City's Economy in Slow Upswing

In a city where financial doom and gloom is commonplace, to say that Rohnert Park has a long way to go in fixing the local economy would be putting it mildly.

There's a laundry list of bad news, including:

• The unemployment rate here is 9.2 percent, up from 3.3 percent in 2000.
• The commercial vacancy rate is about 45 percent and , nearly 3,000 people have moved away in 10 years.
• The cost for retiree medical to a staggering $53.2 million with just $2.6 million has been set aside to date.
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• To make it worse, in our schools.

But City Manager Gabe Gonzalez said recently that, despite a procession of challenges, residents have reason to feel optimistic.

"We have a truly balanced budget for the first time in 10 years," Gonzalez said. "I looked back, and we were at least running a deficit in 2001 of $6.1 million."

While much of the gain in balancing the budget is attributed to public employee givebacks during a hotly-contested season of union negotiations that ended in September, Gonzalez said he can't rely on future cuts alone to keep the city afloat.

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"I can’t go back to the employees year after year — there’s a breaking point with retaining qualified, skilled, experienced employees that are here to meet the service demands of the community," he said. "In addition to relying on employees, how we've been balancing the budget in previous years is by selling city assets and betting on future unrealized revenue from things like the casino and subdivisions."

"None of that ever came to fruition, and the structural deficit has continued to increase at the same time our costs were going up," he added.

The city budget, adopted in July, reported a total $335.9 million total long-term deficit, made up of delayed infrastructure upkeep, replacing the city's vehicle fleet, water and sewer costs and employee benefits including retiree medical and pension payments.

In early October, however, the city outlined a set of goals for the reminder of the fiscal year. Gonzalez calls this a "roadmap" for Rohnert Park's future, including new public policies aimed at attracting and keeping businesses, reducing unfunded liablities by paying annually, and starting new construction projects to improve city streets, rebuild water and sewer lines and open new businesses locally.

Economic Development

Some things have already been impemented. A loan program for developers who want to , the City Council passed a plan to set aside money annually to chip away at long-term public employee benefit costs ($100K the first year, $300K the next, and so on for 20 years) and the way sewer capacity charges are collected was amended; now instead of paying all at once, .

here, there is and even some of the planned developments (stay tuned for future updates). In addition, Sonoma Mountain Village in September .

The recenly-formed tonight will outline a set of aggressive business-attraction strategies. Some of them include: 

• Working with real estate agents to market vacant properties.
• Working with to graduate businesses and relocating them in Rohnert Park.
• Engaging Sonoma State University students to get more involved.
• Marketing Rohnert Park to tourists by working with Chamber of Commerce, Sonoma County Tourism Bureau and Sonoma State.
• Finding funding to rebuild city infrastructure.
• Streamlining planning and zoning requirements to make it easier for developers to open up shop here.
• Inviting more small businesses here and hold meetings with existing ones.
• Developing strategies to attract fine dining and popular restaurants.

"It doesn't surprise me that this is happening," said Robert Eyler, a Sonoma State University economics professor. "Rohnert Park will likely remain the retail and big box center for the North Bay, but their commercial vacancies and the could lead to some recovery."

Eyler said the key is to create a mix of sales tax revenues, by using Sonoma State and the Sonoma Mountain Business Cluster to create a better mix of industries, such as businesses-to-business.

“A balanced budget is only as good as your ability to control expenditures, because municipalities don’t have an enormous ability to control revenues,” Eyler said.

“And certainly long-term strategic planning around city budgeting is a huge plus,” he added. “It sets in stone how expenditures are going to go over time, and regarding labor, there’s only one way to go — that’s up.”

Labor Concessions

Joe Nation, a former North Bay lawmaker who is currently a professor in the school of economic policy research at Stanford University, said there's no doubt public employee benefits have worsened the city's financial state.

“Rohnert Park foolishly believed that the economic boom in the late ‘90s and early 2000s that the dot.com bubble and technology boom would last forever, so they expanded benefits greatly,” said Nation, who is also leading efforts to reform pension obligations largely in Sonoma County.

Nation said two huge parts of the problem include the practice of actuaries — accountants who track long-term city finance — underestimating the true cost of unfunded liablities, and cities giving bloated benefits to public employees.

"I think there needs ot be some kind of reform," he said. "In many cases it's getting harder to justify those huge benefit packages — people who are receiving the benefits need to ask how the average voter is going to respond."

But Nation conceded that it puts cities in a tight spot politically — elected officials want union support but face ballooning costs for retiree medical and pensions.

"No one wants to give," he said.

Gonzalez and the City Council know that all-too-well, where locally unions contested and rallied hard against a proposal to .

Gonzalez wrote to taxpayers in June that "a substantial part of the problem is that we as a city have made future commitments, particularly to our employees, without setting up a funding mechanism to cover those commitments."

Following mid-summer labor talks, the council had this to say:

"We appreciate all the effort that’s gone into all this," said councilwoman Pam Stafford. "You’ve made our city financially stable with the work of our employees; I really do appreciate it."

"Hopefully things will get better in the future," said councilman Amy Ahanotu. "Thank you to the employees for the concessions — don’t think this is an easy process — I recognize that."

Mayor Gina Belforte agreed.

"I know it stings," she said. "It’s our turn as a council to make sure that we don’t go back to the spending practices that we had in the past."