http://paloaltoonline.com/blogs/p/print/2012/03/28/so-much-infrastructure-so-little-money


Local Blogs

By Paul Losch

So Much Infrastructure, So Little Money

Uploaded: Mar 28, 2012

--Blue Ribbon Task Force on Infrastructure;

--How best to address the need for replacing our inadequate public safety building, currently in City Hall

--Acquiring the Birge Clark Post Office Building on Hamilton;

--What to do with the Municipal Services Center and the Animal Services Center along East Bayshore;

--Refurbishing the Golf Course in light of the levy project to control flooding at San Francisquito Creek.

So Much Infrastructure, So Little Money

There is no lack of opportunity and problems with the infrastructure in town. Much of it is self-inflicted, due to lack of upkeep and maintenance over many years. Some it stems from obsolescence or that the useful life of certain things is past the point of being rehabilitated. Some of it is due to changing circumstances that are not in Palo Alto's complete control. Some of it is opportunistic, but appears to have tremendous long term potential to improve the community.

We have got our hands full sorting out the priorities and timing here.

One thing I found useful when I was in Business School is a very simple maxim when choosing what investments to make: first make judgments about whether the idea is a good spending decision. Then, determine what financing strategies are possible to pay for attractive projects. It may be a good spending decision does not lead to a project because a financing strategy cannot be identified.

We certainly face both issues on the numerous infrastructure projects here in town. To use one example to illustrate the point: the Hamilton Avenue Post Office Building

This is clearly an unanticipated opportunity for the City. This downtown icon, which I doubt very many people would want to see torn down, is zoned to be used for public purposes: it cannot be sold off to a private real estate entity. It is near City Hall, the leased space to cover City employee overflow that we presently pay for could be replaced with a re-furbished PO building, saving on rent.

Great! So how where's the money to do what seems at this early stage like an attractive notion?

This is where it gets tricky. How to finance this potential project may be a strategy that is different than what can be done to do sidewalk repairs. Specifically, one avenue the City is investigating is what the savings from not paying leases can be "wrapped" into a bond whereby the savings would go toward paying down the bond that covers the purchase of and improvements to the building. The analysis at this point is at an early stage, but it would be a nice arrangement if savings from terminated leases could apply toward such a bond. I don't know if this will work out this way or not, although I hope it does.

The key message here is that there may be some things on the table right now that can be paid for independent of the general fund budget. And without having to try a general bond campaign such as what done for the libraries. There are funding silos, and one cannot shift money from one project to the other, it has to stick with a particular project.

I am no finance expert, but I have had enough exposure over the years in City affairs in Palo Alto to note that many people have a limited understanding that there are these different financing strategies, and the City needs to take advantage of them when the situation presents itself.

That said, I am doubtful that all the ideas/opportunities/problems around infrastructure can be adequately financed, even using some of the strategies that I have summarized here. It will take a great deal of community involvement (as our Mayor Yeh has called for) and some heavy lifting by City Council, City Staff, and City Commissions to make some choices around these various infrastructure needs.

Comments