Riverside County has gained the dubious distinction of being one of the foreclosure capitals of California, if not the country.
One bright spot, however, has been the unincorporated community of Eastvale, which has grown from an exurb of scattered homesteads a decade ago to a major unincorporated bedroom community of roughly 40,000 residents.
"Eastvale is really leading Riverside County in its ascendance from the recession," said Jeff DeGrandpre, president of the Eastvale Incorporation Committee.
On June 8 Eastvale residents will consider Measure A, a multi-part ballot measure to decide whether the community, located in the northwest corner of the county adjacent to the City of Norco, will become the county's 27th city.
Eastvale is already more than halfway to its projected built-out population of 68,000, and it will have the option of continuing to follow a general plan set forth in the Riverside County Integrated Project. Additionally, proponents say they seek local control over opportunities to promote new commercial developments and contract with the Riverside County Sheriff for dedicated service.
"We're all pretty happy with the way Eastvale looks right now," said DeGrandpre. "We have residential, commercial, and light industrial to come. We're doing this to keep our tax dollars here."
While both opponents and supporters of Measure A say that they favor cityhood and the local control that it would bring, they differ over the issue of whether current economic conditions make this the right time to incorporate. In addition to bearing its own operating expenses, the city of Eastvale will have to pay roughly $1.5 million annually, for 30 years, in net neutrality payments designed to compensate Riverside County for the loss of tax revenue that it will incur upon incorporation.
Analysis revealed that Eastvale would not be able to pay the entire amount from its general fund but will have to dip into its fire fund as well, a move that concerns opponents but still conforms to state requirements.
Opponents of Measure A, however, fear that this payment may doom the city to fiscal ruin from Day One because it is both more generous than it ought to be based on prevailing economic conditions.
"The base year around which the neutrality fees were negotiated was 2008," said Irene Long, one of the leaders of Not Now Eastvale. "The county's revenues have shrunk dramatically, so if we're tied into paying them lose revenues for 2008…we're automatically giving away more money than we need to."
Both Long and DeGrandpre are running to serve on the would-be Eastvale City Council.
Long also contends that proponents of incorporation provided different sets of revenue projections to county officials and that the revisions created a more optimistic picture than the original numbers that appeared in the incorporation committee's Comprehensive Fiscal Analysis. Even so, Long said that the city will have to go to extraordinary lengths to pay what she considers generous net neutrality payments.
"For some never explained reason they decided to throw in what I call the ‘signing bonus'…they would give whatever was left of our fire fund, but no less than 15 percent, to the county as a gift," added Long. "We're in the red from the very first full year of incorporation."
An October 2009 Local Agency Formation Commission staff report, signed by Executive Officer George J. Spiliotis, could not make a recommendation of fiscal viability, and a follow-up report in January maintained that position despite what it acknowledged as "positive fiscal changes" that emerged from subsequent negotiations between the Eastvale Incorporation Committee (EIC) and the county.
A July 2009 incorporation study committed by EIC found that "the feasibility of the incorporation is inconclusive: neither clearly feasible, nor clearly infeasible" and that feasibility would ultimately depend on "policy decisions."
LAFCO Executive Officer George Spiliotis said that the city would in fact be viable as of its first year, according to information that was presented to the commission after the publication of the initial reports on the CFA.
"There was testimony presented by proponents that allayed the commission's concerns regarding staffing, and they ended up approving it," said George Spiliotis, Executive Officer of the Riverside County Local Agency Formation Commission. "They presented information using some of predicted surplus funds and assigned staffing to those funds."
"LAFCO's concerns have been largely alleviated," said Field. "Their staff report indicates that they are, I believe, comfortable with the fiscal analysis as it stands now." Field and DeGrandpre both cited retail and residential projects that are in the pipeline that will contribute to future tax receipts.
Furthermore, Spiliotis said that the use of fire funds would meet state requirements.
"There's no problem," said Spiliotis. "I don't know if you can say it's normal. Each revenue neutrality negotiation is unique, but I do not believe that is unprecedented."
For opponents of Measure A, the negotiations that led to the finding of viability were not nearly transparent enough and in fact were based on questionable data. Not Now Eastvale, which acknowledges "the simple fact that almost everyone wants Eastvale to become a city one day" cites the October 2009 Comprehensive Financial Analysis in finding that the city will run a deficit in years 2-10 of incorporation, resulting in a negative operating reserve of $3 million by the 10th year. The Not Now group wants to put cityhood on old until the economy picks up.
"The main benefit to [voting no] is that we won't be locked into giving away this money," said Long. "That gives us time to renegotiate. I think 2011 is a good year to lock in based on anticipated drop in revenue and then put it back on the ballot in 2012."
Supporters, however, contend that, even in light of the recession, the incorporated city will be no worse off than any other city in the state and, with projected growth, will be on firm footing before long. Proponents also claim that cityhood will not affect residents' taxes.
The revenue neutrality agreement was the best agreement we could possibly have made," said DeGrandpre. "When they started it was in perpetuity. We knocked [the county] down from infinity to 30 years. Do I like it? Not necessarily, but it's the law."
While DeGrandpre said that his group's analysis points to a potential $4 million surplus in the first year, others are expressing more cautious optimism and yet still contend that the moment is ripe for Eastvale to incorporate.
"There are different ways to look at the right moment: political vs. absolute best economic time," said Field. "Even though from an economic standpoint, this probably isn't the perfect time to do it, if you can do it now and succeed…that's a pretty firm foundation for the future."
Moreover, supporters of Measure A contend that a defeat of Measure A will simply mean that the would-be city will have to go through years' more hassle and expense to craft a new measure and a new agreement, at which point it might not be any better off than it would be under Measure A.
"We'd have to start the process all over again," said DeGrandpre. "We'd have to spend roughly $140,000 again, do studies again, collect signatures again. The math doesn't work out."
Jeff DeGrandpre, President, Eastvale Incorporation Committee, (951) 808-4840
John Field, Chief of Staff, Riverside Supervisor John Tavaglione, (951) 955-1020
Irene Long, Not Now Eastvale firstname.lastname@example.org
George Spiliotis, Executive Officer, Riverside County Local Agency Formation Commission, (951) 369-0631