Fact Check

 

City Council Don’t Mislead Voters!

The City Council claims there may be unintended consequences from Measure A that will negatively affect city services and cost the local economy. They warn of delayed public work projects, and lack of maintenance for aging infrastructure.

 

Facts:

The City’s Annual Comprehensive Financial Report (ACFR page 22) for year ending June 30, 2021 shows La Quinta to be well financed and very healthy.

  • AFCR states the City has $163million of “unrestricted net funds that may be used to meet ongoing obligations”.

  • AFCR states the City has “unassigned general fund balance of $24million”.

  • N4N public records request shows City revenues from all sources is running +28% ahead of 2021/2022 and +26% of 2022/2023 budget forecast. 

  • AFCR 10-year budget forecast shows cash surplus to increase by $80million over ten years resulting in a $140million total cash surplus.

  • Measure G tax passed by La Quinta voters in 2016 to fund fire and capital improvement projects has outperformed its projections every year and produces ~$3-5million annual surpluses each of the last six years.

 

So, What Changed? Why the Warnings?

Last month, La Quinta City Council produced a study session 10-year financial scenario based on YES on Measure A passing.

As expected, the study session is one-sided, focusing on the loss of tax and business revenue, with no mention of the revenue that would be gained for the city, schools, and local businesses by having more full-time residents.

In order to overstate expenditures and understate revenues, the City Council chooses to include these assumptions:

  • All sources of revenue are budgeted -11% lower than actual 3-year trend even though they know those very revenues are running +28% now. Why? This artificially lowers and suppresses revenue estimates below current levels for many of the forecasted years.

  • Reduction in sales tax revenue of ~ $1.5 million per year in outlying budget years due to Measure A by taking the Tourist Economic report at its word. This is misleading. The TEC is an un-audited commercial tourism report using factors which applies to major international cities.

  • No offsetting GDP or tax revenue growth from families or seasonal renters occupying these former STVR homes. Why? Are they going to remain empty?

  • No offsetting economic benefit to La Quinta GDP or city TOT revenue attributed to LQ resorts and hotels gaining larger share of tourism.

  • No accounting for growth in STVRs in Tourist Commercial zones. La Quinta has unrealized STVR housing that will grow to replace STVRs in residential neighborhoods. 

  • In order to force budget deficits, the city added $70million of non-approved capital spending. This is four times higher than previous year trends.

 

Just weeks after approving the audited 10-year forecast, the city in publishing their study session scenarios, projected an entirely different view of the future, presumably to defeat Measure A.

 

Neighbors for Neighborhoods had its own professional consultant team analyze the 10-year projections prepared by the city. Our team prepared several scenarios using the city’s numbers with a more “realistic” set of assumptions using city numbers and in EVERY case the city will have more than enough revenues and reserves to weather Measure A. Read N4N CPA's analysis presented to City Council

FACT CHECK ON IT’S ALL ABOUT THE MONEY

  • 10-year City Budget Forecast shows an increasing cash reserve even with reduced STVR permits

  • City has $101M (June 30, 2021) Discretionary Cash Reserve

  • Over 1000 Housing Units will be available in Exempt Areas by January 2025

  • Will 80% of STVR renters suddenly stop visiting La Quinta January 2025?

 

10-Year Budget Forecast Analysis  

  • Reference 10 year budget forecast documents below

  • City is financially very healthy.  

  • Measure A will not change on-going growth of cash reserves. 

  • Police and Fire service expenditures fully burdened will be maintained at the current levels.   

  • Finance Advisory Commission 10-year budget forecast (February 23, 2022 correcting Measure G growth projection) with 100% loss of residential STVR TOT and sales tax increases cash reserve by $60M

  • Finance Advisory Commission 10-year budget forecast (February 23, 2022 correcting Measure G growth projection) only 590 exempt area STVRs 50% loss of STVR TOT (an extremely conservative estimate – demand will be much higher) adds $81M to cash reserve

 

City currently has $101M cash reserve (June 30, 2021) 

  • Reference Cash Reserves June 30, 2021 document below

  • Table shows budget line items with discretionary cash reserves totaling $101M.   

  • 10-year budget forecast shows Measure A will continue to grow cash reserves 

 

Over 1000 STVRs in Exempt Areas by January 2025 

  • Reference Exempt STVR Areas document below

  • Tourist demand to visit La Quinta will not be impacted by Measure A.  

  • Table shows 1015 housing units in exempt areas by January 2025

  • There will be more than enough homes and investors to meet tourist demand for STVRs

 

STVR January 2025 demand will decrease by 80%.  

  • Based on city and independent consultant forecasting no increase in exempt areas STVR growth to offset the phase out of STVRs in residential communities.  

  • City and independent consultant did not apply supply and demand analytics to assess measure A impact on future tourism

  • Morgan Stanley study shows Measure A will have no impact on Tourism

  • In fact, Measure A will grow Tourism by increasing the number of "seasonal" rentals in residential neighborhoods in addition to transitioning and adding STVRs in exempt areas.  

 

Don’t be fooled Measure A is not about money, it is about enforcing existing zoning regulations, saving our residential neighborhoods, restoring home safety, increasing the housing supply, reducing rents, increasing school attendance, and continuing La Quinta’s heritage as a city of families.

Fact Check - Budget Analysis 
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