Fresno pays off $8 million Gap settlement – to itself

Lee and Ashley Clean Things Up

As we’ve seen, City Hall made the first $800,000 annual payment on the Gap Settlement in the 2007-2008 fiscal year. That was when the national housing bubble began to burst. The Great Recession started to hit Fresno hard in the last half of 2008 and early 2009, just as Autry was giving way to Ashley Swearengin.

Lee Brand took his District 6 city council seat in January 2009.

Almost immediately after the arrival of Swearengin and Brand, City Hall was looking under every couch cushion for money. Revenue was drying up while the demand for expensive services remained strong. What little there was to the general fund reserve quickly disappeared. Layoffs and service cutbacks kept Fresno out of bankruptcy court.

Through it all, the shrinking general fund kept sending $800,000 checks to Airports. I’m not saying $800,000 would have dramatically softened the city’s financial crisis. I am saying an extra $4 million (five years at $800,000 each from FY 2009 through FY 2013) would have been put to good use.

Let me add that there’s good reason to think Gap, Inc. with its jobs and property taxes still would have picked Fresno in 1997 without the sale of 201 acres of public property for $4. City Hall and the state had plenty of other incentives at their disposal.

The Great Recession combined with the other debt-subsidy disasters from the Patterson-Autry administrations made Lee Brand into the local political powerhouse he is today. Of course, it was Brand’s smarts and initiative that did the trick. We don’t need to go into each of the acts on fiscal responsibility that Brand authored or co-wrote in his eight years on the council. It’s enough to note that because of the leadership of Brand and Swearengin, City Hall and the people it serves are unlikely ever again to treat public subsidies in a cavalier manner.

Of course, public subsidies are still with us.

Fresno after 20-plus years of strong-mayor government remains a city in desperate need of good-paying jobs and social stability. Everyone can’t work for the government. The private sector, especially the big name companies able to play one struggling Valley city against another, continue to demand public subsidies.

But change is perpetual in a market economy, and the public-private business landscape in 2017 is far different than it was in 1997. Fresno is no longer quite as smitten with old-fashioned warehouse businesses and call centers. E-commerce fulfillment centers are the latest dream.

The incentive packages have changed, as well. For example, in December, during Swearengin’s final days in office, Westerlund (as economic development director) pitched a subsidy plan to the City Council in an effort to attract a Nordstrom, Inc. e-commerce center. In essence, the city offered millions of dollars in sales tax rebates over 30 years but only if Nordstrom delivered on its promises of jobs and expanded facilities.

City officials call this a “performance-based” incentive model. At least for now, it rules the roost in the Brand Administration.

“A successful building of e-commerce centers in the South Fresno industrial triangle will create thousands of new jobs in the area between Highways 41 and 99,” Brand said at a news conference on May 16 when he presented his 2017-2018 budget. “It will also significantly elevate our economic tax base. Over a 10-year period there will be major increases in our property tax, sales tax and business tax revenue.

“Substantial increases in our economic tax base will provide the funding needed to hire more police officers and firefighters, fight blight and homelessness, rebuild our roads and other infrastructure, and improve and build new parks and trails.”

On top of all that, the new budget doesn’t have a Gap Settlement payment.