FIN 2017-10-03 Item 2D - Public Safety Plan - Financing Process

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Rachel Bianchi CC: Mayor Ekberg DATE: September 26, 2017 SUBJECT: Public Safety Plan Financing Process ISSUE Staff is seeking direction from the Committee on an approach and process to identify additional funds needed for the Public Safety Plan due to cost escalation and market conditions. BACKGROUND The City is engaged in implementing the Public Safety Plan, which includes the construction of three new fire stations, guaranteed funding for apparatus and equipment for 20 years, a new justice center to house the Tukwila Police Department and Municipal Court, and a new consolidated Public Works facility. Funding for the fire stations, apparatus and equipment and justice center is from voter -approved bonds. The Public Works facility will be paid for through an equal contribution from the General and Enterprise funds. Planning for the Public Safety Plan began many years ago, with the first seismic study done in 2007. The financial estimates for the buildings were developed in 2015 as a part of the facilities study undertaken by the City. Since that time, the Puget Sound region has seen unprecedented growth. With this growth has come significant increases in land and construction prices, and Tukwila's Public Safety Plan projects are experiencing similar escalation in costs. Tukwila is not alone in this reality, and many other public agencies are seeing similar cost increases. Some highlights recently in the news media include: • Sound Transit has revised the cost -per -parking stalls from $69,000 a space to $118,000 per space at the Sounder train station in Kent. • Sea -Tac Airport added an additional $213 million to the budgets for the new International Arrivals Facility and North Satellite expansion, an increase of 16% and 19% respectively. Indeed, the Tukwila School District has indicated significant increases over their project estimates associated with their construction bonds, approved six months before the City's Public Safety bonds. While the programming phase must be complete on the justice center and Public Works facilities in order to have preliminary updated numbers on those projects, we do know that such numbers for the fire stations indicates a $8.4 million gap. We do know that our current allocated budget for the Public Safety Plan will not allow us to build these five buildings and pay for apparatus and equipment for 20 years. We recognize that additional funding will need to be secured to complete the Public Safety Plan. To finance the gap between what we have budgeted and what the facilities will cost, staff is seeking the Council's development and approval of an overall philosophy to be used as the basis for identifying additional resources. For instance, the Council may give direction that all one-time money — such as property sales — are directed to the Public Safety Plan. Other potential resources include: delay other capital projects, reduce growth in the budget, policy changes that reduce General Fund subsidies, use of ending fund balance, use of current 21