City Council Budget Review Committee member Chris Ward suggested during a hearing Friday that the city of San Diego may need to revisit its facility improvement procedures.
Ward referenced two tenant improvement projects proposed to receive a collective $32.5 million more in renovations than projected when the project budgets were originally approved.
He wondered if a similar fate awaits the city’s upcoming housing navigation center for the homeless, which will occupy a former indoor skydiving center city officials bought for $7.3 million in February. The center is expected to open this fall.
“As presented, we made the purchase of the facility understanding there would be negligible or very minimal tenant improvement needs,” Ward said. “Given what we’re sort of experiencing right now, I’m nervous that won’t be the case. And I certainly don’t want to see a major delay in that facility opening.”
Ward discussed the buildings during an internal operations presentation to the committee, which this week is holding a series of hearings on Mayor Kevin Faulconer’s $3.8 billion proposed budget for the fiscal year beginning July 1.
A recurring topic at the meeting was the San Diego Fire-Rescue Department and Environmental Services vehicle maintenance facility development being proposed at an Othello Avenue building the city leased for $10.4 million in 2017. Officials initially estimated it would cost $6.5 million to make the building suitable for maintenance to large vehicles, including fire engines, but projected costs have since risen to $17 million due to spacing issues.
The project is now on hold, and the building is being used as a warehouse and workplace for city employees.
“Was there any consultation done with (Fleet Operations) to understand the size of the apparatus? Was that just a glaring misstep that was factored into tenant improvement evaluations for the facility?” Ward asked.
Officials did consider vehicle size and turning radius before leasing the Othello building, city Deputy Chef Operating Officer Ron Villa said, but it was later determined it would take more than $6.5 million to make the building suitable for proposed uses.
The Othello building would relieve overburdened Miramar and Rose Canyon fleet maintenance facilities, Fleet Leader Edmond Edwards said during Friday’s public comment period.
“It’s a controlled confusion at some times. Productivity isn’t what it should be because we have the day shift that sometimes has to be delayed because of delays to the third shift,” he said. “We’re always in transition with moving vehicles… it’s a situation that I feel we need to move forward on.”
The $6.5 million in Othello building renovations allocated during the current fiscal year is now proposed to go toward balancing the general fund of Faulconer’s budget for the coming fiscal year.
Committee member Georgette Gomez questioned whether funds should be used against their original purpose with what has so far been minimal City Council oversight.
“I have an issue with that being that we have not been briefed or have not landed on what we’re doing with Othello. There was a plan; now we’re moving those funds because there’s been a decision — not by this council — to not do it. And now we’re creating a bigger problem,” Gomez said.
City Financial Management Director Tracy McCraner said officials didn’t want funds to sit idle while they decide how to proceed with the Othello building.
Internal Operations staff are expected to deliver a thorough review of the Othello building during a City Council Infrastructure Committee meeting on May 23. Also to be addressed: 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 former Sempra Energy building in 2016; at that time officials planned to renovate five floors for around $5 million, then begin moving 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. Renovations are now included in the proposed budget at an estimated cost of $27 million, and the building remains empty.
Committee member David Alvarez requested that copies of the city’s original assessments on the Ash and Othello buildings be proved at the Infrastructure Committee meeting later this month.
“If you all came to us with that request, I’m assuming it was because there was a thorough vetting of what needed to happen. Now $27 million more and an inability to use fire apparatus because it’s too big for Othello — seems like elementary points we should have caught early on,” he said.
The city also recently entered into a lease-to-own agreement for the Civic Center Plaza building, which has seen its own renovation delays related to logistics with the Ash facility.
City Real Estate Assets Director Cybele Thompson said both deals are indicative of the city’s recent strategy shift to avoid “kicking the can down the road” with short-term facilities agreements that result in “long-term pains.”
“Were we too optimistic in how quickly we could occupy the building, and how much it might cost? Yes, that is true. Should that detract from the fact that the capital lease at 101 Ash St. remains an outstanding long-term deal from the city? It should not,” Thompson said.
—City News Service
