Suppose you had a long-running disagreement with your insurance company. You paid premiums dutifully back in the 1990s. Then something terrible happened and you wanted the company to pay up. The company balked and you took it to arbitration, in keeping with the terms of your contract.
And four years after your complaint, the arbiter rules in your favor. You get a check roughly equivalent to your annual salary. What do you do with that money? Do you pay off debt related to the original complaint? Or do you buy something new?
That, in a nutshell, is the debate around Half Moon Bay after the city learned it had won a $10 million interim award from retired California Supreme Court Justice Edward A. Panelli in an ongoing case against the Insurance Company of the West. The arbiter ruled the company was on the hook for part of the expense due to a bungled municipal drainage project that resulted in the $18 million Beachwood settlement.
It looks like city officials, who for years have been cutting services, laying off employees and generally pleading poverty, will be suddenly flush with cash. Now what?
An election-year debate has erupted over how to spend the money. So let’s prioritize.
Pay down the debt. This is the obvious answer and to do otherwise with the lion’s share of the money would be grossly irresponsible. This is likely the only chance city leaders will ever have to avoid millions in interest charges and to get out from under a crushing debt that is currently scheduled to cost Half Moon Bay taxpayers $1.12 million a year for another 27 years.
Prepare and market Beachwood. The city might be wise to use a small portion of the money in preparation for selling the 24-acre Beachwood property to private developers. At the time of the 2008 judgment, the city essentially bought the land. That felt like a hollow thing back then, but, as the housing market turns, it may prove very valuable indeed. Proceeds from that ultimate sale should then be used to pay off the bonds.
Consider necessary infrastructure. Prior to the arbiter’s ruling, the city claimed it had no money for capital improvements after the current fiscal year. Some things, like fixing the crumbling Main Street Bridge, can’t wait forever. It would be a bad idea to defer crucial maintenance; it only gets more expensive. It is prudent to consider using some of the newfound money for long-identified projects that are necessary for basic quality of life in the city.
There may be temptation to spend the money on things we would all like. Improvements at Smith Field, a new library … who knows what else? But the city didn’t win the lottery. It won a hard-fought insurance settlement and it has a lot of bills resulting from that case. Cities, like the rest of us, should pay their bills first.
— Clay Lambert