Millbrae selling land to avert bankruptcy

In the latest episode of the Millbrae budget drama, officials say the city has just months until reserves are bled dry and are debating stop-gap measures to keep afloat.

The city is spending roughly $65,000 a month from the roughly $1 million reserve fund, according to Community Development Director Ralph Petty.

"That can only go for so long, August, maybe September," he said.

To prevent the city from going broke, Millbrae intends to buy itself time by selling about 10 parcels of open space land, which has the potential to infuse millions of dollars into the ailing budget. Tonight, the City Council will hear a report about the land-sale option during its regularly scheduled meeting.

"We are talking a few million dollars of potential value," said Randy Schwartz, Millbrae's interim director of Parks and Recreation. "It's at least enough to bridge the gap between where we are right now and developing a long-range plan for the city, something that will be sustainable."

Times are tougher, according to City Administrator Jeff Killian, but he insists bankruptcy is not an option for Millbrae.

"I think this is the worst it's been in the city's history and I think statewide cities are in worse shape than they ever were," he said. "The city would always be able to trim its expenses to balance its budget.

Killian expressed optimism despite the desperate situation. "We will definitely fix this," he said. "There's no doubt in my mind that we'll be able to fix this."

Millbrae has already hacked its budget to bits, cutting its general fund by almost $5 million throughout the past two years, down to its current $11.9 million. "And it's still not enough," Petty said. "We're down to the point where we have to take every action we can."

Since Gov. Arnold Schwarzenegger rolled back an increase in the vehicle license fee, cities across the state have anxiously waited to learn whether they will receive the funding the governor promised. Schwarzenegger's emergency executive order to redistribute funding to replace the VLF from other state programs to backfill cities may face legal hurdles.

On Jan. 9, the governor announced more bad news for cities, a plan to reallocate some property tax revenue away from cities to fund schools.

For Millbrae, a potential loss of $900,000 in VLF funding and $140,000 in property tax revenue means a gap between expenses and revenues of more than $2 million in the 2004-05 fiscal year.

Killian anticipates that gap could continue indefinitely if the city does not take drastic measures.

The land sale is one of several measures Millbrae is taking to keep the city breathing. City services are at a bare minimum and only 29 general fund employees are serving the city, from a high of 155.

Millbrae has also downsized its police and fire departments and -- with public safety costs comprising 67 percent of Millbrae's general fund budget -- more cuts are expected. Councilmembers are contemplating a sales tax increase to help finance police services, and a fire assessment that would keep the Fire Department intact. Of the financial plans under consideration, city officials view the land sale as one of the faster ways to get a lot of money.

The land parcels in question are corner lots or hidden areas near the Spur Trail, which runs almost uninterrupted from San Bruno to Burlingame.

Millbrae acquired the land as a grant from the state in the 1950s. A provision in the land agreement allows the city to sell the property and use the money for parks and recreation or roads. The money could offset the roughly $750,000 annually the city spends on parks and recreation, Petty said.

Though designated as open space, the community does not use the parcels. All the parcels are large enough to build homes upon; some are large enough to split into two or three lots.

"The open space is a large piece of property," Petty said. "There's room to sell off some lots and not impact the integrity."

The land has yet to be appraised, but undeveloped lots in the city sell for $500,000 or more, Petty said.

The public is invited to meetings to discuss Millbrae's financial troubles and brainstorm solutions. The meetings are scheduled for Jan. 31 from 9 a.m. to noon and on Feb. 5 from 7 to 9 p.m. Both meetings will be at Taylor Middle School, 850 Taylor Blvd., Millbrae.