San Diego Budget Review Committee Meeting - May 4, 2018

On May 4, 2018, the San Diego City Council's Budget Review Committee met to review the proposed FY2019 budgets for multiple city departments under the Internal Operations Branch, including Real Estate Assets, Fleet Operations, Purchasing & Contracting, Information Technology, Human Resources, Personnel, City Clerk, and City Auditor. The meeting featured presentations from department directors, reports from the Independent Budget Analyst (IBA), and public testimony. Key issues included the status of the 101 Ash Street and Othello Avenue facilities, fleet replacement and right-sizing, and the use of one-time funds to balance the general fund.

Public Comments & Testimony

• John Stump (speaking in opposition on multiple items) criticized the Real Estate Assets department for not including Balboa Park and the Zoo Global lease in their report, stating the department is "failing to fully implement and manage the lease." He also called for a new audit of Zoo Global, noting a prior audit found the city gave $14 million but couldn't track expenditures. On Purchasing & Contracting, he questioned the lack of EEO reports and prevailing wage compliance for Zoo Global's 3,000 employees.
• Edmund G. Edwards Jr. (city employee, fleet team leader, in favor) supported moving fire apparatus to the Othello facility, citing overcrowding at Miramar and the need for better repair capacity for fire apparatus and refuse packers.
• Rodney Fowler Sr. (refuse collector for 30 years, in favor) reaffirmed the critical need for the Othello facility and expressed shock that the $6.5 million set aside for it was not spent, urging quick action and continued communication with the division.

Discussion Items

• Real Estate Assets (Director Sabelle Thompson): The department manages the city's real estate portfolio, including SDCCU Stadium, PETCO Park, and airports. Highlights included $3 million over-budget revenue at the stadium due to concerts (Guns N' Roses, Beyoncé) and $15.5 million from selling 10 surplus properties. The 101 Ash Street capital lease was discussed: tenant improvement costs rose from $5 million to an estimated $27 million, and the building remains unoccupied. The Othello Avenue lease faced similar issues, with fire apparatus too large for planned workspaces. Staff will present a comprehensive review at the Infrastructure Committee on May 23rd. IBA noted concerns about budget and schedule implications for 101 Ash, including $2.1 million in moving expenses that may not be used in FY19. Councilmember Kate asked about the stadium's full-year expenses with only half-year events; staff explained a wind-down period of 1-2 years and ongoing negotiations with SDSU for a lease extension. IBA noted the stadium debt repayment extends through 2027.
• Fleet Operations (Director Alya Corey): The department services over 4,300 vehicles. Accomplishments included a renewable diesel program that exceeded the Climate Action Plan's 2020 GHG reduction goal (18,000 tons reduced, 2,000 tons short of 2035 goal). A right-sizing analysis reduced 177 underutilized vehicles and 2.75 FTEs. The proposed budget includes a $1.2 million efficiency target. The $6.5 million previously set aside for Othello improvements (from fleet fund balance) was repurposed to help balance the general fund, leaving no funding for Othello. IBA noted this may require increased usage charges to general fund departments in FY20. Councilmembers expressed concern about zeroing out Othello funding without a council decision and the impact on fleet replacement. Corey noted the five-year replacement plan aims to smooth out overage vehicles (currently 66% within life cycle, up from 50%).
• Purchasing & Contracting (Deputy Director Matthew Helm): The department implemented the AREBA contracts module and in-sourced the administrative hearings program, saving over $100,000. The FY19 budget includes the transfer of the animal services contract (approved earlier in the week) and a reduction in central stores inventory due to just-in-time ordering. IBA noted the animal services contract amount is $450,000 higher than budgeted, to be adjusted in May. Central stores is projected to be out of balance, with expenditures exceeding revenues. Councilmember Gomez pushed for a disparity study to improve contracting with diverse firms, which was not funded.
• Department of Information Technology (CIO Jonathan Banke): The department has 120 employees. Key accomplishments include expanding radio coverage for police and fire and implementing the AREBA catalog. The FY19 budget includes a $656,000 increase for PC replacement on a five-year cycle (20% annually) to reduce cybersecurity risk. IBA noted this is a significant change from the previous 9.3% replacement rate. The budget also includes costs for 101 Ash Street moving and rent.
• Human Resources (Director Judy Von Kalinowski): The department provided over 70,000 hours of training in two years. The FY19 budget decreases by $774,000 due to the transfer of the Public Records Act administration group to the Communications Department. The internship position was restored using CDBG and general fund money.
• Personnel Department (Director Hadi Degani): The department conducted 261 recruitments, processed over 36,000 applications, and hired 936 employees. Automation projects include an online organizational management system and leave request system, to be rolled out citywide by end of FY19. IBA noted that the department eliminated one position in the proposed budget and had two additional positions requested but not funded.
• City Clerk (Liz Maland): The office processed over 15,000 passport applications, generating $500,000 in revenue. The FY19 budget saw minimal increases, and the office consistently returns more than 2% of its budget to the general fund at year-end. Plans include revamping council chambers with a new voting system and creating a citizen resource center.
• City Auditor (Andy Luna): The office issued 22 audits and investigative reports with 115 recommendations, all agreed to by management. The FY19 budget is essentially unchanged at $4.096 million for 22 positions. The Audit Committee recommended no cuts. Public speaker John Stump called for a new audit of Zoo Global, citing a prior audit with the second-worst finding.

Key Outcomes

• No formal votes were taken; the committee heard presentations and will consider the budgets as part of the full council's adoption process.
• Staff will present a comprehensive review of 101 Ash Street and Othello Avenue tenant improvements and costs at the Infrastructure Committee on May 23rd, with third-party expert review.
• Councilmembers directed staff to provide original analyses for 101 Ash and Othello decisions, and to clarify the stadium's non-personnel expense breakdown and debt repayment schedule.
• The use of the $6.5 million in fleet fund balance for general fund relief was criticized by several councilmembers, who emphasized that a council decision on Othello's future must precede any funding changes.
• The IBA highlighted that the general fund may face increased fleet usage charges in FY20 as a result of drawing down fund balance.
• Councilmember Ward requested a top-down review of city-owned properties for affordable housing development; staff indicated an extensive review is underway, more comprehensive than the county's.
• Council President Cole called for a special council meeting on affordable housing and asked for a complete list of city-owned land suitable for development by July 31st.
• The committee acknowledged the need to address cybersecurity threats, PC replacement, and competitive hiring in a tight labor market (national unemployment at 3.9%).