Budget and Government Efficiency Committee Meeting – May 15, 2019

The Budget and Government Efficiency Committee of the San Diego City Council met on May 15, 2019, at 9:00 AM. The meeting was called to order with a quorum present, consisting of committee members Kate Montgomery and Moreno. Also present were IBA representative Chris Olson, CFO Rolanda Sharval, and Deputy City Attorney Brett Bartellotta. The committee approved the record of actions from the April 10, 2019 meeting. The committee then proceeded through five action items, all of which were approved unanimously.

Consent Calendar

• There were no consent agenda items.

Public Comments & Testimony

• Non‑agenda public comment: Three members of the public addressed the committee.
  • Martha Welch criticized the city budget, stating that voter‑approved library funding (a 6% ordinance) had not been followed, that the pension system was “out of whack” due to too few employees supporting retirees, and that the city has many vacancies and lacks employees to respond to infrastructure issues. She urged the city to hold police and fire academies to address upcoming retirements (150 in the next few years).
  • Chris Saberton expressed concern that the new parking lot planned for Fiesta Island would not be handicapped accessible.
  • Karen Riggs Saberton (a UC San Diego funds manager) alleged egregious violations of city regulations regarding expenditure of city funds to benefit a third party in the development of the Fiesta Island Southwest Fenced Area. She stated that at a city planning commission meeting, a commissioner directly asked a benefited third party for explicit approval before proceeding, which she argued establishes a contracting relationship. She claimed that $4 million in directed expenditures (road, utilities, clubhouse, storage) and $250,000 in annual operating costs would benefit only the third party, that the city would need extensive soil testing for PCBs and DDT, and that a better, lower‑cost parking location exists near the east side fence. She requested the city consult its legal team before proceeding.
• No public testimony was offered on any of the action items.

Discussion Items

• Item 2 – Auto‑Return Renewal Agreement Sergeant Brandy Sorby and Captain Laura McLean of the San Diego Police Department presented a request to sole‑source a five‑year agreement with Auto‑Return, the city’s tow dispatch center since 2009. The agreement is cost‑neutral: the $22 per‑vehicle fee is paid by tow providers and passed to vehicle owners. Auto‑Return has not increased fees and has integrated with the police department’s new CAD and MPS systems. Councilmember Montgomery asked how the $22 fee compared with other jurisdictions; staff responded that no other agency in the county uses Auto‑Return, and provided sample tow fees from CHP ($166) and Chula Vista ($209). Vice Chair Kate moved the item, seconded by Councilmember Montgomery; the motion passed unanimously.

• Item 1 – Water Commercial Paper Program, Second Installment Debt management staff (Jyoti Pantlu, Charles Monica, Elson Falkenstein) presented a request to approve the second $250 million allocation for the water utility’s commercial paper program. The first $250 million, authorized in December 2016, has been nearly fully utilized ($214 million spent, $36 million remaining). The new $250 million would provide interim financing: $60 million for the Pure Water program (to be refinanced with a WIFIA loan) and $190 million for baseline CIP (water mains, large‑diameter transmission lines, pump stations, reservoirs, treatment plants). The program’s not‑to‑exceed amount remains $250 million, and the borrowing rate cap is 11%. Current short‑term rates (1.6%) compared to long‑term rates (4.1%) are expected to generate $8 million in annual debt service savings. Vice Chair Kate asked about refinancing of the remaining $44 million and about miscellaneous projects ($9 million), which staff explained include a groundwater asset development pilot ($3.4 million) and a new operations center. Vice Chair Kate moved the item; the motion was seconded and passed unanimously.

• Item 3 – Workers’ Compensation Managed Care Services Contracts Risk management staff (Bill Dickman, Jill Degan, Quinnell Allen) requested approval of three‑year agreements (with two one‑year renewal options) with MedData, Allied Managed Care, RehabWest, and Keystone Medical Resources for managed care services. The estimated annual cost is $3.8 million, funded from the workers’ compensation fund. The city is self‑insured and self‑administered, with a $5 million self‑insured retention. In FY2018, these services saved $19.3 million (91% from medical bill repricing, 9% from utilization review and pharmacy networks). Chair Bree asked about the number of open claims (4,000) and total program costs ($33 million per year, including the $3.8 million). She expressed interest in a future briefing on injury types and claim validity. Chair Bree moved the item; Vice Chair Kate seconded; the motion passed unanimously.

• Item 4 – Fleet Services NAPA Auto Parts Contract Extension Fleet Operations staff (Matthew Cleary, Jim Dagler) requested an 18‑month extension to the existing contract with Genuine Parts Company (NAPA Auto Parts), the sole supplier of automotive parts for the city’s 4,400 vehicles. The initial contract was approved in July 2014; the first amendment in August 2018 removed the annual $12 million cap but kept the total $60 million cap. The extension would authorize expenditure of up to $24 million, based on a $13 million annual spend plus a 20% contingency for tariff‑driven cost increases. The extension allows time for a thorough RFP to incorporate industry changes and service improvements. Councilmember Moreno asked why an extension was not sought earlier; staff explained that service deficiencies were not identified until after the 2018 amendment. Councilmember Moreno moved the item; Vice Chair Kate seconded; the motion passed unanimously.

• Item 5 – Verizon Cellular Equipment and Services Contract Amendment Department of Information Technology staff (Jonathan Banke, Denise McConnelly) requested a six‑month extension (through December 31, 2019) of the Verizon contract under the NASPO ValuePoint cooperative, increasing the not‑to‑exceed amount by $2 million to $7.65 million. The city has over 6,000 lines with Verizon, supporting critical public safety applications (police, fire rescue, lifeguards) and workforce mobility. Spending is discretionary; the estimated run rate for the extension is $1.4 million for normal operations, plus $400,000 for new lines and equipment. 68% of Verizon spending is from the general fund. Councilmember Montgomery asked about the estimated actual spend; staff confirmed typical run rate and additional allowances. Councilmember Montgomery moved the item; Vice Chair Kate seconded; the motion passed unanimously.

Key Outcomes

• All five action items were approved unanimously by the committee, with votes recorded as aye.
• The committee adjourned and will reconvene on June 19, 2019, at 9:00 AM.

Note: The transcript includes a separate press conference by Mayor Kevin Faulconer (2019‑05‑15) regarding the May Revise budget, which is not part of the committee meeting and has been excluded from this summary.