1.  Receive a report regarding:

• Capital improvements and key operating budget projects completed, or scheduled to be completed, in Fiscal Year (FY) 2023/24

• Projects recommended to be cancelled or modified 

• Capital projects funded in (or prior to) FY 2023/24 that are recommended to be carried over, with remaining funds, into FY 2024/25

• Potential new capital improvement projects for FY 2024/25:

• Carry-over paving, drainage, and facility renovation projects requiring supplemental funding for construction
• Potential new projects funded by the Vehicle and Equipment Fund
• Potential new projects funded by the Capital Improvement Fund
• Funding and staffing resource limitations to complete additional projects

• Introduction of the Updated 5-year Capital Improvement Plan (FY 2024/25 through 2028/29)

2.  Provide guidance regarding:

• Total number of FY 2024/25 projects to be funded
• Funding priorities for future Capital Improvement Projects

Executive Summary

This report outlines 15 capital improvement projects completed, or will be completed, in FY 2023/24, 14 operating budget projects completed in FY 2023/24, and 4 projects that are recommended to be cancelled or modified. Next, 14 current FY projects, with a remaining balance of approximately $5.9 million, are proposed to be carried over into FY 2024/25. 

Key messages/recommendations to highlight in this year's introduction of the FY 2024/25 CIP:

• 6 carry over projects (2 paving, 2 drainage, and 2 facility renovations) are designed and "shovel ready" for construction. However, they require supplemental funding of $1.7M to complete. FY 2024/25 capital funding should be programmed to construct these projects prior to planning or funding any new projects.

• 6 new vehicle and equipment funded projects, valued at $545,000, have been identified for consideration for FY 2024/25. Should sufficient funding be available, all of these projects should be considered as the acquisition of vehicles and equipment requires less time and resources versus multi-year infrastructure projects which requires engineering, environmental permitting, public bidding, and construction.

• 12 potential new capital projects, valued at $2.88M, have also been identified for FY 2024/25 capital funds. Staff recognizes all of the projects have merit; however, the total cost of the projects exceeds available funding. More importantly, even without the addition of these new projects, the City's project management resources have no additional capacity over the next year.

• Setting funding availability aside, the total number of CIP Projects programmed to begin in FY 2024/25 should be limited to projects that are "shovel ready" and able to be started with the staff resources available.  Therefore, only a minimal number of critical new CIP projects should be added for FY 2024/25.  This approach will ensure a more manageable and achievable plan for the next year.      

Capital Project Definition

While reviewing capital projects, it is helpful to have a common understanding of what constitutes a “Capital Project.” The Government Accounting Standard Board uses the term “capital assets” to include “land, improvements to land, easements, buildings, building improvements, vehicles, machinery, equipment, historical treasures, infrastructure, and other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period.” 

For the City of Carmel-by-the-Sea, staff recommends that we continue to define a Capital Project, or a Capital Outlay, as an asset with any single component or piece of equipment that costs more than $10,000 and has an expected useful life exceeding ten (10) years.

Some of the projects listed below, such as reports and plans, may not fall under the true definition of a capital project. However, some reports may include recommendations for future capital projects. One example would be the Coastal Engineering Study which has identified numerous physical improvements to be made along the shoreline over the next several years. Other projects are considered one-time special projects designed to meet regulatory requirements, address public safety needs of the community, and/or enhance operational effectiveness.

Infrastructure Needs

A preliminary 5-year Capital Improvement Plan (CIP) is included in Attachment 1. This 5-year CIP framework provides information on the needs for necessary infrastructure for the upcoming fiscal year, as well as a forecast for the subsequent four years. Many of these needs have been identified through assessments and plans for City assets, including: 

• 2013 Carmel Facilities Assessments
• 2018 ADA Transition Plan
• 2018 MTNP Stream Stability Study
• 2020 Storm Drain Master Plan and 2023 Master Plan Update
• 2022 Climate Action and Climate Adaptation Plans
• 2023 Street Saver Pavement Management Plan/Update
• 2023 Electrical Panel Studies (City Hall, Fire Station, Vista Lobos)
• 2023 Facility Condition Assessments (City Hall, Fire Station, Public Works, Vista Lobos)
• 2023 Police Building Condition Assessment
• 2023-2024 Coastal Engineering Study, Phase I
• City Council Strategic Priorities list

This CIP provides a framework for the Council to allocate funding for the most critical projects over time.

1.    Projects Completed in Fiscal Year 2023/24

Fifteen (15) capital improvement projects, with a total value of approximately $2,971,000, were completed in Fiscal Year 2023/24, or are anticipated to be substantially completed by June 30, 2024, as tabulated below:

Last year, a change in strategy was implemented in which ongoing, maintenance-oriented projects were budgeted into the applicable department’s operating budget, rather than including such projects into the Capital Improvement Program, even if the budget for these maintenance-oriented projects exceeded $10,000.

As a review of this change in strategy, the following fourteen (14) additional projects, with a total value of approximately $329,000, were funded in the FY 23/24 Operating Budget and were completed, or are in anticipated to be substantially completed, by June 30, 2024:

2.     Prior Projects Recommended to be Cancelled or Modified

Four (4) projects are recommended to be cancelled or modified as discussed below.

• Harrison Memorial Library Backup Generator: During preliminary design, this project was determined to be cost-prohibitive or too impactful to a historic building. Alternative measures should be included in the planned Library Master Plan renovation projects. Therefore, this separate project should be cancelled.

•  Harrison Memorial Library Carpet Replacement: Carpeting is planned to be included in the planned Library Master Plan renovation projects. Therefore, this separate project should be cancelled.

• North Dunes Habitat Restoration Interpretive Signage and Split Rail Fencing ($25,000 donation):  While several small donations have been received over the past two years, none have sufficient to design and install the desired, upgraded interpretive signage. Therefore, this part of the project should be deferred until specific funding has been programmed.  The Split Rail Fencing portion of the project was approved by the Forest and Beach Commission in January 2024, and installation is scheduled in the Spring using Public Works/Street Maintenance funds. Furthermore, ongoing habitat restoration is ongoing and will continue to be budgeted under the Public Works/Environmental Programs operating budget.

• Resilience Infrastructure Planning and Design: As recommended in the Climate Adaptation Plan, this project involves developing plans for sustainable backup power to provide continued operations of critical facilities. Preliminary review suggests focusing on the Police and Public Works facilities, and potentially include Vista Lobos, in the event of an extended power outage. While this project is still necessary, Staff recommends that this Project be modified by integrating it into the Police Building Project as originally intended along with the remaining balance of approximately $83,000, rather than advancing this into future fiscal years as a separate project.

3.  Projects Funded in (or prior to) FY 2023/24 that are recommended to be carried over to FY 2024/25

The following 14 capital improvement projects, funded in, or prior to, Fiscal Year 2023/24, but not fully completed, should be carried over into FY 2024/25. The total FY 2023/24 budget for these projects was $9,761,100 and an estimated balance of $5,872,659 is proposed to be carried over into FY 2024/25. The exact amount of the carry-over will not be known until the end of the current FY.

Vehicle and Equipment Fund:

• Ambulance and Equipment/AED ($325,000): A contract to build the new ambulance with equipment for $410,000 was executed last year. Delivery is anticipated in December 2025. Funding of $275,000 from the Vehicle and Equipment Fund and a $50,000 donation will need to be carried forward until the invoice is due. Staff recommends carrying the funding over into FY 2024/25, and placing the estimated $85,000 balance for the ambulance into the 5-year CIP for Fiscal Year 2025/26 (Year 2).

• Fire Engine (Prepaid $880,000 in prior FY): In October 2022, Council appropriated this funding and added the fire engine into the FY 2022/23 CIP. The Pierce Manufacturer Enforcer diesel fire engine has been ordered with delivery anticipated by late 2025. Although the purchase is complete, the project is being carried over until delivery of the fire engine.

Capital Improvement Fund:

• Annual Paving Project, FY 2023/24 ($1,096,000): At the April 4, 2023 meeting, Council adopted a list of streets to be included in the FY 2023/24 annual paving project. The City’s Maintenance of Effort contribution of $657,329 leverages $438,570 of external funds via TAMC from Measure X, Gas Tax, SB 1, and RSTP. The project includes design and construction of asphalt pavement overlays of five roadway segments, including Upper Ocean Avenue and Santa Lucia Avenue between Dolores Street and Rio Road, removal of failed pavement sections and providing a slurry seal on up to 21 road segments predominately in residential neighborhoods, and replacing broken concrete, asphalt, and brick sidewalks with permeable pavers along five road segments in the downtown area. Status: Wallace Group submitted the 30% design for City review. Additional funding is needed for construction as discussed in Section 4A below.

• Coastal Engineering Study, Phase 2 ($500,000 - Strategic Priority): In March 2024, Council is anticipated to approve Amendment No. 2 to the Professional Services Agreement with EMC Planning Group, with subconsultants Integral Corporation and Haro, Kashunich & Associates, for a not-to-exceed fee of $450,000, to prepare the Coastal Engineering Study, Phase 2. Phase 2 will focus on: hazards policy review and revisions, public outreach and engagement, socio-economic analysis, adaptation strategies and pathway development, and development of the City’s Local Coastal Program Amendment. This project is fully funded under a recently-executed Local Coastal Program Grant Agreement by the California Coastal Commission. Status: Phase 1 completed in FY 2023/24. Phase 2 to begin upon execution of the Amendment.

• Concrete Street Repairs (FY 2022/23, $1,005,000): In January 2023, Council awarded a $189,667 Professional Services Agreement to BKF Engineers to design this project. The project includes repairs and resurfacing of concrete intersections at Ocean/San Antonio, San Carlos/Fifth, San Carlos/Sixth, and along Ocean Avenue, between Monte Verde and San Antonio, and along San Carlos between Fifth and Sixth. An ADA ramp and bulb outs are also included at the Junipero/Seventh intersection. The total project budget includes $441,300 in external funds (i.e. Measure X, SB-1) plus the Maintenance of Effort requirement of $563,700. During design, the project scope increased along Ocean Avenue to include the three intermittent side streets up to the sidewalks, on both sides of Ocean Avenue. In September 2023, an Amendment was approved with BKF for $49,092. Status: Engineering and design are completed and are "shelf ready". However, the cost estimate well exceeds available funding. The balance of this project funding should be carried over into FY 2024/25, and additional funding will need to be allocated prior to advertising for construction bids as discussed in Section 4A below.

• CIP Contingency Fund ($500,000): During FY 2023/24, $336,831 of this fund was used as follows: Award bid for FY 2022 Paving Project $262,779, award bid for MTNP Tank and Pump House Removal and Well Decommissioning Project $42,378, $17,860 for the Urban Forest Master Plan to cover unanticipated funding shortfall from CalFire Grant, and final payment of $13,814 for the electric Street Sweeper following 3CE reimbursement. Any balance should be carried over into FY 2024/25. Status: The MTNP 3 Stream Stability/Drainage Projects is currently out for bids. It is anticipated that the remaining balance of the Contingency Funds will be exhausted  to award this construction contract. 

• Drainage System Repairs ($580,000): The 2023 City-wide Drainage Master Plan Update identified numerous spot repairs needed for our existing underground storm drain pipes, as well as significant "bottlenecks" in the drainage system. In July 2023, Neill Engineers was issued a $159,100 Amendment to their Professional Services Agreement to design the Acacia Way headwall, and storm drainage upgrades along Eleventh Avenue (Carmelo to San Antonio), along Lincoln Street, from First to Second, along Second Avenue, from Lincoln to Monte Verde, and along Santa Fe from Eighth Avenue to the MTNP outfall. Remaining funding, of approximately $414,000, should be carried over into FY 2024/25 for construction, and additional funding will be required to complete this project. Status: Design is 90% complete. Environmental documentation is currently underway for two locations, and one easement will need to be acquired prior to bidding. With a construction cost estimate at roughly $1M, additional funding will be needed as discussed in Section 4A below. 

• Facility Renovation Projects ($649,000): Six facility renovations were originally programmed with this Project. As noted above, two projects will be completed by the end of FY 2023/24 - the Harrison Memorial Library and Sunset Center painting projects - and two projects are recommended to be cancelled or deferred - the HML Backup Generator and HML Carpet Replacements which are assumed to be integrated into the Library Master Plan Program. Thus, the remaining funds of approximately $283,600 should be carried over into FY 2024/25 to fund construction of the remaining two projects which are for the City Hall Roof Replacement and the Sunset Center Cottage Window Repairs. Status: The City Hall Roof contract was extracted from a larger, bundled facilities renovation project which resulted in very high bid proposals which were subsequently rejected by Council. This project is anticipated to be advertised for bids this Spring with construction scheduled for the summer. The Cottage Window Repairs will be advertised for bids following the City Hall roof replacement. Supplemental funding is being requested for the City Hall Roof and Cottage Window Repairs Projects as discussed below in Section 4A.

• Library Master Plan, Phase II-IV ($100,000): This project complements the Library’s Strategic Plan objective to develop facility plans for the Harrison Memorial and Park Branch Library buildings. The Harrison Memorial Library is 96 years old, and the Park Branch Library was last significantly remodeled 35 years ago. Phases II-IV will encompass community outreach, conceptual designs, and construction documents for initial renovation contracts. Renovations to the facilities are intended to ensure that both library facilities are able to continue to serve the community well into the future. Status: A Request for Proposals is being prepared to retain an architect to design the proposed renovations. Carmel Public Library Foundation will be embarking on a significant fundraising campaign to support proposed renovations to both library buildings.

•  Mission Trails Nature Preserve 3 Stream Stability/Drainage Projects ($85,000): This project, which consists of the first three of eight stream restoration and erosion control measures recommended by the MTNP Stream Stability Study, is partially funded by a California State Parks Per Capita Grant in the amount of $178,000. Acquisition of three environmental permits from regulatory agencies delayed the project for one year. Remaining funding of approximately $67,000 should be carried over in Fiscal Year 2023/24 for construction. Status: This project is currently being advertised for construction bids with an  estimated cost of $510,000  and a bid opening scheduled for March 19^th. It is anticipated that the remaining CIP Contingency funds will be required to award the construction contract. Further, supplemental funding may be required as discussed in Section 4A below.

• Police Building Project ($3,239,000 - Strategic Priority):  In January 2023, Council formed an Ad Hoc Committee, and in June 2023, awarded a $300,000 Professional Services Agreement to Indigo Architects. In FY 2023/24, Indigo prepared a draft Condition Assessment Report and developed Police space programming needs. In January 2024, the results of these tasks were introduced to Council with preliminary recommendations for advancing the project into schematic design to consider the possibility of constructing a new Police Building at a different site, or significantly renovating the Police/Public Works building at the existing site. Several public meetings were held to solicit public input. In addition, a number of urgent safety repairs were completed in the Police Building, including electrical panels, steel doors, security systems, Dispatch Room renovation, and others. The FY 2023/24 project balance of approximately $2.6M to $2.8M should be carried over into FY 2024/25 to cover remaining costs for schematic design, cost estimating, and potentially commencing design development of a selected alternative. Funding should also be earmarked to continue with 4Leaf project management services and to make necessary safety repairs in the building. As listed in Section 4C below, two repairs are proposed to be funding from this project account: replacement of a garage roll up door for $30,000, and installation of a covering over the emergency generator for $15,000. Status: Additional public outreach in progress.

• Scenic Pathway Hardscape Renovations ($100,000 City, $100,000 Donations): Carmel Cares continues to improve the Scenic Pathway. City expenses to date from this fund in FY 2023/24 has been minimal and includes additional lumber and hardware for barrier rail improvements. Proposed improvements along the Pathway include: signage, irrigation repairs, pathway trim edging, decomposed granite repairs, and other hardscape improvements. Remaining funds should be carried over into FY 2024/25. Also, Council requested staff and Carmel Cares to develop a holistic game plan to cover the complete renovation of the Pathway. Status: This game plan is currently under review as it may trigger State public works contracting regulations.

• Shoreline Infrastructure Repairs ($350,000): The first phase of the Coastal Engineering Study included a Shoreline Condition Assessment. The Assessment concluded that 2-4 existing seawalls need repairs, with the Fourth Avenue Outfall as the highest priority. Similarly, of the 11 beach access stairs, 9 need repairs with four stairs now closed due to damage resulting from winter storms. Finally, of the 6 rock revetments, 4 need repairs, 3 of which are high priority. Project funding for FY 2023/24 was set at $250,000; however, at the March 4, 2024 meeting, Council is anticipated to reallocate $100,000 that was originally earmarked to launch the Coastal Engineering Study, Phase 2 into this project, because Phase 2 is fully funded by the Coastal Commission LCP Grant. In November 2023, Council awarded an Amendment to the Professional Services Agreement with Wallace Group to provide project management services for this project for a fee of $64,485. The remaining funds should be carried over into FY 2024/25. Status: A Request for Proposal required to retain a consultant with expertise in environmental permitting, coastal and structural engineering, and cost estimating has been prepared. RFP release is pending consultation with the California Coastal Commission, staff evaluation of wooded stairs that can be repaired by City crews, and City emergency permitting.

• Sunset Center – North Lot Electrical Panel ($100,000): In July 2023, Council awarded a $64,560 Professional Services Agreement to Advance Design Consultants for electrical engineering services associated with three projects, including this project for a fee of $18,240. Based on the 30% design plans and consultations with PG&E and Sunset Center, the project will be able to provide EV charging stations all along the west wall of the parking lot. A two-pronged approach is being pursued. First, the existing, deteriorated electric panel along the Eighth Avenue ADA ramp will be relocated down into the parking lot and rebuilt. This relocated panel will be for commercial service for the parking lot lights. A new PG&E transformer (to be furnished by PG&E at no cost to the City) and electrical panel will also be installed to provide power to the proposed, and future, EV charging stations at discounted energy rates. It is anticipated to 3CE will provide a reimbursement for EV charging stations, but for an amount currently unknown. Remaining funds should be carried over into FY 2024/25. Status: Proceeding to 60% design, and engaging PG&E to design the new transformer.

4.  Potential Capital Improvement Projects for FY 2024/25

While 16 capital improvement projects were completed, or are anticipated to be completed during FY 2023/24, there are still 14 active projects that should be carried over into FY 2024/25. Numerous new projects have been identified, a majority of which were previously included in the prior 5-Year CIP forecast, and all project are needed and worthwhile. The following is a list of the most pressing or urgent projects as identified by staff. Therefore, the list below certainly does not identify all priority projects.

The fiscal impact to the FY 2024/25 Budget for Capital Improvement Projects cannot yet be assessed until specific capital projects are tentatively selected by Council. In other words, screening the projects at the March 5th meeting, and subsequently fine-tuning the list, will allow staff to focus on the highest priority projects, prepare project descriptions, and refine cost estimates for incorporation into the final CIP and Budget for FY 2024/25.

This year, staff will be presenting the proposed projects under three different categories as follows:

•  Carry-Over Paving, Drainage, and Facility Renovation Projects described in Section 3 above, but which require additional funding to proceed with construction
•  Potential New Projects funding by the Vehicle and Equipment Fund
•  Potential New Projects funding by the Capital Improvement Fund

A) Supplemental Funding for Carry-Over Paving, Drainage, and Facility Renovation Projects

At the November 2023 meeting, Council awarded a contract in the amount of $1,139,566 to Monterey Peninsula Engineering for construction of the Base Bid work for the FY 22 Paving Project. It was noted in that staff report that bid prices for paving work have significantly escalated since these prior year paving projects were initially estimated. Furthermore, the Concrete Street Repair Project had a significant, but necessary, scope increase associated with Ocean Avenue structural repairs and improvements to transitions to the intermittent side streets. At that time, staff suggested that no additional paving project designs commence for approximately two fiscal years until funding can be programmed to catch up with construction.

Each FY, the City is obligated to invest Maintenance of Effort funding to maintain our transportation infrastructure to qualify for Measure X, SB-1, and other external funding. For FY 2024/25, with a City MOE of $660,000 plus an estimated TAMC match of $440,000, the total available to help catch up on the above carry-over projects is $1,100,000.

Staff proposes to reformulate the remaining portion of the FY22 and full FY24 paving projects listed above, and fully fund these two projects for construction in FY 2024/25 as follows. Combine Project 1 (FY 22 Bid Additives) plus Paving Project 3 (FY 24 Paving Projects). Total cost estimate needed for construction = $2,517,000.  Funding available for Project 3 ($918,000), plus new MOE and TAMC funding for FY 25 ($1,100,000), plus reallocate $499,000 of the $792,000 from Concrete Streets Project 2, for a total funding of $2,517,000. This approach will allow us to complete two major paving projects next year. However, only $293,000 will remain available for the Concrete Streets, a $2.8M project, for FY 2025/26. Unless other funding is identified to cover this shortfall, the MOE and TAMC match for FY 2025/26 and FY 2026/27 should also be earmarked to cover the cost for construction of the Concrete Streets. This funding strategy is shown in the attached 5-year CIP. 

For the Drainage System Repairs Project 5 above, additional funding of $638,000 is requested for FY 2024/25 to proceed with construction.

For the MTNP Drainage Project 6 above will have more precise costs following the upcoming bid opening. It is anticipated that using the available funding of $67,000 carry-over funding, plus the $178,000 Per Capita Grant (not yet received), plus the remaining balance of the CIP Contingency Fund of $163,000, we should be able to award the Base Bid of two of the three projects, and a supplemental allocation of $102,000 for FY 2024/25 should be able to cover the third project.

The City Hall Roof Replacement and Sunset Center Cottage Window Repairs were both included in the FY 2023/24 Facility Renovation Project, with four other projects, and which had an initial budget of $649,000. Two of the four projects are recommended to be cancelled/deferred in Section 2 - Harrison Memorial Library Carpeting Replacement and Backup Generator Project.  

A construction contract in the amount of $392,150 was awarded to Color New Company in January 2024 for the Sunset Center North Wing Exterior Painting Project and the Harrison Memorial Library Exterior and Interior Painting Project. A deductive change order of $85,000 was negotiated with the contractor due to the reduction in interior painting in the library. Additional costs for this project included project management services by Ausonio, Inc., architectural services by Ten Over Studio, and hazardous materials testing and abatement monitoring by M3 Environmental.  An estimated balance of $283,000 is recommended to be carried over into FY 2024/25 to cover the above Projects 7 and 8; however, a combined Supplemental allocation of $267,000 will be needed to complete these projects.

Supplemental Funding Summary

B)   Potential New Projects: Vehicle and Equipment Fund

C)  Potential New Projects: Capital Improvement Fund

Resource Limitations

Please refer to the Fiscal Impact section of the report for anticipated funding available for the Vehicle and Equipment and Capital Improvement Funds for FY 2024/25. Available funding is recommended to be allocated to already designed, "shovel ready" projects that can proceed into construction with supplemental funding.  As shown in Section 4A above, $1,667,000 is needed to complete these projects. Therefore, the list of projects in Sections 4B (Vehicle and Equipment Fund) and 4C (Capital Fund), should be significantly trimmed back to meet the anticipated budget, despite the fact that each project has merit. 

Staffing capacity has also an ongoing concern. Since the CIP funding resumed following the Covid Pandemic, the City has relied on three outside project management consultants (4Leaf, Ausonio, Inc., and Wallace Group) to manage (currently) 10 capital projects. While they are providing excellent services, the added cost of outside project management is not sustainable in the long term and has contributed, along with inflation, material availability, and construction labor shortages, to the higher than estimated project costs. Also, the in-house project manager is working on an additional eight capital projects, as well as several large utility permits and special projects. As discussed in Section 3 above, 14 projects are proposed to be carried over into FY 2024/25. Even if no new capital projects are funded for FY 2024/25, there is still a full year of workload for our project manager and project management consultants.  

5.  Introduction of the Updated 5-Year Capital Improvement Plan

The updated 5-year CIP Exhibit is shown in Attachment 1. Although only the first Fiscal Year (2024/2) would be funded as part of the City Budget, the remaining 4 years serve as a planning tool to identify in advance anticipated future projects.

 The 5-year CIP is a “snap shot” in time of anticipated needs for future infrastructure revitalization funding in the outer years. As a dynamic planning document, the CIP for Years 2-5 is subject to change as updated information becomes available. A multi-year plan also accommodates scheduling larger projects into multiple years to allow more projects to be underway concurrently, and to allocate construction funding only when those funds are needed.

Note that the needs for infrastructure renewal and facility repairs far exceed the anticipated revenue over the subsequent four years as well.

The following are key projects, by asset category and preliminary budget estimates, for Years 2-5 only:

• Drainage: Includes highest priority drainage repairs and upsizing for 20-year storm events as identified in the 2023 Storm Drain Master Plan Update, bottleneck reconfigurations, and CDS reconstruction = $3.33M.

• Streets: Annual paving MOE and TAMC match funding for Years 2 and 3 are earmarked for the FY 23 Concrete Street Repair Projects. For Years 4 and 5, traditional paving overlays, micro-surfacing treatments, slurry seals, sidewalk repairs, parking lot resurfacing, and a bicycle master plan are proposed = $3.44M City plus $1.81M external funds via TAMC.

• Facilities: As a placeholder, a total allocation of $22M is included to cover final design and construction of a Police Building Project (whether a new station or renovation of the existing building) plus launching the design of the Public Works building renovations. This major project will obviously require a dedicated funding source once a project concept is approved, and these “plug in” numbers need to be adjusted as more information and scheduling becomes available.  

Additional facility renovation projects include relocation and renovation of the Scout House wherein the sale of the existing parcel may offset the costs for renovation, critical repairs/code corrections to City Hall and the Fire Station, repairs to park restrooms, and facility condition assessments, painting, and railing repairs = $25.15M.

• Forestry Parks, and Beach: Design and construction of the remaining 5 MTNP stream stability projects should continue during this time. Funding for construction of the MTNP Laiolo Bridge is proposed in Year 2, for a total of = $1.50M.

• Fleet and Equipment: Replace aging Police, Fire, and Public Works vehicles with Electric Vehicles whenever possible. Replace broken and outdated heavy equipment, including Street’s dump truck and asphalt patch truck, Forestry’s bucket truck and water truck, Police’s speed radar trailer and animal control vehicle, and other vehicles and equipment nearing the end of their useful lives. Complete funding for the Police radios lease and the ambulance purchase = $1.48M plus $0.12M 3CE rebates.

• Environmental and Climate Change: Shoreline infrastructure repairs, notably reconstruction of the Fourth Avenue outfall/wall, as well as for stairs and revetments, and climate action projects and energy upgrade initiatives = $3.85M.

• IT: Equipment replacements, security upgrades, Police records management system, and GIS applications expansion = $0.58M.

• Library: It is difficult to estimate costs for the library as major renovations proposed under the Library Master Plan are largely subject to donor funding. As a placeholder, for Years 2-5, the 5-Year CIP plan assumes the design and construction of the first two or three renovation projects with a cost of $4M, primarily funded by private donations, but with a City matching contribution of $200,000 per year = $0.8M plus $3.2M donations. These “plug in” numbers need to be adjusted as more information and scheduling becomes available.

Years 2 - 5 Needs Summary:

The total estimated investment of City funds identified for Years 2-5 is $42.2M. This amount clearly exceeds anticipated CIP fund revenues over those four years of $5.1M plus any ending fund balance that may be available in those future years. However, without proper investment, the City's infrastructure noted will further decline into worsening conditions with more costly deferred repairs. Therefore, additional revenue sources should be considered.

6.  Council Guidance

Staff is seeking Council's direction on the following issues. Note that this is just the first review and screening of potential projects. Staff will return at the April  2, 2024 meeting to refine the potential projects based on comments received on March 5th.

• Acceptance of the 15 capital improvement projects completed, or anticipated to be completed, in FY 2023/24 as listed in Section 1 above

• Confirmation to cancel or modify the 4 projects described in Section 2 above

• Confirmation to carry over 14 projects from FY 2023/24, including their remaining project funds, into FY 2024/25 as described in Section 3 above

• Review potential projects for the FY 2024/25 CIP, including supplemental funding for carry over paving, drainage, and facility renovation projects, and new projects identified for funding by the Vehicle and Equipment and Capital Improvement Funds as listed in Section 4 above

• Review the preliminary 5-Year CIP, Attachment 1, including the preliminary list of identified projects for Years 2 - 5 as described in Section 5 above

• Add, delete, or modify identified projects considering public comments and as desired by Council, and direct staff to return at the April meeting to refine the list of proposed projects for a second review

Upon Council’s tentative approval in April, the CIP document will be presented to the Planning Commission in May for a General Plan consistency review as required by State law and the City’s Municipal Code.

The preliminary amount of CIP project funding available to be carried over into FY 24/25 is approximately $5.9M. This amount will be refined during the remainder of the current FY 23/24. For comparison purposes, approximately $6.8M was carried over from prior fiscal years into the FY 23/24 CIP budget.

The additional fiscal impact for FY 24/25 cannot yet be assessed until specific projects are selected by the City Council.

Carry-Over Paving, Drainage, and Facility Renovation Projects requiring Additional Funding: Staff recommends that the FY22 and FY24 paving projects, two drainage projects, and two facility renovation projects, most of which have already been designed, bid, and/or are “shelf ready” for bidding, be funded before allocating capital funds to new projects that have not yet been started. As noted above a total of $1,667,000 of City funds are needed to complete these projects

Potential New Projects - Vehicle & Equipment Fund: Six (6) new vehicle and equipment projects are proposed for funding at an estimated cost of $545,000. The City recognizes a 10% reserve in the Vehicle and Equipment fund balance for replacements. For FY24/25, the Vehicle & Equipment Fund reserve balance is estimated to be $310,000.  

Potential New Projects - Capital Improvement Fund: Fourteen (14) additional projects were listed above with a total estimated cost of $2,955,000. Staff recommends that this list be slimmed down to fit into the available budget.

None for Fiscal Year 2024/25.