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:
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.
*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
(1) PDF page 67: http://govwiki.info/pdfs/General%20Purpose/CA%20Moraga%202013.pdf
Good background on settlement agreements from town staff report: here