Water bill error cited in new debt
Ryan Hagen, Staff Writer
Posted: 05/23/2011 05:02:54 PM PDT

GRAND TERRACE – County auditors report that the city owes more than $2 million to the San Bernardino Valley Municipal Water District, worsening an already precarious budget and possibly imperiling efforts to sell bonds for city projects.

In fiscal years 2008-2009 and 2009-2010, the office of the county auditor, controller and treasurer used the wrong formula to calculate the amount owed by two redevelopment agencies, including Grand Terrace’s, that were created before 1989, according Matt Brown, spokesman for the county office.

The other agency that should have had its apportionment computed differently – the Inland Valley Development Agency – owes more than $6.5 million to the water district, according to county records.

“Ultimately, it was human error,” Brown said. “Obviously, we accept responsibility.”

Brown said county staff had been shuffled and an additional supervisor assigned to prevent such oversights in the future, and re-checking entries confirmed that the error only involved the two redevelopment agencies during those two years.

That leaves Grand Terrace to negotiate a repayment schedule for its newly discovered nearly $2.3 million debt, even as the city struggles to close a deficit in its general fund of roughly $50,000 and growing – equal to about 10percent of that fund.

The payment won’t come out of Grand Terrace’s general fund – the Redevelopment Agency is a separate city-controlled entity – but it further limits options for a city that is scheduled to review a plan at tonight’s City Council meeting that recommends severe cuts.

Most of the city’s redevelopment revenues were committed to projects early this year, a tactic council members described at the time as a prudent move in light of Gov. Jerry Brown’s plans to disestablish California’s redevelopment agencies and honor only existing debts as part of his efforts to balance the state budget.

The status of that plan, which many in the state Legislature opposed, is still undecided.

Worse, according to Mayor Walt Stanckiewitz, is that the error was announced just before the city planned to issue up to $29million in bonds to finance public infrastructure improvements.

“The timing was really bad,” Stanckiewitz said. “We’re trying to put together a bond offering and this pops up, which we had to make public.”

Generally, investors demand higher rates on bonds when cities have higher debts. That means less money in the city’s pocket.

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