A City on the Edge : Rancho Palos Verdes: 20 years after incorporating, the community is struggling to shore up an ever-weakening budget.

On Aug. 28, 1973, residents of what was to become Rancho Palos Verdes voted overwhelmingly for incorporation, halting county attempts to urbanize the rugged landscape of custom-built houses with picturesque ocean views.

Now, as the city celebrates its 20th anniversary, residents can still boast of semirural, well-to-do living. But the upscale spaciousness has come at a price.

Having eschewed tax revenue-generating condo towers, apartment buildings and shopping malls, the Palos Verdes Peninsula’s largest city has had to operate for years on a shoestring budget. The financial pressures have only worsened with recent declines in property values and in state funding for cities, forcing Rancho Palos Verdes to forgo some of the most basic of services.

Roads have gone unrepaired. Recreation programs have been cut to next to nothing. Elaborate plans to stabilize a coastal landslide area once and for all are well beyond the city’s fiscal means. And perhaps symbolically, the city government still conducts its business in the concrete-block barracks of a former Nike missile base.

Next year, says Mayor Susan Brooks, “the city is absolutely not going to have the revenue to provide basic services. Even with a no-frills system, we still don’t have enough money to exist. . . . People got what they wanted because they got to maintain local control, but now they have to pay for it.”

On Tuesday, council members will begin public hearings on plans for as many as three types of taxes and fees, on the theory that the city will not be as vulnerable if one of the revenue sources is overturned by state lawmakers or by a court ruling.

Still, with residents already weary from the decline in property values and concerned about the faltering aerospace industry--which is the source of jobs for many of them--taxes are likely to spark controversy or even ballot box revolt.

“Citizens are not willing to have some unspecified, unjustified tax imposed on themselves,” said Gunther Buerk, one of the city’s original council members. The city, he said, has always operated on a bare-bones budget.

When Rancho Palos Verdes was incorporated, it was thought that the city’s share of property and state gas tax revenues would be enough to finance the municipal government.

“We didn’t have any grandiose plans,” said Marilyn Ryan, the founding mayor. “We weren’t looking to build a big city hall or any monuments.”

City Hall originally was on the second floor of Golden Cove Shopping Center. Several years later, it was moved to the former Nike missile site, where offices were placed in the former barracks. (For a time, public meetings were held in a room still bearing a sign that read: “No Smoking in Bed.”)

“We’ve always lived on short rations,” said Bob Ryan, an original councilman who gave up his seat in March to become a member of the county Planning Commission. “But that’s the way city governments should be. It’s always better to be a dollar short than a dollar over.”

In fact, a 1973 study on incorporation, financed by a group pushing for cityhood, downplayed the need for taxes in such an affluent area: “The real decision facing residents and property owners . . . is not primarily a fiscal one. It is a choice which must be made involving the future land use and ultimate character of development.”

But trouble came in 1978, when state voters passed Proposition 13, freezing property taxes and cutting into the city’s primary source of revenue. Since then, the city has often dipped into reserves to balance its budget, which is now $7.4 million.

“When they say, ‘Run the city like a business,’ that can be done, but it’s tough when the rules keep changing,” Councilwoman Jacki Bacharach said. “It’s like a moving target.”

Other unforeseen events also cut into city coffers.

A landslide in Abalone Cove in 1978 destroyed or damaged 48 homes. Although city founders were warned of the potential for additional problems from the adjacent Portuguese Bend slide, which damaged 145 homes in 1956, efforts to stabilize both land masses have cost the city’s redevelopment agency at least $2 million, according to City Manager Paul Bussey.

Just a few years ago, the city spent $900,000 to rebuild a portion of Palos Verdes Drive South. Then, this year, winter rains helped create a large, ski-jump-like dip on a smaller stretch of the roadway, forcing the city to again make emergency repairs.

Another financial setback came in 1987, when new owners of Marineland abruptly closed the park and transferred its animals to Sea World. The park had generated about $50,000 a year in tax revenues for the city and had attracted tourist dollars for nearby Golden Cove Shopping Center.

“That’s what people knew the peninsula for,” Buerk said. “It was part of our identity.”

The latest fiscal woes have in large part been due to the state’s continuing financial troubles. This year, Sacramento lawmakers withheld property tax dollars from cities to balance the state budget.

Caught in the pinch, the City Council slashed the Parks and Recreation Department budget to save $60,000, eliminating nearly 100 classes including dancing, sewing and finger painting. The city’s 11 parks remain open, but the council also voted to stop subsidizing special celebrations, including the city’s traditional Fourth of July picnic.

Nor has the city government been able to pay for its own 20th birthday celebration. A nonprofit committee is raising money for anniversary events by selling such products as Rancho Palos Verdes T-shirts and the city’s own brand-name beer and wine.

Although trimming from recreation programs generated a storm of protest, some supporters of the move contended that the city had drifted from its roots and engaged in nonessential spending.

“It was a conscious policy choice,” said Councilman Steve Kuykendall of the austerity step. “We reordered our spending priorities to spend money on infrastructure rather than recreation.”

But Kuykendall and other council members acknowledge that the city infrastructure still leaves a lot to be desired.

“I have a friend who told me that you don’t need flags to tell you that you are in Rancho Palos Verdes,” Brooks said. “You can just feel it under your tires.”

That problem looks likely to worsen. Funds for road repair--much of which have come from city reserves--are expected to dry up next year, contributing to a projected $2.2-million shortfall in the 1994-95 budget.

“We have to think about how we come up with a tax base that is locally controlled,” Kuykendall said.

For a time, city leaders had hoped that two developments planned for the peninsula would soon generate much-needed revenue. But one of the projects, a resort at the former Marineland site, stalled after its owner filed for bankruptcy. And a coastal development of estate homes and a Pebble Beach-style golf course, planned for seaside bluffs on the eastern end of the city, has been held up for further environmental review.

It is against this background that Rancho Palos Verdes has begun considering new taxes. On Tuesday, the City Council will begin studying two options: a 5% to 10% tax on golf greens fees and a 2.5% to 7% utility tax, with exact amounts for each to be determined later.

The council could approve the taxes without consulting voters in a ballot measure, but public opposition would likely be strong. Last year, voters narrowly rejected a parcel tax. The city imposed a utility tax in 1986, but the levy was discontinued in 1989 amid objections from residents.

And the creation last year of a landscaping and lighting assessment district touched off a storm of protest. The levy, $51 a year for the average homeowner, remains in effect but is due to expire next year.

“Every time a tax is put to the people, it fails,” Mayor Brooks said. “You put it to the vote of the people and you get people out of the woodwork. I don’t blame them.”

Even so, critics say the council needs to do a better job of explaining to residents where the money will be spent.

“It’s not that residents don’t want to pay,” said Ken Dyda, an original council member and chairman of an advisory committee that studied long-range financial questions for the council. “It’s that they don’t want to pay if they don’t know what it is spent on.”

If new taxes aren’t adopted, city leaders may be forced to revisit proposals that have been on the table for years. Among them is merging city services, such as public works and purchasing, with the peninsula’s three other cities. Rancho Palos Verdes already helps pay for local policing by the county Sheriff’s Department under a cost-sharing arrangement with Rolling Hills and Rolling Hills Estates.

“Taxpayers ought to be screaming for (merging services),” Councilwoman Bacharach said. “I just hope the citizens will say: ‘Why are we duplicating (city functions)?’ ”

But getting cooperation has never been easy. The other cities have their own identities: Rolling Hills with its gated exclusivity, Palos Verdes Estates with its own police force and Rolling Hills Estates with a hefty sales tax base from shopping malls.

Still, civic leaders remain optimistic. Dyda, the former council member, acknowledges the city “is going through growing pains.” But he adds: “That doesn’t mean the problems can’t be solved (by the city itself). We haven’t matured into an adult yet.”

Rancho Palos Verdes: Highs and Lows

1973: Incorporation passes by a 5-1 margin, creating the city of 36,000 residents. 1974: Proposal fails that would change city’s name to Palos Verdes. 1975: A former Nike missile complex becomes City Hall, replacing smaller offices at Golden Cove Plaza. 1976: First municipal election is held. 1978: County agency approves annexation of Eastview, a portion of San Pedro. After three years of lawsuits, the annexation becomes official in 1981, and the city gains 7,000 residents. Landslide devastates homes in Abalone Cove, setting off years of legal and environmental disputes. 1984: Pt. Vicente Park and Interpretive Center opens. 1987: In a hushed, overnight move, new Marineland owner Harcourt Brace Jovanovich transfers the park’s killer whales to Sea World; the entire complex is closed 22 days later. 1990: City Council approves Long Point, a resort hotel and golf course at former Marineland site. The project remains in limbo after its developer, James Monaghan, files for bankruptcy. 1992: City Council approves Ocean Trails, a 260-acre coastal project including custom-built homes and an 18-hole, Pebble Beach-style golf course. Environmental groups file suit to block development; court battle continues. 1993: Facing a budget shortfall, City Council cuts recreation programs.