The city has sold six parking lots to its own financing authority, raising nearly $5 million to pay off Redevelopment Agency debts and ease the city's budget problems.
The Huntington Park Public Financing Authority, set up by the city to borrow money for public purposes, sold bonds last week to buy the parking lots from the city, City Administrator Donald L. Jeffers said.
The city will lend more than $2 million of the revenue from the parking lot sale to the Huntington Park Redevelopment Agency to pay off bank loans, Jeffers said. Financing costs and bond underwriter fees were expected to total about $300,000. The remainder from the sale will go to the city's anemic general fund, which pays for law enforcement, fire protection and other basic services.
Spending Cuts Expected
Despite the infusion of cash, officials are still expected to make some spending cuts to balance the budget for the 1989-90 fiscal year, which began July 1, Jeffers said. But the city will not have to borrow money against anticipated tax revenues as it did the past two years.
"It provides us cash up front," Jeffers said.
Two positions--a maintenance painter and a community service officer--will probably remain vacant, Jeffers said. In addition, money is not likely to be budgeted for items considered non-essential, including a grant to the Huntington Park Symphony Assn. and Christmas decorations for Pacific Boulevard, the city's main street.
The budget also contains no money for employee pay raises.
But officials hope that they will soon have enough money for raises, and to hire 15 more police officers and provide other services. A special election on a 7% utility tax is scheduled for Sept. 12. If approved by city voters, the tax will generate $2.74 million a year for Huntington Park.
"We're going to try to hold the line on everything until September," Mayor William P. Cunningham said.
Police Talks Continue
Two of the three employee associations representing city workers have agreed to continue working at current pay levels until the fate of the utility tax is decided, Jeffers said. Negotiations are continuing with the third, the Huntington Park Police Officers Assn., he said. City employees received a 4.2% raise last year, which cost Huntington Park $300,000 annually.
The six parking lots provide free parking for customers of businesses on Pacific Boulevard, Huntington Park's commercial hub.
The city will lease the parking lots from the Financing Authority for the amount it takes to service the newly acquired bond debt--about $400,000 a year, Jeffers said. The city established the Financing Authority in July, 1988.
"The parking lots are essential to the businesses and financial well-being of the city," Jeffers said.
The city plans to use revenue from parking meters and parking lot rental to businesses to make the lease payments. Those revenues amounted to $511,000 for the first 11 months of the fiscal year that just ended. The revenues are expected to total $635,000 in 1989-90, Jeffers said.
The money in the parking fund had been used to pay for cleaning and maintenance of city lots and to pay several parking enforcement officers. The city may eventually raise parking fees to make up for at least part of the money that will now go toward the lease payments, Jeffers said. The parking fund has a $300,000 surplus, he said.
The parking lot transaction is the latest fiscal juggling act performed by Huntington Park officials, who have been forced to weather revenue shortfalls in recent years.
The problem came to a head in late 1987, when the City Council eliminated 13 positions and made other spending cuts to deal with a funding shortfall.
In December, 1987, the city borrowed $1 million against future sales tax revenues. Huntington Park also borrowed $1.6 million against future revenues during 1988-89. The first loan was repaid in November, 1988, and the second loan will be repaid this week, Jeffers said.
Subsidies Have Ended
City officials say Huntington Park is feeling the budget pinch because state and federal subsidies to cities have been reduced or eliminated in recent years.
The Redevelopment Agency also has contributed to the city's financial problems. Project delays in the mid-1980s left the agency unable to generate enough property tax revenue to meet its annual bond debt. In 1987-88, the year the 13 positions were eliminated, the city was forced to lend the Redevelopment Agency about $1.5 million in sales tax revenue that would have been used for general expenses. The city lent the Redevelopment Agency an estimated $775,000 in sales tax revenue for 1988-89.
In addition, the Redevelopment Agency secured more than $2 million in bank loans over the past several years. The city lent the agency money from last week's parking lot sale to repay those loans.
One of the loans was backed by revenue the city receives from the Huntington Park Casino. The money would have gone toward general city expenses. Since April, 1988, as much as $43,000 per month in city revenue from the card club went to service the Redevelopment Agency loan, Jeffers said. That revenue, expected to be about $300,000 in 1989-90, will now be free to pay for general city expenses, he said.
In all, the Redevelopment Agency owes the city more than $11 million.