THE COUNCIL'S SACRED COW

$80 MILLION CITY HALL PROJECT SPARED FROM SCRUTINY

From his downtown office window, attorney Joe Clees can watch the 20-story building that will be Phoenix's new City Hall rise one level at a time. At nine stories right now, it is the only significant stirring on the moribund skyline, and the largest construction project going in the city.

But its rising grandeur begs a question.
Dropping property-tax values have cut the legs out from under the city's capital improvement program. Hundreds of millions of dollars' worth of other projects--things like fire stations, storm sewers, parks and new libraries--are in doubt because of the budget crunch. So why are city leaders proceeding to build themselves a new seat of government?

Exhibiting a trace of defensiveness, officials say the new City Hall, along with a new parking garage and other improvements, is not being built at the expense of other projects. They point out that most of the $80 million price tag will be covered by money saved on rents after city departments--currently scattered about in 15 leased downtown offices--move into the new municipal home.

But even as the edifice rises, the city is trying to pull its building program back from the brink, and citizens like Clees--president of the Friends of the Library--are forced to go to public hearings to plead for mercy for their favored projects.

Though it may look bad, city leaders say that building the new City Hall seemed a safe bet when the contract was signed almost a year ago. And, they point out, there's no way to stop it now.

"The question is valid," says Councilmember Skip Rimsza. "But it's out to contract and we can't stop it now without suffering penalties."
The new municipal showcase, if nothing else, underscores the city's fall from budgetary bliss during the past four years.

Seed money for the new City Hall, $15.7 million, was originally included in a 1984 bond package approved by voters. The city, under then-mayor Terry Goddard, conducted an elaborate--and expensive--international competition for the design of a new municipal complex.

The result was a design far too costly for Phoenix even when it was flush, Mayor Paul Johnson points out, and that plan was scrapped.

In 1988, voters approved another $1 billion bond program, for a wish list of public works projects, including a new central library, a history museum, a new art museum and dozens of parks, roads, and fire and police programs.

Most of the 1988 bonds--about $600 million--were pegged to expected increases in property-tax revenues, just as the $15.7 million for City Hall approved four years earlier was. If property values continued to grow 10 percent a year, as city planners back then predicted, the city would be able to issue bonds for all the projects.

As every developer and banker in Phoenix knows, that rosy forecast did not prove true. In fact, property values have either grown at a much slower rate or declined in recent years, throwing the city's whole construction program into question.

In September, City Manager Frank Fairbanks asked the council to freeze all bond projects that were not yet under way while a solution to overcome the shortfall is devised. Suggestions for solving the crisis range from increasing property taxes by as much as 25 cents per $100 to freezing most new building until the year 2002. The council is expected to decide December 15.

"Admittedly, they have to make some tough choices," Clees says. "But in our view there hasn't been enough emphasis at this point on a new central library. It's a prime time to go forward with the project. The city manager has conceded that if we put these things on hold for a few years, a lot of these projects may vanish."
But as reality has settled in with the rest of the bond program, the concrete has been pouring at the new City Hall. The contrast has not been lost on either side.

"We're sensitive to that," says assistant city manager Sheryl Sculley. "But to say now, after the fact, that we should have done something different? Gosh, you can say that about any program."
Mayor Johnson points out that a "very minimal" amount of the money being spent on the new City Hall could have been used to pay for other projects. But he concedes that the specter of bureaucratic self-indulgence might not rest well with the citizenry.

"It was a decision that we made to move forward on it, and most of the money comes from deferred leases," says Johnson. "It hasn't been [an issue] yet, although internally we recognize that a sharp reporter could turn it into one. But if you look at the facts, it just doesn't affect [other building programs]."
When the council approved the new City Hall two years ago, Johnson says, the property value projections were holding up fairly well. With a scaled-down design initiated after he took office--and the savings on rents--Johnson says the new building made sense then, and makes sense now.

"You can second-guess everything," Johnson says. "A big part of this relates to the unknown. When you issue a bond program, you have to understand that you're banking on the future."
The City Hall project, Sculley points out, is providing almost 500 construction jobs at a time when little else is being built downtown, and the city is capitalizing on a depressed building market.

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