December 21, 2015
Orinda Watch — Road Issues, Charter City, Opinion Poll
Dear Fellow Orindans,
First off, we at Orinda Watch wish our friends, neighbors, and all a most joyous, safe, and happy holiday season. It’s a good time of the year to take stock in our relationships and be thankful for all that we enjoy—including living in Orinda.
We apologize for the length of this Newsletter, but it is simply not possible to communicate an understanding of the prevalent issues in a page or two. There are three broad issues of equal importance:
I. Road status and performance;
II. Questionable taxing mechanism to secure additional road funding; and
III. Upcoming public opinion poll.
All three will be treated herein individually at some length. However, if you wish a brief summation, what directly follows here is an overview on the three issues covered in this newsletter.
Summary perspective on roads, questionable taxing mechanism, and public opinion poll
At the last Council meeting, six questions regarding the roads program were posed, namely:
1. Why focus on least used cul-de-sacs at this point in the program? 62% of the 2017 roads to be fixed are cul-de-sacs—which makes no sense. Is the Citizens Infrastructure Oversight Committee (CIOC) playing games with priorities originally aimed at repairing the worst condition/most traveled roads?
2. Why are we only now considering engineering approaches other than full depth reclamation? Why weren’t less expensive alternatives considered earlier in the design?
3. Why do we NOT have a dedicated, experienced, Roads Project Manager for a project many times Orinda’s annual budget?
4. Why do we continue to base decisions on apparently incorrect, unverified Pavement Condition Index (PCI) numbers?
5. Why does the Council continue to approach the roads and drains program on an annual, piecemeal basis instead of a more cost effective, professional, integrated approach?
6. Why do we NOT have an audit committee to benchmark practices and seemingly high budgeted repair costs of $800,000 per mile?
These concerns need to be addressed if the Council, CIOC, and the Orinda Roads Action Group (ORAG) wish to have any credibility securing additional road funding.
The Orinda Roads Action Group has proposed that Orinda should become a Charter City and fund the remaining tens of millions to fix Orinda’s roads by passing a real estate transfer tax. Both schemes carry serious repercussions and good reasons exist to oppose such a proposal.
First, there is still no definitive “scope” and estimate to fix Orinda’s roads and drains. A project of this magnitude requires defining what is appropriate reclamation for roads of greater or lesser rehabilitation for all Orinda roads to achieve the determined pavement condition index. That information provides accurate project phasing, schedules for intended completion and what funding resources will be required at any point in time. Such scoping also allows for accountability on the progress and quality of the work being accomplished. Unless project scoping is in place, quantifying what funds are required to accomplish repair goals - as well as road selections and timelines - will be in a constant state of flux.
Second, the Orinda Roads Action Committee’s proposal to fund Orinda road rebuilds/repairs AND ongoing maintenance through a real estate transfer tax (RETT) has heretofore never met with popularity by Orinda taxpayers and with good reason. While no tax is much appreciated, the detrimental effects this would have on Orinda homeowners - if and when they wish to sell their home - is not to be underestimated.
Imposition of a transfer tax on homes adds one more cost to a growing list of expenses which must be considered in the purchase and/or sale of a home, including water and seismic retrofit, transaction costs, and property taxes. The cumulative effect of these expenses is to decrease the mobility of households because it becomes too expensive to move. People who might consider buying a home in Orinda, won’t. People who want to sell their home, can’t.
Apart from the fact that transfer taxes are extremely volatile based upon fluctuating economic conditions, the impact on the local economy is serious: By adopting its own transfer tax, the city forfeits the portion of the tax it previously received from the county. Thus, local residents are not only paying more for city government, but also for county government.
It gets worse but, for purposes of the summary here, it must be said further that Orinda’s imposition of a real estate transfer tax necessitates Orinda to become a Charter City. The Orinda Roads Action Group diminishes this aspect by presenting a very limited provisional charter. The history of Charter cities is fraught with lawsuits and court cases that open up Pandora’s Box to all kinds of unwanted, unnecessary repercussions. A charter’s provisions inevitably morph into long and unwieldy policy documents that lead to confrontations with State powers and regulations.
Third, after much review of previous opinion polls, dealing mostly with parcel taxes and ad valorem taxes, on Dec 15, the Council voted 4 to 1 (Phillips opposing) for another opinion poll to test various funding schemes, but definitely to exclude questions about a real estate transfer tax.
Finally, Orinda Watch has always supported fixing Orinda’s roads, but doing so transparently, professionally, and cost effectively.
Important Details of Issues I. through III.
I. Road status and performance
To expand on the above, anyone familiar with the planning and execution of large capital projects, like the $100 million engineering and construction project to rebuild all of Orinda’s roads to a MINIMUM PCI of 50 and fix the drains, (the scope defined by the City Council), knows a dedicated and experienced Project Manager is one of the best investments in a cost effective, on schedule, quality project. Skimping in this area is penny wise and pound-foolish. Yet despite numerous attempts by Orinda Watch, to inform, including the Rotary Presentation in April 2014, which you can find here:
the Community Infrastructure Oversight Committee (CIOC) and the City Council continue to ignore this essential component. In fact, at a recent City Council meeting complete with an abundance of self-congratulatory praise, the Chair of the CIOC boldly announced that the Director of Public Works was the Roads Project Manager—sadly demonstrating a lack of understanding of the vital role the Project Manager plays in planning, organizing, executing, and controlling a large capital project. Capital projects are not managed the same way as maintenance work.
A perspective in the almost two year old April 2014 Orinda Watch Newsletter (seemingly more accurate than some might wish to admit), provides further background—“If Measure J is not the way, then what?” It can be found here:
Another key issue in the City’s execution of the roads and drains program is why are so many cul-de-sacs being selected so early in the program? Of the roads selected to be fixed for 2016, 28% are cul-de-sacs. Of the roads selected to be fixed for 2017, 62% are cul-de-sacs. The criteria are supposed to be low Pavement Condition Index (PCI) and high Average Annual Daily Travel (AADT), which for cul-de-sacs by definition is very low. There are many well-traveled roads with equal or worse PCIs that are not on the rebuild/repave list. Just what is going on here? Is this incompetence or something worse? The cul-de-sacs issue must be fixed or resolved before any future funding is provided.
Other issues raised are equally serious and are mostly self explanatory:
• Why are we only now considering engineering approaches other than full depth reclamation? Why weren’t less expensive alternatives considered earlier in the design?” All of the road segments in the 2015 program, including Kite Hill Road which had an excellent sub base, were specified for Full Depth Reclamation which is a rototiller like treatment followed by lime and cement to rebuild the sub base. Certainly a high quality approach, but is it necessary and cost effective for ALL roads? Does “one size of design” fit all? Clearly NO.
• Why do we continue to base decisions on apparently incorrect, unverified PCI numbers?” There have been several examples so far where the PCI numbers in the Street Saver Program appear incorrect or misleading. Why for example was Kite Hill Road on the very first list of roads to be fixed? It clearly was in much better condition than other roads—Tahos Rd for example is just one. It’s not clear that the Street Saver Program, which is a Preventive Maintenance program where the algorithms of which are programmed accordingly, is in fact the best tool for Orinda’s work where so many of the roads are in such poor condition already.
• Why does the Council continue to approach the roads and drains program on an annual, piecemeal basis instead of a more cost effective, professional, integrated approach? Interestingly both Council Member Orr and appointed member Gee acknowledged this shortfall at the Dec 15, 2015 OCC meeting yet failed to take any action. Council Member Orr claimed lack of total funding as an excuse, which of course makes no sense. Before full funding is provided in the commercial world, generally an engineering scoping document along with a definitive estimate is prepared with an accuracy of plus or minus 10%. To date, no such comparable estimate or scoping document for bringing the roads to a PCI of 50 and fixing the drains has been prepared. Why not?
• Why do we NOT have an audit committee to benchmark practices and seemingly high budgeted repair costs of $800,000 per mile? Replacing and repairing Orinda’s roads, while not rocket science, warrants careful planning, engineering, and construction. Budgeted costs are high. How are we doing? Are we on schedule? Is there a schedule? Are we meeting budget? IS there a budget? Where are the progress reports which show some performance metrics like cost per square meter, cost per mile, compared to budget and benchmarked to other townships like Moraga and Lafayette. These are questions Orinda’s taxpayers want answered.
II. Questionable taxing mechanism to secure additional road funding and proposal for Orinda to become a Charter City
At the Dec 15 City Council meeting, the Orinda Roads Action Group provided several presentations recommending Orinda become a Charter City so as to be able to pass a real estate transfer tax to obtain the balance of funding to fix the roads (above the sales tax amount) to a minimum PCI of 50. This amount is claimed to be roughly $45 million although a Definitive Scoping Document, Definitive Estimate, and Master Schedule have never been prepared—so no one is really sure.
One of the reasons the Orinda Roads Action Group put forth favoring a Charter City and a real estate transfer tax is that only a majority of voters is required to pass the tax vs. the normal 2/3 of voters for a more normal bond measure. The following summarizes some of the arguments opposing the transfer tax. (Citing CA Association of Realtors: Government Affairs)
A. Volatility: Transfer taxes are an extremely volatile and unreliable source of revenue.
B. Excessive Burden: Imposition of a transfer tax on homes adds one more cost to a growing list of expenses which must be considered in the purchase and/or sale of a home, including water and seismic retrofit, transaction costs, and property taxes. The cumulative effect of these expenses is to decrease the mobility of households because it becomes too expensive to move.
C. Decreased Affordability: Transfer taxes decrease the affordability of housing.
D. Impact on Local Economy: High housing costs make it increasingly difficult to attract skilled workers from other areas and to keep existing workers.
E. Many Benefit-Few Pay: Although the residential market accounts for the most transfers of real estate, typically 6 percent or less of a city‘s total single-family housing stock is transferred in any one year.
F. Regressive: The real estate transfer tax is clearly regressive. People spend a smaller share of their income on housing as their income increases.
G. Taxation Without Gain: The transfer tax is levied whether or not the seller makes a gain on their home, unlike the capital gains tax.
H. Mandatory: Proponents of the transfer tax often allege that its impact would be lessened if real estate agents lowered their commission.
I. More Taxes For the County: By adopting its own transfer tax, the city forfeits the portion of the tax it previously received from the county. Thus, local residents are not only paying more for city government, but also for county government.
J. The Legal Perspective: Questionable legality of a general law city imposing an excessive transfer tax.”
While you should judge for yourself, we believe for Orinda to become a Charter City and to pass a real estate transfer tax requiring only a 50% majority opens up the residents to Pandora’s Box and all kinds of unknown, unnecessary consequences.
III. Upcoming Public Opinion Poll
Interestingly, despite most City Council members saying they opposed a January public opinion poll as little as one month ago, the subject was again agendized on the Dec 15, 2015 OCC meeting. Speakers from the Orinda Roads Action Group strongly objected to polling residents as to their feeling regarding a Charter City and a real estate transfer tax. While the Council seemed to be leaning toward a real estate transfer tax, their position on a Charter City was less clear. In fact the whole discussion as to how to obtain additional road funds, in spite of many residents thinking, “we just provided $20 million, let’s see what we get for our money first,” the issue took on an accelerated frenzy.
Council Member Gee, appointed because of her road experience on the CIOC, said she had thought funding support would build as the roads began to be rebuilt/repaired but, with a number of issues arising, was starting to think otherwise—somewhat of a pessimistic outlook in sharp contrast to the abundance of praise she had for CIOC and the execution of the road program as little as a month prior.
As mentioned earlier, after much review of previous opinion polls, dealing mostly with parcel taxes and ad valorem taxes, the Council voted 4 to 1 (Phillips opposing) for another opinion poll to test various funding schemes, but definitely to exclude questions about a real estate transfer tax.
Keep in mind that Opinion polls are frequently used as tools to market and shape public opinion—not just test it.
We’ll do our best to keep you posted.
Your friends and neighbors at Orinda Watch
Orinda Watch’s Purpose and Mission:
Orinda Watch is a volunteer coalition of citizens whose purpose is keeping the people of Orinda, California informed on local affairs while fighting for local control of planning and governance. Orinda Watch has never purported to be, nor does it intend to be, a political party or a political organization whose primary or sole purpose is electing candidates to public office.
It’s your community—get involved.
City Manager: JKeeter@cityoforinda.org
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