Why is Oakland holding Measure U bonds hostage?
City staff are refusing to issue hundreds of millions of dollars in bonds, delaying much needed street paving and affordable housing
🗳️ It’s less than a week until the special election. Be sure to vote early by mail or in-person on April 15!
In 2022, 75% of Oakland voters overwhelmingly approved Measure U, authorizing $850M for affordable housing and public infrastructure.
This included $290M for transportation projects managed by Oakland’s Department of Transportation (OakDOT), which is responsible for things like street paving, bike lanes, and sidewalk repairs.
OakDOT largely relies on a combination of grants and bond measures like Measure U (and Measure KK before it).
Over the past 5 years, OakDOT has raised $300M in grant money, but these grants are typically contingent on matching funds from the city, which come from bond sales.
What’s the problem: The city is yet to issue the Measure U bonds for OakDOT, even though Oaklanders have been paying for them by way of property taxes for the past 2+ years.
Without these funds, OakDOT recently informed city leaders that it cannot move forward on new paving projects.
This means the city will pave a mere 8 miles this year, far short of the 40-50 miles per year afforded by Measure U.
What’s the holdup: The city’s finance department — which is overseen by the City Administrator’s office and ultimately responsible for issuing the bonds — blames the delay on high interest rates.
Oakland’s ability to secure favorable interest rates is in part due to economic factors (rates are historically high), and exacerbated by Oakland’s recently downgraded credit ratings.
Why that doesn’t hold up: For one, interest rates are out of the city’s control, but they also don’t impact our ability to repay the bonds, because the property tax revenue that funds the bonds already accounts for today’s higher rates.
Even if the city waited for rates to come down, any marginal savings would be outweighed by the cost of continued delay.
The result: projects get more expensive due to inflation, matching grant dollars sit unused, people get injured and killed on unsafe roads, and trust in local government continues to erode (along with our streets).
History of roadblocks: This isn’t the first setback for Oakland’s paving projects.
From 2017 to 2022, OakDOT was a well-oiled machine, repaving 160 miles of the city’s total 830-mile road network.
That progress came to an abrupt halt in 2022, when city council rejected all paving bids for being a few percentage points shy of the city’s 25% small local business requirement.
Councilmember Carroll Fife, who spearheaded the rejection against OakDOT recommendations, argued that “Black businesses need to be centered in these contracts.”
The result was an 18-month delay in road work, moving $2.2M in contracts from a Hispanic-owned firm to a Black-owned firm, and an overall $6M increase in costs to taxpayers.
Housing also delayed: Oakland’s housing department faces similar challenges, waiting on $141M in Measure U funds.
These funds would support nearly 1,000 affordable housing units, including more than 250 homeless housing units.
The housing department received an initial $68M in 2023, but the latest round of funds rely on a new bond issuance.
Time is running out: Unless Oakland issues new bonds later this month, OakDOT will miss this year’s paving season, unnecessarily delaying shovel-ready street safety projects.
Bottom line: The city’s refusal to issue new bonds are impacting essential services like street safety and housing.
Meanwhile, Oaklanders have been paying property taxes to fund these yet-to-be-issued bonds, with nothing to show for it.
In theory, OakDOT should be insulated from Oakland’s budget crisis because it's funded through restricted (not general) funds, but it seems to have become the latest casualty of city mismanagement.
How to take action: The city administrator is expected to address the bond issue at the city council meeting on April 14.
Call or email Interim Mayor Kevin Jenkins, the City Administrator Jestin Johnson, and your city council member, and urge them to proceed with the Measure U bond sales immediately. You can use this email template.
Submit an eComment directly to city council (submissions due by April 13).
Comment in-person at the April 14 meeting.
Correction: The original post stated that no Measure U bonds have been sold; the city has sold one tranche of Measure U bonds for housing, but has yet to sell bonds for transportation/OakDOT.
Election reading…
Endorsement: Barbara Lee is an icon, but Loren Taylor has the ideas to lead Oakland into the future (SF Chronicle)
Endorsement: One of the strongest Bay Area candidates in recent memory deserves the nod in Oakland’s District 2 (SF Chronicle)
District 2 candidates lay out their priorities (Oakland Report)
Barbara Lee was supposed to be a lock for Oakland mayor. Why is the race so close? (Politico)
Barbara Lee has avid fans in Oakland mayor’s race. But Loren Taylor is making it a contest (LA Times)
Renewed focus on Sheng Thao is not helping Barbara Lee (East Bay Insiders)
In other news…
“Our officers have been conditioned to do as little as possible—to stay out of trouble” (Oakland Report)
San Jose mayor stumps for two bills that further city’s push to reduce homelessness (Mercury News)
An inside look at how Oakland mayor Sheng Thao tried to fight the recall (Oaklandside)
Thousands of Oakland docs seized by feds reveal inner workings of ex-Mayor Sheng Thao’s orbit (Mercury News)
40 reasons we still love Oakland (SF Gate)
Listen: San José Mayor Matt Mahan's Aggressive Plan to Tackle Homelessness (KQED)
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Mayoral Endorsement: Loren Taylor
District 2 City Council Endorsement: Charlene Wang (#1) and Harold Lowe (#2)
This is bad reporting! When Measure U was approved, the measure promised that tax increases that result from sale of bonds would be limited. When interest rates go up, the payments that the tax payers see on our property tax bills go up. As previous bonds are repaid, there is more room to sell bonds without increasing the tax burden. The Oakland City manager is keeping the promise to the voters by holding off on bond sales until they can be sold at a cost that does not further burden tax payers.
Please correct this poorly researched article.
What a big mess! This is why I will never vote for any tax increases ! Such incompetence!