For the past year my 16 colleagues and I addressed the request of the City Council "to provide a recommendation to the City Council on infrastructure needs, priorities, projects and associated funding mechanisms to the infrastructure backlog and future needs." I encourage other commission members to join this discussion and share their thoughts.
A complete list of our members, meetings and final report can be found on the City's website at [Web Link.]
Readers can get a good summary by reading the 24 page executive summary and then looking deeper in the report as they wish.
For the first several months we split into committees and looked at the public safety facilities, the municipal services complex, and surface and above ground infrastructure in Palo Alto. Members visited our facilities, visited similar facilities in nearby communities and worked with staff to review prior reports and community infrastructure standards. Other committees worked to identify financing options and research how to improve the City's infrastructure management system so the Council and residents would have better and continuous information and monitoring of the City's infrastructure in the future.
Our work identified three major categories of need:
1) Replacing and upgrading two sets of major facilities related to public safety (the public safety building and fire stations at Rinconada and Mitchell Park and the Municipal Services Center (MSC) along East Bayshore and Embarcadero East.
2) Funding a backlog of projects that had accumulated over the years (catch up) and smaller projects planned for the future
3) Maintaining an adequate level of annual maintenance (keep up) to keep our infrastructure in good working order and avoid larger costs down the line.
Commission members found that both the public safety facilities and municipal services complex should be addressed immediately. These facilities are currently inefficient to operate, in need of repair or replacement and often in violation of either legal codes or risk from earthquake or flood. Sections 3 and 4 of the report provide detailed analyses.
An updated cost estimate was prepared for the public safety building and together the public safety building and fire station renovation would cost around $80 million or roughly about the same as the library bond adopted in 2008. The recommendations for the MSC are passed along to the City Council as input into the upcoming consultant study. An earlier out of date cost estimate was in the range of $100 million.
Both the public safety building and MSC replacement offer opportunities to generate revenues from use of the previous sites.
After reviewing our keep up funding needs, commission members found that the City is about $2.2 million short on an optimal level of annual maintenance. We currently spend $30.8 million per year while $33 million should be spent on regular maintenance of our streets and buildings.
Finally commission members working with staff updated the list of backlog projects and smaller future new and replacement projects as detailed in Section 2 of the report. A final tally of approximately $41 million in catch up or backlog projects was identified after the initial list of $63 million was reviewed for duplication and projects that had already been completed or were no longer needed.
The keep up, catch up and smaller project funding needs are approximately $6.4 million per year over the next 20 years.
In July of 2011 the City Council asked the commission to review the Cubberley lease. The commission found that the original conditions that prompted the lease and covenant not to develop "have changed dramatically and are no longer operative." Subsequent to our review the Council and School District have entered into discussions about the School District's plans for the future with regard to the Cubberley site. Our findings are input into those discussions.
The commission now turned to the second part of our taskto identify funding options for the major capital projects and annual funding needs identified during the first nine months of commission work.
The finance working group on which I served along with Mark Harris, John Melton and Jim Olstad developed a set of funding alternatives and eventually the full commission adopted the four funding options that are presented in the report. A full summary of our work is in Section 5 and appendices that review comparable tax rates in neighboring cities and funding options that were not carried forward to the full commission.
There was unanimous agreement that the major capital facility investments should be funded by long-term borrowing and that the MSC is best financed primarily by a Utility Revenue bond paid for by a small increase (1-2%) in rates. Utilities are a major tenant at the MSC.
For the public safety facilities we recommend either a General Obligation bond paid for by a property tax assessment and requiring a vote of the electorate or Certificates of Participation (debt issued by the City and requiring a repayment source) which do not require a vote of residents but are more expensive than G.O. bonds.
For the catch up, keep up and smaller new and replacement projects the City needs an additional $6.4 million per year. The commission's primary recommended options are an increase in the sales tax or use of savings related to Cubberley if the lease is terminated.
The report contains many more findings and recommendations that should be of interest to residents including recommendations for development and use as a policy tool of an infrastructure management system and thoughts about future infrastructure planning beyond what our commission had time to flesh out.
Commission members recognized that infrastructure, particularly things like public safety and municipal services centers and street maintenance, are not "sexy" expenditures and that in these difficult times funding all city programs is challenging. On the other hand as residents we face these challenges in fixing the roof and maintaining our homes and cars. Investing now for future savings or to avoid future problems is always difficult.
In the end our funding recommendations have three principles:
1) All of the needs we have identified should be funded
2) We are giving Council and residents a menu of choices not a single recommended approach
3) Our mission was to develop funding options that did not involve taking money from other city priorities. Council and residents may choose to reallocate current funding but this commission's scope and mission was to fully fund the needs we identified without reviewing or commenting on other city priorities and services.