Jul 31 2020

Transfer Tax increase, as proposed, requires only a majority of voters to support the tax rather than 2/3rds required voter approval of identified purposes.

“Our facilities maintenance fund, which was established in 2003 to address ongoing and deferred maintenance of city owned facilities, has very little planned funding within our budget beyond FY 2019- 2020. The committee has recommended in previous budget analyses that in the near term (over the next 5 –10 years), minimum additional funding of approximately $850,000 per year is needed just to maintain the existing condition of City buildings, parks, streets and sidewalks.”  Report of the Piedmont Budget Advisory and Financial Planning Committee, June 2020.

The lack of steady funding for Facilities Maintenance has been the sole justification offered by the Committee and City Council for the proposed increase in the Real Property Transfer Tax headed for the November 2020 ballot.  The Committee warns the transfer tax will be a flat $2.8M for the next 10 years and recommends raising the tax to bring in $950,000 annually to address the maintenance “deficit.”   Make no mind of the fact that the transfer tax averaged $3.4M over the past decade and is projected to reach $4.5M by 2030.  The Facilities Maintenance fund currently has a balance of $5M and this year’s transfer tax was $3.5M.

Assume the Committee is right.  If so, then why is there a such huge loophole in the resolution authorizing the tax for expenditures other than facility maintenance?  The resolution notes the dire state of Piedmont facilities: “The increase in such tax is made necessary due to aging infrastructure which is escalating operating costs that outpace the growth of City revenues;” yet goes on to state:

“The tax would apply to the sale of real property until ended by the voters; and revenues from the tax could be used for any legitimate governmental purpose; this measure is not a commitment to any particular action or purpose. The tax is a general tax and shall be approved if the measure receives at least a simple majority of affirmative votes.”

“Not a commitment to any particular action or purpose.”  So the new tax can be used for anything – salaries and benefits, new equipment, project overruns.  The real reason for that clause may be to lower the vote needed for the measure to pass – general taxes only need a simple majority to pass.

Garrett Keating

Piedmont Resident

Jul 30 2020

Piedmont would become the first city in California to require existing residences to make retrofits when spending $25,000 on home improvement projects, including kitchen or bath updates.   Berkeley and San Francisco require all electric for new construction, but not for existing homes.

July 20, 2020 was the first time the Council had considered the proposed REACH CODE ordinance.

In a split vote, three City Council members, Vice Mayor Teddy King, Councilmember Jennifer Cavenaugh, and Councilmember Tim Rood, approved the first reading of the REACH energy program designed to wean Piedmonters off of natural gas.  Mayor Robert McBain and Councilmember Betsy Andersen voted against the first reading of the comprehensive ordinance.    Older buildings undergoing a major remodel or new buildings will be the most impacted by the new ordinance.   The second and final reading of the proposed ordinance was expected for August 3, 2020, however the REACH codes are not on the agenda for that meeting.

On its website for days prior to the Piedmont meeting, the Sierra Club stated,  “All Alameda County residents are urged to join this virtual public meeting to give public comment in support of this electrification ordinance. Building electrification is an essential strategy to curb climate and air pollution.”  Sierra Club speakers did participate at the July 20 meeting.  The Sierra Club opposes cooking with gas, not only in homes, but also in restaurants.

The propane gas industry sent two speakers, and various individuals who helped develop the proposed ordinance encouraged the Council to improve it or adopt the ordinance as proposed. 

One or more speakers were less enthusiastic and raised issues of costs, practicality for life conditions, and concerns over commercial and municipal property not being included.  One speaker stated, “It seems the city should start with their own facilities.” 

Councilmember Andersen questioned why the ordinance had not been reviewed by the Planning Commission stating this would give the residents of Piedmont a greater opportunity to consider and participate in the omnibus ordinance impacting Piedmont homes. Additional, information was requested regarding the cost impact to homeowners.

Mayor McBain was concerned that the $25,000 threshold for ordinance compliance was too low and suggested a higher possible $50,000 threshold.

Rood, Cavenaugh, and King praised the staff for involving the public in outreach to form the comprehensive ordinance meeting Piedmont’s Climate Action Plan goals.  There were no changes made to the proposed ordinance provisions, and the ordinance first reading was approved as proposed by the three affirmative votes.

Unresolved questions raised by the public and council were:

  • What is considered cost-effective?
  • Why wasn’t the Planning Commission asked to review the ordinance?
  • What exceptions are allowed under the ordinance?
  • Why are the exceptions not included in the ordinance?
  • Will the Planning and Building staff be making the exception decisions?
  • Was specific consideration given to Piedmont’s many older homes ill fitted for retrofits?
  • Where would the required heat pump be placed on a property?
  • What happens to homes heated by radiators or radiant heat?
  • Why are City, School, and commercial buildings excluded from the ordinance requirements?
  • Should City facilities set the example first and then require homes to comply?
  • Is a 30 year amortization period realistic for expensive energy improvements?
  • What is the expected cost for required improvements of various ages and sizes of homes?
  • Will homeowners be discouraged from making improvements because of significant added costs or evade city permits?
  • What happens if your furnace goes out in the middle of winter and you do not have time to install a required solar system?
  • How much will it cost to administer the ordinance?
  • How was it determined that $25,000 on improvements, such as a new kitchen, would trigger ordinance compliance?

READ the 2020 Ordinance 1st Reading of Ords. 750 & 751 NS Reach Codes & Energy Audit Policy

Piedmont staff described the specific proposed requirements as follows:

  • Newly constructed low-rise residential buildings, including new detached accessory dwelling units (ADUs), must use all electric building appliances.
  • Projects proposing an entire new upper level on a low-rise residential building, or that increase a low-rise residential building’s total roof area by 30% or more, are required to install solar panels on their roof.
  • A housing renovation on a low-rise residential building, that costs $25,000 or more, will require the applicant to include one item from a list of energy efficient insulation or electrification fixes (renovations of $100,000 or more must include two). Multiple items are cost-effective.

The City Council also considered other amendments to the Building Code and policy changes that, while not Reach Codes,  help reduce natural gas use. They are:

  • An application for an electrical panel upgrade must include space in the panel to accommodate future electrification of all building appliances.
  • Kitchen and laundry area renovations must include electrical outlets to allow for future electrification.
  • Requiring completion of a Home Energy Score or Audit (homeowner’s choice) when listing for sale of a property or submitting an application for a design review permit.

Proposed Title 24 amendments (“Reach Codes”), the City Council were considered at the July 20 Council meeting. The first reading was on July 20 and the second reading was expected on August 3, yet is not on the agenda. 

At its regular meeting on July 20th, the Piedmont City Council considered the first reading of an ordinance implementing reach codes, which are amendments to state’s Building Energy Efficiency Standards and state Electrical Code which are designed to promote efficient building methods in homes in Piedmont. The Council considered an ordinance requiring home energy audits under certain circumstances. Click to read the Agenda Report for this item, which includes the proposed ordinances, as well as links to background documents and details on the public outreach. The agenda report and Ordinance 750 N.S. were updated and posted effective July 15, 2020. The update includes typographical corrections in the report and the inclusion of amendments to City Code section 8.02.020 in the ordinance.

The Council was slated to take this issue up at its meeting of July 6th, but due to the importance of the issue and the lateness of the hour, decided to continue consideration to its July 20th regular meeting when a first reading of the ordinance was approved.

These measures are being proposed because Piedmont’s Climate Action Plan (CAP) 2.0 calls for the community to reduce its annual greenhouse gas emissions from the building, transportation, waste, and wastewater sectors, combined, from about 38,000 metric tons of CO2e in 2017 to just 9,800 metric tons in 2050. Currently, a large percentage of Piedmont’s emissions come from natural gas appliances in buildings, especially gas furnaces and water heaters. To meet CAP goals, the Piedmont community must decrease natural gas use in buildings by improving insulation, and by switching out natural gas appliances for electric appliances powered by renewable energy.

Read complete City of Piedmont press release here.

First Reading approved by the City Council >  – 2020 Ordinance 1st Reading of Ords. 750 & 751 NS Reach Codes & Energy Audit Policy

Jun 30 2020

At a Special City Council meeting on June 29, the Council listened intently for hours to staff reports and numerous swimmers about the closed Pool operation and maintenance needs. Opinions varied: close the pool and let Piedmonters know how important an updated pool is, close the pool and put in commercial businesses to increase sales tax, repair the pool and let swimmers continue to use the pool, etc.

COVID-19 has made pool use complicated, but the Recreation Staff has devised ways to make limited use of the pool if allowed to reopened under County approvals.

An ongoing long term issue has been water leaking from the pool.  The solution was indicated as a new pool.

The Council by consensus directed the City Staff to return, as soon as possible, with further information on costs and options for reopening the pool, even if on an interim basis.

Jun 30 2020

Council Seeks Ways for Both Real Property Transfer Tax and General Obligation Bond on November Ballot.

At the Special Council meeting on June 29, 2020, the Council met a complicated set of financing options to deliberate.   After several hours of considering the pool closure and alternatives, a lawyer, financial advisor, Director of Finance, City Administrator and the Council attempted to provide a way of financing improvements to City facilities.

The Community Pool was considered primarily for a bond measure, however many roadblocks arose on the timing and advisability.  The cost for a new Aquatic Center has been roughly estimated up to twenty million dollars.

Some wanted public safety needs to be on the ballot separately from the recreation facility improvements, while others wanted all desirables together on the ballot.

Complex financing mechanisms were suggested from Certificates of Participation to lease back of City facilities. Problems with a bond measure preparation and timing appeared to be disappointing news for the Council, most of whom seemed unfamiliar with the various financing mechanisms.

It was noted that Piedmont would receive a AA+ rating for bonds, as “the City does not hold any debt.”  No mention was made of the money currently borrowed from the State to finance Piedmont’s sewer rehabilitation projects.

The Real Property Transfer Tax (RPTT) increase was discussed and is likely to be approved for the ballot.  Council members noted the RPTT  is levied only at the time a property is sold bringing them to believe the one time expense would be acceptable to voters.

A poll was professionally conducted to determine if voters would likely approve the taxes, and the poll showed passage would be difficult to pass at the 66 2/3 rds level.

Facing a tight August deadline for putting any tax measures on the November ballot, the Council will consider the measures at upcoming meetings.

Jun 29 2020

Recreation projects should be separated from fire and police measures.

Because of COVID- 19, ballot measures in November will not allow for full community discussion of City projects and needs.

Letter sent to the Piedmont City Council:

Based on the survey results and the limitations to public participation brought on by the pandemic, November 2020 does not seem like an appropriate time to put these two initiatives on the ballot, especially the facilities matter.

Every indication suggests a second wave of the pandemic will occur in the fall and these questions should not be put before Piedmonters under constraint.   “Robust resident education will be needed” – that will be a very difficult undertaking during the pandemic and should not be rushed or forced.  The typical forums available for voter education like League of Women Voters, house parties, clubs – won’t be available or will see reduced participation.

And, if put on the ballot, can the public outreach activities staff had planned before the pandemic go forward – it gives the appearance of city staff campaigning for the ballot.  Council should do as it did with the public safety contracts – postpone these ballot questions until more normal conditions return. Two years from now has the added advantage that three council seats – a majority – will be up for election, allowing for the community to send a clear signal of whether it supports these initiatives.

The polling results indicate that well over 60% of Piedmonters consider facilities as excellent, good or average.  The City Administrator concluded that Piedmonters do not clearly understand their facility needs but is that true?  Piedmonters are familiar with the facilities they use and see – recreation and park facilities – and not with the ones they don’t – the police and fire buildings.  The polling results indicate that most Piedmonters like what they see and it’s really up to the city to explain why these facilities need replacement.  Piedmonters understand the maintenance issue with the pool – it has been studied and discussed for years.  The proposals for the pool, Linda Beach and Coaches are for replacement, not maintenance, and looked at this way, the results could indicate that residents do not want these replacements.  To determine if that is the case, it would be better to have the public safety facilities and recreation facilities presented as separate ballot initiatives.

Finally, at a Budget Advisory and Financial Planning Committee (BAFPC) meeting I attended, the Assistant City Manager/City Clerk indicated that General Obligation bonds might require two votes under the City Charter. The BAFPC suggested a way to avoid two votes would be to establish a Community Facilities District (CFD). I think the staff report is inaccurate when it states the BAFPC “favored” CFD bonds, though it did support a parcel-based tax assessment compared to an ad valorem one:

“The Committee recommends pursuing a parcel-based tax assessment. This is preferable to an ad valorem tax given that the facilities to be funded include primarily (or potentially exclusively) essential public services buildings benefiting all Piedmont residents.”

I think it is inaccurate to conclude that the facilities to be funded are primarily “essential public services”.  While I’ve enjoyed the recreation facilities in Piedmont, it is clear that not all residents utilize these facilities, especially so over the next 30 years as Piedmont “ages in place”.  Police and Fire are, of course, essential, so again, consider placing the public safety facilities and recreation facilities on separate ballot initiatives.

Garrett Keating, Former Member of Piedmont City Council

Jun 27 2020

The Community Pool was operated for decades at no cost to the City by the Piedmont Swim Club, a non-profit organization.  It was used by the community, Swim  Club members, the Piedmont Recreation Department, Piedmont schools, and the Piedmont Swim Team.  The Piedmont Unified School District teams were incorporated into the lease of  the pool starting in 1998.  The Piedmont Swim Team, (separate from the School District), submitted a letter supporting continued operation and funding by the Piedmont Swim Club.

In 2010, the Piedmont Swim Club wanted to continue to operate and pay the expenses for the pool; however, in a closed, private meeting, the City Council decided not to renew the $1 lease with the Club and the City assumed the full expense of operating and maintaining the pool.

At the June 29, 2020 Special Meeting, the Piedmont City Council will consider ceasing the pool operation. Discontinued pool operations will likely be coupled with any tax increases on a November 2020 ballot measure.  The cost of a new “Aquatic Center” has been roughly estimated to cost $15,000,000. 

The following article was published on this site by the Piedmont Civic Association on Aug 14, 2010. _____________

Piedmont Swim Club Pools Open but Lease Still in Limbo

Aug 14, 2010

The Swim Club’s lease expires on June 30, 2011.  At that time, unless a new lease has been signed, the facility will revert to the City.   It would then be up to the City to either shutter it or find the funds to operate it.  Without a lease, the Swim Club would be forced to dissolve.  The Swim Club Board is actively negotiating with the City for a new long-term lease.   According to Tim Rood,  Swim Club President:

“In 2008, we successfully negotiated a 3-year extension that removed the requirement for the Swim Club to pay a minimum cash rent, saving the members $114,000 over the three years.   Following a meeting to discuss lease terms with the City Manager and City Attorney, on March 30, 2010, we sent the City a proposal for a 15-year lease, offering to continue to maintain the facility and provide the same, mostly unpaid use by the Piedmont Swim Team, the schools and the Recreation Department – estimated at over $70,000 at prevailing facility rental rates.”

After working on it in closed session, the City returned a mark-up of the lease proposal on May 7.  Rood reports the City indicated that it wants to require the

Swim Club:
– to pay rent, but not how much;
– to contribute to a capital improvement fund, but not in what amount;
– to turn over any funds remaining upon expiration of the lease to the City (which conflicts with Club by-laws);
– to submit to periodic review and arbitration of the longstanding use arrangements during the term of the lease;
– to purchase additional liability coverage and earthquake insurance at considerable expense and questionable benefit.

The City Council further stated that “there are some other items that the Council may want to propose changes on, but they want to think them over further.”

The Council also asked the Recreation Commission to review the use arrangements that have been in effect since 1998.  The Commission recommended to keep school use more or less at current levels and not to add the additional school aquatic programs that the School District had requested.  The Piedmont Swim Team has previously submitted a letter of support for a new Swim Club lease.

In response, the Swim Club Board began preparing long-term financial projections and estimates of the value of the community use provided, obtaining quotes on the additional insurance coverage the City requested, and researching facility rental costs and recreational/lap swimming costs at competing facilities.

In 2006, a consultant studied the option of converting to a City operated pool and determined it would have required annual subsidies from the City’s general fund of $127,000 to $327,000 in excess of revenues from pool operation.  Considering the City’s recent budget deficit situation, the Swim Club Board expects to resolve the contract, avoiding this new expense to the City. Source: October 3, 2006 City Minutes, Consultant’s Report, and Staff Report)  [2020 NOTE: City reports no longer available.]

A significant change from previous leases is found in 9(c) of the Swim Club’s proposed lease, which opens the Swim Club to 130 non-Piedmont residents, expanding possible membership total to 650 from the current approximate 500.

The recent closure required by Alameda County Department of Environmental Health for non-compliance with California State Law AB1020 at the height of summer added to the ongoing stress on the Swim Club membership and the City. Read more about closures.

For additional information on this issue, Mr. Rood recommends a recent article by Linda Davis of the Piedmonter summarizing the complexities of the pool closure and lease negotiations.”

City Administrator Sara Lillevand states in her 2020-2021 Budget overview:

“We are nearing a decision point regarding the future of the Community Pool. The present facility is more than 50 years old and no longer meets the needs of the community. Given its age and the lack of substantial investment over its life, the pool has become increasingly costly to maintain. We completed a comprehensive condition assessment of the entire facility and associated operating systems in 2018. The report indicated an investment of approximately $350,000 will be required to keep the aquatic facility safe and operational in its current form for the next 3-5 years, and an additional minimum investment of approximately $1.5 million to extend its life up to ten years. These renovation and repair costs are in addition to the rising subsidy required to operate the pool. For 2020-21 we are budgeting a decrease in revenue due to poor trends and an increase in operating costs of $120,000. Overall, we are projecting an operating loss of $368,000. In order to maintain a reasonable reserve of approximately $66,000 in the Aquatics Fund, we propose a subsidy transfer from the “General Fund of $300,000, which is $50,000 higher than last year.” May 6, 2020

On Monday, June 29, 2020, 7:30 p.m., at a Special Meeting of the Piedmont City Council, the Council will consider whether or not to discontinue use of the Community Pool because of ongoing maintenance and expense issues.

Links for participation and information are below: 

PCA council-current-agenda (1) 6292020 < Agenda

PCA Continued Operation of the Piedmont Community Pool < Staff Report

Budget Overview – 

Jun 23 2020

Piedmont is the highest taxed of comparable Bay Area cities.

The City Council is considering a raise to the tax when a Piedmont home is sold.

The City Council is currently considering a proposal from the Budget Advisory and Financial Planning Committee (BAFPC) to raise the real property transfer tax (RPTT) the tax buyers and sellers pay when buying a home in Piedmont.  The current rate is  $13/$1000* of the sales price and increases of 3, 3.5 and 7% are being considered.  The rationale given is to raise $850,000 annually to pay for facility maintenance.  Historically the RPTT has been $2.8M and revenue above that has been dedicated to facility maintenance. Over the past 10 years, RPTT has averaged $3.25M and with that excess, the Facility Maintenance Fund now stands at $5.8M.   An analysis of RPTT growth over the past 20 years shows a very consistent increase in revenue, the one outlier being the years 2008 to 2010 (Figure 1.)  Using the RPTT growth rate from the past 20 years shows that by 2030, RPTT revenue will be $4.5M.
Why this matters is that Council must choose a tax increase to put before the voters in November 2020, and should not raise taxes unless necessary.  An analysis by BAFPC shows that Piedmont is the highest taxed of comparable Bay Area cities (http://piedmont.hosted.civiclive.com/government/commissions___committees/budget_advisory___financial_planning_committee December 2019 report).
The City Finance Director estimates that the RPTT will be $2.2M next year and using that as a baseline justifies a 7% increase in order to raise the $850,000 for facility maintenance (Table 1).   If the preceding 10-year average of the RPTT is used, a 3% increase will rise enough for facility maintenance (400,000 + 805000 = $1.2M).  Assuming Piedmont home values continue to increase, no tax increase is needed – the steady increase in real estate values will raise more than enough for facility maintenance ($1,200,000)
Garrett Keating, Former Piedmont City Council Member 
*Updated: 6/25/2020
Jun 17 2020

“Piedmont is the highest taxed city in the area.”

Letter to the Piedmont City Council regarding increase in Piedmont taxes.

Table 4 of the Budget Advisory and Financial Planning Committee (BAFPC) report provides scenarios of increased property transfer tax (RPTT) revenue based on alternative increases to the tax.  The analysis looks backward and provides you with increased revenue the city would have received over the past 10 years had these rates been in place.  That’s an understatement and I recommend you give direction to staff to conduct a fourth scenario that forecasts RPTT growth under the current tax rate that will occur based on the growth rate of the past 10 years.  This is very easy to do and will provide you with information to select the appropriate tax increase, if indeed one is needed at all. 
Three reasons: First, as the BAFPC analysis shows, Piedmont is the highest taxed city in the area and adding more taxes to that burden should be factually considered. Second, the Facilities Maintenance Fund is fully funded.  Third, as the Public Works Director said at your last meeting, facilities maintenance is on pace and substantial deferred maintenance has been achieved under current RPTT revenue.  As you know, the past 5 years have seen record RPTT receipts even in a period of declining sales so there is good reason to analyze whether the a tax increase is needed.

I have some questions for staff:

City Administrator:  the BAFPC recommended city staff dialogue with PUSD officials about how increases in city taxes might impact the District’s need for additional funds.  Can you elaborate on these discussions?

Finance Director:  even in the midst of the pandemic, you recently stated the real estate market is “robust”. Can you elaborate on your projection that revenue will drop by 29% in 20-21,  yielding a RPTT of $2.2M.  Is that due to a drop in the number of sales or home prices?

Assistant City Clerk; You stated that under the City Charter, a bond initiative might require two votes.  Can you elaborate on that and any conclusions?  If that were the case, some have suggested a facilities district as a way to avoid 2 votes. I recommend Council abide by the Piedmont City Charter.

Garrett Keating
Former Member Piedmont City Council 
Link to Budget Advisory and Financial Planning Committee report > Receipt of a Report from the Budget Advisory and Financial Planning Committee on Financing Options for Improvement of City Facilities
Jun 13 2020

The Piedmont Budget Advisory and Financial Planning Committee’s recommendations are as follows:

Facilities Maintenance and Other Infrastructure Needs 

The Committee recommends an increase in the Real Property Transfer Tax (RPTT)  in order to meet the needs of the facilities replacement fund and other infrastructure needs on an average annual basis of at least $700,000 – $900,000. The Committee believes this increase should run in perpetuity until otherwise determined by the citizens that it is no longer necessary.

Capital Projects

The Committee believes that it is necessary and appropriate for the City to pursue debt financing for the City’s public building needs. Determining the amount of debt financing, and the scope of facility projects, will require public input and careful consideration by the Council.

The Committee recommends pursuing a parcel-based tax assessment. This is preferable to an ad valorem tax given that the facilities to be funded include primarily (or potentially exclusively) essential public services buildings benefiting all Piedmont residents. 

Despite current economic uncertainty, the Council should move swiftly in planning for the City’s most urgent facility needs, specifically the City’s police and fire stations, to take advantage of current low long-term interest rates, and the decline in local debt service burden occurring in 2021 and 2022.

Click below to read the full report.

PCA Receipt of a Report from the Budget Advisory and Financial Planning Committee on Financing Options for Improvement of City Facilities

TO VIEW AND PARTICIPATE IN THE JUNE 15 CITY COUNCIL MEETING, CLICK BELOW FOR THE AGENDA AND INFORMATION.

https://piedmont.ca.gov/UserFiles/Servers/Server_13659739/File/Government/City%20Council/Agenda/council-current-agenda.pdf

Jun 9 2020

Piedmont Budget Advisory and Financial Planning Committee

Thursday, June 11, 2020, 3:00 pm

Agenda

1. Consideration of a Report to the City Council on Financing Options for Improvement of City Facilities –

Documents for the committee meeting have not been publicly released.

Click below for instructions on how to observe and participate via Zoom.  The meeting is open to all.  Minutes and videos are not kept of the meetings.

2020-06-11 Budget Advisory & Financial Planning Committee