ON MARCH 3, Alamo voters will be asked whether to make Alamo a city, an irreversible decision. In making that decision, voters should be able to rely on accurate information regarding the financial feasibility of incorporation. Unfortunately, the Comprehensive Fiscal Analysis (CFA) significantly overstates projected revenue and understates expenses, resulting in budget shortfalls that can be remedied only by cutting resident services or raising taxes and fees.

Indeed, a more accurate assessment recently conducted by experts in municipal finance shows that the city would experience deficits within the first few years and every year thereafter.

Overstated revenues:

  • Property tax revenue assumptions are based on revenues generated in 2006, the peak of the state's economy and real estate market, and assume continued growth. In 2008, with the economic downturn and collapse of the real estate market, the reduction in home resales and falling prices yielded a significant decline in residential sales values. CFA assumptions of property tax revenue are no longer realistic.

  • Declining business activity due to the economic downturn (Yardbirds' closing) will result in less sales tax revenue than assumed in the CFA.

  • Fewer and cheaper cars will be sold resulting in less Vehicle License Fee revenue than assumed in the CFA.


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    The cumulative impact of these overstated revenues alone will cause the city to have a budget deficit within two to five years of incorporation.

    Understated expenses:

  • The CFA's assumptions for police protection and traffic enforcement, 42 percent of the budget, are significantly understated, based on experiences of other cities, such as Lafayette, Moraga and Orinda, and whose budgets for police protection have skyrocketed. The county sheriff recommended an additional $1.2 million be budgeted for seven more officers, but the CFA rejects that needed safety expense.

  • The CFA does not include any road maintenance costs or any capital improvement costs for the next 10 years and ignores any needs thereafter.

  • The cost of preparing the state mandated general plan, municipal code and housing element and meeting affordable housing requirements are significantly understated based on recent experiences of similar cities.

  • The litigation costs associated with running a new city are understated. Just one lawsuit over the validity of the city's housing element or a controversial high-density housing project needed to meet state affordable housing requirements can cost the city millions of dollars not accounted for in the CFA

  • Based on comparisons with other cities, such as Lafayette, Moraga and Orinda, the CFA understates the city staffing, salary and benefits required by $1.8 million out of a $7.5 million budget in 2010-11 alone.

    With understated expenses and overstated revenues, incorporation is not financially viable and Alamo residents will suffer reduced services or a need for new taxes, or both.

    Alamo incorporation should not be considered until the economy has stabilized and we have a realistic understanding of the financial risks.

    Best is former chair of the San Ramon Valley Planning Commission, Barclay is a land use attorney and Bologna is a board member of the Alamo Improvement Association.