Pasadena Faces Lean Times as City Runs Out of Growing Room : Finances: Major companies need room to expand. They may go to less expensive areas, taking a chunk of Pasadena’s tax base with them.

After two decades of economic growth, a built-up Pasadena could face leaner times as other San Gabriel Valley cities--and cheaper areas in other states--combine with the recession to bust the city’s boom.

That was the message city officials got Tuesday in a two-hour presentation on Pasadena’s economic health.

As if to underscore it, city directors also were told Pasadena needs to shave $1 million from its $277-million operating budget.

In addition, Pasadena faces a 25% decrease next year in its capital improvement program, with $67.7 million budgeted compared with $89.8 million this year, City Manager Philip Hawkey said. The decrease means postponement of $2.9 million in preventive maintenance for city buildings and streets.

Directors also were told the city’s sales tax rate is stagnant; it lacks sufficient space for office expansion, and its high utility rates may force companies to relocate.

“Pasadena is king of the (San Gabriel) Valley right now in sales taxes,” said William Reynolds, the city’s housing and development director. “But if you look at the growth in sales taxes in the surrounding communities, they’re growing much faster.”

According to a midyear budget review by Finance Director Mary Bradley, the city will receive $500,000 less than the $102.9 million it expected this year from General Fund sources, taxes, fines, allocations from state and federal government, and city fees for service, licenses and permits.

The rest of the city’s operating money comes from city agencies such as the Water and Power Department, the redevelopment agency and the city-run Convention Center.

From July 1 through Dec. 31, 1990, the city received $48.2 million from the General Fund, 2% less than over the same period in 1989, Bradley said. She blamed declines in real estate, construction activity and traffic fines.

Bradley recommended a variety of budget cutbacks to meet the shortfall and provide a $500,000 cushion, including delaying filling 18 staff vacancies, reducing fire and police overtime and dropping some consultant and contract services.

But the board postponed any action after Directors Chris Holden and Rick Cole said the cutbacks might harm human service programs.

Reynolds’ more general report assessed Pasadena’s economic future and competition with other cities. Although Pasadena is home to industrial and high technology manufacturers as well as many corporate headquarters, it lacks expansion space, Reynolds said. “Irwindale, San Dimas, Rancho Cucamonga, someplace east, that’s our competition,” he said.

Lack of space forced the Ralph M. Parsons engineering company to take an 80,000-square-foot office in Glendale, rather than Pasadena, where it has headquarters and 1 million square feet of office space, he said.

Other large retailers including Avon and Fedco have no place to expand in Pasadena, Reynolds said. If the city loses them to other areas, 35% of the city’s $20.2-million annual sales taxes would also disappear, he said.

High utility costs, meanwhile, may force the Bank of America to relocate its 1,700 employees and 400,000-square feet of office space, he added.

“Our competition is not just, can they build a bigger building in Glendale?” Reynolds said. “It’s Phoenix, Salt Lake, places with housing at the $100,000 rate or less.”

A series of recommendations in Reynolds’ report included establishing a liaison with corporations and shuttle buses for shoppers. City directors said they will decide on the recommendations individually.