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City of Morgan Hill 1 Budget Options Report
March 2016
1. Abstract
City of Morgan Hill, California (“City”) has contracted with Adhara Systems, Inc. (“Adhara”) in 2015
for its Pavement Management System (“PMS”) Condition and Budget Analysis for the next 5 fiscal
years (“Project”) starting fiscal year 2016-2017, FY2017. The Project includes updating the City’s
pavement management system database with the latest maintenance and rehabilitation (“M&R”) work in
accordance with the Metropolitan Transportation Commission (“MTC”) StreetSaver Online Pavement
Management Program (“PMP”).
The City maintains 829 sections that amount to 117.9 centerline miles, 258.1 lane miles, or 24.9 million
ft
2
(2.76 million yd
2
) of network after adding Madrone Parkway from Monterey St. to Cochrane Rd.
The results of the M&R work conclude that the City’s weighted average Pavement Condition Index
(“PCI”) of the entire network is 67 as of March 1, 2016, placing the City’s network condition in the
“Good (50<PCI<=70)” condition category.
This report analyzes the City’s Budget Needs along with four additional budget scenarios that the City
may want to apply to future M&R plans for the next five fiscal years. This report analyses a budget
scenario that will best fit the City’s needs.
The City reviewed and updated treatment types and its unit costs in the Decision Tree (see Appendix G)
and assumed 3% interest and inflation rates to determine the City’s Network Replacement Cost and
Budget Needs. The City’s Network Replacement Cost was calculated to be $167.7 million. The
Budget Needs analysis determined that $60.7 million is needed for the City’s M&R needs over the next
five fiscal years. This will eliminate Deferred Maintenance defined by the PMS system and the City’s
network PCI will increase to 87.
The City has estimated an annual average budget of $1.43 million, starting with $2.56 million in
FY2017, for the next five fiscal years. However, with this budget, the current PCI will drop from 67 to
60 in FY2021 and will result in $40.8 million in maintenance backlog. In order to maintain the current
PCI of 67, the City will need to allocate an annual budget of $3.9 million. Additionally, to increase the
current PCI by 5 points from 67 to 72, in the next five fiscal years, the City will need to allocate $6
million per year.