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Street work crosses bumpy road

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Needed street repairs are forcing The City to assume debt, prompting scrutiny of the increasing use of long-term borrowing.

On Wednesday, The City moved forward with a plan to borrow $48 million for street resurfacing and other infrastructure work even though the repayment is expected to total $85.8 million over 20 years. Annual payments are estimated at $4 million.

The budget plan prompted Supervisor Sean Elsbernd to request an analysis of how much The City has already taken on of this type of debt, known as certificates of participation, which has become an increasing practice during lean budget years.

“[The annual payment] is money that is no longer discretionary in the general fund,” Elsbernd said. “I would like to get a sense of how much that is.”

Unlike a general-obligation bond, which is funded through property taxes, certificates of participation do not require voter approval. Instead, The City uses an asset to back up the debt, which is then paid in annual payments plus interest.

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The Board of Supervisors Budget and Finance Committee approved the borrowing proposal Wednesday, which was introduced by Mayor Gavin Newsom. The full board is expected to vote on it Tuesday.

The borrowing proposal is being used to adequately fund street work to prevent overall conditions from decreasing.

Ongoing or routine work “should be financed from a regularly recurring revenue source instead of issuing long-term debt, in our professional judgment,” Budget Analyst Harvey Rose said.

“It’s certainly not ideal to be going to add debt in terms of replacing and fixing our streets,” said Supervisor John Avalos, committee chair. But, he said, repairs not done will only be more costly in future years, and state funding losses placed “huge constraints on our budget.”

The lack of resources is expected to plague The City for years.

“We’re moving towards the next cliff of approving our budget for the next fiscal year, and all of these considerations are heading for a collision course,” Avalos said.

Twelve years ago, street conditions earned an overall score of 78 out of 100. But by 2005, the score dropped to the mid-60s. The current road rating of 64 is considered fair.

The City needs $751 million during the next decade to improve streets to a score of 70, or “good,” and maintain them at that level.


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