City of Stockton Budget Committee

Summary of Citizen Comments Received by Budget/Finance/Economic Development Committee through March 2, 2009 - Updated March 5, 2009

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City-owned Properties

WaMu

Source of funds for purchase and improvements
The Stockton City Council approved the purchase of the Washington Mutual building October 2, 2007 for $35 million. An evaluation estimated the cost to build the same structure, at the time, would be $90 million - nearly three times the actual purchase price. The San Joaquin County Administration Building, currently under construction is a similar size and is being built at a cost of $125,000. A bond was issued to finance the purchase of the building. The bond included funding for some of the improvements necessary for the City to relocate, such as Information Technology (IT) upgrades.
Cost of ownership – are leases “carrying” the cost?
The City operates this building in an Enterprise Fund and as such the rents received from private tenants are being used to operate and maintain the building as well as pay the debt service on the purchase bond. Any revenue received above operating costs and debt service is being retained within the Enterprise Fund to be used for any major repairs or loss in rental revenue. The City Council recently approved monthly rental of 75 parking spaces in the garage that are available to other downtown buildings, which will generate additional revenue.

Status of improvements? IT improvements that will serve the entire building have been completed. Additional work will be required when City departments begin to relocate, as technology will need to be extended on the floor to serve end users. Other improvements may need to take place, when City Departments relocate into the building. Modular furniture was purchased using an existing contract; the furniture can easily be reconfigured and adapted to accommodate changes in wiring.

Cost of phone system purchased for WAMU

The phone system was purchased to replace the City’s existing system at all City buildings, not just WAMU. Telephones are currently being installed in the SEB building. The phone system is being leased. The contract for the lease and the telephone instruments is currently being reviewed to see if there is opportunity to reduce the cost.

Timeline for relocation – consequences for delaying and redirecting funds The timeline for relocation of City departments has been placed on hold, due to the current budget crisis. As space becomes available, due to the expiration of leases, a cost benefit analysis will be developed to determine how and when City departments will relocate. Depending on where City departments are located presently, it may be more cost effective to relocate to 400 E. Main (a newer building) than to continue to operate in older, maintenance intensive City buildings.
Expense to General Fund? The building is currently operating with a positive cash flow and has no negative impact on the General Fund. The IT Department will pay $500K in rent; this is paid through ISF (Internal Service Funds) which are generated through charging other City departments for the services IT provides. Approximately 65 percent of ISF originate from the General Fund. ISF rates were not increased to cover the IT Department relocation to the General Fund, but their costs were not reduced either.

The WAMU building operates as an Enterprise Fund. Leases currently cover all expenses. Leases are scheduled to expire between 2009 and 2027. City departments will only be relocated after a careful cost/benefit analysis. In some instances it may be less costly to move a department, rather than maintain the building where the department is currently located, as many City buildings are operated at a significant cost for heating, cooling, and repairs.

All expenditures will continue to be analyzed and weighed carefully before being made. Top priority will be to have the building continue to “carry itself” and, hopefully, continue to generate excess revenues, which can be used for future repairs and maintenance. Without upgrading the City’s technological capabilities, we cannot assure the public of uninterrupted services in the case of civil emergencies or even delivery of regular, daily services at a level and consistency that our taxpayers and residents deserve and expect. Delivery of these services is critical to Stockton’s ability to attract, retain and grow quality employers and improve the overall economic health of our City.
Sale of building to generate revenue? Net gain/loss? If market conditions are such that it makes more sense economically to lease to 3rd parties, rather than having the space occupied by City departments, leasing space will become part of the cost benefit analysis. The commercial market has been impacted by the current economic downturn, so selling the building is not currently an option.
Plan to lease space to generate revenue? Timeline? Washington Mutual has since been purchased by J.P. Morgan Chase & Co. The total building space is 246,541 square feet; Chase presently occupies 177,603 square feet of the building; 25,000 square feet is occupied by the State of California and Verizon Wireless. There are a series of dates for expiration of the Chase leases depending on the location. A portion will expire in December of 2009 and some go until 2027.

City Contracts

Review Asparagus Festival contract
- Annual cost to the City in services provided
- Renegotiation - The Asparagus Festival contract was renegotiated in 2008 and extended for 5 years and now includes reimbursement of some City expenses. There are direct cost impacts to individual City departments. However, there are significant benefits to having the festival in the heart of Stockton, as it attracts tens of thousands of visitors to our City for a positive event, increasing sales tax for the period of time that they are here for the festival and subsequent return visits.
Review and renegotiate all City contracts; revenue generating whenever possible, revenue neutral at the very least (IFG)
- All contracts are currently being re-evaluated. Often times, the cost of changing a contract or canceling a contract can far exceed the cost of continuing the contract through the scheduled expiration date. The City is currently working with IFG to reduce costs.

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Police and Fire Departments

Redevelopment / Revitalization

Ideas to Increase Revenues

Ideas to Reduce Expenses

Miscellaneous


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