Item 4C: Adoption of Resolution on FY12 CAFR

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In February of 2011, the City Council approved the Capital Improvement Program for FY12 to FY17. The Capital Improvement Program (CIP) forecasts the City’s capital needs over a six-year period based on various long-range plans, goals, and policies. The underlying strategy of the CIP is to plan for land acquisition, construction, and major maintenance of public facilities necessary for the safe and efficient management of City assets. A critical element of a balanced CIP is the provision of funds to preserve or enhance existing facilities and provide new assets which will help the City respond to changing service needs and community growth. The program serves as the basis for the capital budget and is updated every two years. The FY12-17 CIP totals about $152.3 million in projects with funding secured or identified from a variety of sources. City staff are currently working on updating the Capital Improvement Program for FY14-19 planning period, with a draft CIP to be presented to the City Budget Committee and the City Council in early 2013. Transportation is the largest CIP category with a total allocation of $46.9 million, of which $41.6 million is dedicated towards pavement preservation, and another $5.3 million for other transportation projects. Airport capital improvements, including the recently completed airport fire rescue station, terminal building expansion and preservation and maintenance projects, will account for $46.8 million. About $25.5 million for public buildings will primarily be invested in preservation and capital maintenance of existing City facilities. Improvements to preserve and rehabilitate the City’s wastewater system will be funded with $13.1 million. Under the City’s stormwater program, drywell decommissioning, stream corridor acquisition, bank stabilization and stream restoration, and system upgrades and capacity enhancements are to be funded at $13.5 million. Approximately $6.6 million in anticipated capital spending will be for parks and open space projects. In April 2011, the City’s Executive Team reviewed and approved the Multi-Year Financial Plan (MYFP) for FY12 to FY17. The MYFP was subsequently presented to the Mayor and the City’s Budget Committee. The Multi-Year Financial Plan is an annual compilation of significant but unfunded challenges and opportunities that are likely to occur over the next six years. It serves as a strategic planning tool and helps address Council’s goal for “Fair, Stable, and Adequate Resources.” It provides an important means to improve the City’s ability to link the Council goals process, the Capital Improvement Program, the General Fund Six-year Financial Forecast, other project or service specific strategic plans, and the annual budget process. A wide range of unfunded needs, challenges and opportunities, are included in the MYFP, including several high-priority items. The MYFP includes General Fund and other current service funding shortfalls, preservation and maintenance of existing City assets and facilities, and implementation of adopted plans or policies. The plan also identifies important emerging issues that may have a financial impact on the City. The FY12-17 MYFP identified a total of about $281.0 million in unfunded challenges and opportunities that may occur within the next six years. Of this amount, $134.1 million is for the following high-priority items: General Fund shortfall; Ambulance Transport Fund shortfall; Parking Fund stabilization; Parks and Open Space operations and maintenance; Deferred maintenance of City facilities; Echo Hollow/Sheldon Pool preservation; Pavement Preservation backlog; Envision Eugene implementation; and Additional jail beds. All of these high-priority items would need to be funded on an ongoing basis in order for the City’s budget to become a truly sustainable, rather than merely stable, in the long-run. City staff are currently working on updating the Multi-Year Financial Plan for FY14-19 planning period, with a draft MYFP to be presented to the City Council in late 2012. significant amount of future capital projects, as well as identified unfunded needs, the City also With the recognizes the need to be thoughtful and deliberate in planning future debt levels. As a result, the City has developed a Debt Affordability Study that is updated every two years in conjunction with the CIP update. This study looks at not just the legally allowable level of debt, but the level of debt that the community would consider affordable, given the ability of the community to pay for that debt. The Budget Committee adopted a debt policy limit of net direct debt of no more than 1% of real market value of property. The Debt Affordability Study measures future debt plans against this debt policy limit to determine whether those plans are considered affordable and those results are included in the CIP. The City’s net direct debt to real market value is projected to be 0.16% by the end of FY13. 5