SECTION 8. Effective Date. This Ordinance shall take effect thirty (30) days after its final passage.
SECTION 9. Certification. The City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same to be published or posted in the manner required by law.
PASSED, APPROVED AND ADOPTED this day of, , 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Dale Reynolds, Mayor
ATTEST:
Mallory Crecelius, City Clerk
APPROVED AS TO FORM:
Brittany E. Roberto, City Attorney
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CONTINUED
BUSINESS
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THAT'S FIRST
CITY OF BLYTHE
Blythe CITY COUNCIL MEETING
STAFF REPORT
MEETING DATE: August 9, 2022
SUBJECT: Emergency Sewer Repairs at Hobsonway and Lovekin Blvd.
PRESENTED BY: Mallory Crecelius, Interim City Manager
PREPARED BY: Mallory Crecelius, Interim City Manager
RECOMMENDATION: It is recommended Council review the emergency action in place for he collapsed sewer line at Hobsonway and Lovekin Blvd. It is further recommended Council, b 4/5 vote, determine there is a need to continue the emergency repairs FISCAL IMPACT: Costs incurred to date include $548,433.39 for the sewer and manhole relocation, replacement of the 8-inch water line, insertion of three Insta-valves, demolition of old concrete encountered under the roadway, replacement of the storm drain repair of the Frontier fiber optic cable vault and construction management services provided by the Holt Group. This does not include the cost of the street repair
BACKGROUND: In early February, Public Works was notified of a sewer back up at Sure Stay Motel located at the corner of Hobsonway and Lovekin. Crews believed there was a breach in the line and worked to determine its location. Due to the size of the line, no local operators had the equipment necessary to camera the line to determine the location. Crews set up temporary measures to keep the line flowing, and closed Hobsonway as a precaution until the repair could be made.
On February 18, 2022, CV Pipeline was able to camera the line and determined the line was collapsed on the north and south sides of the sewer manhole.
Per Section 2.66.070 of the Blythe Municipal Code and the City's Purchasing Policy, in cases of emergency, the Council, after making a finding, based on substantial evidence clearly stated in the meeting minutes, that the emergency will not allow for a delay resulting from a competitive solicitation for bids, and that the action is necessary to respond to the emergency, may by a four- fifths vote of the Council, repair or replace a public facility, take any directly related and immediate action required by that emergency, and procure the necessary equipment, services, and supplies for those purposes without giving notice for bids to let contracts.
Due to the extent of the collapse and its repair, the location of the pipe in a main City corridor as well as its location to highly trafficked fiber optic lines, Council took action at the February 23, 2022 Special Meeting to deem the repairs an emergency and, by a four-fifths (4/5) vote of the Council, made the required finding that the emergency would not allow for a delay resulting from a competitive solicitation for bids, and that the action was necessary to respond to the emergency.
Per Public Contract Code section 22050(c)(1), the City Council is required to review the emergency action at its next regularly scheduled meeting and at every regularly scheduled meeting thereafter until the action is terminated, to determine, by a four-fifths (4/5) vote, that -251-
there is a need to continue the action. Council is required to terminate the action at the earliest possible date that conditions warrant, so the remainder of the work may be completed by giving notice for bids.
The Blythe City Council determined there was a need to continue the emergency at the March 8, 2022, April 12, 2022, May 10, 2022, June 14, 2022 and July 12, 2022 Council meetings.
STAFF REPORT: The Holt Group provided a design for the relocation of the manhole and collapsed sewer line. Staff entered into an agreement with Radco, Inc. the week of April 4* to relocate the collapsed sewer line and manhole. Project materials were received and Radco, Inc. mobilized on May 3, 2022. During construction several unforeseen issues in the project area were encountered, causing additional work to complete the project.
The project initially included the relocation of the sewer line and manhole and compaction and repair of the street damage caused from the initial sewer line break. The project now consists of the sewer line and manhole relocation, installation of an 8-inch replacement water line, repair of a collapsed storm water drain and repair of frontier's fiber optic cable vault along with the necessary roadway repairs so that the street may safely re-open to traffic.
As of the writing of this staff report, 99.5% percent of the project is complete. The only outian ing item is coating of the sanitary sewer manhole which the contractor will inish in the As repairs from the sewer emergency are ongoing, staff recommends that the City Council determine, by four-fifths (4/5) vote, that there is a need to continue the emergency sewer repairs at Hobsonway and Lovekin Blvd.
ATTACHMENTS: None
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NEW BUSINESS
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TORTES TAST
CITY OF BLYTHE
Blythe CITY COUNCIL MEETING
STAFF REPORT
MEETING DATE: August 9, 2022
SUBJECT: September's City Council Meeting Schedule
PRESENTED BY: Mallory Crecelius, Interim City Manager
PREPARED BY: Mallory Crecelius, Interim City Manager
RECOMMENDATION: It is recommended Council go dark on Tuesday, September 13, 2022 and hold the September City Council Meeting on September 27, 2022, the fourth Tuesday of the month.
FISCAL IMPACT: None.
BACKGROUND: Per the Blythe Municipal Code, regular meetings of the Blythe City Council are held on the second and fourth Tuesday of each month. For several years Council has held one Council meeting on the second Tuesday of every month. Council goes dark for the meeting scheduled for the fourth Tuesday. The City must hold at least one regularly scheduled meeting each month.
STAFF REPORT: The Interim City Manager was selected to be a panelist during the "Making Rural Communities Competitive" session at the League of California Cities Annual Conference in Long Beach September 7-9, 2022. The panel discussion will be moderated by Retail Strategies and includes Interim City Manager Crecelius as well as City Managers from Clearlake and Fortuna.
As the conference lands during the time staff would typically prepare the Agenda for regularly scheduled meeting in September, staff requests the meeting instead be held on the fourth Tuesday of September.
ATTACHMENTS: None
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TAINS HIRE CITY OF BLYTHE
Blythe CITY COUNCIL MEETING
STAFF REPORT
CLERSHED
MEETING DATE: August 9, 2022
SUBJECT: Response to the 2021-2022 Grand Jury Report
PRESENTED BY: Mallory Crecelius, Interim City Manager
PREPARED BY: Mallory Crecelius, Interim City Manager
RECOMMENDATION: It is recommended Council approve the response to the 2021-2022 Grand Jury Report entitled City of Blythe is Dying, in substantially the form as attached and in such final form as approved by the Interim City Manager and authorize the Mayor to execute the response, and direct staff to submit the response as required.
FISCAL IMPACT: None.
BACKGROUND: The Riverside County Civil Grand Jury is the self-described "watchdog" for the cities and county government agencies within the County. As such, the Grand Jury is known to prepare reports on various topics. These reports typically include findings and recommendations and the agencies involved are required by statute to respond within ninety (90) days from issuance.
STAFF REPORT: On June 7, 2022, the Riverside County Civil Grand Jury issued a report to the City of Blythe. The report was made public at the close of business on June 10, 2022. The report included nine findings and two recommendations related to the City's management and financial position. Pursuant to California Penal Code Section 933.05, the draft response includes statements that the City either agrees or wholly or partially disagrees with each finding and details any actions taken or that may be taken to implement the recommendations outlined by the Civil Grand Jury.
The draft response also includes the City's position that the Civil Grand Jury report was prepared with little research to confirm the statements made about various topics including the City's financial position, population, and revenue, which they used to inappropriately declare the "City of Blythe is Dying".
The City's response highlights some of the positive things occurring in the City, including the 21 projects in various stages of the development process and work the City has done to attract new retail businesses to Blythe. It also reflects a more accurate portrayal of the City's financial position and details new services being provided such as the Homeless Outreach Team, Graffiti Abatement Program and Blight Abatement Program along with increased spending on public safety and public works. The City's draft response further details work that has been done with the State of California and Chamber of Commerce to make Blythe the Gateway to California and attract more tourism to the City.
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Contrary to the unfounded conclusion that "Blythe is Dying , Blythe is growing. The City Council, City management, and community leaders and partners are working to rebuild the City in a fiscally conservative better.
ATTACHMENTS:
1. Draft City Response to the Riverside County Grand Jury 2021-2022 Grand Jury Report
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Blythe CITY OF BLYTHE
235 North Broadway • Blythe, California 92225
Phone (760) 922-6161 • Fax 760-922-4938
TABLISHED
September 2, 2022
The Honorable John M. Monterosso, Presiding Judge
Superior Court of California, County of Riverside
4050 Main Street
Riverside, CA 92501
Riverside County Grand Jury
P.O. Box 829
Riverside, CA 92502
Riverside County Clerk-Recorder
2720 Gateway Drive
Riverside, CA 92507
Re: City of Blythe Response to 2021-2022 Riverside County Grand Jury Report Entitled "City of Blythe is Dying"
Dear Judge Monterosso:
The City of Blythe ("City") is in receipt of the 2021-2022 Riverside County Grand Jury Report entitled "City of Blythe is Dying" (the "Report"), provided to the City on June 7, 2022 and released to the public after the close of business on June 10, 2022.
In accordance with California Penal Code Sections 933 and 933.05, enclosed is the City's response to each of the findings and recommendations included in the Report. The Blythe City Council approved the enclosed response on August 9, 2022.
The City of Blythe appreciates the opportunity to comment on the findings and recommendations of the Grand Jury. Further, in accordance with California Penal Code Section 929, the Blythe City Council respectfully requests all of the evidentiary material, findings, and other information relied upon by, or presented to, the Grand Jury for its final report in its investigation of the City, as it is clear no information was obtained from the City to draw these conclusions.
Sincerely,
Dale Reynolds, Mayor
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City of Blythe's Responses to Riverside County Grand Jury's Findings and Recommendations
Grand Jury Findings:
F1. Blythe's completely isolated location in the middle of a desert stifles its growth and makes it unattractive to new sources of badly needed investment.
City's Response: The City partially agrees with this finding. The distance from Blythe and the rest of Riverside County is a challenge. County personnel and services are lacking in has substantially hindered Blythe's growth and potential. State laws, such as California's Short-Lived Climate Pollutant Reduction law (SB 1383) as an example, place unfunded mandates that are costly for small, rural communities like Blythe to comply with.
However, the City believes the focus of the Report should have been the unique position Blythe is in, being in the middle of everywhere. Caltrans estimates eleven million passenger vehicles travel through Blythe annually. The City is working on several projects to capture this market through development of the Colorado River, making Blythe the Gateway to California and providing amenities to travelers. Blythe is also within driving distance of four major metropolitan areas across three states. With an increase in online shopping, Blythe is in an excellent location to be a distribution hub for the Phoenix, Las Vegas, San Diego, and Los Angeles metro areas as well as the Coachella Valley. In addition, with the State of California's push for zero-emission vehicles, Blythe is the common sense stop for vehicle charging stations between Phoenix and the ports within the Los Angeles areas. With wide open spaces, Blythe has an opportunity to capture this new market as the State aims to have 100 percent of in-State sales of new passenger trucks and cars be zero-emission by 2035.
The City also believes the Report's finding should have referenced how Riverside County can better serve the residents of Blythe and the Palo Verde Valley, an underserved community lacking the resources its other cities and communities are privileged to. Due to the distance between Blythe and the rest of eastern Riverside County, County services routinely stop at the "hill," so it takes longer and costs more for Blythe residents to access the services provided elsewhere in the County. For example, the County has considered closing the County-operated Animal Shelter that supports the City of Blythe as well as the Palo Verde Valley for several years. The City and County recently came to an agreement to transfer the shelter from the County to the City over the next three years. The City stepped up to save the shelter from closure, which would have resulted in animals being transported 100+ miles to the Coachella Valley in extreme temperatures. This is another example of how the City and its residents are overburdened with the cost of services that should be provided by the County and State. The Report also states the Grand Jury spoke to one County Supervisor. The City would like to hear what the Board of Supervisors plan -258-
is to better support Blythe and the Palo Verde Valley to bring in new resources and badly needed investment.
F2. There is no coordinated effort searching for overlooked county, state, or federal grant opportunities.
City's Response: The City wholly disagrees with this finding. The City actively searches for and applies for Federal, State and County grant opportunities. In the last year alone, the City received $500,000 in Federal funding to replace much needed water infrastructure.
This grant funding was pursued by City staff and supported by Congressman Ruiz, the Coachella Valley Association of Governments and elected and community officials before it was appropriated in the current Federal budget. City staff is also currently pursuing additional grant funding for water infrastructure upgrades through the State Water Resources Control Board's Disadvantaged Communities program.
In addition to the Federal funding, the City, in partnership with Palo Verde Valley Transit Agency (PVVTA), applied for a grant from the Clean California Local Grant Program, which is State funding to beautify and improve public spaces and infrastructure. The City and PVVTA were awarded $2.9 million to make improvements throughout the City, including park improvements, bus stop improvements and improvements to the City's 2018 (Proposition 68) monies used to enhance three City parks. City staff applied for and received $28,000 in State funding to help with the implementation of an SB 1383 recycling program. The City also applied for and received $60,000 in State funding to update the City's Housing Element. In addition to these recent grant awards to the City, the City previously used grant funding from Cal Recycle to abate blighted property in the City and has used various grant funding opportunities focused on reducing carbon emissions to replace several fleet vehicles, including a fire truck.
The Blythe Fire Department and Blythe Police Department are also taking steps to apply for State and Federal grant opportunities and make the City more competitive for such opportunities. For example, the Blythe Fire Department recently implemented an automated reporting system. This program will provide call statistics, which will make the City more competitive in FEMA and other Fire-related grant opportunities. City staff plans to apply for these grants to purchase equipment for the Fire Department. Further, the Police Department applied for and received roughly $300,000 from the Department of Justice to purchase and install a Computer Aided Dispatch (CAD) System in the Dispatch Center of the Police Department. The Police Department also applied for and received a grant for investigative equipment through the Bureau of Justice Assistance Southwest Border Rural Law Enforcement Assistance Program. In addition, the City Council recently authorized the Police Department to join the Riverside County Post-Release Accountability and Compliance Team (PACT), which will provide AB 109 funding to pay for a Police Officer position along with vehicle and equipment. Police Department staff also applied for but was not awarded funding from the Law Enforcement Mental Health and Wellness Act. The City recently applied for and received a notification of grant award of $150,500 from the California for All Animals program to support Animal Control's field services and the -259-
City's Spay/Neuter Program. These grants are in addition to annual grant allocations through programs such as the Department of Justice for bullet proof vests, overtime for special police projects, and County and State programs for abandoned vehicles, graffit and blight abatement. The City can use these funds for public safety, which frees up general funds to be used for other purposes.
The City also annually applies for Community Development Block Grant (CDBG) funding. This is Federal funding administered by the County of Riverside for cooperating cities such as Blythe. The City has used CDBG funding to enhance City parks with much needed amenities, such as the Splash Pad at Todd Park, installation of playground equipment at Appleby Park, Miller Park and Todd Park, shade structures at Quechan Park and restroom amenities at Appleby Park, Miller Park, Quechan Park and Todd Park.
F3. Blythe has been dealing with deficits to its Operating Fund for nine years and must increase its sustainable revenue base to maintain minimum levels of City services.
Grand Jury is referring to the City's General Fund as the "Operating Fund" for the City.
Since 2016, the City has not had a deficit in its General Fund. From 2008 through 2015, the City worked tirelessly to eradicate deficits in several City funds inherited from a previous administration dating back to the 1990s. The City continues to improve the inancial health of the City year over year. The table below, taken from the City's audite inancial statements, reflects the progress made in the City's General Fund over the past nine years.
General Fund
Fiscal Year: Fund Balance:
2012 (2,360,255)
2013 (1,148,121)
2014 (1,559,174)
2015 (295,449)
2016 299,242
2017 609,965
2018 1,220,525
2019 1,739,996
2020 2,085,063
2021 3,879,348
The City agrees there is continued work to be done to further the financial health of the City, but disagrees with the finding that we need to increase revenues to maintain minimum addition to the $1.8 million currently received annually in Bradley-Burns sales tax revenue. -260-
The City believes it has taken every step possible to raise revenue through tax measures and enhancing the revenue base through development.
The City's sales, property and transient occupancy tax (TOT) revenue have steadily increased over the past five years. As reflected in the below table, TOT tax revenue continues to grow, even through the global COVID-19 pandemic whereas other cities were experiencing a decline in TOT revenue from 30-50%. In Blythe, revenue continues to increase as people looking to get out of big cities have rediscover Blythe as a jewel in the desert.
Transient Occupancy Tax
Fiscal Year: Revenue Received:
2018 $1.06 million
2019 $1.21 million
2020 $1.22 million
2021 $1.48 million
2022 $1.68 million
In terms of services provided, since 2009, the City has maintained service levels while chipping away at a $3.4 million General Fund deficit. Now that the General Fund is in a healthier position, the City can increase service levels. Last year, the City created the Homeless Outreach Team (HOT), which designated Police Department staff to homeless outreach efforts. The City also started a graffiti abatement program and has funded blight abatement efforts in the City. Last year, the City also spent $2 million to update Fire Department vehicles. This year, the City added positions in the Police Department as well as additional Public Works Department staff and funded the City Manager position.
F4. One-time windfalls, such as funding from county, state and federal programs, will benefit Blythe in the short run but will not solve long-term issues.
City's Response: The City wholly disagrees with the finding. Although one-time windfalls such as COVID-19 relief funding will help with one-time expenditures, freeing up other City revenue to be used for other purposes, the City does not expect it to solve any long- term problems. The City does not use these funds to support ongoing operations, so there is no concer of unfunded expenditures when this funding is no longer available. As stated above, the City has already taken the actions necessary to address the City's long-term financial problems, which will be resolved with or without "one-time windfalls" F5. Serious questions continue to arise as to whether Blythe can remain as a "going- concern".
City's Response: The City wholly disagrees with the finding. -261-
The City's General Fund has improved over the last few years including having a positive change in fund balance of approximately $1.8 million and an unassigned fund balance of $689,370, which was one of the issues related to the going concern. The City has also reduced liabilities in other funds such as the Golf Course Enterprise Fund to lower its negative fund balance.
However, based on the disclosures in the latest financial statements (Fiscal Year ending June 30, 2021) and discussions with the City's auditors, the City has other situations causing the going concern, which the City is working to address. These other situations include a negative unrestricted net position of $20 million for Governmental Activities and negative unrestricted net position of $2 million for business-type activities. This is largely due to pension liability and other post-employment benefits as well as depreciation. To alleviate the going concern, the City is currently building its General Fund reserve, transferring available funds to cover other funds with negative fund balances as was done in 2022 to remove the deficit in the Golf Course Fund. Although audited financial statements for FY 2021/22, year ending June 30, 2022, will not be available until later this year, the City anticipates another year of positive gains and growing General Fund reserves.
The City is working to address its financial issues, but it does take time, finding resources, trying to address them individually and building a reserve in the General Fund to cover any future losses in the General Fund or other funds. In the current fiscal year, the City took steps to further reduce the City's pension liabilities by paying it down over the next ten years. This is a big and positive step in removing the going concern and building the financial health of the City.
Financial highlights from the City's 2021 audited financial statements included the City's total net position increased $346,068 and the City's governmental funds reported combined fund balances of $7,274,146, an increase of $1,731,532. At the end of the fiscal year, unrestricted fund balance for the General Fund was $2,284.956 or 31% of General Fund expenditures, showing the progress the City has made to eradicate fund deficits, build reserves and remove the going concern from the City's audited financial statements.
F6. Blythe officials have not yet produced a strategic long-term financial plan for the City's survival.
City's Response: The City wholly disagrees with this finding. The City implemented a plan in 2008 to reduce expenditures and live within its means, producing balanced budgets year over year for the fire til posiven a decade The cy ancial healt The was a slow process, but the goal was attained. Now that the General Fund is no longer in a deficit position, and has healthy reserves, the City has focused on rebuilding the City in a fiscally conservative manner.
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F7. Internal biases and civic pride have created challenges to accepting external input and ideas.
City's Response: The City wholly disagrees with this finding. The City does not believe community pride is a negative. City leaders, staff and residents are passionate about their community, as the Grand Jury discovered, and as is evident to anyone visiting our City.
However, this "pride" does not mean the City is closed off to new input or ideas. It is quite the opposite. The City Council is active in the Coachella Valley Association of Governments, Riverside County Transportation Commission and the League of California Cities, to name a few. The Interim City Manager was selected to be a panelist during a session at the League's 2022 Annual Conference in September. City staff routinely researches processes in other, comparable cities to ensure the City's policies and procedures are not overburdensome and align with what other developers or residents may experience in other cities.
The City hires consultants from out of the area to help with various projects. The Police Department requested that the Commission of Peace Officer Standards and Training (POST) conduct an operation audit of the Blythe Police Department for ideas on how services could be enhanced for residents. City management asked for assistance through HUD's Distressed Cities Program for assistance with homelessness, blight abatement and economic development. Staff has been working with Rural Local Initiatives Support Corporation (LISC) over this past year on these topics. The City also hosts an annual Economic Outlook Conference inviting all regional and City partners to discuss ideas over a few days each April. Members of various committees of the Grand Jury have participated in these conferences for many years. In addition to the City's efforts, the City's partners, such as the Blythe Chamber of Commerce, have spent a great deal of time working with other Chambers and promoting Blythe. Except for the current Interim City Manager, the past four City Managers dating back to the early 1990s were non-Blythe residents. If the City was unable to accept external input and ideas, it would not hire "outsiders" to lead the City.
F8. In the opinion of the Grand Jury a great need exists for a visionary leader with proven experience dealing with distressed cities to guide Blythe away from potential insolvency.
City's Response: The City wholly disagrees with this finding. For the past five years, the City Council, Interim City Manager and City staff have advanced the fiscal position of the City, moving the City farther and farther away from potential insolvency. The Interim City Manager was responsible for the adoption and implementation of the City's commercial cannabis program and helped the City successfully adopt a tax on commercial cannabis businesses. The Interim City Manager was also instrumental in the passage of Measure K, a 1% local sales tax for the City of Blythe, which has resulted in additional annual revenue of approximately $3 million. These actions will provide new and much needed revenue streams for the City. Now that the City is in a more stable fiscal position, the Interim City Manager has focused on development, working to streamline the City's development process. The City also contracted with Retail Strategies, a national expert in recruiting -263-
businesses on behalf of communities, to attract new retail businesses to Blythe. The Interim City Manager has worked closely with the Retail Strategies team to bring new business ventures to the City. The Interim City Manager is continuously working to rebuild the City in a fiscally conservative manner by increasing revenue and working to attract tourism and business development.
F9. The Grand Jury did not find that disincorporation is an option that should be considered part of any strategic plan for the foreseeable future.
City's Response: The City agrees with this finding.
Grand Jury Recommendations:
R1. The Grand Jury concurs with many of the State Auditor's recommendations, especially the need that a permanent City Manager be hired. The current Interim City Manager splits her time as City Clerk and has performed both positions admirably under difficult conditions. However, Blythe is facing as existential threat that screams for a full-time permanent City Manager with proven turnaround skills and experience. The recruitment effort should be completed no later than December 31, 2022 in order to allow time for creation of a new strategic plan prior to the Fiscal Year 2023-2024 budget process. Expected cost $200k-$300k.
City's Response: This recommendation has not been implemented; but will be implemented in the future. Prior to the Grand Jury's report being issued, the City Council directed staff to fund a City Manager position in the FY 2022/23 budget. The budget was adopted on June 14, 2022 and included funding for a City Manager. However, with an election a few months away and three seats up for election, it is more prudent to start the recruitment after a new City Council is seated. This will allow the newly comprised City Council to have input in the process and who is ultimately selected for the position should it not be the Interim City Manager. The City anticipates the City Council will provide direction regarding the recruitment of the permanent City Manager in early 2023, with a permanent City Manager selected by June 30, 2023.
The City agrees that the Interim City Manager has performed admirably under the conditions, doing more with less for the last five years. The Interim City Manager has provided stability in the City Manager position, as the past two City Managers served in the position for less than two years. She has been successful in the position longer than the past three permanent City Managers hired. The Interim City Manager has a Master of Business Administration with a focus in Management and 17 years of municipal government experience. The City has been fortunate to have her. As the City was not in a financial position to fund a full-time City Manager, Mrs. Crecelius has been an instrumental part of the advancement of this City. The City was already on a path forward when Mrs. Crecelius was placed in the position, but she has advanced the goals of the City Council to be fiscally sound, reduce deficits and build reserves, all of which have been accomplished under her tenure.
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As stated in the Report, the City needs to raise revenue to provide basic services. Also, under the Grand Jury's estimate, the cost of a City Manager would be $200,000 to $300,000 per year. Under this assumption, the Interim City Manager has saved the City anywhere between $1 million and $1.5 million over the past five years by serving as Interim City Manager. That is funding the City was able to use in other areas of the City, to support services and eradicate the City's deficit position and build surplus funds. This does not include savings from the other positions the Interim City Manager has assumed at various times throughout her tenure as Interim City Manager to fill staffing voids.
R2. Blythe should aggressively explore all new potential sources of revenue including government and non-profit organization grants. The cost for this important function could be revenue neutral through the new grants obtained. It should be included in the collateral duties of the City Clerk or Finance Director by December 31, 2022.
City's Response: The recommendation has been implemented as indicated in this response. Had the Grand Jury requested any information or documentation related to what the City is and has been doing, they would have discovered the City has aggressively pursued all revenues available to the City at the Federal, State and County levels. Also, the City Clerk is an elected position. It is not a staffed position in which management may assign "collateral duties". Had the Grand Jury researched the City's structure, they would have discovered the City Clerk and City Treasurer positions are elected by the voters. As such, the City Manager cannot assign duties outside of the office they were elected to serve in.
Conclusion
It is the opinion of the City that the Grand Jury had their minds made up about the City and what would be included in this Report before they stepped foot in Blythe or spoke to any City or community officials. It is our understanding that everyone the Grand Jury met with acknowledged the City's challenges, but had nothing but positive things to say about the work the City had done to improve the condition of the City both financially and aesthetically. Nobody is in denial as stated in the Report. We acknowledge the problem and the work ahead, but also choose to focus on the positive accomplishments made as we continue to build Blythe back to what it once was.
The Report is full of half-truths and misleading information that the City will take this opportunity to address and clarify.
Title of Report
The Grand Jury selected "Blythe is Dying" for the title of the Report when in April 2022 the Interim City Manager's State of the City address for the 2022 Palo Verde Valley Economic Outlook Conference was "Blythe IS Growing". This address included information supporting a growing market with over 150 new City Business Licenses issued in 2021 and eight new business store fronts opening in 2021. In addition to growing revenue, the cannabis market continues to expand and the City is experiencing continued economic growth in that area. There are 21 projects in various stages of the development process. This includes cannabis, quick serve restaurants, a fitness center, child development centers, health centers, RV park and storage facility and a hotel. -265-
Blythe is in fact a market ripe for opportunity and investment, a much different picture than what was painted by the Report.
Population Changes
To further iterate that "Blythe is Dying", the Grand Jury states the City's population has decreased
19.5%, whereas Riverside County has experienced a population growth of 8.5% over the past decade. The City's population includes the incarcerated population of two State prisons. Blythe routinely uses two population counts: with and without inmates. Due to realignment and the State's early release of thousands of inmates, the number of incarcerated persons at the City's prisons has decreased. The Report currently reflects a population count of 5,000 incarcerated persons, when that number has been as high as 8,000. When the decrease in incarcerated persons is taken into account, the number of residents residing in the City had a modest increase. It is projected the City's population will continue to grow at a rate of 2% through 2026. That is much different than the 19.5% decrease outlined in the Report. The table below reflects population growth rates of surrounding cities over the past decade. At a growth rate of 1-2%, Blythe is growing at a similar rate as other desert cities.
Population Growth 2010-2020
City: Population Change:
Banning - 3%
Blythe 1%
Calexico .2%
Cathedral City .6%
Coachella 3%
El Centro 3.5%
Needles 2.7%
Palm Springs .1%
Yuma 2.7%
State Auditor's Report
The Report references an "alarming" report issued by the State in March 2021. Although the State Auditor's report was issued in 2021, it focused on financial information from 2016-2019. As previously stated, the City has made great improvements to its financial position since 2016. The City has implemented or completed most of the State Auditor's recommendations, and the completed recommendations have done nothing to change or enhance the City's financial position.
The City believes it is time that these "watch dog" organizations be part of the solution. Instead, they continue to tell us things that we already know, with little insight as to how it can be fixed outside of what is already being done by the hardworking members of the City. The Grand Jury acknowledged the City is in need of investment and economic activity, but it appears they did not consider the consequences of issuing a damaging report to a city that has struggled to rebuild. If a potential developer considering investing in Blythe comes across the Grand Jury's Report that the City is "dying", that developer may take the Report on its face and reconsider such investment. If -266-
the Grand Jury really wanted to help, they would have prepared a report acknowledging the work that has been done, the challenges that remain and the steps the City can take to better Blythe in the future.
Staffing Reductions
The Report incorrectly states that in 2006, City government recognized the peril caused by dwindling City revenues and began a painful program to reduce expenditures and reduced full- time positions from 130 to 69. In fact, the City did not begin the process until 2008 when the City hired David Lane to succeed former City Manager Les Nelson. The peril was caused by a mix of declining revenues and the City overspending and banking on revenue that never materialized in the late 1990s and early 2000s. The City was not living within its means until 2008. Between 2008 and 2009, the City laid off 30% of its full-time staff of 100 full-time positions. The City never had 130 full-time employees.
City Expenditures
The Report also references that City expenditures have exceeded revenues for six of the last nine years and accumulated for a loss of over $7.5 million. The City's FY 2020/21 audited financial statements reflect the City had a positive change in fund balance from 2015 to present. Without further information as to how the Grand Jury came to this conclusion, it is hard to provide further comment. However, the City believes what the Grand Jury is referring to is a change in net position, which accounts for activities within all City funds. This would include annual changes in the City's unfunded liabilities related to pension and other post-employment benefit obligations.
Challenges Faced by the City
The Report notes factors starting in the 1970s that have led to a decline in the City. The first factor noted was the development of Interstate 10 in the 70s allowing travelers to bypass Blythe's downtown. This was followed by promises made by the State of California in the 1980s when building two State prisons that never materialized. In the 1990s, the fallowing program was implemented by Metropolitan Water District. The fallowing program had a ripple effect that some estimates place as much as $30 million in revenue the community lost. The City has navigated these challenges and continued provide services to residents even when revenues and economic activity have declined through no fault of the City and its management.
Tax Revenues
The Report indicates that in Fiscal Year 2019-20, the City's residents paid $1 million in taxes to the County, and the County expended $3.3 million on services to Blythe. What appears to have been left out is the fact that the County has to provide services to the unincorporated areas surrounding Blythe regardless of what is provided to Blythe residents. The property tax figures also do not appear to include property taxes paid from the unincorporated areas surrounding Blythe, which include the Mesa, Ripley, and thousands of acres of farmed lands and commercial enterprises that remit considerable amounts of property taxes to the County. The City believes the numbers cited in the Report do not reflect the whole story and give the perception that the City is -267-
receiving more services than it is paying for. Also not included in these figures are the sales tax dollars the County receives from the City and unincorporated areas, which would be used to provide services to our residents.
The Report continually references stagnant property taxes. However, home prices continue to increase. Values are back to pre-recession levels, which has translated to an increase in property tax revenue. In 2021, there was a 20.78% change in the median home price and the City experienced a net taxable value increase of 3.6%. The assessed value increase between FY 2020/21 and FY 2021/22 was $33 million. That increase accounted for growth of 19%. These numbers clearly do not align with statements made about stagnant property values or a community in decline. HDL, the City's consultant for property tax revenue, stated in its 2021/22 Property Tax Summary the median sale price of a detached single family residential home in Blythe between January through November was $207,750. This represents a $35,750 increase in median sale price from 2020.
The Grand Jury references sales tax revenues that are drying up as residents either leave, travel to distant cities or are forced to shop online. The City has experienced modest increases in the City's Bradley-Burns sales tax revenue from $1.7 million received in FY 2019/2020 to a forecasted revenue in the current fiscal year of $1.9 million. This is in addition to the Measure K revenue of $3 million. Initial projections for Measure K were $1.1 to $1.4 million. Actual revenue has more than doubled what was initially projected. As noted previously, residents are not leaving, and Blythe has a projected population increase of 2% through 2026, whereas the State of California had a .3% decline in population between 2021 and 2022. It should be noted that part of the sales tax revenue received comes from an allocation from the Countywide pool for online purchases made by Blythe residents. However, Blythe is working to attract a number of retailers to curb leakage and keep sales local.
Great Recession
Not noted in the report was the Great Recession of the 2000s, which was the worst economic collapse seen since the Great Depression. Even during the recession, the City was able to reduce its deficits and enhance its financial position. During the recession, the State did a number of things that negatively impacted cities, such as the dissolution of Redevelopment Agencies. This took funding away from cities such as Blythe. This funding had been used since the 1990s to address blight and provide incentives for new development and funding for affordable housing and City infrastructure. The loss of the Redevelopment Agency greatly impacted City's ability to improve infrastructure and provide incentives to attract new business development. As the City's financial position continues to improve, we are now investing in these programs again using City revenue.
As previously stated, the City of Blythe appreciates the opportunity to comment on the findings and recommendations of the Grand Jury. The City Council also requests all of the evidentiary material, findings, and other information relied upon by, or presented to, the Grand Jury for its final report in its investigation of the City, as the City believes the conclusions drawn by the Grand Jury were not based on information obtained from or provided by the City. -268-
O F
UNT RIVERSI
Co
MAY 9, 1893 RIVERSIDE COUNTY GRAND JURY
(951) 955-8990 OFFICE • (951) 955-8989 FAX
June 7, 2022
Blythe City Council
235 N. Broadway
Blythe, Ca. 92225
Subject: 2021-2022 Grand Jury Report: City of Blythe is Dying Dear Clerk of the Board:
Please note that Penal Code Section 933 et seq. specifies that you file a response with the following agencies within ninety days.
John M. Monterosso, Presiding Judge
Superior Court of California, County of Riverside
4050 Main Street
Riverside, CA 92501
Riverside County Grand Jury Riverside County Clerk-Recorder Post Office Box 829 2720 Gateway Drive
Riverside, CA 92502 Riverside, CA 92507
Further, it specifies that this report be kept confidential for a minimum of two working days prior to public release. The contents of this report will be made public after the close of business June 10, 2022.
Sincerely,
Nancy Gibilterra, Foreperson
2021-2022 Riverside County Civil Grand Jury
P.O. Box 829 - Riverside, California 92502
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City in Peril
Blythe is Dying
Riverside County
Blythe
Summary
Blythe is dying.
An isolated city of 18,000 residents, including about 5,000 inmates at two State Prisons, Blythe is located in Riverside County at the California/Arizona border. For most of the last century Blythe was a farming community supplying fruits, vegetables and other crops across the Southwest. The city and its people prospered.
However, the fortunes of the community have changed dramatically over the past two decades.
Family farms are mostly gone, businesses have left, vacant homes and buildings scar the streets.
City tax revenues are stagnant or falling and the younger population, with few opportunities for growth and success, have fled west to the Coachella Valley or east to the expanding suburbs of Phoenix, Arizona.
Many State Prison employees, city staff and other government workers assigned to Blythe have chosen to live elsewhere and make long commutes rather than reside in a city with limited shopping and entertainment opportunities, low-rated schools and rising crime.
In the past decade, while Riverside County's population has grown 8.5 percent, Blythe's (non- inmate population) has fallen 19.5 percent.
The Riverside County Civil Grand Jury 2021-2022 (Grand Jury) is tasked to be the "watchdog" for the cities and county government agencies that serve the county. 1 -270-
The Grand Jury was alarmed by several recent reports, including a March 2021 analysis by the California State Auditor entitled "City of Blythe.... Inadequate Planning and Other Ineffective Management Practices Hinder Its Ability to Provide Needed Services to its Residents." The State Auditor ranks Blythe as 3rd worst of California's 470 cities for their financial health.
In 2021 the City's own independent audit report of finances expressed substantial doubt about Blythe's ability to continue as a "going concern." The independent audit has issued similar alarms for the past decade.
The Grand Jury began its investigation in the fall of 2021. Members traveled to Blythe and met with city officials and staff, along with leading community members and stakeholders. The Grand Jury found hard-working people who care deeply for their community, but most city officials are in denial about the future Blythe faces.
The city council and staff work hard to "keep the lights on" and "pay the bills" but none offered a long-term plan for the future of Blythe and well-being of the residents.
However, the first step in dealing with any problem is to recognize that you have one.
In this report the Grand Jury offers its findings and several recommendations to address the deteriorating situation in Blythe. The Grand Jury agrees with many of the State Auditor's recommendations, especially the need for Blythe to hire a full-time city manager with proven turnaround skills.
Ultimately it will be up to the Blythe City Council, and the people of the City, to determine the future of their community.
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Background
Geography
Blythe is an isolated city of 27.3 square miles on the far eastern border of Riverside County where California meets Arizona. "It is an agricultural area, part of the Colorado Desert along the Colorado River, located approximately 224 miles east of Los Angeles and 150 miles west of Phoenix, Ariz! The closest cities are: Yuma, Ariz. (85 miles), Indio, Calif. (95 miles), Riverside, Calif. (172 miles) and Las Vegas, Nev. (200 miles).
Blythe Past
In 1877 Thomas Blythe, a San Francisco financier, established primary water rights to Colorado River water for over 40,000 acres. His estate changed hands several times before becoming part of the present Palo Verde Irrigation District (PVID). ' By 1916 easy access to an almost unlimited amount of water at minimal cost had facilitated a strong enough agricultural and livestock economy for the 1,622 residents to vote to incorporate the City of Blythe. The farmers and ranchers of Blythe thrived for several decades by producing fruit and vegetable crops, cattle feeds, cotton and livestock.
In its early years, the only roadway from southern California to Phoenix (US 60/70) ran right through Hobson Way, Blythe's main street. Travelers would need to stock up on supplies, repair their vehicles, and often spent the night in Blythe. Until 1928, when the first automobile bridge was built, the Colorado River could only be crossed by ferry.! The Glory Years
The 1940s, 50s, and 60s were the glory years for Blythe. Longtime residents fondly remember shopping locally on Hobson Way. The city boasted three theaters, a drive-in movie, a JCPenney and a K-Mart. The community was small, but close-knit, with several churches and dozens of community service organizations.
The Times They Are a-Changin'
In 1972 Federal Interstate 10 (1-10) opened greatly facilitating travel and commerce between California and all points east. However, the new freeway bypassed Hobson Way and downtown Blythe.
The local economy started shrinking. The original ranching and farming families were aging.
Second and third generations were selling the family farms, often with water rights, to larger corporate farms which could use modern technology to reduce the need for large numbers of farm workers.
Businesses were leaving the City and were not being replaced. New people were not moving in as older residents moved out to growing cities throughout California and Arizona. Attracting new residents to Blythe was a difficult task as a low-rated school system," minimal health care options and lack of new housing developments discouraged new economic growth. 3 -272-
In the late 1980's a spark of economic opportunity presented itself when the State of California opened two state prisons in Blythe. Hundreds of high-paying correctional officer jobs would be needed to accommodate the over 5,000 inmates housed in the prisons. Initially, the economy did in fact receive a much-needed boost. However, City officials stated that many of the officers (50-70%) and their families chose to live elsewhere, such as Indio, and commute long distances rather than reside in Blythe. The economic benefits that the prisons promised were only partially realized by the residents of Blythe, City officials told the Grand Jury.
In 1997 the Metropolitan Water Company began testing a fallowing program which pays tarmers to leave portions of their fields unplanted to conserve water. " A boon for farmers and water conservation, the negative economic impact continues to be felt in Blythe as fewer farm workers are needed. The need for fertilizer, tractors and other farm supplies are reduced for the fallowed fields.
Blythe in the 21s* Century
• By 2006 the City government recognized the peril caused by dwindling City revenues and began a painful program to reduce expenditures in its $42 million budget. Full time positions were reduced from 130 to 69 over the next few years.! • In 2008, Blythe, along with most cities, suffered the impact of the Great Recession and the population continued to decline."
• In 2009 railroad service was abandoned leaving Blythe with tracks going nowhere. 20• Voters rejected Measure H to increase the Transit Occupancy Tax (T.O.T.) to 13.0 percent. 25
• In 2014 the City explored medical marijuana as a potential revenue source. Voters rejected an increase to the sales tax and, again, rejected an increase to the T.O.T. 26 • In 2017 K-Mart closed leaving the City with sales tax revenue shortfalls and the residents without a local source for basic necessities.
Blythe Present Day
Blythe today has not been able to reverse the slow continual decline that has been decades in the making. It suffers the effects of a city that cannot generate sufficient revenues to provide basic city services for the well-being of its residents. Today visitors to Hobson Way see numerous boarded up storefronts and "for lease" signs. Multiple fast food restaurants line the off-ramp streets from I-10. Abandoned buildings, homes, and eyesores are common.
What visitors do not see is the limited police presence, the deferred maintenance of infrastructure, the increasing numbers of the homeless, the exodus of population and the stagnant property values. Health care options are minimal, schools are not highly rated, and new housing developments are non-existent.
The City government has attempted to create a turnaround of Blythe's misfortunes. Over the years it has reduced the City's full-time employees by 45%, sold surplus city assets, outsourced the City golf course and deferred infrastructure maintenance. Several department heads now wear multiple hats including the Interim City Manager who also serves as the City Clerk. The -273-
Chief Building Official is also responsible for code enforcement, building inspections and serves as the Fire Marshal. For the most part, these efforts have not succeeded.
The City's expenditures have exceeded revenues for six of the last nine years for an accumulated loss of over $7.5 million.' In 2020 the voters were once again asked to increase the City sales tax and T.O.T. This time the voters agreed.?
Blythe's population continued to decline. The 2020 census put Blythe's population at 18,317, a figure that includes approximately 5,000 inmates residing in the two state prisons. In the past decade (2012-2022), while Riverside County's population has grown 8.5 percent, Blythe's (non- inmate) population has fallen 19.5 percent, according to the California Department of Finance."° If Thomas Blythe had not obtained the primary water rights in 1877 Blythe would have suffered the same fate as other desert ghost towns such as Ehrenburg, Ariz. approximately 4 miles across the Colorado River.
Why this report?
In 2019 the California State Auditor Dashboard ranked Blythe as the 3rd worst of 470 California cities based on their financial health. '3
In March of 2021 the California State Auditor issued a scathing report entitled "City of Blythe.. Inadequate Planning and Other Ineffective Management Practices Hinder Its Ability to Provide Needed Services to Its Residents". The report designated Blythe as a "High Risk" city.
Among the State Auditor's findings were:
"Blythe's Financial Stability Remains Uncertain Even With Recent Improvements.
Blythe must address Deficits in Its Enterprise Funds as Well as Unmet Safety and Infrastructure Needs.
• The City Needs More Efficient Management Practices to Improve Its Financial Stabilit and Its Ability to Provide Services to Residents. "
California cities retain independent outside auditing firms to review their finances and to report the results. Blythe's most recent city auditor report, dated December 2021, covered fiscal year 2020-2021 and raised "substantial doubt about the city's ability to continue as a going concern."6 The outside auditor has made similar warnings for the previous 10 years as well.
These two reports drew the attention of the Grand Jury, who then chose to investigate Blythe's response to the alarming red flags in these reports. It is a unique situation in Riverside County, perhaps in all of California, for a city to be shrinking and in danger of financial distress or even insolvency. The Grand Jury sought to learn how the city plans to adapt to the new reality.
Methodology
To determine the City's response to the State Auditor's report of March 2021, the Grand Jury reviewed "City of Blythe, Corrective Action Plan, Response to State Auditor "' The first 5 -274-
"Response to State Auditor" was dated May 2021 and a follow-up response was dated September 2021.
Grand Jury interviews were conducted with all five City Council Members, the Interim City Manager, Finance Director, City Attorney, Police Chief, and Chief Building Official to determine their visions of Blythe's future.
To better understand the community, visits were made by Grand Jury members to the Riverside County Sheriff's Department at the Blythe jail, the Riverside County Probation Office in Blythe, the Palo Verde Unified School District, Riverside County Behavioral Health Clinic, Palo Verde Transit Agency, Riverside County Department of Social Services in Blythe, Palo Verde Library, and the Riverside County Animal Shelter in Blythe. In addition, the Grand Jury met with the Blythe Chamber of Commerce, Riverside County Local Agency Formation Commission (LAFCO) and a Riverside County Supervisor.
Discussion
Blythe future
Blythe's fortunes are the result of the march of time as it bypasses this geographically isolated island in the desert.
Due to its remote location, surrounded by 100 miles of desert in each direction, Blythe must create its own economic activity if it is to continue as a "going concern". It has an exceptionally heavy burden for the well-being of its' residents as there are no surrounding cities which can provide jobs, new housing, entertainment, or other quality of life items. This responsibility falls squarely on the shoulders of the Blythe City Council.
All cities depend on tax revenues to provide the funding for basic city services such as police and fire departments, roads, water and sewage, infrastructure, and the salaries of city employees.
Revenues are generally obtained through a combination of property, sales, and tourist taxes.
When city expenditures exceed revenues, the city falls into a short-term deficit until sufficient revenues can once again be obtained to make up for the deficit. Traditionally, cities find ways to reduce their expenditures to make up for revenue shortfalls. Very few opportunities exist for Blythe to further reduce expenditures.
Blythe officials have tried, but have been unable, to increase revenues on a consistent basis.
Property taxes are stagnant and few new homes or commercial developments are being built or contemplated to reverse the downward trend. Sales taxes generated by local retail stores are drying up as more and more residents either leave, travel to distant cities, or are forced to shop online for basic necessities. The City sales tax rate increase, approved in 2020, is yet another financial burden to Blythe's residents.
The first step to address Blythe's financial issue is for the City to recognize that there is a problem. During our investigation City officials minimized their current financial situation and quickly pointed out the various actions taken during the past few years to reduce expenditures. 6 -275-
The two new tax increases were frequently mentioned as proactive future revenue sources. In the opinion of the Grand Jury no other sources to significantly improve the City's revenues for the long-term were presented.
Revenue increases are the lifeblood of any city. Property taxes, based on real estate values, are the most stable method to ensure a revenue stream for many years into the future. New housing brings new families, new demand for goods and services, and new job opportunities to a community.
City services are maintained or improved when revenues are rising. When those revenues are flat, cities are forced to cut essential services. Blythe has been experiencing declining revenues for several years. City services have been cut to the bone as part of a "keep the lights on" budget. The Code Enforcement Department is overwhelmed with over 400 open complaints currently on file and only two employees. There is minimal effort searching for overlooked county, state or federal grants. Eyesores from vacant houses and abandoned buildings dot the city. Infrastructure maintenance has been delayed and the sewer system is crumbling. In short, City residents are suffering from the lack of funding to provide essential services.
The Grand Jury interviewed City officials to learn their plan for addressing the monumental task of turning Blythe around. Several aspirational ideas were floated, such as attracting a logistic center, a giant cannabis cultivation complex, a theme park vacation destination for Colorado River visitors, or a tribal casino. These ideas, and more, have been thoroughly explored, aggressively pursued, and found to be unfeasible by City Councils during the last 20 years. The fountain of new revenue ideas has likely run dry. The prevalent vision was "we're just trying to keep the lights on", or "we're operating month to month" or "we're trying to dig out of a hole." None of the officials expressed a turnaround plan or a realistic assessment of the City's long- term future.
The realistic vision for Blythe is the continuation of declining or stagnant revenues. The California State Auditor and the contracted City auditor are raising the alarm and questioning whether Blythe can continue as a "going concern." Most City officials dismissed the alarm and preferred to envision a brighter future where revenues increase, reserves are built, and City services restored.
City officials in Blythe have deep roots in this small city. They are well known, respected citizens and have been deeply intertwined into the social fabric of the community for decades.
None of thein want to face their friends and neighbors and explain that Blythe is failing. The Grand Jury found hard-working people who care deeply for their community, but most City officials are in serious denial about the future Blythe faces.
The City is failing. The agrarian economy that supported Blythe for decades now consists of international farming companies and a dwindling number of family farms. Blythe is competing with cities throughout the southwest to attract jobs, housing, industry and recreation. It cannot win this competition as Blythe's remote location and limited amenities discourage businesses and families from relocating there. Blythe is also competing with all the other cities in Riverside County for county, state and federal funding. For a small city, Blythe has been receiving a 7 -276-
disproportional amount of service dollars from the county. For the Fiscal Year 2019-20 Blythe's taxes contributed $1.0 million to the County's general fund. In return the County provided $3.3 million of services to Blythe.l
Blythe needs a visionary leader with a long-term strategic plan and the power to execute it. The plan should support the quest for greater revenues and should be realistic about the future of a shrinking Blythe. What steps will Blythe take if revenue does not grow but drops 10%, 20%, 30% in the coming years? What reserves are needed to survive a downturn of the economy, or a sudden economic emergency caused by a potential prison closure, or lawsuit judgment? Can Blythe continue as a "going concern" after a significant exodus of the population? What will that population look like in the coming years when 25% '° of the population already lives in poverty? Is there a plan to avoid or sidestep insolvency?
This Grand Jury does not believe that such a visionary leader exists in Blythe today. Civic pride and an underlying distrust of outsiders hampers efforts by well-meaning persons to be heard by those in charge. The City Council disagreed with the two alarming audits but chose to act upon some State Auditor recommendations. However, Blythe continues to remain in the State Auditor's "High Risk" category.
Where might such a visionary be found? Some potential sources:
1. Permanent City Manager. Among the recommendations by the State Auditor was that the City "should begin the process for hiring a permanent City Manager. "S The City has responded saying that it "does not agree and is confident in the abilities of the Interim City Manager. The recruitment of a permanent City Manager will occur when appropriate by the Blythe City Council" 3 A permanent City Manager with knowledge and experience with distressed cities could create the strategic plan needed to avoid or sidestep potential bankruptcy. Importantly, the City Manager, with the Council's backing, could implement some of the difficult steps that may be needed for survival.
2. Municipal law firms with demonstrated experience dealing with distressed cities. "Lessons from the San Bernardino Bankruptcy for City Attorneys" recommended:
• Cities should fully understand the nature of their financial problems and take whatever steps possible to address them, as early as practicable. • At an early juncture, a troubled city should hire experienced bankruptcy counsel and financial consultants, a process that will likely involve the city attorney.
The Grand Jury was not presented with any evidence that the City's contracted law firm was providing financial advice to the City.
3. Third party turnaround specialists. To improve Blythe's financial condition turnaround specialists can bring much to a city that lacks the necessary financial experience, fails to adapt to changing market conditions or may be hampered with internal biases. Often, the specialist will bring experience dealing with distressed municipal governments. 8 -277-
4. The Government Finance Officers Association, the California Society of Municipal Financial Officers, and other associations are available to provide expert assistance to distressed cities.
The financial survival of the City of Blythe for the foreseeable (5 years) future may not yet be in grave jeopardy but the long-term (5-20 years) future is. As long as there is an almost unlimited supply of inexpensive water, the agriculture businesses in Blythe will continue to thrive even while the population and the non-farm economy continues to decline. Absent the City's ability to affect a financial turnaround, the residents of Blythe will be faced with even greater reductions of City services and greater increases of City taxes to fund their government. Should the financial distress lead to municipal bankruptcy, it is questionable whether Blythe could successfully emerge as other cities have done. If it does not emerge, the City's debts could potentially be passed on to Blythe's property owners.
The community of Blythe is very passionate about supporting each other. The Elks Lodge, Lions Club and many other service organizations hold dinners or fundraisers for the local community.
The Chamber of Commerce functions as a booster for local businesses. This year the entire community turned out to cheer the Palo Verde High School Yellow Jackets football team for an outstanding season. Even the prison associations donate funds for recreational activities in Blythe. The residents are the heartbeat of Blythe. They deserve more from their City officials.
They need to understand what Blythe will look like for future generations.
The unthinkable option: Disincorporation
The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 provides the "sole and exclusive authority and procedure" for the disincorporation of a California city. The disincorporation of a city, which several officials mentioned in their interviews with the Grand Jury, is an extremely rare and complex process that, if completed, would result in the absorption of a city by a county or larger entity.
No city in California has disincorporated since Cabazon in 1972 and Hornitos in 1973. Never has a disincorporation involved a California city as large or complex as Blythe. The Grand Jury does not propose disincorporation for Blythe but it remains a possibility in the future. In the opinion of the Grand Jury, Blythe may be the only city in Riverside County that could possibly demonstrate the need for disincorporation.
The process is extremely lengthy, complex and expensive involving petitions, deadlines, meetings, studies and reviews by LAFCO. It entails the unravelling of a city's debts and assets, likely court challenges, and finally, a vote by the citizens to disincorporate.
In the highly unlikely event that the disincorporation process was successful the following would change:
• Blythe's official status would change from the City of Blythe to the Unincorporated Community of Blythe.
• The City government would be dissolved and all government functions would be managed by the County of Riverside.
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• City assets would be transferred to the County and all debts would be assumed by the County.
• City services would be determined by the County.
What would not change?
• All Special Districts would remain unchanged as they are not part of city government. • Palo Verde Unified School District
• Palo Verde College
• Palo Verde Transit Agency
• Palo Verde Library District
• Palo Verde Health Care District
• Palo Verde Cemetery District
The unincorporated community of Blythe would join the other 40 unincorporated communities within Riverside County.
Findings
F1: Blythe's completely isolated location in the middle of a desert stifles its growth and makes it unattractive to new sources of badly needed investment.
F2: There is no coordinated effort searching for overlooked county, state, or federal grant opportunities.
F3: Blythe has been dealing with deficits to its Operating Fund for nine years and must increase its sustainable revenue base to maintain minimum levels of City services.
F4: One-time windfalls, such as funding from county, state and federal programs, will benefit Blythe in the short run but will not solve long-term issues.
F5: Serious questions continue to arise as to whether Blythe can remain as a "going concern." F6: Blythe officials have not yet produced a strategic long-term financial plan for the City's survival.
F7: Internal biases and civic pride have created challenges to accepting external input and ideas.
F8: In the opinion of the Grand Jury a great need exists for a visionary leader with proven experience dealing with distressed cities to guide Blythe away from potential insolvency.
F9: The Grand Jury did not find that disincorporation is an option that should be considered part of any strategic plan for the foreseeable future.
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Recommendations
R1: The Grand Jury concurs with many of the State Auditor's recommendations, especially the need that a permanent City Manager be hired. The current Interim City Manager splits her time as City Clerk and has performed both positions admirably under difficult conditions. However, Blythe is facing an existential threat that screams for a full-time permanent City Manager with proven turnaround skills and experience. The recruitment effort should be completed no later than December 31, 2022 in order to allow time for creation of a new strategic plan prior to the Fiscal Year 2023-2024 budget process. Expected cost $200k - $300k. (F6) (F8) R2: Blythe should aggressively explore all new potential sources of revenue including government and non-profit organization grants. The cost for this important function could be revenue neutral through the new grants obtained. It should be included in the collateral duties of the City Clerk or Finance Director by December 31, 2022. (F1, F2, F3, F4, F5) Required Responses:
Blythe City Council (F1, F2, F3, F4, F5, F6, F7, F8, F9) (R1, R2)
REFERENCES
1. Wikipedia, Blythe California, accessed April 14, 2022 from: Blythe, California - Wikipedia
2. California State Auditor "City of Blythe, Inadequate Planning and Other Ineffective Management Practices Hinder Its Ability to Provide Needed Services to Its Residents". Published March 2021. Accessed April 14, 2022 from: State Auditor Report
3. City of Blythe "Corrective Action Plan, Response to State Auditor's Report 2020- 802" published May 20, 2021. Accessed April 14, 2022 from: State Auditor Report
4. City of Blythe "Corrective Action Plan, Response to State Auditor's Report 2020- 802" update published September 23, 2021. Accessed April 14, 2022 from: State Auditor Report
Blythe Centennial Historical Magazine, compiled by Blythe Centennial Historical Committee. May 2016
6. Independent Auditor's Report. Teaman, Ramirez & Smith Inc. Years ending June 30, 2010 - June 30, 2021. Accessed April 14, 2022 from:
Document Center • Blythe • CivicEngage (ca.gov)
7. "Municipal Disincorporation in California" John H. Knox and Chris Hutchinson, 2010, Accessed April 14, 2022 from: Municipal Disincorporation in California
8. "Voluntary Municipal Disincorporation: Creative Solutions for Counties of the Second Class" by Aaron Lever, published by University of Pittsburg Institute of Politics, 2017. Accessed April 14, 2022 from: Voluntary Municipal Disincorporation Institute of Politics | University of Pittsburgh
9. "When Recovery Fails: State Intervention and Local Government Bankruptcy" Government Finance Officers Association, published June 19, 2020. Accessed on April 14, 2022 from: www.gfoa.org/FFA
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10. California Department of Finance demographics. Accessed April 14, 2022 from:
https://dof.ca.gov/forecasting/demographics
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13. "Most fiscally Challenged Cities in California" R. Plevin, Palm Springs Desert Sun, October 25, 2019
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15. City of Blythe City Council Meeting - Staff Report, July 29, 2014 accessed April 14, 2022 from: Blythe City Council July 29, 2014
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25. Ballotpedia, accessed April 14, 2022 from: City of Blythe Hotel Tax, Measure H (November 2009) - Ballotpedia
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27. Ballotpedia, accessed April 14 2022 from: Blythe, California, Measure K, Sales Tax (May 2020) - Ballotpedia
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