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CR 91-228 Capital Improvements Plan' Y O O � ti October 8, 1.991 0 P K ` Cl Council Report: 91 -228 1992 -1996 CAPITAL IMPROVEMENTS PLAN Proposed Action. Staff recommends adoption of the following motion: Move to order a public hearing for 7:30 p.m. on November 5. 1991, regarding the proposed 1992 -1996 City of Hopkins Capital. Improvements Plan. Approval of this motion will allow the review and adoption process to continue on the Capital Improvements Plan. ov rview. Since July, City staff has been working on the preparation of the 1992 -1996 Capital Improvements Plan for the City of Hopkins. At this point, the plan has been initially reviewed by the City Manager, Finance Director, and department heads, as well as by the Park Board and the Planning Commission. The Capital Improvements Plan is in draft form and represents the recommendations from the various departments within the City. A final recommended plan will be provided for the November 5 meeting. Certain maps and other graphics are still being prepared and'will be incorporated as a part of the final adopted plan. Also, the project numbers are not yet in sequential format or specific projects may not have been assigned a number. This will be corrected for the final CIP document. Although the action requested by the City Council only involves the scheduling of a public hearing, the City Council is encouraged to make comments or ask questions on the plan as a part of the Council's initial review on Tuesday night. Obviously, the Council will have an opportunity to fully comment on the proposed plan as a part of the public hearing process on November 5. Primary Issues to Consider. o What is the purpose of a Capital Improvements Plan? o What are the highlights of the proposed plan? o What are the financial implications of the proposed plan? Suvoortina Information. o Staff analysis of o Finance Department o Alternatives o aft of 1992 -1996 issues analysis Capital Improvements Plan Tom Harmening Community Develop �tDirector J CR: 91 -228 Page 2 Analysis of Issu s. o What is the purpose of a Capital Improvements Plan? The Capital Improvements Plan is a five-year forecast of project and equipment needs in the City of Hopkins. It is intended to alert the Council and citizens to the major capital needs on the horizon. The Capital Improvement Plan is intended to be a planning tool and is structured to present a meaningful, long - range perspective of the City's capital programming needs. At the same time, sufficient program details are provided to enable those who review the information to make informed decisions on the program projects over the next five years. The first year of the plan presumes an adopted capital budget. The remaining four years represent an estimate of project needs and funding capabilities of the City. In the past, the four years after the first year were proposed without specif is consideration to the ability for the City to financially undertake the projects. The proposed Capital Improvements Plan differs in that the plan was compiled in a manner such that it is more financially realistic. o What are the highlights of the proposed plan? The proposed five-year Capital Improvements Plan outlines projects totalling $15,735,000 over the 1992 -1996 period. This compares with total projects amounting to over $22,000,000 in the previous five-year Capital Improvements Plan (1991- 1995). For 1992, $4,675,000 in projects and equipment are proposed. This compares with $6,975,000 proposed for 1992 in the previous five -year Capital Improvements Plan. Major projects within the Capital Improvements Plan for 1992 include: o ST -5 - Knollwood reconstruction - $ 851,000 o ST -7 - Reconstruction of Mainstreet between 11th Avenue and Shady Oak Road - $ 1,725,000 o ST -9 - CBD alley improvement - $500,000 o CF -5 - Purchase and development of Maetzold Field - $280,000 o MF -11 - Remodeling of the fire station - $ 71,500 o CE -4 - Purchase of a pumper truck — $ 232,500 o CE -19 - Purchase of a front -end loader - $ 80,000 o What are the financial implications of the proposed Capital Improvements Plan? Attached is a memo from John Schedler, Finance Director, which provides an analysis of the effect on the various funds which will be used to support the proposed Capital Improvements Plan. / 1 CR: 91 -228 Page 3 o what is the schedule for adopting the Capital Improvements Plan? o October 15 - Brief City Council review of CIP document and order of public hearing o October.29 - Final review by Planning Commission of CIP document o November 5 - Public hearing by City Council on proposed Capital Improvements Plan o November 12 - City Council review of Capital Improvements Plan during a work session o November 19 - Adoption of Capital Improvements Plan by City Council. Alternatives. 1. Adopt staff's recommendation regarding the scheduling of a public hearing. 2. Approve the action as recommended by staff but set a different date for the public hearing. 3. Table matter for further information or discussion. 0 Finance Director Analysis FINANCIAL REVIEW OF FUNDING Overall this plan is much more attainable in comparison to the prior year's plan. CURRENT REVENUES /GENERAL RESERVES All of the 1992 projects cannot be funded without a reduction in other areas of the 1992 budget. For. 1993 -1996, unless the tax levy and /or LGA formula is revised to allow the City greater flexibility, most of these projects cannot be funded from this source. G.O. BONDS /SPECIAL ASSESSMENT Some projects listed in 1992 and 1993 are designated to be funded from the 1990 bond issue in the amount of $448,500. Funding for the remaining projects would require issuing $3,750,000 in bonds. Year of Issue 1992 1993 1995 Special Assessment Repayment Principal (20 Year Bonds) $1,350,000 1,400,000 1,000,000 3,750,000 2,800,000 Interest & Issuance Cost Life of Issue $1,040,000 1,200,000 850,000 3,090,000 2,200,000 Net Cost to City $ 950,000 $ 890,000 $92,000 average annual tax levy over 20 years -,repay bonds and interest. MUNICIPAL STATE AID The large projects in 1991 and 1992 will cause a two year moratorium on projects, but the CIP takes this into account and funding is sufficient as the projects are listed. TAX INCREMENT FINANCING Cash on hand and increments above debt service would cover these projects and private sector assistance. 4 . 1 .. SANITARY SEWER To accomplish the timing of projects in the 5 year plan would require significant rate increases, even if spread over the next three or four years. This assumes MWCC fees will continue to ,increase 10 to 15% per year. EQUIPMENT REPLACEMENT The continued issuance of $400,000 debt annually has and is providing a steady cash flow to maintain the variable cost of equipment purchases in a given year. Beginning in 1991, the plan is to shift debt instruments from bonds to internal Certificates of Indebtedness. The City is then able to continue levying taxes outside the levy limit, but this change of debt instruments will avoid issuance costs for legal, bond consultant and rating =agency fees. STORM SEWER The heavy construction of sewers in 1990 and 1991 and the low key projects over the next 5 years continue a negative cash flow. Just the debt service and the two annual maintenance projects - systems and alleys - will continue to increase the negative cash position at the present rate. l�i_M The cash position has continued to build up through 1990. The projects completed in 1991 and scheduled in the plan will quickly exhaust the cash by 1994 at the present rate. Small rate increases for each of the next few years would avoid a bond. issue. REFUSE After several years of struggle, working capital (cash) is in a healthy position for this fund. Grants have been most helpful. Cash is available now for the purchase of projected trucks.