HomeMy WebLinkAbout04-18-2016 City Council Agenda packet
SARATOGA CITY COUNCIL
SPECIAL MEETING
APRIL 18, 2016
6:00 PM SPECIAL MEETING
Saratoga City Hall | 13777 Fruitvale Avenue, Saratoga CA 95070
ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS
Any member of the public will be allowed to address the City Council for up to three (3) minutes
on matters not on this Agenda. The law generally prohibits the Council from discussing or taking
action on such items. However, the Council may instruct Staff accordingly.
AGENDA ITEMS
Review of the draft FY 2016/17 proposed General Fund Operating Budget, proposed Capital
Improvement Project Funding, and updated Fiscal Policies.
Recommended Action
Council to review and provide consensus direction to staff on:
1) Draft FY 2016/17 Proposed Operating Budget
2) Revised FY 2016/17 Capital Project Funding Allocations
3) Updated Fiscal Policies
ADJOURNMENT
CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA
PACKET, COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
I, Crystal Bothelio, City Clerk for the City of Saratoga, declare that the foregoing agenda for the
meeting of the City Council was posted and available for review on April 15, 2016 at the City of
Saratoga, 13777 Fruitvale Avenue, Saratoga, CA 95070 and on the City's website at
www.saratoga.ca.us.
Signed this 15th day of April 2016 at Saratoga, California.
Crystal Bothelio, City Clerk
In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials
provided to the City Council by City staff in connection with this agenda are available at the
office of the City Clerk at 13777 Fruitvale Avenue, Saratoga, CA 95070. Note that copies of
materials distributed to the City Council concurrently with the posting of the agenda are also
available on the City Website at www.saratoga.ca.us.
Saratoga City Council Special Meeting Agenda – Page 1 of 2
Any materials distributed by staff after the posting of the agenda are made available for public
review at the office of the City Clerk at the time they are distributed to the City Council. These
materials are also posted on the City website.
In Compliance with the Americans with Disabilities Act, if you need assistance to participate in
this meeting, please contact the City Clerk at 408/868-1269. Notification 24 hours prior to the
meeting will enable the City to make reasonable arrangements to ensure accessibility to this
meeting. [28 CFR 35.102-35.104 ADA title II]
Saratoga City Council Special Meeting Agenda – Page 2 of 2
SARATOGA CITY COUNCIL
MEETING DATE: April 18, 2016
DEPARTMENT: Finance & Administrative Services Department
PREPARED BY: Mary Furey, Administrative Services Director
SUBJECT: Review of the draft FY 2016/17 proposed General Fund Operating Budget, proposed
Capital Improvement Project funding, and updated Fiscal Policies.
RECOMMENDED ACTION:
Council to review and provide consensus direction to staff on:
1) Draft FY 2016/17 Proposed Operating Budget
2) Revised FY 2016/17 Capital Project Funding Allocations
3) Updated Fiscal Policies
BACKGROUND:
The annual Budget Study Session is designed to provide an update of the current year’s funding and expenditure
estimates, a summary overview of next fiscal year’s proposed operating budget and notable changes, and a final
review of recommended capital project funding allocations. Council direction will be incorporated into the
Proposed Operating and Capital Budgets to be presented at the May 18th public hearing. Additionally, as fiscal
policies are included as part of the annual budget adoption, a final review of the proposed policy additions and/or
revisions are provided for discussion.
This informal review process provides Council with the opportunity to ask questions, request clarific ations, and
provide direction in preparation of the final proposed budget presentation.
General Fund Summary Overview
Attachment A, the General Fund Summary schedule, provides 3 years of revenue and expenditure history, the
current fiscal year budget and estimate, and next year’s proposed budget. A review of Total Operating Sources will
include a general discussion of major revenues, trends and projections, and information on the use of fund balance
reserves. A review of Total Operating Uses will highlight notable changes in the current and proposed year’s
budgeted expenditures, trends, and projections.
Of special interest in this year’s review, is the proposal to add a Code Compliance Officer position. Per Council’s
direction at the April 6th City Council Meeting, staff prepared a sensitivity analysis of code compliance services at
a variety of staffing levels for use in discussing this proposal. This analysis is included as Attachment B.
Total Fund Activity Overview
Attachment C, the Total Fund Activity Schedule provides a high level summary of all funds: General, Internal
Services, GO Debt, and Capital Funds. Beginning with the estimated beginning fund balances, we’ll quickly review
total budgeted revenue and expenditure amounts, to arrive at estimated ending fund balances. This high level fund
3
review is intended to provide a broad understanding of how City funds are structured for use in either general or
specific functions and how that impacts City operations.
Capital Project Funding
On the infrastructure side, proposed capital projects were reviewed and discussed during the Council’s Retreat,
which resulted in the Council providing funding allocation direction on proposed capital projects. The Council’s
Retreat direction is documented in Attachment D.
Subsequent to the Retreat, staff brought a few situational changes and opportunities regarding proposed capital
projects to the Finance Committee for review. Attachment E documents the Finance Committee’s recommendations
for discussion of these changes.
Fiscal Policies
Updates to Fiscal Policies are incorporated as part of the budget adoption process. On an annual basis, and as part
of the Finance Committee’s function, the City of Saratoga’s fiscal policies are reviewed. Updates generally include
policy language refinement and clarifications, expanded policy direction, documentation of existing best practices
or verbal policy direction, and any necessary operational or fiscal changes to reflect current practices or legal
requirements.
The proposed policy changes and updates are brought to Council at the Mid-Year retreat and/or Budget Study
Session for discussion prior to the proposed budget hearing in May. While there are many red-line changes in the
Fiscal Policy Attachment F (yellow highlights represent proposed changes subsequent to the Retreat), most of this
year’s updates reflect documentation of the City’s unstated financial practices. For instance, one Fiscal Policy
Statement change is documenting the City’s financial goals:
The City’s primary long-term financial goals are to maintain the City’s fiscal health, preserve essential services, reduce
financial risk, and support short and long-term administrative, financial, and operational goals in a financially
judicious manner. Long-term financial and infrastructure planning and the annual adoption of a structurally balanced
budget provides the foundation to these long -term financial goals. The City shall promote and implement strong
internal financial controls to manage risks and monitor the reliability and integrity of financial transactions and
operational activities.
While this concept was already captured under the Council’s Fiscal Stewardship Strategic Goal statement, the
addition of the Fiscal Policy Statement more clearly articulates Council’s intent and direction. Most of the other
policy update changes are language clarification and clean-up. However, there are a few notable policy changes:
1. Long Term Debt (pages 13-14)
The City has an opportunity to assist 39 Saratoga households, commonly known as the Arrowhead Cooperative,
to form a facility improvement district for the purpose of issuing a bond to fund water infrastructure
improvements. To do so, the City would function as a bonding conduit for the district. A change to include
the authority to act in this manner in the Long-Term Debt fiscal policy documents the Council’s intent to
proceed with this action. The modification includes requirements for City Council approval, full liability
protection, and cost recovery for bond issuance related expenses so as to protect the City and offset any costs
associated with such actions.
2. Facility Replacement Reserve (page 19):
The Finance Committee is recommending Council direct the annual commitment from Net Operations to the
Facility Replacement Reserve be increased from $300,000 to $500,000, (with the qualifier “as funding is
available”). The stated goal is to grow the Facility Replacement Reserve to a level equal to 1/3 of the City’s 4
insured value over the next 20 years (FY 2036/37). Additionally, the intended utilization of the reserve is
stated in more detail to provide guidance for future Councils and staff.
3. Working Capital Reserve / Fiscal Stabilization Reserve (pages 20-21):
The Finance Committee recommends a proposed change to these two General Fund reserves to shift $1 million
dollars from the $2 million Working Capital Reserve to the $1.5 million dollar Fiscal Stabilization Reserve.
This shift is intended to bring a more appropriate funding level for potential uses of these reserves. A review
of the General Fund’s fund balance demonstrated the General Fund remains net positive in most situations. The
total of the collective General Fund’s fund balance reserves offset working capital needs, therefore a standalone
$2 million set aside is not necessary. In addition, a negative fund balance was reflected only for a few months
during the depth of the recession, and for less than $1 million dollars. In addition, Council’s UAL payment
decision demonstrated the Fiscal Stabilization Reserve fund was not adequate to address a significant shortfall
or financial opportunity, therefore a shift in reserve funding is recommended.
Staff requests Council direction on the proposed Fiscal Policy changes prior to the Proposed Budget Hearing as
fiscal policies are not generally highlighted during the Operating and Capital Budget presentation due to the
difficulty of discussing a lone fiscal policy concept without the context or benefit of the entire fiscal policy
document. Budget Hearing communication is typically limited to how budget funding will be utilized.
Please Note: The Proposed Operating & Capital Budget is currently being finalized for the Budget Hearing on
May 18, 2016. Documents and fiscal information provided at this budget study session are still in development and
subject to revisions and updates.
CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION:
Council would not benefit from the review of the proposed operating budget, capital projects, and fiscal policies in
a study session environment, or provide input and direction to staff.
ATTACHMENTS:
Attachment A – Draft Proposed FY 2016/17 General Fund Summary
Attachment B – Code Compliance Sensitivity Analysis
Attachment C – Draft Proposed FY 2016/17 Total Fund Activity Summary
Attachment D – Council Retreat Recommended CIP project funding
Attachment E – Finance Committee’s Recommended Revisions to Capital Projects funding
Attachment F – Updated Draft FY 2016/17 Fiscal Policies (in track changes mode)
5
FY 2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2015/16 FY 2016/17 % of
General Fund Revenues Actuals Actuals Actuals Adjusted Estimated Proposed Budget
Property Tax 8,966,396$ 9,526,189$ 10,436,621$ 10,475,350$ 11,039,209$ 11,324,350$ 56.2%
Sales Tax 1,051,121 941,350 1,224,427 1,060,000 1,280,000 1,125,000 5.6%
Transient Occupancy Tax 228,199 257,010 309,618 310,000 320,000 310,000 1.5%
Business & Other Taxes 541,158 565,261 556,654 575,000 595,000 595,000 3.0%
Franchise Fee Tax 2,083,704 2,112,596 2,234,068 2,186,638 2,218,613 2,212,113 11.0%
Intergovernmental 416,486 466,424 586,596 446,500 490,464 432,000 2.1%
Fees, Licenses & Permits 1,591,517 1,524,041 1,409,199 1,465,900 1,479,673 1,476,680 7.3%
Charge for Services 1,744,112 1,942,388 1,789,649 1,845,234 1,889,928 1,857,267 9.2%
Interest 28,670 40,003 45,229 43,000 51,000 52,000 0.3%
Rental Income 465,460 440,287 474,750 485,602 501,728 497,714 2.5%
Other Sources 519,164 452,817 452,734 281,402 290,266 277,902 1.4%
Total General Fund Revenues 17,635,987$ 18,268,366$ 19,519,545$ 19,174,626$ 20,155,880$ 20,160,026$ 100%
Fund Transfers In 106,000 167,050 - - 206,157 -
Total Revenues & Transfers 17,741,987$ 18,435,416$ 19,519,545$ 19,174,626$ 20,362,037$ 20,160,026$
Use of (Addition to) Fund Balance Reserves
Carryforward Reserve 247,200 73,101 118,788 176,560 176,560 -
Development Reserve - - - 60,000 60,000 -
Environmental Pgm Reserve 50,000 50,000 50,000 50,000 50,000 50,000
CIP Reserve 1,504,944 280,880 1,633,345 1,777,896 1,777,896 1,410,648
CY CIP Reserve - - 500,000 - - -
Hillside Reserve (75,000) (216,721) - - - -
Compensated Absences (200,000) - - - - -
Fiscal Stabilization Loan - - 1,000,000 - - -
Fiscal Stabilization Repayment - - (500,000) (250,000) (250,000) (250,000)
Working Capital Reserve - - 930,184 - - -
Total Operating Sources 19,269,131 18,622,676 23,251,862 20,989,082 22,176,493 21,370,674
FY 2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2015/16 FY 2016/17 % of
General Fund Expenditures Actuals Actuals Actuals Adjusted Estimated Proposed Budget
Salary & Benefits 6,409,105$ 6,408,421$ 6,484,653$ 7,014,983 6,769,979 7,561,719 38.5%
UAL Payment - - 3,294,619 500,000 500,000 500,000 2.5%
Materials & Supplies 188,965 236,925 195,949 305,220 252,714 283,810 1.4%
Fees & Charges 738,596 759,799 732,387 925,455 880,303 892,393 4.5%
Consultant & Contract Services 1,883,085 2,054,371 1,966,367 2,293,729 2,183,590 2,311,422 11.8%
Sheriff Services 4,153,654 4,225,024 4,611,024 4,973,080 4,973,080 5,176,173 26.3%
Meetings, Events & Training 38,946 80,468 73,668 126,800 72,805 135,500 0.7%
Community Grants & Events 122,007 169,725 162,516 229,185 219,952 243,971 1.2%
Fixed Assets - - 35,343 - 5,700 10,000 0.1%
Internal Services Charges 2,033,577 2,202,844 2,325,823 2,455,758 2,455,758 2,536,873 12.9%
Total Expenditures 15,567,935$ 16,137,576$ 19,882,349$ 18,824,210$ 18,313,881$ 19,651,862$ 100%
Streets CIP 195,000 150,000 662,753 1,099,000 1,099,000 1,095,000
Park & Trails CIP 580,000 45,880 443,445 295,000 295,000 75,000
Facilities CIP 224,500 - 339,900 233,896 233,896 190,648
Administrative & Technology CIP 85,000 85,000 120,000 225,000 225,000 50,000
CIP Reserve Transfers 1,084,500$ 280,880$ 1,566,098$ 1,852,896$ 1,852,896$ 1,410,648$
Development Reserve Transfer - - - 60,000 60,000 -
General Fund Transfers
Annual Facilities CIP 100,000 100,000 100,000 - - -
Transfer to Street Resurfacing - - - 64,760 64,760 -
Total General Fund Transfers 100,000$ 100,000$ 100,000$ 64,760$ 64,760$ -$
Total Transfers Out 1,184,500 380,880 1,666,098 1,977,656 1,977,656 1,410,648
Total Expenditures & Transfers 16,752,435$ 16,518,456$ 21,548,447$ 20,801,866$ 20,291,537$ 21,062,510$
Net Operations 2,516,697$ 2,104,220$ 1,703,415 187,216$ 1,884,957$ 308,164$
TOTAL OPERATING USES
TOTAL OPERATING SOURCES
GENERAL FUND SUMMARY
4/14/2016 GF R&E by Category GF rev v exps actuals
6
Code Compliance Staffing Level Sensitivity Analysis
Page 1 of 2
CITY OF SARATOGA
Memorandum
To: Mayor Cappello & Members of the Saratoga City Council
From: Crystal Bothelio, City Clerk/Assistant to the City Manager
Date: April 18, 2016
Subject: Code Compliance Staffing Level Sensitivity Analysis
At the April 6, 2016 City Council Meeting, Council directed staff to provide a sensitivity analysis of
code compliance services at a variety staffing levels. The table below shows a rough breakdown of
compliance staffing capacity, as well as code compliance work that would go unassign ed or be
distributed to other city staff at the varying levels of code compliance staffing. The costs identified
below reflect the full cost of salary and benefits.
CO
D
E
C
O
M
O
P
L
I
A
N
C
E
O
F
F
I
C
E
R
HALF TIME .80 TIME FULL TIME
$64,277 20 hours/wk $102,516 32 hours/wk $128,009 40 hours/wk
Routine Inspections of
complaints
Inspections of
complaints
Inspections of
complaints
Research and respond to
complaints
Research and respond to
complaints
Research and respond to
complaints
Draft letters & notices Draft letters & notices Draft & finalize letters &
notices
Compliance inspections Compliance inspections Compliance inspections
Partial weekend
enforcement
Weekend enforcement Weekend enforcement
Capacity to focus on
voluntary compliance
Capacity to focus on
voluntary compliance
Capacity to work on
policies & procedures as
needed
Trees Limited inspection of
complaints
Limited inspection of
complaints
Inspection of complaints
Complaint based permit
compliance inspections
Complaint based permit
compliance inspections
Permit compliance
inspections
Misc. Special event permits
Solicitor’s permits
Noise permits
Massage permits
7
Code Compliance Staffing Level Sensitivity Analysis
Page 2 of 2
UN
A
S
S
I
G
N
E
D
T
A
S
K
S
Routine Inspections of
complaints
Research and respond to
complaints
Research and respond to
complaints
Finalize letters & notices
Finalize letters & notices Work on policies &
procedures as needed
Work on policies &
procedures as needed
Trees Inspection of complaints Inspection of complaints Inspection of complaints
Complaint based permit
compliance inspections
Misc. Special event permits Special event permits
Solicitor’s permits Solicitor’s permits
Noise permits Noise permits
Massage permits Massage permits
The code compliance duties above have been grouped into three categories: routine, trees, and
miscellaneous. Routine duties include work related to common code enforcement complaints, such
as animal noise or signage violations. Responsibilities related to trees correspond to enforcement of
the City’s tree regulations. Miscellaneous duties include oversight of various permitting programs
previously handled by the code compliance officer.
In addition to the above responsibilities, there are various code compliance responsibilities th at
would continue to be administered by staff in Planning and Building regardless of code compliance
staffing levels. For example, enforcement of Building Code regulations will remain within the
Building Division and there is some amount of basic administrative duties (answering phone calls,
referring and taking complaints) that will be handled by a variety of staff.
8
Estimated Revenues Expenditures Source (Use)Estimated
Fund Balance && of Fund Balance
Fund Category July 1, 2016 Transfers In Transfers Out Fund Balance June 30, 2017
Operating Funds
General Fund Reserves
Environmental Services 313,182$ -$ -$ (50,000)$ 263,182$
Hillside Stability 1,000,000 - - - 1,000,000
Capital Projects 1,410,648 - - (278,685) 1,131,963
Facility Reserve 1,200,000 - - 500,000 1,700,000
Working Capital 1,017,545 - - - 1,017,545
Fiscal Stabilization 2,250,000 - - 250,000 2,500,000
Development Services 653,891 - - - 653,891
Compensated Absences 208,167 - - - 208,167
Other Unassigned 1,823,799 20,160,026 (21,062,510) (421,315) 500,000
Total General Fund Reserves 9,877,232 20,160,026 (21,062,510) - 8,974,748
Special Revenue Funds
Landscape & Lighting Districts 1,031,914 625,011 (700,239) - 956,685
Total Special Revenue Reserves 1,031,914 625,011 (700,239) - 956,685
Internal Service Funds
Liability/Risk Management 341,399 412,577 (416,050) - 337,926
Workers Compensation 304,319 185,000 (216,856) - 272,463
Office Support Services 87,477 61,400 (73,450) - 75,427
IT Services 245,096 531,500 (586,992) - 189,604
Vehicle & Equipment Maintenance 137,960 275,000 (259,033) - 153,927
Facility Maintenance 296,114 929,000 (899,937) - 325,177
Vehicle & Equipment Replacement 586,256 125,000 (252,500) - 458,756
IT Equipment Replacement 227,201 125,000 (118,280) - 233,921
Facility FFE Replacement 105,643 200,000 (222,544) - 83,099
Total Internal Service Fund Reserves 2,331,465 2,844,477 (3,045,642) - 2,130,300
Total Operating Funds 13,240,611$ 23,629,514$ (24,808,390)$ -$ 12,061,734$
Debt Service
2001 Series GO Bonds 867,890 801,300 (847,960) - 821,230
Total Debt Service Funds 867,890 801,300 (847,960) - 821,230
TOTAL OPERATING BUDGET 14,108,501$ 24,430,814$ (25,656,350)$ -$ 12,882,964$
Capital Funds
Street Projects 1,492,228 8,664,089 (10,156,317) - -
Park & Trail Projects 942,974 932,015 (1,850,725) - 24,264
Facility Projects 191,557 391,655 (548,211) - 35,001
Administrative Projects 619,193 180,000 (799,193) - -
Total Capital Funds 3,245,952 10,167,759 (13,354,446) - 59,265
TOTAL ALL FUNDS 17,354,453$ 34,598,573$ (39,010,796) -$ 12,942,229$
Total Fund Activity Summary
FY 2016/17
9
Project
Title
Project
Description
Funding
Request Reserve Park In-lieu Other CIP
1 Annual Roadway Improvements This project is the consolidation of three closed projects and will fund the purchase of
supplies and materials contracting of repairs and reconstruction to the City's roadway
system
550,000 550,000 - -
2 Annual Infrastructure Repairs This project is the consolidation of 4 annual projects and will fund the maintenance
and repairs to the City's sidewalks, curbs and gutters, storm drains and bridges and
will have an annual funding of $200K
200,000 200,000 - -
3 El Camino Grande Storm Drain Pump This is an additional funding request to an existing CIP project. The City has received
a cost estimate increasing the cost from $150,000 to $361,000. Increase in cost due to
increase in scope
105,000 105,000 - -
4 Damon Lane Retaining Wall The City Geologist recommends repairs and reinforcements are to be made to the
retaining wall located in the Mt. Eden Road area on Damon Lane. The retaining wall
is owned by the City and is being compromised by a landslide.
190,000 190,000 - -
1,045,000$ 1,045,000 - -
5 Hakone Gardens Koi Pond Improvements This project will fund improvements to the Hakone Gardens Koi Pond 66,000 43,000 - 23,000
6 ADA Quarry Park Acces to Upper Terrace
Parking Lot and Pong
This project will fund the design,construction and environmental review of ADA
improvements to the Upper Parking Lot at Quarry Park
250,000 - 250,000 -
7 ADA/Inclusive Playground This project will fund the construction of an all-inclusive playground structure at
either Azule or Quarry Park.
160,000 32,000 128,000 -
476,000$ 75,000 378,000 23,000
8 Community/Senior Center Electrical Panel
Upgrade
This project will upgrade the existing outdated electric panel at the
Community/Senior Center.
120,000 120,000 - -
9 Facility Building Improvements This project will fund the purchase of storage units in order to increase facility
utilization at Prospect Saratoga Center and Warner Hutton House.
70,000 70,648 - -
190,000$ 190,648 - -
10 Village Specific Plan Update Transfer an amount from the General Plan Update CIP project into the Village
Specific Plan Project in an amount to restore fund balance to equal $100,000
- - - -
-$ - - -
1,711,000$ 1,310,648 378,000 23,000 TOTALS
TOTAL STREETS NOMINATED PROJECTS
TOTAL PARKS AND TRAILS NOMINATED PROJECTS
FUNDED CIP PROJECT LIST
FY 2016/17
STREET IMPROVEMENT PROJECTS
PARK & TRAIL IMPROVEMENT PROJECTS
FACILITY IMPROVEMENT PROJECTS
ADMINISTRATIVE PROJECTS
TOTAL FACILITY NOMINATED PROJECTS
TOTAL ADMINISTRATIVE NOMINATED PROJECTS
Attachment-D
1
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Project
Number
Project
Title Recommendation Current
City
Website
&
Intranet
Citywide
Transportation
Needs
Assessment
Council
Discretionary
ADA / All-
inclusive
Playground
Unfunded ISF
9461-001 Wildfire Protection Plan Defund project, transfer $15,000 to City Website &
Intranet CIP Project and $10,000 to new Citywide
Transportation Needs Assessment CIP Project
25,000 (15,000) (10,000)
9413-002 City Website & Intranet Receive additional $15,000 from defunded Wildfire
Protection Plan CIP
75,000 15,000
NEW Citywide Traffic Needs Assessment Create new CIP project that will fund a transportation
needs assessment for the City
50,000 10,000 40,000
9211-009 Move ADA/All-inclusive Playground
to Unfunded
Move project to the Unfunded list, shift $160,000 to El
Quito Magical Bridge Project
160,000 (160,000)
NEW El Quito Park Magical Bridge
Playground
Create new CIP project that will fund an all-inclusive
playground in partnership with the Magical Bridge
Foundation. City match to be $160,000 initially.
4,000,000 160,000
9322-011 Civic Theater Boiler Replacement Shift project to Facilities, Fixtures, and Equipment
Internal Service Fund
90,000 (90,000)
9322-012 Civic Theater Rooftop Duct Work
Replacement
Shift project to Facilities, Fixtures, and Equipment
Internal Service Fund
90,000 (90,000)
PROPOSED CHANGES TO CIP PROJECTS
FOR FY 2015/16 & FY 2016/17
Proposed
1
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Project
Title
Project
Description
Project
Cost
1 Quito Road Sidewalk Improvements This project would fund sidewalk improvements along Quito Road between Highway
85 and Allendale Avenue.
150,000
2 Big Basin Way Turn Around This project would fund the design and construction of a turn around on Big Basin Way
to improve traffic circulation through Saratoga Village.
500,000
650,000$
3 Village to Quarry Park Trail This project would fund the design and construction of a trail along Big Basin Way
from Saratoga Village to Quarry Park.
3,000,000
4 Congress Springs Park North Side Entrance This project would fund the construction of a trail connecting the residential
neighborhood around Cox Avenue east of Highway 85 to the northside of Congress
Springs Park.
100,000
5 Via Regina Trail This project would fund the construction of a pedestrian-equestrian trail connecting Via
Regina and Villa Oaks Lane.
60,000
6 Norton/Villa Montalvo Emergency Route This project would fund the construction of an emergency access road connecting the
Montalvo Arts Center parking lot with Norton Road.
1,000,000
7 Joe's Trail at Saratoga de Anza - Phase II This project would fund the design and construction of a trail from Saratoga-Sunnyvale
Rd. to Arroyo de Arguello.
600,000
8 Quarry Park Trail Improvements This project will fund the design, environmental review, and construction of additional
trail improvements at Quarry Park
250,000
9 Quarry Park Pond Improvements This project will fund the design, environmental review, and construction of
improvements to the pond at Quarry Park
150,000
10 Saratoga Village Creek Trail - Construction This project would fund the construction of a trail connecting Saratoga Village to
Quarry Park through Hakone Gardens along Big Basin Way
100,000
11 Saratoga-to-the-Sea Trail This project would fund the design, environmental review and construction of trail
connecting Quarry Park to Santa Clara County Sanborn Park
100,000
5,360,000$
12 Theater Improvements This project would fund the design and construction of improvements identified in the
Civic Theater Master Plan. Improvements include, but are not limted to, the backstage
dressing room, restroom annex, and relocation of control booths
7,000,000
13 Solar Panels at City Hall This project would fund the Installation of Solar Panels on the roof of the City Hall
Administration Building in order to provide increased efficiency and energy savings.
120,000
14 Renovate Existing Stage at Community Center This project would fund ADA accessibility and storage and safety improvements to the
Community Center Multi-Purpose Room Stage. Partial funding may be provided
through a $10k grant from the Rotary Club.
70,000
15 Community Development One Stop Permit Center
Remodel
This project would fund the remodel of the Community Development lobby area to
allow customers to remain at a single location while appropriate staff members respond
to the customer's location during the planning and building customer process, resulting
in improved efficiencies and customer service.
100,000
16 Senior Center Cool Roof This project would completed the installation of a cool roof on the Senior Center
section of the Community Center
65,000
7,355,000$
13,365,000$
UNFUNDED CIP PROJECT LIST
FY 2016/17
FACILITY IMPROVEMENT PROJECTS
TOTAL FACILITY UNFUNDED PROJECTS
TOTALS
STREET IMPROVEMENT PROJECTS
TOTAL STREETS UNFUNDED PROJECTS
PARK & TRAIL IMPROVEMENT PROJECTS
TOTAL PARKS AND TRAILS UNFUNDED PROJECTS
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BUDGET & FINANCIAL POLICY
INFORMATION
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BUDGET PROCESS OVERVIEW
he City of Saratoga adopts an annual Operating
and Capital Budget and an annual budget update
of the five-year Capital Improvement Plan. The
budgets contain summary level information for
revenue and expenditure appropriations for the fiscal
year beginning July 1st and ending June 30th. The
budget documents are prepared on the same basis as
the City’s financial statements, and in accordance with
generally accepted accounting principles (GAAP).
BUDGET PURPOSE
The Operating and Capital Summary Budget and the
Capital Improvement Plan serve as the City’s financial
plan, as well as a policy document, a communications
tool, and an operations guide. Developed with an
emphasis on long range planning, service delivery, and
program management, a fundamental purpose of these
documents is to provide a linkage between the services
and projects the City intends to accomplish, and the
resources committed to get the work done.
The format of the budget facilitates this linkage by
clearly identifying program purpose, key projects, and
workplan goals, in relation to revenue and
expenditures appropriations.
BASIS OF BUDGETING AND ACCOUNTING
Developed on a program basis with fund level
authority, the operating and capital budgets represent
services and functions provided by the City in
alignment with the resources allocated during the
fiscal year.
Basis of Accounting and Budget refers to the timing
factor concept in recognizing transactions. This basis
is a key component of the overall financial system
because the budget determines the accounting system.
For example, if the budget anticipates revenues on a
cash basis, the accounting system must record only
cash revenues as receipts. If the budget uses an accrual
basis, accounting must do likewise. The City’s
budgeting and accounting systems both use a
combination of modified accrual and full accrual basis
in the accounting and budget systems.
The City’s Governmental Funds consist of the General
Fund, Special Revenue Funds, Debt Service Funds,
and Capital Project Funds. Governmental Fund
budgets are developed using the modified accrual
basis of accounting. Under this basis, revenues are
estimated for the period if they are susceptible to
accrual, e.g. amounts can be determined and will be
collected within the current period. Principal and
interest on general long-term debt are budgeted as
expenditures when due, whereas other expenditures
are budgeted for liabilities expected to be incurred
during the current period.
Proprietary fund budgets are adopted using the full
accrual basis of accounting whereby revenue budget
projections are developed recognizing revenues
expected to be earned during the period, and
expenditures are developed for expenses anticipated to
be incurred in the fiscal year. The City maintains one
type of proprietary fund: Internal Service Funds.
Fiduciary funds are also budgeted under the modified
accrual basis. Trust funds are subject to trust
agreement guidelines, and Agency Funds are held in a
custodial capacity involving only the receipt,
temporary investment, and remittance of resources.
Saratoga administers two agency funds.
SUMMARY OF BUDGET DEVELOPMENT
The City develops it budgets with a team-based
budgeting approach. City Management and the
Finance Department guide the process through budget
development; however program budgets and
workplans are developed with each department’s
director or program manager’s oversight and
expertise. This approach allows for hands-on planning
and creates a clear understanding for both
management and staff of a program’s goals and
functions to be accomplished in the next budget year.
THE DEVELOPMENT PROCESS
Typically both the Operating and Capital Budget and
Capital Improvement Plan (CIP) annual development
processes begin in early January with the City Council
and City Manager’s development and refinement of
initiatives and directives for the upcoming budget
year. The Five-Year financial forecast is developed
and brought to the annual Council Retreat to review.
This forecast provides an overview of service level
operations as it ties to fiscal res ources, and guides the
discussion for the upcoming budget direction. The
CIP is also reviewed during this time to determine
funding capabilities, project priorities, and to refine
project workplans. Although the CIP Budget is a
stand-alone body of work, CIP projects impact the
T
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City’s ongoing operations and are therefore
incorporated into the Operating and Capital Summary
Budget document through the resulting financial
appropriations and service level requirements.
In February, the budget preparation pr ocess begins in
earnest. Budget assumptions, directives and initiatives
are provided to set the City’s overall objectives and
goals. Over several months, staff identifies and
analyzes program revenue and expenditure projections
in coordination with Finance/Budget staff and City
management. Capital improvement projects are
assessed and refined, and CIP funding and
appropriation requirements are finalized.
Through rounds of budget briefings and revisions,
operational and capital workplans are reviewed and
compiled, and staff finalizes the proposed program
and capital budgets. Financial summary information
is prepared, and the proposed budget document is
prepared for City Council review. A summary level
Public Hearing presentation is created to highlight the
notable budget impacts in the forthcoming year.
BUDGET ADOPTION
During the month of May, the City Council reviews
the proposed Operating and Capital Summary Budget,
and the Capital Improvement Plan for the five year
period in a public hearing. Notice of the hearing is
published in a local newspaper at least ten days prior
to the Council’s public hearing date. The public is
invited to participate and copies of the proposed
budgets are available for review on the City’s website,
in the City Manager’s office and at the budget hearing.
Under requirements established in Section 65401 of
the State Government Code, the City’s Planning
Commission also reviews the proposed Capital
Improvement Plan and reports back to the City
Council as to the conformity of the plan with the City’s
Adopted General Plan.
Final council-directed revisions to the proposed
budget are made and the budget documents are
resubmitted to the Council for adoption, again in a
publicized public hearing prior to the beginning of
the fiscal year.
Section 2-20.050(i) of Saratoga’s City Code requires
the City Manager to prepare and submit an annual
budget to the City Council. This is accomplished in
June, when the final proposed budget is formally
submitted to the Council in the subsequent public
hearing.
The approved resolutions to adopt the CIP and
operating budgets and the appropriation limitation
(Gann Limit) follow later in this section.
BUDGET AMENDMENTS
During the course of the fiscal year, economic and
workplan changes or unanticipated needs may
necessitate adjustments to the adopted budgets. The
City Manager is authorized to transfer appropriations
between categories, departments, projects, and
programs within a fund in the adopted budget, whereas
the City Council holds the authority for budget
appropriation increases and decreases, and transfers
between funds.
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BUDGET CALENDAR
December
January
February
March
Budget Office to begin development of financial forecast and budgets for
following fiscal year, including:
Draft operating budget revenue and expenditure projections
Prior fiscal year-end fund balance available for CIP
Budget Office to prepare Mid-Year Budget Report and Five-Year Financial
Forecast for Council review at annual retreat
For Operating Budget:
Budget Office to provide budget information to staff on budget
assumptions, directives, initiatives, and goals
Budget Office and Program Managers to prepare Internal Service and
Equipment Replacement Fund analyses and schedules, finalize internal
service rates
Budget Office to prepare operating budget worksheets for updates,
including departmental/program narratives, staffing and financial
worksheets, asset and staffing requests.
For Capital Budget:
Budget Office to prepare updated five-year CIP project worksheets
Budget Office and departments to review current User Fee Schedule for
appropriate changes in preparation of annual updates process
For Operating Budget:
Budget Office to finalize Internal Service Fund program workplans
Budget Office to prepare budget worksheets for departments, including
staffing and internal service program costs
Departments to prepare draft revenue expenditure workplans
For Capital Budget:
Project Managers to prepare funding, scope of work, and cost estimates for
new proposed projects
For Operating Budget:
Departments to finalize budget work plans
Review proposed budgets with City Manager
Departments and Budget Office to finalize budget changes
For Capital Budget:
Project Managers to determine year end CIP project estimates
City Manager to finalize new proposed CIP projects
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April
May
June
July/
August/
September
For Operating Budget:
Departments to finalize program narratives and performance measures
Budget Office to compile final program narratives, financial and
supplemental schedules, and financial budget summaries and charts for City
Council Budget Study Session
For Capital Budget:
Project Managers to finalize new project information for CIP submittal
Public Works Manager to bring new projects to Planning Commission
meeting for General Plan conformance review
City Council to hold Public Hearing for Annual User Fee Update
City Council to hold Budget Study Session
For Operating & Capital Budgets:
Final budget briefing with City Manager
Budget Office to incorporate Council directed changes into proposed
budgets and prepare final documents for Public Hearing presentation
City Council to hold Proposed Budget Hearing
For Operating & Capital Budgets:
City Council revisions incorporated into budget documents
City Council adoption of Operating and Capital Budget
City Council adoption of Gann Appropriation Limit
Final document preparation of financial and supplemental schedules, charts,
reference materials, etc.
Adopted Operating and CIP Budget documents finalized, posted on website, and
distributed
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FISCAL MANAGEMENT POLICY STATEMENTS
With both a general management philosophy and Council goal to practice fiscal responsibility, the City of Saratoga’s
conservative and cautious financial management is achieved through responsible, sustainable, and enforceable fiscal
policies and internal controls to ensure prudent and efficient use of resources. These policies and controls represent
long-standing accounting, budgeting, debt, investment, and reserve principles and practices, and are the foundation
upon which the City maintains its fiscal stability.
TheseSaratoga’a general fiscal management policy statements provide a summary overview of financial, operational,
and budgetary management, in one comprehensive centralized format toand act as guidelines and assist elected
officials and staff with understanding the City’s financial practices for fiscal operations. Detail level Ffiscal policies
are administrative in nature, therefore detail level policy direction is are not included in the budget document.
However, fiscal policies that rise to Council review and approval standards at a more specific level are incorporated
into the budget document for annual adoption by Council. Currently this includes the Fund Balance Reserve Policy
and the Capital Project Process Policy which follows this section. Other Council defined policies will be added as
directed/approved.
The Summary Fiscal Management Policy Statements in this document are organized into the following categories:
General Financial Principles
Appropriations and Budgetary Control
Auditing and Financial Reporting
Capital Improvement Plan
Development Related Financial Policies
Expenditures and Purchasing
Fixed Assets and Infrastructure
Internal Service Funds
Long-Term Debt
Revenues
Risk Management Policies
Treasury Management
General Financial Principles
The City’s fiscal policies are structured to ensure fiscal responsibility, accountability, transparency, and efficient
use of resources. Fiscal policies are to be reviewed, updated, and refined as necessary, with general policy level
decisions brought to City Council for review and approval, and administrative and operational level functions
approved by the City Manager.
Proposed revisions to the Fiscal Management Policy Statements and Council Policies are provided to Council at
the annual Council Retreat. Council members are to provide comments and concerns regarding revisions back
to the Mayor or City Manager at least two weeks prior to the budget study session to clarify or include in agenda.
The City’s primary long-term financial goals are to maintain the City’s fiscal health, preserve essential services,
reduce financial risk, and support short and long-term administrative, financial, and operational goals in a
financially judicious manner. Long-term financial and infrastructure planning and the annual adoption of a
structurally balanced budget provides the foundation to these long -term financial goals. The City shall promote
and implement strong internal financial controls to manage risks and monitor the reliability and integrity of
financial transactions and operational activities. 53
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Financial information shall be provided in a relevant, thorough, and timely manner, to effectively communicate
the City’s financial status to the Council, citizens, employees, and all other interested parties.
Financial stability goals and judicious responsiveness shall be the foundation upon which proactive and
advantageous financial decisions are made, and which guide the City’s response to local, regional, and broader
economic changes through the years.
The City shall undertake, adopt, and integrate new initiatives or programs in a cautious, well planned manner to
support the City’s long-term ability to maintain its essential services at the same level and quality required by its
citizens.
The City Council’s financial and community based goals, objectives, and policies are incorporated into and
implemented with the development and adoption of the City’s Operating and Capital Budgets.
Efforts will be coordinated with other governmental agencies and joint power associations to achieve common
policy objectives, create beneficial opportunities and services for the community, share the cost of providing
governmental services, and support legislation favorable to cities at the state and federal level.
The City will seek out, apply for, and effectively administer federal, state, local, and foundation, business, and
private grants which address the City’s current priorities and policy objectives.
Appropriations and Budgetary Control
The City Council shall adopts an annual balanced operating budget and the first year of an integrated five -year
capital improvement plan budget by June 30th of each yearon an annual basis, to be effective for the following
fiscal year running from July 1st through June 30th. Balanced budgets present budgeted sources in excess of
budgeted uses. Budgeted “Sources” include Revenues, Transfers In, and Appropriated Uses of Fund Balance.
Budgeted “Uses” include Expenditures and Transfers Out. Operating and cCapital bBudgets are to align with
the City’s long-term financial goals.
The City utilizes long-range planning as a decision-making tool, and annually adopts a structurally balanced
financial plan that retains the City’s fiscal health, preserves essential services, and support s short and long-term
goals in a financially judicious manner. moved to general fin policies
Each year the Finance & Administrative Services Department provides a short recap of the prior-year budget, a
mid-year budget status report, and an updated five year financial forecast to the City Council at the Annual
Council Retreat (scheduled in late January or early February ) to assist Council with formulating direction for
long-range fiscal planning, Ooperating Bbudget development, and capital funding appropriations.
Budgets are prepared on the same basis of accounting used for financial reporting: governmental fund types
(General, Special Revenue, and Debt Service) are budgeted according t o the modified accrual basis of
accounting; proprietary funds (Internal Service Funds) and fiduciary funds are budgeted under the accrual basis
of accounting.
The Operating Budget is primarily funded with current year revenues. Dedicated fund balance rese rves, such as
the Carryforward or Fiscal Stabilization Reserves represent prior year savings designated for specific uses, which
may be used to fund current year operational expenses, in accordance with their purpose, upon Council approval.
Council may also approve the use of long -term debt for operational liabilities if they deem it fiscally prudent.
With funding for other committed reserves already in place, a minimal base amount of $500,000 is to remain in
the Unassigned Fund Balance Reserve at year-end to provide a buffer for unanticipated operational shortfalls
and unforeseen needs in the following fiscal year.
City policy is to fund tThe Capital Budget is funded with both prior year surplus funding and dedicated capital
funding resources. Dedicated funding sources include Gas Tax (HUTA) revenues, road impact assessment
revenues; grantsproject revenues and reimbursements; community benefit assessments; and federal, state, local,
and private grants. 54
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In practice, budgeted revenues are conservatively stated and budgeted expenditures are comprehensive, allowing
for the annual operational and capital improvement goals to be completed. With effectively managed revenue
streams and efficient use of resources, fiscal year-end operational budget surpluses are available to fund future
capital improvement projects and contribute to the City’s fiscally responsible reserve accounts.
The City Council maintains budgetary control at the fund level; a ny changes in total fund appropriations during
the fiscal year must be submitted to the City Council for review and Council majority approval. Operating
Budget appropriations lapse at the end of each fiscal year unless specifically carried forward by appropriation
re-appropriated by the City Council in the following fiscal year’s budget. Capital Budget appropriations are
structured as a multi-year workplan; therefore project expenditure balances are automatically carried forward to
the following fiscal year as part of the annual budget adoption until funding is exhausted, modified, or the project
is completed.
The City budget shall comply with the annual determination of the City’s appropriation limit calculated in
accordance with Article XIIIB of the Constitution of the State of California and adopt an annual resolution to
this effect.
The City Manager is authorized to implement the City’s workplan as approved in the adopted budget. Within a
specific fund, the City Manager may transferhas the discretion to adjust appropriations between categories,
departments, programs, and projects as needed to implement the adopted budget, provided no change is made to
the total appropriation amount provided for any one fund. An example would be to backfill a vacant salaried
position with a contract service, therefore shifting funds from wage and benefit appropriations to an operating
expense expenditure within the General Fund appropriation. The City Manager also has the authority to withhold
filling the position for a time if conditions warrant a delay.
Generally, recurring expenditures are funded with recurring revenues or revenues specifically designated for
operational use. One time expenditures may be funded with one-time revenues or fund balances reserves. Fund
balance reserves are to be used for non -recurring one-time expenditures and capital projects.
In compliance with Council’s Fiscal Stewardship goal, fiscal stability and susta inability principles are
incorporated into budget planning. Appropriating adequate funds on an annual basis for the replacement and
maintenance of assets through Internal Service Funds , prioritizing infrastructure maintenance and repair in the
capital budget, and institutionalizing prudent payment strategies for long-term liabilities are foundational
strategies of fiscal stability and sustainability.
In FY 2014/15 CalPERS notified the City that as of 6/30/2015, the City’s Unfunded Accrued Liability obligation
of $7.7 million was to repaid over a thirty (30) year payment plan. The City Council established an alternative
repayment plan to lower the overall cost of the liability while maintaining fiscal stability. Approximately 43%
of the outstanding liability was immediately paid through the use of current year net operations and expendable
reserve funding. The remaining liability is to be paid off with an accelerated payment plan of $500,000 per year.
This payment strategy reduces interest costs by approximately 65% and reduces the payment period to 15 years.
The City Council appropriates has established a $50,000 annually to a ‘Council ContingencyDiscretionary
account’ appropriation for so that Council has funding available forapproved unplanned expenditures. Council
direction and consensus approval is required to utilize these funds. Unexpended appropriations are carried forward
into the following fiscal year.
Parks and Recreation Services are essential elements in meeting the City’s goal to enhance and promote quality
of life in the community. The Recreation Department provides activities, programs, classes, and rental facilities
to the entire Saratoga community, from infants to seniors, through various services. While these services innately
benefit individuals, and would typically be 100% funded through user fees, Council recognizes the general
community benefit and determined the Recreation Department activities would function under a minimum cost
recovery goal of 65%. This calculation is comprised of was established to align with the California Parks &
Recreation Society’s (CPRS) average cost recovery rate for all California recreation departments at the time the
policy was set. total program revenues and expenditures for the General Fund’s Recreation Services, Teen
Services, and Facility Rentals programs, as all share the use of the building, equipment, staff, and purpose, and
are therefore intrinsically connected in the analysis. 55
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The Community Development Department strives to attain full cost recovery plus a $100,000 annual stipend for
advanced planning updates, in recognition that development and building services are provided primarily for
individual and monetary benefitenrichment rather than for the general community’s benefit. Total department
revenues in excess of total department expenses (net gain) are added to the reserve at year end, and up to one -
third of the reserve fund balance may be used to offset a net loss at year end.
Auditing and Financial Reporting
California State statutes require an annual financial audit of the City’s financial records and transactions by
independent Certified Public Accountants. The City shall comply with Generally Accepted Accounting
Principles (GAAP) and produce annual financial reports pursuant to Governmental Accounting, Auditing, and
Financial Reporting (GAAFR) guidelines. The independent auditor will issue an audit opinion to be included in
the City’s Comprehensive Annual Financial Report (CAFR) testifying to the financial reports conformance with
accounting principles.
Additional financial reports issued by the Auditor’s may include: Singe Audit Report (annual report of federal
grant expenditures if in excess of the federal single audit limit is expended in a fiscal year), a Transportation
Development Act (TDA) report (annual report of TDA fund expenditures), an Appropriations Limit review
report (to establish tax revenue appropriation limit), and a Management report on the City’s Internal Controls.
The City shall submit the CAFR to the Governmental Finance Officers Association (GFOA) Financial Reporting
Program each year for review, and if in compliance with the program ’s requirements, to receive an award for
meeting GFOA’s financial reporting standards.
Regularly scheduled external Financial Reports include the following:
A State required Annual Cities Report, and Annual Streets Report are also completed in conjunction
with the year-end close.
Quarterly SMIP (Seismic Motion) fee reconciliation reports; CASp (ADA Accessibility) reconciliation
reports: and California Building Standard Commission (green building standards) reconciliation reports
Quarterly Use Tax Reports to remit uncollected sales tax to the State Board of Equalization
SB90 Mandated Cost reports for claims to comply with State regulated legislation.
Annual UST Certification report to show fiscal responsibility for the City’s underground storage tanks,
Annual Possessory Interest Report submitted to the County’s Assessor’s Office to report City owned
leased property
Regularly scheduled internal Financial Reports include the following:
Weekly check registers and monthly Cash and Investment Treasurer Reports arewill be s submitted for
review and approval at City Council meetings.
Quarterly financial reports will provides a status update on General Fund revenues and expenditures for
the first, second, and third quarters.
At mid-year , a budget status report is presented toat the City Council in February each yearretreat with
to provide a more comprehensive financial overview of the current year’s budget and includes to
proposed recommended budget adjustments as appropriate.
A year-end financial recap is provided after the City’s annual financial audit is completed.
Capital Improvement Plan
A five year Capital Improvement Plan (CIP) is updated annually in conjunction with the operating budget. The
CIP reflects the current and changing needs of the community as well as enhancements to improve the quality
of the community. The first year of the CIP is adopted to authorize appropriations. 56
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The CIP is categorized into programs by project type. The four programs are: Street Improvements, Park &
Trail Improvements, Facility Improvements, and Administrative & Technology Improvement s.
All projects within the CIP programs are appropriated, managed, and tracked separately, and each project’s
financial status is reported on a monthly basis in the Treasurers Report.
Project updates are recorded in the annual Capital Budget, with narrative, timeline, and financial summary
information updated with each published budget document .
Capital improvements that specifically benefit a select group of users and/or are fee-for-service based are to be
financed through user fees, service charges, special assessments and taxes, or development impact fees.
The City shall identify and dedicate capital improvement related funding directly to the CIP and to maximize the
use of grant funding for capital improvement projects.
Grants, insurance, or other reimbursement funding is to be returned to the expenditure’s funding source, unless
otherwise directed by Council. For instance, Hillside Reserve funded projects that receive insurance
reimbursement payments are to be returned to the Hillside Reserve, and grant reimbursements for projects funded
through the CIP Reserve are to be returned to the CIP Reserve when payment is received.
After completion of the prior year’s audit and the General Fund’s priority funding requirements are met, the
remaining net operations are moved into the Capital Project Reserve at year end. Use of the Capital Project
Reserve for the subsequent fiscal year is reviewed and preliminary direction given by consensus of the City
Council at the Annual Council Retreat. Final CIP funding direction is provide through the budget adoption.
Council has designated the following capital projects as fundamental to maintaining City infrastructure on an
ongoing basis, and shall therefore have priority status for available Capital Improvement Reserve funding: The
below funding guidelines shall be reviewed by Council for final CIP Budget dir ection each fiscal year:
$200,000 – Annual Infrastructure Maintenance & Repairs (for Sidewalk , Storm Drains, Curb & Gutter,
and Bridge Maintenance)
$50,000 – Roadway Safety and Traffic Calming
$50,000 – Risk Management and Mitigation Projects
The Annual Roadway Maintenance and Repair (ARM&R) CIP project is the primary CIP project funded in
support of Council’s goal to maintain Saratoga city streets at an average 70 PCI rating. On occasion, separate
street specific resurfacing projects are established due to funding requirements; they also contribute toward this
goal. The ARM&R project was originally established with a $1,000,000 minimum annual funding goal from
dedicated Gas Tax Revenue and Solid Waste Services contract assessed Vehicle Impact Fees. However, after
decreases in the PCI, Council has established a new goal of $2,000,000 annually with the FY 2016/17 budget.
Council is to consider this goal in conjunction with funding requests during the CIP budget discussion each y ear.
This project shall encompass roadway repairs, resurfacing, and rehabilitation projects, traffic light, curb and
gutter, and other miscellaneous repairs, striping and signage, and assorted street materials and supplies.
Development Related Financial Policies
The Development Reserve was established to provide stability for multi -year development related services. The
reserve is funded by Community Development Department revenues in excess of expenses at fiscal year -end. The
reserve is available for use in those years where a shortfall occurs; when development revenues fall below
development expenses. Use of the reserve for operational support is limited to a maximum of 1/3 of the reserve
balance in any given fiscal year; with any budgeted use of the reserve automatically rescinded up to the amount
development revenues are sufficient to cover General Fund net operations. The reserve may also be utilized for
other development related uses, such as funding development software upgrades or spec ial projects, per Council
direction. Additional information on this Development Reserve is located in the Fund Balance Reserve Policies
section.
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The Williamson Act, also known as the California Land Conservation Act, was passed by the California
Legislature in 1965 to encourage rural & agricultural land owners to keep their land undeveloped. When land
owners enter into a contract under the act, they benefit from lower property taxes, which are based on the property’s
current use, rather than paying market value based tax rates. In exchange, the property is to remain undeveloped
and continue to function in the same manner for the duration of the contract. Contracts run for 10 years and are
automatically renewed unless the farmer or rancher cancels it. The City does not limit the number of Williamson
Act contracts entered into each year.
The Mills Act is State-sponsored legislation granting local governments the authority to enter into an agreement
with property owners to allow reduced property tax payments in return for the restoration and continued
maintenance of their historic property. Since the agreement reduces property tax assessment, the City receives a
smaller share of property tax revenue in comparison to a property that is assessed at market value. The City will
allow approval of up to three Mills Act Contracts per year.
Expenditures and Purchasing
All expenditures shall be in accordance with the City’s purchasing policy, travel policy, credit card policy,
agreement, contract policy and public contract code, state or federal law, or any other applicable guidelines or
regulations.
Expenditures are managed at the program level. Program managers are to ensure expenditures do not exceed the
budgeted workplan and must take immediate action if at any time during the fiscal year an operating deficit is
projected at year-end. Corrective actions may include expenditure reductions, or with Council approval, budget
adjustments, or service reductions.
The City’s current purchasing policy, (effective date of 4/23/2007) establishes purchasing authority levels,
purchasing procedures, and procedural requirements, for the procurement of supplies, equipment, and services,
in conformance with Federal and State codes and regulations, and City Ordinance No. 2 -45.
Public Work projects governed by the State’s Public Contract Code are excluded from provisions of the City’s
purchasing policy.
Guidelines established by the City’s Purchasing Policy directs the City’s departments to purchase the best value
obtainable, securing the maximum benefit for funds expended, while providing all qualified vendors an equal
opportunity to do business with the City.
Services and supplies purchases that exceed $5,000 require written quotes, and must be approved by the
Purchasing Officer or designee, typically through the Purchase Order process. Documentation is to be retained
by the department in accordance with the records retention policy and schedule.
Services, supplies, and fixed asset purchases exceeding $25,000 must be authorized by the City Council, unless
purchase is specifically called out in the adopted budget (such as vehicle and equipment replacements) or
excluded under the Purchasing Policy.
The City departments shall conduct quarterly program and capital project reviews to determine if projected
operating revenues and expenditures meet budgeted expectations. If an operating deficit is projected at year -
end, the departments shall evaluate and implement corrective actions as needed, and notify Council if services
will be impacted.
Fixed Assets and Infrastructure
Tangible assets with a cost equal to or greater than $10,000 and a useful life of more than one year are considered
fixed assets and added to the capitalization schedules. Repairs and maintenance of infrastructure assets will
generally not be subject to capitalization unless the repair extends the useful life of the asset.
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The City will sustain a long-range fiscal perspective through the use of a five -year Capital Improvement Plan
designed to maintain the quality of City infrastructure, including streets , sidewalks, curbs and storm drains,
lighting, building, parks, and trees, and through Internal Service Fund programs to both maintain and replace
City building infrastructure, fixtures, and equipment, vehicles, and public works and technology equipment on
an ongoing basis
A Capital Asset system will be maintained to identify all City assets, their condition, historical and estimated
replacement costs, and useful life. Asset information is retained to provide information for preparation of
financial statements in accordance with GAAP, with emphasis placed on completion of GASB 34 requirements.
Infrastructure management systems are to be developed and maintained to provide long range financial and
operational planning. These shall include Roadway System management programs, Storm Drain System
management plans, Bridge replacements, Street Signal System replacements, and all other infrastructure
categories that require significant financial resources to fund the eventual replacement needs.
Information Technology software, hardware, and auxiliary equipment and systems are to be maintained through
the Operating Budget’s Internal Service Replacement Fund, whereas annual appropriations in the Information
Technology Services operating budget or departmental program budgets are to fund ongoing license,
maintenance, and security costs.
Internal Service Funds
Internal Services Funds are established to both equitably allocate operating costs to departments for support and
maintenance services, and to stabilize and spread the City’s replacement and operational costs over fiscal years
for the purpose of providing an accurate and balanced long -range fiscal perspective of the use of services and
assets.
Vehicles, Equipment, and Building asset replacement and maintenance types of Internal Service Funds are
structured to provide a consistent level of funding for asset and equipment replacement, and to ensure sufficient
funding is available for the regular maintenance, repair, and replacement of the City’s vehicles, equipment, and
building fixtures in an ongoing manner.
Technology and Office Equipment replacement and maintenance Internal Service Funds are structured to provide
a consistent level of funding for the replacement of assets and projects, and to appropriately distribute support
and maintenance costs to departments.
The Liability and Workers Compensation Insurance Internal Service Funds shall maintain adequate reserves to
pay all valid self-insured claims and insurance deductibles, including those incurred but not reported, in order to
keep the insurance funds actuarially sound.
Each Internal Service Fund will set recovery charges at rates sufficient to meet all operating expenses,
depreciation, and fund balance reserve policy objectives.
Long-Term Debt
The City shall seek to maintain a high credit rating through sound financial practices as a foundational financial
practice, and to maximize borrowing costs.
The City does not incur debt for operations or capital improvements except under extraordinary circumstances
and with citizen support. Under these circumstances the City will seek voter approval for General Obligation
(GO) Bond Debt for major infrastructure rehabilitation.
Long-term Financing Debt is typically incurred for capital improvements or special projects that cannot be
financed from current or dedicated revenues, or for large liabilities resulting in significant financial impacts. In
principal, long-term debt is to be used only if the debt service requirements do not negatively impact the City’s
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Through City Council approval, the City may function as a bonding conduit for special assessment districts.
This may occur when a neighborhood or area is seeking to improve private or cooperatively owned infrastructure,
such as private roads or water system cooperatives. The City shall require full liability protection and cost
recovery as necessary to protect the City and mitigate the cost associated with such actions.
The term for repayment of long-term financing shall: not exceed the expected useful life of the project; include
financing payment terms at a manageable level; and does notor extend beyond functionally appropriate payment
terms.
The City will monitor all forms of debt annually in conjunction with budget development and throughout the
year, and will report concerns and remedies if necessary to the City Council.
The City will ensure compliance with bond covenants, providing financial information to reporting parties as
necessary.
The City will comply with Government Code Section 43605 limitations on debt, which limits general obligation
indebtedness to an aggregate 15% of the assessed value of all real and personal property of the City.
Revenues
The City will encourage a stable revenue system to offset short -run fluctuations in any one revenue s ource, in
part through balancing revenue fluctuations to related operational fluctuations . –such as This concept is applied
in Community Development as’s multi-year service revenues net operational funding is held in reserve and
utilized to fund operational expenses as needed. and contract services fluctuate with service needs.
Designated and legally restricted tax and revenue funding sources will be accounted for in the appropriate funds.
General taxes and revenues not allocated by law or some other contractual agreement to other funds are
accounted for in the General Fund. Dedicated Capital Project revenues are to be directly accounted for in the
appropriate capital project fund, within a designated project.
A master schedule of User Fees is reviewed and presented to Council on an annual basis to adjust fees to an
appropriate level. Operating departments shall review services and the existing fees to ensure discretionary
services (not specifically waived or modified) reflect direct and reasonable indirect costs of providing such
services.
The City typically establishes user charges and fees at levels that recover the direct and indirect activity cost of
providing a service or product. The City also considers market rates and charges levied by other municipalities
of similar size for like services in establishing rates, fees, and charges. As some services have partial cost
recovery objectives (such as Recreation classes and facility rentals), cost recovery ratios will vary in accordance
with policy objectives.
The City will follow an aggressive policy of collecting local taxes and revenues due to the City through persistent
follow-up procedures, and external resources as necessary.
Donations may be accepted in accordance with the City of Saratoga Donation Policy most recently approved by
the City Council. Under the current policy, unrestricted donations of $5,000 or less may be accepted or declined
by the City Manager. Restricted donations of $500 or less may be accepted or declined by the City Manager.
Unrestricted donations of more than $5,000 and restricted donations of more than $500 must be brought to the
City Council for consideration. The City Manager may choose to request City Council consideration of any
donation, regardless of value.
Risk Management Policy
The City is insured for up to $25 million of general liability, auto, and property damage claims through a Joint
Powers Association insurance cooperative up to $5 million, and an excess insurance provider for claims in excess
of this, up to $20 million.the Association of Bay Area Government’s (ABAG) Pooled Liability Assurance
Network (PLAN) Corporation. The City is self-insured for the first $25,000 for general liability and auto claims;
property damage afterup to $5,000 and third party auto claims afterup to $10,000.
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Workers Compensation claims are insured for the first $250,000 of coverage through the City’s participation in
a Workers Compensation risk pool, known as SHARP (Shared Agency Risk Pool). After the $250,000 limit is
met, an excess insurance coverage policy is activated. The excess coverage provides an employer liability limit
of $5 million,000,000 per occurrence, and workers’ comp per occurrence limit of $100 million,000,000.
Workers' Compensation claims are managed by a third party administrator.
The City’s role in managing both its risk management and workers comp programs is to be preventative in nature
which is accomplished through careful monitoring of losses, working closely with the third party administrator,
proactively addressing infrastructure maintenance and potential risks, and by designing and implementing safety
programs to minimize risk and reduce losses.
Treasury Management
The City’s Investment Policy shall be brought to the Finance Committee and City Council for review, discussion,
direction, and adoption on an annual basis. California Government Code Section 53600 and the; City of Saratoga
Municipal Code Section 2-20.035; and Section 16.0 of the City of Saratoga Investment Policy require the City
Council to annually review and approve the City’s Investment Policy.
It is the policy of the City of Saratoga to invest public funds in a manner which will provide the maximum sec urity
with the highest investment return, while meeting the daily cash flow demands of the City and conforming to all
state and local statutes governing the investment of funds.
Finance staff shall exercise due diligence to comply with the Investment Policy. The City currently practices very
conservative and cautious investment practices throughby limiting its investments to the State’s Local Agency
Investment Fund (LAIF). LAIF’s extensive professional investment staff and conservative investment practices
ensure prudent financial management of the City’s fiscal reserves.Certificates of Deposits and high grade
investment vehicles may also be utilized under the Investment Policy, however the Finance Committee will
provide oversight, review and direction on any decisions to move a portion of the City’s available funds into these
other permitted investments.
Administrative Services Department’s Finance Division shall prepare a monthly report to the City Council that has
sufficient detail to present the financial condition of the City at month end, the cash and investments balance by
fund, and fund balances by fund type.
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FUND BALANCE RESERVE POLICY
Prudent financial management dictates that the City reserve a portion of its funds for future use to: maintain fiscal
stability; ensure the continued orderly operation of government and provision of services to residents; and to
mitigate current and future risks.
As a general budget precept, the City Council decides when and whether to appropriate available funds to and from
a reserve account. Use of reserve funds must be authorized by either specific direction in the annual budget, or by
a separate City Council action – unless specifically directed by policy. Responsible fiscal stewardship also requires
adequate reserves be maintained for all known liabilities and established City Council and community directed
initiatives.
In the following Fund Balance/Reserve Policy overviews, the descriptions include identification of the fund type
and classification, the purpose of the reserve, minimum and maximum funding goals if appropriate, guidelines on
utilization of the reserve and by what authority, and the procedure for funding the reserve initially; on an ongoing
basis, or after utilization.
Fund Balance and Net Position
In 2009, Governmental Accounting Standards Board (“GASB”) Statement No. 54 revised fund balance
classifications for “Governmental Funds” into five specific classifications of fund balance with the intent to identify
the extent to which a specific fund balance reserve is available for appropriation and therefore spendable, or whether
the fund balance reserve is constrained by special restrictions. Government Funds for which these new rules apply
include: the General Fund, Special Revenue Funds, Capital Pro ject Funds, and Debt Service Funds.
For “Non-Governmental Funds”, equity classifications are classified as “Net Position” with sub -classifications of
Restricted or Unrestricted Net Position. A third component of a Non -Governmental Fund’s equity is “Net
Investment in Capital Assets,” which for the City refers to the non-monetary portion of equity such as vehicles and
equipment, net of depreciation. Non -Governmental Fund types include Proprietary Funds (Enterprise and Internal
Service Funds) and Fiduciary Funds (Trust Funds). Currently, the City’s non -governmental fund types are limited
to Internal Service Funds.
Governmental Fund Type Reserve Classifications
The Governmental Reserve classifications are defined as follows, which includes the applicable reserves that fall
into the classification:
Non-Spendable Fund Balance
Represents resources that are inherently non-spendable from the vantage point of the current period. The City
does not presently hold Non-Spendable Reserve funds.
Restricted Fund Balance
Represents fund balance that is subject to external enforceable legal restrictions. The City maintains the
following restricted fund balances under this designation:
General Fund: Environmental Services Fund Balance Reserve
Special Revenue Funds: Landscape & Lighting Assessment Districts Fund Balance
Debt Service Fund: Library General Obligation Bond Debt Service Fund
Capital Project Funds: a) Park In Lieu Fund:
b) Highway User Tax Allocation Fund (Gas Tax):
c) Capital Project Grant Funds
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Committed Fund Balance
Represents fund balance constrained by limitations the government imposes upon itself at its highest level of
decision making and remains binding unless removed in the same manner. The City maintains the following
fund balances under this designation:
General Fund: Hillside Stability Reserve
General Fund: Facility Replacement Reserve
Capital Improvement Plan Funds: Capital Improvement Project Fund Balance Reserve
Assigned Fund Balance
Represents fund balance identified by Council for an intended use; however as no legal obligations exist, the
funds may be re-designated and utilized for another purpose if Council chooses. The City maintains the
following General Fund reserves under this designation:
General Fund: Future Capital & Efficiency Project Reserve
General Fund: Carryforward Reserve
Unassigned Fund Balance
Represents funding which may be held for specific types of uses or operational funding/stabilization purposes,
but is not yet directed to a specific purpose. Only General Fund reserves can be designated under the
“Unassigned” fund balance classification. Other fund types are by nature structured for specific purposes,
hence the fund balances are therefore considered “assigned” for that purpose.
General Fund: Working Capital Reserve
General Fund: Fiscal Stabilization Reserve
General Fund: Development Services Reserve
General Fund: Other Unassigned Fund Balance Reserve
Fund Balance Ratios
To ensure the City maintains available working cash flow and emergency funding at all times, the collective
total of the General Fund’s Assigned and Unassigned Reserves shall be sustained at a minimum of 20% of
General Fund expenditure appropriations, net of transfers out.
General Fund Year-End Allocations
After the City’s financial records are finalized and audited, with legal obligations and liability reserves funded,
revenues in excess of expenditures are closed out to the Other Unassigned Fund Bal ance Reserve. A base amount
of funding, as set by budget policy, $500,000 of funding is to remain in the Other Unassigned Fund Balance
Reserve, with the remainder distributed in the following order:
1. Working Capital Reserve interest allocation.
2.1. Repayment of Fund Balance Reserve loans - back to established levels (e.g. borrowing from/usage of the
Fiscal Stabilization or Hillside Stability Reserves).
a. For the Hillside Stability Reserve, loan repayment shall be made in annual contributions of
$100,000 until reserve balance reaches the $1,000,000 reserve goal.
b. Fiscal Stabilization loan repayments shall be made as directed by Council.
3.2. Annual contribution of $3500,000 to Facilities Replacement Reserve.
4.3. Remaining funds are allocated to the Future Capital Improvement and Cost Efficiency Projects Reserve.
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GENERAL FUND – FUND BALANCE RESERVE POLICIES
Environmental Services Reserve
Under the Restricted Fund Balance classification, the Environmental Services Reserve represents revenues
collected under a prior funding structure for environmental purposes, and is therefore restricted for use in funding
environmental program costs such as clean water programs, street sweeping, and storm drain cleaning services. Per
policy, the Environmental Service Reserve is being utilized through annual budget appropriations of $50,000.
The Environmental Services Reserve originated from a one-time funding structural change and therefore will not
be replenished when depleted.
Hillside Stability Reserve
Under the Committed Fund Balance classification, a Hillside Stability Reserve of $1,000,000 is set aside to provide
funding for unanticipated or unforeseen emergency or extraordinary costs related to hillside degradation, inclusive
of slide prevention and mitigation, slide repair, and associated drainage and roadwork. The reserve is to be
increased by $100,000 each fiscal year from General Fund year -end net operations until a $1,000,000 reserve cap
is reached.
Use of the reserve requires an analysis be prepared and presented to Council for approval, or in the event of a
landslide requiring immediate emergency work, the Public Works Director may direct use of up to 10% of the
reserve to make emergency repairs and mitigate further damage until Council takes action. Reserve funding is to
be used for emergency work which exceeds operational funding provided for in the Operations Budget. Upon use,
refunding of the reserve shall again resume at be provided from year-end net operations in the amount of $100,000
each fiscal year until the $1,000,000 reserve cap is reached.
Facility Replacement Reserve
The Facility Replacement Reserve is established to accrue funding for the major rehabilitation or replacement of
City Facilities (Bbuildings/structures). Eligible uses of this reserve to finance the construction of critical City
facilities include both direct funding of public facility improvements, and the servicing of related debt. Small
facility building replacements, major facility renovations, and down payment contributions toward a large facility
replacement in conjunction with bond measure funding are examples of intended Facility Replacement Reserve
uses.
An initial contribution of $300,000 was established in FY 2012/13 with Council’s recommendation to continue
funding at this level, as a priority use of year-end net operations fundingavailable. Effective FY 2016/17, Council’s
direction is to increase the annual year-end contribution amount to $500,000, as funding is available. Council has
set a goal to fund the Facility Replacement Reserve to a level equal to 1/3 of the City’s insured value over the next
20 years (by FY 2036/37) as a fiscally responsible practice to maintain city infrastructure In principle, Saratoga
does not pursue bond money to fund capital improvements, however, replacing high cost facility infrastructure
requires a long-term funding plan that may or may not be attainable through annual contributions. Therefore, the
Facility Replacement Reserve demonstrates both the City’s good faith funding effort and financial stewardship for
future bond measures if needed, as well as accumulating funding for a down payment on replacement infrastructure
to minimize bond funding needs.
A facility’s insured value represents the initial cost of the facility decreased each year over the facility’s estimated
lifespan. Therefore, insured value represents the remaining life of the facility’s purchase cost – it does not represent
the current cost to replace a facility. The City recognizes that insured value is not sufficient to fund facility
replacements, therefore annual contributions will continue as an ongoing funding obligation even after the 1/3
reserve goal is met.
Changes in aAnnual contributions and ,the reserve goal amount, and utilization shall be determined by Council
during the budget process, in line with changes in as the City’s economic situation changes. Utilization of the
reserve shall be brought to Council for discussion and consideration as needed.
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Future Capital & Efficiency Projects Reserve
Under the Assigned Fund Balance classification, the Reserve for Future Capital Improvement & Efficiency Projects
shall reserve funding for as yet undefined capital and efficiency improvement projects. Reserve funding is derived
from General Fund accumulated net operations (as available) and is therefore considered a “one -time funding
source”. Funds are held in this reserve until Council reviews funding requests and approves a use or transfer to a
capital project fund.
Use of the reserve funding is at the Council’s discretion, but typically occurs in conjunction with the annual budget
adoption after Council conducts a comprehensive review of capital and efficiency improvement needs. Reserve
replenishment is dependent upon net operational savings in subs equent fiscal years.
Carryforward Reserve
Under the Assigned Fund Balance classification, the Reserve for Carryforwards represents funding held at the end
of each fiscal year for critical unexpended operating budget appropriations to be purchased in t he following fiscal
year, and any remaining Council Contingency funding. The reserve is reconciled at the end of each fiscal year to
both release prior year carryforward funding and reserve current year carryforward funding into the following
budget year.
Staff determines the year -end reserve amount after all fiscal year payments are finalized; the reserve amount is
conceptually appropriated by Council each year in the budget adoption resolution.
Working Capital Reserves
In accordance with the City’s cautious and conservative fiscal philosophy, the City’s general prevailing financial
policy holds that the City should fund daily operations with current resources in order to avoid use of short -term
Tax Revenue Anticipation Notes (TRANs). borrowing notes for cash flow management.
To support this policy a Working Capital Reserve is established to meet cash flow requirements and prevent short -
term borrowing, which in turn ensures the continuance of services to the public while also maintaining the City’s
credit worthiness. To provide adequate working capital in the case of extreme circumstances, the City shall
maintain, in conjunction with the Fiscal Stabilization Reserve, a minimum operational reserve of 60 days of the
following year’s General Fund budgeted expenditures net of internal service charges and transfers out, and up to a
maximum operational reserve amount equal to 90 days of the following year's General Fund budgeted expenditures,
net of internal service charges and transfers out. This reserve falls under the Unassigned Fund Balance
classification.
Effective July 1, 2016, the A Working Capital Reserve of $2,000,000 shall be reduced to $1,000,000, in was
established conjunction with increasing the Fiscal Stabilization Reserve by $1,000,000. For the City of Saratoga,
a Working Capital Reserve of $1,000,000 is more than sufficient for cash flow needs. With the $1,000,000 flowing
into the Fiscal Stabilization Reserve, the overall 60 day General Fund operational reserve minimum requirements
shall continue to be met. in April 1994. Effective June 30, 2000, interest earnings accrue to the reserve at the end
of each fiscal year based on the annual LAIF rate, for the purpose of increasing the reserve balance amount in
proportion to Operating Budget increases.
In 2014, accumulated interest earnings of $930,184 were utilized to pay off a portion of the City’s Unfunded
Accrued Liability, bringing the Working Capital Reserve back to the initial $2,000,000 funding level.
As the Working Capital Reserve’s purpose is to ensure sufficient operating cash, there are no defined fund uses,
repayment terms, or authorization requirements. The $1,000,000 Working Capital Reserve funding level will be
assessed on an annual basis to ensure this funding level is sufficient for cash flow needs.
Fiscal Stabilization Reserve
Under the Unassigned Fund Balance classification, a Fiscal Stabilization Reserve of $1,500,000 was established to
provide temporary financing for budget stabilization caused by fiscal downturns, unanticipated extraordinary
expenditures related to a natural disaster or calamity, or from an unexpected liability or funding decrease created
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$1 million transfer from the Working Capital Reserve, up to $2,500,000. This funding shift provides a more
accurate reserve funding purpose and utilization structure.
Fiscal stabilization needs may occur from revenue declines (over one or more years) of more than 5% of either
property tax, the combined total of other taxes, or General Fund revenues in total, or from unanticipated
extraordinary operational increases of more than 5% such as from a natural disaster or unexpected Federal, State,
County or CalPERS funding changes.
Council may utilize funding at budget adoption, by adoption of a budget adjustment resolution during the course
of the year, or after a Federal, State, or locally declared emergency. In the event a locally declared emergency takes
place, the City Manager has the authority to spend funds until such time as the City Council takes action. Reserve
appropriations are to be replenished from year -end net operations, as available, on a priority basis. The $2,500,000
Fiscal Stabilization Reserve funding level will be assessed on an annual basis to ensure this funding level is
sufficient in light of operational reserves and utilization needs.
Development Services Reserve
Under the Unassigned Fund Balance classification, the Development Services Reserve provides fiscal stability for
the Community Development Department’s planning and building programs. Development projects are often
multi-year activities in which revenues may be collected in one year, while project expenditures may extend over
several years.
This reserve represents accumulated excess planning and building net operation funds from years when
development revenues exceeded development expenditures. The reserve funds are subsequently utilized to offset
excess planning and building program expenditures through annual budget appropriations in the years where
revenues are not sufficient, thereby acting as an overall funding stabili zer for multi-year development activities.
Use of reserve funding for operational support is restricted to 1/3 or the reserve balance in any given fiscal year,
with Council approval. Budgeted use of the Development Reserve is to be rescinded if and t o the point where
development revenues are sufficient to cover General Fund net operations at year -end. The reserve may also be
utilized for other development related uses, such as for development software upgrades or special projects, per
Council direction.
Compensated Absences Reserve
Under the Unassigned Fund Balance classification, the Compensated Absences Reserve is established to smooth
expenditure fluctuations resulting from the payout of accrued leave to employees at service separation and
distribution payouts. Initial reserve funding is to be established at $200,000, with a targeted goal of Reserve funding
equal to one-third of the compensated absences liability is established at year-end. Reserve funding in excess of
one-third of the liability is to be returned to the General Fund Other Unassigned Reserve.
Use of the reserve occurs when total annual compensated absences payouts exceed budgeted salary funds. Large
payouts decrease the compensated absences liability at year -end, thereby supporting the practice of utilizing the
reserve as needed. The reserve may be replenished over a three year period. Year -end reconciling allocations to
and from the reserve are approved though Council’s budget resolution adoption each fiscal year, with the liability
and resulting reserve amounts determined as part of the year -end close process.
Council Discretionary Reserve
Under the Unassigned Fund Balance classification, the Council Discretionary Reserve represents unspent funds
from the Council’s annual appropriation. The reserve provides a mechanism to roll forward remaining Council
Discretionary Funds as reserve funds are immediately re -appropriated into the following fiscal year. This allows
Council the flexibility to take advantage of unforeseen opportunities or needs without the restriction of fiscal year
boundaries. Use of the reserve funding requires Council majority approval. The reserve exists at year -end only
when there are remaining unspent Council Discretionary funds at the end of th e fiscal year.
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Other Unassigned Reserve
The ‘Other Unassigned Reserve’ represents accumulated net operations not yet allocated to other fund balance
reserves, and by definition, fall into the Unassigned Fund Balance classification. In the General Fund, a baseline
of $500,000 of accumulated net operations is to remain in the Other Unassigned Fund Balance Reserve at year end
to provide a buffer for unanticipated operational shortfalls and unforeseen needs .
Other fund’s accumulated net operations are typically accounted for in an undefined reserve account – typically
just calledtitled ‘Ffund Bbalance Rreserve’. As the other types of funds are structured for specific uses or
commitments, their fund balance, by its distinctiveness, already has a directed purpose, whereas the General Fund
is used for multiple and general operational purposes thereby requiring a distinction of purpose for each reserve.
Council may utilize reserve funding at budget adoption or by adoption of a budget adjustment resolution during the
course of the year. Reserve funding is replenished from year -end net operations, as available.
SPECIAL REVENUE FUND – FUND BALANCE RESERVE POLICIES
Landscape & Lighting Assessment District Funds
Assessment District Funds are Special Revenue Funds, which is a type of governmental fund. As a governmental
fund, the Landscape and Lighting Assessment District Funds comply with GASB 54 fund balance classifications,
and by nature of the fund’s purpose, fund balance reserves are classified as restricted reserves.
Special Revenue Funds account for and report the proceeds of specific revenue sources that are restricted or
committed to specified purposes (other than for debt service or capital projects.) For the City, Landscape &
Lighting District Special Revenue Funds were established to account for each individual assessment district;
thereby each fund has its own separate fund balance reserve.
Each district’s fund balance reserve should be suffici ent to provide working capital to cover operational expenses
through the first half of assessment receipts in January, therefore equitable to approximately one -half of a district’s
annual expenditure budget. The second half of receipts are received in Jun e. Some districts may include capital
improvement projects in addition to ongoing regular maintenance resulting in fund balance increasing over the
years to accumulate sufficient resources for the improvement projects. As each district’s situation is di fferent, a
district’s maximum fund balance shall be determined by the Public Works Director.
Requests for use of the reserve are approved by Council through budget adoption or by a Council approved budget
adjustment resolution throughout the year. The res erve is replenished from the Fund’s net operations in subsequent
years.
DEBT SERVICE FUND – FUND BALANCE RESERVE POLICIES
Library General Obligation (GO) Bond Debt Fund
The Library General Obligation (GO) Bond Debt Fund is a Debt Service Fund established to account for the
financial resources accumulated for principal, interest, and cost of issuance expenditures associated with the Library
Bond Debt. As Debt Service Funds are a governmental fund type, the fund reserves fall under the GASB 54 fund
balance classifications. Debt Service Fund reserves are classified as Restricted as funding can only be spent for
specific purposes as stipulated by the bond covenants.
The Library GO Bond Debt Fund was established to ensure receipts are tracked separately, and funding is available
for the GO Bond debt service requirements. At a minimum, the year -end fund balance reserve shall be sufficient
to provide working capital to cover the semi-annual principal and interest debt payment due on August 1 st as GO
Bond tax receipts are received after the 1st debt payment is due. December receipts provide for the February
payment. As bond assessments are collected as a percentage of proper ty values, reserves should provide sufficient
funding to compensate for tax fluctuations. The fund’s reserve maximum should be no more than one -year of
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The reserve balance is increased (or reduced) through establishing ass essment rates at more (or less) than the semi-
annual payments and bond services require. Therefore, replenishment (or use) of the reserve is approved by Council
through budget adoption and implemented through an increased (or reduced) assessment rate as a result of the
fund’s net operations.
CAPITAL IMPROVEMENT PROJECT FUNDS – FUND BALANCE RESERVE POLICIES
Overview
Capital Improvement Project (CIP) Funds account for the acquisition and maintenance of major capital assets other
than those financed through special assessments or enterprise funds. Capital Project Funds are a type of
governmental fund and therefore comply with GASB 54 fund balance classifications. As Council directs
appropriated funding be spent for specific improvement projects, the Capital Project Fund Balance Reserves are
classified as Committed Fund Balance.
Budgeted capital improvement project funding is determined by the scope of work approved by Council, and
remains assigned for that use until completed or reassigned by Council. Fund Balance amounts represent the total
remaining funds in the individual projects at year -end. As Fund Balance amounts are determined by the point of
project completion at year-end they cannot be standardized for minimum or maximum amounts. Fund Balance is
re-appropriated to the capital project in the following fiscal year for the work to be completed.
Street Improvement Projects Funds
Street Improvement Project Funds provide for a safe and functional roadway and pedestrian street system. Each
Street Improvement Fund (CIP Street Fund, CIP Grant Fund, and Gas Tax Fund) has multiple projects which roll
up into the overall fund balances, but remain designated for use by project.
The CIP Street Fund receives annual funding from fees, reimbursements, contributions, and transfers from other
funds. The CIP Grant Fund receives federal, state, and local grants whic h vary in source and amount from year-to-
year. On occasion, a private grant may be received. Typically, CIP Grant Funds have a negative fund balance as
project work is conducted before reimbursement is received. Gas Tax Funds represent annual Highway Us er Tax
and Transportation Congestion Relief revenue allocations that are to be accounted for separately and are subject to
State audits.
Year end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund
Balance) which are subsequently re -appropriated by Council into the following budget year through budget
adoption.
Park & Trail Improvement Project Funds
Park & Trail Improvement Project Funds provide for capital improvements to the City’s neighborhood and cit y
parks and plaza, the sport fields, bike and pedestrian trails, and open space areas throughout the City. Each of the
Park & Trail Improvement Funds (CIP Park & Trail Fund, CIP Tree Fund, and the CIP Park & Trail Grant Fund)
have multiple projects which roll up into the overall fund balances, but remain designated for use by project.
The CIP Park & Trail Fund receives annual funding from subventions, occasional Park -in-Lieu fees,
reimbursements and contributions, and transfers in from other funds. The Tree Fund receives revenue from tree
fines and transfers from other funds upon Council direction. The CIP Grant Fund receives federal, state, local and
occasional private grants which vary in source and amount from year -to-year. Typically, CIP Grant Funds have a
negative fund balance as project work is conducted beforehand and then reimbursed from expenditure invoices.
Year end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund
Balance) which are subsequently re -appropriated by Council into the following budget year through budget
adoption.
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Facility Improvement Project Funds
Facility Improvement Project Funds provide for capital maintenance and improvements of the City -owned
buildings and structures throughout the City. Each of the Facility Improvement Funds (CIP Facilities Fund and the
Facility Grant Fund) have multiple projects which roll up into the overall fund balances, but remain designated for
use by project.
The CIP Facilities Fund receives annual funding from a General Fund transfer, from Theater Ticket Surcharge Fees,
and from reimbursements and contributi ons. The Facility Grant Fund receives revenue from grants that vary in
amount from year-to-year. Typically, CIP Grant Funds have a negative fund balance as project work is conducted
beforehand and then reimbursed from expenditure invoices.
Year end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund
Balance) which are subsequently re -appropriated by Council into the following budget year through budget
adoption.
Administrative & Technology Improvement Funds
Administrative & Technology Improvement Project Funds provide for major capital expenditures to improve or
enhance administrative, technology, and operational systems, processes, or functions. Each of the Administrative
& Technology Improvement Funds (CIP Admin & Tech Improvement Fund and the Admin & Tech Grant Fund)
have multiple projects which roll up into the overall fund balances, but remain designated for use by individual
project.
The CIP Administrative & Technology Improvement Fund typically receives funding from a General Fund transfer
as administrative and technology improvement focused grants are limited. If grants are received, projects typically
have a negative fund balance as project work is conducted beforehand and then reimbursed from expenditure
invoices.
Year end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund
Balance) which are subsequently re -appropriated by Council into the following budget year through budget
adoption.
INTERNAL SERVICE FUNDS – FUND BALANCE RESERVE POLICIES
Overview
Internal Service Funds are established to provide centralized cost centers for shared expenses and services in order
to efficiently track costs and manage resources. Costs are then allocated back to the operational programs based
on usage to more accurately determine cost of services.
The City’s Internal Service Funds include the two Insurance funds: Risk Management and Workers Compensation,
four Service/Support funds: Office Support, IT Services, Vehicle & Equipment Maintenance, and Building
Maintenance Funds, and three Equipment Replacement funds: the Vehicle & Equipment Replacement Fund, the
Office Technology Equipment Replacement Fund, and the Building FF&E (Furniture, Fixture , & Equipment)
Replacement Fund.
As each fund is accounted for as a separate entity, operational revenues less expenditures result in either a positive
or negative fund balance at any given point in time – Internal Service Funds are similar to the separate checking
and saving accounts a person may use for different purposes. At year end, each fund’s net balance is represented
as the “Fund Balance Reserve”. The intent of the Internal Service Funds Reserves is to hold appropriate levels of
reserves to support cash flow needs and minimize interfund loans, not to accumulate funds in excess of expected
ongoing operational costs. Reserve levels are determined by the specific operational needs of the program, but
typically will fall within 25 – 50% of annual budgeted expenditures. 70
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Internal Service Funds are a type of Proprietary Fund; therefore GASB 54 fund balance classification (for
Governmental Fund types) does not apply. Instead, Internal Service Fund’s financial statement reports are
presented similar to private-sector businesses and use “Restricted” and “Unrestricted Net Position” to define net
operational balances (equity/fund balance reserves).
Unrestricted Net Position allows reserve funding to be used (with Council approval) within the gene ral scope of
the fund’s purpose. Restricted Net Position reserves are limited to a specific use, narrower than the stated purpose
of the fund. For example, grant funding provided for a defined use, as in remaining funds from a Risk Management
Training Grant within the Liability/Risk Management Fund, must be used for qualified training purposes. Most
Internal Service Funds reserves are held in the Unrestricted Net Position category.
Liability /Risk Management Reserve Fund
The Liability/Risk Management Fund’s Unrestricted Net Position reserve supports cash flow needs and minimizes
interfund loans. Appropriate levels are maintained through service chargebacks to the programs, based on
operational risk factors. Most claims are covered under the insurance risk pool JPA, the City is self-insured for up
to $25,000 per General Liability and City Vehicle Auto Liability occurrence, and up to $5,000 for Property Damage
and 3rd Party Auto Liability. Non -covered claims are paid fully by the City.
The Liability/Risk Management program receives funding from allocations charged to covered departments, from
grant funding, and from claim reimbursements. At year end, unspent funding flows into Unrestricted Net Position
or Restricted Net Position for specific purposes. Requests for use of reserve balance are approved by Council
through budget adoption or by a Council approved budget adjustment resolution during the year. The reserve is
replenished from the Fund’s net operations in subsequent years.
Workers Compensation Fund
The Workers Compensation Fund’s Unrestricted Net Position reserve supports cash flow needs and minimizes
interfund loans. Appropriate levels are maintained through service chargebacks to the programs, based on
operational risk factors. The purpose of the Workers' Compensation program is to provide insurance benefit
coverage for employee work-related illness and/or injuries through its membership in a shared risk pool. The risk
pool provides coverage up to $250,000, and excess insurance provides coverage over this amount up to $10 million.
The Workers Compensation program receives funding from allocations charged to covered departments, from grant
funding, and from claim reimbursements. At year end, unspent funding flows into Unrestr icted Net Position, or
Restricted Net Position for grant funding. Requests for use of the reserve balance are approved by Council through
budget adoption or by a Council approved budget adjustment resolution during the year. The reserve is replenished
from the Fund’s net operations in subsequent years.
Office Support Fund
The Office Support program provides a centralized cost center for administrative office support expenses, including
photocopy machine leases, postage machines, shared office machines, and the associated maintenance and repair
services, postage, paper, and copier supplies. For efficiency, office support costs are managed collectively and
charged back to departmental programs on a use-basis allocation. Accumulated net operations are held in the Office
Support Fund for working capital cash flow.
The reserve is funded from the allocations charged to covered departments. At year end, unspent funding flows
into Unrestricted Net Position. Requests for use of excess reserve balance are approved by Council through budget
adoption or by a Council approved budget adjustment resolution during the year. The reserve is replenished from
the Fund’s net operations in subsequent years.
Information Technology Services Fund
Information Technology Services provide for the delivery of technology based servic es throughout the City’s
operations, including maintenance of the City’s information systems and infrastructure, program implementation,
streaming video, internet, landline, and wireless communications systems, cloud based technology, and support of 71
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all existing information technology as well as new technology initiatives. For technology oversight, security, and
efficiency, information technology costs are managed collectively and charged back to departmental programs on
a service-based allocation to fund the program.
Funding for the program comes from these allocations charged to covered departments. At year end, unspent
funding flows into Unrestricted Net Position. Accumulated net operations are held in the Information Technology
Services Fund for working capital cash flow. Requests for use of the reserve are approved by Council through
budget adoption or by a Council approved budget adjustment resolution during the year. The reserve is replenished
from the Fund’s net operations in subsequent years.
Vehicle & Equipment Maintenance Fund
The Vehicle & Equipment Maintenance program provides for the fuel, maintenance, and servicing of the City’s
fleet and major equipment to ensure all vehicles and equipment comply with manufacturer’s recommendatio ns and
safety requirements.
To fund the program, vehicle & equipment replacement costs are charged back to the departmental programs based
on assigned usage. Accumulated net operations are held in the Vehicle & Equipment Maintenance Fund for
working capital cash flow. At year end, unspent funding flows into Unrestricted Net Position. Requests for use of
the reserve are approved by Council through budget adoption or by a Council approved budget adjustment
resolution during the year. The reserve is replenished from the Fund’s net operations in subsequent years.
Building Maintenance Fund
The Building Maintenance program provides for the custodial, maintenance, and non -major repairs and building
improvement services for all facilities at the Civic Center, Prospect Center, and Museum Park. Additionally, the
program supports the maintenance and repair needs for the tenants of City leased buildings as defined in the lease
agreements. To fund the program, total costs are allocated back to departmental programs primarily based on
building space usage. General and public use is allocated to the Non -Departmental program.
Accumulated net operations are held in the Building Maintenance Fund for working capital cash flow. Funding
comes from the allocations charged to covered departments. At year end, unspent funding flows into Unrestricted
Net Position. Requests for use of the reserve are approved by Council through budget adoption or by establishing
chargeback funding levels higher or lower than budgeted expenditures. The reserve is replenished from the Fund’s
net operations in subsequent years.
Vehicle & Equipment Replacement Reserve
The Vehicle and Equipment Replacement Fund Balance Reserve accounts for ac cumulated funding over an asset’s
lifespan, to be used for the replacement of the vehicle or equipment at the end of its useful life. Initial purchases
are paid for through a department’s operational budget. If the purchased item is for ongoing use, the Vehicle &
Equipment Replacement program appropriates an annual allocation for the replacement of the vehicles and
equipment based on the asset’s cost and years of life. Final determination for replacement of the asset is determined
through an analysis of whether the cost of maintenance equals or exceeds the cost of replacing the asset.
The reserve is funded from allocations charged to covered departments and represents accumulated funding, less
amounts expended for asset replacement. At year end, unspent funding is held in Unrestricted Net Position. The
reserve is to be maintained at a level sufficient to provide replacement funding of vehicles and equipment in
accordance with replacement schedules.
Requests for use of the reserve are approved by Council through budget adoption or by a Council approved budget
adjustment resolution throughout the year. The reserve is replenished from the Fund’s net operations in subsequent
years.
Office Technology Equipment Replacement Fund
The Office Technology Equipment Replacement Fund accounts for accumulated funding over an asset’s lifespan
to be used for the replacement of office technology based equipment such as desktop computers and monitors, 72
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laptops and tablets, network infrastructure, and various other related equipment. Replacement costs are charged
back to the departments based on assigned equipment costs. Initial purchases are paid for through a department’s
operational budget. If the purchased item is for ongoing use, the Office Equipment Replacement program
appropriates an annual allocation for the replacement of the equipment based on the asset’s cost and years of life.
The reserve represents accumulated funding, less amounts expended for replacements. The reserve shall be funded
to provide replacement funding in accordance with replacement schedules. Funding for the reserve comes from
the allocations charged to covered departments. Requests for use of the reserve are approved by Council through
budget adoption or by a Council approved budget adjustment resolution during the year. The reserve is replenished
from the Fund’s net operations in subsequent years.
Facility Furniture, Fixtures & Equipment (FFE) Replacement Fund
The Facility FF&E Fund accumulates funding over an asset’s lifespan to be used for the replacement of furniture –
such as tables, chairs, and cubicle partitions; for fixtures - such as kitchen appliances, sound equipment, lighting,
for equipment - such as HVAC units, boilers, and generators; and for facility infrastructure – such as roof, door,
window, and floor/carpeting replacement.
Initial purchases for new assets may be paid for through the Operating Budget or through the Capital Budget.
Annual replacement charges are charged-back to the supported department programs with full replacement funding
to be accumulated over the asset’s estimated lifetime. Final determination for replacement of the asset is determined
through an analysis of whether the cost of maintenance equals or exceeds the cost o f replacing the asset. The
reserve is intended to be maintained at a level sufficient to provide replacement funding in accordance with
replacement schedules.
Requests for use of the accumulated reserve funding are approved by Council through budget adop tion, or if an
unplanned situation occurs, by a Council approved budget adjustment resolution during the fiscal year. The reserve
is replenished by replacement charge allocations in subsequent years.
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CIP PROJECT PROCESS POLICY
This procedural policy defines how a project moves through the CIP Budget Funding process: from the initial project
idea, through project development, nomination, and project approval process, and if successful, into the Capital Budget
as a funded project.
The CIP project development stage of the policy takes different tracks, depending upon whether the project idea is
staff driven or Council nominated. These two paths are discussed separately below, until the tracks converge for CIP
project assessment preparation.
STAFF PROJECT DEVELOPMENT
1. CIP Project Initiation
As a function of staff’s day-to-day work, infrastructure improvements and large -scale repairs and maintenance
are identified as potential capital improvement projects. These are often highly-visible tangible public assets such
as street repaving, or park and trail improvements. However, many CIP projects are less noticeable, including
facility roof repairs, tree planting, or ADA enhancements. Projects may also be administrative or technology
improvements, and hence invisible to the general public, such a s code updates/revisions, process improvements,
software implementations, or economic vitality programs.
Staff is to discuss the CIP project idea with the appropriate staff or City Manager for feedback and refinement.
Ultimately, projects need clearly defined boundaries to identify project requirements, specifications, and
resources. While this is not always feasible in the initial stages of project development, the understanding that a
project will eventually require a clear and specific scope will en courage better preparation for discussing the
project idea and moving it through the nomination process. After receiving initial approval, staff moves into the
idea development stage.
2. Idea Development
To move the idea forward, staff will need to analyze and articulate the project’s scope, political impacts, priority
factors, resource requirements, and any other relevant considerations.
a. Project Scope – Scope may include the description, project size and location parameters, project purpose,
and goals or deliverables, such as products, services or results. Project justifications and assumptions should
support the project’s purpose and definition, and may include cost-benefit analysis, risk assessments, funding
availability, or even community desirability factors.
The scope should clearly state if a project is to be funded and/or completed in phases rather than as a singular
body of work. If the project is ongoing infrastructure maintenance or a program project, this too should also
be clearly noted. In some cases, project scope may be defined by exclusions – statements about what the
project will not accomplish or produce. Additionally, constraints or restrictions may identify project
limitations.
Project Scope defines a commitment to produce a body of work or end -product with the resources provided
under the stated assumptions. The written scope helps to manage expectations and provide clarity to the
involved parties, reduce confusion and failure, prevent scope creep, and provide transparency to the
community.
b. Political Considerations - Knowledge of historical information, which attests to the necessity of
Council/staff communication is of vital importance in project development. Determine whe ther this project
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has come up for consideration before, or why was it not completed previously. Are there lessons to be learned
from a past project proposal?
Another consideration includes knowing whether a project might be controversial. Is there a s egment of the
community strongly opposed to, or strongly supportive of this specific project? Will this project prompt
demand for further funding or resources? Have similar projects been completed in another part of the city?
Determine why this project should be considered a priority over others, and whether the project’s cost or
benefits would be supported by the community.
c. Priority Factors - Project priority is an important consideration in the CIP approval decision factor.
Council’s role is to determine which projects are of higher priority than others since there will never be
enough money or resources to do every project. Decision criteria may include factors such as:
Health and Safety Issues
Imminent failure of structure/system
Short-term cost of repair vs. long-term cost of replacement
Availability of external or dedicated funding
Efficiencies
Federal or State mandates
Business or community support
Impacts if project is not completed
A project’s priority is also affected by the severity of the criteria. For instance, a project that falls under the
“Imminent Failure of Structure/System” criteria may be an extremely dangerous situation in need of
immediate repair, or low danger of minor importance and simply remedied by removal. Another e xample
would occur with Federal or State mandated projects. There may be little impact as to whether the mandate
is met, or there may be severe fines for lack of timely completion. As a result, project priority is based on
the overall assessment of the circumstances; many factors contribute to priority decisions and Council cannot
rely upon a clear hierarchical order upon which to base their decisions.
d. Project Resources - In the City’s project development discussions, resources typically refer to financ ial
funding. However, resources may also refer to staff time, equipment and materials, community/stakeholder
participation or support, space requirements, information technology services, or some other type of support
or contribution.
Funding plays a critical role in project development. In many cases, lower priority projects may be approved
ahead of higher priority projects simply because there is designated funding available for the lower priority
projects. The ability to bring designated funding (s uch as a grant award) with a project proposal greatly
increases the likelihood that the proposed project is approved. Overall, projects that request undesignated
Capital Project Reserve funding are more competitive due to funding limitations and the numbe r of projects
competing for the same pot of funds.
An additional component of project resource considerations are the unstated resources (identified above)
required in project construction or implementation. For instance, staff time is limited and time spent working
on one project prevents staff time being spent on another project. Project timing and staff time requirements
are therefore an important component of the project that Council may wish to review.
e. Other Considerations - There are numerous other factors not mentioned above that are also take n into
consideration when assessing a project idea. For example, can the City afford the ongoing operating budget
increases to maintain or implement the project? Does the project contribute toward economic vitality? Are
there environmental concerns? Does it enhance the community’s art, education, or cultural resources? Does
the project provide operational efficiencies or cost savings? Are there risk management or legal liability
issues? Does this project require development be staged in phases? Is t here strong community interest in 75
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this project? Each project will differ, meaning analysis is specific to the circumstances, and diligent research
and thought should be put into developing project scope and justification.
In summary, the overall goal of idea development is to identify, quantify, and assess the project
comprehensively. This effort is intended to ensure that a proposed project is well -thought-out, developed,
and articulated thereby enabling the City Manager and Council to make educated and rational decisions.
3. City Manager Approval
Staff is to propose the project idea to the City Manager for approval. If approved, the project is moved onto the
CIP Project Candidate List. Staff is to notify the Administrative Services Director of the project’s approval and
provide pertinent project information.
Staff will prepare written narratives with project scope, justification, fiscal impacts, cost estimates, timelines, etc.
as necessary for Council Retreat assessment package.
City Council Project Development
Council Members are often the recipients of residents’ suggestions for capital project work. Depending on the
topic, Council Members can take these opportunities to: 1) educate the residents on why a project may not be
feasible; or 2) provide residents with information on how to contac t City staff with their requests to determine
feasibility; or 3) Council may support the project suggestion and decide to act as a proponent for the project by
guiding it through the Capital Project Nomination process:
1. Nomination - To move a project idea onto the CIP Candidate List, a Council Member is to propose the idea to
fellow Council Members at the end of a City Council Meeting during the Council Items session and request that
it be put on the CIP Candidate List for review during the next upcoming CIP budget cycle.
2. Idea Concurrence - A second Council Member must concur with the request to move the project idea onto the
Capital Project Candidate List.
3. Follow-up - A nomination to the Capital Project Candidate List is to be recorded in the City Council minutes,
and acted upon as a follow-up item. for staff to City Manager to notify Council Member of project nomination
(to clarify/verify understanding of project scope, and the assignment to a staff member. Staff member to complete
Candidate List step requirements, including: . Staff will preparation ofe written narratives with project scope
narrative and, justification, fiscal impacts, cost estimates, timelines, etc. as required necessary for Council Retreat
assessment package.
CIP Project Assessment
1. Assessment Package
In preparation for the annual Capital Project Assessment, Finance will consolidate t he CIP Project Candidates,
along with proposed changes to current CIP projects, and the current year’s CIP Unfunded Project List into an
assessment package for Council’s review. The Capital Project Assessment review provides a forum to assess all
projects at one time. These assessment package will include:
A review of available funding
Existing projects in the current year’s CIP
Proposed changes to existing projects
The current CIP Unfunded List
Proposed changes to projects on the CIP Unfunded List
New projects on the CIP Candidate List
Review of requests in conjunction with funding sources
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2. Council Retreat
The Capital Project Assessment is to be held annually, prior to the start of the budget development cycle, typically
at the Council Retreat Meeting that occurs in late January or early February. During the assessment review,
Council will review available funding and all project requests.
In their review, Council may request revisions to a project’s scope, funding, or other component. However,
changes that redefine a proposed project must be Council’s consensus direction. As projects are assessed, the y
are either:
Rejected
Accepted, or
Modified and Accepted
At the conclusion of the assessment review, Council will prioritize accepted projects and designate project
funding. Projects placed on the Funded List will be brought forward to the upcoming B udget Study Session. The
remainder will be placed on the CIP Unfunded Project List.
NOTE: Rejected project ideas may be nominated for another attempt to become an approved project in the
following year(s), but must again go through the project develop ment and assessment process.
3. Budget Study Session
Updated CIP funding availability and project revisions will be reviewed a final time with Council. Council will
conduct a final assessment and provide consensus direction to staff for inclusion in the upc oming Proposed Budget
Hearing to be held in May.
CIP Project Funding
1. Proposed Budget Hearing
The final Proposed Capital Budget with the recommended project funding will be brought to the City Council
Budget Public Hearing in May for final review. New funded projects will be presented, along with summary
level budget information.. Council is to provide any final comments or direction for budget adoption.
2. Budget Adoption
The Operating and Capital Budgets are brought to Council in June with all fi nal direction incorporated into the
final summaries. Council is to adopt the budget at this time, with budget funding effective on July 1 st of that year.
Funding Process Follow-up
Approved CIP projects that do not receive funding allocations will be as signed to the next budget year’s CIP
Unfunded List. The list will be included in the budget document, and assessed again during the following year’s
Capital Project Nomination and Assessment Process.
The new CIP Unfunded List has a life span of one budget cycle.
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