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Guest Opinion: Is there a financial crisis in Citrus Heights?

Guest submission by Tim Schaefer–
Recent events have shown that the City of Citrus Heights is now comfortable and actually normalizing long term debt.

Tim Schaefer

Our city incorporated and operated debt free for 21 years, but that all changed in 2018.

From 2018: Citrus Heights City Council approves first-ever $12M line of credit

Was there a financial crisis? Was the economy suffering from a localized recession? Were the city’s revenues down forcing the city to tighten its financial belt? No, no and no.

The local economy is healthy, unemployment is low and wages are finally showing improvement. Things have been so good in fact that this year the city’s general fund budget increased to $38.5 million, up from $36.6 million, and some city employees received pay increases.

So why would the city need to take out a $12 million line of credit?

Maybe the city was concerned about road repairs, realizing how the lack of maintenance has now created a crisis that will be very expensive to correct.  But no, it wasn’t that either.

So why did the city need to take on a $12 million revolving line of credit that could cost the city $9 million in interest if the debt is carried to the full term?

Quoting the resolution that was adopted by the City Council on Nov. 15, 2018:

“RECOMMENDATION: Adopt Resolution No. 2018-121; A Resolution of the City Council of the City of Citrus Heights Authorizing the Execution and Delivery of a Site Lease, a Sublease and a Credit Agreement and Authorizing Certain Actions in Connection therewith in Order to Finance Certain Capital Improvements and Operating Expenditures”.

But there is a greater concern at hand. A revised debt policy was proposed and agendized on Nov. 14, 2019, after the city borrowed $3.8 million to purchase the Sylvan School Property and another $4 million for the second phase of the Auburn Boulevard Complete Streets Project. But before that policy could be voted on by the City Council, city staff pulled that item from the Nov. 14 agenda.

Related: Citrus Heights debt policy item pulled last-minute from agenda

Sometime before the following City Council meeting on Dec. 12, the debt policy was completely re-written and specific language about whether the city will return to a debt-free status is nowhere to be found in it. It was approved by the City Council on Dec. 12, in a 4-0 vote. (See the final version here)

Coincidentally, this was the very same meeting the City Council adopted the recent fee structure increase that significantly increased many fees the city charges residents and developers.

So we are left wondering why the debt was incurred and when substantial street repairs will begin. Merry Christmas and Happy New Year Citrus Heights!  

Tim Schaefer is a 30-year resident of Citrus Heights and has served as president of the Park Oaks Neighborhood Association. He currently serves as a member of the Citrus Heights Planning Commission.

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