Administration - Alison Bong, Deputy Finance Director
Title
Title
Adopt the Facilities 2023 Budget and 2023-2027 Capital Improvement Program (CIP)
end
Executive Summary
Staff recommends that council adopt the proposed Facilities 2023 Budget and 2023-2027 Capital Improvement Program (CIP). Finance and Safety Services presented the 2023-2027 Facilities CIP and 2023 Facilities Budget, at a workshop on October 3 at which time there were no recommendations for changes. The council had an opportunity to ask questions and discuss different projects within the budget.
Background
Safety Services and Facilities staff have collaborated with the Finance Department to develop a 2023 budget and a traditional format Capital Improvement Program (CIP) for 2023-2027.
The CIP program is vetted annually by staff with council guidance. The projects listed in 2023 will be next year’s Facilities Capital Budget upon council adoption. Projects in the out-years (2024-2027) may be delayed, accelerated, or moved forward in priority based on regular budget and program discussions, emergent conditions, and other factors including economic pressures.
Fund Background
In 2019, as part of the city’s efforts to stabilize its general levy and provide a mechanism for ensuring long-term funding of facilities improvements, the city council authorized the creation of an internal service fund to account for facilities management. Internal service funds are used to account for the financing of goods and services provided by one department or activity to other departments or activities of the government on a cost reimbursement basis. To fund facilities, charges are assessed to each department based on the square footage used by each operation.
The facilities managed under this fund include city hall and attached garages, public works (PW) and the PW cold storage facility, the police training facility, Mary Ann Young Center, and old fire station #5.
As the city facilities have been evaluated, a history of deferred maintenance has been identified. The facilities team is working to remedy the impacts of deferred maintenance and performing regular preventative maintenance, but is struggling with insufficient staffing, inflationary costs, and a departmental chargeback system that has not yet caught up to the increased needs of the facilities program.
The facilities fund has received several transfers from the General Fund since 2019 to provide the fund with working capital. The startup transfer in 2019 was $250,000, $75,000 was transferred in 2021 for an LED light project, and $1 million was authorized to be transferred in 2022. The long-term goal is to have facilities be sustained through departmental charges; however, rightsizing the fees is a work in progress. Once chargeback fees are stabilized and the fund becomes self-sustaining, a fund balance to pay for emergency or unforeseen repairs should be maintained with the ideal target fund balance around $400,000.
Revenue
The primary funding source for the internal service fund comes from charges assessed to each of the departments in the city’s general and utilities funds. The charges are split between two different categories: maintenance and replacement. The maintenance chargeback is intended to be used for operational expenses and any repairs to the facilities maintained in this fund, while the replacement charge assists in funding capital replacement items.
The proposed budget includes a 25% increase to department charges, increasing the fund’s revenues by $264,520. The total revenue change from the 2022 budget is $263,020. The 2023 department charges are approximately $18,000 short of funding the 2023 operating costs meaning that the remaining $18,000 of operating expenditures as well as all capital expenditures are being paid for through the facilities fund balance.
Operating Expenditures
The facilities fund accounts for operational costs for facility staff wages and benefits, facility utilities, and contracted services related to facility maintenance.
The proposed operating expenditure budget includes an increase of $389,590 (40.9%).
• Personal services - increasing $126,390
o Addition of a Facilities Maintenance Coordinator position
o 3% cost of living adjustment to staff wages and a $50/month increase to cafeteria benefits
• Supplies - increasing $15,000
o Inflationary costs related to replacement of aging office equipment and carpet
• Contractual services - increasing $248,200
o $115,000 related to utility cost increases
o Adjust the building maintenance budget closer to actual
2023-2027 Capital Improvement Plan
The 2023-2027 CIP includes $1.2 million in capital improvements with an additional $201,000 beyond 2027. The initial 2023 capital requests from facilities were $751,688. As the health of the facilities fund was evaluated, staff determined that the fund could not support those requests. The adjusted 2023 requests are $435,660. One hundred percent of the capital expenditures for 2023 will be funded through fund balance reserves of the Facilities Fund.
The 2023-2027 Facilities CIP consists of three tables:
• Projects with Executive Summary - lists projects with a short summary and project costs by year
• Projects by Revenue Source - lists all revenues being requested to fund capital projects and shows the revenue allocations by project
• Projects by Expense Category - lists projects with expense categories to show what funds are being used for (Ex: construction, consulting, etc.)
Capital Improvement Plan Summary:
|
Revenues |
2023 Budget |
2024-2027 |
Beyond 2027 |
Revenues Total |
|
Communications Fund Res/Rev |
- |
75,000 |
- |
75,000 |
|
Facilities Department Charges |
- |
717,216 |
200,960 |
918,176 |
|
Facilities Fund Reserve |
435,660 |
- |
- |
435,660 |
|
Grand Total |
435,660 |
792,216 |
200,960 |
1,428,836 |
|
Project Costs |
2023 Budget |
2024-2027 |
Beyond 2027 |
Project Total |
|
Buildings & Structures |
121,050 |
342,605 |
- |
463,655 |
|
Construction |
- |
250,000 |
- |
250,000 |
|
Consulting |
50,000 |
- |
- |
50,000 |
|
Contingency |
- |
45,000 |
- |
45,000 |
|
Heavy Machinery & Equip |
85,500 |
- |
- |
85,500 |
|
Major Repairs |
159,055 |
126,300 |
200,960 |
486,315 |
|
Other Equipment |
20,055 |
28,311 |
- |
48,366 |
|
Grand Total |
435,660 |
792,216 |
200,960 |
1,428,836 |
2023 projects include:
• Boiler replacement - Public Works
• Building automation for HVAC at Public works
• City Hall Proposed 7-year pavement management plan
• PD Cold Storage Proposed 7-year pavement management plan
• Public Works - Refrigerators
• Public Works 7-year pavement management plan
• Public Works building roof repair and maintenance program
• Replacement of condensation pumps for boilers - Public Works
• Replacement of service garage door sensors with safety light curtain
• Roof top AC unit for Fire Garage/Armory
• Unit heater replacement - Public Works
Consulting for 2024 projects included in 2023 project costs:
• Council chambers remodel
Five-Year Outlook
Staff continues work in identifying the facilities fund’s scope. A policy to establish the ideal scope of the fund will be worked on in 2023. Additionally, while a five-year capital plan was created for 2023-2027, capital needs are still evolving as city facilities are evaluated.
The facilities fund will need to further increase the department charges in the next five years to preserve and improve city facilities as well as maintain a healthy fund balance. The fund balance is projected to be around $460,000 at the end of 2023 which aligns with the ideal fund balance of $400,000.
Strategic Plan Relationship
Adoption of annual budgets contributes to the overall financial stability of the City.
Financial Impact
The proposed budget, if adopted, would appropriate funds for 2023 facilities operations and capital needs of $1,776,870 by utilizing 2023 revenues of $1,323,120 and fund reserves of $453,750.
Recommendation
By motion, adopt the 2023 Facilities Fund Budget and 2023-2027 Capital Improvement Plan.
Attachment List
2023 Facilities Fund Budget Summary
2023 - 2027 Facilities CIP
Body
WHEREAS, the proposed Facilities Fund Budget and 2023-2027 Capital Improvement Plan for the fiscal year commencing January 1, 2023 have been prepared by the City Manager; and
WHEREAS, the City Council has examined, studied, and reviewed said proposed Facilities Fund Budget and 2023-2027 Capital Improvement Plan; and
WHEREAS, the City Council has, after due consideration and deliberation, made such adjustments in the proposed Facilities Fund Budget and 2023-2027 Capital Improvement Plan they consider necessary, desirable, or expedient.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Blaine as follows:
1. That the proposed Facilities Fund Budget and 2023-2027 Capital Improvement Plan attached hereto are approved; and
2. That the 2023 funding sources identified and attached hereto are approved, and, if and where indicated, the transfer of excess reserves from the General Fund is approved.; and
3. That the 2023 appropriations attached hereto are approved; and
4. That the City’s 5-Year Capital Improvement Plan be updated to reflect the approval of projects included in the proposed 2023-2027 Facilities Capital Improvement Plan; and
5. That the City Manager is authorized and directed to implement and to administer, within the budgetary funding limits and within adopted City policy and relevant State and City laws and regulations, said approved Facilities Fund Budget and 2023-2027 Capital Improvement Plan.
PASSED by the City Council of the City of Blaine this 19th day of December 2022.