Item No. 2
Town of Atherton
CITY COUNCIL STAFF REPORT – STUDY SESSION
TO: HONORABLE MAYOR AND CITY COUNCIL
HONORABLE CHAIR AND COMMITTEE MEMBERS
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT OVADIA, PUBLIC WORKS DIRECTOR
DATE: MAY 6, 2026
SUBJECT: REVIEW OF FY 2026/27 CAPITAL IMPROVEMENT PROGRAM
RECOMMENDATION
It is recommended that the Council review, discuss, and provide feedback regarding proposed projects, programs and funding priorities for the FY 2026/27 Capital Improvement Program (CIP), with lookahead through FY 2030/31.
BACKGROUND
The Town’s Capital Improvement Program (CIP) is a five-year program that proposes projects to analyze, repair or improve Town infrastructure, and the funding for those projects. The Town is focusing on capital project needs in the community. Staff is seeking feedback regarding proposed projects, programs and funding priorities for the FY 2026/27 Capital Improvement Program (CIP), with a lookahead through FY 2030/31.
The General Fund continues to provide new funding capacity in the next several years for project priorities within the CIP Master Plans. Priority projects are derived from the Bicycle Pedestrian Master Plan, Drainage Master Plan, Green Infrastructure Plan, and Road Improvement Plan, and in consideration of on needs identified by the City Council, residents, staff.
The five-year CIP proposes projects to analyze, repair or improve Town infrastructure, and the funding for those projects. The major projects are categorized into three areas:
• Streets & Transportation
o Roadway Maintenance
o Bicycle and Pedestrian Improvements (Active Transportation) o Traffic and Safety
• Drainage
o Flood Control
FY 2026/27 Capital Improvement Program Budget
MAY 6, 2026
o Regulatory and Green Infrastructure
• Town Buildings, Park and Facilities
o Town Center
o Holbrook-Palmer Park
The CIP program is primarily funded by seven (7) capital improvement fund sources that the Town uses for capital improvement/infrastructure needs. These capital improvement fund sources include:
• Atherton General Fund
• Measure M – County Congestion Management Fee on vehicle registration • Measure A – County ½-cent Transportation Sales Tax
• Measure W- County ½-cent tax Congestion Relief Plan
• Gas Tax
• Atherton Channel Fund
• Library Fund
The 1st year (FY 2026/27) of the CIP is incorporated into the Town’s Budget and is the only year for which the City Council applies available funding. The remaining four (4) years of the CIP reflect proposed projects and projected funding. These “out years” are revised annually to reflect changes in City Council priorities, direction, needs and funding availability. Before adoption by the Council, the CIP must be reviewed by the Planning Commission for consistency with the Town’s General Plan. The Planning Commission does not review or comment on individual projects or priorities. This year’s CIP will be reviewed by the Planning Commission at their May 27, 2026, meeting. The Commission will send their comments in writing to the City Council prior to the Council’s June 17 meeting at which the Council is scheduled to adopt the budget, inclusive of the CIP.
ANALYSIS
This year, the 5-year CIP is being presented to City Council in the Study Session in a more detailed workshop format to allow for questions and discussion of individual projects, general discussion about broader objectives to be considered for future proposed projects and priorities for allocating funds. Though the Capital Improvement Program is funded with a variety of revenue sources, most of the revenue sources have restrictions on how the funds can be used. The General Fund is primary funding source for the Capital Improvement Program and thus affords the greatest opportunity for discretionary expenditures for capital projects. As such, the majority of the discussion will be focused on the use of General Funds in the CIP.
Following the workshop, staff will implement changes directed by Council and present the CIP to City Council for consideration at the June Council meeting. Specific project direction from the Council will be incorporated into the CIP presented to the Commission at their May 27 meeting.
At the conclusion of the May 6 Study Session, staff needs the following input and direction from the Council:
FY 2026/27 Capital Improvement Program Budget
MAY 6, 2026
1. Confirmation of existing projects and priorities.
2. Specific direction regarding capital improvement projects to include, the specific fiscal year for inclusion, and the extent of inclusion (FYs 2026/27 through FY 2030/31).
3. If selected projects include Class II bicycle route improvements, staff will seek direction regarding how to process right-of-way improvements for private property development projects that are along identified Class II bicycle routes.
As staff moves through the CIP with the Council at the Study Session, the Council will have the opportunity to modify the 5-Year Financial Outlook to address programmatic and project priorities, project timing, and funding availability. Larger projects often require that project planning and design occur in the fiscal years prior to actual project construction.
FY 2026/27 and beyond include established priority projects that include the Annual Road Maintenance Program, necessary Traffic and Safety Improvements, and the completion of ongoing projects. As noted above, funding for the CIP consists of a variety of sources, some of which are restricted, such as Measures A, Measure M and Measure W funds, as well as funds from Gas Taxes, and the General Fund. These funds are already allocated to the maximum extent to the projects that they support. Additionally, the Town was awarded two grants during the current fiscal year from the San Mateo County Transportation Authority Highway Program as follows:
• Alameda de las Pulgas Traffic and Safety Improvements - $1,000,000 (construction) • ECR/Selby Intersection Improvements - $3,000,000 (design and construction) The established priority projects and programs noted for FY 2026/27 and continuing years are the following:
Project Programs Allocation Note
Roadway Maintenance $840,000 Allocated Annually
Alameda de las Pulgas Traffic/Safety
Improvements $1,000,000 Grant fund allocation [SMCTA].
ECR/Selby Lane Intersection $250,000
Additional funds for design.
Partial grant fund allocation
(FY 26/27) [SMCTA].
Station Lane Connection $600,000 Including $300,000 in Library funds
Drainage Master Plan Update $350,000 Forecasted from FY 25/26 budget
Green Infrastructure $150,000
Allocated Annually. FY
2025/26 funds allocated to
ADLP
Town Center Improvements $100,000 Allocated Annually (reduced from $150,000)
FY 2026/27 Capital Improvement Program Budget
MAY 6, 2026
HPP – General Assessments/Repairs $100,000 Allocated Annually Facilities Replacement and
Accessibility $275,000 Allocated Annually (reduced from $325,000) Total $3,665,000
These projects are listed in the attached spreadsheet and include approximately $3.7 M in general fund allocations for FY 2026/27, including grant and other funds.
There remains an unallocated General Fund balance available for Capital Improvement Project for FY 2026/27. Additionally, there are a few projects funded in previous years that were funded and have either been placed on hold or not started/completed that may be reallocated to current priorities. Staff will identify these projects.
The attached spreadsheet includes various projects and estimated costs and is intended to guide Council discussion for consideration and prioritization proposed through the five-year CIP lookahead. Though the spreadsheet is categorized by program, the Council should consider each project independently. Some of the Town’s Master Plans are dated and should be refreshed to assist in identification and prioritization of community needs. These are included in the out years as identified by Council. Specific projects for which staff anticipates Council policy feedback are:
• Bicycle Pedestrian Master Plan Implementation Program o Selby Lane Bicycle Lanes Project – placed on hold pending the BPMP Update o Watkins Avenue Walkway (Caltrain – Middlefield) – conceptual design completed
o Middlefield Road Pedestrian Improvements (new)
o Other Active Transportation Plan Priorities, TBD
• Traffic Safety Improvement Program
o Middlefield Road Signalization, TBD.
• Drainage Improvements Program
o Drainage Master Plan Update – Programmed FY 2026/27
o Atherton Channel Culvert and Detention System – grant allocation is still pending • Park Master Plan Implementation Program
o HPP Master Plan Update – Programmed FY 2027/28
o Jennings Pavilion Solar and Energy Resiliency project (not started) o o HPP Pathway asphalt resurfacing (new)
o Handball Court area conversion to Pickleball (potential donation) o Carriage House rehabilitation and enhancement (potential donation) • Town Center Parking Lot Solar Carports (not started)
FISCAL IMPACT
There is no fiscal impact of the review and discussion of the CIP. Upon Council approval of the projects and funding for FY 2026/27, those approved projects will be incorporated into the Town’s Budget and their approved amounts will be reflected in the Budget and in remaining fund balances.
FY 2026/27 Capital Improvement Program Budget
MAY 6, 2026
GOAL ALIGNMENT
This Report and its contents are in alignment with the following Council Policy Goals:
• Goal A - Preserve Small Town Character & Quality of Life • Goal C - Maintain Conservative Fiscal Policies and Financial Transparency • Goal D - Be Forward Thinking
• Goal E - Maintain and Improve Public Infrastructure
POLICY FOCUS
This item discusses anticipated revenue and expenditure projections, projects and program priorities associated with the Town’s Capital Improvement Program for FY 2026/27, with a 5- year look ahead. These are policy areas for Council discussion and direction as we prepare the FY 2026/27 budget.
PUBLIC NOTICE
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Information about the project is also disseminated via the Town’s electronic News Flash and Atherton Online. There are approximately 1,200 subscribers to the Town’s electronic News Flash publications. Subscribers include residents as well as stakeholders –to include, but be not limited to, media outlets, school districts, Menlo Park Fire Protection District, service provides (water, power, and sewer), and regional elected officials.
ATTACHMENTS
1. FY 2026/27 Capital Improvement Program Projects Spreadsheet
2. FY 2026/27 Capital Improvement Outyear Planning Tool
3. FY 2026/27 Capital Improvement Available Estimated Balance Spreadsheet