Monday, November 3, 2014

No Matter Who Designs It, the Sack Won’t Be Big Enough

With the election looming ever closer, I’ll offer yet one more perspective on Petaluma’s Measure Q, the proposed one percent sales tax measure that would run into perpetuity.  I apologize for my continued focus on Measure Q instead of touching upon other tax measures in the region, but I’m in a place where Measure Q insights and weaknesses are regularly paraded before me.  And I expect that the lessons from Measure Q are applicable to other tax measures.

In broad brushes, Measure Q is expected to generate an additional $10 million annually in City revenue.  The City Council, in planning for the allocation of the funds, is looking at a 30-year window.  So the total revenue to be spent is $300 million.

In rough numbers, $100 million would go toward infrastructure repairs, largely street work, another $100 million toward emergency services, and the final $100 million toward the Rainier Connector.  (The most frequently published funding need for the Rainier Connector is $88 million, but there are a number of assumptions behind that estimate, some of which may be optimistic, so rounding to $100 million is reasonable.)

Let’s look more closely at the $100 million for infrastructure repair.  A City official has described the sum as sufficient to improve the streets, not to perfection, but to a good level of pavement condition as measured by regional standards.  (To ensure that I’d heard correctly, I confirmed this repair philosophy with another City person.)  I concur with the decision to target good instead of excellent.

However, street repairs have a finite life.  For repairs that are short of complete reconstruction, the life is usually no more than twenty to twenty-five years.

Do you see the problem?  The City would use 30 years of tax revenue to fund repairs with lifespans of less than thirty years.  The repairs would have worn out, the streets returned to their pre-repair state, and further decline begun even while the revenues to pay for the repairs were still being collected from our children.  Even with an increased sales tax rate that would make Petaluma the highest in the region and would nearly reach the state cap, the average condition of the streets would, on average, continue to slide.

Nor is that the only arithmetic problem with Measure Q.  If the Rainier Connector is built in 2018/19, which is earliest date generally projected, the engineer and contractor would expect to get paid as the work is completed, not over thirty years.

Bonding, of course, is how municipalities convert a future revenue stream into the funds needed to pay immediate bills.  However, bond-holders require interest on their funds.  One City candidate offered an estimate that every $1 of bonding would require committing $2 of future tax revenue.  From long-ago experience in financing publicly-owned hydroelectric projects, the estimate seems reasonable.  So, building a $100 million Rainier Connector would require committing $200 million in revenue.

Where does that leave us?  Of the $300 million to be spent, we’ve spent $200 million on the Rainier Connector and another $100 million on street repairs that will wear out before the bill is fully paid.  And we haven’t begun to touch the emergency services needs.

And if that picture isn’t already bleak, we really can’t be sure about the revenue projections either.

The retail world is changing.  On-line sales are replacing brick-and-mortar commerce.  And post-recession wage stagnation is reducing the purchasing power of broad demographic bands.  Plus, the two new Petaluma shopping centers have spaces that haven’t yet filled and reports are that sales tax collections from the properties are running behind projections.  Perhaps the $10 million in annual revenue is optimistic.

Many opponents of Measure Q, in anticipation of its ballot box rejection, are suggesting new ways to bundle the tax measure for the next election, including a rebalancing of the revenue allocation and the use of multiple ballot measures.  In general, I agree with the changes they suggest.  But they continue to leave the Rainier Connector in the mix.

And as long as Rainier is on the table, the problem remains the age-old conundrum of fitting ten pounds of flour into a five-pound bag.  And no matter who designs the bag, what fancy snaps are specified, or how elegant the embroidery may be, the ten pounds of flour won’t fit.

There are remedies available.  I’ve covered them previously, so needn’t pontificate too strenuously today, but there are three essential fixes, one painful and two excruciating.

First, forget the Rainier Connector.  It doesn’t provide much traffic relief and we can’t afford it given other, more pressing needs.

Second, acknowledge that the post-World War II turn toward suburbia was a fundamental mistake and we need to back away from it.  It’ll take years to reverse the harm, but the sooner we start the better.

Third, recognize that Proposition 13 and its ilk were treating a symptom and not the cause, which was suburbia, and begin making up for the thirty-five years of financial legerdemain that has led us to the current distress.

None of them are easy solutions, but all of them are vital.

And the first step is to pass Measure Q.  It may be ill-conceived and poorly formulated, but at least it begins to tackle some of the accumulated deficits.  Especially if the absurdity of the Rainier Connector becomes too obvious to ignore and we can use the new revenues in a pivot toward urbanism.

Perhaps it’s perverse to argue for Measure Q while simultaneously hoping that its key element is never implemented, but it’s no more perverse that the current predicament in which we’ve placed ourselves.

It’s past time to start thinking about what a bag that can hold ten pounds of flour will look like.

By my next post, the election will have passed.  Whether the tax measures such as Measure Q pass or fail, it’ll be time to start plotting the next steps.

Schedule Notes

Two thoughts for your upcoming calendar:

Petaluma Urban Chat: On Tuesday, November 11, Urban Chat will begin a mini-charrette on the potential redevelopment of the Sonoma Marin Fairgrounds.  Although not a requirement, I’d prefer if people could commit to participating at the meeting of the 11th and at the two subsequent meetings on December 9th and January 13th.  Numerous people have made the three-meeting commitment, but more would be appreciated.  Please email me or respond below in the comments.

Unless we have enough folks to move elsewhere, we’ll meet at the Aqus Café at 2nd and H Streets in Petaluma.  We’ll convene at 5:30pm.

SF Urban Film Fest: The SF Urban Film Fest will be held this coming weekend, starting on Thursday, November 6 and closing on Sunday, November 9.  I’ve made tentative plans to attend the closing day.  If anyone wishes to join me, let me know.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (

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