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AGENDA ITEM MEMORANDUM DATE: October 21, 2013 TO:Honorable Mayor and City Council Members FROM: Patrick Klaers, City Administrator SUBJECT: 2014-2018 CIP Discussion The Finance Department has updated the proposed 2014-2018 Capital Improvement Plan (CIP). This document is attached for you review. During discussion of this updated 2014-2018 CIP, there are a few issues that I would like for the Council to consider. These issues are also applicable to the discussion on uses for the franchise fee revenues. Street and Trail Maintenance Within the overall CIP is the Permanent Improvement Revolving (PIR) fund. The PIR fund is where the street and park related expenditures are located. Each year the Council transfers $200,000 from the General fund (basically tax revenues) to the PIR fund. The historic intent for this transfer was to help finance the City share of the Pavement Management Program (PMP) projects (for residential projects, the City share is 50% of the cost of the streets). However, included in the PIR fund are expenditures for street crack sealing and sealcoat work and for trail rehabilitation work and these two expenditures equal approximately $200,000 per year. Accordingly, these annual expenses directly offset the General fund transfer. From an organizational point of view, these two activities should be in the General fund operating budget. The above situation needs to be addressed in order to have the General fund budget for streets and parks reflect actual annual operating expenses; and in order to have the transfer of money to the PIR fund applied toward PMP projects. The suggestion for the Council is to raise tax revenues, or to use franchise fees, or a combination of both. If a franchise fee program is established, I would rate solving this CIP and Operating Budget problem as a top priority.