In pursuit of understanding the true cost of Scottsdale infrastructure needs

Scottsdale Councilman David Smith, who was once the city treasurer, says he has stark concerns regarding long term infrastructure costs. (Independent Newsmedia/Josh Martinez)

Three members of Scottsdale City Council are on a mission to help the municipality prepare for hundreds of millions of infrastructure costs officials say the municipality doesn’t have the money to pay for.

The Scottsdale Council Capital Improvement Plan Subcommittee is charged with presenting the larger governing body with both a recommendation for a list of priority projects to address infrastructure needs this coming fiscal year and, most importantly, marching orders for the next five.

Scottsdale City Council members Virginia Korte, Guy Phillips and David Smith have had three public meetings to date with department heads to better understand the mentality of addressing the needs and wants of the municipal entity.

The projected capital improvement budget heading into fiscal year 2017-18 is approximately $37.5 million of which the majority of those dollars will be going toward two projects: a renovation of the Vista Del Camino Park and subsequent facilities at an estimated cost of $17.5 million; and a Granite Reef Watershed study to the tune of $5.2 million.

The current five-year estimate for staff pursued projects totals $156.3 million, according to a March 2 staff report.

Of that number $72.1 million accounts for projects in the current five-year capital improvement plan, but those projects and that number will likely change as members of the council subcommittee are evaluating the criteria used to judge the necessity of pending projects.

There are approximately $84.2 million worth of CIP General Fund requests not included in the current five-year plan, city officials say.

Dollars derived for capital improvement projects appears to be in short order as city council has set 25 percent of construction sales tax remits, earned interest gained from the General Fund in excess of $1 million and a portion of the 1.6 percent tax on food to be allocated annually to pay for infrastructure needs.

In addition, dollars can be carried over from previous fiscal years as capital projects can often be multi-year endeavors, city leaders say. The city also sees an annual allocation of PAYGO funds, a budget worksheet shows.

A view of Scottsdale City Hall, 3939 N. Drinkwater Blvd. (file photo)

The million dollar question

Councilwoman Korte contends the city of Scottsdale is in a dire situation as it pertains to the municipality’s true infrastructure needs.

“My belief is that what this subcommittee needs to do is look out 20 or 30 years,” she said in a March 28 phone interview.

“People think it is a couple million dollars — our needs are a several hundreds of millions of dollars. How are we going to be able to fund those and phase them in over time?”

Virginia Korte

Councilwoman Korte says Scottsdale is at a critical juncture in its history.

“We really are at a critical point that this city needs to invest in its infrastructure,” she said.

“We do not have the funds in our General Fund to pay for hundreds of millions of dollars of infrastructure needs. It really is important that this subcommittee is unanimous moving forward in making recommendations to the larger council.”

The council subcommittee is leaving no fiscal stone unturned, Councilwoman Korte contends noting some kind of bond measure may become critical in years to come.

“We are looking at the criteria to evaluate the needs of the projects,” she said. “We really need to look at our strategic plans across the city. Look at what those plans call for in terms of infrastructure requirements to further those plans.”

In the short term, Councilwoman Korte says, infrastructure projects and budget allocations have already largely been decided.

“A lot of that money is what was earned five or six years ago and we carry it over year to year to be used for capital improvements. We only expect to spend $18 or close to $19 million and the balance will go into the ‘18-’19 budget.”

Councilwoman Korte says today her view is a future bond measure will be in the cards for Scottsdale residents as more and more of the realization of infrastructure needs will be realized by city leaders.

But Scottsdale residents have been reticent to grant the city’s elected leaders its proposed bond packages at the ballot box. A vocal opponent of the last two bond measures pursued by Scottsdale City Council has been Councilman Phillips.

But Councilman Phillips now has a seat at the table to better determine the true infrastructure needs of the municipality.

Guy Phillips

“I think there has been a disconnect between staff’s desire to fund projects they see as critical needs versus council and citizen priorities,” he said in a March 28 statement. “We need to have ongoing discussions throughout the year, not just during the budget process and this is one thing the subcommittee is working on.”

Councilman Phillips says he has been impressed with the willingness of all parties to help figure out the best approach to solving the city’s infrastructure equation.

“I am impressed by staffs willingness to work with council to help us find new policies concerning the CIP budget so in the future they will have better direction during budget cycles,” he pointed out.

“I think this CIP subcommittee and future ones will be critical in providing direction to council and staff on our city CIP priorities. I have a real sense that all of us are working towards better city government and accountability.”

The need for reinvestment

When asked if the city of Scottsdale can pay for its infrastructure needs without a bonding mechanism, Councilman Phillips replied, “most definitely.”

“Funding mechanisms like shared revenue, private/public partnerships, IGA’s and others all contribute to Scottsdale’s future infrastructure needs,” he pointed out. “The last place we should look for funds is on the backs of taxpayers. I should note here that a lot of the projects that we asked to bond are or will be completed anyway.”

Councilman Phillips also points out city assumptions are notoriously conservative in terms of revenue generation.

“The problem with staff presentations on year five of projects being broke is the assumption that no other money comes in,” he explained.

“I have seen past projects that staff said we couldn’t fund that are now completed or in the five year plan. The subcommittee is looking at these various funding sources and how matching funds can stretch our dollars.”

A workable plan will emerge from the council subcommittee, Councilman Phillips contends.

“We have identified the critical needs — keeping-the-lights-on projects — (and) matching fund projects that could expire and community projects that benefit all are criteria that needs to weighed before recommending a CIP budget for 2017-18,” he said adding the group will have a report to council in the next 30 days.

“If I could speak to all Scottsdale taxpayers it would be to say that we are working hard to find the best means to fund our city infrastructure,” he said.

“Scottsdale is in a great place financially, we are not in dire straits as some would have you believe and I will continue to advocate on the side of the taxpayer. I am very proud of our city and I believe the city staff is as well and so we are all striving to make this the best city (to) live and raise a family. Sometimes we may falter, but you should rest assured and have confidence in your Scottsdale city government’s ability to have a balanced and sustainable budget.”

Councilman Smith says looming infrastructure costs and a lack of reinvestment in city assets is something that keeps him up at night.

“We are going to try and convince the public that this is an honest-to-God, leave-no-stone-unturned kind of exercise,” he said of truly understanding the future needs of the city in a March 28 phone interview.

“Beyond that, we want to look at if there are available funds to do these projects. What keeps me awake at night, and frankly the reason why I ran for council, is because the city is not on a path that is sustainable for the long term.”

Mr. Smith says the city has somewhere in the neighborhood of $3 billion in depreciable assets and should be re-investing at least $100 million annually to maintain those assets — things from police cruisers and trash trucks to buildings and major thoroughfares.

“I don’t make these numbers up, the gross assets of the city have declined for the past four years — that has never happened before but it is happening now,” he said. “It is incumbent that my fellow council members understand that this is an enormous problem and it is your problem. We cannot kick the can down the for a future generation to address. I want to restore us to a position of financial sustainability.”

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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