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Controller recommends roughly $17 million stabilization reserve for DBI; suggests $23 million for one‑time capital projects
Summary
A controller's office analysis recommended the Department of Building Inspection set aside about four months of operating expenses (roughly $17 million) as an economic stabilization reserve and direct roughly $23 million of remaining fund balance to one‑time capital investments, while boosting staffing and conducting a fee study.
Heather McDonald, a performance analyst in the City Services Auditor division of the Controller’s Office, told the Building Inspection Commission on April 17 that her office’s financial analysis recommends DBI set an economic stabilization reserve equal to roughly four months of operating expenses — about $17,000,000 — to protect against cyclical revenue declines tied to construction cycles and emergencies such as earthquakes. McDonald said the recommendation is grounded in an analysis of historical revenues and expenditures and benchmarking against other building inspection agencies, whose targeted reserves ranged from one to six months.
McDonald said the Controller’s Office also recommends designating approximately $23,000,000 of the remaining fund balance for one‑time capital improvements that would improve DBI’s delivery of core services. She recommended the department increase staffing levels to meet workload demands and carry out a fee study next fiscal year to confirm that permit and service fees align with the cost of delivery.
Deputy Director Pamela Levin presented DBI’s budget picture earlier in the meeting, projecting a year‑end fund balance of $14,960,000 derived from revenues and underscoring ongoing recruitment gaps in key inspection and plan‑check positions. Levin described recent hiring activity — promotions to chief building inspector, seven new building inspectors and efforts to recruit electrical and housing inspectors — but said DBI still expects only a modest net gain in positions without additional approvals from the Department of Human Resources.
Commissioners praised the Controller’s report for answering outstanding questions about reserve levels and staffing, calling the analysis “excellent work” and thanking staff for the clarity of the presentation. The report’s next steps, McDonald said, are for DBI to incorporate the recommended stabilization reserve and proposed capital investments into future budget planning, coordinate with Capital Planning on priorities, pursue approved staffing increases, and commission a fee study.
The presentation cited the 2009–2011 downturn as evidence that a larger reserve could help DBI maintain staffing and services during revenue declines. The Controller’s Office noted that best practices from the Government Finance Officers Association recommend at least two months of operating reserves but advised that the volatility of construction revenues and exposure to emergency costs justify a higher target for San Francisco.
