VIVA HERMOSA

Some people claim that the downtown bar scene brings a substantial net income to City government coffers, and that without it, the City could not balance its budget.  Is that correct?

Answer:  No.  The downtown bar scene operates with a subsidy from the rest of town, necessary due to the bar scene's heavy demand for police and other City services.  Much of the money to provide the subsidy comes from the phenomenal increases in citywide property tax revenue - up 34% in one previous year, and still growing now, despite the economy. 


In February 2007 the City's Finance Department staff made a two-page tabulation of the downtown costs and revenues experienced by City Hall during Fiscal Year 2005-2006 (July 1, 2005 to June 30, 2006).  We obtained a copy, and those pages are reproduced below, in their entirety.  Below each page you will find our detailed discussion of the City's numbers, as we disagree with staff's methodology.   We asked the City Council to have a cost-revenue analysis done by an independent expert - and in early 2008 they agreed that they would do so, as part of  the study to create a downtown Specific Plan.  Unfortunately, the Specific Plan study has not been done, nor has the independent cost-revenue analysis.  If they  ever do engage an expert, we would emphasize independent - that he or she not be associated with any firm which presently does recurring audit work for the city or is likely to be bidding on such work.  The City of Fullerton did a detailed analysis, albeit by City staff.  Fullerton Report - Initial (8 mb doc file)    Fullerton Report - Follow Up  (3 mb doc file)  Questions about Hermosa's tabulation should be directed to the City Manager.

Now, as of 2010, the city council is very quietly moving forward to impose a new "sewer fee" on everyone in the City (we already have a sewer tax, the 6% we pay on our utilities, but the money has been diverted for general purposes), but adamantly refuses to raise the business license taxes on the bars.  (A large bar pays $2086 annually.)






Below is vivahermosa.com's table, with numbers revised, and added, to reflect City Hall's costs we believe are attributable to the bars, not to the entire downtown.  This table does not take into account the costs experienced by the private sector - primarily wear-and-tear on the neighboring residential community.

Bar Scene Costs		Notes
Downtown Foot Patrol [Public Safety]	4,350,000	A.  The City's figure represents 4.5% of the $14,500,000 budgeted 2006-2007 for police and fire.  We used a more realistic 30%.
Street Cleaning	52,000	B.  We estimate that the bar scene doubles the cost of street cleaning in the downtown.  We used 50% of the City's figure.
Plaza/Pier Steam Cleaning	12,000	See Note B.
Holiday Decorations/Flags	0	C. The cost of these holiday celebrations and special events is not attributable to the bar scene.
Portable Toilets/Pier Restrooms Closed	0	D.  These expenses will not repeat in the future.
New Year's Celebration	0	See Note C.
St. Patrick's Day Parade	0	See Note C.
Fiestas	0	See Note C.
Traffic Barriers/Navy Visit	0	See Note C.
Landscape Maintenance	9,000	See Note B.
Plaza Clock Project	0	See Note D.
Bucket Truck Rental/Veteran's Day Flags	0	See Note C.
July 4th Celebration	0	See Note C.
AVP Tournament	0	See Note C.
Triathlon	0	See Note C.
July 4th Special Event Security	4,000	See Note B.
Street Repair	450,000	E.  We used 50% of the $900,000 budgeted 2006-2007 citywide.
Insurance and Legal Defense	350,000	F.  The cost of the many bar scene lawsuits brought against the City is difficult for a member of the public to determine.  We used 50% of the City's 2005-2006 liability insurance budget.  We did not use the 2006-2007 budget figure as it has been inflated by $500,000 needed to defend the MacPherson oil lawsuit.
Total Cost Attributable to Bars	5,227,000

Per our tabulations, the bar scene brings City coffers less than one quarter of what it costs to maintain - an annual subsidy of $3,982,000 flowing from the rest of the town.  Those recurring subsidies may explain why Hermosa doesn't have some of the amenities enjoyed by other well-off towns.






The City's 2007-2008 adopted budget is available at HermosaBudget2007-2008.pdf
The staff report associated with the adoption of the 2007-2008 budget is available at
http://www.hermosabch.org/departments/cityclerk/agenmin/cca20070612/5a(1).pdf