DBI reports steep revenue drops; inspectors and stakeholders warn layoffs will risk safety and slow construction

Vivian Day, director of the Department of Building Inspection, opened the commission’s update with a financial briefing that showed sharply lower revenues and proposed short-term spending controls to avoid a year-end deficit. Pamela Levin, DBI finance services manager, said a comparison of the first nine months of the current fiscal year with the first nine months of FY2008 showed a 45% drop in valuation and an 11% drop in permits issued. "The operating revenue projection in February was $40,600,000 and now in March it's $38,400,000," Levin said, "which is a $2,200,000 drop in one month."

The department outlined immediate measures: freeze nonessential encumbrances, approve only critical materials and supplies, hold work orders to budget, and set an earlier deadline for expenditures (no spending after May 1) so year-end obligations are clearer. Levin also described planned changes to how deferred credits are calculated to better reflect multi-year permit and plan-review work. She said revenue proposals such as a small-property license fee and a vacant-property registration are not yet reflected in the current projections and, if implemented through the tax roll, would likely not be visible until late 2009 or early 2010.

The financial briefing set the stage for a lengthy public and staff presentation about staffing reductions planned for May 1. Presenters told the commission DBI expects to lose approximately 12 building inspectors, 9 electrical inspectors, 3 plumbing inspectors and 3 housing inspectors in the first round. Lawrence Kornfield, chief building inspector, and other presenters warned the cuts would reduce capacity for routine inspections, special inspections, condo conversions and outreach; they also stressed the department’s statutory role in rapid post-earthquake assessments. "We're averaging still 1,200 inspections a week," a presenter said, and noted many outstanding inspections originated from permits issued in prior years.

Representatives of contractors, builders and labor organizations urged the commission to seek alternatives. Ken Cochran of BCCI Construction and Jason MacLean of the San Francisco Electrical Contractors Association said inspection delays will ripple through the construction economy, delaying work and reducing tax revenue. Labor and trade representatives—including the San Francisco Building and Construction Trades Council, the San Francisco Electrical Inspectors Association, and the Coalition for Responsible Growth—argued that furloughs, temporary reductions or redeployment could be preferable to permanent layoffs and warned of a long-term 'brain drain' if trained inspectors leave.

Several speakers also raised concerns that over the previous six years about $26–$14 million had been transferred out of DBI to other departments; speakers asked the commission to investigate whether those past transfers could be recovered or reallocated. DBI staff said they are working with the Controller's Office and the Mayor's Office to look at the real estate fund and other funds that might mitigate operating cuts but cautioned those processes involve multiple parties and uncertain timing.

Commissioners asked staff to pursue revenue measures and to seek one-time solutions to delay terminations while longer-term fixes are developed. Director Day and finance staff said they would try to identify options that could defer layoffs and would report back at future meetings. The Commission did not take a formal vote on layoffs at this meeting.