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Ms. Wagner noted that she did not include a review of the Golf Course Fund, which is performing as expected. Councilmember Brown asked Ms. Wagner to explain the increase in retiring medical benefits for the Water and Sewer Funds, given that Zone 7 and DSRSD employees are not City employees. Ms. Wagner explained that it is a function of total personnel costs and has nothing to do with DSRSD. Personnel expenditures are reallocated at midyear based on actual personnel for each department. The Operations Service Center hired 8 new employees during the year therefore the Water and Sewer Funds are being allocated a higher portion of the total cost for employees than at the beginning of the year. Mayor Thorne opened the item for public comment and noted there were no speakers. MOTION: It was m/s by Cook-Kallio/Brown to waive full reading and adopt Resolution No. 13-599 accepting the Midyear 2012/13FY Operating Budget and amending the 2012/13FY Operating Budget as recommended. Motion carried by the following vote: Ayes: Councilmembers Brown, Cook-Kallio, Mayor Thorne Noes: None Absent: Councilmember Pentin, One Vacancy 14. Adopt a Resolution accepting the Midyear 2012/13FY Capital Improvement Program (CIP) and Amending the 2012113FY CIP Accordingly Ms. Wagner presented the staff report and reviewed midyear adjustments to the Sewer, Water, Miscellaneous, Parks and Streets CIP Funds. She reported that staff is anticipating a decrease in projected Sewer Connection Fees and transfer monies to the Sewer CIP Fund, which is offset by an increase in interest income and PG&E solar rebate revenues. Fund expenditures have also been adjusted to accommodate a new project to fund the Sewer Connection Fee update. She noted that this fee, which averages $500 per home as compared to DSRSD's fee of $15,000, as not been updated for 10 years. The Water CIP Fund started the fiscal year with a fund balance of $13.3 million and was projected to end with a balance of $11.9. Staff is now projecting a slightly higher ending balance due to adjusted water connection fees, PG&E solar rebate revenues and a transfer in of recycled water fees. Transfers from the Water Maintenance and Operations Fund also increased thanks to Vineyard Avenue Corridor Specific Plan Fees, which pay down the $9 million loan made to the Vineyard Avenue Corridor area for water tank and sewer improvements some time ago. This is offset by an increase in fund expenditures to help fund recycled water infrastructure at Valle Vista Community Park and the CLC development as well as a Water Connection Fee update. As with the Sewer Connection Fee, this has not been updated in 10 years. Several construction projects were also completed in recent months, freeing up another $113,000 in resources for future projects. Ms. Wagner also reported that staff anticipates a slightly higher than projected ending balance for the Miscellaneous CIP Fund, thanks to a modest increase in revenues from Public Facilities Fees and the PG&E solar rebate as well the receipt of donations for the Firehouse Arts Center. Councilmember Brown asked Ms. Wagner to comment on the decrease in Public Facilities Fees. Ms. Wagner explained that the fee is not for the actual use of various facilities, but rather is like other connection fees for new development. Mayor Thorne referred to Ms. Wagner's comments regarding fee updates. He asked and she confirmed that the intent was not to indicate that the fee would be raised to the levels charged by DSRSD or Zone 7. City Council Minutes Page 4 of 13 March 19, 2013