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HomeMy WebLinkAboutTab 6: Other Issues Impacting the VillageVillage of Mount Prospect Mount Prospect, Illinois INTEROFFICE MEMORANDUM TO: MICHAEL E. JANONIS, VILLAGE MANAGER FROM: FINANCE DIRECTOR DATE: APRIL 19, 2013 SUBJECT: SIGNIFICANT ISSUES UPDATE At the April 2012 Financial Planning workshop there were a number of issues brought forward for discussion that were expected to have a significant impact on the overall financial picture for the Village. Among the issues discussed were the street resurfacing program, flood control program, Emerald Ash Borer (EAB) infestation, Randhurst redevelopment agreement, and a village -wide automated meter reading (AMR) system. Included with this memo is a reprint of the information that was provided for that April workshop. Of the five issues previously mentioned, three are being addressed within existing budget resources (EAB, Randhurst and AMR). The two remaining issues, street resurfacing and flood control, will require a new revenue source to be identified to proceed. In late 2012 and early 2013 the Finance Commission worked to develop funding alternatives for these two capital items. Funding recommendations from the Commission include a general obligation bond issuance and adjustments made to the following revenue sources: • Local motor fuel tax • Direct charge for refuse, in conjunction with a reallocation and lowering of the refuse portion of the property tax levy • Vehicle sticker fee • Sewer construction fee Staff will present on these recommendations at the April 23 financial planning workshop. Members of the Finance Commission will also be on hand to discuss these items further. David O. Erb Finance Director C: \Documents and Settings \djarosz \Local Settings \Temporary Internet Files\Content.outlook \W7C5BMPD \Significant Issues- 2013.docx Village of Mount Prospect Mount Prospect, Illinois INTEROFFICE MEMORANDUM TO: MICHAEL E. JANONIS, VILLAGE MANAGER FROM: FINANCE DIRECTOR DATE: APRIL 19, 2012 SUBJECT: SIGNIFICANT ISSUES - REPRINT Listed below are a number of items that are expected to have a significant impact on the overall financial picture for the Village. While many of these items have their own dedicated revenue source, the revenue is not sufficient to support the programs fully moving forward. Decisions on one particular item will have a direct impact to how others can be addressed. 1) Street Resurfacing Program To prevent streets from deteriorating to the point where a complete reconstruction is required, an annual resurfacing program has been put in place. Resurfacing of village streets included in the program is done according to a 20 -year life cycle. To meet this desired goal, 6.8 miles of streets are to be resurfaced each year. Based on the 2012 cost of $100 per linear foot, the annual funding requirement is $3.6 million. Due to shortfalls in the MFT and Street Construction Funds the amount of streets resurfaced were reduced. In 2010 only 5.0 miles of streets were resurfaced while in 2011 only 4.9 miles were resurfaced. For 2012 only 4.7 miles of streets will be resurfaced. There is currently a backlog of approximately one year's worth of resurfacing at an estimated cost of $4.0 million. Shortfalls in the MFT and Street Funds continue with funding available to support just two- thirds of what is required annually. Currently, funding for the street resurfacing program is derived from the state and local motor fuel taxes and a one - quarter percent home rule sales tax. 2) Flood Control Program Similar to the street resurfacing program, the flood control program was put in place to deal with a backlog of flood projects and to address flood control moving forward. Debt was issued in 1994, 1997 and 1999 to support the initial stages of the flood program. The debt is beginning to be paid off making funds available to support ongoing flood projects. Funding comes from a one - quarter percent home rule sales tax. As a result of the extensive flooding that occurred in the village in July 2011, a comprehensive stormwater study was conducted by Burns & McDonnell. The study presented a series of recommendations to cost - effectively mitigate flooding problems. Recommendations made by Burns & Mc Donnell are for projects outside of existing flood control efforts and includes a strategy that involves both private and public sector improvements. Private sector projects consist of the installation of overhead sewers estimated to cost $9.5 million. Public sector improvements to the village -wide stormwater system are estimated to cost $14.4 million. 3) Emerald Ash Borer Infestation (EAB) The Village began actively preparing for EAB in 2003. Various programs have been put in place to proactively address the pending infestation. It is now apparent that further, more aggressive steps are needed to address the expected loss of ash trees throughout the village. Costs Significant Issues April 19, 2012 Page 2 associated with the removal and replacement of the 4,400 ash trees is expected to cost between $2 million and $3 million. This figure does not include the cost of providing insecticidal treatment for healthy trees. A funding source for addressing EAB has not been identified. 4) Randhurst Redevelopment Agreement In 2009, the Village entered into a redevelopment agreement (RDA) with the owners of Randhurst Mall. The agreement requires the Village to contribute $25 million, in the form of an interest bearing Note, to cover certain costs associated with the redevelopment. Support for the $25 million commitment is to come from various revenue sources generated on the redevelopment site. These revenues include sales and amusement taxes, food & beverage taxes, a hotel /motel tax and a business district tax. Semi - annual payments from these revenues are to begin upon issuance of Certificate of Completion #2. When steady revenue streams have been established the Village will be asked to retire the Note through the issuance of Business District Bonds and /or Revenue Bonds. Although the revenue sources needed to support the Randhurst RDA have been identified, the issuance of Revenue bonds could potentially impact bank - qualified limits on debt issued for street and flood projects. 5) Automatic Meter Reading System An automatic meter reading system (AMR) is planned for both commercial and residential water customers. An AMR system improves the efficiency of the water system by providing real time reads and eliminates the need to visit the physical meter location for routine functions such as final reads. The Village is in the process of selecting a vendor for the installation of automatic meter reading equipment on all commercial accounts. Approximately 1,200 meters will be receiving this new equipment in this first phase at a cost of $565,000. Funds to pay for this first phase are included in the 2012 Water Fund budget. The second phase of AMR involves approximately 12,000 residential customers. The AMR changeover is planned to occur over a four -year period beginning in 2012. The 2012 Water Fund budget included $400,000 towards the initial stage of the project. There is $1 million in each of the following 3 years to complete the residential AMR project. Although the funding source is through the Water Fund, shortfalls in the budget may necessitate this project being deferred. The challenges presented in addressing these above listed items are in addition to those we continue to experience in managing the day -to -day operations of the Village. There still exists in the General Fund a structural imbalance in the growth of revenues versus expenditures and rate increases imposed by the City of Chicago on the cost of water has reduced the amount of funds available for maintaining the Village's water and sewer system. My presentation at the workshop will facilitate discussion on this item. Let me know if you would like to discuss this further. David O. Erb Finance Director C: \Documents and Settings \djarosz \Local Settings \Temporary Internet Files\ Content .Outlook \W7C5BMPD\Significant Issues Memo.docx