TO: Mayor and Members of City Council
THRU: Douglas J. Hewett, ICMA-CM, City Manager
FROM: Jeffrey Yates, Assistant City Manager
Kimberly Leonard, Budget and Evaluation Director
DATE: April 28, 2024
RE:
Title
Presentation of Recommended the FY 2025-26 through FY 2030-31 Capital Improvement Program
end
COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
Goal 5: Financially Sound City Providing Exemplary City Services
Objective 5.1: To ensure strong financial management with fiduciary accountability and plan for the future resource sustainability by aligning resources with City priorities.
Executive Summary:
T
he Capital Improvement Program (CIP) serves as a long-term planning tool designed to shape the future of the community through strategic investments in infrastructure and major assets. Unlike the annual operating budget, which often garners more immediate attention, the CIP plays a critical role in transforming the City's physical landscape over time. While the operating budget focuses on the upcoming fiscal year and addresses short-term, day-to-day expenses such as personnel costs, supplies, minor equipment, and operational needs, the capital program takes a broader view. Spanning fiscal years 2025-26 through 2030-31, the recommended capital program outlines significant projects and investments, including infrastructure improvements, construction of buildings, acquisition of vehicles, implementation of technology systems, and other large-scale initiatives. Together, these two financial plans ensure both the immediate functionality and the long-term growth of the City.
Background:
The Capital Improvement Program (CIP) is closely aligned with the City Council’s recently adopted Strategic Priorities, ensuring that long-term investments directly support the community’s most pressing goals. These priorities include a continued commitment to a comprehensive approach to community safety, advancing revitalization efforts and addressing housing needs, expanding Parks and Recreation opportunities to promote youth engagement and interaction, fostering economic growth throughout the city, and enhancing transportation and connectivity options for residents. By identifying capital needs and planning for their financial feasibility, the CIP systematically supports these initiatives.
The plan is guided by several core principles that ensure its effectiveness and sustainability. First, "Complete What Has Been Started" reflects the importance of prioritizing ongoing projects, given the reality of more needs than available funding. Next, "Ensure Capacity to Deliver" acknowledges that initiating projects without adequate resources or staffing can lead to inefficiencies; thus, the CIP emphasizes achievable goals and realistic timelines. The principle of "Maintain the City’s Assets" highlights the growing importance of maintaining and renewing existing infrastructure as the city expands and ages. Finally, "Ensure Financial Durability and Sustainability" positions the CIP as not just a roadmap for development, but also a comprehensive financial plan. It incorporates a funding strategy based on sound assumptions and economic forecasts, ensuring that the program remains balanced, resilient, and adaptable in the face of changing market conditions and broader economic trends.
Issues/Analysis:
Capacity and Funding Overview
The City’s Capital Improvement Program (CIP) is designed to be financially sustainable, organizationally feasible, and responsive to market conditions. Financial capacity ensures affordability through a blend of debt financing-including General Obligation Bonds, annual appropriation debt, and revenue bonds-and “pay-as-you-go” funding from current revenues, taxes, fees, and other sources. The CIP also relies on state and federal contributions, fund transfers, and reallocated resources from closed projects. It emphasizes not just construction funding but also the long-term ability to operate, maintain, and eventually replace city infrastructure.
Organizational Capacity
Delivering capital projects effectively requires both direct support, such as project management and construction oversight, and indirect functions like procurement and accounting. With major bonds underway-such as $55.8 million in Parks and Recreation and $97 million in Public Safety, Housing, and Infrastructure-the City is enhancing its project management practices. These updates, included in the FY 2025-26 budget, aim to support the growing scale and complexity of the CIP and will be discussed at the May 5 City Council session.
Market Capacity
The ability of the market to meet demand is increasingly strained by limited contractor availability, rising costs, and global supply chain disruptions. Legal restrictions on procurement add complexity. As these challenges evolve, the City must stay flexible, potentially reprioritizing or scaling back projects to stay within budget. While the current CIP doesn’t account for inflation from tariffs, future updates may address these rising costs.
Dedicated and Supplemental Funding
The City funds capital projects with three dedicated property tax rates tied to Parks and Recreation, Public Safety and Housing, and general capital needs. Additional funding comes from vehicle fees, Powell Bill funding for street maintenance, fund balance transfers, project savings, and sales tax reimbursements. New limited obligation bonds and enterprise revenue bonds will support priority projects, particularly in stormwater and infrastructure.
FY 2025-26 Funding Summary
The recommended CIP includes $91.8 million in new funding for FY 2026, contributing to a total six-year CIP of $664.3 million. Fund-level summaries highlight allocations for Parks and Recreation, general government, public safety, transportation, stormwater, airport improvements, and more. Each fund includes new appropriations, reallocated savings from closed projects, and lists of currently unfunded needs. These details provide transparency and ensure funds are aligned with community priorities and available capacity.
Budget Impact:
The Parks and Recreation Bond Fund totals $55.8 million through FY 2026, with $3.7 million in new funding dedicated to the MacArthur Sports Field Complex. Nineteen completed projects have returned $258,457 for reallocation. Separately, the Parks and Recreation Capital Project Fund (non-GO bond) accounts for $37.6 million, including $9.5 million in new funding. It has closed 14 projects, freeing $255,494. Unfunded needs in this category include major initiatives like a $45.5 million Indoor Aquatics Center and an $8.5 million Sherwood Park Recreation Center.
The General Government Capital Project Fund stands at $71.9 million with $7.9 million in new allocations. It has reallocated $899,302 from 27 completed projects. However, it faces significant unfunded requests, including a $125 million Public Services Operations Facility and $4 million for City Hall renovations.
The Economic & Physical Development Capital Fund reaches $20 million, with $408,789 in FY 2026 additions. Seven completed projects reallocated $325,512. The Public Safety Capital Project Fund, which includes the $72 million in general obligation bonds, has closed 16 projects, freeing $304,619. However, it faces substantial unfunded needs, such as $20.95 million for renovating multiple fire stations and $10.9 million for constructing Fire Station #18.
The Transportation Capital Project Fund totals $110.9 million with $13.4 million in new funding. Thirty project closures have reallocated $981,734. It includes unfunded priorities such as building repairs and a downtown parking study. The Stormwater Capital Project Fund is the largest, totaling $151.5 million, with $30.7 million in new funding and $387,884 from seven closed projects. Unfunded stormwater needs include $10.5 million for the Rose Lake Dam analysis and $26 million for future watershed projects.
The Airport Capital Project Fund has reached $103 million and includes $6.8 million in new funding from grants and fees. Twelve closed projects have returned $5.8 million to the fund balance. Meanwhile, the Solid Waste Capital Project Fund includes $537,768 in FY 2026 funding, specifically for women's locker and break room renovations, funded by the Solid Waste Enterprise Fund. The Transit Capital Project Fund will be detailed in the operating budget and supported through annual grants and allocations.
Options:
Receive the Presentation
Recommended Action:
No action recommended. A CIP work session is planned for later in May to discuss the projects and get further direction from the City Council.
Attachments:
Presentation
Document