BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT:
Title
Receive an Overview of the Annual Capital Improvement Program Development Process and the Integrated Financial Planning Schedule.
End
RECOMMENDATION:
Recommendation
A. Receive an overview of the annual Capital Improvement Program development process;
B. Review the integrated financial planning schedule; and
C. Provide feedback as necessary.
Body
SUMMARY:
The annual update of the Capital Improvement Program (CIP) Five-Year Plan includes project plan updates for all existing capital projects and a Validation Process to review and evaluate potential new capital projects for inclusion in the CIP, along with review points for the CIP Committee and decision points for the Board. A presentation that shows the steps in detail, along with the integrated financial planning schedule, is included in the PowerPoint Presentation (Attachment 1).
Annual Process for Development of the CIP Preliminary Five-Year Plan
New Projects: Each year, Santa Clara Valley Water District (Valley Water) staff can submit new projects to be considered for inclusion in Valley Water’s CIP. For each potential new project, staff develop a business case to compare capital, non-capital, and non-asset alternative solutions; evaluate the lifecycle costs of these solutions; and identify a recommended solution that minimizes lifecycle cost while balancing service levels and risk.
From May through September, staff submit the business case for review by their respective Deputy Operating Officer (DOO) or Deputy Administrative Officer (DAO). If staff’s respective DOO/DAO approves the project, it is submitted to the CIP coordinator. Simultaneously, project managers update their existing capital projects to reflect changes to scope, schedule, and project cost/planned expenditures, which are also subject to approval by the respective DOO/DAO.
Between October and November each year, these newly proposed, initially validated projects will be presented to the CIP Committee and Board, along with a list of currently unfunded projects that have been validated during prior years, for review and comment. Committee and Board feedback will be considered when preparing the funding scenarios for the CIP Preliminary Five-Year Plan.
Annual Project Plan Updates: Project plans are updated annually. Every year, capital project managers update their project plans to reflect changes to project scope, schedule, and cost. In the fall of each year, CIP and Finance staff compile the data from existing CIP project plans, collect the operational forecast information, and run the financial models.
Staff Analysis and Recommendations: The CIP Evaluation Team, which includes the Chief Executive Officer (CEO), Assistant CEO, and Chiefs and Deputies from divisions involved in initiating, delivering, implementing, and operating capital projects, will meet in November. During this meeting, the Team will consider the feedback received from the Board and analyze the financial models. The Team will determine which, if any, unfunded projects should be recommended for inclusion and whether any of the currently funded capital projects should be recommended for removal or placement on the unfunded list for the next CIP Five-Year Plan being developed.
To ensure Valley Water’s high-priority business needs are met in adherence to Board policy, the CIP Evaluation team reviews the projects based upon:
• Board Priorities
• Asset’s remaining lifespan
• Available funding
• Urgency of investment
CIP Committee Review and Feedback: Based upon the outcome of its review, the CIP Evaluation Team will provide recommendations regarding whether any projects should be recommended for inclusion, removal, or placement on the unfunded list for the next CIP Five-Year Plan being developed. Funding scenarios that include these recommendations will be presented to the CIP Committee for review and feedback in December, along with the CIP Preliminary FY 2027-2031 Five-Year Plan. In addition, the CIP Committee will receive an overview of significant project plan updates from the prior year’s Board-adopted CIP FY 2026-2030 Five-Year Plan.
Board Direction: Each January, CIP and Finance staff update the funding scenarios to include staff and CIP Committee recommendations, which will be presented to the full Board during a Funding Scenario Workshop, as part of the CIP Preliminary Five-Year Plan and Groundwater Charges item. Each year, direction regarding capital project funding is provided by the Board through its approval of the CIP Preliminary Five-Year Plan.
The Integrated Financial Planning Schedule presented in Attachment 1 (slide 11) provides an overview of all the steps in the CIP Development Process, along with the Water Rate Setting Process and Annual Budget Cycle.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with receiving an overview of the annual Capital Improvement Program Development Process, and the Integrated Financial Planning Schedule.
FINANCIAL IMPACT:
There is no financial impact associated with this item.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: PowerPoint
UNCLASSIFIED MANAGER:
Manager
Luz Penilla, 408-630-2228