Attachment 2c
A - 1
TOWN OF LOS GATOS
CIVIC CENTER 110 E. MAIN STREET LOS GATOS, CA 95030
May 4, 2018
Honorable Mayor and Town Council:
I am pleased to submit to you the Proposed Fiscal Year (FY) 2018/19 – 2022/23 Five-Year Capital
Improvement Program (CIP) for the Town of Los Gatos. The CIP is a comprehensive five-year capital
improvement plan designed to identify projects to develop and maintain the Town’s infrastructure,
consistent with the Town Council Core Goal of maintaining the condition and availability of public
facilities. Guidance for developing priorities for capital improvement projects is also derived from key
plans, including the General Plan and the Council’s Strategic Priorities.
This CIP budget message contains:
• Town’s Core Goals and Strategic Priorities
• CIP Financial Summary - Funding Sources
• Proposed FY 2018/19 – 2022/23 CIP Overview
• Proposed FY 2018/19 CIP Overview
• FY 2017/18 Completed Projects
In February 2018, the Town Council established the 2018-20 Strategic Priorities (see page A-2). The Core
Goals and Strategic Priorities guide the preparation of both the Capital and Operating Budgets. In terms
of capital projects, the Town Council affirmed its interest in completing the Phase II of the Almond Grove
streets, investing in bicycle and pedestrian improvements, addressing cut-through traffic, enhancing
community vitality through events and other efforts, fostering emergency preparedness, and improving
the condition of the Town’s streets. The council also identified new projects, including a Comprehensive
Parking Study, One-Way Downtown Streets Pilot, and Transportation Demand Management/Community
Shuttle. These projects are all included in the Proposed CIP.
All proposed capital projects are described in this document. The reserves and operating expenditures
are discussed in more detail in the Proposed FY 2018/19 Operating Budget.
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 2
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 3
CIP FINANCIAL SUMMARY – FUNDING SOURCES
As in the past, the Town continues to be challenged in its attempts to secure a reliable ongoing source of
revenue for the Capital Improvements Program. The proposed five-year CIP reflects $7.2 million in
ongoing Gas Tax dedicated sources to help fund the proposed $48 million of planned capital
improvements. The balance of CIP funding of $40.8 million is expected to be funded by one–time
appropriations from the General Fund Appropriated Reserves (GFAR), Utility Undergrounds Funds,
Traffic Mitigation Funds, Grant Funds, Storm Drain Funds as follows:
Ongoing Gas Tax 7,174,510$
GFAR 28,593,859
Utility Undeground Funds 6,766,000
Traffic Mitigation Funds 1,978,973
Grant Funds 2,637,319
Storm Drain Funds 880,408
Total Funding Available 48,031,069$
Funding Sources for the FY 2018/19 - 2022/23 CIP
One-Time
GAS TAX
State Gasoline Tax revenue, the only ongoing revenue source for capital improvements, is distributed to
the Town from the State of California and recorded in the Gas Tax Fund. This tax is also known as the
“Highway Users Tax” or the “Motor Vehicle Fuel License Tax.” The gasoline tax is an 18-cent per gallon
tax on fuel used to propel a motor vehicle or aircraft. Gas Tax revenue is allocated to the Town based on
a per gallon of gas purchased within the Town limits and based on population. The estimated Gas Tax
revenue totals approximately $1.2 million for FY 2018/19 due to the recently enacted Road Recovery
and Repair Act of 2017 (SB1). These funds can only be used for new construction and reconstruction of
Town streets.
GFAR
The primary source of funding for the Town’s capital program is the Town’s General Fund Appropriated
Reserves (GFAR). By Council direction, this fund receives transfers from the General Fund’s designated
Reserve for Future and Special Projects, which receives most of the Town’s annual revenues above
operating expenditures after funding all legally restricted reserves at their required levels, including
receipt of one-time funds from grants, property, and other reserves. Because of the availability of
General Fund “one-time” funding sources in recent years, the Council approved a General Fund transfer
to the GFAR fund in the amount of $2.7 million for FY 2013/14, an additional “one-time” source
allocation of $6.6 million for FY 2014/15, and additional funding of $6.9 million for the Almond Grove
Street Rehabilitation project in FY 2016/17, $2.8 million funding in FY 2017/18 and $2.4 million transfer
in FY 2018/19.
After these allocations, the Reserve for Future Capital and Special Projects forecasted June 30, 2019
balance is $5 million. Sufficient balances are anticipated for the following five years of the Plan to
allocate approximately $550,000 from the General Fund Reserve for Capital and Special Projects for FY
2018/19 through FY 2022/23.
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 4
As part of a voter-approved measure from 2010, the Santa Clara Valley Transportation Agency (VTA)
assesses a $10 per vehicle registration surcharge to repair and rehabilitate streets. This funding source
is expected to generate approximately $190,000 annually for Los Gatos, which will be used for street
rehabilitation Town-wide. In November 2016, voters passed Countywide Measure B. This Measure
increased the sales tax by ½ cent for 30 years to fund transportation related projects. One part of 2016
Measure B is a formulaic distribution of funds for roadway maintenance. The Los Gatos annual
allocation is $580,633. However, Measure B funds have been delayed due to a legal challenge to the
ballot measure. Staff anticpates that the funds should become available in FY 2018/19.
The other revenue source for GFAR is the Construction Impact Fee and a Refuse Vehicle Road Impact
Fee. This Construction impact fee is assessed on construction projects based on the square foot size of
the project at a rate of $1.14 per square foot. These fees are intended to recover the damage caused to
Town streets by construction traffic. Construction Impact fees generate at least $110,000 annually.
Refuse Vehicle Road impact Fee estimated to generate $490,000 for FY 2018/19.
The funding from this reserve greatly enhances the Town’s ability to implement the CIP; however, it is
not enough to support future annual infrastructure maintenance or construct new facilities. Establishing
a reliable, dedicated source of funding for basic capital improvements beyond the use of accumulated
reserves remains a long-term need and important goal for the Town.
UTILITY UNDERGROUND FUNDS
The Utility Undergrounding Fund serves as a funding source for activities generally undertaken in
conjunction with street improvement projects. The Town receives approximately $30,000 annually in
Utility Undergrounding funding which is derived from a Town construction tax of 18 cents charged for
each square foot of building addition or alteration within the Town. Total cash balances currently on
hand from the utility undergrounding construction tax are approximately $2.9 million at FY 2017/18
year-end. In addition, the Town may have access to over $3.8 million in Rule 20A funds allocated from a
percentage of electric bills. PG&E retains and tracks these monies. The Town has identified a project to
underground utilities along Los Gatos Boulevard south of Lark Avenue. These projects rely on PG&E for
scheduling and have long lead times. Staff expects a six year project design timeline, and is expecting
project construction in FY 2018/19.
TRAFFIC MITIGATION FUNDS
The traffic impact mitigation fee assures that each new development or expansion of use pays its fair
share of the transportation improvements needed to accommodate the cumulative traffic impacts. The
fee is paid in full prior to issuance of the building permit for new development or expansion of use. In FY
2013/14, the Town Council approved an increased Traffic Impact Fee, expected to generate $2 million
over five years for local transportation improvements. Traffic Mitigation Funds should be used solely for
construction of identified traffic and transportation improvement projects.
GRANT FUNDS
The Town receives grant funds from various sources that help address some of the maintenance and
improvement costs associated with Town infrastructure. Grants include federally funded Surface
Transportation Program (STP) funds which pay for general roadway capital improvements, and a
combination of Federal Innovative Deployment to Enhance Arterials (IDEA) grant funds and State
Vehicle Registration Fee (VRF) grant funds are contributing to the Traffic Signal Modernization project.
In addition, the Town has programmed Community Development Block Grant funds for Bachman Park.
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 5
Total grant funding for FY 2018/19 is estimated at $950,000. The addition of the Transportation and
Mobility Manager in last year’s budget has allowed for staff to dedicate more attention to grant funding
opporutnities.
STORM DRAIN FUNDS
The Town also receives funding from its Storm Drain Fund, which relies on an established charge of
$0.75 per square foot of impervious surface created by new development. Depending on development
activity, this fee produces approximately $100,000 in revenue annually. This fee has not been adjusted
for several years and should be evaluated in the future as part of the NPDES storm water permit process
and as part of a continuous review of development related fees.
The remaining sources are primarily one-time funds from State or Federal government or from special
revenue funds that have often fluctuated in tandem with the economy and the state budget. Examples
of one-time funds include Valley Transportation Authority/Transportation Fund for Clean Air (VTA/TFCA)
funds and State Proposition 42 Gas Tax funds.
PROPOSED FY 2018/19 – 2022/23 CIP OVERVIEW
The Capital Improvement Program is broadly grouped into the following categories:
Streets Program, which maintains and ensures functional streets, pedestrian, and bike systems.
Parks Program, which repairs or improves parks, park buildings, trails, and urban forestry.
Public Facilities Program, which constructs and repairs public buildings, and purchases
equipment.
The proposed CIP projects include both new and carry-forward projects from the prior year as part of
the multi-year programming of $48 million. Approximately $44.3 million (92%) is allocated to the
streets, retaining walls, sidewalks, and curbs category; $2.1 million (4%) is allocated to parks and trails
projects; and $1.6 million (3%) is allocated to public facility projects. Allocations are summarized below
by type of major improvements within the program categories.
Carry-forward
from
2017/18 2018/19
Carry-forward
and New FY
2018/19 2019/20 2020/21 2021/22 2022/23
Total By
Category
Total By
Program
Streets
Reconstruct/Resurfacing 11,900,852$ 2,528,767$ 14,429,619$ 2,592,226$ 2,676,447$ 2,796,447$ 2,796,447$ 25,291,186$
Maintenance & Safety 1,043,624 435,000 1,478,624 435,000 435,000 435,000 435,000 3,218,624
Street Improvements 4,999,335 4,201,782 9,201,116 5,132,149 906,907 150,000 215,000 15,605,172
Bridges 235,087 - 235,087 - - - - 235,087 44,350,069$
Parks
Park Improvements 565,659 338,000 903,659 - 25,000 - 25,000 953,659$
Trail Improvements 226,510 550,491 777,001 350,000 - - - 1,127,001 2,080,660$
Public Facilities
Infrastructure Projects 536,374 144,100 680,474 40,000 40,000 40,000 65,000 865,474$
Equipment Projects 334,865 400,000 734,865 - - - - 734,865 1,600,339$
TOTALS 19,842,307$ 8,598,140$ 28,440,446$ 8,549,375$ 4,083,354$ 3,421,447$ 3,536,447$ 48,031,069$
Five Year CIP Summary
FY 2018/19 - 2022/23 CIP by Program
Total funding for street reconstruction and resurfacing for the next five years is planned at $25.3 million
with approximately $14.4 million allocated in FY 2018/19 including carryovers. Over the five-year
period, the CIP proposes $19 million for various other street-related infrastructure improvements
including street maintenance and resurfacing; curb, gutter and sidewalk maintenance; street
intersection improvements; retaining wall reconstruction; crosswalk ramps and safety devices; and
storm drain improvements.
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 6
Total funding for parks and trail improvements for the next five years is planned at $2.1 million with
approximately $1.7 million allocated in FY 2018/19 including carryovers.
Total funding for public facilities infrastucture improvements and equipment projects for the next five
years is planned at $1.6 million with approximately $1.4 million allocated in FY 2018/19 including
carryovers.
Although the Proposed FY 2018/19-2022/23 CIP is a five-year plan, only the first year of the plan is
formally adopted with funds appropriated by the Town Council as part of the budget process. Future
year projects are funded with designated cash reserves on hand, supplemented by estimated annual
revenues for capital funding purposes such as Gas Tax funds and state transportation funds. The scope
and funding estimates may change based on the Town’s fiscal situation and evolving priorities.
PROPOSED FY 2018/19 OVERVIEW
$28.4 million is being proposed in the first year of the CIP and is comprised of approximately $19.8
million in carryover funds from FY 2017/18 and approximately $8.7million in new funding.
The first year of the five year plan, FY 2018/19 continues funding for the Town Council Strategic
Priorities, including basic infrastructure needs. The first phase of the Almond Grove project, the
reconstruction of Broadway and Bachman Avenues, was completed in the fall of 2016. The Almond
Grove Phase 2 project includes the remaining eight streets. Construction began in the summer of 2017
and continues over the next two summer seasons.
The CIP also continues ongoing funding in areas that require consistent investments to ensure the
stability of existing infrastructure, such as retaining walls, sidewalk repair, and street maintenance. The
latter item, street maintenance, warrants particular attention as the Town Pavement Condition Index
(PCI), a standard rating of street conditions, has fallen in recent years. The PCI reached a recent high
rating of 74 in 2008 due to concentrated investments and is now at the level of 65 (2017 data). With the
new State Transportation Funds, other funding, and combining this project with the Town’s
Maintenance Crack Sealing Project, the investment in street maintenance will rise from $1,075,000 to
$2,450,000 per year. This new investment level will allow the Town’s PCI to increase to a 67 or 68 within
the next five years.
In FY 2015/16, the Council placed several CIP projects on hold and transferred the funding of these
projects to the Almond Grove Project. The following projects have been moved to an unfunded needs
list:
• Parking Lot 4 Repair and Resurfacing
• Downtown Parking Sign Enhancements
• Montebello Way Island Removal
• Oak Meadow Park Upgrades
• Los Gatos Creek Trail Improvements – Charter Oaks
• Worchester Park Improvements
• Civic Center Improvements
• Plaza Park Improvements
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 7
The complete list of the proposed FY 2018/19 carry-forward and proposed projects (categorized by
funds and programs) can be found on page A-8. Projects are listed in the Financial Summary section and
further described in the project detail pages by category. Below is a summary by category. The total FY
2018/19 CIP is $28.4 million.
Grant and Total
Awards Estimated
Street Projects 17,309,000$ 1,841,731$ 2,409,311$ 3,784,405$ 25,344,447$
Park Projects 975,072 705,588 - - 1,680,660
Public Facilities Projects 1,415,339 - - - 1,415,339
TOTAL OF CARRY-FORWARD & NEW PROJECTS 19,699,411$ 2,547,319$ 2,409,311$ 3,784,405$ 28,440,446$
GFAR Gas Tax Other *
Carry-forward & New FY 2018/19 CIP Projects
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 8
GFAR Grants and Gas Tax Other Total
CARRY-FORWARD PROJECTS Awards
Streets Street Repair & Resurfacing 2,967,147$ -$ 2,409,311$ -$ 5,376,457$ *
Annual Street Restriping 119,772 - - - 119,772 *
Almond Grove Street Rehabilitation 9,053,161 - - - 9,053,161
Traffic Calming Projects 78,286 - - - 78,286 *
Curb, Gutter & Sidewalk Maintenance 598,733 - - - 598,733 *
Retaining Wall Repairs 391,526 - - - 391,526 *
Quito Road - Bridge Replacement 235,087 - - - 235,087
Guardrail Replacement Projects 93,043 - - 93,043
224 W. Main Street Property Acquisition (Parking Lot 6)1,214,913 - - - 1,214,913 *
Downtown Parking Lots Seal Coat & Restriping 75,085 - - - 75,085
Hernandez Avenue Storm Drain Improvements - - - - -
Jones Road Storm Drain Improvements - - 2,300 2,300
Blossom Hill Rd/Cherry Blossom Ln Intersection Improvements - - - 500,000 500,000
Los Gatos Blvd/Shannon Improvements - - - 20,000 20,000
Monument Control Network Update 20,000 - - 10,000 30,000
Hwy 9/University Intersection - 199,211 - - 199,211
Sidewalk Improvements Shannon/LGB/Cherry Blossom 129,896 - - - 129,896
Stonybrook & Kennedy Sidewalk Improvements 516,132 - - - 516,132
Sidewalk Improvements - Multiple Locations 60,000 - - - 60,000
Crosswalk Improvements - Santa Cruz/Blossom Hill 58,992 - - 49,906 108,898
Crosswalk Lighting Upgrade 53,739 - - 34,629 88,368
LED Streetlights 108,470 - - - 108,470
Utility Undergrounding Improvements - - - 2,330,000 2,330,000 *
Traffic Signal Modernization - 1,559,525 - 355,738 1,915,263 *
Bicycle & Pedestrian Improvements 536,300 - - 75,000 611,300 *
Cut-Through Traffic Mitigation 63,118 - - 46,721 109,839
Bicknell Road Storm Drain Improvements - - - 63,108 63,108 *
Stormwater Master Plan 200,000 - - - 200,000
Stormwater System - Pollution Prevention Compliance 300,000 300,000 *
Public Art Gateway 25,000 25,000
Parks Trailhead Connector 152,000 - - - 152,000
Parks Playground Fibar Project 36,540 - - - 36,540 *
Park Rehabilitation - Bachman Park 314,582 214,537 - - 529,119
Forbes Mill Footbridge Improvements 74,510 - - - 74,510
Belgatos Park Restroom Improvements 25,000 - - - 25,000
Public Facilities Audio/Video System Upgrade 42,552 - - - 42,552
Information System Upgrade 172,785 - - - 172,785 *
Town-wide Document Imaging Project 16,990 - - - 16,990
Building Replacement at Corporation Yard 149,083 - - - 149,083 *
Fuel System Enhancements 37,420 - - - 37,420
Police & PPW Interoperability Radio Project 87,221 - - - 87,221
Engineering Document Archiving 51,716 - - - 51,716
Civic Center Building Energy Efficiency Measures 25,000 - - - 25,000
Mechanic Bay Heater 25,000 - - - 25,000
Facilities Assessment 80,000 - - - 80,000
Town Beautification 15,000 - - - 15,000 *
Silicon Valley Regional Interoperability Project (SVRIP) Service 63,601 - - - 63,601
Energy Efficiency Upgrade - Town-wide 75,000 - - - 75,000 *
Library Teen Door Installation 51,000 - - - 51,000
Exterior Lighting Replacement - Civic Center 17,216 - - - 17,216
Civic Center Fountain Modification 33,135 33,135
HVAC - Chiller Repair 93,520 93,520
TOTAL OF CARRY-FORWARD PROJECTS (INCLUDES NEW ALLOCATIONS)18,537,271$ 1,973,273$ 2,409,311$ 3,487,400$ 26,407,255$
NEW PROJECTS
Streets Annual Storm Drain Improvement Prj -$ -$ -$ 150,000$ 150,000$
Downtown Parking Study 200,000 - - - 200,000
One-Way Downtown Street Pilot 130,000 - - - 130,000
Pilot School Busing Program 80,600 30,000 - - 110,600
Highway 17 Bicycle & Ped Bridge - 52,995 - 147,005 200,000
Parks Town Plaza Turf Repairs 28,000 - - - 28,000
Oak Meadow Park Exercise Equipment 60,000 - - - 60,000
Creek Trail & Parks Path & Parking Lot Seal & Striping 225,000 - - - 225,000
Charter Oaks Trail Repair Project 15,000 148,051 - - 163,051
Trailhead Connector 44,440 343,000 - - 387,440
Public Facilities Neighborhood Emergency Preparedness 50,000 - - - 50,000
Library Carpet Replacement 56,500 - - - 56,500
EOC Communications Upgrade 50,000 - - - 50,000
Youth Recreation Center HVAC Replacement 22,600 - - - 22,600
IT Disaster Recovery Improvements 200,000 - - - 200,000
TOTAL OF NEW PROJECTS 1,162,140$ 574,046$ -$ 297,005$ 2,033,191$
TOTAL OF CARRY-FORWARD & NEW PROJECTS 19,699,411$ 2,547,319$ 2,409,311$ 3,784,405$ 28,440,446$
* These carry-forward projects include new money for FY 2018/19 in the amount of $6,387,080.
Carry-forward & FY 2018/19 CIP Projects
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 9
FY 2017/18 COMPLETED PROJECTS
Several projects are expected to be completed by the end of FY 2017/18. The table below outlines the
projects, funding source, and total expense of the completed projects, which is estimated to be $0.6
million. More details about the completed projects can be found beginning on page A-15.
Grant & Traffic Total
Awards Mitigation Estimated
Street Program
Pageant Way Parking Lot Reconstruction 214,671 - - - 214,671
Bicycle & Pedestrian Master Plan 111,173 39,640 - - 150,814
Park Program
Tennis Courts Resurfacing - Various Town Parks 47,785 - - - 47,785
Blossom Hill Park Little League Backstop 101,344 - - - 101,344 -
Public Facilities Program
Tiburon CAD/RMS Update 70,000 - - - 70,000
TOTAL OF COMPLETED PROJECTS 544,972$ 39,640$ -$ -$ 584,613$
Projects Completed in FY 2017/18
GFAR Other *
CONCLUSION
The challenge of finding a reliable ongoing revenue stream available for capital projects continues to be
a Town priority. Recognizing the realities of funding challenges and uncertain local economic trends, the
Town’s FY 2018/19 – 2022/23 Capital Improvement Plan continues a strategy of funding the Town’s
most urgent capital needs.
I wish to thank all of the Departments, in particular Department Directors and members of their
management and support staff, for their many hours of work and tireless efforts to present this Capital
Improvement Program to the Town Council, as well as the following staff members:
Stephen Conway, Finance Director
Gitta Ungvari, Finance and Budget Manager
Matt Morley, Parks and Public Works Director
Lisa Petersen, Assistant Parks and Public Works Director/Town Engineer
Mark Gaeta, Accountant
Bobby Gonzalez, Senior Administrative Analyst
Melissa Ynegas, Administrative Analyst
Kenneth Stiles, Administrative Technician
Respectfully submitted,
Laurel Prevetti
Town Manager
A - 11
BUDGET PROCESS OVERVIEW
he Town of Los Gatos adopts an annual
Operating and Capital Budget and an
annual budget update of the five year
Capital Improvement Program (CIP) for the
Town of Los Gatos. The budgets contain
summary level information for revenue and
expenditure appropriations for the fiscal year
beginning July 1st and ending June 30th. The
budget documents are prepared in accordance
with generally accepted accounting principles
(GAAP).
Budget Purpose
The Operating and Capital Summary Budget and
the Capital Improvement Program serve as the
Town’s financial plan, as well as a policy
document, a communications tool, and an
operations guide. Developed with an emphasis
on long range planning, service delivery, and
program management, a fundamental purpose
of these documents is to provide a linkage
between the services and projects the Town
intends to accomplish, and the resources
committed to get the work done.
The format of the budget facilitates this linkage
by clearly identifying the program purpose, key
projects, and work plan goals in relation to
revenue and expenditures appropriations.
CIP Purpose
In particular, the CIP is designed to identify
projects and funds required to adequately
develop and maintain the Town’s infrastructure,
which is consistent with the Town Council
strategic goal of maintaining the condition and
availability of public facilities. The following
plans provide additional guidance in developing
priorities for capital improvement projects:
• General Plan
• Street Improvement Program
In addition, project prioritization criteria such as
health and safety issues, infrastructure or
system condition, short term versus long term
impacts and availability of external funding
sources are assessed as part of the process that
staff uses to rank projects from high to low in
preparing the proposed CIP. As it develops and
matures in its application, the Town’s
Infrastructure Assessment Program will further
support the Town’s long range Capital
Improvement Program, focusing attention on
the current and future infrastructure needs of
the community and balancing the community’s
needs with funding requirements and financial
resources. Other technology tools used in CIP
development include the use of the geographic
information system, the traffic monitoring
system, electronic files for tracking unfunded
projects and replacement schedules, and an
asset management program to track work
requests.
The Town’s capital projects are categorized as
follows:
The Streets Program provides funding for
maintaining a functional street and pedestrian
system. Proposed projects are consistent with
the General Plan, provide for a safe and
efficient traffic flow through intersections while
minimizing unnecessary traffic movement and
noise through residential neighborhoods, and
provide street lighting for traffic safety at
intersections and on public streets. Also
included are sidewalk improvements.
The Public Facilities Program includes projects
for constructing and repairing public buildings
and purchasing equipment. Town buildings
include the Civic Center, the Library, Adult
Recreation Center, Tait Avenue and Forbes Mill
properties, and other assets. Although the
Town owns the three fire stations within Town
limits, the Santa Clara County Fire District
maintains them under contract.
The Parks Program includes projects for parks,
park buildings, urban forestry, and urban
beautification.
Basis of Budgeting and Accounting
Developed on a program basis with fund level
authority, the Operating and Capital Budgets
represent services and functions provided by
T
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 12
the Town in alignment with the resources
allocated during the fiscal year.
The Town’s Governmental Funds consist of the
General Fund, Special Revenue Funds, Debt
Service Funds, and Capital Project Funds for
both the Town and the Successor Agency of the
Town of Los Gatos Redevelopment Agency
(RDA). RDA debt is continuing to be paid for the
Certificate of Participation (COPs) used to
finance the Library. Basis of Accounting and
Budget refers to the timing factor concept in
recognizing transactions. This basis is a key
component of the overall financial system
because the budget determines the accounting
system. For example, if the budget anticipates
revenues on a cash basis, the accounting system
must record only cash revenues as receipts. If
the budget uses an accrual basis, accounting
must do likewise. The Town’s budgeting and
accounting systems both use a combination of
modified accrual and full accrual basis in the
accounting and budget systems.
Governmental Fund and Successor Agency Fund
budgets are developed using the modified
accrual basis of accounting. Under this basis,
revenues are estimated for the period if they
are susceptible to accrual, e.g. amounts can be
determined and will be collected within the
current period. Principal and interest on
general long-term debt are budgeted as
expenditures when due, whereas other
expenditures are budgeted for liabilities
expected to be incurred during the current
period.
Proprietary Fund budgets are adopted using the
full accrual basis of accounting whereby
revenue budget projections are developed
recognizing revenues expected to be earned
during the period, and expenditures are
developed for expenses anticipated to be
incurred in the fiscal year. The Town maintains
one type of proprietary fund: Internal Service
Funds.
The Town’s Fiduciary Funds are also budgeted
under the modified accrual basis. The Town
administers four trust funds and one agency
fund. Trust funds are subject to trust
agreement guidelines, and the Agency Fund is
held in a purely custodial capacity involving only
the receipt, temporary investment, and
remittance of resources.
Summary of Budget Development
The Town develops its budgets with a team-
based budgeting approach. Town Management
and the Finance Department guide the process
through budget development; however,
program budgets and workplans are developed
with each Department’s Director, Analyst, and
Program Manager’s oversight and expertise.
This approach allows for hands-on planning and
creates a clearer understanding for both
management and staff of a program’s goals and
functions to be accomplished in the next budget
year.
The Development Process
Typically both the Operating and Capital Budget
and Capital Improvement Program processes
begin early in the calendar year with the Town
Council and Town Manager’s collaborative
development and refinement of initiatives and
directives for the upcoming budget year as
reflected in the Council adopted strategic
priorities.
In January, the budget preparation process
begins officially for staff with a budget kickoff
meeting. Budget assumptions, directives, and
initiatives developed by Town Council and
management are provided to set the Town’s
overall objectives and goals. Department staff
identify and analyze program revenue and
expenditure projections in coordination with
Finance/Budget staff and Town Management.
Town staff also consult with Town Commissions
for their input on specific investments. Capital
improvement projects are assessed and refined,
and CIP funding and appropriation
requirements are finalized.
Through rounds of budget briefings and
revisions, final proposed program budget and
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 13
work plans are developed by the end of April.
Operational and capital workplans are finalized.
and the Finance/Budget staff prepares financial
summary information. Per the Town Code, the
Town Manager submits the entire proposed
budget package to the Town Council for its
consideration, including Departmental budgets
and work plans.
CIP Development Process
The long term Capital Improvement Program
includes projects that have a value of $25,000
or more with a minimum useful life of 5 years at
a fixed location. Equipment, operating, and
maintenance costs associated with the CIP
projects are identified where feasible, and will
be included in future operating budgets. Cost
estimates for new projects are based on 2017
dollars; however, engineering estimates for
carryover projects from the prior year are
updated to reflect current industry costs.
Under direction from the Town Manager’s
Office, the Parks and Public Works Department
took the lead in the preparation of the
proposed projects for consideration in the FY
2018/19 – 2022/23 Capital Improvement
Program. In coordination with other Town
Departments, projects were reviewed to ensure
that the Town’s priorities are addressed within
available resources. In some cases, previously
approved projects have been deferred due to
reallocation of funding to other priorities and
thus have been noted as unfunded projects in
each program section of the CIP.
The Town Manager’s Office reviews the
prioritized list of proposed capital improvement
projects and funding sources in conjunction
with the preparation of the FY 2018/19
Operating Budget. The Proposed CIP is then
presented by the Town Manager to the Town
Council. The Proposed CIP is also submitted to
the Planning Commission for review to ensure
that the proposed projects are consistent with
the Town’s General Plan. The Planning
Commission reviewed the CIP and found it
consistent with the General Plan on April 25,
2018.
The CIP is reviewed during this time to
determine funding capabilities and project
priorities, and to refine project work plans.
Although the CIP budget document is prepared
separately from the Operating and Capital
Budget, CIP program information is
incorporated into the Operating and Capital
Summary Budget document through the
resulting financial appropriations and service
level requirements.
Budget Adoption
During the month of May, the Town Council
reviews the proposed Operating and Capital
Summary Budget, and the Capital Improvement
Program for the five-year period at a public
hearing. Notice of the hearing is published in a
local newspaper at least ten days prior to the
Council’s public hearing date. The public is
invited to participate and copies of the
proposed budgets are available for review in
the Clerk Department, on the Town website,
and at the budget hearing.
Under requirements established in Section
65401 of the State Government Code, the
Town’s Planning Commission also reviews the
proposed Capital Improvement Program and
reports back to the Town Council as to the
conformity of the CIP with the Town’s Adopted
General Plan.
Final Council-directed revisions to the proposed
budget are made and the budget documents
are resubmitted to the Town Council for final
adoption, again in a publicized public hearing in
June prior to the beginning of the fiscal year
(July 1st).
Section 2.30.295(b) of the Los Gatos Town Code
requires the Town Manager to annually prepare
and submit a budget to the Town Council. This
is accomplished in June, when the final
proposed budget is formally submitted to the
Town Council in the subsequent public hearing.
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A - 14
Budget Amendments
During the course of the fiscal year, workplan
changes and unanticipated needs necessitate
adjustments to the adopted budgets. The Town
Manager is authorized to transfer
appropriations between categories,
departments, projects, and programs within a
fund in the adopted budget, whereas the Town
Council holds the authority for budget increases
and decreases, and transfers between funds.
PROPOSED CAPITAL IMPROVEMENT PROGRAM
Introduction Section
A –14