Stimulus for Alameda

Imagine, if you will, the following scene:

In-person Council meetings now are allowed.

The five elected officials, and staff, are sitting, masked and six feet apart, on the dais.

The doors to Council chambers burst open, and in comes Vice President Kamala Harris, surrounded by Secret Service agents carrying a large rectangular piece of cardboard.

The cardboard turns out to be a check.  Payee:  City of Alameda.  Amount:  $28 million.

The Veep approaches the dais, stops in front of Mayor Marilyn Ezzy Ashcraft, and hands her the check.

“Okay, Marilyn, this is a gift from Joe, Chuck and Nancy,” she says.  “Spend it however you want.”

Far-fetched?  Perhaps.  But it is based on actual facts:  The pandemic-relief bill passed by the Senate and House and signed by the President this week appropriates $350 billion for state and local governments.  The State of California will get $26 billion for state government and $16 billion for distribution to cities and counties.  And, City Manager Eric Levitt told us Tuesday, $28-29 million of the latter amount is expected to go to the City of Alameda.

So what will the City do with the money?

One thing is clear:  Unlike the State, the City has not been counting on a subsidy from the federal government to maintain its previously budgeted spending levels during and after the COVID-19 pandemic.  Indeed, the General Fund budget for fiscal year 2020-21 contains no expected revenue from any stimulus bill.  To cover its operating expenses, the City will withdraw $2.1 million from General Fund reserves, but $31.5 million will be left in the till on June 30, 2021.  Since the City doesn’t need any cash from the feds to pay its bills, the $28 million is, in a very real sense, “found money.”

After the Merry-Go-Round learned from Mr. Levitt about the expected distribution, we assembled a team of experts to spitball ideas for spending the stimulus funds coming to Alameda.  With their input, we came up with 10 ideas, which we present today in no particular order – and with no endorsement implied:

  1. Give every low-income Alamedan a check.

The federal pandemic-relief bill provides for a $1,400 direct payment to every American whose annual income is less than $75,000 (or $150,000 if she files a joint income-tax return).  In addition, the State of California will be sending out additional $600 checks to Californians who earned less than $30,000 last year (and certain others).

Why shouldn’t residents of the City of Alameda get even more if the City can afford to give it to them?

According to the most recent American Community Survey, 14,855 full-time, year-round workers in Alameda earned less than $75,000 per year in 2019.  Giving each of them a $1,000 check would consume just about half of the stimulus money the City is expecting to get.  Which would leave funds available for payments to part-time or unemployed workers as well.

  1. Expand the Emergency Rent Relief Program.

Last June, Council established what it called the “Emergency Rent Relief Program” under which tenants financially affected by the pandemic would get up to $3,500 or one-month’s rent, whichever was less, to pay rent that came due during the state of emergency declared by Council and for 30 days thereafter.  (The cap subsequently was revised to permit grants based on “actual need.”)  The payments would be made directly to landlords.

The program was funded by $713,116 from the federal CARES Act.  The City conducted two rounds of applications, and it approved about 60 applications in each round.  The last of the payments is scheduled to go out this month.

The Emergency Rent Relief Program is one of several actions taken by Council to assist renters during and after the pandemic.  Council passed ordinances prohibiting a landlord from evicting a tenant for non-payment of rent that came due during the state of emergency and 30 days thereafter, and from evicting a tenant for non-payment of back rent for 395 days after the emergency ends.  By enacting the Emergency Rent Relief Program, it reduced the amount of back rent a qualifying tenant will owe.  Council also barred landlords from raising rents through June 2021.

The stimulus funds could be used to expand the rent-relief program – for the benefit of landlords as well as tenants.  For example, the City could increase the maximum amount of the available grant.  Or it could tweak the eligibility rules so that more renters qualify.  Under such a scheme, deferred rent may still accrue, but the total will be lower.  Landlords will end up getting more cash now, and tenants will end owing less later.

  1. Replenish the pension/OPEB reserve fund.

During 2017, Council adopted a “pension reserve” policy whose purpose was to reduce the City’s unfunded liabilities for public-safety employee pensions, which had grown to $170.8 million as of June 30, 2016.  Under the policy, “excess” funds are set aside out of the General Fund balance every year based on the previous year’s results; 75 percent of that amount then is transferred directly to CalPERS, with the other 25 percent going to a City-controlled trust.  (The City also contributes to a separate trust for funding retiree health-care benefits for public-safety employees; the two trusts collectively are often referred to as the “pension/OPEB trust.”)

According to a memo recently sent by Mr. Levitt to Council, the City has made three payments totaling $16,837,052 to CalPERS since December 2017.  In addition, it transferred a total of $3,750,000 to the pension/OPEB trust in FY 2016-17 through FY 2018-19.

The FY 2019-20 budget projected that this pattern would continue in 2020; it included a $7,376,650 set-aside for the pension-reserve payments.  Then the pandemic hit.  One of the responses recommended by Mr. Levitt was to forego the budgeted contribution in order to “improve the City’s position for addressing lost or deferred revenues in FY 2019-20 and FY 2020-21.”  Council agreed, and the City eliminated the set-aside and skipped the payments.

Funding of the pension reserve will resume in the current fiscal year.  A few weeks ago, Council approved setting aside $10.6 million for CalPERS and $3.5 million for the pension/OPEB trust in FY 2020-21 based on the FY 2019-20 year-end results. Theoretically, once these payments are made in May, they may make up for the contribution omitted last year, but not necessarily.

In any event, the principle that led Council to establish the pension-reserve policy in the first place still applies:  Every extra dollar paid to CalPERS or put into an irrevocable trust now not only will reduce unfunded liabilities – which amounted to $191.1 million for public-safety employee pensions as of June 30, 2019 – but lower the annual required contribution to CalPERS.  And, although Depression-era children (and those raised by them) may be dying off, there are still some people who believe that the best use of “extra” money is to pay off debts.

  1. Create a “homeless village” at Alameda Point.

Last May, the City acquired from FEMA – at no cost – four trailers that it has been using to provide housing for a maximum of eight formerly homeless people until they can find permanent supportive housing.  The four trailers are included in the City’s mobile-outreach contract with Operation Dignity, which conducts weekly inspection of the trailers and safety checks of the residents, and coordinates with the Alameda Food Bank to deliver groceries to them.  In addition, the people living in the trailers receive daily meal delivery from Alameda Meals on Wheels; daily wellness checks from the Community Paramedicine Program; regular case management visits from Building Futures; and weekly mobile laundry from Dignity on Wheels.

Update: After this column was posted, we received the following status update from the City’s Ana Bagtas:

The FEMA trailer program has served 9 people since the program’s inception in May.  Three people are currently residing at the site.  There is one trailer that was recently vacated, and we are getting it ready to be occupied.  Residents continue to receive daily well checks from the City’s Community Paramedicine program and on-going outreach and case management from Operation Dignity and Building Futures, respectively. The Village of Love is responsible for the day-to-day service coordination and operation of the program.  They hold weekly support meetings with residents and trouble-shoot any issue that comes up.  Meals on Wheels has been discontinued, as residents are now getting free meals delivered on Mondays from Dine and Connect (in partnership with local churches), Wednesdays from Feed Alameda (the Mayor’s program where meals are purchased from local restaurants and distributed to the un-housed and food-insecure individuals), and weekly groceries from the Alameda Food Bank so that residents can prepare their own meals.  The Day Center is walking distance from the FEMA trailer site where they can get meals daily.   

The stimulus funds would enable the City to broaden the existing program, whose operating costs run about $10,000 per month.  It could buy trailers on its own and thereby provide temporary housing for more people experiencing homelessness.  It also could pay for Operation Dignity and similar organizations to offer additional services to the homeless population.

Alternatively, the City could think even bigger.  We always have been intrigued by the “tuff sheds” project started by the City of Oakland and the “tiny homes” project begun by the City of San Jose.  According to the Mercury News, the tuff sheds cost about $8,750 apiece, and the tiny homes a mere $6,500 apiece, to build.  $28 million would buy a lot of temporary housing for the formerly homeless in Alameda.

One of our “panel of experts,” Richard Bangert, strongly endorsed using at least part of the stimulus money to tackle homelessness.  “The homeless problem is only going to get worse, and if we don’t, as a city, commit to managing the problem, we’re going to have places that start looking like Alameda Avenue in Oakland where Home Depot is located,” Mr. Bangert told us.  “People don’t like the idea of a municipal homeless village, but it sure beats the anarchy of homelessness that defines the issue now.”

  1. Build more affordable housing units.

As we have previously written, public funds often provide the “seed money” needed to finance construction of affordable-housing projects by a city agency (as distinguished from a private developer).  To take the most recent example, the renovation of Rosefield Village is being funded, in part, by loans from the Alameda Housing Authority.  If the City transferred all or part of the stimulus funds to AHA, it could enable the Agency to pursue opportunities for new municipally owned affordable-housing projects.

We asked AHA’s executive director, Vanessa Cooper, for a few examples, and she replied:

AHA could quickly (within next 9-18 months) deploy stimulus funds into affordable housing into key purchases and investment options from the list below:

  • AHA could purchase 18 very low and low-income homes for very low and low-income families (at Bay37 development).
  • AHA could also bid competitively on the purchase of an Alameda Unified School District land disposition that could house 30 affordable family apartments (2615 Eagle Ave).
  • AHA could use $8 million to expedite the first two phases of federal funding applications (tax credit financing) for the AHA’s North Housing Development (586 units). These units are a mix of supportive housing for the homeless, senior, and family housing.
  • AHA could buy existing units and restrict them [to] at least 80% of area median income. The price per unit of these opportunities [is] approximately $270,000 to 280,000 per unit.
  • Every $10,000,000 can generate nearly 30 units of deeply rent-restricted apartments.  If the rental restrictions were not as deep (some units above 80% AMI, for instance), these funds could work to create even more units.

If he hasn’t already, we’d urge City planning director Andrew Thomas to sit down (in person or by Zoom) with Ms. Cooper to discuss these possibilities.  Mr. Thomas, of course, is the City official responsible for devising a Housing Element that satisfies Alameda’s RHNA obligations.  The latest draft calls for the City to make available sites for 1,455 very-low- and 837 low-income units in the next eight-year planning cycle.  If all or some of the stimulus money is transferred to AHA, Ms. Cooper appears poised to help him meet that goal.

  1. Do the highest-priority infrastructure projects.

In February 2018, staff presented Council with a comprehensive list of “Alameda’s Clean Water, Street Repair, Disaster Preparedness Infrastructure Needs.”  The list was divided into four categories (one of which consisted entirely of repairing and upgrading fire stations) and came with an overall $293 million price tag.

Staff proposed that the City issue $95 million in bonds, in three phases, to start to deal with the identified infrastructure needs, and it prepared a list of “priority projects” to be done in the first phase.  Here it is:

By a 3-2 vote (with Council members Vella and Oddie and Mayor Spencer in the majority), Council decided against putting an infrastructure bond measure on the ballot.  It opted instead to seek voter approval for a half-cent sales tax increase, which passed.

Council revisited the issue of an infrastructure bond in March 2020 (on the day it declared a COVID-19 emergency) and again decided not to go to the voters with a ballot measure.  (A year earlier, Council used a mail-in ballot to get voter approval for a property tax increase designed specifically to pay for one of the previously specified infrastructure needs: repair, improvement, and maintenance of the stormwater drainage system.)

The $28 million in stimulus money would provide enough cash for the City to perform almost all of the “priority projects” that would have been done with the first round of proceeds from an infrastructure bond.  But there would be no need for Council to limit itself to those projects.  It could go back to the original $293 million list and choose those projects its current members deem to be of highest priority.  Or it could pick from the revised menu of infrastructure projects contained in the 2019-21 Capital Budget, which reported $203 million in “Citywide infrastructure needs.”

  1. Accelerate implementation of the Transportation Choices Plan.

The Capital Budget contains infrastructure projects of all sorts.  The Transportation Choices Plan adopted by Council in January 2018 focuses on projects intended to meet the Plan’s stated goals of decreasing drive-alone trips at estuary crossings and increasing walking, bicycling, transit, and carpooling in the City.

The Plan identifies 39 programs or projects, whose time frame it divides into near-, mid-, and long-term, and whose priority it ranks as high or medium.  Here’s the list:

Since the TCP was adopted, staff has presented two progress reports to the Transportation Commission, the latest in May 2020.  Not surprisingly, a lot of work remains to be done, especially on the mid- and long-term items.  (Our favorite uncompleted project is item #22 – a cross-town Alameda express bus, but we know others on the dais and at City Hall have their hearts set on item #39 – a bicycle/pedestrian bridge over the estuary.)

At present, the sources of funding for most of the projects consist of County tax revenue (e.g., Measures B and BB) and federal, state, or regional grants (e.g., the Metropolitan Transportation Commission’s “One Bay Area Grant”).  The $28 million in stimulus money would enable the City to complete more of the TCP projects sooner.  It might also provide matching funds for grants requiring investment by a municipality.

  1. Accelerate implementation of the Climate Resiliency and Action Plan.

The other recent planning document that itemizes ways in which the City could spend the stimulus funds is the Climate Resiliency and Action Plan, which was adopted by Council in September 2019.

The CARP focuses on two goals:  reducing greenhouse gas emissions and “building resiliency against climate risk,” which includes protecting against flooding caused by sea-level rise and storm surges.  In each area, the Plan recommends specific actions to be taken over the short, medium, and long term.

Not all of those actions require the expenditure of governmental funds – but many do.  For example, the CARP recommends that the City reduce GHG by, among other things, building more bike lanes; “electrifying” the municipal vehicle fleet; spreading compost; and planting trees.  Likewise, it includes cost estimates for raising the entire Alameda shoreline to combat sea-level rise and storm surges as well as proposals for specific flood-protection measures at 11 different locations.  And it identifies high-, medium-, and low-cost “strategies” the City could employ for “increasing resiliency” in various “asset categories.”

Needless to say, the aggregate price tag is enormous.  (The “cost of inaction,” the Plan says, is far higher.)  The stimulus funds, even $28 million worth, may not be enough to have much of an impact on the overall picture, but they would enable the City to pick a few high-priority projects it could do now.  For example, using some of the money to install solar canopies over every City-owned parking lot is one idea that appeals to our friend Mr. Bangert.

  1. Set up a system for public financing of local campaigns.

Almost every year, it seems, the League of Women Voters sponsors a forum decrying the influence of money on local politics.  But no reform proposal ever makes it onto a Council agenda.

Part of the reason is legal:  thanks to the U.S. Supreme Court’s decision in Citizens’ United, the City can’t prohibit or restrict “independent expenditures” by political action committees like the Alameda Firefighters Association PAC.  Part of the reason is political:  the elected officials who would be asked to change the current system are those who have benefited from it.  And part of the reason may be financial:  the simplest reform measure – public financing of campaigns – is also the most expensive.

But the $28 million in stimulus money may create an opportunity to revisit the issue.

Models for public financing abound.  For example, voters in Denver recently passed – by an overwhelming margin — a ballot measure establishing a city fund to match campaign donations of $50 or less at a ratio of 9 to 1.  To qualify, a candidate must agree to limit the size of contributions she accepts and to take donations only from individuals and small donor committees.  The measure also bans contributions by corporations and unions.  The primary beneficiaries of such a system are candidates who raise their campaign funds in small amounts from local residents, as Trish Spencer did in Alameda last November.

If enough Alamedans were seriously interested in leveling the playing field in municipal elections, perhaps they could convince a Council majority to explore establishing a program similar to the one in Denver (or other cities like New York and Seattle.)  We’re confident it would take far less than $28 million to get such a program up and running.

  1. Give the money to the fire department.

If all else fails, the stimulus money could go the Alameda Fire Department.  After all, its annual budget for FY 2020-21 is only $38.7 million, and there must be dozens of things it could do if it just had more cash.  Maybe Deputy Chief Jeff DelBono can put together a spending package.

All right, we’re just kidding about the last item.  We had to get to 10 somehow, and we knew a proposal to spend money on the fire department was sure to attract interest from at least one, and maybe two, members of the current Council.

We are serious, however, about the first nine items, and we believe a rational case can be made for each one of them.  Presumably, Mr. Levitt and his staff are working on their own list, which we don’t doubt will be better than ours.  But unless the City Manager decides to turn the task over to an ad hoc citizens’ committee that will hold non-agendized, non-public meetings, we’ll look forward to his recommendations sometime soon.

Sources:

FY 2020-21 General Fund budget: 2021-02-16 Ex. 2 to staff report – General Fund Budget Summary

Emergency Rent Relief Fund: 2020-06-02 staff report re CARES Act grant; 2020-09-01 staff report re rent deferrals; 2020-10-06 staff report re emergency rent relief

Pension reserve policy: 2017-11-07 staff report re use of reserves; 2020-06-16 staff report re mid-cycle budget; 2021-02-16 Memos from City Manager; 2021-02-16 (03-02) staff report re budget amendments

Infrastructure bond: 2018-02-20 staff report; 2018-02-20 Ex. 1 to staff report – Expenditure Plan  2018-06-05 staff report re ballot measures; 2020-03-17 staff report re revenue measures

2019-21 Capital Budget: 2019-06-18 Ex. 3 to staff report – Capital Improvement Program

Transportation Choices Plan:Transportation Choices Plan (January 2018)

Climiate Action & Resiliency Plan:2019-09-03 Ex. 1 to staff report – CARP

About Robert Sullwold

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

11 Responses to Stimulus for Alameda

  1. Dorothy Freeman says:

    How about spending some of the stimulus to purchase the 4.2 acres of Union Pacific Railroad land on the South side of the Jean Sweeney Open Space Park. The City Council, in closed session and without public input, has decided land that was promised to become part of the park is no longer desired by some of them.

    • Seriously says:

      I’d argue that adding a small strip of land adjacent to the already expansive Jean Sweeney Park – it’s a fantastic park but only a small fraction of it gets regular use – should be very low on the list of priorities, especially with people having lost jobs, experiencing food challenges, and housing insecurities, and businesses struggling to stay afloat.

  2. Goes up to 11 says:

    11) New signage to rename every street, park, and public space after a BIPOC saint.

    • Seriously says:

      White privilege means being able to poke fun at others for their attempt to address systemic racism. How wonderful it must be to be you.

  3. Allanmann68 says:

    The city diverted $600k to create a fund to help business forced to shut down last year. Perhaps some of the windfall could be used to repay those funds to the city and expand the program.

  4. Really says:

    You left out reparations for slavery, replacing Dr. Seuss books in the library, and removing movies like Dumbo and Peter Pan from pre-school classrooms.

    Setting aside the issue as to why a fiscally responsible city should get any stimulus money, I think we have to use it for Covid relief…and local businesses suffered the most whereas government employees drew full salary during the lockdown.

    How much does AUSD get?
    Couldn’t we hire more police officers?
    Do we need another “tank?” (Just kidding)

    The State of California actually has a surplus of cash right now and also got a huge windfall. With Newsom’s recall coming up, look for Governor Hairgel to throw around obscene amounts of cash to try to save his political life.

    Prediction: it won’t be cash payments to taxpayers and yes, the AFD will get more than its fair share.

    • Seriously says:

      Your question “How much does AUSD get” implies that they are overfunded somehow? Teachers and administrators have been working full-time throughout the pandemic – with many teachers saying this has been the most challenging year of their careers – and with many families disenrolling to put their children in private schools, there is some revenue hit for the district.

      I don’t believe hiring more officers is a budget problem – There’s already room in the budget to hire about 20 more officers – the problem, I believe, is the lack of qualified candidates applying. We used to fill an entire gym full of interested applicants taking an exam, but now we have to poach from rival departments for lateral hires.

      With the pandemic winding down, things opening up, and 4 million Americans getting vaccinated each day, the Newsom recall is already losing steam.

  5. Allan Mann says:

    The Alameda chapter of the League of Women Voters continues to foster conversation on campaign finance issues as you noted. Our next (virtual) forum on the subject is scheduled for the evening of April 28 and campaign contribution data on the November 2020 election is available at all times at https://www.lwvalameda.org/alameda-campaign-finance-review.html.

  6. reylagraber says:

    Since the City and residents were “up in arms” over the issue of Measure Z last November election, I think a wise and judicial use of such a windfall is to build affordable housing.
    And, yes if we do, it should lower our State affordable housing allotment figure.

  7. Undoubtedly says:

    I printed out the Report of the Steering Committee on Police Reform and Racial Equity and put a dollar sign next to all of the price tag items. It’s big bucks. I know where the well placed bet is. Among several truly worrisome proposals, the “overarching recommendation” of the report is to create an entire new city department that would report directly to… The City Manager.

    So the “stimulus” plan was passed a few days ago and the City Council meets tonight to consider the committees recommendations. Depending on your “standpoint” perspective, timing couldn’t be more perfect, or a bigger catastrophe.

  8. Inez says:

    How about keeping it’s residents SAFE from violent crime, from gunshots, from home invasions, from muggings at gunpoint, from racing cars and agro drivers that kill and injure people? How about that for #1? Their very first priority should be our safety. HIRE MORE POLICE! Pull people over for speeding. EVERY one. Deter crime. Deter reckless driving and speeding. They can find police hires. Get creative. Offer more money. Recruit from new places. They just sit on their hands while more families are traumatized by violent crime, more pedestrians and motorists are killed.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s