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HomeMy WebLinkAbout01-07-19 City Commission Packet Materials - C11. Res 4959, Adopt the CIP for FY 2020-2024Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Kristin Donald, Finance Director SUBJECT: Adopt the Capital Improvement Plan (CIP) for Fiscal Years 2020-2024. AGENDA ITEM TYPE: Consent MEETING DATE: January 7, 2019 RECOMMENDATION: Adopt the Capital Improvement Plan (CIP) for Fiscal Years 2020-2024. BACKGROUND: Each year, the City Manager is required to prepare a 5 Year Capital Improvements Plan and submit it to the Commission by December 15th . City Manager and city staff met in October & November to develop the attached Capital Improvement Plan for the equipment and capital needs of the City. The Commission approved the CIP’s for each fund during meetings starting November 5th through December 10, 2018. UNRESOLVED ISSUES: None. ALTERNATIVES: As suggested by the City Commission. FISCAL EFFECTS: This step in the process has no fiscal effect. Once adopted, the Capital Improvements Plan becomes the basis of the City Manager’s Recommended Budget for FY20. Report compiled on: December 12, 2018 103 Attached: Resolution 4959 Capital Improvement Plan FY20 – 24 Summary (Complete Document will be published after adoption) 104 COMMISSION RESOLUTION NO. 4959 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, ADOPTING THE CAPITAL IMPROVEMENT PLAN FOR FISCAL YEARS 2020 TO 2024. WHEREAS, the City of Bozeman Charter Article 5.06 requires the City Manager too submit a multi-year capital program. WHEREAS, the City Commission approved all funds’ Capital Improvement plans during meetings from November 5, 2018 to December 10, 2018. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, that the Capital Improvement Plan for Fiscal year 2020 to 2024, as presented to the Commission and summary attached hereto and by this reference made a part here to of, is hereby adopted. 105 PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 7th day of January, 2019. ___________________________________ CYNTHIA L. ANDRUS Mayor ATTEST: _____________________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney 106 CIP SUMMARY One of the primary responsibilities of local government is to properly preserve, maintain, and improve a community’s stock of buildings, streets, parks, water and sewer lines, and equipment. Planning for these capital improvements is a matter of prudent financial management, as well as sound development practice. At times of rapid growth, as we are experiencing once again, the need for expanded public facilities and services is at its peak. A carefully developed CIP plans for these expansions and communicates our intent to citizens and the development community. In times of economic contraction, like the past‐prolonged recession, capital improvements were often put off (deferred) as a way of trimming budgets. While this can be appropriate in cases, an annual analysis and focus on necessary capital improvements helps to ensure those capital deferrals, and their impact on the community, are fully vetted. Background To provide service to its citizens, a city government needs funding for costs such as salaries, supplies, and other operating items. Most public services also entail costs for furniture, automobiles, other equipment and vehicles, land, and construction of buildings or other public facilities. These costs are separated into two large categories: (1) operating expenditures, and (2) capital outlays. Operating expenditures include personnel costs, day‐to‐day maintenance and operation of City assets, and the acquisition of goods that are consumed or used up as a service is provided. These types of expenses cost less on a unit basis than most capital outlays, and they recur at roughly the same level from year to year. Capital outlays occur on a periodic basis. Within the broad category of capital outlay expenditures, there are two subgroups: (a) capital equipment and (b) capital improvements. The City budgets capital equipment annually through the CIP process. The City budgets capital improvements annually through dedicated revenue. Capital improvement expenses also generate operating costs that must be recognized and accommodated. The CIP includes any planned expenditure of $10,000 or greater, that results in the acquisition of an asset with a useful life of 3 years or more. There is a couple of “exceptions” or “extensions” of this definition that we have found helpful and necessary in past years:  General Planning Documents (master plans, community surveys, etc.) are NOT included in our CIP;  Specific plans that involve pre‐engineering or preliminary design of facilities are often (but not always) included in the CIP. 107  Software purchases that could potentially be “software as a service”. Cloud based services are beginning to replace our purchase of outright software and hardware. In the CIP, we have treated the software projects as a capital outlay purchase; although a “service” type, solution may actually be chosen during the bidding/proposal process. State law and City charter require the City to prepare the CIP. State Law requires the City to maintain a Capital Improvement Plan for our Development Impact Fee programs. Under Montana Code Annotated (MCA), this Capital Improvement Plan provides the schedules and cost projections required under MCA §7‐6‐1602(2)(k)(i‐iv). In Article 5.06 of the adopted City Charter, the City Manager is responsible for preparing and submitting a multi‐year capital program to the City Commission no later than December 15 for the ensuing fiscal year. The plan must be revised and extended each year with regard to projects not yet completed. This plan is required to include: 1. A clear general summary of contents; 2. Identification of the long‐term goals of the community; 3. A list of all capital improvements and other capital expenditures which are proposed to be undertaken during the fiscal years next ensuing, with appropriate supporting information as to the necessity for each; 4. Cost estimates and recommended time schedules for each improvement or other capital expenditure; 5. Method of financing upon which each capital expenditure is to be reliant; 6. The estimated annual cost of operating and maintaining the facilities to be constructed or acquired; 7. A commentary on how the plan addresses the sustainability of the community or region of which it is a part; and 8. Methods to measure outcomes and performance of the capital plan related to the long‐term goals of the community. New Threshold ‐ For FY21 to FY25 Plan The current threshold for the capital improvement plan is $10,000 and many of these items are operational or maintenance expenses rather than capital. In addition, these items are a small portion of the plan. Since this threshold of $10,000 has been set, inflation has increased costs of non‐capital items pushing them into the plan, while our budget and operations have increased due to growth. We reviewed best practices, award winner from GFOA for Capital Plans and Cities of similar size. From this research and a close look at the items I the CIP we determined to better align ourselves with best practices to move the threshold to $25,000 in out next CIP (FY21 to FY25). This will ensure operational and maintenance costs are in the operating budget and capital items in the CIP. 108 CIP Process Each year, we begin the process of updating our Capital Improvements Plan in September. Finance works in coordination with City departments and the City manager’s Office to recommend projects that can be undertaken within the funds available. The process is completed when the Commission adopts a final budget with capital items approved, usually in the following June, see the following calendar: •Departments make new CIP requests September: •Departments make note of any changes to existing CIP projects. •City Manager and staff meet to review new and existing projects; modify any timing, cost or revenue estimates. •Impact Fee Advisory Committee receives and reviews proposed Impact Fee CIP schedules and forwards comments to City Commission. October/November: •City Manager presents Draft CIP to City Commission prior to December 15th. •City Commission holds public hearings, takes public comment and adopts CIP November/December: Plan for ensuing fiscal year. •Adopted CIP is integrated into City Manager’s Recommended Budget for ensuing fiscal year. •Commission, via adopting a final budget, appropriates dollars for CIP projects for the fiscal year. January ‐ June: 109 There are many considerations when developing the plan from basic operational needs to growth. The following descriptions are the areas considered when developing the CIP: City Vision and Strategic Goals The City recently adopted goals to develop a five‐year Strategic Plan and revised its vision. The Plan has been the subject of numerous citizen engagement efforts and public meeting discussions. The Strategic Plan initiatives to date have been included and planned for in this CIP. Below are the vision and vision statements adopted by the Commission May 15, 2017: Vision Bozeman remains a safe, inclusive community, fostering civic engagement and creativity, with a thriving diversified economy, a strong environmental ethic, and a high quality of life as our community grows and changes. Strategic Vision Statements: 1) An Engaged Community. We foster a culture of engagement and civic leadership based on innovation and best practices involving community members of all backgrounds and perspectives. 2) An Innovative Economy. We grow a diversified and innovative economy leveraging our natural amenities, skilled and creative people, and educational resources to generate economic opportunities. 3) A Safe, Welcoming Community. We embrace a safe, healthy, welcoming and inclusive community. 4) A Well‐Planned City. We maintain our community's quality of life as it grows and changes, honoring our sense of place and the 'Bozeman feel' as we plan for a livable, affordable, more connected city. 5) A Creative, Learning Culture. We expand learning, education, arts, expression and creativity for all ages. 6) A Sustainable Environment. We cultivate a strong environmental ethic, protecting our clean air, water, open spaces and climate, and promote environmentally sustainable businesses and lifestyles. 7) A High Performance Organization. We operate as an ethical, high performance organization anticipating future needs, utilizing best practices, and striving for continuous improvement. 110 Level of Service (LOS) Standards Most of the City’s long‐range plans establish level of service standards. These standards are critical to planning for the needs of future city residents. In some cases, such as water quality or wastewater discharge, these standards are often established or guided by outside regulating bodies. The CIP does not frequently reference specific LOS, but the underlying facility and staffing plans will contain detailed discussions of levels of service, and how the City should address increasing or decreasing levels of service through infrastructure and staffing recommendations. Policies for the Physical Development of our Community The City’s Unified Development Code (UDC) is a combination of both Subdivision and Zoning regulations for development within the City. The Code is subject to amendment by the Commission, after public notices and hearings are held. The UDC applies to both private and city‐owned projects. The City is currently underway with “The Bozeman Code Update,” a public process to update the City’s Unified Development Code (UDC). The UDC covers a diverse range of topics, including, zoning, design standards, subdivisions, wetland, and permit review procedures. The key feature of the update is to translate the community's expectations for development as expressed in the Community Plan into a concise and useable set of regulations. Our Current Facilities and their Condition: The City has a number of long‐range (20‐year) facility plans:  Water Treatment & Distribution Facilities  Wastewater Collection & Treatment Facilities  Stormwater Collection & Treatment Facilities  Fire Station, Equipment & Staffing  Police Station & Staffing  Parks, Recreation, Trails & Open Space  Transportation System Plan 111 These studies examine the condition and placement of existing facilities, area growth projections and pattern, regulatory changes, and possible funding mechanisms. The plans analyze various alternatives and make recommendations for implementation. Our Community’s Ability to Pay for Planned Improvements In a community with relatively high cost of living, the ability of citizens to afford the needed utility rate, fee, and assessment levels is of concern. At the same time, the City strives to keep existing facilities properly maintained — and not pass deferred maintenance costs and problems on to future generations. The City has adopted a Utility Rate Studies for Water and Wastewater services. These studies give us an indication of how and when utility rates must be increased to pay for the needed water and wastewater system improvements. For General Fund (Administration, Parks, Recreation, Library, Police, and Fire) facilities and Street construction, the City does not have the ability to easily increase tax levels for funding. The City’s voters must approve any tax levy increase, and state law establishes maximum debt levels. In November 2007, the City of Bozeman voters approved a four mill perpetual levy to establish a Fire Equipment and Capital Replacement fund. This fund was added to the CIP plan, and the funds are for replacements of fire engines, ladder trucks, and other capital improvements to fire stations. In the summer of 2015, the city successfully created a citywide Arterial & Collector Street Special District, under the special district laws of the state. The District is meant to fund street maintenance and (re)construction on Arterial & Collector streets that is NOT eligible to be funded by impact fees. The CIP includes a 5‐year plan for capital projects for this new district. CIP Funding The program is designed and planned by fund. Within those funds, the method for funding the project is determined. Some funds have fees or taxes that are specific to capital improvement or maintenance. Some larger projects financing is required and bonds and other funding mechanisms need to be used. The next chart shows the funding for each area in the plan with exception any debt issuance, which can vary year to year depending on the projects and priority for the plan year. The Capital Improvement Program is then adopted but is not considered funded until the Budget is adopted in June. In addition, certain funding is not final until a passing on election ballot. 112 General Fund ‐ Taxes and Charges for services Special Revenue Funds •Arterial and Collector District – Assessment, Local Share for projects and Gas Tax •Building Inspection Fund ‐ Charges for services •Community Development Fund ‐ Property tax and charges for services •Fire Equipment and Capital Fund ‐ Dedicated tax 4 Mills •Fire Impact Fee ‐ Impact Fee revenue •Forestry‐ Tree Maintenance District ‐ Tree Assessment •Library Depreciation Fund ‐ Remaining budget from prior year •Street Impact Fee ‐ Impact Fees •Street and Curb Reconstruction – Assessment and SID •Street Maintenance District ‐ Assessment Governmental Funds Enterprise Funds •Parking Charges for services and enforcement •Solid Waste Fund ‐ Charges for Services •Storm Water Fund ‐ Charges for Services •Wastewater Fund ‐ Charge for Services •Wastewater Impact Fee ‐ Impact fees •Water Fund ‐ Charges for services •Water Impact Fee ‐ Impact fees Internal Service Funds •Public Work Admin Fund – Internal Charges to other funds Proprietary Funds 113 2020‐2024 CIP PROJECT SUMMARY This five‐year plan has $167 million in scheduled projects and $205 million unscheduled. For scheduled by fund the Water Fund and General fund are the largest. FY20 FY21 FY22 FY23 FY24 TOTAL SCHEDULED PROJECTS Unscheduled Arterial and Collector District 2,381,000 2,850,000 2,502,000 5,250,000 ‐ 12,983,000 6,704,000 Building Inspection Fund ‐ ‐ ‐ ‐ ‐ ‐ 325,000 Community Development 35,000 ‐ 600,000 ‐ ‐ 635,000 ‐ Fire Equipment & Capital Replacement 413,000 364,500 90,500 176,750 1,443,000 2,487,750 ‐ Fire Impact Fee ‐ ‐ ‐ ‐ ‐ ‐ 5,200,000 Forestry 90,000 ‐ 145,000 65,000 75,000 375,000 ‐ General Fund 1,083,580 1,572,000 20,029,145 6,517,485 1,732,388 30,934,598 10,554,933 Library Depreciation 280,000 75,000 ‐ ‐ ‐ 355,000 ‐ Parking 210,000 295,000 285,000 315,000 410,000 1,515,000 1,900,000 Solid Waste Collection & Recycling 890,000 668,000 420,000 600,000 320,000 2,898,000 ‐ Storm Water Utility 650,000 650,000 650,000 650,000 650,000 3,250,000 125,000 Street & Curb Reconstructions 1,072,000 1,794,140 2,615,746 1,365,886 2,117,189 8,964,961 10,095,779 Street Impact Fee 7,376,000 5,200,000 1,000,000 7,250,000 3,250,000 24,076,000 17,816,000 Street Maintenance District 2,663,080 2,189,000 2,800,789 1,920,000 1,934,000 11,506,869 3,581,210 Wastewater Fund 1,682,500 1,697,500 1,202,500 1,182,500 1,372,500 7,137,500 12,484,333 Wastewater Impact Fee 6,774,000 ‐ ‐ 4,050,000 2,550,000 13,374,000 5,490,000 Water Fund 2,542,500 11,446,380 3,229,500 5,368,500 8,623,500 31,210,380 2,994,439 Water Impact Fee 6,295,729 8,350,000 ‐ ‐ 150,000 14,795,729 127,665,296 Internal Service Fund ‐ Public Works 75,000 165,000 ‐ ‐ 65,000 305,000 ‐ Total $ 34,513,389 $ 37,316,520 $ 35,570,180 $ 34,711,121 $ 24,692,577 $ 166,803,787 $ 204,935,990 Scheduled Projects 114 2020 The outlook for the 2020 includes another sewer capacity‐expanding project The Norton East Ranch Outfall Diversion WWIF38 is $5,200,000 and will need financing at this point in the plan. There are again major roads funded through the Street Impact Fee Fund and Arterial Collector fund a good portion is for building of the roads surrounding the new high school. Along with these major projects road maintenance, vehicle replacements and building improvements are in the plan as well. 2021 This includes a water fund major project for the Lyman Tank and Transmission Main Construction W88, which will be funded through financing for $10million. Griffin 7th to Rouse SIF113 funded by Street Impact Fees and Arterial collector funds is scheduled in FY21 for a project total of $3.7 million. 2022 The Indoor/Outdoor aquatics center is planned for FY22 and will be funded through bonds going to the citizens for a vote. The Water fund has an over $6 million projects, PRV Phase 2 ‐ Automation and Instrumentation Upgrades W71 which will provide necessary water system maintenance work. Routine vehicle replacements, pipe replacements and road maintenance is planned. 115 2023 Fowler connection (Huffine to Oak) SIF114 funded by Street Impact Fees and Arterial collector funds is scheduled in FY23 for a project total of $7.5 million. Wastewater Impact Fees has a capacity project N Frontage Rd Interceptor WWIF20 scheduled for just under $5.3 million. In the General fund, the relocation of Fire Station 2 is scheduled to align with service needs as outlined in the adopted master plan. 2024 Water fund and Street Impact Fee fund have added improvements to their time lines. Street Impacts Fee fund sees Kagy improvements for the South side of town with SIF009. The Water fund adds W71, which is the second phase of automation and instrumentation upgrades for the treatment plant. UNSCHEDULED The unscheduled items are in need within the five years or just after. Several large and high dollar projects remain unscheduled due to funding, timing and other unresolved issues. 116 2020 ‐ 2024 CIP FINANCIAL SUMMARY Arterial and Collector District 8% Building Inspection Fund 0% Community Development 0% Fire Equipment & Capital Replacement 2% Fire Impact Fee Forestry 0% 0% General Fund 19% Library Depreciation 0% Parking 1% Solid Waste Collection & Recycling 2% Storm Water Utility Street & Curb 2% Reconstructions 6% Street Impact Fee 15% Street Maintenance District 7% Wastewater Impact Fee 8% Water Fund 20% Water Impact Fee 9% TOTAL SCHEDULED PROJECTS 117