By: David Danelski / Staff Writer | Original Article at pe.com
Just two years ago, then-Beaumont Mayor Roger Berg trumpeted the community’s phenomenal growth as a success story.
The mountain pass town, at the junction of Highway 60 and Interstate 10 in Riverside County, had seen its population more than triple since 2003 to 40,000. Pastures and fields turned into housing tracts with tile roofs as it became a favorite place for developers to pull permits.
The city had planned for such growth, and it brought prosperity, as well as more shopping choices, Berg said at his 2013 State of the City address.
“We recognized that growth was going to happen,” Berg said at the time. “You can ignore it or manage it.”
But how Beaumont shepherded that growth is under increasing scrutiny, and it could result in potentially huge liabilities for the town’s taxpayers.
District attorney’s investigators, with the help of the FBI, last month seized thousands of pages of documents at Beaumont City Hall, the city manager’s home and the offices of Urban Logic Consultants, a firm that for more than 20 years provided the city’s economic development and public works directors as contract employees.
And just last week, the state controller’s office announced it too was launching an investigation after finding significant inconsistencies in city finances.
While these investigations go forward, the city also faces a potentially crippling debt from a civil case awaiting an appeal.
HUGE LIABILITY
A Superior Court judge last year said the city had shirked its obligation to collect tens of millions of dollars in fees from developers for regional transportation projects.
The judgment against Beaumont totaled $43 million. But the city’s cost could be much higher. Interest alone is adding more than $10,000 a day to the city’s potential bill, which is estimated to be about $57 million – nearly the double the city’s annual operating budget.
The city, state auditors say, doesn’t have the money to pay such a judgment.
In addition, Beaumont is forfeiting about $700,000 per year in sales tax revenues paid by residents for the transportation fee program that the city does not participate in, said John Standiford, the deputy director of Riverside County Transportation Commission.
This money is from a half-cent sales tax for transportation projects approved by voters countywide.
Brenda Knight, the current mayor, has said the city expects to win the civil case on appeal, arguing that much of the city evidence was not considered.
The city claims developers built $66 million worth of roads within the city and that work – financed with bonds – offset its obligations to pay the regional transportation fees. It further claims that projects paid for with such bonds must be built within city limits.
Knight said Thursday that she cannot comment on the TUMF suit. However, when the city filed its appeal in September, she released a statement.
“The city of Beaumont is appealing the judgment because the ruling is based on the mistaken idea that Beaumont and all cities in Western Riverside County are required to quit their own road building programs, do nothing but collect TUMF fees, and turn over all major road funding to WRCOG.
“With that mistaken ruling, the trial judge left undecided a long list of legal and factual issues that if decided would have required a ruling in the city’s favor. The city believes that the Court of Appeal will give these factual and legal issues, never addressed by the trial judge, a fair hearing and reverse the trial judge’s mistaken decision.”
Still, at last week’s State of the City luncheon, Knight told the audience that the city is working on a plan for the worst-case scenario and that any settlement will not come on the backs of taxpayers – at least not without their say.
“Taxes cannot go up without your approval,” she said. “The city cannot arbitrarily raise taxes.”
DEVELOPER FEES
The civil case centers on the arcane-sounding “transportation uniform mitigation fee,” or TUMF, that developers in western Riverside County normally pay before they can build. These fees – $8,873 per single-family home or $6,231 for each apartment or condo – raise money for regional road projects needed to keep up with growth.
Starting about a decade ago, those fees have gone into two funds managed by a regional agency, the Western Riverside Council of Governments.
About half the money goes toward projects built throughout the western portion of the county. The other half goes toward local zones where it is collected. Beaumont is in a zone that includes Calimesa, Banning and the nearby county areas.
But between 2003 and 2009, Beaumont didn’t provide its share of such fees to regional authorities, the lawsuit filed by WRCOG alleged.
The city instead did its own road projects financed by bonds that are being paid off by property assessments on people who bought the houses in the new developments.
The case was argued last year in Orange County to provide a neutral courtroom, but the judge left little doubt about his views on Beaumont’s strategy toward growth.
‘DECEPTION’
Not only did Judge David R. Chaffee order the city to pay tens of millions, he said Beaumont officials “engaged in a pattern and practice of deception” that was tantamount to fraud.
He said the testimony from Beaumont’s former economic development and public works directors, both contract employees with Urban Logic Consultants “either lacked specific knowledge or were not credible,” Chaffee said in court.
Chaffee described the transportation fee program as a form of teamwork among the cities of western Riverside County to improve the roads they all needed.
He likened the program to a crew team, with each member oaring a racing shell boat swiftly across a body of water.
“Like rowing … all members of the TUMF program needed to pull together,” he said.
Instead, Beaumont, in many cases, didn’t collect the fee, which brought saved developers nearly $9,000 per house.
This gave Beaumont an advantage in attracting developers, Chaffee said in court.
The road projects and other public works needed to accommodate growth were instead paid for with debt issued by the city, which also worked to the developers’ advantage, the judge said in court.
“No upfront money was required to be paid by any developer who opted for this form of financing,” the judge said.
The debt for these projects was then passed on to the property owners, who pay assessments over terms as long as 30 years.
“The costs are effectively hidden from the property buyers,” Chaffee said.
Other times, the fees were collected but not provided to the regional agency, said Jeffrey Dunn, an attorney for WRCOG. These funds totaled $13.4 million, he said.
What’s more, the road work the city financed didn’t meet many of the area’s transportation needs.
“If anything, the evidence shows poor local transportation planning and execution, resulting in bottlenecks and delays that impair the necessary added capacity,” the judge said.
Attorneys for Beaumont could not be reached, but they filed papers saying Judge Chaffee’s statements about city staff were beyond his mandate and not supported by evidence presented during the trial.
Chaffee’s remarks were “errant, biased and prejudicial,” said the city’s official notice of appeal.
TRAFFIC PROBLEMS
Ruthanne Taylor Berger, deputy executive director of the Western Riverside Council of Governments, said several important road projects have languished because Beaumont never provided the TUMF fees for such projects.
For example, Oak Valley Parkway is a four-lane arterial as it runs along new housing tracts. But once motorists get close to Interstate 10, the road narrows to just two lanes because freeway interchange improvements never occurred. The bottleneck forces traffic to back up onto the improved roadway.
Plans also have languished to build a bypass road along I-10 in Beaumont, which is needed to detour freeway traffic when major crashes occur, she said.
The city also built bridges across railroad tracks and a wash south of Oak Valley on a road that is supposed to lead to new entrance and exit ramps on the north side of Highway 60, but no one has built the ramps.
But recent a visit found no traffic on bridges, which appear to be big enough to accommodate fours lanes, but they connect to a two-lane road.
This road leads to freeways, where drivers have the option going west. But doing so is white-knuckle experience. There is no acceleration ramp to provide for a smooth merge.
Only a stop sign is between a city street and the roaring 60 freeway.
Staff writer Craig Shultz contributed to this report.
Contact the writer: 951-368-9471 or dd*******@pe.com