OAKLAND -- The city's struggle to make up a $46 million budget deficit is just the tip of a desperately serious financial situation detailed in a budget memo Mayor Jean Quan released this week.
The deficit for the fiscal year beginning July 1 is in the city's general fund, used to pay for about 42 percent of Oakland's total $1 billion budget, with the rest being untouchable money for specific purposes. General fund revenue pays for basic programs and services including police, fire protection, libraries, senior and recreation centers, as well as funding the operations of elected offices and municipal business functions.
Not only are revenues to the general fund way down, largely as a result of real estate transfer taxes expected to drop $28 million, but the city's flexibility to handle the problem is limited: 22 percent of the general fund is mandated to pay for debt service and other fixed payments, while another 71 percent is needed to maintain police and fire services at their current levels.
That leaves $26 million to cover $72 million in remaining programs, including senior centers, Head Start, tree services, equal opportunity programs and recreation centers, according to Quan.
In addition to all that, looming federal cuts could cost the city millions of dollars in direct funding and other cash that federal money is used to leverage, while the state is strongly considering eliminating redevelopment agencies, which locally fund almost $25 million in city jobs, $2.5 million in basic overhead, and numerous other project costs.
Further, Oakland's major pension systems are in hot water, with a total of more than $1 billion in unfunded liabilities approaching.
Quan's 84-page memo went out Wednesday afternoon. She's asking for council members to indicate their priorities by April 8 in advance of a daylong retreat she has planned with the council and her own staff for April 11.
Army Base project grinding forward
Oakland's economic development committee extended for a year its negotiating deadline with potential Army Base developer AMB/CCG, agreed to reimburse the developer's subcontractors up to $14.1 million for infrastructure design and planning work, and left the Oakland Film Center scrambling for a place at the table.
City planners and team AMB/CCG -- led by Phil Tagami -- have been negotiating for the past year over what it will take to build out the former base. The negotiations were supposed to culminate in a development agreement by April 22, but the staggering number of details involved in the $500 million project are taking longer than expected, to no one's great surprise.
But another part of Tuesday's action did catch some by surprise. In voting to extend the negotiations, the four-member committee removed a mandate that the developer make space for the Oakland Produce Market and the Oakland Film Center, a collective of more than 20 film industry-related businesses that lease space in an old warehouse on the former base. The businesses are hired to work on movies, TV shows, videos and commercials.
Sean House, owner of Outhouse Productions, accused Tagami and city planning staff members of collusion and reminded the committee that the City Council voted in 2009 to include the Oakland Film Center in the Army Base development because it feared that without such a mandate, the developer would leave them out.
"Today those fears are justified," House said Tuesday.
Tagami told the committee that he would be happy to include the film center if they were willing to pay market rent. Film Center representatives said they would, but their request to keep the mandate failed. Councilmember Nancy Nadel (Downtown-West Oakland) added a motion that "encourages" the master developer to accommodate the businesses at the base at market rents.
The Oakland Film Center currently pays 16 cents a square foot. Space in the new development could run as high as 75 cents a square foot, perhaps less for a basic warehouse. "I think the film center will have to assess whether they can afford the space," Nadel said. "While they can afford market rate of older buildings, this will be a new modern facility and more expensive."
The full council will vote on the issue at its April 5 meeting, and you can bet there's going to be a lot of lobbying between now and then.
Brooks wishes Russo well in Alameda
Councilmember Desley Brooks (Eastmont-Seminary) wasn't happy with her quote in a story this week about Oakland City Attorney John Russo's near-certain departure for the city manager job in Alameda.
When Brooks said, "He was not our attorney: He wasn't serving us. I don't think it leaves us any worse off to have him go," she was referring specifically to the city's struggle to regulate medicinal marijuana farms, an effort in which Russo ceased offering the council any advice beginning in February.
Brooks said the quote made it look like she was trashing Russo when really, "I wished him well then, as I do now."
Contact Sean Maher at 510-208-6430 and Cecily Burt at 510-208-6441.