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- 439 - Capital Improvement Plan This section of the budget contains the City’s Five-Year Capital Improvement Plan (CIP). It also provides specific capital project details (including projected operating budget impacts) and a listing of unfunded projects, as well as a listing of annual maintenance and asset management/lifecycle replacement costs that are not being funded. In conjunction with the annual budget process, the City prepares a CIP that identifies anticipated project expenditures greater than $25,000 over a multi-year timeframe. The CIP provides the City with a strategic planning document that guides near- and medium-term expenditures for preservation of City infrastructure; major investments in existing or new facilities; and other asset maintenance and investment expenditures, including technology and communications systems. Once approved by the City Council, the first year of the CIP is incorporated into the City’s annual Operating and Capital budget, and projects shown in the first year receive budgetary appropriations. Background In October, 2007, the Council held a study session to discuss the City’s unmet operating and capital needs and to consider possible revenue enhancement options. The Council was presented with an initial projection of capital project and asset management needs, which included shortfalls in annual operating and maintenance expenditures, as well as the lack of funding for annual lifecycle replacement costs for City facilities and infrastructure. As shown in Exhibit 5, the City has over $65 million in one-time capital project needs in addition to $1.7 million in annual lifecycle replacement/asset management and maintenance needs. Notes have been added to Exhibit 5 since the October 2007 study session to identify project expenditures that are included in the proposed 2008/13 CIP. In an effort to be more comprehensive and strategic in developing the CIP, particularly with respect to consideration of maintenance and lifecycle replacement needs, staff developed a series of CIP options for review by the Council. These options were presented to the Council at two study sessions, with a third and concluding discussion held in conjunction with the Narrative Budget Study Session on May 20, 2008. Four options were presented to the Council over the course of the three study sessions: 1) Traditional CIP; 2) Inclusion of Asset Management Funding; 3) Major Unfunded Projects; and 4) a Traditional CIP with the addition of funding for the Hacienda Avenue Reconstruction project. After considerable review and discussion, Council requested that staff proceed with Option 4, the Traditional CIP with funding specifically identified for the Hacienda Avenue Rehabilitation project. No funding is included in the proposed CIP for annual maintenance or the establishment of an asset management/lifecycle replacement fund. ---PAGE BREAK--- - 440 - Summary The FY 2008/13 CIP contains 17 capital projects totaling just under $12.7 million over five years. Significant projects include: $1.5 million for Hacienda Avenue Rehabilitation; $1.3 million to complete land acquisition and $1.5 million for design and construction of Stojanovich Park (from Park Dedication fees); a major allocation of funding to pavement maintenance ($2.4 million in CIPR and $2.1 million from other funding sources for a total of $4.5 million); a renewed commitment to install Americans with Disabilities Act (ADA) compliant curb ramps ($35,000 per year); and $500,000 in additional RDA bond proceeds for the East Campbell Avenue Improvement Project to construct additional streetscape improvements between Foote and Page Streets, including widened sidewalks, bulb outs, on street parking and street furniture. Summaries and descriptions of projects can be found in Exhibits 1-4. Year One of the Capital Improvement Plan, to be appropriated in FY 09, includes the following projects: Year One Projects Accessibility Ramps (New) $ 35,000 ADA Transition Plan Improvements (New) 50,000 Misc. Storm Drainage Improvements 50,000 Bike Ped. & Traffic Safety Improvements 65,000 Bascom/Campbell Controller Cabinet 120,000 E. Campbell Ave. Improvements (Add'l) 500,000 Annual Street Maintenance 935,000 Stojanovich Park (Add'l) 2,200,000 Police Department Generator (New) 60,000 Community Center Pool Repairs 70,000 New Roof for Corridor Canopy (Add'l) 15,000 Orchard City Banquet Hall Renovation (Add'l) 325,000 Water Tower Restoration (New) 110,000 TOTAL $4,535,000 The Water Tower project is dependent on receipt of $90,000 in grant funding. Project Funding Sources Revenue for project expenditures comes from a number of funding sources, both restricted and discretionary. As shown in the chart below, the sources of funding for project expenditures in the 2008/13 CIP are: Capital Improvement Plan Reserve (CIPR), Park Dedication Fees, RDA Bond Proceeds, Grants, Environmental Services Fund; Construction Tax Reserve; and Vehicle Impact Fees (a new revenue source dedicated to street maintenance). ---PAGE BREAK--- - 441 - The CIPR, which is part of the General Fund, is the City’s most flexible funding source and has historically been used for a wide range of capital project expenditures. By established Council policy, the CIPR receives a portion of any available General Fund surplus at fiscal year-end. The availability of any funds for the CIPR is a function of actual expenditures and revenues in a given fiscal year. In years where revenues are robust or expenditures are lower than anticipated, the CIPR grows; in years where revenues are lean and reserves are needed to balance the City’s budget, the CIPR does not increase and desired project expenditures are required to be deferred or placed on the City’s unfunded project list. In recent years, relatively little has been able to be added to the CIPR. An important aspect of capital project planning, therefore, is an understanding of the relationship between the Operating Budget and available capital project revenues. FY 2008/13 CIP - By Funding Sources Park 25% CIPR 32% Cons.Tax 6% Environ. 2% Grants 24% Vehicle 4% RDA Bond 7% Changes to the CIP Historically, the City has prepared a CIP that projects both revenues and expenditures over a seven-year time period. This year, the City is proposing a five-year Capital Improvement Plan because changing economic conditions and evolving priorities make reasonably projecting expenditures and revenues beyond a five-year horizon of limited value, particularly where revenue streams for future projects are extremely limited. A five-year plan will provide a reasonable strategic guide for expenditures over a time horizon where some level of funding can be anticipated. In addition to the implementation of a five-year CIP, the CIP, which has historically been issued as a separate document, is now incorporated into the annual operating and capital budget document as a streamlining measure. Environmental Review On May 27, 2008, the Planning Commission held a Public Hearing to consider the proposed CIP. At this meeting, the Commission accepted the CIP, found it be consistent with the City’s General Plan, and recommended that the City Council find the projects in the CIP to be either categorically exempt under the California Environmental Quality Act (CEQA), or to have been considered under previous project approvals. ---PAGE BREAK--- - 442 - Assumptions The 2009/13 CIP is prepared in accordance with certain assumptions about funding constraints, operating budget implications, City priorities, and work plans as summarized below: • Project and equipment costs, where applicable, are based on departmental estimates. Cost estimates are based on current market and contract experience on similar projects, where available, or order of magnitude cost estimates for larger projects in the early phases of design. Projects managed by Pubic Works include “soft costs” such as staff costs for project management, design, inspection and administration, and consultant services as necessary. • Ongoing operating costs for annual maintenance and technical support are projected for each capital project and as appropriate, are reflected in the operating budget. The only CIP project with significant new operating budget impacts is the development of Stojanovich Park. When completed and open to the public, it is estimated that the annual operating costs associated with maintaining this facility will be approximately $58,000 per year. These costs have been included in the City’s multi-year operating budget projections. • Existing work plans, ongoing programs and service level requirements were taken into consideration in project scheduling. Project Selection Criteria Criteria used in evaluating project requests include: • The project’s relationship to the City’s strategic goals and objectives. • The project’s impact on the operating budget (if any). • The nature of the project in terms of preservation of City assets versus new construction or acquisition. • Available financing. • Consequences of not completing the project employee and/or public safety, etc.) Exhibits: 1 CIP Summaries 2 CIP Five Year Cash Flow Analysis 3 Capital Project Descriptions 4 CIP Carry Forward Projects > $50,000 5 Unfunded Projects List ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK---