The above cost excluded the purchase of the Underhill property even though that was the only reason given by the City in 2017 to justify spending almost two million dollars for the purchase and loan cost. Despite not including the land as a project cost, the City Manager attempted to justify the Underhill purchase by comparing an empty lot currently for sale on Laneda for $129 a square foot. Raising this comparison begs some further explanation. Why did the City sell the same sized old City Hall property which is up the street from the aforementioned $129 per square foot example to the contractor who built City Hall for what appears to be a fire sale price for both the land and the “uninhabitable” building for approximately $67 per square foot?
The City Hall project was a capital construction project and as such is entitled to be reimbursed for the administrative efforts of City Hall staff. These indirect costs that City officials charge our Water Operating Fund and justify as responsible accounting were also omitted as a project cost. Utilizing the Water Operating Fund indirect cost methodology employed to reimburse City Hall staff for the administrative support tasks that they provided for the City Hall project over the past three years adds approximately $435,000 to the total cost. (Note) This figure acknowledges that City staff were not responsible for processing monthly payroll for contractors of the project and has been accordingly reduced to reflect this fact.
Despite being substantially built with borrowed money, City officials are unsure what the financing costs to repay those construction funds over the next 20 years are so they will not not be considered as part of the total project cost. What is known is that the current City Budget contains loan repayments for this fiscal year alone for the Underhill property and City Hall construction that total $37,500 per month. Based on the best available information, the 20 year loan interest costs for construction of City Hall alone will total approximately $1.85 million.
Actual Total Project Cost: Approximately $10.2 million.
When presented with the opportunity to give a clear accounting of the total cost of this project based on the decisions, City Budget figures and current accounting practices of our City officials, we get a report that lacks both accounting credibility and common sense. City officials would have us believe that this project involved nothing more than the cost of designing and building a structure and those costs ended with the ribbon cutting.
As this Council celebrates and attempts to dismiss any further explanations on the real cost of the City Hall project, they will pivot to the pressing needs to generate new sources of revenue for City services. Businesses should prepare for the prospect of a food tax and a new monthly street fee for residents on their water bills as the Council resurrects its Revenue Diversification efforts. What businesses and residents will actually experience is Revenue Confiscation to support General Fund services.
It took 75 years from Manzanita’s incorporation as a City for annual expenditures to provide General Fund services to reach $2.5 million in 2021. Just four years later, this year’s Budget for those same services requires $6.7 million annually and includes the largest repayment of long term debt in the City’s history.
The City is discovering that maintaining and providing City services for a year round visitor destination with a foundation built on short term rentals is an expensive undertaking. Higher property taxes and water rates, hiring more employees to administer the growing number of short term rentals and new fees and taxes for residents to subsidize the impact that visitors have on City infrastructure. Amid these facts, City officials seek to reassure residents that thanks to those visitors, community livability has never been better. Moving forward, they appear committed to confiscating and spending whatever it takes to ensure that the quality of life for residents keeps pace with the costs of government because $6.7 million dollars just does not go far these days.
There’s a fine line between fleecing and skinning. I’m not sure City officials grasp the significance of the distinction but residents are feeling the pain.
Randy Kugler
