Scottsdale begins to formulate capital improvement funding strategy

Scottsdale Mayor Jim Lane and his elected colleagues — the Scottsdale City Council — have, through its CIP subcommittee, identified key projects for this upcoming fiscal year’s capital improvement plan as rumors of another general obligation bond attempt continues to permeate through City Hall. (Independent Newsmedia/Arianna Grainey)

Scottsdale’s answer to how to fund the estimated $775 million in capital improvement needs has taken its first step toward action as “keep the lights on” projects have been identified.

In late March, Scottsdale City Council received an update on formal recommendations from its Council Capital Improvement Subcommittee — a three-member advisory body made up of elected leaders and department heads — on which of the municipality’s project wish list ought to be funded.

The CIP Subcommittee is comprised of elected leaders Guy Phillips, Suzanne Klapp and Kathy Littlefield as City Treasurer Jeff Nichols serves as liaison between staff and the larger governing body.

“This is the first time you will see it,” said Scottsdale City Engineer Dave Lipinski.

“You will see this three other times prior to approval. For the General Fund, this year, there were 103 projects submitted and almost $490 million worth of requests. When we started, this year’s available cash balance was $13.9 million, which was left outside of the requests last year. But we realized some higher than expected earnings.”

In all, Mr. Lipinski reports considering all funding sources, which includes a five-year financial forecast for assessed fees, there is $34.8 million available to fund $489.6 million in General Fund specific projects, which represents the lion’s share of the total CIP program.

The CIP program is broken into several categories depending on funding source and will be adopted in June leading up to the adoption of the fiscal year budget prior to July 1, 2019.

The CIP Subcommittee has recommended 14 essential General Fund projects — at a total cost of $29.8 million — ranging from general infrastructure maintenance like the paving of city pools and replacement of aging computer hardware to aircraft rescue and firefighting vehicles.

“The projects above the line is to keep the lights on, if you will,” Mr. Lipinski said. “It’s building repair; and maintenance, replacing roofs and HVAC systems, computer services and networks; radios. These are all capitalizable expenses.”

Of the $34.8 million in available funding, Mr. Lipinski explains $11.9 million is derived from these items:

  • A portion of food sales tax, which is set at 1.65 percent, will contribute $5.6 million;
  • Interest income will contribute $3.6 million;
  • A portion of the 25 percent construction sales tax will contribute $2.6 million; and
  • Interest earnings of assets will derive $100,000.

But Mr. Lipinski reminds total recommendations and funding available are in stark contrast.

“At the end of the day the recommendation coming forward leaves a $5 million dollar cash balance in the General Fund if all of these move forward,” he said. “Again, this gives us $34.8 million to fund nearly $490 million worth of requests.”

The City of Scottsdale, for many, is the crown jewel of the Valley of the Sun but failing infrastructure has become a point of political strife in “The West’s Most Western Town.” (File photo)

Transit and transportation

Capital projects connected to transportation needs, which is derived from a .20 percent sales tax dedicated to shoulder the cost of transit projects and roadway repairs, total $211.2 million attached to 53 projects.

However, the CIP Subcommittee has a formal recommendation of $29.8 million worth of projects to be completed under the guise of the Scottsdale Transportation Department.

“This is the .20 percent sales tax that has been in place for 20 years now,” is how Mr. Lipinski prefaced his comments. “At the adoption of the CIP last year there was a $1 million cash balance available in the transportation sales tax. Starting into this process we had $7.3 available in cash and when you added the fifth year sources of $11.7, which gave us $19 million to spend for $211 million in requests.”

The majority of transportation projects run the gamut of the little things that keep the city moving, according to Mr. Lipinski.

“It is the smaller projects that allow the Transportation Department the ability to react to council concerns and resident concerns,” he said.

The closure of the 68th Street bridge to a failure of structural integrity sparked the outcry for infrastructure repairs throughout city limits. (File photo)

Furthermore, last November Scottsdale voters approved a ballot measure that implemented a .10 percent sales tax increase over the next 10 years beginning this past February.

“We will see revenue from Feb. 1, when it came active to June 30, of approximately $4 million,” Mr. Lipinski explained. “Over the 5 years of the CIP it will see a tax revenue of $64.1 million. This (will be) used primarily to fund the ALCP programs. That is $59.3 million to fund almost $200 million in ALCP projects.”

Allocations of Arterial Life Cycle Program of the Maricopa Association of Governments revenue are administered taxpayer dollars from Prop. 400, which is a .5 percent sales tax allocation for transportation projects.

To qualify for the projects, Scottsdale needed to ensure funding dollars are available to meet tenets of the ALCP, which is dependent upon a cost-share threshold, officials say.

Stormwater projects and
other funding sources

A total of 27 projects were submitted at a total estimated cost of $58.6 million to repair existing and new infrastructure for incoming development, one in particular.

Nationwide Realty Investors is proposing a regional corporate center on 136-acres of a 1,000-acre plot of land in north Scottsdale. And, the first stormwater project — at an estimated cost of $14.5 million is listed as, “Crossroads East Flood Control Phase I,” Mr. Lipinski points out.

In all, there are 27 stormwater projects at a total of $58.6 million

“The $2 stormwater fee in 18/19 will generate $2.2 million with a 1 percent increase projected for the CIP; we are looking at about $18.2 million in revenue from the stormwater fee,” he said. “The first project to be handled by the stormwater fee is the Crossroads East Flood Control Phase 1.”

Mr. Lipinski laid out the remainder of CIP Subcommittee recommendations including enterprise funds of:

  • Aviation Funds and related grants: 18 projects at a cost of $8.3 million.
  • Water and Wastewater: 42 projects at a cost of $57 million.
  • Solid Waste: 2 projects at a cost of $500,000.
  • Preserve Sales Tax: Construction at the Pima and Dynamite trailhead at a cost of $3.8 million.
  • Special revenue TPC Basin: Construction costs associated with the TPC Basin at a cost of $1.9 million.
  • Fleet Management Fund: 1 project at cost of $2 million.

Independent Newsmedia Arizona Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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