City Administrator Responds to Requests for Additional Information

At the August 1 City Council meeting, a number of questions arose regarding the City’s Capital Improvement Program (CIP) fund balances.  It was unclear to the Council, the CIP Review Committee, and members of the public, how much money was in the CIP fund and available for expenditure in FY 2011-12. The CIP list of projects, (p.3) provided by staff lacked information as to funding,  past  appropriations, or past expenditures for each project.  City Administrator Geoff Grote placed the CIP list on the Council August 1 agenda because the CIP appropriations had not been approved in June for the FY 20111-12 Budget.

Vice Mayor John Chiang requested that staff provide on-going Quarterly Reports on the CIP Fund indicating Fund balances – what money was taken out and what remained.  Council Member Keating noted the CIP items listed as deferred were informational, rather than approved appropriations.  The CIP Committee report noted:

“We found it difficult to follow the flow of dollars allocated to specific CIP projects, in particular the disposition of remaining funds upon completion or decision not to pursue a particular project. We recommend institution of clearer summary reporting by project, and can work with City finance staff to develop standard reports from existing sources to meet this need.”

The CIP Committee Chair, Leesy Taggart, speaking at the August 1 Council meeting, explained that a project-by-project summary, offering a complete history of appropriations and expenditures for each project, would be helpful.  The CIP Review Committee makes recommendations on CIP projects and process.

Upon Council inquiry, City Finance Director Mark Bichsel noted money had been taken from the Coaches Field CIP allocation in past years to cover some of the costs associated with the development of Coaches Field and Blair Park, with $653,575 in funding remaining for the Moraga Canyon Sports Field Project (MCSFP).   CIP funds expended in prior years on Coaches and Blair Park were not shown in the CIP Fund staff report (See Staff Report, p. 3.)

Since the meeting, upon request by the Piedmont Civic Association, Grote has provided additional information on CIP funding, including responses to a series of questions from PCA that are listed at the end of this article, a  spreadsheet showing  the expenditures and appropriations for the Moraga Canyon Sports Field Project, and updates to the list of CIP projects. 

Moraga Canyon Sports Fields Project Detail

(Inception through August 9, 2011)

Summary of Moraga Canyon Spreadsheet Detail

• Total appropriations to date                $1,274,730 (private and City funding)
• City appropriations                                     $970,000
• Private appropriations                               $304,730
• City expenditures to date                           $310,132
  
• Private expenditures to date                     $304,730
  
• Total expenditures to date                               $614, 862   (private and City)
  
• Total Legal payments to date                       $133,941    (part of total expenditures)
• City CIP Field “Savings” Fund                   $653,340   (held in special reserve fund)
• Remaining private funds                            $0* 

*The 7/18/11 contribution to the MCSFP of $43,530 has been administratively accepted, but not yet appropriated by the Council,  so the funds are not included in the balance of private funding.

The above report from Grote shows all appropriations and expenditures for Blair Park and Coaches Field, itemizing CIP, private and City general funds separately.  City funding from the General Fund was appropriated by City Councils for Moraga Canyon Sports Fields Project (MCSFP) starting in 2006, but primarily in 2007.   No new City funds have been appropriated since 2008.   Private funds have been received and expended since 2008, mostly in 2009 and 2010.   City funds of $653,340 and private funds of $43,570 remain in the Moraga Canyon Savings Account. 

The remaining unspent $653,340 appropriations for MCSFP will require Council resolutions for funds to be expended, according to Grote.

Grote further noted that “private funds, like public funds can only be spent when they are appropriated to the project. Hence, some private donations are held by the City for years before the project or program is ready to go, and an appropriation is made”.

 Total CIP Funding for FY 2011-12

The 2011-12 CIP Funding Report (shown in full below) was reviewed by the City Council during budget adoption.   On August 18, in response to a Piedmont Civic Association inquiry, Grote provided corrected figures (noted in red) which reflect the completion of the Havens Schoolmates facility and turfed playfield in the amount of $1.2 million and, therefore, removed from the list.

List of Projects

(Without corrections or additions – double click to enlarge)

The “Total Amount of Available CIP Funds” has been changed to $1.5 million (from $2.7 milion)

Based on a PCA inquiry, on August 18 Grote corrected the spend amount by removing Havens Schoolmates facility and turfed playfield of $1.2 million from the spend list leaving a spend amount of $905,547 previously appropriated/designated for specific projects and $573,124 unappropriated (not allocated to any specific project). The total $1.5 million amount in the CIP fund also reflects the previous reduction by $1,060,00 for the private Piedmont Hills under-grounding project.   The CIP Fund balance is now $1.5 million.

The CIP fund balance has in the past been relied upon as an emergency fall back fund.  Unless the CIP money is under a contract for a project, it is fungible and can be redeployed for other uses at any time.  This occurred with its use for the undergrounding project.

The CIP “Spend” Project List has been updated to $905,547 (from $2.1 million)

These projects have been designated as appropriated by prior Council action and may proceed without further Council appropriation.   However, the largest amount for CIP funded projects $653,340 for Coaches Field Improvement (lights and artificial turf) requires additional Council approval prior to expenditure, according to Grote. The error in the 6/20/2011 CIP list noted Havens Playfield as a $1.2 million future project, but this is a completed project.  

The “CIP Account Balance or “Reserve” remains $558,124. 

These are CIP funds not yet designated for a specific project.  They are sometimes referred to as the “CIP Reserve”.   The Council must take action to appropriate these funds to fund a particular project, moving it from the deferred list to the spend list, or adding a completely new project.  According to Grote, funding for the undergrounding problems resulted in the withdrawal of $1,060,000 from the unallocated “reserve.”

The “Deferred Projects” List remains $1.8 million.

This is a list of possible future CIP projects that are unfunded.  These projects might have been recommended for funding many years ago.  The dollars “allocated” to a deferred project are for informational purposes only – to show an estimated cost for funding to achieve an improvement.  Deferred projects cannot proceed without Council appropriation.  Projects may be removed from the list, rather than funded.  Also, new projects can be added to the list.

CIP Fund versus General Fund:

Typically, the Council transfers funds from the General Fund to the CIP Fund each year as part of the City Budget process.  With a limited amount of money available for FY 2011-12, no funds were added to the CIP Fund, and it remained at $2.7 million (revised to $1.5 million).

Questions and Responses from City Administrator on CIP Funding

To gain a better understanding of the available funding for capital improvement projects, the Piedmont Civic  Association posed a series of questions to City Administrator Geoff Grote.  His answers of August 9, 2011 are reprinted below.

1. Given the separate accounting for the CIP fund, how is this money currently invested?

“Funds held by the City are invested in the ‘ Local Agency Investment Fund’  (LAIF ).  This is a State of California operated fund open to all public agencies. When the City needs to pay bills (for a CIP project or any operating expense) or payroll, monies are transferred from LAIF to our local bank accounts at Wells Fargo.”

2. How much money is available for CIP expenditures during FY 2011-12?

“Finance Director, Mark Bichsel, summarized the status of the CIP in his Staff Report of Aug. 1st. In that report he states that $2,638,671 are the ‘Total amount of funds for CIP’. That has not changed.  Money available for expenditures was given as ‘projects classified to be spent’ and is listed at $2,065,547. As you know, the City Council added $ 15,000 to the amount to be spent by approving the City Hall Stucco Wall Repair. This means that the amount available for CIP expenditures in FY 2011/12 is $2,080,547. The City Council’s decision to approve the Ramona/Ronada Median did not add to the amount available in 2011/12 as the funding for that project was transferred (re-deployed is the term used in the Staff Report ) from other projects already in the ‘ to be spent category’. The Council did not approve the $75,000 for the 801 Magnolia project , and thus there was no impact on the amount available for expenditure in 2011/12. I will ask John Tulloch to send you a copy of the Aug.1st Staff Report.”

3. What is the significance of “deferred” on the undated schedule of CIP projects presented to the City Council on August 1, 2011?  What does “spent” mean in relation to the CIP items in the budget?

‘The significance of ‘Deferred’ is that the projects on that list are no longer active (they are put on hold) and that no money will be spent on them until/unless further direction is given by the City Council to do so.  This is discussed in my Staff Report to the City Council of Feb.2, 2009, (LINK) which I will ask Mr. Tulloch to forward to you.  The other category is ‘Spend’ which means that the projects on that list may go forward as originally approved.”

4. If a project is listed as deferred, must it come back to the City Council prior to money actually being expended from the CIP fund? Must the City Council continue with the deferred projects on the CIP list or is this more a wish list allowing changes and the addition of newly identified uses of the CIP money?

“Yes, when a project is on the deferred list it must go back to the City Council before money is spent on it. No, the City Council is not obligated to continue with the deferred projects, and it may substitute other projects if it chooses to.”

5. The question arose at the August 1 City Council meeting about the expenditure of over $2 million from the CIP for the rock problem encountered by the private undergrounding contractors. What was the total amount taken from the CIP for the undergrounding project?

“The amount taken from the CIP for the Undergronding project was $1,060,000.”

6. At the same meeting, another question arose as to how much money had been taken from the CIP fund to pay for the Moraga Canyon Projects. What is the total amount of CIP or private money contributed to the Moraga Canyon Projects under “Coaches Field Improvements”, “Moraga Canyon Sports Fields”, or in other accounts over the years? How was this money authorized for expenditure? Does the City keep separate accounts for donations made toward particular projects? Does the City have a process for acceptance and allocation of donated funds? Please explain.

“We have just recently updated the summary of expenditures for the Moraga Canyon Sports Fields and I have asked that it be sent to you. It shows the expenditures and the sources of funds used to pay them.  The expenditures were made pursuant to City Council authorization and appropriations over a number of years. The City does keep donations separate, for use only for the particular projects intended by the donor. Private funds, like public funds can only be spent when they are appropriated to the project. Hence, some private donations are held by the City for years before the project or program is ready to go, and an appropriation is made”.

7.  The Piedmonter dated August 5, 2011, states:  ” Approval of the two capital projects leaves $527,213 in the capital reserve account.  The total capital improvement fund is $2,638,671 with $2,065,547 earmarked for projects to be done in the future.”  Is this an accurate statement?  Please explain.

“The CIP Reserve is now $558,124. This a result of the Council decision to take $15,000 for the City Hall wall from the reserve and transfer it to the ‘spend’ list. As you will note, the reserve prior to the meeting of Aug.1st was $ 573,124 . ($573,124 – $15,000 = $558,124).  The other decisions made by the City Council did not change the amount in the reserve. The amount available to be spent in FY 2011/12 is as stated above in answer #2 .”

LINKS:

• Detail on Moraga Canyon CIP Funds as of 2011-08-03
• 08-01-11 CIP Appropriations for 2011-12
• Mid-Year Budget Report FY 08-09

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