News

Lawsuit blocks Measure B funds

Local transit projects delayed by legal challenge

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."

Related content:

Palo Alto looks to advance plan for Caltrain 'grade separation'

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Comments

16 people like this
Posted by Resident
a resident of University South
on Aug 30, 2017 at 9:20 am

Brilliant! We have a transportation crisis, come up with a plan to fix it and get the voters to approve. Now, even though we are still paying the taxes, someone sues and makes us wait two more years for traffic relief.

[Portion removed.]


20 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Aug 30, 2017 at 9:33 am

Who suffers here? We all do!

This money is being held in a low yield escrow account, according to the article. In the two years minimum it takes to sort out this mess, all the projects will cost a lot more.

And in the meantime, taxpayers are still paying out the taxes.

This is a lose/lose situation.


11 people like this
Posted by Anon
a resident of Evergreen Park
on Aug 30, 2017 at 10:44 am

[Post removed due to deletion of referenced comment.]


36 people like this
Posted by VTA Board Needs A Reorg ASAP
a resident of Duveneck/St. Francis
on Aug 30, 2017 at 11:07 am

VTA Board Needs A Reorg ASAP is a registered user.

It's time to reorganize the VTA Board. San Jose has too many seats. Palo Alto shares a seat with two other cities. That means we are not represented at all two out of every three years. Right now we are not represented at all--which is why San Jose has been cutting our bus service and engaging in this bait-and-switch behavior. They think they can get away with it right now. So far, they have been able to do so.

VTA Board needs a complete reorg. The current Board is not representative of the county. They consistently refer to cities like Palo Alto and Mountain View as "outlying cities"--because San Jose is the center of their political universe.

Their behavior over the last year has been reprehensible. They pressure Palo Alto to grow while they grab all of the regional transportation resources they can for themselves--and they can grab a lot with the number of Board votes they have. I'm glad someone is shining a bright light on that.

Everyone should watch a few of their Board meetings where Palo Alto and Moutain View issues are discussed. I promise you will be appalled as I was. VTA staff panders to the San Jose power base and the San Jose reps take full advantage of that.

Palo Alto has one of the highest transportation activity levels in the county--yet they are reducing our transit service. VTA needs a Board reorg. This change is needed quickly.

Yes. We have a transportation crisis, but I guarantee this VTA (organized the way it is) will not serve Palo Alto's needs, though they love to collect our tax dollars. They can be trusted to prioritize the needs of San Jose and cities near San Jose over the needs of all cities on the edges of their service area. That has been their pattern of behavior for years. Their recent decisions indicate the pattern will not change.


10 people like this
Posted by @VTA needs reorg
a resident of Los Altos
on Aug 30, 2017 at 12:29 pm

@VTA Board Needs A Reorg ASAP what you say isn't wrong, but I would add a caveat. Measure B funds originally were horribly unequal in its appropriation, and after north and west county cities protested, VTA gave Caltrain grade sep funding an additional billion dollars. VTAnext is not part of Measure B and is based on a ridership study by Jarrett Walker.

Back to the topic, Measure B currently has money waiting to be appropriated to North county cities like PA and MV and we aren't getting that money because of this lawsuit. Yeah, VTA is San Jose centric but our lobbying efforts have forced them to give us back some of that tax money. If they fail to hold up their end of the bargain, then yeah sue them. But so far, they have not shown any indication that they were planning on reneging on their commitment, and this preemptive and counterproductive lawsuit basically means everyone loses while the money sits in an escrow account, useless and untouched.


7 people like this
Posted by Gale Johnson
a resident of Adobe-Meadow
on Aug 30, 2017 at 1:35 pm

What is the exact wording around the word "prudent" that caused this suit to be be filed in the first place, and then appealed? Is there any legal way to get the appeal repealed? Why would this take 2 years to settle? Who specifically, names and titles, will do the reviewing? Someone who is knowledgeable, please explain/elucidate to us laypersons how the appellate system works. How much parsing of words does it take to determine if there is a State law violation in the Proposition. An amendment to the Proposition to correct the language could be made and voted on before the suit is settled and the amendment would probably pass by a 90% approval. People are in dire need of better transportation now, not 2 years from now. There is something very disturbing and wrong about this; that one person can file a suit and hold up money that's already been voted on, and approved, to be raised by taxes and spent according to a plan. Joe Simitian worked very hard to get changes made so that north county cities, including Palo Alto, would be considered fairly. Now this impediment! He must be very upset, as we Palo Altans all are.

But for VTA to show their good faith, they should release the first round of funds to north county projects that are spade ready...as soon as the grade separation decision is made. It seems that all of the bodies and agencies involved in that decision are having their share of difficulties in coming up with the best solution. I ask them, plead with them, please speed that up so you can honestly say "We're ready and we need the money now". If you don't, you'll lose out to some other needs that are readier(sic).


3 people like this
Posted by new in town
a resident of Palo Verde
on Aug 30, 2017 at 5:18 pm

@resident

This statement:

"This kind of pointless obstructionism is why we can't have nice things."

...made me chuckle and wonder if you've lived anywhere else. Traffic, affordable housing, and parking are definitely issues, but if you think Palo Alto doesn't have nice things, me thinks you should get out more.



6 people like this
Posted by disappointed
a resident of College Terrace
on Aug 30, 2017 at 7:56 pm


Just Sad! Amazing how one person can hold all of us hostage, making us wait that much longer for improved transit even after the measure winning at the polls. This is unfair!


8 people like this
Posted by Gary
a resident of Mountain View
on Aug 30, 2017 at 10:40 pm

Thanks for asking. The lawsuit was filed on January 9 - the deadline for filing a "reverse validation" (aka invalidation) lawsuit under CCP section 863 made applicable to this special local tax measure by another state law in Government Code section 50077.5. The invalidation portion of the lawsuit is based on the failure of the VTA and its Board of Directors to state the (specific) purposes for which the tax proceeds may only be used as required by Government Code Sections 50075 and 53724. The VTA wrote the measure to allow the Board to shift use of the money away from any or all of the projects listed and to such other projects as the VTA Board (by 3/4 vote) may approve. State law permits no such switch-a-roo provision. The case was delayed by the failure of the trial court judge to issue a final judgment. The appeal will likely be given priority and be decided within six minths. If Measure B is invalid under the law, it should be invalidated by court order. Then, the VTA or some other agency, such as the county, may present a new ballot measure that does comply with the law.


12 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Aug 30, 2017 at 11:26 pm

Online Name is a registered user.

The VTA justified not giving Palo Alto more service is that they wanted to avoid duplicating services and that we already have -the City Shuttles. Now the city is asking us to pay even more for the shuttle even though we're already paying the increased sales tax for the VTA.

One wonders why the Mayor and other council members endorsed the increased sales tax knowing that's how the VTA thinks.

Since this is double taxation, any chance of getting refunds and/or not paying for one of them?


5 people like this
Posted by Rick
a resident of Crescent Park
on Aug 31, 2017 at 9:59 pm

If the allegations are true, let the lawsuit proceed. VTA created Measure B to throw more public dollars into the morass known as BART, specifically the multi billion dollar tunnel to connect the new BART extension to Alum Rock to downtown San Jose. It was modified ONLY to get enough votes through out the county to pass. Funding for anything besides BART was, and probably still is, a very low priority for VTA, BART, and their public mouthpiece,the Silicon Valley Leadership Group who never cheer louder than for public tax dollars being funneled into their favorite projects. They 'lead', the public pays. If the wording in Measure B is vague, and Palo is north county communities are poorly or not represented at VTA, we have no voice how our tax dollars are spent. Frankly, I won't believe any funds for non-BART projects are released until they actually are. I think VTA is entitled to as much trust as they financially back up, but nothing more. Of course, we can also look at the High Speed Rail Authority who has been re-interpreting the very plain language in the bond measure that breathed life into that fiscal fiasco ever since it passed at the polls. I see no reason that VTA has not paid close attention to how far CA HSR has stretched the meaning of their bond funding ballot measure for their own purposes.


5 people like this
Posted by Not Ready
a resident of Old Palo Alto
on Sep 1, 2017 at 2:51 am

If grade separation in Palo Alto is a contemplated use of these funds, let the money sit in escrow for 2, 5 or even 10 years! At the rate Palo Alto is going with the grade separation project, it will be at least that long before P.A. has a viable plan for g.s. with all of the committees, focus groups, overthinking, "context sensitive solutions" and trying to please everyone. If the funds were made available tomorrow, Palo Alto would have nothing in the way of a g.s. plan for at least another 5 years, maybe longer, by which time Caltrain electrification will have been in place for several years without g.s.


8 people like this
Posted by VTA = Bad
a resident of Los Altos
on Sep 2, 2017 at 7:28 pm

VTA has gotten used to having its way, the law notwithstanding. Something needs to shake them up. Yes 75% of the money from this tax is earmarked to create a subway for Bart
from Berryessa to downtown San Jose. It would be cheaper to put BART aboveground,
as the plan is for High Speed Rail. Why treat things differently? Well, they want Palo Alto and the North County to pay for the subway, so it's the old "OPM" (Other peoples' money). Berryessa is a residential area. Why do they get a subway when Palo Alto has a
complete aboveground track for HSR???? Gotta wonder.

Sure, the measure is invalid for other reasons, but the other reasons involve the lie that VTA put forward about being fair with the plans for the funding. Not so.

And, as several people point out, the delay is no problem at all. None of this money
will be spent anytime soon anyway. It has to build up over time to cover the cheapest projects, and they may not be done first anyway.


Like this comment
Posted by Tim Wilson
a resident of Professorville
on Sep 26, 2017 at 9:08 am

72% of the population voted for this. The ballot description and pros / cons were exceptionally thorough. We must ask why the judge put a "guilty until proven innocent" injunction on these projects.


Like this comment
Posted by One More Reson
a resident of College Terrace
on Sep 26, 2017 at 10:33 am

[Post removed.]


Sorry, but further commenting on this topic has been closed.

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