Regarding Political Theater

Public comment at the meeting on 3.19.24 mostly related to the recent Op-Ed in the Pioneer.  Of the few people who spoke, all were well known to the Council and speak at our meetings often.  These are the same people who's letters to the editor were published and often echo the comments of Councilmember Tillman and Cloven.

It’s interesting watching a manufactured narrative be propagated. The most recent is the amount of staff turnover at the City in an Op-Ed at our local paper. The Op-Ed asserts the City has turned over 8 City Managers, 7 Finance Directors, and 5 Community Development Directors in the last 5 years.

To be sure, there has been turnover at City Hall at a level that is undesirable. But it is not accurate to say that all turnover is for the same reasons. Some have left due to retirement, others seeking career growth, others for higher compensation, and others because the role may not have been a good fit. In some cases when a person separates, there are Non Disclosure Agreements (NDAs) or information subject to attorney-client privilege that is unable to be shared publicly. For example, if there were credible allegations of inappropriate treatment towards female subordinates, it would need to be addressed but that action would likely be taken in a way not able to be shared publicly. In short, trying to create a narrative that people are leaving for the same reason, and the reason is somehow known to an editorial author, is intentionally misleading and false.

Beyond misleading however, is inflating the number of people who have left to sensationalize a narrative. For example, the claim that in the past five years, the City has gone through eight City Managers. In reality, including the recent resignation of our current City Manager, the real number is four which is inclusive of the retirement of a person with 17 years of tenure. The only way that the figure comes to eight is if those serving in interim roles were counted. But this is intentionally misleading as these are different roles. There is a reason the title is “INTERIM City Manager”, and not simply “City Manager”. They are literally different roles - the difference in title is a pretty good clue of that. The author either didn’t understand this basic fact, or purposely conflated the difference to mislead readers.

Those who take on interim roles intend to only stay in the role as long as is needed to find a person on a permanent basis. In fact, many of the people who take on interim roles are retirees who are restricted from working over a certain number of hours. Similar discrepancies exist for the other positions mentioned as well.

Another intentionally misleading part of the Op Ed is that it blames the rate of turnover in the last 5 years on Mayor Diaz, myself, and Vice Mayor Trupiano. What it leaves out is that most of the inflated figures of people left while myself and Mayor Diaz were clearly in the minority on the Council, and Vice Mayor Trupiano hadn’t been elected. In fact, our current City Manager is the first in the role to leave while the group the Op Ed blames has been in the majority. To be clear, this is not to cast blame on other Councilmembers past or present– as I stated above people separate for a variety of reasons.

When someone intentionally misleads with exaggerations to push a narrative, it undermines their credibility. It is political theater and is also what Councilmember Tillman’s repeated badgering about having our City Attorney conduct an investigation into Councilmembers is all about.

To be clear, our City Attorney is able to take action independently if they have evidence or suspect any action that presents risk to the City. Without being prompted, our City Attorney has in the past offered counsel and advice unsolicited in areas they felt appropriate, and has given direction on other matters as well. Our City Manager has authority to engage a third party for up to $30K without any other approval from Council that could be used to engage a third party investigation should they so choose. Both of these roles exercise independent judgment and have not taken any action related to Councilmember Tillman’s requests for an investigation. The only reason to continually ask for an investigation is to engage in political theater and a sophomoric attempt to try and score political points. 

The City certainly has work ahead both in terms of staffing and in its finances. It’s unfortunate that rather than find ways to work together, there are those that would rather exaggerate and mislead in order to divide the community. As I have done throughout my tenure, I will continue to do what’s best for the City and this community.

My 3.19 Meeting Summary

Last night the Council met to discuss a several significant items:

- First we met in closed session to discuss the appointment of an Interim City Manager.  There were no reportable actions from the closed session.  As we go through the process of finding a new City Manager there will likely be several more closed sessions where the Council deliberates.  

- On the consent calendar we updated the City's Purchasing Policy to require an informational item any time the City Manager exercises their discretion in executing service/consulting agreements including a quarterly report out of all ongoing such agreements.  Recently the Budget and Audit Committee discussed with staff some of these expenditures, including over nearly $20K in HR consulting, nearly $20K in assistance implementing SB 1383 for recycling, $30K in a non-cancellable contract for the video website Rep'd, on top of the approximate $2K/week for accounting assistance.

- We received an update on the Interim and permanent City Manager positions and chose Bob Murray and Associates for the firm to assist in both placements.  Bob Murray is a well known governmental recruitment agency and agreed to do both placements at no cost other than direct out of pocket expenses.  We also appointed an ad-hoc committee to assist staff in administrative inquiries and later to facilitate negotiations with candidates.

Originally Councilmember Cloven was opposed to forming this ad-hoc committee, concerned that such a committee would unduly influence the process.  Our City Attorney explained that having the committee is a benefit to staff and that without it, the process may be delayed because we could only address inquiry during Council meetings rather than on an ad hoc basis.  In the interest of alleviating staff burden, I suggested it could be beneficial and that I would support Vice Mayor Trupiano and either Councilmember Tillman or Cloven.  Councilmember Tillman declined.  

Cloven relayed to me that he was very upset that upon hearing of the resignation of our City Manager, I had called Bob Murray and Associates directly.  Bob Murray and Associates is under contract with the City to provide recruitment services at no cost given the prior placement and I wanted to give them a heads up that the City would likely be in contact.  In these matters, time is of the essence and given that we would only have 1 regularly scheduled meeting between the time notice was given and our City Manager's departure, this was appropriate.  I also communicated the same to staff and our City Attorney as no one had yet made contact with the recruiter.

Cloven felt that upon hearing of the departure of a key staff member, we should wait until a meeting to discuss what we should do, even simple administrative functions like making a phone call.  And while Councilmember Cloven originally declined being part of the ad hoc committee, when he realized that if he didn't do it, I would, he changed his mind.  This vote was 5-0.

- We then discussed declaring up to 5 acres of two large City owned parcels at the bottom of Peacock Creek as surplus consistent with the Surplus Land Act (SLA).  The City does not use this land, and a developer has expressed interest in purchasing it for housing development.  The SLA requires that any surplus land first be offered to affordable housing developers for a period of 60 days.  If no affordable housing developers express interest, then the City can sell the land in the open market.  This vote was 5-0.

Upcoming Council Meeting 3.19.24

At our next Council meeting we will be discussing a couple significant items:

- We will receive an update on the Interim City Manager and City Manager recruitment process.

- We will discuss declaring a portion of certain city owned parcels as surplus in connection with the CA Surplus Land Act.

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

My 3.5.24 Meeting Summary - A Path Forward

Last night the Council started our meeting with a recognition and celebration of the City's 60th anniversary.  People were invited to share their history with Clayton and what being in Clayton has meant to them.  The event was organized by our City Clerk and it was great to hear from and talk with people.

After the celebration, we moved into our regular meeting and discussed several significant items:

- We received a presentation regarding the City's five year financial forecast.  The forecast was similar to what we've seen in the past.  Deficits beginning this year, and continuing for all foreseeable years growing larger each year.  As with any forecast, it relies on many assumptions.  These assumptions in the long run will almost certainly be off by some degree, but barring some incredibly significant event like a global pandemic, not off so much that the forecast is not directionally accurate.

Clayton is generally more predictable than other cities for a number of reasons.  We're smaller both in size, population, number of employees, and the types of activities those employees perform.  This makes expenses easier to predict.  We have a concentration of revenue from property taxes which are generally the most stable tax base available.  This means that the city's revenues are less elastic when it comes to economic swings, making revenues easier to predict.  The areas of highest volatility are health care and pension (PERS).  These are costs that we do not have the ability to influence so large swings could have a significant impact to the finances of the City.  

Overall the forecast for the General Fund was as follows:

More on how to address the projected deficits below.

- We reviewed the current Reserve Policy.  The Reserve Policy controls how the City's overall reserves should or should not be used.  Currently the General Fund Reserve is approximately $7.7M.  This represents approximately 125% of our annual General Fund expenses.  For perspective, most public agencies have general fund reserves significantly lower - Concord at 30%, Contra Costa County at 10%.

It's also important to note what these reserves represent.  All of the $7.7M is an excess of tax collection over and above the amount of services provided by the City.  Part of this is due to overly conservative budgeting and staff vacancies.  And it is certainly prudent for the City to retain a portion of funds for unforeseen circumstances, or to fund longer range activities over time.  But it is also true that over time, this underspending that has led to the larger accumulation of fund balance, necessarily means that certain activities or services that have been deferred could have been performed.

On a 5-0 vote, we adopted a policy setting our general reserve at 40%.  We also adopted on a 5-0 vote assignments within the reserve for specific purposes like potential budget stabilization, capital projects, vehicle replacement, etc.  Making these assignments is not a commitment to spend, however it does indicate the intention to utilize these funds for certain things for the betterment of the City.

- We discussed potential actions we could take based on the above forecast presented - either increasing taxes (revenue measures), or decreasing services (austerity measures).

When I ran for re-election in 2022, I committed to not supporting any tax increase unless it was a last resort.  When I first raised the issue of structural deficits in Jul-21, I did so with the intention of starting discussion, and motivating analysis.  Unfortunately that did not occur in earnest for a variety of reasons and in 2022 I did not believe that a sufficient level of diligence had occurred to support going to the taxpayer and asking them to tighten their belts as the City had not demonstrated it had done the same.

This is why after I was re-elected, I lead the Council to look at all potential ways to decrease costs and  increase revenues.  I wrote about what actions we took in greater detail here:  https://www.jeffwanforclaytoncitycouncil.net/2023/12/my-12523-meeting-summary.html.  

What we did that hadn’t been done previously was to begin to gather the information necessary to assess where we are as a City. Instead of rushing out pushing an idea of an exorbitant tax increase immediately, As Mayor in 2023, I took a more measured and prudent approach. Doing this allowed us as a City to make smarter choices, have more thoughtful conversations, and ultimately coalesce around a better approach that works for the City.

Based on the work we've done throughout 2023 and continuing, I believe we've taken all significant steps available to us in order to increase revenue and reduce costs.  We've looked at our Expense Policy, our Investment Policy, our Master Fee Schedule, conducted time studies on hours spent in all major areas including maintenance across the city.  We updated how we operate in several areas across City Hall to reduce unnecessary work.  We've invested in new technology and new ways to work to make the time spent by staff more efficient.  We've begun investments in our energy and utility infrastructure to be more cost and energy efficient over time.  We will continue to pursue any and all ways that are available to reduce cost and be more efficient.  

However, even with all of these efforts, it is now clear that the City needs more revenue in order to operate.  Rapidly rising inflation impacting the cost of all goods and the ability for Clayton to stay competitive from a staff compensation perspective has only exacerbated this need.  Increasing revenue is the only way that allows the city to provide necessary services and continue to help make Clayton a wonderful place to live and raise a family.  

Staff proposed placing a ballot measure this November 2024 to increase sales tax between 0.5% and 1.0%.  The rationale for doing so had merit.  Sales tax is paid by anyone who shops in Clayton so an increase in sales tax would generate a portion of revenue from those visiting and shopping within Clayton.  A 0.5% increase would not be sufficient to cover the projected deficits, so staff recommended the higher amount. A 1% increase in sales tax would keep Clayton in line with other nearby cities as well.

While I think a sales tax measure has merit, I raised a few concerns.

• The sales tax base in Clayton is relatively small, approximately 11% of general fund revenue.  Sales tax revenue tends to be more volatile with market changes over time.
• Currently Clayton has a Landscape Maintenance District (LMD) that assesses a per parcel tax on every household of approximately $290/year.  The LMD funds a significant level of maintenance in the City.  The LMD is also going to sunset in 2027.  Because tax measures can generally only be placed on the ballot during general election years, this means that in order to maintain the current funding that the LMD relies on, we would also need to seek voter approval for the continuation of the LMD.  This means that if we were to move forward with a sales tax measure in 2024, we would again need to come back to the voters and seek approval for another tax in 2026.  I didn't think it would be reasonable to ask voters to approve taxes multiple election cycles in a row.
• The LMD is a special tax.  This means it can only be used for specific purposes.  Because the City has a small number of employees, the same group of people could be doing general work in the City at a point in time, then immediately do work that qualifies under the LMD.  The tracking and administrative burden to ensure record keeping and financial reporting is burdensome and is not a value add activity.  In addition, the protocol for required meetings can also be a burden on staff time as well.
• Recently our City Manager informed us of his resignation.  This means that there will be significant time and energy dedicated to filling this vacancy.  This short term uncertainty adds risk should we seek to pursue a sales tax in 2024 as there is quite a bit of activity needed to give us the highest chance of success.

As an alternative, I suggested another plan.  Rather than rush to seek a sales tax measure for 2024, I suggested that we allow the LMD to sunset, and in 2026 place on a the ballot a general parcel tax that would replace what the LMD covers in addition to the other shortfalls we have as a city.  This means that residents would stop paying the approximate $290/year LMD assessment, and instead pay a general assessment.  This has several advantages:

• It gives us time.  Successfully passing a revenue measure takes significant work in informing residents of why this is necessary and what value it adds.  The more time we take to do this the greater chance of success.
• It makes us more efficient.  Shifting from a special tax which is what the LMD is, to a general tax means that all of the non-value add tracking, recording, reporting, and meeting goes away.  
• It's more stable.  Property taxes in Clayton are a stable less subject to market volatility.
• A single request.  Instead of asking for taxes in 2024, and then again in 2026, this method only asks the residents for money a single time.

Ultimately I considered how we would set up our revenue sources if we were starting from the beginning.  There was widespread agreement that a general parcel tax was a better overall outcome.  Unlike many other issues the Council has discussed recently, we were able to discuss these alternatives and reach a consensus.  We approved this course of action 4-1.  Councilmember Tillman was supportive, however she believed that a sales tax measure in 2024 was a better choice so she voted no.

Because it will take time to execute this plan, we know that we will need to use some of our reserves to fund current operations.  The use of reserves should have a high bar to overcome.  In this case, because we have a plan, and it's for a limited duration, I believe it is appropriate in this instance.  

If we are successful, we will set up the City to get out from under the weight of looming deficits and struggling to pay a market rate to our employees.  We will have created the environment where the City and its residents can thrive.

Over the next 18-24 months the City will be engaged in all of the activities necessary to bring a ballot initiative forward in 2026, including taking the time to do a detailed assessment so we can quantify and demonstrate what this amount will be used for.  During that time there will be questions and I look forward to discussing it with our residents.

Upcoming Council Meeting 3.5.24

Before our next regularly scheduled Council meeting, we will be Celebrating Clayton's 60th anniversary at 6:30pm on 3.5.24.  Please join us and share your thoughts on your history with Clayton, and what living in Clayton has meant to you. Everyone is welcome and we would be honored if you could attend and participate.

We will have cake and refreshments.

Afterwards, we will have our regularly scheduled meeting where we will be discussing a couple of significant items:

- We will review an updated five year forecast, an updated reserve policy, and discuss potential November 2024 ballot measure to increase taxes.

- We will discuss the current purchasing policy.

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