Rebuilding San Diego: rethinking how we prioritize and pay for public property

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January 26, 2013 by Omar Passons

Installation of public infrastructure on El Cajon Boulevard in North Park

Installation of public infrastructure on El Cajon Boulevard in North Park

This is a photo I copied from My City, My Bike on Facebook.  It’s a cool page that allows people to post photos of their personal experiences with our public infrastructure.  If you are reading this, you’ve probably heard that our city has over $1 Billion Dollars in needed fixes to property we already own (as a refresher, since “we” as San Diegans technically own all the buildings, storm drains, streets and other public property, I generally talk about it being “ours” instead of “the City’s”).  You might not know that the City Council has decided to put increased focus on how to rebuild all this property and to figure out the best way to handle additional needs going forward.  Just a reminder, my posts are a mixture of informative and humorous.  This is a volunteer passion of mine, if my special brand of humor doesn’t work for you please adopt Gordon Ramsay’s advice, described here.  Now, back to my post about the new committee.

There is a good overview of what the committee is doing on Voice of San Diego here. Please read that so I can skip to some of the details.  In case you didn’t click the link above, the new infrastructure subcommittee of the City Council, chaired by Mark Kersey, developed a work plan to address many of the most important issues around fixing the property we as San Diegans own.  Here’s the full workplan.  And here’s a summary presentation.

Several important issues come out of this report.  I can’t address them all in one sitting, but here are a couple of the more important ones, starting with quite possibly the biggest.

Issue: We need to identify appropriate service levels for our assets

What does that even mean? A ‘service level’ is basically how well we want a given piece of property to work or what condition of that property is acceptable.

What’s an example? Let’s compare this to a car. You might only be happy with a car that has everything working and looking like it did when you pulled it off the lot. You might want the seats in beautiful condition, the transmission to work well and not make any odd noises, the power windows and seat warmers to work and the paint to be just as shiny as it was back then.  We’ll call this an “excellent” service level.  Alternatively, since keeping your car in that condition all the time isn’t free, you might decide that it’s okay if the paint fades a bit or you don’t buff out every scratch.  Or that the little pinging in the transmission is annoying but doesn’t impact performance, so you can live with it and spend the extra money getting a growler filled at Hess Brewing in North Park or dining along 30th Street – one of the better restaurant stretches in San Diego.  We’ll call this the “fair” service level.  Finally, you might be okay with a hoopty.  That is, you might have a car with holes in the floorboards covered with duct tape, or that backfires when you drive or that you are always kind of praying that it doesn’t break down and get you fired from your job for missing a day.  We’ll call this the “poor” service level.

As you can imagine, the nicer you keep your car, the less money you have to spend on other stuff.  But in theory at some service level you won’t have to worry about it breaking down and so the money you spend will be worth it to make sure you can keep your job, go out with friends, or whatever else strikes your fancy.  Now let’s apply this idea to our City and this Rebuilding Plan.

One thing the Plan does is clarify that we ought to define what the various appropriate service levels ought to be for our city property.  In my example above, “excellent” was defined as “just like new.”  But maybe for a city hall building “excellent” really only needs to be compliant with all building codes, with a working elevator and no peeling paint.  Also, since a city hall building isn’t the same as a storm drain, what we mean by “excellent” is going to be different for different types of property.  Some types of public property have standard service levels across the industry (e.g. a brand new road, installed correctly, is going to be “excellent” regardless of what city you are in).  Others may require some compromise and development because no industry standard exists.

Takeaway #1:  Defining “excellent” or “fair” or “poor” service levels is important both because it sets our expectation for the type of city we want and because those choices cost money.

Another issue, once we’ve defined what the different service levels mean, is figuring out for each type of property how much “excellent” versus “fair” versus “poor” service level is acceptable.  This concept is at least kind of like the car I just described. We could be okay having a “fair” paint job but might want “excellent” transmission, right?  We can pay to keep each item at a certain service level, but there are trade-offs to doing so.  To make the point, in this presentation from patron saint of Craft Beer former Mayor Jerry Sanders, his team makes the financial comparison pretty easy to understand.  One mix of service levels in that presentation would leave us with a $101 Million dollar hole, the other would leave a $136 Million dollar hole. (Note: we didn’t end up using the service levels in that presentation, it’s just an example to make my point).

Takeaway #2: Deciding how much of our city property we want to be at “excellent” vs “fair” vs “poor” service levels impacts how much money we have left over to pay for other stuff like Police Officers, economic development programs or palm tree trimming.  This is hugely impactful and is a part of the process citizens and policy makers need to watch very carefully.  Well, not just watch.  Maybe scrutinize and question is really what I mean.  Every service level mix ought to have a reasonable explanation, or we ought to be told that there is no reasonable explanation–and told why no such explanation exists.

If you are still reading and want a more detailed explanation of service levels, read this explanation from our City officials in charge of this type of thing.  It starts on page 5.  The whole report is interesting, but, ya know, maybe only to me and the guys who wrote it.  One nuance in that report is that it shows an annual Operations & Maintenance cost of $48 Million even though the Plan above says that amount should be more than twice that much.  If it should have been twice that much, doesn’t that mean $48 Million was way too low of an estimate for budgeting to begin with?

Issue: Develop a policy for full funding of ongoing operations and maintenance for existing and new city infrastructure.

Huh? As it turns out, we don’t really have a comprehensive policy for funding the operating and maintaining of all the existing property we own nor the new stuff people want.  You can see how this might get a little problematic.  This isn’t to say we don’t have some policies in this area, but this is about creating a comprehensive approach.

Example: For years I drove a 1998 Ford POS Contour.  It was not new when I bought it, so I expected to have to pay for tires and maybe a new transmission at some point, and to get new brakes and the such.  The car had relatively infrequent and inexpensive maintenance costs.  Not too long ago I upgraded to an Acura. It’s new-ish, so the maintenance costs happen with less frequency.  But I went from using off-brand gas to premium and let’s just say I can’t replace the tires for $200 at Discount Tire or something.  The point, of course, is that I have to plan for the ongoing costs to operate and maintain my car and if I’m prudent I will plan for all of those costs, not just the ones that are most likely.  Upgrading to a new car–like constructing a new building–has costs that must be planned for.

Similarly, our City government needs to plan not just the cost to construct a new fire station, for example, but people to staff it, money to keep the lights on and a portion of the costs for when the roof needs to be replaced, etc.  When our City government budgets for a fire station it can’t just stop at the cost of building it, and the new Plan seeks to make sure we always have an accounting of what the cost to operate and maintain these things will be over time.

Takeaway #1: Planning for the full operations and maintenance cost of the public property we have (and create) is really important and we should pay attention to ensure this happens.

Related Aside: We should make sure our policy makers hold new public property built by real estate developers to this same standard for Operations & Maintenance or at least make conscious choices not to do so.  For example, when a real estate developer is going to put in a new subdivision he or she usually has to build a bunch of storm drains and streets and lights and things.  Some of these are “given” to the city to maintain once they are done.  While it’s cool to get free stuff (like when Oprah gave her audience cars a couple years ago), there are hidden costs.  For Oprah’s audience, it might have been taxes.  For cities like ours, the hidden cost is the cost to maintain those new “free” storm drains when they go bad.  This might not be for years into the future, after all the people who approved the project are long gone.  So it’s important at the time of the approval that we make sure we understand either that the developer is paying into some long term fund or that we are really getting enough value to accept the “free” stuff even though it will ultimately cost us some more money.

Well, this was fun.  There’s a bunch of other useful stuff in that work plan.  Like advocating for putting any savings from efficiency or streamlining right back into more rebuilding.  There’s also a very straight forward explanation of the danger of having more money for construction than we have staff to manage, and a foundational explanation of why we need to rethink how we set priorities.  This last point is also important, because it highlights major weaknesses in the way we currently deal with the issue.  But I’ve been carrying on for a bit, so I’ll revisit that some time after the first meeting (which is on January 28, 2013 – here’s what they’ll talk about). Thanks for stopping by.

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4 thoughts on “Rebuilding San Diego: rethinking how we prioritize and pay for public property

  1. Lori Saldaña says:

    Omar- Thank you for this report and very good description Of the different ways we pay for our shared services and infrastructure. In addition to these commonly known taxes and assessments There are also the Mello-Roos Fees that provide other community benefits.

    I’ll be discussing the challenges of using these fees in terms of the perception of fairness and public-policy As part of an investigative report with KPBS. It should broadcast sometime this week.

    Ever wonder how your property taxes are calculated in San Diego? enter your property parcel number & see all the different assessments.

    Does anyone know what zoological assessment debt service is? I don’t, but for some reason it’s part of the property taxes that I pay
    http://www2.sdcounty.ca.gov/pts/fcsasearch.asp

    • Omar Passons says:

      Thanks Lori. I’ll be looking forward to following your work and that investigation. One interesting issue I hope that investigation reveals is the extent to which geography-specific or project-specific assessments may compromise a broader approach to financing improvements. Thanks for reading

  2. Bernie RHinerson says:

    Omar
    You continue to amaze me with your very positive and productive involvement in pubic issues like this. This post was very informative. This is an issue I plan to follow closely. as a citizen. Eventually I believe that the city will need to place a measure on the ballot to fund much need infrastructure improvements to “Rebuild San Diego”. I for one will be there to support it. Your informative pieces like this one will help us all understand the implications of doing nothing over the need to do something to invest in our city so that the next generation will still have America’s Finest City to enjoy.

    • Omar Passons says:

      Thanks Bernie. I agree that we absolutely need a way to pay for this stuff–both what’s currently falling apart and what we actually want that doesn’t exist yet. I plan to dedicate an entire post or two to big picture issues like having a public discussion on service levels and what we as San Diegans want San Diego to be.

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