Agenda Item Wording:
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Capital Improvement Program - Review select FY 2024/25 and 2025/26 Capital Improvement Program (CIP) Budgets and future capital plans.
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Deadline for Action: 4/15/2024
Submitting Department: Finance and Technology Services
Contact Name and Phone Number:
Melody Murch, (559)713-4379, melody.murch@visalia.city <mailto:melody.murch@visalia.city>
Renee Nagel, (559) 713-4375, renee.nagel@visalia.city <mailto:renee.nagel@visalia.city>
Department Recommendation:
That the City Council receive the fifth (final) presentation of the City’s draft Capital Improvement Program (CIP) budget and provide direction as appropriate. The Council is scheduled to act upon the CIP budget during the month of June in conjunction with the operating budget. No formal action is required or requested at this time.
Background Discussion:
The Review Process- This is Council’s fifth opportunity to review a portion of the City’s proposed Capital Plan. Portions of the proposed 2024/25 and 2025/26 capital budget have been brought to Council for review at each scheduled meeting between February 20, and April 15, 2024. This allows Council to conduct their review of the proposed CIP budget in manageable groupings. This meeting concludes the capital presentations for all funds except for Community Development Block Grant (CDBG) Fund and Measure N. Tonight is also the second public hearing for the CDBG Action Plan. Once approved, these projects will be added to the budget for adoption. Measure N, operations and capital will be presented to Council on May 6th.
The Capital Improvement Program presents the two fiscal years 2024/25 and 2025/26 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 Power Point presentation to review the proposed Capital Programs of the various funds discussed below. CIP Project Managers will be available to address Council’s questions on proposed projects. To assist Council in reviewing the proposed CIP projects, staff recommends the following:
• Staff will present a summary of proposed project appropriations and provide Council with the opportunity to request further information on individual projects.
• It is recommended that Council review and either tentatively approve or direct changes to the attached proposed Capital Improvement Program (CIP) budgets for the selected funds.
• No formal action is required at this time. At Council’s direction, staff will return with additional information or changes to the CIP at a following meeting, until all projects have been reviewed, and Council is satisfied with the proposed capital budget for all funds.
• 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 2024.
The CIP includes all projects and equipment purchases costing $10,000 or more. When possible, 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 by those same capital activities.
Funds for Review- The six funds to be reviewed today include two governmental, one impact fee, one enterprise, one internal service, and one special revenue fund.
• Governmental funds hold the revenue from various taxes including sales and property tax, business tax, and transient occupancy tax as well as fees from government services. The revenues in governmental funds are mainly discretionary and can be used for any purpose approved by the City Council.
• Impact Fee funds hold revenue from fees imposed upon new development to pay for the proportionate costs of providing public infrastructure to serve that new development. These funds can only be used for the purchase or construction of new or expanded infrastructure related to the growth from development.
• Enterprise funds are meant to be self-sufficient, and revenues are restricted to uses designated within the fund in which they are received. Enterprise funds are independent of the General Fund. In general, dollars not used for operating in these funds are available to fund capital projects.
• Internal Service funds provide a service to various City operations on a cost reimbursement basis. All costs of this type of fund are passed through to the operations benefiting from these services.
• Special Revenue Funds collect money which must be used for a specific purpose. These funds provide accountability and transparency to tax and rate payers, requiring funding to be spent for an intended purpose.
The Funds to be discussed in today’s meeting include those listed in Table 1: Capital Budget Funds for Review April 15, 2024, below.
Table 1: Capital Budget Funds for Review April 15, 2024
Scheduling of Technology Projects
Projects requiring the expertise of the City’s information systems division have been included throughout the City’s 6-year capital plan. The projects for review in this agenda item include the Information Services Fund (511), as well as many projects in the General Fund (001) which include technology components. Post-Covid, there is an increased focus on using technology for customer interaction and to increase the efficiency and security of the workforce in general. This has also increased the workload for information systems staff who are tasked with the configuration and implementation of new technology. The timing of the technology related projects in the 6-year capital plan is based upon a combination of the following:
• Staff Capacity: Ultimately, the number of possible projects must be limited by the number of hours in a workday.
• Logistics: Technology projects can include both hardware and/or software and must sometimes be scheduled in phases, or based upon the need to build upon the results of another project that must be completed first.
• Funding Constraints: Projects must be limited to the City’s available funding, and grant-funded projects are often a higher priority based upon grant spending deadlines which limit the time for implementation.
• Life-Cycle Management: Recognizing that computers and digital technology improve at a rapid pace, these assets are scheduled for shorter useful lives, and more frequent replacement. To realize the value of each purchase, assets need to wait for the end of their useful lives before replacement, even when there are new and improved options on the market. In most cases, it’s okay not to have the latest version, and the City’s technology catches up over time, as assets are replaced according to a set schedule.
The priority of information systems projects in the proposed 6-year capital plan is the result of a collaborative process including City management, the City Department Head Group, and the Information Systems Division.
General Fund 001 (CIP detail attached): The General Fund is a governmental fund. Revenues are largely discretionary and can be used for any governmental purpose. This fund consistently receives a large number of requests for funding in every budget cycle. For this reason, project requests are subject to committee review. The General Fund CIP Review Committee is made up of all Department Heads (DH) and each DH may designate an employee to serve on the committee in their place. The committee reviews and ranks projects using an established set of criteria to determine which requests represent the most urgent needs. The guidelines for ranking are included in this item as Attachment C.
The General Fund Capital Summary in Attachment A includes 81 projects. The committee ranked 62 of these projects which are proposed for funding in the 2-year portion of the budget. Table 2: Summary of General Fund Project Budgets by Category shows the total proposed appropriations for each category and the total appropriation proposed for the General Fund.
The capital projects highlighted blue (Attachment A #53 - 62) will be appropriated with the budget. However, these projects will only move forward if funding is available.
The remaining projects are in the planning years of the 6-year capital plan. For a detailed description of each project, please see the Capital Summary in Attachment A.
Fire Impact Fees, Fund 106 (CIP detail attached): This impact fee fund is derived from Fire Impact fees collected at the time of building permit issuance. Funds are to be used for new facilities and equipment and are not for operations or maintenance. After repayment of a General Fund advance used to fund portions of the construction of Station 55 (Northwest Fire Station) and Station 53 (Southwest Fire Station) this fund is building up a cash balance to be used for future fire-related capital projects. This fund has one project requested for funding in the 2-year portion of the budget for the installation of traffic signal pre-emption for emergency services. This is an ongoing project which is planned for every other year in the 6 -year capital plan. For a detailed description of this project, please see the Capital Summary in Attachment A.
Visalia Baseball, Fund 157 (CIP detail attached): This special revenue fund tracks the revenues and expenses related to the agreement between First Pitch and the City for the lease of the Rawhide Baseball stadium. A General Fund annual contribution of $200,000 to be used for baseball stadium capital projects is a feature of this agreement and the single project proposed in this fund (discussed below) will be paid for by the General Fund.
• Replace Rawhide 2nd Floor Walk-in Refrigerator/freezer: Remove and replace existing walk-in refrigerator/freezer on the second floor of the Valley Strong Stadium (Rawhide). Entire freezer unit is damaged beyond repair due to long-term leakage and can only be patched up for short-term operation pending replacement. The unit will be temporarily repaired for the baseball season but will need to be repaired for future use and is the main unit for the rightfield concession and Hall of Fame Club.
For a detailed description of this project, please see the Capital Summary in Attachment A.
Convention Center, Fund 413 (CIP Detail Attached 15): This fund's revenues come from rental fees at the Convention Center and from a General Fund contribution. Funds are to be used only for Convention Center projects. The City completed a renovation of the Convention Center facility 8 years ago, in the 2015/16 Fiscal Year. The projects that have been included in the 2-year portion of the 6-year capital plan are mainly for equipment that has begun to age and requires replacement to maintain the quality of service provided by the Visalia Convention Center. There is also an approaching need to address replacement of the cooling system. In particular, the large chillers used to store up cooling capacity during the lower cost energy rate periods are approaching the end of their useful life in about 8-10 years’ time. The cost of the cooler replacement is estimated to be $2.8 million, and long-term planning is essential to ensure the timely installation of a new system before the old one fails.
The 6-year capital plan for this fund proposes a General Fund set aside of $400,000 each year for a capital transfer to the Convention Center Fund. These funds are to be reserved for capital projects to maintain and improve the Convention Center. Even with this annual transfer, the Convention Center Fund is projected to require an advance from the General Fund to complete the proposed projects in the 2-year budget, with an additional advance projected when the cooling system is replaced. For this reason, the projects in the second year of the proposed budget will be contingent upon available General Fund resources. Should the General Fund be unable to advance funding for these projects, based upon an evaluation of actual resources in the 2025/26 Fiscal Year, these projects will not proceed. Any projects delayed due to a lack of available funding will be reviewed for funding in the next 2-year budget process.
There are 10 projects in the 6-year plan for maintenance of the facility and its equipment and 6 of these projects are in the 2-year budget portion of the plan. For a detailed description of projects included in the 6-year capital plan, please see the Capital Summary in Attachment A.
Information Services, Fund 511 (CIP detail attached): City Departments reimburse this internal services fund for the operation and replacement costs associated with the organization's computer and communications technology, including Geographic Information Systems and Telephone Services. Information Services proposes 16 capital projects, 7 of which require funding in the 2-year budget. These proposed projects are for scheduled replacements of, and upgrades to, existing equipment and software as well as improvements to the City’s fiber optic network and Traffic Management Conduit System. For a detailed description of each project, please see the Capital Summary in Attachment A.
Narcotics Forfeiture, Fund 621 (CIP detail attached): This fund was established to account for money received from narcotics seizures of cash and Property as authorized by the California Health and Safety Code. Monies are held on deposit until a court determines whether the money must be returned to the previous owner or forfeited to the City, which may use the seized funds for the recovery of law enforcement costs associated with the seized funds. This fund has 4 projects in the 6-year capital plan, with 3 of those projects requesting appropriations in the 2-year budget. The projects are for Police K-9 officers and the purchase of police equipment. For a detailed description of the projects proposed in this fund, please see the Capital Summary in Attachment A.
Proposed Changes to Capital Reviewed in Prior Meetings
After the capital plan for each fund is reviewed by Council, any subsequent changes to those funds are to be brought to Council attention. All material changes to projects reviewed in prior Council sessions are listed below.
Fleet Capital Improvements: Capital improvements to Fleet facilities and for Fleet planning documents have been included in the General Fund capital for review in this agenda item. These projects are multi-funded but were not included in the initial review of the other funds which will pay a portion of these projects. The project costs have been spread based upon the percentage of vehicles serviced by Fleet in each fund. The General Fund is responsible for roughly 74% of the vehicles serviced by the Fleet Division and the remaining 26% has been spread to the other funds as shown below in Table 4: Summary of New Fleet Project Cost by Project and Fund.
Table 4: Summary of New Fleet Project Cost by Project and Fund
Each fund included in Table 4 above, is projected to have resources available to cover their portion of the additional project costs, except for the Storm Sewer Maintenance fund (481). The Storm Sewer Maintenance fund was projected to end the second budget year (2025/26) with a deficit. The addition of these projects will increase the 481 Fund deficit by $12,800. However, staff recommends the Storm Sewer Maintenance fund be required to pay its proportional cost of the Fleet projects to properly record the cost of the fund’s activities. The Storm Sewer Maintenance fund will be included in the upcoming review of Storm Sewer rates and once this process is completed, capital in this fund will be reviewed to ensure projects are limited to the projected resources of the fund.
Projects Moved to Later Years: Both projects listed below have experienced changes to their scheduling in the 6-year capital plan. An explanation of these recommended changes is provided with each listed project.
• Community Services Master Plan Update (CS0001-211): With the recent loss of the Community Service Director, this project has been delayed from 2024/25 to 2025/26 to allow for the hiring of a new department head prior to moving forward with this Master Plan update. This department will now be referred to as the Parks and Recreation Department, and this project description will be updated accordingly.
• Maintenance Management Software (CS0068-273): This multi-funded project for maintenance tracking software to be used by both Parks and the Landscape and Lighting Districts (L&L’s), has been pushed out to year 3 of the capital plan (2026/27) to allow the Parks and Recreation Department to work with the Public Works Department and the Information Systems division to find a maintenance tracking solution that will work for the entire City organization. Solutions already underway in other departments will be evaluated for their ability to meet the needs of the Parks and L&L maintenance. Based upon the results of this evaluation, this project may be dropped from the next capital plan.
The changes proposed above will appear in each respective fund, in the final version of the capital plan which will be brought to Council for review in June 2024.
Fiscal Impact:
The City’s Capital Improvement Plan details a six-year plan for the expenditure of funds and the completion of projects (see Attachment A). Information for the years 2026/27 through 2029/30 is provided for information and planning purposes and will be revised, updated, and adopted in 2-year increments.
The attached spreadsheets summarize each fund and provide a detailed list of the proposed project. The fund title and number are followed by a brief explanation of the revenue source and general purpose of the fund. Each fund summary shows projections of the beginning cash, operating revenue (or capital contribution from operating revenue), operating expenditures, proposed CIP expenditures, and the projected ending cash balance for each of the six years.
Prior Council Action: The following is a list of Capital Funds reviewed at prior Council Sessions:
Other:
Alternatives: None recommended.
Recommended Motion (and Alternative Motions if expected):
recommendation
No motion is required or requested at this time.
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Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments:
Attachment A: Summary of proposed Capital Projects by Fund
Attachment B: Directory of Map Points and Maps
Attachment C: Capital Project Ranking Guidelines