City to Weigh Means to Finance Arts Plaza : Thousand Oaks: Leaders grapple with $13-million shortfall in construction budget. Strategies might include taking out loans, issuing bonds and shuffling funds among municipal accounts.

Scrambling to cover a more than $13-million shortfall in the Civic Arts Plaza construction budget, Thousand Oaks leaders tonight will consider taking out loans, issuing bonds and shuffling money among various city accounts.

Finance Director Robert Biery has recommended a number of actions to generate enough cash to finish paying construction bills on the long-awaited performing arts center and government headquarters.

The council will consider, for instance, shifting $1.1 million from the affordable-housing fund to the construction budget. That money would pay for office space for the two staff members who work on housing issues, Biery said.

Although the two staffers draw their salaries from the Redevelopment Agency, which supports the affordable-housing fund, Thousand Oaks has never before dipped into that account to subsidize city office space.

Mayor Elois Zeanah said she disapproved of paying for employees’ cubicles with money earmarked for developing low-cost housing and assisting first-time home buyers.

“I do not think that’s appropriate,” Zeanah said. “That’s affordable-housing money and it should not be used for construction of a new city hall.”

Ventura County Assistant Counsel Daniel Murphy, who has been working with the Thousand Oaks Redevelopment Agency, said he “would be interested in looking to see if they’re really using their (affordable-housing) set-aside appropriately.”

County officials have complained in the past that the Redevelopment Agency, which is required by law to set aside 20% of its funds for affordable housing, spends too much of its money making cosmetic changes rather than fulfilling its stated goal of eradicating blight.

But City Manager Grant Brimhall defended the recommendation to withdraw money from the affordable-housing account for office space, arguing that “everything ought to pay its own way.” The decision not to charge the affordable-housing fund for employee cubicles in Thousand Oaks’ past and present city halls “was an oversight,” Brimhall said.

The allocation from the affordable-housing fund, however controversial, is designed to fill just a small chunk of the gaping hole in the Civic Arts Plaza financing plan.

By far the largest shortfall came about because the original budget counted on at least $11 million from the sale of the former city hall at 401 Hillcrest Drive.

That property remains unsold, and the council has decided to hold on to it for a few years until the sagging real estate market picks up.

Council members express confidence that they will eventually find a buyer for the 30-acre, oak-studded hilltop parcel. But in the interim, they said they need the $11 million.

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To fill that immediate need, Biery has recommended shuffling millions of dollars between various city accounts and taking out loans or issuing certificates of participation, which are similar to city bonds. Either course of action would add to Thousand Oaks’ substantial debt--a prospect that alarms Zeanah and her political ally, Councilwoman Jaime Zukowski.

Already, nearly 10% of the city’s General Fund goes to repay, with interest, the certificates of participation issued to fund construction of the senior and teen-ager centers, the Newbury Park Branch Library, the park behind the main library and the East Valley Sheriff’s Station.

In comparison, neighboring Simi Valley boasts a debt-free General Fund.

The city of Ventura this year allocated about 7.5% of its General Fund to pay off debts, mainly certificates of participation issued to renovate a golf course, refurbish a fire station and build new storm drains.

Although Thousand Oaks’ expenditures on debt service are higher than some other Ventura County cities, Biery said devoting 10% of the General Fund to debt service is “reasonable” and “not exorbitant.”

The city will retire a substantial chunk of its debt in 2001, when payments on the East Valley Sheriff’s Station are scheduled to end, Biery said. Any debt incurred to fund the Civic Arts Plaza would also be short-lived, paid off as soon as the Hillcrest Drive property is sold.

“The city is still in a good, sound financial position,” Councilwoman Judy Lazar agreed. “I’m sure we would have no problem issuing bonds.”

Biery promised to try to structure the bond issue so debt payments would not siphon money from city services. Still, some members of the council remained skeptical.

Pointing out that Thousand Oaks allocates just 13.5% of its General Fund budget for public safety and nearly 10% for debt service, Zukowski said: “The priorities are skewed. We’ve lost our perspective.”

And Zeanah, long a critic of the Civic Arts Plaza’s financing plan, added: “I am concerned that we have moved away from being a pay-as-you-go city and are going further and further and further into debt.”

Instead of seeking loans or issuing bonds, Zeanah would prefer to pay the final eight months of Civic Arts Plaza construction bills by borrowing from various city accounts. Unable to identify which funds would be the best to tap, Zeanah said she would ask for a report from the finance director.

Zeanah said Biery’s preliminary report, contained in a three-page memo to the council, did not satisfy her because it does not include specifics on paying the full construction tab without borrowing more money.

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All told, Biery recommended that the council shift millions of dollars from nine city accounts to cover part of the construction costs, in addition to securing $11 million through bonds or loans.

The initial funding plan, for instance, counted on $2 million from the Conejo Recreation and Park District, in exchange for offices in the complex as the district’s new administrative headquarters. But parks officials last year decided against the costly move--leaving the city with 10,000 square feet of unleased office space and a substantial shortfall.

To make up that gap, Biery is recommending that the city transfer more than $2 million from its insurance fund, which covers small claims for liability and workers’ compensation cases.

Characterizing the transfer as a loan, Biery said he considers the shuffle a sound investment. The insurance fund will be paid back--with interest--when the city finally finds a tenant for that space, Biery said.

In purchasing the space originally designated for the park district, the city will charge itself $200 per square foot. In contrast, Biery is recommending that the Redevelopment Agency’s affordable-housing account pay more than 10 times that amount--about $2,200 per square foot--for office space.

The housing fund’s two full-time workers will each occupy a standard office, which covers roughly 100 square feet, project manager Ed Johnduff said. Even accounting for part-time personnel, total space requirements would be just 500 square feet. For that, the city is prepared to pay $1.1 million.

“What’s in there, gold paneling?” Assistant County Counsel Murphy asked.

Biery explained the difference between the rates by noting that the affordable-housing staff will be renting finished office space, with access to City Hall bathrooms, parking, common space and other amenities. The park district space is unfinished.

Councilman Frank Schillo, calling the housing expenditure reasonable, said, “You can’t compare these kind of things.”

Zeanah and Zukowski, however, said the discrepancy illuminates what they see as a desperate scramble to plug funding holes. “The figures speak for themselves,” Zeanah said.

“I think this emphasizes that this very broad-stroke financial plan needs in-depth evaluation and independent assessment,” Zukowski said. “This sketchy transfer of funds and allocation from new sources is not appropriate when it comes to public funds.”