Officials are proceeding as if 2021 will look a lot like 2020, according to a city staff report.
“The COVID-19 and related economic crisis have lasted longer than most assumed in March,” according to a Powerpoint report in the city’s Finance Committee agenda by Matthew Hawkesworth, director of the city’s Planning Department. “Early reopenings led to increased virus transmission reimposition of [the] economic showdown,” Hawkesworth’s report states,
The Finance Committee will meet at 2 p.m. on Thursday.
“For planning purposes staff is assuming calendar year 2021 looks a lot like 2020,” the report states.
According to the report, the city must maintain fiscal discipline, avoid spending additional General Fund reserves except for the most critical needs, consider compensating reductions, continue monitoring revenues and expenses very closely, and take appropriate actions as may be necessary.
The city has already spent all of the $2.4 million in its unassigned fund, and $3.7 million in the city’s $13.7 million 5 percent operating reserve.
To date, the city has not had to use any money from the 15 percent in the city’s emergency reserve.
The city will continue to use Measure I funds to avoid service reductions to the community, postpone General Fund investments in Capital Projects for FY22, maintain a soft hiring freeze and explore opportunities that don’t impact direct services.
Going forward, the city expects the Rose Bowl Operating Co.’s debt service to be the largest risk.
That debt is expected to reach $12,166,180 by fiscal year 2022 assuming events resume. But even then, operating revenues are not likely to cover full debt service for FY 2022, and potentially beyond.
There has been some positive news regarding the Rose Bowl.
Overall, net income is trending $1 million better than original “no events” projections, and Brookside Golf Course appears to be making a strong recovery, bringing in an additional $300,000 to $500,000 of net revenue.
Although event revenue has been drastically reduced, new revenues of $500,000 have partially offset those losses.
Operating costs have been reduced by $2.7 million, with monthly non-golf operating costs of $550,000.
Also last week, Gov. Gavin Newsom said there were no state guidelines prohibiting the Pac-12 from playing college football and UCLA playing in the Rose Bowl.
According to the report, numerous businesses, particularly restaurants, may not reopen. If those businesses are shuttered, it could impact sales tax and other revenue, such as parking. Current projections have sales taxes back to 2020 levels in 2022. In the travel industry, hotel occupancy is below 45 percent. Total hotel revenues are down by 70 percent.
“High unemployment may continue potentially necessitating ongoing city-provided food support, impacting utility payments from customers,” the report states.