Part II - The Heminger proposal for the consolidation of regional planning is a mess.
Why, then, is it being taken seriously, eating up hours and hours of precious staff time, all of which is being paid for the public?
The most conspicuous answer: it’s coming from Steve Heminger.
Heminger, 56, arrived at MTC in 1993 and became the agency’s executive director in 2001. He previously served as VP of Transportation at the Bay Area Council, the lobby for our region’s biggest businesses. He has an international reputation, burnished by his costly taxpayer-funded junkets to conferences around the world. In 2008 Heminger was rumored to be on Obama’s short list of candidates for Secretary of Transportation. Nancy Pelosi appointed him to the National Surface Transportation Policy and Revenue Study Commission.
Pat Jones was ABAG Assistant Executive Director from 1989 to 2013. Now retired but still living in the Bay Area, she told me she’s “definitely opposed” to Heminger’s bid. “This is about power and control,” said Jones. “It’s about feathering somebody’s cap. Steve has got his palace in San Francisco....He’s built a bridge, so now he wants to be known as the person who took the planning function from ABAG.”
The “palace in San Francisco” is the new headquarters for MTC, ABAG, the Bay Area Air Quality District, and possibly the Bay Conservation and Development Commission, located at 375 Beale Street (formerly 390 Main Street). The agencies are scheduled to move into the place in early 2016. The bridge is, of course, the new eastern span of the Bay Bridge. As noted earlier, Heminger chairs the panel that oversees the project.
That the consolidation proposal is being taken seriously is even more perplexing when you consider the troubled history of these and other major Heminger-directed endeavors, a history that has already generated two state laws curbing agencies effectively governed by MTC.
On September 24, the day after the MTC meeting, the lead story in the San Francisco Chronicle was headlined “Millions more to fix rods on span.” On October 5, the lead story’s headline was “Bay Bridge designer fears leaks are damaging main cable.” These are just the latest of the many widely reported problems with the Bay Bridge: the leaks and faulty bolts, years of delays and million-dollar cost-overruns.
Less widely reported is the passage last August of AB 1284, a bill sponsored by Assemblymember Catharine Baker, who represents the 16th Assembly District (Lamorinda and Tri- Valley). The new law makes the Toll Bridge Project Oversight Committee subject to the Bagley-Keene Open Meetings Act, so that its meetings will be open to the public.
According to the legislative analysis prepared for the Assembly Committee on Local Government, the 2005 bill that established the TBPOC, AB 144 (Hancock),
…specifically exempted the TBPOC from state agency open meeting act requirements (Bageley-Keene Act). SB 66 (Torlakson)...2005, a follow-up measure to AB 144, exempted the TBPOC from local agency open meeting act requirements (Brown Act). An analysis for SB 66 stated that the TBPOC by its nature is an oversight entity only, providing review and monitoring services, evaluating project change orders and developing cost estimates and risk assessments.
The growing uproar over the bridge’s problems raised questions about the TBPOC’s true character and lack of accountability. In May 2014, the TBPC voted to adopt an “open meetings policy” with a provision for closed sessions that, unlike existing law, allowed the committee to go into closed session, “as determined necessary by the members of the committee” and that “allow[ed] the committee to limit reporting on closed sessions at subsequent regular meetings.”
Writing to Baker, the TBPOC justified its action in language whose invocation of efficiency resonates with Heminger’s rationale for an MTC takeover of ABAG planning staff:
While we have taken important steps to open our process, we have done so in a way that balances the need for openness with the need to conduct business as efficiently as possible. In short, we believe we are now in full compliance with the spirit of Bagley-Keene while maintaining some differences from the law’s literal provisions.
Baker disagreed. “Transparency,” she wrote in a statement posted on her official website,
…is essential to accountability, and the TBPOC needs transparency. [On] August 5, 2014, the Senate Transportation and Housing committee held a series of informational hearings on the construction problems with the Bay Bridge. The final report detailed the existing lack of transparency to the public and oversight entities for the Bay Bay Bridge project, despite receiving billions of taxpayer dollars[,] including general fund money....
“The TBPOC adopted an “open meeting policy” but the policy adopted allows the committee to meet in closed session on “any matter” for any reason deemed by themselves to be in the public interest. The committee can similarly expunge the record so that there is no report that a meeting took place or action was taken.
The State Legislature unanimously approved AB 1284.
The new headquarters, Heminger’s baby, was controversial from the start. It’s grown even more controversial due to its delays, cost-overruns, and use of bridge tolls for financing. The Contra Costa Times says that the original budget of $167 million ($93 to acquire the property, $74 million for seismic retrofit and rehab) has now ballooned to $256 million.
In 2013 the state legislature passed SB 613, a bill sponsored by then-State Senator, now Congressman, Mark DeSaulnier, representing 7th State Senate District (East Bay east of the Berkeley hills), that
- prohibits the Bay Area Toll Authority (BATA) from purchasing or otherwise acquiring, directly or indirectly, office space and office facilities in addition to the office space and facilities at 390 Main Street in San Francisco;
- restricts BATA’s contribution to MTC to no more than 1% of the gross annual bridge revenues;
- allows BATA to loan up to an additional 1% of the gross annual bridge revenues beyond its contributions to MTC, to be repaid at the same interest rate that applies to toll bridge revenue bonds of the same duration BATA administers toll revenue for seven state-owned toll bridges in our region (not including the Golden Gate Bridge).
What moved DeSaulnier to sponsor this law was that MTC and BATA had used bridge tolls to buy a building that had more than twice the office space they needed for their own use. Dubbing the structure “a regional governance co-location facility,” the agencies planned to lease the excess space to regional entities, including ABAG.
The legislative analysis done for the Senate Transportation and Housing Committee said “[DeSaulnier’s] office questions why MTC is entering the real estate business and becoming a commercial landlord.”
Working with information provided by the State Auditor’s Office, the legislative counsel ruled that it was legally permissible for MTC to acquire a new headquarters building, but that MTC and BATA did not have legislative authority to provide a regional governance co-location facility, and that hence the use of toll revenues to purchase the building “may be an impermissible use of those revenues.”
DeSaulnier’s office told the legislative analyst that the bill was “necessary to ensure that toll revenues are not used in the future to purchase property that is not ‘solely for the management of state-owned bridges.’” Existing law authorized BATA to make unlimited contributions to MTC to enable BATA to fulfill its responsibilities.
SB 613 passed unanimously.
But to my knowledge, the law is not being enforced. On October 6 Margarita Fernández of the California State Auditor’s office told me that her agency hasn’t audited BATA or MTC since 2012, and that to do so, it would need a mandate from the Joint Legislative Audit Committee.
Meanwhile, in May and June 2014 BATA and MTC approved the transfer of $33 million of what Heminger’s staff report called “non-bridge toll revenue generated from the early retirement of the SPANS [State Payment Acceleration Notes] financing” to the Bay Area Headquarters Authority for construction costs at the new facility. That’s $26.5 million more than the 1% or roughly $6.5 million of annual bridge tolls that BATA is legally permitted to transfer to MTC.
I’d heard about the problems with the bridge project—who hasn’t?— and the new headquarters, but nothing about another item mentioned in Assemblymember Levine’s press release: “risky interest rate swap investments.”
Investopedia defines an interest rate swaps as follows:
An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for another based on a specified principal amount. Interest rate swaps often exchange a fixed payment for a floating payment that is linked to an interest rate (most often the LIBOR [London Interbank Offered Rate]). A company will typically use interest rate swaps to limit or manage exposure to fluctuations in interest rates, or to obtain a marginally lower interest rate than it would have been able to get without the swap.
Darwin BondGraham, now a staff reporter at the East Bay Express, summarized MTC’s hapless venture into swap investments in an incisive essay, “The Swaps Crisis,” posted on Dollars & Sense in May 2012:
In 2002 a little-known but powerful state agency in California and Wall Street titans Morgan Stanley, Citigroup, and Ambac consummated one of the biggest deals to date involving a type of financial derivative called an “interest rate swap.” A year later the executive director of the Bay Area’s Metropolitan Transportation Commission, Steve Heminger, proudly described these historic deals to a visiting contingent of Atlanta policymakers as a model to be emulated. Swaps were opening up a brave new world in public finance by extending the MTC’s purchasing power by $200 million, making a previously impossible bridge construction schedule achievable in a shorter timeframe. The deal would also protect the MTC from future volatile swings in variable interest rates. To top it off, the banks would make a neat little profit too. Everybody was winning.
Then in 2008 it all came crashing down. The financial system’s near collapse, the federal government’s unprecedented bailouts, and global economic stagnation mean that the derivative products once touted as prudent hedges against uncertainty have instead become toxic assets, draining billions from the public sector.
The MTC was forced to pay $104 million to cancel its interest rate swap with Ambac when the company went bankrupt in 2010. Whereas once the Commission’s swaps portfolio was saving it money, now it must pay millions yearly to a wolf pack of banks including Wells Fargo, JPMorgan Chase, Morgan Stanley, Citibank, Goldman Sachs, and the Bank of New York. The MTC’s own analysts now estimate that the Commission’s swaps have a net negative value of $235 million. This money all ultimately comes from tolls paid by drivers crossing the San Francisco Bay Area’s bridges, toll money that not too long ago was supposed to purchase bridge upgrades. Now it’s just a free lunch for the banks.
On May 3, 2011 San Francisco Chronicle columnists Matier & Ross wrote:
If you’re a bridge commuter, this might give you road rage—about a year’s worth of toll hikes, or $120 million thanks to a bond-credit swap gone bad.
“It sucks,” said Marin County Supervisor Steve Kinsey, who— along with other members of the Metropolitan Transportation Commission—voted recently to pony up a final $7.5 million in the hopes of putting an end to one of the biggest financial debacles the agency has ever seen.
The $120 million included “$10 million for a deal to restructure the bonds and other expenses.”
“You know public agencies,” Matier told CBS on May 4. “It wasn’t like they issued a press release saying that a year’s worth of toll increases just went up in smoke. [The information] just sort of eked out.”
Nor did BATA/MTC issue a press release in late October 2014 saying that the agencies had again authorized risky investments.
According to an October 17, 2014 staff report prepared for BATA’s October 22, 2014 meeting, BATA currently has $1.4 billion of “Qualified Swap Agreements...outstanding with various counterparties pursuant to which the Authority pays a fixed rate and receives a variable rate based on an index.”
In the cover memo entitled “Resolution No. 114, FY 2013-14 Financing Plan,” BATA/MTC CFO Mayhew wrote:
Resolution No. 114 authorizes staff to complete the FY 2013-14 Financing Plan with the issuance of $300 million in Toll Bridge Revenue Bonds to fund on-going projects and complete refunding of the remaining outstanding 2009 Fixed Rate bonds....BATA has completed refunding $1.0 billion in 2008 Series F-1 and 2009 Series F-1 bonds. $451.2 million of the 2009 Series F-1 bonds remain outstanding....[O]ur basic plan is to utilize a “put bond” structure that will fix the rate until the 2019 call date on the 2009 Series F-1 bonds.
Mayhew’s memo put a roseate spin on the situation:
The most recent refunding, completed in August 2014, resulted in a cash flow savings of $158 million ($146 million in present value or 14% of refunded principal). However, the “put bond” structure of the refunding guarantees savings only to the call date of 2019 when the bonds will have to be remarketed. Because the rates on the remarketed bonds cannot be guaranteed, future savings are not predictable. Nevertheless, the combination of known cash flow savings, converting from fixed to generally lower-cost variable rate debt and the potential benefit of matching short-term debt with BATA’s investment returns, generally improves BATA’s objectives of improved financial and debt service management.
A passage in the lengthy document appended to the memo was less optimistic. Under the sub-head “Swap Related Risks,” Mayhew cautioned:
The variable rates received pursuant to such agreements which are LIBOR-based may differ, at times substantially, from the interest rates on the Senior Bonds corresponding to such swap agreements. In addition, if the counterparties to such Qualified Swap Agreements encounter financial difficulties [remember AMBAC], under certain circumstances payments may not be received from such counterparties, or the swap agreements may be terminated requiring, depending on market conditions at the time, termination payments to be made by the Authority. Such termination payments could be substantial and are payable as Subordinate Obligations, on a parity basis with the Subordinate Bonds. As of November __, such termination payments would exceed an approximate estimated aggregate amount of $___million.
BondGraham emphasized that MTC was hardly the only public agency whose credit swap investments ended in disaster.
Local governments and agencies across the United States have been caught in a perfect storm that has turned their “brilliant” hedging instruments into golden handcuffs. The result is something of a second bailout for the Wall Street banks on the other sides of these deals.
He also pointed out that the proliferation of these financial instruments should be recognized as “central instruments of contemporary capitalism,” as devices “designed to allow local governments to reduce their risks in a world of global capital flows and floating interest rates.”
But that, BondGraham went on to say, doesn’t excuse the officials who resorted to their use. He cited Pennsylvania state auditor Jack Wagner:
[T]he use of swaps amounts to gambling with public money. The fundamental guiding principle in handling public funds is that they should never be exposed to the risk of financial loss. Swaps have no place in public financing and should be banned immediately.
On September 28 I emailed Mayhew asking, among other things:
When did the Authority enter into these Qualified Swap Agreements?
As of September 2015, what is the approximate estimated aggregate amount that termination payments could exceed?
Why is BATA still paying off 2009 fixed rate bonds? He has yet to reply.
Mayhew also has yet to reply to other questions I posed about Resolution No. 114. His memo stated that the 2013-14 Financing Plan had been approved by the Authority in November 2013. The plan called for new money project funding of up to $500 million and potential refunding opportunities provided either there were minimum 3% net present value savings or the refunding was in the Authority’s “best interests” to achieve other Authority objectives. To date, $200 million of new project funding has been completed.
How did you determine the 3% net present value savings?
What are "Authority's 'best interests,'" and how are they determined?
Likewise, what are or were "other Authority objectives" that entered into that determination?
What was the $200 million of new project funding spent on?”
The memo sought authorization of $300 million in new Toll Bridge Revenue Bonds “to fund on-going projects.” I asked:
What were the “on-going projects” that the $300 million [in Toll Bridge Revenue bonds] will be spent on?
To date, no answers.
I’m not the only one whose questions the MTC/BATA CFO Mayhew has blown off. At the October 22 meeting, he parried BATA/MTC commissioners’ concerns about Resolution No. 114. What’s even more disturbing than Mayhew’s impertinence, however, is the commissioners’ reluctance to press him.
Thanks to former Emeryville Mayor Ken Bukowski-turned- regional-meeting-videographer, we have a 17-minute clip of the give-and-take that readers can view here.
Mayhew’s memo said that “refunding of the remaining $451.2 million principal outstanding 2009 Series F-1 bonds,” with a “’put bond’ structure that will fix the rate until the 2019 call date” on the bonds, would result in an “estimated cash flow savings through 2019 [of] $50 million ($47 million in present value or 10% of refunded principal).”
Marin County Supervisor Steve Kinsey asked Mayhew, reasonably enough, what “the 50 million cash flow benefit actually goes back into in our refinancing.”
Mayhew had also said that the refinancing would fund “projects of special significance” to be chosen by himself and Heminger. Kinsey asked the CFO to identify such projects.
The first question, said Mayhew, was “easy” to answer: The “cash flow” is “like your mortgage”; it “falls into the fund balance.” As for the special projects: “I don’t know what future projects you would have in [garbled]. You know that we’ve been working on a number of them.” Mayhew mentioned express lanes and “the grant.”
The appropriate response to that non-response would have been: If I knew what those projects were, I wouldn’t have asked you to identify them. Until I get more specifics, I’m not prepared to vote on this request.
Instead, Kinsey—who in 2011 said of MTC’s $120-million credit swap gone bad, “It sucks”—murmured, “Thank you.”
Next, Berkeley Mayor Tom Bates asked,
I’m a little confused as to why we’d want to go variable...when it seems like fixed rates are so low now. Wouldn’t it be better to go with fixed rates?” As for variable rates: “Who knows?
So you’re absolutely right.” (His standard response is to profess agreement with his interlocutor and then demur at length.)
Interest rates are incredibly low and attractive at the moment. We do want to take advantage of that market as much as we can....There is a component of the portfolio where basically you’re matching up what you can afford with the variable structure....We have a piece of it, roughly 20, 25%. That piece is matched up against our bank account. So as we earn money in our bank account—we have a reserve of roughly a billion dollars....Economics indicates that a billion dollars taxable can pay off an equal amount or a greater amount of tax exempt....Those two will tend to offset each other....You leave the rest of your debt portfolio as a fixed-rate portfolio, is left to the toll payments.
It’s a way of taking some of the pressure off of the tolls, and since we’re required to maintain a level of liquidity, otherwise we couldn’t have this much in the way of debt. You’d have higher tolls....It’s best to use your bank account here [gestures] to pay off this much of your debt [gestures]. These take care of each other....We waited until the very end to make sure that the market and the different things that go with variable rate debt are all in place, and we’re very comfortable that we’re not going to get into an ’09 situation.
Nothing more from Bates.
Then Napa County Supervisor Bill Dodd asked a softball question:
How many more years are we going to be having this conversation?
Mayhew: “Forty.” [Laughter in the chamber.]
Dodd followed that up with a hardball:
Okay. So I’m interested in understanding what the elasticity is....Right now you’re feeling very good about the short-term rates, and the variable rates....What I’d like to do is be thinking out ten and 15 years, and what would happen if all of a sudden rates went up significantly? Maybe you could do some sort of spreadsheet on that. What would that mean to the ratepayers if we could lock it in now for a little bit more and take risk out of the game?
Well, you’re right—we could do the analytics on it, but the basic theory is very simple: if the rate on your floating rate debt goes up, the rate on your asset side is going up as well. They won’t move in lockstep. Can’t guarantee that. In fact we passed 8% interest rates in ’08, remember, but things [garbled] up. The earnings in our portfolio also began to match it. So that’s what the theory is. ....In a general market, and there’s no indication of a liquidity meltdown like in ’08, but in a general market, over time...everything comes back to the average. This one may spike [moves one hand up], and this one may move later [moves the other hand up], but they will generally move in lockstep, so as you...pay, say 3% on your variable rate, your portfolio probably goes to three-ten, three- eleven.
But Bates and Dodd were asking about what would happen if the “general” market suddenly became exceptional—in other words, what would happen if the capitalist business cycle turns, as it inevitably does.
Mayhew told them: We’re depending on the equilibrium theory of markets. What he didn’t say is that that mainstay of economic orthodoxy was unable to predict the crash of 2008.
That was it for questions.
Nobody asked: Why do we have to do these (unspecified) new projects now? Why the rush? If we can wait, why not take advantage of the current low interest rates and put the excess funds into savings?
At least neither Bates nor Dodd thanked Mayhew. What they did next, however, was worse: they joined the rest of the commissioners, who included San Francisco Supervisors David Campos and Scott Wiener, and voted to approve Resolution No. 114.
Voting on a budget is one of public officials’ most important and most difficult assignments. The finances of an institution as big and moneyed as BATA/MTC are bound to be complex. They need careful scrutiny. Nothing in the perfunctory exchange on October 22 indicates that the members of the BATA/MTC board had a firm grasp on the investments they unanimously approved.
Which is to say, MTC’s recklessness can’t all be pinned on Steve Heminger. Heminger is an appointed official serving a public board. To fulfill his imperial ambitions, he needs that board’s go-ahead. He routinely gets it.
The reasons for this acquiescence are not hard to fathom. As Moraga Town Manager Jill Keimach, a brave woman, put it during public comment to MTC on September 23, “We don’t want to have an argument with a grantor that has our transportation dollars as a huge leverage.”
But even if an MTC or ABAG board member wants to take a conscientious stand vis-à-vis Heminger and his lieutenants, it would be hard to do. As I noted in my first piece about the agencies’ power struggle, the elected officials who sit on these boards lack the knowledge—be it about financial investment, transportation engineering, housing, greenhouse gas emissions, the state of the region—that would enable them to make informed decisions. If they’re county supervisors, they have aides who advise them on matters in their district. If they’re city councilmembers in a larger town, they might have aides; chances are that those aides focus on constituent work, not researching technical issues. But as members of the MTC or ABAG boards, they have no aides to advise or assist them on regionwide concerns. They are at the mercy of the agencies’ staffs.
Marin I-J columnist Dick Spotswood sees another factor in the undue deference to the agency’s staff. "MTC's unelected 21-member board," he writes,
is composed of county supervisors and big-city councilmembers who frequently see their upward mobility blocked and view MTC directorships as career toppers. Given the board’s size, directors must be team players to advance to board posts. That gives MTC’s staff, headed by executive director Steve Heminger, the dominant role.
One MTC commissioner who fits Spotswood’s profile is the board chair, Santa Clara County Supervisor Dave Cortese. The son of former Santa Clara County Supervisor and Assemblymember Dominic Cortese, the current MTC chair served eight years on the San Jose City Council, including two as vice mayor, before being elected supervisor in 2008. In 2014 he ran for San Jose mayor, winning a June primary and then narrowly losing to Sam Liccardo in the November general election.
At the September 23 meeting, Cortese said that it was he, not Heminger, who had initiated the move to consolidate MTC and ABAG planning staff’s.
When I got here as chair this January, I was was asked by the executive director and his team what my priorities were for the year. My answer was this—what we’re discussing here today [taps on Heminger’s white paper]. So if there are people who feel disrespect or who [question] the priority or the process, it should be directed to me. I greatly appreciate the fact that the Metropolitan Transportation Commission team, starting with the executive director said, if that’s what you want to tackle, we’ll staff you in that. We’ll give you options. You tell us what kind of options you want to see, and we’ll present those.
In Cortese’s telling, Heminger and company are just doing the bidding of the MTC Chair. The June recommendation to fund ABAG for only the first half of FY 2015-16 came from Cortese, not Heminger.
No doubt, the two see eye-to-eye on the proposed takeover. But the notion that the idea of a takeover originated with Cortese alone is not credible.
Indeed, if Spotswood is correct, the notion of a strong MTC board is implausible. The prototype for MTC, in his view, is the “Empire on the Hudson,” a.k.a. the New Jersey Port Authority, with its “’staff knows best’ culture of arrogance,” buttressed by political isolation and a board that was “designed to be weak.” At MTC, the board’s built-in impotence is “a fact that most commissioners understandably deny out of ego or incomprehension.”
In Cortese’s case, ego certainly plays a role. On September 23, he touted his 24 years in various public offices, in the course of which he’d served “one of the bigger cities in California” and “a county with 17,000 employees and 40 different departments.”
To state the obvious, egotism doesn’t signify power. At the BATA meeting on October 22, 2014, Cortese, then vice-chair of the board, sat silently while CFO Mayhew bobbed and weaved in his defense of new variable rate interest debt. It was clear who was leading whom.
As Spotswood argues, the real power at MTC lies with the “senior leadership”—Heminger, Mayhew and other top staff —which
…aspires to create its own “Empire on the Bay,” incorporating toll bridges, highways, transit and, with its current effort to gut the Association of Bay Area Governments, housing. If that mistake comes to pass, it’ll lead to MTC influence over local zoning.
Spotswood thinks “the ABAG takeover isn’t about ideology. It’s about power.”
Until last summer, I would have agreed. And, based on years of interaction with both agencies, I would have added that ABAG seemed as impervious to democratic governance as MTC.
My perceptions changed in June, when MTC staff wanted to remove the anti-displacement policy that appeared in Plan Bay Area 2013 from the updated SCS. ABAG staff argued for retention. That conflict revealed that what’s at stake in the current power struggle is whether regional planning is going to embody a commitment to social and economic equity.
That’s not to say that ABAG is a paragon of democratic governance. The myriad tributes to the agency’s dedication to “local control” refer to control by city councils and county boards of supervisors, not the public at large.
When Heminger, having alleged redundancy between MTC and ABAG projects, declared: “The public must be thinking: What are these guys doing?,” I stared at him in disbelief. In reality, the public has no idea that MTC and ABAG exist, much less what they do.
That ignorance reflects the effective blackout of media coverage about regional public affairs. 48 hills is the only news outlet that’s regularly reporting on the power struggle between MTC and ABAG.
But these agencies’ insularity from the public reflects more than media inattentiveness. It also stems from their legal status and authority. The purportedly “independent” components of the hydra-like constellation associated with MTC—BATA, BAIFA, SAFE, BAIFA—are all joint power authorities (JPAs). ABAG is also a JPA.
As Trish Cypher and Colin Grinnell wrote in the 2007 report to the California Senate Governance and Finance Committee, “A Citizen’s Guide to Joint Power Agreements,”
Joint powers are exercised when the public officials of two or more agencies agree to create another legal entity or establish a joint approach to work on a common problem, fund a project, or act as a representative body for a specific activity…
JPAs are different from other forms of government because they are the only type of government formed by mutual agreement. Unlike other governments, JPAs are not formed by signatures on petitions, and they’re not approved by a vote of the people.
Nevertheless, JPAs can sell revenue bonds without voter approval, though each member agency must adopt a local ordinance.
A key point, notes Mill Valley author and community activist Bob Silvestri, is that
JPAs can exercise all the powers that are common to their member agencies. The only power they lack is the power to pass real estate property taxes, though they’ve learned to get around that by calling them fees. But think about this for a moment: all the powers of whatever level of government they are formed out of. And all of those powers without any of the historic checks and balances that are the foundation of our democratic system.
Yes, in theory, JPAs are created and managed by agreement between local or regional governments or agencies (water, power, sewer, police, housing, or city and county governments) under the supervision of our local elected representatives or at the least the staff members or appointees of those elected officials. However, the reality is that almost all JPAs are run by politically appointed executives who have no prior relationship with any of the JPAs member organizations. They go on to hire their own staff and consultants to create the team that will manage and make decisions for this new “quasi- governmental” agency on a day to day basis.
In practice, a JPA’s actions go largely unsupervised by anyone after their formation is approved. And the locally elected officials who approved it, who are often unpaid volunteers, can’t possibly analyze their complexities and potential unintended consequences of what they’ve created. So it’s pretty much all done on good faith and a cursory review of the JPA’s annual report.
This story, already very long, is not the place to delve further into JPAs. What matters here is the realization that making regional governance democratically accountable is going to be a huge challenge.
We should thank Assemblymembers Ting and Levine for trying to rein in our region’s rogue transportation planning agency, which is not a JPA.
But it’s hard to see how replacing MTC and BATA with an agency governed by a popularly elected board, with each commissioner representing about 750,000 residents, would create greater accountability to the public at large. Name your BART District Board member—no Googling allowed. I rest my case.
Thinking along the same lines, I retract my own proposal to put Plan Bay Area to a region-wide vote.
The best idea I can come up with at the moment is a law that requires every city council and county board of supervisors in a region—and not just the handful of elected officials who participate in ABAG’s General Assembly and the Metropolitan Transportation Commission or its successor—to vote on the draft Sustainable Communities Strategy. That would bring the regional “blueprint” for housing and transportation back to venues that are accessible to the people whose lives the SCS will affect. And it would mean that every elected official in the Bay Area would have to take a stand and would have to defend that stand at election time.
As to what MTC will do on October 28: to judge from what commissioners said on September 23, after Heminger’s presentation and public comment, a vote to extend funding to ABAG for the full fiscal year seems certain. Approval of the MTC takeover of ABAG’s planning staff seems unlikely— though it’s important to note that representatives of two of the region’s three largest cities endorsed the Heminger proposal.
Before running off to a press conference about Uber, Oakland Mayor Libby Schaaf asked her colleagues “not [to] let the perfect be the enemy of the good.” And San Francisco Supervisor Scott Wiener said he’d had “a long conversation with Ed Lee,” who felt that “this is a positive step.” (San Jose Mayor Sam Liccardo has not responded to my emailed query about his position.) Most of the other board members indicated that they favored some sort of consolidation but were concerned about moving too fast.
Alameda County Supervisor Scott Haggerty suggested that they take field trips to see how SANDAG (San Diego Association of Governments) and SACOG (Sacramento Council of Governments) run things. There was a lot of talk about bringing in a third party.
And thanks to the muscular showing by organized labor, the need to address the outstanding labor issues was repeatedly noted by members of the board.
Heminger had the last, improbably graceful word: “Be careful what you wish for.”