City manager discusses financial future with businesses

By: Brandon Darnell, News Messenger Reporter
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Lincoln Area Chamber of Commerce representatives had plenty of hard questions Tuesday morning for City Manager Jim Estep. That’s after he told them Lincoln faces a daunting future. Estep outlined the city’s current financial woes Tuesday to about 20 concerned business reps and government officials at the chamber’s monthly Government Relations Committee. Estep told the committee members that city expenditures are exceeding revenues, despite a budget that is $5 million less than last year’s $18 million. Other key points Estep made include: * The state of California recently took more than $800,000 in redevelopment funds to balance its budget – money that was meant to be spent making downtown more walkable and attractive in post-Highway 65 bypass Lincoln. * Recent reassessments on property values dropped 9 percent – 4 percent more than anticipated, translating to a $220,000 unexpected loss. * The state of California also took about $675,000 in property taxes, which go directly to the general fund, from which public safety is funded. The state also deferred gas tax funds of approximately $1 million, meaning no street repairs will be made until 2010 at the earliest. While hearing about the steps taken by the city to save money and a new budgeting process wherein every expense must be justified, members of the chamber of commerce had several questions. Local Realtor Gene Thorpe asked if the state will be paying back the money seized over the past month. “It’s required that they do that in three years,” Estep answered. “Personally, I’m not sure where they will find that money.” In the meantime, Estep said, the city will have to figure out how to get by without it. “Going ahead … we will probably be in a similar position next year?” asked Tina McCauslin, the chamber’s president. Estep replied that he “expects the economic crisis to affect Lincoln in a similar way for the next two or three years.” Even once the economy turns around, Lincoln will take some time to recover. “Because we’re a growth city,” Estep said, “it will take us longer to come back.” According to Thorpe, home sales are booming at the rate they were in 2005. But, Thorpe said, the prices are about half of what they used to be and most of the sales are on preexisting homes – many of which are foreclosures. Before development takes off again in Lincoln, a surplus of bank-owned properties must be purchased. That, according to Thorpe, does have a silver lining. Since many of the home purchases are by first-time buyers, it will stimulate the future market. Another issue negatively affecting new development is the amount of fees on development, according to several audience members. That issue was brought up by representatives of the California Building Industry Association at the May 23 City Council meeting. “We’re meeting with the BIA every two weeks and trying to figure out what works for Lincoln,” Estep said. “There’s a limit to how much of a load you can put on a new residence and still expect it to sell.” According to William Mellerup, a board member with the California Building Industry Association, those talks with the city have been proactive. “It’s working well,” Mellerup said. “If we can make some changes by the end of the year, we can have a good spring (building) season.” Those solutions, according to Mellerup, will be short-term fixes while long-term reassessments of the fees are looked into. “It took 10 to 15 years to get into this,” Mellerup said. “It won’t go away short-term.” Another question McCauslin had for Estep was, with the recent layoff and cuts, how will customer service be affected? “The customer service level in the city is severely lacking,” McCauslin said. According to Estep, that is one of the key issues he and city staff are working on. “This is really a time when customer service needs to be paramount,” Estep said. “We are a service organization.” When McCauslin mentioned hearing some city employees have treated business owners callously, Estep’s reply was quick: “That plain shouldn’t happen.” The whole point of the city, according to Estep, is to help the businesses succeed and provide services to residents. As the city continues to battle falling property and sales tax revenue, Estep said he wants the public to know that though the city has plenty of money in some funds – such as solid waste – they cannot be used to pay for police and fire. “This isn’t like your home budget, where you pull from one big pot of money,” Estep said. “We are very restricted by law on what we can spend where.” Brandon Darnell can be reached by e-mail at