HomeMy WebLinkAbout12-08-2022 REOC Agenda PacketCity of San Luis Obispo, Agenda, Planning Commission
Agenda
REVENUE ENHANCEMENT OVERSIGHT COMMISSION
Thursday, December 8, 2022
5:30 p.m. REGULAR MEETING Council Chambers
990 Palm Street
San Luis Obispo, CA
CALL TO ORDER Chair Jim Hamari
ROLL CALL : Commissioners Christopher Ellwood, Tony Skapinsky, Anthony Bozzano,
and Vice Chair Keith Dunlop
PUBLIC COMMENT: At this time, people may address the Committee about items not on the
agenda. Persons wishing to speak should come forward and state their name and address.
Comments are limited to three minutes per person. Items raised at this time are generally referred
to staff and, if action by the Committee is necessary, may be scheduled for a future meeting.
CONSIDERATION OF MINUTES
1. Minutes of the Revenue Enhancement Oversight Commission of September 22, 2022
BUSINESS ITEMS
2. FY 2022-23 First Quarter Local Revenue Measure Review
(Natalie Harnett – 15 minutes)
Recommendation: Review an update on Local Revenue Measure (LRM) actuals and trends
as of the first quarter of Fiscal Year 2022-23 in addition to any updates on current or ongoing
LRM funded capital projects and programmatic efforts.
3. 2021-22 Annual Community Report and Citizen Oversight Meeting
(Natalie Harnett – 15 minutes)
Revenue Enhancement Oversight Commission Agenda for December 8, 2022 Page 2
Recommendation: 1) Discuss concepts and provide direction for the 2021-22 Annual
Community Report 2) Appoint two Commissioners to serve on a subcommittee to assist in
the development of the report 3) Discuss the 2022-23 Annual Citizen Oversight Meeting.
4. Update on recommended changes to the City’s Capital Improvement Plan Budget and
Fiscal Policies
(Emily Jackson – 15 minutes)
Recommendation:
1. Receive a report to follow up on the recommended approach to the budgeting and
management of the Capital Improvement Plan, including:
a. Recommended deferral of further discussion about budget appropriation to
‘Funding Buckets’ for Asset Maintenance and Asset Replacement projects;
and
b. Development of policy language to clarify management of the Capital
Improvement Plan.
2. Provide input and guidance to staff as necessary.
COMMITTEE ANNOUNCEMENTS
ADJOURNMENT
The next Regular Meeting of the Revenue Enhancement Oversight Commission which will
also serve as the 2022 -23 Annual Citizen Oversight Meeting is scheduled for January 26,
2023.
The City of San Luis Obispo wishes to make all of its public meet ings accessible to the
public. Upon request, this agenda will be made available in appropriate alternative formats to
persons with disabilities. Any person with a disability who requires a modification or
accommodation in order to participate in a meeting should direct such request to the City Clerk’s
Office at (805) 781-7100 at least 48 hours before the meeting, if possible. Telecommunications
Device for the Deaf (805) 781-7107.
Meeting audio recordings can be found at the following web address:
http://opengov.slocity.org/weblink/1/fol/61028/Row1.aspx
DRAFT Minutes – Revenue Enhancement Oversight Commission Meeting of September 22, 2022
Page 1
Minutes - DRAFT
REVENUE ENHANCEMENT OVERSIGHT COMMISSION
Thursday, September 22, 2022
Regular Meeting of the Revenue Enhancement Oversight Commission
The City Clerk administered the oath for incoming commission member Anthony Bozzano.
CALL TO ORDER
A Regular Meeting of the San Luis Obispo Revenue Enhancement Oversight Commission was
called to order on Thursday, September 22, 2022, at 5:35 pm by Vice-Chair Hamari.
ROLL CALL
Present: Commissioners Skapinsky, Ellwood, Dunlop, Bozzano, and Vice-Chair Hamari
Absent: none
Staff: Natalie Harnett, Principal Budget Analyst
Brigitte Elke, Finance Director who also served as Recording Secretary
PUBLIC COMMENT ITEMS NOT ON THE AGENDA
None.
--End of Public Comment--
APPROVAL OF MINUTES
1. Consideration of Minutes of the Regular Revenue Enhancement Oversight Commission
Meeting of May 12, 2022.
ACTION: UPON MOTION BY COMMISSIONER DUNLOP SECONDED BY
COMMISSIONER SKAPINSKY, CARRIED 5-0-0, the Revenue Enhancement Oversight
Commission approved the Minutes of the Regular Revenue Enhancement Oversight
Commission Meeting of May 12, 2022, as presented.
BUSINESS ITEMS
2. Review Purpose of the Revenue Enhancement Oversight Commission and Elect Officers
Staff presented the Municipal Code section pertaining to the Revenue Enhancement Oversight
Commission and the advisory body bylaws.
Public Comment
DRAFT Minutes – Revenue Enhancement Oversight Commission Meeting of September 22, 2022 Page 2
None
ACTION: UPON MOTION BY COMMISSIONER SKAPINSKI SECONDED BY
COMMISSIONER ELLWOOD CARRIED 5-0-0, the commission nominated Jim Hamari
to serve as commission chair.
ACTION: UPON MOTION BY COMMISSIONER SKAPINSKI SECONDED BY
COMMISSIONER HAMARI CARRIED 5-0-0, the commission nominated Keith Dunlop to
serve as commission vice-chair.
3. Unaudited FY Year-End Local Revenue Measure Review
The City’s Principal Budget Analyst, Natalie Harnett, provided a presentation and responded
to Commissioner inquiries. The commission considered the recommended use of one-time
over-realized revenue to move to the City Council for consideration.
Public Comment
None
ACTION: UPON MOTION BY COMMISSIONER DUNLOP SECONDED BY
COMMISSIONER SKAPINSKI CARRIED 5-0-0, the commission recommends to the City
Council the use of unassigned fund balance from the Local Revenue Measure from FY2021 -
22 as presented.
4. Discussion on the City’s Capital Improvement Plan and Budget Strategies
The City’s Capital Project Process Improvement Manager presented the new strategy for the
Capital Improvement Plan. Staff responded to questions regarding the new approach, the
fiduciary oversight, and the information that would accompany the new approach during
budget review and consideration. No action was taken by the commission.
Public Comment
None
COMMENT AND DISCUSSION
5. Staff Updates - none
6. Commission Communications - none
ADJOURNMENT
The meeting was adjourned at 8:00 p.m. The next Regular Revenue Enhancement Oversight
Commission meeting is scheduled for December 8, 2022, at 5:30 p.m., in the Council Hearing
Room, 990 Palm Street, San Luis Obispo, California.
DRAFT Minutes – Revenue Enhancement Oversight Commission Meeting of September 22, 2022 Page 3
APPROVED BY THE REVENUE ENHANCEMENT OVERSIGHT COMMISSION: XX/XX/2022
Revenue Enhancement Oversight Commission
Agenda Report Meeting Date: 12/8/22
Item Number: 2
DATE: December 8, 2022
FROM: Brigitte Elke, Finance Director
Prepared By: Natalie Harnett, Principal Budget Analyst
SUBJECT: 2022-23 FIRST QUARTER LOCAL REVENUE MEASURE UPDATE
RECOMMENDATION
Review an update on Local Revenue Measure (LRM) actuals and trends as of the first quarter of Fiscal
Year 2022-23 in addition to any updates on current or ongoing LRM funded capital projects and
programmatic efforts.
DISCUSSION
Background
The purpose of the quarterly LRM reports is to enhance transparency and provide the Citizens’ Revenue
Enhancement Oversight Commission (REOC) with regular updates on actual revenue received from the
essential services transactions(sales) and use tax as well actual expenditures on projects and programs
that are funded by the measure. The reports will help bring the REOC along through the year and better
prepare the commission to make budget recommendations to the City Council.
The development of the LRM budget for the 2022-23 budget year was guided by the City’s commitment
to advancing its’ Major City Goals and Long-term Community Services and Investment Priorities.
Revenue Trends
While the U.S economy has recovered from the pandemic-driven downturn, new challenges have
emerged. Higher labor and raw material costs due to supply chain issues, along with inflationary
pressures drive taxable good prices upward and increase the City’s sales tax revenue. However higher
prices will ultimately reduce consumer demand and increase the City’s own expenditure costs. As of the
end of the first quarter, LRM revenue remains very strong. Given the waning of consumer confidence
and threats of a looming recession, a strong first quarter could help offset a potential slowdown later in
the fiscal year.
Sales Tax Forecasting Considerations:
• Economic Trend Forecasts
• Rising interest rates
• Supply chain and labor shortages
• Inflation
• Consumer travel and purchasing behavior during holiday season
City of San Luis Obispo, Title, Subtitle
City of San Luis Obispo, Title, Subtitle
Item #2 2022-23 First Quarter Local Revenue Measure Update
Table 1: Year-to-date Measure G-20 Revenue (Compared to prior year)
Q1 Measure G-20 Revenue Received
Fiscal Year July August September Total Q1
Revenue
% of Annual
Revenue
FY 2021-22 $2,090,112 $2,759,614 $2,091,997 $6,941,723 24%
FY 2022-23 $2,415,414 $2,729,001 $2,393,719 $7,538,134 28%1
Variance from prior year 16% -1% 14% 9%
Expenditures Overview
The Local Revenue Measure funds 45 positions and over 85 CIP Projects in the 2022-23 Budget. The
table below shows the expenditures by priority.
Table 2: Expenditures by LRM Priority 2022-23
Operating Budget
2022-23 Capital
Budget
Address Homelessness $ 764,069
Community Safety and Emergency Preparedness $ 1,992,685 $ 1,520,700
Creek and Flood Protection $ 742,816 $ 550,000
Economic Development and Business Retention $ 757,375 $ 117,500
Open Space/Natural Areas Preservation and
Maintenance $ 709,019 $ 730,000
Other Services and Projects $ 1,165,820 $ 1,230,817
Protect Financial Stability $ 404,558
Safe and Clean Public Areas $ 586,454 $ 2,710,000
Street Maintenance and Transportation (includes bicycle
and pedestrian improvements) $ 1,084,129 $ 6,721,573
Youth/Senior Services and Recreation Facilities $ 395,492 $ 1,701,500
Allocation to Capital Reserve $ 2,697,500
Grand Total $ 8,602,418 $ 17,979,590
One-time Appropriations made at 2021-22 Year End
Based on unaudited financials presented in the 2021-22 Year-End Budget Report, the Local Revenue
Measure Fund had an unassigned fund balance of approximately $3.8 million. On October 4th, 2022 City
Council approved the REOC’s recommendation to allocate some of that funding towards the emergent
one-time budget needs listed below.
1 Based on budget for FY 2022-23.
City of San Luis Obispo, Title, Subtitle
City of San Luis Obispo, Title, Subtitle
Item #2 2022-23 First Quarter Local Revenue Measure Update
Table 3: Local Revenue Measure - Allocation of Unassigned Fund Balance
Unassigned LRM Fund Balance $ 3,737,952
Type 3 Wildland Engine Replacement Additional Funding $ 85,000
Fire Recruit Academy to Address Paramedic Shortage $ 110,000
Accelerate Fire Pumper (Engine 4) Replacement $ 900,000
Public Works - Contract Coordinator $ 65,846
Allocation to Capital Reserve $ 907,000
TOTAL $ 2,067,846
Remaining unassigned fund balance $ 1,670,106
To see the full list of LRM funded expenditures, please visit slocity.org/budget.
Project Updates
While the City has made significant progress on delivering capital projects, it is currently constrained by
unprecedented labor and supply chain shortages that are affecting the entire world. Locally, these include
labor market shortages, significant construction activity in our area that are increasing local competition
for design, inspection, and construction services.
Orcutt Tank Farm Roundabout: Construction complete.
2022 Roadway Sealing: Project in construction. The remaining items of work are striping and markings,
green paint, curb paint, signs, and punch list items which are expected to be completed early December.
Signal improvements at Marsh and Santa Rosa will be delayed until February 2023 when signal
equipment is expected to be delivered. Project completion is expected in March 2023.
Area 6 & 7 Curb Ramps: Construction complete.
Santa Rosa at Monterey Intersection Improvements: Project is in suspension pending the delivery of
signal equipment. The project is expected to resume in June 2023 and is expected to be completed be
completed August 2023.
Capital Reserve Balance
In June 2021 and based on the REOC’s recommendation, the City Council adopted a comprehensive
Fund Balance and Reserve Policy (R-11250). The policy states that the City will maintain a committed
reserve of 20% of the capital improvement plan budget from the Local Revenue Measure for
unanticipated costs. Use of funds from the Capital Projects Reserve Fund can be made upon Council
approval as necessary during any fiscal year. The chart below shows the current balance of the reserve.
City of San Luis Obispo, Title, Subtitle
City of San Luis Obispo, Title, Subtitle
Item #2 2022-23 First Quarter Local Revenue Measure Update
Table 4: 2022-23 Capital Projects Reserve Fund
Beginning Balance (July 2022) $ 4,008,708
Use of Funds:
Cerro San Luis Greenway2 - Project was identified with the 2021-23
Financial Plan but budget had not been fully appropriated due to a
pending grant. Cost escalation required use of the capital reserve.
$1,000,000
Cheng Park – Increase in project costs. $200,000
City Hall Meeting Room Tenant Improvements - Increase in project
costs. $160,000
Fire Station 1 Roof Repairs - Structural repair work associated with the
unexpected water damage to the roof’s structural members. $350,000
Railroad Safety Trail - Increase in project costs. $380,000
Ending Balance of Capital Reserve as of 11/15/2022 $ 1,918,708
Looking forward
As the City enters calendar year 2023, financial planning will commence at full speed. Staff are bringing
FY 2021-22 audited financials to Council on January 17, 2023 which will show the unassigned fund
balance for LRM. Council can appropriate unassigned fund balance at mid-year or as part of the 2023-
25 Financial Plan. The most difficult challenge faced in financial planning will be addressing the
increased cost of capital projects originally planned in 2023-25. Based on the latest revenue forecast,
there is a significant gap between project costs and available resources. The City’s CIP Review
Committee is currently engaged in a rigorous project ranking and review process and will bring a
proposed project list to the REOC in March 2023. An updated five-year fiscal forecast, including the
LRM revenue projection, will be provided at the 2022-23 Mid-year Review on February 7, 2023.
2 In addition to the $1 million from the Capital Reserve, $1.2 million of LRM funds were re-appropriated from the
Infrastructure Investment Fund for this project.
Revenue Enhancement Oversight Commission
Agenda Report Meeting Date: 12/8/22
Item Number: 3
DATE: December 8, 2022
FROM: Brigitte Elke, Finance Director
Prepared By: Natalie Harnett, Principal Budget Analyst
SUBJECT: 2021-22 ANNUAL COMMUNITY REPORT AND CITIZEN OVERSIGHT
MEETING
RECOMMENDATIONS
1. Discuss concepts and provide direction for the 2021-22 Annual Community Report; and
2. Appoint two Commissioners to serve on a subcommittee to assist in the development of the report;
3. Discuss the 2022-23 Annual Citizen Oversight Meeting.
DISCUSSION
Chapter 3.15 of the Municipal Code (Essential Services Transactions [Sales] and Use Tax) includes
specific citizen oversight and fiscal accountability provisions. These provisions include an annual
community report and annual citizen oversight meeting:
Annual Community Report. A written report shall be reviewed at a public hearing by the Revenue
Enhancement Oversight Commission, and a summary will be provided annually to every household
in the community detailing how much revenue is being generated by the measure and how funds are
being spent (MC 3.15.040.E).
Annual Citizen Oversight Meeting. An invitation will be extended each year to the entire
community inviting them to participate in a forum to review and discuss the use of the revenue
generated by this measure. City staff will also be available to meet with any group that requests a
specific briefing with their members to discuss and answer questions about the revenues generated
by the measure and their uses (MC 3.15.040.F).
Annual Community Report
The annual community report is produced based on revenues and expenditures from the previous fiscal
year. The most recent report was published for Fiscal Year 2020-21 (Attachment A). This report
included:
1. An update regarding the economic impacts of the COVID-19 pandemic.
2. Background of the sales tax measure
3. Local Revenue Measure Ballot Language (Measure G)
4. Revenue overview including historic data
5. How Local Revenue Measure funds were used including Project Spotlight descriptions and
photography
6. Planned Local Revenue Measure uses for the following year
City of San Luis Obispo, Title, Subtitle
City of San Luis Obispo, Title, Subtitle
Item #3 2021-22 Annual Community Report and Citizen Oversight Meeting
7. Detailed Local Revenue Measure projects and services along with expenditures
8. REOC members
Although staff recommend maintaining the overall style of the current report because it in line with City
branding and will be familiar to the public. The REOC could consider concepts and provide direction on
ways to enhance this report.
Annual Citizen Oversight Meeting
The Annual Citizen Oversight Meeting is intended to provide an opportunity for the public to learn about
how funds generated from the Local Revenue Measure were spent and provide feedback and input. The
meeting satisfies the obligations identified in City’s Municipal Code related to the Local Revenue
Measure (MC 3.15.040.F).
When the Annual Citizen Oversight Meeting occurs in the same year as the development of the City’s
two-year financial plan (as it does this year), the meeting is included as a part of the biennial Community
Forum. The Community Forum is a joint meeting with the City Council and is associated with the
financial plan development process.
The Community Forum is scheduled for January 26, 2022 at 6 pm at the Ludwick Center in San Luis
Obispo. More details will be provided to the REOC as they become available.
Streets Reconstruction and Resurfacing
The Local Revenue Measure helps fund the annual
resurfacing and reconstruction of local streets. New
road designs will help improve bicycle safety and
promote multi-modal transportation. SPOTLIGHT PROJECT
MARSH STREET BRIDGE REPLACEMENT
PAGE 9
Learn about the City's milestone projects that included
the replacement of the 100-year old Marsh Street
Bridge.
HOW DID WE SPEND REVENUES?
PAGE 7
Read about how Local Revenue Measure funds were
spent in 2020-21
LOCAL REVENUE MEASURE
ANNUAL COMMUNITY REPORT
Fiscal Year 2020-21
CITY OF SAN LUIS OBISPO 1
Specific roadway improvements for
2020-21 included the installation of
buffered bike lanes as well as
pedestrian crossing beacons along
High and Nipomo Street.
Local Revenue Measure funding was used to replace the Meadow
Park pedestrian bridges and re-surface the pedestrian pathways.
The project addressed sever cracking, rutting and potholes along
the pathways. This project was completed in November 2021.
2
This report highlights the revenue and uses of the Local Revenue
Measure for the time frame beginning July 2020 and ending June
2021. At the time of budget adoption, the forecasted revenue
projection was about 10% lower than the pre-pandemic forecast. In
light of the reduced revenue forecast, all LRM-funded projects
were evaluated and prioritized based on how they supported
essential services to the community and aided economic recovery
from Covid-19 impacts.
The Revenue Enhancement Oversight Commission (REOC) will
continue its oversight role on the use of the Local Revenue
Measure to support accountability, transparency, and public
engagement efforts. The Local Revenue Measure continues to
be a vital resource to deliver the community's highest priorities
and support San Luis Obispo's economic stability, recovery and
resiliency. Community members can learn more about the Local
Revenue Measure by visiting www.slocity.org/localrevenue.
3
Rangers funded by the Local Revenue Measure have been working
hard to unveil the City's latest trail project, Miossi Open Space. The
260 acre property currently has 3.1 miles of trail with an additional
3+ miles planned for the future. The trail includes a 12-foot wide
panoramic informational sign on the Open Space that allow users to
learn more about the nine sisters (Morros) history.
The Local Revenue Measure is a 1.5 percent local sales tax approved
by City voters in November 2020 and went into effect on April 1, 2021. It
replaced the previous .5 percent local sales tax approved by City voters
in November 2006. It helps protect and maintain operating services and
public infrastructure identified by the community such as
community safety, creek protection, addressing homelessness,
keeping public areas safe and clean, retaining local businesses,
youth/senior services, streets, open space/natural areas and other
vital services and facilities.
LOCAL REVENUE MEASURE BALLOT MEASURE
(MEASURE G20)4
The Local Revenue Measure helps fund road
work that makes city streets and pedestrian
crossings safer for the community.
"To protect the City of San Luis Obispo’s financial stability; maintain
fire/community safety, health emergency/disaster preparedness;
protect creeks from pollution; address homelessness; keep public
areas clean/ safe; retain local businesses; maintain youth/senior
services, streets, open space/natural areas, and other general
services, by extending voter- approved funding at a 1.5¢ (1.5%)
rate, providing approximately $21,600,000 annually until ended by
voters; requiring audits/ all funds used locally."
REVENUES 5
One of the major uses of Local Revenue Measure is for
annual asset maintenance, including the cost of
maintenance vehicles and equipment such as the
Street Sweeper. All City streets are swept on a regular
basis. Visit our interactive website to see the street
sweeping schedule: www.slocity.org/living/maps/street-
sweeping.
The Local Sales Tax revenue totaled $12.8 million in 2020-21, amounting to approximately 14.6 percent of general fund revenue. At the
time of budget adoption, the revenue projection was $7.3 million. Fiscal Year 2020-21 marked the first year that the City collected
additional revenue due to the increase in the tax rate (Measure G-20), which went into effect on April 1, 2021. The Local Revenue
Measure has generated more than $100 million since its original adoption in November 2006.MillionsFISCAL YEAR (JULY 1-JUNE 30)
Increase due to the new tax rate from
Measure G-20 (effective April 1, 2021).
Create Grant Funding Opportunities for Tenant Improvements (TIs)$2,000,000
Expand the SLO City Small Business Relief Grant Program $500,000
Increase Efforts to Support Downtown Vitality $425,000
Implement an Economic Development "Shop Local" Incentive $200,000
Homeless Service Support & Coordination $300,000
Total Investment $3,425,000
INVESTMENT INTO ECONOMIC RECOVERY 6
Add a little bit of body text
At the time that Measure G20 passed, there was an immediate need to invest in additional economic recovery efforts to support
businesses and homeless services to assist the community's most vulnerable. The additional revenue collected from the increased
tax rate had not been included in the adopted budget. Therefore; on December 8, 2020 Council approved the recommendation to
allocate $3,425,000 from the anticipated first quarter revenue from the augmented local transaction and use tax for economic
recovery and community assistance efforts to aid in the recovery of Covid-19.
Investment in Economic Development Efforts and
Homeless Services
23%
NEIGHBORHOOD
STREET PAVING
$2.12M
$617,000
PARKS AND
RECREATION/SENIOR
PROGRAMS AND
FACILITIES
7%
$1.1M
FLOOD
PROTECTION
12%
$302,000
CODE
ENFORCEMENT
3%
$655,000
TRAFFIC CONGESTION
RELIEF/SAFETY
IMPROVEMENTS
7%
$2.78M
PUBLIC SAFETY
30%
$480,000
BICYCLE AND
PEDESTRIAN
IMPROVEMENTS
5%*
$502,000
OPEN SPACE
PRESERVATION
6%
$645,000
OTHER VITAL SERVICES
AND CAPITAL PROJECTS
7%
$3.4 M**
COVID-19 ECONOMIC
RECOVERY AND
PUBLIC HEALTH AND
SAFETY
LOCAL REVENUE MEASURE USES IN 2020-21
2020-21 Local Revenue Measure funds were used on the following Council-adopted priorities:
The Local Revenue Measure funded two Code
Enforcement Officers and one Code Enforcement
Technician focused on promoting health and safety in
neighborhoods and increasing awareness of City
policies.
7
**One-time amount which was un-budgeted at the time of budget adoption. See page 6 for detail.
*Projects listed in the "Neighborhood Street Paving" category also include significant bicycle and
pedestrian improvements.
LOCAL REVENUE MEASURE USES IN 2020-21 8
Local Revenue Measure uses fall into two categories: operating programs and
capital programs.
Operating Uses: $2.4M // 26%
Capital Uses: $6.8M // 74%
To fund positions that provide community services
Examples of operating expenditures include funding for positions such as police officers,
open space rangers and flood control staff.
For every
$1 of revenue
generated by the Local Revenue Measure,
approximately
70¢ is paid by visitors
and
30¢ is paid
by City residents
( based on 2019 data)
To fund construction and investment in equipment
Examples of capital expenditures include construction of major projects like the Marsh
Street Bridge Replacement as well as the maintenance of City infrastructure.
The Local Revenue Measure helps fund fire fuel
reduction and flood control efforts. Rangers and
flood control staff are instrumental in making sure
that creeks are clear of debris.
PROJECT SPOTLIGHT 9
To highlight the historical significance of the original
bridge, energy-efficient LED fixtures were installed
that replicate the original kerosene fixtures that were
lit along the bridge every evening. The guardrails
mimic the historical structure as well.
Marsh Street Bridge Replacement
In January 2021, the City completed the Marsh Street Bridge
Replacement Project, which significantly improved the safety of a
major connection to Downtown San Luis Obispo. Revitalization of
the bridge is part of the City's ongoing efforts toward Downtown
Vitality.
The bridge, located between Osos and Santa Rosa Street at the San
Luis Obispo Creek crossing, has stood for over a hundred years and
was determined to be structurally deficient in 2008. Replacement of the
bridge was achieved thanks to the diligence and collaboration of many
agencies, contractors, and City staff.
PLANNED AND RECENTLY COMPLETED LOCAL
REVENUE MEASURE USES
10
The Local Revenue Measure is a critical revenue source for community investment. The City is committed to completing projects that maintain
infrastructure and support the delivery of essential services to residents and businesses.
Planned completion:
Spring 2022
Annual Downtown
Pavement Improvements
Completed November
2021
Sinsheimer Irrigation and
Stadium Drainage Completed December
2021
Laguna Lake Dredging
Planned completion:
Summer 2022
Orcutt/Tank Farm
Roundabout
Planned completion:
Spring 2022
Railroad Safety Trail
(Taft to Pepper)
The Downtown Pavement Improvements project is a
multi-million dollar project that will remove and replace
asphalt, fix damaged curbs and gutters, upgrade ADA
ramps, and apply slurry seal and striping.
Completed December
2021
Mission Plaza Railing
Add a subheading
Storm Drain System Replacement
Broad and Leff Culvert Repair
Foothill Storm Drain Repair
Bullock Lane CMP Replacement
Creek and Flood Protection (FTE = 6)
Subtotal
CAPITAL PROJECTSOPERATING PROGRAMS
Project Title 2020-21
(BUDGET)
2020-21
(ACTUAL)
2020-21
(BUDGET&
CARRYOVER)
2020-21
(ACTUAL)
Subtotal $ 521,322 $ 450,391$ 667,282 $ 667,282
10,000
93,269
79
36,380
65,907 65,907
352,146 348,025
667,282 667,282
FLOOD PROTECTION
LOCAL REVENUE MEASURE SUMMARY
FOR THE FISCAL YEAR ENDED JUNE 30, 2021 11
OPEN SPACE PRESERVATION
295,455
152,922
Urban Forest Annual Asset Maintenance
$ 448,224 $ 350,029$ 152,922 $ 152,922
28,597
670
17,600
3,673
15,962
292,655
15,962
104,537 23,142
Laguna Lake Dredging and Sediment Management
Open Space Acquisition
Enhanced Open Space
Open Space Maintenance
Open Space Preservation (FTE = 2)152,922
Subtotal
12
Add a subheadingAdd a subheading
578,968
106,126
49,125
149,469
497,068
12,032
25,149
Subtotal $ 898,688 $ 543,029$ 112,237 $ 112,237
15,000 8,780
Traffic Congestion Relief (FTE = 1)112,237 112,237
Traffic Congestion Relief/ Safety Improvement
CITY OF SAN LUIS OBISPO // LOCAL REVENUE MEASURE SUMMARY
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
CAPITAL PROJECTSOPERATING PROGRAMS
2020-21
(BUDGET)
2020-21
(ACTUAL)
2020-21
(BUDGET&
CARRYOVER)
2020-21
(ACTUAL)
The Local Revenue Measure helps fund
Public Art Projects throughout the City.
This aerial image shows several of the
Neighborhood Greenway Art Projects,
each conducted by local artists.
Traffic Safety Report Implementation
Transportation Safety & Operations
Neighborhood Traffic Improvements
Orcutt/Tank Farm Roundabout
South Street Median Landscaping
13
2,117,092663,940
Public Safety
906,401
42,706
230,762
164,791
24,520
123,271
115,381
42,706
687,237
136,561
24,520
119,796
165,250
396,851
23,849
165,250
324,803
23,849
400,000 400,000
Subtotal $ 2,555,390$ 663,940
76,989 76,989
Police Station Replacement Study & Design
Police Patrol Vehicle Replacements (5)
Fire Stations Building Maintenance
IT Replacements and Improvements
Public Safety Battery Backup
Radio Handhelds
ECC Equipment Replacement
Community Safety Emergency Response Communication Equipment
KVEC Tower
Tait Radio System Upgrade
Air Compressor Replacement - Station 1
Public Safety (FTE = 4)663,940 663,940
LOCAL REVENUE MEASURE SUMMARY
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
Add a subheadingCAPITAL PROJECTSOPERATING PROGRAMS
2020-21
(BUDGET)
2020-21
(ACTUAL)
2020-21
(BUDGET&
CARRYOVER)
2020-21
(ACTUAL)
The Local Revenue Measure is used to replace aging
Public Safety vehicles and equipment, including IT
equipment. It also funds three Patrol Officers and a
Sergeant.
$ 663,940 $ 2,117,576
14
Add body text Add body textAdd body text Add body text
373
1,921
Active Transportation Plan
Add a subheadingCAPITAL PROJECTSOPERATING PROGRAMS
2020-21
(BUDGET)
2020-21
(ACTUAL)
2020-21
(BUDGET&
CARRYOVER)
2020-21
(ACTUAL)
BICYCLE AND PEDESTRIAN IMPROVEMENTS
Sidewalk Replacement
Railroad Safety Trail: Taft Street to Pepper Street
Bicycle Facility Improvements
Anholm Neighborhood Greenway Plan
Downtown Renewal
Street Lights Annual Asset Maintenance 80,891
66,637
105,911
186,313
7,743
1,921
373
17,903
69,205
1,700
53,673 53,566
Pedestrian Crossing Improvements 32,810 32,092
Pedestrian Safety Improvements on Montery at Buena Vista 30,000 10,766
Pedestrian Crosswalk Beacon on Ramona 50,000 15,000
Bike and Pedestrian Quick Build Projects 41,575 41,575
Subtotal $ 215,023 $ 215,023 $ 667,354 $ 264,878
Neighborhood Greenways Public Art 24,250 13,034
Bicycle and Pedestrian Improvements (FTE = 1.6)215,023 215,023
LOCAL REVENUE MEASURE SUMMARY
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
15
PARKS AND RECREATION/ MAINTAIN COMMUNITY SERVICES & FACILITIES
130,513 130,513
112,861 64,338
20,000
10,900
89,673
20,000
10,555
89,673
251,751 235,357
$ 615,698 $ 550,436$ 66,954 $ 66,954Subtotal
Swim Center Building Maintenance and Equipment Replacement
Parks Major Maintenance & Repairs
Islay Hill Park Playground Equipment Replacement
Meadow Park Pedestrian Bridges and Pathways
Laguna Lake Golf Course Annual Asset Maintenance
Mission Plaza Restroom Replacements and Enhancements
Parks and Landscape Maintenance (FTE = 1)66,954 66,954
Add a subheadingAdd a subheadingCAPITAL PROJECTSOPERATING PROGRAMS
2020-21
(BUDGET)
2020-21
(ACTUAL)
2020-21
(BUDGET&
CARRYOVER)
2020-21
(ACTUAL)
NEIGHBORHOOD STREET PAVING
474,214
1,369,734
416,055
1,366,928
$ 2,013,648 $ 1,928,049$ 189,527 $ 189,527
169,700 145,066
Street Reconstruction and Resurfacing
Marsh Street Bridge Replacement
Subtotal
Higuera Street Paving
Neighborhood Street Paving (FTE = 2)189,527 189,527
INCLUDES IMPROVEMENTS TO BIKE LANES
LOCAL REVENUE MEASURE SUMMARY
FOR THE FISCAL YEAR ENDED JUNE 30,2021
CODE ENFORCEMENT
$ 302,046
302,046
$ 302,046
302,046Code Enforcement (FTE = 3)
Subtotal
16
$ 4,480,509 $ 4,069,560
381,934
61,265
70,650
32,226
202,482
61,265
275,407
53,320
32,025
22,307
3,425,000
87,949
69,149
149,854
3,425,000
3,366
68,384
128,486
Subtotal
Facilities Annual Asset Maintenance Account
City Facilities HVAC Replacements
Multi-site Energy Management
Fleet Replacements Annual Asset Maintenance
City Hall Fireline Replacement
Downtown Cleaning Equipment
Fleet Services Vehicle Lift
Facility Parking Lot Maintenance
Economic Recovery and Public Health and Safety COVID-19 (See Slide 6)
OTHER VITAL SERVICES AND CAPITAL PROJECTS
TOTAL LOCAL REVENUE MEASURE USES $ 12,210,833 $ 10,273,464$ 2,369,931 $ 2,369,931
Add a subheadingCAPITAL PROJECTSOPERATING PROGRAMS
2020-21
(BUDGET)
2020-21
(ACTUAL)
2020-21
(BUDGET&
CARRYOVER)
2020-21
(ACTUAL)
LOCAL REVENUE MEASURE SUMMARY
FOR THE FISCAL YEAR ENDED JUNE 30,2021
PRIORITIES SET BY THE CITY COUNCIL FOR FY 2020-21 INCLUDE:
17
Add a subheading
17
CITIZENS' REVENUE ENHANCEMENTCITIZENS' REVENUE ENHANCEMENT
OVERSIGHT COMMISSIONOVERSIGHT COMMISSION
Volunteer Residents Serve on the
Commission
The Revenue Enhancement Oversight
Commission (REOC) reviews, reports, and
makes recommendations directly to the City
Council regarding the revenue and
expenditures of the City's general purpose,
half-percent sales tax. The REOC consists of
five members who must be residents and
registered voters of the city.
Jeanette McClure - Chair
Jim Hamari - Vice Chair
Tony Skapinsky - Commissioner
Christopher Ellwood - Commissioner
Matt Quaglino - Commissioner
Open Space Preservation
Bicycle and Pedestrian Improvements
Traffic Congestion Relief/Safety Improvements
Public Safety
Neighborhood Street Paving
CITY OF SAN LUIS OBISPOCITY OF SAN LUIS OBISPO
For more information, please visit:
www.slocity.org/budget
Photography: Kelly Donohue Photography
City of San Luis Obispo
PRIORITIES SET BY THE COUNCIL FOR FY 2020-21 INCLUDED:
Code Enforcement
Flood Protection
Parks and Recreation/Senior Programs and Facilities
Other Vital Services and Capital Projects.
Revenue Enhancement Oversight Commission
Agenda Report Meeting Date: 12/8/22
Item Number: 4
DATE: December 8, 2022
FROM: Brigitte Elke, Finance Director and Emily Jackson, Finance Director
Prepared By: Emily Jackson
SUBJECT: RECOMMENDED CHANGES TO THE CAPITAL IMPROVEMENT PLAN
BUDGET AND FISCAL POLICIES
RECOMMENDATIONS
1. Receive a report to follow up on the recommended approach to the budgeting and
management of the Capital Improvement Plan, including:
a. Recommended deferral of further discussion about budget appropriation to
‘Funding Buckets’ for Asset Maintenance and Asset Replacement projects; and
b. Development of policy language to clarify management of the Capital
Improvement Plan.
2. Provide input and guidance to staff as necessary.
DISCUSSION
Background
All City construction projects and equipment purchases costing $25,000 or more are included in the
City’s Capital Improvement Plan (CIP). The Five-Year CIP is refreshed and adopted as part of the budget
in every Financial Plan and accomplishes several goals.
Maintains and replaces existing City infrastructure in accordance with the City’s asset
management plans, infrastructure replacement schedules, and other documents
Meets community needs and desires as established during the Community Forum,
Major City Goals and Council priorities.
Plans, schedules, and finances projects to ensure cos t-effectiveness and conformance
with established policies.
Comprehensive policies relative to the development of the City’s CIP are specified in the Budget Policies
section of the 2021-23 Financial Plan1 including detailed information relative to both the two-year
Financial Plan and the Five-Year CIP forecast.
1 2021-23 Financial Plan, Pages 537-569. https://www.slocity.org/government/department-directory/finance/city-budget
City of San Luis Obispo, Title, Subtitle
City of San Luis Obispo, Title, Subtitle
Item #5 2020-21 Annual Community Report and Citizen Oversight Meeting
Deferral of CIP ‘Funding Buckets’ Consideration
At the September 22, 2022 REOC meeting, staff presented a recommendation to restructure the CIP
budget, using ‘funding buckets’ to provide budget appropriation for Asset Maintenance and Asset
Replacement projects. The intent of using the funding buckets is to:
• Enable staff to be nimbler in responding to cost overruns as well as changes to project
prioritization to deliver projects;
• Price projects closer to when they are initiated rather than during budget development; and
• Provide staff with additional time to develop project scopes which will result in more accurate
and complete project scopes.
Feedback from REOC members was (generally) that they recognized the benefit of the funding bucket
approach in addressing cost overruns. However, members also expressed a strong desire to make sure
that both REOC and the City Council had a clear picture of what projects would be funded out of each
bucket along with cost estimates for each individual project, and that both bodies would have the
opportunity to weigh in, in the event that cost overruns on any project might impact the City’s ability to
deliver any other projects from the bucket.
Subsequent to the September REOC meeting, staff continued to refine the funding bucket approach, and
presented it to the City Council, as part of a broader budget item. While some Councilmembers were
supportive of the bucket concept, others had transparency concerns and wanted to make sure that the
City Council would have the opportunity to evaluate and approve significant project budget adjustments
that might impact the ability to deliver other projects.
Due to concerns expressed by both the REOC and City Council, staff has decided to defer further
discussion about the funding bucket approach to a future Financial Plan (beyond 2023-25). This deferral
will provide staff with additional time to refine the approach and have targeted meetings both REOC and
the City Council to gather additional input and address current concerns. The deferral will also provide
the opportunity to discuss a restructuring of the CIP budget when the City isn’t in the midst of developing
its next Financial Plan which will enable a more engaged process to ask questions and address issues.
Expansion of CIP Policy Language
Despite deferral of changes to the CIP budget structure, other efforts to improve the City’s ability to
deliver the CIP are still underway. As noted in the September 22nd CIP update, staff has been working
to amend existing policies and add new language to provide for more holistic governance of the CIP.
Many of the recommended changes clarify existing processes, roles and responsibilities, or document
new administrative processes that have or will be implemented as a part of broader process improvement
efforts. A summary of the recommended policy changes is included below (Attachment B includes a
redline version of the changes). Staff will seek City Council adoption of the revised policy language
with development of the 2023-25 Financial Plan.
City of San Luis Obispo, Title, Subtitle
City of San Luis Obispo, Title, Subtitle
Item #5 2020-21 Annual Community Report and Citizen Oversight Meeting
Recommended Changes to Existing Policies
Policy Title Description and Rationale for Change
CIP Project Manager Reflects current role for project managers to manage project scop e, budget allocation, timeline
and communications with project stakeholders. Revisions clarify that project management is
primarily performed by staff from CIP Engineering but can also be done by staff in other
departments, as appropriate.
CIP Review
Committee
Expands description of the CIP Review Committee’s role and reflects current membership of
the Committee. Revisions clarify that 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
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 mid-year to address
emergent needs; and
4. Evaluating the re-prioritization of projects as needs and conditions change to ensure
consistency with project evaluation criteria, ability to deliver projects, and City
priorities.
Recommended New Policies
Policy Title Description and Rationale for Change
CIP Project Type Identifies and defines project types, including Asset Maintenance, Asset Replacement, and New
Asset projects, and clarifies existing process of considering Asset Maintenance needs before
recommending funding for projects to replace existing assets or construct new assets.
Project Request
Forms
Requires that departments submit a Project Request Form (PRF) to formally document and
describe requested capital projects. Use of this new form is in tended to ensure that the CIP
Review Committee has the information it needs to evaluate and prioritize projects for funding.
This new practice is also intended to address a Management Partners recommendation that staff
allocate additional time for project scoping. The information provided on the PRF is intended to
help address this recommendation by requiring requesting departments to articulate the scope of
a project early on.
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.
Cost of CIP Program
Management
Establishes that the Capital budget will reflect the projected cost of staff time within the Public
Works Department spent on management of the CIP and delivery of projects.
CIP Reporting Requires staff to publish reports on the CIP on a quarterly basis, as part of Quarterly Budget
Reports provided to the City Council; and specifies that the reports should include a status
update on projects in progress, information about project budgets, and a listing of projects
completed within the quarter.
Diversity, Equity and
Inclusion
In 20202, the City Council declared diversity, equity, and inclusio n (DEI) as integral aspects of
their City Vision and Meta Goal. The 2021-23 Major City Goal related to DEI sets a precedent
for how DEI can be embedded acro ss all City departments. Addition of this policy language is
intended to further reflect the ways in which Capital Improvement Projects can advance DEI
initiatives citywide.
Policies Recommended to be Deleted
Policy Title Description and Rationale for Change
Program Objectives Eliminating policy that does not reflect current practice. The existi ng policy states that “Project
phases will be listed as objectives in the program narratives of the programs, which manage
projects.”
City of San Luis Obispo, Title, Subtitle
City of San Luis Obispo, Title, Subtitle
Item #5 2020-21 Annual Community Report and Citizen Oversight Meeting
ATTACHMENTS:
A. 9-22-22 REOC Report
B. Recommended CIP Policy Changes- Redline Version
Revenue Enhancement Oversight Commission
Agenda Report Meeting Date: 9/22/22
Item Number: 4
DATE: September 22, 2022
FROM: Brigitte Elke, Finance Director
Prepared By: Natalie Harnett, Principal Budget Analyst
Emily Jackson, CIP Process Improvement Manager
SUBJECT: Capital Improvement Plan Updates
RECOMMENDATION
1. Receive a report on the recommended approach to the budgeting and management of the
Capital Improvement Plan, including:
a. The structure of the Capital Improvement Plan budget and staff discretion to move
funding within appropriated budget to approved projects as needed
b. Development of policy language to clarify management of the Capital
Improvement Plan; and
c. Inclusion of the CIP Engineering program cost in the Capital Budget.
d. The role of the Revenue Enhancement Oversight Commission in reviewing and
recommending capital improvement projects to the City Council
2. Provide input and guidance to staff as necessary.
DISCUSSION
Background
All City construction projects and equipment purchases costing $25,000 or more are included in the
City’s Capital Improvement Plan (CIP). The Five-Year CIP is refreshed and adopted as part of the budget
in every Financial Plan and accomplishes several goals.
Maintains and replaces existing City infrastructure in accordance with the City’s asset
management plans, infrastructure replacement schedules, and other documents
Meets community needs and desires as established during the Community Forum,
Major City Goals and Council priorities.
Plans, schedules, and finances projects to ensure cost -effectiveness and conformance
with established policies.
Item #4 Attachment A - Previous CIP Agenda Report (9/22/22)
City of San Luis Obispo, Title, Subtitle
Item #4 Capital Improvement Plan Updates
Comprehensive policies relative to the development of the City’s CIP are specified in the Budget Policies
section of the 2021-23 Financial Plan1 including detailed information relative to both the two-year
Financial Plan and the Five-Year CIP forecast.
The 2021-23 Financial Plan includes funding
for 115 construction projects (inclusive of
new assets, asset replacements and asset
maintenance) that are managed primarily by
CIP Engineering, Transportation,
Maintenance or Utilities project managers.
City construction projects are carried out
through seven distinct phases, shown to the
right. While the construction phase is the
most visible to the community, it is also the
culmination of months to sometimes years’
worth of planning, scoping, design,
engineering, and permitting; all leading up to
the construction phase.
As discussed previously, the 2021-23
Financial Plan represents significant growth
to the City’s CIP largely due to the passage
of the Local Revenue Measure (Measure G-
20) which increased the local sales tax rate
from 0.5 percent to 1.5 percent which at the
time of adoption was projected to generate
approximately $25 million annually.
General Fund capital expenditures in the current year have increased by 65% compared to pre-Measure
G-20 levels.
The growth of the CIP has exceeded the City’s existing organizational capacity to effectively deliver
capital projects. To address this, the 2021-23 Financial Plan included budget augmentations of
$500,0000 in FY 2021-22 and $1 million in FY 2022-23 and beyond to “right-size” the organization to
address the increased project workload. In 2021, the City contracted with Management Partners, a local
government consulting firm, to perform an assessment of the delivery of the CIP and provide both
structural and process improvements to deliver projects. The Management Partners assessment resulted
in 53 recommendations covering all aspects of the City’s CIP to improve project delivery.
In addition to the expansion of the CIP due to the passage of Measure G-20, CIP delivery is currently
also constrained by a number of different factors, including staffing constraints, supply chain issues, and
construction cost escalation.
1 2021-23 Financial Plan, Pages 537-569. https://www.slocity.org/government/department-directory/finance/city-budget
Item #4 Attachment A - Previous CIP Agenda Report (9/22/22)
City of San Luis Obispo, Title, Subtitle
Item #4 Capital Improvement Plan Updates
A CIP Process Improvement Manager was hired in November 2021 to lead the implementation of the
Management Partners recommendations, as well as other identified areas for improvement. Process
improvement work to date has included:
1. Creation of two new classifications:
a. Capital Improvement Plan Administrative Manager to manage the non -technical
aspects of the City’s CIP, and
b. Capital Projects Coordinator to provide project management for capital projects that
do not require a high degree of engineering expertise and to partner with Engineers
to manage larger and more complex capital projects.
2. Addition of 4.00 FTE new positions to build capacity to address the growth of the annual
CIP.
3. Development of a reporting database to centralize information about project status
(including scope, timeline and budget) in a single document for streamlined reporting.
4. Collaboration with Finance and IT staff to improve financial system (Oracle) functionality
to better track and control capital project budgets and expenditures.
5. Development of a recommended new budget structure for the Capital budget (discussed in
more detail below).
6. Clarification of CIP processes through enhancement of CIP governance, including:
a. Updates to CIP policies to clarify CIP processes, and support the recommended new
budget structure noted above and discussed in more detail below
b. Development of a Charter to clarify the role of the CIP Review Committee and
meeting procedures
c. Development of project evaluation criteria to be used on an ongoing basis, regardless
of economic outlook and external impacts
d. Development of a Project Request Form that departments will be required to complete
in order to request funding for a new capital project. This form is intended to :
i. assist departments in developing the scope of the requested project,
ii. provide the CIP Review Committee with the information it needs in order to
evaluate and prioritize projects for funding, and
iii. provide a good starting point for project managers to develop project plans.
It is expected that the work efforts following the Management Partners study will be reflected during the
2023-25 Financial Plan. To proceed with implementation of the process improvements, staff is seeking
input from the Revenue Enhancement Oversight Commission (REOC).
CIP ‘Funding Buckets’
As discussed in the FY 2021-22 Mid-Year Budget Update and FY 2022-23 Budget Supplement, supply
chain issues and cost escalation have significantly impacted the delivery of the City’s capital projects;
an example is the Summer 2022 Roadway Sealing project, which came in significantly over bid and
required a budget adjustment of almost $1.6 million. To provide staff with flexibility to adjust the
budgets of individual capital projects, staff is recommending that the City Council appropriate funding
for Asset Maintenance and Asset Replacement costs in the CIP budget at a ‘funding bucket’ level, rather
than at the individual project level. This approach would allocate a total budget to each category (see
below) and in doing so, Council would provide staff with the flexibility to move money between projects
within a ‘funding bucket’ administratively, without seeking approval from the Council. This approach
Item #4 Attachment A - Previous CIP Agenda Report (9/22/22)
City of San Luis Obispo, Title, Subtitle
Item #4 Capital Improvement Plan Updates
will put emphasis on delivering projects and shift priorities to ensure projects are being constructed.
Asset Maintenance projects are ones that address recurring and annual needs to maintain existing assets.
Asset Replacement projects are ones that address periodically recurring and/or annual needs that replace
existing assets with a similar new asset. This approach is not recommended for New Asset projects
which expand the City’s infrastructure that serves the community—budget adjustments for those projects
are recommended to remain under the purview of the City Co uncil due to their scope, fiscal impacts
including debt issuance, and generally higher level of community interest.
The “funding buckets” are intended to group like projects within the Asset Maintenance and Asset
Replacement project type and include:
1. Fleet
2. Facilities
3. Open Space and Natural Areas Preservation
4. Parking and Transit
5. Parks, Urban Forestry, and Public Art
6. Streets, Bridges and Multimodal Transportation
7. Creek and Flood Protection
8. Information Technology
9. Water Resources, Treatment and Distribution
10. Wastewater Collection and Treatment
Use of “funding buckets” has several benefits, including:
1. Appropriation at the bucket level and staff discretion to move money within a bucket allows
the City to be nimbler in responding to cost overruns, as well as changes to project
prioritization to deliver projects instead of lengthy processes to re-allocate budget. Under
current processes, staff must prepare City Manager Reports or Council Agenda Reports to
seek a budget adjustment for a project. Drafting and routing these reports can take days to
weeks, especially for the budget adjustments that require City Council approval; a process
that can consume two months.
2. Projects are budgeted closer to when they are initiat ed, rather than during budget
development, which can be two years before a project begins. Developing project budgets
closer to when they are initiated allows for more accurate cost estimates, based on known
scopes and the impact of external conditions (eg. cost escalation).
3. Staff has additional time to develop project scopes. Rather than scoping projects during
budget development in order to identify a budget to seek Council appropriation, staff will
have the ability to focus on scoping projects as they are assigned, which will result in more
accurate and complete project scopes (more time to scope projects directly aligns with a
Management Partners recommendation).
Recognizing that the funding bucket approach changes the role of both the REOC and the City Council
in appropriating funding for capital projects, staff has been working on updates to policies and
procedures to assure that appropriate controls and checks and balances are in place . Staff will provide
quarterly reporting about project status and use of funding within each bucket for transparency and
increased communications. The processes being developed require coordination between multiple
departments to address budget considerations in the broader context of the entire CIP. To that end, staff
is developing policy language for consideration and approval by the City Council. As of the writing of
Item #4 Attachment A - Previous CIP Agenda Report (9/22/22)
City of San Luis Obispo, Title, Subtitle
Item #4 Capital Improvement Plan Updates
this report, the language is under development and a summary of the changes to be recommended is
included below:
Recommended Changes to Existing Policies
Policy Title Description and Rationale for Change
Project Manager Reflects current role for project managers to manage project scope, budget allocation, timeline
and communications with project stakeholders. Revisions clarify that project management is
primarily performed by staff from CIP Engineering but can also be done by staff in other
departments, as appropriate.
CIP Review
Committee
Expands description of the CIP Review Committee’s role and reflects current membership of
the Committee. Revisions clarify that the Committee is responsible for:
1. Assessing the City’s fiscal condition and staff capacity to deliver projects so that the
recommended CIP represents what can realistically be accomplished; and
2. Recommending to the City Manager the projects that should be funded in the biennial
financial plan, as well as appropriate funding levels for the CIP funding buckets; and
3. Considering requests for new projects that may be requested mid-year to address
emergent needs; and
4. Evaluating the re-prioritization of projects as needs and conditions change to ensure
consistency with project evaluation criteria, ability to deliver projects, and City
priorities.
CIP Appropriation Clarifies recommended new approach of City Council appropriation of CIP budget to ‘funding
buckets’ for Asset Maintenance and Asset Replacement projects and provides staff discretion to
administratively move funding within the buckets. Identifies the ‘buckets’ as:
1. Fleet
2. Facilities
3. Open Space and Natural Areas Preservation
4. Parking
5. Parks, Urban Forestry, and Public Art
6. Streets, Bridges and Multimodal Transportation
7. Creek and Flood Protection
8. Information Technology
9. Water Resources, Treatment and Distribution
10. Wastewater Collections and Treatment
Clarifies that appropriation of budget for New Asset projects is made to individual projects a nd
that budget adjustments for these projects require City Council authorization.
Recommended New Policies
Policy Title Description and Rationale for Change
Project Type Identifies and defines project types, including Asset Maintenance, Asset Replacement, and New
Asset projects, and clarifies existing process of considering Asset Maintenance needs before
recommending funding for projects to replace existing assets or construct new assets.
Project Request
Forms
Requires that departments submit a Project Request Form (PRF) to formally document and
describe requested capital projects. Use of this new form is intended to ensure that the
Committee has the information it needs to evaluate and prioritize projects for funding. This
new practice is also intended to address a Management Partners recommendation that staff
allocate additional time for project scoping. The information provided on the PRF is intended
to help address this recommendation by requiring requesting departments to articulate the scope
of a project early on.
Project Evaluation
Criteria
Identifies the criteria that will be used to evaluate and prioritize requested capital projects for
funding. Evaluation criteria is as follows (equally weighted at 1 point each):
1. Does the project support economic sustainability of the community and organization?
2. Does project address a critical community health or safety need?
3. Does project make good on ongoing commitments? Consider:
a. Previously budgeted (or existing external funding source)
b. Approved planning documents
Item #4 Attachment A - Previous CIP Agenda Report (9/22/22)
City of San Luis Obispo, Title, Subtitle
Item #4 Capital Improvement Plan Updates
c. Address mandates or legal requirements
4. Does the project address core infrastructure needs?
5. Does the project provide a visible and measurable community benefit?
6. Does the project align with Major City Goals?
7. Does the project address Measure G priorities?
a. Economic development and business retention
b. Safe and clean public areas
c. Youth/senior services and recreation facilities
d. Open space/natural areas preservation and maintenance
e. Street maintenance and transportation
f. Community safety and emergency preparedness
g. Protect financial stability
h. Creek and flood protection
i. Address homelessness
8. Does the project have a positive impact on ongoing operations ?
a. Reduction to operating costs
b. Improved service delivery
Creation of Projects Establishes that projects will only be created (outside of budget development) if they address an
emergency need.
Project
Appropriations
Clarifies the recommended new approach of appropriating CIP funding to ‘buckets’ by
identifying that appropriation to individual projects does not occur with adoption of the budget.
Identifies five options that staff can pursue if a project is expected to be considerably over
estimated budget:
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 budget
4. Appropriate additional budget from the appropriate bucket to the project to meet the
need
5. Appropriate additional resources as necessary from the Capital Projects Reserve in the
event that the balance in the appropriated funding bucket isn’t sufficient.
Administrative
Budget Adjustments
Establishes the process staff must follow to process a budget adjustment administratively within
a bucket. The process requires consultation between the project manager, City Engineer, CIP
Administrative Manager, and Public Works Analyst to consider the request for additional
funding for a project within the context of other projects intended to be funded within the
bucket. To assure appropriate checks and balances, the policy also identifies the required
routing for budget adjustments which must be signed off by staff from the proponent
department, Public Works staff, and Finance staff.
CIP Reporting Requires staff to publish reports on the CIP on a quarterly basis, as part of Quarterly Budget
Reports provided to the REOC and City Council; and specifies that the reports should include a
summary of administrative budget adjustments made within appropriated funding buckets as
well as a status update on projects in progress.
Policies Recommended to be Deleted
Policy Title Description and Rationale for Change
Program Objectives Eliminating policy that does not reflect current practice. The existing policy states that “Project
phases will be listed as objectives in the program narratives of the programs, which manage
projects.”
Inclusion of the CIP Engineering program cost in the Capital Budget.
In addition to the funding bucket approach, staff also plans to recommend the inclusion of the CIP
Engineering program supporting project delivery in the capital budget. The intent of doing this is to
accurately reflect the cost of delivering the City’s C IP. Many other organizations achieve this by
charging staff time to individual projects, based on timecoding. Staff is building a list of employees in
Item #4 Attachment A - Previous CIP Agenda Report (9/22/22)
City of San Luis Obispo, Title, Subtitle
Item #4 Capital Improvement Plan Updates
Public Works who play a significant role in capital project oversight and delivery and the percentage o f
time they spend doing this work. As a part of the 2023-25 Financial Plan, staff will recommend inclusion
of this staff time in the capital budget, rather than the operating budget.
REOC’s Review and Approval of Capital Projects.
The REOC is an advisory body to the Council that provides important citizen oversight of local
transaction tax revenues and expenditures. For the proposed CIP strategy, it is recommended that the
REOC review the proposed funding distributions at bucket level and the projects proposed within each
bucket during each budget development cycle. The new CIP approach will allow staff to engage the
REOC in more strategic review of the use of the tax dollars as opposed to spending valuable time
reviewing each project’s budget allocation. As part of the annual financial audit and the Annual LRM
Community Report, a detailed report on Local Revenue Measure expenditures by project will still be
provided.
Item #4 Attachment A - Previous CIP Agenda Report (9/22/22)
Section 8. 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 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 as 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 prepare the project proposal, ensure that required phases are
completed on schedule, authorizing authorize all project expenditures, ensure that required
phases are completed on schedule, ensuringe that all regulations and laws are observed,
regularly communicating with project proponents and other stakeholders, andand periodically
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 and Budget 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
2.Recommending to the City Manager the projects and associated budgets that should be
included in the biennial financial plan; and
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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.
C. Headed by the City Manager or designee, this Committee will review project proposals,
determine project phasing, recommend project managers, review and evaluate the draft CIP
budget document, and report CIP project progress on an ongoing basis.
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.
D.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 design, 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.
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7. Construction. Construction contracts.
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.
E.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.
F.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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G. Program Objectives. Project phases will be listed as objectives in the program narratives of the
programs, which manage the projects.
H.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.
I.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.
J.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
K. 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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