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Attachment B THE CITY OF 1 1. num —n ud:6u :.i�'�I 1 III PLE ASANTON, MEMORAN DUM Date: May 27, 2009 To: Mayor and City Council From: Nelson Fialho, City Manager Subject: Capital Improvement Program for Fiscal Years 2009 -10 to Fiscal Years 2012 -2013 I. INTRODUCTION AND OVERVIEW OF CIP PROCESS This Capital Improvement Program (CIP) has been prepared to provide the City Council, and the community, with information outlining capital improvement projects and revenues for the next four years. Consistent with the City's two -year Budget, it is recommended that the first two years of the CIP be adopted and that funds be appropriated to cover the projects included in these two years. The projects included in the final two years of the CIP are tentative based on currently identified needs and are subject to revision to accommodate changes in priorities and /or expected funding levels. As part of the ongoing budget monitoring program, staff will conduct a thorough review of the Capital Improvement Program at the end of fiscal year 2009 -2010 (as part of the Mid -Term Budget process) and will provide the City Council with any recommended changes to projects and revenues. Because a portion of the total revenue available to the CIP is derived from development related fees assessed on new development, and other sources not directly related to ongoing City revenue, the status of the economy, state and federal programs and policies and the amount of local development activity during the next several years will play a major role in the City's ability to finance projects included in this program. This situation is amplified in this CIP based on concerns about the overall economy, the impact that the State's budget may have on Pleasanton and cities in general, and the fact that a significant portion of projected development fee revenues are derived from a few approved development projects, such as the Windstar BART apartment development that have not yet begun construction. In recognition of the uncertainty of development fees, only development fees collected in calendar year 2008 are being used to fund projects in fiscal year 2009 -10. Development fees projected for calendar year 2009 are programmed to fund projects in 2010 -11. This conservative approach assures that if anticipated funds are not collected in calendar year 2009, adjustments can be made as part of the Mid Year CIP. To assure that there is adequate funding for the recommended 2010 -11 projects, staff will refrain from incurring significant costs on these projects until after approval of the Mid -Term Budget when any revenue adjustments are approved. Staff will continue working on existing projects that have received partial funding and approvals in previous years. By utilizing the above method, the City avoids project 3