In the State of the City address given earlier this year, Encinitas Mayor Jerome Stocks said Encinitas was in great financial shape.
If that’s true, why is the city proposing to raid the Capital improvement Funds and increase public debt to build the Hall Park?
The city is struggling to find money to build the Hall Park and improve Moonlight Beach.
Rather than pursue what I believe is a responsible “pay as you go” approach, the council is considering taking a risky financing plan that would link the two projects, and that could place the city in a precarious financial position.
When I wrote one year ago that the city did not have the money to build Hall Park and that the council needed a taxpayer bailout to cover up for their fiscal failures Mayor Stocks wrote an editorial in The Coast News claiming the city’s finances “can’t be judged by the status of any one project,” and suggested that selling the park’s naming rights might magically produce funding.
We can learn a lot by judging the Hall Park mismanagement to see how one project’s failure affects the entire city.
In 2001 the council committed $46 million to acquire the land and then let it sit vacant.
In 2008 the park was going to cost $36 million to build, but because of poor planning the budget was reduced.
Again, in 2008 the city said it had $9 million saved, but we now learn the city only has $7.8 million. I guess the market for selling the parks naming rights is not good.
There seemed to be light at the end of the tunnel a few months ago when the city requested bid packages for phase-one.
This “pay as you go” approach would allow the city to begin park construction without endangering the overall fiscal health of the city.
Now the city is considering a “take, borrow and spend” approach to the tune of about $15 million. To me, this approach makes the light at the end of the tunnel appear to be more like an approaching train of debt.
The new proposed Hall Park cost is $19.3 million.
Under the borrow approach, the city would take nearly $7 million away from15 other capital improvement funds. The move would strip bare the money set aside for important city improvements like sewers, roads, trails and open space.
Even then it’s not enough money.
The city would also propose to borrow $8 million. If the city uses lease revenue bonds, the council can conveniently avoid a public vote on the issue. Projects financed by lease revenue bonds are supposed to generate a revenue stream, but it’s questionable the park would qualify. In fact, it will cost money to operate. Where would the money to pay for the bond come from? How would we replenish the accounts being raided?
The city could consider General Obligation bonds that would require a vote of the people.
The advantages of these types of bonds are that they carry lower interest rates. Because they are voter approved it means that you and I could determine the amount of debt we’d leave to our families. This would take the power away from the council and put it in the hands of the public.
“Pay as you go” isn’t sexy but it’s responsible.
The “take, borrow and spend” approach is a public confession of what residents have long claimed — that the city doesn’t have the money to build the park, and the city councils of the past decade have squandered our resources.
It looks to me like the Hall Park chickens of mismanagement are coming home to roost.