Orange City Council members are scrambling to avoid economic ruin after consultants tasked with assessing their financial future bluntly warned them they’d be bankrupt in three years if they don’t make radical changes.
“It’s time we finally put a stake through the heart of the Orange way. This is clearly not working,” Mayor Dan Slater candidly said at their Aug. 12 meeting.
“I’m going to officially propose tonight that we roll out the new Orange and and we’ve got to do several things, but first and foremost, the thing we can address immediately is making our city much more business friendly and attracting growth and development.”
[Read: Orange On Track for Bankruptcy in Three Years Without ‘Radical’ Change]
Their first course of action is to try and make the historic city more friendly to developers to attract new business after consultants told them they have garnered a reputation as a “closed for business” town.
Last Tuesday, a majority of city council members directed staff to craft and bring back an ordinance to dial back the city’s design review committee responsibilities for approving development designs in an effort to make the city more business friendly to developers.
The shifting strategy comes after consultants with Grant Thornton warned the city would be over $40 million in debt by 2031 and recommended they rein in spending, implement a sales tax increase – something that failed at the ballot box last year – and bring in new business.
At the Aug. 12 meeting, a couple of council members pushed back on the accuracy of the report.
Councilwoman Arianna Barrios said the council shouldn’t rush into anything and that the numbers in the consultant’s report might not be accurate.
“What has come up just in the last couple of hours, is that those numbers that were in there were erroneous and I don’t want to be deciding major things if we have bad information, if what was in that report is at all contested by our staff,” she said at the meeting.
“I just want to make sure that we’re working off legitimate numbers. There are a lot of cuts that need to be made, and I don’t want them to be so severe that we killed the patient.”
Barrios added that the city should hold a community workshop to discuss the report and how to implement recommendations
In July, Councilman John Gyllenhammer pushed back on the consultants warning that the city was a few years away from bankruptcy.
Last week, he doubled down on those remarks.
“When this report was given, there was a statement made three years till bankruptcy. I think we’re going to find that that’s not correct and I think specifically some of the numbers that they’re operating on have some assumptions built in that aren’t reasonable to what is actually more realistically going to happen,” said Gyllenhammer, who attended the meeting by teleconference.
He also said a main part of the problem is they increased full time staffing by 100 people ahead of the pandemic and gave “equity bumps.”
“There was a steep increase in expenses and significantly outpaced our revenue growth. This does not get solved unless we bring our run rate or total head count closer or back in line and I think a really deep look at organizational effectiveness is going to be at the heart of the solve here,” he said.
Shawn Stewart, a principal with Grant Thornton, did not respond to a request for comment Thursday.
In July, he publicly disagreed with Gyllenhammer, telling him “at a certain point you either have to determine I’m going to believe my finance function, I’m going to believe an objective, outside CPA firm, or I’m going to hold to my own assumptions.”
Making a Historic City More Business Friendly
Last Tuesday, a majority of city council members directed staff to prepare an ordinance to shift some of the city’s design review committee’s responsibility for approving development and sign designs to city staff.
Under the expected ordinance, the committee would still be responsible for approving designs for development projects involving historic properties and projects in a historic district.
The direction comes after Grant Thornton consultants told elected officials the city is not considered business friendly by developers because of onerous requirements from the design review committee.
It also comes as elected officials are considering replacing the committee entirely with a historic preservation committee.
Councilwoman Kathy Tavoularis said pulling back the committee’s review power was something she has been pushing for since before the Grant Thornton report.
“I think that’s been sort of a stop gap in businesses finding Orange to be difficult because we have an extra hoop for them,” she said.
Councilman Jon Dumitru agreed.
“There is absolutely no reason the DRC should hang up a project in the industrial zones of Orange for years,” he said. “We have to signal to the business community that the constraints that have been handcuffing new businesses from coming here is changing.”
Slater said the committee has been running smoothly for the past couple of years and hasn’t held up the project but its existence is a “real turnoff to developers.”
Maryanne Skorpanich, chair of the design review committee, suggested the council put a moratorium on the committee reviewing nonhistoric projects – an idea Barrios supported and pushed for unsuccessfully.
Other Ideas For Preventing Bankruptcy
Dumitru called on staff to put together an inventory of all unoccupied and undeveloped properties in the city and reach out to groups like the Orange County Business Council to try and encourage new businesses to come to Orange.
He also called for the full consultant report and city staff’s own analysis to be added to the city’s website.
“This goes back to the idea of transparency. I think it’s real important that while we’re talking about the financial issues that are affecting the city. Anything we get that’s data related should be available to the public to look, criticize or praise,” Dumitru said.
He also called on his fellow council members to consider allowing at least a couple of marijuana dispensaries to open up shop in the college town.
“There is sales tax revenue that we’re giving away to Santa Ana, because people just go there to buy their marijuana, and we can get sales tax revenue and fees for licensing through both of those.”
Hosam Elattar is a Voice of OC reporter. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.