In reviewing the votes of the Anaheim Planning Commission over the past several years, you’ll start to wonder why we have any zoning regulations at all. Every time a developer goes before the commission for a General Plan Amendment, Zone Change or Variance the planning commission will grant the change or waiver the developer is seeking. The General Plan and zoning regulations are important tools any city has to guide their future development. By allowing developers to change that guidance at their will, the City of Anaheim is indicating that it’s not interested in where it goes in the future.

By contrast, the most economically successful city in Orange County, Irvine, has an unbelievable set of rules that are enforced with vigor. This has been especially true since Irvine recruited a number of people from Santa Monica into their planning department a few years ago. Irvine’s success has attracted many large and successful companies that pay top wages, especially in technology. Not everyone wants to live in a hyper-planned community like Irvine, but it is where people want to work and companies want to locate.

The path that Anaheim has set itself on ensures that many businesses will want to locate within the city. Unfortunately, they’re the wrong type of businesses. Anaheim is currently attracting businesses that have very low margins and are looking for any advantage they can find to improve their bottom line. They are willing to give up on nice buildings and smooth roads because they simply don’t have the money to afford to locate in a nicer area. Unfortunately, these are the same businesses that tend to have lower wages.

The City of Anaheim shouldn’t discourage any type of business to establish itself within the city. However, it should try to specifically attract companies that will offer high wage jobs even if that means some of the lower wage paying companies don’t end up locating within the city. Anaheim could attract companies like Blizzard Entertainment or Linksys into its business corridor, as Irvine has done, if it enforced planning guidelines and invested in beautifying and enhancing the roads and right-of-ways.

Anaheim is currently in a race to the bottom, but we seem to be racing against ourselves. We need to stop relying upon a doctrine that says less regulation creates economic growth and realize that one of our neighbors is eating our lunch by having more regulation than any other city in the county. The only way to attract good paying jobs into Anaheim is by creating a place companies want to call home. The only way to do that is by creating and enforcing rules ensure Anaheim is a desirable place to do business, that it looks nice, has low crime and a quality transportation network.

A few weeks after making my initial Anaheim Anytime request, I received a call on my cell phone from somebody saying they were with the City’s transportation department. They were calling about an email I sent and wanted to get some more information. Of course, I hadn’t sent an email and had no idea what the person I was talking with was talking about. I tried to ask for some clarification but had difficulty cutting into to this person speaking a mile a minute. Eventually I deciphered that the call was about my Anaheim Anytime request and we started to move on.

Now, if you have AT&T as your cell phone provider and live in Anaheim Hills, you’ll know that the cell service isn’t the most reliable. After a frustrating forty seconds on the phone, my phone started to cut out. I tried asking for a phone number to call her back, but it was too late, she could no longer hear me. And yet, I could still hear her, because as she was hanging up the phone, I heard her say to someone else, “That asshole hung up on me.”

Over the years, I’ve come into contact with many city staff members through my work, as a member of a city board, and simply as an engaged resident. Never before had a city employee spoken to me in anything but a respectful and professional manner. And it turns out that a city employee still hasn’t spoken to me in anything but a respectful and professional manner. Unfortunately, the City Council has decided to outsource many of the job from within the city to private companies. The person I was talking to about my Anaheim Anytime request happened to be an employee of one of these private companies.

There is no doubt that, over the long term, government employees are expensive. Mostly due to retirement benefits. To put this retirement benefit into perspective, it’s useful to look at the present value of their pension payouts. In other words, how much money would someone need in the bank today to retire with an annual income similar to what a government employee makes from their pension?

Let’s say that the retirement income in $40,000/year is current year dollars. Let us also say that the average inflation rate is 4% per year and that the income is taxed at 25%. Finally, let’s also assume you can get a return on your investments of 2% above inflation. Given these assumptions, a retiree would need $8 million in the bank to get the same type of income government employees make from their pension. Eight million dollars is a lot of money, more than most people save for retirement. In fact, to save $8 million, it requires putting away $130,000 per year over a forty year career (assuming it grows 2% above inflation and is tax free.)¹

The appropriate way to look at a public employees compensation is their salary plus $130,000/year in retirement benefits.

So we can see that public employees are expensive over the long term, and when you’re just looking at the bottom line it makes sense to try to outsource as many job functions as possible but in doing so we also lose a certain amount of quality in the work preformed by government.

Dead-weight loss is a term that normally refers to the affect taxes have on a standard supply and demand curve and describes the inefficiencies that come about through taxes. Because of taxes, producers make less profit on sales, so they produce less while purchasers have higher prices so they buy less. The relative burden on producers and purchasers is determined by the slopes of the supply and demand curves. Outsourcing jobs, as Anaheim has done, produces a perverse dead-weight loss, an inefficiency, that behaves just like raising taxes.

Instead of a tax bringing the quantity of goods produced down, the profit the private companies extract from their contracts with the city behaves in the exact same way that a tax would. Anaheim is paying a certain amount for services and instead of all of that money going to the people who are actually preforming the services, as it would if they were city employees, some portion of what the city is paying is being diverted towards profit for the companies it contracts with.

The end result of this type of dead-weight loss is that the city is unable to get the same amount of services as they would if they spent the same amount of money on city employees.

In the end, Anaheim is left between a rock and a hard place, but there is a way out as demonstrated over the past few years by the Anaheim Union High School District: negotiate with the public employee’s unions. Anaheim residents and tax payers are not getting the quality and quantity of services that they’ve paid for due to the city outsourcing many government jobs.

The public employee’s unions want to keep the number of employees high, the more employees they have the more power they have. They should be willing to negotiate on pay and retirement benefits in order to stop the outsourcing of government jobs.

Unfortunately, the current mayor and city council seem to have no interest in negotiating with the employees and their unions and instead have worked hard to outsource as many jobs as possible within the city. While outsourcing these jobs might help the city’s finances in the long run, doing so also severely decreases the quality of services residents receive when interacting with Anaheim “staff”.

There hasn’t been anything of note in either the City Council or Planning Commission agendas over the past few weeks. However, there are two items of interest in the agenda for next Monday’s meeting.  The first is a proposal Mayor Pringle first announced at the State of the City last month to refund half of all city sales tax on large purchases.  The second is a zoning code amendment to help minimize the opportunity for graffiti in Anaheim.

Item #10 – Providing a partial rebate of local sales tax to encourage and promote major purchases

If approved, this new program called the Anaheim Purchase Initiative (API), will provide a rebate on all purchases over $20,000 made in Anaheim. The City of Anaheim receives 2% of the price of goods bought in the city as its portion of sales tax. API will refund half of its share of the sales tax, 1% of the purchase price, back to the buyer. The net affect for buyers will be a 1% reduction in the cost of goods in the City of Anaheim.

This program is a bit of a gamble, even the staff report says there is an unknown impact on the City’s general fund. The logic behind API is that businesses will take advantage of this program and start spending money now instead of waiting until the economic recovery is more established. In other words, this will move spending up and hopefully jump start new growth for Anaheim businesses. The risk is that companies will take advantage of this program now instead of spending money later. If Orange County faces a double dip recession, API might not spur the medium-term growth and renewed economic vitality that is hoped for.

Even knowing that API is a gamble, this is a good proposal.  If we do suffer a double dip recession, and Anaheim doesn’t see the returns on investment that might be expected from this program, all that will be lost is a bit of tax revenue.  An amount that will be a drop in the bucket considering the entire size of Anaheim budget.  However, if we’re truly coming out of this recession and this program is successful, this will spur growth in Anaheim, buoy its employment base, and in the long run increase the desirability of Anaheim as a place to live and work.  This, in turn, will raise property values and property taxes, which will increase the City’s general fund many times over the cost of this program.  API has its risks, but they are risks worth taking.

Item #15 – Zoning amendments relating to various anti-graffiti measures

Over the past couple of years, Anaheim has been cracking down on the graffiti throughout the city.  The City itself has the Anaheim Community Anti-Graffiti Effort and residents have made Anaheim Beautiful much more active in combating graffiti.  Now, the City is working on finding ways to change our built environment to discourage graffiti.  While I’m a big proponent of using design to change behavior, this specific proposal is too narrow in scope.

First, there is this change:

.020 Landscape Maintenance. All landscaping, including parkway landscaping, shall be maintained in a neat, healthy and clean condition. A regular maintenance schedule shall be submitted as part of the landscape and irrigation plans. Any dead or diseased plant shall be immediately removed and appropriately replaced in accordance with the requirements of this chapter. All pruning or trimming of required trees and specimen trees shall be in compliance with the standards for street trees adopted by the International Society of Arboriculture, and consistent with Chapter 13.12 (Street Trees) of the Anaheim Municipal Code.

If I’m reading this correctly, if a plant next to a wall or fence dies, the property owner will be forced to replace that plan with a non-deciduous vines or shrubbery to cover the wall. It doesn’t matter if the vines or shrubbery fit in with the overall landscaping of the property, or if the wall has been a target for graffiti, the property owner will have to comply with this section of the zoning code or be at risk of being cited for being out of compliance with code.

I do understand designing new developments to address the problem of graffiti and even to work towards reducing the amount of graffiti on existing buildings.  But this proposal seem onerous and expensive for Anaheim’s property owners.  This code amendment imposes a one-size-fits-all approach to addressing Anaheim’s graffiti problem.  There are many ways of changing the existing built environment to reduce graffiti.  The City of Anaheim needs to explore other alternatives for property owners.  Additional vegetation on walls and fences is just one solution to this problem, it is not the only one.

Yesterday was the Anaheim Chamber of Commerce’s annual State of the City event.  There were a number of interesting initiatives that both the City and the Chamber are attempting that I hadn’t heard about before.  I’ll post more about these once I have a chance to do a bit more research, but from the event yesterday, here is a short list of developments that were of interest:

• The Chamber is trying to form an Enterprise Zone in Anaheim.  They didn’t mention where in the city the Enterprise Zone would be, but I would expect that The Canyon would be the most likely place.
• The Mayor announced an initiative that he is trying to get adopted by the City Council to refund one half of the City’s part of the sales tax on all large purchases of $20,000 or more.  He wants this program to run from February until June, in order to help spur the local economy and encourage large purchases from local businesses.
• The Anaheim Fixed-Guideway Transit Corridor has been renamed Anaheim Rapid Connection (ARC).  Additionally, Anaheim has launched a new website and branding campaign for all of the City’s transportation related projects called A Connext.  This is especially exciting because it shows the City’s understanding that all of our transportation amenities form an interdependent network for people to move around the city.
• Finally, Mayor Pringle talked about the successes of AC-NET over the past year and also mentioned that the City received a $5.8 million grant to help create a smart grid for the City and encouraging the creation of renewable energy for Anaheim.  This is particularly timely for Anaheim 2060 because there is a post on renewable energy scheduled to be posted later today.