|Going to the Well Too Often?
November 4, 2006
We were sorely disappointed that the
West County Times today chose to editorialize against Measure T,
particularly when they invoked the same lame arguments used by Chevron
in their blizzard of mailers.
Several weeks ago, John Marquez and I responded to the WCT’s invitation to meet with them to discuss Measure T, and we came away with the impression that they were receptive, which is now clearly not the case.
Despite the advice not to take on folks who buy ink by the barrel, I am compelled to challenge the Times’ rationale (or lack thereof)
First of all, they used the weary “landlords will pass the increase along to tenants” argument. Not only that, they chose Richmond’s largest apartment complex to make their point and aggregated the tax on over 600 units to come up with the big scary number of $57,000.
I don’t know about the Times editorial writer, but once upon a time, I took economics 101, where they taught us about the free market economy and the law of supply and demand. Prices for most things, including real estate, whether purchased or rented, are based on what people are willing to pay in a free market (with the possible exception of government contractors in Iraq and oil companies). As a business owner myself, I know that no matter how much I would like, I cannot simply pass my costs on to my clients. I suspect that the neither does the Times keep its advertising rates artificially low at a level that will simply cover its costs, nor would they hesitate to raise those rates if they could for no reason whatsoever. The proposition that landlords can simply raise rental rates because their internal costs have gone up would earn an “F” in economics 101.
But, for arguments sake, let’s say there is a unique economic model here in Richmond that exists nowhere else. It’s a cost-based model that works on the theory that whatever a vendor wants to charge, customers will have to pay it, and, in the case of residential rentals, all landlords calculate their rents as a direct function of their costs. Most residential rentals in Richmond are not 600-unit complexes. They are single-family homes, duplexes and triplexes. According to WCT economics, their rents should fall by up to $178 per unit per year. In fact, under Measure T, more rents would fall than rise. Wouldn’t that be a good thing?
Even if rents did rise at Bella Vista by $90 a year, that’s only 25 cents a day. Why didn’t the Times use that number instead of scaring people with $57,000? Anyway, is $90 so outlandish? Take a look at our neighbor El Cerrito, which charges $80 a year plus additional administrative fees (http://www.el-cerrito.org/services/pdf/feeschedule.pdf). Why is this okay for El Cerrito but not for Richmond?
Next, the Times punned about “only going to the well so many times,” as if Chevron was about to become a dry hole, sucked clean by Richmond’s onerous taxes. Since Prop 13, many cities, of necessity, have looked, figuratively speaking, for their own productive wells. San Pablo found its well at a casino that has become the city’s essential source of revenue. Other cities have found their wells in tourism or big box stores that vacuum sales taxes from well outside the cities’ borders. Our neighbor cities over the hill and across the Bay have become bedroom communities for many of the wealthiest people in the country and have done well with post-Prop 13 property taxes on new multi-million dollar homes. We in Richmond also have a well. Is it so bad that we, like an enterprising oil company, want to inject a little steam in it and see if we can increase the yield? Over the last several years, Chevron has become obsessed with trying to reduce the amount of taxes it pays to Richmond, first by challenging property tax appraisals and lately by changing the way it calculates its utility taxes (Yes, Virginia, that was Chevron’s choice, not Gayle McLaughlin’s). Is this a one-sided game where all the moves belong to Chevron?
Finally, the Times bought into the Chamber of Commerce line and complained “Measure T would simply infuse millions of dollars into the general fund, with no specific plan for how it would be spent - a formula, in our view, for disaster.” I don’t know how many times it has to repeated that a general tax, in this case a business license tax, cannot, by the California Constitution, be changed via this type of ballot measure if it is committed to a specific allocation.
Does Richmond have desperate needs for the additional revenue, or not? Even though the City Council cannot project allocations for the revenue, individual Council members can. With the second worse roads in the Bay Area, I would say we have a hole to fill. Have you looked at the parks where those famous tent cities have gone up? Did you notice the broken irrigation, the brown turf and the weeds? Or how about crime? Although we are, like every Bay Area city, challenged in hiring police officers from a small pool in a competitive market, we can invest in crime busting technology like video cameras in crime hotspots, electronic gunshot sensors, police substations, computer software and telecommunications systems for patrol cars.
Which brings up a final irony. While putting Richmond in its place, the Times editorialized in favor of tax increases in Lafayette, Orinda and Pinole.
Noting that “There is simply no arguing that the roads in Orinda need massive repair,” the Times thought it was a good idea for Orinda homeowners to pony up money for a $59 million bond issue for roads and other infrastructure. I guess roads are important to those rich folks in Orinda, but we in Richmond should shut up and appreciate what we have.
Or how about Lafayette, where the Times notes, “While crime is far from rampant in Lafayette, we think voters should vote yes on Measure P, which would add four police officers to its police force.” The Times believes Lafayette homeowners should cough up $900,000 a year, even though Lafayette probably hasn’t seen a murder in 50 years. But we understand that wealthy people have a right to be crime free just like anybody else. I was curious about crime in Lafayette, so I perused the Minutes from the monthly Lafayette Crime Prevention Committee from 2006. Although no crimes were discussed, the committee was certainly busy with its main project, holding an Art and Wine Festival and backing Measure P.
The Times even signed on to Pinole’s Measure S, because “Pinole would use the money to fund street repairs, add police to focus on gangs and violent crime, maintain a fire station and expand its disaster preparedness.”
But in Richmond, it’s a bad idea to tax corporate landlords and $100 billion multi-national corporations to provide the same benefits for our residents that the Times believes are essential to residents of Orinda, Lafayette and Pinole?
Don’t listen to the Times. Don’t listen to Chevron, the Council of Industries or the Chamber of Commerce. Do yourself and your neighbors a favor. Vote for Measure T.
Posted on Sat, Nov. 04, 2006
Editorials on local measures No on Measure T
ON TUESDAY, RICHMOND residents will vote on Measure T, a ballot measure that proposes to raise $8.5 million in new revenue by raising the city's business license tax on large landlords and manufacturers.
Measure T supporters say the city needs the money to pay for police and other vital public services. Yet, as has so often been stated, money is not a problem for the police department, which hasn't been able to spend the money it already has.
Richmond has recovered well from the financial debacle two years ago that led to the $35 million budget deficit. It has money in reserves, and its bond ratings have been upgraded. Why does the city need to raise taxes now?
Measure T would simply infuse millions of dollars into the general fund, with no specific plan for how it would be spent - a formula, in our view, for disaster.
Measure T would overhaul the 25-year-old business tax by changing the business rate of $250 per address to $90 per unit or less, depending upon the number of units owned.
That means Bella Vista, Richmond's largest apartment complex, would be required to pay $57,000, more than 40 times what it paid last year.
The upshot is that landlords who are able to get away with it will pass the increase on to tenants. We can't see why the City Council members supporting Measure T can't see that.
Forty-five percent of the housing in Richmond is rental housing, so a lot of people would be affected by this measure.
Measure T also would impose a tax on companies that use raw materials for manufacturing - $1,250 for every $1 million of raw material they use.
There are a half-dozen manufacturers in the city. But for all intents and purposes, this is a tax directed at Chevron, which brings in millions of barrels of oil to its Richmond refinery.
One can only go to the well, no pun intended, so many times. Richmond shouldn't be raising taxes unless there is a demonstrated need.
We urge residents to vote no on Measure T.
Vote yes on Measure Q
BY MANY STANDARDS, Orinda is one of the nicest communities in the East Bay -- but not when it comes to roads. There is simply no arguing that the roads in Orinda need massive repair.
It is such a given, in fact, that all five of the candidates running for the three seats on the City Council support Measure Q. So do we.
Measure Q is a $59.1 million bond on the ballot to repair the city's roads and drains. There is little doubt that a majority of Orinda voters will vote for the bond measure, but to pass, the measure must garner a two-thirds vote, and that likely will be a close call.
Orinda has long struggled to maintain its streets, because even though it's one of the most affluent communities around, the city's budget is small.
The city, which inherited the roads when it incorporated in 1985, receives only 7 cents on the dollar from property tax rolls and can muster only about $850,000 a year to fix all of its public roads.
The measure would provide $44.3 million to repair the most heavily used roads, such as Moraga Way and Miner Road. The rest of the money would go toward repairing drains under the streets being fixed and replacing old fire hydrants and water pipes.
Residents would pay about $34 per $100,000 of assessed home value for 30 years. The average homeowner would pay about $160 a year.
We think that is worth it for the improvements that would be brought. We urge Orinda voters to vote yes on Measure Q.
Yes on Measure P
WHILE CRIME IS FAR from rampant in Lafayette, we think voters should vote yes on Measure P, which would add four police officers to its police force.
Measure P is a parcel tax that will cost homeowners about $64 a year for the next five years. After five years, the tax would have to be reapproved. That sunset clause should put voters' minds to rest, because this tax is not forever.
The tax will need a two-thirds majority to pass, and would generate about $900,000 annually.
The city spends $3.9 million, or about 40 percent of its annual budget, on police. Officers sometimes take up to 30 minutes to respond to calls. Passing this measure would mean the evening and early morning shifts would be staffed by three officers instead of two, thus cutting down response time.
Lafayette's police force is smaller than other cities its size, such as Hercules, Pinole and El Cerrito. We believe this would be money well-spent, and voters in Lafayette should vote yes on Measure P.
Yes on Measure S
WE THINK RESIDENTS in Pinole should vote yes on Measure S, which would increase Pinole's sales tax by a half-cent on the dollar, to 8.75 percent, and pump an estimated $1.8 million a year into the city's general fund.
Pinole would use the money to fund street repairs, add police to focus on gangs and violent crime, maintain a fire station and expand its disaster preparedness.
All of the candidates for City Council favor Measure S. Some of them point out that most of the tax burden would fall on nonresidents. Pinole relies heavily on sales tax from Pinole Vista, a regional shopping mall along Interstate 80, for its general fund.
Opponents argue that the sales tax increase would discourage shoppers from coming to Pinole to shop. While a few people might not go to the mall, we are convinced that it would be only a few and that the increased sales-tax revenue would far offset any losses.
We urge Pinole voters to vote yes in Measure S.