Mailing it in

If you’re an Alameda property owner, you got in the mail a day or so ago a four-page document from the City of Alameda entitled, “Notice of Public Hearing/2019 Water Quality and Flood Protection Fee.”

And you may well have asked, what the hell is this?

Well, the Merry-Go-Round is about to tell you.

The bottom line is that the City is proposing to assess a new fee that will add $78 annually to the property-tax bill for a “typical” residential parcel (defined as 0.08-0.14 acre).  This fee would be in addition to the $56 “urban runoff” fee currently levied on such a parcel, bringing the total storm water charges paid by the typical single-family home owner to $134 per year.  (The new fee also will be assessed on non-residential property on a per-acre basis.)

The new “water quality and flood protection” fee is estimated to generate $2.89 million per year.  Together with revenue from the urban runoff fee, the additional revenue will cover the annual costs of street sweeping and storm drain maintenance.  It will also fund $1.205 million worth of capital improvements annually.

We’ll explain in a minute the reasons for the new fee.  But what’s more interesting to us is the process staff convinced Council to use to seek voter approval for it.  It is one that has never been tried before in Alameda.

The process has a couple of steps.  The first is mailing the notice to property owners.  It tells them that, if they oppose the new fee, they should submit a written objection to the City Clerk within 45 days.  A public hearing then is scheduled for October 1.  If the Clerk has not received objections from a majority of property owners by that date, Council can set the final amount of the fee and submit the issue to a public vote – by mail-in ballot sent only to property owners, not to all registered voters.  If a majority of property owners vote yes, the new fee will go into effect.

Proposition 218, passed in 1996, specifically authorized this method of obtaining voter approval for a new or increased property-related fee or charge, and the state Constitution was amended accordingly.  That didn’t stop one of our local politicians from throwing a hyperbolic fit when the idea was floated at the April 16 Council meeting.

We’re referring, of course, to Councilman Jim Oddie.

The Prop 218 method, Mr. Oddie claimed, would “disenfranchise” renters.  The “right to vote,” he lectured,

does not come cheap, does not come free to people, does not come easy, people have died, people have bled, we fought a civil war, we fought a revolutionary war, we fought fascism, and I don’t think it’s something we should take away because it’s easier and cheaper, disenfranchising half of our, over half of our voters are renters, and to me it’s just a slap in the face to us, as the only renter on this Council, that we’re not going to have a say in this.

And the exaggerations didn’t stop there.  The proposal to use the Prop 218 method, Mr. Oddie contended,  created

a basic civil rights issue that we’re going to exclude our renter population, which is predominantly less wealthy than property owners, which is predominantly more people of color, and is predominantly probably more senior. To me, it comes down to basic civil rights.  I’m not one to throw away someone’s civil rights because it’s easier, it’s cheaper.

All of this was nonsense.  You can’t “disenfranchise” someone who never had the franchise in the first place, and the procedure for approving a new property-related fee based on a vote of property owners alone is enshrined in the state Constitution.  And while it’s true that the Prop 218 method “excludes” a category of residents – i.e., renters – it’s ludicrous to suggest that it discriminates against any group because of their wealth, race, or age.

Those who have followed Mr. Oddie’s career won’t be surprised to learn that, when the matter came back to Council on July 16, he flip-flopped.  Missing was any overblown rhetoric about voting rights and civil rights.  Instead, he joined a unanimous vote to use the Prop 218 procedures – despite their “disenfranchisement” and “exclusion” of renters – to obtain voter approval of the new storm water fee.  (This time, the only Council member who took care to cater to her base was Malia Vella, who reminded her colleagues that renters are people, too.)

Staff may not have recommended the Prop 218 method out of bias against renters, but its recommendation wasn’t an accident, either.  It may well have realized that Council wasn’t willing to appropriate any money from the General Fund to rehabilitate the storm water system, and it already had tried – and failed – to get Council to authorize a bond issue whose proceeds would be used for that purpose (among others).  Prop 218 with its mail-in ballots by property owners might have looked like the only viable alternative.

As described in the July 16 staff report, the storm water system consists of 11 pump stations, 26 pumps, 126 miles of storm drains, two lagoon systems, 278 outfalls, 2,879 catch basins, and 1,967 manholes; it also includes 200+ miles of curbs and gutters.  Some of the pump stations and pipes date back to the 1940s and earlier.  This is troubling enough, but, according to the staff report, “the City’s risk in maintaining an out-of-date storm water system is only compounded by climate change’s rising seas and more frequent, intense storms.”

The only funds dedicated to paying the costs of operating and maintaining the storm water system are the revenues from the urban runoff fee now charged to property owners.  The amount of that fee – $56 – hasn’t changed since 2005.  Moreover, since fiscal year 2013-14, the annual revenue hasn’t been enough to cover the system’s costs.

Public Works Director Liam Garland gave us the details:  The balance in the urban runoff fund declined from $5,903,392 at the beginning of FY 2014-15 to $1,100,310 at the beginning of FY 2017-18.  And when the books are closed on FY 2018-19, the money in the fund will be gone:  projected operating and maintenance expenses amount to $3.17 million and the urban runoff fee generated only $2.2 million.  As Mr. Garland told Council in April, “We’re running on empty.”

The urban runoff fund is supposed to provide money for capital improvements as well as to pay expenses.  But if all of the fee revenue goes to cover operating and maintenance costs, there’s nothing left for any capital projects.  When we asked about the last major storm water project the City did, Mr. Garland cited the South Shore lagoon dredging work completed in 2015.  Since then, Council has authorized spending $14 million to construct a new emergency operations center/fire station – but it has appropriated nothing from the General Fund to upgrade the storm water system.

The current list of storm water capital projects is a long – and expensive – one.  An appendix to the fee study commissioned by staff and presented to Council on July 16 showed $170.3 million worth of projects, of which 19 costing a total of $30,022,000 were deemed to be “high priority.”  These projects included not only replacing antiquated pump stations and pipes but also complying with state mandates for trash capture, pollution control, and “green infrastructure.”

One might have expected that, when the City found itself with a projected $14.5 million in “excess” reserves in the General Fund back in 2015, Council would have chosen to spend some of that money on the storm water system.  But no storm water project made the politicians’ list.  (Council did appropriate $457,000 as a “contingency” for the EOC/fire station; as it happened, that much, and more, was needed to complete the Grand Street palazzo.)

So staff began looking for other sources of funds.  In February 2018, it proposed that Council consider authorizing the issuance of $95 million in general obligation bonds.  The proceeds would be earmarked for infrastructure needs, of which “Clean Bay, Pollution/ Flood Protection, and Sea Level Rise” were given top billing.  According to the staff report, a survey conducted for the City showed that 78% of respondents considered “upgrading storm drains to keep pollution from the Bay” to be “extremely” or “very” important.

The February meeting degenerated into dysfunction without a vote being taken on staff’s suggestion, but at the mid-cycle budget workshop in May, a majority of Council wanted to pursue the idea of putting an infrastructure bond measure – as well as a measure for a half-cent increase in the sales tax – on the November ballot.  In June, staff presented draft language for both measures.  It also proposed that, of the first $35.5 million draw down of the infrastructure bond proceeds, $12.5 million should be spent on “priority projects” for the storm water system:  “flooding and adaptation measures,” renovating pump stations, and repairing storm drains.

At the June Council meeting, Council member (and now Mayor) Marilyn Ezzy Ashcraft and Councilman Frank Matarrese supported placing the infrastructure bond measure on the ballot.  Mr. Oddie and Ms. Vella opposed it.  Mayor Trish Spencer then cast the decisive no vote.  Ms. Spencer also voted against the sales tax measure, but Mr. Oddie and Ms. Vella changed sides, and the motion carried by a 4-1 vote.  (Unlike the proceeds from the infrastructure bond, the revenue from the sales tax increase could be spent for any purpose, including public-safety union salaries, pensions and health benefits.)

The latest proposal followed the demise of the infrastructure bond idea.  The April staff report didn’t specifically recommend the Prop 218 approach, but it provided a timeline based on it.  Staff also asked Council to appropriate $94,009 to pay a consultant for preparing a fee study, conducting a community survey, and managing the mail-in balloting.

At the April meeting, after Mr. Oddie disparaged the constitutionally authorized Prop 218 procedures as unfair to renters, Mr. Garland explained that there was another option that would put the issue before all registered voters, including renters:  a parcel tax.  But he warned that this approach would be more expensive than the Prop 218 method.  He also pointed out that, if the fee were structured as a parcel tax, a two-thirds majority would be required to approve it, as compared to a simple majority if the Prop 218 process were used.

Ultimately, Council agreed to pay for the community survey – but it instructed staff to make sure renters as well as property owners were polled.  (Protecting their pro-tenant credentials, Ms. Vella and Vice Mayor John Knox White joined Mr. Oddie in so insisting.)  It also accepted the suggestion by new City Manager Eric Levitt that the report on the survey contain a comparison of the Prop 218 and parcel tax options.

The staff report for the July 16 meeting confirmed what Mr. Garland had told Mr. Oddie three months earlier:  following the Prop 218 procedures for approving the fee by mail-in ballots would cost $38,000; putting a parcel tax on a general or special election ballot would cost $200,000 to $600,000.  In addition, the survey showed that the choice of methods would make a difference:  If the Prop 218 process was used, a new $78 fee was likely to pass, since 56% of property owners in the survey supported it.  But if the proposed fee were submitted to the electorate as a parcel tax measure, a $78 fee was likely to fail, since it would not get the required two-thirds majority of registered voters.

And what about the separate survey of renters demanded by Mr. Oddie, Ms. Vella, and Mr. Knox White?  Of the 2,998 surveys sent to renters who were registered voters, only 229 were returned.  (Maybe the conventional wisdom about low turnout by renters is true after all.)  But of those respondents, 72% – an even higher percentage than property owners – supported a new $78 fee.  (Of course, the tenants who favored the fee might have assumed that their landlords would put aside their greed and absorb the additional cost without raising the rent.)

Now that Council has approved using the Prop 218 procedures, the process will go quickly.  Assuming that a majority of property owners don’t submit written objections, Council will set the final amount of the “water quality and flood protection” fee on
October 1 and direct that ballots be sent out to property owners.  The ballots will be mailed on October 10, and balloting will close on November 25.  If a majority of property owners approve the proposal, Council will authorize the new fee on December 17.

If all goes as planned, the Prop 218 procedures will have passed their first test in Alameda.  Those procedures can’t be used for every kind of new or increased fee – only “property-related” fees.  But if they work for the storm water fee, we expect our creative City staff might find other areas in which to try them.  If so, the City actually may be able to start raising funds to address the infrastructure needs the politicians decry but do nothing about.  True, this would mean that property owners alone will be shouldering the cost of performing necessary work that benefits all Alameda residents.  But so what?  Isn’t that a result “progressives” should cheer?

Sources:

Infrastructure bond: 2018-02-20 staff report; 2018-02-20 Presentation; 2018-06-05 staff report re tax ballot measure; 2018-06-05 Presentation; Stormwater-protest-hearing-notice-r8

Storm water fee: 2019-04-16 staff report re stormwater fee; 2019-07-16 staff report re stormwater fee; 2019-07-16 Ex. 1 to staff report – Draft Stormwater Fee Report; 2019-07-16 REVISED Presentation

About Robert Sullwold

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

16 Responses to Mailing it in

  1. Tawney says:

    Dare I say, odorous Oddie?

  2. Half2837 says:

    In the meantime, Council’s railroading of aggressive rent control in Alameda limits the ability of landlords to have their tenants share in this increase to their costs. Seems that if they can apply a very stringent cap to rent prices, voters should apply a stringent cap to City Council spending of our tax dollars.

  3. Keith Nealy says:

    One acre is 43,560 sq ft. 0.08 X 43,560 = 3484.8 sq ft., not 3267. In order to get 3267 an acre would have be 45,114 sq ft.

    0.14 X 43560 = 6098.4 again, not 6316. In order to get 6316 an acre would have to be 40,037.5

    So you can see not only are your numbers incorrect, but they assume two different values for the number of square feet in an acre.

    Nonetheless, thanks for your good work.

    • Thanks. I took the numbers (both acreage and square footage) straight out of the official Notice sent by the City. Liam Garland is on vacation, so I can’t bring the discrepancy to his attention. Instead, I’ll correct the column by striking the conversion.

  4. Patricia Gannon says:

    Hi:

    This is long, but parts of it are interesting.

    Pat

    On Sun, Aug 18, 2019 at 8:19 PM Alameda Merry-Go-Round wrote:

    > Robert Sullwold posted: “If you’re an Alameda property owner, you got in > the mail a day or so ago a four-page document from the City of Alameda > entitled, “Notice of Public Hearing/2019 Water Quality and Flood Protection > Fee.” And you may well have asked, what the hell is this? ” >

    • Tom Charron says:

      The city council might really consider cutting all the funding of out of sight salaries we pay firepersons and their outrageous retirements and fund our city infrastructures, parks and streets with dollars not spent on firepersons.
      I pay more than enough taxes now!!!!

  5. CAN Greedy Landlords (sic) pass these costs on to their renters?

  6. Trish Spencer says:

    Thanks for the info. My understanding is that this proposed property tax/fee has no end date, similar to the hospital tax. Do you know? Thus, in perpetuity unless at some point in the future community members collect enough signatures to put on the ballot and then all (I’m assuming all, not just property owners) vote to terminate. Also, any language of auto increases? Thanks!

    • The final language of the ordinance won’t be submitted for Council’s approval until October 1. But, . .
      The fee report recommends an annual increase based on the increase in the Bay Area CPI.
      I have seen nothing suggesting there will be a sunset date.

      • Terry says:

        Perhapse, the Council having miraculously divined 70% of the CPI as the maximum amount for rent increases which they are certain will allow landlords to cover expenses and generate a reasonable return on their investment, they should stick with this formula for determining annual adjustment for this fund as well. I believe it could even more appropriately be applied to salary adjustments for City staff and other City employees, including police and fire personnel.

  7. Helen says:

    Thank you for the information. In glad to hear that only property owners get to vote!! Also, to submit a written objection, is it a form or just an email to the city council members?

    • I contacted City Clerk Lara Weisiger to get answers to your questions.
      She told me that there is no form for submitting a protest, but that the City will accept an email protest. The email, however, should be directed to the City Clerk rather than to Council members.

  8. Fey says:

    Has any one yet proposed that there should be a reduction of the fee based on the proportion of hard surface areas of the lot. and a reduction based of ability to either capture and/or direct storm water run off (from roofs and other hard surfaces) into landscaped / xeriscaped / other- yards where it will not enter the storm drains.

    • TJ says:

      The fee runs afoul of the legal requirements for a property-based fee, Art. XIII D, specifically: “The amount of a fee upon any parcel or person as an incident of property ownership shall not exceed the proportional costs of the service attributable to the parcel.” and “no fee may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees based on potential or future use are not permitted.” The rate is derived by looking at aerial photographs of a randomized sample of various-sized parcels to determine the percentage of the impervious surface area (ISA) — structures, driveways, paved over areas that result in water running off into storm drains. The consultant then averaged the ISA, and came up with 60% ISA to set a rate standard. Averaging from a random sample most definitely results in a rate that “exceeds the proportional costs of the service” for parcels with an ISA less than 60%. Example: I estimate that the ISA of my lot is less than 30%. My gutters drain into the earth my front and back yards lay upon. There is very little, if any?, run off from my parcel, as compared to my neighbor’s same sized lot that has an ISA of well over 80%, (larger house and detached garage, backyard completed cemented over). Or adjustments for storm water recapture, as Fey points out. This tax is on its face unconstitutional on this point alone. If it does pass, it will most likely be challenged. The ballot information guide also neglects to mention that the existing urban runoff fee will generate more income as new properties are added to the rate base. I would haved liked to have seen a numbers analysis with the new developments factored in, as well as EBMUD and other agencies’ potential funding and shared responsibility. And why not identify the current “storm water utility fee” as the “urban runoff” fee as it appears on our property tax bill?

  9. Robert Matz says:

    I find the timing of this to be telling; Jamestown has submitted plans to build an eight story building on the Sushi House site, right across the street from the Bay, down the street from the bird sanctuary, and much closer to the Bay than the single story structure once known as Lum Elementary School (which they shuttered since it was such a danger…being in the liquefaction zone and all). The EIR would need to address the storm water situation which, on Shoreline Drive, is particularly bad. In fact, in a recent post, they showed the flooding across from Sushi House as evidence of the need for this bond. In the absence of this bond, I suppose Jamestown would need to explain how they were going to address this impact. Now, if this passes, Jamestown could point to the generosity of the taxpayers and say, this impact will be addressed by the upgrades and repairs the taxpayers have agreed to pay for. Why is the City pushing to have taxpayers, who have already agreed to pay increased sales tax, to pay even more in taxes to fix this problem….for a developer who stands to profit handsomely if they are allowed to build housing on this site? Whose side is the City on? As Mr. Sullwold points out, “Council has authorized spending $14 million to construct a new emergency operations center/fire station – but it has appropriated nothing from the General Fund to upgrade the storm water system.” I submit this tax is further evidence our Council is selling out the citizenry in favor of monied, special interests.

  10. m says:

    The council has stopped working for the Alamedan’s who have given there all to this fine city there entire lives. All my children were born at Alameda Hosp. This use to be a great city, a barber ran this town as Mayor, and did a better job than the current Mayor, and the entire council, who except for Tony are most likely all receiving green mail. There is the odorous hint if corruption, definitely do not trust those who have already been caught with their odorous, vella pants, down, whatever they have the rest of the council has caught it. SICK.

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