The Los Altos City Council last week agreed to stick with a $34.7 million budget for rebuilding Hillview Community Center.
In a split 3-2 vote, the council Jan. 9 rejected the city staff recommendation of $30 million for the 24,500-square-foot project. In a 10-year financial forecast, staff predicted that the city would have to take on debt if the budget totaled $34.7 million.
Mayor Jean Mordo and councilwomen Jan Pepper and Mary Prochnow voted in favor of the $34.7 million budget, while councilwomen Jeannie Bruins and Lynette Lee Eng voted against.
Citing healthy city revenues, the council had agreed during a September study session to increase the project budget from its initial $25 million, adding nearly $10 million more. Staff cautioned in November that the increased budget could be too high after a review of budget projections.
The conceptual project design approved Nov. 30 by the 11-member Hillview Community Center Project Task Force has a projected price tag of $36.9 million.
Caution versus risk
The council vote capped a rousing, and often philosophical, discussion centered on caution versus risk.
“Start with $25 million and build what you can,” urged Gary Kalbach of the city’s Financial Commission.
Kalbach said the commission extensively studied the city’s financial picture and concluded that there was no spare money that could be added to the community center funding.
He cited CalPERS pension obligations that will put increasing stress on city budgets in the years ahead.
“We’d love to (have) $40 million for you – we’d love to find it. We can’t,” Kalbach said.
“You have confirmation after confirmation after confirmation that you should look at $25 million,” Los Altos resident Roberta Phillips said. “You’ve really got to cap it.”
But Pepper, who initiated the motion for the $34.7 million budget, said: “I think we should do it right. This is an investment for the next 50 years.”
Pepper said additional money could be found through park in-lieu fees and a possible increase in the transient occupancy tax on hotels/motels.
“I still feel comfortable with the $34.7 million,” she said. “I feel we are not taking an excessive risk.”
Mordo echoed Pepper’s comments.
“We are approving a once-in-a-lifetime project and we need to do it right,” he said. “We should not skimp on the expense. We have a sizable portion of the amount already (and) can borrow at an interest rate that is very low. (Our) primary source of revenue (property taxes) is extremely stable.”
Other funding priorities
Bruins said she would have voted in favor of the $34.7 million figure if the council would have also agreed to poll residents on whether they would support a bond measure to supplement the funding.
“I’m having a real hard time getting my head wrapped around how we want to finance this, because we missed this opportunity just like we did when we put the bond measure forward,” she said. “We’re so darn serial on this council that we can’t look ahead and can’t do anything in parallel to give ourselves the flexibility.”
According to Eng, the community center’s big budget would compromise the city’s other funding obligations, including deferred maintenance projects.
Sharif Etman, the city’s administrative services director, gave an impassioned argument for approving the staff recommendation of $30 million.
“It’s the nature of life – projects’ costs (will) go up,” he said. “I’m the biggest advocate that you need to spend this money. (But) every building (in the city) is falling apart. My job is to make sure we touch as many buildings as we can. City hall is falling apart, the police department is leaking, the Garden House (in Shoup Park) needs help, the Halsey House (in Redwood Grove) is in shambles. … If you build a $35 million community center, what happens to the rest of our projects? You’re saying for the next 10 years you’re not going to touch any of our buildings?”
City Manager Chris Jordan noted, “Understanding where we’ve come to at this point, going anything below $27 million, $28 million means starting all over again – $30 million is a comfort zone, and I still believe it’s a good place to be.”
But Jordan recalled the words of an associate from years back: “Nobody’s going to remember what you spent on the project, they’re going to know whether they like it. Which leads to the phrase ‘One chance to do it right the first time.’ It’s important to remember this bigger picture of what we’re trying to accomplish.”