The City of Clinton’s proposed Capital Improvement Plan for 2015-16 totals more than $1 million over the current plan behind sizable water and sewer projects — and several steps, including fee increases and fund balance allocation, have been recommended to deal with those expenses.
The recommended 2015-16 CIP includes 21 projects totaling close to $8.5 million for the General Fund and the Water and Sewer Fund, about $1.2 million more than the 2014-15 CIP. That increase is due to large rolling stock purchases, a significant renovation at Royal Lane Park and the Pierce Street extension utilities, City manager Shawn Purvis told City Council members during a recent workshop.
Water and sewer projects total more than $7 million of the $8.5 million, a 15 percent increase from Water and Sewer projects this year alone.
“The increase is the result of the $6.5 million required for construction of an elevated water tank, the water production expansion and Pierce Street extension utilities,” Purvis stated in a memo to Council. “Previously, the CIP included the elevated tank and water expansion project over a two-year period. Both these projects should come to completion in 2015-16, at which time the city will incur the debt obligation.”
The proposed CIP does have a significant effect on the General Fund operating budget, he noted.
“The budget allocates the use of $150,000 of fund balance in the General Fund,” Purvis stated. “The use of fund balance will still leave the fund within ranges specified in the city’s fund balance policy.”
Previous capital planning included renovations for the city’s police and fire stations beginning in 2016-17. Under the current proposed CIP, that has been pushed back to a 2017-18 for the police department and 2019-20 for the fire department. Several projects, including new road and greenway construction, as well as future renovations at Royal Lane Park, remain unfunded in the CIP.
“The possibility of a significant increase in the city’s tax base does exist with several new industries looking to locate to the area and the expected commercial growth from the N.C. 24 expansion. This growth, however, is at least two years away from fruition.”
Without new industry or a significant increase in the city’s assessed valuation growth rate, it will remain that way, Purvis conceded. The city will have to consider postponing the projects and others indefinitely or consider a change in revenue generation, specifically property taxes.
“Although it does not fund all requests made by departments, (the CIP) does include priority needs of the city and is set to maintain a high level of service for Clinton citizens. If the city realizes more revenue than projected, City Council may wish to pursue some future projects during the upcoming fiscal year.”
He mentioned proposed repairs for the city-owned ACE Plaza parking lot among them.
A water and sewer rate hike has been proposed for the City of Clinton, with the average user expected to pay a few quarters more on their monthly bill — a move made in part to generate revenue for high-priced projects coming down the pipe.
While there is $387,000 in debt coming off the fund’s books in 2015-16, there is the need to set money aside for ongoing and upcoming projects.
City water and sewer projects, specifically the water plant expansion, will put the city in a solid position for the future but there is still a matter of revenue generation to offset the cost of those endeavors. A water production expansion has a price tag of $4.8 million, the Southwood elevated tank costs $1.7 million and a utilities relocation for N.C. 24 tallies $2.5 million.
To that end, Purvis has recommended an increase in water and sewer fees by 1.5 percent, expected to yield an increase in estimated revenues of $60,000. The same hike was done last summer for the current budget.
“Even with the adjustment,” the city manager has noted, “our water and sewer rates are still among the most affordable in the state. It is important that we are able to maintain our system properly in order to keep the rates low in the long term.”
The proposal, if approved, would bring water base rates from $12.37 to $12.56 and sewer base rates from $12.89 to $13.08. Similarly, water consumption rates would increase from $1.86 to $1.88 per 100 cubic feet and sewer consumption rates would rise from $1.80 to $1.83 per 100 cubic feet.
For an average household with a 800 cubic feet consumption, that would translate to a monthly hike of 72 cents from $48.96 to $49.68, an overall increase of $8.64 a year.
Purvis previously addressed what he deemed “revenue concerns,” saying that municipalities as a whole have taken a hit in revenues over the past couple of years with the expiration of the hold harmless sales tax and the removal of privilege licenses.
For Clinton, that accounts for approximately $175,000 in lost revenue, or 2.5 cents on the tax rate, the city manager has pointed out.
The city will also lose $15,000 in the sale of recyclables, as well as see a slight decline in Powell Bill Funding. While modest growth in sales tax revenues and ad valorem should generate about $65,000 in revenue, Purvis has said, that still leaves the city’s expected revenues for 2015-16 at $75,000 less than the current year.
In addition to the water/sewer fee hike, Purvis has proposed a 50 cent increase in the monthly garbage fee, which would generate another $17,000.
Additionally, implementing a $35 business registration fee to offset the privilege license elimination is expected to generate another $35,000 and increasing the fire district tax by half-cent to 10 cents — in line with other county districts — would generate an additional $22,000. That ultimately has to be approved by the Sampson Board of Commissioners.
Purvis will present his proposed budget and a public hearing will be held on June 2, with tentative adoption set for June 16.