We are pleased to submit a balanced Capital Improvements Program budget for the five fiscal years 2007 – 2011. Funds for capital improvements in the community are severely limited over the next five years, due to constraints of the City Charter spending cap, use of the annual $1 million annual payment from Collier County for the next four years on the North Collier re-construction project, and the requirement to fund debt service on the bonds issued for the purchase of Veterans Community Park within the Spending Cap. Over the next five years
only $21.8 million will be available for infrastructure repairs and improvements. To put that number into perspective, replacement of the East Winterberry Bridge will cost in excess of $4 million; that bridge is only one of fifteen City-owned bridges and most are reaching the end of their useful lives.
On May 22nd, City Council will review and discuss the 5-year Capital Improvements Program (CIP) for 2007 – 2011; the Operating Budget for 2007 will be reviewed on August 8th. If the time available on this date is not sufficient for a full review of all budgets, additional workshops will be scheduled.
Legal requirements under the State of Florida Truth in Millage (TRIM) law include a certification from the City Manager of the maximum millage rate for Fiscal Year 2007 by August 1st. By July 1st, we will have the certified assessed taxable property valuation from Collier County. At part of the CIP Budget Workshop, we will discuss next year’s property tax levy with the City Council. The TRIM law also includes the requirement for two public budget hearings during the month of September.
Table of Contents
The May 22nd CIP budget workshop will include:
· Review Five-year General Government CIP and the Five-year CIP for the Water/Sewer Enterprise Fund.
· Review the financial allocations and funding sources for each capital project in the General Government CIP within the following categories:
VIII. Civic Facilities
· Amend (and reach tentative agreement) on the proposed General Government Five-Year Capital Improvement Program and the Five-Year Water/Sewer Enterprise Fund Capital Improvement Program as deemed acceptable to the City Council.
General Government Capital Improvements
The proposed General Government Five-Year Capital Plan is based on the work and acceptance by City Council of the 2006 Five-Year Program. While most of the projects shown have appeared in the prior Five-Year Plan, new ones have been added and some have been deleted. Among the reasons are:
· Reallocation of priorities and needs that may prompt inclusion of new projects or the deletion of previously listed projects;
· Revised cost estimates to reflect existing conditions or greater knowledge of a particular project;
· Revised priorities reflected through the continuing master planning process;
· Changing social, political, and economic conditions,
During Fiscal Years 2006 and 2007, the City will rebuild North Collier Boulevard from San Marco Road to the Jolley Bridge. That project is budgeted at $11,838,000 with funding as follows:
· $3,036,843 Florida Dept of Transportation 3R Program
· $2,014,000 current balance in Collier Transportation Grant funds
· $1,054,000 current balance in Roadway Impact Fees
· $4,000,000 short-term borrowing (to be repaid from next four years Collier Transportation Grant funds at $1 million annually).
· $858,157 General Fund revenues subject to annual Spending Cap ($400,000 in 2007).
· $670,000 transfer of funds from the Racquet Club/Winterberry Pathway project.
· $55,000 Hideaway Beach funds for the Kendall Drive traffic signal.
· $150,000 from the Esplanade for the West Elkcam traffic signal.
A significant variable in the Five-Year Plan is in the area of bridge repairs. A number of City-owned bridges sustained damage from undermining as a result of Hurricane Wilma in October 2005. The 2007 CIP budget has been amended from the budget submitted last year to provide additional funds for bridge repair. Some cost reimbursement is available from FEMA; however, that federal agency has determined that the majority of repair work is required from deterioration over the years rather than direct storm damage. $140,000 for bridge repairs will be received from FEMA.
The Five-Year Capital Improvement Plan establishes minimum goals consistent with the commitment to maintain existing infrastructure and to provide new and expanded infrastructure, recognizing imposed financial limitations. Capital improvement and preservation of existing infrastructure is essential. New and expanded infrastructure is required to address growth related enhancements in transportation, storm drainage, parks and recreation, and community facilities and water and wastewater utilities.
The CIP provides a planned, logical, and integrated project schedule supported by community goals. Capital Improvement Projects proposed in the plan are linked to the City’s Comprehensive Plan and other master planning documents. These master planning documents include the Right-of-Way Master Study, the Master Drainage Study, and the Master Parks, Recreation, and Open Space Study, the Mackle Park Master Plan, and the Marco Island Utility Master Plan.
The Capital Improvement Plan does not attempt to prioritize projects. Instead, it recognizes nine capital project categories and attempts to fund all or most of these categories. This method, consistently endorsed by City Council, allows allocation to address many capital maintenance and improvements, although the allocation seldom is able to fund all capital needs within a particular category. The goal is to consistently fund categories to meet the long-term goals established through the master planning process, while attempting to fund a broad-based program supported by Marco Island citizens. Your staff has attempted to allocate funds across the spectrum based on their perceived priorities, but is it recognized that City Council are the only ones who must reach consensus as to the expectations of
Marco Island citizens.
Annual expenditures for the City of Marco Island are limited by a Charter provision for a spending cap. That provision limits the growth in annual budgets to the prior year’s level plus the annual change in the cost of living index (COLA) and a 3% annual growth factor. The Fiscal Year 2006 spending cap was $16,503,287. That cap has been increased for fiscal year 2007 by the allowable 3% annual increase and by 4.1% for COLA, as published by the Bureau of Labor Statistics for October 2005, effective for Fiscal Year 2007. This establishes the 2007 cap:
Fiscal Year 2007 Spending Cap $17,695,319
Several items in the preliminary fiscal year 2007 budget are not subject to the spending cap:
1. BUDGETED BUT NOT EXPENDED FUNDS: These are capital projects authorized in the Fiscal Year 2006 budget, and subject to spending cap restrictions in 2006, which will not be completed or expended by the end of this current fiscal year. Funding for those projects will be carried forward into the fiscal year 2007 budget and will not be subject to the spending cap a second time. For this year, this will include the completion of the re-construction of North Collier Boulevard, scheduled to be built over two years, as well as any other capital projects not completed as of September 30th.
2. EXPENDITURES FINANCED BY GRANTS, GIFTS, AND IMPACT FEES: The City Charter provides an exception to the spending cap for expenditures financed by grants, gifts, and impact fees.
3. ENTERPRISE FUNDS: Voters in September 2002 also removed expenditures made through self-funded Enterprise Funds from the calculation of the annual Spending Cap. The City of Marco Island purchased the water and sewer operations of Florida Water in November 2003 and operates those functions as the Water/Sewer Enterprise Fund. Also, a Recreation Enterprise Fund was created to account for the revenues and related expenditures of expanded recreational programming. Building Services is accounted for as an enterprise fund.
4. CAPITAL PROJECTS FINANCED WITH MUNICIPAL BONDS: The City of Marco Island spending cap has been based on the Truth in Millage (TRIM) Florida law. TRIM specifically excludes bond-financed projects:
“Provided, however, those moneys held in or used in trust, agency, or internal service funds, and expenditures of bond proceeds for capital outlay or for advanced refunded debt principal, shall be excluded (s. 200.065(3)(I), F.S.).”
Therefore, expenditures for projects funded by bonds are excluded from the Spending Cap. However, annual bond debt service payments, both principal and interest, are included in the Spending Cap calculations. $6 million in Sales Tax Revenue Bonds were issued in the summer of 2005 to reimburse City reserves advanced for the construction of the Tarpon Waterway Bridge on Barfield Drive and costs of Collier Boulevard, and to finance the construction of the new Police Building.
Zero Net Debt
City Council has adopted a zero net debt policy. This policy allows the unrestricted reserves to accumulate until the amount of unrestricted reserves will offset the outstanding debt. When the unrestricted reserves match the outstanding debt, or any time before, City Council may decide whether to pay off the outstanding debt obligations with the unrestricted reserve fund.
The City currently has four outstanding obligations financed by other than Enterprise Funds. In 2000, the City approved a $1 million State of Florida Loan Pool borrowing to replace the bridge on North Barfield Drive at Factory Bay. The debt service for that loan averages $95,000 per year over the fifteen (15) year life of the loan. In 2004, based on approval of the voters in a bond referendum, the City issued $10 million in General Obligation Bonds to finance the acquisition of 6.85 acres of undeveloped property in the Marco Town Center area, now named Veterans Community Park. Debt service on those bonds will be $843,934 in 2007. The debt service on the 2005 Sales Tax Revenue Bonds will be $529,560 in 2007. Annual payments on the seven year lease-purchase for the new Fire Department
apparatus are $85,701. Debt services expenditures are subject to the spending cap and reduce funding that would otherwise be available for General Government operations or capital projects.
Total outstanding debt, not including Water/Sewer Enterprise Fund and Hideaway Beach debt but including the $4 million in short-term borrowing for North Collier Boulevard, is $20.4 million, and the total unrestricted reserves are estimated to be in the range of $1 million at the end of the current fiscal year, reduced significantly from last year by the completion of capital projects carried forward from 2005 and the emergency replacement of the East Winterberry Bridge. The current property tax mil levy provides approximately $1 million annually into unrestricted reserves for the next several years prior to any emergency expenditures. In addition to using unrestricted reserves to meet the “No Net Debt” policy, those reserves may be used at the discretion of the City Council for emergency
expenditures, both for operations and capital projects.
FISCAL POLICIES FOR MANAGEMENT OF DEBT AND CAPITAL IMPROVEMENTS
Following are current fiscal policies:
1. Long-term borrowing will not be used to finance current operations or maintenance.
2. Long-term borrowing with a pledge to repay the loan with ad valorem revenue shall be submitted to the electorate for approval through referendum.
3. All debt issued, including lease-purchase, will be repaid within a period not to exceed the expected useful life of the improvements financed by the debt.
4. For any enterprise fund or stormwater management fund that is supporting debt, periodic rate studies will be performed to ensure that fees or rates are sufficient to meet the debt service requirements.
5. The City will strive to maintain a high reliance on pay-as-you-go financing for its capital improvements.
6. The City will maintain its bonded debt at a level not to exceed 1% of the assessed valuation of taxable property within the City.
7. The City will maintain its annual net bonded debt service costs at a level less than 15% of the General Fund expenditure budget.
8. The City will maintain a General Fund Emergency Reserve balance at a level not less than 25% of annual operating expenditure.
9. A five-year projection of revenues and expenditures for the general special revenue and enterprise funds will be prepared to provide strategic prospective to each annual budget process.
10. Annually, a five-year capital improvements program will be developed analyzing all anticipated capital expenditures by year and identifying associated funding sources. A five-year CIP will be approved by City Council.
11. The City will utilize the Comprehensive Plan and Five-year Capital Improvement Program as a policy statement to support and approve the application of grand funding to assist in the financing of capital improvements.
12. Projects identified as ongoing maintenance of infrastructure shall be financed annually on a pay-as-you-go basis.
DEVELOPMENT OF THE CAPITAL IMPROVEMENT PLAN
To assist in the analysis of the City’s current and future infrastructure requirements, and to involve Marco Island residents and businesses in the decision process for the development of future facilities, the City initiated master planning processes. These were used to develop the Marco Island Comprehensive Plan and the Five-year Capital Improvement Plan. Each of these studies was developed following a series of public charettes as a means to encourage public input. The master planning processes are summarized as follows:
1. Right-of-Way Master Plan
This study was prepared by a team consisting of Michael Redd and Associates, Planning Consultants, David Plummer and Associates, Inc., Transportation Engineers, McGee and Associates, Landscape Architects, and RWA, Inc., Civil Engineering. The team studied the existing street system, and identified required upgrades to existing and future transportation conditions. From public input, the team determined a public preference to minimize the amount of lanes on the City’s roadway network in order to maintain the Island community character. Also cited were the aesthetic benefits derived from limiting the amount of asphalt constructed to accommodate vehicles. The general consensus was to limit the widths of roadways on the Island to no more than four lanes.
The proposed future transportation network attempted to balance the elements of streetscape aesthetics with the movement of pedestrians, bicycles, and motor vehicles within the right-of-way. Pedestrian, bicycle, and vehicular improvements to the network focus on safely and efficiently moving traffic while protecting and encouraging non-vehicular modes of transportation. The aesthetic improvements include a variety of items such as adding landscaping, benches, informational signs, and directional signs.
The area studied included the following streets:
North Collier Boulevard South Collier Boulevard
San Marco Road Bald Eagle Drive
North Barfield Drive South Barfield Drive
Winterberry Drive South Heathwood Drive
Kendall Drive Tigertail Court
Hernando Drive Elkcam Circle
Landmark Street Yellowbird Street
As part of the overall design of the right-of-way cross-section, eight-foot sidewalks were proposed on both sides of the street. The study encouraged the acquisition of land for passive recreational space, including pedestrian nodes along the major transportation routes. The study also provided drawings of right-of-way cross-sections to accommodate existing utilities and provide corridors for stormwater improvements and sanitary sewer facilities.
The report recommended future four-lane urban cross-sections for Collier Boulevard, Bald Eagle Drive, and San Marco Road. The four-lane urban cross-section was recommended for roadways that carry the majority of the Island’s traffic and are essential for the City’s hurricane evacuation routes. The cross-sections provided sufficient distance between the travel ways and walkways for landscaping and meandering. While medians are provided, the width of the median should be such that planting may occur along the outside areas of the right-of-way. The report addressed five major intersections providing for two levels of improvements for each intersection, interim and maximum. Following public hearings, five additional intersections were added to the study. The ten intersections
provide for a combination of additional right and left-turn lanes and signalization.
The study and public hearings identified streetscape clutter. This includes items such as traffic control reflectors, utility devices, a variety of signs, and unsightly landscape and rockscape materials. Recommended were the replacement of all traffic and informational signage and landscape materials within the public ROW that does not adhere to the overall streetscape design. Color schemes of signs were recommended and subsequently developed by the City’s Beautification Committee and City Council.
Landscaping is an important element of the overall streetscape. A list of species suitable for the diverse ecosystem of Marco Island was developed to serve as a future guide for landscape enhancements.
The study developed priorities for implementation with opinions of probable cost.
2. Master Drainage Plan
The firm of RWA, Inc. was contracted to develop a Master Drainage Study. Prior to the City’s incorporation, the stormwater infrastructure was operated and maintained by Collier County. The facilities were largely constructed by The Deltona Corporation. No Master Plan or document existed to document the existing stormwater drainage infrastructure. RWA was asked to assemble all existing drainage plans and conduct appropriate field surveys to develop a map of the City’s drainage infrastructure in digitized form. The study documented regulatory issues, existing conditions, and hydraulic models and analysis of existing infrastructure. It identifies needed infrastructure improvements and provides a hydraulic model and recommendations. The infrastructure improvements were
ranked according to need and level of service with an estimate of probable cost.
The study suggests that the surface and subsurface drainage infrastructure generally has the capability of passing the ten-year one-hour storm standards. Some of the Island was not under the development control of The Deltona Corporation. The result is deficiencies in the drainage system. In other areas, outfalls were not constructed as indicated on the Deltona plans. The majority of drainage complaints are a result of the inherent slow and constrained drainage provided by an open swale system, which was constructed on relatively flat terrain with permeability restrictions in the native soils and high water table. This condition is worsened by the thousands of buildings and driveway connections and the near impossible task of effectively controlling final grading of driveways and swales.
The study indicated that maintenance of the drainage system, including the removal of debris and the replacement of failing storm sewers and culverts is required. Most of the failures are occurring in areas where corrugated metal pipe was used for storm sewers and culverts.
The recommended projects were to alleviate flooding that had the potential to affect public safety and damage property. Those areas are included in the five-year CIP. Next in priority was improved drainage in those areas where intersection capacity improvements are planned.
In conclusion, the Master Drainage Study identified the following types of general system improvements:
· Drainage improvements at major intersections.
· Additional outfalls and swale re-grading.
· Eliminate swale intersections.
· Replace throat structures.
· Replace/line deteriorating or failing drainage conduits and structures.
3. Master Parks, Recreation, and Open Space Study
The firm of Glatting Jackson was commissioned to study and develop a strategy for the City’s parks, recreation, and open space. Within the scope of the project, the consultant was required to: provide an assessment of Island demographics and population projections; develop appropriate Level of Service (LOS) standards for recreational facilities and amenities; critique existing park facilities and open space sites; provide recommendations for land acquisition and share use opportunities; outline minimum design standards for facilities; develop conceptual plans for selected locations; and to ensure coordination with the Right-of-Way Study.
The study examined the demographics and population characteristics of Marco Island, provided a comparison of Island facilities and amenities to State and National standards, and identified needs and priorities through focus groups, meetings, interviews, and surveys.
4. Mackle Park Master Plan
The firm of Goetz and Stropes was commissioned to assist in the development of a Master Plan for the Mackle Park facilities. The Plan has been completed and reviewed and approved by the City Council.
CIP PRIORITIES
To implement the projects recommended in the three studies within a five or ten-year capital planning period are far beyond the likely financial resources available to the City. Many of the improvements, however, may very well be necessary over a longer twenty or twenty-five year planning period. In developing the Five-year Capital Improvement Plan your staff assumed that City Council anticipates a CIP that will:
· Address capital needs of several different elements, such as transportation, drainage, parks and open space, etc.
· Be prioritized based on staff’s recommendation of need as determined by previous studies, observation, and citizen input.
· Be responsive to needs previously expressed by City Council.
· Provide a realistic balance between pay-as-you-go and debt financing methods.
· Be funded within “politically” attainable revenue levels.
· Be attainable within the five-year planning period.
· Be coordinated within anticipated current revenues or realistic anticipation of receipt of such revenues.
· Maximize the benefits for the dollars expended.
Water/Sewer Enterprise Fund:
The City Council has endorsed the master plan for rehabilitation and expansion of the water and wastewater facilities owned and operated by the City. The Utilities Master Plan was developed by MWH and City staff and adopted by the City Council on January 31, 2005. Based on this master plan, a long-term Capital Improvements Program has been prepared for the utility. The original capital financing plan was developed with the assistance of the Public Resources Management Group for the ten-year period 2004-2013. Attached for council’s review and consideration is the Five-year Capital Improvements Program for the years 2007 – 2011. Funding for utility capital improvements comes from several sources:
2003 Utility Revenue Bond Issue: As part of the bonds sold for the acquisition of the utility in November 2003, approximately $11 was raised to finance capital improvements needed immediately to meet the needs of the utility. A number of capital projects in the 2006 budget are funded from this source.
Renewal and Replacement Fund: Bond covenants require the creation of a Renewal and Replacement Fund to provide funding for the replacement of equipment reaching the end of useful lives. 8.5% of annual operating revenues on both water and sewer sales are placed into this fund. For 2006, that amount is $1,567,550.
Capital Reserve Fund: Bond covenants also require a Capital Reserve Fund. From operating revenues, $1,504,500 is deposited into this fund and used for the purchase of new capital equipment and the funding of capital projects.
Impact Fees: Water and sewer impact fees are collected on new construction at the rate of $1,800 for water and $2,910 for sewer per ERC (equivalent residential connection). The use of funds collected is restricted by state statutes to new capital equipment and capital construction required due to system growth. Impact fees are currently being studied by Public Resources Management Group for possible revision.
Assessments: The Septic Tank Replacement Program is financed by assessments on properties receiving sewer service through the new construction. The Capital Improvements Program for utilities includes a number of projects required to upgrade and expand both the wastewater treatment plant and the wastewater collection system to accommodate the increased number of system users.
Utility Revenue Bonds: The Utility Master Plan identifies the need for additional bond issues to finance the construction needs of the utility. Debt service on these new bonds will be paid through the rate base of all system users. Public Resources Management Group has been retained to update the long-term financial plan of the utility to identify the impact on utility rates of these bonds. That study is in progress.
Major capital programs in utilities include the following:
Water Projects:
· North Collier Boulevard waterlines: As part of the re-construction of this roadway, water lines will be replaced.
· Finished Water Storage Tank: A new storage tank will be built on the land recently acquired from Collier County through a land swap. This new tank will assure adequate capacity of stored water.
· Membrane Filtration – Reverse Osmosis Plant: The water treatment process at the City’s reverse osmosis plant (south plant) will be upgrade to membrane filtration.
Wastewater Projects:
· Wastewater Treatment Plant: The City’s existing wastewater treatment plant will be upgraded to membrane technology to meet new Clean Water requirements and will be expanded to meet the needs of new customers added through the Septic Tank Replacement program. Existing customers, through their monthly utility bills for sewer service, will pay for the costs of upgrading the current plant. New customers will pay for the cost of plant expansion through the Capacity Charge portion of the sewer assessments.
· North Collier Boulevard sewer lines: As part of the re-construction of the roadway, sewer lines will be replaced and increased in size to handle additional flow.
· Septic Tank Replacement Program: The first two districts are scheduled for construction during 2006. Remaining districts will be built over the next six years.
Electric Franchise Fee Fund:
In Fall of 2004, the City Council approved a franchise agreement with Lee County Electric Co-operative, providing for LCEC’s use of public rights-of-way and a five percent (5%) franchise fee payable to the City. City Council has restricted the use of funds from the franchise fee for capital programs to underground power lines and install new street light fixtures, and payment of street lighting costs.
This fund has paid for the undergrounding of power lines on South Collier Boulevard and the purchase and installation of new street lighting fixtures. That project cost approximately $1,250,000. A similar project is currently underway for North Collier Boulevard. That project is expected to cost in the range of $3,000,000, when completed.
City Council has agreed on a program to place underground all single-phase power lines that serve residential streets. The City has paid $383,000 for LCEC to engineer the program. Engineering is now complete, and LCEC and the City are ready to begin construction. Total construction costs will be in the range of $10 million, with additional funding required for the purchase and installation of new lighting fixtures.
In the undergrounding of power lines, the City pays the engineering and construction costs for the installation of underground power lines and new pad-mounted transformers, less a credit equal to the depreciated value of the existing overhead power lines. To allow the project to move forward in advance of LCEC having capital funds available, the City and LCEC have agreed for the City to advance $1.9 million to LCEC. Those funds will be recovered as credits to City costs in Phases 2 and 3. The City’s construction cost for Phase 1 will be $3.5 million.
Phase 1 of the neighborhood underground program will come to the City Council within the next 60 days. These costs, combined with costs from North Collier Boulevard, will be financed with a bond issue supported by the flow of funds from the 5% franchise fee.
Attachments:
· Five-Year General Government and Five-year Water/Sewer Enterprise Fund Capital Improvement Program spreadsheets identifying each project and funding sources;
· Explanation of variances between projects identified in the current and proposed CIP;
· Septic Tank Replacement Program (STRP) summary.
· Description of each capital project category and its link to the related master planning document;
· Narrative description of each project, funding requirement by year, and source of funds used to finance the project;
· Relevant exhibits providing additional information for each project.
The City Manager and department directors will provide an overview of the CIP and each specific project.
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