FY 2021 2122 ADOPTED OPERATING AND FY 2021 2526 CIP BUDGETS

FY 2020-21 and FY 2021-22 CIP will be appropriated as part of the Biennial Budget approval and it totals $77.1 million. Some of the project highlights include the following: • Borello School/Park ($2.0 million): Development of a joint park/school facility on a portion of the site off Peet Avenue in the northeast area of the City. • Pavement Rehabilitation Program ($5.8 million): Ongoing program to address the City's pavement rehabilitation needs (see additional information in the next section). • Hale Avenue Extension ($16.8 million): The extension would provide relief for congestion along Monterey Road through the Downtown and relief for the residential areas west of the Downtown. It is important to note that most of the project funding will need to be secured prior to commencing construction. • Sewer System Repair and Replacements ($13.1 million): Implement needed repairs and improvements for various pipeline groupings to ensure the optimum level of sewer service. • Sewer Plant Expansion Project ($11.8 million): The project is for the City's 41.9 percent share of the expansion costs at the South County Regional Wastewater Authority (SCRWA) treatment plant which is co-owned with the City of Gilroy. • Water Supply Facility and Water Pipeline Repair and Replacement ($3.1 million): Various work items including fixed generator replacement, well replacement, electrical and mechanical systems improvements, pipeline repair and replacement to ensure facilities function as intended. • Llagas Flood Control ($4.5 million): Address storm water conveyance infrastructure that drains into the Upper Llagas Creek Flood Protection Project (ULCFPP) and the West Little Llagas Creek watershed. • Storm System Expansion ($2.7 million): To construct improvements that support expanding storm drain system capacity in alignment with the 2018 Storm Drainage System Master Plan. Public Infrastructure In Morgan Hill, consistent with other California cities, there is a need for additional public investment in streets, parks and landscape, and public building infrastructure. The City recognizes that ongoing revenue is insufficient to fund these vital community assets at a sustainable level. The condition of the publicly owned infrastructure (especially streets) is deteriorating and the deferred maintenance backlog is increasing. The expense to repair these assets grows as each year passes so it is fiscally responsible to address this issue now. As reported in the Infrastructure Update in April 2019, it was determined that the City has an annual funding gap of approximately $3.4 million for its streets, parks, and public facilities infrastructure maintenance. The $3.4 million does not include the future anticipated funding needs related to park maintenance and storm water. Nor does it account for actions necessary to deliver the future capital project needs related to the Water and Wastewater Funds.

ADOPTED BUDGET MESSAGE 19