City Drains Some Reserve Funds to Pay for Arts Plaza : Thousand Oaks: The financing plan relies heavily on debt. But leaders say the $86-million complex is worth it.

By STEPHANIE SIMON

Oct. 21, 1994 12 AM PT

TIMES STAFF WRITER

In their crusade to boost Thousand Oaks’ stature by building a world-class stage and a monumental government center, city leaders have stripped money from an array of municipal accounts, emptying some reserves to pay for the $86-million Civic Arts Plaza.

Led by Mayor Alex Fiore, council members have shoveled cash from at least a dozen city accounts into the towering complex. They have patched together a financing plan that relies heavily on debt: bonds and internal loans account for nearly 75% of the total Civic Arts Plaza budget.

City officials say the performance complex and new City Hall are worth the mammoth expense. The arts center, which officially opens tonight, will serve for decades as a building of note in Southern California--and as a community rallying point.

By raiding reserve funds to pay for the project, however, officials have tied up money that otherwise could have been used to pave roads, run libraries, build trails and maintain countless other city services. And despite prior assurances, city officials now say several of those accounts may never be repaid.

To fund the Civic Arts Plaza, city officials have also sunk the downtown Redevelopment Agency heavily into debt and left little money for its broader task--sprucing up the rest of Thousand Oaks Boulevard.

The Redevelopment Agency has issued nearly $43 million in bonds to pay for the Civic Arts Plaza, and has borrowed another $18.5 million from the city.

For years, Thousand Oaks has been the Ventura County city most flush with reserves for future projects and emergencies.

But with so much money dedicated to the performing arts center, the Redevelopment Agency will have “very little margin” over the next few years, Finance Director Bob Biery said. “We have a few dollars for the boulevard, but nothing of major consequence.”

Even the city’s long-standing promise to use redevelopment bond money for an auditorium at Thousand Oaks High School and a stadium at Westlake High may be in jeopardy, city officials acknowledged.

Biery still hopes to meet those commitments by refinancing existing debt and issuing new bonds in 1995. But both he and City Manager Grant Brimhall said funding for the school projects depends largely on issues out of Thousand Oaks’ control, such as national interest rates and the state’s financial health.

If the state grabs money from redevelopment agencies to balance its budget, as it has for the past several years, “we have a problem,” Biery said. “I can’t put it any more directly.”

Still, Brimhall and Biery repeated reassurances this week that Thousand Oaks remains on solid fiscal footing. They note that the city owns a half-dozen valuable parcels, which could be sold to raise tens of millions of dollars.

“Anyone who would really like to be fair and honest about this (project) would have to say, ‘Yeah, it’s all right,’ ” Brimhall said. “This is a good, strong, solid city.”

The Civic Arts Plaza, approved in 1990, was to have been paid for fully by a combination of redevelopment funds, the sale of two old city halls, and rent payments from the local park district for space in the new complex.

But when the economy soured, that plan collapsed. In a depressed real estate market, city officials could not unload their old city hall for a good price, so they postponed the sale of the property at 401 W. Hillcrest Drive--leaving a huge gap in arts plaza funding.

Meanwhile, the park district pulled out of plans to rent $2 million worth of space. And interest rates fell sharply, so money that city officials had invested earned lower-than-anticipated returns.

Consequently, Biery and Brimhall had to overhaul the Civic Arts Plaza budget again and again, juggling city resources to find money to pay construction bills.

With the council’s approval, the city dipped first into a capital fund supported by developers’ fees from the giant Shapell and Dos Vientos projects. The city then wiped out a $1-million account reserved for parks and trails.

Finally, the city borrowed $13 million from a variety of municipal funds, including those set aside to freshen up the city golf course, update city computers and build housing for low income residents.

The council majority--Fiore, Frank Schillo and Judy Lazar--has consistently defended their decision to funnel cash from a dozen flush accounts into the Civic Arts Plaza.

“(The money) is being used for a city purpose,” Lazar said. “It’s not like it’s being expended for something that is of no use to the city. That, to me, is the bottom line.”

As the Civic Arts Plaza’s stunning purple-hued auditorium opens, Lazar and other city leaders will congratulate themselves on finally bringing star-studded culture--and Hollywood glitz--to Thousand Oaks. They have often declared that the Civic Arts Plaza represents the city’s crowning achievement, the last project needed to transform Thousand Oaks into a self-sufficient, enviably endowed community.

“It’s the culmination of the dreams of a lot of people,” Lazar said. “What we have is a stellar facility that’s a credit to the community.”

But critics see more debits than credits.

Councilwoman Elois Zeanah, who leads the Civic Arts Plaza opposition, said she fears Thousand Oaks’ prized new “castle” will continue to pull money from worthy community projects.

“It’s a house of cards,” Zeanah said flatly. “It’s a shell game.”

Clutching a folder stuffed with documents tracing the Civic Arts Plaza’s tangled funding, Zeanah added: “(The council majority) wanted this project so much . . . that they were willing to put the city on the financial brink.”

When selling the project to the public, the city stated that it had enough bonds, excess land and existing construction money “in the bank” to build the arts plaza.

“There is no use of General Fund tax or fee revenues . . . in the project, and thus no impact on city operations or normal Capital Improvement Program,” Fiore and Schillo wrote in a 1990 memo to the council.

But just eight months later, the council agreed to pull more than $1.8 million from the general fund to buy land for the arts plaza.

Billed as a loan, that sum is supposed to be repaid with interest. So far, however, the council has not replenished the general fund, an account that pays for a wide variety of basic city services such as police protection.

Schillo said he approved the use of general fund cash because the land purchase was an unexpected expense. Original sketches of the arts plaza had not indicated that the city would need to purchase that particular chunk of land, he said, so he considered it an “add-on” appropriate to fund with a loan from the general fund.

As for his promise to refrain from using general fund tax and fee revenues, Schillo said that statement applied only to the project’s construction costs, not the land prices.

Even that narrow interpretation, however, has been tested as city officials have struggled to pay arts plaza bills. The construction budget includes more than $3 million in general fund cash--money that had been set aside to repair the old city hall on Hillcrest Drive.

With that fund stripped bare, the council will need to find fresh money to refurbish the dilapidated building, which has been vandalized so badly that officials have said they are embarrassed to show it to potential buyers. One local real estate broker has estimated that cost at $500,000.

The Civic Arts Plaza’s budget also draws deeply on the city’s capital fund, an account earmarked for construction projects ranging from storm drains to ball fields.

The capital fund, which once held as much as $20 million, has kicked in $6.1 million in loans for the arts plaza land and construction budgets. Another $3.25 million from the capital fund was not designated as a loan, and thus will never be repaid.

Despite the drawdown, city officials say the capital fund maintains an adequate reserve of $11 million. “This will not adversely affect our ability to deliver any services, now or in the future,” City Manager Brimhall said.

But Finance Director Biery said most of the remaining capital fund cushion has been reserved for traffic signals, tree plantings and road improvements.

That leaves few dollars for the kind of projects Zeanah covets: sound walls, bike paths, sidewalks and playing fields.

“We have drawn down all our reserves,” Zeanah said. “That’s no way for a rich city to behave.”

Lazar defended the city’s capital improvement program. Baseball diamonds and soccer fields, she said, should be the responsibility of the park district. As for residents’ other needs, Lazar said she believes Thousand Oaks has juggled demands skillfully.

“We have done a good job,” she said. “We have looked at what our most pressing needs are, and we have tried to meet them.”

Lazar and her colleagues have consistently promised to restore every depleted account, repaying every loan with interest. Yet Brimhall acknowledged this week that the city may never settle all of its debts.

Thousand Oaks has no obligation to repay $6.1 million in loans from the capital fund, or $4 million from an account set aside to upgrade city equipment, Brimhall said.

A penny-pinched future council could write off those debts, he said.

“We think we can, we think we will,” Brimhall said. “(But) there is no legal requirement that (the money) be paid back.”

The city’s ability to repay the capital fund depends primarily on future real estate transactions. Thousand Oaks officials are counting on raising millions from the sale of 401 W. Hillcrest Drive--the bunker-like former city hall that juts out of a grassy, brush-studded slope overlooking The Oaks mall.

The last appraisal five years ago pegged the land value at up to $14 million. But that estimate was based on splitting the 35-acre parcel into three lots: one for 10 residential units, one for a restaurant site, and the third for commercial development.

Because the council has not yet considered rezoning the parcel, Zeanah has blasted the appraisal as unrealistic.

And even Fiore has conceded that Thousand Oaks might have to sell off other surplus land to fully fund the Civic Arts Plaza if the 401 W. Hillcrest Drive property does not fetch top dollar.

The city’s most valuable asset is situated next door to the Civic Arts Plaza--the 11 acres slated for private development at the east end of the former Jungleland wild animal park. Brimhall estimated the property’s value at about $9 million, and said the city has been receiving “big, big nibbles” from interested developers.

Other surplus city properties include two dozen residential lots off California 23, which Brimhall valued at about $2.5 million; the former Goebel Senior Center across Conejo School Road from the Civic Arts Plaza, and the old Fitzgerald House, a small residential property.

Backed by these assets worth more than $20 million, Thousand Oaks will be able to meet its debts and repay its loans, Brimhall said. But he added that untangling the internal money transfers is not urgent.

“What needs to be straightened out?” he asked. “There’s no life-and-death issues here.”

The city accounts most severely depleted are the insurance reserve fund, the low- and moderate-income housing fund, and the fixed-asset replacement fund.

* The insurance reserve fund, designated to cover the city’s liability in case the government loses a major court case, loaned more than $4 million to the project. The fund now contains just $400,000.

* The fund to support affordable housing lost half its reserves, plummeting to $500,000. Before approving the loan, council members stipulated that returning money to that account must be a top priority.

* The fixed-asset fund, which is used to replace worn-down city equipment, loaned $4 million to the Civic Arts Plaza. That left just $800,000 in the account. Biery and Brimhall said they believe the cushion will be sufficient to meet the city’s needs.

* The park fund, fed by a $50-per-bedroom tax on residential development, was wiped out entirely to pay for the Civic Arts Plaza’s seven-acre park. That $1 million was not considered a loan, so it will not be repaid, Biery said.

From Zeanah’s point of view, the raids on various city funds belie officials’ repeated claims that the Civic Arts Plaza was completed on time and under budget.

“To me, there’s a revenue side of the budget and an expenses side of the budget,” she said. “The revenue side was in trouble from the very beginning. We have never been on budget.”

Schillo, however, feels certain that the city’s financial plan will be vindicated and the Civic Arts Plaza will become a smash success.

“Listen,” he said, “we have had a history of years and years and years of doing the right thing after well-thought-out proposals are thoroughly discussed. We are doing that same thing here.”

FYI

Tonight’s grand-opening concert at the Civic Arts Plaza begins with a ribbon-cutting ceremony on stage at 8. Doors open at 7:15 p.m., and ticket-holders should arrive early. Garage parking is free, though valet service is available for $7. Overflow parking will be available in a lot off Conejo School Road. The show, featuring the Conejo Symphony Orchestra and Bernadette Peters, will last until about 11 p.m. Soft drinks, liquor and champagne will be sold during the 20-minute intermission.

Civic Arts Plaza Financing Land costs

The city bought four parcels for $22.2 million for the Arts Plaza. Nearly half of the 22-acre site has been set aside for sale or lease to developers.

Funding sources:

Redevelopment Agency bonds: $15,235,021

Loan from Capital Fund: $3,638,438

Loan from General Fund: $1,843,000

Gas Tax Fund: $613,189

Miscellaneous: $11,728

Construction costs

The city Redevelopment Agency will pay for the performing arts center and the city will pay for the government center within the $63.85-million Civic Arts Plaza.

Cash sources:

Redevelopment Agency bonds: $27,700,000

Sale of 2150 W. Hillcrest Drive: $9,200,000

Capital Fund (developer fees): $3,250,000

General Fund account set aside to

repair 401 W. Hillcrest Drive: $3,040,000

Interest on cash accumulated from bond sales: $2,785,500

Utilities Fund: $1,950,000

Park Fund $1,000,000

Internal loans:

Insurance Reserve Fund: $4,050,000

Fixed-Asset Replacement Fund: $4,000,000