Why this election matters

So you don’t think the election this Tuesday for Mayor and Council will matter much to the daily lives of Alamedans?

Think again.

In fact, within less than a year, Council will be making decisions about waterfront development, Alameda Point, retiree health benefits, and the budget.  Each of these decisions will have immediate and long-term impacts; together, they will set the course for the City for the foreseeable future.  And once that course is set, it will be hard to reverse.

The Merry-Go-Round’s good friend, Planning Board member John Knox White, recently wrote about the local election, “For me, the choice is one based on ‘are you happy with life in Alameda and the direction of the city’ or ‘do you think we need to freeze Alameda in amber and pretend that will work?’”

As usual, Mr. Knox White got it only half right.  It is fairly easy to predict the “direction” the City will take in the four areas we mentioned if the two incumbents, Mayor Marie Gilmore and Councilman Stewart Chen, D.C., are re-elected and Bonta aide-de-camp Jim Oddie gets a Council seat.  If you’re “happy” with that prospect, by all means vote for the IAFF Local 689 slate (or, if you truly aspire to act like the elite, join the Emperor of the Enlightened in voting just for Ms. Gilmore and Mr. Oddie).

But the alternative is not to “freeze Alameda in amber.”  (In fact, it’s tough to “freeze” anything in fossilized tree resin).  It is to vote for the candidates, Trish Spencer for Mayor and Frank Matarrese for Council, who would take the City in a different direction in each of the four areas.  It’s harder to predict exactly where we’d end up, but it’s not the same place those now calling the shots want to go.

Russo email re TrishThe opportunity – indeed, the necessity – for the Mayor and Council to decide whether to stay the course – or to begin charting a new one – will be upon us very soon.  Indeed, some of the action items are scheduled to be presented to Council even before the new Mayor and Council are sworn in.  But we would find it extraordinary if staff tried to jam approval through the old Council should either Ms. Spencer or Mr. Matarrese be elected next week.

Let’s start with waterfront development.

At its last two meetings, the Planning Board approved the key features of the Del Monte warehouse project, which will consist of 414 new housing units, 308 of them in the old warehouse and the rest on two adjoining parcels, and 30,000 square feet of retail space.  According to City Planner Andrew Thomas, the Planning Board will hold one more meeting on the parking plan for the project, then staff will present the package to Council on December 2 and request authority to enter into a Development Agreement with Tim Lewis Communities.

The major issue raised by the Del Monte project involves traffic.  The “initial study” for the project estimated that it would generate 3,861 daily vehicle trips, including 207 out-bound trips during the morning rush hour and 237 in-bound trips during the evening rush hour.  Inevitably, a goodly portion of the rush-hour trips will be headed to, or coming from, the already clogged tube and bridges.

Of equal importance to the people living around the Del Monte warehouse is the impact of the project on their neighborhood.  The City’s own “schedule of required minimum and maximum off-street parking” requires two spaces per unit for housing units of 3,000 square feet or less.  That would mean that the Del Monte project would need to provide no fewer than 616 off-street spaces for the 308 units in the renovated warehouse.  But the development plan calls for only 415 on-site parking spaces, 326 of them in an underground garage.  Where will the other cars park?  The neighbors fear that they will look for spaces on the adjacent streets.

The City’s solution to these problems, of course, is “Transportation Demand Management.”  Under the TDM plan approved by the Planning Board, each housing unit will be charged an annual fee of $350 (and each commercial unit a fee of 55 cents per square foot) to fund a “Transportation Management Association” that will provide a commute-hour shuttle bus to BART as well as Easy Passes for use on AC Transit bus lines (of which there are currently two that provide regular service to Oakland and San Francisco).  A “bicycle kitchen” and three car-share spaces also will be available.

Contrary to the suggestion floated in this space a while ago, automobiles will not be banned from the project.  But, if a car owner wants to park on-site, she will have to pay for the privilege at a price set by the “property manager.”  (Under an earlier version of the TDM plan, condo buyers would be charged $30,000 for an interior parking space and $20,000 for an exterior space; apartment renters could lease an interior space for $75 per month and an exterior space for $40 per month).

According to its designers, the TDM plan will reduce the number of new daily vehicle trips generated by the Del Monte project to 2,649.  Unlike the initial study, the plan does not estimate rush-hour trips separately, but apparently staff and the Planning Board are not troubled by the additional burden on the tubes or bridges resulting from the development even after implementation of the TDM plan.  Nor are they especially concerned about the “spill over” of cars from the project onto adjacent streets.  According to the last two staff reports presented to the Planning Board, the number of on-site parking spaces provided by the project itself is “appropriate” for the number of new residents.

If the Council approves the Master Plan and the Development Agreement for the Del Monte project, the City will be going all in on TDM as a solution to the impact of development on traffic.  If the plan works, and the planners assure the public it will, the project will not add materially to congestion either at the tube and the bridges or on neighborhood streets.

But if it doesn’t?  Well, then the nightmare envisioned by residents will occur.  The TDM plan provides for annual monitoring and promises that, if its goals are not being met, the project will be “required to implement a Goal Attainment Plan (GAP). . . .”   And if that doesn’t work, “it will be the City that determines consequences. . . .”  By then, of course, it may be too late.

Based on the last two years, it is reasonable to expect that a Council headed by Mayor Gilmore and including Dr. Chen will approve the Del Monte project without further ado.  If Mr. Oddie is elected, he can be counted on, if necessary, for the third vote, since his primary backer, the firefighters’ union, already has publicly endorsed the development.  (Why do the firefighters’ care?  You’ll have to ask IAFF Local 689 president Jeff DelBono, who sent his predecessor, Dom Weaver, to the Planning Board to speak in favor of the plan, presumably because Mr. Weaver actually lives in Alameda).

Frank Matarrese

Candidate Frank Matarrese

And what if Ms. Spencer and Mr. Matarrese get elected?  We doubt that either would seek to kill the Del Monte project outright.  But Mr. Matarrese has spoken during the campaign about reducing the number of housing units at the site to the “realistic capacity” set forth in 2015-23 Housing Element (200 units) or its 2007-14 predecessor (150 units).  (Ms. Spencer has been less specific; she says she wants to “slow down” the pace of waterfront development).  So if the challengers get seats on Council, they might try to send the Del Monte project back to the drawing board.  All it would take for that to happen is for them to get the increasingly independent Vice Mayor Marilyn Ezzy Ashcraft or the always unpredictable Councilman Tony Daysog to go along.

Council also will be making decisions very soon about several development options for Alameda Point.

One involves whether to move forward with the entity calling itself Alameda United Commercial, LLC.  Back in July, Council approved, by a 4-1 vote, an exclusive negotiating agreement between the City and AUC for renovation of the former Bachelor Enlisted Quarters for a “combination of assisted senior living, independent senior living, student housing and office space.”  At the same meeting, Council approved, by a 3-2 vote, a second ENA with AUC for a “new development along the taxiways that includes hotels and residential condominiums.”  (The draft term sheet refers to 250 hotel rooms and 200 condos).

According to Alameda Point Chief Operating Officer Jennifer Ott, staff will present its recommendations about the AUC proposals to the Planning Board in December or January, with presentation to Council to follow.

Staff also has been negotiating with developers over two other, larger parcels at the Point.

Back in April, staff issued requests for qualifications from developers for what staff called “Site A,” consisting of 68 acres located within the “Waterfront Town Center” zoning sub-district, and “Site B,” consisting of 82 acres, of which 14 acres are located within the WTC sub-district and the rest within the “Enterprise” sub-districts.  For the former, staff sought a developer for a “residential/commercial mixed-use project” that included a minimum of 800 new housing units.  For the latter, it looked for an outfit willing to undertake commercial development, “with a focus on a major sales tax generator, such as a premium retail outlet (not a “big box” store) and/or a corporate “build-to-suit” user(s).”

Staff then selected two finalists apiece for each site.  Both Site A finalists submitted project descriptions that included 800 housing units and 200,000 square feet of commercial uses. Both Site B finalists said they would focus on build-to-suit corporate users, “including office/R&D and light industrial uses, and also potentially retail, hospitality and other commercial uses.”

In September, Council authorized staff to pick its “preferred” developer for each site.  Once the choices are approved by Council, the City will enter into ENAs with the winners, with a Development Plan and a Disposition and Development Agreement expected within six months.  Ms. Ott told us staff intends to present to Council its pick for Site A on November 18 and for Site B on December 2.  Again, these dates may be bumped if the election puts Ms. Spencer in the Mayor’s chair and/or gives Mr. Matarrese a seat on Council.

It thus is likely that, by the beginning of next year, Council will have decided whether to give the go-ahead to development proposals for a significant portion of the Point.  True, the negotiations of the formal agreements for Site A and Site B will take a while longer, but the momentum will be hard to resist.

As with the Del Monte project, Mayor Gilmore and Councilman Chen, if re-elected, undoubtedly will rubber-stamp staff’s recommendations for the Point.  As far as we know, the firefighters’ union hasn’t taken a public position, so Mr. Oddie still will need to await his final instructions, but there’s no reason to expect that he won’t go along with Ms. Gilmore and Dr. Chen.

Trish Spencer

Candidate Trish Spencer

Again, the outcome could be different if Ms. Spencer and/or Mr. Matarrese get elected.  During the campaign, Mr. Matarrese has stated that he opposes construction of any new housing units at the Point. (Again, Ms. Spencer has been less unequivocal).   If Mr. Matarrese can get two other votes, the proposals expected from AUC and the “preferred” Site A developer, both of which include new housing, will need to be re-worked.

We don’t know how Mr. Matarrese would react to whatever proposal the “preferred” developer for Site B staff comes up with.  But we suspect that he’d want to “give direction” to Mr. Russo and Ms. Ott to turn their attention to luring maritime and “green” industries to the Point.

Now for financial matters.

Our regular readers should have the figures for the City’s “unfunded liabilities” for pensions and retiree health benefits memorized by now:  $85,728,554 (as of June 30, 2012) for pensions for public safety employees; $25,206,659 (as of June 30, 2012) for pensions for “miscellaneous” employees (i.e., City workers who aren’t firefighters or cops), and $91,172,000 (as of January 1, 2013) for “other post-employment benefits” (“OPEB”) – i.e., retiree health benefits – for both groups.

The politicians always claim – incorrectly – that they can’t do anything to reduce unfunded pension liabilities.  Indeed, despite a host of rulings from the California Supreme Court and the federal Ninth Circuit Court of Appeals holding otherwise, Mayor Gilmore probably still believes it would be “unconstitutional” for the City to change any of the terms of its employee pension plans.

But even the elected officials allied with the public employee unions admit to having more wiggle room when it comes to retiree health benefits.  Until now, all Council has done to address unfunded OPEB liabilities is to create a “trust fund” to which it will put money in whatever amount and at whatever time it chooses.  (According to Assistant City Manager Liz Warmerdam, the unaudited balance in the trust fund as of June 30, 2014 was around $2 million).

Change may be on the way.  A few weeks ago, Mr. Russo told the audience during his “State of the City” speech before the League of Women Voters that staff had met with the public safety unions, and “I have a plan to eliminate the OPEB debt.”  He didn’t reveal the details, but he hinted that, “Everyone will contribute more.  Benefits will change.”

In response to our inquiry, Mr. Russo said he expected to present his OPEB plan after the New Year.  So it will be up to the new Council to review and approve it.

Not knowing the specifics, it is hard to predict whether Mr. Russo’s plan really will “eliminate the OPEB debt.”  We’re quite sure that Mr. Russo is capable of devising such a plan.  But how much the public safety unions will agree to depends on the results of next week’s election.

Chen & Gilmore

Mayor Gilmore and Councilman Chen

There’d be no point for the firefighters’ union to offer any significant concessions if the IAFF Local 689 slate prevails, since it is safe to say that Ms. Gilmore, Dr. Chen, and Mr. Oddie would hail any proposed agreement as a tribute to Mr. Russo’s ability to negotiate and the unions’ willingness to “sacrifice.”  By contrast, if Ms. Spencer and/or Mr. Matarrese are elected, they might not be so eager to applaud only token cost-sharing by the unions.

Instead, if elected, the two challengers might suggest that Council re-visit the comprehensive list of proposed solutions prepared by the Pension and OPEB Task Force in October 2012 or the similarly detailed list compiled by staff in July 2013.  Led by Mayor Gilmore, the last two Councils nodded politely at these presentations – and then did nothing other than set up the “trust fund.”  A new Council with Ms. Spencer and/or Mr. Matarrese on board could insist on more effective action.  In any event, we suspect that Ms. Spencer, in particular, might have, well, a few questions for the City Manager.

Whatever happens with Mr. Russo’s OPEB plan, it’s just the prologue to the most important financial decision the new Council will have to make in the coming 12 months:  the adoption of a budget for fiscal years 2014-15 and 2015-16.

Our regular readers also should recognize the table below, which was presented by former City Finance Director Fred Marsh to Council last June:

5 Year Projections - 2

During the campaign, the Mayor and her IAFF Local 689 slate-mates came up with a standard response whenever Mr. Marsh’s projections were mentioned:  Sure, that’s what he said, but his projections didn’t take account of the steps we might take to bring the budget back into balance.  (This was a silly point – how could Mr. Marsh be expected to forecast the impact of actions that hadn’t yet even been proposed?)  But by next June the new Council, whether presided over by Ms. Gilmore or Ms. Spencer, is actually going to have to decide what to do to prevent the outcome projected by Mr. Marsh.

Among other decisions that will need to be made are:

  • To what extent, if any, will the City continue to rely on – and treat as “revenue” – advances from other agencies (like Alameda Municipal Power) and/or transfers from other City-controlled funds (like the Fleet Industrial Supply Center Fund) into the General Fund?
  • To what extent, if any, will Council look to save costs by reducing the budgets for the fire and police departments, which together consume about 75% of General Fund revenue?
  • And, more specifically, to what extent, if any, will Council insist that former IAFF Local 689 president and current fire chief Mike D’Orazi cut his department’s spending?
Oddie reads speech

Candidate Jim Oddie

If the Local 689 slate wins, we expect they will do all they can to keep fire (and police) wages and staffing at their current levels and to continue to provide our finest and bravest with the latest and greatest in facilities and equipment.  After all, the firefighters’ union didn’t put up all the money it did — about $25,000 through Friday – to get Ms. Gilmore, Dr. Chen, and Mr. Oddie elected only so they could turn around and cut the public safety budget.  Should that happen, there’ll be no more lobster feeds for Ms. Gilmore, luaus for Dr. Chen, or days at the ballgame for Mr. Oddie.

(Incidentally, far from anticipating that he will be asked to make cuts, former IAFF Local 689 president and current fire chief Mike D’Orazi probably is itching to make the pitch for re-opening fire station no. 5 – or, better yet, building a new one – to serve the new developments along the waterfront and at the Point).

And the politicians know just how to justify their failure to act:  We can’t spend a dollar less on fire and police without jeopardizing the well-being, indeed, the very lives and safety, of every resident of Alameda!  That was the excuse given in 2012 when staff asked each City department to cut its budget by 5 to 10 per cent – and the fire department came up with only a 2 per cent reduction.  It was the excuse given in 2013 when the similar staff request was for 1-to-5 per cent departmental budget cuts – and the fire department managed a reduction of less than one per cent.  You can be sure it will be the excuse this time.

But if that’s the way a Gilmore-Chen-Oddie Council chooses to go, staff will have its work cut out for them.  The techniques to which they resorted in the past may no longer be available.

Since Mayor Gilmore took office, staff has “increased revenue” by taking “advances” of payments in lieu of taxes from AMP ($1 million in FY 2012-13 and $1.2 million in FY 2013-14) and “repayments” of loans from the FISC fund ($480,000 in both FY 2011-12 and FY 2012-13).  And it has “reduced expenses” by out-sourcing the animal shelter to a non-profit organization and transferring recreation and park salaries from the General Fund to the Athletic Trust Fund.  Those ships already may have sailed.

When all else failed, the Russo/Gilmore administration turned to Mr. Marsh, whom they could count on to find money in some obscure “internal fund” to use to make up the General Fund shortfall.  But Mr. Marsh has left the City to go to the City of Fairfield, and, unless he shared his secrets with Ms. Warmerdam before he departed, the search for found money may prove fruitless.

Unless there are still more tricks up staff’s sleeve, the budget to be proposed next June may represent the day of reckoning for the City’s elected officials.  If the politicians truly want a “balanced” budget that does not rely on “carryovers” – i.e., draws from reserves – to make up the shortfall between revenues and expenses from operations, the time finally may come when the only way to stay away from cutting fire and police department spending is to reduce the amounts spent on such City services as parks and libraries.

Unlike the IAFF Local 689 slate, Ms. Spencer and Mr. Matarrese would not be beholden to the public safety unions for their election, so it’s possible they would be willing finally take a knife to the fire and police department budgets.  Indeed, during the campaign Mr. Matarrese expressly has raised the possibility of re-negotiating union contracts.  (Ms. Spencer has been less specific, vowing only that “everything will be on the table”).

But it will take a knock-down, drag-out battle for them to succeed.  Captain DelBono may be no Churchill, but he didn’t become president of the firefighters’ union in order to preside over the decimation of the fire department’s empire.  Ultimately, it may come down to what price those on the dais are willing to pay to maintain “labor peace.”

With the budget, as with waterfront development, Alameda Point, and retiree health benefits, the outcome of the election this year thus could affect the future of the City for years to come.  So our message to Alameda voters goes beyond the standard civics lesson (“Every vote counts”).  Instead, vote as if your “quality of life” depended on it.  Because it very well might.

Sources:

Del Monte:Del Monte Warehouse – initial study2014-09-22 staff report to PB re Del Monte2014-10-27 staff report to PB re Del Monte TDM plan2014-10-27 Ex. 2 to staff report – letter from consultant re Draft Del Monte TDM plan

AUC: 2014-07-15 staff report re AUC (BEQ)2014-07-15 staff report re AUC (taxiways)

Sites A & B: 2014-04-15 staff report re RFQ2014-09-02 staff report re Site A finalists2014-09-16 staff report re Site B finalists

Pensions & retiree health benefits:  2012 CalPERS annual valuation report (safety)2012 CalPERS annual valuation report (misc)Bartel OPEB Final Report (2014-01-27)

Budgets: 062811 transmittal letter2012-06-26 transmittal letter2013-06-11 transmittal letter

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
This entry was posted in Alameda Point, Budget, City Council, Development, Firefighters, Pensions and tagged , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

4 Responses to Why this election matters

  1. Denise Lai says:

    Reblogged this on Raising Hell For Good and commented:
    Seriously. Vote Trish. Mr. Sullwold details about 100 reason why …

  2. notmayberry says:

    Voting YES on 45 is a help to decreasing the OPEB debt, because the unrestrained rise in health insurance costs is a great factor in why OPEB is so high.

  3. tom says:

    Robert:

    Alameda is headed for disaster in its coming budgets….

    We will see big changes within 5 years no matter who is elected…
    I certainly hope Matarrese and Spencer are in City Hall to guide us thru some troubling finances and moderate the outside influences for development which are playing so well now at City Hall.

    Russo needs to be taken down a few steps and reprogramed for civil behavior with the citizens of Alameda.

    Thanks for your reporting facts and blowing the smokescreens from those currently in power.

    Tom

  4. Eugenie Thomson P.E. says:

    Bob
    Thank you for your well researched commentary.

    BTW, The consultant traffic report for the Del Monte Project showed only negligible increases in future traffic volumes out bound into the Posey tube and bridges.. As a result the consultant concluded no increases in congestion due to the Del Monte project. (ie no traffic nor parking impacts due to Del Monte and so no mitigations)

    And most unusual is the consultant also concludes only 19 vehicles more during the am peak hour as a result of all the development including Alameda Point outbound (yr 2035 am pk hr Posey tube) and concludes NO congestion increases at the west end whatsoever!!!

    Furthermore, the consultant’s projection for the Posey tube’s morning peak hour traffic volumes in the future (yr 2035) are close to and less than the historical volumes (ie since the base closure). Auto traffic is dropping in the future and no increases in congestion approaching the Posey tube in the morning??

    The Alameda Point EIR too had similar unbelievable/incorrect results such as the Ala POint project would not result in any traffic volume nor delay increases outbound at any of the island crossings. No increases in congestion at all at the west end due to the Ala Pt project.

    I agree with your point above that increases are likely but that is not what the reports are stating. Obviously these traffic reports are incorrect.

    Reference:
    The Del Monte Traffic Impact Analysis March 25, 2014 for the above traffic facts can be found on the City website: Planning Board Agenda item #7B, June 23, 2014, click on File # 2014-652, then click on Draft Supplemental Negative Declaration (Exhibit 3) and download the PDF pages 214 and 233. By doing the simple math calculation one can obtain the difference between the volumes for northbound coming out of the Posey tube (this is the volume approaching the 7th and Harrison intersection # 20: AM Existing is 902 thru and 1686 turning => total 2588 vehicles per hour; and AM Cumulative year 2035: 869 thru and 1738 turning => total 2607 vph). This calculates to only 19 more cars per hour above the report’s today’s AM peak hour volume into the Posey tube after all the developments are built including Alameda Point for the Cumulative condition without Del Monte, the cumulative condition upon which Del Monte was tested for its future traffic impacts. And then concluding neither Del Monte nor all the other projects combined would produce zero traffic impacts at the west end.
    And the last paragraph on page 253 provides the consultant’s parking conclusion (TR-9) of no parking problems.

    Unfortunately, Council is not questioning these reports with the hidden incorrect data and unbelievable results of no congestion increases at the west end, even after the residents including me, raise these concerns.

    Instead, Council is ignoring the future traffic problems, does not perform the effort to find the financially feasible infrastructure solutions nor does Council assess how much development is feasible for the island. Sad and we hope with Trish and Frank this will change.

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