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BACKGROUND The Budget includes a comprehensive detailed account, forecast and plan of all City revenues and expenditures including the General Fund, enterprise funds, internal service funds, special revenue funds and capital funds. It is divided into two components with one, often referred to as the "operating budget" dealing primarily with ongoing operating expenses and revenues including personnel costs, ongoing programs and routine maintenance and the other, the CIP, pertaining to major infrastructure improvements and expansion projects that are generally one time in nature. The CIP does not include any personnel related expenses. Both the Two Year Operating Budget and the CIP documents include narratives that provide information regarding budgetary opportunities, issues and goals. As with all City budgets, this document focuses attention on those areas deemed by the City Council to be high priority. As a result, the Budget maintains existing service levels and meets capital needs in a way that addresses not only new programs and capital projects, but a wide range of maintenance projects related to roadways, parks, water and sewer systems. In this way it meets Council, community and staff goals. DISCUSSION As indicated above, this item is intended to be informative providing the Council and the public with an opportunity to review recommended expenditures, revenues and assumptions. In addition, it provides the Council with an opportunity to request additional information, if necessary, prior to the adoption of the Budget, which is scheduled for June 16, 2015. Staff intends to provide presentations covering all aspects of the Budget with a more abbreviated presentation at the June 16 meeting. Auf der Maur Affordable Housing Agreement On August 6, 2013, the City Council approved a Planned Unit Development Application (PUD-87) submitted by E & S Ring Management (Ring), on behalf of Frank Auf der Maur and Konrad Rickenbach (property owners), to construct a mixed use housing and retail development on a 16-acre site located at 3150 Bernal Avenue at the southeast corner of Bernal Avenue and Stanley Boulevard and at the same meeting, the City Council approved the Affordable Housing Agreement (AHA) for this development. As the City Council may recall, this AHA provides for either 52 below market rate (BMR) affordable units or a $4.5 million in-lieu fee payment as determined exclusively by the City Council. At the City Council meeting of September 16, 2014, the City Council took action approving an option that included selecting the in lieu payment of which $1,041,421 would the allocated to the City Lower Income Housing Fund and the remaining $3,458,579 would be allocated to a special fund for a one-time capital or operating program, including potentially an affordable housing project to be determined as part of the City's regular priority setting and/or budget and capital improvement program processes. Because staff does not anticipate the in lieu payment being received until sometime after the start FY 2016-17, these funds are not programmed in either the CIP or the operating budget. Nevertheless, should the City Council have a particular interest in a specific capital project, affordable housing project, and/or operating program, it would be appropriate to provide staff with general direction so that staff can incorporate Council Page 2 of 3