FY 2024-25 Budget Workshop #3 Presentation
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FY 2024-25 Budget Workshop #3 CIP City Council Conference Room Thursday, March 21, 2024 | 4:00 pm Making it Happen Our Brand A safe, diverse, equitable and inclusive community that connects people, chooses innovation and inspires excellence FY 2024-25 Budget Theme 01. Overview of Proposed 10-Year Capital Improvement Program (CIP) 04. Key Budget Dates and Questions 02. Chandler Water and Wastewater Utilities – Major Projects and Rates 03. Review List of Projects in Proposed 10-Year Capital Improvement Program (CIP) Agenda New Fiscal Year 2024-25 starts 7/1/2024 “Making it Happen” Council/Resident Process Staff Process Chandler Budget Process Timeline Strategic Framework Guides Our Decision Making Focus Areas •Economic Vitality •Innovation and Technology •Mobility •Neighborhoods •Quality of Life •Good Governance Proposed 10-Year Capital Improvement Program (CIP) Fiscal Foundations – Current 10-Year CIP Council Guidelines • Minimize increase in property taxes • Maintain, enhance, or re-imagine existing infrastructure • Finish planned construction of streets, parks, fiber and utility systems • Prior to adding capital, ensure related ongoing O&M can be supported • Utilize master plans to guide long-term capital investment • Deliver on commitments made to residents through 2021 bond election • Balance inflation, workload, and timely completion of high-visibility and grant-funded projects Priorities for One-Time Dollars 1. Reinvest in existing aging infrastructure, neighborhoods & systems and projects that generate ongoing savings 4. New initiatives and capital, including sustainability 3. Maintain reserves sufficient to meet financial policies 2. Operating and capital spending to advance Strategic Framework goals Paid down large unfunded PSPRS liability to generate ongoing savings and continue to maintain payoff status Summary of City-wide Core Infrastructure Focus on improving overall quality in rising cost environment 10-Year CIP Overview • 2025-2034 CIP total is $2,493,804,031 ($529.8M more than the 2024-2033 CIP) • Updated to reflect continued inflationary pressures • Continued focus on aging infrastructure • Includes $299M in key aging infrastructure projects for water and wastewater • Additional capacity was gained from secondary levy growth higher than anticipated (+5.3% versus +4%) 10-Year CIP Comparison by Department Current 10-Year and Next 10-Year CIP Comparison – • Continued planned project cost increases have taken a toll on how and when projects are funded • Example projects with significant increases or new (all funds) • Airport Hangar Pavement Reconstruction +$10.5M, Rehabilitate Runway 4R/22L Pavement +$6.3M • Traffic Management Center Rehabilitation +$5.6M • Fire Station #4 Rebuild +$7.3M, Fire Station #12 +$4.9M • IT Projects including Financial/HR system replacement +$6.5M • Sustainability (Solar Capital Investment, produces ongoing savings) +$15M • Mesquite Groves Park +$19.4, Tumbleweed Multi-Gen +$7.1M • Police Forensic Facility +$15.8M, Main Station Renovations +$7.8M • Kyrene Rd (Chandler Blvd to 202) +$13.6M • Price Rd/Queen Creek Intersection +$19.3M • New- McQueen Rd (Warner to Pecos) $84.9M • Frye Rd. Protected Bike Lane +$7.8M • Santan Freeway 66” Sewer line +$40M, Wastewater Capacity Increases +$16.8M • Main and Valve Replacement +$105M, Production Facility Improvements +$49M 10-Year CIP by Focus Area GO Bond Authorization History Need for Bond Election Bond Authorization usage higher than anticipated and will be exhausted by FY 2025-26 for Parks, Streets and Police, and FY 2029-30 for Fire. Bond Election needed by Fall of 2025 to continue capital program in these areas. GO Bond Authorization Project Drivers Parks Streets/Transportation Increases as high as +30% to +50% in Capital Project costs 4 Diamond Fields $22.3M + Ryan Rd 5.9M Pickleball $6.6M (12 to 18 courts) & 3 Tennis Cts/Lights $2M Cooper/ Insight Loop $13.5M Price/Queen Creek Intersection $19.3M (Beg. FY 2025-26) Alma School (Germann to QC) $10.1M Cost Changes since 2021 Arterial +19.2% Intersect. +19.1% Collectors +21.4% Public Safety Police Public Safety Fire Forensic Facility $64.8M (incl $9.1 GF) Station 2 Rebuild $10.7M (+$1.4M GF) Station 4 Rebuild +$16.8M (beg. FY 2028-29) Regional Park Development Auth $18,074,000, now $61.5M Multi-Gen Expansion $14.8M (gym delayed) Forensic Facility Auth $38,325,000 Fire Stations Auth $15,670,000 Streets Auth $10.9M, now $42.9M Mesquite Groves Ph 1 $10M (SDF shortfall) GO Bond Projects Additional Bond Authorization Needs Parks Mesquite Groves Phase II (portion) and III* AJ Chandler Park Renovation* Existing Community and Neighborhood Park Improvements* Folley Pool/Park Renovation* Tumbleweed gymnasium expansion Streets/Transportation Street Repaving* Traffic Signal Additions and Repairs* Kyrene Rd (Chandler Blvd. to Santan 202) (portion)* Price Rd. Queen Creek Intersection* McQueen Rd (Warner to Pecos)* Washington Street Improvements* Note: Additional projects if Prop 400 does not pass Public Safety Fire Fire Station 4 Rebuild (portion)* Fire Station 12 * = projects included in bond election, but additional bond authorization needed to complete Public Safety Police Police Main Station and Criminal Investigation Bureau (CIB)/Communications Renovations * Fire Station #4 Chandler Water and Wastewater Utilities: Major Projects and Rates Utility Rates Initial adjustments were made in current Fiscal Year to start to be able to address additional infrastructure projects Anticipated rates as shared in FY 2023-24 Major Drivers - Aging infrastructure Water • Total mains 1,228 miles • 31 operating wells • Reactive replacements based on breaks, proactive replacements based on risk assessment Wastewater • 958 miles of sanitary sewer lines • 19,000 manholes 7,000 need repair • Proactive replacements based on physical inspections Decade in which underground infrastructure established Water and Wastewater Operational Needs Operating impacts, on top of major projects and debt service, are driving revenue requirement increase for Water and Wastewater Utilities Water • Granulated Activated Carbon (GAC) costs +$500k • Powdered Activated Carbon (PAC) costs +$2M • Increased surface water costs +$1.6M Wastewater • Ocotillo Brine Reduction +$2.3M (revenue offset) • Reclaimed Water Interconnect Facility +$877k (revenue offset) • Reclaimed Water Utilities Increase +$200k • Increased baseline testing costs for WW +$150k Water Infrastructure New Infrastructure – Pecos Water Plant Improvements A total of $222M is being proposed in the new CIP for improvements to Water Facilities Aging Infrastructure – 48” Transmission Line Design was included in current CIP of $17.7M and proposed CIP has the construction of an additional $134.5M for $152M total Adds redundancy for this single point of failure Allows for eventual rehab on original transmission main Seeking Congressionally Designated Funding for at least a portion of this project Aging Infrastructure – Water Production Facilities The use and maintenance of ground wells is critical to Chandler’s water portfolio Booster station failures have become more of an issue, and the cost for rehabilitation is higher if earlier remediation is not done Average age of these remote facilities is 24-years with the newest being 4-years and the oldest 40-years Aging Infrastructure – Watermains Recommended replacement plan would start out averaging 3-5 miles per year, escalating to 7.5 miles per year over the next 30 years to address all at risk lines. Coordination with other projects is vital. Plan would address these areas Aging Infrastructure – Water Mains Water Main Replacement Scenarios • 20-Year spread average 1% replacement/year covers all moderate to high risk • Effect on rates over next five years: • 30-Year spread (recommended) average 0.6% replacement/year covers all moderate to high risk • Effect on rates over next five years: Water Rate Driver Comparison Each 1% rate change equates to about $580,000 in revenue This year’s operating increase is about $3.3M ongoing (5.7% rate increase to fully fund) This year’s personnel increase is about $400k ongoing (0.7% rate increase to fully fund) Wastewater Rates Large Project in current CIP 66” Wastewater pipe $40.6M: Design in FY 2024-25 and Construction in FY 2025-26 Aging Infrastructure – Wastewater Mains/Manholes Recommended replacement plan would start out averaging 90-120 manholes per year, escalating to 350 per year over the next 30 years to address all 7,000 manholes that have known issues Plan would address these areas Aging Infrastructure – Wastewater Mains/Manholes Wastewater Scenarios • 20-Year spread covers all 7,000 moderate and major rehabs needed • Effect on rates: • 30-Year spread (recommended) covers all 7,000 moderate and major rehabs needed • Effect on rates: Wastewater Rate Driver Comparison Each 1% rate change equates to about $460,000 in revenue This year’s operating increase is about $1M ongoing (2.2% rate increase to fully fund) No new personnel planned in FY 2024-25 Proposed 5-Year Enterprise Fund Balance Projections City Residential Rate Comparison Estimated based on Tempe Cost of Service July 2023 results at 10,000 gallons single family residential rates for FY 2023-24 plus known Water and Wastewater increases across all Cities Would be effective January 2026 Cost of Services Allocations – Water / Wastewater COS rate allocations: Water 8.5% increase Residential 3.7% Multifamily 2.5% Non-Residential 11.4% Landscape 13.7% Industrial 21.3% Wastewater 8% Increase Residential 0.0% Multifamily 18.8% Non-Residential 14.8% Multifamily Average Bill Impact Non-Residential Average Bill Impact Review List of Projects in the Proposed 10-year Capital Improvement Program (CIP) Summary of Proposed Key General Government Capital Projects in the 1st 5-Years Technology • ERP Modernization/Replacement Fire • Emergency Vehicle Replacements • Self Contained Breathing Apparatus Replacements • Station #4 Rebuild Design Police • Forensic Services Facility • Police Main Stations Renovations Street/Transportation Projects • Street Repaving Program ($116.7M in first 5-years) • Washington Street Improvements • Alma School Rd (Germann Rd to Queen Creek Rd) • Kyrene Road (Chandler Blvd to San Tan 202) • Ray Road/Dobson Road Intersection Improvement • Turf to Xeriscape Program • Frye Rd Protected Bike Lanes • Paseo Trail Crossing Improvements • Kyrene Branch and Highline Canal Shared Use Path Airport • Hanger Area Pavement Reconstruction • Runway 4R/22L Extension Buildings & Facilities • Building Renovations and Repairs • Space Utilization Improvements Community/Regional Park Improvements • Tumbleweed Regional Park Expansion • A.J. Chandler Park Improvements • Existing Community and Neighborhood Park Imp • Existing Athletic Field Improvements • Mesquite Groves Phases I & II • Folley Pool Renovation • Lantana Ranch Park Site • Tumbleweed Ranch Development Services • Citywide Fiber Upgrades • Traffic Management Center Upgrades Summary of Proposed Key General Government Capital Projects in the 2nd 5-Years Fire • Station #4 Rebuild Construction • Station #12 Design and Construction Police • Police Main Stations Renovations continuation • Radio Communication Equipment Street/Transportation Projects • Street Repaving Program • Warner Road (Price Rd. to Arizona Ave.) • McQueen Road Improvements • Ray Road/Dobson Road Intersection Improvement • Ocotillo Road Shared Use Path Airport • Heliport Apron Construction • Taxiway B Construction Buildings & Facilities • Building Renovations and Repairs Community/Regional Park Improvements • Existing Neighborhood Park Improvements • Mesquite Groves Phase III • Tumbleweed Ranch Development Services • Citywide Fiber Upgrades Budget Event Date Council Budget Kickoff Completed Resident Budget Survey with Council Videos Completed Council Workshop #1 Completed Council Workshop #2 Completed Council Workshop #3 Capital Improvement Program Tonight All Day Budget Briefing 4/26/2024 Council Meetings Tentative Adoption 05/23/2024 Public Hearing and Final Adoption 06/13/2024 Adoption of Tax Levy & Fee Action 06/27/2024 Key Budget Dates Questions?