Foster City boosting reserve, establishing capital needs

The council approved staff to use a "10-year cash flow forecasting” approach in funding capital improvement projects.

Foster City’s current budget is roughly $30.7 million and its projected reserve at the end of fiscal year 2010-11 is expected to be about $21 million or about 60 percent of expenditures.

But the city faces a structural deficit in a couple of years and the reserve will likely be used to balance future budgets if the city does not realize cost savings or generate revenue.

Currently, the city mandates a minimum $10 million reserve, set aside in case of unforeseen catastrophies.

City Manager Jim Hardy, Public Works Director Ray Towne and Finance Director Steve Toler projected out the city’s infrastructure needs for the next 20 years, establishing benchmarks for when certain critical work to streets and parks should be made and establishing needed work to the city’s water and sewer systems and how much the work would cost.

The council directed staff last night at a special budget study session to set aside $1.37 million annually for non-enterprise capital improvement projects, including roads and parks.

"The city has had the good fortune of utilizing a variety of funding sources for its CIPs in the form of one-time revenues from capital asset sales, park-in-lieu fees, developer contributions, federal and state grants and bond financing,” according to as staff report by Hardy and Toler. "The city does not anticipate the magnitude of prevous one-time revenues or CDA (redevelopment) funds to be available in the future.”

The council also directed staff to set aside $500,000 a year for water system repairs and another $1.15 million a year for fixing its sewer system. This set aside is meant to spare Estero Municipal Improvement District customers from seeing excessive rate increases due to infrastructure needs.

The city’s finance director considers this a pay-as-you-go strategy. The strategy is also meant to spare Foster City residents from having to approve and pay for bonds to fix its infrastructure, Toler said.

Taking the $3 million out of the general fund, however, will task city staff in finding cuts or new sources of revenue to balance future budgets that are already expected to be in deficit.

Mayor Rick Wykoff also expressed concern in whether the state will execute any more takeaways of local revenues to balance its nearly $20 billion projected deficit for the next fiscal year.

"I have concerns over future state takeaways. I say be cautious on relying on the state,” Wykoff said. "I never thought the state could take $5.6 million from the RDA (redevelopment agency).”

Councilwoman Linda Koelling noted that California is due to repay local cities borrowed property tax revenue in a couple of years, a reality she is not sure on which the state can deliver.

The city has already approved four major developments that will provide park-in-lieu fees and other revenue to help make improvements to roads and parks, for instance. The four proposed developments, however, represent essentially the last bit of land in Foster City that can be built on.

Those developments include Triton/Pilgrim, Chess/Hatch, Gilead and Mirabella.

Some of the major infrastructure needs in coming years will be the widening of a State Route 92 entryway, lagoon dredging and installing synthetic turf at Sea Cloud Park.

Bill Silverfarb can be reached by e-mail: silverfarb@smdailyjournal.com or by phone: (650) 344-5200 ext. 106.