Saturday, July 01, 2006

A City Policy of Continuing Deferred Maintenance Despite Millions of Dollars in Reserves

Capital Investments, including Carmel-by-the-Sea’s road infrastructure, water and sewer systems, government buildings, cultural and historic facilities and parks, are the “public physical heritage” of the city and essential to the city’s economy and quality of life. Our "public physical heritage" has been neglected and allowed to deteriorate over many years. Mayors and City Council Members have not provided adequate annual funding for routine maintenance, repair, replacement, ADA compliance and capital improvements.

As Carmel-by-the-Sea’s deferred maintenance grows over time, the deterioration accelerates over time; thereby increasing the magnitude of money the City must expend to restore its infrastructure, etc. to its original condition. Moreover, the infrastructure gets to the point where it is less expensive to rebuild. For example, City Administrator Rich Guillen described three levels of road conditions which require either slurry seal, overlay or total reconstruction. Needless to say, the spending required for total reconstruction could be avoided, and the city’s capital assets extended, if the City Council committed to adequate levels of funding for maintenance on an annual basis.

In sum, the City’s chronic under investment in Carmel-by-the-Sea’s public assets can negatively impact our economy, expose the City to legal liability, and threaten residents’ and visitors’ health and safety.

Lastly, when reserves or “Unreserved Fund Balances” reach 70% of the General Fund, (ex. $12 million General Fund, $8 million in Reserves and millions in deferred maintenance), then the City Administrator is exercising poor financial management of the city and the City Council is negligent in allowing reserves to accumulate to an obscene level while the City’s infrastructure continues to experience accelerated deterioration over time.

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