Cost projections for staying at current civic center painted an inaccurate picture, report says
By Aaron Burgin
Originally published 1:52 p.m., May 23, 2011, updated 6:28 p.m., May 23, 2011
San Diego city officials exaggerated the costs of staying at the current City Hall to justify spending nearly $300 million on a new civic center, the San Diego County Grand Jury said in a report released Monday.
The grand jury’s report runs counter to the city’s contention that the construction project would be cheaper than renovating the complex and leasing downtown office space for overflow office space.
“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,” the report says.
The decision on whether to build a new civic center has been pending decades. In recent years, opponents have argued that a new edifice would be fiscally irresponsible during an economic crisis. Supporters, including Mayor Jerry Sanders, have argued the converse.
Jay Goldstone, the city’s chief operating officer, defended figures the city used to justify its support of the project.
“I have no idea what numbers the grand jury used on which to base its conclusions,” Goldstone said. “Our numbers were provided by nationally-recognized experts and were vetted extensively.”
Critics, including Councilman Carl DeMaio, capitalized on the grand jury’s findings and called on the city to drop the project.
“The report validates what our opposition has been, that developers have been pushing this project and that city government has been using very faulty and misleading financial projects to try to cram it through,” DeMaio said. “I hope this is a nail in the coffin for the project and that we move toward more common sense alternatives.”
The “common sense alternatives” DeMaio referred to include downsizing certain city departments to reduce the need for office space, which the grand jury also recommended in its report.
The City Hall project was tabled last year because city officials did not want it to appear on the November 2010 ballot alongside a sales-tax measure, which voters rejected anyway.
Since the election, four council members — DeMaio, Sherri Lightner, Kevin Faulconer and recently elected Lorie Zapf — have signed a memo that they will not pursue the City Hall project without a public vote, effectively creating a veto-proof majority.
The council in February voted to spend $4.2 million upgrading the current building with a complete fire sprinkler system, in part because the new civic center project was not moving forward.
The concept of a new facility to replace the aging building and consolidate the downtown office space it rents has been considered in each of the past three decades. In its most recent incarnation, city officials proposed a 19-story, 576,000 square-foot building at C Street and First Avenue, where Golden Hall sits just west of the existing City Hall
Officials have argued that the 1964 City Hall is in disrepair and that it would be more cost-effective to replace the building rather than spend millions to renovate it and renew leases on 500,000-square feet of office space.
A study done for the Centre City Development Corp. in 2009 by Jones Lang LaSalle, one of the top three international real estate firms, appeared to substantiate the city’s claims. It said it would cost the city nearly $417 million over the next 15 years to rehab the old building and continue to rent office space, compared to $359 million to build a new complex over the same period of time.
The city at the time was poised to enter into an exclusive negotiation with Portland developer Gerding Edlen to build a new Civic Center complex.
The study came under fire at the time from leasing specialist Irving Hughes, a San Diego-based firm, which argued the report used overinflated rental figures to justify the project.
“There’s no excuse for disregarding or misrepresenting the facts, no matter how noble the goal,” Jason Hughes, a principal with the firm, wrote in a July 29, 2010, opinion piece in the U-T. “The city shouldn’t tell voters it’s cheaper to build than to remodel and lease non city-owned office spaces when it’s clear that such is not the case.”
The four-page grand jury report echoes Hughes’ sentiments, questioning the city’s renovation and leasing estimates, which it says were based on pre-recession figures and the top end of cost estimates.
The grand jury said it found that downtown lease rates this year range from $1.70 to $1.90 per square foot, far less than the $2.50 to $2.75 per-square-foot rental rates cited in the city report. It also said the city used the maximum cost estimate for rehabbing the building instead of the minimum cost to ensure public health and safety.
Goldstone, in a prepared response, said the city’s lease estimates were based on response from landlords of the city’s privately owned annexes.
“The city specifically reached out to each of its landlords and asked them to price out an extension, knowing that the city was looking to vacate its leases once they expired,” he said. “This gave them every opportunity to provide the city with their best rates. The lease information used by the city in its analysis was based upon these responses.”
The grand jury recommended, among other things, the city study current rates rather than use older rates to justify the new facility; determine if downsizing departments will allow for a long-term reduction in leased space requirements; re-evaluate the cost of retrofitting the existing building considering both the minimum and maximum expenses along with public safety requirements; and re-examine and report current construction costs and cost savings against those used in 2008 and 2009.
While the project is dormant, DeMaio said he is concerned that the city will to try to revive the project, despite the council bloc opposed.
“That is why I am hoping this report puts an end to this,” he said.
http://www.signonsandiego.com/news/2011/may/23/grand-jury-questions-city-hall-project/
No comments:
Post a Comment