At the November 20, 2018 El Cerrito Council meeting the new independent City Auditor Ahmed Badawi presented on the findings.
First a bit of history. The City of El Cerrito’s last 6 audits were conducted by the same auditor. For the 2016-2017 audit, the El Cerrito Financial Advisory Board (FAB) recommended that the city put out a bid for a new auditor. The bid was late and as a result, the 2016-17 audit only recently came before the City Council in November. Although the auditor completed the final Comprehensive Annual Financial Report (CAFR) in August of 2018, it is not known why the presentation to the Council did not occur until this November meeting.
The findings of the auditor are sobering, according to City Council Member Quinto. To see the video please click here and then go to the Baldawi presentation. Findings included the following:
- For the last three years the City has been borrowing money from the General Fund to various agencies such as Integrated Waste Management. Those loans totaled about 2 million dollars. For the most part very little if any of that borrowed money has been repaid. The auditor stated that typically loans such as these are used as bridge funds.
For example, city projects that are grant funded are often reimbursable grants. The City can temporarily use general funds to front projects costs and the City is then reimbursed. This is generally done on a quarterly basis and considered short-term. However, in this case, funds have been outstanding, without reimbursement for almost three years. As a result, the “so called” balance budget reported by the City staff, and passed by the Council, is by no means balanced. When funds were transferred out of the general fund it was done without action by the Council and without a plan for repayment. The auditor also reported most of those agencies did not have any identifiable ways to pay back the money. He also stated in most cities something like this would normally be approved by council and there would either be a write off of these funds or a repayment plan.
- As a result of the above borrowing for the the last three years, the city budget has been showing these loans as assets even though they were not. That money should have been marked as unusable. Essentially the city was spending money they did not actually have.City staff convinced the auditor to postpone the adjustment of the city budget for this approximately 2 million dollar deficit for FY 16/17 until the completion of the 2018 audit. There is the suggestion that revenues not previously reported may be forthcoming and reimbursed into the General Fund based on the timing of the review. The auditor reported that thus far in FY 2018 approximately $300, 000 has been repaid. He anticipates a budget deficit of over 2 million dollars.
- According to the auditor, the deficit needs to be addressed before any other spending priority. The city cannot operate with a negative balance sheet.
- During the presentation Councilperson Abelson suggested using transfer tax monies (the result of the passing of Prop V). City staff also said none of that money should be spent until this was figured out.
- Other council members asked questions that seemed to indicate that they did not understand the severity of this issue. They were talking about building a reserve. The auditor clearly stated you cannot have a reserve if you have a deficit.
- There was no discussion on how this happened or what was going to change to make this not happen again. The auditor suggested a policy that such loans be approved by city council and the council asked if other councils did this. He answered” yes.
- The auditor also found a few additional deficiencies. A prior financial report had to be amended due to be incorrect.
- The closing of the fiscal year was reported to be not done in a timely manner.
Again the auditor is currently working on the FY2018 audit and more information will be known when that report is completed.
When El Cerrito adopted the El Cerrito Affordable Housing Strategy the staff identified four pillars to address affordable housing needs. The Community Workshop (above) emerges from staff’s research to address the second pillar: Reduce the Risk of Displacement and Stabilize At-Risk Populations. In other words, mitigate gentrification as the region grows in this next decade and protect those renters who are on fixed, low or middle incomes and paying over 50% of their income in rent.
In early November, City Staff hastily organized a Community Workshop on Tenant Protections. It was no surprise that only a hand full of tenants attended, matched by a similar number of landlords. The majority of those in attendance were members of El Cerrito Progressives, including tenants and allies. We learned that non-binding rent mediation anchored the proposal for tenant protections. Also known as the Rent Review Program, once implemented, the tenants and landlords sit down together when there is disagreement on rental terms. Sounds good? Let’s say the mediator decides that the tenant has a case and that the 20% rent increase is unwarranted, that would be a victory for the tenant, right? Wrong. The mediation is non-binding and the landlord can ignore the mediator’s decision. According to Carol Lamont, previous Housing Director for the City of Fremont, and the developer of a rent mediation program for the City of Fremont:
The best the mediation process offered was additional time for tenants to move out before a rent increase that they could not afford went into effect. Now I have been told by one of the mediators, who is a long time resident, that Fremont’s ordinance is useless, and that it reflects poorly on the City.
Many members of the audience urged staff not to put forward the Rent Review Program. Audience members cited poor evaluation reports of similar programs from San Leandro and Concord as well as Fremont, all pointing to the weaknesses of non-binding resolution. Even landlords spoke up against the program, but for obvious different reasons.
But most voices were muted, and continue to be muted over the call for a Rent Review Program. The Rent Review Program will be heard by the City Council on December 18th, when our local officials make decisions on tenant protections. Tenants and homeowners continue to be concerned that the protections being suggested will be too little too late. But there can be an alternative or additional course of action.
When the Human Relations Commission met in September of this year, Commissioner Makalia Aga raised the issue of a moratorium on rent increases and help with eviction. As a long time resident, senior citizen and renter, she faces a 20% rent increase in the next few months, and worries about her future in El Cerrito. Members of the Commission took up the banner and returned the following October to present a strongly worded resolution recommending that the City Council adopt an anti-gouging measure and just-cause eviction ordinance to protect tenants. They voted in the majority to bring the resolution to the City Council for the November agenda. So where is that resolution and why does it not appear on the November Agenda?
El Cerrito Progressives and other concerned residents will be at the meeting on Tuesday, November 20th to ask that question, and hopefully reset the volume so that tenants can truly get some needed protections. (BTW – we know there are good landlords and encourage you to join us !)
To see more on this interactive map please follow the link: Map
El Cerrito is not immune to the Bay Area housing crisis that finds long term residents forced to move or pay an extraordinary percent of their income toward rent in order to stay. Although the City Council is looking into short and long term solutions for tenant protection, the City Council’s lack of support for a temporary freeze on rent hikes may result in some families packing their bags and leaving. For example, a resident writes about their story (September 2018) of displacement in El Cerrito Next Door.
“We moved into El Cerrito 9 years ago and paid $2375 for a 3 bedroom, 1 bath. We had a neighbor that was downstairs. During the nearly 8 years we lived there, the rent increased to $2,575 in the last two years of our tenancy there. Last year, owner decided to sell and we had to move. When we looked around May/June timeframe, the going rent was minimally $3,500 for a shared rental. This year, and one year after our last move, we were given notice again to move as the owner is selling. The going rate now is $4,100. I think this is reflective of a rental hike. Needless to say, we couldn’t justify living in El Cerrito anymore and just moved out to Pinole this past week before our 3 kids starts school.”
Another renter of El Cerrito (who chooses to remain anonymous) found herself sleeping in her car after her landlord raised her rent from $1,100 to $1,600 a month. As resident renters struggle to stay in their apartment, the risk of homelessness grows. Not surprising, research conducted by Zillow last year predicts that rising rents will see an increase in homelessness in urban areas. For example, a 5 percent increase in Los Angeles rents would lead to roughly 2,000 additional people experiencing homelessness. Zillow Rising rents and Homelessness
What can residents and local politicians and policy makers do to stop the bleeding of our local low and moderate income seniors, workers and residents?
El Cerrito Human Relations Commission speaks out on El Cerrito Housing Crisis
At their September meeting, members of the Commission listened to testimony from residents about the perils of rent increases, including a story from one of their own Commissioner’s, Makalia Aga. Commission members agreed that housing as a basic right is under the purview of the Commission, as is a call to action to prevent our community from being an elite city, affordable only to those with high incomes. Commission members will be voting on an action to take a resolution for a rent/eviction freeze to the El Cerrito City Council.
Time is Running Out for Renters. As our City Council and other cities seek to develop their commercial area, housing stock and ultimately the health of their city budget, demographic changes are inevitable. According to the Urban Displacement Project (UDP), research on gentrification and displacement bears out the importance of not only increasing production of subsidized and market-rate housing in California’s coastal communities, but also investing in the preservation of housing affordability and stabilizing vulnerable communities.Download the Research Brief here.
Stephen Barton (El Cerrito resident) and Eli Moore recently prepared a report for the Haas Institute, making the case that relief for renters must happen now, and that rent control and just cause eviction although not the only solution, is part of the five pillars to ensure that a city like El Cerrito maintain it’s economically diverse population. Read the full report here: The PDF _Rent Control- Opening the Door 45 minuteVideo Presentation
Do you want to be more involved in creating protection measures for tenants in our city? Please contact us at: firstname.lastname@example.org
VOTE YES ON 10!
The housing market is booming for homeowners while tenants face skyrocketing rent increases in El Cerrito. At a recent El Cerrito City Council Meeting, Human Rights Commissioner Makalia Aga reported that she and other seniors living in a property on Liberty Street were facing a rent increase of 20%.
El Cerrito Progressive members met with the Aissia Ashoori, Housing Analyst for the City of El Cerrito to discuss tenant protections and potential actions including rent stabilization, just cause eviction protection and a moratorium on rental increase while setting plans in place. Ms. Ashoori is continuing to seek out input from residents to shape further action.
Listening Session on Affordable Housing Rent Scheduled for Tuesday, August 21st at 7:00 p.m. City Hall
Please contact us if you would like to share your story about your experience as a renter in El Cerrito.