Atherton to refund $1.6 million in road fees


It seemed like a good idea at the time: charge builders a road impact fee and use it to repair Atherton roads torn up by heavy construction vehicles. Now, town officials are preparing to refund $1.65 million in road fees collected since July 1, 2006.

The Atherton council voted to approve the refunds on a 3-1 vote, with Mayor Kathy McKeithen opposed, at the Feb. 17 City Council meeting. Councilman Jim Dobbie was absent.

"If it keeps the town from lawsuits, that's worth a lot," said Councilman Jerry Carlson.

Road-impact fees are a matter of legal controversy, according to Atherton's city attorney, Wynne Furth. However, the town is legally obligated only to refund fees collected in the 90 days prior to the date in December when the council rescinded the road impact fee, she said.

The plan, to refund anyone who paid the fee from July 2006 to December 2009, was proposed by a citizen committee. During that time period, the town collected $2.7 million in road fees. Anyone who paid the fee would have to apply for a refund.

"We request that you acknowledge that this was of questionable legality," said Jeff Wise, a member of the committee.

Mr. Wise said his group was OK with capping the total refunds at $1.6 million. Councilman Charles Marsala pointed out that it was likely that not everyone who paid the fee would request a refund. Atherton recently refunded improperly assessed business license taxes, and only 42 percent of those entitled to a refund applied for it, Mr. Marsala said.

From July 2001 through June 2009, the town collected a total of $5.17 million in road-impact fees. Road-impact fees paid for about half of all of the street reconstruction projects done in Atherton last year, Public Works Director Duncan Jones told The Almanac.

Mayor McKeithen espoused different parameters and time-frames for refunds, saying she was concerned that some in town would see the refunds as a gift of public funds to builders. Mr. Carlson said he hoped people receiving the refunds would consider making charitable donations to nonprofits that support the town, such as the Holbrook-Palmer Park Foundation.

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Like this comment
Posted by Thelma
a resident of Atherton: other
on Feb 18, 2010 at 12:13 pm

This again is the development interests in Town scrambling to get as much money out of the Public coffers as they can BEFORE all the various civil rights law suits can be addressed.
The have already bulldozed their way through to a two million dollar budget shortfall and don't care if Mr. Buckheit or Mr, Johns get left with an I.O.U.
Thanks for nothing to Charles and Elizabeth

Like this comment
Posted by Fred
a resident of Atherton: West Atherton
on Feb 18, 2010 at 12:56 pm

You can say that again.

Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Feb 18, 2010 at 1:29 pm

Peter Carpenter is a registered user.

Look at the facts. The Town imposed a tax which, in retrospect, turns out to have been illegal. It can now either continue to defend its action and expose the Town to very expensive litigation or it can decide to remove the tax and offer refunds to some of the people who paid the tax.

Sounds to me like the Council made the correct decision. Would you rather that they decided to continue with an illegal tax?

Like this comment
Posted by ED
a resident of Atherton: other
on Feb 18, 2010 at 7:53 pm

Peter-Expecting the people who damage our roads in the process of making money for themselves was a perfectly REASONABLE idea.
The quibble over defining it as a users fee or a tax was was very creative spin which benefited some attourney(s) and a lot of builder/developers.
I have actually been wondering--do these lawyers write bad laws on purpose just so they can make more money later redoing/undoing them.
They only needed Legally to refund a small portion of this 1.6 million as stated in this article.
SO in a way my answer is Yes--I would rather that the town comes up with a challenge proof way to bill this cost to the appropriate users.

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Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Feb 18, 2010 at 9:50 pm

Peter Carpenter is a registered user.

Ed states :"I would rather that the town comes up with a challenge proof way to bill this cost to the appropriate users."

The problem is that there is NO challenge proof way to bill the costs to the appropriate users. The Town examined this option very carefully and concluded that what would be nice would not be legal.

Like this comment
Posted by Candle Lighter
a resident of Atherton: West Atherton
on Feb 18, 2010 at 10:17 pm

The big picture of what's really going on here was stated eloquently by an Atherton resident during the public comments session of last night's council meeting. It is nothing especially particular about Atherton; the same circumstances are playing out all over California, though in Atherton the problems are more acute. We have a police department we cannot afford. The pension costs of this police department have skyrocketed, and are continuing to skyrocket. Unlike other cities in California, Atherton hasn't even begun to reckon with these pensions. The default solution is to raise fees and taxes much like the Dutch boy with his finger in the dam, begetting more lawsuits, refunds, etc., with a vicious circle ensuing.

The real solution is to address the problems, not the symptoms.

Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Feb 18, 2010 at 10:35 pm

Peter Carpenter is a registered user.

This was clearly predicted more than a year ago:

PA Weekly Spectrum - Friday, December 5, 2008

Guest Opinion: Economic 'perfect storm' is brewing for local agencies

by Peter Carpenter

For many years I have been directly involved in local government agencies or in federal programs designed to support local and state agencies.

Never in that period have I seen such financial storm clouds as now appear on the horizon of local governments.

For the last eight years I have had the privilege and the responsibility of serving the citizens as an elected director of the Menlo Park Fire Protection District (which serves Menlo Park, East Palo Alto, Atherton and parts of San Mateo County) — one of the finest fire districts in the country.

Previously, I served as a Planning Commissioner in Palo Alto and, many years ago, as the federal official in the Office of Management and Budget who was responsible for coordinating all federal assistance to state and local governments.

With falling property values yielding less property-tax revenues, falling consumer and business spending yielding less sales taxes, increased retirement costs (because CalPERS has suffered significant loss of capital in the current financial downturn), continued demands for well-above-average salary increases by public employees, and the governor declaring a financial emergency, local governments in California are facing a Perfect Storm.

Unless local governments act promptly to respond to these dramatic changes we will see more of them joining Vacaville and Rio Vista in being forced into bankruptcy.

Housing prices and hence property taxes will be depressed for at least another two years — just about everywhere except the Palo Alto area, it seems.

And if a lot of the current homeowners request reassessments the decreases will be dramatic.

Similarly consumer and business spending are forecast to be depressed for the next two years.

And CalPERS, which is obligated to continue to pay out fixed-benefit retirement payments and which has seen huge losses in its capital, can only turn to local governments to make up the difference.

And local governments have no choice but to pay what CalPERS will demand.

And while this is all happening local-government unions are continuing to ask for significant increases in both salaries and benefits.

The total labor costs for most local governments are between 60 and 80 percent of their total budgets. While California's local governments are blessed with very talented and capable employees, the current process of salary-and-benefit negotiation has gotten out of hand.

Local-government employee unions insist that the standard for setting their pay be that they be above the average of other public employees. But if everybody is above average then the average goes up very quickly.

While we have many superb employees working for local government, those employees should not expect to receive salaries and benefits that are inconsistent with those of the citizens whom they serve or that will bankrupt their employers.

And in most cases those inflationary-spiral labor agreements are being approved in secret without any public input or scrutiny.

As an elected member of the Board of Directors of one of the finest fire districts, what do I think should be done to respond to this Perfect Storm?

First, local governments need to recognize that there is a crisis and act now.

Second, they need to involve their citizens in a careful look at each of their programs to determine which programs are no longer affordable — however nice or special they might have been in better times, or even how worthy any single program might be.

Third, they need to plan now for hiring freezes, elimination of overtime, reduction in services, layoffs, renegotiated labor agreements and, in the extreme, bankruptcy.

Fourth, they should consider accelerating essential capital-improvement projects (the operative word is essential), as construction costs during this downturn will be substantially less than if the projects are delayed until the recovery begins.

Finally, they need to move the review and approval of new labor agreements out from behind the current wall of secrecy from which the public is excluded.

Once new labor agreements have been agreed upon by the negotiators then those agreements should be simultaneously submitted to both the union members and to the public that will bear the costs well before the city councils and special district boards meet in public session to vote on those agreements.

The Perfect Storm can be weathered but not by sunbathing on the deck.

Like this comment
Posted by ED
a resident of Atherton: other
on Feb 18, 2010 at 11:31 pm

PETER: The town PRETENDED to "examine the the issue of road impact fees very carefully."
THEY PRETENDED to examine the biz lisc issue, the off haul issue (I believe we are getting ready to cave on drainage if we haven't already, and on something called drive way encroachments ........the list has been endless law suit threats for what development wants ever since the Bld Dept Audit was tossed under the bus.
Wouldn't it make these issues CHALLENGE PROOF IF WE VOTED THEM INTO LAW?? There is an election soon--can we put them on a ballot or would this fail as well??


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Posted by Candle lighter
a resident of Atherton: West Atherton
on Feb 18, 2010 at 11:50 pm

No, municipal residents cannot vote in any measures that are prohibited by California state law or federal law. Atherton needs to address is pension problems. At last night's council meeting, a new slate of increased fees went into effect and there will be a lawsuit filed over that according to one speaker.

Like this comment
Posted by Louise
a resident of Atherton: Lindenwood
on Feb 19, 2010 at 12:57 am

So when the town finances do bleed out how will development interest continue to sustain themselves off the golden eggs of a dead goose?

Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Feb 19, 2010 at 7:46 am

Peter Carpenter is a registered user.

New homes have been the goose that laid the golden eggs for the Town of Atherton over the last ten years because of the significant (and continuing every year) increase in property taxes (and one time construction fees.) The developers may have done well but Atherton does even better as these taxes continue long after construction is completed.

And these new homes do not place a proportionately (relative to their property tax contribution)higher burden on the Town than the homes which they replaced or their older neighbors, so it is a net gain for the Town. In fact, I find it unconscionable that I pay 1/20 of the property taxes as do my neighbors with newer homes (due to Prop 13) and yet we receive exactly the same Town services.

With regard to the Town's revenue gap, the critical issue with a revenue gap is the sooner you recognize that such a gap will or is occurring and make expense reductions the easier it will be to solve the problem. Most local governments ignored the clear warning signs in 2008 and convinced themselves that the economic downturn was both going to be short and, of course, would not impact our very special community - WRONG on both counts.

Having waited to make significant changes the pain of closing the revenue/expense gap will now be much greater and the longer we wait that harder it will be to close the gap. Unfortunately almost all of the Town's variable costs are labor costs so closing the gap means either fewer employees or lower salaries and benefits or both.

Like this comment
Posted by Candle Lighter
a resident of Atherton: West Atherton
on Feb 19, 2010 at 11:08 am

I completely agree with Peter's analysis, Louise, and believe it or not, the big developers have actually helped delay the day of reckoning by building the mega-priced mega-mansions of recent years that have generated outsized tax revenues for the town. The fact that Atherton is in a desperate financial condition, clearly cannot afford the existing police department, yet is rebelling against a citizen oversight/review board for it, is in and of itself remarkable.

Like this comment
Posted by Less was More
a resident of Atherton: other
on Feb 19, 2010 at 12:01 pm

OK so I finally get it
we owe a debt of gratitude to the developers for providing us with the very means by which we can afford our bloated and litigious Police Dept
I will be even more grateful when I hear that they have offered to pool their resources and pay for Police services directly.
Just think of the savings if we could cut out all mid management--a beautiful world of moated castles with just a few elected realtors---and no more pension problems!

Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Feb 19, 2010 at 5:38 pm

Peter Carpenter is a registered user.

Less is More states:"OK so I finally get it we owe a debt of gratitude to the developers for providing us with the very means by which we can afford our bloated and litigious Police Dept"

Please explain how in the world you have come to that conclusion based on the article and the above comments.

Sorry, but further commenting on this topic has been closed.

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