Agenda Item Wording:
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Capital Improvement Program - Continue review of select fiscal year 2026/27 and 2027/28 Capital Improvement Program Budgets and future capital projects. Funds to be reviewed are Gas Tax, SB1, Measure R Local & Regional, Transportation Impact Fees, Landscape & Lighting, State Transportation and NE Capital Improvement.
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Prepared by: Nichol Ritchie, Finance Manager Nichol.Ritchie@Visalia.gov, (559) 713-4379; Renee Nagel, Finance and Technology Director Renee.Nagel@Visalia.gov, (559) 713-4375.
Department Recommendation: It is recommended that the City Council receive this third Capital Improvement Program (CIP) presentation and provide directions as appropriate. Council is scheduled to take a motion on the CIP budget with the operating budget in June 2026. No formal action is required or requested at this time.
Summary:
The Capital Improvement Program (CIP) represents a comprehensive six-year planning document that outlines the City’s proposed capital investments in infrastructure, facilities, and equipment. The first two fiscal years (FY 2026/27 and FY 2027/28) are proposed for adoption and appropriation, while the subsequent four years are included for long-range planning purposes to provide transparency regarding anticipated infrastructure needs, funding capacity, and future project timing.
Only the first two years of the CIP will be appropriated in the proposed two-year budget and therefore warrant the greatest level of review.
This CIP includes proposed capital projects that address regulatory requirements, street maintenance and rehabilitation, traffic signal improvements, corridor capacity enhancements, and development-related transportation infrastructure. These investments support the continued maintenance and improvement of the City’s transportation network and help accommodate future growth while maintaining safe and efficient travel throughout the community.
Background Discussion:
Capital Review Process:
This item represents Council’s initial opportunity to review a focused portion of the City’s proposed Capital Improvement Plan for Fiscal Years 2026/27 and 2027/28. The CIP is being presented in a series of meetings from February through April 2026 to allow for a more detailed and manageable review of projects by funding category and infrastructure type.
The two fiscal years (2026/27 and 2027/28) are proposed for adoption and appropriation. Four additional years are shown for planning purposes only to assist the City Council in evaluating long-term infrastructure needs, funding sustainability, and the potential impacts of future development and regulatory requirements. Amounts shown in the outer years are not appropriated within the two-year budget and are subject to change based on funding availability, grant awards, development activity, and updated master plans.
Staff have prepared a detailed PowerPoint presentation summarizing the proposed capital projects within the identified funds discussed below. CIP project managers will be available during the presentation to provide technical information, respond to Council questions, and clarify project scope, funding sources, and implementation timelines.
To assist Council in its review, staff recommends the following:
• Staff will present a summary of proposed project appropriations by fund.
• It is recommended that Council review the proposed capital projects included within the identified funds and provide direction to staff by either tentatively concurring with the proposed appropriations or requesting revisions, prioritization adjustments, or additional information on specific projects.
• No formal action is required this evening. At Council’s direction, staff will incorporate any requested changes and return with updated information, if needed, at subsequent CIP review meetings.
• Upon completion of the review process, a finalized Capital Improvement Plan document will be prepared and included with the City’s Operating Budget for formal adoption in June 2026.
The Capital Improvement Plan includes capital projects and equipment purchases of $10,000 or more. Capital projects are budgeted separately from the operating budget using separate capital funds. This separation provides greater transparency into long-term infrastructure investments and ensures that one-time capital costs do not distort ongoing operating expenditure or service-level analysis.
Funds For Review
The eight funds to be reviewed today include one impact fee and several special revenue funds.
• Impact Fee funds hold revenue from fees imposed upon new development to pay for infrastructure improvements necessary to accommodate growth. These funds may only be used for the purchase or construction of new or expanded infrastructure related to the growth from development.
• Special Revenue Funds collect money that must be used for a specific purpose and provide accountability and transparency to taxpayers and rate payers requiring funding to be spent for an intended purpose.
Transportation Funding included in this report represents the primary revenue sources available to the city for the construction, improvement, and maintenance of public roadways and related transportation infrastructure. Funding sources include Gas Tax, SB1 Road Maintenance and Rehabilitation funds, Measure R Local and Regional funds, Transportation Impact Fees, State Transportation funds, Landscape and Lighting District funds, and Northeast Capital Improvement funds.
These revenues are primarily used to support the ongoing maintenance and rehabilitation of Visalia’s street network, traffic signal systems, and transportation infrastructure, as well as to construct new roadway improvements needed to accommodate future growth and development within the city.
The only transportation capital funding excluded from this item is street maintenance funded by Measure N, which is subject to additional budget requirements. Measure N proposed budget items is being presented to Council tonight in a separate agenda item.
The Public Opinion Annual Survey has shown consistently over the years that maintenance of City roads, traffic signs, and signals is a high priority for the citizens of Visalia. The Pavement Management System (PMS) is used to prioritize and schedule the maintenance of Visalia's streets. New construction of City infrastructure, including roads, is driven by development, and the funds to be discussed tonight include projects which have been based upon projections of growth and development in the City of Visalia. Construction of new, and improvement of existing street infrastructure, supports and encourages new development.
The Funds to be discussed in today's meeting are listed in Table 1: Capital Budget Funds for Review March 16, 2026. The table shows the funds and the total recommended capital appropriation for each budget year.
Table 1: Capital Budget Funds for Review - March 16, 2026
Several projects are funded by multiple funds; however, each fund only shows its contribution to the project. Projects that include funding from multiple funds will list each fund’s contribution in the project description. Below is a description of each fund and highlights of proposed projects. A detail project list, by fund, is included in Attachment A.
Gas Tax - Fund 111
This fund receives the local portion of state excise taxes on gasoline and diesel fuel which is distributed to cities under sales and excise taxes-sections 2103-2107.5 on the sale of transportation fuels of the California Streets and Highways Code which are levied by the State. Gas Tax funds may be used for construction, improvements, and maintenance of public streets and roadways.
Gas Tax funding is programmed to preserve and maintain the City’s existing street infrastructure and to support ongoing transportation system reliability throughout the city. Projects funded through Gas Tax revenues typically include pavement rehabilitation, traffic signal improvements, traffic calming measures, and other roadway maintenance activities that extend the useful life of existing infrastructure.
Gas Tax funding also supports the replacement of specialized streets maintenance equipment used by the Streets Division to perform pavement preservation and roadway maintenance activities. Most projects for construction and improvement of city streets are programmed with Measure R, Transportation Impact Fees and other State and Federal grant programs which are typically housed in the State Transportation Fund (281).
S81-Road Maintenance and Rehabilitation Act (RMRA) - Fund 113
This fund, which was established under Section 2032(H)(2) of the Streets and Highway Code with the adoption of SB1, provides funding to address maintenance of local streets and roads. Eligible uses include road maintenance and rehabilitation, safety projects, railroad grade separations, complete street components, and traffic control devices. Projects eligible for SB1 funding are required to be identified in detail and adopted through local government resolutions prior to receiving state funds. SB1 funding has allowed the city to begin addressing deferred maintenance within its transportation infrastructure and supports long-term rehabilitation of priority roadway corridors identified through the City’s Pavement Management System (PMS).
For the FY 2026/27 and FY 2027/28 budget periods, SB1 funding is programmed for several roadway rehabilitation projects throughout the city to increase structural strength and extend the service life of the city streets. In addition to these corridor projects, this fund has three projects proposed in the two-year budget. The two largest projects are listed below:
• Acequia & Center Rehabilitation ($3.7M): This project is to rehabilitate the pavement on Acequia and Center Street from Willis to Santa Fe. This consists of areas of a dig outs, full reconstruction, and a grind and overlay. In addition to these improvements the project will also upgrade existing curb ramps to meet current ADA and PROWAG guidelines. Lastly, the project will incorporate some traffic signal improvements at intersections throughout the corridor.
• Annual Pavement Rehabilitation - SB1 ($3.9M): The SB1 program continues to fund the Annual Pavement Rehabilitation Program, which rehabilitates various streets throughout Visalia based on priority rankings established through the Pavement Management System. Street rehabilitation is done to improve the ride quality, add structural strength, and extend the life expectancy of a street. This project is a longer lasting and important maintenance project for City streets that will be coordinated with the Public Works Department and Engineering through analysis from Pavement Management System.
Measure R Local - Fund 131
This fund receives monies from the local portion of the Measure R one-half cent transportation sales tax approved by voters of Tulare County in November of 2006. Local agencies collectively receive one-third of all Measure R revenues for local transportation projects. These funds may be expended on transportation improvements as determined by each local jurisdiction and with the Measure R Expenditure Plan administered by the Tulare County Transportation Authority.
The Measure R Local fund proposes 18 projects, with 14 requesting appropriations in the 2-year portion of the budget. These projects include roadway widening projects, corridor rehabilitation, traffic signal improvements, and neighborhood connectivity enhancements. These projects support improvements to the City’s transportation network, enhance traffic safety and mobility, and provide infrastructure needed to accommodate future growth.
These projects coordinate with other transportation funding sources to maximize available funding and deliver larger infrastructure improvements throughout Visalia.
The two largest projects are listed below:
• Shirk Street Widening - Walnut to Noble ($2M): This project includes widening of Shirk Street from two lanes to four lanes with a center median, including installation of master storm trunk line, ditch culvert extension, curb and gutter, pavement, bike lanes, street lighting, utility pole relocations, median landscaping improvements. The project is necessary to alleviate traffic congestion, support future development, and improve overall corridor capacity and safety within the City's transportation network. This project is multi-funded for a total of $21 million.
o $4.8M from Measure R Local, includes prior funding of $131K
o $1M from Measure R Trailways
o $5M from Measure R Regional, includes prior funding of $727K
o $2.5M from Storm Sewer Construction, including prior funding of $241K
o $43K from Wastewater Trunkline prior funding
o $4.8M from Transportation Impact Fee, includes prior funding of $1.3M.
• Traffic Signal Modifications - Lovers Lane and Walnut Ave ($1.6M): This project includes traffic signal modifications and associated improvements at Lovers Lane and Walnut Avenue to accommodate future roadway widening and increased traffic demands generated by new developments in the area. Improvements will include installation of additional signal heads, pole modifications, and adjustments to signal timing and configuration. The city is responsible for implementing signal improvements to maintain operational efficiency and safety at the intersection between Lovers Lane and McAuliff St. Multi-funded project total of $3.8m.
o $1.1M from Transportation Impact in prior year funding
o $1.6M from Measure R Local, including $725K prior year funding
o $275K from State Transportation
Measure R Regional - Fund 133
This fund receives monies from the regional portion of the Measure R one-half cent transportation sales tax approved by voters of Tulare County in November of 2006. Regional projects in Tulare County collectively receive one-half of all Measure R revenues. The Tulare County Transportation Authority (TCTA) administers the Measure R Expenditure Plan, which establishes how these funds may be allocated for regional transportation improvements. Measure R Regional funding supports larger transportation infrastructure projects that provide mobility benefits beyond a single jurisdiction. These projects typically focus on improving regional roadway connectivity, increasing traffic capacity, and enhancing safety along major transportation corridors.
Measure R Regional is proposing 2 projects, with 1 requesting appropriations in the 2-year portion of the budget discussed below.
• Shirk/SR 198 Improvements ($5M): This project includes the design and construction of corridor and interchange improvements along Shirk Road in the vicinity of SR-198, including traffic signal installation at Shirk Street and SR-198 ramp intersections and roadway improvements along the east side of Shirk Street from the westbound on/off ramps to Walnut Avenue. Improvements will address capacity constraints, enhance safety, and improve circulation in a high-growth area. Work includes roadway improvements along the east side of Shirk Street from the westbound on/off ramp to Hillsdale. This project is multi-funded for a total of $6.6 million.
o $450K from Measure R Local, including prior year funding of $336K
o $450K from Transportation Impact Fee’s Fund, including prior year funding of $336K
o $5M from Measure R Regional
Transportation Impact Fees (TIF) - Fund 241
This fund is derived from developer fees collected at the time of building permit issuance or, if requested by the developer, at the time of occupancy. These funds may only be used for the construction of new street improvements and expansion of transportation facilities required to support growth as included in the Circulation Element of the City's General Plan.
TIF Program: When the City approves a development project, it commits to providing the necessary community-wide public improvements, including transportation infrastructure, needed to support that development. In establishing development impact fees, staff evaluates the infrastructure needs identified in the General Plan and its Circulation Element to determine the cost of improvements necessary to accommodate future growth. Impact fees serve as the funding source of last resort and are intended to ensure that new development contributes its proportionate share toward the cost of infrastructure improvements required to support growth.
To balance the Transportation Impact Fee Fund for the proposed two-year budget, projects were deferred to the outer years. Staff is currently working with a Consultant on a nexus study to increase the impact fees and will be brought back to in June 2026.
This fund is proposing 20 projects, with 14 requesting appropriations in the 2-year portion of the budget. The two largest projects requested in the two years is listed below:
• Linwood Street Extension - North of Riggin ($3.6M): This project includes the design and construction for the extension of Linwood Street north of Riggin Ave. The roadway will be located within & along the westerly portion of the current Modoc Basin footprint w/a signalized connection at Riggin Ave & extend north across Modoc Ditch. Construction of Linwood St. alignment north of Riggin Ave up to Modoc Ditch to accommodate access to the Tier II Urban Development Boundary north of the Modoc Basin. This project will build the extension of Linwood St with a signalization connection at Riggin Ave & extend north up to Modoc Ditch. This project will coordinate with and follow the Linwood St Embankment Project. Contingent upon development in the North. This project is multi-funded for total of $5.7 million.
o $464K FY 2026/27 from Transportation Impact for (Design), includes prior year funding of $300K
§ $3.2M FY 2027/28 for (Construction)
o $182K FY 2026/27 from Storm Sewer for (Design)
§ $1.2M FY 2027/28 for (Construction)
o $50K FY 2026/27 from Wastewater Trunkline for (Design)
§ $344K FY 2027/28 for (Construction)
• Riggin Widening - Roben & Akers ($2.6M): This project includes curb & gutter, pavement, medians, streetlights, and other infrastructure such as fire hydrants and drainage inlets. Also, includes relocation of SCE facility. Construction of this segment will help to complete the 4-lane arterial from Hwy 63 to Hwy 99 on Riggin Avenue, providing a major East-West corridor along the North side of Visalia. Construction contingent upon federal grant funding from state/federal grant funds which need an additional $3 million. This project is multi-funded for a total $7.6 million.
o $390K from Measure R Regional
o $5.6M from Transportation Impact Fee
o $1.6M from the State Transportation fund
o $4.8M from Transportation Impact Fee, including prior year funding of $1.3M.
Landscape and Lighting - Fund 273
This fund receives property tax assessments on properties located within each Landscape and Lighting (L&L) District and is used for the maintenance and improvement of community landscaping, lighting, and related infrastructure within those districts. Funds may only be used within each individual L&L District for costs identified in the engineer's report prepared at the time the district was established.
The 6-Year Capital Plan includes projects for eligible street maintenance and enhancements for L&L districts with available funding that include landscaping, sidewalk repair, and irrigation controller replacements. The operating portion of this fund which provides for the regular maintenance of the L&L districts will be brought to Council in June along with the operating budget. In 2005, newly formed L&L Districts began to include street maintenance in their engineer’s reports and assessment amounts. Based upon the street maintenance schedule included in the individual L&L’s engineer’s reports, reclamite, crack seal, overlay, and cape seal projects are proposed during the 2-year portion of the CIP budget.
All L&L’s which include street maintenance also include an automatic inflation of the annual assessment amount. The cash balance of each L&L is evaluated annually and automatic increases only take effect if they are found to be necessary. Street maintenance projects for individual L&L’s will be grouped together annually and combined with other like projects for bidding to achieve any available economies of scale.
State Transportation - Fund 281
This fund is derived from one-quarter cent of statewide sales tax collected and returned to each County in accordance with the Local Transportation Development (LTD) Act. These funds are administered locally through the Tulare County Association of Governments (TCAG). The primary use of these funds is to support public transit services. After transit funding requirements are met, remaining revenues and discretionary funds may be used for local street and road purposes, including bicycle and pedestrian facilities improvements.
Transportation-related grants funds awarded to the City of Visalia may also be accounted for within this fund. These monies are restricted and must be used only for eligible transportation projects in accordance with the requirements of their individual funding sources. The State Transportation fund includes four proposed projects in the 6-Year Capital Plan with three projects proposed to receive appropriations in the 2-year budget. These projects support transportation infrastructure improvements throughout the city. Projects included in the two-yar portion of the Capital Improvement Plan represent a combination of transportation system improvements and infrastructure projects supported by State Transportation Funding sources administered through TCAG.
NE Capital Improvement - Fund 291
This fund is derived from fees paid by developers, builders, and subdividers for projects located withing the Northeast Specific Plan area. These funds are used to construct infrastructure improvements necessary to support development within the Northeast area of the City, including transportation improvements, storm drainage facilities, parks, landscaping, and other amenities identified in the Northeast Specific Plan.
Projects included in the Capital Improvement Plan for this fund support infrastructure necessary to accommodate growth and development within the Northeast planning area.
This fund is proposing 2 projects and is in the 2-year portion of the budget. These projects support the continued development of infrastructure and community amenities necessary to accommodate growth within the Northeast Specific Plan area. The largest project requested in this fund is the following:
• Road 148 improvement - Houston to Murray: This project includes the design and construction of approximately 0.61 miles of roadway improvements to establish a north-south arterial corridor. The project includes roadway construction, trail improvements, drainage facilities, and other associated infrastructure necessary to support development in the surrounding area.
Each Funds proposed projects is listed in detail in Attachment A.
Next Capital Funds to be Reviewed
As mentioned earlier, Capital Funds will be presented to Council during the months of February through May. This allows Council to conduct their review of the proposed CIP budget in manageable groupings. Funds listed at prior Council meetings are listed in Table 2: Capital Funds Reviewed. The table shows the date the funds were reviewed by Council.
Table 2: Capital Funds Reviewed
The proposed presentation schedule is listed below in Table 3: Capital Funds to be reviewed by Council in future Council Sessions.
Table 3: Capital Funds Reviewed at Prior Council Session
Fiscal Impact:
The Capital Improvement Plan is presented as a six-year planning document, with FY 2026/27 and FY 2027/28 proposed for adoption and appropriation, and the remaining four years are provided for long-term planning purposes only. The attached financial schedules (Attachment A) provide a comprehensive summary of each fund, including beginning cash balances, projected revenues, operating expenditures, proposed capital expenditures, and estimated ending fund balances over the six-year planning forecast. These projections are based on current revenue trends, adopted fee structures, development activity assumptions, grant funding availability, and known capital project commitments.
Revenue projections used in the CIP are based on current trends in gas tax allocations, Measure R transportation sales tax revenues, development activity projections, adopted fee structures, anticipated grant funding, and other restricted transportation revenue sources. Expenditure projections reflect currently identified capital improvement needs, project cost estimates, and known capital project commitments.
For the two-year proposed budget period, total recommended capital appropriations across the funds under review are as follows:
FY 2026/27: $22.8M
FY 2027/28: $29.2M
These appropriations support a variety of transportation infrastructure improvements, roadway rehabilitation projects, traffic signal improvements, growth-related transportation infrastructure, and related capital investments necessary to maintain and enhance the City’s transportation network.
in addition to the projects proposed for appropriation in the two-year budget period, an additional $134M in CIP projects are identified in the outer planning years to reflect anticipated future infrastructure needs and long-term capital planning; however, these amounts are not appropriated and are subject to change based on funding availability, project prioritization, and Council direction during future budget cycles.
Several of the proposed capital projects are multi-funded and leverage a combination of impact fees and special revenue sources, and grant funding. In such cases each fund included in this report reflects only its proportional share of the total project cost, consistent with the City’s capital budgeting practices and nexus requirements.
Operating and maintenance impacts associated with the proposed capital projects are expected to be minimal in the near term and, where applicable, are incorporated into the respective operating budgets of the departments responsible. Certain infrastructure improvements may result in incremental maintenance obligations; however, these costs will be evaluated and addressed through the City’s annual operating budget process.
While approximately $7.37M in project funding is initially supported by the General Fund in current year for the City Inclusive Park, these costs are anticipated to be fully offset by grant funding and other external revenue sources. As a result, no net long-term General Fund impact is anticipated for the proposed CIP projects included in this review. The identified funding sources consist primarily of restricted transportation revenues, voter-approved sales tax revenues, development-related impact fees, and other dedicated infrastructure funding sources. Overall, the proposed CIP represents a coordinated investment in the City’s transportation infrastructure and supports the continued maintenance rehabilitation, and expansion of the City’s roadway network necessary to accommodate existing transportation needs and anticipate future growth.
No appropriation or budget action will result from this review item. The final CIP will be presented for adoption and appropriation with the City’s Operating Budget in June 2026.
Prior Council Action: None
Other: None
Alternatives: None
Recommended Motion (and Alternative Motions if expected):
recommendation
No motion is requested or required at this time.
Environmental Assessment Status: N/A
CEQA Review: N/A
Deadline for Action: 3/16/2026
Attachments:
Attachment A - Summary of proposed Capital Projects by Fund
Attachment B - Directory of Map Points and Maps
Strategic Goal:
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