Public pensions

. . . are much in the news.

Former Kinko's CEO Dan Frederickson (whose new office building is moving forward on California Street) recently circulated a story from the conservative magazine Newsmax headlined: "Three Trillion Dollar Pension Crisis Threatens Cities, States." Meanwhile, the City Council narrowly approved a new contract for Ventura's firefighters that included a controversial provision to upgrade their pension plan a year from now. And a union representing rank-and-file city workers is also pushing for enhanced pension benefits.

Is there a public pension crisis? Is Ventura crazy to even consider increased pension obligations?

Yes and no.

Yes, there is a public pension crisis. Just like there is a Medicare and Social Security crisis. Just like there is a national debt and infrastructure crisis.

Oh, yeah. Yawn.

As a nation, we've committed ourselves to long-term debts that are not sustainable. We can't afford the cost of entitlements over the lifetime of retiring baby boomers. Any serious observer would acknowledge this. But are either of the candidates for president? No. Why? Because it is a huge and insoluble challenge that can be safely put off until someone else's term in office.

So, is Ventura crazy for even considering enhanced retirement benefits for firefighters? Will we soon be following Vallejo to bankruptcy court?

Well, no. Certainly the critics are right that we have a big problem as a nation. And certainly we here in Ventura need to be cautious about the long-term implications of what we do today. But in fact, Ventura has been very cautious and is only belatedly surrendering to the realities of the marketplace.

Two points. First, Ventura does not have any lifetime medical benefits for retirees. Both Oxnard and Thousand Oaks do. That problem is a much more pressing one. Ventura has always held the line.

Second, when Ventura upgrades its pension plan for firefighters next year, we will be the last one of our size (or larger) in the entire state to abandon the old 2% at 50 formula. Nor are we going to the most common standard -- the one offered by all our surrounding, competing agencies. Our firefighters settled for a middle ground plan -- and no general salary increase, despite being 10% below the average pay in comparable agencies.

Of course, much of the online reaction to this news in the Ventura County Star focused on whether firefighters deserve enhanced compensation. One camp took the "they put their life on the line" stance. The other took the "they have a cushy job that mostly involves sitting around the firestation when they are not jogging at the beach" tack.

Both are pretty shallow and beside the point.

The reality is that Ventura residents expect first-class emergency response to medical emergencies, industrial accidents, toxic spills, natural disasters, and, yes, fires. Yet compared to the County (which serves Camarillo, Thousand Oaks and Simi Valley) we have long eaked out delivering that service with lower staffing levels; lesser equipment, stations and training facilities; and much lower pay and benefits (at one point, County fire captains were making $1000 a month more than our people, plus a significantly better pension.) Of course, as a result, our emergency protection costs less than it would cost for the County to provide it -- between $4-5 million according to a study done to look for cost savings. Instead, of course, it turned out that it would cost more.

So it is really a business decision. Today, we struggle to find and keep the top-flight talent that we can trust to open a breathing passage in your child's throat or handle an accidental release of an odorless poison or travel 400 miles to spend three weeks fighting wildfires under our mutual aid obligations. Contrary to outdated stereotypes, these college-educated, experienced professionals are not sleeping overnight to line up to qualify for these jobs. In fact, last year we went several months before we could find six recruits to put through the intense fire academy. Only five graduated, only four remain with us. Our standards are tough.

Reasonable people can second-guess labor contracts -- the split vote on the Council is an indication that balancing budgets and keeping the right talent are tough challenges. But no, we are not going bankrupt, nor has the City lost its mind. We have huge pension challenges as a nation -- but here in Ventura, we are working hard to keep the community safe. That comes at a cost -- both financial and in political terms. But safety is not something that any community can sell short.

What’s America’s Favorite Radio Station?

No, it’s not KHAY or the Boomer. It’s WII-FM. Never heard of it? It stands for “What’s in it for me?”

That’s not to say that Americans in general – and you and I in particular – are motivated solely by self-interest. But our hyper-competitive and individualistic society naturally reinforces our human tendencies toward envy and resentment. It’s hard to escape the temptation to compare ourselves with others and wonder why we work so hard and others get so much.

That thought crossed my mind when I read about the new City Manager in Salinas, a friend who I’ve known since he was an intern in Pasadena. Most recently, he was an Assistant City Manager in West Covina. Salinas is a struggling town that three years ago narrowly averted closing its libraries for lack of funding. His starting salary? It’s $205,000 or 18% higher than what I’m paid after more than four years leading a similar sized-city. In Palo Alto, the new manager will be getting $240,000 starting salary, a transportation allowance of $600 per month and the city will contribute another $23,000 a year toward a supplemental retirement plan. There is also a generous housing assistance plan of up to $2 million dollars.

It may be tough for City Councils to recruit top managers in this tough political climate, but these kinds of compensation packages not only evoke jealousy from other city managers, they understandably stoke hostility from citizens. And that generalized anger extends to virtually anyone in public employment, as reflected in the comments on the Ventura Star’s website regarding the Firefighter contract approved last week by the Council on a 4-3 vote. “They already have fat pensions,” insists a reader who calls himself ‘Growlerboy.’ “How much is enough? When does it end? The only way to get the city's attention is to vote down all future taxes. No more money until they can prove it will be spent wisely!” ‘Sassygal’ weighs in with her opinion that Ventura firefighters have it “made in the shade” and growls: “We should pay them more for their services? HARDLY!!!”

In this polarized environment, our City Council must weigh and balance the conflicting demands of a public clamoring for high quality services and a workforce expecting competitive compensation to provide those services. Each side is focused on the obvious question: “what’s in it for me?”

That's hardly surprising. Citizens pay Federal, State and various local taxes seemingly at every turn at a time when families and businesses are struggling to make ends meet. If you work for a bank, a car dealer, an airline, a real estate firm or a builder, losing your job is probably more likely than getting a raise. Not much sympathy for public servants, especially if higher taxes or fees are involved!

Ironically, those same public servants mirror that frustration. They pay those same taxes and face the same higher gas, food and medical costs. They recall tough times where they skipped cost of living adjustments for years at a time with the hope that they would catch up later. They wonder why their families should remain loyal to Ventura if Ventura won't pay them benefits comparable to at least the average of other communities.

I don’t have a pat answer to those who ask the question: “What’s in it for me?” To the citizens, I’ve tried to make the case that you can’t run a first-class city with second-class compensation. To city staff, I’ve tried to make the case that pride, respect, excellence, public service, innovation, sustainable finances and a positive work environment are just as important factors as pay and benefits. I’ve tried to set a personal example – my pay remains below my predecessor’s, well below the market average and is no longer even the highest paid in our city government (I’m now third.) Yet I recognize that my willingness last year to participate in the Austin city manager selection process reinforced the natural suspicion that I am just another mercenary who was willing to jump for a more lucrative offer if it had been extended. Few seemed to believe that I would be intrigued by the challenge of helping one of America’s fastest growing big cities to achieve their goal of becoming “the most livable and sustainable city in the nation.” Or that I would conclude on my own that running an organization with 12,000 city employees was not the job for me, even if it did mean lots more money and prestige.

So I don’t know how much anyone – citizens or city staff – buys my argument that we actually all have it pretty good here. Comparative studies show we run a remarkably economical city government – but you wouldn’t know that from the constant carping of those who rail against “the gang in the Ivory Tower.” Market data shows that while we remain behind the curve on competitive compensation, we have made significant progress – and we are continuing to make modest progress in catching up to the average.

Clearly the City Council doesn’t get sufficient credit for their steady and responsible efforts to find the right balance. Nor will it get easier for us as the economy continues to deteriorate. But the problem with the question of “What’s in it for me?” is that we all depend on each other. When we lose sight of that, envy and resentment can blind citizens and staff alike to the blessings we share and the mutual obligations we owe each other.

In much tougher times, Ben Franklin told his fellow pioneers in self-government, “we must all hang together – or most assuredly, we all hang separately.” Subordinating one’s immediate interests for the long-term greater good isn’t the mark of either a saint or a sap. It’s enlightened self-interest. Those little stickers that sprouted after 9/11 have begun to fade and peel. But the sentiment still holds: “United we stand.” Divided we fall.

Schwarzenegger stands up for local government

There is plenty of blame to go around for the repeat of the perennial budget mess in Sacramento, but Governor Arnold Schwarzenegger's defense of local government is a refreshing break from the partisan gamesmanship.Unable to reconcile their profound disagreements, leaders in both parties in the Legislature have decided to raid cities and counties.

Having dug themselves into a hole by gimmicks and borrowing, they've come up with an absurdly irresponsible plan to "borrow" at least $1.4 billion from already strapped city and county governments, as well as $1.1 billion in funds promised for transportation projects.What is most reckless about this scheme is not the devastating impact it will have on vital local services -- it is that the State will have to pay it back with interest. Why does anyone think that a State that was recently given the lowest fiscal rating in the nation (a D+) should borrow more?

Especially since the borrowing won't produce any tangible assets -- just a bigger hole in the balance sheet?Governor Schwarzenegger chided the Legislators for their arrogance, describing their attitude as: "Let's grab their money now because we've made a mistake."If you would like to express your opinion to local legislators on why the State should not force local governments to make cuts when they won't, here's their contacts:

Assemblymember Pedro Nava (D): (916) 319-2035 assemblymember.nava@assembly.ca.gov

Senator Tom McClintock (R): (916) 651-4019 senator.mcclintock@sen.ca.gov

Kids Vs. Global Warming

There's a new prime time television series on "The Secret Life of the American Teenager" which dwells on the depressing topic of kids growing up way too quickly in ways that can't be good for themselves or our future. How encouraging that here in Ventura, some American teenagers are taking responsibility for the future of our planet.

"Kids Vs. Global Warming" is a movement launched by some amazing middle school students at Ventura Charter School of Arts and Global Education. Wunderkind Alec Loorz, now 13, apparently started things off by putting together a Powerpoint on the perils of climate change, inspiring a growing cadre of classmates and their parents to crusade for local awareness and action. They quickly rallied around SLAP or "Sea Level Awareness Project." The idea is to erect poles that will show the alarming level of sea rise that scientists predict lie ahead if the planet continues to heat up. It's a way to dramatize that much of Ventura's coastal zone would be under water by the end of the century if current trends continue.

On Sunday, these energetic activists erected their first poles along Ventura's Promenade. Speeches, wrist bands, music and striking new t-shirts highlighted the event.

Loorz is off to El Camino High School in the fall, but his network of activists hopes to continue to spread to other campuses through educational outreach efforts. For more on the group and their ambitious effort to save the planet, check out their web site (and Alec's blog) at:


http://www.kids-vs-global-warming.com/

There is also an in-depth story by Zeke Barlow on the group that ran in the VC Star:

www.venturacountystar.com/news/2008/jun/27/teens-warning-on-global-warming-will-be-overhead/

If there is a "secret life" for teenagers, this is certainly a better alternative. Pass on the word . . . and maybe it won't be a secret anymore that some kids have better things to do than getting in trouble or going shopping.

Younger market for Ventura?

Nothing doing for the next two years when it comes to building new homes. But then demand from a new generation of Californians will mean an updated version of the American Dream.

That's the message I heard this week at a conference in San Francisco on "Multi-Family Housing Trends," held each year in conjunction with the massive Pacific Coast Builders Conference. I attended to participate in a unique session that encourages developers to partner with the public sector and community to produce more compatible and sustainable development. Called "Planning for Approvals: Real Solutions in Real Time," the audience watches as the developer's "cookie cutter" site plan is rejected, three alternatives are designed and eventually through interaction with the city government and the community, a far better final plan emerges. Although the actual site is a real one, I play the city manager of the fictional town.

The conference kicked off with a compelling talk by one of the nation's leading housing analysts, Robert Gardner of the widely respected Robert Charles Lessor & Co. Here are the grim factors that will continue to depress the residential development business:
• Low consumer confidence levels
• Too many units in the resale market and in foreclosure
• Uncertainties about prices and values, keeping legitimate buyers on the sidelines
• Unrealistic expectations regarding consumers’ housing purchase power
• Questions about the health of the banking system
• Concerns for the degree of the sub-prime /foreclosure problem

Gardner expects home prices to continue their decline by another 10-15%, with a real possibility of another 15-20% drop if the economy continues to sputter. Under that scenario, prices don't pick up again until 2012.

Already across the western U.S., prices have fallen back to 2004 levels and sales have dropped 54% off the 2005 pace. There are, of course, significant regional differences, as well as wide variations when comparing new vs. resale and single family homes vs. condos. But out of the welter of data, a clear trend emerges for Southern California: although we have too many new and foreclosed homes on the market, buyers are reluctant to buy into a falling market. That has made apartment building a far safer bet.

We're seeing that in Ventura. After a major homebuilder dropped its plans to build on both sides of the railroad tracks on the bluff overlooking Harbor and Seaward, a local developer has submitted a plan for the southern side of the site that calls for building more than 300 rental units. The plan was given a cautious go-ahead from the majority of the Council, with the clear signal that there should be a mix of ownership units as well. Out on the east side, another developer has submitted another plan for more than 300 units near the Johnson Drive freeway entrance next to the Century 16 shopping center.

Whether these projects will win approval or ever be built is an open question. But there was a real sense of gloom about moving forward with "for sale" units in most markets. Not only is the market continuing to deteriorate, banks and other financeers are under glaring scrutiny about the loans and investments they make.

In these predictions, Gardner is very much in the mainstream. But what made his presentation compelling was his analysis of future trends. In his view, we are not just looking at a cyclical downturn: we are looking at a generational sea change away from suburban tract homes and toward higher-density urban living.

What will drive this new model? Higher gas prices, obviously. But much more importantly is a younger generation looking for a hipper, greener and more affordable lifestyle -- as well as part of the aging baby boom generation looking for a lower maintenance, higher amenity alternative.

Here are some of the demographic factors drivng this emerging trend:

• Large households are plunging (25% decrease 200-2006 in households of more than 5 people) while small ones are growing (almost 20% increase in households of 1 or 2.)


• Over the next ten years, the age group that has been buying larger suburban homes (40-54 year olds) will drop by almost 4 million, while the younger group (25-39) will surge by more than 5 million. And aging baby boomers looking to potentially downsize will swell the ranks of 55 and up by nearly 14 million.

The huge baby boom generation is leaving the stage of wanting to move up (which usually meant moving outward from the urban core.) The next generation (the so-called Gen X cohort born between 1965-1978) is much smaller than the Gen Y group (born between 1979-96.) Raised on "Friends" and "Seinfeld," surveys that fully 71% of that group expect to live in an urban rather than suburban setting -- and one-third say they would pay more to not have to drive to work, shopping and entertainment. Rising fuel prices will only make that trade-off more attractive.

These trends are already reshaping metro areas like Portland and the Silicon Valley. In Portland, for example, the proportion of owners living in attached homes has shot up 54% in the last six years.

Here are Gardner's predictions about an evolution in the American Dream:

• Intown areas and inner suburbs will remain on an upward trajectory
• Diversity, walkablity and proximity to jobs will be keys to site selection and premiumsRenters will represent a steady stream of demand as Gen Y will shift toward homeownership in 2018
• Product types -- smaller and affordable and should have focus on design over size
• Suburbs will need to evolve to remain attractive to Gen Y with more walkable areas, including new and existing town centers – urbanizing suburban commercial nodes
• Master-planned communities will need a greater variety of product and higher connectivity

So, if Gardner's case is on target, what does it mean for Ventura?

The community Vision adopted in our 2005 General Plan actually anticipated this shift. More in-town attached housing in our historic Downtown and along the transit corridors of the Westside and Midtown. A greater variety of home types in more suburban settings. Improved transit as well as making walking and biking safer, more convenient and more attractive. Encouraging a greater mix of uses so residents have a choice about whether they get in their cars to shop, work or seek outdoor or indoor recreation. Promoting high wage, high value jobs to keep residents closer to home for making their living.

These principles appeal both to the younger cohort looking to buy their first dwelling as well as empty nesters ready to give up the big home and big yard. That puts Ventura in a strong position for long-term success as we welcome the next generation of families to live the American Dream along the California coast.

Can we afford sprawl?

Suddenly the price of gas is validating the long-standing critique of suburban sprawl. The Wall Street Journal writes today that: "Today, the subprime-mortgage crisis and $4-a-gallon gasoline are delivering further gut punches by blighting remote subdivisions nationwide and rendering long commutes untenable for middle-class Americans." This morning's LA Times highlights the plunge in values in far-out Victorville and Lancaster. CNN over the weekend carried a story: "Is America's suburban dream collapsing into a nightmare?"

Of course experts differ on whether today's high gas prices are an irrational spike or a long-term reality. And certainly in the short run, there is no reason to believe that the doubling of crude oil price in less than a year is a permanent situation. But any serious observer would agree that even if a declining economy eventually brings down the cost of oil and gasoline, fuel is never going to be as cheap as it's been for the last half century. Even if drilling were resumed offshore in California and the vast resources on protected reserves were thrown open to exploitation, the time and investment needed to bring them online will ensure costly energy for a long, long time.

So that leaves Ventura in an enviable position. Yes, we've suffered from high home prices and a dearth of private sector jobs. But now we have an opportunity to be a model for sensible, compact development that enhances livability and energy efficiency. There is an opportunity to bring back some of the jobs and investment that for too long flowed to the far fringes of our region (requiring costly transportation upgrades to facilitate those long commutes.)

But with every opportunity comes challenges. First, we need to find ways to promote local jobs so fewer of our own residents jump on the 101 Freeway in the morning. Second, we have to be more open-minded about new development in older areas. Third, we have to actively improve alternatives to driving: transit, walking and biking.

Hard as those challenges may seem, the alternative is not workable. We can't go back to cheap gas. And we can't afford to spend what we are now spending on gas.

For more on how we can adapt to the new energy costs, check out the report on "Transforming Urban Environments for a Post Peak Oil Future" on our Green Ventura page:

www.cityofventura.net/GreenVentura/

Grand Jury weighs in on 911 Fee

Grand jury.

It can send chills down your spine.

Tracing its history back to medieval England, a criminal grand jury meets in secret, summons witnesses under oath, listens only to the prosecutor and hands down indictments of the accused.

Less well known is the institution of county grand jury. Made up of mostly retired citizen volunteers, the purpose of our county grand jury is to investigate inefficiency and corruption to "insure that government is serving the best interests of Ventura County's citizens."

As City Manager, I meet once a year with the incoming jurors to brief them on our city's organizational structure and current issues. I've also been summoned on occasion to testify on various matters the jury is reviewing.

This week, the grand jury is releasing a report on Ventura's 911 Emergency Communications Fee. It is a careful and thoughtful report. While I can quibble with some of its findings and recommendations, the basic thrust of the concerns are valid. The grand jury is right that the fee is based on estimates of future revenue and is lower than could theoretically be charged. Their recommendation that we notify phone users in writing of the annual upcoming choice between monthly fee or per use fee is reasonable. It would address the complaints we received of a handful of phone users that they missed all the media coverage and city communication on the deadline this year.

The Grand Jury also supported the Council's decision to hold off on hiring six additional police officers and three more firefighters until the funding from the 911 Fee is quantified and stabilized.

Congratulations to the Grand Jury for wading through the emotions and myths regarding the new fee and providing careful analysis and thoughtful recommendations.