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Gomez’s worries sprang from an Independent Budget Analyst report delivered during the first in a series of committee hearings on Mayor Kevin Faulconer’s $3.8 billion proposed budget for the fiscal year beginning July 1.
The IBA report called the proposed budget “balanced, sensible and responsible,” but identified several caveats, including delays and cost increases to three city facilities projects.
In 2017, the council approved — on the advice of a consultant — a 10- year, $10.4 million lease for a facility to improve fire equipment maintenance. Necessary improvements were originally estimated to cost $6.5 million, but have since risen to $17 million.
The project is now on hold, and the building is being used as a warehouse and workplace for city employees. Gomez said she didn’t find out about the delay until reading the IBA’s report.
IBA Analyst Andrea Tevlin also expressed concern over an office building at 101 Ash St. intended to accommodate city employees currently working in rental spaces. The city signed a 20-year lease-to-own agreement for the building in 2016; at that time officials planned to renovate five floors for around $5 million, then move employees into the building last July.
Following council approval, city staff began working with planners and determined all 19 floors of the building should be renovated to increase the number of work stations from 800 to 1,150. A round of project bids were rejected; the project is now included in the proposed budget at an estimated cost of $27 million.
The city in 2015 also entered into a lease-to-own agreement for the Civic Center Plaza building, where city employees work. Up to an estimated $21.4 million in improvements were anticipated within the first five operation years.
Reconfigurations have been put on hold, however, because plaza employees would temporarily move to the City Operations Building during construction. That cannot happen until Development Services Department employees in the Operations Building can permanently move to the renovated Ash Street building.
Committee member David Alvarez questioned city staff on how current circumstances have strayed so far from expectations, particularly for the Ash Street building.
City Assistant Chief Operating Officer Stacey LoMedico said staff determined a 19-floor renovation is more cost effective in a 15- or 20-year context.
“That’s not what the council was told when we approved this. We were told it was ready to move into and that five floors need to be worked on,” Alvarez said. “The cost of this is just astronomical … I would caution the administration moving forward on grand plans that go beyond council approval.”
Tevlin’s office recommended possibly scaling back renovations to the Ash Street building closer to original plans. Tevlin also encouraged the creation of financing plans for the three aforementioned buildings, a recommendation backed by committee president Barbara Bry.
“It’s clear the city needs a comprehensive real estate strategy going forward, and that we shouldn’t make any large expenditures before we have that,” she said.
The IBA report noted several other potential problems with Faulconer’s budget.
Nearly $13 million, mainly from Housing Commission reserves, was allocated to operate three large tent shelters and a transitional storage center for the homeless, but no sustainable funding was identified for later years.
“As the need for these facilities is likely to continue, we recommend that the council requests that an ongoing funding plan be identified,” IBA Deputy Director Jeff Kawar said.
The IBA report also highlighted maintenance reductions across several departments.
The budget includes a $882,000 reduction in tree-trimming funds, which is similar to a proposal that was suggested by the mayor’s office, then rejected by the council last year. If the reduction stays in place, the amount of trees trimmed in fiscal year 2019 would fall from 20,000 to 10,000. Trees trimmed once every nine years would instead be maintained once every 21 years, which gave committee member Lorie Zapf pause.
“We’ve been having some issues with trees as they become mature and need trimming, and branches fall on people and cause us huge liability,” she said.
Faulconer’s budget also proposes a $355,000 reduction in facilities maintenance, a $300,000 reduction in graffiti abatement and a $267,000 reduction in citywide park maintenance.
Such reductions likely would result in diminished services at a practical level, Tevlin said. The Facilities Division has for two consecutive years requested funds to hire 21 additional employees.
“They feel very strongly they cannot keep up with service levels that have been adopted by the council for those facilities,” Tevlin said. “It’s something to keep talking about with them to see what the real need is.”
Budget hearings are expected to continue through May 9. A final budget will likely be adopted in June.
— City News Service
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