SunnyvaleRTC

June 15, 2004

SUBJECT: Approval of Funding Appropriations for Proposition 40 Funds (California Clean Water, Clean Air, Safe Neighborhood Parks and Coastal Protection Act of 2002) and Budget Modification No. 35 (04-225)

REPORT IN BRIEF
The City of Sunnyvale has received an award of $943,604 in State bond monies due to the passage of Proposition 40. In order to receive the funds, the City must apply to the State for approval of specific projects to be funded. Council has previously authorized staff to apply for two projects under Proposition 40. One application would seek $500,000 for the City’s contribution to the Sunnyvale Historical Museum project. The other would secure the remainder of the City’s share of Proposition 40 funds for the Sunnyvale Downtown Plaza project. At this time, the State has approved the Downtown Plaza project for Proposition 40 funding. For efficiency and ease of administration, staff recommends using the entire Proposition 40 allocation towards the Downtown Plaza project. The Sunnyvale Downtown Plaza project currently has $1.25 million of General Fund monies programmed. The Proposition 40 funds would replace $943,604 of this.

The City has also received additional Park Dedication funds, as discussed at the Special Council Meeting on the budget on April 10, 2004. At that time, the Mayor requested staff look into the potential of replacing General Fund monies with Park Dedication funds in the Downtown Plaza project. This project is eligible for Park Dedication funds and staff recommends replacing the remaining General Fund monies of $306,396 with Park Dedication funds. Staff also recommends changing the funding source for the Sunnyvale Historical Museum project to Park Dedication funds, instead of Proposition 40 funds as currently budgeted.

Approval of Budget Modification No. 35 would not change the budget for the Downtown Plaza project or the Sunnyvale Historical Museum project. It would only amend the funding sources for these two projects. However, the City would save $1.25 million of General Fund monies currently programmed in the Downtown Plaza project, which would be returned to the General Fund Resource Allocation Plan Reserve.

BACKGROUND

Proposition 40

A brief chronology of Proposition 40 funding is provided below:

March 2002: The California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Act of 2002 (a.k.a. Proposition 40) was approved by California voters in response to the recreational and open-space needs of a growing population and expanding urban communities.

July 2003: Funding for Proposition 40 was identified in the State’s budget. Proposition 40 funds earmarked for the City of Sunnyvale are made available in two (2) separate sources based on city population. The City of Sunnyvale qualified for Proposition 40 funds in the amounts of $359, 604 from the Roberti Z'berg Harris Block Grant and $584,000 from the Per Capita Grant Fund Program. Together, the available Proposition 40 funds total $943,604.

August 2003: Procedural guides and application forms were made available to cities (first step required the City to pass a resolution authorizing staff to submit funding applications).

November 11, 2003: City Council approved Proposition 40 Funding Resolutions for Per Capita Grant Fund Program (RTC 03-151) and for the Roberti Z'berg-Harris Block Grant (RTC 03-152).

December 2003: Council Resolutions were forwarded to the State.

January 2004: Fully executed contracts were returned from the State authorizing the City to apply for Proposition 40 Per Capita Grant funds and Roberti Z'berg-Harris Block Grant funds.

March 2004: The State approved the City’s application of Proposition 40 funds for the Per Capita Grant ($584,000) and the Roberti Z'berg-Harris Block Grant ($359,604) for the Sunnyvale Downtown Plaza in an amount up to $943,604.

Downtown Plaza Project

The Downtown Plaza project was established in FY 2001/2002 with a total budget of $6,061,700. This was funded by the following revenue sources:

Park Dedication

$2,725,046

Mozart Land Sale Proceeds

$1,000,000

Proposition 40

$ 487,000

General Fund Revenues

$1,250,000

General Fund (Source TBD)

$ 599,654

Total Funds

$6,061,700

Subsequently, on March 18, 2003, Council authorized staff to proceed with a phased Downtown Plaza project and eliminated any unsecured funding. Proposition 40 funding of $487,000 was eliminated due to the uncertainty of this funding source at that time, and City funding of $599,654 was eliminated in light of the City’s fiscal crisis. With this reduction in funding, the project budget was adjusted down to $4,975,046.

On July 15, 2003, Council approved Budget Modification No. 4 to fund the cost of the base construction and the addition of an arbor. A total of $1,906,436 was added to the project, funded by Park Dedication monies the City had received to date and anticipated to be received in the next two years. A budget modification was necessary because the base construction bid came in much higher than the engineer’s estimates, and Council elected to add an arbor to the Downtown Plaza Park. This brought the project budget to $6,881,482. Accounting for prior years actual expenditures of $884,649, the current FY 2003/2004 budget for the Downtown Plaza project is $5,996,833.

EXISTING POLICY
The proposed budget modification request is supported by the following City policies:

Recreation Sub-Element of the General Plan
Policy 7.1A.1e.	Investigate potential new revenue sources, particularly those that do not add to the tax burden of residents or local businesses.
Open Space Sub-Element of the General Plan
Policy B.4	Identify revenue sources and increase revenues, where possible, which can be allocated to parks and open space operating budgets and capital improvements.
Action Statement B.4.d	Continue to monitor all governmental agencies for potential open space grants and prepare applications as appropriate.

DISCUSSION
Council has previously authorized staff to apply for two projects under Proposition 40. One application would seek $500,000 for the City’s contribution to the Sunnyvale Historical Museum project. The other would secure the remainder of the City’s share of Proposition 40 funds for the Sunnyvale Downtown Plaza project. At this time, the State has approved the Downtown Plaza project for Proposition 40 funding. For efficiency and ease of administration, staff recommends using the entire Proposition 40 allocation towards the Downtown Plaza project. The Sunnyvale Downtown Plaza project currently has $1.25 million of General Fund monies programmed. The Proposition 40 funds would replace $943,604 of this.

Allocating the entire Proposition 40 grant towards the Downtown Plaza project has the following benefits:

It takes the guesswork out of the Proposition 40 application process since the State has already approved the Downtown Plaza project for Proposition 40 funding. When Council first contemplated funding the $500,000 commitment to the Sunnyvale Historical Museum project via Proposition 40 Grant Funds, staff had advised Council that the museum project might not qualify under Proposition 40 guidelines. This remains a potential issue.
It simplifies the process greatly, for both the City and the Sunnyvale Historical Society and Museum Association. The Sunnyvale Downtown Plaza project has been approved by the State as an acceptable project for Proposition 40 Grant Funds. A separate application for the Sunnyvale Historical Museum project will require significant additional staff time to complete. Assuming the application is accepted by the State, both the City and the Sunnyvale Historical Society and Museum Association would then need to comply with a variety of requirements imposed by Proposition 40 (e.g., payment request processes, separate tracking and reporting of funds used for specific purposes, etc.).

FISCAL IMPACT
Approval of Budget Modification No. 35 would not change the budget for the Downtown Plaza project or the Sunnyvale Historical Museum. It would only amend the funding sources for these two projects. A total of $1.25 million of General Fund monies would be returned to the General Fund Resource Allocation Plan Reserve. The Downtown Plaza Park project would be funded by $943,604 of Proposition 40 funds and $306,396 of Park Dedication funds instead of the $1.25 million General Fund monies currently budgeted. The Sunnyvale Historical Museum project would be funded by Park Dedication monies, instead of Proposition 40 funds as currently budgeted. The $1.25 million has already been anticipated in the recommended FY 2004/2005 budget.

With these funding changes, a total of $806,396 Park Dedication revenues would be recognized and appropriated into the two projects as outlined above.

BUDGET MODIFICATION NO. 35 FISCAL YEAR 2003/2004
	Current	Increase (Decrease)	Revised
Capital Projects Fund/General Fund Assets Sub-Fund
Revenues
Proposition 40 Grant – Sunnyvale Historical Museum Project	$500,000	($500,000)	$0
Proposition 40 Grant – Downtown Plaza Park Project	$0	$943,604	$943,604

Transfers-In
General Fund - Downtown Plaza Park Project	$1,250,000	($1,250,000)	$0
Park Dedication - Sunnyvale Historical Museum Project	$0	$500,000	$500,000
Park Dedication- Downtown Plaza Park Project	$1,906,436	$306,396	$2,212,832

Park Dedication Fund
Revenues
Park Dedication Revenues	$0	$806,396	$806,396

General Fund
Reserves
General Fund Resource Allocation Plan Reserve	$33,575,173	$1,250,000	$34,825,173

PUBLIC CONTACT
Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, publication of the Council agenda in the San Jose Mercury News, and the availability of the report in the City Clerk’s office, Library, Parks and Recreation Administration, Community Center, and Senior Center.

A copy of this report was provided to the Sunnyvale Historical Society and Museum Association.

ALTERNATIVES
The following alternative courses of action are outlined for Council’s consideration:

Direct staff to continue to pursue $500,000 of Proposition 40 Per Capita Grant Funds for the Sunnyvale Historical Museum; appropriate $84,000 in Proposition 40 Per Capita Grant Funds and $359,604 in Roberti Z'Berg Harris Block Grant Funds to the Downtown Plaza project and return the saving of $443,604 from the Downtown Plaza project to the General Fund Resource Allocation Plan Reserve.
Appropriate $500,000 of Park Dedication funds to the Sunnyvale Historical Museum project. Appropriate $943,604 of the City’s Proposition 40 Grant award and $306,396 of Park Dedication monies to the Sunnyvale Downtown Plaza project. Return $1.25 million of General Fund monies from the Downtown Plaza project to the General Fund Resource Allocation Plan Reserve.

RECOMMENDATION
Staff recommends Alternative No. 2.

Prepared by:
Robert A. Walker
Director, Parks and Recreation

Reviewed by:
Marvin Rose
Director, Public Works

Reviewed by:
Mary J. Bradley
Director, Finance

Approved by:
Amy Chan
City Manager