Fiscal Year 2013-2015 Special Budget Meeting

Page 12 FY 2013-2015 BUDGET HIGHLIGHTS VI. CAPITAL IMPROVEMENT PROJECTS A Capital Improvement Program (CIP) represents a major investment in a city's infrastructure and assets. It must balance repair and replacement of existing assets with delivering new assets where they may be needed. It must reflect the overall priorities of the City. It has a huge impact on the health and vibrancy of the community. Capital projects are defined as a long-term investment that builds, replaces or improves an asset (buildings, roads, parks, sewer and drainage lines, technology systems, etc.) and that has a useful design life of at least ten years and a minimum cost of $50,000. Oakland's Capital Improvement Program (CIP) is formally reviewed and approved every two years, as part of the biennial policy budget. There are limited sources of internal funding available for capital improvements, typically with restrictions on their use within broad categories, described below. Grants are another source of funding for capital projects. While often a major source of capital funding, they are even more limited, typically competitive and cyclical in nature. Internal Sources: The following are the major sources of funding for capital investment in Oakland:  Sewer Service Fund (Fund 3100). Limited to funding maintenance and capital improvements to the sanitary sewer collection system.  Measure B - Transportation (Fund 2211). Limited to funding transportation and traffic safety improvements within the public right-of-way.  Measure B - Bicycle and Pedestrian (Fund 2212). Limited to funding bicycle and pedestrian safety and accessibility improvements within the public right-of-way.  Vehicle Registration Fee (Fund 2215). Limited to funding transportation and traffic safety improvements within the public right-of-way. Grant Sources: Additionally, Oakland aggressively pursues grant opportunities for various capital improvements. While by their nature these grants are only available for specific projects and purposes, they do represent a significant addition to local funds. They represent the most viable source to fund new improvements and allow internal funds to be kept available for existing assets. In the period including the last two fiscal years to date, staff successfully applied for and received a total of $36 million in grants for 29 capital projects. Staff will continue to seek grants when projects are competitive and meet the City's need to address unfunded priorities. A total of $87.8 million is recommended for investment in 27 projects, summarized here:  Buildings and Facilities — 7 projects, $1.4 million  Sewers — 12 projects, $29.1 million  Streets, Sidewalks — 10 projects, $19.6 million  Traffic Improvements — 5 projects, 4.5 million  Garage Improvements — 3 projects, $33.2 million (subject to State Approval of Redevelopment disposition) Like many older cities, Oakland has an aging infrastructure and a significant backlog of deferred maintenance. The proposed CIP includes funding for only a small portion of this backlog or need, reflecting the limits of existing fund sources. Because of this, a strategic approach to prioritizing the remaining unmet needs is needed. Such an approach will necessarily require an assessment of core City programs, the assets needed to deliver those programs, a condition assessment of those City's assets, and a long-term funding approach to addressing those assets considered critical to core functions and future growth.