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Montebello, Commerce Approve Asset Swap
Posted By admin On November 21, 2013 @ 11:54 am In City of Commerce,Eastern Group Publications/EGPNews,Featured News,Montebello | 3 Comments
The cities of Commerce and Montebello have entered into an agreement that each municipality is calling a win-win situation for its residents.
As part of the deal, Commerce will pay Montebello $750,000 for $1 million in Proposition A transportation funds. The money paid to Montebello will go to the city’s General Fund, but unlike the Prop A funds, can be used on any city service or expenditure approved by the council.
The fund exchange, according to Commerce City Administrator Jorge Rifa, was proposed by Commerce as a way to obtain more revenue for the city’s transportation operations. Prop A funds are administered by the Los Angeles Metropolitan Transportation Authority (Metro) and may only be used for transit-related projects or a Prop A exchange between cities.
“The key for [Montebello] is that they have a stronger need for General Fund money than they do for special purpose money,” Rifa told EGP.
It’s a financial move Commerce has used for the last 20 years, said Commerce Director of Finance Vilko Domic. The goal is to bring in more money for transportation needs, he explained.
While Commerce plans to use the Prop A funds to continue to provide fixed routes, medi-ride and recreation transit services to residents, Montebello officials say they will use their new revenue “strictly” for street repairs and tree trimming.
Those are areas that residents have complained about in the past that we will now be able to address with this exchange, said Councilmember Jack Hadjinian at the Nov. 13 council meeting where the agreement was approved.
“This happens to be the common denominator among every resident,” he said. “It’s either an overgrown tree or a pothole in front of their house.”
Rifa told EGP these types of agreements have helped the city avoid taking funds from other departments to pay for transportation related costs, and he couldn’t understand why anyone would even consider it “a story.” The Commerce City Council unanimously approved the agreement Tuesday, without discussion.
“When we do a Prop A exchange we basically get 125% in Prop A money,” Rifa said. “We use 75 cents on the dollar of the General Fund to purchase 100 percent of Prop A.”
But those numbers did not sit well with Montebello Mayor Christina Cortez, who at the Nov. 13 public council meeting asked Montebello’s City Administrator Francesca Tucker-Schuyler to explain why the city was “giving up” $250,000.
“We can look at it that way or we can look at it as gaining $750,000 in General Funds,” responded Tucker-Schuyler, who stated that on average the market rates for such exchanges are 65 cents on the dollar.
Seemingly not satisfied with the answer, Cortez asked the city administrator why not just take the $750,000 from the $7 million in reserves in the General Fund, to which Tucker-Schuyler said Montebello needs to “preserve the reserve balance” because the city has ongoing obligations, including unresolved litigation.
Still unsatisfied, Cortez continued to push the issue.
“I’m not sure if I’m willing to give up $250,000 especially when we have reserves and can look at other options. We’re not in the business here to give another city an extra $250,000 because we think we need it [cash] at this moment,” Cortez said.
To which Councilman Hadjinian, visibly irritated by the mayor’s line of questioning, interjected, “You should have done your homework. You should have asked your questions before the meeting.”
He continued to express disapproval of Cortez for not agreeing with the proposal, and for questioning the reasoning behind the agreement in front of residents at the council meeting.
“This is going to afford our cities to pave our streets and trim our trees, if you’re not OK with that then you’re not listening to the community’s needs,” he said.
Earlier in the meeting, Public Works Director Danilo Batson told the council that since July, the city and its contractor had trimmed 436 trees and removed 55 trees with root problems or other issues.
He said adding a new vehicle and staff “would help a lot” in dealing with the city’s deferred tree maintenance. He estimated it would cost $180,000 a year to add two people to the tree trimming staff.
“$750,000 is going to go a long way,” said Mayor Pro Tem William M. Molinari before the agreement was approved.
Clearly outnumbered, Cortez again voiced that she didn’t understand why the city would want to approve a loss, before Hadjinian snapped at her.
“If you don’t understand the matter don’t talk about it,” he said. “You’re putting doubt in the community’s minds.”
Undeterred, Cortez asked Tucker-Schuyler to explain how the fund exchange with Commerce had come about and why she thought the city would be interested in the first place, going so far as to ask if the city administrator had previously worked for Commerce.
Tucker-Schuyler said the proposed agreement was sent out to several cities and with Montebello’s history of General Fund constraints, she thought the city would benefit from the agreement. She also noted that she had previously worked for Commerce as the city’s assistant director of finance.
The agreement was approved 4-1 with Cortez casting the lone dissenting vote.
On Wednesday Cortez told EGP that she asks questions during council meetings, even though she may know the answers, as a way for staff to publicly answer questions that residents may have.
“Its not that I don’t understand the information,” she said. “I ask questions for the public.”
Cortez said she is worried the money from the agreement which is expected to go to the General Fund may not strictly be used for tree trimming and street repairs.
“When money gets put in, all of a sudden there is a reason that money is needed [for something else],” she told EGP. “If we leave the money in the Prop A fund, it would ensure that money is used for transportation.”
“Why sell our Prop A to a city that has more than enough money for their own projects,” she told EGP. “They’re not counting their nickels and dimes like we are.”
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