FY 2018-19 and 2019-20 Adopted Operating and CIP Budget

CITY OF MORGAN HILL CAPITAL IMPROVEMENT PROGRAM

CAPITAL IMPROVEMENT PROGRAM OVERVIEW

The Capital Improvement Program (CIP) is the primary tool that local governments use to plan for major capital projects and acquisitions. It identifies major capital needs over a multiyear forecast period and reflects the overall priorities of the City. The CIP focuses on large capital projects and acquisitions with long useful lives that have significant impact on the health, safety, and vibrancy of the community. Expenditures typically address one-time needs as opposed to the City’s operations budget which addresses ongoing, year to year needs. The City currently prepares a two-year operating budget and a six-year CIP. The biennial budget consists of two separate annual budgets that the Council will consider for adoption. Prior to the conclusion of the first annual budget, the Council will be provided an update on revenue assumptions, fund balances, and possible amendments to the second year annual budget. In conjunction with the biennial operations budget, the City Council also approves the six-year CIP budget. o Parks and Recreation: Fields, landscaping, lighting, irrigation, and recreational amenities o Public Facilities: Community, public safety, recreation, and civic facilities o Wastewater: Collection pipes, lift stations, and trunk lines o Storm Drainage: Inlet structures, pipelines, channels, and basins o Streets & Roads: Sidewalks, ramps, street lights, traffic signals, and signs o Water: Wells, pipelines, storage tanks (also called reservoirs), and pumping stations The six-year CIP is a long-term spending plan that requires forecasting what the infrastructure needs for the City will be and forecasting the revenues needed to fund those needs. Morgan Hill has awide variety of funding sources for CIP projects, some steady and predictable while others are dependent on outside agencies. For instance, the City receives monies annually from the State to help fund road repair projects. Also, a portion of the water and wastewater charges paid by residents and businesses (user fees) go towards capital projects that keep the water and wastewater systems in good repair and functioning efficiently. New development in Morgan Hill, be it residential homes or commercial and industrial buildings, is required to pay impact fees to the City for the impact the new development’s presence will have on the City. These fees support the funding of new and future infrastructure that will be needed as the City grows. New development pays the following impact fees: traffic, water, wastewater, drainage, police, fire, parks, community/recreation center, library, and public facilities. These impact fees can only be used to build new infrastructure and facilities and cannot be used for ongoing maintenance or operations. When the City Council adopts the six-year CIP, it approves the six-year spending plan for all capital projects and appropriates funds for the first two fiscal years of that plan, in this case FY 2018-19 and FY 2019-20. These appropriations authorize City staff to spend the designated CIP funds on the approved projects in those fiscal years. The recommended FY 2018-19 through FY 2023-24 CIP totals $151.5 million. The project categories include 1) Parks & Recreation ($28.9 million), 2) Public Facilities ($8.0 million), 3) Storm Drainage ($7.0 million), 4) Streets & Roads ($46.5 million), 5) Wastewater ($44.5 million), and 6) Water ($16.6 million). The CIP is intended to address the following multi-faceted infrastructure needs of the City: FY 2018-19 & FY 2019-20 CAPITAL IMPROVEMENT PROJECTS AND FUNDING

2019-2024 Six-Year Capital Improvement Program

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