Thursday, July 24, 2008

Financial Analysis Released - "No Worries, Mate!"

The AlamoInc website has put up a copy of the anticipated "Comprehensive Financial Analysis" contracted by LAFCO, and paid for by supporters. It is the official, non-partisan, claimed to be objective report.

No surprise that it thinks the original proposal is fiscally viable. Let's look at some of what it says.

The 106 page report by Winzler and Kelly, of Anaheim, looks at two slightly different boundaries for the proposed town, one as submitted, and another including parts of currently unincorporated Tice Valley; also at two different incorporation dates, June 30 and July 1 2009, which affect some tax deadlines. Including the Tice Valley alternative was LAFCO's idea.

The report concludes that the "no Tice Valley" proposal is feasible with either date, with typical budget surpluses of about $500,000 a year (page 59). It also concludes neither of the proposals including Tice Valley works without "revenue enhancements" (raising taxes somewhere), with a shortfall of $500,000 in year 10 (page 84).

Notably, under either proposal, the budget balance starts OK, and deteriorates over time. Under the baseline proposal, it never turns to deficit, but the surplus bottoms out around $322,000 in years 9 and 10.

All the flavors of proposal are for a "contract city", where services like Police are contracted out to, for example, the Sheriff or the Walnut Creek Police instead of having departments created that are solely for the town. This results in some organizational economies.

The report does not anticipate much further development, though there may be improvement.

The Alamo community is essentially a built out community with limited ongoing residential development, and little to no new retail or commercial development. The only development activity occurring within the community is confined to lot splits for 2nd residential units, remodels, expansions, and replacements of existing residential units. Some infill commercial has occurred recently. It is anticipated that this type of upgrading of the residential component of the community will continue over time, however, no major new residential or commercial development will occur as there is little remaining available land within the proposed incorporation boundaries. Projected new residential development is anticipated in the CFA to average approximately 25 units annually
page 13

I think this appropriately understates the prospects of commercial redevelopment/improvement, because the town is likely to be resistant to major changes. That is, no major Mall to replace Alamo Plaza, or a Ritz-Carlton to replace Alamo Hay and Grain.

Capital Improvements
The report does not anticipate major capital projects that are not funded with new revenue measures. It assumes repairs will be done on an as-needed, as-funds-available basis, consistent with current practice under the county. There is existing revenue in various tax measures for road repairs (Measures C and J).

Revenue Neutrality to the County
Under law, the split is to be "revenue neutral" to the County, though the term is ill-defined. The proposal includes "mitigation" to the tune of perhaps $3 million (page 44).

No New Taxes
Under law, the incorporation is to be done with no new taxes, and the report assumes that for planning purposes. The Prop 13 appropriations limits for the proposal is about $8.6 million, and including Tice Valley would be about $10 million.

City Staffing
Under the "contract city" structure, the report anticipates a city staff of ten "full time equivalents".

One of the big differences between the proposals is that policing the base proposal would cost about $2.7 million a year, while including Tice Valley would cost $3.3 million.

The new City of Alamo looks better off financially than Clayton and Moraga, about the same as Lafayette, not as good as Orinda, and considerably worse than San Anselmo and American Canyon, on the basis of costs/revenue.

Then there are 50 pages of tables and numbers to stare at.

We Think...

Fact-based opposition will argue the numbers in a policy-wonk way. Emotional opposition will seize on some flash-point issue and suggest that should be a reason to leave the status-quo.

For example, one might now flame fears about various energy costs and general inflation, and say those are budget busters that will cripple the city. Left unaddressed with that argument is how things would be better with the County under the same pressures. With increased energy costs, the status-quo doesn't remain the same for either organizational alternative.

The bottom line to us seems to be, down the road, is Alamo better off with decisions being made by the County staff and the County Supervisors, or locally elected representation?

As for the boundary issue, I don't care much about Tice Valley -- but if I'm redrawing a map, maybe I go to war with Danville over what city really should have the Alamo Cemetary. It just seems wrong for it to be in the other town, don't you think?


Steve said...

Nice summary. The police seems to be the largest expense. For $2.7 million, I'd hope we'd get more than the 1-2 police cars we currently have driving around Alamo!

Anonymous said...

The "Police Cars" driving around Alamo are County Sheriff's cars and they cover an area of 140 square miles - they are not assigned strictly to Alamo.


and look at the "Valley Jurisdiction" link.