Berkeley’s 2016 Infrastructure Bond: A Cautionary Tail

Has Berkeley Bitten Off More than It Can Manage?

In November 2016, Berkley voters approved bond Measure T1. The funding from the $100 million general obligation bond was to be used for improvements to the City’s “sidewalks, storm drains, streets, parks, community centers, and other key infrastructure and facilities.”

Since Measure T1’s approval improvements in infrastructure have been scarce at best. According to a May 2022 city audit, the unfunded needs of sidewalks, storm drains, streets, and other key infrastructure have more than doubled since the measure’s approval.

Despite the clear need for repairs, $20 million has still not been issued.  This 6-year delay has no doubt contributed to the further decline in Berkeley’s infrastructure, especially streets. The City plans to issue this remaining authorized amount ($20 million) between FY 2024 and FY 2026.

The Measure T1 story is troubling for several reasons:

• The Problem Always Grows: Despite the largest onetime investment in the city’s history our infrastructure gets worse not better.
• Our Maintenance System is Overwhelmed: In 2018, no streets were paved at all causing further declines in infrastructure.
• Politics Can Eclipse Process: After the community charged with prioritizing T1 projects, identified the most critical needs, the city manager decided at the 11th hour direct fund toward the remodeling of Mental Health Department buildings in place of streets, sidewalks and parks.

This experience raises a fundamental question of whether we have bitten off more than we can manage? If we spent $100 million only to see the problem get significantly worse, then perhaps it is time to consider whether less is more. Currently, city council is doing the opposite as they want to commit residents to new projects including a 1,400-foot recreational pier with initial cost estimates of $122 million.

Are we trying to “boil the infrastructure ocean;” could less be more? Numerous municipalities have developed infrastructure with creative partnerships and financing.  One approach is for cities to offer long-term leases on sites needing rehabilitation. Sites can be developed for a publicly beneficial purpose with outside investment while the actual property remains in public domain.

Is $67,886 “de minimus” to Your Family?

 

Council Member Declares that $67k per Family is Insignificant

Websters Dictionary defines “de minimus” as being so minor as to merit disregard. On June 21, during a special session council member Kate Harrison declared the additional $500+ increase in city tax assessment required to support new borrowing was a “de minimus” or insignificant amount for a family to pay. She suggested the proposed bond repayments were like the “de minimus" interest paid on a home mortgage (see video below).

Harrison was referring to $500 per year for approximately 30 years that city council is proposing to charge residents for just one of two proposed bond measures. Imagine, for example, that you invested the same $500 for 30 years in a retirement account. After 30 years of payments, your investment would be $67,886. This figure assumes the same return rate as the city’s pension fund. Also, keep in mind that $500 in annual tax is the average amount meaning about half the city’s residents will pay even more.

City council’s “de minimus” claim exceeds the amount of money most families are trying to save for college. Can you afford this diversion from your children’s future education? The tradeoffs City Council is creating represents another challenge for Berkeley families coping with the high cost of living.

The average per household opportunity cost of just one of the city council’s proposed new bond measures is a “de minimus” $67,886 

Don’t take our word for it, see the complete video here

City Council Wants Residents OK $650 Million in New Spending

Mortgage Holders Will Be Asked to Foot the Bill

Berkeley City Council wants residents to authorize at least $650 million in new spending. $300 million would be used for affordable housing and other, yet to be identified, infrastructure. Up to $500 million could be raised by a parcel tax. This new $300 million bond comes on the heels of the $135 million Bond Measure O in 2018 that added $270 million in debt. Property tax rates have increased by approximately 20% since 2016 and debt payments for Measure O have not yet started to kick in. 

Mortgage holders are already challenged by the increasingly high cost living and would face continuous increase in property taxes to finance the city's new spending. In the case of subsidized housing, City Council is asking for hundreds of millions more despite existing programs that guarantee tens of million each year. WOMBerkeley believes this is a “bond too far” because it stretches our finances for projects that already have funding.

City Council has not specified what the infrastructure programs would be but discussions have ranged from renovating city buildings in the downtown to building a recreational pier in the marina.

 A1,480 feet long and 22 foot wide recreational pier is among the projects championed by city council. Initial cost estimate $122 million.