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Home My WebLink About8B Cap Imp Program STAFF AGENDA REPORT DATE: 8B RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF 1997-2001 CAPITAL IMPROVEMENT PROGRAM (CIP) JUNE 3,1996 AGENDA #: PREPARED BY: SUBJECT: INTRODUCTION: Annually the City prepares a capital improvement program which is designed to identify infrastructure improvements and funding sources therefore which are necessary as a result of primarily two factors; community growth and infrastructure replacement. Such projects include City initiated improvements, county and state road improvements and improvements requested by developers. In some cases they involve financial responsibility on behalf of Prior Lake, while in others they may not. In addition, capital equipment purchases are included within the CIP. Within the CIP are condensed project summary sheets (see salmon color inserts entitled "Reference Summary") that present a list of projects by year along with a financing source recap and the City's specific share of the project cost and the estimated tax impact of each year's projects. This capsule summary should be helpful for the Council to refer back and forth between years as a quick reference guide. DISCUSSION: It is important for the Council to recognize that the document is a flexible planning tool that is affected by the actions of a number of governmental agencies (State, County and Shakopee Mdewakanton Dakota Community). The Council should critically review those projects proposed for 1997. Those improvements selected for bonding will affect the property taxes payable in 1998. Council should remember that the school district and county will also influence the level of taxes through their annual levies and periodic referendums and bond issues. Those programs which are not deemed to be of high priority should be eliminated now so they do not generate public expectation and also to avoid unnecessary City effort and expense. Following Council approval of the Capital Improvement Program, Engineering will prepare a feasibility report. Adequate lead time is 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER extremely important for surveying, right of way acquisition and engineering to obtain the best possible bids, which is generally early in the year. Subsequent years in the CIP are more important from a planning perspective. Our objective in preparing the CIP ~as been to balance the tax impacts from year to year while addressing infrastructure needs. ISSUES: In reviewing the draft 1997-2001 Capital Improvement Program, the Council should discuss the following issues: A. ANNUAL TAX IMPACT The major projects proposed for 1997 and their individual associated tax impact are as follows: Project Description Project Levy City Tax Impact $ % Street Sealcoating $65,000 $1.65 0.27% Lakefront Park $75,000 $1.90 0.32% Mushtown Road $220,000 $5.58 0.93% CSAH 42 $375.000 ~ 1.59% TOTALS $735,000 $18.65 3.110/0 The remaining four years propose a similar tax impact. The question is whether this impact is acceptable. B. COMMUNITY PARK FUNDING The City Council has previously discussed the fact that there is no funding source for the improvement of community parks. This Capital Improvement program proposes a community park allocation of $75,000 in 1997 and 1998 and $100,000 in 1999 and. 2000 and $125,000 in the year 2001. In the absence of some other funding source, there would be no other funding allocated for community park improvements. C. LIBRARY IMPROVEMENTS There are also three scenarios involving library improvements that are nm included in the 1997 CIP document. They involve remodeling, building expansion and new construction. The current 3,500 square foot, two level building that is being used as the library facility was originally built in 1961 as a bank building and was purchased by the City from Prior Lake State Bank for $150,000 on November 15, 1983. Since the building is 35 years old and because of the roof damage A960J.DOC 2 -.. . .~ sustained by City Hall as a result of the ice storm earlier in the year, the plan was to consolidate the roof replacements on both buildings this year. The funding for roof replacement has been approved by the City Council from the Contingent Reserve account. The three options for Library improvement are: 1. Redecoratinf: - Ceiling tile replacement, wall papering and new carpeting have been requested by Library staff. These redecorating costs have been estimated to approach $40,000. This does not address the restroom ADA issues (estimated at $40,000). 2. Addition - County projections are that the library in Prior Lake should comprise a minimum of 10,000 square feet based upon our current population. This would involve adding 6,000 square feet at a cost of $760,000 which would address handicap accessibility requirements as well. 3. New Building - A new library facility would provide 15,000 square feet of usable library space and possibly incorporate a dance studio of 5,000 square feet. Rough cost estimates would probably be in the neighborhood of $2.5 million. There is no immediate or long term funding available m the magnitude required for either the addition or new building. Given the financial constraints, the only options available to the City are either do nothing, redecorate, add the ADA restroom, or a combination of the latter two. The staff would recommend that the redecorating option be included in the 1998 Capital Improvement Program. We estimate that a handicapped accessible bathroom would be an additional $40,000. In the event of a complaint, this. improvement could be paid for using the 1998 allocation, (if the Council elects to add a $40,000 allocation to the CIP and designate a funding source). Also a subsequent allocation would have to be made to complete the redecorating. D. DEVELOPER REQUESTED PROJECTS Sienna Corporation has requested the acceleration of the Fish Point Road project in Cardinal Ridge from 1998 to 1997. This project is funded primarily through MSA funding. The City has used its MSA allocation and this request places additional burden on that fund. On the positive side, the developer has agreed to grade for this improvement (value estimated at $100,000) if the City will accelerate the project. The draft CIP shows this project in 1997. A9603.DOC 3 .....~.___...-_~,._~,_...,.v".~ -"'''', ". ....... ALTERNATIVES: A9603.DOC E. FIVE HA WKS/CSAH 23fT.H. 13 REALIGNMENT The 1998 CIP shows this improvement. In 1994 the City originally proposed a signal at Five Hawks and T.H. 13. The state refused because it did not meet warrants and continued a poor intersection configuration. We discussed this with the state, county and school district. The state has about $200,000 available for this safety improvement. Assuming a school district contribution and property assessments, we have estimated a net City cost of $340,000. MSA is the funding source. Listed below is a year by year tax recap if all the projects that include a tax levy were implemented. The Scott County Assessor has estimated the average mean Prior Lake market value home to be approximately $120,000. This typical value has been utilized for purposes of calculating the following tax impact. (A 1996 base tax of $600.43 [City portion) was utilized to compute the beginning percentage increases. Budgetary increases are excluded for purposes of comparing the effect of capital dollars only within the context of the CIP. Also this model assumes an annual 2% tax capacity valuation growth.) Project Year and Levy Amount Tax Impact $ % $18.65 3.11% 21.84 3.53% 22.18 3.46% 23.18 3.520/0 4.37 0.64% 1997 1998 1999 2000 2001 $735,000 $875,000 $905,000 $965,000 $190,000 The annual tax impact is very balanced over the course of the CIP, with the exception of the final year. The appropriate department heads will present project summations of those improvements which would come under their departmental responsibility. The Council should carefully examine the proposed projects for each year, focusing particularly upon those scheduled for 1997. The following alternatives are available for Council consideration: 1. Provide direction to the staff to modify the proposed program to mitigate annual tax increases while insuring appropriate maintenance of public infrastructure. 4 2. Amend the 1997-2001 Capital Improvement Program as per Council determination. 3. Approve the proposed 1997-2001 Capital Improvement Program as submitted. RECOMMENDATION: Staff would recommend any of the three alternatives. While it is important that the Capital Improvement Program be adopted expeditiously, it is equally important that the Council be comfortable and supportive of the proposed projects and their tax consequences. Once the CIP is approved the Engineering department will begin the feasibility study as soon as possible for those projects scheduled for 1997. ACTION REQUIRED: As determined by the City Council. 1t Reviewed by: A9603.DOC 5 .... I