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2017-2018 Capital Improvement Budget: Big Plans, Little Money

Santa Clara has over $1 billion penciled into its capital improvement plans for the next six years, if you include the planned $200 million new swim center and a $94 million youth sports complex. But the only year it’s going to meet its goals is the present one, according to the Capital Improvement Plan budget the City Council finalized on June 27.

By 2023 the City will face a $600 million cumulative shortfall in its budget for public investment in roads, city buildings, parks and recreation facilities.

The biggest shortfall is in the Parks and Recreation capital budget: $184 million of approved or anticipated projects–not including the new swim center and youth sports complex–and only $29 million in anticipated funding.

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The forecast shows no general fund surpluses to boost the Capital Improvement Budget (CIP) Reserve Fund, leaving the fund empty by 2021 and with a $5 million deficit by 2023.

Starting in 2018-2019, two of Santa Clara’s three CIP categories, Street and Highway and General Government–public buildings, parks, IT–won’t be able to pay for all the approved or needed projects.

First priority will be completing projects that are already approved, according to the Council’s budget priorities. Following that comes serious deferred maintenance projects and replacing obsolete and unsupported (end-of-life) technology.

New projects get higher priority if they are “mandatory”–required by law, critical safety hazards, or seriously deteriorated–have built-in funding like user fees or new tax revenues, or reduce operating costs.

The five-year forecast shows that Santa Clara will have only 45 percent of the money needed ($53.3 million) for pavement and crosswalk improvements. The City will spend $4 million this year on streets maintenance (out of $24 million budgeted over the next six years). Money for street maintenance comes from gas and transportation taxes, government grants, developers’ payments and the CIP reserves.

General Government funds cover public buildings, libraries, parks, sports fields, storm drains, IT and public safety communications systems. This money comes from developer park fees and contributions, the Building Inspection reserve fund, CIP reserves, and, if the projects are shared with utilities, enterprise funds.

This year’s General Government budget includes completion of the new Reed Street Soccer Park ($13 million), new police and fire communications systems ($9.4 million), Montague Park improvements ($3.2 million), completion of the new Mission branch library ($2.9 million), new IT systems and upgrades ($2.2 million) and miscellaneous playground improvements ($741,000).

There are two notable unfunded budget items in the Parks and Recreation budget. One is the long-needed rebuild of the International Swim Center. The other is a new youth sports complex. These two increase the bill of the unfunded Parks and Recreation projects to $458 million.

In 2016 the Council approved a new $200 million Central Park swim center complex, first proposed in 2014. But there’s no funding–at least none that’s been discussed publically, although the Santa Clara Swim Club has been working for several years to raise private donations. The City has hired Public Finance Advisory ($650,000) to finance and manage the project privately–what public officials like to call “creative financing.”

A $94 million youth sports complex has been a stated City Council goal since 2013. Like the swim center, there’s no money for it on the horizon, although $1.3 million is theoretically allocated for it this year.

Santa Clara’s Enterprise funds–utilities such as electric, water and sewer–provide the bright spot in the CIP plan. These are primarily funded by business and residential charges for services, and the anticipated revenue and utility reserves will be able to cover all the plans.

The CIP Reserve fund is comprised of Santa Clara general fund money allocated for approved capital projects in the five-year plan. This money supplements revenues financing specific infrastructure programs: state and county taxes and grants, service charges and fees, and bonds issued for specific projects.

Santa Clara’s 2017-2018 CIP budget is at www.santaclaraca.gov/government/departments/finance.

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