TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Amber Shah, Parks & Public Works Director/City Engineer DATE: March 28, 2025
SUBJECT: REVIEW OF DRAFT FY 2025-26 CAPITAL EQUIPMENT AND CONSTRUCTION PLANS AND 5-YEAR FORECAST
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Efficient, Responsive, and Effective City Services
Engaged and Connected Residents
Fiscally Responsible and Transparent City Government
Inviting and Relevant City Facilities
Safe Community
Well-Maintained Infrastructure
BACKGROUND
Overall Budget Process
During the Fiscal Year 2019-20 budget process, staff worked together with the then City Council Budget Liaisons to develop an innovative and streamlined budget process that ultimately led to a successful adoption of the budget on June 26, 2020. Staff has continued to use the same budget process each fiscal year since Fiscal Year 2019-20.
At the February 12, 2025, City Council meeting, staff presented the Fiscal Year 2025-26 budget calendar, gave a FY 2025-26 budget overview, and presented proposed priority initiatives. A community engagement survey was also available for residents to complete until March 3, 2025. At the March 12, 2025, City Council meeting, staff presented more detailed information on the FY 2025-26 proposed priority initiatives and received feedback from Council on which items to include in the proposed budget. Today represents the next stage of the budget process. Staff will present both the capital equipment and Gretchen Shepherd Romey, Mayor
Tony Chou, Vice Mayor
Hunter Chang, Council Member
John Chou, Council Member
Calvin Lo, Council Member
capital construction budgets. On April 25, 2025, we will present each department’s Fiscal Year 2025-26 work plans and budgets. Staff will continue to work with the Budget Liaisons to ensure that our presentations meet the Council’s needs.
Please note that there will still be opportunities for adjustments and additions/removals as the budget process continues, but today’s discussion and decisions will give staff the direction needed to prepare the proposed Fiscal Year 2025-26 capital equipment and construction budgets.
DISCUSSION
Each year as part of the adoption of the City’s municipal budget, new and planned capital expenditures are compiled and presented to the City Council for review and deliberation. Afterward, those projects and programs that are approved for an appropriation in the coming fiscal year are incorporated into the City’s capital budget.
This budget workshop will include a review and discussion of the draft FY 2025-26 capital equipment and construction budgets and an update to the 5- year forecast.
Capital Equipment
This year’s format is identical to the one presented to the City Council the last six (6) fiscal years. The following information is provided in the attached draft capital equipment plans:
· Attachment 1- The current status of all FY 2024-25 capital equipment expenditures.
· Attachment 2 -A summary table of the recommended capital expenditures for FY 2025-26.
· Attachment 3 - A detailed description and cost estimate for each proposed capital expenditure.
The recommended items presented to the City Council today have gone through several rounds of prioritization. The requests for equipment purchases were first generated by each department head based on their individual work plans and operational needs.
Director Shah and Finance Director Guirola-Leon then presented the submitted requests to the City Manager, who reviewed the requests based on City Council priorities. In summary, the proposed capital equipment list (Attachment 2) was reviewed and sorted into upcoming FY 2025-26 purchases, and future purchases (Attachment 3).
Capital Construction
Concurrently, the following information is provided in the attached draft capital construction plans:
· Attachment 4 - The current status of all FY 2024-25 capital construction projects and programs
· Attachment 5 - A summary table of the recommended capital construction projects and program expenditures for FY 2025-26
· Attachments 6, 7, and 8 - A detailed description and cost estimate for each proposed capital improvement expenditure (right-of-way, park and grounds, civic facilities, wastewater collection, and stormwater) The capital construction requests were generated by the Parks and Public Works Department based on the five-year CIP plan and operational needs.
The capital construction requests are sorted into 1) Annual/Recurring Capital Construction Projects, 2) Proposed New (FY 2025-26) Capital Construction Projects, 3) Proposed Future (FY 2026-27 and beyond) Capital Construction Projects.
The following projects below have already been approved for funding by the City Council during prior budget processes, but have not yet been completed.
These projects are listed in the tabulation spreadsheet (Attachment 5) under the category “Re-Appropriations/Re-Budgets.” However, as these projects were all previously approved by City Council and no new funding is requested at this time for FY 2025-26 or future years, they are not included in the individual request forms for this meeting. Forms will be included in the final adopted budget book for ease of reference and transparency. Attachment 4 provides further detail on the status of each of these projects:
· Bridge Maintenance Program
· Measure R 710 North Projects
· Huntington Drive/Mission Street Beautification
· City Hall Campus – Emergency Generator Connection
· Library – Barth Community Room Lighting
· Lift Station Improvement Program
· Sewer Master Plan
· Rio Hondo Load Reduction Strategy
· Condition Assessment – Park and Street Trees
Commission Review
The proposed capital equipment plan was presented to the Public Safety Commission on March 17, 2025. The Public Safety Commission took action to recommend forwarding the proposed FY 2025-26 capital equipment list to the City Council for approval.
Capital Equipment and Construction 5-Year Plan
The table below shows an estimated $81.7 million in city-wide capital needs for the next five fiscal years, including both capital equipment and construction needs. Of this amount, approximately $20 million are capital needs related to the Wastewater system.
Each year, the City receives approximately $1.6 million in special revenue funding to help cover some of these capital needs. However, the remaining projected amounts are currently unfunded.
FISCAL IMPACT & PROCUREMENT REVIEW
All FY 2024-25 City Council-approved equipment has been either purchased or is expected to be purchased by June 30, 2025, as detailed in Attachment
1. Attachment 2 provides the budgeted capital equipment expenditures that are completed (highlighted in yellow), new capital equipment requests for FY 2025-26, and the 5-year equipment expenditure plan. In total, staff is proposing seven (7) new capital equipment purchases to be considered for next fiscal year. The table below provides the proposed budget by funding sources for the next fiscal year.
Funding Source FY 2025-26 Proposed Budget
Capital Equipment $344,000
COPS $144,604
Total $488,604
The Capital Equipment Fund (Fund 591) would need a budgeted transfer in from the General Fund to cover the costs of $344,000. The transfer in would be incorporated as part of the proposed budget presented in May 2025.
As of July 1, 2024, $14,254,998 of funding was available in the Capital Projects Fund (Fund 394).
The proposed Capital Projects for FY 2025-26 total $9,408,342. The table below provides the proposed budget by funding sources for the next fiscal year.
Funding Source FY 2025-26 Proposed
Budget
Special Revenue Funds $2,352,195
Capital Projects Fund (Fund 394) $7,056,147
Total $9,408,342
Of the $3,540,289 of new funding requests for the FY 2025-26 capital improvement budget, $1,565,189 is funding allocated from the Capital Projects Fund (Fund 394). The remaining $1,999,610 is from the Gasoline Tax Fund (Fund 202), Proposition A Fund (Fund 207) TDA Article 3 Fund (Fund 214), Proposition C Fund (Fund 215), Measure R Fund (Fund 243), Measure M Fund (Fund 247), Measure W Fund (Fund 246), CDBG Fund (Fund 204), and the Donations Fund (Fund 281) (precise amounts are shown on Attachment 5). Projects and programs underway and not completed this fiscal year will be re-budgeted or re-appropriated into next fiscal year.
The Parks and Public Works Department will be embarking on three (3) financially-significant construction projects this coming fiscal year: the completion of Lift Station upgrades ($1,985,690), the Street Rehabilitation Program ($3,978,647) and another year of Annual Sidewalk Improvements ($484,235).
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends that the City Council review the draft FY 2025-26 capital equipment and capital construction budgets and 5-year plans and provide direction and guidance on the following two matters: 1) approve or reject the proposed FY 2025-26 expenditures, and 2) offer guidance on any FY 2026-27 or beyond projects that should be moved up into FY 2025-26. Staff will include the Council’s direction in the proposed budget.
ATTACHMENTS
1. Status Update on the FY 2024-25 Capital Equipment Plan
2. Summary Table of Recommended FY 2025-26 Capital Equipment Purchases and 5-Year Plan
3. Capital Equipment Request Forms - All Departments (FY 2025-26 and future years)
4. Status Update on the FY 2024-25 Capital Construction Programs and Projects
5. Summary Table of Recommended FY 2025-26 Capital Construction Projects and 5-Year Plan
6. Capital Construction Request Forms - Annual/Recurring Projects/Programs
7. Capital Construction Request Forms - Proposed New FY 2025-26 Capital Construction Projects
8. Capital Construction Request Forms - Future Projects (FY 2026-27 and beyond)