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05/30/2006 - Minutes PROCEEDINGS OF THE CITY COUNCIL OF SALT LAKE CITY, UTAH WORK SESSION TUESDAY, MAY 30, 2006 The City Council of Salt Lake City, Utah met in Work Session on Tuesday, May 30, 2006, at 5 : 30 p.m. in Room 326, Committee Room, City County Building, 451 South State Street. In Attendance : Council Members Carlton Christensen, Van Turner, Eric Jergensen, Nancy Saxton, Jill Remington Love, Dave Buhler and Soren Simonsen. Also In Attendance : Cindy Gust-Jenson, Executive Council Director; Gary Mumford, Council Deputy Director/Senior Legislative Auditor; Lehua Weaver, Council Constituent Liaison; Mayor Ross C. "Rocky" Anderson; Rocky Fluhart, Management Services Department Chief Administrative Officer; Alexander Ikefuna, Planning Director; Sam Guevara, Mayor' s Chief of Staff; Max Peterson, City Engineer; Lynn Jarman, Engineering Planning and Programming Manager; Rick Graham, Public Services Director; Kevin Bergstrom, Public Services Deputy Director; Timothy Harpst, Transportation Director; Kim Clark, H.W. Lochner; Jim Horrocks, Horrocks Engineering; Russell Weeks, Council Policy Analyst; Sylvia Jones, Council Research and Policy Analyst/Constituent Liaison; David Oka, Redevelopment Agency Executive Director; Valda Tarbet, Redevelopment Agency Deputy Director; Rusty Vetter, Appointed Senior City Attorney; Mack McDonald, Redevelopment Agency Project Coordinator; Matt Dahl, Redevelopment Agency Project Coordinator; David DeRoos, Citygate Associates President; Dwane Milnes, Citygate Associates Principal; Patricia Comareli, Citygate Associates, Senior Associate; and Scott Crandall, Deputy Recorder. Councilmember Buhler presided at and conducted the meeting. The meeting was called to order at 5 : 37 p.m. AGENDA ITEMS #1 . 5:37:07 PM CONSIDER A MOTION TO ENTER INTO EXECUTIVE SESSION TO DISCUSS PERSONNEL MATTERS IN KEEPING WITH UTAH CODE ANN. § § 52-4-204 AND 52-4-205 (1) (a) . Councilmember Simonsen moved and Councilmember Jergensen seconded to enter into Executive Session, which motion carried, all members voted aye . See file M 06-2 for Sworn Statement. 9:30:08PM Councilmember Simonsen moved and Councilmember Christensen seconded to enter into Executive Session to continue the discussion, which motion carried, all members voted aye . See file M 06-2 for Sworn Statement. #2 . 9:30:08 PM CONSIDER A MOTION TO ENTER INTO EXECUTIVE SESSION IN KEEPING WITH UTAH CODE, TO DISCUSS LABOR NEGOTIATIONS, PURSUANT TO UTAH CODE ANN. § § 52-4-204 AND 52-4-205 (1) (b) . 06 - 1 PROCEEDINGS OF THE CITY COUNCIL OF SALT LAKE CITY, UTAH WORK SESSION TUESDAY, MAY 30 , 2006 Councilmember Simonsen moved and Councilmember Christensen seconded to enter into Executive Session, which motion carried, all members voted aye . See file M 06-2 for Sworn Statement and tape. #3 . 7:32:08 PM RECEIVE A PRESENTATION FROM THE UTAH DEPARTMENT OF TRANSPORTATION (UDOT) REGARDING THE I-80 , STATE STREET TO 1300 EAST IMPROVEMENT STUDY. View Attachments Russell Weeks, Tim Harpst, Kim Clark, Jim Horrocks and Alex Ikefuna briefed the Council with a computer presentation and the attached handouts . Councilmember Simonsen asked for a report on how many auto/pedestrian and auto/bicycle accidents had occurred at cross streets along Interstate 80 . He asked the developers to make pedestrian movements a top priority and consider pedestrian crosswalks at Stratford Avenue and other locations along the corridor. He said he would e-mail comments/suggestions to Mr. Horrocks . Mr. Harpst said information was currently being gathered in conjunction with UDOT and the design team and would be presented to the Council along with a recommendation from the Administration. Councilmember Christensen asked if intersections/bridge crossings farther east along the corridor were being considered in future development. Mr. Horrocks said he would look into the issue and get information back to the Council . Councilmember Saxton said she wanted to encourage the developers to implement alternative transportation systems such as bike or pedestrian trails which would run parallel to freeways or highways whenever any improvements were made . She said any excess land resulting from freeway improvements needed to be considered/developed for off-leash dog activities . #4 . 8:12:37 PM RECEIVE A BRIEFING REGARDING THE AUDIT OF THE ENGINEERING DIVISION. View Attachments David DeRoos, Dwane Milnes and Patricia Comareli briefed the Council with a computer presentation and the attached handouts . #5 . 8:38:54 PM RECEIVE A BRIEFING REGARDING THE AUDIT OF THE REDEVELOPMENT AGENCY (RDA) OF SALT LAKE CITY. View Attachments David DeRoos, Dwane Milnes, Patricia Comareli and David Oka briefed the Council with a computer presentation and the attached handouts . 06 - 2 PROCEEDINGS OF THE CITY COUNCIL OF SALT LAKE CITY, UTAH WORK SESSION TUESDAY, MAY 30, 2006 Councilmember Christensen said he was concerned about the RDA maintaining a secondary financial system and wanted to explore ways to utilize the City' s system. Councilmember Buhler said he understood the RDA was not following City personnel policies such as probation periods and annual reviews . Mr. Oka said the department planned to conform to City policies and procedures . #6 . 9:27:20PM REPORT OF THE EXECUTIVE DIRECTOR, INCLUDING A REVIEW OF COUNCIL INFORMATION ITEMS AND ANNOUNCEMENTS . See file M 06-5 for announcements . The meeting adjourned at 11 : 45 p.m. COUNCIL CHAIR CHIEF DEPUTY CITY RECORDER This document along with the digital recording constitute the official minutes of the City Council Work Session meeting held May 30, 2006 . sc 06 - 3 Re«rc(ers AL' ` CIPRPOAIOi OFFICE OF THE CITY COUNCIL Posted: May 26, 2006 SALT LAKE CITY COUNCIL WORK SESSION MEETING 5:00 p.m., Some Council Members may dine together in Room 125 at the City&County Building. (The room is open to the public.) DATE: May 30,2006 TIME: 5:30 p.m. (Public meeting should begin approximately 6:45 p.m.) PLACE: City&County Building 451 South State Street,Room 326 Salt Lake City, Utah AGENDA ITEMS 1. The Council will consider a motion to enter into Executive Session, in keeping with Utah Code to discuss personnel matters in keeping with the Utah Code Ann. § § 52-4-4 and 52-4-5 (1)(a)(i). 2. The Council will consider a motion to enter into Executive Session, in keeping with Utah Code, to discuss labor negotiations, pursuant to Utah Code Ann. § § 52-4-4 and 52-4-5 (1)(a)(ii). 3. The Council will receive a presentation from the Utah Department of Transportation regarding the I-80, State Street to 1300 East Improvement Study. (Approximately 6:45 p.m.) 4. The Council will receive a briefing regarding the audit of the Engineering Division. 5. The Council will receive a briefing regarding the audit of the Redevelopment Agency of Salt Lake City. 6. Report of the Executive Director, including a review of Council information items and announcements. Access agendas at http://www.slcgov.com/council/agendas/default.htm. People with disabilities may make requests for reasonable accommodation no later than 48 hours in advance of council meetings. We make every effort to honor these requests, and they should be made as early as possible. Accommodations may include alternate formats, interpreters,and other auxiliary aids. The City and County Building is an accessible facility. For a questions or additional information,please contact the City Council Office at 801 535-7600; TDD 535-6021. Assistive listening devices are available on Channel I; upon four hours advance notice. Please allow 72 hours advance notice for sign language interpreters; large type and#2 Braille agendas. After 5:00 p.m., please enter the City&County Building through the east entrance. Accessible route is located on the east side of the building. In accordance with State Statute,City Ordinance and Council Policy, one or more Council Members may be connected via speakerphone. 451 SOUTH STATE STREET, ROOM 304, SALT LAKE CITY, UTAH 841 1 1 TELEPHONE: 801-535-7600 FAX: 801-535-7651 WWW.SLCGOV.COM/COUNCIL EMAIL: COUNCIL.COMMENTS@Q SLCGOV.COM LS] MEMORANDUM DATE: May 24,2006 TO: City Council Members FROM: Russell Weeks RE: Presentation:I-80, State Street to 1300 East Improvement Study CC: Cindy Gust-Jenson, Rocky Fluhart, Louis Zunguze, DJ Baxter,Alex Ikefuna, Tim Harpst,Kevin Young, Gary Mumford,Janice Jardine This memorandum pertains to a scheduled presentation of the 1-80, State Street to 1300 East Improvement Study on May 30. Kim Clark of H.W. Lochner and Jim Horrocks of Horrocks Engineering will make the presentation on behalf of the Utah Department of Transportation. The presentation is scheduled to include a roughly 15-minute Power Point presentation based on the attached document. The Utah Department of Transportation held six open-house meetings between April 18 and May 18 with residents of neighborhoods near Interstate 80. According to UDOT representatives, the depaitiuent mailed 5,000 meeting notices.About 200 people attended the open houses. UDOT representatives also met with about 25 residents at a City-sponsored meeting on May 23 and with the Salt Lake City Planning Commission on May 24. KEY POINTS • The proposed project is a roughly$104 million project, according to the UDOT Internet website. It currently is in a study phase. If UDOT decides to pursue the project, design would begin in fall 2006, and construction would start in fall 2007 or spring 2008.1 • UDOT representatives plan to bring four issues before the City Council: • Potential changes to Driggs Avenue near 1300 East Street that would include closing Driggs Avenue west of 1300 East. Closing the avenue probably would require the demolition of two homes. • Closing 600 East Street to automobile traffic where the street runs underneath the interstate highway. • Modifying Elizabeth Sherman Park which is located at 2400 South and Highland Drive. • Using noise walls along the 1-80 corridor. • According to UDOT representatives, priorities for using the $104 million allocated for the project are: • Safety improvements. • Replacing worn structures and pavement. 1 • Improving I-80's capacity to carry traffic. • Noise walls. • Aesthetics. • It should-be noted that UDOT representatives indicated that capacity improvements and noise walls generally are considered together because if carrying capacity increases,noise walls have to be considered as a way to mitigate increased noise. It might also be noted here that one UDOT representative indicated that the project might require 12-foot-high to 16-foot-high noise walls almost the full length of the I-80 corridor with the exception of commercial areas near downtown Salt Lake City and possibly at 1300 East Street. In addition,noise walls might be built first to mitigate construction noise.2 • The project is expected to remain mostly within existing UDOT right of way. However, "minor areas of land will need to be obtained, specifically at State Street and at 700 East."3 ISSUES/QUESTIONS FOR CONSIDERATION • What is the Administration's position or viewpoint of the study and project? • Would repairs to structures and pavement dampen traffic sound enough to eliminate the need for noise walls? • Where are the sections on State Street and 700 East Street where the right of way might be expanded? What properties would be affected by expanding the right of way? • What specific modifications might be made to Elizabeth Sherman Park? DISCUSSION/BACKGROUND The project under study will be paid entirely with State of Utah funds. According to an Improvement Study slide,UDOT identified ramp lengths,pavement deterioration, median treatment,the structural integrity of the highway system, congestion, and traffic safety as issues the study should address. In addition, the study has listed the following items as identified by the public: noise, schedule, utility conflicts, community cohesion,and impacts to surface streets. The study currently is in a public comment phase that will run through most of the summer. Later in the summer,UDOT will publish the study. After the study is published there will be a 30-day public comment period including a public hearing. It should be noted that Salt Lake City Planning Commissioners suggested that other states include the potential for light rail lines in highway project plans and that UDOT might consider doing the same for the Interstate 80 corridor,particularly long-term to address Summit County population growth.4 The following is intended to address the four items listed by UDOT representatives in more detail. DRIGGS AVENUE The Interstate 80 eastbound exit for 1300 East Street runs parallel to Driggs Avenue which is south of the exit ramp. UDOT would like to close the west end of Driggs Avenue and make a cul-de-sac. The cul-de-sac appears to do two things. One, the cul-de-sac would eliminate 2 conflicts between cars from the exit ramp turning right onto 1300 East Street and cars turning right from Driggs Avenue onto 1300 East Street. Two, it would allow improvements for exiting traffic so that traffic would not back up onto Interstate 80. The proposal might require City Council action to close Driggs Avenue at that location. According to UDOT representatives, the department views reconfiguring the exit ramp as a safety issue and a major component of the project. CLOSING 600 EAST STREET TO AUTOMOBILE TRAFFIC According to UDOT representatives, the department supports closing the street to automobile traffic. The presentation poses the issue this way: "Would closing 600 East to motorized vehicle traffic and providing a pedestrian underpass better serve the community?" One result of closing the street to motorized traffic would be that a bridge spanning 600 East could be shortened considerably. UDOT representatives indicated that shortening the span could save up to $3 million—some of which could be re-allocated to improve the aesthetics of noise walls. Closing the street would require City Council action. MODIFYING ELIZABETH SHERMAN PARK The Sugar House Master Plan describes Elizabeth Sherman Park as"a 1.5-acre linear park located behind the UP&L Southeast Power Station between Elizabeth Street and the Interstate 80 overpass.The park was built in 1987 through efforts of the Sugar House CommunityCouncil, with contributions from UP&L and UDOT. It is built over the former Brickyard railroad spur, and connects the Jordan and Salt Lake City Canal corridor to the Parleys Creek/Denver&Rio Grand Railway trail corridor." UDOT representatives indicated that residents near the park would like the park improved to deter loitering, improve safety and reduce crime. Modifications also would provide pedestrian and bicycle access,better landscaping and additional lighting.5 According to a UDOT representative,the department owns the park. NOISE WALLS The project includes adding additional traffic lanes within the Interstate 80 right of way. According to an Improvement Study slide, "if lanes are added to I-80,noise will be mitigated where feasible."As mentioned previously, noise walls might be a component of the project throughout most of its length. To determine if noise walls are necessary,UDOT would take a reading of current noise decibels near the freeway. The department then would use the readings and future estimated traffic levels to project future noise levels and "sound contours"—more or less a topographical map of noise affected by landscape and structures. Utah Administrative Code R930-3 requires that sound barriers must reduce noise levels by at least five decibels for"typical impacted receivers nearest the highway."The code also says in part, "Noise abatement may not be planned after local government department and impacted residents' involvement if a majority of them are in opposition or indifferent to noise mitigation." To determine support or opposition,UDOT would send ballot to people who would have a five- decibel reduction in noise based on the"sound contours."If 75 percent of those who receive 3 ballots and who live closest to a noise wall support building a wall, UDOT will proceed to build a noise wall. If a wall is built UDOT would be responsible for maintaining the side closest to the freeway. The property owner on the other side of the wall would be responsible for maintaining that side. Another section of R930 says, "The Department shall coordinate in the local government review process with regard to aesthetics,height, and other design features of the proposed noise abatement measure." Salt Lake City's Zoning Ordinance—Section 21A.40.120—has height restrictions on fences and walls but appears to deal largely with private property. Another section—21A.52.100 —says, "The board of adjustment may grant a special exception to exceed the height limits established for fences and walls in part IV, chapter 21A.40 of this title"under certain conditions. One of those conditions includes the following: "Fences,walls or other similar structures which exceed the allowable height limits, in cases where it is determined that an undesirable condition exists because of the abnormal intrusion of offensive levels of noise, pollution, light or other encroachments on the rights to privacy, safety, security and aesthetics." The Sugar House Master Plan also includes this paragraph: "Fairmont Park--When the detailed planning for the Interstate-80 reconstruction project is commenced by UDOT, the issue of buffering Fairmont Park should be addressed. Whether through increased vegetation or sound walls, the investment the City has in Fairmont Park and the experience of the park user needs to be protected. In order to address all of these needs in a comprehensive manner, a master plan for the park is recommended." Improvement Study slide,Page 2;Planning& Zoning Division Memorandum,Page 2, Question 11. 2 Planning&Zoning Division Memorandum, Page 2, Question 4. 3 3 Planning&Zoning Division Memorandum, Page 2, Question 13. Summary of the Planning Commission 1-80 Meeting(May 24, 2006). Improvement Study slide. 4 ballots and who live closest to a noise wall support building a wall,UDOT will proceed to build a noise wall. If a wall is built UDOT would be responsible for maintaining the side closest to the freeway.The property owner on the other side of the wall would be responsible for maintaining that side. Another section of R930 says,"The Department shall coordinate in the local government review process with regard to aesthetics,height,and other design features of the proposed noise abatement measure." Salt Lake City's Zoning Ordinance—Section 21A.40.120—has height restrictions on fences and walls but appears to deal largely with private property.Another section—21A.52.100 —says,"The board of adjustment may grant a special exception to exceed the height limits established for fences and walls in part IV,chapter 21A.40 of this title"under certain conditions. One of those conditions includes the following: "Fences,walls or other similar structures which exceed the allowable height limits,in cases where it is determined that an undesirable condition exists because of the abnormal intrusion of offensive levels of noise,pollution,light or other encroachments on the rights to privacy, safety, security and aesthetics." The Sugar House Master Plan also includes this paragraph: "Fairmont Park--When the detailed planning for the Interstate-80 reconstruction project is commenced by UDOT,the issue of buffering Fairmont Park should be addressed. Whether through increased vegetation or sound walls,the investment the City has in Fairmont .. ,j Park and the experience of the park user needs to be protected.In order to address all of these _; needs in a comprehensive manner,a master plan for the park is recommended." Improvement Study slide,Page 2;Planning&Zoning Division Memorandum,Page 2,Question 11. 2 Planning&Zoning Division Memorandum,Page 2,Question 4. 3 3 Planning&Zoning Division Memorandum,Page 2,Question 13. a Summary of the Planning Commission I-80 Meeting(May 24,2006). 5 Improvement Study slide. 4 MEMORANDUM LAKE Cfl 451 South State Street, Room 406 Salt Lake City, Utah 84111 (801) 535-7757 Planning and Zoning Division Department of Community Development TO: Louis Zunguze, Community Development Director FROM: Alex Ikefuna — Planning Director DATE: May 24, 2006 CC: Brent Wilde, Deputy Community Development Director Tim Harpst, Transportation Division Director SUBJECT: I-80 Presentation at Sprague Library in Sugar House On May 23, 2006, the Salt Lake City Transportation and Salt Lake City Planning Divisions co-hosted a community meeting at the Sprague Library in Sugar House to discuss the Utah Department of Transportation's I-80 Reconstruction project. Approximately 25 members of the public attended this meeting. As you are aware, UDOT is in the environmental planning stage for a reconstruction project along 1-80 from State Street to 1300 East. One critical aspect of this stage is to obtain public input regarding the project. Consultants for UDOT presented an overview of the project and entertained a question and answer session at the community meeting. The following is a list of questions and answers, as well as comments, expressed by various members of the public during this meeting as noted by Planning Staff: 1. Comment—The numbers presented for reported accidents at each of the interchanges appears to be underestimated. This comment was made by a former police officer who responded to accidents along this section of the freeway for a period of six years. The consultant responded that any additional information that this member of the public could provide would be helpful in presenting the case that accidents along this stretch of the freeway are a problem and a significant safety concern. 2. Question—Has there been much opposition from the public regarding sound walls? Answer—A couple, but the overwhelming response has been in favor of sound walls. UDOT utilizes a ballot/voting system to obtain input as to whether or not a neighborhood wants sound walls installed. 3. Question—What is the volume of traffic increase along this section of freeway in the last 10 years? Answer—The consultant responded that he did not have numbers readily available at the meeting, but noted that a great amount of the noise produced from this stretch of freeway is due to road deterioration and not necessarily increased traffic volumes. 4. Question—What are some of the impacts to be expected during the construction? Answer—In terms of noise, sound walls will most like be constructed first to help mitigate the noise impact. The construction will be "phased", and "Rapid Construction Techniques" such as prefabricates bridges constructed off-site will be used to mitigate noise. It is difficult to balance construction and noise impact during the day and night hours, but the contractors will be sensitive to this issue. Of coui se, there will be traffic impacts (delays) due to the construction. 5. Question—Explain how costs can be decreased for the proposal at 600 East? Answer—A reduction in the existing bridge lengths causes costs to decrease. This savings can be used for other aspects of the project such as aesthetic enhancements. 6. Question—How much of the funding for this project is Federal? Answer—This project is State funded. 7. Question—Is there any consideration for pedestrian crossings, specifically at 1300 East with the proposed free flow turn lane? Answer—Pedestrian crossings are an issue that must be addressed. 8. Comment—A citizen noted that those turning right at the top of the 1300 East eastbound exit often turn right again at Parkway and proceed down to Highland Drive to access the Sugar House Business District. This citizen wanted to know if any traffic calming measures were proposed to mitigate the traffic impact on Parkway. Salt Lake City Transportation Division responded that changes to the interstate often have other impacts and traffic impact mitigation could be examined for Parkway. 9. Comment— If 600 East is closed to vehicular traffic, a park at either end of the underpass would be preferable to aesthetic treatments to the underpass itself. 10. Question—How can dust be mitigated at State Street? Answer—New pavement (although this too will deteriorate over time) and sound walls can and will mitigate some dust impact. 11. Question - What is the timeframe between the decision to build the project and the actual construction? Answer— Should the decision to be made to go ahead and build the project, construction would take place starting in Fall 2007 or Spring 2008. It is anticipated that the construction would take place over two building seasons. 12. Comment—It appears that with the construction of retaining and noise walls, combined with the required slope, the physical structures of the interstate will be closer to several residences. 13. Question—The existing chain link fence that borders the freeway is the extent of the current right-of- way? Will more right-of-way need to be obtained for construction? Answer—Additional, yet minor, areas of land will need to be obtained, specifically at State Street and at 700 East. Summary of the Planning Commission 1-80 Meeting (May 24, 2006) At 6:52 p.m., Ms. Clark concluded the presentation and requested comments from the Commissioners. Commissioner Diamond extended appreciation for the presentation, and expressed concern regarding the integration of potential light rail into the 1-80 project plan. He noted numerous states include the potential for light rail into project plans and suggested the topic be considered in the further development of the plan. He requested additional insight from Ms. Clark regarding the project's intensions for development of light rail within the Interstate corridors. Ms. Clark stated that UTA and WFRC had worked with UDOT on the plan, and noted that plans to identify other modes of transportation were being considered for the long range plan. She stated that funding for the rail line would be from a different source with the potential of using the Sugar House Spur Line. In response to Commissioner Diamond's comment regarding light rail within the Interstate corridors, Ms. Clark commented that UTA has been addressing the light rail approach with the consideration of the existing line south of 2100 South. She stated that HOV lanes in the median are being considered by UDOT. Commissioner Diamond stated that the growth of Summit County should be a concern and considered when preparing a plan for the transportation in the area. He requested UDOT to consider the light rail, or regular gauge trains, to move people more efficiently with non-vehicular means. He stated that the Planning Commission considers long-term planning, and acknowledges the budget and safety concerns for Interstate 80, but requested additional thought be taken for potential long-term action. Ms. Clark stated that she would transmit the concerns and suggestions to WFRC, but that the funding for the proposed project is generally for safety improvements. Commissioner Chambless agreed with the comments stated by Commissioner Diamond and included that the general purpose lanes, could serve as a potential for light rail when considering long-term transit concerns. Page 1 of 3 , Weeks, Russell From: Harpst, Tim Sent: Thursday, May 25, 2006 4:49 PM To: Weeks, Russell Cc: Zunguze, Louis; Wide, Brent; Gust-Jenson, Cindy; Wheelwright, Doug; Coffey, Cheri; Ikefuna, Alexander;Young, Kevin Subject: UDOT's upcoming 1-80 briefing of City Council May 30 Russell: In addition to the information Alex has shared, I would like to provide you with comments from the Transportation Advisory Board and the issues this office sees as items the City Council may wish to question UDOT about at the briefing. Because of the shortness of time between the recent meetings and the upcoming briefing, I am providing this information to you such that you can, in turn, provide it to City Council in preparation for the briefing. TAB At the May 1 TAB meeting, UDOT presented the environmental study they are doing. TAB stated they would like UDOT to return to their June 5 TAB meeting to present the results of the various neighborhood meetings they have conducted over the past couple of weeks. TAB expects to take some positions regarding aspects of the proposed improvements at their June meeting. However, they did feel strongly enough about one matter that they made a unanimous recommendation regarding 600 East at their May meeting. TAB recommended that at a minimum, a bicycle and pedestrian way remain under 1-80 at 600 East. ISSUES There are 5 issues that City staff have identified that the City administration and/or City Council may well wish to make recommendations on. UDOT,to their credit, has asked that the City consider providing them recommendations of any kind on this project, but they are very interested in the following: 1. Proposal to cul-de-sac Driggs Avenue at 1300 East. The planned improvements provide additional vehicle stacking space on the eastbound off-ramp plus a free right turn lane for east-to-south traffic. The project is primarily being pursued by UDOT as a safety matter. At this location, traffic routinely backs down the ramp onto the mainline of 1-80. This location has the highest crash statistics and these types of crashes are often severe due to the high speed on mainline traffic. In order to install the improvements that would correct the problem, Driggs would need to be closed and the two houses immediately west of 1300 East purchased and removed to construct a cul-de-sac. Closing Driggs has been a proposed action for a number of years. This office concurs that the safety problem needs to be corrected. UDOT has requested to go through the City's street closure process. If the City does not go through such a process or if the result of processing such a request does not result in a closure, UDOT will assess it's ability to close the street anyway using their authority and the seriousness of the safety problem as justification. 2. Noise Abatement. UDOT's study consultant, Horrocks Engineers, is currently performing noise analysis along this section of I- 80. Their preliminary work indicates that noise abatement, highly likely in the form of noise walls,would meet the UDOT criteria which is basically to provide noise abatement as part of the project improvements if the nearby residents agree to have them as determined in a ballot process. UDOT has asked if the City has any comment on this matter. The City does not have any adopted preferences regarding noise walls. Those that have been installed in recent years have followed UDOT's criteria. 3. Aesthetics. UDOT has asked the City and general public for input on aesthetic matters relative to the project. A workshop has been held in which City staff and interested citizens have participated to discuss types of aesthetic 5/25/2006 Page 2 of 3 improvements such as landscaping. In addition, UDOT has stated that they intend to spend their entire $104 million budget on the project and are willing to incorporate some or all savings, as the result of decisions or recommendations the City provides,to additional aesthetic improvements. UDOT has been asked to be more specific about this. 4. Possible narrowing of Elizabeth Sherman Park. UDOT has suggested that if the City concurs,the bridge over Highland Drive and this park could be replaced with a narrower bridge that spans Highland, but not as much of the park as at present. This would save funds that could be used toward aesthetics elsewhere on the project. The current bridge was built to span the road and a rail line that has since been abandoned and a small park with winding sidewalks now takes its place. The suggestion is to not have as wide an opening on the west side of the street. There have been problems with vagrants and illegal activities in this area induced or enhanced by the otherwise unused space west of the streetside sidewalk. The underlying ground where the park exists under 1-80 is owned by UDOT. 5, Possible narrowing or closure of 600 East. UDOT has suggested that if the City concurs, 600 East could be closed or narrowed to preclude car traffic, but still allow bicycle and pedestrian movement. Savings from a shortening or elimination of the interstate overpass bridge could be put toward project aesthetics. UDOT has identified this as an idea to consider, but has no position on it. UDOT will incorporate whatever preference the City has with respect to maintaining the street underpass as is, narrowing the bridge to allow bikes and peds only or eliminating the crossing entirely. 600 East currently carries about 1,400 cars per day and is a designated bicycle route. Concerns would be impacts to nearby streets if the road was closed to auto traffic. Because this is an existing bicycle route,this office concurs with TAB that at least the bicycle and pedestrian movements under the interstate should be preserved. Because the analysis on several of the above issues have not been completed,we are not in a position to provide additional recommendations at this time. The above information is intended to provide background for the upcoming briefing. Timothy P. Harpst, P.E., PTOE Transportation Director Salt Lake City Transportation Division Phone: 801 535-6630 349 South 200 East, Suite 450 Fax: 801 535-6019 Salt Lake City, Utah 84111 email: tim.harpst@ci.slc.ut.us From: Ikefuna, Alexander Sent: Thursday, May 25, 2006 2:02 PM To: Weeks, Russell Cc: Zunguze, Louis; Wilde, Brent; Gust-Jenson, Cindy;Wheelwright, Doug; Coffey, Cheri; Harpst,Tim Subject: RE: Planning Commission Russell: I have attached a summary of the 1-80 discussion at the Planning Commission meeting last night.Also 5/25/2006 SALT LAKE CITY COUNCIL MEMO DATE: May 30, 2006 SUBJECT: Final Report on the Management Audit of the City's Engineering Division STAFF REPORT BY: Lehua Weaver CC: Rocky Fluhart, Sam Guevara, DJ Baxter, Rick Graham, Kevin Bergstrom, Max Peterson, Jennifer Bruno Attached is a copy of the Final Audit Report from Citygate&Associates regarding their management audit of the City's Engineering Division. Citygate representatives will be at the May 30th Council Work Session to provide the Council with a presentation on the audit findings and recommendations. A briefing will be scheduled at a later date with Public Services and Engineering staff for their responses and action items based on the audit recommendations. A more detailed Council staff report will be provided at that time. The attached audit report provides an Executive Summary on pages one through 22 of the bound report document. I- 80 1-80, State Street to 1300 East Improvement Study Salt Lake City Public Meeting May 23, 2006 Sprague Library Wortawtriscossaws I80 1-80 History O Construction of I 80 - 1960's 0 Major Investment Study - Late 1990's • Project Limits - I-15 to Base of Parleys Canyon • Funding Required -+$500 million • Complete Redesign of Interchanges El Under Bridge Rehabilitation Project - 2000 •:• Rehabilitated Structures from I-15 to Base of Parley's Canyon 0 Environmental Study - Currently Underway LIEMilkil01111.1 1 gQ Other Area Projects • UTA • Sugar House Spur - TBD O Trails/PRATT Projects •:• Jordan River to 1300 East - Future Project ❖ 1300 East to 1700 East - Environmental Study ❖ 1700 East to I-215 - Environmental Study ❖ I-215 Bridge - Under Construction I8O Project Schedule �•,.� : aooa 12006 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Notice To Proceed 4iNi Sep 27,2005 Kickoff Meeting Oct 20,2005 Agency Scopir Nov 2005—Jan 200 Draft Improvement Nov 2005—Summer 2006 Study Public Hearing Fall 2006 Final Improvement Summer 2006—Fal 2006 If a build alternative is selectol: Design:Begin Fall 2006 Construction:Begin Fall 2007Warograineraw 2 I gQ Project Area vb Y„ Interstate 80 from State Street to 1300 East � 2100 South f� 1100 south "-� I a F F F t9 Tu.uMI•.-—.: IPmWIVIY 6-16 con tan. 3 jl li juur _n I 2700 South -- 2700 South LITD9rcalernaccasurrs Project Overview O Project Goal Develop an improvement study to address correction of several deficiencies O Project Commitments • Improve safety •:• Take care of what we have Make what we have work better • Seek input to understand and effectively respond to community concerns 111Posemet7reaseroras `I I8O Project Overview 1 Existing Project Issues Identified by the Project Team: ❖ Ramp Lengths ❖ Pavement Deterioration •'• Median Treatment + Structural Integrity + Congestion ❖ Traffic Safety Wisgrailrcoasu s I8O Project Overview Some of the Project Issues Identified by the Public: •:• Noise ❖ Schedule •'• Utility Conflicts ❖ Community Cohesion •'• Impacts to Surface Streets •'• Others? 4 J I Pr,go Project Overview Starr Srrc-i i. t., Traffic and Safety isifi . , Mao Key iI I M : I l 2005 Daly Traffic Wmters j 2033 Proj ated Daily Traffic Wmbel e� � '+i56000 1(ei �_. ,rJ d 3 .�1 1+‘r. HsbricProperties 23• , . � o a 1Lcil`� . c�� ,� e a 5g,000 _ r _Mvr� •c 4. 82,000 - ],.. .c_at•. 51,000 u cowcrrraa ware-es Igo Project Overview Traffic and Safety . ,ff:; _.1 --; A s L Mai Key a V fir, , • Via. {/ " lis •1 2005 Daly Traffic Wm6ers �:I ..i �vtri. ..�'"_ 203)Projected Daily Traffic Wm6ers ` 85 yi.. i I.r�,z Hstvic Properties rr 4.; t ,ems w tilty - .. .1. r- —01 ..,.1.w iiiior 5 I8O Project Overview Traffic and Safety ill , Suga House a Pak •t -, Mao Key 43,000 iitt - Val mint 'r .�.1 j+- 200iDayTraftHunters - Parl - .RW 2030 Prgected Day Traffic Hunters t." 65 M Ar_ _ Lit p,_ 42 ( z-. j \-5A• - � � �.- f -is[oric Properties ' t 43,000 ')Ai= 14f ' " . , ,; I �: . Forest Dale 1 !r ', •I- v' "st` Golf Cairse � _l '.-M!4: + tarffiPargirsres gift 're l I� g Possible Improvements ,rt300 Eau 7 Improvements to be Evaluated May Includes ❖ Additional General Purpose Lane: EB and WB •:• Auxiliary Lane: EB and WB ❖ Ramp Improvements • New Concrete Pavement •:• New Bridges at 300 East, 500 East, 600 East, 700 East, 900 East and Highland Drive • Rehabilitation of the State Street Bridge • Intersection Improvements •:• Retaining Walls to Reduce Right-of-Way Impacts •:• Noise/Sound Walls 4) AMP 11 .....w. 1:80 Typical Section Proposed Gen eral Parpose La ne P,as ihk\,r,r W.,lI P e re I ` Ks rrer F�1 a Al Rarrr Proposed Auxiliary Larc PosiMe Retention Wall Pis sidle Rex ne in/Kose W al I Pa nel Four General Purpose Lanes Altemative LFrarnrcrnrumrs I"I go State Street Interchange i TAT_. 3THLU I 4 I e �. j i t i 1►fir' . . 11 r tf ' i Trt - VII • ".. . ,. r .NNr, •'„ .h. _ ilorw�W� .............. _ Ceno.mLkta lira .. C 711C MOWN' 7 I Me/go 700 East Interchange StmeNvr,11. i MAU,,,A.r I ... - : •--1 IT si I * .1,4,,laAc a F--- , --'. ”41 A e :: •••'. _.: Avi. -1,- -, ,a1.011 . rik,, sl . • , :: L, 4„),,vriiktil j; 1' tr:_-.r.r=.• 11-tf-4-;..i,,Az.E.,..4;y • --, • - :: • - •••• 7, -4. :..' L.e.: -,_. • '-i 14.4 13 PA! . _ - - " • • - - - • ' - "- NO iniiiiii 1 ..., .. . ._... •- ' - - ----"'N:: .. - -7,4 filir .. • ', •-.-:.. •- • 1.. . __ •. 1.::.`" •._.: r. . ..- 400, =. ':-.-".. ' "svi • - ; _10 •• -tie•-.11111,—ay ovi. "7,-,...,-/..;, , ..., ., " 11114li\• •-• • .. ... kWoll7rawatarw A I....go 1300 East Interchange Statt Sow It I.,100 EAST .. • , . i .• ., .. ..I..1::7,4,..:. T.,:- .'.\N ..:' ,• , tit , . • -'-'-.---.-4.:. "••••,. .''',:.il--, -!ii .,. .."t-•. '• ,. ' •-• -_:-....dia/• ,-a-.'' ' ';.'"';":•A :''•' ':- '''''' in ii - . ::,-'.--••'''''''V guni `. i .. f• Ai 1-,,,,,, : ::v7--,-;.-- .Tv•t-;:c..-4,-.;:—.. __ t. ....... •-4 - ,•, -: • - , .. 64,... ariPlinlbsil l MINIM 1 I"I go Specific Areas O Specific Areas of Question and Input • Driggs Avenue • 600 East ❖ Elizabeth Sherman Park • Corridor-Wide Noise Liffigilh-... A Igo Driggs Avenue -,.. 'a' Traffic Stacking and -'1111114 Blocking Manlne '' ► �,�+ - Conflict with two •`6111 right turns iipar• rrnsay.unrJ 2 Igo Driggs Avenue vnr Nrcn i.,'. pHd_C�_AVEtIIJL - — , ism • r fiFF - =grib'camiews I80 Driggs Avenue 0 Summary of Concerns ❖ Maintenance ❖ Visual Impacts •'• Property Acquisition •'• Noise ❖ Aesthetics and Landscaping ❖ Loitering 3 1...., 8 0 600 East Scur NI. , i -- 1,•. -..,_11 :'I II,.1 t , '' rek .4, -' : 1-. .. • IA. t:-. 1.01i. ,"1',, ,,, - , .. _,, i 0'4A I i. ...• .., , , _._ it e, 1.-. ,1 j; 11. .71t.:(k,:$:..., : ":: - i .1 :- _ :-___ -•,----------- - 1.,w_ 4,FIL anal_- -- -• • -'-' -- -7 -- - -...:1"....._:-.-:•------:'•" : : , E i':i'-' ..--: - ti•---i4e) .:.-•7^ ,'"...."---- - . ---- ' 1;•,,,1 -- :: .1;, . 4 .1 1-1 '' _ . . .. . ... . ' ... -P7/40 - ,' .4..4 •• .i*-.-1.. ismi .. ... •--. 11•01.16‘Vilib .. ... MA.110./..Nq - ..' ... Casone.1.1••• ... ... Ory iamb., - ....•• ...... ArRifillib'illarli Ili 600 East .... lgiLott EN_ Traffic Volumes if 600 East is Closed to Motorized Traffic 1, 4 1 , I . PO 470 A -----I 1 ::-- 1 --- .. '-'---=1 1:' P 7- .--...------------- ' "--- 7' .. 1.0•,W.. 890 ON, deo 400... LEGEND i XXXX Existing ADT(2008) l L 1 XXXX 800 East Closure ADT(2008) .......d....._,..„. ., ,:orecatsursres 0 4 I�80 600 East Would closing 600 East to motorized vehicle traffic and providing a pedestrian underpass better serve the community? 4 v......z. i . . , ,,, • ., .. , __ , , _ __._.., --� - I� I8O 600 East Conceptual Ideas for 600 East y .i,r. .,, -,- '[...,,A izz__,.; : . , . , , , ___,_, ,..,.. ^.fir; ' - =r ._�. 5 i I8O 600 East El Summary of Concerns ❖ Speeding ❖ Traffic Impacts ❖ Safety •'• Pedestrian and Bicycle Access ❖ Aesthetics and Landscaping ❖ Access for Emergency Vehicles •'• Impacts to Surrounding Streets •'• Community Cohesion ❖ Clean up Trash and Graffiti (160 Oporrigrcomsamff 6 180 Elizabeth Sherman Park _ '' . - _ _ —erna1 -•J ~ .. t \....., i �r :P• f i I80 Elizabeth Sherman Park State!wen to I 14r,Ia., i" Would modifications to Elizabeth Sherman Park benefit the community? 4 . }�w•� 46, A I It �a. s Looking North Looking North awtercm.c. 1 80 Elizabeth Sherman Park Would modifications to Elizabeth Sherman Park benefit the community? -1. f'1- Looking South Looking South Winfilbnavarsraw I 8� Elizabeth Sherman Park 1 Summary of Concerns ❖ Pedestrian and Bicycle Access ❖ Improve Safety and Reduce Crime ❖ Aesthetics and Landscaping ❖ Additional Lighting ❖ Clean Up ❖ Deter Loitering and Graffiti Artists ❖ Open Park Feel ❖ Don't Add More Concrete • Warawirsareasissm I 8O Noise Analysis Noise Background ❑ Noise is defined as unwanted sound. Sound is produced by the vibration of sound pressure waves in the air. U Sound pressure levels are used to measure the intensity of sound and are measured in terms of decibels (dBA). APigrbnc. • I 86) Noise Analysis Common Noise Levels (dB°). 1. Existing and future noise levels do Rock Ban will be calculated along I-80 Flyover too 2. Noise levels will be compared to Your Lawn er 90 F Blender UDOT Noise Abatement 80 Criteria: Shout' g 70 Normal Sp ghbor's Lawn Mower O 65 dBA for Residential 60 Areas(outdoor) 50 Dishwasher Si Next Room El 72 dBA for Commercial 40 Areas(outdoor) Library 3. Iflane(s) are added to I.80,noise 0 will be mitigated where feasible • Hearing Threshold AMierikasarows 3 I Pese go Noise Mitigation Abatement ❑ Noise mitigation will be provided if it is determined that it is both feasible and reasonable. ❑ Noise abatement must substantially reduce noise when noise levels reach 65 dBA or greater for residential and public areas. U At a minimum a 5 dBA decrease must be achieved by those landowners in the impact area. 5 dBA is a readily perceptible change. caosecasageors I pre 8 Noise Mitigation Noise walls are the most common way to mitigate roadway noise. ' tti Vegetation Barriers Earth Berms (usually not dense enough to be effective) (require a lot of space) • 414146, Noise Walls Traffic Management (effective if they break line-of-sight) (usualy not possible to restrict roadway use) AMfigkrowayst 4 I Setl g0 Noise Mitigation UDOT Noise Mitigation Policy Walls must meet specific requirements: ❑They work to reduce noise by at least 5 decibels ❑They can be built ❑They are cost effective ❑Affected residents want them UDOT will also consider written documentation from local governments and/or community councils regarding their noise wall/abatement desires. C G Noise Mitigation Community Acceptance ❑ Balloting-only property owners with noise levels greater than 65 decibels receiving a 5 decibel reduction receive a ballot. ❑ At least 75%of the impacted front row (adjacent) residentslandowners and 67%of overall residentWlandowners (including front raw receivers) must provide written support for the wall. ❑ Ballots will be mailed to the impacted residents/landowners. The number of ballots returned will be divided by the number of ballots that were sent out to determine the percentage. • 5 I IV go Impacts of Noise Walls Visual Impacts . , - . 6 1 I l coro caveverx Iiiiii6(2_ Impacts of Noise Walls Typical Noise Walls / OCONa+rIO7ra 6I I8O Impacts of Noise Walls Some noise walls have included aesthetic treatments. —_�''---fir._- Wall type can influence the look of the roadway corridor. I,..., 8 0 Impacts of Noise Walls Conceptual Noise Walls Along 1-80 APraacrighscatatenrs I 1- 80 Side-Slopes Conceptual Side-Slope Treatment �b — aar rra.wo.. C {43(J Community Outreach m I;4RI I:aat O Neighborhood Meetings (May 2006) O Local Organization and Government Meetings O Online and Printed Comment Forms O Bi-lingual Support O Web Site (www.udot.utah,gov/i-80state-1300) 0 Media Relations APjfifkrarrars • 8 I8O Neighborhood Groups 2100 South 2100 South o - E ; F E E § Sey.s M 8 b'o 8 1 1.80 r S N E IG«I°w s - :..... 1 § § 8 E 8 c �....» E E E F ra - - EP. 2700 South 2700 South Nerhbu,hod Goup.l 4 .yhhoehood O,uup.4 NuohSide o lb8l}h4i n&o,,o500 fi., lS th Side of580:500 too o9006• •Nethbwdehoodo Goup.2 Nephbwhoud Group*Soud,Si ii 80 F4i n5,oe,m 500 E.. l Nom hSide o 1580.900 fi.,o 1300 6i Ne4hbnhoad Goup.3 Nxlte o/L80:5006.,o 900 E.n 6 d Gope6 e.1.1."oa O,ouxh Stle 01140.900 fiat o 11006 i Q71lC/1:11 FJ I8O Neighborhood Groups Yae tiuret .I�it M1 Gxt Neighborhood Group Meetings: Neighborhood Group#L• May 17,2006 from 6:00 p.m.to 7:30 p.m. South Salt Lake Columbus Hall:2531 South 500 East Neighborhood Group#21 May 18,2006 from&00 p.m.to 7:30 pm. South Salt Lake Columbus Hall:2531 South 500 East Neighborhood Group#it May 3,2006 from 600 p.m.to 730 p.m. Nibley Elementary School:2785 South 800 East Neighborhood Grote#4 May 4,2006 from 600 p.m.to 730 p.m. Nibley Elementary School:2785 South 800 East Neighborhood Grasp#5 May 9,2006 from 6:00 p.m.to 730 p.m. Nibley Elementary School:2785 South 800 East Neighborhood Grote#tat May 10,2006 from&00 p.m.to 7:30 pm. Nibley Elementary School:2785 South 800 East cneaa'nts'A514I07e7 9 sr' fi sOG CITTIITt fiTtS , LK • FOLSOM(SACRAMENTO) MANAGEMENT CONSULTANTS■ • • MANAGEMENT AUDIT OF THE juacce ejiry EMNERNG DiN NW" RIPSI1 MAY 19, zoos ■ ■ . . 1 s- s. 410 ' ! F 16' . . rill • 2250 East Bidwell Street, Suite 100 ■ Folsom, CA 95630 �r��Kr��r (916) 458-5100 ■ Fax: (916) 983-2090 CI(1 Tt flSS:Clflit LL TABLE OF CONTENTS Section Page Executive Summary Executive Summary—page 1 A. Division Organization Structure and Workload 1 B. Project Planning and Project Management 3 C. Prioritizing and Scheduling Work 3 D. Coordination of CIP Projects With Others 4 E. Reliability of Project Estimating 4 F. Cost Allocation 5 G. Outsourcing Engineering Services 6 H. Recordkeeping and Interface with GASB 34 Requirements 7 L Geographic Information System 7 J. ADA Requirements 8 K. Permit Process and Enforcement 8 L. Community Relations/Customer Relations and Service 9 M. Reporting to the City Council 9 N. Action Plan (described) 11 Introduction Section 1—page 1 A. The City of Salt Lake City 1 B. Study Background 1 C. The Engineering Division of the Public Services Department 1 D. Objectives of the Management Review 3 E. Study Approach and Work Plan 4 Task 1 - Project Initiation and Management 4 Task 2—Complete Initial Interviews and Related Data Collection 4 Task 3 —Review Organizational Structure and Staffing Requirements 5 Task 4—Perform In-Depth Operational Analysis 5 Task 5 —Review Preliminary Findings With the City Council Audit Committee 6 Task 6—Prepare and Present Draft and Final Report with Executive Summary 6 II. Overall Department Issues Section 2—page 1 A. Overview of the Engineering Division 1 B. Organization and Reporting Relationship 2 C. Workload and Its Impact on Staffing 3 D. Backlog of Work 6 SW Mt Table of Contents-i CI01'0 f flSSMClflifi.LC III. Project Planning and Project Management Section 3—page 1 IV. Prioritizing and Scheduling Work Section 4—page 1 V. Coordination of CIP Projects with Others Section 5—page 1 VI. Reliability of Project Estimating Section 6—page 1 VII. Cost Allocation Section 7—page 1 A. Cost Allocation Model 1 B. City Engineering Project Costs Compared to Benchmarks 3 C. Management of the Cost Allocation System 5 VIII. Outsourcing Engineering Services Section 8—page 1 A. When Are Consultants Used By The Engineering Division? 1 B. Is It Cost Effective To Use Consultants? 2 C. How Are Consultants Selected? 2 D. How Are Consultants Managed 4 IX. Recordkeeping and Interface with GASB 34 Requirements Section 9—page 1 A. Recordkeeping Function 1 B. GASB 34 3 X. Geographic Information System Section 10—page 1 XI. ADA Requirements Section 11—page 1 XII. Permit Process and Enforcement Section 12—page 1 XIII. Community Relations/Customer Relations and Service Section 13—page 1 A. Customer Service Surveys 1 B. Customer Service Performance Measures 2 C. Customer Service and Satisfaction on Public Way Projects 2 XIV. Reporting to the City Council Section 14—page 1 A. CIP Monthly Project Status Report 1 B. Annual Budget and Subsequent Fiscal Reports 3 C. Business Plan and Performance Measures 3 XV. Survey of Similar Engineering Departments/Divisions Section 15—page 1 i r' Table of Contents-ii CTVI flss4CflTfs.uc EXECUTIVE SUMMARY Pursuant to the City Council policy to conduct periodic management reviews of City Departments and Divisions, the City Council chose to have a review conducted of the Engineering Division. The principal purpose of the review was to assess the Division's organization structure, staffing levels, workload, project scheduling, workload prioritization, project management, outsourcing/contracting services, cost allocation formulas, cost allocation methodology, record keeping, customer service/relations, and the internal and external coordination of work. To address the objectives of the management review, Citygate Associates used an approach involving five tasks. Task 1: Project Initiation and Management Task 2: Complete Initial Interviews and Related Data Collection Tasks 3 and 4: Perform In-Depth Operational Analysis Task 5: Review Preliminary Findings with the Board Audit Committee, Prepare Final Draft and Final Report Prior to preparing a formal draft report, Citygate met with members of the Audit Committee to determine if there were any areas of interest to the City Council that needed additional study. Several comments and questions raised during that discussion helped to shape the topics addressed in the Final Report. The various parts of this report will provide recommendations for improvement in work sections and processes of the Engineering Division. While we believe that the recommended changes will improve the efficiency and effectiveness of the Division, we found few operational problems and no large inefficiencies or ineffectiveness that have an adverse impact on Division output in the short-term. Furthermore, the staffing level is adequate to meet the present expectations of the City Council. Rather, the significant problems we found are largely processes and procedures that are working well now because the Division staff has adapted old systems to current situations. However, the systems do not have the long-term capacity for change and so will adversely impact the City's ability to effectively deliver CIP projects in the future if the issues are not proactively addressed now. The Division staff is very dedicated and focused on the timely delivery of CIP projects in a manner sensitive to the needs and perspective of the public. Yet the form and frequency of information flow and reporting to the City Council causes misunderstanding and have an adverse impact on the ability of the City Council to adequately perform its policy-making and oversight role. A. DIVISION ORGANIZATION STRUCTURE AND WORKLOAD On the formal organization chart, the Engineering Division is divided into five sections reporting to the City Engineer. ■ Executive Summary—page 1 ur ari r�9ciflrrs.u< City Engineer Office Facilitation Community Project 2 Staff Coordination&Street Light/ Traffic Signal Construction 1 Staff Planning and Development -Engineer•mS Contracts and Capital Projects 6 Subdivisions Budgets 7 Subdivisions 23 Staff 1 Subdivision 23 staff \ K Waif The organization format has resulted in "sections" composed of fairly common and interrelated functions, with the informal communication system in the Division working very well to overcome potential problems associated with separating activities that require mutual coordination and sharing of information. Even where there are a large number of employees in a work "section," work is adequately supervised because the long tenure and experience of employees permits delegation of responsibility in an environment in which employees share a common understanding of their mission and priorities. While the total number of employees in the Engineering Division is 56, a key descriptive element is its heavy reliance on technical staff below the level of registered engineer and its relatively small number of registered engineers. With the exception of the Civil Projects Design and Construction, the function of most of the registered engineers and architects is review and supervision, which effectively leverages this more costly expertise, and is also consistent with larger private architectural or engineering firms. While about half of the projects involved the use of outside consultants, overall the in-house engineering staff performed 85 percent of the work on an average of 30 projects per year. This is because two-thirds of the consulting services were devoted to 8 large street projects during the three-year period we reviewed. The size and type of projects projected over the next ten years in the City's CIP supports the view that the present staffing level is adequate to handle the projected volume of work, since they have been able to deliver about that annual volume of projects over the past three years. The Architectural and Parks functions make greater use of in-house architects than is usually found in cities. While the work volume presently supports this level of staffing, the uneven scheduling of projects in the Ten Year CIP may make it necessary for the Engineering Division to adjust project schedules to properly balance the use of in-house staff with outside consultants. However, an additional measure that should be examined to obtain a more complete picture of whether the staffing level is adequate is the backlog of work. To achieve an understanding of the a ■ Executive Summary—page 2 onTa,f NSS9CIES.uc backlog, we analyzed which projects are currently under design, and how many of those were under design one and two years ago. We found that only about half a dozen projects over a two- year period did not have an obvious explanation for why the project was listed for more than 12 months in the "Design" portion of the monthly report. Just determining the status of these design projects over a 24-month period using available Division reports was a lengthy and tedious process, because the monthly report does not provide all of the information that is needed to understand project history and status, and the information in the report is not presented in a visually easy way to use/understand. The present Engineering Division Monthly Project Status Report does not provide a clear and easily usable status report that permits policymakers to participate effectively in setting and adjusting priorities among CIP projects. B. PROJECT PLANNING AND PROJECT MANAGEMENT The Salt Lake City Engineering Division adopted a unique (for the time) and effective project planning and management system over two decades ago. That system is oriented around interdisciplinary Project Teams within the Engineering Division. These Project Teams are assigned a project and are responsible for it from the inception of design to acceptance of the final constructed or rehabilitated public facility. The Division and Project Teams have a well-defined and well-understood project process. Each team is headed by a senior engineer, architect or landscape architect with a broad range of project experience and the authority to interpret and approve design changes based on field conditions. This provides the flexibility to assign members to construction management work during the short duration spring through fall primary construction season and to assign members to design activities and preparation for bidding during the less than ideal construction conditions often prevailing in late fall and winter. The Project Team approach allows a team member to always maintain a presence on the construction project in order to identify and resolve issues in a timely manner at lower levels. Succession Planning for the Project Team leaders needs to begin, since the senior project managers are expected to be retiring at or near the same time. C. PRIORITIZING AND SCHEDULING WORK As the City Council approves new CIP projects each year, there is no mechanism in that process for establishing priorities. Rather, the Engineering Division establishes the priorities. While the criteria used by the Division to prioritize projects are very reasonable and applied in a manner that appears to reflect a good understanding of the factors that will necessarily affect the scheduling of a project, neither the criteria nor their application are well known by people outside of the Engineering Division. Projects are typically scheduled for design on a "first in—first out" basis. Of those projects, higher priority is given to those that have a well-defined scope and do not require significant collaboration with other parties or residents/business/property owners. Projects that provide a solution to multiple needs are often given next highest priority. Finally, of the above projects, those with fully identified and committed funding are usually placed ahead of those without adequate funds. If a project appears to be of obvious high priority to the City Council and cannot be accommodated reasonably in-house without causing significant disruption to the scheduling •.. f'1 Executive Summary—page 3 OM%an.u< of other projects, then the project will be outsourced to a consultant to proceed without distraction. The Engineering Division is not reluctant to delay a project if doing so will result in a better result or construction process for affected parties. The Engineering Division should report project priority and the estimated schedule to the City Council in a report shortly after approval of the Annual Budget and CIP. D. COORDINATION OF CIP PROJECTS WITH OTHER UNRELATED PROJECTS From a construction perspective, the streets of Salt Lake City are a busy place. Not only does the City work in numerous blocks to seal, overlay or reconstruct streets, but they also repair sidewalks and replace underground wastewater, water and storm water facilities. Private utilities such as electricity, telephone and cable have facilities over and under the streets and other public rights of way. Coordination among different departments and agencies and with the needs of the public is largely a matter of having processes in place to ensure advance notice and an opportunity to rework schedules. While the Engineering Division has made a good faith effort to remember the stakeholders that need to be involved in a project at its various stages, a formal comprehensive check list to serve as guidance to new project managers and to document coordination is not available. Internally, the Public Services and Public Utilities Departments have a regularly scheduled coordination meeting to talk about the current projects on the Engineering Division monthly CIP report (that is accessible by computer). Each department delays or accelerates projects as necessary to ensure that construction of underground utilities coordinates well with the roadwork. Both the Public Services and Public Utilities Departments are satisfied with the process and level of coordination that presently occurs. Even though both the Public Service and Public Utilities engineering functions need to share files and GIS system information more readily, both functions involve distinctly different engineering design activities. The engineering activities of Public Utilities and the Public Services Engineering Division are unique, with little crossover in their functions, but they have an obvious need to coordinate activities. A more formalized coordination will allow the two to function as well as if they were under a single structure. The only staffing advantage in combining a utility engineering function with a street, parks and building engineering function is the possible savings of one supervisory position. However, even this may be illusory if the workload requires an Assistant Division Head be added to oversee one half of the combined operation. E. RELIABILITY OF PROJECT ESTIMATING The Engineering Division has a reasonably rigorous process of establishing, updating and reviewing project cost estimates. Public building projects under $2,000,000 are estimated in- house using industry standards on a square foot basis and adjusted for recently completed projects of similar scope. On larger building projects, a professional estimator is used. Park projects are estimated in-house or by a design consultant based on unit costs of elements of the projects taken from recently bid projects with similar individual elements. Street projects are Executive Summary—page 4 arrca�f�S9011s uc estimated by in-house staff based upon senior staff's professional experience and historical trends in local market pricing. The number of bidders who propose on a project can significantly affect project costs, with the number of bids usually reflecting the supply of either skilled labor or construction materials. Cost estimates in this dynamic environment are established as part of the budget process. Thus, they are often made as part of the CIP process, which is over a year in advance of the CIP approval process and possibly two years in advance of the earliest construction date anticipated for projects. In 287 projects reviewed by Citygate, the aggregate actual construction cost for all projects was 12.5 percent lower than the total cost estimate on all of the projects. Of the 287 projects, 42 exceeded the cost estimate by 10 percent or less. Of the remaining 52 projects, half of them experienced a high percentage difference, but the actual dollar variance between the bid cost and the engineer's estimate was less than $20,000. The Engineering Division cost estimates are reasonable in view of the short-term impact of labor and material costs and field changes necessary due to unforeseen underground conditions. F. COST ALLOCATION Until several years ago, most of the Engineering Division staff costs were supported by the City General Fund, and none of the design and project management expenses represented by in-house labor were allocated to individual capital projects. This meant that the City did not know the full cost of each project and often used General Fund money to pay for the design phase of a project that could be wholly funded from special state or federal money. The Division now uses a cost allocation model that is a straightforward calculation that determines a "billable" hourly rate for all employees who charge their time directly to capital projects. The contents of the formula are very standard, with the exception of omitting the support costs such as citywide finance, legal, and personnel. These Engineering Division hourly rates compare quite favorably to a representative sample of hourly rates being charged to the City when it obtains consultant services. The hourly "billing" rates that the Engineering Division uses in developing charges for the Division's work on CIP and special improvement districts is reasonable and somewhat less than the rates charged for comparable work by consultants. The City is not including some overhead charges for citywide support services, such as finance, legal, capital planning, and personnel, in developing its "billing" rates. Including these costs will be consistent with practices by larger communities and will result in a more accurate reflection of the full cost of capital or special improvement district projects. Using the existing Engineering Division rate structure, we examined the Design and Construction Management Costs on 92 recent Salt Lake City projects managed by the Engineering Division. We found that the overall average cost of Design and Construction Management (including the use of outside consultants with specific expertise) as a percentage of Total Project Cost for projects conducted in-house, was not quite within the range of the previous Hughes-Heiss Engineering Division study for about 45 percent of the projects, but certainly was well within the range of the more recent and very comprehensive and rigorous California benchmark study. This reflects an effective use of in-house staff. However, the Division Executive Summary—page 5 UR OE fi 9ciarfs.ac continues to use the outdated Hughes-Heiss study benchmark that should be either superseded or updated to provide the Division with a more effective management performance measurement tool. Type of Project City Average City Range Hughes- Benchmark Heiss Study Parks 18% 2-45% 20-22% 37-47% Buildings 16% 7-43% 20-22% 49-60% Streets 19% 11-56% 13-24% 31-54% While the Engineering Division's cost allocation system is based on a very reasonable formula, maintaining the data in the system is very cumbersome. Originally, the system was developed on an Excel spreadsheet. This works adequately for producing a report that presents the data in such a way that all users can extract from it what they need by reading the single very large report. However, if there is a need to produce reports that arrange and summarize the data in unique fashions or to meet the needs of multiple users with very different interests, an Excel spreadsheet-based report is very time consuming to use. The cumbersome system is becoming an issue for those managing projects, because the Project Team is responsible for control of Design and Construction Management costs on each project, yet they neither have direct access to the needed data, nor can they reasonably obtain timely information. This is clearly frustrating to the Project Managers. The Engineering Division should allocate funds to reform its present cost allocation reporting system so that it can provide information in a flexible manner to meet the needs of users at many levels and be able to provide easily unique reports in response to future management and policy needs. G. OUTSOURCING ENGINEERING SERVICES Almost every local government uses consulting architectural and engineering services to assist in delivering their capital projects. The level of consultant utilization will vary widely between agencies, based on the nature and level of specialization of the projects they are doing each year, the volume of projects, the engineering division vacancies the agency may be experiencing and the local philosophy regarding contracting versus in-house work. Of the almost 100 projects reviewed by Citygate, about 36.7 percent of the Design and Construction Management work was outsourced. Consultants were used primarily for design work on Park and Building projects. About 57 percent of the consultant work was devoted to 7 street reconstruction and overlay projects, which are relatively easy to contract out. The Division has appropriately allocated the work assignments between in-house staff and consultants. This takes advantage of areas in which consultants have expertise not available among Division staff and avoids project backlogs by assigning work to consultants. The consultant procurement process and the forms used by the Division are similar to that used in other cities. The process, as applied by the Engineering Division, reasonably creates an environment in which the selection process is highly likely to result in the selection of the most , Executive Summary—page 6 aFKOTt aMIES 1K qualified firm. The Division has followed the City policy, understands that policy, concurs in the value of process as providing a neutral and objective evaluation of consultant services, and clearly makes an effort to conduct its procurement process in a manner that will be perceived as fair. H. RECORDKEEPING AND INTERFACE WITH GASB 34 REQUIREMENTS As organizations become larger and multiple people need access to plans and records, an efficient method needs to be found to file and retrieve documents. Not only staff within the Department may need the records, but also other departments, residents, professionals working on projects, emergency response personnel, and others often need the records and plans. It is common for the Engineering Division to be the repository of plans and specifications and all of the written documents associated with designing and constructing a project. Recordkeeping takes in and processes about 12,000 engineering documents (including plans, reports, logs, etc.) per year. It responds to about 5,000 requests for information per year, or an average of 20 or more per day. They provide the sets of contract drawings and documents to bidders. In addition, they review and purge old documents, based on a records retention schedule. They presently have a 2-month backlog in purging old records that no longer need to be retained. Using their records, the Engineering Division's approach to developing the value of older assets and the projected life of those assets is adequate for the needs of the City and the Division. The City has adopted and is making reasonable progress in implementing an electronic data management system. However, at the present staffing level, the Division is not making much progress in digital capture of historical old plans/drawings, which are fragile and deteriorating. Most historical plan/drawings are not easily retrieved in the event of an emergency that requires the building, utility or other infrastructure information detailed on the historical plans. While the records section appears to have adequate space, the records are not well protected. The area is not separated from the remainder of the building by an adequate firewall, and the fire protection system within the area is a water-based fire sprinkler system located in the ceiling that will saturate or destroy the already fragile surviving records, if any. I, GEOGRAPHIC INFORMATION SYSTEM Like other medium to large cities, Salt Lake City has a Geographic Information System (GIS). The City has four focal points for its GIS system: The Airport with its own server and self- contained coordinate system; the Information Management System Department that maintains the base data on a server; the Public Utility Department that maintains a GIS system with utility data; and the Engineering Division that maintains a GIS system with its own server. In effect, the City has two separate GIS systems for the whole City, plus a separate system serving only the Airport. The Engineering Division's GIS system is not a real-time system, and it relies upon deleting and re-creating maps in order to update the base data displayed on maps. With a six-person GIS function, the Engineering Division does a very effective job of making a cumbersome system work and serve the needs of the City. The problem is that as the City becomes larger, issues Executive Summary—page 7 ararres u< facing the City become more complex, and as quality and timeliness of analysis and information becomes more important, the current system will not be adaptable to providing real-time management information. The City has a large investment in the present GIS software and configuration, and it is returning substantial information value to the City. However, it does not appear to be a priority to forecast the geographic based information management needs of the City and to evaluate the value of changing the system. If the system is as cumbersome as it appears and is not able to provide real time information, then the longer the City waits to evaluate and update the GIS, the more costly will be any change because of the growing investment in the present system. That investment is not simply dollars, but more importantly, the City is developing and adapting sub-optimal work processes tied to the present system. The City, possibly through the Engineering Division budget, should hire an outside consulting firm very familiar with all aspects of GIS. This firm should provide the City with an evaluation of the capabilities of its current system, the limitations, and evaluate the short- and long-term capability/value of alternatives to the present system, along with a range of cost for any alternatives. .I. ADA REQUIREMENTS Salt Lake City has taken a very proactive and responsible approach to compliance with the Americans with Disabilities Act, and it has made implementation of the removal of barriers to accessibility a high priority in the Engineering Division. Citygate Associates reviewed the policies and the CIP projects that implement ADA activities and found these projects reflective of the City's commitment and the requirements of the Act. The City has a comprehensive and well thought out approach to complying with ADA standards, updating an ADA Transition Plan, with the present inventory updated in 2005. The principle area of concern is lack of clarity regarding who in the City is responsible to ensure that special ADA accommodations are made in public places. K. PERMIT PROCESS AND ENFORCEMENT The Engineering Division's principal permit activity is issuing permits for work in the public rights of way. The purpose of the permitting is to ensure that the applicants know the regulations that apply to their proposed work/project that encroaches on the public rights of way, including restoration of the area, and to provide a tracking mechanism for the Division to use in scheduling inspections of the work throughout the duration of the project as well as near the end of the warranty period. Approximately 2,300 right of way permits are issued each year. Approximately 1,000 complaints annually receive a response from the permit staff. A proactive part of the work in the Public Rights of Way function is to review building permits, subdivisions, plan amendments, street closures, annexations and similar requests for possible right of way encroachment needs. They also provide review and inspection for an average of approximately 8 subdivisions per year. The permit processing and management is adequately automated, although the system is not exactly real-time due to the limitations of the City's chosen software. However, the City does not measure the length of time it takes to issue a permit or respond to a request for public right , Executive Summary—page 8 (I aS9OES[K way project inspection, nor has it established performance measures that will assist management and the City Council in assessing the adequacy of the permit process. L. COMMUNITY RELATIONS/CUSTOMER RELATIONS AND SERVICE The Engineering Division uses two standardized customer service survey forms to assess how customers perceive the type of service they receive. One rates the service in the Division; the other is used to obtain feedback on various aspects of construction projects. Neither form is focused on external customers, and there is no apparent effort to assess how well they serve the departments/employees within the City who rely on and interact with the Engineering Division to accomplish their own work. Very few customer survey forms assessing service within the Division are completed, giving the Division an incomplete understanding of how acceptable their customer service is when external customers seek assistance. The Division should develop a proactive plan to encourage both external customers and other City Departments to complete the survey forms at regular intervals. There are no performance measures reported in the Division that are related to customer service to either internal or external customers. The Division should review the work activities of each function and select performance measures that can be easily administered and that relate directly to the provision of services to internal and external customers. These measures should be included in the Division Monthly Scorecard. The Engineering Division is very sensitive to the concerns, needs and satisfaction of residents and business owners affected by CIP projects. A Customer Relations/Public Information liaison is assigned to each project where project impacts are anticipated. The liaison manages the project relations based on a basic template of activities that is adapted for the special aspects of each project. An effective Customer Relations Program template has been developed by the Division; and the staff reflects a sincere desire to both promote good customer relations as well as to provide good customer service to individuals impacted by construction projects. M. REPORTING TO THE CITY COUNCIL In interviews throughout this project, there were two persistent themes. The first is a belief among many Division personnel that they are providing information in both regular reports, the annual budget, the Business Plan and individual Council Agenda reports on the status of projects and the other work of the Division; and yet, there are still questions coming from the policy level of the City that many Division personnel feel are answered in these regular reports and other sources of information. The second theme is a belief by some at the policy level that the status of projects and Engineering Division work is not adequately available unless specific questions are asked. In our study we have found no fundamental problems in the organization or processes of the Engineering Division, but it is clear that substantial improvement needs to occur in the area of communicating information to the City Council and, in turn, communicating policy priorities to the Division. Wit II Executive Summary—page 9 a,1flr'flss9 r[.[K All of the Division's Capital Improvement Projects that are not completed and closed out are currently included in the monthly CIP report that the Engineering Division believes goes to the City Council as the key source of information on the status of each project. In fact, the Council does not receive the full report. In addition, even if they did, the report neither contains all of the information necessary to fully understand the status of each project, nor is it in an easily usable format. The CIP Monthly Status Report needs to be restructured substantially, with the design done in cooperation with the City Council so they are provided with the information they need in an easily understandable format. The annual budget document appropriates money to capital projects. Once that has occurred, the Engineering Division has the authority, following the procurement procedures, to manage the project without coming back to the City Council for any additional approvals. The City Administration can even transfer funds into the project to cover cost overruns, with the Council not learning of this in any organized fashion, although there is an adopted procedure requiring notification to the City Council if funds are allocated to a project from an established cost overrun budget. While it is probably not a good idea to have the City Council be involved in detailed administration by evaluating all cost overruns and approving transfers of funds, it is important that they be alerted to those projects where the scope and funding changes might be significant. A monthly report to the City Council should alert Council to those projects where a change in scope or transfer of funds is being contemplated based upon a significant change in the project. This will give the City Council the opportunity to inquire and discuss the issue prior to a decision being made. The Division Business Plan is largely a descriptive document and not a "plan" that sets out the challenges in detail facing the City for which the Division has responsibility, a specific proposed path for addressing the challenges, a clear explanation of how the proposed solution will address the challenges, alternatives to addressing challenges (rather than simply lowering service levels), and specific measurable goals that will allow policymakers to know what to expect if they approve the proposed solutions. In its present form, the Business Plan provides little more than a description of what the Engineering Division does and very general statements of what additional resources they need. The Business Plan does not serve as a planning document or a context in which policymakers can consider alternative responses to challenges facing the City. The performance measures used by the Engineering Division in the Business Plan do not relate to any standards or goals and serve little function in providing management or analytical information for either the Division management, the Administration or the City Council. The Engineering Division should develop a series of performance measures that communicate useful information to the City Council, serve as management and analytical tools for the Engineering Division, and generally meet the standards in the performance measurement scheme described in this report. PWI.. ■ Executive Summary—page 10 arm ts9afiits u< N. ACTION PLAN A list of our recommendations and a blueprint for their implementation are presented in the following Action Plan. This plan contains: • The priority of each recommendation • The suggested implementation timeframe • The anticipated benefits of each recommendation • The responsible organization. The legend at the bottom of each page of the Action Plan defines the level of each priority indicated by the letters "A" through "D." It is important to note that priorities have been established independent of the suggested timeframe. For example, a recommendation may have the highest priority (indicated by the letter "A") but may require an estimated six months to implement. Conversely, a recommendation with the letter "C" priority, which indicates that the recommendation is not critical but will improve operations, may have a two-month timeframe, since the estimated implementation effort would not require an extended period of time. It is also important to note that an "A" priority, which indicates that the recommendation is deemed "mandatory or critical," should not be interpreted to mean that the recommendation is "mandated" by a statute or regulation--it is simply an "urgent" recommendation of high priority. 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THE CITY OF SALT LAKE CITY Salt Lake City, with a population of approximately 180,000 and covering an area of 111 square miles, serves as the central city in the larger metropolitan area. It is a full service city functioning under the Council-Mayor form of government. The directly-elected Mayor serves as Chief Executive Officer and directs the activities of the various City departments, while the City Council serves as the legislative body responsible for adopting policy through ordinances and resolutions, as well as adopting of the annual budget and capital improvement program. As part of its policy setting and oversight function, the City Council periodically provides for a management review of the various City departments and divisions that report to the Mayor and provide day-to-day services to the community. These management reviews assist the City Council in their legislative role and provide useful information and recommendations to the administration of the City. B. STUDY BACKGROUND Pursuant to the City Council policy to conduct periodic management reviews of City departments and division, the City Council chose to have a review conducted of the Engineering Division of the Public Services Department. The principal purpose of the review was to assess the Division's organization structure, staffing levels, workload, project scheduling, workload prioritization, project management, outsourcing/contracting services, cost allocation formulas, cost allocation methodology, record keeping, customer service/relations, and the internal and external coordination of work. In brief, the City is seeking an assessment of the current management systems and processes to determine whether there are changes that will improve the cost effectiveness of engineering services. C. THE ENGINEERING DIVISION OF THE PUBLIC SERVICES DEPARTMENT The Engineering Division is one of two engineering service providers in the City government of Salt Lake City. The Public Utility Department provides engineering services related to the construction, operation and maintenance of municipal utility services, while the Engineering Division of the Public Services Department is responsible for the following services: • Capital Improvement Program (CIP) — Planning, programming, cost estimating, designing, budgeting, and construction of Capital Improvement Projects. • Engineering General Services—Managing the public way including engineering records, survey information, street addresses, Geographical Information Systems, and special improvement districts. • Public Way Regulation and Control — Ensuring that privately funded public way construction, including excavations, subdivision development, and street improvements, are constructed in accordance with established standards. Coordinating of public way activities to minimize public way damage and disruption to the traveling public and adjacent property owners. Tv% Section 1—Introduction—page 1 unit IsTKiares ac The Engineering Division has 56 full-time staff members organized into five sections that report to the City Engineer. These sections include the following: • Office Facilitation - Office Facilitator and Office Technician provide support services to the City Engineer and the remainder of the Division. • Community Project Coordination — One staff person reports to the City Engineer in order to provide direct authority and clear responsibility for the Public Relations/Information functions associated with each Division project. As time permits, this person also serves as project manager for signal and street lighting projects. • Development Engineering — Subdivision review and public way permit inspections, public way permit review and issuance, pavement management, land surveying, Geographical Information System and mapping, and planning and programming for the Division. • Engineering Contracts and Budgets - Budgets, procurements, special assessments and engineering documents/data. • Capital Projects — Civil project design and construction, architectural project design and construction, parks planning, design and construction, landfill and civil projects/engineering standards, engineering materials quality control, and sidewalk repair and replacement and access ramps. The Division is quite busy, completing a significant number of projects each year, providing Geographic Information Services mainly to the Division operations and other City departments, surveying for City projects, maintaining engineering maps/records, and regulating access for construction in the public right of way. To illustrate the volume of work undertaken by the Division, on average each year they: • Provide or manage the design of 28 street projects • Provide or oversee construction management on 22 CIP projects • Provide or oversee the design of 15 park projects • Provide or oversee the design of 14 building projects • Respond to 5,000 requests for general Engineering Records Information and process about 12,000 engineering documents • Conduct a conditions survey of 15 percent of the City streets and update 3,000 street records to reflect the condition and planned repair activity • File about 10 plats per year with the County Surveyor and respond to approximately 200 requests for information regarding public rights of way • Perform development review on about 60 projects • Review, issue and inspect approximately 2,300 excavation, sidewalk and curb gutter permits and review about 600 building permits per year. While the above information is fairly representative of the work that goes on within the Division, it is only intended as a sample to provide a sense of both volume and scope. Section 1—Introduction—page 2 araiarts.LK D. OBJECTIVES OF THE MANAGEMENT REVIEW This project is intended to provide an independent, objective and rigorously analytical appraisal of the Engineering Division. A number of dimensions were studied including organization, staffing, workload, scheduling, fiscal management issues and overall efficiency and cost/effectiveness of the various Division activities. The project expectation also includes suggestions, where warranted, for the creation of new methods and approaches, and the development of a plan to implement any necessary improvements. In addition, there are 22 specific issues and questions that are to be addressed. 1. Analysis of organization and administration (Is the Division organized properly?) 2. Appropriateness of staffing levels and types of positions. 3. Evaluation of efficiency and effectiveness of day-to-day operations. 4. Evaluation of work scheduling process (How are priorities set given the large unfunded need?) 5. Analysis of project management structure. 6. Evaluation of the effectiveness of the analysis used by the Division for setting criteria to prioritize workload. 7. Analysis of project planning and timeline determination from funding to completion. 8. Reliability of project estimating. 9. Comparisons of fully-loaded hourly rate with private engineering firms. 10. Evaluation of the use of in-house staff versus outsourcing (When and how is it determined to outsource? Which is usually more cost effective? How are consultants selected?) 11. Evaluation of the need for a City engineer to oversee outsourced projects. Would a lower-paid project manager-type person be an acceptable alternative? 12. Evaluation of workloads including backload. 13. Analysis of coordination of construction work within the public rights of way (street cuts) with street reconstruction or overlays. The review should include both the coordination between reconstruction or overlay of streets and sidewalks with the City's Public Utilities Department, with other utility companies, with the City's Redevelopment Agency, and with the City's capital improvement program. 14. Evaluation of engineering record keeping program. 15. Evaluation of project management system and its interface with the City's accounting system for required reporting under GASB 34. 16. Analysis of charging of engineering fees to projects. 171 Section 1—Introduction—page 3 arn�ISS9aflItS.«c 17. Analysis of engineering costs charged to property owners of concrete special improvement districts (currently charging 15 percent of construction costs -- is this consistent with actual engineering time?). 18. Analysis of engineering permit process and enforcement. 19. Evaluation of community relations/customer service/business relations. 20. Determination of whether the City is meeting or exceeding the ADA requirements. 21. Evaluation of the coordination between the Engineering Division and a separate engineering group in the Department of Public Utilities. Determine whether there are any efficiencies or advantages of combining the two engineering groups. 22. Benchmark comparison with at least 10 other cities. Items to be benchmarked include costs to process, amount of time it takes, and amount of gap between estimates and actual. Upon completion of the project, the City expects to have a good understanding of the structure, processes and management practices of the Engineering Division, including recommendations for potential improvements in efficiency, effectiveness, responsiveness, and the quality of services provided to customers and residents. The end result of this study will be a report, including recommendations and a proposed implementation plan, provided to Salt Lake City, in order to help the Engineering Division achieve its goals and objectives. The report can be used to strengthen and enhance the efficiency and effectiveness of the Engineering Division in its endeavor to better serve the customers, citizens, and stakeholders of Salt Lake City. E. STUDY APPROACH AND WORK PLAN To address the objectives of the management review of the Engineering Division, Citygate used an approach involving six tasks. Task 1 - Project Initiation and Management Our initial task involved a Kick-Off Meeting with appropriate City personnel, including City Council, Public Services Department and Engineering Division staff. The purpose was to review and confirm our understanding of the project scope and objectives, task plan and project schedule, to review documents previously provided to Citygate Associates by the Engineering Division, and to obtain the initial assessment of Department and Division management on the principal issues in the "scope" of this management review. We also provided orientation material to the Division, outlining the objective of the review and Citygate's approach to accomplishing the tasks. Task 2 — Complete Initial Interviews and Related Data Collection Citygate worked with the Engineering Division liaison to develop an interview schedule that permitted us to meet with the working staff involved in each of the areas of interest in this review. We requested an extensive list of documents and work products, which were thoroughly reviewed prior to these meetings, thereby providing us with not only an initial understanding of the Division Section 1—Introduction—page 4 ancflT�s9ciflrfs.uc processes and procedures, but also served as an excellent source for additional clarifying questions and requests for further documentation. Our familiarity with engineering operations allowed us to fairly quickly ask detailed questions regarding processes and procedures, to assess the Division staff's familiarity with other alternative practices and their understanding of any shortcomings in their current processes, equipment and technology availability. Organization charts, budgets, staffing plans, forms, reports, cost allocation plans, records, equipment and software, schedules and related work products were all part of the review conducted with the outstanding cooperation of Division staff. Task 3 — Review Organizational Structure and Staffing Requirements With the technical information gathered from Task 2, Citygate reviewed the organizational structure, answering a number of questions necessary in order to address the issues of interest to the City in their requested scope of work for this management review. • What is the hierarchical structure of the Division and its subunits in terms of: ➢ Who does what? ➢ What is the role of supervisors and managers? ➢ What is the span of control and responsibility? • What do each of the sub-parts of the Division do? • Is their overlap between parts of the organization? • How does coordination of tasks occur both within and between subunits and with other City departments? • Are there alternative organizational arrangements that might provide greater coordination and improved effectiveness in achieving the goals of the Division and the City? • What are the staff needs in each of the parts of the organization and how does present staffing related to: ➢ How schedules, priorities and specific assignments are made? ➢ How projects and tasks are accomplished? ➢ How are both routine and non-routine tasks handled? With this understanding of the structural processes and relationships in the Engineering Division, we undertook Task 4. Task 4 — Perform In-Depth Operational Analysis The purpose of Task 4 was to conduct an in depth analysis of the technical and process functions of the Division to identify those functions where change might provide a noticeable improvement for the Division and the City. We had particular emphasis upon the 22 questions and issues of principal concern to the City. The study of the technical and process aspects of the Division were used to analyze the project management structure, the scheduling of projects, the interrelationship between project management and budgeting, reporting to the City Council, cost allocation and cost estimating, Section 1—Introduction—page 5 ancar' ss9ciares uc the use and management of consultants, record keeping and customer responsiveness, specific coordination structures/methods and feedback within the Division on how well it is doing. Task 5 — Review Preliminary Findings With the City Council Audit Committee Prior to preparing a formal Draft Report, we met with the City Council audit committee to determine if there were any areas of interest to the City that needed additional study. No additional study areas or emphases were identified by the committee. Task 6 — Prepare and Present Draft and Final Report with Executive Summary The final task incorporates two steps. The first is preparation of a Draft Report for review by the City to ensure that all of the areas of interest have been adequately addressed and that Citygate appropriately understood the facts of each situation analyzed. With approval of the Draft Report, the second step is completion of the Final Report (this report) with any needed modifications. This Final Report contains an Executive Summary and an Action Plan that is a compilation of the recommendations developed in the management review. Ir Section 1—Introduction—page 6 aITGlif nac��.uc SECTION 2-OVERALL DEPARTMENT ISSUES As each of the sections of the Engineering Division were reviewed, it was clear that the fundamental framework within which they all function is the overall Division organization. It is that organization, reporting relationships, resulting assignment of work workload and staffing levels that are the fundamental determinants of how well the Division functions. Policies, procedures and technology also influence Division effectiveness; but if the overall structure of the organization does not support coordination, the smooth flow of work, distribution of information for management purposes, and the even distribution of workload, then the quality, timeliness, effectiveness and efficiency of the organization and its output will be less than what it ideally could be. This section of the report addresses the overall Division organization and assesses its impact on the organization output. A. OVERVIEW OF THE ENGINEERING DIVISION Any organization will have some areas where it can improve, particularly where fiscal resources are limited and management must prioritize where it spends its available money. In large cities such as Salt Lake City, the coordination between City departments may be difficult due to inadequate coordination structures and limited fiscal resources to solve technology problems that may be at the heart of some problems. The subsequent sections of this report will provide recommendations for improvement in various sections and processes of the Engineering Division. While we believe that the recommended changes will improve the efficiency and effectiveness of the Division, we found few operational problems and no large inefficiencies or ineffectiveness that has an adverse impact on Division output in the short term. The staffing level is adequate to meet the present expectations of the City Council. Rather, the significant problems that we found are largely processes and procedures that are working well now because the Division staff has adapted old systems to current situations. However, the systems do not have the long-term capacity for change and so will adversely impact the City's ability to effectively deliver CIP projects in the future if the issues are not addressed now. The Division staff is very dedicated and focused on the timely delivery of CIP projects in a manner sensitive to the needs and perspective of the public. Yet, the form and frequency of information flow and reporting to the City Council causes misunderstanding and has an adverse impact on the ability of the City Council to adequately perform its policy making and oversight role. An underlying frustration that we sensed within most parts of the Engineering Division was their inability to communicate the shortcomings of their present management systems and the inability to get other parts of the City organization to give priority attention to the problems that are looming ever larger over the horizon. This is probably the frustration of most government departments in an environment focused on year-to-year delivery of services and projects, and little time and resources to address issues that will adversely affect the organization in later years. One function of this report is to draw attention to long-term issues and to urge the City to devote resources to the resolution of the problems. In most cases, the outlay is relatively small in relationship to the overall organization and the present annual surplus of revenue over annual LI ■ Section 2—Overall Department Issues—page 1 waif M9(1fiaits ac expenditures. At this moment in time, it does appear from the City's annual financial reports that some resources are available to begin addressing longer-term issues such as improvement in the Geographic Information System, project financial reporting system and recordkeeping systems. These issues will be addressed at greater length elsewhere in this report. B. ORGANIZATION AND REPORTING RELATIONSHIP On the formal organization chart, the Engineering Division is divided into five sections reporting to the City Engineer. The number of subdivisions and the number of staff are indicated in each box of the organization chart. There are a total of 56 employees in the Division. l City Engineer c Office Facilitation " Community Project 2 Staff Coordination&Street Light/' Traffic Signal Construction 1 Staff Planning and Development "Engineering Contracts and Capital Projects 6 Subdivisions Budgets 7 Subdivisions 23 Staff 1 Subdivision 23 staff 6 Staff In designing an organization, one must balance both the number of employees in each reporting relationship and the relatedness of the functions in each reporting unit (or box on the organization chart). One must avoid having more than 5-7 people reporting to each supervisor, having too many different skills and unrelated functions reporting to one supervisor, or having functions that must closely coordinate report to different supervisors. Unfortunately, it is rare to meet all those organizational design criteria. There need to b.e compromises; and where there are compromises, the organization needs to have compensating mechanisms. Often, the most effective compensating mechanism is the "informal organization" created by personal interrelationships among long-term employees. This latter is the situation in the Engineering Division. The Planning and Development Section has very different functions reporting to the Deputy/Planning and Development Engineer, and yet this diversity has not resulted in a fundamental lack of coordination among functions and employees in the department. Section 2—Overall Department Issues—page 2 CI1Y R BSS°IES ac CDeputy/Planning and Development Engineer Planning ttuu Programming Subdivision Public Way Pavement Land Surveying Geographical Review and Permit Review Management Information Public Way and Issuance j System and Permit Inspections \� MappingJ The compromise in organization design made by the Engineering Division has resulted in "sections" composed of fairly common and interrelated functions. For example, the Capital Projects Section, unlike the Planning and Development Section above, is composed principally of 7 functional areas, most devoted to design and construction: civil, architectural, park and sidewalk/ADA projects. It is fairly standard for organizations to have a turnover rate averaging 3-8 percent per year, which equates to 2-4 employees per year in the Engineering Division. The Division staffing is very stable with little or no turnover each year. This has allowed the development of a common vision/mission, a common ethos to produce projects well and timely, and to coordinate effectively between each other. It is this organizational characteristic that permits the compromises in organizational design to work effectively. Of course, organizations are dynamic, and a change in leadership or other critically placed employees can change the simple coordination to one of separateness or what is called "silo mentality." Finding: The present organizational design of the Engineering Division serves well as a result of the informal organization based in the long tenure of employees. The design does not stifle coordination or communication among employees and functions within the Division. Work is adequately supervised because the long tenure and experience of employees permits delegation of responsibility in an environment in which employees share a common understanding of their mission and priorities. C. WORKLOAD AND ITS IMPACT ON STAFFING While the total number of employees in the Engineering Division is 56, a key descriptive element is its heavy reliance on technical staff below the level of registered engineer and its relatively small number of registered engineers. There are 11 registered engineers, and 31 Section 2—Overall Department Issues—page 3 CAW aNcmifs uc professional and technical level engineering staff members distributed throughout the organization, 3 landscape architects and 2 licensed architects. Most of the remainder of the staff perform support functions for the Division, other Departments, the public, contractors, and engineering/architectural professionals who need the information. The eleven registered engineers are located as noted in parentheses below: • City Engineer (1) • Sections Heads ➢ Deputy/Planning and Development Engineer (1) • Subdivision Review and Public Way Permit Inspections (1) ➢ Engineering Contracts and Budgets (1) ➢ Deputy/Capital Projects Engineer(1) • Civil Project Engineer (4) • Landfill and Civil Projects/Engineering Standards (1) • Sidewalk Repair and Replacement/ADA Access Ramps (1) With the exception of the Civil Projects Design and Construction, the function of most of the registered engineers and architects is review and supervision, which is also consistent with larger private architectural or engineering firms. Professional technical staff then produce and manage work on a daily basis. This is necessitated by the number of employees reporting to each registered professional. The earlier organizational chart reflected 22 employees each reporting to two of the registered engineer section heads responsible for most of the work in the field. Over the past three years, the average annual value of projects delivered by the Division, including all construction, design and management costs, is approximately $10,687,000, with an average of$327,000, and an average of 33 projects completed each year. While about half of the projects involved the use of outside consultants, overall the in-house engineering staff performed 85 percent of the work on an average of 30 projects per year. This is because two-thirds of the consulting services were devoted to 8 large street projects during this three-year period. This overall Division workload is consistent with the value of projects approved in the CIP for the current fiscal year and with the projected value of projects over the next ten years as reflected in the CIP. The size and type of projects projected over the next ten years in the City's CIP supports the view that the present staffing level is adequate to handle that volume of work, since they have been able to deliver about that annual volume of projects over the past three years. However, the projects are not evenly distributed in the CIP over the ten-year period to maximize the use of in- house staff and minimize the use of outside consultants. Of course, CIP programs change and the distribution of projects from year to year may actually be adjusted to even out the volume of projects annually. Every few years, the CIP priority of projects should be reviewed with the City Council, and the Division should make recommendations for shifting projects among years to balance the workload. This is particularly important since some projects have a long lead-time as a result of planning, community input, design activities, or funding application before construction can begin. Shifting of projects is a fine balancing act, since both funding sources and the urgency of public interest in projects plays a role in scheduling as well. Section 2—Overall Department Issues—page 4 afTGfllf BSS9Ciflrfs uc The mirror image question in looking at workload is whether there are too many staff positions for the workload. In the sections of this report on "Cost Allocation" and "Outsourcing Engineering Services," we conclude that the Division is neither overstaffed nor understaffed at its present volume of work. Finding: The Division is adequately and appropriately staffed to handle the present volume of work. Finding: The City's Ten Year Capital Improvement Program does not have projects scheduled in a manner that will maximize the use of in-house staff and minimize the use of consultants to handle variations in workload. This is not uncommon in Capital Improvement Programs, but signals that there will likely be changes in schedule and prioritizing projects in later years. Recommendation II-1: The Engineering Division should review the long term CIP every few years and discuss priorities with the City Council. While the CIP is usually reviewed annually in looking at the proposed one-year CIP in the annual budget, every few years a broader long-term review should be done to make sure future projects are prioritized by the City Council. This is particularly important since some projects have several years of planning, public input, etc. before construction can begin. Note should be made that the Capital Projects Section Architectural function has two licensed architects reporting to the function's project manager and the Parks Planning and Design/Construction function has three landscape architects. This higher level staffing is somewhat unusual in Citygate's experience, because many larger cities use consultants for the higher-level building and landscape architectural work. In Salt Lake City, the work volume appears to support this number of professionals, and the overall rate of charges to projects is consistent with an adequate workload to support them. In addition, the ten-year capital improvement program currently has projected a workload not only to support this staff but also to require hiring consultants as a supplement. Nevertheless, as the CIP schedule and projects change over the years, this staffing level in these two functions should be reviewed to ensure that the in-house staffing level matches the workload. Finding: The Architectural and Parks functions make greater use of in- house architects than is usually found in cities. While the work volume presently supports this level of staffing, the uneven scheduling of projects in the Ten Year CIP may make it necessary for the Engineering Division to adjust projects schedules to properly balance the use of in-house staff and outside consultants. Recommendation II-2: Particular attention should be paid to scheduling future Building and Architectural workload to ensure that in-house staff is fully utilized. Section 2—Overall Department Issues—page 5 arr�aie ass�ciflifs uc D. BACKLOG OF WORK In the subsections above and in the "Outsourcing Engineering Services" Section of this report, we addressed the fact that both the time and cost devoted to projects by the Engineering staff and the annual dollar volume of CIP projects delivered support the fact that the Division staff is working at an acceptable level of effort and is delivering projects at the same volume as generally expected, on average, over the next ten years. However, an additional measure that should be examined to get a more complete picture of whether the staffing level is adequate is the backlog of work. Just because the staff is able to handle roughly $10-12,000,000 in annual projects does not mean that there is not a mounting backlog that might require greater use of consultants or more staff. To get an understanding of the backlog, we analyzed which projects are currently under design as reported in the Division monthly report and how many of those were under design one and two years ago. For each project that was under design for more than 12 months during that period, we looked at the nature of the project and issues such as funding availability, participation by other departments and community stakeholders that might reasonably cause the delay. We found that only about half a dozen projects over a two-year period did not have a readily obvious explanation for why the project was listed for more than 12 months in the "Design" portion of the monthly report. Even for street related work where approximately one-third of the projects were listed in the report for more than 12 months, these 10-15 projects could be largely explained by funding issues, community participation process and the involvement of other government agencies and City Departments. Finding: There is not a large backlog of work that is the result of staffing shortage or inadequate use of consultants. Most of the projects that appear to be taking somewhat longer in the design phase involve complications over which the Engineering Division does not have full control. What we did observe, however, is that in a few cases the longer design period might be shortened if it was made clear that these were priority projects and that greater staff time needed to be devoted to resolving the issues slowing down the project. This is not an uncommon situation in which the staff may encounter difficulties and then shift staff priorities elsewhere. Unless there is an adequate reporting system that permits the elected officials to be aware of the difficulties, the elected officials cannot participate in the process of determining priorities. Just determining the status of design projects over a 24-month period using available Division reports was a lengthy and tedious process, even for people who understand funding, design and construction issues. The monthly report does not provide all of the information that is needed to understand project history and status, and the information in the report is not presented in a visually easy way to use/understand. The Division has assumed that this monthly report does provide the City Council with an update and understanding of project status; but in fact, the City Council as a whole does not receive the report in its entirety. Based on the Engineering Division Monthly Project Status Report, it is reasonable to assume that policymakers in the City do not have a complete picture of project status, except when they make individual inquiries, or the Section 2—Overall Department Issues—page 6 arirGar[fls590P1[s uc subject might be brought up in the context of an individual City Council agenda item. This issue will be addressed more completely in the "Reporting to the City Council" Section of this report. Finding: The present Engineering Division Monthly Project Status Report does not provide a clear and easily usable status report that permits policymakers to participate effectively in setting and adjusting priorities among CIP projects. Section 2—Overall Department Issues—page 7 UM aMiflrfs u< SECTION 3-PROJECT PLANNING AND PROJECT MANAGEMENT Even if a City can prioritize projects well, if it cannot plan and execute the project, the system is perceived as being dysfunctional. The Salt Lake City Engineering Division adapted a unique, for the time, and effective project planning and management system over two decades ago. That system is oriented around the Project Teams. These are interdisciplinary teams within the Engineering Division that are assigned a project and are responsible for it from the inception of design through to acceptance of the final constructed or rehabilitated public facility. Each team is headed by either a professionally licensed engineer, architect or landscape architect who has the ability to design projects, sign off on their adequacy and responsibly make or approve field changes in design during construction. The team not only designs a project (or supervises a consultant designer), but also oversees estimating, bidding, construction, field inspection and final project acceptance. Finding: The Division has a well-defined and well-understood project process that includes: scope definition and initial project cost estimating; obtain CIP approval; assemble project team and assign design responsibility, either to the team or outsource to a consultant managed by the project manager; design development; public input; project management; project design, document and estimate review; bidding, contract analysis and award; construction monitoring and inspection; substantial project completion; and final project close-out. In assigning a project to a Team, the full project schedule is affected by a number of factors discussed in the section of this report regarding "Prioritizing and Scheduling Work." Unfortunately, a rigid schedule cannot always be established because external factors, such as the availability of construction funding or coordination with other agencies, may delay a project. Consequently, Project Team work assignments and priorities may frequently be changed, requiring the team to be flexible and agile in the shifting of its internal resources. Flexibility and agility is promoted by the 3 - 5 person Project Team size. Finding: The Project Team approach is very effective in consolidating responsibility for the budget, schedule, design, bid, construction and project completion. Each team is headed by a senior engineer, architect or landscape architect with a broad range of project experience and the authority to interpret and approve design changes based on field conditions. This provides the flexibility to assign members to construction management work during the short duration spring through fall primary construction season and to assign members to design activities and preparation for bidding during the less than ideal construction conditions often presented in late fall and winter. Finding: The Project Team approach allows a team member to always maintain a presence on the construction project in order to 111 ■ Section 3—Project Planning/Management—page 1 a eTI�S900Ifs.��c identify and resolve issues in a timely manner at lower levels on-site during construction. Finding: The Project Team approach creates a well-rounded cross- trained staff that accepts responsibility for projects. One significant reason the Project Teams work so well is that the team leaders are senior long- term City employees. It would appear as if there will be significant turnover in these positions during the next 5 or so years. Since the City has relatively few registered engineers, promotion into these positions from within is problematical. Yet, effectively leading the team requires substantial experience with the City systems and with the Engineering Division staff. Recommendation III-1: Succession Planning for the Project Team leaders needs to begin, since the senior project managers are expected to be retiring at or near the same time. Section 3—Project Planning/Management—page 2 urrcarr assLciartS.uc SECTION 4-PRIORITIZING AND SCHEDULING WORK As the City Council approves new CIP projects each year, there is no mechanism in that process for establishing priorities. Rather, the Engineering Division establishes the priorities and assigns projects to the Project Teams based on a general set of prioritizing criteria. The application of the criteria requires considerable judgment on the part of the Division management, and yet the outcome appears to accurately reflect the realities of factors usually not fully under the Division's control. While simple street overlay activities can primarily follow the recommendations of the Pavement Management System for a clear project scope, several longer- term projects may not have a well-defined scope or may evolve significantly from what was originally conceived over the term of the project. Projects requiring a lot of interagency collaboration or planning with nearby residents and businesses may also move much slower. While the criteria used by the Division to prioritize projects are very reasonable and applied in a manner that appears to reflect a good understanding of the factors that will necessarily affect the scheduling of a project, neither the criteria nor their application are well known by people outside of the Engineering Division. As a result, the City Council does not have an opportunity to know the priority of projects, the projected schedule, or how to express their own priorities in a fashion that is compatible with the scale of the Capital Improvement Program. Finding: Projects are typically scheduled for design on a `first in—first out" basis. Of those projects, higher priority is given to those that have a well-defined scope and do not require significant collaboration with other parties or residents/business/property owners. Following those well-defined projects, those projects that provide a solution to multiple needs are often given next highest priority. Finally, of the above projects, those with fully identified and committed funding are usually placed ahead of those without adequate funds. If a project appears to be of obvious high priority to the City Council and cannot be accommodated reasonably in-house without causing significant disruption to the scheduling of other projects, then the project will be outsourced to a consultant to proceed without distraction. Once a project schedule has been established, a number of factors can delay the project. While these are well understood by those familiar with CIP design and construction, the reporting of both the initial schedule and any changes does not effectively convey this information to the Elected Officials. This issue is discussed more fully in the section on "Reporting to the City Council." The modifications to scheduling are largely handled internally by the Engineering Division Management as they constantly balance the ever-changing needs and priorities of the Capital Improvement Program. Within the Division, the highest priority is always placed on obtaining a quality project as opposed to placing first emphasis on a"speedy" project. Finding: The Engineering Division is not reluctant to delay a project if doing so will result in a better result or construction process for affected parties. Section 4—Prioritizing and Scheduling Work—page 1 anaar[nss9C1firt5.��c Finding: Given the difficulty of construction work in the winter, the ideal time to start construction is in spring. However, if short- term factors delay that start very long, the project will be outside of the peak bidding season; and depending on the anticipated length of construction, the project could be held over a full year. Recommendation IV-1: The Engineering Division should report project priority and the estimated schedule to the City Council in a report shortly after approval of the Annual Budget and CIP. Recommendation IV-2: The Monthly CIP Project Status Report should be modified, as recommended elsewhere in this report, to include a continual update on the project status compared to the original schedule. P'� .. Section 4—Prioritizing and Scheduling Work—page 2 a>raari nPcres.ac SECTION 5-COORDINATION OF CIP PROJECTS WITH OTHERS From a construction perspective, the streets of Salt Lake City are a busy place. Not only does the City work in numerous blocks to seal, overlay or reconstruct streets, but they also repair sidewalks and replace underground wastewater, water and storm water facilities. However, private utilities such as electricity, telephone and cable have facilities over and under the streets and other public rights of way. Even within the City, the projects undertaken in or adjacent to the streets are funded and/or managed by several departments, including Public Services, Public Utilities and the RDA. Utah Department of Transportation projects may also occur within the City limits and interface with City streets and current City construction work. The public often wonders whether the left hand knows what the right hand is doing with regard to street construction. Are all of these projects coordinated so that work is not duplicated, torn up and then replaced or prematurely disturbed, and is the public inconvenienced as little as possible? Do various agencies adjust their work schedules to take advantage of economies of scale? Are the projects coordinated with the needs of businesses and individuals? Of course, the obvious answer is that coordination is never perfect; but also apparent lack of coordination often has a logical explanation regarding both unavoidable events and there simply being more events, people and organizations to coordinate than are possible to schedule/organize seamlessly without overlap, duplication of effort or inconvenience. Coordination among different departments and agencies and with the needs of the public is largely a matter of having processes in place to ensure advance notice and an opportunity to rework schedules. The key element of the processes is to identify all of the stakeholders that have an interest in the project boundaries as well as those that may be indirectly affected by the project. Finding: While the Engineering Division has made a good faith effort to remember the stakeholders that need to be involved in a project at its various stages, a formal comprehensive check list to serve as guidance to new project managers and to document coordination is not available. Recommendation V-1: Develop a formal list of all potential stakeholders, and when a project scope is developed, use the list to check off affected parties and send a formal documented communication alerting them to the project scope and schedule. Develop a mechanism by which they can respond if they have interest or questions. A shorter version of the list should receive plans for comment once they are completed in draft form,as occurs now. Recommendation V-2: All communications among agencies, whether formal or informal, should be documented in the project file. The Public Services and Public Utilities Departments have a regularly scheduled coordination meeting to talk about the current projects on the Engineering Division monthly CIP report (that is accessible by computer). The November meeting always involves coordinating the list of projects that have been approved by the City Council as part of the new budget CIP. Each Section 5—Coordination of CIP Projects—page 1 aruf auaiarts«c department delays or accelerates projects as necessary to ensure that construction of underground utilities coordinates well with the roadwork. Issues, such as the complexity of design and immediate availability of construction funding, help determine project timing. The Engineering Division may accelerate a project by several years to ensure that new asphalt is laid after a major leak is repaired or a new service line is run through the street to adjacent property. Both the ` Public Services and Public Utilities Departments are satisfied with the process and level of coordination that presently occurs. The Engineering Division routinely provides copies of plans to other agencies for their comment prior to the formal completion of design. This does not ensure that the other agencies will review the plans in a timely manner and seek to coordinate with the City. With regard to private utilities, the City does have an adequate ordinance attempting to control premature "cuts" into new pavement and has very good revised specifications for repair of utility cuts. The City has worked closely with both the City Public Utilities Department and private utilities to productively divert money into full street overlay that might go into less comprehensive "repair of a street" following a utility cut. This "economy of scale" and coordination of funds and work results in a better street at less cost to the public. Finding: Formal and informal meetings are held with City Public Utilities to coordinate their underground utility work with City projects, but there is no formalized procedure to ensure that CIP construction jobs are discussed in a timely manner. Some of the CIP street projects that appear to be delayed are on hold in order to coordinate with underground utility construction contracts. Finding: Plans are provided to affected agencies, both within and outside of the City organization, so that they can identify the location of their facilities and any interest they might have in performing work ahead of or at the same time as the City construction project is underway. However, such coordination is provided on an as-needed basis as perceived by the Engineering Division. Finding: Occasionally, the Public Services Department will install a temporary patch to meet certain short-term needs and then soon thereafter begin street reconstruction. Where this has occurred, there appears to have been a good rationale, although the process does not appear to be cost effective to the casual observer. Both the Engineering Division and the Public Utilities Department maintain a GIS function that serves the needs of each operation. However, neither fully understands the method of operation and the content of the other departments GIS files. Additionally, neither system can be accessed from a desktop by engineers in the other department. Citygate discussed GIS with representatives of both departments and found substantially different descriptions of the content and capabilities of each system; and yet, both departments use and need the information in both GIS systems. The lack of shared on-line information creates a cumbersome process to obtain R ■ Section 5—Coordination of CIP Projects—page 2 u, flr�uaiflr�s«c and use the information created by the "other department." A similar situation exists with regard to the plans and other project documentation. Finding: Engineering and Public Utilities each maintain separate historical document files and GIS systems without ready on- line access by either engineering function. Recommendation V-3: A revision in the GIS service and installation of the Hummingbird program should be used as an opportunity to provide real time on-line access to all files by both engineering functions: utility and streets. Even though both the Public Service and Public Utilities engineering functions need to share files and GIS system information more readily, both functions involve distinctly different engineering design activities. Given the work volume in both design and construction management and the current Engineering Division method of organizing projects around an interdisciplinary team, there is no "down time" among Engineering Division staff that could accept spill over work assignments from the Public Utilities Department. The only substantial overlap between the two department engineering activities is the need to coordinate projects and to recognize the occasional value in bidding a large job with both street and utility components as a single project in order to shift some coordinating responsibility for the various components from the City to the contractor. Finding: The engineering activities of Public Utilities and the Public Services Engineering Division are unique, with little cross over in their functions, but they have an obvious need to coordinate the activities. A more formalized coordination will allow the two to function as well as if they were under a single structure. Finding: The only staffing advantage in combining a utility engineering function with a street, parks and building engineering function is the possible savings of one supervisory position. However, even this may be illusory if the workload requires an Assistant Division Head be added to oversee one half of the combined operation. Recommendation V-4: There is little cost or operational improvement to be gained by combining the Utility engineering function and the Public Services Engineering Division, because they serve two separate functions and different customer groups. Section 5—Coordination of CIP Projects—page 3 arrGfli'u�ciflrfs. [cm SECTION 6-RELIABILITY OF PROJECT ESTIMATING The Engineering Division has a reasonably rigorous process of establishing, updating and reviewing project cost estimates. Public building projects under $2,000,000 are estimated in house using industry standards on a square foot basis and adjusted for recently completed projects of similar scope. On larger building projects, a professional estimator is used. Park projects are estimated in-house or by a design consultant based on unit costs of elements of the projects taken from recently bid projects with similar individual elements. Street projects are estimated by in-house staff based upon senior staff's professional experience and historical trends in local market pricing. Project costs can be significantly affected by the number of bidders who propose on a project, with the number of bids usually reflecting the supply of either skilled labor or construction materials within the local construction market at the time of the proposal. Typically, a project with 3 or fewer bidders will be expected to produce bids that exceed the engineer's estimate. Projects with 6 or more bidders will be expected to produce a bid below the engineer's estimate. Finding: Project costs can be strongly influenced by short-term price hikes in construction materials, energy costs or labor availability. Short-term price hikes cannot be reasonably anticipated in cost estimates. Cost estimates are established as part of the budget process. Thus, they are often made as part of the CIP process, which is over a year in advance of the CIP approval process and possibly two years in advance of the earliest construction date anticipated for projects. Projects that are estimated in the CIP in the spring and approved in July are targeted for design so that bidding can occur shortly after December for standard projects. Finding: The one-year lead in making cost estimates amplifies the affect of short-term price hikes in labor and materials. Finding: Unforeseen conditions in the right of way involving utilities and inaccurate record drawings can significantly affect costs through change orders, with the percentage difference being very high on small cost projects. In 287 projects reviewed by Citygate, the aggregate actual construction cost for all projects was 12.5 percent lower than the total cost estimate on all of the projects. Of the 287 projects, 42 exceeded the cost estimate by 10 percent or less. Of the remaining 52 projects, half of them experienced a high percentage difference, but the actual dollar variance between the bid cost and the engineer's estimate was less than $20,000. Finding: The Engineering Division cost estimates are reasonable in view of the short-term impact of labor and material costs and field changes necessary due to unforeseen underground conditions. Section 6—Reliability of Project Estimating—page 1 arraai'flsalfirfs.ac Recommendation VI-1: If the City Council continues to be concerned about underestimation of project costs, the Engineering Division should consider either putting a professional cost estimator on staff or subcontracting for cost estimating on all building and specialized projects along with all high dollar value projects. Recommendation VI-2: Regular training should be provided to all staff estimating projects. Recommendation VI-3: Establish and maintain a historical database of both Engineering Division and outside agency cost and bid data to assist in future Division estimating, project management and cost control. Recommendation VI-4: Establish criteria to identify bids in excess of the engineer's estimate and/or the budget estimate, which should be taken to the City Council for discussion regarding change in scope or appropriation of additional funds. This will permit the City Council to participate in the consideration of changing the scope to something other than what they anticipated when they approved the project. They can then participate in the consideration of the use of added funds, which will reduce funding available for other future projects and programs. Section 6—Reliability of Project Estimating—page 2 arm s�ciflres.«c SECTION 7-COST ALLOCATION Until several years ago, most of the Engineering Division staff costs were supported by the City General Fund, and none of the design and project management expenses represented by in-house labor were allocated to individual capital projects. This meant that the City did not know the full cost of each project and often used General Fund money to pay for the design phase of a project that could be wholly funded from special state or federal money. In order to address both problems, the Engineering Division was asked to develop and implement a cost allocation model that would fairly capture both the direct and indirect costs of the Division activities that supported both the capital and special improvement district projects. This model has now been in place for over two years, and the City is interested in an independent review of both the adequacy and the application of this model to various city construction/project activities. Citygate Associates reviewed the Engineering Division cost allocation model and the resultant in-house rates. These were compared to hourly rates being charged by local consulting firms providing the same services to the City under contract, to the benchmark being used by the Division from an old Hughes-Heiss study of the department, and to a benchmarked model updated regularly by a consortium of California cities. We also reviewed the manner in which the Division's cost allocation model is actually applied to capital projects and special improvement districts, comparing this application to the local consulting hourly rates and the benchmarked model. This review is summarized below. A. COST ALLOCATION MODEL The cost allocation model is a straightforward calculation that determines a "billable" hourly rate for all employees who charge their time directly to capital projects. For FY 2005-06, the rate is 1.89 times the direct salary-based hourly rate of the employee. The formula results in a rate that adds 89 percent to the direct hourly rate to cover the following three components: 1. A calculation of the percentage of time spent on CIP projects by each of 12 administrative staff, common use costs such as materials and supplies, phones, computers and training, and the cost of vehicles associated with CIP projects incurred by the Engineering Division. The annual dollar value of the administrative time and the common use costs are added together to determine an overhead rate of 32.5 percent. This is quite a bit lower than overhead rates that Citygate has seen because it does not include an allocation of costs for other "support services" within the City, such as Finance, Legal, Capital Planning, Personnel, depreciation of office space etc. This omission is the only notable departure from standard formulas for calculating "billable" hourly rates. 2. A factor of 23.6 percent is added to the formula to account for vacation, sick leave, holidays and other non-billable hours. 3. Employee benefit costs are included in the formula at 32.7 percent. The contents of the formula are very standard, with the exception of omitting the support costs such as citywide finance, legal, and personnel. Citygate frequently sees formulas that use a multiplier of 2 to 2.5 times the direct salary. Section 7—Cost Allocation—page 1 � i a mnss9aff isIMMIMMMMNMMMMMMMIMMMIIIIIMIIMMIMMMMNMMMIMMOMMMMM uc The average direct hourly rate of the City employees working on CIP projects is reported by the Engineering Division to be $27. While this results in a "billable" hourly rate of about $51 per hour, the actual billable hourly rate ranges from $33.74 per hour for office/clerical staff up to $54.08 per hour for the registered engineers and $68.44 per hour for the Project Managers. These Engineering Division hourly rates compare quite favorably to a representative sample of hourly rates being charged to the City when it obtains consultant services. This is typically done either because the workload requires the additional assistance or because the consultants have specialized skills, such as electrical or mechanical engineering, that are not used often and so are better outsourced. The outsource hourly rates are quite a bit lower than Citygate has seen elsewhere, which is reflective of the Salt Lake City market rate for such services when project management and engineering services are contracted from local firms. The range in the table below reflects not only a range of type of professional consultant being hired, but also the organizational level, such as senior engineer compared to associate engineer on the staff of the firms providing the service. Type of Service City Engr/Arch/Landscape Arch Consultants Project Manager $68 $84-156 Professional $54* $58-128 Administrative/Clerical $34 $29-50 *The cost of some professional positions is lower. The hourly rate being charged is only one indicator that the City costs are not out of line with those charged by private firms offering the same skills and services. An important question is whether the City's total costs for providing engineering services on a project are comparable to those provided by private firms. If the City spends more hours to accomplish a project, its costs might be higher than the cost of using consultants for the same work. This issue is addressed in the next section. Finding: The hourly "billing" rates that the Engineering Division uses in developing charges for the Division's work on CIP and special improvement districts is reasonable and somewhat less than the rates charged for comparable work by consultants. Finding: The City is not including some overhead charges for citywide support services, such as finance, legal, capital planning, and personnel, in developing its "billing" rates. Including these costs will be consistent with practices by larger communities and will result in a more accurate reflection of the full cost of capital or special improvement district projects. Recommendation VII-1: If the City is interested in the full cost of constructing projects, it should consider adding a component to its cost allocation formula that recognizes the support services provided to the Engineering Division by other City Departments. ►•1.. Section 7—Cost Allocation—page 2 anvnirrfs.uc B. CITY ENGINEERING PROJECT COSTS COMPARED TO BENCHMARKS Delivering a completed Capital Improvement Project begins with the initial project planning and cost estimating, development of the basic project proposal for consideration by the Administration and the City Council, design, bidding, preparation and execution of the contract, management of the construction, inspection, change orders related to field conditions, and finally, formal project acceptance and inspection during the warranty period. Even if the City chooses to contract out the design and construction management portion of a project, the remainder of the functions requires City staff involvement, including the additional burden of to soliciting, contracting with, and managing the consultant firm. Economies of scale, complexity — whether technically or politically — of a project and the frequency with which the City undertakes a particular type of project will determine the percentage of total project cost dedicated to design, construction management, and project administration. To illustrate the range of cost for professional support for the execution of an ongoing capital improvement program, the California Multi-Agency CIP Benchmarking Study reflects that Design and Construction Management will cost a range of 47 percent - 54 percent for Street Reconstruction work with a total capital improvement cost under $500,000. That percentage range falls dramatically to 16 percent - 22 percent for projects costing over $3,000,000. There is a similar illustrative range for Street Signal work, where projects under $500,000 experience Design and Construction Management of 37 percent - 44 percent while for projects costing over $3,000,000, the range falls to 13 percent - 21 percent. Playground, bike paths and community buildings all exhibit a similar change in Design and Construction cost as a percentage of total project cost. We examined the Design and Construction Management Costs on 92 recent Salt Lake City projects managed by the Engineering Division. We found that the overall average cost of Design and Construction Management (including the use of outside consultants with specific expertise) as a percentage of Total Project Cost for projects conducted in-house, was not quite within the range of the previous Hughes-Heiss study for about 45 percent of the projects, but certainly was well within the range of the more recent and very comprehensive and rigorous California benchmark study for projects of similar size to those in Salt Lake City. Although the Hughes- Heiss study has provided a reasonable starting point for the City, it is based largely on the professional judgment of that consulting firm. Conversely, the California Benchmark Study is a very analytical and methodologically rigorous study that incorporates updated data every two years in order to provide detailed best management practice guidance to the participating agencies. Type of Project City Average City Range Hughes- Benchmark Heiss Study Parks 18 2-45 20-22% 37-47% Buildings 16 7-43 20-22% 49-60% Streets 19 11-56% 13-24% 31-54% The data changes marginally if only the cost of in-house staff work is considered as shown below: Pr'1.. Section 7—Cost Allocation—page 3 arrcnr RSS9CIflitS u< Hughes- Type of Project City Average City Range Benchmark Heiss Study Parks 15% 2-37% 20-22% 37-47% Buildings 26% 25-26%* 20-22% 49-60% Streets 27% 15-56% 13-24% 31-54% *2 Projects Even including additional citywide support costs as part of the Engineering Division cost allocation formula will result in the City remaining well within and likely toward the low end of the Benchmark range. It was challenging to compare the overall total project cost of in-house City Design and Construction Management to that of consultants, because the City did not often hire consultants to perform all of the project functions but to supplement in-house staff where needed. The City was typically responsible to perform all of the front-end planning and contracting as well as final inspection and management of consultant work. Nevertheless, we were able to compare the average cost of Design and Construction Management on projects where consultants were used to some extent with projects where the City performed all functions in-house. In-house City staff project costs compared well to those involving consultants as reflected in the table below. Average of City In- Average of Average of"All" Type of Project Projects Using House Projects Consultants Projects Parks 15% 19% 18% Buildings 26% 16% 16% Streets 27% 17% 19% Special Improvement Districts are a special case in establishing the cost of engineering services. Assessments are estimated prior to construction and final assessments are set when construction is completed and all costs are known. Consultants are generally used on large dollar volume projects, while in-house staff design smaller projects with associated higher percentages due to the smaller project size. The City charges actual Engineering costs to the SID, reflecting the cost of all engineering services, which averages around 25 percent. Finding: City engineering charges for special improvement districts are reasonable and well under the range of design and construction management cost normally expected on a street project with total project costs between $500,000 and $3,000,000. Finding: The Engineering Division costs for in-house Design and Construction Management, as a percentage of total project cost, are well within both a comprehensive Benchmark Study as well as Citygate's own experience. This reflects an effective Section 7—Cost Allocation—page 4 out ftss9ciflrts uc use of in-house staff. However, the Division continues to use an outdated Hughes-Heiss study benchmark that should be either superseded or updated to provide the Division with a more effective management performance measurement tool. Recommendation VII-2: The Engineering Division should either adopt the California Benchmark Study standards as its guideline to measure the appropriateness of engineering expenses on projects or conduct its own study to establish benchmark standards that more closely reflect the local cost and contracting environment of Salt Lake City. C. MANAGEMENT OF THE COST ALLOCATION SYSTEM While the Engineering Division's cost allocation system is based on a very reasonable formula and the Division's costs are usually below the lower end of the range of expected costs, maintaining the data in the system is very cumbersome. Originally, the system was developed on an Excel spreadsheet. This works adequately for producing a report that presents the data in such a way that all users can extract from it what they need by reading the single very large report. However, if there is a need to produce reports that arrange and summarize the data in unique fashions or to meet the needs of multiple users with very different interests, an Excel spreadsheet-based report is very time consuming to use. Like so many report systems, as users have realized what information is available, the need for unique reports has multiplied. Each new need seems relatively small and requires only small modifications to the spreadsheet or only a few minutes to "cut and paste" information into a unique report. However, over time the sum of all needs results in a cumbersome system that does not allow users to access the database and create their own real-time reports. In addition, the Excel spreadsheet system does not interface with the City's accounting system, resulting in both delay in reporting project costs in a timely manner useful to project managers, but also a significant time investment in creating and generating useful reports. In simple terms, the present system can be described as heading up a"dead end alley" in which there is little room for growth or timely and flexible project cost information reporting to meet future project management and accounting needs. The cumbersome system is becoming an issue for those managing projects, because the Engineering Division is responsible for control of Design and Construction Management costs on each project, yet, they do not have direct access to the needed data, nor can they reasonably obtain timely information. This is clearly frustrating to the Project Managers. The Engineering Division Management recognizes the management shortcomings of the present cost control reporting system. Finding: The Engineering Division cost allocation reporting system is cumbersome and does not provide adequate timely information to project managers to permit real-time control of the various engineering costs associated with each individual project. Section 7—Cost Allocation—page 5 G1TGflif�fl Dciaies.LC Recommendation VII-3: The Engineering Division should allocate funds to reform its present cost allocation reporting system so that it can provide information in a flexible manner to meet the needs of users at many levels and be able to provide easily unique reports in response to future management and policy needs. P''.. Section 7—Cost Allocation—page 6 arTGfli'Iu90fi,fs uc SECTION 8-OUTSOURCING ENGINEERING SERVICES Almost every local government uses consulting architectural and engineering services to assist in delivering their capital projects. The level of consultant utilization will vary widely between agencies, based on the nature and level of specialization of the projects they are doing each year, the volume of projects, the engineering division vacancies the agency may be experiencing and the local philosophy regarding contracting versus in-house work. A comparison of Salt Lake City with seven large agencies in a multi-agency benchmarking study reflects the other agencies expending an overall average of 23.9 percent of all Design and Construction Management costs by hiring consultants while the overall range was between 14.1 percent and 54.5 percent. Salt Lake City expended 40 percent of similar engineering costs on consultants. While this measure may provide a broad indicator as to whether Salt Lake City Engineering contracts in "roughly" similar proportion to other agencies, Citygate Associates was asked to analyze if the current consulting level is a prudent choice given the City staffing. We were also asked to determine if consultants were used, is the City following an appropriate procedure for selecting consultants. A. WHEN ARE CONSULTANTS USED BY THE ENGINEERING DIVISION? With a total of 56 Full Time staff, the Engineering Division has only 11 licensed as Professional Engineers, 2 Licensed Architect positions and 3 landscape architects. There are no electrical or mechanical engineers on the staff. In order to accomplish the annual CIP with the limited number of professional staff, the City has relied heavily on their very experienced technical staff of 31 junior engineer and technician level personnel, most with long City experience. While the Division's objective is to accomplish as much work as possible in-house, it does have to outsource work based on several criteria, including lack of in-house technical skill set, project urgency, and in-house project work load. Of the almost 100 projects reviewed by Citygate, about 36.7 percent of the Design and Construction Management work was outsourced. It is interesting, however, to look at the details behind this broad percentage. Total Design Percentage Percentage Percentage and Percentage In- Construction Other Misc. Construction House Design by Management Work by Management Consultants g by Consultants Consultants $5,933,032 63.3% 23.6% 13% .1% Consultants were used primarily for design work on Park and Building projects. About 57 percent of the consultant work was devoted to 7 street reconstruction and overlay projects, which are relatively easy to contract out. On these local street projects, consultants do most of the construction management, and it is relatively easy for the City to maintain quality control because the work is not complex. This is borne out by the relatively low percentage of total project cost (12-15 percent) devoted to engineering services on this street work. A logical question is whether the projects assigned to consultants as a result of perceived excess workload could in fact have been done in-house. The short answer to the question is, no the outsourced work generally needed to be contracted because either the technical knowledge/skill Section 8—Outsourcing Engineering Services—page 1 annr G `1ss9c`Ifs.uc was not available in-house or the projects would have been delayed due to the workload. Although a detailed time and motion type study of the Engineering Division might provide a more detailed analysis, we have nevertheless concluded, based on our review of consultant use on individual projects, that outsourcing was appropriate. The overall Design and Contract Management Costs allocated to projects by the Engineering Division are reflective of an efficient use of staff time. A good measure of the efficient use of staff time is whether the Division has reasonably met its target dollar amount in the annual budget for charging labor and other expenses to projects. Since the present cost recovery policy has been fully in effect, the Division has been quite reasonably close to the target and appears very likely to do so again in the current fiscal year. Since the Division is reaching the target by charging less, on average, to projects than the benchmarks used by the Division (as reported in the section of this report on "Cost Allocation"), our conclusion is that an excess amount of in-house staff time is not being used on projects, and the outsourcing of work has been necessary as a result of the CIP workload of the Division. Finding: The Division has appropriately allocated the work assignments between in-house staff and consultants. This takes advantage of areas in which consultants have expertise not available among Division staff and avoids project backlogs by assigning work to consultants that relieves the workload without adding substantial work in overseeing the consultants. B. IS IT COST EFFECTIVE To USE CONSULTANTS? An added question raised by outsourcing is whether it would be more cost effective to hire additional staff to reduce the amount of work that is contracted to consultants. There are two measures that help address this question. The first is whether there is a significant difference in the cost of Design and Construction Management on jobs using consultants; and the second is whether the dollar volume of work outsourced would even support hiring additional in-house staff. With regard to the cost difference on projects between in-house and consultant Design and Construction Management, those projects that used consultants for purposes other than unique technical knowledge or skill reflected that total Design and Construction Management costs, as a percentage of total project cost, were both below the benchmark as well as generally lower than in-house conducted projects. In examining the nature of projects where consultants were used, it was apparent that the lower cost was a result of the nature of the projects rather than more efficient work by consultants. The staff generally retained those projects that were more complex and would require a proportionately greater number of engineering hours, because in- house hourly rates, as discussed in the "Cost Allocation" section of this report, are lower than those of consultants. C. HOW ARE CONSULTANTS SELECTED? The City has a procurement policy that establishes the procedures for hiring consultants such as those used by the Division for Design and Construction Management work. We discussed the procedures with the Division and reviewed a sample of the individual consultant contracts. Citygate was particularly interested in the evaluation and selection process, because it is in these . Section 8—Outsourcing Engineering Services—page 2 out Ilan[1c areas that judgment enters into the process and where there will be the greatest potential for complaints and appeals. The Engineering Division has two distinct broad types of consulting services. The first is a "Term Contract" for under$70,000, with a consulting firm to provide services "on-call" during a two to four-year period. These contracts are used for small consulting jobs, typically those requiring technical knowledge/skill that the Division does not have on staff, or occasionally, small fill-in tasks particularly in park development where the workload necessitates obtaining outside assistance. The second type of consulting contract is a specific project contract usually for a very large, unique job. For the Term Contract, the Division uses a Request for Qualifications (RFQ) proposal process that asks interested firms to submit their qualifications to do a particular class of work. The City advertises the opportunity to submit proposals, with most firms seeing the upcoming contract opportunity on the City's website. If firms express their interest, they receive an RFQ package. The City Project Manager assists in putting together the questions in the RFQ, but all RFQs are sent out through one person in the Division. All subsequent questions from interested firms go to this Division liaison, which responds in writing and issues addenda to all potential proposers if the questions and/or answers are materially substantive. This is a normal process followed by most cities. An evaluation team of 3-7 individuals is selected, but the Proposers are not permitted to contact them nor do the members of the team talk to each other while they individually read and evaluate the proposals. Each person on the team completes a rating sheet on each proposal and then the entire team meets. The ratings are tallied prior to any oral discussion in order to prevent the ratings of one person affecting those of another evaluator. The results are provided to the team; and then collectively they orally evaluate the proposals and arrive at a final ranking of the top 3 - 5 firms, who are then interviewed by the team. The ranking process is repeated to select the firm with which the Division will negotiate a contract. The City Engineer is the designated City procurement officer and can negotiate and sign the contracts. The procurement process for consulting services on more complex projects follows a very similar process with several exceptions. For these projects, there is normally a two-step process in which the firms will first respond to an RFQ. Using the evaluation process described above, the Division will rank the firms and create a short list of usually 3-5 firms (depending on the number and quality of the proposing firms). Members of the evaluation team usually include one or more people from the City Department or Departments affected by the project and possibly someone from outside of the City staff if there is a clearly affected community stakeholder group that can provide effective evaluation assistance. The selected firms on the "short list" will then be asked to complete a more comprehensive proposal that addresses the conditions of the particular large or complex project for which consulting services are sought. Interviews of the selected firms are held by the evaluation team, which uses an evaluation process and evaluation forms in the same manner as is done at the RFQ stage of the selection process. In both types of consultant procurement processes, firms are not asked to submit a "price," but rather firms are selected based on qualifications. After tentative selection, the Division negotiates a contract, including the price using a standard City contract form. If the Division is unable to reach agreement with the first selected firm, they then move on to negotiate with the Section 8—Outsourcing Engineering Services—page 3 unrscciflres ac second firm. This infrequently happens, and almost never does the City move beyond the second ranked firm in reaching acceptable contract terms. Finding: The consultant procurement process and the forms used by the Division are similar to that used in other cities. The process, as applied by the Engineering Division, reasonably creates an environment in which the selection process is highly likely to result in the selection of the most qualified firm Finding: The Division has followed the policy, understands that policy, concurs in the value of process as providing a neutral and objective evaluation of consultant services, and clearly makes an effort to conduct its procurement process in a manner that will be perceived as fair. D. HOW ARE CONSULTANTS MANAGED Each project in the Engineering Division is assigned to a project manager. That person is responsible for overseeing the design, bidding, construction, inspection and acceptance of a project. For the larger projects, there may be a team of 3 to 4 people, each performing different functions throughout the project. For the smaller project, one person may be responsible for most of the phases of project delivery. Wherever possible, the principal responsibility for overseeing the design work of a consultant is that of the project manager. For the larger and more complicated street projects, this will be a registered engineer, while for smaller projects, depending upon staff availability, it will still be a design professional, but the level of education/license or registration will be appropriate to the complexity of the project. As discussed in another section of this report, the Engineering Division uses project teams and delegates responsibility to make change order approval/field design adjustments, as conditions require. This necessitates a responsible project manager with the design experience and familiarity with the project to make those decisions. This speeds up the project by avoiding construction delays while several layers of administration might otherwise have to approve a change; it can limit the cost of change orders; and it reduce the chances of contractor claims for delay caused by the City taking extensive time to approve changes in design. The City has a very limited number of licensed engineers and has used licensed engineers for the four principal project management positions mainly engaged in street-related projects. These individuals not only design projects themselves particularly during the winter months when construction is not occurring, but also manage the design consultants when they are used. The Division assigns this responsibility to the project manager because that position is both responsible for approving the design as well as then overseeing the project construction. This close tie not only improves coordination of the project as it moves through its phases, but it also improves the quality of the City's construction management, as discussed in the paragraph above. Finding: The use of Project Teams and the Project Manager to oversee consultant work improves the coordination, speed and quality of project work in comparison to an organizational design that would separate consultant oversight, design approval and w . it Section 8—Outsourcing Engineering Services—page 4 anvar[nsaiares.«c construction management into more separate organizational units. Section 8—Outsourcing Engineering Services—page 5 aTiCflif BSS°Cifl'fS«< SECTION 9-RECORDKEEPING AND INTERFACE WITH GASB 34 REQUIREMENTS For anyone who has ever tried to work on five projects in one day, each at a different stage of progress, and left the files on the desk, the mess and difficulty of finding something when you return briefly to one of the projects may be an all too familiar agony. It is at that moment that we may briefly dream of the joy of an effective filing system that keeps records in a form that provides easy access. Hunting for historical files may bring the familiar refrain, "I remember we prepared that report or plans, maybe eight years ago; and so where did we put it?" As organizations become larger and multiple people need access to plans and records, an efficient method needs to be found to file and retrieve documents. Not only staff within the department may need the records, but also other departments, residents, professionals working on projects, emergency response personnel, and others often need the records and plans. Older cities, such as Salt Lake City with older streets, underground utilities, and buildings, need the plans in order to do work in and around these older facilities. While the City Recorder will be the repository of many official city records, it is common for the Engineering Division to be the repository of plans and specifications and all of the written documents associated with designing and constructing a project. The Engineering Division has a section largely devoted to recordkeeping, and its workload, in measurable terms, is very large. They are the principal information repository of a substantial amount of the assets owned by the City. A. RECORDKEEPING FUNCTION Recordkeeping takes in and processes about 12,000 engineering documents (including plans, reports, logs, etc.) per year. It responds to about 5,000 requests for information per year, or an average of 20 or more per day. They provide the sets of contract drawings and documents to bidders. In addition, they review and purge old documents, based on a records retention schedule. They presently have a 2-month backlog in purging old records that no longer need to be retained. The Division has a very sophisticated approach to its record management system. They are implementing "Hummingbird," a software system being installed and implemented citywide. This system promotes the scanning of documents into digital form and the digital capture of some documents generated within the City at the point of creation. Documents may also be captured digitally as they are faxed to and from the City. Once in the system, all City staff granted access to the records management system will be able to access the records by project number and type of document. Both the records staff and the project manager will customarily retain hard copies of documents for a limited period of time, then purge the documents, based on the records retention schedule. Hard copies of documents that need to be retained in perpetuity are retained at the Division offices for five years and then moved to offsite secure storage. Old plans/drawings and design documents provide critical information when making improvements in and around existing infrastructure. These historical documents are used by both the City staff and private professionals/firms for all improvements made in the City's public Section 9—Recordkeeping/Interfacing with GASB 34 Requirements—page 1 �, nrf�s�ciarfs.«c ways or to existing facilities as well as private development dependant on the City for access and services. Review of the records storage area and methods, found many of the documents to be fragile and exposed even though they are stored in traditional and adequate storage racks. Many of the older plans simply were not created on materials that maintain the integrity of the document for very long, particularly if handled periodically. The old paper is deteriorating and ink is no longer adhering to the sepia and Mylar documents. Presently about a third of the plans/drawings have been captured electronically, but the user has to unroll or unfold the original document to view the remainder. Finding: The City has adopted and is making reasonable progress in implementing an electronic data management system, "Hummingbird," which will provide greater physical security and broader access to records. This is a good system that will serve the City well if an adequate staff level is maintained in the records section that permits keeping up with the filing and maintenance of records. Finding: The Division is not making much progress in digital capture of historical old plans/drawings, which are fragile and deteriorating. Most historical plan/drawings are not easily retrieved in the event of an emergency that requires the building, utility or other infrastructure information detailed on the historical plans. While the records section appears to have adequate space, the records are not well protected. The area is not separated from the remainder of the building by an adequate firewall, and the fire protection system within the area is a water-based fire sprinkler system located in the ceiling that will saturate or destroy the already fragile surviving records, if any. The microfilm equipment utilized is outdated in that parts to repair or maintain the equipment are challenging to find. A modest investment in new equipment will help assure continued access to records should the equipment fail during the years that it will take to convert all of the records/plans/drawings to an electronic format and remove them to offsite secure/controlled storage. Finding: The Engineering Division records are reasonably well organized but are not protected from damage due to fire or some other natural disaster or catastrophic event. Finding: Microfilm equipment is outdated and parts are not readily available to maintain the equipment, placing the Division and the City at risk of not being able to access microfilmed records easily when the equipment is out of service. Recommendation IX-1: The City needs to substantially accelerate the conversion of old plans/drawings to electronic format and to ensure steady progress toward implementing the "Hummingbird" system with the objective of having all historical records digitally captured in the system within five years. If the City does not Section 9—Recordkeeping/Interfacing with GASB 34 Requirements—page 2 omit Si•rfs uc do this, then it is imperative that they provide proper protection from fire or other natural disasters for the current hardcopy records. Recordkeeping is often a backwater concern of administration, causing substantial inefficiencies and loss of costly professional staff time when records are not managed and available in a timely manner. Information to address policy questions may not be easily found or available in a timely manner if recordkeeping does not receive a high enough priority to implement and maintain and adequate system. The inadequacy of a recordkeeping system is often not recognized until the user cannot find what is needed or experiences delays. The present system being implemented has the potential to meet the City's needs, but some areas outlined above need to be given greater priority in order to obtain the benefits of the electronic data management system for both the City and other users. B. GASB 34 GASB 34 is the accounting standards rules that require local governments to record the value of their assets as part of their financial statements. New assets are entered into the asset record each year and existing assets are depreciated. The primary objective of the GASB 34 rules was to provide a more complete picture of the financial condition of local government, which invests substantial money annually in new fixed assets and expends large amounts maintaining and extending the life of existing assets. The City has chosen a relatively simple approach to recording assets, similar to that of other communities. The asset and its value is reported to the finance department at the end of the year in which it is completed, and then assets are depreciated on a straight line schedule. While this satisfies the requirements of GASB 34, it assumes that the City maintains all of its assets in a manner such that all predicted lifespans are fully realized. In fact, some assets will last longer and some will not. The City did not know the original value of many assets, such as streets. Thus, a reasonable cost was developed with an average lifecycle assumed for all of the assets. A more sophisticated approach would be to reassess asset value and asset life as it undergoes major maintenance and rehabilitation. However, this takes additional staff time and does not really return the City any additional "value." Finding: The Engineering Division's approach to developing the value of older assets and the projected life of those assets is adequate for the needs of the City and the Division. avw Section 9—Recordkeeping/Interfacing with GASB 34 Requirements—page 3 asit®Es.is SECTION 10-GEOGRAPHIC INFORMATION SYSTEM Like other medium to large cities, Salt Lake City has a Geographic Information System (GIS). In its traditional form, GIS is a database system that produces maps to visually present the data on a map. When GIS was first utilized by cities, the primary use was to produce maps on a parcel base map that reflected the location of various facilities: streets, utility lines, streetlights and traffic signals. The collection and digital representation of this information was to provide both City staff and the public a central source of record information. In the GIS system, one could call up and print a map from the computer at a level of detail ranging from the "whole city" down to parts of a block. Eventually, census data was integrated into GIS, and the system took on a whole new role as not just a representation of physical facilities but an analysis tool that could provide information to better inform those making public policy decisions. Policy models that integrated data and maps allowed agencies to make future projections or to complete alternatives analysis to investigate what the future might look like as they planned programs and facilities. As GIS has matured, the more sophisticated systems offer the capability of entering and retrieving data in real time, so that it is a real-time information and management tool. For instance, as various City departments issue permits, this information may become part of the system, and shortly thereafter, a City planner, code enforcement, fire or police looking for the permit history of the property will know the real-time status. Properly integrated into a police Records Management and Dispatch System and available to the Fire Department as well as an Emergency Operations Center in the event of a natural disaster, GIS provides access to a wide array of data that is very helpful in managing a public safety emergency situation. The City has four focal points for its GIS system. One is the Airport with its own server and self-contained coordinate system. The second is the Information Management System Department that maintains the base data on a server and acts as a data source from which the City Divisions/Departments can extract base data and then add individual Division information to the maps created and maintained on the Engineering Divisions GIS server. The third focal point is the Public Utility Department that maintains a GIS system with utility data. Finally, the fourth focal point is the Engineering Division that maintains a GIS system with its own server. Engineering has the most comprehensive map capability, providing information to all departments. Transportation, Police and Planning each have a GIS person who knows how to access and use the available GIS information, most of which is on the Engineering server. In addition, they do make use of information on— and the capability of—the Public Utilities system as well. In effect, the City has two separate GIS systems for the whole City, plus a separate system serving only the Airport. The Engineering Division's GIS system is not a real-time system, and it relies upon deleting and re-creating maps in order to update the base data displayed on maps. With a six-person GIS function, the Engineering Division does a very effective job of making a cumbersome system work and serve the needs of the City. The problem is that as the City becomes larger, issues facing the City become more complex, and as quality and timeliness of analysis and information becomes more important, the current system will not be adaptable to providing real-time management information. E ■ Section 10—Geographic Information System—page 1 a flrf Rss9aflIfs uc The limitations in the current system are illustrated by the limited connectivity between various "Power Builder" applications in City departments. While City employees can access applications in other departments, they have to search to find the data elements they need, import these back to their own application and then create a report that draws from this data. A fully integrated system would permit the user to simply create a report by querying the entire system for the data elements needed and have them aggregated into the desired report. This data cannot be imported directly into a GIS map layer either. Finding: As the City becomes larger, more complex and creates an increasing number of semi-independent "Power Builder" based applications, the cumbersome nature of drawing upon this data for reports and analysis will become ever more obvious. The City has a large investment in the present GIS software and configuration, and it is returning substantial information value to the City. However, it does not appear to be a priority to forecast the geographic based information management needs of the City and to evaluate the value of changing the system. If the system is as cumbersome as it appears and is not able to provide real time information, then the longer the City waits to make that evaluation, the more costly will be any change because of the growing investment in the present system. That investment is not simply dollars, but more importantly, the City is developing and adapting sub-optimal work processes tied to the present system. The Engineering Division Business Plan notes the need for an additional position in GIS and that requests will have to be prioritized if this is not approved. The staffing request and need may be more related to the shortcomings of the current GIS system, and approval is not recommended until after the City has evaluated the present system and alternatives, as recommended below. Finding: The Engineering Division understands the value of GIS and is making as effective use of the system as its current limitations will permit. However, the present GIS system does not provide real time information. Recommendation X-1: The City, possibly through the Engineering Division budget, should hire an outside consulting firm very familiar with all aspects of GIS. This firm should provide the City with an evaluation of the capabilities of its current system, the limitations, and evaluate the short- and long-term capability/value of alternatives to the present system, along with a range of cost for any alternatives. Section 10—Geographic Information System—page 2 C11TGfli[flSS4CIB'fS.llC SECTION 11-ADA REQUIREMENTS Salt Lake City has taken a very proactive and responsible approach to compliance with the Americans with Disabilities Act, and it has made implementation of the removal of barriers to accessibility a high priority in the Engineering Division. The City's policy and its particular application to special events is featured on the City's website. Citygate Associates reviewed the policies and the CIP projects that implement ADA activities and found these projects reflective of the City's commitment and the requirements of the Act. Finding: The City has a comprehensive and well thought out approach to complying with ADA standards. This approach includes: 1) incorporating accessibility into new public facilities, 2)upgrading existing infrastructure, buildings and parks, 3) maintenance of public ways, 4) ongoing assessment of public facilities, 5) public dialogue through established committees, and 6) defined procedures for accommodation during temporary events in public spaces. Finding: The City has an ADA Transition Plan based on a 1995 inventory of public way street intersections and has upgraded two-thirds of the approximately 15,000 locations where ramps were needed to meet current ADA standards. The inventory of sites was updated in 2005. Finding: It is not clear who is responsible to ensure that special ADA accommodations are made in public places, although the written documents provide a mechanism by which this is to occur. Recommendation XI-1: Establish a citywide policy regarding who is responsible to ensure that special ADA accommodations are made in public places. Over the years, several acceptable methods have been approved for providing a warning on sidewalk ramps where the edge or end of the ramp is near. Although a variety of different methods have been used in the past, in 2002 the Engineering Division settled on a single standard. The Engineering Division has used a variety of different methods and apparently not settled on a single standard. They are now working through an APWA ADA Committee to have single standard adopted statewide. Recommendation XI-2: Seek statewide adoption of the present Salt Lake City Section 11—ADA Requirements—page 1 aITTatf fSSoafltfs.ac SECTION 12-PERMIT PROCESS AND ENFORCEMENT The Engineering Division's principal permit activity is issuing permits for work in the public rights of way. The purpose of the permitting is ensure that the applicants know the regulations that apply to their proposed work/project that encroaches on the public rights of way, including restoration of the area, and to provide a tracking mechanism for the Division to use in scheduling inspections of the work throughout the duration of the project as well as near the end of the warranty period. Approximately 2,300 right of way permits are issued each year. The Division also responds to complaints regarding ongoing work permitted within the public right of way. The Division monitors the status of permits, which allows them to identify who might be working in the area of a complaint and to dispatch an inspector with the original permit information. Approximately 1,000 complaints annually receive a response from the permit staff. A proactive part of the work in the Public Rights of Way function is to review building permits, minor subdivisions, plan amendments, street closures, annexations and similar requests for possible right of way encroachment needs. They also provide review and inspection for an average of approximately 8 subdivisions per year. In order to manage the permit activity, the Division requires permit applicants to obtain the permit at the first floor Engineering Division counter, where the information is entered into the computer. The permit location is displayed on a computer map and the permit information can be accessed. Inspectors in the field use a laptop with wireless connection to enter permit inspection information. Warranty inspections are listed as the "due date" approaches in order to schedule this final inspection. Finding: The permit processing and management is adequately automated, although the system is not exactly real-time due to the limitations of the City's chosen software. Presently the permit program must be shut down and restarted in order for any new information that has been entered to be reflected and accessible on the maps. Recommendation XII-1: As noted elsewhere in this report in discussing GIS, the City should consider having an outside consultant evaluate the overall City data management system and recommend changes that will provide sufficient flexibility and real-time data over the next decade. Even with the current level of automation in the permit process, the Engineering Division does not measure or report how long it takes to issue a permit or how long it takes to respond to a request for project inspection. Current customer service questionnaire responses do not ask directly whether response time on permits is adequate. The number of questionnaires returned is inadequate to provide any meaningful evaluation of customer response to the permit system. Finding: The City does not measure the length of time it takes to issue a permit or respond to a request for public right way project inspection. -119 Section 12—Permit Process and Enforcement—page 1 TEM Man uc Finding: The Engineering Division has not established performance measures that will assist management and the City Council in assessing the adequacy of the permit process. Recommendation XII-2: Performance goals should be established with regard to the time it takes to issue a permit and respond to a request for inspection. The Division should then measure this "time" through an appropriate sampling procedure and report periodically to the City Council. Recommendation XII-3: Specific questions on the customer survey should address the various aspects of permit issuance and management so that the Division can determine its level of performance and whether changes need to be made. Section 12—Permit Process and Enforcement—page 2 1559(If ac SECTION 13-COMMUNITY RELATIONS / CUSTOMER RELATIONS AND SERVICE Community Relations and Customer Relations and Service really refer to several aspects of the basic question: "How well do we serve our customers?" This is not only a measure of how pleased the customer is with the particular transaction or encounter they have with government, as reflected on a survey form, but how well did the Division serve its customers measured by customer service performance measures. This section will review Community and Customer Relations and Service from both of these perspectives as well as assess the proactive process the Division has for anticipating and meeting the needs and concerns of the residents of the community who are affected by the projects managed by of the Division. A. CUSTOMER SERVICE SURVEYS The Engineering Division uses two standardized customer service survey forms to assess how customers perceive the type of service they receive. One rates the service in the Division; the other is used to obtain feedback on various aspects of construction projects. Neither form is focused on external customers, and there is no apparent effort to assess how well they serve the departments/employees within the City who rely on and interact with the Engineering Division to accomplish their own work. The Division Service survey form asks the respondent to check a box identifying the type of service they received and then to rate from "5 or Excellent" to "1 or Poor" whether the employees were available, courteous, helpful and professional, the information clear concise and provided in a timely manner, requirements were fair and reasonable and finally a rating of the overall experience. The six simple questions make the form quick and easy to complete and provide an opportunity for the respondent to comment and to request a reply. Between January 2003 and December 2005, the Division received forms in only 10 of the months, and in almost all cases, the average numerical rating of the responses to the six questions was 5 or Excellent. The rating never fell below 4.8 for any service. Finding: Very few customer survey forms assessing service within the Division are completed, giving the Division an incomplete understanding of how acceptable their customer service is when external customers seek assistance. Finding: There is not an organized and consistent effort to assess the customer service provided by the Division to other City operations and employees. Finding: The monthly scorecard, reporting customer survey results, does not contain the detail associated with the individual questions, which would be valuable in understanding the specific aspects of customer service that need improvement. I Section 13—Community Relations/Service—page 1 (ME asaia es.uc Recommendation XIII-1: Develop a proactive plan to encourage both external customers and other City departments to complete the survey forms at regular intervals. Recommendation XIII-2: Revise the Monthly Scorecard report to contain information on the number of survey questionnaires completed and the average score on each of the questions. B. CUSTOMER SERVICE PERFORMANCE MEASURES While a survey form records customer reaction and perception to the service they receive, performance measures can assess how well the Division does in delivering the service using objective measures. For instance, a goal of issuing permits over the counter might be to achieve an average issuance time of 15 minutes. Records or plans and drawings might be provided within 24 hours of the request. Performance measures need to be something that is actually measurable without creating an administrative burden, and they must be something that the customers perceive as affecting the quality of the service they receive. Just because something can be counted does not mean it is a useful performance measure. In fact, the most useful performance measures are those that are developed in conjunction with the customers, so that the department or division is sure they are measuring something that is meaningful to their customers. Each function in a department may have different performance measures, just as each function has different customers. Customers may be both external as well as internal customers. The Public Services Business Plan includes a number of measures of output and activity, but none appear to relate to the provision of public service as might be perceived by the customers. It is important for a function to have such customer service related performance measures that measure service activities, which the Division might choose to change or improve as they succeed/or not in meeting their performance measure goals. Finding: There are no performance measures reported in the Division that are related to customer service to either internal or external customers. Recommendation XIII-3: The Division should review the work activities of each function and select performance measures that can be easily administered and that relate directly to the provision of services to internal and external customers. These measures should be included in the Division Monthly Scorecard. C. CUSTOMER SERVICE AND SATISFACTION ON PUBLIC WAY PROJECTS The Engineering Division is very sensitive to the concerns, needs and satisfaction of residents and business owners affected by CIP projects. This sensitivity includes not only a willingness to allow participation in the design process where reasonable alternatives may be available in both street and park design, but also informing and accommodating individuals affected by their projects as much as reasonably possible before and during the construction phase. A Customer Relations/Public Information liaison is assigned to each project where project impacts are Fki Section 13—Community Relations/Service—page 2 CIiY R Bss4aflrts.uc anticipated. The liaison manages the project relations base on a basic template of activities that is adapted for the special aspects of each project. It is the intent of the Division to contact people who will be impacted by a project well in advance of actual construction, to be proactive in the investigation of design alternatives, where appropriate, and to address issues such as parking, access, refuse collection, deliveries, utilities, timing of partial street closures, traffic control in advance of mobilization and commencement of activities on the project. There is a concerted effort to identify issues that are perceived as critical in the construction zone so that accommodations can be made, when possible. The liaison position is usually performed by an in-house staff person associated with the project who can answer questions directly, respond to emergencies, and has the authority to alter construction timing as needed. Contractors are also required to have a designated contact person and an on-site contact person who can provide timely responses on behalf of the contractor to make operational modifications or to address typical construction issues, such as interrupted utility or plumbing facilities that may accidentally be damaged. The City's on-site project managers are encouraged to resolve field issues in a timely manner so that they are not unnecessarily elevated higher in the organization, frustrating the affected residents and business owners and taking added time of City staff. The Division's commitment to customer service is evident in the standard contract provision, which gives the City the authority to remove any rude or abusive employee of the contractor from the job site. The Division expressed the view that "You cannot start talking to people too soon." While this is the attitude expressed by many agencies, few have as formal and proactive a process of Community Relations as we have found in Salt Lake City. Finding: An effective Customer Relations Program template has been developed by the Division; and the staff reflects a sincere desire to both promote good customer relations as well as to provide good customer service to individuals impacted by construction projects. For each project, there is a ten question Citizen Response Questionnaire that allows affected people to rate from Excellent to Poor how various aspects of a CIP project were conducted. Questions include accommodation for refuse collection, traffic and pedestrian access and flow, how well informed they were, how quickly the City/Contractor addressed problems, how courteous and considerate City and Contractor personnel were, and if the survey respondent was pleased with the outcome of the project. Unlike the survey discuss in subsection "A" above, there is a fair sampling of surveys returned to the City. A December 2005 report lists the responses to each of the tend questions individually for 33 surveys. All but one of the questions had an average rating of 4.25 or higher (on a scale of 5 for Excellent and 1 for Poor). Only the question concerning whether the contractor took appropriate measure to minimize noise, dust and vibration created by the project received a lower rating of 3.88. While the overall average rating for all questionnaires on all ten questions was 4.3, the Division also separately reports the response to the two questions of whether the City personnel were considerate and helpful and if the project improved conditions in the neighborhood. The average rating here was 4.5. Each month the Division reports this subset score on its Monthly Scorecard ■ Section 13—Community Relations/Service—page 3 arrGflrf 5S9aflits.uc and directly associates the score with the City Project Manager. The three-year average of this survey score subset is 4.7. It is reasonable to expect that not every project will proceed smoothly and/or not seriously inconvenience some adjacent properties. On major projects, the Division knows that there will very likely be a substantial loss of business for affected businesses in spite of the best efforts to keep access open and schedule construction work, when possible, to avoid peak traffic and business hours. Of the 33 questionnaires in December 2005, two reflected in the response to almost all of the questions a very high level of dissatisfaction with how the construction proceeded, while an additional four showed a moderate level of dissatisfaction. All of the remainder of the responses rated the project conduct as Very Good or Excellent. Finding: Neither the overall average survey rating for construction projects nor the average response to key individual questions regarding how the project was conducted are included in the Monthly Scorecard, although the information is available in the Division. Recommendation XIII-4: Results of the survey responses on construction projects should be included in the Monthly Scorecard and annually a summary shared with the City Council. ■ Section 13—Community Relations/Service—page 4 an�fl�i�ssxiflr�LK SECTION 14-REPORTING TO THE CITY COUNCIL In interviews throughout this project, there were two persistent themes. The first is a belief among many Division personnel that they are providing information in both regular reports, the annual budget, the Business Plan and individual Council Agenda reports on the status of projects and the other work of the Division; and yet, there are still questions coming from the policy level of the City that many Division personnel feel are answered in these regular reports and other sources of information. The second theme is a belief by some at the policy level that the status of projects and Engineering Division work is not adequately available unless specific questions are asked. From neither the perspective of the Division personnel nor the policy level of the City does it appear as if this "disconnect" is deliberate or the result of poor work. Rather, it seems to be accepted that the "disconnect" between what information is thought to be provided and what is perceived as being received "simply exists." While the problem creates frustration, it has not risen to the level of someone expressing a need for an overall solution. Yet, the information disconnect seems to be at the heart of many of the questions and frustrations Citygate Associates heard throughout this project. Finding: In our study we have found no fundamental problems in the organization or processes of the Engineering Division, but it is clear that substantial improvement needs to occur in the area of communicating information to the City Council and, in turn, communicating policy priorities to the Division. A. CIP MONTHLY PROJECT STATUS REPORT All of the Division's Capital Improvement Projects that are not completed and closed out are currently included in the monthly CIP report that the Engineering Division believes goes to the City Council as the key source of information on the status of each project. In fact, the Council does not receive the full report. In addition, even if they did, the report neither contains all of the information necessary to fully understand the status of each project, nor is it in an easily usable format. Council members have limited time and need to be able to view and understand information quickly and usually need an Exception and Summary section as a starting point. Neither of these elements is included in the monthly report. The present monthly report separates projects by type (Street, Building, Parks and Subdivision), and within each type, the report separates those projects that are still in the design stage from those which are now in the construction stage. Each report page for projects "Under Construction" includes the title of the project and source of funding, the project engineer and contact phone number, the contractor and amount of the contract (which does not always match the listed amount of appropriated funds), the date the contractor was given notice to proceed, estimated construction time and elapsed time, and percent of the project that is completed. A comment section allows for miscellaneous relevant information to be included. For projects under design, the project title, project engineer and contact number are listed along with the budget source, the design budget amount and anticipated construction cost. The months Section 14—Reporting to the City Council—page 1 ananrf�ss9oarts,uc during which design is to occur are listed along with the percent of the design portion completed, the anticipated bid opening date and expected length of construction period. There is a comment section in this portion of the report for each project as well. There are several problems with the report format described above. • Neither report section indicates when the project was first approved by the City Council so it can be seen if a project has been delayed in beginning design. • By separating the construction reporting from the design phase reporting, there is no way to tell "why a project has taken so long" once it goes into the construction phase because all of the historical design phase information on the project is deleted. • Even though there is a percent complete in each phase, there is no way to tell if the project is on schedule, and if not, comments are often so limited as to provide no understandable answer to someone who may not be very familiar with how projects proceed and the history of this particular project. • When the design and construction budget exceed available funds, there is no ready indication that this has occurred, particularly once the historical design information has been omitted from the project. Without this information, the City Council has no way to know where the additional funds will come from and how that might then limit their choices for future projects. This is mitigated somewhat by the fact that presently cost overrun is not a common occurrence and the City Council is involved in approving additional funding for large cost overruns. Project cost control is critical in a tight financial environment, particularly since failure to do so limits policymakers' future choices, and in this case, they do not even know it is occurring until well after the fact. • There is no Summary section or Exception section that allows policy makers to quickly scan all projects and to see which ones are not on schedule and within budget. Finding: The CIP Monthly Status Report does not contain information necessary for the City Council to perform their policy and oversight roles, nor does it provide them with the information necessary to respond effectively to some types of constituent questions. Recommendation XIV-1: The CIP Monthly Status Report needs to be restructured substantially, with the design done in cooperation with the City Council so they are provided with the information they need in an easily understandable format. An evaluation should be made as to whether several reports might be better, each providing a different perspective; and elected officials might choose to review those of interest to them more frequently than the other reports. Each report could provide a different perspective on CIP projects. Consideration should be given to including both the Construction and Design Phase information Section 14—Reporting to the City Council—page 2 unGEss�rfs uc on one "legal sized page" so the report user can see the full history and current status of a project. B. ANNUAL BUDGET AND SUBSEQUENT FISCAL REPORTS The annual budget document appropriates money to capital projects. Once that has occurred, the Engineering Division has the authority, following the procurement procedures, to manage the project from design through completion of construction without coming back to the City Council for any additional approvals. The City Administration can even transfer funds into the project to cover cost overruns, with the Council not learning of this in any organized fashion, although there is an adopted procedure requiring notification to the City Council if funds are allocated to a project from an established cost overrun budget. By not knowing about cost overruns often until well after the fact, the City Council does not have the ability then to perform an oversight role and participate in the decision of whether to modify a project or go ahead and add more funding. While this may not be a significant issue on minor projects, downsizing a project may affect council constituents in a noticeable way. Adding more funding to a project instead of downsizing may reduce funding available to meet cost overruns in other projects or authorize new projects. Finding: While it is probably not a good idea to have the City Council be involved in detailed administration by evaluating all cost overruns and approving transfers of funds, it is important that they be alerted to those projects where the scope and funding changes might be significant. Currently the City Council does not receive a regular report alerting them to significant project changes and thereby providing an opportunity for dialogue with the City Council, if the elected officials think it is important. This possibility is usually known by staff in sufficient time to inform the Council without delaying the project. Recommendation XIV-2: A monthly report to the City Council should alert Council to those projects where a change in scope or transfer of funds is being contemplated based upon a significant change in the project. This will give the City Council the opportunity to inquire and discuss the issue prior to a decision being made. C. BUSINESS PLAN AND PERFORMANCE MEASURES The Public Services Department Business Plan/Engineering Division Section consists of a description of the Engineering Division functions, a selection of information reporting the number of things produced, delivered, or requests answered and three performance measures that relate specifically to Engineering. For several of the functions described, the Business Plan says additional staff is needed, and if they are not approved, then service will need to be prioritized. The Division Business Plan is largely a descriptive document and not a "plan" that sets out the challenges in detail facing the City for which the Division has responsibility, a specific proposed path for addressing the challenges, a clear explanation of how the proposed solution will address Section 14—Reporting to the City Council—page 3 anGar'asRiEs.uc the challenges, alternatives to addressing challenges (rather than simply lowering service levels), and specific measurable goals that will allow policymakers to know what to expect if they approve the proposed solutions. Finding: In its present form, the Business Plan provides little more than a description of what the Engineering Division does and very general statements of what additional resources they need to handle workload problems in one or more functional areas. The Business Plan does not serve as a planning document or a context in which policymakers can consider alternative responses to carefully described challenges facing the City. The performance measures cover only three subjects: completion of CIP projects on time; amount of the street network rehabilitated each year; and the amount of paved streets that are in satisfactory condition. The first measure would be reasonably useful if there were any way of knowing what the "start" date is for each project in order to determine whether "on-time" is measured from when the City Council approved a project or when the Division first began working on the project. Is a project being "on-time" measured against a schedule established and communicated to the City Council? The second performance measure records work output (street rehabilitation) but does not measure this against any standard or goal. Is this amount of work adequate to maintain City streets at an acceptable level of maintenance? The third performance measure concerning the condition of City streets reports a baseline and a target, but does not give any indication what it means to accomplish the target in terms of City Council or public expectations regarding street quality. Effective performance measures are intended to be integrated into management of the organization, to describe what is happening in the organization in a way that helps managers and policymakers understand what work is being done, how it is being done, whether the work is meeting expectations and the measures then serve as the basis for analysis and justification for either asserting that "all is well" or quantifying what changes need to occur to improve things. Expressed in a simpler way, performance measures help us know how well the organization is being managed. There are several types of performance measures, each of which is useful while each serves a different purpose. Below is one scheme for categorizing types of performance measures. • Input Measures: This counts things like number of employee hours used, number of complaints received, and number of requests for records. These measures are important as an indicator of work volume or service demand and are largely useful as a comparative tool in looking at changes over time. When not associated with a validated standard, we do not know whether the service demand is large or small. • Output Measures: These measures identify how much work was performed such as the number of projects completed, records requests responded to, GIS maps provided, consultants managed or bids awarded. From this information, we can tell how much work was done and variability over time, but we do not know Section 14—Reporting to the City Council—page 4 arrcarf flss9cia1.uc whether this is an acceptable output without validated standards. We do not know how efficiently or how well the work was done; only how much was done. • Efficiency Measures: These measures relate the amount of work performed as a ratio of resources (such as money, electricity, or gasoline) used. While these help the organization gauge whether it is using resources wisely, efficiency may be achieved at the expense of effectiveness. • Outcome Measures: These measures focus on program results and service quality, which requires the organization to develop validated standards against which to judge its activities and these standards need to relate to the policy goals of the City. The number of citizens rating a service as "very good or excellent" is an important measure if one of the objectives of a customer relations program is to deliver a capital project with as little perceived disruption as possible. Similarly, if a goal of the organization is to assist residents in understanding and establishing a Special Improvement District, then the citizens' rating along a number of question/dimensions may be very useful in knowing if the objective or outcome was achieved. • Process Measure: These measures are related to outcome measures. Often the time it takes to process something is related to the satisfaction experienced by the person receiving the service. The amount of time it takes to issue a permit, to provide an inspection, to resolve a complaint or to complete a capital project are all important measures if process is an important goal of the organization. By establishing standards or targets, the organization can measure how well it is doing in processing things, which then serves as a guide to where and how improvement might be achieved. Finding: The performance measures used by the Engineering Division in the Business Plan do not relate to any standards or goals and serve little function in providing management or analytical information for either the Division management, the Administration or the City Council. Recommendation XIV-3: The Engineering Division should develop a series of performance measures that communicate useful information to the City Council, serve as management and analytical tools for the Engineering Division, and generally meet the standards in the performance measurement scheme described in this report. Section 14—Reporting to the City Council—page 5 arraflrf RSS9CES.uc SECTION 15-SURVEY OF SIMILAR ENGINEERING DEPARTMENTS/DIVISIONS Citygate surveyed 10 other cities that are of similar size and have Engineering Departments or Divisions that perform much the same functions as the Salt Lake City Engineering Division. The purpose of the survey was to determine if the Salt Lake City Engineering Division is staffed and organized similarly and whether its performance is similar along some key measures of interest to the City Council. The Salt Lake City population is 178,605, while the population range of the cities surveyed is from 90,570 to 269,100. A brief review of the data below reflects that Salt Lake City Engineering is reasonably staffed compared to other agencies when you combine the perspective of the size of the CIP program and the percentage of that program designed by consultants. Citygate's own review of the specific workload of the Division, as discussed in other sections of this report, confirms this view. An important policy and economic issue is whether Salt Lake City relies on more expensive consultants than other communities and whether the City is achieving the right cost effective balance between in-house and outsourced design. The survey reflects that Salt Lake City consultant rates are similar to those in other communities, recognizing that the local wage market will somewhat affect the hourly rate charged. Within this report, we have then compared the hourly rate to the cost of in-house design and found that the City is somewhat less expensive on an hourly basis, but uses consultants to both undertake work that requires skills that the City staff does not have and to smooth out unusual peak workloads, in order to avoid overstaffing. The principal performance measure that we were able to find in use in engineering divisions is the amount of time it takes to process a right of way permit. Salt Lake City does not formally keep this measure, although indicating that it may take only a few minutes or hours if the permit request is not complex. Other cities report a range of time from a few hours to as much as 7 days. We have suggested in this report that the Division needs to develop performance measures in order to determine how well they are doing in meeting the public's needs as well as to measure the on-going effectiveness of the operation. Related to the issue of performance measures, is whether an agency uses customer surveys. Salt Lake City is one of the few that does so, reflective also of the fact that the Division has a very comprehensive public relations outreach program to help people impacted by projects. The City's program is one of the best we have seen. An area of particular concern to the City has been the quality of engineer's estimates compared to the bids. Salt Lake City Engineering has a record substantially better than most of the surveyed communities. This is substantiated again in a section of this report specifically devoted to the issue. Finally, a critical issue that is often given low priority is the maintenance of old records. Salt Lake City is doing at least as well as most of the agencies in the survey. Only three reported that all old drawings and plans have been electronically preserved. All of the agencies appear to be working on this problem, and we have encouraged that this is an important area of focus for Salt Lake City. Section 15—Survey of Similar Engineering Departments/Divisions—page 1 CIiTM flSS. rfS uC The conclusions to be drawn from the survey below are that Salt Lake City is not overstaffed compared to the other cities; and that along measures that were important elements of this Management Review by Citygate, the Engineering Division is doing as well or better than most agencies. Unfortunately, most agencies are so busy "getting out designs" that attention to fine- tuning the organization is not of high priority. The request for this Management Review for the Salt Lake City Engineering Division reflects that fine-tuning the organization is important to the City. The results of the review are that the Division is appropriately staffed, well organized and makes good judgments regarding the allocation of its time and resources, but can improve in areas that will benefit both the Division and the City. 111 Section 15—Survey of Similar Engineering Departments/Divisions—page 2 CIiTGflif flSS°CifS uc i., co o _ CA •N L a o o a,. y al 0) Y a) a)N y N N O a) a) C .o CA N t m ro a co c a) a) N 7 7 c • in 7 E 7 7 7 7 cn O > CO o 7 a) CO O o M a o y o 7 0 ;g coo t t O o o N o o 5 O ._ 0 > a) U c y 7 C n ° L C L p L p L O O O L L N M o L N D o y 7 N a U .0 O C 0 y C C• C C oif C p C co C C c° C 0 C 0 co 0 2 _c 0 CAC o) o o 0 c v) o Qo '0 N .co o lio �g o'Krp m p rn -o c - > c•-• co �' 2 0) 3 a, a co U o N m m c o N o p 2 c c a o c -o . 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L U �_ a) o c ° o c o Z U C N a o N L O Q N O a) O U .O C E a co U a) C Y f0 Y m L O O a) O W J m U U LL _ 2 to Cl) O E Cn to Memo Date: 5/26/2006 To: City Council Members,Mayor Anderson Cc: Cindy Gust-Jenson,Rocky luh From: Dave Oka a.' RE: Response to daft Ma agement and Performance Audit In response to the draft Management and Performance Audit, I would like to express my appreciation to the City Council and Council staff for investing the time and resources to accomplish this sensitive but necessary task. The report provides great opportunities to improve our system and will help ensure a bright future for the Agency. Please find attached the responses to the recommendations in the report. I feel that it is noteworthy to point out that the responses to the audit involved input from my staff in addition to me. 5/3/2006 Confidential 1 O as.' o .5 Q L >" b O O o cn o ,fl-o p o 0 › 0 0 0 > o ... 4.0 a. o o. s. �. o Q,Aa 0~ 'J 0* }' �. ° o Eon °' 0° . y s. 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I U` " u MN IN sz U > CIT1 fiTf flSS°CIflTfS , CITY�flTf flSS°CIflTfS LIMITED LIABILITY CORPORATION Dwane Milnes MANAGEMENT AND `Dm'(i C hDeRo�s Principal PERFORMANCE AUDIT • OF THE REDEYELOPMEN1 ■ 705 Gold Lake Drive, Suite 100 AGENCY . .ti Folsom, CA 95630 Cell 559-786-8587 FOR Fax 916-355-1390 dmilnes@mreach.com mdmilnes@citygateassocates.co # — � cirir ,, MilAjt Ill nail Itepott MAY 19, zoos • a ! . ,, , I I;4 i F :iwt�t ', " r , ,), I.7 , , , { a " = r 111 PM 00000, • 2250 East Bidwell Street, Suite 100 • Folsom, CA 95630 I Ott LANCCM (916) 458-5100 • Fax: (916) 983-2090 Caitiff fiSS(I111tS i«. TABLE OF CONTENTS Section Pare Executive Summary Executive Summary, page 1 A. Organization Structure 1 B. Staffing and Workload 3 C. Human Resources Management 3 D. Fiscal Management and Processes 4 E. Project Management 4 F. Planning: Strategic Plan and Annual Goals 6 G. Role of the Policymakers/Administration and City Departments 7 H. Action Plan 9 Introduction Section 1—page 1 A. The City of Salt Lake City 1 B. Redevelopment Agency 1 C. Study Background and Objectives 2 D. Study Approach and Work Plan 3 E. Organization of the Report 4 II. Organization Structure Section 2—page 1 A. Organization Structure 1 B. Staffing and Workload 4 C. Human Resources Management 6 HI. Fiscal Management and Processes Section 3—page 1 A. RDA Budget 1 B. Accounting System and Fiscal Management/Control 2 IV. Project Management Section 4—page 1 A. Management Control Systems 1 B. Project Evaluation Process 2 RDA Support of a Project 3 Impact of an RDA Project 5 V. Planning: Strategic Plan and Annual Goals Section 5—page 1 tr" Table of Contents-i ME MI OMIT(MalliitS liC VI. Role of the Policymakers/Administration and City Departments Section 6—page 1 A. Role of the Board and Administration 1 B. Communication and Feedback Processes and Tools 3 C. Coordination with Other Departments 5 D. Recordkeeping 8 VII. Survey of Similar Redevelopment Agencies Section 7—page 1 Appendix Exhibit I—Analysis of the Costs and Benefits of Proposed RDA Projects Exhibit II—Market And Financial Assessment Exhibit III—Public Information and Participation Table of Contents-ii rr Frss rfs �< EXECUTIVE SUMMARY Pursuant to the City Council of Salt Lake City and Redevelopment Agency (RDA) Board policy to conduct periodic management reviews of City departments and divisions, the RDA Board chose to have a review conducted of the RDA. The RDA Board is seeking an assessment of the current management systems and processes to determine if there are changes that will improve the cost effectiveness of RDA programs. To address the objectives of the management review, Citygate used an approach involving six tasks: Task 1 —Project Initiation and Management Task 2—Complete Initial Interviews and Related Data Collection Tasks 3 through 5—Perform In-Depth Operational Analysis Task 6 — Review Preliminary Findings with the Board Audit Committee, Prepare Final Draft and Final Report Prior to preparing a formal Draft Report, Citygate met with an RDA Board Audit Committee to determine if there were any areas of interest to the Board that needed additional study. Several comments and questions raised during that discussion helped to shape this Draft Report. The framework within which RDA activities occur is the organization structure, staffing and workload of the Agency. The first part of this Citygate report describes and assesses these elements and then addresses the more internal technical issues of fiscal and project management. By looking first within the organization and then outward to the Agency relationship with others, Citygate acknowledges that an effective RDA must have good internal structure, processes, and adequate staff in order to effectively perform its role in the outside community. This role involves planning, communication, and coordination with policy makers, developers, City Departments that must support/implement RDA activities, and residents/businesses affected by RDA activities. A. ORGANIZATION STRUCTURE The Redevelopment Agency organization structure is classic in its form. It appears to be the very flat format that is often recommended to enhance delegation of authority, facilitate and encourage self directed activity within a clear sphere of responsibility, and enhance staff job satisfaction. The span of control does not exceed the traditional recommendation that no more than seven subordinates report to a supervisor. And so, from a cursory perspective, the organization form seems appropriate to the mission of an organization that relies upon project managers/coordinators to handle most aspects of an RDA project from beginning to end. The practicality of this organization form, however, is seriously affected by the experience/skill level of the individual employees and their capacity to act effectively on complex projects with a great deal of independence. Two of the project manager/coordinators have less than two years employment with the Agency and one has less than four years. The result is that the Agency's project managers require more supervision than the "flat" organization form implies. Complex projects and fiscal management are handled by the Deputy Director, who also is responsible for Executive Summary—page 1 {,;tfl f; directly supervising and training five employees. In practice, also provides supervision to the Administrative Secretary position as well. The Deputy, as staff supervisor, has developed a semi-structured training program that assigns new employees a series of increasingly more complex and varied projects. This on-the job training has resulted in productivity that keeps up with the current workload. However, there is not a training plan that outlines technical education that would significantly improve their knowledge and expose them to policies, programs and procedures of other development organizations. The Deputy Director has too large a span of control to provide adequate supervision and training to a relatively inexperienced staff, and to insure that complex projects and Agency fiscal affairs are adequately managed. On the organization chart presented in Sections 1 and 2 of this report, the one-to-one relationship between the Deputy Director and the Executive Director position implies that most of the Director's time is spent handling external affairs. But the Agency does not proactively pursue the creation of projects, is engaged in almost no planning activities beyond the short-term planning to implement current programs/projects in current Project Areas, and has relatively little need to be involved in capital projects once they are turned over to the City Engineering Division for implementation. If all of these additional activities were taking place, there would be a need for a much larger staff and an appropriate need for delegation. In light of the current RDA workload and activities, there should be a substantial amount of time that the Director could devote to day- to-day agency management activities such as employee supervision and personnel management, training and fiscal affairs, and assisting in major project implementation. Communication between the Director and the staff is particularly important to make sure the Director and staff speak with one voice in expressing policy and procedures on each project. This is not just good project management, but for this RDA, it is an important training tool. Responsibility for creating both an atmosphere of open communication and a process that encourages and provides for open and thorough communication is the responsibility of the Executive Director. Setting the tone and form of the organization is the responsibility of the leader and cannot be delegated, because in both large and small organizations, the staff look to the leader for cues on how to function and communicate. However, the Director has not established communication that is perceived as providing open and thorough communication and keeping the Director and the staff adequately informed of each other's activities. While the Director holds staff meetings, the internal process of these meetings is neither perceived as providing the Director with an adequate knowledge of what the staff are doing, nor communicating to them the outcome of discussions with developers and others that might affect the project being managed day-to-day by the staff The Director needs to share responsibility for day-to-day oversight of project managers/coordinators with the Deputy Director and improve communication and staff training opportunities. This should be accomplished by using a management facilitator to assist in redesigning the delegation of authority, communications between the Director and Deputy Director, communication among all of the Agency staff, and the form and functioning of staff meetings. Executive Summary—page 2 ��,f f;;�irts ��: B. STAFFING AND WORKLOAD The RDA has taken very little initiative to create new projects or to proactively recruit developers to undertake key catalyst projects over the past few years. Instead it has been processing projects that have been "in the pipeline" for a while and are reacting to project interest and proposals from others in the community. As a result, RDA project activity is at a fairly low level. This explains why the present number and experience level of the staff is adequate to handle the currently active projects. The experience level of the staff has significantly affected the workload distribution in the Agency. Over three-quarters of the projects (many of which are currently inactive due to lack of developer interest) are assigned to 2 of the 4 staff people. The training program for new employees is significantly better than normally found in organizations that hire entry level positions, but the small size of the Salt Lake City RDA does not provide the opportunity to make up for this inexperience with other longer-term staff. This means that an accelerated training schedule and formal training plan for each employee using a combination of the current on-the-job training and outside formal education/training/seminars would speed up the integration of new employees into the organization and permit them to take on a larger and more complex workload earlier than is presently occurring. While their appears to be a temporary flattening of workload in the Agency with a little extra productivity possible, reducing the staff would result in a lack of capacity to handle three or four of the large projects that the Agency expects to "take off during the next year," would reduce the capacity to address many of the procedural and planning findings and recommendations raised in this report, and adversely affect the RDA ability to proactively plan activities in the CBD. The issue of staff training is a consistent issue in this report, and it becomes important again when we look at the assignment of responsibility to provide financial planning and monitoring. The Deputy Director has handled these functions for many years, preparing all of the reports and handling the financial issues with elected officials. Citygate found that the Director has a general knowledge of the financial processes of the Agency, but this does not allow the Director to step in and backup the Deputy Director. The staff below the Deputy position does not have the knowledge or experience to understand the finances even at the level of the Director. C. HUMAN RESOURCES MANAGEMENT In 1978 the Board adopted a resolution making City personnel rules applicable to RDA employees. Citygate reviewed the RDA resolution and personnel related files and procedures and met with staff in the City Human Resources division to determine whether the RDA was complying with City Personnel Rules. We found that the RDA does not consistently follow City Personnel Rules and Procedures, and as a result, neither the personnel files are kept in Human Resources nor are the RDA files complete and in compliance with City Personnel Rules. Human Resources should conduct a detailed performance review of RDA personnel practices, make recommendations for change that will bring the RDA into full compliance with City Personnel Rules, and then develop procedures in cooperation with RDA management to have RDA conform to all City Personnel Rules and procedures. LI Executive Summary—page 3 t, *Mails ,,, One aspect of the City Personnel Rules that needs to be clarified is "Who is the appointing authority for RDA employees?" Assignment of appointing authority responsibility for RDA staff to the Mayor as CAO is inconsistent with the reporting and employment relationship of the Executive Director, who has an equal employment relationship with the Mayor and the RDA Board. The Mayor appears to have employment control over the RDA staff while the Mayor shares employment control over the Executive Director with the RDA Board. The RDA Board should amend the By-Laws to make the RDA Executive Director the appointing authority for RDA staff and direct that such authority be exercised consistently with City Personnel Rules and procedures. D. FISCAL MANAGEMENT AND PROCESSES Citygate reviewed the RDA budget document and found that the RDA annual budget reviewed by the Board is essentially an accounting document that does not contain information regarding the policy goals, specific measurable objectives, a description for each of the project line items, and importantly a Capital Improvement Program comparable to the City budget. All four of these components are critical to establishing an integrated picture of the policy path the RDA plans to follow in the coming year and its relationship to Board policy goals and objectives. The City Finance Division provides the automated accounting services for the RDA. However, the financial reports and records of the RDA are not easily understood by people external to the RDA staff, because they contain too much information and require coordinating different pages of financial data in order to clearly understand the Agency's financial status. There is no adequate summary report available that focuses on the key financial data so that the more detailed reports might serve as backup for those interested in more extensive information. Financial reports should be developed in conjunction with the Board so the reports are easily and quickly understood and used and the budget reshaped from its present accounting format to a policy document. E. PROJECT MANAGEMENT The day-to-day operating focus of the RDA is on managing projects. The important issue in project management is whether or not there are control systems to monitor progress. While the Agency does maintain a list of projects and assignments, there is no documented or structured reporting process to keep RDA management informed and no established key milestones for each project to serve as a scheduling mechanism. The principal project control mechanism to keep the Director informed of project status is staff meetings. However, these are perceived by the staff as not structured in a way to insure adequate communication of necessary status, policy and procedural information both up and down. Written policies and procedures were reviewed and many were found to be outdated and to have been superseded by supplemental procedures and "personal knowledge." Most of the procedures themselves do not have a publication date to indicate if they incorporate the latest changes. The RDA staff should establish a schedule and assign responsibility to revise all of the remaining outdated policies and procedures with a responsible custodian to review them with the staff for accuracy at least every two years. Executive Summary—page 4 crt � `f,, Even with the lack of clarity in communication, policies, and procedures, work is being accomplished in a timely manner and the end product of the work is good, because the current workload is not overwhelming. A portion of project management is project evaluation, which has two sides to it. First is the evaluation of whether a project should be supported by the RDA with staff effort and possibly financial assistance. The second is evaluating whether a project or series of projects are meeting the goals and objectives of the RDA. The RDA determination of whether to support a project is not based on any clear set of guidelines. Since the Agency is largely reactive and responds to proposals by those seeking to develop, the Agency applies two sets of passive criteria. The first is a very general determination of whether the project fits within the Master Plan for the Project Area, without a corresponding determination of how this projects ranks in priority among other possible projects. Funding and staff time may be allocated to a project because it has "come in the door" without determining whether this would siphon away funding and staff assistance from a later project that might be of much higher priority and with greater catalyst potential. The second criteria are whether a loan applicant meets the Agency underwriting standards. There are no clear written guidelines regarding whether or not to approve a project loan. In other words, will the work on the project produce enough additional assessed value and income to secure the loan and provide reasonable assurance that the applicant can make the payments? This leaves applicants unsure regarding their qualification until the staff makes an independent judgment. Without comprehensive guidelines, there is no opportunity to make findings establishing why a loan should be approved even if it falls outside of the guidelines. This passive approach to determining whether to support a project does not include two important elements in project evaluation. The first is an analysis of the Cost and Benefits of the Proposed Project and the second is to conduct a Market and Financial Assessment to determine if the project will be a financial success. A Cost/Benefit Analysis takes into account both direct and indirect costs and benefits, and so a project may be very well worth supporting even if it does not directly return direct benefits that offset financial cost. Conducting a Market and Financial Assessment of a project is an expanded and more structured version of the process now followed by the Salt Lake City RDA in examining whether a project is financially strong enough to make repayment of its RDA and private financing. Every RDA project should be accompanied by an assessment that is part of the agenda package. The RDA is not conducting more than a minimal informal cost/benefit analysis and market and financial assessment of recent RDA projects and relies instead upon the passive criteria of whether the project meets the broad goals of the Project Area and meets general loan underwriting criteria. The RDA should develop a general template for a Cost/Benefit Analysis and a general template for a Market and Financial Assessment of each RDA project and insure that these are separate and formal elements of each agenda package when the Board considers approval of a project. Another part of evaluation is determining the impact of an RDA Project, to help determine whether or not the impact met expectations and if the results point to necessary changes in policy, goals and objectives. While the RDA has a Master Plan or Project Area Plan for each project area, the plans do not contain objective or observable subjective standards by which to NM ME Executive Summary—page 5 tr�� r3:Krt measure the success of individual projects. In order to assess the impact of RDA activity, the Agency needs to establish objective or subjectively measurable goals and objectives. Even if a project has the potential of significant positive impact on the Project Area, the RDA resources are limited. An important criterion for evaluating the appropriateness of RDA support for a project is whether the project would proceed even without RDA funding. In light of the extensive private investment documented in the 2004 ERA Economic Impact report, RDA support is frequently not necessary as an inducement to private investment. The RDA Board should require all applicants for financial assistance from the Agency to establish to the satisfaction of the Redevelopment Advisory Committee and Board that the project cannot go forward without RDA assistance or will not go forward at the size and complexity desired by the Agency. F. PLANNING: STRATEGIC PLAN AND ANNUAL GOALS A Redevelopment Agency is an important tool in a city's effort to achieve its Master Plan. The Agency will adopt some form of Master Plan for each Project Area. But as with City-wide Master Plans, these planning efforts are usually general in nature; and so the choices made by the RDA Board each year need to be guided by the annual adoption of goals and of specific objectives that state the particular projects or actions the Agency will take in the coming fiscal year. Citygate reviewed the recently adopted RDA goals and found that the form of each goal was appropriate, but for most goals there was no obvious connection to any City or RDA plan or document, leaving the impression that there is not an overall Strategic Vision for Redevelopment as a whole or within each project area. We also found that the Specific Objectives in the annual adopted Goals Plan are a mixture of very general statements and some specific projects. None have any timeline and most are stated in a way that it can be determined if and when the objective has been achieved. In light of the lack of connection between the goals for the project areas and the specific plans or documents, Citygate met with a variety of policy officials and staff and toured each of the project areas several times with a particular emphasis on past RDA projects, planned new activities, and areas yet to be redeveloped. It was clear to Citygate that the RDA could not clearly articulate the vision of what Redevelopment hopes to accomplish in transforming each project area over the next decade (or the remaining life of the project area if its expiration date is sooner). Individual projects could be cited, but there was no strong connection between the project and what catalytic role it would serve in redeveloping the area. The RDA does not have a plan for redevelopment of the Central Business District over the next decade and has not determined a process for establishing a plan. RDA participants are hopeful that the Arts District Study will result in a plan, but there is no strategy for how to accept and review the study and determine if that is an appropriate direction for downtown. The Agency should develop or reaffirm long-term measurable and visual master plans for each redevelopment area and develop specific goals that clearly reflect how the vision or master plan for each project area will be achieved, and develop specific, action-oriented and measurable objectives with specific dates anticipated. FIN Executive Summary—page 6 <I V ,.<111, TABLE OF CONTENTS Section Pare Executive Summary Executive Summary, page 1 A. Organization Structure 1 B. Staffing and Workload 3 C. Human Resources Management 3 D. Fiscal Management and Processes 4 E. Project Management 4 F. Planning: Strategic Plan and Annual Goals 6 G. Role of the Policymakers/Administration and City Departments 7 H. Action Plan 9 Introduction Section 1—page 1 A. The City of Salt Lake City 1 B. Redevelopment Agency 1 C. Study Background and Objectives 2 D. Study Approach and Work Plan 3 E. Organization of the Report 4 II. Organization Structure Section 2—page 1 A. Organization Structure 1 B. Staffing and Workload 4 C. Human Resources Management 6 III. Fiscal Management and Processes Section 3—page 1 A. RDA Budget 1 B. Accounting System and Fiscal Management/Control 2 IV. Project Management Section 4—page 1 A. Management Control Systems 1 B. Project Evaluation Process 2 RDA Support of a Project 3 Impact of an RDA Project 5 V. Planning: Strategic Plan and Annual Goals Section 5—page 1 O Table of Contents-i "raRrt flssa rs s �c G. ROLE OF THE POLICYMAKERS/ADMINISTRATION AND CITY DEPARTMENTS The Redevelopment Agency is a separate governmental agency, clearly distinct from the City of Salt Lake City. Under the current RDA By-Laws, there is no clear management oversight or direction of the RDA Executive Director due to the dual hiring/dismissal responsibility of the Mayor and the Board. The By-Laws do not clearly and unambiguously assign management responsibility to oversee the Executive. Because the RDA Executive Director has no clear reporting relationship and therefore has no individual who can provide feedback and advice on significant project and management actions, the Executive Director receives inadequate policy direction. The Board should formally assign day-to-day oversight responsibility of the RDA Executive Director on Board policy issues and agenda matters to the RDA Chair. This should involve consulting with regard to such things as day-to-day interpretation of RDA Board policy, agenda timing, content of staff reports, and the nature of staff presentations to the Board. The Board should clarify that the CAO has responsibility to oversee the day-to-day actions of the Agency, unless the CAO's direction concerning RDA actions conflicts with that of the Board The RDA Board exercises its influence over the RDA principally through the Board meetings as well through the Chair and Vice Chair of the RDA Board. Improvements that focus the meetings more on policy issues are possible. The agenda for monthly RDA Board meetings now gives equal weight to all project decisions, even if the matter is clearly routine, and it is clear the Board will approve the project or requested action. The Board meetings are lengthy and involve discussion of matters frequently delegated to staff in other public agencies. As a result, there is a greater likelihood that policy level discussions will not always receive the attention that should be devoted to these higher-level issues. The RDA agenda should contain a "Consent Calendar" section and the RDA should schedule a Board meeting to precede every City Council meeting for routine consent calendar type items only, and cancel the meeting if there is no business to be conducted. There is very limited organized communication between the RDA staff and the Board. The two principle communication tools are agenda items and agenda presentations and within the past few months, the Director has begun sending the Board members a weekly update. The Director also meets with the RDA Board Chair and Vice Chair, but has little communication with most of the remaining Board members. The result is that the Board has little opportunity to be updated on matters coming to them prior to the issue reaching the Board agenda. For many agencies, on- going progress reports insure that the Board is well educated on the general subject when the full detailed report is presented to them. Background discussion and information help the Board better understand the report, the policy issues, to identify the critical elements of the study and to more knowledgably participate in discussions. In exploring this communication issue, Citygate noted that the City Council Executive Director has frequent contact with Board members in their role on the City Council and has an excellent opportunity to understand whether Board members are adequately informed and the nature of the communications that works most effectively with each Board member. The RDA Director does not have as frequent a contact with the Board members and it is reasonable to expect that the RDA Director will not be as well informed or sensitive to the information needs of the Board, as evidenced by the uneven communication the Director has now with the Board. r'l Executive Summary—page 7 (Milt E A possible role for the Council Executive Director may be to meet regularly with the RDA Executive Director and assist in determining the nature, content and timing of communication with the Board and to coordinate written communication to the Board and recommend oral communication by the RDA Director and/or staff as appropriate. Other important constituencies for the RDA staff are the residents, businesses and property owners affected by the RDA. While the staff does recognize the importance of communicating with them, the small staff has neither formal training in citizen participation nor a formal process for involvement throughout a project and the use of survey instruments for feedback afterwards comparable to that used by the City Engineering Division. There is also no communication plan for involvement of people in the processes of setting RDA goals and objectives. The RDA should obtain the assistance of the Engineering Division or an outside consultant to develop a public participation process template, including the use of written surveys to assess redevelopment needs and reaction to RDA projects and the manner in which they have been processed and operated. As Citygate met with staff of both the RDA and the City, we heard anecdotal reports of the lack of coordination and cooperation from both parties. Often, part of the problem appeared to be a difference in perceived role and responsibility, in which the RDA saw its mission as development and its position as both a separate agency as well as a City partner deserving of special attention. The City departments saw their role as assisting the RDA, but consistent with the same rules that would apply to any other party developing a project in the City. This difference in perception is certainly not uncommon between city and RDA staff in various communities. The tension will likely always be present. Nevertheless, coordination with other departments at the lower staff levels of the RDA is an accepted responsibility by the RDA staff that makes a creditable effort to meet with and work out issues with their counterparts at the lower levels of City departments. However, while there are some coordination processes in place at the management level of RDA and City Departments, such as regularly scheduled meetings with the Community Development Director, these are sometimes ineffective because participants believe that occasionally critical information is not shared. Additionally, the Board is not always aware of alternate views by City departments, which should be considered by the Board from both the perspective of whether the RDA follows City rules and procedures as well as the perspective of any conflict between RDA action and City policies and goals. For every project before the RDA Board for approval, the Board should require written comments from any affected City department (most particularly Community Development, Public Services and Public Utilities) as part of the agenda report. The RDA Executive Director should be responsible for convening a Development Review Team meeting at the outset of and again prior to a project going on the Board agenda to insure that all City and RDA requirements have been addressed and there is agreement on the requirements that must by met for the project to proceed, the timeline to meet these requirements and responsibility for ensuring this is done. The RDA should hire a facilitator to assist the RDA and departments in defining the root of the coordination problem, cultural differences between organizations, and their approaches and any other communication and coordination mechanisms that might be helpful in addition to those recommended in this report. Executive Summary—page 8 Crt.t' << H. ACTION PLAN A list of our recommendations and a blueprint for their implementation are presented in the following Action Plan. This plan contains: • The priority of each recommendation • The suggested implementation timeframe • The anticipated benefits of each recommendation • The responsible organization. The legend at the bottom of each page of the Action Plan defines the level of each priority indicated by the letters "A" through "D". It is important to note that priorities have been established independent of the suggested timeframe. For example, a recommendation may have the highest priority (indicated by the letter "A") but may require an estimated six months to implement. Conversely, a recommendation with the letter "C" priority, which indicates that the recommendation is not critical but will improve operations, may have a two-month timeframe, since the estimated implementation effort would not require an extended period of time. It is also important to note that an "A" priority, which indicates that the recommendation is deemed "mandatory or critical," should not be interpreted to mean that the recommendation is "mandated" by a statute or regulation--it is simply an "urgent" recommendation of high priority. The timeframes indicated in the Action Plan do not necessarily mean the anticipated completion dates for the implementation of each recommendation. The responses from the City Manager and each department may indicate how much implementation progress can be made within the defined timeframes. Executive Summary—page 9 oncflrf�ss9ciares.ac • ✓act, r`ly ct • estfil yeh, �it:Q O ° x -Z • r. ° U ct U � � ° a.) OJ Ri U O bA cA O t .' bA`a--' = •N — O 'C cd Q bA 12) 5-4 O N U O� .fl O 'd = Q4'F i..,. ycip -b y CI* ° 'b ° cwC O L. 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M 2 § D , \ . 9 o < U © k o % ) « � � / \ Ri 3 2 \ '- ? @ 2 '- c ,_ .g - pl / ƒ � \ o \ � o � ' Q / / . § o 0 0 \ \ . 2 P4 /U W� § % 0 U § \ \\ Q 0 � - _ ° m « ' u o & a ill eq k 7 / E - / 2 ) � � en / / 0 k 0 _ � \ u » G 3 z c y c \ /\ - k § / © q / / R / 7 / { o © U -0 H U 0 0 •6 @ 00 \ E § 4 W § t 0 R § - \ / 0 C I / § # § \ \ \ u ..\ CC el .K o § / G �.S c = ® Ct ° M 2 / tt m E ' ® = E 0 E _ � R 2CI) \ U b = A Q § 2\ E § � ' s. ct - & q ° c § § A 4 o [ 2 8 § \ 0 ii § 0 •0 / 0 ,_ § _ & J m § G 0 § = t ,$ > § R /2 R C. 2 § § / E 0 Z � ./ % \ P. a Q 4 = Q c � § k / \ / § 2 " § k E = = q = SECTION 1-INTRODUCTION A. THE CITY OF SALT LAKE CITY Salt Lake City, with a population of approximately 180,000 and covering an area of 111 square miles, serves as the central city in the larger metropolitan area. It is a full service city functioning under the Council-Mayor form of government. The directly elected Mayor serves as Chief Executive Officer and directs the activities of the various City departments, while the City Council serves as the legislative body responsible for adopting policy through ordinances, resolutions, and adopting the annual budget and capital improvement program. As part of its policy setting and oversight function, the City Council periodically provides for a management review of the various City departments and divisions that report to the Mayor and provide day-to-day services to the community. These management reviews assist the City Council in their legislative role and provide useful information and recommendations to the administration of the City. B. REDEVELOPMENT AGENCY The Salt Lake City Redevelopment Agency is a separate agency incorporated under Utah State Code June 10, 1969. The Salt Lake City Council serves as the Redevelopment Agency (RDA) Board of Directors, who have adopted By-Laws designating the Mayor as the Chief Administrative Officer (CAO) of the RDA. The Board's responsibilities under the By-Laws are primarily policy. The RDA Executive Director is employed by the joint action of the Board and the CAO, with the day-to-day administration of the Agency performed by the Executive Director and the business and administrative affairs of the Agency under the general supervision of the CAO. The RDA staff consists of eight positions with the formal organization of the office reflected in the chart below: Executive Director Deputy a Director I Project Project Project Property Office Manager Coordinator Coordinator Manager Facilitator Administrative` Secretary II X Section 1—Introduction—page 1 .iv ' j ; ,; The RDA exists to improve blighted areas of Salt Lake City, encourage expansion of economic development and the employment base of the City, and encourage the development of housing for low and moderate-income households within the City. Some of the tools available to the RDA include: • Property acquisition, clearance, re-planning, sale or redevelopment • Planning, financing and development of public improvements • Gap financing in the form of loans, grants and equity participation to encourage private investment • Providing financing and contract oversight for projects which will improve blighted areas • Relocation assistance and business retention to business. There are presently six active RDA Project Areas and an aggregate RDA FY 2005-06 budget of $36,127,538, over 79 percent of which is supported by Tax Increment revenue. Project Area Year Created Central Business District 1971—extended 2004 Central City 1978 Sugar House 1986 West Temple Gateway 1987 Depot District 1998 Granary 1999 C. STUDY BACKGROUND AND OBJECTIVES Pursuant to the City Council and RDA Board policy to conduct periodic management reviews of City Departments and Divisions, the RDA Board chose to have a review conducted of the Redevelopment Agency. The principal purpose of the review is to assess the Agency's organization and management structure, staffing levels, workload, management control system, procurement, budgeting, human resource and asset management procedures, program effectiveness, record keeping, customer service/relations, plan and goals. In brief, the RDA Board is seeking an assessment of the current management systems and processes to determine whether there are changes that will improve the cost effectiveness of RDA programs. This project is intended to provide an independent, objective and rigorously analytical appraisal of the Redevelopment Agency. A number of dimensions were studied including organization, staffing, workload, fiscal management issues, plans and goals, communication among agency staff and with the Board, and measures of program effectiveness. The project expectation also includes suggestions, where warranted, for the creation of new methods and approaches, and the development of a plan to implement any necessary improvements. Upon completion of the project, the Board expects to have a good understanding of the structure, processes and Section 1—Introduction—page 2 management practices of the Agency, including recommendations for potential improvements in efficiency, effectiveness, responsiveness, and the quality of program outcomes. The end result of this study will be a report, including recommendations, provided to the Salt Lake City RDA Board, in order to help the Agency achieve its goals and objectives. The report can be used to strengthen and enhance the efficiency and effectiveness of the RDA in its endeavor to serve as a catalyst for economic development, provisions of housing for low to moderate income residents and the removal of blight in Salt Lake City. D. STUDY APPROACH AND WORK PLAN To address the objectives of the management review of the Redevelopment Agency, Citygate used an approach involving six tasks. Task 1 —Project Initiation and Management Our initial task involved a Kick-Off Meeting with appropriate RDA personnel, including Board Members, City and Agency staff. The purpose was to review and confirm our understanding of the project scope and objectives, task plan and project schedule, to review documents previously provided to Citygate by the Agency, and to obtain the initial assessment of Agency management on the principal issues in the "scope" of this management review. We also provided orientation material to the Agency, outlining the objective of the review and Citygate's approach to accomplishing the tasks. Task 2—Complete Initial Interviews and Related Data Collection Citygate worked with the RDA to develop an interview schedule that permitted us to meet with the working staff, RDA Board members, Advisory Committee members, City Departments, and customers/developers involved in each of the areas of interest in this review. We requested an extensive list of documents and work products, which were thoroughly reviewed prior to these meetings, thereby providing us with not only an initial understanding of the Agency processes and procedures, but also served as an excellent source for additional clarifying questions and requests for further documentation. Our familiarity with RDA operations allowed us to fairly quickly ask detailed questions regarding processes and procedures, to assess the RDA staff's familiarity with other alternative practices and their understanding of any shortcomings in their current processes and programs. Organization charts, budgets, staffing plans, forms, reports, records, work products, State Code and Agency By-Laws were all part of the review conducted with the outstanding cooperation of RDA staff. Tasks 3 through 5—Perform In-Depth Operational Analysis With the technical information gathered from Task 2, Citygate reviewed the organizational structure, answering a number of questions necessary in order to address the issues of interest to the RDA Board in their requested scope of work for this management review. • What is the organizational/management structure of the Agency in terms of: ➢ Who does what? ➢ What is the role of supervisors and managers? Section 1—Introduction—page 3 ;,v",, ,; ➢ What is the span of control and responsibility? • What does each of the employees do? • Is their overlap or appropriate coordination between employees and program areas? • How does coordination of tasks occur both within the Agency and with City Departments? • Are there alternative organizational arrangements that might provide greater coordination and improved effectiveness in achieving the goals of the RDA? • What are the staff needs both in the present as well as forecasted for the next decade? With this understanding of the structural processes and relationships we conducted an in depth analysis of the technical and process functions of the Agency to identify those functions where change might provide a noticeable improvement for the RDA. The study of the technical and process aspects of the Agency was used to analyze the project management structure, the process and content of program evaluation, planning activities, selecting and prioritizing projects and soliciting developer/property owner interest, policies and criteria for the use of RDA assistance on specific projects reporting to the Board, data and records management, fiscal management, customer responsiveness, and specific coordination structures/methods among the staff and with City Departments. Task 6 — Review Preliminary Findings with the Board Audit Committee, Prepare Final Draft and Final Report Prior to preparing a formal draft report, we met with an RDA Board Audit Committee to determine if there were any areas of interest to the Board that needed additional study. Several comments and questions raised during the discussion helped to shape the final draft report. The final task concluded with two steps. The first was preparation of a Draft Report for review by the Agency to ensure that all of the areas of interest had been adequately addressed and that Citygate appropriately understood the facts of each situation analyzed. With approval of the Draft Report, the second step was completion of the Final Report with any needed modifications. This Final Report contains an Action Plan that is a compilation of the recommendations developed in the management review. E. ORGANIZATION OF THIS REPORT The framework within which the RDA activities occur is the organization structure, staffing and workload of the Agency. The effectiveness of the staff in program management is initially shaped by the form and effectiveness of the organization and management structure. The first part of this Citygate report describes and assesses the organization, staffing and workload, and then addresses the more internal technical issues of fiscal management and project management. Finally, this report looks outside the Agency organization to address two broad areas: the status of RDA plans and the relationship between these and program effectiveness, and communication and coordination within the staff, with the Board and with City Departments. By looking first within the organization and then outward to the Agency relationship with others, we Section 1—Introduction—page 4 acknowledge that an effective RDA must have good internal structure, processes and adequate staff in order to effectively perform its role in the outside community. This role involves planning, communication and coordination with policy makers, developers, and City Departments that must support/implement RDA activities, and residents/businesses affected by RDA activities. Section 1—Introduction—page 5 SECTION 2-ORGANIZATION STRUCTURE A. ORGANIZATION STRUCTURE The Redevelopment Agency organization structure is classic in its form. The organization chart shown in the Introduction Section of this report is repeated here to clearly illustrate that the form appears to be the very flat organization format that is often recommended to enhance delegation of authority, facilitate and encourage self directed activity within a clear sphere of responsibility, and enhance staff job satisfaction. Executive_ Director Deputy Director Protect Project Project Property Office Manager Coordinator Coordinator Manager Facilitator Administrative A e Secretary The span of control does not exceed the traditional recommendation that no more than seven subordinates report to a supervisor. And so, from a cursory perspective, the organization form seems appropriate to the mission of an organization that relies upon project managers/coordinators to handle most aspects of an RDA project from inception through approval by the Board and then finally coordination of project implementation with the developer/property owner and/or City depaitiuents. The practicality of this organization form, however, is seriously affected by the experience/skill level of the individual employees and their capacity to act effectively on complex projects with a great deal of independence. Two of the project manager/coordinators have less than two years employment with the Agency and one has less than four years redevelopment experience. None of them have any prior experience with redevelopment or closely related work and have little knowledge/understanding of the fiscal structure of the RDA. Each has received their training within this organization, with little outside targeted technical training to supplement on-the-job experience. The result is that the Agency's project managers require substantially more supervision than the "flat" organization form implies. Complex projects and fiscal management are handled by the Deputy Director, who also is responsible for directly supervising and training WI ISection 2—Organization Structure—page 1 y,-m ;XE,. five employees. In practice, the Deputy Director also provides supervision to the Administrative Secretary position as well. The Deputy, as staff supervisor, has developed a semi-structured training program that assigns new employees a series of increasingly more complex and varied projects. This exposure to the on-the job training has resulted in productivity that keeps up with the current workload and rapid professional growth by new employees, although there is evident frustration over a perceived lack of mentoring for some people due to the heavy workload borne by the Deputy Director. There is also not a training plan that outlines technical education that would significantly improve their knowledge and expose them to policies, programs and procedures of other development organizations. Also, there is no training plan for more experienced employees. Continuing education is important not only to broaden their knowledge and flexibility of assignment within the RDA, but also to keep them abreast of changing laws and regulations. Finding: The Deputy Director has too large a span of control to provide adequate supervision and training to a relatively inexperienced staff, and to ensure that complex projects and Agency fiscal affairs are adequately managed. Finding: Agency training of new employees is principally on-the-job training and lacks a formal training component that recognizes the limited experience and knowledge of staff with little or no prior redevelopment related experience. Finding: There is only $5,000 budgeted in the RDA for"education" among 8 employees and no training plan for individual employees. On the organization chart, the one-to-one relationship between the Deputy Director and the Executive Director position implies that most of the Director's time is spent handling external affairs, including meeting with elected officials, major developers, community leaders involved in redevelopment planning and with City Department heads that interact with the RDA. In this organization form, the day-to-day activities of the Agency would be appropriately delegated to the Deputy Director, as they are in Salt Lake City, if the Director had little time to devote to directly managing the fiscal and personnel affairs of the Agency and be closely involved in the development of major projects. But, as will be discussed later in this report, the Agency does not proactively pursue the creation of projects, is engaged in almost no planning activities beyond the short-term planning to implement current programs/projects in current Project Areas, and has relatively little need to be involved in capital projects once they are turned over to the City Engineering Division for implementation. If all of these additional activities were taking place, there would be a need for a much larger staff and an appropriate need for delegation. In light of the current RDA workload and activities, there should be a substantial amount of time that the Director could devote to day-to-day agency management activities such as employee supervision and personnel management, training, fiscal affairs, and assisting in major project implementation. When an RDA Executive Director is working with the community, it is not uncommon for people to misunderstand what the Director says and restate or interpret that to the project manager in a way that benefits the developer or property owner. Not having been part of the discussion, the project manager does not directly know whether the statement of policy attributed to the Director is accurate, especially if it is at variance with standard Agency policy or procedures. However, close communication between the Director and the staff in a way that the Section 2—Organization Structure—page 2 staff perceive they can fully inform the Director of their activities, have a continuing agreement on policy and procedures for each project and are informed of contact in the community that affects the project, will allow the staff to perceive when they need to check with their supervisor to confirm what is accurate. The relative inexperience of the Agency staff contributes to the perceived difficulty in maintaining policy and procedure continuity, because they have not had the work experience to see and understand that in redevelopment activities there may need to be a wider range of acceptable procedures and criteria in some projects due to the project difficulty, high community profile, or importance as a catalyst project. And so communication between the Director and the staff is particularly important to make sure the Director and staff speaks with one voice in expressing policy and procedures on each project. This is not only good project management, but for this RDA, it is an important training tool. Responsibility for creating both an atmosphere of open communication and a process that encourages and provides for open and thorough communication is the responsibility of the Executive Director. Setting the tone and form of the organization is the responsibility of the leader and cannot be delegated, because in both large and small organizations, the staff looks to the leader for cues on how to function and communicate. Finding: Day-to-day Agency activities are delegated to the Deputy Director, including fiscal management and interaction with elected officials on specific project issues. The Director has not established an effective form of communication that is perceived as providing open and thorough communication and that keeps the Director and the staff adequately informed of each others activities so that the positions of the Director and the staff are congruent and represent a consistent Agency position on policy, criteria and procedures. While the Director holds staff meetings, the internal process of these meetings is neither perceived as providing the Director with an adequate knowledge of what the staff are doing, nor communicating to them the outcome of discussions with developers and others that might affect the project being managed day-to-day by the staff. Instructions received from the Director and Deputy Director are sometimes perceived to be substantially at variance with each other. As a result, there is not a great deal of staff confidence in the continuity of policy, criteria and procedure between projects. This is particularly important when the staff is relatively inexperienced and may not readily see and understand the value of varying policy on specific projects. Finding: The near total delegation of day-to-day activities to the Deputy Director, as represented in the current organization chart, is not appropriate in a situation in which all of the project manager/coordinators are relatively new to the redevelopment field and certainly is not necessary in light of the current lack of planning and major project activity in the Agency. Recommendation II-1: The Executive Director needs to meet frequently with the Deputy and staff to obtain detailed reports on their activities, to report conversations he has with applicants, and to delay giving opinions or making decisions on projects until he has consulted with Agency staff. Recommendation II-2: The project manager should attend all meetings with a project developer, including those with the Executive or Deputy Director and other departments. WM Section 2—Organization Structure—page 3 ,, � ;;" Recommendation II-3: The Director needs to share responsibility for day-to-day oversight of project managers/coordinators with the Deputy Director and improve the perceived value and functioning of staff meetings in order to improve communication and staff training opportunities. This should be accomplished by using a management facilitator to assist in redesigning the delegation of authority, communications between the Director and Deputy Director, communication among all of the Agency staff, and the form and functioning of staff meetings. Recommendation II-4: Develop an individual training plan annually in cooperation with each employee and budget sufficient funds to implement the plan. Recommendation II-5: Future vacancies in the Agency should be filled with people who have significant redevelopment experience with either a public agency or large real estate development companies. This will be particularly helpful if the Agency undertakes the task of reforming its goals and objectives, and develops a more clear and detailed long term vision for each project area, and considers forming one or more additional project areas. B. STAFFING AND WORKLOAD The RDA has taken very little initiative to create new projects or to proactively recruit developers to undertake key catalyst projects over the past few years. Instead it has been processing projects that have been "in the pipeline" for a while and are reacting to project interest and proposals from others in the community. As a result, RDA project activity is at a fairly low level. This explains why the present number and experience level of the staff is adequate to handle the currently active projects. Finding: No project was observed to be delayed due to staff workload and some project managers/coordinators indicated that they had the capacity to handle a little bit more work at this time. The experience level of the staff has significantly affected the workload distribution in the Agency. Over three-quarters of the projects (many of which are currently inactive due to lack of developer interest) are assigned to 2 of the 4 staff people (3 project manager/coordinators and the Deputy Director) who handle projects. The smaller number of projects is handled by the 2 staff members with the least years of experience, because they are trained through a structured series of projects of increasing complexity and variety. The potential workload on the two individuals assigned the greatest number of projects is simply unmanageable if even a quarter of the projects assigned to them become very active during the coming year. The less experienced staff could N Section 2—Organization Structure—page 4 �,;: �, << assist on these projects, which would be an excellent training opportunity, but the Agency staff would be seriously stressed in its ability to keep all of the projects on a schedule that would satisfy project proponents. Finding: The training program for new employees is significantly better than normally found in organizations that hire entry level positions, but the small size of the Salt Lake City RDA does not provide the opportunity to make up for this inexperience with other longer-term staff This means that an accelerated training schedule and formal training plan for each employee using a combination of the current on-the-job training and outside formal education/training/seminars would speed up the integration of new employees into the organization and permit them to take on a larger and more complex workload earlier than is presently occurring. There are two other important elements affecting staff workload and the nature of that work. The first is the Agency emphasis on small loans in each of the project areas. These take a substantial amount of staff time in spite of the small loan amount. And so the dollar volume of work in the Agency is not a good measure of the staff time necessary to do the work. The second is the fiscal future of the CBD. Even though CBD tax increment will only be available for use on new projects through 2008 and not again until 2015, workload in the RDA should shift during that period to planning the CBD area projects that can start up about 2015. Many projects have a long lead time and should be preceded by a substantial planning effort involving the RDA, various City Depai lments and many elements of the community. Finding: While their appears to be a temporary flattening of workload in the Agency with a little extra productivity possible, reducing the staff would result in a lack of capacity to handle three or four of the large projects that the Agency expects to "take off during the next year," would reduce the capacity to address many of the procedural and planning findings and recommendations raised in this report, and adversely affect the RDA ability to proactively plan activities in the CBD. Recommendation II-6: The RDA staff level should at a minimum remain where it is currently, but be monitored to insure that if large complex projects begin, there is the capacity to handle these, the small loan programs, planning for future RDA activities, and proactively seek developers for the catalyst projects in each of the Project Areas. The issue of staff training has been a consistent issue in this report, and it becomes important again when we look at the assignment of responsibility to provide financial planning and monitoring. The Deputy Director has handled these functions for many years, and as a result the Director has the Deputy prepare all of the reports and handle the financial issues with elected officials. The Deputy Director is the only one who fully understands and can prepare comprehensive fiscal analyses and forecasts for each project area. Citygate found that the Director had a general knowledge of the financial processes of the Agency, and while this is appropriate in a large organization and is sufficient knowledge to make policy decisions, it does not allow the Director to step in and backup the Deputy Director. And in the same way, the staff below the Deputy position does not have the knowledge or experience to understand the finances even at the level of the Director. Section 2—Organization Structure—page 5 ;,.";,, __� Finding: The RDA does not have the current staff depth or knowledge to provide financial planning and monitoring backup to the Deputy Director. Finding: The Agency needs Budget Manager skills to supplement the work of the Deputy Director and to relieve this position of some responsibility so that the Deputy can begin to turn more focus to planning the CBD, consideration of future project areas, and guiding the staff in proactively seeking developers for catalyst projects. Recommendation II-7: Hire a Budget Manager position that can also perform some project management as the Agency becomes involved in CBD planning, active in promoting future projects, and the establishment of additional project areas. C. HUMAN RESOURCES MANAGEMENT Organizing and managing people to accomplish work requires a set of well understood rules that provide the framework that is both a form of contract between the employer and the employee as well as the expectations regarding behavior by both the employer and the employee. Human Resources Management is often a department or division within an organization that maintains the rules adopted by the organization, implements many of the actions required by the rules and monitors compliance by others in the organization. This provides both consistency in the application of the rules and assistance to the other parts of the organization which are more focused on operations than personnel rules. Although the Salt Lake City RDA is a separate government agency, the overlap in governing bodies and daily administration makes it efficient to integrate the RDA into the City functioning as much as possible. Many RDAs simply function as another City department and use the financial, personnel, maintenance, purchasing and other services of the City seamlessly as if they were a City department and not a separate agency. In Salt Lake City this has been accomplished through the By-Laws and various resolutions adopted by the RDA Board. In 1978 the Board adopted a resolution making City personnel rules applicable to RDA employees. Finding: The language of the resolution does not incorporate all future amendments, and so arguably only the policies in place in 1978 apply to the agency and its employees. Recommendation II-8: The Agency should have the RDA personnel resolution reviewed by an attorney to determine whether an amendment is necessary to incorporate all past and future personnel rule changes. Citygate reviewed the RDA resolution and personnel related files and procedures and met with staff in the City Human Resources division to determine whether the RDA was complying with City Personnel Rules. We found that the RDA does not permit the Human Resources division to maintain the official personnel file on each RDA employee, as is required in the City Personnel Rules and that the personnel files do not contain a complete record of the personnel actions and evaluations for the RDA employees. Some of the specific deficiencies in the files include: FIE Section 2—Organization Structure—page 6 o -�s: .r u • Annual employee evaluations are not consistently documented. • Records requiring signatures are either missing or do not have all of the required signatures. • The documentation of employee probationary periods is incomplete, with no indication that probation has been completed by some employees while the limited records in City Human Resources indicates otherwise. • No record of follow-up on mid-point probationary review and confirmation of meeting in-house training requirements that are part of the probation period. A review of City Personnel Rules compared to RDA procedures indicates: • The RDA does not consistently comply with City employee probationary period procedures • Policies and Procedures for the maintenance of a working copy of the personnel files in the RDA do not exist, while an official hard copy of the personnel files is not maintained in Human Resources • An official copy of each employee's performance appraisal record is not maintained in Human Resources. Finding: The RDA does not consistently follow City Personnel Rules and Procedures and as a result neither the personnel files are kept in Human Resources nor are the RDA files complete and in compliance with City Personnel Rules. Recommendation II-9: Human Resources staff should be requested to work with RDA staff to construct and maintain as complete a personnel file for each employee as possible, with the original to be retained in Human Resources. Recommendation II-10: Human Resources should conduct a full and detailed performance review of RDA personnel practices, make recommendations for change that will bring the RDA into full compliance with City Personnel Rules, and then develop procedures in cooperation with RDA management to have RDA conform to all City Personnel Rules and procedures in the same manner as City Departments. One aspect of the City Personnel Rules that needs to be clarified with regard to its application to RDA employees is "Who is the appointing authority for RDA employees?" The rules appear to provide responsibility to the Chief Administrative Officer (Mayor) for the appointment and removal of all RDA staff except the Executive Director, although this power is subject to policies approved by the Board of Directors. No such policies have been found by Citygate, other than the City Personnel Rules. Under a normal line of authority, it would be assumed that the Executive Director would be reporting to the Chief Administrative Officer, who may delegate appointing authority responsibilities to the Executive Director. However, the RDA By-Laws provide dual responsibility to the Mayor as Chief Administrative Officer (CAO) and the RDA Section 2—Organization Structure—page 7 ;, ;. t, ,r. Board for the employment of the Executive Director. This creates an anomalous situation where the Chief Administrative Officer is the appointing authority for RDA staff who report to the Executive Director, but the Executive Director does not report solely to the CAO. This assignment of appointing authority to the CAO for all RDA staff creates a reporting/employment relationship that is inconsistent with the relationship between the Executive Director and the Chief Administrative Officer (Mayor) and the Board. Finding: Assignment of appointing authority responsibility for RDA staff to the Mayor as CAO is inconsistent with the reporting and employment relationship of the Executive Director, who has an equal employment relationship with the Mayor and the RDA Board. The Mayor appears to have employment control over the RDA staff while the Mayor shares employment control over the Executive Director with the RDA Board. Finding: It is unclear whether it was intended by the RDA Board for the City Personnel Rules to be the complete and exclusive policies and procedures governing the CAO's personnel actions with regard to RDA employees. The By-Laws say that the CAO's actions will be performed subject to policies approved by the Board. Recommendation II-11: The RDA Board should amend the By-Laws to make the RDA Executive Director the appointing authority for RDA staff and direct that such authority be exercised fully consistent with City Personnel Rules and procedures. r' 111 Section 2—Organization Structure—page 8 SECTION 3-FISCAL MANAGEMENT AND PROCESSES A. RDA BUDGET A budget document serves the most effective purpose if it relates the policy direction and choices for the elected officials, clearly relates fiscal information to those policy matters, and provides an easily understood picture of both the current financial status and proposed fiscal actions for the coming year. Citygate reviewed the RDA budget document from this perspective and compared it to other documents with which Citygate is familiar, some of which have received MFOA (Municipal Finance Officers Association) awards for complying with Best Practices endorsed by MFOA. Finding: The RDA annual budget reviewed by the Board is essentially an accounting document that does not contain information regarding the policy goals, specific measurable objectives, a description for each of the project line items, and importantly a Capital Improvement Program comparable to what is part of the City budget. All four of these components are critical to establishing an integrated picture of the policy path the RDA plans to follow in the coming year and its relationship to Board policy goals and objectives. While new projects may come along that were not anticipated and other projects may proceed more slowly, change can be accommodated through budget amendments or reports to the Board while still leaving a comprehensive picture of the planned RDA activities for the year. The Board reviews and approves goals and objectives each year but there is not a document available to them at that time which directly relates the fiscal future of the RDA to the goals and objectives. Furthermore, the RDA goals and objectives are not contained in the budget document where they could be related to the RDA financial plan. Finding: There is no documented relationship between Board adopted policy goals and objectives and the annual budget or long term fiscal projections for the RDA. Citygate also reviewed the periodic fiscal updates received by the Board and found them also to be largely accounting documents that would be difficult to use for those not intimately familiar with both Government Fund Accounting and RDA accounting in particular. As such they do not serve well to keep either the Board or the public informed of the fiscal status and plans of the RDA. Finding: Mid-year fiscal updates for the Board are not user friendly documents easily understood by those not well familiar with the RDA finances, and as such it is difficult for the updates to facilitate the Board effectively performing its role of fiscal oversight and monitoring the relationship between the fiscal status of the RDA and Board adopted goals and objectives. Recommendation III-1: The RDA Budget should be reshaped from its present accounting document format to a policy document containing goals, measurable objectives, a CIP, clear line item operating budget detail and project descriptions. ■ Section 3—Fiscal Management—page 1 Recommendation III-2: Periodic budget status reports should be restructured to provide a visual summary of the status of each project area, with detailed reports as backup for those interested. The detailed reports should be designed in cooperation with the Board to provide a report that is easily read and provides the information the Board will find useful. B. ACCOUNTING SYSTEM AND FISCAL MANAGEMENT/CONTROL Management of the RDA finances is the responsibility of the Deputy Director who has an excellent understanding of the month-to-month, annual and multi-year projected financial condition of the Agency and accurately reflects this on reports. However, as noted in a previous section of this report, there is no staff backup to the Deputy Director and the amount of time this responsibility takes conflicts with other delegated responsibilities. The Deputy position is clearly overburdened so that some tasks such as Personnel Management and employee training are not conducted as effectively as they should be. Some of the personnel and fiscal management work of the Deputy is effectively the responsibility of the Director, who has delegated these matters to the Deputy. However, it would normally be expected in an agency of only 8 employees that the Director would take personal responsibility for personnel management including participating in employee evaluations, mentoring employees by participating directly in some project activities, and assisting in developing and presenting Board presentations with individual staff people. It would also be expected that the Director participate directly in most financial activities in order to be a seamless backup to the Deputy Director in RDA financial matters. Finding: The Deputy Director position is over-burdened with personnel and fiscal management work, some of which should be the responsibility of the Director and which should be done by the Director, including participating in employee evaluations, mentoring employees by participating directly in some project activities, assisting in developing and presenting Board presentations with individual staff people, and participating directly in most financial activities in order to be a seamless backup to the Deputy Director in financial matters. The City Finance Division provides the automated accounting services for the RDA, and as a result the RDA records conform to the City form in terms of the chart of accounts, the nature of the reports, how bills are paid and the expenditures recorded, and the receipt of revenue. Other than the comments in the sections above regarding the format of the RDA budget, the finance services appear to be adequate for staff level fiscal management of the RDA. However, the financial reports and records of the RDA are useful and understandable to those managers and staff who are very familiar with the financial rules, processes and projects of the Agency. However, they are not easily understood by people external to the RDA staff, because they contain too much information and require coordinating different pages of financial data in order to clearly understand the Agency's financial status. There is no adequate summary report available that focuses on the key financial data so that the more detailed reports might serve as backup for those interested in more extensive information. Section 3—Fiscal Management—page 2 Management of the loan portfolio, in the opinion of the RDA staff, requires updated data on a frequency which the normal City reporting cycle will not provide, and so the RDA maintains an in-house record of expenditures on "Quicken" that provides a necessary more timely view of the Agency's financial situation, particularly with regard to loans. This record also permits the RDA staff to catch errors in either their records or the City Finance records more quickly and results in more accurate/reliable financial reports. This system appears to work well for the RDA staff and Citygate sees no reason to change it. Finding: The City finance system serves the RDA well, and where more timely information is needed, this is effectively provided to the RDA staff through "Quicken" Reports which are maintained by the staff Finding: There is very good fiscal control of RDA financial affairs at the staff level, but the reports are not user friendly and so not easily used for oversight by the RDA Board or the public. Recommendation III-3: Financial reports should be developed that summarize the Agency financial status at a level that provides meaningful oversight for the Board, focuses on key financial data, and is developed in conjunction with the Board so the reports are easily and quickly understood and used. Recommendation 111-4: The Executive Director should assume responsibility for Personnel Actions (including evaluations, training plans, and mentoring of employees, and also assume formal responsibility to be trained as the backup for day-to-day fiscal matters of the Agency and preparation and maintenance of the annual budget and periodic fiscal reports. E Section 3—Fiscal Management—page 3 ,, ,; SECTION 4-PROJECT MANAGEMENT The RDA is involved in several general types of projects: Construction of buildings and other improvements by either a developer/property owner or the RDA, small loans to renovate existing buildings, public improvements or infrastructure necessary to permit the appropriate development of land, and development of plans for existing or new Project Areas. Each type of project requires a different project management approach by the Director and Deputy Director, who are RDA management in this small Agency. • Developer/property owner projects involve shepherding the project through various City Departments during the design process, assessing the need for financing and working with the developers financial resources to ensure the project is adequately financed, shepherding the project through the construction permit process and then assisting as needed during construction and final approval of the development. A project manager is usually assigned to oversee a project from beginning to end and RDA management needs to be informed of progress and problems so that the project is continually reviewed to insure it meets RDA procedural and content requirements including conformance to RDA Board approved master plans. • Small loans also will be shepherded by a project manager, who can do so with greater independence because the consequences of error are normally much less than on larger projects. RDA management oversight of small loan activity can be much more cursory. • Public infrastructure activities are actually turned over to the City Engineering Division for design and construction, with an RDA project manager overseeing the work to insure design conforms to RDA Board approved plans and that the fiscal aspects conform to the RDA budget. For these projects the Deputy Director often provides the oversight and may attend Engineering Division meetings. Project management here involves the direct involvement of RDA management. • Development of RDA Project Area plans has the direct involvement of the Deputy Director and the Director. Goals and objectives are initially prepared by or under the immediate direction of the Deputy Director. Project management, here then, is direct involvement by RDA management. A. MANAGEMENT CONTROL SYSTEMS The outline above of the different types of projects and associated project management only provides a quick overview of RDA management's role in each type of project. The real issue is whether or not there are control systems to monitor progress on each type of project. In large organizations control systems need to be more complex and involve status reports and meetings at progressively higher levels of the organization when there are project problems to solve. In a small organization such as the Salt Lake City RDA with only 8 employees, project control more often can involve weekly general purpose staff meetings, direct one-on-one interface between the RDA management and the Agency's project manager/coordinator assigned a project and relatively simple schedule and milestone reports. FPN Section 4—Project Management—page 1 a.y` , While the Agency does maintain a list of projects and assignments, there is no documented or structured reporting process to keep RDA management informed and no established key milestones for each project to serve as a scheduling mechanism. A reporting process and milestones are early warning devices to identify delays that may be caused by problems or roadblocks that can be addressed and resolved. The principal project control mechanism to keep the Director informed of project status is staff meetings. However these are perceived by the staff as not structured in a way to insure adequate communication of necessary status, policy and procedural information both up and down. Conflicting instructions are perceived as being given by the Director and Deputy Director, leading to confusion on the part of some staff regarding what the appropriate policy and procedure will be and the criteria to determine when current policy and procedure will apply to specific projects. The Section of this report on Organization Structure explored this issue as well and contains recommendations. Written policies and procedures were reviewed. Some have been reviewed by RDA staff and updated over the past two years, but many were found to be outdated and to have been superseded by supplemental procedures and "personal knowledge." Most of the procedures themselves do not have publication date to indicate if they incorporate the latest changes. Most of the RDA policies, as approved by the Board, date back to the mid to early 1990s with some as old as 1983 and 1978. Some are outdated because they did not include language incorporating subsequent amendments by the City or a regulatory agency such as HUD. Finding: RDA policies and procedures are outdated and do not provide effective written guidance to the staff, leading to a slower learning process for new employees and some uncertainty regarding how policies and procedures are to apply to particular loans and projects. Recommendation IV-1: The RDA staff should establish a schedule and assign responsibility to revise all of the remaining outdated policies and procedures and include these in a formal policy and procedure manual with a responsible custodian to review them with the staff for accuracy at least every two years. Even with the lack of clarity in communication, policies and procedures, work is being accomplished in a timely manner and the end product of the work is good, because the current workload is not overwhelming. Finding: RDA Projects are being accomplished on a reasonable schedule, largely because the current lighter workload allows for organizational inefficiencies; and the end product of the work is good. Additional findings and recommendations concerning communications in the RDA are covered in the Report Section on Organization Structure. B. PROJECT EVALUATION PROCESS Project evaluation has two sides to it. First is the evaluation of whether a project should be supported by the RDA with staff effort and possibly financial assistance. The second is Section 4—Project Management—page 2 ;, :'•; evaluating whether a project or series of projects are meeting the goals and objectives of the RDA. RDA Support of a Project The RDA determination of whether to support a project is not based on any clear set of guidelines. Since the Agency is largely reactive and responds to proposals by those seeking to develop, the Agency applies two sets of passive criteria. The first is a very general determination of whether the project fits within the Master Plan for the Project Area, without a corresponding determination of how this projects ranks in priority among other possible projects. Funding and staff time may be allocated to a project because it has "come in the door" without determining whether this would siphon away finding and staff assistance from a later project that might be of much higher priority and with greater catalyst potential. The second criteria are whether a loan applicant meets the Agency underwriting standards. In other words, will the work on the project produce enough additional assessed value and income to secure the loan and provide reasonable assurance that the applicant can make the payments? There are no clear written guidelines regarding this underwriting evaluation, which leaves applicants unsure regarding their qualification until the staff makes an independent judgment. Without comprehensive guidelines, there is no opportunity to make findings establishing why a loan should be approved even if it falls outside of the guidelines. Findings would provide a basis for public understanding that RDA actions are based on goals and objectives and not influence and/or poor judgment. This passive approach to determining whether to support a project does not include two important elements in project evaluation. The first is an analysis of the Cost and Benefits of the Proposed Project and the second is to conduct a Market and Financial Assessment to determine if the project will be a financial success. A Cost/Benefit Analysis takes into account both direct and indirect costs and benefits, and so a project may be very well worth supporting even if it does not directly return direct benefits that offset financial cost. In fact a project might be public infrastructure or service project that will return no direct financial dollars to the Agency or the City but it may be a key physical link between other aspects of redeveloping a Project Area or it may be a catalyst project that will generate a lot of private investment in the area. Too often Redevelopment Agencies simply assume that there is a positive cost/benefit outcome without conducting a rigorous analysis. Many times the analysis does not have to be expensive or time consuming, but does need to be structured and the analysis provided to the RDA Board as part of an agenda package where the Board will consider approving support for a project. Exhibit I to this report is a discussion of the "Analysis of the Costs and Benefits of Proposed RDA Projects." The exhibit provides a basis for the RDA to develop a template for assessing Cost/Benefit prior to project approval. A template for analysis is only a guideline or outline that helps insure that many aspects of a project are examined, but the analysis should be shaped to the specific nature and location of project. Since a Cost Benefit Analysis is a best practice used by RDAs, we have prepared a description of this best practice for other RDAs, and present this best practice in Exhibit I at the conclusion of this report. Section 4—Project Management—page 3 ME;.,WE Conducting a Market and Financial Assessment of a project is an expanded and more structured version of the process now followed by the Salt Lake City RDA in examining whether a project is financial strong enough to make repayment of its RDA and private financing. Is there a market for the project and will income be adequate to repay any loans? Exhibit II of this report is a discussion of Market and Financial Assessments, which is also a best practice of RDAs. Whether the assessment is fairly quick and easy and completed by in-house staff or more extensive and completed by consultants expert in the particular type of project, every RDA project should be accompanied by an assessment that is part of the agenda package where the RDA Board will consider assisting a project. A template developed from the discussion in the attached will help the RDA formalize the process and insure that all factors are considered and presented to the Board as well as help the staff determine whether the analysis can easily be accomplished in- house. The limited number and experience of the RDA staff now results in fairly minimal market and financial assessment being done on projects. Finding: The RDA is not conducting more than a minimal informal cost/benefit analysis and market and financial assessment of recent RDA projects and relies instead upon the passive criteria of whether the project meets the broad goals of the Project Area and meets general loan underwriting criteria to determine whether to approve a project. Finding: While the staff standards appear to be adequately conservative in their loan approval determinations, providing a secure position for the RDA, there are not comprehensive written guidelines regarding whether or not to approve a project loan. In other words, will the work on the project produce enough additional assessed value and income to secure the loan and provide reasonable assurance that the applicant can make the payments? These can be very helpful to the staff, the Redevelopment Advisory Committee (RAC) and the Board in determining if a loan application falls within an acceptable range. Presently there are no findings that a loan outside of the guidelines meets an overriding RDA objective. Recommendation IV-2: The RDA should develop a general template for a Cost/Benefit Analysis and a general template for a Market and Financial Assessment of each RDA project and insure that these are separate and formal elements of each agenda package when the Board considers approval of a project. Recommendation IV-3: As part of a Market and Financial Assessment template for projects, the RDA should develop specific guidelines to assist in determining whether to approve a loan application. If a loan falls outside of the guidelines, then approval should require first that specific findings be made by the recommending staff and/or Redevelopment Advisory Committee and findings made by the Board establishing that the loan meets some overriding need or objective of the Agency to warrant the additional financial risk. Section 4—Project Management—page 4 ;,v«'.Ai't ,; In order to assess whether projects are being successful in meeting the overall goals of the Agency, there needs to be some evaluation process that determines the impact of the project on the project area. Did the project have the anticipated impact? Impact of an RDA Project While the RDA has a Master Plan or Project Area Plan for each project area, the plans do not contain objective or observable subjective standards by which to measure the success of individual projects. The fact that businesses open or expand, jobs are created or blighted land redeveloped is insufficient as an evaluation, because it does not tell what the degree of impact is and whether that impact warranted the use of RDA money on the project or was there a project of greater catalytic value that could have been supported. In 2004, an "Economic Impact Assessment of Redevelopment" report was completed by Economic Research Associates (ERA). They examined each project area and listed the adopted goals, described the agency investment in projects, listed other public and private investment in the area that has occurred during the life of the Project Area, and showed the change in assessed valuation during the study period. The ERA report was handicapped by a number of factors. • The Agency goals are not measurable but instead are very general statements such as "preservation of historic buildings" and "enhancing the quality of public space and structures." With these goals, it is not possible to tell the degree to which the objective was met. Is a little bit of historic preservation adequate and representative of satisfactory work by the RDA? • While the report describes projects that have been completed, there is not a before and after picture of the number of jobs, manufacturing, retail sales that are typical measures of economic improvement. The ERA report could not address these measures either on a project-by-project basis or even in short time periods for the total Project Area because there is no base line of information against which to measure progress. • Assessed value is not shown in constant dollars, nor is there a measure of change in assessed value on individual projects as a result of RDA activity. Per Capita income, home prices and population below poverty level are also measures used in the report that do not separate out the impact of the RDA from the impact of the larger economy in order to assess the value of RDA activity. Finding: The RDA does not have adequate measures by which to evaluate the impact of RDA projects. Recommendation IV-4: In order to assess the impact of RDA activity, the Agency needs to establish objective or subjectively measurable goals and objectives that the Board and the public will be able to use to clearly determine if the goals/objectives have been met by a project or a small collection of projects. These should be an integral part of each Project Area Plan and each project approval. " 5 Section 4—Project Management—page 5 `•,; Even if a project has the potential of significant positive impact on the Project Area, the RDA resources are limited. Since the RDA is largely reactive and does not seek developers for projects that have the greatest potential for a high impact (catalyst projects), it does not ask the question of whether a project will proceed "without RDA financing." Obviously, if a developer wants to undertake a project and can get lower cost financing through the RDA, it makes sense for the developer to make an application for funding. The RDA Economic Incentive Policy requires applicants to submit an explanation of why they need RDA assistance to complete the project when tax increment financing is considered. Although the Utah State Code does not require a finding that RDA financial assistance can only be used in the case where "But for" this assistance the project would not go forward, the Agency currently uses a "But for" test on construction loans and approves all other applications for assistance if 1) the funding is available, 2) the project meets the general goals and specific objectives of the Agency and 3) the applicant/project meets the criteria used to determine if an applicant/project is financial sound and able to repay an RDA loan (most RDA assistance is in the form of a loan). Not having a "But for" criteria means that the Agency is more likely to be simply responding to project applications rather than proactively seeking projects that would most effectively fulfill the vision, goals and specific objectives of the Agency and it means that funding is being committed without considering priorities regarding what projects/locations would be of greatest value to develop as a catalyst to redevelopment. Finding: An important criterion for evaluating the appropriateness of RDA support for a project is the question of whether the project would proceed even without RDA funding. In light of the extensive private investment documented in the 2004 ERA Economic Impact report, RDA support is frequently not necessary as an inducement to private investment. Recommendation IV-5: The RDA Board should require all applicants for financial assistance from the Agency to establish to the satisfaction of the Redevelopment Advisory Committee and Board that the project can not go forward without RDA assistance or would not go forward at the size and complexity desired by the Agency because financial assistance from some other source is not available or such assistance has terms or conditions that would make the project not financially viable. Section 4—Project Management—page 6 _, SECTION 5-PLANNING: STRATEGIC PLAN AND ANNUAL GOALS Cities usually have a Master Plan that sets out a picture of how people want the community to look when it is nearly"built out" as a mature city. But these plans are at a level of generality that they do not help elected officials know from year to year how to prioritize the use of scarce funds to undertake work which will ultimately help the City attain its Master Plan vision. The year-to- year activities are often guided by the adoption of general goals that address various elements of the Master Plan and Specific Objectives that are particular projects or actions the City plans to undertake. A Redevelopment Agency is an important tool in a city's effort to achieve its Master Plan. The Agency will adopt some form of Master Plan for each Project Area that helps transform the area into the vision imagined in the City's Planning. But as with City-wide Master Plans, these planning efforts are usually general in nature; and so the choices made by the RDA Board each year need to be guided by the annual adoption of goals that address sub-elements of the Project Area plan and specific objectives that state the particular projects or actions the Agency will take in the coming fiscal year. The goals and specific objectives serve several purposes. First, the goals help the RDA Board determine if proposed budgets and particular projects and Agency actions really will further the vision contained in a Project Area master or strategic plan. Does the goal express an intent that is consistent with the overall vision for the area? If the Agency achieves the goal will the vision have been significantly implemented? Citygate reviewed the recently adopted RDA goals and found that the form of each goal was appropriate, but for most goals there was no obvious connection to any City or RDA plan or document, leaving the impression that there is not an overall Strategic Vision for Redevelopment as a whole or within each project area. Some of the goals list the related city document or plan, while most of them stand alone, with the reader left to assume, but not know for sure, that the goal relates to a plan. Finding: Recently adopted RDA goals for each project area do not reference the relevant plan which the goal is intended to implement. This type of formal documented connection helps the Agency continually "check back" to ensure its path is consistent with the original master plans for the project area. Recommendation V-1: Each goal adopted by the RDA should reference the particular Master Plan and portion thereof which is being implemented by the goal. The second major purpose is actually served by the specific objectives that implement the goals. While stating particular projects or Agency actions, they then serve as specific direction to the staff', an allocation of that fiscal year's staff time and agency financial resources, and finally as a way of monitoring the staff progress toward achieving the specific intent of the RDA Board. In order for specific objectives to serve these three functions well, they need to be stated in a way that the Board can clearly see whether the specific objective was achieved on time. In other words each objective needs to have an estimated completion date and be stated in a way that the Section 5—Planning—page 1 Board can count/measure or physically see that the objective has been met. Something has been built. A design has been completed. Attendance at events has increased by a target percentage. Some of the objectives adopted by the RDA partially meet this criterion. For example, Objective 2A in the Granary District reads: "Prepare applications for funding to remove rails and reconstruct 400 West from 600 South to 900 South"; Objective 4B reads: "Acquire a large parcel for commercial or mixed use development. " Both of these objectives are specific enough that the Board can determine whether or not they have been accomplished. But without a targeted completion date, the Board cannot tell during the year whether reasonable progress is being made and if problems are occurring which either require Board action to insure the objective is met or events over which the Agency does not have control will delay the project and require a new target completion date. Without completion dates, the Board will have difficulty exercising oversight of the Agency activities. Other objectives are far more general. Objective 4a in the Depot District reads: Market Depot District housing program. " And Objective 2B for Capitol Hill reads: "Market Neighborhood Business Loan Program. " The language of both objectives is so general that any activity at all might be argued to have met the intent of the Board. A more appropriate wording would state what specific marketing activity is going to be undertaken and by what date? Additionally will that activity involve a certain number of meetings or contacts with property owners, and if so this measurement could be included in the language of the objective. Similarly, Objective IB for Capitol Hill reads: "Promote Residential Renovation Loan Program and partner with the City Housing Division to rehabilitate existing housing stock to assure long term viability. From the language of this latter objective it is impossible to determine if the objective has been met because the language provides nothing to objectively or subjectively measure an outcome. It is interesting that this objective contrasts so sharply with the immediately preceding Objective 1 A for Capitol Hill that reads: Complete construction of eight new town homes on 700 North 300 West properties to increase homeownership through construction of new housing opportunities. " Except for the absence of an estimated completion date, this specific objective serves well to inform the Board of what particular tasks will be undertaken by the RDA staff and how to measure the outcome. Finding: The Specific Objectives in the annual adopted Goals Plan are a mixture of very general statements and some specific projects. None have any time line nor are most stated in a way that it can be determined if and when the objective has been achieved or how the objective assists in accomplishing the vision for the relevant project area. In light of the lack of connection between the goals for the project areas and the specific plans or documents, Citygate met with a variety of policy officials and staff and toured each of the project areas several times with a particular emphasis on past RDA projects, planned new activities, and areas yet to be redeveloped. It was clear to Citygate that the RDA could not clearly articulate the vision of what Redevelopment hopes to accomplish in transforming each project area over the next decade (or the remaining life of the project area if its expiration date is sooner). Individual projects could be cited, but there was no strong connection between the project and what catalytic role it will serve in redeveloping the area. This catalytic role is critical because the RDA not only does not have sufficient resources to be the sole source of development, but the 2004 ERA report emphasizes the additional private investment that has occurred in each area. Creating an environment that attracts private investment that does not need Agency financial assistance is a key role of the RDA. This shortcoming was particularly evident for the Central .. frit Il Section 5—Planning—page 2 c,� g;`t.. Business District in which it was generally acknowledged that a new downtown plan needs to be developed and maybe the Arts District Study will be the central focal point for that plan. Finding: The RDA cannot express clearly the vision it has for redevelopment of each Project Area,particularly over the next decade. Finding: The RDA does not have a plan for redevelopment of the Central Business District over the next decade and has not determined a process for establishing a plan. RDA participants are hopeful that the Arts District Study will result in a plan, but there is no strategy for how to accept and review the study and determine if that is an appropriate direction for downtown. Finding: The RDA does not have a clear understanding of what projects and RDA actions are of highest priority to serve as a catalyst in redeveloping each project area. Recommendation V-2: Develop or reaffirm long-term measurable and visual master plans for each redevelopment area that makes clear what the vision is for both redevelopment of the project area and for a catalyst effect on the surrounding area. Recommendation V-3: Develop specific goals that clearly reflect how the vision or master plan for each project area will be achieved, and develop specific, action-oriented and measurable objectives with specific dates anticipated for accomplishment to be adopted annually by the RDA Board. Recommendation V-4: Goals and Specific Objectives for the RDA should be developed at a Board retreat and then further discussed and adopted after the staff has put them into a formal format, providing whatever details (such as timelines) were requested as additional information by the Board. Section 5—Planning—page 3 NM E;., SECTION 6-ROLE OF THE POLICYMAKERS/ADMINISTRATION AND CITY DEPARTMENTS The Redevelopment Agency is a separate governmental agency, clearly distinct from the City of Salt Lake City. This is reflected in both the State Code and the RDA By-Laws. Yet with a staff of only eight people, the RDA relies upon City Departments to provide support services and actually "implement" the actions proposed by the RDA. For instance the City Engineering Division implements RDA infrastructure projects and Housing works in consort with the RDA to implement housing projects. Finance, personnel, purchasing and information services are other City functions that support the RDA. The fact that the RDA is both a separate government agency and yet receives services through the, City creates an interesting relationship that is discussed in this section of the report. A. ROLE OF THE BOARD AND ADMINISTRATION The City Council serves as Board of Directors of the RDA and in that role adopts By-Laws. The Board has chosen to have the Mayor serve as Chief Administrative Officer of the RDA, with the RDA Executive Director in practice reporting to the CAO. As discussed elsewhere in this report, the Board and CAO share responsibility for employing the Executive Director, while the CAO acts as appointing authority for the remainder of the employees. Although some have suggested that it is not clear that the CAO has appointing authority, Citygate's reading of the By-Laws supports the view that the CAO is the appointing authority and in practice employment actions are generally conducted as if this is the case and for the most part consistent with City Personnel Rules. With regard to the Executive Director, the By-Laws in Article III, Section 4 details the role of the CAO, while in Article IV, Section 7 uses language giving the CAO only "general supervision" authority over the "administrative and business affairs of the Agency." In the Human Resources Management Section of this report, Citygate has suggested that the RDA Executive Director be designated as the appointing authority over the RDA staff, to be exercised consistent with all City Personnel Rules and Procedures. Finding: Under the current RDA By-Laws, there is no clear management oversight or direction of the RDA Executive Director due to the dual hiring/dismissal responsibility of the Mayor and the Board. The By-Laws do not clearly and unambiguously assign management responsibility to oversee the Executive. Finding: Because the RDA Executive Director has no clear reporting relationship and therefore has no individual who can provide feedback and advice on significant project and management actions, the Executive Director receives inadequate policy direction. Recommendation VI-1: The Board should formally assign day-to-day oversight responsibility of the RDA Executive Director on Board policy issues and agenda matters to the RDA Chair. This should involve consulting with regard to such things as day-to-day interpretation of RDA Board policy, agenda riV Section 6—Role of the Policymakers—page 1 o I timing, content of staff reports, and the nature of staff presentations to the Board. Recommendation VI-2: The Board should clarify that the CAO has responsibility to oversee the day-to-day actions of the Agency and its receipt of services from City Departments, unless the CAO's direction concerning RDA actions conflicts with that of the Board, in which case the Board's view should prevail to ensure that there is ultimately a single chain of command for the RDA. The RDA Board exercises its influence over the RDA principally through the Board meetings as well through the Chair and Vice Chair of the RDA Board. These latter meet regularly with the Director. However there is dissatisfaction both on the part of the Board as well as the staff in the content/form of the RDA Board meetings. Citygate reviewed meeting agendas and minutes and discussed the meetings with both elected officials and staff. Citygate found that there is no consent calendar for the monthly Board meetings, resulting in routine matters often being given a level of attention much the same as for non-routine or higher policy level matters. Finding: The agenda for monthly RDA Board meetings gives equal weight to all project decisions, even if the matter is clearly routine; and it is clear the Board will approve the project or requested action. Finding: The Board meetings are lengthy and involve discussion of matters frequently delegated to staff in other public agencies. As a result, there is a greater likelihood that policy level discussions will not always receive the attention that should be devoted to these higher- level issues. Finding: Since, RDA Board meetings are only held monthly, even routine items may be delayed in approval if the next scheduled meeting is three or four weeks away or is cancelled for some reason. Recommendation VI-3: The RDA agenda should contain a "Consent Calendar" section where items that are commonly understood to be routine are included along with an action recommendation by the staff. The items that are to be included on the Consent Calendar would be approved by the RDA Chair and Vice Chair. Recommendation VI-4: The RDA should schedule a Board meeting to precede every City Council meeting for routine consent calendar type items only, and cancel the meeting if there is no business to be conducted. A monthly separate Board meeting would then be held to consider matters that require more extensive presentation and discussion. Section 6—Role of the Policymakers—page 2 WE I= B. COMMUNICATION AND FEEDBACK PROCESSES AND TOOLS There is very limited organized communication between the RDA staff and the Board. The two principle communication tools are agenda items and agenda presentations and within the past few months, the Director has begun sending the Board members a weekly update. This letter alerts them in a short two or three line note to the status of a variety of issues and projects that the Director feels might interest the Board. The Director also meets with the RDA Board Chair and Vice Chair, but has little communication with most of the remaining Board members. The result is that the Board has little opportunity to be updated on matters coming to them prior to the issue reaching the Board agenda. An example of a major issuing being handled by the RDA staff with little Board input or progress briefing is the Downtown Art District Study. While a draft of the report has been prepared, the full Board had not received periodic progress briefings or been given an opportunity to discuss some of the major policy matters inherent in such a study in order to provide the consultants and staff with insight from the Board members. For many agencies, such on-going progress reports through longer memos and discussion items on the agenda are fairly routine and ensure that the Board is well educated on the general subject when the full detailed report is presented to them for discussion and policy decisions. Background discussion and information help the Board better understand the report, the policy issues, to identify the critical elements of the study and to more knowledgably participate in discussions. Another example is the lack of progress reports on the Board adopted goals and objectives. While this annual goal and objectives policy document should be the critical element providing direction to the staff for preparation of the budget and allocation of resources and staff time, there is no report back to the Board after adoption of the budget regarding whether the staff is actually pursuing the objectives or how successful they are in attaining the objectives. An earlier section of this report discussed the shortcomings of the goals and specific objectives as presented to and adopted by the Board. The lack of clear objectives that are objectively or subjectively measurable and with target dates for completion does not give the Board an opportunity to monitor whether or not the Agency is actually doing what the Board directed or being successful in its efforts. The City Council Executive Director has frequent contact with Board members in their role on the City Council and has an excellent opportunity to understand if Board members are adequately informed of issues that will come before them and also to understand the nature of the communications that work most effectively with each Board member. The Council Executive Director performs a very active role in identifying information and issues that the Council needs to be briefed on and kept informed of progress on, and in getting information to the Council with appropriate analysis in a timely manner. The RDA Director does not have as frequent a contact with the Board members as the Council staff and it is reasonable to expect that the RDA Director will not be as well informed or sensitive to the information needs of the Board, as evidenced by the uneven communication the Director currently has with the Board. A possible role for the Council Executive Director may be to meet regularly with the RDA Executive Director and assist in determining the nature, content, and timing of communication with the Board and to coordinate written communication to the Board and recommend oral communication by the RDA Director and/or staff as appropriate. Section 6—Role of the Policymakers—page 3 Finding: There is very limited communication between the RDA Director and the Board, with not all Board members being contacted on issues. The Board is not adequately informed of issues and progress on projects, and in turn is not well briefed by the time a matter is listed on the agenda. This is in sharp contrast to the very good communication, preparation on issues, and analysis received by the City Council through the office of the Council Executive Director. Finding: The Board does not receive frequent scheduled progress reports regarding the annual adopted Goals and Specific Objectives. Recommendation VI-5: After revising the Annual Goal and Specific Objective format and content as recommended elsewhere, establish a template for an easily updated standard form quarterly report detailing progress toward achieving the Goals and Objectives approved by the Board. Finding: While the Board is receiving a weekly progress report from the Director, not all of the Board members felt this form of communication was equally useful. The RDA Executive Director communicates far more frequently with some Board members and does not have a clear plan or procedure for communicating equally with all Board members. This uneven communication results in different information and project understanding at the Board meetings. Recommendation VI-6: The Executive Director and RDA Board Chair and Vice Chair should develop a communication process recommendation for consideration by the full Board and implementation by the Executive Director, to include an active role by the City Council Executive Director serving a comparable coordinating role on behalf of the RDA. Recommendation VI-7: Poll Board members to determine the usefulness of the present form of Weekly Report, adjust the form as needed, and begin sending hard copies as well as e-mail. Other important constituencies for the RDA staff are the residents, businesses and property owners affected by the RDA. While the staff does recognize the importance of communicating with them and involving them from the early stages of project planning, the small staff has neither formal training in citizen participation nor a formal process for involvement throughout a project and the use of survey instruments for feedback afterwards comparable to that used by the City Engineering Division. There is also no communication plan for involvement of people in the processes of setting RDA goals and objectives. Exhibit III to this Report is a discussion of a public participation template and principals. This exhibit is very similar to the formal public participation program being used by the City Engineering Division, that does a very good job of planning for and conducting public participation in its projects. Since a Public Participation Plan is a best practice used by RDAs, we have prepared a description of this best practice for other RDAs, and present this best practice in Exhibit III at the conclusion of this report. ..Pry . Section 6—Role of the Polic makers—Pa e 4 ,3 « Finding: The RDA does not have a communication plan nor an organized and consistent process for obtaining public participation at all stages of setting goals and objectives, planning and project execution. Recommendation VI-8: The RDA should obtain the assistance of the Engineering Division or an outside consultant to develop a public participation process template, including the use of written surveys to assess redevelopment needs and reaction to RDA projects and the manner in which they have been processed and operated. Recommendation VI-9: As part of formal staff training, they should be encouraged to attend seminars and conferences focused on public participation processes and the experiences and practices of other agencies. C. COORDINATION WITH OTHER DEPARTMENTS The RDA relies on other City departments for not only day-to-day administrative services support, but also for direct execution of RDA projects on behalf of the Agency. Coordination and cooperation with these departments is critical if the projects are to be conducted so that the developer/property owners/businesses do not experience unnecessary delay due to lack of coordination/planning/communication between the RDA and City departments. Loss of time can be expensive in terms of the dollar value of time as well as give the public the impression that the City and RDA are not well organized, trained or sensitive to their needs. As Citygate met with staff of both the RDA and the City, we heard anecdotal reports of the lack of coordination and cooperation from both parties. Often, part of the problem appeared to be a difference in perceived role and responsibility, in which the RDA saw its mission as development and its position as both a separate agency as well as a City partner deserving of special attention. The City departments saw their role as assisting the RDA, but consistent with the same rules that would apply to any other party developing a project in the City. This difference in perception is certainly not uncommon between city and RDA staff in various communities. The tension will likely always be present, although Citygate has seen it at a significantly lower level when the leadership of both the RDA and the City are determined to make cooperation and coordination work and when there is a continuous effort and a formal structure for coordination. Coordination with other departments at the lower staff levels of the RDA is an accepted responsibility by the RDA staff that makes a creditable effort to meet with and work out issues with their counterparts at the lower levels of City departments. However, while there are some coordination processes in place at the management level of RDA and City departments, such as regularly scheduled meetings with the Community Development Director, these are sometimes ineffective because participants believe that occasionally critical information is not shared. The outcome is some inefficiency in managing projects, confusion for developers, and the Board not having the full picture regarding the relationship between an RDA project and City goals, I II Section 6—Role of the Policymakers—page 5 a' policies and procedures. Additionally the Board is not always aware of alternate views by City departments, which should be considered by the Board from both the perspective of whether the RDA follows City rules and procedures as well as the perspective of any conflict between RDA action and City policies and goals. Where the tension between the RDA and other City departments exist, it is often because the Board and Administration do not make it clear that the RDA is, in effect, an implementing arm of the City Master Plan and not the custodian of a separate plan and direction, and the RDA Executive Director does not see the RDA as serving this "supportive" role that is comparable to that of the City Planning Department, Public Utilities, and Engineering. From this perspective, it is the responsibility of the RDA Executive Director to insure that the RDA programs are in consort with and supportive of the City Master Plans rather than the City Planning and other departments monitoring the RDA to insure that the RDA is in line with the remainder of the City. This is, indeed, a somewhat subtle shift in perspective, but defines the role and responsibility of the RDA Executive Director to seek and insure that the RDA is in alignment with the remainder of the City and that the RDA and its Director's communications are thorough, well-understood by others, and timely. Finding: There is a difference in perceived role and responsibility between the RDA and City Departments, in which the RDA sees its mission as development and its position as both a separate agency as well as a City partner deserving of special attention. The City departments see their role as assisting the RDA, but consistent with the same rules that would apply to any other party developing a project in the City. It is the RDA Director's responsibility to insure that the RDA activities are in alignment with City goals and the RDA and its Director's communications are thorough, well-understood by others, and timely. Finding: The City depai talents and RDA are aware of the deficiencies in cooperation and coordination, have a willingness to improve it, but do not have a mechanism or structure that will facilitate the improvement. Recommendation VI-10: The RDA Executive Director should be responsible for convening a Development Review Team meeting at the outset of and again prior to a project going on the Board agenda to ensure that all City and RDA requirements have been addressed and there is agreement on the requirements that must by met for the project to proceed, the timeline to meet these requirements and responsibility for ensuring this is done. The Development Review Team should consist at a minimum of a management level person representing Community Development, Planning, Traffic, Public Services/Engineering and Public Utilities with both the technical background as well as the authority to accurately advise the RDA and make definitive commitments on behalf of the Department or Division. Section 6—Role of the Policymakers—page 6 ;'•� Recommendation VI-11: The RDA should hire a facilitator to assist the RDA and departments in defining the root of the coordination problem, cultural differences between organizations and their approaches and any other communication and coordination mechanisms that might be helpful in addition to those recommended in this report. Recommendation VI-12: For every project before the RDA Board for approval, the Board should require written comments from any affected City department (most particularly Community Development, Public Services and Public Utilities) as part of the agenda report. These comments should at a minimum indicate City policies and procedures that have been followed and areas in which there is either nonconformance or additional approvals and reviews needed by the Department, a City Planning Commission and/or City Council. The recommendation above regarding a facilitator is important enough to warrant a brief listing of the tasks for a facilitator. Should the RDA choose to hire a facilitator, the scope of work might include: 1. Assist in devising agenda formats for staff meetings 2. Observe and provide training and individual counseling as needed regarding how to conduct a meeting and how to effectively participate in meetings 3. Meet with various City departments and the RDA to understand the different perspectives and then serve as meeting facilitator of group meetings of the departments and RDA to help participants: ➢ Define their differing perspectives ➢ Shortcomings in the nature, content and timing of communications and possible solutions ➢ Processes in which each participate and explore modifications that will improve the manner in which RDA/City Department business is conducted 4. Assist in devising the structure and content of a Development Review Team for RDA projects and activities 5. Assist in devising the form, content and timing of communications with the Board, including weekly reports, progress reports on goals and objectives, and progress reports on RDA projects 6. Assist in devising a process and format for arriving at the Board's annual goals and objectives. PM Section 6—Role of the Policymakers—page 7 ,rit D. RECORDKEEPING A specific issue of coordination is the safe keeping of official RDA records. The RDA maintains all of the original records of agreements, contracts, etc. in the RDA office rather than in the office of the City Recorder. This does not ensure that records management is consistent with City policy, public access requirements or ensure long term preservation. The City Recorder is the repository of the original of all critical City records, including contract, agreements, deeds etc., and is trained and equipped to manage and preserve records for the long term. Finding: The RDA staff is not large enough nor does it have the long-term facilities to ensure the safekeeping of official records that should not be lost or inadvertently destroyed. Recommendation VI-13: RDA records that are official documents needing long- term preservation should be merged with those of the Recorder, with the RDA retaining a working copy for their daily use. rig .. Section 6—Role of the Policymakers—page 8 SECTION 7-SURVEY OF SIMILAR REDEVELOPMENT AGENCIES Citygate surveyed 10 other cities in the western states that are of similar size and have redevelopment agencies. The purpose of the survey was to determine if the Salt Lake City Redevelopment Agency is staffed and organized similarly, whether they operate key elements similarly, and if they plan and evaluate programs any differently than the other agencies. The Salt Lake City population is 178,605, while the population range of the cities surveyed is from 141,300 to 269,100. A brief review of the data in the survey included below makes it fairly clear that Salt Lake City is not comparatively over staffed. With the exception of Oceanside, Salt Lake City has the highest ratio of tax increment dollars to staff; and although this can be skewed by the extent to which an agency's tax increment may be devoted to existing debt service, this is still a good beginning rough measure when taken in concert with the second workload measure: loans and grants. Here, Salt Lake City processes the highest number of all of the agencies. These are very work intensive activities that consume a lot of staff time, as was reflected in Citygate's review of the processes. The fact that a public loan committee is involved in the larger loans as is the RDA Board adds to the work involved in loan processing. Just as important as work volume and staffing, is the availability and use of program effectiveness measures. For all practical purposes, no agency really uses project effectiveness measures and none consistently use program effectiveness measures either, including Salt Lake City. Citygate has recommended both of these as important elements in determining whether or not scarce redevelopment dollars are being allocated to projects that provide the greatest catalyst affect in each Project Area. Most of the agencies surveyed, including Salt Lake City, have a relatively current set of goals and objectives for the RDA. What surveys cannot really tell us is whether policy makers actively use these for guidance in budgeting each year. City's such as Folsom, CA and Stockton, CA have a relatively sophisticated set of goals and objectives for each City operation and review these each year prior to developing the budget. The objectives then serve as focal points for allocating resources. This is the approach recommended by Citygate for the Salt Lake City RDA. In terms of operations, all of the redevelopment agencies are integrated into the city so that they use city support services such as procurement and finance. Almost all of them, including Salt Lake City, rely on other city departments to implement capital projects as well. And so, from an operational standpoint, the Salt Lake City RDA functions the way most other agencies do. The conclusions to be drawn from the survey below are that comparatively, the Salt Lake City RDA is not overstaffed and is organized in a manner similar to other RDAs. It is integrated into City operations, at least formally, and has formal goals and objectives. But like other agencies, program and project evaluation measures are not commonly used. In each of these broad areas, the Citygate report examines the Salt Lake City RDA in greater depth and makes recommendations for improvement. Section 7—Survey of Similar RDAs—page 1 :MR IRE Does the RDA have an Asst Director? Does Is the RDA To whom it have instead divided into does the a Deputy several RDA Director and if Divisions, and if Department #of so, are there so what are the Tax increment Head #of RDA Clerical more than titles of the Revenue for City Population report? FTE staff Positions one? Divisions? last FY Chula Vista CA 208,510 CDD Dir. 6 0 No,No No $ 8,939,342 Eugene OR 142,680 CM 6 2 No, No No $ 2,000,000 Deputy Housing/ Fremont CA 209,100 CDD Dir. 14.5 4 Director Commercial $ 27,126,000 Economic Dev/ Glendale CA 205,422 CM 10 3 No, No RDA $ 14,279,000 Lakewood CO 141,300 CM 1.3 0.3 No, No No $ 921,502 Modesto CA 206,200 CDD Dir. 3 1 No, No No $ 2,272,000 Oceanside CA 172,800 City Council 2 0.5 No, No No $ 6,100,078 Oxnard CA 186,610 CM 9 3 Div. Mgr. No $ 9,812,688 Reno NV 197,960 CM 12 3 No CDBG/RDA $ 4,150,000 Salt Lake City UT 178,605 8 2 1 No $ 20,850,309 Deputy 2 (CDBG and City Housing Redevelopment Stockton CA 269,100 Manager 13 2 Director Agency) $ 7,471,156 ` .. Section 7—Survey of Similar RDAs—page 2 c;wA r,t o,rs Is construction Does the RDA of RDA CIP #of grants Does the RDA have strategic Are loans #of Loans projects given by the have any plans and goals reviewed by a successfully managed by RDA and the measures of the Does the formally loan committee processed the City Public aggregate effectiveness of its RDA follow adopted by the consisting of during the last Works Dollar programs, and if so City Board and if so, any FY year and Department? amount of what are the procurement in what FY were representatives the aggregate and if not, then grants given measures and how practices or these last other than City amount of the who manages by the RDA does the agency does it have reviewed by the City employees? loans them? is last FY fare on these? its own? Board? Yes, Currently No CIPs in updating 5 yr Chula Vista CA No loans N/A RDA 0,0 Currently creating City plan Changes in property value over time--works Eugene OR No loans N/A Mostly 4, $250,000 well City Yes, 2005 #of Affordable hsing units added each year/The alleviation of blight from each commercial proj. Fremont CA Yes Unavailable Yes 12, $200,000 Works well City Yes, 2003 Demographics every 2 years; Glendale CA No Loans N/A RDA 0,0 works well City Yes, 2005 Part of annual No CIPs in budget adopted Lakewood CO No loans N/A RDA 2, $10,000 No City by Board Sales tx,lncrement increases; Jobs created; Public/Private investment ratio. Modesto CA No loans N/A Yes None Works well City Yes, Dec. 2005 Yes, 20 years Oceanside CA No loans 0,0 Yes 0,0 No City ago Some PW/ Oxnard CA Yes N/A Some RDA 0,0 No City Yes, 2005 5 year goals; 1 year goals; performance standards. Works Part of annual Reno NV Yes 0,0 No, RDA 0,0 well City budget process 14/ Salt Lake City UT Yes $8,336,215 Engineering 0,0 No City Annually PIE E II Section 7—Survey of Similar RDAs—page 3 ;, ,, tt,t, APPENDIX Exhibit I—Analysis of the Costs and Benefits of Proposed RDA Projects Exhibit II—Market And Financial Assessment Exhibit III—Public Information and Participation as Ya s EXHIBIT I—ANALYSIS OF THE COSTS AND BENEFITS OF PROPOSED RDA PROJECTS For the RDA Board, it is useful to have a reference document that provides information on the forms of financial assistance that might be provided by the RDA to a project and the questions and indicators that should be used in assessing the appropriateness of such financial assistance. These questions and indicators are important as well to inform potential developers, the public and the staff of the questions and issues that will be addressed by the RDA Board in assessing a proposed project and evaluating the role of the RDA in financially assisting the project. Each RDA project should involve an analysis that reviews a standard set of questions or indicators and addresses those that are appropriate to the project under consideration. FORMS OF FINANCIAL ASSISTANCE FOR PROJECTS Available Financial Tools The RDA may use one or more of the following methods to financially assist a project when necessary to achieve RDA Project Goals. Such assistance will be at the minimum necessary to secure the project for the community as reflected in a financial analysis acceptable to the RDA Board. Financial assistance will be judged based on indicators of benefit to the community and indicators of the projected financial performance of the project. The particular mechanism for implementing the "intent" of the financial tools will vary depending upon the requirements of the project and legal parameters. • Write down of Land Cost When the RDA purchases land for a project, it may resell or lease that land to a developer at less than market value and/or less than the RDA paid for the land. • Demolition and Land Preparation Prior to Sale or Transfer When a project requires preparation of land prior to construction, including, but not limited to such things as demolition, compaction, the addition/removal of soil or hazardous materials remediation, the RDA may complete this work prior to sale, transfer or lease of land for a development. • Rights of Way A development may require obtaining or extinguishing easements or other rights associated with the property. The RDA may use its powers to handle rights of way issues and fund all or a portion of the costs, and/or the RDA may partner with the City to handle such issues where the role and powers of the City are needed. • Removal of Assessments or Liens on Property Property intended for development may be encumbered by assessments or other liens. As part of a development agreement, the RDA may pay the costs associated with removing such encumbrances prior to sale, transfer or lease of land for a development. • Funding Off Site Improvements Exhibit I—page 1 �. When a development requires off site improvements such as traffic signals, street lights, street construction/modification, wastewater, water or storm water facilities and the developer is required to construct such improvements at their own expense, the RDA may choose to fund some or all of those improvements on behalf of the developer. • Payment of Permit and Other Development Related Fees A development may be responsible under existing laws and regulations for the payment of permit and development related fees to one or more government agencies. The RDA may choose to fund some or all of these fees on behalf of the development. • Payment Assistance to Offset the Cost of Taxes A new development will generate additional tax revenue to the City and to the RDA. While the RDA will not abate any tax liability associated with a development, the RDA may choose to pay to the developer a sum for one or more years to offset part or all of the tax liability. • Environmental Studies Prior to commencing a project, a development may require the completion of environmental studies. The RDA may choose to contract for or to pay a potential developer to contract for the completion of such studies. • Provision of Parking and Parking Assessments A development may require offsite parking or may be responsible for a parking assessment. The RDA may choose to meet some or all of such parking responsibility on behalf of the development. • Development Loan The RDA may loan funds to a developer, with appropriate security for the loan, to assist in undertaking a development project. Funds will normally be repaid to the RDA at an annual interest rate not less than the annual CPI. Such repayment may come in the form of increased tax revenue generated by the development or payment of funds to the RDA by the developer. • Grants or Loans from Other Government Agencies The RDA and/or the City may obtain grants or loans for a project from other government agencies such as the Economic Development Administration or Housing and Urban Development Department. The RDA may serve as the applicant or co-applicant with the City or a developer. • Grants from the RDA The RDA may provide grants for a project to assist in any portion of the construction or acquisition by the developer in order to make the project financially feasible. EVALUATION OF THE PUBLIC INVESTMENT Simply because the RDA has financial tools available to assist in development of a project does not mean that every project should be assisted or that selected projects should each receive the same level of assistance. In the private sector, the concept of"Return on Investment" is used to analyze whether money should be invested in a project. If the return is too low, then the project Exhibit I—page 2 is not worth undertaking and some other project that will return a higher yield is undertaken. This same concept is adaptable to the public sector, although here "Return on Investment"means not simply repayment of loans, but also includes the generation of new tax revenue, the creation of net new jobs (taking into account jobs displaced by new projects and new larger retailers), inspiring additional private investment, increased property value that also increases tax revenue, increased sales/revenue for existing businesses, and removal of slum and blight. An investment in RDA projects should be evaluated against all of these types of "Return on Investment" to determine whether the return justifies the investment of public funds. Sometimes these are referred to as "Direct and Indirect Returns on Investment". The "Direct Returns" are tax dollars and loan repayments flowing directly from the project and new jobs created on the site. "Indirect Returns" refers to the net new increased economic activity in the community after taking into account the negative impact of the new development on existing businesses. Direct Return on Investment is relatively easy to determine if based upon a rigorous financial analysis that looks at the existing market, number of potential customers and the dollars they will spend, and how much of this will simply be sales or clients that shift from other businesses in the community. The study also determines how quickly the new project will generate revenue and jobs. Indirect Return is more difficult to determine and requires a more sophisticated study that is usually an extension of the initial financial analysis to determine the Direct Return on Investment and the financial viability of the project. An Indirect Return financial analysis examines the spillover effects of the project: what other private investment will be inspired, additional jobs created, sales created, and money spent locally. The analysis looks for the net additional business and jobs in the community, recognizing that many new RDA projects may take some business away from existing merchants and professionals. This requires a sophisticated understanding of: 1) the economics of both the project being proposed and related businesses; 2) computer based economic projection models; 3) the local market; 4) general economic conditions and how these relate to the region; and 5) the local impact from project construction activities (including hiring local construction workers, materials that might be purchased locally, and engineering/architectural services that might be locally acquired). The analysis, to be useful to the RDA, must be based upon real expected and not speculative results. Accompanying the fiscal Direct and Indirect Return analysis should be an examination of any additional costs that will be paid by the City to provide services to the project. This should include not only the obvious services provided to the project site such as police, inspection, and storm water control, but also the off site impact of traffic, water, wastewater and storm water demands that might require additional capital improvement projects elsewhere in the City to mitigate the impact of this project. Often the impact is small and new mitigating projects are only required after several developments have occurred. But the City and RDA need to forecast the incremental impact of development to insure that the new taxes generated by projects will return sufficient funds to pay for the work when the City needs to do it. While Indirect Return on Investment may be more difficult to summarize in a set of indicators, Direct Return on Investment lends itself to establishing indicators by which the RDA can assess the appropriateness of investing in a project. The indicators that should be considered for analysis on each project are set out below. Those which are appropriate to the project should be Exhibit I—page 3 „ .r C. contained in a detailed report which uses a Market and Financial Assessment of the project as its factual and analytical basis. • Indicator of Direct Financial Return on Investment An RDA investment in a development project through the use of any of the "Available Financial Tools" should be recouped by the RDA and/or the City through either additional tax revenue coming directly from the project to the City and/or the RDA, or through direct repayment to the RDA by the developer. The length of time it will take to recoup the investment is one strong indicator of the financial benefits of a project. For example, a project that returns sufficient increased tax revenue equal to the RDA investment in ten years or less may be judged to be a strong financial investment for the community, while one that takes fifteen or more years may be marginal unless there are other clearly identifiable valuable Indirect Return benefits for the community, including additional private investment that is reasonably expected and not speculative and is based upon the financial analysis of the project that is acceptable to the RDA Board. • Other Investment Return Indicators RDA financial assistance for a project will also be judged on other indicators of benefit to the community and other indicators of financial performance of the project, based on a financial analysis acceptable to the RDA Board. Assessment of a project's performance should be based upon benefits that are reasonably expected and not speculative and demonstrated in the financial analysis. Indicators used in an analysis should be appropriate to the specific project. • Ratio of private financial investment to RDA investment, including, but not limited to, the original cost to the RDA of any land sold or transferred to the developer by the RDA, or the value of any other RDA financial investment through the use of the "Acceptable Financial Tools". • The ratio of RDA investment to the number of net new Full Time Equivalent long-term jobs that will be created within the City in the project. • The number of years/months necessary for the RDA to recover, through tax revenue to the City and/or the RDA and/or through payments from the developer to the RDA, all of its direct investment in a development project. • The long-term average annual rate of return for the developer with and without RDA financial assistance. • Dollar amount of additional private investment expected within the Project Area and, separately, within one-mile of the Project Area over the next 5 years/l0 years. • Net new dollars circulating within the community annually as a result of the project. • Average annual salary of net new jobs compared to the current average annual salary of jobs in the community. • Percentage change of total assessed value of property in the Project Area as a result of the project. Exhibit I—page 4 ;L�,. • Percentage of change of total assessed value of property outside of the Project Area as a result of the project. Exhibit I—page 5 :o:, I x 1T: EXHIBIT II-MARKET AND FINANCIAL ASSESSMENT WHAT IS A MARKET AND FINANCIAL ASSESSMENT? There are really two parts to the assessment. The first is a study to determine what the "MARKET" or need or demand is for the office space, industrial space or retail space that is being proposed. In other words, once the project is built, how quickly will users fill the office space? How quickly will industrial firms locate in the new industrial park or fill the "spec buildings"? How many customers will come to the retail shops and how much will they spend? There are fairly sophisticated studies involved in determining whether the market or demand is for new office, industrial or retail space. These will be discussed in more detail below. The second part of the assessment is a "FINANCIAL" study to determine whether the market or demand for the office, industrial or retail space in a project is high enough to allow the investor to make enough money to both pay off their loans on the project and to make a profit. Will the space fill quickly enough and is the market or demand high enough to allow rents that will return enough money quickly enough to the investors/developer? The "Financial" Study can be expanded to also include a more specific analysis of Direct and Indirect Investment Returns to the RDA and the City and a determination of how closely a project conforms to any RDA Investment Return Benchmarks. WHY SHOULD AN RDA HAVE A MARKET AND FINANCIAL ASSESSMENT PRIOR To APPROVING A PROJECT? Whether the investor is a private party or a public agency, an economic development project needs to meet two related criteria in order to be successful: 1) There must be sufficient market demand for the project; and 2) the rents or purchase price that users are willing to pay must be high enough and the absorption rate (how long space is vacant) must be fast enough to allow the investors to not only pay off their loans but also, in the case of private investors, make a profit. If a project is not going to be profitable for the private investor involved in an RDA project, some of the consequences are: 1) the project could go into foreclosure; 2) there could be a large amount of vacant space which means jobs and economic stimulus is not occurring; 3) the failure could be a discouragement to other potential private investors interested in projects in or near the RDA project area; and 4) the investor may not be able to meet their obligations to the RDA if there is public investment in the project. The RDA, in expending public funds to achieve economic development goals, needs to have a reasonable assurance that the project will be successful and that the public funds are even needed to make the project financially viable. If it is not successful, the economic development goals will not be met, or at least their achievement will be delayed until the market demand catches up with the project. To illustrate, over the past decade a number of hotel projects were constructed which had insufficient occupancy and/or the room rates were too low to pay off the debt. The projects went into foreclosure and/or were sold for less than their original construction cost, bringing the annual loan payments for the new buyers down to a level where the occupancy rate and room rates that the market would support were enough to make loan payments and make a profit. Exhibit II—page 1 ;. ,._ SW For some smaller RDA projects, common sense answers the question of whether the market will support a project. For instance, a developer may also be the sole tenant. Or the project may be constructed only after the developer secures a tenant with a long-term lease. For other projects there may be a speculative element, such as having only a portion of the space leased prior to construction. For the more speculative but still small RDA projects, an in-house staff analysis of the market and financial viability of a project is sufficient. There is still the question of whether RDA assistance is necessary in order to allow the project to proceed. In other words, the contractual commitments may be based upon certain space rental rates that can only be offered if the developer obtains RDA financial assistance that reduces the size of the loan they must take out to construct the project. Even this aspect of the financial analysis can often by done in-house if the staff is diligent enough in fully detailing, with supporting evidence, for the RDA Board the revenue and costs of the project (the project pro-forma). If a project's financial viability depends upon renting space or selling land (in the case of an industrial park) on the open market, then the Market and Financial Assessment Study should have two stages, because these are much riskier projects. The first stage of the study is an in-house assessment of whether, based on the staffs knowledge of the local area, the proposed project appears feasible. This is largely a generalized judgment based upon an overview of the probable project finances and the market as understood by both the developer and the staff. This first stage study is usually done when the project is initially proposed and before many of the project details are worked out. Once a formal proposal is made, the much more sophisticated Market and Financial Assessment Study should be done. This second stage study should occur for almost any project that will require RDA assistance and will rely upon the market to fill enough space at a high enough rental rate to meet the developer's loan obligations. These are much riskier projects. Since the RDA is planning to invest public funds in a project, it should do so only after diligently assuring itself that the risk is nominal because the market will support the project, that the RDA funds are necessary to make the project financially viable and determine how closely the project conforms to any RDA investment return benchmarks. If a project fails, not only may private investors lose their investment, but the RDA may as well. The second stage study is critical in establishing the extent of RDA assistance needed to make the project financially viable. If the market demand for office or retail space is weak, then the RDA may have to invest a much larger amount of money in order to permit the developer to charge lower rents that will fill up the project. The RDA needs to have good hard market and financial data in order to evaluate the request of the developer. To determine whether the request meets the RDA guidelines on when and how much to invest, an expanded "Financial" Study should be done to determine the Direct and Indirect Investment Returns of an RDA assisted project. Described below are some of the content and tools of a Market and Financial Assessment Study. In-house economic development staff in many jurisdictions deal quite well with the smaller projects and their broad experience often allows them to conduct the stage one study for these riskier projects. But given the use of public funds and higher risk involved in the more complex or higher risk projects, it is wise to find outside expertise that has worked in the particular field represented by the project. For instance, if a hotel project is being proposed, then a firm that has done a large number of hotel analyses and understands the local, regional, and national market PIS Exhibit II—page 2 Cry r x�t; could do a cost effective analysis. Similarly for a large multi-tenant retail project, it is best to use a firm that has daily familiarity with the potential tenants, understands their peculiar economic and demographic needs, and can model local demand based upon local and regional demographics and competing businesses. SOME OF THE CONSIDERATIONS/ANALYSES INCLUDED IN A MARKET AND FINANCIAL ASSESSMENT STUDY A Market and Financial Assessment of an RDA project takes into account a number of factors. Below are listed some of these, by way of illustrating the complexity and the depth of knowledge needed to conduct this type of study. We have included here as well some of the factors that should be included in an expanded "Financial" Study that assesses the Direct and Indirect Investment Returns of an RDA project and determines how closely the project conforms to any RDA investment return guidelines. This is neither intended to be a complete list nor to imply that all of the factors are relevant to each type of development. The information and analysis that would be developed for an office project, is different from that of an industrial project, which is different still from a retail project or mixed-use project. • Identify population demographics such as the income, age, and ethnicity of the population and the population density at various distances from the project site. • Identify traffic patterns and traffic inhibitors, both present and projected. Ease of accessibility is especially important for industrial and retail developments. • Based on factors such as the above, designate the geographic area that is the "market" from which demand will come, and the pricing, locational, amenity and product preferences of the population in the market area. • Identify product (a product could be an office space or a retail good), location, amenity and pricing preferences of the population in the market area. • Identify the location, size, amount, and characteristics of the competition (retail stores, vacant office space, vacant industrial land or buildings) along with the pricing or rental rate structure for each in the market area. • Develop an appropriate computer model, similar to a gravity model, that will estimate the proportion of shoppers that will be attracted to a new retail center from alternative geographic areas based on the demographics of the population and input concerning square footage of retail space by type. The results of the model will then be modified based on a more detailed analysis of the character of the competition. • Characterize parking and commuting and public transportation as attractors and inhibitors to the development. • Develop a model illustrating the amount of space that will be occupied under different pricing or rental rate scenarios. • Characterize and estimate the amount of additional private investment expected to occur as a result of the project. Exhibit II—page 3 • Identify the positive and negative impact on other business uses in the community. • Identify the labor market area and the availability of the appropriately skilled labor that could be attracted to work for an industrial project. • Estimate jobs expected to be lost and gained in the community as a result of the project, the annual average salary of the net new jobs, and the extended economic impact (or spin off benefits) of these jobs on the community. • Expected change in property value of the project property and other properties in the community as a result of the project. • Increase in annual tax revenue to the RDA and the City as a result of the project. Exhibit II—page 4 { EXHIBIT III-PUBLIC INFORMATION AND PARTICIPATION Public Information and Public Participation are really two subjects on a single continuum. You cannot have effective public participation without effective information, and providing information to the public frequently inspires a greater degree of participation, because through information residents see how they and/or their property will be directly affected by a government activity. Redevelopment activities seem to be right up near the top of the list of government activities that generate public interest and a demand for information and the right to participate, because redevelopment directly affects so many people and their property. This public interest, and often times accompanying opposition to redevelopment activities, may seem hard to fathom when the elected officials and their staff believe that the redevelopment activities are undertaken in support of the goals and objectives that the voters appear to have approved in electing their public officials. The conundrum is that many voters expect their elected and appointed officials to make wise decisions on their behalf when the subject matter indirectly affects them; but when their daily life and property are affected, the residents frequently want to directly participate in the decisions. Redevelopment then becomes the place where representative democracy converts to a public expectation of direct democracy. The problem is not so much that the lesson of fostering public participation and providing information on redevelopment projects has not been learned, but that many agencies do not do it well. They do not do it well because it is often an after thought in a redevelopment program that focuses on process, projects and deals rather than incorporating the public as an equally important element. Public information and education supporting effective participation should be an important part of every redevelopment project because the project directly affects people and their property and because redevelopment is difficult to understand if you do not work in it every day. Even if the end result of redevelopment is projects that the community strongly needs, in today's world the public and media are skeptical of government. Property owners, business owners and residents can only stay informed with accurate and factual information to the extent that the RDA makes the effort to keep them informed. PUBLIC INFORMATION AND PUBLIC PARTICIPATION PLAN Each redevelopment project should begin with the development of a plan regarding how and when the public will be informed about the essentials of a project and how and when their participation will be proactively sought. The plan in its "broad outlines" should be approved by the elected officials at about the same time as they take the first steps to approve RDA exploration of a project, because public information needs to be made available from the very beginning. In the absence of information, rumors and erroneous suppositions will likely fill the void. We use the description "broad outline" deliberately, because the details of the plan will change and be filled in as the elected and appointed officials move closer to the point of approving a project and even after project approval as the public needs to be told what to expect as the project is implemented. A Redevelopment Agency's communications should continually be adapted to address rapidly changing questions and issues. imimmimiimmilmimm=mimmmimmmimmimmimmiminimmiExhibit III—page 1 The Public Information and Public Participation Plan needs to be before the elected officials every time they consider some aspect of a project and the question asked and answered, "What information will be disseminated, to whom, when, and how?" When will people be able to make their views known?" The staff should be proactively proposing the answers to these questions at each step of project consideration. KEY COMPONENTS OF THE PLAN An RDA public information and public participation plan should be designed with both an external and an internal focus. The external focus reaches out to the public outside of the government offices while the internal focus is on the staff and elected officials of the City and the RDA. A. External Communications: To Which Public? A public information and participation plan should recognize that for every project there are several "publics" and should separately address how, when and what information will be provided and how, when and where participation will be afforded each public. One way of looking at this is to picture four concentric rings, each containing a "public" that is differently affected by an RDA project. 1. First Ring: Property Owners, Business Owners and Residents within the Project Area The first concentric ring involves the individuals who own property within the Project Area. Many of these individuals may be directly involved with improvements to their own properties, or in a business transaction to sell their property. A public information and participation plan may need to involve individual meetings with property owners within the Project Area to describe plans and obtain input. These meetings involve the use of documents prepared to provide detailed information at the parcel-specific level, up to and including Owner Participation Agreements (OPAs). At key stages of the process, these meetings with individual property owners may need to be repeated. In addition, public meetings with all of the property owners within the Project Area should be conducted to facilitate group discussions and participation in the planning and implementation processes. Involving the directly affected people early in the project planning process and actively inviting their suggestions regarding implementation that will mitigate hardship on them frequently smooths the project later, because the concerns and suggestions usually arise and it works better to have them heard early and to visibly incorporate as many suggestions as reasonable. 2. Second Ring: Property Owners, Business Owners and Residents Immediately Outside the Project Area Who Are Also Directly Impacted Just outside the border of the Project Area are properties that will be impacted by changes in vehicular traffic, businesses that will experience greater competition and/or greater potential retail "traffic", and residents that will see their lifestyle and neighborhood change as the project area across the street or down the block is completed. This public has the same concern regarding the project configuration and implementation as those formally within the Project Area. Many of the same steps in providing information and opportunities to participate in Exhibit III—page 2 planning and implementation discussions should be afforded the public in this second ring as are provided to those who are within the boundaries of the Project Area. 3. Third Ring: Public in the Community Outside of the Project Area Who are Indirectly Impacted. Many residents and businesses outside the Project Area are indirectly impacted by redevelopment activities: Examples of indirect impacts include traffic and pedestrian circulation, during both and after the construction phase. Community meetings, written descriptions used as handouts and/or mailings, individual "drop ins" at stores and businesses, and other approaches are helpful at letting this public know what to expect, and to discuss how the Agency can go about its plans in ways that maximize the benefits to the surrounding area and minimize the negative impacts during and after construction. 4. Fourth Ring: Community at large Redevelopment has an impact on a fourth public, the community at large. Here the impact is often both cost and benefit. Costs occur when this larger public must assist in financing projects such as street widening and water/wastewater utility line expansion partially caused by the added burden stemming from the project(s) in a redevelopment project area. The benefit arises from added jobs, removal of blight and reducing associated government service costs, new tax sources and so on. The elected and appointed officials balance these costs and benefits in determining whether or not to proceed with a redevelopment project. But in order to have public support for redevelopment activities, a public information and participation plan needs to provide for communication with members of the community, and provide them with the accurate information they need to evaluate redevelopment programs and provide input to policy makers. The local community needs to know of the positive impact of redevelopment in order to give their support. They need to know that the RDA is a good steward of their tax increment dollars and that they are using them to achieve worthwhile community goals and objectives. Property owners, business owners, and voters can only stay informed with accurate and factual information as the RDA makes the effort to keep them informed of its activities. Public information and public participation by the redevelopment agency is the primary, and perhaps the only proactive way, the RDA can disseminate its plans to the community. You cannot rely upon the media to determine what information is to be provided and the timing of that information. It is the RDA that is better able to be thorough in its dissemination of information and time the information so that it properly coordinates with opportunities for public participation. B. External Communication: How? There is not one single marvelously effective method of communicating with the public in the four concentric rings. And with the exception of the rising use of the internet, there are not really any new methods either. Most agencies know the basic methods of communicating with the public. But many redevelopment agencies provide information too late or after the public has risen up in opposition to a project. The dialogue becomes conflict and the opportunity for a collaborative solution to project implementation problems is dramatically lessened. Effective communication must be a forethought and not an afterthought. A forethoughtful plan for external communication and public participation can be as simple as a several column check list that lists all of the possible types of communications and public Pict • Exhibit III—page 3 :rc,sR igc: 1. participation, and then you can note to which public each applies and approximately when it should be implemented. This is illustrated below. Type of Communications Public and Timing Public 1—when Public 2—when Public 3—when Public 4—when Orientation Brochure X Sept 06 X Sept 06 Direct Mailings X Oct 06 X Oct 06 Newspaper Inserts X Sept 06 X Sept 06 Neighborhood Forum X Nov 06 X Dec 06 Community Forum X Jan 07 X Jan 07 X Jan 07 X Jan 07 Elected officials need to be assured there is plan for adequate communication and be able to see how and where their participation in the communication process could be helpful. Even though the details of the implementation are usually handled by the staff, if communications and participation are not working, are not effective, it is the elected officials who will hear about it from their constituents; and so the elected officials need to be satisfied that the plan is appropriate for the project. Each project plan will be different and, as noted before, will likely need to be adjusted throughout the project as questions and issues arise. Exhibit III-A is an illustration of the "Steps for Community Outreach". Again, how, when and to whom you communicate is unique to a project. The key to effective communication is to develop a plan before you get started and not after you are in trouble with the public. C. Internal Communications Redevelopment frequently becomes a project oriented activity, with the staff focused on the steps necessary to deliver the project. Redevelopment agency staff communicate with the City Council/RDA Board, as well as other city employees, city boards and commissions and these communications normally focus on process, the "what," "when," and "how". Internal communications should also explain the "why": that redevelopment activities are in support of the community goals and objectives. Unless the "why" is continually reinforced, the internal audience may see redevelopment as only a process. Ensure that the internal groups have the necessary understanding of redevelopment so that they may articulate the positive contributions of redevelopment in their conversations and presentations to others. Without that knowledge, they may not be able to adequately communicate RDA efforts and the connection between the Agency activities and the accomplishment of community goals and objectives. Accordingly, the public information and public participation plan should take care to make sure the staff itself understands and can effectively communicate the larger purposes of Exhibit III—page 4 redevelopment as represented by this project; and that they understand the critical importance of satisfying the concerns of the various publics impacted by the project. Exhibit III-B is a list of ten guiding principles for public information and public participation that may seem obvious, but all too often are forgotten in the focus on "delivering the project." These principles are included here as another reminder of the importance of outreach and collaboration if redevelopment is to be perceived as fair, legitimate and not economically benefiting only a favored few. Exhibit III page 5 w EXHIBIT III-A-STEPS FOR COMMUNITY OUTREACH • As educational and publicity materials, RDA Board and staff should direct the development of a 2-3 page orientation brochure, briefly describing the project and its preliminary goals and objectives. These materials should include the use of visuals and graphics, including maps of the area and conceptual drawings of the project. • Define and identify the interest groups (i.e., neighborhood associations, education, arts, business, safety, historical, etc.) within the project area, adjacent to it and in the community at large. • Attend and present materials at regularly scheduled civic organization and club meetings (i.e. athletic and rotary clubs). • Identify the leaders of the various interest groups, civic organizations and clubs and: • Invite them to a forum to discuss project goals and objectives, and • Ask them to conduct community outreach themselves and to then provide additional comments in writing to the RDA. • Publication materials for community public forums/events/focus groups can be communicated to the public through the following modes: • city's internet site, • direct mailings to homes and businesses, • mass e-mails, local cable outlets, • mailings with utility billings, • inserts in local and/or regional newspapers, • city newsletters, • radio, grocery stores, • churches and other faith based organizations, and • government offices. • The public forums/events/focus groups should be held in various geographic parts of the City. These public meetings should represent a cross section of the community to obtain citizen reaction and ideas for the project. • Conduct an internet based citizen survey to obtain citizen input • If there is a segment of the population that is not English speaking, then materials need to be appropriate for that segment. • For ongoing public input, the city can establish a citizen `discussion board' on their internet site Exhibit III—page 6 EXHIBIT III-B-TEN GUIDING PRINCIPLES FOR PUBLIC INFORMATION AND PUBLIC PARTICIPATION 1. Communicate vs. Respond-It is better to initiate communication rather than respond to criticism. This allows an agency to define the local redevelopment discussion rather than just respond to those who oppose redevelopment. It allows for the community to understand the many positive benefits to their redevelopment activities. 2. Positive vs. Negative-The emphasis should be on the many positive redevelopment benefits. Don't dwell on negative factors. They are few compared to the many positive contributions. How you communicate will set the tone of the redevelopment discussion. 3. Future vs. Past-Emphasize the future-the great benefits for citizens that are being planned and implemented. Build on successful projects, honor the past, but don't dwell on the past. Learn from it for the future. Redevelopment agencies should understand and interpret the future in light of past activities, but the emphasis must always be on the future. After all, the future is the only dimension in which positive change can take place. 4. Two-way vs. One-way-Effective agency communicators listen to their community members. They engage citizens in dialogue to understand their needs, hopes and dreams. Agencies use redevelopment to assist citizens in achieving their personal goals and thereby benefit the community. 5. Team Building vs. Acting Alone-Redevelopment is an important part of a community's revitalization effort and provides an important synergism when teamed with other public and private programs. Redevelopment works by forming partnerships, not by acting alone. 6. Open vs. Closed-Agencies are open for community participation. Redevelopment supports the goals and interests of the citizen and property owner of the community. Agencies seek to communicate with the media to ensure that citizens understand that the redevelopment agency is fulfilling community goals and interests. 7. Decentralized vs. Centralized-Decentralization is a practical method of operation. The best source of information is the person who works in a particular program area every day. With decentralization comes the need for training to ensure that agency employees are sensitive to the differences between factual information and policy areas. 8. Interactive vs. Top down-Agencies desire interactive communications with community members. This can come in various forms including council meetings, community meetings, and media stories. Agencies set and fulfill community goals in response to expressed citizen desires. 9. Inclusive vs. Exclusive-Redevelopment agencies seek teamwork with the community to break down feelings of "we" versus "they" which are common in many government organizations. Agencies communicate because they desire to include everyone who cares to participate and to motivate those who are not engaged. 10. Strongly themed vs. Scattered messages-Agency communication is built on a few strong themes. It is more effective than unrelated, scattered messages. Redevelopment communications should focus on those with the greatest community interest. Teamwork with interested organizations can only occur when residents understand how redevelopment is carrying out community goals and interests. Exhibit III—page 7