Pomona Council Split on How to Finance City Face-Lift Plan

Times Staff Writer

Council members are in unanimous agreement that Pomona must spruce up its image--and quickly--if it is to attract new businesses and the tax revenue they bring.

They support City Administrator A. J. Wilson's call for an accelerated capital-improvement program that would include $10 million worth of street repairs, lighting, landscaping, sewer construction and building renovation over the next two years.

But they disagree sharply about who should pay for the city's face-lift.

Wilson has suggested that the 11.5% utility tax paid by businesses be raised to 14% for the first year of the program, lowered to 13.5% for the second year and then reduced to 12%.

20-Year Bond Package

The higher utility tax would generate $1 million a year, which the city would use to pay the first two installments of a 20-year bond package that would total about $20 million, including interest, Wilson said. The remainder of the bond payments would be covered by increased revenues resulting from new businesses attracted to the city, he said.

But the idea of having business bear the burden for the city's capital-improvement program is not universally popular with council members, who postponed action on the proposal when they passed Wilson's budget last month. Earlier this week, the council again declined to choose between deferring improvements that many believe have been put off too long and raising a tax that many feel is already too high.

Council members C. L. (Clay) Bryant and Nell Soto have argued that any further increase in the utility tax would pose a hardship for small-business owners. Mayor Donna Smith and Councilman E. J. (Jay) Gaulding have contended that all business people will benefit from the improvements paid for by the tax, noting that the Chamber of Commerce supports the temporary tax increase.

Compromise Suggested

Able to cast the swing vote Monday night, Councilman Mark Nymeyer instead suggested a compromise that he hopes will bring the two sides together. The city can avoid raising the utility tax, he said, by borrowing $500,000 each year from its general fund reserves and its Water Department reserves to make the first two years of bond payments. The city would repay the loans in the 1990-91 and 1991-92 fiscal years.

Wilson said he will have the city staff study the feasibility of Nymeyer's proposal and report back to the council Aug. 17. Both Bryant and Soto said they were interested in Nymeyer's idea.

However, Wilson expressed concern that in the 1990-91 and 1991-92 fiscal years, the city might have trouble repaying both the the $1-million in-house loan and the $1-million bond installment. "Probably at best it would be very, very tight," he said.

Nymeyer said the city should be willing to take this chance.

Opposes Tax Increase

"If we're not willing to risk the money we have sitting in our reserves, then we shouldn't risk the money that we would be taking from the business district," Nymeyer said.

Nymeyer said that if his in-house loan proposal is not feasible, he will not vote to raise taxes.

"At this point, my alternative is to lighten the load," he said. "(Capital improvements) will not be accelerated at the same pace. Instead of making it a 2-year plan, it would probably be a 4-year plan."

Wilson said such a slowdown may blunt the effectiveness of the capital-improvement program.

"I happen to think that getting that project done in two years is pivotal to bringing in new investment," Wilson said.

Business leaders have told Wilson that they would be willing to help pay for the capital-improvement program, provided that the money were collected through an existing tax and not through the imposition of a new one.

Utility Tax Load

Because the council has already decided to raise the business utility tax to 12% by July, 1989, to offset a scheduled reduction in the residential utility tax, business owners would be paying an "increased" rate for two years, Wilson said.

The economic impact of the utility tax increase over the 2-year period would range from $696 for a small retail business to $18,000 for a large industrial plant, Wilson said.

At Monday's meeting, real estate broker Bill Brooks told the council: "I will gladly pay my little increase to get some this (capital-improvement) stuff done."

However, motel owner Ralph Diaz said a campaign to spruce up the city means little to a struggling businessman who could not afford the utility tax increase. "If I don't got no business, I don't care what the city looks like."

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