GT Mayor: Past Neglect Of Economic Development Necessitates City Tax

(April 12) Grand Terrace Mayor Walt Stanckiewitz recently defended his administration’s handling of the challenges facing the city, asserting that under his watch the city has defied doomsayers that predicted the town’s demise because of a perpetually weak revenue base that has been worsened in recent years by the economic downturn.
Stanckiewitz, who zoomed into the mayoralty in some measure on the strength of his criticism of the city’s historical reliance on diverting money from its redevelopment agency to shore up its general fund, was nevertheless critical of the state’s wholesale dissolution of municipal redevelopment agencies in 2011, which he said puts Grand Terrace at a disadvantage.
Moreover, the mayor said he was determined to go hat in hand to the city’s residents later this year to request that they approve some form of tax to provide the city with more substantial operating revenue.
Though the county Local Agency Formation Commission did not oppose Grand Terrace’s incorporation in 1978, the commission’s staff was skeptical of the city’s ability to generate sufficient tax revenue to sustain itself as a municipality. From the outset, the city’s limited population and its geographic isolation  which discourages outsiders from traveling through it translated into a severely limited number of shoppers frequenting Grand Terrace’s modest commercial district.
Today, among San Bernardino County’s 24 incorporated cities, Grand Terrace is the third smallest population-wise, with 12,040 residents. It ranks 24th as a producer of tax revenue of all sorts, such that it has the most meager of the county’s 24 municipal budgets. The city’s financial status as a municipality being outhustled by practically every other incorporated city in Southern California for tax revenue clashes with the image the city has enjoyed otherwise. In 2007, Money magazine ranked Grand Terrace as one of the United States’ “Top 100 Cities to Live In.”
For years, under the stewardship of former city manager Tom Schwab, the city made a practice of diverting a sizeable amount of the Grand Terrace Redevelopment Agency’s available funding into the city’s general fund, using that money to defray a portion of municipal operations.
Schwab, who began with the city in 1984 as a finance department employee and became city manager in 1989, left as city manager in 2008, which corresponded with Stanckiewitz’s election to the city council. Stanckiewitz was outspokenly critical of Schwab’s use of redevelopment money to fund city operations and in 2010, successfully ran for mayor as a municipal and financial reform candidate in a campaign which made frequent reference to Schwab’s diversion of redevelopment money.
Upon becoming mayor, however, Stanckiewitz was given a very dire assessment of the city’s financial standing and in his first state of the city speech just a few months after becoming mayor he raised the specter of disincorporating the city and returning the 3.502 square miles within its city limits to the county for administration. Simultaneously, the city was hit with the state’s dissolution of redevelopment agencies as well as being informed by the county auditor-controller that in 2008-09 and 2009-10, the auditor-controller’s office, which handled the apportioning of state redevelopment pass-through funding, had mistakenly credited Grand Terrace with $2.294 million that should have gone to the redevelopment agency for the San Bernardino Valley Municipal Water District. That overpayment was later recalculated to actually have been $2,052,000. Grand Terrace has since entered into an agreement to repay that money over ten years, tantamount to  a $205,200 shrinking of the city’s yearly budget for the next decade.
Stanckiewitz stridently assailed the state for the destruction of  redevelopment as a tool available to his city.  That raised questions about Stanciewitz’s earlier attacks on Schwab for his creative use of redevelopment funding. Stanckiewitz’s growing chorus of critics noted that as mayor he was put in the position of having to deal with the city’s intrinsic financial shortcomings and was fairing no better than had Schwab, who for 19 years had sustained the city. In the light of harsh financial reality, it was said, Stanckiewitz’s criticism’s of Schwab’s approach were not only politically motivated, but self-delusional and mean-spirited, as well.
Stanckiewitz rejects those portrayals, maintaining that Schwab’s formula was one of using the redevelopment agency as a crutch, such that the city never adjusted to walking on its own.
“The truth is we never did develop an adequate tax base and relied heavily, too heavily, on our redevelopment agency to cover general fund expenditures,” Stanckiewitz said. “Mr Schwab’s strategy was to substitute available redevelopment funding for economic development. We are weaning ourselves from [our financial dependency on] the redevelopment agency. When you are as dependent on your redevelopment agency to shore up your general fund as Grand Terrace was, that is not something you can do overnight.  This is something the state is forcing us to do, but we have been cutting and cutting for years, so we are not in a position where this shocked us. We are not, for example, as hard hit as the city of San Bernardino. It is basically a structural deficit. We have got to address those problems that were identified by LAFCO [the county’s local agency formation commission] when we formed as a city 35 years ago. We were told by LAFCO that we don’t have the tax base we need to hold together as a city. Now we are faced with the cold hard facts. What we will now need to do is go out with a tax measure.”
Stanckiewitz said he believes a vote can be scheduled for later this year to get the tax in place, if the voters approve it, by January 1.
“We could have that on the ballot in November if we hit all the time lines right,” he said.
He said he had no fear of asking the people he represents to tax themselves for the city’s sake.
“I think if we lay it out right and explain it  to people and involve citizens in the city so they know the whole process and give them the choice and say, ‘This is what it will cost to keep the services you are accustomed to. If you don’t approve it, we will be providing you less service,’” Stanckiewitz said.
In fact, Stanckiewitz said, the reductions that will be necessitated if no tax is imposed will result in Grand Terrace residents “receiving less service than if we were part of the county. We need to lay it out and show people we are not asking for pie in the sky to start grandiose programs but just want to maintain our little city to the level of service we are accustomed to having.”
While he is now the mayor and the chickens are coming home to roost, Stanckiewitz said, he is not the one to blame for the city’s long slide into the fiscal morass. He insisted Schwab was the culprit.
‘Thirty years passed and nobody did anything,” he said.
As the guy in office now, Stanckiewitz said, he is looking for long term solutions. The foremost prospect he sees is expanding the city’s commercial base and generating more sales tax.
“The city needs to put a welcome mat out,” he said. “I’m not sure the city was real open to a lot of commercial development. Once they found out how they could use the redevelopment agency to divert money into the general fund, doing commercial development became secondary. We had some attempts ten or twelve years ago with the Outdoor Adventure Center, with lakes and businesses around it. I’m not sure anyone was dedicated to that. At other times, city officials were talking about Lowes [i.e., a hardware store]. What it came down to is if you don’t have the traffic counts you can’t get businesses to look at you seriously. If you don’t have commercial development, you don’t get traffic counts. Stater Bros. took it upon themselves to put in a new store and a new center that held out the promise of bringing in even more. The world went sour and they are having a tough time attracting business to come in there. In the old Stater Bros. center, we have had some companies look at the space there, but it all comes back to the traffic counts aren’t there. There is not an overnight fix. They had thirty years to do it and it wasn’t done.”
The city is still afloat, but struggling to dogpaddle and keep its head above water, the mayor said.
“We will end the current fiscal year with a balanced budget and some reserves, how much we are not sure,” he said. “Next year could be the challenge. Given the redevelopment agency takeaways by the California Department of Finance, we will be short in the general fund. Our reserves cannot fill the hole. We’ve got a budget workshop coming up on April 23, which should give us a clearer picture relative to what the state is doing with the redevelopment agency takeaways.”

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