ADOPTED Supplement 16-17

San Luis Obispo, California
2015-17 Financial Plan
Supplement
Adopted 2016-17 Budget

2015-17 Financial Plan Supplement
July 1, 2016
JAN HOWELL MARX, MAYOR
DAN CARPENTER, VICE MAYOR
CARLYN CHRISTIANSON, COUNCIL MEMBER
JOHN ASHBAUGH, COUNCIL MEMBER
DAN RIVOIRE, COUNCIL MEMBER
Katie Lichtig, City Manager
Prepared by the Department of Finance & Information Technology
Derek Johnson, Interim Director, FIT & Assistant City Manager
Shelly Stanwyck, Director, Parks & Recreation
Xenia Bradford, Budget Manager
Traci Kawaguchi, Accountant
Kelly Medina, Administrative Assistant
Proposed 2016-17 Budget

REPORT PRODUCTION AND ANALYSIS
Budget Review Team
Katie Lichtig, City Manager
Derek Johnson, Interim Director of FIT & Assistant City Manager
Monica Irons, Director of Human Resources
Shelly Stanwyck, Director of Parks & Recreation
Greg Hermann, Principal Analyst
CIP Review Committee
Michael Codron, Director of Community Development
Garret Olson, Fire Chief
Carrie Mattingly, Utilities Director
Daryl Grigsby, Director of Public Works
Barbara Lynch, Deputy Director & City Engineer, Public Works
Budget & Report Production Staff
Cheryl Blair, Administrative Analyst
Ryan Betz, Administrative Analyst
Department Fiscal Officers
Cori Ryan, Community Development
Cheryl Blair, Utilities
Julie Cox, Fire
Nickole Sutter, Human Resources
Kelly White, City Attorney’s Office
Lindsey Stephenson, Parks & Recreation
Melissa Mudgett, Parks & Recreation
Melissa Ellsworth, Police
Ryan Betz, Public Work
Finance & Information Technology Staff
Derek Johnson, Interim Director of FIT &
Assistant City Manager
Vilma Warner, Finance Operations Manager

TABLE OF CONTENTS
(a)
PREFACE
Budget Process Overview i
How to Use the Financial Plan Supplement iii
About the City iv
Goal-Setting and the Budget Process v
Section A
INTRODUCTION
Budget Message A-1
Mission Statement A-23
Organizational Values A-24
Directory of Officials and Advisory Bodies A-25
Organization of the City A-26
Awards for Distinguished Budget Presentation
and Excellence in Budgeting A-27
Section B
STATUS OF GOALS & OBJECTIVES
Overview B-1
2015-17 Action Plans
Open Space Preservation B-4
Multimodal Transportation B-9
Housing B-13
Neighborhood Wellness B-20
Laguna Lake Restoration B-23
Fiscal Sustainability and Responsibility B-25
Downtown B-28
Section C
BUDGET GRAPHICS
Overview C-1
Combined Expenditures and Revenues: All Funds
Total Expenditures C-2
Total Funding Sources C-3
Operating Program Expenditures by Function C-4
Operating Program Expenditures by Type C-5
Capital Improvement Plan Expenditures C-6
Debt Service Expenditures by Function C-7
Total Expenditures by Fund C-8
General Fund Expenditures and Uses C-9
General Fund Operating Program Expenditures
By Function C-10
By Type C-11
General Fund Revenues C-12
Authorized Regular Staffing by Function C-13
Changes in Financial Position Summary: 2015-16 C-14
Changes in Financial Position Summary: 2016-17 C-15
Section D
OPERATING PROGRAMS
Overview
Purpose and Organization D-1
Summary of Major Functions and Operations D-2
Expenditure Summaries D-3
Operating Expenditure Summaries
Operating Expenditures by Function D-4
Operating Expenditures by Program
Public Safety D-6
Public Utilities D-7
Transportation D-8
Leisure, Cultural and Social Services D-9
Community Development D-10
General Government D-11
Operating Expenditures by Department D-12
Expenditure Trends by Type - All Funds D-14
Expenditure Trends by Type – General Fund D-15
Significant Operating Program Changes
Supporting Documentation D-16
Section E
CAPITAL IMPROVEMENT PLAN (CIP)
Overview E-1
Summary of CIP Expenditures
By Fund & Funding Source E-2
CIP Project Expenditures
By Fund E-4
Supplemental CIP Project Description E-12
Section F
DEBT SERVICE
Introduction
Description of Debt Obligations F-1
Summary of Annual Payments by Function F-7
Summary of Annual Payments by Source F-8
Computation of Legal Debt Margin F-11

TABLE OF CONTENTS
(b)
Section G
CHANGES IN FINANCIAL POSITION
Overview
Introduction G-1
Combining Fund Statements
All Funds Combined G-3
All Governmental Funds Combined G-4
All Enterprise and Agency Funds Combined G-5
Individual Funds
Governmental Funds
General Fund G-6
Local Revenue Measure Sub-Fund G-7
Insurance Benefit Fund G-8
Downtown Business Improvement
District Fund G-9
Tourism Business Improvement District Fund G-10
Community Development Block Grant Fund G-11
Gas Tax Fund G-12
Transportation Development Act Fund G-13
Law Enforcement Block Grant Fund G-14
Public Art Fund G-15
General Purpose CIP G-16
Parkland Development Fund G-17
Transportation Impact Fees Fund G-18
Fleet Replacement Fund G-19
Open Space Protection Fund G-20
Airport Area Impact Fee Fund G-21
Affordable Housing Fund G-22
Los Osos Valley Road Sub-Area Fee Fund G-23
Information Technology Replacement Fund G-24
Major Facility Replacement Fund G-25
Infrastructure Investment Fund G-26
Debt Service Fund G-27
Enterprise and Agency Funds
Water Fund G-28
Sewer Fund G-29
Whale Rock Commission G-30
Parking Fund G-31
Transit Fund G-32
Boysen Ranch Fund G-33
Section H
FINANCIAL & STATISTICAL TABLES
Overview H-1
Revenue Summaries
Summary of Key Revenue Assumptions H-2
Revenues by Major Category and Source H-6
Interfund Transactions
Reimbursement Transfers H-13
Operating Transfers H-14
Staffing Summary
Regular Positions by Department H-19
Financial Trends
Pension Obligation Cost Trends H-31
Retiree Health Care Obligations H-36
Revenue and Expenditure Trends:
Last Five Completed Fiscal Years H-38
Other Statistical and Financial Summaries
Appropriations Limit History H-39
Demographic and Statistical Summary H-40
Section I
REFERENCE MATERIALS
Overview I-1
Resolution Adopting the Financial Plan I-2
Supplement and 2016-17 Budget

RESOLUTION NO. 10727 ( 2016 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ADOPTING THE APPROPRIATIONS LIMIT
FOR 2016- 17
WHEREAS, the voters approved the Gann Spending -Limitation Initiative on November
6, 1979 and Proposition 111 on June 5, 1990, which establish and define annual appropriation
limits on state and local government agencies; and
WHEREAS, regulations require that the governing body of each local agency establish
its appropriations limit and annual adjustment factors by resolution; and
WHEREAS, the required calculations to determine the City' s appropriations limit, and
estimated appropriations subject to limitation for 2016- 17, have been performed by the Finance
Information Technology Department are available for public review.
NOW, THEREFORE, BE IT RESOLVED that the Council of the City of San Luis
Obispo hereby adopts the City' s appropriations limit and annual adjustment factors for 2016- 17
as follows:
Appropriations Limit 15- 16 62, 534,500
Increase in Non -Residential Assessed Valuation
Due to New Construction
5. 63%
Population Factor: County Population Growth 0. 60%
Compound Percentage Factor ( multiplicative not
additive)
1. 063%
Appropriations Limit 2016- 17 66,451, 524
Upon motion of Council Member Ashbaugh, seconded by Mayor Marx, and on the following roll
call vote:
AYES: Council Member Ashbaugh, Vice Mayor Carpenter and Mayor Marx
NOES: Council Members Christianson and Rivoire
ABSENT: None
R 10727

Resolution No. 10727 ( 2016 Series)
The foregoing resolution was adopted this
14th
day of June 2016.
Mayor J arx
ATTEST:
Lee Price, MMC
Interim City Clerk
QVED AS
9. Christine Dietrick
City Attorney
Page 2
IN WITNESS WHEREOF, I have hereunto set my and and affixed the official seal of the City
of Sam Luis Obispo, California, this day of
Lee Pn e MMC
Interim City Clerk
R 10727

RESOLUTION NO. 10728 ( 2016 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING THE 2015- 17 FINANCIAL PLAN
SUPPLEMENT, ADOPTING THE 2016- 17 BUDGET, AND AMENDING
THE FUND BALANCE AND RESERVE POLICY (C)
WHEREAS, the Council adopted the 2015- 17 Financial Plan on June 23, 2015, which
established comprehensive financial and policy guidelines for fiscal years 2015- 16 and 2016- 17;
and
WHEREAS, the 2015- 17 Financial Plan included appropriations for fiscal year 2015- 16;
and
WHEREAS, the City Council has reviewed proposed changes to the 2015- 17 Financial
Plan to be effective for fiscal year 2016- 17 after holding noticed public hearings; and
WHEREAS, the 2015- 17 Financial Plan includes budget and fiscal policies that provide
direction on Financial Plan Objectives, Financial Report, Budget Administration, General
Revenue Management, User Fee Cost Recovery Goals, Enterprise Fund Fees and Rates, Revenue
Distribution, Investments, Appropriations Limitation, Fund Balance and Reserves, Capital
Improvement Management, Capital Financing and Debt Management, Human Resource
Management, Productivity, and Contracting For Services; and
WHEREAS, the proposed Organizational Efficiency, Effectiveness and Transparency
Initiative Significant Operating Program Change in the 2016- 17 Financial Plan Supplement
appropriates fund for the purchase of an Enterprise Resource Planning ( ERP) system to replace
the City' s finance and accounting system and to provide additional functionality to increase
productivity and efficiency of City services; and
WHEREAS, the ERP system will be purchased over three fiscal years as a Software -as -a
Service ( SaaS), meaning it does not fall within the definition of a Capital Improvement Project as
defined under budget and fiscal policies which allows for carryover for three years after budget
adoption; and
WHEREAS, amending Fund Balances and Reserves Policy ( C) will allow for the
carryover of appropriated funding for the ERP system for the duration of the project; and
WHEREAS, the City Manager submitted the 2015- 17 Financial Plan Supplement and
the 2016- 17 Financial Plan Supplement to the City Council for their review and consideration at
a duly noticed meeting.
R 10728

Resolution No. 10728 ( 2016 Series) Page 2
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis
Obispo as follows:
1. That the above recitals are true and correct.
2. That the Budget and Fiscal Policy, Fund Balance and Reserve Policy (C), is hereby
amended in its entirety to read as follows " Information Technology (IT) Replacement
Fund. The City will establish an IT Replacement Fund for the General Fund to
provide for the timely replacement of information technology, both hardware and
software, with an individual replacement cost of $25,000 or more. During the 2015-
17 Financial Plan period, the City will establish and maintain a minimum fund
balance in this fund equal to $ 400,000 for the emergency replacement of equipment
that is damaged beyond repair and not covered under the City' s property insurance
program. Interest earnings and the proceeds from the sale of surplus equipment as
well as any related damage and insurance recoveries will be credited to the fund.
Funds appropriated for the Enterprise Resource Planning system in the 2016- 17
Financial Plan Supplement may be carried over for the duration ofthe project. "
3. That the 2015- 17 Financial Plan Supplement and the 2016- 17 Supplemental Budget is
hereby adopted with amendments shown in Exhibit A provided as attachment to this
resolution.
Upon motion of Council Member Ashbaugh, seconded by Mayor Marx, and on the following roll
call vote:
AYES: Council Member Ashbaugh, Vice Mayor Carpenter and Mayor Marx
NOES: Council Members Christianson and Rivoire
ABSENT: None
The foregoing resolution was adopted this 14`
h
day of June 2016.
rl"Puw 4--
Ma Jan Marx
ATTEST:
4 L.Lee Price, MMC
Interim City Clerk
R 10728

Y Christine Dietri
City Attorney
Page 3
IN WITNESS WHEREOF, I have hereunto set my 4apd and affixed the official seal of the City
of San Luis Obispo, California, this Alay of
Lee Price, MMC
Interim City Clerk
R 10728

EXHIBIT A
Exhibit A —Changes to the Proposed Budget
General Fund: Decrease CIP Infrastructure Designation
Decrease CIP Infrastructure Designation
Transfer -out to Parkland Development Fund
Parkland Fund: Appropriate Funds for Parkland Acquisition
Transfer -in from General Fund
Increase Expenditures
Parkin Fund: Appropriate Funds for Parking Demand Model
Increase Expenditures
Page 4
900,000
900,000
900,000
900,000
100,000
R 10728

PREFACE
BUDGET PROCESS OVERVIEW
i
The City of San Luis Obispo continues to receive
national recognition for its use of a two-year budget
process that emphasizes long-range planning and
effective program management. Significant features
of the City's two-year Financial Plan include the
integration of Council goal-setting into the budget
process and the extensive use of formal policies and
measurable objectives. The Financial Plan includes
operating budgets for two years and a capital
improvement plan (CIP) covering five years.
While appropriations continue to be made annually
under this process, the Financial Plan is the
foundation for preparing the budget in the second
year. Additionally, unexpended operating
appropriations from the first year may be carried over
into the second year with the approval of the City
Manager.
Purpose of the Two-Year Financial Plan
The fundamental purpose of the City's Financial Plan
is to link what we want to accomplish for the
community with the resources necessary to do so.
The City's Financial Plan process does this by: clearly
setting major City goals and other important
objectives; establishing reasonable timeframes and
organizational responsibility for achieving them; and
allocating resources for programs and projects.
Major City Goals
Linking important objectives with necessary
resources requires a process that identifies key goals
at the very beginning of budget preparation. Setting
goals and priorities should drive the budget process,
not follow it.
For this reason, the City begins each two-year
Financial Plan process with in-depth goal setting
workshops where the Council invites candidate goals
from community groups, Council advisory bodies and
interested individuals; reviews the City's fiscal
outlook for the next five years and the status of prior
goals; presents their individual goals to fellow
Council members; and then set and prioritize major
goals and work programs for the next two years. City
staff then prepare the Preliminary Financial Plan
based on the Council’s policy guidance.
Financial Plan Policies
Formally articulated budget and fiscal policies
provide the foundation for preparing and
implementing the Financial Plan while assuring the
City’s long-term fiscal health. Included in the
Financial Plan itself, these policies cover a broad
range of areas such as user fee cost recovery goals,
enterprise fund rates, investments, capital
improvement management, debt management, capital
financing, fund balance and reserves, human resource
management and productivity.
Preparation and Review Process
Under the City Charter, the City Manager is
responsible for preparing the budget and submitting it
to the Council for approval. Although specific steps
will vary from year to year, the following is an
overview of the general approach used under the
City's two-year budget process:
First Year. As noted above, the Financial Plan
process begins with Council goal-setting to determine
major objectives for the next two years. The results
of Council goal-setting are incorporated into the
budget instructions issued to the operating
departments, who are responsible for submitting
initial budget proposals. After these proposals are
comprehensively reviewed and a detailed financial
forecast is prepared, the City Manager issues the
Preliminary Financial Plan for public comment. A
series of workshops and public hearings are then held
leading to Council adoption of the Financial Plan by
June 30th.
Second Year. Before the beginning of the second
year of the two-year cycle, the Council reviews
progress during the first year, makes adjustments as
necessary and approves appropriations for the second
fiscal year’s budget which is known as the Financial
Plan Supplement.
Mid-Year Reviews. The Council formally reviews
the City's financial condition and amends
appropriations, if necessary, six months after the
beginning of each fiscal year.

PREFACE
ii
Interim Financial and Project Status Reports. On-
line access to “up-to-date” financial information is
provided to staff throughout the organization.
Additionally, comprehensive financial reports are
prepared monthly to monitor the City's fiscal
condition, and more formal reports are issued to the
Council on a semi-annual basis. The status of major
program objectives, including CIP projects, is also
periodically reported to the Council on a formal basis.
Administration
As set forth in the City Charter, the Council may
amend the budget at any time after its adoption by
majority vote of the Council members. The City
Manager has the authority to make administrative
adjustments to the budget as long as those changes
will not have a significant policy impact nor affect
budgeted year-end fund balances.

PREFACE
HOW TO USE THE FINANCIAL PLAN SUPPLEMENT
iii
This supplement reflects the City's continued use of a
two-year financial plan that emphasizes long-range
planning and effective program management. The
benefits identified when the City's first two-year plan
was prepared for 1983-85 continue to be realized:
1. Reinforcing the importance of long-range
planning.
2. Concentrating on developing and budgeting for
significant objectives.
3. Establishing realistic schedules for completing
program objectives
4. Creating a pro-active budget providing for
orderly and structured operations.
5. Promoting more orderly spending patterns.
6. Reducing the amount of time and resources
allocated to preparing annual budgets.
Appropriations continue to be made annually;
however, the Financial Plan is the foundation for
preparing the budget for the second year.
Additionally, unexpended operating appropriations
from the first year may be carried over for specific
purposes into the second year with the approval of the
City Administrative Officer.
The 2016-17 Budget document uses the same format
as the 2015-17 Financial Plan and is organized into
the following sections, which primarily focus on
changes from its parent document:
Section A
Introduction
Includes the Budget Message from the City Manager
highlighting key issues considered in preparing the
Financial Plan Supplement. Additionally, this section
includes financial highlights for the Council’s
consideration.
Section B
Status of Goals & Objectives
Provides an overview of the status of Major City
Goals and Other Important Objectives.
Section C
Budget Graphics
Provides simple tables and graphs which highlight
key financial relationships and summarize the overall
budget document.
Section D
Operating Programs
Presents the operating budget at the function and
program levels, and summarizes changes from the
2015-17 Financial Plan.
Section E
Capital Improvement Plan
Summarizes changes in capital improvement plan
expenditures from the 2015-17 Financial Plan.
Section F
Debt Service
Summarizes the City’s debt obligations at the
beginning of the fiscal year.
Section G
Changes in Financial Position
Provides an individual summary of revenues,
expenditures and changes in financial position for
each of the City’s operating funds.
Section H
Finances & Statistics
Summarizes revenues by major category and sources;
expenditures by type and function; and authorized
regular employees by department.
Section I
Reference Materials
Lists a number of major policy documents that guide
the preparation and execution of the City's financial
plan.

PREFACE
ABOUT THE CITY
iv
ho We Are and How We Got Started
The City of San Luis Obispo serves as the
commercial, governmental and cultural hub of
California’s Central Coast. One of California’s oldest
communities, it began with the founding of Mission
San Luis Obispo de Tolosa in 1772 by Father
Junípero Serra as the fifth mission in the California
chain of 21 missions.
The mission was named after Saint Louis, a 13th
century Bishop of Toulouse, France. (San Luis
Obispo is Spanish for “St. Louis, the Bishop.”) The
City was first incorporated in 1856 as a General Law
City, and became a Charter City in 1876.
here We’re Located
With a population of 46,377, the City is located
eight miles from the Pacific Ocean and is midway
between San
Francisco and Los
Angeles at the
junction of Highway
101 and scenic
Highway 1.
San Luis Obispo is
the County Seat,
and a number of
federal and state
regional offices and
facilities are located
here, including Cal
Poly State
University, Cuesta Community College, Regional
Water Quality Board and Caltrans District offices.
The City’s ideal weather and natural beauty provide
numerous opportunities for outdoor recreation at
nearby City and State parks, lakes, beaches and
wilderness areas.
reat Place to Live, Work and Visit
While San Luis Obispo grew relatively slowly during
most of the 19th century, the coming of Southern
Pacific Railroad in 1894 opened up the area to the rest
of California. The City’s distance from major
metropolitan areas to the north (San Francisco Bay
Area) and south (Los Angeles) have allowed our area
to retain its historic and scenic qualities, which
contribute to the superb quality of life our residents
enjoy, and attract visitors from many other areas.
owntown
Another key feature contributing to the City’s great
quality of life is our delightful downtown. The heart
of downtown is Mission Plaza. With its wonderful
creek side setting and beautifully restored mission
(that continues to serve as a parish church to this day),
Mission Plaza is the community’s cultural and social
center.
This historic plaza is complemented by a bustling
downtown offering great shopping, outdoor and
indoor dining, night life, and its famous Thursday
Night Farmers’ Market, where you can buy locally
grown fresh produce and enjoy an outdoor BBQ.
This unique blend of history, culture, commerce and
entertainment make San Luis Obispo’s downtown
one of the most attractive, interesting and
economically vibrant downtowns in America.
overnment
The City operates under the Council-Mayor-City
Administrative Officer form of government. Council
members are elected at-large and serve overlapping,
four-year terms. The Mayor is also elected at-large
but for a two-year term, and serves as an equal
member of the Council. The Council appoints the
City Manager and City Attorney. All other
department heads are appointed by the City Manager.
San Luis Obispo is a full-service city that provides
police, fire, water, sewer, streets, transit, parking,
planning, building, engineering and parks &
recreation services to the community.
W
W
G
D
G

PREFACE
GOAL-SETTING AND THE BUDGET PROCESS
v

BUDGET MESSAGE
DATE: June 14, 2016
TO: Mayor and City Council
FROM: Katie Lichtig, City Manager
On behalf of the entire City staff, I am pleased to present to you the 2015-17 Financial Plan Supplement and 2016-17
Revised Budget.
The Financial Plan Supplement continues to take the City on a path of long-term financial sustainability and fiscal
responsibility. It identifies and funds vital services important to the community, enables the implementation of the
Major City Goals and Other Important Council Objectives determined by Council, reinvests in infrastructure, and
provides employees with the tools, equipment, and training to deliver services to our community in the most effective
way. Most importantly, the proposed plan balances the provision of essential services with the resources available now
and in the future.
In alignment with the Financial Responsibility Philosophy, the proposed Financial Plan Supplemental Budget allocates
funds toward operating and capital programs that strengthen the City’s support functions and align the City’s
Information Technology financial infrastructure with the current available technological advances, thus, positioning
the City to provide the services expected by the community in the most efficient way. The proposed Financial Plan
Supplemental Budget addresses the challenges ahead and proactively allocates funds toward infrastructure capital and
workforce needs, long-term unfunded liabilities, and risk reduction programs.
The City continues to benefit from both the national and State favorable economic climate as well as economic
investments in the City of San Luis Obispo that positively contribute toward the City’s financial diverse revenue
streams. While the economic climate is projected to be favorable, the budget is structured in a manner to flexibly
respond to changes in economic conditions by using one time revenues for one time purposes and making continued
progress to address unfunded liabilities, capital infrastructure and equipment needs.
For purposes of the 2016-17 Supplemental Budget, the City Council was provided a presentation in February 2016, the
2015-16 Mid-Year Budget Review, that highlighted the 2014-15 Fiscal Year end unassigned General Fund balance of
$4.9 million dollars and $281,935 in Local Measure available fund balance for future one-time appropriations.
During the Mid-Year review, staff recommended that one-time allocation of General Fund balance should be limited
to $4.4 million in order to maintain the 20% policy reserve fund balance. The 2016-17 Supplemental Budget is based
on the latest trends in revenues and operating and capital expenditures balanced by drawing on the fund balance in the
amount of $5.8 million, including Local Measure Sub-fund balance of $281,935, toward one-time expenditures.
The General Fund positive growth in revenues and the draw on the General Fund balance are proposed to fund a
number of significant operating program changes and new capital improvement projects. Below are some highlights of
the proposed allocations:
1. $661,700 in ongoing operating programs, including $472,545 toward GFOA recommended additional
staff for Finance and Information Technology function as part of the Organizational Efficiency and
Effectiveness Initiative and $125,000 for Leadership & Learning Academy.
2. 2.8 million in one-time funding toward Organizational Efficiency and Effectiveness Initiative, $1.9
million of which is funding set-aside for the purchase of an Enterprise Resource System (ERP) and
$718,000 in support functions temporary staff to implement the ERP and provide with added resources to
Human Resources and City Attorney functions.
3. $1,000,000 toward Long-Term Cost reduction priorities to pay additional payments of $750,000 to
California Public Employees Retirement System (CalPERS) and $250,000 toward Other-Post-
Employment-Benefits (OPEB).
A-1

BUDGET MESSAGE
In the Water Fund, the Financial Plan Supplemental Budget proposes funding for two major changes in operations and
capital improvement program to address the impacts of the drought: an increase in operating expenditures to maximize
water delivery from the Nacimiento Project and expansion of groundwater program. With remaining drought
conditions, the Water Fund continues to experience pressure from decreased revenues and potential for rate increases
to maintain the infrastructure.
In sum, steady economic outlook, paying down long-term unfunded liabilities, investment in future infrastructure,
minimizing long-term costs and maximizing operational efficiencies will ensure our future ability to serve the
community. The opportunity is right to maximize utility of the resources by funding these key long-term investments.
Staff is remaining diligent in its pursuit of continuous improvement in the city operations and in evaluating actions that
will further the objective of serving the community in a way that balances the expectation for services with the need
for prudent spending. The proposals before the City Council for consideration will appropriate funds for the second
year of the 2015-17 Financial Plan and amend the current year’s budget, all of which are aligned with the overall
objective of steady progress towards fiscal health.
The purpose of the City’s budget is to link, through public engagement and decision-making process, the interests of
the community to optimize the allocation of financial resources to achieve the desired results. The majority of the
City’s public engagement process occurs as part of the development of the 2015-17 Financial Plan. Before beginning
of the second year of the two-year cycle, the Council reviews progress during the first year, makes adjustments as
necessary and approves appropriations for the second fiscal year’s budget, which is known as the Financial Plan
Supplement Budget.
The City has received national recognition for its use of a two-year Financial Plan and budgetary process that
emphasizes long-range planning and effective program management. The Financial Plan includes an operating
budget for two years and a capital improvement plan (CIP) covering five years. The analysis that is done to support
the proposed budget include fiscal forecasting that ranges from 5-years in length to more than 20-years. Each fund
is evaluating and projecting capital needs as well as economic trends that will impact revenues and expenses.
Moreover, staff outlined uncertainties that may impact the projections. Ultimately, the Financial Plan as well as the
proposed budgets reflect best professional judgement about what the future holds.
The City has set forth a wide array of long-term goals to accomplish through a variety of policy documents and
plans – such as the General Plan (and its many related elements such as Land Use, Open Space, Circulation, Parks
and Recreation, and Housing), Water and Sewer Master Plans, Access and Parking Management Plan, Pavement
Management Plan, Short-Range Transit Plan, Bicycle Plan, Facilities Master Plan, and Downtown Physical
Concept Plan.
On July 1, 2014, the City Council adopted a Financial Responsibility Philosophy as a means for promoting
community health and well-being. The philosophy affirms the City’s commitment to fiscal responsibility through
good economic times, as well as economic downturns, and includes the following directives:
1. Informed Decision-making. The City will identify and consider immediate and long-term economic,
social, and environmental impacts of all decisions considered by the Council.
2. Shared responsibility. The City recognizes a shared responsibility between the employee and
employer to appropriately fund employee benefits, including pension benefits. Ensuring an appropriate
balance is a valuable tool in attracting and retaining well-qualified employees that deliver services to
the community, while maintaining a long-term, sustainable, and balanced budget.
3. Increased Transparency. The City will conduct all business, including labor negotiations and other
employee compensation matters, with transparency pursuant to all applicable laws and regulations.
A-2

BUDGET MESSAGE
The City will continue to develop tools, such as key measures and dashboards that make information
readily available to community members in a timely and useful manner.
4. Aligned Investments. The City shall allocate resources in alignment with community needs and
priorities for maintaining and/or adding capital projects, assets, or services.
5. Diversified and Aligned Revenue Sources. The City will pursue diversified revenue sources that are
aligned with expenditures and community priorities.
6. Long-Term Unfunded Liabilities. The City will identify all long-term liabilities, including unfunded
pension obligations and strive to achieve a higher funded portion of pension obligations; and shall
manage all liabilities to maintain and enhance fiscal responsibility.
7. Continued Efficiency and Effectiveness. The City will explore and implement operational
efficiencies including alternative service delivery, best management practices, and cost containment
measures while preserving effectiveness.
Since 1991-1993, early Council involvement in setting Major City Goals and priorities has become the first major
policy step in preparing the Financial Plan. This approach allows the City to better focus organization-wide efforts
and resources in ensuring that the most important, highest-priority objectives are accomplished, and that these high-
priority objectives are communicated to the public and the organization.
Council goal-setting is the first formal step in the City's two-year budget process. This helps ensure that the
Preliminary Financial Plan and Budget prepared by the staff and presented by the City Manager later in the process
clearly addresses and responds to the hopes and aspirations of the City's elected leadership and community.
Linking important objectives with necessary resources requires a process that identifies key goals at the very
beginning of budget preparation. Setting goals and priorities should drive the budget process, not follow it. For this
reason, the City begins each two-year Financial Plan process with in-depth goals setting workshops where the
Council invites candidate goals from community groups, Council advisory bodies and interested individuals;
reviews the City’s General Fund fiscal outlook for the next five years and the status of prior goals; presents their
individual goals to fellow Council members; and then set and prioritize major goals and work programs for the next
two years. City staff then prepares draft work plans which are considered at Strategic Budget Direction. Then staff
presents the Preliminary Financial Plan based on the Council’s policy guidance.
At the Goal-Setting Workshop, Council established three Major City Goals and four Other Important Council
Objectives, as follows.
Major City Goals. These represent the most important, highest priority work programs for the City to accomplish
over the next two years, and as such, resources to accomplish them are included in the 2015-17 Financial Plan.
Open Space Preservation. Protect and maintain open space.
Multimodal Transportation. Prioritize implementation of the Bicycle Transportation Plan and improve
and maintain bicycle, pedestrian, and transit facilities.
Housing. Implement the Housing Element, facilitating workforce, affordable, supportive and transitional
housing options, including support for needed infrastructure within the City’s fair share.
Detailed work programs for each of these Major City Goals were first reviewed by the City Council in April 2015.
The City Council adopted the works programs in June 2015 and they can be found in Section C: Goals and
Objectives of the Financial Plan.
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Other Important Objectives. Objectives in this category are important for the City to accomplish, and resources
should be made available in the 2015-17 Financial Plan if at all possible. In general, these objectives reflect the
continuation of current efforts or new initiatives that are not likely to have significant General Fund resource
requirements.
Neighborhood Wellness. Improve neighborhood wellness, work with residents, Cuesta, and Cal Poly;
increase public safety, code compliance, and collaborative solutions.
Laguna Lake Restoration. Initiate implementation of the Laguna Lake Natural Reserve Conservation
Plan.
Fiscal Sustainability and Responsibility. Implement the City’s Fiscal Responsibility Philosophy with a
focus on the reduction of unfunded liabilities.
Downtown. Adopt a Downtown Concept Plan, develop a plan for expansion of Mission Plaza, and improve
safety, infrastructure, and maintenance in the Downtown.
The City balances payment of long-term costs with the need to maintain and/or expand current services
commensurate with identified needs in the community. In alignment with Financial Responsibility Philosophy and
the Fiscal Sustainability and Responsibility objective, on February 17, 2015, the Council adopted policy guidance
for the 2015-17 Financial Plan to address the City’s Long Term unfunded liabilities and to give prioritization of
one-time funding for:
1. Unfunded pension liability
2. Other Post Employment Benefit (OPEB) liability
3. Roads infrastructure
4. Equipment replacement fund
The preparation of the 2016-17 Budget Supplement continues to honor the City’s fiscally prudent practices and
proposes to use one-time funding to address these four priorities as well as for services to support City operations
that are critical to providing efficient and effective city services.
ECONOMIC OUTLOOK
The US economic outlook remains positive. In 2015, the national GDP increased by 2.3% according to the Bureau
of Economic Analysis. However, the US economy expanded an annualized 0.5% in the first quarter of 2016,
which is lower than a 1.4% expansion in the previous period.
The Bureau of Economic Analysis new release for the first quarter of 2016 states:
“The increase in real GDP in the first quarter reflected positive contributions from personal
consumption expenditures (PCE), residential fixed investment, and state and local government
spending that were partly offset by negative contributions from nonresidential fixed investment,
private inventory investment, exports, and federal government spending. Imports, which are a
subtraction in the calculation of GDP, increased.”
The unemployment rate in 2015 was 4.9%, which is within the range of natural unemployment rate1
.
After holding short-term rates near 0% for 7 years, the Federal Open Market Committee (“Committee”) increased
the Federal Funds Target Rate to target range of ¼ to ½ percent. According to the Committee press release from
March 16, 2016, “the stance of monetary policy remains accommodative, thereby supporting further improvement
1
The natural rate of unemployment is a combination of frictional and structural unemployment that persists in an efficient,
expanding economy when labor and resource markets are in equilibrium.
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in labor market conditions and a return to 2% inflation. These indicators continue to show a steady economic
expansion.
The California economy continues to show positive signs. Statewide sales tax trends show healthy growth. For
example, the Building and Construction industry shows 8% growth in 2015-16 and 7% growth projection in 2016-
17, according to the City’s sales tax advisor HdL Companies. Food/Drugs and General Consumer Goods are
showing steady 2.5% and 2.6% respective growth through the end of 2016-17 fiscal year.
The California nonfarm employment growth was 2.7% in 2015-16 and is expected to continue into 2016-17 at
2.4%. The Professional and Business Services sector provided 116,000 new jobs over the year. The Leisure and
Hospitality (79,100 jobs) and Construction (41,000 jobs) sectors were another major source of growth as both the
tourism and building industries have been thriving.
Locally, the City of San Luis Obispo, also benefits economically from its diverse and dynamic demographic and
employment related structures. In 2016, the City partnered with the Central Coast Economic Forecast and Beacon
Economics and produced its first ever analysis of job growth in the City. Overall, the following are trends related
to jobs and specifically head of household jobs.
1. Total nonfarm employment in San Luis Obispo County increased 3.2%, outpacing the 2.8% mark in the
state overall.
2. Gain in payrolls have also pushed the unemployment rate down to just 4.1%
3. The Natural Resource and Construction sector was responsible for both the most new jobs in the region
over the last year and the highest growth in percentage terms.
4. From 2013 to 2014, wage growth in San Luis Obispo County came in at just 2.0%.
Job growth in the City has outpaced the County since 2009. The San Luis Obispo entrepreneurial ecosystem
continues to grow and develop with both the HotHouse and the SLOMakerspace moving to new larger locations in
2016. The City continues to retain and attract technology companies including start-ups from the community,
CalPoly and the HotHouse as well as possible satellite locations for major global technology companies.
Growth has spread across much of the County, with coastal communities leading the way. From the fourth quarter
of 2013 to the fourth quarter of 2014 (the most recent estimates available), City of San Luis Obispo, which
expanded its payrolls by 4.3% (+2,051 jobs) over the period. Growth in the City was driven by the Health Care and
Accommodations and Food sectors.
The downtown core is thriving as is reflected by sales tax growth and TOT growth. The sales tax base growth for
2015-16 is estimated at 6.5%, not accounting for the Triple Flip Deduction effects. The TOT growth was 6.5%
through February of 2016 compared to previous year.
Residential and commercial development activity in the City remains strong. In 2015, 167 building permits were
issued for single-family and multi-family projects, resulting in the addition of 232 residential units. Large
commercial projects like Chinatown, Garden Street Terraces and the Monterrey Hotel are currently under
construction and others have been proposed. In addition to the number of building permits issued, the City
continues for the fourth year in a row to see a notable increase in construction valuation, which is a good indicator
of the level of private investment in building construction. Residential and commercial development will positively
contribute to the future sales tax, TOT and property tax revenues.
FIVE-YEAR FORECAST
The purpose of a fiscal forecast is to evaluate current and future fiscal conditions to guide decisions about goals,
policies, and programs. It is important to stress that forecast is not a budget. The City utilizes a five-year forecast based
on objective assumptions.
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General Fund
The Five Year General Fund Forecast shows a balanced budget though Fiscal Year 2019-20. The current forecast is
based on the analysis for the 2015-17 Financial Plan and is adjusted based on 2014-15 fiscal year actual results and
trends in revenues and expenditures throughout the current fiscal year. The total uses are over total sources for
operating budget due to draw on fund balance by $4.2 million in 2015-16 fiscal year and by $5.9 million in 2016-17
fiscal year while maintaining reserve levels consistent with adopted budget policies.
*2012 excludes bond related revenue and expenditures
Revenue Highlights:
Sales tax consisting of Bradley-Burns, Proposition 172, and Local Measure sales taxes, is the City’s number one
General Fund revenue, accounting for 36.5% of General Fund’s total revenues. The 2015-16 Fiscal Year is the last
year impacted by the “triple flip”, decade old mechanism affecting State and local finances in California. Due to the
last true-up transaction for “triple flip”, the Fiscal Year 2015-16 general sales tax revenue is estimated at $240,000
higher than sales tax revenues in Fiscal Year 2016-17. The sales tax revenue true growth rate has been positive since
2010 and sales tax is expected to continue to grow through Fiscal Year 2019-20 given the current known economic
indicators. It is important to note, however, that sales tax is one of the more volatile revenue sources which is
responsive to fluctuations in economic conditions.
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The sales tax revenue forecast taken into account the Beacon Economics econometric study presented to the Council
on December 16, 2014 and the most current sales tax forecast presented by the City’s sales tax advisors, HdL
Companies. Beacon Economics forecast is based on standard time-series econometric techniques based on historical
correlations and future trends. The HdL Companies closely tracks sales tax receipts for the City. These trends allow
staff to make better informed forecast assumptions into the future years as information becomes available. Based on
historical trends as presented by Beacon Economics, current trends as presented by HdL Companies, the national and
state economic indicators, and local economic developments, the Five Year Forecast for Bradley-Burns sales tax
revenues adopts the following sales tax growth assumptions:
Sales Tax Gowth Projections
Fiscal
Year
Beacon HdL Forecast
2016‐17 4.7% 2.9% 2.9%
2017‐18 4.5% 3.6% 3.6%
2018‐19 4.3% 3.1% 3.1%
2019‐20 4.2% 3.0% 3.0%
Local Measure ½ cent sales tax continues to play a major role. The Local Measure sales tax revenue in Fiscal Year
2016-17 is estimated at $7.9 million, which constitutes 11.4% of General Fund revenues. The Local Measure sales tax
is not impacted by the sunset of the “triple flip” or fluctuations in the State and County pools; yet, it follows the pattern
of Bradley-Burns sales tax growth.
Property Taxes are the second major source of General Fund revenues and with property tax in lieu of Vehicle
License Fee and Real Property transfer tax, constitute 22% of General Fund revenues. Based on data from County
Auditor-Controller’s Office, the 2016-17 property tax is expected to grow by 8% in Fiscal Year 2016-17. Based on
Beacon Economics forecast the forecast assumes an average of 5% growth from Fiscal Year 2017-18 through 2018-19
and a moderate decline to 4% in Fiscal Year 2019-20 due to greater uncertainly in outer years. The confidence in this
forecast is further supported by current residential and commercial developments within the San Luis Obispo City.
Transient Occupancy Tax (TOT) is the third major source of revenue that constitutes 10.4% of General Fund
revenues. The growth rate for TOT was 6.3% as of the end of March 2016 as compared to the previous fiscal year.
The rate of growth in TOT dropped slightly in the winter months when California saw first snow in the mountains
since the draught begun and tourism was deflected to the ski areas. Overall, localities throughout the region are
benefiting from a vibrant tourism industry, and this is reflected in the TOT. TOT has also benefitted from the extensive
marketing efforts of the Tourism Business Improvement District and investments in the City’s community promotions
program. TOT revenues have consistently grown at an average rate of 8% over the past four year and are now at
historic high levels. Based on current economic outlook and consistent with the Tourism Board Improvement District
strategic plan, the TOT growth through Fiscal Year 2019-20 assumes 5% yearly growth rate.
Development Review Fees revenues continue to growth above expected levels due to high volume of development
applications and calls for inspection services in the community. Fiscal Year 2015-16 Development Review revenues
are projected to be $1 million higher than the original budget. The current trends in development and the Beacon
Economics forecast both support continuing growth in this revenue stream that funds the services provided to process
the applications.
As allowable by legislation and Council policy and not otherwise adjusted by the Council action, all charges for
services were increased by 0.7% based on all urban consumers price index growth. It is important to note that fees
charged for permit review are to recover the reasonably related costs associated with permit review, inspection and
other linked services.
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Expenditure Highlights:
Operating expenditures are adjusted based for salary and equity adjustments adopted in 2015-16 Fiscal Year. The
operating expenditures financial schedules for the proposed 2016-17 Financial Plan Supplement budget and the Five
Year Forecast also include the expenditures associated with the proposed and recommended significant changes in
operating programs.
The forecast for ongoing operating expenditures assumes an escalating growth rate of 3% in Fiscal Year 2017-18,
3.25% in 2018-19, and 3.5% in 2019-20 to accommodate for inflation, minimum wage and other natural wage
increases. This amount must also incorporate any growth in positions based on workload and major city initiatives.
Retirement Benefits costs to the California Public Employees’ Retirement System (CalPERS) are forecasted separately
based on the CalPERS current required rates per actuary valuation reports as of end of Fiscal Year 2014-15 and the
CalPERS forecast into the future. The General Fund Five Year Forecast does not take into account any potential
fluctuations in economic assumptions (such as return interest rate), demographic assumptions (such as mortality), fund
stabilization policies and/or changes to rates charged to the City that CalPERS may implement in the future.
The Five Year Forecast incorporates the adopted five-year Capital Improvement program budget and the proposed and
recommended one-time additional expenditures toward Capital Improvement Project, Infrastructure, and paying down
Long-Term Unfunded Liability.
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BUDGET MESSAGE
City of San Luis Obispo - General Fund Five Year Fiscal Forecast
FY 2016-17 Supplemental Budget
$ in 000's Actual Revised Proposed
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
1 Sales Tax 15,273 17,537 17,297 17,700 18,238 18,782
2 Measure Y/G Sales Tax 7,136 7,397 7,886 8,070 8,315 8,563
3 Sales Tax Prop 172 410 420 428 437 445 454
4 Property Taxes 9,632 9,726 10,511 11,037 11,588 12,052
5 Property Tax in Lieu of VLF 3,849 4,042 4,365 4,583 4,813 5,005
6 Transient Occupancy Tax 6,806 6,844 7,186 7,546 7,923 8,319
7 Utility Users Tax 5,211 5,506 5,562 5,729 5,901 6,078
8 Franchise Fees 2,790 1,540 1,557 1,596 1,636 1,677
9 Business Tax 2,203 2,339 2,395 2,455 2,516 2,579
10 Real Property Transfer Tax 298 184 301 304 307 310
11 Subtotal Taxes 53,608 55,536 57,488 59,456 61,682 63,819
12 Transfers In (Gas, TDA, CoS, Other) 1,505 2,341 2,353 3,254 3,254 2,371
Insurance Benefit Transfer In - - - - -
13 Other Subventions & Grants 1,278 335 323 323 323 323
14 Development Review Fees 5,274 4,490 4,681 4,856 5,569 6,235
15 Rental Inspection Fees 146 445 461 472 484
16 Recreation Fees 1,881 1,646 1,646 1,679 1,713 1,747
17 Other Service Charges 1,875 1,738 1,750 1,777 1,803 1,830
18 Other Revenues 697 553 543 543 543 543
19 Subtotal Non-Tax Revenues 12,510 11,249 11,741 12,893 13,677 13,533
20 Total Resources 66,120 66,783 69,229 72,349 75,359 77,352
21 Operating Expenses (excl PERS) 1
44,576 47,610 49,553 51,278 53,095 55,063
22 PERS Normal Costs 4,322 3,833 4,574 4,122 4,248 4,375
23 PERS Unfunded Liability 3,536 5,629 6,163 6,987 7,701 8,565
24 Subtotal: Operating Expenses 52,434 57,072 60,290 62,387 65,044 68,003
Other One-Time Non Allocated
25 Debt Service 5,312 3,015 3,246 3,212 3,202 2,912
26 Transfer to CDBG 73 147 154 154 154 154
27 Transfer to Insurance Benefit Fund 280 2,124 1,740 - - -
28 CIP - Fleet Replacement 533 1,229 - 704 471 485
29 CIP - IT Replacement 991 1,191 2,621 831 925 525
30 CIP - Major Facility Replacement 551 837 235 915 790 1,190
31
CIP - All Other & Local Measure Funded
projects) 2,918 5,440 6,777 3,497 3,652 3,502
32 Subtotal: Operating Transfers 10,658 13,982 14,773 9,313 9,193 8,768
33 Total Expenditures 63,092 71,055 75,063 71,700 74,237 76,771
34 Resources Over/(Under) Expenses 2 3,028 (4,271) (5,834) 649 1,122 581
35 Fund Balance, Beginning of Year 20,317 23,847 18,059 12,226 12,874 13,996
36 Encumbrances (1,516)
37 Funding Adjustment 502 - - - -
38 Ending Fund Balance 23,847 18,059 12,226 12,874 13,996 14,577
39 Reserve @ 20% Operating Costs 10,487 10,389 10,825 11,380 11,769 12,188
40 Adj for Debt Svc Reserve (303) (303) (303) (303) (303) (303)
41 Designated Reserve (8,108) (963) - - - -
42 CIP Infrastructure Designation (900) (1,000) (1,400) (1,500)
42 Reserve Over/(Under) Policy Level 4,949 6,404 197 191 525 587
Notes
1PERS costs estimated based on CalPERS valuation reports and are broken out to show contribution to normal cost unfunded liability.
2 2016-17 Proposed Budget includes one-time expenditures.
Forecast
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Enterprise Funds Summaries
Wastewater
The Wastewater Division is responsible for collecting wastewater from businesses and residences and transporting
it to the Water Resource Recovery Facility where it is treated to high standards for reuse in the creek system and as
an irrigation water source. Additionally, biosolids and energy are recovered for beneficial reuse. Protection of the
wastewater system, its workers, and the environment is provided through the Environmental Programs group in
compliance with the federal pretreatment program. The Water Quality Laboratory team provides citywide services
related to water quality studies, data, testing, and analyses to ensure appropriate regulatory compliance and
operational decision-making. Operating, maintaining, and installing and/or replacing the hundreds of millions of
dollars of wastewater infrastructure assets is the responsibility of this entire group of professionals.
The Water Resource Recovery Facility completed its energy efficiency project, a public/private partnership with
PG&E, in December 2015. A component of the project is presently generating about 25% of the facility’s energy
requirements. In January 2016, the project was awarded project of the year in the environmental class from the
American Public Works Association local chapter. In December 2015, the design consultant for the WRRF project
was hired and the draft Environmental Impact Report was released in April 2016 with completion scheduled for
early summer. Design of the WRRF Project continues. The wastewater collection system Infrastructure Renewal
Strategy was approved by City Council in January 2016. This strategy document is a valuable tool that includes an
operating model of the collection system, prioritized capital improvement list, and recommendations such as a
strategy to control inflow and infiltration.
The City Council adopted the 2016-17 Fiscal Year wastewater service rates for the work outlined in the City’s
2015-17 Financial Plan on June 23, 2015. Both the base and volumetric portion of the rate increase 3% over the
2015-16 Fiscal Year.
Sewer Rates 2015-16 2016-17
Base Fee $ 8.32 $ 8.57 3%
Volume Charge $ 9.17 per unit $ 9.44 per unit 3%
A consequence of the extraordinary conservation measures taken in support of the severe drought conditions, 2016-
17 Fiscal Year revenues for the wastewater fund are expected to be $1.4 million less than budgeted. This is a result
of sewer cap numbers coming in much lower than anticipated during the 2015-17 Financial Planning process. This
has a significant impact on wastewater fund revenues and future rate requirements will likely need to be higher than
predicted. It is critical to adequately position the fund to support the debt service required for the Water Resource
Recovery Facility project and other critical capital projects.
Water Fund
The Water Division is responsible for securing and protecting the community’s surface and ground water supplies,
treating water to meet stringent water quality standards, and safely distributing it to the community. Distributing
recycled water is an important function of this group. Maintaining complex infrastructure including a dam, multiple
tanks, and pressure zones will soon be assisted by the installation of sophisticated monitoring equipment on pumps,
tanks, and special valves that will allow for remote access and control of these systems. This project is currently
underway.
Although rainfall levels were near average in 2016, the prolonged drought has fully engaged the community in
laudable water conservation efforts with water use down almost 20% as compared to 2013. The Utilities Services
team performed hundreds of water audits, administered water reduction programs, and ensured community member
compliance with State and local mandates along with multiple outreach, engagement, and education activities.
Additional funding is requested to support the continued temporary staffing needed to fulfill the needs of the water
conservation program efforts.
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BUDGET MESSAGE
The addition of 2,100 acre feet of water from Lake Nacimiento to the City’s water supply was an important
milestone achieved in 2015-2016. In light of the ongoing drought and in order to be prepared to maximize the use
of water from Nacimiento, additional funding is requested to support the energy and staffing requirements for 24/7
water treatment plant operation. This additional expense is significant and requires the deferral of critical capital
projects identified in the Potable Water Distribution System Operations Master Plan adopted in January 2016.
Reprogramming funds for a capital improvement project to expand the city’s groundwater program is also
requested.
The City Council adopted the FY 2016-17 water service rates for the work outlined in the City’s 2015-17 Financial
Plan on June 23, 2015.
Water Rates
Increase
Water
Base Fee 7.63$       9.98$       31%
Drought Surcharge 0.37$       0.74$       100%
Tier 1 Rate 6.92$       1 ‐ 8 units 6.92$       1 ‐ 8 units 0%
Tier 2 Rate 8.65$       9+ units 8.65$       9+ units 0%
2015‐16 2016‐17
Parking
The Parking Fund’s 5-Year forecast projects a positive balance over the next 5-years. Consistent with previously
adopted policies, the forecast assumes a conservative 1% growth in Revenues in 2016-17 and 2017-18 and a 10%
increase in 2018-19 for periodic rate adjustments. The forecast assumes a 3.0% increase in operating expenses in
2017-18, 3.25% in 2018-19 and 3.5% in 2019-20. Several major capital improvement projects, including the
proposed construction of the Palm/Nipomo Parking Structure, have been included in the forecast. The anticipated
costs for the Palm/Nipomo Parking Structure were developed several years ago, and staff will be working with a
consultant to update the costs and project timeline. A parking structure rehabilitation assessment, including
anticipated costs to replace outdated structure equipment, is expected to be completed in 2016-17.
Transit
The Transit Fund’s 5-Year forecast projects a positive balance over the next 5-years. Based upon past trends, the
forecast assumes the availability of Federal and State transit grant funding to remain relatively stable, though staff
will monitor the status of the State’s Gas Tax issues in anticipation of the 2017-19 Financial Plan. Several major
capital improvement projects, including the replacement of four buses and one trolley in 2018-19 and 2019-20,
have been included in the forecast. The forecast assumes the new contact costs for the local transit provider, some
additional transit services as a result of the adoption of the Short Range Transit Plan and a 25 cents general fair
increase in 2017-18. Staff expects to present more detailed service enhancements and options for general fare
increases in the Fall of 2016-17.
ADDRESSING CHALLENGES AHEAD
The City is committed to delivering and enhancing the services expected by the community. The 2016-17 Financial
Plan Supplement addresses this commitment by actively engaging the principles of the Financial Responsibility
Philosophy and addressing long-term Liabilities. Despite current favorable economic outlook, the City must be
cognizant and vigilant in addressing the long-term Capital infrastructure needs; inherent volatility in pension, retiree
healthcare, workers compensation and liability insurance rates; and workforce reliability.
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Long-term capital infrastructure needs have been recognized by the Council with the policy direction to address long-
term unfunded liabilities. The roads infrastructure and the Five Year Forecast anticipate additional funding for street
reconstruction and resurfacing. Any additional one-time funding to deferred road maintenance reduces costlier future
maintenance and reconstruction costs; addresses Council pavement condition goals; contributes toward holding
pavement at its current conditions and lowers costs to road user as a result of less vehicle damage. Furthermore, the
Council recognized the need for Equipment Replacement Funds toward vehicle and Information Technology, which
focuses on timely maintenance and reduction of future equipment financing costs and needed investment in
Information Technology to improve service reliability to the customer and user. $270,000 is proposed to be allocated
with the 2016-17 Supplemental Budget for Facilities Master Plan to guide the improvement, maintenance and
replacement of City facilities.
The City (like every other agency) continues to face challenges of stock market volatility and the associated pressures
on the CalPERS retirement and OPEB retiree healthcare plans. The City is actively addressing the long-term liability
by continuing to allocate one-time resources to pay down the unfunded liabilities.
The CalPERS Board has taken a number of steps over the last few years to stabilize the fund. In 2013, the Board
adopted an amortization and smoothing policy to fix the payoff timeline to 30 years and spread the associated rate
increases over a 5-year period. In 2014, the Board adopted the new Demographic Assumptions that account for public
employees living longer. Finally, in 2015, the Board adopted a Funding Risk Mitigation Policy that according to the
Board will lower the discount rate in years of good investment returns and also reduce risk and volatility in the pension
system. The Funding Risk Mitigation Policy established a mechanism to reduce the discount rate by a minimum of
0.05 percentage points to a maximum of 0.25 percentage points in the years when investment returns outperform the
current 7.5% discount rate by at least 4 percentage points. The policy is anticipated to result in lowering of the
expected portfolio volatility to 8% in about 21 years. It is anticipated that even though the expected rates are going to
increase for CalPERS employers, the policy is designed to minimize the amount of increases above projected rates.
Given market uncertainty, it is unknown when investment returns will outperform the current discount rate by at least
4%, which would trigger the reduction in discount rate applied to the plans.
The City’s primary Other Post Employment Benefit Program (OPEB) obligation is the minimum contribution that the
City is required to make under its participation in the CalPERS health care program under the “unequal contribution
option”, where the retiree contribution is increased annually until it equal the Public Employee’s medical and Hospital
Care Act (PEMHCA) minimum contribution. On June 2, 2015, the Government Accounting Standards Board
approved two new Statements designed to improve accounting and financial reporting for state and local government
OPEB plans, GASB 74 and GASB 75. In accordance with the pronouncements, the long-term liabilities for OPEB
plan will be reflected on the financial statements effective for fiscal years starting after June 15, 2017. In addition, in
May 2014, Actuarial Standards Board released revised Actuarial Standards of Practice No. 6 effective on or after
March 31 of 2015, which requires implied subsidy2
valued for community rated plans. This resulted in an increased
Annual Required Contribution (ARC) to $1,182,000 in 2016-17 Fiscal Year. Even though the City is not required to
contribute the full ARC, payment of the full ARC ensures management of long-term liability in-line with actuarial
assumptions. The proposed allocation of funds to fund payment of the full ARC, will decrease the City’s unfunded
liability.
The City is actively working with CJPIA to minimize the Worker’s Compensation and Liability costs. These
expenditures are volatile in nature based on the actual experience in cases and will continue to vary from fiscal year to
fiscal year. Therefore, the City continues to set aside funds for future fluctuations.
Another challenge faced by the City is workforce reliability. Over 22% of the city employees are eligible for
retirement. The Citywide turnover rate was 10% in 2014-15 and 7% to date in the current fiscal year. Improving
economy following an economic downturn and flattening or decreasing wage is now followed by slow but steady
recovery. According to the San Luis Obispo Workforce Investment Board, average wages for nearly all
2
Implied Subsidy is the difference between average retiree claims and premiums charged by the insurer or by CalPERS.
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occupational categories in San Luis Obispo County are below that in California. Furthermore, California minimum
wage legislation has set forth the following minimum wage increases: minimum wage will increase to $10.50
January 2017, $11 in January 2018 and then by $1 in January of every year until 2022 where it will reach $15/hour.
The impacts of an increase in minimum wage are difficult to estimate at this time, however, the Five Year Forecast
includes broad assumptions of wage growth based on these economic trends.
On April 19, 2016 the Council received a report with recommendations from the Government Finance Officers
Association (GFOA). GFOA performed an organizational assessment of the Finance and Informational Technology
department of the City, with a focus on Finance function to determine areas of improvement. The results of the
assessment provide four key recommendations: 1) Immediately address the lack of a complete financial system; 2)
Align a chart of accounts with business requirements and system capabilities; 3) Streamline ineffective business
policy and process; 4) Clarify roles and responsibilities and implement service level agreements for all central
functions.
GFOA concludes that these core issues represent the most significant problems faced by the City’s Finance function
and cause ripple effects throughout all City departments. In other words, over time, the Finance Department has
blurred lines of responsibility as staffing levels have decreased and responsibilities have increased. This combined
with an outdated financial system inhibits the department’s ability to improve efficiency and effectiveness even with
temporary resources. While there have been attempts to address challenges in Finance and Information Technology
department in the past by allocating temporary resources or transferring work to other departments, little if any relief
has been achieved and the foundational changes and improvements needed for long-term sustainability have not been
achieved.
The City is committed to delivering and enhancing the services expected by the community and exploring and
implementing operational efficiencies including alternative service delivery, best management practices, and cost
containment measures while preserving effectiveness. Workforce Reliability is a challenge given the City’s workforce
demographics. The City is proactively engaging the City staff by providing training through the Leadership and
Learning academy in order to well-equip the workforce for current and future demands by focusing on the
development of proven public sector competencies, preparation for supervisory, program management, and leadership
roles in complex environments.
With the 2016-17 Supplemental budget, staff recommends to fully fund the Efficiency and Effectiveness Initiative and
implement an Enterprise Resource Planning System (core Financial, Budget and Human Resources) while
streamlining the business policies and processes. The Efficiency and Effectiveness Initiative is a key infrastructure
effort and both an investment in highly functional Information Technology Infrastructure and support departments
workforce infrastructure that will lead to: 1) increased efficiencies; 2) ability to utilize technology to implement
alternative service delivery methods within the support functions; 3) best management practices; 4) allow for future
cost containment measures in the workforce while preserving effectiveness through utilization of information
technology and process realignment.
The proposed 2016-17 Financial Plan Supplement is the second year of the 2015-17 Financial Plan and is based on the
goals and priorities set by the Council goal-setting process. In order to maximize the utility of resources, the proposed
budget allocates the fund balance above policy reserve level and the current fiscal year projected over-realized
revenues to deliver the services expected by the community.
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BUDGET MESSAGE
FINANCIAL HIGHLIGHTS
The Proposed 2016-17 Supplemental Budget allocates the available 2014-15 Fiscal Year end General Fund balance
above the 20% reserve policy level in the amount of $4.9 million and the $281,935 Year end balance in Local Measure
funds In February 2016, the 2015-16 Mid-Year Budget Review was presented to the Council, that highlighted the
2014-15 Fiscal Year end unassigned General Fund balance of $4.9 million dollars and $281,935 in Local Measure
available fund balance for future one-time appropriations. Staff recommended to return to Council with the 2016-17
Financial Plan Supplemental Budget to make recommendations for appropriation of these funds. In order to meet the
20% policy reserve level through the Five Year Forecast staff indicated that the maximum amount available for
funding of one-time expenditures form the fund balance was $4.4 million. Review of the Five Year Forecast showed
stronger than expected growth in the major revenue sources for the General Fund. For example, based on the latest
trends, the sales taxes revenue is now projected $359,000 higher than staff estimated at the Mid-Year Review. The
County Assessor-Controller, released the property tax estimate for 2016-17, which is $405,000 higher than expected.
These trends in major revenues positively impact the Five Year Forecast and the full $4.9 million plus the $281,935 in
the Local Measure fund balance are available for appropriation toward one-time expenditures.
Allocations in the General Fund are proposed based on available fund balance, actual revenues received in the current
Fiscal Year 2015-16 and projected revenues and expenditures throughout the Five Year forecast.
In alignment with the Financial Responsibility Philosophy, the adopted Major City Goals and Other Important
Objectives, and the Council adopted policy to address the City’s Long Term unfunded liabilities, the proposed 2016-
17 Financial Plan Supplement allocates General Fund funding for the following purposes:
Ongoing SOPC* $731,745
One-Time SOPC $4,025,000
CIP $1,625,000
Long-Term Reduction Priorities $1,000,000
CIP Infrastructure Designation $900,000
Transfer to Insurance Benefit Fund $989,898
Total: $9,201,598
*Significant Operating Program Change (SOPC)
1. $750,000 in additional payment toward CalPERS unfunded liability;
2. $250,000 in additional payment toward OPEB unfunded liability;
3. $670,000 in General Fund and $955,000 from Local Revenue Measure sales tax toward Capital Improvement
Plan infrastructure and roads improvements.
4. $900,000 toward CIP Infrastructure Designation (specific projects to be determined in the future);
5. $474,545 in ongoing costs to strengthen the Finance & Information Technology support structure and
$2,832,000 toward implementation of an Enterprise Resource Planning System investing in the infrastructure;
6. $125,000 in ongoing Leadership & Learning Academy to enhance employee training, resulting in improved
workforce reliability; and
7. $310,000 is proposed to be allocated towards programs and efforts to reduce risk and analyze insurance
options. These efforts are proposed to be funded by $979,898 in savings as compared to the 2015-17
Financial Plan anticipated costs in worker’s compensation and liability insurance premiums. The remaining
$669,898 is proposed to be transferred to the Insurance Benefit Fund to address long-term fluctuations in
these expenditures.
8. $664,656 in one-time funding is proposed to be allocated for additional contract staff and contract services in
order to timely respond to development review requests and $145,400 for a three year lease to accommodate
the additional temporary staff from over-realized 2015-16 development services revenue.
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BUDGET MESSAGE
9. $8,000 ongoing and $18,000 one-time costs are proposed to be funded by the Local Revenue Measure for
“PulsePoint Respond”, a Software-as-a-Services solution designed to improve out-of-hospital cardiac arrest
survival rates.
10. $29,944 one-time expenditure is proposed to be allocated to purchase protective gear for police officers.
11. $60,000 ongoing and $25,000 one-time is proposed to be allocated for the mandated Stormwater Program.
12. And, $64,200 ongoing is proposed to be allocated for additional Aquatics temporary staff to address safety
best practices recommended by the American Red Cross and the American Lifeguard Association.
In addition, for the Water Fund, $1,193,549 is proposed to be allocated in increased operations expenditures to
facilitate 24 hour a day operations of the water treatment plant and $1,470,000 in additional Capital Improvement
expenditures.
The proposed total appropriations for 2016-17 Financial Plan Supplemental Budget are as follows:
Governmental
Funds
Enterprise and
Other Funds Total
Operating Programs 64,072,606   34,402,263    98,474,869
CIP 22,289,512   7,375,824   29,665,336
Debt Service 3,245,866   4,598,779   7,844,645
Total 89,607,984   46,376,866    135,984,850
These allocations address the following Major City Goals and Other Important Objectives:
Operating
Programs
Capital
Improvement
Plan
Major City Goals
Open Space Preservation 100,000
Multimodal Transportation 200,000
Housing 810,056 1,470,000
Other Important Council Objectives
Neighborhood Wellness 26,000 1,055,000
Laguna Lake Restoration
Downtown
Fiscal Responsibility 3,304,545
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BUDGET MESSAGE
The Local Revenue Measure continues to enable the City to provide important and valued essential services to the
community via day-to-day operating programs and one-time capital improvements. $8.4 million in Local Revenue
Measure funds are budgeted to be spent in 2016-17 to address the priorities set-forth by the voters for the ½ percent
local sales tax. 72% or $6.1 million will be spent on capital projects with 28% or $2.7 going to support operations.
Funding highlights include resurfacing Madonna Road and neighborhood street sealing, construction of a bike and
pedestrian bridge on Phillips Lane and the replacement of the Marsh St. Bridge over San Luis creek. In addition, $1
million of additional revenue from improved sales tax receipts or future forecasts will provide enhanced services
such as replanting of street trees lost due to the drought, increased wildfire fuel reduction in open spaces and new
park projects like the replacement of the backstop and Sinsheimer Stadium and pedestrian bridge in Exposition
Park.
SIGNIFICANT OPERATING PROGRAM CHANGES GENERAL FUND
1. Organizational Efficiency, Effectiveness & Transparency
The GFOA assessment that focused on areas of improvement in the Finance and Information Technology functions
resulted in staff recommendation to fund the Organizational Efficiency, Effectiveness & Transparency Initiative that
addresses three key service level objectives aligned with the Financial Responsibility Philosophy and Fiscal
Sustainability and Responsibility Other Important Objective: 1) Ensure support functions provide a solid foundation to
operating departments that deliver service to the community; 2) Improve organizational efficiency and effectiveness
and minimize inefficient duplication of efforts, and 3) provide integrated information and reporting that enhances
efficiency, transparency and improves service to the community. The proposed allocations in the amount of $472,545
in ongoing costs and $2,832,000 in one-time costs address the GFOA recommendations including funding for an
Enterprise Resource Planning system, long-term staffing needs in the Finance and Information Technology program
and temporary staffing for support Legal and Human Resources programs to implement the GFOA recommendations.
Staff recommends further assessment of the support functions long-term staffing needs based on current and future
service level demands and the efficiency and effectiveness resulting from this initiative. Staff will return to Council
with recommendations with 2017-19 Financial Plan process.
2. Leadership & Learning Investment in Workforce Infrastructure
An important part of meeting the City’s obligations to the community for maintaining and/or expanding levels of
service involves investment in staff. To ensure workforce reliability by investing in the workforce infrastructure, staff
recommends an ongoing allocation of $125,000 per year from the General Fund for Leadership and Learning
Academy. The Leadership and Learning Academy and partnership with the Centre for Organization Effectiveness
ensures City employees are well-equipped for current and future demands by focusing on the development of proven
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BUDGET MESSAGE
public sector competencies, preparation for supervisory, program management, and leadership roles in complex
environments.
3. Cost Neutral Fire Fighter Over-Hire
This program funds three new Firefighters without increasing the minimum staffing in the Fire Department from
the current level of 14 personnel per shift and without increasing the Fire Department’s staffing budget. Every day
the Fire Department fills vacancies created by employee leave (vacation, training, sick leave as examples) and staff
vacancies, and many times the department must mandatorily hold employees over for up to 24 hours to maintain
minimum staffing needs for service. This program would stabilize daily staffing by funding one additional
firefighter per shift.
4. Pulse Point Software to Increase Cardiac Arrest Survival Rates
PulsePoint Respond (“PulsePoint”) is an enterprise-class, software-as-a-service (SaaS) solution designed to support
public safety agencies working to improve out-of-hospital cardiac arrest survival rates through improved bystander
CPR prior to arrival of firefighter-paramedics. Where adopted, PulsePoint Respond has empowered everyday
citizens to provide life-saving assistance to victims of sudden cardiac arrest via a smart phone application that is
free to end users. Combined with the Fire Department’s High Performance Cardiopulmonary Resuscitation
(HPCPR) program, PulsePoint can significantly improve survival rates for San Luis Obispo citizens and visitors
who suffer an otherwise fatal heart attack. $8,000 in ongoing costs and $18,000 in one-time costs are proposed to
be allocated funded by the Local Measure revenue.
5. Increase in Aquatics Temporary Staffing for ongoing Safety at the SLO Swim Center:
The Aquatics division has been updating its policies and procedures to increase the level of training and safety that
is recommended by the American Red Cross and American Lifeguard Association. The purpose is to provide a safe
environment for swimmers and families at the SLO Swim Center. Temporary lifeguard staffing on the pool deck is
directly tied to the level of safety provided to the community. Recruiting and retaining skilled staff has been a
challenge in the Parks and Recreation Department. Ongoing cost of $64,200 for health and safety
enhancements and retention of trained employees.
6. Essential Safety Gear for Sworn Police Officers
Riot helmets are essential safety gear that is issued to every sworn police officer. These helmets provide a high
level of protection to officers when working large events, riots, active shooter situations and for search warrant
service. Currently the Police Department has 60 sworn officer positions. The Police Department currently only
possess 15 riot helmets that have not reached their expiration date. To ensure all officers have properly functioning
safety equipment staff is requesting to replace the 45 expired riot helmets. This is a one-time cost of $29,944
funded from the General Fund.
7. Resources to Address Stormwater Mandates
The City is enrolled in the National Pollutions Discharge Elimination System (NPDES) Municipal Separate Storm
Sewer System (MS4) program, currently entering Year 4 (beginning July 1, 2016) of the most recently adopted
State program. This is a mandated regulatory program administered through the State Water Resources Control
Board through the Central Coast Regional Water Quality Control Board. $60,000 in ongoing cost and $25,000 in
one-time cost are proposed to be funded by the General Fund. The additional resources will allow the City to attain
compliance with current prescriptive State and local requirements for stormwater quality. Compliance brings with
it public benefits in the form of cleaner water and improved environmental habitat.
8. Development Services:
The Community Development Department and the Fire Department are requesting four contract positions and
additional consultant and contract services needed to assist the City in technical support and timely response to
applications for the 2016-2017 Fiscal Year. The objective of this request is to ensure the City is able to timely
process applications through the development review and plan check process given increased permit activity.
Should these resources not be available, permit volumes will overwhelm the development review process,
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BUDGET MESSAGE
impairing the City’s ability to keep pace with permit volumes and implement Major City Goals and other
objectives. The one-time costs will be offset by FY 2015-16 over realized revenue. The total proposed
appropriation is $664,656 in one-time costs.
9. Development Services Office Space Lease
The Community Development Department is proposing to lease 2,000 square feet of office space located at 999
Monterey Street, Suite 345, in the Court Street project to accommodate 8-12 employees for a period of three years.
Staff has negotiated a cost of $2,500 per month for the 2,000 square foot lease space. One-time costs of $50,000 are
estimated to furnish the space and make information technology improvements such as cabling and an air-link for
data connectivity to City Hall. Total cost is $81,800 in 2016-17, $31,800 in 2017-18, and $31,800 in 2018-19. The
only additional expenditure outside of the monthly rent is for water and electricity, expected to total $150 per
month or $1,800 annually. The total one time cost to span from FY 16-17 to FY 18-19 will total $145,400. The full
cost will be offset by over realized revenues from Development Services Fees.
10. Insurance Savings Reallocations and Retention
The City of San Luis Obispo became a member of the California Joint Powers Insurance Authority (CJPIA) in 2003
for participation in the liability program and in 2004 for participation in the workers’ compensation program. The
CJPIA Executive Committee approved a prospective funding model (beginning with the claim year 2013-14) that
aimed at funding coverage periods sufficiently, providing budgetary predictability for members by requiring one
annual contribution and eliminating the retrospective adjustments, and rewarding effective loss control and risk
management efforts with lower rates. Coverage years under the prospective formula will not be adjusted
retrospectively on an annual basis. However, if net asset levels become insufficient, an assessment may be needed
in the future. The new funding model is intended to provide overall financial strength and security for the pool, and
rate stability and fairness for the members. Coverage years under the old funding model (prior to 2013-14) will
continue to have retrospective adjustments until all claims are closed for those years.
The annual contribution for the Workers’ Compensation Program was under budget. In addition, based on the
claims experience the City received a retrospective credit adjustment for an overall savings of $762,652 resulting in
revised budget amount of $1,559,889 for the Workers Compensation Program. The annual contribution for the
Liability Program was under budget as well. In addition, based on the claims experience we received a
retrospective credit adjustment for an overall savings of $217,246 resulting in a revised budget amount of
$1,797,393. The combined savings for Fiscal Year 2016-17 for both programs is $979,898.
Funding from these savings in the amount of $250,000 in one-time cost and $2,000 in ongoing software license
costs are recommended toward conducting an Assessment and Transition Plan as required under the American
Disabilities Act of 1990. This need has been identified through membership in the CJPIA.
One-time cost of $20,000 to continue OSHA compliant safety policy development and program implementation, a
one-time cost of $40,000 to conduct a risk management program audit and a one-time cost of $250,000 to complete
an ADA Assessment and Transition Plan in 2016-17. Ongoing cost of $2,000 for software license fee beginning in
2017-18.
SIGNIFICANT OPERATING PROGRAM CHANGES FUNDING: OTHER FUNDS
2. TBID Support Staff
As the tourism program continues to grow, the need for increased support to maintain the program effectiveness has
been realized by the TBID Board. The proposed budget is to, within the Tourism Business Improvement District
(TBID), establish a full-time support position for the advancement of the tourism promotion program for a total
ongoing cost of $95,041. This position would be funded by the TBID fund with no salary impact on the General
Fund. The added staff position will support the Tourism Manager with the day-to-day operation and advancement
the City’s tourism program and would allow the Tourism Manager to focus on strategic program development,
policy, community & constituent outreach, and future planning efforts.
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BUDGET MESSAGE
3. Increased Electrical and Operational Expenditures for Nacimiento Water Delivery
$1,193,549 is proposed to temporarily increase the Source of Supply and Water Treatment Plant operating budgets
to allow for 24-hours per day, seven days per week treatment plant operation and maximum water deliveries from
the Nacimiento Project. Continued drought is placing strain on the water supplies in Salinas and Whale Rock
Reservoirs with Salinas near minimum pool. With the City Council’s recent approval to contract for an additional
2,102 acre feet per year of water from Nacimiento Reservoir, the City has the opportunity to conserve its current
supplies in Salinas and Whale Rock Reservoirs. Utilizing this strategy will allow for increased water resiliency and
is consistent with the General Plan, Water and Wastewater Element, Goal 5.1.1: Identify and meet the City’s multi-
source water supply needs.
4. Utilities Services Temporary Staffing
$59,000 in one-time operating expenditures is proposed for continuation of a temporary Utilities Services Technician
in order to fulfill the educational components, state-mandated enforcement measures, and other activities related to the
continuation of the drought.
CAPITAL IMPROVEMENT PROGRAM
1. Facilities Master Plan
The City of San Luis Obispo owns and is responsible for 221,000 square feet of buildings. This inventory consists
of all types of facilities, including, fire stations, golf courses, City Hall, and other structures. At some point in time
each of these spaces will need to be evaluated to determine if the physical spaces have outlived their original
purpose. There may be additional or modified space needs. The building may no longer meet current codes, or the
heating systems and roofs are outdated. Maintenance costs of old systems may no longer be fiscally responsible.
New regulations, increasing energy costs and changes in the way business is done may make what was once a
perfectly usable space into a place that is inefficient, costly to maintain, or insufficient for current needs.
This project was originally proposed in 2017-18 Fiscal Year for $145,000 with the 2015-17 five-year Capital
Improvement Plan. The project is accelerated to begin work in 2016-17 Fiscal Year and the scope is augmented to
include and consolidate the space plan studies for the Police and Community Development Departments. This project
will prepare and update a 1988 facilities master plan which will guide the improvement, maintenance and replacement
of City facilities. The cost is anticipated to be $270,000 in 2016-17, including $20,000 to augment the related Police
Department facilities assessment (budgeted at $45,000), and $50,000 to address interim facility needs for Community
Development.
2. California & Taft Roundabout
As part of the City’s General Plan Update & CalPoly Housing South Environmental Impact Reports the intersection
of California & Taft has been identified as operating with excessive congestion, level of service F, during peak
hours. This level of congestion exceeds the City’s general plan thresholds. In addition to operational deficiencies
this intersection also experiences a high rate and severity of collisions. In the last five years there have been
approximately 30 traffic collisions, approximately 20 resulted in injuries and of those 8 involved pedestrians or
cyclists. Roundabout control is projected to reduce congestion to a level of service “A” and mitigate the rate and
severity of traffic collisions. Roundabout control at this location will also provide key bicycle and pedestrian
connection to the RailRoad Safety Trail furthering the City’s modal split objectives and improving the aesthetics of
the area providing opportunities for enhanced landscaping and public art.
The intersection of California & Taft has been a top ranking priority for traffic congestion and traffic safety
improvements for several years. When presented to the Council as part of the City Annual Traffic Safety Program
there was interest from the Council in accelerating the project, therefore staff is presenting this request at this time.
This proposal will complete the study and design to install a roundabout at the intersection of California & Taft to
address traffic safety and operational issues will cost $200,000 in 2016-17.
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BUDGET MESSAGE
3. Enhanced Park Major Maintenance (funded by Local Measure Sales Tax)
The backstop at Sinsheimer Park at the Stadium is believed to be the original from the Stadium construction in the
1970’s. It is regularly coated on the outside to prevent rusting; however, there is clear evidence that the backstop is
rusting from the inside and is in need of replacement or rehabilitation.
There are two pedestrian bridges in Meadow Park. The bridge linking the parking lot to the community building
and playground is currently scheduled to begin design in the upcoming 2016-17 fiscal year. The second bridge
(officially in Exposition Park) crosses the creek at about the mid-point of the park, near the terminus of King Street.
The bridge in the middle of the park near King Street has deteriorated to the point where it can no longer be
repaired and will need to be closed or removed in the near future. Combining design efforts for these two structures
is anticipated to reduce overall design costs.
Replacing the Sinsheimer Stadium Backstop and Meadow Park Bridge at King Street will cost $220,000 in 2016-
17.
4. Enhanced Urban Forest Maintenance and Restoration (primarily funded by Local Measure Sales Tax)
The City’s urban forest is losing its Street Trees to declining health due to age and drought stress. Approximately
30 Street Trees were lost in each recent year. There are currently 310 empty street tree wells. This project will
replant 40 trees to restore street trees lost over the last year. The trees will be watered for the initial establishment
period of 3 years, as part of the project. Replanting and initial establishment of replacement Street Tress will cost
$120000 in 2016-17 funded by the Local Revenue Measure.
This funding will provide for a major pruning effort of these tress to occur. 139 Large Blue Gum Eucalyptus Trees
along the creek dividing Johnson and Sinsheimer parks, and Sinsheimer Elementary School need much more
frequent pruning than provided under the current maintenance rotation. This is due to their enormous size and
proximity to school children, scheduled users of the playground equipment coming from YMCA programs, and the
frequent users of the park who play amongst the trees. The frequency of this pruning work should be every two to
three years because of the high use of the area and the nature of large blue gum eucalyptus trees. Trees that are
beyond reclamation will be removed under the City Arborist’s authority. The pruning of Johnson Park Eucalyptus
Trees will cost $65,000 in 2016-17 funded by the Local Revenue Measure.
Lastly, seven large Canary Island Date Palms on California Street were identified for removal by the City’s service
contractor during a scheduled pruning. This was confirmed during an aerial inspection by City Forestry staff in
June 2014. Having reached a near critical decay threshold, two of the palms were in imminent danger of failure and
were removed. Over the past 20 years several other palms have been removed without replacement. The remaining
five palms identified need to be removed soon to avoid failures, and replanting and initial maintenance
implemented to restore the palms, ensuring this iconic gateway to Cal Poly is preserved. The trees will be watered
for the initial establishment period of 3 years, as part of the project. The removal, replanting, and initial
establishment efforts to maintain the palm trees on California Boulevard will cost $30,000 in 2016-17 funded by
the General Fund.
5. Enhanced Street and Sidewalk Maintenance (funded by Local Measure Sales Tax)
The City has a few concrete streets which have never received maintenance. The City’s most recent Pavement
Condition Survey indicated that, while overall Pavement Condition Index (PCI) has increased from 72 to 73; the
Concrete streets have declined to 35. A maintenance strategy has now been developed for these streets and will roll
out with upcoming area pavement maintenance. However, three intersections have drawn the attention of staff as
being in need of immediate attention. Planning and design is nearing completion for work at Toro & Palm, Toro &
Johnson, and Nipomo & Dana. These intersections are very uneven and present a challenge to pedestrians crossing
the street, particularly those with mobility issues. The proposed funding will allow for complete reconstruction of
these intersections, including updated sidewalk ramps, without impacting funding for regularly planned
neighborhood paving. The new intersections will be safer and more accessible.
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BUDGET MESSAGE
The City maintains 241 miles of sidewalks. Sidewalk maintenance has historically been incorporated into the
Pavement Management Program whereby sidewalks are systematically inspected and repaired when that
geographic Pavement Area (total of 8) is up for resurfacing. In addition, priority sidewalk repairs are addressed on
an ongoing basis. Since the Urban Forest is integral to the city’s streetscape, there are instances where tree roots
and other factors cause deterioration of the traveling surface. Even with the City’s comprehensive sidewalk
management program, there continue to be unmet maintenance needs. This request would fulfil some of those
unmet needs. Job Order Contract is in process of being updated with a contractor to be on-board by the end of July
2016. A location list has been prepared of potential and actual trip and fall sites and once the contractor is hired,
work can begin almost immediately. The additional proposed funding will allow for an additional 4 to 5 sites to be
reconstructed.
Expanding maintenance of City streets and sidewalks in the Public Right-of-Way will cost $520,000 for
intersection reconstruction and $100,000 for sidewalk repairs in 2016-17.
6. Open Space Maintenance: Wildland-Urban Interface and Invasive Species Program Implementation (funded
by Local Measure Sales Tax)
With the adoption of the 2015-17 Financial Plan significant investment was identified by the Council to address its
Major City Goal of open space protection. The work program is successfully utilizing a two-part strategy: planning
and implementation. Completion of land acquisitions and implementation of the Council adopted Open Space
Maintenance Plan have significant one-time costs associated with each that have been adequately funded; however,
only minimal program funding is available for fuel reduction and invasive species treatment. By providing
additional funds to each effort greater protection of the City’s open space natural resources values can be achieved.
This project provides additional one-time funding in the amount of $100,000 to address the Local Revenue Measure
Priority and Major City Goal regarding ongoing Open Space Protection and Maintenance. The City Council
adopted 2015 Open Space Maintenance Plan included two technical appendices that detail priorities and strategies
with particular focus on wildland-urban interface fuel reduction and invasive species treatments. These activities
are also consistent with the Conservation Plans that have been adopted and identify these projects for the City’s
various Open Space and Natural Reserve properties.
7. Bike Bridge at Phillips Lane (acceptance of Grant)
In November 2000, the Council adopted the preliminary alignment plan for the Railroad Safety Trail. Since that
time grants have been applied for and work continues with Union Pacific Railroad to receive approval for specific
segments, using a phased approach. In 2013 the bike path and fencing was extended southward along California
Boulevard to Taft Street. An additional phase was planned for construction during the Spring of 2015, which
would have extended the pathway on the westerly side of California Boulevard, to the intersection of California
Boulevard and Phillips Lane, as the first phase of the previously approved “Taft to Pepper” project. That project,
however, was denied an encroachment permit from Caltrans and efforts to complete that project were subsequently
abandoned. Efforts were then renewed to extend the pathway southward to the Phillips Lane cul-de-sac through an
alignment which traversed behind the CHP facility on California Blvd, adjacent to the railroad tracks. As of April
2016, that project is 50% completed through design.
The project completes the connection to Pepper Street. This bridge connection over the railroad will allow cyclists
traveling north, to avoid crossing California Blvd to get onto the Trail, either at Phillips Lane or farther north at
Taft Street. Cyclists will be able to ride north on Pepper Street, cross the bridge to Phillips Lane, and join the Trail
at California Boulevard, without crossing the street. Future phases will be pursed to extend the trail southward to
connect to the existing southern portion starting at the Railroad Station.
This project is being included in the 2015-17 Budget Supplement to reflect the City’s receipt of grant funding in the
amount of $3,244,000.
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ADOPTED Supplement 16-17

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