Big Budgets and Public Art
In Which: I return, Council talks public art fees, Our tasty water will cost a little more, And the City's budget gets approved despite the deficit.
Welcome back to our regularly scheduled news! I’m only just recovering from the time zone changes, but after 2 weeks there’s a lot of news to cover. This meeting happened on the 17th, just so you know. Also, we’ll be at the Hayward Night Market at St. Rose Hospital on Saturday. Swing by and say hi. We’ll have special Hayward Herald stickers!
Secret Meeting Updates
The City Council is allowed to meet in Closed Session to cover sensitive topics like personnel, negotiations, and litigation. A lot of this is speculation and educated guesses, but it’s informed by public reports and court documents when possible.
Former HPD Chief Sues City
Former HPD Police Chief Toney Chaplin is apparently suing the City of Hayward over worker’s compensation. After a brief stint leading the department—during which there were also 5 confirmed officer-involved shootings—from 2019 to 2022, Chaplin took extended medical leave. Then-Captain Matthews was running the department for over a year before Chaplin stepped down.
It was never clear what prompted the extended leave, but clearly Chaplin—who pulled down close to $300,000 per year—didn’t like how the City handled their end of it.
Dr. Alvarez Definitely Out
After being put on paid administrative leave several weeks ago in response to outcry from City employees, Dr. Ana Alvarez’s status hasn’t been fully clear to the general public. Everyone assumed she was definitely let go, but with City Attorney Lawson in place as “Acting” City Manager and extended employee performance discussions in closed session, nothing seemed settled from the outside. Until now.
Dr. Alvarez’s paid leave was extended to today (June 24), likely to coincide with the appointment of Library Director Jayanti Addleman to the position of Interim City Manager. Council voted unanimously for the appointment and it will officially take effect today—the day Alvarez’s leave ends.
Addleman is expected to have the role through the end of the year, which would give Council time to open up a new search for a City Manager.
Public Art Fee Will Come To Hayward
The City of Hayward is looking for a way to pay for public art, and they’re considering an Impact Fee on development to cover it. The City already has over 200 public art pieces, mostly murals and painted signal boxes, that have been paid for by the $25,000 annual budget of the Art and Mural Program. But at the request of Councilmember Andrews, the City is looking to find a way to grow the program and wants developers to pay for it.
This would be the third Impact Fee in the City—after Park and Traffic Impact Fees—to have been added since 2019. The idea is that a developer pays a small percentage fee to help cover public goods. For Traffic, it would pay for the traffic impacts of the development, for example. In order to enact the fee, something called a Nexus Study is required by State Law.
The study will be paired with a Public Art Master Plan—developed in-house to save money—and both the Plan and the Study will involve a lot of community outreach and input. “Right now we’ve done a great job putting art in the City, but there are no guidelines,” Staff said. “Now it’s better for us to actually have a plan.” The timeline is expected to be 9-12 months, and money won’t be collected until another year after that.
The whole project is expected to cost $100,000 to start. And while they don’t know how much money the fee will bring in, they took a guess at what it would have brought in if it had been 1% for FY 24, and that would have generated about $314,000. Some of that would need to be spent on Staff to manage the program and the amount would vary from year to year depending on development activity. Still, it’s a lot more than the $25,000 being spent right now.
Public Art Makes Money
Everyone on Council was supportive of the Public Art Impact Fee. Councilmember Zermeno, who said he’s been “an early proponent of murals back in 1994,” expressed strong support. “Let’s do this,” he said.
Councilmember Andrews, who frequently frames art as an economic benefit, said, “I’ve been looking forward to this.” She asked if there were interim plans to incorporate art into infrastructure projects. “We’ve been seeing some of that art happen organically,” she said. Staff said that the current $25,000 budget will continue to fund projects.
However almost everyone on City Council seemed to support Public Art solely because of perceived economic benefit, which countered any budget concerns. “This is not a good time to be asking for funds to do such a thing,” Councilmemeber Roche said, despite supporting the idea. She wished the Staff Report had included “just what public art does to stimulate the economy.”
Even Councilmember Bonilla, the most vocal budget hawk on Council, supported the $100,000 price tag. He supported “making our community feel more alive, more vibrant” and that it would convince people to “spend more time in Hayward, spend more money in Hayward.”
Mayor Salinas felt similarly. He told an anecdote about alleged controversial statues in cities like San Leandro. “But what happens when you go and look at the statue? You go grab something to eat,” he said with a laugh.
Councilmember Syrop focused mostly on placemaking. “When we think of landmarks in Hayward, we’re kind of stretched thin,” he said. “Now we have a water tower and maybe All Saints and… The Loop? I don’t know.”
Councilmember Syrop pushed back on framing art only as a money-maker. He made clear that he didn’t want the Economic Development Committee to be the decision-making body. “I really want us to be deliberate about the selection process,” he said, and pushed for community involvement. Staff reassured him that the Plan will have details on how decisions are made.
Hayward Has To Pay For Good Water
Water rates are set to rise about 6% a year over the next two years after Council approved new rates. The primary drivers of the rate increase are the cost of buying water from the San Francisco Public Utilities Commission (SFPUC), funding the water reserve fund, and paying for replacing old pipes. The rate increase will go into effect in October of this year.
For those who don’t know, Hayward buys all of its water from the SFPUC’s Hetch Hetchy Reservoir and has since the mid 1950s. The water is widely regarded as some of the cleanest municipal water in the United States. If you’ve been drinking Aquafina or La Croix, you’re drinking Hayward’s water—Aquafina is bottled in the Pepsi plant and La Croix is bottled at the Shasta plant.
The water bills for most people will only go up a little bit—around $2 per bill. And compared to other cities that also buy 100% of their water from SFPUC, Hayward is the most affordable by far—about $20 per year cheaper for residential customers.
Part of that is because the City subsidizes the rate increases from SFPUC—which at one point were as high as 9%. The City is still subsidizing the rates, even with the proposed increases, by $6,000,000 this year and $4,000,000 next year. Replenishing the reserves is also one reason for the fee increases.
The rate increases will take effect October 2025.
Reigning In A Growing Deficit—Together
According to Acting City Manager Lawson, the budget deficit has grown from $12,600,000 to $16,100,000 since the last update in May. But Staff worked to identify $7,200,000 in one-time savings to bring the actual deficit down to $8,900,000—which is still around 4% of the budget.
Interim Finance Director Etman stressed during his presentation that the biggest sources of money for the City are from property tax, sales tax, and the Utility Users Tax. Unfortunately, the City can’t control most of that directly, so cuts are often made from the cost side. And 80% of the City’s cost is in people—salary and benefits, technically.
“When you’re trying to make significant structural changes, you really do need to make a structure change to the salary and benefits side,” Director Etman said. The cuts they made this time around can’t be repeated and came from liability insurance reductions, transferring 238 money to the General Fund, and vacancy savings from unfilled positions. “These are not ongoing measures,” Etman said.
The City will discuss the budget at least two more times during the year, in November and February, which should allow time to make changes and adjust things. Staffing cuts of some kind are coming, and labor groups will be negotiating before the Fall revise in November.
Adjusting Staffing and Overtime Costs
When Councilmember Bonilla asked how the number went up since May, Director Etman said that $3,500,000 additional came from Fire Department overtime costs. Apparently there were “premature” decisions made about the overtime. Councilmember Syrop asked how that was possible since the MIHU was cut specifically to address overtime. Director Etman said that the cost was in addition to the MIHU savings, which were already accounted for.
Councilmember Bonilla asked if the City had an appropriate amount of staff for its size, but Director Etman said it was mostly an issue of being able to support the salary and benefits the City is offering.
In fact, when Councilmember Goldstein asked how to prevent this, Assistant City Manager Youngblood said that the City needed to better understand salary impacts on the General Fund. “We need to look at our fiscal situation prior to going into negotiations and understanding exactly what we can and cannot afford.” Councilmember Goldstein responded, “We had that.” Apparently the analysis was not sufficient.
Think of Economic Development!
One of the places that the one-time savings came from was the Economic Development Department. This panicked many people on Council, including Councilmember Andrews. Despite being reassured by Acting City Manager Lawson that funds could be moved back if needed, she called up the Economic Development Director to lay out the programs affected.
The Director explained that the affected programs were the programs funded by ARPA money—the #Hayward initiative, influencer program, that kind of thing. He also said that many of the programs were going to be sunset anyway because of cost—the ARPA money was several million compared to the quarter million they usually have—and because they’re down a staff member now.
Councilmember Andrews still pressed to have the funding returned. “That is a very important area that I would like to see continue to grow, not reduce,” she said. Councilmember Roche agreed, misrepresenting it as a cut to the departments funds—though Mayor Salinas later clarified that it is just discretionary programming funds. But she still pressed for the funds to be returned.
Mayor Salinas laid out the argument succinctly. “[Economic Development] is the one department that generates revenue, generates jobs, and it generates property taxes.” He said that Economic Development was “one department that we’re all committed to and the one department that really generates… economic enthusiasm.” He said he wants cuts to be as far from Economic Development as possible.
We’re In This Together
But no matter what, cuts are coming to City Staff. Councilmember Roche said that the City will need to “start reeling that in” in regards to salary and benefits costs. Director Etman said that they will do a full position analysis for the Fall revise. And everyone on Council framed this as needing to be a group effort with labor groups.
Unfortunately, a representative of SEIU wasn’t so excited about where the discussion was focused. He pointed to executive salaries, for example the increase in the City Clerk’s salary. “I don’t hear anything about what you’re doing to decrease management or to correct the wages that management receives.”
Councilmember Syrop addressed the comment later saying that he includes HAME—the Hayward Association of Management Employees—whenever he mentions labor groups. “We’re, as a Council, putting everything on the table,” he said.
Mayor Salinas also stressed past cooperation with labor groups. “When we have asked our labor partners to come through and help sus get through tough economic times, they’ve showed up… We’re in this together… We’ve just got to trust each other.” Though the Mayor spared a snide comment for SEIU’s calling in during public comment.
New Programs Will Be A Luxury
Acting City Manager Lawson set a certain tone regarding the City’s future. “There won’t be new programs,” he said. “Can’t afford it. Programs will be a luxury.” Although Councilmember Goldstein said, “That could be a problem since we are a growing city,” others Councilmembers also pushed back.
Councilmember Syrop pushed back on the idea of new programs being a luxury. “It’s our job to figure out how to make it work,” he said. “[We need to] be mindful of the kinds of investments we want to make that will yield greater returns… I don’t want us to operate with too much of a scarcity mindset.”
Councilmember Andrews also felt the need to defend the Public Art Impact Fee she championed. “[It] does seem odd during this time, but this is something that we havec been waiting for for years.” However, she continued to tie it mostly to economic development and cost savings— “a way to reduce maintenance,” she said. “This is a relatively small ask as it relates to studies.”
Acting City Manager Lawson then backtracked some and said that the City has had some “encouraging conversations” with the County regarding Measure W funds. These funds, for those who don’t know, have been caught up in a legal battle for years and should be allocated to homelessness and housing—though there’s still some debate about how much will be given to Hayward.
The City Council eventually approved the budget unanimously.