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Healdsburg faces redevelopment losses



Healdsburg is bracing for another blow to its already depleted general fund, possibly within weeks, because of the loss of its redevelopment programs.

Visitors to Healdsburg Square in 2003. (PD FILE, 2003)

The City Council was informed Monday evening that the general fund may have to cover $600,000 in administrative costs that were in the redevelopment budget.

That comes on top of an estimated $984,000 deficit the $7 million general fund already faces at the close of the 2011-2012 budget year on June 30.

“I’m holding my breath and the shoe has not fallen,” Finance Director Heather Ippoliti told the council during a budget workshop. “There is a possibility the $600,000 might hit the general fund this fiscal year.”

More than 95 percent of the general fund goes to the Police and Fire departments’ budgets. Although the city has $4.7 million in reserves, those are projected to dry up by mid-2016 because of more anticipated chronic deficits.

Redevelopment programs were ended last year by Gov. Jerry Brown and the Legislature in an effort to redirect the property tax revenues they relied upon to schools and other underlying agencies.

Ippoliti said the state Department of Finance, which is determining how much redevelopment money cities and counties can hang on to for existing projects, is limiting the way local governments allocate administrative costs to those programs.

Healdsburg planned to have redevelopment funds pay for $856,000 in costs associated with city administration, consultants, the City Council and the finance department because they oversee redevelopment programs but now expects it will be limited to $250,000.

“This is money we thought we were allowed to run the Redevelopment Agency,” City Manager Marjie Pettus said.

“A lot of cities are being limited this fiscal year” to $250,000, Ippoliti said. “That’s a big difference.”

She said she expects to hear by June 11 whether the state will enforce a similar limit for Healdsburg.

“We incurred expenses as the redevelopment agency,” said Councilman Jim Wood, adding the city is being told “after the fact” it can’t.

In effect the state is saying, “‘We’re going to go back six months into your pocket.’ I’m dumbfounded by it,” he said.

“The rules have changed,” Ippoliti said.

Assistant City Manager David Mickaelian said it is unclear if the state Department of Finance is overstepping its boundaries.

“The Department of Finance is not the final arbiter. Who is is yet to be seen,” he said. “My guess is you will see litigation in the near future if it’s not resolved.”

The possibility of potentially more bad news for the general fund comes after it already was projected to be $620,000 in the red at the start of the current budget year. That increased to $984,000, mainly because of a decline in projected sales tax revenue with the departure of solar power company DC Power, one of the city’s top revenue generators

There were a few bright spots Monday, including growth in hotel room taxes. Year-to-date revenues are 17 percent above the same period last year.

The budget is emerging as political issue during a year when three council members are up for re-election.

The City Council has been criticized recently by a group of citizens, including former Mayors Eric Ziedrich and Leah Gold for not doing enough to address the city’s financial “crisis,” particularly cutting pension costs.

As a result, council members recently ratified a letter stating they have been “working diligently over the past three years to decrease operating expenses and promote sound financial practices,” including reducing the city work force by 18 percent and gaining concessions from employee groups.

In all, audited numbers show salaries and benefits decreased by $2.1 million over a two-year period, the council said.

City administrators are negotiating with police and fire unions, But even if the city manages to get those employees to pay more of their medical and pensions costs — equivalent to new agreements with the other employee groups — Ippoliti said, the savings for fiscal year 2012-2013 will be about $127,000.

You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com

8 Responses to “Healdsburg faces redevelopment losses”

  1. Vowel Movement says:

    “More than 95 percent of the general fund goes to the Police and Fire departments’ budgets.”

    Absurd beyond belief.

    Thumb up 10 Thumb down 0

  2. Fishburger says:

    The Burg’s incestuous relationship is finally raising its depressing little heads. Sell the properties that the city owns like the 3 acre piece west of Big John’s which is worth about $1M.
    Vote NO on the sales tax and definitely NO on Measure

    Thumb up 7 Thumb down 2

  3. Jim Bennett says:

    ‘Healdsburg Residents are spared from Redevelopment losses’.

    Through Redevelopment communities lose SO much.

    We don’t want ‘Change’.

    We don’t want to be ‘Redeveloped’.

    We want them to play by the Rule Book they swore to support…
    The Constitution.

    Get out of the way, set the Free Market Free and leave us alone.

    They won’t.

    When you drive through Healdsburg, does it look like it needs to be…’Redeveloped’?

    Guess all the ICLEI social engineering can’t turn it into a slum yet, give ‘em time.

    Smart, creative citizens will fill needs,
    it’s called Capitalism…
    that’s the only ‘ism’ we want our ‘public servants’ to foster.

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  4. Great Expectations says:

    Its time for some new politicans in Healdsburg who have their feet on the ground. The current lot have their heads in the clouds.

    Three of the current council members are thinking first about their public pensions earned in service while employed in Healdsburg city government.

    It also is time for a new city manager who actually knows how to manager a city budget and make cuts to meet city income instead of flying by the seat of her pants.

    These are really tough economic times for city governments in Sonoma County and in too many instances, the city councils and city management are not up to the job of managing their resources. This in addition to being in bed with the employee unions who in to many cases put them in office.

    Tough times call for tough people. The current crop don’t meet this criteria.

    Thumb up 9 Thumb down 2

  5. onlooker says:

    The state controller’s office web site shows the entire administrative staff makes $732,674.00.

    How is it that redevelopment should pay 600k of that?

    Looks like the Healdsburg got caught with their hand in the states cookie jar.

    Thumb up 15 Thumb down 1

  6. Marc says:

    Why is this a surprise to Healdsburg?

    Thumb up 10 Thumb down 1

  7. Dan Drummond says:

    It’s a real shame California cities are facing these kinds of problems without the tools necessary to resolve them. Relying on negotiations with the various bargaining units in the hope meaningful concessions will result I’m afraid is but a pipe dream. Sure, there may be some small concessions, but nothing on the order of magnitude necessary to reverse the flow of red ink. The legal impediments that prevent cities and counties from making the pension reforms necessary have been developed over a period of years at the hand of the employee unions and legislators loyal to them. As draconian as it may be, it seems the only tool available to the cities is to start laying off employees and outsourcing their jobs. Doing so will in the short term relieve the city of ongoing wage and benefit obligations, but in the long term may wake up the employee unions to the fact that they need to be more agreeable to serious reform lest they all lose their jobs.

    Thumb up 16 Thumb down 1

  8. Follower says:

    “working diligently over the past three years to decrease operating expenses and promote sound financial practices,”

    Thumb up 7 Thumb down 0

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