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Home My WebLink About3. 2012-2016 CIP - Memo 07/12/2011 Village of Mount Prospect Mount Prospect, Illinois INTEROFFICE MEMORANDUM TO:VILLAGE BOARD AND FINANCE COMMISSION FROM:FINANCEDIRECTOR DATE: JUNE 15, 2011 PROPOSED CIP: 2012-2016 SUBJECT: Attached hereto is the proposed 2012-2016Capital Improvements Plan (CIP). The projects being considered for the year 2012total $11,765,268. The five-year total for all projects is $64,630,228. We encourage you to read the Manager’s transmittal letter beginning on page ii. This correspondence describes the purpose of the CIP, highlights some of the more significant projects, and reviews project funding. To help you evaluate our ability to fund the requested projects a five-year financial forecast isprovided for the major operating and capital project funds that supportfunding for the CIP. These forecasts can be found in Section H of the document. In general, the projects being presented directly relate to the monies expected to be available. However, from reviewing the CIP requests in conjunction with the five-year financial forecasts I would like to direct your attention to several project areas. General Fund The CIP is showing the five-year average of projects being paid from General Fund revenues as $390,000(A-10). This istypical of the amount of capital projects funded by the General Fund on an annual basis. I would like to point out the five-year financial forecast for the General Fund. This forecast is showing anoperating deficit in 2012of $1.0millionwith annual deficits increasing eachsubsequentyear through 20165($3.4million). Based on this information it is likely that many non-critical projects will be deferred. See the complete five-year forecast for the General Fund beginning on page H-1. Motor Fuel TaxFund (MFT) Receipts from motor fuel taxes beginning in2012are expected to grow by just 1% through 2016. Due to this low level of growth in revenue,the street resurfacing program for 2012 wasscaled back.Spending on street resurfacing for 2012 is $790,000, down from the $1.3 million originally proposed. The programsfor 2009, 2010 and 2011 werealso been scaled back to the level of available funds. The street improvement budget for 2013-2016still reflect full program costs. These project years will also need to be scaled back if revenues cannot support the higher levels. Proposed CIP June 152011 Page 2of 3 Capital Improvement Fund The Capital Improvement Fund is meant to support intermediate sized capital expenditures for various departments that are non-recurring in nature. Some examples of these projects are Detention Pond Improvements, Emergency Generatorsand public building improvements.Supported by a one-quarter cent home rule sales tax, there is approximately $1.0million annually available forthese types of capital projects. Projects included in the five-year plan after 2013will need to be further prioritized with some deferrals to bring the total annual amount down to what can be supported with current revenue streams. Street Improvement Construction Fund Projects The forecast for the Street Improvement Fund (H-11) is showing a positive fund balance of $133,794at the end of 2011, but the fund balance will become a significant deficit by the end of 2013due to stagnant revenues. Revenue to support the program comesfrom the state and local motor fuel tax and one-quarter centhome rule sales tax. Each of these revenue sources isexpected to either show minimal or no growth over the next several yearsresulting in fewer funds available to fund the street program. Adjustments to the amount of work planned each year will be necessary if these revenue sources do not rebound during 2012.The street resurfacing program supported by this fund was reduced from $2.4 million to $1.1 million in order to maintain an adequate level of fund balance. Flood Control Construction Fund Projects Major projects in this fund resumedin 2011when funding from the home rule sales tax became available.Previously, the tax was allocated to support debt service from earlier flood control projects. Beginning in 2011, approximately one-half of the tax is freed up to fund various projects. Prospect Meadows storm sewer and ditch improvements ($1,000,000) isscheduled for 2011-2013. In addition, the Hatlen Heights storm sewer project is slotted to begin in 2015 and is expected to cost $1.9 million. It is anticipated that there will be sufficient funds on hand by that time to begin the project. Funding levels anticipated in 2016 do not support the McDonald Creek project and may have to be deferred. See the complete five-year forecast for the Flood Control Construction Fund beginning on page H-12. Water and Sewer Fund There are several large capital projectsincluded in the CIP for 2012-2016.The first is the ongoing Combined Sewer Improvement project started in 2006. The total cost for the project was originally estimated at $15 million and expected to take 10 years to complete. Funding for this project comes from a $5 per month sewer construction fee and basic sewer usage fee. Based on early results, overall pricingis coming in lowerthanoriginally estimated and completion will likely occur before the planned 10 years. Other major projects include ongoing sewer and water main replacements/rehab averaging $776,000 per year and water tank rehabstotaling $1.4 million.The cash and investment balance is projected to decrease starting in 2013so projects will have to be prioritized and deferred to a level where they can be supported by ongoing revenues.New projects introduced that carry a steep price tag such as the Residential AMR System totaling $3.8 million is likely one that will need to get pushed back. C:\Documents and Settings\djarosz\Local Settings\Temporary Internet Files\Content.Outlook\W7C5BMPD\2012-2016 CIP - Board Memo June 2011.docx Proposed CIP June 152011 Page 3of 3 Funding to be Determined The CIP is showingthreeprojects where funding has yet to be determined. These projects includethe Ash Removaland Ash Replacement programsexpected to cost $1.8million over a ten-year periodandPortable/Mobile Radio purchases for Police and Fire costing $1.1 million.Work began in 2009 on a program to treat Ash trees in an effort to prevent infestation of 800 existing White, Blue and Manchurian Ash trees. These trees are not part of the program and will not require removal and/or replacement.The radio purchase for Police and Fire are due to changes to the communications system at Northwest Central Dispatch that will require an upgrade of the radios currently being used by the public safety personnel. Meetings to review the CIP are scheduled for June 23(Finance Commission) and July 12 (Village Board). Staff looks forward to discussing the project submittals and their impact to operations. David O. Erb Finance Director Copy:Michael E. Janonis, Village Manager Dave Strahl, Assistant Village Manager Lynn Jarog, Deputy Finance Director Department Directors C:\Documents and Settings\djarosz\Local Settings\Temporary Internet Files\Content.Outlook\W7C5BMPD\2012-2016 CIP - Board Memo June 2011.docx