Cypress answers a looming budget crisis by (almost) awarding a huge consulting contract. Unfunded public employee pension liabilities make CalPERS a sucking wound in the the budgets of cities like Cypress. Suck it up, taxpayers!
At a workshop on Monday, Feb. 27, members of the Cypress City Council walked through hair-raising numbers projecting budget woes over the next five to ten years. The City’s budget has been and is managed conservatively. The big problems on the budget horizon are rooted in unfunded public employee pension liabilities and mismanagement by the California Public Employee Pension System (CalPERS).
For years, CalPERS has failed to meet its goals for return on investment. Unsurprisingly, these goals are set in a fashion that makes CalPERS look like its meeting its obligation to fund public employee pensions through investment income. When the goals are not met, the gap is added to a huge and growing unfunded public employee pension liability.
That’s bad enough. But it gets worse.
Somebody had the bright idea that maybe a vigorously growing unfunded public employee pension liability was not good. So new rules were put in place to forcibly fund that liability.
Kind of like being forced to pay a 30-year mortgage in five years, with no opting out.
Who is paying off that 30-year mortgage in five years? Ultimately California taxpayers, of course. But cities are where the pain is being felt through bigger fatter slabs of CalPERS bills that cities can’t say no to.
Public budget workshop
So City staff members responsibly explained the sad and painful projections to the City Council at a public budget workshop that was not well attended by the public. Members of Council recognized a need to “enhance revenue” to meet the projected rise in CalPERS expense.
Where does the City get its money? Mostly from property and sales taxes. So: development!
The City hired a consultant to represent it to the business community, to fill vacancies along the Katella corridor and replace lost retailers like the Kohl’s that closed on Valley View St.
New residential property development at Mackay Place and across from the civic center will mildly enhance property taxes. To the extent that new residents shop in Cypress, they will also raise revenue from sales tax.
New retail development — for instance, The Boardwalk on Katella Ave. and Cypress Village on Valley View St. — will soon bring in more sales tax revenue from formerly underperforming properties. (Did you know that cold sandwiches are not taxed but hot sandwiches are? I was told this during a conversation with City staff about Which Wich at The Boardwalk.)
Measure GG in last November’s election
Staff members, knowing the CalPERS numbers, quietly watched last November’s election returns for the fate of Measure GG, concerning a development plan put forward by owners of the former golf course and current race course. The Measure would have created a new specific plan for not only the former golf course and current race course properties, but also property along Katella Ave. that the race course had sold to the (now dissolved) Cypress Redevelopment Agency.
Title to that property — a little more than 13 acres at the front of the parking lot, between Siboney and Winners Circle — became tangled when the State of California dissolved redevelopment agencies. The title tangle was only recently unknotted. The City held a public town hall meeting to hear pitches from two prospective developers of that property. The City would like development of that property to mesh with development of the remainder of the race course and golf course properties.
But Measure GG failed.
New direction to reach community consensus
So City staff decided to address redevelopment of that property from another direction, by hiring an outside facilitator to reach a community consensus on how to proceed.
A fine goal. Except the outside contract was for $330,000.
Oh my gosh.
The first comment from City Council was made by Councilwoman Stacy Berry, who declared her opposition, in light of the budget workshop they had just come from.
Mayor Paulo Morales and Mayor Pro Tem Jon Peat formed an activist bloc, sort of. Mayor Morales reminded the audience that Measure GG lost by a narrow margin: 433 votes out of 19,685 votes cast. Mayor Pro Tem Peat expressed urgency about lead time in developing new revenue-producing property in relation to the CalPERS payments.
Councilwoman Mariellen Yarc pushed for an alternative to an expensive outside contract, at least to start the process.
The question was asked why Los Alamitos Race Course could not help pay for the community consensus-building. City Manager Pete Grant said that the Race Course was approached, and said no.
In the end, after a great deal of discussion, City Manager Grant was instructed to schedule a workshop or town hall meeting that would allow Council members to begin to work closely with residents of Cypress in developing a consensus on how the community would like to see the property developed.
Entirely unfair comparison
An article on the front page of this morning’s edition of the Sacramento Bee reminded me of the Cypress City budget woes joined to a suggested outside consultant contract.
“UC Berkeley paid $306,000 for publicist amid big deficit” by Sam Stanton and Diane Lambert describes how one campus of the University of California tried to put lipstick on a pig by hiring a public relations firm to explain needed belt-tightening. Major spending cuts and staff layoffs were coming — so let’s spend big on spin!
Although superficial similarities link the UC Berkeley story with the struggle of the Cypress City Council, the comparison is ultimately unfair because the budget blows faced by the City are outside its control. The City in no way is responsible for the CalPERS mess.
But spending $330,000 on an outside firm still looks really bad.
Really important zoning information
Part of the property under question is owned by the City of Cypress. Another piece of the property used to be a golf course. The rest is what’s left of currently operating Los Alamitos Race Course. All the property is zoned public/semi-public. That doesn’t mean the property is owned by the public.
Only the 13+ acres along Katella Ave. are owned by the City of Cypress. The rest is private property.
“Public/semi-public” is a zoning designation that limits the sort of development that can be applied to a property without requesting a change in zoning. Yes, a park might be built on the property — but would not result in any income to the City, only expense for building and maintenance. But a school could also be built. Or a hospital. Or a cemetery. Without rezoning.
Many residents of Cypress believe that Measure D grants full control over how “open space” is developed, whether that property is private or public. That belief is not true.
Development of the private property can be moved forward without rezoning, as long as the proposed use falls under the public/semi-public zoning designation.