I realize that the term “fool” has a more derogatory term now than in the early 1700s when the word was coined. The term then meant someone who has behaved foolishly and that is the meaning that I use today to describe the rush to issue bonds and the rush to spend 13 million dollars of taxpayers’ money. Then to add insult to injury, the 13 million will end up costing the city of 29 approximately 36 million dollars.
Why did the former Redevelopment Agency issue bonds in early 2011? The city was financially sound, tax increment money was averaging well over a million dollars and was projected to continue to do so. Set aside the fact that this money would be going to taxing entities such as Morongo Unified School District, Copper Mountain College, and Hi Desert Medical Center if RDAs never existed, set aside that thought even though it is hard, and look at what the city did with the RDA money in 2010, without creating debt. Historic Plaza and Williams’ Insurance building were renovated jointly by RDA funds and matching owner funds. Not everyone agreed with those decisions, but at the very least, it didn’t put a dent in the city’s finances. The answer to why, is the advice given to the City Council by Staff.
Governor Brown’s re-election coincided with the seating of the new 2011 city council. It is my opinion that these gentlemen were ready to be the council that got stuff done. A noble cause that was thwarted by Gov. Brown’s resolve to eliminate RDAs statewide. What to do? The city council had a 5 year implementation plan that was going to improve downtown, bring in customers, rejuvenate the economy of 29 Palms, and the city was in the beginnings of writing a new General Plan. Rosenow Spevacek Group, Inc (RSG) from Santa Ana had been planning Project Phoenix since 2008 and Hogle Ireland were already hired to assist in the writing the new General Plan. The way the council understood it, the state would take all the tax increment money and distribute it among the city’s taxing entities, and the RDA money would not be available to fund such great plans.
Interim City Manager Tooker in a staff report dated February 8,2011 advises the City Council of Governor Brown’s plan and what that would mean for the city. He suggested that the council to direct staff to approve a bond financing team and direct staff to pursue issuance of bonds to be secured by tax increment money. Staff advised the council this was a way to secure the tax increment money and ensure that the projects could be completed. In March of 2011, public study sessions were held to discuss the issuance of bonds. The city councilmen passed the bond issuance with a 3-2 vote, Harris and Klink, no.
The bonds were to be used for a multitude of things to include Project Phoenix. Project Phoenix had two phases that would cost 2 million dollars. The two phases were public parking improvements, paseos and facades.
Despite warnings from the Govenor that such actions taken to encumber money would be reviewed and possibly found to be unlawful, our city acting under the advice of lawyers and the new City Manager Warne, issued bonds anyway.
Governor Brown signed AB X1 26 and 27 on June 28th, 2011 the bills were signed into law. As expected lawsuits were filed and the bills were sent to the CA Supreme Court. It is my opinion that anyone that was a fan of RDAs did not believe that RDAs would really be dissolved. AB X27 allowed RDAs to continue, but had to pay a big payment to schools to do so. However, RDAs were told to cease and desist under 1.8 of AB 26. RDAs were to prepare Enforceable Obligation Payment Schedule( EOPS) as if RDAs were being dissolved. RDAs could not incur new debt or enter into any new contracts as of June 28th, 2011. EOPS were the guideline for RDAs, only these payments and these activities could be acted upon.
29 Palms listed the Bonds A and B, RSG Consulting, Employee costs of the Agency, Rutan and Tucker Legal Service, Hogle Ireland, City Agency Cooperative Agreements, Dokken Engineering for HWy 62 improvements, and then lists the pass through agreements such as MUSD, County Schools, Community College, and the library to name a few.
In spite of 1.8′s demand to stop all RDA activities, other than what was obligated, our staff presented a expanded Project Phoenix on July 26, 2011. Project Phoenix now included community center, workforce housing, a theater and public parking. City Attorney Munoz states at this council meeting that we are “on a tight time line to spend 13 million dollars.” City Manager Warne presents the new Project Phoenix and asks that council directs staff to quickly(rush) develop plans for a number of redevelopment plans that had already been under consideration. He continues to say that the motivation (to rush) is to commit funds on hand before the state decides it needs to raid the cities for more money. This activity is in direct conflict with California Law AB 26. The minutes say that there was a “consensus among the council to move forward”. Did they or didn’t they vote on this issue? Another thing to question, is if the city council approved it, why did the public session not take place until November?
The CA Supreme Court issues a death blow to RDAs in late December. AB 26 was upheld and AB 27 was struck down as unconstitutional. RDAs were now held to the EOPS and now had to begin to wind down under a successor agency and then an oversight board. Recognized Obligation Payment Schedules are the payments that are to occur in six month increments beginning January 2012-June 2012. ROPS can not contain many of the things on the EOPS. Agreements between the RDAs and the governments that created it are not allowed on the ROPS. ROPS have to be approved by the Successor Agency and then the Oversight Board and then submitted to the State Department of Finance and the County Auditor Controller.
Tonight, we will see the moral compass of 7 outstanding citizens. Surely when they look at the 29 Palms ROPS and see Project Phoenix at 8.5 million, and 400,000 to Administrative Costs for Project Phoenix, they will realize two things:
The city did not comply with state law and that the money rightfully belongs to the special districts that they represent.
We can’t recall the bonds, but we can stop the rush to encumber 13 million dollars and stop paying outrageous amounts of money to lawyers and consultants. How many homes do we need to buy for folks that live down the hill? Lets regain some common sense and ask what would reasonable people do?