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08-27-19 CCM Workshop (CIP Plan)HUTCHINSON CITY COUNCIL REVIEW OF 2020 PRELIMINARY CAPITAL IMPROVEMENT PLAN MINUTES TUESDAY, AUGUST 27, 2019, AT 4:00 PM CITY CENTER — COUNCIL CHAMBERS 1. Call to Order Mayor Forcier called the workshop to order at 4:00 p.m. Members present included Mary Christensen, Steve Cook, Dave Sebesta and Chad Czmowski. Others present were Matt Jaunich, City Administrator and other city directors. REVIEW OF 2020 PRELIMINARY CAPITAL IMPROVEMENT PLAN 2. 2020 Preliminary Capital Improvement Plan Matt Jaunich, City Administrator, presented before the Council. Mr. Jaunich reviewed the purpose of a capital improvement plan and the planning that goes into it. A CIP is a document that realistically projects city needs, outlines means by which those needs can be met and provides prioritization of those needs. The planning process provides city staff and Council with a framework to make decisions regarding current and future city needs considering the city's financial capability. The CIP commits the City to a long term capital plan that ensures that expenditures can be made to add or replace capital items when needed, without significant fluctuations in the property tax levy. Capital planning enables the City to maintain a stable property tax rate, prevent peaks and valleys in its debt retirement program and establish and thereafter improve its credit rating. The CIP establishes a comprehensive development program that is used to maximize outside revenue sources and effectively plan for the growth and maintenance of the city's infrastructure. The plan should be used as a goal, priority and vision - setting tool. Mr. Jaunich also reviewed how the CIP Plan is built which includes individual City Council goals and collective Council goals; citizens/business/user feedback to elected officials (needs, wants, desires of the community); City staff long-term maintenance and replacement schedules; and state/federal mandates. Mr. Jaunich began an overview of the five year capital plan document. The proposed plan is estimated at $53.94 million. The Plan is approximately $2 million larger than last year's five- year plan. The plan has an average CIP cost of $10.8 million. 2020's $18.4 million CIP cost currently accounts for approximately 20-25% of all budgeted expenses. For comparison purposes, this year's (2019) general fund budget is $13.12 million. This plan includes costs for a new police station in 2020. Mr. Jaunich reviewed that the plan is divided into infrastructure at $20.64 million; Park & Rec at $3.8 million; Enterprise Funds at $15.58 million; Public Works at $3.23 million; Public Safety at $9.99 million and General Government at $705,100. The make-up of the CIP includes: New Debt: $17.90 million (amount of money that we need to borrow to pay for capital projects); Aid/Grants (state aid, federal/state grants, bridge funds, donations): $3.37 million; Enterprise Funds (Creekside, Liquor Store, Refuse, Water, Sewer, Wastewater, Stormwater): $17.21 million; Taxes (money from our tax levy that gets designated towards capital projects): $10.90 million; Special Assessments (direct costs that will be assigned to property owners adjacent to projects): $4.47 million; Special Funds/Reserves (rural fire department, cooperative agreements): $90,680. CIP funding sources for general fund projects include the General Fund from the Facility Improvements (Capital Improvements Fund and $700,000 of LGA is dedicated annually); Fleet & Equipment (Equipment Replacement Fund, General Fund — annual transfer of $275,000, current funding is not adequate for "small" and "heavy" fleet needs, additional funding source of about $327,000/year is needed); and Other Capital Needs (department budgets — tax levy, grants or donations, and other city funding). Enterprise fund projects are covered by cash flow from operations driven by user revenue and cash reserves. Infrastructure improvements debt are covered by GO special assessment improvements bonds, special assessment, municipal state aid for streets, grants, enterprise fund contributions and other city funding from Capital Projects and Community Improvement. Capital project costs and funding is reviewed by the Resource Allocation Committee. The Capital Projects Fund funding sources come from LGA, bonding dollars and grants. The use of these funds are for general fund capital improvements included in the Facility Plan, miscellaneous infrastructure maintenance such as trails, sidewalks, parking lots, street lights, sealcoating, etc., and other projects approved by the City Council. The 2018 year- end unreserved cash balance is $594,803 from this fund. The Community Improvement Fund funding sources come from retired debt service funds and donations. The use of these funds are for City Council approved projects and Public Arts Commission & other public arts projects. The 2018 year-end unreserved cash balance is $3,034,633 from this fund. The Public Sites Fund funding sources come from park dedication fees, donations, grants and rent on agricultural land. The use of these funds are for parkland improvements, tree development, arts, and City Council approved projects. The 2018 year-end unreserved cash balance is $128,053 from this fund. Mr. Jaunich noted where the proposed 2020 CIP monies are going to. They include $4.50 million for infrastructure (TH 15/Main Street, Linden Avenue SW/Sunset Street SW/Harrington Street SW/Neal Avenue SW/Merrill Street SW/Clinton Avenue SW, LED light retrofits, other miscellaneous streets); $1.16 million for Park & Rec (vehicles, rec Center roof, zamboni); $2.75 million for Enterprise Funds (Creekside facility/equipment, water/sewer/wastewater/storm water improvements and equipment); $743,900 for Public Works (airport runway, cemetery, street vehicles/equipment); $9.20 million for Public Safety (new police station, police vehicles, radio replacements); $50,000 for General Government (general facility upgrades). Mr. Jaunich then reviewed where the proposed 2020 CIP monies are coming from. They include $9.74 million from New Debt (amount of money that we are planning to borrow to pay for capital projects next year); $398,620 from Aid/Grants; $3.30 million from Enterprise Funds; $4.35 million from Taxes (money from our tax levy that is helping to pay for capital projects next year); and $611,759 from Special Assessments (direct costs that will be assigned to property owners adjacent to projects). Mr. Jaunich reviewed the five components of the Plan which include the fleet committee, facilities committee, Creekside, Resource Allocation Committee and General. Mr. Jaunich provided an overview and brief history of the fleet committee. Since that committee was formed nine years ago, more than 30 pieces of equipment were eliminated in the process. Mr. Jaunich spoke about light duty fleet and heavy duty fleet. There are currently 100 pieces of light duty equipment which are made up of cars, pickups, skid loaders, etc. Currently $275,000 of CIP funds are allocated annually for light duty fleet, funded by the general fund. The unreserved cash balance at the end of 2018 acquisitions is $617,000. Seven vehicles have been approved for replacement in 2019. The City currently has 22 pieces of heavy duty equipment which are made up of fire apparatuses, snow equipment, frontend loaders, etc. The light duty and heavy duty fleet program is currently not sustainable with the plan and has an annual shortage of roughly $327,000. Discussion was held regarding the proposed 2020 tax levy being allocated to the general fund and not the CIP. Mr. Jaunich provided information on additional fleet analysis completed which included looking at bonding/borrowing for future heavy duty fleet, completing an audit report, looking at policy changes, and less focus on expected life and more focus on Vehicle Condition Index. Mr. Jaunich then provided an update on the facility committee noting that the Facility Planning Concept/Funding Model has been working well and the Facility Manager concept has been working well. Mr. Jaunich noted that construction costs are increasing In 2016 and 2017 the aquatic center took up most of the City's resources and pushed others back on the priority list. In 2018 a schematic design of the new policy facility was completed. There is also a Small Project Building Repair Fund whereby staff has set aside up to $50,000 per year to address smaller facility items such as lighting upgrades, small roof projects, tuck pointing/joint repair, etc. 2019 projects include roof replacement at recreation center, City Center ADA sidewalk improvements and access controls, library roof restoration and restroom remodel, tennis court improvements, LED retrofits at various buildings and other miscellaneous small building repair projects. Council Member Cook expressed some concerns with a roof replacement at the recreation center this year and wait and see until long-term plans are finalized for the facility. He asked if perhaps there was a five-year plan that could be applied to it instead of a full replacement. Dolf Moon, PRCE Director, responded on the dire need of condition of the roof and the need for replacement at this time. Mr. Jaunich then reviewed a draft project list for 2020- 2024. Mr. Jaunich also reviewed the 5 Year CIP for both the compost and refuse funds which is just over $4.3 million. No major changes are planned in the compost fund from last year's 5-Year CIP. Three walking floor trailers are planned along with a screener replacement in 2020 and a wheel loader in 2023. The Refuse Fund saw a significant increase from the previous year's 5- Year CIP with it being about 51.4 million higher than the previous plan. The previous plan had the replacement of composting vessels at $200,000 per year and staff now believes those costs to be closer to $400,000 per year. The new plan also includes facility upgrades that previously weren't included. The Refuse Fund's CIP is planning for operations to remain status quo with upgrading the very antiquated software for composting vessel controls which is backlogged from 2016, improve the tipping building's HVAC system and other general upgrades and replace composting vessels starting in 2020 (five per year, 20 total). Past discussions have touched on potential changes with regard to the source -separated organic material curbside collection program, processing operations and product end use and this will continue to be addressed. An office addition/expansion and other improvements have now been included with the plan. Another item to consider is that the garbage contract is up in October 2020. Public Works projects included in the 2020 plan are: Hwy 15/Main Street dominating most of 2020; Pavement Management Program which includes Clinton Avenue SW (Harrington to Merrill), Merrill Street SW/Sunset Street/Harrington Street SW (South Grade Road to Linden), Neal Avenue (Keith to Sunset), Linden Avenue (Dale to Harrington); Pavement Sealing/Seal Coating; Wastewater Treatment Facility & Collection System; Water Treatment Facility & Collection System; Storm Water System Repairs; Lakes/River Basin Improvements; Street Lighting LED Retrofit; Airport Runway Seal Coat; and Vehicle/Equipment Replacements. Mr. Jaunich then reviewed the street improvement projects scheduled 2021-2024. Mr. Jaunich also reviewed project funding limitations/concerns which include a 51.9 million bonding target limitations, dedicated street sealcoating funding at $125,000/year, infrastructure maintenance needs at $250,000/year, construction cost increases, utility funds capacity, municipal state aid & federal aid utilization and environmental and infrastructure grant possibilities. Mr. Jaunich also noted that long-term funding needs have to be identified for heavy and light fleet as well as playground system replacement. A funding plan for a new police station needs to be finalized (currently the five-year plan assumes a cost of $10 million with $3 million currently set aside to help with upfront costs and borrowing $7 million). Funding of infrastructure improvements need to be reviewed. The Compost fund needs to be reviewed as the facility is getting older and improvements are needed with more coming. An analysis on cash use versus financing will continue to be looked at. Proper planning/forecasting on storm water, wastewater and water projects will be needed when evaluating the use of cash reserves to meet project needs. Funding of water/wastewater/storm sewer needs to be addressed and the impact on the rate study. Mr. Jaunich explained that the LGA allocation is 46% to the general fund and 54% to the CIP. Council Member Cook asked about the Montana Street/Hwy 7 crossing that was not included in the plan. Kent Exner clarified that the project is actually in this year's plan but will be bid out in 2020, therefore the plan needs to be updated with that information. Council Member Cook also asked about City Center security upgrades. Mr. Jaunich explained that that project was pushed back in correlation to the new police facility. Council Member Cook also asked about campground upgrades. With the investment in the sewer system, he felt that further improvements should be included in the plan. Council Member Cook also asked about skin coating and if that process could be applicable to parking lots. Kent Exner spoke about the proper conditions this could be applied to. Council Member Czmowski noted that he would like the Council to consider adding a splash pad into the plan. Morgan Baum, 950 2nd Avenue SW, asked if the public safety center number is a real number or if that is over budget? Mr. Jaunich explained that the $10 million was a real number provided to staff in 2018. However, as a final design is completed, obviously a final number will be determined. He noted it could be higher and it could be lower. Ms. Baum also asked if there is a timeline on the community survey results. Mr. Jaunich noted that results should be completed in mid -September with a final report being made to the Council in mid -October. 3. Adjournment Motion by Cook, second by Czmowski, to adjourn the workshop at 5:20 p.m. Motion carried unanimously. ATTEST: Gary T. Forcier Mayor Matthew Jaunich City Administrator