Vanguard Analysis: The Road to Fiscal Sanity… If Only It Were That Easy

Fiscal-CliffThe city, in the next month and a half leading up to the June election and then for the next six months, should do nothing but read letters to the editor, and then identify misconceptions within in the public and address them. Frankly, this process should have started a year ago.

They clearly need to educate the public on how municipal financing works. It is not that the city has done everything they need to do, and for years they have dug themselves a hole that the council only in the last two or three years has really begun dig themselves out of.

So we get this op-ed in the local paper, dripping with sarcasm. The author writes, “I do get annoyed at being lectured to by a bunch of pinheads.” And yet, he proceeds to show deep misunderstandings about how municipal finances could work.

He writes, “I so enjoy our civic leaders’ use of that quaint term — ‘structural deficit’ — like it is anything but fiscal mismanagement at its core. You arrive at such a dire crisis by spending more than you take in and you keep doing it year after year after year.”

There are different definitions to a structural deficit, but it is often used to describe a situation where the structure of the agencies’ revenues and expenditures creates the deficit rather than simply a reduction in revenue.

In the city’s case, it is not correct to suggest that the city spent more than it took in year after year – it can’t actually do that. In this case, the biggest two problems are that the city promised more to employees in the past than it funded for those benefits and, second, that for several years the city ignored deferred maintenance and those bills have come through as well.

The author is correct that this is fiscal mismanagement but does not appear to understand the mechanisms that led to the problem.

The writer continues, “They then pretend to be concerned by nibbling at the edges — firing a few low-level bureaucrat bottom-feeders (who probably did most of the real work anyway) or cutting back on services just to give us a hint of how terrible things can get if we don’t fall in line. (I do get annoyed at being lectured to by a bunch of pinheads.)”

This is not exactly what has happened either. The city in response to the fiscal crisis in 2008 did cut employees – not necessarily low level employees – through attrition. As we have discussed, this is certainly not the ideal approach and we are to some extent paying for that now.

We will have to cut back services in the future largely because employee costs are the bulk of the city’s budget, and cutting staff means cutting services.

The author is correct that the city employees, or many of them, have probably overly-generous compensation plans, but he probably underestimates just how generous because he doesn’t look at pensions and OPEB.

He then suggests that city staff has come up with a plan to save their own jobs, but taking “more of our money (in the form of increased taxes) to give to those who are causing most of the deficit problem in the first place. Brilliant! Why didn’t I think of that? There apparently are no other remedies.”

As our observant readers know that is not the full picture. The city is planning to increase taxes as a short-term remedy; if the voters do not agree, however, they will make large cuts – and let’s not kid ourselves, those cuts will impact city services. Those are the only two realistic short-term solutions. Longer term, they are looking at economic development.

“But let’s not get fooled by them telling us they will finally be taking care of our long-ignored infrastructure. Most of the tax increases will be to continue to pay for pensions and benefits, the level of which most of us do not currently enjoy.”

The sales tax does largely address the immediate needs which go to pay for the increase costs of pensions and retirement health care.

He continues, “I just had to laugh at a recent ‘threat’ in a news article that parks maintenance will be virtually a thing of the past if they don’t get their way on a tax increase. Yeah, right. Like we’ve been enjoying a lofty level of service all along.”

The November parcel tax would address roads and parks. It’s likely without this money, we will see parks have to be closed, along with green belts and other services.

It is here that that he strikes on his plan.

He writes, “Well, I have a better solution to our ‘structural deficit.’ I propose we declare bankruptcy and void all our current contracts, union and otherwise.” He then proposes to re-advertise the current positions with a based reduction.

He adds, “Furthermore, overtime (where one employee made over $81,000) will not be tolerated except under extreme conditions, allowing less than 10 percent of the current $1.5 million expenditure.”

So he believes that when a city offers too high a contract to employees, they can remedy that error by simply declaring bankruptcy? It doesn’t work that way, and, even in Vallejo, they are finding that road more difficult than probably some would like to believe.

You have to actually have a basis for doing that, and under AB 506 it is much more difficult. That law, passed in 2012, makes filing for bankruptcy protection “a last resort,” one that is “instituted only after other reasonable efforts have been made to avoid a bankruptcy filing or otherwise appropriately plan for it.”

Under that law, there is a process for the city and its “creditors” to engage in “reasonable efforts” to resolve their disputes outside of bankruptcy or, if the disputes cannot be resolved, to begin negotiations that will continue in the bankruptcy action.

The first problem we face with declaring bankruptcy is that we are not bankrupt. Yes, we have a bad structural deficit. Yes, we have promised too much to our employees, particularly with regard to retirement health care and salaries.

But we have also taken many steps to remedy this problem by restructuring retiree health, increasing the employee portion of their pensions, and reductions in cafeteria cash outs. The area of salaries was probably not cut as much as we should have, but we are now mid-contract and, unlike the author, we cannot simply void them when we feel like it.

The first thing the city would have to do if it wanted not to raise taxes would be to cut employees. We saw the cut list last week; it will be painful and ugly, city services would be slashed, but we would keep public safety relatively intact and, because of that, we are nowhere near bankruptcy.

A city can declare bankruptcy when, due to the cost of its labor force, it can no longer provide basic city services such as police and fire protection and ordinary maintenance of its roads and parks. We are nowhere near there.

The roads are bad, costs are ugly, but our roads according to city staff can continue to deteriorate another five to seven years before they reach the point where they could be a reason we declare bankruptcy.

We can survive with really bad roads, but if we continue to wait to fund them, we will never catch up and most of the town would look like Olive Drive.

Bottom line here, the plan put forward by the writer could not possibly save what he thinks it will.

There are two short-term ways to go: raise taxes or cut services. The residents of Davis twice in the next eight months will decide what kind of community they want to live in.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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59 Comments

  1. Tia Will

    David

    I thank you for this piece. You have not only provided an in depth view of why there is not a simple solution to our current fiscal problems, but done so without rancor or dismissiveness.

    I feel that this is the timely manifestation of what I was getting at when I wrote my Easter Sunday piece.
    Anger and frustration may serve as motivators to move an individual towards constructive action to effect change.
    However, unless they give way to a calm, analytic view of the problem free of disdain for those who would address the problem differently, these negative emotions and the name calling they engender will never serve to move us towards constructive solutions.

    While there are clearly areas where individuals will disagree with your interpretation and conclusions, this was a nice piece of writing for which you have my appreciation.

  2. DT Businessman

    Putting on my Easter Sunday best, I respectfully disagree. The thrust of the op ed in the local paper is correct even if some of the details are off. The city for years has spent more than the income it generates. It has masked the deficit by not properly maintaining its assets year after year. The city for many years has failed to properly inform the voters as to the extent of the crisis. Even now, the CC loads up meeting agendas with secondary and tertiary items with individual CC members then complaining that priority items aren’t being given adequate attention (no sense of irony there!). All the while CC meetings are dominated by political theater rather than a laser focus on increasing revenue, containing costs, and fully informing the voters of the full extent of the crisis and providing a complete range of solutions. I can no longer listen to CC members pronounce from the dais, “This is the Davis way.” It might be their way, but it’s not my way.

    And finally, there is little doubt that the city is sliding toward fiscal insolvency. That might not be quite the same as municipal bankruptcy, but it’s unacceptable nevertheless.

    -Michael Bisch

    1. David Greenwald

      “even if some most of the details are off.”

      Most of the details were off and the details matter particularly when his main point was that we could save $22 million by following his prescription.

      1. DT Businessman

        I disagree, David. I think the writer’s main point is the city is off the rails, is not fully acknowledging it’s off the rails, and is not doing what it needs to do to get back on track. Instead of focusing on the main point, where you likely are in agreement, you’re quibbling about details.

        -Michael Bisch

        1. David Greenwald

          1. You make it seem like there were minor flaws in his piece, there were major flaws.
          2. His piece insults current councilmembers who have worked hard to start fixing the problem.
          3. His piece drastically oversimplifies how difficult the problems were.
          4. His piece demonstrates a fundamental lack of understanding of financing.
          5. His piece needed someone who knew the issues to smooth it.
          6. His piece is a good example however for the council and staff as to where they need to focus their efforts.

          I agree with one of his main points, but the rest of his piece was very poorly done and is likely in this town to push people in the wrong direction.

          1. Barack Palin

            “I agree with one of his main points, but the rest of his piece was very poorly done and is likely in this town to push people in the wrong direction.”

            And what is that wrong direction David? Is it the direction you don’t prefer?

          2. David Greenwald

            In my opinion, the author is likely to push people away from his position.

            1. He’s too crass/ sarcastic/ angry
            2. His remedy is impossible
            3. His tone will put people off

            Therefore, in a town like Davis, people are likely to side against him on the core issue of city reforms and believe either (A) we don’t have that bad a problem or (B) taxes will solve it all. I disagree with both positions and think therefore that this pushes us in the wrong direction.

          3. hpierce

            It’s only his view… I see little credibility/cachet to the author… don’t think it pushes us anywhere.

  3. Tia Will

    DT

    “a laser focus on increasing revenue, containing costs, and fully informing the voters of the full extent of the crisis and providing a complete range of solutions.”

    This is the kind of narrow focus that I believe is likely to get us suboptimal results. I am not for a moment under-estimating the importance of adequately addressing our fiscal problems. However, when anyone starts talking about “laser focus” what occurs to me is that they may not fully appreciate how various different aspects of our community well being, environmental, social, safety, health and wellness and fiscal are all interrelated and none can be ignored without peril to the entire entity.

    In medical terms, this would be like saying we have a problem with the heart ( an organ certainly necessary to the survival of the organism ) therefore we will “laser focus” on the heart and just forget about the brain for now, completely ignoring the fact that the brain is also essential for the well being of the whole. What I see as needed is balance, not a “laser focus”.

    1. Mark West

      The City Council has so far failed to prioritize their response to the fiscal crisis. Perhaps you think that dithering for six years is the appropriate thing to do, but some of us think that time the Council wastes making people feel good is time taken away from actually solving the problem. Isn’t that why Doctors have a support staff of nurses and aides, so that the physician can prioritize and maintain a laser focus on the medical issues, rather than cleaning bed pans and changing the sheets?

      1. D.D.

        “laser” focus? I disagree. Doctors help themselves when they occasionally do the dirty work. It makes them appreciate the staff , and their patients, more. It brings them in closer proximity of their patients, and they might actually learn something from their patients. Just like a husband who does laundry & changes dirty diapers stays in touch with his family.

  4. DT Businessman

    Tia, please. Failing to revisit the Central Park bathroom decision or moving the tank house around downtown, to use just a couple of examples, is hardly akin to forgetting about the brain.

    -Michael Bisch

  5. Mark West

    “In the cities case, it is not correct to suggest that the city spent more than it took in year after year, it can’t actually do that. In this case”

    This statement is false. When we promised to make the payments (salary, benefits, opeb), we spent the money. The actual cash may not have left the City’s accounts yet, but it was already committed. When we failed to repair our infrastructure all we were doing was hiding the fact that we didn’t have enough cash to pay our obligations. For years the City has spent more than the revenues that were coming in just as the author stated.

    1. Davis Progressive

      you guys seem to think that david is defending the city, that’s clearly not the case.

      “In the city’s case, it is not correct to suggest that the city spent more than it took in year after year – it can’t actually do that. In this case, the biggest two problems are that the city promised more to employees in the past than it funded for those benefits and, second, that for several years the city ignored deferred maintenance and those bills have come through as well.”

      “The author is correct that this is fiscal mismanagement but does not appear to understand the mechanisms that led to the problem.”

      “The author is correct that the city employees, or many of them, have probably overly-generous compensation plans, but he probably underestimates just how generous because he doesn’t look at pensions and OPEB.”

      1. Barack Palin

        “you guys seem to think that david is defending the city, that’s clearly not the case.”

        That’s something I’ve been noticing lately on the Vanguard, David seems to be more and more in the city’s camp these days.

          1. Barack Palin

            David, you make a good point and I hope that’s the case. I think the Vanguard can attribute whatever success it’s had to the fact that you’ve always been willing to take on the city, the council and other local entities without impunity and I hope it remains that way.

          2. David Greenwald

            I have been willing to take the city on when it deserves and will continue to. However, I think even critics of the city must recognize that we have made program since 2010 and more so since 2012. But we also stand at a critical crossroads. Pinkerton leaves after tomorrow, we cannot underestimate his hard work and impact. We will have a new council. I don’t know where things go after June 4, but the thought keeps me up at night.

  6. Sam

    “In the cities case, it is not correct to suggest that the city spent more than it took in year after year, it can’t actually do that.”

    If you defer maintenance costs and pension costs and pay out all of your current year cash as payroll, then yes you spent more each year than you took in.

    Why would we keep offering pay and benefits to employees that the current revenue can’t afford. I understand it is less than before, but if we still can’t afford it, why would we offer it?

    1. Davis Progressive

      it’s called an unfunded liability. it means that it made promises to employees that were not funded and would have to be paid back in time. the problem here is not that the enterprise writer is wrong, he’s just not really that familiar with the city’s situation and is trying to lecture councilmembers who are actually working to fix some of these problems.

  7. Frankly

    So I get the argument that politics is a justified profession because government has grown so damn complex, and then I get to read that the reason that government cannot live within its means is that government finance is so damn complex.

    What a nice situation.

    I would like the same. I would like to overpay all my employees, have too many of them, allow them to work fewer hours, have more holidays, have more vacation, pay for more of their healthcare, allow them to retire early and give them 70-90% (depending on which departments I like better) of their pay in retirement and cover their healthcare costs too. Then when my company is insolvent and heading toward bankruptcy, I would like to be given a pass because the company budget is just so damn complex.

    I’m sorry but the Vanguard missed the mark on this article. The Enterprise letter writer was completely on-track if not completely accurate with details.

    1. hpierce

      Frankly, for understanding… are you using hyperbole, or are you saying you believe that ALL (your word) City of Davis employees are overpaid, that we have too many of them, we should have them work longer hours (makes sense if we have less of them), we should cut back holidays/vacation/sick leave to no more than what your firm offers its employees, reduce what the city pays for health care to what your firm pays (if any), require them to work until age ___(68?) before they are entitled to any ‘pension’, and give them at most 69% of compensation (after subtracting out what they would get from social security) for that ‘pension’ and pay nothing or retiree medical (since they would presumably qualify for Medicare [without supplements]?

      Just trying to understand your post… sharing ideas, and all…

      1. Frankly

        From government labor statistics public-sector employees, when compared to private-sector employees, for peers, and in general:

        – Are paid larger salaries
        – Get more holidays
        – Get more paid time off
        – Get more sick leave
        – Get more of their healthcare cost covered
        – Work fewer hours per day
        – Retire earlier
        – Get significance greater retirement benefits
        – Enjoy greater job security
        – Have fewer performance expectations… especially for accomplishing complex change

        This does not mean that ALL government employees enjoy ALL of these enhancement. But most of them do… again when compared to their professional peers in the private sector.

        And because this is fact it might help you understand why Democrats keep pushing the minimum wage hike. What better way to protect those public sector employee enhancements than to force the private sector to pay more.

        1. TrueBlueDevil

          Good points. I’ve heard that, on average, government workers make 50 percent more than those in the private sector, but that was a figure from years ago. It could be higher. Much of that is received in retirement.

        2. hpierce

          OK… let me re-phrase… you’d like to see City of Davis employees make the median of Davis private sector employees (per job description), and leave time should be at the median of Davis private sector employees, retirement benefits should be no greater than the median of Davis private sector employees, time worked should be at least the median of Davis private sector employees, have their job security restricted to that of the median Davis private sector employee, etc.?

          And I’m assuming that that would apply to all City employees, by class, rather than taking into account performance (admittedly, public agencies have a lousy record of dinging the marginal, or rewarding the exceptional).

          1. Frankly

            I think the right thing to do is to level the labor costs to the labor market. I view labor as a commodity augmented by individual skills and capabilities, and at varying levels demonstrated by actual performance. The cost of labor is the total cost of all pay and benefits… and even other intangibles like job security.

            I would do a job duty inventory that then allows me to do a job role/title mapping and then differentiate job steps within each of these. Let’s use accounting specialist or arborist as an example. Find out what these jobs pay on average for the region. There are compensation studies available. They break compensation into quartiles. The top quartile is the top pay level and it is for those employees with greater skills, greater certifications/credentials and greater responsibility. The lowest quartile is the entry-level to the job.

            Merit increases happen when employees develop and can take on greater responsibility because they acquire the necessary skills and credentials and they demonstrate capability. The ability to advance pay grades is a key to leveraging human motivation to progress and move up in economic class and professional recognition.

            Here is how I structure my pay plans. I do as prescribed above, then I knock 10-15% off the salary component for all employees and take that total of reserved compensation and put it in pool that I use for performance bonus. I set annual performance goals, and at the end of year I divvy out the pool based on a forced ranking of employee performance relative to plan. Some of the criteria are objective and some subjective. But all are fair and apply to specific or common performance criteria that are clearly communicated up front, and then ongoing during the year. No reasonable employee should be reasonably surprised by the end of year results.

            And for those employees that get zero bonus, generally they are also on some performance notice and development plan.

            Also, if the company is more profitable, the bonus pool is increased beyond the basis of reserved compensation. So here we help motivate that employee that would otherwise come complaining to management that they are overworked and stressed and demand we hire more help. We say, “are you sure you cannot work with your coworkers to come up with a way to get the work done without another hire… because if we do, it will impact everyone’s potential end of year bonus.” Surprise, surprise… 99% of the time they figure out some creative solution for doing things faster, better, cheaper.

          2. hpierce

            Still don’t understand how you compute “job security” into your calculus, but since you didn’t answer that part, I assume you figure that to be 50-75% of total comp.

    2. Davis Progressive

      “I’m sorry but the Vanguard missed the mark on this article.”

      how is that? the vanguard corrected the writer’s errors, expanded on points where the writer didn’t know specifics, and agreed where the writer was wrong.

      where did the vanguard miss the mark? it just explained it better than the writer.

      1. DT Businessman

        Where the Vanguard missed the mark is by not beginning with, “I fundamentally agree with the main thrust of the op ed, but there are certain details that I’d like to correct or expand upon.”

        -Michael Bisch

      2. Frankly

        Starting with the title. The premise of the article is that the structural budget problems are much more complex that the letter writer noted. However, the letter writer was fundamentally correct and the reason that our budget is such a mess is really quite simple and easy to understand.

        The letter writer writes:

        You arrive at such a dire crisis by spending more than you take in and you keep doing it year after year after year.

        That it. Pure and simple. What is the solution? Simply stop spending more than we take in. And at this point because we have created such a large deficit, we need to start taking in more than we spend… or we need to start spending less than we take in.

        Or my favorite… start spending less and taking in more.

        It is really quite simple.

        That is where the VG missed the mark.

  8. TrueBlueDevil

    The maintanence / replacement of roads is a huge issue. I’ve read reports which state that the cost to repair a road are significantly cheaper than replacing it – but that said repair has to be done before the road becomes too old and damaged.

    1. Davis Progressive

      correct. david cited stats that at one level of repair it is $9 per square yard, that number goes up to $21 and then over $60 as the roadway delines. plus there is an 8% inflation rate for asphault.

  9. TrueBlueDevil

    BTW, did we try to lure Costco to Davis? I’ve read that the average Costco location has sales of $103 Million – how much would that contribute to the city coffers per year?

          1. Frankly

            Here is their most recent annual report to shareholders:

            https://corporate.target.com/annual-reports/2011/images/company/annual_report_2011/documents/Target_2011_Annual_Report.pdf

            This might be the closest we can get to understanding the sales volume of our Target store.

            California is listed as over $300 in sales per year per capita for the state. If we use that metric of $300 in sales per capita for our local population of $66,000, we get $19,800,000 in sales. Our 1.25% share of this would be $247,500.

            Now, in affluent Davis I would expect that our Target’s sales per capita to be higher than $300 per. Let’s say it is $500 per. That is $33,000,000 in sales and $412,500 in sales tax revenue.

            I don’t know where the $600,000 came from unless this also includes the property tax revenue.

          2. Frankly

            Sorry, population 66,000 not $66,000. Since I am in lending most numbers I deal with have a dollar sign included.

          3. Don Shor

            The $600,000 was used repeatedly by proponents of Target during the referendum. Your numbers are probably more accurate, based on what I’ve read about retail sales per square foot for stores of that type.

          4. Frankly

            You mean the property tax revenue is included.

            If so, we should be able to get that number. And if we add that number to the $500 per capita sale tax number we would probably be pretty close to the $600,000 projected revenue. However, there is really no way to know if $500 per is accurate or not. I know that my family has probably spent more than $1000 per year at Target since this is where we have routinely purchased most of my kids school supplies and clothing. And some appliances and electronics. Now that the kids are out of the house, it is probably down quite a bit… more likely the $500 level.

          5. Don Shor

            No, I’m quite sure the number we heard during the Target campaign was $600,000 in sales tax revenue. And I recall that being used in budget discussions in the next year or so as well. I remember at the time doing calculations based on the square footage and average sales of Big Box stores, and concluding that was unrealistic.

          6. Frankly

            With a $.50 sales tax increase, based on the $500 per capita number we get to $577,500.

            I understand the reason that companies don’t like to publish their per store sales data though. What better time to start offering up discounts if you knew your competition was struggling… knock them out with a new blow to their sales by using predatory discounting.

          7. Don Shor

            They claim >$300 per capita in some states (including California), less than that in most. I’d be very surprised if they have stores doing $500 per capita. If they did, they’d probably be bragging about it on their company reports. Estimate $300 – 400 per capita.

          8. Frankly

            Maybe, but I don’t think we know. It is certainly possible that the Davis Target is a high dollar per capita store. The limited shopping alternatives and the relative affluence of the population tends to support that theory.

            There are a lot of Targets in lower income neighborhoods and that are surrounded by other shopping options. Woodland has a Costco right next door and a Kmart a couple of miles away. Davis has….. nada except some small mom and pops downtown.

            I would not bet on it being $500 or more, but I also would not bet on it being less than $500.

  10. DT Businessman

    I don’t think this discussion is framed properly. The proper context is a financial earthquake occurred in 07/08. The city knew a tsunami was going to hit, at first did very little to prepare, then the wave hit, and the city is ever so slowly trying to deal with the destruction. Policy meetings were taking place years ago about the pending tsunami, council members were insisting they were fully prepared and had all contingencies covered, and they’re still saying the same thing today. They clearly were not prepared, were not taking the necessary actions (that’s not to say they weren’t taking any action), and the same is still true today. The way they go about setting priorities and then allocating resources to the priorities is inadequate, dare I say dysfunctional. I can’t at all understand why Tia or anyone else is even arguing this point at this stage of the game. It is clear from their frustration expressed on the dais that even CC members see it this way, yet they can’t get out of their own way.

    The other dynamic going on is the CC members are being publicly bashed so hard and so often for their missteps that even when they do consider focusing on a project or policy that actually helps pull us out of the fiscal train wreck, they’re extremely gun shy about it for fear of the criticism from the NOE crowd. It’s really quite a mess. From my perspective, the city is borderline ungovernable at this point.

    -Michael Bisch

    1. David Greenwald

      You may actually understate the nature of the problem. At the same time, no one has the appetite to call out how we got there, how we can avoid getting there in the future, and who are obstructing us from doing the right things.

    1. South of Davis

      D.D. wrote:

      > Wonder if the city will re-visit selling the DACHA homes. They are worth a lot of money.

      As long as the homes are owned by the city we don’t have anyone paying property tax. If the homes were sold the city would get a lot of cash this year and we (as taxpayers) would probably get more per year in property tax than we (as taxpayers) are getting in rent less expenses.

      An even bigger money pit than the GAMAT homes is the Pacifico Student Housing Cooperative (at 1752 Drew Circle) that has been on average 50% vacant for the past TEN (10) YEARS and MORE then 50% vacant for the past FIVE (5) YEARS. The property worth MILLIONS is spinning off ZERO ($0) cash and is on the tax rolls as owned by the city with ZERO ($0) property tax due (since it is city owned).

      A few years back when the Davis rental market had about a 1% vacancy rate and UCD had all their dorm rooms filled the Aggie newspaper wrote that the Pacifico Co-Op was 89% empty (only 12 rooms out of 112 filled). It is sad that the city does not seem care about renting the place to get an extra $400-$500K a year in rent (they are probably too busy working to raise the sales tax and give each other raises)…

  11. D.D.

    Wow. So no one has to pay property taxes on the DACHA homes? And the city got a deal on them when the city bought them, even with the lien (or whatever you want to call the pending lawsuit,) when they were sold to the city. Wow. Doesn’t seem fair.

  12. D.D.

    I went to the sale of the DACHA homes when they all sold at a group sale of all the homes. The sale took place in West Sacramento. At the time, I was living in one of them. Trying to be honest here. I don’t wish to discuss that matter much further, it still stings. Let’s just say I lost money on my DACHA home and I’m kinda jaded about the whole co-op concept, unfortunately.
    If the city is sitting on oodles of money because they bought them at a low price, that does not seem fair to me.
    They were purchased at a low price. I know what the comparable value of my neighbor’s houses were at the time the city bought my DACHA home.
    Enough said.

    1. South of Davis

      D.D. Wrote:

      > They were purchased at a low price.

      I believe the low sale price was due to the deed restrictions on the property (that would have to be removed if the city wanted to sell them and get ~$10 MILLION they are worth today with clear fee simple title and about another $1.5 MILLION in property taxes and parcel taxes over the next 10 years).

      In 2012 (just a few months before the city gave him $300K in taxpayer cash to go away) David Thompson if Twin Pines/Neighborhood Partners/DACHA posted to the Vanguard:

      “Waste is evident at the top. In August of 2009 (35 months ago) the first of the 20 DACHA homes became vacant. Ten of the homes were vacant most of 2010 and all of 2011 and all of 2012 so far. On those empty DACHA homes, the City staff led by Housing Manager Danielle Foster have lost $15,000 a month in income every month for at least the past 20 months. $300,000 lost for the past 20 months and how much since August of 2009 for all those empty homes. Probably over $400,000 in lost income to the City just on ten empty homes. That money just wasted by senior city management. ”

      > Yeah, what the heck IS happening with all those empty units in that other co-op? (Pacifico)

      After 5+ years of riding by it on the bike trail I can tell you that Nothing has happened to the two north buildings that have just sat vacant, but why worry about a half million or so in lost rent every year when it is easier to just raise the sales tax (or pass another parcel tax)…

      1. Mark West

        One thing that the City has clearly demonstrated over the past 10-20 years is that the Staff are completely incapable of running an effective low income housing program. Their performance is so astoundingly bad that it makes me really excited to know that we are considering having them run the POU too. Woo Hoo!

      2. D.D.

        I get anxiety commenting on any DT quotes, still fear lawsuits …
        Altogether someone rec’d more than $300K.
        Part of the reason that DACHA homes were empty: nice, responsible people, who were responsibly paying their carrying charges (“rent”, “mortgage”, whatever you want to call it), got scared of lawsuits and moved out. Can’t blame them. No extra money in their family budgets for lawyers. Scary period of time. Not very cooperative period. Others had fallen behind in their payments.
        Someone rec’d a lot of money in consulting fees.
        The city could do a lot with the equity in those homes.
        DACHA people were lower middle income, too. Not just low income.

        I used that same bike/walking trail & saw all those empty units at Pacfico, also.
        Does anyone reading this post know why Pacifico units sit empty?

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