Turn McHenry Museum, Mansion over to nonprofits?

Modesto should consider donating its McHenry Museum and McHenry Mansion to qualified, worthwhile nonprofit organizations that would take on the cost of running them while ensuring the two institutions remain true to their missions.

That is among the recommendations outlined in the 10-page final report of Mayor Ted Brandvold’s 100-day budget review committee. The report includes lots of recommendations the city has considered over the years but never acted upon, such as having the DoubleTree operate Modesto Centre Plaza, as well as apparently new ones, such as exploring whether Modesto and Stanislaus County could consolidate their vehicle maintenance operations to save money.

Modesto could face challenges if it decides to implement some of the recommendations, which could result in outsourcing jobs.

In a statement, Kim Gillingham, the labor representative for the Modesto Confidential and Management Association – one of the city’s six labor groups – warns that while it is good practice to look at the costs and benefits of keeping services with the city vs. outsourcing, those comparisons need to be comprehensive and include all costs.

She said the city also needs to make sure it is getting real value if it outsources and consider that outsourcing can affect employee morale and productivity; and the city can lose control, accountability and transparency when it outsources.

The committee in its report acknowledges many of its recommendations are not new and the city has grappled with some of them in the past but not made decisions. But the committee said it’s imperative the city start taking action now.

“Unless Modesto sheds a ‘business as usual’ approach and acts soon on multiple fronts, it is possible the city general fund will struggle to supply even the most vital services to its citizens within five to 10 years,” according to the report, which was approved by committee members Thursday.

The general fund makes up nearly a third of the city’s $361 million operating budget in its 2016-17 fiscal year, which starts July 1. The general fund draws the most attention because the City Council has wide latitude over how to spend it and it primarily pays for public safety. The city has struggled in recent years to balance the fund, whose revenues include sales and property taxes.

Modesto put sales tax increases on the November 2011 and November 2013 ballots to beef up the general fund and pay for more public safety services. Voters rejected both of them. Modesto has faced criticism over some of its spending decisions, such as the early February decision to spend as much as $75,000 from the general fund to provide meals and lodging for the Amgen Tour of California, though the bicyclists were not racing here.

Brandvold took office in late February after defeating incumbent Garrad Marsh in a runoff election. He asked the council to form the 100-day committee in March. The committee started meeting April 1 and was tasked with finding money in the general fund to hire more police officers and make recommendations for the city’s long-term financial sustainability.

The 2016-17 budget includes Brandvold’s proposal to hire as many as 22 police officers, with the funding coming from anticipated new revenues, reducing what the city spends in other areas, such as for consultants and professional services, not filling several vacant positions, and other sources.

The committee’s long-term recommendations include:

▪  Consider using what is called managed competition to see whether the city can save costs on such services as accounts payable, payroll and repairing sidewalks. Managed competition involves city employees and private companies submitting proposals that include how much they would charge to perform a particular service. The city has used managed competition in the past and in one case stayed with city employees and in another used a private company.

▪  The city should talk with the county about what services could be consolidated at Tenth Street Place, the city-county administration center, such as mail services, purchasing and human resources. The two governments also should look at whether they could consolidate vehicle maintenance operations. The report says Modesto has $6.4 million set aside for a new vehicle maintenance facility but some or all of that could be placed in reserves if this consolidation took place. The report does not say how much of the $6.4 million is from the general fund.

▪  Consider annexing the area of north McHenry Avenue that is home to several auto dealerships and other businesses. “Initial estimates indicate doing so would bring into the City between $500,000 to $1 million or more in sales and property taxes every year,” according to the committee report. The report states that if a city analysis confirms the estimates, the city should take steps to annex the area.

▪  Modesto Centre Plaza – the city convention center – is expected to lose $514,000 in the 2016-17 fiscal year, with the general fund subsidizing the loss. The report recommends the city try to reach a deal with the DoubleTree to have the hotel manage and operate the center or consider closing or selling the facility. The city is in talks with the DoubleTree and has talked with the hotel in the past. It could be difficult to close or sell the center. It was built by the city’s now-defunct redevelopment agency, and the state has the final say over facilities built through redevelopment.

▪  Consider selling one or more of the city’s three golf courses. The report says the courses will operate at a loss of $696,000 in the 2016-17 fiscal year. The general fund would subsidize the loss. Modesto has faced stiff opposition when it has talked about closing one of its courses. Golfers packed a city meeting nearly two years ago when officials talked about closing the nine-hole Modesto Municipal Golf Course.

▪  Review emergency medical services. “There appears to be an overlap or duplication of services between American Medical Response, which responds to emergency medical calls, and the City Fire Department,” according to the report. “This should be reviewed to eliminate expensive replication of services through greater cooperation without jeopardizing the quality of service to the community.”

▪  The report says the city expects to lose $187,000 operating the McHenry Musuem and McHenry Mansion during the 2016-17 fiscal year. The buildings are overseen by two city employees with the help of volunteers from the McHenry Museum & Historical Society and the McHenry Mansion Foundation. The two nonprofits also raise money for projects that benefit the institutions, which draw about 40,000 visitors annually. Officers with the two nonprofits’ boards did not respond to requests for comment made through the city.

The committee’s recommendations are expected to go the council at its July 5 meeting. City Manager Jim Holgersson said he will ask the council at the meeting for 90 days to come up with a plan on how the city will analyze the recommendations and how it would implement them. He said the plan will include plenty of opportunity for public input and council involvement.

He said it could take a year or two to implement some of the major recommendations – such as turning the museum over to a nonprofit – and would require final council approval to move forward.

Brandvold acknowledged Modesto has issued plenty of studies and recommendations over the years that have sat on shelves gathering dust. He said this time will be different. “We are going to follow through,” he said. “It’s about being fiscally responsible.”

This story was originally published June 26, 2016 at 1:29 PM with the headline "Turn McHenry Museum, Mansion over to nonprofits?."