Saturday, March 31, 2018

The Chronicles of Narnia - Aslan's Resurrection

Marinwood Fire Department can learn from the Herald Fire Protection District

Pension woes cloud small fire district


A worried Herald Fire Protection District board discussed the possibility last week that the fee for leaving CalPERS may be around $400,000, an amount some members fear could push the small district in southern Sacramento County into bankruptcy.
Earlier this month, Transparent California reported that the suburban Sacramento Metropolitan Fire District has 216 retirees receiving annual pensions of $100,000 or more, and a dozen of those are $200,000 or more.
The Herald district, which approved a $655,000 budget last week, filed to leave CalPERS in January 2016 because pension costs were becoming unaffordable.
Sacramento Metropolitan was formed from 16 smaller fire districts, several in rural areas similar to Herald. How the large consolidated district and tiny Herald evolved in such drastically different ways might make a good case study of local government efficiency.
Now Sacramento Metropolitan provides some of the most generous pensions in the state. The Herald district, which approved a $655,000 budget last week, filed to leave CalPERS in January 2016 because pension costs were becoming unaffordable.
On the Transparent California list of the 25 local governments with the most annual pensions of $100,000 or more, Sacramento Metropolitan ranks above the city of Sacramento, which is 13th with 167 pensions. The highest is former police chief Rick Braziel at $198,412.
Sacramento Metropolitan also ranks above two large regional districts. The Metropolitan Water District of Southern California is 15th with 159 pensions of $100,000 or more, a half dozen above $200,000. The highest is Gilbert Ivey, $298,233.
The San Francisco Bay Area Rapid Transit District is 24th with 133 retirees receiving pensions of $100,000 or more. Three of the pensions are above $200,000, topped by Gary Gee, $218,666.
“We do have a higher percentage of employees who reach that level.” — Chris Vestal
Sacramento Metropolitan says it’s the seventh largest fire agency in the state. The only other fire district on the top 25 list, Alameda County, ranked 25th with 126 pensions of $100,000 or more, led by Daniel Berfield, $172,475.
The Alameda County Fire District has a smaller staff than Sacramento Metropolitan, 450 compared to 700. But it covers a higher-cost area, particularly for housing, that includes San LeandroNewarkUnion City, Emeryville, Dublin and the unincorporated area of the county.
Sacramento Metropolitan covers eastern and northern Sacramento County and a tiny piece of Placer County. Its 358 square-mile service area has a population of 738,000 and includes Rio Linda, Citrus Heights, Orangevale, Fair Oaks, Carmichael, and Rancho Cordova.
So, why does Sacramento Metropolitan have what seems to be an unusually large number of retirees with high pensions: 216 receiving $100,000 or more a year, and the top dozen receiving $200,000 or more?
A spokesman said Sacramento Metropolitan firefighters tend to work a full career of three decades. “We do have a higher percentage of employees who reach that level,” Capt. Chris Vestal said in a brief interview, cut short.
Five years ago, a former Sacramento Metropolitan Fire chief, Kurt Henke, was among the local officials who successfully urged the CalPERS board to phase in a lower investment earnings forecast over two years, softening the impact of an employer rate increase.
Henke told  the CalPERS board that Sacramento Metropolitan had closed six of 42 fire stations, cut the budget from $159 million to $132 million, and obtained $28 million in labor concessions.
He said the proposed rate increase would cost his agency $2 million to $2.5 million, adding to an expected loss of $6 million in revenue as Sacramento area property values continue to drop.
“You have a lot of local agencies that are on the verge of economic hardship and/or bankruptcy, and to implement this in one fell swoop would push a lot of those entities over the edge,” Henke said.
Top Sacramento Metropolitan pensions (Transparent California)
Herald has told the California Public Employees Retirement System that a termination fee of around $400,000 might push the small fire district into bankruptcy, said Lindsey Liebig, the Herald board chairwoman.
After filing to leave CalPERS last year, Herald waited the mandatory year before completing the exit in January. Liebig said the district was told to expect a final termination fee in four to six weeks.
But Herald is still waiting for the termination fee that could determine its future. The district has retained an attorney and is contesting some of the seven or eight former employees CalPERS thinks are eligible for a pension.
A CalPERS spokeswoman, Amy Morgan, said via email: “The District found some discrepancies for the termination valuation data (i.e., contesting employment classifications, compensation, and dates of employment) that CalPERS is validating in order to issue an accurate final termination valuation.”
Employers and employees no longer contribute to a terminated pension plan.
Presumably, CalPERS is proceeding with caution because it recently cut pensions for the first time when termination fees were not paid by a tiny Sierra town, Loyalton, and a disbanded job-training agency, LA Works.
Herald could be the third round of CalPERS pension cuts, compounded this time by putting a small fire district out of business. But letting Herald off the hook could set a precedent at a time when local governments are struggling with rising pension costs.
The termination fee, due in a lump sum, is controversial. Employers and employees no longer contribute to a terminated pension plan. So CalPERS says the fee must be large enough to invest and cover all of the future costs of pensions.
If the termination fee is not paid, CalPERS cuts the pensions to the amount covered by the employer’s pension fund. The Loyalton pensions were cut by about 60 percent, currently being replaced by city payments, and LA Works pensions were cut by 63 percent, not being replaced.
In 2011 CalPERS sharply increased termination fees. The investment earnings forecast used to calculate the fee was dropped from the regular forecast, now 7 percent, to a risk-free bond rate, now 2 to 3 percent in the termination fee estimates in annual plan valuations.
Several cities, notably Villa Park, considered exiting CalPERS but balked at the high termination fee. The judge in the Stockton bankruptcy called the fee a “poison pill.” Others refer to the old “Hotel California” pop song: You can check in, but you can’t check out.
Herald now has only one full-time employee, an administrative assistant, said Liebig. About 30 volunteer firefighters are paid by shift and per call.
With new leadership, the Herald district is still responding to a county grand jury report in 2014. “A Firestorm Raging in Herald” said the close-knit community had been torn apart by two years of criticism of the district.
The grand jury said a bank account was not revealed to the county finance department or auditors. Firefighters were not given due process. Staff did not respond to a subpoena for financial information. And the board did not candidly respond to the public at meetings.
Last week, Liebig said a grand jury followup in June criticized the district for not budgeting money for the CalPERS termination fee. She said that would be difficult when the fee amount is uncertain and the district is continuing to spend to make more improvements.
Herald now has only one full-time employee, an administrative assistant, said Liebig. About 30 volunteer firefighters are paid by shift and per call, providing 24-hour staffing with one to three firefighters depending on the shift.
Previously, she said, three full-time firefighters only provided staffing Monday through Friday from 8 a.m. to 5 p.m. Last month the district, which has a 96 square mile service area, responded to 45 calls.
In discussions with CalPERS, Liebig said, estimates of the CalPERS termination fee have ranged from zero to about $400,000. She said the district is in “limbo” while waiting for a fee that may determine whether it continues to operate, closes, or merges with another district.
“I wish they would give us some sort of news, whether it’s good, bad or ugly,” Liebig said.

Ed’s Note: Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are

C.S. Lewis on Tyranny

"Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience." - C. S. Lewis

The Vertical Earthquake essay by Herb Caen


Henry Park has invented a parlor game - fun for young and old alike - called City Planning. The equipment is simple, and any number can play. All you need is a grid map of San Francisco, crayons and a dice box.

The player who wins the toss rolls the dice, finds the corresponding coordinates on the map and "destroys" or "improves" that square with his crayon. If he colors a landmark, he gets 10 points. A theater is worth 9 points. If the numbers he rolls fail to intersect, he may draw a freeway - 15 points - between the two spots and pick up any number of points in between, depending on the buildings in his path (a pre-1906 house is worth five points).

The players may give themselves various titles - state highway engineer, city architect, Eastern capitalist and so on - and the one who destroys City Hall for a parking lot is declared the winner. To add a final note of verisimilitude, all players are blindfolded.

Well, City Planning, like Monopoly, is just a game - a dangerous game that San Francisco is playing every day with great recklessness. It contains an added hazard: The players are not only blindfolded, they are also masked, and the masks aren't necessarily black or white. It's hard to tell the good guys from the bad guys, and even the players themselves aren't sure. If you want to build a 33-story skyscraper on a slope of Nob Hill, are you a hero or a villain? Not too long ago the answer would have been simple.

A few days ago, we were delighted or chagrined, according to our various tastes, to read that another 20-story apartment house will rise on Russian Hill - in a so-called "sacred enclave." For years, the general feeling in that area has been that nobody would dare desecrate it with a towering slab of concrete. Good taste would prevail.

Well, we learned something - again too late. Nothing is sacred in San Francisco any longer. The Russian Hillers who opposed that 20-story building expressed a great love for San Francisco and made vain appeals to ethics and morality. The lady who is going to build that skyscraper probably loves San Francisco, too, in her own fashion, and would like to make a buck besides. That is also a sacred tradition.

Which brings us to the Nub Hill of the problem: The lady who owns the Russian Hill property isn't breaking laws by building her monster.

If what's left of the physical character of San Francisco is to be preserved, the laws have to change. (Frank Lloyd Wrightonce said, "San Francisco is the only city I can think of that can survive all the things you people are doing to it and still look beautiful." Then he snickered, "What San Francisco really needs is another earthquake," which overlooked the fact that we are having a quake - a vertical one.)

Changing the law to provide for zones that are indeed sacred - for reasons of history, beauty and just plain breathing space - is not going to be easy. There are people in City Hall who would tear down City Hall without a qualm in the name of that magic slogan: "Get it on the tax rolls!"

A high Chamber of Commerce official said: "We WANT big buildings here. We want this to remain the business capital of the West." So does everybody - as long as the buildings add to, rather than detract from the city.

"We don't want people to say San Francisco is dying," another said.

When is a city dying? Howard Moody answers that question this way:

"A city is dying when it has an eye for real estate values but no heart for personal values, when it has an understanding of traffic flow but no concern about the flow of human beings, when we have competence in building but little time for ethical codes, when human values are absent at the heart of the decision-making and planning and governing of a city - it is dead and all that is left is decay." 

The Vertical Earthquake

The vertical earthquake of the 1970s and 1980s destroyed what was left of a tradition and covered it with a new city that bears no resemblance to what had gone before, The piledrivers were singing the song of the big buck. 
- Herb Caen, "The Vertical Earthquake," 1993

Friday, March 30, 2018

California’s housing crisis and the density delusion

California’s housing crisis and the density delusion

Joel Kotkin and Wendell Cox
PUBLISHED: March 10, 2018 at 8:30 pm | UPDATED: March 11, 2018 at 11:46 am

Construction workers make their way across a scaffold, facing the Los Angeles City Hall, left, during a hard-hat tour of a half-completed museum, "The Broad" in Los Angeles on Tuesday, Sept. 17, 2013.

Once seen as a human-scale alternative to the crowded cities of the past, California’s cities are targeted by policy makers and planners dreaming of bringing back the “good old days,” circa 1900, when most people in the largest cities lived in small, cramped apartments. This move is being fronted by well-funded YIMBYs (“yes in my backyard”), who claim ever greater densification will help relieve the state’s severe housing crisis.

The goal, as stated by one YIMBY journalist, is startling in its retroactive boldness. “Getting people out of their cars in favor of walking, cycling or riding mass transit.” notes Liam Dillion, “will require the development of new, closely packed housing near jobs and commercial centers at a rate not seen in the United States since at least before World War II.”

Besides being ahistorical — this kind of housing was restricted to the urban cores a few of the largest metropolitan areas — many residents of these districts, including in California, gleefully abandoned this lifestyle for a more private, lower-density and family friendly lifestyle as soon as it became practicable. In fact, millions of people moved here from crowded cities, small towns, rural areas and other countries to enjoy this lifestyle.

The density delusion

The density-seeking measures such as state Sen. Scott Wiener’s highly contested SB827 seek to dismantle local zoning to boost densities, allegedly to address state’s housing affordability crisis. High density housing is far more expensive per square foot to build than townhouse or single-family construction. Nearly all the new market-rate housing built in the state is “luxury” by middle-income standards, and more expensive than what it replaces.

In reality, the YIMBY’s suggestion that new, dense housing will improve affordability for all is patently absurd. Decades of densification in Los Angeles has seen ever higher rents, displacing low-income, especially minority households. Many former transit customers have been driven to lower-rent areas with less transit service, precipitating a massive decline in ridership, even as billions continue to be spent building new rail lines. The Wiener Bill could exacerbate this trend, and likely increase the need for low-income housing, already well beyond the capability of public coffers.

Nowhere, here or abroad, has densification materially improved housing affordability, whether for low income households or the larger number of middle-income households. Density-oriented policies have helped drive prices up so high that Bay Area, $200,000 salary engineers cannot afford a home near their headquarters. In the meantime, many young families are increasingly leaving the state for less heavily regulated and less expensive states like Texas, Nevada and Arizona. Among those under 35, 80 percent of all homes purchased nationwide are single family houses and virtually all surveys of millennials express an overwhelming desire for this kind of residence.

Crowding to save the planet

Planners and most academics, including many conservatives, have long favored densification policies, but concerns over warming now serve as the densifiers “killer app.” This claim to improve the environment is also largely specious. Even the pro-density UC Berkeley Termer Center, acknowledges that virtually banning urban fringe development will account for barely 1 percent of the proposed state GHG reduction by 2030 — a pittance for polices that could drive house prices and rents even higher. On a global basis such restrictions represent statistically irrelevant noise, 0.003 percent of current annual worldwide emissions.

State enforced density also creates other unanticipated effects like ever higher levels of congestion and emissions. The whole policy assumes density will force more people unto transit, a dubious suggestion with transit ridership plunging in both Los Angeles and the Bay Area. The idea that in the age of Lyft, Uber, and eventually autonomous cars, more people will be forced onto traditional transit is deluded, at least without coercion beyond the stomach of most Americans.

Finally, in their zeal to squash single-family homes and suburbia, the zealots ignore the many positive environmental attributes — such as water retention, species habitats, tree cover and improved health outcomes — that can be achieved, as MIT’s Alan Berger has noted, in modern suburban development. In addition, suggests Britain’s Hugh Byrd, low-density communities are ideally suited for an eventual transition to solar energy generation in ways that high rise cannot emulate.

Modest proposals to address the affordability crisis

The false premises preferred by the forced densifiers do not mean we should not expand housing of all types; there is plenty of high density zoned property available for purchase by developers for denser housing. Local zoning also should encourage repurposing surplus retail and office space, creating new product that does not destroy neighborhoods or displace people. But ultimately, prices can only be brought down by allowing more construction on the fringe, restoring the competitive market for the price of land. Economists Edward Glaeser and Joseph Gyourko have shown that higher land prices are largely responsible for coastal California’s exorbitant house prices.

Finally, if we want to build more affordable housing, we look at non-profit organizations — including churches and charitable groups — to build housing without the need to create high returns or raise rents on their market-rate customers.

California sorely needs to build more housing, but can do so without forcing everyone back to the “glory” days of the city of tenements.

Joel Kotkin is the R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange and executive director of the Houston-based Center for Opportunity Urbanism ( Wendell Cox is principal of Demographia, a St. Louis-based public policy firm, and was appointed to three terms on the Los Angeles County Transportation Commission.

LA votes to oppose California’s transit, housing bill827 “This bill takes a chainsaw approach”

LA votes to oppose California’s transit, housing bill827

“This bill takes a chainsaw approach” to the state’s housing crisis
By Matt Tinoco Mar 27, 2018, 1:59pm PDT

The Los Angeles City Council heaped on scorn Tuesday of a state bill intended to spur the construction of more apartment buildings near transit stations.

It voted unanimously to oppose Senate Bill 827, which would allow apartments and condos to be built near transit stations, even if a city’s local zoning code bans multi-family housing in those areas. It has the potential to add density to single-family neighborhoods—in an effort to solve California’s housing crisis.

“I appreciate the catalyst that this bill is trying to accomplish, but it’s too blunt a tool as currently written,” said Councilmember Joe Buscaino, who represents Harbor area neighborhoods like San Pedro and Wilmington. “This bill takes a chainsaw approach to the patient, instead of a scalpel.”

The opposition came with a string of criticism from City Councilmembers over gentrification and local control over planning and land use.

“The intent behind SB 827 is good, and I support initiatives for more affordable housing. But it would lead to massive displacement,” said Councilmember David Ryu, who represents neighborhoods including Sherman Oaks, the Hollywood Hills, Fairfax, and Los Feliz. “Central to this bill is that it eliminates local control and gives LA planning policy over to Sacramento.”
“This bill as it stands is insanity. I think it’s the craziest bill I have ever seen.”

“This is a bad bill,” said Councilmember Mike Bonin, who represents Westside neighborhoods, including Brentwood, Mar Vista, and Venice. “But it is absolutely unsurprising that it’s come up... because our current system also does not provide enough affordable housing for our next generation.”

State Senator Scott Wiener (D-San Francisco), who authored the bill, says it would help to relax restrictive zoning codes that stall the construction housing.

California is in the grips of a profound housing crisis, and the bill’s supporters say that making it easier to build dense multi-family housing is one way to address the crisis. Adding more housing could help drive down the cost to rent and buy.

“At the heart of all of this is that as a state, we under-produce by about 100,000 housing units every year, and we have a housing debt that’s growing,” Wiener told Curbed in January. “We can’t just do little changes and nips and tucks. Building dense housing around transit is one of the most pro-affordability and pro-sustainability things we can do.”

Under the bill, builders would be allowed to erect multi-family residential buildings up to four or five stories in height within a .5 mile of a rail station or a stop on high-frequency bus line, defined as those with service at least once every 15-minutes during rush hour.

Buildings could be built taller—up to seven or eight stories—within one-quarter mile of those transit stops.

The bill would also relax parking requirements to alleviate construction costs for developers.

In February, more than three dozen Los Angeles affordable housing, tenants rights and transit equity groups lead by ACT-LA sent a letter to Senator Wiener arguing his bill would undo the positive effects of Measure JJJ, a voter-approved initiative in the city of Los Angeles that requires affordable units be included in certain types of new development.

Opponents are also concerned SB 827 would lead to displacement and gentrification, because existing housing, especially those that are rent-controlled, could be demolished to make way for new market-rate units.

Asiyahola Sankara, ACT-LA’s organizing and outreach program manager, calls SB 827 the “wrong bill.”

“It doesn’t address... affordability of housing, access to transit, and environmental benefits. It doesn’t do any of that,” he says.

Dozens of different neighborhood councils across Los Angeles voted to oppose SB 827 before the City Council’s vote on Tuesday.

“If this bill becomes law, the city of Los Angeles would no longer be able to regulate local land use by zoning and development regulations throughout much of the city,” wrote the Greater Echo Park Elysian Neighborhood Council. “It would eviscerate local input into land use decisions, and moot the city’s current efforts to update community plans and the general plan.”

A repeated concern among neighborhood councils is that the bill would usurp protections for historic buildings in LA’s historic preservation overlay zones, special districts that limit alterations to old properties in order to “protect neighborhoods with distinct architectural and cultural resources.”

“This bill will be absolutely devastating to historic preservation, will be devastating to single-family home neighborhoods, and I really think it would destroy the character of Los Angeles,” said Councilmember Paul Koretz on Tuesday. “It really makes no sense. This bill as it stands is insanity. I think it’s the craziest bill I have ever seen.”

Reached by the Los Angeles Times in late February, a spokesperson for Mayor Eric Garcetti said the “bill is still too blunt for our single-family home areas.”

Though SB 827 has attracted national attention, it is yet to have a hearing in Sacramento.

Curbed LA Newsletter

Thursday, March 29, 2018

Live in a Drainpipe? Five Extreme Ideas to Solve Hong Kong’s Housing Crisis

Live in a Drainpipe? Five Extreme Ideas to Solve Hong Kong’s Housing Crisis


Hong Kong has the world’s most expensive housing market. A government task force is considering solutions.CreditLam Yik Fei for The New York Times

HONG KONG — For eight years in a row, an international survey of nearly 300 cities has named Hong Kong the world’s least affordable housing market.

It is not hard to see why. Located on a group of hilly islands and a corner of the Chinese mainland, Hong Kong has always been short of places to build. The government’s reliance on land sales for revenue creates an incentive to keep prices high. Money pouring in from mainland Chinese investors pushes them even higher.

The extremes can be staggering. A single parking spot sold for $664,000 last year. Apartments only slightly bigger, and in much less desirable parts of town, go for more than $380,000. Living spaces have shrunk so much that a new term has emerged: “nano flat,” for apartments measuring around 200 square feet or less.

Many Hong Kongers have been priced out of the housing market, including young people forced to live with their parents. Their discontent is said to have contributed to recent street protests like the 2014 Umbrella Movement.

A government task force is considering a wide range of options for making better use of available land. Architects and developers have also put forward some novel proposals, ranging from the quirky to the audacious. While some of the ideas may be repackaged versions of the cramped spaces the city has long known, others could reshape the future of housing in Hong Kong. Here are some of the ideas:
Living in a DrainpipeContinue reading the main story

A prototype of the OPod, designed by the architect James Law, which would create a living space of about 100 square feet out of concrete drainpipe. CreditLam Yik Fei for The New York Times

The architect James Law was at a construction site in town when he noticed some concrete pipes left over from an infrastructure project. They were large enough to walk in, cool in the summer and surprisingly nicely finished.

“I had a eureka moment,” he said.

So he spent about a month designing and building the OPod, two sections of concrete drainpipe joined to create a living space of about 100 square feet. It includes a couch and foldout bed, a desk, shelving, a tiny kitchenette, a hanging closet and a shower.

The pods can be stacked up to five high, or placed in small, unused spaces between buildings and under bridges. A prototype is now on display in a waterfront park, but there are no plans yet for commercial production.

“It is not a complete solution to what is a very complex problem,” Mr. Law said. “But it is a fun, design-oriented way to stimulate debate and even, on a small scale, create model projects.”
Return of the Tenements

Bibliotheque, a half-century-old building turned into slickly designed dormitory-like living spaces with shared kitchens and bathrooms. CreditLam Yik Fei for The New York Times

One idea is already a reality, in a pair of 50-year-old buildings with distinctive blue, gray and green geometric patterns.

The buildings stand on a street lined with shops selling power tools and industrial fans. Such tenements, known as tong lau, were common here in Hong Kong before high-rises. Synergy Biz Group, a local architecture and development company, has recycled them into communal living spaces with some modern touches.

Called Bibliotheque, the buildings feature slickly designed dormitory-like living spaces with shared kitchens and bathrooms. The rooms are tiny, with about 50 square feet per single unit, and cost from about $450 to $750 a month. The residents are mostly young, drawn by rents that are low by Hong Kong standards.

Jo Chow, a 33-year-old office administrator who lives in one of the spaces, said she pays half of what she did for an apartment in a more distant corner of Hong Kong.

“For me, I just need a flat in a convenient location,” she said. “I don’t need a big place to live right now.”

Some people have criticized these spaces as new takes on Hong Kong’s infamous “coffin homes,” apartments that have been subdivided into tiny spaces, and questioned the appeal of such cramped, communal arrangements.

“They may save on the cost of rent,” said Yip Ngai-ming, a professor of public policy at City University of Hong Kong. “But whether it will work, I don’t know.”

But Keith Wong, the director of Synergy, argued that group living provided security and a sense of community. He said the company wanted to add more buildings and to work with landlords to convert individual apartments.
Building Up (Even More) to the SkyContinue reading the main story

A design by University of Hong Kong students for adding to the height of public housing towers near the Chai Wan neighborhood in Hong Kong. CreditHo Yuen Hin Sonia and Li Zhongqi Cheer

Half a century ago, when refugees poured into Hong Kong to escape turmoil in mainland China, the city started a public housing program that provides residences, usually in high-rises, for nearly half of the population today.

The architect and professor David Erdman has suggested fitting in more people in those same buildings by going even higher, adding cornices of from 5 to 25 stories atop the existing structures, which are already often about 40 stories tall already.

The idea was inspired by discussions with former colleagues at the University of Hong Kong about fitting additional housing in the spaces between public housing blocks. Building upward instead would offer the same result without harming existing amenities, said Mr. Erdman, now chairman of Graduate Architecture and Urban Design at the Pratt Institute in Brooklyn.

His students have produced dramatic designs that would transform the drab and repetitive look of Hong Kong’s public housing complexes. “I would love to see one built,” Mr. Erdman said.
Cruise Ships and Islands

Care to live on a cruise ship? That’s another thought for how to solve Hong Kong’s housing crisis, as envisioned in a design by Doctoral Exchange, a local research organization.CreditDoctoral Exchange

Perhaps the most unconventional idea calls for putting people on cruise liners.

The floating community would not be a permanent solution but is instead the first step in a proposal from Doctoral Exchange, a local research group.

The second step of the plan is even more ambitious: building several large artificial islands in the sea to the south of Hong Kong. The new, 45-square-mile archipelago would fall outside Hong Kong’s boundaries, meaning it would require backing from China’s central government.

Island building on such a scale would likely face opposition over potential environmental damage. But China would have at least one advantage in such a project, said Francis Neoton Cheung of Doctoral Exchange. It could use the same reclamation technology that it is currently developing in the South China Sea to build military strongholds on what were once sunken reefs, he said.

“I know it’s a bit daring, but it might be the solution,” he said. “If circumstances allow.”
Turning Ports into TowersContinue reading the main story

A view of Hong Kong’s container port. Some have proposed moving the port elsewhere to build more housing, or to build housing on top of it. CreditLam Yik Fei for The New York Times

Hong Kong’s container port is the world’s fifth-largest by volume. It also sits on an iconic part of the waterfront that the government task force is now looking at to ease the land shortage.

Hundreds of thousands of people could live on the port’s 900 acres. One proposal calls for relocating the port to make way for housing. Another calls for keeping the port where it is, while constructing huge platforms above its bustling waterfront cranes on which residential skyscrapers could then be built.

Officials call this idea feasible, and the port operator says it is open to the idea, but the cost and levels of public support are still unknown.

Like other more ambitious ideas for new housing, the port-topping towers might never be built. But the idea of redeveloping ports isn’t so unusual. One of Hong Kong’s first large-scale private housing developments, Taikoo Shing, was built on the site of Swire Company’s dockyards.

Brasilia - A Lesson in the Failures of Planned Communities.

Wednesday, March 28, 2018

Shell Games - Part II: MCE's cash hoard


Shell Games - Part II: MCE's cash hoard

Marin Clean Energy is sitting on a mountain of cash that continues to grow. The cash doesn’t belong to MCE, a not-for-profit government agency, it belongs to its ratepayers. MCE has no plans of returning it.
MCE's pre-launch commitments with the community included:
  • Delivering cleaner energy than PG&E;
  • Lower prices than PG&E;
  • Payment of customers’ monthly exit fees that are levied by PG&E. This broken commitment amounts to more than $100 million that MCE did not honor.
MCE has failed in serving the community, while it feathers its own nest.
MCE – Massive Cash Exploit
MCE now holds $37 million in cash and expects that to more than triple to $118 million by the end of its 2019/20 fiscal year. This behavior is more fitting of a private for-profit company that claims altruistic social objectives, then takes advantage of busy consumers who aren’t aware of what is happening.
MCE’s cash accumulation has not been used to reduce prices, unless 6/100 of 1%below PG&E prices is considered low; nor has the cash been applied to the purchase and delivery of real clean energy to MCE’s customers during the past few years.
Where’s the money going?
To assuage onlookers’ potential objections, MCE claims the cash is needed for “working capital requirements.” However, as a percent of operations, MCE’s desired cash dwarfs its previous requirements, as identified in each generation of its several revised Implementation Plans.
MCE also claims the cash is needed for “rate stability” and to “procure energy at competitive rates.” That is a reasonable suggestion, but it must be weighed against MCE’s record. It is just as reasonable to ask: How can MCE have banked $37 million in cash if it’s not already procuring energy at competitive rates?
Discovery of MCE’s cash horde prompted one energy trader in Oregon to offer the following off-the-record observation:
The place is gorging on cash. MCE is, to be generous, nothing more than a trading house -- a broker – that is not exposed to having risk associated with acquiring and maintaining an inventory while holding it to fulfill customer demands for that inventory. MCE’s inventory is dispatched instantaneously. MCE has no power resources to maintain. It doesn’t even pay to clean the panels at its “local” solar power plants – those solar farms are owned by private developers who bankrolled and own those resources. So, what does MCE’s staff need all of this cash for? Legal, consulting fees, staff salaries, and bonuses.”
Those comments are more troubling after examining MCE’s history of choreographed bait & switch that extends through all of its operations with fashionable, headline-grabbing commitments that it quietly changes when it believes no one is reconciling its behavior. This includes:
  • Continued support of oil (Shell) after declaring it is severing ties;
  • Private support of nuclear (EDF (aka √Člectricit√© de France) and Palo Verdenuclear in Arizona) while publicly rejecting support of the nuclear industry and the purchase of nuclear generated electricity
  • Import of coal and nuclear that it repackages as "clean" energy (MCE lobbied for the cessation of including granular e-Tag data in public reports that was included at the end of this letter -- these data identified MCE's imports);
  • Use of RECs (renewable energy certificates) that is rebranded fossil-fired power;
  • Commitment to pay ratepayers’ PG&E exit fees, then cancelling that commitment, and keeping the cash for itself;
  • Amassing enormous sums of cash as a government agency, rather than returning it to its ratepayers.
MCE got it “wrong” even before its business launch, when its leadership failed to prioritize its customers first, and instead favored its staff and consultants. MCE elicits a communal awareness of environmental sell-out each time it tells consumers that Shell is gone and that it has cleaned up its own oily mess, then surreptitiously cuts another million-dollar payment to Royal Dutch Shell for electricity purchases.
MCE is beyond tone-deaf.
Imagine the bait & switch uproar at MCE if, instead of receiving paychecks, staffers were suddenly given coupons that identified someone else, someplace else, had already completed similar work to what they completed and that, as a result, the coupon could be redeemed for pennies on the dollar.
This is akin to what MCE does to the community each time it enters into a REC transaction. Consumers paid for clean energy, but MCE delivers fossil-loaded power (known as "Unspecified power," sourced through California's electric grid manager, CAISO). This arrogance extends to, and is underwritten by, MCE’s board. The cash hoarding occurs under its watch.
Think the deviations won’t happen to your CCA board if you’re forewarned?
Yes. They will.
The list of MCE’s bait & switch is exhaustive and illuminates the absence of integrity in community choice aggregation (CCA). It’s a problem that will only grow as CCA (aka community choice energy (CCE)) boards grow in number, as municipal representatives come aboard to take their representative positions on unwieldy large governing bodies.
It’s a matter of conversion and indoctrination. Group-think boards are shaped by ambitious executives and shrewd consultants who hone their skills from experience and information-sharing with other consultants at other CCAs.
The loss of critical and independent thinking by MCE’s board was evident when meeting with one of its board members in January 2015, after one year of his service on MCE’s board (see the comments at bottom of board member's post). When MCE’s green-washing activities with RECs was discussed, he denied what had happened and said, “That’s not my understanding of it.” Fair enough.
When he was shown MCE’s Business Plan identifying MCE’s unlikely use of RECs, he bristled, “It says 'potentially' right there! MCE isn’t doing anything with RECs it said it wouldn’t. So, what’s the problem?”
Here is the problem.
Language is carefully twisted. Today, to combat objections, proposed CCAs throughout California promise one thing during public presentations, while their Business Plans include parsed wording that includes loopholes big enough to pass a coal-fired power plant through. Los Angeles’ CCE believes it can ignore California’s clean energy mandates and simply make up its own rules. [Foot note1]
MCE the beast cc 2.JPG#asset:9528
MCE has become what it claimed it wouldn’t – greedy, overly dependent on consultants, and dismissive of consumers
Why hasn’t MCE spent its cash on clean energy deliveries to its customers over the past several years? MCE’s prices are 6/100 of 1% lower than PG&E prices. Why hasn’t MCE put its cash (ratepayers’ cash) into lowering its energy prices these last several years?
Through 2015 -- five years of available data -- MCE’s energy portfolio emits an average of 43% more greenhouse gas (GHG) than PG&E’s energy, or 181 pounds more GHG per megawatt-hour, per anti-REC legislation AB 1110. According to MCE’s own filings with state regulators, one of its biggest “clean” electricity providers is New Mexico’s San Juan coal-fired power plant.
San Juan’s power is cheap. Why are MCE’s prices high?
Who is MCE’s top priority, cuz it’s not MCE’s customers
MCE recently submitted a proposal to its Executive Committee on behalf of its CEO, Dawn Weisz. The compensation study called for adjusting Weisz’s annual salary to upwards of $332,062, putting her in the highest echelon of public service pay in California. Weisz came to MCE as a county planner with zero electricity experience.
CCA executive pay is skewed by comparisons to CEO pay at other CCAs. These government agencies mirror and escalate one another's executive pay, creating a compensation bubble that is not based upon government energy agencies in California.
Appropriate executive pay is more aptly found in the government agencies that regulate all of California's energy sector, and carry responsibilities that dwarf MCE's brokerage house existence. Similar to MCE, these agencies have no power generation fleet to maintain or transmission & distribution maintenance costs:
  • President of the California Public Utilities Commission (CPUC), Michael Picker: $149,226
  • Chair of California Air Resources Board, Mary Nichols: $166,710
  • Executive Director of California Energy Commission, Drew R. Bohan: $178,508
  • MCE CEO Dawn (Brown) Weisz current regular pay (2015 data): $259,744
  • MCE CEO Dawn (Brown) Weisz requested pay (2018): $316,250 + 5%, or $332,062
MCE’s cash king 
Weisz is set to take a large sum from MCE’s coffers, along with her many consultants, lawyers, and wholesalers -- collectively known as "CLAW" -- who also feed at MCE’s trough. Some of MCE’s outside legal counsel collects more than $500 per hour.
However, MCE’s money grab winner is Pacific Energy Advisors (PEA). After its help off-loading MCE liabilities, Weisz was indebted to share MCE’s wealth.
MCE’s combined payments to PEA's two main principals since MCE launch, including the late arrival of a third person at PEA, is $4 million through March 2018.
MCE's masterpiece: its multi-hundred-million dollar swindle that began in 2010 and continues today
When MCE launched into business in 2010, it committed to pay all customers’ exit fees levied by PG&E. PG&E’s fee is known as “PCIA,” or Power Charge Indifference Adjustment. PCIA covers long-term energy contract obligations that PG&E assumed before MCE switched consumers from PG&E into its program, via its Opt Out mechanism.
Weisz made presentations throughout Marin before MCE’s launch, and in the months afterward. MCE would provide each customer with an "energy credit" on their monthly electricity bill as full reimbursement of PG&E’s exit fees.
The credit would show as a deduction on each customer’s monthly electricity bill from PG&E (PG&E includes MCE’s charge for “Generation” on its monthly electricity bills).
PG&E’s exit fee currently amounts to about 3.5¢ per kilowatt-hour, almost $18 per month for a typical MCE home.
Dawn Weisz’s titanic problem – who to blame?
MCE’s original Implementation Plan, submitted to the California Public Utilities Commission (CPUC), identified MCE's "phase in" first-five-years of exit fees (energy credits to be paid by MCE) as $27.4 million. This would be applied to each MCE customer’s monthly bill, based upon their energy usage. [2] [3]
But there was a problem. A big financial problem.
The energy credits calculated by MCE weren’t coinciding with the exit fees charged by PG&E. There was a $2 million-plus shortfall in the first year alone.
Weisz was alarmed. MCE’s ballooning liability, which would ultimately prove to be $48 million over its first five years of operations, could torpedo her ship, along with the salaries and fees that MCE staff and consultants garnered each month from her agency.
But Weisz had a plan, and she engaged her chief consultant, John Dalessi, in its execution.
Smoke & mirrors
Nine months after its business launch, MCE announced a 14% price reduction. The news captured headlines of Marin’s primary media outlet, the Marin Independent Journal (IJ). Weisz touted MCE’s “superior product,” while Dalessi claimed the price cut would bring MCE prices into parity with PG&E.
As part of its 14% price slash, MCE quietly cancelled its energy credit.
The cancellation instantly shifted hundreds of millions of dollars of MCE’s long-term liability onto its customers.
The 14% deal was complex and beyond the focus of Marin’s busy consumers. MCE's price cuts weren't uniform through its five price tiers. Furthermore, each residence’s energy use was different each month. Quantification of savings was next to impossible.
Nevertheless, a 14% price-cut was a good deal, right?
Consumers, unable to decipher what they were getting in the deal, did what they always did -- glanced at the multitude of line item charges on their monthly PG&E bill, cursed, and paid the amount due.
Average ratepayers realized an 18% increase in their total electricity costs. High-electricity-use residences benefitted the most, realizing about 4% savings after also paying the exit fees that MCE had off-loaded onto them. Ultimately, any savings that consumers realized vanished with MCE’s next price increase.
Weisz was privately exuberant. She had achieved the tantamount of a bloodless coup right under her customers’ noses. Successfully off-loading MCE’s ever-growing, monster-sized exit fee liability onto her ratepayers was a watershed event that signaled revitalized life for her new career. Life was better than good.
No one was the wiser. 
Sleight of hand -- MCE’s board didn’t see a thing
Dalessi’s recommendation to MCE’s board, which was reviewed by MCE’s CEO, Weisz, said that MCE’s energy credit was being eliminated “in the interest of rate simplification and in anticipation of the reduction in PG&E’s exit fees – its power charge indifference adjustment” (emphasis added).
The red herring was lost on MCE’s board, which lacked financial acumen. There was no rate simplification. Rates remained as convoluted as before, through five tiered price levels.
Most troubling of all was this...
If Weisz and Dalessi “anticipated” a reduction in PG&E’s exit fees (a reduction in MCE’s corresponding energy credit liability), why, after only nine months of operation, would they suddenly recommend that MCE cancel payment of its energy credit? Wasn't this a cornerstone of what MCE sold to consumers?
After all, Weisz and her consultant were regularly tracking PG&E’s exit fees – they effectively had CPUC regulators on their speed-dial -- everything was on the up-and-up, wasn’t it?
  • Shortly after MCE’s “14% price reduction" was implemented PG&E’s exit fees increased 3.3%.
  • Through 2015, MCE’s ratepayers were left holding more than $112 million of costs that MCE had previously committed to pay in the form of its monthly energy credit.
$118 million cash – it’s not MCE’s – it belongs to the ratepayers
MCE is a government agency that is supposed to be a not-for-profit.
The cash that MCE is accumulating belongs to MCE’s ratepayers. Those ratepayers paid higher prices for the delivery of low-quality fossil energy that was, and is, loaded with GHGs while MCE, and other CCAs (CCEs) following the MCE model, rebrand it “clean.” Contrary to Dawn Weisz’s claim, MCE does not deliver a “superior product.”
Click image of chart to enlarge
To date, Weisz ignores inquiries about returning its cash to MCE’s ratepayers.
What to do?
Opt Out of MCE at (888) 632-3674. You will need your PG&E bill in hand to refer to your account number. You may also complain to your city council or, if you reside in an unincorporated area, County Supervisors.
It is recommended that MCE’s board does the following six things to introduce integrity to its operations:
  • Return its cash to its customers in the form of a large, one-month credit on their energy bills. Credits would reflect the amount of time a given customer has been an MCE ratepayer;
  • Cease all cash accumulation activities;
  • Freeze, or reduce, energy prices for three years;
  • Sever all ties with Pacific Energy Advisors;
  • Engage an executive search firm for the replacement of MCE’s current CEO, Dawn Weisz.
  • Redesign the board so that it is staffed with representatives who are not prone to group-think, and who have a skill set that is suitable for serving on the board of an energy reseller.

[1] LACCE Business Plan, dated June 30, 2016. Page 21, Exhibit 15, shows LACCE (aka Clean Power Alliance of Southern California) believes it can satisfy California's clean energy requirements with 100% Bucket 2 energy. However, California regulations limit Bucket 2 to a maximum of 25%.
[2] Marin Energy Authority Community Choice Aggregation Implementation Plan and Statement of Intent, January 2010: Retail Sales (MWh), p. 29, and Marin Clean Energy Summary of CCA Program Phase-In (January 2010 through December 2015), p. 43.
[3] PG&E Power Charge Indifference Adjustment Rates, updated 5/31/2016 by MCE. See also footnote 2.

Part 1 in this series may be found here.
Part 3 in this series will discuss (1) MCE’s public rejection of false green energy – renewable energy certificates (RECs) -- and its concurrent use of a front organization that lobbies for the continued use of RECs; and (2) MCE’s quid pro quo outreach where jobs are promised in exchange for favorable public relations in its coming fight with legislators and utility companies.

About the Author:
Jim Phelps is retired after serving the power, petrochemical, and geothermal industries for nearly 35 years as a power contractor and utility rate analyst. He is not now, nor has he ever been, employed by PG&E. He has not received any money from PG&E for his work tracking Community Choice Aggregation and Community Choice Energy activities. He has also completed consulting and thermal performance test work for Shell Oil at one of its Gulf Coast refineries. Shell is formerly MCE's full-services energy manager and currently one of its regular energy providers.
Among the former power company clients of Mr. Phelps' are Pacific Corp, Utah & Power Light, Kansas Power & Light, Duke Power Company, Cincinnati Gas & Electric, Pacific Gas & Electric, and Carolina Power & Light.

Mr. Phelps operates one of Marin's largest residential solar electric systems at his home in Novato. Several years ago he initiated contact with PG&E about its carbon emission practices and also with MCE about its emission practices. He requested clarification from MCE and other CCAs about several business conduct issues, however, those CCAs declined to provide answers. To this time, MCE's only input about its business is to ignore Public Records Act requests, to identify the costs for copies of public documents, or to deny the existence of basic information, such as invoices detailing its procured volumes of system power (fossil energy).