The Morning Report
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Tuesday, June 9, 2009 | The proposed downtown library currently remains on life-support after receiving a temporary extension from the State Librarian. Councilmember Carl DeMaio, a vocal critic of the project, recently pointed out that significant funding shortfalls for construction continue to plague the project. Beyond the cost of construction, the city would have to find almost $6 million every year to cover increased annual operating costs.
Equally troublesome, the latest proposal includes the highly questionable use of school bond dollars to make up for a lack of private funds. Given the city’s dire financial situation for the foreseeable future, pulling the plug on boondoggles like this project has never been more important.
In 2005, construction of the library was estimated to cost $185 million, more than double the 1996 estimate of $63 million. Funding for construction of the project was slated to come from $80 million in CCDC redevelopment funds, $20 million from a State grant and $85 million in private donations. When private fundraising failed to meet the December 2008 state grant deadline, project proponents suggested the inclusion of a school on the two top floors of the proposed library to make up for funding shortfalls and extend the viability of the grant.
In order to maintain the $20 million grant from the state, the city and school district are required to conduct a “feasibility study” to update construction costs and determine any redesign needs to accommodate a school as part of the building. This $169,000 study will update cost estimates and analyze any changes in design necessary to accommodate the inclusion of a school.
The city and San Diego Unified School District (SDUSD) have yet to reach an agreement on the proportionate funding of the feasibility study, but before $169,000 of taxpayer money is spent to investigate whether the hybrid project is actually viable, the complete inability of the proposal to pencil out must be considered.
A recent report released by the Office of Councilmember Carl DeMaio highlighted the following:
- Adjusting the 2005 proposal for construction cost inflation only (i.e. ignoring the school component) suggests that costs have increased from $185 million to $208 million today.
- Additional construction costs associated with Field Act compliance are likely to increase construction costs by at least another 3-4 percent. This yields an estimate of $214 million today.
- Using the most conservative of these inflation adjustments ($208 million construction cost), the project is underfunded by $55 million, even after taking the additional $20 million of school bond dollars in account.
- According to the city’s Independent Budget Analyst, the new main library will require $5.7 million more per year to operate than the current downtown library.
This means that the new library will add to the city’s annual operating costs at a time when budget deficits abound, branch library closures have been threatened and hours have been reduced.
Private fundraisers have also promised to cover the first five years of operating cost increases, which amounts to more than $28 million. In total, private fundraisers have promised to raise $85 million for construction of the library, plus $28 million for operating costs. To date, only $33 million has been acknowledged, and far less confirmed.
Furthermore, excess space in the library was originally designed to help mitigate cost by generating revenues. Adding the school to the proposal eliminates anywhere from $950,000 to $1.5 million of estimated annual revenue that would help to offset the annual operating cost increases.
The red balance sheet outlined above tells the real story of the downtown library proposal: taxpayers are left holding the bag. Under the funding proposal in 2005, public funds (from CCDC and the State) accounted for 55 percent of the project cost. Today, assuming construction cost inflation to $208 million, taxpayer funds (via CCDC, Proposition S, the State, plus the shortfall of $57 million) would make up more than 80 percent of project funding.
Furthermore, the proposed use of Proposition S school bond dollars for the project is a desperate attempt to save this ill-advised project and a classic case of bait-and-switch. Prior to the election last November, SDUSD sought endorsements from a variety of stakeholder groups, and provided lists of projects it planned to pursue with the bond dollars. During this campaign, SDUSD clearly outlined the need for a new elementary school downtown. However, law requires elementary schools to be housed on the lower floors of buildings and the available space in the proposed library is on top floors.
Within moments of this discovery, the need for the new elementary school downtown was conveniently tossed aside by the school district in favor of a high school which could save the project.
Every aspect of the library proposal depicts a financial disaster in the making. Construction is underfunded, the city cannot afford the increased operation and maintenance expenses and library boosters want taxpayers to pick up a greater portion of the total bill. In no uncertain terms, the time has come to pull the plug on this proposal once and for all.
Lutar is president and chief executive officer of the San Diego County Taxpayers Association, a nonprofit, nonpartisan organization that promotes accountable, cost-effective and efficient government. You can reach her at email@example.com.