Wednesday, January 31, 2018

An Important San Leandro City Council Meeting On Monday, Feb. 5th, 7 pm

This message was posted on NextDoor by San Leandro resident Aaron Bukofzer:

"This coming Monday, February 5th, the San Leandro City Council will be holding a meeting at which they will be discussing a process for updating and improving the Zoning Code. Many of us from the community believe that we now have an opportunity to close some of the loopholes created by the prior Zoning Code amendments in 2016. We want to make sure that future development is of an appropriate scale that complies with the intent of the 2016 amendments that were enacted with substantial public input. To that end, we've met with with members of the City Council in recent weeks. Also, on Jan 8th, we attended the City Council meeting and raised three issues during the public comments section. Evan Adams spoke about ambiguities in the General Plan that could be interpreted as saying that all P-zoned properties should be consider "Downtown mixed use". Evan pointed out the absurdity of this interpretation by showing a P-zoned parcel next to Washington Elementary School, another in the Manor near Porky's Pizza and three more on Hesperian literally on the edge of San Leandro city limits. I spoke about the changes to the zoning code that opened up P-zoned parcels to residential development. These changes were made in 2016 as part of a normal update occurring roughly every 10 years, and also in response to community feedback from the first 1388 Bancroft proposal. The intent was to allow up to 24 units/acre on P-zoned properties. This was done by referencing an existing RM-1800 designation that allows 24 units/acre, however, RM-1800 also allows structures up to 50 ft when P only allows 30 ft. I highlighted an FAQ produced by Staff during the 2016 discussion clearly indicating the intent was to limit building heights to 30 ft in the P district. A copy of the FAQ is available at: or click here for a pdf of the document.
Lindsay White spoke about the need for regulations regarding car stackers next to single-family homes. She and her fiance, Dave Ruedi, built a mock of a 13 ft fence and took pictures of it on their fence line that abuts 1388 Bancroft. This is visually very compelling as 13 ft is nearly the height of the top of their roof line. Our request to the City Council was to address the first two issues as clarifications of the intent of 2016 decisions. The car stacker issue is new topic. The Jan 8th City Council meeting was a working meeting so there was no avenue to immediately address the issues we raised. The next City Council meeting was Jan 16th and was a regular meeting. District 1 Council member Debra Cox made a motion that our issues be addressed. The motion passed and the matter was referred to Staff. Staff replied with a report stating they have numerous issues with how the current zoning code is written and have a list of 38 clean-up items they'd like to address. Staff also proposed a process for doing a major clean up of the zoning code. The proposal is a two-phase approach with a long timeline. The first phase includes dealing with updates to the residential section of the code and, likely, won't finish until the end of 2018. We are concerned about the timeline. The staff report is available at: The City Council has placed this item on the Feb 5th agenda to direct Staff to begin this process. Updating and cleaning up the zoning code is a much needed step, however, we are concerned that clarifications around the 2016 decision to open up P-zones to residential are getting lost in a general clean-up. We feel the items that Evan and I spoke to on Jan 8th need be addressed in a timely fashion. We are not asking for new decisions, rather, to accurately record decisions that were made. We plan to attend the Feb 5th City Council meeting and propose a three-phased approach, where phase zero addresses items that are clarifications of existing decisions."

Tuesday, January 30, 2018

San Leandro Should Authorize Its Dispensaries To Sell Adult/Recreational Cannabis

On the topic of San Leandro finances, the City is counting on taxes from cannabis dispensaries to help it fill its brand new annual deficit. The City is projecting $1 million in 2018-19 from its new dispensaries. 
This would be helpful - but would not close the City's fiscal hole as the deficit may be as large as $7 million over the next two years. Moreover, as I have been working in the cannabis industry since last Fall, I have a specialized knowledge of many of the issues facing cannabis businesses. 
I shared this information recently with the City Finance Director and City Council. In short, I stated the City should exercise extreme caution in its cannabis tax revenue projections. I gave two reasons: 
1) Although the City has authorized 3 dispensary licenses.  Only two operators - Davis Street Wellness Center and Blum San Leandro - appear likely to be opening in 2018. I have no idea if and when the first city licensee, Harborside San Leandro, will open.
2) The legalization of cannabis in California and specifically the authorization of the sale of cannabis to adults 21 and older, e.g. adults no longer need a medical marijuana card to purchase cannabis, is resulting in a major transformation of the marketplace. 
The excise and sales tax paid by cannabis users under state law as of January 1, 2018, is the same regardless of whether the purchase is for medical or adult/recreational cannabis (absent the small minority of patients that obtain their card directly from the state). Thus, most patients presently with a medical card for cannabis will not renew their cards in 2018 or 2019 as the card no longer serves any purpose and it costs approximately $50 to renew a card. 
Dispensaries in the communities immediately adjacent to San Leandro - Oakland and unincorporated Alameda County - are permitted to sell adult/recreational cannabis, e.g. you don't need a medical marijuana card to purchase the cannabis. Hayward's new ordinance also allows for dispensaries to sell adult/recreational cannabis. 
However, San Leandro's cannabis ordinance presently bans the sale of adult/recreational cannabis. Only persons holding a medical marijuana care are allowed to purchase cannabis.
Do you see what I am getting at? The marketplace for cannabis this year and next will rapidly shift from medical marijuana sales to adult/recreational use sales. Absent action by the San Leandro City Council, dispensaries located here will increasingly have to turn away customers. As a result, the City will receive far less tax revenue. 
Alternatively, if San Leandro changes its ordinance to allow adult/recreational sales of cannabis it will financially benefit the Davis Street Wellness Center as well as the other dispensaries operating in San Leandro. And it will also mean that local sales of cannabis on the black market (which of course do not generate sales tax revenue for the City) should diminish as adults can now buy high quality cannabis, tested by a state approved lab, and sold by a state licensed dispensary. 
Please note - I work as General Counsel for Bloom Innovations, e.g. I am the in-house attorney for the company. The CEO of Bloom Innovations is also the CEO of the Davis Street Wellness Center. I am not an employee or director of the Davis Street Wellness Center. 
Cannabis is now legal in California. If the City wants tax revenue from cannabis sales in my view it should allow all local dispensaries to sell the product to adults whether for medicinal or recreational use. 
What are your views?

Friday, January 26, 2018

San Leandro City Budget Turns From Black To Red

Despite a booming local economy, a $5 million general fund surplus when I left office, and overseeing the Yes on Measure HH campaign that resulted in a $10 million boast in sales tax revenue in fiscal year 2015-16, the City of San Leandro is now running multi-million dollar deficits with no end in sight. 

How could this occur? Exploding employee pension costs is the prime reason. Employee salary and benefit costs jumped $7 million from fiscal year 2016-17 to the current fiscal year.

Mayor Cutter and City Council needed to continue to make progress on employee pension costs in labor negotiations and didn’t. These photos are from San Leandro Finance Director David Baum’s presentation at the city planning retreat on January 20, 2018.  Here is a link to presentation powerpoint.

Here is an article on the San Leandro budget deficit from the San Leandro Times:

City Budget Forecast:  In the Red
February 1, 2018

The City of San Leandro’s unfunded pension costs have doubled in the past four years, according to a recent budget presentation, which also shows that the city’s general fund is projected to be in the red over the next several years. City Finance Director David Baum says San Leandro is currently looking at $210 million worth of pension liabilities looming, compared to $105 million in 2014. 

Former Mayor Stephen Cassidy has long said the pension system in San Leandro and beyond is untenable in the long run. Cassidy said the city took some measures during his time at City Hall – including having employees pay a percentage of their salaries into CalPERS – but the city hasn’t done enough since then. 

“Despite a booming local economy, a $5 million general fund surplus when I left office plus a $10 million boost in sales tax revenue following the passage of Measure HH in November 2014, the City of San Leandro is now running multi-million dollar deficits with no end in sight,” Cassidy said. “The City needed to continue to make progress on reducing employee pension costs in labor negotiations and didn’t."

Baum said the reason pension costs to the city have ballooned is due to poor investments by the California Public Employee Retirement System (CalPERS), the pension program for state and city workers. CalPERS manages the largest public pension fund in the United States, with over $320 billion in assets. 

Over the past decade, CalPERS has retuned 4.4 percent compared to the Standard & Poor 500’s 7.1 percent, according to Barron’s. And CalPERS "guarantees" its stock investments, meaning that if returns don’t come in, it is up to cities to bridge the gap and make up for any losses. “There’s no question the amount of unfunded liabilities have gone up dramatically and that’s because CalPERS hasn’t been getting the returns,” said Baum. 

The city has tried to mitigate the pension debt by creating a Prioritizing Unfunded Liabilities Liquidation (PULL) investment fund. It’s an irrevocable trust account that can only be spent on pensions, Baum says. So far, the city has about $14 million in PULL – which is equivalent to just about one year of pension costs. The exact amount that will be put in the PULL account this fiscal year will be determined by the City Council over the next few months. They will meet in a budget work session on April 9 and the final budget will be adopted in June. Baum said the minimum amount they’ll put in PULL this fiscal year is $750,000 and he estimates the actual figure will be around $2 million. Baum recently gave the 

Monday, January 22, 2018

Statement Concerning San Leandro City Manager

Here is my statement on the sexual harassment and abuse of power allegations made against San Leandro City Manager Chris Zapata:

It saddens me to say the following as I know and worked closely with City Manager Chris Zapata for three years:  The Mayor and City Council must place him on administrative leave.  I say this not because Rose Johnson, the longstanding director of the Davis Street Family Resource Center, has alleged that the City Manager sought to use his power over City resources to pressure her into a sexual relationship.  I do not claim to know if this allegation is truthful.   

What I do know is that last week the City Manager issued a 23-page, single-spaced memorandum severely criticizing Rose Johnson and those he blames for the allegations made against him.

The appropriate action for the City Manager would have been to issue a short statement denying the allegations and pledging full cooperation with the City’s internal investigation.  Instead, the City Manager issued a rambling, incoherent diatribe filled with salacious gossip, inflammatory accusations, and petty boasts. 

In my opinion, Chris Zapata has sought to destroy Rose Johnson’s professional reputation plus the reputations of former Council member Gordon Galvan and current Council member Ed Hernandez, who appears to have the gall, in the eyes of the City Manager, to question his decisions, in retaliation for the allegations of sexual harassment and abuse of power made against him.

The City Manager’s memorandum constitutes a warning shot to the Mayor, City Council members, and other civic leaders that he will reveal private and potentially embarrassing information about them to protect his position.  The memorandum further sends a powerful message of intimidation to current and former city employees who may have experienced similar alleged harassment from speaking out. 

By issuing the memorandum in his capacity as City Manager, Chris Zapata has exposed the City to additional liability.  By not having placed him on a leave of absence, the Mayor and City Council are signaling their tacit approval of the City Manager’s grossly unprofessional conduct in releasing the memorandum and failing to protect others from retaliation and intimidation.

Thursday, January 18, 2018

The Future of Our City: City Council Planning Session

This Saturday, January 20th, the San Leandro City Council is holding its annual planning session at the San Leandro Senior Community Center, located at 13909 East 14th Street, from 8:30 a.m. until approximately 2:00 p.m. The meeting will include opportunities for public comments and questions.

Why is this meeting important? For two reasons: (1) the City Finance Director provides a multi-year forecast on the city budget and (2) the City Council sets goals and priorities for our local government for the coming year and beyond.
If we want to influence what issues our local elected officials should address, Saturday is the time to speak up.

In addition, the budget update is extremely important. Neighboring cities have reported that despite rising revenues they expect to run deficits in the coming years due to continuing increases in pension and retiree health care costs.

San Leandro has been running a budget surplus the past several years. That all may be about to change (or already has changed). Further, it appears that the City has not brought in third parties to comprehensively examine its pension and retiree health care costs since 2013.

Wednesday, January 17, 2018

What is the core measure of leadership by a Mayor & City Council?

Timely resolving significant community problems is my answer. Last night the San Leandro City Council had the opportunity to address a significant community concern pertaining to a zoning matter that affects not only the Estudillo Estates neighborhood but also the Broadmoor, the Manor and South San Leandro. Instead of taking clear and decisive action, the City Council deferred to staff to develop a proposed course of action without any set timeline or a defined process. One Council member voiced concern that taking any other action would be "micro managing staff." Accordingly, I sent the following message to the Mayor and City Council today: Dear Mayor and City’s council - Timely addressing significant community concerns is not micro managing staff. Rather it is the essence of leadership. You are given political power to solve problems and lead our community. That requires decisiveness. That requires setting priorities for staff and even disagreeing with staff on some occasions. The Council has the fiduciary responsibility of acting in the best interests of the people of San Leandro. Case in point: You had a wonderful presentation last night on all the good that the new San Leandro Hospital is doing and its plans to do more. None of that would have occurred if I and the then City Council followed the City Manager and staff’s recommendation which was to not provide any money to save the hospital. The deal to save the hospital would have collapsed. Furthermore the failure of prior Mayor Santos to develop a plan to save the hospital was a critical factor in why the people of San Leandro entrusted him with only one term as Mayor. We are now in year three of the controversy over the zoning of Professional district properties. You had the opportunity last night to take a significant step to resolve the controversy in a matter of weeks. Instead you passed the issue onto staff to come up with some type of solution at a future date through an undefined process. Again the essence of leadership by a City Council is timely solving significant community concerns.

Tuesday, January 16, 2018

Need for Independent Appraisal in Sale of City-owned Properties

I sent the following message to the Mayor and City Council today concerning the need for independent appraisal prior to the sale of any City owned properties, including property along the San Leandro shoreline for the proposed Cal Coast development:

I see the City Council has several properties under discussion for transfer/sale in closed session agenda today.

3.A. Closed session pursuant to California Government Code section 54956.8: CONFERENCE WITH REAL PROPERTY NEGOTIATORS Property: Alameda County APN 075 0209 001 00 Agency negotiator: Cynthia Battenberg, Community Development Director Negotiating parties: Wells Fargo Bank Under negotiation: Price and Terms of Payment City of San Leandro

3.B. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Properties: Alameda County APNs 079A 0475 009 04, 079A 0590 001 07, 079A 0590 001 05, 079A 0590 003 00, 079A 0590 002 00, 079A 0590 004 00, 080G 0900 004 01 Agency negotiator: Cynthia Battenberg, Community Development Director Negotiating Parties: Cal-Coast Companies, LLC Under Negotiation: Price and Terms of Payment

Has the City has obtained independent appraisals for the properties in question?

As background, when the City sought to sell the Village Marketplace to David Irmer we did not have an independent appraisal. Staff was resistant to obtaining one and, for a temporary period, so was the majority of the City Council as incredible as that sounds.

Council members Jim Prola and I continued to push for an independent appraisal, which was eventually done. Not surprisingly, following the appraisal, the final price for the Village Marketplace paid to the City/development successor agency was greater than what was initially offered and recommended by staff for the City Council to accept.