Fort Bragg City Manager Tabatha Miller wrote in this week’s report to her City Council: “What we don’t know is how long this recession will last. The thought that the recession length and depth would look like a V with a quick deep drop followed by a strong recovery has been largely discarded in favor of the swoosh, with its quick deep drop and gradual recovery.”
Swoosh. That's what they're calling the economic “recovery.” We first noticed the swoosh concept in April (before it was swooshing) when County Auditor Lloyd Weer told the Supervisors that his expensive Sacramento financial consultant called “HdL” had predicted that there would be a dip in tax revenues associated with the covid-recession followed by a “gradual recovery” over the next three years or so to something like pre-covid levels.
In May Mr. Weer told the Supervisors: “In FY 2021-22 [July of 2021 to June of 2022] it is expected spending will begin to increase and build back to pre-COVID levels by 2024-25 as businesses find new ways to operate with fewer employees and more moderate capital investments.”
“Fewer employees” and “more moderate capital investments” does not sound like a formula for “build back.”
Weer continued: “Forecast will be reevaluated as more is known about the progression of COVID-19 related events. Business-level sales tax data from the State reflecting the first weeks of this crisis arrives at the end of May; data reflecting the April-June impacts will be available in August. …”
So far, no new or updated forecasts (the tax revenue data lags by several months or more) have been presented to the Supervisors and no new “data reflecting the April-June impacts” which were supposed to be available in August have been offered.
These finance consultants, many of them paid to produce forecasts that their tax-funded customers want to hear, all assume that there will be an economic recovery of some kind, that life pre-covid will resume or at least approximate resumption. But there’s plenty of reason to think that, at best, the economy will stay flat for the foreseeable future — or even decline further, a decline accompanied by more homelessness, food shortages, massive social disruption, and increased civil disorder, not to mention unpredictable weather caused by accelerated global warming, and mass medical emergencies via covid. Even by their own words the forecasters admit that the “recovery” will involve “fewer employees.”
Last week the San Francisco Chronicle reported that “more than 2,000 SF area businesses are permanently closed” (many of them restaurants) and thousands more say they are “temporarily closed” (with no estimated date of re-opening) based primarily on Yelp data. “There is going to be no restaurant that survives this unless you own your own building, you’re part of a national chain, or you have a trillion dollar backer,” said one prominent Oakland restaurateur. Further, California has seen more permanent closures than any other state, and the Bay Area is listed as suffering the highest number of closures in California. In general, tourism-based economies like Mendo’s are the hardest hit.
Yet Mendo continues to blithely assume the recovery will “swoosh” and does not even talk about Plan B options if (when) it doesn’t. We are now in the middle of August and we see no indication that Mendo’s crack finance team is working on what to do if the swoosh fails to swoosh, a backup plan being be the minimum one might expect. The only efforts Mendo is making are a (partial) attempt to cut (some) outside contracts by 5%, a soft-hiring freeze, and a pathetically petty attempt to “collect service fees for Animal Care Services.”
Meanwhile, Mendo is spending lots of time and money dealing with the covid emergency without knowing how much of that cost will be reimbursed, buying new buildings, hiring a new Health Officer to overlap with the current one, contact-tracing more and more people, and continuing with in-process capital improvements. Not to mention the sheriff’s obvious overtime usage for Round Valley and other incidents. In fact, so much time and money is being spent on covid that the Supervisors have voluntarily restricted their own questions of staff to somehow save time!
“The recession has begun with major impacts in FY 2019-20 and 2020-21. FY 2021-22 the economy is expected to begin a slight incline but will take until 2024-25 to pass FY 2018-19 tax levels,” said CEO Carmel Angelo in May. Then, repeating Auditor Weer’s contradictory wording verbatim, Angelo continued, “Businesses will emerge with new ways to operate with fewer employees and more moderate capital investment.” Angelo concluded, “It will take consumers time to fully get back to previous levels of leisure travel, dining and spending. Estimate five years to get back to pre-COVID tax levels.”
But Mendo’s biggest expense is salary and benefits, with the average employee costing taxpayers well over $100k per year in total salary and bennies.
With last year’s big salary increase for all employees — especially top management — Mendo has set itself up for a big fall if the swoosh doesn’t materialize.
That swooshing sound you hear, just might be the local economy going permanently down the drain.
BESIDES THE USUAL COVID REPORT and health order updates, the Supervisors have several significant but easily overlooked non-routine matters on next Tuesday’s agenda:
• Extension of eviction moratorium to September 30, 2020 (or later if extended by Governor).
• Finalize the purchase of the former Nursing home on Whitmore lane for $2.2 million.
• Hear a presentation on the long-awaited Homelessness Strategic Plan with its promised inclusion of the recommendations of the famous Marbut report from two and a half years ago now.
• Hear a presentation on planned public safety power shut-offs by PG&E.
Approve spending $3.7 million to build the Crisis Residential Treatment facility next door to the Schraeders’ offices on Orchard Avenue. That’s $3 mil for the building plus $700k more for “soft costs and contingencies” including $321k for “construction manager.” (On top of an additional $750k for design and planning.)
Increase outside lawyer costs by $50k for legal costs associated with former Ag Commissioner Harinder Grewal’s lawsuit concerning his claim of unlawful termination against the County.
Finalize payment to a previously undiscussed Ukiah consultant who audited the jail’s healthcare contractor to the tune of $255k over the last three years. (We have not seen the report, and it has not been posted on any county website that we are aware of.)
Consider purchase of three (3) Ukiah motels: Two Motel 6s and the Best Western two doors down from the Schraeders on Orchard Avenue.
The proposed motel purchases are hidden deep in the agenda under “closed session/property negotiations” with no identification other than their street address which, when we looked them up, turned out to be the three Ukiah Motels. There’s no explanation why they’re being considered, what they’ll be used for, why they’re for sale, or what funds will be used if they are purchased.
That makes five new buildings which will likely be added to the County’s fixed asset list soon, with only one of them having an identified funding source. And that one with the funding source — the Crisis Residential facility on Orchard Ave — is a hugely overpriced, gold-plated project that probably wouldn’t be necessary if part of the Whitmore Lane Nursing Home was used for crisis residential patients. The only reason it’s being pursued is that Mendo accepted a $500k grant for the bare ground from the state a few years ago for non-Measure B mental health services and they didn’t want to give the grant back. As a result, they’re paying well over $4 million for a brand-new glorified motel suite, instead of buying and remodeling an existing four-bedroom house for under a million. This gold plated building just happens to be next door to the Schraeders’ $20 million mental health services hub so no extravagance is too much. However, that’s $3 million or more of Measure B money that could have been spent on more practical existing facilities and/or service upgrades.
Perhaps more information on the CEO’s property shopping spree will be made available at the Supes meeting, although the motel purchases are being discussed in closed session so that will probably remain undisclosed. For all the County’s talk about “transparency,” it’s actually harder to find useful information or figure out what the County is doing than it ever was.
FORT BRAGG COUNCILMAN BERNIE NORVELL explains what Mendo should have explained when the buried the procurement of three motels on Tuesday’s Supes Agenda under closed session without identifying the motels or the purpose:
“The funding for the three hotels in Ukiah is from Operation Homekey. Counties and cities across the state will identify which buildings they intend to purchase and apply to the state for $550 million in grant funding dedicated to this purpose. Once acquired, the local governments will plan for the long-term social services and subsidy needs of the Homekey buildings, with access to $50 million in dedicated Homekey support and an additional $300 million in general local homelessness support which can be used for Homekey, among other priorities."