Linking Capital Budget and City Planning Process: A Case study of Milpitas, CA
Introduction
This article provides linkages and lack of linkages between the Capital Budget and the City planning process. The Coordination of the “General Plan”, the “Capital Improvement Program” and the “Budget & Financial Plan” over a span of at least four to five years is important for successful operations of any city. The observations in this blog is based on the Milpitas General Plan, Annual reports of Budget and financial plan from 2016–2019 and finally the Annual reports of the 5-year Capital Improvement Program from 2016–2019 of Milpitas.
About Milpitas
Location: Santa Clara County, California
Size: 18 sq mi (2.6 sq mi of land area)
Population: 70,8171
Location map:
Milpitas experienced rapid growth lately and has developed into a suburban center. Majority of the valley floor is fairly new — with the exception of the Great Mall (previously Ford Motor Company plant), and some scattered subdivisions and buildings along Main Street. Rapid growth in the region has left little room for expansion of the City boundaries in the flatlands. The Milpitas Planning Area encompasses an area of approximately 18 square miles, extending between the south end of the San Francisco Bay and the Los Buellis Hills of the Mount Diablo Range in northern Santa Clara County
Brief Economic History
Milpitas is considered the “Crossroads of Silicon Valley”. The leading economic segments in sales tax are apparel stores, restaurants, electronic equipment and auto sales. The five largest manufacturing employers are Cisco Systems, Inc., KLA-Tencor Corporation, SanDisk Corporation, Linear Technology and Flextronic. The Great Mall is the largest enclosed mall in Northern California with almost 1.1 million square feet of leasable space for retail and entertainment operations. Several local shopping centers cater to the needs of Asian oriented retail and services. The lack of available homes continues to push the housing prices higher.
GENERAL PLAN
Guiding Principles:
Land use element:
- Maintain a land use program that balances Milpitas’ regional and local roles by providing for a highly amenable community environment and a thriving regional industrial center.
- Maintain a relatively compact urban form. Emphasize mixed-use development to the extent feasible, to achieve service efficiencies from compact development patterns and to maximize job development and commercial opportunities near residential development.
- Provide for a variety of housing types and densities that meet the needs of individuals and families.
- The Town Center will be the “heart” of Milpitas’ civic, cultural, business, and professional life.
- Park-like setting will be created by a series of local parks, school sites, trails, and a greenway system laced throughout all living areas.
- The City should consider a long term approach to managing its income/job generating lands and the impacts of development on public services.
- Manage the City’s future growth in an orderly, planned manner that is consistent with the City’s ability to provide efficient and economical public services.
Circulation Element:
- Maintain acceptable service standards for all major streets and intersections.
- Create accessible transportation networks to meet the needs of all segments of the population, including youth, seniors, persons with disabilities and low-income households.
- Develop a street network integrated with the pattern of living, working and shopping areas, and which provides for safe, inviting, convenient, and efficient intermodal movement within the City and to other parts of the region.
- Create a balanced multimodal transportation network that meets the needs of all users of streets, roads, and highways for safe and convenient travel in a manner that is suitable in respect to the community context of the general plan
- Implement measures that increase transit use and other non-motorized travel modes that lead to improved utilization of the existing transportation system, such as improvements to access public transit stops and stations by walking and biking, and provide transit stops near employment centers and higher density residential developments.
- Promote walking and bicycling for transportation and recreation purposes by providing a comprehensive system of sidewalks, bicycle lanes and routes and off street trails that connects all parts of the City and end-of trip support facilities for bicyclists at centers of civic, retail, recreation, education, and work activity.
Open Space & Environmental Conservation Element:
- Provide a park and recreation system designed to serve the needs of all residents of the community.
- Develop a diversified trail system along stream sides and other public rights of way to provide recreational opportunities and link facilities.
- Protect and conserve open spaces which are necessary for wildlife habitats and unique ecological patterns.
- Preserve and protect populations and supporting habitat of special status species within the Planning Area, including species that are state or federally-listed as Rare, Threatened, and other species proposed for listing.
- Support agricultural activity that is compatible with urban uses, and as an interim use in areas that are designated for urban uses. Provide for extraction of minerals to help meet future regional needs in an environmentally sensitive manner.
- Preserve existing historical and cultural resources, especially those sites where an Historical Park may prove feasible.
- Preserve the natural beauty of the Milpitas area and Establish a network of continuous and varied Scenic Routes that provide views of Scenic Resources and access from urban areas and the regular transportation network to parks, open spaces and cultural attractions.
Seismic and Safety Element:
- Minimize threat to life and property from seismic and geologic hazards.
- Minimize threat to life and property from flooding and dam inundation.
- Provide high quality, effective and efficient fire protection services for the Milpitas area residents.
- Use the City’s Emergency Management Plan as the guide for emergency management in the Planning Area.
Noise Element:
- Maintain land use compatibility with noise levels similar to those set by State guidelines.
- Minimize unnecessary, annoying, or injurious noise
Housing Element:
- Provide Adequate Sites. Maintain adequate sites to accommodate the City’s share of the regional housing need.
- Maintain high‐quality residential neighborhoods and preserve existing housing resources, including units affordable to extremely low‐, very low‐, low‐, and moderate‐income households and market rate units.
- Promote new housing development and remove public infrastructure constraints to new housing development.
- Support the development of a diverse range of housing types, including rental and ownership units, housing affordable to all economic segments of the community, and housing for individuals with special housing needs.
- Eliminate Housing Discrimination.
- Promote energy efficiency in residential development in Milpitas, including reduction of energy use through better design and construction in individual homes and energy‐efficient urban design.
Planning Areas
The Milpitas Planning Area encompasses an area of approximately 18 square miles, Milpitas’ incorporated limits represent about 13 square miles of the Planning Area; while the remainder of the land is unincorporated
The city is divided into two sub-areas
- Valley Floor: About one-third of the developed land in the Valley Floor is devoted to Single Family Low-Density Residential use, with all designated residential areas accounting for about 46% of the Valley Floor. About 25% of the Valley Floor is designated for industrial (Manufacturing and Industrial Park) uses. About 15% of the total land in the Valley Floor is vacant and available for development.
- Hillside: The conditions warrant Plan proposals and use classifications that differ from those for the Valley Floor Area. To ensure safety and to preserve its natural ambiance, all development in the Hillside Area is to be of low-density rural residential nature.
The General Plan Land Use Map has two specific plans:
- Midtown Specific Plan
- Transit area plan
ANNUAL BUDGET AND FINANCIAL PLAN
Budgetary Process
As of FY 2019–20
The annual budget process has almost been the same over the last 5 years, with an exception of including community participation in various stages. Until FY 17–18, there was only one public hearing scheduled towards the very end of the process. In FY 18–19, the city decided to include community engagement from the very beginning of the budgetary process. Only in FY 19–20, public hearings, community engagement and Town halls were scheduled across the budgetary process, for the back and forth of the proposed budget.
Budget Preparation
Key players and organizations
- Director of financial services
- Finance Manager
- Finance Budget team
- Budget Manager
- Budget Liaisons
- City council
- Senior Management Staff
- City Manager
- Department/ division heads
- HR Director
- Public works director
- Finance Subcommittee
Responsibilities of few key players:
The Director of Financial Services is the most active key player throughout the Budget preparation with various responsibilities such as overview of general financial status, budget project for non departmental, conduct revenue discussions, discuss Capital Outlay requests, review drafts and proposals. The Director of Financial Services is responsible for providing periodic budget status reports to the City Manager and the City Council and monthly budget reports to the Department Heads to facilitate control and compliance with the budget.
The Department Heads are responsible for monitoring their respective budgets for compliance with the intent of Council priorities and for ensuring that appropriations of the aggregate total of the department are not exceeded.
The City Manager is responsible for proposing to the City Council a balanced budget which is consistent with the Council’s service level priorities and sound business practices. The City Manager is also responsible for establishing a system for the preparation, execution, and control of the budget which provides reasonable assurances that the intent of Council policies is met.
Another key player during the budget preparation are the Budget Liaisons, they are responsible for providing details for each line item, request for new positions, reclassification and reallocation of existing positions due to finance, provide all budget preparation information due to finance, review the budget changes and help employees whose split funding will be different in the financial year with Personnel action forms.
Budget Forecast Methodology
CPI is projected to be in the 2 to 3% increase range based on the average urban Consumer Price Index in the last 10 years for the San Francisco-Oakland-San Jose Metropolitan Areas. CPI is only applied to non-major revenues and only after specific annual trends have been reviewed.
Sales Tax: Staff’s assumption for FY 18–19 sales tax revenue is an 11.8% increase from the FY 17–18 estimate. The projected increase reflects continuing economic growth in the region and population growth in the City as many of the new residential developments are constructed and occupied. It is assumed that Milpitas businesses will capture a portion of the consumer spending, especially in the retail and restaurant economic segments. The projection is consistent with the projection of the City’s sales tax consultant.
Property tax revenues are estimated to increase by 8.9% in FY 18–19 from the FY 17–18 budgeted revenue. The increase is partially attributed to the inflation adjustment allowed by Proposition 13 at the lower of 2% or California Consumer Price Index, and partially due to new residential units that added to the assessed valuation of the secured properties. The projection is consistent with the assessed valuation information provided by the County of Santa Clara Assessor’s office. In addition, pursuant to ABx1 26 that legislates the dissolution of the redevelopment agencies (RDA), all remaining RDA property tax revenue after satisfying the approved obligations of the RDA, will be distributed to the taxing entities within the RDA project area.
Transient Occupancy tax revenue is projected to increase $1,248,000 or 13.9% from the FY 17–18 budget. All 19 hotels in the local area continue to have high occupancy rates, and it is anticipated that FY 18–19 will continue with a slight increase.
Building permit and inspection revenues in FY 18–19 are projected to be $7.2 million, an increase of 15.2% or $0.9 million over the FY 17–18 budgeted revenue. It is anticipated that residential developments will continue at a high level similar to FY 17–18 and TASP growth will be strong. The projection is based on the number of recent applications submitted and the potential commencement dates of the construction. Building permits, inspection revenues from home and commercial tenant improvement are included in the projection.
Fund Structure (as of FY 19–20)
Types of Funds
- General Fund
- Special Revenue Funds
- Capital Project Fund
- Enterprise Fund: water and sewer funds
Dollar amount for each fund:
The revenues for enterprise funds are at an all time high in FY 2019–20 due to water and sewer bonds issued in that year. The revenue bonds make it risky as it is highly dependent on the end product to pay back its bonds. However, the revenues from Capital Project Funds have plummeted due to no revenues from three of the impact fees due to no new developments in those categories.
Distribution of Revenues FY 2019–20 (all funds)
Dollar amount for expenditures of each fund:
There has been a significant decrease in park improvements and transit area impact fee by function in the last two years leading to low expenditures in Capital project funds. Expenditures in the general fund have gone up since FY 2017–18 due to expenses of city manager and building inspection services. New categories of expenditures have been added from then.
Distribution of Expenditures FY 2019–20 (all funds)
For all governmental funds, revenues and expenditures are budgeted on a modified accrual basis. for all proprietary funds, revenues and expenditures are done on an accrual basis.
Modified Accrual Basis is accounting in which revenues are recognized when measurable and available, and expenditures are recorded when the fund liability is incurred.
Accrual Basis is accounting in which transactions are recognized at the time they are incurred, as opposed to when cash.
Budgetary Approach
The City Manager’s proposed budget, the Preliminary Budget and Financial Plan, shall be
presented in a form which is sufficient to allow the City Council to determine and review:
- Provision of City Council priorities as established at the annual Planning Session;
- Projected revenues by major category;
- Operating expenditures by department or program, and by fund;
- Historical Staffing by Division and Service levels;
- Statements of objectives and accomplishments;
- Recommendations for policy changes and impact;
- Capital improvement appropriations by project.
- Comparison with the preceding year’s actual results and current year’s projected results will be provided for each category of revenue and expenditure shown in the budget.
- A statement of the services reduced or eliminated and the services improved or added, as compared to the current year, will be included.
- A schedule of General Fund Revenue and Expenditure projection for the next five years.
CAPITAL IMPROVEMENT PROGRAM
Timeline and process:
The process has almost been the same over the last 5 years, with an exception of including community participation in various stages. Another exception is, in FY 17–18 was the separated timelines for Capital improvement program and operating budget, with their respective schedules for public hearing, community meetings and adoptions.
Key Players and organizations involved in the CIP process:
- Finance Manager
- CIP Staff
- CIP Accountant
- Land Development Principal Engineer
- Utility Engineering Staff
- Senior Management Staff
- City Management
- PRCRC
- Finance Subcommittee
- Public Works Director
- Director Of Financial Services
- Budget Manager
- Planning Commission
- City Council
Structure Of The Document:
The annual CIP document is arranged into six sections:
- Community Improvements
- Parks
- Streets
- Water
- Sewer
- Storm Drain
These projects are then divided into New Projects, Planned Projects and Projects with funding.
New Projects: These are the projects that are added to the document every year.
Planned Projects: are the ones that are introduced the previous year but they have not been advanced through the planning process to the first funded year.
Funded Project: are the ones with funding.
Linkages Between CIP and General Plan
Good Linkages:
- Mention of project in CIP document of 2017–22:
TASP Underground Utility District
Priority: Improve the Quality of Life
This project provides for the creation of new Underground Utility District (UUD) #7 within the City’s Transit Area Specific Plan redevelopment area. The new district would be administered by the City, with engineering design and construction to be completed by PG&E.
With the vision and goals of the General Plan’s Transit Area Specific Plan to develop into a high intensity TOD, the infrastructure needs to match its demand and therefore this project seems to be a perfect linkage. The priority of the project also aligns with the policies and guidelines of the General Plan.
2. Mention of project in CIP document of 2017–22:
Street Resurfacing Project 2018
Priority: Rehabilitation of Existing Capital Assets or Systems
This project provides for roadway pavement repair including overlay and reconstruction. It also consists of implementation of Class II bike lanes, and Class III bike route facilities as described in the 2009 updated City of Milpitas Bikeway Master Plan.
The Bikeway Master Plan was amongst the Circulation Element of the General Plan, Milpitas which was amended in 2009 to update various parts of the chapter. These upgrades also align with the Bikeways Policy: 3.d-I-13 Make improvements to roads, signs, and traffic signals as needed to improve bicycle travel.
Lack of Linkages:
- Mention of project in CIP document of 2018–23:
Carlo Park
Priority: Infrastructure and Community Facilities Maintenance
This project provides design and construction of a new park on an undeveloped 5,200 square foot City-owned parcel at the south-west corner of South Main Street and Carlo Street. The parcel is an opportunity to provide for a small park with ADA pathway, landscaping, irrigation, bench(s) and interpretive displays.
The location of Carlo Park in the Land Use Masterplan of the General Plan document is inconsistent as the parcel in that area is zoned as Mixed Use (MXD).
Reference of Images:
2. Mention of project in CIP document of 2017–22:
Feasibility & Location for Performing Arts Theater
Priority: Studies and Analyses
The original feasibility study is now ten years old. Staff will update the study and evaluate the reuse and renovation of existing building structures to house the facility and would update anticipated construction and operating costs.
Study and analysis is mentioned as the priority in the Capital Improvement Plan Document. However there is no mention of any guidelines or policies that align with the General Plan.
Linkages Between CIP and Budget & Financial Plan
Good Linkages:
- Mention of project in CIP document of 2019–24:
Midtown street light project
Priority: Economic Development and Job Growth
This project provides for the installation of Midtown decorative street lighting and signal improvements along South Main Street from Carlo Street to Great Mall Parkway. The Corning to Curtis phase would be completed after PG&E Rule 20A undergrounding of overhead utilities.
The Budget Document has been consistent with the CIP documents for this project over the last four years i.e., from FY 2016–17 to 2019–20. The improvements are expected to reduce maintenance costs. However, the cost savings amount has not been determined at this time.
2. Mention of project in CIP document of 2019–24:
Montague Ped. Overcrossing at Penitencia Creek
Priority: Improve Quality of Life
The pedestrian overcrossing is part of the Transit Area Specific Plan (TASP) circulation infrastructure improvement to provide safe and convenient pedestrian circulation between TASP residential developments, schools, and park sites.
The budget document of FY 2019–20 is consistent with the CIP document of 2019–24. Both of these documents have an estimated cost of $2,700,000 set aside for improvements.
Lack of Linkages:
- Mention of project in CIP document of 2016–21:
City Hall Pond & Water Feature Rehabilitation
Priority: Rehabilitation of Existing Capital Assets or Systems
The project provides for the replacement of the pump system for the pond and water feature in front of City Hall, and provides for the replacement and upgrade of the chlorination and water quality systems. The project also provides for the re-coating of the pond at the rear of City Hall with a system that is less prone to annual maintenance.
This project Is not reflected in the capital budget of any documents from FY 2016 to 2019, expecting a lump sum amount set aside in the year 2019.
2. Mention of project in two CIP documents — 2015–20 and 2016–21:
City Parking Lot Improvements
Priority: Rehabilitation of Existing Capital Assets or Systems
This project provides for minor pavement replacement, seal coating and restriping of City parking lots at City buildings including the Civic Center, Sports Center, Public Works, and Police Department. This project will also include required ADA upgrades to the handicap parking stalls and ramps within the parking areas, as needed.
The project is scheduled to receive funds in FY 2017–18, however the project is not listed in CIP document 2017–2022 or the Budget document of FY 2017–18.
Overall Assessment of Linkages and City Performance
What works
- There is a governing body — the planning commission that reviews the consistency of CIP with the General Plan.
- The GP articulates concise and a comprehensive vision.
- The Budget Document and the CIP are very consistent.
Areas of Improvement
- Greater transparency for average citizens for better understanding and easier approachability.
- Consistency in figures to make the document more appealing and interesting.
- The CIP document does not mention any guidelines or policies that could be linked to the General Plan document. It only has a sub-heading titled priority with an ambiguous phrase aligning the General Plan.
Suggestions and Strategies
- The detailed coding for guidelines and policies in the General Plan could be used in the CIP document for better linkage between both these documents.
- The CIP projects could be ranked in the order of priority.
- The budget document could be structured in a way for easy consumption of residents.
References
Milpitas. “2015–16 Budget & Financial Plan.” 2015.
Milpitas. “2015–20 Capital Improvement Plan.” 2015.
Milpitas. “2016–17 Budget & Financial Plan.” 2016.
Milpitas. “2016–21 Capital Improvement Program.” 2016.
Milpitas. “2017–18 Budget & Financial Plan.” 2017.
Milpitas. “2017–22 Capital Improvement Program.” 2017.
Milpitas. “2018–19 Budget & Financial Plan.” 2018.
Milpitas. “2018–2023 Capital Improvement Program.” 2018.
Milpitas. “2019–20 Budget & Financial Plan.” 2019.
Milpitas. “2019–24 Capital Improvement Program.” 2019.
Milpitas. “City of Milpitas General Plan .” Last Amended: April 2015.
Milpitas. “Milpitas Midtown Specific Plan.” updated 2010.
Milpitas. “Milpitas Transit Area Specific Plan.” Amended December 2011.
