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A Pricey Palace, A Lawsuit in Risky Investments, a Busted Bridge – Now MTC Wants More Power

Part I - It now looks as if the open power struggle between the Association of Bay Area Governments and the Metropolitan Transportation Commission will persist for at least a few more weeks.

At MTC’s standing-room-only meeting on September 23, Executive Director Steve Heminger laid out his controversial proposal for his agency to absorb ABAG’s land use planning staff—a shift whose implications for democratic governance and social justice in the Bay Area are vast and troubling. MTC commissioners paved the way for that shift on June 24, when they voted to fund ABAG’s planning staff for only the next six months instead of the customary full fiscal year.

No action could be taken on the 23rd, because the MTC chair, Santa Clara County Supervisor Dave Cortese, had placed consolidation on the agenda as an information item. MTC will act on Heminger’s proposal, detailed in a white paper dated September 18, at its October 28 meeting.

Opposition to both the truncated funding and the proposed consolidation has continued to mount.

On September 17 the ABAG Executive Board voted to ask MTC to fund ABAG planning staff for the full FY 2015-16, to terminate the proposal for consolidation of the two agencies’ planning staffs, and to join ABAG in a discussion about a restructuring or merger.

On September 22 District 10 (Marin and southern Sonoma Counties) Assemblymember Marc Levine put out a scathing press release that assailed MTC as a publicly unresponsive and unaccountable board

…that is preoccupied with consolidating agencies, risky interest rate swap investments and speculative real estate deals....This hostile takeover is a terrible idea. The public would be better served if MTC focused on Bay Area highways and roads instead of empire building.

Levine and District 19 Assemblymember Phil Ting (San Francisco and northern San Mateo County) have introduced AB 1X-24, which would replace MTC and the Bay Area Toll Authority, a major source of MTC’s discretionary revenue, with a single, elected body called the Bay Area Transportation Commission.

In contrast to MTC’s 21 appointed commissioners, an elected board, Levine told me, will “have to make the case” that they’re doing their jobs—above all, eliminating gridlock on the region’s roads.

He also cited “the faulty construction of the Bay Bridge.” The bridge project is managed by the Toll Bridge Program Oversight Committee, a three-member body chaired by Heminger.

Also on September 22 ABAG Executive Director Ezra Rapport published a one-page memo summarizing his agency’s forceful rebuttal to Heminger’s proposal, accompanied by detailed statements from his senior staff, including Finance Director Charlie Adams, Planning & Research Director Miriam Chion, and Legal Counsel Kenneth Moy.

At public comment on MTC’s September 23 meeting, dozens of speakers, including former ABAG Executive Director Henry Gardner, asked the transportation agency to “slow down.”

On October 1, the Contra Costa Times and the Oakland Tribune—two of the Bay Area News Group papers—both ran an editorial under the headline “Stop MTC leader’s bid for regional planning czar.” A third BANG paper, the Marin Independent Journal, called for “more conversation” about regional power.

As of October 9, ABAG, MTC, or both had received letters of concern, if not outright protest, from the cities of San Pablo, Hayward, Antioch, Clayton, Danville, Lafayette, Mill Valley, Concord, Walnut Creek, and Union City; the town of Moraga; the planning departments of San Jose and San Francisco; TransForm; Greenbelt Alliance, East Bay Housing Organizations; the Housing Leadership Council of San Mateo County; the League of Women Voters of the Bay Area; the Non-profit Housing Association of Northern California; the Bay Area Planning Directors Steering Committee; SPUR, the Sierra Club; the Cities Association of Santa Clara County; the West [Contra Costa] County Mayors and Supervisors Association; and the Bay Area Transportation Working Group. A draft letter of opposition is on the October 8 agenda of The Contra Costa Mayors Conference. Some of these letters endorse the idea of integrating regional land use and transportation planning; every one of them objects to the rushed nature of MTC’s move.

The labor councils of San Francisco, the North Bay and Alameda County, as well as SEIU Local 1021, have also registered opposition. SEIU represents ABAG employees;

MTC workers have no union representation. Many of the speakers at the September 23 public comment were current or retired ABAG staff, who fear for their jobs and their pensions.

Except for Levine’s press release, all the documents referenced above are posted on the ABAG website under “ABAG-MTC Merger Reference Materials.”

In advancing his proposal for MTC to take over ABAG’s planning staff, Heminger has wielded the proverbial iron fist in a velvet glove: he’s argued that this course of action is the most rational way to proceed--and that since MTC has the money, ABAG has no choice in the matter.

With one exception, during his testy, hour-long presentation on the 23rd, Heminger kept the gloves on, contending that consolidation was justified by the following benefits:

More efficient planning

When the two agencies developed Plan Bay Area, “literally hundreds of hours of staff time were spent coordinating, cajoling, backtracking, and even some bickering over matters large and small...Far too often, it was just a waste of time.”

Heminger pointed to a disagreement between MTC and ABAG over the state law that requires each Sustainable Communities Strategy (a.k.a. Plan Bay Area) to accommodate a region’s entire population. ABAG came up with “an extremely unusual interpretation” of that requirement—exactly what, Heminger didn’t say. He hasn’t replied to my request for clarification. “Our joint outside counsel and MTC counsel disagreed.” MTC deferred to ABAG “to avoid a stalemate.”

The upshot, according to Heminger: “a lawsuit.” “None of this would have happened,” he asserted, “if one agency”—presumably his—“had developed and adopted the plan.”

He also said that “due to work by ABAG,” the plan was several months late and was challenged by the California Department of Finance and the [Department of] Housing and Community Development, placing the agencies in “a conformity lapse” that could have resulted in the loss of federal construction money. Thanks to a grace period, “nothing really bad happened....Were we good, or lucky?”

It was also hard to “keep a single corporate message” during the plan’s preparation. At times ABAG Executive Director Ezra Rapport told the Congestion Management Agencies in the region “things we hadn’t discussed or that were different from what we’d discussed. I had to go and clean that up.”

He went on to mention duplicated work—“it sounds petty, but I think it’s telling”—specifically MTC’s Vital Signs and ABAG’s State of the Region projects. The latter, he claimed, “did more or less the same thing” as the MTC project. “We tried to argue them out of it,” but to no avail. The public must be thinking: What are these guys doing?”

Heminger also claimed that ABAG said it would help fund defense against litigation over Plan Bay Area—there were four lawsuits— but turned out not to have the money. MTC ended up paying. The tab is $700,000 “and counting.” MTC Director for Legislation and Public Affairs Randy Rentschler later explained to me that the two lawsuits that initially lost in court appealed—one from the Post- Sustainability Institute, the other from the Koch Brothers-funded Pacific Legal Foundation—and the cases are pending in the Court of Appeals.


According to Heminger,

Everywhere else in California, the Sustainable Communities Strategy [Plan Bay Area] is developed by one agency. What we’re proposing is one staff serving two boards. MTC has been making that work for quite some time. You have on staff here that serves BATA [Bay Area Toll Authority] and SAFE [Service Authority for Freeways and Expressways] and BAHA [Bay Area Headquarters Authority], and any other JPA [Joint Powers Authority] you want to create. We don’t create a new staff to staff these organizations; we create a new board, and the same staff staffs all of them.

MTC’s expertise and experience

MTC, said Heminger, has exercised “quite a lot of leadership in the policy areas of land use and housing questions,” starting with the Transportation for Livable Communities program, which was initiated in 1997 and served as the precedent of the current OneBay Area Program. He conceded that ABAG has been at it a lot longer. But “[i]t’s not like we’re complete rookies” at land use planning.

Efficient public finance

“What if MTC paid for one planning department instead of two?” That would result in “a more efficient use of taxpayers’ dollars.”

Yes, the loss of MTC’s funding would have “a real financial impact” on ABAG—to the tune of $1.5 million in new overhead and pension costs. But according to Heminger, that’s “manageable,” “not catastrophic.” ABAG “could raise its members’ dues” and “tighten its belt.” And MTC might provide “a cushion” that would put ABAG on “a glide path.”

Nor would moving ABAG’s unionized employees into MTC’s non-unionized workplace face “impediments from a labor law point of view,” at least not according to Meyers Nave, the “outside labor counsel” that MTC consulted.

In any case, MTC would offer ABAG’s 15 land use planners the right of first refusal of work at MTC’s expanded planning department. Acknowledging that there’s “quite a big difference between” the two agencies’ pay scales—MTC’s is much higher— Heminger ventured that “the benefits are close enough for government work, as Justice Scalia says.”

Only once in Heminger’s presentation did the gloves come off. “The money’s there,” he averred, “and it’s all ours.”

His white paper follows suit. Most of the document elaborates the points Heminger touched on in his presentation to the commission, including a detailed description of a five-part, MTC-directed regional land use and transportation planning department.

But the section on the retention policy for ABAG staff moving (or not) to MTC, ends with this assertion:

Like any other grant funder of ABAG, MTC has complete discretion over whether to continue or discontinue its financial assistance.

We’re calling the shots here, ABAG; you’re just a supplicant, and don’t you forget it.

But ABAG has forgotten it. More precisely, ABAG staff have members disputed their allegedly subordinate status.

That status is the first issue addressed in ABAG Executive Director Rapport’s terse response to Heminger’s white paper:

This is the heart of the problem. ABAG is not a mere grantee. ABAG is a partner with MTC in approving the Sustainable Communities Strategy (SCS). [State law requires each SCS to integrate transportation and land use planning so as to reduce greenhouse gas reduction.] ABAG was given this authority by the State Legislature precisely because it is the Council of Governments for the Bay Area....No other region has taken regional land use coordination out of the Council of Governments.

All true. The contortions Heminger undertakes in an effort to fit this truth into his argument would be comical if they weren’t so disingenuous. Marking “the unique Bay Area arrangement under which SCS development is supervised by two separate boards,” he asks in his white paper:

What happens if the two boards disagree? Wouldn’t it make more sense for only the MPO [Metropolitan Planning Organization, a federal designation] to adopt and update Plan Bay Area, as is the case in every other metro region in California?

But what’s also the case in every other metro region in California is that the MPO is subsumed under the Council of Governments— an inconvenient reality that Heminger backs into:

To eliminate ABAG’s role altogether in the preparation of Plan Bay Area....would ignore the fact that—unlike all those other California MPOs—MTC does not serve as the Council of Governments for the Bay Area. ABAG does.

Just so.

Of course, SB 375, the state law that both mandates the creation of the SCS and designates ABAG as the agency responsible for the land use planning in the SCS, could be amended.

Heminger entertains that possibility:

To eliminate ABAG’s role altogether in the preparation of Plan Bay Area would require amending state law, which always entails the risk of unintended consequences.

One such consequence—unarticulated by the MTC executive director—is that the state legislature could put MTC in the same position as the other MPOs in the state, which is to say, subordinate to the Council of Government in the preparation of the Sustainable Community Strategy.

All this may sound like a bureaucratic squabble over pecking order.

It’s not.

To begin, these designations signify markedly different histories and cultures. MTC is a state agency created by the California legislature in 1970; in that capacity it functions as the Bay Area’s regional transportation planning agency. ABAG was formed as a Joint Powers Authority by the cities of the Bay Area in 1961 with the express purpose of protecting local control—that is to say, control by the elected bodies of the region. ABAG’s 38-person Executive Board comprises elected officials who have been chosen by their city councils and county boards of supervisors. Sixteen of the 18 voting Metropolitan Transportation Commissioners are also elected officials who have been selected by city councils and county boards of supervisors. But unlike MTC, ABAG is a membership organization.

ABAG Finance Director Charlie Adams scoffed at Heminger’s suggestion that to compensate for the loss of MTC funding, ABAG could raise its membership dues. “The removal of the primary function performed by ABAG, land use planning,” Adams wrote, “...will likely reduce the number of dues paying ABAG members.” Such a reduction would be critical, because membership dues, which amount to $1.9 million and constitute 13.2% of the agency’s operating budget, “are the only fully discretionary funding of the Association.”

Rapport put it even more starkly. Speaking at public comment on the 23rd, he said the idea that “there is a glide path for a myth.” His white paper charges that MTC’s unilateral decision to end a funding agreement with ABAG that ran through 2021 “eliminates over 40% of ABAG’s overhead, and will risk ABAG’s bankruptcy.”

ABAG’s survival isn’t the only thing that Heminger’s proposal puts at risk. Rapport writes: “Failure to fund ABAG to carry out its statutory role will seriously jeopardize the timing and approval of SCS and the Regional Transportation Plan.”

Approved in July 2013, Plan Bay Area is now in the early stages of its state-mandated quadrennial update. Even if MTC does take over ABAG’s planning staff, the ABAG Executive Board retains its legal authority to approve the updated plan. ABAG Legal Counsel Kenneth Moy asks:

Is MTC relying on brinksmanship: that ABAG would not dare to imperil the region’s ability to complete the RTP in 2017 by exercising its policy-based statutory authority to not approve an SCS prepared solely by MTC?

Moy warns that

[w]ithout a close working relationship between the ABAG Executive Board and the staff performing regional land use planning, there is a real risk that the land use planning elements of the PBA 2040 will not meet the policy objectives of ABAG.

That risk seems serious, to judge from ABAG Planning and Research Director Miriam Chion’s assessment of the consolidated MTC-directed regional planning department envisioned in Heminger’s white paper. The problem, writes Chion, isn’t “the desire for a more integrated approach to regional planning.” ABAG staff share that desire. The problem is partly that, contrary to its stated motive, Heminger’s proposal has the potential to diffuse regional planning, thanks to the five-unit scheme’s “problematic fragmentation of land use, housing and equity and sustainability.”

You’d think that Heminger would have devoted considerable attention to what is supposedly the heart of his proposal. Instead he spent about two minutes on the subject, directing questions about “the details” to MTC Planning Director Ken Kirkey.

His reticence is understandable, once you read Chion’s critique of the proposed entity:

[H]ousing is included under “local Planning and Implementation” but not under “Regional Planning/Policy,” when it is clearly both a regional and local issue....” “Resilience” is mentioned in the “Equity and Sustainability” unit, but the ABAG Resilience team is not folded into the consolidated department...Similarly, the Bay Trail is not part of the proposed integrated planning department despite its essential role in regional-local collaboration around open space issues and the PCA [Priority Conservation Areas] program. In addition, the process by which the five planning units would produce coordinated work is unclear, leaving the possibility that a move intended to increase integration will actually reduce it.

But greater integration is only one of ABAG’s policy objectives. Chion says that Heminger’s proposal falls short in other ways as well. Citing his lamentation over “’too much time spent arguing over matters ranging from high-level policy to low level minutiae,’” Chion observes:

A single department reporting to the MTC Executive Director would create a more streamlined decision-making process, but could also reduce the breadth of meaningful dialogue on regional issues such as displacement or housing growth.

In truth, when it comes to fostering “meaningful dialogue” on contentious matters, especially at the grass-roots, both MTC and ABAG have a long way to go. But while ABAG is a laggard, MTC is virtually a no-show—and proud of it.

Consider this statement from Heminger’s white paper:

I think it’s safe to say that MTC is more action-oriented, while ABAG is more discussion-focused and policy-based.

To get a sense of what Heminger means by “action-oriented” as opposed to “discussion-focused and policy-based,” you have only to look at the peremptory manner in which he’s rolled out and rationalized his takeover proposal.

On the 23rd, he groused that some cities had filed their objections to his proposal before he’d issued his white paper on September 18. “Folks want to get a jump on things,” he said. “But it’s my experience that it’s usually better to commit to something you’ve read.”

Apparently some “folks” didn’t have to read the white paper in order to know that they objected to the imposition of a “high- level policy” about which, despite its profound consequences for their communities, they had been kept in the dark.

In a letter to Dave Cortese and ABAG President Julie Pierce dated September 17, Clayton Mayor David Shuey wrote that his city

…expresses its grave concern over the recent ploy by the Metropolitan Transportation Commission (MTC) to jerk the Planning Research Function from the Association of Bay Area Governments (ABAG) to the MTC, effective January 2016. The proposal has not been a collaborative effort between both agencies, numerous stakeholders have not been afforded the opportunity to evaluate the proposal or provide reflective communication regarding its merits or alternatives, and the carnivorous MTC scheme to terminate ABAG’s $3.6 million in funds for this long-held regional land use planning function is government at its worst display.

Antioch Mayor Wade Harper conveyed similar thoughts in a September 18 letter to Pierce

It is our understanding that this change [the transfer of ABAG’s land use planners and “associated funding” to MTC] is on a fast track, without consultation with, or an opportunity for input from, city and county governments....

Two threshold questions come to mind: “Why the rush?” and “Why the lack of transparency?

At the meeting on the 23rd, Heminger’s reluctance to engage in discussion was apparent in his elliptical reference to ABAG’s “extremely unusual interpretation” of the state requirement that a Sustainable Community Strategy accommodate all of a region’s population in its forecasts—an interpretation that, he said, led to a lawsuit. He didn’t specify either the nature of the interpretation or the lawsuit.

Was he referring to the inclusion of anti-displacement language in Plan Bay Area’s housing goals—a policy that is not required by SB 375—and to the suit by the Building Industry Association of the Bay Area? But BIA didn’t sue over the anti-displacement language; it sued over the omission of in- commuters (people who come into the region to work) from the population forecast. Did ABAG support that omission? Heminger hasn’t replied to my email asking for specifics.

He also told MTC that the argument continues. Again, he provided no details.

The only ongoing argument about PBA 2013 of which I’m aware was about whether the anti-displacement language should be included in the SCS update. Initially, ABAG staff thought it should; MTC staff thought it shouldn’t—setting off a heated debate at the joint meeting of the MTC Planning Committee and the ABAG Administrative Committee in July, and a vigorous campaign for inclusion from the Six Wins for Social Equity Network. As I’ve reported, the two agencies’ planning directors seem to have resolved that disagreement, though the exact wording remained to be pinned down.

In response to my request for further clarification, Chion emailed:

I believe we are on the same page. However there is a language disagreement on the performance target number two on housing. The difference is that MTC doesn't accept the inclusion of the phrase "Regional Housing Control Total" [residents plus in-commuters], which reflects the BIA legal settlement. MTC Executive Director, Steve Heminger, indicated that it is complicating the language unnecessarily.

Given Heminger’s professed regard for legal precision, which seems odd.

Chion says that “[i]t would be up to the Joint ABAG/MTC Committee to decide on the final language. It should be simple.” That body’s next meeting is on October 9.

Chion also takes on what she calls Heminger’s “core” argument: the current division of regional planning labor is inefficient. She notes, accurately, that he doesn’t back up this charge with specifics. She adds that in the eight years since the agencies signed their inter-agency funding agreement, “MTC has not registered concerns about the substantive or financial performance” of tasks that ABAG has documented on a quarterly basis. Moreover, “[a] third party audit completed in June 2015 did not find any irregularities in ABAG expenditure of planning funds.”

And she dismisses as “simply not accurate” the claim in the white paper about “significant duplication” of efforts work between ABAG and MTC planning departments, stating that in discussions between MTC and ABAG staff, MTC has never raised the issue.

On the 23rd, Heminger backed up the duplication claim with a single illustration: MTC’s Vital Signs and ABAG’s State of the Region Report. But as ABAG Cynthia Kroll explained to me, the two projects significantly differ. The MTC staffer in charge of Vital Signs, Dave Vautin, has not replied to my query about duplication.

Heminger’s idea of an “action-oriented” executive appears to be someone who brooks no opposition and doesn’t feel it’s necessary to support his claims with evidence. This bodes poorly for the efficient, which is to say, timely preparation of the Plan Bay Area update.” As Chion argues, the success of a regional plan hinges on “buy-in” from local governments, who alone have the “land use authority” to implement it.

High-handedness aside, another cause for trepidation on the part of local governments is the transportation planning agency’s seeming ignorance about basic land use processes and programs. “The MTC staff report,” says Chion, “inaccurately characterizes a number of basic land use and housing issues,” thereby “call[ing] into question MTC’s understanding of fundamental planning issues.”

For example, Heminger compares the role of staff in an integrated regional planning department to the role of staff in local planning departments, who support both a planning commission and a city council or board of supervisors.

As any local land use activist could tell you, this analogy fails. Chion offers a corrective: “A Planning Commission plays an advisory role to a City Council or Board of Supervisors” [emphasis added]. By contrast, legally speaking, ABAG and MTC are on an equal footing; each agency is statutorily “responsible for adopting discrete policies.”

One such discrete policy that looms large in the minds of local councils and boards of supervisors is the Regional Housing Needs Allocation (RHNA). RHNA is one of the most significant—and contentious—land use planning processes undertaken at the regional level. Every region is responsible for zoning an amount of housing at specified levels of affordability determined by the California Department of Housing and Community Development. ABAG divvies up the regional allocation among the cities in the Bay Area. Don’t do the designated zoning, especially for housing affordable to low-income residents, and you invite a lawsuit from the state and very likely one from Public Advocates (see: Urban Habitat v. City of Pleasanton). How the RHNA is determined is thus of intense interest to every jurisdiction.

Chion says Heminger’s treatment of the RHNA is problematic. For one thing, he refers to its determination as a “quadrennial” affair; in fact, it occurs every eight years. For another, he surmises that the regional planning workload could be reduced if more counties “accept delegation of the intra-county negotiation among cities for allocating housing need.” Not so, says Chion: even if additional RHNA sub-regions are created,

…county-level sub-RHNA negotiations are informed by the fact that governments know exactly what their allocation would be under the regional RHNA if the county-level negotiations were to fail.

ABAG staff also cast aspersions on MTC’s supposed contributions to regional land use planning. “MTC’s involvement,” writes Moy, “...has focused on the limited use of transportation funds to support transportation-related activities.” Heminger’s report states that MTC “played a key role in the development of the FOCUS Program and the Priority Development (PDA) and Priority Conservation Area (PCA) programs.” Moy says that’s untrue: “ABAG led the ground-breaking land use planning that created, informed and implemented the region’s FOCUS/PDA/PCA programs.”

If Chion finds that Heminger’s proposal offered “no clear benefit to local governments,” ABAG Director of Information Services and Human Resources Brian Kirking wonders whether it offers any benefits at all to him and his colleagues, including the fifteen land use planners whom MTC covets.

Heminger’s report says that “MTC would determine the classification level and salary grade for each MTC position that most closely matches each planner’s current ABAG salary.” Kirking points out that “[t]his is very different from matching current job title, responsibilities, background and experience.” Speaking at public comment, ABAG Regional Planner Pedro Galvao went further, declaring that, given ABAG’s lower salaries, Heminger’s proposal amounts to “masked demotions.” And whatever their new classification and salary grade, at MTC the land use planners will have lost the protections they had as members of ABAG’s unionized workforce.

The 50-plus ABAG employees who are not working in the agency’s land use planning department may face even greater risks. Kirking challenges Heminger’s assertion that “unfunded pension and OPEB [other post-employment benefits, i.e. health insurance] ‘belong to ABAG.’” That assertion ignores the fact that

…the ability to fund these liabilities is tied to ongoing operations of the agency. As functions and staff are removed, funding of these liabilities falls on a smaller pool of remaining positions....If [the Planning Department] disappears; a proportionate share of the agency’s ability to fund those liabilities goes with it.

Other departments will be asked to cover the costs. They may find that burden to be “significant” and “possibly unbearable.

Worse yet, ABAG employees who provide support such as accounting, human resources, information technology and office services may lose their jobs altogether. At the meeting on the 23rd, many ABAG staff bore signs saying “Not one of the 15.” Others, now retired from ABAG, had signs that read: “Unfunded Liability?—ABAG Retiree.”

Read PART II - Why The Metropolitan Transportation Commission Is Now A Rogue Agency