San Diego Infrastructure Committee Meeting Summary: December 4, 2017
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The Committee on Infrastructure convened on December 4, 2017, with Chair Mark Kersey presiding, along with Vice Chair Chris Ward and Councilmembers Lorie Zapf and Georgette Gómez. The primary agenda item was the Fiscal Year 2018 Capital Improvements Program (CIP) Mid-Year Budget Monitoring Report, which included a significant consolidated budget adjustment and updates on cash management initiatives.
Consent Calendar
The committee approved the meeting minutes from the November 13, 2017 meeting.
Public Comments & Testimony
- Catherine Rhodes (Point Lema) raised concerns about the FY2017 San Diego Housing Commission comprehensive annual financial report, alleging the hiding of assets and revenues in relation to the CIP budget. She praised the city for acknowledging previously hoarded funds and reducing the push for deferred capital bonds. Rhodes urged the city to comply with state law requiring construction start and end dates for all CIP projects and recommended adopting SANDAG's multi-year project templates.
- Catherine Rhodes (on Item 1) reiterated her call for construction dates and clearer reporting on fund balances, revenues, and expenses. She claimed the city was holding $64 million in pre-2010 successor agency bonds beyond the three-year spending requirement. Rhodes also asserted the city had $20.85 million in excess Transnet funds over the allowable 30% cap, which she recommended be redirected to housing or homeless services pending SANDAG approval.
Committee Comments
- Vice Chair Chris Ward expressed extreme disappointment with contractor performance on recent street resurfacing in Mission Hills. He detailed complaints from dozens of constituents regarding contractors YBS and SRM Contracting, including damage to curbs, removal of landscaping without notice, sloppy paving (asphalt over gutters), and the use of a known bad batch of asphalt. Ward called on the city to hold contractors accountable and improve quality management.
- Chair Mark Kersey voiced frustration with lengthy delays on private developer road projects in his district, where lanes and intersections have been torn up for months, in one case over a year. He stated he was working with the Mayor's office to revise right-of-entry permits to include more strict milestones and timelines to hold developers accountable.
Discussion Items: FY18 CIP Mid-Year Budget Monitoring Report
Presentation by Matt Vespi (Deputy Director, Financial Management) and Adam Jones (CIP Budget Coordinator) The report focused on a consolidated request for council action and updates on cash management.
- Consolidated Budget Adjustments: The report combined 83 individual council actions into one, recommending approximately $100 million in appropriations and reallocations (including an amendment to the Regional Transportation Improvement Program), saving an estimated 415 staff hours citywide. Key adjustments included:
- $11.7 million for the Torrey Pines South golf course improvements (ahead of the 2021 U.S. Open).
- $21.2 million in developer fees (expedited appropriation to speed up spending by six months).
- $49 million for water and sewer enterprise projects.
- Cash Management and Spending:
- Transnet: Fund balance at SANDAG decreased by 40% since July 2015, reflecting increased spending. The city received commendations from the Oversight Board.
- Gas Taxes: Fund balances and revenues for gas taxes and the new Road Maintenance and Rehabilitation Account (RMRA) are fully budgeted. A citizens' initiative to repeal the new gas taxes poses a $121 million risk to road funding.
- Infrastructure Fund: Flexible funds from Proposition H have been programmed for slurry seal, drainage, and facility improvements.
- Lease Revenue Bonds (DC3): Spending has averaged $8.5 million per month since April 2017. The city is on track to meet the IRS requirement to spend 85% of proceeds within three years.
- New Financing & Efficiencies:
- Commercial Paper: The water enterprise fund has drawn $62.6 million from a $250 million line of credit at an average interest rate of 1.03%. A $75 million General Fund commercial paper program is planned for spring 2018 to fund active construction projects.
- Encumbrance Process: A pilot on the SR 163 project, using reliable Transnet revenue to encumber future years, freed up $2.9 million for other priorities.
- Pooled Contingencies: A pilot program for water and sewer mains reduced project contingencies from 5% to a pooled 3%, freeing $3 million. Only one project has drawn from the pool so far.
- Committee Questions & Discussion:
- Councilmember Gómez clarified Transnet spending figures ($37M spent vs $31.9M received in 2017). Staff confirmed that excess funds from the near-complete Fire Station 17 project will be reallocated to the Mission Bay Lifeguard Station, and the Fairmont Fire Station design is fully funded.
- Councilmember Zapf praised the streamlining efforts. She inquired about the pilot contingency program; staff confirmed it will continue to be monitored for another year before a potential expansion. She also requested follow-up information on remaining funds for the Rosecrans Street repaving project to coordinate with community planning.
- Chair Kersey praised the report as a great success story, highlighting the flexibility of the infrastructure fund and the faster spending of lease revenue bonds.
Key Outcomes
- The committee voted unanimously to adopt the staff recommendation for the FY18 CIP Mid-Year Budget Monitoring Report and forward it to the full City Council. Vice Chair Ward recused himself from the vote due to a property interest affected by a project in the report.
- The Independent Budget Analyst (IBA) announced that an office report responding to the CIP report would be issued later that week.
- The meeting concluded the committee's business for the 2017 calendar year.
Meeting Transcript
Well good morning, everybody, and thank you for joining us for today's special meeting of the uh Committee on Infrastructure. Today is December 4th, 2017. Let the record reflect that we are uh joined here by a full compliment of the committee, including Vice Chair Ward and Councilmember Zaf and Gomez. We also have our City Attorney Representative Christina Ray, our IBA Representative Gillian Cassie, our mayor representative Alejandra Gavalden, and our infrastructure committee consultant Lee Friedman. I'd like to thank the members of the public who are with us today or watching on City TV. We will start with non-agenda public comment. And we do have apparently uh one member of the public who would like to speak, and that is Catherine Rhodes. Please come forward, and you have two minutes. Um hello. And I wanted Catherine Rhodes from Point Lema and I want to talk about what I call potential fraud in the fiscal year 2017 San Diego Housing Commission comprehensive annual financial report, and then it'll probably be for your other report also. And the reason for it um is because you're hiding, you know, you're hiding assets, revenues, um, and how it relates to the CIP budget. Um for the CIP, you know, you you're talking um you guys actually are doing so much better than you did before. One thing I was so happy about is that you guys kind of acknowledge you had hoarded funds all this time, you had hundreds of millions of dollars in cash sitting around. And what's great is that you um staff is no longer trying to push these um deferred capital bonds on you guys again because you don't need to pay all those bank costs because you have so much cash cash in the bank. So I'm um very uh thankful for that. Um the other thing is that um every CIP per state law, every CIP project requires um a construction start date and a construction end date. And it could only be three years maximum. It can't not only eighty-five percent of it has to be three years maximum, all the um funding through your CIP projects need to be three max three years maximum. Another thing I thought what would be um that I would recommend that you do, and for your multi-year, you know, budget and budget moderating for CIP is actually use the sand egg um templates that they use for their projects. What you can see there is a multi-year, there's just so much good information. And then also um what's uh and of course what what my main issue that I come here around is that you know, even in the infrastructure, you're using some of the successor agency redevelopment bonds. But for all the fund balances, including um, you know, all of these, you don't tell us what the start balance was, the expenses of revenues. Thank you. Thank you. That concludes non-agenda public comment, turning to committee comment. Would any member of the committee like to make comments at this time? Vice Chair Ward. Thank you, Chair Kercy. So um wanted to raise an issue today that um particularly came to me from Mission Hills constituents, but I know I have talked about generally uh I certainly am grateful for a lot of the road work that we are doing and our commitment to try to achieve a thousand miles of repaving soon, but we also want to make sure that quality management is uh on top of our uh our minds as this work progresses. Um there's just been, I think, an increasing number of really unacceptable um conditions, unacceptable performances with regard to some of this work. Uh in Mission Hills, we have heard from a number of constituents about the recent street resurfacing and in particular North Mission Hol Mission Hills uh is being described as having been done recklessly. Constituents have provided evidence of street curbs having large chunks removed by the machinery and they have still not been fixed and their calls are not being responded to. Dozens of constituents have interfaced with our office and reported that the contractor was rude and unconcerned with damage and would not follow up with them. When the ADA ramps in the parkway were being done, the contractor, YBS ripped out vegetation, landscaping, irrigation systems, and lighting systems without any advanced notice to homeowners, and folks came home to find their parkway all ripped up. The pavement was done very sloppily. They installed asphalt over concrete gutters, which messes up the curb and the gutter for our stormwater drainage systems. And in one case, SRM contracting knew that they received a bad batch of asphalt, and we have that communication between them and city staff, but they paved the street with it anyway, and then they had to go back and uh cut out that badass fault and then patch it. And the whole point of resurfacing our streets is not to have patches. Here we have to create it a weak spot that will be vulnerable to rain damage uh in the future and additional potholes. So overall, I'm just really extremely disappointed in some of this contracting work, and I hope that the city would hold hold them accountable. We can't expect to have the public stress if we are not requiring quality work of our contractors, and I look forward to working with the mayor and the administration to improve quality management going forward. Thank you. Thank you, and I appreciate those comments. Uh would anybody from staff or the mayor's office like to address any of those comments at this time? Mr. Nagoborn, good to see you. Good morning. Good morning, James Megart, Director of Public Works and City Engineer. Um I'll reach out to your office to get the exact addresses and locations and that some of this may be uh not only learning lessons in that, but some hopefully might be still under warranty. Thank you.
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