City forgives $1 million in Arts Center, library debts

Tariq Malik

HUNTINGTON BEACH -- City officials set aside more than $1 million

Monday for Huntington Beach Arts Center and Huntington Beach Library to

cover unpaid loans and deficits accumulated over the last several years.

The City Council unanimously approved a plan to absorb the five-year

operating deficit of $522,000 from the Arts Center, and $484,000 in

unpaid loans to the arts center’s cultural fund and the city’s library

services fund.

About $194,000 will go toward covering some of the extra construction

costs for the Arts Center’s 1995 renovation, which at the time ran

$521,000 over budget, and $290,000 for the expansion of Central Library.

“Every year we were all told that the budget was balanced. . . . it’s

hard to understand where the huge operational deficit came from,” said

Gerald Chapman, co-chair of the Arts Foundation, a group that raises

money for programming and exhibits at the center.

City Administrator Ray Silver said the error lies in overestimating

the center’s projected annual revenue, which resulted in an estimated

$100,000 loss each year because of normal operation expenses.

That loss followed the center over the last five years instead of

being paid off annually as in other departments, city officials said. The

deficit carried over each year because city officials wanted to know more

about the center’s expenses before paying off the debt.

Similarly, the city’s Park Acquisition and Development Fund, which

originally loaned the money to these groups, has been waiting for both

loans to be repaid.

In 1995, the City Council maintained that the two organizations should

repay the money as it became available, but it later became apparent that

the Arts Center and the library would not be able to do so, city

officials said.”It’s time to pay the piper,” Councilman Tom Harman said.

“Five years ago, we did promise to repay this money, and if it means that

our reserve won’t be as pumped up as we’d like . . . well, that’s what

you have a reserve for in the first place.”

Last week Community Service commissioners said they have been counting

on the payback for years, and that the city’s park system is in dire need

of the money.

“Our park improvement fund is depleted, and we have playgrounds

without tables or benches and [the city planned] on forgiving that loan .

. . it’s incredible,” Commissioner Jay Kreitz said.

City officials said the outstanding debts will be paid from the

general fund’s reserve, which was set at about 7% of the $127.5 million

2000-01 budget. The reserve will be decreased to 6.2% of the budget.

But, city officials said there is a bright side.

Councilwoman Shirley Dettloff said that by eliminating the loan debts,

the library and the Arts Center should have an easier time finding donors

and grants.

Silver added that city officials will revisit the city budget to look

for other, if any, outstanding debts or loans in other departments.