How stockton Went Belly-up, and how to get out of financial woes.

Overbuilding
By Eric Schulzke

Stockton pushed for an arena complex, including a 10,000-seat hockey arena, a 5,000-seat baseball diamond and an attached hotel complex. When cost overruns drove up the cost, the city got creative. Johnston recalls the scene in when she was on the city council.

"The mayor was talking about wanting a ballpark on the waterfront. The city manager said, 'There is no money. We can't do this.' And the mayor said, 'Can't we take money from municipal utilities, can't we take it from community development?' 'No, it's not legal to do that,' the manager said," Johnston recalled.

"And so he was stymied," she said, "but he kept trying to figure out how he could do some of these projects."

Eventually, a new city council was elected and a new city manager hired. "The city manager got an opinion from some attorney over in Oakdale, who said, "Oh yeah, you can borrow from municipal utilities," Johnston said.

So to help build the arena, the city raided dedicated sewer and water funds, which were legally segregated and not available for building projects.

But the Oakdale lawyer was wrong. Several years, $145 million and one lawsuit later, the city agreed to pay back to the stolen funds. With interest, it will cost the city $1 million a year over 30 years to pay back the $10.9 million it raided for the arena complex.

Altogether, the new complex cost more than $135 million in bonds. Unlike the parking garages and the office building, both now repossessed, the city has held onto the arena complex and the theater — subsidizing annual operating losses as it struggles with the construction debt.

Did you notice Ann Johnston stating that "they" the city council was responsible for these expenditures, and she she was one of them! And she admits to using funds for other departments for the cost of construction!