Letter To The Tattler: Ken Bukowski

Former city councilman and progenitor and spokesman for the Emeryville Property Owners Association, Ken Bukowski says electric bikes may help the Police Department respond to calls faster and funds for purchase may be available from Alameda County Measure B.

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I recently bought an electric bicycle from Pacific Alternative Bicycle Store in Berkeley.  My new bike is fun to ride and I find it really great.  It can go anywhere from 20-25mph. The motor makes it go about 20mph, but when you pedal to assist the motor, it goes about 25mph on level ground.  You just plug it into a normal electric outlet. 

This would be a great idea for the Emeryville Police Department's bicycle patrol.  I'm sure it is something the officers would enjoy and it could reduce their response time.  I think they would look forward to riding it as much as I do. 

The bike I bought was $1,000, but I added a hydraulic brake for another $200 which I think is really necessary for added stopping power.  Unlike the conventional bike, the electric motor makes a real difference for riding ease and enjoyment.  It has a range of about 25 miles.  As I get older, having the necessary energy to pedal everywhere I want to go can sometimes be challenging but with the electric bike, that has definitely changed.

The upcoming Alameda County Measure B sales tax for transportation includes 8% for bicycle-pedestrian projects, which I think could potentially provide funding for electric police bicycles in all Alameda County cities.  I think our City Council should be the first to adopt a resolution to support this idea.

Emery Unified's Dangerous Bond Strategy

School District Considering 

Paying $107 Million

To Borrow $20 Million 

Bond Interest To Principle Ratio Is A Whopping 5:1

Emery School District has released a bond financing document that details how punishingly expensive money for the District has become in the wake of Emeryville's economic slide.  The document, an algorithm depicting debt service requirements for the sale of the last school bond meant to fund the building of the proposed Kindergarten through 12th grade school on San Pablo Avenue, is being used to calculate how much money it's going to cost to borrow the last $20 million the District wants to spend.

It's going to cost a lot.

  

The District has issued three Measure J school construction bonds so far (called Series A, B, and C) for a total of $48.5 million, an amount the District now says is sufficient to complete the Kindergarten through 12th grade school, albeit a less then desirable one than they envision.  It should be noted that earlier before the economic slide, much higher minimum amounts were reported by the School Board as necessary.  However, at the last School Board meeting, officials stated at least $20 million more would be needed to add to the $48.5 million already borrowed to "build for excellence" as School Board member Josh Simon puts it.  

While over 70 concerned parents, guardians and residents have recently urged the District to work with the money we have by keeping the elementary students at Anna Yates Elementary School and building a less-costly middle and high school on the San Pablo Ave site, the District has instead indicated its intention to forge ahead with its more costly "co-location" vision. District officials admit the $48.5 million already in the bank would be plenty for a new high school without closing the existing elementary school.   
So, how might the District fill this $20 million financial gap?

Dangerous Strategy
The answer is a dangerous strategy known as a Capital Appreciation Bond (CAB) or a zero coupon bond, which is a type of bond that accrues interest until maturity at which time both interest and principal become due.  As the schedule shows (viewable here: http://bit.ly/seriesd), the District is considering issuing a Series D bond that would provide the District with $20 million now, in exchange for payments that don't begin until 2032 and that would end in 2049.

Like a mortgage with a balloon payment, the schedule also shows just how costly this strategy can be, as it indicates that Emeryville tax payers would end up paying over $107 million for that $20 million loan.

"This type of financing is not preferred 

but if that's what you need to do to 

bring the money sooner, it's done"

Emeryville City Manager Pat O'Keeffe

Last year the Los Angeles County Treasurer and Tax Collector, Mark Saladino, wrote a letter to school finance professionals in which he explained that CABs result in a significantly higher debt burden and explained that his office would not support transactions relying on such bond structures. http://www.bondbuyer.com/pdfs/0523LA.pdf

But unlike credit default swaps, CABs are not some new financial wizardry that confuse even seasoned financial professionals.  On the contrary, their risky and costly nature has been long-recognized and in 1994 the State of Michigan even banned the use of CABs for school construction financing. http://www.bondbuyer.com/news/-37281-1.html

These are the lengths that this School Board is willing to go to in an attempt to maintain their vision.  They would risk bankrupting future Emeryville residents with soaring property tax bills for a K-12 school site, which by 2049 when the bond is finally paid off, may itself be in need of replacement, as it will have been in use for nearly 35 years.

The schedule also shows the assumptions one has to make to believe that the District will be able to keep its promise to voters that their property tax bills for Measure J would not exceed $60 per $100,000 of assessed valuation. (See the far right column of the schedule.)  The only way the District can keep that promise is if Emeryville's assessed valuation grows at a steady 4% annually (second column from left in the series D document).
Some are saying given the 2011 decrease in assessed valuation of over 6%, and with the Redevelopment Agency gone, this 4% claim seems highly unlikely. Thus, the reality is that even if the District stops now and issues no more school construction bonds, the Emeryville taxpayers are likely to see bills in excess of $60/$100k because it's unlikely that assessed valuation will continually increase by 4% for roughly the next 20 years.  

In 2010, Oakland Tribune reporter Daniel Borenstein warned Emeryville residents about Measure J, the school bond financing scheme they were about to vote on, then pegged at $95 million.  He made a wild prediction: Emeryville taxpayers would have to pay back the bonds with almost three times that amount in interest.  It was bad financing based on overly rosy predictions of Emeryville's assessed valuation growth, he said.  City and School District officials pounced: Mr Borenstein was a lout they said, he didn't know what he was talking about and moreover he is from Oakland, what can he know about Emeryville?  
Some may now ask, what indeed.

From The Archives

The Tattler introduces 'From The Archives', a new feature that brings back Tattler stories from the past that we deem to still be of interest.  From The Archives will appear on an occasional basis.  

Here then is our From The Archives offering for today:

SUNDAY, JANUARY 9, 2011

Emeryville: Land Of Palm Trees

All Pedestrians See Are Bare Trunks

Why So Many Palm Trees?

Opinion
Work crews are finally preparing to take down the power line poles from the new plaza near the railroad tracks at the foot of Park Avenue as part of the Park Avenue improvement plan.  The poles will be removed so that six large palm trees can be planted.   Strangely, those trees will be planted even though the citizen's committee charged with co-designing the plaza several years ago specifically said "no" to palm trees there.
It's not only the committee that objects to palm trees.  Councilwoman Ruth Atkin likes deciduous leafy trees and she has railed against the plethora of palm trees planted in Emeryville, calling them "ugly", yet we still seem to get palms planted everywhere here.
Why palm trees?   Because, as it turns out, some nameless, faceless bureaucrat from 100 years ago thought two palms would look nice in front of City Hall, so now Emeryville must  live with palm trees everywhere.

A healthy mature palm

At the Park Avenue plaza, the new palms will create a "unified and homogeneous street-scape"; at least that's what the city planners with masters degrees tell us.  City Hall, up the street has palm trees in front, so in order to tie Park Avenue together in a Big Lebowski oriental rug sort of way, we must also have palm trees in the plaza.

Indeed even the palm trees at City Hall are brought to us by the palm trees at City Hall.  Because of the now unknown designer in 1903 that planted the two large palms in front of the original building, the architect who designed the building's addition in 2000 insisted we must have more palms around the building to achieve proper "contextualization" (see Tattler story January 2nd).
The existence of the palms at city hall, iconic in their auspicious placement, have been used to justify palms all over town from Pixar across Park Avenue to the Public Market on Shellmound Street.

Our fate seems to be sealed because like it or not, a critical mass seems to have been reached and palm trees are now seen by architects and city planners as emblematic of Emeryville.  This vision is so strong for them that they over-turned a democratic vote by citizens on the Park Avenue Committee to not plant palms in the plaza.  The irony of the ugly bare power poles there being replaced by palms is probably lost on them.

So it looks like we're going to be seeing a lot of bare trunks and not a lot of leaves in Emeryville unless someone without a masters degree in city planning can shout loud enough that the emperor has no clothes.

The one on the right is healthier

Former Emeryville Strongman Now Throws Weight Around At State Level

Former Emeryville Mayor Redefines "Strongman"

After ruling Emeryville with an iron fist through much of the 80's and 90's, former council member and mayor Greg Harper still rules but now he's pumping iron.
Mr Harper won a State powerlifting competition in San Jose last spring with a series of lift catagories, setting a California State powerlifting record for his age group.  The former Mayor told the Tattler he started lifting weights to keep fit a few years ago and he entered the competition on a lark.  The US Powerlifting Association noted Mr Harper set the State record for the 90 kg weight class for the over 60 age group.

Powerlifting competitions combine three lifts for a total.  Mr Harper's lifts were:
Squat - 110 kg (242.5 lbs)
Bench -  70 kg (154 lbs)
Deadlift -  152.5 kg (336 lbs)
Total (record) - 332.5 kg (733 lbs)

Greg Harper, attorney-at-law, continues to live and work
in Emeryville.  He serves on the Emeryville Oversight Board for the former 
Redevelopment Agency and he also serves on the AC Transit Board of Directors.
He's not a guy to be trifled with.

Emeryville Planning Director Forced To Renounce Planning Canon

Pity Emeryville's Planning Director

He's Forced To Carry Water For Pro-Developer Philistines:  Fast Food Restaurants Are Now "Memorable" 

Opinion
Like the Christians of ancient Rome, who had to renounce Jesus to the Emperor to stay alive, so too must Emeryville's Planning Director renounce universally accepted planning standards and precepts as his esteemed planning colleagues in the Bay Area look on, all to keep his job at City Hall.
Trying to fit the newly approved Panera Bakery building into compliance with Emeryville's new forward thinking General Plan has been no small feat for the Director, Charlie Bryant; and he's really earned his money, giving the decision makers in town all the cover they need to push the fast food establishment through to completion.

Emeryville's General Plan gets an award
from the American Planning Association.
Mr Bryant is second from the left.

But consider how badly Mr Bryant has had to prostrate himself before his council majority paymasters in so doing.  Mr Bryant has had to find Panera Bakery, a fast food restaurant with 1500 locations to be totally consistent with the directives of Emeryville's General Plan...a plan that no reasonable person could make claim to that kind of development, let alone a planning director.

The new General Plan received a 'Small Jurisdiction' award in 2010 from the American Planning Association.  That august and professional association noted Emeryville's General Plan will transform the town into a "vibrant, livable city".  The presenters of the award took into account the fact that 20% of the people of Emeryville participated directly in shaping the plan over a four year period, a remarkably democratic public vetting led in no small part by Mr Bryant himself.

Bollocks!
Against this weighty backdrop, Planning Director Bryant has had to make some pretty outrageous claims to grease the skids for Panera, among them:

• Panera 'employs Emeryville residents', but at $8 per hour without benefits, there's nobody working there that can afford to live in Emeryville

• The archetypal fast food style building is of 'high aesthetic quality'...this makes us wonder what kind of development would be considered low aesthetic quality 

• Panera is supporting a 'vibrant community' and 'contributing to the well being of the community'...and this makes us wonder how low the bar can be set

• The restaurant and building is a 'memorable' place, even though it's only one of 1500 across the US and Canada

Loyalty is often considered a positive personal trait, especially for employees and we wonder if the Planning Director is acting the faithful employee for the city council and the City Manager.  To that we would remind Mr Bryant of his duty to his job to the people of Emeryville and to repaying in kind to us, his level of planning expertise that he is forsaking in the Panera case.
If there is some other reason why our General Plan should be so distorted to serve some foreign cause, we are ignorant but we would like to know.  We do know a general plan is not needed to bring fast food restaurants to a town.  In fact no planning is needed at all and we point to Anytown USA as proof.  Fast food is what you get in the absence of planning.
No, this is a corruption of what the people of Emeryville worked so hard for.  All those General Plan meetings the citizens participated in should not net more fast food restaurants for Emeryville.

If Mr Bryant is simply worried about his job security, we are empathetic.  We feel for Charlie Bryant; he knows it's a load of bollocks and no doubt he wishes his professional planning colleagues don't catch wind of his covering for Panera.  He can feel some consolation that his colleagues don't have to answer to the likes of the Emeryville city council majority, all his hyperbolic claims of fast food memorability and high aesthetic quality notwithstanding.

City Council Jettisons Red Light Cameras

Video from KTVU Channel 2 News:

Emeryville dumps red-light cameras after state redirects revenues from city.

AC Transit Hydrogen Incident

From the Oakland Tribune:

Wrong valve cause of fire at AC Transit hydrogen station By Denis Cuff Contra Costa Times Posted:   07/24/2012 04:45:27 PM PDT Updated:   07/24/2012 08:57:26 PM PDT EMERYVILLE -- The use of an incorrect valve caused a May 4 Emeryville fire that caused neighborhood  evacuations and closed AC Transit's $10 million new hydrogen fueling station for buses, federal  investigators have concluded. In an apparent slip up, a pressure relief valve at the hydrogen fuel plant was made with a type of hard  steel known to crack and fail when exposed to hydrogen, Sandia National Laboratories investigators  said in a 33-page report released this week. "Proper material selection would have prevented this incident," Sandia experts said in the report to be  discussed Wednesday night by the AC Transit board. "The valve manufacturer already offers the same  valve component using an appropriate material, therefore the correct selection (was) available." It's unclear why the wrong valve was installed, officials said, but the result was dramatic. Eight months after the plant opened as a model to boost hydrogen fuel cell buses, the valve failed,  leaking hydrogen into the air that caught fire, boomed, and then burned for two hours. No one was injured, but the fire rattled neighbors, spurred street closures and evacuation of two schools  and several businesses, including Pixar Studios. Meanwhile, AC Transit has temporarily suspended use of its 12 hydrogen cell fuel buses because it has  no place to refuel them. AC Transit spokesman Clarence Johnson said Tuesday the transit agency still hasn't sorted out Advertisement whether the wrong valve was ordered,  or the supplier provided a valve different  from requested. "We're still not clear on  that," he said. AC Transit hopes to reopen the fuel station  in September after making a series of  recommended equipment and procedure  changes, including replacing the valve that  caused the fire. "We're not going to reopen the plant until  we're sure we have measures in place to  prevent a recurrence," he said. Johnson said the firm that designed and  engineering the hydrogen fuel plant --  Linde North America -- will pay for the  repairs and changes in accordance with its agreement with AC  Transit. There is no cost estimate yet for fire damage and repairs. In their report, Sandia safety experts said the intensity and duration of the fire could have been reduced  if AC Transit and Linde employees had followed procedures to promptly communicate fire and plant  operation information to Emeryville Fire Department. "Both AC Transit and Linde communicated well internally, but failed to communicate with each other  or the incident command (Emeryville Fire Department)," concluded the report by Sandia. The safety investigators also said the fire lasted longer than necessary because the plant was not  designed well to isolate the flow of hydrogen. The fuel cells combine hydrogen with oxygen in the air to make electricity to run the buses without pollution.

Peet's Coffee Going Private

From the San Francisco Chronicle:

Peet's Coffee & Tea going private for $977.6M

Updated 02:51 p.m., Monday, July 23, 2012

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EMERYVILLE, Calif. (AP) — Peet's Coffee & Tea is being taken private by a German conglomerate for approximately $977.6 million.

Privately held Joh. A. Benckiser, which invests in consumer goods brands, will pay $73.50 per share, a 29 percent premium to Peet's closing stock price of $57.16 on Friday. The companies said Monday the deal was worth about $1 billion.

Shares of Peet's jumped $15.89, or 27.8 percent, to close at $73.05 Monday. Over the past year, the stock has traded in a range of $51.16 to $77.60.

Mitchell Pinheiro of Janney Capital Markets said in a client note that Peet's was a logical acquisition target because of its strong brand and growth potential. But the analyst was a bit surprised by the going-private deal.

"We thought Peet's would make more sense for a larger packaged food company that would have more marketing muscle, distribution power and cost synergies, as opposed to being part of a private equity portfolio," he wrote.

BDT Capital, a Chicago merchant bank, is a minority investor and adviser in the buyout.

Peet's was founded in 1966 in Berkeley, Calif., by Alfred Peet. The company gets more than half its revenue from its coffee shops and the rest from grocery sales, home delivery and sales to food service and offices.

Benckiser already holds a minority stake in D.E. Master Blenders 1753. The company was created when Sara Lee Corp. split into two businesses.

Peet's Coffee & Tea Inc. has about 13.3 million outstanding shares, according to FactSet. The current management and employees will remain with the company and its headquarters will stay in Emeryville, Calif.

The acquisition, which was unanimously approved by Peet's board, is expected to close in about three months. A majority of Peet's outstanding stock must be voted in favor of the deal at an upcoming special shareholders meeting.

Benckiser is the majority owner of Coty Inc., which is known for its celebrity fragrances and OPI nail polish. Coty announced last month that it is planning to go public and hopes to raise $700 million in an initial public offering. Bensckiser also owns Labelux, a luxury goods company with brands such as Jimmy Choo, Bally and Belstaff.