Emery Ignores State Issued Moratorium on CABs

Emery Defies State Moratorium

Below is a letter of moratorium issued from the California Department of Education.  The State is urging local school districts to not issue Capital Appreciation Bonds (CABS) to fund school facilities construction.  Emery Unified School District has just recently issued a CAB for the school rebuild associated with the Center of Community Life.  The District was aware of the looming moratorium and new law cracking down on the multi-generational CAB loans but beat the deadline and issued their CAB just under the wire.

  

Here is the State issued moratorium:

State Schools Chief Tom Torlakson, State Treasurer Bill Lockyer Caution School Districts Against Issuance of Capital Appreciation Bonds

January 17, 2013

SACRAMENTO—State Superintendent of Public Instruction Tom Torlakson 

and State Treasurer Bill Lockyer today issued the following letter to local 

educational agencies regarding capital appreciation bonds:

Capital Appreciation Bonds

Dear County and District Superintendents:

We understand many districts face a critical need to build or modernize 

facilities for their children, and we recognize that falling property tax 

assessments, revenue losses, and statutory debt service limits have 

all combined to reduce districts' debt financing options. As a result, 

some districts have turned to capital appreciation bonds (CABs), which 

have forced taxpayers to pay more than 10 times the principal to retire 

the bonds.

Thus, we urge you and your Board of Education not to issue CABs until 

the Legislature and the Governor have completed their consideration of 

this year's proposals to reform the CAB issuance process by improving 

transparency and protecting taxpayers against exorbitant debt service 

payments. Through this process, we welcome and encourage your input 

to ensure that the needs of districts are still being met.

In too many cases, CAB deals have forced taxpayers to pay more than 10 

times the principal to retire the bonds. Also, the transactions have been 

structured with 40-year terms that delay interest and principal payments 

for decades, resulting in huge balloon payments and burdens on future 

taxpayers that cannot be justified. Too frequently, board members and the 

public have not been fully informed about the costs and risks associated 

with CABs. In some cases, board members have reported they were not 

even aware they approved the sale of CABs.

It is important to note that CABs with terms exceeding 25 years place the 

repayment obligation on future taxpayers who likely will not benefit from 

the capital improvements financed by the CABs. At the same time, the 

CABs payments will reduce those taxpayers' capacity to finance 

construction and modernization projects their own children will need.

We are convinced that remedial legislation is needed to prevent abuses 

and ensure that both school board members and the public obtain timely, 

accurate, complete, and clear information about the costs of CABs, and 

alternatives, before CABs are issued. The Governor has told us he wants 

reforms. Key lawmakers and legislative leaders have made clear they 

agree statutory changes are needed.

For all these reasons, we believe your district and every other district in 

the state should impose a moratorium on issuing CABs. The moratorium 

should remain in effect until the Governor and Legislature decide on 

reforms in the current legislative session. If reforms are enacted, 

subsequent CABs deals can be conducted in compliance with the new 

statutory requirements.

Thank you for your consideration. Should you have any questions or 

concerns, please contact Jeannie Oropeza, Deputy Superintendent, 

California Department of Education, by email at joropeza@cde.ca.gov.

Sincerely,

Tom Torlakson

State Superintendent of Public Instruction

California Department of Education

Bill Lockyer

State Treasurer 

California State Treasurer's Office 

School Board to Vote on 'Surplus' Facilities Including City Owned Property

Fate of Public Properties/Community Services to be Mostly Determined Behind Closed Doors

Another $170,000 For Consultants

The Emery School Board conducted an early morning meeting last week to determine the fate of "surplus" school properties and included City of Emeryville owned properties. The decision made at the meeting would forward payment of some $170,000 for consultants to coordinate plans for a "Six-Site Master Plan" that will be decided mostly behind closed doors the Tattler has learned.

The Master Plan will be formulated by a Task Force led by the consultants in series of meetings to be concluded in June 2013.  San Francisco based consulting firm MKThink, one of the two firms coordinating the Master Plan, announced public representatives in the Task Force will be permitted at less than half of the 22 meetings planned.

The Six-Site Task Force will be led by consultant John Flores, formerly Emeryville's City Manager and will determine the fate of:

1. Anna Yates Elementary School
2. Ralph Hawley Middle School
3. Emery Secondary School
4. The Recreation Center
5. The Senior Center 
6. The Child Development Center

The Recreation Center, the Senior Center and the Child Development Center are owned by the City of Emeryville.

The other consulting firm paid to coordinate the Master Plan, Berkeley based MIG will jointly control with MKThink, the non public meetings and will present to the School Board final determinative fate of all community services in Emeryville in June.  The actual community is not invited to the majority of the slated meetings.

The non-televised School Board Facilities Committee early morning weekday meeting last week constituted a legally required public '1st reading' of the proposed sweeping policy change enabling placement of the issue on the Consent Calender for the Board's normally scheduled Wednesday meeting.  The Consent Calender decree would constitute the legally required 2nd and final reading of the Six-Site Master Plan.   Consent Calender items are commonly grouped together and considered accepted by "consent", meaning there is no actual specific vote.

Emery's CAB Runs the Press Gauntlet

Emery Unified School District's method of financing the schools rebuild at the Center of Community Life, the Capital Appreciation Bond (CAB), continues to get flogged by the press.  Now it's coming from the front page of the New York Times:

California Schools Finance Upgrades by Making the Next Generation Pay

By IAN LOVETT

Published: February 9, 2013

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LOS ANGELES — School officials in Santa Ana were in a bind several years ago: they wanted to build hundreds of new classrooms, but feared that voters would rebel against tax increases to pay for the construction.

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Bill Lockyer, the state treasurer, criticizes the school deals.

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So in 2009, the Santa Ana Unified School District borrowed $35 million using an inventive if increasingly controversial method known as capital appreciation bonds, which pushed the cost of the construction on to future taxpayers. Not a cent is owed until 2026. But taxpayers will eventually have to pay $340 million to retire that $35 million debt.

Since 2007, hundreds of school districts and community colleges across California have used capital appreciation bonds to raise nearly $7 billion for various construction projects, according to data from the state treasurer’s office. The bonds have allowed school districts that are short on cash to finance classroom renovations and new athletic facilities while delaying payment for years, or even decades.

But these new facilities often come at an enormous cost to future taxpayers, who will be liable for huge interest payments that sometimes balloon to more than 10 times the amount borrowed over as much as 40 years. By contrast, repayment on traditional school bonds usually costs no more than two to three times what was borrowed.

“It’s the school district version of printing money,” said Bill Lockyer, the state treasurer. “These bonds are bad deals for taxpayers, and they contribute to the general view that the government doesn’t spend their money intelligently.”

In San Diego, property owners owe $630 million on a $164 million bond. For the Folsom Cordova Unified School District, a $514,000 bond will cost $9.1 million.

And in the most expensive case yet, the Poway Unified School District borrowed $105 million to finish modernizing older school buildings, which local property owners will be paying off until four decades from now at an eventual cost of nearly $1 billion. Because payments on the bond do not start for 20 years, current school board members faced little risk of resistance from property owners.

Still, residents and elected officials have expressed growing outrage at the bonds sincenews of the Poway deal was reported.

A bill making its way through the State Assembly would cap the maturity of the bonds at no more than 25 years and the total debt at no more than four times the amount borrowed.

“Right now, if they don’t have the revenue, school boards can say, Let’s just kick the can down the road 20 years and let them deal with it,” said Assemblyman Ben Hueso, a Democrat from San Diego who co-sponsored the bill.

Capital appreciation bonds have become especially popular in California and Texas, according to Fitch Ratings, which evaluates risks for bond investors.

Some states — including, until recently, California — have strict laws to curb use of these bonds. Michigan has barred school districts in the state from selling capital appreciation bonds at all.

But in 2009, as the housing market crash drove down tax revenues for schools and state education financing was cut, California lifted its requirement that long-term bonds be paid off at approximately the same rate each year, opening the door for bonds that delay payments for 20 years.

Tom Duffy, a former superintendent of the Moorpark Unified School District who now works as a lobbyist for the Coalition for Adequate School Housing, said long-term capital appreciation bonds offered school districts needed flexibility. He criticized efforts to limit them again.

“California school districts have a very limited number of tools available to them when it comes to financing public infrastructure,” he said.

The bonds let school districts embark on costly school renovations with minimal immediate pain for property tax payers.

A bond measure that Santa Ana voters approved in 2008, which authorized the district to borrow $200 million, has financed the replacement of hundreds of temporary classrooms with new, permanent ones. More than 800 existing classrooms have been renovated.

District officials had pledged to complete all those projects without raising property taxes further. To keep those promises, they had to turn to long-term bonds, said Michael Bishop, an associate superintendent for the Santa Ana school district.

Although the 2009 capital appreciation bond brought in only 17 percent of the $200 million authorized by the 2008 bond measure, it accounts for more than half of the total debt the district incurred. As a result, more than half the cost of all the projects will fall on the shoulders of taxpayers decades from now.

In addition, if property values do not continue to rise in the intervening years, as district officials are anticipating, future school board members may have to raise taxes to pay for 30-year-old classrooms.

Still, Mr. Bishop said, the incentives to build as soon as possible included low construction costs in 2009 and the promise of millions of dollars in matching money from the state that would otherwise have gone to other school districts. And future taxpayers, he said, will also benefit from the new classrooms.

“We are not financing a computer over 30 or 40 years,” he said. “We are financing buildings that will probably be operating a good 50 to 60 years after that bond was issued.”

As Mr. Lockyer sees it, the only people these deals benefit are the financial advisers, who have collected millions of dollars helping school districts sell capital appreciation bonds, according to the treasurer’s office.

Many voters — and even some school board members — said they did not realize when they supported the bond measures that they would be signing up for huge debts that local homeowners would still be paying off 40 years from now.

“If you asked the average voter,” said Assemblywoman Joan Buchanan of Alamo, a co-sponsor of the Assembly bill, “I think they would have no idea what a capital appreciation bond is.”

Council Votes Themselves Another Year in Office

Vladimir Putin is Here in Emeryville 

                                             (in spirit)

"I'm Putin!"

Opinion

"No, I'm Putin!"

"No, I'm Putin!"

"I'm Putin!"

It was suddenly very cold.  It seemed you could see your breath as people buttoned up their top coats and raised their collars against the chill.  A chimera wafted through Emeryville's City Hall on an icy breeze.  It was Vladimir Putin. You could FEEL his presence filling the council chambers.  As council members one by one unshackled themselves from the yoke of democracy and one by one voted themselves an extra year in power, it seemed Vladimir Putin, not one normally associated with demonstrative emotion, smiled just a little as he vanished quickly as he came, in a vortex, ethereal, rising up above the dais with only the sound of papers left gently rustling in the room.

And just like that, what Emeryville voters wanted, four years, suddenly became five.  Scarcely five minutes had passed.  An issue seemingly pugnacious and vexing ultimately was mechanical even mundane...cold, like Putin.  Citizens looked around...it was done.

Emeryville and Moscow; sister cities, if not in letter, certainly in spirit.

"I'm Putin!"

"No, I'm Putin!"

Richmond Police Chief Magnus & Emeryville Police Chief James - Proposals to Reduce Gun Violence

The City Manager Doesn't Read The Secret News (or the Tattler)

"I Normally Don't Read..."

Opinion
The Secret News, a news blog City Manager Pat O'Keeffe does not read he informs us, recently reported on rumors that he, Mr O'Keeffe has met behind closed doors with potential developers for building out the Sherwin Williams site, the last large piece of fallow land in Emeryville.  The story wasn't intended to highlight that but rather to explain the need for citizen diligence with the selection of a replacement, owing to his looming retirement.  The closed door meetings at City Hall were only mentioned in the story to illustrate the need for a change in the culture as we seek a new city manager.
In fact, it's hardly newsworthy that Mr O'Keeffe would meet with developers for the Sherwin Williams site behind closed doors, the public not invited, to plot out the development.  That's the way it's been done for years here.

"I normally don't read The Secret News 
or the Emeryville Tattler"
Ooops, your pants
are on fire!

Pat took umbrage to the Secret News story however, and he fired off a February 1st e-mail to the city council denying he had conducted any such closed door meetings.  He also took the opportunity to tell the council that "I normally don't read" The Secret News (or the Tattler for that matter).  He did note that his underlings had conducted closed door meetings with would be Sherwin Williams developers but not him...only his subordinates...and there is nothing improper going on... and he doesn't read The Secret News.

The e-mail failed to mention The Secret News by actual  name, readers might like to know, rather Pat called it "One of the two blogs that like to poke at City Hall".  This was done in furtherance of Pat's refusal to utter the words "The Secret News" or "the Tattler" in any public setting.  This longstanding policy, also adapted by councilwoman Nora Davis it should be noted, is emplaced because of the severe negative health effects Pat and Nora would experience as a result of their heads exploding upon those words passing their lips.

Pat wants the council to know that although he doesn't read The Secret News (or the Tattler), he can report on their "lack editorial discipline", not like the discipline that City Hall demonstrates as they pursue their ideologically driven pro-developer 'public' policy you see.  The reporting by The Secret News and the Tattler, critical as they are of the doings at City Hall, don't meet with Pat's approval he says (although he doesn't read them) for they are "designed to misinform."  Got that?  Emeryville City Manager Pat O'Keeffe is complaining about misinforming the public, people.

"The Secret News"...Kabloom!

It's not like the old days before The Secret News and the Tattler when there was no reporting on the business being conducted in the council chambers and back rooms at City Hall whatsoever.  A little light is anathema to the traditional way of doing things at City Hall.

The back room culture at City Hall has been well documented and has been standard operating procedure since the days of the previous City Manager, John Flores.  In fact, Residents United for a Livable Emeryville (RULE) was initiated to counter this back room dealing with developers.
Both John Flores and Pat O'Keeffe came from an economic development background and both were extremely tenacious and single minded in their quest to attract development to our town.
Emeryville's city manager's backroom style it should be noted is not like Berkeley where there's a very active citizenry and democratic action is the norm.  Contributing to this is Berkeley's robust local media, keeping city hall honest.  All told, it's pretty messy and not a very good way to quickly and massively develop a town however.

In Emeryville now, we seem to be leaving our adolescence.  Toes are getting stepped on. The Secret News, the Tattler, RULE; it seems an awakened citizenry is something Pat is uncomfortable with.
We hereby invite Pat to start reading The Secret News and the Tattler (we'll have to e-mail this to him).  He may find it's even worse than he thinks it is (presuming he doesn't read them).

No Bomb Found At UC Lab Building

From the San Francisco Chronicle:

(02-06) 13:18 PST EMERYVILLE -- A bomb threat Wednesday at an Emeryville office building used by the Lawrence Berkeley National Laboratory caused a six-hour evacuation, but nothing was found, authorities said.

The bomb threat at 5885 Hollis St. was reported about 7 a.m., drawing a response by UC Berkeley and Emeryville police, Emeryville firefighters and officers with the U.S. Department of Homeland Security. The university runs the lab - whose main campus is in the Berkeley hills - under contract with the federal government.

The Emeryville building houses the lab's Joint BioEnergy Institute, according to the research center's website. The institute's mission is to "advance the development of next generation biofuels," the website says.

Police evacuated the building, called in explosive-detecting dogs and the campus bomb squad. A search found no explosive, authorities said.

Henry K. Lee is a San Francisco Chronicle staff writer. E-mail: hlee@sfchronicle.com Twitter: @henryklee

Read more: http://www.sfgate.com/bayarea/article/No-bomb-found-at-UC-lab-building-4255853.php#ixzz2KCrkGorC

Bomb Scare

Breaking News
From the Mercury News:

Emeryville: Police investigating bomb threat at Lawrence Berkeley Lab facility By Daniel M. Jimenez Bay Area News Group Posted:   02/06/2013 07:50:11 AM PST Updated:   02/06/2013 08:07:53 AM PST EMERYVILLE -- Police and firefighters are at the scene of a bomb threat reported this morning at a laboratory space rented by Lawrence Berkeley Lab. The threat to the office in the EmeryStation East building at 5885 Hollis Street was received about 7 a.m., according to Emeryville police Sgt. Fred Dauer. The building, completed in 2007, houses workspaces for the Berkeley lab as well as the Joint BioEnergy Institute, Amyris Biotechnologies, Bayer HealthCare Pharmaceutical, KineMed and Berkeley Lights, according to a website created by Wareham Development, the building's owner. Officials were still clearing the building as of about 7:40 a.m., according to UC Berkeley Police Lt. Eric Tejada. Dauer said his agency was working with UC Police and the Alameda County Fire Department. Tejada confirmed that UC officials had received a threat, but would not elaborate further.

Council Moves To Lower Standards For Center Of Community Life

Project Advertised To Exceed Gold Standard, Now Dropped To State Minimum

The city council voted tonight to reduce the energy efficiency and green building standards for the Center of Community Life to the minimum allowable by State law but lower than the city's own minimum requirements.  In a 3-2 vote (West and Asher dissenting) the council signed off on the proposed schools and community center known as the Center of Community Life, to drop a previously touted LEED gold standard. 
LEED, or Leadership in Energy and Environmental Design, is a voluntary consensus-based market-driven program that provides third party verification of green buildings.  With the council vote, the Center of Community Life, a project the City proudly calls "State of the Art", will now flout the City's own official goal to make all new major development LEED certified.

The LEED chart:
The Center of Community Life will be off the chart.

Emery School District architect Roy Miller told the council members that keeping to the LEED gold standard would cost more money and school programs would suffer as a result.  
The School District has not released the total amount of money Emeryville taxpayers will spend on the Center of Community Life but more than $5 million has been spent so far on "community engagement" and consultants it should be noted.

Dissenting council member Jac Asher expressed concerns that the broken promise of green building standards for the Center of Community Life represents "another compromise" and she lamented that there has been an overall erosion in the project, a "chipping away" she said.  She expressed worry that the project ultimately will not meet its vision, a sentiment shared by councilwoman Jennifer West.

Council member West expressed concern
energy savings won't be realized over the
next 34 years of the project, the length
of the bond term.

Council members Ruth Atkin, Nora Davis and Kurt Brinkman, the majority vote tonight, have been vocal in their support for LEED certified projects in Emeryville.
 City Hall has long touted its green bone fides.  A 'Green Business Program' has been initiated, giving certified green Emeryville businesses marketing support, helping them "communicate their dedication to the environment, their customers and the communities they serve" according to the city's website.

From The Archives

The Tattler's 'From The Archives', brings back Tattler stories from the past that we deem to still be of interest.  From The Archives appears on an occasional basis.

The featured story is from 2011, an opinion piece focused on a double deal with regards to trees never planted at the East Bay Bridge Mall.  The story, while specific to the trees can serve as a stand-in for the greater disconnect between what is promised to the residents versus what is delivered by the city council and the staff at City Hall.  The final thought in the opinion piece challenges any city council member to come forward to press for the resident's interests but two years on, City Hall continues to think city planning is best left to business interests.  This tree problem was purposely left unresolved, the developer serving as the winner and the residents serving as the losers....a common outcome here in Emeryville, the little city that can't seem to do anything right.

Here then is our From The Archives offering for today:  

THURSDAY, JANUARY 27, 2011

Missing Trees At Target Store Site 18 Years Later, Mistake Is Perpetuated

This is what the East Bay Bridge Mall

was supposed to look like.

This is what we got and it seems,

all we're ever going to get.

Staff Makes Same Mistake Again; Can't Learn

 Emeryville: The Little City That Can't Seem To Do Anything Right

Opinion

The 1992 Environmental Impact Report for the sprawling East Bay Bridge Mall says it all:  The rows of parked cars there will be ugly and create harsh glare, lowering the quality of life; a "significant" impact for residents.  Fortunately for us the report also identified the fix: plant trees, lots of them and then the problem will become "less than significant".  Unfortunately for us though, Emeryville contains more than its share of pro-developer government officials that don't really care about the resident's interests.  So we didn't get the required trees.

Now years later, part of the mall is being redeveloped with a Target store moving in, and we've been given a second chance to get the landscaping right, but once again government officials can't or won't work in our interests so again we won't get our promised trees.

The Target parking lot has been reconfigured and they're planting new trees right now after having recently cut down the 1990's specimens.  The city says perhaps as many as 100 new trees in all will be planted by Target.  But as in the 1990's, the percentage of the parking lot tree 'canopy coverage', that is the percentage of the parking lot covered by trees when viewed from above, will not be close to the 25% required by the mall's environmental documents.  What percentage of tree coverage Target will plant the city cannot say since apparently only Target knows that; the city hasn't taken an interest.

Past Corruption

Back in the '90's, how we first lost the trees is a history of bad governance; essentially a primer on how not to do it.  A citizen prompted 2003 Planning Department investigation revealed certain rogue Planning Commissioners had 10 years earlier, unilaterally revised the contract with the developer of the mall, Catellus Development Corporation, freeing the developer from the large number of parking lot tree plantings mandated by the mall's Environmental Impact Report document.  The action was literally a back room deal.  The environmental document required a minimum of 25% tree canopy coverage, but the actual amount planted was about 2% according to the investigation.

The investigation fingered at least three Planning Commissioners and cleared up the question as to why the environmental document required 25% tree coverage but the final 'Conditions of Approval' for the mall ultimately showed no tree requirement at all.  The investigation revealed the Planning Commissioners in question never provided testimony as to why they had intervened and let the developer off the hook for providing the trees.  One of the commissioners reflecting on the contract revision from 10 years earlier, did indicate that Catellus simply didn't want to spend the money the larger number of trees would cost and they asked the commissioners for relief from the 25% tree requirement, a task the commissioners gladly, and out of the public spotlight, provided.  The Planning Commissioners must have felt Catellus' pain since the Planning Department's investigation found no evidence of bribes having taken place.

Ghost Of The Corruption

Today, the staff has finally given up on the idea of planning at the East Bay Bridge mall since they are content with letting Target decide how many trees it wants in its parking lot.  The 25% requirement seems to have been abandoned and deference has been given to an 18 year old back room deal between some former Planning Commissioners and the profit maximizing Catellus Development Corporation.  We're locked it would seem, into a place where we cannot honor the ethos of livability the city council keeps publicly hawking.  Nobody at City Hall seems to see the folly of this: it was the apolitical Environmental Impact Report, a scientific document, that ruled that the 25% tree coverage to offset the parking lot negative impacts was necessary, not any commercial interests.  Now it seems this random piece of bad governance from a bygone era is going to continue to haunt future residents of Emeryville until a forthright leader steps up and disposes this ridiculous impediment.