REVISED—News Analysis: Committee Recommends 1 Cent Sales Tax Increase in Pacifica

BY LIONEL EMDE
RIPTIDE CORRESPONDENT

The Financing City Services Task Force met January 7 in what appeared to be the last of four meetings to determine what to recommend to City Council as a substitute for the Fire Assessment, which expires in July 2009. Current yearly income from this assessment is $1,038,000. The committee recommended a 1 cent sales tax increase to council, with possible consideration of a sunset clause at some future date. Timing of the vote for this tax increase is the June 2009 state ballot. It requires a simple majority to pass.

Consulting firm Fairbank, Maslin, Maullin & Associates conducted a phone poll designed to gauge community sentiment for the three alternatives: a sales tax increase, a utility user’s increase, or a new parcel tax. Budget for the consulting firm is a maximum of $30,000. The City of Pacifica started this fiscal year with a $4.6 million balance, information which was not communicated to the public in the poll. Answers from the polled public indicated a preference for a sales tax increase over the other two alternatives, and the committee rejected the utility user’s tax increase outright during the meeting. The committee’s recommendations are nonbinding on the council.

How much money raised?
City Manager Steve Rhodes estimated that a 1 cent sales tax increase would raise approximately $1,674,000, based on fiscal year 2007-2008 figures. Several audience members questioned the "stopgap" nature of such a tax increase, and called for more commercial development in Pacifica. Committee member Omar Saleh agreed, adding that the city needs to agree to development but that everyone should tell 10 friends to come to council meetings and hammer home this idea.

Undiscussed was the issue of employee salaries, benefits, and pensions, which the city is struggling to pay for, and which make up the vast majority of the city budget. Bernie Sifry talked about money raised by a sales tax increase being "earmarked" for purposes it is advertised for (fire, police, etc.), but Rhodes made clear several times that the general fund is where the funds would go, and there is no specificity of expenditures from there.

Was this process open?
Mark Stechbart raised the issue of lack of documentation of the committee’s work before this meeting. Staff revealed that no one had seen the final reports from the consultant until this meeting, and Stechbart asked who was responsible for circulating draft documents and then withdrawing them, despite there having been public meetings about them. This reporter had submitted a Public Records Act Request for any and all documents relating to the committee’s work previous to this meeting, and the answer relayed from the city manager was that there were no such documents or emails, despite these drafts' existence and use at public meetings.

What happens next?
The matter will be taken up at the first council meeting in February. Rhodes said that two city budgets will be prepared prior to the election—one showing cuts equivalent to lost revenue from the Fire Assessment and one showing projected added revenues if the sales tax measure passes. Rhodes estimated an election cost of $6 to $7 per voter to put the issue on the ballot, for an estimated total cost of between $144,000 and $168,000. Costs may go down if other issues appear on the ballot, but currently there are none. Uncertainty about the state’s budget picture complicates the matter, because a state sales tax increase also has been floated as a way to plug the huge state budget gap.

 

Comments

[Steve Sinai]

Lionel - I wasn't sure if you were responding to the outlet malls idea. But if so, an outlet mall might work in the Quarry because it would be a unique destination that will draw people here. It wouldn't depend on Pacificans. Maybe if we had more people coming here to shop in the outlet mall, the customer base for the other shops in Pacifica would increase, and the empty storefronts would decrease.

I agree that something like a Target or other big-box store wouldn't work for the reasons you mentioned. (Except maybe Fry's, which I would oppose, because I'd go broke if one was nearby.) We're too far off the beaten path, and there's plenty of competition just over the hill. That's one of the reasons I don't think we can confine ourselves to retail that mainly serves locals.

[Lance Fernork]

Lionel,
excellent points about retail leakage and empty storefronts. I think council will be considering a "fix" for all this in February. Double the sales tax that Pacifica collects for it's coffers. That's a sure fire remedy to kick start this towns economy.

[Lionel Emde]

There is a problem with demographics as well as access: The reason we don't have a Target, for example, is that we are bounded by one side on the ocean and that there aren't enough people here. Since retail "leakage" (charming term) is already 75% out of Pacifica, why would they come here?
Big box chains have precise rules governing placement, and Pacifica doesn't fit.
If commercial development was easy or even somewhat feasible, Peebles Corp. would have been in process already.
I heard a rumor, that if Tesco (Fresh & Easy) fails to go in here, we might get a Trader Joe's, but only in 3-5 years. Long time for that space to remain empty.
I think that unless we are able to bolster and fill the retail space that's already built, we won't even have the low level of revenue currently coming in.

[Dan Underhill]

"Do you think Pacifica has any control over it's own economy?"

Yes, But many of the "cures" look worse than the disease.

I didn't mean to imply that all entrepreneurs are right wingers, and I don't think I did so. I am an entrepreneur and am certainly not a right winger.

[Steve Sinai]

Dan - Running out of arguments? Most of the people I know who support more development in Pacifica are hardly right-wingers. Just like me, most are political moderates or liberals who probably voted for Obama. I'm sure you know Peebles was a major fund raiser for Obama. (I read he's hosting the "must-be-seen-at" gathering in Washington during the inauguration.)

Do you think Pacifica has any control over it's own economy?

Matt & Karen (& everyone else) - Petaluma Outlet Mall advertises scheduled bus trips to the mall that pick up at San Francisco Hotels. The ones in Vacaville and Gilroy will arrange a shuttle bus for groups of six or more. Pacifica's a lot closer to downtown SF than Petaluma.

[Dan Underhill]

"Having so many people travel to Pacifica to spend their money that it caused traffic jams would be a good problem to have."

I certainly agree with Scotty on that one.

[Dan Underhill]

"book...said the more conservative you were, the more you believed your fate was in your own hands. The more liberal you were, the more you thought your fate was in the hands of others."

Local liberals seem to be pretty much in charge of their fate when carpetbaggers come here trying to buy elections, and the local right wingers regularly attribute their lack of success to liberals. Maybe the author of that book got it exactly backwards.

[Matthew Levie]

Interesting. To Karen: I was thinking people would BART to Colma and pick up a bus there. A third of San Franciscans don't own a car. If we were really clever, we could find some kind of incentive for people not to drive--10% off if you show your bus transfer or something.

Or on weekends, there could be a direct bus to the City--many cities back East have "outlet tours" like that.

I admit most people would probably drive. But they'd come on weekends, so commute traffic wouldn't be affected. And I admit there might occasionally be a snarl on weekends, but in my (probably too optimistic) universe we'd then have money to deal with it.

[Steve Sinai]

It looks like one of my comments got lost in the email, but I can summarize here.

I always assumed outlet malls were built out in the boonies because land was cheap. After doing some web research on outlet malls, it looked like retail stores seemed less insistent that outlet malls be far away, but instead that outlet malls didn't sell anything unless it was out-of-fashion or out-of-season. While most outlet malls were outside of towns, there are also outlet malls in the middle of Las Vegas and Los Angeles (City of Commerce.)

For example, one story about an outlet mall being built just outside of Pittsburgh, PA. said that the mall couldn't sell anything that hadn't been on the shelves of retailers for less than 50-100 days.

It was also noted that outlet malls are places where retailers try to sell their unsold inventory to the public. That was another reason retailers didn't mind having outlet malls nearby.

[Steve Sinai]

"as much as I cringe when my Republican friends rail about how the problems of our country are not George Bush's fault, I'm equally mystified when we give local leaders a pass."

The comments about how Pacifica has no control over it's economy reminded me of a book I read a few years ago (I think it was "The 2% Solution") that talked about the differences between liberals and conservatives. It said the more conservative you were, the more you believed your fate was in your own hands. The more liberal you were, the more you thought your fate was in the hands of others.

I'm sure the reality is between the two extremes. There's no value judgment here, but since Pacifica is a pretty liberal town, it's interesting to see the comments about us having no control over our economy confirm what the book said. I consider myself to be slightly liberal, which fits my own belief that while we don't have full control over our economic destiny, we at least have some control.

*************************

"One question I have, though, is that the reason outlet malls are generally located so far away from urban centers is that the manufacturers don't want the outlet stores competing with their own retail stores. Is Pacifica actually too close for something like this?"

Good question...which means I never thought about it. I always assumed outlet malls were built out in the boonies because land was cheap. I was googling around for about 30 minutes on this, and I found outlet malls were mostly located 15 minutes to an hour from city centers. In Las Vegas, they have big outlet malls right by the casinos.

I came across a story about an outlet mall being built near Pittsburgh, PA., where they discussed the issue of outlet malls taking sales away from retailers. It looks like the retailers are less concerned about distance, and more concerned about making sure that the merchandise sold in outlet stores is out-of-date and out-of-fashion. It mentioned that the goods had to be on the retailers shelves for anywhere from 50-100 days before it could be sold in outlet stores. Plus, outlet malls were places where retailers could get rid of their unsold inventory, so the retailers weren't that opposed to them.

[Scotty]

Having so many people travel to Pacifica to spend their money that it caused traffic jams would be a good problem to have.

[Steve Sinai]

"I also wonder how a developer could persuade the Coastal Commission to accept self storage facilities as 'visitor serving'."

It's not like I want self storage units in the Quarry, but they exist near the beach on Palmetto, so I don't think there's anything blocking self-storage units near the beach. I also think the term "visitor serving" is a Pacifica desire, and not a Coastal Commission requirement. The biodiesel plant made it past the Coastal Commission, and I wouldn't describe it as "visitor serving."

I'm perfectly happy to hear anyone's ideas for businesses that would work in Pacifica. The predictable knee-jerk "no" responses to anything that's proposed get very tiresome, and don't do anything to solve the city's financial problems.

Retail that serves primarily Pacificans would be great, but I can't think of much that would work in that respect. Again, any specific ideas about what would work, beyond vague statements like "we need more retail that would serve locals," would be appreciated.

I'm noticing this schizophrenic aspect toward "visitor serving" businesses in town. I keep hearing that we should make use of Pacifica's natural attractions to attract visitors here, which seems to be the city's official position, but then people complain about the fact that people have to drive here. You can't have it both ways. If you want businesses that attract visitors, they have to get here somehow.

I think attracting visitors here through the availability of something unique in the area, be it Outlet Malls, a Casino on the beach, a 5- or 6-star hotel on the beach, or something else, is the way to go.

[Karen Rosenstein]

Ah, the outlet idea! I also post regularly on the SF travel forum that Steve refers to and yes many visitors are discouraged about the distance to the outlet malls.

Yes, outlet malls are outside of metro regions for many reasons. One of them is distance from the regular stores to avoid competition. Another is the traffic issue. As one of the few people here who has been to Gilroy Outlets and has seen the traffic jams that ensue on "Black Friday"... That mess makes morning rush on Hwy One to be a breeze!

Better public transit might make the outlet malls possible. But where would people park to pick up transit? Over the hill at Serramonte or ?? If that was the case, then why come here? Having a car to dump purchases in thruout the day is a key component to successful outlet shopping. So, when I figured the above out, I gave up my dream of having an outlet mall oh so close.

I also wonder how a developer could persuade the Coastal Commission to accept self storage facilities as "visitor serving".

And as we have been seeing on the news and in the papers the folly of being dependent on just retail for a town's business. Pacifica needs to have a variety of types of businesses in town that locals as well as visitors will support.

[Lionel Emde]

Unfortunately, we have lots of time to debate what development may or may not be possible, because we've identified that there is no quick fix.
But the short term financial crisis rapidly approaches, and this imperfect proposal of a sales tax increase may be necessary.
Yesterday morning (Sat.) the Obama people issued a 14-page report on the proposed shape of the stimulus package, and one item that caught my attention was a proposed infusion of cash to state and local governments to preserve vital services. Whether that goes beyond police and fire wasn't said.

[Jeffrey Simons]

"Our situation was not created by and won't be solved by this or any other city council. Our situation is a pretty good one if you like hills and ocean. It is less good if you were hoping for an upscale community or wanted to finance your early retirement by selling your Pacifica home."

I'll nominate that for the best summary of Pacifica politics/finance, ever.

****************

why? the first sentence ignores a lot of our history in the last 8-10 years.

first of all this city council has created an additional $110 million in debt service through the creation of and refinancing of the Sewer debt (did you know they authorized a bond that now pays over $500,000 per year in just interest?) and the C.O.P. bonds, which were refinanced to pull out $2 million that has sat in a Capital Improvement Fund for 4 years, accumulating interest, to "renovate" the old waste water treatment plant. Despite knowing this cost was unreasonably low and unrealistic.

This city council transfered $700,000 per year for several years from the Sewer Enterprise into the General Fund under a legal but fiscally irresponsible payment in lieu of property taxes, and this city council has raised the sewer rates over 200% to cover this debt.

This city council has strung along, turned away, or mishandled at least 5 developers (Marchetti/Sochin, Kiwi, Barry Swenson, Peebles, Skyfield) interested in developing the site of the Old Waste Water Treatment plant, which could have been a redevelopment district generating an 85%-90% return on the tax dollar. for what? the mistaken notion that it could be renovated for $2 million dollars and turned into a non-revenue producing City Hall, which they were told repeatedly was not fiscally sound?

This City Council saw a fire assessment pushed through, and instead of using the money to augment and improve the fire department, they closed down a fire station and cut 3 firemen.

This City Council eliminated 40 full time jobs from the city payroll in the last 4 years. During a housing boom and commercial upswing, we made the cuts other cities are only NOW making due to the global economic meltdown.

Todd Bray is exactly right about how much of our taxes go to the state and the county, and the only other mechanism to fight it was the creation of the redevelopment agencies, where a city gets 85% - 90% of those taxes. and this city council saw about 15 sites taken off the redevelopment table due to inaction. and we've failed to develop our most critical redevelopment district because of "355 Houses" or "traffic" or other specious arguments.

as much as I cringe when my Republican friends rail about how the problems of our country are not George Bush's fault, I'm equally mystified when we give local leaders a pass. Why even have a city council if they can't make any relevant decisions to secure our future solvency? If nothing is ever their fault, or they have such little control over their decisions as I have heard them say whenever something goes wrong, what do they actually do?

We can have the open space and the pretty hills AND the housing and commercial we need to flourish. We don't have to be Sausalito or Carmel, but we can do better than what we have. Ignoring history and transferring responsibility from the people driving the bus to the passengers seems a little Rovian.

[Matthew Levie]

I actually think the outlet mall suggestion is really intriguing. It's something people can't get in Colma, it would provide a rationale for increased transit service that Pacificans could benefit from as well (a third of San Franciscans, and a lot of tourists, don't have a car) and it's the only suggestion I've heard so far that might drag people over the hill.

One question I have, though, is that the reason outlet malls are generally located so far away from urban centers is that the manufacturers don't want the outlet stores competing with their own retail stores. Is Pacifica actually too close for something like this?

[Steve Sinai]

"Builders probably also notice that this is the spot where the San Andreas Fault meets the Pacific ocean."

If this were the case, Daly City and SSF would be in the same situation as we're in. Skyline Boulevard is basically built on top of the fault-line. The fault-line then cuts through heavily developed portions of Daly City. So I'm afraid I don't buy this. There's plenty of development on the Hayward Fault, too.

Builders don't come here because they've seen what's happened to other builders who tried to come here.

****************************

"Let's think quality instead of quantity. What about a nature education/adventure enterprise centered in the quarry, partnering with Don Peebles or whoever buys him out? "

I think this is fine, John, but I've been hearing people advocate for this type of thing since I first moved here in '83, and have yet to see tangible results. The Ocean Discovery Center seemed to be an attempt at this type of enterprise until people ultimately realized it would have drained, rather than added to, city revenues. If people can come up with ideas for economic development that leverage Pacifica's natural advantages and environmental attitudes, I'm all for it, but given our history, I don't think we should count on it.

Other than surf shops, I can't think of any businesses in town that really make use of Pacifica's unique characteristics. Bait shops maybe, but I don't think they bring in much tax revenue.

I agree with Matt that people are deluding themselves if they think Pacifica is going to be thought of as another Carmel or Sausalito. I still like Peebles' idea for a distinctive and unique hotel in the Quarry, but I suspect he's lost interest and fear he'll ultimately sell to a run-of-the-mill developer who puts self-storage units and a dime-a-dozen strip mall there.

An idea that always intrigued me was Barbara Carr's idea of building an Outlet Mall in the Quarry. There's a San Francisco travel forum I take part in a lot, and people are always asking about Outlet Malls near San Francisco. The closest ones are in Petaluma, Vacaville and Gilroy, and visitors seem very disappointed to find out how far they have to go to shop at one. Of course, if this was seriously proposed, we'd immediately hear complaints about how the cars coming here would contribute to global warming; how frogs would be stepped on; and how our roads would becoming parking lots...which demonstrates my point about builders not wasting their time coming here.

[Frank Siciliano]

"Our situation was not created by and won't be solved by this or any other city council. Our situation is a pretty good one if you like hills and ocean. It is less good if you were hoping for an upscale community or wanted to finance your early retirement by selling your Pacifica home."

I'll nominate that for the best summary of Pacifica politics/finance, ever.

[Dan Underhill]

The Ocean Discovery Center enthusiasts are still in town. That strikes me as a way to capitalize on the unique qualities of this place.

[JOHN MAYBURY]

Let's think quality instead of quantity. What about a nature education/adventure enterprise centered in the quarry, partnering with Don Peebles or whoever buys him out? Could something like this generate serious revenue from classes, tours, experiences, races, marathons, festivals, outdoor/sports supplies and equipment, focusing on our ocean, beaches, dunes, parks, creeks, wetlands, and ridge trails? It might take soft money to get it started, but this could turn into cold, hard cash for the city. Am I dreaming or is this a real possibility?

[Dan Underhill]

Reg: "Nobody comes here with plans anymore"

I think nobody is going anywhere with plans right now.
There is also very little buildable land remaining unless we want to make our highly unstable hills available and wait to see how soon the houses slide down. Builders probably also notice that this is the spot where the San Andreas Fault meets the Pacific ocean. Our situation was not created by and won't be solved by this or any other city council. Our situation is a pretty good one if you like hills and ocean. It is less good if you were hoping for an upscale community or wanted to finance your early retirement by selling your Pacifica home. It is what it is and, for the most part, I like it.

[todd bray]

We as a municipality along with every other municipality in California generate a large amount of revenue but the state and county keep 89% of it. No matter how much development you want it will only return 11% of the tax revenues it generates.

If you want to be proactive about increasing Pacifica's revenues find other like minded folks in the state and start an initiative to increase our property and sales tax shares to 15% or more even. Anything else is wasted energy. Especially if you are laying this at the feet of our local government which has zero control of how taxes are re-distributed.

By taxing ourselves we insure we get back 100% of that revenue. If you are really serious about increasing local revenues the only way to do that under the current imbalance is a special tax on ourselves that is devoted to just us.

If you are angry, be angry at the right target. Our local government is the wrong place for it.

[Matthew Levie]

I'm not an expert, but I was wondering what kind of commercial development people would like to see.

I ask this because commercial development only works for the city if people actually spend money there, and it seems to me that the only people who will be spending money in any development in Pacifica are the people who live here.

I know some people think that Pacifica is somehow going to become a tourist destination and attract people from all over the Bay Area to shop here, but I'm pretty skeptical. What could we offer them that, say, Half Moon Bay on the one hand and Colma on the other don't?

So it would be best to create businesses that supply things that people are currently going over the hill for. What do you think those things are?

[Steve Sinai]

"There's not much the Council can do about stalled projects and empty storefronts. They're the result of the collapse of the capital markets and the national economy. Nobody can come up with a plan to grow the local economy when the nation's economy is failing. Sorry, Virginia, there is no Santa Claus."

When the fire assessment tax was passed, the economy wasn't struggling. We had plenty of opportunity to take steps to improve the city's economy, but the opportunity was squandered. The lack of effort in developing an economy has been a long-term problem. The current national financial mess isn't the issue.

"And the solution is NOT 'If the Council wants more money, they should have approved more development, such as at the eye sore gravel pit.' The Council has ultimately approved all development plans that have come before them. (No project plan for the quarry was submitted to the city.) The Council can't approve more development if they don't have development plans to approve. If they had 'em, they'd probably approve 'em."

Nobody comes here with plans anymore because they know the attitude of the city toward development ranges from hostile at the worst, to ambivalent at the best. Even Julie (or maybe Sue) recognized at a city council meeting that nobody's coming here with development plans. Developers have learned that if you want to build something in Pacifica, it will take years, so why bother? Every other town is around here is able to generate some level of economic growth. What's the matter with Pacifica?

[Steve Sinai]

Peter - I want to make sure that the city doesn't become permanently dependent on this tax, and has a plan to alleviate the need for it within the next few years. The city promised the fire assessment tax would only be needed for five years, and then did nothing to make good on that promise. The city has spent far too much time and money on non-revenue producing projects like trail building and restoration, consultants for projects that never go anywhere, carelessly stepping into lawsuits, etc. - rather than building an economy that would have made temporary tax assessments genuinely temporary.

I'd like to see an economic development plan with some specifics. Not some meaningless pablum like “Enhance economic development in a manner which emphasizes sustainable urban development, increased public sector revenue, increased investment in the community, and positively impacts the physical environment and quality of life.” That came out of the strategic plan, and says so much that it says nothing. And then every year they should be required to report to the city what they have accomplished in the way of meeting those goals, with a report that's printed in the Tribune, presented and discussed at a city council meeting, and easily available to those who want to see it. Hiding it away deep in the city's website, or only making one copy that nobody can find won't cut it.

I'd like to see someone in the city responsible for economic development. From what I can tell, the local Chamber of Commerce is useless. Also, while we have committees in town that are opposed to development (e.g., open space committee,) we don't have committees that try to promote development. (The city turned WSPAC into a farce.) I'd like to see something like an economic development committee that has people that are genuinely interested in finding ways to increase economic development in town, rather than a committee run by people from groups like Pacificans for Sustainable Development, who, for the most part, are against economic development. Apparently, that's what happened the last time the city tried to create an economic development committee, and was why it went nowhere. (Although given the complaints by other committees that city council doesn't listen to them might make this suggestion meaningless.)

It would be interesting to hear the city council's vision of how they plan to use the Quarry to produce revenue. They say that want it developed to a certain extent, but I'm not seeing any action on their part to make it happen. In fact, I get the feeling that they're working behind the scenes to keep it from happening.

When someone asks for my money, I want to know what they're going to do with it, and I want to make sure they're not going to keep coming back asking for more handouts. I voted for the fire assessment last time, but feel like I was burnt (pun semi-intended) by the city in how they used the money. It's a case of "fool me once..."

I'm not against paying more taxes if I think they're spent well. What bugs me is that the city doesn't do anything to make its economy more self-sufficient. I feel that giving the city extra money is like throwing money down the drain. Obama plans to try to stimulate the economy at the national level, so why can't we do something to build the economy at the local level?