The Case For Cityhood
The El Dorado Hills Citizens for Cityhood prepared a brief presentation outlining the expected benefits of becoming a city. The El Dorado Hills CSD received this presentation at their regular March 13 meeting and again at a special session with greater public involvement on April 3. While the public was allowed to comment, there was no interaction or debate with either the EDHCC or EDHCSD members. Public comment was limited to 3 minutes per person. Suffice to say that this was generally a one-way communication.
Both presentations, which are essentially the same, are published on the El Dorado Hills Community Services District Exploring Cityhood web page. In order to avoid any copyright issues, I have not made the presentations available here. You can download copies from the EDHCSD site. That web site also has a complete timeline of the current actions regarding this attempt at cityhood. Since the EDHCSD is everwhelmingly in favor of cityhood, do not expect to see any information that would challenge the current cityhood effort.
Click on each slide below for a critical discussion of the information presented.
Slide 3 - Current Situation
The slide notes that the EDH Census-designated population is larger than any city in El Dorado County and that our tax base funds the rest of the county. This is true, but not a compelling reason to become a city.
Bullet 2 states that although the CSD is focused on parks and recreation, major decisions are made by the County board of Supervisors and only one Supervisor lives and represents EDH. This is misleading. Although two other supervisors do not live in EDH, their districts include a portion of EDH.
The presentation claims that the current CSD model no longer meets local needs. However, the slide fails to mention any concrete examples of needs going unmet.
Bullet 5 makes the point that EDH taxes fund much of the county and that EDH residents contribute more in taxes than thay receive in services. While this is undoubtedly true, it is a moot point. The state of California contributes more in taxes than the state receives in services. As we will show in the PCFA, in order to be viable, the city will have to imporse a sales tax or increase property taxes. Is it worth paying more in taxes so we can claim that we are receiving our fair share of tax revenue?
Slide 4 - What Does it Mean to Become a City?
Bullet 1 claims that bureaucracy will be reduced by combining County and CSD functions into one city entity. This is only partially true. There will still be many law enforcement, planning and zoning, and road projects that will require county approval and/or participation.
Bullet 3 states that the cityhood effort will be abandoned if more taxes are needed. Currently, both El Dorado County cities impose additional sales taxes. Placerville has a one cent sales tax and South Lake Tahoe adds one and a half cents. Folsom voters rejected a one cent sales tax and the city is now suffering from a financial crunch. Why would the city of El Dorado Hills be different? More taxes will be needed in order to fund the city.
Slide 5 - Advantages of Cityhood
The slide implies that once we have a city council making local decisions, we will always get what we want. Not always. For example, I live in Marina Village and rarely go beyond Town Center on Latrobe. I think it would be great to put a huge Amazon warehouse on the south side. More tax revenue, more jobs, my Amazon orders may be delivered faster and since I rarely use Latrobe, there is little downside to me. I would ask my council member to vote for the Amazon warehouse. This is certainly not what the local control folks have in mind.
The slide also mentions that cityhood provides local control to handle affordable housing mandates. Creation of a city also creates a new legal entity that the state can use to impose state mandates. Currently affordable housing mandates are imposed on the county which may or may not allocate a portion of the mandate in our area. Once El Dorado Hills becomes a city, the state will impose mandates to be carried our within the city limits.
Slide 6 - Cityhood Can Help Fulfill CSD's Mission
The main takeaway from this slide is that the city will generate budget surpluses that can be used for police, parks, and recreation. As we will show in our PCFA analysis, there will be no budget surplus. In addition, the CSD FY 24-25 budget1 reported a $15 million surplus in the General Fund that supports district operations after purchasing a 55 acre parcel that was the old Executive Golf Course iwth no debt. It would appear that the CSD is currently in excellent financial shape without any needing any imaginary surplus tax revenue.
Slide 7 - EDH is Great; Why Change Anything?
This slide emphasizes the ability of the city to apply local control to limit undesirable projects and create financial independence via revenue growth in already-approved retail and housing. However, in doing so, the slide also mentions the importance of the new Costco store as a source for financial independence. Here again is another example of the dichotomy between those who see the new Costco as a revenue generator and those who oppose Costco as urban sprawl. I suspect a city council would be more inclined to approve a Costco project for the tax revenue and less likely to support those on the side of limited growth.
Conclusions
The EDHCC presentation does an excellent job spelling out the benefits of cityhood. Unfortunately, some of these benefits are questionable and/or are overstated. The slide deck does not mention any drawbacks associated with cityhood.
One of the cityhood claims is that tax dollars collected in El Dorado Hills will stay in El Dorado Hills and that cityhood will impose no additional taxes. All other cities in El Dorado and Sacramento counties have imposed (or requested voters to approve) additional sales taxes. Some have added fees to support their city. There will be additional taxes. Having to pay more tax just to be able to keep tax revenues local is a Pyrrhic victory.
Creation of a city establishes a new legal entity that can impose taxes, be sued, and is subject to state mandates. Burdens previously shared across the county will now be borne directly by the city. Absent liability insurance, one lawsuit against the city can impact the city budget for years and could require the city to file for bankruptcy.
The myth of local control implies that we will always get what we want. There are two sides to every story. You may wind up on the losing side of an issue with five city council members just as you would with five county supervisors.