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: 3/4/2024
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 this second presentation (Impact Fees, Enterprise Funds and Special Revenue Funds) of the City’s draft Capital Improvement Program (IP) 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 second opportunity to review a portion of the City’s proposed Capital Plan. Portions of the proposed 2024/25 and 2025/26 capital budget are being brought to Council for review at each scheduled meeting between February 20, and April 1, 2024. This allows Council to conduct their review of the proposed CIP budget in manageable groupings.
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 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 eight funds to be reviewed today include three impact fees, one enterprise fund, and four special revenue funds.
• 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 for capital projects.
• 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 March 4, 2024, below.
Table 1: Capital Budget Funds for Review March 4, 2024
1
Common Revenues - Storm Sewer Fees
Storm Sewer fees are a source of funding for several of the funds to be reviewed tonight. Every housing unit in the City of Visalia is billed a flat rate of $2.65 monthly on their utility bill for storm sewer. The revenue from this fee is divided amongst several capital funds as shown below in Table 2, Summary of Storm Sewer Fee 2023-24. There is also a variable rate which charges each parcel $.24 per 1,000 sq. ft. This variable fee is deposited to the Storm Sewer Maintenance Fund (481).
Table 2: Summary of Storm Sewer Fee 2023-24
Measure R Trailways, Fund 132 (CIP detail attached): In 2006, the voters of Tulare County approved Measure R, creating a ½ cent sales tax for transportation within the incorporated and unincorporated area of Tulare County for the following 30 years. The Measure R Trailway fund shares a 14% portion of Measure R revenues with Transit. After funding for Transit, environmental projects and projects in unincorporated areas (Santa Fe gap), the remaining funds are to be used for ballot measure authorized Bike and Pedestrian Trails. Projects are programmed according to the Measure R plan and eligible expenditures are paid to the City on a reimbursement basis. All Measure R Trail projects require review and approval by the Tulare County Association of Governments (TCAG) prior to moving forward. Any new projects approved by Council will be submitted to TCAG to complete the approval process. Ten projects have been included in the capital plan, and 3 of those projects are requesting funding during the 2-year budget. The largest project, Greenway Trail - Mill Creek to St, John’s, is discussed below.
• Greenway Trail - Mill Creek to St. John's: This project will Construct a 10' - 12' wide trail from Mill Creek Bridge to St John's Trail and includes landscaping with native trees and shrubs following City of Visalia Urban forestry standards, solar lighting, benches, trash receptacles and trail signage. This is phase 3 to complete the third (3rd) segment of five (5) segments to construct the Greenway Trail from Walnut Ave. to the St. John's Trail and this project is contingent upon receiving grant funds. Multi funded project total of $2.59m is from $541k Measure R Trailways (132), including $230K prior year funding, and $2.05m from State Transportation (281).
For discussion of additional projects included in the Measure R Trails capital plan, please see the project summary in Attachment A.
Recreational Facilities Impact Fee, Fund 211 (CIP detail attached): This fund is derived from developer impact fees paid by developers of residential property in lieu of providing parks and open space. Funds are to be used only for open space acquisition and providing new parks and recreational facilities. The Recreational Facilities Fund has a total of 14 projects in its capital plan and 8 projects are requesting funding in the two-year budget. The demands on this fund clearly outweigh the resources as shown by the funding deficit in the capital planning years (2026-2030). Projects must be chosen based upon the greatest impact in response to community needs and development trends. Over the next two years, staff will carefully evaluate the projects included in the planning years and recommendations for which projects to move forward will be brought back in the next capital plan.
The main focus of the projects requesting appropriations in the two years is the design and construction of infrastructure for the East Side Regional Park (ESRP) and development of neighborhood and regional parks to provide basic recreation activities for Visalia citizens. There are four (4) parks planned for land acquisition, design, and/or development to begin during the next two years. These parks will be designed to accommodate the features of their locations with amenities that will generally include walking paths, playgrounds, picnic areas, benches, and open turf. The park locations have been selected in accordance with the General Plan’s Element on Parks and Recreation Facilities and according to development trends. The four park projects not associated with the ESRP that are requesting funding in the 2-year portion of the budget are discussed below.
• Goshen-Virmargo Park/Pond: This regional park/pond to be located at the northwest corner of Goshen and Virmargo will serve existing and future development between Cain St, Lovers Lane, Houston Ave, and Mill Creek. Funding will provide for preparation of a shovel-ready design for either potential grant opportunities or excavation by developers. The basin parcel is already City property, but the park will require additional land acquisition to the West. Multi-funded project total of $1.53m from $265K Storm Sewer (221) and $1.26m Parks & Rec (211).
• 4-Acre Neighborhood Park: Per the general plan, the City will acquire land, design, and build a 4-acre neighborhood park in the area of Tulare and Roeben. Neighborhood Parks are intended to provide basic recreation activities for one or more neighborhoods with a service area of one half to one mile radius. Neighborhood parks usually include playgrounds, picnic tables, benches, and walkways. This location will also include innovative features. Annual maintenance costs for this park are estimated to be $96k per year.
• Cameron Creek Regional Park/Basin: Funding to acquire a site for a 5.25 acre storm/recharge basin with a 4-acre park, to include .5 mile asphalt trail along southerly extension of McAuliff adjacent to Cameron Creek to serve existing and future development within the one-mile development block of Lovers Lane to Road 148 and Caldwell to Walnut. Pond may also receive TID exchange water from Cameron Creek. Geotechnical testing will be required to determine eligibility for ground water recharge funding. Multi-funded: Project total $3.1m from $1.3m current and $537k prior Parks & Rec (211), $442k current and $179k prior Storm Sewer (221), and $432k current and $179k prior GW Recharge (224). Annual maintenance costs for this park are estimated to be $116k per year.
• 2-Acre Neighborhood Park: Acquire land, design, and build a neighborhood park of 2 acres in the north side of Ferguson 1/4 mile west of Demaree in accordance with the General Plan's element on Park and Recreation Facilities and development trends. Park improvements are to include walking paths, a playground, picnic area, and open turf. Funding requested is for acquisition to begin in FY-25/26 with construction to follow in FY-26/27. Maintenance costs for this park are estimated to be $48k per year.
To review all projects included in the proposed CIP budget, please see the fund summary included in Attachment A.
Storm Sewer Construction, Fund 221 (CIP detail attached): This fund is derived from Storm Sewer developer impact fees collected at the time of development and a portion of the monthly storm sewer user fees. In addition to impact fees, this fund shares $.84 of the $2.65 monthly storm sewer fee with the Wastewater Trunk line Construction Fund (231). Funds are to be used only for construction of new storm sewer infrastructure to implement the Storm Sewer Master Plan. When possible, storm basin projects are combined with neighborhood parks and/or perimeter trails. When this is not feasible, current landscaping standards for basin projects are set at a minimum level, limited to street frontage trees and mulch. Staff pursues any available grants which might pay the cost of tree planting around City basins.
Although projected to be balanced during the appropriation years, the 6-year plan shows this fund in a deficit position in years 4-6. To avoid a deficit, the projects which move forward must be chosen based upon actual development needs and future trends. Over the next two years, staff will evaluate the projects included in the planning years and recommendations for which projects to move forward will be brought back in the next capital plan.
The Storm Sewer Construction fund has a total of 17 projects in its capital plan and 12 projects are requesting funding in the two-year budget. The largest project in the 2-year portion of this capital plan is for design and right-of-way (ROW) acquisition to develop a new regional basin on southwest Shirk. This project is discussed in more detail below.
SW Shirk Regional Basin: Funding for design, ROW, and construction of new regional basin on the West side of South Shirk Road between Paradise Ave and Tulare Ave. This basin will serve the future widening of Shirk and tier 2 and 3 development between SR198 and Walnut Avenue and requires acquisition of approximately 17 acres for the ultimate basin configuration, design, and construction. Development has already started expressing interest in the area. Starting design and acquisition early will allow for excavation to be done by development as it occurs. Construction by the City is therefore put in the planning years. The projected total cost of this project is $13.6 million, $1.65 million of which is in the 2-year portion of the budget.
To review all projects included in the proposed CIP budget, please see the fund summary included in Attachment A.
Storm Sewer Deficiency, Fund 222 (CIP detail attached): This fund receives $.67 of the $2.65 monthly storm sewer fee. The funds are to be used for construction of storm sewer facilities to correct existing deficiencies as identified in the Storm Sewer Master Plan. The projects in this fund reduce the potential of flooding during storm events. The demands on this fund outweigh the projected resources as shown by the funding deficit in the capital planning years (2026-2030). Projects must be chosen based upon the greatest impact in response to community needs and development trends. Over the next two years, staff will carefully evaluate the projects included in the planning years and recommendations for which projects to move forward will be brought back in the next capital plan. The Storm Sewer Deficiency Fund has 7 projects in its capital plan, 5 of which are proposed for funding in the two-year budget. The most significant project proposed for funding in the next 2 years is discussed below.
• County Center/Evans SD Lift Station Overhaul: Funding for evaluation, design, and reconstruction/retrofit of the existing storm drain lift station at County Center and Evans Ditch, just north of Walnut Ave. The existing lift station is poorly designed and constructed leading to poor utilization of existing pumps and flooding on County Center, Demaree, Tulare, and local streets in the surrounding neighborhoods. This project has been identified by Water Collections as a high priority existing deficiency. Existing pumps will be removed and returned to service once the wet well is redone. Project total of $370k is 100% funded by Storm Sewer Deficiency (222).
For more detail on proposed projects please see the fund summary included in Attachment A.
Ground Water Recharge, Fund 224 (CIP detail attached): This fund is derived from a portion of the monthly City utility bill. The fees for this fund are based on the size of the water service line and range from $.59 to $67.46 a month per water connection. In 2002, the City Council adopted this additional fee as part of an agreement with the Tulare Irrigation District and the Kaweah Delta Water Conservation District for the acquisition of water and other activities to improve groundwater levels. This fund contributes to projects which create opportunities to improve groundwater levels and increase the supply of water to the city. Contributions from this fund for basin projects are contingent upon geotechnical testing to determine the soil infiltration qualities of the basin and any necessary testing will be completed prior to the expenditure of any ground water recharge funds.
Projects with requested appropriations in the 2-year budget are mainly focused on design and land acquisition for projects to be funded in future budgets, which are shown in the planning years (2026-2030) with a significant amount of future funding planned for the East Side Regional Park (ESRP). Also included in the proposed expenditures of this fund are operating costs of $227,600 annually which are shown in the Cash Balance Summary of the fund and include the City’s portion of the operating cost of the State mandated Groundwater Sustainability Agency (GSA).
There are six (6) projects in the capital plan for this fund and three (3) of these are requesting funds during the 2-year portion of the budget. For detail on these proposed projects please see the fund summary included in Attachment A.
Waterway Maintenance, Fund 251 (CIP detail attached): This fund was created to account for acquisition and landscaping of development buffers along designated waterways. The fund receives $.51 of the $2.65 monthly storm sewer user’s fees and funds are to be used only for maintenance of waterways and limited riparian areas located along waterways. The funds are restricted for acquisition and development of setbacks along waterways designated in the Visalia General Plan and restoration of riparian vegetation along the setback areas. The limitations imposed upon this funding make the single proposed project an excellent fit for waterway maintenance. However, the large scope of the Mill Creek Embankment Reconstruction is projected to create a deficit in this fund. With this project in the planning years, staff will carefully evaluate the project and bring updated estimates of the cost and timeframe for the recovery of this fund, should the project move forward. For more information on the projected deficit and this proposed project please see the fund summary included in Attachment A.
Waterway Construction, Fund 261 (CIP detail attached): This fund is derived from developer impact fees. The funds are restricted for acquisition and development of setbacks along waterways designated in the Visalia General Plan and restoration of riparian vegetation along the setback areas. The Waterways Fund has four (4) projects included in the capital plan, with two (2) projects proposed for funding in the 2-year portion of the budget. The main project, which is to acquire and restore riparian area right-of-way along waterways, is meant to occur in conjunction with any development in these areas. For more detail on these proposed projects please see the fund summary included in Attachment A.
Storm Sewer Maintenance Fund, Fund 481 (CIP detail attached): This proprietary fund receives monies generated from storm sewer user fees. The fees for this fund are collected with the monthly utility bill and each parcel is charged $.24 per 1,000 sq. ft. In addition, this fund shares a portion of the monthly flat storm sewer rate. Funds are to be used only for operation, maintenance, and storm sewer improvements, including equipment and vehicle acquisitions related to collection and disposal of storm runoff. Storm sewer maintenance is needed to maximize drainage and prevent water damage during storm events.
In April of 2013, Resolution 2013-25 was adopted making local storm channel maintenance an eligible use of the Kaweah Lake Enlargement/Storm Sewer Maintenance portion of the fee. This has allowed funding to be shifted from the Kaweah Lake fund (223) to the Storm Sewer Maintenance Fund (481). This infusion of funding provided for an increase in staffing, however, it did not provide for any significant increase in capital projects and the Storm Sewer Maintenance Fund remains unable to fund capital improvements which are needed for the repair and maintenance of the City storm drainage system. These projects which continue to be pushed out to the budget planning years, where they create significant deficits, are evidence of this on-going challenge. Without additional funding, projects will again need to be reduced in years 3-6 of the capital plan to prevent deficits.
The Storm Sewer Maintenance Fund has 23 projects in its capital plan 6 of which are proposed for funding in the 2-year budget. Proposed funding is focused on much needed repair and replacement of storm drainage system components and essential vehicles. For more detail on proposed projects please see the fund summary included in Attachment A.
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 informational 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 projects. 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 Session:
Other:
Table 3 is a summary of the remaining capital funds to be reviewed by Council on the dates indicated:
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