$20M cost overrun in SF fire station projects shows uncertainty of bond funding 

click to enlarge Fire Station No. 44, a 100-year-old facility in Visitacion Valley, reopened last summer following work done through a 2010 public-safety bond approved by voters. - MIKE KOOZMIN/THE S.F. EXAMINER
  • Mike Koozmin/THe S.F. Examiner
  • Fire Station No. 44, a 100-year-old facility in Visitacion Valley, reopened last summer following work done through a 2010 public-safety bond approved by voters.

When San Francisco voters approve a bond — as they have done multiple times in recent years — it is likely the last time they think about it. But as one recent bond shows, if the funding plan is not clearly laid out, then The City can be left with dashed expectations, shifting timelines and cost overruns.

When San Francisco voters approved a $412.3 million Earthquake Safety and Emergency Response Bond in June 2010 they were told $65 million — or $64 million in some documents — would go toward fixing up about half of The City's 42 neighborhood fire stations. Five years later, the work on those fire stations has soared by $20 million.

The cost escalation illustrates how bond-funded projects don't always pan out exactly as planned and what happens next in those situations. And while voters have shown an appetite for approving bonds at the ballot box to invest in San Francisco's infrastructure, they may not always be aware of what is happening behind the scenes.

As city officials update San Francisco's 10-year capital plan annually and decide what bonds to take to voters, ongoing work stemming from previous bonds remains part of the discussions.

REPAIRS RESULT IN OVERRUNS

The 2010 public-safety bond did not specify which fire stations would receive repairs. They were selected shortly after the bond was approved based on preliminary estimates finding more than $350 million in needed repairs and seismic upgrades. Among them was the century-old Visitacion Valley Fire Station No. 44, the reopening of which was celebrated by city officials in June after a $1 million overhaul.

However, according to a Feb. 2 Department of Public Works document, costs to do work on the other stations busted the budget by $20 million.

"The forecasted increase is due to multiple factors," the document said. Those factors included "unfavorable market conditions" that forced rebids and changes to projects, a Fire Department request to "assure operational sufficiency of facilities," underestimating the complexity of the work, "causing higher design fees" and "unforeseen" conditions at sites that also negatively impacted the projects.

As the costs began to soar, The City added more than $8.1 million in fiscal year 2012-13 to the budget from a previous bond directed at the Fire Department, documents show. The Feb. 2 document recommended shifting about $5 million in savings from that bond's public-safety building project to the neighborhood fire stations.

A DPW spokeswoman said the $20 million cost overrun will be covered by another public-safety bond, this one approved by voters last year. Within the $400 million Earthquake Safety and Emergency Response Bond is $85 million for work on unspecified neighborhood fire stations.

"The additional $20 million is being funded through the voter-approved $400 million 2014 ESER bond, of which $85 million was set aside for neighborhood fire stations," spokeswoman Rachel Gordon said in an email. "ESER 2014 will continue the ESER 2010 bond's commitment to making operationally important improvements, and with the balance of $65 million will do so among fire stations not previously addressed under ESER 2010."

LACKING DETAILS

Some red flags have been raised over the fact that recent bonds have been approved even though the projects are a bit fuzzy.

SPUR, the Bay Area urban planning think tank, addressed in its voter guidebook the 2010 public-safety bond.

"Despite acknowledging the challenge of voter confidence in the bond funding process and spending more than $14 million to prepare the ESER bond projects, the ESER bond lacks specificity in some areas due to the lack of required environmental clearance. It fails to identify the fire stations eligible for the $65 million in funding," SPUR wrote.

October 2010 documents related to the bond when the Board of Supervisors voted to issue the debt did assume 19 fire station projects at $65 million.

Concerns over the lack of specificity were most recently raised by opponents of November's $500 million transportation and roads bond, Proposition A. Opponents unsuccessfully attempted to derail it by saying the lack of specific spending requirements and projects allows a "diversion of funds" and probable cost overruns that will "eat up" the San Francisco Municipal Transportation Agency's operating budget.

Jennifer Clary, president of San Francisco Tomorrow, one of the groups that opposed the transit bond, said the cost overrun in the 2010 public-safety bond "is an illustration of why people are mistrustful of The City and its use of bond funds."

"S.F. voters are very supportive of the need for these investments, [but] The City needs to be equally responsible in ensuring that their expenditures match their available funding," Clary said. "The City has a growing habit of putting 'just trust me' bonds on the ballot. But if they spent more time preparing projects and understanding the costs, they could provide the voters with more realistic expectations of what their dollars can buy."

FUTURE BONDS

Since 2008, after The City created a capital plan, voters have approved seven bonds funded through property taxes — a portion of which can be passed on to renters — totaling $2.8 billion for such things as parks, transit, police and fire. No bonds were approved between 2001 and 2007.

The next bond scheduled to go before voters is a $311 million public-health and safety bond in June 2016 to pay for a new animal shelter and a Fire Department ambulance deployment center. Another emergency bond is planned for 2020 when more than $100 million would go toward neighborhood fire stations.

Despite the cost overruns, Gordon wrote, "Voter faith should remain steadfast. As promised, we are methodically delivering relevant projects to meet the current and future needs of the Fire Department to safeguard San Francisco."

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