HomeMy WebLinkAbout1997-06-26 City CouncilCity of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:JUNE 26, 1997 CMR:306:97
SUBJECT:UNANTICIPATED OVER_EXPENDITURE IN WATER & GAS
CUSTOMER DESIGN AND CONNECTION SERVICES
CAPITAL PROJECTS
REQUEST:
This is an informational report and does not require any Council action.
EXECUTIVE SUMMARY:
The City of Palo Alto Municipal Code places budgetary controls on capital improvement
projects and does not allow additional appropriations to capital improvement projects without
Council authority. There are two capital improvement projects in the water and gas utilities
that provide design and connection services to customers. These projects are for the
connection of water and gas service l~om private property to the mains in the street. The City
is reimbursed approximately 75 percent of the costs for these services by the individual
customers. The volume of new design and connection services is directly linked to new
building construction, and remodeling activity and is very difficult to forecast accurately.
During the current fiscal year, the number of service requests surpassed staff estimates,
primarily because of the booming economy and a strong real estate market.
Based upon the service requests received in the first half of the fiscal year, the Council
approved additional funding for the two projects in the 1996-97 Midyear Financial Summary
and Budget Amendment Ordinance (CMR: 167:97). However, the customer demand has
remained stronger than what was anticipated at midyear. Consequently, in order to continue
to meet the customer demand, the actual costs for Water System Extensions (8013) and Gas
System Extensions (8017) are projected to exceed their approved budgets by $25,000 and
$20,000, respectively, by the end of the fiscal year. This increase would bring the total
expenditure budget for the Water System Extensions capital project to $222,000 and the Gas
CMR:306:97 Page 1 of 2
System Extensions capital project to $380,000. The revenues associated with Design and
Connection services will also exceed their budgeted targets, resulting in a minimal net fiscal
impact. Since it is so close to the end of the fiscal year, staff proposes to include budgetary
adjustments to correct these overexpenditures in the fiscal 1996-97 year-end Budget
Amendment Ordinance (BAO).
FISCAL IMPACT:
The fiscal 1996-97 year-end BAO will include supplemental funding requests for Major
Capital Projects 8013 & 8017 to cover cost overruns.
PREPARED BY: . Tony Sandhu, Senior Accountant
DEPARTMENT HEAD APPROVAL:
Melis~a Cavallo
Acting Director
Administrative Services
CITY MANAGER APPROVAL:
Emi~ Harrison
Assistant City Manager
CC:n/a
CMR:306:97 Page 2 of 2