The city of St. Helena should step up its efforts to confront a wide range of financial and infrastructure challenges, according to a new report by the Napa County Grand Jury.
The various concerns outlined in the report “present a worrisome future picture for the City, unless the present Council, Mayor, and City Staff successfully resolve these issues,” the Grand Jury concluded.
Recommendations include prioritizing legally mandated projects, reconsidering the future of City Hall with an emphasis on using the city’s existing property, renegotiating the city’s water contracts, and hiring professional help to manage complex projects at Bell Canyon Reservoir, the Upper York Creek Dam, and the Wastewater Treatment Plant.
“As is customary, the City will review the accuracy of the report’s statements, assumptions, and findings and file a response within 90 days,” City Manager Mark Prestwich said in a statement. “This will include providing the Grand Jury with historical perspective on capital expenditures and, as referenced in the Grand Jury Report, updates on the progress of City capital projects, adoption of new financial policies, and improvements in City finances that have occurred since 2018 and earlier periods referenced by the report.”
The report, titled “St. Helena: A Small Town With Big City Problems,” was prompted by “visible issues in what is presumed to be a wealthy, thriving small town,” including a tarp on the roof of City Hall, news articles about the long-delayed removal of the Upper York Creek Dam, water main ruptures that have required emergency repairs, and the increasing number of empty storefronts downtown.
“Despite longstanding public knowledge of these issues, the City has failed to take action and, in some cases, its actions – or inactions – have exacerbated the present and future impacts of these issues,” the report states.
“After interviews with multiple members of City Staff, the Jury came to believe that these individuals are working at ‘maximum capacity’ and therefore their organization will require additional personnel and other assets to address the issues described in this report.”
The report is based on interviews conducted up until Feb. 1 and acknowledges that some of the city’s responses will contain new and updated information about the city’s efforts since February.
The city was already pursuing some of the recommendations before the report was even released. For example, the city recently issued a Request For Proposals for new legal services in response to the city’s high legal fees, and the council told staff on Tuesday to report on the city’s long-term pension liabilities.
The Grand Jury report is based on 13 interviews with former and current members of the City Council and current senior city staff, as well as various city reports.
The city’s 10-year Long-Range Financial Forecast (LRFF) contains overly optimistic revenue projections and fails to analyze constraints on revenue growth, including the Agricultural Preserve bordering the city, the impact of high vacancy rates in downtown storefronts, and “the political impact of an anti-hotel/anti-growth faction of City voters,” the report states.
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“Virtually every decision made by the City Council and City employees should find its background and support in the LRFF,” the report states. “Although it is not a ‘budget,’ if the assumptions and conclusions in the LRFF are incorrect or misleading, then decision-making errors are inevitable.”
The St. Helena Asset Planning Engagement (SHAPE) Committee relied on a LRFF that was “fundamentally flawed,” resulting in a flawed analysis of the city’s funding options, the report states.
According to the Grand Jury, the SHAPE Committee’s report contained three “very realistic and cost-effective options” for a new City Hall that were never presented to the council: sell City Hall and house city workers in existing city-owned buildings; buy/swap an existing city building and sell City Hall; or exchange existing assets for empty or partially occupied commercial properties.
Only 68 percent of the city’s retirement fund obligation has been funded. The unfunded liability is estimated at $12 million to $15 million.
Last year, the city hired a consultant to assess its pension liabilities. The Grand Jury report notes that St. Helena’s pension obligations will increase over time, especially as the fire department transitions to a professional model with full-time employees.
The city’s recently adopted 2019-2020 budget allocates $407,700 to pay down its unfunded pension liabilities, about $260,000 more than the mandatory minimum.
The Grand Jury says the city should investigate a tiered water/wastewater rate structure that would distribute fixed costs across all users, adjust rates for users outside the city limits, and distinguish rates between residential and commercial users.
Many customers pushed for the City Council to adopt such a system in 2017, but at the time a rate consultant said the city couldn’t legally justify a tiered structure. A new study is underway.
The city reached a $1.15 million settlement with its previous rate consultant related to a computational error in the current wastewater rates that resulted in a revenue shortfall.
The city should also renegotiate all of its water contracts for commercial and residential users inside and outside the city limits, the Grand Jury said.