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About this blog: So much is right — and wrong — about what is happening in Palo Alto. In this blog I want to discuss all that with you. I know many residents care about this town, and I want to explore our collective interests to help ...  (More)

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Palo Alto officials: Stop milking us for more money!

Uploaded: Sep 28, 2021
Once again, another utilities rate hike is in store for Palo Alto residents, courtesy of our city manager and council. Will these almost annual hikes never stop? Or is the Utilities Department simply a golden cow to provide a green revenue stream to city coffers?

The delightful irony of their latest move is the result of a lawsuit from resident Miriam Green, filed in 2016, who challenged the city's long-term practice of transferring utility revenues to the city's "general fund/equities fund," as this transfer was labeled.

Green claimed the city's gas rate increases were really taxes, not increased gas prices. And voters never approved these hikes although taxes must get voter approval before any new rate increases. The Santa Clara County Superior Court agreed, and ordered the city to pay back to affected residents the $12 million of their money the city took in. These transfers were thus illegal, the court said last year.

The city implied last week that it knew it already spent the $12+ plus million we were illegally charged, and, presumably, didn't want to pay us back. It appealed the court decision and also asked the payback be allocated over 10 years. The court refused. Last week, the council, in turn, appealed to the court again because it was facing "these novel legal questions," which, rather than paying back the $6 million due in October, stops the payback clock for a while.

So, in its own unique manner, the council tried to figure out what to do. The city's revenue has significantly dropped the past two years, in part due to the pandemic. It did some creative thinking: Let's increase the utility rates we charge customers anywhere from 1 percent to 10 percent, and that way the city can collect millions!

That means the city is asking residents to pay for higher utility rates so that they can collect the money and give us our $12M back for the higher gas rates it charged us for years!!

Five stars for performance!

For more than a decade, the city has a raised half dozen or so of the utility rates we consumers pay monthly. As the Weekly reported in 2019: "The latest round of hikes marks the fifth year in a row in which the city has raised utility rates. Since 2014, the last year in which there were no rate increases, the average residential utility bill has gone up by more than $70." It's gone up a lot more since then.

Go to Google and check out Palo Alto's utility rate increases and you will see a long list of hikes on water, gas, electric, storm sewer, utility tax, etc. increases over the past several years.

And at its Sept. 21 meeting, the city's Finance Committee unsurprisingly considered a new 1% to a10% additional tax on utility usage. Currently tax rate is at 5% of electric, gas and water use.

According to staff analysis, a 1percent increase in the utility users' tax for electricity, gas and water customers would bring in about $2 million in annual revenues. Raising the current rate 10 percent more (from 5 to 15 percent) would bring in about $20 million in new annual revenues.

How nice for city coffers. But how about consumers' wallets?

Yes, this city's typical response to deficits is to charge those in town: raise taxes on businesses, charge more for utilities, hike permit fees, etc.

I am angry about and tired of these constant utilities hikes. Such taxes are regressive. We, the residents, are their golden cow. You, council and staff, are milking this cow.

And, by the way city, we are the ones who are paying for your court appeals -- especially those that delay giving us our money back. Irony squared.

If council agrees to the proposed raise, it would be on the November 2022 ballot, along with a business tax.

But wait, there's more, as TV ads proclaim.

It turns out the city council was recently told that Palo Alto has a $500 million debt for employee pensions. Yes, that's a half billion.

The staggering increase in Palo Alto's employee pension obligations is a whopping 23 percent growth over the past three years. And the amount the city has put in a special fund to help pay off this debt, has amounted to only $7 million to date.

Among those who continue to receive pension checks are former City Manager June Fleming, who retired in 2000 (21 years ago) and then moved to Virginia, and Frank Benest, who held the same post, "retiring" (with council nudging?) in 2008. There are thousands of other former employees getting very healthy pensions, in some cases equivalent to their former salaries -- with COLA adjustments.

Let's just turn off some faucets in town, some way. Pensions can't be changed -- or can they? Maybe this is the time we could use a good consultant. And huge spending doesn't have to be so huge.

P.S.
Here are three "consent approval" items from next week's (Oct. 4) city council meeting. Typically, items like this are approved without discussion. Or, if a council member opposes an item, his comments as to why the "no" is heard after the approval vote.

1. Approval of an Exemption to Competitive Solicitation and Change Order No. 1 to Existing Contract C20172366A With Hotline Construction, Inc. for Additional Underground Construction and Emergency Construction On-call Services, Increasing the Contract Amount by $6,800,000 for a new Not-to-Exceed Amount of $11,300,000; and Approve a Budget Amendment in the Electric Fund
2. Approval of Advanced Metering Infrastructure (AMI) Contract with Sensus USA Inc. in the Amount of $15,283,218; and Authorization for the City Manager to Negotiate and Execute Change Orders up to a Not-to-Exceed Amount of $1,484,000, for a Total Contract Amount Not-to-Exceed $16,767,218; Approval of Amendment No. 2 with E Source in an Amount Not-to-Exceed $1,339,947 for Phase 3 AMI Consulting; and 3) Adoption of a Resolution to Transfer up to $18,900,000 from the Electric Special Project Reserves to the Smart Grid Technology Installation Project EL-11014

That's a lot of money for one council consent agenda!








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Comments

 +   14 people like this
Posted by Citizen , a resident of College Terrace,
on Sep 28, 2021 at 9:52 pm

Citizen is a registered user.

I agree Diana. The City has been ripping us off and proposes to rip us off more so it need not cut costs and live within its already generous means. No.


 +   15 people like this
Posted by Anne, a resident of Midtown,
on Sep 29, 2021 at 10:39 am

Anne is a registered user.

Thanks Diana. I'm also tired of these repeated end around moves by the City. Where's our business tax, a tax most or all other local municipalities have? We need to make businesses pay for their impacts on citizens, not the other way around.


 +   10 people like this
Posted by I+miss+my+small+town+feel, a resident of another community,
on Sep 29, 2021 at 12:03 pm

I+miss+my+small+town+feel is a registered user.

Just think how much worse this pension debt would be if the stock market went down rather than soared.... "It turns out the city council was recently told that Palo Alto has a $500 million debt for employee pensions. Yes, that's a half billion. The staggering increase in Palo Alto's employee pension obligations is a whopping 23 percent growth over the past three years. And the amount the city has put in a special fund to help pay off this debt, has amounted to only $7 million to date."


 +   5 people like this
Posted by NB, a resident of Barron Park,
on Sep 29, 2021 at 2:00 pm

NB is a registered user.

If you sue your own city/municipal utility you're essentially suing yourself... One way or another, *you* are going to pay for anything they have to pay out.


 +   15 people like this
Posted by Online Name, a resident of Embarcadero Oaks/Leland,
on Sep 29, 2021 at 5:01 pm

Online Name is a registered user.

Thank you, Donna. MOOO. This cash cow is furious the city keeps ripping us off and then making us pay for their appeal! We pay the City Attorney and "managers" to serve us, not, er, bilk and stonewall us. It takes real nerve to demand more increases and a few bodies on the scale to say 11,000 of us need to protest increases for them to pay attention! Chutzpah! Since I started paying attention, they've pushed ridiculous programs and excuses to rip us off. We've paid for mailings, contests and unworkable apps telling to Conserve, Conserve, You're Using More than Your Neighbors mailings that ignore household sizes... So we conserve. THEN they raise rates because we conserved too much. Then they send more expensive mailings telling us to conserve. More mailings saying Get your rebates here that lead to unworkable systems! Do they have a clue how much more plumbers cost than the $25 water heater rebate?? They charged us for unwanted tiny compost bins, leading to a protest where customers sent back their larger trash cans to get rate reductions. Then there was the GO SOLAR program. Too bad a highly paid staffer alienated all the solar companies. Their brilliant solution when exposed? Did they fire the staffer? Nope. They proudly announced they were ouble-teaming so incompetents can "learn" from each other. People lost THOUSANDS on that one! They never put in power backup systems and/or got their act together re informing is about the causes / duration of outages. Do we get refunds for the outages and spoiled food? HAH! People regularly complain about huge unexplained bills but did they train their staff how to respond? No! We learn on NextDoor about the excellent county WaterWise programs. Much of this happened when our City "Manager" "managed" CPAU! And he and his huge "Communications" staff continue to stonewall and stall. Pay me my money with interest. Dock their pay and benefits to cover the appeal.


 +   8 people like this
Posted by Annette, a resident of College Terrace,
on Sep 30, 2021 at 8:00 am

Annette is a registered user.

The ONLY headline that can follow a story about a half BILLION (and growing and largely unfunded) pension obligation is this: HIRING FREEZE. We should expect to pay, through taxes and fees, for City services. But not for mismanagement. The City's plan here puts us in the same sorry boat as PG&E customers who are paying rate increases to cover fire damages. And bankruptcy, should the pension issue come to that as the recent news story suggested, categorizes Palo Alto with Vallejo, Stockton, and San Bernardino. Diana's point about the Consent Calendar focuses attention on Council agendas which can be “interesting". At the Feb. 1 Council meeting, spending $118 million on a new life safety building was approved. At the following meeting it was revealed that City revenues were down significantly and the new budget would necessarily include severe service cuts. Timing is everything. Our City Manager recently proposed adding an Economic Development Director to his staff at a cost of $245 - $290k. I get that the City needs to do something to bolster business but the optics on this are not good. Also, since we are repeatedly told that the salaries Palo Alto pays for senior staff are justified b/c we hire only the best talent how is it that we need to keep adding to that talent pool? Palo Alto is not a big city. I'd be interested in hearing the City Manager (not his Chief Communications Officer) explain why the existing talent can't work with the Chamber and City Council to come up with a good plan for economic development.


 +   12 people like this
Posted by Robin Layne, a resident of Crescent Park,
on Sep 30, 2021 at 9:58 am

Robin Layne is a registered user.

Top tier city officials have always been overpaid and their benefits package is very lucrative. Why else would they major in Public Administration and gravitate towards these jobs? And various assignments can be easily farmed-out to consultants or simply handed-off to underlings. How easy (aka lazy) is that?


 +   4 people like this
Posted by Online Name, a resident of Embarcadero Oaks/Leland,
on Sep 30, 2021 at 10:46 am

Online Name is a registered user.

Yup, we've got a huge overpaid "communications" staff that consistently fails to reach out to effected people re construction, power outages etc etc. and not a single one of them can / will reformat the city's policy handbook so we've got to pay for a consultant -- to cite just one recent example of waste. Re overpaying, my favorite was the night police dispatcher who made $300,000++ with overtime about 5 years ago. I remember because I called about a 1AM fight in the intersection in front of our house. She snarled at me that the fight had ended and they'd taken care of it. I held the phone to the window saying, "Can you hear it now? I'm looking at them fighting right now!" After that response, I've joked that she her rudeness and inaction must have cost us extra.


 +   1 person likes this
Posted by neighbor of PA, a resident of Menlo Park,
on Sep 30, 2021 at 11:29 am

neighbor of PA is a registered user.

I totally agree that the transfers from Palo Alto Utilities to the City's General Fund are questionable and should be approved by the voters. However, voters should be aware that their high levels of service area supported by these transfers and that non-residential customers pay a LOT of these charges. Outside of Palo Alto, we are subject to the rising energy costs from PG&E and know that we continue to face higher charges due to rising costs. As to pension costs, yes, those are high! Yikes. At least newer employee pension costs are lower thanks to state laws that changed under Governor Brown and took effect in 2013.


 +  Like this comment
Posted by neighbor of PA, a resident of Menlo Park,
on Sep 30, 2021 at 11:29 am

neighbor of PA is a registered user.

I totally agree that the transfers from Palo Alto Utilities to the City's General Fund are questionable and should be approved by the voters. However, voters should be aware that their high levels of service area supported by these transfers and that non-residential customers pay a LOT of these charges. Outside of Palo Alto, we are subject to the rising energy costs from PG&E and know that we continue to face higher charges due to rising costs. As to pension costs, yes, those are high! Yikes. At least newer employee pension costs are lower thanks to state laws that changed under Governor Brown and took effect in 2013.


 +   1 person likes this
Posted by Bystander, a resident of Another Palo Alto neighborhood,
on Sep 30, 2021 at 11:51 am

Bystander is a registered user.

Power Outage in Midtown reported recently. Nobody knew anything, Twitter not reporting anything, Nextdoor reports from upset residents. These outages keep on happening. Reporting is not happening on Twitter or website. Days later, the cause is not being reported. This is Silicon Valley. This is where all the gizmos and gadgets, high tech stuff is invented. Yet our power is not reliable and as customers we are treated like infants. No information, no sign of any improvements and no accountability. PG&E is no better. Why is that we are getting third world service in one of the most technological innovating areas of the world. Our infrastructure is not innovative. We can invent it, but we can't apply it. What is wrong with this picture? Something is very rotten in the State of Denmark (oops California).


 +   3 people like this
Posted by Consider+Your+Options.+, a resident of Another Palo Alto neighborhood,
on Sep 30, 2021 at 12:31 pm

Consider+Your+Options.+ is a registered user.

This article reads like a citizen rant, not a fact-based editorial. It needs some editing, Palo Alto Online. Ms. Diamond, while I agree with some of what you say, some of it is just wrong.


 +   9 people like this
Posted by III, a resident of Midtown,
on Sep 30, 2021 at 12:39 pm

III is a registered user.

Reminds me of the water billings. I cut back almost 25% from 7yrs ago, prior to drought. And my water pricing has gone up at least 15%..... I realize is due to profit loss, as less water, means less profits for Utilities. BUT YOU ASKED ME TO DO THIS AND IF DID NOT I could see penalities. Sure is an odd catch 22 revolving door. III


 +   6 people like this
Posted by ALB, a resident of College Terrace,
on Sep 30, 2021 at 2:36 pm

ALB is a registered user.

As gas prices go up and up the city will most likely justify the increase to consumers in order to create the payback funds. The city LOST the case and I do not understand how M. Stump thinks she is in the right legally. Face the music and pay the residents according to the schedule dictated by the courts. I respect Miriam Green for her courage and tenacity in showing the city how the residents must be treated in the accordance of the LAW.


 +   1 person likes this
Posted by Annette, a resident of College Terrace,
on Oct 1, 2021 at 7:41 am

Annette is a registered user.

I+miss+my+small+town+feel raises an excellent question: what happens if the stock market falters? Remember what happened to Orange County in 1994. That bankruptcy was due to risky investments and reliance on interest rates not going up, but the point is: it happened. Not surprisingly, our City Manager isn't commenting on Palo Alto's pension issue. His reports to CC are pretty fluffy for a city that has serious problems. Eric Filseth is often good about posting explanations in this forum. Perhaps he will comment here about the City's plan for keeping Palo Alto off the O.C. track and getting the unfunded pension liability under control.


 +  Like this comment
Posted by OldPA+Resident, a resident of Old Palo Alto,
on Oct 2, 2021 at 12:15 am

OldPA+Resident is a registered user.

In addition to Orange Country in 1994, Detroit also declared Chapter 9 bankruptcy in 2013. The process falls under the jurisdiction of a Federal court so California's laws protecting pensions don't apply. Chapter 9 process allows for a great deal of flexibility in reducing the pension obligations as well as either reducing or eliminating COLA. So it's not necessary to take draconian steps to eliminate the pensions.


 +  Like this comment
Posted by Brad Lockhardt, a resident of Barron Park,
on Oct 3, 2021 at 8:14 am

Brad Lockhardt is a registered user.

The city must do everything in its power to keep the administration afloat even if it means ‘soaking the residents' to ensure survival.


 +   7 people like this
Posted by Moctod, a resident of University South,
on Oct 4, 2021 at 11:48 am

Moctod is a registered user.

Sent to the City Council today (edited for length): I am opposed to the action item on tonight's consent agenda to spend 17.1 million dollars for so-called "smart" (AMI) meters and an additional 1.3 million dollars for yet another consultant and contractor to manage the project. As I remember the proposal that two new city employees and a supervisor would be hired to interface with the contractor. The funds for this significant project I assume has come from millions of dollars in overcharges to customers from the grid price as we have watched our electric bills climb close to PG&E rates from the lower prices we paid just a few years ago. I have lived with a conversion from analog to AMI meters in a home that also had natural gas and the electric bill tripled. We tried to shift our usage to times when the rates were lower, but the bill just dropped to double what it was before the new meter was installed. I presume that you know that the CA Public Utilities Commission provides for residents to opt out of these so-called "smart" meters and continue with a flat rate. There is a one-time charge of $75 ($10 for lower income) and then a monthly rate of $10 ($5 for low income) and that monthly fee expires after three years. I understand you want to push electric power usage to off-peak times but the only way to do this is by hurting customers and charging them significantly more for power when they want to use it. I would guess that this item is on the consent agenda as I have the feeling that this will not be a popular program when you switch on those new high rates in 2025. Last, these new high electric rates will hit just as Palo Alto is planning to phase out the use of natural gas for residents (not the city or commercial customers) and, it is proposed, end the service in 2025. So, our residents will lose natural gas in a gesture to end global warming while paying huge new electric bills. Cold at night? Put on another sweater.


 +   2 people like this
Posted by Ozymandias, a resident of another community,
on Oct 4, 2021 at 4:35 pm

Ozymandias is a registered user.

Kudos to Diana Diamond for pointing out the obvious. They can't stop spending other people's money. Next up is how to soak utility customers by purchasing 'smart meters' for every home in the city. The price tag for that is currently $18 million but is sure to cost more and deliver what few people want.


 +   1 person likes this
Posted by S.+Underwood, a resident of Crescent Park,
on Oct 5, 2021 at 10:00 am

S.+Underwood is a registered user.

Start with our highly paid bureaucrats who don't live in town. (or don't 'really' live in town, in Ed's case). A lot of it flows from there. There is even a culture within both our city and school administration to openly talk-down / insult the residents.... I've seen it from the inside. The prevailing attitude is --"What's a couple of million of other people's money between friends -- Whatever makes my workday and path to my next pay increase the simplest."


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