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HomeMy WebLinkAboutTab 1: IntroductionVILLAGE OF MOUNT PROSPECT, ILLINOIS 2014 - 2018 CAPITAL IMPROVEMENT PLAN VILLAGE OFFICIALS MAYOR Arlene A. Juracek TRUSTEES Paul Wm. Hoefert A. John Korn John J. Matuszak Steven S. Polit Richard F. Rogers Michael A. Zadel i ADMINISTRATION Michael E. Janonis Village Manager David O. Erb Finance Director /Treasurer William J. Cooney, Jr. Community Development Director Nancy M. Morgan Human Services Director Michael J. Semkiu Chief of Police John J. Malcolm Fire Chief Sean Dorsey Public Works Director M. Lisa Angell Village Clerk i MAYOR Arlene A. Juracek TRUSTEES Paul Wm. Hoefert A. John Korn John J. Matuszak Steven S. Polit Richard F. Rogers Michael A. Zadel 1 li Village of Mount Prospect 50 South Emerson Street, Mount Prospect, Illinois 60056 July 3, 2013 The Honorable Arlene A. Juracek, Village President, Board of Trustees, Finance Commission Members, and Residents of the Village of Mount Prospect VILLAGE MANAGER Michael E. Janonis VILLAGE CLERK M. Lisa Angell Phone: 847/392 -6000 Fax: 847/392 -6022 TDD: 847/392 -6064 www mountprospect.org I am very pleased to forward to you a copy of the proposed 2014 -2018 Capital Improvements Plan (CIP) of the Village of Mount Prospect. The Village has included as part of the annual budget process the preparation of a 5 -year capital plan each year since 1998. The CIP gives us a clear, comprehensive view of our long -term capital needs and a firm basis from which to begin the preparation of the next year's operating budget. The total cost for all proposed projects in the 2014 -2018 CIP is $56,860,811. The Concept of a CIP The CIP is our plan for capital expenditures /projects over the upcoming five years. We have defined capital expenditures /projects, in general, as the purchase or construction of long - lived, high -cost, tangible assets. For our purposes, "long - lived" implies a useful life in excess of one year. "High- cost" means that the project amounts to at least $25,000. "Tangible" assets exclude contractual services except those that are necessary for putting a tangible asset into service. The guidelines for capital expenditures /projects have been relaxed in certain instances so as to include certain items in the CIP that otherwise would not meet our basic definition of a capital item. For the first instance, departments were asked to state any need for an addition to the Village's vehicle fleet as a CIP project request even if the cost of the vehicle concerned would be less than $25,000. We have used this convention because the purchase of a vehicle represents a substantial commitment on the part of the Village. Once a vehicle is recognized as an operational need, lease payments to the Vehicle Replacement Fund (internal service fund charges) become necessary in the budget programs of the operating departments so as to provide for the replacement of the vehicle. In other words, we start programming the financial means to replace a vehicle in the year following its purchase. Given the continuing financial implications of adding a vehicle to the Village fleet, proposals for additions to the fleet should be closely scrutinized. The second instance of relaxation of the capital project guidelines relates to certain high -cost projects that do not necessarily give rise to a tangible asset but are related to maintaining capital assets. This has been done simply to document the other large capital - related expenses that confront us. The best example of such a project included in this CIP is Sewer Main Rehabilitation (page F -27). In addition, Information Technology (IT) related projects are now part of the CIP. Many of these projects have costs that fall below the $25,000 threshold, but are being included to coordinate IT purchases among the different departments. This will also ensure that additions to the computer system are picked up in computer replacement program, similar to the way replacement vehicle purchases are made using the vehicle replacement fund. ii A project's inclusion in the CIP does not, in and of itself, commit the Village to funding and accomplishing it. As stated above, the CIP identifies our capital needs. Available funds, taxing capacity, and debt capacity may require that some projects ultimately be deferred beyond the years in which they are initially programmed for accomplishment in the CIP. Even so, the CIP will have served its purpose as a planning tool. However, projects programmed for the first year of the CIP (the year 2014 in the case of this 2014 -2018 document) take on special importance because they must be addressed in the next year's Village operating budget. To help understand the impact the proposed expenditure /project would have on the Village's finances, detailed five -year financial forecasts for all major operating and capital funds have been included in this document and can be found in Section H (Five -Year Financial Forecast). The Review Process The process that we have put in place to yield the CIP closely parallels what has been the Village's traditional budget process. For the 2014 -2018 CIP, the operating departments submitted their project requests to the Finance Department. The Finance Department compiled the project requests. A review team consisting of staff from the Village Manager's Office and Finance Department then meet with each of the departments to discuss the requests. The proposed CIP is then distributed to the Village Board and Finance Commission for consideration (without a commitment to funding all included projects). The Project Requests You will note that most of the project requests included in the 2013 -2017 CIP reappear in the 2014 -2018 document. In some cases, a project scheduled for a particular year has been accelerated or deferred based upon the staff's reassessment of Village needs. In other cases, the cost of a project may have changed due to our obtaining more complete information about it. Refinements such as these are an appropriate part of the capital projects planning process. The CIP is a working document. Our intent is to update it annually to reflect the current needs of the Village and the best information available. There are a few aspects of the 2014 -2018 CIP that I would like to highlight. • Street Improvement Program (page F -2). This submittal is part of the continuation of the street revitalization program approved by the Board in early 1997. The amount allocated in 2014 for resurfacing has decreased from the original program spending plan. The street program is funded with a combination of MFT and Street Improvement funds. Revenue shortfalls have forced the MFT and Street Improvement Funds to reduce their contribution from the original plan amount. As a result, total spending in 2014 was reduced from $3.9 million to $2.5 million. The 2014 -2018 CIP is showing a total of $19.6 million being spent on resurfacing over the five -year period. • Combined Sewer Improvements (page F -3). A study of the combined sewer service area revealed significant structural deterioration of main line pipes and manholes. A combined sewer evaluation study was completed in 2004 and the results of this study were used to identify potential problems and prioritize repairs. Category 5 (immediate attention needed) defects were first addressed in 2006 and completed in 2007. Category 4 (severe, although not as immediate) defects were addressed during 2007 - 2010. Category 3 (less immediate) defects are to be corrected during 2009 - 2014. The total amount of the project was initially estimated to be $15,000,000. Pricing during the early, most critical phases has been favorable and the total cost for the program will likely come in below original estimates. Funding for the project comes from an increase in the sewer rate and a $5.00 per month sewer construction fee. • Flood Control Program (page F -4). The CIP worksheet covering flood control reflects projects programmed prior to the completion of the comprehensive flood in early 2012. Under the existing program there are two large -scale flood control improvement project planned over the next five years. The Prospect Meadows storm sewer and ditch improvements project is an ongoing project expected to be completed in 2014. This was a multi -year project that began in 2010. Total cost to complete the work in Prospect Meadows is estimated at $1.0 million. The second project is the McDonald Creek Bank Stabilization at an estimated cost of $1.5 million. Due to limited resources, this large -scale project has been deferred in past capital improvement plans. The existing funding source is a one - quarter percent home rule sales tax. A portion of the tax is used to support debt service issued for flood control related projects. 111 The final report of the 2011 Comprehensive Stormwater Study was presented to the Village Board at the April 10, 2012 Committee of the Whole meeting. The study was a response to the extraordinary rain event that occurred in July 2011. Included with the report were several recommendations for dealing with the recurring flood problems. Solutions presented for consideration include $14.5 million in public sector improvements and $9.5 million in private sector improvements. Project areas include the previously mentioned Hatlen Heights storm sewer, Isabella and Lonquist combined sewer and private property overhead sewers for residences located in the study area. • Ash Tree Removals and Replacement (pages F -11 and F -12). The Emerald Ash Borer is an exotic beetle that was discovered in southeastern Michigan near Detroit in the summer of 2002. The adult beetle nibbles on ash foliage but cause little damage. The larvae (the immature stage) feed on the inner bark of ash trees, disrupting the tree's ability to transport water and nutrients. This destructive pest was first found in Illinois in June 2006, in Kane County. Since then it has been found in several communities throughout the Chicagoland area, including Mount Prospect in 2010. In response to these announcements, the Village of Mount Prospect is attempting to minimize the impact on its tree population by establishing a systematic tree removal and replacement program for its Ash population. This multi -year program will remove and replace all Ash trees on public property. Current pricing for tree removal is $372 and for tree replacement is $258. Total estimated cost for the multi -year program (with inflation) is approximately $1.1 million. • Residential AMR /AMI (page F -24). The expansion of the AMR /AMI system to include all properties would provide greater fiscal control and accountability of our water revenues. The new AMR /AMI system would relieve residents from the need to provide monthly meter readings. The system would also be less labor intensive, able to provide multiple readings per day and allow for timelier final reads with less inconvenience to the customer. Approximately 10,000 residential units would need conversion at $300 each. The infrastructure for this project is planned to begin in 2013 as part of the commercial /multi - family AMR /AMI effort. The balance of the work on the project is expected to be completed in 2014 and 2015. Sources of Funds The 2014 -2018 CIP includes a summary of "Projects by Sources of Funds" (pages A -10 through A -13). This summary provides an overview of the potential demands upon the Village's financial resources. A few comments are warranted with regard to the "Projects by Sources of Funds" summary. To further assist the reader in understanding the affordability of the proposed projects, five -year financial forecasts are included in this document in Section H. The Village has in place a home rule sales tax to support certain capital programs and operations. Three - quarters of the 1% home rule tax is allocated to capital projects. The Street Improvement, Flood Control, and Capital Improvement Funds each receive annually a one - quarter share (approximately $1.2 million). As mentioned previously, projects are placed in the 5- year capital plan based on available revenues. When home rule tax receipts fall short of projections, adjustments are made to existing budgets in these Funds and future projects are deferred until revenue becomes available. • General Fund. The General Fund is the Village's primary operating fund. The only capital projects charged to the General Fund are those to be undertaken each and every year, although the level of funding from one year to the next may vary. Projects charged directly to the General Fund include IT projects (G -2 — G -12, G -15, G -17 - G -19 and G -21), sidewalk improvements (F -5 and F -6), and tree program (F -11 — F -12 and F -23). Beginning in 2013 a new program to inspect and televise storm sewers began to be compliant with NPDES (National Pollutant Discharge Elimination System) regulations. This ten -year program (F -14) is estimated to cost $1.0 million. The General Fund five -year forecast (H -2) is showing a preliminary deficit of $160,000 for 2014. Steps will be taken during the budget process for 2014 to eliminate the deficit. • Capital Improvement Fund. The Capital Improvement Fund is the Village's fund for "Intermediate sized" capital expenditures that are either nonrecurring or expected to end at a determinable point in the future. It is not a fund through which bond proceeds are expended. Large capital purchases would generally be made through a bond proceeds fund. Prior to 2001, the Village was able to transfer excess General Fund revenues to the Capital Improvement Fund. However, stalled revenues resulted in our having to discontinue the transfer beginning with the 2002 fiscal year. From 2002 through 2007 approximately $3.7 million in projects were deferred due to discontinuing the General Fund transfer. These projects are now being slowly placed back on the schedule for completion now that a dedicated funding source has been identified. 1V In 2007, the Village Board approved a permanent funding source for these mid -sized capital projects. An additional one - quarter percent home rule sales tax was implemented beginning January 2008 that will generate approximately $1.2 million annually. It is intended to allocate a portion of the revenue towards building up the fund balance for both the Capital Improvement Fund and the Village's two Parking Funds. Approximately $893,000 is available for capital projects. Fund balance at the end of 2013 in the Capital Improvement Fund is estimated to be $1.1 million. Several large projects will draw down on this fund balance beginning in 2015. Fund balance policy states the fund balance shall be maintained at 50% of the five -year average for capital expenditures supported by this fund to a maximum of $1 million. Further prioritizing of projects is needed for projects beyond 2014 to ensure the goal of fund balance stabilization is met. • Motor Fuel Tax Fund and Street Improvement Construction Fund. The street maintenance and resurfacing programs are supported primarily from these two funds. Revenue to support the programs comes primarily from the state and local motor fuel tax and one - quarter percent home rule sales tax. As mentioned earlier in this transmittal, both of these revenue sources have declined (home rule sales tax) or remain flat (state motor fuel tax) resulting in fewer funds available for the program. Adjustments to the amount of work planned in 2009 - 2013 were made due to declining revenues. Until additional revenue sources are identified, the program will be adjusted each year based on available funding. The street program will focus on streets deemed most in need of resurfacing to prevent deterioration to a point where a complete replacement is needed. • Water and Sewer Fund. There are numerous projects listed in the CIP as being funded out of the Water and Sewer Fund since they directly relate to our providing water and sanitary sewer service to customers. The 2014 -2018 CIP is showing projects valued at an average of $2.8 million per year over the next five years. The Water and Sewer Fund had a cash and investment balance of $1.9 million at the end of 2013. Our five -year financial forecast for this fund is shown on pages H -13 thru H -16. The current rate structure is sufficient to support ongoing operations while capital projects proposed in the five -year plan will need further prioritizing to maintain proper fund balance. A great deal of staff time and effort has been invested in the development of the 2014 -2018 CIP. Certainly, the investment has been a prudent one. The CIP gives us a clear picture of the Village's capital needs for the next several years. Meetings with the Village Board and Finance Commission to discuss the Proposed CIP will provide further direction leading into the budget process for 2014. Respectfully submitted, David Strahl Assistant Village Manager 0 2014 — 2018 CAPITAL IMPROVEMENTS PLAN Structure of the Document and the Project Request Form Conceptually, there are two ways of organizing the various project requests: by requesting department or by project type. Organization by department is most useful to the Village for management purposes. Therefore, after the summaries section of the CIP, project requests are organized by department and set off in separate sections. The Summaries section begins with a recapitulation of project requests by department on page A -1. Immediately following this recapitulation, beginning on page A -2, are several summaries by project type group. These summaries provide the alternate view of the project requests. The project type groups are: Water and Sanitary Sewer, Flood Control, Street Construction /Reconstruction and Resurfacing, Public Buildings, Computer Hardware and Software, Equipment, and Miscellaneous. In the final pages of the summaries section, pages A -10 through A -12, the project requests are listed by their sources of funds. Each departmental section begins with a summary of the project requests. Most of the blocks on the project request form are self - explanatory. However, some elaboration about certain blocks may be helpful. • Project Name. In this block, each project is given a short title followed by an "(E)" if it is the continuation of an established project or an "(N)" if it is a new project. Until funds are provided for a project for at least one year in the Village operating budget, the project is considered to be new. • Project Type Code. As stated above, each project or portion of a project has been assigned to a project type group. Each group has a specific project type code. These codes are detailed on the next. Projects or portions thereof with the same project type code are presented in separate summaries on pages A -3 through A -9. • Description. This block provides a more detailed description of the project than is possible in the "Project Name" block. • 2014 Dept. Priority. Because projects for which amounts have been requested for 2014 must be considered for funding during the formulation of the 2014 Village Budget, they take on special importance. To facilitate the evaluation of these projects, the departments have prioritized them with "1" being the highest priority, "2" the next highest, and so on. The priorities have been assigned without regard to source of funds. This has been done to provide an overall picture of the relative importance of each project from the department's perspective. • Annual Dollar Impact Upon the Operating Budget. Operating expenditures may come with the purchase or construction of a capital asset. For example, annual maintenance agreements are necessary with many items of equipment. In some circumstances, the purchase of a capital asset may enable the Village to reduce operating expenditures. Information provided in this block addresses those effects. • Source of Funds. A potential source of funds has been indicated for most projects. For some projects, multiple potential sources are shown. vi 2014— 2018 CAPITAL IMPROVEMENT PLAN Program Type Codes 1. Water and Sanitary Sewer: 700 — Water System 701 — Sanitary System 2. Flood Control and Related Projects: 702 — Flood Control Projects 703 — Storm Sewer 3. Street and Related Projects: 704 — Street Construction and Reconstruction 705 — Resurfacing /Curbs & Gutters /Sidewalks 4. Public Buildings: 706 — Construction of and Improvements to Public Buildings 5. Equipment: 707 — Computer Hardware /Software 708 — Vehicles and Automotive Equipment 709 — Non - Automotive Equipment (excluding computer hardware /software) 6. Miscellaneous: 710 — Miscellaneous vii 2014 — 2018 CAPITAL IMPROVEMENTS PLAN Equipment Replacement Guidelines PickupsNans Patrol Cars CSO Cars Other Cars Aerials Trailers Medium Trucks Heavy Trucks Sweepers Large Dumps Backhoes & Loaders Ambulances Fire Equipment Leaf Machines Other Equipment (depending upon usage) Computer Hardware /Software 10 years or 50,000 miles 3 years or 70,000 miles 5 years or 70,000 miles 8 years or 85,000 miles 15 years or 50,000 miles 15 -20 years 12 years or 50,000 miles 15 years or 50,000 miles 10 years or 50,000 miles 15 years or 50,000 miles 15 years 6 -8 years or 60- 75,000 miles 10 -15 years 15 years 6 -20 years 3 -5 years The equipment guidelines listed above simply provide general direction for when a piece of equipment should be considered for replacement. These time estimates are not hard and fast. If replacement is not warranted due to condition or low level of use, purchase of new will be deferred until the following year at which time the equipment will be reevaluated. viii 2014 — 2018 CAPITAL IMPROVEMENTS PLAN (CIP) Planning Calendar CIP worksheets and instructions forwarded to department directors Completed Computer CIP worksheets returned to Finance Department Remaining CIP worksheets returned to the Finance Department Departmental meetings with Village Manager and Finance Director Complete Proposed CIP Amounts Proposed CIP distributed to Village Board and Finance Commission Proposed CIP reviewed by the Board and Finance Commission at Joint CIP Workshop Acceptance of Proposed CIP by the Village Board CIP distributed 03/07/13 03/15/13 03/29/13 05/13/13 - 05/17/13 06/28/13 07/03/13 07/09/13 07/16/13 08/16/13 1x