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Home My WebLink AboutStaff Report 170-06City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL 4 FROM: DATE: SUBJECT: CITY MANAGER APRIL 3, 2006 REQUEST FOR APPROVAL DEPARTMENT: OF A BUDGET UTILITIES CMR:170:06 AMENDMENT ORDINANCE IN THE AMOUNT OF $500,000 FOR ELECTRIC DESIGN AND CONNECTION SERVICES CAPITAL PROJECTS RECOMMENDATION Staff recommends that the Council adopt the attached Budget Amendment Ordinance (BAO) in the amount of $500,000 for the Electric Customer Connections capital project (EL-89028). RECOMMENDATION The City of Palo Alto Municipal Code places budgetary controls on Capital Improvement Pro~am (CIP) projects and does not allow additional appropriations to CIP projects without Council approval. The Electric Customer Connections capital project provides funding for improvements to the system to allow the connection of the new electrical services. The improvements include the installation of new conduits, transformers, meters, cables, and electrical enclosures. The City receives reimbursement of approximately 30% to 40% of the total electric service connection expense from customers. The Electric Fund reimbursement is smaller than that received in the other Utility Funds because the Electric Utility funds expensive capital equipment, such as transformers, required to provide service. DISCUSSION Based on the service requests received in the first 8 months of the fiscal year, the Customer Connections Project (EL-89028) will run out of funding before the end of the fiscal year unless additional appropriation is made. There were five service requests that were unanticipated prior to the budgeting process that account for $318,000 of extra expenditure. In addition, a large new electric service to 3401 Hillview is currently in the design stage and approximately $180,000 worth of new transformers and switches need to be ordered this year to support the project. Most of this will be recovered through reimbursement by the customer. RESOURCE IMPACT A BAO in the amount of $500,000 is requested, to come from the Electric Utility Fund Rate CMR:170:06 Page 1 of 2 Stabilization Reserve. The $500,000 increase requested will be partially offset by $275,000 in revenues from customer connections payments. The BAO will result in a net reduction in the Electric Utility Fund Rate Stabilization Reserve of $225,000. POLICY IMPLICATIONS These recolrmaendations do not represent a change in existing City policies. ENWIRONMENTAL REVIEW Categorically exempt from California Environmental Quality Act (CEQA), pursuant to sections 15302 and 15303 of the CEQA guidelines. ATTACHMENTS Attachment A - BAO Exhibit A (under attachment A) Attachment B - CIP Page PREPARED BY: CITY MANAGER APPROVAL: Acting Manager, Electric Engineering EMIL~I~ARRISON ~ Assistant Ci~ Manager CMR:170:06 Page 2 of 2 Attachment A ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 2005-06 TO PROVIDE AN APPROPRIATION OF $500,000 INTO CAPITALIMPROVEMENTPROGRAM(CIP)PROJECT NUMBER EL-89028, ELECTRIC CUSTOMERS CONNECTION The Council of the City of Palo Alto does ordain as follows: SECTION i. The City Council of the City of Pa!o Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 20, 2005 did adopt a budget for fiscal year 2005-06 (~Budget"); and B. The Budge% includes CIP Project NumSer EL-89028, Electric Customers Connection with an initial appropriation of $1,500,000 and with estimated customers reimbursements of $450,000; and C. Based on an unanticipated increase in customer service requests received during the first eight months of the 2005-06 fiscal year a shortfall in funding is projected for CIP Project Number EL-89028, Electric Customers Connection; and D. The increase in customer service requests will also result in an increase in customer reimbursements to CIP project EL-89028, Electric Customers Connection in the anticipated amount of $275,000; and E. Adjustments to the Budget are necessary to appropriate an additional $500,000 to increase funding for CIP Project EL- 89028, Electric Customers Connection and to recognize the anticipated increase of $275,000 in customer reimbursements to this project; and F. If Electric Fund ongoing costs will be incurred, they will be included in the operating budget; and G. City Council authorization is needed to amend the 2005- 06 budget as hereinafter set forth. SECTION 2. The sum of Five Hundred Thousand Dollars ($500,000) is hereby appropriated to CIP Project EL-89023, Electric Customers Connection. SECTION 3. The Electric Fund Distribution Rate Stabilization Reserve is hereby decreased by Two Hundred Twenty Five Thousand Dollars ($225,000) with a remaining balance of Eleven Million Four Hundred Seventeen Thousand Five Hundred Seventy Six Dollars ($11,417,576) as shown in Exhibit A attached to and made a part of this Ordinance. SECTION 4. Revenues from customer reimbursements are hereby increased by $275,000. SECTION 5. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 6. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance will take effect upon its adoption. SECTION 7. The Council finds that the funding of CIP Project EL-89028, Electric Customers Connection, to restore and replace existing utility facilities and create new utility facility connections, is a fiscal activity that does not involve a commitment to any specific project and therefore is not a project subject to- review under the California .Environmental Quality Act (CEQA) [CEQA Guidelines Section 15378 (b) (4)]. Funding of the program does not indicate approval of any individual new utility connection or replacement, which as each is proposed will be subject to individual project level analysis under CEQA. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM:APPROVED: City Attorney City Manager Director of Utilities Department Director of Administrative Services City of Palo Alto EXHIBIT A Budget Amendment Ordinances Impacting Utilities Rate Stabilization Reserves Approved To Date in 2005-06 03/27/06 Elec~ic Fund 2004-05 CAFR Distribution RSR Balance 2005-06 budgeted changes 2005-06 Projected Ending Balance before BAOs 2005-06 Midyear changes BAO - EL-89028 ( Electric Customers Connection) Total BAOs RSR Balance After BA O’s $13,519,000 ($1,701,000) $11,818,000 ($175.424)$275,000 $225,000 ($225,000) $275,000 $225.000 SO ($400,424) $11,417,576 $0 Attachment B Description: This project performs the following: installation of services, transformers, and meters for new customers, up~ading of existing services, temporary service connections, and overhead and underground extensions for new or existing customers. Justification: The project provides funding for the connection of new customers and the upgrading of existing services. These are critical functions for providing electrical service to the City’s customers. During a typical year, over 200 electric services are installed or upgraded in the City. Supplemental Information: Revenue from others represents reimbursements from customers. i py Budget ongoin~ !i PY Actuals as of ~t $0 CIP FACTS: ¯ Continuing . Managing Department: Utilities ¯ Comprehensive Plan: This project furthers Policy N-44 and Program L-81 IMPACT ANALYSIS: ¯ Environmental: Categorically exempt under Sec- tion 15302 of CEQA. ¯ Design Elements: Pad-mounted equipment will be screened. I Pre-Design Costs I Design Costs Construction Costs i Other Total Budget Request $1,600,000I $1,600,000 $1,500,000 $1,800,000 $1,900,000 $8,500,000 ] Sl,500,000 I $1,800,000 $1,900,000 $8,500,000 !Revenues:$450,000 ] $480,000 $540,000 ] $570,000 $2,550,000 i Source of Funds:Electric Fund with thefollowingreimbursements: Others(S2,550,000) $1,700,000 $1,700,000 $510,000