The URL can be used to link to this page

Home My WebLink About13.B.1. Long Term Capital Project FinancingTO: Mayor and Council Mark McNeill, City Administrator FROM: Gregg Voxland, Finance Director Bruce Loney, Public Works Director SUBJ: Long Term Capital Financing DATE: January 27, 2011 CITY OF SHAKOPEE Memorandum Introduction This is a continuation of the discussion on capital financing from the January 18 meeting. Background Council directed that staff bring back options for capital project financing while keeping the tax levy increase down to 1% per year. The immediate question is proceeding with the 2011 projects in a timely fashion. The subsequent years' projects are heavily impacted by the County's Transportation Improvement Plan. Staff does not have enough detail on the county's proposed city cost to determine funding sources. After a future meeting with the County, Council will need to decide how much funding they are willing and able to contribute to the proposed county projects in order to plan for 2012 — 2016 in the budget process. Alternatives 2011 Projects 1. 2011 Recon. See attached project sheet. Funding has been updated and revised to maximize state turn -back funding and to use all of it for street vs using some for utility work. The result is reducing the tax levy portion from $785,000 to $130,000. A. Include $130,000 in a bond issue. B. Use CIF fund for the $130,000. C. Use General Fund —fund balance for $130,000. D. Cancel the project (loss of state turn -back funds). 2. 2011 Overlay. See attached project sheet. Funding has been updated and revised. A. Do not assess based on 2010 Council decision. 1. Use CIF for the project cost. Tax levy phased in to replenish the CIF. 2. Use General Fund balance over the 40% transferred to the CIF to pay the cost of the project. Such transfer is consistent Council's use of fund balance for financing capital items vs. operating costs. B. Reverse decision and assess 30 %. City would need to do feasibility report and the time line for the project would be delayed about 2 months and may result in higher prices due to fuel and contractor scheduling. Engineering staff would recommend that the project be delayed as the workload for CR 101 reconstruction and the 2011 reconstruction would be too great. It would be better to delay the project a year than to assess for this year. Delaying the project would also reduce budgeted General Fund engineering revenue from this project. 1. Internal financing using the CIF fund for the 70% of the project. Tax levy phased in to replenish the CIF. 2. Bond issue and future tax levy for the 70% of the project. The project would need to be assessed at least 20% and a MSA 429 bond issue would be needed which would add about $30,000 to the cost of the project. Tax levy needed to support the bonds would be higher unless council "buys down" the levy. Recommendation 1.B. Proceed with 2011 recon project using $130,000 from the CIF in lieu of tax levy. 2.A.2. Proceed with 2011 Overlay project without assessing and using a 2010 transfer from the General Fund to the CIF. Actual motion to approve transfer from the General Fund to the Capital Improvement Fund consistent with past practice would be brought to Council in subsequent months pending more work on finalizing 2010 financials. Further action on 2012 — 2016 projects is pending the 2/22/11 meeting with the County on its TIP. Action Move to proceed with 2011 recon project using $130,000 from the CIF in lieu of tax levy and proceed with 2011 Overlay project without assessing and using a 2010 transfer from the General Fund to the CIF Gregg Voxland Finance Director H:budget /2011 /cip /LT finance II City of Shakopee Capital Improvement Program 2011 -2015 Project Manager: Bruce Loney A. Expenditure Items: Land & ROW Construction Improvements Engineering /Admin. Total B. Funding Source: General Fund Capital Improvement Fund Park Reserve Fund Grants (specify) Donations (specify) State Aid (turn back funds) Assessments Sanitary Sewer Fund -Base Sanitary Sewer Fund -Trunk Storm Drainage Fund -Base Storm Drainage Fund -Trunk Tax Levy Total Project Type: Street Construction 2011 4,288,460 650,000 4,938,460 129,840 713,900 2,200,300 626,890 477,400 790,130 4,938,460 2012 (SPUC) PROJECT LOCATION Project Title: 2011 Reconstruction Project 2013 2014 Total Project Cost: $4,938,460 2015 Description: Street, sanitary sewer, storm sewer and watermain reconstruction. Including old TH 300. Justification: To continue with the rehabilitation of the City's infrastructure. Other Comments: Streets should be reconstructed with old T.H. 300. Turnback funds for T.H. 300 are available in 2011. Operating Costs: City of Shakopee Capital Improvement Program 2011 -2015 Project Manager: Bruce Loney A. Expenditure Items: Land & ROW Construction Improvements Engineering /Admin. Total B. Funding Source: General Fund Capital Improvement Fund Park Reserve Fund Grants (specify) Donations (specify) State Aid Assessments Sanitary Sewer Fund -Base Sanitary Sewer Fund -Trunk Storm Drainage Fund -Base Storm Drainage Fund -Trunk Tax Levy Total Project Type: Street Construction 2011 430,000 80,000 510,000 510,000 510,000 2012 PROJECT LOCATION Project Title: 2011 Bituminous Overlay 2013 2014 Total Project Cost: $510,000 2015 Description: Bituminous overlay of 2nd Avenue and 3rd Avenue, from Atwood Street to Spencer Street; 1st Avenue, from Holmes Street to Sommerville Street; Atwood Street, Fuller Street, Lewis Street and Sommerville Street, from 1st Avenue to 4th Avenue; and Holmes Street, from 1st Avenue to 3rd Avenue. Justification: Continuation of the City's Pavement Preservation Program to maintain existing infrastructure. Other Comments: Bituminous overlays are much more cost effective than reconstructing pavements. Streets will be evaluated each year and may be moved up or moved back in the CIP. Operating Costs: City of Shakopee Capital Improvement Program 2011 -2015 Project Manager: Bruce Loney A. Expenditure Items: Land & ROW Construction Improvements Engineering /Admin. Total B. Funding Source: General Fund Capital Improvement Fund Park Reserve Fund Grants (specify) Donations (specify) State Aid Assessments Sanitary Sewer Fund -Base Sanitary Sewer Fund -Trunk Storm Drainage Fund -Base Storm Drainage Fund -Trunk Tax Levy Total Project Type: Street Construction 2011 480,000 70,000 550,000 550,000 550,000 2012 PROJECT LOCATION Project Title: 2011 Bituminous Overlay 2013 2014 Total Project Cost: $550,000 2015 Description: Bituminous Overlay of Ruby Lane, Ruby Circle, Granite Drive, Granite Court and Sapphire Lane, from Vierling Drive to Murphy Avenue; Heritage Drive, from Vierling Drive to Onyx Drive, Ramsey St., Dallas Dr., Swift Cir.; and Vierling Drive, from Limestone Drive to Ramsey Street. Justification: Continuation of the City's Pavement Preservation Program to maintain existing infrastructure. Other Comments: Streets will be evaluated each year and may be moved up or moved back in the CIP. Operating Costs: