Oakland City Administrator Deanna Santana will soon hire a firm to look into whether the city has grounds to cut ties with Goldman Sachs.
The City Council, urged on by activists, has been seeking to stop doing business with the Wall Street titan, after it refused to cancel an investment that will cost taxpayers about $20 million before it expires in 2021.
Oakland entered into the deal with Goldman to protect itself from potential interest rate spikes on city bonds issued in 1998 to fund police and firefighter pensions. But interest rates have remained low, and the city continues to pay Goldman a fixed interest rate that is much higher than the prevailing rate Goldman pays Oakland.
Unions and citizen groups pushed Oakland and other municipalities to take a tough stand with investment banks over interest rate swap deals. They said banks were profiting from their role in the 2008 financial collapse, which forced the Federal Reserve to slash interest rates and consequently turned the deals dramatically in the banks' favor.
City law gives Santana sole authority to decide whether to proceed with the process of cutting ties, known in legal parlance as debarment. Goldman would get a chance to rebut the charges at a hearing, according to a city report that will be discussed Tuesday at the City Council's Finance Committee meeting.
If the hearing officer rules the city has grounds to cut ties with Goldman, the bank could be barred from contracting with Oakland for up to five years.
Newark to reconsider election years
The city of Newark could save as much as $115,000 by holding its elections in even years, according to a city staff report.
Newark's next mayoral and council election is scheduled for November, making it the only Alameda County city holding elections in odd years. But the rising costs of elections might prompt Newark to change that. If the city goes it alone on Election Day, it would pay from $192,000 to $230,000, according to the Alameda County Registrar of Voters. But if Newark held the election a year later, in November 2014, its tab would drop to between $76,788 and $115,182.
The costs would be lower because Newark would split the bill with nine other cities and school districts in Alameda County, as well as other counties, the state and the federal government.
Councilman Luis Freitas requested last fall that staff employees start analyzing the benefits of switching. City Manager John Becker is scheduled to deliver a presentation on the issue to council members Thursday, but they are not expected to vote on it.
"When you look at the additional costs, I think it would be very difficult to continue with holding odd-year elections," Becker said. "But we'll see what the City Council says. Our recommendation is for them to discuss the item and provide any necessary direction to staff."
San Leandro wins redevelopment suit
The city's redevelopment successor agency will get to keep more than $6 million the state demanded in payment from the agency last summer, a judge ruled last month.
The city filed suit in January. Superior Court Judge Michael Kenny on March 20 ordered the state to stop withholding tax revenue from the city as a penalty for paying $521,000 instead of the $6.59 million demanded in leftover redevelopment funds. Kenny also ordered the county redevelopment successor agency to pay $2.98 million-worth of the demanded funds for an area jointly covered by both redevelopment agencies before they were disbanded by the state last year.
San Leandro's case is one of 15 cases settled statewide over the state's "true-up" demands made last July, city officials said.
But the state-city battle over old redevelopment funds is not over yet. San Leandro was one of 42 cities given a 30-day notice to hand over old redevelopment affordable housing funds, or again face penalties.
City Attorney Jayne Williams said discussion is still underway over how to resolve the new dispute.