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Moreno Valley Moves To Stave Off Bankruptcy

Well dear readers, it appears that the Moreno Valley City Council is finally trying to get it's act together.

Last Tuesday the five members of the Moreno Valley City Council unanimously voted to approve the Highland Fairview Corporate Park (aka the Skechers project) in the eastern Moreno Valley community of Rancho Belago.  The project is likely to generate enough revenue in taxes and fees to keep Moreno Valley from going broke.

By keeping the city solvent, Moreno Valley will be able to prevent cuts to its police and fire departments, as well as keep other public works projects going, like street improvements. Additionally the City Manager will get to keep his unjustified salary and avoid laying off worthless members of his staff that are also collecting fat checks that they probably don't deserve either.

Members of the Moreno Valley City Council have been outraged at our reporting that the City's finances were in worse shape than they were letting the public know.   Specifically they disapproved of our releasing information that the City of Moreno Valley may be on the verge of bankruptcy given the collapse of the City's housing market, which has been a major source of revenue for Moreno Valley.

However it should be noted dear readers that not one member of the Moreno Valley City Council ever denied that the City could be going bankrupt, or that the City Council may be discussing the possibility of filing for federal bankruptcy protection.  Instead they have lashed out at anyone who may insinuate that the City could take such drastic action in angry and obvious attempts to stop whatever member of the City Council or the city staff is talking about such a bankruptcy contingency plan.

With the approval of the Highland Fairview Corporate Park/Skechers, all of this talk may now be a moot point.  Construction of the project will generate about $10 million of building fees for the City in the short term, finally growing to about $40 million in total fees.  1,000 construction workers, many who are currently unemployed, will soon be put back to work.  When completed Moreno Valley will have 2,000 new jobs.  

On top of that the project will generate anywhere from $100 million to $150 million in economic activity in Moreno Valley when fully operational.  This will put anywhere from $4 million to $10 million into the city coffers each year.

These arguments did not sway the misguided Planning Commission or the opponents of the Highland Fairview project who fought the Corporate Park on the basis that it would create too much air pollution, too much big rig traffic, and destroy housing values.  However, these same harbingers of doom failed to oppose a similar project in Moreno Valley located next to a residential community and near a public school that came before the Planning Commission only a week after Skechers.  

This double standard seems to have appalled the City Council and solidified its members into making this a unanimous decision.  

We can only hope dear readers that the approval of the Skechers project is the beginning of a new day in Moreno Valley and that the City will finally start welcoming job-creating industry.  Yet there are deep racial divides in the City between long time white residents and newer Hispanic residents that are rapidly challenging the good old boys lock on power, as evidenced by the racial divisions for and against Skechers and the election of Jesse Molina to the City Council over long serving incumbent Charles White.

The people of Moreno Valley would be wise to lay down their racial prejudices and avoid any race baiting politics.  It doesn't matter where they came from before because they are all in the same boat now.  That boat in Moreno Valley.  Working together they can finally get that city moving the right direction.  Or they can keep up the infighting and continue sailing the boat in circles as it sinks, even though land is in sight.   

More on Moreno Valley's Financial Mess

Whether or not the Moreno Valley City Council will decide to file for bankruptcy protection for their city remains to be seen.  What is known however is that Moreno Valley is in a very serious financial mess.

Yesterday's article may have produced a panic in Moreno Valley's City Hall and a string of denials from City Councilmembers and the City Manager about the possibility of bankruptcy.  Despite such denials, the facts of the matter are undisputed:  Moreno Valley is in big trouble.

Our sources claim the City of Moreno Valley may be facing a budget deficit anywhere in the range of $10 million to $20 million by June of this year.  In the last two years tax revenues declined about $15 million in Moreno Valley giving the City a gross loss of tax revenues of up to $35 million.  

Moreno Valley's financial situation could likely be worse than when March Air Force Base was mostly closed and turned into a reserve base in the early 1990's under Bush Senior.  Back then March Base was the lifeline of Moreno Valley.  In this decade it has been the housing industry that kept Moreno Valley afloat. When the housing market collapsed, so did the economy of Moreno Valley.

Moreno Valley's unemployment rate is now 11.1%.  That's nearly twice the national unemployment rate of 6.7%.

While rubber stamping any housing development a home builder wanted to bring to Moreno Valley, including far too many low income residences that have kept crime high, the City Council failed to properly work to bring any other other industry and any other jobs outside of construction to the City. Now with the only real estate action in Moreno Valley being the issuance of foreclosure notices, the City is reeling and possibly dying for the failures of the City Council the last ten years.

The recession is hitting Moreno Valley without mercy. Residents without jobs can not spend money in the City and generate taxes.  Even if they could, businesses are leaving Moreno Valley.  The Moreno Valley Mall is in shambles and may be completely shuttered before next Christmas.  Housing is not only in the toilet, it's been flushed down into the sewer.   The building fees being generated by building are non-existent.   The City's public utility is not making money.  In fact, sources say legal issues have actually made the City's utility a drain on Moreno Valley's budget.

So what's a poor City like Moreno Valley that keeps being kicked when its down supposed to do? 

Options on the table for the current City Council are limited and drastic.  Please note things are things that are out there, we are not endorsing them.  The City of Moreno Valley has not endorsed any of these options, but the City has not dismissed or denied them as possibilities either.

OPTION 1. The City Council may have to cut its public safety spending.  Fearful of rising crime, police cuts will probably not be considered, but cuts to fire services could happen.  One option is to re-negotiate the the contract with the County/State Fire Department to have only three firefighters working on an engine, sometimes only two.  While this would increase response times and decrease service, such action could cut a lot of money from the budget.

OPTION 2. The City Council could reduce all non-emergency services, like street and park improvements.  Instead of maintaining the parks the City would ask the people to use the parks to maintain them, even having the teams that use the youth sports fields to take full responsibility for keeping them clean and the grass water. Street improvements would be delayed and city staff cut. Regular resurfacing would be delayed at least a year, possibly two.  Only major issues, like crater sized potholes would be filled, but only as the number of resident complaints arise.

OPTION 3.  The City Council could try to increase the Sales Tax.  The City Council could put an emergency measure before voters asking them to raise the sales tax in Moreno Valley anywhere from a quarter percent to an entire percent.  This would likely be done under the guise of saving the police and fire departments from cuts.  This could work with voters, but may be a hard sell.  With many being on tight budgets and the state about the raise taxes on them, voters could turn out in mass to shoot down any proposed new taxes.

OPTION 3. The City Council may declare Moreno Valley bankrupt.  To the very risk averse Moreno Valley City Council this may be their best choice. Instead of making tough choices as they have all shown they have no ability to do, bankruptcy would allow Federal Bankruptcy Court to make the tough calls for the City Council.  

If Moreno Valley does go bankrupt, it won't be because of the current recession, it will be because of the City has been bankrupt of leadership for at least ten years.  If bankruptcy were declared, the best decision the Court could make would be to dissolve the City of Moreno Valley and let it go back to the County.  Supervisor Marion Ashley and the Riverside County Board of Supervisors would likely be able to better manage the money and the affairs of Moreno Valley than its weak-willed City Council has.

The only question would be dear readers is whether or not the County would want to assume the failures of a once promising City that never made it out of mediocrity called Moreno Valley.

Is Moreno Valley on the verge of Bankruptcy?

The City of Moreno Valley may be in worse financial shape than the Moreno Valley City Council is letting the people it represents know, making Morneo Valley's bankruptcy a possibility later in the year.

Sources in Moreno Valley have alerted us dear readers that Moreno Valley's solvency in 2009 is uncertain.  Given the current recession, the collapse of the Moreno Valley's housing market, and the State prepared to take millions away from cities, Moreno Valley may not have enough money to make it through the year.

In the last two years the City of Moreno Valley's revenue decreased approximately $15 million.  While minor cuts and adjustments were made, no tough decisions, such as layoffs were on the table.  Our sources indicate that this was a political decision made to delay major budget cuts to protect incumbents Charles White, Frank West, and William Batey in their November 2008 re-election bids.

This "Everything Is Fine" strategy may have helped Batey avoid having an opponent in his race, but public disgust at the good old boys running Moreno Valley coupled with anti-incumbent fever and a well financed campaigns against White and West saw them both tossed out of office by neophytes Jesse Molina and Robin Hastings respectfully.

Jesse Molina and Robin Hastings are probably in for more than they even imagined given the bleak financial picture that is now becoming obvious to all involved in Moreno Valley's budget.  Hopefully these two have the steel in their bones to deal with the issues the city faces, since Batey and fellow Councilmembers Richard Stewart and Bonnie Flickinger have shown that they do not.

By putting off the tough budget decisions, the Moreno Valley City Council may have created for themselves an even worse budget situation.  Moreno Valley's financial cold has grown into economic pneumonia that will require massive cuts in spending that will require layoffs.  Since Moreno Valley contracts out for its police and fire services, those contracts would need to be renegotiated to allow any reductions in service in public safety.  That's not likely to happen.

Instead, the Moreno Valley City Council will have to focus on massive layoffs from the bloated City Hall staff and from its Parks and Recreation Department.  But because the City Council has delayed addressing the budget crisis, layoffs may not be enough to keep the city afloat, which is why bankruptcy is a possible consideration for the cash-strapped city unless the financial situation miraculously turns around in the coming months.

We don't expect dear readers that the people of Moreno Valley will be brought into any discussions about the bankruptcy possibility, as this would be a legal matter that can be discussed in Closed Session.  By keeping bankruptcy as an option the Moreno Valley City Council will effectively be able to avoid public discussions of the budget, which from our humble view dear readers is an abuse of the process.

As always we will keep you posted dear readers on any developments on this issue in Moreno Valley and in any other Riverside County cities that may go under as the recession continues.

If you have any further information about the financial meltdown of Moreno Valley and the City Council's coordinated efforts to keep the facts away from the public, please post them, as we will investigate and report back on what we find out.

(This is the first article in a new series of articles on the state of Riverside County's economy and the consequences of the recession and the housing market meltdown called "The Economy, Stupid!)