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Home My WebLink AboutCapital Improvement Plan 2013-2018 CAPITAL IMPROVEMENTS PLAN 2013 - 2018 Approved August 6, 2012 Resolution No. 3416 CITY OF PASCO 2013 -2018 CAPITAL IMPROVEMENTS PLAN TABLE OF CONTENTS ExecutiveSummary -------------------------------------------------------------------------------------------------------------------------• 1 I. Introduction Definition and Purpose of Capital Improvements Plans ------------------------------------------------------------- 2 CIP Project Considerations ------------------------------------------ - ----------. 3 -------- --------- --------- --------- --------- Why Plan for Capital Facilities ------------------------------------------------------------------------------------------------------ 4 II. Fiscal Policies I. Financial Feasibility -----------------------------------------------------------------------------------------------------------. 5 2. Financial Responsibility ----------------------------------------------------------------------------------------------------------- 5 3. Financing and Debt ------------------------------------------------------------------------------------------------------------ 6 4. Operating and Maintenance Costs ------------------------------------------------------------------------------------• 7 5. Revenues Requiring Referendum .-------------------------------------------------------------------------------------• 7 6. Uncommitted Revenues 7 III. Capital Improvement Projects Capital Project Detail Discussion------------------------------------------------------------------------------------------------------. 8 CIP Costs Summary 2012—2018 .................................................................................................... 9 CIP Revenue Source Summary --- -------- -------- -------- -------- -------- -------- -------- -------- ----------. 14 Individual Project Sheets ----------------------------------------------------------------------------------------------------------------- 22 "Each of us is carving a stone, erecting a column, or cutting a piece of stained glass in the construction of something much bigger than ourselves." Adrienne Clarkson Pasco,City of Washington —Z� EXECUTIVE SUMMARY The Capital Improvements Plan (CIP) supports the City of Pasco's comprehensive plan. Capital and major improvements usually have very long useful lives, significant costs, and are generally not mobile. The definition of"Capital Improvement Projects" is provided in the Introductory Section of this CIP. CONTENTS The Capital Improvements Plan(CIP) is presented in three sections: I. Introduction: Purpose,benefits, and methodology of the CIP. II. Fiscal Policies: Statements of requirements and guidelines that are used to finance the CIP. III. Capital Improvement Projects: List of proposed capital projects, including description, project costs,revenues and timing; as well as future operating costs. CAPITAL IMPROVEMENT PROJECT COSTS The total cost of Capital Improvement Projects for 2013 -2018 is: Cost Project Type (Amounts in Thousands) General 15,835 Park&Recreational 3,514 Economic Development 720 Street Overlay 6,730 Street Construction 103,789 Water 12,447 Sewer 20,567 Process Water Reuse Facility 1,350 Stormwater 748 Irrigation 1,570 Grants, Studies, and Other Operating Projects 1,348 Total 168,618 Capital Improvement Plan 2013-2018 City of Pasco. Washington 1. INTRODUCTION DEFINITION AND PURPOSE OF CAPITAL IMPROVEMENTS PLAN The CIP is a six year plan for capital and major improvements that support the City of Pasco's current and future population and economy. The following definitions are presented to distinguish between a capital improvements plan (CIP), Capital Projects Budget, and report of annual spending for capital projects. Types of capital to be included in the CIP are also listed in this section of the CIP. Capital Improvements Plan (CIP) The City's CIP is a long-range schedule of proposed public facilities, infrastructure and major projects which includes estimated costs and sources of funding over a six year period. The CIP is updated annually for the purpose of confirming and/or reorganizing projects on a priority basis, and to prepare the Capital Projects Budget. Capital project work of a like nature that occurs each year may be included as one project in this plan. Capital Projects Budget The City's Capital Projects Budget consists of a list of capital projects, together with amounts and sources of approved projects and creates continuing budget authority for the life of the project without regard to the year the spending occurs. This budget requires council's approval to add a new project or to increase the total approved cost of an existing project. This budget also communicates which projects are finished and closed. Capital project work of a like nature that occurs each year and listed together in the CIP may be included as separate projects in the Capital Projects Budget based on such factors as work location and construction start dates. Capital Project Budgets may include related project work that may not meet the accounting definition of "capital" but are directly related to the project. The Capital Projects Budget is contained as a section in the City's "Annual Operations & Capital Improvement Budget" document. Repair and maintenance work, though it may be significant in dollar amount, is included as part of the annual Operating Budget. The annual "slice"of the Capital Project Budget is also included in the annual Operating Budget. To present an overall view for the year, the annual Operating Budget shows the total budgeted resources and uses for the entire city for the year (including combined annual and continuing authority items). The City's annual Operating Budget is contained as a section in the City's "Annual Operations & Capital Improvement Budget" document. Capital Improvement Projects Capital Improvement Projects are major, non-recurring expenditures for land, facilities, equipment, or infrastructure with a useful life of five (5) years or more, and a minimum cost of $50,000. Capital expenditures that do not meet the criteria stated above and not included in this document are also included in the capital outlay section of the City's annual Operating Budget. Specific types of Capital Improvement Projects may include one or more of the following: a. Land acquisition for a public purpose; Capital Improvement Plan 2013—2018 City of Pasco, Washington 0 b. Construction of new facility, such as a public buildini,. ball field, water treatment plant; or expansion of such a facility; C. Construction relating to the addition or replacement of infrastructure (such as pipes, streets, etc.) d. A non-recurring rehabilitation, or major repair of all or part of a building, its grounds, facility, or major equipment; e. Purchase of major equipment; and f. Planning and feasibility studies. CIP PROJECT CONSIDERATION FACTORS 1. Public Safety. The project must identify a clear and immediate safety risk. Requests from departments, which deal principally with public safety, such as Fire and Police, do not automatically meet this standard. Another department, such as Parks and Recreation, could have a project that addresses a clear and immediate safety issue. 2. Public Health. Benefit to the environment and public health is a primary consideration. This consideration is only used when public health is a critical factor; a matter of necessity, rather than a matter of choice. For example all water or sewer projects concern public health; however, this consideration would be used only when urgent. Continual health hazards, however, would make a water or sewer project virtually mandatory. 3. Legal Requirement. Many federal and state grants are contingent upon local participation, and such intergovernmental agreements require legal compliance. Court orders and judgments (e.g., annexation, property owner rights, environmental protection), also represent legal requirements which may affect a CIP project. Consideration must be given to both existing legal requirements (e.g., federal/state stipulation that earmarked funds must be spent by a certain date), and anticipated legal requirements (e.g., pending annexation which is expected to be approved by the end of the year). 4, Related Projects. CIP projects in one category are essential to the success of projects in other categories. In some instances, a street should not be developed until a storm drain has been completed. Obviously, park development cannot proceed until park land has been acquired, but the development may also depend upon the completion of a street project to provide access to the park. In addition, significant federal or state grants might be involved, and the City would be required to provide its matching share or forfeit the grant. Related projects by other agencies may affect a saving which should be pursued. 4. Consistency with Current Master Plan. A master plan for a specific category of public facilities has long-term objectives set dui-ing the planning process. City departments have an obligation to request CIP projects that support and Capital Improvement Plan 2013—2018 City of Pasco, Washington implement the stated goals and objectives of the master plan. Consideration should not be given here to any project that does nothing to actively implement the plan, or adversely affects the plan. 5. Net Impact on Future Operating Bitdgets. The substantial cost impact of a proposed CIP project on future operating budgets of the City is an important factor in the City's decision to construct the project. In some cases, however, a project may generate enough revenue to offset, or even exceed, future operating costs(e.g.,water or sewer treatment plant, stadium, airport, etc.). 6. Other. There are additional priority factors that departments may include for evaluation. Some of these additional factors for consideration could include public support, level of service, cost savings to the City, and impact on economic development. WHY PLAN FOR CAPITAL PROJECTS? There are at least three reasons to plan for capital projects: (1) good fiscal management, (2) managing growth, and(3) eligibility for grants and loans. 1. Good Fiscal Management Planning for major capital projects and their costs enables City of Pasco to: • Demonstrate the need for facilities and identifying how to pay for them; • Estimate future operations/maintenance costs of new facilities that will impact the annual budget; • Take advantage of various sources of revenue (i.e., available grants and low interest loans, etc.) that may require a CIP in order to qualify for the revenue; and • Receive better ratings on bond issues when the City borrows money for capital (reducing interest rates and the cost of borrowing that money). 2. Managing Growth Capital Improvement Plans are necessary in the comprehensive plan in order to: • Provide capital for land development that is envisioned or authorized by the land use element of the comprehensive plan; • Maintain the quality of life for existing and future development by establishing and maintaining standards for the levels of service of capital and facilities; • Coordinate and provide consistency among the many plans for capital and improvements, including: Capital Improvement Plan 2013—2018 City of Pasco,Washington • Other elements of the comprehensive plan (i.e.,transportation and utilities elements), • Master plans and other studies of the local government, • Plans for capital and facilities of state and/or regional significance, • Plans of other adjacent local governments, and • Plans of special districts. • Ensure the timely provision of adequate facilities to support existing populations and future development; • Document all capital projects and their financing (including projects to be financed by impact fees and/or real estate excise taxes that are authorized by the State of Washington Growth Management Act(GMA)). The CIP is the element that makes the rest of the comprehensive plan "real". In reality, the CIP determines the quality of life in the community. 3. Eligibility for Grants and Loans The State of Washington Department of Community, Trade and Economic Development's Public Works Trust Fund requires that local governments have some type of CIP in order to be eligible for grants and loans. Some other grants and loans have similar requirements (i.e. Interagency for Outdoor Recreation), or give preference to governments that have a CIP. II. FISCAL POLICIES Fiscal Policies Goal Provide needed public facilities that are within the ability of the City to fund the facilities, or within the City's authority to require others to provide the facilities. Policy 1.0: Financial Feasibility. The estimated costs of all needed capital improvements shall not exceed conservative estimates of revenues from sources that are available to the City pursuant to current statutes, and which have not been rejected by referendum, if a referendum is required to enact a source of revenue. Conservative estimates need not be the most pessimistic estimate, but cannot exceed the most likely estimate. Revenues for Capital Improvement Projects must be "financial commitments," which shall be sufficiently assured to be bankable or bondable by the City. Policy 2.0: Financial Responsibility. Existing and future development shall both pay for the costs of needed capital improvements. 2.1 Existing development. 2.1.a: Existing development shall pay for the capital and improvements that reduce or eliminate existing deficiencies, some or all of the replacement of obsolete or worn out facilities, Capital Improvement Plan 2013 -2018 City of Pasco, Washington and may pay a portion of the cost of capital and improvements needed by future development. 2.1.b: Existing development's payments may take the foam of user fees, charges for services, special assessments and taxes. 2.2 Future development 2.2.a: Future development shall pay its fair share of the capital and improvements needed to address the impact of such development. Upon completion of construction, "future" development becomes "existing" development, and shall contribute to paying the costs of the replacement of obsolete or worn out facilities as described in Policy 21a, above. 2.2.b: Future development's payments may take the form of, but are not limited to, voluntary contributions for the benefit of any public facility, impact fees, capacity fees, dedications of land, provision of public facilities, public/private partnerships, voluntary funding agreements, and future payments of user fees, charges for services special assessments and taxes. Future development shall not pay impact fees for the portion of any public facility that reduces or eliminates existing deficiencies. 2.2.c: Both existing and future development may have part of their costs paid by grants, entitlements or public facilities from other levels of government and independent districts. Policy 3.0: Financing and Debt. Capital and improvements shall be financed, and debt shall be managed as follows: 3.1 Capital and improvements financed by City utility funds shall be financed by: 3.1.a: Debt to be repaid by user fees and charges and/or connection or capacity fees for utility facilities and services, or 3.Lb: Current assets (i.e., reserves, equity or surpluses, and current revenue, including grants, loans, donations and inter-local agreements), or 3.Lc: A combination of debt and current assets. 3.2 The net income of City utility funds shall be at least equal to the annual cost of the following: (a) principal reductions of outstanding bonds; (b) loan requirements to Federal or State agencies; (c) annual operating reserve increases; and (d) bond coverage requirements per bond covenants. 3.3 Fees and charges for utility funds shall be established and maintained at a level sufficient: 3.3.a: To pay the net income requirement in each fiscal year, as described in Policy 3.2 above; 3.3.b: To pay the full cost of operation, and maintain the utility in good repair and working order; Capital Improvement Plan 2013-2018 City of Pasco. Washington 3.3.c: To provide an operating reserve equal to 15% of budgeted operating expenditures; and 3.3.d: To provide a future capital and improvements reserve in an amount equal to the average annual cost (excluding debt financing) of the approved six year capital and improvement program, considering any changes which, from time to time, may be made in such program. 3.4 Leveled rate increases are preferred for City utility funds, and when possible, should be achieved through leveled expenditures. 3.5 Capital and improvements financed by nonutility funds shall be financed from either current assets: (i.e., current revenue, fund equity and reserves), or debt, or a combination thereof. Financing decisions shall include consideration for which funding sources (current assets, debt, or both) will be; a) most cost effective, b) consistent with prudent asset and liability management, c) appropriate to the useful life of the project(s) to be financed, and d)the most efficient use of the City's ability to borrow funds. Policy 4.0: Operating and Maintenance Costs. The City shall not provide a public facility, nor shall it accept the provision of a public facility by others, if the City or other provider is unable to pay for the subsequent annual operating and maintenance costs of the facility. Policy 5.0: Revenues Requiring Referendum. In the event that sources of revenue listed under "Projected Costs and Revenues" require voter approval in a local referendum that has not been held, and a referendum is not held, or is held and is not successful, this Capital and improvements Program (CIP) shall be revised at the next annual amendment to adjust for the lack of such revenues, in any of the following ways: 5.1 Increase the use of other sources of revenue; 5.2 Decrease the cost, and therefore the quality, of some types of public facilities, while retaining the quantity of the facilities that is required to provide the appropriate level of service. 5.3 Decrease the demand for and subsequent use of capital and facilities; 5.4 A combination of the above alternatives. Policy 6.0: Uncommitted Revenue. All development permits issued by the City which require capital improvements that will be financed by sources of revenue which have not been approved or implemented (such as future debt requiring referenda) shall be conditioned on the approval or implementation of the indicated revenue sources, or the substitution of a comparable amount of revenue from existing sources. Capital Improvement Plan 2013—2018 City of Pasco,Washington M. CAPITAL IMPROVEMENT PROJECTS Section III of the CIP presents Capital Improvement Projects, and the financing required to pay for those projects. Each project type listed in the executive summary is described in this section of the CIP. CIP Project Detail Sheet Project Description Each proposed capital and improvement project for each of the eight types of public facilities is described on the CIP Project Form. Each improvement project is named, and briefly described. First, the CIP Project Form specifies the Project's name, description, and organization responsibility. Project Justification. Second, the CIP Project Form includes a justification and/or benefits explanation for each project,which summarizes the results of the project ranking process described in the Introduction of this CIP. The information obtained from the project ranking system is used to prioritize and assist in determining which projects would be recommended for inclusion in the 2013 - 2018 CIP. Project Costs. Third, each CIP project's covering the next six fiscal years is shown in thousands of dollars ($1,000). All cost data is in current dollars; no inflation factor has been applied because the costs will be revised as part of the annual review and update of the CIP. Each capital and improvements project was prepared by the department providing the public facility. Project Funding. Fourth, specific sources and amounts of revenue are shown for each of the next six fiscal years, which will be used to pay for the proposed Capital Improvement Project. The forecasts of existing revenue and expenditures are provided to (1) determine the City's overall financial position, and (2) identify existing and proposed new City of Pasco revenue that can be used for future projects. One of the most important requirements of the Capital Improvements Plan is that it must be financially feasible. This means it must include a balanced budget, which clearly identifies sources of public money for all projects. In keeping with these requirements, the City's fiscal policies described in Section II of this CIP require conservative estimates of revenues from sources that are available to the City pursuant to current statutes and which have not been rejected by referendum, if a referendum is required to enact a source of revenue. Operating Budget Impact. 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