Is Adelanto the next CA city to go belly up?

Adelanto signJuly 3, 2013

By Wayne Lusvardi

The pathway into municipal budget distress is not the same for every city in California.  No known city in California has attempted to cut its general fund budget nearly in half. But that’s what Adelanto is trying to do by cutting its budget from  $5.5 to $2.6 million.

And few cities in California have a budget document that is as honest as Adelanto’s. Budgets too often rely on “gimmicks” to hide problems and shortfalls. But not in the city whose motto is, “Progress By Design.”

Located in the Mojave Desert of Southern California, Adelanto gets its name from the Spanish word for “progress” or “advance.”  But despite measures to drastically cut its budget, Adelanto has regressed to a $2.5 million deficit and the city is considering declaring a “fiscal emergency.”

If taxes are not increased, this could also lead to the city declaring bankruptcy in 2014. Raising taxes could be tough on a city with only 7,300 households, nearly a third of which live near or under the poverty line.  Raising the existing utility tax by $2.5 million per year, as the city proposes, would reflect a $342 per year tax increase per household.

The median household income in Adelanto is $42,208 per year.  This is $19,424 less than the statewide median income of $61,632 per household. About 28 percent of residents of Adelanto live below the poverty level, compared to about 14 percent for the statewide average.

City government living off sewer fund

The biggest budget problem is not a decline in tax revenues as much as it is an inability to sustain the level of funding for an incorporated city in the first place.  The largest current tax generator to the city’s general fund is a $2.2 million annual transfer from the Public Utility Fund of utility bill revenues for a proposed sewer treatment facility.  Adelanto’s city government is dependent on a sewer project to patch its budget.  What happens when this project is finished?

In recent years, the city has balanced its budget only by using $5.1 million in the remaining proceeds from the $28 million sale of the city-owned and operated Adelanto Community Correctional Facility in 2010.  Adelanto had gotten into the corrections business to supplement its low private economic base.  But now the state has vastly reduced or taken away redevelopment funds and diverted property taxes back to schools.  This forced Adelanto to sell its correctional facility as a stopgap measure to plug the hole in its municipal budget.

Affordable housing an artificial jobs program

When the state took away redevelopment from cities in 2010, however, it allowed them to retain their affordable housing funds.  Under California’s former redevelopment law, 20 percent of the property tax increase created by commercial redevelopment was designated for affordable housing.  But creating government jobs producing affordable housing in Adelanto would at best be an artificial jobs program.

Zillow.com reports the median home sales price in Adelanto is $116,000.  Assuming a 30-year fixed mortgage, 20 percent down payment and 5 percent interest rate, the typical monthly housing payment in Adelanto would be $498 per month.

The U.S. Department of Housing and Urban Development’s affordable housing formula calls for no more than 30 percent of gross household income to go toward housing.  In Adelanto, HUD’s affordable housing formula would equate to about $1,055 per month maximum mortgage payment.   Houses typically rent from $750 to $1,250 per month in Adelanto, according to Zillow.com.

So the private marketplace is already producing re-sale and rental housing at a much lower price than even HUD standards.  Nonetheless, the State of California Department of Housing and Community Development has mandated that Adelanto must rezone 40 acres of vacant desert land for multi-family housing.  This would only add to the burden of public services that Adelanto must provide without adding any economic base to support it.

Adelanto history is depleted water basins and budgets

Ironically, the history of Adelanto has not been reflected by progress, but by the depletion of natural and financial resources.  The city was once known for its apple tree orchards grown in the middle of the desert until in the 1950’s, when the local groundwater basin became overdrafted.  By 1990, the nearby City of Barstow had to sue Adelanto and other users to get a court to oversee management of the Mojave Groundwater Basin.

Adelanto’s history is a story of depleted water basins and longstanding depleted municipal budgets.  The Mortgage Bubble and Redevelopment Bubble covered up Adelanto’s chronic municipal budget deficit issue for decades.

California’s Solar Initiative database indicates only 21 installations of rooftop solar systems in Adelanto since 2007, hardly enough to help impact a distressed community with jobs or decreased electricity bills.

Adelanto is not the only high desert city in San Bernardino County is budget distress.  Adelanto has joined Apple Valley, Hesperia and Victorville in exploring the feasibility of forming a regional police and fire agency, instead of contracting with San Bernardino County for such services.

The biggest economic generator in Adelanto has been government, not industry or commerce.  Ironically, if the city merely dis-incorporated, letting the county take over all services, its budget problems might disappear altogether.  But this is not going to happen when municipal employment is a source of six-figure jobs for a few people in a community without much economic mobility.   The prospect of a government or school district job for a few in such struggling communities is often more symbolically powerful than reducing the burden of government for everyone.

But history has shown that more government hasn’t provided a pathway out of Adelanto’s budget problems.  Less government by dis-incorporation is a potential option, but not a politically viable one.

15 comments

Write a comment
  1. Bob
    Bob 3 July, 2013, 06:37

    Now how could it go belly up?

    The city has unlimited possibilites, dontcha ya know?

    Reply this comment
  2. Spoonman
    Spoonman 3 July, 2013, 07:39

    The biggest economic generator in Adelanto has been government…..

    ECONOMICS FAIL.

    Whatever will become of Queegs truckstop?

    Reply this comment
  3. Wayne Lusvardi
    Wayne Lusvardi 3 July, 2013, 07:43

    Look, there are good people in Adelanto and the local government appears honest. Adelanto is not a clone of Bell, California. The point of the article is not to ridicule Adelanto or its citizens but point out that government particularly at the state level has failed the city. Mandating the city rezone 40 acres for more apartments will only put more of a burden on city services. Let’s hope Adelanto finds a way out of their budget problrm.

    Reply this comment
  4. Rex the Wonderdog!
    Rex the Wonderdog! 3 July, 2013, 09:02

    Don’t knock Teddy Steals hometown 🙂

    Reply this comment
  5. Rex the Wonderdog!
    Rex the Wonderdog! 3 July, 2013, 09:44

    If taxes are not increased, this could also lead to the city declaring bankruptcy in 2014. Raising taxes could be tough on a city with only 7,300 households, nearly a third of which live near or under the poverty line. –

    Here is an idea, how about shaving 50% off the Cadillac pay and benefits of the gov employees.

    Reply this comment
  6. stolson
    stolson 3 July, 2013, 09:44

    Wow. There is an underbelly there of gangs, welfare for lifers, etc. There are good people there, of course, but foreclosures were high–Chinese came in and bought up at pennies on the dollar–property taxes plunged. A tax base is needed for essential services. Interesting to see what transpires soon.

    Reply this comment
  7. Wayne Lusvardi
    Wayne Lusvardi 3 July, 2013, 11:45

    More interesting is that redevelopment and affordable housing left nothing for Adelanto to sustain itself.

    Adelanto is not alone in the High Desert with these sort of problems. Apple Valley, Hesperia, and Victorville are all desperately trying to find an economic base after losing George Air Base. Victorville tried the more entrepreneurial approach but got caught in the crash of money markets with the Mortgage Meltdown. Loma Linda might find an economic base with its medical school and hospital under Obamacare.

    Let’s hope Adelanto finds a pathway to self sufficiency other than by having to continue to raise taxes.

    Reply this comment
  8. Steele, Ted, When only the very best will do!
    Steele, Ted, When only the very best will do! 3 July, 2013, 12:52

    LOL the supeme irony here is tghat Adelanto is where most of the doomers out here live!!!!!!!!!!!!!!!!

    Reply this comment
  9. Rex the Wonderdog!
    Rex the Wonderdog! 3 July, 2013, 12:54

    [email protected] Teddy’s home town 🙂

    Reply this comment
  10. Ulysses Uhaul
    Ulysses Uhaul 3 July, 2013, 18:40

    Queeg is having a cool one after a record day moving gloomers….a smile on his face reading all the moans from Carp, Poodle, The RAGWUS haters, Teddy Fans and Carpetbaggers Target and Hondo.

    Adelanto is a dust allergy nightmare… high desert doomer oasis…..

    Cannot get a decent Slurpee or corn dog at Poodle’s truck stop…..

    Reply this comment
  11. stolson
    stolson 4 July, 2013, 08:55

    moving out of CA is not due to gloom or doom, but job necessity and retirees trying to make it, straight up. There is no sky is falling mentality–just survival. If there is a major job scarcity — own up.

    Reply this comment
  12. Hondo
    Hondo 4 July, 2013, 09:30

    Socialism fails when you run out of other peoples money.
    Hondo….

    Reply this comment
  13. Queeg
    Queeg 4 July, 2013, 21:05

    Service jobs are not career jobs…..they are jobs created by modern slavers and exploitive globalists.

    Less and less manufacturing….more and more latte baristas…lower productivity….welcome falling personal income growth and standard of living.

    Raise taxes in this enviro and destroy the health care delivery systems…..the worst is still to come…..

    Reply this comment
  14. Tough Love
    Tough Love 8 July, 2013, 07:36

    Quoting …. “The biggest economic generator in Adelanto has been government, not industry or commerce. Ironically, if the city merely dis-incorporated, letting the county take over all services, its budget problems might disappear altogether. But this is not going to happen when municipal employment is a source of six-figure jobs for a few people in a community without much economic mobility.”

    THAT paragraph says it all …. greedy Gov’t workers (i.e., “I got mine … screw you”)

    Reply this comment
  15. Icantquit
    Icantquit 21 August, 2014, 10:25

    Greedy government workers? Where do you get that from? They aren’t getting paid that much. No raises for years, less benefits, extremely high case/work loads, these people that work in government aren’t the enemy. Maybe you can classify certain high up people in government that way but 99% of them are just people like me and you trying to make a living, barely doing so and struggling just as hard as the rest of us.

    I am always amazed at how so many people hate government workers and I’m not sure why? Is it because you couldn’t get hired there? Don’t have the education they required or what? The city couldn’t run without these people. You wouldn’t have any of the amenities you have without them. Think real hard about what life would be like without them – don’t mess around but seriously think about it. They are the spokes in the wheel that keep things rolling. Of course, there are always bad people and this is true as well for government employees but not as a general rule.

    Reply this comment

Write a Comment

Your e-mail address will not be published.
Required fields are marked*



Related Articles

Adachi Pushes New S.F. Pension Reform

MARCH 28, 2011 By DAVE ROBERTS Jeff Adachi, San Francisco’s elected public defender, is a modern-day Don Quixote tilting at

CalPERS' Ailing Long-Term Care Plan

Editor’s note: A new article on this controversy, published Feb. 20, 2013, is here. It concerns the recent 85 percent

Detroit sends CA another bankruptcy warning

The Stockton and San Bernardino bankruptcies in 2012 were the largest for cities in American history — until Detroit in 2013.