Burlingame City Council members will start the new year by looking at ways to fix the city's aging flood control infrastructure.
City Manager Jim Nantell said Friday that he plans to ask the council at its Jan. 7 meeting to either approve plans to take a $35 million to $44 million bond measure or a community facilities district to the voters to pay for the work. Recent history suggests that it could be difficult to pass such a bond measure, Nantell said.
The $44 million Measure H bond initiative for flood control fell a few percentage points short of the two-thirds vote it needed in November 2006. Its opponents argued that it would have been unfair to new homeowners in the city because they would have had to pay more. Measure H would have charged property owners an average of $32 per $100,000 of assessed value.
A facilities district would also need a two-thirds vote to pass.
After Measure H failed, state Sen. Leland Yee, D-San Mateo, and Sen. Tom Torlakson, D-Antioch, introduced a state constitutional amendment in May that would allow cities to charge residents a rate to maintain, operate and upgrade flood control and storm drain systems without having to pass a local initiative. That amendment, known as SCA12, needs to be approved by two-thirds of the state Legislature and a majority of voters statewide. Sen. Yee spokesman Adam Keigwin said more Republican votes are needed in the Legislature before it can go to voters. "We have little hope that it is going to make it," Nantell said about the amendment. "We can't just sit here for another nine months or two years waiting for the state measure to be put on the ballot."
The city could go to voters with another bond measure in June 2008, but it would take at least until August 2008 and an estimated $50,000 to do the necessary work to prepare a facilities district proposal, Nantell said. A citywide community facilities district could be done in a number of ways, including making property owners pay an amount based on the size of their land or by using some other formula, Nantell said.
- Written by Fiona
The CFD study costs will hopefully be viewed as an investment. A GO bond alternative has its own costs - especially the cost of another potential failure (with associated diverted staff/Council time). It is interesting to note the recently passed Burlingame School Bond (Measure A) would have failed if it required the same 2/3 voter threshold (it garnered 63.9%) -- and schools are a "sexier sell" than flood infrastructure. Furthermore Per Rich's comments on a prior post, a GO bond/assessed value tax (a la Measure H) seems particularly difficult to pass now, given:
1. We've just had two consecutive years of property tax rate increases (San Mateo High School District in '06 and the Burlingame Elementary School District in '07)
2. Trying to pass a property tax increase during a real estate downturn is going to be a huge challenge
3. The City's assumptions of cheap financing costs and ever increasing home prices don't look so conservative anymore
4. There are likely more residents opposed to a GO bond than before- 300-500 homes have sold in Burlingame since Measure H was defeated and these new homeowners will likely oppose an assessed value tax
5. The opposition is better organized
6. Most importantly, a Mello-Roos (community facilities district) financing structure is a better and more equitable alternative that would not cost the average home owner much more than a GO bond
Posted by: | December 29, 2007 at 06:28 PM
FYI, following excerpt is from City staff report concerning whether or not the Council should puruse another general obligation bond/assessed value tax (a la Measure H) for the June 2008 ballot. Staff is recommending the Council NOT pursue a GO bond in June, but allocate resources for continued exploration of a Community Facilities District. Again, the recently passed Measure A school bond, which did not face public opposition, would have failed if it required the same 2/3 voter threshold:
RECOMMENDATION: That the City Council not pursue a June 2008 General Obligation Bond election for storm drainage improvements and
a. Direct staff to contract with NBS to undertake the study required for the formation of a citywide Community Facilities District,
b. Direct staff to do additional research on the legal basis for creating storm drainage property fee,
c. Provide staff direction relative to the development of a budget reduction option that could fund an ongoing $2 million for a pay as you go? storm drainage improvement program.
BACKGROUND: After the unsuccessful ballot initiative of November 2006, the City Council continued to review options to fund $44 million in deferred capital improvements of which the vast majority consisted of storm drainage improvements. Staff presentations were made at a Special City Council meeting of December 13, 2006 and at the regular meetings of January 2, 2007, January 16, 2007 and February 21, 2007.
At the February 21st meeting, staff presented options around the two most likely financial vehicles to secure the necessary funding, a GO Bond or a Community Facilities District Tax. At that time the Council, for many reasons, including other competing elections and the hope of passage of (SBA12) State Legislation sponsored by Senator Leyland Yee, deferred the decision until 2008.
Community Facilities District
Although SBA 12 failed to secure enough support to be placed on the ballot, Senator Yee was successful in keeping the bill alive by converting it to a two year bill. Given the fact that SBA 12 requires a 2/3rds vote of the legislature, which will require significant support from Republicans in the legislature, the chance of success are realistically less than one would want. Staff recommends against continuing suspending action pending the out come of SBA 12. At the very minimum we recommend that we use the first part of 2008 to undertake the development of a possible Community Facilities District Tax (CFD). That way by the time we know the fate of SBA12 the Council will have all the information you need to determine whether to go forward with a GO Bond Measure for November of 2008 or a Community Facilities District Tax Measure for the November ballot. CFD can also be presented through a mail in ballot the date of which is determined by the City Council.
Staff believes that the Council should use the previously budgeted funds to do more analysis on the Community Facilities Tax (CFD) because the group that fought Measure H (2006 City sponsored GO Bond Measure) will support a CFD approach but have pledged to fight another GO Bond. When you take into consideration that Measure H received 64%, or 2.6% less than required and the recent Burlingame School District GO Bond Measure received only 62% without any opposition getting the last 2.6% of the voters with organized opposition is a daunting task.
As per the February 20, 2007 Memo from the City Manager (Attachment A) although the majority of property owners would pay more under a CFD approach than they would under a GO Bond (assumes both are structured to raise the same amount of funds), the CDF would be a more equitable method and would avoid the situation where recent homeowners paying would be paying as much as 20 times more than other long term homeowners. It is the later situation that generated all the opposition to Measure H.
GO Bond Measure for June 2008
If the Council prefers the more traditional GO Bond approach staff would reluctantly suggest that we reduce the amount being funded and thus the amount paid by the tax payers as another way to respond to the new home owners attack against Measure H. Attachment B reviews five different funding amounts and the ramifications based on different property assessed values.
Two other observations, as the Council knows any ballot measure requires private fund raising to pay for the campaign costs waiting to fund a campaign for a November ballot measure would put us midway between the funding raising associated with last November's council election and the next council election in November 2009. Secondly, although conventional wisdom has often argued for placing tax measures on a smaller turn out election with the logic being the campaign works hard to get out the yes votes, the consultants conducting our per election polling of voters indicated in the case of funding the storm drainage improvements we would do better at higher turn out elections. November 2008 being a presidential election should be a high voter turn out election.
Storm Drainage Property Fee
As the Council may recall some court cases associated with the use of Storm Drainage Property Fee has led to caution around pursuing that option. Attachment B shows that it is otherwise an attractive option as it only requires a simple majority of the property owners vs. the 2/3rds voter majority required with a GO Bond or Community Facilities District. Given that more time has transpired since those court cases we are suggesting that Council concur with staff recommendation to under take additional research relative to those cities that have recently implemented a storm drainage property fees.
Alternatives to New Revenues to Fund Storm Drainage Improvements
Should we continue to fail to achieve the voters approval of funding storm drainage improvements there are two obvious other options. The first is the one that has effectively been used in the last six years since the General Fund revenues have been insufficient to adequately fund storm drainage improvements through our annual CIP. That is the default option? of just accepting the existing level of our storm drainage infrastructure and plan to live with the periodic impacts associated with significant storms. Another obvious option is to decide that adequate storm drainage infrastructure is a basic responsibility and therefore identify and implement budget reductions that would fund an ongoing $2 million per year for a pay as you go? storm drainage improvement program.
Information that was not available during the Measure H campaign was what we do if there is no additional funding for storm drainage improvements. If the Council agrees that investing in our storm drainage infrastructure is a responsibility that we can not ignore then, absent additional funds, we need to look at budget reductions to fund a minimal pay as you go storm drainage improvement program. Developing what one might call the back up option? allows the voters to have that information when they are considering the ballot measure. Although many may feel they don't care about storm drainage problems because it doesn't impact their property they may feel differently if they realized failure to fund this basic responsibility means reducing the funding for other services they do care about (i.e. cleaning up downtown, reduced traffic enforcement, less library hours and park maintenance) may result in their support of additional funding for storm drainage improvements. On one hand development of the back up option? may be seen as unfair because it looks like black mailing the voters to vote yes, if the Council believes budget reductions are necessary if we don't get additional funding then not disclosing that to the public is unfair as well.
BUDGET IMPACTS:
The FY07-08 adopted budget contains a total of $190,000 to pursue the creation of a citywide community facilities district. The appropriation covers the cost of the NBS consultant study ($50,000); the cost of printing voter educational materials ($50,000) and the cost for conducting a special election ($90,000). Only the cost of the study would be expended at this time.
Posted by: | January 03, 2008 at 06:24 PM
FYI, I should also note our group will oppose ANY G.O. bond, regardless of the $$ unt. In other words, we are ultimately opposed to the G.O. bond/assessed value tax structure in principle, not principal.
Posted by: | January 03, 2008 at 06:47 PM
Timely weather for discussion of flood infrastructure improvements. :) Rather than forcing one constituent to essentially subsidize the cost (under a GO bond, 20% of homeowners would be paying 80% of the tax), the community, AS A WHOLE, has to step up to the plate if it really wants to pay for this work. Everyone benefits from these improvements, and, again, a CFD can be tailored to make means-based exceptions for those who can't legitimately afford the investment/tax.
Posted by: | January 04, 2008 at 08:53 PM
The 80-20 rule is about in line with how the government works overall.
For some perspective on this, the Wall Street Journal of Dec. 17, 2007 reports that "the Congressional Budget Office joined the IRS in releasing tax numbers for 2005...and the richest 10% paid 70%." This was reported in the context of many politicians thinking that the richest 10% should pay much MORE.
Some may not like it (me included), but that is how such things typically operate.
Posted by: | January 05, 2008 at 08:14 PM
Why is there not enough money already being taken in general taxes to afford these things? (I just got a bonus from my employer for a good year and a job well done - I received, the government took 55% of it.)
Unfunded retirement programs and out-of-line employee compensation is the reason we can't fix the infrastructure with the money they are already taking from us. Fix those things rather than always coming to the citizens with more taxes. A couple weeks ago I posted about the community college district giving administrators huge pay increases, while the schools say they don't have enough money. The point is that revenues are way up but the compensation for a ruling class of public employees is eating it up, and then coming to us asking for more. Shame on us to let them get away with it. Vote against all tax increases no matter how they are being sold.
Posted by: Ron Fulderon | January 05, 2008 at 09:34 PM
Hi Joe -- Assessed value has nothing to do with who is "rich" or "poor;" two homes can have the same market value (average home value in Burlingame is $1.4 million), but very different assessed values.
Posted by: | January 07, 2008 at 02:12 AM
Hopefully the new city council will not pursue a GO bond format. The organized opposition to any new GO bond will surely surpass Measure H's opposition given the issues that Lorne mentioned above. A CFD-type bond would surely have a better chance of passing with several hundred new homeowners since Measure H was defeated more likely to vote NO on a GO bond.
Posted by: gr8flmd | January 07, 2008 at 07:39 AM
That soaking feeling (by Heather Murtagh, Daily Journal)
Photo - Irene Sandoval of Burlingame cleans out the gutter to try to alleviate the flooding in front of her home. Improvements to the city, including updating drainage will be discussed at tonight's Burlingame City Council meeting.
Rainwater pooled in Burlingame over the weekend reminding residents and city leaders of the overdue needs to address storm and sewer drainage a topic the City Council will tackle tonight.
Many potential options to fund a portion of the city's laundry list of capital improvement projects could be researched if approved by the City Council tonight. A bond measure is always an option, but not the recommended one before the council. Instead, the city is considering studying the creation of a community facilities district; the legal basis for creating a storm drainage property fee and the potential of cutting $2 million from the budget annually to cover a portion of the improvements. The study would cost $50,000 from $190,000 already budgeted to pursue the creation of a citywide community facilities district, according to a staff report prepared by City Manager Jim Nantell.
The city did begin putting money into repairs and updates since 2002, said Mayor Rosalie O'Mahony. But the pipes are close to 60 years old and are coming to the end of usefulness,? she said adding the system was not built to serve the population Burlingame has currently.
A community facilities district allows for financing of public improvements and services. Creation would require a two-thirds approval by the voters. A storm drainage fee, on the other hand, would only require a simple majority.
Alternatively, the city can consider cutting $2 million from its annual budget to put toward capital improvement projects for a pay-as-you-go coverage method. No ideas were given as to where the cuts would be made in the staff report.
The battle to fund the much-needed improvements began in Burlingame more than a year ago with Measure H a $44 million bond measure marginally defeated in November 2006. Since then, the city looked at various alternatives for funding projects including a second bond measure.
The narrow defeat was attributed to a small but vocal group of residents who felt the general obligation tax was unfair for new homeowners. That thought has not changed. Those of us who publicly opposed Measure H will unequivocally oppose any future general obligation bond for flood infrastructure improvements, regardless of the dollar amount. We continue to support the alternative of a community facilities district. As Burlingame city staff has noted, a CFD has a flexible tax structure and can be tailored to maximize community support. The general obligation bond has no such flexibility. Furthermore, per last year's preliminary consultant report, a CFD requires less debt than a [general obligation] bond for the same project cost, which can result in several million dollars saved in interest costs,? wrote Lorne Abramson, a previous leader with the No on Measure H campaign.
A smaller bond was considered in early 2007. Plans were scrapped allowing the city to see the results of a California constitutional amendment proposed by state Sen. Leland Yee, D-San Mateo/San Francisco, before moving ahead.
Proposition 218, approved by California voters in 1996, requires either a majority of property owners or a two-thirds vote of residents in a specific area to raise property-related fees. Fees for water, sewer and garbage collection services were specifically exempted from the voter approval requirements. A board of directors can adjust these fees when necessary.
The proposed amendment would do the same to address storm drain and urban water runoff problems, such as those facing Burlingame.
Needed support from the Legislature was not secured stopping the amendment from being placed before the voters. Yee since converted it into a two-year bill keeping the option alive for longer. It still requires a two-thirds vote of the Legislature.
Posted by: | January 07, 2008 at 03:30 PM
We're obviously happy with the Council's decision to not proceed with another G.O. bond/assessed value tax at this point, and, instead, consider other financing alternatives. Two follow up points in response to last night's meeting:
1) Means based California tax deferral for those over age 62 applies to those with income of $31.5K or less - More details: http://www.sco.ca.gov/col/taxinfo/ptp/faq/index.shtml#1
2) The $50K price tag for establishing the CFD was mentioned as an issue. Not to discount this investment cost by any means, but a key point which was not brought up last night: FEWER bonds need to be issued under a CFD than a G.O. bond approach for the same project cost. Specifically, please refer to page 13 of De La Rosa's presentation attached to the 5/21/07 Staff Report for Agenda Item 8b. Under a $37 million dollar scenario, the GO bond would have required $8 million of additional total debt outstanding. As page 13 states, "funding under a CFD enables projects to be funded directly from CFD taxes, resulting in fewer bonds being issued with saves property owners in financing and interest costs." These savings can CONSIDERABLY outweigh the aforementioned $50K upfront investment (i.e, by millions of dollars!).
Posted by: | January 08, 2008 at 04:48 PM
Hi Lorne--You are right because California doesn't really work on "assessed value" the way most Eastern cities work on assessed value. Prop. 13 set an entirely different baseline---last sales price--and that's what we have to live with unless you want to create a shadow appraisal department with its own databases at City Hall and start setting "mil rates" each year. When all you have are lemons, you cannot make orange juice.
By the way, a single year's income doesn't decide who is "rich" or "poor" either, but that is the way the state and federal tax systems work and how they are analyzed after the fact. If what you mean by your comment is those terms are often misapplied in both wage and housing studies then I agree with you.
There is no getting around who is carrying the burden as Arnold is finding out again.
Posted by: | January 09, 2008 at 04:28 AM
Hi Joe - Thanks for your comments. Bottom line, I accepted Prop 13 when I bought my house (otherwise, I would have stayed in New Jersey!). Furthermore, and most importantly, Prop 13 is a 30 year old piece of statewide legislation that has absolutely nothing to do with - and thus does now dictate how- local municipalities structure their own specific taxes (i.e. for flood control). In other words, we have a blank slate when it comes to the structure of new local taxes. We have found many other municipalities here in the Bay Area using community facilities districts.
Posted by: Lorne | January 09, 2008 at 04:40 AM
Does New Jersey have flooding and sewage problems? Do they have a statue of Anson Burlingame? He probably spent more time in Jersey than he did in this burg.
Posted by: fred | January 09, 2008 at 05:37 AM
What baseline valuation do you propose and who would set it?
Posted by: | January 09, 2008 at 05:59 AM
Hi Joe -- A CFD would not have to use any baseline valuation of our homes. A flat parcel rate could apply to all properties, or different rates based on square footage. That's one of the primary benefits of a CFD - it provides ultimate flexibility. The city will be hiring a CFD consulting firm to devise a tax structure, should it move forward with this approach. If you want more detailed info on how CFD's work, I suggest you contact City Hall and request their 5/21/07 Staff Report on the subject. Cheers, Lorne
Posted by: | January 09, 2008 at 07:56 PM
This new web site is horrible!
Posted by: Holy Roller | January 17, 2008 at 02:21 AM
Why can't the storm drains become a 94010 issue? The hills and flat lands of Hillsborough feed into the Burlingame storm drains. With the run off from these larger homes and property, it would seem fair to have them foot some of the cost for the upgrades. The city ( Hillsborough) could be assessed a city usage fee as well as a per residence fee. I think Burlingame is happy to pay their share but why should Burlingame residents foot the entire bill. I think of us as all part of the same community. We all shop on the Ave., get our groceries from the same stores and drive on the same roads day in and day out.
Just my thoughts
Posted by: visitor | January 25, 2008 at 09:25 PM