deficit. It was planned, it was really to reinvest in our community. We are kind of looking at ourselves as a startup. We are trying to reinvest in our future and we want to make sure that we have a good foundation going forward.”

According to both Simpson and Baldwin, the passage of Measure A would threaten everything the city has worked so hard to achieve.

“So how does this all relate to Measure A,” Simpson asked. “The council just adopted an amended plan for Alberhill Villages Specific plan and that plan essentially was also negotiated with the developer and it puts the city in a much better position financially than when the city adopted the plan and then the developer came in and filed an initiative to essentially not want to pay for anything and let the city pay the capital costs.”

Simpson said should Measure A pass there would be no way the city would be able to fund it.

“The impact, there was 8,000 residential units planned and should they be built they wouldn’t pay their fair share of the increased impact on police and fire,” he explained. “We negotiated that and they are going to be paying their full impact under the new plan.”

Measure A or the Alberhill Villages Specific Plan being placed before voters in a special election May 2, projects a loss of somewhere between $33 million and $243 million based on a variety of factors including the sports park, inclusion in the CFDs and a number of other potential issues that could arise. Under the newly agreed upon plan, the city stands to gain $25.7 million at the 20-year mark. Should Measure A pass, it would negate the newly agreed upon plan.

“The initiative was too far along for them to pull it back,” Simpson said. “Both the opponents and proponents are recommending everyone vote no on the initiative in May.”

One Response to "Bankruptcy looms for city of Lake Elsinore should Measure A pass"

  1. Kenny Mayes   March 17, 2017 at 3:30 pm

    Everyone should vote yes on A. The city of lake elsinore had plenty of time to negotiate a deal with Castle & Cook, they (the city) chose to force Castle & Cook to put forth this initiative which took a couple of more months to work its way thru the process. The city was so sure there was no way this would get on the ballot.
    Its time to replace the entire hierarchy of the city of lake elsinore.

    Reply

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