For several years now, the Vanguard has been warning the Davis community that the fiscal condition is far worse than most people have been led to believe. At times, citing our unfunded liabilities in retiree health and pensions, we have suggested that Davis might not be far from bankruptcy.
We now believe that assessment was wrong. While the unfunded liabilities in both retiree health and pensions are concerning, and need to be addressed through the bargaining process, they are manageable. Unlike other cities, Davis is not saddled with huge amounts of debt. It has managed the fiscal crisis not by digging a deeper debt hole, but rather by failing to spend money that it needed to spend but did not have.
In a sense, the leaders of Davis should be commended for this. But while Davis does not face imminent bankruptcy, it faces another fiscal crisis that might be just as bad. Because what Davis has done is balance the budget by failing to invest in critical needs. For years, they assigned capital improvement projects into the unmet needs category.
What we have are basically a series of deferred maintenance costs, and this year we learned just how much maintenance has accrued for Davis. In roadways alone, we must pay at least $8 million a year (more than eight times what we are paying now) to keep roadways from becoming critical, with more than $140 million in backlog.
The city has failed to keep up with maintenance on parks, and the parks tax that was passed last year was insufficient to deal with the magnitude of the problem. The city is running a $3 million a year deficit on critical water infrastructure, that would be shored up with money that comes in through the currently proposed Prop 218.
As citizens become increasingly alarmed about a series of burglaries, the city lacks the ability to hire more police.
One reason that this crisis reached the level that it did was that council put off critical needs over the last five to ten years. Instead, we see the rapid growth in the budget for the fire department over the last twenty years.
In a ten-year period following the decision by the city council to go from three on an engine to four on an engine, the fire department’s budget grew from $4.4 million in the 98-99 fiscal year to $9.9 million in the 2007-08 fiscal year. Personnel costs amount to more than 80% of all expenditures.
The city spends more each year on the fire department than it spent in the last decade on road maintenance.
On Tuesday night, the city had a decision to make in terms of fire staffing. Interim Chief Scott Kenley’s proposal would have saved the city $360,000 a year by reducing staffing from 12 to 11. He believed this could be done with a minimal amount of impact on public safety.
Critically, Chief Kenley argued that this plan would increase the number of available resources and reduce the total response times by allowing the fire personnel to stay in their own area rather than having to move around to backfill for the central fire station.
At the same time, he acknowledged the potential for delay in entering a structure, in approximately one percent of all first alarm responses.
The firefighters scoffed at this notion, arguing that there is uncertainty at times as to whether there is someone inside the building, that waiting will turn small fires into big ones, and that this plan puts lives and property at risk.
In the face of these arguments and public pressure, the council retreated from acting on the interim chief’s recommendations, absent a fuller discussion on the budget.
From our standpoint, this is a tactical error on the part of the council. In January, the council had to face a few firefighters in the room, but the delay of a month allowed the firefighters to mobilize the community.
While having an engaged public seems like a good idea, the public was responding with fear and only a partial grasp of the facts, as illustrated by the emails we published earlier this week.
More than that, we had one resident talking about his garage fire and his prized cars. He argued that people would have a different view if they faced losing their most prized possessions. But Landy Black better captured the trade when he noted he would trade saving one life for ten houses any day of the week.
Moreover, as Chief Kenley would note, the garage fire did not trigger an IDLH (Immediately Dangerous to Life or Health) inside the house and, therefore, the firefighters could attack it from the inside.
Others talked about the need for four, based on medical responses like heart attacks, but the Interim Chief noted that you do not need four firefighters to treat a heart attack and having a more flexible force might have allowed help to arrive more quickly.
The firefighters were late to organize, but once they did they were able to organize an effective amount of public pressure to convince the council to wait.
Will waiting longer now give the city council a more strategic advantage? That remains a critical question.
Within the broader budget context, some worry that pitting firefighters against parents with concerns about pool closures and recreational fee increases and other service cuts is not a healthy way to engage in community discourse.
On the other hand, it was suggested that putting the discussion into the broader context, particularly the discussion on roads which is an overwhelming problem, will force the discussion back into the realm of reality.
The suggestion is that $360,000 from a department that expends $9.6 million a year currently is not nearly enough. Moreover, there is some belief that this discussion will push labor talks back into the realm of reality as the firefighters realize that they face more severe cutbacks if they do not take concessions.
The problem is that merely taking the same cuts as every other department may not be sufficient to forestall personnel cuts.
In the end, we are led to believe that the cuts will come, but the delay may actually enable the cuts to be far greater than the $360,000 currently on the table.
It is a dangerous game, and playing the organizing game with professional organizers may be a losing battle.
The biggest chip that the city has on its side is the enormity of the budget crisis that, if anything, is only getting worse as we finally, honestly take stock of how bad things really are.
—David M. Greenwald reporting
On August 31, 2013 there were at least three empty DACHA homes. The city bought them at a fraction of their worth, due to lawsuits pending. Is there any possibility that the city could sell any of those homers to help with this budget mess?
Sorry – *2102*.
geez- *2012*. I better have some coffee…
All of those homes are being rented and if they sold it, it would be one time money and far less than what is needed. We are talking about millions in ongoing monetary needs for the city.
[quote]Personnel costs amount to more than 80 % of all expenditures [/quote]
Just a point for clarification David. This seems to have been true for 5 of the 8 years listed prior to the change to a 4 man crew as well as most of the years since. I am uncertain why this is the case since the addition of a man would at least intuitively seem to shift the percentage to the personnel side, but it does not seem to have made a difference in the percentage.
Does this mean that the firefighters have made cuts in other areas to offset the personnel cost ?
If so, this would not seem to have made a negative impact on delivery of services.
Are their standards established in the firefighter community for what percentage should go for personnel vs
other costs ? If so, is Davis’ proportional spending in line with these standards ?
What are the comparable expenditures of similarly sized and located communities ?
I’m not comfortable answering your question, I would have to dig deeper, I noticed the same thing that they appeared to increase capital costs concurrent with personnel costs.
David
I figured that you might not have the answers.
What I would find very refreshing would be for the firefighters themselves to analyze and present the answers to these kinds of questions rather than spending their efforts whipping up public opinion through the presentation of highly emotional, but ultimately anecdotal evidence, which is not even demonstrated to be relevant since we do not know for any of these individual cases what the outcome would have been with one less person, or a few seconds difference on way or the other which is how I interpreted these changes from the presentation.
It may be that there is very good evidence for the superiority of a four man crew over the three man model.
The problem is that they have simply not presented any. I eagerly await evidence to the contrary, but until that evidence is presented, I strongly feel that this is a change that our council should act on in the interest of the city overall.
If the firefighters truly feel that the four man crew is necessary for public safety, they have another cost savings measure available to them in the form of concessions such as other departments have already taken. It would seem to me that they have more flexibility in this situation than does the CC and therefore have at least some choice about how to make their contribution to the financial well being of the city.
A question for you David.
Do you know what percentage of our firefighters live in Davis ?
I am wondering because it seems to me that firefighters who are also residents of the city might be more inclined to think in broader terms about the entire well being of the city than just about the perspective from their own job as it relates to public safety.
I don’t have the exact figure,I think the Aaronson report placed the figure at 70% lived outside of the city of Davis.
Taking the moderate to long range view, I am wondering if it would not make sense to actively promote interest in this line of work at the high school level and promote resident hiring if this is not already being done.
All of those homes are being rented and if they sold it, it would be one time money and far less than what is needed. We are talking about millions in ongoing monetary needs for the city.
I agree. But every little bit of money helps. An Albany Cirlce non-DACHA home sold, around 2011, for $250,000. Three times that (3 emtpy homes in 2011) would have been a quarter million dollars for the city. The Lake Alhambra DACHA home is worth more. Just something to consider, as a way to generate revenue for the city.
*3 quarters of a million*
I’m wondering if the “budget” numbers Davis presents are what the city actually spent or what they planned to spend when they prepared the “budget”. We all know people that “budget” one amount for something, but spend much more. Living in SF it seems like every year around this time (March) I would read that the SF Fire department has exceeded its overtime “budget” for the year (but they would keep spending and end the year at 400% of “budget”). I just did a quick Google search and didn’t find the exact articles I was looking for, but I did find the article below that mentions a Firefighter that made $55K in OT in just 6 months.
http://www.sfexaminer.com/local/2011/04/overtime-cap-mere-formality-san-francisco-city-workers
Medwoman wrote:
> Does this mean that the firefighters have made cuts in
> other areas to offset the personnel cost ?
It would be nice if we put the entire line by line fire budget on line (not to pick on the Fire Department since I would like to see EVERY city budget including the “child care” department that I just heard about yesterday). I’m guessing that like most public agencies the Davis Fire Department has “incremental budgeting” aka “use it or lose it budgeting”. I have good friends in multiple fire departments and all of them have hundreds of thousands of dollars of equipment in storage that they may never need since it was bought at the end of the year because if they didn’t buy the stuff they would have the equipment budget cut the next year.
“I’m wondering if the “budget” numbers Davis presents are what the city actually spent or what they planned to spend when they prepared the “budget”.”
Good question. I used the final adjusted budget numbers. There is a small difference between that and actual expenditures. Over the 22 year period (not counting this year), we actually spent $4 million less than the final amount budgeted and two million less than the original budget passed on July 1. Most years you are talking about $100,000 to $200,000 difference between budgeted and actual. So I don’t think this really changes the overall analysis.
JimmysDaughter wrote:
> On August 31, 2012 there were at least three empty
> DACHA homes. The city bought them at a fraction of
> their worth, due to lawsuits pending. Is there any
> possibility that the city could sell any of those
> homers to help with this budget mess?
In December 2012 the Enterprise wrote:
> Fourteen of the 20 houses are occupied
Way to go City of Davis, 30% vacancy in a city with a 1% vacancy rate.
Then Davis wrote:
> All of those homes are being rented and if they sold
> it, it would be one time money and far less than what
> is needed.
With the homes being rented at below market rents and maintained by above market (union) labor I’m betting that the city is spending more than they make each year renting the homes, so the city would not only get money from the sale, but save money going forward (I have never heard of any city running subsidized housing that is cash flow positive over many years. The sooner the city gets rid of the houses the sooner they will save money (and will have plenty of cash left over to give poor people that need help affording housing)…
David wrote:
> I used the final adjusted budget numbers.
> There is a small difference between that
> and actual expenditures.
Thanks, I was also wondering if you have the head count per year so we can get an average cost per employee per year.
“Interim Chief Scott Kenley’s proposal would have saved the city $360,000 a year by reducing staffing from 12 to 11.”
How was this annual figure calculated? Does this understate the future savings represented by eliminating a position? Does it include non-personnel costs of supporting a person? Does it consider furture personnel cost increases that would eat into the “savings” figures in the years ahead?
Does the city have any financial obligation when a firefighter retires (lump sum payments) and afterward or does the state retirement fund take on all retirement expenses?
It was suggested that cutting back expenses during bargaining or budget formulation might change motivation about going to three-pension crews. Ignoring whether it would be a good action regardless of cost savings, I’m wondering if cutting back $X on supplies or overtime would generate the same savings as getting rid of a position.
SOD: I checked in with the property manager of the former DACHA properties, the only ones vacant are ones that they needed to do work on and that work was completed but it took them off rental cycle, so by next summer they will all be rented. I don’t see this as a viable way to get revenue and i think we have an interest in keeping housing affordable.
I don’t have a head count per year, I know at one there were as many as 45 and that number by attrition is down to 37, but with overtime (since the staffing needs are constant), the price is not very different.
You do have two salary wage spikes in there, around 2000 and around 2004, those continued incrementally through the MOUs. Where the costs come down is once the new 2009 MOU kicked in with reductions in salary and a bit in compensation.
“In December 2012 the Enterprise wrote: Fourteen of the 20 houses are occupied.”
“All of those homes are being rented and if they sold it, it would be one time money and far less than what is needed”
How could both of these statements be accurate?
In any case, let’s not dismiss JimmysDaughter’s idea too quickly. Yesterday’s story noted Brett Lee’s observation that cutting expenses during budget formulation and collective bargaining would make it “less necessary to attempt to achieve $360,000 in savings through staffing changes….”
Selling the DACHA housing would meet Brett’s need for 14 years (@$250,000 per house).
$5-million isn’t chump change, and I suspect SoD is correct that the inventory isn’t providing the city a positive cash flow anyway.
Regardless whether one agrees with Brett that cutting back elsewhere should result in maintaining 4-person fire crews, getting completely rid of the DACHA albatross seems like a great idea.
Now that the water issues have been solved, and you have extra time, a thorough analysis of the present DACHA operation would make a worthy Vanguard investigative report.
“How could both of these statements be accurate? “
They aren’t. The first statement was erroneous. The second statement clarifies and corrects teh first.
“Cutting back on the DACHA albatross sees like a great idea”.
But is it ?
I do not know the answer but I do think that there are other considerations than whether or not the city gets a positive cash flow. One known need that we have in this community is affordable housing. So the other way to look at this is whether or not the city as a whole benefits from the provision of housing to those who would other wise have to live elsewhere and possibly commute to jobs in Davis. What are the benefits of their spending money locally instead of spending it in other communities ? What are the benefits long term of their children attending our schools ? What are the environmental impacts of cutting down on commuting ( did you catch the tip of the hat to you Robb ? ) ? There is more to be looked at here than just the amount of rent obtained, and I see this as a very small scale landlord as well as a citizen of Davis.
“I don’t see this as a viable way to get revenue and i think we have an interest in keeping housing affordable.”
I didn’t get to see this before writing my DACHA comment. Why do you say that selling off the houses isn’t “a viable way to get revenue”? Seems more viable than having a third of the inventory off the market for months in order to spend $? to make them rentable and more viable than paying $? for a permanent staff and/or contractors to manage this scattered bunch of houses.
Of course, we have an interest in affordable housing in Davis. But, is maintaining a DACHA-stock program an efficient and cost-effective way to do it? How can we know until you investigate this?
“In December 2012 the Enterprise wrote: Fourteen of the 20 houses are occupied.”
“All of those homes are being rented and if they sold it, it would be one time money and far less than what is needed”
“How could both of these statements be accurate?”
“They aren’t. The first statement was erroneous. The second statement clarifies and corrects teh first.”
To further clarify: Do you mean that the Enterprise statement (“14 of 20 are occupied”) is correct, that your first response (“all rented”) is erroneous and that your follow up comment (“off the rental cycle”) the correction to your first response?
This raises more questions about the “at least three vacancies” in August and the six vacancies in December and the unspecified number of vacancies you found today involve any of the same buildings. Are houses “off the rental cycle” (vacant) for many months, up to a year, in order get the work done to make them rentable or are the current vacant buildings different ones than the Enterprise reported?
I don’t know the answer to your question, medwoman, any more than I know the answer to my own. It’s impossible to decide the value to our community of continuing to use DACHA inventory for subsidized housing without knowing the costs and evaluating whether we’d be better served by investing the DACHA assets in another model.
My suggestion for an open-minded investigation has nothing to do with whether subsidized housing provides benefits beyond those obtained by the tenants. I hope it’s clear that I’m suggesting we look at more than cash flow, but that we consider whether we’re providing the benefits you suggest in an effective and efficient way.
I may have confused things by suggesting that JimmysDaughter’s idea of getting money for the city shouldn’t be dismissed out of hand, not that I’m thinking the proceeds really should be redirected to the fire department. I support getting by with fewer firefighters in order to reduce our long-term costs.
David wrote:
> I don’t have a head count per year, I know at
> one there were as many as 45 and that number
> by attrition is down to 37
Taking the most recent “Personnel Only Budget” of $7,820,661 divided by 37 we get an average Total Cost of Employment/TCE of over $211,000…
I know the average firefighter does not “take home” $200K+ but it shows that city’s tend to spend a lot of money to employ people…
medwoman writes (about getting rid of the DACHA homes):
> I do think that there are other considerations than
> whether or not the city gets a positive cash flow.
> One known need that we have in this community is
> affordable housing.
I don’t know what the cost to the city of Davis is to run the 20 units of subsidized housing (maybe David can ask the Vanguard advertiser that rents them?) but a recent report showed that the average public housing unit in the city of San Francisco costs taxpayers almost $3,000 per month per unit. Looking at a listing for one of the homes (see below) it seems like the city of Davis is renting the place for at most $500 below market (but asking for an above market security deposit from the poor people). I’m betting that Davis is not as bad as SF where it “costs” $3K a month to run each subsidized unit, but it probably costs much more than $500. We could help more poor people afford housing in Davis if we just gave them a check and let them rent anything they wanted (like medwoman’s rental) in any part of Davis rather than trying to make the poor live in one of the crappy little former DACHA homes.
http://chl.ucdavis.edu/listing/154932
Good question, SoD, revealing that the average cost per firefighter might be increasing more rapidly that this chart suggests. How many authorized positions do we have, 37? Has attrition come from permanently eliminating positions, or just not filling authorized vacancies because the money hasn’t been available? What types of services have we lost in the reduction from 45 to 37?
When looking for cash flow to the city and state it is important to remember almost all city and state owned real estate (including every public housing I have ever seen) is tax exempt.
If we were to sell the 20 DACHA homes for about $300K each there would be an extra ~$70K a year in property tax income and an extra ~$19K a year in parcel taxes coming in every year.
When you add in the cost of actually running the homes the city could give more poor people bigger rent subsidies if it just sold the DACHA homes and got out of the low income rental home business.
The long-time DACHA ex-co-op members who paid their rent and actually made improvements to their homes, believing they would be able to stay in a nice affordable home in Davis, should not have their rental sold from under them. I meant the empty or newly-rented homes should be sold.
Last year, a 3 bedroom 2 bath. 1 car garage DACHA home rented for about $1200 a month. Those homes were for middle income, too. Not just low income. It’s hard to live in Davis and be middle income.
Off topic, I know, but re:DACHA, it seems like the people that did okay were the people filing law suits, and the city. The DACHA members who joined a “co-op” in good faith and paid their rent on time did not do well. They lost their down payments(“carrying charge”) in the lawsuit.
Re: the budget, the empty or newly-rented homes should be sold to help the city’s budget needs, IMO.
Agree that special consideration should be given to the DACHA original owners who still are in their original homes–these could be disposed of after they leave. I actually think that “they lost their down payments (‘carrying charge’)” when the city foreclosed on DACHA, not in any lawsuit. I wonder how many people who paid their rent on time still are in their original homes, now as tenants?
In any case, now would be the perfect time to evaluate the costs of maintaining this city project and, if appropriate, start selling them off as they are vacated and taken “off the rental cycle” for repairs.
For all the reasons SoD has listed, I suspect that any objective evaluation would reveal that continuing the DACHA units as a city rental program is a serious waste of taxpayer funds, a poor use of city property and of marginal benefit as an affordable housing program when compared to alternative approaches.
I do hope David will take this on as an investigative project, given his history of interest about the DACHA episodes.