17 Staff Report - FY 2006/07 Operating Budget and Capital Improvement Plan~pW N 0
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DATE:
TO:
FROM:
SUBJECT
COUNCIL/AGENCY AGENDA REPORT
June 19, 2006
MAYOR AND TOWN COUNCIL/
MEETING DATE: 6/19/06
ITEM NO.
CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY
TOWN MANAGER/EXECUTIVE DIRECTOR P .
ADOPT RESOLUTIONS APPROVING THE TOWN AND
REDEVELOPMENT AGENCY'S FISCAL YEAR 2006/07 OPERATING
BUDGET, CAPITAL IMPROVEMENT PLAN FOR FISCAL YEARS
2006/07-2010/11, CARRY-FORWARD APPROPRIATIONS, AND OTHER
APPROVED ADJUSTMENTS AND MINOR CORRECTIONS
RECOMMENDATION:
Adopt resolution approving the 2006/07 Operating and Capital Summary Budget and the FYs
2006/07-2010/11 Capital Improvement Plan for the Town of Los Gatos, directing staff to
incorporate within the final adopted budget any changes related to Council approved meet and
confer process or management compensation plan amendments, classification adjustments or
minor corrections, carryforward appropriations, changes due to more refined estimates and grant
approvals, or additional Town Council direction received by staff upon adoption of the budget.
2. Adopt resolution approving the FY 2006/07 Operating and Capital Summary Budget and the FYs
2006/07-2010/11 Capital Improvement Plan for the Redevelopment Agency of Los Gatos,
directing staff to incorporate within the final adopted budget any changes related to Council
approved meet and confer process or management compensation plan amendments, classification
adjustments or minor corrections, carryforward appropriations, changes due to more refined
estimates and grant approvals, or additional Town Council direction received by staff upon
adoption of the budget.
PREPARED BY: STEPHEN CONW Y
Finance & Admini:<Lrative Services Director
N:AFINANCE\Council Staff Reports\Budget\FY 2006-07\Budget Adoption\2006-07 TCR Budget Adopt
(Operatin- C1P-RDA).wpd
Reviewed by: Assistant Town Manager Town Attonzey Clerk Finance
Community Development Revised: 6/14/06 4:14 pm
Reformatted: 5/30/02
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE 2005/06 OPERATING/CAPITAL
BUDGET
JUNE 19, 2006
BACKGROUND:
A public hearing was held on the Town and Redevelopment Agency's Operating & Capital
Summary Budget, and FYs 2006/07 - 2010/ 11 Capital Improvement Plan on May 15, 2006. Council
approved both the Proposed Town and RDA Operating and Capital Budget for FY 2006/07, and the
Proposed FYs 2006/07 - 2010/11 Capital Improvement Plan (CIP).
As a result of additional information received subsequent to this meeting date, staff recommends
several appropriation modifications to the Proposed Operating and Capital Budget and CIP, as
detailed in the following discussion. Any additional changes or corrections directed by the Town
Council upon adoption of the budget can be incorporated into the final authorized budget as
provided for in the adopted Budget Resolution.
On June 14, 2006, the Planning Commission reviewed the CIP as required by State law. The
Commission determined that the CIP is consistent with the General Plan, and all specific plans.
Upon this determination, the Planning Commission recommended Council approve the FY 2006/07-
20101/11 CIP.
DISCUSSION:
RECOMMENDED MODIFICATIONS TO THE PROPOSED BUDGET AND CIP
Staff recommends the following modifications to the Proposed Budget and CIP; all adjustments in
capital improvement projects:
1. Staff's review of the Redevelopment Agency's funding uses determined a portion of the
Downtown Street Resurfacing project for storm drain improvements on North Santa Cruz
Avenue in FY 2002/03 was paid for by Redevelopment Agency funds. Staff determined it was
appropriate to fund this storm drain work from Storm Drain Basin funding and requested
approval for the reallocation of funding. With this funding reallocation, $400,000 of RDA funds
are returned to the agency and made available for appropriation for the remainder of the
Downtown Street Resurfacing project. Additionally, $25,000 of funding remaining from the
Parking Lot 5 project was re-appropriated to the Downtown Street Resurfacing Project. Council
approved these changes in the June 5, 2006 Council Meeting and are reflected in the FY 2006/07
final budget documents.
2. Council also approved $255,000 of additional funding for the Los Gatos Almaden Road Street
Improvement Project at the June 5, 2006 Town Council Meeting, with a Fund Balance transfer
from the General Fund's Capital and Special Projects Reserve. A FY 2005/06 budget
adjustment for this transfer to GFAR is reflected in the FY 2006/07 final budget documents.
3. The Highway 9 Safety Improvements Project was originally planned to begin in FY 2005/06
with Bicycle Safety grant funding, and additional interagency funding from Monte Sereno,
Saratoga, and Los Gatos. Project approval from Caltrans was delayed and the project is now
scheduled to begin in FY 2006/07. As a result, funding appropriations and expenditures were
realigned to FY 2006/07 in the final budget document to reflect this change.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE 2005/06 OPERATING/CAPITAL
BUDGET
JUNE 19, 2006
4. Staff determined the Wedgewood Avenue Storm Basin Improvement Project was incorrectly
appropriated in Storm Drain Basin #2 in the FY 2005/06 budget and brought forward into this
year's proposed CIP budget. The project site was subsequently determined to be located in
Storm Drain Basin #3. Corrections to budget appropriations and past expenditures were entered
for the FY 2006/07 final budget document.
The table below presents revised summary fund information which incorporates these modifications
into the FY 2006/07 proposed budget reviewed by Town Council on May 15, 2006.
FY 2006/07
FY 2006/07
Proposed
Budget
Recommended
TOWN REVENUES & OTHER FUNDING SOURCES
Budget
Revisions
Budget
General Fund
28,332,820
28,332,820
Special Revenue Funds
780,915
780,915
Internal Service Funds
4,082,030
4,082,030
Trust & Agency Funds
177,440
177,440
Capital Project Funds
4,824,379
1,718,000
6,542,379
Redevelopment Agency Funds
61742,210
-
6,742,210
Total Town Revenues & Transfers In
44,939,794
1,718,000
46,657,794
Plus Use of Reserve Funding
Use of Capital Project Fund Balance for Capital Projects 3,760,549 (1,444,000) 2,316,549
Use of RDA Fund Balance for Capital Projects 871,850 425,000 1,296,850
Use of State ERAF Reserve 480,000 - 480,000
Total Use of Reserve Funding 5,112,399 (1,019,000) 4,093,399
TOTAL TOWN REVENUES & OTHER FUNDING SOURCES 50,052,193 699,000 50,751,193
TOTAL TOWN EXPENDITURES, TRANSFERS OUT & CARRYFORWARD APPROPRIATIONS
General Fund
28,614,645
28,614,645
Special Revenue Funds
1,003,415
1,003,415
Internal Service Funds
5,260,460
5,260,460
Trust & Agency Funds
193,400
193,400
Capital Project Funds
8,512,843
325,000 8,837,843
Redevelopment Agency Funds
6,180,740
425,000 6,605,740
TOTAL TOWN EXPENDITURES & OTHER FUNDING USES
49,765,503
750,000 50,515,503
TOTAL SOURCES OVER USES OF FUNDS 286,690 (51,000) 235,690
The revised Town and RDA Recommended Budget for FY 2006/07 retains a small surplus of
revenues and other funding sources above expenditures with total revenues and other funding
sources of $50,751,193 exceeding total operating and capital expenditures of $50,515,503.
As demonstrated in the Fund Balance Activity Summary in the Financial Summaries section of the
FY 2006/07 Operating and Capital Budget (page C-23), the Town's Capital Project, and the RDA
Capital Projects and Debt Service Funds have sufficient fund balance projected to be available to
cover an operating revenue shortfall, if one should occur. Per accounting principles, "reserves" are
not classified as revenues; instead they are shown as "Reserve Funding" in the table above.
PAGE 4
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE 2005/06 OPERATING/CAPITAL
BUDGET
JUNE 19, 2006
OTHER PENDING BUDGET ISSUES
Encumbered Items Outstanding at June 30, 2006
Town policy calls for unexpended encumbered funds to lapse at the end of the fiscal year. However,
Town policy also provides that valid encumbrances open at the end of the fiscal year may be carried
forward to the following fiscal year and re-appropriated from the encumbrance reserve dollars set
aside upon the close of the prior fiscal year.
Because of the need to reduce expenditures, the majority of encumbrances will either be closed out
during the year-end process or paid in full by the time of the final fiscal year close-out and will not
be carried forward to FY 2006/07. Only on an exception basis through Town Manager's approval
are outstanding encumbrances or unspent appropriated balances from the prior year carried forward.
These amounts will be reserved in their respective funds at year end under a designated reserve.
Capital Project Fund appropriations differ in that encumbrances are carried forward to the following
fiscal year until the projects are completed.
Non-Encumbered Items
In addition to the open encumbrances outstanding at year-end, staff is proposing to bring forward
remaining current year appropriations for unexpended balances in its grant funded operating
projects. Grants provide matching revenues for expenditures and often span two or three fiscal years
in their program or project implementation.
Final Adopted Budget Changes FY 2006/07
The resolution adopting the FY 2006/07 recommended budget directs staff to include changes
resulting from Council approval of the meet and confer process or management compensation plan,
from classification adjustments or miscellaneous corrections, from changes due to more refined
estimates or grant approvals, or from further Town Council consensus direction received on June
19, 2006 that will cause the final published budget to differ slightly from what is presented for
adoption. Other minor adjustments as authorized by Town Council on June 19"' will be incorporated
within the final published budget document thereby not requiring a second adoption of the annual
budget.
FISCAL IMPACT
The fiscal impacts of the Town and Redevelopment Agency's FY 2006/07 Operating and Capital
Budgets are provided in the Financial Summaries section of the budget document including
estimates of Fund Reserves at June 30, 2007.
As stated by staff at the public hearing on May 15, 2006, the Town will continue to monitor local
economic developments and associated impacts to the Town and RDA's adopted FY 2006/07
budgets. It is currently anticipated that staff will bring forward any further adjustments necessary
in the Town's mid year budget review. These adjustments may include some further actions
PAGE 5
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE 2005/06 OPERATING/CAPITAL
BUDGET
JUNE 19, 2006
necessary to align operating revenues with expenditures, however staff cannot determine at this time
whether or not these will be required.
Attachments:
1. Resolution Approving Town of Los Gatos' FY 2006/07 Operating and Capital Summary Budget
and FY 2006/07 - 20010/11 Capital Improvement Program Budget.
2. Resolution Approving the Los Gatos Redevelopment Agency's FY 2006/07 Operating and
Capital Summary Budget and FY 2006/07 - 20010/11 Capital Improvement Program Budget.
imam" I
ATTACHMENT 1
RESOLUTION 2006-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
APPROVING FY 2006/07 OPERATING BUDGET & FY's 2006/07 - 2010/11 CAPITAL BUDGET
AND CARRY-FORWARD APPROPRIATIONS AND OTHER APPROVED ADJUSTMENTS
RELATING TO MEET AND CONFER PROCESS, MANAGEMENT COMPENSATION PLAN,
CLASSIFICATION ADJUSTMENTS, MINOR CORRECTIONS, AND REFINED ESTIMATES
WHEREAS, 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 and be responsible for its administration;
and
WHEREAS, the Town Manager did submit a proposed budget for the 2006/07 to the Town
Council; and
WHEREAS, the Town Manager did submit a proposed five-year capital improvement plan
for FY's 2006/07 - 2010/11; and
WHEREAS, the Town Council has considered and reviewed said proposed budget and
capital improvement plan during public hearings.
RESOLVED, that the Town Council hereby adopts as the budget for the Town of Los
Gatos for the 2006/07 fiscal year the schedule entitled "Total Town Revenues By Fund and Total Town
Expenditures By Fund" including the first year (FY 2006/07) of the Town's Capital Improvement
Program budget as contained in the Town's FY's 2006/07 - 2010/ 11 Capital Improvement Plan.
BE IT FURTHER RESOLVED, that the final adopted budget includes approved carry-
forward appropriations for unspent operating grants and pass-throughs from FY 2005/06, and that there
be carried forward from prior year's Reserve for Encumbrances within each fund an amount sufficient to
cover approved outstanding encumbrances as of June 30, 2006;
BE IT FURTHER RESOLVED, that the Town Council hereby directs staff that any
changes or impacts resulting from: Council approval of the meet and confer process or management
compensation plan; from classification adjustments or miscellaneous corrections; from changes due to
more refined estimates or grant approvals; or from further Town Council consensus direction received on
June 19, 2006, be incorporated within the final FY 2006/07 Operating and Capital Budget.
ATTACHMENT I
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los
Gatos, California, held on the 19th day of June, 2006 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTACHMENT 2
RESOLUTION 2006-
RESOLUTION OF THE REDEVELOPMENT AGENCY
CONSENTING TO THE PROVISION OF PUBLIC IMPROVEMENTS BY THE LOS GATOS
REDEVELOPMENT AGENCY AND MAKING MANDATORY FINDINGS IN REGARDS TO
CAPITAL PROJECTS PROVIDED FOR IN THE LOS GATOS REDEVELOPMENT AGENCY
FY 2006/07 OPERATING AND FY's 2006/07 - 2010/11 CAPITAL IMPROVEMENT PLAN
WHEREAS, Section 33445 of the Health and Safety Code requires the local legislative body to
consent to the provision of public improvements by its Redevelopment Agency and make findings: 1) that
the public improvements are of benefit to the project area or the immediate neighborhood of the project
area; 2) that no other reasonable means of financing such public improvements are available to the
community, and; 3) that the Agency's contribution to the cost of the public improvement or facility will
assist in eliminating one or more blighting conditions in the project area, and is consistent with the
Agency's implementation plan adopted pursuant to Section 33490 of the Health and Safety Code, the
("Implementation Plan"), and
WHEREAS, the Redevelopment Agency's FY 2006/07 - 2010/11 Capital Budget provides
funding for the following projects (the "Projects"): 1) Downtown Street Resurfacing; 2) S. Santa Cruz
Avenue/Wood Road Gateway;
WHEREAS, the Projects will be of substantial benefit to the downtown business district and
surrounding areas of the Central Los Gatos Redevelopment Project Area (the "Project Area") established
pursuant to the 1991 Redevelopment Plan (the "Redevelopment Plan");
WHEREAS, the Town has limited financial resources for capital improvements and these funds
are conunitted to other critical infrastructure needs of the Town such as repairing aging streets outside of
the Project Area;
WHEREAS, the Projects have been specifically called for in the Town's Redevelopment Plan and
Implementation Plan; and
WHEREAS, the Downtown infrastructure was initially in a deteriorated condition with broken
pavement, deteriorated streets and alleys, deteriorated sidewalks, and functionally obsolescent, and the
capital projects have helped, and continue to help, eliminate these blighting conditions;
F_
ATTACHMENT 2
THEREFORE BE IT RESOLVED, that the Town Council of the TOWN OF LOS GATOS does
hereby consent to the provision of funding for the Capital Projects by the Los Gatos Redevelopment
Agency in accordance with the Agency's FY 2006107 Operating and FY 2006/07 - 2010/11 Capital
Improvement Program budgets totaling adopted revenues of $6,742,210 and expenditures of $5,308,890
(prior to carry-forward appropriations); and
BE IT FURTHER RESOLVED, that the Agency Board hereby finds that the Projects are of
benefit to the Project Area and the immediate neighborhood of the Project Area; and
BE IT FURTHER RESOLVED, that the Agency Board hereby finds that no other reasonable
means of financing such public improvements are available to the community; and
BE IT FURTHER RESOLVED, that the Agency Board hereby finds that the Los Gatos
Redevelopment Agency's contribution to the cost of the public improvements will assist in eliminating
blighting conditions in the Project Area, and is consistent with the Implementation Plan.
BE IT FURTHER RESOLVED, that the Agency Board hereby directs staff that any changes or
impacts resulting from: Council approval of the meet and confer process or management compensation
plan; from classification adjustments or miscellaneous corrections; from changes due to more refined
estimates or grant approvals; or from further Agency Board consensus direction received June 19, 2006, be
incorporated within the final FY 2006/07 Operating and Capital Budget.
PASSED AND ADOPTED at a regular meeting of the Redevelopment Agency of the Town of
Los Gatos held the 19th day of June, 2006, by the following vote:
REDEVELOPMENT AGENCY MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
CHAIR OF THE REDEVELOPMENT AGENCY
TOWN OF LOS GATOS, CALIFORNIA
ATTEST:
SECRETARY OF THE REDEVELOPMENT AGENCY
TOWN OF LOS GATOS, CALIFORNIA
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