Yorba Linda begins spend-down of small portion of reserves with $2.5 million going to arts center

Implementation of a planned spend-down of a small portion of Yorba Linda's more than $21 million stockpiled in reserve accounts has been approved by the City Council as part of the adoption of a two-year budget on a 5-0 vote last month.

This year's expenditure isn't much – just $3.6 million – and reserves will remain well above 50 percent of one year's operating expenses that is in keeping with official council policy adopted by a past council decades ago and followed by all succeeding councils.

Biggest chunk of the spend-down cash, $2.5 million, will go to fund a portion of the 13,500-square-foot, one-story arts center to be built in tandem with a 45,000-square-foot, two-story library on Lakeview Avenue close to the Lemon Street intersection.

Other uses include $725,000 to catch up on a backlog of road maintenance; $183,000 for a payment that would amortize 1/20th of the city's unfunded pension liability; and $200,000 to be deposited to the city's “other post-employment benefits” trust to pre-fund a portion of the city's unfunded retiree healthcare liability.

Revenue that brings city reserves above the 50 percent mark is considered “surplus operating reserves,” which is expected to reach $4.6 million at the end of the current fiscal year June 30.

About $1 million would be retained as a “reserve cushion,” resulting in a 53 percent stockpile, according to figures presented to council members recently by Finance Director Scott Catlett.

Two other interesting budget items:

– Revenue at the city-owned Black Gold Golf Club is expected to remain static for the current fiscal year, down only a few thousand dollars, with income anticipated to increase slightly to a bit above $6.1 million by the end of the next fiscal year.

Golf rounds, pro shop and range income will dip this fiscal year but rebound some in the next fiscal year. Food and beverage revenue will jump both years, according to current estimates.

The same is true for Community Center catering, which is also managed by Kemper Golf. Last year's near $300,000 income will drop to $225,000 this year and $230,000 next year.

--And in response to a council question about sales tax revenue expected from Town Center, Catlett noted funds have not been included in sales tax estimates “due to the amount of time still remaining before the project is complete and because the tenant mix is still not finalized.”

Catlett said, “Staff, however, engaged the city's sales tax consultant to provide an estimate based on the known tenants and presumed remaining tenant mix. Their estimate is that the Town Center will generate sales tax revenue of approximately $175,000 per year.”

Current estimates are that city-wide sales tax revenue will drop nearly $240,000 to $7.3 million at the end of the current fiscal year and rebound about $160,000 to close to $7.5 million by the end of the next fiscal year, still about $77,000 under last year's projection.