Good morning, everyone.

It's 9 30, so let's get started.

I'm filling in today for the mayor.

So you got me.

I'd like to call to order the study session on deferred maintenance and infrastructure backlog.

Tony, will you take the roll, please?

Cohen?

Here.

Ortiz?

Present.

Mulcahi.

Here.

Juan?

Here.

Candelas.

Casey.

Foley.

Here.

Mayhand.

You have a corn.

Great.

Thank you.

So as this is a study session, we start off with a presentation, then we go to council questions, and then if time permits, we go to opening to any comments from the general public.

So I see we have Matt and Jim in the box.

Let's get started.

Well, welcome all.

So we have about 20 slides to get through with a decent amount of content.

If you made it through the report, uh you're probably better than most.

It is sort of a beast, and it's not even all of the work that gets done around our infrastructure and our maintenance.

So I'm here as a public works director, but I am by no means the only department that runs or does maintenance or deals with infrastructure.

We have many people here, and many of our departments are represented to talk.

If there's very specific questions that Jim or I can't cover, we'll bring in some folks from the audience to support the different areas.

And so we'll work through of um what is deferred maintenance and infrastructure and why and what we want to talk through there.

The key is and infrastructure, because we as we continue to study what is going on around our ecosystem here in San Jose, um, we find things that are short of what we expect.

And our community tells us what's we're short and what they expect.

And so we keep um cataloging and understanding it some more.

We'll walk through the current DMIB, and that's uh we'll keep saying that over and over again, but that's the deferred maintenance and infrastructure backlog report.

Um we'll talk about some critical near-term things that we would like to that we will be addressing.

Um, and you'll see in front of you a different forums to make decisions that we'll be asking you for things.

And then uh Jim will very specifically talk about some strategies to help with this because the backlog really is about money, and so if we had the money that's listed in this report, um, we would have a plans around it and we'd be in our capital program and or our maintenance opportunities with our operating budgets to maintain them.

So we would these shortfalls that we'll be talking about.

Um we wouldn't be here talking about them, you'd be seeing them in the different other reports, and then we'll have time for discussion and questions and so forth.

Here we go.

Um so what is the DMIB?

It's the list of all the repairs and upgrades and replacements of all the different assets, and we're endeavoring to keep them in good condition and serviceable conditions, both and we obviously focus on safety as a primary thing, but we also functionality and uh ease of use and what our community wants.

Um why it's deferred, it's either noted because it was never brought into our CIP in terms of capital as we study things through master planning and so forth, or there's just lack of resources for us to do the maintenance in the timely way, or we made decisions about maintenance and how we do repairs and so forth.

Um then the infrastructure gaps is when we'll do studies.

In particular, we'll keep saying this about storm.

If you look just at the chart on the early couple pages of the report, the storm um DMIB number jumped quite a bit, and that's because we completed a master plan and identified um some very large um vulnerabilities that we have in our storm system.

And so those numbers and so it's a gap that we would describe.

Why does the DMIB matter?

Um, how we deliver a lot of our services, we describe it here as the platform is delivered by many of our pieces of infrastructure, whether it's a library or a park, or a community center, or a fire station for our team to come out of, um, our yards where many of our staff work.

So it's a platform from which many of our services are provided, and the sanitary and storm system and the roadway system, it's all parts of the thing where people are using that system at large.

And so when they don't work, there's obviously impacts, service impacts, and so some real clear and easy things you could see is when the pavement isn't working.

You have a lot of potholes, and so we've invested heavily in the last few years.

And DOT's done yeoman's effort and their paving program of repairing or maintaining our roads so that they're in better conditions, and the scores match that in terms of because of that investment through measure T and measure A, there's been investments, and that you've seen those improvements.

Then there's also public safety impacts by infrastructure that's not functioning in the way that we would want it to.

We have environmental concerns when the storm or sanitary system isn't performing or maintained appropriately.

And then when we don't repair it, it becomes an emergency repair.

When you have these long-term costs, because we're not investing in the current maintenance of it, it has impacts.

More and more we have regulatory things that are causing costs that we're having to work our way through.

Very clear and easy ones are things like in the fleet where there's carb requirements in terms of how we acquire and procure vehicles.

So there's different and ADA changes.

We have even our presentations have to change because of different requirements.

So again, it's it's just the environment in which we work, they cause different impacts.

And then the things just defer to entropy.

They have a defined lifespan.

Um if you maintain them, great, they'll last a little bit longer, but then you have to repair them because they do tend to break.

Um, and then if you don't repair them, you'll have to replace them.

And those things are kind of the scale-up of costs.

Um I'll use some analogies through the presentation today where it's not necessarily a direct because there's so many numbers in this report, and it's so long and dense that it is to make some connections to it.

Um, many people in the room own a vehicle.

Uh I presume most people who own the vehicle do some sort of maintenance.

They replace tires, they change the oil.

Those are choices.

You can not invest in those.

You can just ride it and not do any of them, and there'll be consequences to your engine, to your tires, to your drivability.

It's a very clear example to what you so you can not change your tires, and then they would cause issues driving in the rain, and then you likely have an accident and have higher costs.

Um, those are real good analogies that we'd like to pair to the amount of things in a building, which are much more complicated systems that are harder to grasp, bigger dollars, often and systems that you don't see.

Um fortunately or unfortunately had to replace my phone in the last couple of weeks.

Um, but so because it stopped doing its main function of taking and receiving phone calls.

Um that caused some consternation.

Um, and so uh it wasn't that old of a phone, it was six years, and I tried to do everything I could to rep just to keep it going on, but it it stopped functioning in its core place, and so you had to replace it.

Um you all have apps on your phones, those apps have things that are maintained by the manufacturers, they get updated and pushed.

If you don't do them, there's issues in using the different things, and so your phones are things that are good other analogies of kind of real-time over-the-air pushes of things that we deal with all the time in maintenance.

And same thing with software, because if Khaled had his way, he'd have instantaneous updates on your phones or on your computers, so you make sure everything's cyber secure, but we all have software that gets pushed and maintained because otherwise you end up with risks.

So, all these things are kind of real life things that we deal with, cars and phones and computers and so forth, um, that are similar to giant buildings and parks and everything else that we deal with in our ecosystem.

And so, this is why if we don't you can we can choose not to maintain or repair things, and then we end up replacing things, and those are just choices, and oftentimes that's what we have to do.

That's what our teams have to do.

Because if very simply, we could have uh some of our parks maintenance teams deal with uh a deck that had, and every day they can go look at every single screw and tighten every single screw on that deck just to make sure that it's so every single day.

And that deck would probably last a really long time.

That's also probably absurd.

Should we do it every week?

Should we do it once a month, once a quarter?

And so those are the choice sets that we do, and sometimes in low dollar amount things like that, we might just ride them out and just every once in a while just do a quick scan of them.

But many of our maintenance teams and our professional teams in our field in the field do just a magnificent job in terms of care and uh of the facilities that we are in charge with the good morning, Vice Mayor Council, Jim Shannon City's budget director.

Uh, to continue off of what Matt was was saying there, um how did we get here?

Um in a little bit, Matt's gonna talk through a pretty substantial backlog.

And so the obvious question is how how could this have happened?

Um I will say that San Jose is not unique.

Um we are not uniquely positioned to have a uh large infrastructure backlog.

Many municipalities in California and across the the country have a backlog, it's very difficult to adequately fund um preventative maintenance and frequent re rehabilitation of all the infrastructure that public owns.

So I do want to uh uh say that, but in it still is the fact that in the long run, as Matt said, underfunding preventative maintenance is more expensive than um than maintaining them as a regular schedule would otherwise have us.

But in the short run, with extremely limited resources, underfunding preventative maintenance is often preferable to reducing services.

And so when we've got some uh really significant trade-off and the asset is still going to work or the building is still going to function, um the city council and the administration may recommend sort of a lower level of investment for maintenance and capital rehabilitation than otherwise be strictly warranted.

Um over time, that's gonna have some consequences.

So this graph that's here is more of a stylized version.

Of course, we don't uh invest zero uh zero dollars in preventative maintenance, but for a number of years, it's gonna be fine.

Like the like Matt said, the car is going to run, the infrastructure will still function, and we might take that trade-off of being able to keep libraries open or to be able to um have a certain level of police and fire services as opposed to investing more resources to be able to maintain some assets.

And so that's really sort of where we're we're talking about here is is that that gap in the early years, because as we get to the out years, that asset fails, we have to replace it.

And when an asset fails, we either replace it or we stop doing that service.

And so ultimately that'll be the choice that that we have as an organization.

I want to talk through a little bit about how the different funding sources impact um the backlog.

So we've got numerous special and capital funds that provide dedicated resources for infrastructure maintenance, and we've sort of uh categorize them according to this little table here.

So where we have dedicated funding and it's relatively easy to increase the revenues as needed to maintain that infrastructure, we've got little to no infrastructure backlog.

So think about the air airport where the revenues generated by airport operations along with funding from FAA to do capital work, there is really no backlog at the air airport.

Um similarly for our way to convey water throughout the the city, um, our regional wastewater facility, our sanitary sewer system, our water utility system, you know, those are very low to zero levels of backlog, and that's because the city council has the ability to raise rates uh for the users to maintain that asset, not just to operate it, but to make sure that we have enough capital investment to make sure those assets operate uh as they they should.

Then we got the next category, which is we yeah, we do have dedicated funding, but it's really difficult to increase revenues as needed and often would require the general fund to supplement.

So we've got a few um uh major tax categories that fund capital.

So of course we have our construction and conveyance tax, our C and CNC tax that helps fund parks and libraries and fire stations and communications and service yards.

Um so we do have some capital investment there.

Um we've got our trans occupancy tax, a portion of that does fund um capital improvements at the convention center and some of the cultural facilities operated by Team San Jose.

Um and then we've got our development taxes, our construction excise and building and structure construction tax that's levied on new development and rehabilitated development, um, which helps fund our transportation uh program.

Uh and so those are examples of where, yeah, we do have dedicated revenues.

As the activity levels in those categories are higher, we've got more revenues, but the activity levels drop, we have fewer revenues to main maintain the system.

The city has relatively little impact over how the economy performs.

And if the city wanted to raise the rates in any of those individual taxes, that requires a vote, often a two-thirds vote.

And so that's why we see, even though there is dedicated funding, that that backlog is pretty significant in those various categories.

And then we've got this last category, which is no dedicated funding, and really just relies on the general fund as the resources are available.

The only asset classes there are really our emergency response vehicles for police and fire.

We do fully fully fund the replacement of those vehicles, but that's really about it.

So all those other um different types of city infrastructure that don't have a dedicated funding source, like animal care and services, city hall, police head headquarters, other cultural facilities, you know, those really rely on the general fund.

And uh, as we know, general fund is very limited, and so that's why you also see a pretty significant backlog within those categories as well.

So we'll dig into some of the numbers.

And one of the things that I like off the top, the precision of the numbers.

I think sometimes these get reported out that this is an exact thing.

If you gave us 2.6 billion dollars today, we'd solve all these problems.

We'd solve a lot of problems, and I don't know that the number is exactly 2.6 billion.

It's not 1 billion, and it's not maybe not 4 billion, but it's it's it's trajectorily in the right category and right area of what we think the number is based on what we currently have reviewed.

And so in all of the categories below it, as we go through these, just like it's not I don't want to have a false sense of precision.

I know there was some stuff uh a few months back about one of the different categories about I don't believe that it's this much, and it might be up or down a little bit, depending on what that is, but it's not far below these numbers.

And so um staff has done their professional level best to get to what these numbers are and their area of expertise and the area of operations that they own, but that's where this specifics are.

So right now it's 2.6 billion dollars, is what's in our current report of the one-time unfunded infrastructure needs.

That's a massive number.

Also, there's about 259 million dollars of annual ongoing funding needed just to maintain and prevent conditions from worsening.

So it's a quarter billion dollars needed to maintain it in good order, so it doesn't get worse.

This is not static, it's not the same as it and things come and go.

We let's sell off an asset, get a different asset, swap it out, and so forth.

It's not we're not imagining what might be in the future necessarily, but we have a pretty this is so it things that's why every two years we come back with what is our current review.

But there's still significant funding over a multi-year that period that's needed.

And we'll get to that at the end of some ideas that we have that we'll share and open for discussion.

These are the different categories that we're talking about.

The left is the current backlog need, and the right is the annual ongoing needs that added up to the two numbers that we talked about.

And so largely, some of them have increased, some of them have decreased.

Some of them have been invested in, so therefore that decrease is has impacted that.

Some notable changes.

So you'll see the plus up and down, and the report has very specific as a table with 2024 numbers versus 2026.

But for simplicity, we just have this year's numbers.

Some notable is the change in the storm sewer.

If you look at the actual memo, it went from 100 and some million to 900 and some million.

Like what in the heck happened?

Well, we completed our so we've done we do master planning and public works for the sanitary system and the storm system.

Um the sanitary system is more the master planning is more advanced than the storm system is, the master planning.

And so we just completed the phase two of the master planning uh a year or so ago.

Um, and that identifies some they just provide critical projects.

Those aren't urgent, and so just really clear.

I was wondering the words are important, looking at the lawyers and they're urgent or emergent projects.

These are things over the next 20 to 30 years we need to be investing in these specific storm areas.

And that's true of all of these different systems when we have urgent or current needs.

Um the storm system identified 17 projects that are will are very important for us to achieve over the next 30 years.

And some of them are system miles and miles of pipe that need to be upsized or repaired or replaced or added, or drainage systems and so forth.

And so transportation system, because of the investment of measure T and measure A in the work by DOT, that's been brought down and their scores have improved.

But there's still, as you can see, a half billion dollar backlog in transportation.

And we'll talk about some of these as we flip through those slides.

But you know, parks and pools and city buildings and fleet and libraries are all mixed in here.

The city operated buildings, we'll talk about us in some specific as we go to these things.

It's still 418 million dollars, so half a billion dollars there, roughly.

And so these things are large dollars with large backlogs that are waiting.

Let's talk about some specifics.

City facilities.

So this is includes our parks buildings, and so just to be clear, so there's parkland and parks play structures, but buildings for parks, which there are a lot of.

There's City Hall and the Team San Jose, where we're talking about the convention center areas, our cultural facilities, our police libraries, fires, and uh the ACS Animal Care Services Center.

Um that's half a billion dollars there for all of these different city facilities that are needed.

And in the report, there are details of what specific things are needed in each one of these categories.

Um are more detailed than others, but uh in general, there are some you think City Hall, it's a relatively new building, it's built, but it's 20 years old, and so the components of this building are showing its wear.

Um we'll talk in detail about elevators.

Many have had wonderful elevator opportunities here.

Um, and so sometimes there's delays and so forth.

These systems wear down, just so we've talked about, and if we don't do the maintenance or the the modernization or the repairs of these things, we'll have continue to have it.

Where we have this building that's very nice and it's very pleasant, but there's also massive bits of infrastructure we need to invest in as well.

Plus, there are some things that are failing around the building.

Let's get a little more nuanced.

So this is just an example.

Every one of all of the parks buildings, libraries have all of these different systems that we have to review to see what is the condition, what is the expected service life of that system, and then what's needed to maintain them.

Everything from the roofing to the lighting outside, lighting inside.

Um, sometimes that's easy to do, sometimes those are hard to do.

Elevators, uh, we'll have a detail, we have some details about the 70 elevators or so that we own and have to maintain.

Um have large problems with elevators and several of our libraries, some of them are very urgent that we need to get to.

Um plumbing systems, the plumbings are plumbing, uh especially at this campus is very challenged.

That PAB is a has massive plumbing needs, and there's a measure T project that's focused on some of the plumbing systems.

And these electrical systems are not just the plugs, it's all of the things you're putting to there.

Is you have emergency generators that are feeding into these systems, and some of the work at like the police administration building has infrastructure that's 70 years 70 years old and has original parts.

Um, and so you have to have very trained staff that knows many of the old systems and how we can maintain them.

How do we get parts for something that's that old?

Is it compatible with current equipment?

Um, that's one of the issues we have with I you're gonna hear me say elevators a lot because it's a very current issue.

Um that's one of the issues that we have with elevators is that having ready available parts to replace failing bits is very challenging to get to.

Just because it focused on elevators, because we all have that experience, but parks has the same problem, same challenge of finding things that are compatible with aged systems.

Um we look at the exterior shell, so that's meaning like is are the walls still sound?

Um, is the paint on it still good, preventing water intrusion and things like that.

Um, how are the HVAC systems?

HVAC systems are the most expensive systems of the building, they're the highest energy need use of all the buildings.

So uh those of us who are concerned about energy consumption, um, that's it is the number one use of any building is the HVAC system.

And so when it's not performing well, it uses even more.

And so we have to have um we do a lot of work to maintain them to get them ready.

Um we do as much duct tape and bubblegum as we can to keep them up and running, but it sometimes we have lots that we have to do to replace them.

The fire alarms and the fire alarm systems to keep everybody safe in those buildings to make sure that they get alerted if there's any emergent issues.

Those things have lifespans just like the electrical systems, just like the HVAC systems.

Um now that we've added solar systems to our many of our buildings, and our we have uh maintenance opportunities there and things that are short that we have to look at.

And just like the roads, many times at our yards or at our facilities, we have overlooked the investment in the paving of the parking lots and dry valleys.

Um it's very important in areas for fire stations to make sure that they're sound, but also just for our community, that there's no trip hazards, that they're ADA accessible, that they're current and maintained.

And then we have the interior shell.

How is the look?

Is the is the carpeting deteriorated?

Do we need to maintain that?

And so there's lots of opportunities there.

Okay, another example to talk through.

Again, this isn't to pick on any one of our cultural facilities.

Again, it's a caveat everything that I'm not trying to pick on the tech because we've had to invest into it a lot, even though it's a relatively new building.

People think of the tech as a pretty modern building.

But again, like many of our like City Hall, we need to invest in it.

The escalators need to be replaced.

They've been worn out and they're overused, and we and are having trouble keeping them running.

That's an uh should be invested in that.

How do we invest in that?

What happens when that's down?

The elevators need to be replaced.

So between those two, that's seven and a half million dollars.

And as Jim noted, there's no dedicated funding for that, so that we have to figure that out out of the general fund.

Um the roof needs to get replaced.

There's another so between these three projects alone that are waiting to be uh call them maintenance or repairs.

There, these are projects that need to be done.

We keep band aiding the elevators and escalators.

At some point, they're just going to cease working.

And there's 10 million dollars in just those three projects.

And we you can see on the right the investments that we've put into that building over the last eight, nine years.

And this is true of all of our buildings, and so it's just an example of something downtown that we can all see.

And we could put up libraries or a community center and have the same type of report and data.

And so, but we wanted to kind of focus, these are the kind of different areas that we look at in all the buildings.

Have I beat up elevators enough?

Um, probably not.

Um, because uh the number of calls I get, but I've had to wait for an elevator.

Um, there's multiple reasons for that.

Um each, and so all the downtown elevators have all been replaced in all the garages, they've all been modernized.

And we talk about this idea of repairing them versus modernizing them.

So if we have a broken, they have these control arms that make the doors open and close and don't make you get smushed when they uh close and they bump into an obstruction.

Um so they have those things break frequently just because they're very mechanical things that um aren't built like a tank, they're built to be gentle like an elevator, and so they're break frequently, and so to repair them, we're constantly going out to all of our elevators to do things like that.

Um behind those little buttons, they have these things called control panels.

Um that are once they're 20 or 30 years old, they don't make those parts anymore.

And so we're trying to repair them, and sometimes our litter our elevator mechanics are solderized, soldering um different parts on the control panels just to keep them working, and it's just and so we need to modernize it and put all new equipment in it that makes it so that it runs better and it's easier to repair.

Um but they also have lights and vent fans and so forth, and um oftentimes our firefighters sometimes have to go and uh help people out from getting into an elevator that's not functioning anymore.

There's uh one or two of our libraries that have very critical elevator repairs and modernizations that are needed that can't function if those the the library can't function because there's the only way to get to a second floor, and so we need to invest in those things.

And so um major components, control systems, hosting equipment.

So they have the very specifics there, but um we have about 70 elevators, and 31 of them are needing modernization.

Rip out the guts, put in the new ones.

The look and feel is the same, similar to the ones on 4th Street that we've modernized recently going up to uh the summit center.

Um we they have all these glasses the ones on the fourth street with glass doors, we modernized all of those, and so that like what happened or look the same.

It's well, it's all the guts and the machines below it to make sure the thing functions.

And if you have the ones that are lifted by cables like we have here at City Hall, those things are more complicated than the ones that are in sometimes one or two floor lifts that use hydraulics that are a little bit simpler to replace repair in place.

Our park system is gigantic.

I mean, it's there's no way around it, it's huge.

Um there's some park staff here that can tell you exactly how many members of their team they have to maintain them.

It's small compared to how ginormous their system is.

And so it's very hard for them to maintain the entire thing to the standard that everybody would desire.

So that's why there's a giant backlog in terms of projects that need to get done or repairs that need to happen.

Um of these 200 parks and 300 playgrounds, they want to be in excellent condition, but it's very hard for them to have the dollar, there's not enough dollars to maintain them and to keep them as current as everybody would like.

So we're not having to close things because of disrepair.

But these are this is a massive responsibility that parks in partnership with several other departments maintain all of this.

It is a ginormous exercise.

And there's just not enough money to, or staffing to maintain this whole thing.

And so that's why there's the backlog in parks.

They did it recently in 2026.

And so parks is doing an excellent job in the last few years, I'm not of reporting out and providing detail to the public and have public reports on the specifics of what their opportunity is in terms of maintaining their.

But then all the sidewalks and gutters and roadway markings.

I mean, they have an enormous problem set that if you pay attention when you drive around, all of that problem set is DOTs to maintain, and hence that's why there's still a half billion dollars worth of DOT infrastructure, even though we've invested in the pavement part of it.

There's other parts of it that weren't part of it.

We invested in the street lights through the uh a cooperation with PGE to fund the replacement and swap out to LEDs for all the street lights, but that didn't impact the traffic signal system.

They've done other investments in traffic signals, but there's still a gap in terms of what's needed.

Getting close to me talking through all the numbers, everybody's favorite.

Um the different gaps that we have here, though, there's a lot of money going into the pavement.

There's still a shortfall in terms of what's needed for that for pavement.

Um there's been a I think it's when all said and done with measure T and measure A, it's close to 800 million that's been invested into that.

Uh I think we're you've witnessed it.

I think as you drive around, the roads in San Jose are quite nice.

Um, but there's still areas that still need improvement.

There's areas that don't have sidewalk, there's areas that don't have curb gutter.

There's areas that we've annexed that still has that old annexation standard of curb gutter sidewalk and street lighting that doesn't meet DOT's standards that need investment in short.

Um we all want more trees in San Jose.

There's a lot of trees in San Jose.

We already said there's a quarter million.

There's lots of areas that you can say there's that we need more, and so, but there's also uh some additional funding that's needed for that.

And I think I've just one more bit of numbers for you.

So we have to choose our words carefully when we talk about important projects.

Um these aren't just important because we want them or they're important to somebody for some uh political measure.

These are critical bits of infrastructure that need investment.

Um this complex has water intrusion in the basement.

Um we've studied it, we've studied it for years.

Um we've actually had to evacuate our facility staff from the sub basement due to both water and in their workspace, but then also the mold growth that grew around their workspace.

Um we need to invest in fixing that, and so in the cost of those repairs is 45 million dollars.

It's a lot of money for one building.

Um we're very aware of that, and we're concerned because if we don't repair this, not just because our facility staff doesn't have doesn't get to work in the basement anymore, but because it could have integrity to the building and the complex that we're sitting in.

So we need to um invest in that.

Um it's a it's gonna be very intrusive project.

Um pun intended, but um, it will impact it will be impact.

The construction will be impactful.

Um, but we need to set forth getting working on that soon.

And so we have a plan some things when it works for the next fiscal year of starting the design and that getting the professional help around that work, um, but that is uh project of importance.

Um elevator modernization.

Um 31 of the 70 elevators need modernization.

Each elevator is approximately 800 to a million dollars to modernize, plus or minus, uh, depending on the complexity of the elevator.

Some of them are extremely urgent that we would like will we're seeking kind of funding this year to begin that work.

Um these HVAC upgrades, um there are many facilities that we need to upgrade the the HVAC systems.

Um there's one of the cultural facilities downtown a few years ago.

Um part of the HVAC system is this chilling tower that has a lot of water in it.

It was leaking and leaking and leaking and leaking, and we tried to repair it and repair it and repair it and repair it.

Um it just got to the it's it's um its lifetime, and we needed to replace it.

And if we it if it failed, we would have need to clear out the entire building, and most of the innards of it would have been ruined with hundreds of thousands of gallons of water through the building.

Um luckily our team was able to keep it steady, and right now we have a project going to replace that, and so and the piping system around it.

And so um those are real things that happen, and but there's many other upgrades upgrades that are needed that are not nearly as um exciting as a failure and leaking into a building, but it's um they are serious because the air temperature in the room is unacceptable and and the space is not maintainable.

Um we have a lot of generators around our facilities.

Um we had money in last year's budget for the police administration building.

We've requested a little bit more to achieve that project.

Uh it is unacceptable for several of our buildings to fail with power.

But power sometimes does fail from the PGE feed for a variety of variety of reasons, therefore, we need to have backup generation power, generator power.

Um those have lifespans.

They all get tested and they all get test um trialed monthly or yearly to make sure that they can function.

Uh, we do it on this building, we do it on several other critical buildings.

But they're very expensive.

They're basically gigantic engines that generate power and they cannot fail, and so they need to be replaced over time.

As we get more vehicles, um as we get more vehicles that are electric, we need to have the infrastructure to charge them.

So it's most parking lots that we have originally don't have charging infrastructure that goes out to the parking lot.

So we need to go build that.

Um so we've been thoughtful trying to figure out how to do that most effectively.

Some of them need new and enhanced, just not regular uh stuff like we'd have in our dryers or we would put in our house to 20 volt um chargers.

We need the bigger ones, these level three chargers that uh I describe them like lightning coming out of them in their 480 amp, they're ginormous um power systems to for our larger vehicles that will be electric.

Um they need massive systems that get put in there, and the those that bits of infrastructure is very expensive.

Uh we meant I've talked to you more than you want to know about storm systems, and we can talk some more if you want, but we there they're we have 400 outfalls that need repair.

Everything from small 18, 20 inch pipes to big 60 and 70 inch pipes, and they're very costly.

And our cultural facilities need about 20 million dollars.

So you can see here there's a lot of work that are what we would describe as critical.

Um we were very careful to pick that word.

So on to Jim.

Thanks, Matt.

Uh, so what are some of the strategies that we can employ to address the backlog?

So um we'll we'll talk through a little bit of those.

Again, there's no decision or recommendation here, but we just won't want to talk through some of the strategies the city is gonna need to consider over the next several years.

So, in the immediate term, you know, we're gonna need to prioritize funding to address the most urgent projects, and we're gonna need to leverage some limited one-time funding to get projects started and then um supplement with some financing uh as needed, which would require some separate city council action, as long-term financing is gonna require long-term debt service obligations.

A good example is a city hall water intrusion repairs project that Matt was talking about earlier.

You will see in the proposed budget that will come forward in the next few weeks, um, an allocation of one-time funds to get that project started, because we really can't wait on that project.

Um, and then as that project sort of goes through the initial um design phase to get that scoped out a little bit more specifically, we'll be coming back probably in the spring with a potential financing strategy uh or a combination of using some one-time funds and some financing to be able to make sure that project goes forward, and we'll be doing the same thing for some of the other projects that's there also.

Um we are looking at pursuing a new revenue source for the storm sewer system.

Uh as Matt said, that's you know a hugely critical piece that has revealed itself to have a very large backlog.

Um one of the options that we're looking at is a um uh a property-based fee, assessment fee that would be potentially uh uh thought about through a mail-in ballot.

There's a lot of work to still going on there, but that is something that we will are actively pursuing, and you'll you'll hear more about that uh over the coming year.

Um and we are continuing to assess the viability of a general obligation bond for those sources of funds that don't have um another dedicated funding source.

The 26 selection cycle is not looking very positive.

I mean, we're not giving up on that yet, but it's looking more like 2028 than 2026.

Um geo bond is is critical.

Like that is really uh one of the few ways to get substantial dedicated funding to be able to maintain our infrastructure.

Um the last time we did one was Measure T in 2018.

As Matt said, that that funding has been put to really good use and has done a lot of really good work, but that's uh almost fully expended.

Uh, one of the things to think about for general obligation bonds, so not only does it provide sort of a lot of funding up front, um, it does provide some intergenerational equity to pay for the life of the assets.

So if you've got a piece of of pipe or building infrastructure that's gonna last you know 30 to 50 years, if that's paid all up in front by today's users, maybe today's users are bearing more than their fair share burden of the of the of the cost.

And so financing that over a longer period of time um through a general obligation bond or other financing mechanism helps promote sort of that intergenerational equity amongst future users and current users.

Um but one of the challenges, of course, is that a general obligation bond also requires a two-thirds voter approval.

So it requires you know really good um scoping and polling to to make sure that we can get something in front of voters that will end up end up passing over the next five years.

Um that work will need to continue.

Plus, um one of the things that that we really need to struggle to to make progress as a city is to, as budgetary conditions improve, to prioritize some dedicated preventative maintenance funding and capital rehab funding in the general fund.

It's a really tough I I talked through the the slide where it says here's why we don't do it.

Um but as the backlog grows and as our ability to sort of uh address it through other means narrows, um having some ongoing general fund resources would make a significant impact.

Uh if you look at attachment B in the memo, sort of the ongoing unfunded need is about sixty million dollars ongoing.

So if if we did two percent of general fund based budget expenditures, that would get to about half of the ongoing backlog.

Uh that would make a significant in uh impact.

It wouldn't it wouldn't uh make it go away, but it certainly would have um uh some some real benefits in the near and the the long term.

So as budgetary conditions improve, you know, we're I'm not saying they're right around the corner, but um budgetary conditions will will will get better and we'll have that opportunity to make some more dedicated funding choices.

Um we'll also need to be considering um alternative funding sources.

We haven't mentioned it before, but but grants play a huge role in how the city funds its its capital infrastructure.

We're very successful at that, and we will continue to do that, but I've as is shown it's not um enough.

Um we I know we already have direction to look at some enhanced infrastructure financing districts.

That is a tool that's obviously geographically limited and is not really a near-term solution, it's more of a longer uh a longer term piece.

Um there are there could be opportunities for public-private partnerships to maintain or operate certain assets that would relieve city of some of its funding obligations.

You know, if it if it came came to it, potentially the city or city could consider selling or just de decommissioning certain assets, say, hey, you know, maybe we just don't maintain maintain this piece, or maybe we need to sell off this this piece of property um and use those sale proceeds to invest in something else.

So those are certainly options that we'll be needing to think through as an organization as elected officials over the coming years.

But I mean I I do want to emphasize it's it's kind of bleak.

Um, but you know, we're not here as Jennifer says we're not here to just add admire the problem.

We're here to figure out what the solutions are, you know, bring forward in each budget cycle.

We're gonna bring forward the solutions that we can from our sources that we do have dedicated funding and where we can prioritize limited general fund resources.

We'll continue to be solution-oriented to try to again uh find ways to to get at this this backlog and making sure that we are at least addressing the most critical projects um that we have on the books coming up.

So with that, you have you have made it to the end of our presentation, unless Matt wants to add some really drive it home.

Yeah, we'll just go over a few more numbers for you.

I'm just kidding.

Um, we regularly supply Jim with our top 20 projects and what we prioritize in terms of that current critical need list so that they can choose as they work through the different issues through the budget, and you'll see those things reflected in the proposed um what comes out in May.

And so we regularly provide them very specific lists with dollar amounts for specific projects we can achieve.

And I think so we we came out in 2024 with a report, we came out in 2026.

If you remember when I um uh interviewed for this job, I said I would be doing a different effort on the DMIB.

Uh I haven't achieved that yet, and so I'm making sure that it were that I'm aware of that.

And so um I've got uh a little redirected and prioritization on some of the housing construction and the items, but that's not an excuse.

We will we will be doubling down and investing in terms of um making sure we have a robust and complete reporting on our infrastructure.

Um and what I'm doing, what I mean by that is you can notice that some departments have much more robust reporting than others, and so we're gonna make that more aligned across the department.

So we'll be working over the next um six to twelve months about clearing that up and make sure we have all the types of structure and then streamlined reporting.

So look and feel everything looks and feels the same.

Um and so we'll you'll see some of those things, and then that'll enhance and feed into Jim's uh budgetary documents that he's producing um for the uh biennial um CIP budgeting exercise.

So to that, we're ready for your questions.

Thank you.

That was a lot of information and a lot of numbers, and it it's clear that we have a huge backlog of deferred maintenance, and we know that when we put off maintenance that the cost gets more expensive as the issue becomes more and more critical that we replace it.

I'm very concerned about the city hall building and the water issue.

And I have lots of questions about how it could have been built that way, 20 years old.

And but I don't want to go there right now.

That's not this is this is not the time.

I have a few questions, but first I'd like to go to Councilmember Ortiz.

Thank you, uh Vice Mayor.

Um I also want to thank and appreciate staff for bringing this presentation and report forward.

It's clear and confirms what many of us as council members hear from our residents every day.

Um and uh definitely uh I've been stuck in the elevator a few times here at City Hall, and so uh I I've I've experienced that backlog uh personally, and so yeah, definitely feel the frustration.

Uh but we're now looking at a 2.6 billion deferred maintenance black backlog with nearly 259 million needed annually just to keep up.

Um just hearing those numbers make my eyes kind of gloss over.

Um, but that's that's not just a number.

That's what our residents are experiencing every day, whether it's broken park equipment, aging community centers.

I think we just had a conversation in regards to um the aging libraries uh at NSE, whether unsafe streets or just infrastructure that's simply not keeping up with our residents and and with our city.

Um and then if you represent a uh working class area, a loc l uh lower income community like East San Jose, this backlog hits even harder because these are the the neighborhoods where our residents are using the parks every day.

They're coming into the community centers, they're utilizing the library because they don't have alternatives, whether that's you know, private child care, um, you know, or you know, being able to send your your child to um private after school programming.

A lot of times it's the city safety net in which our our residents are relying on to get that essential quality of life services, which also wears down uh our infrastructure.

So the question before us isn't just how big the backlog is, it's also how are we going to address um this major concern uh in a way that's intentional, strategic, and focused on um the areas that really need uh the biggest support.

Uh and so I just had some quick questions for you.

Um, and so what safeguards?

I don't know if we're keeping track of the backlog in a way, you know, if we're connecting it to disadvantaged neighborhoods or you know, areas in which you know communities may be using the infrastructure at a higher rate than others, but how are we making sure that you know the deferred backlog doesn't impact some parts of the city more than others?

It's funny as I uh wrote down before you started talking, uh slice these by district um because I knew the question would come up.

I don't know that we have a slice by district in we don't have it ready in the report.

That's sort of what I mean by saying you'll see these products coming forward, so that we'd like to have it readily available.

Um I don't know I'll use the exact platform that Joe uses for the audit items in terms of he has that on his website, but I'd like to get to a place where you can see the catalog of things by district or by services so that we could slice them so it's easier to understand.

We could certainly do some work and break those things out, but to say we're acting so we don't actively track the backlog per se on a regular, we we review it every two years to produce this report to see what we study.

We're doing our work in our silos, so whether it's like example the storm system, the facilities, the parks, the transportation, and so forth, and we and then come together, we aggregate them at that time.

We haven't gotten to the place historically of creating this is the your case the district five backlog, and what is the difference between district by backlog now versus two years ago and what were the leading factors?

That's some place that we should I I think endeavor to get towards.

Great.

I appreciate that.

Um thank you.

And I guess how are we are we using the backlog for any like decision making, like especially for thinking about like our park scores or you know, um you know, just like quality of life uh uh management.

Are we referencing like the backlog as we look at like PCA scores and to determine oh hey, wait a minute, you know, these scores in this area um also are directly connected to a major uh backlog, or uh how are we using that with like how we make our decisions?

So if we are if we are well, I think we are in several different areas, and I think if there's several departments here that could talk how they do it in specifics, whether it's in parks or in transportation, those are probably the two ones that I could think of readily that they have that you'll see that in their memos when they bring projects forward.

They've looked at other indices or utilization.

They're driving so that these projects are so like I'll I'll talk about us as uh facilities.

We bring forward facilities that think are most critical, that these systems are gonna fail.

If we don't get to them now, the prices are just gonna go up and the costs are gonna go up, or and the impact to that area that they have a non-functioning facility of something we and DOT and parks does the same thing.

They don't directly reference the DMIB, but it informs all the prioritization work that they have.

Um because the systems are so big, um I mean with the hundreds of parks and the thousands of miles of transportation pieces and the 500 buildings that we have, that there's so many there's so many bits of information we have to stack rank the things that we're getting most issues from and then be cognizant of the impact of that facility, whatever that is not being available.

And so to say that we directly reference it, I don't know that we directly reference it, but I know DOT and parks, and when we prioritize it to Jim for our list for general fund money for facilities work, um we stack rank it informed by all of this, but we don't necessarily directly reference it.

Does that make sense?

Okay, I don't know that we have like inner memos, like per the deferred maintenance backlog, because we don't have a list of projects in here, we have categories of work.

Um that that's probably the safest.

That was actually gonna go into my next question.

How how do we you know essentially approach moving this?

I I guess tackling this this backlog.

Are we looking are we weighing in you know the amount of usage of you know facilities?

Are we looking at you know the safety of facilities?

How or do we just go down the list?

How are we determining which ones are prioritized?

I guess so it's multiple things.

Um so for example, listen again, I keep harping on elevators because they're the uh project problem de jure.

Um so if a pick a library, if it has two elevators in it and one fails, um or another library that has only a single elevator and it's required for that place to be available and up for use.

Logic would tell us we should focus on that one first.

Uh and so, but if there's um but uh then they also would balance it up like look that this one isn't used nearly as much, this place isn't used very much.

There's other opportunities, those also inform the prioritization, and so they look to the operating department, whether it's library or parks or whoever, to prior that to shove those efforts forward in terms of urgency.

Um to say we do it perfectly or it's m a perfect science, I don't think so, but they're certainly are informed.

Um and uh, for example, libraries very attuned to the utilization of their places and the urgency of a particular failed piece of infrastructure.

Um and we talk about it regularly with them.

And so same thing with all of the other bits.

Um, I don't know that they have a measurement for this thing gets X amo more use, so therefore it should be prioritized first.

I don't think that's necessarily the case.

Um, but it's um it's certainly something that the operating groups have in mind as they do this.

Okay.

I got one one more question since I'm running out of time.

This may need uh a little bit of uh quarterbacking from parks, but we'll see if you if you could um answer this.

I know that obviously we have a long-term uh maintenance uh backlog when it comes to parks.

Um and I I've been an advocate, there's been a few projects in my district who uh one, the Alamock School District, they're building housing, they wanted to do a park, uh, but I believe the city said no because of our backlog because it'd be too too much to have a new park to essentially maintain.

But then I also know that we're building parks in district three.

And so I wanted to ask since we're building new parks and maintenance, what is the long-term maintenance funding plan?

Or are we growing essentially the backlog by expanding these new inventory in other areas?

Thanks for the question, John Cisrelli, director of parks recreation neighborhood services.

If I understand the question, it's built does building new parks create future maintenance problems?

For sure it does.

Um course, in the initial years, not so much, usually unless something unexpected happens or breaks, typically the newer parks are easier to maintain and easier to keep up for a period of time.

But just like anything, over time they start to wear down, and that has a cost, and we don't have we don't, for example, build a new park and say, okay, we built this park today, we're gonna start setting aside a little money every year as a reserve to support that park in 10 or 20 years.

We don't have systems like that.

So it becomes we have to find the money in any given year.

And that's the process we go through with all of you every year on your capital plans in your council districts is we're looking at what are those priorities, what are the areas that have the most need, what are the areas that are underserved, all that's part of the equation.

So then is sorry, I know my lights blinking, but just one piggyback question on that.

And so in this situation of like how I presented how I know I haven't had the conversation with you, but with other PRS staff, um where they're pretty much saying, Oh, we can't do new parks in district five because of maintenance and the lack of resources.

Then I do see us doing new parks in district three and district four.

Can you help me understand that?

Because my constituents are coming to me saying, like, hey, they just did a new ribbon gunning, you know, in D3, and you know, what's going on in District 5?

Yeah, sure.

Um, the issue with district side five is similar to most other districts, other than three and six.

And three and six, we've talked about this.

The the funding mechanism for building new parks is primarily associated with new residential development.

Yeah.

And so where that happens, it gets investment in that area.

And we actually are geographically restricted.

The furthest away we can go from that development is three miles.

Um, and most of it happens within three quarters of a mile of the development.

So you can see it it keeps it pretty restricted where you can spend it in the city.

So there are those two districts that get a lot of the particularly the more dense uh buildings, right?

The taller buildings, that produces a lot of parks fees to be able to do parks in those areas.

That's for capital funding, right?

It's not for maintenance funding.

Yeah.

So in theory, if there was a developer who could who wanted to have this amenity to build a park, it would be essentially in the same boat that district three would be in because or district six, because essentially they have the funds to build it, but not necessarily to maintain.

That's right, yeah.

So every park has a maintenance.

We have a per acre cost when we build a park that's built in.

And so when we know, for example, we're gonna build a new park, say in three years.

The budget office already knows that now, more than three years in advance, and are planning in those future years to add maintenance dollars when that new park comes on.

And okay, it it I can also just the I think there's there's two types of sort of in maintenance type expenditure.

So there is the day-to-day, like I need to uh have uh staff over there to maintain the park and to mow the grass and to to make sure the building is in decent decent shape.

We do fund that so when a new capital project comes online that requires operating expenditures, that becomes part of our base budget forecast, and those resources come online to main to maintain the park on the day-to-day pieces.

But when uh assets wear out and they need to be re-replaced, that sort of higher level maintenance level of investment is part of the capital program, which is where John talks about.

So the subdivision park trust fund can be used for both the building of a new park and the rehabilitation of existing park assets, and so those are the two pieces.

So we we we will carry the day-to-day maintenance cost, and you'll see that in the operating budget for new parks that are coming online.

But um to maintain those parks over their long life cycle requires higher level of investments than just the day-to-day staff to keep them looking good.

Okay.

Thank you.

Sorry, I've gone over my time.

Appreciate it.

No worries, thank you, Councilmember.

Councilmember McKame.

Thank you for the presentation.

It's a little bit depressing.

I um I'm really intrigued by your uh slide um five, where you know, the two lines of preventative maintenance and underfunded and reactive maintenance sort of shoots up.

Uh I'm just wondering if I you don't have the years specified there, but I'm just wondering it was that during uh 2012 when redevelopment went away.

That was meant to be more of just a stylized version of take any generic asset, and over time, uh you don't have to put too much money into it and it'll function fine.

But if you don't do that preventative maintenance at some point in time in the future, and that's gonna depend on the type of asset.

I'm sure that that Matt can talk about that cost then shoots up because you have to do emergency repairs, which are much more expensive, or you need to replace it all all together.

So it's just a stylized example of your generic asset.

I see.

Um because I know that um during the time of redevelopment, there was a lot of assets that came online, and we're now approaching a period where you know, 20, 21, 22 years have gone by, and then you have a boatload of assets that all of a sudden uh so I'm I'm a little bit concerned, and I appreciate that um you do have some uh strategies to address uh you know, sort of the backlog and how we're able to get some funding or uh what we can do, but um I'm also worried about this sort of balloon of assets that are gonna come uh to either a point of uh facilities replacement or decommissioning or something, right?

And there's gonna be a bunch of them, right?

Because we did do a lot of uh of building during uh the redevelopment years, and I'm just wondering does that get incorporated into your uh sort of thinking of how we're able to address uh the backlog.

Yeah, for sure.

When you're looking at so what's hard about this problem set in describing it is you have the whole component of the building, and so the probability of a whole facility going offline, there's only a few key components that make a whole facility go offline.

Um some of which could be power, so like the backup generation seems like you should prioritize that.

Maybe not paint.

Um you can patch a roof, but only so long.

And so those so there's different, but or like HVAC, you have to have a temporate place um to have people in.

And so there's a few key components of those buildings that would make the building go offline as opposed to the whole building.

So that's where each one of the bits of assets has this different line, and they're different.

That's why you can't put years on it, because one's a five year and one's 40 years.

Um and when you look at the storm thing, we've been uh harping on the thing I've been harping on is that's 900 million over 30 years we need to invest as opposed to something that's failed right now, but there's components that need to be failed.

Okay.

Thank you.

Um the other question I had was in regard to um going uh waiting until 2028.

And I know that uh there are many other agencies who are also in the same boat, they're sort of also you know, want money and you know, they're going to the voters, and I'm a little bit concerned that you know it's I mean, in another two years, it's gonna get worse.

I mean, it's not I I don't see it getting better.

And even though you know it doesn't look great for 2026, waiting till 2028.

Uh I'm not so sure it's gonna be any better.

Uh yes, you know, we can kind of like figure it out and all of that, but why don't we go in 26?

I think I can answer that.

Lee Wilcox Assistant City Manager.

Uh to be blunt, I don't believe we have anything politically viable in the way of a tax increase for the November ballot.

Um we will be getting top lines back later today from FM3 our polling firm.

So we did go out again on the parks parcel tax and bond measure.

Yeah.

Um those are a good 15 to 16 points away from the two-thirds threshold.

So what that tells us is you know, we as staff need to engage much more purposefully with you over the next two years about something in 2028.

And I would say that's what happened with Measure T.

While Measure T passed in 2018, there was a recognition by the council and staff in 2016 when we did the sales tax and pension reform that we really needed to move forward with something.

And we were very purposeful about our community budget meetings in your districts um focusing on this work and kind of a lot more education with the community around the needs, and that's what those numbers tell us, in addition to just the catastrophic timing of uh tariffs, gas tax, and every you know, other uncertainty that surrounds us right now, probably driving those numbers down.

Is there any talk about uh having a you know uh citizens initiative?

I know that it would be obviously the threshold is lower uh to be able to do like a parks uh measure or uh library measure or a parkside library measure uh because I think that you know maybe a a citizens initiative uh would be much more viable in terms of at least meeting the threshold of they absolutely can be.

Um I think probably that our library system probably has the most robust and uh engaged foundation that was probably in a position to move something forward through the signature process.

I would say that's unfortunately the Parks Foundation.

We have not found them in a lead driver role around advocacy or really engagement with the community to bring those numbers up.

So I I don't believe they'd be in a position to gather signatures as well.

I think that's something that manager's office and parks really need to think through because we haven't been able to get the you know, whether it's a parks bond or parcel tax, we haven't been able to get those parks numbers up in over 55 percent, um, which is still you know 11 percent away from the threshold needed.

Okay, thank you.

Thank you.

Councilmember Mulcahy.

Thank you, Vice Mayor.

Um thank you for the report.

Um it's uh daunting task to look at all of those.

So thanks for the effort.

Um so I wanted to sort of go to a couple of questions.

Um this one I think for Matt or Jim or both, perhaps, or real estate advisor.

I don't know if Kevin is here or not.

Um, but it just goes to how we sort of evaluate our real estate portfolio with 400 buildings, five million square feet.

The idea of opportunities that would make sense to offload the ongoing cost of ownership and future requirements of the capital investments.

How you know I know from time to time we've sold off property and met you even mentioned sold and bought.

How intently are we looking at our portfolio relative to this issue that we're talking about today with respect to long-term capital requirements, cost of ownership?

Yeah, I'll start that answer.

I think we are very intentional about selling surplus property in any given year to generate general fund revenue.

So that's part of the ongoing work program of OEDCA.

I I don't think we have any active work streams looking to specifically address this issue.

It's something that probably needs to become one of our priorities.

I think it's one thing to sell and get rid of an asset and not provide that service.

That's probably an easier market taker than to get somebody to sort of take on the asset and the ownership but still provide some that level of service.

I think when we look got directed to look at that in years past, that's been more challenging.

But it doesn't mean that we shouldn't be thinking it through.

Well, you bring up a good point.

On page 19, you have the strategies to address the backlog.

It doesn't include anything related to investigating selling or public-private partnerships that might be better alternatives.

And you know, I think about, you know, I'm as you know, I'm a big supporter of the arts, but I also think about the expense and cost of the cultural facilities that we own.

And you know, without saying the specific buildings, you know, one has a heck of a lot more land value available to it than it does in sort of an ongoing concern as uh a building that we continue to invest millions of dollars every year in.

We've got another one that you know has got more of a historic fabric, but you know, would it be better, you know, owned by the organization that operates the facility, and we can offload that ongoing capital request cost as well as the operating cost of that building.

So I really would like us to consider, you know, adding to our strategy list this very issue of uh the impacts and opportunities around the users we already have, public-private partnerships, land value underneath those buildings that we own, and we own a lot of them.

Um let's see.

So uh this might be a question for John Cicerelli as well, but it kind of is in the same vein.

So PRS shows more than 650 million in needs across park grounds, trails, regional facilities, and buildings, so we know which PRNS assets are closest to failure.

So my real question in that is like uh in the past, would the Ranger station at Confluence Park and would the carousel at Arena Green West, would that have been on the capital requirement list?

Sorry, John.

I don't think so.

Thanks for the question.

I don't think the Ranger station was because the Ranger Station was a reaction to it being set on fire a couple times.

And and we just said, you know what, we're not gonna keep going.

It's too much damage, it's not worth repairing and continuing to fight fires.

So we saw a better plan there.

The carousel would have been tracked.

That was something that we were aware of.

We had a cost about that, what it would take to repair it and and what one what money was needed.

Well, I raise it just because I think there are two good examples of this public-private partnership to a get rid of an ISOR that was creating more challenges than it was worth, as well as removing the the carousel, keeping the pavilion and sort of doubling down on the sort of the asset we didn't really know we had, right?

Because we had this dysfunctional carousel there.

So this is in line with this thinking around, you know, what what other opportunities are out there so we can get proactive around public-private partnerships that might be able to take some capital requirements off of our books or at least share that weight as we sort of bring assets back to the community.

Yeah, we agree.

And um, I actually have my staff working on our current community center inventory.

We have 47 community centers.

We as we only have staff in maybe 15 of those.

Um the rest are either some are empty and some are uh as you know, used by nonprofits where we kind of repurpose them.

But some of those are just assets sitting there that we could sell.

We could just sell them into the market, take the cash and walk away and move on.

I will tell you, we went through this about 15 or 20, maybe not 20 years ago during the housing crisis.

PRNS went through the reuse process where we used to run all those community centers.

And we said, Well, we don't have the people, we've laid off a lot of people, so we contracted.

But the initial idea was to sell off the assets.

But the community said, no, we don't want you selling these community centers.

Even the little ones, even the really old ones, even the ones that are just houses on a piece of property.

Um there was a lot of pushback from the community.

So there's a there's a process, a community process there that we'd probably have to get through to be able to sell some of those assets, but it is something we are considering.

Great.

Thank you, John.

Sure.

Um then on page nine, Matt, um, you talk about the you have the list of the city facilities at 570.9 million.

When you list Team San Jose at 79 million, I think you mean the convention center specifically.

Correct.

Yeah.

There's that whole complex, yes.

Yeah, let's not reference it as Team San Jose, the manager.

Let's represent it as our asset, which is the convention center.

I believe it's uh I believe it's listed in the report as convention center.

But I just just a little nitpicky.

And I think it would be the few other there's a five other cultural buildings that are under that auspice.

I think that incorporates the 79 million is the convention center plus those few other CPA, the yeah, I got that.

Um and then I maybe not last, but um with respect to the airport, you have it zeroed out.

Is that because the capital requirements are all managed through its enterprise fund?

No, it is because they're able to achieve through usually FAA grants or some other partnerships with airlines and so forth to fund the issues that are or things that are needing to be remedied at the airfield or in the buildings there.

Right.

Um so they've that's where there's nothing pending right now that they can't achieve through other funding sources.

Have you seen the bathrooms lately?

Uh I mean, I don't mean to be smug about it, but I know that that's on the airport's mind.

Certainly, you know, the concourses look fantastic.

They look like you're walking down Santana Row and then you go into the bathroom and they don't.

So that's not really for you to answer necessarily, but I was just curious.

You know, I know that there's thinking around projects related to capital investment, but it doesn't end up on this list.

Correct.

And Gene, I believe is here that it could help some of that in terms of specifics.

Um just to help for the aggregation of this report.

It's not necessarily driven all by one department, it's aggregated by others, and certainly um asset owners certainly own the information from their group.

Yeah, Gene Fraser, uh Deputy Director of Facilities and Engineering.

Yeah, just as you mentioned, Mookie has been looking at all the five bathrooms, looking at potentially upgrading those, and that would be identified on our CIP or also our master plan.

Cool.

Thank you so much.

Uh I think that's it for me.

Thank you, Vice Mayor.

Thank you, Councilmember.

Councilmember Tordillos.

Thank you, Vice Mayor, and thank you, staff, for the very comprehensive presentation.

Uh, I think agree with my colleagues here, very sobering report in terms of the depth uh of the backlog.

I think one of the things that caught my eye similar to Councilmember Mulcahy was uh, you know, the eye-popping numbers around some of the cultural facilities in and around downtown, uh, you know, adding it up, I think close to 140 million just downtown in some of these facilities.

Um I think that was striking to me just because you know we've been talking a lot recently about sports and entertainment district, you know, forward-looking economic development and investment in the downtown.

Uh, and I struggle a little bit to look at those new investments proposed alongside kind of the existing significant backlog.

You know, Councilmember Ortiz talked about this question of our when we build new facilities, are we just creating more maintenance burden down the line?

I think that's something we need to be mindful of as these sports and entertainment district discussions proceed.

You know, obviously it's very early in those discussions.

We don't know yet if these are gonna be city-owned facilities, if we're gonna be trying to incentivate uh incentivize private capital come in and build things.

Uh, but I think we want to be wary of, you know, setting up more maintenance as we have a backlog that we don't currently have a strategy to address here.

Uh so it also just kind of plus one council member Mulcahy's comments here about really being intentional about thinking about some of the assets that we own that we maybe don't need to.

Uh you know, are we the right property owners for some of these cultural facilities in particular?

Uh so we'd love to dig more into that in the future.

Thank you.

Thank you.

All good questions and uh good information.

Again, thank you for the presentation.

I just had a couple questions about the funding sources or the potential funding sources.

Jim, you talked about a property assessment fee, and then you mentioned uh general obligation bonds.

What's the impact to the taxpayer on both of those uh potential fees and assessments and bonds?

Yeah, that's a good yeah.

The uh the good question, the answer is that it's gonna vary depending on sort of what actually uh ends up uh happening.

Uh so for an example for a general obligation bond, that um uh there is an assessment that's placed on the property tax role to pay off the debt obligations for that general obligation bond.

Those debt obligations are tied to the issuance of when the bonds are actually issued.

So, for example, for the measure T bond, I think we had three tranches of debt issuance.

So um as that gets scoped out, like hey, what are we gonna do in the next few years?

We need to go out and get some bond financing for that.

That um that amount for repayment is then applied to the um the property tax role.

Similarly for an assessment-based fee, that would also appear on the the property tax bill, um, because it would be that service the the proportion that property owner would pay would be tied to the proportionate benefit of the service received provided by the city.

So, but the actual amount is going to vary depending on how that gets scoped.

So, and I I know we're not you're not proposing any of that uh but right now, but I'm just trying to get uh an understanding of the assessment fee.

Are you looking at districts then that would have a particular assessment that benefits from a particular park or particular uh activity in their district, or more global of an assessment fee more like a parcel tax?

Uh I think it would look more like a I mean I am careful about the language that I'm using here.

I think for the the stormwater, I think it is for the stormwater conveyance throughout the city.

So I'm I'm I I think staff's looking at a sort of a citywide assessment fee, but again, I think we're still in the engineering phases of that and we'll have more information for it, but it would be their proportionate use.

I I think citywide for stormwater conveyance.

Okay.

And so with the general obligation bond, that's based on the value of your property and your parcel, your property tax assessment, right, per 100,000.

Um with regards uh Lee, you mentioned we're polling.

Can you tell me what we're polling, what kind of language we're we're out there with right now?

Yes, I don't have the exact language in front of me.

It was on a general is fine.

Sure.

So one was on a parks parcel tax.

Um and then the second item um, as we kind of did a split sample, one was on a uh infrastructure bond, as Jim mentioned, and we used the polling that we did right after Thanksgiving, or honestly, I'm sorry, between Halloween and Thanksgiving of last year to help refine both of those ballot statements.

Okay.

And I remember I recall the results of the one as it been a year over a year ago, that our polling numbers weren't very good, and you're saying they're not improving.

No, they've they went down, in fact, unfortunately.

So that you know, the only thing that staff really saw is viable um given where the numbers um were at last year was the TOT measure, which is why we brought that forward to you, and and ultimately you guys move that forward.

Um but that is why Jim's comments were more focused on 2028.

Um there's nothing, even if we all decided in this room right now, um, on a big campaign and uh you know big spending plan that we see as politically viable.

It's it's gonna take a lot more community conversation to get that across the goal line.

I I think that's absolutely accurate that we need to make sure if we're considering anything like that, that we need to go out to our community and gauge their concerns, their input.

What would they like to see with these these funds in the way of infrastructure and backlog repairs?

Not that it's not important, but that the community needs to weigh in on it because they're ultimately going to be paying for it in many ways.

All right, thank you.

That's the end of my questions, and I see councilmember Duana has some comments.

Thank you, Vice Mayor.

Thank you for the presentation today and the overview of the unmet infrastructure's needs.

Now, like many other city and county, our needs are far outweighed uh the funding that is available.

While new funding will be certain on the table for discussion some point in time.

Um I'm curious, are we exploring ways to bring down the cost first?

For example, are we looking at new construction innovation to help reduce the cost?

Are we looking also or there's a way to reduce the cost of PW projects?

Because I know that if we were to contract out a particular project, it costs us less because right off the bat, I believe PW now is 40 percent upfront cost on any project.

In terms of upfront costs, I think some of the numbers that people have talked about public works costs are the costs, the soft costs that it takes to deliver a project, whether it's um the staff to get the consultant or get the contractor or the staff that are needed to pay the invoices from the contractor and the engineer or architect or project manager team and inspection team to then build and then inspect the project through delivery.

That is usually in that range that price that cost, it's not an upfront cost necessarily.

Some have again, depending on how projects are paid and how funds choose to pay them, some are off the top.

I mean, that's where the term comes up the front up front, others are assessed to the program uh by project.

And so that's just the cost to deliver the project.

You have the hard cost, which is the contractor and the and all the materials and goods to build the thing.

Um, and um I'll argue, and we've been audited and reviewed.

If it's um if there's another delivery of a project and you look at all of those pieces and the cost to bring those to bear, it's the same.

If you don't and if you don't include all of the people to inspect, or you don't include the people to do the invoicing or the people to procure the contractor to deliver the stuff, you don't include all of that in the price, it's just not a comparison.

No, I understand that.

Thank you.

Let's say a project is a million dollars, and 40% of that million would be 400,000.

So now the project become 1.4 million dollars in order to accomplish.

Am I correct on that?

No, I would describe the project as a 1.4 million dollar project, of which one million of it is soft costs and 400,000 is sorry, one hundred one million is hard costs and four hundred thousand dollars is a cost.

So the project is a one point four million dollar project.

You can't ignore the delivery of the project outside of the construction of it.

They're they're not two separate things, they're a collective whole.

Do we have a policy lever that would help bring the costs down versus 40 percent?

Can we bring it down to like 25 percent?

A policy lever?

No, there is no policy lever.

Okay.

I I think uh council member, if I could just time in a little bit.

Uh one of the things is that the public works department um is is funded like an enterprise fund almost, so it has to be cost recovery in the charges.

So if a department is working on a project and let's say they're managing a project with just their general funded staff or their special funded staff, their staff is often not uh counted as part of the overall project cost because it's budgeted somewhere else.

But when public works has to deliver a project, um their budget exists uh only on a project-to-project basis.

So uh that's why you see sort of the the public works cost looks like it's a higher cost than a non-public works cost.

It's it's really not, it's just that the public works is an enterprise almost like funded department that has to be paid by the individual project cost themselves, which is why it shows up there.

So would you say that public work costs is is comparable to our private industry cost, the including the hard hard costs and the soft cost?

So the hard costs come from private industry because they're private contractors delivering the construction services, and the soft cost, they have a lot of private industry people participating in that, whether it's the design firms that are helping us design it if we're not designing it in-house, and so they're comparables.

Um the question is is um we I don't know that we have a direct comparison of cost to a private sector construction project that has the amount of things that we need to include in our projects that have the soft cost and hard cost separation.

I I think there's also I think public works um uh uh looks at individual projects to see how that it's most effectively to be delivered.

So some projects are at the traditional design bid build, but others may make sense to be more of a design built project where the the private contractor is brought on earlier and is responsible for both the design and the construction pieces.

So I mean I think there is some evaluation for this given project, what's the most efficient way to deliver that?

And I think that's part of the ongoing evaluation process.

Thank you.

How is it that we are not preserving fund for the major infrastructure that is needed?

It seemed like from the day one when we built this building, for example.

There were problems, right?

And then the water intrusion.

Why didn't we address this years ago?

At least at the point where it's still under warranty by the contractor.

And then now we go on to too far.

The the warranty is expired, now it's coming out of our taxpayer money.

So the warranty is usually generally a year, depending it's varies depending on the product and thing that they're what's being delivered.

Um there's bits and components that have longer warranties and some have shorter warranties.

So it's the warranties are hard to describe in terms of an entire complex like this.

Um I don't know that there was water intrusion from the very outset while it was still in the warranty period.

I don't know that because I don't think it's been reported to me that we have reports and studies back then.

Um the question is do we dig down, dig out 20 years hence um what the actual cause was in terms of was it is it a failed component, failed design, or is it uh poor construction?

Those are the three things that would happen in some kind of failure.

Um both are beyond the period right now in terms of when we've gotten the specific components that we need to replace, beyond which we could hold a tribute to anyone else.

So we still have this problem that we need to solve and stop the water from coming in so we don't have building failure.

All right, thank you.

How do you deal with safety issues or emergency requirement?

For example, the ALMA community center, the senior center.

So as you well know, the temperature is getting higher and higher.

And ALMA Senior Center is considered one of the oldest or the first community center.

And the lifespan of that HVAC is over 25 years.

Why didn't we replace it like you know, five five years ago?

Now we're going to a safety issues, an emergency.

Where do we get the funding to take care of that?

So the funding to take care of a replacement at a community center comes from a couple places, but usually it's out of specific areas we work with parks in terms of the funding resources.

There's not a dedicated resource that's allocated in public works to go and build a replacement outside of getting either capital funds from Jim and the general fund dollars through a budget process or a budget allocation.

There are pockets of money in council districts that parks can help clarify that are available to assign to different projects, as was discussed with John earlier.

Um whether it's us or parks, whether so there are projects listed in here that get to the 2.6 billion that we say we've been we say for a so I have 17 storm projects say we need to build these over the next 30 years, and so we're saying that now.

We've said that before about Alma community center and the HVAC system that needs to get replaced.

We've said it in the past that that we're it's beyond repair.

Um and so we have to make constant trade-offs in terms of what's available with the limited dollars that are here.

So my question is where are you going to find the funding to replace that?

HVAC at the Alma Senior Center because it's considered a safety issue at this point.

In terms so when I looked when I when public works comes with a failed system, and if it is more urgent or critical, uh we look to the departments, the operating departments and or the budget officer, what we have this need.

Um, what are the sources of funding available?

And we have a dialogue to see what is anything could be brought to bear and what is the total cost.

And yeah, similar, I think yeah, if John has any insight into that particular asset, but I know part of the annual capital project is to see uh to capital development processes to evaluate the resources that we have in the CNC funds and the park trust funds.

Um, you know, I think if there is something that looks like to be a life safety or critical issue, like we'll work to address it either through the prioritization of the limited resources that we have or in some cases uh uh infusing the general fund dollars which we have in the past, but I'm not sure about this particular instance.

Yep, that's the case in this one.

It's coming from CNC and park trust fund that's dedicated to this district.

If you don't have enough CNC funding, it is considered a safety emergency issue for their seniors.

Where you can get the funding to go ahead and replace that HVAC.

If we aren't able to do that, then we'd have a conversation with the budget office about well, is there is there money?

Is there one-time dollars?

In this case, this is not a huge project, it's less than a couple hundred thousand.

So in those cases, you might be able to grab a little general fund money if there's something available, or some one-time money, um, but it can be a scramble to try to figure out.

So, but if it becomes an emergency, meaning it's going to fail, um, then it suddenly pushes it to the front of the line.

And I know you asked why didn't we do this five years ago?

Because five years ago, there was something else that was about to fail.

And so we did little patch repairs to keep this system going because other systems were failing elsewhere because we just can't get to everything.

So each year, this is a juggle that we have to go through with our assets, is things will just start to break, and we know we can't fix them anymore.

You can't get the parts anymore, and suddenly it's an expense you weren't planning for.

Where's the money going to come from?

Is a struggle.

Thank you.

Uh, my time is out.

I know the capital funding is very little, and and I'm hoping that we can find a possible funding from somewhere so that we can replace the AUMA air conditioning.

Thank you.

Thank you.

Again, thank you for that really detailed uh eye-opening presentation.

And I think that concludes our study session.

Do we have any members of the public who wish to speak?

Looking up there, I see nobody, so that would be a no.

With that, we stand adjourned.