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Sunday, September 30, 2012

RULE Meeting

R   U   L   E  .  .  .  .  .  .  .  .  .  .   
Residents United For A Livable Emeryville

Next meeting:  Saturday, October 6
10:00 - 12:00

5514 Doyle St., Community Room, 1st floor

Bring breakfast snacks
Coffee and tea provided

Before the next meeting, and as soon as possible, please read and weigh-in on the Public Notice and Accountability Initiative to be found at EPOA.US.  RULE would like member feedback in order to take a position.  

Our agenda:  Steering Committee, please come at 9:40 to set the detailed agenda! 
(Minutes of last meeting are attached).

Upcoming city council election

Remaining issues of RULE bylaws:  roles for Steering Committee members, for example

Baystreet Site B.....what's next?

Planning our agenda for the remainder of 2012, and for 2013. In addition to working on the election, what are our other priorities? Some ideas include the remaining land to be developed in town, including Sherwin Williams and the plot next to Bay Street; ECCL and the city's debt;  tree ordinance/ urban forestry  and historic building preservation ordinance

For information respond to this email or call Judy Timmel at 601-6521 

Saturday, September 29, 2012

Will Emeryville's New Bike Plan Be Ignored?

Major Traffic Calming Long Past Due For Horton Street

Emeryville's premiere bicycle thoroughfare, the Horton Street Bike Boulevard, has so much high speed traffic that it has become unsafe for bicycling.  So says Alta Planning, a Berkeley based urban bike network design firm that was commissioned by the City of Emeryville to study bicycling in town.  The $200,000 study, now incorporated into Emeryville's Bicycle/Pedestrian Plan and adopted into law by the city council lays waiting, ready to be implemented.
The question is, will it really be implemented or will it languish in some dusty corner at City Hall as so many other expensive studies have done?  Given the city council's baleful history of failing to calm the traffic on Horton Street for bicycle traffic and working to improve the street for vehicle use at the expense of bicycling, it seems likely it will be ignored and will remain a major automobile thoroughfare, unsafe for bicycles and becoming increasingly more so over time.  

Central to the Alta study is a limit on the number of cars that may use Horton Street, set at 3000 vehicles per day, before a mandatory set of traffic calming procedures kicks in.  The idea is that the traffic calming fixes will lower the number of vehicles that use the bike boulevard down below the 3000 maximum.  It should be noted Emeryville's 3000 number earmarked for bike boulevards is larger than any other city in the Bay Area. 

A choker is an example of a 'neckdown'
called for by level 4 traffic calming.
The prescibed traffic calming comes in a series of increasingly interventionist levels, one through five, that reduces traffic volume and speed, the last such level resulting in a total diversion for through traffic.  Each level requires two years to adequately assess its efficacy.  

At this point, Horton Street has already gone through the first three traffic calming levels; these involve street stenciling, signage and intersection "bulb-outs".  Now, since traffic has not subsided on Horton (it's actually increased), it's time for level 4 traffic calming to be implemented according to the Plan.
Level 4 calls for "significant traffic calming", specifically, 'neck downs' or traffic limiters such as 'chokers', designed to act like a one lane bridge permitting only one car through at a time.

Here's what the Bike Plan calls for on Emeryville's bike boulevards:

Level 1 Basic Bicycle Boulevard- signs, pavement markings
Level 2 Enhanced Bicycle Boulevard- wayfinding signs, reduced delays at intersections
Level 3 Limited Traffic Calming- intersection bulbouts
Level 4 Significant Traffic Calming- neckdowns
Level 5 Traffic Diversion

Level 5 calls for diverters: This
is called out only if level 4 doesn't
work after two years.
The problem is the Bike Committee has already twice voted on significant traffic calming for Horton Street in years past.  Both times the city council has overridden the committee's findings.  The last time the committee voted unanimously to add such calming, councilwoman Nora Davis explained her veto to the committee, "I have no problem putting paint on the asphalt [pavement markings]" but anything more dramatic than that would draw a veto from her and consequently also from the council majority.

In the intervening two and a half years since the last council veto shutting down Horton Street traffic calming, the city has commissioned and now encoded the $200,000 Alta study.

While we acknowledge Ms Davis' forthrightness in explaining to the people why they shouldn't expect safe biking routes in town, we call on the rest of the council to abide by the new Bike Plan they have adopted.  The fact that other such documents have been subverted in the past by the council should not serve as a precedent for inaction on Horton Street.  It's never too late to start working towards livability and rational public policy.  Let's make bicycling safe on the Horton Street Bicycle Boulevard.  It's time for a choker on Horton Street.

Wednesday, September 26, 2012

Emery School Bond Corruption May Be Banned

State To Consider Outlawing Emery Style School Bond Corruption

A school district wants money to improve its facilities so they put a school bond on the ballot for voters to decide.  The district accepts money from a bond underwriting corporation to fund the election campaign in favor of the bond.  Then after the election is won at the polls, the school district turns around and gives the bond underwriting contract, worth millions of dollars, to the same corporation that "donated" money for the election campaign.  
It's a disturbing scenario for those who favor transparency in government and democracy as a general thing and it's exactly what happened in Emeryville in 2010 when the bond underwriting corporation Caldwell, Flores and Winter "donated" $10,500 and its vice president chipped in $1000 to help fund the Measure J campaign, a $95 million school bond.  After Measure J passed, the Emery Unified School District awarded Caldwell, Flores and Winter the contract to issue the bonds, a contract worth millions of dollars and paid by Emeryville taxpayers.

As is the case with all public sector/private sector pay-to-play schemes, it's all perfectly legal as long as Emery School District continues to insist that there was no prior agreement, no quid pro quo with Caldwell.  Barring any paper trail or recording that would point to such an agreement, there's no way the State could prove any malfeasance on Emery's part. 

There may be change coming however.  The Bay Citizen reports on corruption in school bond issuance across the State; a county treasurer said that when contributions influence the hiring of an underwriter instead of a competitive process, "we all end up paying for that as taxpayers."

It's a major shake-up in the nexus between school districts and private bond underwriters that Emery Unified School District is right in the middle of.  If the State gets its way, what Emery did in 2010 will be illegal.

Here's the Bay Citizen story:

Regulators urged to crack down on donations to bond measures

Federal board seeks feedback on proposal to expand disclosure of contributions

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By  on September 21, 2012 - 12:01 a.m. PDT

Education finance photo/Shutterstock
Critics of political donations to school bond campaigns from companies that profit from the bonds are urging federal regulators to take bolder steps against what they call a “pay to play” practice.
The California Association of County Treasurers and Tax Collectors, as well as some financial firms, called on the Municipal Securities Rulemaking Board this month to consider banning donations from bond underwriters to bond campaigns.
The federal board had solicited feedback, much of which came in just before the Monday deadline, on a more cautious proposal to expand public disclosure of such donations. The board stated that enhanced transparency would help it decide whether more regulations – including a ban on the donations – would be necessary.
A financial industry trade association pushed back on some of the proposed regulations, and a conservative legal organization, the Center for Competitive Politics, argued that a ban would be unconstitutional.
An earlier story by California Watch, sister site of The Bay Citizen, found that leading bond underwriters gave $1.8 million over the last five years to successful school bond measures in California, and in almost every case, school districts gave underwriting contracts to those same firms.
In Alameda County last year, for example, a $63 million bond measure campaign for the Newark Unified School District received $20,000 from the underwriter hired by the district, De La Rosa & Co.
Underwriters are middlemen who buy bonds from school districts and sell them to investors. While critics believe the campaign contributions affect school districts’ hiring of specific underwriters, the companies and school officials insist there is no influence.
Federal authorities already mandate disclosure of the contributions, but the proposed changes would require more information, such as the contribution date and the date an underwriter is hired. The changes also ask for more complete reporting of in-kind contributions, such as election-related work provided free of charge.
The additional information would help the Municipal Securities Rulemaking Board determine whether more restrictions are needed, said Ernesto Lanza, deputy executive director and chief legal officer.
Lanza said stories by California Watch and The Bond Buyer, a trade publication, helped trigger the new proposed rules.
"We want to make sure we have a very good handle on the level of potential problems being created in the marketplace," Lanza said. "You have groups of people who give (contributions) and the same people by and large get the business, but is it causal or not?"
The California county treasurers group supported the changes and advocated [PDF] that the board "go one step further" in banning the contributions outright.
Wayne Hammar, president of the association and Siskiyou County treasurer, said in an interview that when contributions influence the hiring of an underwriter instead of a competitive process, "we all end up paying for that as taxpayers."
Hammar said he hoped strengthening disclosure would keep underwriters "on their toes so that they know that people are watching them."
Two California companies that serve as financial advisers to local governments on bond issues, Magis Advisors and Government Financial Strategies, also pushed for more public disclosure – requiring more timely and searchable reporting of campaign contributions. Some financial advisers also make contributions to bond measures.
"Government Financial Strategies is concerned about the lack of transparency in how school bond campaigns are funded, frequently by interested parties and in significant amounts, and how this leads to corruption," according to the Sacramento firm's statement [PDF] to the board.
On the other hand, the Securities Industry and Financial Markets Association, whose membership includes underwriting companies that make campaign contributions, objected [PDF] to some of the proposed regulations.
The association stated that its members "generally support transparency as a way to eliminate any possible perception of impropriety," but argued that some additional reporting requirements could cause "false positives," rousing suspicion where none is warranted. The group also said it could be impossible to pinpoint the exact date an underwriter is hired by a local government.
The Center for Competitive Politics, which advocates and litigates against campaign finance regulations, warned [PDF] securities officials that they are treading on constitutionally shaky ground. Any effort to curtail contributions probably would be challenged in court, said Allen Dickerson, the center's legal director.
The courts have upheld limiting contributions directly to candidates, but not to ballot measures. Candidates can be corrupted, the logic goes, but ballot measures can't.
The Center for Competitive Politics helped give birth to the current era of super political action committees through a case called v. Federal Election Commission. That case expanded on the U.S. Supreme Court's decision in Citizens United v. FEC, which struck down limits on corporate and union political spending.
Even the bond board's proposed disclosure requirements are problematic, Dickerson said – it seems officials are trying to "manufacture" evidence of a problem that hasn't been proven.
"To put out a regulation that will impose burdens on organizations just because we thought it might be interesting isn’t a great way to regulate," he said.

Friday, September 21, 2012

Sacramento Schools Nightmare Coming To Emeryville?

Sacramento School Bonds Reveal Emeryville's 
Near Future

The Sacramento Bee reveals the horrendous nature of the Capital Appreciation Bond (CAB), a popular new way for cash strapped school districts up and down the State to finance capital improvements to their schools.  CAB financing is what irresponsible school districts are using when they have champagne visions but don't have the borrowing capacity to fund them.  This type of financing is exactly what the Emery School Board is considering doing here.  
In order to close down the Anna Yates Elementary School and move the children over to the new high school site on San Pablo Avenue, a consolidation of the two schools called "co-location", the School Board is prepared to saddle Emeryville residents with an extra $107 million in debt to finance the $20 million they need to close the school via a CAB.  This extra debt will be added to the debt approved by Emeryville voters in 2010 that's already been taken on to rebuild the High School, some $48 million (plus interest).   
The proposed extra bond for the elementary school move, called the Series D bond, is the last in a series of four bonds that will push payments out to 2049, swamping the next generation of residents.  The School Board, in response to bad press about the Series D CAB financing recently rolled out a different bond proposal, technically not a CAB but will cost the same $107 million and take until 2053, four years longer to pay off.

Here is the Sacramento Bee story:

Some Sacramento-area school bonds have long-term, pricey payments

Published: Sunday, Sep. 16, 2012 - 12:00 am 
A 38-year loan with no payments for 26 years that will eventually cost $12 for every $1 borrowed.
This isn't a subprime mortgage sold during thehousing boom – it's a bond issued last year by a Sacramento-area community college district.
Across Sacramento and the state, school districts have issued a flurry of "capital appreciation" bonds to keep construction projects going even as property tax revenue falls. It's a borrow-now/pay-later approach that relies on today's students – and their children – for tomorrow's payments.
Or, as Robert Wassmer, a professor of public policy at Sacramento State, observes, it's like taking a 10-year car loan and not making payments for five years.
"The total cost of the car will be much higher due to higher interest payments," he said. "You will be making very high payments in years five to 10 on an asset whose productive life is near its end."
School districts have turned to these types of bonds for a range of projects, from new buildings to general upgrades, because they are wrestling with two constraints. One is the recent decline inproperty tax revenue; the other is the limits on tapping those funds.
Those two factors have rendered the more common approaches to raising the money – general obligation bonds – insufficient to meet the construction needs.
Most voter-approved general obligation bonds require immediate collection of revenue fromproperty taxes. There are limits to how much a district can get from taxpayers in any given bond election. For elementary districts, that limit is $30 annually per $100,000 in assessed property value. For community colleges, it's $25 per $100,000.
Because property values have fallen, those spending limits mean districts can't get as much from a general obligation bond as they would have during the boom years. Capital appreciation bonds allow districts to delay payment until a time in the future when, presumably, property values would be higher. The risk is in the higher costs, incorrect projections and the possibility of default.
In short, some districts can't take any more from today's taxpayers, but future taxpayers are fair game.
This practice received national scrutiny after Poway Unified School District near San Diego sold about $100 million in bonds at a cost of almost $1 billion over 40 years.
Here, large school districts such as Folsom Cordova Unified and Sacramento City Unified have issued capital appreciation bonds within the past five years.
Three other districts in the area stand out. They each will pay off bonds over 38 to 40 years, well above the standard 25 years. And they will collectively pay almost $10 for every $1 in bond proceeds:
• The Yuba Community College District, which operates schools in Woodland and Marysville, will pay $59 million to retire $4.6 million in bonds that trustees approved last year. The district won't make bond payments until 2038 and won't finish until 2050.
• The Dry Creek Joint Elementary School District in Roseville will pay $66 million toward $8.2 million in bonds from 2009. It won't start making payments until 2033 and won't finish until 2048.
• The River Delta Unified School District south of Sacramento will pay $19.5 million to retire $3.3 million in bonds from 2008. It won't start making payments until 2032 and won't finish until 2048.
Jim Estes, a finance professor at California State University, San Bernardino, called the interest payments the three districts will make "staggering." He said the bonds may ultimately threaten the districts' financial stability, though ratings agencies consider the risk of default low.
"There will be nobody around that voted for this in 30 or 40 years," Estes said. "There will be nobody to hold accountable. The bonds have a longer term than the facilities they want to build."
Some board members at the districts issuing the bonds either said they couldn't recall approving them or that they were misled about terms.
Other district leaders noted the bonds are part of larger portfolios. Some expressed hope that the bonds could be refinanced as the economy improves. Some hoped inflation would lessen the pain. A few said rising property values would make retiring them easy.
Despite their cost, the bonds, they said, let voter-approved projects continue.
"We had promises made to our local communities," said Kuldeep Kaur, chief business officer for the Yuba Community College District. "Our assessed property values would not have allowed us to pay."

The good and the bad

The Yuba district, which serves a mostly rural area with high poverty, offers a good example of the advantages and pitfalls offered by capital appreciation bonds.
Many of its buildings needed renovation, and the district couldn't serve all students who wanted to attend. So the district put a $190 million bond measure on the 2006 ballot, needing 55 percent approval. It hit 57 percent.
A year later, the district issued bonds for $95 million. Some were capital appreciation bonds, with the district promising to pay $3 toward interest for every $1 in principal.
Property values then fell fast, limiting the district's ability to borrow more.
Last year, the district issued another $30 million in bonds with traditional payments before approaching statutory limits. But it needed $4.6 million more to finish projects, including a new Sutter County campus.
So the district's eight-member board approved $4.6 million in capital appreciation bonds that put off payments for 26 years – at a cost of $12 per $1 borrowed. The payments will be $7 million in 2038, followed by annual payments of about roughly $17 million in 2048, 2049, 2050.
Two board members this week said district staff did not, at the time, fully explain the structure of the bonds to them. They called the bonds a raw deal.
One of the board members, Jim Kennedy, served as Yuba County's treasurer-tax collector for three decades, often administering complex bonds. The board never would have approved the bonds, he said, if college staff had given an honest account of the bond terms.
"These were done without the knowledge of the board of trustees," he said. "They were done at the last minute. There weren't a whole lot of specifics. It's frustrating."
Xavier Tafoya, a retired small-business manager who chaired the board at the time, said he is happy about buildings constructed with bond proceeds. But, referring to when the first bond payments come due: "I'll probably be dead by then. That's a hell of a note to leave your grandchildren. It's just insane."
Former Yuba College Chancellor Nicki Harrington, who retired last year, had a different recollection. She, along with the financial adviser hired by the district, said the board was clearly apprised of the cost of the bonds.
"There were pictures, documents, overheads – everything was laid out," she said. "We were all very transparent and very open."
As to the terms of the bonds, Harrington said, "People were pretty confident that by that time (when the bonds matured), we would be able to catch up financially."
Current Yuba College Chancellor Douglas Houston, declined to comment on the actions of his predecessors, but said the district is looking for a way to refinance the bonds.
It will be tough. The terms say the capital appreciation bonds "are not subject to redemption prior to maturity" between 2038 and 2050.
"I'm concerned about the burden that will be placed on our taxpayers," he said. "I'm looking for solutions."

Expensive decisions

At Dry Creek Joint Elementary, which operates schools in Roseville and Antelope, taxpayers will spend $66 million to retire $8.2 million in capital appreciation bonds. Dry Creek won't finish paying off the bonds until 2048 – and won't start making payments for more than 20 years.
The district's bonding capacity – although not the bonds' structure – was approved by a thin margin, needing 55 percent voter approval and receiving 56.6 percent.
The $8.2 million helped relieve overcrowding through construction of Creekview Ranch Middle School in 2009. The school has a life expectancy in excess of 50 years, so a decade after the bonds are retired, the school will near the end of its life span.
Why choose such an expensive bond? The short answer from district officials: The $8.2 million was accompanied by more traditional bonds that cost far less; the district had bumped into borrowing limits; and projects couldn't otherwise go ahead.
Superintendent Mark Geyer expects the district's tax base to grow before payments from $3 million to $7 million annually start in 2033 (with a two-year break in 2046 and 2047).
"We're using the $8.2 million as a kind of bridge financing to get to some point in the future where we're going to have the (taxing) capacity," he said.
The board president, Scott Otsuka, said the decision was sound.
"We're a high-performing school district in a fairly affluent area, and the citizens demand a high-quality project," Otsuka said.
At River Delta Unified School District, five capital appreciation bonds have been issued in the past seven years for renovation and updates of schools. Most are for terms of 25 years or less. But the district's most expensive capital appreciation bond pushes payments to April 2048.
By then, the $3.3 million in proceeds will have cost the district $16.2 million in interest.
Superintendent Rick Hennes joined the district after that bond deal went to market in 2008. "We had some dire facility needs that had to be addressed," Hennes said.
Construction costs were falling then, district Chief Business Officer Sonnya Kale said, adding a sense of urgency. Property owners in an area covering 2,350 parcels will pay for the bond.
Alicia Fernandez, president of River Delta's board of trustees, said she did not recall the details of the $3.3 million bond issue. But she saw the use of the bond as necessary.
"There is no money coming from the state," she said "If it's costly, it's unfortunate. But I'd rather have all of our children go to facilities they can be proud of. Not ones that are falling down."

Heading underwater?

Several bond experts equated capital appreciation bonds with "balloon payment" home mortgage loans, which were popular during the housing boom and let buyers put off big payments until the end of the mortgage.
Wassmer, the public policy professor, noted that many local residents who took out balloon payment mortgages later regretted it.
"The homeowner gets underwater and ends up with an asset worth less than what they owe on it," he said. "These school districts will face the same concern 20 to 30 years from now when they are still paying on buildings that are now obsolete and need to be rebuilt with another bond issue."
Much like lenders sometimes didn't adequately explain the risks of balloon payment mortgages, some districts don't adequately explain the risks of capital appreciation bonds to their governing boards, said Estes, the CSU San Bernardino professor.
"Nobody reads all the stuff in these," he said. "When they are told about them later, they say they wouldn't have voted for it."
These bonds are more common today, but not universal.
Some districts face the same choice as Dry Creek, River Delta and Yuba Community College – use capital appreciation bonds or forgo construction projects – but say no thanks.
"Almost any type of bond is OK, provided there is a dedicated source of funds to repay the bond when it becomes due," said Rob Ball, associate superintendent of business support services at Twin Rivers Unified, which has shied away from capital appreciation bonds. "But that dedicated source must be certain."

Call The Bee's Phillip Reese, (916) 321-1137. Bee staff writer Melody Gutierrez contributed to this report.

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