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6. Staff Report-2015-2019 CIPSCANDIA Staff Repovt Date of Meeting: June 4, 2014 To: City Council From: Kristina Handt, Administrator Re: 2015-2019 CIP Background: A Capital Improvement Program, or CIP, is a multi -year (typically 5 years) capital expenditure plan for a City's infrastructure (such as streets, parks and utility systems), vehicles, equipment and public buildings. It identifies the major projects needed and desired by the community, their potential costs and how they would be financed. Including a project in a CIP does not commit the city to that project. The City Council must specifically authorize each one, and the associated funding, before any project may proceed. When the CIP is reviewed (ideally annually, in conjunction with the budgeting process) projects may go forward as planned, advance ahead of schedule, be removed entirely, or new projects may be added, depending upon changes in circumstances and priorities. As requested last year, the Planning Commission heard from department heads regarding the Capital Improvement Program (CIP) requests at their May meeting. Department heads will also be at the June Council work session to answer any questions about the proposed projects/expenditures. Because the CIP is part of the Comprehensive Plan, the Planning Commission holds a public hearing (typically at their November meeting) prior to recommending City Council approval. Council approval has occurred concurrent with adoption of the annual budget and final tax levy, generally at the last meeting of the calendar year. Issue: What projects should be included in the 2015-2019 CIP? When? Should any cost estimates be changed? Are there any projects to add to the CIP (Must be a capital project that costs over $10,000 with a useful life of 5 years or more)? Proposal Details: Included in your packet are two lists. The first, "Project Listing" lists all CIP projects, both active and pending, by department. The second, "Projects By Department," lists all active projects over the next ten years and includes cost estimates. Administration: All projects related to the space needs study and possible community center/city hall expansion remain pending. Community Center: New for 2015: Seal coating of the Community Center parking lot. The parking lot was cracked filled in 2014. This should be followed up with seal coating the following year to maintain the parking lot. Fire: Included in your packet is a copy of the Fire Chief s requests. ➢ The Fire Department HVAC Replacement and Radio Replacement have not been changed from the current plan. ➢ The Civil Defense Sirens have been moved from a 2 to a 3 priority and pushed back a year. ➢ Tanker 5177 Replacement has been moved from a 3 to 1 priority and the price increased $30,000. ➢ Grass Rig 5175 Replacement has been moved from a 3 to 1 priority. ➢ The second fire station has been moved from a 3 to 2 priority and increased by $10,000 ➢ SCBA Compressor Replacement has been moved from 2 to 1 priority ➢ 12 SCBA & 30 Masks has been added for 2016 at a cost of $98,000 from the Equipment Replacement Fund ➢ Roof Replacement has been added for 2019 at a cost of $100,000 from the Capital Improvement Fund ➢ Outdoor Training Building has been moved from a 3 to 2 priority. ➢ The Chiefs Vehicle has been moved from pending to active in 2019. Ice Rink: The replacement of the Zamboni has been pushed back a year to 2017, if grants/donations are obtained. The Public Works Director believes it will last longer after the maintenance performed on it last year. Parks and Recreation: The Parks and Recreation Committee reviewed the CIP projects at their April meeting and are suggesting the following: ➢ No changes were made to Lilleskogen Park Improvements. The Park Capital Improvement Fund will be depleted following the parking lot work until new fees are collected. Park fees from a couple subdivisions are expected to come through next year. The $36,000 planned for 2015 would be grants/donations for site improvements such as picnic tables, benches, signage, etc. ➢ Wind in the Pines was moved to pending. The committee did not feel a Natural Resources Management Plan was needed as long as regular maintenance occurred. ➢ No changes were made for a full reconstruction of the tennis courts in 2018. Resurfacing was completed in 2013. Log House Landing Improvements have been updated to reflect the $400,000 cost estimate in the grant application. The full project has been moved back to 2015. In addition to the $200,000 grant from the DNR, the plan assumes $100,000 cost share from the watershed district. The remaining $100,000 would come from the Capital Improvement Fund. Public Works: Public Works Director Kieffer is recommending the following changes to the CIP; ➢ Purchase of a wood chipper has been moved to pending. This winter the City rented a chipper and that seemed to work well. ➢ PW-024 Utility Truck with Crane has been increased by $6,500. ➢ The John Deere Tractor wBroom and Blower scheduled for replacement in 2016 has been pushed back to 2017. ➢ Street Maintenance Program has been increased to $2.8 million and pushed back to 2016. $300,000 would continue to come from the General Fund. The additional $2.5 million would need to be bonded for and paid back through the levy and special assessments via the Debt Service Fund. City Engineer Ryan Goodman put together a couple lists of possible roads that may need full depth reconstruction (included in your packet). Completing soil borings will be the only way to truly know if a road needs a full depth reconstruction or a mill and overlay. For the purposes of this discussion, we are assuming the roads need a full depth reconstruction. ➢ Quinell Ave is still in the plan for 2015 at $185,000. This assumes a mill and overlay. It will be updated after a soil boring is done. Approximately $120,000 would come from the turn back money from Washington County and the other $65,000 from the Local Road Improvement Fund. Fiscal Impact: Included in your packet is a handout titled "Projects By Funding Source." By the end of 2014 the following balances are projected for the funds: Capital Improvement: $255,250 Equipment Replacement: $428,400 Park Capital Improvement: $0 Local Road Improvement: $327,704 The Equipment Replacement Fund would cash flow through 2017 with annual contributions of $100,000. However, it would have a deficit of $222,000 by 2018 and $209,000 still in 2019. The Council may want to consider other funding sources (debt), shifting future funding from Capital Improvements to Equipment Replacement or eliminating some planned replacements. The Capital Improvement Fund is projected to have positive cash balances through 2019 when the fund would reach $469,000, if annual contributions of $100,000 are continued. Contributions could be reduced and redirected to Equipment Replacement, Local Road Improvement other areas of the budget or the levy could be reduced. Options: 1) Make changes to staff/committee recommendations 2) Make no changes Direction provided at this time will inform staff on how to compose the draft 2015 budget to be reviewed by the Council beginning in August.