Local Elections : BATTLE: 3-Way Race for Signal Hill Council : City’s Spending to Lure New Business at Issue in Signal Hill Council Race

Voters Tuesday will be asked to decide whether city officials gave away the store in their successful campaign to lure business to the city.

City officials maintain that they made smart business deals in landing the Price Club membership discount store, which opened last November, and the new Eastman Inc. office and warehouse, which is scheduled to open this summer.

The two businesses are expected to generate $1.7 million in annual sales and property taxes, city officials said.

Critics, however, charge that city officials made too many concessions to win the two businesses. Figures released by City Manager Louis Shepard show that the two businesses will cost taxpayers a net total of about $8.6 million, which means that it will take the city about five years to recoup its investment.

The recent economic development by the city is the major issues in the City Council election in which three candidates are competing to replace former Councilman David Bellis. Bellis resigned last September after moving out of the city to take a job in San Bernardino. His four-year term, which expires in April, 1988, pays $150 a month.

The three candidates include a political newcomer and two former city mayors who are attempting political comebacks.

The newcomer is Jim Kruger, 27, an Irvine real estate broker. The former mayors are Louis Dare, 67, a retired owner of a machine shop who was a council member from 1982 to 1986, and Nick Mekis, 61, a retired construction company owner, who was a council member from 1974 to 1978.

The election will not have a significant effect on the existing council, which is split, 3 to 1. Three council veterans--Mayor Jessie Blacksmith, Gerard Goedhart and Richard Ceccia--are backing former colleague Dare for election. Meanwhile, the newest council member, Sara Dodds, who defeated Dare last April, has said that she would prefer serving with either Kruger or Mekis rather than her previous political adversary.

This year, Kruger and Mekis have echoed Dodds’ successful rhetoric from the last election, with both pledging to work with Dodds to bring what they call quality development into the city.

In last year’s city election, Dodds, who designs restaurants for a living, was the highest vote-getter among six candidates, after a campaign in which she capitalized on public opposition to the Price Club. That opposition came principally from condominium owners who, like Dodds, after paying as much as $275,000 for the spectacular vistas afforded from their hilltop homes, were unhappy with the prospect of living within view of the Price Club.

The Price Club, Kruger said, “does not represent the type of aesthetics that we need to anchor our town center.”

“I don’t want Signal Hill to turn into a Discount City,” said Kruger, a condo owner who is a neighbor of Dodds.

Mekis, another condo owner, said he also objects to the Price Club’s central-city residents.

Most city officials say that Shingleton left to take a better position. Shepard, however, according to council member Dodds and candidate Mekis, left because he did not want to deal with the groundswell of opposition to the Price Club and the prospect of a changing City Council.

“Discount City, that’s where Mr. Shepard was taking us,” Dodds said.

Building the Price Club in the center of town “just wasn’t good planning,” she said, and that’s the message voters sent last year when she defeated Dare, Dodds said. Shepard, according to Dodds, “got the message . . . . Louie (Dare) hasn’t gotten the message yet but I’m hoping that he will next election.”

Mekis, in an interview, contended that Shepard was leaving because of political pressures. Shepard, according to Mekis, “found a way out and he’s taken it.”

Shepard disputes this, saying, “That’s just not true.” He declined, however, to discuss his reasons for leaving, saying instead that he was excited about the challenge of running the city of Commerce.

Mayor Blacksmith said the real reason why many officials leave Signal Hill is because of the city’s tiny size.

“When you have a city this size people stay a few years and leave no matter what you pay them,” she said.

A look at the Price Club and Eastman transactions shows that taxpayers will spend a total of $16.4 million to land the two businesses. After the city sells two properties purchased in the deals with the businesses for an expected $7.8 million, taxpayers will end up with a net cost of $8.6 million, according to figures released by Shepard.

Shepard, however, also said that the two businesses are expected to bring in $1.5 million in annual sales taxes and $240,000 in annual property taxes for the city’s Redevelopment Agency. The amount is significant in a small city like Signal Hill, which in 1986-87 has a general fund budget of $6.5 million, Shepard said.

Critics have attacked the many concessions that the city gave to the two businesses.

Purchased 11-Acre Site

In the Price Club transaction, Signal Hill bought the nearly 11-acre property for the Price Club at the corner of Willow Street and Junipero Avenue last July for $4.2 million, Shepard said.

In addition to the purchase price of $4.2 million, the city spent approximately $2.5 million to improve the site, Shepard said. Those improvements included $800,000 for excavation and construction of retaining walls, $559,000 for street improvements, $550,000 for closing old oil wells formerly on the property, $386,000 for removing oil pipelines and $60,000 for landscaping, according to Shepard.

The city then sold the site to the Price Club for $2.8 million, Shepard said. Subtracting the sales price from the money the city spent to acquire and develop the Price Club site (a total of $6.7 million), the city spent a net total of $3.9 million.

The Price Club, however, is expected to generate $650,000 in annual sales taxes and $80,000 in annual property taxes, a total of $730,000 a year.

‘Good Business Deal’

It was a “very good business deal,” Blacksmith said.

“We did the best possible job and I see it (the Price Club) as a real boon to the future of the city of Signal Hill,” the mayor said. “I’ve been talking to other municipal officials and they feel we are just blessed to have the Price Club come into our community.”

In the Eastman transaction, the city bought the firm’s existing building on Willow for $5.4 million and then paid the firm $1.5 million for fixtures and equipment in the building, and $2.1 million in relocation benefits. City officials said that Eastman was contemplating moving out of the city into larger facilities.

The firm then moved east on Willow Street, where it will build a 250,000-square-foot warehouse and a 100,000-square-foot office building on a 12-acre site at the corner of Willow and Redondo Avenue.

In addition, the city spent $440,000 to make improvements at the new site. The improvements include landscaping, a right-turn lane and a decorative wall on Redondo, a water fountain, and three illuminated flagpoles, according to figures released by Shepard. The city also spent $230,000 to purchase the remainder of a lease at Eastman’s former office building, Shepard said.

That brings the total price tag for keeping the office supply manufacturer in the city at $9.7 million. It is worth it, say Shepard and Dare.

Eastman is the city’s largest producer of sales tax revenue, and is expected to pay the city $850,000 this year, according to 1986-87 budget estimates. The firm also is expected to pay $160,000 in property taxes to the Redevelopment Agency, according to the 1986-87 budget.

Spending $4.7 Million

The city expects to recoup about $5 million from selling the former Eastman building, meaning that taxpayers spent a net total of $4.7 million to keep Eastman in the city.

Candidate Mekis said the city paid too steep a price to keep Eastman.

“It would have been criminal to have lost them (Eastman) but I think the city could have cut a better deal,” Mekis said. He said the Eastman transaction had too many “freebies” for the firm, such as the lease buy-out and purchase of equipment.

Mekis added that, in his opinion, the city “gave away the store” to keep Eastman and land the Price Club.

Kruger says the two transactions show him that city officials are “grasping for sales tax revenues and jumping at a concept that’s hot today,” meaning retail businesses.

“Maybe we shouldn’t jump on every bandwagon,” Kruger said.