20A - AA FOR PROJECT 19-6942,17-6880,17-6801

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Approve Appropriation Adjustment & Add Contingency Funds to Existing Contracts April 7, 2020 Page 3 contingency funds and accommodate the proposed work, key considerations included favorable unit prices in order to leverage the most cost effective work, continued compliance with the Community Workforce Agreement, the location of their current projects, and a contractor's ability to complete their current projects in a timely manner. During the February 18, 2020, City Council meeting, the mid -year budget update presented to the City Council projected a net year-end balance of $10.1 million in the General Fund. Staff seeks approval to utilize a portion of these General Funds to add monies to existing contract contingencies (Exhibits 1-3) to deliver the street improvement and median landscaping projects by fiscal year end and thus meet the MOE requirement. Not doing so will jeopardize close to $20 million in future grant funding from OCTA. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #6 - Community Facilities & Infrastructure, Objective #1 (establish and maintain a Community Investment Plan for all City assets), Strategy C (invest resources and technology to extend the service life of existing infrastructure to protect the City's investment and support a high quality of life standard). ENVIRONMENTAL IMPACT In accordance with the California Environmental Quality Act, the recommended actions are exempt from further review. Each change order is covered by its corresponding construction contract, and each contract has its own Categorical Exemption Environmental Review (see attached RFCA awarding the construction contracts. FISCAL IMPACT As reported on February 18, 2020, with the Midyear Budget Update, staff expected the General Fund to have $10.1 million in excess of the City Council's policy reserve thresholds. After the City Council approved the Midyear appropriation adjustments and the cost of the special election, the revised estimate of available General Fund balance is $9.2 million. We expect the COVID-19 pandemic to have a significant impact on General Fund revenue. At this time, it is too early to quantify the impact; but early information suggests a potential reduction of at least $20 million. The City Council should carefully consider the importance of using General Fund balance for street improvements and beautification at this time. A more measured approach would be an approximate $3 million use of the General Fund balance to ensure the City meets its requirements to spend General Fund money on street maintenance per the Orange County Transit Authority Maintenance of Effort. Each Cost Analysis (Exhibits 1-3) indicates the amount of additional contingency for each project for a total of $2,981,016 in additional roadway and median landscape improvements. Approval of the requested Appropriation Adjustment will recognize $2,473,000 from the General Fund prior year fund balance revenue account (No. 01102002-50001) and appropriate the same amount to the Public Works Roadway Markings & Signs General Fund, Improvements Other Than Building 20A-3