Fiscal Prudence – City & CUSD

Letters to the Editor submitted to The Coronado Times are the opinions of the author and do not necessarily reflect the opinions of the publisher, editors or writers of this publication. Submit letters to letters@coronadotimes.com.

Submitted by Daron Case


On Tuesday of this week there was a “Special Meeting” of the City Council where they pushed forward a $30-40 Million sewage plant on the golf course to convert wastewater to purple pipe to irrigate the golf course, parks and medians in town. When completed, the project is expected to operate at an annual deficit for decades, with an expected first-year expense of $1.8M. The reasons set forth for doing the project now is because there has been prolonged drought in the past, and there could be drought in the future, along with the possibility of future state regulations that might require an alternative water source (other than potable water) for green spaces. However, California was just declared “drought free” this week, and there is no current legal requirement for purple pipe in Coronado.

Mayor Bailey acknowledged the project may not be fiscally prudent, and abstained from the vote to press ahead with the sewage plant saying: “I’m not 100% convinced at this point looking at those numbers that it is as strong of a business case as I would like it to be to feel very confident moving forward at this time.” The rest of Council acknowledged the numbers don’t look pretty, but nonetheless voted unanimously to push the sewage plant forward characterizing the exorbitant expense as “insurance.” If the sewage plant is insurance, it is a staggeringly expensive insurance policy.

Our City Council is also pressing full steam ahead toward what amounts to a staggeringly expensive beautification project to underground utilities in town at an estimated price tag of $175 Million, which is roughly equal to the City’s outstanding CalPERS pension obligations if paid in a lump sum today. Bottom line – the sewage plant and undergrounding utilities are unnecessary and not fiscally prudent. City Council should shelve these projects, save over $200 Million, and focus on better ways to spend public money.

The City of Coronado derives the bulk of its revenues from property taxes. As a Coronado property taxpayer, I would support the City spending more to help Coronado Unified School District (CUSD). CUSD is in a financial crisis because previous incarnations of City Council opted to build municipal structures with redevelopment bond debt, and the repayment of these bonds via tax increment financing utilizes the portion of the tax increment that would otherwise go to CUSD from the State of California. Last year the City Council (operating as the Successor Agency to the former Community Development Agency of the City of Coronado) voted to defease and refinance the redevelopment bond debt in order to get what is called “basic aid” status back to CUSD sooner (perhaps as early as 2026), when the tax increment that goes to pay the redevelopment debt will then go to CUSD. Until CUSD achieves basic aid status, they will be in a financial crisis and need every bit of help they can get.

There is an existing legal mechanism for the City of Coronado to provide financial aid to CUSD – it is called the Joint Use Agreement (Agreement), whereby the City pays CUSD $370K/year for the public to use CUSD facilities such as athletic fields, basketball courts, and the high school track on weekends.

There are many ways to justify the City paying a higher annual amount per the Agreement. Most commercial leases have annual rent escalations to account for inflation. The amount the City pays CUSD per the Agreement has remained $370K/year since the Agreement was originally negotiated in 2016. As an example, simply build in annual rent bumps of 5-10% per year. Had that been done from the outset, the amount paid to CUSD per the Agreement in 2019 could have been around $500K with compounded escalations. As another example, simply expand the hours that the CUSD facilities are available to the public. For instance, the high school track is currently available to the public from 6-10am on weekends… make it 6am – noon, and increase the rent accordingly. There are innumerable ways to justify a higher annual payment from the City to CUSD.

The City should pay more per the Agreement, because unlike the sewage plant on the golf course or undergrounding utilities, helping CUSD is fiscally prudent. Coronado’s public schools are a primary selling point for Coronado residential real estate. Speaking from my own experience, I grew up in Coronado… I am a product of Coronado public schools… I left Coronado for a quarter century after graduating CHS in 1990, then moved back 5 years ago to raise my own kids here, primarily because of the schools. The calculation my wife and I made is to consider private schools in Los Angeles at $20K/year from K-12 vs. moving to Coronado with good public schools, and put the money saved into a Coronado home instead. For us it was a no-brainer to move to Coronado. This analysis only works if Coronado public schools are high quality and financially solvent.

As the City’s primary revenue source is property taxes, and a main selling point of Coronado residential real estate is the strength of CUSD, the importance of CUSD to property tax revenue cannot be overstated. To insure CUSD’s continued strong performance, we must find ways to help CUSD through the budgetary crisis until basic aid status is attained around the year 2026. I want to make it clear that I am not advocating for a “bail out” like the CUSD bond issue measure (Prop E) from 2014. Quite the opposite – I am advocating AGAINST bond issues and $200M of unnecessary expenditures for things like the sewage plant on the golf course and undergrounding utilities… and in favor of simply bumping up the amount paid to CUSD per the Agreement from now until we get basic aid status back in 2026, which to me as a parent with 3 children going through the CUSD system, is the most fiscally prudent way I can think of to spend my taxpayer money. It is critical, as Coronado citizens, that we get our elected officials on board with this fiscally prudent strategy before they go off the rails with public funds. Please write our Mayor and Councilmembers to say NO to the sewage plant and undergrounding utilities, and say YES to helping CUSD by bumping up the annual amount the City pays per the Joint Use Agreement.

Daron Case

 

 

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Originally from upstate New York, Dani Schwartz has lived in Coronado since 1996. She is thrilled to call Coronado home and raise her two children here. In her free time enjoys hitting the gym, reading, and walking her dog around the “island.”Have news to share? Send tips, story ideas or letters to the editor to: manager@coronadotimes.com