Grand closing? The report on the new City Hall project by the San Diego County grand jury questions key assumptions

Written by Michael M. Rosen
Friday, 27 May 2011 13:49
Whither the new city hall project?

The $300 million project was yanked from the November 2010 ballot after supporters grew wary of placing it on the ballot next to a proposed sales tax increase, and has remained in limbo ever since.

Proponents, like Mayor Jerry Sanders, argue that building a new home for city operations will save millions of dollars in the long run, when weighed against renovating and upgrading the current, forlorn, Soviet-style monstrosity centered at 202 C Street. They also contend that city employees—and the residents they serve—need a new home that will inspire civic pride. Moreover, they note that the downturn in the housing and construction markets presents a unique opportunity to build at a steep discount.

Opponents, led by City Councilmember Carl DeMaio, regard the project as a gigantic white elephant that the city can’t even dream of affording, given its $70 million-plus budget deficit. Far better, they say, to live within our means and bring our current building up to snuff. A new structure won’t make residents’ lives any better, and the intangible benefits of appealing new architecture don’t outweigh its costs.

On Monday, the San Diego County Grand Jury, after studying the issue in depth, largely sided with the opponents, reporting that “the City can have a safe city hall that will be functional for many years without borrowing hundreds of millions of dollars that provide no new services.”
Part judicial body and part civic watchdog, the Grand Jury isn’t well understood by most San Diegans. While the term “grand jury” conjures up the handing down of criminal indictments, the San Diego County Grand Jury is charged with “investigating, evaluating, and reporting on the actions of local governments and special districts.” The grand jurors serve a year-long term, essentially performing full-time duties during that period, and are nominated by Superior Court judges. They monitor election results and processes, investigate corruption, and generally take a long, objective view of issues of importance to San Diegans in general.

In publishing the results of its findings, the Grand Jury reported the following facts:

Structural maintenance has been routinely neglected at city hall over many years.
The financial report on the existing city hall covering leasing, retrofitting and new construction was completed in 2008, but lease and construction conditions have changed significantly since 2008.
With the changes in the economy since 2008, the rehabilitation, construction and lease costs noted in the commissioned study are seriously outdated.
Construction of a new city hall is projected to cost nearly $300 million.
The City’s ability to finance large capital projects is questionable.

In other words, things are bad at the current City Hall, but many of the projections and budget assumptions are obsolete.

The Grand Jury also arrived at the following findings:

The existing city hall is in disrepair.
The City has granted itself exemptions from established safety and habitability standards.
The published estimated city hall rehabilitation costs appear to be more than required to ensure public and employee safety.
Third-party building owners/leasing agents confirm a continued downturn in lease rates.
The $500/square foot estimated construction cost for the new building is inconsistent with the $200/square foot rate currently available for the purchase of existing buildings of sufficient size to accommodate the City’s needs.

Specifically, the Grand Jury concluded that, “for the rehabilitation option, the City used the maximum rehabilitation cost instead of the minimum cost to ensure public and employee health and safety.” In other words, while 202 C requires significant work, the projections for renovations put forward by new city hall advocates are overstated, presumably—and perhaps deceptively—to make the case for new construction that much more attractive.

Based on these facts and findings, the Grand Jury issued the following recommendations:

Obtain cost information from current lessors for extending lease agreements beyond existing termination dates.
Determine if departmental downsizing will allow for a long-term reduction in leased space requirements.
Re-evaluate and report the costs associated with retrofitting the existing city hall, considering minimum/maximum expenses along with public safety.
Re-examine purchase options for temporary and permanent solutions.
Re-examine and report current construction costs and cost savings vs. those used in 2008 and 2009.
Inform voters and other interested parties about the future of San Diego city hall.

Thus, before moving forward, the Grand Jury advised, city planners have some serious homework to do.

The report won plaudits from new city hall skeptics like DeMaio. “I applaud the San Diego Grand Jury report for questioning the renovation and leasing estimates used by the City to push for a new City Hall,” DeMaio said in a press release. “This report validates our concerns that the project would cost millions of dollars we simply do not have.”

DeMaio went further, “call[ing] on city leaders to abandon this project. There are plenty of common sense alternatives that deserve consideration. San Diego taxpayers deserve an open and honest discussion on this important subject, with accurate and up to date information.”

Whether such an honest discussion will materialize remains to be seen. But in the meantime, the Grand Jury has done an admirable job examining these issues closely.

Michael M. Rosen, a San Diego Newsroom contributor, is an attorney in Carmel Valley.

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