Blog: September, 2012
The Time Is Now for Business Tax Reform
San Francisco’s technology sector is booming once again, the real estate market appears to be in full recovery mode and office vacancies are at record lows. The city’s economy is quick to catch fire, but it’s also prone to downturns. This has benefited the city’s coffers and the public services they support, but it forces difficult decisions when fortunes turn for the worse.
These boom and bust cycles have exposed the importance of consistent sources of revenue for the city. Repeated economic fluctuations — as well as the recent recession — have shown the inherent volatility of the city’s business tax. A flat 1.5 percent tax on all payroll expenses above $250,000, the business tax is the city’s second largest source of revenue for the general fund (it brings in approximately $410 million per year), behind only the city’s property tax. But the payroll tax has fluctuated dramatically from year to year. In fact, it has increased more than 10 percent year-over-year four times in the last decade and actually declined on four separate occasions in the same period.
Growth in Property Taxes, Business Taxes and Employment in SF
To address this volatility, Proposition E on the November ballot would replace San Francisco’s payroll tax with a gross receipts tax, a more common and more stable tax structure found in cities throughout California.
As we explained in a previous post, the gross receipts tax is common in California, but it wasn’t the first choice of the state’s largest cities. From 1970 to 2001, San Francisco’s business tax required companies to pay either the city’s gross receipts tax or the city’s payroll tax, whichever was greater. Los Angeles used a similar system. Following legal challenges in both Los Angeles and San Francisco (the requirement to pay the higher of the two options was found to be unconstitutional), San Francisco agreed to a settlement of approximately $80 million and subsequently eliminated the gross receipts tax and applied a flat tax of 1.5 percent of payroll to all businesses. Meanwhile, Los Angeles implemented a gross receipts tax.
In the decade since the legal settlement forced the city to choose between the payroll or gross receipts tax, there has been general agreement that San Francisco’s business tax needs to be reformed but little consensus about how that might happen or what might succeed the payroll tax. SPUR and much of the business community have argued that we should restructure the city’s tax system to remove disincentives to hiring inherent to the payroll tax. Reform has been attempted at least three times in the last decade, but those efforts were ultimately unsuccessful. Instead, the city has more recently adopted a new tactic: payroll tax exemptions, also known as “governing by exception.”
Since 2001, the city has granted payroll tax exemptions to a number of companies to keep them from leaving San Francisco once they grew large enough to be affected by the payroll tax. Prior to 2011, these exemptions were used exclusively to grow the biotechnology sector. But in 2012, separate exemptions were also granted for stock-based compensation and for new businesses locating in the Mid-Market area, exemptions targeted largely at growing technology companies. These incentives have unquestionably been effective: Zynga and Salesforce maintained their corporate headquarters in the city, and technology companies have been attracted in droves to Mid-Market, starting a renaissance that has failed to take root in the neighborhood ever since the construction of BART down Market Street.
But something else has happened in the years since the city opted for the payroll tax: Two significant downturns and three economic booms have driven uneven growth. In fact, the city’s budget has increased by nearly 50 percent in the last 10 years while inflation grew only 31 percent. These cycles have been further exacerbated by the fact that these funds are driven by less than 10 percent of businesses in the city: Only 7,500 of the city’s more than 96,000 registered businesses pay business taxes.
Business taxes are certainly not the only reason that companies come to — or stay in — San Francisco. There are myriad factors that play into location decisions. But given the volume of voices that have called for tax reform, as well as some prominent relocations of major companies, it certainly can’t be ignored.
Proposition E would replace the city’s payroll tax with a gross receipts tax. Gross receipts taxes are significantly more complex than a payroll tax, but also have a number of different benefits:
- Slower growth and more jobs.The proposed gross receipts tax will grow more slowly over time than the payroll tax, and is projected to generate more jobs than the existing tax.
- Greater stability.Through various economic cycles, payroll tax revenues can vary wildly; gross receipts tax revenues are projected to be significantly more stable and predictable over time, with less dramatic shifts in revenue than with the payroll tax.
- More equitable.The payroll tax is a flat rate for all companies, regardless of size or profit margins that can vary dramatically by industry. By contrast, gross receipts will bundle industries by their ratios of payroll to gross receipts to approximate ability to pay. This structure generally mirrors that used in other California cities with gross receipts taxes, but it simplifies that structure with fewer schedules. What’s more, the gross receipts tax will apply to businesses located in tax shelters such as the Presidio of San Francisco. (Tenants there have enjoyed payroll tax exclusions under federal statute. Prop. E would end these tax shelters.)
How does a gross receipts tax work? To be honest, it can get very complicated, very quickly. But there are four main ways that Prop. E changes how businesses will be taxed in San Francisco:
- Industry-based rate schedules. Separates the business tax base into seven groups based on industry sectors. This structure mirrors that used in many other California cities but simplifies the structure with fewer schedules.
- Progressive rates. Transitions tax rates from a flat tax to a structure in which rates increase as earnings increase. Companies pay a higher rate as they earn more. Conversely, companies pay a lower rate if they earn less.
- Marginal rates. Creates tiers of rates that apply only to the specific range of gross receipts, rather than the entire amount of gross receipts, similar to personal income taxes. For example, a company in schedule 1 (see sample below) would pay 0.1 percent tax on gross receipts from $1 million to $2.5 million and 0.35 percent on all gross receipts from $2.5 million to $25 million. Companies in all schedules are exempt from the tax until they make at least $1 million.
- Broadens the tax base. Increases the number of businesses paying the payroll tax to 15,500 from only 7,500 in 2010.
Sample Gross Receipts Schedule Under Prop. E
Schedule 1: Retail trade, wholesale trade and certain types of services.
More important than the sum of these benefits is the road traveled to develop Prop. E. Discussions with such far-reaching implications are frequently contentious, and several reform attempts in the past decade have ended with no change at all. This process, however, was marked in its collaboration and communication. In the first six months of this year, San Francisco Mayor Ed Lee and Board of Supervisors President David Chiu worked with City Controller Ben Rosenfield to conduct a months-long outreach process. Involving literally hundreds of companies and other stakeholders, and informed by detailed analysis, the final proposal is the result of sustained engagement and extensive collaboration. This level of complexity seldom yields perfection, but this is certainly a preferable route to contentious fights that lead to no change.
One of the compromises achieved by this process was around new revenues. Though not the original intention, Prop. E generates $28.5 million of new revenue for the city’s General Fund. These funds are not programmed for anything specific at this point, but strong commitments have been made to direct funds to SPUR priorities such as affordable housing and the Housing Trust Fund, as well as to Muni maintenance and operations.
Given this level of complexity, the road to passage will be anything but easy for Prop. E. With a number of other important measures on the November ballot, tax reform is a topic to which few voters pay attention. Previous efforts, while not as well developed or supported, have suffered at the ballot for lack of understanding. And regardless of the collaboration and extensive agreement, the minutiae of the measure could complicate matters significantly when it reaches voters.
But for all of these reasons, Prop. E also presents a tremendous opportunity. The stars seldom align to present the voters with a unified front for such a complex change, and we should seize the moment — and the momentum — to make the transition.
This is the time for San Francisco to move past the payroll tax. Join us in supporting Prop. E on November 6.
Still have questions? Look for our complete ballot analysis in the SPUR 2012 Voter Guide.
Bus Rapid Transit Getting Traction on El Camino Real
At a workshop on September 21, the Valley Transportation Authority (VTA) Board reaffirmed its support for a bus-rapid transit (BRT) project on El Camino Real in Santa Clara County. The project takes a 17.3-mile route from the HP Pavilion in San Jose through Santa Clara, Sunnyvale, Mountain View, Los Altos and north to Palo Alto. This corridor already has the highest transit ridership in the county between the 22 local bus and the 522 rapid bus.
Over the past year, the cities of Mountain View and Sunnyvale demonstrated their skepticism of BRT by voting against dedicated bus-only lanes on El Camino Real, the “Main Street” of Silicon Valley. Given how such local decisions can negatively impact regional transit service, the VTA board could have elected to slow down or abandon the BRT project altogether. Instead, board members decided to continue with BRT on El Camino Real in a project that includes dedicated bus-only lanes in the City of Santa Clara and mixed-flow travel (i.e., buses travel in lanes with cars) in cities to the north.
The map below shows the project’s current mix of dedicated lanes in the City of Santa Clara and mixed-flow travel in other cities:
In an important move pushed by TransForm, the Silicon Valley Leadership Group, the South Bay Labor Council and others, VTA agreed that the project’s environmental impact report will also study an alternative plan that would use dedicated lanes throughout the corridor.
Here’s how this alternative plan would look:
As TransForm argued:
VTA should not close the door for cities to adopt dedicated lanes as more information comes to light over the course of the planning process. In particular, VTA should study both a mixed flow and dedicated lane alternative in the project’s Environmental Impact Report (EIR) so that decision makers will have more information to base their opinions on in the future.
The decision to study dedicated lanes throughout the corridor will cost a little more money in the short run, but in the long run, by including both alternatives in the environmental impact report, VTA will have cleared the far better BRT alternative in the event that other South Bay cities become supportive of dedicated lanes.
The next step in the El Camino Real BRT project is for VTA to formalize these recommendations at a November board meeting. SPUR looks forward to working with partner organizations and VTA on the successful implementation of BRT along El Camino Real and other Santa Clara County corridors such as Stevens Creek and Santa Clara-Alum Rock.
New Superintendent Brings New Energy to School Food in SF
Richard Carranza has been an educator for more than twenty years. He has seen firsthand how student learn better when they’re healthy and nourished. And, as a father of two daughters enrolled in the city’s public schools, he’s heard firsthand that students want better food in their cafeteria. Professionally and personally, he understands that school food is integral to the lives of students and the success of the District. And, as the new Superintendent of San Francisco Unified School District (SFUSD), he is in a position to improve the school meals program.
But, as Superintendent Carranza made clear at a September 6 forum at SPUR, he and the District face significant obstacles.
Primary among the challenges is funding. The $18 million budget of the school meals program is supported mostly by revenue from the 27,000 breakfast and lunches as well as the 6,000 snacks that Student Nutrition Services serves each day. In San Francisco, like in many other urban school districts nationwide, the majority of the students eating school meals receive the meals for free. In exchange for providing the meal, the federal government, in the current school year, will send the District a reimbursement of about $2.90 per lunch and $1.55 per breakfast. The students who don’t qualify for a free meal pay $3.00 per lunch and $1.50 per breakfast. The combined revenue of reimbursements and sales is used to cover the costs of the school meals program: food, labor, distribution and management. In San Francisco, the revenue has not been enough to cover the costs and the District has offset shortfalls in the school meals program by transferring money from the District’s general fund. Student Nutrition Services has begun reducing this deficit in the past two years and may be able to increase efficiency more in the coming years. But, even with greater efficiency, the District will continue to face a difficult fiscal position so long as increases in food and labor costs continue to outpace increases in the federal reimbursement rate.
Compounding the difficulty of raising revenue is the criteria that defines who qualifies for a free or reduced meal. The federal government, which sets the standard, has one threshold for the entire lower 48 states, with separate rates for Hawaii and Alaska. A family of four only qualifies for a free meal if their household income is less than $30,000 per year – regardless of whether they live in San Francisco or a small town in Mississippi. In San Francisco, 50% of public school students meet that threshold, which is a sobering statistic. But, according to the Food Security Task Force, a family of four in San Francisco could be food insecure even with an income twice that. The result is that many hungry students receive free meals from the District, which has a policy of feeding any hungry student regardless of their ability to pay, but the District cannot receive a full reimbursement for that meal because those students don’t fall within the poorly calibrated federal definition of poverty.
A third significant challenge for the school meals program’s financial picture is that fewer students are choosing to eat the meals. They are, as the Superintendent put it, “voting with their feet.” The number of SFUSD students eating school meals (called the “participation rate”) is significantly lower than that of comparable districts and has declined since 2009. And, the fewer students who eat the meals, the less revenue SFUSD receives.
Despite these challenges, Student Nutrition Services has made considerable improvements in the past few years. They have, among others successes, installed a point of sale system that expedites meals service and provides valuable data to managers, reduced the paperwork for enrolling families in the free and reduced meals program, and improved the nutritional standards of the food that is served. This has helped SNS begin to reverse the deficit trend including recently lowering the deficit covered by the District’s general fund from $3.5 million in 2009-10 to $2.5 million in 2011-2012 (see: 2 hours and 43 minutes into the video).
Alongside these improvements, however, kids continue to vote with their feet. Many choose to eat bag lunches from home, off-campus, or not at all. As a study recently published by the San Francisco Food Bank details, many factors influence their choice: the amount of time they are given to eat, social pressure and stigma, the number of meal options, the cafeteria environment, and, perhaps most of all, the quality and appeal of the food itself. The report, which was inspired by a goal of “more kids eating better food” at school, provides an extensive list of recommendations for how SFUSD can improve the current program, including calls for: increasing the number of management staff (which the District has begun to do), remodeling of both kitchen facilities and cafeterias, soliciting greater participation in the free and reduced lunch program, and many management suggestions.
Long-term, though, the question for how to substantially improve the school meals program in San Francisco remains. Superintendent Carranza reported that the District is beginning a planning process to produce a 5-year strategic plan addressing the issue and is also reissuing its meal service contract for competitive bid among contractors. The challenges for improving SFUSD’s school meals program are considerable, but these steps and others outlined by the Superintendent are strong indications that there is a new energy, focus and commitment to tackling the issue at the highest levels of the District.
BART’s Balancing Act: Ridership and Bike Access
It’s been an interesting month for BART. Not only did the transit system mark its 40th birthday on September 11, but during the week prior it experienced four of its top-ten most crowded days ever. Ridership exceeded 400,000 on three of those days, and the fourth, September 6, was a day with no special events to boost regular numbers.
BART's 10 All-Time Highest Ridership Days
This explosion of ridership followed on the heels of a pilot project that, every Friday in August, lifted the commute-hour restrictions on bringing bikes onto BART. The experiment was a test of the feasibility of relaxing the existing rush-hour bike blackout, and by all accounts it went smoothly, aided by the generally low ridership of Fridays in August.
BART’s bike plan, published in July, aims to double the number of passengers who reach the system by bicycle (from 4 to 8 percent) by 2022. The hope is to attract more bikes and fewer cars, which would reduce the need to build expensive car parking and contribute to regional goals to reduce traffic congestion and greenhouse gas emissions.
On its face, a plan to make trains more accommodating to bicycle commuters sounds great. But in terms of transit capacity, bikes present a challenge. One bike generally takes up the space of three people. And with ridership up, the system is increasingly struggling to fit commuters onto crowded trains and manage platform circulation during peak hours.
Transit best practices aim to maximize rider capacity in the most constrained parts of a transportation network. This usually means making more room for people on trains at peak times by removing the things — including seating and bikes — that reduce space for riders. This is the same argument that supports replacing automobile lanes with more room for bikes, which consume a tenth of the road space per person that cars do.
BART Manager of Access Programs Steve Beroldo acknowledges that the more crowded the system gets, the more difficult it is to accommodate bikes. He says some of the first lessons BART is taking away from the pilot concern ways to make more room for bicyclists by removing seats near the doors in all cars and encouraging modifications to queuing on platforms, in order to improve flow.
Optimizing bicycle accommodation on board trains is only one of BART’s strategies to improve bike access. Others include improving cyclist circulation within BART stations, increasing the amount of bicycle parking, helping to assure bicycle access beyond BART’s boundaries and supporting programs to encourage bike safety and awareness. SFStreetsblog provides great analysis of the plans, noting its emphasis on expanding secure bike parking.
For everyday commuting, secure, sheltered bike parking is a strategy many modern countries prioritize. The Dutch rarely allow bikes on any of their trains, instead providing abundant secure, affordable, front-door bike parking at almost all rail stations. BART’s bike plan notes that “providing plentiful and convenient bike parking is also the most effective tool BART has to encourage as many passengers as possible to leave their bicycles at the station, rather than bringing them onboard.” Bike stations at Embarcadero, Downtown Berkeley and Fruitvale BART stations are a small start toward an excellent network of bike-parking facilities. Additional bike-parking at Civic Center is expected to come online by the end of the year.
A strong regional bike-sharing program could also play a role in improving the number of users who reach BART by bicycle without needing to bring their bikes onto trains. Washington, D.C., Paris, Montreal and other cities have demonstrated that bike-sharing programs work very well in conjunction with transit, particularly for irregular trips (errand-running, meetings, etc.). According to Peter Harnik, a longtime biking advocate with the Trust for Public Land, “The bike-sharing program in D.C. has been spectacularly successful and is physically transforming the area into a much more bikeable and bike-friendly region.” So far, BART’s approach to bike sharing has been to adopt a wait-and-see approach as a long-anticipated regional pilot gets underway this year in San Francisco, San Mateo and Santa Clara counties.
On its first day of operations in 1972, BART drew 15,000 riders. To transit advocates, it’s encouraging to see the great growth in ridership numbers that had led to the 415,000 experienced on Monday of this week. Getting more people to leave their cars at home and ride transit is good for public health, equity, environmental quality and productivity.
But as BART looks forward to hitting 500,000 riders in one day, we have to weigh carefully how bikes are integrated with increasingly crowded trains. The reality of the Bay Area’s development pattern is that, after their transit trip ends, people will often still need to travel several miles to their final destination. Our mild weather makes bicycling a great way to solve this “last mile” problem. Whether we redesign future BART cars to hold more bikes during peak hours or instead focus on a better system of secure bike parking or bike sharing at stations is an important debate.
Planning Action on San Francisco's Waterfront
In recent decades, San Francisco’s waterfront has been home to some of the city’s most transformative projects, including Mission Bay, AT&T Park, China Basin and the South Beach neighborhood. Today the waterfront is once again where many of the city’s largest and most exciting development proposals are taking place. Several new plans along the bay — including Seawall Lot 337/Pier 48 (also known as Mission Rock), Pier 70 and the Warrior’s Stadium — are proposing to make their mark on the city. At the same time, San Francisco is hosting the America’s Cup races in 2012 and 2013. Throughout the fall, SPUR will be hosting a series of forums exploring planning on the waterfront.
Located just south of AT&T Park, Seawall Lot 337/Pier 48 is one of the most interesting development opportunities in the city. Currently home to a large surface parking lot serving AT&T Park, Mission Rock will create a mixed-use development featuring a large waterfront park on the northeast corner of the site. The plan also calls for breaking down the site into a series of small, walkable blocks (at a finer grain than those in neighboring Mission Bay). The Port of San Francisco is working with the SF Giants and the Cordish Company to further refine this plan. We’ll be hearing the latest on October 29 at SPUR’s forum The Future of Mission Rock.
To the south of Mission Rock and east of the Dogpatch neighborhood sits Pier 70, a 69-acre site that includes many beautiful historic structures desperately in need of repair and conservation, as well as a the largest floating dry dock on the west coast of the Americas. The Port of San Francisco has engaged in a lengthy planning process to find ways to preserve the waterfront’s rich history and create new parks while protecting maritime and industrial needs. At the same time, the plan invites new development to create a place for innovative industries and new residents. The port is working with Forest City to bring this plan to fruition. SPUR will host a forum on Pier 70 on November 29 and a walking tour on October 17.
Another major project on the waterfront is the plan proposed on Piers 30-32 and Seawall Lot 330 for a privately financed, multi-purpose entertainment and commercial complex that includes a new facility for the Golden State Warriors basketball team, complementary maritime uses and substantial new public access and open space on the pier. This project would host not just Warriors games, but conventions, performances and special events. Located just south of the Bay Bridge, Piers 30-32 are within walking distance of AT&T Park and served by Muni’s N-Judah and T-Third lines.
As always, SPUR will be tracking and weighing in on all of these important projects, which collectively have the potential to make an enormous positive impact on the waterfront, as well as helping enable the port to repair and seismically upgrade some of its deteriorating infrastructure. For more on SPUR’s perspective on waterfront planning, see our report Hard Choices at the Port of San Francisco.
North American Cities Produce Bumper Crop of Urban Agriculture Studies
There may be a drought in much of North America, but this summer has produced a bumper crop of reports on urban agriculture in cities across the continent. Nonprofit groups in New York, Toronto and Boston have recently published studies examining what their cities can do at the policy level to support city gardeners and farmers.
In the Big Apple, the Design Trust for Public Space and Added Value partnered together to produce Five Borough Farm: Seeding the Future of Urban Agriculture in New York City, the most comprehensive of the reports. The study’s snapshot of urban agriculture revealed:
- More than 700 farms and gardens (including school gardens) are producing food. This, the report pointed out, is more than three times the number of Starbucks in the city.
- In addition to 390 food-producing community gardens managed by the Department of Parks and Recreation, the New York City Housing Authority hosts 245 food-producing gardens.
- The vast majority of the sites are 5,000 square feet or less.
An innovative aspect of the report was its call for the city and urban agriculture practitioners to provide more detailed metrics — not only to track production (in pounds of food, value, jobs and participation) but also to track impact (dietary change, food literacy and social cohesion). In the coming year, the Design Trust will begin working with a small sample of sites to collect this sort of data, similar to the work of Farming Concrete.
One other notable aspect of the New York City report was how the history of land insecurity, specifically former mayor Guliani’s attempt to auction off 115 community garden sites for private development in 1999, led to a very specific garden review process for any future transfer proposals. It also led to the establishment of a small handful of land trusts — including the New York Restoration Project and three smaller community trusts that were recently spun off by the Trust for Public Land — that own scores of community garden sites. In contrast, there are no community land trusts operating urban agriculture projects in San Francisco.
Providing an international perspective from a colder clime, Toronto’s Food Policy Council published GrowTO: An Urban Agriculture Plan for Toronto. The goal of this enthusiastic report was to scale up urban agriculture across the city. Reflecting the similarities that dense cities face on this issue, the four top policy recommendations from Toronto are similar to those SPUR identified for San Francisco:
1. Create an urban agriculture program within the City of Toronto.
2. Update city policies to support and implement urban agriculture.
3. Provide incentives (financial and/or other) to groups and individuals starting or growing their urban agriculture initiative.
4. Develop a website that provides a clearinghouse of urban agriculture information.
The report also highlighted a “yard sharing” initiative called YIMBY (Yes in My Backyard), a model of maximizing use of private yards that has not been institutionalized yet anywhere in the Bay Area.
Not to be outdone by bigger cities, researchers from the Conservation Law Foundation in Beantown issued their report Growing Green: Measuring Benefits, Overcoming Barriers, and Nurturing Opportunities for Urban Agriculture in Boston. Unlike the others, this report was framed as a feasibility study for a hypothetical commercial urban farming venture that would cultivate many sites across Boston, totaling 50 acres. Two notable findings in the study were that:
- Commercial urban farms were likely to employ 2.6 to 4.5 people per acre
- Boston has at least 800 acres of vacant land suitable for urban agriculture
Alongside its feasibility analysis, the report provides detailed descriptions of existing policy and initiatives in the city, including an urban agriculture zoning overlay district. Unaddressed, however, was whether that zoning policy, or any other policy change, would make it feasible for any urban agriculture venture to gain access to 50 acres of land.
What the three studies show is both a growing sophistication of urban agriculture policy efforts in cities across the continent and the similar obstacles facing farmers and gardeners in dense urban areas. What is not yet clear is whether the bumper crop of studies will lead to subsequent bumper crops of food produced in those cities.
SPUR San Jose Takes to the Streets on Two Wheels
A cadre of 45 urbanists gathered downtown on a recent Sunday morning to join SPUR San Jose Director Leah Toeniskoetter for a bike tour. Beginning in the urban plaza fronting Philz Coffee, our mighty bike train easily navigated its way along the brand new buffered bike lanes of Third Street, en route to Japantown. A project of the City of San Jose, the extra-wide bike lanes are a product of recent “road diets” on certain streets, where three lanes of auto traffic were reduced to two in order to add the buffered bike lane.
The new lanes easily accommodated the group as it cruised past St. James Park and through the Historic Hensley District, known for having the highest concentration of Victorian homes in the city’s central core. San Jose Director of Transportation Hans Larsen noted that the district really came to life in 2005 when road diets were applied to the section of Third and Fourth streets in the Hensley District, calming the fast three-lane, one-way streets to a slower two-lane, two way street with bike lanes. The transition has prompted continued investment in the historical character of the neighborhood.
In no time at all, the two-wheelers turned onto Jackson Street, the main road through the Japantown neighborhood — one of only three historical Japantowns in the United States. The heart of this district was embodied by the tables full of people outside of Roy’s Station, a gas-station-turned-coffeehouse on the corner of Jackson and Fifth streets. After passing the Sunday farmers’ market at the site of the old City of San Jose Corporation Yard, the group continued into the heart of the Northside Neighborhood District’s Luna Park Business District surrounding Backesto Park. Winding its way back through the neighborhood’s charming homes to the newly installed Tenth Street buffered bike lanes, the group made a straight shot back to the center of downtown and onto the San Jose State University campus.
As the oldest public institution of higher education on the West Coast, the SJSU campus is full of serene quads with surprises such as the Black Power Statue, the historic and architecturally significant Tower Hall, built in 1910, and the first library (Dr. MLK, Jr. Library) in the nation to be jointly owned by a city and university.
After snaking through the campus the bicycle caravan entered the city’s first protected bike lane, which runs along Fourth Street on the campus’ western edge. The group then circled back to San Fernando Street, the main bike route between campus and historic Diridon Station, the second busiest train station in California.
The tour then led to the Alameda, built in 1799 as the connection between Mission Santa Clara and the Pueblo of San Jose. In 1868, the Alameda became the state’s first interurban horsecar line and, in 1888, it became California’s second electric trolley line, after San Diego. Previously State Route 82 but now under the purview of the City of San Jose, the Alameda is expected to undergo an extensive upgrade in the Fall of 2012.
With a turn into the Rose Garden neighborhood the caravan passed the Rosicrucian Park and Museum, home to the largest collection of ancient Egyptian artifacts on display in Western North America, and wound its way around another beautiful neighborhood, with homes dating to the 1920s and 1930s. A tour of the Rose Garden neighborhood wouldn’t be complete without passing its namesake, the San Jose Municipal Rose Garden, a 5.5 acre city park filled with more than 3,500 bushes and 250 varieties of roses cared for by local volunteers.
A quick venture into the Shasta-Hanchett neighborhood, lined with Craftsman houses built between 1900 and 1920, led the group back to the Alameda, through the Cahill Park neighborhood and then to Park Avenue, another bike route into the downtown. A turn onto the Guadalupe River Trail, a separated bike path that runs along the Guadalupe River Park, guided the caravan straight through the 32nd annual Italian Family Festa of San Jose. After riding past stands offering fresh cannoli and other treats, the group traveled just a few blocks further to finish the tour at the San Pedro Market, having experienced a new way to see at least a small portion of what San Jose’s biking landscape has to offer.
California's Water Wars: Three Decades, Same Issues
California water policy is endlessly fascinating. It addresses the single most important resource problem facing the state. It is complex. And it changes with glacial slowness.
This year, San Franciscans face two issues that reprise what occurred three decades ago: What should the city do regarding the long-term fate of the Tuolumne River? And what should the state do about moving fresh water through the Sacramento/San Joaquin Delta for shipment to the south?
Indeed, these two issues were the first water policy questions SPUR ever addressed. In 1982, the Modesto and Turlock Irrigation Districts and the San Francisco Public Utilities Commission were proposing to build three dams and two powerhouses along the 20-mile stretch of the Tuolumne River between O’Shaughnessy Dam and New Don Pedro Reservoir. Also in 1982, Governor Jerry Brown was proposing to build a Peripheral Canal around the delta to move Sacramento River water directly to the massive pumps that send it to the South Bay, Central Valley and Southern California.
SPUR opposed both proposals. We persuaded Mayor Dianne Feinstein to forego the additional revenue, water and electricity that the Tuolumne dams would generate. She even authorized me to go to Washington, D.C., to testify on the city’s behalf at a congressional hearing on designating the Tuolumne as a Wild and Scenic River. I also joined a variety of environmental groups in several meetings with Governor Brown and his staff to try to persuade him to drop the Peripheral Canal.
Governor Brown put a bond issue for the canal on the November 1982 ballot. It lost. More than 90 percent of Northern Californians voted against it. Congress voted to save the Tuolumne in 1984.
And now, here we go again.
For the Tuolumne, the issue at stake is San Francisco’s Proposition F, which asks whether the city should commence planning to demolish O’Shaughnessy Dam and allow the Hetch Hetchy Valley to return to its natural state. Doing so would, however, deprive the city of one of the purest water supplies of any urban area in the nation — as well as hydroelectric power and a revenue stream generated by the sale of a portion of that power. SPUR has written previously about how decommissioning the dam and reservoir will threaten San Francisco’s water supply and why the city will continue to need this system.
But what would this proposal mean for the Tuolumne River itself? It means destroying the very values of that 20-mile stretch downstream that persuaded Congress to save it. In those 20 miles, with hardly a road or a structure in sight, there are two dozen major rapids. It is one of the finest whitewater experiences in the world. Running those rapids is possible all summer long because of a reliable flow of water released daily from Hetch Hetchy. Demolishing O’Shaughnessy would mean that the water would be too high and violent during spring runoff, and too low for the rest of the summer for all but a handful of days. There would be no dam in place to capture the high spring flows, and no reservoir to provide timed releases all summer long.
The Tuolumne is also a premier trout fishery. Demolishing O’Shaughnessy eliminates that fishery, because the water would get too warm during the summer months without replenishment on a daily basis from Hetch Hetchy.
Having failed in 1982 to persuade the voters to approve the Peripheral Canal, Governor Brown now wants to pursue a $14 billion project funded by revenue bonds to construct a Peripheral Tunnel. He argues this is essential to save the fragile ecology of the Sacramento/San Joaquin Delta and to assure the continued delivery of a reliable supply of water to the South Bay, Central Valley and Southern California. The bonds and operating costs would supposedly be repaid by city and agricultural water users, although California farmers served by the two water systems receive heavily subsidized water supplies and cannot possibly afford to pay the full cost of developing the water.
The arguments from 30 years ago still apply today, even though conditions in the delta have gotten worse and the state has grown more populous. The proposed tunnel would have a capacity to deliver 9,000 cubic feet per second of water to the pumps for delivery south. Bypassing the delta would enhance the reliability of this water supply against an earthquake disrupting the delta and ensure that this water was of a higher quality than at present. It would also end the confusion fish face as they try to swim upstream while the pumps change the direction of stream flows.
But pumping this much water would consume one half to two thirds of the average normal monthly flow of the Sacramento River during the summer, when demand is highest. What happens during a drought? At present, the pumps cannot draw too much fresh water from the delta without sucking in salt water from the San Francisco Bay. With the tunnel, no such impediment would exist, and the entire flow of the Sacramento could be sent to the pumps. Halting the flow of fresh water into the bay for any sustained period would destroy its value as a major estuary.
Assurances are offered that the primary goal of this whole effort is to restore the delta environment, and that it may produce no new water or even result in reduced flows. This claim is based on the assumption that existing environmental laws and regulations will remain in place and be enforced, so too much water cannot ever be sent south.
Remember what happened on the Klamath River in 2002? The federal government decreed that less water was needed to preserve the salmon fishery, so more could be delivered to farmers. The result? More than 70,000 salmon died before reaching their spawning grounds. It took four years for a court to decree that the decision to reduce the flow was wrong, but the damage had been done.
So long as Sacramento River water going south has to flow through the delta, rather than around or under it, the Central Valley and Southern California cannot take all of it. But the Klamath River experience suggests that environmental laws and regulations alone cannot prevent excessive water withdrawals.
San Franciscans have a direct role to play in determining the fate of Hetch Hetchy reservoir by voting on Proposition F in this November’s election. Their role in addressing the issue of the Peripheral Tunnel is less direct. Without question, the current system for transporting water from north to south damages the environment and is vulnerable to disruption from natural disasters, ranging from drought to earthquakes. But fixing it involves finding a Gordian knot solution that links protecting the environment with ensuring a reliable supply of high-quality water via a mechanism not vulnerable to political pressure.
* Michael McGill served as SPUR associate director from 1973 to 1981 and executive director from 1982 to 1989. He moved to Washington, D.C., to serve as chief of staff and senior advisor on water policy to Senator Dianne Feinstein, and currently is a public affairs officer with the U.S. General Services Administration’s Public Buildings Service. The opinions expressed in this post are his alone and not necessarily the opinions of SPUR.