San Diego faces $7.8 billion capital shortfall; stormwater needs dominate five‑year outlook

San Diego officials told the City Council March 10 that the city’s five‑year capital infrastructure planning outlook (FY2027–FY2031) identifies $12.82 billion in infrastructure needs and projects roughly $5.0 billion in available funding over the same period, leaving a $7.8 billion programmatic funding gap.

Karen McGriff, assistant director of the Project Management Office in Engineering and Capital Projects, summarized the department’s work to quantify citywide capital needs and match projects to likely funding sources. “We’ve prioritized finishing existing projects and ensuring available revenues match projects already in the delivery pipeline,” she said during the presentation.

The report and the Independent Budget Analyst’s (IBA) review both flagged stormwater as the primary driver of growth in needs. The city’s projected stormwater capital need is roughly $5.5 billion over five years, an increase of about $1.4 billion from last year, the IBA said. IBA analyst Julian Andalina told council members that stormwater and drainage projects account for most of the increase in the gap and recommended the city pursue dedicated funding.

“The magnitude of stormwater needs means action should be taken to secure additional dedicated funding for stormwater,” Andalina said. He and others pointed to the heavy use of emergency spending for stormwater repair, which the IBA found has surged in recent years and often carries higher per‑project costs.

City finance staff said projected revenue sources include general fund financing, development impact fees, grants, and enterprise funds for water and wastewater, but that eligibility restrictions and an expected decline in some federal loan sources will limit available funding. Michael Palaiho, a financial operations manager, said the city anticipates roughly $96 million per year in additional general fund financing might be available but that most flexible revenue is already committed to high‑priority needs such as stormwater WIFIA loan obligations.

Division of Race and Equity staff urged council members to consider how investments are sequenced and distributed. Kim Desmond said that of the SIP (Strategic Investment Program) projects fully funded in the outlook, only about 23% were located in structurally excluded communities and recommended better data capture and explicit targets to ensure equity‑focused outcomes.

Environmental and advocacy groups in the public comment periods urged hard choices and new revenue tools. Courtney Brown of San Diego Coastkeeper called for protecting the stormwater budget and pursuing new revenue sources, warning that underfunding could lead to catastrophic infrastructure failures and higher long‑term costs.

Council members said they will use the outlook as a planning tool as the FY2027 budget process proceeds. The IBA and city staff recommended close alignment between project funding and the actual delivery pipeline, increased transparency in condition assessments for facilities, and evaluation of financing options, including dedicated fees or bonds, to scale up stormwater work.

The outlook is informational; no formal action was required at the meeting. City and IBA staff plan follow‑up briefings as the council reviews the proposed CIP in the coming weeks.