WHAT'S THIS JOINT POWERS THING THAT'S GOING TO OWN THE ARENA?

In the unlikely event that the illegal violation of Proposition 218, The Right to Vote on Taxes Act, by the City and County of Sacramento to raise the sales tax to build the Kings an arena succeeds, we are told that the taxpayers will put up the money, a Joint Powers Agency or Authority (JPA) will own the whole works and pay the taxes, and the Kings will rent, manage, and maintain the facilities and keep all the money earned. The interesting feature is the lack of anything in writing. Doesn't take a rocket scientist to figure out why. Anything agreed to in writing before the November election could show up in a court injunction as proof that the whole scheme has a special purpose, and should require a two-thirds vote for approval instead of a simple majority, as required by Proposition 218. Proposition 218 clearly states that "Special Tax" means any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund. So people, you can bet neither our law-dodging elected officials, nor the Kings, will put anything in writing until very close to, or right after the election.

But an interesting part of the plan is the Joint Powers feature. Unless you are in the "governing" business, few know or understand what a Joint Powers operation is. Essentially the formation and operation of a JPA involves a contracting agreement and arrangement among public agencies in the same or similar business, aimed at managing a specific project or operation jointly. Those involved combine their legal obligations and powers hoping to achieve an objective jointly for the common good. But you've got to be careful about how the basic agreement is put together, as it can boomerang and create a great deal of mischief. Such is quite possible in the public ownership of the Kings arena, considering what we are being told.

The JPA will construct the arena, its garage, and associated facilities, and will own the arena when its completed.. The JPA is also responsible for covering overruns during construction, which is likely, based on what we have read. The understanding is that the JPA will identify three arena designers, from which the Kings will select and work with one to establish the final design. A risky combination wherein the Kings chose and control the design, but the JPA must pay the bill to build it as directed.

The JPA will probably be composed of elected officials from the Board of Supervisors, and City Council Members from each of the County's Cities. The usual number is two from each Board, i.e., a primary representative and an alternate. A budget must be established and amended over the 30 or more years of operation of the JPA, as it will need office space, equipment, people to run the operation, a General Manager or Executive Director, and access to an attorney or attorneys during construction, and JPA responsibilities thereafter. Budget costs for a JPA, are the responsibility of each of the public agencies involved, the money normally coming from contributions from each of the County and Cities general funds made up of taxpayers money. The cost is usually proportioned on an equal percentage basis of the total general fund.

When construction begins, the JPA will have to borrow large sums of up-front money, as the flow of funds from the tax increase will not be sufficient to cover initial construction costs. It has been estimated that the interest paid on the borrowed money will add about 31 to 50 million dollars to the total cost, and would probably require a guarantee of repayment, backed by the existing income of JPA members general funds.

Tack onto that, as owners of the arena the JPA will be responsible, over the life of the structures, for all insurance requirements involved, and at the same time have agreed to pay a possessory interest tax (in lieu of property taxes) for the Kings, a tax normally paid by rental operators of such facilities. While this is going on, the JPA will not receive a dime of the money generated by the arena, its parking garage, or naming rights. And its being advertized as a great deal!

DEALS IN NORTH NATOMAS
Joe Sullivan

Activities in the North Natomas area relative to actions by the City and County of Sacramento involving potential annexations and condemnations, coupled with handling of repayment of Mello-Roos bond money for infrastructure, has become significant concerns to the Taxpayers League. As a result, an investigative committee of League professionals has been formed to study and diagnose the activities to determine whether there have been violations of laws. The following are our major areas of concern:

1. The Boot Area - During an emergency meeting of our Board of Directors on August 10th, one of the issues we agreed to support was the interest of family farmers and landowners in the Natomas Basin, otherwise known as "the Boot", in the context of regional planning. Both the Sacramento Area Council of Governments (SACOG) Blueprint and Sacramento County General Plan Update prioritize planning principles curbing urban sprawl, placing development close to planned and existing infrastructure, and reducing commute time and distances.

The area comprising the Boot is about 1,200 acres located north of Interstate 80 between the Sacramento City limits and Garden Highway, only 2.5 miles from the city core, near existing major water, sewer and road infrastructure, part of nearly $900,000,000 in infrastructure in the Natomas Basin. By developing the Boot, the County can maximize the return on existing infrastructure paid for by Sacramento County taxpayers.

Discussions regarding land use options within the Natomas Boot have been complicated by a one-mile wide buffer from the Sacramento River referenced in the Natomas Habitat Conservation Plan (HCP). This buffer was the product of an agreement among the City of Sacramento, and State and federal regulatory agencies in the Natomas HCP. The problem is that the buffer impacts property situated entirely within the unincorporated area of Sacramento County. More importantly, neither the property owners of the area, nor the County of Sacramento, participated in the discussions that led to the establishment of the one-mile buffer. Further compounding the problem is the fact that this buffer zone has become the basis for subsequent land use planning processes. From the League's standpoint this is judged an inappropriate use of government's police power, amounting to a condemnation of private land. The land owners are appealing to the Board of Supervisors to give them a chance to make a case as to whether or not other land uses, besides open space, are appropriate for farm land in the Boot. If the Board denies the landowner's application, the landowners within the Boot will have lost their ability to pursue appropriate land use changes to their property. This is patently unfair and they certainly deserve due process.

On behalf of the Sacramento County Taxpayer Leagues, I joined with the Boot farmers and landowners on August 29th at a Sacramento County Board of Supervisors meeting, and advised the Board that the League supports the landowner's request.

2. The Greenbriar Project - A 3,700 housing unit project, titled the Greenbriar Project, is being urged by developers, and is being supported by the City of Sacramento, although it is not in the City's General Plan. Oddly it is being expedited by the Local Area Formation Commission (LAFCo) before the City's General Plan has been completed. It is zoned agricultural, and is outside the City limit and the County's Urban Services Boundary (USB). As the Greenbriar area is outside either plan the impact of its conversion from agricultural to urban use is not addressed in any environmental review, as required by law. The expansion and possible annexation seems to be designed to push the urban limit line and expand into the Natomas Basin, a change not
identified in any existing City or County planning document. The City wants the land under its sphere of influence for the obvious reasons of increased growth, and added tax, fee, and assessment revenues.
Greenbriar's conversion to urban use is opposed by environmentalists complaining about habitat losses, and others whom are concerned about inadequate flood protection for future residents and businesses. The Corps of Engineers in July decertified the levee system surrounding the Natomas basin as inadequate to sustain the 100-year flood level. This is a major problem, ignored over the years, and the thrust to put 3,700 homes and commercial enterprises in harms way in anticipation of future improved flood control improvements is folly.

The League joined with those in opposition from the taxpayers standpoint, as costs to accomplish everything required to make this a safe and well serviced area is going to be astronomical. And every bit of the cost will be borne by taxpayers, whether the money is provided by the Federal Government, the State, the County, the City or by the individuals who live and work in the area. At the LAFCo hearing on August 30th, I told the Board that I lived in the unincorporated County, and that if my area was annexed by the City, I would move, as City residents are taxed at levels many times higher than anywhere else in the County. City utility taxes on electric power, natural gas, telephone and television service at 7.5% ($56.8 million/yr.) is three times higher than anywhere else in the County. And the City alone has the audacity to tax water, garbage, sewerage, and stormwater runoff rates, provided as City utilities, by 11%. ($15 Million/yr ). We are a state that does not tax food or medicine, considered to be necessities, yet the City of Sacramento charges its citizens, commercial enterprises, and office buildings 11% of their water rates. If the Greenbriar area must be developed some time in the future, the County should control the development area, which would quickly be inundated by the City's people and commercial enterprises seeking to escape the City's clutches.

3. City of Sacramento Handling of Mello-Roos Bond Money - A Sacramento Bee article related that a developer may have been over-paid for construction of drainage facilities for subdivisions in the North Natomas area. under the City of Sacramento's 1994 North Natomas Financing Plan. The contention was the city paid the developer $5.4 million beyond actual cost for the drainage facilities, which seemed an illegal profit, along with "fee credits" on future development. Originally, the city's legal staff, treasurer, and bond counsel warned a double reimbursement was "clearly illegal." Notwithstanding the warning, the city signed a Memorandum of Understanding (MOU) with the developer on October 5, 2000, based on the plan.

The story came to light in court documents in a wrongful termination lawsuit filed against the city by a former Sacramento senior deputy attorney, who questioned the reimbursement plan, stating, "it violated state and federal laws." The Taxpayers League was asked to investigate the matter, and our Board of Directors instructed me to obtain related information, and to present a plan for action by the League to assist in the request. Since, additional information has been obtained, and a League Committee, drawn from its Board of Directors, has been established to investigate allegations that Mello-Roos Bonds may be mishandled statewide. This work is ongoing.

The case seems to involve an advance full payment of $15 million for drainage facilities by a principal developer, whose total cost would be less than $9 million, while other developers, who would also benefit, were unwilling to put up money in advance. In 1999 the City paid for the drainage system by repaying the developer the $15 million out of proceeds from sale of Mello-Roos bonds. The developer was to pay off their share of the bonds over time, with interest, through a special tax assessment on home owners. By 2003, as other developers developed their property, they paid the City for their share of the drainage facilities. The City then payed the principal developer more than $6 million more of the new developer's money, allegedly to reimburse it for tax assessments and interest, and for the alleged reduction of the property value resulting from the Mello-Ross tax. It is this $6 million payment that is challenged. The 15 million had been reimbursed, and transferring an additional $6 million to the original developer of other developers payments amounted to reimbursement in excess of 100 percent of actual cost. This appears to the League as being a gift of public money.

County District Attorney (DA) Jan Scully's office investigated the Natomas matter, and The Bee reported that the DA announced on August17th that her office found "no evidence of criminal misconduct" by Sacramento City officials in the payment of public money to the developer. The DA concluded the tax assessment and interest, and the Mello-Roos tax assessment's negative impact on the value of the lands became part of the drainage facilities cost, for which the developer was entitled to reimbursement.

There are questions regarding the DA's analysis, significantly disturbing such the League's committee on the use and repayment of Mellos-Roos bonds will continue its work. Stand by for the results, for if what we believe is correct, many millions of dollars of taxpayers money statewide is at risk.

LETTERS TO THE LEAGUE

We seek “Letters to the League” from Members concerning projects and issues on which we are working, along with recommendations on those we should look at. Letters may be edited and republished in any format, primarily in the interest of available space. Send letters, faxes, or e-mail to the Sacramento County Taxpayers League. Our e-mail is sactaxleague@prodigy.net; our telephone number is (916) 921-5991. Our fax number is (916) 567-1279. And our address is:
Sacramento County Taxpayers League
1804 Tribute Road, Suite 207
Sacramento, CA 95815.

EXECUTIVE DIRECTOR'S MESSAGE

LIVING THE SLOW DEATH OF OUR REPRESENTATIVE GOVERNMENT

Years ago I attacked public officials actions which I believe weaken the people's exercise of true representative government. We seem to be unable to differentiate between what constitutes a Republic, which we are as a nation, and a Democracy, which we seem to think we are. Although we like to call ourselves a Democracy, in fact we are governed by elected officials. Democracy, in its basic definition is "government by the people." Yet we all know, or should know, that this is not the way our Founders established our system of government. We select people from among us, whom we call "politicians", to represent us, and to run our governing elements.

We are watching national and local actions, and the lack of actions, which together have great impact on our lives, and on those whom we have elected to represent us. Sadly, our politicians, supposedly the best among us, seem to have trouble handling the difference between their roles as our representatives, and their commitment to special interests whom work to keep them in power.

I wrote earlier about something that "dogs" me, something I truly fear. It needs repeating, particularly with respect to the promises being given to us by politicians, from top to bottom. It's the "chicken in every pot" syndrom, the promise to fulfill everyone's wants, without the means, or even the intent to do so. I write again that history has a sobering message for us.

Over 200 years ago English Professor Alexander Tytler wrote the following about the fall of the Athenian Republic (ancient Greece). "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on,the majority always votes for candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship." He went on to state, "The average age of the world's great civilizations has been 200 years. These nations have progressed through this sequency; from bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependency; from dependancy back to bondage."

I have lived through 4 of the 9 steps, and fear that we are in the 8th, next to the last. We are moving through a time of apathy, as our people regale in becoming dependents of government, led by politicians beholding to special interests, as we slowly surrender our freedoms. I am lucky in that I will probably not live long enough to see the final step, but I fear greatly for my grandchildren, great grandchildren, and their children yet to be born.

Joe Sullivan

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