Friday, July 30, 2021

Upcoming Council Meeting 8.3.21

There are a few significant items being discussed at the next council meeting:
  • Discussion on protocol and policy around using taxpayer funds for recognition of citizens, volunteers, employees and elected officials.
  • Discussion of the rejection of liability for damage caused by a city owned tree that fell and impacted a residential fence and house.
  • Discussion regarding updating the list of cultural heritage months and other significant events that the city recognizes.
  • Discussion regarding potential changes to the city's sign ordinance, specifically around temporary non-commercial signs. 

    Prior to 2019, the city had restrictive sign ordinances that limited any temporary non-commercial signs to 3 square feet per parcel.  This meant that if an individual wished to exercise their right to speech, they could only do so with a sign that was no larger than for example, 1.5' x 2'.  That was overly restrictive and upon receiving complaints, enforcement of that policy was suspended.

    The Council took up this issue at the 2.5.19 meeting.  At that time, the Council decided to update the sign ordinance to be more permissive, adopting a restriction on individual signs greater than16 sqft with no aggregate limit.  Recently some folks in town have chosen to express themselves with many signs, well in excess of the prior to 2019 limit, but consistent with the current ordinances.  Now we will discuss if modifications are necessary to address any ongoing concerns.

    I will reiterate my previous position as it remains unchanged:

    Staff discussed several cases where the issue of sign size was limited and provided overall guidance on what had previously been struck down and what had been upheld in the courts.  There was a sentiment to avoid sign blight, the city should adopt an ordinance as restrictive as possible as to size that is consistent with the law.  I took a different approach here.  I think the first amendment and speech are critically important.  The protections over speech are not necessary to express views that are popular.  Free speech protections are needed for expressing views that are unpopular.  It is in protecting unpopular speech that we demonstrate our principles.  Any time speech is being restricted I would challenge the basis on which such restrictions rest upon.  

    And while I personally would not want to see the city littered with signs of all manner, the principle of free speech supersedes my desire for aesthetics.  Ultimately the Council directed staff to come back with a draft ordinance that limits individual signs to no greater than 16 sqft, without any aggregate limit and no time based limit.  The vote was 4-1, I was opposed because I would have not imposed such a restriction.

    I look forward to the discussion, again. 

If you have any thoughts or questions regarding these items please let me know.

Wednesday, July 21, 2021

7.20.21 Meeting Summary

Last night there were a few significant items that were discussed:
  • We approved an annual levy increase of 3.8% for the Diablo Estates at Clayton Benefit Assessment District (BAD).  This affects 24 parcels east of Regency Drive primarily on Seminary Ridge and Promontory Place. The levy is to cover maintenance, landscaping, drainage, etc. for these properties and was set up originally by the builder in order to have the costs for these particular parcels pay for themselves.  Self funding districts have been a preferable method of funding improvements as the assessments are levied on new developments as they are approved. 

    The reserve of the BAD has built up over time as it is also intended to cover replacement of long lived assets - the reserve increases each year and when it comes time to replace certain assets a sufficient fund balance has been accumulated.  This same practice occurs with HOAs as well, however with HOAs a reserve study is required not less frequently than once every three years.  The purpose of the reserve study is among other things, to assess the current remaining useful life of certain covered assets.  By doing this, it could inform how much of an increase in assessment is required to be fully funded.  Because the city manages the BAD, a reserve study is not needed and each year the assessment has been increased by CPI, or 4%, whichever is lower.  This is the maximum that the assessment can be increased.  Starting in 2012, the initial assessment was just north of $3K/parcel.  Now, the assessment is close to $4K/parcel.  If the homeowners in this subdivision desire, they could conduct a reserve study in order to validate the need for these assessments.  Without evidence suggesting it is not necessary, it is likely the city will continue to raise the assessment each year to the maximum extent allowable.

  • We heard an appeal of the Planning Commission decision to grant an extension of 1 year to the Olivia Project.  The specific section of the Clayton Municipal Code under which the Planning Commission granted an extension was 17.64.030 which reads in part:
Upon showing of good cause therefore, the Planning Commission may extend the period of a permit in which it is to be exercised, used or established, for a maximum of twelve (12) months at a time or as otherwise specified on the permit. 

It was made clear that the term "good cause" is not defined, and therefore the Council had discretion on what criteria is uses to determine if there was good cause, and whether the criteria was met.  The second clause of the sentence above states that even if "good cause" is shown, the extension "may" be granted.  In statutory construction, the word "may" indicates a discretionary action.  When legislators wish to require an action, the word "must" or "shall" is typically used, with the latter falling out of favor in recent times.

I made it clear that while previously some folks may have felt compelled to take actions at a project approval stage because of various legal requirements or potential penalties, none of that existed at the project extension stage and that any action take is based on each individual's choice.  I made a motion to grant the appeal and reject the 1 year extension.  Myself and Councilmember Diaz voted to reject the extension, however ultimately it was granted on a vote of 3-2.   The builder now has until March of 2023 to pull building permits.

  • We also discussed adopting a general fund reserve policy by which a certain percent of our reserves are designated for specific purposes.  Ultimately I did not think that the policy was specific enough and it would allow easier spending down of our reserves which I am opposed to.  As drafted, it also contemplated leaving near 50% of the reserve as undesignated, which I was concerned would then lead to calls to spend it as it didn't have a specific purpose.

    I suggested stronger language to provide more constraints around what were allowable uses, greater approval requirements than a simple majority to ensure full community support, and greater restrictions around the use of undesignated reserves.  This will be updated based on feedback and brought back to Council at a later time.

 

Friday, July 16, 2021

Upcoming Council Meeting 7.20.21

There are a couple significant items on the agenda for the next meeting:
  • Discussion of an increase in annual levy of 3.8% for the Diablo Estates at Clayton Benefit Assessment District.  This district was created to provide funding for the maintenance, operation and improvement of the landscaping, street lighting, and drainage and stormwater treatment facilities.  The District consists of 24 parcels east of Regency Drive primarily on Seminary Ridge and Promontory Place.  Self funding districts have been a preferable method of funding improvements as the assessments are levied on new developments as they are approved.

  • Discussion regarding potential time extension of permits and project approval of the Olivia Project.

  • Discussion regarding establishing a General Fund Reserve policy.  Such a policy would inform how our unrestricted fund balance should be utilized.
If you have any thoughts of questions on these items, please let me know.

Tuesday, July 13, 2021

Question: Raise Taxes, Reduce Services, or Both

Background:

While we were able to balance the Fiscal Year ending June 2022 (FY22) budget with a slight surplus, we are projecting growing deficits for each year projected thereafter. The latest estimated deficit for FY23 is approximately $200K, growing slightly more than $100K each year thereafter. This is an unsustainable situation and we need to address it if we as a city wish to remain solvent.


The causes of the projected deficits are not complicated – our spending is growing faster than our income. Most of that spending is in the form of wages and in order to be competitive with the market we have had modest increases to wages over time. Wages are the largest component, but the cost of everything has risen as well. Our income as a city however, is primarily a function of property taxes and our property tax base is not elastic. Our revenues will not keep up with our spending. As a result, city staff are paid well below market and even then it is projected our costs will exceed our revenues starting with FY23.

In addition to our general fund, three of our Special Revenue Funds (Stormwater, Lighting, and Oakhurst Geological Hazard Abatement District [GHAD]) are projected to be insolvent in the coming year as well. These special revenue funds were established to cover certain costs like the streetlights and have their own dedicated revenue sources, however the amounts levied have not kept up with inflation and therefore if we do nothing, the services they provide will have to be curtailed or they will need to draw from the general fund exacerbating our budget challenges.

It is true that we have significant reserves, however using reserves to cover ongoing operational expenses would be like using a credit card to pay for groceries and not paying off the balance. That would be unsustainable and fiscally irresponsible without a long term plan that doesn’t rely on reserve spending. That’s where we are today.  And while I am typically fiscally conservative, part of good governance and stewardship is to ensure our overall finances are sustainable and we are able to continue operations as a city.

Discussion:

There are 26 employees in the City of Clayton, of which 12 are in our Police Department. Of the 7 Department heads, all are compensated less than the median wage across comparable cities, by an average of 23%. In the past 3 years, we’ve had four different Community Development Directors, four different Finance Directors, five different City Managers, and turned over 50% of the police force. There are a number of reasons for this, not all of which are connected to compensation, but it cannot help that as a city we are significantly under market in what we pay our employees. Our total compensation for city staff, including PERS, benefits, and other required employee related costs is approximately $4M/year. If we are 23% below median, that would represent an annual shortfall of approximately $920K.

High staff turnover is detrimental to the city in many ways. When we are short staffed, the level of service we are able to provide is reduced. Open positions puts a burden on existing staff and required work essentially gets triaged into what is most important. The impact on employee morale is also a factor, and hurts our ability to attract and retain employees. It’s difficult to have an engaged workforce when it’s a regular occurrence that a co-worker can leave to a similar job in a nearby city and get a 30-40% pay raise.

The consequences of being unable to staff our open positions are substantial. Some consequences may be more indirect - if we are unable to provide the services that our residents expect Clayton can become a less desirable place to live and we may lose our tax base as property tax revenues may decline. Other consequences may be more direct - If we are unable to remain in compliance with state mandates, we could lose funding for certain activities like road maintenance - exacerbating the deficit between what the city is able to accomplish and our residents’ expectations.  If we are unable to attract talented individuals to fill our roles, the city is more at risk to making erroneous decisions that could incur liability as a result.

Actions:

It is clear to me that we need to take action. So here is the question – In order to address the structural deficits we are facing, should we increase taxes, reduce services, or both? We often want a high level of service at a low cost – an unrealistic desire. If we want a high level of service, we have to be willing to pay for it. As an elected representative, my top priorities are public safety, fiscal sustainability, and preserving home values – all things that contribute to quality of life. To deliver on these things, it requires adequate staffing and resources. Continuing with the status quo is not sustainable, therefore we need to take steps to shore up our financial position. Those steps could be increasing revenue (taxes), reducing services, or both.

1. Increase Taxes:

To ensure fiscal sustainability, the city could increase its revenue by approximately $1M/year. This amount represents the approximate difference in what we pay vs. the current market rate.  We could also target a lower rate, but for the sake of discussion I'll use this amount as a placeholder.

The two main tools we have to increase revenue (taxes) are via sales taxes and parcel taxes. Sales tax increases have the benefit of deriving a portion of revenue from non-Clayton residents who shop within the city. The largest sales tax providers in Clayton are Safeway, Walgreens, and CVS. Sales tax however, is only approximately 11% of our general fund revenue. Our current projection for sales tax revenue is approximately $585K. To achieve a net increase of $1M in sales taxes, it would require a significant increase in sales tax rate.


Property taxes represent approximately 42% of our general fund revenue and are our largest source of funding. With approximately 4,400 residential units in the city, this is a wider and more stable base of revenue that the city may draw from. To achieve a net increase of $1M in parcel taxes, it would require approximately $220/household per year. We could also put a CPI riser on this as we do with other sources of revenue to ensure long term stability.



It’s important to note that Clayton’s share of the 1% ad valorem (based on assessed value) property tax is actually quite small. Of the total amount paid in ad valorem property taxes in Clayton, the City only receives 6.6% of that. For a house assessed at $500,000, they will pay $5,000 in ad valorem property taxes, but of that amount, only $330 will be received by the City. The remainder goes to other destinations like schools, libraries, and Contra Costa County. A parcel tax however is different. If voters approve a parcel tax, 100% of that would go to the city. If a levy of $220/household per year is approved, then all of that would go to the City of Clayton.

For any general taxes (taxes without a restricted purpose), either sales or parcel, they are required to be placed on a ballot during a regular election (not special election, like a recall), and receive > 50% vote.  Special taxes with restricted purpose require > 2/3 vote.

2. Decrease Services:

Another way to address our projected deficits would be to spend less. For example, we could eliminate the stipend for Councilmembers which would save approximately $28K. On a General Fund budget of $5.2M however, that is not enough to make any significant difference.


Our two largest components of the General Fund spending are Administrative Services (department heads) and our Police. Together, these two components make up over 72% of our general fund. For a reduction to be meaningful it will necessarily need to impact those areas. That could mean deprioritizing non-emergency police services, less maintenance of the parks, or other steps to reduce costs.  As a city we operate very lean already.  At any given time, there are only two police officers on duty.  We staff as light as possible to meet our requirements.  Any reduction will be felt in the specific area impacted as well as other tangential areas. The added risk of reducing services is we make the city a less desirable place to work and live, which could have a detrimental impact on home values and quality of life.  

We can also do a combination of both of these things. As a city in California though, there are certain compliance requirements that take time and cost money and those cannot be skipped else our ability to self govern as a city could be threatened. Being a city means certain things, like having an approved General Plan with a Housing Element. Those requirements are a mandated by the state, and to prepare documents that meet those compliance requirements takes time and costs money.

Conclusion and request:

No matter what combination of actions we choose, it will take time and resources to execute. That’s why I want to start this conversation now. I think our goal should not necessarily to be competitive with other cities on compensation – we don’t have the population base or size to do that. What I think we should do is not be so far away that it is difficult to attract and retain employees in a way that is detrimental to the operations of our city. A modest parcel tax could ensure fiscal sustainability and the services we’ve come to enjoy as part of the quality of life of living in Clayton.

Soon the Council will be discussing if and how our reserves should be spent down and utilized.  To me, I think we need to focus on how to sustain our ongoing operations before we decide to spend down our savings.

I’m interested to hear your thoughts.


eta:  I realized I made an error on my initial post above.  I transposed the vote requirement for a general vs. special tax.  General taxes require > 50%, where Special taxes require 2/3 approval.  In my head I must have switched those around.  Apologies and I've corrected this in the body of this post.

Wednesday, June 30, 2021

6.29.21 Meeting Summary

Last night's meeting discussed a number of significant items.  The order changed around a bit as we discussed the Oakhurst Geological Hazard Abatement District (GHAD) first.
  • We approved a GHAD real property assessment increase consistent with Consumer Price Index (CPI) increase of 3.8% for affected parcels.  The type of the parcel determines the amount of the assessment.  CPI increases were contemplated with the inception of the GHAD and approved by voters.  The GHAD does not receive sufficient funds to do significant repair or improvements.  It's function is primarily to cover the cost of monitoring soil movement, some minor repairs, and over time has the potential to accumulate funds for some larger restoration work.  Typically these would require aggregation of multiple years worth of funding.

  • Last night was the last meeting for our Finance Director and I wish him the best of luck.  We appointed a new Interim Finance Director while we search for a permanent replacement.

  • We adopted a series of increases on levies and property tax assessments in other areas that allow for annual increases related to CPI.

  • We approved the list of streets slated for repaving as part of our periodic Neighborhood Streets Pavement Preservation Project. Each year funds accumulate from various specified sources, however we tend repave every other year as we do not have enough funds in a single year to be efficient. At that time, certain streets are selected for repaving based on their Pavement Condition Index (PCI). Streets are chosen based on available funds, and their current conditions, with lower PCI streets being prioritized. The street program was supposed to happen in 2020, but was postponed due to COVID. Currently the plan is to perform the work that was originally slated last year in 2022. At that time, and again last night, the streets selected for repaving next summer are:


  • We approved the FY22 budget (city government fiscal years end on June 30).  I'm glad to see the inclusion in the budget of a few items that I've been advocating for over the past few years.  The first is the additional crossing guard in front of Mt. Diablo Elementary.  When kids are back at school in the fall, the additional crossing guard will improve pedestrian and vehicle safety around our youngest students.  This was originally requested by the then Parent Faculty Club (PFC) president and in working with the PFC the city secured a donation to cover the cost for the first year.  We have now added it to our budget and it will be a great improvement to the quality of life in our city. 

    The second item was maintenance of the dog park.  There is a dog park to the west of Diablo View Middle School that has been maintained by a combination of the City and volunteers through the Clayton K-9 Association.  This non-profit group was formed to perform various maintenance activities for the dog park.  In order to shift towards a sustainable maintenance model, the city will assume the maintenance of the facility which is appropriate as this is a city owned property.



  • There is also allocated funds to install interactive traffic signals on Marsh Creek Rd. near the middle school which will enhance pedestrian and traffic safety near the middle school.  This requires coordination with the County so will take a bit of time to come to fruition.

  • The Council approved the Oak Creek Canyon Project, a 6 unit single family development at the eastern part of town.  As one of the conditions of approval, the developer has agreed to extend a mixed use walking/biking path from the length of the development connecting to the entrance of the Community Park at Regency Parkway.

  • The Council also agreed to appeal our current draft Regional Housing Needs Assessment (RHNA) allocation. Every eight years the city is allocated a certain number of housing units that we need to zone for. In the previous cycle, that number was 141. In the upcoming cycle, the amount of housing units needing to be zoned for is 570, an increase of approximately 300%.  There are a number of factors that support our appeal, including a lack of jobs and available transportation in Clayton, the fact that Clayton is not a predicted growth area, the geological hazards related to the GHAD, and lack of water distribution availability.  And while these reasons for appeal appear compelling, the likelihood of success of our appeal is very low.  The Association of Bay Area Governments (ABAG) controls the allocation and they are ultimately an unelected body (made up of elected officials) dominated by larger cities in the Bay Area that can impose these mandates without any available recourse.

  • We also adopted an updated salary schedule for city staff.

Friday, June 25, 2021

Upcoming Meeting 6.29.21

As mentioned in previous posts, we've scheduled a special meeting for this Tuesday, June 29 at 7pm primarily to address items that are approaching the end of fiscal year deadline of June 30.  There are several significant things being discussed including a few on the consent calendar:
  • The consent calendar this meeting includes several real property tax assessment increases based on specific areas and various Consumer Price Index (CPI) increases.  CPI for this period increased 3.8%, however several of the increases are capped at no more than CPI or 3%, whichever is less.  Staff is recommending increasing assessments to the extent allowable.
  • Discussion and approval of the FY 22 Budget that was discussed last meeting.

  • Discussion of the appeal of the Planning Commission recommendation of denial of the Oak Creek Canyon Project.  This project is proposed for six single family units at the east end of the city, at the intersection of Diablo Parkway and Marsh Creek Road.

  • Discuss whether to appeal the latest Regional Housing Needs Assessment (RHNA) allocation to Clayton.  Every eight years the city is allocated a certain number of housing units that we need to zone for.  In the previous cycle, that number was 141.  In the upcoming cycle, the amount of housing units needing to be zoned for is 570, an increase of approximately 300%.  

  • Adoption of updated salary schedule for the city.

  • The Oakhurst Geological Hazard Abatement District (GHAD) will also meet to discuss increases in real property assessments based on CPI increases.

If you have any thoughts or questions about any of the above, please let me know.

Wednesday, June 16, 2021

6.15.21 Meeting Summary

Tonight, the Council took action on several items:
  • The Council voted to appoint 1 new Planning Commissioner, Justin Cesarin, and reappoint Ed Miller to fill two vacant spots.  The vote was 3-2 with myself and Councilmember Diaz voting no.  

  • We chose to cancel two regularly scheduled meetings which is typical in the summer months.  We chose the two meetings that immediately follow holidays.  The July 6 and September 7 meetings are cancelled.

  • We adopted a resolution to fly a Pride flag at the three city flagpoles throughout the month of June each year going forward.  Last year when the Council first agreed to raise the Pride flag, I voted in favor. I will reiterate comments I made last year: LGBTQ rights are civil rights. I support all civil rights. Issuing a proclamation and raising a flag is the smallest of gestures, but these gestures could go a long way to communicating a message of inclusiveness that all members of our community are welcome and I'm glad to do it.

    And while the question of marriage has been answered in this country, treatment of LGBTQ community members still has distance to go. Raising the Pride Flag is a small step towards making sure that every member of our community is treated with dignity.

  • We authorized a letter to be sent in favor of using County Measure X funds towards development of a comprehensive system where anyone in Contra Costa County can access timely and appropriate behavioral health crisis care anywhere at any time similar to a 911 emergency call system.

  • We recommended that the proposed budget be brought back for adoption at a scheduled special meeting on June 29.  Discussion about the larger looming structural deficits will take place later in the year after this year's budget is approved.  

    I'm glad to see that inclusion of a crossing guard in front of Mt. Diablo Elementary, and funding of city owned dog park maintenance were included in the operating budget.  I had advocated for both of these items.  The crossing guard was at the request and urging of parents and the Mt. Diablo Elementary PFC to increase safety for our youngest students.  The city owns the dog park, however a significant amount of maintenance is performed by a local non-profit, the Clayton K-9 Association and through volunteers from local Boy Scout Troop 484.  These groups will still be involved in volunteering and assisting I'm sure, however the small cost of maintenance will be assumed by the city.  This is appropriate as the dog park is owned by the city and is maintained as a benefit for all of our community.

  • The GHAD also met to approve annual CPI based tax assessment increases which it does each year.  Assessments are sufficiently low that the GHAD is primarily used for monitoring.  If there were serious issues discovered through that monitoring, another funding source would likely be needed for any substantive actions to be taken.

  • There was also a closed session regarding labor negotiations with the Clayton Police Officers Association.  No reportable action from that closed session.