Hawaiian Gardens Gives Building as Collateral

Hawaiian Gardens has pawned its recreation building in an effort to repay its $4-million debt to the city’s redevelopment agency.

While the City Council’s decision Tuesday was greeted by sighs of relief--City Hall was originally offered as collateral--it could mean 30 years of debt and could cost the city as much as $9 million in interest payments.

Moreover, while the arrangement between the city and its redevelopment agency may avert bankruptcy, officials acknowledged that tough decisions remain before they can proclaim the city budget balanced.

Still on the line, Mayor Lupe Cabrera said, is the city’s new $2-million-a-year police force, whose officers were recently promised a 19% raise. Other city employees were promised a 7% pay increase that also is in jeopardy, he said.

“We still are out of money in the general fund,” Cabrera said. “We prematurely gave out raises and we have to rescale on that.”

City officials said they also were concerned about an audit by the state controller’s office. A spokesman for the controller would not say why the audit was initiated, but he indicated that the findings may soon be made public.

Tuesday’s deal, similar to a bond issue between separate branches of government, represents the first time the city has acknowledged its fiscal woes. The debt came to light recently when the redevelopment agency’s lawyer threatened to quit unless the City Council repaid the money.

Some contend that the city’s financial woes stem from undue optimism after voter approval last year of the city’s first card club. Supporters of the casino portrayed the club as an boon to the city budget.

But the election polarized the council and residents. Almost immediately, Councilwoman Kathleen Navejas filed a lawsuit that has kept the casino from opening. Since negotiations with the card club licensee never provided for cash advances, the casino has failed to deliver the bounty it promised.