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Agenda Packet - CC - 2017.05.10
Y BURLINGAME CITY HALL City of Burlingame 501 PRIMROSE ROAD BURLE BURLINGAME, CA 94010 Meeting Agenda - Final City Council Wednesday, May 10, 2017 6:30 PM Council Chambers Budget Study Session Note: Public comment is permitted on all action items as noted on the agenda below and in the non -agenda public comment provided for in item 4. Speakers are asked to fill out a "request to speak" card located on the table by the door and hand it to staff, although the provision of a name, address or other identifying information is optional. Speakers are limited to three minutes each; the Mayor may adjust the time limit in light of the number of anticipated speakers. All votes are unanimous unless separately noted for the record. 1. CALL TO ORDER - 6:30 p.m. - Council Chambers 2. PLEDGE OF ALLEGIANCE TO THE FLAG 3. ROLL CALL 4. PUBLIC COMMENTS, NON -AGENDA Members of the public may speak about any item not on the agenda. Members of the public wishing to suggest an item for a future Council agenda may do so during this public comment period. The Ralph M. Brown Act (the State local agency open meeting law) prohibits the City Council from acting on any matter that is not on the agenda. 5. STAFF REPORTS AND COMMUNICATIONS (Public Comment) a. Fiscal Year 2017-18 Budget Attachments: Staff Report b. City Council Review of Draft FY 2017-18 Capital Improvement Program Attachments: Staff Report Presentation March 15, 2017 Staff Report FY 2017-18 General Funds CIP Spreadsheet 6. ADJOURNMENT City or Burlingame Page 1 Printed on 51512017 City Council Meeting Agenda - Final May 10, 2017 Notice: Any attendees wishing accommodations for disabilities please contact the City Clerk at (650)558-7203 at least 24 hours before the meeting. A copy of the Agenda Packet is available for public review at the City Clerk's office, City Hall, 501 Primrose Road, from 8:00 a.m. to 5:00 p.m. before the meeting and at the meeting. Visit the City's website at www.burlingame.org. Agendas and minutes are available at this site. NEXT CITY COUNCIL MEETING - Next regular City Council Meeting - Monday, May 15, 2017 VIEW REGULAR COUNCIL MEETING ONLINE AT WWW.BURLINGAME.ORG - GO TO "CITY COUNCIL VIDEOS" Any writings or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at the Water Office counter at City Hall at 501 Primrose Road during normal business hours. City of Burlingame Page 2 Printed on 51512017 STAFF REPORT MEETING DATE: May 10, 2017 Honorable Mayor and City Council May 10, 2017 Carol Augustine, Finance Director— (650) 558-7222 Subject: Study Session: Fiscal Year 2017-18 Budget The purpose of the this report is to give an overview on the development of the 2017-18 fiscal year budget, and receive Council comment and direction. No Council action is required. BACKGROUND Development of the fiscal year 2017-18 budget has been underway since January, and the final budget document is beginning to take shape. Before finalizing the proposed budget for City Council approval at a public hearing in June, staff wishes to provide this budget overview for Council comment and direction. As always, this important effort should reflect the priorities and needs of the Burlingame community. Over the past year, City staff has engaged in a proactive, comprehensive public engagement effort to identify resident priorities and make sure those priorities are reflected in a community -responsive budget process. Staff is pleased that hundreds of people have responded through a variety of mechanisms to that interactive effort. Although a summary of current economic conditions was provided with the mid -year report in March, an updated summary is intended to give context to the upcoming fiscal year revenue forecast. Any major changes from the mid -year forecast and results of prior fiscal years are identified and explained. The economy in the Bay Area has had nearly 10 years to improve since the Great Recession that started in 2008. While significant growth has occurred, the City continues to be ever cognizant of the uncertainty that results from the ebbs and flows of the economy, including any changes resulting from last year's national elections and potential funding impacts on California and its cities. Staff remains focused on establishing fiscal policies that will sustain Burlingame's long-term financial strength through all economic environments, while continuing the transparent, accountable stewardship the community expects and deserves. The City has sought to identify any unfunded liabilities and aggressively set aside funds to decrease the burden of such legal obligations on future year budgets. In addition, the City has established reserve levels that will allow the City to deal with the inevitable downturns in the economy as well as potential FY 2017-18 Budget May 10, 2017 emergencies and unforeseen events. However, fiscal sustainability is but one of the organization's overarching goals for which the 2017-18 fiscal year budget will need to provide. In addition to funding day-to-day operations, prior year liabilities, and currently unfunded facilities and infrastructure projects, the budget will necessarily reflect limited fiscal capacity to take on new priorities, unexpected opportunities, or needs identified by the public for which there is no funding. These needs include the City's more than $100 million backlog in public infrastructure projects such as the City's World War II -era Recreation Center and proper maintenance of streets, sidewalks, and parks. DISCUSSION Economic Conditions —The following information and analyses on the economic forces affecting local government agencies has been compiled largely from reports provided by HdL Companies, the City's sales tax consultant, in partnership with Beacon Economics, LLC. The evaluation is included here to offer additional perspective to the projections contained in both the revenue and expenditure budgets for each of the City's various funds for the 2017-18 fiscal year. National Economy Data from the Bureau of Economic Analysis (BEA) showed the nation's economy picking up momentum after a somewhat sluggish 2016. The year ended with a fourth quarter that saw a weaker -than -expected 1.9 percent growth rate, a trend that was largely driven by a substantial increase in the nation's trade deficit. Although soft growth continued into the first quarter of 2017, other indicators suggest growing momentum in the economy. Consumer demand (driven by increases in consumer, business, and government spending) grew at a 2.6 percent pace, the highest rate since the third quarter of 2015. The nation's economy entered 2017 poised for economic growth. Industrial production estimates from the Federal Reserve have been steadily increasing since the final quarter of 2016, and the Institute of Supply Management (ISM) indexes for manufacturing and services are also on the rise. These upward trends are bolstered by strong international economic performance, with Europe, China and, to a lesser extent, Japan each reporting better-than-expected growth. Meanwhile, U.S. exports continue to grow, and the beleaguered oil industry is also seeing signs of recovery, with new well construction and oil production rising. Also significant is the nation's increasingly tight labor market. The headline U.S. unemployment rate was reported to be well below 5 percent after the first quarter of 2017. In April the U.S. job market rebounded strongly, and the unemployment rate fell to the lowest level seen in a decade — 4.4 percent. Consumer spending and credit expansion continue to move forward at a sustainable pace, helping to smooth out some of the bumps created by a volatile global economy. The net result has been an increase in wages (average hourly earnings rose by 2.5 percent in April from the previous year) as well as a sharp acceleration in labor force growth. Beacon Economics notes that the Trump Administration's first three major policy initiatives on travel, health insurance, and the budget have all been stymied by the courts or infighting within 2 FY 2017.18 Budget May 10, 2017 the Republican Party. Given these early results, it has become harder and harder to predict how policy in the United States will actually change — and what it may mean for economic growth. State Economy The California economy generally tracked the national economy as it advanced throughout 2016. The state's unemployment rate fell to its lowest level in 10 years at 5.1 percent in January 2017, marginally higher than the U.S. rate. California's real Gross Domestic Product in the third quarter of 2016 (latest available data) grew 3.3 percent over the prior quarter in annualized terms, approximately on par with the nation's 3.5 percent rate in that period. California continues to get significant contributions from the tech sector, which accounted for 30 percent of the state's economic growth in the third quarter. The state continued to experience steady but somewhat slower job growth as it entered 2017. Wage and salary jobs rose by 2.0 percent year -over -year in January 2017. In the private sector, Health Care made the largest contribution, followed by Leisure and Hospitality, Professional Services, and Information. The Government sector also saw a significant gain mostly due to hiring by local school districts. These five sectors accounted for two-thirds of the 330,500 jobs added during the period. Unemployment Rate: California, National 10.0%i 75% 5,0% j 2.5% 0% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Note: Recessions shown in gray Having finished 2016 with the highest annual employment rate on record despite the drought and the strong dollar, Agriculture posted an impressive 2.4 percent yearly job gain in January 2017. Regionally, virtually all the metro areas of the state saw yearly job gains in January 2017. The picture of California housing continues to be mixed. Outside of the San Francisco Bay Area, home prices have yet to surpass their pre -recession peaks. Demand for homes has been sustained by low interest rates, but has also been impeded by limited inventories, high underwriting standards, and large down payment requirements. On the supply side, existing home sales have been well below their long run averages, while new home construction has been relatively weak since the recession. Meanwhile, with the homeownership rate at its lowest level in decades, high demand for rental units has driven rents up and rental vacancy rates down. With growing incomes, more households will seemingly be in a position to become homeowners. 3 FY 2017-18 Budget May 10, 2017 However, interest rates are expected to rise, as will prices, and it appears that lenders are tightening their lending requirements. The rental market will offer little relief as renters face yet another year of rent hikes, prompting concern about affordability in many communities around the state. Per Beacon Economics, California and its regions should experience continued growth in economic activity and jobs throughout 2017, with the largest contributions to employment coming from Health Care, Leisure and Hospitality, and Professional Services. However, California will have to deal with housing affordability concerns. In addition, the state must face up to long -run water problems, even though drought conditions across most of the state have been alleviated by recent rains. The state and its regions must do more to ensure that the all-important statewide water system, which ties north to south and inland California to coastal California, will be reliable for future generations. Infrastructure needs in transportation and other systems will also have to be addressed in order to support a growing state economy in the decades ahead. Local Economy Beacon Economics provides analysis of the economy of the San Francisco Metropolitan Division (MD) in their quarterly "Regional Outlook" report. The MD covers the counties of San Francisco and San Mateo. The San Francisco MD posted another year of solid employment gains, adding 28,100 jobs from January 2016 to January 2017, a 2.6 percent rate of growth. These latest data show that San Francisco reached another record high for total employment, with nonfarm payrolls hitting 1,105,000 jobs in January 2017. Furthermore, the unemployment rate in the area held steady at 3.0 percent - a decrease of 0.1 percentage points from one year earlier. This is particularly impressive considering the fact that the labor force grew by 1.2 percent in 2016 – reflecting the opportunity and desirability to be in the San Francisco MD market. The strongest growth across 2016 and into 2017 came from the Information (+7 percent), Natural Resources and Construction (+5.6 percent), Education and Health Care (+3.9 percent), and Finance Activities (+3.8 percent) industries. Over the next few quarters, Beacon Economics expects employment in the San Francisco MD to continue its steady expansion, growing at about 0.3 percent per quarter and hitting 1,120,000 positions by end of 2017. Likewise, Beacon Economics expects unemployment to hold steady at 2.9 percent or thereabouts well into 2018. In line with employment trends, single family home prices in San Francisco have continued to reach record levels, although prices are growing at a slightly slower pace than in recent quarters. From the fourth quarter of 2015 to the fourth quarter of 2016, median home prices in San Francisco grew from $1,150,000 to $1,276,000—an increase of 10.9 percent. Over the same time period, home sales decreased by 9.9 percent, with a total of 1,800 sales. This comes on top of a 3.9 percent annual decrease in home sales from 2014 to 2015. One reason why home sales have fallen to almost historic lows is the region's serious affordability problem. According to the California Association of Realtors, just 13 percent of all households in San Francisco could afford to purchase the median -priced home in 2016. With such tough barriers F] FY 2017.18 Budget May 10, 2017 against entry into the local housing market, most residents have turned to the rental side. Apartment rents have continued to climb in the area. In the fourth quarter of 2016, average monthly rents were $2,930, while vacancy rates hovered at around 5.0 percent. Beacon Economics expects to see median home prices in the area continue to increase at a rapid pace, surpassing $1.3 million in the middle of 2017, and reaching $1.4 million by the start of 2019. In addition, 30 -year mortgage interest rates are expected to increase slightly over the same period, hovering around 4.5 percent toward the end of this year. Overall consumer spending has slowed in recent months, but residents of the San Francisco MD continue to shop at local establishments and make large purchases. Taxable sales in San Mateo County decreased 0.5 percent in the fourth quarter of 2016 from the same quarter one year prior. In comparison, taxable sales grew by 1.6 percent in the Bay Area and 1.5 percent in the state overall in that same period. Similar to other agencies dependent on traditional brick -and -mortar retail stores for a major portion of their sales tax, Burlingame will be facing new challenges in the coming year as merchants retrench and downsize to cope with a rapidly changing environment. Generational preferences for experiences over merchandise, plus the growing costs of health care, education, and housing, are reducing discretionary spending for taxable goods, while time -challenged consumers are opting for the convenience of online shopping. Online sales accounted for 13.0 percent of all general consumer goods purchased in 2016, with a 9.2 percent gain over calendar year 2015, while the growth in tax receipts from brick -and -mortar stores only grew 0.6 percent. Retailers are responding by increasing their investment in mobile shopping platforms and delivery systems while pulling back investment on brick -and -mortar stores. $8,000 $6,000 $4,000 $2,000 $0 04 04 04 04 13 14 15 16 Burlingame County California 5 FY 2017-18 Budget Pools 17% Aulos/ii48us./Ind 31% COnS.Goocls 1J";, Reslaurarls 15% , % 11% May 10, 2017 In short, the state and local economic outlook is expected to coincide with the national outlook of continued recovery. As the San Francisco Bay Area is currently a "hot spot" for the growing economy, it may experience a stabilization effect sooner than other parts of the state. Even with the positive economic trends of the last three years, the FY 2017-18 budget has been developed with a relatively conservative approach. The recession brought home the realization that some of the City's largest sources of revenue are highly volatile, inexorably linked to the health of the general economy and events that cannot be anticipated in the short term. Renewed emphasis on budgeting for the longer-term will provide more certainty for future budgets. However, the City cannot have a true budgetary "surplus' if unfunded needs continue to grow or if some of the City's funds continue to be vulnerable to State money grabs. For this reason, it is strongly recommended that the City exercise as much local control as possible over significant revenue sources. Locally -enacted, voter approved funds such as the City's storm drain funding are legally required to stay in Burlingame and be spent for the benefit of Burlingame's residents. General Fund Burlingame's fiscal year 2016-17 budget anticipated that the local economy would continue to gain momentum at a moderate pace, with a long-term forecast that reflected relative stability for at least the next several years. Departments were not required to provide further expenditure reductions for the mid -year analysis, which was presented to the City Council in March. However, departments were asked to identify, to the extent possible, additional funding sources or revenues to offset any additional budgetary needs. The City's 2016-17 fiscal year General Fund budget now reflects mid -year budget changes, with revenues projected to be nearly $1.7 million (or 2.5 percent) higher than projected in the FY 2016- 17 adopted budget. For fiscal year 2017-18, General Fund revenues are expected to grow to 0 FY 2017-18 Budget May 10, 2017 $68.9 million - an additional_2.1 percent overall. Although revenue projections for the 2017-18 fiscal year are discussed in more detail in this report, it should be noted that these revenue projections vary less than '/z of one percent in total from the five-year forecast presented with the mid -year report. Nearly all of the mid -year General Fund revenue adjustments were the result of increased tax receipts, reflecting real progress in terms of the local economy. Departmental expenditure budgets remain tight, however, in recognition of the many unfunded projects that need to be addressed in some manner in the near future. In establishing departmental budgets for the upcoming fiscal year, emphasis was placed on the desire to maintain current service levels, particularly in public safety, deliver on the City Council's established shorter -term goals, preclude any increase in unfunded liabilities, and prepare to address the City's current unfunded needs. As a result, the initial expenditure budgets for the 2017-18 fiscal year continue to reflect significant fiscal restraint on the part of all departments. The following table shows the current forecast of fiscal year 2017-18 General Fund revenue projections in the context of recent year actual amounts and current year estimated amounts. The 2016-17 Adjusted Budget column includes the revenue amendments approved with the mid- year report on March 15th. Although these fiscal year 2017-18 projections show continued improvement over the current mid -year projections for many revenue sources, the resulting increase in General Fund revenues for the upcoming fiscal year is slightly shy of the $1.7 million increase projected in the General Fund Five -Year Forecast presented in March. CITY OF BURLINGAME, CA SUMMARY OF GENERAL FUND REVENUES FY16-17 $ Change %Change FY14-15 FY15-16 Adjusted FY17-18 from Prior from Prior Actual Actual Budget Proposed Year Year Property Tax $16,677,381 $17,645,289 $18,851,000 $19,189,000 $338,000 1.8% Sales and Use Tax 11,100,900 12,827,673 12,150,000 12,205,000 55,000 0.5% Transient Occupancy Tax 23,698,396 26,092,240 26,216,000 26,871,000 655,000 2.5% Other Taxes Franchise Tax 1,579,976 1,604,757 1,614,000 1,630,000 16,000 1.0% Business Tax 966,675 985,568 990,000 994,000 4,000 0.4% State HOPTR 64,810 53,710 62,000 62,000 0 0.0% Real Property Transfer Tax 436,853 499,514 292,000 360,000 68,000 23.3°% Licenses & Permits 83,840 86,154 88,000 88,500 500 0.6% Fines, Forfeitures and Penalties 837,704 864,393 942,000 901,500 (40,500) -4.3% Use of Money & Property 207,952 200,196 161,000 165,000 4,000 2.5% Charges for Services 4,481,618 4,470,274 5,247,200 5,257,500 10,300 0.2% Other Revenue 1,046,512 35,974 30,500 30,500 0 0.0% State Subventions 578,158 146,530 234,000 234,000 0 0.0% Interest Income 260,740 757,153 630,000 9 000 315,000 50.0% Total, General Fund Revenue $62,021,516 $66,279,425 $67,507,700 68,933,00 $1,425,300 2.1% 7 FY 2017.18 Budget May 10, 2017 Revenues from property taxes are expected to remain strong in the 2017-18 fiscal year. As of the writing of this report, the tax roll established by the County Assessor's Office shows a growth of 5.27 percent in assessed value for the City of Burlingame over the prior year. (This includes an inflation factor of slightly over one percent for all properties; the remaining growth is attributable to higher assessed values of properties that have changed ownership over the course of the year.) Although there is not a one-to-one correlation of the change in assessed values to the change in property tax eventually allocated to the City, it is a good indication of how property tax receipts will trend in the upcoming year. The reason the forecast for property tax revenues shows only a mild increase from the current year's property tax estimate is because of changes in distributions from the County's Educational Revenue Augmentation Fund (ERAF). Higher funding for education will be needed, as the Governor's proposed budget significantly increases funding distributed to schools under the Local Control Funding Formula, legislation enacted with the fiscal year 2013-14 state budget. The higher funding will translate to higher draws from county ERAFs statewide. In addition, ERAF monies are being used to satisfy other State commitments that will ultimately eliminate any excess ERAF that has (in the past) been returned to the cities and other local governmental agencies that contribute to the fund. Although excess ERAF refunds will contribute nearly $1.5 million to the City's property tax receipts in the current fiscal year, a conservative estimate of $800,000 is projected for fiscal year 2017-18. Other property tax line item revenues, both secured and unsecured, are expected to remain strong. City of Burlingame General Fund Revenue Composition - ■ Property Tax 5 __ �- ■ Sales and Use Tax Transient - =-a eranc-.-se,r , Occupancy Tax, - - 39.0% ■Transient _ Occupancy Tax - - ■Other Revenue TOT (Transient Occupancy Tax) revenues constitute Burlingame's largest General Fund revenue and are usually a good indicator of current economic activity. At mid -year, the forecast for TOT for the current (2016-17) fiscal year was increased $216,000 (0.8 percent) to reflect growth in receipts year-to-date. Hotels in the area continue to experience very high occupancy rates (averaging 84.9 percent). The fiscal year 2017-18 budget forecast anticipates a further rise (2.5 percent) in this revenue source. Although occupancy rates should level off in the near future, and the number of Burlingame hotel rooms is not increasing, the average daily room rate (ADR) FY 2017-18 Budget May 10, 2017 is expected to rise moderately despite the completion of new hotels along the Peninsula. The five- year forecast shows a continued rise in these revenues until the 2019-20 fiscal year, when a new 400 -room hotel at SFO is expected to open. Sales tax receipts also reflected a fairly healthy economy this past year. Although these revenues appear to have suffered a 5.3 percent decline from the prior year, recall that the 15.5 percent bump up in fiscal year 2015-16 was due largely to the end of the State's "triple flip" revenue swapping procedure. This revenue should stabilize, reflecting true economic activity, in the years to come. However, the proposed sales tax revenue budget for fiscal year 2017-18 shows a decline of approximately $200,000 (1.6 percent) from the estimate projected in March's five-year forecast. Transaction data from the fourth quarter of calendar year 2016 is now available and presents a slightly more subdued revenue picture. Although sales are still expected to be higher in most major industry groups, transactions in the City's Auto and Transportation sector leveled off considerably in the third quarter of 2016, with similar fourth quarter results. The slow -down is not particular to Burlingame. Although the auto industry has been steadily expanding for seven years, automakers recently reported the fourth straight monthly retreat in sales of new cars and light trucks, the longest stretch of declines since 2009. The slump underscores the view of many that auto sales have peaked and are set to trend downward, although a slight increase in sales is projected for the upcoming fiscal year. Business to business sales are also now projected to increase by less than I% in the coming fiscal year. As can be seen from the pie chart above, 84.5 percent of General Fund revenues (per the initial fiscal year 2017-18 budget) are derived from TOT, property tax, and sales tax receipts. Because TOT and sales tax revenues are closely linked to the local economy, these revenues tend to be much more volatile than property taxes and most other revenue sources. For long-range fiscal planning purposes, these revenues should bolster the General Fund reserve when the economy is strong, and be used to support General Fund services in times of economic downturn. The volatility of these revenues is a major consideration in the City's risk-based reserve policy. As the City Council has been discussing over the past year, locally enacted sales tax funding also represents a potential source of revenue for the City. In a community survey conducted last year, as much as 62% of Burlingame voters said they would support a''/2 cent local sales tax requiring a simple majority vote to maintain Burlingame's quality of life. Should the Council decide to proceed in this direction, none of these funds can be taken by federal or state governments, and every penny would be spent locally on priorities such as infrastructure repair. Other taxes consist largely of franchise fees and the City's business license tax, comprising less than 2.4 and 1.5 percent, respectively, of the City's General Fund revenue sources. The solid waste franchise fee makes up nearly half of all franchise fee revenues for the City. Because these and other utility rates are fairly stable, this revenue will remain flat. Business license taxes, generally $100 per business establishment, should also remain stable. In addition, property transfer taxes, charged when properties change ownership, decreased last year as turnover in the real estate market has slowed. These tax receipts are anticipated to remain at a M FY 2017-18 Budget May 10, 2017 long-term average of $360,000 in fiscal year 2017-18, though even a small number of large property sales in the city could bolster this line item revenue. Licenses and permits consist largely of alarm permit fees and taxicab licenses. These revenues, which account for less than '/2 of one percent of total General Fund revenues, are not expected to deviate significantly from current collections. In the category of fines, forfeitures and penalties, installation of "smart meters' in the City's downtown may enhance parking fee revenues (for the Parking Enterprise Fund), but is expected to reduce the number of citations issued. Although compliance with parking restrictions throughout the city is necessary to support the safe and fair turnover of the limited parking facilities available to residents, businesses, and customers, this is an excellent result attributable to the convenience of the new meters. CITY OF BURLINGAME, CA CHARGES FOR SERVICES BY DEPARTMENT Revenues from charges for services levelled out in fiscal year 2015-16 after experiencing a growth of nearly 10 percent in the prior year. Fiscal year 2016-17 projections are higher due largely to fees generated in the Public Works Department from development projects of higher structural complexity, requiring special permits that reflected significant staff time. In addition, credit card fees that previously offset these revenues prior to the current fiscal year are now budgeted separately as an expense. Other than a return to more normal levels in Public Works, service volumes in the upcoming fiscal year are not proposed to deviate significantly in any one area. (Recreation fees are coming in higher in the current fiscal year than reflected at mid -year, along with additional expenses associated with the recreation programs.) The Master Fee Schedule has been updated per Council direction to keep up with the current cost of providing services; the revised schedule is effective at the beginning of the 2017-18 fiscal year. The revenue projection for this category has decreased somewhat ($95,000) from March's five-year forecast based on the departmental projections for this revenue source as shown above. Finally, interest income on the City's investment portfolio is predicted to rise with increasing yields on the City's portfolio as well as an increase in the size of the portfolio. In the past year, the average yield to maturity on the City's portfolio has risen from 0.95 percent to 1.24 percent (as of March 31"), a 30.5 percent increase. The portfolio itself increased 16 percent. Because interest attributed to the City's Renewal and Replacement Reserve and other governmental capital project 10 FY16-17 $Change %Change FY14-15 FY15-16 Adjusted FY17-18 from Prior from Prior Actual Actual Budget Proposed Year Year Police $62,280 $59,456 $62,700 $66,500 $3,800 6.1% Parks 158,475 148,572 172,500 158,000 (14,500) -8.4% Recreation 2,599,854 2,637,298-.. 2,778,000 3,092,000 314,000 11.3% Planning 617,287 577,413 626,500 657,200 30,700 4.9% Public Works 425,538 421,996 - 895,000 500,300 (394,700) -44.1°% Library 613,879 619,508 708,000 779,000 71,000 10.0% Other 4,306 6,031 4,500 4,500 0 0.0% Total, Departmental Fees $4,481,618 $4,470,274 _. $5,247,200 $5,257,500 $10,300 0.2% Revenues from charges for services levelled out in fiscal year 2015-16 after experiencing a growth of nearly 10 percent in the prior year. Fiscal year 2016-17 projections are higher due largely to fees generated in the Public Works Department from development projects of higher structural complexity, requiring special permits that reflected significant staff time. In addition, credit card fees that previously offset these revenues prior to the current fiscal year are now budgeted separately as an expense. Other than a return to more normal levels in Public Works, service volumes in the upcoming fiscal year are not proposed to deviate significantly in any one area. (Recreation fees are coming in higher in the current fiscal year than reflected at mid -year, along with additional expenses associated with the recreation programs.) The Master Fee Schedule has been updated per Council direction to keep up with the current cost of providing services; the revised schedule is effective at the beginning of the 2017-18 fiscal year. The revenue projection for this category has decreased somewhat ($95,000) from March's five-year forecast based on the departmental projections for this revenue source as shown above. Finally, interest income on the City's investment portfolio is predicted to rise with increasing yields on the City's portfolio as well as an increase in the size of the portfolio. In the past year, the average yield to maturity on the City's portfolio has risen from 0.95 percent to 1.24 percent (as of March 31"), a 30.5 percent increase. The portfolio itself increased 16 percent. Because interest attributed to the City's Renewal and Replacement Reserve and other governmental capital project 10 FY 2017-18 Budget May 10, 2017 funds is credited to the General Fund, these interest earnings should continue to grow until the funds are appropriated to the City's infrastructure needs. Burlingame invests in only the safest of securities (the highest priority of the City's investment policy is preservation of capital), and yields remain fairly low on U.S treasuries and federal agency notes as demand continues to outpace supply. However, the Federal Open Market Committee (FOMC) increased the federal Funds target rate by 0.25 percent in March (to 1.0 percent), and the market expects future increases, albeit gradual. In the meanwhile, yields on commercial paper and negotiable CDs continue to offer significant yield pickup relative to short-term government securities. As always, an assumption about the year-end "mark -to -market" adjustment is not included in the City's budget. General Fund - Expenditures The following table shows the proposed fiscal year 2017-18 General Fund expenditures by department/area as compared to the current year adjusted budget: CITY OF BURLINGAME, CA SUMMARY OF GENERAL FUND EXPENDITURES By General Fund Department City Council City Manager City Attorney City Clerk Elections Finance Human Resources Central County Fire + Disaster Preparedness Police & Dispatch Parking Enforcement Public Works Community Development Aquatics Center Library Parks Recreation TOTAL, Operating Expenditures Again, expenditure budgets are compared with the prior fiscal year as well as with the current year (2016-17) adjusted budget. The FY 2016-17 Adjusted Budget column includes all budget revisions approved by the City Council since the beginning of the fiscal year, including mid -year budget revisions. 11 FY17-18 FY16-17 $Change %Change FY15-16 Adjusted FY17-18 from Prior from Prior Actuals Budget Proposed Year Year $291,779 $367,113 $345,699 ($21,414) -5.8% 657,684 791,092 823,277 32,185 4.1% 495,644 759,424 906,965 147,541 19.4% 296,685 296,493 366,167 69,674 23.5% 23,381 50,000 168,000 118,000 236.0% 1,919,776 2,092,939 2,227,805 134,866 6.4% 792,452 924,810 956,176 31,366 3.4% 10,966,697 10,896,255 10,851,669 (44,586) -0.4% 13,200,600 14,811,226 15,447,078 635,852 4.3% 457,774 617,823 638,422 20,599 3.3% 4,693,548 5,093,323 5,958,029 864,706 17.0% 1,405,794 1,718,233 1,836,358 118,125 6.9% 336,689 476,000 510,500 34,500 7.2% 4,385,376 5,004,939 5,190,727 185,788 3.7% 3,743,840 4,310,964 4,786,633 475,669 11.0% 3,791,741 4,105,494 4 s4r.753 441,259 10.7% $47,459,460 $52,316,12 55,560,25 $3,244,130 6.2% Again, expenditure budgets are compared with the prior fiscal year as well as with the current year (2016-17) adjusted budget. The FY 2016-17 Adjusted Budget column includes all budget revisions approved by the City Council since the beginning of the fiscal year, including mid -year budget revisions. 11 FY 2017.18 Budget May 10, 2017 To allow a comparable operating picture as the adopted budget for fiscal year 2016-17, the fiscal year 2017-18 proposed budget provides a consistent application in accounting principles and budgetary assumptions, as well as a systematic allocation of the costs of funding the City's long-term liabilities. For example, retiree medical benefits, shown on a "pay-as-you-go" basis as a non -departmental expense prior to FY 2014-15, are now shown in the departmental budgets. Both the normal (current year benefits earned by active employees) and amortized (benefits earned in all prior years) costs of the retiree medical program are part of the regular operating budgets. Overall, proposed budget expenditures are shown as increasing 6.2 percent over the fiscal year 2016-17 adjusted budget. Major deviations within the departments are largely the result of increases in personnel costs. Since personnel costs represent a large investment in the City's current and future resources, requests for increases in Full Time Equivalent (FTE) positions are carefully monitored to ensure they provide the best on-going value for the City. As can be seen in the table above, the largest share of the General Fund budget is allocated to Police services such as 911 emergency response, neighborhood patrols, crime prevention, and investigation programs. Maintaining public safety as the City's number one priority while enhancing additional quality of life services remains the City's vision and goal. Strategic Increase in FTE (2.80 City-wide) The fiscal year 2017-18 budget proposes to add FTE (full time equivalent) positions as needed to carry out the City's priorities and support both General Fund and Capital Improvement Program activities. In addition, several classification revisions are proposed to more closely align actual duties performed by staff with the job classification. The proposed classification changes have all been presented to the City's bargaining units. The Public Works Department is proposing to restore a position previously deleted during the economic downturn by adding an Engineering Technician II position. This position will support the Traffic, Water, Sewer, and Storm Drainage Capital Improvement Programs in the Engineering Division and provide critical counter encroachment permit coverage. The position is currently being covered by two part-time Engineering Tech II positions when they are available. Because these positions are part-time, it is extremely difficult to retain staff, as well as assign long-term assignments that require full-time attention. It is proposed to combine two of the existing part time positions into one full-time position to provide consistency and stability in staffing for the department. Though initial funding for the position is in the General Fund budget, much of the increase would be charged to the appropriate CIP projects. The additional FTE would increase the Engineering Division's personnel budget by $122,300; the reduction in part-time help would be approximately $25,000. An additional Leadworker position and an increase in part-time Laborer hours is also proposed in the Streets/Storm Drain Division. An employee in the division was promoted earlier in the current fiscal year to fill a Street and Sewer Supervisor position, but the employee was unable to successfully complete the probationary period. The additional Leadworker position, which adds a cost of $123,000 in wages and benefits, will allow the employee to return to his previous 12 FY 2017-18 Budget May 10, 2017 position. Additional part-time Laborer hours are proposed to assist the division in its work backlog; the impact of the extra part-time help is approximately $53,800. Also within the Public Works Department, a reclassification of an Assistant Engineer position to Associate Engineer is proposed. The position supports engineering programs as well as the City's Capital Improvement Program, especially in the area of high-profile projects that have a significant impact on the residents of Burlingame. The proposed reclassification would provide for more flexibility in staffing as it would allow the department to under fill the position to Assistant Engineer in the future if it is determined to better meet the needs of the department and if the qualifications and experience of the individual performing the work merit assignment to the Assistant Engineer classification. A Meter Reader classification is proposed to be deleted (-1.0 FTE) in the Water Division of Public Works. This position is no longer needed as improvements to the Meter Change Out/Automated Meter Reading (AMR) program (starting in FY 2006-07) now allows for expedited reading of the water meters via modernization. The AMR program uses radio signals and eliminates the need for a person (the Meter Reader) to walk to each of the 9,000 plus water meters within the city. Also within the Water Division, a new position of Utilities Inspector/Locator is being proposed. This will fill a need in the department that is currently difficult to meet with the existing configuration of classifications. The City has over 105 miles of water distribution pipeline system, 140 miles of sewer pipelines, 50 miles of storm drainage system, approximately 1800 street lights, and approximately 35 traffic signals that require the City to provide Underground Service Alert (USA) markings for underground excavation upon notification. A dedicated Utilities Inspector/Locator position would more efficiently and effectively oversee these regulatory requirements and better meet current service demands. Within the fiscal year 2017-18 proposed budget, the deleted Meter Reader position serves to reduce personnel costs by $126,400; the added Utilities Inspector/Locator position increases the proposed personnel budget by $152,900, for a net increase of $26,500. In the Parks and Recreation Department, the budget includes a proposed increase of 0.80 FTE for the addition of a new part-time, benefitted Program Outreach Specialist position. The Program Outreach Specialist is responsible for the design of promotional materials for the Parks and Recreation Department, its programs, events, and sponsorships. Currently, these functions are fulfilled using a temporary, non -benefitted employee limited to 20 hours a week or less. This person is tasked with developing and maintaining viable communication outlets with the public, sponsors, and customers and supporting public engagement activities, leading outreach efforts, and connecting services with community groups and the community. These programs have grown and need the support of someone on a more regular basis, requiring more than 20 hours a week of work. The Library has proposed an increase to a current .63 FTE Librarian I position to full-time status within the Children's Division. This division has a heavy workload with desk shifts, children and teen programs, storytimes, school visits, Summer Reading programs, and staffing the Easton Branch. The Division Manager relies heavily on professionally trained librarians to work with children and family literacy needs. The proposal remains nearly budget -neutral by the reduction of a Librarian Assistant position, soon to be vacated due to retirement, from 1 FTE to .63 FTE. 13 FY 2017-18 Budget May 10, 2017 The net cost for 2017-18 is $1,500, as the change will take place approximately halfway through the new fiscal year. Finally, the Finance Department has proposed a reclassification of an Accounting Assistant III to an Accounting Technician. The incumbent has been shown capable of performing work beyond the scope of the duties of the current classification, and the change in duties is anticipated to be permanent. Areas of responsibility include supporting the Accountant and providing backup for payroll. This position supports the Accountant by performing various reconciliations, preparing journal entries, and maintaining the fixed asset schedule. The higher - performing position will be particularly necessary as the department moves toward new accounting and record-keeping systems. To the extent position changes are agreeable to the City Council, a staff report with the revised staff position listing and updated job descriptions will be brought forward to the Council to be approved by resolution prior to the beginning of the new fiscal year. Shown below are appropriations by department or functional area: CITY OF BURLINGAME, CA SUMMARY OF GENERAL FUND EXPENDITURES Parking Enforcement Public Works Community Development -Planning Leisure & Cultural Services Aquatics Center Library Parks & Recreation Total Expenditures 0 457,774 617,823 638,422 20,599 3.3% 4,769,873 4,693,548 5,093,323 5,958,029 864,706 17.0% 1,244,199 1,405,794 1,718,233 1,836,358 118,125 6.9% 400,831 336,689 476,000 FY16-17 34,500 $ Change %Change 4,385,376 FY14-15 FY35-16 Adjusted FY17-16 from Prior from Prior Description Actual Actual Budget Proposed Year Year General Government $4,121,895 $4,477,401 $5,281,871 $5,794,089 $512,218 9.7% Public Safety & TrafOc $27,241,053 $28,961,566 $1,720,513 6.3% Non -Personnel Costs 18,176,224 Central County Fire + Disaster Prep. 10,470,376 10,966,697 10,896,255 10,851,669 (44,586) -0.4% Police & Dispatch 12,303,118 13,200,600 14,811,226 15,447,078 635,852 4.3% Parking Enforcement Public Works Community Development -Planning Leisure & Cultural Services Aquatics Center Library Parks & Recreation Total Expenditures 0 457,774 617,823 638,422 20,599 3.3% 4,769,873 4,693,548 5,093,323 5,958,029 864,706 17.0% 1,244,199 1,405,794 1,718,233 1,836,358 118,125 6.9% 400,831 336,689 476,000 510,500 34,500 7.2% 4,392,441 4,385,376 5,004,939 5,190,727 185,788 3.7% 6,702,331 7,535,581 8,416,458 Adjusted 916,928 10.9% $44,405,064 $47,459,460 $52,316,128 Q55,560,258 ,244,130 6.2% Year Year Personnel Costs $22,273,440 $24,236,950 $27,241,053 The 2017-18 fiscal year budget proposed for the General Fund can also be compared to the current year budget by category of expenditure. CITY OF BURLINGAME, CA SUMMARY OF GENERAL FUND EXPENDITURES BY TYPE FY16-17 $Change %Change FY14-15 FYSS-16 Adjusted FY17-18 from Prior from Prior Description Actuals Actuals Budget Proposed Year Year Personnel Costs $22,273,440 $24,236,950 $27,241,053 $28,961,566 $1,720,513 6.3% Non -Personnel Costs 18,176,224 19,920,557 21,259,341 22,265,115 1,005,774 4.7% Internal Services 3,861,235 3,247,960 3,586,234 4,124,377 538,143 15.0% Capital Outlay 94,165 53,993 229,500209200 (20,300) -8.8% Total Expenditures $44,405,064 $47,459,460 $52,316,12 55,560,25877' $3,244,130 6.2% 14 FY 2017-18 Budget May 10, 2017 Personnel Costs — When reviewing the proposed 2017-18 fiscal year General Fund expenditure budget by type, note that personnel costs increase 6.3 percent (approximately $1.7 million) when compared to the current year. Some of the increase is due to the inclusion of additional FTEs as previously outlined (approximately $313,000). Increases in CaIPERS pension costs ($587,000) also contribute to the growth in personnel costs. Regular salary increases were calculated to contractually -agreed upon increases for most miscellaneous employees, including hourly employees. Non -Personnel Costs — This category of costs is increasing 4.7 percent in the 2017-18 fiscal year proposed budget when compared to the current year budget. Though not a large percentage increase for the fiscal year, the change represents not only regular cost increases, but an attempt to address Council's initiatives for the year. Departments were careful to review contract services to ensure that only projects that were necessary and could realistically be addressed in the upcoming fiscal year were included in the budget proposal. The proposed budget currently includes $168,000 for election expenses, where there were no expenses in the prior year adopted budget. (The Measure R election expenses were not included in the adopted 2016-17 fiscal year as there was no ballot measure at the time of budget adoption. These expenditures are reflected in the adjusted budget for FY 2016-17 as approved by the City Council in March.) The Police Department budget includes an increase ($125,200) for updating technical equipment such as body worn cameras, computer system virus infiltration protection, and hand-held ticket machines. The Recreation budget includes a $194,000 increase in the contractual services budget for the costs associated with Enrichment enrollment and enhanced class offerings. As these programs are very popular, the additional costs will be offset with revenue (charges for services) in the department. The Parks Division budget includes an increase of $147,000 in contractual services expenditures for tree trimming, grid pruning, and the Cartegraph system (which is used to track work orders and asset management). A decrease in the contract with CCFD ($104,000) accounts for the largest single cost reduction in non -personnel costs in the General Fund. This 2 percent decrease from the current year's budget is primarily the result of a significant reduction in workers' compensation funding for FY 2017-18. Funding for fire operations comes from the City of Burlingame, the Town of Hillsborough, and the City of Millbrae. The higher internal services costs are due not only to cost increases within the Internal Service Funds themselves, but in several instances, to a reallocation of the costs to General Fund activities. In total, General Liability increased by $229,000; Admin/IT costs are expected to increase by $156,000; and Facilities Maintenance costs are increasing by $147,000 over the current year's budget. General Fund Operations Summary A summary of the General Fund operations per the 2017-18 proposed budget is shown below: 15 FY 2017.18 Budget CITY OF BURLINGAME, CA GENERAL FUND OPERATING SUMMARY Total Revenue Expenditures Departmental Expenditures Transfers (In) Out Total Expenditures Net Operating Revenue CIP Renewal & Replacement Reserve Change in General Fund Balance FYIS-16 Actuals $66,279,425 (47,459,460) May 10, 2017 FY16-17 FY17-18 Adjusted Proposed Budget Budget $67,507,700 (52,316,128) $68,933,000 (55,560,258) (7,679,186) (8,041,015) (8,829,244) (55,138,646) (60,357,143) (64,389,502) 11,140,779 (10,500,000) 7,150,557 (7,000,000) 4,543,498 (3,000,000) $ 640,779 $ 150,557 $ 1,543,498 As anticipated with the mid -year budgetary changes approved by the City Council in March, the General Fund shows a budgetary surplus (net operating revenues) for fiscal year 2016-17 of $7.1 million prior to funding the CIP Renewal & Replacement Reserve. The adopted budget provided for a $3 million transfer to the reserve due to the surplus experienced in fiscal year 2015-16; this amount was increased to $7.0 million with mid -year results that reflected higher revenues than anticipated in the original budget for fiscal year 2015-16. Note, too, that additional budgetary savings are a certainty, because the expenditure budgets reflect the limit of spending levels for each department. Departments are only able to expend or commit funds up to this legal level of budgetary control. Because these budgetary controls are established within each category of departmental expenditures, budgetary savings tend to average two to four percent of the annual expenditure budget. The initial General Fund budget for fiscal year 2016-17 anticipates a surplus of over $1.5 million. As previously noted, the budget provides funding of $3 million for an increase in the Renewal and Replacement Reserve in the City's Capital Projects Fund, to provide partial funding of the City's most immediate facilities' needs. Unlike the current Capital Projects Fund Balance, the Renewal and Replacement funding will not be appropriated to a specific project. Rather, it will accumulate for capital projects as prioritized by the City Council, to be initiated when timing is optimal and sufficient other funding is identified. As can be seen in the schedule of General Fund Debt Service Obligations below, the net General Fund Debt Service (not reimbursed by other funds) will decrease by 6.1 percent in the upcoming fiscal year, due largely to the maturity and early payoff of two loans procured in 2011. 16 FY 2017-18 Budget May 10, 2017 CITY OF BURLINGAME, CA GENERAL FUND DEBT SERVICE OBLIGATIONS General Fund Balance The General Fund shows a projected total fund balance of more than $31.3 million at the end of the 2017-18 fiscal year. As previously stated, budgetary savings in the current fiscal year should provide a higher beginning fund balance than shown in the chart below: CITY OF BURLINGAME, CA CHANGES TO GENERAL FUND BALANCE Beginning of Year Balance (Budget/Audit) Projected Revenues & Expenditures Projected revenues Projected departmental expenditures Subtotal, Revenues Net of Expenditures General Fund Long -Term Debt Transfer to CIP Renewal & Replacement Reserve Other Transfers In (Out) of General Fund Projected General Fund Balance, net of transfers FY16-17 Adjusted FY17-18 Budget Projected $ 29,641,334 $ 29,791,891 67,507,700 68,933,000 (52,316,128) (55,560,258) 15,191,572 13,372, 742 (5,756,745) (5,574,688) (7,000,000) (3,000,000) (2,284,270) (3,254,556) $ 29,791,891 $ 31,335,389 The schedule below shows how this change in fund balance will impact the reporting of General Fund reserve levels: 17 FY16-17 FY17-18 $ Change from % Change from Description Maturity Adopted Proposed Prior Year Prior Year 2006 Pension Obligation Bonds FY2036 $3,734,042 $3,845,225 $111,183 3.0% 2010 Corp Yard Lease Refunding Bonds FY2021 1,163,975 1,164,875 900 0.1% 2011 Master Equipment Lease Purchase FY2018 240,646 0 (240,646) -100.0% 2011 CEC LED Streetlight Loan FY2021 54,594 0 (54,594) -100.0% 2012 Lease Revenue Bond* FY2042 548,488 549,588 1,100 0.2% Debt Administration Costs 15,000 15,000 0 0.0% Subtotal, Principal and Interest 5,756,745 5,574,688 (182,057) -3.2% Contributions from Other Funds (2,267,169) (2,296,965) (29,796) 1.3% Net General Fund Debt Service $3,489,576 $3,277,723 ($211,853) -6.1% •100% reimbursed by the Speci a I Assessment District and Parking Enterprise General Fund Balance The General Fund shows a projected total fund balance of more than $31.3 million at the end of the 2017-18 fiscal year. As previously stated, budgetary savings in the current fiscal year should provide a higher beginning fund balance than shown in the chart below: CITY OF BURLINGAME, CA CHANGES TO GENERAL FUND BALANCE Beginning of Year Balance (Budget/Audit) Projected Revenues & Expenditures Projected revenues Projected departmental expenditures Subtotal, Revenues Net of Expenditures General Fund Long -Term Debt Transfer to CIP Renewal & Replacement Reserve Other Transfers In (Out) of General Fund Projected General Fund Balance, net of transfers FY16-17 Adjusted FY17-18 Budget Projected $ 29,641,334 $ 29,791,891 67,507,700 68,933,000 (52,316,128) (55,560,258) 15,191,572 13,372, 742 (5,756,745) (5,574,688) (7,000,000) (3,000,000) (2,284,270) (3,254,556) $ 29,791,891 $ 31,335,389 The schedule below shows how this change in fund balance will impact the reporting of General Fund reserve levels: 17 FY 2017.18 Budget CITY OF BURLINGAME, CA GENERAL FUND BALANCE ASSIGNMENTS Add: Unassigned Fund Balance 11,003,467 11,091,891 12,291,389 Total, Ending Fund Balance $29,203,467 $29,791,891 $31,335,389 May 10, 2017 As of June 30, 2017, a fund balance of approximately $29.8 million represents 49.4 percent of the General Fund's total expenditures of $60.3 million for the year. Although this would normally be considered a very strong level of reserves, the City Council adopted a risk-based General Fund Reserve Policy that targets reserve levels as a percentage of General Fund budgeted revenues (before transfers). Because the policy is based on an assessment of the City's revenue volatility and infrastructure risks, as well as the possibility of extreme events, the City Council's reserve management strategies reflect best practices in public finance. The FY 2017-18 General Fund's projected surplus will be first used to increase the Economic Stability Reserve to the level prescribed by the City's General Fund Reserve Policy: (The policy calls for an Economic Stability Reserve of 24 percent of budgeted revenues, a Catastrophic Reserve of $2.0 million, and a $500,000 Contingency Reserve.) Increased revenues projected in FY 2017-18 result in an increase in reserves of $344,000. Any remaining fund balance will be reported as "unassigned fund balance" Other Funds Although the General Fund is the main operating fund of the City, the City utilizes various enterprise, capital, internal service, and special revenue funds to account for both governmental and business -like activities. The activities accounted for in these other funds are significant and wide-ranging. Staff analyzes all funds at least monthly to ensure that they are self-sustaining and carry adequate fund balances for periods of uncertainty. The chart below shows initial expenditure budgets for the City's larger funds for the 2017-18 fiscal year: i[% FY15-16 FY16-17 Actual Adjusted FY17-18 Results Budget Proposed Economic Stability Reserve $ 15,700,000 $ 16,200,000 $ 16,544,000 Catastrophic Reserve 2,000,000 2,000,000 2,000,000 General Plan Reserve 0 0 0 Contingency Reserve 500,000 500,000 500,000 Subtotal, Assigned Fund Balance 18,200,000 18,700,000 19,044,000 Add: Unassigned Fund Balance 11,003,467 11,091,891 12,291,389 Total, Ending Fund Balance $29,203,467 $29,791,891 $31,335,389 May 10, 2017 As of June 30, 2017, a fund balance of approximately $29.8 million represents 49.4 percent of the General Fund's total expenditures of $60.3 million for the year. Although this would normally be considered a very strong level of reserves, the City Council adopted a risk-based General Fund Reserve Policy that targets reserve levels as a percentage of General Fund budgeted revenues (before transfers). Because the policy is based on an assessment of the City's revenue volatility and infrastructure risks, as well as the possibility of extreme events, the City Council's reserve management strategies reflect best practices in public finance. The FY 2017-18 General Fund's projected surplus will be first used to increase the Economic Stability Reserve to the level prescribed by the City's General Fund Reserve Policy: (The policy calls for an Economic Stability Reserve of 24 percent of budgeted revenues, a Catastrophic Reserve of $2.0 million, and a $500,000 Contingency Reserve.) Increased revenues projected in FY 2017-18 result in an increase in reserves of $344,000. Any remaining fund balance will be reported as "unassigned fund balance" Other Funds Although the General Fund is the main operating fund of the City, the City utilizes various enterprise, capital, internal service, and special revenue funds to account for both governmental and business -like activities. The activities accounted for in these other funds are significant and wide-ranging. Staff analyzes all funds at least monthly to ensure that they are self-sustaining and carry adequate fund balances for periods of uncertainty. The chart below shows initial expenditure budgets for the City's larger funds for the 2017-18 fiscal year: i[% FY 2017-18 Budget CITY OF BURLINGAME, CA BUDGET SUMMARY BY FUND May 10, 2017 The 2016-17 fiscal year Capital Projects Program budget was increased at mid -year to provide additional appropriations of $574,000; $500,000 of this amount was needed to appropriate matching funds for the Broadway Grade Separation Project. The 2017-18 fiscal year budget is based on the CIP (Capital Improvement Program) as presented earlier this year. A complete presentation of 2017-18 fiscal year Capital Projects Program activities has been prepared by Public Works for this (May 10, 2017) Budget Study Session. Note that both the current year and FY 2016-17 transfers to the Renewal and Replacement Reserve will not be included as Capital Projects Fund appropriations. This will occur once the funding for a specific capital project is determined, and a budget for the project is established within the Capital Improvement Program. Although deferred infrastructure maintenance must be avoided for a truly sustainable budget, it is difficult to determine the appropriate annual investment into comprehensive maintenance programs and the Renewal and Replacement Reserve that will provide for assets that retain a targeted condition level. But it is clear that past investment in infrastructure has not been adequate. The $3 million transfer to the Renewal and Replacement Reserve serves as a placeholder, representing an affordable investment in these unfunded infrastructure projects. Staff is developing a framework for a reserve policy specific to this Capital Project Fund reserve for City Council consideration and discussion prior to the beginning of the new fiscal year. Water & Sewer Funds In recent years, the Bay Area has been heavily impacted by a severe drought. Declining water levels at the Hetch Hetchy Reservoir and a lack of rain and snowfall prompted aggressive campaigns promoting water conservation at both the local and state levels. In January of 2014, Governor Brown issued an Executive Order mandating water use restrictions, and by this time last year, the City's residents and business owners had reduced consumption by 30 percent to date as compared to calendar year 2013 (surpassing the State's mandate for Burlingame of a 16 percent 19 FY16-17 FY17-18 Adjusted Budget Proposed General Fund $52,316,128 $55,560,258 Capital Projects 19,675,000 24,808,000 Financing Authority 8,008,965 7,634,037 Building Enterprise 2,216,026 1,757,187 Landfill Fund 244,607 252,223 Parking Enterprise 563,037 616,657 Sewer Enterprise 10,572,671 10,967,292 Solid Waste Enterprise 564,405 674,925 Water Enterprise 14,528,578 14,699,794 Special Revenue Funds 60,000 60,000 Other Funds 554,650 643,334 Total $109,304,067 $117,673,707 May 10, 2017 The 2016-17 fiscal year Capital Projects Program budget was increased at mid -year to provide additional appropriations of $574,000; $500,000 of this amount was needed to appropriate matching funds for the Broadway Grade Separation Project. The 2017-18 fiscal year budget is based on the CIP (Capital Improvement Program) as presented earlier this year. A complete presentation of 2017-18 fiscal year Capital Projects Program activities has been prepared by Public Works for this (May 10, 2017) Budget Study Session. Note that both the current year and FY 2016-17 transfers to the Renewal and Replacement Reserve will not be included as Capital Projects Fund appropriations. This will occur once the funding for a specific capital project is determined, and a budget for the project is established within the Capital Improvement Program. Although deferred infrastructure maintenance must be avoided for a truly sustainable budget, it is difficult to determine the appropriate annual investment into comprehensive maintenance programs and the Renewal and Replacement Reserve that will provide for assets that retain a targeted condition level. But it is clear that past investment in infrastructure has not been adequate. The $3 million transfer to the Renewal and Replacement Reserve serves as a placeholder, representing an affordable investment in these unfunded infrastructure projects. Staff is developing a framework for a reserve policy specific to this Capital Project Fund reserve for City Council consideration and discussion prior to the beginning of the new fiscal year. Water & Sewer Funds In recent years, the Bay Area has been heavily impacted by a severe drought. Declining water levels at the Hetch Hetchy Reservoir and a lack of rain and snowfall prompted aggressive campaigns promoting water conservation at both the local and state levels. In January of 2014, Governor Brown issued an Executive Order mandating water use restrictions, and by this time last year, the City's residents and business owners had reduced consumption by 30 percent to date as compared to calendar year 2013 (surpassing the State's mandate for Burlingame of a 16 percent 19 FY 2017.18 Budget May 10, 2017 reduction in consumption.) Consumption patterns reached progressively lower levels in the past two years due to the concerted and deliberate efforts to conserve water. As a result of reduced water consumption due to drought conditions, and the increased capital and operating costs of the water system — including the cost of wholesale water purchased from the San Francisco Public Utilities Commission (SFPUC) — the City found it necessary to raise water rates to offset lost revenue. The proposed rate increases are equivalent to 9 percent in 2017, 7.5 percent in 2018, and 7.5 percent in 2019. However, recent winter rains have brought an end to drought conditions in Northern California. Water consumption in the first four months of the current fiscal year was above prior -year actual amounts, but dropped to new lows when the rains began. For the remainder of the fiscal year, consumption is projected to match prior -year experience. As such, revenues of the fund are anticipated to be on target with the 2016-17 fiscal year budget, and no adjustment to these revenues was made in the mid -year report. For 2017-18, the higher rates are used to project income, also assuming no major increases to water consumption. CITY OF BURLINGAME, CA CHANGES TO WATER FUND BALANCE Beginning of Year Balance (Budget/Audit) Projected Revenues & Expenses Projected revenues Projected operating expenses Subtotal, Revenues Net of Expenses Interest Expense FY16-17 Adjusted FY17-18 Budget Projected $ 8,634,713 $ 6,157,096 16, 626, 500 17, 965,000 (14,528,578) (12,631,543) 2,097,922 5,333,457 (891,601) (772,751) Transfers - General Fund - Contributions for Debt Service (856,991) (871,189) Transfers - Capital Projects Fund (2,500,000) (2,750,000) Other Transfers In (Out) of Water Fund (326,947) (422,698) Projected Water Fund Balance, net of transfers $ 6,157,096 $ 6,673,915 20 FY 2017-18 Budget CITY OF BURLINGAME, CA CHANGES TO SEWER FUND BALANCE Beginning of Year Balance (Budget/Audit) Projected Revenues & Expenses Projected revenues Projected operating expenses Subtotal, Revenues Net of Expenses Interest Expense FY16-17 Adjusted FY17-18 Budget Projected $ 8,940,788 $ 7,726,213 16,056,600 16,171,000 (10,572,671) (8,234,089) 5,483,929 7,936,911 (950,150) (829,574) Transfers -General Fund- Contributions for Debt Service (856,991) (871,189) Transfers- Capital Projects Fund (4,700,000) (4,700,000) Other Transfers In (Out) of Sewer Fund (191,363) (214,670) Projected Sewer Fund Balance, net of transfers $7,726,213 $9,047,691 May 10, 2017 Gas Tax (HUTA) and Road Repair and Accountability Act (RRAA) of 2017 — The Gas Tax is a special revenue fund used to account for the revenue received from the State of California derived from gasoline taxes. These funds may only be used for street purposes as specified in the State Streets and Highways Code, and so they have always been an important revenue source for the City's Streets Capital Improvement Program. The projection of Highway Users Tax (HUTA) revenues is complex, with differing allocations derived from various sections of the Code, and differences in the allocation of gasoline tax revenues from diesel and fuel use tax revenues. Calculations are further complicated by the State's gasoline sales taxlexcise tax swap introduced in 2010, and formulas to ensure that cities and counties are "made whole' from impacts of the swap. Due to the nature of these allocations, this revenue source is erratic from year to year. In the ups and downs of the HUTA formulas, recent year allocations have reflected a reduction for a prior year over -collection of excise tax revenue, as well as a downward trend in taxable sales of gasoline. As a result, road and transit investments have not kept pace with the growth in transportation needs across the state. Fortunately, the Road Repair and Accountability Act of 2017 (SB1) provides a significant new investment in California's transportation systems of about $5.2 billion per year over the next decade, split equally between state and local investments. The Act enhances HUTA allocations through increases in per gallon fuel excise taxes, diesel fuel sales taxes, and vehicle registration taxes; stabilization of the problematic price -based fuel tax rates; and inflationary adjustments to rates in future years. The Act will more than double local streets and road funds now allocated through the Highway Users Tax Account by also providing funds from new taxes through a new Road Maintenance and Rehabilitation Account (RMRA). The following table includes projections of previously existing Highway Users Tax Account (HUTA) funds as well as funds from the State's new RMRA. The RMRA allocations include funds from the additional taxes enacted by SB1: a 12 cent gasoline excise tax, a 20 cent diesel fuel 21 FY 2017-18 Budget May 10, 2017 excise tax, and transportation improvement fees (vehicle registration taxes). In addition, the Act provides for the payment of $225 million of transportation loans to be repaid over three years. Highway Users Tax Projected Revenues City of Burlingame FY 2016-17 FY 2017-18 FY 2018-19 Sec 2105 $ 175,888 $ 172,763 $ 172,763 Sec 2106 $ 111,024 $ 109,144 $ 109,144 Sec 2107 $ 227,198 $ 223,185 $ 223,185 Sec 2107.5 $ 6,000 $ 6,000 $ 6,000 Sec 2103 $ 72,208 $ 119,009 $ 130,909 Loan Repayment $ 34,010 $ 34,010 TOTAL HUTA $ 592,318 $ 664,111 $ 676,011 Road Maintenance $ - $ 171,410 $ 510,603 Rehab Acct TOTAL $ 592,318 $ 835,521 $ 1,186,614 FY 2017-18 is a partial year of funding from these new sources. The first full year of funding will be FY 2018-19. In that year, the allocations to local streets and roads and other transportation programs will increase substantially. RMRA funds to local streets and roads in FY 2017-18 are currently estimated by the state Department of Finance at $453 million including loan repayments. In FY 2018-19 this figure goes up to $1.2 billion. Although the impact is not particularly significant in the upcoming fiscal year, SB1 will definitely help California municipalities address aging transportation infrastructure in the future. VIMUMIT-74k In recent years, the City has grappled with prioritizing a significant list of unfunded needs, largely in the area of City facilities, many of which are utilized by the public. The City Council ranked a new downtown parking garage as the highest priority for small businesses and shoppers alike, followed by a new Community Center and essential City Hall upgrades to enhance public access to policy decision-making. As funding options have been pursued, other capital needs have been identified that will require funding as well as stretch the organization's capacity in the future, such as the Broadway Grade Separation project. In order to facilitate the funding of some of these projects, the City has explored whether it can partner with private developers to build one or more parking garages at little or no cost to the City. In addition, staff has worked with its financial consultant to help determine how to fund projects such as the Community Center that may require some type of voter -approved funding mechanism. To date, no decisions have been made about any of the potential public-private partnerships or tax mechanisms. The City continues regular investments in building maintenance 22 FY 2017-18 Budget May 10, 2017 and infrastructure maintenance through the five-year CIP, but this approach has not proved to be sufficient in averting further unfunded needs. To the extent possible, funds are being set aside in the City's Renewal and Replacement Reserve within the Capital Projects Fund. The reserve balance as of the end of the current fiscal year is anticipated to be $20.5 million. However, the reserve is being funded by annual surpluses and one-time revenues, and as such will be the first General Fund resources that will be reduced or eliminated when the economy inevitably retracts. The City Council has also expressed an interest in funding the growing unfunded pension liabilities with CaIPERS. A recent actuarial study presented with the mid -year report shows that the City's CaIPERS contribution rates are expected to surge from the current Misc./Safety rates of 22.9%/42.0% to 40.6%/86.2% (as a percent of payroll) in the next 10-15 years. Staff plans to present options for funding these obligations early in the new fiscal year. But current estimates are that additional funding of $3.7 million would be needed to begin funding these liabilities, which currently total $49.3 million, in the 2017-18 fiscal year. These unfunded needs should be kept in mind when assessing the City's long-term fiscal health. General Fund Five -Year Financial Forecast The five-year forecast was last updated with the fiscal year 2016-17 mid -year report in March. General Fund revenues reflected in total in the initial fiscal year 2017-18 budget are approximately one-half a percent ($339,000) less than in the five-year forecast; General Fund expenditures are approximately 1.6 percent more ($891,000) than projected for FY 2017-18 in the forecast. Where the five-year forecast anticipated a $2.7 million surplus for fiscal year 2016-17, this initial budget shows a $1.5 million surplus. For all intents and purposes, the assumptions of the five-year forecast remain in place. Staff will continue to monitor economic conditions and analyze events that could impact the City's future revenue or expenditure composition. Changes that significantly alter the City's long-term projections will be brought to the Council's attention. Longer term financial planning is not limited to the General Fund. The City's other operating funds are also examined for unfunded liabilities and future vulnerabilities, and adjustments are made as needed. To the extent these funds are not self-sustaining, they can indicate a drag on the City's General Fund operations. To avoid such a condition, long-term plans are updated frequently, and any changes in the outlook of these funds are brought to the City Council's attention through the budget, mid -year analysis, and financial reporting processes currently in place. FISCAL IMPACT The preliminary General Fund budget for the 2017-18 fiscal year calls for projected revenues of $66.9 million, with expenditures and net transfers out of $64.5 million. Though balanced, this preliminary budget cannot fully address the unfunded needs identified in previous budget discussions. As these unfunded needs generally reflect the long-term degradation of City facilities and other infrastructure, it is unclear as to whether the budget can be considered sustainable over the long-term. The preliminary budget does provide for an additional $3 million transfer out of the 23 FY 2017-18 Budget May 10, 2017 General Fund to the Capital Projects Fund in order to increase the Renewal and Replacement Fund to help curb the creation of additional capital needs. The General Fund balance is estimated to be $31.3 million at the end of fiscal year 2017-18. The budgets for all other funds have been equally reviewed and analyzed in the context of long- term fiscal planning. At this time, these funds appear to be self-sustaining, with operations that do not pose a threat to the City's long-term fiscal health. More detail on each of these funds will be provided in the final 2017-18 Budget document. 24 City of Burlingame Budget for 2017-18 BURLINGAME ',1 r May 10, 2017 General Fund Challenges L Provide day-to-day operations and capital needs required to sustain high quality services 1. Fund long-term, legally -obligated liabilio'es 3. Resole unfunded infrastructure needs Budget Highlights for 2017-18 • Aligned with Council and commun priorities • Confirms long-term focus: identify and fund accrued liabilities • No nrajgr changes from 5 -year forecast LUnfunded infrastructure needs 1 2017-18 Proposed Budget Assumes strategic staff (FTE) increases, allowing the City to retain highly skilled, experienced staff and service providers Assumes relatively low investment returns continue Consistent with careful planning, anticipates $3 million funding of the Renewal and Replacement Reserve 1 2017-18 Proposed Budget (cont.) General Fund revenues up 21 % (though up 4.7%from 1016-17 adopted budget) Total General Fund balance to increase ove 1. million L_ General Fund Revenues .Mol..ffi...A�a Transient Occupancy Taxes (TOT) I I Transient Occuoancv Taxes • Average Daily Room Rates (ADR) steady Actually declining slightly in San Francisco area - Occupancy rates holding steady at 84.5% • 2016-17TOTprojected revenues up''/=% sin%prioorr year • 6 owtlnr'� 7. % assumed for 2017-I8 Provides $4:5 million guideline for capital projects spending_ ogaa.Mer,u rruvv+eto.�rw.. i npMln 9zaT.ffi A)A6� I SY6µm N]a6l ABVL nq fl,Yd,R6 iµ91Yo - �sLam XH1L6 65pA iso Wsrivv�P fl .A hl Alm .gym A,d Q,.a Am Am. ,.nm..q•� m 1m.Aa mau. .am Immo wm ssixx amAe unm :yo.� s �osoo no 0 lasso ssan mo aox mw un wmo uimo m.�m..A. caro ® _cam Transient Occupancy Taxes (TOT) I I Transient Occuoancv Taxes • Average Daily Room Rates (ADR) steady Actually declining slightly in San Francisco area - Occupancy rates holding steady at 84.5% • 2016-17TOTprojected revenues up''/=% sin%prioorr year • 6 owtlnr'� 7. % assumed for 2017-I8 Provides $4:5 million guideline for capital projects spending_ ogaa.Mer,u rruvv+eto.�rw.. i Property Taxes - ERAF • ERAF withheld from the City's 2016-17 property tax allocation is nearly $2.5 million • The City's "Excess ERAF" distribution amoynte 10 $1.49 million • The State's obligation to schools is 1. projected to increase, decreasing the amount of "Excess returned to agencies Sales Taxes Revenue by Business Group —Calendar Year 2016 City of Burlingame Sales Taxes Taxable sales far all of California in the final quarter of 1016 were up 2.1 % compared to the same period in 2015 1016 trends in Burlingame. — New auto sales, 4. - Restaurants & Hotels ?4.2% General Consumer Goods +0.4% Sales Taxes Sales Taxes CHY aI O_kP .G SREMMM W.Yaa Appropriations by Program I, -Expenditure Highlights • City-wide increases in personnel expenditures are recommended to maintain and retain the level of experienced services requested and valued by the public Additional fundingfor General Fund capital projects Appropriations by Type Em OfwMIMkME,EA EUMMARYOf6fNEML W NOEWENORVRE641 TPE Rroasa wl� P1V-L M1V M• I®PbE N.nt6•. rasa r6.n n•Pr Y® Panmtlut Sa]j(]¢] SZ)yf.® SWWj6c 56.1➢LSEI 4..i% NmYumiutl[aro YaM 3III9301 a]6E.516 ipgne 0.]% mntlxrv¢•, 3.4613<4 6.596y9 •,atSa Z$1<3 ]S.U% ymlOulVY IH.sm 1mm 19t•91 •aM.a •.•R• ww fio.a R.. m.ia. omYY W 55}u)n M�VP1 S.4.ut M�lll6 Al% .MSN E.Mfamn No.�N..�.a.• �o.M6.as �m6a: MaalM wvn ¢aEpp¢n�♦ L.tt[96 E4euys 6KAs] rmm, 61)8a st1W IDSM .tylia wia sSVoe mu,rya...Fpnert�P•.vEa L61.ry 1.]u.v3 LM6)s+ lu.lE es• �M•M•R.e..�� nom +E4® slen wT zm9lf £a+.++• £gym la rewEp p s fi I, -Expenditure Highlights • City-wide increases in personnel expenditures are recommended to maintain and retain the level of experienced services requested and valued by the public Additional fundingfor General Fund capital projects Appropriations by Type Em OfwMIMkME,EA EUMMARYOf6fNEML W NOEWENORVRE641 TPE Rroasa wl� P1V-L M1V M• I®PbE N.nt6•. rasa r6.n n•Pr Y® Panmtlut Sa]j(]¢] SZ)yf.® SWWj6c 56.1➢LSEI 4..i% NmYumiutl[aro YaM 3III9301 a]6E.516 ipgne 0.]% mntlxrv¢•, 3.4613<4 6.596y9 •,atSa Z$1<3 ]S.U% ymlOulVY IH.sm 1mm 19t•91 tool E.oenEnu,e, l3)I Sa31f]a S4E.5511E• Ss1NLg S6fKEy 48 _Authorized Full -Time Equivalents Ia ...N." . xee.xm vuv u rw au>.v r r cXea•X.n v,u. rw 4[X@11N6L .wwm wnw uwfwn a5. cxf R.wm.. ux zsa X� mf n.n zso zw ..rvlew.... CRy ManaSee sasLamo 2a OM mmunirylkvelopmmt-Nannne b]5 6.r5 Om so..ss a.;. INs 1a35 0.W RlJfgfnl WNa.wl M1iarel6n p8A.1161 OJly:il RN ESL Om eWry NLSb WJssaall o.W Polke KW 6yaM5 fJ50p) PoI'a-Cnmmunwno6. lw lm IimoAml blke.iMrM smn,rtmen, <m M414 WePo�YpneeXr! IVS tl.15 ,n N6rnenf 4rm Nblk Wa,k-SuensX Stam Onln I.OI !m Im usx xm r.ol�w.l N.e IXM zm General Fund Summary Authorized Full -Time Equivalents Changes in FTE, Chy-wide recommended for enhanced service delivery amareuaxc� �u ma6xcvn 6w .fuaen �e.emm .wwm wnw uwfwn a5. Rfip.,r finew IS$91$)i I]LIY W,ry ran Iwn ..rvlew.... s66ne.ns sasLamo uzw.,.m sM.l33m6 �m tlE:Pmeacf RmWn`-w*leea aW R54 SR>u MI. so..ss a.;. M — NfM.rml WJlr3m1 RlJfgfnl WNa.wl M1iarel6n p8A.1161 OJly:il r.arwnAm, ISv1a,Nm I#.rays WJssaall IMY3,SW1 HerOpMq Mmue u}spiry 6yaM5 fJ50p) ISeS.aW ax6wPwl IimoAml navmN I3JWIm1 ,n N6rnenf 4rm f f RYMO I IR1N ! f.LIIM Authorized Full -Time Equivalents Changes in FTE, Chy-wide recommended for enhanced service delivery amareuaxc� �u ma6xcvn 6w (,eneral Fund Balance cmolexwxwme. rn m!a a� nuv wsl race./ s a,6R13v s a,AlA91 MjMetl Rrvmun 6lapmtlnum .fuaen ww..w. .wwm wnw aeJm a5. mPx.^^6 M64gneMMieN IS$91$)i I]LIY W,ry 6:IIbxyWmn,nlewmwl If],SEI IfFY)I If6.a511 Iren.v enilemmEnl gMtTnnJm In jawl ol6enmlfuntl jrjN 7.1 �m tlE:Pmeacf RmWn`-w*leea aW R54 SR>u MI. so..ss a.;. eee: s>nssu,,.l.,uwma 3.a1 hus ums uzara rMUxi6,,fiewwfuJ 38] s:l2fss sz143II s3zefw (,eneral Fund Balance cmolexwxwme. rn m!a a� nuv wsl race./ s a,6R13v s a,AlA91 MjMetl Rrvmun 6lapmtlnum 4rojnretlrtvenvee 6i$w,)W 6p,933,Wp irolMetltlepemnmreleyen41Nre5 1533]6,1]81 135$EOj5R1 luMeY4 Rennuw Nw A6epenMunS IS$91$)i 1333L]bz Gmmltuna refbn oM1l 0,756,346) a$74,6m1 Tnm3n3e [IV Renewn6RgYwmml Rnme O==) 13pwAal gMtTnnJm In jawl ol6enmlfuntl jrjN 7.1 13j51 Q lmfe[Y/4lmnl iuntl MYnn. nnofbenllln Sn."Ur's SM.I. General Fund Balance Emw•6nn %Cip•Pn. • 9Y3oyvn 916yA.® 9165H.0[O Hfpo Ulf% ]1Rwf ']PT+P% LMAn 5 FOIE uwL• nw m PO% sMeW.ugnglunee•nnn le}O,m f4Th.PT f9p°Y 3uID9 f.fR rnnmewr.r Ml.... Capital Improvement Program Pm OFSOFUN EME aMn UPML yPanMEM PP MM a.nw Nne Me•/9eunn rp! 53P30.¢O $Y 9]A10.000 P•ieebnE0.6Fn9n[IP 0 0 NtTn••[IP 1E6.. 3.E&Mf 0.]OI.fW C.l0yD9P snw,6PP u9P,aw 9Mrmo-• fASOAP 9.630pL 6.6Apx WUxf11 P ;]91Ltt0 E1301U3 M [M WnflgSeurt\n. MPf]�Y Yi® IWROm IMYMY6 Public ,VrastTucture is a top issue of concern prr our community. Note that the City still has jL100 million in unfunded infrastructure needs Other Funding Sources [IT' OF EWYXOPME,4 O] XEEEI6XIFIFPXTWNM in that funds can c !_ 9996Y tlwf9•�L RmM PUIMIq Lndmha STaE6.W6 34]E;YI L•ntlPll funP 3U,W] 3333E pr4M6 EnuR�n 563A33 fi1463J nnr EnRRke 3OSEb]3 1096)011 arytlse SUNS 6]6y35 nnghe W'iwl 3a5Y9e Wbs9]s6 $Y U93W SY 96P O)6 in that funds can c !_ I'- Community Group Funding • Included in City Council (General Fund) Budget • Prior year budget $90,000 -Included one-time increase for those ?disadvantaged in growing economy • Proposed budget for 2017-18 fiscal year includes traditional amount of Zi S0 i I -Co 8�z �,aa (Priorities Identified by the Community The City has engaged hundreds of residents, who have told its their priorities include: — Repairingpotholes - Maintaining streets & sidewalks — Replacing infrastructure such as our WWII<ra Recreation Center — Maintaining our excellent public safety services, par onaptogramsfor all ages Prior tote.City Council's adoption of the FY 1017-18 budget, City staff will present the results of this Jfw odbe Research Conununiq, Priorities Su I Unfunded Needs - Status Unfunded infrastructure projects formally identified in fiscal year 2013-14 Extensive public outreach helped to prioritize needs in spring/summer 2014 6 urious funding mechanisms examined Ren ewal A,Replacem en t Reserve established rpt January 2015 __Recent extensive public engagement effort to confirm priorities\` Legal! Obligated Pension Liabilities GASB Statement 68 —Accounting and Financial Reporting for Pensions • ImplenientedFY2014-I5 • Net Pension Liability now is reported on the City's Balance Sheet Ca1PERS Discount Rate Reduction . D ym$AIS :mx,e ]PISf MUNAl6 ID,E,c I ,l]51 • Employer contributions currently 22.9%/40.6% • Will rise, to 36.0%/69.8% in 5 years Will rise to -42.0%/82.3% in II years Ca1PERS Discount Rate Reduction I Benefits • Strengthens long-term sustainability of the fund to pay promised benefits • Reduces negative cash flow and the chances of falling below an undesirable funding level More stable required contributions h the long ternr`-� Car]rtloonoc Puoae.7mo's-Yl,urru.Y.v[ms _ �7 �� Dlxvuut Pule Rad•reJ D•m )S%1•]%mer3 Yeuis - m.. .i �FMq=J `:nt^ .anrvnaur—anwm�s •wmma �' [- C C ilnl rir)�. R\rl, Siiil\ IM—unn R,ile R,dur,J fram 7.5% In 7%over d Yvan ' X. �i i• f y Inid.Ws.xn vi 1w. l_% C uunr fln RVL 51{n lii-omfl R.tty Rnlmvd Ongu 7.5% In ]°: mnJ Penn 76.91 '.....a 'ate.... ,�..�"..9T? Ya'�Y.. t%V'a J., P'`l a..:re... ✓. o. co, rRni l'111\Pecu.c'iI1V-lll.\t'CI IRuounl RnreReduced _ Rare_ 7.5% to 7%aaer3 Yens. - �- J6l% n.aCoi°.d:.-, ..... .'a°.@ ,. a. r:,aa'f. o"Jo°✓°� °d —In. H Renewal & Replacement Reserve C" OF BURLIN6AME, CA CHANGES TO RENEWAL AND REPLACEMENT RESERVE Beginning Balance 7/1/16 $ 13,5W,000 Budgeted Transfer fram Geneal Fuld in FY201617 3,OW,000 Add -I (Mid-Wadtansferfmm GenmlFuld 4W�OW Projected Ending Balance 6/30/17 $ 20154)I,OW Budgeted Transfer from Geneal Fund In H2017-18 3000.0 Projected Ending Balance 6/30/M S 4SW1000 yA or Next Steps C Position Reclassifications toNGnip.CM+9le �� _a_ Next Steps Clarifying information /response to Co unci/ questions Additions/Changes to Proposed Budget - ApproSr funding ufRenaral & Rrplarrmrnt Rrsrnr - Apprmr cummunyfunding aPPrnpnarion - Discus�fimding afyensiun obfigadons .run I h Public Hearing -Fin eufg nd?Oli Cnmmuniry Prinrinnpresenrcd Budget option Cwm App an Limnapyro5ed - Gmliderndon afforul rclrnue options nnrce xmwM1aawaumin ]BArI B)Pel IYB 4)9l xmwnhe*eRmRNn _ mF6 1o49A t�pii ly6 55}96 i�e�YtTmg,6wvY fuM Sll61 AA3 9W1 4IM L§395 m01ry1npe�we0w toNGnip.CM+9le �� _a_ Next Steps Clarifying information /response to Co unci/ questions Additions/Changes to Proposed Budget - ApproSr funding ufRenaral & Rrplarrmrnt Rrsrnr - Apprmr cummunyfunding aPPrnpnarion - Discus�fimding afyensiun obfigadons .run I h Public Hearing -Fin eufg nd?Oli Cnmmuniry Prinrinnpresenrcd Budget option Cwm App an Limnapyro5ed - Gmliderndon afforul rclrnue options BURL,INGAME STAFF REPORT To: Honorable Mayor and City Council Date: May 10, 2017 AGENDA NO: MEETING DATE: May 10, 2017 From: Syed Murtuza, Director of Public Works — (650) 558-7230 Subject: City Council Review of Draft FY 2017-18 Capital Improvement Program Staff recommends that the City Council review the proposed draft FY 2017-18 Capital Improvement Program (CIP) and provide feedback. On March 15, 2017, staff presented the City Council with a draft of the proposed General Fund CIP as part of the Mid -Year Budget Update Study Session in order to receive Council feedback. The presentation included summaries of the public's infrastructure priorities, General Fund projects, and Gas Tax and Measure A funded projects. DISCUSSION This is a follow-up review of the overall draft FY 2017-18 CIP and includes Water Enterprise, Sewer Enterprise and Storm Drainage projects as well as any changes made to the draft General Fund CIP previously reviewed by the City Council. Based on the condition assessment of City owned infrastructure systems and capital improvements planning, staff is proposing a total of $23,388,000 in the CIP program for FY 2017- 18 appropriations as follows: General Fund projects Gas Tax/Measures A & M Fund projects Water System Enterprise Fund projects Sewer System Enterprise Fund projects Storm Drain System projects Total: $6,288,000 $4,200,000 $2,750,000 S4,700,000 $5,450,000 $23,388,000 9 City Council Review of Draft FY 2017.18 Capital Improvement Program A summary of all the projects is provided below. FY 2017-18 GENERAL FUND PROJECTS May 10, 2017 Staff has identified a total of $6,288,000 of projects under the General Fund CIP as follows: PARKS AND RECREATION UPGRADES ($3,228,000) Community engagement and surveys over the past year show that residents feel that excellent parks and recreation contribute towards Burlingame's quality of life. The following recommendations are consistent with priorities identified by residents to support quality programming and maintenance of Burlingame's parks and playgrounds. Staff is proposing a total of $3,228,000 for the following Parks and Recreation projects: Murray Field Synthetic Turf/Grass ($1.750,000): The Murray soccer field is in dire need of upgrades. The current irrigation system is undersized and does not adequately water the field, resulting in bare, patchy, and uneven surfaces. Staff has tried to repair the worst areas, but a complete upgrade is required. Installation of a synthetic turf (non -rubber) will allow for year-round play, increasing the usage from approximately 1500 hours to 2500 hours, and a reduction in water usage. Ray Park Playground ($428,000): The playground facility at Ray Park was constructed in the late 1990's. The playground does not meet current safety standards and needs to be upgraded. The project will upgrade the high -use playground with new equipment and resilient surfacing. Paloma Park Playground — Fire Damage Replacement ($325,000): This project will replace the 20 -year old, non-compliant playground that was permanently damaged by vandalism. City Parks Master Plan ($275.000): The purpose of this effort is to develop a comprehensive master plan to maintain and upgrade existing community assets based on the input from the community. The process will include an evaluation of the existing park system; establishing goals and policies that will help guide decision making; documenting priorities and demands of the current population; and charting a long-range plan and implementation program that outlines projects, anticipated costs, potential funding sources, and operational and maintenance implications. • Washington Park Restroom Replacement ($250,000): The project goal is to replace the only existing outside restrooms in this highly used park. The existing restrooms are 24 years old, non-compliant, and in critical need of replacement. • Burlingame Aquatic Club Pool Deck Replacement Construction Documents ($90,000): This request is to fund the City's 50% share of the design cost for the preparation of construction documents related to the replacement of the pool deck and large pool resurfacing, which have reached the end of their useful life. Upon completion of the engineering design work, staff will 2 City Council Review of Draft FY 2017-18 Capital Improvement Program May 10, 2017 return to the City Council to request funding for the City's portion of the construction costs. • Playground Replacement Fund and Annual Tree Replacement ($60,000): Staff has completed an assessment of all City playgrounds and ranked them by amount of usage, the age of the equipment, the type and amount of accessibility deficiencies, and safety concerns. This project funds a systematic replacement of playgrounds to be implemented over the next five years. Additionally, the project also provides $5,000 of funding for street trees as part of being a Tree City USA. • Playground Resilient Surfacing Repairs ($50,000): Many of the City's playgrounds have resilient surfacing that is in need of repair or replacement. Staff has developed an annual surfacing program to address the playground needs and has ranked the priority of repair/replacement based on the severity of the problems. Staff is proposing work at Washington, Cuernavaca, and Laguna Parks during FY 2017-18. PUBLIC/COMMUNITY FACILITIES ($1,400,000) The City owns and maintains 20 public or community facilities with over 200,000 square feet of office space. Many of these public facilities and associated components are aging and need upgrades. Timely maintenance will not only be less expensive now than in the future, but will also extend the life of the facilities. Staff is proposing a total of $1,400,000 for the following public/community facilities upgrade projects: • Fire Station #35 HVAC. Roof Replacement, and Upgrade ($750,000): Fire Station #35 is 67 years old and is beyond its intended service life. The City Council approved $500,000 in FY 2016-17 to undertake engineering design and develop the project. However, additional funding is recommended to expand the project scope to address deficiencies identified in the condition assessment of the building. The project will include roof replacement, an updated HVAC system, fire sprinklers, plumbing, remodeling of the living quarters, and renovation of bathrooms. • Energy Efficiency Upgrades ($300.000): This project is to retrofit all existing high pressure sodium lights in City parking lots and Parks facilities with new LED lights for cost efficiency. Additionally, the project includes lighting control improvements and replacement of fluorescent fixtures with low -wattage equivalent lamps. The upgrades were identified in the California Energy Commission's (CEC) energy assessment conducted last year. • Fire Stations 34, 35 and 36 Emergency Generator Upgrade Proiect ($150.000): The generators and Automatic Transfer Switches (ATS) at Fire Stations 34, 35 and 36 are outdated, and the facilities condition assessment identified these generators for replacement. Staff is recommending a $150,000 budget for preparation of contract bid documents. Upon completion, additional funds will be requested for the construction phase of the project. • Fuel Pump Station Project at the Corporation Yard ($100,000): The gasoline fuel pump area at the Public Works Corporation Yard is in need of replacement due to aging and regulatory 3 City Council Review of Draft FY 2017-18 Capital Improvement Program May 10, 2017 compliance issues. Staff is requesting a budget of $100,000 to prepare engineering plans and bid documents to upgrade the gasoline fuel pumps, address regulatory issues associated with spill prevention, and relocate the fuel site controller from the roadside to within the Public Works Corporation Yard. Upon completion of the engineering design, staff will return to the City Council to seek approval for the project construction. Building Facilities ADA Improvement ($100.000): The purpose of this project is to address the Americans with Disabilities Act (ADA) improvements identified from the ADA Assessment Study a few years ago. The work identified in next year's program is to upgrade the existing pedestrian access ramp at the Police Station for compliance with ADA. BICYCLE, PEDESTRIAN, AND TRAFFIC SAFETY PROJECTS ($1,050,000) Staff is proposing a total of $1,050,000 for bicycle, pedestrian, and traffic safety improvements projects as follows: California Drive Class II Bike Lane Proiect ($500,000): Staff has studied and identified a number of options for both long-term and short-term solutions to improve bicycle safety along California Drive north of Broadway. Staff proposes implementation of a near-term solution, which will significantly improve bicycle safety along this corridor and can be done relatively soon. The project consists of installing Class II bike lanes, infrastructure modifications to address potential safety concerns, and traffic calming elements along the corridor. Hoover School Sidewalk Improvements ($200,000): The City was awarded $700,000 in federal funds through the One Bay Area Grant 2 (OBAG2) Program to improve pedestrian safety in the vicinity of Hoover School. The project scope consists of installing a new sidewalk along Summit Drive from Hillside Circle to Hoover School. The funding request of $200,000 is for the City's local match to receive the grant. Broadway Corridor Pedestrian Lighting Improvements ($180.000): The City was awarded $720,000 in federal funds through the OBAG2 Program to improve lighting and pedestrian safety along the Broadway corridor between the U.S. 101 Interchange and EI Camino Real. The funding request of $180,000 is for the City's local match to receive the grant. • Residential Traffic Calming Program ($100,000): This funding request is to implement traffic calming measures and/or studies that may arise through community requests. Bike Boulevards Feasibility Study ($70,000): The project consists of conducting a feasibility study for implementing safe alternate bicycle routes through neighborhoods. Additionally, staff would like to mention two major projects under this program category that will be worked on over the next fiscal year, for which the funding is available through outside grants and project fund balances as follows: Broadway Grade Separation ($4,350.000): The City received a $3.85M Measure A Program grant from the San Mateo County Transportation Authority for the Broadway City Council Review of Draft FY 2017-18 Capital Improvement Program May 10, 2017 Grade Separation Project Environmental Study and Preliminary Engineering phase work. The City Council had previously approved a $500,000 local match as part of the mid -year budget review on March 15, 2017. Because this is primarily a rail project, the Peninsula Corridor Joint Powers Board (PCJPB) will be the lead agency on this project. However, City staff will be working closely with PCJPB staff to complete environmental studies and advance the project to the next phase. • Residential Sidewalk Program ($1,000.000): Staff estimates approximately $1,000,000 will be available in the Sidewalk Repair Program budget fund balance; these funds will be utilized to perform sidewalk repairs over the course of next year to address what the community has identified as a top priority. Additionally, staff will return to the City Council at a later date to present options to modify the current 50/50 Sidewalk Repair Program to make it more efficient and effective than the current approach. UPDATED FINANCIAL SOFTWARE SYSTEM ($200,000) The City's financial software system is outdated and needs to be upgraded to bring it to current standards. Staff is requesting $200,000 to hire a professional consultant to provide project management services to assist the City in evaluating, selecting, and implementing a new financial software system to meet the needs of the City, which will continue to ensure proper fiscal management and accounting practices. POLICE DEPARTMENT CAPITAL NEEDS ($160,000) The Police Department's portable radios are outdated and need to be replaced for compliance with narrow band frequency requirements. Staff estimates an approximate budget of $80,000 to replace the portable radios. Additionally, the Police Department dispatch area needs ergonomic upgrades, along with necessary modifications to the dispatch system infrastructure. Staff estimates an approximate budget of $80,000 to implement the upgrades. ELECTRONIC RECORDS MANAGEMENT SYSTEM ($250,000) The City does not have an efficient electronic records management system. Records are currently kept by individual departments, and old records are archived using an archaic file storage and retrieval system. It is very time consuming, and inefficient to locate, retrieve, and access data/records when needed or requested by the public. The City Clerk has conducted a comprehensive study to evaluate the needs of various departments relative to managing data and records and is recommending the purchase of a new electronic records management system that can better track and access data/records from a centralized location that is accessible citywide, also improving transparency and ability to respond to public requests for records and archived information. Staff estimates a budget of approximately $250,000 for this project. FY 2017-18 GAS TAX, MEASURE A AND MEASURE M FUND PROJECTS: The City maintains 84 miles of streets valued at $150M. The estimated backlog of work is $20M, which is a source of frustration for the community and City alike. Staff is proposing a total budget 5 City Council Review of Draft FY 2017-18 Capital Improvement Program May 10, 2017 of $4,200,000 from a combination of Gas Tax, Measure A and federal -aid grant revenues to resurface the following streets: • Broadway — EI Camino Real to California Drive; • Cadillac Way — Rollins Road to Carolan Avenue; • California Drive — Peninsula Avenue to Burlingame Avenue; • Trousdale Drive — California Drive to Marco Polo Way; • California Drive Roundabout Project (Resurfacing); and • Humboldt Drive between Rollins Road and Peninsula Avenue in a shared cost project with the City of San Mateo. FY 2017.18 WATER ENTERPRISE FUND PROJECTS The City owns and maintains over 100 miles of the drinking water distribution system, with five storage reservoirs and several pump stations. Based on a condition assessment of the City's water distribution system, and prioritization of the Capital Improvements Plan, staff recommends a total of $2,750,000 of improvements to the City's drinking water system as follows: Burlingame Shoreland Subdivision Water Main Improvements — South Rollins Road Phase 2 ($1,650,000): This is Phase 2 of a large subdivision project for replacing the old and aging cast iron water mains with new PVC/ductile iron water mains in the Burlingame Shoreland Subdivision. The project locations consist of Winchester Drive, Winchester Place, Corbitt Drive, Francisco Drive, Marin Drive and Oak Grove Avenue. Lagoon Bridge 12 -inch Diameter Water Main ($350,000): The 12 -inch diameter water main under the lagoon pedestrian bridge located near Bayview Place is in poor condition and is in need of rehabilitation. The City Council has previously approved $50,000 for the preliminary engineering of the project. Staff has completed the preliminary design, and is requesting $350,000 to prepare bid documents to construct the project. Burlingame Avenue East of California Water Main Improvements — South Rollins Road Phase 3 ($300,000): This is Phase 3 of a large subdivision project for replacing the old and aging cast iron water mains with new PVC/ductile iron water mains on Burlingame Avenue between Rollins Road and East Lane. The funding request is for the development of engineering design and preparation of plans, specifications, and cost estimates to prepare the bid documents. Upon completion of engineering design, staff will return to the City Council at a future date to seek funding for the construction. South EI Camino Real from Sanchez Avenue to Barroilhet Avenue Water Main Improvements Phase 1 ($300,000): This is the first phase of a large subdivision project for replacing the old and aging cast iron water mains with new PVC/ductile iron water mains along EI Camino Real from Sanchez Avenue to Barroilhet Avenue. The funding request is for the development of engineering design and preparation of plans, specifications, and estimate to prepare the bid documents. Upon completion of engineering design, staff will return to the City Council at a future date to seek funding for the construction. 0 City Council Review of Draft FY 2017-18 Capital Improvement Program May 10, 2017 Citywide Large Water Meter Replacement Program ($100.000): The City has replaced all the small old water meters with newer meters and is in the process of initiating replacement of larger water meters. The new metering system will provide a high degree of accurate meter readings and prevent water losses. Meter industry standards recommend water meters be replaced every 10 years to meet a minimum accuracy level of 98.5%. In next year's program, the old large water meters will be replaced with newer and efficient meters in the area between Oak Grove Avenue and Peninsula Avenue (north/south) and between Rollins Road and California Drive (east/west). Regional Water Supply Studies and System Modeling ($50.000): Staff is requesting a $50,000 budget to perform tasks related to continued long-term water supply planning, water conservation, and updating the water system hydraulic modeling. FY 2017-18 SEWER ENTERPRISE FUND PROJECTS The City owns and maintains over 100 miles of sanitary sewer collection system with several pump stations and the Waste Water Treatment Plant. Based on a condition assessment of both components of the waste water collection system and the treatment plant, as well as prioritization of the capital improvements, staff is recommending a total of $4,700,000 in improvements to the City's sanitary sewer system as follows: Easton Addition, Ray Park & Neighborhood Sewer Rehabilitation, Phase 2 and 3 ($2,100,000): The project scope consists of rehabilitating approximately 5,800 linear feet of aging sanitary sewer mains within the upper area of the Easton Addition No. 7 Subdivision. Additionally, the project includes the 1200 block of Mills Avenue, and abandoning an 18 -inch diameter aging sewer main along Rollins Road to prevent infiltration. These mains are over 100 years old and are identified as high priority in the Sewer Master Plan. 1740 Rollins Road Pump Station Improvements ($1,000,000): This project involves rehabilitating the existing deteriorated Pump Station at 1740 Rollins Road. It is critical the pump station be upgraded before failure, which would result in significant adverse impact to a large part of the city. The project is being implemented in conjunction with the storm water pump station at the same location to gain economies of scale benefits. Easton Addition, Ray Park & Neighborhood Sewer Rehabilitation, Phase 4 ($400.000): The project scope consists of designing approximately 5,000 linear feet of sanitary sewer mains within the Ray Park, Easton Addition No. 2 & 3 Subdivisions, as well as other neighborhood projects. These mains are over 100 years old and are identified as high priority in the Sewer Master Plan. Citywide Sewer Main Spot Repairs ($400,000): The project scope includes repairing short sections of broken sewer mains at various locations throughout the city. This is a new annual project to replace approximately 30 to 40 of the most severely damaged failures within the sewer system to prevent infiltration and sewage spills. City Council Review of Draft FY 2017.18 Capital Improvement Program May 10, 2017 Rollins Road Sewer Rehabilitation between Channing Road and Humboldt Avenue ($325.000): The project scope consists of rehabilitating approximately 1,000 linear feet of sanitary sewer mains along Rollins Road between Humboldt Avenue and Channing Road. These sewer mains are under sized and need to be upgraded to increase capacity. Waste Water Treatment Plant Rehabilitation, Phase 1 ($165,000): Staff has recently completed an updated Waste Water Treatment Plant Master Plan. The Master Plan has identified over $22M in necessary improvements, including near-term (0-5 years), midterm (6 to 10 years), and long-term (11-15 years) plans. The FY 2017-18 CIP for the Waste Water Treatment Plant will include site safety upgrades, structural, piping, and infrastructure rehabilitations. SFO 39 -Inch Diameter Force Main Relocation Feasibility Study ($160,000): The City's 39 -inch diameter outfall force main currently traverses through the SFO -owned property in South San Francisco through an easement. SFO is in the process of expanding the airport garage and rental car facilities, and recently found that the City's existing force main in their property is in conflict with their proposed improvements. As a result, SFO has requested that the City relocate the force main outside the area of conflict. The project scope consists of conducting a feasibility study to relocate the existing 39 -inch diameter outfall force main from the SFO Airport Parking Lot to a different location. Summerhill City Easement Sewer Main ($100.000): The project scope consists of designing a new sewer main within the sewer easement established as a part of the Summerhill Apartment Project, and abandoning an existing main located in the backyards of homes along Toyon Drive. Miscellaneous Sewer Repairs and Sewer Root Foaming ($50,000): This is an annual program to rehabilitate sewer manholes and mains to control intrusion of tree root infestation, which reduces capacity of the system and results in sewage backup. This project will help alleviate capacity problems, and minimize sewage backups and spills. FY 2017-18 STORM DRAINAGE FEE FUND PROJECTS In the mid 2000's, a Condition Assessment Study of the 100 year old storm drainage system identified $39M of critical projects to protect public health and safety. In 2009, Burlingame property owners approved a ballot measure to upgrade the aging and deteriorated storm drainage system to provide 30 -year design storm capacity to major creeks, and address localized flooding problems citywide. Thanks to the community's support, approximately $22M of improvements have been completed. The completed projects include the Easton Creek Improvements, Marsten Pump Station, Marsten Outfall Channel, Laguna Storm Drainage Culvert, Burlingame Creek Bypass Stub at Safeway, Burlingame Avenue Improvements, Terrace Creek Capacity, and miscellaneous projects to address localized flooding problems at 92 locations citywide under the Neighborhood Storm Drain Improvements Program. For FY 2017-18, staff is recommending $5,450,000 for Storm Drainage Projects as follows: 1740 Rollins Road & 842 Cowan Pump Station Upgrade ($2,000,000): This project consists of upgrading the two storm water pump stations. The pump stations are approximately 50 to 60 City Council Review of Draft FY 2017.18 Capital Improvement Program May 10, 2017 years old and have exceeded their useful life. The project involves the replacement of all pumps, and associated electrical and plumbing equipment. The facilities will also be upgraded to meet current building code requirements. Neighborhood Area Storm Drain Proiect No.10 ($1,200,000): This project will address flooding in various parts of the city and will also focus on areas that were impacted by the 2017 winter storm events. There were six locations identified for immediate improvements. Depending on the engineer's estimate and funding availability, more projects may be added to the scope of work. Lorton Avenue Storm Drain Line Cleaning ($650,000): This project consists of the removal of sediment buildup from approximately 1,030 linear feet of a 54 -inch diameter storm drain pipe that runs from Burlingame Avenue to California Drive. Sediment has built up over the years and has significantly reduced the capacity of the storm drain line. Neighborhood Area Storm Drain Project No. 9 ($600.000): This project addresses localized flooding areas in various parts of the city. Staff is recommending $600,000 be added to the current budget to allow for an expanded scope. Flap Gates on Sanchez Lagoon Project ($350,000): This project involves the design and replacement of nine storm water flap gates (tide control valves) that vary in size from 12 -inch to 96 -inch in diameter. These flap gates prevent bay water from entering into the storm drain culverts and inundating the low lying areas along Rollins Road during high -tide events. EI Portal, Trousdale, Gilbreth Creek Imorovements Project ($200,000): This project consists of repairing concrete liner channels within the EI Portal/Trousdale watershed area. These channels have cracked and buckled over years of deterioration, and need to be repaired in order to prevent flooding and maintain normal flow of storm water to the Bay. Vancouver -Easton Storm Drain Repair ($200,000): This project involves the repair of a storm drain channel under Vancouver Avenue near Easton Drive. A portion of the embankment wall of the channel has eroded away and resulted in a sink hole on Vancouver Avenue. The project consists of an open cut excavation, shoring the channel wall, backfilling the void, confined space entry, and repairing the street. Culvert Crossing Repairs ($200.000): This project involves the repair of various culvert crossings throughout the city that have been prioritized for repairs after completion of a citywide culvert crossings assessment. Repairs may range from structural to preventive maintenance, and/or cleaning. Program Management ($50.000): These funds will be used for staff augmentation as necessary for specialty services that require professional consultants during various phases of projects. As these projects draw from property owner -approved funding, the City is pleased that all funds have been spent to date as promised to the community, with projects being completed on time and within budget. 0 City Council Review of Draft FY 2017-18 Capital Improvement Program May 10, 2017 FISCAL IMPACT The estimated total funding identified to undertake the projects presented in the staff report is approximately $23,388,000 in FY 2017-18. The funding sources include General Fund, Gas Tax, Measure A, Federal Funds, Water Enterprise Fund, Sewer Enterprise Fund and the Storm Drain Fee as outlined in the staff report. Exhibits: • Presentation • Copy of March 15, 2017 Staff Report & FY 2017-18 General Funds CIP Spreadsheet 10 aBURL STAFF REPORT AGENDA NO: MEETING DATE: March 15, 2017 To: Honorable Mayor and City Council Date: March 15, 2017 From: Syed Murtuza, Director of Public Works — (650) 558.7230 Subject: Review of Draft FY2017-18 General Fund, Gas Tax, Measure A, Measure M and Federally Funded Capital Improvement Program (CIP) Staff recommends that the City Council review the proposed draft General Fund, Gas Tax, Measure A, Measure M and Federal funds CIP, and provide feedback. BACKGROUND Historically, staff has presented the City Council with a draft of the proposed General Fund CIP as part of the mid -year budget update study session in order to receive Council feedback with sufficient time to incorporate any changes prior to the adoption of the budget. The proposed draft CIP includes General Fund, Gas Tax, Measure A, Measure M, and federally funded projects. Staff will be presenting the CIP Program for the Storm Drainage System, Drinking Water System, and Sanitary Sewer System at a future meeting as part of the overall budget presentation. DISCUSSION GENERAL FUND CIP In developing the FY2017-18 CIP, staff conducted a needs assessment of various infrastructure owned by the City, and identified a total of approximately $38AM of General Fund projects. After further review and analysis of these needs, and taking into consideration the existing available funding through fund balances and grant opportunities, staff refined the CIP requests list to a total of approximately $18.9M. Upon further analysis of the CIP requests from the perspective of prioritizing projects based on risk management principles, public health and safety needs, and staff's capacity to undertake the projects in the context of existing work load and other priorities, staff is recommending a total of approximately $6.3M of General Fund CIP for FY2017-18. Please refer to the attached spreadsheet for project details and costs. The proposed FY2017-18 projects are basic and essential infrastructure needs to provide quality public services to the community. It should be noted these projects are in addition to the ones previously identified as big-ticket item projects in the City's Unfunded Needs list. Below is a summary table of the proposed Draft FY2017-18 CIP. Staff will be providing the City Council with a detailed presentation of these projects at the March 15th Mid -Year Budget Study Session. 1 FY2017.18 General Fund, Gas Tax, Measure A, Measure M and Federally Funded CIP March 15, 2017 (in thousands) (n thousands) (in thousands) (n thousands) Building Facilities 14,100 520 12,330 1,400 Bicycle, Pedestrian& Traffic Safety 17,820 6,770 1,050 1,050 Parks & Recreation 5,910 962 4,948 3,228 City Clerk 250 250 250 Finance rr 200 200 Police 160 160 160 Department Totals $38,44 $8,252 $18,938 $6,288 GAS TAX, MEASURE A, MEASURE M AND FEDERALLY FUNDED CIP PROJECTS Based on condition assessment of 84 miles of existing street infrastructure, staff is proposing a total of $4.2M of CIP funding from a combination of Gas Tax, Measure A, Measure M, and Federal grant funds for next fiscal year's street improvement program as follows: • Broadway Commercial Corridor from EI Camino Real to California Drive • Cadillac Way from Rollins Road to Carolan Avenue • California Drive from Peninsula Avenue to Burlingame Avenue. • California Drive from Burlingame Avenue to Oak Grove Avenue (as part of Roundabout Project) • Humboldt Avenue from Rollins Road to Peninsula Avenue (shared with San Mateo) • Trousdale Drive from California Drive to Marco Polo Avenue. It is important to note that the City has applied for and is eligible to receive $546,000 in federal funds for resurfacing the arterial streets. The City will be utilizing a total of $3,654,000 from a combination of Gas Tax, Measure A, and Measure M funds to resurface the above -identified streets as part of the annual street resurfacing program and to provide additional funds for the California Drive Roundabout Project. FISCAL IMPACT General Fund CIP The total estimated cost of the recommended Draft General Fund CIP program is $14,540,000; $6,288,000 of this amount is recommended in new General Fund appropriations for FY2017-18, and $8,252,000 is available from a combination of outside grants and available project fund balances. 2 FY2017-18 General Fund, Gas Tax, Measure A, Measure M and Federally Funded CIP March 15, 2017 Gas Tax, Measure A, Measure M and Federal Funds CIP The estimated cost of the Street Improvement Program is $4,200,000; $546,000 of this amount is available from federal funds through the OBAG2 Program, while the remaining $3,654,000 is available from a combination of Gas Tax, Measure A, and Measure M funds. Exhibits: • FY2017-18 General Fund CIP Program Spreadsheet • PowerPoint Presentation 3 M017 -I8 Draft General Fund Capital Improvement Program 3/15/201] Projects Description Project Costs in thoussndA Existing Funds/Grants On thpuzanas FY -17-18 CIP Requests in mous.nasl Draft Recommendations lin 1housanes) A Building Facilities Improvements I City Hall- HVAC and Plumbing Improvements and Asbestos Abatement 5,200 5,200 2 Parks Corporation Yard Renovation 1,750 1,750 3 Carnage House Improvements 1,300 1,300 4 FSg35 HVAC, Roof Replacement and Living quarters Improvements 1,200 450 750 750 5 Energy Efficiency Improvements 1,000 300 300 Recreation Center Roof Replacement, Fire Sprinklers and Emergency 6 Generator Improvements 900 900 7 Fire stations emergency generators upgrade project(F534,35 and 36) 700 150 150 8 Donnelly Parking Garage Deck Coating 575 70 505 9 FS #36 Foundation Rehabilitation 350 350 10 FS P34 Roof Replacement and HVAC upgrades 300 300 11 PW Corporation Yard Roof Repairs 210 210 12 Fuel Pu cop Station Improvements at Corp Yard 200 200 100 13 Library Basement Flood Protection Improvements 200 200 14 Easton library HVAC Improvements 115 115 is Building ADA Improvements 100 - _ 100 100 ""''''Facilities Bud P. cities improvements Total 14;100 520 12,330 1,400'. B Bicycle Pedestrian and Traffic Safety Improvements 1 California Drive Class( Bike/Ped Track Projec(Long Term Solution) 10,000 2 California Drive Class 11 Bike lane Project (Near Term Solution) 5DD _ 500 500 3 Broadway Grade Separation Project(PA/ED Phase) 4,350 4,350 4 Sidewalk Repairs Program and ADA improvements 11000 1,000 5 Hoover School Sidewalk Improvement (local match for federal grant) 900 1 700 200 200 6 Broadway Pedestrian Lighting (local matching funds for federal grant) 900 ]20 180 180 ]Residential Traffic Calming Program 100 100 100 e Bike Boulevards Implementation Feasibility Study 70 _ 70 70 Bicycle, Pedestrian and Traffic Safety Improvements Total 17,820 6,]]0 JAM,050 1 1,050 C Parks & Recreation Improvements I Murray Synthetic Turf Installation Project 2,200 450 1,750 1,750 2 Burlingame High School Aquatic Center Pool Deck Replacement Project 1,200 1,200 90 3 Ray Park Playground Upgrade 800 372 428 428 4 Burlingame Square Improvements 600 140 460 5 Paloma Park Playground- Fire Damage Replacement 325 325 325 6 City Parks Master Plan 275 275 275 ] Washington Park Restroom Replacement 250 250 250 8 Bay Trail Fitness Equipment Upgrade. 150 150 9 Playground Repairs and Trees Planting 60 60 60 10 Playground Reallent Surfacing Repairs SD 50 50 „Parks&Reereatiaprovements Total 5,910 962 4,948 3;228. D Finance 1 New Financial System 200 200 200 Finance.. .. E Police 200 - 200 200 I Digital portable radio replacement 2 Police Dispatch Furniture Upgrades 80 80 - 80 80 80 80 Police F Cid S Electom, Records Management System 160 250 - 160 250 160 250 = City Clerk 250 250 250 oaal 38,444' 81 I 38'938' I g,M 0 rf mn m< 0 1 rW 0 G) mO mN O m CD 0 MN 0 A V/ i mn r\V a min CL O -n m W W -0 00 m S m 0 l<Q . 0 o CD c (a Q° 0 0 m v � o a7 a n CD v o - m v N a v' cn o in v w c c m c 3 v m c (D �. 3 G) mO mN O m CD 0 MN 0 A V/ mn r\V a min CL O 0 00 ma 21) MN pr Cl) X CD n MN CD 2i ■T IL■ 0 m rn T T T µ T V C C /� l/ T V T N d d �G �• N `< O t r • _ •� O O •.. 7 Ct y m K , d 3 3 Q N y K O. O. CD 7 d rn = 3 CCD CSD y vi U2 .r ,(D„ O n (Q C 7 N n m O 3 = .. d Ny O O. _ ,. 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