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HomeMy WebLinkAboutAppendix C - Long Term CostsWorking together to serve, build community and enhance quality of life. Appendix C Long-Term Costs Long-Term Costs This section analyzes some of the annual hidden costs facing the City. It includes an in- depth discussion of issues surrounding street and bridge maintenance, storm drains, building and component replacement, technology replacement, vehicle replacement, and equipment replacement (collectively referred to as infrastructure); a discussion of long- term leave liability, followed by a general discussion of unfunded liabilities and wastewater assets. This information is essential to establishing a practical financial strategy. The information developed within the following pages has been verified to the extent possible. However, as more information becomes known or as experience modifies the facts or assumptions, the information will be modified. Street and Bridge Maintenance Introduction The City of Atascadero is responsible for maintaining a transportation system that includes 145 centerline miles of roadway. While the primary focus of maintaining this system has been on pavement management, other system components include bridges, traffic signals, traffic signs, pavement markings, guardrails, streetlights, landscape medians, curbing, sidewalks, pedestrian ramps, and storm drainage. All these components are integrated into the City’s transportation system and work in concert to support safety of motorists, pedestrians, and bicyclists. Furthermore, the transportation system is a core function to support residents, businesses, industries, commerce, and public safety (police and fire). This network represents a substantial investment by the City, and has been identified as a critical concern of the community. This section deals with the street, bridge and other similar infrastructure maintenance responsibilities of the City. Analysis Streets The Atascadero Road Program was developed in 1999 to focus the City’s efforts in maintaining and protecting the roads of Atascadero in an organized, efficient and cost- effective manner. With the relatively high miles of road to maintain and the relatively low revenue per capita, keeping the City’s roads maintained in a fair or good condition has always been a challenge. Ironically, some of the conditions that make the community so wonderful to live in, such as Atascadero’s rural character and relatively low population, make it the most difficult to secure funding. Many federal and state road maintenance funds (i.e. Gas Tax revenue) are derived from population statistics. Similar to many other cities, Atascadero suffers from a funding shortfall for road maintenance due to the aging road system and the City’s revenue base. The reality is that funding options from federal and state agencies are limited, leaving the City with fewer options for maintenance and rehabilitation. Since the inception of the Atascadero Roads Program, significant effort has been made toward repairing the roads and minimizing the maintenance deficit. The Atascadero Road Program is based on local pavement management strategy. Pavement management is the process of planning the maintenance and repair of City streets, in order to optimize pavement conditions over the entire network. Pavement management incorporates life cycle costs into a more systematic approach to minor and major road maintenance and reconstruction projects. The needs of the entire network as well as budget projections are considered before projects are executed. Pavement management encompasses the many aspects and tasks needed to maintain a quality pavement inventory, and ensure that the overall condition of the road network can be maximized to the extent possible. In March 2015, the City Council endorsed the Critical Point Management methodology for the City’s Pavement Management System. The City utilizes a software program called StreetSaver® to manage roadway pavements. This software is one of the most accepted industry leaders in pavement management technology. The road network and GIS information were entered into the program and then streets were field inspected for pavement distresses. The collected data is used to calculate a Pavement Condition Index (PCI) based on the 0 to 100 rating scale, 100 being excellent and 0 representing a failed road. StreetSaver® keeps track of the inspected conditions for each roadway segment (intersection to intersection) and any maintenance and improvement work is logged to keep conditions current. Funding scenarios are run using the critical point management and PCI break points to develop a priority list of roadway segments that are included in the City 5-year Capital Improvement Program. Following the initial inspection in 2014 and data entry, visual field inspections are scheduled for every five years. A visual inspection was performed in 2019, and then most recently in summer 2024 for the 145 miles of municipally maintained and managed roadway system. As of the most recent inspection, the overall weighted PCI has risen to 56 on a 100-point scale, which corresponds to the lower end of “fair” pavement conditions. This also represents an increase in PCI of six points since the previous field inspections conducted in 2019. In 2014, the PCI was projected to decrease eight points over a ten-year period, even with the new Measure F-14 funding, but actually increased nine points. This increase demonstrates that Critical Point Management, coupled with sound engineering decisions, is a successful strategy. It is important to keep in mind that PCI numbers are relevant to one another and used as a planning tool for prioritizing where monies are best spent. Field inspections are undertaken every five years, with the next inspections scheduled for 2029. The breakdown by functional road classification is summarized in the following table: Street Classification Centerline Miles Area (Square Feet) Percent of System Average PCI Arterial 37.36 6,009,915 31.4% 62 Collector 21.74 2,851,220 14.9% 50 Residential 86.08 10,262,706 53.7% 54 Total 144.74 19,009,181 100.0% 50 The following table shows the PCI distribution in the street system in 2019: Condition PCI Range Percent of System 2019 2024 Excellent – Very Good 100 - 91 5.73% 10.96% Good 90 - 71 14.01% 20.69% Fair 70 - 51 25.17% 22.26% Poor 50 - 31 30.33% 27.33% Failed 30 – 0 24.76% 18.77% There are three common strategies in pavement management and project prioritization: 1. “Best First” – focuses on keeping best conditioned streets in good condition; 2. “Worst First” – focuses on improving the worst conditioned street; and 3. “Critical Point” – focuses on preventing streets from dropping into PCI ranges that trigger more expensive maintenance and improvements. The City has selected Critical Point Management for project prioritization, which involves utilizing pavement management strategies, improvement techniques, and prioritization for roadway projects with the available funding that are geared to provide the lowest life cycle costs for the roadway system.There are economical, safety, and social/political considerations in each of the strategies. The first two strategies are short-sighted and will allow roadways to degrade and slip into a more costly PCI range for needed improvements. The critical point strategy is a long-range methodology that focuses on preventing roadways from dropping into PCI ranges that trigger more expensive maintenance and improvements. Although the unit prices are not current, the charts to the right provide an example of the costs savings by employing the critical point management theory. State and federal revenue streams for transportation are primarily funded through the fuel tax. Higher fuel efficiency vehicles, increases in electric vehicle use (which do not pay any gas tax) and changes in vehicle use patterns all affect the current revenue stream and foreshadow continuing declines in fuel tax receipts for future transportation investments. Even though vehicle miles traveled in California have increased and fuel prices have risen significantly in that same time period, the California gas tax can’t keep pace with the cost of road maintenance and repairs. Broad inflation over the last several years has also significantly impacted construction costs, and oil price increases specifically have increased the costs for asphalt pavement rehabilitation. The passage of SB-1 in 2017 accommodates annual adjustments to the gas tax rates, but it will take many years (if ever) to finally intercept the inflated rates and CPI increases that have occurred in the past. The Road Maintenance and Rehabilitation Act (SB1) provides an estimated $600,000± annually to supplement the City’s ongoing maintenance efforts. Funding available to the City for road projects has been a challenge. The City continues to maximize the projects that can be completed with the funding that is available, in addition to actively looking for any grant opportunities that may become available. The cost to maintain Atascadero’s road system, combined with the declining availability of road funds to accomplish this maintenance, were key considerations for a sales tax increase that would primarily fund road projects. In November 2014, Atascadero voters approved Measure F-14, a half-cent sales tax increase that became effective April 1, 2015. The voters also approved advisory Measure E-14 at the same time, indicating that the community preferred to spend that additional revenue on roads. Measure F-14 provides additional road funding and will work together with the City’s existing funding sources to maintain/increase the citywide road conditions. Measure F-14 was approved for a period of 12 years. In anticipation of the expiration of Measure F-14, Measure L-24 was brought to the voters in November 2024. Atascadero voters approved the Measure, which will extend the current half-cent sales tax, without a sunset date. This sales tax funding has been critical for the City to rehabilitate and maintain local roads. The City has developed a 5-year Capital Improvement Program (CIP) for roadway projects, which includes projects funded by both Measure F-14, Measure L-24, and existing City capital project funds. StreetSaver®, using critical point management, is used to develop a list of roadway segments for consideration each fiscal year. Roadway projects utilizing Measure F-14 and Measure L-24 funds are typically not combined with other roadway segments utilizing other funding sources. A separate list is generated for Measure F-14 and Measure L-24 roadway segments and non-Measure F-14 and Measure L-24 roadway repairs. The current 5-Year Capital Improvement Plan (FY23/24 – FY27/28) includes over 34 centerline miles of roadway improvements involving rehabilitation or resurfacing. Almost 235 miles are funded with Measure F-14 funding, and the remaining approximate 11 miles have other funding sources, such as LTF and SB1. While the 34 miles of road improvements translates to nearly 25% of the City’s maintained roadway system being improved over five years, this does not translate to mean that the entire system will be improved in the next 15 to 20 years since many of these roads are in a fair to good condition and less costly to repair than those which are not included. The StreetSaver® pavement management approach will assist the City in optimizing available funding by focusing projects on the highest need ranked areas and performing lower cost preventative maintenance as much as possible to avoid higher cost reconstruction project. Spending funds on preservation (crack filling, seal coating, chip seals, etc.) delays or prevents major restoration projects, and results in lower long-term costs. Well-timed preventative maintenance of a roadways’ surface increases its service life and delays the need for expensive rehabilitation or reconstruction. This has been particularly apparent in the last several years as both oil prices (the primary cost component of asphalt) and labor costs have escalated. While costs for resurfacing, which has the lowest oil content and is the most mechanized, have remained fairly stable, costs for more labor-intensive asphalt overlays and roadway reconstructions have increased substantially. This is illustrated in the cost per square yard for minor maintenance all the way up to major reconstruction in the following chart. Traffic Signals, Traffic Signs, and Pavement Markings The City owns and operates 12 signalized intersections - two which are located at the Santa Rosa Road/US 101 interchange and the remaining ten located on El Camino Real at Santa Barbara Road, San Rafael Road, Santa Rosa Road, Palomar Avenue, Junipero Avenue, Curbaril Avenue, West Mall, Traffic Way, San Anselmo Road, and Del Rio Road. Many of these traffic signals were constructed as a condition of nearby developments to mitigate traffic impacts generated by the development to the intersections. The most recent traffic signal constructed is over ten years old (Santa Rosa at US 101) and others are much older. However, over the last several years improvements have been made, as a condition of adjacent developments, to portions of the intersections signal systems at the West Mall and Del Rio Road intersections. Additionally, signal improvements will be implemented during 2025 at the El Camino Real/Traffic Way intersection, and a new traffic/pedestrian signal installed as part of the Downtown El Camino project. The Master Facilities Plan includes improvements to some of the remaining intersections that will require replacement or upgrades to traffic signals. The cost of these improvements is calculated into the Traffic Impact Fees charged to developments and eligible for use of those funds when improved or upgraded. However, these funds are not eligible for upkeep, repairs, or in-kind replacement of traffic signal components, which often are paid from operational expenditures. Other critical components to the City’s transportation system include traffic signs and pavement markings. There are currently 2,120 traffic signs, 16.5 miles of pavement striping and 24,210 pavement legends in use on City maintained roadways. While these signs and markings may seem to be trivial expenses compared to road improvements and bridge replacements, signs and markings instruct and guide motorists and other roadway users for safe use of the roadways. This is especially important when driving in the dark. The Federal Highway Administration (FHWA) understands the importance of keeping traffic signs and pavement markings in good condition, and made an amendment in 2012 to the Manual on Uniform Traffic Control Devices (MUTCD) requiring retro-reflectivity standards. The MUTCD requires the City to have a management plan to inspect and replace traffic signs, which typically need replacement every ten to fifteen years. Pavement markings wear out much quicker depending on type and traffic usage. Painted markings last from one to four years, while new thermoplastic markings may last up to seven years. Pavement markings will become much more important to keep in good condition as vehicle automation with self-driving cars rely on pavement markings for controlling and guiding the vehicle. Replacement of traffic signs and maintenance of pavement markings is currently paid through operational expenditures. Pavement markings are typically replaced with thermoplastic markings with roadway projects on the capital improvement program, but maintenance of others are typically painted. Based on information from StreetSaver®, it is estimated that the total accumulated reserve deficit is about $125 million. Bridges The City is also responsible for 18 vehicular bridges and a handful of other non-vehicular bridges such as Centennial Bridge over Atascadero Creek. While some of these bridges are relatively new, such as the Lewis Avenue Bridge over Atascadero Creek, Via Avenue Bridge over Atascadero Creek, and the Santa Lucia Road Bridge over Graves Creek, others are in excess of 100 years old. The following table shows the vehicular bridge inventory within the City. The Garcia Road over Graves Creek is privately owned and maintained, and the UPRR railroad bridge over Capistrano Avenue is the responsibility of Union Pacific Railroad, but both are shown on the table as they are located within City limits. Bridge Number Feature Intersected Facility Carried Location NBI Bridge Suff Rating Bridge Health Rating Year Built 49C0157 ATASCADERO CREEK SYCAMORE RD 0.05 MI N/O SR 41 NBI Bridge 76.0 Fair 1990 49C0159 ATASCADERO CREEK SAN ANDRES AVE 0.25 MI W/O SR 41 NBI Bridge 85.4 Fair 1993 49C0160 ATASCADERO CREEK SAN GABRIEL RD N/O W LINDO AVE NBI Bridge 74.2 Fair 1969 49C0163 GRAVES CREEK DEL RIO RD 0.40 MI W/O SF 101 NBI Bridge 70.8 Fair 1957 49C0277 GRAVES CREEK MONTEREY RD AT GRAVES CREEK RD NBI Bridge 93.8 Fair 1993 49C0295 ATASCADERO CREEK PORTOLA RD 0.1 MI W/O SR 41 NBI Bridge 49.5 Fair 1950 49C0312 ATASCADERO CREEK ATASCADERO AVE 0.12 MI N/O SANTA YNEZ AVE NBI Bridge 79.6 Fair 1958 49C0313 WEST BRANCH PALOMA CREEK VIEJO CAMINO 0.4 MI S/O EL CAMINO REAL NBI Bridge 64.4 Good 1959 49C0364 PALOMA CREEK VIEJO CAMINO 0.2 MI S/O EL CAMINO REAL NBI Bridge 97.0 Good 1976 49C0365 E BRANCH ATASCADERO CREEK EL CAMINO REAL 0.12 MI S/O SR 41 NBI Bridge 76.2 Fair 1965 49C0430 ATASCADERO CREEK EL CAMINO REAL 0.1 MI S/O EAST MALL NBI Bridge 96.1 Good 1915 49C0431 ATASCADERO CREEK HOSPITAL DRIVE 0.1 MI S/O CAPISTRANO AVE NBI Bridge 42.4 Poor 1921 49C0432 CAPISTRANO AVE UP RR & AMTRAK 0.2 MI N/O VIA AVE NBI Bridge 1902 49C0439 GRAVES CREEK GARCIA RD 0.3 MI N/O DEL RIO NBI Bridge 99.9 Good 2007 49C0442 ATASCADERO CREEK LEWIS AVE 0.2 MI NW/O SR 41 NBI Bridge 93.0 Good 2007 49C0450 GRAVES CREEK FERROCARRIL RD 0.1 MI W/O EL CAMINO REAL NBI Bridge 60.8 Good 2005 49C0451 UP RR & AMTRAK EL CAMINO REAL 0.1 MI N/O SAN RAMON RD NBI Bridge 76.1 Good 2005 49C0452 EAGLE CREEK ATASCADERO RD 0.1 MI E/O SANTA BARBARA RD NBI Bridge 83.5 Good 2005 49C0483 ATASCADERO CREEK VIA AVE 0.12 MI E/O TRAFFIC WAY NBI Bridge 98.5 Good 2023 Caltrans inspects and rates each of the 18 City bridges every two years. As the table shows, most bridge condition are in the fair and good category rating. There is a single bridge with poor ratings, but none that have been categorized as “Structural Deficient” (SD) or not capable of handling the current design loads. Many of the older bridges are considered “Functionally Obsolete” and do not meet current standards for lane configuration, approach alignments, or other geometric requirements. Historically, bridge maintenance and replacement have largely been funded through the federal Highway Bridge Replacement and Rehabilitation Program (HBRRP). While this funding had been looking much less secure, funding became available in 2022 for bridge replacement projects ready for construction. This was welcome news for the City, as two bridges scheduled for replacement (Via Avenue over Atascadero Creek and Santa Lucia Road over Graves Creek), were fully designed and ready for construction. Both bridges were allocated construction funding through HBRRP and replaced during the 2023 calendar year. Going forward, however, the amount of HBRRP funding available for future projects remains unclear, and eligibility requirements for HBRRP funds have tightened as costs escalated for current projects in the federal Program, leaving fewer resources available. Currently, bridges are only eligible for replacement with HBRRP funding if they are determined to be Structurally Deficient. Conclusion It is the City’s goal to fully fund street maintenance, and the Public Works Department has developed a strategy to maximize available road project funding. Measure F-14 (and later Measure L-24) and SB1 have been a boost in local roadway funding and will go a long way in improving the PCI of Atascadero’s road system, but the City needs to invest more if the overall pavement condition of the roadway system is to continue to increase and other transportation components are proactively maintained and replaced to ensure the performance, reliability, and safety of all that depend upon it. Storm Drain Maintenance Introduction Atascadero’s Storm Drain system has historically been a source of mystery and concern. The collection system is primarily a covert system; its purpose is to quietly collect excess runoff and keep the streets from flooding. Thanks to the efforts of the Public Works department, the storm drain system is fairly effective in keeping the water off the streets and reducing the risk of flooding in typical rain events, but it hasn’t always been like that. In the not too distant past, even modest rains brought uncontrolled flooding, primarily due to the “organic” nature in which the system was constructed, which relies on surface drainage to convey stormwater runoff. By better understanding the system and evaluating the condition of each of the components, the City is better able to manage the system and be proactive in preventing problems. Analysis To this end, in 2012, the Public Works Department inventoried the complete drainage system of all pipes, inlets, manholes and bridges, and measured and characterized the location, size, material and general condition of each facility. There are currently over 28- miles of culvert or storm drain piping within City road right-of-way. The study created an initial priority list for future projects, and established a replacement schedule and the funding needs based on conservative lifespan and construction costs so as to not overstate the cost to maintain these facilities. Using the information collected, a number of immediate maintenance and replacement projects were identified, and carried out within the limitations of the current Operations budget. The following are some highlights of the study’s findings: Existing Storm Drain Inventory (2012 Study) • 28 miles of existing culverts within the city’s storm drain network • A total of 1,740 individual pipe segments – 1,022 segments are CMP (shortest lifespan) – 416 segments are HDPE – 238 segments are RCP – 60 segments are PVC – 4 segments are Steel • 1,440 segments are City maintained – The length of city maintained culverts is 24.4 miles – 48% of all city maintained culverts are CMP – Currently 3,180 feet of culvert is characterized as needing near term replacement • 600 drain inlets and structures The graph below illustrates the condition of the segments in 2012: EXCELLENT 10% GOOD 52% FAIR 24% POOR 9% REPLACE 5% Storm Drain Segment Condition The good news in 2012 was that 86% of pipes were considered “Fair” or better. However, galvanized steel pipe (CMP) has a life expectancy of 15-40 years, and over the past twelve years since the 2012 study a significant percentage of the CMP installed in the City has reached or exceeded that life expectancy. The evidence of this aging of the storm drain culverts has been a significant increase over the last five years in the number of pavement sinkholes resulting from failed culverts below the road. A rough estimate of the annual storm drain replacement needs over a 30-year period is $200,000 per year through 2025, ultimately increasing to $600,000 per year. When possible, the City includes replacement of old CMP storm drain pipes with new HDPE (high density polyethylene) pipes during roadway rehabilitation projects. This significantly lowers storm drain replacement construction costs and minimizes impacts to the travelling public. This also reduces the amount that the City needs to set aside specifically for drainage replacement costs as those costs are included with the road project costs An updated drainage system evaluation will provide more accurate and detailed information of existing liabilities. The future replacement schedule will significantly increase as CMP material culverts (primarily) installed in the ‘70’s, 80’s and ‘90’s reach their expected lifespan. The study concludes that replacement costs step up and are estimated as follows: - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 An n u a l R e s e r v e Re q u ir e m e n t Fiscal Year Conclusion The City gained a much better understanding of the Storm Drain system after the 2012 study was performed. The 2012 study, combined with additional data gathered during street inspections, has provided valuable information on the condition and location of each of the many components so the Public Works Department can best focus resources on the issues of highest concern. Although the system is aging, the incorporation of culvert replacement into paving projects has managed to maintain the overall storm drain inventory in relatively good shape. The proactive approach to repairs of the storm drain components protect life and property by reducing or preventing flooding and helping to preserve the adjoining roads and infrastructure. City staff plans to perform an updated evaluation of the storm drains and culvert conditions and costs in the near future. Building Replacement Introduction The City of Atascadero owns a number of different buildings including City Hall, Police and Fire Stations, the Pavilion on the Lake, the Colony Park Community Center, and the City Corporate Yard. This section also encompasses a wide range of assets such as park restrooms, playgrounds, sports areas, building improvements, and Zoo exhibits, just to name a few. Assets of most departments are included in the following discussion, with the exception of the Wastewater Department. Analysis The City keeps a list of all buildings and improvements within the City. The list estimates the original cost, size, age and remaining life of the assets. The list tracks all buildings, storage structures, park buildings and improvements, and Zoo exhibits along with the corresponding costs and depreciation. The City should be setting aside funds each year in the reserve account to fund replacements and major repairs. The fire stations are good examples of the City’s need to invest in building replacement. Over the decades, the fire stations have housed many firefighters while they work to protect the City of Atascadero. Built in 1952, Station 1 on Lewis Avenue was designed as a station for a mostly volunteer firefighting staff. From volunteer firefighter beginnings, the station morphed into what we have today, which required several remodels and changes along the way. Station 1 now facilitates 24/7 staffing which required the addition of bedrooms, bathrooms and a kitchen. It houses three fire engines, one rescue trailer, one ambulance and several command vehicles. It provides storage for advanced medical equipment and supplies, self-contained breathing apparatus equipment, the firefighter turnout washer, breathing air compressor and so much more. While staff takes great pride in maintaining the Fire Station, the station is showing signs of its nearly 70-year-old age. Water-stained ceiling tiles, masonry cracks throughout the station flooring, driveway and exterior columns, diesel exhaust stained walls, small rooms and limited storage all speak to the underlying issues that the current budget has been unable to fix. Safety items to be addressed include the structural stability and earthquake retrofit of both the roof structure and the hose tower. The station needs updated features to keep firefighters safe. Cancer causing agents such as vehicle exhaust and dirty turnout gear or biohazards on medical equipment need to be isolated from the living quarters to keep firefighters safe and healthy. Fire Station 2 was built in the mid-1980s and is also showing its age. With one bedroom and a small square footage, it was built to house two firefighters. With four firefighters now on duty at the station during the wildfire season, this small footprint provides for very cramped quarters. Measure D-20, a one cent sales tax, was passed by Atascadero voters in 2020 and provides funding for a number of critical City priorities, including full replacement of Fire Station #1 and significant upgrades to Fire Station #2 and the Police Headquarters. Construction of improvements to these facilities are anticipated to begin in 2025. Maintenance and enhancement of the Charles Paddock Zoo and the animal exhibits will continue to be a priority. Many of the animal exhibits at the zoo need repairs or replacement. In order to continue to provide for these endangered animals, these exhibits must be regularly maintained. Many of the Zoo’s needs are often met through the generous donations of the community. The Zoo has historically received donations both through the Friends of the Zoo, and directly from members of the community. The Thelma Vetter Red Panda Exhibit is a great example. Staff work diligently to maximize these funding sources by fulfilling the unmet needs of the Zoo, and follow up with City-funded resources when possible. The Zoo staff is currently working on narrowing the list of deferred maintenance and bringing the Zoo up to standards. Park facilities are also deteriorating including parking lots, sidewalks, benches, picnic tables, playgrounds, restrooms, and athletic facilities. The shoreline retaining walls at Atascadero Lake needs significant work, and the lake requires costly periodic dredging to keep it healthy. The City did receive a grant to complete much-needed improvements to the Lake pier and sidewalk in 2023. Replacing and repairing these assets has been put off in order to make ends meet. Some items like playground equipment, shade structures or picnic benches are removed until donations are made to replace them. Other critical infrastructure that must be replaced or fixed is done as an emergency measure by eliminating or delaying some other service, program, or capital replacement. It is important to find ongoing funding to repair and replace these items as necessary. Understanding the value of funding these items, the City Council has authorized transfers from the General Fund to the Building Maintenance and Replacement fund. These investments are made possible due to some one-time occurrences in the General Fund in a particular year, making the amount unexpectedly available to be put in reserves for future facility repairs or replacements. A valuation of Atascadero City-owned property was recently completed and paid for by the California Joint Powers Insurance Authority (CPJIA), the City’s self-insurance pool. The replacement cost of City-owned buildings and improvements was estimated in excess of $108 million. This doesn’t suggest that the City should have that amount tucked away in a reserve account, however it does provide some context as to the level of investment the City has in this category Conclusion It is the City’s goal to fully fund building replacement. The City was able to begin partially funding building replacement in fiscal year 2000/01, and continued through 2008/09 until the Great Recession prevented further funding. Historically, the building reserves were largely used to pay for repair projects and improvements, which prolong the lives of the assets and keep them in good working order. In addition, staff actively looks for grants and other opportunities to augment available funds. The City has been successful with FEMA/OES and California Cultural and Historical Endowment (CCHE) funding for City Hall, grant programs such as the Energy Efficiency Grant for municipal buildings, Proposition 68 for the replacement of the Atascadero Lake Pier, and local donations. This has been an effective strategy thus far, but eventually costs will come due. Technology Replacement Introduction The City has a significant investment and dependence on technology equipment throughout the different departments. The computers and associated software make-up a technology system that is crucial to the day-to-day operations of the City. The system represents a total value of about $3.5 million including specialized software. This section deals with the current technology replacement responsibilities of the City. Analysis Each department was reviewed for the number of computers and associated software necessary to complete department objectives. Expected useful lives and replacement costs are determined and used to calculate the amount of reserve necessary each year. As technology continues to emerge quickly, it can be difficult to know what the future brings. Technology staff are always on the lookout for newer and more efficient technology that will provide safe and effective computing tools for managing City business. The City has been funding replacement and maintenance reserve for technology for over 25 years, and as a result, the technology reserve is almost fully funded. Both hardware and software are maximized, and best efforts are made to stretch the useful life out as long as possible, while keeping a tight balance with efficiency. The reserve fund allows for hardware and upgrades as determined necessary. Daily City business functions are dependent on the consistent operation of the City’s computers, associated technologies, safety, data backup, and data integrity. The two biggest concerns in the field of technology and data management are data loss and data corruption (through any number of methods.) Data backup and redundancy are critical to protect against these two concerns and are the backbones of the City’s technical infrastructure. The City must be prepared in the event of emergencies that may impact the electronic operations of the City, and the City must have security in place to avoid being the target of unwanted data intrusions and ransoms. Therefore, it is critical that the City have a designated reserve for the replacement and upgrade of computers and other technology equipment as it becomes obsolete. Conclusion It is the City’s goal to maintain a technology fund that will provide for the replacement and upgrading of technology as needed. Since the City began funding technology replacement in the 1998/99 budget, an adequate reserve exists to fund the City’s technology needs in order to keep operations running smoothly and efficiently. Costs to fully fund technology have not been delayed as other reserve funds were. In addition to providing the opportunity to replace items as needed, the technology reserves allow the City to take advantage of newer and more efficient technologies as they become mainstream. That being said, technology is constantly evolving and prices are continuously changing. The amount to fully fund this category may change and grow and it is important to evaluate the City’s needs with each new budget cycle. Vehicle Replacement Introduction The City owns many vehicles that are operated in the various City departments, from patrol cars to parks vehicles. The estimated replacement value of this rolling stock is about $10.5 million. Eventually, all of this equipment must be replaced as it becomes ineffective. Like similar tools addressed previously, vehicles are critical to performance of department objectives and in order to carry out the priorities of the community. Analysis Ninety-eight percent of the value of the $10.5 million in vehicles belongs to the police, fire and public works departments. All of these departments require employees to travel throughout the community with very specialized vehicles. Police officers need patrol cars to keep criminal activity in check, fire fighters need fire trucks and engines to fight fires, and public works need tractors, mowers, and service trucks to keep up the infrastructure and the community treasures. These specialized vehicles are critical to the operations of the departments and are typically higher priced purchases. The Council’s goal has been to fully fund the vehicle replacement fund. Vehicles, like technology, are used until they become either inefficient or inoperable. Savings can be achieved when a vehicle’s useful life can be stretched out by one or more extra years. Staff has been conscientious about how this affects the City’s bottom line and has utilized this technique effectively. While the City has consistently been funding the routine replacement of smaller vehicles such as police cars and building inspector vehicles, there was pause on funding the larger, more expensive vehicles from 2009-2011 through 2019-2021 due to revenue constraints. Starting with the 2021-2023 budget cycle, these vehicles are once again being funded and additional amounts were added to the reserve to make up the difference from the twelve-year funding holiday. These were funded with Measure D-20 in the 2021- 2023 budget cycle. Costs of replacement vehicles have risen significantly in the past few years. Starting with the 2021-2023 budget cycle, many of the replacement values of the existing rolling stock were increased to reflect current pricing environments. Prices have risen since COVID, and it is only very recently that prices are beginning to ease slightly. The COVID-era impacts of supply chain shortages have not yet fully been resolved in the marketplace, and supply of most vehicles continues to be somewhat limited. It is not uncommon to see lead times of a year or more on police and fire vehicles, which puts even more pressure on the departments to continue use of older rolling stock. Conclusion As part of the budget cycle, staff will look at the City’s fleet of vehicles to determine the appropriate amount of annual funding needed and how much of that can be accommodated in the budget. Thanks to the careful planning of the Council, the City has met its goal to have sufficient funding for the replacement vehicles. Because the City has committed to annually contributing to vehicle replacement, vehicles are replaced as needed. Equipment Replacement Introduction The City has a significant amount of equipment, which is essential to the operation of the City. These tools are necessary and allow employees to effectively perform their duties. The ideal strategy would be to work toward a program where replacement is funded annually, allowing the City to stay current with equipment. Wastewater equipment is not included in the estimates for this section. Analysis Each department has specialized equipment that assists employees in performing their duties as expected. Office staff need office machines such as copiers, police officers need radios and radio repeaters, fire fighters need breathing apparatuses and jaws of life, parks employees need mowers and irrigation equipment. For example, as an all-risk fire department, the firefighters are equipped and trained to respond to not only structure and vegetation fires, but also medical emergencies, traffic collisions, hazardous material incidents, technical rescues, natural disasters and more. Public safety personnel rely on a variety of tools and equipment that are crucial to mitigating these emergencies. Traffic collisions sometimes require extrication tools, like the Jaws of Life, to remove a trapped occupant from a vehicle. Every medical emergency, fire paramedics use cardiac monitors to assess and treat patients. Firefighters require specialized breathing apparatus to fight structure fires, keeping their airway safe from fatal heat and gases. Both Fire and Police require specialized protection as part of their uniform, like firefighter turnouts and bulletproof vests and helmets. All public safety members rely heavily on radios for communication, which not only means hand-held and mobile radios, but also the towers and equipment that support the radio network. Recent mandates by the State have placed additional requirements on the Police Department radio system. Also, standby generators are important pieces of equipment throughout the City that allow services to continue uninterrupted during power outages or PG&E power shutdowns. Generators provide back-up power to essential service buildings such as the Police and Fire Stations, but also power essential functions such as radio repeaters sites, wastewater lift stations and Zoo refrigerators, but not all of these facilities have the generators needed in a PG&E widespread shut down. While Staff does their best to keep existing equipment running for the maximum amount of time, eventually equipment ceases to be effective. Often times, specific items of equipment must be replaced to comply with new regulations or safety requirements. Limited, yet helpful, contributions have been included in budgets over the year where resources allowed. Measure D-20 made additional strides toward funding equipment. Staff continues to look for opportunities for grants, alternative funding sources, and donations to fund this equipment where possible. The 2023-2025 budget cycle includes funding for an asset management program. The process of implementing this program would include a survey of the City’s equipment and other assets. Once this survey has been completed and is uploaded to the software program, staff will have a much better understanding of all the equipment needs. Conclusion It is the City’s goal to fully fund equipment replacement; however, this has been a difficult goal to achieve. City staff will continue to maximize the equipment life to the extent possible, take advantage of savings opportunities as they arise, and continue to pursue grant funding as an alternative funding source. Equipment replacement will need to be reviewed while developing the next budget cycle. Leave Accruals Vacation Accrual Employees earn vacation time off in accordance with their applicable MOU or Resolution. Paid vacation leave accrues based on years of service. During early employment with the City, most employees earn 10 days of vacation annually and the earning rate increases with employee longevity. The City’s vacation policy allows employees to accrue up to a maximum of two (2) times their annual vacation earnings rate. The total vacation accrual amount will grow as additional staff members are added to the City team. The vacation accrual at June 30, 2024, was $830,880. Holiday Accrual Employees receive 12 paid holidays per year (Fire receives 5.6 shifts per year). Some employees are unable to take the holidays off when the holiday occurs due to the nature of their position. Primarily, this is a function of the 24/7 scheduling of public safety, but also affects the Zoo and some Public Works positions. Employees of these departments work regularly on holidays and accrue the paid time off. The MOU between the City and the Police department allows employees to either take the time off or to be paid off annually for the holiday time accrued. (Most eligible employees are paid off annually and this amount in included in the police budget.) The MOU with the Fire department does not include a similar annual payoff. Fire Department employees tend to build up paid holiday time off as an alternative to causing the department to pay overtime to backfill their shift. Gradually, the accruals build up. There is no maximum cap for holiday accruals. The value of this accrued time is paid out to the employee upon termination of employment. Hiring of a replacement employee has historically been postponed until payroll savings on the vacancy is enough to cover the payout amount. The Citywide holiday accrual at June 30, 2024, was $784,570. Administrative Leave Accrual Administrative Leave is paid leave granted to certain positions that are exempt from overtime. It is common practice to include administrative leave in compensation packages for salaried positions. The employees in these positions usually work a significant number of extra hours, and receive administrative leave as a benefit in lieu of overtime that is typical of non-exempt employees. Administrative leave functions similar to vacation time except that it is tracked separately and is carried over to the next fiscal year only under specific conditions. The administrative leave accrual at June 30, 2024, was $6,190. Sick Leave Accrual Sick Leave is provided to employees to minimize the economic hardship that may result from an unexpected personal or dependent illness or injury. It is accrued at the rate of eight hours per month (12.01 for Fire personnel) without a maximum cap. Some employee groups are eligible for an annual Stay Well Bonus that pays out a portion of the employee’s sick leave accrual, at the employee’s option, up to an established maximum. Additionally, some employee groups are eligible to receive up to one-half of the employee’s accrued sick time paid out at termination. The City’s policy and practice support an employee’s use of his/her entire sick leave accrual bank, as necessary, with an appropriate verification documenting the illness or injury. The sick leave accrual at June 30, 2024, was $445,280. Compensatory Time Accrual Non-exempt employees may choose to accumulate compensatory time instead of receiving overtime pay. The compensatory time credit is computed at time and one-half. The maximum hours non-exempt employees may accumulate is determined by the employee’s MOU or Compensation Resolution. Compensatory time may be partially or fully paid out at any time at the request of the employee or may be used as paid time off in place of vacation or other similar paid leave. Compensatory time accrual is paid out to the employee at termination. Total compensatory time accrual at June 30, 2024, was $285,370. Conclusion There are a variety of types of paid time off that staff can accrue. While it is essential to monitor the balances and keep these in mind when making staffing/policy decisions, paid time off continues to be an attractive benefit for current and potential employees. As the number of City staff members grow, so too will the number of people with accrued leave banks. Liquidation of these balances will ebb and flow, however, it’s important to remember that they won’t all be paid off at once. Unfunded Infrastructure There are other public asset maintenance costs that are not included in this section due to the fact that they are not the responsibility of the City to maintain according to the Atascadero Municipal Code. Instead, these assets are the responsibility of adjacent property owners. Many property owners feel this is unfair, and care for these assets may be worth consideration for City funding. Property owners are often surprised to find out that sidewalks and street trees in the public right of way are actually their responsibility. Property owners often assume the City takes care of these items, so they do not perform repairs and maintenance. As a result, the sidewalks and trees fall into a state of disrepair until a problem occurs and the property owner and City are sued. A lot of staff time is spent to notice and explain this responsibility to property owners and it takes funds to defend the City in lawsuits. There are also over 30 miles of public streets in Atascadero that are not maintained by the City but instead, by property owners that live on the street. Many of these streets were never built to City standards, and others meet standards but were not accepted after completion. These public roads are used like City maintained roads, but the burden to maintain and repair them falls to adjacent property owners – who pay the same taxes as those on City maintained roads. There is also a Community Facility District that require some newer residential units to pay an additional tax of about $845 each year to help offset that home’s impact to police, fire, and parks. A proposed unit to be constructed that requires City Council approval for the project will have to pay this additional tax, while other new units in projects that don’t require City Council approval, and existing units do not need to pay the tax. Wastewater The Wastewater system is a significant part of the City’s infrastructure, but is excluded from the analysis in this Section. The Public Works Department is currently nearing completion of an updated Collection System Master Plans. This report incorporates existing and projected future flows (from the ongoing 2025 General Plan update) to identify system collection deficiencies and develop necessary Capital Improvement Projects. Concurrently, the City is in the preliminary design phases for construction of a new Wastewater Treatment Plant to meet new State regulatory requirements and facilitate future growth of the City. Wastewater collection and treatment involves year-round, 24-hour per day energy intensive and highly mechanical processes. Pumps and equipment are particularly susceptible to frequent repair, reconditioning, and replacement. Pipes and manholes are constantly exposed to highly corrosive liquids and gasses and have finite lifespans. Currently, the City has a relatively simple and low-cost treatment plant technology compared to some other surrounding communities. Future increased wastewater treatment plant technology is expensive as evidenced by the recent Paso Robles Wastewater Treatment Plant upgrade that cost $50 million dollars. The City is currently in the preliminary design stages for the Wastewater Reclamation Facility upgrade project. A new treatment process will be required to meet future wastewater flows as there is no additional area to expand the existing wastewater pond system, and the pond system is incapable of meeting newly adopted State waste discharge requirements. Preliminary estimates for a new wastewater treatment process could range anywhere up to $75 million or more, depending upon treatment processes required to meet discharge requirements. The City’s current challenge is to maintain and operate what we have today, keep up with the replacement costs of the equipment and facilities described above, and prepare for future growth to build out as identified in the City’s General Plan. In 2019, staff completed a fee study with a consultant to determine if and by how much those connection fees and annual sewer fees may need to be adjusted. Based on the findings of that study, a rate increase for sewer service charges and connection fees was approved to be phased in over five years. In 2025 staff will complete a new rate study to determine appropriate adjustments for connection and annual sewer fees for an additional five-year period. The additional revenue from these increases in rates puts the City in a good position to continue to fund ongoing operations and maintenance while also planning for needed upgrades to the wastewater system.