Because most folks are too lazy to click through to attachments, here is the City budget which lays out the prospective budget until 2017 for Alameda Point. From what I understand, some folks think that it’s meaningful to add up the “Total Revenue” line and say, “hey the City is going to be taking in x millions of dollars in revenue from Alameda Point in the next x number of years” without any sort of context at all.
In order to put some meaningful numbers behind the conversation of whether or not Alameda Point actually makes any money on the lease revenues, we have to sort of the line items that are relevant.
Because the “projected fund balance” is reserve from past successful years (and $2.4 million worth of the initial $8.5 million fund balance is a loan made to the ARRA from the General Fund) looking at the “Total Revenue” line which adds the fund balance to the “Total Lease Revenue” total isn’t indicative of how collected revenues match up against expenditures on an annual basis. I could go through a long process of pointing out that you have to subtract Total Expenditures from Total Lease Revenues, but a much simpler line to look at is toward the bottom which says “Net Impact (Rev. less Exp.).”
This is how much — taking the fund balance out of the equation — that Alameda Point loses from year to year. And according to the budget, the switch doesn’t go from negative to positive until 2013/2014 when the $8.5 million fund balance has been whittled down to a mere $1.8 million. Also, on the subject of assumptions, the assumption made on this budget is that revenues will grow at a rate of 3% each year, but the bigger assumption (not really an assumption because there is no line item in the budget for it) is that there will be no money earmarked from the lease revenues towards “large capital projects/repairs-emergencies.” Which means that when — not if, when — there comes a need for a large capital project or a large scale repair, there is no money with the exception of the “fund balance” being drawn down each year until 2013/14 to spend on capital improvements at Alameda Point.
A random thought, one that I should probably follow up on but will just put out there in the ether, I wonder how much money was saved in the Municipal Service Fee (police, fire, etc.) line item because of the closure of Fire Station No. 5 at Alameda Point.
Blogging Bayport Alameda 
the fact that revenue-expenses is a NEGATIVE number says it all. but the anti-B folk will brush it off and claim this is propaganda.
Comment by E — January 13, 2010 @ 10:26 am
That it’s a negative number is a fact, not propoganda. That something must be done about is a fact, not propoganda.
Declaring that to fix it we need to enter a disadvantageous contract that severely strains public finances is propoganda, not fact.
Comment by David Hart — January 13, 2010 @ 11:01 am
2:
The negative cash flow problems at Alameda point would be a less pressing problem if there were real signs of progress on conveying the base to City hands as well as any evidence–lacking so far–that City of Alameda staff and elected officials were more interested in presenting a balanced economic analysis of Measure B’s Development Agreement.
Even though the SunCal-funded and SunCal-authored initiative is problematic, the City staff’s “worst-case” (AKA “the sky is falling”) assumptions about the scope and costs of the Development Agreement lead to skewed results because the staff did not consult with the authors regarding the author’s intent of their language. (As a writer and editor, I always look to the author first as the most authoritative source to clarify questions of original intent. This is a standard practice in my profession and a sound one.)
If Measure B fails it will in part be due to official City of Alameda “propaganda” masquerading as an objective or impartial analysis. As a taxpayer, I find the City’s official analysis of Measure B at least as flawed as the imperfectly-written initiative itself.
Comment by Jon Spangler — January 13, 2010 @ 11:47 am
#3: Jon: You stated in a recent comment (on an earlier posting here) that you’re a member of an advisory committee for SunCal. In that case, you must be looking out for SunCal’s interests, because that’s your role.
City staff is looking out for the city’s interests, and that’s their role, along with the City Treasurer and City Auditor, who oppose Measure B. The Chamber of Commerce is looking out for the local business interests, and they’re opposed to Measure B as well.
Comment by dlm — January 13, 2010 @ 1:22 pm
“This is how much — __taking the fund balance out of the equation__ — that Alameda Point loses from year to year”.
Translation: The fund surplus isn’t accumulating fast enough.
That is NOT
Comment by dlm — January 13, 2010 @ 1:29 pm
[Sorry, I’m typing around the cat. I’ll start over.]
“This is how much — __taking the fund balance out of the equation__ — that Alameda Point loses from year to year”.
Translation: We’re skipping the fund balance because it doesn’t show a loss.
Or in practical terms: The fund surplus isn’t accumulating fast enough.
That is NOT a loss — the city does NOT have to shell out money from the General Fund for Alameda Point. The lease revenue has been accumulating a surplus for years, which — to state the obvious — could not exist if there had been ongoing deficits.
The spreadsheet above is hard to read so I’ll type out the most relevant entry:
Net Impact Total (Rev-Exps): $126M
So according to this 12 year projection, the city will GAIN $126M from ARRA Lease Revenue. That doesn’t look like a loss.
Comment by dlm — January 13, 2010 @ 1:43 pm
Sigh.
Since we like our analogies when dealing with this whole issue. Let’s use this analogy.
Say Alameda Point is my household budget. I have $8.5 million in my savings account accumulated when I had less expenses and no major big ticket items to purchase.
However, for the next five years I am anticipating that I will take in less money that I will actually spend, requiring me to dip into my savings every year in order to balance my household budget.
Plus, I have budgeted no money in case that my roof starts leaking or I need to fix my indoor plumbing.
Plus I have to pay off a $2.4 million loan in those 5 years.
At the end of the five years, my savings account is down from $8.5 million to $1.8 million.
That’s not the way to budget one’s household account, nor is that the way that government should run either.
Comment by Lauren Do — January 13, 2010 @ 1:56 pm
Also you may want to check your math on the “Net Impact Total (Rev-Exp)” or check your reading on the graph.
Comment by Lauren Do — January 13, 2010 @ 2:03 pm
#7
Sounds like you are in financial trouble. You need help. Perhaps these nice folks can help you.
Comment by AlamedaNayTiff — January 13, 2010 @ 2:10 pm
Accuracy would be wonderful, I would love to see that happening.
For starters, it’s misleading to point to a deficit in one year and claim that it represents an ongoing loss when in reality it doesn’t — which is my point. As I said earlier, how did the lease revenue accumulate a surplus if there were losses every year?
It’s also misleading to say that we’re losing all kinds of money when that’s only a supposition — which is also my point.
Various proponents have claimed that the city is losing $14M a year on Alameda Point as you must have seen — including Barbara Kahn and Josh Cohen. If accuracy is what really matters, then would youu agree that this claim is a gross exaggeration?
Comment by dlm — January 13, 2010 @ 3:19 pm
Saying that Alameda Point costs the City of Alameda $14 million a year is not “a gross exaggeration,” it’s political spin. It’s technically true since that is how much the City (aka the ARRA) will spend for expenditures at Alameda Point. But it is removed from context which is that revenues collected are about $11 million.
Saying that the “Net Impact Total (Rev-Exp)” is equal to $126 million is a gross exaggeration or just bad math.
Comment by Lauren Do — January 13, 2010 @ 3:31 pm
#8: This is a more recent spreadsheet that doesn’t show the totals on the (similar) one that I have, altho it shows higher ending balances overall.
Specifically, it shows a projected Ending Fund Balance (a surplus) for the next 10 years that begins around $7.9M and ends around $3.1M. (To anyone who wants to print this, it’s the last page in the budget document posted above.)
Comment by dlm — January 13, 2010 @ 3:39 pm
Yes, the $14M figure is expenditures for FY 2008-2009, which are offset by revenues of $11.9M.
So the Net Impact (Rev. less Exp.) = -$2.6M, for that one period.
For the total I quoted, see this link, at the bottom of the “Total” column on the left, under “Net Impact (Rev less Exp)”. To be accurate, I think the $126M figure is meant to be the city’s gain over the entire leasing period including as projected thru FY 2016/2017.
Anyway, that’s what it says.
http://actionalameda.org/actionalamedanewsblog/2010/01/12/alameda-point-lease-revenues-to-exceed-130-million-over-next-eight-years/
Comment by dlm — January 13, 2010 @ 3:49 pm
I wonder how other neighborhoods stack up using the same criteria that we’re trying to make sense of here? Do all of them make a profit, or at least break even in giving revenues to the city?
For example, perhaps we should see if the Bayport neighborhood is consistently bringing in more revenue than Alameda is spending on it. If not, tear those decrepit buildings down and let’s hand it over to a developer.
The truth is, Alameda Point is already a thriving place of homes and businesses that could do a lot better if tenants were allowed to upgrade the properties.
Comment by Jack Mingo — January 13, 2010 @ 4:14 pm
Jack M.: You are right, it is a thriving place of homes and businesses. But right now, the City is responsible if one of the sewer mains blow or if the electrical grid needs capital improvements.
There is no money in the ARRA fund to pay for that and there is no money in the general fund for that either.
As for Bayport, we have a reserve fund to pay for infrastructure and services (separate from ad valorem property taxes) so I assure you that we are sending more revenue to the City then we are expending.
Comment by Lauren Do — January 13, 2010 @ 4:28 pm
DLM: Can you explain how that $126 million number is calculated?
Comment by Lauren Do — January 13, 2010 @ 5:00 pm
DLM, doesn’t understand accounting obviously. Plus how can you expect growth in revenue of 3% when Bay Area commercial rents have dropped substantially. What about major capital improvements which 90% of the buildings need. Paint, roof, utilities, etc.
My old company sold most of their older industrial properties because they just were not cost effective.
Comment by Joaquin — January 13, 2010 @ 6:36 pm
Folks: the spreadsheet in the Action Alameda link above came originally from the written arguments posted by the League of Women Voters, in support of SunCal’s arguments. So if it’s wrong, then I guess we’re all in trouble.
Further, we have rely on the city’s financial reports obviously — I can’t independently verify those reports, obviously.
As to where the $126M figure came from (on the spreadsheet in the link above), it reads:
TOTAL REVENUE: $208M
TOTAL EXPENDITURES: $88M
Net Impact (Rev less Exp): $126M
If you want to dispute the meaning of that, by all means do, but that’s what it says.
Comment by dlm — January 13, 2010 @ 8:29 pm
Here’s a link to the Measure B “Pros and Cons” arguments
Click to access measurebcorrected.pdf
See Q3, after the “SunCal-Yes” argument — there’s a reference to the ARRA Budget Report for September 2009, which is the document I’m citing.
Comment by dlm — January 13, 2010 @ 8:41 pm
DLM: Perhaps I should have clarified my question. The “Total” column at the very start of your spreadsheet does not exist on the spreadsheet produced by the City.
One cannot simply total up the “Total Revenue” line item (As this is Total Lease Revenue + Fund Balance) and say “This is the Total Revenue that Alameda Point Collects.” The Fund Balance is not a cost collected every year to be added, which is why on the City’s charts, they subtract Total Lease Revenue from Total Expenditures only. Then the identify what the Ending Fund Balance is.
Comment by Lauren Do — January 14, 2010 @ 6:43 am
[…] wanted to talk about the conversation around the leases, especially with Darcy Morrison running around claiming that Alameda Point has generated $126 million in net income o…. As proof, she points to David “Action Alameda” Howard’s “analysis” of the ARRA’s cash […]
Pingback by Alameda Point Leases: The smartest guys in the room | Stop, Drop and Roll - mindfulness in the face of a challenge — January 14, 2010 @ 9:19 am
There is no surplus in the ARRA budget!
Continuing to argue this point is reminiscent of that famous statement by the Iraqi Minister of Information:
“There are no American infidels in Baghdad. Never!”
http://www.welovetheiraqiinformationminister.com/
Someone should create our own local version called We love the SunCal Minister of Information.
Comment by Richard Bangert — January 14, 2010 @ 3:24 pm
Richard: You know that is not what is being argued. The point of contention is how the $126 million being proffered by DLM is being calculated.
As it stands the fund balance, a fixed amount, not a source of revenue collected annually, is being counted multiple times to show that there is more revenue being generated at Alameda Point than actually exists.
Comment by Lauren Do — January 14, 2010 @ 3:34 pm
SunCal and the Alamedans for Alameda Point Revitalization group it funds continue to peddle the canard that $12,000,000 of taxpayer money is being spent every year maintaining the former navy base.
Will we be seeing an equal level of criticism aimed at that claim?
Comment by AlamedaNayTiff — January 14, 2010 @ 3:53 pm
Tell you what ANT, I will level an equal amount of criticism at pro Measure B groups that you direct at anti Measure B groups.
Comment by Lauren Do — January 14, 2010 @ 4:00 pm
Okay, Lauren, I’ll tell you what, let’s deduct the $51M for the fund balance from the $126M on the CITY’S spreadsheet — that still leaves $75 MILLION in accumulated surplus, profit, whatever you want to call it, it’s NOT A LOSS!!!
Believe it or not, this isn’t political to me, it’s just a matter of telling the truth. I hate spin.
Hard to imagine, I guess.
Comment by dlm — January 14, 2010 @ 4:01 pm
DLM, at the end of the day there is only one number that indicates a surplus/fund balance/reserve. That is the last line item which reads “Ending Fund Balance.”
In 2007/08 it was approx. $8 million, in 2016/17 it’s projected to be $3.1 million. A fund balance should grow, not reduce. That is the point I am making.
And, this doesn’t even have contingencies for capital improvements.
Comment by Lauren Do — January 14, 2010 @ 4:15 pm
Lauren, will your new-found accounting skills bear fruit anywhere else??
Comment by David Hart — January 14, 2010 @ 6:09 pm
This may help answer some questions:
http://actionalameda.org/actionalamedanewsblog/2010/01/14/alameda-point-made-money-in-the-last-fiscal-year/
Comment by RM — January 14, 2010 @ 6:49 pm
#23, Lauren,
OK, my comment was flip. I guess I am at a loss as to why the subject of lease revenues continues to be the subject of such intense scrutiny. Once was enough to get all the points out.
Comment by Richard Bangert — January 14, 2010 @ 7:27 pm
31. same could be said for the procedure used by SunCal to gather signatures, but that dead horse was revived again for beating on this blog recently (see recent exchanges with Jon Spangler). The fact there was no legal action on the petitions should have laid that issue to rest immediately, but it went on for weeks as an issue of intergity.
I think the obvious reasons lease discussion has been drawn out is that there is an ongoing disparity in people’s math, which may not be as important as the one about $200 cap in terms of impact, but understanding the mechanics of economic formulation is basic to an informed debate. Also, the lease issue will live on no matter what becomes of B.
I think there are people who want the public to get the impression that the leases can be a cash cow, which is not accurate.
By the way, I thought Eugenie Thompson’s op ed in the Sun was pretty bad. One could easily read it to say that SunCal is saying the $200 cap applies to all infrastructure which has been projected to cost $600 million beyond those amenities. Or maybe I’m so confused that it didn’t imply that. How the hell would the majority of average voters know that?
The Sun’s front page article was another editorial masquerading as journalism. If one wanted to skew the article toward SunCal it would only require flipping the headline to emphasize that SunCal was questioning the City for funky math. Any article truly aimed at informing the public might have included the actual details of the disparity, like the soft costs, etc.
Oh, I might as well throw in the kitchen sink since it’s Friday. How about those slick glossy NO on B fliers (we’ve gotten 3). Who’s paying for that?! It’s not the evil developer but I’d like to know if it’s all from $10 donations at the grass roots or what. AND I got a “robo-call” from mayor Johnson asking me to vote no on B. OMG!
Comment by M.I. — January 15, 2010 @ 9:55 am
The lease revenues would not be a subject of such intense scrutiny if they were not continually being touted as (1) the financial solution to the redevelopment of the old base (“The City can develop the whole thing itself, and pay for it with lease revenues!”) and (2) proof that Measure B will unfairly benefit the developer at the City’s expense (“The base is a cash cow, and Measure B would just give it away!”).
The question of whether or not the City is making or losing money on the old base is a matter of fact, not opinion, and I am glad that a number of people with varying opinions on Measure B are doing research on the issue. However, double-counting (not to mention triple-counting and quadruple-counting!) or other “funny math,” whether intentional or unintentional, muddles the debate and deserves to be called out and corrected immediately, before the erroneous numbers take on a life of their own.
This isn’t all about “he said, she said”; there are some objective facts on which this debate needs to rest.
Comment by Michael Krueger — January 15, 2010 @ 10:18 am
I can’t speak for others’ interest in the leases, but my own is very simple:
The curent situation is only losing a few million a year. And yes, it is a loss, no equivocation.
But that’s not a lot of money & the small sum strongly suggests that changing the terms to incentivize the tenants to maintain & improve is an idea with legs. It’s not a stretch to get the thing at least cash neutral, positive over time, with the right structure in place.
That makes a helluva lot more sense than spending 9 (do I hear 10?) figures on a cleanup that may not work, housing that strains rather than aids the city budget, unmanagable traffic and future parcel taxes. There’s a reason why so many base re-uses have been commercial & industrial — because they make economic sense.
Comment by David Hart — January 15, 2010 @ 10:39 am
Our house received two flyers yesterday.
One NO on B flyer was signed by Assemblymember Sandre R. Swanson, Former Vice Chair Alameda Base Reuse Authority and Bay Farm Island resident.
At the bottom, the flyer says, “Paid for by No on B–Bad for Alameda
Sponsored by Alameda Labor Council, AFL-CIO and Alameda Bilding and Construction Trades Council, FPPC #1323125
The other NO on B flyer was from Protect the Point, a Committee Against Measure B, FPPC #1318258
Whatever these flyers cost, it is a mere fraction of what SunCal and DE Shaw paid for the very slick two page photo advertisement in the January issue of Alameda Magazine. The paid advertisement has the appearance of an article. Makes it look like the magazine is advocating a Yes vote.
In fact, the cover of the magazine has an accented circle saying Vote YES…., referring readers to the inside pages. Makes it look like the magazine is supporting Measure B.
What do you think that ad and front cover mention cost?
I’ll never look at that magazine as a source for information again.
Further, what do you think SunCal/DE Shaw are paying for their cable television commercials?
There’s no doubt about it, they think their big bucks can buy their way into Alameda.
Comment by Bob — January 15, 2010 @ 10:59 am
SunCal has tried to use fear in its campaign to create a sense of urgency. SunCal claimed that the former base was costing Alamedans $12,000,000 each year and that doom was about to befall us. What the numbers show is that there is no immediate crisis and no need to sign a contract that puts us at a disadvantage. We can and should do better.
SunCal’s proposal has divided the community. A good proposal would have united it.
Comment by AlamedaNayTiff — January 15, 2010 @ 12:16 pm
34.
“There’s no doubt about it, they think their big bucks can buy their way into Alameda.”
Doesn’t it take big bucks for anyone to buy their way into Alameda? Are we to understand that SunCal should not have a profit motive? Are we to understand that Alameda
Magazine should not accept advertising dollars from those who want to advertise their product in the magazine? Did you believe everything you read in Alameda Magazine until they ran the SunCal ad?
Comment by Jack Richard — January 15, 2010 @ 12:21 pm
SunCal’s proposal has divided the community. A good proposal would have united it.
Purple Elephant Non-Profit Collective – CLOSED
Where you gett’n it now, Ant?
Comment by Jack Richard — January 15, 2010 @ 12:25 pm
just got my No on B robo-call from Sandre Swanson. Big bucks behind No on B seems to be labor, but my impression is they don’t give a shit about what gets built, just what they get out of it.
Comment by M.I. — January 15, 2010 @ 3:41 pm
make that BIG Labor! OMG!
Comment by M.I. — January 15, 2010 @ 3:46 pm