Merger stalls

Scott Gruendl’s deciding vote on Tuesday (Nov. 18), one of his last as mayor and a member of the Chico City Council, took a dramatic turn during the night’s regular meeting. For heightened theater, those most affected by the council’s eventual decision—residents of Chapmantown and the Mulberry district—have never had a say in City Council elections.

For months, the council has deliberated on whether to sign an agreement with the Local Agency Formation Commission (LAFCo) that would, in five years, annex the two neighborhoods—so-called “urban islands” of county land—into the city of Chico. It’s a contentious and complicated issue. Many of the 1,300 who live in those unincorporated areas prefer to remain politically separate and, at the very least, want the right to vote on joining the city—although there’s no mechanism in place to hold a neighborhood vote.

As longtime resident Bill Story, one of 16 speakers on the subject, told the council, “We’re having this shoved down our throat.”

From the city’s perspective, there are also financial considerations. By current estimates, annexing the two areas would cost around $400,000—mostly due to increased fire and law enforcement coverage—even accounting for property tax revenues generated by the move, Community Development Director Mark Wolfe later said in a phone interview. What’s more, rejecting the deal likely would prompt a LAFCo lawsuit related to 62 unauthorized sewer hookups in the area.

“This puts us in a horrible situation,” said Councilwoman Tami Ritter. “We’re not your representatives; you did not vote for us … and yet we are making a decision that greatly affects you, that, if we don’t make, subjects us to a lawsuit we cannot afford.”

Councilwoman Ann Schwab maintained her stance that the city is in no position financially to assume responsibility for the two neighborhoods. “Until the city can afford it, and until the citizens can vote and have a say in this matter, I’m not going to support this,” she said.

Vice Mayor Mark Sorensen and Councilman Sean Morgan, meanwhile, said annexation is a foregone conclusion. Indeed, lacking an agreement between the city and LAFCo, the county may try to force annexation in fewer than five years, anyway.

Many who weighed in during the public comment period of the meeting urged the council to nix the agreement, though some, including Chapmantown resident Kevin Thompson, said “annexation should have happened many, many years ago.”

Councilmembers Randall Stone, Schwab and Ritter voted to reject the agreement, while Mary Goloff, Morgan and Sorensen voted in favor.

That left Gruendl as the deciding vote. He paused to acknowledge it was his last of consequence, having lost his council re-election bid. After sharing his thoughts aloud and seeming torn over the decision, Gruendl exclaimed, “No. I’m voting no!” resulting in a round of applause from the audience.

In other council news, the city may be closer to clawing its way out of the general fund deficit sooner than was expected.

As new Administrative Services Director Frank Fields explained, financial statements on June 30 of last year reflected a net deficit of about $7.7 million—a $13.1 million deficit countered by emergency reserves of about $5.3 million. In December of last year, the council approved a plan to repay $1.52 million each year starting in fiscal year 2014-15 and ending in 2021-22.

But the city has made “amazing strides” in replenishing the general fund this fiscal year, Fields said. The city saved on personnel costs due to unfilled vacancies and employee concessions, revenues increased and it received a number of unexpected one-time payments.

Given that the city intends to continue budgeting conservatively and a repayment plan is in place, “there’s a reasonable possibility that that deficit could be liquidated in the next year or two,” Fields said.

But a general fund deficit of $2.8 million remains. In order to present financial statements to auditors and the public in a manner complying with generally accepted accounting principles, Fields requested approval of a one-year advance of $2.8 million in cash to the general fund from five other funds, a 90-day loan of $4.9 million from other governmental funds, and a five-year loan of $500,000 to the airport fund.

The council voted unanimously to approve the resolution.