Neighbors again propose alternate uses for site once planned for private, Christian high school

A group of residents who 10 years ago opposed construction of a private high school on 32 acres of city-owned land at Bastanchury Road and Casa Loma Avenue again are offering a plan for the property first presented to city officials in 2003.

Some 400 residents near the proposed school site fought the city's action to lease the land to Yorba Linda Friends Church by forming Yorba Linda Residents for Appropriate Land Use.

When that battle was lost on a 4-1 City Council vote, the group stayed active, and in 2005, with an attorney's aid, came to an agreement with the school on traffic, noise, parking and pedestrian safety issues.

Thereafter, group leader Ken Charlton often spoke at council sessions on school issues, and in 2011, he urged council members to require “immediate” construction of promised joint-use facilities or “move forward with alternate uses” for the property.

Now, Charlton and the group are renewing past ideas for the acreage: sell the southern 13 acres to a builder for residential use--“let the city pocket those funds”--and build facilities for the public on the other 19 acres that have restrictions requiring public use.

Cost of new municipal facilities to replace the once-planned city-school recreational amenities could come by extracting “enough of a penalty from the defunct school lease,” Charton stated.

The 2003 lease signed by city and church officials doesn't spell out actual dollar amounts of penalties for default, but according to the document, the city “may recover all payments and pursue any other rights and remedies...by reason of such default as provided by law.”

Past due payments for five quarter-year periods total more than $1.1 million, including a 10 percent penalty assessed when rents were five days late. Lease terms state that late fees “are separate from any other rights and remedies” the city might have “as provided by this lease or by law.”

And, according to the lease, “all improvements...shall become property” of the city “at no cost” to the city. The church has reported spending nearly $2.7 million on actual site work and $6.1 million on architect, engineering, consulting, legal and other fees, which includes cash paid for plan checks and permits to 10 government agencies, with $408,000 collected by the city.

Should the city seek bids on the entire 32 acres, a prospective tenant – either another private school or other group willing to allow public use on the 19 acres – would be unlikely to accept lease terms similar to the pact signed with Friends Church.

One 2011 calculation put the total 99-year lease cost, with yearly 2.2 percent consumer price index increases, at $253 million, with annual payments growing from $800,000 to $6.2 million.

Meanwhile, the city faces a potential $105,800 cost to manage the site, with outlays for erosion control, site stabilization, weed abatement and storm drain maintenance.

City workers pay into retirement fund

Back in the halcyon days of this city's budget process – when ever-increasing property and sales tax revenues allowed officials to build up a reserve fund in excess of $30 million – the city's workers were granted a generous perk that significantly boosted their take-home pay.

The city began picking up each employee's portion of the amount required to fund retirement benefits under the Public Employees Retirement System, which totaled a 7 percent pay hike, with deductions for withholding and payroll taxes taken since 2007.

Now, with a much tighter municipal budget, the city's 93 employees again will contribute a percentage of their paychecks to fund their retirement benefits: 2.5 percent starting July 1 this year and an additional 2.5 percent July 1 next year, for an eventual total of 5 percent.

The city will continue to contribute the amount shy of the 7 percent requirement, as well as the city portion, which lately has approached 14 percent, although the latter number varies, depending on calculations from retirement system actuaries.

However, the employees – which include six management, 21 mid-management and 66 “miscellaneous” workers – won't suffer a pay cut as a result of the increased deductions. The new pact includes a 3 percent “cost-of-living” adjustment retroactive to January and another 3 percent hike next January.

Also, furlough days, which cut salaries 5 percent, ended September 2012, and vacation buy-backs will be reinstated. The suspended pay-for-performance program will be “reconsidered” during the upcoming budgeting process for the 2013-14 fiscal year.

Negotiations could be reopened before the contract expires Sept. 30, 2014, regarding a furlough program, and interestingly, the Jan. 9 local holiday for Richard Nixon's birthday was switched for the Martin Luther King, Jr., national holiday.

Both full and part-time employees working 30 hours will contribute $75 per month retroactive to January, with an additional $75 per month starting in 2014 for the health benefits package.

The city contributes $1,020 monthly for a “cafeteria plan” that is used to pay health insurance premiums, with any residual amount paid either as cash or applied to deferred compensation.

The retirement plan currently in use is a “2 percent at 55” formula, which allows employees full retirement benefits at age 55 based on two percent of the highest year of compensation multiplied by the number of years worked.

Employees hired after Jan. 1 this year will fall under a new state-mandated formula of 2 percent at age 62, with the highest compensation year figured on a three-year average, although new workers already in PERS can apply the older formula.

Cost to the city for the salary hike less the new employee PERS contributions will total $704,180 through September 2014. The one-time estimated costs for vacation buy-backs could be up to $150,000, taken from an employee leave reserve fund that now totals $1.4 million.

Lease revenue loss will have budget impact

Termination of the revenue-producing lease with Yorba Linda Friends Church for a 32-acre city-owned site planned for a Christian high School will have a decided impact on the city's budget for the upcoming fiscal year.

Loss of lease payments totaling $1.1 million already put a crimp in the budget for the current fiscal year, and the shortfall is likely to continue, even if the City Council quickly approves an alternate plan for the land.

Although a one-year loss of $842,624 in lease revenues seems small for an approximate $28 million budget, the amount is significant because city expenses have exceeded income on an average in the $1 million range the past few years.

Basically, the council has three choices for the vacant site, two of which could produce future cash: sell the land or seek another lease. A third option is for the city to use all or portions of the site for recreational or other public purposes.

Should the council choose a revenue-producing option, time would be needed to prepare and issue a request for proposals, evaluate responses and negotiate potential sale or lease terms.

Meanwhile, city officials face the possibility of further drawing down cash reserves built up in better economic times. Final figures aren't available until the close of the fiscal year June 30, but expected expenses outran anticipated income in the adopted 2012-13 budget.

Shortfalls associated with the city's Black Gold Golf Club and the Landscape Maintenance Assessment District account for red ink in past budgets, and the loss of lease income adds new problems for 2013-14.

Interestingly, if the city decides to either sell or lease the 32 acres at Bastanchury Road and Casa Loma Avenue, Friends Christian High School leaders could remain in the mix, with an offer to buy the land or present a new lease in competition with other suitors for the location.

Of course, accepting a new lease from the Friends group would be unlikely, considering the five quarters of missed payments, but school officials asked to purchase the site last year, a request denied by the council.

A legal effort to recover past-due payments from the church is possible. A report by City Attorney Todd Litfin notes a $403,088 grading bond that could be pursued. The city also holds other deposits.

Different property appraisals led to the failure of negotiations to reduce lease payments. The city's appraisal of a value in the $32-$36 million range led council to believe the current lease was reasonable. The church's appraisal was in the $10-$16.8 million range.

Church officials said onerous lease terms prevented them from obtaining $39 million in loans for construction. They had already invested $14 million in the $53 million project.

Redevelopment revenue to play a diminished role in Yorba Linda's Town Center area renovation

One of the more complex issues facing Yorba Linda's elected leaders involves the financial affairs of the city's disbanded Redevelopment Agency and the diminished role the agency's once-plentiful property tax collections will play in renovation plans for the Town Center area.

Again--as mandated by state officials--this city has dispatched a six-month spending plan for redevelopment revenue to state and county agencies, a plan likely to result in most available dollars in the second half of 2013 going for payments on previously issued bonds.

And interestingly, for the most recent bond issued, the city will pay a bit more than $1.6 million in principal and interest this year, while the bond sale proceeds remain in a trustee account at U.S. Bank, unused for Town Center or other redevelopment endeavors.

The bond in question was authorized for about $19.7 million in 2011, with payments, totaling some $33.9 million, running through 2032. The proceeds can't be used at present, since the bond was sold after a cut-off date set by the state for redevelopment project financing.

In all, the city has five “tax allocation” bonds for redevelopment projects outstanding, with repayment schedules just shy of $120 million and final payment dates from 2023 to 2032.

Proceeds from two of the bonds, issued in 1993 and 1998, refunded bonds issued in 1989 and have already been spent. Two 2005 bonds were meant for Town Center infrastructure and further land acquisition. Cash from the 2011 bond, as noted, sits in the U.S. Bank.

Aside from the $120 million bond debt, the city lists $13.7 million in outstanding obligations to be paid from redevelopment property tax revenues. Largest amount is the nearly $6.5 million from the 2005 bonds the city seeks to spend on infrastructure and more acquisition projects.

One problem with the city's spending plan for the July 1-Dec. 31 period is the amount of cash available to the city from the redevelopment property tax collections. Finance Director Dave Christian told me the county estimates the city will receive about $4.4 million to spend, some $3.3 million less than the requested amount.

Under rules established by the state Department of Finance, the city must adopt a spending plan involving property tax revenues from former project areas still collected under formulas used by the former Redevelopment Agency twice each year.

A new $10,000 fine is to be imposed each day a plan is late, so a sense of urgency is added to a process involving approval by the City Council and a specially appointed seven-member Oversight Board.

Some of the city's past requested expenditures were denied by the state, including payments for a Savi Ranch sign improvement project and certain engineering expenses associated with Town Center.