Palo Alto Weekly

News - January 20, 2012

Council skeptical about ways to pay for infrastructure

Officials weigh controversial choices for fixing Palo Alto's buildings, roads

by Gennady Sheyner

Seeking to get a better grip on the city's gaping infrastructure needs, Palo Alto officials on Tuesday delved into a long-awaited report by a commission that had spent more than a year studying the problem.

But while the City Council praised the report and embraced several of its recommendations, members were less enthusiastic about the report's most controversial proposals, including ones to raise the city's sales tax and to scrap the city's lease of Cubberley Community Center.

The council's Tuesday meeting kicked off what Mayor Yiaway Yeh branded the "year of infrastructure renewal and investment" in Palo Alto. The discussion focused on a comprehensive report by the 17-member Infrastructure Blue Ribbon Commission, a citizens group that surveyed the city's infrastructure backlog, maintenance costs and facility needs and recommended ways to finance the repairs. As the council dives deeper into the report in the coming months, the biggest question it will tackle is whether the city should place a measure on the November ballot that would pay for some of the big-ticket items on the commission's list.

The commission's report estimated that Palo Alto needs to spend an additional $2.2 million annually to maintain existing infrastructure and that the city has $41.5 million backlog in deferred maintenance repairs that should have been made earlier but weren't. The commission also recommended replacing the city's cramped and seismically deficient police headquarters with a new public-safety building and refurbishing two fire stations, items that together would cost more than $90 million.

The report suggests going out for either a bond or certificates of participation to pay for the police building and the fire stations. It also recommends paying for routine maintenance and catch-up costs through an annual revenue source such as an increase in sales tax. Perhaps its most controversial recommendation is ending the city's lease of Cubberley Community Center space with the Palo Alto Unified School District, a move that the commission estimated would save the city about $6 million annually.

But that recommendation encountered resistance Tuesday from several tenants of the community center and from two former mayors, Mike Cobb and Lanie Wheeler. Cobb, a board member at Palo Alto Girls Softball, urged the council not to include the complex subject of the Cubberley lease in the larger discussion of the city's infrastructure.

"The future of Cubberley and the services it provides here are much too significant to the community to be lost in this discussion," said Cobb, whose league plays at Cubberley.

Wheeler agreed and while she lauded much of the commission's infrastructure report, she urged the council to have a larger community discussion about Cubberley so that the various stakeholders could agree on a future course.

"Cubberley is much more than the money pit it is presented to be, or the source of funds it is presented to be," Wheeler said. "It's really a quality-of-life issue that needs to be discussed."

Despite the report's recommendation, council members are unlikely to make a decision on Cubberley any time soon. The city last year established a framework for working with the school district throughout 2012 on the thorny topic of the Cubberley lease. In a memo to his colleagues, Yeh noted that the council "has already established a process to work with the School District" on the subject and said the commission's recommendation on Cubberley "needs to be reconciled with adopted Council direction."

Councilman Greg Schmid expressed skepticism about the Cubberley recommendation Tuesday and said the commission's report failed to consider benefits that the city would lose by not renewing the lease. The city-leased portion of Cubberley currently houses a variety of playing fields, artist studios, day care centers and nonprofit groups.

"I'm struck that there was no discussion of the cost inherent in the tradeoff and what infrastructure would be lost by the ending of that lease," Schmid said. "I think the city has gotten some true and important benefits from the current situation."

The report's other funding recommendations, including a bond and a sales-tax increase, come with their own political challenges. Councilman Pat Burt acknowledged Tuesday that "it's not going to be easy to come up with enough dollars to do what we're all acknowledging that we need to do."

Though the council's discussion of the proposed revenue sources was relatively brief, several members expressed misgivings about some of the recommendations in the commission's report. Councilwoman Karen Holman voiced skepticism about a recommendation to increase the city's sales tax by three-eighths of a cent and wondered if the change would drive shoppers to other communities. Burt also suggested that the proposed increase is too high.

"Three-eighths of a cent increase is a pretty big jump on a local level for a sales tax," Burt said. "If we look at that, we may look at something that's a little less than that."

Council members were more enthusiastic about the commission's recommendation that the city create an "infrastructure management system" a database that keeps track of the city's maintenance needs. Schmid and Holman both said they strongly support the recommendation and Larry Klein said it "makes a lot of sense." Council members also generally agreed with the report's recommendation that the city should have a high-level official overseeing infrastructure management.

The council was unanimous in praising the work of the commission, which was officially discharged at the end of the meeting. Yeh said that "without the attention that IBRC has brought to the issue, as a community we wouldn't be able to move forward as informed as we want to." Councilman Sid Espinosa also lauded the commission, calling it an "All-Star team."

"What we ended up with was not only something well-written, very thoughtful, but also absolutely comprehensive, immensely helpful and absolutely critical to the future planning for the city for many years to come," Espinosa said.

Ray Bacchetti, who led off the commission's presentation Tuesday, quoted Lily Tomlin's observation that "reality is the leading cause of stress amongst those in touch with it." He called infrastructure "one of the most significant topics the community must face."

"We hope to have taken some of the uncertainty out of it with our report and some of the stress out of it with our recommendations, but we don't think it can ever be a stress-free topic," Bacchetti said.

What: The City Council will hold its annual retreat to set priorities and continue its discussion of infrastructure.

When: 9 a.m. on Saturday, Jan. 21

Where: Downtown Library, 270 Forest Ave.

TALK ABOUT IT

What do you think of the city raising its sales tax, putting a bond measure on the November ballot, or ending its lease of Cubberley in order to fund infrastructure repairs? Share your opinions on Town Square, the online discussion forum on Palo Alto Online.

Staff Writer Gennady Sheyner can be emailed at gsheyner@paweekly.com.

Comments

Posted by JT, a resident of Crescent Park
on Jan 18, 2012 at 3:09 am

The city of Palo Alto gets an astounding amount of revenue every year, much more than other cities. especially when you consider our city-owned utilities. Why has the city, with this kind of cash flow, allowed its assets to deteriorate? We need to change the behavior of city employees and the council so that they do a better job maintaining our assets with current revenues. When I see that happening, I'll consider a tax to build more assets (such as a public safety building). But right now we need an accounting as to why the city has let its infrastructure fall apart. Asking for more money isn't the answer. We need to find out what went wrong so that we don't repeat this behavior. I really get the feeling that city employees only care about their paychecks, benefits and pension---and they don't care whether our assets deteriorate or not.

I also wonder if some of this deterioration is deliberate. I recall the PAUSD let its buildings become rundown, especially Gunn. They had plenty of money in reserves, but they pretended as if they were poor to pass a bond measure. I'll bet the city is up to the same old tricks.


Posted by Resident, a resident of Another Palo Alto neighborhood
on Jan 18, 2012 at 8:27 am

So the city needs to find another $2 million per year to pay for infrastructure, well stop funding PACT $1 million each year and we are half way there.

See, it is easy to find the money if we really want to without raising taxes or asking voters to agree to a bond. Why should the residents of Palo Alto pay for the financial mistakes of the city administrators.

If my home needs more money spent on upkeep I take money out of some of our fun activities to pay for it, I don't put it on the credit card and ask my boss for a raise to pay for things I haven't bothered to do for the past x number of years. Fiscal responsibility starts with deciding where to save money at home rather than always expecting it to appear from nowhere.


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Jan 18, 2012 at 10:06 am

Very, very well stated Resident of Another Palo Alto Neighborhood. In addition to suspend funding to the Children's Theater, our city leaders and elected officials could also look at making cuts to other non-essential city services. The Lucie Stern Zoo comes to mind, as well as look contracting out our Animal Services as other neighboring cities have recently. I also question whether or not public funds should be used to fund homeless outreach programs like the Opportunity Center. A six figure allowance going toward a program that serves a majority of people with few if any ties to our community.

The people spending our taxes have to hear loud and clear that we want to see a practice of sensibility and fiscal responsibility before they come back to us for more money. They have been telling us that we are facing an unprecedented financial crisis and experiencing annual budget deficits. These are their words, not mine. If that's the case, then the city simply can't continue to fund non-essential programs. I would love for Palo Alto to have these many programs and amenities that make it so special, but you know what, we can't afford it anymore, and I resent being asked to pay more taxes when they failed to allocate public funds for our essential needs. When they have public safety and vital infrastructure needs met, then come back to us to see if we want to spend additional funds on the special projects. Set some priorities and demonstrate some fiscal responsibility already!


Posted by pat, a resident of Midtown
on Jan 18, 2012 at 12:08 pm

Here we go again. As soon as some sensible suggestion is made to save money, the special interest groups come wailing to the city council: "Boo-Hoo. Please don't take away my day care/studio/ball field/softball/theatre/library/... I can't survive without it."

Council Member Pat Burt thinks it would be "problematic" to divert funds intended for recreational facilities to infrastructure.

Of course it's a problem to take something away from someone after they've grown used to getting it for free. Solving "problematic" issues is what the council is supposed to be doing! Can anyone seriously believe that recreational facilities are more important than infrastructure? It's not as if the city doesn't have plenty of other recreational facilities.

And these are the people who ran, and are currently running, the city!

Are there any adults here, or are they all whiny children who will cry and throw tantrums to keep their special toys?


Posted by svatoid, a resident of Charleston Gardens
on Jan 18, 2012 at 12:17 pm

Well said, Pat.

here is another typical comment:
"Cobb, a board member at Palo Alto Girls Softball, urged the council not to include the complex subject of the Cubberley lease in the larger discussion of the city's infrastructure."

Why should it not be include in the discussion? We need to start figuring out how to address the infrastructure issue before they get worse. or can we expect the Pat Burt-style comments trying to avoid addressing what will be painful cuts??


Posted by Well said, Mr. Cobb and Ms. Wheeler, a resident of Another Palo Alto neighborhood
on Jan 18, 2012 at 2:04 pm

With all due respect, your quote of Mr. Cobb is taken out of context. He advocated for Council to continue on the course they approved during the fall--a specific process to consider options related to Cubberley with the city, PAUSD and the community to identify the next best use for Cubberley, an extremely valuable community asset. Having listened to his actual full statement last night, I thought it was very sensible.


Posted by svatoid, a resident of Charleston Gardens
on Jan 18, 2012 at 2:15 pm

Well said, Mr. Cobb and Ms. Wheeler:

The discussion last night was about the recommendations from the report of the committee. As the article states:
"Perhaps its most controversial recommendation is ending the city's lease of Cubberley Community Center space with the Palo Alto Unified School District, a move that the commission estimated would save the city about $6 million annually."

of course, this is what is going to happen--if you talk about Cubberly Cobb and Wheeler will object. If you talk about cutting PACT, then the friends of PACT will object, if you talk about the libraries, then the Friends of the PA Library will object and on and on it will go.

As Pat pointed out--this is what the council is supposed to do. Seems that they are more worried about upsetting people than they are about addressing the infrastructure issues.


Posted by Resident, a resident of Another Palo Alto neighborhood
on Jan 18, 2012 at 2:19 pm

I think the Cubberley situation is another discussion because it also affects the school district. I know they are two different entitities but they both serve the same population and they should work hand in glove. Anything the city discusses about Cubberley must be done with full school district knowledge and approval. Otherwise it will be a case of the tail waving the dog.

Otherwise, I agree about sorting out some of these black hole money pits.


Posted by Exit-Cubberley-Committments, a resident of Another Palo Alto neighborhood
on Jan 18, 2012 at 3:25 pm

> Council Member Pat Burt thinks it would be "problematic" to divert
> funds intended for recreational facilities to infrastructure.

The UUT was passed in 1988, so it's a toss as to whether the paper-bound City Clerk can produce a copy of the ballot language. The County Registrar can, but they will want some money to fetch the documents from off-site storage. If memory serves, the language was very vague for that ballot item. It created the UUT "in perpetuity", but for no specific purpose.

The Cubberley site was the "hook" that those promoting this deal were using to gain voter approval. From time-to-time there has been some suggestion that excess money was supposed to be used for sidewalks and curbs (which are a part of the storm-drain system in some parts of town). However, no one has ever managed to dig up the ballot language and publish it. Maybe the Historical Society has a copy, but we are bound by that language--unless, of course, we overturn that vote with another one that allows the money to be used for infrastructure. At the moment, it goes into the General Fund--which is used almost extensively for salaries and benefits.

> Pat Burt ..

Burt is becoming an embarrassment. It's time for him to go!


Posted by Really, a resident of Community Center
on Jan 18, 2012 at 6:37 pm

I totally agree with Marrol.

With the revenue this city has compared to neighbors, I really don't understand why the money has not been there to maintain the infrastructure. Has the city been overpaying for this maintenance?


Posted by jardins, a resident of Midtown
on Jan 18, 2012 at 8:34 pm

The article states: "Council members also generally agreed with the report's recommendation that the city should have a high-level official overseeing infrastructure management."

Yet ANOTHER (excessively salaried) manager??!!

NOTE: around the autumn of 2011, it was announced that the city had discovered $40 million (I forget where from), and immediately there were ideas to build a new bike bridge, refurbish the golf course, etc., etc. Why not use all of that $40 million to catch up with (almost) all the backlog of infrastructure repairs (if the cost of those is still $41.5 million at the moment I write)???


Posted by Exit-Cubberley-Commitments , a resident of Another Palo Alto neighborhood
on Jan 18, 2012 at 8:57 pm

> With the revenue this city has compared to neighbors, I really
> don't understand why the money has not been there to maintain
> the infrastructure.

It's kind of sad seeing statements like this, since the City has been on a path that most assuredly led to this situation for the last thirty years.

The City has never been well-managed, spending most of its money on increasing salaries, benefits and "services". The City has never had an asset management program that encompasses all of the City's assets. It has not had operational audits of its major departments, even though there has been an auditor on staff since 1982.

Why?

Well, the City Council has been busy being a "world leader" in this, that and the other. Certainly all the gobbledygook about "global warming", "climate change", Vietnam, Afghanistan and Iraq opposition, as well as "alternative transportation" (such as the recent "approval" of about $100M for bike paths, bridges, etc.) or the $250M approval of a transportation hub for downtown. The City Council has simply been free to do what it wants--and there have been no real oversights by the residents holding the Council accountable.

The Neighborhood Associations (NA) do, from time-to-time, get involved. We saw that not too long ago when some of the NAs in South Palo Alto banded together to run Ricky's out of town, and to help to reduce the number of lanes on Charleston/Arastradero--claiming: "we're redesigning South Palo Alto". Right .. see how that turned out?

Try to talk to a City Council Member about a meaningful asset management program--and all you get are "blank stares". But these people's eyes light up when you talk about providing "more services". The only decent City Council Member we've had for the past 20-odd years was Dick Rosenbaum, who pushed City Manager June Fleming into doing an inventory of City infrastructure issues back in 1998. She called the inventory the "$100M problem" at the time. It's now the $550 million (or 1 billion dollar) problem now.

What has the City Council been doing since then? Well, they spent a lot of time on a crazy idea about swapping City land for a new Auto Row, they have supported an incredibly expensive new library that will be unused within a few years, they have failed to recognize digital technologies are rapidly replacing paper technologies, and have done nothing to push for e-Government .. and the list goes on, and on.

We have a local government that seems to be a play thing for some of the political class, and a source of bloated salaries and little expectations for its employees.

The model that the City has been operating on for decades has been to spend all of the general fund on "services" (meaning salaries and benefits), and defer most of the expensive infrastructure costs for a decade or two--and then promote bonds to pay for knockdown/rebuilds of clearly aging structures. The idea of continuous maintenance has not been all that popular with the various levels of management. And given that the Council hired people like June Fleming (for what reason?) .. the City's assets got no real top-down management attention for a long time. Even now, does anyone really believe that James Keene knows anything about running a City? Has anyone actually seen him out in the field .. looking at the various properties, buildings, and mobile assets of the municipal corporation? Can Keene really say with credibilty: "I've actually been there, talked to the people on the ground, and have a good idea what the issues are?"

In the long run .. Palo Alto has been left in the hands of people who turned out to be "electable", but had no idea of what the job entailed, much less the power (provided under the Charter) to do anything about the problems they saw once they were in office.

About the only thing the Council can do is to fire the City Manager, and make it clear to the next City Manager that the same fate awaits him if he spends a lot of his time travelling around, teaching classes at Stanford, and expecting the real work to be done by the Assistants and Directors.

Sadly .. we don't have much history in this town of people on the City Council doing much but looking to get re-elected, and/or jumping to the next level of government--like Joe Simitian did when he was re-elected to the Council, and then turned around and ran successfully for another office a few months later.

Folks .. the problem is us .. local government isn't working because most people in this town are just looking for "the goodies" that government can hand down. Remember the battle cry: "it's all free in the library"!

Right .. "all free in the library" ..


Has the city been overpaying for this maintenance?


Posted by Mark Weiss, a resident of Barron Park
on Jan 19, 2012 at 12:27 am

The public is invited to attend and even to speak at the City Council "retreat" Saturday morning and early afternoon at the downtown library. The main topic is infrastructure.

I am cynical enough to see "pork" when they say "infrastructure" and I also therefore think of the Blue Ribbon Committee as Pork Cordon Bleu.

Yeah, I think government is a we not a they and I think we should have "free libraries" and services, and make this as good a place for teens and seniors and the arts as it was when I grew up hereabouts.

This is a bit of a red herring but my reaction to Mr. Bacchetti's letter to the editor (another editor) about the propriety of a bank running an ad referencing "The Stanford Indians" is that I would actually like to see our City Council come to meetings in face paint and feather bonnets because at the very least it would indicate some type of function in the higher cortex. With all due respect. Good luck Mayor Yeh -- the first Red and Black alum in office -- and Vice Mayor Scharff and maybe we can have a special election to get our so called representatives to listen to citizens and residentialists and not just the builders and the concrete and asphalt mongers -- who to my mind are first cousins to the War Mongers.

In sum I tend to downplay the significance of the infrastructure problems just as I previously thought the budget problem was overplayed.


Posted by Wayne Martin, a resident of Another Palo Alto neighborhood
on Jan 19, 2012 at 9:37 am

Cubberley

Dealing with the Cubberley Center is going to be a contentious issue because it has served several functions over the years, creating constituencies for each of these uses: high school, buffer against over development and community center. The School/Site/Center has never been seen in terms of "cost/benefit", and now, looking forward, some thinking along those lines necessarily must include the City's involvement with Cubberley in the future.

Originally a school, the site was built in the 1950s when land and labor were cheap. Now, at (nominally) $5M an acre, the site is worth about $150M for the land's value alone. The buildings, while quite aged, have some worth, so let's say $50M (for discussion's sake). This brings the site's value to $200M (minimum). Rebuilt/developed by the right party, the site could easily be worth $500M.

Between 1988, and 2021 (and arbitrary endpoint for the City's involvement), the City could easily end up paying about $192M to the School District for use of the land (lease fees). The Site/Center does generate some revenue, but the City Council has indicated to Staff that the Center should charge "less than market rates" when determining charges for leases, and room-rentals.

Artists' Lease Revenue/Subsidies:
Web Link

Historical/Future Payments To PAUSD For Cubberley:
Web Link

The payments to the PAUSD are generated by the Utility Users Tax, which now generates over $11M a year for the City's General Fund.

The biggest single problem in trying to perform a cost/benefit analysis for Cubberley is that the City does not report the revenue/expenses along Profit&Loss accounting methods (P&L). This data is available to the public via Public Records Requests, but unless one understands how the City performs its internal accounting, all of the needed data might not be properly requested. Sadly, the City Council has never understood the need for P&L accounting of this, or any other City activities, so none of us can make reasonable decisions involving finances when it comes to City "enterprises", like Cubberley.

The Benest Years

When former City Manager Benest came to town, he did a fairly good job of analyzing the financial situation of the City, particularly where infrastructure was concerned. He provided the public good estimates of refurbishment costs that saw Cubberley needing about $38M in work at the time (about 10 years ago). What wasn't discussed, however, was whether the City should rebuild some of the Cubberely Center, rather than refurbish the aging buildings—driving the costs even higher.

There are some that believe that Cubberley should be reopened as a high school. This decision would probably require (a minimum) $150M in rehab work (straw man estimate). It's not clear that there will ever be enough new students to justify this decision/expense. If Cubberley were to be sold for new housing, this could easily bring several thousand new families to town—which most assuredly would require a massive investment in new schools and other public infrastructure. And if the site were to be used for commercial purposes, the anti-business people would no doubt revolt.

Benest did do some work on this issue. It was discussed from time-to-time at City Council meetings. The Assistant City Manager did take some interest in generating rather good (for the City) web-based status reports of how infrastructure refurbishments were coming along. But all of this seemed to stop at some point. Perhaps the work went on, but a full accounting of the $100M problem did not.

Cubberley maintenance did seem to be on-going during the Benest years. It was painted, at least. The yearly maintenance expenditures are no doubt "buried" in the City budget, but since the interior budgets of the various departments are not published, the exact amount of maintenance is not generally known.

What To Do

At a minimum, the City should:

Provide the public with a full P&L accounting of the Center for as many years as its data retention permits.

Increase all use costs/leases to be slightly revenue-positive—moving as much of that new revenue as possible into a reserve account for "infrastructure".

Hire a consultant to do an assessment of what redevelopment options exist for this site. No doubt the opinions and suggestions of the Consultant will be well received by the public; but with $200M-$500M on the table--it's time for some professional help in developing our options. This work should include future taxes generated by repurposing this land, as well as City/PAUSD costs needed to facilitate repurposing of the land.

Seriously engage ABAG over its unrealistic housing demands for Palo Alto.

Sequester the UUT revenues not paid to the PAUSD in a reserve account that will ultimately be used for infrastructure. This comes to about $7M a year, at the moment.

Investigate changes to CA AB8 tax revenue allocations that will see the City of Palo Alto receive more than 9% of the property taxes generated.


Because of the lack of complete and accurate financial information involving Cubberley, and the emotionalism that routinely is injected into community decisions in Palo Alto, decisions involving Cubberley will doubtless be much harder than they need be. However, with the lease up in 2014, it's time to do the work necessary to make reasonable decisions about our city's future.


Posted by pat, a resident of Midtown
on Jan 19, 2012 at 3:44 pm

I hope all of you posters are sending your comments to the city council.

I would like to see the cost of EVERY non-essential city service currently being funded, including the cost of salaries/benefits/pensions, maintenance, utilities, administration and IT services.

The list would include, but not be limited to:
- Golf Course
- Children's Theatre
- Jr. Museum and Zoo
- Animal services
- Cubberley
- Art Center

Add them all up to see how much could be shifted to the infrastructure budget to plug the $41.5M gap – and contribute to a public safety building.

Many of these services could be taken over by the private sector. Several years ago, a group came forward and offered to take over the Jr. Museum and Zoo. Then-Councilwoman Cordell objected because she feared some city employees might lose their jobs!

The city should also figure out if it's going to consolidate public safety services with neighboring cities. Until this is decided, it's impossible to estimate what kind of public safety building is needed or how much it will cost.

None of this is rocket science. Businesses do it every day. But the council is afraid of cutting anything because they can't say NO to the self-indulgent special interest groups who bring crying children to the council chambers, begging to keep whatever "beloved" program is dear to them.

BTW, I was amazed to find out that the city makes charitable donations every year, to the tune of $1.3M. Why is someone at city hall giving my tax dollars to charities? And which charities are they?


Posted by Civitas, a resident of another community
on Jan 19, 2012 at 5:01 pm

pat, self indulgence in Palo Alto, the center of the universe? Really? I'm amazed to learn of this situation. Shocking!


Posted by Crescent Park Dad, a resident of Crescent Park
on Jan 20, 2012 at 11:17 am

Cubberly - the lease expires in 2014. PAUSD may choose to take the site back --- certainly knowing *now* would be of great benefit to those organization who currently rent space.

We have always known that the CPA/PAUSD agreement would allow PAUSD to re-acquire the site and use it once again as a school.

I amazed by the "stakeholders" who have already started crying and whining about losing their space. Newsflash: It was never yours to begin with! And for those complaining about the money they have spent improving their space at Cubberly - that is the risk of either leasing or renting space.

PAUSD is going to need the space back --- we all know it. The question is not "if", but rather "when".

Stop whining, seize the day and start your proactive planning for the change of use at Cubberly!


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