Where the money goes

Where the money goes

Fee hikes for restaurants and other businesses draw attention to budgets and spending at City Hall

By Joe Piasecki 06/04/2009

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Already feeling the pinch of the economic downturn, Pasadena business owners are now also bracing for significant fee hikes from City Hall.

City Council members voted Monday to help balance the city's books by increasing Public Health Department fees, including those for hotel and restaurant inspections, by anywhere from 10 percent to nearly double. In recent weeks, trash, sewer and some permit fees have also gone up.

While concerns expressed by the Chamber of Commerce and a number of restaurant owners ultimately led officials to soften the blow by phasing in the higher inspection fees over the next two years, the most contentious cost increase is on the agenda for next week - when council members will consider July water rate hikes that could cost many businesses tens or even hundreds of dollars a month.

"It's a concern, given the current state of the economy. The worry is that one more fee or one more cost placed on businesses, especially some of the ones that are particularly hard-hit, could be disastrous," said Chamber President Paul Little, a former councilman.

Area restaurants have seen their business decline as much as 30 percent in recent months, dropping to below 2006 levels, said Blair Salisbury, president of the Los Angeles Chapter of the California Restaurant Association and owner of the El Cholo, Barn Burner and Doña Rosa restaurants in Pasadena. He and other restaurateurs, including Jack Huang of Villa Sorriso and Abel Ramirez of El Portal, have been meeting with Little to revive the Pasadena Restaurant Association.

"Every business in Pasadena is having to make changes to adjust to the economy," said Little, who is currently faced with cutting his organization's budget by as much as 20 percent, "but what I'm not sure I'm seeing from the city [and Department of Water and Power] is the same level of scrutiny for their own operations - at least not so far."

By mid-month, city officials are expected to approve a budget for the fiscal year beginning July 1 that would aim to alleviate projected general fund operating losses of $4.6 million.

Ongoing budget hearings have already built consensus for eliminating 80 vacant positions and having city department heads cut their spending by as much as 10 percent (savings included in the deficit estimate), but one of the most significant potential cutbacks - asking all city employees to forego scheduled raises, a savings of $7.9 million citywide, $4.5 million of it in the general fund - remains incomplete, with negotiations ongoing in closed session at City Hall, said Mayor Bill Bogaard.

Health inspection rates were raised due to more than $1.6 million in state funding cutbacks last year - and more expected to come - that have already forced the department to drop from 112 employees in 2007 to 93 as of July 1, said Public Health Director Takeshi Wada. Current inspection fees do not recoup the cost of service, so were raised to match the lesser of the city's cost of service or the current LA County Department of Public Health rate.

Proposed water rate increases (which can be avoided if businesses are able to use less water) are deemed necessary to cope with a drastic spike in the price of importing drinking water through the Metropolitan Water District, which is facing shortages.

The Department of Water and Power's Water Division has cut $1.5 million from its current fiscal year budget and expects more reductions next year through eliminating nearly its entire overtime and vehicle replacement budgets, said Shari Thomas, assistant general manager for finance and administration. But, "over half the budget is water we purchase [from MWD], so we don't have any control over that," she added.

Meanwhile, City Council members - who over their last three regular meetings have spent more than $10 million on contracts for goods and services - on Monday approved applications for more than $2 million in federal stimulus package funding to support environmental and social welfare programs.

A $1.5 million conservation grant would go towards installing energy-efficient lighting in 26 city facilities and retrofitting 100 street lights, saving $200,000 in annual energy costs.

Nearly $600,000 in stimulus money managed by the US Department of Housing and Urban Development (HUD) would go to converting a vacant structure at La Pintoresca Park into a teen center, installing solar panels at the Pasadena Enterprise Center, providing 150 low-flush toilets in low-income neighborhoods, plus $20,000 each for literacy, homelessness, education and health-related programs. These efforts are expected to create or retain several jobs, mostly in the nonprofit sector, said Pasadena Housing Director William Huang.

The Foothill Workforce Investment Board, a job placement and training center serving Pasadena and five other cities, is receiving $2 million in stimulus funds through the Department of Labor. In addition to retraining laid-off workers and the chronically unemployed, the funds will expand the city's youth summer employment and job training programs to include 140 more teenagers, said Phillip Dunn, administrator of the city's Career Services Division.

It isn't clear, however, what if any impact other City Hall regular and stimulus spending will have on the local economy.

Because work created through the HUD stimulus money will be managed under federal guidelines, city officials are unable to require that contractors abide by established hiring preferences for local workers, said Public Works Director Martin Pastucha, who added that most of the work may nonetheless be performed by city employees.

Under the First Source Hiring Program, created in 2004 by former City Manager Cynthia Kurtz, developers whose projects benefit from city funding must work with local employment agencies to first interview unemployed Pasadena workers before hiring outside the city. In April, Chino-based CS Legacy Construction hired 16 new workers - all from Pasadena - to fulfill a $2.75 million contract for expansion of Robinson Park.
But builders who do not receive city funds and most of the businesses that receive contracts for services from City Hall are not required to participate in First Source but would receive tax rebates for doing so.

"Our goal is a minimum 15 percent local hiring. Because of federal and state law you cannot require it, but there's a good faith effort," said Dunn.

Bogaard and Salisbury also described the city's decision to make health inspection fee hikes incremental as a sign of good faith between City Hall and the business community.

"It's evident that we're attempting to be responsive to concerns from our business community," said Bogaard. "People ask where I am on the water rate hikes, and I say I want to go through [Monday's] public hearing on this and see what we learn."


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