Workshop Item: 2 - Joe Huss, Finance Director
Title
FUNDING PARK IMPROVEMENTS THROUGH USE OF CAPITAL IMPROVEMENT FUND
Background
In August 2011, and then on January 12, 2012, Council held discussions regarding the development of a large, multi-use athletic facility along Lexington Avenue on the site of the Finn Farm. Subsequently, at the February 2012 Retreat Workshop, Council directed staff to bring forward for Council consideration a proposal to use the City's Capital Improvement Fund (CIF) to fund a portion of the costs for acquisition and improvement of the athletic complex to be known as Lexington Athletic Complex (LAC), as well as to fund various improvements at Aquatore Park.
Funding Plan
The total cost to purchase the roughly 38 acre LAC site is $2.3 million. Purchase would be made with $800,000 cash up front, with the remaining $1.5 million paid through park dedication and Water Access Charge (WAC) credits. It is expected to take four years to reach the $1.5 million credit mark. The staff estimate to develop LAC is $2.3 million. Improvements at Aquatore Park include field improvements and parking lot improvements. Staff estimates for these improvements total $390,000 and include $278,000 for field improvements and $112,000 for parking lot improvements.
While park development is typically funded through the collection of park dedication fees, the current balance in the City's Park Development Fund ($518,000) is not sufficient to fund these two projects and other projects included in the Park Capital Improvement Plan. A proposed funding plan prepared by staff would employ three funding sources: the Park Development Fund ($390,000); the CIF ($1.9 million); and the Water and Sewer Utility funds, from which $1.2 million would be borrowed and repaid from park dedication fees over seven years. The WAC credit would be repaid to the Water Utility Fund from the Park Development Fund over seven years beginning in 2016. The borrowing from the utility funds would be structured as an internal loan with interest paid based upon the City's weighted average rate of return on its investment portfolio. Attached for Council review is a funding proposal for the projects and a revised Parks Capital Improvement Plan.
Use of CIF
Spending from the CIF is restricted to interest earnings of the fund and there currently exists just over $1.9 million of spendable reserves in the CIF. Authorization for expenditure out of the CIF is guided by Chapter 2 of the Blaine City Code. Pursuant to section 2-153 of the Code, the City Council must conduct a public hearing on whether the proposed project is to be funded, and Council must identify and make certain the following findings:
1. The project has sufficient community-wide benefits consistent with other City goals, programs, and policies;
2. The project would not otherwise occur but for financing from the CIF;
3. CIF financing is not proposed as an alternative to funding from another previously programmed or available source.
A public hearing to consider the use of the CIF is scheduled for April 19, 2012, and a resolution authorizing use of the CIF has been prepared for Council action on April 19 as well.
For consideration and discussion by the Council this evening is the conceptual approval of the funding plan as a whole, and use of the CIF as a component of the funding plan.
Recommendation
Staff is seeking Council direction regarding moving forward with the proposed funding plan.