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AddendumN F MEETING DATE: 05/17/16 ITEM NO: 5 COUNCIL AGENDA REPORT ADDENDUM DATE: MAY 16, 2016 TO: MAYOR AND TOWN COUNCIL FROM: LAUREL PREVETTI, TOWN MANAGER SUBJECT: OPERATING AND CAPITAL BUDGETS A. CONSIDER THE TOWN OF LOS GATOS PROPOSED OPERATING AND CAPITAL BUDGET FOR FISCAL YEAR (FY) 2016/17 B. CONSIDER THE TOWN OF LOS GATOS PROPOSED CAPITAL IMPROVEMENT PROGRAM FOR FISCAL YEARS 2016 -2021 REMARKS: After the release of the staff report and budget document, staff has prepared the list of donation needs per the Town Council Donation Policy (see Attachment 3). In addition, staff found typographical errors on a couple of pages. Replacement pages are contained in Attachment 4. Below are responses to Council inquiries for this agenda item. 1. Almond Grove Street Rehabilitation Project Proposed Funding Sources: Please explain the sources and verify that the Town is not double counting the estimated expenditures. The concrete pavement of all ten streets is estimated to cost $16,741,707 based on the February 16, 2016 report to Town Council. The Council established the Almond Grove Reserve by resolution at its November 3, 2015 meeting in the amount of $12,155,973. The $12,155,973 reserve balance includes the existing project balance of $3,696,000 and the additional amount of $8,459,973 from different funding sources. Town Council authorized the Town Manager to award a contract to Vanguard Construction in the amount not to exceed $2,716,077 for the construction of the first two streets. All funding not expended from the current project balance of $3,696,000 on the first two streets will provide funding for the next eight streets. Based on the Council interest to bid the remaining eight streets in FY 2016 /17, funding for the entire balance must be budgeted. To fund the Almond Grove Street Rehabilitation Project in Fiscal Year 2016 /17 fully, staff recommends that the Council consider adding the following items to the already PREPARED BY: STEPHEN CONWAY Finance and Administrative Services Director Reviewed by: Assistant Town Manager Town Attorney Finance SACOUNCIL REPORTS \2016 \5- 17- 16\Budget & CIP\Staff Report - Budget Addendum FINAI -doex PAGE MAYOR AND TOWN COUNCIL SUBJECT: OPERATING AND CAPITAL BUDGETS- ADDENDUM DATE: MAY 17, 2016 REMARKS (cont'd): established Almond Grove Reserve: • Transfer current projects on hold (funding balance of $2,107,700) and place these projects on an unfunded list • Transfer $1,000,000 from FY 2014/15 year -end saving (currently in General Fund Capital Reserve) • Use $1,478,034 available fund balance from General Fund Appropriated Reserve (GFAR) The table below shows the proposed sources and is color coded to the project funding page contained in the FY 2016 -17- 2020/21 Capital Improvement Program with the Almond Grove Street Rehabilitation project on page C -9 (please refer to replacement page C -9 contained in Attachment 4). Proposed Funding Sources for Almond Grove Street Rehabilitation Existing Project Budget (Allocated to Almond Grove Project) $ 3,696,000 Almond Grove Reserve Balance (Unallocated) $ 8,459,973 Total Almond Grove Reserve (Includes Existing Funding) $ 12,155,973 Current Projects on Hold 2,107,700 Additional from FY 2014/15 Savings to AG 1,000,000 Additional from GFAR 11478,034 Estimated Total $ 16,741,7 ALMOND GROVESTRW RMAABRITION PROJECT at 811 -0003 Prior Y. 2015116 Fhdmated 2016117 2016117 2017/18 2015/19 201920 202021 Atonal, Eetimatad Catryfwd NewF nding Budget Propmed Pmpoa d Proposed Proposed Total Project SODROEOFFF)"S to 201627 (MtFC GFAR S 299.833 S 47.238 $ 3,696,000 S 1,478,034 S 5.174.034 $ S - 8 - S $ 5,521.105 AIMONDGROVERFSERVE - - - 8,459,973 8,459,973 - - - 8459,973 FROM PROJECTS ON HOLD(GFAlO - - 2,107,700 - 2,107,700 2.107,700 ADDFY2014 /l5YESAV1NNG - 1,000,000 1,000,000 - 1,000,000 TOTALSOIIRCEOFFUNDS S 299,833 S 47,238 S 5,803,700 $ 10,938,007 $ 16,741,707 S $ 5 S S 17,088,78 Prior Yra 201Y16 Estimated 201627 201627 201728 2018/19 201920 202021 Aemala Fstimated Carryfwd New Feuding Budget Proposed Proposed Proposed Proposed Total Projem OSKOFFUNDS to 2016117 (with Cerryf" GFAR Salaries and Beoeliv $ - S - $ - $ - Se kalsvpOna/Epommt - SwAcqukidon &Preparation - ConrultansSavkee - PgortCmssmcdowErpemes 299,833 47,238 5,803,700 10,938,007 16,741,707 17,088,778 TOTAL GFAR S 299,833 $ 47,238 $ 5,803,700 S 10,938,007 $ 16,741,707 $ - $ - S - $ - $ 17,088,778 TOTALUSEOFBUNDS S 299,833 S 47,238 S 5,803,700 S 11,938,007 S 16,741,707 is $ T S S 17,0811, The FY 2015/16 actual expenditures, including the pavement of the first two streets, will be determined by the end of the calendar year at the time the Town closes its books for fiscal year 2015/16. The financial table only shows current estimated spending available at the time of the proposed Budget's publication. At the time of closing the fiscal year, the unspent project balance will be carried forward to the next fiscal year to provide funding for the next eight streets. PAGE MAYOR AND TOWN COUNCIL SUBJECT: OPERATING AND CAPITAL BUDGETS- ADDENDUM DATE: MAY 17, 2016 REMARKS (cont'd): 2. Why does page C -9 in the Operating Budget show $12,282,993 as the 2015116 estimated capital project expenditure and $14,648,366 as the 2016/17 proposed amount? Are we double counting Almond Grove? FY 2015/16 estimated capital project expenditures of $12,282,993, represent staffs best estimate at the time of the publication of the Proposed FY 2016/17 Budget. FY 2015/16 capital funding includes $3,966,126 of new appropriations adopted by Council last May, the carryforward balances of on -going capital projects from FY 2014/15, and any new capital projects that were approved during FY 2015/16 such as the Pedestrian Bicycle Master Plan. Staff cannot determine the actual FY 2015/16 capital project final expenditures until the close of the end of fiscal year (at the end of calendar year 2016) and uses these estimates to forecast year end fund balances. At the time of closing the fiscal year, the unspent balances of all continued projects will be carried forward to the next fiscal year, so typically actual expenditures are lower than estimated. FY 2016/17 capital expenditures of $14,846,366 represent new proposed appropriations from various proposed capital funding sources of which $10.9 million is for the Almond Grove Street Rehabilitation project. Specific projects funded under the different funds are listed in the CIP Financial Summary Section from pages B -11 to B -21. Estimated expenditures for the Almond Grove Street Rehabilitation Project include $5,803,700 for FY 2015/16 and $10,983,007 for FY 2016/17 to meet the total estimated cost of $16,741,707. The Almond Grove Street Rehabilitation project is not double counted. After completion of the entire project, all the funds allocated but not used for the project will roll back to the General Fund Appropriated Reserve (GFAR) balance and will be available for future project appropriations. 3. Pension Fresh Start: Why do we say that we would get a reduced "interest rate" when interest isn't really being collected as it would on a regular loan? The staff report refers to total interest savings. The $4.7 million of interest savings refers to the estimate of total interest costs saved on the amount Ca1PERS charges on the unfunded liability balance. The Town is proposing to pay down the unfunded balance more quickly under a Fresh Start program, 20 years versus 30 years, so the unfunded balance will drop much like a reduction of principal balance if a homeowner does a 15 -year mortgage versus a 30 -year mortgage. CalPERS currently charges a 7.5% interest rate annually on unfunded balances. If the unfunded balances are reduced, the annual interest cost that Ca1PERS builds into the pension will be reduced as well. 4. How much money is in our tree replacement fund? The Town's tree replacement account has a current balance of $303,034. As previously communicated to the Council, staff has not been planting trees through the drought, creating growth in the account. The Council could establish a CIP project to increase the number of trees planted. PAGE 4 MAYOR AND TOWN COUNCIL SUBJECT: OPERATING AND CAPITAL BUDGETS- ADDENDUM DATE: MAY 17, 2016 REMARKS (cont'd): 5. What is the budget allocated to repainting faded red curbs and street poles? Red Curbs — Town staff repaints red curbs as part of the annual street maintenance budget of $585,709 (page D -194 of the FY 2016/17 Proposed Operating Budget, Attachment 1). Typically curbs are painted based on priority areas where there is high pedestrian traffic or based on requests from residents. Requests can be provided directly to Parks and Public Works (PPW) as needed. Street Light Poles — The Town eliminated the street light pole repainting program several years ago. Repainting can cost $1,000 a pole. If the Council so directs, PPW can implement a program with appropriate funding and staffing resources to manage a program. 6 Please explain "2% at age 60. " Ca1PERS offers a defined benefit plan where retirement benefits are based on a formula, rather than contributions and earnings to a savings plan. At the time of retirement, the lifetime retirement benefit is calculated using a formula that includes using the years of service credit, age at retirement, and final compensation. Final compensation is the highest average full -time monthly pay rate for a 3 -year period based on the employer contract or collective bargaining unit agreement. The Town contributes 26.96% of the employee salary while the employee contribute 6.75% of the salary. If an employee retires at age 60, worked 20 years for the Town of Los Gatos under the 2% plan, and the employee's final compensation was $100,000, the employee would collect approximately $40,000 per year in retirement. The calculation is done by multiplying 2% and 20, which equals 40 %. 40% is multiplied by the final salary of $100,000 to obtain an annual retirement disbursement of $40,000. Attachments Previously Distributed: 1. FY 2016/17 Proposed Operating and Capital Budget (Previously Submitted) 2, FY 2016 -2020 proposed Capital Improvement Program Budget (Previously Submitted) Attachments Included with this Addendum: 3. Town of Los Gatos Donation Opportunities: FY 2016/17 Lis of Town Needs 4. Replacement pages for FY 2016/17 Capital Improvement Program for correcting typographical errors B -11 and B -12, and C -9 and C -10 TOWN OF LOS GATOS DONATION OPPORTUNITIES FY 2016/17 LIST OF TOWN NEEDS To ensure that all donations and contributions are sought and accepted in an ethical manner, the Council established a Donation and Solicitation Policy. A list of Town needs was developed to identify goods, services, and other contributions to enhance Town services, programs, and events. The recommended needs for FY 2016 /17 are: PUBLIC SAFETY • Volunteer Program Materials and Equipment • Specialized Public Safety Equipment and Supplies, including Support for Canine Program Training Support for Public Safety Staff and Volunteers Equipment, Supplies and Materials to support Police Operations Community Outreach Program Supplies LIBRARY SERVICES • Children, Youth, and Adult Program Collections, Supplies and Services • Library Book and Audio/Visual Collections • Funding to Support Technological Enhancements, including Digital Services • Equipment and Services to Support Historical Preservation Efforts • Resource support for Collection Development and Reference, Local History, and Library Policy SENIOR SERVICES • Senior Program Supplies, Materials, and Services • Cell Phone and other Telecommunications Equipment COMMUNITY EVENTS • Supplies, Materials, and Services for Special Community and Volunteer Events and Activities • Funding for or Donations of Public Art subject to Public Art Selection Policy TOWN PARKS AND FACILITIES • Beautification Materials and Services for Town Parks, Open Space, and Infrastructure; Land for Parks and Open Space • Contributions that Support Recreation or Expansion of Athletic Fields • Contributions for Public Improvements for Civic Center Deck and Facilities Housing Museums of Los Gatos and Friend of Los Gatos Library SUSTAINABD3TY Contributions to Help Minimize Impacts on Local, Regional, and Global Ecosystems through Conservation, Reduced Pollution, Increased Efficiency, and Protection of Wildlife, Vegetation, and other Ecosystems. TECHNOLOGY • Equipment, Software and Services to Enhance Communication with the Public and Organizational Productivity ATTACHMENT CAPITAL IMPROVEMENT PROGRAM Financial Summaries B-11 ATTACHMENT 4 GFAR FUND PROJECT SUW ARY Espeodetl Estimated Through Carryfud to 2016117 2017/18 2018119 201960 202021 Total 201526 201627 Budget Budget Budget Budget Budget Budgeted Carryforward R'ojuk 4004 Oak Meadow Pak Upgrades S - S - S - S - S - S - S - S - 4504 Op. Sp. Trial Upgrades - 250,000 - - - - - 250,000 4605 Parks Playground Fibar Project 42,510 32,501 - 25,000 - 25,000 - 125,000 4203 Plaza Park Improvements 3,663 33,338 - - - - - 37,000 3104 Perk Rehabiltation - Bachman Park - 325,000 - - - - 325,000 3406 Blossom Hill Park Reamman Building Upgrades - 40,000 - - - - - 40,000 4506 Los Gatos Crack Trail Improvements a Charter Oaks - - - - - - - - 4301 Worcaler Park - - - - - - - - 3407 Blossom Hill Park LmN League Backstop - 50,000 60,000 - - - - 110,000 2103 HVAC Upgrades- Old Library, 643,379 - - - - - - 643,379 2002 Town Beautification Projects 87,593 10,160 - - - - - 97,753 6001 AudiNVidon System Upgrade 52,440 58,160 - - - - - 110,600 6101 Information System Upgrade 392,981 $2,019 - - - - - 475,00 6003 Town -wide Document Imaging Project 198,011 16,990 - - - - - 215,000 6302 Tiburon CAD/RMSUpgrade 28,000 42,000 - - - - - 70,000 2302 Building Rep lacenwnt at Corporation Yard 11,557 208,443 - - - - - 220,000 2105 ON Lduary Reuse Project 1,049,203 28,286 - - - - - 1,077,489 2109 Former Lbmry Rooflmprov ®etas - 90,000 - - - - - 90,000 2304 Fuel System EMance sent - 75,000 - - - - - 75,000 2402 Police lateropaabiGty Radio Project - 150,000 - - - - - 150,000 2305 Engineering Document Archiving 907 39,093 20,000 - - - - 60,000 2110 Civic Center Energy Assessment - 25,0011 - - - - - 25,000 2306 PPW Imeropersbibty Radio Project - 150,000 - - - - - 150,000 6305 Silicon Valley Interopenability Project (SVRIP) Service To 129,600 23,276 152,876 152,876 - - - 458,628 2111 Civic Comte Improvements - - - - - - - - 2008 Energy Efficiency Upgrade - Town -wide - - 25,010 25,000 25,000 - - 75,000 9901 Street Repair & Resurfacing 3,680,602 385,933 525,010 525,000 525,000 525,000 525,!00 6,691,535 9902 Annual Strict Restripi g 153,998 71,002 25,000 25,000 25,000 25,000 25,000 350,001 9903 Panamint Rehabilitation- Crack Seal 195,521 514,107 160,000 160,000 160,000 160,000 160,000 1,509,628 0003 Almond Grove Street Rehabilitation 347,070 5,803,703 10,938,007 - - - - 17,088,781 0007 Hillside Road Repair &Resurfacing 159,361 88,563 - - - - - 247,924 0127 Traffic Calming Projects 132,059 22,941 10,000 10,000 10,010 10,000 10,00 205,000 9921 Curb, Gutter& Sidewalk Maintenance 1,648,811 351,264 250,000 250,000 250,000 250,000 250,000 3,250,075 0122 Electrical Panel Replacement on Pageant Way - 45,000 - - - - - 45,000 9930 Retaining WallRWairs 1,194,284 243,304 100,000 100,000 100,000 100,000 100,000 1,937,588 0801 Quito Road- Bridge Rephw.ement 96,632 235,087 - - - - - 331,719 0120 Guardral Rep laceomt Projects 129,858 100,143 - - - - - 230,001 07M 224 W. Main Strut Property Acquisit am(Pmking Lot 6) 4,000 1,196,000 - - - - - 1,200,000 0705 Downtown Parking Lots Seal Cast &Restriping - 100,000 - - - - - 100,000 0214 M ormnern Control Network Update - 20,000 - - - - - 20,000 0705 Downtown Parking Signs Enhancements - - - - - - - - 0218SharmoM.GB /Cherry Blossom Sidewalk Improvements 104 129,896 - - - - - 130,000 2019 Stonybrook& Kemtedy Sidewalk Improvements 12,808 287,192 - - - - - 300,000 0706 Parking Lot - - - - - - - 0220Imersation Safety & Traffic Flow Improvements 38,696 11,304 - - - - - 50,000 0221 Sidewalk Improvements- Multip In Locations - 60,001 - - - - - 60,000 0125 Crosswalk Add - Santa Cruz Ave - 60,000 - - - - - 60,00 0126 Crosswalk Lighting Upgrade - 50,000 - - - - - 50,000 W07 Pageamt Way Parking Lot ReconaWnion - 175,550 - - - - - 175,550 0223 Momebello Way Island Removal - - - - - - - - 0224 LED Stractlghts - 50,648 - - - - - 504,648 0127 Traffic Around School - 78,794 - - - - - 78,794 0226 Bicycle & Pedearunt Master Plan - 7,500 - - - - - 7,500 New Projeco 4608 Tennis Courts Repass - Various Town Parks - - 140,000 - - - - 140,000 2114 HVAC System Upgrade - Civic C onfer - - 100,000 - - - - 100,000 2112 EAerior Lighting Replacement - Civic Center - - 25,000 - - - - 25,000 2113 Civic Center Fomntain Modifteation - - 35,000 - - - - 35,00 0228 IvteWgent Poking Imeastroeure 427,000 427,000 Tot a1 GFAR Projects $10,433,639 S 12,271,196 512992,883 S 1,272A76 51,095,000 $1,095,0011 $1,07Q000 $40230,594 B-11 ATTACHMENT 4 CAPITAL IMPROVEMENT PROGRAM Financial Summaries TRAFFIC MITIGATION FUND STATEMENT OF SOURCE AND USE OF FUNDS B -12 Budget& Adjusted Budget Fathomed CveyfiW Proposed Proposed Proposed Proposed 2015116 2015/16 2016117 2017118 2018/19 2019120 2020/21 SOURCEOFFUNDS Beginning Fund Balance Unrestricted $ 184,940 $ 184,940 $ 184940 S 184,940 $ 184,940 $ 184,940 $ 184,940 Defected T'mffic Mitigation Total Beginning Fund Balance S 184,940 $ 184,940 S 184,940 S 184,940 $ 184,940 $ 184,940 $ 184,940 Revenues Deferred Revenue $ 1,757,512 $ 571,852 S 1,414,229 S 602,895 S 425,027 S 10,000 S 10,000 In -Lieu Fees Total Revenues S 1,757,512 $ 571,852 $ 1,414,229 $ 602,895 S 425,027 $ 10,000 S 10,000 TOTAL SOURCEOF FUNDS $ 1,942,452 $ 756,792 S 1599,169 $ 787,835 S 609,967 S 194,940 $ 194,940 USEOFFUNDS Completed Projects Total Completed Projects $ 25,142 S 25,142 $ - $ - $ - $ - S - CarryforwurdProjecB Winchester Blvd/Lark Ave. Intersection 805,571 489,377 316,194 - - - - Los area Blvd /lark Intersection 174,299 - - - - - - BlossomRdlRd /Cheny In Intersection 500,000 - 500,000 - - - - Los Gatos Blvd /Shannon Improverrents 20,000 - 20,000 - - - - Monument Control NetworkUpdate 10,000 - IO,O00 - - - - Intersection Safely & Traffic Flow I p 40,000 31,962 8,038 - - - - Gosswalk Add - Santa Cruz Ave 50,000 - 50,000 - - - - CmsswaBLightingUpgrede 50,000 15,371 34,629 - - - - Bicyclea, PedestrianMasterPlan 72,500 - 72,500 - - - - ProposedProjects Traffic Signal Modernization - - 177,859 592,895 415,027 - - Cut- Through Traffic Mitigation 215,OW - - Total Project Espenditures S 1,7479512 $ 561,852 S 19404,229 S 592,895 S 415,027 $ - $ - Operating Trans fen S 10,000 S 10,000 S 10,000 S 10,000 $ 10,000 $ 101000 $ 10,000 Total Opened ug'1'ransfers S 10,000 $ 10,000 S 10,000 S 10,000 $ 10,000 S 10,000 $ 10,000 Ending Food Balance Unrestricted $ 184,940 $ 184,940 $ 184,940 $ 184,940 S 184,940 $ 184,940 S 184,940 Deferred Traffic Mitigation 'Total Ending Fund Balance $ 184,940 $ 184,940 S 184940 S 184,940 S 184,940 $ 184,940 $ 184940 TOTAL USEOF FUNDS S 1942,452 S 756,792 S 1$99,169 S 787,835 $ 609,967 $ 194,940 S 194,940 B -12 STREETS PROGRAM Street Reconstruction & Resurfacing Project Summer 2016 Construction Phase 1 project construction Components & Fall 2016 Completion Phase 1 project completion & closeout Estimated Timeline Winter 2017 Design Phase 2 Completion of plans and specifications FsUmoted Spring 2017 Bid process Phase 2 Council approves plans and authorizes bidding the AMWS project Csrt$rssd Sumner 2017 Construction Phase 2 project construction Total Projed Fall 2017 Completion Phase 2 project completion & closeout ALMOND GROVE STREEF RER43RJMN PROJECT' ProiM 811 -0003 Pdor Y. 201V16 FsUmoted 2016/17 2016/17 2017/18 2018/19 201920 202061 AMWS Estimated Csrt$rssd New Funding eudot Pr ed Propoed Proposed Pro posed Total Projed SOURCEOFEUNDS ro201667 wiOC GFAR S 299333 $ 47,238 $ 3,696.000 S 1478,034 $ 5,174034 $ - $ 5 - S - S 5.521.105 ALMONDG11 RESERVE - - 8,459.973 8,459,973 - - - - 8.459 -973 FROM PROJECTS ON HOLD(GFAR) - 2,107,700 - '_.10],700 _.107v0U ADD IN 2014/15 YE SAVING 1,000,000 1,000,000 1,000000 TOTALSOURCEOFFUNDS S 299,833 S 47,238 S 5,803,]00 $ 10,938,007 $ M74L707 5 S S S S 1],088,]]8 Prior Y. 2015/16 F fim.Wd 2016/17 20165,7 M17/19 201809 201960 202061 AemWS Esdmeted Ca.,l New Pood, Ibdget Proposed Proposed ProWSed Pro ed ToW Project USEOFFUNDS m2016M withC 'FAR Sowries and Fenepa S - $ - S - $ $ - $ - $ $ _ $ _ $ - Ser tces�u PPlies/F4uiPment Sik AC uWi . & PreF .Iwn consulw+d Sovwes - - - - - - - Pro'atCanstrvcnon mu 299,833 47238 5,803,700 10,938,007 16,741,707 - 17,088,778 TOTALGFAR S 299,833 $ 47,238 $ 5,803.700 S 10,938,007 $ 16,741,707 $ - $ - s - $ - $ 17,088,778 TOTAL USE OF FINDS $ 299,833 S 47,278 S 5,007700 $ 11,938007 $ 16741707 S $ $ $ $ 1]088]/8 C -9 STREETS PROGRAM Street Reconstruction & Resurfacing TOWN -WIDE Project Name Pavement Rehabilitation — CrackSeal Project Number 811 -9903 Department Parks & Public Works Project Manager Town Engineer: Lisa Petersen Description This project will rehabilitate streets throughout Los Gatos to maintain the Town's roadway infrastructure. Location This project is located at multiple locations Town -wide. Project The lack of a consistent funding source for street rehabilitation has been a challenge for many local Background municipalities for several years. As part of voter- approved Measure B from 2010, the Santa Clara Valley Transportation Agency (VTA) assesses a $10 per vehicle registration surcharge to repair and rehabilitate streets. Eighty percent of the revenues collected by the VTA are returned to the local municipality in which they were generated. The remaining 20 percent is used for regional and county- wide projects. This funding source is expected to generate approximately $160,000 annually for Los Gatos, which will be used for street rehabilitation Town -wide. This Town -wide crack seal program extends the life of roadway surfaces throughout the community. Operating This project will use staff time for construction inspection and management. The staff time for this Budget Impacts project is included in the department's FY 2016/17 Operating Budget. C -t0