City officials, thwarted by taxpayers in their efforts to raise revenue through special assessments, are considering a complicated financing plan involving the sale of municipal facilities to pay for millions of dollars in capital improvements.
The plan would involve selling several city-owned properties, such as libraries and community buildings, to a recently formed nonprofit corporation run by the three-member Finance Committee of the Board of City Directors. The corporation, called the Pasadena Community Improvement Corp., would then use the properties for security in the sale of certificates of participation. The city would retain use of the buildings by leasing them back for a small fee from the nonprofit corporation.
Could Get $68 Million
Finance Director Harry Lauritzen said the city could get as much as $68 million under the plan. Using that figure, he said, $40 million would be immediately available to build a police and fire facility and for street rehabilitation. The rest would be invested in securities to pay off the debt over a period of up to 30 years, he said.
The unusual financing plan, patterned after a program developed in Oakland, is being considered by the Finance Committee.
City officials said they are interested in the “lease-back” proposal because it presents a less controversial alternative for raising money than previously failed efforts to raise taxes. Pasadena voters recently defeated a city proposal to assess property owners to pay for street and sidewalk repairs. In 1984, voters rejected a similar assessment that would have paid for a new police and fire facility. In light of those failures, city officials are looking for new ways to raise revenue.
One of Several Plans
Finance Committee Chairman John Crowley said the plan is one of several financing programs being considered. “It’s just a fragment we’re examining,” to cover Pasadena’s financial needs, he said.
In Oakland, city officials raised $221 million this year using a similar plan, under which 22 pieces of municipally owned property were sold to Oakland’s redevelopment agency, then leased back to the city.
“It is very successful,” said Oakland Finance Director Richard Digre. “It takes the value of the property and turns it into cash.”
Finance Committee member William Thomson said it is too early to tell if the plan will work in Pasadena.
“We are looking to see if it is practical for our situation--if it would raise sufficient money. I can’t say if I’m in favor of it because it’s too early for an evaluation,” Thomson said.
Crowley, however, said that he thinks the plan has promise “because I believe we should never spend cash that can be invested when we can borrow at a lower rate. If we can possibly borrow money for a capital purpose and do it legally, we should do that.”
Already Has Opposition
Although city officials said it would be more than a month before the matter is decided, a citizens’ group has already publicly opposed it.
William Fackler and Dona Mich, who spent three months organizing Pasadena: On the Move, a grass-roots organization designed to monitor local government, held their first public meeting last week to discuss the lease-back plan.
“It’s buying a pig in a poke to use city money to speculate with for up to 30 years,” Mich said. “I think the whole thing is ill-advised. That’s too long to gamble with city money.”
The main function of Pasadena: On the Move, Fackler said, is to guard against “funding schemes” such as the proposed special assessment district, which prompted hundreds of residents to call for a reorganization of city government.
“We see the city doesn’t respond to citizens’ concerns. It’s hard to get information and hard to know what’s happening,” Fackler said.
Another meeting is scheduled for 7:30 p.m. today at Hamilton Primary School, 2089 Rose Villa St.
Meanwhile, Crowley said, lawyers and investment counselors are reviewing the lease-back plan.