Looks like while I was gone the city of Chula Vista got some unpleasant news. As you know I’ve been following that city for a while, ever since its officials bragged about being able to steal police officers from the city of San Diego because of their ability to pay higher salaries.

Those officials are now largely gone. And the ones below them who used to sing about the city’s bursting coffers now have a different tune.

Chula Vista’s Drug of Choice

The ratings firm, Standard & Poor’s issued a report Sept. 17 downgrading Chula Vista’s credit rating. Standard & Poor’s is the same firm that in 2004 suspended the city of San Diego’s credit rating and has not revisited that decision. Our news partners at NBC 7/39 did a little piece on the Chula Vista’s situation. NBC 7/39 focused on Scott Barnett, who has been decrying the situation for a year now.

You should read the report, it gives a nice rundown on the city’s situation.

It’s quite simple, really. Chula Vista has borrowed millions to build all kinds of new things. Officials expect to be able to pay back those loans with fees they charge developers. But those fees are one-time payments. If the development boom subsides (which it is), then the fees dry up.

However, within the past two years, the city has seen a considerable slowdown in the housing market as a result of general economic conditions and, in particular, the subprime mortgage industry. Specifically, residential permits fell to 600 units in fiscal 2007, or roughly one-fifth the level experienced in fiscals 2001, 2003, and 2004.

Yuck. So how is the city going to pay its bills?

Specifically, the city has met with its labor unions and is currently negotiating with the unions to reduce the city’s salary and payroll expenses, which account for roughly 80% of expenditures. At a minimum, the city has enacted a hiring freeze for fiscal 2008. Management also plans to offer an early retirement program to senior employees.

Combined, these initiatives are expected to generate at least $3 million in savings in the current fiscal year.

San Diego police officers turned to places like Chula Vista after years of salary freezes as if the suburbs really were just doing something better. They weren’t. They were just making bigger bets. Things like hiring freezes are just the beginning.

San Diego hasn’t done much to balance its books, but at least its troubles have kept it out of the casino.

Chula Vista has a tough time ahead.


Leave a comment

We expect all commenters to be constructive and civil. We reserve the right to delete comments without explanation. You are welcome to flag comments to us. You are welcome to submit an opinion piece for our editors to review.

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.