The specter of the Fresno Falcons is returning to City Hall with a familiar warning — city finances are precarious.
The City Council on Thursday tackles a housekeeping chore at Selland Arena. The semi-pro ice hockey team that died five years ago comes into the picture in a key, though roundabout, way.
Fresno officials some years ago bought roll-up bleachers for Selland. The bleachers' aisles don't have lights. State code requires them for safety in a power outage.
The council is being asked to spend $270,000 to add the lights.
But who at City Hall has a spare $270,000? The city-owned Convention Center is subsidized annually with millions from the general fund — money spent at the discretion of elected officials.
The general fund is in such terrible shape that Mayor Ashley Swearengin had to borrow $14 million from the water department to balance this year's budget.
The Falcons helped contribute to this landscape. Those bruisers on skates once were beloved by Fresno. So much so that, five years ago, they became the object of a bidding war between Fresno State's new Save Mart Center and Selland.
Much to their regret now, city officials won. To lure the Falcons, they borrowed millions for expensive improvements at Selland and elsewhere at the Convention Center. Some of the planned improvements weren't made, leaving $1.2 million in the pot that can be spent only on something connected to the convention center. The $270,000 will come from there.
Three things happened at City Hall since the Falcons went belly up that reflect on the bleacher-lights issue.
The city's general fund has had to foot the bill (more than $1 million annually) on bonds sold to improve Selland to please the Falcons.
The Great Recession hit with force, forcing Swearengin (who took office in January 2009) to slash police, fire and parks departments largely dependent on the general fund.
A half-year investigation by a council committee found that the Convention Center can't compete in an entertainment world dominated by Indian casinos unless millions are invested to modernize the nearly 50-year-old facility.
It's an old song for Fresno — too many needs, too little money. That's why City Manager Bruce Rudd is reluctantly spending $270,000 on bleacher lights and planning to spend the remaining $930,000 of bond money on debt service rather than Convention Center upgrades. The general fund's condition is that desperate, he says.
With no hint of an intended pun, he says, "I'm just trying to keep the lights on."
Era of unlimited hopes
To put the Falcons fiasco in proper context, turn the page back to Nov. 7, 2000, when more than 61% of Fresno voters chose Alan Autry for mayor.
"We need an affordable, balanced and fair growth policy that ends this 'Tale of Two Cities' and starts us on becoming one," he said on election night.
Autry tried to keep his promise with loans. Wall Street analysts and national business reporters struggle to pick which bond deal epitomizes the Autry era's mania for borrowing Fresno's way to prosperity.
A perennial favorite is the deal that, among other things, paid for construction of a lightly used Convention Center parking garage that forced city officials to quietly dip into other city accounts to pay bondholders.
Another worthy contender is what's known at City Hall as the "Falcons bond."
It's actually two bond deals worth millions. The first, sold in 2006, went toward Convention Center upgrades. The importance of this deal is that it led to a second deal.
Autry in his second term was hustling to build a legacy worthy of his "Tale of Two Cities" vow. He wanted to turn central downtown into a sports-themed entertainment center. Chukchansi Park, where the Fresno Grizzlies baseball team plays, would anchor one end, Selland the other. Kern Street, the middle of this axis, was to become Sports Town Promenade.
All this was to be complemented by Forest City Enterprises' $400 million South Stadium residential/commercial project and its anchor tenant, Bass Pro Shops.
To help make this work, Autry needed entertainment in Selland during the cold months when Chukchansi was dark.
There was no way to lure back Fresno State basketball now that the Bulldogs had an on-campus arena. The Falcons, who fled north in Autry's first term, were a different matter.
It took awhile, but the Autry administration successfully courted the team. Administration officials in 2008 got the council to borrow $20 million — the second bond deal — to get the Falcons back to Selland.
For tax reasons, nearly half the money was used to redeem bonds from the 2006 deal. That left about $11 million.
More than $4 million went for things the Falcons wanted: new ice rink, hockey equipment, VIP seats and new scoreboard, among others.
About $7 million went to a variety of upgrades, including improvements to the sound system, boiler and hot water system.
On Dec. 22, 2008, just a handful of games into the season, the Falcons folded. The team was broke. Autry was termed out of office two weeks later. Forest City left town without building anything. General fund revenues were tanking.
Loan is a challenge
But the Falcons bond money was in hand, so the city had no choice but to continue with the Convention Center's planned upgrades. An item on the list was a new roof for the city-owned Schoettler Conference Center, located across M Street from Selland.
The Schoettler Center is connected to the Radisson Hotel but was considered part of the Convention Center. The new roof was to cost $500,000.
However, City Hall was slow to getting around to the Schoettler roof. Swearengin and her team were busy avoiding bankruptcy. The mayor laid off hundreds. She recruited volunteers to maintain parks. She privatized the commercial trash service.
Then city officials publicly acknowledged after questioning by The Bee that, after decades of internal borrowing to maintain spending they couldn't afford, they had to repay $36 million to themselves to balance the books. These "negative fund balances" are a big reason the credit-rating agencies have persistently lowered Fresno's credit ratings.
The general fund reserve had once been in the $10 million range. Critics beefed that the money was not a true reserve, something acquired through prudent saving, but merely the surplus from an Autry-era refinancing of pension obligation bonds. Still, there were millions in a rainy-day account.
Fresno now has barely $1 million in its general fund reserve. How did a hefty general fund reserve at the end of the Falcons' era dwindle to barely $1 million? Much of it was spent on reducing the negative fund balances so disliked by Wall Street.
All of this swirled as city officials pondered what to do with the Schoettler Center.
They decided earlier this year to sell it to Radisson.
City Hall never got around to putting on the new roof. City Manager Rudd says the Schoettler Center was last on a to-do list that wasn't a high priority.
At about the same time, Council Member Lee Brand convened the council's Finance and Audit Committee to investigate Convention Center operations. The committee discovered, among other things, a backlog of undone upgrades that would cost millions.
The bleacher lights will cost $270,000 of the $1.2 million left from the Falcons bond. Why not spend the remaining $930,000 to put a dent in the backlog?
Rudd says the city's finances remain so precarious that he must use the money to help pay debt service on the Falcons bond. Fixing up the Convention Center is important, he says, but not as important as reducing cash-flow pressure on the general fund.
Rudd agrees it doesn't make sense to spend borrowed money to pay for borrowed money. He agrees it makes no sense to borrow money for Convention Center repairs, then not make the repairs. He agrees the Falcons' spending spree makes no sense in hindsight.
But, Rudd adds, Fresnans are wrong if they think the city's financial problems are in the past.
"We could put this money right back into the building," he says. "Then what — more layoffs?"
The reporter can be reached at (559) 441-6272 or email@example.com. Read his City Beat blog at news.fresnobeehive.com/city-beat.