Monday, June 27, 2011
City to Sell Kaiser Center to Redevelopment Agency
Art / Politics / People Robert Gammon — Mon, Jun 27, 2011 at 1:33 PM
Based on budget proposals made by councilmembers late last week, it seems obvious that the city council plans to approve Mayor Jean Quan’s plan for the city to sell the shuttered Henry J. Kaiser Center to Oakland’s Redevelopment Agency for $28.3 million. In fact, all of the three budget proposals made by the eight councilmembers contemplate using proceeds from the sale of the Kaiser Center to help close Oakland’s $58 million general fund deficit.
Moreover, proposals by seven of the councilmembers would use more money from the Kaiser sale than Quan had proposed to balance next year’s budget. The proposal, for example, by Councilwomen Rebecca Kaplan, Pat Kernighan, Nancy Nadel, and Libby Schaaf would use $15 million from the sale of the Kaiser to help balance next year’s budget, and $5 million from the sale for the 2012-13 fiscal year.
Quan, by contrast, proposed using just $2 million from the sale for each of the next two years in her budget scenario B, and would use the remaining $24-plus million in proceeds to help pay off Oakland’s debt. (It makes more sense to compare the Kaplan-Kernighan-Nadel-Schaaf budget to Quan’s scenario B because both assume substantial public-employee concessions at the bargaining table. Quan’s scenario A, by contrast, assumes no employee concessions, and would only achieve compensation savings from city workers by implementing unpaid furlough days.)
The revelation that all of the councilmembers are proposing to sell the Kaiser to the redevelopment agency also comes in contrast to criticism leveled at Quan when she initially made the proposal. Some councilmembers, including Ignacio De La Fuente, had called the proposal “illegal,” and yet they’re now all basing their budget proposals on it. (To be fair, however, the proposal by Councilmembers Desley Brooks, Jane Brunner, and Larry Reid contemplates restructuring the planned Kaiser sale so that the redevelopment agency does not use funds earmarked for new construction projects in East Oakland.)
Looking at the councilmembers budget proposals, it’s also clear that the one by Kaplan, Kernighan, Nadel, and Schaaf would result in the fewest cuts to city services — in part because it relies so heavily on the Kaiser sale. This budget, for example, would not only keep all of the city’s libraries open, but it would maintain 85 percent of Oakland’s cultural arts funding and restore planned cuts to tree maintenance and city parks.
This budget also calls for putting $6 million into the city’s reserve fund and rehiring 44 cops who were laid off last year and are still looking for jobs. In an interview, Schaaf explained that their budget assumes the city will be able to afford the cops because the current attrition rate among police officers is higher than what Quan estimates in her proposals. Their budget, unlike those from De La Fuente, Brooks, Brunner, and Reid, also does not call for cuts to Oakland’s already understaffed Public Ethics Commission.
Finally, it should be noted that based on the all of the proposed budgets made so far, it seems clear that councilmembers think that De La Fuente’s call on Friday for the Oakland police union to make more concessions at the bargaining table is unrealistic. None of the other proposals call for the police union to make an additional $2.3 million in givebacks — as De La Fuente has done.
As a result, it seems obvious that De La Fuente is on his own with that demand. Indeed, De La Fuente said he had to break away from working on a proposal with Brooks, Brunner, and Reid because he could not reach agreement with them.
Comments (6)
Showing 1-6 of 6
kia, to put this on a more personal level, it sometimes makes sense to use one's savings, or sell a valuable possession to fund one-time expenses. One may save up money for the down payment on a house or to buy a boat, for example. The problem starts when one uses one's savings to pay for a life style beyond what one's income can support.
This works fine, until the savings run out. What is one to do then? Make the lifestyle cutbacks that should have been done before and, unfortunately, one now has no savings for emergencies. This is not how one should run one's private life and it is not what we should expect from our elected officials.
One can argue that one needs to dip into savings sometimes, say, when one spouse loses a job. Even so, one, to be prudent, should also immediately lower expenses -- put off vacations, less dining out, etc. One cannot simply hope that things will improve.
No one likes the idea of closing or cutting back on libraries. As a matter of fact, I believe that the Mayor (who has always been a big supporter of the libraries) is playing chicken with the City Council and making the tough cuts their problem. She knows that library supporters will pack the Council Chambers. This, too, is not what we should expect from our elected officials.
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Finding temporary funding for ongoing projects during a recession makes sense to me. As the economy (hopefully) continues to rebound, we'll gain revenues for the city. In the long run we'll be happy we still have libraries!
@ Lawngun,
While legal, there actually is a hurdle for the Council to go through in order to use money from the Kaiser Center for programs.
There's a city ordinance that says that one-time revenue must be used to pay down negative account balances and debt, unless both of the following conditions are met:
First there must be a deficit in the general fund of $30 million or more. That is happening this year. But next year and the following year, if we want to keep spending Kaiser Center proceeds on programs, we need a $30 million deficit each year.
Second, the council must vote to declare a state of fiscal emergency. By my interpretation, this means that they need to declare a fiscal emergency every year for the next three years if they want to spend Kaiser money over three years.
Legal or not, it is one-time revenue. It begs the question, what do you plan to sell next? The budget gap hasn't gone away, it has just been covered with a bandaid.
Without the details of the redevelopment transaction (and, perhaps, a law degree), it is unclear as to whether the use of the funds is illegal. Illegal or not, the use of redevelopment funds is inappropriate. The use of the funds does absolutely nothing to fight blight -- the heart of redevelopment activities.
Lawngun, I bet they just realized that doing something potentially (not proven yet?) illegal to balance the budget is going to be politically at least possible, unlike closing libraries. After all, there were no mass protests staged against selling Kaiser Center.
They just did a quick political expediency calculation, and it's a no-brainer.
This council does potentially illegal things all the time, after all. They just wait to get sued and deal with it then.
Nothing scarier than the usual shenanigans, IMO. It's been very scary to me here for a long time. But maybe I just scare easy. :)
If the City Councilmembers didn't understand that the use of one-time revenues to cover on-going operating expenses is fiscal mismangement, this might be easier to stomach. But, they do know that what they're proposing is not in the least bit prudent. They know it's wrong, but each and every one supports the idea. This is very scary.
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