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3 - Transmittal Letter A - 1 TOWN OF LOS GATOS CIVIC CENTER 110 E. MAIN STREET LOS GATOS, CA 95030 May 28, 2013 Honorable Mayor and Town Council: I am pleased to submit to you the Proposed FY 2013/14 – 2017/18 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. Guidance for developing priorities for capital improvement projects is derived from key plans the General Plan and other Town documents. In February 2013, the Town Council reaffirmed its Core Values and discussed the status of the 2012-2014 Strategic Goals. The Council provided direction to update the Strategic Goals, which will be presented as part of the public hearing on the budget. One of the affirmed Core Values is to maintain the condition and availability of public facilities, transportation systems, and other public facilities. In January 2013, the Town Council identified priorities for the allocation of one-time funds for capital projects. The Five-Year Capital Improvement Program (CIP) reflects the Council’s priorities for use of these funds, as well as other projects using other funding sources. The first year of the five year plan, FY 2013/14, includes funding for basic infrastructure needs, including new public facilities and parks, street repair and reconstruction, street safety projects, retaining walls, sidewalks, and park projects. Significant projects recommended for FY 2013/14 by category include: Street Program Projects:  Highway 9/University Avenue intersection traffic system improvements, including dedicated left turn lanes, new traffic signal and sidewalks, and ADA improvements.  Almond Grove Street Rehabilitation Project, including the design and first phase of reconstruction of neighborhood streets.  Winchester / Knowles Intersection Improvement project to add an additional turning lane, new sidewalks and traffic signal improvements.  Winchester / Lark Intersection Improvement project to add a receiving lane northbound on Winchester Boulevard from Lark Avenue in addition to traffic signal improvements.  Funding of approximately $1.7 million for residential street repair and rehabilitation.  Funding of $250,000 for curb, gutter, and sidewalk repairs throughout the Town.  Funding allocation of $100,000 for retaining wall repairs.  $25,000 additional funding for annual street restriping. Parks Projects:  Blossom Hill Park Pathway Improvements  Planning for a Pedestrian Bridge connecting the Creekside Sports Park to the Los Gatos Creek Trail  Open Space Trail Improvements  Tree Trimming – Various Town Parks  Town Park Lighting Replacement Project Public Facilities Projects:  Civic Center Deck Repairs & Waterproofing  PPW Administration Building Safety Improvements  Old Library re-use project CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 2 In addition to the projects highlighted above, the FY 2013/14 includes other infrastructure projects as detailed in CIP summary documents and further described in the project detail pages by category. CIP FINANCIAL SUMMARY The proposed five-year plan totals $24.4 million. Approximately, $10.5 million is proposed in the first year of the plan, which is comprised of $5 million in carryover funds from FY 2012/13 and $5.5 million in funding for new projects and/or additions to existing projects. The proposed five-year CIP reflects only $4 million in ongoing Gas Tax dedicated sources to help fund the proposed $24.4 million of planned capital improvements. The balance of CIP funding of $20.4 million is funded by:  Grant Funds ($1.5 million)  Traffic Mitigation Funds ($1.5 million)  Storm Drain Funds ($479K)  Accumulated operating budget savings/excess revenues from the General Fund 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 (current balance projection for July 1, 2013 is approximately $7.8 million) 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 identified and allocated at the January 2013 Council study session on capital priorities, a General Fund transfer to the GFAR fund is recommended in the amount of $2.7 million for FY 2013/14. An additional “one-time” source allocation of $4.8 million is scheduled for FY 2014/15. After these allocations, sufficient balances are anticipated for the remaining three years of the Plan to allocate approximately $750,000 from the General Fund Reserve for Capital and Special Projects for FY 2015/16 through FY 2017/18. The funding from this reserve greatly enhances the Town’s ability to implement the CIP; however, the proposed new level of annual funding still falls short of the required funding necessary 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. Another source of funding for infrastructure improvements is long-term debt. In FY 2009/10 approximately $14 million in Certificate of Participation (COPs) were issued. This financing was secured by tax increment reimbursements via the Redevelopment Property Tax Trust Fund (RPTTF), which funded most of the $17.8 million new library project. In July 2002, the Town issued approximately $10.7 million in COP’s to provide funding for eligible priority projects within the former Redevelopment Agency project area. Notable improvements included the Town Plaza reconstruction, downtown streetscape and street reconstruction, and alleyway projects. The Town also receives funding from its Storm Drain Fund, which relies on a previously 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 will need to be evaluated in the future as part of the NPDES planning process. A comprehensive presentation to Council on NPDES and other storm water requirements, workloads and issues is scheduled for early 2014. CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 3 The Utility Undergrounding Fund serves as a funding source for activities generally undertaken in conjunction with street improvement projects. The Utility Undergrounding funding is derived from a Town construction tax of 18 cents charged for each square foot of building addition or alteration within the Town, and from Rule 20A funds allocated from a percentage of electric bills. The Town's allocation is typically $15,000 annually. Total cash balances currently on hand from the utility undergrounding construction tax are approximately $2.5 million at FY 2012/13 year-end. No projects are proposed in 2013/14 through 2017/18 given the long lead times required for use of the PG& E funding. 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 VTA/TFCA funds and State Proposition 42 Gas Tax funds. PROPOSED FY 2013-18 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, and urban forestry.  Public Facilities Program, which constructs and repairs public buildings and purchases equipment. The proposed CIP projects include both carry-forward projects from the prior year as part of the multi- year programming of projects and new projects not previously programmed. Of the total estimated five- year CIP cost of $24.4 million, approximately $19.9 million (82%) is allocated to the streets, retaining walls, sidewalks, and curbs category, $3.1 million (13%) is allocated to parks and trails projects and $1.4 million (5%) is allocated to public facility projects,. Allocations are summarized below by type of major improvements within the program categories. Carryfwd to 2013/142013/142014/152015/162016/172017/18 Total By Category Total By Program Streets Reconstruct/Resurfacing309,550$ 2,259,000$ 4,885,000$ 1,385,000$ 1,385,000$ 1,385,000$ 11,608,550$ Maintenance & Safety1,155,865 575,000 465,000 435,000 435,000 435,000 3,500,865 Street Improvements2,829,920 1,035,000 254,299 565,000 - - 4,684,219 Bridges123,730 - - - - - 123,730 19,917,364$ Parks Park Improvements 59,488 891,869 807,000 25,000 25,000 25,000 1,833,357 Trail Improvements- 250,000 1,050,000 - - - 1,300,000 3,133,357$ Public Facilities Infrastructure Projects310,160 510,000 150,000 200,000 - - 1,170,160 Equipment Projects200,447 - - - - - 200,447 1,370,607$ TOTALS4,989,160$ 5,520,869$ 7,611,299$ 2,610,000$ 1,845,000$ 1,845,000$ 24,421,328$ Five Year CIP Summary Total funding for street reconstruction and resurfacing for the next five years is planned at $11.6 million with approximately $2.6 million allocated in FY 2013/14 including carryovers. Over the five-year period, the CIP proposes $8.3 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. Although the Proposed FY 2013/14 - 2017/18 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. CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 4 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 bond funds. The scope and funding estimates may change based on the fiscal situation and evolving priorities. As discussed earlier, the proposed FY 2013/14 CIP appropriation totals $10.5 million. Of this amount, $5.0 million represents carry forward funds available from the prior year. The following schedule lists the carryforward and new projects by fund and by program for appropriation in FY 2013/14. GFARGrants andGas TaxOtherTotal CARRYFORWARD PROJECTSAwards StreetsStreet Repair & Resurfacing792,098$ -$ 935,000$ -$ 1,727,098$ * Almond Grove Street Rehabiltation Project500,000 - - 42,452 542,452 * Pavement Rehabilitation - Crack Seal160,000 - - - 160,000 * Traffic Calming Projects37,027 - - - 37,027 * Curb, Gutter & Sidewalk Maintenance544,433 - - - 544,433 * Retaining Wall Repairs863,527 - - - 863,527 * Annual Street Restriping 55,878 - - - 55,878 * Public Access Infrastructure Improvement Projects- - - - Guardrail Replacement Projects230,000 - - - 230,000 * Hwy 9/University Intersection- 889,127 - 243,244 1,132,370 224 W. Main Street Property Acquisition (Parking Lot 6)1,200,000 - - - 1,200,000 Winchester Blvd. / Knowles Intersection- - - 487,550 487,550 Winchester Blvd. / Lark Ave. Intersection- - - 810,000 810,000 * Quito Road - Bridge Replacement123,730 - - - 123,730 Parks- - - - - Public FacilitiesTown Beautification Projects10,160 - - - 10,160 Civic Center Reuse Project500,000 - - - 500,000 * HVAC Upgrades - Old Library200,000 - - - 200,000 Information System Upgrade83,169 - - - 83,169 Town-Wide Document Imaging Project21,775 - - - 21,775 Audio / Video System Upgrade53,503 - - - 53,503 Tiburon CAD / RMS Upgrade42,000 - - - 42,000 TOTAL OF CARRYFORWARD PROJECTS (INCLUDES NEW ALLOCATIONS)5,417,300$ 889,127$ 935,000$ 1,583,246$ 8,824,672$ NEW PROJECTS StreetsLos Gatos Blvd / Shannon Improvements - - - 10,000 10,000 Hillside Road Repair & Resurfacing Project- 139,000 - - 139,000 Downtown Parking Lots Seal Coat & Restriping100,000 - - - 100,000 Electrical Vehicle Charging Station Infrastructure100,000 - - - 100,000 Townwide Vehicle Speed Survey25,000 - - - 25,000 ParksBlossom Hill Park Pathway Improvements 89,000 157,357 - - 246,357 Pedestrian Bridge to Sports Park50,000 300,000 - - 350,000 Open Space Trail Upgrades250,000 - - - 250,000 Tree Trimming - Various Town Parks100,000 - - - 100,000 Parks Restroom Partition Upgrades55,000 - - - 55,000 Parks Playground Fibar Project25,000 - - - 25,000 Parks Reservation System Replacement25,000 - - - 25,000 Town Park Lighting Project150,000 - - - 150,000 Public FacilitiesCivic Center Deck Repairs & Waterproofing60,000 - - - 60,000 PPW Administration Building Improvements50,000 - - - 50,000 TOTAL OF NEW PROJECTS1,079,000$ 596,357$ -$ 10,000$ 1,685,357$ TOTAL OF CARRYFORWARD & NEW PROJECTS6,496,300$ 1,485,484$ 935,000$ 1,593,246$ 10,510,029$ * These carryforward projects include new money for FY 2013/14 in the amount of $3,895,000. Carryforward & New FY 2013/14 CIP Projects All physical assets, such as road surfaces and buildings, have a useful life and must be refurbished, reconstructed, or replaced at some point. A regular program of preventive maintenance and repair can extend the useful life of these assets. Despite the cyclical nature of some of the revenue sources outlined above, the Town is committed to maintaining its infrastructure assets utilizing the resources available. Approximately 82% of the proposed FY 2013/14 - 2017/18 CIP funding is allocated to street reconstruction and maintenance projects. These projects include: street base repairs and resurfacing, curb, gutter, and sidewalk replacement, retaining wall construction, and storm drain improvements. This emphasis reflects the Town Council’s priority to address street maintenance needs. The goal is for Town streets to be at an average Pavement Condition Index (PCI) of above 70 (100 being the highest rating CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 5 possible). The Town’s cumulative investment in its streets resulted in raising the PCI from a low of 64 in 2002 to the level of 75 in 2006. The PCI value for all Town streets as of winter 2012 is 72. This value is primarily driven by the condition of residential streets. The PCI for arterials and collector streets is 80 and 70 respectively. Potential Funding Sources As illustrated in the chart below, funding for street repair is based on revenue from two primary sources: gas tax, and transfers from the General Fund Designated Reserve. Potential Funding Source Annual Estimated Amount Per Five-Year CIP Gas Tax Funds $700,000 Measure B Funding $160,000 Transfer from General Fund Designated Reserve $525,000 Five-Year CIP Estimated Annual Total $1,385,000 Gas tax revenues ($700,000) and funding from the General Fund Designated Reserves account for the majority of the $1.4 million annual funds available for street maintenance. Other funds that help support street repair and maintenance are subject to a year-to-year allocation as part of the State budget process. The Town has historically received one time grants for various street projects and transportation improvements coordinated or issued by ABAG, MTC, VTA and/or other regional authorities, which are expected to become fewer in number or smaller in size due to grant funding criteria and priorities recently established through Senate Bill 375 and the “One Bay Area Grant” process. Partially offsetting this reduction is new annual funding for street repairs from a recently enacted vehicle license fee increase for Santa Clara County registered vehicles. Assuming that the proposed five-year CIP annual investment of $1.4 million in streets continues to be available, options to achieve the Town’s investment target of $2 million include:  Reducing other capital or operating budget priorities to increase streets funding;  Increased budgeting of future year surpluses;  Explore new revenue sources, such as a voter-approved debt taxes, assessment districts or increased traffic impact fees. The Council has already directed exploration of potential revenue sources as part of the 2012-14 Strategic Goals. Staff will continue to work within funding limitations to address the Town’s overall pavement conditions while ensuring the continue use of best practices in materials, selection, and construction/project management. Aside from the significant street infrastructure projects, the Town is also moving forward with several other major capital projects such as the Old Library Re-use Project. CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 6 FY 2012/13 COMPLETED PROJECTS Several high priority projects are expected to be completed by the end of FY 2012/13. The schedule below outlines projects, corresponding funding source, and total expense of the completed projects, which is estimated to be $25.5 million. Prior YearsGFARGrant and TrafficOther *Total AwardsMitigationEstimated ExpExpExpExpExp Street Program Wedgewood Ave Improvements674,131$ -$ -$ 352,711$ -$ 1,026,842$ Univ Ave Resurfacing (Shelbourne to Vasona)22,470 81,546 500,000 - - 604,016 Blossom Hill Road Improvements 599,703 - - 707,870 - 1,307,572 University Avenue Sidewalk / Creekside Sports Park7,520 48,001 60,150 - - 115,671 Hicks & Philips Culvert Improvements440 - - - 241,845 242,286 Northside Parking Lot Improvements - 74,516 - - - 74,516 Shannon Road Annexation- - - 3,834 - 3,834 Park Program Pageant Grounds Phase 3 Improvements530,750 482,064 - - - 1,012,814 Los Gatos Creekside Sports Park1,386,407 1,391,788 - - - 2,778,195 Howe's Playlot Pathway Upgrade- - 34,535 - - 34,535 Turf Conversion & Water Conservation- 33,000 - - - 33,000 Live Oak Manor Park Upgrades316 41,895 109,120 - - 151,331 Public Facilities Program Library Facility17,796,794 16,098 - - - 17,812,892 Energy Efficient Lighting Project144,108 - 18,603 - - 162,712 Plaza Bus Shelter 2,210 5,820 - - - 8,030 DT Tree Light Replacement- 97,500 - - - 97,500 TOTAL OF COMPLETED PROJECTS21,164,849$ 2,272,228$ 722,408$ 1,064,415 241,845$ 25,465,746$ * Other Funds include Storm Drain Fund, Gas Tax Funds, Utility Underground Funds and SA RDA. PROJECTS COMPLETED IN FY 2012/13 Prior year high priority and or highly visible completed projects include:  New Library  Police Operations Building  Los Gatos Creekside Sports Park  Pageant Grounds Phase 3 Improvements  Wedgewood Avenue Improvements  Roberts Road Bridge Replacement  Blossom Hill Road Improvements  Several Traffic Calming Projects  Renovation of Playlots CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 7 CONCLUSION The challenge of finding a reliable ongoing revenue stream available for capital projects continues to be a Town priority. Recognizing the realties of funding challenges and uncertain local economic trends, the Town’s FY 2013/14 – 2017/18 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 countless hours of work and tireless efforts to present this Capital Improvement Program to the Town Council, as well as the following staff members: Pamela Jacobs, Assistant Town Manager Todd Capurso, Parks & Public Works Director Kevin Rohani, Town Engineer Stephen Conway, Finance and Administrative Services Director Jennifer Callaway, Finance and Budget Manager Linda Isherwood, Accountant / Administrative Analyst Gitta Ungvari, Administrative Technician Tim Kawasaki, Administrative Analyst Respectfully submitted, Larson Town Manager CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 8 FY 2013/14 – 2017/18 CAPITAL IMPROVEMENT PROGRAM BUDGET ADDENDUM The Council’s adoption of the Capital Improvement Program will appropriate the first year of budgeted revenues, expenditures, and operating transfers as outlined in the budget document. The CIP’s out years reflect the established plan at the time of adoption. As appropriate, out-year plans will be reviewed and adjusted in following year’s Capital Improvement Programs. This budget addendum section, which follows the proposed budget’s Transmittal Letter, conveys Council directed revisions to the proposed budget as determined in the May 2013 public hearing on the proposed CIP budget, as well as corrections and project revisions. Council did not direct any project changes, additions, deletions, or funding revisions for the FY 2013/14 – 2017/18 Capital Improvement Program. CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 9 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 and the Successor Agency of the Town of Los Gatos Redevelopment Agency (RDA). 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 and Redevelopment Agency intends to accomplish, and the resources committed to get the work done. The format of the budget facilitates this linkage by clearly identifying 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  Storm Drain Master Plan 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 new library, Adult Recreation Center, Service Center, Tait Avenue and Forbes Mill Museums, and partial service to the Recreation Center, which is a Town-owned building leased to Los Gatos-Saratoga Community Education and Recreation. 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. T CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 11 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 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). 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 types 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 five 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 it 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 in the fall with the Town Council and Town Manager’s collaborative development and refinement of initiatives and directives for the upcoming budget year. 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 and agency staff identify and analyze program revenue and expenditure projections in coordination with Finance/Budget staff and Town management. Capital improvement projects are assessed and refined, and CIP funding and appropriation requirements are finalized. Through rounds of budget briefings and revisions, staff’s final program budget and workplans are developed by the end of April. Operational and capital workplans are finalized, and the Finance/Budget staff prepares financial summary information for Town Council review in addition to departmental budgets and workplans. CAPITAL IMPROVEMENT PROGRAM Introduction Section A - 12 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 2013 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 2013-18 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 2013/14 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 on April 24, 2013. 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 in 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 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 plan with the Town’s Adopted General Plan or part thereof. Final Council-directed revisions to the proposed budget are made and the budget documents are resubmitted to the Town Council for adoption, again in a publicized public hearing prior to the beginning of the fiscal year. 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. The approved resolutions to adopt the CIP and operating budgets and the appropriation limitation (Gann Limit) follow this section. Budget Amendments During the course of the fiscal year, workplan changes and unanticipated needs will 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.