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THE CITY OF Attachment 2 Nlitl .I. ;III pLEASANTON® MEMORANDUM Date: May 27, 2011 To: Mayor and City Council From: Nelson Fialho, City Manager Subject: Capital Improvement Program for Fiscal Years 2011-12 to Fiscal Years 2014-15 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 2011-12 as part of the Mid-Term Budget process and will provide the City Council with any recommended changes to projects and revenues for FY 2012-13. 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. As always, this situation is of concern since the state of the overall economy will impact local development. As with previous CIP's, this matter is mitigated to some extent in that revenues for funded projects are based on development revenue already received. If calendar year 2011 development revenues fall short of targets, then adjustment will be made for the FY 2012-13 Mid Term CIP. In addition to development related revenue matters, concern with the overall economy may impact estimates of streets related revenue, such gas taxes, Measure B and grant funding anticipated in this CIP. Should changes occur these will also be adjusted as needed as part of the Mid-Term CIP. This conservative approach assures that if anticipated funds are not collected in calendar year 2011, adjustments can be made as part of the Mid-Year CIP. Finally, to assure that there is adequate funding for the recommended FY 2012-13 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. By utilizing the above method, the City avoids project funding shortfalls resulting from less than anticipated revenues and minimizes the impact of having to stop a project due to lack of funding. 3