Gardena Considers Fee Hikes as Debt Repayment Looms

A deadline is looming for Gardena: Pay $26 million in loans by the end of August -- or face possible bankruptcy.

The city, however, is hoping for its third loan extension, and in a bid to show its creditors that it is serious about fiscal prudence, the City Council today will consider about 100 fee increases for city services.

The proposed increases would hit new card club employees, fortunetellers, junk collectors and junk dealers -- among others looking for first-time permits -- hardest. City officials say the fee hikes could provide an additional $480,000 a year in revenue.

But critics say the city is trying to solve its fiscal woes by dipping into the pockets of those who can least afford it.

“It’s putting the problems the city has had with its own mishaps on the backs of the minimum-wage employees,” said Tom Candy, manager of Gardena’s Hustler casino.

But Mayor Paul Tanaka said, “We’re not trying to make our city whole on the back of any one group.”

Tanaka said that Gardena is raising fees to cover the city’s costs of processing applications and providing services. State law prohibits cities from charging more than their cost.

Most of the money the city hopes to raise would come from the 1,700 card club permit applications it processes each year. The cost of permits for first-time employees could go from $125 to $212.50. Most other cities charge about $60, card club managers say.

In addition, new employees at auto wrecking shops will have to pay almost $280 -- up from about $170 -- to crush cars; and bingo permits would rise from about $150 to $390. A permit to release birds such as doves at a wedding or celebration doubles from $50 to $102.

Residents will also pay more for some services under the proposed increases. Block party permits would go from $50 to $139. Garage sale permits would cost $27.75, up from $20.75. Bike licenses would rise from $1.25 to $3.

Some fees will go down, including the cost of police fingerprinting, lobbyist registration and sewer connection. But that’s little comfort to those who will pay the higher fees.

Barbara Leslie, 56, who started work at the Normandie casino 35 years ago, said many employees who come to work at the casino can’t pay large fees upfront.

“A lot of these kids that work here are porters or housekeepers, and they have four or five kids at home that they’re trying to feed and keep up with,” she said.

Although Leslie’s fees won’t go up because casino workers’ permit renewal fees aren’t increasing, Karlo Deza, the Normandie casino’s manager, said fee increases for new workers to obtain permits would “affect our business dramatically.”

Deza said potential employees will look for other jobs where fees aren’t as high, since they have to pay for the permits themselves.

“If we cannot get the help that we need to care for all our customers they’ll go elsewhere, and we’ll lose revenue and the city will lose revenue,” he said.

Under the proposal, Jolly Martin, the owner of Gardena Jewelry & Loan Co., a pawnshop, would not see his fees increase. But any new pawnbroker will be paying $422.25, up from the current fee of $243. “Gardena got into trouble a few years ago with a couple of crummy ideas,” Martin says.

The city’s financial trouble stems from two ventures it started in 1993 -- an insurance company and a first-time home-buyers program. Both failed and left the city in debt. Two refinancings, in 1995 and 1999, raised the city’s debt load.

The original $26 million was due Dec. 31, 2004, but the city paid about $61,000 to extend the loan until the end of May. It then paid nearly $35,000 more to push the deadline to Aug. 31.

But even if the city gets another loan extension, its problems won’t go away -- it still must come up with millions owed.

“Unless someone donates $26 million to the city of Gardena it will not be resolved,” Tanaka said.

City officials hope the banks forgive all or part of the loan or restructure it. The city also hopes for another extension, said City Manager Mitchell Lansdell. The other alternative is declaring bankruptcy, he said.

Lansdell said that over the next few months city officials will look at other ways of showing the banks they are serious about improving finances. Officials will look at increasing revenue through proposed tax increases on card clubs and utilities, and levying a per-unit tax on landlords, Lansdell said. Those taxes could be put on a November ballot and would have to be approved by voters.

Tanaka said that the taxes are needed because any “government fat” is gone. City services have been scaled back, and maintenance has been postponed.

“We’ve already cut the meat off, and we’re at the bone,” he said. “The bank knows that we’ve reached that point.”

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Rising fees

The Gardena City Council today will consider increasing about 100 city service fees, a move expected to generate approximately $480,000 a year. An estimated 50 fees would be cut, though not by much.

Proposed increases

*--* Current fee Proposed Bicycle license $1.25 $3.00 Garage sale permit 20.75 27.75 Card club employee permit 125.00 212.50 Block party permit 50.00 139.00 Pawnbroker permit 243.00 422.25 Fortunetelling permit 252.50 354.75

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Proposed decreases

*--* Current fee Proposed Oversized-load permit $21.50 $18.00 Fingerprinting 22.75 17.75 Lobbyist registration 25.00 24.50 Tree planting 63.50 63.25 Sewer connection 63.50 63.25 Curb-painting permit 219.00 82.50

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Note: Permit fees are for first-time permits, not renewals.

Source: City of Gardena

Los Angeles Times