Council Looks Into Intervening in Housing Market
After nearly a year in power, Lakewood’s new mayor, Adam Paul, is showing signs of continuing the heavy handed tactics of his mentor, Bob Murphy. During a discussion in early September about spending $85,000 with a 17th Street consulting firm to study “housing” and make policy recommendations, Ward 4 Councilmember David Wiechman questioned whether this study could be the first step in an eventual plan to have the city intervene in the housing market. This interference could take the form of loosening zoning rules to allow higher density, allowing housing on the Denver Federal Center and/or spending tax dollars to subsidy low income (or affordable/attainable or whatever is the latest politically correct term) housing.
When Paul painted the expenditure as a “routine” action not warranting any discussion, Wiechman reminded the Council that years earlier the Murphy administration had received Council authority to spend tax funds on a “study” of a possible “exchange” with the Federal government. At that time the “horseshoe” acquisition was described as a replay of the no-cost pass-through exchange of a parcel from the Feds to the City who in turn passed it on to St. Anthony Hospital and RTD within a matter of hours.
Wiechman pointed out the DFC study eventually ended up costing the taxpayers nearly a million dollars in “fees”. Furthermore, instead of being a repeat of the St. Anthony Hospital no-cost, pass-through exchange, the 2015 DFC “exchange” turned into an attempt to acquire 59 acres of contaminated land at the northwest corner of the Denver Federal Center for over $28 million dollars in tax dollars.
In addition to cutting Wiechman off during the debate, the mayor also refused to recognize any seconds to Wiechman’s motion to have a study session to examine the city’s long-term housing agenda before spending money on consultants. Paul’s ruling came despite at least two council members objecting to the mayor’s action.
During a separate action to allow Metro West Housing to utilize several million dollars of Lakewood’s tax credits to build a 152-unit low-income high-rise project at 5800 W. Alameda Ave., MWH’s director noted nearly 45% of Lakewood’s population currently qualifies for subsidized housing. This provoked Wiechman to question whether the government will eventually become the landlord for nearly half the City’s population.
Council Continues to Look Into Housing Market
The Council planning retreat and the second in a series of “briefings” on a “housing study” indicate the Adminstration is still bent on increasing the construction of more housing. At the day-long planning retreat, the Adminstration brought in speakers to make the case for more housing and city intervention into the marketplace.
In March the downtown consultant hired by the city gave a two hour presentation that reiterrated housing marketing studies show newcomers want more amenities and lower housing prices. The most obvious way to drive down housing prices is to increase the supply of housing. This can only be done by permitting the construction of more residential developments.
The one-sided marketing presentation failed to note increasing new housing could have adverse impacts on the existing residents. Although the consultant did dismiss any safety concerns, he totally ignored the congestion impacts of more people on traffic and over-crowding. This omission came despite recent citizen surveys listing overcrowding as the people’s third highest priority (after safety and quality of life issues). Also ignored was the fact lower housing prices mean lower home values for existing homeowners.
At the end of the presentation, the consultant noted it was unlikely the City would get any funding from either the federal or state governments. This implied any additional funding for affordable housing would have to be raised from new local revenues (taxes, fees, de-TABOR?).
On the subject of putting a de-TABOR issue on the November ballot, the idea of forming a citizen’s commission was floated. This group (appointed by mayor or his Council majority?) would recommend how to spend the funds raised from keeping the excess city funds TABOR requires be refunded to the citizens. The plan appears to be designed to get open space advocates to take the lead by pushing for a de-TABOR measure that would provide some monies for acquistion of open space.
At the planning retreat, reform Councilors pushed for efforts to rein in over-development. While development concerns ranked high, improving infrastructure was rated as a higher priority for the year. What is not clear was whether this will translate into improving existing infrastructure for the current residents or result in improvements to support additional development.
Stormwater Background Facts
The older (northeastern parts of the City were built when development standards were lower, resulting in several drainage ditches that could flood.
To get around the TABOR requirement to take tax increases to a vote of the people, a special stormwater “utility” was created that could bill for “utitlity charges”. On the City’s financial books, this is called an “Enterprise Fund”. All revenues and expenses are accounted for separately from other City monies.
The annual fee is based upon the “imprevious surface” (rainwater run off rather than soaking in) each property possesses.
Currently the annual fees raise about $2.5 million dollars. Of that about $1.5 million is used for routine maintenance and to contribute to the regional stormwater management program. This leaves about a $1 million dollars for capital projects. Staff estimates there are between $100 to $150 million dollars of capital needs.
Three Councilmembers (Ramey Johnson - Ward 1, David Wiechman - Ward 4 and Pete Roybal - Ward 3) unsuccessfuly attempted to prevent the fee increase.
Among the various amendments offered was an amendment by Roybal to put the issue to a vote of the people. Although the City Attorney says the storm water fee, also called a “utility charge”, is not subject to the TABOR requirements for a vote of the people, Roybal argued it would be morally the right thing to do.
As an example of how the Council picks and choses ballot issues in 2014 the Council put a special issue on the general election ballot (at the cost of an extra $100K) to get a sense of the people’s will on recreational marijuana shops in Lakewood (2A). Even though we already have regularly scheduled city elections in November (which is already budgeted for), the council majority voted 7-3 not to seek even an advisory vote.
Wiechman (the economist on the Council) tried financial reasoning. The $2.5 million brought in by the fee increase could be found by reallocating funds from other parts of the budget.
He offered amendments to move the nearly $1 million in the city manager’s budget earmarked for studies of the Denver Federal Center to the capital improvement budget. He also moved to switch $1 million of the $2 million budgeted for sidewalk repair to storm water capital improvements arguing flood control is a higher priority.
Finally he moved to use some of the over $40 million dollars currently in the City’s reserves funds for flood control. All his motions, even the one to eliminate the automatic annual inflation adjustment, were rejected by the majority.
City Attorney Gets No-Bid Contract
An attempt by the Council’s reform faction to apply good business practices failed when the establishment majority voted to maintain the status quo by giving out the contract for City Attorney without putting it out to bid or even giving it a cursory review. Although it is standard procurement policy to put contracts involving more than $50,000 out to bid, the establishment utilized a legal loophole to keep the $250,000 / year (plus expenses and sub-contracting) contract in the good-old-boy network without competitive bidding.
Using the classic late night meeting tactic to thwart public input and to wear down the resistance of tired Councilors, the establishment renewed the service contract with the City Attorney’s law firm in a 7-4 vote (For – Mayor Adam Paul, Ward 1’s Charley Able, Ward 2’s Scott Koop and Sharon Vincent, Ward 3’s Shakti, and Ward 5’s Dana Gutwein and Karen Harrison; Against – Ward 1’s Ramey Johnson, Ward 3’s Pete Roybal and Ward 4’s David Wiechman and Barb Franks).
Ward 4 Councilor David Wiechman (who is a retired government economist) pointed out it is standard “best practices” for decision makers to consider all possible reasonable alternatives and select the option which yields the best value for the dollar.
However, the establishment majority refused to consider any other options and focused on their desire to “stay on course”. Their “if it ain’t broke, don’t fix it” attitude not only flies in the face of common sense (progress requires seeking improvement) but isn’t supported by the record of the last several years.
This City Attorney advised Council that it is legal to give tax funds to charities and hold its’ annual planning sessions outside of Lakewood despite clear language in our City Charter and state Constitution prohibiting these actions. In the last couple years the City Attorney has overseen the spending of nearly a million dollars in an effort to buy the contaminated land in the northwest corner of the Federal Center (called the horseshoe property).
However, this attorney is possibly best remembered as spending hundreds of thousands of dollars in an unsuccessful effort to defend the Council’s failed attempt to give away the city parkland at 2090 S. Wright St. (which the attorney had advised Council). Despite these failings the Council majority decided he deserved a no-bid renewal.
The only defense against the concerns raised was the contract retains the standard termination clause that Council can fire the City Attorney at any time. Since this clause was never utilized in the current contract it is unrealistic to expect it will now be applied by this Council after its vote of confidence.
Other Rewards of Service
While one can’t get rich on a City Council salary, there can be rewards for loyal service to the establishment.
Former Ward 5 City Council member Tom Quinn was selected to be the new executive director of the Alameda Gateway Communmity Association. Although the pro-establishment group does not provide public access to their financial records, it is believed Quinn’s new salary will be over $90,000 per year.
Other former city politicians doing well include former mayor Bob Murphy who was appointed state director of AARP. Quinn’s former council mate, Diane Wilson, is now the chief communication officer for Jeffco R-1 School District.
Planning Retreat Held in Lakewood
In a small concession to the reformers, the City Council held its annual planning retreat within the city limits. In previous years, the Council has held a two-day session at a resort outside of Jefferson County.
This year Council held a one-day event at the H heritage Center Visitor Center in Belmar Park. Without the need to travel out of town the work could be accomplished in one day thus sparing participants from taking off work and saving the taxpayers the extra expenses of over-night accommodations and meals.
In addition all the meals were catered by local restaurants. Holding the meeting in town put the Council back in compliance with the City Charter requirement that official meetings be held in town. Finally, the local venue allowed several citizens to stop by for an hour or two at a time to observe the proceedings.
The change is a testament to the persistence of a couple reform Councilors and previous Council member Doug Anderson. The previous mayor and his allies had opposed holding the meeting in Lakewood for years.
City Donates Tax Dollars to Charities
In a replay of the debate last year between fiscal conservatives and social activists, City Council narrowly approved another $100,000 in donations to local charities in 2016. This year’s proposal changed the selection committee to seven members - two from City Council, three from the Advisory Commission for an Inclusive Community and two from the Lakewood Legacy Foundation. The general public does not have a non-government representative.
The vigorous debate revolved around the role of city government. The fiscal conservatives argued charity giving should be an individual choice and tax dollars should only be spent on municipal services like parks, police and streets. The social activists argued charities are doing good work that helps our community and is an effective use of tax dollars.
One of the more interesting points in the debate was the question of legality of cities donating to charities. It was noted the Colorado Constitution (Article XI, Section 2) prohibits cities from donating to nonprofit corporations. The City’s charter also limits appropriations to only municipal purposes. Specifically, Article XII 12.3 © states “... expenditures necessary for the operation of the City, (d) expenditures necessary for debt service.” The City Attorney responded to these objections by stating there were recent court decisions that allow cities broad discretion.
The 6-5 vote: For the donation - Adam Paul, mayor, Sharon Vincent & Scott Koop (Ward 2), Shakti (Ward 3) and Karen Harrison & Dana Gutwein (Ward 5). Against the donation - Ramey Johnson and Charley Able (Ward 1), Pete Roybal (Ward 3) and Barb Franks and David Wiechman (Ward 4).
Who Does Council Serve?
In an interesting development in the old question of who the City Council serves, the issue of “trust” was debated at this year’s planning retreat. As usual the establishment tried to indoctrinate the new Councilors with the standard fare about how Council is a “team”, staff is helpful, and Council should “trust staff”.
However, this time around Ward 4 Councilman Wiechman, a veteran of six retreats, submitted a research paper reminding participants that Council is legally required to work for the citizens who elected them to office.
He pointed out our democratic system of checks and balances means Council and staff can’t be members of the same “team” but rather Council serves as the guardian of the people’s interests and therefore acts as a watchdog over government employees.
In promoting the “trust, but verify” approach he noted Council has a fiduciary responsibility to the citizens. This legal concept means the Council members have a “special duty of care” to the citizens to put the people’s interests ahead of their personal interests, special interests and those of the professional staff.
Trust is for those whom P.T. Barnum described as the “sucker born every minute” while Council’s fiduciary responsibility requires critical thinking, skepticism, evaluating all alternatives, and conducting independent research using third-party sources. The staff is tasked with helping and carrying out Council direction.
City's Financial Situation
Currently City revenues are way up. Sales taxes are at a record high, going up 6% in 2014. Property taxes will be going up soon after property values were increased about 20%. The result is that City revenues are now in excess of the limits imposed by TABOR. The surplus in 2014 was $4 million dollars.
Accordingly, the City has engaged in a spending spree. About $6.5 million was spent to fix up city hall. An additional $2 million has been budgeted for sidewalks. Nearly a million dollars has been budgeted to study developing the Denver Federal Center. Over $100K was spend for last year’s marijuana election, another $100K was donated to charity and another $100K to upgrade the City’s cable channel 8.
Even after the spending spree the City has record levels of reserves. Over $30 million is available in general fund reserves and another $10 million is available in various other reserves. These reserves constitutes about 25% of our budget compared to the 10% goal previously set by Council.
Whether it is by reallocating funds from other projects, using some of our reserves or tapping into our annual surpluses, the $2.5 million dollars raised by the higher fee was not necessary.
Instead it is a scheme to keep the TABOR refunds the City is required to make. In an accounting exercise the required City (not state) TABOR refunds are applied against the new stormwater fees to yield a lower net due.
Over Development Continues Under New Council
Lakewood’s housing development continues unabated. In addition to the 150-unit low-income, high-rise project planned for 5800 W. Alameda Ave., other projects are underway at Solterra, Belmar (a low-income project) and Union Blvd. The latest news is Lakewood is looking at annexing 310 acres along the south end of Rooney Valley from the town of Morrison. In the Green Gables area we hear rumors: (1) a developer may buy and develop the Taylor property and (2) the Ward Lake Tree Farm may be sold and developed with multi-family housing.
The recent proposal to build 250 apartments along W. Ohio Ave. just north of the Safeway on Alameda exposes yet another problem with the relaxed pro-development zoning adopted by the previous City Council. The property was originally zoned for offices (which would create jobs). In fancy new planning lingo, the new code zoned it as “Mixed Use-Employment-Suburban”.
Ward 4 Councilor Barb Franks observed the code describes this zone as dedicated to employment-generating activities with dozens of business-related permissible uses. It also envisions the possibility of mixing in some housing. Examples would be multiple story buildings with retail, commercial or office uses on the lower floors and housing above them on the upper floors. To allow for this mix the code includes ancillary residential use at the end of the list of permissible uses.
Franks pointed out devoting the entire site to housing is incompatible with the spirit of what was intended. A common problem with regulations is they are designed to accomplish worthy goals but in the legal fine print is often some general language that can be interpreted to allow almost anything.
Another change in the code was getting away from density limits (# of units per acre). Now developers can put in as many housing units as they can fit in (if they meet the height and setback limitations). So if a developer wants to cram in lots of studio units instead of family homes that is permissible.
Who Will Pay More ?
Everyone, of course, and multiple times over.
Obviously homeowners will see their fee nearly doubled every year. In addition, churches, nonprofits, schools and businesses will see their current bills now doubled. Renters could pay more as landlords pass through their higher fees.
Finally, you could pay more at the shops you patronize as businesses pass through their higher fees. If the $2.5 million dollars raised by the fee increase is divided by our 145,000 residents and then multiplied by four people/family means the average family will pay $69 more per year (even before the future inflation adjustments).
Plans For Upcoming Year -
de-TABOR Vote in Nov. 2016
While scores of ideas were thrown out at the retreat, there were a couple eye openers and clues for what’s ahead. One objective pushed by staff and the establishment faction was to do a housing “study”. While it’s not clear what is the real objective of the study our sources suspect it will be used an excuse for spending tax money on “affordable” housing (or some new politically-correct semantic term).
The other objective pushed by staff and the establishment councilors was to stdy “TABOR options”. TABOR stands for Taxpayers Bill of Rights. Again there was no detail at this time but it appears to be designed to find some funding “need” that can be used as an excuse to have a de-TABOR vote on this November’s ballot to allow the City to keep the refund TABOR otherwise requires citizens receive. Last year's TABOR refund of about $5 million was used to pay down much of the stormwater fee. This year the TABOR refund is about $4.5 million dollars or about $35 per person.
On the other hand, the reformers pushed for changes in the culture at City Hall and way we are governed. Chief among their proposed reforms was to change “study sessions” from the current sales presentation of staff’s position into a true “hearing” in which all sides of an issue could make their case. By giving equal hearing to opposing sides, it is hoped Council members won’t go into meetings with a predetermined outcome but rather can listen to public input.
Annual Storm Water Fee Nearly Doubled
(posted in July 2015)
As we predicted in an earlier, the City Council did go ahead and raise our annual storm water fee. The amount was essentially a doubling (87% increase) of the current fees. The increase will take effect on January 1. As the gift that keeps on giving the fee automatically increases every year by inflation. In recent years the annual inflation rate has been averaging between 2 and 3%.
The 87% increase is in sharp contrast to the actual inflation rate we have been experiencing. From the year 2000 when the storm water fee was established to 2015 the inflation rate totaled less than 40%. Since the new fees will only raise another $2.5 million per year the City plans to sell a “bond” or something similar to raise $20 to $30 million upfront. The “bond” would then be paid off in periodic payments funded by the storm water fees.
The mayor and his allies are planning on offsetting much of the fee increase with the TABOR refund we are scheduled to get over the next few years. Since the City has been bringing in more revenues than it is allowed to keep under TABOR the citizens are required to receive a refund. This is separate from any TABOR refund due from the state or other political entity.
The plan is to apply the refund to each citizen’s storm water fee (the new higher fee) thus yielding a lower net amount due from the consumer. This mitigation is hoped to reduce any voter backlash from the fee increase.