3 - Transmittal Letter A - 1 T OWN OF L OS G ATOS C IVIC C ENTER 110 E. M AIN S TREET L OS G ATOS , CA 9503 0 May 19 , 201 4 Honorable Mayor and Town Council : I am pleased to submit to you the Proposed FY 2014/15 – 2018/19 Five -Year Capi tal 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 main tain the Town’s infrastructure , which is consistent with the Town Council core value 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. In February 201 4 , the Town C ouncil reaffirmed its Core Val ues and established the 2014 -16 Strategic Goals . The Town Council identified several new strategic goals, including significant policy work in the area s of complete streets and updating of the tree ordinance , that will affect the capital budget priorities in the future. The Five -Year 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 2014/15 , includes funding for the Town Council Strategic Goals, in cluding basic infrastructure needs, such as phase one of the Almond Grove street rehabilitation project, increasing electric vehicle charging stations, and implementing a complete streets pilot project. Significant projects recommended for FY 2014/15 by ca tegory include: Street Program Projects: Almond Grove Street Rehabilitation Project , incl uding the design and first phase of reconstruction of neighborhood streets. Winchester Boulevard/Highway 85 sidewalk project to construct new sidewalk, curb and gutte r along the east side of Winchester Boulevards between the Albright Developm ent and existing Netflix Campus utilizing developer funding. F unding of approximately $1.3 million for residential street repair and rehabilitation . F unding of $2 50 ,000 for curb, g utter, and sidewalk repairs throughout the Town . Funding allocation of $100,000 for a pilot Complete Streets project. F unding allocation of $1 00 ,000 for r etaining wall repairs . Funding allocation of $75,000 for electric speed signs. Funding of $70,000 for public access infrastructure improvement s (i.e. curb cuts for sidewalks). $25,000 additional fundin g for annual street restriping . Parks Projects: Park Plaza Improvements. Planning for a Highway 9 pathway and bridge connection to Los Gatos Creek Trail. P ark Rehabilitation – Bachman Park . Blossom Hill Park Pathway Improvements. Public Facilities Projects: Regional communications and interoperability for both Police and Parks and Public Works. Design for b uilding replacement at the Corporation Yard. Civic Center building energy efficiency measures. Completion of the Old L ibrary R e -use improvements.
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 2 In addition to the projects highlighted above, FY 2014/15 includes other infrastructure projects as de tailed in CIP summary documents; and further described in the project detail pages by category. CIP FINANCIAL SUMMARY The pr oposed five -year plan totals $24.3 million . Approximately, $15.3 million is p roposed in the first year of the plan , which is comprised of $7.4 million in carryover funds from FY 2013/14 and $7.9 million in funding for new projects and/or additions to existing projects. The proposed five -y ear CIP reflects only $3.1 million in on going Gas Tax dedicated sources to help fund the proposed $2 4.3 million of planned capital improvements. Th e balance of CIP funding of $21.2 million is funded by: Grant Funds ($1 million ) Traffi c Mitigation Funds ($1.9 million ) Storm Drain Funds ($69 K ) Accumulated operating budget savings/excess revenues from the General Fund The prim ary source of funding fo r the Town’s capital program is the Town’s General Fund App ropriated Reserve s (GFAR). By C ouncil direction, this fund receives transfers from the General Fund ’s designated Reserve for Future and Special Projects (current bal ance pr oje ction for July 1, 201 4 is approximately $12.4 million) which receives most of the Town’s annual revenues above operating expenditures after funding all legally re stricted reserve s at their required levels , including receipt o f 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 was recommended in t he amount of $2.7 million for FY 2013/14. An additional “one -time” source allocation of $6.6 million is scheduled for FY 2014/15. After these allocations, sufficient balances are anticipated for the remaining three years of the Plan to allocate approxi mately $757,000 from the General Fund Reserve for Capital and Special Projects for FY 2015/16 through FY 2018/19 . Th e f unding from this reserve greatly enhances the Town’s ability to implement the CIP ; however , th e proposed new level of annual funding sti ll 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 re mains a long -term need and important goal for the Town. Another source of f unding for infrastructure improvements is long -term debt. In FY 2009/10 approximately $14 million in Cert ificate of Participation (COPs) were issued . This financing was secured by tax increment reimbursements via the Redevelopment Property Tax Trust Fund (RPTTF), which fund ed 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 pr ojects within the former Redeve lopment Agency project area. Notable improvements included the Town Plaza reconstruction, do wntown s treet scape and s treet r econstruction , and a lleyway projects . This funding source is no longer available following the state -mandated dissolution of redevelopment agencies. 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 should be evaluated in the future as part of the NPDES storm water permit process and as part of a continuous review of developmen t related fees.
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 3 The Utility Undergrounding Fund serves as a funding source for activities generally undertaken in conjunction with street improvement projects. The Town receives approximately $15,000 annually in Utility Undergrounding funding which is d erived from a To wn 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 $2.6 million at FY 20 13/14 year -end. In addition, the Town may have access to over $3 million in Rule 20A funds allocated from a percentage of electric bills. PG&E retains and tracks these monies. No projects are prop osed in 2014/15 through 2018/19 given the long lead ti mes required for use of the PG&E funding , but Council direction on undergrounding priorities would assist long -term planning for utilization of these funds . The remaining sources are primarily one -time funds from State or Federal government or from special r evenue funds that have often fluctuated in tandem with the economy and the state budget. Examples of one -time fund s include VTA/TFCA funds and State Proposition 42 Gas Tax funds . The Town will request redirection of a Water District grant for the Sport s Park Pedestrian b ridge to the Highway 9 pathway and bridge c onnection to Los Gatos Creek Trail project, as the Sports Park b ridge project cannot proceed pen ding completion of a Vasona Dam seismic study by the County and Water District. PROPOSED FY 201 4 -19 CIP OVERVIEW The Capital Improvement Program is broadly grouped into the following categories : Street s Program, which maintains and ensures functional streets , pedestrian , and bike systems. Park s Program, which repairs or improves parks, park buildin gs, 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 $2 4.2 million. A pproximately $20.1 million (8 3 %) is allocated to the streets, retaining walls, sid ewalks, and curbs category, $2.3 million (9 %) is allocated to park s and trails projects , and $1.9 million (8 %) is allocated to public facility projects . Alloc ations are summarized below by type of major improvements within the program categories. Carryfwd to 2014/15 2014/15 2015/16 2016/17 2017/18 2018/19 Total By Category Total By Program Streets Reconstruct/Resurfacing 1,169,945 $ 4,896,000 $ 1,285,000 $ 1,285,000 $ 1,285,000 $ 1,285,000 $ 11,205,945 $ Maintenance & Safety 1,284,263 675,000 435,000 435,000 435,000 435,000 3,699,263 Street Improvements 2,588,919 979,299 1,265,000 - - 65,000 4,898,218 Bridges 299,681 - - - - - 299,681 20,103,108 $ Parks Park Improvements 358,140 443,450 325,000 25,000 25,000 25,000 1,201,590 Trail Improvements 550,000 500,000 - - - - 1,050,000 2,251,590 $ Public Facilities Infrastructure Projects 760,160 200,000 365,000 - - - 1,325,160 Equipment Projects 355,104 210,000 20,000 20,000 - - 605,104 1,930,264 $ TOTALS 7,366,213 $ 7,903,749 $ 3,695,000 $ 1,765,000 $ 1,745,000 $ 1,810,000 $ 24,284,962 $ Five Year CIP Summary Total funding for street reconstruction and resurfacing for the next five years is planned at $11.2 million with approximately $6 million allocated in FY 2014/15 including carryovers. Over the five -year period, the CIP proposes $8.9 million for various other street -related infrastructure improvements including street maintenance and resurfacing ; curb, gutter and sidewalk maintenance; street intersection i mproveme nts; retaining wall reconstruction ; crosswalk ramps and safety devices; and storm drain improvements.
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 4 Although the Proposed FY 2014/15 -2017/18 CIP is a five -year plan, only the first year of the plan is formally adopted with funds appropriated by the Tow n 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 bond funds. The scope and funding estimates may change based on the fiscal situation and evolving priorities . As discussed earlie r, the proposed FY 2014/15 CIP appropriation totals $15.2 million . Of this amount, $7.4 million represents carry forward funds available from the prior year. The following schedule lists the carryforward and new projects by fund and by prog ram for appropriation in FY 2014/15 .
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 5 GFAR Grants and Gas Tax Other Total CARRYFORWARD PROJECTS Awards Streets Street Repair & Resurfacing 799,532 $ -$ 700,000 $ -$ 1,499,532 $ *Almond Grove Street Rehabiltation Project 4,037,764 - - - 4,037,764 *Pavement Rehabilitation - Crack Seal 276,573 - - - 276,573 *Hillside Road Repair & Resurfacing Project 113,076 139,000 - - 252,076 *Traffic Calming Projects 36,152 - - - 36,152 *Curb, Gutter & Sidewalk Maintenance 359,402 - - - 359,402 *Retaining Wall Repairs 962,831 - - - 962,831 *Annual Street Restriping 80,878 - - 80,878 *Public Access Infrastructure Improvement Projects - 70,000 - - 70,000 *Guardrail Replacement Projects 230,000 - - - 230,000 Electrical Panel Replacement on Pageant Way 45,000 - - - 45,000 *Los Gatos Blvd / Lark Intersection - - - 174,299 174,299 *Los Gatos Blvd / Shannon Improvements - - - 20,000 20,000 *Hwy 9/University Intersection - 108,738 237,060 345,797 Winchester Blvd. / Lark Ave. Intersection - - - 837,122 837,122 224 W. Main Street Property Acquisition (Parking Lot 6)1,196,000 - - - 1,196,000 Blossom Hill Rd / Cherry Ln Intersection - - - 5,000 5,000 *Monument Control Network Update 20,000 - - 10,000 30,000 *Downtown Parking Lots Seal Coat & Restriping 100,000 - - - 100,000 Electrical Vehicle Charging Station Infrastructure 100,000 - - - 100,000 Quito Road - Bridge Replacement 299,681 - - - 299,681 - Parks Blossom Hill Park Pathway Improvements 105,450 167,550 - - 273,000 *Oak Meadow Park Upgrades 30,000 - - - 30,000 *Pedestrian Bridge to Sports Park - - - - - **Tree Trimming - Various Town Parks 100,000 - - - 100,000 Parks Playground Fibar Project 26,590 - - - 26,590 *Open Space Trail Upgrades 250,000 - - - 250,000 Highway 9 Pathway Connection to LG Creek Trail 500,000 300,000 - - 800,000 *Blossom Hill Park Upgrades 30,000 - - - 30,000 * Public Facilities Town Beautification Projects 10,160 - - - 10,160 Old Library Re-use Project 500,000 - - - 500,000 HVAC Upgrades - Old Library 200,000 - - - 200,000 Town Digital Aerial Photo/Topographic Map 88,000 - - 42,000 130,000 *Building Replacement at Corporation Yard 20,000 - - - 20,000 *- PPW Administration Building Improvements 50,000 - - - 50,000 Information System Upgrade 83,169 - - - 83,169 Audio / Video System Upgrade 58,160 - - - 58,160 Town-wide Document Imaging Project 21,775 - - - 21,775 Tiburon CAD / RMS Upgrade 42,000 - - - 42,000 Police Interoperability Radio Project 150,000 - - - 150,000 TOTAL OF CARRYFORWARD PROJECTS (INCLUDES NEW ALLOCATIONS)10,922,194 $ 785,288 $ 700,000 $ 1,325,481 $ 13,732,962 $ NEW PROJECTS Streets Complete Streets Project 100,000 - - - 100,000 *Electronic Speed Signs 75,000 - - - 75,000 *Shannon/LGB/ Cherry Blossom Sidewalk Improvements 20,000 - - - 20,000 *Stonybrook & Kennedy Sidewalk Improvements 40,000 - - - 40,000 *Parking Lot 4 50,000 - - - 50,000 *Intersection Safety & Traffic Flow Improvements 50,000 - - 40,000 90,000 *Sidewalk Improvements - Multiple Locations 60,000 - - - 60,000 *Winchester Blvd/Highway 85 Sidewalk 500,000 - - - 500,000 *Parks Plaza Park Improvements 37,000 - - - 37,000 *Park Rehabilitation - Bachman Park 225,000 - - - 225,000 *Oak Meadow Park Gazebo 40,000 - - - 40,000 *Blossom Hill Park Restroom Building Upgrades 40,000 - - - 40,000 *Public Facilities CarteGraph System Upgrades 40,000 - - - 40,000 *Civic Center Improvement ( Noise Isulation)25,000 - - - 25,000 *Engineering Document Archiving 20,000 - - - 20,000 *Civic Center Energy Assessment 25,000 - - - 25,000 *PPW Interoperability Radio Project 150,000 - - - 150,000 *TOTAL OF NEW PROJECTS 1,497,000 $ -$ -$ 40,000 $ 1,537,000 $ TOTAL OF CARRYFORWARD & NEW PROJECTS 12,419,194 $ 785,288 $ 700,000 $ 1,365,481 $ 15,269,962 $ * These carryforward projects include new money for FY 2014/15 in the amount of $ 6,366,749 Carryforward & New FY 2014/15 CIP Projects
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 6 All physical assets, such as road surfaces and buildings, have a useful life and must be refurbished, reconstruc ted, 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 infrastr ucture assets utilizing the resources available. Approximately 80% of the proposed FY 2014/15 – 2018/19 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 possible). The Town’s cumulativ e 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 71 . This value is primarily driven by the condition of residential streets. The PCI for arterials and collector streets is 8 0 and 70 respectively. Potential Funding Sources As illustrated in the chart below, funding for street repair is bas ed on revenue from two prim ary sources: gas tax, and transfers from the General Fund Designated Reserve . Potential Funding Source An nual Estimated Amount Per Five -Year CIP Gas Tax Funds $600,000 Measure B Funding $160,000 Transfer from General Fund Designated Reserve $525,000 Five -Year CIP Estimated Annual Total $1,285,000 Gas tax revenue s ($6 00,000 ) and funding from the General Fund Designated Reserves acco unt for the majority of the $1.13 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 co ordinated 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 $1.2 mill ion in streets continues to be available, options to achieve the Town’s investment target of $2 million include: R educing other capital or operating budget priorities to increase streets funding ; Increased bud geting of future year surpluses; E xplore new r evenue sources, such as a voter -approved taxes or assessment district s . The Council has alrea dy directed exploration of potential revenue sources as part of the 2014 -16 Strategic Goals. Staff will continue to work within funding limitations to address th e Town’s overall pavement conditions while ensuring the continue use of best practices in materials, selection, and construction/project management.
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 7 Aside from the significant street infrastructure projects, the Town is also moving forward with severa l other major capital projects such as the Old Library Re -use Project. FY 2013/14 COMPLETED PROJECTS Several projects are expected to be completed by the end of FY 2013/14 . The schedule below outlines projects, corresponding funding source, and total expens e of the completed project s, which is estimated to be $0.9 million . Prior Years GFAR Grant and Traffic Other *Total Awards Mitigation Estimated Exp Exp Exp Exp Exp Street Program Townwide Vehicle Speed Survey -$ 13,500 $ -$ -$ -$ 13,500 $ Northside Parking Lot Improvement - 87,231 - - - 87,231 Winchester/ Knowles 37,978 - - 417,845 - 455,824 Park Program Town Park Lighting Project - 150,000 - - - 150,000 Parks Reservation System Replacement 25,000 25,000 - - - 50,000 Parks Restroom Partition Upgrades - 55,000 - - 55,000 Public Facilities Program Civic Center Deck Repairs & Waterproofing - 69,136 - - - 69,136 TOTAL OF COMPLETED PROJECTS 62,978 $ 399,867 $ -$ 417,845 -$ 880,691 $ * Other Funds include Storm Drain Fund, Gas Tax Funds, Utility Underground Funds PROJECTS COMPLETED IN FY 2013/14 Prior year high priority and or highly visible completed projects include: • Win c hester/ Knowles Intersection Improvements • Townw ide Vehicle Speed Survey CONCLUSION T he chal lenge of fi nding a reliable ongoing revenue stream available for capita l projects continues to be a Town priority. Recognizing the real i ties of funding challenges and uncertain local economic trends , the T own’s FY 2014/15 – 2018/19 C apital I mprovement P lan 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 Matt Morley , Parks & Public Works Director Maziar Bozorginia , Associate Civil Engineer Stephen Conway, Finance and Admini strative Services Director J en nifer Callaway , Finance and Budget Manager Linda Isherwood, Accountant / Admin istrative Analyst Gitta Ungvari, Administrative Technician Tim Kawasaki, Admin istrative Analyst Respectfully submitted, Larson
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 8 Town Manager FY 2014/15 – 2018/19 C APITAL I MPROVEMENT P ROGRAM B UDGET A DDENDUM 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 docum ent. 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 the following year ’s C apital I mprovement Programs . This budget addendum section , which follow s the proposed budget’s Transmittal Letter , conveys Council directed revisions to the proposed budget as determined in the May 2014 public hearing on the proposed CIP budget , as well as corrections and project revisions.
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 9 B UDGET P ROCESS O VERVIEW 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 1 st and ending June 30 th . The budget documents are prepared in accordance with generally accepted accounting principles (GAA P). 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 p lanning, service delivery, and program management, a fundamental purpose of these documents is to provide a linkage between the services and projects the Town and R edevelopment 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 an d funds required to adequately develop and mai ntain 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 de veloping 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 versu s 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, t he Town’s Infrastructure A ssessment Program will further support the Town’s long -range Capital Improvement Pro gram, focusing attention on the current and future infrastructure needs of the community and balancing the community’s needs with funding require ments and financial resourc es. 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 wor k requests. The Town’s capital pr ojects 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 Muse ums , and partial service to the Recreation Center, which is a To wn -owned building leased to Los Ga tos -Saratoga Community Education and Recreation . Although the Town owns the three fire stations within t own limits, the Santa Clara County Fire District main tains them under contract. The Parks Program includes projects for parks, park buildings, urban forestry, and urban beautification. T
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 10 Basis of Budgeting and Accounting Developed on a program basis with fund level authority, the o perating and capital b ud get s 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 ac counting. 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 expendi tures 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 r ecognizing revenues expected to be earned during the period, and expenditures are developed for expenses anticipated to be incu rred in the fiscal year. The Town maintains one type of proprietary fund: Internal Service Funds. T he Town’s fiduciary funds ar e also budgeted under the modified accrua l 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, tem porary investment, and remittance of resources . Summary of Budget Development The Town develops it s budgets with a team -based budgeting approach. Town m anagement a nd 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 process es begin in the fall with the Town Council and Town Manager’s collaborative developm ent and refinement of initiatives and directives for the upcoming budget year as reflected in the Council adopted strategic goals. In January , the budget preparation process begins officially for staff with a budget kickoff meeting. Budget assumptions, d irectives , and initiatives developed by Town Council and m anagement 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/Budg et 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 . O perational and capital workplans are finalized , and the Finance/Budget staff prepares financial summary information for Town Co uncil review
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 11 in addition to departmental budgets and workplans. 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 wi ll be included in future operating budgets. Cost estimates for ne w projects are based on 201 4 dollars; however, engineering estimates for carryover projects from the prior year are updated to reflect curr ent 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 projec ts f or consideration in the 201 4 -1 9 Capital Improvement Program . In coordination with other Town departments, projects were reviewed t o ensure t hat the Town’s priorities are a ddressed 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 201 4 /1 5 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 2 4 , 201 3 . The CIP is revi ewed during this time to determine funding capabilities and project priorit ies , and to refine project work plans . Although the CIP budget document is prepared separately from the Operating and Capital Budget, CIP program inform ation is incorporated into t he O perating and Capital Summary B udget d ocument 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 Imp rovement 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 propos ed budget s 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 C apital Improvement Program and reports back to the Town Council as to the conformity of the p lan with the Town’s A dopted G eneral P lan or part thereof. Final C ouncil -directed revisions to the proposed budget are made and the budget documents are resubmitted to the Town Council for ad option, 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 Amen dments During the course of the fiscal year, workplan changes and unanticipated needs will necessitate adjustments to the adopted budget s . The Town Manager is authorized to transfer appropriations between categories, departments, projects, and programs w ithin a fund in the adopted budget, whereas the Town Council holds the authority for budget increases and decreases and transfers between funds .
C APITAL I MPROVEMENT P ROGRAM Introduction Section A - 12