As the Town Council moves forward in review of its capital improvement plan over the next five years the math indicates that by the end of the next fiscal year, June 30, 2017, the balance in the town’s Capital Reserve Fund could be less than half a million dollars.

As a result the council discussion with staff at a special session March 8 focused on where funding for the capital improvement plan comes from and how decisions are made about how to use it.

Staff calculations indicated that once current projects are completed and projects planned for the 2016/2017 fiscal year are included, the fund balance as of the end of next fiscal year will be $428,707.

That is something of a phantom number, however, because exact revenues are only projections at this time, as are project cost estimates, and staff has a tendency to overestimate needs.

“You don’t want to shortchange yourself in the budget for capital projects,” Development Services Director Paul Mood told the council.

If you underestimate a project and don’t have enough money in the budget, you can’t finish the project until you can budget the funds the next year.

By the same token, carryover on projects is far more common. If the work is not completed in the fiscal year the money is budgeted it can be carried over into the next budget year to complete the work.

The Shea Boulevard work and the Saguaro Boulevard re-construction are both examples of this carryover.

Also, the planned Fire Station #2 relocation will have the entire project budgeted for the 2016/2017 fiscal year. However, it will not likely be completed until near the end of the 2017 calendar year, which is into the 2017/2018 fiscal year.

Income

The town’s capital improvement fund receives its revenue from money received for the construction sales tax. Currently 50 percent of those revenues are put in the capital fund. The other half go to the General Fund.

At one time the capital fund received 80 percent of the construction sales tax. However, during the recession, the council determined more was needed to support the General Fund.

At one time any year-end carryover from the General Fund was transferred to the capital projects fund. However, according to Finance Director Craig Rudolphy, there has been no surplus for a number of years.

Other sources of revenue for capital projects include grants and bonds, and money from the Highway User Revenue Fund (HURF) can be used for some street-related capital work.

The town still collects limited development fees that can be used for growth-related capital projects, although currently very little is being collected. The town has about $250,000 in development fees it can use for the Fire Station #2 relocation.

Also, the planned Preserve Trailhead will be funded with $1.8 million in development fees collected for open space projects over the years. The town can no longer collects fees for open space and any money collected previously must be spent for related projects.

There is currently about $486,000 from the CIP fund earmarked for the trailhead project in addition to the separate development fee funds.

Projects

Fire Station #2 and the Trailhead are by far the largest capital projects planned for the 2016/2017 fiscal year budget. They account for an estimate of just over $6 million combined.

Other work includes repairs to McDowell Mountain Road within Fountain Hills ($75,000). This was budgeted for the current fiscal year, but has not yet been done.

The town will purchase a third chiller for the Civic Center physical plant (Town Hall, Community Center and Library/Museum). The third piece of equipment was never installed and it has reached the point where two are running at capacity with no back-up. The cost on this is estimated at $250,000.

Tennis Courts at Golden Eagle Park will be upgraded for $390,000. This includes a grant of $211,000 from the Maricopa County Stadium District and $179,000 from the CIP fund. The CIP money is being transferred from surplus funds from the Fountain Park phase six improvements.

The budget includes $205,000 for installation of 24 additional water circulation devices in Fountain Lake to improve water quality.

Staff is also working on a project to improve pedestrian access into Fountain Park from the intersection of Avenue of the Fountains and Saguaro Boulevard. Staff is estimating $375,000 for this project. It will be funded from the Downtown Strategy Fund.

The town will spend $75,000 to demolish an old garage/storage facility next to Four Peaks School. The area will be landscaped. This project is initiated by neighborhood concerns.

Additional alley paving is slated for the next fiscal year, costing about $255,000. This work is being done to help comply with county air quality requirements.

Staff has earmarked $500,000 for shoulder paving along Fountain Hills Boulevard between Pinto Drive to Segundo Drive. Grant funding accounts for $255,000 of the total. This project is to improve drainage and safety along the roadway. These are not driving lanes.

The capital projects estimate for the 2016/2017 fiscal year is approximately $9.3 million. The five-year projection for capital improvements is $23 million.