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West of Twin Peaks Observer
Another Blank Check Bond?
by Patrick Monette-Shaw
Deeply concerned about Novembers San Francisco General Hospital Proposition A bond measure, San Franciscos Civil Grand Jury released its report, Accountability in San Francisco Government, on June 26, highly critical of the previous Branch Library Improvement project (BLIP) and Laguna Honda Hospital (LHH) replacement general obligation bonds.
A footnote in the Grand Jurys report indicated a current City Supervisor acknowledged nobody has been minding the Citys information technology expenditures store, apparently including himself. Similarly, the Board of Supervisors also hasnt been minding the bond measure store.
The Jury concluded the Citizens Obligation Bond Oversight Committee (CGOBOC) cant utilize its experience to improve projects prior to placing bond measures on a ballot, including the proposed rebuilding of SFGH. The Jury is concerned key lessons werent learned from the BLIP and LHH bond fiascos, which may be repeated.
Among other findings, the Grand Jury recommended increasing CGOBOC responsibilities. The Jury determined that pre- and post-election independent analyses of the Controllers voter guide estimates to establish whether the Controllers projections are accurate isnt being performed by either the Controller or the Board of Supervisors Budget Analyst. Failing to test accuracy of the Controllers financial projections leaves the Controllers Office unaccountable, the Jury noted.
San Franciscos elections code requires the Controller estimate increases to City government costs from ballot measures. The Grand Jury is critical that the Controllers Office has previously neglected to address whether proposed legislation may result in increasing the cost of City government.
The Bay Guardians August 13 editorial And now, the controllers big lie, exposes Controller Rosenfield vastly overestimated by billions this years Clean Energy Act. In stark contrast, Rosenfields August 11 Proposition A voter guide statement vastly underestimates City government cost increases, neglecting to mention the $36 million annual operating costs that will result by adding 212 employees to SFGH when its rebuild is complete.
The Grand Jury noted that in both the BLIP and LHH bonds there was a lack of sufficient funding upfront to complete the facilities promised to the voting public, since both projects far exceeded what could actually be constructed from bond proceeds. Both projects also had grossly underestimated escalation costs. The Grand Jury noted LHHs escalation factors alone may well increase construction costs as high as 69% over its baseline budget. Another of the Jurys findings was that the Mayors Office, the CGOBOC, and the Department of Public Works either knew or should have known that escalation calculations were inadequate for both projects.
Mayor Newsom, for his part, has noted a lot of angry people dont trust the City after the Laguna Honda bond measure; he claims the proposed costs to rebuild SFGH have been made clear, right from the start. But both Newsom and Rosenfield have neglected mentioning the SFGH $887.4 million bond may underfund the project by at least $55.6 million, if the Department of Public Healths estimate SFGH construction costs may reach $943 million turns out to be accurate.
To complete BLIP projects, the Mayor and Board of Supervisors have abused issuing revenue bonds that dont require voter approval to supplement the BLIP funding shortfall. Even though the LHH project has been scaled back by 35% to rein in costs, the Mayor and Board are also abusing issuing $185 million in Certificates of Participation (COPs) to supplement bond financing for LHH, also without voter approval.
Astute observers have noted the Mayors Office of Public Finance has defined clear policies for issuing COPs to accomplish future savings to the Citys General Fund. But the LHH replacement project is funded by general obligation bonds and tobacco settlement revenues, not the General Fund, so it doesnt appear to meet these, and other, COP best-practice policies.
If the SFGH bond is already underfunded by $55.6 million, the Mayor and Board of Supervisors will be handed a blank check to issue additional revenue bonds or COPs to augment yet another inadequate general obligation bond, without voter approval.
The Jury noted private-sector projects experiencing significant cost overruns and delays would likely replace project managers. And the Grand Jury found that the Mayor and Board of Supervisors should authorize the CGOBOC to evaluate bond measures before placing them on the ballot to assure proper project plans, escalation factors, milestones, damage clauses and the like are in place to deliver projects on time and within budget the voters are asked to approve. Although the City had several months to implement the Grand Jurys recommendations before placing the SFGH bond measure on Novembers ballot, none of the recommendations were adopted before doing so.
The Jury noted voters are left holding the financial bag and burden, from the lack of accountability and oversight of bond projects. The Grand Jury concluded the appropriate response is for voters to demand better governance from City officials.
We need both of our County hospitals. But we shouldnt sacrifice increasing government accountability and project oversight to rebuild either LHH or SFGH.
Send City Hall a message it must implement the Grand Jurys recommendations before well pass another bond measure. Vote No on Proposition As blank check.
is an Accountability Advocate
The Grand Jurys report can be found on its web page at:
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