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HomeMy WebLinkAboutAgenda Packet - CC - 2018.05.09City Council City of Burlingame Meeting Agenda - Final BURLINGAME CITY HALL 501 PRIMROSE ROAD BURLINGAME, CA 94010 Council Chambers6:30 PMWednesday, May 9, 2018 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) Study Session: Fiscal Year 2018-19 Budgeta. Staff ReportAttachments: City Council Review of Draft FY 2018-19 Capital Improvement Programb. Staff Report Presentation March 14 2018 Staff Report Attachments: 6. ADJOURNMENT Page 1 City of Burlingame Printed on 2/28/2019 May 9, 2018City Council Meeting Agenda - Final 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 21, 2018 VIEW REGULAR COUNCIL MEETING ONLINE AT www.burlingame.org/video 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. Page 2 City of Burlingame Printed on 2/28/2019 STAFF REPORT AGENDA NO: MEETING DATE: May 9, 2018 To: Honorable Mayor and City Council Date: May 9, 2018 From: Carol Augustine, Finance Director – (650) 558-7222 Subject: Study Session: Fiscal Year 2018-19 Budget RECOMMENDATION The purpose of this report is to give an overview on the development of the 2018-19 fiscal year budget, and receive Council comment and direction. No Council action is required. BACKGROUND Development of the fiscal year 2018-19 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. Through the budget process and guided by Council discussion, City staff has endeavored to identify resident priorities and make sure those priorities are reflected in each of the department’s budget proposals. 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 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 continued ambiguity surrounding federal policy and the possible impact on the State of 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 emergencies and unforeseen events. 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. FY 2018-19 Budget May 9, 2018 2 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 2018-19 fiscal year. National Economy Data from the Bureau of Economic Analysis (BEA) showed the nation’s economy continuing to hold promise after a solid year of growth in 2017. U.S. real GDP increased 2.73 percent in 2017, the highest rate since 2014, with the most acceleration seen in the third and fourth quarters. The increase in real GDP from the prior calendar year reflects solid consumer spending and an uptick in private inventory investment and in commercial fixed investment. This measure of the nation’s economic growth indicates a slightly faster pace than experienced in previous years, reflecting relative strength in the global economy. According to Beacon Economics, a leading independent economic research and consulting firm, moderately low inflation and interest rates continue to support spending. Prospects for the national economy in the near-term are even better, with good momentum resulting from the Tax Cut and Jobs Act (TCJA) signed into law in late December. The U.S. unemployment rate was 4.1 percent in March 2018, which is largely accepted as full employment, as a result of a tight labor market and more full-time hiring. This rate has remained stable since October 2017, though job openings remain high and the number of workers available decreases. Most economists anticipate that national unemployment will remain low going into 2020. And g rowth in payrolls is projected to push the unemployment rate a bit lower. Lower unemployment typically pushes wages higher, so inflation is expected to move higher as well. As a result, interest rates, both on the short end of the yield curve and longer-term rates, are expected to increase. In addition, higher wages should bolster consumer confidence, leading to potentially FY 2018-19 Budget May 9, 2018 3 higher personal consumption expenditures, which will also put upward pressure on inflation. And yet, inflation is expected to stay below the 2 percent Fed target rate for the near future. US retail trade rose by 0.6 percent month-over-month in March, recovering from a 0.1 percent drop in February and beating market expectations of a 0.4 percent gain. U.S. consumers continue to be relatively bullish on the economy: despite a modest retreat in the consumer confidence level in March, the index levels remain historically high, having reached the highest level since 2000 in February 2018. This suggests strong growth in consumer spending in the months ahead. However, there are certain risks that should not be ignored in the coming year, including a worsening labor shortage that could have implications for years to come. Other potential risks to the economy include the growing federal deficit. As the huge Baby Boomer generation retires over the next decade, there will be a sharp rise in federal entitlement spending but without the corresponding revenues to pay for the increase. And the recently enacted tax overhaul bill will make a bad deficit situation worse. The new tax plan will also have an unintended consequence for the U.S. economy—higher interest rates and tighter lending markets. According to the Beacon Economics forecast, “The U.S. economy suffered badly during the past two asset bubbles and it’s likely that the Fed will try to head off a third by being aggressive in 2018….Such efforts will flatten the yield curve and slow lending – and that will more than offset the modest stimulative effect of the tax cuts.” In addition, a protectionist trade strategy emerged from the nation’s capital in March: import tariffs on steel and aluminum represent the first major step. The extent to which the country’s policy change escalates and threatens global and domestic economic growth will depend on how some of the nation’s main trading partners, notably the EU and China, react. FY 2018-19 Budget May 9, 2018 4 State Economy Although California turned in a solid performance in 2017, the economy exhibited slower growth than the nation as a whole. With GDP growth of 2.1 percent, California’s economy accounts for 14.2 percent of the U.S. GDP. The unemployment rate for California fell to a record low of 4.3 percent on a seasonally adjusted basis in March 2018, down from a 5.0 percent rate in March 2018. Nearly every industry in the state continued to add jobs year-over-year, with the categories of Education and Health Services leading the way. Manufacturing continued its slight decline in jobs in 2017. Job growth in the Leisure and Hospitality Industry followed closely behind. With these decreases, the state’s unemployment rate is moving ever closer to parity with the nation overall. The latest jobs numbers from the state Employment Development Department (EDD) show California employment continuing to grow across industries and the unemployment rate at an all- time low. Job growth for the year ending in February increased 2.3 percent over February 2017 levels – well ahead of the national job growth of 1.6 percent over the same period. The unemployment rate in California reached another record low, dropping to 4.3% in February. “The record low unemployment rate signals a taut labor market, but the labor force has been growing at a moderate pace and has enabled the state’s industries to continue hiring,“ said Robert Kleinhenz, Executive Director of Research at Beacon Economics and the UCR Center for Forecasting. “Looking at individual industries, continued increases in construction jobs reflect ongoing strength in that sector, while California manufacturing has seen a welcome surge in hiring in recent months following a slowdown at this time a year ago.” Key findings in the report include: FY 2018-19 Budget May 9, 2018 5 • The Construction sector led job gains in February, adding 6,800 positions to payrolls. With yet another solid month of job gains, year over year growth in this industry now stands at a sizeable 9.5%. • Other sectors adding a significant number of jobs include Health Care (6,700 jobs), Administrative Support (6,500 jobs), and Manufacturing (3,500 jobs). With this strong month of gains, year over year growth in Health Care stands at 3.4%, Administrative Support is at 2.3%, and Manufacturing is at 0.8%. • Job counts were not up across all sectors in the latest numbers, with Education Services (-3,900 jobs), Other Services (-2,800 jobs), and Government (-2,500 jobs) all shedding a significant number of positions during the month. Still, year over year gains remain positive with jobs in Education Services expanding by 4.5%, in Other Services by 0.6%, and in Government by 1.1%. Economists expect real personal income growth in the state, estimated to be 3.1 percent in 2017, to increase in the range of 3.9 percent to 4.5 percent in each of the next two years, as a tighter labor market results in higher wages for more workers. California’s minimum wage also will increase in future years under state law. Also, consumer inflation has averaged 1.9 percent in California and 1.6 percent in the nation since 2010, as measured by the Consumer Price Index. Inflation began to pick up in 2016 due to increasing housing costs, medical costs, and energy prices. Consumer inflation is poised to hover between 2 - 2.5 percent annually from 2018-2020. It is no coincidence that slower labor force growth has occurred as the cost of living has soared in California. Since 1990, the California median has consistently exceeded the US median by more than 50 percent; now it is nearly double. As long as growth in the supply of housing remains low, home prices are expected to increase at above average rates in the near future. As can be seen in the chart below, median home prices in California have been rising faster than median household income. This condition leads to more crowded conditions, especially in areas where jobs are being added. The housing constraints are assumed to lead to a slower job growth in the governor’s budget forecast. FY 2018-19 Budget May 9, 2018 6 Per Beacon Economics, California and its regions should experience continued growth in economic activity and jobs throughout 2018. However, California will have to deal with labor shortage issues and 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 in the past two years. The state and its regions must do more to ensure that the all-important statewide water system 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. Finally, recent national tariffs on imported and exported goods could ultimately set back California’s economy. Not only are exports are a large part of the California economy, but tariffs on many imported goods, such as solar panels, could have an outsize effect on California. 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. With its emphasis on the tech sector, the San Francisco Bay Area economy continued to outperform the nation in 2017. The nine-county Bay Area experienced an unemployment rate of 2.5%; the San Mateo County unemployment as of December 31, 2017 (not seasonally adjusted) was 2.1% – the lowest in the state. An additional job surge in January was fueled in part by very large technology companies, such as Google, Apple, Adobe Systems, and Facebook, which are hiring employees at a rapid pace. Growth is expected to continue, with the Bay Area’s economy growing at a faster rate than nearly all other large metropolitan areas in the country. However, Beacon Economics anticipates job growth in San Francisco to expand at a more subdued rate of approximately 1 percent over the next year. The firm sees housing costs slowing the pace of people moving into the region. While the influx of highly educated professionals has been a primary driver of growth, the rising cost of living in the area often offsets wage advantages, and net migration is expected to decline over the next few years. The median home price in San Francisco climbed by 6.4% between the third quarter of 2016 and the third quarter of 2017, reaching $1.3 million. Over the same period, the median price of a home in nearby Oakland increased by 12.4%, and in San Jose by 14.0%. Home sales also continue to rise despite San Francisco having one of the highest median home prices in California. Between the third quarters of 2016 and 2017, sales grew by 2.3%, indicating steady demand from high- earners in the region. Beacon Economics is forecasting the median home price in San Francisco to continue rising over the next year, but at a slower pace. Meanwhile, sales activity will remain lively as the region continues to benefit from income gains. Rents in the area appear to have stabilized from the frenzied growth of the last few years, or are at least increasing at a slower rate. In an area of sky-high rents and housing prices, this is small comfort for tenants who must dig even deeper to live in the area. As job growth exacerbates the FY 2018-19 Budget May 9, 2018 7 demand for housing, there is little relief in sight for the high cost of Bay Area housing in the near future. Because the San Francisco Metropolitan area continues to be one of the United States’ top tourist destinations, Burlingame continues to see strength in hotel tax revenues and consumer spending. With an 86.4 percent occupancy rate in the first eight months of this fiscal year, hotels in the area are among the most occupied in the country. (The nationwide average for hotel occupancy rates in 2017 was 65.9 percent.) Burlingame’s revenues from TOT (transient occupancy tax) were up 5.1 percent from the same period last year. All indications are that travel and tourism is alive and well in the Bay Area. Although federally-imposed travel restrictions could negatively impact tourism and the area’s occupancy rates in the future, there are no current indications of any slowdown in this industry. As in other cities in the region, spending on autos, general consumer goods, and restaurants was up through the first half of calendar year 2017. Burlingame sales tax receipts in the 4th quarter of 2017 were 1.6 percent higher than the same quarter of the previous year (compared to an increase of 7.0 percent county-wide, and 3.6 percent for the state as a whole). Generally, the City experienced a solid quarter for auto sales and rentals, building-construction supplies, and some categories of business-related purchases. Higher fuel prices and strong restaurant patronage also contributed to the overall increase. However, the temporary closure of a major retailer within the general consumer goods group hampered growth in that business group. Again, although increasing incomes and wages among local residents have helped fuel taxable sales, the high cost of housing in the region could impede growth in consumer spending in coming years. As more and more residents spend a larger portion of their income on housing, less money is left to purchase goods and services. 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 was previously a “hot spot” for the growing economy, it is expected to experience a stabilization effect sooner than other parts of the state. FY 2018-19 Budget May 9, 2018 8 The transaction tax that resulted from November’s successful Measure I, effective April 1, 2018, will fund additional safety services and enhanced streets and sidewalk maintenance activities, as well as provide partial support to the construction of a new Community Center, which is long overdue for replacement. Other liabilities await funding, however. The deferral of maintenance to infrastructure and facilities has resulted in an increase of projects on the City’s list of “unfunded needs.” In addition, the growing cost of previously-incurred pension liabilities must be addressed: the establishment of a § 115 Trust for this purpose was intended to prevent these costs from burdening operating budgets in the next 5-10 years. But it must be funded while the local economy is exhibiting strength. Staff will strive to identify all deferrals and liabilities, and recommend their systematic funding within the operating budget (of the appropriate fund) whenever possible. General Fund Burlingame’s fiscal year 2017-18 budget anticipated that the local economy would continue to gain momentum at a moderate pace, and the long-term forecast reflected relative stability for at least the next several years. Departments were not required to provide 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. As a result, General Fund revenues were adjusted upward (approximately 2.2 percent) to reflect the most up-to-date projections based on current economic realities; and expenditures were increased (slightly over 1 percent), largely to forward initiatives approved by the Council earlier in the fiscal year. In addition to these changes, the City Council approved General Fund appropriations to further the Community Center Project design ($428,000), and provided the funding necessary to study the potential impacts of cell tower/antenna leases ($75,000). Based upon an actual increase in unrestricted General Fund balance of $3.3 million from the prior fiscal year, the City Council also directed the transfer of $2.3 million to the Capital Investment Reserve (in the City’s Capital Projects Fund), and approved an additional $1 million contribution to the § 115 Trust Fund established with Public Agency Retirement Services (PARS) to augment funding of the City’s pension obligations. The City’s 2017-18 fiscal year General Fund budget now reflects all of these mid-year budget changes, with revenues anticipated to be over $1.5 million higher than projected in the FY 2017- 18 adopted budget. For fiscal year 2018-19, General Fund revenues are expected to grow to $74.9 million – an additional 6.3 percent overall. Although revenue projections for the 2018-19 fiscal year are significantly (3.8 percent) higher in total from the five-year forecast presented with the mid-year report, the $2.8 million difference is the result of two major changes in the forecast. All General Fund revenues are discussed in more detail in this report. Each revenue line item was refined to reflect existing and anticipated changes in terms of the local economy. Departmental expenditure budgets remain tight, deviating less than ½ of one percent from the recent five-year forecast. In establishing departmental budgets for the upcoming fiscal year, emphasis was placed on the desire to maintain current service levels, particularly in public safety, lay the groundwork for delivery of the established objectives accompanying Measure I funding, preclude any increase in FY 2018-19 Budget May 9, 2018 9 unfunded liabilities, and prepare to address the City’s current unfunded needs. As a result, the initial expenditure budgets for the 2018-19 fiscal year continue to reflect significant fiscal restraint on the part of all departments. General Fund - Revenues 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 2017-18 Adjusted Budget column includes the revenue amendments approved with the mid- year report on March 14th. These fiscal year 2018-19 projections reflect continued improvement over the current mid-year projections for many revenue sources. The increase in General Fund revenues for the upcoming fiscal year is well over the $1.7 million increase projected in the General Fund Five-Year Forecast presented in March, due largely to the addition of Measure I sales tax revenue, and acknowledgement that property tax revenues will probably be augmented by a much larger ERAF refund than previously (conservatively) included in budgetary projections. Revenues from property taxes are expected to remain strong in the 2018-19 fiscal year. As of the writing of this report, the tax roll established by the County Assessor’s Office shows a growth of 5.83 percent in assessed value for the City of Burlingame over the prior year. (This includes an inflation factor of two 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. CITY OF BURLINGAME, CA SUMMARY OF GENERAL FUND REVENUES FY15-16 Actual FY16-17 Actual FY17-18 Adjusted Budget FY18-19 Proposed $ Change from Prior Year % Change from Prior Year Property Tax $17,645,289 $18,932,795 $20,150,000 $21,335,000 $1,185,000 5.9% Sales and Use Tax *12,827,673 12,089,288 12,205,000 14,367,000 2,162,000 17.7% Transient Occupancy Tax 26,092,240 26,262,930 27,400,000 27,950,000 550,000 2.0% Other Taxes Franchise Tax 1,604,757 1,633,303 1,669,000 1,766,000 97,000 5.8% Business Tax 985,568 976,307 994,000 998,000 4,000 0.4% State HOPTR 63,710 62,669 62,000 60,000 (2,000)-3.2% Real Property Transfer Tax 499,514 352,108 360,000 370,000 10,000 2.8% Licenses & Permits 86,154 88,069 88,000 88,000 0 0.0% Fines, Forfeitures and Penalties 864,393 898,184 910,700 909,500 (1,200)-0.1% Use of Money & Property 200,196 182,216 165,000 165,000 0 0.0% Charges for Services 4,470,274 6,023,353 5,337,775 5,693,000 355,225 6.7% Other Revenue 35,974 74,712 30,500 30,000 (500)-1.6% State Subventions 146,530 281,916 251,216 113,000 (138,216)-55.0% Interest Income 757,153 184,900 840,000 1,092,000 252,000 30.0% Total, General Fund Revenue $66,279,425 $68,042,750 $70,463,191 $74,936,500 $4,473,309 6.3% *Sales and Use Tax - FY18-19 Proposed Budget includes Measure I tax revenue of $1.75M. FY 2018-19 Budget May 9, 2018 10 The forecast for property tax revenues therefore shows an increase of nearly 5.9 percent from the current year’s property tax estimate. The increase reflects a revenue assumption change - - the inclusion of Excess ERAF a revenue. In prior years, property tax revenue projections were slightly minimized due to uncertainties in the annual distributions from the County’s Educational Revenue Augmentation Fund (ERAF). Higher State funding for education was anticipated with changes to the Local Control Funding Formula legislation enacted with the fiscal year 2013-14 state budget, with the higher funding translating to higher draws from county ERAFs statewide. It was also feared that ERAF monies could be used to satisfy other State commitments, which would ultimately eliminate any excess ERAF that had in the past been returned to the cities and other local governmental agencies that contribute to the fund. For these reasons, revenues from excess ERAF refunds have been considered one-time revenues, and not fully budgeted. However, the improved economy is having the opposite effect on the County’s ERAF funds, as it appears that the State can meet its obligations to educational agencies from the improved property tax revenues of recent years. In fact, higher property tax revenues result in more funds from local agencies being held in the ERAF fund, and fewer demands are being made on these funds. It appears that the ERAF refunds will not only continue, but grow larger as long as the State’s economy remains strong. In addition, the manner in which ERAF refunds are calculated and paid to contributing agencies (up to three fiscal years after the funds are withheld) suggests that agencies within the county will have ample warning of any legislative impacts on the calculation and distribution of ERAF refunds. Therefore, the full amount of anticipated ERAF refunds ($1.7 million) is included in the property tax projection for fiscal year 2018-19. This change in assumption causes the property tax projection to be $900,000 higher than projected in the General Fund Five-Year Forecast presented with the Mid-year Report in March. Other property tax line item revenues, both secured and unsecured, are expected to remain strong. 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 (2017-18) fiscal year was increased $529,000 (2.0 percent) to reflect growth in receipts year-to-date. Hotels in the area continue to experience very high occupancy rates (averaging 86.4 percent). The fiscal year 2018-19 budget forecast anticipates a further rise (2.0 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) 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 350-room hotel at SFO is expected to open. Sales tax receipts also reflected a fairly healthy economy this past year. Since the end of the State’s “triple flip” revenue swapping procedure in fiscal year 2015-16, this revenue source now reflects true economic activity, and, as such, should be much easier to project in coming years. a Educational Revenue Augmentation Fund (ERAF) is a mechanism used by the State to shift funding from local property tax dollars to schools. When local property tax dollars shifted into ERAF exceed what is necessary to fund the schools, those excess funds are returned to the local taxing entities (cities, special districts) via Excess ERAF revenue FY 2018-19 Budget May 9, 2018 11 The proposed sales tax revenue budget for fiscal year 2018-19 is comprised of a projected $12.6 million in the Bradley Burns (local 1%), and an estimated $1.8 million from the City’s new ¼ cent Measure I transactions tax that went into effect on April 1st. Although these are both reported as General Fund sales and use tax revenues, the two taxes are not applied to the same transactions. Measure I monies are separately budgeted, and will be recorded in a separate sub-fund to allow for maximum transparency and accountability, and ease of presentation and audit for the Measure I Citizens’ Oversight Committee. The inclusion of Measure I revenues in the proposed budget causes the Sales and Use Tax revenues for 2018-19 to be $1.8 million higher than the estimate projected in March’s five-year forecast. The Local 1% sales tax projection represents a 3 percent increase over the current year’s budget of $12.2 million from this revenue source. Transaction data from the fourth quarter of calendar year 2017 is now available, and supports this fairly positive revenue picture. Sales taxes are expected to be higher in most major industry groups. However, transactions in the City’s Auto and Transportation sector leveled off considerably in the third quarter of 2016, and are expected to remain fairly flat through 2018 and 2019. The slow-down is not particular to Burlingame, and is a predictable result of the auto industry’s seven years of expansion following the recession. The sector is still strong, comprising 33 percent of the City’s local sales tax receipts Sales tax receipts from the Fuel and Service Stations sector are anticipated to increase at a higher rate than other sectors (5.4%), while Business to Business sales are projected to increase by less than 1% in the coming fiscal year. As can be seen from the pie chart below, 84.9 percent of General Fund revenues (per the initial fiscal year 2018-19 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. FY 2018-19 Budget May 9, 2018 12 Other taxes consist largely of franchise fees and the City’s business license tax, comprising less than 2.4 and 1.4 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. While solid waste rates have not increased since 2012, changes in the collection, disposal, and recycling processes have resulted in increased costs, which will be considered in the establishment of rates to be effective January 1, 2019. Service volumes are also on the rise due to significant development activity; additional accounts will bolster system revenues and associated franchise fees paid to the City. Gas and Electric utilization/consumption and rates have also increased in recent years, as reflected in the fiscal year 2018-19 franchise fees projection from these utilities. 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 long-term average of $370,000 in fiscal year 2018-19, 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 ½ of one percent of total General Fund revenues, are not Property Tax, 28.47% Sales and Use Tax, 19.17% Transient Occupancy Tax, 37.30% Other Revenue, 15.06%Property Tax Sales and Use Tax Transient Occupancy Tax Other Revenue City of Burlingame General Fund Revenue Composition CITY OF BURLINGAME, CA FRANCHISE TAXES FY15-16 Actual FY16-17 Actual FY17-18 Adjusted Budget FY18-19 Proposed $ Change from Prior Year % Change from Prior Year Gas $109,865 $114,754 $115,000 $130,000 $15,000 13.0% Electric 228,920 240,826 242,000 280,000 38,000 15.7% Garbage 699,539 715,184 742,000 775,000 33,000 4.4% AT&T Cable TV 437,018 449,851 459,000 475,000 16,000 3.5% Wave Astound 25,079 24,138 24,000 23,000 (1,000)-4.2% AT&T Video Service 104,336 88,550 87,000 83,000 (4,000)-4.6% Total, Franchise Taxes $1,604,757 $1,633,303 $1,669,000 $1,766,000 $97,000 5.8% FY 2018-19 Budget May 9, 2018 13 expected to deviate significantly from current collections. Revenues from activities in the category of fines, forfeitures and penalties, are expected to level off now that “smart meters” have been installed in the City’s downtown, reducing 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. Revenues from charges for services increased significantly in fiscal year 2016-17 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. As these Public Works activities return to more normal levels, the department is anticipating the need to conduct storm water discharge compliance reviews, for which a fee will be charged sufficient to cover additional costs to the department. Other than a resumption in the volume of development application services in the Planning Department, service volumes in most other departments are not anticipated to deviate notably in any one area or department. (County booking fees are no longer being recorded as revenues in the Police Department, as these are County revenues.) Receipts from recreational services indicate a continued demand in this area; the additional revenue from expanded programs is somewhat offset by the expenses associated with these recreation programs. The Master Fee Schedule is being updated to keep up with the current cost of providing services, and the revised schedule will be effective at the beginning of the 2018-19 fiscal year. The revenue projection for this category as a whole has increased somewhat ($248,000) 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 1.24 percent to 1.77 percent (as of March 31st), a 42.75 percent increase. The portfolio itself increased 10.4 percent. Because interest attributed to the City’s Capital Investment Reserve and other governmental capital project CITY OF BURLINGAME, CA CHARGES FOR SERVICES BY DEPARTMENT FY15-16 Actual FY16-17 Actual Y 3 FY17-18 Adjusted Budget FY18-19 Proposed $ Change from Prior Year % Change from Prior Year Police $59,456 $91,258 $90,250 $78,500 ($11,750)-13.0% Parks 148,572 153,036 167,000 177,000 10,000 6.0% Recreation 2,637,496 2,827,667 2,970,125 3,192,000 221,875 7.5% Aquatics 0 233,198 247,000 262,000 15,000 6.1% Planning 577,413 875,485 536,500 657,200 120,700 22.5% Public Works 421,996 1,192,274 582,600 575,000 (7,600)-1.3% Library 619,507 640,982 732,500 742,000 9,500 1.3% Other 5,834 9,453 11,800 9,300 (2,500)-21.2% Total, Departmental Fees $4,470,274 $6,023,353 $5,337,775 $5,693,000 $355,225 6.7% FY 2018-19 Budget May 9, 2018 14 funds is credited to the General Fund, these interest earnings should continue to grow until the funds are appropriated to the City’s infrastructure needs. Burlingame invests in only the safest of securities (the highest priority of the City’s investment policy is preservation of capital), and yields on many maturities of U.S treasuries increased to highs not seen since 2008. The Federal Open Market Committee (FOMC) increased the federal Funds target rate by 0.25 percent in March (to 1.75 percent), and the market expects future increases, albeit gradual. In the meanwhile, corporate notes and negotiable CDs offer significant yield pickup relative to short-term government securities. Supranationals now also provide additional diversification to the City’s investments, comprising 4 percent of the portfolio. As shown in the chart above, all funds are projected to benefit from higher interest earnings in fiscal year 2018-19. Note that an assumption about the year-end “mark-to-market” adjustment is not included in the City’s budget, and the FY 2016-17 actual interest earnings are shown without that year-end adjustment. Fund 2016-17 Actual 2017-18 Adjusted Budget 2018-19 Proposed Budget General Fund 584,842$ 840,000$ 1,092,000$ Burlingame Avenue Assessment Dist.3,885 6,000 7,000 Gas Tax Fund 12,539 18,000 23,000 Measure A Fund 16,127 23,000 30,000 Water Fund 154,284 222,000 288,000 Sewer Fund 154,215 222,000 288,000 Solid Waste Fund 43,218 62,000 75,000 Parking Enterprise Fund 68,153 98,000 128,000 Building Enterprise Fund 66,152 95,000 124,000 Landfill Fund 11,936 17,000 22,000 Worker's Compensation Fund ISF 61,276 88,000 115,000 Facilities Services Fund ISF 3,448 5,000 6,000 Equipment Services Fund ISF 60,445 87,000 113,000 Information Services Fund ISF 6,598 9,000 12,000 OPEB Retiree Medical ISF 674 - - General Liability ISF 37,836 55,000 72,000 Other Local Grants/Donations 2,091 3,000 4,000 Public TV Access Fund 4,371 6,000 8,000 Development Fees 40,623 60,000 78,000 Storm Drainage Fund 151,154 218,000 283,000 Debt Service Fund 50,757 73,000 95,000 Total 1,534,624$ 2,207,000$ 2,863,000$ FY 2018-19 Budget May 9, 2018 15 General Fund - Expenditures The following table shows the proposed fiscal year 2018-19 General Fund expenditures by department/area as compared to the current year adjusted budget: Again, expenditure budgets are compared with the prior fiscal year as well as with the current year (2017-18) adjusted budget. The FY 2017-18 Adjusted Budget column includes all budget revisions approved by the City Council since the beginning of the fiscal year, including mid-year budget revisions. To allow a comparable operating picture as the adopted budget for fiscal year 2017-18, the fiscal year 2018-19 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. Note, however, that pension costs are shown within the departmental budgets only to the extent that the CalPERS required employer contributions are made. Additional contributions approved by the Council for the § 115 Pension Trust are not shown as expenses in the City’s operating budget; such contributions are shown as reserved cash for the payment of pension obligations in future years. CITY OF BURLINGAME, CA SUMMARY OF GENERAL FUND EXPENDITURES By General Fund Department FY16-17 Actuals FY17-18 Adjusted Budget FY18-19 Proposed $ Change from Prior Year % Change from Prior Year City Council $359,692 $355,699 $385,071 $29,372 8.3% City Manager 735,829 823,277 849,583 26,306 3.2% City Attorney 577,890 906,965 948,990 42,025 4.6% City Clerk 282,246 366,167 392,391 26,224 7.2% Elections 74,466 168,000 0 (168,000)-100.0% Finance 2,063,962 2,242,805 2,369,665 126,860 5.7% Human Resources 780,164 956,176 921,539 (34,637)-3.6% Central County Fire + Disaster Preparedness 10,761,242 10,851,669 11,106,979 255,310 2.4% Police & Dispatch 14,206,009 15,543,678 16,585,795 1,042,117 6.7% Parking Enforcement 585,108 638,422 682,090 43,668 6.8% Public Works 4,456,522 6,397,129 6,145,429 (251,700)-3.9% Community Development 1,530,975 1,861,358 1,941,729 80,371 4.3% Aquatics Center 419,971 510,500 602,800 92,300 18.1% Library 4,710,029 5,181,277 5,554,025 372,748 7.2% Parks 4,143,637 4,848,133 5,016,926 168,793 3.5% Recreation 4,019,738 4,560,586 4,771,800 211,214 4.6% TOTAL, Operating Expenditures $49,707,480 $56,211,841 $58,274,812 $2,062,971 3.7% FY18-19 FY 2018-19 Budget May 9, 2018 16 Overall, departmental expenditures are shown as increasing 3.7 percent in the proposed budget over the current fiscal year 2017-18 adjusted budget. Much of the increase (68.6 percent) is the result of increases in personnel costs, despite keeping growth in the City’s workforce to a minimum. 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. Personnel Changes The fiscal year 2018-19 budget proposes a handful of changes in personnel/positions that are deemed necessary to effectively carry out the City’s priorities and support both General Fund and Capital Improvement Program activities. Several of these changes entail modest increases or decreases in hours for specific positions; all are proposed to more closely align actual duties performed by staff with the job classification. The proposed classification plan changes have all been presented to the City’s bargaining units. A Police Officer position is proposed to be added in the Police Department in accordance with the Measure I spending plan. Although the department is able to handle its current call volume, that volume is expected to grow markedly as the population increases and as various commercial projects come online. The department will add the Officer to either the Patrol, the new Community Response Team, or the Traffic Unit, as needed to most effectively support public safety efforts as assured by Measure I. The cost of an additional Police Officer is just under $200,000 (including the long-term costs of CalPERS pension benefits) annually. The proposed budget for the Parks and Recreation Department reflects a change in the use of two positions. The Program Outreach Specialist position, which was added as a .80 FTE (Full Time Equivalent) position to the budget in FY 2017-18, remains unfilled. An analysis of personnel use within the department identified a more pressing need for resources in the area of programming. Increased program offerings dictate that savings from deleting this position be used to increase the hours of the Program Coordinator position, currently filled as a .75 FTE position, to a full time position. It appears that the design of promotional materials for the Department can be supported with existing personnel. These changes amount to a net decrease of .55 FTE for the department. The Library has proposed changes in the hours of two part-time regular positions: a decrease in hours of a recently vacated 1.0 FTE Library Assistant II position in the Children’s Department to a 0.63 FTE position is proposed to be offset by an increase of a current 0.63 FTE Librarian I position to full-time status. These changes are requested to most effectively meet the organizational and programming needs within the Library’s Children’s Department. The net FY 2018-19 Budget May 9, 2018 17 increase in wages and benefits due to the difference in the two positions’ pay scales is less than $2,500 annually. These changes amount to a net increase of personnel positions in the General Fund by 0.45 FTE as shown in the chart below. No other changes are proposed to the City’s workforce for the upcoming fiscal year. 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: Department 2017-18 Adopted 2018-19 Proposed Change Since Prior Year GENERAL FUND City Attorney 2.50 2.50 0.00 City Clerk 1.50 1.50 0.00 City Manager 2.13 2.13 0.00 Community Development - Planning 6.75 6.75 0.00 Finance 10.25 10.25 0.00 Human Resources 3.00 3.00 0.00 Library 22.88 22.88 0.00 Parks 20.50 20.50 0.00 Police 46.00 47.00 1.00 Police - Communications 7.00 7.00 0.00 Police - Parking Enforcement 4.00 4.00 0.00 Public Works - Engineering 12.75 12.75 0.00 Public Works - Streets & Storm Drain 8.03 8.03 0.00 Recreation 11.80 11.25 (0.55) Total General Fund 159.09 159.54 0.45 CITY OF BURLINGAME, CA PROPOSED BUDGET FISCAL YEAR 2018-19 AUTHORIZED FULL-TIME EQUIVALENT POSITIONS CITY OF BURLINGAME, CA SUMMARY OF GENERAL FUND EXPENDITURES Description FY16-17 Actuals FY17-18 Adjusted Budget FY18-19 Proposed $ Change from Prior Year % Change from Prior Year General Government $4,874,249 $5,819,089 $5,867,239 $48,150 0.8% Public Safety & Traffic Central County Fire + Disaster Preparedness 10,761,242 10,851,669 11,106,979 255,310 2.4% Police & Dispatch 14,206,009 15,543,678 16,585,795 1,042,117 6.7% Parking Enforcement 585,108 638,422 682,090 43,668 6.8% Public Works 4,456,522 6,397,129 6,145,429 (251,700)-3.9% Community Development - Planning 1,530,975 1,861,358 1,941,729 80,371 4.3% Leisure & Cultural Services Aquatics Center 419,971 510,500 602,800 92,300 18.1% Library 4,710,029 5,181,277 5,554,025 372,748 7.2% Parks & Recreation 8,163,375 9,408,719 9,788,726 380,007 4.0% Total Expenditures $49,707,480 $56,211,841 $58,274,812 $2,062,971 3.7% FY 2018-19 Budget May 9, 2018 18 The 2018-19 fiscal year budget proposed for the General Fund can also be compared to the current year budget by category of expenditure. Personnel Costs – When reviewing the proposed 2018-19 fiscal year General Fund expenditure budget by type, note that personnel costs increase 4.9 percent (approximately $1.4 million) when compared to the current year. The increase is due largely to the inclusion of regular salary increases, calculated according to contractually-agreed upon increases for most employees, including hourly employees. Additional staffing proposals were kept to a minimum as previously outlined – an increase of 0.45 FTE is included in the General Fund budget at a cost of approximately $95,000. Increases in CalPERS pension costs—based on the required employer contribution rates for both Safety and Miscellaneous Employee Plans—also contribute to the growth in personnel costs, as shown below. Again, contributions to the § 115 Trust for pension obligations are not included in the budget as an expenditure at the time of contribution. Only when the trust fund is drawn upon to pay required CalPERS employer contributions will the expenditures be recorded. CITY OF BURLINGAME, CA SUMMARY OF GENERAL FUND EXPENDITURES BY TYPE Description FY16-17 Actuals FY17-18 Adjusted Budget FY18-19 Proposed $ Change from Prior Year % Change from Prior Year Personnel Costs $25,754,672 $29,059,967 $30,475,759 $1,415,792 4.9% Non-Personnel Costs 20,266,011 22,818,297 23,369,572 551,275 2.4% Internal Services 3,587,253 4,124,377 4,187,333 62,956 1.5% Capital Outlay 99,544 209,200 242,148 32,948 15.7% Total Expenditures $49,707,480 $56,211,841 $58,274,812 $2,062,971 3.7% CITY OF BURLINGAME, CA GENERAL FUND WAGES & BENEFITS DETAIL Personnel Cost FY17-18 Adjusted Budget FY18-19 Proposed $ Change from Prior Year % Change from Prior Year Wages 18,354,484$ 19,065,685$ 711,201$ 4% Benefits: Retirement 4,771,375 5,312,435 541,060 11% Health Premiums 2,871,317 2,968,157 96,840 3% Medicare 269,098 286,371 17,273 6% OPEB Current 1,039,901 1,034,179 (5,722) -1% Workers' Compensation 728,827 728,828 1 0% Dental, Vision, Life, LTD 307,724 294,400 (13,324) -4% Other Benefits 717,241 785,704 68,463 10% 29,059,967$ 30,475,759$ 1,415,792$ 4.9% FY 2018-19 Budget May 9, 2018 19 Non-Personnel Costs – This category of costs is increasing 2.4 percent in the 2018-19 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 the City 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. It should be noted that not all expenses are incurred every fiscal year. For example, the proposed budget for fiscal year 2018-19 does not include an appropriation for election expenses, whereas the adopted budget for the current fiscal year includes $168,000 for this expense. In addition, certain expenditures may be anticipated in the delivery of services that provide a high level of cost recovery, increasing revenues at the same rate as the increased expense. The Recreation budget includes an 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. General Fund Operations Summary A summary of the General Fund operations per the FY 2018-19 proposed budget is shown below: 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 2017-18 of nearly $4.6 million prior to funding the CIP Capital Investment Reserve. The adopted budget CITY OF BURLINGAME, CA GENERAL FUND OPERATING SUMMARY FY16-17 Actuals FY17-18 Adjusted Budget FY18-19 Proposed Budget Total Revenue $68,042,750 $70,463,191 $74,936,500 Expenditures Departmental Expenditures (49,707,480)(56,211,841)(58,274,812) Transfers In/Out - Debt Service (3,474,575)(3,277,833)(3,109,939) Transfers In/Out - Other (4,566,440)(6,408,111)(7,044,883) Total Expenditures (57,748,495)(65,897,785)(68,429,634) Net Operating Revenue 10,294,255 4,565,406 6,506,866 Transfer to Capital Investment Reserve (7,000,000)(5,300,000)(2,000,000) Change in General Fund Balance 3,294,255$ (734,594)$ 4,506,866$ FY 2018-19 Budget May 9, 2018 20 provided for a $3 million transfer to the reserve due to the surplus experienced in fiscal year 2015-16; this amount was increased to $5.3 million with mid-year results that reflected higher revenues than anticipated in fiscal year 2016-17. 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 2018-19 anticipates a surplus of over $4.5 million. As previously noted, the budget provides funding of $2 million for an increase in the Capital Investment Reserve in the City’s Capital Projects Fund, to provide partial funding of the City’s most immediate facilities’ needs. This transfer to fund future capital projects is $1 million less than in the prior year’s adopted budget in recognition of an additional $1 million in debt service which, when combined with the $1 million from the Measure I revenues, will provide funding for a bond issuance of approximately $30 million for the long-anticipated Community Center. Unlike the current Capital Projects Fund Balance, the Capital Investment Reserve 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. The City has an extensive list of currently unfunded capital needs, both in facilities and infrastructure, which makes continued funding of this reserve imperative. General Fund Debt Service Obligations 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 66.1 percent in the upcoming fiscal year, due largely to the decrease in debt service requirements for the 2006 Pension Obligation Bonds. Note that this schedule depicts only current debt service obligations. The proposed budget includes an additional $2 million in General Fund debt service costs ($1 million specifically funded from Measure I monies) with the issuance of additional lease revenue bonds in FY 2018-19. The approximate $30 million in bond proceeds will help fund a new Community Center at the site of the City’s current Recreation Center. CITY OF BURLINGAME, CA GENERAL FUND DEBT SERVICE OBLIGATIONS Description Maturity FY17-18 Adopted FY18-19 Proposed $ Change from Prior Year % Change from Prior Year 2006 Pension Obligation Bonds FY2036 $3,845,225 $956,648 ($2,888,577)-75.1% 2010 Corp Yard Lease Refunding Bonds FY2021 1,164,875 1,164,275 (600)-0.1% 2012 Lease Revenue Bond*FY2042 549,888 550,888 1,000 0.2% Debt Administration Costs 15,000 13,000 (2,000)-13.3% Subtotal, Principal and Interest 5,574,988 2,684,811 (2,890,177)-51.8% Contributions from Other Funds (2,296,965)(1,574,872)722,093 -31.4% Net General Fund Debt Service $3,278,023 $1,109,939 ($2,168,084)-66.1% *100% reimbursed by the Special Assessment District and Parking Enterprise FY 2018-19 Budget May 9, 2018 21 General Fund Balance The General Fund shows a projected total fund balance of more than $36.8 million at the end of the 2018-19 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: The schedule below shows how the $4.5 million change in fund balance will impact the reporting of General Fund reserve levels: As of June 30, 2018, a fund balance of approximately $32.3 million represents 45.9 percent of the General Fund’s total expenditures of $70.4 million for the year. Although this would normally CITY OF BURLINGAME, CA CHANGES TO GENERAL FUND BALANCE FY17-18 Adjusted Budget FY18-19 Projected Beginning of Year Balance (Budget/Audit)33,057,408$ 32,322,814$ Projected Revenues & Expenditures Projected revenues 70,463,191 74,936,500 Projected departmental expenditures (56,211,841)(58,274,812) Subtotal, Revenues Net of Expenditures 14,251,350 16,661,688 General Fund Long-Term Debt (3,277,833)(3,109,939) Transfer to CIP Capital Investment Reserve (5,300,000)(2,000,000) Other Transfers In (Out) of General Fund (6,408,111)(7,044,883) Projected General Fund Balance, net of transfers 32,322,814$ 36,829,680$ CITY OF BURLINGAME, CA GENERAL FUND BALANCE ASSIGNMENTS FY16-17 Actual Results FY17-18 Adjusted Budget FY18-19 Proposed Economic Stability Reserve 16,200,000$ 16,913,000$ 17,985,000$ 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 18,700,000 19,413,000 20,485,000 Add: Restricted for Pension Trust Fund (PARS)0 4,139,920 6,977,920 Add: Unassigned Fund Balance 14,357,408 8,769,894 9,366,760 Total, Ending Fund Balance 33,057,408$ 32,322,814$ 36,829,680$ FY 2018-19 Budget May 9, 2018 22 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. In addition, the City’s fund balances now include amounts that are restricted – set aside for use only to pay unfunded pension obligations due to CalPERS. These obligations are large. Valued at approximately $57.7 million as of the beginning of the current fiscal year, the amount due from these liabilities will increase in the near future due to the application of more realistic discount rates (as well as other assumption changes) in the coming years. Due to the magnitude of the unfunded pension liabilities, the City established a § 115 trust fund with Public Agency Retirement Services (PARS) in October 2017, making an initial contribution of $3.7 million. ($3.1 million of this contribution was from General Fund monies.) The intent of the trust fund is to grow these contributions at a higher yield than can be generated in the City’s own portfolio so that monies are available when the required employer contribution rates to CalPERS, which will increase rapidly in the next 5- 10 years, exceed certain threshold rates. The following schedule shows the same General Fund Balance changes, but includes not only revenues and expenditures, but funding of the reserves according to Council policy, and the contributions accumulating in the § 115 Trust Fund. Although a total change in fund balance of $4.5 million is shown, unassigned and unrestricted fund balance increases by only $597,000. The FY 2018-19 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 2018-19 require an increase in reserves of nearly $1.1 million. After reflecting the contribution to the City’s § 115 Trust fund for pensions, the remaining fund balance will be reported as “unassigned fund balance”. CITY OF BURLINGAME, CA GENERAL FUND BALANCE ASSIGNMENTS Assigned Fund Balances Economic Stability Reserve Catastrophic Reserve Contingency Reserve Total Fund Balance Beginning Balance at 7/1/2018 8,769,894$ 4,139,920$ 16,913,000$ 2,000,000$ 500,000$ 32,322,814$ Changes in 2018/19: Projected Revenues 74,936,500 74,936,500 Projected Expenditures (58,274,812) (58,274,812) Transfer Out to Debt Services (3,109,939) (3,109,939) Transfer Out to CIP Replacement Reserve (2,000,000) (2,000,000) Other Transfers In/Out, net (7,044,883) (7,044,883) Transfer to Restricted & Assigned Fund Bal.(3,910,000) 2,838,000 1,072,000 - - - Subtotal, Changes in 2018/19 596,866 2,838,000 1,072,000 - - 4,506,866 Ending Balance at 6/30/2019 9,366,760$ 6,977,920$ 17,985,000$ 2,000,000$ 500,000$ 36,829,680$ Unassigned Fund Balance Restricted for Pension Trust Fund (PARS) FY 2018-19 Budget May 9, 2018 23 Measure I Fund– Though Measure I revenues and expenditures are part of General Fund operations, these monies will be accounted for in a separate sub-fund to provide greater transparency in reporting the uses of this new funding source. This accounting treatment will also facilitate external audit activities and allow a straight-forward review by the Measure I Oversight Committee. Approved by voters in November 2017, this general purpose ¼% transaction tax went into effect on April 1st. However, the Measure I Expenditure Plan was adopted by the City Council in February. The budget priorities from the public engagement surrounding Measure I included public safety; street and sidewalk maintenance; and safe, adequate park and recreation programs and facilities. The tax is expected to provide approximately $1.75 million in additional revenue. Initial-year expenditures will include funding for one police officer, $1 million in debt service for an anticipated Lease Revenue bond issuance for the new Community Center construction project, and approximately $575,000 for specific street and sidewalk improvements identified in the 2018-19 Capital Improvement Plan. The chart below shows $23,000 in administrative services, largely for the State’s preparation and administration of the tax in this first fiscal year. The City has also contracted with HdL for audit services for the ¼% tax, but these fees will be shown as a direct reduction of the Measure I tax revenues received. Initial revenues will not be received until after the current fiscal year, though any funds received for the quarter ended June 30, 2018 will be accrued as revenues to the current fiscal year. Unfunded Needs The City has long recognized the need to balance ongoing operations and services with a significant list of unfunded needs. These unfunded needs are largely reflected in the City’s aging facilities, many of which are utilized by the public. Nearly four years ago, the City Council ranked a new downtown parking garage as the highest priority for small businesses and shoppers alike, followed by a new Community Center and essential City Hall upgrades to enhance public access CITY OF BURLINGAME, CA MEASURE I FY18-19 Proposed Projected Revenues 1,750,000$ Projected Expenditures: Public Safety - adding 1.0 FTE police officer (172,810) Administrative Services (23,000) Total Expenditures (195,810) Projected Transfer (Out): Transfer Out to Street Capital Project Fund (575,000) Transfer Out to Debt Service Fund (1,000,000) Total Transfer (Out)(1,575,000) Revenues (Under) Expenditures & Transfer Out (20,810)$ FY 2018-19 Budget May 9, 2018 24 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 addition, unfunded pension liabilities are requiring immediate attention, as the interest on these obligations begins to outpace efforts to pay down these expenses for prior year service. In order to facilitate the funding of some of the capital projects needed, 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, and/or in conjunction with providing the much-needed development of low-income housing. The City continues regular investments in building maintenance and infrastructure maintenance through the five-year CIP, but this approach has not proved to be sufficient in averting further unfunded needs. In the past year, the passage of Measure I has helped advance the replacement of the City’s World War II-era Recreation Center at Washington Park with a new, more functional Community Center. A new lease revenue bond issue is now contemplated in FY 2018-19 to make the new Community Center a reality. In addition, more infrastructure (specifically, street and sidewalk) repairs and replacement will be made possible with Measure I funds. To the extent possible, funds are being set aside in the City’s Capital Investment Reserve within the Capital Projects Fund. The reserve balance as of the end of the current fiscal year is anticipated to be $25.8 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 taken steps to address funding the growing unfunded pension liabilities with CalPERS. Recent actuarial studies show that the City’s CalPERS 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. The 2018-19 fiscal year will be the second year for funding the § 115 Trust Fund. The trust fund was established to augment the City’s budget when required CalPERS employer rates exceed a pre-determined threshold. Although staff continues to analyze additional options for funding pension obligations, these unfunded needs will be kept in mind when assessing the City’s long-term fiscal health. 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: FY 2018-19 Budget May 9, 2018 25 Capital Projects Fund The 2017-18 fiscal year Capital Projects Program budget was increased during the year to provide additional appropriations of $428,800 (for design and CEQA documentation services for the Burlingame Community Center and Washington Park renovation project) and $350,000 (for the City’s contribution toward the resurfacing of Burlingame School District fields). The 2018-19 fiscal year budget is based on the CIP (Capital Improvement Program) as presented earlier this year, and was updated to include $400,000 of funding for the Skyline Park project, discussed with the City Council in April. A complete presentation of 2018-19 fiscal year Capital Projects Program activities has been prepared by Public Works for this (May 9, 2018) Budget Study Session. Note that both the current year and FY 2018-19 transfers to the Capital Investment Reserve will not be included as Capital Projects Fund appropriations. This will occur once the funding for a CITY OF BURLINGAME, CA BUDGET SUMMARY BY FUND FY17-18 Adjusted Budget FY18-19 Proposed General Fund $56,211,841 $58,274,812 Capital Projects 25,586,800 22,100,000 Financing Authority 7,634,037 4,747,600 Building Enterprise 1,757,187 2,137,350 Landfill Fund 252,223 258,004 Parking Enterprise 704,657 792,492 Sewer Enterprise 10,903,192 10,915,726 Solid Waste Enterprise 674,925 797,284 Water Enterprise 14,679,866 14,865,720 Special Revenue Funds 264,650 215,500 Other Funds 482,540 946,666 Total $119,151,918 $116,051,154 CITY OF BURLINGAME CAPITAL IMPROVEMENT PROGRAM General Fund Other Funds/Sources FY18-19 Total Facilities CIP $2,810,000 $0 $2,810,000 Parking & Garages CIP 0 0 0 Parks & Trees CIP 3,105,000 0 3,105,000 Sewer CIP 0 5,200,000 5,200,000 Storm Drain CIP 0 4,020,000 4,020,000 Streets CIP 1,325,000 2,640,000 3,965,000 Water CIP 0 3,000,000 3,000,000 All CIP Funding Sources, FY2018-19 $7,240,000 $14,860,000 $22,100,000 FY 2018-19 Budget May 9, 2018 26 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 Capital Investment 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. A $3 million transfer to the Capital Investment Reserve has served as a placeholder in past budgets, representing an affordable investment in these unfunded infrastructure projects. For the FY 2018-19 Budget, this amount was reduced to $2 million in recognition of an additional $1 million in debt service requirements needed for the lease revenue bond issuance that will provide funding for the Community Center project. The balance in the reserve, assuming no projects are funded from this source during the fiscal year, will be $27.8 million as of June 30, 2019. Solid Waste Fund and Landfill Funds: As noted in the mid-year report, FY 2018-19 will present significant changes in the City’s Solid Waste Enterprise Fund. Since the challenging years of 2011 and 2012, when significant increases in Solid Waste rates were necessary to pay off a deficit position from the 2001-2010 contract for solid waste services, revenues have been adequate to generate surpluses within the Solid Waste Fund. The higher rates ended the need for General Fund transfers to support activities of the Solid Waste Fund; revenues became sufficient to pay the costs of all solid waste contracts and City-provided services, and funding of a Solid Waste Rate Stabilization Reserve was possible. Because of this reserve, rate increases have not been required despite increasing costs over the years. For calendar year 2018, estimated revenues from collections for Burlingame ($10.9 million) will fall short of the costs of the City’s collection contractor (Recology) of $5.8 million; disposal & processing fees of $3.5 million; franchise fees of $740,000; funding of the City’s landfill post-closure costs ($465,000); and $655,000 for costs borne by the City, including street sweeping and steam cleaning and maintenance of public receptacles. A slight reduction in the utility’s rate stabilization reserve is anticipated. Mid-year budget adjustments reflected a $39,600 increase for additional part-time staff to augment maintenance services in the Broadway Business District as directed by the Council in November: such services include cleaning pavers, power washing concrete sidewalks, street sweeping, litter debris pickup, and the cleaning of public lots. These costs will continue to be charged to the Solid Waste Fund in future years. The largest increase in the fund’s appropriations, however, is necessitated by the disparity between the costs of the utility and the revenues generated, which has become significant in recent years. The shortfall is anticipated to be approximately $185,000 for calendar year 2018, so the reserve will again be tapped before rates can be appropriately adjusted for the second half of the fiscal year. Although reserve levels in the Solid Waste Fund have allowed the City to avoid rate increases in recent years, the utility faces significant challenges in the future. The fire at the Material Recovery Facility at the Shoreway Recycling Center in September of 2016 will require a significant capital investment in fire suppression equipment and strategic changes in collection and disposal operations to protect the future insurability of the Center. In addition, changes in the market for recyclable materials will drive even higher capital investment at Shoreway. To insure that the FY 2018-19 Budget May 9, 2018 27 fund can endure these challenges and is in good fiscal position when the current franchise agreement with Recology terminates at the end of 2020, rates will be reviewed early in fiscal year 2018-19. A multi-year approach to collecting funds sufficient for the new franchise agreement will probably be needed. The new agreement was reviewed by the Council in January; it allows for an extension of the services provided by Recology through the year 2035. Solid Waste rates also include a 5 percent surcharge for landfill post-closure costs. The surcharge provides revenues to the Landfill fund to cover maintenance and monitoring functions at the landfill site, and will serve to reduce the $2.2 million fund deficit that results from the liability recorded for future post-closure costs. Although the surcharge rate remains the same, an increase of $30,200 in this revenue is anticipated in fiscal year 2017-18 based on prior year actual and year-to-date receipts. Water & Sewer Funds Winter rains brought an end to a severe five-year drought in northern California in 2017. With improving reservoir levels and water consumption easing back into higher, pre-drought patterns, revenues in the Water and Sewer Utilities are much less difficult to accurately anticipate than just a few years ago. In response to the drought, which created higher costs and lower revenues (due to conservation efforts) for both these funds, the City raised water rates over a three-year period. The rate increases, which were needed to cover the higher cost of wholesale water purchased from the San Francisco Public Utilities Commission (SFPUC) and to continue to fund prudent capital improvements in the Water utility, amounted to 9 percent in 2017, 7.5 percent in 2018, and 7.5 percent in 2019. In fiscal year 2018-19, water consumption is projected to match prior-year experience. Due to the rate increases, projected revenues are anticipated to be nearly $1 million higher than estimated for the current fiscal year. Funding of capital projects/infrastructure within the Water utility will CITY OF BURLINGAME, CA CHANGES TO WATER FUND BALANCE FY17-18 Adjusted Budget FY18-19 Projected Beginning of Year Balance (Budget/Audit)8,581,186$ 8,371,933$ Projected Revenues & Expenses Projected revenues 17,602,500 18,598,000 Projected operating expenses (15,967,115)(16,228,569) Subtotal, Revenues Net of Expenses 1,635,385 2,369,431 Interest Revenues (Expenses)(550,751)(449,151) Transfers - General Fund - Contributions for Debt Service (871,189)(509,242) Other Transfers In (Out) of Water Fund (422,698)(428,580) Projected Water Unrestricted Net Position 8,371,933$ 9,354,391$ FY 2018-19 Budget May 9, 2018 28 increase $250,000 (to $3 million). As with other operating funds, the cost of debt service will decrease, as the fund’s contribution toward payments on the City’s pension obligation bonds is reduced. Projected revenues for the Sewer Fund are projected to increase less than 3 percent in fiscal year 2018-19, as no rate increases were indicated for the fund as part of the 2016-17 rate study. Funding of capital projects/infrastructure within the Sewer utility will increase $500,000 (to $5.2 million). As with the Water Fund, the cost of debt service will decrease $362,000 from current year levels. 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. As discussed in the Mid-year Report, 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 (HUTA) by also providing funds from new taxes through a new Road Maintenance and Rehabilitation Account (RMRA. Fiscal year 2017-18 provided only 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 $453 million including CITY OF BURLINGAME, CA CHANGES TO SEWER FUND BALANCE FY17-18 Adjusted Budget FY18-19 Projected Beginning of Year Balance (Budget/Audit)8,693,215$ 10,554,164$ Projected Revenues & Expenses Projected revenues 16,028,000 16,505,000 Projected operating expenses (12,473,618)(12,629,081) Subtotal, Revenues Net of Expenses 3,554,382 3,875,919 Interest Revenues (Expenses)(607,574)(498,645) Transfers - General Fund - Contributions for Debt Service (871,189)(509,242) Other Transfers In (Out) of Sewer Fund (214,670)(212,037) Projected Sewer Unrestricted Net Position 10,554,164$ 13,210,159$ FY 2018-19 Budget May 9, 2018 29 loan repayments. In fiscal year 2018-19 this figure goes up to $1.2 billion. For Burlingame, total HUTA revenues will climb from an estimated $835,000 in the current fiscal year to nearly $1.2 million in the new fiscal year. Although an initiative to repeal the new taxes will likely be included on the November 2018 ballot, use of these funds is slated for specific street paving and reconstruction projects in the 5-year Capital Improvement Project Plan. Internal Service Funds Internal service funds (ISFs) are used to account for internal costs that are borne by all departments/programs of the City. Allocation of these centrally-incurred cost is performed based on estimated usage or other metrics. Although the proposed budgets for all of the City’s ISFs are increased over the current year spending levels, the impact is spread city-wide and impacts each department and program differently. For example, even though funding for the General Liability ISF (through internal charges to departments) has not increased, the allocations to some departments are diminished, while others bear a higher percentage of the charges based on past frequency and severity of General Liability claims. The highest budgetary increase is proposed in the Fleet and Equipment ISF. The Capital Outlay budget for the division includes replacement of seven vehicles: five Police vehicles with required equipment and accessories, one truck for Parking Enforcement, and one van for Facilities Management. It also includes replacement of one Sewer Cleaning Truck and two Street Sweepers. These costs will obviously increase the allocation of this ISF to the Police Department, as newer vehicles result in higher depreciation costs. Beyond regular increases in personnel costs, the proposed budget for the Facilities Services ISF includes an increase in the estimated cost for the new janitorial contract. In the long run, aging facilities will continue to require higher repair and maintenance costs. CITY OF BURLINGAME, CA INTERNAL SERVICE FUNDS FY16-17 Actuals FY17-18 Adjusted Budget FY18-19 Proposed $ Change from Prior Year % Change from Prior Year Admin & Info Technology ISF $1,081,618 $1,253,911 $1,334,387 $80,476 6.4% Facilities Services ISF 1,402,531 1,563,871 1,716,612 152,741 9.8% Fleet & Equipment ISF 1,178,029 1,706,502 1,879,332 172,830 10.1% OPEB Retiree Medical ISF 4,425,862 4,838,078 5,093,603 255,525 5.3% General Liability ISF 1,045,148 1,510,000 1,510,000 0 0.0% Worker's Comp ISF 513,266 758,000 823,612 65,612 8.7% Total $9,646,454 $11,630,362 $12,357,546 $727,184 6.3% FY 2018-19 Budget May 9, 2018 30 General Fund Five-Year Financial Forecast The five-year forecast was last updated with the fiscal year 2017-18 mid-year report in March. General Fund revenues reflected in total in the initial fiscal year 2018-19 budget are approximately 3.85 percent ($2.8 million) more than in the five-year forecast, due largely to the inclusion of $1.75 million in new Measure I revenues, and an additional $900,000 in property tax revenues, in anticipation of continued ERAF refunds of amounts similar to those received in prior years. General Fund expenditures are approximately 2.5 percent ($1.7 million) more than projected for FY 2018-19 in the forecast due to the inclusion of Measure I expenditures and transfers for debt service. Where the five-year forecast anticipated a $3.4 million surplus for fiscal year 2018-19 (before funding the City’s § 115 Trust for pension obligations), this initial budget shows a $4.5 million surplus prior to such funding. For all intents and purposes, the assumptions of the five-year forecast remain in place, except for the full inclusion of ERAF rebates in property tax revenue projections. 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 2018-19 fiscal year calls for projected revenues of $74.9 million, with expenditures and net transfers out of $70.4 million. Much of the remaining $4.5 million operating surplus will be used to further fund the City’s § 115 Trust Fund for pension obligations ($2.8 million from the General Fund) and bolster (by nearly $1.1 million) the Economic Stability Reserve, as prescribed in the City’s General Fund Reserve Policy. Obviously, this seemingly balanced preliminary budget cannot fully address all of 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 $2 million transfer out of the General Fund to the Capital Projects Fund in order to increase the Capital Investment Reserve to help curtail the creation of additional capital needs. The General Fund balance is estimated to be $36.8 million at the end of fiscal year 2018-19. 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 2018-19 Budget document. 1 STAFF REPORT AGENDA NO: MEETING DATE: May 9, 2019 To: Honorable Mayor and City Council Date: May 9, 2018 From: Syed Murtuza, Director of Public Works – (650) 558-7230 Subject: City Council Review of Draft FY 2018-19 Capital Improvement Program RECOMMENDATION Staff recommends that the City Council review the proposed draft FY 2018-19 Capital Improvement Program (CIP) and provide feedback. BACKGROUND On March 14, 2018, 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 infrastructure priorities for General Fund projects and Gas Tax and Measure A, I, and M funded projects. DISCUSSION This is a follow-up review of the overall draft FY 2018-19 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 $21,900,000 in the CIP program for FY 2018-19 appropriations as follows: CIP Program Categories Estimated Cost General Fund projects $7,540,000 Street Resurfacing Program (Gas Tax, Measures A, I and M) $2,140,000 Water System Enterprise Fund projects $3,000,000 Sewer System Enterprise Fund projects $5,200,000 Storm Drain System projects $4,020,000 Total: $21,900,000 City Council Review of Draft FY 2018-19 Capital Improvement Program May 9, 2018 2 A summary of all the projects is provided below. FY 2018-19 GENERAL FUND PROJECTS Staff has identified a total of $7,540,000 of projects under the General Fund CIP as follows: PARKS AND RECREATION UPGRADES ($3,105,000) Project Description FY2018-19 Recommendations (in thousands) Community Center Project Victoria Playground 600 Pool Deck Replacement and Resurfacing 600 Skyline Park Improvements 400 Pathway & Landscape Improvements 150 Bay Trail Fitness Equipment 200 Burlingame School District Synthetic Turf Replacement Fund 200 Murray Field Synthetic Turf Replacement Fund 150 Parks Safety & Maintenance Improvements 110 Playground Replacement Fund 100 City Parks Fencing 100 Murray Playground Removal and Installation of Grass 100 Double Batting Cage at Bayside Park 100 Parks, Picnic Tables, Benches & Fountains 70 Playground Resilient Resurfacing/Treatment 70 Central Irrigation Controller 50 Washington Park Parking Lot Resurfacing 50 Mills Canyon Hazard Mitigation Project 50 Annual Tree Replacement 5 Total: 3,105 The above list primarily consists of infrastructure maintenance projects based on the needs assessment and replacement schedule as identified in the department’s work program. The list includes $200,000 funding for future replacement of synthetic turf at Burlingame School District facilities (BSD). Staff will be programming $200,000 annually for the full replacement of the synthetic turf at BSD facilities over the next 10-year period. Funding for the Community Center Project is not identified in the above list because the final project scope and financing details are still being developed. Once the project scope and details are finalized, and Council’s approval is obtained, the project will be included in the CIP Program. Additionally, staff has included $400,000 in the CIP for Skyline Park Improvements based on Council direction at the April 16th City Council meeting. City Council Review of Draft FY 2018-19 Capital Improvement Program May 9, 2018 3 PUBLIC BUILDING FACILITIES ($2,125,000) The City owns and maintains 20 public building 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 $2,125,000 for the following public/community facilities upgrade projects: Project Description FY2018-19 Recommendations (in thousands) Police Station Underground Fuel Storage Tanks Upgrade 400 Fire Station 35 Communication Tower Relocation 300 Paving of City Facilities Parking Lots (PW Corp Yard & PD) 250 Facilities CIP Program Management 200 City Hall Carpet Replacement Project 200 City Hall – CDD Renovation 100 Facilities ADA Improvements Program 100 Library HVAC & Energy Management System (EMS) upgrade 100 Facilities Energy Upgrades Program 100 City Hall- Acoustic Improvements (sound masking) Project 75 Village Park Deck Improvements 75 Parks Corporation Yard bathrooms & locker rooms gender separation/remodel project 75 FS #35 Traffic Signal Upgrades 50 PW Corporation Yard EMS Upgrade Program 50 Minor Building Facilities 50 Total: 2,125 The above project list primarily consists of building maintenance projects and upgrades for various City building facilities based on a needs assessment and replacement schedule. Of note, next year’s CIP program includes $400,000 to upgrade the fuel storage tank at the Police Station, which has been subject to regulatory non-compliance conditions, and is a high-priority project. The Council had previously provided funding for engineering design and project development. Additionally, the CIP program includes funding for Americans with Disability Act (ADA) improvements in several buildings as part of the City’s proactive effort to comply with ADA regulations. BICYCLE, PEDESTRIAN, AND TRAFFIC SAFETY PROJECTS ($1,425,000) Staff is proposing a total of $1,425,000 for bicycle, pedestrian, and traffic safety improvements projects as follows: City Council Review of Draft FY 2018-19 Capital Improvement Program May 9, 2018 4 Project Description FY2018-19 Recommendations (in thousands) Sidewalk & ADA Improvements (General Fund $200k & Measure I -$300k) 500 Bicycle and Pedestrian Master Plan Update 250 Lyon Hoag Neighborhood Traffic Calming Study 200 Old Bayshore Highway Streetscape Project Study 200 Bay Trails Gap Improvements Design Development (Airport Blvd & Broadway) 200 Traffic and Transportation Studies (annual) 75 Total: 1,425 The CIP program includes $200,000 in new General Fund and $300,000 from Measure I, for a total of $500,000 in new funding for the next fiscal year for sidewalk and associated ADA improvements. Furthermore, staff will be utilizing $1,000,000 in existing project fund balance to implement the sidewalk repairs and ADA improvements in the next fiscal year. Additionally, next year’s work program includes such major projects as the development and updating of the Bicycle and Pedestrian Master Plan, Lyon Hoag Neighborhood Traffic Calming Studies, an Old Bayshore Highway Streetscape Improvements Feasibility Study, and development of Bay Trail Gap Improvements Plan. UPDATED FINANCIAL SOFTWARE SYSTEM ($500,000) The Finance Department’s existing financial system is outdated and needs to be upgraded to bring it to current standards. The City Council had previously provided funding to develop the project scope and develop the project specifications. Based on that effort, staff believes deployment of a new system would range from $400,000 to $900,000. Currently there is $100,000 available in the project fund balance, and based on the cost reasonableness analysis, staff is requesting $500,000 in the next fiscal year’s budget to implement the project. ENVIRONMENTAL/GREEN INFRASTRUCTURE IMPROVEMENTS ($200,000) Staff is proposing to study the feasibility of implementing green infrastructure improvements on Chapin Avenue between El Camino Real and Primrose Road. Chapin Avenue is a two-lane roadway with wide traffic lanes and angled parking in both directions. Staff believes the wider roadway provides an opportunity to install green infrastructure for the treatment of storm runoff, as well as pedestrian/bicycle and streetscape improvements. Additionally, the project would promote carbon sequestration, improve water quality, and enhance pedestrian safety and traffic calming. The funding request is to study the project feasibility, develop engineering plans, and determine cost estimates. The project scope also includes public outreach efforts to obtain input from the community. Upon completion of this phase of this work, staff will return to the City Council with next steps regarding implementation. City Council Review of Draft FY 2018-19 Capital Improvement Program May 9, 2018 5 POLICE DEPARTMENT CAPITAL NEEDS ($185,000) Project Description FY2018-19 Recommendations (in thousands) Study to remodel jail for officer sleeping quarters & lactation station 75 Records Division furnishings & workstations remodeling 60 Voice Recorder System 50 Total: 185 FY 2018-19 STREET RESURFACING PROGRAM (GAS TAX, MEASURES A, I AND M) Based on condition assessment of 84 miles of existing street infrastructure, and the recommendations from the Street Pavement Maintenance Software Program, staff is proposing a total of $2.14M of CIP funding from a combination of Gas Tax, Measure A, Measure I, Measure M, and SB 1 funds for next year’s street repairs and resurfacing program as follows: • Albemarle Way – Davis Drive to Ray Drive • Alvarado Avenue – Hillside Drive to Hillside Circle • Benito Avenue – Easton Drive to Hillside Drive • Castillo Avenue – Easton Drive to Hillside Drive • Channing Road – Burlingame Avenue to Peninsula Avenue • Clarendon Road – Burlingame Avenue to Peninsula Avenue • Columbus Avenue – Easton Drive to Hillside Drive • Corbitt Drive – Rollins Road to Winchester Avenue • Davis Drive – Valdivia Way to Quesada Way • DeSoto Avenue – Easton Drive to Hillside Drive • Hillside Circle – Alvarado Avenue to Alvarado Avenue • Maple Avenue – Morrell Avenue to Park Road • Montero Avenue – Easton Drive to Hillside Drive • Murchison Drive – Sequoia Avenue to El Camino Real • Park Road – Winchester Drive to Carolan Avenue • Sequoia Avenue – Trousdale Drive to Murchison Drive • Winchester Place – Rollins Road to Cul-de-sac The above list of streets is tentative and subject to change depending on the availability of funds and construction costs. Of the total $2.14M of proposed for next year, $275,000 is from Measure I, and the rest is from a combination of Gas Tax, Measure A, Measure M, and SB 1 funds. In addition, an estimated $200,000 will be contributed by the City of Millbrae for their portion of street resurfacing of Sequoia Avenue and Murchison Drive. City Council Review of Draft FY 2018-19 Capital Improvement Program May 9, 2018 6 FY 2018-19 WATER ENTERPRISE FUND PROJECTS The City owns and maintains over 100 miles of the drinking water distribution system, with five storage reservoirs and six 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 $3,000,000 of improvements to the City’s drinking water system as follows: Project Description FY2018-19 Recommendations (in thousands) Burlingame Ave East of California Utility Improvements – S. Rollins Phase 3 1,450 Burlingame Shoreland Subdivision Water Main Project – S. Rollins Phase 2 825 Glenwood & Burlingame Height Subdivision – S. ECR Water Main Phase 2 300 Water System Valve Replacements 200 Water Meter Replacements 100 Skyview Retaining Wall Repair 75 Regional Water Supply Studies/Modeling 50 Total: $3,000 The above list of projects primarily consists of replacing aging water pipelines, water meters, valves, and other necessary infrastructure. The projects are identified in the above list are the next high priority improvements identified in the Water System CIP. FY 2018-19 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 (WWTP). 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 $5,200,000 in improvements to the City’s sanitary sewer system as follows: Project Description FY2018-19 Recommendations (in thousands) Easton Addition & Neighborhood Sewer Rehabilitation Phases 4 & 5 2,500 Burlingame Ave East of California Utility Improvements - S. Rollins Ph. 3 1,500 WWTP Upgrades 610 Relocation of Sewer Main in Summerhill Easement 330 Mills Canyon Sewer Access Road Repair 210 Misc. Sewer Root Foaming and Sewer Repair 50 Total: $5,200 City Council Review of Draft FY 2018-19 Capital Improvement Program May 9, 2018 7 The above list of projects primarily consists of replacing aging sanitary sewer mains and waste water treatment plant infrastructure improvements. The next year’s program includes repairing a sewer maintenance access road in the Mills Canyon area, which has been damaged due to rains and due to subsurface erosion. Additionally, the program includes relocation of an existing sewer main from the rear of residential properties fronting Toyon Drive to the new easement within the Summer Hill Project. FY 2018-19 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 high priority 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 to date. The completed projects include the identified 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, Vancouver Bridge repair, Summit Drive Culvert, Lorton Storm Drain cleaning and miscellaneous neighborhood projects to address localized flooding problems at 142 locations citywide under the Neighborhood Storm Drain Improvements Program. For FY 2018-19, staff is recommending $4,020,000 for Storm Drainage Projects as follows: The above list of projects by and large consists of addressing localized flooding, repairs to storm drain infrastructure, and constructing storm water treatment facilities. FISCAL IMPACT The estimated total funding identified to undertake the projects presented in the staff report is approximately $22,100,000 in FY 2018-19. The funding sources include General Fund, Gas Tax, Measures A, I, & M, Water Enterprise Fund, Sewer Enterprise Fund, Storm Drain Fee and City of Millbrae’s contribution of $200,000 as outlined in the staff report. Exhibits: Project Description FY2018-19 Recommendations (in thousands) Neighborhood Storm Drain Project #11 1,200 Culvert Crossing Repairs 1,000 California Drive Roundabout Storm Facilities 520 El Portal Creek, Trousdale Channel, Gilbreth Creek Improvements 500 Pump Station Improvements - 1740 Rollins PS & Cowan PS 500 Neighborhood Storm Drain Project #10 250 Program Management 2018-19 50 Total: $4,020 City Council Review of Draft FY 2018-19 Capital Improvement Program May 9, 2018 8 • PowerPoint Presentation • March 14, 2018 Staff Report Draft FY2018-19 Capital Improvement Program City Council Budget Study Session May 9, 2018 Overview of FY 2018-19 CIP General Fund Projects Street Resurfacing Program (Gas Tax, Measures A, I and M) Water System Projects Sewer System Projects Storm Drainage Projects Council Feedback and Direction Proposed FY 2018-19 General Fund CIP Department FY2018-19 Recommendations (in thousands) Parks & Recreation $3,105 Building Facilities $2,125 Bicycle, Pedestrian & Traffic Safety *$1,425 Finance $500 Environmental / Green Infrastructure $200 Police $185 Total Improvements:$7,540 * Includes $300K from Measure I Parks & Recreation Projects Project Description FY 2018-19 Recommendations (in thousands) Community Center Project Victoria Playground 600 Pool Deck Replacement and Resurfacing 600 Skyline Park Improvements 400 Pathway & Landscape Improvements 150 Bay Trail Fitness Equipment 200 Burlingame School District Synthetic Turf Replacement Fund 200 Murray Field Synthetic Turf Replacement Fund 150 Parks Safety & Maintenance Improvements 110 Playground Replacement Fund 100 City Parks Fencing 100 Murray Playground Removal and Installation of Grass 100 Double Batting Cage at Bayside Park 100 Parks, Picnic Tables, Benches & Fountains 70 Playground Resilient Resurfacing/Treatment 70 Central Irrigation Controller 50 Washington Park Parking Lot Resurfacing 50 Mills Canyon Hazard Mitigation Project 50 Annual Tree Replacement 5 Total:3,105 Public Building Facilities Projects Project Description FY 2018-19 Recommendations (in thousands) Police Station Underground Fuel Storage Tanks Upgrade 400 Fire Station 35 Communication Tower Relocation 300 Paving of City Facilities Parking Lots (PW Corp Yard & PD)250 Facilities CIP Program Management 200 City Hall Carpet Replacement Project 200 City Hall –CDD Renovation 100 Facilities ADA Improvements Program 100 Library HVAC & Energy Management System (EMS) upgrade 100 Facilities Energy Upgrades Program 100 City Hall-Acoustic Improvements (sound masking) Project 75 Village Park Deck Improvements 75 Parks Corporation Yard bathrooms & locker rooms gender separation/remodel project 75 FS #35 Traffic Signal Upgrades 50 PW Corporation Yard EMS Upgrade Program 50 Minor Building Facilities 50 Total:2,125 Bicycle, Pedestrian & Traffic Safety Projects Project Description FY 2018-19 Recommendations (in thousands) Sidewalk & ADA Improvements (General Fund $200k & Measure I -$300k)500 Bicycle and Pedestrian Master Plan Update 250 Lyon Hoag Neighborhood Traffic Calming Study 200 Old Bayshore Highway Streetscape Project Study 200 Bay Trails Gap Improvements Design Development (Airport Blvd & Broadway)200 Traffic and Transportation Studies (annual)75 Total:1,425 Finance, Police and Environmental Infrastructure Projects Department Project Description FY 2018-19 Recommendations (in thousands) Finance Finance Software 500 Environmental – Green Infrastructure Chapin Avenue Streetscape and Storm Water Treatment Improvements 200 Police Study to remodel jail for officer sleeping quarters & lactation station 75 Police Records Division furnishings & workstations remodeling 60 Police Voice Recorder System 50 Total Improvements:885 Street Resurfacing Program Funding Source Amount (in thousands) Measure A $800 SB 1 $535 Gas Tax $400 Measure I $275 Measure M $130 Total Recommended:$2,140 * Resurfacing Projects for FY2018-19: Albemarle Way –Davis Dr. to Ray Dr. Alvarado Ave. –Hillside Dr. to Hillside Cr. Benito Ave. –Easton Dr. to Hillside Dr. Castillo Way –Easton Dr. to Hillside Dr. Channing Rd. –Burlingame Ave. to Peninsula Ave. Clarendon Rd. –Burlingame Ave. to Peninsula Ave. Columbus Ave. –Easton Dr. to Hillside Dr. Corbitt Dr. –Rollins Rd. to Winchester Dr. Davis Dr. –Valdivia Way to Quesada Way DeSoto Ave. –Easton Dr. to Hillside Dr. Hillside Cir. –Alvarado Ave. to Alvarado Ave. Maple Ave. –Morrell Ave. to Park Rd. Montero Ave. –Easton Dr. to Hillside Dr. Murchison Dr. –Sequoia Ave. to El Camino Real Park Rd. –Winchester Dr. to Carolan Ave. Sequoia Ave. –Trousdale Dr. to Murchison Dr. Winchester Pl. –Rollins Rd. to end * Additional $200k will be provided by the City of Millbrae for their share of the resurfacing of Murchison Drive and Sequoia Avenue. Location Map of FY 2018-19 Street Resurfacing Program Water System CIP Water System CIP Studies were performed to assess the condition of the City’s 105-mile water system CIP master plan prioritized over $120M of improvements Council approved rate increases to fund accelerated projectsthrough issuances of bonds $42M of work is completed o Replaced 13.9 miles of old deteriorated transmission and distribution pipeline o 1,345 water services installed o 1300 linear feet of fire services rehabilitated o Updated Unidirectional Flushing Program $86M backlog of work still remains Water System Projects Completed in FY 2017-18 South Rollins Road Water Rehabilitation •$2M •95 new water services •4,425 feet of new water main •Replaced old cast iron mains with PVC mains and increased pipe size to improve fire flows Unidirectional Flushing •$50K •Reduces staff time to complete flushing •Reduces volume of water to complete flushing •Improves water quality Proposed FY 2018-19 Water System CIP Projects Estimated Costs (in thousands) Burlingame Ave East of California Utility Improvements –S. Rollins Phase 3 1,450 Burlingame Shoreland Subdivision Water Main Project –S. Rollins Phase 2 825 Glenwood & Burlingame Height Subdivision –S. ECR Water Main Phase 2 300 Water System Valve Replacements 200 Water Meter Replacements 100 Skyview Retaining Wall Repair 75 Regional Water Supply Studies/Modeling 50 Total Recommended:$3,000 Proposed FY 2018-19 Water System CIP Map Burlingame Ave. East of Calif. Utility Improvements –S. Rollins Phase 3 Burlingame Shoreland Subdivision Water Main Project –S. Rollins Phase 2 Glenwood & Burlingame Height Subdivision - S. ECR Water Main Phase 2 Sanitary Sewer System CIP Sanitary Sewer CIP Studies were performed to assess the condition of the City’s 100-mile sanitary sewer system CIP Master Plan prioritized over $160M of upgrades Council approved past rate increases to fund accelerated projects through issuances of bonds $74M of work completed o 37 miles of pipeline replaced o 2,650 private laterals replaced with cleanouts o Upgrades were done at the Waste Water Treatment Plant to meet state requirements $85M backlog of work still remains Sewer CIP Completed/In Progress Projects in FY 2017-18 Easton Addition & Neighborhood Sewer Rehabilitation Project Phase 2 •$2M •Rehabilitated approx. 2,700 of 8-10” sanitary sewer with PVC or HDPE pipes utilizing trenchless methods Easton Addition & Neighborhood Sewer Rehabilitation Project Phase 3 •$2M •Rehabilitated approx. 3,000 linear feet of 8” sanitary sewer with PVC or HDPE pipes utilizing trenchless methods South Rollins Road Sewer Rehabilitation •$500k •Replaced 1,000’ of existing 8” VCP sewer main with a 8-10” PVC sewer main Proposed FY 2018-19 Sanitary Sewer System CIP Projects Estimated Costs (in thousands) Easton Addition & Neighborhood Sewer Rehabilitation Phases 4 & 5 2,500 Burlingame Ave East of California Utility Improvements –S. Rollins Phase 3 1,500 WWTP Upgrades 610 Relocating Sewer Main through Summerhill Easement 330 Mills Canyon Sewer Access Road Repair 210 Misc. Sewer Root Foaming and Sewer Repair 50 Total Recommended:$5,200 Proposed FY 2018-19 Sanitary Sewer System CIP Map Summerhill Easement Main East Burlingame Ave. Utility Improvement Easton Addition & Neighborhood Sewer Rehab Ph. 4 & 5 Mills Canyon WWTP Storm Drainage System CIP Storm Drainage System CIP City has 50 miles of storm drains, drainage channels, and four major pump stations. Conditions assessment of the 100-year old storm drainage system identified $39M of key capital improvements to protect public health and safety. In 2009, property owners approved a ballot measure to upgrade the aging and deteriorated storm drainage system, to provide 30 year design storm capacity and address localized drainage problems citywide. $24M of projects completed since the passage of the measure as promised to property owners and the community. $28M backlog of work still remains (includes inflation) Storm Drainage Projects Completed in FY 2017-18 Vancouver Ave. Bridge Repair •$150K •Repair to street bridge structural supports that eroded •Replace failed concrete lining of storm channel •Backfill street that failed due to erosion Summit Drive Culvert Repair •$180K •Replacement of a collapsed 42” corrugated metal pipe under street bridge •Installation of new storm inlet and abandonment of existing that ran through private property Lorton Ave. Storm Drain Cleaning •$500K •Approx. 1,030’ of storm drain cleaned from 54” reinforced concrete pipe •220CY of debris removed from pipe •Reduces risk of flooding along Burlingame Avenue Neighborhood Storm Drain Project No.9 •$1M •Approx. 100’ of storm drain mains by open trench construction •Approx. 380’ of cured in place pipe •22 new/replacement storm drain inlets •Various concrete work on driveway/sidewalks Proposed FY 2018-19 Storm Drainage CIP Projects Estimated Costs (in thousands) Neighborhood Storm Drain Project No.11 1,200 Culvert Crossing Repairs (citywide)1,000 California Drive Roundabout Project Storm Facilities 520 El Portal Creek, Trousdale Channel, Gilbreth Creek Improvements 500 Pump Station Improvements -1740 Rollins PS & Cowan PS 500 Neighborhood Storm Drain Project No.10 250 Program Management for FY 2018-19 50 Total Recommended:$4,020 Proposed FY 2018-19 Storm Drainage CIP Map Neighborhood Storm Drain No.10 Culvert Crossing Repairs Flap Gates Project Cowan Pump Station Rollins Pump Station El Portal Creek, Trousdale Channel Creek Improvements Neighborhood Storm Drain #10 Summary of FY 2018-19 CIP Program CIP Program Categories Measure I Revenue (in thousands) FY 2018-19 Recommendation (in thousands) FY 2018-19 Total (in thousands) General Fund 300 7,240 7,540 Street Resurfacing Program 275 1,865 2,140 Sewer System Enterprise 5,200 5,200 Storm Drain System 4,020 4,020 Water System Enterprise 3,000 3,000 Total Recommended $575 $21,325 $21,900 1 STAFF REPORT AGENDA NO: MEETING DATE: March 14, 2018 To: Honorable Mayor and City Council Date: March 14, 2018 From: Syed Murtuza, Director of Public Works – (650) 558-7230 Subject: Review of Draft FY 2018-19 General Fund, Gas Tax, Measure A, Measure I, Measure M and Senate Bill (SB 1) Funded Capital Improvement Program (CIP) RECOMMENDATION Staff recommends that the City Council review the proposed draft FY 2018-19 General Fund, Gas Tax, Measure A, Measure I, Measure M, and SB 1 funded 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 I, Measure M, and SB 1 funded projects. Staff will be presenting the CIP Program for the Storm Drainage System, Drinking Water System, and Sanitary Sewer System and Waste Water Treatment Plant at a future meeting as part of the overall budget presentation. DISCUSSION GENERAL FUND CIP In developing the FY 2018-19 CIP, staff conducted a needs assessment of various infrastructure owned by the City, and identified $6.84M in General Fund projects; $1.865M in Gas Tax, SB 1 and Measure M funded projects; and $575,000 in Measure I projects, for a total of $9.280M for the next year’s CIP. The proposed FY 2018-19 projects are basic and essential infrastructure needs to continue providing high quality public services to the community. Below is a summary table of each of the CIP Program areas with project descriptions and costs. Staff will be providing the City Council with a detailed presentation of these projects at the March 14th Mid-Year Budget Study Session. FY2018-19 General Fund, Gas Tax, Measure A, Measure I and Measure M funded CIP March 14, 2018 2 PARKS AND RECREATION IMPROVEMENTS ($2,705,000) The above list primarily consists of infrastructure maintenance projects based on the needs assessment and replacement schedule as identified in the department’s work program. In addition, the list includes $200,000 funding for future replacement of synthetic turf at Burlingame School District facilities (BSD). Staff will be programming $200,000 annually for the full replacement of the synthetic turf at BSD facilities over the next 10-year period. Funding for the Community Center Project is not identified in the above list because the final project scope and financing details are still being developed. Once the project scope and details are finalized, and Council’s approval is obtained, the project will be included in the CIP Program. FY2018-19 General Fund, Gas Tax, Measure A, Measure I and Measure M funded CIP March 14, 2018 3 BUILDING FACILITIES IMPROVEMENTS ($2,125,000) The above project list primarily consists of building maintenance projects and upgrades for various City building facilities based on needs assessment and replacement schedule. Of note, next year’s CIP program includes an additional $400,000 to upgrade the fuel storage tank at the Police Station, which has been subject to regulatory non-compliance conditions, and is a high-priority project. The Council had previously provided funding for engineering design and project development. Additionally, the CIP program includes funding for Americans with Disability Act (ADA) improvements in several buildings as part of the City’s proactive effort to comply with ADA regulations. BICYCLE, PEDESTRIANS AND TRAFFIC SAFETY IMPROVEMENTS ($1,425,000) FY2018-19 General Fund, Gas Tax, Measure A, Measure I and Measure M funded CIP March 14, 2018 4 The CIP program includes $200,000 in new General Fund and $300,000 from Measure I, for a total of $500,000 in new funding for the next fiscal year for sidewalk and associated ADA improvements. Furthermore, staff will be utilizing $1,000,000 in existing project fund balance to implement the sidewalk repairs and ADA improvements in the next fiscal year. Additionally, next year’s work program includes such major projects as the development and updating of the Bicycle and Pedestrian Master Plan, Lyon Hoag Neighborhood Traffic Calming Studies, an Old Bayshore Highway Streetscape Improvements Feasibility Study, and development of Bay Trail Gap Improvements Plan. NEW FINANCE DEPARTMENT SOFTWARE SYSTEM ($500,000) The Finance Department’s existing financial system is outdated and needs to be upgraded to bring it to current standards. The City Council had previously provided funding to develop the project scope and develop the project specifications. Based on that effort, staff believes deployment of a new system would range from $400,000 to $900,000. Currently there is $100,000 available in the project fund balance, and based on the cost reasonableness analysis, staff is requesting $500,000 in the next fiscal year’s budget to implement the project. ENVIRONMENTAL/GREEN INFRASTRUCTURE IMPROVEMENTS ($200,000) Staff is proposing to study the feasibility of implementing green infrastructure improvements on Chapin Avenue between El Camino Real and Primrose Road. Chapin Avenue is a two-lane roadway with wide traffic lanes and angled parking in both directions. Staff believes the wider roadway provides an opportunity to install green infrastructure for the treatment of storm runoff, as well as pedestrian/bicycle and streetscape improvements. Additionally, the project would promote carbon sequestration, improve water quality, and enhance pedestrian safety and traffic calming. FY2018-19 General Fund, Gas Tax, Measure A, Measure I and Measure M funded CIP March 14, 2018 5 The funding request is to study the project feasibility, develop engineering plans, and determine cost estimates. The project scope also includes public outreach efforts to obtain input from the community. Upon completion of this phase of this work, staff will return to the City Council with next steps regarding implementation. POLICE DEPARTMENT CAPITAL NEEDS ($185,000) GAS TAX, SB 1, MEASURE A, MEASURE I AND MEASURE M FUNDED PROJECTS Based on condition assessment of 84 miles of existing street infrastructure, and the recommendations from the Street Pavement Maintenance Software Program, staff is proposing a total of $2.14M of CIP funding from a combination of Gas Tax, Measure A, Measure I, Measure M, and SB 1 funds for next year’s street repairs and resurfacing program as follows: • Albemarle Way – Davis Drive to Ray Drive • Alvarado Avenue – Hillside Drive to Hillside Circle • Benito Avenue – Easton Drive to Hillside Drive • Castillo Avenue – Easton Drive to Hillside Drive • Channing Road – Burlingame Avenue to Peninsula Avenue • Clarendon Road – Burlingame Avenue to Peninsula Avenue • Columbus Avenue – Easton Drive to Hillside Drive • Corbitt Drive – Rollins Road to Winchester Avenue • Davis Drive – Valdivia Way to Quesada Way • DeSoto Avenue – Easton Drive to Hillside Drive • Hillside Circle – Alvarado Avenue to Alvarado Avenue • Maple Avenue – Morrell Avenue to Park Road • Montero Avenue – Easton Drive to Hillside Drive FY2018-19 General Fund, Gas Tax, Measure A, Measure I and Measure M funded CIP March 14, 2018 6 • Murchison Drive – Sequoia Avenue to El Camino Real • Park Road – Winchester Drive to Carolan Avenue • Sequoia Avenue – Trousdale Drive to Murchison Drive • Winchester Place – Rollins Road to Cul-de-sac The above list of streets is tentative and subject to change depending on the availability of funds and construction costs. Of the total $2.14M of proposed for next year, $275,000 is from Measure I, and the rest is from a combination of Gas Tax, Measure M, and SB 1 funds. FISCAL IMPACT The estimated cost of the proposed CIP program as identified in this staff is $9.28M as follows: • General Fund $6,840,000 • Gas Tax, Measure A, Measure M and SB 1 $1,865,000 • Measure I ($300k for sidewalks & $275k for streets) $575,000 Total $9,280,000 Exhibit: • PowerPoint Presentation