The city of Clinton’s finances are solid, but the concern is not as much about the present as it is to lay the groundwork for future sustainability, officials said.
That was the message from assistant city manager Shawn Purvis as he gave an overview of the Capital Improvement Plan, a multi-year forecast of big-price expenses from fiscal year 2013-14 to 2017-18 and into the future, during a Tuesday night meeting. Purvis noted that the CIP is a tool to gauge budget impact and is in no way a static planning document.
Before detailing a number of capital projects on the horizon, Purvis gave a quick outline of the city’s financial standing as compared to peer cities, taking into account things such as dependency, debt service ratio and fund balance.
“We do as well or better typically than our peers based on these financial indicators,” said Purvis. “We are fiscally sound. The concern isn’t what we are now; the concern is where we’re going moving forward. We want to make sure we’re in the right place moving forward and able to do the things we want to do.”
Currently, the General Fund is in stable financial condition but sustainability is the main issue facing the fund. Many of the city’s facilities and infrastructure are at the end of their useful life or have been outgrown based on the city’s needed capacity or service expectations, said Purvis.
“Currently, we’re financially stable,” said Purvis, “however, we have a lot of significant projects to come.”
Low growth and a slow economy contribute to revenues that are lagging behind expenditure growth. Some new industry and recent expansion of existing industry could help close part of the gap, but without new construction or renovations, city services run the risk of becoming less efficient and effective, said Purvis.
The CIP was broken into short-term projects (years 1 and 2), and long-term projects (years 3-5+), all subject to change based on Council direction.
In the short-term, General Fund projects and expenses include Phase I of the Royal Lane Rehab, at a cost of $1 million, as well as the purchase of a fire apparatus for the Beaman Street station, at $150,000. Two current trucks — one a 1988 model and the other a 1992 — could be consolidated into one with the purchase, Purvis said. Fire chief Adon Snyder noted the lifespan of a fire truck is usually 20 to 25 years.
Also included are a police radar trailer, at $13,000; Eliza Lane streets, at $107,000 (all Community Development Block Grant funds, with city portion already expended in the past two years); and tennis court refurbishment, at $125,000, which could be contingent on some grant funds.
Eight courts were previously proposed, but that may be modified to four. The front set of courts, which are nearly 40 years old, would receive a complete refurbishment under the proposal. The other set of courts, which are newer, are in worse condition. There is a recreation focus group meeting planned to gauge public opinion about the issue.
Financial software upgrades are also encompassed in the plan, at a cost of $125,000, which would be split between the General Fund and Water and Sewer Funds.
The city’s current Logix accounting software is not meeting new computer specifications. Computers purchased now come with a 64-bit platform. Logix only operates on 32-bit and has expressed no intention of upgrading on any of its software or equipment, Purvis said.
“We already have server issues,” he said. “All of the new laptops have to have a work-around done, patchwork just to operate. This would be a transition away from Logix.”
A new police station, at a cost of $3.4 million, would come in year 2, according to the proposal. A City Hall generator, at a cost of $50,000, is also in the short-term CIP, but has been put off in previous budgets.
Long-term General Fund projects include the continuation of the $1 million Royal Lane Rehab; Bellamy Center addition, at $2.5 million; N.C. 24 North parallel road, at $500,000; fire station renovations, at $1.5 million; fire station 2, at $2 million; and a fire training tower, at $250,000.
Other programs on the horizon, but without cost attached, including work on city-owned parking lots, parks and playgrounds and the construction of sidewalks and greenways as part of the Clinton Pedestrian Plan.
Among the expenses in the Water and Sewer Fund for the short-term are the Chemtex infrastructure, at $2.4 million; Smithfield water tank, at $1.7 million; water plant expansion, at $4.8 million; Public Works facilities renovations, at $380,000; and Eliza Lane CDBG Water and Sewer, at $293,000.
The Caison Building demolition and the building of a sealed shelter to effectively house Public Works equipment is estimated at $125,000, to come in year 2.
Over the long term, 3-5 years out or more, the plan proposes N.C. 24 expansion lines, at a cost of $1.35 million; automated meter reading implementation, at a cost of $1 million; Deer Track lines, at $350,000; UV disinfection system, at $600,000; and N.C. 24 North parallel utilities, reimbursement to the Department of Transportation as part of the road expansion, at $500,000.
The Water and Sewer Fund is in sound financial condition, with about $500,000 in annual debt service for several projects coming off the books over the next three years, Purvis said, That additional capacity, coupled with significant retained earnings, provides the opportunity to pursue projects.
Several of those projects, including the water plant expansion, Smithfield tank construction and Chemtex infrastructure, are in the works, due to break ground in the next couple years.
“What we need to be aware of is that doesn’t mean (the Water and Sewer Fund) is a cash cow,” said Purvis. “We still have plenty of projects out there that are large projects. The condition the fund is in allows us to do these projects, but not necessarily everything we want, at least not without considering fees and rates (changes).”
Planning for the future
Purvis said it was important not only to forecast large items in particular, but determine a way of budgeting the regular purchase of necessary vehicles and equipment citywide, as well as street paving, on a rotating basis so that the financial burden does not fall all at one time.
Establishing capital replacement programs, while difficult on short-term cash flow, can prove beneficial for the long-term fiscal health of the city.
“What we’re trying to do is establish a program so that there’s a set rotation, it balances out every year,” said Purvis, versus a small expense this year and a huge one the next. “As you establish this program, there is a set amount every year and you know what you are getting. So that 30 years down the road, there’s already a plan, everything is in place and it will make the city more financially stable.”
Lawnmowers at the Grounds Department were one example: there are five, and they can all be run into the ground at one time and be purchased at one time, or one can be purchased every year because they usually last five to seven years.
“You’re in a constant rotation of $10,000 a year, and you don’t have to spend $50,000 all at one time,” said Purvis. “You’ve always got what you need, it’s less maintenance cost, we get a higher return when we surplus it and it keeps us more efficient.”
Purvis said such programs were being looked at for all equipment and vehicles, some of which will bring a greater budget impact because they simply cost more. The impact may not be seen until down the line, with some rotating expenses for some vehicles spread further apart than others. However, the impact on future city budgets and operations will be a positive one.
“The full effect won’t be seen by us on a lot of these programs,” said Purvis. “The point is what is there for those sitting in this room 30 years from now, when they’re trying to put everything in place and make sure everything is in sound financial condition.”
“It might be a little difficult at first as we try to get our cash flow in order to make sure we can establish the programs,” said Purvis, “but once they’re there, they will be less expensive and easier to manage on the back end. We may never actually see the outcome, but we know they are set and in place.”
City manager John Connet said the the city’s future planning has improved over the years, thanks to staff work and Council directives.
“Each year we take another step forward as far as our capital planning, which is one of our goals,” Connet told Council members. “One of your goals is financial sustainability, and that’s really what we’re trying to meet, so that your successors have a good plan and don’t have to deal with all you’ve had to.”
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at firstname.lastname@example.org.