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HomeMy WebLinkAbout7.2 Budget Fin Plan Update~~~~ ~~1~~ \~V/~: CITY CLERK File # ^~^~J ^0 -~Q AGENDA STATEMENT CITY COUNCIL MEETING DATE: November 18, 2008 SUBJECT: Update On Impacts to the Adopted Fiscal Year 2008- 2009 City Budget And Financial Plan From the State Budget And Economic Downturn Report Prepared by Paul S. Rankin, Administrative Services Director Pf~2 ATTACHMENTS: 1) Preliminary Analysis of Economic Impacts on the Fiscal Year 2008/2009 Adopted City Budget (Prepared November 2008) RECOMMENDATION: 1) Receive Staff report and any updated information that may have become available after the report was prepared. 2) Defer the San Ramon Road Landscaping Project and continue to freeze the vacant Administrative Aide position; or provide Staff with direction on modifications to be enacted at this time. 3) Direct Staff to update the status as information becomes available and to present amid-year Budget Adjustment and revised funding plan once adequate information is available. FINANCIAL STATEMENT: See Report DESCRIPTION: The City of Dublin Fiscal Year 2008/09 budget was adopted on June 26, 2008 prior to the California Legislature adopting a State budget. The City's Budget was prepared based upon certain assumptions and estimates in terms of both revenues and expenditures. Since the time that the City Budget was adopted, both the State Budget as well as the general economy experienced significant challenges, which were not part of earlier forecasts. To the extent that these conditions will directly impact City revenues and expenditures, it is appropriate to report to the City Council and public on steps being initiated at the local level to proactively respond to these conditions. Preliminary Nature of Information Available Prevents Calculation of Exact Impact It is important to understand that there is a significant time lag in the availability of key pieces of data which will assist in defining the precise extent of the impact. Two key areas which impact overall City revenues are Property Tax and Sales Tax. These two revenue sources account for over two-thirds (69%) of the Budgeted Fiscal Year 2008/2009 General Fund Revenue as shown below: Prouerty Tax & Retail Sales Tax As A Percentage of $53.2 million General Fund Revenue '2008/09 Bud et __ - % of TotalGeneral Fund`Revenuc Pro e Tax $ 22,920,050 43% Sales Tax (Includes In-Lieu $ 13,863,628 26% TOTAL $ 36,783,678 69% COPY TO: Page 1 of 4 ITEM NO. /• L- F:~Agenda~2008 StateBudget~Ag_2008_StateBudget.doc ~~ Due to the reporting nature of these revenue sources, there is a lag in the availability of data related to both Property Tax and Sales tax. The first significant property tax receipts are received by the Alameda County Tax Collector in December 2008. Given the economic issues and recent trends County officials have indicated a steady increase in the number of delinquent tax payments Countywide. While the City will ultimately get its share of the taxes, the revenues may be received in a different period. It is also unknown as to the outcome of property tax appeals submitted to the County seeking a reduction in the Assessed Value of the property, but Staff would expect it to have some effect on our revenues. Sales Tax data also has a significant lag time. In September 2008, Staff received detailed data regarding retail sales transactions that took place in April -June 2008. The first data related to current fiscal year revenue will not be received until December 2008 at which time Staff will receive July -September 2008 retail sales transactions. In terms of the State Budget there is also limited information available which would allow the City to more precisely plan for how mid-year actions by the State may impact local cities. Governor Schwarzenegger has recently made several proposals, but they require legislative action. On November 5, 2008, Gov. Arnold Schwarzenegger called the Legislature back for a special session to address a solution to the State of California's projected $11.2 billion shortfall. The Governor cited the extreme volatility in the stock market, decreases in consumer spending, and the housing slump as causes for the drop in California's revenues. How the Governor's proposal or some other legislative action would be precisely structured, and what impact the proposal(s) might have on the City remains unknown. Analysis of Impacts As discussed above, there is a fair amount of information which remains unknown or in a state of flux. In order to provide the City Council with an idea of the impacts of the recent economic upheaval, Staff completed an analysis of the potential impacts from the State, as well as evaluation of the assumptions used in the adopted Fiscal Year 2008/2009 City Budget. The detailed findings from this analysis are presented in Attachment 1. The Analysis indicates that there is a high likelihood that the City will need to make adjustments to its adopted Fiscal Year 2008/2008 budget in order to align with revised projections. The following Table summarizes the potential impacts discussed in Attachment 1 as they relate to the State Budget. The State of California is facing a significant Budget challenge only six weeks after the Legislature adopted its Fiscal Year 2008/2009 Budget. SUMMARY OF STATE BUDGET IMPACTS ~' P~tenti~lAd`ustmcnts- Preliminary~Im acts Description Jail Booking Fees ($7,000 - $20,000) Additional unbudgeted ex ense. Citizens Option For Public Safety ($15,000) would result in increased COPS General Fund expense. Vehicle License Fee (VLF Revenue ($50,000 - $80,000) Impact from economy and Legislator funding of State administrative costs. Property Tax Borrowing No proposal to date State could borrow up to 8% of roe tax. Total Im act From State Bud et $72,000 - $115,000 Page 2 of 4 Given the preliminary nature of proposals under discussion to address the State Budget deficit a precise impact on the City Budget is not possible. Staff will continue to monitor proposals and evaluate their potential impact on the City. The current economic conditions will also have direct impacts on the City's adopted FY 2008/2009 Budget. Attachment 1 provides a more detailed analysis of the major City Revenue Sources and the potential need to reduce revenues proposed for FY 2008/2009. The revenues that were analyzed represent approximately 75% of the Total City Revenue projected for Fiscal Year 2008/2009. The following Table provides a summary of this information: CTTMMeRV nF T.(1(`AT. RF.VFNTTF. TMPAf'TC nT1F Tn TNF, F.CnNnMY ~~ Preliminary Impacts ~ Potential Ad'ustments _ ~_ ~ Description Sales Tax Revenue ($500,000) Reduction due to economy and r cent closures of businesses. e Amount ma o hi her. Property Tax ($ 0 - $300,000) Depends on extent of assessment appeals granted and delinquent or late a ents. Transient Oeeu anc TaX Hotel Tax ($170,000) Decrease based on 1st qtr results. Interest Revenue Current No Change As the year progresses may need to address if available interest rates continue to decline. Building Permit Revenue ($0 - $415,000) will depend on whether large projects delay obtaining permits until after June 30, 2009. Development Processing Fee Revenue Current No Change Potential for a positive change if large planning projects proceed with more being completed in FY 2008/09 than on inall estimated. Traffic Impact Fees Current No Change Approximately $1.5 million is budgeted. Most of projects are being funded directly by develo ers orb cash reserves. Public Facility Impact Fees Potential Impact Approximately $7.1 million of the FY 2008/09 budgeted revenue was to be collected from projects where the developer is reconsiderin ro'ect timelines. Ne ative Im acts To Ci Bud et ($670,000 - $1,385,000 Items still remain under review. The amounts estimated above are considered preliminary and will require additional refinement as information becomes available. As noted in cases such as the Public Facility Fee collection, it may result in a need to reassess the timing of projects to be constructed. Based on these preliminary estimates, the combined impact of both the State Budget and local economic changes on the adopted City Budget has the potential to be between $742,000 - $1,500,000. In order to address these conditions Staff have immediately looked at initiating several steps to reduce the impact on the City. Adopted City Budget Identified Potential Need For Adjustment The potential for this review does not come as a surprise. On June 26, 2008, the Dublin City Council adopted a balanced budget (with a $64,545 projected surplus to reserves) for Fiscal Year 2008/2009. As part of the City Manager's Transmittal it was noted that the State of California was facing a budget deficit and it was suggested that potentially foregoing two planned expenditures would offset these impacts and maintain a balanced budget. The first was a delay of the planned San Ramon Road Landscape Renovation Page 3 of 4 Project with an estimated cost of $211,640. The second was the elimination of $53,000 in funding for the Dublin Unified School District Groundskeeper. At this time, the City Manager has directed the Public Works Director to defer any expenditure on the San Ramon Road Landscaping Project for the current fiscal year. As part of the Capital Improvement Program Update, Staff will provide a recommendation for revised timing of this project. With respect to the School District support, Staff is discussing with the Superintendent the impact of eliminating or reducing the support at this point in the fiscal year. The School District is also facing significant reductions in State funding and it would be appropriate to understand the implications before making a recommendation on this item. Staff will provide an update at the City Council meeting on any information obtained from the School District. Proactive Measures In addition to the deferral of the San Ramon Road Landscaping Project referenced above, the City Manager is working directly with City Staff as well as Contract Service providers to immediately identify areas where steps can be taken now to reduce costs without having a substantial impact on service levels. The largest contract service providers to the City are Alameda County Sheriff's Department (Police Services) and Alameda County Fire Department. Negotiated labor adjustments for these entities are not typically known until later in the year. The City Manager will be working with Alameda County Fire and the Alameda County Sheriff's Department to examine any potential cost savings in the Fiscal Year 2008/2009 Budget. In preparing for Fiscal Year 2009/2010, the City Manager has established a clear objective to examine opportunities to control costs with the City's contract service partners (both public and private). In terms of direct City Staff positions, a vacant Administrative Aide position in Community Development has been left unfilled. This vacancy will generate approximately $110,000 in General Fund Savings. In the event there are additional vacancies among City positions, they will not be automatically filled without first undergoing an evaluation of the City needs. Staff is also examining costs associated with improvement items included in the adopted budget to refine costs and where possible examine alternative funding sources. One such project being reviewed is the replacement of the 19 year old chairs used at the Council Chamber dais. Staff is examining options which may qualify for purchase with special funds designated for recycled products. If this alternative is deemed feasible, Staff will proceed with the replacement of these chairs using the special funds. In .the event that the available products do not adequately meet the City's needs, Staff would recommend that the General Fund budgeted item be deferred to a future year. Staff is also reviewing the periodic update of City fees and charges to assure that they are current and reflect appropriate cost recovery for City services. At the same time Staff is aware of the immense pressures on the Development and Business communities which pay these fees. Staff is examining opportunities to responsibly offer relief, potentially in terms of the timing of fee payments, and will seek to provide information to the City Council at a future meeting. Recommendation It is Staff's recommendation that the City Council: 1) Receive the Staff report and any updated information that may have become available after the report was prepared. 2) Defer the San Ramon Road Landscaping Project and continue to freeze the vacant Administrative Aide position; or provide Staff with direction on modifications to be enacted at this time. 3) Direct Staff to update the status as information becomes available and to present amid-year Budget Adjustment and revised funding plan once adequate information is available. Page 4 of 4 `i' PRELIMINARY ANALYSIS OF ECONOMIC IMPACTS ON FISCAL YEAR 2008/2009 ADOPTED CITY OF DUBLIN BUDGET (Prepared November 2008) In a normal fiscal year cycle, Staff reports to the City Council on mid-year adjustments to the adopted budget as part of a report presented after a full six months of data are available (approximately March of each year). However, there have been extraordinary events in the financial markets and economy that have directly impacted State and local revenues. In order to be proactive Staff has prepared this report which provides an analysis of State Budget Impacts as well as projected adjustments to the adopted City Budget. It is expected that Staff will report back at a future date with specific Budget adjustments and / or expenditure reductions, as additional data and information becomes available. STATE BUDGET IMPACTS Based upon the adopted State Budget as well as current proposals to amend the State Budget the following are key areas that can impact City spending. Jail Booking Fees - (Potential $7,000 - $20,000 Unbudgeted City Expense) In the adopted State Budget, the State reduced the amount that is provided to counties to offset the cost of the jail booking process. To the extent that the State does not fully fund these costs counties may impose on local jurisdictions a jail booking fee based on the number of persons booked by the local police agency. The adopted Fiscal Year 2008/2009 City Budget did not budget any funds for this expense. In Fiscal Year 2007/2008 the City incurred $6,373 in Booking Fee costs based on the State funding formula for that year. Citizens Option For Public Safety (COPS) - (Potential Reduction In State Grant Revenue $15,000) The adopted City Budget included $100,000 in state grant funding for Police Services Staffing costs. In the past this has been the minimum grant allocated to cities based on population. Although the City has received the $100,000 grant for several years, the Fiscal Year 2008/2009 Budget message noted that as part of the State Budget discussions there were considerations of eliminating the program. A recent proposal by the Governor is to change the source of funding for these grants which may reduce the total amount distributed. There is not specific implementation language that defines whether the minimum $100,000 threshold would be reduced. If the current change in funding is approved the total funds available are reduced by approximately 15%. Vehicle License Fee Revenue (VLF) (Potential Reduction In Revenue $50,000 - $81,000) The potential for receiving a reduction in the local share of the Vehicle License Fees collected by the State is a factor of both the economy and State budgeting practices. The Fiscal Year 2008/09 budget estimated revenue of $207,000 from VLF (Prior year actual as of June 30, 2008 was $197,245). The decrease in auto sales, automobile values as fewer new cars are sold; and vehicle registrations has reduced revenue. Two years ago the City received $261,276 from this source and with the reductions in auto sales it has declined. The State also has a direct impact in the amount of funds available for distribution. The State Legislature allows for Department of Motor Vehicles (DMV) administrative costs to be deducted before amounts are distributed to local agencies. These State administrative charges have been increasing at roughly 10% per year while the VLF revenue has been flat or declining. Property Tax Borrowing (Not currently listed as a proposal; 8% total property tax under Prop. lA) In 2004 the voters approved a Constitutional amendment that was established to impose restrictions on the ability of the State Legislature to balance its budget by redirecting local property tax revenues. Beginning in Fiscal Year 2007/2008 the Legislature may "borrow" not more than 8% of the local property taxes. There `;~~:~t-`~,,~ r l ~ i~~~ ~ Attachment 1 Page 1 of 6 PRELIMINARY ANALYSIS OF ECONOMIC IMPACTS ON FISCAL YEAR 2008/2009 ADOPTED CITY OF DUBLIN BUDGET (Prepared November 2008) are certain conditions including a requirement that the Governor declare a severe fiscal hardship and it requires 2/3 vote of both the Assembly and the State Senate. The Legislature must also enact a plan for the full repayment of the "borrowed funds" plus interest within three years. When this measure was enacted it is unlikely that this was foreseen as a potential mid-year action. Cities and other entities have already adopted budgets assuming that the full property tax levy is available. However, included in the Governor's recent proposals are significant mid-year adjustments to the school funding which are expenses that are the responsibility of the State. The potential for State "borrowing" in the current year will continue to be monitored by Staff as proposals are presented. Advance Release Of Proposition 1B Transportation Funds (No current City Proiects are identified) In 2006, California voters approved a major transportation improvement program, which included local allocations. The first allocation of $701,759 was used by the City of Dublin towards the Dougherty Road improvements between Houston Place to Interstate 580. It is estimated that the City will be eligible for a second allocation of approximately $666,834, however the State has not established a schedule for the release of these funds. The Governor has proposed an economic stimulus package, which will in turn boost revenues. The Governor proposes to expedite infrastructure bond funding appropriations of another $700 million in Proposition 1B local streets and roads funding, representing the next allocation. Local agencies would have to agree to encumber these funds by December 31, 2009. Staff will be evaluating whether there are potential projects eligible for Proposition 1B funds that could meet the 2009 deadline. The City will not be able to take any action until the program modification is announced by the State. Staff will continue to monitor this situation. ADOPTED CITY REVENUE BUDGET /ECONOMIC IMPACTS The City Budget and Financial Plan for Fiscal Year 2008/2009 was adopted as a balanced budget in terms of General Fund revenues and expenditures. Some of the General Fund spending for capital projects was projected to be funded from reserves established in prior years (Shannon Center Reconstruction; Historic Park; Civic Center Expansion Design; Fallon Sports Park Artificial Turf). The General Fund budget as adopted projected only a $64,545 contribution to reserves (i.e. Revenues were projected to exceed expenditures by approximately $64,000). During the first four months of the year the City has experienced the impacts from the global banking crisis and its effect on the national and local economy. These conditions will directly impact the City financially in terms of General Fund operating revenue as well as the timing of Impact Fee Program Revenue which is needed to fund identified capital projects. Sales Tax - (Projected Reduction of $500,000 -May go higher depending on economy) The City retains 1 % of retail sales tax generated in the City. The composition of the retail outlets located in the City is heavily weighted in two categories: Autos and Transportation and General Consumer Items. The following table shows the percentage of retail sales tax collected in Fiscal Year 2007/2008 from each of the major categories. Attachment 1 Page 2 of 6 .N~, ,, ..M ~ PRELIMINARY ANALYSIS OF ECONOMIC IMPACTS ON FISCAL YEAR 2008/2009 ~ ` ADOPTED CITY OF DUBLIN BUDGET (Prepared November 2008) Fiscal Year 2007 / 2008 Sales Tax By Major Business Groups Business Groin ..Percentage of Sales Autos & Transportation (Includes new and used auto dealers) 35% General Consumer (Includes general merchandise such as Target; Mervyns; etc.) 30% Restaurants & Hotels 9% Business & Indust 9% Buildin & Construction 8% Fuel /Service Stations 7% Food & Dru s 2% The fact that the Automobile Sales and General Consumer groups make up 65% of the sales and that both are struggling from economic pressures, magnifies the impact on City revenues. The preliminary projected adjustment is based upon reductions as a result of additional data that can be described under the following groupings: 1. Update of Fiscal Year 2008/2009 Budget based on June 30, 2008 results. (Minus -$240,000) As stated earlier in this report there is a significant time lag in receiving actual sales tax data. When the Budget projection is developed Staff typically have only six months of actual sales tax data. The second six months is estimated, which is then adjusted based on known information and projections for major categories to derive the Budget projection. Staff used the June 30, 2008 sales tax data (received in September 2008) and worked with HdL, the City's Sales Tax Consultant, to update the Fiscal Year 2008/2009 estimate. The revision assumes a continued slow down in most categories performing below the Fiscal Year 2007/20081evels. 2. Estimated impact of business closures partially offset by new businesses. (Minus -$260,000) In the adopted FY 2008/2009 budget, Staff did not include any revenues from the recently closed Ford of Dublin. However, since July 2008 additional retailers have declared bankruptcy and are undergoing liquidation sales. These retailers include: Mervyn's, Circuit City, Shoe Pavilion, and 84 Lumber. The former Crown Chevrolet dealerership also closed for a several days pending a re-opening under new ownership. The adjustment also accounts for the closure of Golfsmith and the temporary closure of the Alcosta Shell gas station (Alcosta and San Ramon) for reconstruction. Staff has offset these decreases with revised estimates from new retailers at the Dublin Place Shopping Center (Elephant Bar, Panera Bread, Chipotle, etc.). Since there are no known retailers at this time to occupy the vacant or soon-to-be- vacant retail spaces, Staff has not attempted to make any adjustment for the possibility of a replacement generating sales tax during this fiscal year. 3. Unknown impact of continued deterioration of retail sales including automobiles. The estimates above (Items 1 and 2) have been based on reductions in retail sales. The City does not have any actual retail sales data for transactions after July 1, 2008. The first data will be received in December 2008 /January 2009. These trends and results will be closely monitored and may result in further adjustments. Attachment 1 Page 3 of 6 ~r ~. PRELIMINARY ANALYSIS OF ECONOMIC IMPACTS ON FISCAL YEAR 2008/2009 ;r ADOPTED CITY OF DUBLIN BUDGET (Prepared November 2008) The City has experienced fluctuations in Sales Tax over the past few years. In Fiscal Year 2007/2008 new retailers opened including Lowes and Hummer /Saturn /Saab. Even with these additions the economic trends indicate a substantial decline in revenue for the current year. Historical Trend Sales Tax Revenue (Includes In-Lieu Sales Tax) [Actual As Reported In Comprehensive Annual Financial Report] 2004/2005 2005/2006 2006/2007 2007/2008 2008/09 '' Actual Actual _ :actual Actual Budget __ Bud et 2008/09 $ 13,863,628 Preliminary Adj. 11/08 50( 0,000) Adjusted Projection for 2008/09 Compared to $14,517,465 $14,807,059 $14,025,869 $14,225,661 $13,363,628 Four Prior Year Actual Property Tax - (Potential decline from appeals and delinquent payments $0 - $300,000) The adopted Fiscal Year 2008/2009 budget estimated nearly $23 million in revenue for the current fiscal year. Staff has a meeting scheduled with the City Property Tax Consultant on November 19, 2008 to discuss the Fiscal Year 2008/2009 tax roll and current trends. The City will receive its first significant payment in December 2008. The potential for declines in this revenue- will be affected by assessment appeals granted as well as delinquent and late payments. The City will ultimately receive any unpaid taxes including penalties and interest. The current year Budget estimate for property tax is 3.7% more than the final actual collected last fiscal year. Preliminary information from the County Assessor showed that the assessed values for the secured property component increased by approximately 5%. However, other portions of the property tax revenue are projected to grow by a smaller percentage. The uncertainty of factors that can have a further negative impact accounts for the wide range of potential adjustments to Property Tax revenue at this time. Staff will continue to monitor this revenue as the year progresses. Property Tax Revenue By Type Fiscal Year 2007/2008 Actual Compared To Fiscal Year 2008/2009 Budget 2007/2008 Actual 2008/09 B~aget Chan` e Current Secured $16,114,834 $17,000,000 Current Unsecured 1,026,800 973,550 Prior Year Taxes (Secured / Unsecured) 412,481 380,000 Su lemental Pro er Taxes 958,453 875,000 In Lieu Pro er Tax -State 3,352,904 3,550,000 In-Lieu Property Tax -Housing Authori 42,304 6,500 Penalties 190 653 ,135 000 TOTAL $22,098,429 $ 22,920,050 3.7% Attachment 1 Page 4 of 6 " Ar C-d~'A ' f v- PRELIMINARY ANALYSIS OF ECONOMIC IMPACTS ON FISCAL YEAR 2008/2009 °; ADOPTED CITY OF DUBLIN BUDGET (Prepared November 2008) Transient Occupancy Tax (TOT) - (Projected Reduction of $170,000) Based on the fact that first quarter of revenue tax receipts in this category are down by 20.5% compared to Fiscal Year 2007/2008, Staff has reduced projected revenues by $170,000. These results may have been skewed by reduced occupancy at the Amerisuites Hotel as the owners did room renovations and rebranding of the Hotel to a Hyatt Place. Staff will monitor these revenues closely. Interest Revenue - (Monitor need for adjustment will depend on interest rates). During the first quarter the interest rates achieved and estimated balance invested were close to the assumptions used in the Fiscal Year 2008/2009 Budget. In the event that interest rates continue to decline an adjustment may be required. The budget estimate of General Fund interest revenue in Fiscal Year 2008/2009 is approximately $2.3 million. Building Permit Revenue - (Monitor -adjustment will depend on project timing $0 - $415,000.) The Fiscal Year 2008/2009 budget projected approximately $2 million in revenue. The actual revenue collected in the previous year was approximately $1.5 million. Some developers have indicated that they are experiencing delays in financing the construction of their projects. This in turn delays the payment of building permits and undertaking construction.. In the Fiscal Year 2008/2009 Budget Staff assumed that some of the permits fees associated with the Windstar Apartment (West Dublin BART Station) and The Green At Park Place (Blake Hunt Project - Hacienda at I-580), would be paid prior to June 30, 2009. In the event that these projects were both delayed until Fiscal Year 2009/2010 the estimated revenue for Building Permits .would be decreased by approximately $415,000. Besides these two projects nearly $1 million in revenue was estimated to result from other new residential projects that are developing in phases. These Developers may also slow the rate at which they obtain permits which will reduce the revenue collected. The building Official indicates that up to a 10% reduction from the estimate may occur. The Community Development Director and Building Official closely monitor the level of contract building inspectors and make adjustments based on workloads in order to control costs. However, due to the fact that inspections can occur beyond the year the permit is obtained, it can create a lag in the direct correlation of revenue and expenses for the building inspection activity. Staff will continue to monitor this activity. Development Processing Revenue (Monitor -need for adjustment will depend on project timing.) The Fiscal Year 2008 / 2009 Budget projected a decrease in the total revenue for Development related processing and inspection. The following Table shows the final Fiscal Year 2007/2008 results along with the Budget as adopted for Fiscal Year 2008/2009. Primary Development Related Charges For Service Fiscal Year 2007/2008 Actual Compared To Fiscal Year 2008/2009 Ruduet 2007/2008 2008/09 % _ _ Aetual Budget Chan e Zoning & Subdivision Fees $ 1,871,929 _ $1,688,909 Plannin / Ci Attorne Plan Check & Inspection 1,921,670 1,434,304 Public Works / En ineerin TOTAL $ 3,793,599 $ 3,123,213 -18% Attachment 1 Page 5 of 6 PRELIMINARY ANALYSIS OF ECONOMIC IMPACTS ON FISCAL YEAR 2008/2009 r ADOPTED CITY OF DUBLIN BUDGET (Prepared November 2008) As shown above, the Budget projected a decrease of 18% in development planning activity revenue. Recent meetings with developer representatives have indicated that there maybe potential for longer term projects, to have more activity than was assumed in the Budget assumptions. This would include the SunCal Companies initiating the start of planning on the Camp Parks project as well as Kaiser Permanente potentially beginning the planning process for their property at Fallon Road. Both of these are large scale projects which will also have impacts on expenditures. However, the City would be recovering those costs as well as an allocation of overhead and any direct Staff costs. Until further meetings are conducted with the project representatives precise budget impacts are unknown, however they could be positive depending on the timing of the formal project application. Staff will continue to monitor these conditions. Traffic Impact Fees - (Monitor - no projected need for adjustment at this time.) The appropriations in Fiscal Year 2008/2009 from the Traffic Impact Fee Fund total nearly $19.5 million. However, it is important to note that the revenue collected from fees in this same year are only projected to be $1,556,741. A majority of the expenditures in this fund are being expended from reserves, including funding provided by Developers for the Fallon Road Interchange project. As of June 30, 2008 available balances in the Traffic Impact Fee Funds totaled approximately $23.5 million. Based on the scheduled work in Fiscal Year 2008/2009 the projected amount of fees should not present any problem with work underway. It may result in an adjustment to the progress payments made for repayment of funds advanced by the City of Pleasanton; Alameda County; and Bay Area Rapid Transit District (BART). Staff will evaluate the impact this further in the coming months. Public Facility Fees (PFF) - (Evaluate further -delay in development projects may require a delay in the construction of PFF projects not currently under construction.) The Fiscal Year 2008/2009 revenue budgeted from these sources totaled $8.9 million. Public Facility Impact Fees (PFF) fund portions of the following types of capital projects: park land, park improvements, Aquatic Center, Libraries, Community Buildings, and the Civic Center Expansion. The major projects with PFF funding in Fiscal Year 2008/09 are: a portion of the Shannon Center Reconstruction ($1,017,290); initiation of the design of the Emerald Glen Aquatic Center ($836,784); Park Play Area Renovation ($59,500); Passatempo Park preliminary design ($72,807); Fallon Sports Park ($4,192,556). The total budgeted expenditures in Fiscal Year 2008/09 are approximately $6.2 million. The timing of receiving Public Facility Fee revenue will impact the overall ability to proceed with projects at critical milestones. For example, the Fallon Sports Park project is a $14.3 million project spread over two years. A majority of the Fiscal Year 2008/2009 revenue in the Public Facility Fee category was projected to be collected from Park Land fees which are collected at the time of the final map or for the Windstar Apartments at the time of the Building permit. Approximately $7.1 million in Public Facility Fees were expected to be collected from the following projects: Windstar (West Dublin BART); Fallon Crossing / Standard Pacific (Tassajara Road); and Pinn Brothers Phase IV (Silvera Ranch). These project developers have given indications that with the current market conditions they are assessing the timing of their projects. If they are delayed into the next fiscal year, this will impact the fees available to proceed with projects. Staff will be doing a more thorough cash flow projection in the upcoming month in order to determine whether the schedules for City Capital Projects funded with PFF need to be altered based on estimated cash flow. Attachment 1 Page 6 of 6