DATE:
April 9, 2024
TO:
Honorable Mayor and City Council
FROM:
Nancy Doan, Senior Management Analyst
Joy Houghton, Senior Civil Engineer
Robert Gonzales, Principal Civil Engineer
Edward Arango, Acting Public Works Director
VIA:
Kimbra McCarthy, City Manager
TITLE: Fiscal Year 2024-25 Capital Improvement Program
PURPOSE
The purpose of this Study Session memo is to provide the City Council an overview of the Capital Improvement Program and obtain City Council input to guide staff in the preparation of the recommended Fiscal Year 2024-25 Capital Improvement Program.
BACKGROUND
This Study Session memo presents:
1. A n overview of the Capital Improvement Program (CIP) and second-year planning cycle;
2. T he status of active CIP projects;
3. I nformation about CIP funding sources and financial constraints;
4. R ecommendations for prioritizing CIP unrestricted funds;
5. A n update to the City’s Pavement Condition Index;
6. P lanned projects that are scheduled to “roll forward” from the existing CIP;
7. A mended and new projects; and
8. R ecommendation for the 1020 Terra Bella Avenue utilities undergrounding project.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
CIP Overview
Fiscal Year 2024-25 is the second year of the biennial capital improvement planning cycle. During the second year of the cycle, review is focused on the following types of projects:
1. Projects that are scheduled to “roll forward” for funding in Fiscal Year 2024-25;
2. Modifications to some “roll forward” projects;
3. Amendments to existing projects; and
4. A limited number of new projects.
The Capital Improvement Program (CIP) is divided into Non -Discretionary and Discretionary Projects as described below:
• “ Non-Discretionary Projects” are primarily annual and periodic infrastructure maintenance projects to preserve the City’s significant investment in its infrastructure and facilities and projects required for regulatory compliance. While Council can alter funding, these projects are generally approved with few changes on a consistent cycle (annual or biennial) with small, inflationary adjustments.
• “ Discretionary Projects” are those projects that do not fit the nondiscretionary description and require approval of the City Council.
The number and types of projects recommended to be included in the CIP are dependent on staffing and funding resources.
Active Projects
There are currently 336 active projects in the CIP, of which 141 are Non-Discretionary Projects and 195 are Discretionary Projects (Attachment 1). Figure 1 illustrates the breakdown of the active CIP projects by category.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Figure 1: Active CIP Projects by Category
Notably, 42 of the active CIPs involve pedestrian and bicycle improvements, and 14 involve park projects. Attachments 2 and 3 provide the status of these projects.
During the CIP development efforts over the past two years , staff reduced the recommended number of new projects to better align with staff’s capacity to deliver the projects and respond to the reduction of available CIP funding as compared to prepandemic amounts. While staffing levels have improved, staff is still catching up to the backlog of capital projects, particularly in pavement, transportation, and larger facility projects. Due to limited staffing capacity for new project delivery and reduced available CIP funding discussed later in this Study Session memo, staff recommends that the number of roll -forward and new CIP projects included in the Fiscal Year 2024-25 CIP be limited.
CIP Funding Sources
Depending on the project scope and location, different funding sources may be used. Table 1 lists the funding sources used to fund capital improvement projects.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Table 1: CIP Funding Sources
Funding Source and Uses
UNRESTRICTED FUNDS
CIP Reserve General Fund surpluses as approved by the City Council and a portion of lease revenues. There are no restrictions on the type or location of projects to be funded.
Construction/
Conveyance Tax
(C/C Tax)
Revenues derived from construction and real property conveyance fees.
Expenses are restricted to implementation of the CIP, including servicing bonds issued in connection with capital improvements; however, there are no restrictions on the type or location of projects.
ENTERPRISE FUNDS
Water Fund Restricted to operation and maintenance of all facilities required to supply, distribute, and meter potable and recycled water.
Wastewater Fund Restricted to operation and maintenance of all facilities required to transport and process wastewater.
Solid Waste
Management Fund
Restricted to solid waste collection, transportation, processing, and recycling services of the City and two of the City’s landfill postclosure maintenance activities.
TRANSPORTATION FUNDS
Gas Tax Fund As prescribed by state law, restricted to transportation purposes, primarily:
• Road construction;
• Maintenance and repair of roads, highways, bridges, and culverts; • Improvement of public transportation, trade corridors, and infrastructure promoting walking and bicycling;
• Reduction of congestion on major corridors; and
• Certain administrative costs.
Senate Bill 1 (SB 1)/
Road Maintenance
and Rehabilitation
Account (RMRA)
Revenue from the state derived from an increase in diesel excise and sales taxes, gasoline excise tax, the assessment of an annual transportation improvement fee based on the value of the vehicle, and an annual $100 Zero-Emissions Vehicle Fee. The use of the City’s share of formula funds received from the s tate is primarily restricted to road infrastructure maintenance and repair.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Funding Source and Uses
Vehicle License Fee—
2010 Measure B
Managed by the Santa Clara County Valley Transportation Authority (VTA), 80% is allocated to the cities and County of Santa Clara based on city population and County road and expressway -lane mileage; and primary use of this funding is for road infrastructure maintenance and repair.
VTA Measure B
2016 Sales Tax
Provides formula and competitive grant funding for road infrastructure maintenance and repair, grade -separation projects, and bicycle/pedestrian projects.
General Fund—
Transportation
Reserve
The Transportation Reserve was initially funded with $4 million from General Fund surplus. Based on a Council resolution adopted in 2018, 80% of the increased revenue from the business license tax (2018 Measure P) is also placed into the Transportation Reserve to be used for transportation and innovative transit solutions, including:
• Mountain View Community Shuttle;
• Caltrain grade-separation projects;
• Bicycle and pedestrian improvements; and
• New transit systems to employment centers.
SHORELINE REGIONAL PARK COMMUNITY FUND
The state Legislature created the Shoreline Regional Park Community. T he tax increment derived on the difference between the frozen base-year value and the current fiscal year-assessed value and other revenues generated from the activities of the Shoreline Community are to be utilized to develop and support the Shoreline Community and surrounding North Bayshore Area. In addition to annual operations and maintenance expenses, the SRPC is used for the following types of capital projects to support the North Bayshore Area:
• Transportation improvements, including North Bayshore Precise Plan Priority Transportation Improvements;
• Sea level rise infrastructure improvements;
• Landfill postclosure; and
• Utility (water, recycled water, sewer, storm drain) improvements.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Funding Source and Uses
DEVELOPMENT FEES AND CHARGES
Impact Fees Uses are restricted to projects/improvements identified in the relevant impact fee’s nexus study:
• Shoreline Community Development Impact Fee—Sewer;
• Shoreline Community Development Impact Fee—Transportation; • Shoreline Community Development Impact Fee—Water; and • Citywide Transportation Impact Fee.
Utility Capacity
Charges
Used for new or upsized water and sewer utility mains to meet growing service demands Citywide.
Storm Drain Fund Revenues derived from off -site drainage fees authorized by Mountain View City Code, Section 28.51, which are restricted for storm drainage capital improvements.
Park Land Dedication
Fund
Revenues derived from fees authorized by Chapter 41 of the Mountain View City Code, which are restricted for park and recreation projects.
Community and Public
Benefit Funds
A developer may be required by the City Council under certain conditions to provide communit y or public benefits, such as area improvements or affordable housing, as a result of their development project. A developer may pay a fee in lieu of providing these community or public benefits, which will then be used by the City to provide capital improvements in the general area of the development as approved by the City Council.
The Finance and Administrative Services Department provides the estimated revenue and/or fund balances for all funding sources available for allocation in the CIP. The Publ ic Works Department reviews and evaluates project scope and location to determine appropriate funding sources and presents the recommended projects with proposed funding sources to the City Council for review and approval.
DISCUSSION
The number and types of projects to be included in the CIP are dependent on staffing and funding resources. As noted in the Background section, there remains a very high number of active CIP projects and staffing limitations that affect the capacity to add new projects. In addition, the cost impacts from recent high inflation rates are creating the need to add funding to existing and planned projects, which reduce funding available for new projects. The rise in inflation, construction, labor, and material cost increases , coupled with flattened revenues C itywide, have negatively impacted the ability to fund all projects.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Financial Constraints
Inflation and Cost Rise
The City continues to experience price inflation in labor and materials in line with regional and national inflationary trends, impacting construction projects and new bids, leading to increased costs and delays. Although reduced from the 2021 rate of 13.4 %, the California Construction Cost Index ( CCCI) increase was 9.3% and 9.4% in 2022 and 2023, respectively . In the last year, the City has received multiple bids on several CIP projects that have resulted in bids in line with expectations, though not for all projects. This is suggesting that competition is slowly increasing and cost-estimating is taking into account current market rates. While this is beginning to show a turn in a positive direction for the City, staff recommends continuing to adjust project budgets consistent with current cost indices.
In 2023, staff applied a 10% increase to all Discretionary and Non-Discretionary Projects for Fiscal Year 2023-24 to provide a catch-up for the inflation increases. Due to the increase in competition and some leveling of increased costs, there is a potential that the rate of increase this year could be less. Over the past year, the San Francisco Area Consumer Price Index for All Urban Consumers (CPI-U) rate increase has consistently trended downward, from 5% a year ago, to 2.4% in February 2024, the lowest rate of increase since March 2021. In an effort to not overextend limited City funding, staff is recommending applying a 4% increase to all Discretionary and Non-Discretionary Projects with construction programmed in Fiscal Year 202 4-25 (Year 2 of the Five -Year CIP).
Active and already funded projects needing additional funding due to cost rise will be presented to the City Council for approval of additional appropriation on a case-by-case basis.
Status of CIP Funding Sources
With the exception of the Shoreline Regional Park Community (Shoreline Community or SRPC) , most of the funding sources available for the Fiscal Year 2024 -25 CIPs have declined between 15% to 48% as compared to funding in Fiscal Year 2023-24, as shown in Figure 2 and Table 2.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Figure 2: Funding Sources Status
Table 2: Funding Sources Status
Funding Balances
Available
for the CIP
2022-23 2023-24
Estimated
2024-25*
Unrestricted Funds
(CIP Reserve and
C/C Tax)
$14,732,000 $19,173,000 $10,020,000
Enterprise Funds
(Water, Sewer, and
Solid Waste)
$25,735,000 $13,414,000 $11,390,000
Transportation
Funds (Gas Tax,
SB 1, VLF, Measure
B 2016, Measure P)
$7,871,000 $17,650,000 $5,808,000
SRPC $30,624,000 $38,905,000 $63,646,000**
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Funding Balances
Available
for the CIP
2022-23 2023-24
Estimated
2024-25*
Development Fees
and Charges (Impact
Fees, Utility
Capacity Charges,
Storm Drain, Park
Land, and
Community Public
Benefits)
$82,504,000 $87,630,000 $48,611,000
* Anticipated in Fiscal Year 2024-25.
** Higher balance as a result of not programming the full fund balance in Fiscal Year 2023-24.
• Unrestricted Funds —The CIP Reserve receives most of its revenue from General Fund annual surpluses, and it is unknown whether a further decrease will occur over the next few years because of economic factors. The only other source of funding for the CIP Reserve is from a portion of lease revenue. The CIP received a total of $31.5 million in CIP Reserve over the last five years but is currently projected to receive $13 million in the next five years.
The C/C Tax funds ongoing maintenance and improvement needs for a variety of projects, such as City buildings/facilities, information technology, parks, pavement, and other transportation improvements. Revenues derived from construction and real property conveyance fees are seeing a significant decline in recent and upcoming years. The estimated available funding for Fiscal Year 2024-25 is 25% less than the previous year, and these reduced funding levels are expected to continue.
• Enterprise Funds—These funds are generated by fees charged to residential and business customers and are used to fund utility (storm, sanitary sewer, water, and solid waste/landfill) projects. The inflation and cost increase coupled with the reduced consumption is anticipated to negatively impact the Water F und. A Utility Rate Study and a Solid Waste Study are currently under way and will recommend future water, wastewater, and solid waste rates, starting in Fiscal Year 2024-25, to fund operating and capital project needs associated with these utilities. Following completion of the Utility Rate Study, water and wastewater capacity fees will be evaluated for adjustment, and a strategy will be developed for funding future stormwater system needs.
• Transportation Funds—The funding received from the Vehicle License Fee, Measure B Sales Tax, and SB 1 for road infrastructure maintenance and repair is expected to remain relatively stable. These three funds combined provide an average of $4.5 million per year, which provides most of the City’s funding for road maintenance and improvements.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
• Gas Tax —The Gas Tax has experienced a significant decline in revenues due to the pandemic and new hybrid remote -work trends. Prior to Fiscal Year 2022 -23, the annual allocation of the Gas Tax for road maintenance and improvements ranged from $1.5 million to $1.9 million. In Fiscal Year 2022-23, the City received only $299,000. This revenue source has begun to bounce back, though not to prepandemic levels. The forecast for Fiscal Year 2024-25 is currently $918,000.
• Shoreline Regional Park Community —At this time, this revenue source has not been affected by the economy. The balance is hi gher this fiscal year due to staff not programming the full fund balance in Fiscal Year 2023 -24. The intent was to set aside a majority of the 2023-24 balance for several future-year CIP projects in the North Bayshore that will require funding within the next two to four years, such as the construction of the North Bayshore Recycled Water Reservoir ($26 million).
• Developer Fees and Charges —Development activity is substantially reduced due to the economic downturn. One factor that may affect CIP funding is a reduction in Community and Public Benefits, which have historically provided significant funding for transportation improvements.
The available funding will be used to fund the roll -forward projects, amendments to existing projects, and a limited number of new projects.
Completed Projects to Close
Each year, staff carefully reviews the status of all active capital projects to determine which could be closed at the end of Fiscal Year 2023 -24 so that unspent balances can be returned to the appropriate funds and be made available for other capital projects . Rec ognizing the reduc ed amount in available funding sources, particularly in Unrestricted Funds, staff was proactive in identifying any eligible projects to close . This effort is resulting in approximately $20 million of unspent funding being made available for the recommended Fiscal Year 2024 -25 planned projects, amendments to existing projects, and new projects. Approximately $6 million of the unspent funding are unrestricted funds. Staff’s recommendations explained later in this Study Session memo allocate this unspent funding into the recommended Fiscal Year 2024 -25 projects.
Recommendations for Prioritizing CIP Unrestricted Funds
Consistent with the City’s strategy over the past three years, staff recommends that the Non- Discretionary Projects with no or insufficient dedicated funding sources continue to be funded first from available CIP Reserve and C/C Tax F unds. These projects are essential in providing for critical infrastructure rehabilitation, maintaining current Citywide service levels, and supporting municipal operations.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Based on the reduced funding levels for the unrestricted funds (Table 2), preliminary estimates are that there may be a $ 3 million to $ 4 million shortfall in CIP unrestricted funds for Fiscal Year 2024-25 to fund all of the potential roll -forward Discretionary P rojects, active project amendments for rising construction costs, and potential new projects that will need unrestricted funds.
Staff also recommends amendments to existing projects be a second priority. Some of t hese projects may also be without a dedicated funding source, are currently in process, and additional funding is needed for additional scope identified, cost rise, and/or the implementation phase of the project. Providing the additional unrestricted funding allows these existing active projects to continue proceeding forward. These projects are well into design and are closer to the construction phase. Delaying or deferring additional funding will result in loss of time, progress, and a higher cost to reinitiate them.
To identify priority for the remaining planned roll-forward Discretionary Projects and new Discretionary Projects, staff recommends using the previously Council-supported criteria from the 2021 CIP process (Fiscal Year 2021-22 through Fiscal Year 2025-26), and reaffirmed on April 3,
2023 wi th the Fiscal Year 2023 -24 through Fiscal Year 2027-28 CIP process. The criteria are as follows:
• Public and personnel safety;
• Compliance with regulatory requirements;
• Keeping City facilities in a state of good repair;
• Local match or cost sharing to secure grants or other funding;
• Pavement rehabilitation/reconstruction and preventative maintenance as needed to maintain the City’s current Pavement condition Index (PCI) rating (including the integration of bicycle and pedestrian improvements); and
• Council Strategic Priorities and work plan projects.
In summary, staff recommends an approach of maximizing the availability of the unrestricted CIP Reserve and C/C Tax funds for projects with no dedicated funding sources, funding the Non- Discretionary Projects off the top, prioritizing amendments to existing projects second, and using the criteria listed above to prioritize the remaining Discretionary Projects for CIP Reserve and C/C Tax funds.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Question No. 1: Does Council support or have any feedback on staff’s recommended approach and criteria to determine which projects to prioritize for the CIP Reserve and C/C Tax Funds?
Pavement Condition Index Update
The City’s street network was recently evaluated by a third -party consultant as part of the Metropolitan Transportation Commission’s Pavement Management Program (PMP) and shows the City’s PCI has declined to 67. Recently completed and in-process pavement projects, such as Park Drive, Sonia Way, and the SB 1 project, were not included in this evaluation but would not have likely changed the overall PCI rating. The main factor contributing to the decline in PCI was the significant reduced staffing levels between 2020 and 2022, requiring staff to prioritize capital projects with grant funding and other critical deadlines . This created a backlog and delayed delivery of road pavement projects for two years. As a result, t he City has accumulated $34.54 million from various funding sources for paving projects.
Staff is currently addressing the backlog, and the status of projects are:
• Two projects will start construction this calendar year, valued at $5.16 million.
• Five projects are currently in design with a combined value of $ 22.12 million. These five projects in design will start construction in 2025.
• Five projects valued at $ 7.26 million have not yet started, but staff expects these to start design in nine months.
As shown in Figure 3, at the current baseline f unding levels of approximately $5.8 million per year, the PCI will continue to slowly decline. While the paving projects planned for construction in 2024 and 2025 may increase PCI, staff expects it will be offset due to the delay in full implementation for almost t wo years as the pavement continues to degrade . To maintain PCI levels, there will be a need to increase baseline funding levels to avoid further decline.
Approximately $8 million is needed per year (an increase of $2.2 million per year over current baseline funding) to maintain the PCI, and $14 million per year for five years (an increase of $8.2 million per year over current baseline funding) to increase the PCI by five points.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Figure 3: Pavement Investment and PCI Status
As a result , staff is recommending to prioritize and continue funding pavement projects to support the City’s pavement maintenance needs. As discussed later in this Study Session memo, staff also recommend s deferring two non-pavement maintenance projects planned for Fiscal Year 2024-25 with fundin g source s using Gas Tax and 2016 Measure B funds and redirecting those funds to pavement projects . More information on the status of the PCI , current paving projects, and program funding needs is included in Attachment 4.
Fiscal Year 2024-25 Projects and Existing Projects
Non-Discretionary/Pavement Roll Forward
The list of 27 planned Non-Discretionary/Pavement Projects scheduled to roll forward for funding in Fiscal Y ear 2024 -25 is shown in Table 3 . These projects are essential in maintaining and preserving the City’s infrastructure and facilities and are recommended for funding. These projects include a 4% increase to account for inflation and are funded from a variety of sources, with CIP Reserve and C/C Tax Funds providing $5.56 million of the total $20.68 million in funding.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Table 3: Fiscal Year 2024-25 Non-Discretionary/Pavement Roll-Forward Projects
Project Title Funding Source Funding
Amount
Annual Street Maintenance (25-01) C/C Tax, 2016 Measure B Sales Tax, 2010
Measure B VLF
$2,153,000
Concrete Sidewalk/Curb Repairs (25-02) C/C Tax $821,000 SB-1 Streets Project (25-03) SB 1 $2,000,000
Biennial Installation of ADA Curb Ramps (25-04) C/C Tax $81,000 Public Services Street Section Maintenance (25-05) C/C Tax and Shoreline $578,000 Water System Improvements and Recycled Water System
Improvements (25-06)
Water $778,000
Wastewater System Improvements (25-07) Wastewater $199,000 Annual Water Main/Service Line Replacement (25-08) Water $3,200,000 Annual Storm/Sanitary-Sewer Main Replacement (25-09) Wastewater $2,002,000 Shoreline Landfill Gas, Cap, and Leachate Maintenance
(25-10)
Solid Waste $506,000
Shoreline Infrastructure Maintenance (25-11) Shoreline $184,000 Facilities Maintenance Plan (25-12) CIP Reserve and
Shoreline
$989,000
Planned and Emergency Facilities Projects (25-13) CIP Reserve and Shoreline
$695,000
Annual New Energy Conservation Measures (25-14) CIP Reserve and Shoreline
$118,000
Biennial ADA Improvements to City Facilities (25-15) C/C Tax $109,000 Annual Traffic Infrastructure Maintenance/NTMP
Improvements (25-16)
C/C Tax and Shoreline $716,000
Annual Parks Renovations/Improvements (25-17) C/C Tax $284,000 Forestry Maintenance Program and Street Tree
Replanting (25-18)
C/C Tax $534,000
Biennial Good Neighbor Fence Replacements (25-19) C/C Tax $44,000 Biennial Tennis Court Resurfacing (25-20) C/C Tax $102,000 Biennial Turf and Bunker Improvements (25-21) Shoreline $338,000 Developer Reimbursements (25-22) C/C Tax, Water,
Wastewater, and
Storm Drain
$140,000
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Project Title Funding Source Funding
Amount
Maintenance Agreement for JPB/VTA Transit Center
(25-23)
Other (Reimbursement) $69,000
North Bayshore Semiannual Traffic Counts (25-24) Shoreline $182,000 Annual Regional Public Safety (25-25) C/C Tax $180,000
Annual Real Estate Technical and Legal Services (25-26) Property Management Reserve
$104,000
Annual Capital Improvement Program Development
(25-27)
CIP Reserve, Water, and
Wastewater
$78,000
Staff recommends modifications to five of the roll-forward Non-Discretionary Projects:
Biennial Installation of ADA Curb Ramps (25-04)—Staff recommends moving the ADA curb ramp project forward to occur on odd- number years and deferring the Biennial PMP Recertification project to even-number years.
Public Services Street Section Maintenance (2 5-05)—The roll -forward budget for the Public Services Street Section Maintenance was shown as $459,000 in the Five -Year CIP adopted in June 2023. Staff recommends a one-time budget increase of $110,000 from C/C Tax to support the cost increase of street poles and streetlights. This will help the City continue its program of replacing poles on a 40-year life cycle.
Annual Storm/Sanitary -Sewer Main Replacement (25 -09)—Staff recommends amending the project title to Annual Sanitary Sewer Main Replacement to reflect the scope of the project.
Shoreline Landfill Gas, Cap, and Leachate Maintenance (25-10)—The roll-forward budget for the Shoreline Landfill Gas, Cap and Leachate Maintenance was shown as $326,000 in the Five -Year CIP adopted in June 2023. Staff recommends a one-time increase of $180,000 from Solid Waste and Shoreline Regional Park Community to support the cost increase needed for pumps , materials, and vendor contracts as well as equipment rentals in the City’s closed landfill site.
Facilities Maintenance Plan (25-12)—The roll-forward budget for the Facilities Maintenance Plan was shown as $872,000 in the Five-Year CIP adopted in June 2023. Staff recommends an increase of $100,000 from the CIP Reserve and creating a subproject every five years for maintenance of the Child-Care Center.
There is sufficient funding for Non -Discretionary P rojects, including the recommended modifications for five projects.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Amendments to Existing Projects
There are various active CIP projects with recommended changes in the project scope or funding.
These amendments to existing projects are recommended for funding to continue ongoing work and progress towards construction and implementation. The recommended amendments are listed in Table 4 and further description of the IT Projects can be found in Attachment 5.
Table 4: Fiscal Year 2024-25 Amendments to Existing Projects
Project Amendment Justification
IT Computer Projects—Permit
Tracking (11-18)
Increase funding by $300,000.
(C/C Tax, Water, Wastewater)
Additional funding for
professional services
IT Computer Projects (15-18)
Increase funding by $100,000
(CIP Reserve, Water,
Wastewater)
Integration of Customer
Relationship Management
system with Work Order
Management System
IT Computer Projects (17-18)
Increase funding by $100,000.
(CIP Reserve, Water,
Wastewater)
Add Zoom Web Conferencing
System in City conference
rooms
Shoreline Boulevard Bus Lane
(18-43)
Increase funding by
$5,000,000
(Water, Water—NBS
Wastewater)
Increase costs
Upgrades to the Irrigation Pump
Station, Phase 1, Construction
(19-43)
Add planned construction
funding of $2,160,000 to
design phase, add construction
and amend title (SRPC)
Efficiency and to accurately
reflect number of projects
Cross Culvert Removal and Storm
Drain Extensions (19-49)
Combining with 24-30 funds of
$710,000 (Wastewater)
Efficiency of one project
providing same scope
Water/Sewer Replacement at 101,
Construction (20-41)
Funding sources
(Wastewater, Sewer-NBS) Swapping of funds
Calderon Bike Lane, Mercy to ECR
(20-47)
Increase funding by $21,000
(2016 Measure B)
Administrative funding
cleanup
IT Infrastructure and
Telecommuting Support (21-33)
Increase funding by $100,000
(CIP Reserve, Water,
Wastewater, SRPC)
Add capacity due to new hires
El Monte Avenue Improvements,
Design and Construction (21-38)
Add OBAG grant funds of
$2,400,000 and add City funds
($1,500,000) for scope from
22-29 (2016 Measure B, ECR
Public Benefit, OBAG)
Transfer grant funds and
additional City funds to fund
scope
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Project Amendment Justification
City Buildings Workspace Study and
Modifications (21-50)
Increase funding by
$1,010,000
(C/C Tax)
City Hall office remodeling
Shoreline Sea Level Rise Study
Update (21-54)
Increase funding by $250,000
(SRPC) Add funds for levee repair
Annual Street Maintenance (22-01)
Add funding of $30,000 from
closed CIP 10-28
(C/C Tax)
Increase funding from similar
scope project for ongoing
street maintenance
Concrete Sidewalk and Curb Repairs
(22-02)
Combining with 23-02 funds of
$717,000 (C/C Tax)
Efficiency of one project
providing same scope
Biennial Intersection Traffic Signal
System—Major Replacement and
Upgrades (22-15)
Funding sources—
appropriating developer funds
(C/C Tax, Dev. Fund)
Swapping of funds
El Camino Real Bike/Ped
Improvements, Construction (22-29)
Transfer OBAG grant funding
of $2,400,000 to El Monte
Corridor Improvements
(21-38) (OBAG)
Grant funding to be utilized
for 21-38
MOC Confined Space/Trench,
Design and Construction (22-33)
Add planned construction
funding of $500,000 to design
phase, add construction, and
amend title (C/C Tax, Water
Wastewater)
Efficiency and to accurately
reflect number of projects
City Hall, HVAC GHG Offset, Phase II
(22-34)
Increase funding by $125,000
for Phase II (CIP Reserve)
Fully funding tree planting per
previous Council direction*
Middlefield and Moffett Sewer
Replacement (22-42)
Add planned construction
funding of $9,690,000, add
construction, and amend title
(Wastewater, Sewer Capacity)
Efficiency and to accurately
reflect number of projects
SB-1 Streets Project (23-03)
Combining with 22-03 funds of
$3,080,000. (CIP Reserve,
C/C Tax, SB-1)
Efficiency of one project
providing same scope
Shoreline PVC Landfill Gas Header
Replacement, Construction
Add planned construction
funding of $2,010,000 to design
phase, add construction, and
amend title (SRPC)
Efficiency and to accurately
reflect number of projects
SRPC Water Control Improvements,
Construction (23-44)
Add planned construction
funding of $2,000,000, add
construction, and amend title
(SRPC)
Efficiency and to accurately
reflect number of projects
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Project Amendment Justification
Annual Street Maintenance (24-01)
Combining with 23-01 funds of
$2,406,000 (C/C Tax, Gas Tax,
2016 Measure B, VLF, Other)
Efficiency of one project
providing same scope
SB-1 Streets Project (24-03)
Transfer OBAG grant funding
of $3,500,000 to Moffett
Boulevard Complete Streets
(25-03) (OBAG)
Grant funding to be utilized
for 24-03
Civic Center Phase III (24-33) Increase funding by $91,000. (CIP Reserve) Added project scope
Generator Project, Planning and
Implementation (24-34)
Add planned implementation
funding of $1,000,000 to
planning phase, add
implementation, and amend
title. (CIP Reserve)
Efficiency and to accurately
reflect number of projects
Creek Assessment and Erosion
Repair, Construction (24-43)
Add construction funding of
$1,500,000, add construction
to design phase, and amend
title (CIP Reserve)
Efficiency and to accurately
reflect number of projects
____________________________
* The original Council -authorized amount for Phase II was $175,000. Staff inadvertently added only $50,000 for Phase II during the Fiscal Year 2023-24 CIP planning cycle.
There is sufficient funding for the recommended amendments to existing projects.
Discretionary Projects
There were 24 new Discretionary Projects scheduled to roll forward in Fiscal Year 2024 -25. As part of reviewing and evaluating these projects, staff recommends the following modifications:
• Adjusting budgets based on currently anticipated needs;
• Adding the planned construction funding to the existing project’s design phase CIP as an amendment rather than creating a new CIP project for the construction phase . This will result in fewer ongoing CIP active projects, more accurately reflect the actual number of projects, and provide flexibility to use remaining design funds towards construction; and
• Deferring several projects due to prioritizing pavement funding, lack of available funding and staff resources, project schedule changes, and/or previous direction from Council.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
These modifications are detailed below.
Adding Planned Construction Funding to Existing Projects:
Generator Project, Implementation —Delete the proposed new CIP project for the implementation phase and use the roll -forward budget of $1,000,000 to amend Generator Project, Planning, Project 24 -34, Phase l to increase funding and include implementation in the project title and scope.
MOC-Confined Space/Trench, Construction— Delete the proposed new CIP project for the construction phase to amend the MOC-Confined Space/Trench Design, Project 22-33, to increase funding by $500,000 and include construction in the project title and scope.
Middlefield and Moffett Sewer Replacement, Construction —Delete the proposed new CIP project for the construction phase and use the roll -forward budget of $9,690,000 to amend Middlefield and Moffett Sewer Replacement, Design, Project 22 -42, to increase funding and include construction in the project title and scope.
Upgrades to the Irrigation Pump Station , Phase 1, Construction—Delete the proposed new CIP project for the construction phase and use the roll -forward budget of $2,160,000 to amend the Upgrades to the Irrigation Pump Station, Phase 1, Project 19-43, to increase funding and include construction in the project title and scope.
Shoreline PVC Landfill Gas Header R eplacement, Construction— Delete the proposed new CIP project for the construction phase and use the roll -forward budget of $2,010,000 to amend the Shoreline PVC Landfill Gas Header Replacement, Project 23 -41, to increase funding and include construction in the project title and scope.
Recommended Project Deferrals:
Due to project managers being fully committed with ongoing projects, existing project backlog still remaining, lack of unrestricted funding, and recent City Council direction, staff recommends deferring 14 projects that were scheduled to roll forward in Fiscal Year 2024-25 as summarized in Table 5 below.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Table 5: Fiscal Year 2024-25 Projects Recommended for Deferral
Project Planned Funding Justification
Active Transportation
Improvements $1,000,000 Lack of unrestricted funding
Evelyn Avenue Bikeway (Franklin
Street to Bernardo Avenue), Study
and Design
$2,000,000 Lack of unrestricted funding
Middlefield Road Sidewalk Across
SR-85, Feasibility Study and
Preliminary Design
$500,000 Lack of unrestricted funding
El Camino Real/Castro Protected
Intersection and Castro Bikeway
Improvements (Yosemite/High
School), Design and Construction
$3,871,000 Staff resources not available
Rengstorff Avenue Adaptive Signal
System $3,110,000 Staff resources not available
Citywide Traffic Signal and Traffic
Center Operations, Planning and
Design
$1,000,000 Lack of unrestricted funding
El Camino Real Median Landscaping
Project $195,000 Waiting on Caltrans work to
be completed
Callahan Field (Crittenden) Lighting
Upgrade $470,000 Staff resources not available
Rengstorff House Restoration,
Interior and Outdoor, Construction $6,000,000 Project phase not ready to move forward
711 Calderon Park, Design and
Construction $2,000,000 Lack of park land and
unrestricted funding
CPA Roof Repair and Replacement $1,800,000 No current issues with the roof
Shoreline Area Irrigation Main
Improvements, Construction
(Phase 1)
$4,060,000 Project phase not ready to
move forward
These projects will be moved into a future fiscal year as part of the next five -year CIP planning process in 2025.
Staff recommends the 2016 Measure B supplemental funds identified for Active Transportation Improvements and the Gas Tax supplemental funds identified for Evelyn Avenue Bikeway, in the combined amount of $1.5 million, be reserved and redirected toward existing paving projects.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Two additional projects were scheduled to roll forward and are also being deferred:
• Transit Center Grade Separation, Additional Construction ($33 million) • Rengstorff Grade Separation, Construction ($105 million)
These were originally intended to be placeholders as both have significant funding needs dependent on grants and other potential future sources . At the January 23, 2024 Council Study
Session, Council directed staff to prioritize the staff-recommended Rengstorff Grade Separation project, including utilizing the planned Measure B funding for the Castro Street Grade Separation toward the Rengstorff Avenue Grade Separation. Caltrain will be starting the final design phase for the Rengstorff Grade Separation project this year, and the construction phase is expected to begin in 2026. These two allocations for construction funding are recommended to be deferred as they are not yet needed and the funding is not available for programming.
Staff did evaluate reprioritizing existing active projects to identify an option of having a few of the staff-recommended deferred projects shown in Table 5 remain. The best candidate projects are those that are using unrestricted funds and have just started design or are not yet started.
After evaluation, staff determined that due to the category of projects predominately falling within the criteria for prioritizing CIP unrestricted funds previously mentioned, the active projects have warranted needs, and staff does not recommend defunding one or more projects to fund a new Discretionary project. Should Council wish to have a project move forward, a currently active project with similar funding would need to be put on hold to free up both unrestricted funds and staff resources. The projects evaluated are shown in Table 6.
Table 6: Active Projects Using Unrestricted Funds
Project
Year Project Title Category FUNDING
SOURCES
UNRESTRICTED
AMOUNT
(thousands)
2023-24
Street Reconstruction Project (24-28) Pavement
CIP Reserve
and 2016
Measure B
$120
Fire Station No. 3, Feasibility Study
and Preliminary Design (24-31) Facility CIP Reserve $1,000 Firefighter Personal Protective
Equipment Storage at Fire Stations,
1, 3, and 4 (24-32)
Safety CIP Reserve $1,250
Security Badge System, Phase II and
III (24-35) Facility CIP Reserve $120
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Project
Year Project Title Category FUNDING
SOURCES
UNRESTRICTED
AMOUNT
(thousands)
2022-23
Hope Street and Villa Street Traffic
Signal Installation (23-29)
Cost Share
with
Developer
C/C Tax $1,070
Fire Bay Door Evaluation and
Replacement (23-32) Maintenance CIP Reserve $470
Adobe Building—Patio Tiles
Replacement (23-34) Safety CIP Reserve
and C/C Tax $700
Citywide Benchmark Program
(23-38) Maintenance C/C Tax $190
2021-22
MOC Confined Space/Trench, Design
(22-33) Safety
C/C Tax,
Water, and
WW
$126
SCT Bridge Over Central/Evelyn
Replace Deck and Paint (22-35) Facility
CIP Reserve
and Park
Land
$1,212
North Bayshore Discretionary Transportation Projects
This section is separated from the others to clearly outline transportation project changes to the Shoreline Regional Park Community Fund . As previously mentioned, current development activity has significantly slowed , including in the North Bayshore A rea with changed traffic conditions in and out of North Bayshore . This has prompted staff to reconsider the timing of three projects. Staff is recommending closure of two existing projects and deferral of one new project as follows:
• Close: Landings Frontage Road (Landings to Permanente Creek), Project 22-28.
This project funded 50% of the Landings frontage road construction, consistent with the condition of approval for the development project, and is no longer needed at this time. As North Bayshore employers continue to support remote work policies and more flexible commute schedules, they are reconsidering office space needs. As a result, the largest employer, Google, is not planning any new office development at this time and is terminating the Google Landings office development.
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
• Close and add to Unscheduled Proposed Projects: Landings Frontage Road Connections (Rengstorff Avenue to Plymouth Street), Design, Project 23-28.
As a result of Google terminating its Landings office development, this project is recommended to be closed and deferred to a later date. Staff will continue to monitor developments in the North Bayshore and reprioritize this project as the need arises.
• Defer: Shoreline Boulevard Cycle Track and B us Lane Extension from Plymouth Street to Charleston Road (Planned Fiscal Year 2024-25 CIP).
This project is the next phase of the Shoreline Boulevard Interim Bus Lane and Utility Improvements project that would extend the transit lane from Plymouth Stre et to Charleston Road. Staff is not ready to move this project forward until the Shoreline Interim Bus Lane and Utility Improvements and the Plymouth/Space Park Realignment projects are complete. Staff recommends deferring this project to a later year.
Recommended Roll Forward Discretionary Projects:
As a result of the recommended modifications and deferrals listed above, staff recommends four CIP Discretionary Projects to roll forward to Fiscal Year 2024 -25 as shown in T able 7 . These projects address priority pavement maintenance needs, safety improvements, and initiating a study update for the Shoreline Landfill Master Plan.
Table 7: Fiscal Year 2024-25 Discretionary Roll-Forward Projects
Project Title Funding Source Funding
Amount
Street Reconstruction C/C Tax and 2016
Measure B Sales Tax
$1,000,000
2024-25 City Bridges and Culverts Structural
Inspection and Repairs
C/C Tax and
Shoreline
$371,000
Cross Culvert Removal and Storm Drain Extensions Storm Drain and Gas Tax
$707,000
Shoreline Landfill Master Plan Study Update Shoreline $720,000
New Discretionary Projects
During the roll -forward year of the CIP funding cycle, new projects are generally limited to projects that have more immediate needs and should not wait until the next five -year CIP Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
planning process. In reviewing the new project requests, staff recommends that Council support the new projects l isted in Table 8 as part of the Fiscal Year 2024-25 CIP based on immediate needs, available funding and staff resources, and the criteria previously supported by Council .
These projects would be funded with the typical funding sources available for CIPs.
Table 8: Fiscal Year 2024-25 New Discretionary Projects
Project Title Funding Source Funding
Amount
Park Impact Fees Nexus Study
This project will conduct a nexus study of Parks and
Recreation Development Impact fees as outlined in the
City’s 2023-2031 Housing Element, Program 1.8 Park Land Ordinance Update.
CIP Reserve $120,000
Shoreline Coastal Habitat Restoration, Planning and
Design
This project will restore tidal marsh and wetland habitats at Mountain View Slough and at the lower reach of
Permanente Creek.
Shoreline $1,200,000
Watershed Management On-Call
This project will provide engineering support on various tasks related to watershed management, including storm
drain system condition assessment, site-specific
preliminary study, and other engineering and design
support as needed.
Storm Drain and
Shoreline
$250,000
Monta Loma Playground Renovations, Construction
This project is for renovations to the public playground at Monta Loma Elementary school.
CIP Reserve $330,000
Eagle Park Pool Improvements
This project will improve the Eagle Park Pool, including deck replacement, replastering of the pool, removal of the 3M diving board, relocation of the 1M diving board, and installation of new pool lights.
Park Land $1,800,000
Question No. 2: Does Council support or have modifications to staff’s recommendations for the Fiscal Year 2024- 25 CIP project recommendations, including the Roll -Forward, modified Non-Discretionary Projects, amendments to existing projects, modified Discretionary Projects, and new projects?
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
Equity Lens
Staff reviewed the new Discretionary Projects and project amendments recommended in the Fiscal Year 2024 -25 CIP in terms of benefit and/or burden to communities of color and/or low-income residents. Staff did not identify any CIP projects that would burden communities of color and/or low-income residents.
Many projects were considered neutral in terms of burden or benefit and are prioritized based on preventive maintenance, replacing infrastructure at end of useful life or at ris k of failure, regulatory requirements, and safety. Examples of these projects include street reconstruction, water and sewer main replacement/utility improvements, bridge structural inspections/repairs, and park and facilities improvements.
Underground Utilities at 1020 Terra Bella Avenue
On June 30, 2020
, Council approved a new mixed -use development at 1001 North Shoreline Boulevard and directed staff to consider allocating the project’s community benefit funds to various active transportation improvements in the Terra Bella area. The developer has paid $1.04 million in community benefits to date and is expected to provide an additional $260,000 when they are ready for their next building permit, currently anticipated to be in approximately 18 months.
At the City Council meeting on March 14, 2023, Council directed staff to bring back options for including a project in the CIP to fund undergrounding the overhead utilities along the Terra Bella Avenue frontage for the 1020 Terra Bella Avenue affordable housing project. The rough order of magnitude cost for this project was anticipated to be around $1 mill ion. As part of the adopted Fiscal Year 2023 -24 through Fiscal Year 2027- 28 CIP on June 27, 2023 , Council approved
redirecting the 1001 North Shoreline Boulevard project’s community benefit funds for undergrounding the utilities at 1020 Terra Bella Avenue ( Underground Utilities at 1020 Terra Bella, Project 24-38).
Staff has been actively working with the developer (Alta Housing) on a funding agreement for Alta Housing to deliver the undergrounding of utilities as part of the development project. This allows the underground work to be coordinated with their project and take place as a part of their street frontage improvements for efficiency and to minimize disruption. As part of this effort, staff expects to return to Council this spring for authorization to enter into a funding agreement with Alta Housing for the City to f und the undergrounding of utilities design and construction. Staff recently received an updated cost estimate of $2.7 million . T his is still preliminary as the design effort has not started that would provide a more accurate cost estimate, specifically f or construction. A majority of the costs ($2.2 million) are for the construction phase of the project. The design phase of the project would start once a funding agreement is executed, and design is expected to be complete by summer 2025 . There is Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
sufficient funding in the project for design, however, funding of approximately $1.7 million , or more, will be needed in summer 2025 for Alta Housing to contract for the work and for the City to fully fund the project. There is no dedicated funding source for this project, and the additional $1.7 million would have to come from unrestricted funds.
Due to the decline in unrestricted funding revenues, expected projection of these revenues to remain low, and continued demand for othe r projects without dedicated funding sources, including pavement improvement projects, staff recommends closing the Underground Utilities at 1020 Terra Bella, Project 24 -38, and redirect ing the community benefit funds back to active transportation improvements in the Terra Bella area.
As an alternative to closing the project, Council can direct staff to defer the project until additional funding for construction can be identified as a midyear project update or part of the next CIP planning process in 2025. The City may have to then design and construct the project separate from the Alta Housing project. This would result in the loss of efficiency of the developer delivering the project while constructing other improvements along their frontage, including additional delay costs, and the general disruption caused by construction activities for the future 1020 Terra Bella residents and Terra Bella neighborhood.
Question No. 3: Does Council support staff’s recommendation to close Underground Utilities at 1020 Terra Bella, Project 24 -38, and redirect the community benefit funds to active transportation improvements in the Terra Bella area?
RECOMMENDATION
Staff seeks Council input regarding the following to allow staff to finalize the Recommended Fiscal Year 2024-25 CIP.
Question No. 1: Does Council support or have any feedback on staff’s recommended approach and criteria to determine which projects to prioritize for the CIP Reserve and C/C Tax Funds?
Question No. 2: Does Council support or have modifications to staff’s recommendations for the Fiscal Year 2024 -25 CIP project recommendations, including the Roll- Forward, modified Non - Discretionary Projects, amendments to existing projects, modified Discretionary Projects, and new projects?
Question No. 3: Does Council support staff’s recommendation to close Undergrounding Utilities at 1020 Terra Bella, Project 24 -38, and redirect the community benefit funds to active transportation improvements in the Terra Bella area?
Fiscal Year 2024-25 Capital Improvement Program
April 9, 2024
NEXT STEPS
Based on the direction provided by Council at this Study Session, staff will develop and present the recommended Fiscal Year 2024-25 CIP to the City Council for adoption on June 25, 2024.
PUBLIC NOTICING
Agenda posting, email to neighborhood associations, and posts o n social media and the City’s website.
ND-JH-RG-EA-DSC
LL/1/CAM
771-04-09-24SS
203650
Attachments: 1. Active CIP Projects
2. Pavement and/or Pedestrian and Bicycle Improvements
3. Park Projects
4. City Pavement Condition Report
5. IT Memo
cc: PWD(A), APWD(A)—Byrer, APWD —Au, SMA —Doan, SMA —Goedicke, PCE —Gonzales, SCE—Houghton