Governing by Grant

(Originally posted on The Alamedan February 25, 2013)

To paraphrase Gordon Gekko:  Grants are good.

At least they’ve been good for the city of Alameda.  During fiscal year 2010-11 (the last year for which data has been published), the City received $7.828 million in operating grants and contributions, and $5.578 million in capital grants and contributions, from federal and state government agencies.  These funds supplemented the $70 million in revenue from property taxes and the like that went into the general fund.

Thanks to these grants, the city has provided, or intends to provide, such amenities to segments of the populace as bike lanes along Shoreline Drive and a cross-estuary shuttle from the West End to BART.  In addition, grants enabled the city to buy a new fire boat and “wildland firefighting personnel protective equipment” for the fire department, and two new Crown Victorias and “marine patrol equipment” for the police department.

City politicians and staffers love grants because they enable the city to provide services without having to pay for them out of the general fund.  This is especially attractive in a place like Alameda where the city is spending more than it takes in from taxpayers.  If grants can be used to maintain current levels of service, maybe no one will notice that the general fund is running out of money.  Indeed, one Council candidate went so far as to suggest that the city could avoid a fiscal crisis simply by beseeching Washington and Sacramento for bigger bucks.  This candidate was elected, so, Congresswoman Lee and Assemblyman Bonta, please stay by your phones.

But grants can be used for purposes other than providing services at somebody else’s expense.  They can also be employed to make policy through the back door.  During the last two years Alameda’s staff and Council have proven themselves masters of the art of governing by grant.  Simply by accepting a grant, they have been able both to set in concrete fire department staffing levels and to pave the way for high-density multi-family housing at Alameda Point.  By these means, the City’s leaders have managed to advance their agenda not by building consensus around a policy but by arranging a seemingly done deal that achieves the same result.

Take the $1,763,754 SAFER grant from the federal government to pay salaries and benefits for six additional firefighters.

Ever since a national consulting firm concluded that the fire department could do its job with fewer personnel, the issue of fire department staffing has been a topic of discussion.  The report’s conclusions – and, indeed, the consultants’ credibility – were roundly ridiculed by the current and former fire union presidents, the latter of whom now holds the position of fire chief.  The city posted the report on its website, and city manager John Russo promised he’d also post a review of “this notorious . . . study” revealing its “grave logical errors.”

He never got around to it.  Instead, the issue was framed in terms of whom do you believe: our own fire chief or a report commissioned by (wait for drum roll) the much-maligned Ann Marie Gallant?  And there it stood – until the SAFER grant ended the debate before it began.

The granting agency, the Department of Homeland Security, made it quite clear in the application materials that the grant came with conditions:  We’ll pay the salaries and benefits for the additional firefighters for two years.  But during those two years, you can’t lay them off.  And you can’t make any other staffing reductions, either – for any reason.

The city applied for the SAFER grant; DHS awarded it, and Council approved it.  Notably, staff placed the recommendation for approval on the consent calendar, which is reserved for non-controversial items.  And there was, in fact, no discussion about the conditions to which the City was binding itself by accepting the grant – or, indeed, any discussion at all.

Not that City Manager Russo himself was ignorant of those conditions.  At the time the city accepted the grant, staff had started negotiations with the public safety unions for new contracts.  Ordinarily, staffing is part of the bargaining process, since it is one of the primary components of cost.  But not this time.  As Mr. Russo candidly told Council when he presented the results of the negotiations, “staffing reductions are not on the table until September 2014 because of the SAFER grant.”  By accepting the grant, staff and Council thus made it impossible, for at least two years, to reduce public safety costs by reducing head count.  No one should have been surprised that the new contract with the IAFF actually increased costs by $2.6 million.

Then there’s the $200,000 grant from the Metropolitan Transportation Commission to pay for a “precise plan” for a “Waterfront Town Center” at Alameda Point.

Back in March, City staff presented to Council a “disposition and development strategy” for Alameda Point that would cost $5 million and be financed through issuing bonds.  As the strategy evolved over subsequent meetings, it included staff’s recommendation that the city prepare a “detailed plan” for development of a “town center” running along both sides of Atlantic Avenue from Main St. to the Seaplane Lagoon and then north of the Lagoon.  According to a staff report, the “town center” would be the “gateway” to the Point and the “primary location” for entertainment, lodging, restaurants, stores, and recreational uses.

Despite support from the unlikely duo of Councilmembers Johnson and deHaan, Council rejected staff’s recommendation to engage in detailed planning for a town center (or anything else).  Ultimately, Council agreed to authorize preparation only of a master infrastructure plan and EIR for the entire base.  The reduced scope of work would be paid for out of lease revenues and no bonds would be issued.

But this decision did not mean that the detailed plan was dead.  In April, before Council had taken any final vote on the proposed “disposition and development strategy,” staff applied to MTC for a $160,000 grant to fund preparation of a “precise plan” and “form-based code” for what was now called the “Waterfront Town Center,” a 125-acre portion encompassing the “town center” and “maritime and visitor serving” areas.  Among other things, the application stated that a “variety of 400-500 housing units are planned to be centered in a 20-25-acre area within the Waterfront Town Center, including significant affordable housing, with an approximate density range of 25-60 du/acre, meeting MTC’s required density goals.”

The proposed density range exceeded the 21 dwelling units per acre limitation imposed by Measure A.  Of this staff was well aware.  Indeed, the application stated that, “A critical component of this scope of work will be the development of a master Density Bonus plan that enables the development of multi-family housing in this Area, despite the limitations of Alameda Charter Amendment 21 (Measure A).”

The MTC bought the proposal.  It not only approved the grant application but bumped the award to $200,000 “to address anticipated project challenges.”  Staff did not ask Council formally to approve the grant — according to Alameda Point Chief Operating Officer Jennifer Ott, Council approval is necessary only where the City furnishes more than $75,000 in matching funds and the match for this one was only $50,000 —  but staff did apprise Council of its existence.  In fact, both Mayor Gilmore and then Vice Mayor Bonta asked Ms. Ott publicly about the terms of the grant.

How much housing to allow at Alameda Point – and of what type – has been a contentious issue almost since 1996 when the Community Reuse Plan was adopted.  By entering into the no-cost conveyance agreement with the Navy, the City agreed to a cap of 1,425 residential units (deducting 260 existing units brings the cap down to 1,165 new residential units).  At the time it approved the agreement, Council did not decide, and was not asked to decide, how to allocate the cap among various housing types.  Nor did Council have to confront this issue when it approved the Housing Element last July, since the new Housing Element specifically excluded Alameda Point from the land inventory.  But once the MTC grant is carried out, the new Council will be presented with a detailed plan for devoting more than a third of the new residential construction allowed under the no-cost conveyance agreement to high-density multi-family housing.  If Council goes along, planning will drive policy, not the other way around.

Maybe there is nothing wrong with governing by grant.  It can be argued that, had Council been asked to vote on prohibiting cuts in fire department staffing, a majority – check the Form 460’s if you don’t know who – would have gone along with the past and present union chiefs.  Likewise, had Council been asked to vote on planning for high-density multi-family housing at the Point, probably a majority would have gotten on board as long as somebody else picked up the tab.  So the same decisions might have very well have been made anyway.

Nevertheless, there is something to be said for forcing the politicians actually to take votes on controversial issues rather than allowing them to make policy through the simple expedient of accepting a grant.  And there is also something to be said for making sure that everyone, including the public, understands the consequences of what otherwise may appear an innocuous action.  If accepting the SAFER grant signifies that the city’s leaders have decided to abandon any serious effort to control public safety costs, then they’ll need to find other ways to balance the budget.  Likewise, if accepting the MTC grant shows that those leaders have resolved to prioritize high-density multi-family housing at the Point, they may need – finally – to ask the voters explicitly to amend or repeal Measure A.

Grants may be good.  Governing by grant, not always.  But at the very least staff and Council should give the public the complete picture.  Until then, whenever anyone at City Hall trumpets another grant-grabbing triumph, keep your ears open for the sour note.