State of the City & Town Hall Address

January 21, 2009

5:30 PM

Reno City Hall, Council Chambers

Mayor Robert Cashell

Good evening and welcome to my first “State of the City” address.

We are facing challenging times. Many of you are experiencing this first hand.

Unfortunately—as bad as it seems right now—there is concern we may have not hit bottom yet.

That is why my colleagues on the City Council and I are here tonight. We felt it was important to provide you with a status report on the City. We also felt it was important you know that the Council and City Manager have a plan to manage the challenges before us.

Given the current economy, we are fortunate that up until now the state of our city has been good—but we need to be prepared for things to get worse. Our revenues are down, but because of our City Manager and staff, we’ve been able to balance our budget through careful planning and disciplined spending. And although times are tough, the City has been able to move ahead with many priorities that you told us are important to you.

Last year the City conducted an aggressive program to put a new street surface on about 65 miles of neighborhood streets. This surface treatment is about one tenth of the cost of a street reconstruction and can prolong the life of a street about ten years.

Using more than $3 million in private donations, the City purchased the former YMCA on Foster Drive. The first building in the project to be re-opened is the E. L. Wiegand Youth Center, thanks to a $1 million donation from the E. L. Wiegand Foundation.

It is operated by the Boys & Girls Club and provides much needed child care for working parents and low-income families.

It was private donations that helped us complete the Community Assistance Center and open the Family Shelter and Resource Center Building. The money came from 50 different non-profits, foundations, businesses and government agencies, including our partners Washoe County and the City of Sparks. In addition to the new Family Shelter, the facility also has a men’s shelter, women’s shelter and Triage Center.

Despite tough times, our community and City staff continues to rise to meet new challenges.

Working with neighborhood volunteers, we have come a long way in cleaning up the Oliver/Montello neighborhood. Children are playing in Pat Baker Park again. And the City, again in partnership with residents, has launched a similar project in the Linden Grove neighborhood.

We have also worked on redevelopment projects that rejuvenate and beautify our downtown core. These projects will also stimulate our economy.

For instance, we have invested in beautifying our downtown, adding lights, trees, and plants. Improvements can be seen on Fourth, Arlington, and Sierra Streets as well as on Virginia Street, which is much more pedestrian friendly now.

Also, the City opened the West Street Market last year. So far, the venture has supported local, small businesses, creating 25 jobs, and rehabilitating several old buildings.

We just covered a two block section of ReTRAC, creating new real estate out of thin air, providing the opportunity for more business investment.

And we are all excited about the opening of the Reno Aces Baseball stadium in April that will create more than 200 new jobs, with the potential of even more.

But as long as this recession continues, we must prepare for the possibility that the economy could get worse. Sales tax, property tax, room tax—almost all of our revenues have continued to decline.

The Governor’s budget proposal diverts local taxes to the state level, which could further reduce our revenues. We will work together with the County and Sparks to defend our revenues from being poached by the state.

We’ve also had a nasty surprise, the failure of the auction rate bond market.

We used auction rate bonds to leverage resources to create real value for the City—

• Building the Reno Ballroom,

• Improving Virginia Street,

• Beautifying the downtown,

• Buying and renovating the National Bowling Stadium.

And then an unprecedented failure in the market caused our payments to more than triple.

Since the beginning of the auction rate market in 1988, there has never been this kind of disruption. Other local agencies have been affected by this market failure too, such as Clark County, Washoe County, St. Mary’s Medical Center and Renown Medical Center.

And, while we may ask a lot of questions to be fully informed, I want to assure you that we will not default on our bonds.

We’re in the process of converting those bonds, lowering our costs, but it’s another example of how this economy continues to hammer away at us.

My colleagues and I have the experience to know the economy runs in cycles.

Our City Manager spent the first two decades of his career in California, where he learned to plan for boom and bust cycles. Because of his experience, we have had budgeting mechanisms in place that will help us survive hard times.

The City Manager instituted a policy of holding back 2% of budgeted expenditures each year. He also set up a stabilization fund where we save money each year for times like these.

But, despite all of our efforts, we know we will need to do much more.

We are hopeful that Congress and the new Administration will find ways to help us create jobs and bolster the local economy. We have developed a list of priority projects for immediate implementation should Congress create a Main Street stimulus package.

Already, nearly $5 million in federal assistance has been allocated to the area to stabilize neighborhoods with vacant, foreclosed homes.

On January 28th, my colleagues and I will finalize contingency plans on what we will cut from the City budget if revenues continue to decline. It’s likely that they will continue to go down and we need to be ready to act when they do.

Since we have cut all we can without impacting services, the next steps will be a little bit harder. Our employees have already shown that they’re willing to make sacrifices and be creative in addressing this challenge.

We’re hoping we can avoid layoffs by reaching agreements with our collective bargaining units to reduce pay or working hours. We don’t want to add more to the ranks of the unemployed and we don’t want to lose the knowledge and experience these people represent.

Any pay cuts will start at the top. I—along with the Council, City Manager, and the department heads—have all agreed to the same cuts we will ask of anyone else. We will all share equally in the sacrifices.

If we all work together, I believe we will keep the budget balanced and continue to weather the storm.

While there is reason for concern, I am optimistic about our future.

Thank you.