Results shock local staffs; official calls report flawed, ‘irresponsible’
RENE RAY DE LA CRUZ
Posted Dec. 26, 2014 @ 5:28 pm
Updated Dec 26, 2014 at 5:33 PM
HESPERIA — Staff members at one financially stable local municipality were shaking their heads in disbelief after a recent report ranked their city as one of the most likely to file bankruptcy.
In the recently released California’s Most Financially Stressed Cities and Counties report card, the California Policy Center ranked Hesperia in the 25th spot, with a .40 percent chance of default out of 492 California municipalities surveyed.
Meanwhile, the study ranked cash-strapped Adelanto as financially stable.
Despite a $2.6 million budget deficit and thoughts of bankruptcy, the survey placed Adelanto at number 414, with a .01 percent chance of default.
Hesperia Assistant City Manager Brian Johnson told the Daily Press that the policy center’s report seemed flawed and is “irresponsible,” especially if it hinders developers and businesses from coming to town.
“If they used financial figures from 2013, Hesperia had a major fiscal drop in its general fund balance,” Johnson said. “That figure would put a dent in our budget. But if they looked closer, they would have found that we expensed millions of dollars to purchase the water rights for Rancho Las Flores.”
After a financial investigation of the city’s budget and CPC survey, Johnson’s initial observation was correct.
Casey Brooksher, senior financial analyst for Hesperia, said the policy center used information obtained from fiscal year 2012-13, the year that the city purchased 5,971 acre-feet of permanent water rights for $30 million, which was not properly accounted for in the CPC study.
“Factoring out the permanent water rights purchase, which is a revenue generating asset, the city should have expected a ranking of roughly 336 out of 492 cities and counties,” Brooksher said.
The permanent water rights were held by Rancho Las Flores LLC., according to a document from the Mojave Water Agency.
Barstow, with its 0.00 percent chance of default, ranked 455 on the list, which made it the strongest city financially in the High Desert, according to the list. Victorville ranked 48 with a .32 percent chance of insolvency, and Apple Valley ranked 410 with a .02 chance of bankruptcy.
“We understand, and as the California Policy Center suggests, a review of different metrics may produce different results,” said Mark Puckett, assistant town manager for Apple Valley.
Puckett said it was “pleasing to note that the cities” of Beverly Hills, Newport Beach, Palo Alto, Berkeley and Huntington Beach had a much higher chance of default in 2014 than Apple Valley.
Puckett also noted that the cities he mentioned have all traditionally been “triple A” rated by creditors — the highest rating given to public agencies.
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