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How MILLION$ of Palos Colorados Funds Really Get Spent

The $17,000,000

Palos Colorados Fund

isn't always spent

as promised or intended.

$2,000,000+ out of bounds?


In this article:

- Background on the $17,000,000 Palos Colorados Fund

- Town Council Stated Intent for Use of Funds

- The Town's Actual Use of Funds

- Palos Funds and The Storm Drain Tax Premium

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Recent NextDoor posts occasionally have referenced the Palos Colorados fund when discussing the town's financial management (including allegations of misuse of Palos funds) in general and the proposed storm drain fee in particular.

Here's a brief explanation and what we've found.


Palos Colorados is a 123 home development slated for the open space before Sky Hy Drive, on the right just before you leave town on the way to Lafayette. It's been in the works for over two decades.

As a result of at least two settlement agreements, the developer agreed to deposit $14,500,000 into the general fund based on development milestones and another $2,500,000 when it eliminated a golf course from the plan. The $17 million over time is in lieu of the usual developer impact fees they'd be responsible for paying, including those related to roads, police, and storm drains.

Council's Thinking on Use of Palos Funds Over Time

funds to be used for infrastructure, then changed to parks and recreation

Over time, the town council has variously discussed and/or stated that as a matter of unwritten policy, the funds would only be used consistent with the intent for which they were received. The stated and promised intent has variously changed (and sometimes has been ignored) depending on who is on the town council, between using it for:

  • infrastructure, or

  • parks & recreation, or

  • an endowment (spending only the interest to fund specific town expenses and investments)

A good article on the changes in purpose is located here.

Generally speaking, the funds initially were supposed to be dedicated to infrastructure, since all the money was in lieu of developer impact fees that are ostensibly meant to fund a development's impact on town infrastructure.

Subsequently, in 2007, the council changed its mind* and determined that Palos funds should be dedicated to parks and recreation activities and investments. Parks and recreation is the present and prevailing "rule" in terms of use of Palos funds.

*Mayor Trotter was on that council, recently elected on a "community gym" platform, so perhaps he knows more about the change from an infrastructure focus to a recreation one.

Town Spending of Palos Funds Over Time

some related to infrastructure and parks/rec, others not so much

Over time, the town has accessed the Palos fund to varying degrees for various uses. Some are directly connected to the stated intent, others questionable, and some apparently not at all. Here are some from town financial reports:


$1,454,202 for employee pensions (see link 1 at the bottom of this article)


$225,000 to pay off a loan balance on new town hall/council chambers (see link 2)


$500,000 for the ongoing hillside regulations project (see link 3)

Others (see link 3):

Hacienda Hotel/Restaurant Studies ~$150,000

Hacienda de las Flores Community Priorities/Survey ~$26,000

Hacienda de las Flores Improvement Program ~$85,000

Hacienda Bldg ADA Accessibility to Upper Floors ~$40,000

Hacienda Pavilion Turf Improvements ~$16,000

Commons Park Master Plan Update ~$65,000

Commons Park Improvement Program ~$70,000

Commons Park Sand Volleyball Court Renovation ~$165,000

Commons Park ADA Pathway ~$50,000

All Access Playground - ~$80,000

Municipal Parking Lots & Pathways Resurfacing ~$35,000

Moraga Library HVAC System Replacement ~$285,000

Library Restroom Remodel/ADA ~$230,000

Art in Public Spaces $5,000

Sinkhole Repair on Rheem Blvd at Center St ~$1,100,000*

Canyon Road Bridge Emergency - Initial Response ~$1,000,000*

* these amounts will be reimbursed approximately 90% by the Feds

Back to the present:

​Palos and Its Impact on the Storm Drain Tax

Palos Colorados exempt from impact fee; the rest of us pay more

Since Palos funds are deposited into the general account and are in lieu of developer impact fees, that development is exempt from a one-time, front-end payment of $350,000 to $400,000* towards storm drain infrastructure it otherwise would have and should have paid. Of course, the town council could apply some of the $17 million (whether already received or expected) towards that intended purpose, but it isn't.

* $350,000-$400,000 is our conservative estimate; we've received a few emails contending the amount may exceed $500,000 and even approach $1,000,000, depending on the size of the homes, streets and sidewalks, and lots/landscaping/hardscaping.

The $350,000-$400,000 shortfall resulting from their exemption from the one-time impact fees will be absorbed by the balance of town residents. Here's why:

  • The town seeks $9,059,400 for high priority projects (this includes a 30%-40% contingency)

  • $1,748,500 will be covered by developer impact fees (Palos being excluded from this offset)

  • The net amount residents will pay is $7,310,900

Palos Colorados not paying their impact fees of $350,000-$400,000: That's 5% of the amount the town seeks from the rest of us.

Facts, Analysis and Our Entire Collection of Articles

on the Storm Drain Tax Are Available On Our



Good background on settlement agreements from town staff report: here

Lamorinda Weekly articles here and here

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