San Diego’s infrastructure funding gap surges past $5 billion

Cars travel on a road being repaved in San Diego in 2020.
(Nancee E. Lewis)

San Diego’s funding shortfall for infrastructure projects surpassed $5 billion this winter for the first time — a nearly 20 percent jump driven by sharply increasing needs for parks projects, streetlight upgrades and flood prevention.

The city’s infrastructure backlog — the gap between projected infrastructure needs over the next five years and the funding available for them — climbed from $4.32 billion last winter to $5.17 billion now.

“A very deep hole has been dug by past decisions,” said City Councilman Joe LaCava. “I think we’re really stepping up to try to address this in a very transparent way. We’ve got a long way to go.”

This year’s jump is partly due to new state mandates, surging costs for materials and labor and the city paying greater attention to its infrastructure backlog by comprehensively reviewing all its assets in recent years.

For example, the first comprehensive assessment of city parks completed a year ago boosted the projected need for parks infrastructure funding over the next five years by 57 percent, from $700 million to $1.1 billion.

City’s first comprehensive evaluation shows most of its 235 parks are in good or fair condition

Oct. 17, 2021

Needed streetlight funding more than doubled from $281 million to $574 million as city officials prioritized repairing broken lights and inflation raised the costs of those repairs.

Street paving costs also rose sharply, from $430 million to $987 million. City officials said a key driver was inflation, with the city revising the estimated cost per mile for pavement overlay from $800,000 to $1.5 million.

Costs for stormwater projects, which include flood prevention and efforts to boost water quality, increased from $1.4 billion to $2.1 billion — the highest cost of any city infrastructure need.

City officials say San Diego faces a more severe infrastructure problem than many other cities because its largest population boom was in the 1950s and ‘60s — meaning much of the infrastructure built during that boom is nearing the end of its life span.

“Our city is aging,” said Caryn McGriff, assistant director of the city’s Engineering & Capital Projects Department. “As a result of periodic population booms in the past, we have more infrastructure reaching the end of its useful life than we have had in prior years.”

And it’s not just ordinary replacements. The city says it must replace bridges, roads, sewer mains, storm drains and other infrastructure projects with new versions that meet current seismic standards and dozens of other regulations.

“Not only are we replacing more, but we are replacing more to a higher standard and with a focus on the future,” McGriff said.

The infrastructure funding gap, summarized in a 38-page report released by the city last week, would be even wider if city officials hadn’t essentially eliminated some building upgrades from the analysis.

The five-year estimated price tag for building upgrades plummeted from $618 million in last year’s analysis to $78 million.

McGriff said city officials didn’t estimate needed costs for building upgrades because several factors made them doubt whether they could provide reliable estimates.

Those factors included a need to conduct an updated condition assessment of all city buildings. The last assessment was completed from 2014 to 2016. Another factor was a new city mandate that all new and significantly renovated buildings emit zero greenhouse gases.

The city’s funding gap also would be much higher if the analysis included projected costs to cope with sea-level rise and other challenges city officials expect because of climate change.

The analysis also doesn’t include projected costs for special projects such as possibly expanding the waterfront convention center.

Councilwoman Monica Montgomery Steppe said she’d like to see future versions of the report include estimates for infrastructure upgrades that will be required to support all the new midrise and high-rise housing projects the city is approving.

City officials said those costs aren’t included partly because funding will come from the developers who build the projects.

The city’s infrastructure funding gap has continued to grow despite steady increases in the money San Diego gets for projects, which includes fees from developers, state gas tax money and two dozen other sources.

Since 2019, projected city funding for projects has climbed from $3.76 billion to $4.58 billion. But the projected cost for needed projects has climbed even more steeply, from $5.62 billion to $9.75 billion.

City officials say a key factor in those rising cost projections is that San Diego is the only city in the region that has assessed all its infrastructure in the past decade. It also is the only city to estimate its infrastructure funding gap every winter — a practice that began eight years ago.

While the funding gap is daunting, city officials say they’d rather know where they stand than remain in the dark and kick the can down the road to future city leaders.

Officials say that’s what happened for decades, creating the problem the city faces now.

“Over the last nine years, the city has come a long way toward understanding capital needs and providing transparency,” said Erin Noel, a fiscal and policy analyst for the city’s independent budget analyst.

Noel, however, criticized the analysis for eliminating a key data point included in previous years: projected funding gaps by individual category, such as parks, streetlights or libraries.

She also noted that the funding estimates don’t include any money from lease-revenue bonds, a method the city has used frequently in recent years to fund infrastructure projects.

The analysis this year also eliminated a distinction between “priority” and “discretionary” infrastructure needs. That distinction, which was added several years ago, aimed to let city officials see how many of the projects were truly crucial.

City officials said infrastructure spending is expected to change significantly in San Diego in coming years, thanks to several new policies.

The City Council unanimously approved a complex scoring system and commitment to gather more feedback on projects from underserved areas

Dec. 12, 2022

An infrastructure equity policy gives a leg up for projects in neighborhoods that have been historically underserved.

“Build Better San Diego” allows fees collected from developers of projects anywhere to be funneled into low-income areas for infrastructure. Instead of developer money staying in the neighborhood where a housing or commercial project is built, it will be placed in a new citywide pot of money.

The new infrastructure funding gap analysis is scheduled to be presented to the City Council on Tuesday, Feb. 14. The independent budget analyst is slated to release a comprehensive report roughly a week before that.


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