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BACKGROUND The Capital Improvement Program (CIP) has been prepared to provide the City Council with information necessary to determine capital improvement funding over the next four years. The program contains recommendations for funded projects and available revenues. As with any forecasting program, unforeseen changes in the economy, funding, and other conditions may substantially impact the priorities as set forth in this program. However, staff has taken steps to minimize these impacts and as a result, projects recommended for funding in the first two years have either already received full funding or have a high potential for receiving full funding. As an example, many Streets programs are dependent upon receiving state gas tax revenues which are potentially subject to state budget actions that could impact the amount received. However, these funds have been stable and there are no current plans divert the funds. So, as a result, they are included in the CIP based on projections received from the state. The introduction to the CIP, which highlights revenue and expenditure estimates and projects, is attached to this report as Attachment 2. As outlined in the recommendation, the CIP anticipates a transfer of $378,037 from the Happy Valley Bypass Road to the Bernal Community Park, Phase II which reflects the General Fund portion of the total reserve estimated at $1,011,996. The remaining $633,959 is comprised of developer fees paid toward the road and staff anticipates this will be programmed at a later date. The transfer is facilitated by the City Council removing the bypass road from its listing of priority projects. Regarding the use of In Lieu Park Dedication fees for the Bernal Community Park, Phase II, as the Council recalls, the City's ordinance for this fee limits fee usage to park and acquisition. However, due to the importance of this project, and the limited potential for the need to acquire additional land, the funding will be best utilized if it is directed to this park. Finally, regarding the approval of carry-overs, it is common for CIP projects to take more than one year to complete and as a reflection of that situation, staff recommends the Council reaffirm using the funds for the projects that were approved by the City Council previously. DISCUSSION Upon adoption of the CIP, the first two years of the program will be funded and adoption authorizes staff to begin work on these projects. However, staff does not expect to begin incurring any significant costs on new projects funded in the second year of the program until after the completion of the mid-term review scheduled for June 2014. Submitted by: Fiscal Review: Approve by: Steven B cian kmily Wagner Nelson Fialho Assistant City Manager Director of Finance City Manager Page 2 of 4