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Posted on: November 26, 2018

Capital Improvement Plan Approved by Council

“Executive Summary of the FY 20-24 Grinnell Capital Improvement Programs

There is one number that stands out when reviewing the FY 20-24 CIP, $18,148,500 the total expenditure figure. Although this number seems significant it is the lowest number in the 15 years we have been preparing an annual CIP. In the FY10-14 CIP cycle the total expenditure was $27,062,929. Many of the largest projects in previous plans have been completed or are in process so no longer included: new waste water treatment plant, reconstruction of the public infrastructure in the downtown, Central Park reconstruction, purchase of the aerial fire pumper, and Iowa Highway 146 north to name a few.  The city of Grinnell had developed a backlog of large capital projects over several previous decades and we have now eliminated that backlog and can settle into a more reasonable pace. 

The $18,148,500 total expenditure is more easily comprehended if broken down by project category and funding source.  There are three funding categories that account for nearly 64% of the total revenue necessary to complete the projects in this CIP.  The CIP calls for the utilization of $5,136,000 in Intergovernmental Grants. Of this total, all but $475,000 (recreation trail grant) is for projects at the Grinnell Regional Airport. These funds will be used for the runway and runway lighting construction, replacement of the fuel systems, and land acquisition. 

The second of the three revenue sources that makes up the 64% mentioned above is Revenue Bonds at $3,930,000.  This will be used to fund all or portions of three projects: water distribution improvements $1,150,000; new water storage facility $2,100,000; $400,000 for water main replacement on 10th Avenue from East Street to Penrose Street; and $280,000 to run new 12” water main in the vicinity of the Grinnell Regional Airport.

The third revenue source rounding out the 64% from above is Tax Increment Financing at $2,469,000.  These TIF funds can be placed into four categories: recreation trails $200,000; airport $589,000; street improvements at $1,505,000; and water distribution improvements $175,000. 

One interesting note is that this CIP does not include the issuance of any G.O. debt. Certain TIF debt and Capital Loan notes count against the city’s G.O. debt capacity; however, it does not have a significant impact in this plan. We forecast that in FY 27 or FY 28 the city may issue a large G.O. note once the debt from Drake Community Library, Grinnell Public Safety Building, and the Grinnell Mutual Family Aquatic Center is retired. The G.O. notes issued for these projects are being serviced exclusively with local option sales tax revenue, not our debt service levy.

There are many notable projects in this CIP ranging from the completion of the water storage in south Grinnell to the necessary improvements to the Grinnell Regional Airport. There are also plans to replace many pieces of equipment.  Some of these replacements include continued replacement of police vehicles, the street sweeper, dump trucks with snow plows, the skid steer, and several vehicles.

Over recent decades, Grinnell has established a tremendous track record of maintaining, expanding and improving all aspects of the water production, water distribution, sanitary sewer collection, sanitary sewer treatment and storm sewer system. This CIP has a very strong focus on the water distribution system. This is possible due to the tremendous work that has been completed on the sanitary sewer collection system over the past five years and the construction of the new waste water treatment plant. Although not included in this CIP, Grinnell was awarded $1 million to complete a variety of storm water quality projects throughout Grinnell in FY 20 and FY 21. These projects were not included due to the fact they are 100% grant funded and have no impact on other city projects.

There is one class of projects that is being aggressively addressed; however, we still do not feel the work outlined in this CIP is adequate.  Many cities in Iowa and across the US have been unable to rebuild vital infrastructure in recent decades.  The reasons vary from reduced state and federal assistance, reduced road use tax revenue, rapid inflation of construction costs, and resistance to increased property taxes to having other projects with higher priorities.  Due to these reasons many cities have lived off the depreciation of their infrastructure assets.  Cities’ ability to continue to live off this depreciation is diminishing.  Grinnell’s streets are largely functional with a few notable exceptions.  There are many areas where water drainage, safety, ride, and pavement condition are significant concerns.  While aesthetics is often cited by residents, this is seldom a serious consideration in staffs’ decision-making process.  The City Council decided to make a substantial investment in streets and other infrastructure in the CBD.  This decision was because it was some of the oldest and most deteriorated infrastructure in the city.  This investment is also expected to yield a more vibrant commercial climate in the CBD resulting in increased sales tax and property tax revenues over time.

Even with the aggressive street reconstruction program that has been completed and planned for in this CIP, staff does not believe it is adequate to bring our streets to the standards expected by the citizens of Grinnell.  We are limited by available funding; however, staff will continue to look for opportunities to access intergovernmental grants, private sources, or other options to improve our street network.  Staff will also keep a close eye on city revenues such as TIF, sales tax, and capital loan notes for opportunities to direct funds to streets, and possible sidewalk improvements. 

As noted above there are many projects not listed in this CIP due to lack of funding or they simply fall outside the five-year planning window.  Possibly the largest single capital project not directly identified in the CIP is the pending improvements to the water production facility.  These expenditures will likely come into the five-year time frame during the FY 2021-2025 CIP and may only include funds for planning initially.

We are fortunate that we have invested in and completed many necessary and expensive improvements. Some of the debt issued to complete those projects has been retired and a significant portion is retired just beyond the scope of this CIP in FY 25 and FY 26. Although the pace of work in this CIP is modest in comparison to previous years, there will be funds soon to make tremendous advances in projects yet to be determined. One area likely to get significant attention will be streets and related infrastructure.

Submitted by Russell L. Behrens, City Manager                                                                                                                                                                    

Capital Improvement Plan

Linking the Budgetary Process to the Capital Improvements Process

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Posted on: November 28, 2018