This FAQ Sheet was prepared by Castro Valley YES On "Q"

FREQUENTLY ASKED QUESTIONS

• Can we really afford to become a city?
• But we don't have a strong sales tax base. Isn't that necessary for a city to be fiscally sound?
• Will Ciyhood raise our taxes?
• Won't the City Council just raise our taxes? After all Fremont and other cities have done this in the past without regard to the wishes of the voters.
• What about the serious state and county budget problems? Won't they mean disaster for a new city?
• Doesn't Castro Valley account for 43% of Alameda County's budget?
• Local hotels say their occupancy rates are lower than the Comprehensive Fiscal Analysis projects. Won't this mean that a new city will not have the revenues that are projected?
• I've heard that the business license tax will be increased because of cityhood.
• I'm afraid that a new city council will spend millions of dollars building a new City Hall.
• Why are we making a “mitigation payment” to Alameda County for ten years?

• Why would I want another layer of government?
• Would we have more local control of our government if we voted to incorporate?
• Can't other forms of “government,” such as Community Service Districts, give us local control?
• Won't our current services be reduced because of lack of funding if we incorporate?
• Won't cityhood result in more development?
• I've heard that a city council will re-design downtown Castro Valley with car dealerships and “big box” stores such as Home Depot.

• What is this “CFA” we keep hearing about?
• Just who is Economic & Planning Systems and why should we trust them?
• Did the cityhood proponents have an undue influence on the outcome of the Comprehensive Fiscal Analysis?
• There were several CFA's. I'm confused. Is cityhood economically feasible or not?

A: An independent study paid for by Alameda County reveals Castro Valley CAN afford to pay for police, planning and street services, PLUS contribute an additional $690,800 a year to the library fund AND pay Alameda County more than $610,000 per year for its lost profits – WITHOUT raising taxes or cutting services. Under state law, the County Local Agency Formation Commission (“LAFCo,” comprising two Supervisors, two Mayors, two Special District Members and one Public Citizen) MUST find cityhood affordable with NO reduction in service levels before recommending it.

A: NO. Regardless of what you may have heard, a city must have a strong total tax base – not just a strong sales tax base. Yes, our sales tax yield is low. It accounts for less than 13% of the entire city budget. It ranks fourth in the list of local revenue sources. Property taxes, motor vehicle license taxes and the utility users taxes rank higher. The advantage to this is that Castro Valley is better balanced and not as vulnerable to economic trends as are many cities that rely heavily on sales tax revenue from local commercial activity. 

While high sales taxes would be nice, the total tax base is more important. Of eight cities used for comparison in the Comprehensive Fiscal Analysis, Castro Valley's per capita sales tax revenue is lower than we might desire. However, our per capita property tax revenue is higher than San Leandro, Hayward, Oakley, Windsor, Fairfield and Vallejo. Different cities have different sources of revenue.

In addition, a city not dependent on sales taxes is insulated from economic downturns. If the current economic slump continues, might Castro Valley be better off than some of its neighbor cities who depend strongly on sales tax revenues?

A: To be honest with you, taxes will go up in November, whether or not you vote for cityhood. 

A hotel tax (Transient Occupancy Tax, or TOT) will be on the November ballot twice. If Measure "Q" passes, the TOT funds will stay in Castro Valley for use in Castro Valley. If cityhood fails, the TOT funds will go the Alameda County for use in its general budget.

Cityhood is also dependent on city voters authorizing a permanent extension of the Utility Users’ Tax, which is presently scheduled to expire in 2009. If Castro Valley voters choose citihood, this tax will be “locked in” at its present rate. If citihood is defeated, this tax WILL be renewed by all of the voters in Alameda County. Supervisor Nate Miley has gone on record as saying, “this tax will not go away.” 

A: City councils used to do this. But Proposition 218 (passed in 1996) made this impossible. ONLY VOTERS CAN RAISE TAXES. A City Council can raise certain fees, like building permits or dog licenses, but ONLY to a level that would cover direct expenses to pay for a specific service.

In addition, these fees account for less than 3% of the Castro Valley city budget. 
A city council would have to answer to the local electorate if it considered raising any unpopular fees or fines. 

Besides, they aren't needed.

A: Any state budgetary problems hit both cities and counties – but counties suffer more because of the scope of their responsibilities. If money is short, do they cut back on juvenile services, health services, the criminal justice system, or do they cut police services to the unincorporated areas – the areas with no power to complain.

As a non-city, we will have no control over what services in Castro Valley will be cut by the county in an economic downturn. Nothing obliges the county to spend what's needed on Castro Valley services just because the money came from Castro Valley -- not if in its judgment there is a more important need elsewhere in the county.

With cityhood we will control how local money will be spent. For this very reason, we HAVE to incorporate to be sure we are spending our own money on our own needs. The county is simply not geared for running cities or towns.

A: Alameda County's total budget is more than 1.9 BILLION dollars. Castro Valley's budget is approximately 20 MILLION dollars. Castro Valley, therefore, represents only about 1% of the county's budget.

A: Local hotel owners allegedly claim they have never reached the occupancy level used in the CFA. If that is so, why are two of them adding a substantial number of rooms? If hotel occupancy is so low, why did a new hotel open up within the last couple of years? 

It is understandable that hotel owners do not wish to reveal their true gross income to just anyone. Few businesses would do so. However, the CFA's projections were based on actual, reported occupancy, and not on anecdotal evidence.

A: Absolutely not! Under Proposition 218, all taxes, including the business license tax, must be adopted by the voters. Further, the business license tax accounts for less than 3% of the proposed city budget.

A: Not unless the citizens of Castro Valley want it. Under Proposition 218, any bond issues for capital improvements must be approved by the voters.

The cost for renting space for city governmental offices is already built into the budget. If one of your local representatives proposes building an ornate marble city hall, what do you believe are his chances of re-election?

A: According to the Comprehensive Fiscal Analysis, “the difference between revenues transferred [from Castro Valley to Alameda County] and expenditures transferred [from Alameda County to Castro Valley] is a negative County General Fund impact of $610,150, based on 2000-2001 costs and revenues.” 

In other words, Alameda County drains more than half a million dollars a year from Castro Valley than it returns in services. 

This mitigation payment is based on actual budget figures and did not result from the county “negotiating with itself.” Alameda County does have the right to waive these “lost profits,” or to take a smaller yearly sum than the figures show. Given the county's current budget constraints, it understandably chose to demand the full amount of its lost profits for the maximum-allowable ten years.

After ten years, however, this money reverts to the city, to be used for...well, you decide. Contact your city councilperson with your ideas.

A: The operative word is TRANSFER of government functions -- not adding another layer. The Municipal Advisory Committee will be replaced with a city council. The Board of Supervisors will no longer govern Castro Valley.

Of course, we will contract out many of our services, such as road maintenance and police. But these contracts will only be to perform the actual work. The budget, the planning, the policies, the priorities will all come directly from the City of Castro Valley.

A: Castro Valley's local government is the Alameda County Board of Supervisors. They administer a $1.9 billion budget that includes hospitals, social services, courts, probation, welfare and – when and if they have time – local government for the unincorporated areas of the county.

We represent about 20% of the constituency of one out of five members of the Board of Supervisors. We do not have the votes to elect our Supervisor, nor do we have the votes to turn him out of office if we are not happy with his job performance. 

Supervisor Nate Miley seems to have a genuine interest in this small corner of his constituency. Supervisors in the past have not been so friendly to our town, and who knows about future supervisors? After all, we don't elect them.

On the other hand, a five-member, elected city council will be directly responsible to Castro Valley voters. Castro Valley issues will not just be one line-item on a three-hour agenda, but will represent the council's only agenda. And if any council member fails to fulfill his/her campaign promises s/he will be history come the next election.

We know that Castro Valley citizens serve responsibly in elected positions. Many of our citizens now serve on our School, Library, Sanitation, Parks and Recreation and MAC boards. You can expect the same kind of dedicated and civic-minded people to serve on a Castro Valley City Council. 

If we trust them enough to elect them to responsible positions in other areas, we should trust them to guide the entire city to a better future.

A: A resounding “NO.” Other forms give us only the ability to advise – not to make decisions. We would have no more control over our own affairs than we currently have with the Municipal Advisory Committee (MAC). 

We would only be able to recommend action to the Board of Supervisors. We could not plan ahead. We could not direct where our taxes are spent. Only cities and counties in California are authorized to use the "police power," – that is adopting and regulating a variety of activities, including planning, zoning, building standards, traffic control, citation and arrest and promoting economic or residential development.

A: Under California law, the Local Agency Formation Commission MUST find that cityhood will cause no reduction in the level of service. After reviewing all the facts, this commission has so found. 

How can city services fail to be better than county services? They will be here in town. The staff will be dedicated to Castro Valley. A City Manager will spend his entire efforts on Castro Valley. The Planning Department and Police Department will answer directly to the City Manager, and ultimately to the city council.

A: Honestly, there's not much land left to develop. The Comprehensive Fiscal Analysis assumes that we will add 103 new homes per year, because that is our historical average. However, this figure is not mandated.

How much more development could there be than what we've had with the county in control?

A: Sorry. This is a scare tactic. Nobody on either side of this issue wants an auto dealership on Castro Valley Boulevard -- or anywhere else in town. But it would be nice to have a Mervyn’s, perhaps, or another reasonably sized retail outlet. NOBODY in favor of cityhood has EVER suggested an auto dealership. 

A: The Board of Supervisors voted to contract for a Comprehensive Fiscal Analysis (CFA) to determine if Castro Valley citihood was economically feasible; i.e., do we generate enough tax dollars to pay for the services now being provided by the county? A Berkeley firm, Economic & Planning Systems (EPS), was retained to do the analysis. 

The CFA went through several drafts, each one being more finely tuned; each one including more recent financial information, and each one showing that Castro Valley cityhood was more and more attractive.

A: Economic & Planning Systems (LINK TO EPS ) has been in business for more than 30 years. They have done major financial studies throughout the state on a variety of issues and are highly regarded by political entities throughout California. They have done numerous studies about the budgetary feasibility of cityhood for numerous California communities, and NOT ONE OF THEM has failed to succeed as predicted.

As a company that contracts with governing bodies all over the country, EPS has an incentive to be extremely conservative in its reports. If their fiscal analyses prove to be incorrect, they will most certainly lose out on future contracts.

A: In fact, both the pro-cityhood and the anti-cityhood groups had equal access to EPS. This access was mostly limited to comments at public meetings of the Citizens’ Advisory Committee, appointed by Supervisor Nate Miley. Comments and suggestions, both pro and con, were entertained at these meetings, and any valid comments were given due consideration. 

In fact, we believe that EPS was much too conservative in all of its assumptions regarding income and much too generous in its assumptions regarding expenditures.

A: The fiscal analysis took many months to complete. Along the way, several draft versions of the analysis were submitted for public review, comment and revision. Each of these versions was clearly labeled “DRAFT.” Each successive draft had the benefit of more research, more facts gathered and more input from the public at meetings of the Citizens’ Advisory Committee.

Yes, the first draft concluded that cityhood was not feasible. However, those preliminary figures contained many incorrect assumptions that were later corrected. Among these were an assumption that sales tax revenue would remain the same for ten years, an unrealistically high budget for police protection and far more salaried employees than are necessary. 

As only one instance of the latter, the Finance Department's staff was projected to include a finance manager, two accountant/budget analysts, three accounting technicians and two secretarial/clerical staff. 

Proponents of cityhood correctly pointed out that these staff levels were excessive, and in subsequent drafts, more accurate staffing recommendations were adopted.

Once a more realistic police budget was developed, excess staff trimmed, newly available information “plugged in” to the study and the hotel tax revenue added in, later drafts of the CFA (and the final version) concluded that there is a sound fiscal basis for cityhood.

We believe that it is unreasonable to focus on the very first draft while ignoring all of the subsequent studies. The final word is clear: Yes. Castro Valley CAN afford to have its own government.

Reasons for Cityhood
Excerpts from the Comprehensive Fiscal Analysis
You have questions?  We have answers. (FAQ)
Alameda County LAFCo Fact Sheet