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Home My WebLink AboutWastewater Impact Fee CIP for FY14-18 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager Anna Rosenberry, Finance Director SUBJECT: Adoption of the Wastewater Impact Fee Fund Capital Improvement Plan (CIP) for FY14-18. AGENDA ITEM TYPE: Action MEETING DATE: December 10, 2012 RECOMMENDATION: Adoption of the Wastewater Impact Fee Fund Capital Improvement Plan (CIP) for FY14-18. 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. The City’s Impact Fee Advisory Committee (IFAC) met on November 29th to review and make recommendations for the planned expenditures of Wastewater Impact Fees. The Committee forwards the attached schedules for approval, with the following notations: • The WW28 – Design of Phase II of WRF project is removed from the schedule this year. This project once had capacity expanding elements; now, the project consists of regulation-related improvements, and is no longer eligible for impact fees. • The WWIF15- Flanders Mill – Hidden Valley Trunk Main and Lift Station project to expand service in the West part of town (from the Huffine Lane area back to the Water Reclamation Facility) is being added to the list. The early design, and identification and purchase of utility right-of-way could prove to save millions of dollars, if done before 246 more development occurs in the area. The Committee recommends spending $300,000 next year, and $200,000 to design and acquire right of way in the next two years. • The IFAC thought it best to continue to pay Debt Service off as quickly as possible, but balance that with the need to begin engineering and design on the Flanders Mill area project. The interest costs to delay paying down $500,000 in debt would less than $30,000. The financial advantages of early design and right-of-way acquisition in WWIF15 – Flanders Mill project could easily be in excess of millions of dollars in construction and operating costs in the future. • In general, the amount of Impact Fees collected going forward could be greatly impacted by the results and implementation of the adopted Impact Fee Study. Because the amount of impact fees collected each year reflect the individual nature of the projects built around town, it is very difficult to predict revenues at this point. The CIP schedules reflect revenues at their current levels. Next year, we will be able to adjust the schedules to better reflect any adopted Impact Fee Study ramifications. UNRESOLVED ISSUES: None. ALTERNATIVES: As suggested by the City Commission. If the Commission is does not wish to adopt this schedule tonight, it can be scheduled for approval on a later agenda. FISCAL EFFECTS: This step in the process has no fiscal effect. Once adopted, the Capital Improvements Plan becomes the basis of the City Manager’s Recommended Budget for FY14. Report compiled on: November 30, 2012 Attached: Wastewater Capital and Equipment Fund CIP 247 Wastewater Impact Fee Capital Improvement PlanFinancial Summary Current YearFY13 FY14 FY15 FY16 FY17 FY18UnscheduledProjected Beginning Reserve Balance Dedicated to CIP 264,000$ 255,800$ 255,800$ 247,435$ 238,903$ 230,200$ ‐$ Plus: Impact Fee Revenues Dedicated to CIP 820,000$ 836,482$ 844,847$ 861,744$ 878,979$ 896,558$ ‐$ Less: Scheduled CIP Project Costs (828,200)$ (836,482)$ (853,212)$ (870,276)$ (887,681)$ (896,558)$ (16,812,000)$ Projected Year‐End Cash Dedicated to CIP 255,800$ 255,800$ 247,435$ 238,903$ 230,200$ 230,200$ Assumptions Made for Revenue Estimates: Current YearFY13 FY14 FY15 FY16 FY17 FY18Estimated Annual Wastewater Impact Fee Revenues 828,200$ 828,200$ 836,482$ 844,847$ 861,744$ 878,979$ Estimated Annual Increase 0.0% 1% 1% 2% 2% 2%Total Estimated Revenues 828,200$ 836,482$ 844,847$ 861,744$ 878,979$ 896,558$ Current Revenues Dedicated to CIP % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Plus: Increase Dedicated to Wastewater Capacity Expansion CIP 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total % Dedicated to CIP 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%ProjectedProjectedTotal Estimated Revenues Dedicated to CIP 828,200$ 836,482$ 844,847$ 861,744$ 878,979$ 896,558$ 18,000,00016,000,00014,000,00012,000,00010,000,0008,000,0006,000,0004,000,0002,000,0000FY14 FY15 FY16 FY17 FY18 UnscheduledWastewater Impact Fee Projects 248 CIP PROJECT FUNDPROJ.DEPARTMENPROJECT NAMEFY14FY16UnscheduledFY15FY17FY18Impact Fees WastewaterWWIF05WWATER IFHOSPITAL TRUNK LINE: HAGGERTY TO KAGY$1,062,000WWIF11WWATER IFREPLACE FRONT STREET: TAMARACK/ROUSE$1,800,000WWIF12WWATER IFGRAF STREET EXTENSION$50,000WWIF14WWATER IFWRF PHASE I DEBT RETIREMENT$536,482$653,212$870,276$600,000$887,681$896,558WWIF15WWATER IFFLANDERS MILL ‐ HIDDEN VALLEY TRUNK MAIN AND LIFT STATION$300,000$200,000$13,300,000Summary for Impact Fees Wastewater (5 items)Totals by year:$836,482 $853,212$870,276$16,812,000FY14FY15FY16UnscheduledFY18$896,558$887,681FY17249 CIP Project Fund Impact Fees Wastewater PROJECT NUMBER WWIF05 DEPARTMENT WWATER IF PROJECT NAME HOSPITAL TRUNK LINE: HAGGERTY TO KAGY FY14 FY15 FY16 Unscheduled $1,062,000 DESCRIPTION OF PROJECT Construct ~7,900 LF of 12" and 15" sewer collector from manhole C0507 to 1E22. ALTERNATIVES CONSIDERED Limit future development in the area. ADVANTAGES OF APPROVAL If constructed to the line sizes master planned in the City’s Wastewater Facilities plan, capacity will be provided for anticipating the long-term future growth in this area. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Annual Operating and Maintenance Costs: Impact fees can not fund operating and maintenance costs. The city’s wastewater utility will pay for these costs, which are estimated to be a small increment of the city’s system as a whole. FUNDING SOURCES 70% Wastewater Impact Fees = $743,400 30% Developer Contribution = $318,600 New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:27 FY17 REQUIRED - CAPITAL or DEBT SERVICE REQUIRED - USEFUL LIFE 10+ YEARS REQUIRED - CAPACITY EXPANDING BENEFITS TO NEW DEVELOPMENT: (Up to 20 pts)20 DIRECT BENEFITS: (Up to 10 pts)2 FUNDING CERTAINTY: (Up to 10 pts)5 COMMISSION WORK PLAN PRIORITY: (Up to 10 pts)0 FY18 250 CIP Project Fund Impact Fees Wastewater PROJECT NUMBER WWIF11 DEPARTMENT WWATER IF PROJECT NAME REPLACE FRONT STREET: TAMARACK/ROUSE FY14 FY15 FY16 Unscheduled $1,800,000 DESCRIPTION OF PROJECT This project consists of construction of ~11,000 LF 18", 21" & 24" sewer pipe from manhole F0330 to C0507. The lower portion of the existing sewer is at capacity. Additional capacity is needed to serve the future Bozeman Deaconess Hospital development and lands to the south. It is estimated that 70% of this project costs will be due to capacity expansion and will be eligible for Wastewater Impact Fees. The remaining 30% of the project costs will need to be provided by a developer contribution or other source. At this time, the City’s Wastewater Utility does not have a need to replace the existing facility; as such, no utility dollars are scheduled to be spent. ALTERNATIVES CONSIDERED Limit development to only that capacity of the existing sewer. ADVANTAGES OF APPROVAL This project will significantly increase the service area and capacity of the trunk sewer. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Annual Operating and Maintenance Costs: Impact fees can not fund operating and maintenance costs. The city’s wastewater utility will pay for these costs, which are estimated to be a small increment of the city’s system as a whole. FUNDING SOURCES 70% Wastewater Impact Fees = $1,260,000 30% Developer Contribution = $540,000 New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:27 FY17 REQUIRED - CAPITAL or DEBT SERVICE REQUIRED - USEFUL LIFE 10+ YEARS REQUIRED - CAPACITY EXPANDING BENEFITS TO NEW DEVELOPMENT: (Up to 20 pts)20 DIRECT BENEFITS: (Up to 10 pts)2 FUNDING CERTAINTY: (Up to 10 pts)5 COMMISSION WORK PLAN PRIORITY: (Up to 10 pts)0 FY18 251 CIP Project Fund Impact Fees Wastewater PROJECT NUMBER WWIF12 DEPARTMENT WWATER IF PROJECT NAME GRAF STREET EXTENSION FY14 FY15 FY16 Unscheduled $50,000 DESCRIPTION OF PROJECT This project is to extend Wastewater Mains below Graf Street approximately ¼ mile in order to connect infrastructure east from 19th Avenue. This is an important connection for public safety purposes – allowing fire service to meet their response time requirements in areas where they currently cannot. The Wastewater infrastructure should be installed at the same time the street connection is made. ALTERNATIVES CONSIDERED Do nothing and wait for development to connect the infrastructure. ADVANTAGES OF APPROVAL Improved traffic flow and better emergency response to the local area. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED FUNDING SOURCES 100% Wastewater Impact Fee – to be recovered by developer payback. New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:35 FY17 REQUIRED - CAPITAL or DEBT SERVICE REQUIRED - USEFUL LIFE 10+ YEARS REQUIRED - CAPACITY EXPANDING BENEFITS TO NEW DEVELOPMENT: (Up to 20 pts)20 DIRECT BENEFITS: (Up to 10 pts)10 FUNDING CERTAINTY: (Up to 10 pts)5 COMMISSION WORK PLAN PRIORITY: (Up to 10 pts)0 FY18 252 CIP Project Fund Impact Fees Wastewater PROJECT NUMBER WWIF14 DEPARTMENT WWATER IF PROJECT NAME WRF PHASE I DEBT RETIREMENT FY14 $536,482 FY15 $653,212 FY16 $870,276 Unscheduled $600,000 DESCRIPTION OF PROJECT Total adjusted project price for the Water Reclamation Facility (WRF) construction of phase one is estimated at $53.8 Million. Of that amount, $17.9 Million is for capacity expanding costs of construction. The impact fee account will not have enough cash on hand to pay the costs of construction when the facility is built. As such, impact fee revenues will be dedicated to pay the outstanding debt in future years, as fee revenues are collected. At this point, approximately $4.87 Million of impact fee eligible costs will be paid with a long-term loan (20 years, 3.75%) through the State’s Revolving Loan Fund. A debt schedule will be updated semi-annually with the amount of impact fee dollars that have been dedicated to debt payments until the full amount owed is paid. ALTERNATIVES CONSIDERED ADVANTAGES OF APPROVAL Major capital expansion of the Bozeman WRF will enable the City to meet its ever growing demand for wastewater services and still produce a high quality effluent that is in full compliance with the City’s MPDES discharge permit. Expansion of the Bozeman WRF is consistent with the City’s long-term need to accommodate rapid growth and economic development in the Gallatin Valley. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED FUNDING SOURCES *We anticipate having a minimum of $13.1 Million available from Impact Fees through the end of the construction period. Impact fee collections during the construction period will be dedicated to the project. The remainder of eligible construction costs would be dedicated to debt service on the Utility Revenue Bonds, as it is collected in the Impact Fee Fund. New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:50 FY17 $887,681.00 REQUIRED - CAPITAL or DEBT SERVICE REQUIRED - USEFUL LIFE 10+ YEARS REQUIRED - CAPACITY EXPANDING BENEFITS TO NEW DEVELOPMENT: (Up to 20 pts)20 DIRECT BENEFITS: (Up to 10 pts)10 FUNDING CERTAINTY: (Up to 10 pts)10 COMMISSION WORK PLAN PRIORITY: (Up to 10 pts)10 FY18 $896,558 253 CIP Project Fund Impact Fees Wastewater PROJECT NUMBER WWIF15 DEPARTMENT WWATER IF PROJECT NAME FLANDERS MILL - HIDDEN VALLEY TRUNK MAIN AND LIFT STATION FY14 $300,000 FY15 $200,000 FY16 Unscheduled $13,300,000 DESCRIPTION OF PROJECT This project consists of the installation of large diameter sewer from Huffine Lane to the City Water Reclamation Facility along the Cottonwood-Flanders Mill- Hidden Valley alignment as identified in the Wastewater Facility Plan. It also includes a Regional Lift Station located at the north of the alignment and the installation of the force-main necessary to complete the project. ALTERNATIVES CONSIDERED Limit development in the area served by this trunk sewer to that which can currently be served. ADVANTAGES OF APPROVAL This project will significantly increase the area which can be served by the City’s wastewater treatment infrastructure making development in this corridor possible. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Annual operating and maintenance costs. Impact fees may not be used to finance those costs. The City’s wastewater utility will pay for these costs which are estimated to be a small increment of the City’s system as a whole. FUNDING SOURCES 70% Wastewater Impact Fees (est.) = $9.3M 30% Development contribution =$4M New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:30 FY17 REQUIRED - CAPITAL or DEBT SERVICE REQUIRED - USEFUL LIFE 10+ YEARS REQUIRED - CAPACITY EXPANDING BENEFITS TO NEW DEVELOPMENT: (Up to 20 pts)20 DIRECT BENEFITS: (Up to 10 pts)5 FUNDING CERTAINTY: (Up to 10 pts)5 COMMISSION WORK PLAN PRIORITY: (Up to 10 pts)0 FY18 254