PISMO BEACH COUNCIL AGENDA REPORT
Agenda Item #12.A
SUBJECT/TITLE:
CAPITAL IMPROVEMENT PROGRAM SEMI-ANNUAL REPORT
RECOMMENDATION:
No action required; information only.
BACKGROUND:
The City's Engineering Division consists of five full-time staff members: the Director of Public Works/City Engineer, Senior Engineer, Engineer, Engineering Technician, and Management Analyst. The Engineering Division remains busy with capital improvement projects, development review, and administering the City's water conservation programs.
The City Council met on February 12, 2021 to establish new goals to guide capital improvements, investments, and initiatives for the City for the next two years. Additionally, due to the duration of certain projects, some projects that staff is working on reflect direction from the City Council’s previous goals. The Council’s current goals are:
1. Water Supply, Conservation and Central Coast Blue
2. Public Safety
3. Traffic, Circulation, and Parking
4. Community Character and Quality of Life for Residents In the past, the semi-annual CIP update has been a tool to update the City Council and the community on the progress of current capital projects and Council Goals. In recent months the City has seen a significant increase in construction prices and delays due to supply chain issues and labor shortages associated with the COVID-19 pandemic, so the Council directed staff to provide revised budget and construction timeline estimates for some of the larger capital projects.
When discussing project estimates, it is important to understand the project development and estimating process. Capital projects are typically developed during the drafting of each 10-year CIP update, which happens every two years in conjunction with the city’s budget. Projects that are included in the 10-year CIP and city budget come from a variety of sources, including the City Council, Planning Commission, Parks, Recreation and Beautification Commission, the Traffic Safety Committee, the Parking Advisory Committee, City staff and the community.
Once a project is identified, a project description and scope is developed to help staff form a Level 2 to Level 3 construction estimate. When developing cost estimates, there are five levels of estimates ranging from Level 1 to Level 5 with Level 1 being the most general and Level 5 being the most accurate.
12.A-1Council Agenda 3-1-2022
The five levels of cost estimates are defined below:
Level 1 – Order of Magnitude
The Order of Magnitude estimation is an extremely rough estimate created before the project is well-defined. It is based on expert judgement and previous costs of similar projects. The typical accuracy range in this level is from 25%–75%.
Level 2 – Intermediate/Feasibility Estimate
The primary purpose of the intermediate estimate is to determine project feasibility from the concept of the general project.
Level 3 – Preliminary Estimate
This estimate uses a somewhat detailed scope to consolidate unit costs. It is accurate enough to be used as a basis for project funding/financing.
Level 4 – Substantive Estimate
The substantive estimate is based on estimated unit costs. The estimate is created by analyzing reasonably finalized projection designs, objectives and deliverables that are established by the organization.
Level 5 – Definitive Estimate
This estimate is the most accurate and reliable because it occurs when costs are known. It used to create bids and cost baselines.
Completed
Shell Beach Tennis Court Rehab – This project replaced a tennis court with pickleball court, reseal and restripe all courts, including the basketball court. Original Estimate – $43,000
Updated Cost – $43,408
Price Canyon Road Slope Repair – A section of Price Canyon Road just west of the City limits experienced damage during the 2017 winter storms. The project includes repair of a damaged section of slope along the south side of Price Canyon Road near the Pismo Beach city limit. This project is funded through Federal Emergency Relief funding through FHWA and Caltrans Local Assistance (LA), 88.53% of which is reimbursed by FHWA/Caltrans LA and 11.47% would be supported by a City match.
A contract was awarded to S. Chaves Construction on August 17, 2021, and construction began on September 23, 2021. Construction of the project has been completed and three- month plant establishment period began on January 25, 2022. A notice of completion will come to the City Council in May 2022.
Original Estimate – $1,191,395
Updated Cost – $900,000
Original Timeline – 70 working days
Updated Timeline – 100 working days
12.A-2Council Agenda 3-1-2022
Dinosaur Caves/Price House Restroom Project – This project includes the relocation of the existing restroom at Dinosaur Caves Park to the Price Historical Park and installation of a new restroom purchased through Public Restroom Company at Dinosaur Caves Park. A contract was awarded to JJ Fisher Construction on August 17, 2021, and construction began the week of October 4, 2021, with clearing and grubbing at the Price Historical Park restroom site. Work at both sites is complete and JJ Fisher Construction is working to address last remaining items identified during Building Department final inspections. Both restrooms are anticipated to be open to public the week of February 28, 2022.
Original Estimate – $377,000
Updated Cost – $380,000
Original Timeline – 70 working days
Updated Timeline – 100 working days
Under Construction
Council Goal – Traffic, Circulation, and Parking
Bello Bridge Replacement – A contract was awarded to Papich Construction by City Council on April 21, 2020, for construction of the Bello Bridge Project. Construction started in early June 2020. The project was stopped on October 31, 2020 per the permit requirements with the California State Water Resources Control Board (Water Board).
Construction resumed on June 15, 2021 and is nearing completion. The post-construction re-vegetation contract was awarded and that work, which includes a five-year plant establishment period, will begin upon completion of the bridge construction. This project is expected to be completed by mid-March 2022.
Original Estimate – $6.5 M
Updated Cost – $8 M
Original Estimated Completion Date – January 2022
Updated Estimated Completion Date – March 2022
2021-22 Paving Project – In Fall 2020, the City entered into a contract with Pavement Engineering Incorporated (PEI) to develop an update to the City’s Pavement Management Plan. In April 2021, the City Council approved the recommended 5-year plan. On May 18, 2021, the City Council awarded a contract to PEI for evaluation and development of plans and specifications for the 2021-22 Paving Project which includes light rehabilitation to Mattie Road and Ocean Boulevard, light to heavy maintenance to Highland and Ventana Drives north of James Way and residential roads in the neighborhood joining those two collector roads, residential roads north of James Way in the vicinity of New Life Community Church and Wadsworth Avenue from Price Street to the end. The project also includes adding a section of sidewalk along Spyglass Drive from Shell Beach Road to Mattie Road that passes under US 101 and a bike lane for pedestrian and bicyclist safety. Construction is estimated to begin in late Spring 2022. The original project was expected to cost $6 million and would be the largest paving project the City had undertaken. Since that time, the Council has directed staff to expand the project to include Price Street from Dolliver Street/Highway 1 to the US 101 onramp with new paver
12.A-3Council Agenda 3-1-2022
median and parking meters, the Bluff trail at end of Indio Drive, City Hall Parking lot, and additional streets in the neighborhoods northeast of James Way. Further, there is consideration of the rehabilitation of Solar Way. The current estimated project cost including construction ($13 million), construction management services, engineering services during construction and contingency is approximately $17 million based on updated plans and an updated engineer’s estimate received from the City’s design consultant in February. The project will be advertised with a base bid and multiple bid alternates to provide the Council with options on what portions of work to award. Staff put the project out to bid on February 24, 2022 with bids due on March 31, 2022. Staff will provide a full update to the City Council and Community on this project when a contract is brought back to award in April 2022.
Original Estimate – $6 M plus soft costs (design, engineering services during construction)
Updated Estimate – $13 M plus soft costs
Original Timeline – 500 working days, estimated completion date June 2024 Updated Timeline – unknown until construction starts
Sidewalk Under US 101
Original Estimate – $300 K
Updated Cost – $270 K
Original Estimated Completion Date – Winter 2023
Updated Estimated Completion Date – won’t know until construction starts
Other Projects
Wastewater Treatment Plant Improvements Project – The project includes:
Rehabilitation of the existing:
o Belt Filter Press – Completed
o Dissolved Air Flotation Tank – Completed by staff
o Clarifiers – Going to bid fall 2022
o Digester #2 – Soliciting quotes fall 2021
Cleaning of the oxidation ditches – Will be performed by staff once the new bypass pump is received.
Demolition of Digester #1 – Going to bid spring 2022. Construction of a new 60-foot by 60-foot steel building – Waiting for demo of digester #1.
Construction of a new dump station and retaining wall – Staff will complete as time allows.
Repaving of the corporation yard lot after completion of construction of the various improvements – Waiting for completion of Corp Yard Admin Building.
Shell Beach Reservoir I Replacement – This project involves the removal and replacement of a one-million-gallon water storage tank (Shell Beach Tank #1). Upgrades include piping, electrical components, tank appurtenances, seismic, and safety features.
12.A-4Council Agenda 3-1-2022
Construction began September 15, 2021, and to date, the existing tank has been demolished, site preparation has been completed, and the new tank is being constructed.
This project is anticipated to be completed by May 20, 2022, which is 21 days past the project extended completion date. Staff will be seeking liquidated damages from the contractor in the amount of $1,000 per day past the extended project completion date of April 29, 2022.
Original Estimate – $1.7 M
Updated Cost – $1.7 M
Original Timeline – 170 working days
Updated Timeline – 190 working days
Corporation Yard Facilities Building/City Hall Improvements Project – This project includes a remodel and addition to the Corporation Yard facilities building and a remodel to City Hall. The focus of the remodels is to enhance employee safety and customer service to the public. A contract was awarded to Quincon Inc., for the project on May 18, 2021. Construction began in two phases, with the Corporation Yard portion starting on July 6, 2021, and the City Hall portion on August 2, 2021. Staff estimates completion of the City Hall portion the week of March 7, 2022 with the contractor moving items back into City Hall downstairs that has been temporarily stored in the storage container in the City Hall parking lot. The Corporation Yard portion of the project is estimated to be complete in April 2022.
Original Estimate – $1.7 M
Updated Cost – $2.0 M
Original Timeline – 160 working days (Corp Yard), 80 working days (City Hall) Updated Timeline – 219 working days (Corp Yard), 138 working days (City Hall)
Price Historical Park Sign Plan – This project will install the Price Historical Park driveway monument sign and entrance circle sign as established by the Price Historical Park Master Signage Plan, approved by Friends of Price House and the Parks, Recreation and Beautification Commission. Construction of the foundations and stone facing for each of the new signs was completed via change order to JJ Fisher Construction’s contract for the Dinosaur Caves and Price House Restroom Project. Foundations and stone facing for both signs are complete, Southpaw Sign Company has delivered and installed the entry way sign, and delivery and installation of the parking lot sign is anticipated week of February 28, 2022.
Original Estimate – $29,000
Updated Cost – $32,667
Original Timeline – Mid-February 2022
Updated Timeline – February 28, 2022
Price Historical Park Event Green
Consultant has summitted preliminary landscape improvement plans for a grassy event area between the Price House and the Meherin House. Available budget is $61,114 plus balance of previous Meherin House budget ($42,185). Total available budget $103,299.
12.A-5Council Agenda 3-1-2022
Pismo Beach Storm Drain Project – This project consists of storm drain projects at three separate locations including Encanto Avenue, Reef Court, and Windward Avenue. A contract was awarded to AAAA Engineering Contracting Inc. at the July 20, 2021 City Council meeting. Construction began on September 7, 2021 and to date the Reef Court and Windward Avenue portions of the project have been completed. During construction of the Encanto Avenue portion of the project, it was discovered that the Encanto Outfall was in need of replacement. The materials for the outfall were on backorder and delayed the project. Staff anticipates this portion of the project to be completed by the end of February.
Original Estimate – $950,000
Updated Cost – $950,000
Original Timeline – 65 working days
Updated Timeline – 106 working days
Previous Council Goal – Bluff Protection
Ocean Boulevard Coastal Access Improvement Project – The Ocean Boulevard Coastal Access Improvement Project includes the following:
Ocean Boulevard bluff stabilization (federally funded) Ocean Boulevard Pedestrian Walkway between Vista del Mar and Capistrano Avenue (City-funded)
Morro Stairs Replacement (City funded)
Morro Storm Drain Outfall Replacement (City funded)
The bluff stabilization portion of the project is funded through Federal Emergency Relief funding through the Federal Highway Administration (FHWA) and Caltrans Local Assistance (Caltrans LA), 88.53% of which is reimbursed by FHWA/Caltrans LA and
11.47% would be supported by a City match. The Morro stairs and storm drain outfall replacement portions of the project are City-funded with assistance from a partial insurance claim with the City’s insurance provider, the California JPIA.
This project was set to bid in February, however due to additional bluff failure that occurred just prior to bidding the project adjacent to the project site, the project was delayed so that a repair of this section of bluff could be included in the project. By delaying the project and including this section of repair in the project, 88.53% of this repair will be reimbursed by FHWA/Caltrans LA. Council provided staff with authorization to bid at the October 5, 2021, City Council meeting, and bids are due on November 18, 2021.
The project was rebid in October 2021 and a contract was awarded to Granite Construction in the amount of $5,172,223 on December 21, 2021. During the submittal review/supply percurrent period of the project, it was found that epoxy-coated rebar has a current lead time of approximately two months due to global supply chain issues.
Because the epoxy-coated rebar is a critical component of the bluff protection and beach access structure construction will not begin until April 2022. In the meantime, Granite is procuring other materials for the project and working with city staff to have the appropriate submittals reviewed and approved so construction can begin once the materials arrive.
12.A-6Council Agenda 3-1-2022
Original Estimate – $6.9 M
Updated Cost – $7.1 M
Original Estimated Completion Date – April 2023
Updated Estimated Completion Date – June 2023
Design
Council Goal – Water Supply, Conservation and Central Coast Blue Central Coast Blue
Central Coast Blue was recently awarded the League of California Cities Helen Putnam Award for Intergovernmental Collaboration. This is the City’s first Helen Putnam award.
Financing
The City was awarded a Prop 1 Groundwater Grant Program (GWGP) planning grant for the funding amount of $2,000,000 and all funds expended after November 4, 2014, count toward the cost share for this grant, therefore no additional funds are required to meet the match requirements. The grant agreement was executed in April 2019 and grant activities were completed in January 2022. These activities included construction of a test injection well, construction of a monitoring well, aerial geophysics investigations, completion of a leaching study, developing an updated groundwater monitoring plan, and completion of an anti-degradation analysis, all of which will assist in advancing the Central Coast Blue project. On September 7, 2021, the City submitted its concept proposal for Round 3 Prop 1 GWGP Implementation Grant funding. The concept proposal included a request for $28 million, or approximately 50% of implementation costs, in grant funding for the project. The State Water Resources Control Board (SWRCB) Department of Financial Assistance anticipates completing its review of the Round 3 Concept Proposals by March 2022, and will then solicit full proposals from the selected projects.
The City applied for a Title XVI planning grant from the United States Bureau of Reclamation and was notified in February 2019 of an award of $796,094. This grant will fund program management, final design, and value engineering. The City then applied for a Title XVI implementation grant and was notified in August 2021 of an award of $1,700,000 for use in funding final design. The plans to submit another Title XVI implementation grant request on March 15, 2022 for the remainder of funding available to the project from this program. The project is eligible to receive up to 25% of total project costs or approximately an additional $12 million.
San Luis Obispo County plans to submit a State Integrated Regional Water Management Grant Program, Prop 1 Round 2 Implementation Grant request in summer of 2022 that includes multiple projects from around the County. The City
12.A-7Council Agenda 3-1-2022
intends to submit a request for $1 to $2 million in funding for Central Coast Blue and will be engaging with the County in March 2022.
The City submitted applications to the SWRCB for Clean Water State Revolving Fund (CWSRF) financing for construction of the project before the end of the year.
The City submitted two applications, one on behalf of the City, and one on behalf of the proposed Central Coast Blue Joint Powers Authority to keep the City’s loan options open during discussions with project partners City of Grover Beach and City of Arroyo Grande. Both Grover Beach and Arroyo Grande also submitted CWSRF applications for the project. If successful, the CWSRF will provide low interest financing for the construction of the project.
Project Siting
A 1.75-acre parcel was purchased by the City as a location for the advanced treatment facility. Private leases are being terminated on the site to begin site cleanup and preparation.
Technical
The City completed 50% design plans in December 2021. Also, the City has engaged relevant permitting agencies in 2021 to set up permit applications to be submitted in 2022.
Governance
A cost-sharing agreement has been developed and includes the following key terms:
The City of Pismo Beach remains lead agency and acts as project developer through final completion of Phase 1 of the Project.
Costs will be shared by the three cities in proportion to their share of the benefits (water) allocated to the jurisdiction. Grover Beach and Arroyo Grande will reimburse Pismo Beach for their respective shares of the costs of the Project, including all pre-construction and construction costs. Ongoing pre-construction costs will be split between Arroyo Grande and Grover Beach until each party reaches its total contribution amount for its share of pre-construction costs. The allocation of costs/shares are as follows:
o Pismo Beach: 39%
o Grover Beach: 36%
o Arroyo Grande: 25%
The cities will form a Joint Powers Authority (JPA) that will own and operate the Project, as well as obtain financing for construction of the Project.* o The JPA Board of Directors will consist of one representative of each city with each member retaining an equal vote on the Board.
o The JPA will own all Project assets and will employ or contract for the Project’s operations and administrative staff.
o *The revised framework indicated that the JPA would become effective upon completion of construction and commissioning of the Project.
However, the Agreement calls for the JPA to be formed earlier in order to
12.A-8Council Agenda 3-1-2022
ensure that the JPA is able to obtain financing for the Project. The Agreement also acknowledges the intent for the JPA to apply for and obtain financing from the State Water Resources Control Board Clean Water State Revolving Fund (SRF) and, if financing is not available to the JPA through the SRF, that the parties may independently seek financing from the SRF. Joint meetings of the three City Councils will be held at least once annually until the Project is constructed to provide a venue for discussion and transparency for the public on the project progress, to receive Project updates, and discuss policy issues as needed (e.g., unexpected timeline extensions, approvals of expenditures beyond the Project budget, etc.).
A Technical Advisory Committee made up of staff from the three cities may be formed and meet monthly to evaluate pre-construction and construction costs, provide input into formation and operations of the JPA, and present reports at the joint City Council meetings.
Each City Council will review and approve the scope, budget, contingency, and procurement for the remainder of pre-construction and construction phases of the Project. Costs in excess of the agreed-upon budget, plus a 20% contingency, will require approval of all three City Councils. If all three City Councils do not approve any such change order, the parties will meet and confer to arrive at an agreement on the requested change. If this process is unsuccessful, costs will be reduced to below the 20% contingency.
The Agreement does not impose groundwater pumping limitations on participating parties and recognizes the participants’ contribution of new developed water for their exclusive use. The Agreement also acknowledges that Project water will not be transported out of the Northern Cities Management Area (NCMA) without the prior written approval of the parties.
An opt-out clause is included to allow exit of a party prior to award of a construction contract as long as the identified share of costs incurred to date are paid by that party.
This cost share agreement was approved by the Arroyo Grande City Council on January 25, 2022 and by the Grover Beach City Council on February 15, 2022. The cost share agreement is on the Pismo Beach City Council agenda this evening.
Previous Council Goal – Old City Hall Public Safety Center
Public Safety Center – Staff and the consultant team are continuing to develop the parameters of the design-build documents for project delivery and reviewing cost impacts and alternate building and site configuration layouts. The team has received requests for qualifications from the future design-build teams to pre-qualify their services to design and construct the new fire station and renovations and additions to the existing police facility, and related site work at 1000 Bello Street.
Original Estimate – $20 M
Updated Cost – $22 M to $30 M, depending on project scope
12.A-9Council Agenda 3-1-2022
Chapman Estate Improvements
Windows
Original Estimate – $200 K
Updated Cost – $440 K
Original Estimated Completion Date – November 2021
Updated Estimated Completion Date – July 2022
ADA Restroom
Original Estimate – $200 K
Updated Cost – $475 K
Original Estimated Completion Date – February 2022
Updated Estimated Completion Date – August 2022
Roof
Original Estimate – $500 K
Updated Cost – $580 K
Original Estimated Completion Date – March 2022
Updated Estimated Completion Date – March 2022
Projects include the reroof of the estate, window replacement and construction of an ADA- compliant bathroom, replace parquet floor, paint the interior and repair the plaster ceiling of the estate.
The reroof is currently in progress with anticipated completion in March 2022. Staff is currently working with two separate architectural consultants on plans and specifications for the ADA bathroom and window replacement with an estimated advertisement for construction bids in May 2022.
Council Goal - Community Character and Quality of Life for Residents James Way Beautification Project
In addition to the installation of additional trash cans, benches and new mutt mitts, on February 15, 2022, the City Council directed staff to move forward with a streetscape project that would significantly enhance the corridor with the installation of planters and trees on the ocean side of James Way. The project includes the removal of the concrete between the sidewalk and fence line and replacing it with drought-tolerant landscaping.
Staff is currently developing a request for preproposal to procure a consultant team to design the project and prepare construction documents. The current timeline for the project anticipates construction to begin in October of 2022. Original Estimate – $300 K
Current Project Estimate – $1.5 M
12.A-10Council Agenda 3-1-2022
Toucan Terrace Sewer Trestle Rehabilitation
Awarded a Professional Services contract to a Consultant to prepare plans and specs for recoating the Trestle support bridge.
Original Estimate – $300K
Updated Cost – Pending Inspection and Assessment
Original Estimated Completion Date – N/A
Updated Estimated Completion Date – N/A
Chumash Park and Palisades Park
Request for proposals were received for playground equipment manufacturers. PRBC has reviewed proposals and short-listed vendors who are currently providing updated options and renderings. Request for proposals were received for professional engineering site design layout and ADA improvements. Initial budgeting cost estimates for both park improvements were $450K. Current estimates for park improvements are $1.1 million.
The increased costs are a result of cost increases for installation services, softfall installation and the amount of access improvements that must be constructed in both parks. Staff estimates a budget shortfall of $650K. Current estimated playground equipment vendors manufacture lead-time from the date of authorized purchase is 4-6 months.
Original Estimate – $450 K
Updated Cost – $1.1 M
Original Estimated Completion Date – Summer 2022
Updated Estimated Completion Date – Winter 2022 due to lead time for play equipment
Pier Avenue Stairs Closure
Consultant has been selected to evaluate the stairs and propose repairs and alternatives.
A cost estimate as well as projected timeline will be developed as part of the evaluation.
Dolphin Bay Public Strom Drain Repair
Awarded a Professional Services contract to a consultant to prepare plans and specs to replace existing public storm drain adjacent to The Dolphin Bay Resort. Survey and site assent of pipe and bluff top currently being performed. Geotechnical report has been prepared. Initial cost estimate $250K. Estimated start of Construction Fall 2022.
Completion 2023.
Original Estimate – $250 K
Updated Cost – $300 K
Original Estimated Completion Date – Beginning of 2022 Updated Estimated Completion Date – Fall 2022
12.A-11Council Agenda 3-1-2022
FY 2023 Projects
The projects in this section have not yet been developed to a point to provide an anticipated completion date. Staff will continue to develop these projects.
Dog Park at Spyglass
This project will install a dog park at a portion of Spy Glass Park including chain link fencing to keep the dogs contained in the “dog park,” benches, trash cans, and Mutt Mitt stations.
Original Estimate – $75 K
Updated Cost – $80 K
Hinds/Oceanview Pedestrian Path
This project will construct a sidewalk between Price Canyon Road/Hinds Street to Ocean View adjacent to the US 101.
Original Estimate – $180 K
Updated Cost – $195 K
Shell Beach Parking Lot
This project includes adding a parking lot on Shell Beach Road to the north of the Shell Beach Road tennis courts and pickleball courts. The parking lot must not be larger than 5,000 square feet.
Original Estimate – $175 K
Updated Cost - $250 K
New Production Well
This project will construct a new production well which will add redundance to the system and eventually replace Well 5, which has been rebuilt twice in the last twenty years and is not expected to be rebuilt again in the future.
Original Estimate – $500 K
Updated Cost – $528 K
FISCAL IMPACT:
There is no direct fiscal impact associated with this report. However, based on projected cost increases with these larger capital projects competing for limited resources, staff would like to provide the City Council with an update on the General Fund-supported projects to make sure that Council is aware of its resources as the Council moves forward with approving future funding.
In general, capital projects are funded using one-time funds from accumulated fund balance and can be supported using various special revenue funds, grant funds, capital project funds, enterprise funds, internal service funds, half-cent sales tax fund, and the General Fund. The funding source that is used depends on the type of project and differs based on available resources.
12.A-12Council Agenda 3-1-2022
Currently, the FY 2022 General Fund is supporting $10.6 million of varying levels for 36 different projects. Of those 36 projects, this General Fund support represents about 33% of the total project, where 67% of these projects are supported by other funding sources.
After further review of these 36 projects, staff have identified 6 of these projects that are anticipated to need significantly more funding based on updated cost projections. These projected costs are still estimates at this time as the projects have not been bid. So, it is possible that these costs could be higher or lower.
The projected ending General Fund unassigned fund balance for FY 2022 is $9.5 million.
Staff projects that the 6 projects will require a potential additional $9.5 million from the General Fund unassigned fund balance, completely using up all the remaining projected available General Fund unassigned fund balance. The following table lists the 6 projects that staff is projecting that require a total of $9.5 million from the General Fund unassigned fund balance.
Risks of Using all General Fund Unassigned Fund Balance There are financial risks associated with appropriating all of the City’s General Fund unassigned fund balance in one year. One major concern is the uncertain economic situation with rising inflation, supply chain issues, and global unrest. With these factors, the City has relied on its Budget Stabilization set-aside of $2.0 million that could be used in the event of an economic downturn or rising inflation impacts the City’s other operating costs during this period. Another concern is that it is common that these large capital projects run into unforeseen issues that require change orders or amendments, increasing the cost of the project. It will be imperative to approve these projects with sufficient contingency balances. Furthermore, spending all the City’s General Fund unassigned fund balance may impact cash flow as staff recommends that Council leave approximately $2.5 million to help with this purpose. However, it is likely that these large projects will be spent over time and cross fiscal years which could mitigate this concern.
Finally, as the Council contemplates moving forward with the Public Safety Facility, the City will need to seek a credit rating and the more cash available may help the City obtain a lower borrowing rate.
Once these projects are actually bid, staff will work to find all the funding sources available to support these projects to help offset the impact to the General Fund. In conclusion, while there are risks associated with using all of the General Fund unassigned fund balance, the City is poised to support these major investments with proper planning.
However, any project cost increases and likely inflationary increases on regular operating costs will put a strain on any future projects and possibly impact the City’s credit rating.
In other words, the City can move forward with these projects, but this is the total limit.
The City will require another strong revenue year or two to build up fund balances.
12.A-13Council Agenda 3-1-2022
Table 1. Potential Additional General Fund Support Need for Upcoming Capital Projects ALTERNATIVES:
1. Provide additional direction to staff.
ATTACHMENTS:
None
Prepared by: Meeting Date: March 1, 2022
Benjamin A. Fine, P.E., Director of Public Works/City Engineer City Manager Approval:
Project Title
FY 2022 GF
Support
Remaining Budget
FY 2022 All
Funds Budget
Actuals +
Encumbered
FY 2022
Remaining
Budget
Updated All
Funds Projected
Cost
Other Funding
Sources
Potential
Additional GF
Need Notes
Public Safety
Facility ‐
PAYG/Cash
portion only
2,799,869 3,000,000 2,222,565 777,435 4,000,000 1,000,000 Additonal pre‐construction costs (staff movement, building upgrades)
FY 2022 Paving
Project
2,000,000 6,311,920 708,125 5,603,795 13,708,125 850,000 6,546,205 Assumes a $13M project, also assumes $400K additional Half ‐cent sales tax funds (*New*)
and $300K Spyglass sidewalk US‐101 from
LBID Fund + $150K from Circulation Fee Fund
3101 (*New*)
James Way
Beautification
300,000 300,000 35,330 264,670 1,466,608 1,166,608 Additonal potential cost per City Council Direction on 2/15/22
Chumash Park
improvements
350,000 350,000 339 349,661 629,000 279,339 Softfall surfacing material and install, engineering and topo, construction and CM
Palisades Park 100,000 339 99,661 453,000 100,000 353,339 Softfall surfacing material and install, engineering and topo, construction and CM.
$100K Park Development Funds
Radio Secure
Communications
project
‐ ‐ 625,000 470,000 155,000.00 75% Grant funded, need 25% for Dispatching needs
Total 5,449,869$ 10,061,920$ 2,966,698$ 7,095,222$ 20,881,733$ 1,420,000$ 9,500,491$ 26%
Projected General Fund ending unassigned fund balance as of 6/30/22 9,459,599$ Remaining Balance after Potential Additional Need $ (40,892)
12.A-14Council Agenda 3-1-2022