Memorandum 16-167 2017-2022 Capital Improvement Plan

Memorandum 16-167

TO:                       Mayor and City Council                                         

FROM:                 Jenny Carroll, Special Projects & Communications Coordinator

THROUGH:       Katie Koester, City Manager

DATE:                  October 5, 2016

SUBJECT:         Follow-Up Information on City of Homer 2017-2022 Capital Improvement Plan Project Questions

The purpose of this memo is to provide additional information requested at the August 26, 2016 Worksession on the 2017-2022 City of Homer Capital Improvement Plan (CIP). 

Financing Assumptions: The Financing Assumptions #’s 1, 4 and 6 have been updated and is included with this Memorandum.

Main Street Sidewalk Facility (North of Pioneer Avenue): Staff is working on design and construction costs for the new “Main Street Sidewalk Facility (North of Pioneer Avenue)” project added at the August 26 Council meeting.  Project cost will be included in the project description when I receive the estimates.

Ocean Drive Reconstruction with Turn Lane: Council Member Aderhold asked staff to revisit the CIP long-term project “Ocean Drive Reconstruction with Turn Lane” for possible removal from the CIP.  Removal of this project would be by Motion by the City Council.

 I am providing some background for your consideration.  The project first appeared in the 2011-2016 CIP as a Legislative Request project with the recommendation that the project be added to the Statewide Transportation Improvement Program and be completed as soon as possible.  The following year, the project moved to the State Road Project section of the CIP and in 2014 the project moved to the long-range project section of the CIP.

Ocean Drive got some State DOT attention in 2014 when ADOT/PF conducted a repaving project in Homer on the Sterling Highway from its intersection with Pioneer Avenue to the end of the Homer Spit.  Sean Baski, the Project Engineer reported at the August 11, 2014 City Council meeting that while alternatives for safety measures were discussed, the preferred plan was a shared use pathway on either side for pedestrians and bicyclists.  Extension of the road (for wider shoulders at that time) was out of the project’s resurfacing scope.

ADOT/PF’s 2016-2019 Statewide Transportation Improvement Program (STIP), which was approved Sept. 22, 2016 does not include an Ocean Drive Reconstruction project.

Federal Legislative Request:  By Motion at the October 10 City Council meeting, Council should select 2 projects to include in the Federal Legislative Request.

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City of Homer Financing Assumptions: Capital Improvement Program

Implementation of the City of Homer Capital Improvement Plan requires utilization of various financing mechanisms. Financing mechanisms available to the City of Homer include:

Federal grants or loans
State grants or loans
General obligation bonds
Limited obligation bonds
Revenue bonds
Special assessment bonds
Bank loans
Pay as you go
Private sector development agreements
Property owner contributions
Lease or lease–purchase agreements

The use of any of the financing mechanisms listed above must be based upon the financial capability of the City as well as the specific capital improvement project. In this regard, financing the CIP should take into consideration the following assumptions:

1.The property tax cap of six-mill (at which point sales tax goes away) precludes use of this revenue source for major capital improvements.  Available revenue should be utilized to fund operation and maintenance activities.

2.The operating revenue of enterprise funds (Port & Harbor, Water & Sewer) will be limited and as such, currently only fund operation and maintenance activities.

3.The utilization of Federal and State grants will continue to be significant funding mechanisms. Grants will be pursued whenever possible.

4.The 1½ percent sales tax approved by voters of Homer for debt service and CIP projects is dedicated at ¾ percent to sewer treatment plant debt retirement, with the remaining balance to be used in water and sewer system improvement projects, and ¾ percent to the Homer Accelerated Roads and Trails (HART) Program.  Currently, though, the HART fund balance will not grow as the 3/4 percent dedicated to the HART Program fund has been suspended until 2019.

5.The HART Program will require property owner contributions of $30 per front foot for road reconstruction, with an additional $17 per front foot for paving.

6.The Accelerated Water and Sewer Program will only be considered if the fund has a debt service of 1.25 or greater.

7.The private sector will be encouraged to finance, construct, and operate certain nonessential capital improvements (e.g., overslope development).

8.The utilization of bonds will be determined on a project-by-project basis.

9.The lease and/or lease–purchase of capital improvements will be determined on a project-by-project basis.