According to City Manager Steve Mermell, the city faces two immediate challenges during the COVID-19 pandemic – the battle to curb the spread of the deadly virus and a growing economic challenge, as one of the region’s hottest destination locations.
“He is doing an amazing job of moving us forward,” said Pasadena Public Information Officer Lisa Derderian. “He is meeting every morning with the executive leadership team, some virtually, some in person. Then those conversations continue throughout the day based on the respective department’s action items for the day. Things are rapidly evolving minute by minute. Steve and his management team are constantly reevaluating our needs.”
Mermell and a team from the city toured Huntington Hospital on Monday to help the hospital as it develops a plan to increase capacity if the virus surges.
“Certainly we don’t want to see a huge number of people succumbing to this disease,” Mermell said.
In an effort to control the spread of the virus, Mermell declared a local emergency on March 16.
Three days later, the city’s Health Director Ying Ying Goh issued a local order that closed all non-essential businesses. The county and the state have issued similar orders.
Pasadena has six confirmed cases of the Coronavirus.
Hundreds of businesses have been forced to shut down locally since Mermell declared a local emergency. Some local businessmen feel the situation could wipe some businesses out totally in a short amount of time.
“I have heard from some of my clients, especially small restaurant owners, that if it goes beyond two weeks, they would not be able to open their doors again because of the large cost of reopening,” local tax preparer Ishmael Trone said.
Republicans and Democrats appeared to be inching towards a $2 trillion dollar stimulus package that could provide some relief to the American people and business owners losing money due to the virus.
As part of the stimulus, the Federal Reserve could start purchasing municipal bonds, according to Mermell, which could help the city avoid about $500,000 a month in debt due to the Civic Center’s bond, which is about $135 million in outstanding debt.
“We’ve gone from paying 1 percent interest on those bonds to paying about 6 percent interest on those bonds,” Mermell said. “That’s an additional $500,000 a month in debt service expense. The city’s general fund stands behind those bonds. So if the convention center, which of course has no business right now, can’t make that payment, then the general fund will have to make that payment.
“It would be great to see if the federal government would start purchasing those bonds, but we don’t even know what the interest rate would be when they would purchase them. That’s a real good example of how federal action may provide some immediate relief to us.”
According to Councilman Victor Gordo, the city relies on a healthy economy more than any other city in the region.
“We rely on an economy that involves retail, entertainment and dining, and all of those sectors have taken a tremendous hit,” Gordo said. “So the biggest challenge economically for the city is the challenge that our local business community and its employment base are facing at the moment.”
According to Gordo, the city should be advocating for the federal government to assist and help stabilize the local economy as city leaders work hard to protect residents from the virus.
“Both present a very serious danger to the residents of Pasadena: the virus and the short and long term impact to people, economically,” said Gordo.
The shutdown has forced some cities to start Gofundme campaigns.
“The financial pressure on Pasadena hasn’t manifested itself yet,” said Mayor Terry Tornek. “We’ll see it as the weeks go by. The reduction in revenue is going to blow a hole in our budget, and the question really is how big that hole gets.”
According to Tornek, most of the city’s revenue comes from real estate tax, which probably won’t be heavily impacted by the pandemic.
“The other big sources of income for us as you know, are sales tax and TOT [transient occupancy tax.] Those are both going to take a nosedive obviously. That’s going to have a big impact.
Under the city’s TOT, 12.11 percent is paid to the city on stays at hotels, motels and other places,” said Tornek.
“We’re thinking longer term now in terms of if this is sustained over the next two or three or four months, what does that do to the city’s revenues?” Mermell said. “What sort of pressure does that put on us financially? We are still very keen on identifying ways to help our local businesses get through this.”
Managing Editor André Coleman contributed to this story.