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HomeMy WebLinkAbout051325-03.1 CIP MEMO May 8, 2025 TO: Mayor and Town Council FROM: Joseph Calabrigo, Town Manager Tai J. Williams, Assistant Town Manager Diane J. Friedmann, Development Services Director Steven Jones, City Engineer SUBJECT: Draft FY 2025/26 – 2029/30 Capital Improvement Program It is our pleasure to present the draft Fiscal Year 2025/26 – 2029/30 Capital Improvement Program (CIP), a key component of the Town’s long-term financial strategy. While the Operating Budget outlines the Town’s annual service delivery plan, the CIP serves as a multi-year roadmap for designing, constructing, and maintaining the Town’s public infrastructure. Unlike most California municipalities that prepare five-year CIPs, Danville has extended its planning horizon to 10 years. This approach aligns with the Town’s 10- year Operating Budget forecast and supports more strategic planning based on long- term needs, costs, and funding capacity. As proposed, the CIP recommends a total funding appropriation of $12,031,300 in FY 2025/26. Funding for future years (2026/27 through 2029/30) is included for planning purposes only. Each project identified in the CIP reflects the Town’s ongoing commitment to safety, the stewardship of public facilities, community enrichment, and economic vitality. Key Points for Consideration: • The proposed CIP remains focused on strategic financial management to maintain Danville’s infrastructure and sustain Danville’s high quality of life. 2 • As anticipated in prior forecasts, the FY 2026/27 through 2029/30 CIP begins to reflect growing financial constraints. These pressures stem from the accumulation of community capital assets over the past 30 years, the aging condition of much of that infrastructure, and stagnant revenue sources— placing increased reliance on the General Fund. • As a result, the recommended FY 2025/26 appropriation reflects a $5.33 million increase over the prior year, attributable to a strategic shift in the Town’s capital funding approach to proactively set aside General Purpose revenues in anticipation of future large-scale rehabilitation needs - particularly major arterial roadway improvements. This strategy enables continued investment in critical infrastructure while upholding the Town’s long-standing commitment to debt-free capital financing. This memorandum is intended to provide broader context for the recommended CIP funding appropriations and the factors influencing future investment decisions. BACKGROUND Since 2000, Danville has invested over $190.5 million in capital projects, averaging $7.6 million annually, significantly benefiting the community in numerous ways. Danville’s infrastructure, ranging from storm drains to roadways and parks, was primarily built between the 1950s and 1990s. The Town’s vast network of public infrastructure is now 30 to 70+ years old. Capital Project Selection The recommended 2025/26 CIP is comprised of projects that best balance numerous objectives and maximize community benefits and value. The primary considerations for funding recommendations include whether the project is mandatory to comply with legal requirements or address imminent health and safety issues; or discretionary, those that bring value to the community but are not required. Additional considerations in the project selection process include alignment with the Town’s vision and goals as outlined in the General Plan, the potential for broad public benefit, and the ability to support long-term asset sustainability through preventive maintenance. Projects that leverage outside funding—particularly time-sensitive grants—are prioritized, as are those that can be effectively managed within existing staffing resources. FY 2024/25 CIP Status and Progress The major CIP projects completed in FY 2024/25 are listed in Exhibit A, with several constructed in phases over multiple years. This year’s achievements reflect the 3 undertaking of many postponed projects that had been deferred due to the urgent need to repair critical infrastructure—such as culverts, slides, and roadway sinkholes—following the severe storms of December 2022 through early 2023. 2025/26 CIP Development and Adoption The CIP is shaped through a collaborative, year-round process. Town staff and advisory commissions gather community input - both formally and informally—on emerging needs and infrastructure priorities. These ideas are incorporated into the capital project selection process and presented in a Draft CIP, which is reviewed in a series of public study sessions by the Town Council before being considered and adopted at a public hearing – currently scheduled for 5:00 PM on Tuesday, June 17, 2025 - alongside the Town’s Operating Budget. DISCUSSION The FY 2025/26 – 2029/30 CIP recommends new funding appropriations of $12,031,300 for FY 2025/26, with an unexpended balance of $33,242,780. The unexpended balance consists primarily of prior-year appropriations for projects that are still progressing through the planning, design, or construction phases, as well as strategic reserves set aside for future large-scale rehabilitation and replacement projects. The recommended FY 2025/26 appropriation reflects a $5.33 million increase from the prior year and reflects a strategic shift to proactively set aside General Purpose funds in anticipation of future major capital needs, such as arterial roadway improvements. This need is driven by the reduced access to state and federal transportation grants. By building capital reserves, the Town can continue to re-invest in its critical infrastructure without debt financing. Summary of FY 2025/26 Revenues Two primary revenues sources are used to fund the CIP: General Purpose and Special Purpose. General Purpose (a.k.a., General Fund revenues) can be allocated to any type of project and have historically been used as the “local match” in competing for outside capital grant funding. In contrast, Special Purpose revenues are designated for specific types of projects. This strategy has enabled the Town to complete projects without the use of special taxes, assessments, or debt to date. As previously noted, the Town’s reliance on General Purpose revenues for capital projects has increased—from 41% of total CIP funding in FY 2024/25 to 71% in FY 2025/26—as shown in the table below: 4 Revenue Types FY 2024/25 FY 2025/26 General Purpose (Unrestricted) Revenues 41% 71% Special Purpose (Restricted) Revenues 59% 29% Total: 100% 100% The shift toward greater reliance on General Purpose revenues is further illustrated by comparing two major roadway rehabilitation projects. The recently completed San Ramon Valley Boulevard project had a total cost of $3.86 million, with General Purpose revenues covering $590,292 - or just 15% - while grant funding covered $1.78 million, or 46% of the cost. In contrast, the upcoming Sycamore Valley Road Improvements project, estimated at $3.42 million, is expected to rely much more heavily on General Purpose revenues, which are anticipated to fund approximately $2.3 million—or 67%—of the total project cost. Unlike San Ramon Valley Boulevard, the Sycamore Valley Road project did not qualify for available grant funding, which is increasingly focused on projects serving designated "communities of concern" and non-motorized transportation improvements. Summary of FY 2025/26 Expenditures Consistent with Town Council direction from the Annual Planning and Goal Setting Workshop in February 2025 and subsequent actions, priority efforts for FY 2025/26 include: CIP # Project Name Target Objective for FY 2025/26 A-330 Townwide Storm Drain Master Plan (Phase 2) Begin Construction A-620 Fiber Optic Cable Interconnect (Sycamore Valley Rd) Complete Design Fiber Optic Cable Interconnect Master Plan (Townwide) Complete Design B-560 Diablo Vista Park Playground Replacement Complete Construction B-628 Town Green and Arts District (Pavilion) Begin Construction B-629 Town Green and Arts District (Makers Space/Studio) Begin Construction B-643 Non-Functional Turf Replacement Begin Construction C-055 Diablo Road Trial Under Construction C-057 Diablo Road Trail Crossing (HAWK signal) Under Construction C-305 Iron Horse Trail Crossings (HSIP grant) Complete Construction C-521 West El Pintado Road Sidewalk Improvements Complete Design C-599 La Gonda Way Bridge Improvements Continue Design C-607 Iron Horse Trail Crossings (Federal Earmark) Complete Construction 5 C-610 FY 2025/26 Pavement Management Project Begin Construction C-635 Sycamore Valley Road Improvements Begin Construction C-634 Traffic Signal Modernization Under Construction Ongoing Capital Maintenance Over the next 10 years, maintaining the Town’s aging infrastructure at current service standards will require dedicating an increasing share of the capital budget to maintenance activities—ranging from routine upkeep to major rehabilitation and asset replacement. As the Town’s infrastructure portfolio continues to expand, so too does the need to allocate greater resources toward preserving and maintaining existing assets. A high- level assessment of the Town’s major infrastructure inventory reveals that an annual commitment of approximately $6.01 million will be needed to support ongoing capital maintenance and infrastructure replacement efforts, as outlined in the table below. Major Assets (sampling) Count Average Cost (estimated) Asset Life Cycle Estimated Annual Arterial Roadways 18.04 centerline miles $3.3M CLM 20 years $2.15M Local Roadways 140.34 centerline miles $440K CLM 20 years $2.65M Bike Safety (e.g., green bike lanes) 45,000 SF $20/SF 15 years $50K Pedestrian Safety (e.g., RRFBs) 16 sets $30K/set 10 years $30K Parks – Playgrounds 5 main playgrounds $1.5M/playground 15 years $500K Parks – Turf Fields 3 turf fields $1M/field 9 years $330K Parks – Sports Field Lighting 2 parks $1M/park 20 years $100K Storm Drain Infrastructure Hydraulic structures, open channel, pipes Varies Varies $200K Recommended Annual Set-Aside for Capital Maintenance: $6.01M Given that a significant portion of capital maintenance is funded through General Purpose revenues, establishing ongoing set-aside funding for this effort will remain a focus for the Town’s long-term financial capital planning. CIP Project Types CIP projects fall into one of three categories: General Improvements (“A” projects); Parks and Facilities (“B” projects); and Transportation (“C” projects). In FY 2025/26, reflecting the shift toward prioritizing infrastructure maintenance, the CIP introduces a new system for classifying project types as a way to track funding commitments: 6 • New/Modified Projects: Those that add new assets to the Town’s infrastructure inventory or significantly modify an existing asset. This category includes projects whose scope has evolved over time. • Rehabilitation/Replacement Projects: Those that involve major rehabilitation or full replacement of existing assets, including arterial roadways, bridges, buildings, turf fields, and playgrounds. • Capital Maintenance are those ongoing annual maintenance projects that ensure the ongoing functionality of an asset as well as to ensure that its life is extended. In FY 2025/26, approximately 71% of CIP projects are dedicated to capital maintenance or rehabilitation/replacement efforts and account for 64% of the total capital budget appropriation. In contrast, the remaining 29% of projects—typically involving new assets—represent just 36% of the capital budget. Pavement Management Program The Town’s roadway network is its largest capital asset. Currently, the Town maintains 158 centerline miles—equivalent to 27.17 million square feet—of paved roadway, with a current Pavement Condition Index (PCI) of 79. The PCI is a standardized scale from 0 to 100 used to measure pavement quality, with 100 representing new, pristine pavement and scores below 10 indicating pavement that has failed or reached the end of its useful life. Asphalt pavement deteriorates through a combination of fatigue and aging, and as it ages, the type and cost of necessary maintenance treatments increase. Effective pavement management focuses on applying the right treatment, at the right time, with the right materials to extend pavement life and minimize long-term costs. Doing so allows most roadways to achieve their design life. For FY 2025/26, a $3 million appropriation to the Pavement Management Program is recommended to fund the maintenance and rehabilitation of Danville’s residential streets. This investment supports the Town’s goal of maintaining an average PCI of 70 or higher across the roadway network over the next five-year CIP cycle (see Scenario 1 below). In addition, funding is being set aside for future rehabilitation of major arterial roadways, timed to coincide with the end of their estimated 20-year service life. Financial Outlook In years past, the Town has been able to reserve General Purpose revenues (also referred to as General Fund revenues) as the “local match,” or seed funding, to leverage state and federal grants for capital projects. This approach allowed Danville to utilize its more 7 flexible General Fund revenues for projects that lacked dedicated special revenue sources. However, with the decline in available transportation grants for major roadway rehabilitation efforts, the Town must now rely more heavily on the General Fund to directly fund capital maintenance needs. In prior years, the Town typically transferred approximately $2 million annually from the General Fund to the CIP through the annual budget process. Looking ahead, a high- level assessment of the Town’s infrastructure inventory indicates that sustaining ongoing capital maintenance at current standards will require approximately $6.01 million per year. Without the availability of special revenues, such as grants, the General Fund will become the primary source for funding the maintenance of public infrastructure. This growing dependence on the General Fund as the primary source for capital maintenance funding must also be considered alongside two other potential funding demands: the Lighting and Landscape Assessment District and the Clean Water Program. Lighting and Landscape Assessment District Since incorporation in 1982, Danville property owners have paid annual LLAD assessments specifically earmarked for the maintenance of public parks, landscaping, lighting, and community facilities. The last voter-approved LLAD rate increase occurred in 2003 and did not include a cost-of-living escalator. As a result, over the past two decades, LLAD revenues have increased by just 3%, while Bay Area consumer prices (CPI) have risen by approximately 78%. During the same period, operating costs - particularly utilities and contracted maintenance - have increased by 84%. This May, the Town is seeking property owner approval for the first LLAD assessment increase since 2003. Without property owner approval, significant service reductions—or continued and growing General Fund subsidies—will be necessary to sustain these community assets. This ongoing and increasing demand for General Fund support across both the CIP and LLAD operations will continue to strain the General Fund’s capacity, particularly as it becomes a critical backfill for roadway maintenance in the absence of external grant funding sources. Clean Water Program (NPDES) The 1972 Clean Water Act requires municipalities to limit pollutants entering stormwater systems that discharge into natural waterways. In California, these requirements are regulated through the National Pollutant Discharge Elimination System (NPDES) permits issued by the State Regional Water Quality Control Board (RWQCB). 8 In Contra Costa County, cities and the County operate under a shared Municipal Regional Permit (MRP) administered by the Contra Costa Clean Water Program, with each city or town responsible for local compliance activities. The RWQCB continues to impose increasingly stringent requirements with each five-year permit cycle, driving up program costs. To address this unfunded state mandate, Danville property owners have paid a fixed $30 annual Stormwater Utility Assessment (SUA) since 1993. SUA revenues fund activities performed by the Town (e.g., street sweeping) and the Town’s share of countywide MRP activities. However, as MRP requirements expand, existing SUA revenues are no longer sufficient. Further increases to the SUA would require property owner or voter approval. Current projections indicate that countywide Clean Water Program reserves will be depleted within two years. A regional effort is underway to assess the feasibility of seeking voter approval for a modest fee increase to offset rising costs. Without new revenue, the Town’s General Fund would be required to subsidize the escalating expenses of meeting Clean Water Program mandates. This would place additional strain on the General Fund, which is already supporting LLAD operations (if property owners do not approve a rate increase in 2025) and major arterial roadway maintenance and rehabilitation projects. SUMMARY The draft FY 2025/26 – 2029/30 Capital Improvement Program recommends appropriation of $12,031,300 in FY 2025/26. Together with prior-year unexpended appropriations, the CIP represents the best use of available resources to address community needs and advance Town Council priorities. The CIP reflects a fiscally responsible, forward-looking plan for investing in Danville’s infrastructure, consistent with the Town’s long-standing commitment to financial stewardship, debt avoidance, and reserving funds in advance of major capital needs. Attachments: Exhibit A – Completed FY 20245/25 Project Highlights EXHIBIT A Major Completed Projects in FY 2024/25 (list is not all-inclusive) • A-330 -Townwide Storm Drain System Management: Completed inspections for 146 sites and identified 17 locations in need of maintenance or repair as part of the Storm Drain Master Plan Phase I. Phase II inspections and summary report encompassing the remaining town-wide storm drain sites will be completed in Spring 2025. • A-362 – Downtown Improvement Project: A contract was awarded and construction started on the Downtown Master Plan Catalyst Project. The project will add approximately 11,675 square feet of new public gathering space (Prospect Park Plaza, Village Theatre Plaza, and E. Linda Mesa Avenue seating area), artistic lighting elements, 18 new streetlights, intersection bulb outs, and traffic calming measures. The project is expected to be completed in Spring 2025. • C-600 – San Ramon Valley Blvd. Improvements: Concrete work and pavement resurfacing work is complete. Work is being coordinated with CIP A-620 – Fiber Optic Cable Interconnect project. Cable Interconnect infrastructure has been installed on Front Street. Both projects will be completed in Spring 2025. Major Projects Underway in FY 2024/25 (list is not all-inclusive) • B-560 – Diablo Vista Park Playground Renovation Project – A contract was awarded to upgrade and replace existing play features including a play area for both older and younger children, as well as those with limited mobility. Construction to begin in May 2025. • B-628 - Town Green and Arts District: This project includes improvements to activate the Town Green and Front Street Arts District, including a larger stage, seating options, musical garden, climbable art, creek walk enhancements, maker space and gateway monuments. Project design phase scheduled to be completed in Fall 2025. • B-629 – Arts District Maker Space: A companion project to project B-628, this project is currently in the design phase. The design phase is scheduled to be completed in Fall 2025. • B-643 - Nonfunctional Turf Replacement: In compliance with AB 1572, this project would convert approximately 13 acres of nonfunctional turf into compliant landscape areas. The project design phase is expected to begin in Summer 2025. 10 • C-055 Diablo Road Trail from Alameda Diablo to Tank Access Road: Environmental permits have been secured, design work continues. Additionally, work is underway on the design of the trail crossing at the intersection of Diablo Road and Fairway Drive. Project is expected to go to bid in Summer 2025. • C-599 – La Gonda Way Bridge Improvements: This project is currently in the environmental and design stage. Total project cost is estimated at $6.03 million, with 88% of the cost eligible for federal funding through the Caltrans Highway Bridge Program. Construction is expected to begin in Summer 2027. • C-607 - Iron Horse Trail Crossing Improvements: The project is funded by a $350,000 federal earmark and consists of constructing raised crosswalk treatments along the Iron Horse Trail at Paraiso Drive, El Capitan Drive and Greenbrook Drive, and provides signing, striping, traffic signal and sidewalk improvements at the intersection of Sycamore Valley Road/Camino Ramon. The project is scheduled to go to bid in Fall 2025. • C-610 - Pavement Management Program: The next round of pavement overlay is expected to be completed in Spring/Summer 2025. • C-634 - Town-Wide Traffic Signal Modernization: This is a multi-phased project consisting of design and construction of traffic signal video detection systems, ATC traffic signal cabinets, battery back-up systems, and implementation of signal software systems to improve signal timing, coordination, safety and monitoring. Locations include Camino Tassajara, Crow Canyon Road, Sycamore Valley Road, San Ramon Valley Boulevard and El Cerro Boulevard. The project is scheduled to go to bid in Fall 2025.