CIP Committee Recommends .25% Additional and .25% Continuance to Capital Needs

Last night, as a member of the CIP Committee, I had the unpleasant duty of reporting the findings along with the recommendation of the 21 member citizens committee called to review the City’s capital needs over the next 10 years. When I first considered participating in the committee I was indeed hesitant. While I personally was familiar with the City budget, for a good deal of members of the committee this was their “first run” at them. I have to tell you I was very pleased to find out the number of investment bankers and accountants that volunteered for the committee.

The committee comprised of the following members, you may know one or more of them. Tim Evans, Mark Mabelitini (resigned), Steve Staub, Chris Hypes, Mike Griesenmeyer, Larry Reisser, Gordon Honeyman, Brenda Seagraves, Tom Deffet, Mike McFarland, Brent Armentrout, Gordon Pittenger, Joanna Pittenger, Mark Browning, Kim Yoder, Brent Rawlins, Jackie Wahl, Steve Huffman, Scott Brownlee, and yours truly, Mike McDermott.

We met on 7 occasions from between 2 hours to 3 1/2 hours each, reviewing the various components of the Tipp City financial picture including the 2010 operating budget, the 2011-2015 Capital Plan (which Council considers each year), curb and gutter assessments, debt schedules, year end balances for each department, list of city-owned assets, 2009 uniform crime report, Kyle Park master plan, staffing and salary plan per department, review of the # of lane miles added to the City, a list of vacant land for commercial and residential development, lawn mowing schedules, fire/EMS expansion plans, and the current EMS billing process.

Along with the information we reviewed, we had a schedule of planned expenses over the next 10 years that has been presented in draft form by City staff to City Council. It included $21,838,562 in capital expenditures over the next 10 years. In reviewing the proposed 10-year CIP, the committee identified several items/projects that we felt were not immediate or priority needs during the next 10 years. Basically, the citizens had an opportunity to recommend the removal/or addition of several projects that we felt were “Wants” rather than “Needs”. Here they are..

Project by Project

As you can imagine, there is a story behind each of these recommended changes. The West Side Roof Replacement was deemed unnecessary as the committee agreed to the recommended firehouse improvements which include the addition of a pitched roof and second floor to accommodate a showering area along with shared bunks for our fire/EMS volunteers to rest during their 12-24 hour shifts. As for the fire truck, some members of the committee took on the overall quoted price of the ladder truck and did their own research on new and used values for ladder trucks across the country. After which Chief Kessler stated “If you can get me $900,000 I can get you a fire truck”, which reduced the former $1 million price tag by $100,000. The committee also requested that the ladder truck include a pumper so the station would not need to acquire an additional pumper vehicle to the tune of $450,000. The basketball court at City Park needed a new backboard and possibly needs moved to the tune of $50,000, the committee did not deem this to be a necessary expense for taxpayers. The City purchases those white lounge chairs for the pool and has a rule that you cannot bring your own lounge chairs, stating that there are safety hazards with bringing non-City owned lounge chairs to the Aquatic Center. The committee rather liked the idea of being able to bring y0ur own lounge chairs and scrapped the $40,000 in future expense. The committee removed the planned $100,000 for the zoning code update as non-essential. The South Kinna Drive extension project is seen as a safety and economic development action, providing additional access to additional commercial real estate with the overall pricetag of $419,000. The committee did not want to commit to nearly a half million dollars in “if you build it they will come” and only recommended $100,000 to purchase the land rights and easements for the project. And if you have ever been over Evanston Road, there is that really annoying and unsafe hump in the road as you approach South Hyatt, with a price tag of $216,322 to remove the hump in the road the committee again decided against the project, suggesting that the City install a “stop ahead” sign upon the approach to the hump in the road.

CR-25A widening

The CR-25 A widening project was also removed from the recommended capital improvement list by the committee. Several council members raised their eyebrows to this component of the recommendation as the overall project to widen one (1) mile of CR-25 A will cost $3 million, but the State of Ohio currently has a 60% grant that Tipp City can obtain to perform the work at the low, low price of $1 million (the City’s share). As you may or may not know, all of the capital projects that the City engages in currently are ones that are paid for in great part or entirely by Federal or State grant. When asked, I explained that the committee looked at the 1 mile extension plan from Main St to Michaels Rd. and noted that a great percentage of the land that borders the 1 mile of planned development was residential. (so there is no true commercial interest) The committee also pressed the City Manager on the status of the second mile (from Michaels to Evanston). He stated that the plans for that are more than 10 years out, and that he thought that the same level of funding from the State of Ohio (60%) would be highly unlikely for that project, meaning that Tipp would end up paying an estimated $2-3 million for the second mile widening project to get it to the City line of incorporation. Several councilmen pressed me on this as they seemed surprised that the committee would knowingly turn this project money down from the State. I shared with them that the committee did not believe that it was prudent to add an additional 3 new commercial/industrial lane-miles to the City’s pavement schedule without properly addressing the miles of cracks and potholes that make up many of our residential communities. I added that many residential streets in Tipp have not been repaved in more than 20 years, with one being as old as 35 years. (the recommended re-pavement schedule for residential roads in Ohio is 10-15 years) In closing, I shared that the City has done a poor job of keeping up with the capital needs of our streets and roads and this recommendation with urgency is being provided to them to catch up and repair what is in disrepair.

The Recommendation

The CIP Committee reviewed several alternatives for funding the City’s long-term capital needs. Those alternatives ranged from separate levies for the ladder truck, fire station improvements and road improvements to a combination safety services property tax levy/0.25% income tax dedicated to capital needs. Ultimately 15 of the 17 voting committee members present supported a 10 year, 0.25% increase in the income tax in 2011 dedicated to capital improvements and a 10 year continuation of the 0.25% parks levy for capital improvements in 2013. Taxpayers who work in Tipp City would therefore see a net increase in their local tax rate by 0.25% beginning in 2011. This would make their effective local tax rate 1.5%, while still continuing the tradition of Tipp City having the lowest tax rate of any City in Miami County.

Of note, is that the tax increase suggested will be presented as one issue on the May 3, 2011 ballot. The committee wanted to ensure that there was accountability for the money in the projects that it can be used for (by assigning it to Capital Improvements) as well as the time frame that the City would request the residents to pay the tax. If after 10 years the City has not found other resources to pay for the pavement of roads and fire/EMS needs, it will need to go to the voters to again request the funding.

The recommendation presented to Council also included an accelerated payment schedule. Instead of recommending that the City finance these projects over 20 years which was their plan, the committee suggested that the payment of the debt be accelerated to 10 years, slashing an additional $885,000 off of the overall cost of these projects in interest payments. In review of the monies currently being paid to capital improvements, we noticed that there was already a large burden to the City to pay for projects that were completed more than 15 years ago (some of which already need to be repaired). The new payment schedule will save the City hundreds of thousands in interest payments, and keep the payment of projects well within their planned life expectancy.