Retrofit Would Drain Glendale Capital Reserves

GLENDALE — The Glendale City Council, already confronting a $5.8-million budget deficit, needs to spend $2.8 million more to retrofit the Municipal Services Building so that it meets federal earthquake standards, according to a new staff recommendation.

Top city staff said the building, which rests on steel pillars next to City Hall, is considered safe by engineering consultants. Still, the building should be reinforced as a precautionary measure, even if it disrupts other municipal projects, they said.

City officials, including Finance Director Brian A. Butler, said the project would reduce the city’s capital-improvement reserves to their lowest level in memory.

By Butler’s estimate, the project would leave the city with just $1.8 million in capital reserves, which by design are built up over time to pay for such costly projects as new buildings.

“What that means is that when the next emergency comes up, we won’t be able to as readily respond to it,” Butler said. “Unfortunately, our cushion is getting very small.”

Added Assistant City Manager Robert K. McFall: “It creates an even greater dilemma on how we prioritize the existing resources.”

The retrofit recommendation, which the staff expects to present to the City Council on Tuesday, follows the council’s decision last week against borrowing money to build a $48-million police complex.

Instead, the council intends to pay cash over five years for the police complex, using money from its dwindling capital-improvement fund, the same funding source for the retrofit project.

While City Manager David H. Ramsay said the office work will have no effect on the police complex, at least one council member, Ginger Bremberg, disagreed.

“It certainly is going to reduce the available cash,” said Bremberg, who questions the cost of and the need for new police facilities. “If there isn’t cash, it will slow down the [police] project.”

City officials, noting that consultants had found structural weaknesses in steel-framed buildings in other nearby municipalities after the 1994 Northridge earthquake, hired an engineering firm to examine its own four steel-framed buildings about a year ago, said Public Works Director Kerry L. Morford.

Only the four-story, 47,000-square-foot Municipal Services Building, which was built in 1964 and houses about 200 city workers, was found to have “certain structural flaws that negatively impact the seismic stability of the structure,” according to a memo Morford sent Ramsay.

If approved by the council, which city officials consider likely, the work would commence during the fiscal year that begins July 1 and take about four months, according to engineers. Among other things, it would include modifications to the base of the building and reinforcements to the steel framing in the four columns that support the structure. The building will remain functional and open during construction.

While few people, if any, question the need for the work, critics say it dramatizes how a five-year drift in municipal budget policies has left the city with its lowest capital reserves in 40 years.

Jim Rez, whose 14-year service as city manager ended in 1988, said the city historically paid for capital improvements--such as the main city library and at least three fire stations--with a ready supply of cash.

Typically, he said, the city would have about $20 million in capital reserves during his tenure. Glendale helped build reserves through a policy of placing half its annual sales tax revenues into its capital improvement fund, while other cities generally used such revenues for daily expenses, he said.

Rez added that he could think of no time in the history of the city’s capital-improvement fund, which dates to 1953, that the reserves had dipped as low as $1.8 million.

The problem, he and Butler agreed, is the city’s five-year practice of balancing its budget by spending capital reserves on day-to-day expenses. This has been done by transferring previously unallocated money from the capital-improvement fund to the general fund, which pays for city services.

The practice, which began with a $1.9-million transfer during the 1992-93 fiscal year, is expected to continue, with a projected $4-million to $4.5-million transfer during the 1997-1998 year, according to city officials.

Rez likened the practice to transfers between savings and checking accounts.

“You notice that you’re a little short of money in your checking account, so you transfer a little out of savings,” he said. “And finally, you need, say, to add a new room to your house, and you check the savings account and there’s not enough there.”

That, he said, is the problem with the police complex.

“They’ve been spending money on things that the capital-improvement fund was not meant for, and now the birds have come home to roost,” Rez said.

Ramsay, who advised previous councils to transfer funds, conceded that the retrofit project, combined with the police complex, will “run down our reserves.”

Ramsay said he had little choice because a tight economy in recent years reduced the city’s revenues from sales and property taxes. Low interest rates also reduced the city’s investment income, he said.

Without taking from reserves, Ramsay said, the city could not have maintained its level of service. Although Glendale’s previous budget practices worked for many years, there was nothing wrong with making adjustments, particularly when the city was faced with reduced revenues, he said.

“It’s a Glendale policy,” he added, “not a law.”