City coffers

“The enemy here is the budget.”

That’s how Chico City Councilman Jim Walker responded to a report from city staff proposing wage reductions and other measures to balance an increasingly bloated budget deficit, a figure that has climbed to a projected $6.7 million for the next two fiscal years.

Jennifer Hennessy, the city’s finance director, was the bearer of that news during the council’s regular meeting Tuesday evening (May 18). It followed news that citywide expenditures for the third quarter are actually falling below budget targets.

Among the measures in a plan to fix the shortfall is the permanent elimination of 19 currently vacant staff positions from the budget. The proposal also calls for overtime reductions for the police and fire departments. And then there are the eight bargaining units, all of which will be asked to take across-the-board 5 percent pay reductions starting the first of the year.

City Manager David Burkland said discussions with representatives of those units likely will begin this week and that the council could see a final proposal sometime in September. (Contracts of seven of the eight bargaining units end Jan. 1.)

This is just the latest round of cost-cutting measures for the cash-strapped city. Last month, the council approved an early-retirement program that would provide employees with an additional two years of service credit. The city’s 34 targeted positions would have resulted in a cost savings of about $3.8 million annually, but only 12 people thus far have agreed to the “golden handshake.”

Curiously, city employees wouldn’t go for another cost-saving strategy that would save the city more than $800,000 over the next two years. Hennessy reported that employees narrowly voted down a proposal to switch from Blue Shield to another health-care provider with more reasonable rates. Blue Shield is slated to raise its premiums by more than 40 percent.

City Councilman Scott Gruendl appeared most perplexed by that revelation.

“I guess I’m just having difficulty knowing people would vote on something, knowing ultimately it will cost them more,” he said. “I’m stunned.”

Hennessy acknowledged the outcome of that vote further burdens the city. She noted that the measures the city is looking for approval on are designed to be permanent. The budget-reduction plan calls for the city to reduce its share of health-insurance commitment for employees from 75 percent to 60 percent. A negotiation deadline will be Sept. 31. If an agreement isn’t reached, the city will implement its “last, best and final offer” for a period of one year, she said.

By the end of the discussion, each of the council members appeared to be on the same page.

“We are faced with increasingly challenging times and this is going to be difficult—difficult for everyone on the city team,” summed up Councilman Larry Wahl.

Earlier in the nearly four-hour-long meeting, the panel took a crack at another controversial item during a public hearing on whether to approve a development agreement for a proposed apartment complex. It was actually a re-approval for the Bidwell Park Apartments project, which council members gave thumbs up to back in 2008.

The planned development came back to the council level because its approval expired in December. And that reopened a can of worms.

Bidwell Park Apartments comprises 38 units of affordable housing replacing the A&A Pear Grove Mobile Home Park, a blighted pocket situated west of Highway 99 between Eighth and Ninth streets. The developer of the $8 million project is Stone Building Corp. out of Southern California, although local financial planner Randall Stone, whose brother is president of the company, is one of the project proponents.

One of the other sticking points for the project was the request of the council—in its role as the redevelopment agency—to lend the developer $400,000. This is in addition to the $2.6 million the RDA allotted in 2007. The additional money, explained city staff, would increase the chances of the project’s earning federal tax credits needed to complete it. Getting such funding is highly competitive; the Chico area goes up against Sacramento and other growing regions.

Reactions from the public were mixed. Evan LeVang, director of the Chico-based Independent Living Center of Northern California, championed the project as a great benefit to the community, and the disabled in particular. Chico resident Bob Kromer had multiple concerns about the location of the project, which he noted is far from pedestrian friendly. Others complained that the three-story development is a bad fit with the neighborhood.

Kromer, who is a current candidate for the City Council, also wondered whether the city could strike a better deal, suggesting the project warrants further review. His concerns were echoed by Wahl, who noted that the cost per unit at $211,000 is close to the cost of Chico’s median single-family home price ($235,000).

“We should never, never overpay to reduce blight with taxpayer money,” he said.

Gruendl noted, however, that the builder will be providing housing at a significantly reduced rate for a term of 55 years while simultaneously repaying the RDA loan. In other words, the project is not comparable to the open market.

Wahl cast the lone dissenting votes when it came to approving the project and the additional RDA funding.