State of the City: Mayor Tornek Mixes Revenue Warnings with Guarded Optimism

Despite a growing concern that Pasadena is developing burgeoning budget shortfalls starting in Fiscal Year 2018, Mayor Terry Tornek hit three significant positive notes in his “State of the City” address Wednesday evening saying Pasadena is not adding vast amounts of new development, the City does have has adequate water to supply new development, and traffic is not approaching gridlock, or “even getting measurably worse.”

The Mayor delivered his address following the dedication of the new gymnasium at Washington STEAM Academy, a $10.4 million joint use collaboration between the school district and the City, funded mostly by Measure TT funds.

Washington STEAM Magnet School Principal Shannon Malone welcomed the Mayor as well as members of the Pasadena Unified School Board, along with members of the City Council, and said of the new gymnasium and its facilities, “It is in this space that Washington STEAM will continue to grow and thrive.”

Following an introduction by Vice-Mayor Gene Masuda, Mayor Tornek centered his “State of the City” address around numbers, presenting a primer on City finances, noting first that the City’s General Fund Revenues are approximately $238 million, primarily from four sources — Property Tax at $57 million, Sales Tax at $35.5 million; Utility Users Tax at $30.4 million, and Transient Occupancy taxes at $14.6 million. The remainder of the City’s revenue comes from charges, fees, and unpredictable intergovernmental transfers, totaling $100.5 million, the Mayor reported.

Increased development rising property values will continue to be the City’s primary source of revenue, Tornek said.

Acknowledging a projected revenue shortfall in the coming years, Mayor Tornek, said “The inevitable conclusion is that we cannot support the existing payroll of 2,200 employees indefinitely. Further, if we are to maintain high quality services, personnel reductions will mean eliminating some programs altogether. And since every program has a constituency, this will not be a popular effort.”

Meanwhile the City spends $71.3 million annually for Police services, up 8.5% from $65.7 million last year; $43.8 million for Fire services, up from $42 million last year; $23.8 million for Public Works, up from$22.4 million last year; $10.7 million for Libraries, and the remaining $58.2 million on Human Services, Planning, and Transportation.

The City’s contribution to the employee Retirement system – CalPERS — continues to take a growing bite out of the budget, the Mayor noted, as the City makes rising budget payments to the system — $39million last year, and projected to grow rapidly to $65 million in four years.

“And,” said the Mayor, “based upon recent CalPERS actions, the number will get even worse.”

Tornek said, however, that the City’s savings are strong, with funds nearly at pre-recession levels of approximately $46 million, while warning that expenses will begin to outstrip income by $3.6 million in 2018, and then more than double to $8.6 million within four years.

“This is not an acceptable outcome,” said Tornek. “So we must continue to work hard to enhance income and reduce expenses. We must use the budget process in April and May as a comprehensive and collaborative review to determine what programs can be shifted to other funding sources or which activities are no longer necessary. We must make structural changes now so that we don’t spend more than we collect.”

Addressing the issue of rapidly increasing development in Pasadena, the Mayor noted that all is not as it appears.

“Pasadena’s population is not exploding,” said Tornek. “Since 2000, we have added 7,710 people over 15 years, or .3% a year. LA County has added .44% over the same period. We have added 5,324 residential units over the same 15-year period, or .76% a year, and 1.3 million square feet of commercial space.”

As the Mayor explained, “Because of the cyclical nature of real estate development, annual residential growth has ranged from a low of 20 units in 2000 to a high of 929 in 2008. 2015 added 363 units. Not explosive.”

Tornek also noted that due to conservation, and more water-efficient code requirements, Pasadena’s has declined from 226 gallons per day per person in 1997 to 148 gallons per day per person today.

“Pasadena’s total water consumption in absolute terms, in 2015, was the lowest that it has been since 1952 in spite of our modestly growing population,” he said.

Speaking to the issue of local traffic, the Mayor said, “The old suburban auto-dependent travel patterns no longer apply (here) because the residents rely less on their cars. Instead they walk, bike or take advantage of Uber and Zip Cars. This trend is accelerating in cities around the world and yes, also in Pasadena.”

“During this recent period of growth in development and population, the City has only seen a slight traffic increase since 2006,” continued the Mayor, adding that traffic “is actually down in some cases.”

“Pasadena is not approaching gridlock or even West LA traffic levels,” said Tornek.

The mayor then detailed the upcoming developments in the City, acknowledging that while one project is a large one, most are what he called “modest.”

The Cordova/Oakland development replaced a single family home with 21 new apartments on an arterial street, and is adjacent to existing multi-family buildings. According to the mayor, real estate taxes will go from $17,000 to $150,000, which will generate an additional $28,000 a year to the City. The project also paid $470,000 in fees to the city and will accommodate 30-40 additional residents who can walk to downtown attractions, but who may also own 20-30 additional cars, the Mayor noted.

A development on El Molino south of Del Mar has generated fees of $187,000 to the City and will house 10 additional residents.

“These increases in density are only occurring in specified areas that are planned for multi-family housing,” said Tornek. “They do not threaten the 75% of the City that is not zoned to permit multi-family or commercial development. But they will upgrade the housing stock, support businesses and allow our city to accept its fair share of regional growth.

“Still,” the mayor continued, “we must continue to carefully review what is actually happening and strive to find a balance that will allow our City to grow and change without losing the essence of what we love about Pasadena.”

Finally the mayor discussed what may be dramatic upcoming changes to the Arroyo Seco, what he called, “our most precious distinctive natural resource.”

Currently the County Department of Public Works has a large sediment removal plan in Hahamongna, and the National Park Service is proposing to add the Arroyo to the Santa Monica Mountains National Recreation Area.

In addition, the Mayor noted that the Army Corps of Engineers has a habitat restoration study underway that could remove much of the concrete surrounding the flood control channel.

The City has also invested $200 million to enhance the Rose Bowl and “ensure its future viability,” said the mayor, and there are more than $80M worth of unfunded projects in the rest of the Arroyo.

“With all of these issues swirling around, the administration of this key resource is divided between various City agencies, departments, commissions & operating companies,” said Tornek. “During 2017, the City Council will work with the City Manager’s Office, the Rose Bowl Operating Company and residents citywide to step back and consider the entire Arroyo Seco in a comprehensive way, not just as a site for a huge variety of user-driven functions, but as the living, beautiful, natural heart of our City. Watch for it.”