Eye on Sacramento Issues Report Challenging Sacramento Convention Center Expansion

MEDIA RELEASE

For Immediate Release

Date/Time: October 17, 2016, 10:30 a.m.
Contact: Dennis Neufeld, Director of Research
Eye on Sacramento
Phone: (916) 539-1054
E-mail: dennis@eyeonsacramento.org
Website: www.eyeonsacramento.org

 

Eye on Sacramento Issues Report Refuting Economic Premise

For Expanding the Sacramento Convention Center

 

At a press conference held this morning at the Sacramento Convention Center, Eye on Sacramento officials released a comprehensive report revealing the long track record of growing financial losses at the Convention Center, as well as challenging the proposition that a nearly $200 million taxpayer-funded 70,000 sq. ft. expansion of the Center will provide any net economic benefits to Sacramento.  Among the report’s findings:

The Convention Center will lose $19 million this year.  Center losses have been growing at a pace of $1 million annually for several years.  The Center has lost an astonishing $268 million in taxpayer funds over the past 17 years.

From its construction in 1974 to its major expansion in 1997, the Center has failed to generate revenues anywhere close to official projections, leading the city council to double the city hotel tax to cover its mounting losses in the early years and to extend $10.4 million in emergency bailout loans to the Center following its 1997 expansion, loans which remain largely unpaid today.

Because of the heavy drain of Center losses, Sacramento devotes 87% of its annual hotel taxes to covering Center red ink.  The nine cities that Sacramento competes with for convention business uses an average of only 45% of their hotel tax revenues to fund its convention centers, with 55% of such taxes going into their general funds.

If Sacramento reduces its allocation of hotel taxes to the Center to match the 45% average allocation of its nine competing cities – which it can do over time by simply avoiding the proposed Center expansion – EOS projects that the city would see an additional $8 million of hotel taxes flow into the city’s general fund each year to fund police, parks, road maintenance and other vital services.

The municipal habit of expanding convention centers in pursuit of greater center attendance has been a grotesque failure in city after city in the U.S., leading to a veritable “arm’s race” of center expansions and resulting in a massive glut of space, while actual demand for  convention space has been declining.

The theory of “Build It and They Will Come” may work in Hollywood movies, but the evidence clearly shows that it does not work with convention center expansions.  The following cities have each expanded their convention centers in recent years only to experience an actual decline in attendance following expansion: Chicago, Las Vegas, Seattle, Philadelphia, St. Louis, San Francisco, Orlando, Washington, D.C., and Boston, as well as many smaller cities.

The common culprit in the growing number of failed convention center expansions throughout the country (including Sacramento’s 1997 expansion) has been the grossly inaccurate projections of future center revenues generated by professional convention center consultants hired by cities.

Following Boston’s failed convention center expansion in 2004, the then executive director of the Massachusetts Convention Center Authority, James Rooney, was quoted as saying:

When I talk to people from other cities about making a public investment in a convention center, I’m equally blunt about the feasibility studies these consultants use to justify [such] investments…some of these guys ought to be taken out and shot.”

EOS has also determined that, in the lead up to the Sacramento city council’s key May 3rd policy decision to proceed with an expansion of the convention center, city staff presented the council with a staff report that relied heavily on the city’s primary convention center consultant, the firm of Conventions, Sports & Leisure International (CS&L).  City staff cherry-picked data and findings from the CS&L study, but staff failed miserably to provide council members with crucial findings in the CS&L study that clearly state that an expansion of the Convention Center is not needed nor justified given market conditions.

In short, the city council was misled by its staff into believing that its principal convention center consultant was solidly in favor of the proposed expansion when, in fact, it was opposed to it.

The city staff’s proposal to expand the Sacramento Convention Center is on the city council’s meeting agenda for tomorrow evening.

The EOS Report is viewable and downloadable via this link.

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Eye on Sacramento Special Board Meeting

We would like to extend a personal invitation to you to join Eye on Sacramento for a special Board Meeting this Friday, June 24, 2016 at Noon featuring a special guest speaker: Jorge Oseguera, the City Auditor for the City of Sacramento.

We will meet at the Perko’s Cafe located at 925 3rd Street, Sacramento at J Street & 3rd Street.

If you plan to attend, please R.S.V.P. to Anna Robertson at via email at anna@eyeonsacramento.org by Thursday June 23rd.

We hope to see you there!

Steinberg’s Consulting Arrangements with Metropolitan Water District

MEDIA RELEASE

Date/Time: June 2, 2016, 3:00 p.m.
Contacts: Craig Powell, President,
Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org

Eye on Sacramento Calls on Mayoral Candidate Darrel Steinberg

to Fully Disclose the Details of His Contractual Relationship

With Southern California’s Metropolitan Water District

Sacramentans learned for the first time yesterday from a Sacramento Bee story that Darrell Steinberg, while actively seeking the support of Sacramento voters for his mayoral bid, has been covertly providing strategic consulting services to the politically powerful Southern California-based Metropolitan Water District (MWD) whose interests are very much at odds with the interests of the City of Sacramento and its residents on just about every major water issue facing our region. Steinberg’s law firm, Greenberg Traurig, has been collecting $10,000 per month from MWD for Steinberg’s services since July of last year.

Eye on Sacramento (EOS) has been championing the adoption of meaningful transparency and ethics reform in the City of Sacramento for the past 18 months. EOS co-hosted 10 public forums on the subject last year, helped form a broad coalition of supportive community groups and presented reports and proposals for a model ethics code, a robust ethics commission, a strong Sunshine Ordinance and an independent redistricting commission.

We are troubled that Sacramento voters who have already voted via absentee ballot (now fully half of all Sacramento voters) did so without the knowledge that one mayoral candidate was effectively on the payroll of the MWD. While nothing can be done at this late date to cure that significant informational failure, there are some immediate steps that Mr. Steinberg can and should take to fully explain the nature and extent of his relationship with MWD for the benefit of voters who will be casting their ballots on Election Day.

Questions that Mr. Steinberg should now answer include: When did he and MWD first begin discussing a consulting arrangement? How much of his time over the past year has he devoted to providing “strategic advice” to MWD as called for in the contract? Has he been maintaining time records of his services? Will he publicly disclose such records? Has he provided any “deliverables” to MWD, such as reports and other documentation? Will he and MWD now disclose such documents? What public officials in our region did he meet with in the service of MWD’s goal of building relationships with North State stakeholders? Will he and MWD voluntarily release copies of their e-mail communications with one another, without the need for submitting formal public records requests? (Note: Steinberg was providing “consulting services” for MWD, not legal services which would have been protected from public disclosure under the attorney/client privilege).

The voters of Sacramento deserve to know if Mr. Steinberg, in providing consulting services to MWD while campaigning for Sacramento mayor, has been acting appropriately, ethically and loyally as both a Sacramento resident and an aspirant to the mayor’s office or has he acted in a manner that is at odds with the long-term best interests of Sacramento and its residents?

By promptly and fully disclosing these matters to the Sacramento public, Mr. Steinberg will go a long way towards allaying legitimate public concern over the role he is playing with MWD. If Mr. Steinberg fails to provide such disclosures, we would encourage the Sacramento County Civil Grand Jury to consider initiating an investigation into Mr. Steinberg’s relationship with MWD to uncover the facts. One way or the other, Sacramento voters deserve to know the facts and implications of Mr. Steinberg’s dealings with MWD.

The contract between WMD and the Greenberg Traurig law firm involving Mr. Steinberg’s consulting services to WMD may be viewed on the EOS website via this link.

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RT’s $10 Million Streetcar Design Contract

MEDIA RELEASE

Date/Time: April 25, 2016, 4:00 a.m.
Contacts: Erik J. Smitt, Policy Director,
Eye on Sacramento
Phone: (916) 215-2275
E-mail: erik@eyeonsacramento.org

REGIONAL TRANSIT’s $10.2 MILLION CONTRACT

DOWNTOWN RIVERFRONT STREETCAR DESIGN SERVICES

Tonight, Sacramento Regional Transit District’s Board of Directors will consider approving a $10.2 million contract with HDR, Inc. for design services of the Downtown Riverfront Streetcar Project. These design services will cover complete track-routing and all other facets of the proposed 4.2 mile system. The $10.2 million will come from federal Congestion Management Air Quality funds.
But there is more to the story.

The community does not want this useless streetcar. Last June, city of Sacramento registered voters in a proposed assessment district voted a resounding “NO!” to a $38 million bond measure to fund the city’s share of the $195 million streetcar project. This “NO!” vote created a significant hole in the streetcar construction funding. As yet, after ten months, the city has not found a funding source for their commitment to the project. Also, the State of California has not firmly guaranteed their $10 million share of construction.

Now, with significant funding still in limbo, the RT Board is asked to roll-the-dice on this $10.2 million financial commitment, which could be used on more important projects.

Another consideration: As pointed out in our recent report, “EOS’s Recommendations on RT’s Fiscal Crisis,” Appendix 1 (www.eyeonsacramento.org), based upon research by transit authority Dr. Gregory Thompson, annual operational expenses will likely range from $6.3 to $8.8 million. The streetcar project’s operational cost projections are woefully below this range, adding another significant project risk.

We want and need smart, long-range decisions for transit problems. Not needed are decisions, such as the one before the RT Board tonight, that may not only cause chronic operational red ink, but also become a waste of taxpayer funds if anticipated local monies fail to materialize.

Unless construction funding by all governmental agencies committed to this project are firmly identified, Eye on Sacramento urges a “No” vote on this Downtown Riverfront Streetcar design services contract.

(The design contract is #13 on RT’s Agenda. The board meeting begins at 6:00 pm and the meeting chambers are located at RT’s headquarters, 1400 29th St.)

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RT on the Rocks … Fight over fare hikes splits transit board

By Craig Powell

 

To get a sense of how broke Regional Transit is, consider this analogy. Let’s say you’re part of a Sacramento family. You have a fairly well-off, middle-class lifestyle, but in the last couple of years you’ve really splurged, buying yourself a big, new Mercedes and a big, pricey cabin up at Lake Tahoe, all financed to the hilt. Meanwhile, the small business you run, RT Clothing, has never regained the boatload of customers you lost when you decided to jack up your prices by 20 percent in the middle of the last recession (oops), leaving you with a flat income for years. Fortunately, your wife, a retiree who collects both a military pension from the federal government and a healthy state government pension, has been collecting cost-of-living increases for years. She brings home close to 80 percent of the family income these days, bless her. Together, you have a family income of close to $150,000 per year.

The charming new home you bought 30 years ago in Light Rail Estates is showing serious signs of age and, let’s be honest, neglect. Your roof is shot, the paint’s badly peeling, you may need a new furnace and your backyard pool has algae stains and a rather unpleasant odor. Lately, some of the sketchier kids in your neighborhood have been jumping over the fence when you’re not home, swimming in your pool, hanging around for hours on end and leaving their trash everywhere. It’s gotten so bad that many of your longtime friends no longer accept invitations to your summer pool parties. You’ve spotted some of them going into Bob and Nancy Uber’s backyard down the street. The Ubers put in a nice, new pool last year and they let their friends drop in to swim whenever they want.

Things are going so-so until one day you decide to open up your bank and credit card statements for the first time in six months. You’re stunned (stunned!) to see all of the savings you thought you were socking away each month have somehow evaporated. Not only that, you owe a whopping $18,000 on your Visa bill. (How did that happen?) In a panic, you check the balance in your checking account and your heart sinks further. You have just $3,000 in cash and, at the rate your family burns money, it will be long gone in three months’ time.

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Eye on Sacramento Urges City Council: Give Back the Tax!

MEDIA RELEASE

Date/Time: March 21, 2016, 4:00 p.m.
Contacts: Craig Powell, President,
Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org

Sacramento City Council Poised to Increase Utility Taxes By

$10 Million/Year as Part of its Major City Utilities Rate Hikes;

Eye on Sacramento Urges Council: Give Back the Tax!

Tomorrow evening, the Sacramento City Council is poised to approve double-digit, four-year hikes in city water and sewer rates. In 2018, the council is expected to seek voter approval of 16% annual hikes – for four straight years – in the city’s storm drainage rate. Collectively, the water, sewer and storm drainage rate hikes, if approved, would draw an estimated $88 million more each year from the pockets of Sacramento residents and businesses once fully implemented.

But there is more to the story.

Because of an imbedded 11% city “utility tax” that is unknown to most city residents, close to $10 million of the $88 million will be siphoned each year from utility customer payments and diverted into the city’s general fund to pay for the general costs of government. The diversions will reduce resources available to keep city water safe and clean, and to keep our sewer and storm drainage systems operating effectively. The diversions also drive up the need for future city utility rate hikes.

“The Council has a clear conflict of interest in deciding whether and how much to increase city utility rates,” said Eye on Sacramento President Craig Powell. “They know full well that for every dollar they increase city utility rates, they automatically divert 11 cents of that dollar into the city’s general fund due to the utility tax. This creates an almost perverse incentive for tax-hungry politicians to raise utilities rates as high as possible so as to inject more dollars into the general fund which councilmembers can spend any way they please,” Powell added.

“The Council can eliminate its conflict of interest and ease the burden on hard-pressed Sacramento residents and businesses quite easily: by returning to the Department of Utilities the $10 million in higher utility taxes that the utility rate hikes would generate each year, preferably with instructions to rebate 100% of the funds to utility customers,” Powell said.

“Several councilmembers have made public statements that major utility rate hikes are needed to upgrade and maintain our water, sewer and storm drainage systems. If that is, in fact, their sole and honest motivation for supporting major rate hikes, they can prove it quite easily by returning the nearly $10 million in higher utility taxes that the rate hikes will generate each year back to the Department of Utilities, instead of snatching it from the pockets of hard-pressed ratepayers for purposes entirely unrelated to utilities service,” Powell concluded.

Just how hard-pressed are Sacramento residents? Based on the most recently available data from the U.S. Census, EOS has computed that the mean household income in Sacramento has declined a stunning 12% from 2007 thru 2013.

The City Council will meet tomorrow evening, Tuesday, March 22nd, at 6:00 p.m. at City Hall, 915 I Street, Sacramento, CA 95814. Make your voice heard by phoning, e-mailing or coming down to City Hall tomorrow evening to make your voice heard on these important issues. Join us in urging the City Council to “GIVE BACK THE TAX!”

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Proposed RT Rate Hike & Alternative Solutions to RT’s Fiscal Crisis

MEDIA RELEASE

Date/Time: March 14, 2016, 1:30 p.m.
Contacts: Craig Powell, President,
Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org

Professor Greg L. Thompson, Chair
EOS Transportation Committee
Phone: (916) 246-9230
E-mail: greglthompson123@gmail.com

Eye on Sacramento Issues Report Critical of Proposed RT Fare

Hikes and Proposing Alternative Solutions to RT’s Fiscal Crisis

Eye on Sacramento (EOS) issued a report today that is highly critical of a proposal to hike RT fares by 20%, which would make them tied with New York City for the highest transit fares in the county. The report sets forth dozens of proposals for closing RT’s looming budget deficits by reducing RT’s operating expenses without significant cuts to service levels. The RT board of directors will be considering its staff’s fare hike proposal at an RT board meeting this evening.

The EOS report is titled “Avoiding Both Bankruptcy and a Transit Death Spiral.” It makes the case that RT doesn’t have to choose between imposing huge, damaging fare increases, which could very well trigger a transit death spiral, on the one hand, and doing nothing about its looming financial crisis, which would likely lead to bankruptcy, on the other. The EOS report proposes a “third way” for RT to work its way out of its current fiscal crisis: smartly managing its way through the crisis with a laser beam focus on shedding unnecessary costs, renegotiating burdensome labor and other contracts and putting what have been sacrosanct and inefficient functions out to competitive bid.

“There is a road thru RT’s current financial crisis that does not involve massive fare hikes that will punish RT riders, drive down already depressed ridership and risk a transit death spiral,” said EOS President Craig Powell. “EOS has offered today what is essentially a roadmap for how RT can move beyond its fiscal crisis by reining in RT’s bloated operating costs without any serious cuts to service levels. It’s now a question of whether the RT board and its management can marshal the political courage to take the cost-cutting actions that are essential to stabilizing RT’s very shaky finances and protecting its vital role as provider of transit in our region,” Powell added. “The era of protecting sacred cows and entrenched interests must end at RT if it’s to avoid the awful choice between bankruptcy and a transit death spiral,” Powell concluded.

The principal author of EOS’s report is Professor Greg L. Thompson, who recently retired from the faculty of Florida State University. Professor Thompson is a transit expert who currently serves as chair of the Committee on Light Rail Transit of the Transportation Research Board, a Washington, D.C-based organization.

To View/Download EOS’s report, click here
To View/Download the Executive Summary of EOS’s report, click here

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The Pot Tax … Helping kids at the expense of the general fund

By Craig Powell

Jay Schenirer means well, he really does. But programs launched with the best of intentions are no guarantee of sound policy or effectiveness, as Schenirer’s recent proposal confirms.

His basic idea is to dramatically increase city funding of programs for children and young adults by getting voters in June to approve a “new” 5 percent tax on marijuana cultivation, with the proceeds directed exclusively to youth services, bypassing the city’s general fund. Schenirer and his hardworking staff have spent the past year compiling research studies that show the benefits such programs can have on outcomes for kids.

Schenirer is certainly not new to youth issues: He’s spent most of his adult life working on them—in state service, on the city school board, as an education consultant and as the founder of youth-focused nonprofits since his 2010 election to the city council. (He’s raised more private funds for these nonprofits from corporations and foundations than any other councilmember with the exception of our city’s star private fundraiser, Mayor Kevin Johnson.) Schenirer is almost certainly the council’s foremost authority on youth issues, with Rick Jennings—the long-term CEO of the Center for Fathers and Families who served on the city school board alongside Schenirer—a close second.

Schenirer and his staff have prepared a thoughtful 22-page blueprint for how to create a new city department of youth services, an idea that city manager John Shirey threw cold water on by calling it a wasteful increase in city overhead. Shirey prefers to have the parks department, which administers the city’s current youth services programs, handle any expansion of such programs.

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Hikes Would Impose the Highest Bus Fare in the Country, Higher Than New York City

MEDIA RELEASE

For Immediate Release
Release Date/Time: January 25, 2016; 1:45 p.m.
Contact: Craig Powell, President, Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org

Survey Data Show that Regional Transit’s Proposed Fare

Hikes Would Impose the Highest Bus Fare in the Country, Higher Than New York City

R.T.’s Growing Financial Crisis Cries Out for Governance Reforms To Control Escalating Costs

Eye on Sacramento (EOS) announced today that its analysis of survey data of bus fares charged by transit systems throughout the U.S. and Canada shows that the 20 percent fare hike (from $2.50 to $3.00) being considered tonight by the Regional Transit board of directors (6:00 p.m.) would, if approved, impose a bus fare on Sacramento residents that would be the highest in both the U.S. and Canada, exceeding bus fares charged by all transit systems in both countries.

EOS researchers examined the database maintained by the American Public Transportation Association (APTA), specifically its 2015 Public Transportation Fare Database of fares charged by transit agencies throughout the U.S. and Canada. EOS analyzed the APTA Fare Database to identify regular base fares, exclude fares for intercity commuter service and to convert Canadian fares to U.S. dollars at prevailing exchange rates.

EOS’s finding that RT’s proposed $3.00 bus fare would be the highest in the U.S. is confirmed by the World Atlas, which published a report on November 17, 2015, which tabulated the highest transit fares in the world and identified New York City as the city with the then highest U.S. fare at $2.80 per subway ride, a fare which would be eclipsed by RT’s proposed $3.00 fare.

RT’s Unprecedented Proposed Fare Hikes Are a Sign of Deepening Crisis at RT

RT is facing a major financial crisis that has been a long time in the making. In the past five years its operating costs have risen by 29% (according to RT’s staff report on the proposed fare hike), while inflation, as measured by the Consumer Price Index, over that same period rose only 8.7%. RT experienced such a major escalation in expenses despite the fact that energy costs, which have a major impact on RT’s bottom line, have declined significantly in recent years.

Raising fares to the highest in the nation to deal with such a crisis is a desperate and potentially reckless move that would punish low-income, seniors and transit-dependent Sacramento residents for RT management’s failure to rein in RT’s escalating costs of operation. It would push the price of basic transportation beyond the reach of potentially tens of thousands of people, leading to further revenue declines and a pernicious cycle of rate hikes/ridership drops that could very well lead to the system’s bankruptcy. (We take note of RT’s recently adopted board policy which calls for fare hikes every two years.) And the fare hikes would do nothing to address the real source of RT’s financial problems: its failure to control rapidly increasing operating costs.

RT’s Governing Board Needs Major Reform

RT’s governing board is comprised of 11 elected officials from the County of Sacramento and the cities that RT serves. “Historically and by natural inclination, politicians prefer to spend money to keep constituents happy rather than cut spending which makes constituents unhappy. Politicians are too often beholden to well-heeled special interests with agendas that differ from the broad public interest. Finally, local officials serve on an excessive number of boards, commissions and committees in addition to their primary duties as elected officials on their own jurisdictions’ governing board,” said EOS President Craig Powell.

“Sacramento city councilmembers, for example, serve on more than a dozen different governing boards, commissions, joint power authorities and committees (in addition to the city council), which stretches their ability to provide meaningful, informed, engaged and responsible oversight of RT and its staff beyond the capacity of even a superhuman,” said Powell.

“It is time for our local elected officials to recognize their human limitations and do the right thing by appointing experienced, independent and highly qualified individuals to serve on the RT board who will be better able to oversee RT management, as well as represent their jurisdiction’s interests in their place and stead. We support the Sacramento business community’s recent policy initiative which includes a recommendation that the Sacramento city council appoint experienced business men and women to represent Sacramento on the RT board. We encourage the leaders of all local jurisdictions to do the same, balanced with appointees who can represent the interests of all RT stakeholders, such as riders, seniors, the disabled and last, but by no means least, taxpayer,” Powell added.

“We recognize that such governance reforms may require charter and even legislative amendments. Given RT’s dire financial condition, there is no time to waste in enacting them,” Powell concluded.

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A bitter divorce on ethics reform

FOON RHEE

SEPTEMBER 30, 2015

Eye on Sacramento and League of Women Voters joined forces to push City Hall

But after holding 10 public forums, the two groups disagreed on policy and tactics

Now, league is backing city plan, while watchdog group is mulling ballot measure

BY FOON RHEE