TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, City Manager
FROM: Trang Nguyen, Finance Director
1. Subject
title
Second Budget Study Session for the Proposed Fiscal Year 2024-25 Budget.
body
2. Summary
This is the second budget study session in support of the preparation of the Fiscal Year 2024-25 Budget. This study session is intended to provide the draft of the Five-Year Capital Improvement Plan for the period of Fiscal Year 2024-25 through Fiscal Year 2028-29.
3. Recommended Action
recommendation
Receive and file the report and provide direction to staff.
end
4. Fiscal Impact
Fiscal impact will be determined with final budget adoption.
5. Strategic Plan Goals
Goal 2: Be a fiscally healthy community
a: Expend fiscal resources responsibly.
b: Analyze future fiscal needs and potential revenue opportunities.
c: Provide appropriate reserves.
6. Discussion and Background
This is the second budget study session in support of the preparation of the City’s Fiscal Year 2024-25 (FY 25) Budget and is intended to focus on presenting the draft Five-Year Capital Improvement Plan for the period of FY 25 through FY 29.
The Five-Year Capital Improvement Plan (CIP) serves as a comprehensive budget and strategic planning tool used to determine the extent of future needs and identify sources of funding. Funding is provided by a variety of sources including development impact fees, transportation funds, grants, reimbursement agreements, and long-term financing.
The City continues to provide its residents and businesses with much-needed capital improvements and infrastructure, despite budgetary challenges. While several projects have been deferred in recent years, the City strives to maintain a steady level of capital improvement activity in Orange.
The FY 25 Five-Year CIP identifies 137 proposed projects. FY 25 itself, there are 66 budgeted projects while the remaining 71 projects are either a continuation of previously approved plans or anticipated to start during the out-years. With these proposed projects, the City Council will be investing almost $38.1 million in the upcoming fiscal year and almost $144.8 million over the five-year planning horizon. This is in addition to project appropriations that will be carried over from the current fiscal year. To ease the challenges of the City’s budgetary operating deficit, 14 projects were deferred or reduced for FY 25, totaling approximately $10.4 million.
As in previous years, the CIP will be funded through several funds. This includes $8.6 million from various transportation funds (Traffic Improvement, Gas Tax Maintenance, Road Maintenance Rehabilitation, and TSIP); $9.6 million from the City’s Enterprise Funds (Sanitation and Water); $4.7 million from the City’s Internal Service Funds (Equipment Replacement and Computer Replacement); $2.9 million from the City’s Capital Project Fund; and, $12.3 million from various funds.
In FY 25, there are 11 identified project categories. The most funded include a $8.8 million investment towards the improvement of road conditions around the City, $1.4 million towards City facility improvements, $3.9 million towards City park improvements, and a $3 million investment in the City’s vehicle replacements.
Five-Year Capital Improvement Plan
The following are highlights of the FY 25 Five-Year CIP projects:
New Park in West Orange
A 2.4 acre piece of property managed by Orange County Flood Control (OCFC) has been identified as a location for a new park on the west side of the City. Based on the conceptual plan and feedback from the County, the next steps include completion of environmental review, design, and construction. The environmental review and design process has already started in FY 24, and staff worked with OCFC to enter into a long-term 50-year lease agreement for the property. City funding leveraged from former Redevelopment Capital Fund has been identified in the amount of $3 million for the project, with the potential for federal grant funding sponsored by Congressman Correa to partially fund the project.
Corporation Yard Renovations
Bids were received for the first phase of the Corporation Yard Renovation project which focuses on building a police storage facility along with other site improvements. Staff plans to move forward with construction in June 2024, if approved by the Council later this month. Multiple construction phases are expected to complete the more efficient layout at the consolidated site.
Pavement Management Program
This program coordinates the comprehensive maintenance needs of the City’s road system. Maintenance strategies include asphalt resurfacing, slurry seal, and where needed reconstruction. Approximately $7.6 million is requested in FY 25. Based on the City’s Pavement Management Plan, the City should be spending approximately $10 million annually on road maintenance to prevent long-term deterioration. This program is funded by Measure M2, Gas Tax, Community Development Block Grant, Capital Projects, and the Road Maintenance Rehabilitation Account funds.
Water Projects
A commitment of $7.1 million in FY 25 towards ten water infrastructure projects intended to maintain or improve the City’s water production and distribution. This includes $1.8 million for pipeline replacement, which provides for the design and construction of water mainline replacements for the City's water system. Additionally, $1.4 million is budgeted for the replacement of an aging hydropneumatic tank and $2 million for the drilling of a new water production well. The new well is designed to provide approximately 3,000 gpm and significantly enhance the City’s groundwater production.
Sewer Projects
Commitment of $2.4 million to the Sewer Replacement Program to maintain or improve the City’s sewer pipe network, which provides for the design and construction of sewer mainline replacements for the City's sewer system. Approximately one mile of pipeline is targeted to be replaced annually due to increasing age, substandard sizing, corrosion, or high maintenance. The program will focus on locations such as Grand Street, Glassell Street, Center Street, Culver Avenue, Olive Street, and Maple Avenue
Capital Projects Fund (500)
Prior to FY 20, the City aimed to set aside monies from the unreserved fund balance of the General Fund to support the Capital Projects Fund (500). This funding provided necessary reinvestment in the City’s aging infrastructure. However, due to recent budgetary challenges, monies for these infrastructure needs have not been contributed towards for some time. Several projects have been in deferment despite evaluation of poor condition. As such, the City has continued to prioritize projects that can no longer be deferred due to safety concerns and projects that are partially grant funded. After careful consideration, there are $2.9 in projects proposed for FY 25:
1. Pavement Management Program ($1,250,000);
2. Minor Traffic Control Devices ($200,000);
3. City Facilities Improvements ($450,000);
4. Santiago Bike Trail Phase IV ($500,000);
5. Streetlight Pole Replacement Program ($470,000);
6. Rolling File Cabinet Replacement ($50,000)
Deferred Projects
To address the City’s budgetary constraints, several projects that had been recommended from City departments have been deferred and are not included in the FY 25 CIP. The projects and project amounts are listed below:
|
Project |
Fund |
Amount Deferred/Reduced |
Notes |
|
Tot Lot Shade Sails |
Park Acquisition (510) |
$430,000 |
Deferred to FY 26 |
|
El Modena Basin Area Improvements |
Park Acquisition (510) |
30,000 |
Deferred to FY 26 |
|
Rubberized Tot Lot Installation at La Veta Park |
Park Acquisition (510) |
125,000 |
Deferred to FY 26 |
|
Facilities Condition Assessment |
Capital Projects (500) |
100,000 |
Deferred to FY 27 |
|
Fire Station Improvements |
Capital Projects (500) |
400,000 |
Deferred to FY 27 |
|
Community Services Building Restoration |
Capital Projects (500) |
200,000 |
Deferred to FY 27 |
|
El Modena Electric Vehicle Charging Station |
Capital Projects (500) |
50,000 |
Deferred |
|
Roof Replacement at City Facilities (rated poor in condition) |
Capital Projects (500) |
500,000 |
Reduced to exclude locations |
|
Depot Building Improvements |
Capital Projects (500) |
400,000 |
Deferred |
|
Municipal Parking Lot Maintenance |
Capital Projects (500) |
20,000 |
Deferred to FY 26 |
|
Fire Station 5 Exercise Room Addition |
Capital Projects (500) |
600,000 |
Deferred to FY 27 |
|
Fire Station 2 Remodel |
Capital Projects (500) |
900,000 |
Deferred to FY 27 |
|
Citywide Bike Lane Enhancements |
Capital Projects (500) |
200,000 |
Deferred to FY 26 |
|
Vehicle Replacements |
Equipment Replacement (720) |
6,500,000 |
Reduced vehicles to replace |
|
Total Deferred Projects |
$10,455,000 |
|
Conclusion
The FY 25 proposed Capital Improvement Plan reflects the City’s challenges with addressing the General Fund’s operating deficit, while also maintaining a standard level of service and operations for the citizens and businesses of Orange.
In the next two months, staff will continue to refine the City’s FY 25 operating and CIP budgets for preliminary review in May 2024 and final adoption in June 2024.
7. ATTACHMENTS
• FY 25 Draft Five-Year Improvement Plan