Agenda Item Wording:
title
Capital Improvement Program - Review select fiscal year 2026/27 and 2027/28 Capital Improvement Program Budgets and future capital plans.
body
Agenda Date: 02/17/2026
Prepared by: Nichol Ritchie, Finance Manager (559)713-4379, nichol.ritchie@visalia.gov
Finance and Technology Services Director Renee Nagel, (559) 713-4375, renee.nagel@visalia.gov
Department Recommendation: Provide City Council with the first of several presentations of the City’s draft Capital Improvement Program (CIP) budget and provide directions as appropriate. The Council is scheduled to consider adoption of the CIP in June 2026 in conjunction with the operating budget. No formal action is required or requested at this time.
Summary:
The Capital Improvement Program (CIP) presents a six-year plan. The first two fiscal years (FY 2026/27 and FY 2027/28) are proposed for adoption and appropriation. Four additional years are included for planning purposes only to assist the City Council in understanding future project needs and the near-term impacts of policy and funding decisions. Only the first two years will be appropriated in the proposed two-year budget and therefore warrant the greatest level of review.
Background Discussion:
Capital Review Process
This item represents Council’s first opportunity to review a portion of the City’s proposed capital plan. The proposed FY 2026/27 and FY 2027/28 capital improvement plans will be presented for Council review at scheduled meetings during the months of February through April 2026. This allows Council to conduct their review of the proposed CIP budget in manageable groupings.
The Capital Improvement Program (CIP) presents the two fiscal years 2026/27 and 2027/28 for adoption and appropriation. Four additional years are shown for planning purposes only. This allows Council to plan future projects and consider the near-term impacts of those decisions. However, only the first two years are proposed for appropriation and deserve greater scrutiny. Amounts included in the final four years will not be appropriated in the 2-year budget.
Staff has prepared a PowerPoint presentation to summarize proposed capital projects within the funds discussed below. CIP project managers will be available to respond to Council questions on proposed projects. To assist Council in reviewing the proposed projects, staff recommends the following:
• Staff will present a summary of proposed project appropriations and funding sources.
• It is recommended that Council review all proposed projects provide direction to staff by either tentatively approving the proposed appropriations or request revisions and/or additional information on individual projects.
• No formal action is required at this time. At Council’s direction, staff will return with any requested changes or supplemental information at subsequent meetings as the review continues.
• A final Capital Improvement Program document will be prepared, after the review process is completed, and included for adoption with the City's Operating Budget in June 2026.
The Capital Improvement Plan includes capital projects and equipment purchases of $10,000 or more. Capital projects are separated from the operating budget, using separate capital funds. This allows a clear view of capital activities and prevents operating budgets from being artificially inflated with one-time capital expenditures.
Funds For Review
The eight funds included in this first presentation include two Impact Fee funds and six Enterprise funds.
• Impact Fee Funds hold revenue collected from new development to pay for the proportionate cost of public infrastructure needed to serve that new development. These funds are restricted and may only be used for the purchase or construction of new or expanded infrastructure that is eligible growth-related infrastructure.
• Enterprise funds are intended to be self-supporting, and revenues are restricted to uses authorized within the funds in which they are received. Enterprise funds are independent of the General Fund, except for funds approved by Council that require a subsidy. In previous budgets, Council has authorized the Convention Center and Animal Services Funds to be subsidized. In general, revenues not required for operating costs may be used for capital projects.
The Funds to be discussed in today's meeting are listed in Table 1: Capital Budget Funds for Review February 17, 2026. The table shows the funds and the total recommended capital appropriation for each budget year.
Table 1: Capital Budget Funds for Review - February 17, 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.
Wastewater Trunk line Construction - Fund 231
Revenues are derived from Sanitary Sewer and Trunkline Connection Fees and a portion of the monthly storm sewer fee revenue. Funds are restricted to new sanitary sewer trunk line construction and may not be used for operations and maintenance. A comprehensive study of the fees is currently being conducted and will be presented to Council once completed. This fee study is for all wastewater fees which includes the Wastewater Trunkline fees (Fund 231) and Sewer Connection fees (Fund 232), and the Wastewater Facility (Fund 431).
Seven projects are proposed in the two-year budget, including annual appropriations for preliminary engineering and developer reimbursements as needed to support development. The remaining projects address trunkline improvements driven by development demand and will be updated as development activity changes. The largest project proposed in this fund is summarized below:
• Shirk Street Sanitary Sewer Trunkline - Walnut to Noble ($2M): Construct a 48" sanitary sewer trunkline along Shirk Street (south of Hwy-198) from Walnut Avenue to Noble Avenue to connect existing sewer trunkline system. This project includes removal of existing 6" sewer force main and the associated annual operations/maintenance costs for the lift station located at Shirk Street and Noble Avenue. The replacement of the line will provide the necessary wastewater conveyance capacity to accommodate future development growth in the service area. Project total of $5.2m includes $3.2m prior year funding.
Projects shown in the outer planning years are dependent on development conditions and will be re-evaluated during the next two-year budget cycle.
Sewer Connection - Fund 232
Revenues are from treatment plant connection fees and may be used for expansion of Wastewater Reclamation Facility (WRF) capacity and sanitary sewer infrastructure. This fund will need an advance from the Wastewater Fund which can loan to other funds that are used for the collection and treatment of wastewater and sewer water. A comprehensive study of the fees is currently being conducted and will be presented to Council once completed. This fee study is for all wastewater fees which includes the Wastewater Trunkline fees (Fund 231) and Sewer Connection fees (Fund 232), and the Wastewater Facility (Fund 431).
This fund has two projects proposed in the two-year budget. The largest project is listed below and is funded with several other funds:
• Anaerobic Digestion Capacity Expansion ($11.6M): Increase anaerobic digestion capacity at the Wastewater Treatment Plant to maintain reliable solids processing and accommodate current and future loading. The capacity of the anaerobic digestion system is currently limited by the HRT criteria. At current sludge flows, the digestion system is below capacity with the largest digester being out of service, creating operational risk during peak conditions. The project will restore and expand treatment capacity to improve system reliability by adding an additional Digester. This will reduce potential process disruptions, and support long-term wastewater system demands identified in the Sewer Master Plan. It is estimated to take at a minimum 3 years to design, construct, and have a new digester be placed into service. Multi-funded total of $42.9M.
o $31.29M from WRF (431) including $4.2M prior year funding
o $11.60M from Sewer Connection (232).
Building Safety - Fund 401
This fund was established for the operation of the Building Safety Division. Revenues are provided by fees charged for Building Permits. This revenue is used to fund both the operational expenses and capital needs and does not maintain a separate capital reserve.
This fund has three projects proposed in the two-year budget. The largest project is listed below:
• Comprehensive Fee Study ($300K): The fee study would conduct a comprehensive update to the City’s Building Safety fee schedule to ensure fees accurately reflect the current cost of providing plan review, inspection and permit services. The existing study is more than 20 years old and does not reflect current service demands, technology, or staffing costs. Updating the fee structure would improve cost recovery, maintain program sustainability, and ensure equitable allocation of costs between development activity and the General Fund.
Animal Services - Fund 406
This fund supports the City’s Animal Control facility and state-mandated services. Revenues include licensing, adoptions, vaccinations, shelter-related fees, and contracted services provided to the surrounding cities. This fund receives an annual cash transfer from the General Fund which is used in combination with the fees charged for services to operate the Animal Services division. Since this fund does not fully cover its own expenses with the revenues it generates, any capital request will increase the transfer amount required by the General Fund.
The Visalia Animal Care Center opened in 2016. As the facility and equipment age, capital maintenance and replacement needs are expected to increase. Construction of the Animal Care Center was completed with debt financing, which will have a remaining principal balance of $1,087,362 as of June 30, 2026. The final debt payment is scheduled for March 21, 2028.
This fund has one project proposed in the two-year budget which is listed below:
• Replace Animal Center Camera ($60K): Replace the existing animal shelter camera system, which is nearing end of life. This project is a scheduled replacement that will ensure continuous monitoring of public areas, kennels, and operational spaces and aligns the facility with current security and evidence-retention standards throughout the Visalia Animal Care Center.
Airport - Fund 411
The Airport Fund's primary revenue source is airport user fees, such as hangar rentals and fuel sales. These revenues are used to fund the Airport's operating expenses. Funds not used for operating expenses are set aside for capital. The Airport Fund has shown the ability to cover operating expenses with the revenue it generates, and fund smaller capital projects. Larger capital projects are typically funded through FAA Airport Improvement Program (AIP) grants. Projects are submitted based on the Airport Layout Plan and prioritized by FAA criteria.
The standard FAA match requirement increased from 5% to 10% when Visalia Airport was accepted into the Community Flexible Pilot Program in 2016. The Airport may be eligible to receive a 5% match from the Caltrans Department of Aeronautics (DOA) which pays a portion of the required 10% local match; remaining match requirements are paid from Airport fund balance.
This fund has nine projects proposed for funding in the two-year budget. Appropriations include FAA and/or state-match funded design work and construction related to taxi lane and tiedown apron reconstruction. Only projects receiving final grant awards will proceed. The largest project requested in the two years is listed below:
• Tie-Down Apron “A3” Reconstruction - Construction ($3.2M):
This FAA-approved and funded project will utilize the previously completed design phase to reconstruct Tie-Down Apron “A3,” which has experienced pavement deterioration due to age, weather exposure, and continuous aircraft loading. The work will restore the structural integrity of the apron, eliminate surface defects that pose safety risks, and preserve the Airport’s existing aircraft parking capacity. Rehabilitation of this asset is necessary to maintain safe aircraft parking operations, reduce ongoing maintenance needs, and extend the useful life of the facility. The total project cost is $3.2M, funding breakdown is as follows:
• $2,853,045 FAA
• $101,492 State matching grants
• $215,513 Airport Fund
The Airport Fund is projected to have sufficient reserves to cover the local match and Airport-funded projects during the six-year period.
Wastewater Facility - Fund 431
This fund is supported by sanitary sewer user fees and rates. Funds are to be used only for wastewater operations, maintenance, and capital improvements for the collection system and the wastewater reclamation facility (WRF). A comprehensive study of the fees is currently being conducted and will be presented to Council once completed. This fee study is for all wastewater fees which includes the Wastewater Trunkline fees (Fund 231) and Sewer Connection fees (Fund 232), and the Wastewater Facility (Fund 431).
The WFR was upgraded in 2018 to meet Regional Water Quality Control Board permit requirements. The upgrade was financed through the Clear Water State Revolving Fund (CWSRF). The projected debt balance will be $76,278,500 at June 30, 2026.
As the plant equipment and infrastructure begins to age, maintenance tasks are required to ensure optimal function and to preserve this investment. The 6-year capital plan includes maintenance projects and spare part purchases which are required to keep the WRF operational. The Wastewater fund includes 49 projects in the six-year capital plan, with 34 requiring funding in the two-year budget. The three largest projects are listed below:
• Anaerobic Digestion Capacity Expansion - ($42.9M): Multi-funded as described above in the Sewer Connection Fund (232).
• Membrane Replacement ($10M): Manufactured guidance recommends replacing membrane curtains every 8-10 years. One train was replaced in FY 2025/26 as a pilot. The remaining nine trains are proposed for replacement in FY 2026/27 FY 2027/28 to reduce risk of regulatory violations and emergency failures and to maintain treatment efficiency.
• Replace and Relocate Sanitary Sewer Mains ($1M annually): Ongoing replacements and relocations to address deteriorating mains and accommodate development, reducing risk of overflows and service disruptions.
Solid Waste - Fund 441
This fund is supported by refuse collection fees and pays for operating costs and capital needs, including long-term fleet replacement. Available annual fund balance is set aside for future replacement costs. This fund is responsible for the replacement cost for the Solid Waste Fleet which has over 60 garbage trucks. With no significant grant funding currently available for the large-scale replacement of Solid Waste vehicles, it is necessary to plan long-term for the replacement of this large fleet which is so vital to the health and safety of our citizens. The two-year CIP also includes ongoing programs and capital purchases such as Dump-On-Us events, container and bin purchases, roll-off replacements, and systems to enhance services.
Solid Waste Fleet Replacement and Fuel Strategy
Solid waste collection vehicles have an approximate 10-year service life and replacement timing is coordinated with Fleet Maintenance based on condition and operational needs. Trucks which have reached the end of their useful life are sold at auction after they have been replaced. Typically, a new residential truck is needed for every additional 960 daily pickups (3,840 per week), and a commercial truck is needed for every additional 105 daily pickups (525 per week). Vehicle additions are dependent on growth in service demand.
In compliance with Title 13 of the California Code of Regulations, Section 2021.2, the Solid Waste fleet was converted to compressed natural gas (CNG) in 2022 with CMAQ grant assistance. With limited grant assistance currently available to offset the higher cost of CNG replacements, fuel options are evaluated at the time of purchase considering lifecycle cost and emissions performance. Recent replacements have included clean diesel vehicles consistent with prior Council direction. All vehicle purchases will comply with applicable California Air Resources Board requirements. The City will continue to pursue grant opportunities; if grants are not awarded, purchases may proceed using Solid Waste fund resources based on fleet condition and operational needs. Moving forward, it is appropriate to fully evaluate the long-term costs, and carbon footprint of different fuel options each time a purchase is made.
Transit - Fund 452
This fund was established to support Transits capital projects and is funded by Local Transportation Funds (LTF), Federal Transportation Agency Funds (FTA), Measure R transit funds, contract set asides from the National Park Service contract for Sequoia service, and various other state/federal capital grants. Funds are restricted to capital expenditures only.
The six-year plan includes 12 projects, with 10 requesting appropriations in the two-year budget. The two largest projects are listed below:
• Cross Valley Express (CVE)/Signal Prioritization (Phased) ($60M): The City of Visalia was selected as project lead on the Cross Valley Express project which will include signal prioritization to support the BRT (Bus Rapid Transit) and CVE (Cross Valley Express) routes. Phase 1 in FY 2026/27 ($1.3M) supports administration, planning, design, and environmental work. Phase 2 in outer years supports construction ($57M).
• Transit CNG Station Study and Upgrade ($3.4M): Evaluate long-term demand for compressed natural gas (CNG) and station capacity; the current station is operating 30% above intended capacity. Planned funding includes potential expansion if recommended. Primary funding is anticipated from existing FTA grant, with Solid Waste (fund 441) match participation based on usage share.
Total Cost Breakdown:
• Transit LTF (Fund 452): $69k FY 25/26
• FTA Grant (Fund 452): $331k FY 26/27 and $2.3m FY 27/28
• Solid Waste (Fund 441): $30k FY 25/26 and $690k FY 28/29
*All Transit capital projects included in the CIP are contingent upon confirmation and formal award of all external funding sources. Projects will proceed only after grant funding has been secured, required matching funds have been identified, and final approval has been granted by the City Manager. No project will move forward without confirmed funding in place
Each Funds proposed projects is listed in detail in Attachment A.
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.
The proposed presentation schedule is listed below in Table 2: Capital Funds to be reviewed by Council in future Council Sessions.
Fiscal Impact including annual maintenance and operating costs:
The CIP presents a six-year plan, with FY 2026/27 and FY 2027/28 proposed for adoption and appropriation and the remaining four years are provided for planning purposes. The attached spreadsheets summarize each fund and provide and include beginning cash, operating revenue, operating expenditures, proposed CIP expenditures and projected ending cash balances across the six-year period (Attachment A).
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
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: 02/17/2026
Attachments:
Attachment A - Summary of proposed Capital Projects by Fund
Attachment B - Directory of Map Points and Maps
Strategic Goal: Indicates which City Strategic Goal(s) this item supports. Check all that apply.
|
☒ Economic Vitality |
☒  Organizational Excellence |
☒ Fiscal Strength |
☒  Infrastructure & Growth |
☒  Quality of Life |