Budget cuts and new revenue sources needed to finance a new public-safety building won't be easy, Palo Alto City Manager Frank Benest warned the City Council Monday night.
"We are going to struggle with some of these revenue increases and cost reductions," Benest said as he outlined alternatives. "It is not easy."
The city needs to come up with $5.2 million each year to finance the new building, currently estimated at $81 million. Financing currently would be through issuance of "certificates of participation," or COPs, a means of attracting outside investments.
About $3.3 million will come from renting the Police Department's current Forest Avenue facility, enacting a business-license tax and paying for the city's pension and retiree medical costs annually rather than monthly.
Additional funding is needed from the city's general budget, Benest said.
He proposed a list of changes that would contribute $965,000 of new revenue and cost savings of $1 million — a total of nearly $2 million that allows for the elimination of unpopular or infeasible ideas.
Most controversial was his proposal to transfer half the cost of routine sidewalk maintenance to property owners.
Councilman John Barton said the concept made him squirm.
"That just doesn't feel civic to me," Barton said.
The city estimates it could save nearly $600,000 a year and motivate property owners to take responsibility for their sidewalks. It could even saving legal costs by preventing claims caused by hazardous sidewalks, Benest and City Attorney Gary Baum said. Homeowners' insurance already covers sidewalks, Benest said.
The city would still be subject to lawsuits and would also pay for emergency repairs, Baum said.
Council members Yoriko Kishimoto and Pat Burt said they also had trouble with the idea.
Many other cities already make property owners pitch in with their sidewalks, Benest said.
"It is quite common," he said.
Benest's list also includes several "cost recovery" programs: $150,000 from targets of code enforcement; $50,000 from park field users; $35,000 for the spay-and-neuter program; $80,000 for paramedic services in the form of a 911 fee; and $68,000 from transferring full traffic-control and police costs for special events (such as football games) to Stanford.
The city could charge new developments a public-safety-services fee, generating $300,000, he said. Allowing advertising on city shuttle buses could raise $50,000.
A landlord-registry fee could raise $65,000, and adding a parking-enforcement employee would generate $167,000 from additional tickets.
To cut expenses, Benest proposed several staffing shifts. Outsourcing maintenance of two parks could save $100,000.
The council did not vote on the proposals Monday.
Potential revenue from selling or leasing part of Cubberley Community Center to Foothill College — a deal that appeared on previous iterations of public-safety building financing strategy as generating $35 million or $1.4 million annually — now has a question mark, reflecting news that Foothill College is considering other locations.
Reducing operating hours of foothills Fire Station 8, a cost-saving option Benest has proposed in the past, was not included on his latest list of recommendations and alternatives.
The city also intends to shave about $20,000 by reducing its newspaper advertising for board and commission recruitments and council agendas.
The city has already slashed about $23 million from its budget during Benest's tenure, he said.
In addition to the proposals presented Monday, Benest said staff is working on other ways to save or generate money to develop a "status quo" balanced budget that will be presented to the Finance Committee in May.
The city originally intended to pay for the public-safety building — needed to provide larger, up-to-date space for police and dispatchers and to comply with current laws — with a bond measure, which would have provided new money and saved $12 million in financing costs.
But a February 2007 poll found only 57 percent of voters were likely to support bonds for the facility, well below the nearly 67 percent necessary.
The council turned to an alternative: using certificates of participation (COPs), the city could raise the money by funneling city money through a city-managed nonprofit, which would sell certificates to investors.
The public-safety building is planned for 2785 Park Blvd., just south of Oregon Expressway. Construction could begin in April 2009 and finish two years later, according to city estimates. Every month of delay beyond that schedule adds $500,000 due to construction-related inflation, according to staff.
In other business:
• The council agreed unanimously to investigate acquiring an easement from Wilkie Way to El Camino Real through property owned by Dinah's Garden Hotel, linking to 45 new condos slated for the Elks Lodge property south of Charleston Road.
• On a 6-3 vote — with council members Sid Espinosa, John Barton and Mayor Larry Klein voting no — the council agreed to include an evaluation of the merits of public versus private streets in new development projects as part of the Comprehensive Plan update expected to begin in several months.
• The council on a 7-2 vote asked staff to research the city's process for evaluating major development projects, with Espinosa and Barton voting no. In particular, Kishimoto said she would like to investigate if the council could weigh in before the Architectural Review Board makes a recommendation.
City Attorney Baum said he had some legal concerns about the proposal, but would research it.