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Home My WebLink AboutWater 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 Water Impact Fee Fund Capital Improvement Plan (CIP) for FY14-18. AGENDA ITEM TYPE: Action MEETING DATE: December 10, 2012 RECOMMENDATION: Adoption of the Water 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 Water Impact Fees. The Committee forwards the attached schedules for approval, with the following notations: • The WIF01 - Water Supply Planning and Infrastructure project is removed from the schedule this year. This is meant to reflect the fact that our current Water Impact Fee Study is moving forward without these costs; and, some of these elements will likely be added back later, after more information is gained from the Integrated Water Resource Plan. • The WIF09 – Cottonwood/Stucky Trunk Main Loop project to expand service in the South West part of town (Cottonwood/Stucky area) is being added to the list, 237 unscheduled. The committee felt this was a needed piece of infrastructure and would signal to the development community that the project is on our radar. • The IFAC thought it best to continue to pay Debt Service off as quickly as possible, given that there weren’t any other immediate projects in need of funding. When the project construction is completed, we will be able to finalize total debt amounts owing. • 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: Water Impact Fee Fund CIP 238 Water Impact Fee Capital Improvement PlanFinancial Summary Current YearFY13 FY14 FY15 FY16 FY17 FY18UnscheduledProjected Beginning Reserve Balance Dedicated to CIP 5,000,000$ 2,774,710$ 882,915$ 865,573$ 847,885$ 829,842$ ‐$ Plus: Impact Fee Revenues Dedicated to CIP 850,000$ 858,500$ 867,085$ 884,427$ 902,115$ 920,158$ ‐$ Less: Scheduled CIP Project Costs (3,075,290)$ (2,750,295)$ (884,427)$ (902,115)$ (920,158)$ ‐$ (31,330,000)$ Projected Year‐End Cash Dedicated to CIP 2,774,710$ 882,915$ 865,573$ 847,885$ 829,842$ 1,750,000$ Assumptions Made for Revenue Estimates: Current YearFY13 FY14 FY15 FY16 FY17 FY18Estimated Annual Water Impact Fee Revenues 850,000$ 850,000$ 858,500$ 867,085$ 884,427$ 902,115$ Estimated Annual Increase 0.0% 1% 1% 2% 2% 2%Total Estimated Revenues 850,000$ 858,500$ 867,085$ 884,427$ 902,115$ 920,158$ Current Revenues Dedicated to CIP % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Plus: Increase Dedicated to Water 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 850,000$ 858,500$ 867,085$ 884,427$ 902,115$ 920,158$ 35,000,00030,000,00025,000,00020,000,00015,000,00010,000,0005,000,0000FY14 FY15 FY16 FY17 FY18 UnscheduledWater Impact Fee Projects 239 CIP PROJECT FUNDPROJ.DEPARTMENPROJECT NAMEFY14FY16UnscheduledFY15FY17FY18Impact Fees WaterWIF03WATER IF5.3MG CONCRETE WATER STORAGE RESERVOIR$5,300,000WIF05WATER IFWEST WATER TRANSMISSION MAIN LOOP$21,680,000WIF07WATER IFGRAF STREET EXTENSION$150,000WIF08WATER IFWATER TREATMENT PLANT DEBT SERVICE PAYMENT$2,750,295$884,427$902,115$920,158WIF09WATER IFCOTTONWOOD/STUCKY TRUNK MAIN LOOP$4,200,000Summary for Impact Fees Water (5 items)Totals by year:$2,750,295 $884,427$902,115$31,330,000FY14FY15FY16UnscheduledFY18$920,158FY17240 CIP Project Fund Impact Fees Water PROJECT NUMBER WIF03 DEPARTMENT WATER IF PROJECT NAME 5.3MG CONCRETE WATER STORAGE RESERVOIR FY14 FY15 FY16 Unscheduled $5,300,000 DESCRIPTION OF PROJECT According to the 2007 Water Facility Plan, a new 5.3MG partially buried concrete water storage reservoir was to be constructed by 2017. Given the recent slow-down in growth, we anticipate needing the tank some time after 2017. The proposed location of the reservoir is on City property adjacent (to the North) of the proposed new Hyalite/Sourdough water treatment plant. This reservoir is sized to meet the City’s storage needs up to 2025, assuming a 5% annual growth rate. Locating the storage reservoir at the recommended site will raise the hydraulic grade line in the City’s water system, which will increase pressure for the southern part of the City and will allow future development to occur in the south on a gravity system. ALTERNATIVES CONSIDERED The water facility plan reviewed numerous options. This is the preferred alternative of the adopted plan. ADVANTAGES OF APPROVAL Increased water storage to meet the needs of our growth community, and the requirement of MDEQ. Increased system water pressure in the southern part of the City. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Requires minimal operation and maintenance. Checking of valves, level sensors and vents on an annual basis and diver inspection and vacuuming every five years. Estimated at $4,000 annually. FUNDING SOURCES 100% Water Impact Fees New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:28 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)3 FUNDING CERTAINTY: (Up to 10 pts)5 COMMISSION WORK PLAN PRIORITY: (Up to 10 pts)0 FY18 241 CIP Project Fund Impact Fees Water PROJECT NUMBER WIF05 DEPARTMENT WATER IF PROJECT NAME West Water Transmission Main Loop FY14 FY15 FY16 Unscheduled $21,680,000 DESCRIPTION OF PROJECT The Water Facility Plan identifies this project as the most critical redundancy issue in the City’s water distribution system. 4,525 N/A 12" Install New 12" $ 911,335 2,636 N/A 24" Install New 24" $ 1,101,716 5,154 N/A 36" Install New 36" $ 3,481,785 17,093 N/A 48" Install New 48" $16,187,712 Total Project Cost $21,682,548 The precise location of the required mains is somewhat flexible, but in general will be from Wagonwheel road (extended) in S. 19th to Goldenstein to South 3rd to Nash Road (see exhibit 5.B.3 of the facility plan). Given the priority of the Water Treatment Plant project, the City is not currently planning to complete these projects. ALTERNATIVES CONSIDERED Do not build redundant transmission main. ADVANTAGES OF APPROVAL The city will be assured that water can be supplied even if one transmission main sustains damage and is offline for a number of days. The City receives the majority of its water from the Water Treatment Plant through an existing 30 inch concrete transmission main. If this main is off-line for any reason, the City will need to rely on storage from its three reservoirs. At 2005 water demand levels, storage reserves would be depleted in three days during the average day demand, and in 24 hours during the maximum day demand. Not only will a second transmission main provide the security of redundancy if the existing 30-inch ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Annual Operating & Maintenance Costs: Impact Fees can not be spent on annual operations and maintenance costs. The Water Utility will see incremental increases in general maintenance costs. Current cost estimate of $12,500 per water-main mile maintained annually. FUNDING SOURCES Impact Fee eligible portions are related to improvement costs beyond an 8” line capacity. At this point in time, it is estimated that the 12” and 24” lines are most likely to be built within the next 5 years; the cost of over-sizing those lines would be eligible for impact fees and is estimated to total $1,874,886. Given the priority of the Water Treatment Plant project, it’s relative size and scope, these improvements have been moved to “unscheduled.” New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:10 FY17 REQUIRED - CAPITAL or DEBT SERVICE REQUIRED - USEFUL LIFE 10+ YEARS REQUIRED - CAPACITY EXPANDING BENEFITS TO NEW DEVELOPMENT: (Up to 20 pts)5 DIRECT BENEFITS: (Up to 10 pts)5 FUNDING CERTAINTY: (Up to 10 pts)0 COMMISSION WORK PLAN PRIORITY: (Up to 10 pts)0 FY18 242 CIP Project Fund Impact Fees Water PROJECT NUMBER WIF07 DEPARTMENT WATER IF PROJECT NAME GRAF STREET EXTENSION FY14 FY15 FY16 Unscheduled $150,000 DESCRIPTION OF PROJECT This project is to extend Water 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 Water 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% Water 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 243 CIP Project Fund Impact Fees Water PROJECT NUMBER WIF08 DEPARTMENT WATER IF PROJECT NAME WATER TREATMENT PLANT DEBT SERVICE PAYMENT FY14 $2,750,295 FY15 $884,427 FY16 $902,115 Unscheduled DESCRIPTION OF PROJECT Total adjusted project price for the Water Treatment Plant (WTP) construction of phase one is estimated at $40.7 Million. Of that amount, $13.3 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 $5 Million of impact fee eligible costs will be paid with a long-term loan (20 years, 4%) 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 Water Treatment Plant (WTP) will enable the City to meet its ever growing demand for water services. Expansion of the Bozeman WTP is consistent with the City’s long-term need to accommodate growth and economic development in the Gallatin Valley. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED FUNDING SOURCES FY08 Pilot Testing: $200,000. FY09,FY10, FY11 Design and Membrane equipment deposit, construction $7,267,000. FY12 $16,460,000. FY13 $16,460,000. Of this total, approximately 33% is eligible for payment via impact fees. New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:50 FY17 $920,158 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 244 CIP Project Fund Impact Fees Water PROJECT NUMBER WIF09 DEPARTMENT WATER IF PROJECT NAME COTTONWOOD/STUCKY TRUNK MAIN LOOP FY14 FY15 FY16 Unscheduled $4,200,000 DESCRIPTION OF PROJECT Installation of a trunk water main loop from the intersection of Cottonwood and Huffine Lane south to Stucky Road then east to South 19th Avenue. ALTERNATIVES CONSIDERED Postpone installation to some future time. It is unlikely that such an ambitious and expensive project could or would be installed by the concerted effort of private developers. Even if that were to happen, the City would be asked to participate in the oversizing of these mains, all of which exceed the local 8” diameter requirement. ADVANTAGES OF APPROVAL Provides the water main backbone which will support future growth In a large area of the City. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Incremental increase in the cost of operation and maintenance FUNDING SOURCES Impact fees, developer contribution for local equivalent share. New Replacement Equipment Project Impact Fee Funds Project and Equipment Scoring TOTAL SCORE:45 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)10 COMMISSION WORK PLAN PRIORITY: (Up to 10 pts)5 FY18 245