Fall 2019 Capital Improvement Program (CIP) Worksessions Capital - - PowerPoint PPT Presentation

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Fall 2019 Capital Improvement Program (CIP) Worksessions Capital Improvement Program Overview October 30, 2019 A GENDA CIP Overview (Tonight) Overview of CIP Development Process Affordability of CIP Policy Issues Considered in CIP

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SLIDE 1

Fall 2019 Capital Improvement Program (CIP) Worksessions

Capital Improvement Program Overview October 30, 2019

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SLIDE 2

AGENDA

  • CIP Overview (Tonight)
  • Overview of CIP Development Process
  • Affordability of CIP
  • Policy Issues Considered in CIP Development
  • Public Infrastructure – Transportation, Sewers,

Recreation & Parks, Waterfront Flood Mitigation (Nov. 7th)

  • Public Facilities and IT Infrastructure (Nov. 11th)

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SLIDE 3

CIP DEVELOPMENT PROCESS

  • June 2019: CIP Development

Process kicks off

  • September 2019: departments

submitted capital project change requests

  • September 2019 – October

2019: OMB reviews project submissions

  • September 2019 – December

2019: Capital Improvement Program Steering Committee (CIPSC) crafts recommendations for the City Manager

  • January 2020 – February 2020:

City Manager develops recommendations and finalizes Proposed CIP

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What is CIPSC?

  • Committee of most capital

intensive City departments (T&ES, RPCA, DGS, ITS, DPI, and P&Z), charged with:

  • Crafting recommendations for a

balanced proposed CIP

  • Identifying policy priorities and

themes for the CIP

  • Presenting recommendations to the

City Manager

  • Committee chaired by Deputy

City Manager Emily Baker

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SLIDE 4

CIP DEVELOPMENT PROCESS

  • FY 2021 – FY 2020 CIP will be a major revision

year (“on year”)

  • CIP follows a biennial development cycle
  • During off-year, only minor changes to project funding

and schedules

  • Proposed CIP will include new projects, re-

estimates of project costs, and changes to project timing

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SLIDE 5

CIP CHALLENGES

COST DRIVERS

  • Significant focus on re-estimating

construction/implementation costs

  • Significant increases in construction related costs are anticipated
  • Nationwide, construction costs are being pressured by
  • Increased inflation,
  • Labor shortages,
  • Material cost increases, and
  • Fuel cost increases
  • Mortenson Construction Cost Index predicts (nationwide) a 6% to 8% increase

in nonresidential building construction costs for 2018

  • Increased focus on understanding changes in project

scope over life of the project

  • Unforeseen circumstances, design changes driven by community

involvement, etc.

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CIP CHALLENGES

COST DRIVERS (MORTENSON CONSTRUCTION COST INDEX 2009 – 2018)

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90 95 100 105 110 115 120 125 130 135 Q4 09 Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15 Q4 16 Q4 17 Q4 18

Overall Construction Cost Index (Jan. 2009 = 100)

A construction cost estimated 5 years ago may have increased by as much as 18%.

  • Ex. A project estimated at $1 million in 2014, may cost $1.18 million today.
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SLIDE 7

ACPS $479.5 M Transportation $237.1 M WMATA $143.3 M Community Development $145.6 M Public Buildings $150.3 M Reservation of Bond Capacity/Cash Capital for City/School Facilities $87.9 M Recreation & Parks $86.7 M CIP Development & Implementation Staff $77.8 M Stormwater Management $71.0 M Sanitary Sewers $65.2 M IT Plan $64.6 M Other Regional Contributions $8.9 M

FY 2020 - FY 2029 USES

$1.6 BILLION

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SLIDE 8

FY 2020 - FY 2029 USES

$1.2 BILLION(GENERAL FUND UNRESTRICTED ONLY)

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ACPS $479.5 M Public Buildings $150.2 M WMATA $141.6 M Community Development $91.5 M Reservation of Bond Capacity/Cash Capital for City/School Facilities $87.9 M Recreation & Parks $83.7 M Transportation $77.7 M CIP Development & Implementation Staff $53.0 M IT Plan $52.8 M Other Regional Contributions $8.9 M

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SLIDE 9

CIP CHALLENGES

AFFORDABILITY OF CAPITAL PROGRAM

  • Support of City and School capital programs are

causing significant expenditure pressure on City’s General Fund budget

  • In FY 2009, G/F supported debt service and direct cash

funding of projects represented 6.0% of general fund expenditures

  • In FY 2020, G/F supported debt service and direct cash

funding of projects represented 14.1% of general fund expenditures

  • In FY 2030, G/F supported debt service and direct cash

funding of projects represented 16.6% of general fund expenditures

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LARGE DRIVERS OF BORROWING

BASED ON APPROVED FY 2020 – FY 2029 CIP

  • FY 2020 – FY 2029
  • ACPS Capital Program ($380.9 M)
  • WMATA Capital Contributions ($139.3 M)
  • Waterfront Flood Mitigation ($50.1 M)
  • City Hall Renovation ($30.8 M)
  • Street Reconstruction & Resurfacing ($30.4 M)
  • Witter/Wheeler Campus ($29.5 M)
  • Fire Department Vehicles & Apparatus ($20.0 M)
  • Capital Facility Maintenance Programs ($13.0 M)
  • Fire Station 207 Duke Street ($13.0 M)
  • Fire Station 205 Cameron Street ($11.0 M)

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LARGE DRIVERS OF BORROWING

BASED ON APPROVED FY 2020 – FY 2029 CIP

  • FY 2021
  • ACPS High School Project ($103.7 M)
  • Waterfront Flood Mitigation ($50.1 M)
  • WMATA Capital Contributions ($14.0 M)
  • Street Reconstruction & Resurfacing ($4.9 M)
  • Capital Facility Maintenance Programs ($3.4 M)
  • City Hall Renovation Planning ($2.4 M)

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SLIDE 12

APPROVED FY 2020 - 2029 CIP

PLANNED 10-YEAR BORROWING - $870.2 M

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$- $50 $100 $150 $200 $250 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029

Millions

GO Bonds GO Bonds - Sanitary GO Bonds - Stormwater

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SLIDE 13

DEBT CAPACITY

OUTSTANDING DEBT AS A % OF GROSS FAIR MARKET VALUE OF REAL PROPERTY

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1.60% 1.88% 2.14% 2.23% 2.15% 2.06% 1.99% 1.92% 1.80% 1.74% 1.65% Limit 2.50% 1.50% 1.70% 1.90% 2.10% 2.30% 2.50% 2.70% FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030

Debt as a % of Gross Fair Market Value of Real Property

Outstanding Debt as a % of Gross Fair Market Value of Real Property Limit

Note: Excludes Sanitary Sewer and Stormwater Management related debt, which is funded by dedicated revenue sources.

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$- $20 $40 $60 $80 $100 $120 $140 $160 $180 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030

Millions

Debt Service (City) Debt Service (Schools) G/F Cash Capital TIP Cash Capital

GENERAL FUND SUPPORT OF CAPITAL PROGRAM

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$107.0 M

14.1% of G/F

$161.7 M

16.6% of G/F

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SLIDE 15

GENERAL FUND SUPPORT OF CAPITAL PROGRAM

AS CENTS ON THE REAL ESTATE TAX RATE

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25.5¢ 26.2¢ 31.5¢ 34.7¢ 34.8¢ 35.8¢ 36.2¢ 36.7¢ 37.1¢ 38.3¢ 38.5¢ 0.0¢ 5.0¢ 10.0¢ 15.0¢ 20.0¢ 25.0¢ 30.0¢ 35.0¢ 40.0¢ 45.0¢ FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030

Cents on the Real Estate Tax Rate

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HOW TO FUND CAPITAL PROGRAM

  • Additional $54.7 million needed by FY 2030 to support City

and School capital programs

  • 35% of this increase is related to increases in School capital debt

service

  • Limited tax base growth will not be sufficient to fund

increase

Alt lternatives

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  • Reductions in City and School programs/capital investments
  • Increasing the existing Real Estate tax rate
  • Establishing a separate dedicated Real Estate tax rate for

school capital

  • Consideration of increasing other taxes, which may require

state enabling legislation

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SLIDE 17

IDENTIFIED CITY CAPITAL NEEDS

SUMMARY OF FY 2021 – FY 2030 PROJECT SUBMISSIONS

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$- $50 $100 $150 $200 $250 $300 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030

Millions

Approved FY 2020 - FY 2029 CIP FY 2021 - FY 2030 Submissions

For FY 2021 – FY 2029, project submissions have increased $470.5 million, over the Approved CIP.

Note: Excludes Schools, Other Regional Contributions, and CIP Contingency Funds

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GUIDING PRINCIPLES FOR PRIORITIZATION

  • Proposed CIP will not be able to fund all project requests,

but will strive to accomplish the following:

  • Address identified Health & Safety Issues
  • Meet capacity needs and maintenance needs of Schools
  • Meet our required contributions to WMATA capital

investment

  • Protect City’s existing assets (State of Good Repair)
  • Invest in service expansions that have an economic

development impact

  • Within these broad categories, urgency and readiness of

projects will also be considered in determining funding levels

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SLIDE 19

PROJECT PHASING

19 Phase I (Years 1-3) Phase II (Years 4-6) Phase III (Years 7-10)

  • Project is specific in

scope

  • Preferred Alternative

has been Identified

  • Project is in final

design or implementation

  • Costing is based on

engineering documents or being developed

  • Service need has

been identified

  • Costing is higher-level

estimate (per unit cost, similar completed project) Funding is aligned to specific project(s) Funding is aligned to identified ‘capital needs’

  • As project progresses in CIP, level of planning, specificity of costing, input

from City Council & residents increases

  • Projects should not progress, unless criteria/thresholds are met
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SLIDE 20

NEXT STEPS

  • The next two worksessions will discuss State of

Good Repair by CIP section, and highlight major projects underway or proposed

  • During these worksessions, consider the

following:

  • The capital projects discussed, relative to the overall

affordability of the CIP

  • Alignment of these projects with City Council’s

priorities

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SLIDE 21

QUESTIONS/DISCUSSION

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