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Civil Grand Jury reports (Volume 1976-77) online

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annual Port budget goes to pay interest on this debt. Recently the
Port Commission took a major step toward developing the strategy
with which to approach the State in an attempt to gain "forgiveness"
for at least to reduce that portion, $36.5 million, owed to the State.
It is imperative that this Commission convince Mayor Moscone to use
his persuasive powers and influence on the State legislators, with
whom he worked so well for many years, to develop a sound and reason-
able package for reduction of this obligation.

Perhaps 10,000 Jobs in San Francisco are directly related
to cargo handling and other maritime activities, such as ship
chandlery, repair, insurance, etc. The economic multiplier effect on
other peripheral Jobs created by this direct employment could be two
or three to one, creating some 25,000 Jobs in the City and the Bay
Area. In addition, San Francisco remains the center of port-related
functions - even for many shipping companies whose cargo handling has
been transferred to Oakland and other Bay Area ports -and the hub of
import/export firms. The Port produces Jobs, income to the local
populace and, indirectly, tax revenues to the City. It is therefore,
necessary to the City economy that the Port not only continue
operation but also expand its activity in a logical, planned,
businesslike manner.

San Francisco has one of the traditional, technologically
obsolete ports. Its finger pier construction is grossly inadequate
to handle large modern vessels and container cargo carriers. As



constituted, it cannot easily be converted to a terminal for handling
bulk cargo such as coal. The major positive factor of the Port is
the excellent, natural deep-water channel that now exists to Piers 80
through 98 and to the Hunters Point area.

The Army Street Terminal, Pier 80, was reconstructed
several years ago at a cost of $8 million. It has eight berths and
two container cranes. It is, however, barely adequate and because
of subsidence is only slightly above water level at high tide. This
reconstruction was done despite the known risk of settlement,
recognized at that time by the engineers working on the project. The
decision was made to proceed then with construction on a less costly
basis and face the consequences at a later date - now. The only
technically viable solution at present is to place a layer of paving
on the existing pier at a cost of $150,000 to $250,000, an expenditure
the Port can ill afford at this time but one that must be done at
some time soon if this pier is to remain as a usable facility. There
appears to be no legal recourse available to recover any of the costs
of reconstruction resulting from the now-obvious poor decision of
ten years ago. Piers 91 and 96 were recently completed at a cost of
$15 million and are as modern as their competitors across the Bay
in Oakland.

Several major projects are in the planning stage that will
take economic advantage of both the deep-water channels available and
the real estate potential of the water's edge. Maximum effort must
be made by the Port Commission and the City Administration to spear -
head a drive to develop the waterfront properties . Necessary permits
must be obtained and the way cleared for construction of the proposed
$40 to $60 million bulk coal terminal at Pier 91, the slurry terminal
at Pier 98 and the $29 million North Point Pier plan at Piers 37, 39
and 11.

Mr. Soules has already made contact with international
receivers to assure, in advance, that markets are available for moving
bulk coal through the Port. The investment in the bulk coal terminal
will be made by private developers with relatively minor expenditures
required of the City. It is estimated that the Port will benefit by
almost $1.5 million annually from this project when it reaches full
operation of 10 million tons of coal each year. The Port would be
required to dredge the harbor at a cost of about $1 million to
accomodate the large vessels used but this investment would be
returned many times over in the future.

The recent resignation of Port Commissioner Byron Arnold
gives Mayor Moscone an opportunity to appoint a third person to the
five member Commission and, in effect, gain control of the waterfront
through his appointees. Rumors that the future of Port Director
Soules may be at stake in this appointment cannot do other than hurt
the already troubled Port. Although Mr. Soules may have difficulty



dealing with the political problems of San Francisco's Port, he has
nevertheless attracted several major developers. This Grand Jury
believes that he warrants a vote of confidence from the Port
Commission and the Mayor and an opportunity to continue to revive
what had been a dying San Francisco entity.

Several interesting and innovative concepts were advanced
and discussed during the investigation by this Grand Jury. At least
one of these - the "independent" Port Authority - is worthy of
comment. Without substantial further study , however, we cannot
recommend the Implementation of such a proposal at this time . We do
recommend that the Mayor appoint a task force to study the legality ,
feasibility and acceptability of such an arrangement. As an example,
under one scheme proposed, the Port would be directed by an elected
board, be independent of the City and County government, and be
subsidized by funds from a revenue producing source such as the
Airport. Although such an agency, which apparently has worked well
in other geographic areas , can and does have appeal to the Port
Director, who has had difficulty disengaging the problems of the Port
from those of the political arena, it does require substantial
reorientation and restructuring of the City and County government.
It must be studied very carefully.

Although not yet financially healthy, the Port appears to
be improving its general fiscal condition. Back, unpaid rent is
being pursued vigorously. A recent financial report may be somewhat
deceptive, however, since it shows a substantial positive net income
position. This in fact results from approximately $2.95 million in
insurance, payments received after the Pier 37 fire less some $600,000
required to clear the site. Even in this transaction the present
management has shown its resourcefulness. We understand that Mr.
Soules had been advised to accept $1 million for the loss but because
of his tenacity and knowledgeability the Port's position has been
improved by almost $2 million. Approximately $2.3 million of the
settlement is now in escrow and can only be used for revenue producing
capital improvements dedicated to maritime use.

This Grand Jury recognizes many problems still to be dealt
with. We also note that there are improvements resulting from the
current management. We strongly urge that City government improve its
relationship and its attitude toward the Port and that a project plan
be prepared and promoted for major development of the area. Unless
this is done, the Port will remain mired in financial difficulty.

Wolfgang Hellpap,

Frank L . Markey ,

Stelios M. Andrew, Chairman


The Municipal Railway has a greater impact on the residents
of San Francisco than any other City service. It is not an emergency
service; it is not geared to one interest group; it is not an indirect
service. The Municipal Railway provides vitally needed transportation
to 250,000 passengers daily. All residents are eligible to use public
transit, and a greater percentage do so than in any other city in the
country, save New York.

In scope of proposed service, Muni is a first-class transit
system. Over 80% of the City's residents live within two blocks of a
Muni line. Muni operates more than 1000 vehicles over 70 routes having
300 line miles. It is first in the country in revenue passengers per
employee; first in the country in vehicle hours per inhabitant; first
in the country in revenue passengers per mile of service.

We emphasize the impact of the Railway because we are alarmed
by the extent to which it has been neglected. Our report covers the
effect of this neglect on City residents, how the neglect came about,
and the parties responsible for it.

Equipment Deterioration

There can be no doubt that the Municipal Railway's rolling
stock was allowed to deteriorate badly during the last three years.
The Grand Jury has attempted to determine why, until recently, the
equipment was in such poor condition.


Muni first became aware of its critical maintenance problem
in April, 1974-. During December, 1973* while he was still Deputy
General Manager, Curtis Green asked one of his operations analysts to
study Muni's automotive maintenance practices. The resulting report,
dated the following April, is astonishing. Record-keeping, inventory
and maintenance itself were found to be chaotic.

Supervisors and mechanics wasted a lot of time on clerical
work because shop clerks were badly trained and in short supply.
Record-keeping was inconsistent and erroneous because of poor training
and because the results were not seen as a valuable planning tool, but
were regarded instead as history only. A chronic shortage of parts
had resulted in 72 coaches (13 per cent of the fleet) out of service.
Supervisors and foremen spent 50 to 70 per cent of their time rummaging
for parts; a common practice was to raid an out-of-service coach for
parts to repair another one. Mechanics even resorted to making parts
themselves, and the resulting product might cost three times purchase
price. The General Motors coaches were inspected every 6000 miles


MUNICIPAL . ..ILwAY (continued)

instead of the manufacturer's recommended 1500. The mechanics in the
automotive divisions spent at least 60% of their time responding to
emergency road calls since the poorly maintained "buses broke down at
an alarming rate. In short, there was a complete lack of anything a
transit expert would call preventive maintenance.

Muni ' s Response

Despite the crippling effect of poor maintenance practices,
Muni was still able to hobble along: the General Motors coaches
(purchased during 1969-70) were relatively new and there were not
enough operators to place a maximum demand on usage. Meanwhile, there
was an attempt to regroup. Top management gave its official blessing
to a policy of preventive maintenance, and although it took great
persistence to convert the supervisors and foremen, a maintenance
schedule was installed at Kirkland and Ocean Divisions. Mechanics
and servicemen were made more efficient by having operators bring
coaches into the yard for repair, by abbreviating the servicing cycle
and by eliminating the use of mechanics as servicemen. Training
courses and bi-weekly meetings were required of shop supervisors. A
work order system was clearly needed, but was delayed for two reasons.
An ED? system (TIMS) was being designed and the development of an
interim manual system was seen as hindering progress on the automatic
system. When it became clear that it would take years to develop
TIMS, a manual work order system was devised but was not installed
until early 1977 because of a shortage of clerical shop personnel.
The chronic parts shortage could be solved only by increased budget

The Board's Response

Following the revealing report of April, 197^ and Curtis
Green's promotion to General Manager, the first budget submitted by
the new Muni administration was for 1975-76. This budget emphasized
preventive maintenance, including mechanics, shop clerks, and parts.
The budget was approved by the Board of Supervisors without critical
cuts; however, because of pressure to relieve the City's property tax
rate, most of the new maintenance positions, including the clerks,
were frozen. The Board promised to release the frozen positions in
January, 1976 but did not. During May the Board requested that Muni
cut one-half its vacant positions, both new and old positions which
were vacant because they were frozen.

The Mayor's Response

In September, 1975 the Public Utilities Commission requested
31.5 million for Muni maintenance, but the request was cut to $.5
million by Mayor Alioto. In December Muni initiated an engine re-
building program, using the supplemental appropriation to hire an out-
side contractor to perform part of the work and to hire six additional



Muni mechanics. The number of out-of-service coaches dropped, but
the program was terminated on June 30, 1976 when the half-million
ran out.

The Results

During the summer and fall of 1976, Muni equipment was sink-
ing to a critical level of disrepair. Any semblance of scheduled
maintenance came to an end, as the mechanics coped with the ever in-
creasing number of road breakdowns. The Elkton shop was capable of
six engine overhauls a month, but the breakdown rate was at least 150%
the repair rate. The Flyer trolleys were arriving, full of bugs and
creating more work in the electrical maintenance shops. Throughout
the mounting crisis, there was a severe shortage of mechanics and
servicemen. Primarily because of the passage of Proposition B which
cut craft workers' pay, the retirement rate doubled, but vacant posi-
tions were still frozen. The manpower shortage was acute in every
classification; for the Electrical Transit Service Workers, hours of
availability dropped 32%. Even the position of Automotive Transit
Equipment Superintendent was vacant for over two years, and as of this
writing, still is. When the last Superintendent died, he left 7 1/2
months of accumulated benefits which had to expire. Since then, there
has been no list from which to hire a replacement, although one is now
in preparation.

The Board Again

Meanwhile, the new Muni budget request for 1976-77 had been
cut from $87 million to $80 million by Mayor Alioto and had been fur-
ther cut to $73 million by the Board of Supervisors. Instead of the
1902 drivers and 520 maintenance personnel considered necessary by
Muni to operate the schedules then in force, the Board had allocated
1862 drivers and 512 maintenance personnel and because of continued
position freezing, only 1800 drivers and 490 maintenance personnel
were actually working. In August the FUG voted to accept the reduced
schedule proposed by Muni and to send a strongly worded message to
the Board. The message requested that frozen positions be restored
and stated that the full complement of 1902 drivers would be required
to meet schedules as printed. The Board did agree to release frozen
positions if Muni would agree to another $1.8 million cut. In
September the FUC requested the remaining $1 million to continue the
engine rebuilding program, but the Board reasoned that Muni had the
manpower to do the job in-house.


The entire question of whether to reduce runs and how many
drivers would be required to meet any given schedule was becoming
academic; because of broken-down vehicles, Muni missed about 25% of
scheduled runs during September and October of 1976.



The Board's Response

In September, 1976, Muni reached its nadir; in November,
the Board responded by hiring the United Transportation Development
Corporation to investigate maintenance operations at the Municipal
Railway. The UTD report, dated December 8, was hailed by the Board
as proof that Muni's maintenance problems were due primarily to poor
management; even a Public Utilities Commissioner declared the report
"fair and objective." Indeed, the report is stylishly written, with
Just the right touch of sarcasm. Muni's written response, dated six
days later, is dowdy, heavy-handed and evidently not even proof-read.
In substance, both the report and the response are lacking.

One by one, UTD dismisses each possible factor in the main-
tenance muddle, leaving only management as the culprit. The Muni
organizational structure (whereby accounting, personnel, safety,
transit planning and public service all report to the PUC General
Manager rather than to the Muni General Manager) is recognized as
peculiar, but not a problem. The Geneva and Elkton yards are admit-
tedly antiquated, but the Kirkland yard is declared adequate despite
the fact that 2hk coaches are stored in an area designed to hold 178.
The parts shortage, not cured until the 1975-76 budget, is dismissed
as a myth and part of the Railway's "folklore." A five per cent in-
crease in approved staff is seen as an indication that "the Railway
is no worse off now than it was in the late 60 's." In reality, the
number of working mechanics, machinists and servicemen has declined
from 1 worker per H.l vehicles in 1967-68 to 1 worker per 4.5 vehicles
in 1976-77. Since the UTD consultants are Toronto transit men, they
should perhaps compare the Muni maintenance force to Toronto's. At
the time of the report, Muni employed 506 maintenance workers for 1040
vehicles, or 1 worker per 2.1 vehicles; Toronto had 199^ maintenance
workers for 2600 vehicles, or 1 worker per 1.3 vehicles.

Even though all problems external to Muni are discounted,
the UTD report does offer several anecdotes which reflect poorly on
Muni management. The Muni response to these stories generally con-
sists of excuses and rationalizations and circuitous reasoning, when
frank acknowledgement might be in order if no better answers can be


In late December, 1976, San Francisco received a Federal
grant of nearly $3.4 million, under the Local Public Works Employment
Act. Mayor Moscone announced that approximately one-half the grant
would be used to fund a crash maintenance program at Muni. Perhaps
generosity was prompted by the Urban Mass Transit Administration.
On November 10, UMTA sent a letter to the Public Utilities Commission
threatening to discontinue Federal funds for capital improvement un-
less the City cleaned up its maintenance act. UMTA had so far pro-



vlded $275 million, primarily for the purchase of new rolling stock,
only to see those nev; vehicles rotting away for want of repairs.

During the Fall of 1976, a crash maintenance program had been
outlined by Muni, the original idea being to ask the Board for a sup-
plemental appropriation. When the Federal funds became available, the
Emergency Maintenance Program was begun on December 1 and will continue
until November 30, 1977. About 86 additional maintenance workers are
to be hired, and most of the automotive personnel have been recruited.
The diesel engine overhaul rate has been increased from 1.5 per week
to 6 per week, and is expected to go to 7 per week. Approximately
100 coaches have been returned to service, and missed runs have been
reduced to 5%.

A few of the projects originally Included in the program were
deleted because of a $139,000 cut in Muni's share of funds. The Board
of Supervisors voted to reduce Muni's share and the Recreation and
Park share, and to use $200,000 of the deleted funds to hire an
independent consultant, (read UTD) to implement the recommendations in
the UTD report. The Board took this action despite the fact that
Public Works ' money can only be used for wages and must be spent on
deferred programs.

Financial Resources

Funding for the Municipal Railway has three nearly equal
sources: fares; ad valorem taxes; and State and Federal assistance.


Currently Muni collects an average fare of 21$ for a ride
that costs approximately 68<fc. While this Grand Jury is adamantly in
favor of tax-supported public transit, we feel that the time has come
for a fare increase. If the fares were increased to 35<fc for regular
riders and 10<fc for children and seniors, total revenue would increase
from $22 million to $29 million. A counter argument often heard is
that ridership would decline, but we cannot imagine that regular
riders would walk, drive, or simply stay home rather than pay an extra
dime or nickel. Those on General Assistance already ride free, and
the increased fares would still be among the lowest in the nation.

During the coming year, fares will account for an even
smaller proportion of expenses. The Muni budget for 1977-78 shows a
deficit of $62 million; the deficit for last year was $1*8 million.
The Metropolitan Transportation Commission paid 6% of Muni's operating
expenses last year, and this important source of funds might be
endangered if fares are not increased. MTC guidelines call for 35£
farebox funding as a prerequisite to MTC financial assistance. Even
with the credit allowed for discounted fares, Muni is only 32!? fare-
box funded, and the percentage will drop when the new budget is




The Public Utilities Commission approved a fare increase
over a year ago. During the furor last Fall over the increased
property tax rate, Mayor Moscone sent to the Board a list of several
alternative revenue sources, including a Muni fare increase. The
Board's Finance Committee rejected the suggestions in toto. Instead,
the Board raised the property tax rate and refused to fund a mainten-
ance program for Muni. Not only did the Board fail to increase fares,
their failure to fund a maintenance program has resulted in a decrease
in farebox revenue. When Muni misses 25$ of scheduled runs because
of poorly maintained equipment, the effect on fares collected is
noticeable. During last September and October revenue was 9% less
than in 1975.

The fare increase so far proposed has been 35<t and KH for
single rides, and §15. 00 and $3«50 for Fast Passes. Perhaps it would
be wiser to keep senior fares at the present level and raise passes
proportionately less than single fares in order to encourage regular
riding. We do not endorse any particular scheme, but we do urge that
fares be raised in some manner in the coming year.

Ad Valorem Taxes

Despite inflation and rising salaries, the City's share of
Muni funding dropped from $36-9 million in 197*1-75 to $25.6 million
in 1975-7^. It is true that most of the decrease was caused by the
sixty-day strike since wages and benefits account for nearly 90* of
Muni's operating expenses (compared to 655? for other Bay Area transit
systems). Nevertheless, City support dropped about $2.8 million
(nearly °%) . We believe that the underlying reason for this inade-
quate financial support is a mistaken notion on the part of some mem-
bers of our Board of Supervisors that the Muni budget should not show
such a large deficit.

The proposed Muni budget for 1977-78 included 55 additional
maintenance personnel expressly for a preventive maintenance program.
It should be kept in mind that overtime will be cut by 25 man years,
leaving the true increase In manpower at 30. The original budget had
provided for lHk new maintenance workers, but that number was cut to
55 by the Public Utilities Commission. The PUC's rationale for the
cut was that Muni could not absorb that many new workers In one year,
even though the Emergency Maintenance Program was utilizing the ser-
vices of 60 new, but temporary, employees with spectacular success.

We attended one session of the Board's 1977-78 budget hear-
ings, on the day of Muni's reckoning before the Finance Committee.
The chairman of that venerable committee is Supervisor Barbagelata;
the other members are Supervisors Kopp, Molinari and von Beroldingen.
Throughout the hearing, the members of the Finance Committee seemed



determined in refusing to believe that the Muni budget could possibly
be warranted. Supervisor Barbagelata commented that "we lose $5
million a month on Muni," although other city departments are not
expected to make money. He estimated an average taxpayer's annual
share of the Muni budget deficit and appeared astounded at the answer
which was $200.00 for a house assessed at $50,000. Perhaps Super-
visor Barbagelata thinks in terms of the taxpayer who maintains a car
and drives it everywhere, rarely using a transit service he is
nevertheless forced to pay for. A more enlightened view might consider
that the purpose of a public transit system is to get drivers out of
their cars; that the cost is a bargain for those to take the Muni;
and that traffic is reduced, the environment protected, and energy
saved, all of which benefit everyone, even those who must drive.

Supervisor Barbagelata cited the UTD report as generally
accepted proof that Muni does not require more mechanics; he even
stated that Muni already has more maintenance personnel than the

Online LibraryCalifornia. Grand Jury (San Francisco)Civil Grand Jury reports (Volume 1976-77) → online text (page 4 of 32)