Blogging Bayport Alameda

October 12, 2009

Kevin Kennedy: A Long Way To Go, And A Short Time To Get There

When Lauren asked me to write a guest blog posting, I thought about all of the subjects I have an interest in as possible topics: fly-fishing, college football, keeping raccoons out of your backyard pond…

But I’m a money guy, I’m in my third term as your City Treasurer, and I’m not one to shy away from controversy, so let’s talk City finances!

Financially, Alameda is on the “Vallejo trajectory”. While bankruptcy is not imminent, if we continue down the path we’re on today, we’ll be there soon enough.

The report issued by the Fiscal Sustainability Committee (which I co-chaired with our City Auditor, Kevin Kearney), spells it out pretty clearly. For years, maybe decades, we’ve lived way beyond our means:

  • under-funding important commitments like maintaining our roads and sidewalks (more than $100 million of deferred maintenance needed over the next 10 years)
  • entering into obligations like pensions and retiree healthcare that have grown to onerous levels (we currently have $75,000,000 in unfunded retiree health care obligations)

The City has basically avoided paying any bill that could be pushed into the future in order to keep the operation running. (If you want more detail on this, check out the report and the presentation we gave the City Council and have been making to various community groups on the City’s website.)

Time is running very low to deal with this situation. With every passing day, we get further and further into a financial hole. Vallejo ignored this until the only option left was bankruptcy. I hope Alameda doesn’t make the same mistake.

The economic downturn has put added focus on the City’s financial issues, but in truth these problems will exist in the same overwhelming degree in good or bad economic environments. Thus, we can’t hold our breath hoping that an economic recovery bails us out.

So what can we (the public) do about it? Having viewed this blog for years, I know that many readers are also key community activists, so I’m hoping the following answer moves some of you to follow through on helping to solve our mutual problem before it has a devastating impact on our community.

Alamedans need to be vocal about their concern and active in a solution. This clearly isn’t a problem that government, left alone, will willingly solve. Nothing against any of our current leadership, who have in fact shown some fortitude in starting this process lately, but true solutions will not be implemented until the public is as vocal about this as they are about Alameda Point, LGBT lessons, or the myriad other topics that dominate the social landscape in town. We can get on top of this now, or we can ignore it, but we can see how our fate will play out by looking at Vallejo.

How can we engage ourselves in solving this issue? Take a look at what Oakland is doing, using the Web and a creative budget “tool” to allow residents to provide input. This program is written by a company called Next10 . The licensing cost is $15,000, and I will approach the City about pursuing this (or maybe a community group could raise funds to purchase it?). This is the most imaginative way I’ve seen to get the average person to understand the trade-offs involved in balancing a budget.

There is also the old-fashioned democratic way to get involved: contact Council members and City management and express your opinion. While they are all aware of the situation and working toward solutions, knowing the public supports their efforts would go a long way toward speeding the process along.

I’d also suggest one other route: vote for people who are committed to change. Is a candidate willing to make tough decisions, stand up to entrenched special interest groups, and break the cycle that has gotten us to where we are? Everything has to be on the table in this discussion, no more sacred cows and “everyone else does it this way” baloney. It won’t be easy, but if they are not going to be part of the solution, they are in fact part of the problem.

Living within our means as a City will certainly not be as fun as being fiscally ignorant, but its way overdue, and in my mind nothing threatens our wonderful community more than a bankrupt City government.

Kevin Kennedy is an avid fly-fisher, college football enthusiast, and skilled at extracting raccoons from ponds.  Oh yeah, and he’s the City of Alameda’s elected Treasurer.

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29 Comments

  1. “Living within our means as a City will certainly not be as fun as being fiscally ignorant,…”

    If fire salary and retirement cannot be addressed and be realistically resolved, than the only solution is to go the Vallejo “no fun” way.

    At the time of its bankruptcy filing, Vallejo spent 74 percent of its $80 million general fund budget on public safety salaries, 25 percent higher than the state average. The generous contracts were the result of deals struck in the 1970s, following a police strike that left the city in turmoil.

    From the National Law Journal 3/17/09

    In the first ruling of its kind, a bankruptcy judge held the city of Vallejo, Calif. has the authority to void its existing union contracts in its effort to reorganize, holding public workers do not enjoy the same protections Congress gave union workers at private companies.

    Comment by Jack Richard — October 12, 2009 @ 8:36 am

  2. Mr Kearney, thank you for your commentary, and how do you view the SunCal initiative from a fiscal sustainability standpoint? Do you share the concerns of the Chamber of Commerce, Renewed Hope, the city manager, and others?

    Comment by AD — October 12, 2009 @ 9:34 am

  3. Excellent blog entry Mr Kennedy … finally a voice of reason in the Alameda government.

    Unfortunately, what you fail to realize (or are unable to convey because of the political repercussions) is that most Alamedans are complete retards. They will scream, preach and protest all day about the willie nillie politically correct useless topic of the moment. However, when it comes to things that truly matter in government, like fiscal responsibility or defeating the ridiculous sense of entitlement displayed by most of our community, they have nothing productive to contribute. “Live within our means” … come on. This Island community is more concerned with funding their feel good charity case of the moment than funding actual necessities that are the real responsibilities of government. But don’t worry … they’ll just pass a dozen more parcel taxes. After all, anyone who owns property must be rich and thereby has a social obligation to support all of the “have nots” of the community.

    My prediction: this community will not get its act together and bankruptcy will follow the wasteful spending shortly. Sad, but inevitable …

    Comment by Jeff R. Thomason — October 12, 2009 @ 10:15 am

  4. #1 Keep an eye on the State Legislature and their efforts to restrict municipal bankruptcies (Chapter 9 filings): http://www.insidebayarea.com/trivalleyherald/opinion/ci_13292350. This may trump the Vallejo ruling…

    #2 Ummm, I’m Kennedy, Kearney is the Auditor. Don’t worry, you’re not the first to confuse us. In regards to Alameda Point, clearly it needs to be fiscally neutral, or add net revenue to the City, we can’t afford to take on the additional costs of servicing that area without equal or greater amounts of revenues. The key is striking a balance between revenue-generating activities and quality-of-life issues. I think there are others in the community who can provide opinions on the Sun Cal development plan, I’m more focused on the sustainability of our existing government operations.

    #3 Thanks for the compliment, and I really hope your prediction is wrong

    Comment by Kevin Kennedy — October 12, 2009 @ 2:42 pm

  5. I’m impressed. Your writing is coherent and well structured. It is good to know that you are keeping an eye on our money. I was also a big fan of your predecessor.

    I do have a question for you. Why not declare bankruptcy? Wouldn’t that be in the better long term interest of the City? We are going to drown in our commitments to retiree and spousal medical benefits otherwise.

    Comment by AlamedaNayTiff — October 12, 2009 @ 3:55 pm

  6. Re: #4

    I know it’s editorial but your link doesn’t place much confidence in senate bill 88’s passage and even if it does pass not much confidence it’ll pass muster in the bankruptcy courts.

    From: InsideBayArea

    “It is meaningless because the commission retains the authority to saddle approval of access to bankruptcy courts with conditions that would prevent the dissolution of labor contracts.”

    “It is the responsibility of bankruptcy courts, not a politically motivated state commission, to judge whether a fiscally troubled municipality is able to pay its bills and if it has a viable plan for reorganizing its debt to get back into the black.”

    Comment by Jack Richard — October 12, 2009 @ 4:11 pm

  7. I am afraid putting it in the public’s hands will solve nothing. Most people are either stupid or Nimbys, and thus nothing will get done. It is sad to see a public official such as yourself who is doing the community a service ignored by the council members. If they refuse to make the tough choices they should be exposed and replaced; but good luck with that. Accountability seems to be a foreign concept in government these last ten years. What happens when the artificially inflated home prices crash down in the next year or two? Less taxes than before to deal with and higher demand for programs. The budget issues surrounding public safety need to be addressed. Here’s hoping you/Alamedans are successful in battling the police and fire unions. Thanks for the article.

    Comment by Dan S. — October 12, 2009 @ 4:27 pm

  8. In late Dec. 2008 Save Our City! Alameda started with these:

    and

    http://actionalameda.org/actionalamedanewsblog/2009/09/24/league-of-women-voters-meeting-is-alameda-going-bankrupt/

    Back in January it was inconvenient for the City of Alameda to be on the verge of bankruptcy, and people who brought it up were scoffed.

    Somehow, it’s now convenient to talk about bankruptcy.

    There must be a reason–what is it? Is it to break the public safety contracts? Is it that the city wants to disentangle from SunCal/DE Shaw? Does the city want Alameda Point for free?

    The old saying, “follow the money….” or, follow the lack of money

    Comment by RM — October 12, 2009 @ 4:53 pm

  9. Also–It’s good that city treasurer Kevin Kennedy is bringing this financial situation to light.

    It’s great that our new city manager Ann Marie Gallant has been decisive, trimmed staff and facilities, and most importantly, has critically analyzed the SunCal/DE Shaw initiative.

    More and more Alamedans are becoming alert and this is gratifying. Let’s continue to think clearly and work together for the long term good of the city.

    At the top of the “To Do List” should be: reject a hedge fund takeover of a third of our city with no guarantees.

    Comment by RM — October 12, 2009 @ 5:35 pm

  10. #5 Thanks! As far as “pro-actively” declaring bankruptcy, I don’t think anyone wants to get into that mess, just look at what’s happening in Vallejo. Short-term, it’s a disaster for the commiunity, and long-term there would be a lot of negative effects hanging over the City.

    #6 I don’t know how viable the effort by the Legislature is, but just the fact that they want to control the ability to file Chapter 9 is scary.

    #7 You’re welcome!

    #8 Not sure it’s “convenient” to talk about bankruptcy, and there isn’t a big City agenda to bring this up, sorry…

    The issue I had with the “Save Our City! Alameda” discussion of this was around their notion that we’re “on the verge” of bankruptcy. That implies two things: one, a bankruptcy filing may be imminent (not true, and potentially damaging to the City and residents). And two, that it’s a foregone conclusion that we’ll end up there. While I clearly argue that if we do nothing it’s a definite possibility, I’m not willing to give up on trying to alter the course before our options pass us by.

    I think the fact that the Council initiated the Fiscal Sustainability Committee shows they are willing to take a real look at City finances. That’s not something you do if you aren’t prepared for the results.

    The key now is to take action to solve the problems, and this will require all of us to be involved, understand the scope of the issue, and offer up solutions.

    Comment by Kevin Kennedy — October 12, 2009 @ 5:51 pm

  11. 10. Kevin, despite the dire possibilities for the City, your blog and post 10 response are sort of upbeat and helpful. I think your response to RM about #8 makes a really important distinction between laying out possibilities for the purpose of being factual, informational and helpful, and making a forecast to fulfill an agenda and to scare or stampede people, like Carl Rove would do.

    Comment by Mark Irons — October 12, 2009 @ 6:28 pm

  12. I know that we live in a society that seems reluctant to place blame even when that blame is well earned. Certainly, much of this could have been avoided if our Mayor and Council had taken action in the past. What actions could have helped to alleviate the current situation?

    Comment by AlamedaNayTiff — October 12, 2009 @ 6:45 pm

  13. Would it help to use the park money for some of that deferred maintenance rather than giving it to the Boys and Girls Club? I would imagine every million helps.

    Comment by Jill Staten — October 12, 2009 @ 7:18 pm

  14. Sorry, I should have added that the deferred maintenance is for existing park facilities, which are crumbling. I’m not talking about raiding park money for street repairs.

    Comment by Jill Staten — October 12, 2009 @ 7:19 pm

  15. How long have you been the City’s Treasurer? This is your 3rd term? Better late than never to notice how bad the situation has deteriorated. What was going on the last 10 years or so with the City’s finances? With the Auditor? How come no one noticed the items the the Interim City Manager pointed out early this year had not being correctly dealt with for so long? If you did, what did you do about it? The council receives $50 per meeting and the Mayor an extra $250 per month. How can they compete with the resources of the highly paid City staff? I understand the CM Flint was not the most honest person, and Kurita left us in even worse straits financially. What can the Treasurer and Auditor do to actually hold the Council and thereby City staff accountable? What can a lay part time Council do to keep professional staff doing what they are paid high salaries to do? (3 votes to fire the CM and CA)

    What can the Treasurer actually do to ensure that the SUNCAL Initiative is fiscally neutral? What does that mean? Monthly balances? Yearly? We’ll repay you in 25 years if you pay for it today? Wimpy on Popeye would gladly repay Tuesday for a hamburger today. Will the City, can the City front the money for SUNCAL’s infrastructure?
    How will that fiscal neutrality be measured? Fiscal neutrality for what entities? Who will pay for the schools, teachers and maintenance for the 2 schools needed forever? It is well settled that residential never pays for itself. I am curious as to how this factor will be included. What about the intangible costs of all the lost time of residents as they travel off the island. Instead of 4 minutes to get to 880 through the tube, it will take 22 minutes. How is all that lost time for residents being factored in to the fiscal neutrality equation? What about the additional gasoline spent, and fumes exhausted into the air and the resulting increase in respiratory illness for the island’s children? The medical costs and shortened lives. How will that be measured and taken into the consideration of SUNCAL being fiscally neutral? Oakland has fought for decades to regain some of its lost air quality due to the trucks serving the container ships. Will we factor in the City’s losses from Webster Street’s loss of taxes and business due to the unavoidable economic shift to Alameda Point?

    Fiscal neutrality measured by who and using what criteria? How will we enforce a lack of fiscal neutrality? The voters aren’t even told what the incarnation of “SUNCAL” is that we are dealing with and its resources, or lack thereof.

    How can anyone evaluate the risk of a business relationship when we are not told what the legal entity is, what its resources are, and what other demands those resources are obligated to meet? Without first filing a lawsuit. Doesn’t that tell a cautious person that something doesn’t smell right from the very beginning?

    Comment by barbara — October 12, 2009 @ 7:30 pm

  16. #11 Thanks, hopefully we can have an intelligent, productive process to resolve this (but that might be a first in government…)

    #12 I’ll answer that in the context also of what we can do differently in the future.

    Put people in government who are willing to say no and tell the truth.

    Understand that life is full of trade-offs, and if we want more of something we may need to be willing to give something else up. As the Stones sang, “You can’t always get what you want, but if you try some times, you get what you need.”

    Hold people accountable, support their hard work, and understand that if they are honest they probably won’t make decisions that please you 100% of the time but they are doing what they think is right.

    And even when a problem is identified, don’t assume gov’t will fix it without public pressure (ex. Social Security).

    There’s a few I can think of off the top of my head.

    #13/14 Gov’t finance is full of restricted funding, monies dedicated to specific projects, etc. I’m not sure what that money can be used for, but certainly there is a long list of work that needs to happen in town…

    #15 Yes, third term, started in 2000. In 2005, the City Auditor and I proposed the idea of doing a 10yr forecast, invested a lot of time in building a model, didn’t gain traction with powers-that-be, was never used to my knowledge.

    The current CM is excellent, she has already brought up a lot of issues to work on and implemented a number of them (10% staff reductions for example).There have been some groups less than pleased with her recommendations, but those who care about keeping our City solvent should appreciate her work (see my points to response 12 above).

    Ultimately, the City Council is accountable to those who empower them (voters), and City staff is accountable to those who hire them (Council in the case of staff leadership — CM, Attorney, Clerk). Council should make sure staff is accountable to them, or replace them. Likewise with the voter/Council relationship.

    As for the Alameda Point issue, a subset of this whole discussion in a way. Again, appply the same logic.

    Comment by Kevin Kennedy — October 12, 2009 @ 8:27 pm

  17. Thank you Kevin(s) for all your diligent work on these issues. I’m glad you were a guest stepping in for Lauren. This has been very informative. Thanks for continuing to answer questions and refine your points. I had only been able to make one of the FSC meetings and missed the 10 yr forecast presentation to council. I’m glad to have now seen it on the City web page. (except one page is too small to read) Seems like many years ago we talked about the unsettling financial condition of the city, yet not much changed with the old CM, and not enough has happened yet with AMG. It is rather foul medicine, but we have no option. I thought the “big Box” frames were silly, because we all know that in the long run cities loose income w/ big box stores. There is no area on our island that would attract only off island customers, and shifting our on-island sales from our family business to BB stores would hurt more than big boxes would help. That is well known info, and the reason so many municipalities now try to pass laws to prevent them.

    For clarification (re :15) when did you and Mr Kearny begin to inform the CC and CM of the fiscal problems the city would face if we did not start to change our outgo: income ratios? When were you 1st warning them of the growing and significant problem with the pension and welfare costs associated with some of the city employee contracts? I think Matt Naclerio (PW) has been telling the CC for over 5 years of the $100M+ backlog of deferred maintenance. Putting off maintenance increases the cost of each project.

    A final question – Have you ever researched or understood different types of Public Land Trusts and the models now being built to serve both residential and commercial needs of communities?
    The more I learn the better it seems for Alameda growth especially when compared to the SunCal proposal.

    Okok another final question – are you considering CC / Mayorship? Would you step up if asked? ..and how many questions is that?

    Comment by Dave K — October 12, 2009 @ 11:15 pm

  18. To expand upon this point made in post #4:

    In regards to Alameda Point, clearly it needs to be fiscally neutral, or add net revenue to the City, we can’t afford to take on the additional costs of servicing that area without equal or greater amounts of revenues. The key is striking a balance between revenue-generating activities and quality-of-life issues. I think there are others in the community who can provide opinions on the Sun Cal development plan, I’m more focused on the sustainability of our existing government operations.

    ==================================

    The current plan relies heavily on Tax Increment Financing which results in the Point becoming a significant drain on city finances.

    The details are too great for me to type all at this time, but in a nutshell the process has the city forgoing approx 88-90% of the property tax revenues from the Point, as well as all future increases in property tax revs, to finance a large portion of the cleanup. Property taxes are by far the General Fund’s largest source of revenue, revenue which simply cannot be made up from the other alternatives (sales, utility & transfer taxes).

    To quote a few numbers, in fiscal 08-09, proprty tax revenue was approx 22.5MM, more than double the next largest source (utilities tax of 9.1MM) and nearly quadruple the 5.7MM sales tax. When completed, the Point will require police, fire and all other services but will not be contributing to sufficient resources to the General Fund to pay for these. The term “fiscally neutral” is often used when describing the Suncal plan, but that applies only to the construction phase. Once constructed, the neighborhood becomes a significant drain on city coffers.

    If we fast forward out to the completion of the plan, we can reasonably project 4500 new dwellings at an average of 600M each in today’s dollars. (SFH’s likely more, condos likely less, it’s just a guess). That’s 2.7B in residential property value, which outside a Tax Increment District would generate approx 7.8MM in property tax revenues for the General Fund (GF gets .29 of the 1.14% base rate). Since the base is currently within a TID, and the Suncal plan would continue that status, nearly all of that revenue is forgone to the TID while the GF is still responsible for governing the area.

    Many backers of the Suncal plan cite sales taxes from new businesses as one of the plan’s benefits to the city. Those people should note that the forgone property tax revenue in the above example is greater than the city’s ENTIRE sales tax levy for the current year.

    Comment by David Hart — October 13, 2009 @ 8:28 am

  19. Hi Kevin,
    Didn’t know you were a fly-fisherman. Poke your head over the fence and let’s set up a trip.

    Cheers,
    MRA

    Comment by MRA — October 13, 2009 @ 8:50 am

  20. #17 Thanks, Dave!

    In regards to the Big Box illustration in our FSC presentation: we’re trying to show how one solution alone won’t solve the budget problems. Again, back to the issue of trade-offs and finding a combination of cuts to services and increased revenue opportunities that solves the problem and preserves our vision of our community.

    On the issue of talking about the City’s financial difficulties: please don’t think that Auditor Kearney and I are the first ones to bring this up. Council and staff have dealt with tough budget decisions for many years, at least going back to the recession in the early 2000s. I think what we added to the discussion was the idea of looking beyond the current budget cycle and doing some long-range planning, seeng the long-term impact of short-term decisions.

    On 1/4/2005, Council approved the 10-yr budget model project. We (Auditor, Treasurer, CFO, Finance staff) worked for a year on building a model. Goal was to have a tool that would be useful for internal planning, and also for the public to use and learn from. Didn’t happen, whether it was lack of interest from the powers-that-be, an improving economic backdrop turning the heat down on fiscal issues, clearly the timing wasn’t right. But we have it now with the FSC work, so we need to act on it.

    Land trusts: haven’t looked at it, would echo the comments I made above about any solution needing to be fiscally-neutral (added maintenance, police/fire coverage, and other expenses must be covered by new revenues).

    CC/mayorship: God bless those who are able to serve the City in basically a full-time capacity for $300/month. That is a huge committment, and while you don’t have to agree with every decision the Council and Mayor make, I sure hope everyone respects their sacrifice to serve us. I’m not in a position to do that right now. But never say never.

    #18 The poster, Dave Hart, is/was a member of the FSC, wrote the whole section of our report on City debt structure. This post is the type of discussion that needs to happen regarding the financial aspect of developing Alameda Point.

    #19 Michael: go to http://www.YouTube.com, search krkennedy1967, I just posted some video of my Calgary trip!

    Comment by Kevin Kennedy — October 13, 2009 @ 12:39 pm

  21. We do not have the Vallejo School Problem. People were(are) moving out of Vallejo in droves because the schools are in the toilet. We have the opposite here. People move here – or say they have – to send their children to our wonderful schools. Do what we can to raise funds – bridge tolls, beach parking meters, more parking meters, marina fees – especially short-term. Don’t put it all on homeowners. Spread the use fees around.

    Hey, I have an idea. Why don’t we let Suncal start developing Alameda Point so we can begin collecting revenue and taxes. I don’t see any other developers jumping up to take the job.

    Comment by Jenny — October 13, 2009 @ 2:35 pm

  22. Mr. Kennedy,
    Thank you very much for the commentary. It is good to know that at least someone is presenting tough criticism, if not a recognizable solution. While it is obviously important for some of us to be more aware and involved, is there a common-sense plan in the works for fiscal responsibility? If there were a reasonable, understandable set of guidelines, with an explanation of the impact and the potential, some of the active groups could get behind the proposal and perhaps help it onto a ballot. It’s unrealistic to think the average citizen is going to know, or readily learn, enough about municipal finance to call his or her councilperson and present a cogent, comprehensive 20-year plan for fiscal responsibility. Is that something the treasurer or you could do?
    by the way, are the figures for sales taxes published anywhere? I have heard that Alameda actually had an increase in sales tax, with Albany one of the few cities in the area to see one. Is this true? If so, during what period did that happen? If it did, can you sell a story to one of our pitiful newspapers? It seems that an increase in this revenue, during one of the worst downturns in recent memory, would be news….
    Maybe I missed it.

    Comment by Stev Ball — October 13, 2009 @ 5:18 pm

  23. 22. I think the fact that the average citizen is not likely to be much of an expert on city finance is an important point, but I can’t imagine putting more stuff, like a long term fiscal plan, on the ballot would be a very useful method for solution. I’d like to see less on the ballot and that includes fire fighter’s issues and entire developments like Alameda Point.

    If we as voters passed a long term fiscal plan, then we could better take collective blame or credit for the outcome, but many times voters vote without being well informed and in fact I think that is what drives much of the trepidation by opponents of the SunCal initiative.

    Comment by M.I. — October 13, 2009 @ 8:00 pm

  24. 18 Dave Hart. Thanks. You have stated clearly how in post construction the expanded police and fire costs would not be neutralized by tax increments from the Point but would burden the general fund. If they are calculated to be offset indirectly by other means, I’d like somebody who can explain that to step forward and contradict your explanation.

    One point about the Chamber’s position which I think SunCal detractors have too conveniently glossed over, and the same for City manager’s criticisms. Neither Chamber or City Manager are critical of TIDs in general, but they both seem to object that the tax increments from the Point won’t be merged with BWIP. Whether one supports TIDs or not, it seems to me you would muddy the water by mixing the funding stream from the Point. I guess the logic is that if those funds are left at the Point SunCal somehow makes off with them as profit. Do you care to comment on any of that?

    Comment by M.I. — October 13, 2009 @ 8:42 pm

  25. #21 Jenny, keep in mind that the school district runs its own finances, and raises its own revenue. But you’re right, both the school district and the City need to be in good shape financially to maintain our quality of life in Alameda.

    #22 I’m hoping the work of the FSC meets some of your needs, we really tried to make it understandable to everyone.

    Technically, the City is required to have a balanced budget, so I’m not sure how we could legislate that more tightly. But clearly that can be done at the expense of not paying bills that are not immediately due bbut pile up for the future (i.e. deferred maintenance, retiree health care obligations).

    I do think the City could do a better job of communicating these budget issues to the public, and I’ve expressed that opinion to them. Public finance is not the most intuitive process, and while I don’t feel the City has not been transparent about finances (as some have argued), I definitely think it is worthwhile to go the extra mile to translate this stuff into a form the average resident can understand.

    In regards to sales tax revenue, we’ve fared better than most recently, but that comes off a very low base. Alameda collects less sales tax per capita than most surrounding cities (I think only Piedmont is lower than us, and they have virtually no retail business there).

    #23 MI, I agree, we shouldn’t be trying to legislate budget issues right now. In fact, the first thing that needs to happen is a review of the services the City provides in the context of what the citizens value and what we can afford.

    If the true costs of running the City are 20% higher than currently budgeted (as our FSC work suggests), the first thing we need to do is decide where to cut 20%. And this is on the heels of 10-20% cuts over the past few years, so this decision isn’t easy and will impact services. That’s why public input is so important.

    #24 The opinions of experts are always important to help one form an educated view. Whether you agree with the expert or not, if that person is knowledgable and has done their homework they should be listened to.

    Comment by Kevin Kennedy — October 14, 2009 @ 10:05 am

  26. Mr. Kennedy — Thank you for your commentary and your follow-up comments, and for all your efforts on behalf of the city.

    The report on fiscal sustainability assumes fiscal neutrality in any future developments (at Alameda Point or elsewhere) in its projections, but as things stand, the city doesn’t have any systematic, objective means of ensuring that this goal is met. The city could wind up losing a whole lot more money in this respect than it might hope to save through extensive cost cutting measures. I recognize that ensuring fiscal neutrality isn’t simple, and that it’s also very political, but I think it should be considered along with any and all cost cutting measures.

    I also recognize that you probably don’t want this problem dumped on you, but I’m not sure how fiscal sustainability can be discussed without giving some thought to fiscal neutrality.

    Comment by DLM — October 15, 2009 @ 12:05 am

  27. 24:

    An interesting & thought provoking question. I don’t know if the revenues can be merged, if if they can, what it matters. What do you think?

    As far as Suncal getting the cash, the tax dollars are controlled solely by the TID and their use is divided btw debt service and various pass-thrus (affordable housing, school district etc). The TID can’t just cut Suncal a check gratis. (At least I don’t think they can…)

    The way for Suncal to realize additional benefit from this additional cash is that extra tax increment can be leveraged into extra borrowing, the proceeds of which can be spent on additional projects that earn Suncal a profit, but that is indirect. Suncal can’t just grab the cash.

    Comment by David Hart — October 15, 2009 @ 7:42 am

  28. #26 DLM, you’re exactly right about the difficulty of deterining if something is “fiscally neutral”. I would argue that that problem already exists in the current operation of Alameda Point, where assessing what our costs of managing and servicing that property is difficult at best. For example, what portion of our public safety efforts are consumed by the AP property? Or public works? Is the current revenue stream from leasing fully offsetting these costs?

    The reason the FSC assumed “fiscal neutrality” regarding any development at Alameda Point is so it wouldn’t taint our projections one way or the other. We worked with what we knew for a fact, and didn’t make any big assumptions about future projects like Alameda Point. At this point, even estimating the timing of development at AP is just an educated guess, and we didn’t want guesstimates and assumptions to flaw our work.

    That said, it’s pretty easy to see that if any project the City undertakes isn’t at a minimum going to pay for itself, it just puts us in worse shape financially.

    How do we assure fiscal neutrality? Tough question, but I think it needs to be asked with the same urgency as questions about traffic flow, open space, density, and all of the other elements of AP development that are frequently debated.

    #27 Thanks Dave for continuing to share your knowledge.

    Comment by Kevin Kennedy — October 15, 2009 @ 9:43 am

  29. What I don’t understand is how so many people claim that they want fiscal responsibility by our local government but then vote for clowns who do nothing to provide it. Are these people lying or do they simply not understand what fiscal responsibility is?

    Comment by Jeff R. Thomason — October 18, 2009 @ 12:22 pm


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