Santa Clara County's new Measure B sales tax has already collected tens of millions of dollars for a multitude of transportation upgrades, but that money is now embargoed from being spent.
An appellate lawsuit filed by Mountain View attorney Gary Wesley on behalf of Saratoga resident Cheriel Jensen is blocking the Santa Clara Valley Transportation Authority from spending any of the $6.5 billion in revenues expected to come from the new tax. For local communities, this means a series of crucial projects -- such as plan for Caltrain grade separation and new bikeways -- could be on hold for up to two years before the suit is resolved.
The suit seeks to dismantle the sales tax by arguing that the language of Measure B was overly broad and lacked specifics as to how the money would be spent.
"$6.5 billion is not pocket change. And we do intend to get the measure invalidated," Wesley wrote in an email to the Voice. "The VTA staff and board did not comply with the law in writing and proposing this open invitation to bait-and-switch."
The Measure B sales was approved by nearly 72 percent of county voters in last November's election. The half-cent tax surcharge lasts for a 30-year span.
Prior to the election, the sales tax raised some political controversy, especially in the northern areas of the county. Elected officials from Palo Alto, Mountain View and other neighboring cities complained that San Jose officials held too much sway on the VTA board. A coalition of nine cities demanded restrictions on how the money would be spent, particularly on how much would be spent bringing a BART extension to San Jose.
The result of this was VTA officials agreed to an allocation plan to split up the money into nine spending categories. This included some vital projects for the North County, such as $700 million for Caltrain grade separation and $250 million for bicycle and pedestrian improvements. Meanwhile BART spending was capped at around $1.5 billion.
Despite this spending plan, the lawsuit argues that VTA officials sought latitude to spend the tax money however they desire. The suit alleges the money could still be shifted to any purpose deemed "prudent." For that reason, he argues the measure falls short of the requirements under the state government code stipulating that voters deserve to know specifics for how revenue from a proposed tax would be spent.
VTA officials acknowledged the suit in a blog post published last week, but they expressed confidence that Measure B would ultimately prevail in court. VTA spokeswoman Lihn Hoang pointed out that her agency had successfully defended the measure against an earlier civil suit filed by Wesley in Santa Clara County Superior Court. Following that loss, Wesley filed an appeal earlier this month.
"We feel confident in our position moving forward," Hoang said. "We're continuing to move along and be ready so when the funds are ready, we can be ready to distribute them accordingly."
VTA has already collected about $40 million in tax revenues under Measure B. That money is currently being held in a "low-yield" escrow account, she said.
In general, Hoang said these cases can take one to two years to resolve. Attorneys for VTA would look for ways to speed up the process, she said.
In the meantime, the lawsuit leaves many cities stuck in a holding pattern, especially for some vital projects.
Mountain View and Palo Alto leaders were banking on receiving funding from Measure B for projects to separate city streets from crossing the Caltrain rail line. These grade-separation projects are supposed to be finished by 2020, when Caltrain expects to upgrade to a faster electrified rail system.
"We are disappointed in the delay in the distribution of Measure B funding and encourage the VTA to resolve this issue as soon as possible," Mountain View Mayor Ken Rosenberg wrote in an email. "We continue to work with VTA as they develop guidelines and are cautiously optimistic that the lawsuit will not significantly delay any of the city’s projects."