Autopsy report

The infrastructure bond proposal presented to Council last Tuesday earned a distinction unique in the term of the current Council:  it was the first major issue on which Mayor Trish Spencer found herself on the same side as both of her “progressive” colleagues, Malia Vella and Jim Oddie.  In opposing the staff recommendation for a $95 million bond measure, Ms. Spencer wasn’t a lone voice crying “No”; she was part of a chorus (with Councilman Frank Matarrese humming the same tune in the wings).

No vote was actually taken, but the upshot was that there will be no infrastructure bond measure on the June ballot.

For those who are so inclined, it’s easy to find simplistic explanations for the failure of the proposal.  Blame staff for not putting the item on the agenda at an earlier meeting so that Council could, if necessary, fine-tune the measure that would be submitted to the electorate.  Blame the Council members who refused to vote for extending the meeting past 11 p.m. so that Council could finish its consideration of the proposal that night.  Or blame Ms. Spencer for not exercising more “control” over the discussion so that the item could be wrapped up before 11 p.m.

There may be a nugget of legitimacy in each of these contentions.  Staff could have made sure that the proposal was presented to Council before the last regular meeting at which a vote could be taken to place the measure on the June ballot.  The Council members who voted against extending the time could have sucked it up and paid the price of having to attend one more regular meeting this year.  And Ms. Spencer could have moved the item to a vote by cutting off Councilwoman Marilyn Ezzy Ashcraft when, with only a few minutes remaining until the clock struck 11 p.m., she launched into an discourse about the water situation in Flint, Michigan.

But to the Merry-Go-Round, these superficial explanations, made-for-Twitter as they may be, are unsatisfactory.  Our own view is that, however well-intentioned the infrastructure bond proposal was, its design and drafting were so defective that it was nowhere close to being ready for the ballot.  Small wonder that such an unlikely trio of opponents came together to kill it off.

Herewith, our autopsy report.

According to City Manager Jill Keimach, the impetus for the infrastructure bond proposal came from the “quality of life” survey done for the City by FM3 Research in July 2017.  The pollsters reported that 42 percent of respondents “would be willing to pay additional taxes and fees” for “repairing sidewalks, streets, and storm drains.”  Moreover, having been read a hypothetical measure for issuing bonds to generate funds to “maintain and improve Alameda’s infrastructure,” 80 percent of respondents said they would “definitely” or “probably” vote for (or would lean toward voting for) a $45 million bond measure and 75 percent said they would support a $95 million financing.  (A two-thirds vote is required for passage).

Staff thus was already thinking about an infrastructure bond measure when the so-called Alameda Point “tap water crisis” occurred in September 2017.  Although staff attributed the incident to a quickly remedied “cross-connection issue,” they told Council they wanted to “explore additional financing sources” – i.e., funds beyond development fees and proceeds from land sales – for re-building the entire potable water system at the Point.  The staff report specifically mentioned a “potential Citywide infrastructure bond” as one such source.

Staff then decided that the City ought to conduct its own poll (which they called an “engagement survey”).  They prepared a list of 11 “key infrastructure priorities” and asked Alamedans to rank them in order of importance.  According to Public Information Officer Sarah Henry, the City got 2,953 completed responses, online and in paper form, to the survey.  Here are the ranked results (Council saw an edited summary):

Key Infrastructure Priorities Average Rank
Improving traffic safety/flow 3.92
Repairing potholes and sidewalks 4.23
Maintaining City streets 4.29
Maintaining/repairing storm drains to reduce flooding and keep pollution out of the Bay 4.77
Ensuring community disaster preparedness 5.96
Maintaining the condition of neighborhood parks 5.99
Addressing climate change impacts, including sea level rise 6.46
Upgrading utilities and infrastructure at Alameda Point, ensuring safe, clean drinking water 6.53
Providing affordable housing options 6.88
Protect and maintain street trees 7.20
Restoring historic Carnegie Library and Veterans’ Buildings to public use 8.84

Staff also retained a political consulting firm called the Lew Edwards Group, whose clients include Congresswoman Barbara Lee and the Alameda firefighters’ union (which hired the firm – for $5,000 – as a consultant for the 2016 Council election campaign).  Apparently at Lew Edwards’s suggestion, staff decided to have FM3 “update” the survey it had done just last July with a second round of 400 telephone interviews at the end of January.  In the new survey, respondents were read a list of 25 “investment areas” and asked how important each one was.  Here are the complete results (Council was shown a slide with the first eight):

long priorities chart

Having gotten the results of these surveys, the next step was to draft the ordinance that would govern, among other things, the use of the bond proceeds.  There was a simple way to determine which infrastructure needs the proceeds could be spent on:  Take the projects ranked highest by the public and restrict spending to those items.  Indeed, this was the approach advocated by City Treasurer Kevin Kennedy and City Auditor Kevin Kearney, who recommended that the ordinance limit the use of the bond proceeds to the four top-ranked items in the City survey.  “Keep it simple for the voters,” Mr. Kearney told Council.  “You spent a lot of money on polling, you spent a lot of money on consultants.  And if you’re going to spend the money, you ought to follow what the results are, and the results are that those are the four things people say they’re interested in.”

For our part, as much as such a straightforwardly democratic approach appeals to us, we’re wary of deferring entirely to public preferences.  Recall that one of the priorities in the City survey was “providing affordable housing options.”  The respondents ranked this item ninth out of 11.  One might interpret this result as militating against including affordable housing in any bond measure because the public doesn’t care about it.  But it can be argued that the finding reflects not apathy but ignorance.  If so, maybe the City should earmark bond money for affordable housing – and then educate the public to understand why it benefits all of us.

The problem with creating exceptions like this is that it opens the door for the ideologues to press their own agendas.  For example, before Tuesday’s meeting, BikeWalk Alameda sent Council a letter advocating that the bond money be used for “desperately needed estuary overcrossings.”  That item wasn’t even on the list of infrastructure priorities that the City or FM3 polled about.  But we wouldn’t be surprised if the BikeWalk crowd regarded this as a more urgent priority than, say, repairing potholes, which, after all, are caused by the sort of vehicles (i.e., cars and trucks) they’d like to see – eventually – banned from city streets.

Moreover, as Councilman Oddie pointed out, the top-ranked priorities in the City and the FM3 surveys are similar, but they are not the same.  For example, at the top of the list for the FM3 respondents was “ensuring safe, clean drinking water.”  But Public Works Director Liam Garland explained that the “safe, clean drinking water” staff had in mind was the potable water system at Alameda Point.  When the City itself polled residents about that specific item, it ranked eighth out of 11.  At the least, it looks like a split decision.

In any event, the drafters of the proposed bond measure didn’t take the approach recommended by Messrs. Kearney and Kennedy.  Here’s the ballot question proposed to be submitted to the voters:

To upgrade storm drains, keep pollution from the Bay, and beaches/parks clean, protect drinking water, address sea-level rise/flooding; repair deteriorating streets/potholes/police and fire facilities, improve traffic congestion/safety; and other infrastructure, shall the City of Alameda issue $95,000,000 in bonds with average levy of $23 per $100,000 of assessed value, generating approximately $6,000,000 annually to pay bonds over 36 years, and requiring fiscal accountability?

And here’s the use-of-proceeds paragraph in the bond measure itself – i.e., the underlying ordinance:

The object and purpose of issuing the Bonds is to finance the costs of providing and/or enhancing public infrastructure to keep the Bay clean; reduce pollution and prevent flooding; address sea-level rise; ensure clean drinking water and safe, clean parks; street and pothole repair; traffic safety/traffic congestion management; disaster-emergency preparedness and other capital projects adopted by the City Council. The foregoing improvements are referred to herein as the “Project” and include, but are not limited to, projects identified in City’s capital plans, such as improvements or reconstruction of the City’s streets and storm drains, sewer lines, Fire Stations 2 and 5; levee repair; protection and upgrades of at-risk water lines; projects included in the City’s Transportation Choices Plan and park improvement plans; and other similar plans approved by the City Council.

We call your attention to three things.

First, the ballot question and the bond measure don’t describe the purpose of the bonds in the same words or in the same sequence.  It’s a minor point, but we would have hoped that the political consultants who drafted the ballot question got together with the lawyers who (presumably) drafted the ordinance to ensure that the two statements were consistent with each other.  Linguistic discrepancies can lead to lawsuits – which we know our litigation-averse Council hates.

Second, both the ballot question and the bond measure contain vague and open-ended clauses.  The former asks voters to approve issuing bonds for “other infrastructure.”  Wazzat?  Apparently, looking at the ordinance, it means “other capital projects adopted by the City Council” and “other similar plans approved by the City Council.”  As Councilman Matarrese pointed out, with language as broad as this, Council essentially has the discretion to spend bond money on whatever projects it pleases.

Third, we’re sure our careful readers haven’t missed the one item that doesn’t show up as a priority in either the City’s engagement survey or FM3’s latest polling.

We refer, of course, to the phrases we’ve highlighted: “police/fire facilities” in the ballot question and “Fire Stations 2 and 5” in the ordinance.  Called upon to elaborate on this item at Tuesday’s meeting, Fire Chief Ed Rodriguez explained that the department’s “two most pressing needs” were to replace these two fire stations (even though Fire Station No. 5 at Alameda Point hasn’t been operational since 2009).  And the Chief made clear that he meant not merely repair, but replace – at a cost of $12.5 million apiece.

Since building new fire stations was not one of the priorities identified in either the City or FM3 surveys, Mayor Spencer wanted to know the basis for believing that voters wanted to raise and spend bond money for that purpose.  She never got a straight answer.  Miranda Everitt, the pollster, argued that using bond proceeds to build two new fire stations could be justified by the community’s support for “upgrading public facilities to address earthquake safety” (ranked 10th out of 25 in the latest FM3 survey) – even though Chief Rodriguez stated that he wanted the fire facilities replaced, not upgraded, and he expressed no concerns about earthquake safety.  Catherine Lew, the political consultant, claimed that public demand for building two new fire stations could be inferred from a 2015 survey in which 73% of respondents supported the goal of “ensuring community preparedness for disasters and large-scale emergencies” – even though the City just finished spending $11.1 million on a new fire station no. 3 and state-of-the-art “emergency operations center.”

Like the Florida high school student we saw on the news, we “call BS” on the two consultants.  To us, this seems like just another example of how, in this town, what fire wants, fire gets.

The failure to match the work authorized by the ordinance with the priorities identified by the public wasn’t the only flaw in the proposal.  Even if the permitted items had corresponded exactly with residents’ preferences, the ordinance didn’t rank them in order of priority, nor did it specify minimums or maximums for any category.  According to staff, if the measure passed, the bonds would be issued in three tranches of about $30 million apiece.  Council then would adopt “guidelines” for spending the bond proceeds.  But there was nothing in the ordinance specifying where the money would go first, or how much, or little, of it would go to each item.  At least in theory, Council could decide to use $25 million of the first $30 million to build the two new fire stations, and everything else on the list would have to wait.  Under the ordinance as drafted, such an action would be perfectly legal.  But it surely wouldn’t be what the public thought it would be paying additional property taxes for.

This point isn’t one we came up with on our own.  In fact, the credit belongs to . . . former Planning Board member and Inner Ringleader John Knox White.

Before the meeting, Mr. Knox White sent Council an email pointing out that the draft measure proposed “ill-defined expenditure categories without being able to guarantee that each of them will even see funds.”  This “sets up the possibility,” he continued, “that voters will vote to fund a traffic congestion program only to see the money go exclusively to sewers.”  To address this issue, he recommended that the ordinance provide that “no category will receive more than 35% of the total funding and that each category will receive at least 15% of the total.”  At the meeting, Ms. Spencer expressly endorsed Mr. Knox White’s recommendation, and her newfound allies, Mr. Oddie and Ms. Vella, voiced their support for the suggestion as well.  But time ran out before the ordinance could be rewritten on the fly.

Now, we don’t know if staff intends to revamp the infrastructure bond proposal and present a revised version to Council.  It’s too late to put the measure on the June ballot, and Ms. Keimach acknowledged that, since staff is working on a sales tax measure for November, it might be asking too much to submit a bond measure to the voters at the same election.  But we hope staff doesn’t give up.  The idea of issuing bonds to pay for infrastructure is a valid one, and the City’s “executive team,” particularly Ms. Keimach and Mr. Garland, already have put a lot of work into it.

But if staff does decide to try again, we have one suggestion:  Find a new political consultant.  In five years of watching Council meetings, we haven’t seen a more pretentious and condescending performance than the one put on by Ms. Lew.  She began by cautioning Council members not to make any changes in the wording of the ballot question her firm had drafted.  She then warned them against identifying themselves as Council members in any ballot argument they submitted.  But the real show came later when Mayor Spencer tried to pin her down on the rationale for using bond money for the fire stations, and Ms. Lew behaved as if she was Mitch McConnell dressing down Elizabeth Warren.  The “body of research over time was utilized effectively and well,” the consultant lectured the City’s top elected official, “in crafting a measure that effectively captures the priorities of the public.”  Nevertheless, like Senator Warren, Ms. Spencer persisted.

Although we hesitate to play the blame game, we wonder just how many of the design and drafting flaws in the proposed bond measure resulted from staff following Ms. Lew’s “expert judgment” rather than using their own common sense.  In any event, next time around, let’s give the job of advisor to someone who listens and counsels, not pontificates and dictates.

Sources:

Infrastructure bond proposal: 2018-02-20 staff report2018-02-20 Presentation2018-02-20 Ordinance2018-02-20 Correspondence

FM3 surveys: FM3, Quality of Life Community Survey (July 2017)FM3, Bond Measure Survey (January-February 2019)

City survey: 2018-01-02 press release re surveyfinal_infrastructure_feedback_form_122917

 

 

About Robert Sullwold

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

4 Responses to Autopsy report

  1. Bierwith Catherine says:

    😉

  2. Another potential lopsided outcome of the proposed bond measure as drafted comes under the commitment to “improve traffic congestion/safety.” Voters reading this language in the ballot question may not have looked further to find that the ordinance for this measure defines this commitment as “projects included in the City’s Transportation Choices Plan.” Besides the fact that the bulk of the bond proceeds could, in theory, be spent on projects in the TCP, many of the “projects” in the TCP involve providing services, mainly bus service. While the need for more transit service is unquestionably real, I don’t think voters would be expecting their infrastructure tax money to go for buying buses. Buses are not infrastructure, they are assets, which, by the way, would need replacing long before the bond was paid off.

    Here’s another idea: Why not place a Transportation Improvement Bond on the ballot? The TCP already has what the infrastructure measure lacked: A detailed project list with cost projections and orders of priority. I thought that was the whole point of spending $400,000 on the transportation plan – identifying needs and then seeking funding.

  3. SMARTMoraga says:

    Great article and analysis. We’re doing something similar over in Moraga (Keimach’s “old” home) at SMARTMoraga.com

    Same kind of crazy with ballot measures not matching the promises, engineered and expensive surveys being spun, councilmembers thinking they don’t have to listen to the electorate after the election votes are counted.

    It’s nuts and pervasive.

    Keep up the good work!

  4. carol says:

    Related SF Chronicle/CAL Matters article by Dan Walters [3/26/2018] is worth reading:

    Over the past few years, voters in hundreds of California cities and other local governments were asked to pass tax increases. Another big batch of local tax measures will be on this year’s ballots.

    All but a handful of the previous tax hikes were approved,….One could conclude that the high passage rate for most cities reflects voters’ faith that elected officials would spend the additional tax revenues wisely.

    Perhaps so, but they also reflect some very clever, even propagandistic, packaging of the tax proposals by political consultants who boast of their ability to overcome resistance to such measures.

    Local governments cannot, by law, directly finance campaigns to win voter approval of new taxes. However, local officials can — and quite often do — hire consulting firms to test voter sentiment in advance, design tax proposals to give them the best chance of winning approval, and design supposedly educational mailers and other materials that portray the taxes in positive terms.

    Passing local tax measures has become big business, and California voters will face another barrage of proposals this year because cities are facing unprecedented fiscal crises, born mostly of rapidly increasing demands by the California Public Employees Retirement System for more money to shore up its shaky finances.

    However, based on how these local tax measures have been packaged by consultants in past years, this year’s voters won’t be told that more of their money is needed for pensions, because that wouldn’t sell very well.

    What does sell, according to the polling, is “public safety,” along with fixing local streets and roads. Therefore the demands for more pension funds are typically reconfigured in tax proposals as bolstering police and fire protection.

    It’s a half-truth because the biggest drivers of pension spending are benefits for police officers and firefighters. Their pensions can approach, or even exceed, 100 percent of their salaries. They are costing close to 50 cents for every dollar of salary, and costs are still rising.

    As the local tax wave continues to build, it will eventually hit some limits, not only because voters’ appetites for paying more are finite but because state law caps the combined sales taxes of all local agencies to two cents per $1 of purchases.

    The wave could flatten, too, if the underlying pension costs that are driving tax proposals get more public exposure.

    Dan Walters is a columnist for CALmatters, a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

    https://www.sfchronicle.com/news/article/How-political-consultants-help-cities-sell-tax-12779641.php

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