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THE CITY OF ATTACHMENT 2 ,. , ,a .,_r irr pLEASANTON. MEMORANDUM Date: May 24, 2013 To: Mayor and City Council From: Nelson Fialho, City Manager Subject: Capital Improvement Program for Fiscal Years 2013-14 to Fiscal Years 2016-17 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 2013-14 as part of the Mid-Term Budget process and will provide the City Council with any recommended changes to projects and revenues for FY 2014-15. Because a portion of the total revenue available to the CIP is derived from development related fees assessed on new development, and federal/state related revenue such as gas taxes, and grant funding 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. However, this matter is mitigated to some extent in that revenues for funded projects are based primarily on revenue already received or those that have been estimated based on economic activity that has already occurred. If revenues fall short of targets, then adjustment will be made for the FY 2014-15 Mid-Term CIP. This conservative approach assures that if anticipated funds are not collected, adjustments can be made without significant impact to FY 2013-14 approved projects. Finally, to assure there is adequate funding for the recommended FY 2014-15 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.