San Luis Obispo City Council
June 6, 2023

Capital Improvement Plan
Project Number Project Name
1000522 Major Facility Replacements
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal
Economic Resiliency, Cultural Vitality, and
Fiscal Sustainability
Partnership Project No
Project Classification Public Facility
Project Type
Annual Asset Maintenance, Asset
Replacement
Purpose and Need
This project will maintain, upgrade, or replace City facilities that serve the community. Funding in this Financial Plan is intended to support ongoing planning and outreach work for the Public Safety Center.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 350,000 1,040,000 3,100,000 3,500,000 7,990,000 Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 350,000 1,040,000 3,100,000 3,500,000 7,990,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total General Capital Outlay 0 0 40,000 1,500,000 0 1,540,000 Local Revenue Measure 0 350,000 1,000,000 1,600,000 3,500,000 6,450,000 CIP# 91 Financial Plan Page 460

Capital Improvement Plan
Project Number Project Name
2001033
Downtown Transit Center Rehabilitation
(Transit Fund)
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal
Climate Action, Open Space, & Sustainable
Transportation
Partnership Project No
Project Classification Transportation
Project Type Asset Replacement
Purpose and Need
The project will include the removal of existing mission style structures, demolition of concrete, add new passenger bus shelters, interactive kiosks, digital displays, smart bus stop signs, conduit for future opportunity charging, self-cleaning restrooms, benches/waiting rails, bus pads, ADA improvements, and security cameras. This project will also include new bus shelters similar RTA.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 140,000 1,500,000 1,640,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
621 - Transit Fund 0 0 0 140,000 1,500,000 1,640,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total State or Federal Grant 0 0 0 140,000 1,500,000 1,640,000 CIP# 92 Financial Plan Page 461

Capital Improvement Plan
Project Number Project Name
2001037
Climate Action Plan Support - Carshare
Program
Project Classification Classification Description
CIP Project Function Community & Neighborhood Livability Major City Goal
Climate Action, Open Space, & Sustainable
Transportation
Partnership Project No
Project Classification Community Improvement
Project Type New Asset
Purpose and Need
This project includes exploration of a potential car share system in San Luis Obispo, which would provide access to shared automobiles for short-term rentals. A carshare system would support the goals of the Climate Action, Open Space, & Sustainable Transportation Plan and Active Transportation Plan by providing the ability for users to pay only for short-term rentals when they need a vehicle, reducing the financial burden of permanent vehicle ownership and storage. Ultimately, access to carshare could be integrated with bikeshare, public parking, and transit passes as part of a "mobility as a service/transportation wallet" program, as recommended in the City's Access and Parking Management Plan.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 0 115,000 115,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 0 0 115,000 115,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 0 0 0 115,000 115,000
CIP# 93 Financial Plan Page 462

Capital Improvement Plan
Project Number Project Name
91739 Sewer Inflow/Infiltration Reduction
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
Replacement of wastewater collection pipes, and related infrastructure is an ongoing program for a reliable sanitary sewer collection system. The program’s inflow and infiltration program will conduct pipe integrity tests, video inspections of public sewers, smoke testing of service areas, and schedule point repairs to address existing deficiencies according to priority. The objective of the project is to explore opportunities to consolidate sewer collection systems that may run parallel along roadways and construct new sewer lateral interconnections that can simplify maintenance operations, reduce illegal stormwater connections into the sewer, and rehabilitate fractures in clay pipes that may be experiencing groundwater infiltration due to soil settlements or root instructions. A decrease of infiltration flows will result in lower energy costs needed to treat sewer volumes at the wastewater treatment plant. The project efforts may include sewer lateral rebates, engineering reports, construction plans for point repairs, construction management services, sewer manhole re-coatings, sewer flow monitoring studies, and field testing of wastewater piping infrastructure.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 250,000 250,000 250,000 250,000 1,000,000 Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
602 - Sewer Fund 0 250,000 250,000 250,000 250,000 1,000,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Sewer Fund 0 250,000 250,000 250,000 250,000 1,000,000
CIP# 94 Financial Plan Page 463

Capital Improvement Plan
Project Number Project Name
2001052 Water Storage Tank Inspection and Cleaning
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
Storage capacity of treated water is an essential function of a water distribution system to provide adequate flows and pressures throughout the community. In addition to water storage tanks at the Water Treatment Plant, there are nine water storage tanks located within the City’s distribution system, and a few have been in operation since the early 1940s. Maintenance of water storage facilities is necessary to prolong the useful life of these assets and ensures staff’s ability to operate the water system to State and Federal standards. This project will fund inspection, cleaning, and disinfection cycles need at the water storage tanks to meet State and Federal standards.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 50,000 250,000 300,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 0 0 50,000 250,000 300,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 0 0 50,000 250,000 300,000
CIP# 95 Financial Plan Page 464

Capital Improvement Plan
Project Number Project Name
2001031
Laguna Lake Golf Course Irrigation
Improvements
Project Classification Classification Description
CIP Project Function Community & Neighborhood Livability Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Asset Replacement
Purpose and Need
The life expectancy of a golf course technical irrigation system varies from 10 to 30 years. The Laguna Lake Golf Course irrigation was installed in 1976, exceeding its functional lifespan by 16 years. Maintenance staff currently must make weekly repairs, taking staff away from required maintenance work and improvements to support the sustainability of the course. The Parks and Recreation master plan, (Parks + Recreation Blueprint for the Future: 2021-2041) highlighted the LLGC’s failing irrigation infrastructure and has a MidTerm goal (5 to 10 years) to assess and implement a rehabilitation of the irrigation and utilities at the course.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 0 300,000 300,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 0 0 300,000 300,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 0 0 0 300,000 300,000
CIP# 96 Financial Plan Page 465

Capital Improvement Plan
Project Number Project Name
2001028 Lead by Example
Project Classification Classification Description
CIP Project Function Community & Neighborhood Livability Major City Goal
Climate Action, Open Space, & Sustainable
Transportation
Partnership Project No
Project Classification Public Facility
Project Type New Asset
Purpose and Need
Resolution-11159 (2020 Series) establishes a goal of municipal operations carbon neutrality by 2030, which includes a building sector goal to “[…] eliminate fossil fuel use in buildings and facilities.” As part of the 2021-23 Financial Plan, staff developed a building decarbonization and electrification roadmap. This project would begin implementing the roadmap, with design work on major projects in years one through three of the Capital Improvement Program, and ongoing construction through year five of the Capital Improvement Program.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 100,000 78,000 765,000 570,000 1,513,000 Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 100,000 78,000 765,000 570,000 1,513,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 25,000 78,000 765,000 570,000 1,438,000 State or Federal Grant 0 75,000 0 0 0 75,000
CIP# 97 Financial Plan Page 466

Capital Improvement Plan
Project Number Project Name
2001054
Waterline Replacement: Patricia, Highland,
and La Entrada
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type New Asset
Purpose and Need
The City operates a complex potable water distribution system that is comprised of 15 distribution zones, nine potable water storage tanks, two reservoirs, five hydro‐pneumatic tanks, seven pump stations, 21 pressure reducing valves (PRVs) and over 180 miles of pipe with diameters ranging in size from four inches to 30 inches. This project will replace critical infrastructure that has reached the end of its useful life, experienced water main breaks, and is ranked as a high priority for replacement in the water masterplan. The objective of the project is to replace asphalt cement or cast-iron pipe with pipe meeting new standards by the American Water Works Association (AWWA) to provide resiliency in the distribution network against variations in pressure and flows.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 127,000 1,397,000 1,524,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 0 0 127,000 1,397,000 1,524,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 0 0 127,000 1,397,000 1,524,000
CIP# 98 Financial Plan Page 467

Capital Improvement Plan
Project Number Project Name
1000508 City Hall Exterior Lighting
Project Classification Classification Description
CIP Project Function Community & Neighborhood Livability Major City Goal
Economic Resiliency, Cultural Vitality, and
Fiscal Sustainability
Partnership Project No
Project Classification Public Facility
Project Type New Asset
Purpose and Need
This project is to install safety and accent lighting for the exterior of City Hall.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 50,000 200,000 0 250,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 50,000 200,000 0 250,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total General Capital Outlay 0 0 50,000 200,000 0 250,000
CIP# 99 Financial Plan Page 468

Capital Improvement Plan
Project Number Project Name
1000524 Old Garden Creek Retaining Wall
Project Classification Classification Description
CIP Project Function Environmental Health & Open Space
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
A portion of Old Garden Creek immediately upstream and west of Cuesta Drive contains a retaining wall that is failing. The wall is immediately adjacent to several trees which are destabilizing the wall as they grow and increase in size. The project will likely require the removal of trees and replacement the failing wall.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 175,000 0 800,000 975,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 175,000 0 800,000 975,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 0 175,000 0 800,000 975,000
CIP# 100 Financial Plan Page 469

Capital Improvement Plan
Project Number Project Name
1000553 Fleet Replacement: Police
Project Classification Classification Description
CIP Project Function Community Safety
Major City Goal Other
Partnership Project No
Project Classification Fleet
Project Type
Annual Asset Maintenance, Asset
Replacement, New Asset
Purpose and Need
This funding replaces existing City vehicles in compliance with revised Fleet Replacement Guidelines. Revised Fleet Replacement Guidelines include the evaluation of the following criteria: Emission Compliance, Engine hours, Mileage, Age, Known Manufacture Problems, Repair Cost History, Utilization, and Fleet System Analytics. Additionally, the age and mileage replacement targets have been extended for all vehicle and equipment categories within the Fleet. New vehicle and equipment replacements are selected with the cleanest emissions systems possible that can be fueled and/or charged locally while meeting the end users' operational needs.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 90,000 350,000 482,000 1,201,500 2,123,500 Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 0 127,000 631,500 758,500 402 - Fleet Repl Fund 0 90,000 350,000 355,000 570,000 1,365,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 90,000 350,000 482,000 1,201,500 2,123,500 CIP# 101 Financial Plan Page 470

Capital Improvement Plan
Project Number Project Name
2001038
Sewer-main Replacement: Bee Bee - South
Street to Sandercock
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Asset Replacement
Purpose and Need
The City’s wastewater collection system includes approximately 148 miles of sewer mains. Some pipes are over 100 years old and are undersized to handle the current flow rates. Maintenance needs increase dramatically as pipelines reach their flow capacities, or when they approach the end of their useful life. Pipelines in the public wastewater collection system are inspected using specialized video equipment that will prioritize periodic cleaning frequencies or recommend a complete replacement. Based on the assessment, this project is needed for the replacement of sewer mains dating back to 1927 that require high cleaning frequencies, have experienced structural failures due to root intrusions, and have shown high infiltration flows rates during major storm events.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 400,000 0 400,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
602 - Sewer Fund 0 0 0 400,000 0 400,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Sewer Fund 0 0 0 400,000 0 400,000
CIP# 102 Financial Plan Page 471

Capital Improvement Plan
Project Number Project Name
91368
T-3 Water Storage Tank Replacement - High
Pressure Zone
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
The City currently operates two potable reservoirs (Tank #1 and #2) that are estimated to be 60 years old. Reservoir #2 is a 7.44 million-gallon (MG) reservoir equipped with floating covers that had previously been identified to be replaced in 2015. This reservoir supplies about half of the City’s potable water needs. Because the reservoir is one big basin, the entire storage volume must be taken out-of-service for reservoir maintenance. The water distribution hydraulic model, identified opportunities to consolidate water distribution zones to improve operations, reduce pumping needs, eliminate tanks and pump stations that would otherwise require replacement, improve fire flow, and improve available fire storage. Replacement of Reservoir #2 with a new High-Pressure Zone (HPZ) water storage tank will include construction of two new 2.5 MG above-ground tanks at the existing reservoir site or equivalent elevation. This will provide critical redundancy and allow for tank maintenance without service interruption. It will also be designed to increase water mixing in the reservoir, which will in turn lessen the overall age of water. Older water age contributes to disinfection byproducts, a regulated substance which may be harmful to human health. The study phase will research constructability and identify funding options, and begin in property acquisition, preliminary designs, and environmental clearances needed to secure State or Federal funding.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 900,000 500,000 0 0 1,400,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 900,000 500,000 0 0 1,400,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 900,000 500,000 0 0 1,400,000
CIP# 103 Financial Plan Page 472

Capital Improvement Plan
Project Number Project Name
2001039
Sewer-main Replacement: Broad, Murray, and
Chorro
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Asset Replacement
Purpose and Need
This project is needed for the replacement of sewer mains dating back to 1951 that require high cleaning frequencies along backyard easements, have experienced structural failures due to root intrusions, and have shown high infiltration flows rates during major storm events. The project will include pipe bursting or open trench replacement, easement acquisition, and reconstruction of sewer appurtenances.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 0 145,000 145,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
602 - Sewer Fund 0 0 0 0 145,000 145,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Sewer Fund 0 0 0 0 145,000 145,000
CIP# 104 Financial Plan Page 473

Capital Improvement Plan
Project Number Project Name
1000092
Sewer-main Replacement: Buchon - Morro to
Johnson Pipeline Replacement
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
The City’s wastewater collection system includes approximately 140 miles of sewer lines and related operational equipment. Some pipes are over 100 years old and are undersized. Maintenance requirements increase dramatically as pipeline and equipment approach the end of their useful life. Pipeline and operational equipment require ongoing maintenance and condition assessment to prioritize periodic replacement, ensure proper function, and prolong service life. The objective of this project is to replace existing clay pipes from 1927 with a new 10-inch sewer main serving areas that have shown high inflow or infiltration flows based on recorded sewer spills, and high recorded flow rates during major storm events. The pipeline replacement project will require re-routing the sewer flows near the intersection of Johnson and San Luis Drive.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 135,000 2,485,000 2,620,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
602 - Sewer Fund 0 0 0 135,000 2,485,000 2,620,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Sewer Fund 0 0 0 135,000 2,485,000 2,620,000
CIP# 105 Financial Plan Page 474

Capital Improvement Plan
Project Number Project Name
1000512 Downtown Zig-Zag Lighting
Project Classification Classification Description
CIP Project Function Community & Neighborhood Livability Major City Goal
Economic Resiliency, Cultural Vitality, and
Fiscal Sustainability
Partnership Project No
Project Classification Community Improvement
Project Type New Asset
Purpose and Need
Upgrade the downtown overhead "zig-zag" lighting, originally installed as a temporary pilot project, to a permanent installation, including expansion to additional streets within the downtown where feasible.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 1,100,000 0 1,100,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 0 1,100,000 0 1,100,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 0 0 1,100,000 0 1,100,000
CIP# 106 Financial Plan Page 475

Capital Improvement Plan
Project Number Project Name
2001042
Sewer-main Replacement: Chorro - Boysen to
Rougeot
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
The 2015 Wastewater Infrastructure Renewal Strategy (IRS or masterplan) identified sewer service areas with capacity constraints from stormwater infiltrations into the sewer system. One of the capacity constrained areas (Area A) is located north of Foothill and west of Chorro and is currently undergoing sewer main improvements to remove existing clay sewer pipes with new fused plastic pipes using high density polyethylene (HDPE). Other on-going improvements to reduce capacity constraints include replacement of sewer laterals through lateral rebate programs or as triggered by building permit submittals. Additionally, the collaboration with the 790 Foothill development identified the opportunity to improve the conditions in Area A by transferring the sewer serving the project site and adjacent parcels from Area A to the Area C sewer pipe network, which has available capacity. The proposed pipeline replacement project will expand on this initial point repair completed by the development and replace the existing 6-inch sewer main along Chorro Street with a larger pipe from Highland to Meinecke.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 250,000 2,750,000 0 0 3,000,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
602 - Sewer Fund 0 250,000 2,750,000 0 0 3,000,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Sewer Fund 0 250,000 2,750,000 0 0 3,000,000
CIP# 107 Financial Plan Page 476

Capital Improvement Plan
Project Number Project Name
1000094 Sewer-main Replacement: Foothill Siphon
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
The City’s wastewater collection system includes approximately 140 miles of sewer lines and related operational equipment. Some pipes are over 100 years old and are undersized. Maintenance requirements increase dramatically as pipeline and equipment approach the end of their useful life. Pipeline and operational equipment require ongoing maintenance and condition assessment to prioritize periodic replacement, ensure proper function, and prolong service life. The objective of this project is to replace sewer pipes from 1951 located in the northwest part of the City that have shown high inflow or infiltration flows based on recorded sewer spills, and high recorded flow rates during major storm events.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 200,000 250,000 2,750,000 3,200,000 Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
602 - Sewer Fund 0 0 200,000 250,000 2,750,000 3,200,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Sewer Fund 0 0 200,000 250,000 2,750,000 3,200,000
CIP# 108 Financial Plan Page 477

Capital Improvement Plan
Project Number Project Name
1000574 Parking Pay Station Installation
Project Classification Classification Description
CIP Project Function Community & Neighborhood Livability Major City Goal
Economic Resiliency, Cultural Vitality, and
Fiscal Sustainability
Partnership Project No
Project Classification Community Improvement
Project Type New Asset
Purpose and Need
Installation of on-street and lot pay stations. This funding would be used for the installation of paid parking infrastructure in the Downtown Core and Upper Monterey Street.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 600,000 600,000 600,000 0 1,800,000 Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
611 - Parking Fund 0 600,000 600,000 600,000 0 1,800,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Parking Fund 0 600,000 600,000 600,000 0 1,800,000
CIP# 109 Financial Plan Page 478

Capital Improvement Plan
Project Number Project Name
1000517 Fire Station 4 Metal Building Gym Space
Project Classification Classification Description
CIP Project Function Community Safety
Major City Goal Other
Partnership Project No
Project Classification Public Facility
Project Type Asset Replacement
Purpose and Need
Addition of workout space external to the station will support the Fire Department's continued effort in reducing workplace injuries. This project will improve the usable exercise space at Station 4 by providing a detached exterior structure to allow a single engine company to perform physical fitness training and facilitate a remodel of the living space to accommodate single person sleeping quarters and restroom facilities. The scope of the project includes the installation of a detached concrete pad and an approximately 24' x 24' steel frame structure in size with utilities.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 200,000 0 0 200,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 200,000 0 0 200,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total General Capital Outlay 0 0 200,000 0 0 200,000
CIP# 110 Financial Plan Page 479

Capital Improvement Plan
Project Number Project Name
1000509
Corporation Yard Perimeter Fence
Replacement
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Public Facility
Project Type Annual Asset Maintenance
Purpose and Need
The Corporation Yard campus has been subject to multiple break-ins in recent years. Due to the amount of City vehicles, equipment, industrial chemicals, and materials stored at this location, the potential for theft of expensive items is elevated. This project would replace the original chain link fence with a heavy-duty ornamental iron fence that is much more difficult to breach.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 550,000 0 0 550,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 550,000 0 0 550,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total General Capital Outlay 0 0 550,000 0 0 550,000
CIP# 111 Financial Plan Page 480

Capital Improvement Plan
Project Number Project Name
1000571
Sewer-main Replacement: San Jose,
Ramona, Monte Vista, and California
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Asset Replacement
Purpose and Need
The City’s wastewater collection system includes approximately 140 miles of sewer mains. Some pipes are over 100 years old, and are undersized to handle the current flow rates. Maintenance needs increase dramatically as pipelines reach their flow capacities, or when they approach the end of their useful life. Pipelines in the public wastewater collection system are inspected using specialized video equipment that will prioritize periodic cleaning frequencies or recommend a complete replacement. Based on the assessment, this project is needed for the replacement of sewer mains dating back to 1958 that require high cleaning frequencies, have experienced structural failures due to root intrusions, and have shown high infiltration flows rates during major storm events.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 1,225,000 0 0 0 1,225,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
602 - Sewer Fund 0 1,225,000 0 0 0 1,225,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Sewer Fund 0 1,225,000 0 0 0 1,225,000
CIP# 112 Financial Plan Page 481

Capital Improvement Plan
Project Number Project Name
99110
Laguna Lake Dredging and Sediment
Management Project Implementation
Project Classification Classification Description
CIP Project Function Environmental Health & Open Space
Major City Goal
Climate Action, Open Space, & Sustainable
Transportation
Partnership Project No
Project Classification Community Improvement
Project Type New Asset
Purpose and Need
The Laguna Lake Nature Reserve is 344-acres of City owned land. Laguna Lake is a naturally occurring water body although the lake and surrounding watershed have been modified including the rerouting of Prefumo Creek into Laguna Lake. This rerouting of Prefumo Creek has increased sediment deposits into the lake. This is an ongoing maintenance project.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 900,000 0 900,000 0 1,800,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 900,000 0 900,000 0 1,800,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 900,000 0 900,000 0 1,800,000
CIP# 113 Financial Plan Page 482

Capital Improvement Plan
Project Number Project Name
1000555 Fleet Replacement: Admin
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal OtheOther
Partnership Project No
Project Classification Fleet
Project Type Annual Asset Maintenance, New Asset
Purpose and Need
This funding replaces existing City vehicles in compliance with revised Fleet Replacement Guidelines. Revised Fleet Replacement Guidelines include the evaluation of the following criteria: Emission Compliance, Engine hours, Mileage, Age, Known Manufacture Problems, Repair Cost History, Utilization, and Fleet System Analytics. Additionally, the age and mileage replacement targets have been extended for all vehicle and equipment categories within the Fleet. New vehicle and equipment replacements are selected with the cleanest emissions systems possible that can be fueled and/or charged locally while meeting the end users' operational needs.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 250,000 175,000 50,000 50,000 525,000 Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 50,000 50,000 50,000 150,000 402 - Fleet Repl Fund 0 250,000 125,000 0 0 375,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total General Capital Outlay 0 115,516 125,000 0 0 240,516
Local Revenue Measure 0 134,484 50,000 50,000 50,000 284,484 CIP# 114 Financial Plan Page 483

Capital Improvement Plan
Project Number Project Name
1000534
SLO Creek Walk Maintenance - Lighting,
Signage, Irrigation, Plants
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal
Economic Resiliency, Cultural Vitality, and
Fiscal Sustainability
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
This project is intended to remove invasive weeds and plants in the creek channel area and intended to create a more inviting experience for community members and visitors of the Mission Plaza.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 250,000 0 250,000 0 500,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 250,000 0 250,000 0 500,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 250,000 0 250,000 0 500,000
CIP# 115 Financial Plan Page 484

Capital Improvement Plan
Project Number Project Name
1000033 Playground Equipment Replacement
Project Classification Classification Description
CIP Project Function Community & Neighborhood Livability Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
In 2008, the State passed AB 1144 which mandates that all play equipment constructed between 1994 and 1999 be replaced or upgraded within 15 years of installation. Replacements are to take place in FY 2025-26 at Devaul Ranch Park, Vista Lago Mini Park, and Laguna Hills Park.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 1,100,000 1,100,000 1,600,000 3,800,000 Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 1,100,000 1,100,000 1,600,000 3,800,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 0 1,100,000 1,100,000 1,600,000 3,800,000 CIP# 116 Financial Plan Page 485

Capital Improvement Plan
Project Number Project Name
2001051 Source Water Strategic Plan
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Community Improvement
Project Type Annual Asset Maintenance
Purpose and Need
With substantial completion of the WRRF Upgrade (SLO Water Plus) in 2023 and regulatory requirements for potable re-use, this Source Water Strategic Plan is needed to look at possible roadmaps that can consider the preservation or expansion of the City’s Water Portfolio. The study will study the restrictions of potable re-use on surface or groundwater programs and develop a decision matrix for new projects that may expand the City’s source water portfolio.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 90,000 0 0 0 90,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 90,000 0 0 0 90,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 90,000 0 0 0 90,000
CIP# 117 Financial Plan Page 486

Capital Improvement Plan
Project Number Project Name
2001046
Waterline Replacement: Rockview -
Stoneridge to Broad
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Asset Replacement
Purpose and Need
The City operates a complex potable water distribution system that is comprised of 15 distribution zones, nine potable water storage tanks, two reservoirs, five hydro‐pneumatic tanks, seven pump stations, 21 pressure reducing valves (PRVs) and over 180 miles of pipe with diameters ranging in size from four inches to 30 inches. This project will replace critical infrastructure that has reached the end of its useful life, experienced water main breaks, and is ranked as a high priority for replacement. The objective of the project is to replace existing cast-iron pipe from 1962 with pipe meeting new standards by the American Water Works Association (AWWA) to provide resiliency in the distribution network against variations in pressure and flows.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 130,000 1,530,000 0 1,660,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 0 130,000 1,530,000 0 1,660,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 0 130,000 1,530,000 0 1,660,000
CIP# 118 Financial Plan Page 487

Capital Improvement Plan
Project Number Project Name
1000037 South Street Median Landscaping
Project Classification Classification Description
CIP Project Function Community & Neighborhood Livability Major City Goal Other
Partnership Project No
Project Classification Community Improvement
Project Type New Asset
Purpose and Need
Caltrans and the City collaboratively installed medians in South Street as part of a traffic safety improvement project. This traffic safety project established all necessary infrastructure to support planted medians in South Street except for irrigation. This project will install an irrigation system to support future landscape plantings in the medians on South Street.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 550,000 0 0 550,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 0 550,000 0 0 550,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 0 550,000 0 0 550,000
CIP# 119 Financial Plan Page 488

Capital Improvement Plan
Project Number Project Name
1000543
Waterline Replacement: Stenner Canyon at
Reservoir
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
The 17.6 miles of pipeline conduit that transport raw water from the Salinas Reservoir to the City of San Luis Obispo is from 1960.

Given the aging infrastructure, this project will include point repairs or replacement of pipe segments that have experienced corrosion or have failed the structural integrity assessment in the older transmission system along Stenner Creek and northeast of the Water Treatment Plant.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 80,000 1,100,000 0 1,180,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 0 80,000 1,100,000 0 1,180,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 0 80,000 1,100,000 0 1,180,000
CIP# 120 Financial Plan Page 489

Capital Improvement Plan
Project Number Project Name
1000549
Whale Rock Pump Station Electrical Repairs
(A and B)
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
The project involves rehabilitation of the Whale Rock Pump Station Facility.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 1,960,620 0 0 0 1,960,620
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
705 - Whale Rock Fund 0 1,960,620 0 0 0 1,960,620
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Whale Rock Fund 0 1,960,620 0 0 0 1,960,620
CIP# 121 Financial Plan Page 490

Capital Improvement Plan
Project Number Project Name
91320 Downtown Renewal
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal
Economic Resiliency, Cultural Vitality, and
Fiscal Sustainability
Partnership Project No
Project Classification Community Improvement
Project Type Asset Replacement
Purpose and Need
This annual asset maintenance project continues to improve the aesthetic of the downtown core with sidewalk frontage improvements.

The addition of pedestrian lighting and conduits to support tree lighting and other Downtown Association activities is incorporated. The proposed work plan includes design funding in year 2024/25 for the West side of Broad Street from Marsh to Higuera Street including adjacent intersection improvements.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 200,000 0 2,000,000 0 2,200,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
401 - Capital Outlay Fund 0 200,000 0 2,000,000 0 2,200,000 Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Local Revenue Measure 0 200,000 0 2,000,000 0 2,200,000 CIP# 122 Financial Plan Page 491

Capital Improvement Plan
Project Number Project Name
1000529
Recycled Waterline at Orcutt Road -
Fernwood to Laurel
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type New Asset
Purpose and Need
The City continues to expand the recycled water system that is currently comprised of one distribution zone, one booster-pump station, and one tank located at the WRRF. This project will install critical infrastructure on Orcutt Road. The objective of the project is to expand the distribution system in anticipation of the WRRF upgrade and meet the increased demands on recycled water for irrigation.

The new pipe system will meet standards by the American Water Works Association (AWWA) and regulatory requirements.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 25,000 675,000 0 0 700,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 25,000 675,000 0 0 700,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 25,000 675,000 0 0 700,000
CIP# 123 Financial Plan Page 492

Capital Improvement Plan
Project Number Project Name
2001049 WRRF Asset Replacement - Screw Press
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Asset Replacement
Purpose and Need
The City’s Water Resource Recovery Facility (WRRF) was originally constructed in 1941. In 1993, a significant upgrade to portions of the plant were completed to meet changing water quality requirements. In September of 2019, another major upgrade project known as Water Plus was initiated that will replace older equipment, provide additional treatment capacity, enhance disinfection with ultraviolet light to produce recycled water and reduce the use of disinfection chemicals. During construction, ongoing maintenance of existing facilities and equipment at the WRRF are necessary to prolong the useful life of the facilities and ensure staff’s ability to operate the plant and treat water to State and Federal standards until the upgrade is completed. The proposed asset replacement projects include servicing: screening washer-auger, influent storm pumps, screw press, primary scum pit, grit pumps, grit blowers, laboratory fans, security lights, chain link fence, and digester cleaning. Construction of these asset replacements will be coordinated with facility’s infrastructure renewal strategy and will allow plant staff to prioritize capital improvement projects for the next decade.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 200,000 3,360,000 3,560,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
602 - Sewer Fund 0 0 0 200,000 3,360,000 3,560,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Sewer Fund 0 0 0 200,000 3,360,000 3,560,000
CIP# 124 Financial Plan Page 493

Capital Improvement Plan
Project Number Project Name
2001045
Recycled Waterline at Tank Farm - Long to
Innovation Pipeline
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Asset Replacement
Purpose and Need
The City continues to expand the recycled water system that is currently comprised of one distribution zone, one booster-pump station, and one tank located at the WRRF. This project will install critical infrastructure needed to connect a dry-pipeline system constructed by the subdivision completed in 2018 (Tract 3009). The objective of the project is to expand the distribution system in anticipation of the WRRF upgrade and meet the increased demands on recycled water for irrigation. The new pipe system will meet standards by the American Water Works Association (AWWA) and regulatory requirements.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 25,000 625,000 650,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 0 0 25,000 625,000 650,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 0 0 25,000 625,000 650,000
CIP# 125 Financial Plan Page 494

Capital Improvement Plan
Project Number Project Name
1000531 Recycled Water Annual UV Bulb Replacement
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
This project involves replacement of UV Bulbs for proper functioning of the City's Recycled Water System Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 10,000 10,000 10,000 10,000 40,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 10,000 10,000 10,000 10,000 40,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 10,000 10,000 10,000 10,000 40,000
CIP# 126 Financial Plan Page 495

Capital Improvement Plan
Project Number Project Name
2001041
WTP - Filter Media Replacement and
Underdrain Repairs
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
The City’s Water Treatment Plant was originally constructed in 1961. In 1995, a significant upgrade to the plant was completed to meet changing water quality requirements. In April of 2008, another major upgrade project was completed that replaced older equipment, added additional storage capacity for treated water, and enhanced treatment processes. The ongoing maintenance of the facilities and equipment at the Water Treatment Plant is necessary to prolong the useful life of the facilities and ensure staff’s ability to operate the plant and treat water to State and Federal standards. The proposed project includes a study phase to analyze the condition of the water filter media and associated undrain system. The study will develop a framework for the design and construction of a new filter media of equal or greater performance, which is a required treatment process to meet State and Federal regulations for drinking water standards.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 60,000 60,000 250,000 370,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 0 60,000 60,000 250,000 370,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 0 60,000 60,000 250,000 370,000
CIP# 127 Financial Plan Page 496

Capital Improvement Plan
Project Number Project Name
2001043 Recycled Water Pump Station Maintenance
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type Annual Asset Maintenance
Purpose and Need
The recycled water pump station and storage tank was constructed within the Water Resource Recovery Facility (WRRF) in 2003 and is need of maintenance work. The required maintenance includes asset replacement of existing pipe supports and pipe fittings that experienced settlements due to pressure surges and minor corrosion problems. The project will correct the existing deficiencies with new pipeline spools and re-coat the exterior of the pipe manifold to extend the life of the pump station infrastructure.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 60,000 0 0 0 60,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 60,000 0 0 0 60,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 60,000 0 0 0 60,000
CIP# 128 Financial Plan Page 497

Capital Improvement Plan
Project Number Project Name
2001044 Recycled Water Storage Tank
Project Classification Classification Description
CIP Project Function Infrastructure & Transportation
Major City Goal Other
Partnership Project No
Project Classification Maintenance
Project Type New Asset
Purpose and Need
The recycled water pump station and storage tank was constructed within the Water Resource Recovery Facility (WRRF) in 2003 and needs additional storage capacity. The purpose and need for this project is to begin a study phase of the storage tank expansion. The expansion opportunities may include incorporating stranded assets that could get repurposed into a recycled water tank or look for new sites that could incorporate a tank and pipe transmission system that can address pressures and system demands. The study could include preliminary design, land title research to evaluate site constraints, and property acquisitions.

Cost Budget 2023-24 2024-25 2025-26 2026-27 2027-28 Total Contract Services 0 0 0 0 20,000 20,000
Fund 2023-24 2024-25 2025-26 2026-27 2027-28 Total
601 - Water Fund 0 0 0 0 20,000 20,000
Funding Source 2023-24 2024-25 2025-26 2026-27 2027-28 Total Water Fund 0 0 0 0 20,000 20,000
CIP# 129 Financial Plan Page 498

REFERENCE MATERIAL
Financial Plan Page 499

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Financial Plan Page 500

PENSION OBLIGATION TRENDS
CalPERS Pension Obligations
Background
About CalPERS. Along with 3,000 other cities and local agencies, the City of San Luis Obispo contracts with the California Public Employees Retirement System (CalPERS) for its “defined benefit” retirement plan, which covers all regular employees (and temporary employees when required by State law). In 2012, the City proactively negotiated a lower second tier retirement benefit for employees hired after CalPERS contracts were amended. In addition, the Public Employee Pension Reform Act (AB 340) became effective in January 2013 and created the third, and even lower, tier retirement benefit. Under this program, employees who are considered new to the CalPERS retirement program are enrolled under the new law. Currently, 75% of all participating City employees are enrolled in the lower retirement tiers.

Table 70: Benefit Tiers
Employee Group Tier 1 Tier 2 Tier 3 - PEPRA
Sworn Public Safety 3% at age 50 Police – 2% at age 50
Fire – 3 % at age 55

2.7 % at age 57
Non-Sworn Employees 2.7% at age 55 2% at age 60 2% at age 62 CalPERS establishes the annual employer contribution rate that is charged against the City’s payroll costs for eligible employees. The annual contribution rate is comprised of the following components:

1. Normal Cost, which is the amount needed to fund benefits earned by active employees in the upcoming year.

2. Unfunded liability required contribution, which is the amount charged to pay down the pool’s unfunded liability.

Each October, CalPERS provides an actuarial valuation report for each benefit plan that updates certain values to reflect changes in plan activity since the previous valuation. These changes include but are not limited to:
✓ The difference between the expected rate of return and the actual rate realized. ✓ Changes in the number of plan members who retire each year. ✓ Changes in the number of new plan members.
✓ Changes in the annual payroll provided to existing members of the plan.

The actuarial valuations also provide new information on the variables associated with maintaining the plan, such as the amount of the unfunded liability and the annual Employer Contribution rate, which represents the amount that the City is required to pay for every dollar of eligible payroll, beginning the following fiscal year. The information used for this report is taken from the latest valuation report that was issued for the year ending June 30, 2021.

CalPERS is a separate and distinct legal entity from the City and serves as an independent fiduciary in managing the City’s retirement plan assets.

Financial Plan Page 501

PENSION OBLIGATION TRENDS

CALPERS EMPLOYER CONTRIBUTIONS
CalPERS Employer Cost Trends
The following summarizes CalPERS employer contributions since 2011-12. *Reflects additional one-time payments towards unfunded liability.

In July 2021, CalPERs reported a 21.3% net return on investments for the 12-month period that ended June 30, 2021. Under the Funding Risk Mitigation Policy, approved by the CalPERS Board of Administration in 2015, the double-digit return triggered a reduction in the discount rate used to calculate employer and Public Employees’ Pension Reform Act (PEPRA) members contributions. The discount rate, or assumed rate of return, has now dropped from 7% to 6.8% on ongoing basis. The lowering of the discount rate will increase both employee and employer normal cost and influence the unfunded liability. In the short term, the double-digit gains mitigated some of the impact of the lower discount rate on the unfunded liability; however, CalPERS’ recently announced

7.5% investment losses in 2022 will severely impact the CalPERS funded status and will ultimately increase the City’s future unfunded liability payments.

Unfunded Liabilities
In 2018, City Council adopted a Fiscal Health Response Plan (FHRP) to help address the City’s unfunded liabilities.

One component of the FHRP included making additional discretionary payments to CalPERS. To date, the City has made a total of $16.6 million in additional discretionary payments (ADPs) in order to paydown its pension liability.

In March 2023, staff engaged with Foster & Foster, an independent national actuarial consulting firm to perform a review of the City’s progress in paying down unfunded liabilities. Based on the Foster & Foster actuarial report, the City’s commitment to paying down its pension debt by making additional ADPs has helped to make progress on improving the plan’s overall funded status. Unfortunately, the 2022 investment losses experienced by CalPERS have significantly impacted the City’s funded status (as well as that of other PERS agencies throughout California).

Feedback provided by the City’s independent Actuary is that the City is taking appropriate action to make progress in paying down the unfunded pension liabilities, but that market conditions impacting CalPERS investments hinder progress. The impact of the -7.5% investment return in FY 2021-22 provides a good reminder that the City’s ability to address unfunded liabilities is heavily impacted by factors outside of the City’s control. The primary recommended strategy coming out of the Foster & Foster report is to continue to make required and Additional Discretionary Payments and the City’s five year forecast assumes $2 million annually in addition to maintaining a Table 71: Employer Retirement Contributions
Fiscal Year Safety Non-Safety Total
2011-12 $4,202,200 $4,226,700 $8,428,900
2012-13 $4,418,518 $4,347,255 $8,765,773
2013-14 $4,152,103 $4,528,325 $8,680,428
2014-15 $4,607,331 $5,027,328 $9,634,659
2015-16 $5,885,722 $5,824,217 $11,709,939
2016-17 $6,299,915 $6,776,945 $13,076,860
2017-18 $5,910,345 $6,693,987 $12,604,332
2018-19* $8,348,780 $9,361,882 $17,710,662
2019-20 $7,167,638 $7,709,918 $14,877,556
2020-21 $7,631,620 $8,069,806 $15,701,426
2021-22* $12,756,585 $15,923,929 $28,680,514
Financial Plan Page 502

PENSION OBLIGATION TRENDS
$2 million balance in a 115 Trust. Lastly, City adopted policies prioritize any year of year unappropriated balances toward Additional Discretionary Payments.

Current CalPERS Employer Contribution Rates
CalPERS has published the employer rates for 2023-24 as well as projected rates for the following year, as shown below. While CalPERS has been able to create separate rates for each of the Safety Plan Benefit Tiers, they have chosen to create a blended rate for all three Miscellaneous retirement benefit tiers. The table below is based on June 30, 2021 valuation date, which is the latest available valuation.

Table 72: PERS Employer Rates
Retirement Tier 2023-24 2024-25 Projection
Miscellaneous 10.53% 10.40%
Safety Tier I 29.09% 29.10%
Safety Police Tier II 21.78% 21.80%
Safety Police Tier III 14.50% 14.50%
Safety Fire Tier II 24.79% 24.80%
Safety Fire Tier III 14.50% 14.50%
In addition to the rate for the normal cost, CalPERS requires a fixed annual amount to pay down the unfunded liability. The June 30, 2021 valuation provides the amount for 2023-24 and a projection for 2024-25 as shown below.

Table 73: Unfunded Liability Payments
Employer Payment 2023-24 2024-25 Projection
Miscellaneous $ 6,938,929 $ 6,990,000
Safety $ 6,359,352 $ 6,415,000
Employee Contribution Rates
Employees are making contributions to CalPERS along with employer contribution rates. Employee contribution rates vary, depending on retirement tier. Beginning in January 2014, the Police Officers Association agreed to contribute an additional 3% of pay to offset the employer’s share of the retirement contribution. In 2018, the Fire, Unrepresented Management, and Confidential employee groups agreed to contribute an additional 3.0% of pay to offset the employer’s share of the retirement contribution.

Employee Plan Employee Contribution Rate
Miscellaneous 7.5% to 11%
Public Safety Sworn 9% to 15%
Table 74:

Financial Plan Page 503

PENSION OBLIGATION TRENDS
CalPERS Plan Funding Levels
The following shows CalPERS funding levels for the City’s Miscellaneous Plan and Safety Pool for the actuarial valuations from June 30, 2011 through June 30, 2021. This is the most recent actual information that is available from CalPERS.

Actuarial
Valuation
Date Ending
June 30
Asset Value 1
Entry Age Actuarial
Accrued Liability
Assets Over (Under)
Actuarial Accrued
Liability
Funded
Ratio
Tier I Safety Employee Plan
2011 $ 94,068 $ 143,482 $ (49,414) 65.6%
2012 $ 92,264 $ 149,615 $ (57,351) 61.7%
2013 $ 100,910 $ 154,746 $ (53,836) 65.2%
2014 $ 113,884 $ 165,802 $ (51,918) 68.7%
2015 $ 111,864 $ 170,942 $ (59,078) 65.4%
2016 $ 109,934 $ 178,704 $ (68,770) 61.5%
2017 $ 118,917 $ 188,177 $ (69,260) 63.2%
2018 $ 123,952 $ 200,729 $ (76,777) 61.8%
2019 $ 127,661 $ 205,097 $ (77,436) 62.2%
2020 $ 128,700 $ 210,170 $ (81,470) 61.2%
2021 $ 153,350 $ 220,803 $ (67,453) 69.5%
Miscellaneous Employee Plan
2011 $ 103,392 $ 150,651 $ (47,259) 68.6%
2012 $ 108,926 $ 157,223 $ (48,297) 69.3%
2013 $ 101,989 $ 163,765 $ (61,776) 62.3%
2014 $ 117,762 $ 178,138 $ (60,376) 66.1%
2015 $ 118,043 $ 185,020 $ (66,977) 63.8%
2016 $ 116,863 $ 196,413 $ (79,550) 59.5%
2017 $ 128,186 $ 208,025 $ (79,839) 61.6%
2018 $ 136,587 $ 225,101 $ (88,514) 60.7%
2019 $ 144,624 $ 234,600 $ (89,976) 61.6%
2020 $ 147,848 $ 240,866 $ (93,017) 61.4%
2021 $ 177,819 $ 255,715 $ (77,896) 69.5%
All numbers presented in Thousands of Dollars
Beginning in 2006, the Safety Plan is a member of a CalPERS safety pool. 1 Before 2013, CalPERS used the Actuarial Value of Assets. Starting in 2013 Market Value of Assets is used.

Table 75:

Financial Plan Page 504

Appropriation Limit
Appropriation Limit
The City’s appropriation limit is based on the Gann Spending Limit Initiative, a State constitutional amendment adopted by the voters on June 6, 1979 and amended in 1990 with Proposition 111. It is anchored in the State Constitution under Article XIIIB.

The limit restricts appropriations from tax revenues by State and local governments. Under its provisions, no local agency can appropriate proceeds of taxes in excess of its “appropriation limit”. Excess funds may be carried over into the next year. However, any excess funds remaining after the second year must be returned to taxpayers by reducing tax rates or fees; a majority of the voters may approve an override to increase the limit.

The City’s appropriation limit is calculated by considering population growth and cost of living as allowed under Proposition 111.

Table 76: Appropriation Limit 2023-24 - Calculation
Factors Ratio Formula
A) Prior Year Appropriation Limit $85,706,220
B) Adjustment Factors

1. Population Change1 1.15% 1.0115

2. Cost of Living Increase2 4.79% 1.0479

3. Combined Factor 1.06% 1.0599 B1*B2
Adjusted Limit $90,839,932 A*B3
The following summarizes changes in the City’s appropriation limit and appropriations subject to the limit for the past ten years as well as the appropriation limit for 2023-24. A positive variance indicates that the City’s appropriations are lower than the allowable limit.

Fiscal
Year
Limit Base Cost of
Living
Factor
Population
Factor
Appropriation
Limit
Appropriations
Subject to
Limit
Variance
2014-15 54,337,500 8.69% 0.09% 59,112,600 36,642,900 22,469,700 2015-16 59,112,600 4.97% 0.78% 62,534,500 46,067,700 16,466,800 2016-17 62,534,500 5.63% 0.60% 66,451,500 49,397,200 17,054,300 2017-18 66,451,500 1.20% 0.92% 67,867,633 50,036,391 17,831,242 2018-19 67,867,633 1.88% 0.35% 69,383,546 51,142,315 18,241,231 2019-20 69,383,546 6.37% 0.24% 73,981,290 50,127,692 23,853,598 2020-21 73,981,290 1.92% -0.04% 75,373,410 48,342,410 27,031,416 2021-22 75,373,410 5.11% 0.31% 79,470,558 52,362,031 27,108,458 2022-23 79,470,558 7.55% 0.28% 85,706,220 65,610,162 20,093,058 2023-24 85,706,220 4.79% 1.15% $90,839,932 71,693,192 19,146,740 1 State of California Department of Finance https://dof.ca.gov/wpcontent/uploads/sites/352/2023/05/PriceandPopulation2023.pdf 2 San Luis Obispo County Assessor 2022/23 Secured Tax Rolls, provided by HDL, Coren & Cone Table 77:

Financial Plan Page 505

Fiscal Policies
Section 1. GENERAL REVENUE MANAGEMENT
A. Diversified and Stable Base. The City will seek to maintain a diversified and stable revenue base to protect it from short-term fluctuations in any one revenue source.

B. Long-Range Focus. To emphasize and facilitate long-range financial planning, the City will maintain current projections of revenues for the succeeding five years.

C. Current Revenues for Current Uses. The City will make all current expenditures with current revenues, avoiding procedures that balance current budgets by postponing needed expenditures, accruing future revenues, or rolling over short-term debt.

D. Interfund Transfers and Loans. In order to achieve important public policy goals, the City has established various special revenue, capital project, debt service and enterprise funds to account for revenues whose use should be restricted to certain activities. Accordingly, each fund exists as a separate financing entity from other funds, with its own revenue sources, expenditures and fund equity.

Any transfers between funds for operating purposes are clearly set forth in the Financial Plan, and can only be made by the Finance Director in accordance with the adopted budget. These operating transfers, under which financial resources are transferred from one fund to another, are distinctly different from interfund borrowings, which are usually made for temporary cash flow reasons, and are not intended to result in a transfer of financial resources by the end of the fiscal year.

In summary, interfund transfers result in a change in fund equity; interfund borrowings do not, as the intent is to repay the loan in the near term.

From time to time, interfund borrowings may be appropriate; however, these are subject to the following criteria in ensuring that the fiduciary purpose of the fund is met:

1. The Finance Director is authorized to approve temporary interfund borrowings for cash flow purposes whenever the cash shortfall is expected to be resolved within 45 days. The most common use of interfund borrowing under this circumstance is for grant programs like the Community Development Block Grant, where costs are incurred before drawdowns are initiated and received. However, receipt of funds is typically received shortly after the request for funds has been made.

2. Any other interfund borrowings for cash flow or other purposes require case-by-case approval by the Council.

3. Any transfers between funds where reimbursement is not expected within one fiscal year shall not be recorded as interfund borrowings; they shall be recorded as interfund operating transfers that affect equity by moving financial resources from one fund to another.

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Section 2. USER FEE COST RECOVERY GOALS
A. Ongoing Review
Fees will be reviewed and updated on an ongoing basis to ensure that they keep pace with changes in the cost-of-living as well as changes in methods or levels of service delivery.

In implementing this goal, a comprehensive analysis of City costs and fees should be made at least every five years. In the interim, fees will be adjusted by annual changes in the Consumer Price Index.

Fees may be adjusted during this interim period based on supplemental analysis whenever there have been significant changes in the method, level or cost of service delivery.

B. User Fee Cost Recovery Levels
In setting user fees and cost recovery levels, the following factors will be considered:

1. Community-Wide Versus Special Benefit. The level of user fee cost recovery should consider the community-wide versus special service nature of the program or activity. The use of generalpurpose revenues is appropriate for community-wide services, while user fees are appropriate for services that are of special benefit to easily identified individuals or groups.

2. Service Recipient Versus Service Driver. After considering community-wide versus special benefit of the service, the concept of service recipient versus service driver should also be considered. For example, it could be argued that the applicant is not the beneficiary of the City's development review efforts: the community is the primary beneficiary. However, the applicant is the driver of development review costs, and as such, cost recovery from the applicant is appropriate.

3. Effect of Pricing on the Demand for Services. The level of cost recovery and related pricing of services can significantly affect the demand and subsequent level of services provided. At full cost recovery, this has the specific advantage of ensuring that the City is providing services for which there is genuinely a market that is not overly-stimulated by artificially low prices.

Conversely, high levels of cost recovery will negatively impact the delivery of services to lower income groups. This negative feature is especially pronounced, and works against public policy, if the services are specifically targeted to low income groups.

4. Feasibility of Collection and Recovery. Although it may be determined that a high level of cost recovery may be appropriate for specific services, it may be impractical or too costly to establish a system to identify and charge the user. Accordingly, the feasibility of assessing and collecting charges should also be considered in developing user fees, especially if significant program costs are intended to be financed from that source.

C. Factors Favoring Low Cost Recovery Levels
Very low-cost recovery levels are appropriate under the following circumstances:

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1. There is no intended relationship between the amount paid and the benefit received. Almost all "social service" programs fall into this category as it is expected that one group will subsidize another.

2. Collecting fees is not cost-effective or will significantly impact the efficient delivery of the service.

3. There is no intent to limit the use of (or entitlement to) the service. Again, most "social service" programs fit into this category as well as many public safety (police and fire) emergency response services. Historically, access to neighborhood and community parks would also fit into this category.

4. The service is non-recurring, generally delivered on a "peak demand" or emergency basis, cannot reasonably be planned for on an individual basis, and is not readily available from a private sector source. Many public safety services also fall into this category.

5. Collecting fees would discourage compliance with regulatory requirements and adherence is primarily self-identified, and as such, failure to comply would not be readily detected by the City.

Many small-scale licenses and permits might fall into this category.

D. Factors Favoring High Cost Recovery Levels
The use of service charges as a major source of funding service levels is especially appropriate under the following circumstances:

1. The service is similar to services provided through the private sector.

2. Other private or public sector alternatives could or do exist for the delivery of the service.

3. For equity or demand management purposes, it is intended that there be a direct relationship between the amount paid and the level and cost of the service received.

4. The use of the service is specifically discouraged. Police responses to disturbances or false alarms might fall into this category.

5. The service is regulatory in nature and voluntary compliance is not expected to be the primary method of detecting failure to meet regulatory requirements. Building permit, plan checks, and subdivision review fees for large projects would fall into this category.

E. General Concepts Regarding the Use of Service Charges The following general concepts will be used in developing and implementing service charges:

1. Revenues should not exceed the reasonable cost of providing the service.

2. Cost recovery goals should be based on the total cost of delivering the service, including direct costs, departmental administration costs and organization-wide support costs such as accounting, personnel, information technology, legal services, fleet maintenance and insurance.

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3. The method of assessing and collecting fees should be as simple as possible in order to reduce the administrative cost of collection.

4. Rate structures should be sensitive to the "market" for similar services as well as to smaller, infrequent users of the service.

5. A unified approach should be used in determining cost recovery levels for various programs based on the factors discussed above.

F. Low Cost-Recovery Services
Based on the criteria discussed above, the following types of services should have very low-cost recovery goals. In selected circumstances, there may be specific activities within the broad scope of services provided that should have user charges associated with them. However, the primary source of funding for the operation as a whole should be general-purpose revenues, not user fees.

1. Delivering public safety emergency response services such as police patrol services and fire suppression.

2. Maintaining and developing public facilities that are provided on a uniform, community-wide basis such as streets, parks and general-purpose buildings.

3. Providing social service programs and economic development activities.

G. Recreation Programs
The following cost recovery policies apply to the City's recreation programs:

1. Cost recovery for activities directed to adults should be relatively high.

2. Cost recovery for activities directed to youth and seniors should be relatively low. In those circumstances where services are similar to those provided in the private sector, cost recovery levels should be higher.

Although ability to pay may not be a concern for all youth and senior participants, these are desired program activities, and the cost of determining need may be greater than the cost of providing a uniform service fee structure to all participants. Further, there is a community-wide benefit in encouraging high-levels of participation in youth and senior recreation activities regardless of financial status.

3. Cost recovery goals for recreation activities are set as follows:

High-Range Cost Recovery Activities - (60% to 100%)
a. Adult athletics
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b. Banner permit applications
c. Child care services
d. Facility rentals (indoor and outdoor; excludes use of facilities for internal City uses) Mid-Range Cost Recovery Activities - (30% to 60%)
e. Triathlon
f. Golf
g. Summer and Spring Break Camps
h. Classes
i. Major commercial film permit applications
Low-Range Cost Recovery Activities- (0 to 30%)
j. Aquatics
k. Community gardens
l. Junior Ranger camp
m. Minor commercial film permit applications
n. Skate park
o. Parks and Recreation sponsored events (except for Triathlon) p. Youth sports
q. Teen services
r. Senior/boomer services

4. For cost recovery activities of less than 100%, there should be a differential in rates between residents and non-residents. However, the Director of Parks and Recreation is authorized to reduce or eliminate non-resident fee differentials when it can be demonstrated that:
a. The fee is reducing attendance.
b. And there are no appreciable expenditure savings from the reduced attendance.

5. Charges will be assessed for use of rooms, pools, gymnasiums, ball fields, special-use areas, and recreation equipment for activities not sponsored or co-sponsored by the City. Such charges will generally conform to the fee guidelines described above. However, the Director of Parks and Recreation is authorized to charge fees that are closer to full cost recovery for facilities that are heavily used at peak times and include a majority of non-resident users.

6. A vendor charge of at least 10 percent of gross income will be assessed from individuals or organizations using City facilities for moneymaking activities.

7. Director of Parks and Recreation is authorized to offer reduced fees such as introductory rates, family discounts and coupon discounts on a pilot basis (not to exceed 18 months) to promote new recreation programs or resurrect existing ones.

8. The Parks and Recreation Department will consider waiving fees only when the City Manager determines in writing that an undue hardship exists.

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H. Development Review Programs
The following cost recovery policies apply to the development review programs:

1. Services provided under this category include:
a. Planning (planned development permits, tentative tract and parcel maps, re-zonings, general plan amendments, variances, use permits).
b. Building and safety (building permits, structural plan checks, inspections). c. Engineering (public improvement plan checks, inspections, subdivision requirements, encroachments).
d. Fire plan check.

2. Cost recovery for these services should generally be very high. In most instances, the City's cost recovery goal should be 100%.

3. However, in charging high cost recovery levels, the City needs to clearly establish and articulate standards for its performance in reviewing developer applications to ensure that there is “value for cost.”

4. Building Permit Plan Check Services – The City of San Luis Obispo offers building permit plan check services through consultants at a set price, not to exceed 65% of the City’s fee for the service. Building Permit Plan Check Services are offered by the City on a 100% cost-recovery basis, and the service is provided after the fee is paid in full. As a result, the Finance Director is authorized to make appropriations from the related revenue account to cover the cost of the services provided.

I. Comparability with Other Communities
In setting user fees, the City will consider fees charged by other agencies in accordance with the following criteria:

1. Surveying the comparability of the City's fees to other communities provides useful background information in setting fees for several reasons:
a. They reflect the "market" for these fees and can assist in assessing the reasonableness of San Luis Obispo’s fees.
b. If prudently analyzed, they can serve as a benchmark for how cost-effectively San Luis Obispo provides its services.

2. However, fee surveys should never be the sole or primary criteria in setting City fees as there are many factors that affect how and why other communities have set their fees at their levels. For example:

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a. What level of cost recovery is their fee intended to achieve compared with our cost recovery objectives?
b. What costs have been considered in computing the fees? c. When was the last time that their fees were comprehensively evaluated? d. What level of service do they provide compared with our service or performance standards? e. Is their rate structure significantly different than ours and what is it intended to achieve?

3. These can be very difficult questions to address in fairly evaluating fees among different communities. As such, the comparability of our fees to other communities should be one factor among many that is considered in setting City fees.

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Section 3. ENTERPRISE FUND FEES AND RATES
A. Water, Sewer, and Parking. The City will set fees and rates at levels which fully cover the total direct and indirect costs—including operations, capital outlay, and debt service—of the following enterprise programs: water, sewer, and parking. For Water and Sewer, the rate setting process will be in accordance with Proposition 218 and its notification requirements.

B. Transit. Based on targets set under the Transportation Development Act, the City will strive to cover at least twenty percent of transit operating costs with fare revenues.

C. Ongoing Rate Review. The City will review and adjust enterprise fees and rate structures as required to ensure that they remain appropriate and equitable.

D. Cost of Service Fees. The City will treat the water and sewer funds in the same manner as if they were privately owned and operated. This means assessing reasonable cost of service fees in fully recovering service costs.

The purpose of the cost of service fee is reasonable cost recovery for the use of the City’s services such as street rights-of-way and public safety. The appropriateness of charging the water and sewer fund a reasonable cost of service fee for the use of the City streets is further supported by the results of studies from Arizona, California, Ohio, and Vermont which concluded that the leading cause of street resurfacing and reconstruction is street cuts and trenching for Utilities.

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Section 4. REVENUE DISTRIBUTION
The Council recognizes that generally accepted accounting principles for state and local governments discourage the “earmarking” of General Fund revenues, and accordingly, the practice of designating General Fund revenues for specific programs should be minimized in the City's management of its fiscal affairs. Approval of the following revenue distribution policies does not prevent the Council from directing General Fund resources to other functions and programs as necessary.

A. Property Taxes. With the passage of Proposition 13 on June 6, 1978, California cities no longer can set their own property tax rates. In addition to limiting annual increases in market value, placing a ceiling on voter-approved indebtedness, and redefining assessed valuations, Proposition 13 established a maximum county-wide levy for general revenue purposes of 1% of market value. Under subsequent state legislation, which adopted formulas for the distribution of this countywide levy, the City now receives a percentage of total property tax revenues collected countywide as determined by the State and administered by the County Auditor-Controller. The City receives 14.9% of each dollar collected in property tax after allocations to school districts.

Accordingly, while property revenues are often thought of as local revenue sources, in essence they are State revenue sources, since the State controls their use and allocation.

With the adoption of a Charter revision in November 1996, which removed provisions that were in conflict with Proposition 13 relating to the setting of property tax revenues between various funds, all property tax revenues are now accounted for in the General Fund.

B. Gasoline Tax Subventions. All gasoline tax revenues (which are restricted by the State for streetrelated purposes) will be used for maintenance activities. Since the City's total expenditures for gas tax eligible programs and projects are much greater than this revenue source, operating transfers will be made from the gas tax fund to the General Fund for this purpose. This approach significantly reduces the accounting efforts required to meet State reporting requirements.

C. Transportation Development Act (TDA) Revenues. All TDA revenues will be allocated to alternative transportation programs, including regional and municipal transit systems, bikeway improvements, and other programs or projects designed to reduce automobile usage. Because TDA revenues will not be allocated for street purposes, it is expected that alternative transportation programs (in conjunction with other state or federal grants for this purpose) will be self-supporting from TDA revenues.

D. Parking Fines. All parking fine revenues will be allocated to the parking fund, except for those collected by Police staff (who are funded by the General Fund) in implementing neighborhood wellness programs.

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Section 5. INVESTMENTS
Link to the City’s Investment Policy & Management Plan:

POLICY STATEMENT
The City of San Luis Obispo shall invest public funds in such a manner as to comply with state and local laws; ensure prudent money management; provide for daily cash flow requirements; and meet the objectives of the Investment Policy & Management Plan in priority order of Safety, Liquidity, and Return on Investment.

The purpose of the Investment Policy and Management Plan is to establish policies, practices, and procedures to be used in administering the City's investment portfolio in accordance with the City's Statement of Investment policy.

PRIMARY INVESTMENT OBJECTIVE
The City's primary investment objective is to achieve a reasonable rate of return on public funds while minimizing the potential for capital losses arising from market changes or issuer default. Although the generation of revenues through interest earnings on investments is an appropriate City goal, the primary consideration in the investment of City funds is capital preservation in the overall portfolio. As such, the City's yield objective is to achieve a reasonable rate of return on City investments rather than the maximum generation of income, which could expose the City to unacceptable levels of risk.

In determining individual investment placements, the following factors shall be considered in priority order: 1) Safety 2) Liquidity 3) Yield – (Return on Investment).

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Section 6. APPROPRIATIONS LIMITATION
A. The Council will annually adopt a resolution establishing the City's appropriations limit calculated in accordance with Article XIII-B of the Constitution of the State of California, Section 7900 of the State of California Government Code, and any other voter approved amendments or state legislation that affect the City's appropriations limit.

B. The supporting documentation used in calculating the City's appropriations limit and projected appropriations subject to the limit will be available for public and Council review at least 10 days before Council consideration of a resolution to adopt an appropriations limit. The Council will generally consider this resolution in connection with final approval of the budget.

C. The City will strive to develop revenue sources, both new and existing, which are considered non-tax proceeds in calculating its appropriations subject to limitation.

D. The City will annually review user fees and charges and report to the Council the amount of program subsidy, if any, that is being provided by the General or Enterprise Funds.

E. The City will actively support legislation or initiatives sponsored or approved by League of California Cities which would modify Article XIII-B of the Constitution in a manner which would allow the City to retain projected tax revenues resulting from growth in the local economy for use as determined by the Council.

F. The City will seek voter approval to amend its appropriation limit at such time that tax proceeds are in excess of allowable limits.

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Section 7. FUND BALANCE AND RESERVES
Link to the City’s Fund Balance & Reserve Policy
This policy establishes guidelines and procedures for allocating and reporting the City’s fund balances in the financial statements in accordance with Governmental Accounting Standards Board (GASB) Statement No. 54 and as committed by the City Council effective beginning fiscal year ending June 30, 2021.

Additionally, the policy establishes the City’s reserve levels to address protection from risk and unexpected situation that require financial resources. The City of San Luis Obispo faces risks such as revenue shortfalls during recessions and losses from extreme events, like earthquakes, wildland fires, flooding, and other natural disasters. Prudent reserve levels help make sure that the City of San Luis Obispo can respond quickly and decisively to those events.

Reserves also support vital public services during revenue declines.

As such, the City’s reserve policy describes how much the City will retain in the reserves and stipulates activation and acceptable uses of the reserves.

Since reserve levels need to be considered when establishing fund balances, both are addressed within this policy.

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Section 8. CalPERS & UNFUNDED LIABILITIES
With the 2018-19 Financial Plan Supplement, the City adopted its Fiscal Health Response Plan (FHRP); a three-year plan to address the City’s escalating unfunded pension liability stemming from the CalPERS’ changes under the Public Employees’ Pension Reform Act (PEBRA). PEBRA prescribe that a member agency’s pension liability had to be paid down over a 30-year period which triggered annually escalating contributions through 2045.

The FHRP therefore targeted a realignment of revenues and expenditures to allow for additional payments to CalPERS, negotiated additional contributions toward pension payments for employee groups, and prioritized the use of unassigned fund balance once the City’s Financial Statements had been audited and accepted by the City Council. The goal of this realignment was the payment of the UFL over a reduced timeline therefore securing pensions for City employees and saving the City considerable interest payments.

Given the long-term ramifications of the deliverables put in motion through the FHRP, this section addresses the City’s long-term commitment to payment of the UFL, annual additional discretionary payments (ADPs), and the needed prioritization to hold the shortened timeline.

1. The City sets the following prioritization of unassigned General Fund balance:
a. Additional discretionary payments to CalPERS
b. Infrastructure investments
c. Emerging Health and Safety needs of the community

2. The City commits to ADPs to CalPERS and adding an annual inflator equal to increases in payroll whenever CalPERS reaches its discount rate or larger rates of return based on what is presented in the latest five-year forecast.

3. Whenever CalPERS does not reach its adopted discount rate, the City commits to first use any unassigned fund balance to counteract the investment loss CalPERS experienced. It will add the loss to the committed ADP as outlined above to safeguard the investment already made toward the early repayment of the UFL.

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Section 9. CAPITAL IMPROVEMENT PROGRAM MANAGEMENT
A. CIP Projects: $25,000 or More. Construction projects which cost $25,000 or more will be included in the CIP and are accounted for the in the Capital Outlay Fund. Minor capital outlays of less than $25,000 will be included with the operating program budgets.

B. CIP Purpose. The purpose of the CIP is to systematically plan, schedule, and finance capital projects to ensure cost-effectiveness as well as conformance with established policies. The CIP is a five-year plan organized into the same functional groupings used for the operating programs.

The CIP will reflect a balance between capital replacement projects that repair, replace, or enhance existing facilities, equipment or infrastructure; and capital facility projects that significantly expand or add to the City’s existing fixed assets.

C. CIP Project Type. Projects are categorized by type, including:

1. Asset Maintenance – Reoccurring and annual needs that maintain existing assets.

2. Asset Replacement – Periodically reoccurring and/or annual needs that replace existing assets with similar assets.

3. New Asset – Periodic needs to expand the number of assets that serve the community.

Asset maintenance projects and costs should be considered before recommending funding for projects to replace existing assets or construct new assets. Asset Maintenance projects are not ranked by the CIP Review Committee.

D. CIP Project, Project Manager. Every CIP project will have a “project manager” who will be responsible for managing the project scope, budget, and timeline. Project managers will be responsible for ensuring that required phases are completed on schedule, authorizing all project expenditures, ensuring that all regulations and laws are observed, regularly communicating with project proponents and other stakeholders, and reporting on project status. Project management will primarily be performed by staff in the Public Works Department, but staff from other departments may also manage projects.

E. CIP Review Committee. The CIP Review Committee provides governance of the CIP by evaluating and prioritizing capital projects based upon an established set of criteria to ensure alignment with Major City Goals, the General Plan, strategic growth objectives and needs for services provided within the City. The Assistant City Manager serves as Chair of the Committee and the Director of Public Works is Vice Chair; other members include: Deputy City Manager, Director of Community Development, Director of Finance, Director of Parks and Recreation, Director of Utilities, and a public safety department head (rotating between the Fire Chief and Police Chief). The CIP Administrative Manager, City Engineer, Principal Budget Analyst, DEI Manager, and Sustainability Manager provide staff support to the Committee. The Committee is responsible for:

1. Assessing the City’s fiscal and staff capacity to deliver projects so that the recommended CIP represents what can realistically be accomplished; and
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2. Recommending to the City Manager the projects and associated budgets that should be included in the biennial financial plan; and

3. Considering requests for new projects that may be requested outside of financial plan development to address emergent needs; and

4. Evaluating the re-prioritization of projects as needs and conditions change in order to ensure consistency with project evaluation criteria, ability to deliver projects, and City priorities.

F. Project Request Forms. The CIP Review Committee requires that departments submitting a request for a project to be funded in the Five-Year CIP cycle submit a Project Request Form (PRF) to formally document the project request. The PRF is intended to ensure that the Committee has necessary information to evaluate and prioritize projects for funding. In addition to completion of the PRF, the Committee may also request a presentation from the requesting department to gather additional information. The content of the PRF shall include, but not be limited to the following:

1. Proposed project title

2. Proponent (Client) department

3. Proposed managing department or division

4. Project function

5. Project type

6. City priority alignment

7. Project scope

8. Proposed project schedule/delivery

9. Estimated project budget and funding source(s) (if any) G. Creation of Projects. New projects shall only be considered during development of the biennial financial plan. Requests for projects outside of the financial plan development process will be considered only if they are intended to address an emergency need. Staff may create new projects as directed by the City Council at any point.

H. CIP Phases. The CIP will emphasize project planning, with projects progressing through at least two and up to ten of the following phases:

1. Designate. Appropriates funds based on projects designated for funding by the Council through adoption of the Financial Plan.

2. Study. Concept, site selection, feasibility analysis, schematic design, environmental determination, property appraisals, scheduling, grant application, grant approval, specification preparation for equipment purchases.

3. Environmental Review. EIR preparation, other environmental studies.

4. Real Property Acquisitions. Property acquisition for projects, if necessary.

5. Site Preparation. Demolition, hazardous materials abatements, other pre‐construction work.

6. Design. Final design, plan and specification preparation and construction cost estimation.

7. Construction. Construction contracts.

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8. Construction Management. Contract project management and inspection, soils and material tests, other support services during construction.

9. Equipment Acquisitions. Vehicles, heavy machinery, computers, office furnishings, other equipment items acquired and installed independently from construction contracts.

10. Debt Service. Installment payments of principal and interest for completed projects funded through debt financings. Expenditures for this project phase are included in the Debt Service section of the Financial Plan. Generally, it will become more difficult for a project to move from one phase to the next. As such, more projects will be studied than will be designed, and more projects will be designed than will be constructed or purchased during the term of the CIP.

I. CIP Appropriation. The City’s annual CIP appropriation for study, design, acquisition and/or construction is based on the projects designated by the Council through adoption of the Financial Plan. Adoption of the Financial Plan CIP appropriation does not automatically authorize funding for specific project phases. This authorization generally occurs only after the preceding project phase has been completed and approved by the Council and costs for the succeeding phases have been fully developed.

Accordingly, project appropriations are generally made when contracts are awarded. If project costs at the time of bid award are less than the budgeted amount, the balance will be unappropriated and returned to fund balance or allocated to another project. If project costs at the time of bid award are greater than budget amounts, five basic options are available:

1. Eliminate the project.

2. Defer the project for consideration to the next Financial Plan period.

3. Rescope or change the phasing of the project to meet the existing budget.

4. Transfer funding from another specified, lower priority project.

5. Appropriate additional resources as necessary from fund balance.

J. Cost of CIP Program Management and Project Delivery. The Capital budget shall reflect the projected cost of staff time within the Public Works Department spent on management of the CIP and delivery of projects budgeted in the Capital budget.

K. CIP Budget Carryover. Appropriations for CIP projects lapse three years after budget adoption.

Projects which lapse from lack of project account appropriations may be resubmitted for inclusion in a subsequent CIP. Project accounts, which have been appropriated, will not lapse until completion of the project phase.

L. CIP Reporting. Staff shall publish reports on the progress of delivering the Capital Improvement Plan at least quarterly, as part of Quarterly Budget Reports provided to the City Council. These reports shall include a summary of project budgets, a status update on projects in progress, and a listing of projects completed within the quarter.

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M. Public Art. CIP projects will be evaluated during the budget process and prior to each phase for conformance with the City's public art policy, which generally requires that 1% of eligible project construction costs be set aside for public art. Excluded from this requirement are underground projects, utility infrastructure projects, funding from outside agencies, and costs other than construction such as study, environmental review, design, site preparation, land acquisition and equipment purchases. It is generally preferred that public art be incorporated directly into the project, but this is not practical or desirable for all projects; in this case, an in‐lieu contribution to public art will be made. To ensure that funds are adequately budgeted for this purpose regardless of whether public art will be directly incorporated into the project, funds for public art will be identified separately in the CIP.

N. General Plan Consistency Review. The Planning Commission will review the Preliminary CIP for consistency with the General Plan and provide its findings to the Council prior to adoption.

O. Climate Action Plan Implementation. Council adopted Resolution No. 11159 (2020 Series) establishes a goal of community-wide carbon neutrality by 2035 and municipal operations carbon neutrality by 2030. The City’s Capital Improvement Program is a critical implementation tool, and every CIP will be evaluated for alignment with these climate goals. Examples of ways projects or project components can align the with goals include (but are not limited to):

1. Elimination or reduction of vehicle miles traveled (e.g., active transportation and transit improvements),

2. Elimination or reduction of fossil fueled appliances, vehicles, and equipment,

3. Reduced energy consumption (e.g., efficient mechanical equipment, efficient lighting, etc.)

4. Carbon storage through tree planting or landscape management, and

5. Solid waste/ green waste diversion
P. Diversity, Equity and Inclusion. In 2020 the City Council declared diversity, equity, and inclusion (DEI) as integral aspects of their City Mission and Meta Goal, ensuring that through policies, programs, and projects, San Luis Obispo will foster a community that is welcoming, equitable, safe and inclusive for all. The City’s Capital Improvement Program is a critical component of achieving these goals by ensuring that capital projects are designed to be accessible, inclusive, and safe for diverse populations. Capital Improvement Projects can advance diversity, equity, through project design and accessibility, diverse representation in art components of projects, ensuring there are programs to subsize costs for low-income communities to access the project, providing opportunities to diverse populations and stakeholders for community input, including DEI as a priority in RFPs or project scope, and ensuring the project does not disproportionately burden one community over another.

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Section 10. CAPITAL FINANCING AND DEBT MANAGEMENT
Link to the City’s Capital Financing & Debt Management Policy

POLICY STATEMENT
The City of San Luis Obispo (City) will maintain, at all times, debt management policies that are fiscally prudent, consistent with State and Federal law, and reflective of the most opportune financing strategies to deliver on the needs and goals of the community and the City organization.

The Debt Management Policy establishes objectives, parameters, and guidelines for responsibly issuing and administering the City’s debt. Prudent management of the City’s debt program is necessary to achieve costeffective access to the capital markets and demonstrate a commitment to long-term financial planning and sustainability.

DEBT MANAGEMENT OBJECTIVES
The policy sets forth key objectives for the City in issuing and administering the City’s debt, which are to:
• Maintain the City’s sound financial position.
• Minimize debt service and issuance cost.
• Maintain access to cost-effective borrowing.
• Achieve and maintain highest reasonable credit rating. • Ensure full and timely repayment of debt.
• Maintain full and complete financial disclosure and reporting including voluntary disclosures. • Ensure compliance with State and Federal laws and regulations.

SCOPE
This policy establishes the framework for when the City of San Luis Obispo should consider issuing debt and the overall acceptable debt burden. Long-term debt is an effective way to finance capital improvements by matching the term of the debt with the useful life of the asset being financed. Properly managed debt provides flexibility in current and future operating budgets and provides the City with the long-term assets required to deliver services, programs, and public infrastructure to the community. The City recognizes that effective debt management practices require a comprehensive Debt Management Policy that details the use of capital debt to support the capital infrastructure in the community while maintaining a stable and prudent fiscal outlook.

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Section 11. HUMAN RESOURCE MANAGEMENT
A. Regular Staffing

1. The budget will fully appropriate the resources needed for authorized regular staffing and will limit programs to the regular staffing authorized.

2. Regular employees will be the core work force and the preferred means of staffing ongoing, yearround program activities that should be performed by full-time City employees rather than independent contractors. The City will strive to provide competitive compensation and benefit schedules for its authorized regular work force. Each regular employee will:
a. Fill an authorized regular position.
b. Be assigned to an appropriate bargaining unit, unless designated as an unrepresented management or confidential classification.
c. Receive salary and benefits consistent with labor agreements or other compensation plans.

3. To manage the growth of the regular work force and overall staffing costs, the City will follow these procedures:
a. The Council will authorize all regular positions.
b. The Human Resources Department will coordinate and approve the hiring of all regular and supplemental staff.
c. All requests for additional regular positions will include evaluations of:
• The necessity, term and expected results of the proposed activity. • Staffing and materials costs including salary, benefits, equipment, uniforms, clerical support and facilities.
• The ability of private industry to provide the proposed service. • Additional revenues or cost savings, which may be realized.

4. Periodically, and before any request for additional regular positions, programs will be evaluated to determine if they can be accomplished with fewer regular employees. (See Productivity Review Policy)

5. Staffing and contract service cost ceilings will limit total expenditures for regular employees, supplemental staff, and independent contractors hired to provide operating and maintenance services.

B. Supplemental Staff

1. The hiring of supplemental staff will not be used as an incremental method for expanding the City's regular work force.

Financial Plan Page 524

2. Supplemental staff include all employees other than regular employees, elected officials and volunteers. Supplemental staff include seasonal or occasional employees, employees with irregular schedules, limited benefit employees, temporary employees, contract employees, CalPERS retired annuitants, and leased employees. Supplemental staff may work on a full-time or part-time basis and will generally augment regular City staffing. Supplemental staff may be used as extra-help during peak workloads, as coverage during extended absences of regular employees, seasonal workforce, as a means to assess ongoing staffing needs, or as the staffing method for program delivery that is most effectively staffed using part-time hours to ensure adequate coverage.

3. The City Manager and Department Heads will encourage the use of supplemental staff rather than regular employees to meet peak workload requirements, fill interim vacancies, and accomplish tasks where less than full-time, year-round staffing is required.

Under this guideline, supplemental staff hours will generally not exceed 50% of a regular, fulltime position (1,000 hours annually). There may be limited circumstances where the use of supplemental staff on an ongoing basis in excess of this target may be appropriate due to unique programming or staffing requirements. However, any such exceptions must be approved by the City Manager based on the review and recommendation of the Human Resources Director.

4. Contract employees are defined as supplemental staff with written contracts approved by Human Resources Director and City Attorney who may receive approved benefits. Contract employees will generally be used for medium-term (generally between six months and two years) projects, programs or activities requiring specialized or augmented levels of staffing for a specific period.

5. Leased employees are employed during short-term, peak workload assignments to be accomplished using personnel contracted through an outside employment agency (OEA). In this situation, it is anticipated that City staff will closely monitor the work of leased employees and minimal training will be required. However, they will always be considered the employees of the OEA and not the City. All placements through an OEA will be coordinated through the Human Resources Department and subject to the approval of the Human Resources Director.

The services of contract employees will be discontinued upon completion of the assigned project, program or activity. Accordingly, contract employees will not be used for services that are anticipated to be delivered on an ongoing basis and as such, a determination as to the expected need will be made at the end of each contract term and prior to extending or renewing a contract.

C. Overtime Management

1. Overtime should be used only when necessary and when other alternatives are not feasible or cost effective.

2. All overtime must be pre-authorized by a department head or delegate unless it is assumed preapproved by its nature. For example, overtime that results when an employee is assigned to standby and/or must respond to an emergency or complete an emergency response.

Financial Plan Page 525

3. Departmental operating budgets should reflect anticipated annual overtime costs and departments will regularly monitor overtime use and expenditures.

4. When considering the addition of regular or temporary staffing, the use of overtime as an alternative will be considered. The department will take into account:
a. The duration that additional staff resources may be needed. b. The cost of overtime versus the cost of additional staff. c. The skills and abilities of current staff.
d. Training costs associated with hiring additional staff. e. The impact of overtime on existing staff.

D. Independent Contractors
Independent contractors are not City employees. They are used in construction of public works projects and delivery of operating, maintenance or specialized professional services not routinely performed by City employees. Such services will be provided without close supervision by City staff, and the required methods, skills and equipment will generally be determined and provided by the contractor. Contract awards will be guided by the City's purchasing policies and procedures. (See Contracting for Services Policy)
Financial Plan Page 526

Section 12. CONTRACTING FOR SERVICES
A. General Policy Guidelines

1. Contracting with the private sector for the delivery of services provides the City with a significant opportunity for cost containment and productivity enhancements. As such, the City is committed to using private sector resources in delivering municipal services as a key element in our continuing efforts to provide cost-effective programs.

2. Private sector contracting approaches under this policy include construction projects, professional services, outside employment agencies and ongoing operating and maintenance services.

3. In evaluating the costs of private sector contracts compared with in-house performance of the service, indirect, direct, and contract administration costs of the City will be identified and considered.

4. Whenever private sector providers are available and can meet established service levels, they will be seriously considered as viable service delivery alternatives using the evaluation criteria outlined below.

5. For programs and activities currently provided by City employees, conversions to contract services will generally be made through attrition, reassignment or absorption by the contractor.

B. Evaluation Criteria
Within the general policy guidelines stated above, the cost-effectiveness of contract services in meeting established service levels will be determined on a case-by-case basis using the following criteria:

1. Is a sufficient private sector market available to competitively deliver this service and assure a reasonable range of alternative service providers?

2. Can the contract be effectively and efficiently administered?

3. What are the consequences if the contractor fails to perform, and can the contract reasonably be written to compensate the City for any such damages?

4. Can a private sector contractor better respond to expansions, contractions or special requirements of the service?

5. Can the work scope be sufficiently defined to ensure that competing proposals can be fairly and fully evaluated, as well as the contractor's performance after bid award?

6. Does the use of contract services provide us with an opportunity to redefine service levels?

7. Will the contract limit our ability to deliver emergency or other high priority services?

8. Overall, can the City successfully delegate the performance of the service but still retain accountability and responsibility for its delivery?
Financial Plan Page 527

Section 13: Productivity
Ensuring the “delivery of service with value for cost” is one of the key concepts embodied in the City's Mission Statement (San Luis Obispo Style— Quality With Vision). To this end, the City will constantly monitor and review our methods of operation to ensure that services continue to be delivered in the most cost-effective manner possible.

This review process encompasses a wide range of productivity issues, including:

A. Analyzing systems and procedures to identify and remove unnecessary review requirements.

B. Evaluating the ability of new technologies and related capital investments to improve productivity.

C. Developing the skills and abilities of all City employees.

D. Developing and implementing appropriate methods of recognizing and rewarding exceptional employee performance.

E. Evaluating the ability of the private sector to perform the same level of service at a lower cost.

F. Periodic formal reviews of operations on a systematic, ongoing basis.

G. Maintaining a decentralized approach in managing the City's support service functions. Although some level of centralization is necessary for review and control purposes, decentralization supports productivity by:

1. Encouraging accountability by delegating responsibility to the lowest possible level.

2. Stimulating creativity, innovation and individual initiative.

3. Reducing the administrative costs of operation by eliminating unnecessary review procedures.

4. Improving the organization's ability to respond to changing needs and identify and implement cost-saving programs.

5. Assigning responsibility for effective operations and citizen responsiveness to the department.

H. Maintaining City purchasing policies and procedures that are as efficient and effective as possible.

Financial Plan Page 528

Glossary
A
Abatement. A reduction in amount, degree, or intensity of something, such as a tax.

Account. A separate financial reporting unit. All budgetary transactions are recorded in accounts.

Accrual Basis. A basis of accounting in which transactions are recognized at the time they are incurred, as opposed to when cash is received or spent.

Actuarial. A person or methodology that makes determinations or required contributions to achieve future funding levels that address risk and time.

Ad Valorem Tax. A tax levied on the assessed value of real estate and personal property. This tax is also known as property tax.

Adopted Budget. The proposed budget as formally approved by the City Council.

Appropriation. An authorization made by the City Council, which permits the City to incur obligations to make expenditures for specific purposes.

Assessed Valuation. A value that is established for real and personal property for use as a basis for levying property taxes.

Asset. Resources owned or held by a government that have monetary value.

B
Balanced Budget. A budget in which planned funds or revenues available are equal to planned fund expenditures.

Bond. A written promise to pay a sum of money on a specific date at a specified interest rate. The interest payments and the repayment of the principal are detailed in a bond ordinance. The most common types of bonds are general obligation, revenue bonds, and
Bond Rating. The City of San Luis Obispo uses both of the Nation's primary bond rating services - Moody’s Investors Service and Standard & Poor's. These rating services perform credit analysis to determine the probability of an issuer of debt defaulting partially or fully.

Bond Refinancing. The payoff and re issuance of bonds to obtain better interest rates and/or bond Financial Plan Page 529

conditions.

Budget. A plan of financial operation for a specified period of time (fiscal year). The Annual Budget authorizes and provides the basis for control of financial operations during the fiscal year.

Budget Adjustment. A procedure to revise a budget appropriation either by City Council approval through the adoption of a supplemental appropriation ordinance for any interdepartmental or inter-fund adjustments or by City Manager authorization to adjust appropriations within a departmental budget.

Budget Calendar. The schedule of key dates or milestones that the City follows in the preparation, adoption, and administration of the budget.

Budget Document. The instrument used by the budget- making authority to present a comprehensive financial program to the City Council.

Budget Team. A fun group of hard-working employees responsible for budget preparation, benchmarking, forecasting, and financial analysis.

Budget Message. The opening section of the budget that provides the City Council and the public with a general summary of the most important aspects of the budget, changes from the current and previous fiscal years, and recommendations regarding the financial policy for the upcoming period.

Budgetary Basis. This refers to the form of accounting used throughout the budget process. These generally take one of three forms: GAAP, cash, modified accrual, or some type of statutory form.

Budgetary Control. The control or management of a governmental unit or enterprise in accordance with an approved budget for the purpose of keeping expenditures within the limitations of authorized appropriations and available revenues.

C
Capital Assets. Assets of long-term character that are intended to continue to be held or used, such as land, buildings, machinery, furniture and other equipment.

Capital Budget. The appropriation of bonds or operating revenue for improvements to facilities and other infrastructure.

Capital Improvements. Expenditures related to the acquisition, expansion, or rehabilitation of an element of the government’s physical plant, sometimes referred to as infrastructure.

Capital Improvements Plan. A plan for capital expenditures to provide long-lasting physical improvements to be incurred over a fixed period of several future years. The City of San Luis Obispo’s City Charter requires annual submission of a five-year capital program for City Council acceptance.

Financial Plan Page 530

Capital Outlay. Expenditures that result in the acquisition of, or addition to, fixed assets.

Cash Basis. A basis of accounting in which transactions are recognized only when cash is increased or decreased.

Contingency. A budgetary reserve set aside for emergencies or unforeseen expenditures not otherwise budgeted.

Core Service. A principal service or product delivered by a program or department that is necessary to the successful operation of the city.

D
Debt Service. The amount of interest and principal that a City must pay each year on net direct long-term debt plusthe interest it must pay on direct short-term debt.

Deficit. The excess of an entity’s liabilities over its assets or the excess of expenditures over revenues during a single accounting period.

Department. A major administrative unit of the City that indicates overall management responsibility for an operation or a group of related operations within a
functional area. Departments are comprised of divisions, programs, and/or sections.

Depreciation. Expiration in the service life of capital assets attributable to wear and tear, deterioration, action of the physical elements, inadequacy, or obsolescence.

Division. A functional unit within a department.

E
Encumbrance. The legal commitment of appropriated funds to purchase an item or service. To encumber funds means to set aside or commit funds for a future expenditure.

ESG Investing. Environmental, Social, and Governance refers to the three central factors in measuring the sustainability and societal impact of an investment in accompany or business. The method rates company’s environmental footprint, social behavior, and company governance such as labor practice, governing board composition, talent management, product safety, and data security to name a few.

Estimated Revenue. The amount of projected revenue to be collected during the fiscal year.

Financial Plan Page 531

Expenditure/Expense. This term refers to the outflow of funds paid for an asset obtained or goods and services obtained.

F
Financial Reserves. An unappropriated source of funding that can be utilized to meet unexpected budgetary needs.

Fiscal Year. The time period designated by the City signifying the beginning and ending period for recording financial transactions. The City of San Luis Obispo has specified July 1 to June 30 as its fiscal year.

Forfeiture. The automatic loss of property, including cash, as a penalty for breaking the law, or as compensation for losses resulting from illegal activities. Once property has been forfeited, the City may claim it, resulting in confiscation of the property.

Full Faith and Credit. A pledge of a government’s taxing power to repay debt obligations.

Full-Time Employee. A full-time employee working 38-40 hours per week and receiving benefits.

Fund. A set of inter-related accounts to record revenues and expenditures associated with a specific purpose.

Fund structure presented below
Governmental Funds
Capital Projects Fund. Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds and Trust Funds).

Debt Service Fund. Debt Service Funds are set up to receive dedicated revenues used to make principal and interest payments on City debt. They are used to account for the accumulation of resources for, and the payment of, general obligation and special assessment debt principal, interest and related costs, except the debt service accounted for in the Special Revenue Funds and Enterprise Funds.

General Fund. The General Fund is the general operating fund of the City. It is used to account for all activities of the City not accounted for in another fund.

Special Revenue Fund. Special Revenue Funds are set up as accounts for Federal or State grants legally restricted to expenditures for specific purposes.

Proprietary Funds
Financial Plan Page 532

Enterprise Funds Enterprise Funds are used to account for operations including debt service (a) that are financed and operated in a manner similar to private businesses – where the intent of the government body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis is financed or recovered primarily through user charges; or (b) where the governing body has determined that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control accountability, or other purposes.

Internal Service Funds Internal Service Funds are established to account for an entity that provides goods and services to other City entities and charges those entities for the goods and services provided.

Fund Balance. The difference between revenues and expenditures. The beginning fund balance represents the residual funds brought forward from the previous year (ending balance) G
Generally Accepted Accounting Principles. (GAAP) Uniform minimum standards for financial accounting and recording, encompassing the conventions, rules, and procedures that define accepted accounting principles.

General Governmental Revenue. The revenues of a government other than those derived from and retained in an Enterprise Fund. General Governmental revenues include those from the General, Debt Service, and Special Revenue Funds.

General Obligation Bonds. Bonds that finance a variety of public projects such as streets, buildings, and improvements; the repayment of these bonds is usually made from secondary property taxes, and these bonds are backed by the full faith and credit of the issuing government.

Goal. A statement of direction based on identified strategic priorities. Should be measurable and able to be achieved in 3 to 5 years.

Grant. A contribution by the State or Federal government or other organization to support a particular function. Grants may be classified as either categorical or block depending upon the amount of discretion allowed the grantee.

I
Indirect Cost. A cost necessary for the functioning of the organization as a whole, but which cannot be directly assigned, such as administrative support, facility maintenance or custodial services.

Inflation. A rise in price levels caused by an increase in available funds beyond the proportion of available goods.

Financial Plan Page 533

Infrastructure. Public domain fixed assetsincluding roads, curbs, gutters, sidewalks, drainage systems, lighting systems, and other items that have value only to the City.

Interest Income. Revenue associated with the city cash management activities of investing fund balances.

Intergovernmental Resources. Funds received from federal, state, and other local government sources in the form of grants, shared revenues, and payments in lieu of taxes.

Inter-fund Transfer. The movement of monies between funds of the same governmental entity.

Inter-local Agreement. A contractual agreement between two or more governmental entities.

Internal Services Charges. The charges to user departments for internal services provided by another government agency, such as data processing, equipment maintenance and communications.

L
Levy. To impose taxes for the support of government activities.

Long-Term Debt. Debt with a maturity of more than one year after the date of issuance.

M
Major City Goals. The most important, highest priority goals for the City to accomplish over the next two years, and as such, resources should be included in the 2023-25 Financial Plan.

Major Fund. Funds whose revenues, expenditures/ expenses, assets, or liabilities (excluding extraordinary items) are at least 10 percent of corresponding totals for all governmental or enterprise funds and at least 5 percent of the aggregate amount for all governmental and enterprise funds. These represent the City's most important funds and include the General Fund.

Mandate. A requirement from a higher level of government that a lower level of government perform a task in a particular way or standard.

Mission Statement. The statement that identifies the particular purpose and function of an entity.

Modified Accrual Basis. The basis of accounting under which revenues are recognized when measurable and available to pay liabilities. Expenditures are recognized when the liability is incurred except for interest on long-term debt which is recognized when due, and the noncurrent portion of accrued vacation and sick leave, which is recorded in general long-term debt.

Financial Plan Page 534

Municipal Code. A collection of laws, rules, and regulations that apply to the City and its citizens.

N
Neighborhood Services. A program developed to promote and strengthen the stability, development, revitalization, and preservation of neighborhoods through community-based problem solving.

Net Position. Governmental financial statement reporting for proprietary funds where assets plus deferred outflows of resources, lessliabilities, less deferred inflows of resources, equals net position program.

O
Objective. A specific measurable and observable result of an organization’s activity, which advances the organization toward its goal.

Ombudsman. One that investigates reported complaints, reports findings, and helps to achieve equitable settlements.

OPEB. Other post-employment benefits are benefits that an employee will begin to receive at the start of retirement such as health care and deferred-compensation arrangements.

Operating Budget. The portion of the budget that pertains to daily operations that provide basic governmental services. The operating budget contains appropriations for expenditures such as personnel, supplies, utilities, materials, travel, and fuel.

Operating Expenses. The cost for personnel, materials, and equipment required for a department to function.

Operating Revenue. Funds that the government receives as income to pay for ongoing operations, including such items as taxes, user fees, interest earnings, and grant revenues. Operating revenues are used to pay for day-to- day services.

P
Pay-As-You-Go Financing. A term used to describe a financial policy by which the capital program is financed from current revenues rather than through borrowing.

Financial Plan Page 535

Per Capita. A measurement of the proportion of some statistic to an individual resident determined by dividing the statistic by the current population.

Performance Budget. A budget that focuses upon departmental goals and objectives rather than line items, programs, or funds. Workload and unit cost data are collected in order to assess the effectiveness and efficiency ofservices. Typical measures collected might include average emergency response time for fire.

Performance Measure. Data collected to determine how effective and/or efficient a program is in achieving its objectives.

Policy. A plan, course of action or guiding principle designed to set parameters for decisions and actions.

Prior Year Encumbrances. Obligations from previous years in the form of purchase orders or contracts that are chargeable to an appropriation, and for which a part of the appropriation is reserved. They cease to be encumbrances when the obligations are paid or otherwise terminated.

Potable Water. Water that is fit to drink.

Program. Group activity, operations, or organizational units directed to attaining specific objectives and achievements and budgeted as sub-units of a department.

Program Budget. A budget that allocates money to the functions or activities of a government rather than to specific items of cost or to specific departments.

Property Tax. A levy upon the assessed valuation of the property within the City of San Luis Obispo upon each $100 ofassessment.

R
Retained Earnings. An equity account reflecting the accumulated earnings of an enterprise or internal service fund.

Revenue. Funds that the government receives as income. It includes such items as tax payments, fees from specific services, receipts from other governments, fines, forfeitures, grants, shared revenues, and interest income.

Revenue Bonds. Bonds usually sold for constructing a project that will produce revenue for the government.

That revenue is pledged to pay the principal and interest of the bond.

Reserve. An account used to indicate that a portion of a fund’s assets are legally restricted for a specific purpose and is, therefore, not available for general appropriation.

Resolution. A special or temporary order of a legislative body requiring less legal formality than an ordinance Financial Plan Page 536

or statute.

Resources. Total amounts available for appropriation including estimated revenues, fund transfers, and beginning balances.

Risk Management. An organized attempt to protect a government’s assets against accidental loss in the most economical method.

S
Sales Tax. Tax imposed on the taxable sales of all final goods.

Source of Revenue. Revenues are classified according to their source or point of origin.

Special Assessment. A compulsory levy made against certain properties to defray part or all of the cost of a specific improvement or service deemed to primarily benefit those properties.

State and Local Fiscal Recovery Funds. Federal program authorized by the American Rescue Plan Act (ARPA) to provide $350 billion to state, territorial, local, and Tribal governments across the United States to support their response to and recovery from the COIVD-19 public health emergency.

Strategic Plan. A document outlining long-term goals, critical issues, and action plans that will increase the organization’s effectiveness in attaining its vision, priorities, mission, goals and objectives.

System Development Charge. That portion of the connection charge that is determined to be the customer’s proportionate share of the cost of providing transmission, pumping, and storage facilities required to serve the various distribution areas or zones within the system.

T
Tax Levy. The resultant product when the tax rate per $100 is multiplied by the tax base.

Taxes. Compulsory charges levied by a government for the purpose of financing services performed for the common benefit of the people. This term does not include specific charges made against particular persons or property for current or permanent benefit, such as special assessments.

Transfers In/Out. Amounts transferred from one fund to another to assist in financing the services for the recipient fund.

U
Undesignated Fund Balance. The portion of a fund’s balance that is not legally restricted for a specific purpose Financial Plan Page 537

and is available for general appropriation.

Unencumbered Balance. The amount of an appropriation that is neither expended nor encumbered. It is essentially the amount of money still available for future purposes.

Unfunded Pension Liability. The difference between assets in a pension fund and the amount of benefits the fund is required to pay out in the long-term.

Unreserved Fund Balance. The portion of a fund’s balance that is not restricted for a specific purpose and is available for general appropriation.

Useful Life. The period of time that a fixed asset is able to be used. This can refer to a budget period of time for an equipment class or the actual amount of time for a particular item.

User Charges. The payment of a fee for direct receipt of a public service by the party who benefits from the service.

Financial Plan Page 538

DRAFT
R _____
RESOLUTION NO. _____ (2023 SERIES)

A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING THE 2023-25 FINANCIAL PLAN AND FISCAL YEAR 2023-24 BUDGET.

WHEREAS, in accordance with San Luis Obispo Charter Section 802, the City Manager has submitted the 2023-25 Financial Plan to the Council for review and consideration consistent with established budget and fiscal policies; and WHEREAS, the preparation of the 2023-25 Financial Plan was based on extensive public outreach, comment, and input and the City Council’s strategic vision as discussed during public hearing for strategic budget direction on April 18, 2023; and WHEREAS, the Planning Commission reviewed the City’s Capital Improvement Plan for the 2023-25 Financial Plan on April 26, 2023, and confirmed the plan’s conformity with the City’s General Plan; and
WHEREAS, the City Council held a public hearing on June 6, 2023 to consider the preliminary 2023-25 Financial Plan and Fiscal Year 2023-24 budget appropriations for the General Fund and Enterprise Funds; and
WHEREAS, the City maintains a minimum fund balance of at least 20% of the operating expenditures in the General Fund to provide for economic uncertainties, local disasters, and other financial hardships; and
WHEREAS, expenditures related to the immediate response to the 2023 storms and damages caused by the incident are an appropriate use of the General Fund reserve.

NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis Obispo as follows:

SECTION 1. The 2023-25 Financial Plan and Fiscal Year 2023-24 budget with appropriations consistent with the proposed capital improvement plan are herewith adopted and official copies of the financial plan, budget, and the capital improvement plan for all funds, as adopted, shall be maintained on file with the City Clerk along with this Resolution.

SECTION 2. The City Manager is hereby delegated authority to approve budget adjustments consistent with the adopted budget appropriations and financial policies to maintain budgetary flexibility and balances for the organization.

SECTION 3. The City Manager is hereby delegated the authority to approve non substantive format and typographical changes found within the 2023-25 Financial Plan as needed.

Financial Plan Page 539

DRAFT
Resolution No. ____ (2023 Series) Page 2
R _____
SECTION 4. The City Manager shall have authority to use General Fund Reserve balance to pay for operating and capital expenditures related to the January and March 2023 storm events.

SECTION 4. The City Council approves the appropriation limit as set forth on page 504 of the 2023-25 Financial Plan and 2023-24 Budget.

On motion of ___________________, seconded by _______________________, and on the following vote:

AYES:

NOES:

ABSENT:

The foregoing Resolution was passed and adopted on ___________, 2023. ______________________________
Mayor Erica A. Stewart
ATTEST:

Teresa Purrington,
City Clerk
APPROVED:

J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ________________________________
Teresa Purrington,
City Clerk
Financial Plan Page 540

R _____
RESOLUTION NO. _____ (2023 SERIES)

A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING THE 2023-25 FINANCIAL PLAN AND FISCAL YEAR 2023-24 BUDGET
WHEREAS, in accordance with San Luis Obispo Charter Section 802, the City Manager has submitted the 2023-25 Financial Plan to the Council for review and consideration consistent with established budget and fiscal policies; and WHEREAS, the preparation of the 2023-25 Financial Plan was based on extensive public outreach, comment, and input and the City Council’s strategic vision as discussed at a public hearing for strategic budget direction on April 18, 2023; and WHEREAS, the Planning Commission reviewed the City’s Capital Improvement Plan for the 2023-25 Financial Plan on April 26, 2023, and confirmed the plan’s conformity with the City’s General Plan; and
WHEREAS, the City Council held a public hearing on June 6, 2023, to consider the preliminary 2023-25 Financial Plan and Fiscal Year 2023-24 budget appropriations for Governmental Funds and Enterprise Funds; and
WHEREAS, the City maintains a minimum fund balance of at least 20% of the operating expenditures in the General Fund to provide for economic uncertainties, local disasters, and other financial hardships; and
WHEREAS, expenditures related to the immediate response to the 2023 storms and damages caused by the incident are an appropriate use of the General Fund reserve.

NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis Obispo as follows:

SECTION 1. The 2023-25 Financial Plan and Fiscal Year 2023-24 budget with appropriations consistent with the proposed Capital Improvement Plan are herewith adopted and official copies of the Financial Plan, Budget, and the Capital Improvement Plan for all funds, as adopted, shall be maintained on file with the City Clerk along with this Resolution.

SECTION 2. The City Manager is hereby delegated authority to approve budget adjustments consistent with the adopted budget appropriations and financial policies to maintain budgetary flexibility and balances for the organization.

SECTION 3. The City Manager is hereby delegated the authority to approve nonsubstantive format and typographical changes found within the 2023-25 Financial Plan as needed.

Resolution No. ____ (2023 Series) Page 2
R _____
SECTION 4. The City Manager shall have the authority to use General Fund Reserve balance to pay for operating and capital expenditures related to the January and March 2023 storm events.

SECTION 5. The City Council approves the appropriation limit as set forth on page 505 of the 2023-25 Financial Plan and 2023-24 Budget.

On motion of ___________________, seconded by _______________________, and on the following vote:

AYES:

NOES:

ABSENT:

The foregoing Resolution was passed and adopted on the ____ day of ________, 2023. ______________________________
Mayor Erica A. Stewart
ATTEST:

Teresa Purrington,
City Clerk
APPROVED:

J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ________________________________
Teresa Purrington,
City Clerk