Financing Our Future – Part 2
The City Council can potentially fund the maintenance/operations center and LOCOM/Police/911 within existing resources. The operations/maintenance center and LOCOM/Police/911 are part of the overall picture. There is nuance and trade-offs, but there is a way forward. This month, let’s discuss the maintenance/operations center.
The operations/maintenance facility needs replacement. The operations/maintenance building was designed in 1979 and originally occupied by a metal building manufacturing company. The City Public Works department and equipment moved into the site in 1980-81. The building is outdated, outmoded and is not earthquake resistant. Though our Public Works department takes pride in keeping the operations/maintenance facility going with “gum and duct tape”, it needs replacing in order to provide core basic service the city needs. Subject to several caveats, replacement of the facility can be done in two phases over 5 years.
Why talk about finances? Easy. Everyone can come up with visions, but.….no money, no vision. Whatever the vision is, if there is no money…….it does not matter.
The capital improvement plan estimates replacement at $17 million. Public Works staff believe we can, though value engineering, do the project for less. As a working number, let’s use $15 million for replacement cost. Funding to replace the facility must be split about 50/50 between the general fund and public works (street, wastewater, surface water, water), although general fund contributions can be higher.
Funding sources are:
1) PERS – A source of funds is reserving the PERS differential between budgeted and actually paid. By budgeting for a higher amount and paying a smaller amount, the city will build/reserve dollars potentially approaching $5 million in the next five years.
2) Unassigned General Fund Balances – Assuming sale of the West End Building (WEB), there will be about $1.5 million of existing unassigned balances in the general fund. Those dollars can be assigned/reserved for the operations/maintenance center.
3) WEB Payments no Longer Required – Another source of dollars is the $1.2 to $1.5 million the city will no longer be spending on WEB debt and operating expense. Within 5 years that could be as much as $4 to $5 million.
4) Existing Resources – Utility Funds – The wastewater fund has sufficient existing resources to fund its estimated share of the project. The street, surface water and water funds could fund its share of the project by deferring existing funded projects or using additional general fund dollars (which may require deferring other needed funded projects). Over 5 years, these dollars could range from $1 to $2 million total. The range could be more or less depending on the amount of General Fund money that is used to offset the public works dollars (street, wastewater, surface water, water) so as to avoid deferring some projects.
5) Future General Fund Dollars – For 2013/2014 the city budgeted a breakeven (revenues = expenses) general fund. It is likely the city will be somewhat positive each year going forward. If good management continues over the next 5 years, the annual surplus can be added to the reserve for the maintenance facility. This could be as much as $2 to $3 million.
Good leaders inspire, but they also perspire over the painful, difficult specifics of policy visions (the unpopular choices and tradeoffs to achieve a particular vision). The operations/maintenance center is a specific overlooked for too long.