Agenda #: 1
Meeting Date: May 6, 2025
CITY COUNCIL STUDY SESSION REPORT
TO: Honorable Mayor and Members of the City Council
VIA: Daniel Fox, City Manager
FROM: Jason Jacobsen, Finance Director
TITLE: DRAFT FY 2025/26 CAPITAL IMPROVEMENT PROGRAM BUDGET Each year, the City prepares an annual Operating Budget and Capital Improvement Program (CIP) for City Council consideration that implements the Council’s priorities and Strategic Plan Goals, and provides the financial resources to deliver services to the community. The preparation of the annual budget is a significant and important undertaking that takes place over the course of more than five months.
Below is the schedule for the preparation of the FY 2025/26 City Budget:
• Council Study Session on Draft FY 2025/26 CIP and Draft Five-Year CIP Review – Scheduled for 05/06/2025
• Council Study Session on Draft FY 2025/26 Operating Budget – Scheduled for 05/20/2025
• Adoption of the Proposed FY 2025/26 City Budget & CIP – Scheduled for 06/03/2025
The purpose of this budget study session is to provide the opportunity for the City Council to review the proposed projects in the Draft FY 2025/26 CIP budget.
Additionally, staff is presenting the City Council with the Draft FY 2025/30 Five-Year CIP for review. Based on the direction provided by the Council, staff will incorporate the FY 2025/26 CIP budget and the Five-Year CIP list into the City’s official budget document for consideration and adoption at the June 3, 2025, Council Meeting. As the City adopts budgets on an annual basis, only the FY 2025/26 CIP will be funded. The approved Five-Year CIP will be looked to for guidance as staff prepares future budget requests, and will provide the basis for further discussions on long-term funding priorities and needs to advance these and other unfunded projects. The Draft FY 2025/26 CIP and Draft FYs 2025/26-29/30 Five-Year CIP are presented in detail in Attachments 1 and 3, respectively. In addition, Attachment 2 contains a status update for projects funded in the current fiscal year.
DISCUSSION:
The Draft FY 2025/26 CIP budget includes seven (7) new projects totaling $5.8 million, encompasses four project categories and represents an expenditure decrease of 58.3% when compared to the Adopted CIP for FY 2024/25. The full itemized project list, with funding sources, is included in Attachment 1.
CIP Program Year-Over-Year Adopted FY 2024/25 Draft FY 2025/26 % Change Street Improvements $ 13,356,189 $ 4,499,000 -66%
Traffic Mgmnt./Safety Improvments 64,000 414,000 547%
Transportation Infrastructure Improvments - 300,000 N/A Misc. Public Works Improvements 380,000 - -100%
Facilites, Parks and Rec. Improvments 150,000 600,000 300% Total $ 13,950,189 $ 5,813,000 -58.3%
The City’s Pavement Rehabilitation program is experiencing ongoing funding shortfalls, which are impacting the ability for the City to maintain and rehabilitate streets at the desired level of residents and businesses. Revenues dedicated to this program have not kept pace with the rising costs of materials, labor, and construction, resulting in deferred maintenance and improvements across both residential areas and major arterial routes. Additionally, county and state funding sources that typically support this program are projected to be down by $300,000 for the upcoming fiscal year. As a result, residents may notice that not all streets will be resurfaced with traditional black asphalt treatments. Instead, some streets may receive alternative surface treatments or experience delays in rehabilitation as the City works to prioritize limited funds and preserve pavement conditions as effectively as possible.
As the Council will recall, the CIP for FY 2024/25 represented an increase of 16.0% year-over-year, with new projects proposed for streets, parks, facilities, transportation, and traffic improvements, some of which are still on-going (see Attachment 2). In comparison, the Draft FY 2025/26 CIP represents a year-over-year decrease in Capital Improvement expenditures in the amount of $8.1 million primarily due to the Diamond Bar Blvd. Complete Streets project which was funded in FY 2024/25. This project is currently in the funding stage, with staff working diligently to meet Federal and State funding requirements needed to fully fund the project. Bids are expected to be solicited in early FY 2025/26. As such, funding for this project will be carried over into FY 2025/26.
Pavement Rehabilitation Program Service Level Reduction The FY 2025/26 Pavement Rehabilitation program has a requested construction budget of $3.8 million for Arterial Street Rehabilitation with nothing proposed for the Residential Pavement Rehabilitation. Traditionally, the City slurry sealed all streets in residential areas as part of a seven-year pavement rehabilitation cycle. However, due to rising costs and in line with industry standards, the City Council approved a change in the FY 2024/25 CIP. The new approach focuses on slurry sealing only those street segments being treated. Consequently, as mentioned last year, not all streets in the current FY 2024/25 Residential Pavement Rehabilitation project (Area 4) will receive slurry seal, which is in line with the City’s new practice.
Under the previous seven-year cycle, Residential Area 5 was slated for a pavement rehabilitation project in FY 2025/26. However, initial cost estimates from the City’s pavement program consultant indicate expenses exceeding the normal special revenue fund budget of approximately $3.6 million for this residential project alone. Hence, if an Area 5 Residential Rehabilitation project is pursued for FY 2025/26, there would be inadequate funds for arterial streets. Given that many arterials citywide require essential rehabilitation and have a significant impact on traffic safety and the City’s economy, it is recommended that the entire available construction budget be allocated to arterial projects in FY 2025/26, resuming the residential pavement program in subsequent fiscal years. This would result in a reduction in service levels in the City’s Pavement Rehabilitation program for Residential Area 5. Deferring these improvements by one year, without the addition of new funding sources, is expected to create a cascading effect in which all other residential areas scheduled for rehabilitation will also be delayed by one year on an ongoing basis. See Attachment 4 for Residential Area boundaries.
Proposed New CIPs for FY 2025/26 - Total Budget Request: $5,813,000 The Draft FY 2025/26 CIP presented to the City Council for discussion this evening proposes to utilize one-time General Fund reserves in the amount of $300,000 for the design and preparation of construction plans and specifications for multiple electric vehicle charging stations for the City's fleet located at the Civic Center. This project could include an upgrade to the City Hall electrical panel. Other non-General Fund funding sources proposed for the remainder of the requested projects amount to $5.5 million (see Attachment 1).
Project No. Street Improvements: $4,499,000
SI261 Pavement Rehabilitation Design Project FYs 2026-28 (Arterials, Residential, Collector Street Rehab, and CDBG Curb Ramps).
SI262 Arterial Street Rehab (Construction)
- Brea Canyon Rd from DBB to Pathfinder
- Brea Canyon Rd from Pathfinder to Golden Springs Dr
- Diamond Bar Blvd from Westbound SR 60 off-ramp to City Limits SI264 CDBG Area 6 ADA Curb Ramp Project (Construction)
Project No. Traffic Management/Safety Projects: $414,000 TM261 Battery Back-Up and CCTV Replacement Program FY 25/26 (Construction)
TM262 Citywide Traffic Mitigation Fund Planning
Project No. Transportation Infrastructure Improvements: $300,000 TI261 Fleet Electric Vehicle Charging Stations (Design) Project No. Miscellaneous Public Works Improvements: $0
N/A N/A
Project No. Facilities, Parks and Rec Improvements: $600,000 FP261 LLADs Irrigation, Landscape, and Miniparks Improvements Completed CIPs in FY 2024/25
Of the twenty-three (23) capital improvement projects underway at the start of FY 2024/25 – sixteen (16) of which carried over from the prior FY 2023/24 – fifteen (15) are anticipated to be completed by the end of FY 2024/25. The remaining eight (8) projects will be carried over to FY 2025/26. See Attachment 2 for details.
Street Improvement Projects
Est. Status on
June 30, 2025
1) Residential and Collector Street Rehab - Area 4 (Const.) Carry Forward 2) Arterials Street Pavement Rehabilitation -Lemon Ave (SR60 to City Limit); Brea Cyn Cutoff (SR57 to City Limit)
Carry Forward
3) Diamond Bar Blvd Complete Street Project Construction Carry Forward 4) Residential and Collector Street Rehab. (Design)
• Arterial Street Rehab (Design)
• CDBG Curb Ramp (Design)
Completed
5) Residential and Collector Street Rehab - Area 3 (Const.) Completed 6) Arterial Street Rehab (Const.)
• Golden Springs Dr from Grand Ave to Temple Ave
• Grand Ave from Diamond Bar Blvd to East City Limits
• Gateway Center, Copley Dr, Bridgegate Dr
Completed
7) CDBG Area 5 ADA Curb Ramp Project (Const.) Completed 8) CDBG Area 4 ADA Curb Ramp Project (Const.) Completed Traffic Management / Safety Improvements
9) Battery Back-Up and CCTV Replacement Program FY24/25 Completed Transportation Infrastructure Improvements
10) Intersection Safety Improvements (Constr.) Completed Miscellaneous Public Works Improvements
11) Brea Canyon Storm Drain Lining Project (800 ft between DB Church and GSD)
Carry Forward
12) Full Capture Devices on Stormwater Catch-basin for Trash Amendment Compliance - Phase 1
Carry Forward
13) Grand Avenue Median Drainage Improvement Project (Design Completed and Const.)
14) Steep Canyon Erosion Control and Sedimentation Prevention (Design & Const.)
Completed
Facilities, Parks and Recreation Improvements
15) Sycamore Canyon Park Lower Bridge Replacement Options (Design)
Carry Forward
16) DBC GVBR Lighting & Controls Upgrade (Const.) Carry Forward 17) DBC Main Entry/Doors & ADA Improvements (Const.) Carry Forward 18) City Hall Cable Channel Broadcast and A/V Equipment Upgrade (Const.)
Completed
19) Pantera Park Hard Court Rehab and LED Retrofit Project (Design & Const.)
Completed
20) Maple Hill Park Playground/Restroom Replacement and ADA Upgrades
Completed
21) DBC AC Replacement & Air Quality Upgrades (Const.) Completed 22) Heritage Park Renovation Phases 1 and 2 (Design) Completed 23) City Hall Roof Rehabilitation/Solar System Removal and Reinstallation
Completed
Heritage Park and Community Center Improvements
In FY 2023/24 CIP, the City Council approved a design project for the complete renovation of Heritage Park and Community Center, excluding the ball field. That design work has been completed, and shovel-ready plans are available for construction. The City’s effort on grant funding so far has brought in about $250 thousand for design work (already used for that effort) and a $500 thousand grant for construction. A $1.5 million dollar grant previously awarded was recently cancelled by the federal administration.
Considering the cost of construction of the project, three Alternatives have been developed for the City Council’s consideration and direction:
• Alternative 1 - Full Improvement ($24 million): Expanded Building, Entrance Structures, Full site improvement. This option is not financially feasible given the City’s current fund balances.
• Alternative 2 - Site-Only Improvement ($6.65 million): Rebuild parking lot, park, playground, walking trails, park restrooms (minimal building improvement). • Alternative 3 - Building Interior ($1.27 million): interior doors and full flooring replacement, paint interior and exterior, interior lighting conversion to LED.
As the $500 thousand grant funding must be allocated by mid-2026, it is requested that the City Council provide direction whether or not to pursue one of the alternatives, or place the project on hold until additional funding can be secured. Alternatives 2 and 3 would require staff to renegotiate the grant scope of work with Congresswoman Sanchez’s office. There is no guarantee at this time that a revised scope of work would be approved.
The Draft FY 2025/26 CIP budget is scheduled to be reviewed for consistency with the City's General Plan at the May 13, 2025, Planning Commission meeting.
Attachments:
1. 1.a Attachment 1 - Draft FY25-26 CIP_04302025
2. 1.b Attachment 2 - FY24-25 CIP Status_04292025
3. 1.c Attachment 3 - Draft 5-Year CIP FY26-30_04292025
4. 1.d Attachment 4 - City Pavement Areas