CVIndependent

Sat08182018

Last updateWed, 27 Sep 2017 1pm

Palm Desert Mayor Sabby Jonathan recently invited the public to enjoy complimentary coffee and conversation—something he plans on doing every month.

During his January coffee meeting, at the Desert Willow Golf Resort, the new mayor (the position rotates among City Council members on a yearly basis) was battling the flu. However, Jonathan, who works as a certified public accountant, was kind enough to agree to answer questions on anything—ranging from the city budget to new hotels to past city-employee wrongdoing—via email.

Regarding your quest for transparency—why the coffee chats?

Coffee chats are a great way for the community to engage with its elected officials. They provide an informal forum where concerns of residents can be heard and questions can be answered. The chats take place monthly, throughout the year, with the exception of July and August.

Is Measure T—an increase of the city’s hotel tax from 9 to 11 percent, passed by voters in 2016—working? How much money is it bringing in yearly, and is the city safer now because of it?

The change generates approximately $2 million in additional general-fund revenue a year, supporting police and fire services as well as other municipal programs and services that help keep Palm Desert safe and ensure a high quality of life that is enjoyed by our residents and visitors.

What is the city’s budget structure? How many special funds are there, and what are total revenues and expenditures?

The city financial records have many “governmental funds,” including the above noted general fund. The city has over 50 special revenue, capital, enterprise, special assessments and internal service funds. Most other funds are restricted or assigned for specific purposes and include traffic safety, transportation improvements, fire facilities, housing, development impact fees, recycling, public art, recreational facilities, capital improvement projects, landscape and lighting districts, etc.

For the fiscal year 2017-18, the overall expenditures anticipated for all funds are $118,624,985. Revenues are same as expenditures! Our complete budget is available online.

As a CPA, would you recommend changing anything in the current structure of the city budget?

Overall, our current budget process works very well. It is based on the city’s goals for the upcoming year, and it is “bottoms up,” meaning the process starts with the individual departments, which then take ownership of their respective budgets. We are looking at adding a five-year forecast to the budget process. … It would enable us to look ahead for the next five years, ensure there are no surprises, and give us an opportunity to take action if needed.

The city previously froze some motorcycle-cop positions. Do you plan to put them back on the streets soon?

We continue to work closely with our public-safety professionals to measure whether there have been any impacts from the frozen positions. To date, we have not seen any diminishment in the city’s ability to provide exceptional public-safety services. If this changes, we will act quickly.

The city of Palm Desert does not have its own independent police force, but instead contracts with the Riverside County Sheriff’s Department. What is the total annual dollar amount for the sheriff’s contract, and what is the current crime rate?

For fiscal year 2017-18, the city budgeted approximately $21.9 million for police services. The FBI Uniform Crime Reporting Program data for 2016 illustrates the city has a higher incidence of property crime than violent crime. This fact is likely attributable to the higher concentration of retail establishments within the city, as larceny-theft constitutes the highest number of property crimes. Examples of larceny-theft include shoplifting, bicycle thefts and pocket-picking.

Comparing the UCR data with the past crime rate reports, was there an increase in violent crimes and property crimes?

(There were) … significant decreases in every crime category, with the exception of motor vehicle theft. Overall, violent crimes were down from 117 in 2015 to 77 in 2016, and property crimes were down from 2,302 in 2015 to 2,146 in 2016.

Is the city improving, considering the new (hotel tax) income? Are the anticipated new hotels being finished on time?

Our transient occupancy tax revenue is supporting public safety and other municipal services and programs that enhance Palm Desert’s wonderful quality of life. The city is working closely with the developers of Hotel Paseo to facilitate its opening as soon as possible. … The Fairfield Inn on Cook Street finished on time and opened last summer. The SpringHill Suites (formerly the Fairfield Inn on Highway 111, which was destroyed by fire several years ago) is being reconstructed and should open later this year.

What is the city manager’s salary and benefits? The previous one (John Wohlmuth) got $300,000 (in severance and accrued vacation/sick pay) to leave amid a scandal involving nude pics.

The current city manager is paid $220,000 with a three-month severance package, but without health care or a car allowance, and with a maximum accrual of 320 hours combined sick leave and vacation. For comparison sake, the previous city manager’s salary was $248,911 annually (when he left), with six months’ severance, plus $500 per month for an automobile allowance, and the same health care and leave benefits as other executive employees (which excludes the 320 hour cap that the current city manager has). He had a combined total of 1,028 hours of sick leave and vacation time at his departure.

How do you keep the city fiscally sound? How is the city handling salaries and pensions?

The city of Palm Desert, throughout its history, has been a prudent steward of the public’s money. This is reflected in the fact that for decades, Palm Desert has adopted a balanced budget in each year, and maintains a healthy reserve balance. Looking back, we have been forward-thinking in addressing challenges related to staffing, whether it be during a development boom or a recession. During the recession, Palm Desert reduced its staff by over 30 percent, and we were proactive in making changes to pension and other benefits for new employees well before the statewide efforts to enact pension reform. … We continue to evaluate the labor market and look for the most effective ways to ensure that we have the best employees available to provide services to our residents.

Do you support the city’s system to rotate mayoral positions annually?

I am a strong proponent of rotating the mayor’s position, especially in small cities like ours. It avoids a lot of the “drama” that we see in cities with elected mayors, and it gives each councilmember an opportunity to engage at a deeper level, which I believe makes for more knowledgeable councilmembers, and a more effective council.

For information on upcoming coffee conversations, call 760-346-0611, or visit www.cityofpalmdesert.org.

Published in Local Issues

For the second time in six years, Palm Springs voters have agreed to open their pocketbooks a little wider.

Measure D, voted in last November, and Measure J, approved in 2011, will bring in a total of about $20 million in tax dollars annually to the city.

One problem: Millions from Measure J were given to John Wessman, the original developer of the downtown redevelopment project, and now the subject of numerous bribery indictments along with former Mayor Steve Pougnet.

One question: Will the city seek reimbursements from Wessman if he is found guilty?

Anticipating legal issues in the wake of the bribery scandal, which culminated in an FBI raid of City Hall, Palm Springs officials hired a new city attorney, Edward Kotkin, in April. While previous city attorneys were contractors, Kotkin was brought on as a city employee, at a salary of $206,088 a year plus benefits.

Kotkin is a former Riverside County deputy district attorney who is expected to develop strategies to protect the city from potential legal troubles regarding the outcome of the Wessman-Pougnet criminal case. He came to the city with a fantastic reputation as a skilled attorney.

Here’s an edited version of Kotkin’s answers to my questions, done via e-mail.

If or when Wessman is convicted of the criminal charges, will you seek retribution from Wessman’s companies—in other words, seek to get our taxpayer money back?

If there are convictions in the district attorney’s prosecution of Messrs. Pougnet, Wessman and (Richard) Meaney, those convictions will have civil legal ramifications that the City Council will consider and act upon in its discretion. The council will always act in the best interest of the city, its residents and businesses. The city has already initiated litigation aimed at protecting the city’s rights and remedies as to assets involved in transactions related to the criminal case, and will certainly continue to do so if and when the council determines that new litigation will advance the city’s interests.

It seems the city’s finances are always supported by yet another tax measure, but how long (will this go on)—until the next measure, or until the city’s bankrupt?

There is no potential whatsoever for future increases to the local sales tax. Only a certain amount of tax can be charged at the local level, and Measure D brings the percentage of tax passed through to local government to the maximum. The city has no current plans to consider or present the voters with any additional taxes in the foreseeable future. The city manages its finances effectively, and does not foresee any potential for municipal bankruptcy.

What are the city’s total annual expenditures, all funds included, and what are the annual revenues?

The city’s adopted budget with respect to all funds reflects revenues of nearly $222 million, and expenditures of nearly $230 million. It is misleading and inappropriate to view or portray this data as reflecting “deficit” spending by the city. For example, revenues from past years are being applied this year, based upon the timing of projects. That creates an artificially high figure regarding expenditures. Airport customer facility charge revenue accumulated through many years of rental car fees is being spent this year on Phase 1 of a significant new airport car-rental facility. Revenues of approximately $2 million are dwarfed by project-related expenditures of $6.5 million. Further, the general fund anticipates a small surplus this year, and leaves a reserve of approximately 20 percent.

I presume that you will not frame this revenue and expenditure data in a misleading or inappropriate manner. If you do so, it will compromise your relationship with my office irreparably.

Would it (have been) possible to keep the city of Palm Springs financially afloat, (and residents safe), without Measure D? For how long?

The city of Palm Springs handles its finances in a responsible manner at all times, and will always advance the interests of its residents, businesses and visitors to the greatest extent possible, within its means. Public safety will always be a top priority for the city. Your question presumes that there is an objectively quantifiable amount of funding that will make the city “safe,” and presumes that some level of public services translates to the city remaining “afloat.” The city rejects your question as based upon false presumptions. The city will always be safe, and always remain afloat. More resources at City Hall equate to better public safety and more city services.

What are the city’s legal tools and remedies to recoup the taxpayers’ money if there is or was a developer’s default, such as a prolonged timeline in finishing the additional structures (in the downtown redevelopment plans)?

The city declines to discuss legal strategies that may be employed to address any matter of city business. Doing so disadvantages the city in the event that those legal strategies must be employed. The city has made, and will continue to make, all decisions with respect to the evaluation and pursuit of the city’s legal rights and remedies, as they relate to the downtown project, in the best interest of the city’s residents and visitors. The city is proud of the West Elm building and store, and extremely excited about the … Kimpton Rowan hotel and related commercial locations. Your question contains a determination that the developer of the downtown project is in default. The city is the only party authorized to make that determination, and has not done so to date.

The city’s budget is a complex financial package. How do you help ordinary but curious Palm Springs residents, who are not accountants, grasp where and how taxpayers’ money is spent and used?

The city has implemented the OpenGov Portal (palmspringsca.opengov.com) to assist residents and other interested parties secure access to very user-friendly data regarding the city’s finances. … The city adheres to Governmental Accounting Standards Board requirements and segregates funds accordingly. The city’s comprehensive annual financial report is independently audited for compliance with all GASB (requirements), and all other applicable federal and state requirements.

The city claims transparency and that all of the information is out there on the site. Why, then, did the FBI raid City Hall in 2015 and seize certain records that resulted in indictments, if everything was in order?

The 2015 FBI search and seizure and the prosecution by the District Attorney’s Office did not reflect systemic problems at City Hall. The allegations in this matter pertain to a single elected official, his relationship with developers, and certain specific transactions where the elected official is alleged to have violated conflict-of-interest laws. The city has provided full cooperation with law enforcement’s efforts to investigate and prosecute this matter, and also initiated civil litigation to protect city rights and remedies related to the prosecution. The city has been, and remains, transparent with respect to its dealings with the developer of the downtown project. When money is spent under the PFA, an independent fund control agent and a city-retained consultant for “on-call” facility construction owner representative services help ensure the proper expenditure of all public funds through separate escrows for private and public improvements.

Published in Local Issues

A recent review of the budgets of all nine Coachella Valley cities confirms what multiple sources have mentioned over the last several months: The costs of providing police and fire protection have been rising every year—and could soon become a worrisome financial burden.

“About 50 percent of our general-fund budget at this time goes specifically to public safety,” Coachella City Councilmember V. Manuel Perez told the Independent in a recent interview. “In the course of the last few years, public-safety expenses have increased between 5 and 7 percent every year.

“The passing of Measure U a couple of years ago, which was a 1 percent sales-tax increase, is the only reason why … we’ve been able to sustain ourselves—and we understand that these annual (public-safety cost) increases are going to continue.”

With 50 percent of the general fund being allocated to public safety, Coachella falls in the middle of the pack, as far as valley cities go. Given different accounting methods, a direct comparison is difficult to make. However, Indian Wells is at the low end, spending about 35 percent of its general fund on public safety, while Cathedral City is on the high end, around 65 percent.

This is not just a problem here in the Coachella Valley, and studies have been done across the country over the past decade in an effort to determine what’s driving the trend in rising public-safety costs, even when adjusted for inflation. But because there so many variables at play, these studies have not uncovered a single root cause.

In the Coachella Valley, five cities—Rancho Mirage, Palm Desert, La Quinta, Coachella and Indian Wells—contract out public-safety service to Riverside County and Cal Fire, while the other four cities—Palm Springs, Cathedral City, Desert Hot Springs and Indio—still maintain independent police departments. Only Palm Springs and Cathedral City have independent fire departments. Yet independence does not seem to be an indicator of how large a city’s budget allocation will be, since Palm Springs comes in on the low end at about a 45 percent budget allotment, with Cathedral City on the high end at 65 percent.

Back in 2013, Desert Hot Springs was in the midst of a financial crisis and explored outsourcing services to the county. “We were looking at our police force and what we could do either with the sheriff’s department or keeping our own police department,” said Mayor Scott Matas, who was a City Council member at the time. “When the sheriff’s department’s initial bid came in to us, it appeared that it was a couple of million dollars less. But after the interim police chief and his staff tore the bid apart and compared apples to apples, when the sheriff’s department came back for a second round, we found out it was actually going to cost us $1 million more, so it was pretty much a no-brainer for us to keep our own police department.”

Desert Hot Springs is now on better financial footing. “Recently, we actually gave a little bit back to the police department, which was cut by upwards of 22 percent when the fiscal crisis was going on,” Matas said. “It’s been nice to keep our own police force. It’s more personable when it comes to your community policing, because you have the same police officers there. When you contract out, you never know what that face is going to be. We have that issue with our county fire contract. We’re very fortunate that some of the firefighters who work in this community have been here a long time, but for the most part, they rotate in and out all the time, so you never have that same chief, or you never have the same firefighters.”

Indio City Council member Glenn Miller, who has also served as the city’s mayor, touted the benefits of Indio having its own police force.

“About 80 percent of the police officers working with us live in our city,” Miller said. “We have a large contingent that is home-grown, and then a lot of them have moved into the city, including our police chief, Michael Washburn, who came from Seattle. So they are vested in the city, and that does us a lot of good. … When they live in our neighborhoods, they get to know those communities.”

What solutions are mayors and city councilmembers looking at to keep public-safety spending in check?

“When it comes to county fire, they’ve just been given larger pay increases, which then trickles down to the people who contract with them,” said Matas, the DHS mayor. “We were hoping to open another fire station eventually, but now we’re looking at just trying to keep the staffing that we have. … It’s always a challenge with public safety. We’ve been very fortunate with our police services. Crime is down. We’ve got a great chief (Dale Mondary), and we’re working in a great direction, but with this fire budget coming up, I don’t know how we’re going to do that.”

Coachella’s V. Manuel Perez said there’s no way his city can keep pace with the public-safety cost increases as things stand now.

“We have to figure out how we can work with other valley contracting cities to come up with a long-term solution for this problem,” Perez said. “Maybe we can come up with some sort of (joint powers authority) between the cities to support an agreement to help pay for public safety.”

Newly elected La Quinta City Councilmember Steve Sanchez agreed that it’s worth exploring whether the valley’s cities should join forces … perhaps literally.

“I think that’s something we need to discuss amongst all our council members,” Sanchez said. “We need to look at all options, whether it’s (joining forces with) Indio or other cities, or if it’s just staying with the sheriff’s department—whichever makes the most sense.”

Miller said East Valley cities have already started talking about working together more.

“When I was serving as the mayor of Indio, up until the end of this last year, we discussed with (La Quinta Mayor) Linda Evans and (Coachella Mayor) Steve Hernandez the possibility of doing an East Valley coalition plan that would include combining police and parks, and … making a better community overall by working together as one. We could lower costs for each individual city by economies of scale. Also, we talked about economic development, youth programs and senior programs. Not that we were going to give up our autonomy, but we’re looking at ways we could partner up to get a bigger bang for our buck, and maybe do better for our residents by being able to provide additional services.

“With public safety, we’d look at what we could do, since we’re right next to each other, to institute a regional police force. It’s something that we’re open to. You never shut the door on any option.”

Published in Local Issues