REPORT TO THE CITY COUNCIL
FROM: Randall W. Morrison, PE, Director
Capital Projects Department
BY: JANESSA SELZER, Business Manager
Capital Projects Department, Capital Administration Division
SUBJECT
Title
***RESOLUTION - Adopting the 46th Amendment to the Annual Appropriations Resolution (AAR) No. 2023-185 appropriating $2,383,300 for Indirect Costs in the Capital Projects Department Capital Projects Capital Indirect Cost Recovery Fund. (Requires 5 Affirmative Votes) (Subject to Mayor’s Veto)
Body
RECOMMENDATION
Staff recommends City Council adopt the 46th Amendment to the Annual Appropriations Resolution (AAR) No. 2023-185 appropriating $2,383,300 for the Capital Projects Department operating budget.
EXECUTIVE SUMMARY
The newly formed Capital Projects Department was created to improve the support to the City’s Capital Program through streamlining the delivery of capital infrastructure projects for several City Departments. On July 20, 2023, City Council approved the creation of the new department, as well as the adoption of the 6th Amendment to the AAR No. 2023-185, which appropriated the $50,000,000 received from the State of California for the Downtown Fresno Public Infrastructure Improvement Projects and established the Capital Projects Department initial budget. In December 2023 Council adopted the 30th Amendment to the AAR No. 2023-185, which transferred $2,200,000 in State grant appropriations from the Public Works Department to the Capital Projects Department to cover the additional startup costs and indirect expenses of the growing Department.
On a concurrent path, the Public Works Department has been coordinating with Caltrans in order to establish an approved indirect cost rate for the Capital Projects Department, which would allow the City to capture grant reimbursements on indirect costs for grant funded capital projects. Since the new Capital Projects Department does not have historic indirect cost data to establish this rate, Caltrans has allowed the City to establish the initial rate based on the adopted budget. Therefore, the proposed 46th Amendment to the AAR No. 2023-185, will appropriate the dollars necessary for the indirect cost estimate for Fiscal year 2024 in the Capital Projects Capital Indirect Cost Recovery Fund.
BACKGROUND
The Capital Projects Department serves other City departments such as Public Works, Public Utilities, Police, Fire, and PARCS to deliver the departments' capital programs. The Capital Projects Department is actively managing hundreds of capital projects through the design, environmental, right-of-way, and construction phases for citywide parks, public safety facilities, street infrastructure, active transportation, wastewater, and water systems.
As approved by the Council on July 20, 2023, the Capital Projects Department added 46 new positions, and transferred 74 positions from the Department of Public Works and 20 positions from the Department of Public Utilities for a total of 140 positions to address a significant increase in the City’s capital project workload. In addition to the creation of the new department and the addition of staff, Council adopted the 6th Amendment to the AAR No. 2023-185, which appropriated the $50,000,000 received from the State of California for the Downtown Fresno Public Infrastructure Improvement Projects and established the Capital Projects Department initial budget. Of the $50,000,000 received from the State, only $500,000 was appropriated in the Capital Projects Department’s initial budget to assist with launching the new department and funding the 46 new positions. The AAR also transferred appropriations of $4,492,800 from the Department of Public Works and $1,867,900 from the Department of Public Utilities into the new Capital Projects Department. The funds transferred from Public Works and Public Utilities were existing appropriations related to the existing positions that transferred to the Capital Projects Department.
On December 14, 2023, Council adopted the 30th Amendment to AAR No. 2023-185, which provided additional appropriations in the Capital Projects Department budget to support the growth of the new department. The AAR transferred $2,200,000 in State grant appropriations from the Public Works Department to Capital Projects Department to cover the necessary startup costs and indirect expenses of the Department.
The U.S. Department of Transportation - Federal Transit Administration (DOT-FTA) reviewed and approved the City’s Indirect Cost Rate Plan (ICRP) for a five-year period, which has allowed the City to pursue millions of dollars in federal and state reimbursement of indirect costs for projects. However, the approved rates are specific to each City Department and Division and cannot be used for the Capital Projects Department. The Public Works Department has been coordinating with Caltrans in order to establish an approved indirect rate for the City to capture grant reimbursements on indirect costs for the new Capital Projects Department on grant funded capital projects. Since the new Capital Projects Department does not have historic indirect cost data to establish this rate, Caltrans has allowed the City to establish the initial rate based on the budget. The proposed AAR will appropriate the necessary funding to cover the estimated indirect costs for the Department in FY2024. This AAR differentiates the true indirect costs from the initial startup costs by properly appropriating them in the correct funding source. The indirect costs are recovered by applying an approved indirect rate to all the Capital Labor to be Allocated or direct project hours.
The proposed 46th Amendment to the AAR No. 2023-185, will appropriate the dollars necessary for the indirect cost estimate for Fiscal year 2024 in the Capital Projects Capital Indirect Cost Recovery Fund. This will provide the supporting documentation for the City to pursue an approval from Caltrans for a new ICRP for the Capital Projects Department. The recommended resolution would amend the appropriations within the identified operating programs to allow for the department’s development and growth this fiscal year. Detailed adjustments are in the Amendment to the Annual Appropriation Resolution attached.
ENVIRONMENTAL FINDINGS
This is not a project pursuant to CEQA guidelines Section 15378.
LOCAL PREFERENCE
Local preference is not applicable to this item.
FISCAL IMPACT
Adoption of the 46th Amendment to AAR No. 2023-185 will provide the necessary appropriations for the Capital Projects Department to operate and expand in order to meet the capital project workload demand, with no impact to the General Fund. The proposed AAR appropriates funds in the Capital Projects Capital Indirect Cost Recovery Fund, which is recovered by applying the approved indirect cost rate to the direct bill project hours.
Attachment: 46th Amendment to the AAR No. 2023-185