What the City, and Wareham Development, Can be Thankful For

November 28, 2012

Finance Committee Update: Sales Tax Asset, Cheaper Fire Services, and Potential 12-Year Tax Exemption for Wareham Development

The Finance Committee met on Monday, Nov. 19, just three days before Thanksgiving.  Are we feeling thankful?  Yes and no.

On the positive side, city revenue remains up over last year— the new Target store in town is proving to be a solid sales tax asset—and expenditures by most city departments are down.  Doug Robinson, a regular advisor to the city on its investments, reported that our monies are in safe instruments and remain substantially liquid.  No surprises here, and we don’t expect any given the city’s conservative investment philosophy.  We heard a report on the new contract arrangement with Alameda County for fire services, and aside from a modest increase, county-wide, in overtime costs, the new system looks like a winner for cost savings over all.   I should also add that Debra Auker has been named Director of Administrative Services for the city, and she continues her responsibilities for managing financial affairs.  The Finance Committee members find her reports and analyses clear.  She is also responsive to our queries and suggestions. I think I speak for the Committee when I say that puts her appointment in the plus column.

Wareham's proposed Transit Center in Emeryville

So what’s to worry about?  Topping the list is the continuing process of leaving our old Redevelopment Agency operations, making paybacks to the state, and liquidating redevelopment assets.  The city is meeting all the deadlines for negotiations with the state on these murky matters, but how they will come out is unclear.  Will we have to cough up more?  Will litigation be necessary?  No one knows for sure.  About the only positive spin I can put regarding this on-going drama is that the state, with passage of Prop. 30 and an improving economy, may be a bit more generous to former Redevelopment programs such as ours and squeeze less hard.  Time will tell.

The city is moving toward an unusual arrangement with Wareham Development, the designated developer of the Transit Center site, presently a capped brownfield zone suitable only for a surface parking lot.  Further clean-up is needed if anything is to be built there.  How to pay for such clean-up now that Redevelopment money is gone and clean-up is estimated to cost $1.5 to $1.7 million, maybe more?

Staff proposes a deferred tax scheme, in which the developer will do the clean-up and build on the site in exchange for a 12-year property tax exemption up to $3 million in value on what gets built.  City Manager Patrick O’keefe admits that this is an unusual arrangement, one the city would be reluctant to repeat.  But his reasoning—and so far three City Council members agree—is that the site will produce no revenue as a parking lot, nothing will get built there until clean-up is completed, so why not get things moving and look for profit 12 years down the road?  He also noted that no money will be coming out of the general fund to finance the clean-up, a possibility that concerned the Finance Committee.  A final contract on the Transit Center site will be coming to the City Council soon.  Keep an eye on the details, and don’t hesitate to weigh in if you have any worries about it.  The Finance Committee certainly will do both.

Bill Reuter is Resident Member and Chair of the Emeryville Finance Committee.

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One Response to What the City, and Wareham Development, Can be Thankful For

  1. Brian Donahue on November 29, 2012 at 2:37 am

    Everyone should realize that Warehame has no intention of cleaning up the site, they are going to remove the top 10 feet of contaminated soil and then re-cap it and then build the tower on top of the new cap. The Transit Center project is going to kick the toxic can down the road for another generation to deal with.
    The General Fund tax increment deal being bestowed upon Wareham is indeed a first for Emeryville but hearing Pat O’Keeffe say it won’t be repeated is like when the Rehnquist court gave the election to George W in Gore v Bush and then imply the law forbids any precedence flowing from the decision. They implied that the decision was only intended to award the presidency to Bush…nothing more. Here in Emeryville, this Wareham deal is only meant to award Wareham with the Transit Center, nothing more says O’Keeffe. What a sham!

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