Despite the Threat of Bankruptcy, Stanton Is Spending Millions to Build One Park

Despite the Threat of Bankruptcy, Stanton Is Spending Millions to Build One Park
Kevin McVeigh

CHAPTER 1: PIGS
In March 2011, facing a $4 million deficit, panicked Stanton City Council members met in special session and voted unanimously, dramatically to declare a fiscal emergency.

It was the sort of thing we'd been hearing from Portugal, Italy, Greece and Spain for months—a government's tax revenues falling so disastrously short of its spending that what comes next is slaughterhouse ugly. By the standard of the PIGS, what followed immediately in Stanton might strike you as banal: Having declared a fiscal emergency, the council agreed to ask voters to approve a 50 percent hike in the city utility tax, from 5 percent to 7.5 percent.

At that meeting, David Shawver—then a 23-year council veteran and self-proclaimed "ultra-conservative football coach Republican"—said he and his colleagues had no choice but to raise taxes. As with the PIGS of Europe, the Great Recession had slammed Stanton, Shawver said. The city was pinched between the rising cost of its public workers and falling property- and sales-tax revenues. Conservative George W. Bush bailed out the nation's largest banks in 2008; David Shawver begged for a new tax in 2011.

"We had to come up with some type of system or some type of program to generate more revenue to keep the city going," Shawver told a Garden Grove reporter at the time.

That same night, leaning on the podium reserved for public comments, a retiree named Charles Rell asked Shawver and the others a question that seems just as pertinent today: "How much more can we afford to pay?"

Shawver's response could have been that neither Rell's personal finances nor even arithmetic figured into the city's calculations. Because long before that night, Shawver and his council colleagues had embarked on a great adventure, a free-spending circus in one of the county's poorest and smallest cities: the creation of a $6 million park that would supernova into a $24 million project that will cost the city millions more over time.

Whether Rell and others like him can afford that park is irrelevant. Thanks to Shawver, they'll have to.

It's not too late to christen it Central Pork.

“What’s that old saying about the first thing you do when you find yourself in a hole—stop digging?” —Steven Greenhut
“What’s that old saying about the first thing you do when you find yourself in a hole—stop digging?” —Steven Greenhut
Brian Feinzimer

CHAPTER 2: GO-GO, STANTON!
To understand how truly weird it is to blow $24 million after you've declared a fiscal emergency and begged the public to raise taxes, it's best to start in 2010. In September of that year, about the time of the Great Recession's second, deepest roller-coaster plunge, the city announced it would spend $12.5 million to purchase land from the Savanna School District. Two months later, at a formal signing ceremony, buyer and seller cock-a-doodled their delight. Stanton City Council member Al Ethans said the purchase "enhances our facilities for parks beyond our fondest expectation."

Looking back from the lofty promontory of 2016, hearing a guy say that his real-estate deal is "beyond our fondest expectation" sounds like the sort of go-man-go, mad-money hyperbole that was on almost every overmortgaged American's lips—right up to the moment the housing crisis burned down the entire planetary economy in 2008.

Stanton's $12.5 million land acquisition was followed just four months later by the self-declared fiscal emergency and the call for a bump in the utility tax.

Finances grew shakier. Stanton voters rejected the council's pitch for a tax hike on utilities. And in June 2011, California Governor Jerry Brown announced that he and state lawmakers had decided to kill the state's scandal-plagued redevelopment process. For years, city officials, including those in Stanton, had used the state's redevelopment law as a revenue booster. In return for declaring property "blighted," city officials were allowed to freeze the assessed value of that property and therefore the property-tax revenue for everybody else. School districts all over the state went into the red as their expenses climbed but their share of property-tax revenue remained frozen by the city. Redevelopment in Stanton meant that schools were on fixed incomes while the city captured 100 percent of the tax on the increase in the value of the land over time—what geeks call the "tax increment."

Officials were not unique in having claimed their entire city was blighted, and therefore subject to the pickpocket-light touch of the city tax collector. State lawmakers excused the accounting trick as necessary to improvements—by which they meant the replacement of rundown properties with high-income, tax-generating commercial and residential projects.

When the band stopped playing—when Sacramento officials shut down the redevelopment dance hall—Shawver threatened legal action. In a statement that reveals his very liberal reading of a program that was supposed to build new buildings and clear away the wreckage of his city's past, Shawver told the Orange County Register, "We were using that money for a lot of our city services."

 

Brown's decision ended Stanton's future casino-style real-estate investments—but would not apply retroactively to the 2010 announcement to buy school property, though no cash would change hands until 2013.

Throughout much of that period, a Los Angeles Times reporter noted, the digital sign outside the Stanton City Hall blinked the ominous, verb-free reminder: "STANTON FISCAL CRISIS." In June 2012, just before voters killed the utility-tax hike, City Manager Carol Jacobs warned residents the city was on the verge of bankruptcy.

Tallying up the toll of the financial crisis in Stanton in 2012, Times reporter Christine Mai-Duc wrote, "In the last two years, after-school programs have been cut, city staffers have been laid off and even the lone police station in town has closed to the public, a sign on the door offering residents a number to call if they need assistance. The city has even elected to stop paying dues to the League of California Cities, an organization that lobbies on behalf of local governments. It's not required by law, says City Manager Carol Jacobs, and Stanton just can't afford it."

"We've never really had much fat in this city," Shawver told the Times. "We're getting to a point here where there's not much left to cut."

CHAPTER 3: DON'T MENTION THE PORK
To recap: a self-declared "fiscal emergency," the threat of bankruptcy so catastrophic that the city had shuttered its police station, the end of redevelopment and the death of a tax hike at the polls. During all of this, in October 2011, the council voted to spend $6 million to build Central Park on land it bought from the school district for $12.5 million.

That would be $18.5 million. But the cost to build Stanton Central Park is now at least $24 million—the cost of the school property, plus the city's upwardly revised $11.5 million construction estimate.

Still, the city spends. And as if to answer Rell, the fixed-income retiree raising uncomfortable questions at that 2011 emergency council meeting, city officials asked residents to pay still more. But they don't mention Stanton Central Pork.

In 2014, city council members, many of them present for the unanimous declaration of financial emergency three years before, backed a 1 percent local sales tax. Their reason: Without the sales-tax increase, they told voters, the city would lose vital public-safety services. Of course, it wasn't presented that way in the city's full-color, ALL-CAPS messaging. In that campaign, opposing the city sales tax meant you supported house fires and gangsters—and, what's maybe worse, that you hated cops and firefighters.

Faced this second time with a tax hike or the apocalypse, voters approved the tax.

Shawver has tried to downplay the impact of the now-1-year-old tax hike on residents—and is working to kill a November 2016 ballot measure to repeal the tax.

The self-described conservative and member of the Orange County Republican Party's central committee told a March community gathering that the increased sales tax is great—because it's pretty much a tax on outsiders and it pays for sheriff's deputies and firefighters.

"It's a tax on people who drive through our community," Shawver said at that meeting. "They drive up and down Beach Boulevard, stop to get gas, and we get one penny. One penny! And thanks to that one little penny, we've been able to restore critical public-safety assets."

It also hits anyone who shops in Stanton, of course, though not (the officials stayed carefully on message) grocery and pharmaceuticals shoppers.

But it's all for a good cause, Shawver said: public safety.

Stanton has a well-earned reputation for violence—it's among the toughest towns in a county more famous for catfights among wealthy housewives than gunfights, gangs and prostitution. So public safety is no abstract line item. But even Shawver admits the county sheriff's deputies, firefighters and paramedics who patrol Stanton are a major cost center.

"I'm not going to fool you," Shawver told the community gathering. "Public safety is expensive, but I am concerned with maintaining the level of service that you demand."

Already expensive, public safety is getting pricier. This year, the city will pay an additional $1.1 million for public safety, most of that for the escalating pay and benefits of its $220,000-per-year firefighters and $187,000-per-year sheriff's deputies. Those are extraordinary pay packages, even in relatively affluent Orange County. And they stand out especially in Stanton, where the median yearly household income is $46,000 and 22 percent of the population lives below the poverty line. They were negotiated with the county by the powerful firefighters' and deputies' unions—the same public-employee unions that back Shawver and who carried almost the entire cost of the 2014 campaign to raise the sales tax.

Building the narrative: Estimated costs for Central Park have quadrupled
Building the narrative: Estimated costs for Central Park have quadrupled
Brian Feinzimer

 

CHAPTER 4: 'STOP DIGGING'
If it weren't for a few lousy public investments—such as the park—the city might be able to pay its sheriffs and firefighters even at that stratospheric level, without a tax hike of any kind. But park spending never made even a cameo appearance in the muffled 2014 debate over the tax increase. There has been only limited dissent inside City Hall. Stanton businessman Rick Muth was an early critic of the park, and that was when he was outside City Hall. Muth says he became more alarmed when he got inside, after Republican state Senator (and former Orange County treasurer and county supervisor) John Moorlach appointed him to the oversight board responsible for winding down Stanton's redevelopment agency. That put Muth directly in contact with Shawver and Shawver's Great Pork.

Muth's connection to Stanton runs through Orco Block Co., the company that Muth's father, grandfather and a family friend created in 1946—a full decade before Stanton became a city. The Big Bang in Southern California building that followed shortly after Orco's founding continues to this day, and it helped make the company one of the largest building-materials suppliers in the region.

Orco is still in Stanton, and Rick Muth runs it. Like Shawver, Muth is a self-declared conservative. Unlike Shawver, he clearly expects the city's finances to be handled as a business like Orco might manage them.

Citing the city's financial emergency and a general lack of transparency where city spending is concerned, Muth opposed park funding. He says he battled city staff "even to get minutes from meetings" and was repeatedly denied itemized park expenses. When he asked council members how a city in a financial death spiral could afford to build and maintain the park, Muth says Shawver told him that all construction and operations costs would be funded through the sale of "excess city land around the park" once the real-estate market ticked up.

Muth says shortly after that conversation, he was touring the proposed park site with another council member. He asked the council member to point out the excess park land Shawver had said would be sold to cover operating expenses. Muth says the council member looked at him "with this really puzzled look on his face" and told Muth there was no excess park land to sell.

Now it was Muth's turn to look puzzled. But the council member said any budget gap would be easy to fill: The city would cut down on park costs by closing the Central Park occasionally. Muth is still incredulous as he recounts the conversation and those that followed. "No one could tell me how you close a park for a few days every week," he says.

"The last straw for me," Muth recalls, "was when the city refused to give another oversight board member the true, full cost of the park"—unless she dropped her demand to explain how the park had jumped from $6 million to $8 million, then to $11.5 million. In March 2015, he resigned from the board.

Shawver did not respond to multiple requests for comment.

His City Council campaign site lists accomplishments that will outnumber mine if I live to be 400. He's a credentialed teacher; a softball, wrestling and football coach at Millikan High School in Long Beach for 42 years; he's got certificates for first aid, CPR and lifeguarding. He's taught religion in his Catholic parish. He coached Pop Warner football and was his Neighborhood Watch director. He volunteered for the Stanton Haunted House, the Christmas pageant, the Easter egg hunt and the Drug Busters youth program. The list of activities that Shawver recites—afternoon teas, soccer, fiestas, civic clubs, pancake breakfasts and charity luncheons—suggests not just boundless commitment, but also capacious memory of his own remarkable contribution. It's unlikely he's forgotten anything.

But if these good deeds indicate feverish social activity, they do not really capture something else about the man: After 28 years on the Stanton City Council, he says, "my work is not finished." Looking back over the past many years of financial drama, the city's residents may wish that it was—finished, I mean.

The man's energy may also explain his Rooseveltian (Franklin, not Teddy) sense that government can and should do anything, including build a massive park in a time of financial crisis. "Quality of life is very important, but if a city is in such financial crisis that it has to go out and raise taxes, well, you just have to go back to basics, to do what you're absolutely responsible for," says former city of Orange mayor Carolyn Cavecche, who is CEO of the Orange County Taxpayers Association.

 

Building a park is nice, Cavecche says, "because everybody loves parks, including me." But paying for public safety? "That's just basic."

Steven Greenhut laughed when told about the city's decision to build Central Park in the midst of financial crises. "What's that old saying about the first thing you do when you find yourself in a hole? Stop digging?" says Greenhut, a former Register editorial writer who's now western region director for the free-market R Street Institute. "Cities that cry 'poverty' and 'public safety' to convince their residents to pay higher taxes have no business spending big bucks on new parks."

CHAPTER 5: THE PAPER TRAIL
City officials say not to worry. The city budget declares, "The project's design, construction and construction management are funded from a Redevelopment Agency Bond, a State Grant and Park-In-Lieu Fees and has no impact on the City's General Fund."

Translation: State taxpayers (who generously funded the public-parks-friendly Proposition 84, but who don't count because, like drivers who stop in Stanton to buy gas, most of them live elsewhere) and hypothetical future real-estate developers (who will pay fees on construction) will fund most of the park. On page 126, deep in the Stanton budget, there's also the promise that city staff will "successfully procure sponsors and additional revenue programs for the new Stanton Central Park." In public meetings, officials have offered the example of revenue from participants in a community softball league.

But by far the biggest source of cash will come from $28 million in bonds hurriedly issued by the Stanton Redevelopment Agency just as Brown raised his sword over the program.

The city's assertion that paying for the Central Park will have "no impact on the City's General Fund" is hard to square with reality. My colleague, the bond analyst Marc Joffe, found Stanton's bonds cost city taxpayers nearly $400,000 to issue. Interest payments—totaling $42 million over 30 years—will continue to put a multimillion-dollar ding in the city's budgets.

There are other significant park costs that Stanton officials never mention in their estimates but which appear scattered throughout city financial documents. There's lost revenue from the golf course that closed when the city took over the school property. The city's park-maintenance budget will jump dramatically, on average about $150,000 in each of the next two years. The budget for parks staff will go up "by $202,810, or 43 percent in FY [fiscal year] 2015-16. The increase primarily relate [sic] to salaries for the new Stanton Central Park," the budget reports. A new, six-figure community-development director will spend part of her time managing the park.

"Saddling the people of Stanton with a $24 million park and all the other associated costs—a park that was sold to them as $6 million—is unconscionable," says Sal Sapien, the city's former mayor and still a member of the county Democratic Party's central committee. Sapien is also a longtime Shawver adversary. Recalling that he and other council members voted to censure Shawver in the early 1990s "for his antics," he says, "The council should censure him again."

The “gift” that will keep on giving: Residents of one of oc’s poorest cities will pay bankers $42 million in interest alone
The “gift” that will keep on giving: Residents of one of oc’s poorest cities will pay bankers $42 million in interest alone
Brian Feinzimer

CHAPTER 6: THE GOLDEN SHOVEL
Spiraling costs weren't on the official brain at last summer's Central Park groundbreaking, though. That June, with golden shovels held over their hard-hatted heads in triumph, city officials were talking about the future, about coming together, about the generosity of government, the noblesse oblige of City Hall.

"This is a gift to Stanton residents," declared Allan Rigg, the public works director. "I'm excited. It's an exciting time in Stanton."

But as Register reporter Chris Haire deftly observed in his account of the groundbreaking, "Not everyone is thrilled about the impending [park] construction."

Haire talked with leaders of three churches renting space on the old school grounds. In a little-remembered footnote to the city's $24 million Central Park, the churches are gone now.

"The churches received 45-day eviction notices. Because of their size—California Christ Community Church has 50 to 60 members—and lack of money, the churches are having trouble finding new locations," Haire reported.

"It was kind of a shock for us," Daniel Park, pastor of California Christ Community Church, told Haire. "I don't even know if the city knew we were here."

Will Swaim is vice president of communications for the California Policy Center and founding editor and former publisher of OC Weekly.

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