Oakland--First World Taxes, Third World Services

The Oakland Tribune recently reported that due to the city's "truly unprecedented" financial crisis, the City Council may be placing both a parcel tax and a utility tax on the November ballot to generate more revenue ( New Oakland tax measures.). The City of Oakland already has some of the highest combined taxes in the west. Overall, the city's annual budget for FY 2009-11 is approximately $1.1. billion dollars (Oakland City Budget). Yet,  the city is unable to use existing revenues to balance our budget and maintain infrastructure and wants more money from residents. Its hard to imagine how overtaxed middle class residents are going to be willing to fork over even more taxes when most feel they don't get their money's worth to begin with.

City Councilmembers and the City Administrator, Dan Lindheim, suggest the budget problem is due strictly to the dire state of the economy. There is no doubt revenues across the board are down. While all local governments in the State of California face the same problems of reduced tax revenues due to the poor economy, not all all share the same massive budget problems as Oakland. In the City of Oakland, Councilmembers and the City Administrator alike are framing the budget quandary to force residents to pony up more tax revenues--give us more money or we will cut core police and fire services. Certainly, there is more to this story than the poor economy.

The City Council's recent demand for more revenues is largely a scare tactic to cover up the mismanagement and lack of leadership among the City Council, the mayor and the City Administrator. Their rationale for new taxes is that a good share of the city's budget is consumed by voter mandated programs, such as Kids First OO and Measure D, Measure Q for libraries, and Measure Y for Violence Prevention and Public Safety, and because they have already cut other programs to the bone, they need more revenue from John Q. Public or they will be forced to cut police and fire which make up the majority of the General Purpose Fund. If police and fire are not to be cut, they proclaim a need to eliminate wholesale senior citizen services, libraries and parks.

Of the approximately $1 billion of revenue, approximately $421 million is the General Purpose Fund budget. Of that $421 million approximately 88%, or $369 million, is mandated for certain programs. This of course all depends where you pull the numbers. (Oakland Budget Office) (Balancing Measures FY 2009-10 Budget Shortfalls) (Oakland City Budget Facts). Of course there are alternatives to additional taxes including repealing all voter mandated programs or suspending them to allow discretion in re-directing revenues to provide core city services like police and fire. These measures would have to be taken to the electorate in the form of ballot measures not unlike new taxes. However, that tough solution seems to have eluded City Council, the Mayor and the City Administrator.

Nevertheless, what is being ignored here is any discussion on the mismanagement of city finances and the lack of leadership among City Councilmembers, the Mayor and the City Adminstrator. As early as July 2008, concerns were being expressed about the revenue projections of former City Administrator Deborah Edgerly that relied on rising property tax and transfer tax revenues at a time when the economy was tanking. In 2008 the City Administrator and City Council also were drawing down the City reserves from $70 million to $15 million. Despite furloughs, elimination of vacant positions, and other budgetary measures, the then $15 million dollar deficit eventually ballooned to approximately $114 million (cumulatively). This was largely because City Councilmembers, the Mayor and the City Administrator failed to make realistic revenue projections and failed to act swiftly enough and cut deeply enough to stem this massive budget deficit.

Why neither Councilmember Jean Quan, as the Chair of the Finance Committee, or Dan Lindheim as the City Administrator have been able to get a handle on revenue projections and their relationship to the budget deficit is a mystery. Budgets involve revenues and expenditures. If revenues are going down, expenditures must follow at an equal or greater rate or you generate a deficit. 

Another glaring lack of leadership revolved around the Kids First debacle. When the voter approved Kids First Measure OO went back on the ballot for a second time as Measure D seeking even a greater piece of the budget pie, every City Councilmember knew that the program was a budget buster. At that point, the City was projected to be $50 million in debt. Yet, none of the City Councilmembers, including Jean Quan who is now running for Mayor, took an active leadership role to campaign against the Kids First revenue grab. They all saw that train wreck coming, but did nothing to repeal Measure OO altogether. In fact Jean Quan actively negotiated a compromise that put Measure D on the ballot and guaranteed Kids First a significant slice of the City budget, albeit at a lower rate than Kids First originally sought. She then spun it as a budget saving measure and a necessary compromise at a time when the city finances were in disarray and going downhill fast.

On another front, the city has allowed tax dollars to be spent on sending staff to attend Eskimo yo-yo making classes in Alaska and other excessive out of state travel that occured in 2007-2008 as revealed by the Alameda County civil grand jury (Frequent Flying Staff). All the while, Mayor Dellums continues to spend extravagant amounts on his Washington expense account for top five star hotels, exclusive restaurants, limousine service and a chauffeur (Ron Dellums Living Large). Ironically in a September 27, 2008 SF Gate article, Chris Heredia quoted Mayor Dellums in response to our budget woes as saying that "At the end of our review, we came to the conclusion: Oakland is living beyond its means. As mayor, my job is to speak the truth, as painful as it is". It is certainly true that some have been living large at the public trough, including our Mayor. Yet our City Administrator Dan Lindheim and Councilmember Jean Quan routinely dismiss such boondoggles as being so small they are irrelevant to the overall budget problem.

On still another front, the City Auditor has refused to take a 15% budget cut that other politically elected officeholders agreed to. It's no wonder the city's budget deficit seems to grow and grow and grow.

Now that the city has dug itself a huge budget hole, we have to wonder why City Councilmembers and the City Administrator Dan Lindheim have chosen to frame the budget problem as one of raising more revenue through additional parcel taxes, rather than one of repealing voter mandated measures, such as Kids First, to allow greater discretion in the use of all existing revenues so that core city services, such as public safety, can be maintained. Oakland has first world taxes, but third world services. The problem is lack of leadership and an unwillingness to tackle the real problem--voter mandated spending, mismanagement of existing revenue and a failure to set core priorities. City Councilmembers are unwilling to discuss repealing Kids First because it is like the third rail of politics in liberal Oakland.

Meanwhile, our public infrastructure seems to be crumbling before our very eyes and has a direct effect on reducing the volume of taxes we collect. The city uses very little of its discretionary budget to maintain infrastructure such as roads and sidewalks. The paving cycle in the City of Oakland is 80 plus years. That's right, the city streets get paved once every 80 years or so. Maintenance of infrastructure, such as roads and sidewalks, is commonly viewed in the United States as a core local government service, as are police and fire. In the City of Oakland they are not. The city relies on state and federal tax dollars to repave city streets. This money, which is subject to state and federal budgetary issues, is largely metered through the Metropolitan Transportation Commission.

Roads that are full of potholes and sidewalks that are significantly deteriorated have a direct affect on the city's ability to maintain and generate a higher volume of tax revenues. If our basic infrastructures is falling apart and creates blighted conditions, it signals to others the poor state of our local economy, the poor health of our local government, and the inability of the city to maintain core services. These conditions, on top of already high tax rates and high crime rates result in fewer people interested in locating in Oakland, fewer businesses willing to operate in Oakland, and fewer people interested in recreating and shopping in Oakland. This means lower demand for housing which results in lower home prices and lower property tax revenues and transfer tax revenues. This also means lower business taxes, hotel taxes and sales taxes because the lower overall volume of businesses and shoppers. Think of all those people flocking to San Francisco, Walnut Creek, and Corte Madera for their safe, clean, pothole free shopping experience. Oakland is one of the lowest sales tax generators in the Bay Area. Ever wonder why?

In North Oakland, residents have been complaining to the Public Works Department and for the past year about the poor state of Shattuck Avenue between the Berkeley border and 55th Street and torn up sidwalks on Tremont Street. The City Public Works Department has made several half-hearted efforts to fill some potholes and to put asphalt over concrete sidewalks. Still Shattuck is rapidly deteriorating and has numerous potholes that are a safety hazard to bicyclists and motorists and the deteriorated sidewalks on Tremont Street have already caused one serious injury. Frustrated residents have even taken it upon themselves to mark numerous potholes with spray-paint on Shattuck between Alcatraz and 65th Street, as a warning to motorists and bicyclists. The city cannot provide basic core services such as filling potholes and fixing deteriorated sidewalks that are safety hazards, yet they want more money. Interestingly, as part of the proposed budget solution the city will reduce the street and sidewalk maintenance program by eliminating five vacant staff positions in the Public Works Agency. This reduces the number of concrete grinding crews from three to one for the entire city.

To the City Council and the City Adminstrator here are our recommendations to address the budget crisis:

1. Place measures on the November ballot to repeal all voter mandated programs, including Measure OO/D Kids First, Measure Q and Measure Y. This is necessary to restore discretion in our budget process. We have enough existing revenues to provide core city services. We are just being forced to use them in ways that do not meet core objectives such as public safety and maintenance of infrastructure;
2. Develop a prioritization of core city services with a focus on public safety, infrastructure, and revenue generating enterprises. A safer, cleaner and better maintained city will attract middle and higher income residents and shoppers to Oakland, thereby, generating more tax revenue. We need to increase the volume of taxes not by taxing the middle class out of Oakland, but by growing businesses and attracting new residents;
3. Stop using a budget process that mandates across the board cuts equally. Not all services are equal and not all services are necessary in times of budgetary crisis. Whole programs should be cut if they do not fall within the core services provided by local government. Cut all other city services that do not meet the descriptions identified in number 2. We cannot continue to be all things to all people during a budgetary crisis;
4. Personnel expenditures are the single biggest cost in the city. City employees have some of the highest salaries in the state and country for comparable sized cities. Require all remaining staff to take a 20% furlough and eventually renegotiate 15-20% permanent reductions in pay scales and freeze any cost of living adjustments for the next four years when union contracts are due.
5. Re-negotiate benefit packages when the union contracts are due to create a second tier retirement program for new staff that is no higher than 2% at 55, requires an 8 year vesting time period and requires existing staff to pay an additional 5% towards their retirement benefits;
6. Institute pay for performance measures to ensure taxpayers actually get their money's worth from city employees. This would include courteous and prompt service to all city residents. Fire employees who do not perform to well-defined metrics. This will create incentives for all employees to better perform their assigned job duties.
7. Require that all elected offices take a 20% funding cut. Yes, this even includes the City Auditor.
8. Establish strict guidelines and protocols for travel and training that applies to all city staff and all elected officials. This policy should mirror the per diems the state of California has adopted including strict controls on out of state travel.
9. Require the City establish a rainy day account for future economic crises.

Oh, and stop ignoring the residents' complaints and fill the potholes on Shattuck Avenue and fix the sidewalks on Tremont Street before someone gets seriously hurt, sues the City and makes our budget deficit even larger.

Bringing in Spring

During the long, wet winter season our fight against blight slows down. Many of the repairs and improvements that are required to remedy blight are often difficult for property owners to undertake during the winter season. Consequently, we also go into hibernation. However, this winter much of our time has been taken up with a determined fight against the Nic Nak Liquor Store.

Our strategy for addressing blight in North Oakland and South Berkely has been to focus on a limited geographic area that is bounded roughly by Ashby Avenue, Shattuck Avenue, 51st Street and Sacramento/Market Street. However, at times we have pushed all the way west to Emeryville and south to the McArthur Freeway. Our core area encompasses both South Berkeley and North Oakland. Admittedly, we have focused much of our energy on North Oakland as the City of Berkely has been incredibly difficult to work with and unwilling to provide basic services to remedy blighted properties in South Berkeley. The challenge in Berkeley will be to push for a ballot measure to change the definitions of blight and the remedies for addressing blighted properties.

Our first step has been to focus on the removal of abandoned vehicles. We got over 100 vehicles removed from North Oakland. We then moved on to blighted properties. We have been in the process for the last year or so of identifying all blighted properties and reporting them to the City of Oakland. All the properties have been identified and reported to the City and are in various stages of remediation or further prodding of the City Code Enforcement to take further action. Currently we have 47 active properties with blight that are under investigation by the City of Oakland. Many properties have already been cleaned up. A total of 72 blighted properties have been reported and remediated. Some of the 47 outstanding properties have been intractable and need further work not just by We Fight Blight but by the North Oakland Community and the Crime Prevention Council.

Once We Fight Blight adequately addresses and resolves the remaining blighted properties, our next step is to focus on public infrastructure by cataloging all failed and deteriorated streets, sidewalks, benches, parks, bus stops, streetlights and any other public infrastructure and requesting the City repair and remediate the blight pursuant to their own Blight Ordinance. Understandably this may be challenging under the current budget crisis as this requires an investment in public infrastructure by the City itself and it will likely not have any money. Our final step will be a push for major street tree planting and median planting through a public private partnership, property owner investment and donations.

Despite the recent economic downturn, we have witnessed many positive changes in North Oakland and South Berkeley. Houses are being refurbished and remodeled, new restaurants and cafes are opening, the Ed Roberts Campus is almost done, homes are selling at a brisk pace, more families are moving into the community, and crime seems to be down. We like to think our efforts have helped in some small way to bring about some of these changes though we recognize many of these changes are subject to larger macro-economic forces and the cumulative decisions of many individuals. In the short-term we will continue the fight against liquor sales at the Nic Nak. Spring brings renewed hope in our community and marks an opportunity for positive changes in North Oakland and South Berkeley. We hope you join our efforts in making North Oakland and South Berkeley a better, safer place to live.

Nic Nak Hearing Delayed Until May

The Nic Nak hearing of March 16 at the City Council has been delayed by City Council Rules Committee at the request of the Pannell's and their Attorney, Hiawatha Roberts. Mr. Roberts requested the postponement because a college friend of his and Judge in Texas recently passed away.  Mr. Roberts is to attend the funeral which conflicted with the hearing date. The hearing will be rescheduled most likely the first City Council meeting in May. We Fight Blight will keep you posted on the new hearing date.

Approving Nic Nak Would Set Bad Precedent for Oakland

The Nic Nak appeal will be heard by the City Council on Tuesday, March 16, 6:30 pm Oakland City Council Chambers, City Hall, Agenda Item 9.1. The appeal has been filed by concerned residents with support from the East Lorin Neighborhood Association, the Shattuck Crime Prevention Council, and business leaders. The Planning Commission approved the Nic Nak despite the objections of of North Oakland residents and City Planning Staff and the City Attorney who had previously informed the Planning Commission the City could not make the necessary legal findings to approve the liquor sales. Should the City Council uphold the Planning Commission's approval for liquor sales at Nic Nak it would set a significant precedent allowing other non-conforming liquor sales that have gone out of business to re-open, contrary to the existing law and established public policy of the City. Approval of Nic Nak would turn the deemed approved program for liquor sales on its head.

The intent of the deemed approved program for non-conforming liquor sales is to allow such uses to continue under very limited circumstances but to eventually bring such uses into conformance with the current City regulations or eliminate them altogether as an undesirable land use. To remain a deemed approved use the requirements for liquor stores include not creating nuisances and/or not having a lapse in continuous alcohol beverage sales for more than 90 days. In Nic Nak's case it was shut down for more than five years, well beyond the 90 day requirement. The Nic Nak's owners, the Pannells, even surrendered their state Alcohol Beverage Control license during this time. The Nic Nak was originally considered a non-conforming use because it was not consistent with the revised City regulations governing alcohol beverage sales that preclude liquor stores from being located within 1,000 feet of each other. The Nic Nak was not alone in being a non-conforming liquor store. Such non-conforming liquor outlets are abundant throughout the City of Oakland. The City's fundamental goal has been to reduce the over-concentration of liquor stores in Oakland.

The City Council adopted new regulations restricting liquor stores because of the demonstrated nuisances created by such uses including public drunkeness, public urination/defecation, littering, increased violent crimes, and public disturbances. It has been shown through peer reviewed studies at the local, state, national and international level that the problems associated with liquor stores are amplified when there is a concentration of liquor stores in any particular area.

Because the Nic Nak ceased operations for greater than 90 days its deemed approved status was terminated by the City. In seeking to sell liquor again, the Nic Nak is considered a new land use and therefore is required to obtain a Major Variance and a Major Conditional Use Permit. The Major Variance is required because of the 1,000 foot rule--the Nic Nak is 80 feet from another liquor store. The Major Conditional Use Permit is required because liquor sales are considered to be a potentially problematic land use that requires site specific conditions to restrict such uses and ensure they are not a nuisance to the community.

The Planning Commission approved a Major Variance allowing liquor sales at Nic Nak using an unprecedented and legally suspect  rationale that "historical relevance" is equivalent to a physical site constraint. Never before in the history of the City has such a rationale been used to approve any variance for any land use. We cannot find any precendent for such rationale in any other local jurisdiction. In the City of Oakland a variance is warranted when there is a unique physical or topographic site constraint with the property--such as an irregular lot size, unusual topogrpahy, or significant natural feature such as a large rock outcroping that other properties do not suffer from--that prevents the property owner from meeting the intent of the Oakland Planning Code. An economic hardship is not a legal basis for approving a variance. The Planning Commission asserted that because Mr. Pannell had owned the Nic Nak property for many years it would essentially create a hardship for him to move his liquor sales to another location that was consistent with the Oakland Planning Code because it would severe ties to his historic customers. This was the case even though the Nic Nak had been closed for more than five years and the Pannells had already voluntarily severed his ties with his historic customers by closing the store and surrendering his liquor license.

A great percentage of non-conforming liquor stores with a deemed approved status have historical ties to their physical location. That is the very nature of most deemed approved, non-conforming liquor uses throughout Oakland. Allowing the Nic Nak to re-open contrary to the requirements of the Oakland Planning Code would open the door for any other liquor store in Oakland with a deemed approved status that ceases operations for greater than 90 days to re-open under the suspect rationale of "historical relevance". This would substantially weaken the City Coucnil intent of ensuring that non-conforming uses either operate consistent with the requirements of the deemed approved status program or are eliminated. The policy for eliminating non-conforming liquor stores that violate the deemed approve status requirements and the imposition of the 1,000 foot rule was approved by the City Council to address the over-concentration of liquor stores in Oakland. There are already 20 off-site liquor sales within 1 mile of the Nic Nak. Allowing the Nic Nak to re-open removes a significant tool from the City's toolbox for addressing liquor stores in Oakland.
Allowing the Nic Nak to re-open and sell liquor is a bad precedent for the City of Oakland. If you don't want your neighborhood suffer the same fate, please make sure you express your views at the City Council Hearing.

When: Tuesday March 16, 6:30 pm Oakland City Council Chambers, City Hall Agenda Item 9.1

Speakers can also sign up on-line by going to http://www.oaklandnet.com/ On the home page there is a heading for City Council with a choice of Meetings and Agendas. Click on that: to the left of that is a choice to "Speak at Council". Click on that and follow the simple instructions. Speakers cards for the March 16 meeting can be filled out after 12:00 pm on Friday March 12, right up to 5 pm March 16.