A city memo from this fall estimates a shortage of 16,000 affordable housing units. But resources to deal with that shortage have dwindled as well. In California, redevelopment funds from the state had been a reliable means of developing affordable housing, but when California was facing its severe budget deficits in the midst of the recession, its governor and Legislature did away with redevelopment programs.
Leslye Corsiglia, the city’s housing director, said that in 2010, the city received $40.6 million in redevelopment funds that could be used for low- and moderate-income housing. Now that money is spent. From all sources, federal, state and local, the city’s funds for affordable housing have dropped by a third since then, to $61 million.
Just last month, the City Council passed a housing impact fee requiring that developers of market rate rental housing pay $17 a square foot toward development of low-income housing. But revenue from that fee will not kick in until at least 2019.
Read: Few Options for Homeless as San Jose Clears Camp – NYTimes.com. (12/4/2014)
Five decades after President Lyndon B. Johnson declared a war on poverty, the nation’s poor are more likely to be found in suburbs like this one than in cities or rural areas, and poverty in suburbs is rising faster than in any other setting in the country. By 2011, there were three million more people living in poverty in suburbs than in inner cities, according to a study released last year by the Brookings Institution. As a result, suburbs are grappling with problems that once seemed alien, issues compounded by a shortage of institutions helping the poor and distances that make it difficult for people to get to jobs and social services even if they can find them.
In no place is that more true than California, synonymous with the suburban good life and long a magnet for restless newcomers with big dreams. When taking into account the cost of living, including housing, child care and medical expenses, California has the highest poverty rate in the nation, according to a measure introduced by the Census Bureau in 2011 that considers both government benefits and living costs in different parts of the country. By that measure, roughly nine million people — nearly a quarter of the state’s residents — live in poverty.
The New York Times looks at suburban poverty in California, mentioning the lack of social services in the suburbs, but doesn’t dig too deep. I worked on a research project several years ago that asked me to try to conceptualize the material difference in suburban versus urban poverty. Many fine-grained indicators of financial insecurity are hard to map at a sub-metro level: health insurance, use of food stamps, etc. Although there has been a boom in literature about suburban poverty (and a hearty anecdotal understanding across the country that poverty is not an inner city issue), I haven’t seen much in the way of robust research on what this means for policy.
This article is an example of a description that surprises less than it seems to think it will, and raises fewer questions than it should: Why don’t those suburbs, in some cases huge municipalities, offer services? Is the reliance on private charity really much higher in the suburbs, or are urban residents also drawing heavily on them?
Researchers and journalists, take heed!
The fate of San Jose’s pension reforms remains unclear after a recent court decision.
SAN JOSE — In a landmark ruling that could help shape city budgets around the state, a judge invalidated key parts of San Jose’s voter-approved pension cuts but upheld other elements that could still save huge taxpayer costs.
Santa Clara County Superior Court Judge Patricia Lucas’ tentative decision released Monday prohibits the city from forcing current employees to contribute significantly more toward their pensions, as called for in last year’s Measure B. But the ruling allows the city to cut employees’ salaries to offset its increasing pension costs.
City leaders may find it difficult to go through with the pay cuts, however. The City Council earlier this month approved 10 percent pay raises for cops, after police officers began fleeing the department for better-paying cities. The cop exodus has coincided with a huge increase in crime, above the California and national averages, while arrests have dropped in half in recent years.
A California city that filed for bankruptcy in 2001 after a developer secured a $10 million judgment against it, Desert Hot Springs was featured in the NYT for its fiscal troubles.
The city, Desert Hot Springs, population 27,000, is slowly edging toward bankruptcy, largely because of police salaries and skyrocketing pension costs, but also because of years of spending and unrealistic revenue estimates. It is mostly the police, though, who have found themselves in the cross hairs recently.
“I would not venture to say they are overpaid,” said Robert Adams, the acting city manager since August. “What I would say is that we can’t pay them.”
Public safety was once considered a basic urban service – perhaps the primary reason for incorporation. Police (and fire) pensions are more costly than others because workers are allowed to retire earlier, and because the city pays into a pension fund instead of social security, for which many public safety retirees are not eligible. It’s not hard use simple figures to paint police benefits as “generous” or “unsustainable,” particular in small, working-class cities like Desert Hot Springs. But the short-term gaps that emerge from bad policy and economic cycles belies the fundamental sustainability of well-managed pension funds over the long-term. The fact that so many cities are being dragged down by pension obligations speaks more to poor management and the ominous fiscal picture of cities in general.
Police unions say the fault lies with state and local politicians who failed to adequately fund the pension system over the years, and inflated benefits during boom years. Others wonder whether such salaries and pensions were ever affordable, particularly in cities as small and struggling as this. In Desert Hot Springs, for example, for every dollar that the city pays its police officers, another 36 cents must be sent to Calpers to fund their pensions.
As burglaries, home invasions, carjackings and assaults creep into Oakland neighborhoods less accustomed to crime, residents have built fences, armed alarms and installed security cameras.
Oakland has been dealing with a resurgence of crime, particularly in the rapidly-gentrifying areas of the city, including Temescal. Some neighborhoods have also hired private security firms (some of which use armed guards) to patrol their communities, and one of the most rapidly-gentrifying neighborhoods in the city, Temescal, has been exploring doing the same. In addition to rising crime (and specifically rising crime in wealthier neighborhoods), Oakland has suffered from deep budget cuts to its police department, resulting in
Oakland police appreciate the help, said Officer Johnna Watson, a police spokeswoman.
“We are all striving for the same goal, and that is reducing crime,” she said. “The security companies are an extra set of eyes that allow the community to be empowered.”
Putting more police on the streets is the city’s top priority, said Sean Maher, a spokesman for Quan. There are now 615 officers patrolling the city of roughly 400,000 people – down from a peak of 830 officers in January 2009, according to police records.
“When communities get organized and rally around a cause like public safety, it is incredibly effective,” Maher said. “It is unfortunate that people feel forced to do this. We want a fully staffed Police Department.”
“Cities are cash-strapped, and they are finding it difficult to keep up with the costs of a municipal police force,” Wexler said. “And if you want more police, you really have to ask yourself this question: What are cities prepared to do?”
Still, Wexler said, private security companies are no substitute for a competent police force.
“When you are talking about municipal police, you are talking about public officials and holding them to a high standard,” he said. “If private security is involved, they should be held to an equally high standard.
When residents pay for services to be provided privately, what happens to their demand for the government to fully fund those services? Does having private security in wealthier neighborhoods in Oakland deprive other communities of the collective effort (and willingness to pay) for public policing throughout the city? The most crime-plagued areas of Oakland don’t have residents who can afford to replace necessary policing with private officers. What are the consequences of private citizens channeling their energy into private services? K-12 schools are perhaps the most obvious comparison, but perhaps education is a more divisible product than policing. You never know when you’ll be in a neighborhood that doesn’t have private security, but you can control whether your kids ever go to the public schools.
“Oaklanders deserve more safety, and to the extent that citizens can generate it for themselves and their neighborhood, I applaud that effort,” said Councilwoman Libby Schaaf. “But it does not excuse the city for failing to provide the most basic element of government. It is not a substitute.”
In the community meetings held to discuss the possibility of private security in Temescal, many residents pointed out the other obvious dangers: racial profiling and the lower standard of accountability private actors have then public police officers.
Several residents spoke about their concerns over racial profiling, especially after the death of Trayvon Martin, a Florida teenager gunned down by a neighborhood watch volunteer.
During the meeting, a Latino resident and a transgender resident questioned the safety of those that do not fit the description of an “average citizen.” Both spoke to the idea that they could be considered outsiders in their own neighborhood and would actually feel less safe with private security.
“I believe that increasing police presence in a neighborhood only increases safety for some people,” said Kane.
There are many policies floating around to reform the muck that is municipal finance these days. A group of U.S. representatives from California are pushing a bill in Congress that would require states and cities to disclose the “true cost” of their pension plans, and whether they can pay those costs. California, of course, is home to raging debate over whether bankrupt cities like Stockton can continue to make pension obligation payments while defaulting on payments to other creditors. Paul Ryan (R-Wisconsin, former vice-presidential candidate) is also co-sponsoring the bill.
“The key to addressing this problem is shining a light on the financial health of pension systems and making clear that federal taxpayers will not pick up the bill for reckless mismanagement,” said Mr. Issa, whose district includes prosperous communities in San Diego County, which has had pension trouble, and Orange County, which declared bankruptcy in 1994 after its aggressive investments soured.
Orange County, of course, did not collapse because of pension agreements but because of overzealous entrepreneurial activities. And San Diego can be seen as many different governance failures, including rampant anti-tax sentiment, not just a pensions problem. The real debate, however, is over how governments present pension liabilities to potential investors:
The new bill would not use the tax exemption so much to narrow the federal deficit as to force municipalities into giving the world an unvarnished look at their pension plans. Until now, the accounting rules have permitted governments to factor in actuarial assumptions and smoothing techniques that greatly lowballed the benefits’ cost.
A similar bill failed in 2011, but it’s unclear what its chances are now. And it may matter less whether this bill passes than how ratings agencies calculate pension liabilities. The missing part of this equation, of course, is the cost of other liabilities: such as property tax exemptions to private companies, state corporate tax credits, and other liabilities that don’t show up as direct expenditures, and often escape being discussed as expenditures at all.
Wall Street is taking America’s biggest pension fund to court this week, for a long-awaited battle over who takes the losses when a city goes bust — workers and retirees, municipal bondholders, or both.
California is being closely watched as battles in San Bernardino and Stockton look to reshape how pensions are treated in municipal bankruptcies. Bondholders may be emboldened by Rhode Island’s successful attempt to prioritize bondholders over other creditors, thus placing risk more squarely on cities, their employees and retirees, and taxpayers throughout the state.
Vallejo becomes the model for post-bankruptcy urbanism – is this the future some people would like to see in American cities?:
VALLEJO, CALIF. — The first couple of years were ugly. After this working-class port city became the largest in America to declare bankruptcy in 2008, crime and prostitution surged as the police force was thinned by 40 percent. Firehouses were shuttered, and funding for libraries and senior centers was slashed. Foreclosures multiplied and home prices plummeted.
But then this city of 116,000 began to reinvent itself. It started using technology to fill personnel gaps, rallying residents to volunteer to provide public services and offering local voters the chance to decide how money would be spent — in return for an increase in the sales tax. For the first time in five years, the city expects to have enough money to do such things as fill potholes, clear weeds, trim trees and repair tennis courts.
The dire conditions, however, have made California a laboratory for how to run cities in an age of austerity.
Declaring bankruptcy used to be a last resort for cities, not only because it would cripple their ability to borrow for years to come but because of the blow to their reputation. But that attitude has started to change as more cities have found themselves facing fiscal catastrophe; bankruptcy offers an opportunity to start over with a clean slate.
Vallejo is in a markedly different situation. While it still faces some serious challenges — crime continues to be a problem, and the housing market remains depressed — the city’s finances are doing so well that a federal judge released it from bankruptcy in November.
“We’re seeing a lot of cities around us that are where we were five years ago,” Gomes said. “Some of those cities were laughing at us back then. It’s nice to be on the other side of it.”
While its general-fund budget of $69 million for 2012-13 is a far cry from the $85 million at its peak in the 1980s [for roughly the same number of people!], Vallejo is in much better financial shape than many other cities around the country.
Assistant City Manager Craig Whittom, who has worked in Vallejo since 2003, said the bankruptcy may have been the best thing to happen: “It was effective at helping us re-create ourselves and change the culture so that we could restart from a stronger financial footing.”
What is Vallejo really like now? It seems that the “clean slate” that makes bankruptcy appealing is not about future economic prosperity, but just about shrinking the role of government. I’d love to dig into the budgets from the 1980s and figure out what Vallejo’s residents have lost over the past decades. Sounds like a good excuse for a trip inland.
School administrators tell business leaders about budget cuts (Riverside, California), part of the Riverside Chamber of Commerce Business Education Partnership.
As California governor Jerry Brown’s efforts to put tax increases on the ballot winds its way through the state’s political process, school districts continue to struggle. Teachers, administrators, and parents are trying to bring attention to the effects a faltering school system has on local communities and the state.
Budget cuts to California schools are now to the point where they’re doing irreparable harm, Riverside Unified Superintendent Rick Miller told business and education leaders Tuesday. …
The state is now talking about cutting 20 days off the school year in 2013 if voters reject tax increases heading for the November ballot. Miller said families will get used to a shorter school year of 160 days.
“Over a few years, we’ll lose a year of instruction,” Miller said.
In addition to dramatic cuts in funding over the past years, school districts are affected by the state’s ability to write checks for the money it has budgeted:
The state is supposed to send monthly payments to school districts. Fine said the state has called school districts to say that payments won’t be coming until months later, or sometimes the next fiscal year, because the state doesn’t have the cash.
School funding has dropped to about 77 or 78 cents of each dollar received in 2007, and because of the deferrals, schools and community colleges are getting only about 57 cents, with the rest promised later, Fine said.
Alvord Unified School District Superintendent Nick Ferguson said he’s never seen budgets this bad in his 44 years in education.
Although it’s state policy at stake in these discussions, it is at the local level where parents and schools manage the fallout of these cuts. School districts (usually aligned with cities, sometimes counties) are left to raise funds to cover the gaps, which only heightens the dramatic inequalities between communities.