During the meeting, Mayor Judy Thein offered an explanation of the city's current financial condition that put a great deal of blame on past city leaders and which credited current City Administrator Dale Neiman with, in Thein's view, finally putting the city on the right path.
The matter came at the end of a four hour and 15 minute meeting, the first several hours of which had largely been devoted to code enforcement matters.
Neiman's report on the midyear budget was a bleak one, asking the council for direction on looking into possible bankruptcy measures should the city's revenues fall any further.
“We have a very serious cash flow problem with the city's operational funds,” Neiman said.
The operational funds could have negative balances of $429,000 by the end of the fiscal year, which will come June 30, he said.
Special revenue funds can't be used for the city's operational expenses, because Neiman said it will lead the city into a hole from which it can't dig out.
He said the city has made many difficult decisions over the past three years, including eliminating 30 percent of its staff positions, and eliminating or reducing services.
That means that not much, if anything, now is left to cut. Neiman said they could cut his position, shut down park restrooms and take other last-ditch measures to eliminate expenses.
“In my professional opinion, if we can't generate additional revenues, I think the future of the city looks pretty grim,” he said.
He offered a rundown of city services that was the same as he offered during a Jan. 7 meeting on the proposed Lowe's shopping center project at the city's Pearce Field airport property on Highway 53.
The city has gone from five to six police officers per patrol shift several years ago to one to two today, while at the same time experiencing a 15-percent call volume increase to the city's police department, he said.
A pavement management study estimated that over the next five years 62 percent of the city's residential streets with some form of paving will revert to dirt, and Neiman said an increased amount of flooding can be expected because of an aging and undersized city sewer and drainage system.
Neiman said the city has two major problems – lack of revenue and operational costs higher than other cities of similar size.
He asked for council direction on how to proceed, including looking at the possibility of filing for bankruptcy.
“I don't know much, if anything, about bankruptcy, but we should evaluate it,” Neiman said.
He also suggested the city consider what portions of its jurisdiction that could be detached and given back to the county in order to reduce service costs.
Other cost-cutting measures Neiman proposed included freezing vacant positions whenever possible and putting off the payment of whatever bills they can. A $50,000 grant the police department received, which was going to be used for equipment, now is proposed to be used for salaries.
Neiman said when he started working on the midyear budget review Feb. 2, he went home for lunch and his wife told him that his face was white.
Thein, herself a former city employee of 21 years in the finance department, said many people are asking how the city got into its current situation, and she wanted to offer a brief summary of the city's history, beginning with incorporation in 1980.
She said the city had faced a similar fiscal crisis in 1984, and said poor management led to numerous layoffs.
They had several more changes in city administration, but there was never any clear direction “out of the woods,” Thein explained.
The city seemed to work more or less. “We just got by,” she said.
In the past, city administrators didn't seem to understand redevelopment, which didn't do what it was meant to – bring the city financial prosperity, Thein said.
She said the city's troubles deepened in the late 1990s under new city management, which she said concealed the city's true situation. Redevelopment funds were used to pay general fund expenses, and those redevelopment housing funds had to be repaid.
That matter was a huge blow to redevelopment, said Thein.
“We were juggling. That's all we were doing,” she said, with the city robbing Peter to pay Paul. “We seemed to be spinning out of control and we were living a lie.”
She said the city's management team lacked experience and education at that time, but a stable economy disguised the problems.
Another change in city administration occurred in 2005, and the city brought in an interim administrator, Thein recounted.
Thein didn't name the officials, but at this point she was referring to David Lane, who left the city in 2005, and interim City Administrator Robert Van Nort, who was brought in to succeed him.
“He quickly realized we were in deep trouble,” she said of Van Nort, noting that he saw the city's revenues were stagnant and the expenses out of control.
Another city administrator was hired – again not named by Thein, but which was Kathy Kivley based on the chronology – and after Kivley left Van Nort returned.
Neiman, who was hired in 2007, has the experience and knowledge to lead the city, Thein said.
When Neiman arrived, the city held a workshop open to the public to help chart the city's future, but she said no one from the public attended. Part of what came out of that workshop was to develop the airport property.
Now the city's administration is attempting to pick up the remnants and move forward, Thein said.
“We as a community need to build together,” she said, asking for members of the public to come forward and offer suggestions.
City resident Estella Creel said Thein's words were a “nice and touching speech,” but she criticized the city's shopping center plan, which she said is a failure.
Thein asked Creel why she had changed her mind about the plan, which she said Creel had supported at one time. She read from an article quoting Creel – who ran for city council in 2008 – supporting bringing in big box stores like Lowe's.
Creel said she wasn't against big boxes and noted that Home Depot – once considered a possibility to come into the airport development as the anchor tenant – has cheaper prices than Lowe's. She also said the city has enough fast food restaurants.
Walter Cole, a member of the Konocti County Water District Board, asked how they could expect to bring a multibillion dollar company like Lowe's to Lake County, with a population of 65,000, and expect it to be profitable and draw from surrounding communities.
“I suspect there's some pie in the sky that got in the way here, guys,” said Cole, who has lived in the county for 50 years. “We've got to work within the reality of this county.”
Another community member, Mike Dunlap, said they need to define what the community wants from its government. He said government is supposed to provide some services people can't get on their own, such as streets, lighting and stormwater facilities.
He suggested community members may have to start going out and cleaning up parks themselves.
If the city wants more tourism, he said they need to give people a reason to come there, including good restaurants and facilities. Dunlap said the city has no public marina or dock facilities currently.
Councilman Roy Simons disagreed with Dunlap that it was the city's responsibility to provide streets. Dunlap countered that the city can require infrastructure be put in place for development.
Neiman said streets in other areas have been paid for through assessment districts. Currently the city is maintaining 115 miles of streets with four people. “It's impossible. It will never happen.”
Simons said there was a time when Clearlake was alive, but local business didn't keep up with competition. He said the only available industry for Clearlake is tourism, and Dunlap agreed.
Dorothy Myers said her family moved to the Clearlake area in the 1950s, and when the county had jurisdiction over the area she said it was in great condition.
The airport should have been made into an industrial park where jobs could have been created, said Myers, who suggested Clearlake wasn't ready to be a city.
Rick Mayo, an area resident of almost 32 years, said the city has “champagne dreams but is working on a beer pocketbook.”
Mayo, who said he didn't know how much money it would take to make the city salvageable, adding that the community has been through nothing but pain since incorporation.
He suggested the council should give up his health benefits and Neiman could work for less money.
The council told Neiman to proceed with looking at the bankruptcy option.
Councilman Curt Giambruno suggested they should pursue all possible avenues, not just bankruptcy or detaching portions of the city.
“The economy is taking a dump and we're right in the middle of it,” Giambruno said.
E-mail Elizabeth Larson at
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