State of the City Address
January 9, 2003

"VISIBLY PASADENA"

I consider it a privilege to hold this event on the campus of Caltech, and I want to express gratitude to the Institute for its hospitality.

Congratulations are in order upon the recent opening of Caltech’s Broad Center for the Biological Sciences, a major new facility that will house a dozen research groups from several disciplines including biology, chemistry and engineering. Caltech’s new biological sciences initiative—based in the Broad Center—has significance for the entire world, but locally it reflects a Caltech’s commitment to facilitate technology-transfer in a manner that helps create new technology based enterprises in the Pasadena area.

Let me start by saying that, even with its uncertainty and surprises, last year was a good year for Pasadena, and I believe 2003 will be good year as well.

The public mentality today, nationally and regionally, is one of uncertainty. If we look at the nation’s experience, 2002 will surely go down as one of the worst – or at least one of the most complicated – in history. The national economy was wobbly throughout the year. The stock market is down the third year in a row. Evidence regarding an economic upturn is at best indecisive, and other national and international issues, including impending war and the threat of terrorism, create further dark clouds on the horizon.

Further, the State of California, the governor and the legislature are grappling with a $35 billion budget shortfall, which cannot fail to have a direct impact on municipalities throughout the state.

Our City Manager, Cynthia Kurtz, is carefully watching current operations and prioritizing City services to determine the alternatives available when we feel the sting of the state’s budget cuts. It seems likely that the City will suffer reductions in funding from Sacramento in this fiscal year in the range of $5 million, and a larger number—perhaps double that--in 2004.

At the same time, costs are going up. These include normal compensation adjustments, premiums for workers compensation coverage, and the cost of retirement benefits.

It may sound as if I am reading a laundry list of budget woes in Pasadena, but these issues are the reality faced by many cities at the present time. You may wonder how I can possibly express optimism about Pasadena’s economic picture for the coming year.

That’s where the good news comes in. First, Pasadena has performed very well during the last two years. According to the financial report from the quarter ended September 30, the City’s revenues and expenditures were right where budget projections said they should be, thanks to a combination of economic recovery and business expansion from commercial and retail development. Retail sales and construction should be strong this year contributing to general fund revenues. The five year analysis by the staff suggests that City finances will remain stable in that time frame.

Second, Pasadena is fortunate to have a diverse economy. Its leading industries include health care, telecommunications and utilities, engineering and construction, financial services, higher education, and general retail merchandise, including automobiles. Increasingly, technology-based companies are emerging as an important player. This economy has performed well in recent years, even with the uncertainty.

Over recent years, the City has maintained a balanced budget and prudent reserves, which have increased in recent years. The reserves are invested in fixed-income opportunities where they grow safely and responsibly. In that regard, I want to recognize the financial leadership and success provided by Cynthia Kurtz and Finance Director Jay Goldstone.

In the coming year, the City intends to pursue funding opportunities for parks, affordable housing, after-school programs and other facilities that have become available under recently approved ballot propositions.

May I say a word about the financing plan approved by the City Council a few months ago for the City Hall. It was based on a recommendation of a group of citizens acting as the City Hall Retrofit Finance Committee. The City will fund the retrofit of this renowned architectural treasure by using existing revenue streams. It is an innovative and prudent approach that does not require a tax increase.

Earlier I tried to estimate the direct impact of the state’s budget crisis on Pasadena. There is sure to be an indirect impact as well, which will affect members of our community with lower income. As community-based organizations and the county lose state funding, the safety net of social services for those at the lower rungs of the income scale will weaken and in some cases disappear. As a community, we should expect new hardships among low-income families, and as a City, we must be prepared within our resources to step forward and help on public health, housing, human services and recreation needs more than at any other time in recent memory.

With this brief look at the financial picture, let us move to other matters—matters more visual—about the coming year. They relate to housing, transportation and parks.

In the last couple of years, there has been a high pace of residential development. Whereas during the 1990s, the number of units constructed in the City averaged less than 100 per year, in this decade—in the years 2001 and 2002--housing totals have been more in the range of 800 per year. This means that in the past two years, we’ve built 150% more units than in all of the 90s.

With all this new housing, I am hearing some people say there is too much development, and that it is changing Pasadena. I believe this is a question that should be discussed and I want to offer a few thoughts about how we got where we are.

When you think about it, you realize that the bulk of the new development is taking place in commercial areas: on Walnut, Colorado, Cordova, and Del Mar. This accords with a judgment made when Pasadena’s general plan was adopted in the 1990s. It calls for targeted development in the Central Business District, and in certain other areas of the City covered by specific plans.

The thinking for encouraging residential land use in commercial areas was, first, to reduce development pressure on our wonderful single family neighborhoods, and secondly, to encourage what planners call “smart growth”.

Smart growth places living opportunities near transportation, and work, retail, and recreational land uses. It allows a style of living in an exciting environment, with less dependence on the automobile. People come and go and conduct their business and have fun from early morning until late at night. I remember the scenes from the 2002 video which show Pasadena as a cosmopolitan community, with a European flavor. Pasadena is evolving into a city with character, class and qualities that make it “urban”, memorable and exciting.

Thus, as we think about the pace of development and whether our current policies are correct, obviously we should go back to the general plan and review the considerations that led to its adoption nearly ten years ago.

There is another issue relating to housing. Pasadena’s success as a business, education and retail center has had one effect which is negative for persons of lower income. The issue is housing affordability.

Following the economic doldrums of the early 1990s, real estate values spiraled upward not only here and in Southern California, but throughout the nation. This has impacted the ability of persons of average income to achieve homeownership, even though they have jobs that are important to our community. Rising housing costs also challenge persons with special needs such as fixed-income seniors, persons with disabilities and persons of very low income.

Since the 1980s, maybe even before, Pasadena has been aggressive in using available resources to make housing more affordable. But recent value appreciation has been so rapid, the need has increased greatly, and the City has attempted to respond. Two years ago, the City adopted a policy that requires larger housing projects to make 15% of the units available as workforce housing and other housing needs. Last year, the Council established a task force to review what we have been doing, to explore new approaches and to offer new ideas.

This challenge is huge in economic terms, but the moral and political commitment of the City is clear. It is my hope that the Housing Affordability Task Force, now in its fourth month of deliberations, will forward to the City Council this spring effective recommendations to mitigate the increasingly high cost of housing.

New economic development also brings with it the challenge of traffic and the need for transportation. Some are saying that traffic is our greatest challenge. Pasadena will take a visible step to meet those needs when the Gold Line light rail system goes into operation this summer.

I am extremely proud of the City’s work in expanding local bus service, the ARTS bus system. The two routes that have operated now for several years have been increased to four, and in the spring, four additional routes will go into operation. The original purpose of the ARTS bus—to provide transportation to persons who are transit dependent—is still a priority, but to that has been added the goal of assuring that this bus system connects with Gold Line stations.

A community-wide local bus system will also reach to those who are automobile dependent, inviting them to use public transportation and leave their cars at home. We believe the Gold Line along with the local bus system expansion offer great promise for reducing the number of cars on our streets.

These developments in housing and transit have a visual impact on our Central Business District, composed of four principal centers: Old Pasadena, Paseo Colorado, the Playhouse District, and South Lake. During 2002, each of these areas has made considerable progress and will contribute to Pasadena’s economic vitality and excitement in the coming year.

In Old Pasadena, the City was able to identify roughly 200 additional parking credits, which enables various new investments to move forward in the coming year, increasing Old Pasadena’s significant contribution to jobs and to tax revenues.

At Paseo Colorado, Pasadena Star-News broke the news in November that it is being sold by the original developer, Trizec Hahn, to a partnership consisting of Lehman Brothers and a company called Developers Diversified Realty, which is building The Pike retail center on the shore at Long Beach. The buyer is proceeding with the purchase because it found that the Paseo is operating consistently with projections and is improving steadily each month. (The residential portion of the project, which has been reported as more than 75% leased, is not part of this sale transaction.)

Across the street from Paseo Colorado, construction is actively underway on Western Asset Plaza, an office building at Los Robles and Colorado. The principal tenant there is a highly regarded investment firm with global business operations.

In the Playhouse District the focus is arts and culture, but the area is supported by strong economic investment and increasing business activity. The Pasadena Museum of California Art opened in the fall and the Playhouse is playing to sold-out audiences. Seven development projects are underway there, representing more than 800 residential units.

In recent months, all eyes have been on South Lake. Retail expansion surrounding the architecturally significant Macy’s Department Store is in the final stages of construction. Several new stores began operations prior to the end of this year and several more will open in the spring.

May I now turn to the topic of parks, an issue the City Council addressed last year with valuable help from the City staff and the Recreation and Parks Commission. For too long, since the 1980s, we have failed in our responsibility to support, maintain and improve our parks.

The City Council has made a new commitment to parks, including increasing support in the last year by several million dollars. More support will be provided in the coming year. The City Council recently increased the residential impact fee, established under state law to provide for new parks and park expansion as additional residential units are constructed. This increase should produce three to four million dollars for park funding.

In addition, a master program of capital needs is being developed for spending so that, as funding becomes available, it can be allocated in an area pursuant to an overall plan, so that park improvements take place equitably around the city. The people of Pasadena have reason to be encouraged by these steps in support of parks, but there is still much to be done. I hope those who support parks will remain focused on the City’s progress in the months ahead.

I have suggested that we have lots to look forward to this year, even though our progress presented difficult challenges. There are a couple of other reasons for my optimism.

One, mentioned in the 2002 video, is the Pasadena Bioscience Center, a vision of Senator Jack Scott that is overseen by a board consisting of the City of Pasadena, Pasadena City College, Cal State L.A. and Cal Poly Pomona. The Center’s mission is to provide training for bioscience laboratory technicians and researchers, which will fill a workforce need for our region’s emerging bioscience industry, and help retain these companies in this area. We expect its graduates to be welcomed by companies performing sophisticated and important work.

The other initiative is called Pasadena: City of Learning, conceived by Erica Clark of Art Center College of Design and supported by Pasadena’s major educational institutions and organizations. The mission of City of Learning is to foster a community-wide climate for learning at all ages of life—lifetime learning--based upon the unique resources currently available in the city and the potential for new learning opportunities from new partnerships.

In the spring, a series of neighborhood meetings will be held to inventory learning needs as well as opportunities throughout the City. In addition, since City of Learning believes that we all learn by seeing the accomplishments of others, it will recognize “heroes” in the field of learning, people who demonstrate a commitment and success in helping others learn. With the momentum of this effort, Pasadena could become a model for the nation.

An example of the kind of new partnerships that the City of Learning intends to encourage involves Pasadena’s Carnegie Observatories.

Last summer, Carnegie, an affiliate of the Carnegie Institution in Washington, D.C., joined in CORAL Pasadena’s summer training program for outstanding public high school students. They became after-school program mentors after eight weeks of schooling in astronomy and related sciences. To my knowledge, this is the first time Carnegie has become engaged in this way in the community and it has already made other commitments.

If Pasadena were just a bedroom community, where people commuted every day, never got to know their neighbors and felt no sense of community responsibility, this would be a very different city. But Pasadena is a community that is central to the lives of the people who live and work here.

I take great pride in celebrating with you the greatness of Pasadena, and call upon us all to renew our dedication to building a greater city. For Pasadena is much more than buildings and transit systems. Indeed, it is the people of our outstanding community who time and again best reflect the theme, “Visibly Pasadena.”