HomeMy WebLinkAbout2.b. Review draft (Captial Improvements Program (CIP) 4 ROSEMOUNT EXECUTIVE SUMMARY
CITY COUNCIL
City Council Workshop Meeting: November 17, 2009
AGENDA ITEM: Review draft Capital Improvements AGE SECTION:
Program (CIP) ✓1 ��iRcc1d0
PREPARED BY: Dwight Johnson, City Administrator AGENDA NO. 2,g,
ATTACHMENTS: Draft CIP APPROVED BY:
Poi
RECOMMENDED ACTION: Review draft CIP and identify any changes to be made.
BACKGROUND
Each year, the City updates its 10 -year Capital Improvements Program. This exercise helps the City to
identify new needs and plan for the proper replacement or addition of buildings and equipment.
Maintaining a current CIP is one of the financial practices that helps the City maintain a very high bond
rating and also helps the City with long range financial planning. Cash flow analysis of all CIP funds was
done to help assure that the listed projects are realistic and to identify any potential future financial
problems. Current levels of taxes and fees were generally assumed except where noted below.
DISCUSSION
The following is a summary of some of the major projects in the proposed 10 year CIP.
Equipment CIP
During the preparation of the 2010 budget, staff had previously identified a high and a low estimate for
future equipment replacement needs. The high estimate was based on the current replacement schedule.
The low estimate was derived from an alternative replacement schedule in which many items of equipment
were pushed an additional five years before scheduling replacement. The amount in the 2010 proposed
budget reflects an overall number about half way between these two scenarios.
Subsequent analysis using the current replacement schedule with current tax levy support shows that the
Equipment CIP would not cash flow and would have deficits for most of the next 10 years. A number of
alternative scenarios were reviewed to address this problem. A scenario where many items of equipment
are extended an additional five years before being replaced is financially viable, but staff is concerned with
adopting a model pushing the current equipment replacement schedules out that far with no experience or
data to show that the equipment can really last that long without undue major breakdowns, maintenance
costs and operational disruptions.
Therefore, staff evaluated a new scenario which pushes the replacement of a number of vehicles about 2 -3
years further into the future from the current schedule. This scenario is financially successful if the levy is
gradually increased by about $25,000 per year for the next several years, and if some combination of
surplus or unallocated SKB funds totaling $200,000 can be earmarked for this fund to increase its cash
balance in early 2010. Staff believes that this scenario that combines moderate extensions of the
equipment replacement schedule with several manageable annual levy increases (about 1 /4 of 1°/0) is the
best model to adopt for this fund. Actual purchases of equipment will be decided during the annual
budget cycle for that year.
Building CIP
The Building CIP currently has enough funds on hand to complete the initial improvements for the old St.
Joe's Church and also to do the minimal code improvements needed to open the main floor of the old St.
Joe's School should we decide to do so.
Beyond this project, staff has been reviewing possible scenarios for the possible expansion /replacement of
the current Public Works buildings and the City Hall. As a part of this review, the schedules for the
expiration of existing debt have been reviewed to look for windows of opportunity to do a new building
project without increasing taxes. It currently appears that a new City Hall or Public Works facility costing
about $4 million could be accommodated in about the year 2016 without any additional tax levy needed.
This coincidentally is the same year that we have designated for a possible future water treatment facility in
our water rate scenarios earlier this year. However, this coincidence is important, because staff has
sketched site plans showing that a new public works facility could be built on the same land designated for
the Water Treatment Facility in the Business Park, suggesting that perhaps these two projects should be
done together around the year 2016. This scenario does not address the possible need for a new City Hall
at some future date, which currently suggests that a bond issue with an additional tax levy might be needed
for a possible new City Hall. Certainly this is all very speculative, since we can't accurately assess when we
will need expansions in either Public Works or City Hall space. The overall economy and community
growth are very important variables.
Another scenario that appears to work financially is that minor additions could be financed much sooner
without a tax increase for both Public Works and City Hall to buy time before we would have to make a
major investment in either one. For example, this scenario would allow perhaps 10,000 square feet to be
added to the current public works complex and also would allow the upper floor of the City Hall to be
expanded over the police department. These two projects could probably be done for $1 million to $1.5
million.
The draft CIP shows a $4 million building expansion in the year 2016, but other scenarios should continue
to be evaluated.
Street CIP Fund (Pavement Management)
An updated analysis of our future street maintenance and reconstruction needs shows that our funding
level is adequate to maintain our current pavement management rating for the next several years.
However, later in this decade, a number of streets will be due for maintenance within a relatively short
time frame, indicating that our current level of effort of $700,000 tax levy may need to jump to over $1
million per year in 2016. In order to avoid a major tax increase all in one year, the CIP proposes a
graduated increase in the tax levy for the Street CIP Fund of about 6% per year for the next several years.
The 2010 program includes a number of streets in the Country Hills subdivision and portions of Shannon
Parkway. The 2011 program is proposed to include 145th street. Assessments and contributions from the
water, sewer and storm sewer funds also help pay for the Pavement Management Program.
Major Street and Highway Projects
The proposed CIP has been revised to show the construction of Akron Avenue in 2010 from County
Road 42 to Bonaire Path using $2.9 million of Federal stimulus funds. The remaining portion of Akron
Avenue north of Bonaire Path is scheduled for 2014 which follows the County's plan. The actual year of
construction will depend on the degree of growth in that portion of the community.
2
The 42/52 interchange improvement project is also shown in the CIP, but depends heavily on the timing
and availability of funds from the State of Minnesota. The County is also a partner on this project. The
counties along the Highway 52 Corridor from the Twin Cities to Rochester meet at least once a year and
have identified a project in Cannon Falls as the number one priority for the corridor, with the 42/52
interchange project as the second priority for the group. The 42/52 interchange design is now shown as a
full cloverleaf design.
The two approved safety improvement projects on Highway 3 at 143rd and 145th are also shown in the
plan, as well as several projects for which we have made application for grants.
Park Projects
Two parks projects scheduled in the near future include a proposed baseball complex on UMORE
property and a cluster of up to eight tennis courts in Erickson Park. The baseball complex would be
located just south of the new soccer fields near DCTC and would consist of four regular fields and one
field suitable for DCTC games. The tennis courts would be located on an existing soccer field in Erickson
Park and would help facilitate tennis tournaments and events adjacent to our downtown area as well as
provide for leisure tennis in a central location. The Park and Recreation Committee has expressed concern
about the loss of a current soccer field, however, and recommended a delay in the tennis court
construction project.
These two projects would use almost all of the available Park Dedication funds on hand. All future
projects in the Parks portion of the CIP depend upon growth resuming in the community.
Other Major Projects
The Water Fund CIP shows the possible construction of a Water Treatment Plan in the year 2016. This
was discussed during the review of the water and sewer rate studies earlier this year. Due to expiring debt
in 2016, the Water Treatment Plan could be funded at that time with minimal impact on water rates. The
cost of a Water Treatment Plant is currently estimated to cost $10,000,000. Two new wells are also
shown in the 10 year plan, with growth being the main factor on when they will be needed.
SUMMARY
The City Council should review the plan for consistency with citywide goals and plans as well as for its
financial viability. In particular, two funds (the Equipment CIP Fund and the Street CIP Fund) have been
identified as needing more funding in the long term to meet identified needs and gradual increases in
funding have been proposed for both. No changes in the 2010 budget or tax levy are indicated. Finally,
there should be some discussion of the Erickson Tennis Court project due to concerns noted by the Park
and Recreation Commission.
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(With Delayed Purchasing Dates -12/13 Years)
Fund: Equipment CIP (With 2011 Fire Equipment)
Year Levy Revenue Expenditures Balance
(1) 984,112
2010 Non Vehicle 168,000 439,000 $439,000 984,112
Vehicles 271,000
2011 Non Vehicle 330,000 464,000 $1,236,000_ (2) 212,112
Vehicles 906,000
2012 Non Vehicle 214,000 489,000 $692,700 (2) 8,412
Vehicles 478,700
2013 Non Vehicle 235,500 619,000 $509,000 (2), (3) 118,412
Vehicles 273,500
2014 Non- Vehicle 186,000 737,000 $569,000 (2), (4) 286,412
Vehicles 383,000
2015 Non Vehicle 326,000 737,000 $929,500 (2) 93,912
Vehicles 603,500
2016 Non Vehicle 85,000 737,000 $723,500 (2) 107,412
Vehicles 638,500
2017 Non Vehicle 263,000 737,000 $808,500 (2) 35,912
Vehicles 545,500
2018 Non Vehicle 198,000 737,000 $773,200 (2) (288)
Vehicles 575,200
2019 Non Vehicle 123,000 637,000 $223,000 (2) 413,712
Vehicles 100,000
(1) Assumes adding $200,000 of reserves SKB funds at the end of 2009 to bring the beginning balance to $984,112
(2) Assumes adding an additional $25,000 to the levy each year in addition to the beginning number of $439,000.
This will continue through 2014 when the levy increase will remain constant at $100,000 until 2019 when it will go to zero.
(3) Assumes adding an additional $105,000 to the levy each year replacing the equipment certificate levy that was paid off in 2012.
(4) Assumes adding an additional $93,000 to the levy each year replacing the equipment certificate levy that was paid off in 2013.