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Will Alameda Declare Bankruptcy?

The City Manager for Vallejo is recommending to council that the city file Chapter 9 bankruptcy to get out from under a $16 million shortfall looming for the June 30th budget deadline. Is the City of Alameda far behind in declaring bankruptcy?

The City of Alameda is facing it’s own budget shortfall this year, although, unlike Vallejo, Alameda has reserves. But for how long can the City of Alameda keep dipping into their reserves?

Further, the study of transportation alternatives for Alameda Point by WRT Solomon indicated that none of the three alternatives presented are “fiscally neutral” – meaning all three alternatives cost the city more money than the revenue they generate. The report goes on to note that “General Fund property tax revenues are limited due to the fact that Alameda Point is located in a redevelopment project area” – meaning that the use of redevelopment in Alameda will aggravate the budget problem, today, and in future years.

Adding more retail is not going to solve the problem – even if the City of Alameda were to recapture all of the sales tax on the estimated $41 million of sales leakage, the 1% share of the sales tax that Alameda receives amounts to merely $410,000 per year – a drop in the bucket. And city leaders show no real interest in trying to explore retail sales tax sharing agreements with neighboring cities like Emeryville, Oakland and San Leandro that have built a lot of retail.

It’s time for Alameda City Council to reverse a path that is surely parallel to that of Vallejo’s – they need to terminate the Alameda Point redevelopment project so that property taxes generated from Alameda Point can reach the general fund in full.

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