City Facing Financial Surplus

As reserves fill up, city manager eyes project priorities

By Daryl Kelley
Two years into his tenure as Ojai city manager, Jere Kersnar faces the pleasing prospect of telling his City Council bosses in 2008 that they need to start thinking about what they want to do with hundreds of thousands of extra dollars.
Make that $750,000 extra every year out of a city budget of nearly $8 million.
That’s about what the council has been stashing as an emergency reserve for each of the last three years. And after one more frugal budget cycle, they may actually have extra money to improve roads, police protection, recreation and other services basic to the lives of Ojai residents.
“That’s on my list to do this year,” Kersnar said. “As we reach our budget reserve targets, what will be our spending goals for that extra $750,000 after the end of 2008-2009?”
If all goes as expected, Kersnar said the city’s budget reserves will reach nearly $4 million by mid-2009, about half of its annual budget and a figure the council considers adequate to protect against emergencies.
Kersnar said he doesn’t think the housing slump will affect the city’s budget for the fiscal year ending June 30, and may not hurt it much next year, although some local cities are already planning cuts in their budgets in response to the downturn.
That’s partly because Ojai is a tourist mecca, so property taxes make up only 17 percent of the city’s revenue, with hotel taxes being nearly twice as much and sales taxes accounting for the same share as property levies. So as long as tourists continue to find Ojai a bucolic getaway, the city’s finances should be relatively sound, he said.
“We expect property taxes to still be fine this year,” he said. “What’s unclear is what effect the housing market will have on the next fiscal year (beginning July 1). Housing values are going down.”
But there’s a lag time from when houses lose value and when the county assessor reappraises them, lowering property taxes. So if the housing market stabilizes in the next year or so, there may not be much damage to city revenue, he said.
“If all this works out, by the end of ‘08-09 we’ll be where we ought to be with our reserves,” Kersnar said. “So we’re going to be asking, ‘OK, once you have the money, what do you want to work on?’ For so long, we’ve been in a reactive mode. Now we can push for a long-range plan. We’ve got all sorts of long-range plans to work on.”
Will the council decide to increase services in areas such as street repair, which already has an earmark of $400,000 this year and is awaiting a matching grant from a state bond? Should it add more to its budget for a new skate park, which received a pledge of $100,000 last year?
Or should it decide to set aside money for upgrading of the city’s recreational centerpiece, antiquated Libbey Bowl?
“Potentially, that could be the most costly,” Kersnar said. “The bowl is a big problem because that could potentially be a couple of million dollars. And that’s not counting the tennis courts. Our season kicks off in April with the Tennis Tournament. And we would like to have a Band-Aid (repair) at least by the start of the Music Festival in June.”
The council could also decide to hire a part-time code enforcement officer, which was rejected to save money in this year’s budget, to make sure residents are not converting garages illegally or storing vehicles, boats or throw-aways in their front yards.
A new city report looks at just how many homes have illegal dwellings in their back yards or garages, so this issue could become volatile this year.
The report identifies 309 illegal residences in the city.
“It raises the whole issue of amnesty,” he said. “Should we legalize some of these illegal residences and claim credit for them as new low-income housing? Or do we really want to reward those who broke the law by allowing these residences? Do we promote property owners’ willing participation to bring these residences up to standard, or do we punish them for violating the law? That will be a policy decision by the council.”
Indeed, housing is one of the top issues on the council’s agenda for the first half of this year.
The city must submit its new plan to provide all types of new housing to the state by June 30. This so-called Housing Element was recommended by the Planning Commission last year, but the council directed city planners to do more research before it signs off on a new five-year plan.
At issue is how the city can address a state-forced quota that requires the city to provide 433 new dwellings, despite a shortage of bare land and the traffic and smog problems that growth would bring to this narrow valley served by two-lane highways.
The council must also deal with a second benchmark plan within the first few months of 2008 — how to extend the life of its Redevelopment Agency.
Within the next three months, the council, acting as the city Redevelopment Agency board, must focus on how it can continue to refurbish the city’s core as the agency approaches a cap on how much it can collect in property taxes.
Since its founding in 1972, the Redevelopment Agency has captured about $18 million in property tax that would otherwise have gone to other government entities. But, with soaring property values during the last decade, the agency is now approaching a $23.2-million cap on how much it can collect.
That means that by 2012, the agency could be effectively out of the redevelopment business, and the city would be hard-pressed to find another source for the $1 million a year the agency collects.
A top redevelopment lawyer recently said the city might be able to extend Redevelopment Agency collections for a few more years. That’s because Ojai’s collections cap may apply only to its original redevelopment zone — its aging core — and not to two newer, smaller redevelopment zones for East and West Ojai Avenue and Bryant Street, the lawyer said.
“The other council focus in the first six months will be the skate park,” Kersnar said.
Last year, the council dedicated $100,000 to construction of a new skate park on school district property at Fox Street and Ojai Avenue. Supporters of the new park say it will cost $350,000, and they’ve set out to raise the extra money. But Kersnar said he’d always heard that $500,000 was a better estimate.
“That was probably for a more extensive park,” he said. “But I don’t know if they can get it done for $350,000.”
In any case, the council must also negotiate with Ojai Unified School District to extend the city’s lease for the park site, Kersnar said. The current lease expires in 2023 and the city wants another 20 years or so on top of that to justify construction.
“I’ve been reluctant to say the city should build it without the extension,” he said. “The facility could have a 40-year life. Concrete lasts that long.”
But the School District has hesitated to commit to an extension because it wants to leave its options open to possibly develop its current district headquarters site, of which the skate park is part, the city manager said.
Other city objectives for the new year include maintaining a drop in gang-related crime that occurred last year, and may be partly attributed to a new west Ventura County anti-gang unit, Kersnar said.
“Gang activity has been down,” Kersnar said. “We know the violence is down. It’s noticeable to me.”
A shooting of a 17-year-old boy near the skate park last weekend ended a long period without such violence, Sheriff’s Capt. Bruce Norris said.
“I’ve been bragging for quite a while that it’s been down,” said Norris, who functions as Ojai’s police chief. “We can’t say for sure yet that it’s gang-related, but that seems sensible.”
With a new city engineer, Glenn Hawks, the city is also ranking city streets for repair, based on how much they need the work and how much they’re traveled, Kersnar said.
Along with that, the city is studying whether neighborhood streets rarely traveled by anyone other than nearby residents should be maintained through a special tax on property owners in those neighborhoods. Other cities have implemented such tax districts, Kersnar said.
The city will also continue to join local residents to fight an increase in gravel trucks from the Lockwood Valley area and Santa Barbara County through the valley, he said.
“The concern is how to deal with these multi-jurisdictions,” he said, noting that Caltrans also has responsibility. It’s a difficult question.”