HomeMy WebLinkAboutStaff Report 14632
City of Palo Alto (ID # 14632)
Finance Committee Staff Report
Meeting Date: 11/29/2022 Report Type: Action Items
City of Palo Alto Page 1
Title: Approval of the FY 2022 Annual Comprehensive Financial Report (ACFR)
and Year-End Budget Amendments in Various Funds
From: City Manager
Lead Department: Administrative Services
RECOMMENDATION
Staff recommends that the Finance Committee forward to the City Council for its approval:
1. The City’s Fiscal Year (FY) 2022 Annual Comprehensive Financial Report (ACFR); and
2. Amend the FY 2022 Budget Appropriation Ordinance for various funds as identified in
the attached Recommended Amendments to the City Manager’s FY 2022 Budget
(Operating Budget: Attachment B – Exhibit 1; Capital Budget: Attachment B – Exhibit
2).
EXECUTIVE SUMMARY
The City’s fiscal year ended on June 30, 2022, financial records closed, and financial reports
summarizing the fiscal year were prepared. The reports, along with the City’s financial data,
were audited by Macias Gini & O’Connell LLP (MGO), Certified Public Accountants, a firm hired
by the City Auditor. MGO issued an unmodified (clean) audit opinion on the financial position of
the City’s activities and, together with the City’s financial statements and other information ,
comprises the City’s Annual Comprehensive Financial Report (ACFR). The full report can be
found in Attachment C.
In addition to the ACFR, this report includes recommended budget adjustment actions to close
the fiscal year. These technical actions reallocate and realign the budget to appropriate funds in
alignment with actual operating and capital expenditures and revenue collected as well as
adjust transfers between funds.
Financial Highlights for FY 2022
Government-wide
At the close of FY 2022, the City’s total Net Position is $1.27 billion, an increase of $40.6 million
or 3.2% over the prior fiscal year. The Statement of Net Position (p. 31 of the ACFR) repo rts
Governmental Activities Net Position (the City’s basic services which are generally funded by
taxes, and by specific program revenues such as fees and grants) at $474.1 million, a $51.0
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million increase from the prior year, and Business-Type Activities Net Position (the City’s
enterprise activities which are funded in whole or in part by fees charged to external parties) at
$796.8 million, a $10.4 million decrease. Various factors contributed to these changes, including
accounting adjustments required by the Governmental Accounting Standards Board (GASB).
General Fund
The General Fund ended with a net Budget Stabilization Reserve (BSR) surplus of $14.2 million,
compared to estimates used in the development of the FY 2023 Adopted Budget and the
Council’s target reserve level of 18.5% of budgeted expenses. Overall, a total $100.1 million
fund balance of both restricted and unrestricted balances is $24.4 million higher than the prior
year balance of $75.6 million. The BSR is $72.8 million, a $23.7 million or 48.3% increase from
FY 2021. This increase is driven by both higher than budgeted revenues and lower than
budgeted expenditures. Much of this variance was forecasted, discussed, and a core
component of the FY 2023 Adopted Budget and two-year budget balancing strategy to ensure
continued stability for the organization and community through uncertain times. Once the BSR
is adjusted for Council approved uses to balance the FY 2023 Adopted Budget 1 and other needs
through the first quarter of FY 2023, the City’s actual $59.8 million BSR balance is above the
Council’s 18.5% target ($45.6 million) for FY 2023 by $14.2 million.
Major tax revenues such as sales tax, property tax, transient occupancy tax, utility user tax, and
documentary transfer tax were higher than budgeted while expense savings were realized
across many of the departments (detailed in Attachment A). Although all the major taxes are
higher than the Adjusted Budget, the pandemic continues to impact the City’s revenue with
sales tax, transient occupancy tax, and utility user tax, remaining lower compared to pre -
pandemic revenues.
Business Type Activities (Enterprise Funds & Internal Service Funds)
As of June 30, 2022, the City’s Enterprise Funds reported a total net position of $796.8 million, a
decrease of $10.4 million or 1.3% from the prior year. All funds showed positive balances: Net
Investment in Capital Assets ($670.8 million), Restricted for Debt Service ($3.3 million), and
Unrestricted ($122.7 million).
Internal Service Funds ended the fiscal year with $86.0 million net position balance. All funds
showed positive balances except the Printing and Mailing and Workers Compensation
Insurance Program Funds. The Printing and Mailing Fund reported a $0.2 million negative
balance due to the pension liability per GASB 68 and Other Post-Employment Benefits (OPEB)
liability per GASB 75. Workers Compensation Insurance Program Fund showed a $0.6 million
negative balance due to unrealized market losses on investments. Once adjusted for these
noncash transactions, both funds remain with a positive fund balance.
1 City Council June 30, 2022, Agenda Item #28; CMR #14352;
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-council-
agendas-minutes/2022/20220620/20220620pccsm-amended-final-final.pdf#page=557
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BACKGROUND
The City’s fiscal year ends on June 30, at which time its financial records are closed for the year
and financial reports are prepared. The reports, along with the City’s financial data, are audited
by Macias Gini & O’Connell LLP (MGO), Certified Public Accountants, a firm hired by the City
Auditor. MGO issues an audit opinion on the financial position of the City’s activities and ,
together with the City’s financial statements and other information, comprises the City’s
Annual Comprehensive Financial Report (ACFR) that can be found in Attachment C.
Attachment B outlines technical recommended amendments to the FY 2022 Budget. These
recommended actions close the fiscal year by reallocating and realigning budget to appropriate
funds for actual operating and capital expenditures and revenue collected as well as adjust
transfers between funds. The General Fund Summary found in Attachment A, provides detailed
information of revenue and expenditures by department. The Discussion section of this staff
report includes Results by Fund which discusses position of fund balances, major revenue
sources, and expense highlights.
The ACFR includes government-wide statements and fund level financial statements that
provide a snapshot of fund balances and activity for the year. An overview of financial results,
information on how to navigate the ACFR document, and highlights of key fiscal issues affecting
the City can be found in the Management’s Discussion and Analysis (MD&A) section (ACFR p. 5).
The MD&A also provides a discussion and analysis of the City’s current fiscal health and
includes financial statements and analysis compared to the prior year, along with capital asset
and debt administration data.
Throughout this report, pronouncements released by GASB are referred to by issuance number.
For example, GASB Pronouncement No. 68 is referenced in this report as GASB 68. A full list of
pronouncements can be found on GASB’s website.
DISCUSSION & ANALYSIS
There are two methods of displaying the City’s financials that are included in the FY 2022 ACFR,
1) Government Wide Statements and 2) Fund Financial Statements. The discussion below is
organized by these two reporting standards and the results contained within. To assist in the
terminology below is a brief overview of these; each of these displays of the City’s financial
statements are governed by Generally Accepted Accounting Principles (GAAP) as modified
regularly by the Governmental Accounting Standards Board (GASB). Neither of these views are
the same as the City’s annual budget; however, Fund Financial Statements is most closely
aligned.
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Government Wide Financial Statements Fund Financial Statements
• Governmental Activities – City’s basic
services generally funded by taxes,
and/or by specific program revenues
such as fees and grants (full accrual) +
includes portion of internal service funds
• Business Type Activities – City’s
enterprise activities which are funded in
whole or in part by fees charged to
external parties (full accrual) + includes
portion of internal service funds
• Governmental Funds – similar to
“governmental activities” EXCEPT on a
modified accrual basis of accounting +
excludes internal service funds.
• Proprietary Funds – same as “business
type activities” EXCEPT includes internal
service funds. Includes what we refer to
as “enterprise funds” (full accrual)
Government-wide Statements
Statement of Net Position
The Statement of Net Position presents information of all the City’s assets plus deferred
outflows of resources, and liabilities plus deferred inflows of resources, with the reported net
position.
The City’s net position was $1.271 billion on June 30, 2022, compared to a balance of $1.230
billion on June 30, 2021. The total increase of $40.6 million, or 3.2%, consists of $51.0 million
from governmental activities partially offset by a decrease of $10.4 million from business -type
activities.
The largest portion of the City’s net position ($1.175 billion or 92.4%) is its net investment in
capital assets such as land, buildings, infrastructure, vehicles, and intangible assets – right to
use leased assets less any related outstanding debt that was used to acquire these assets. The
restricted portion of the City’s net position ($76.2 million or 6.0%) represents resources that are
subject to external restrictions on how they may be used. The remaining balance of $20.0
million, across all funds, representing 1.6% of the City’s net position, is unrestricted and may be
used to meet the City’s ongoing obligations to its citizens and creditors.
The unrestricted net position for the governmental activities portion is negative mainly due to
the recognition of the net pension liabilities required by GASB Statement No. 68 and net OPEB
liabilities required by GASB Statement No. 75. The $102.7 million deficits for governmental
activities include the $286.6 million impact of net pension liabilities and its related deferred
outflows of resources (GASB 68) and $78.3 million impact of net OPEB liabilities and its related
deferred outflows of resources and deferred inflows of resources (GASB 75). Excluding these
impacts, the Governmental Activities’ unrestricted net position is $262.2 million.
The net position of both governmental and business type activities reduced by $50.6 million
due to unrealized market losses on the City’s investment. Actual investment earnings on the
City’s portfolio are $9.0 million; however, the net interest earnings reported in the financial
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statement have a negative balance of $41.6 million due to accounting for unrealized losses on
the City’s investments. Per GASB 31, public agencies are required to report the change in the
valuation of City’s portfolio, and due to the rising interest rates, the portfolio’s fixed income
securities have a “paper” loss as of June 30. The City’s long-standing practice is to hold
investments to maturity and due to this practice, there will likely be no actual losses incurred
on these investments.
TABLE 1
STATEMENT OF NET POSITION
As of June 30, 2022
(in millions)
2022 2021 2022 2021 2022 2021
Cash and investments 400.7$ 443.4$ 241.3$ 285.6$ 642.0$ 729.0$
Other assets 82.4 76.6 50.7 47.7 133.1 124.3
Capital assets 674.2 602.0 735.2 693.2 1,409.4 1,295.2
Deferred outflows 59.2 60.8 24.7 21.1 83.9 81.9
Total assets and deferred outflows 1,216.5 1,182.8 1,051.9 1,047.6 2,268.4 2,230.4
Net pension and OPEB liabilities 316.5 438.2 109.5 159.7 426.0 597.9
Long-term debt 210.2 217.5 64.3 68.9 274.5 286.4
Other liabilities 102.9 87.6 33.1 23.8 136.0 111.4
Deferred inflows 112.8 16.3 48.2 6.4 161.0 22.7
Total Liabilities 742.4 759.6 255.1 258.8 997.5 1,018.4
Net Position
Net investment in capital assets 503.9 480.6 670.8 642.0 1,174.7 1,122.6
Restricted 72.9 80.3 3.3 3.4 76.2 83.7
Unrestricted (102.7)(137.7)122.7 161.8 20.0 24.1
Total Net Position 474.1$ 423.2$ 796.8$ 807.2$ 1,270.9$ 1,230.4$
Governmental Business-type Government-wide
Activities Activities Totals
Statement of Activities
The major sources of the City’s revenues are Program Revenues and General Revenues.
Program Revenues consist of charges for services (both governmental and business type
activities) as well as operating and capital grants and contributions. General Revenues include
property tax, sales tax, utility user tax, transient occupancy tax, documentary transfer tax, other
taxes and miscellaneous revenue.
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Revenues for the City in FY 2022 were $565.4 million, an increase of $11.7 million or 2.1%
above FY 2021, due to a $21.6 million increases in Governmental Activities partially offset by a
$9.9 million decrease from Business Activities. Governmental Activities increased $21.6 million
due to program and general revenues. The increases in program revenues are due to
resumption and increase of in-person classes, paramedic revenues, ARPA funding totaling $8.2
million, and $25.7 million donation from Friends of the Junior Museum & Zoo (JMZ). The
increases in general revenues are from major taxes partially offset by decreases in investment
earnings from the negative impact of fair market value adjustments. Business Activities revenue
decreased $9.9 million mainly due to decreases in Water Fund reven ues resulting from
conservation efforts in response to the drought. This was partially offset by an increase in Gas
Fund revenues driven by a 3% rate increase and portion of the commodity price increases is
passed through to customers. Another factor driving the decrease of the revenue is the
decrease of investment earnings resulting from negative fair market value adjustments.
Expenses for the City in FY 2022 were $524.8 million, a decrease of $24.1 million or 4.4% below
FY 2021, due to a $45.6 million decrease from Governmental Activities that is partially offset by
a $21.6 million increase from Business-type expenses.
The decrease in Governmental Activities expenses is mainly due to the decrease in pension and
OPEB related adjustments for GASB 68 and GASB 75, primarily due to higher actual than
expected interest earnings of City’s pension and OPEB plan.
Administrative Services expenses decreased $8.0 million, primarily due to the $12.6 million set
aside established in FY 2021 for Green v. City of Palo Alto. Additional expenses of $4.9 million
were set aside in 2022 to settle the case. The City has a total claim payable of $17.5 million for
the Green case on its governmental activities’ financial statements
Public Works expenses, which decreased $21.5 million mainly due to review and reclassification
of construction in progress balances and determined that certain expenses, specifically various
repairs and maintenance of streets, sidewalks, facilities, and parks, should not have been
capitalized per Generally Accepted Accounting Principles (GAAP). The expense to correct these
construction progress balances was recorded as part Public Works functional expenses in FY
2021. These actions are consistent with recent staff review, affirmed by an audit compl eted by
BakerTilly (the City Auditor), to more accurately account for capitalized assets.
The increase of Business Type Activities is driven by several cost categories and resulted in
higher costs compared to prior year, including energy purchase cost, op erations and
maintenance in Electric Fund, and commodity purchases in Gas Fund. These increases were
partially offset by the decrease in pension and OPEB related adjustments for GASB 68 and GASB
75, primarily due to higher actual than expected interest earnings of City’s pension and OPEB
plan.
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TABLE 2
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Capital Assets
The City’s capital assets for its governmental and business-type activities as of June 30, 2022
amounts to $1.409 billion (net of accumulated depreciation), which is a $98.9 million or 7.5%
increase over FY 2021. The increase was primarily due to various projects such as the
Charleston Arastradero Corridor, Public Safety Building, Highway 101 Bicycle and Pedestrian
Bridge, Water Main Replacement, Smart Grid Technology Installation, Electric System
Improvements, and Primary Sedimentation Tank Rehabilitation. In addition, due to the $29.2
renovated Junior Museum and Zoo (JMZ) of which $25.7 million was a donation from the
Friends of JMZ
City implemented GASB 87 – Leases which resulted in an increase of Intangible Asset – right to
use leased assets amounting to $9.1 million, net of amortization.
TABLE 3
Capital Assets
2022 2021 (Decrease)
Governmental activites
Land and improvements 82.1$ 82.1$ -$
Street trees 15.0 14.8 0.2
Construction in progress 121.9 143.4 (21.5)
Building and improvements 350.6 272.1 78.5
Intangible assets 3.8 3.8 -
Equipment 82.9 80.3 2.6
Roadway network 359.1 335.3 23.8
Recreation and open space network 37.0 35.2 1.8
Less accumulated depreciation (385.2) (365.0) (20.2)
Intangible assets-right to use leased assets 9.8 - 9.8
Less accumulated amortization (2.8) - (2.8)
Total Governmental Activities 674.2 602.0 72.2$
Business-Type Activities
Land 5.0$ 5$ -$
Construction in progress 136.9 129.0 7.9
Buildings and improvements 80.5 74.5 6.0
Infrastructure 0.6 0.6 -
Transmission, distribution and treatment systems 948.9 914.8 34.1
Less accumulated depreciation (438.8) (415.4) (23.4)
Intangible assets-right to use leased assets 2.9 - 2.9
Less accumulated amortization (0.8) - (0.8)
Total Business-Type Activities 735.2$ 708.5$ 26.7$
Total Capital Assets 1,409.4$ 1,310.5$ 98.9$
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Liabilities
As of June 30, 2022, the City’s liabilities totaled $831.6 million, which is a $164.1 million or
16.5% decrease below FY 2021. The decrease was due City’s Net Pension Liabilities and Net
Other Post-Employment Benefit (OPEB) Liabilities decreasing by $171.9 million, driven primarily
due to investment earnings that increased the OPEB Plan’s Net Position, scheduled debt service
payments, and refinancing activities. The decrease was partially offset by an increase of lease
liabilities amounting to $10.0 million due to GASB 87 – Leases implementation.
Fund Financial Statements
General Fund
General Fund Reserves
The General Fund ended with a net Budget Stabilization Reserve (BSR) surplus of $14.2 million,
when compared to estimates used in the development of the FY 2023 Adopted Budget and the
Councils target reserve level of 18.5% of budgeted expenses. Overall, at the end of the current
fiscal year, the General Fund’s fund balance was $100.1 million of both restricted and
unrestricted balances. This fund balance is comprised of several reserves: the Budget
Stabilization Reserve (BSR or City’s general reserve), reappropriations, notes and loans,
inventory, prepaid items, and other general government special purpose reserves (this includes
reserves for encumbrances and donations). In FY 2022, $1.7 million was set aside for the
Reserve for Excess Educational Revenue Augmentation Fund (ERAF) for the at-risk amount
related to the lawsuit filed in November 2021 by the California School Boards of Association
and its Education Legal Alliance against the Controller of the State of California for over the
calculation methodology of the Excess ERAF.
As described in the BSR reserve policy approved by the Council, the reserve is to remain 15 -20%
of the General Fund operating budget, with a target goal of 18.5%. Any reserve balance in
excess of the 18.5% target may be transferred to the Infrastructure Reserve (IR) in the Capital
Improvement Fund, and/or the City's Section 115 Pension Trust, as outlined in the Pension
Funding Policy at the discretion of the City Manager.
The FY 2023 Adopted Operating Budget projected a $54.7 million BSR balance as of June 30,
2022, compared to the actual balance of $72.8 million (this is a component of the General
Fund, fund balance noted above). The BSR is above projected levels due to higher major taxes
and program revenues, and lower expenses due to higher vacancy savings and lower expenses
across departments for internal costs to run the City such as utilities, printing and mailing, and
vehicle maintenance.
Much of this variance was forecasted, discussed, and a core component of the FY 2023 Adopted
Budget and two-year budget balancing strategy. The Council recognized these higher than
budgeted estimate and used these funds to bridge the transition as the City and community
emerged from the pandemic while ensuring stability for the organization. The chart below
outlines the already approved uses of the BSR in FY 2023. These adjustments, totaling $13.0
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million, results in a BSR balance of $59.8 million; approximately 24.2% of the FY 2022 Adopted
expenses of $247.4 million. This level is approximately $14.2 million above the target level of
18.5% ($45.6 million). Micro and macro-economic conditions are adjusting daily, with rising
inflation, changes in jobs, and recessionary trends creating significant uncertainty. As the St ate
of California Legislative Analyst Office (LAO) wrote in their annual Fiscal Outlooks for California
“Economic Conditions Weigh on Revenues, [the] booming economy has led to high
inflation…efforts to tame inflation are slowing the economy…inflation pres sures remain, raising
risk of recession…fiscal outlooks revenues balance competing risks.2” Therefore, below are
recommended adjustments in line with the City Manager’s authority for transfer of excess BSR,
adjusted for a recommendation to reserve funds to safeguard the stability the City has strived
to achieve in the recent year by re-establishing an economic uncertainty reserve. Staff
anticipates returning to Council in February 2023 with the FY 2023 Mid -Year Review and
recommendations in alignment with the allocation below for the appropriation of BSR funds
above the 18.5% level. Staff do recommend a transfer to the Infrastructure Reserve as
inflationary costs are impacting capital project needs including anticipated significant price
increases in the Automated Parking Guidance Project, as well as a need to provide safety
improvements to critical assets such as the artificial turf playing fields.
2 The 2023-24 Budget California’s Fiscal Outlook, California Legislative Analyst’s Office (LAO), November 16, 2022,
https://lao.ca.gov/Publications/Report/4646
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TABLE 4
Year-End Budget Stabilization Reserve (BSR) Summary
(in millions)
General Fund BSR Balance, June 30, 2022 $72,835
Uses of the FY 2022 Surplus
FY 2023 Approved Adjustments to the BSR Balance
FY 2023 Adopted Budget ($9,072)
FY 2023 Services Reinvestment ($3,700)
Downtown Streets Team (CMR 14526) ($167)
Reappropriations (CMR 14728) ($100)
Subtotal: Approved Adjustments to the BSR Balance ($13,039)
Subtotal: BSR Balance, After Approved Adjustments $59,796
FY 2023 RECOMMENDED Adjustments to the BSR Balance
(to be considered in FY 2023 Mid-Year Budget)
Reserve for Economic Uncertainty ($5,000)
Transfer to Section 115 Pension Trust Fund ($5,000)
Transfer to Infrastructure Reserve (IR) in the Capital Improvement Fund ($4,000)
Subtotal: RECOMMENDED Adjustments to the BSR Balance ($14,000)
Current Projected FY 2022 BSR Level, (June 30, 2023) $45,796
General Fund Revenues
General Fund revenues for FY 2022 were $190.4 million, which is $23.6 million or 14.1% higher
than the prior year. Year-over-year changes in each of the major tax revenue categories are
summarized in the following table. The majority of these higher than budgeted revenues were
forecasted and discussed as part of the FY 2023 Adopted Budget, in May 2022, staff and the
Finance Committee discussed use of a projected $14 million excess revenues to develop a two-
year budget strategy and begin reinvestments.
TABLE 5
General Fund Major Tax Revenues
(in millions)
Category FY 2022 FY 2021
% Change
Increase (Decrease)
Property tax $ 59,353 $ 56,572 4.9%
Sales tax 32,705 29,127 12.3%
Utility user tax 15,599 14,642 6.5%
Transient occupancy tax 16,946 5,179 227.2%
Documentary transfer tax 11,990 10,627 12.8%
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Property tax revenue increased $2.8 million or 4.9% due to property assessed value growth
that was driven by the change of ownership, and an increase of $1.1 million in the Excess
Educational Revenue Augmentation Fund (ERAF) distribution.
Sales tax receipts were $3.6 million or 12.3% higher than the prior year. The increase is due to
the strong performance of apparel and department stores, furniture/appl iance, and food
products categories which include restaurants, and transportation such as new auto sales. The
City’s revenue base also benefits from many high-end goods and dining options at regional
destinations, such as Stanford Shopping Center.
Utility user tax revenues are $1.0 million or 6.5%, higher compared to prior year. The economic
recovery resulted in increased business activity and workers returning to the office/business
site resulting an increased use of services subject to UUT.
Transient occupancy tax (TOT) ended the year $11.8 million or 227% higher than prior year.
The increase is exceptionally high because this is compared to a time when there was a high -
level of health, safety and travel restrictions however remains lower than the pr e-pandemic
levels. In FY 2022, the average occupancy rate was 63.5%, a 57.4% increase and the average
room rate was $194.89, a 68.6% increase over the prior year. The entire 15.5% TOT rate from
new hotels, plus 3.5% from all other hotels, has been allocated to the Infrastructure Plan
pursuant to City Council direction. This results in additional TOT for the Infrastructure plan of
$2.2 million. These additional funds, coupled with the recommended excess BSR funds will
assist in ensuring capital projects may continue as planned, adjusting for the rising costs due to
the current inflationary economic conditions. The following is a comparative breakdown of the
allocation of transient occupancy tax receipts:
TABLE 6
Allocation of Transient Occupancy Tax
FY 2022 FY 2021
% Change
Increase (Decrease)
General Fund $ 8,828 $ 2,796 215.7 %
Infrastructure Plan
New hotels – 12% 4,292 1,214 253.5 %
All hotels – 3.5% 3,826 1,169 227.3 %
Subtotal Infrastructure 8,118 2,383 240.7 %
Total TOT Receipts $ 16,946 $ 5,179 227.2 %
Documentary transfer tax increased $1.4 million or 12.8% compared to prior year due to nine
large commercial property transactions that occurred in FY2022. The number of transactions
was comparable to the prior year This revenue source is volatile since it is highly dependent on
sales volume and property values and the mix of commercial and residential sales.
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Charges for services increased $4.2 million or 16.7% compared to prior year mainly due to
resumption of program and classes and offered both virtually and in-person with the lifting of
many State and County Public Health restrictions.
Other revenues decreased $2.8 million or 56.0% compared to prior year, due to decrease of
investment earnings, mainly from unrealized market losses on investments, partially offset by
the American Rescue Plan Act distribution of $8.2 million recognized as revenue in FY 2022.
The following is a chart which depicts the relative contribution of each tax category over the
past seven years (2016 through 2022), as well as the current budgeted year (2022).
CHART 1
General Fund Tax Revenues
Actual Fiscal Years 2016 – 2022
Budget Fiscal Year 2022
($ in thousands)
General Fund Expenditures
General Fund expenditures for FY 2022, including encumbrances and reappropriations, totaled
$209.5; an increase of 14.0% from the prior year, primarily due to the increase in salary and
benefit costs, and indirect charges. The increase in salaries and benefits are due to overtime,
specifically police and fire, paid leave, and pension. The indirect charges were higher in the
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current year primarily due to liability insurance charges, vehicle equipment maintenance
service and information technology (IT) support. The increase in liability insurance charges is
based on actuarial analysis of the City’s liabilities costs over the past few years and provides an
85 percent confidence level. Another factor driving the increase was due to reappropriations of
$12.4 million claims for a class action lawsuit.
The Adopted Budget of $194.4 million was increased to the Final Adjusted Budget amount of
$215.1 million, primarily due to increased funding from prior year encumbered and
reappropriated balances and increases for several departments throughout the year also
occurred based on City Council direction per recommendations contained in City Manager
Reports. The following is a chart which compares actual departmental costs, including
encumbrances and reappropriations, excluding Cubberley lease over the past seven years and
budgeted costs for FY 2023.
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CHART 2
General Fund Departments
Actual Expenditures Fiscal Years 2016– 2022 (including reappropriations and encumbrances)
Budgeted Expenditures Fiscal Year 2023
($ in thousands)
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 220,000
FY 2023 Budget
FY 2022 Actual
FY 2021 Actual
FY 2020 Actual
FY 2019 Actual
FY 2018 Actual
FY 2017 Actual
FY 2016 Actual
FY 2023
Budget
FY 2022
Actual
FY 2021
Actual
FY 2020
Actual
FY 2019
Actual
FY 2018
Actual
FY 2017
Actual
FY 2016
Actual
Public Safety 89,724 83,339 77,795 83,616 77,592 75,975 72,815 65,005
Community Services 32,866 31,712 27,769 31,489 30,201 28,395 26,573 25,262
Admin Depts 41,302 39,762 26,165 28,169 29,304 23,538 22,157 22,059
Public Works 20,134 19,448 18,553 18,932 17,928 18,908 17,475 15,084
Planning and Development Services 22,615 21,231 18,782 21,098 22,606 23,006 22,400 21,784
Office Of Transportation 1,718 1,648 2,010 2,360
Library 10,211 8,904 8,636 10,092 9,491 9,357 9,266 8,217
The Development Services Department was combined with the Planning and Community Environment in FY 2020 and renamed
to the Planning and Development Services Department.
The Office of Transportation Department, which previously was a division of the Plannin g and Community Environment
Department was established in FY 2020.
Capital Projects Fund
The Capital Projects Fund ended the year with a fund balance of $117.9 million, comprised of
the following:
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TABLE 7
Capital Projects Fund – Fund Balance
Fund Balance Component
Amount
($ in millions)
Restricted for Library projects $ 251
Reserved for Roth Building rehabilitation 5,184
Reserved for Cubberley expenditures 5,720
Restricted for Public Safety Building 48,216
Assigned for all other Capital projects 58,567
Total Capital Projects Fund Balance $ 117,938
Restricted for Library projects $0.3 million is the portion of fund balance dedicated to the
remaining Mitchell Park Library expenditures which, if considered bond expenses will be paid
for with cash from bond proceeds. Non-bondable expenditures such as salaries and benefits are
funded from the Infrastructure Reserve (ending fund balance in the Capital Projects Fund), as
established at the time of the bond issuance. The Mitchell Park Library project is already
completed but the roof defects need to be fixed using this reserve.
Restricted for Public Safety Building $48.2 million represents the remaining bond funding
dedicated to the construction of the public safety building. This project is currently under
construction with estimated completion in Fall 2023.
Assigned for all other Capital projects $58.6 million represents the amount of unspent funds
associated with Adopted Capital projects and other noted items. Outside funding sources such
as grants, donations and future debt issues are not factored into this component of the fund
balance until they are received.
Enterprise Funds
The City’s Enterprise Funds reported a total Net Position of $790.7 million, a $12.6 million, or
1.6% decrease from the prior year. The table below summarizes the overall change in Net
Position for each Enterprise Fund. Compared to FY 2021, the Change in Net Position for
Enterprise funds decreased $34.8 million driven primarily by the Electric Fund, Wate r, Fiber
Optics and Gas Funds – details of these funds are summarized following this table.
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TABLE 8
ENTERPRISE FUNDS
Change in Net Position for the Year Ended June 30
(in millions)
Increase/
Fund Name 2022 2021 (Decrease)
Water 0.7$ 6.6$ (5.9)$
Electric (24.2)(4.8)(19.4)
Fiber Optics (1.2)1.5 (2.7)
Gas (0.6)3.5 (4.1)
Wastewater Collection 1.2 0.7 0.5
Wastewater Treatment 1.4 3.1 (1.7)
Refuse (0.2)1.9 (2.1)
Storm Drainage 2.6 3.0 (0.4)
Airport 7.7 6.7 1.0
Total Change in Net Position (12.6)$ 22.2$ (34.8)$
Overall, Changes in Net Position decreased $34.8 million for Enterprise Funds, mainly due to
accounting adjustments that resulted in over $21.5 million net unrealized market loss. In
addition, the Water Fund experienced lower revenue due to residential conservation efforts.
The Electric Fund also reported negative net change from the prior year due to increases in
purchases of electricity which were primarily driven by higher than historical forward energy
prices (future delivery), increased resource adequacy costs (capacity supply and demand), and
lower hydroelectric supply. The Gas Fund showed a $4.1 million negative change due t o higher
commodity prices partially offset by a 3% rate increase and increased revenue from a portion of
the commodity price increases being passed directly to customers. The Airport Fund reported a
$1.0 million positive net change due to federal grants received for the Apron Reconstruction
project.
The table below details the Change in Unrestricted Net Position in the Enterprise Funds.
Enterprise Fund Rate Stabilization, Operations and other reserve balances are shown in detail in
the ACFR (p. 96). Overall, except for the Wastewater Treatment Fund and the Airport Fund,
each Enterprise Funds maintained a positive unrestricted net position balance as of June 30,
2022. Adjustments for the Pension Reserve (as required by GASB 68) and OPEB Reserve (as
required by GASB 75) total $130.2 million and unrealized market losses on investments total
$21.5 million (as required by GASB 31) for all Enterprise Funds and reduce each fund’s
unrestricted net position.
The Wastewater Treatment Fund reflects a $14.8 million Un restricted Reserve deficit and is
mainly driven by $ $26.1 million in Pension Reserves and OPEB Reserves adjustments.
The Airport Fund reports a $3.0 million Unrestricted Reserve deficit which is attributed to the
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$1.1 million Pension Reserve and OPEB Reserve adjustments. Second, the fund deficit in the
Airport Fund is also a result of cumulative fund deficits over the life of the fund as fiscal
operations at the airport stabilize and capital projects near completion. The $7.7 million change
in net position of Airport Fund in current year is $0.6 million from operations and $7.1 million
grants received in current year.
TABLE 8
Increase/
Fund Name 2022 2021 (Decrease)
Water 27.8$ 33.0$ (5.2)$
Electic 46.5 74.5 (28.0)
Fiber Optics 32.1 34.5 (2.4)
Gas 6.4 11.6 (5.2)
Wastewater Collection 2.1 0.7 1.4
Wastewater Treatment (14.8) (10.8) (4.0)
Refuse 13.9 14.1 (0.2)
Storm Drainage 5.5 4.0 1.5
Aiport (3.0) (3.7) 0.7
Total Changes in Reserves (Unrestricted)116.5$ 157.9$ (41.4)$
Enterprise Funds
Changes in Unrestricted (Deficit) Net Position
(In Million)
RESOURCE IMPACT
Recommended actions in the report will align the FY 2022 appropriations with final fin ancial
activities as outlined in Attachment B. Overall, the City ended the FY 2022 in a positive net
position.
STAKEHOLDER ENGAGEMENT
The review and writing of this report was coordinated among various divisions within the
Administrative Services Department, along with Departments who assisted in staff’s analysis.
The actions recommended in this report were discussed and communicated to the impacted
departments.
ENVIRONEMENTAL REVIEW
This is not a project for purposes of the California Environmental Quality Act.
.
Attachments:
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• Attachment A: General Fund Summary (Budget and Actuals)
• Attachment B: Recommended FY 2022 Year-End Budget Actions
• Attachment C: FY2022 Annual Comprehensive Financial Report
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2.a
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Department Adjustment Adjustment
GENERAL FUND (102)
City Attorney's
Office
Contract Services
This action reallocates funding as a result of higher than anticipated contract services expenses in FY 2022.
These higher expenditures are primarily due to special projects including the Roth Building rehabilitation,
wireless ordinance update, employee investigations, and capital project construction contract claims.
‐$ 103,000$
City Auditor's
Office
Salaries & Benefits and Contract Services
This action reallocates funding as a result of salary and benefit expenses in FY 2022 that were unbudgeted as
well as higher than anticipated contract services expenses related to FY 2021 audits that were paid during FY
2022.
‐$ 25,000$
Community
Services
Departmental Expense Savings
This action reallocates departmental cost savings within the General Fund in order to offset departments with
higher than anticipated expenses in FY 2022. The Community Services Department realized a net savings,
primarily in salaries and benefits, as a result of a large number of vacancies as well as savings from lower than
anticipated utility charges.
‐$ (253,000)$
Fire Charges for Services and Revenue from Other Agencies/Salaries & Benefits
This action reallocates funding as a result of higher than anticipated salary and benefit expenses and recognizes
and appropriates higher than anticipated paramedic services revenue and revenue from the State of California.
The higher expenditures, specifically in overtime costs, are primarily due to an above average amounts of
vacancies, employee leave, and employee turnover (voluntary and retirement) as maintaining minimum
staffing levels requires the use of overtime for backfill. The higher expenditures are partially offset by increased
paramedic transport services revenue as well as additional revenue from the State of California as
reimbursements for participating in Strike Teams and other statewide fire services.
600,000$ 725,000$
Non‐
Departmental
Transient Occupancy Tax Revenue/Transfer to Capital Improvement Fund
This action increases the transfer to the Capital Improvement Fund as it relates to Transient Occupancy Tax
(TOT) revenues earmarked for city‐wide infrastructure improvements due to higher than anticipated TOT
collections in FY 2022.
2,219,000$ 2,219,000$
GENERAL FUND (102) SUBTOTAL 2,819,000$ 2,819,000$
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 BUDGET
Revenues Expenses
ATTACHMENT B, EXHIBIT 1
2.b
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Department Adjustment Adjustment
CAPITAL IMPROVEMENT FUNDS
GENERAL FUND CAPITAL IMPROVEMENT FUND (471)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in
Attachment B, Exhibit 2.
‐$ 419,000$
Capital Transfer from General Fund
This action increases the transfer from the General Fund related to TOT revenue Council
earmarked to use for city‐wide infrastructure improvements due to actual revenue collected
being higher than budgeted in FY 2022.
2,219,000$ ‐$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ 1,800,000$
GENERAL FUND CAPITAL IMPROVEMENT FUND (471) SUBTOTAL 2,219,000$ 2,219,000$
CUBBERLEY PROPERTY INFRASTRUCTURE FUND (472)
Public Works Revenue from Other Agencies/Salaries and Benefits
This action appropriates funding for increased costs related to facilities maintenance work at
the Cubberley Property and recognizes and appropriates increased revenue from the Palo Alto
United School District (PAUSD) to reimburse the City for their share of the costs as outlined in
the Cubberley lease agreement between the City and PAUSD.
22,000$ 22,000$
CUBBERLEY PROPERTY INFRASTRUCTURE FUND (472) SUBTOTAL 22,000$ 22,000$
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 BUDGET
Revenues Expenses
ATTACHMENT B, EXHIBIT 1
2.b
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Department Adjustment Adjustment
ENTERPRISE FUNDS
ELECTRIC FUND (513 & 523)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in
Attachment B, Exhibit 2.
‐$ 145,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (145,000)$
ELECTRIC FUND (513 & 523) SUBTOTAL ‐$ ‐$
FIBER OPTICS FUND (533)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in
Attachment B, Exhibit 2.
‐$ 18,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (18,000)$
FIBER OPTICS FUND (533) SUBTOTAL ‐$ ‐$
GAS FUND (514 & 524)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in
Attachment B, Exhibit 2.
‐$ 4,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (4,000)$
GAS FUND (514 & 524) SUBTOTAL ‐$ ‐$
REFUSE FUND (525)
Public Works Refuse Collection, Hauling, and Disposal
As described in CMR 14275, at the end of each fiscal year staff estimates the expenses needed
for the next contract year for GreenWaste of Palo Alto (GWPA) and conducts a technical clean‐
up of expenses to ensure that any excess carryforward amount from the contract
encumbrance is returned to the fund balance. An error occurred in FY 2021 and too much was
returned to the fund balance, leaving insufficient funds for the contract in FY 2022. CMR
14275 approved a $0.9 million budget adjustment but this $1.4 million technical correction
augments the adjustment made in CMR 14275 to fully align the budget with the total
expenses for services provided by GWPA in FY 2022.
‐$ 1,443,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (1,443,000)$
REFUSE FUND (525) SUBTOTAL ‐$ ‐$
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 BUDGET
Revenues Expenses
ATTACHMENT B, EXHIBIT 1
2.b
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Department Adjustment Adjustment
ENTERPRISE FUNDS
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 BUDGET
Revenues Expenses
ATTACHMENT B, EXHIBIT 1
STORMWATER MANGEMENT FUND (528)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in
Attachment B, Exhibit 2.
‐$ 5,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (5,000)$
STORMWATER MANGEMENT FUND (528) SUBTOTAL ‐$ ‐$
WASTEWATER COLLECTION FUND (527)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in
Attachment B, Exhibit 2.
‐$ 90,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (90,000)$
WASTEWATER COLLECTION FUND (527) SUBTOTAL ‐$ ‐$
WATER FUND (522)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in
Attachment B, Exhibit 2.
‐$ 145,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (145,000)$
WATER FUND (522) SUBTOTAL ‐$ ‐$
2.b
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Department Adjustment Adjustment
INTERNAL SERVICE FUNDS
VEHICLE REPLACEMENT & MAINTENANCE FUND (681)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in
Attachment B, Exhibit 2.
140,000$ 140,000$
VEHICLE REPLACEMENT & MAINTENANCE FUND (681) SUBTOTAL 140,000$ 140,000$
WORKERS' COMPENSATION FUND (688)
Human
Resources
Claims Costs/Reimbursements
This net‐neutral action increases the estimate for workers' compensation claims by $115,000,
from $5.9 million to $6.0 million, due to higher than anticipated claims costs in FY 2022. This
amount is fully offset by additional revenue for excess insurance reimbursements received
during the period.
115,000$ 115,000$
WORKERS' COMPENSATION FUND (688) SUBTOTAL 115,000$ 115,000$
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 BUDGET
Revenues Expenses
ATTACHMENT B, EXHIBIT 1
2.b
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Department Adjustment Adjustment
SPECIAL REVENUE FUNDS
PUBLIC ART FUND (207)
Community
Services
Contract Services
This action increases the appropriation for contract services in the Public Art Fund to align with the
costs associated with the City's CodeArt Festival.
‐$ 48,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (48,000)$
PUBLIC ART FUND (207) SUBTOTAL ‐$ ‐$
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 BUDGET
Revenues Expenses
ATTACHMENT B, EXHIBIT 1
2.b
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Department Adjustment Adjustment
DEBT SERVICE & AGENCY TRUST FUNDS
2021 PUBLIC SAFETY BUILDING COP FUND (363)
Administrative
Services
Debt Service Payment
This action appropriates funding to cover the capitalized interest payment for the Certificates of
Participation to fund the New Public Safety Building capital project (PE‐15001). These funds
were set aside as part of bond sale in this Fund in order to make this payment; however, they
were not appropriated as part of the FY 2022 Budget.
‐$ 3,133,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (3,133,000)$
2021 PUBLIC SAFETY BUILDING COP FUND (363) SUBTOTAL ‐$ ‐$
LIBRARY PROJECTS FUND (370)
Administrative
Services
Bond Proceeds/Debt Service Payment
This action recognizes and appropriates bond proceed revenue from refinancing of Library
General Obligation (GO) Bonds (CMR 13438). This action also appropriates funding to pay off
the previous GO Bond amount. The refinancing occurred in June 2022, so this action is needed
to true up the budget with the actual amounts for the bond sales.
41,197,000$ 44,071,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (2,874,000)$
LIBRARY PROJECTS FUND (370) SUBTOTAL 41,197,000$ 44,071,000$
UNIVERSITY AVENUE PARKING ASSESSMENT AGENCY FUND (775)
Administrative
Services
Contract Services
This action increases the appropriation for Contract Services within the fund to align budget
levels with actual expenditures in FY 2022.
‐$ 2,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
‐$ (2,000)$
UNIVERSITY AVENUE PARKING ASSESSMENT AGENCY FUND (775) SUBTOTAL ‐$ ‐$
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 BUDGET
Revenues Expenses
ATTACHMENT B, EXHIBIT 1
2.b
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Project
Number Title Revenue Expense Comments
PE‐19002 Animal Shelter Renovation $ 74,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
FD‐21000 Automated External Defibrillators $ (50,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐18006 Byxbee Park Completion $ (500,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PF‐14004 Cal Avenue Parking District Parking
Improvements
$ 1,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PG‐14002 Cameron Park Improvements $ 16,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
AS‐10000 Capital Improvement Fund Administration $ (1,040,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐13011 Charleston/Arastradero Corridor Project $ 205,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐20001 City Bridge Improvements $ (19,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐09003 City Facility Parking Lot Maintenance $ (61,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐17010 Civic Center Electrical Upgrade & EV
Charger Installation
$ 6,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐18016 Civic Center Fire Life Safety Upgrades $ 34,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐15020 Civic Center Waterproofing and Repairs $ 114,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PG‐18001 Dog Park Installation $ 36,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PL‐14000 El Camino/Churchill Enhanced Bikeway $ (518,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
FD‐14002 Fire Ringdown System Replacement $ 14,000 Increase to project due to higher than
anticipated contract service expenditures to
close out the project.
PE‐15003 Fire Station No. 3 Replacement $ 87,000 Increase to project due to higher than
anticipated contract service expenditures to
close out the project.
PE‐18002 High and Bryant Street Garages
Waterproofing and Repairs
$ 6,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐11011 Highway 101 Pedestrian/Bicycle Overpass
Project
$ 524,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures ($315k). Increase to project due to
higher than anticipated contract service
expenditures to close out the project ($209k)
CAPITAL IMPROVEMENT FUND
ATTACHMENT B, EXHIBIT 2
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 CAPITAL IMPROVEMENT PROGRAM
2.b
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Project
Number Title Revenue Expense Comments
ATTACHMENT B, EXHIBIT 2
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 CAPITAL IMPROVEMENT PROGRAM
LB‐21000 Library Automated Materials Handling $ (50,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PF‐17000 Municipal Service Center A, B, & C Roof
Replacement
$ 80,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐18000 New California Avenue Area Parking
Garage
$ 34,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
OS‐00001 Open Space Trails & Amenities $ 135,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
OS‐09001 Off‐Road Pathway Resurfacing and Repair $ (16,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PG‐09002 Park and Open Space Emergency Repairs $ 37,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PG‐19000 Park Restroom Installation $ (71,000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PG‐14000 Ramos Park Improvements $ 29,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐08001 Rinconada Park Improvements $ 236,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures ($127k). Increase to project with
corresponding reduction in FY23 due to project
expenses for construction oversight
anticipated in FY23 being completed in FY22
($109k). FY23 reduction action approved by
Council on 10/24/22 in CMR 14728.
PO‐89003 Sidewalk Repairs $ 533,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐86070 Street Maintenance $ 518,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
PE‐21004 University Avenue Streetscape Update $ 25,000 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.
Total $ ‐ $ 419,000
EL‐06001 115 kV Electric Intertie $ 28,000 Increase to project due to higher than
anticipated expenditures.
EL‐19001 Colorado Power Station $ (730,000) Decrease to project due to lower than
anticipated expenditures to offset overspent
projects.
EL‐89028 Electric Customer Connections $ 1,100,000 Increase to project due to higher than
anticipated expenditures, with a $650k
reduction in EL‐17007, and a $450k reduction in
EL‐17002, both of which had some project
savings.
EL‐17007 Facility Relocation for Caltrain $ (650,000) Decrease to project due to lower than
anticipated expenditures to offset overspent
projects.
EL‐11014 Smart Grid Technology Installation $ 18,000 Increase to project due to higher than
anticipated expenditures.
ELECTRIC FUND
2.b
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Project
Number Title Revenue Expense Comments
ATTACHMENT B, EXHIBIT 2
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2022 CAPITAL IMPROVEMENT PROGRAM
EL‐17002 Substation Breakers $ (450,000) Decrease to project due to lower than
anticipated expenditures to offset overspent
projects.
EL‐89044 Substation Facility Improvements $ 99,000 Increase to project due to higher than
anticipated expenditures.
EL‐16003 Substation Security $ 1,100,000 Increase to project due to higher than
anticipated expenditures with a $730k
reduction in EL‐19001, and a $370k reduction in
EL‐19004, both of which had some project
savings.
EL‐19004 Wood Pole $ (370,000) Decrease to project due to lower than
anticipated expenditures to offset overspent
projects.
Total $ ‐ $ 145,000
FO‐16000 Fiber Optics Network ‐ System Rebuild $ 18,000 Increase to project due to higher than
anticipated expenditures.
Total $ ‐ $ 18,000
GS‐11002 Gas System Improvements $ 4,000 Increase to project due to higher than
anticipated expenditures.
Total $ ‐ $ 4,000
SD‐22000 East Bayshore Road & East Meadow Drive
Storm Drain System Upgrade
$ 5,000 Increase to project due to higher than
anticipated expenditures.
Total $ ‐ $ 5,000
VR‐22000 Scheduled Vehicle and Equipment
Replacement ‐ Fiscal Year 2022
$ 140,000 $ 140,000 Adjustment to align project budget with mid‐
year amendments to the operating budget for
the purchase of a tractor ($100K) and a code
enforcement vehicle ($40K).
Total $ 140,000 $ 140,000
WC‐99013 Sewer Manhole Rehab/Replacement $ 85,000 Increase to project due to higher than
anticipated expenditures.
WC‐80020 Sewer System, Customer Connections $ 5,000 Increase to project due to higher than
anticipated expenditures.
Total $ ‐ $ 90,000
WS‐80013 Water System Customer Connections $ 145,000 Increase to project due to higher than
anticipated expenditures.
Total $ ‐ $ 145,000
TOTAL CIP ADJUSTMENTS $ ‐ $ 718,000
GAS FUND
STORMWATER MANAGEMENT FUND
WATER FUND
WASTEWATER COLLECTION FUND
FIBER FUND
VEHICLE FUND
2.b
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Fiscal Year 2022 Annual Comprehensive Financial Report
This document may be viewed at the City’s website:
Financial Reporting – City of Palo Alto, CA
https://www.cityofpaloalto.org/files/assets/public/administrative-services/financial-
reporting/comprehensive-annual-financial-reports-cafr/current-2011-cafrs/2022-acfr-final/
city-of-palo-alto-acfr-fy2022-final.pdf
ATTACHMENT C
2.c
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