HomeMy WebLinkAboutFIN 2018-02-06 Item 2B - Public Safety Plan - FinancingCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Rachel Bianchi
CC: Mayor Ekberg
DATE: January 30, 2018
SUBJECT: Financing the Public Safety Plan
ISSUE
Due to market conditions and cost escalation, the City has a significant gap in the Public Safety
Plan budget. The Finance Committee has been tasked with reviewing options and identifying
potential recommendations for the full Council to consider later this spring. The Justice Center
will also finish Schematic Design this spring and will provide for better understanding of the
costs associated with that project. Merging these timelines will provide the necessary
information for the City Council to provide direction on the next steps on the Public Safety Plan.
BACKGROUND
Process:
Due to the gravity and complexity of this issue, staff worked with the Committee Chair to identify
the following schedule for covering the various information associated with tackling the funding
gap:
February 6, 2018 Finance Committee:
• Project costs as known
• Overview of voter -approved bonds
• Debt capacity and term
• Fire Impact Fees
• Land sales and other one-time funds
• REET 1
February 20, 2018 Finance Committee:
• New revenue options
March 6, 2018 Finance Committee:
• General fund and operations
• CIP prioritization
March 20, 2018 Finance Committee:
• Review project schedule
Staff proposes that the Committee review the information presented and provide direction to
staff at each meeting as to which options are of interest to the council. Staff will then use the
intervening time to build an iterative financial model that can be reviewed and added to at
subsequent meetings. For instance, if the Committee is interested in dedicating land sales to
filling the gap, this would be a tool we would build into the model and bring back to show you the
implications as to how that tool — along with others agreed to by the committee — would work
together to fill the gap. By the end of this process, the goal is to have a collaboratively built
model to inform the full Council and any final decisions.
Staff has provided its recommendations after each tool to inform the Council of its position.
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INFORMATIONAL MEMO
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Project costs as known:
Before we discuss tools for filling the gap, it is important that everyone has the same
understanding of the current known project costs.
Below are the current budget estimates for the Public Safety Plan projects. Fire Station 51 has
completed the schematic design phase, allowing for more certainty on the estimates associated
with the fire stations. However, the estimate for the Justice Center is carrying many significant
costs, such as budget allotted for site preparation and the Public Works facility estimate is the
most extreme, assuming none of the buildings on the current site could be reused. The Justice
Center will be done with Schematic Design in May and at that point there will be more certainty
on the budget estimate. The Public Works facility will not hit that stage until toward the end of
this year.
Public Safety Plan Project Cost Estimates as of January, 2018 (in millions)
Project
Initial Budget
Updated
Gap
Fire Station 51
$11,446
$12,509
$1,063
Fire Station 52
$5,657
$17,652
$11,9951
Fire Station 53
$7,329
$14,753
$7,424
Justice Center
$28,629
$68,536
$39,907
Public Works Facility
$29,493
$63,270
$33,777
Total Gap for Projects
$94,166
Utility Fund Gap Obligation for PW
($16,888)
Total Unfunded Gap
$77,278
The cash flow spreadsheet for the projects, on the current schedule, is attached.
Voter -Approved Bonds:
The voters approved a $77.4 million bond measure in November 2016. In December 2016,
$36.7 million, of these bonds were issued. Based on the cash flow analysis provided by SOJ in
December 2017, the remainder of the bond authorization, or $40.6 million, will be needed in
2018 and 2019 to fund property purchases and construction costs. The recommendation is to
issue the bonds in the fall of 2018 so the debt service can be included with the 2019 property
tax assessments.
Debt Capacity and LTGO Bonding:
In order to address the Public Safety Plan funding gap, it is likely that the City would need to
issue additional bonds, this time councilmanic ones.
State law limits the amount of debt the City can carry. For councilmanic/limited tax general
obligation (LTGO) debt, the City is limited to 1.5% of taxable assessed valuation. Total debt
(including voted and non -voted debt) is limited to 2.5% of assessed valuation. As of December
31, 2017, the City had capacity for an additional $59 million in councilmanic debt. This number
will increase as assessed valuation goes up and existing debt is paid off, providing the City
additional capacity in the out years.
1 The headquarters station was moved from Fire Station 51 to Fire Station 52
during the siting phase, technically flipping the budgets for Stations 51 and
52, hence the relatively small gap for 51 and huge one for 52.
W:12018 Info Memos\PSPIanFinancing1.doc
INFORMATIONAL MEMO
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Bonds are normally issued for a 20 -year term. However, debt payments can be spread over the
useful life of the underlying asset. In the case of structures such as the Justice Center and the
Fire Stations, the debt payback period could be increased to 30 years since the life of the
structures will be 30 or more years. A longer payback period translates into lower annual debt
service payments, albeit over a longer period of time.
Staff recommendation: Use LTGO bonds to cover the Public Safety Plan gap in a manner that
allows for some cushion in the event of an economic downturn; leverage the fact that some
existing debt drops off in 2020 and 2024 freeing up additional capacity to pay back the bonds.
Fire Impact Fees:
Fire impact fees are charged on residential and commercial development to pay for the impact
of growth on fire facilities. Fire impact fees, on average, have yielded $120K over the past 9
years, excluding the $500K fire impact fee deposit received in 2017 through the Tukwila South
Development Agreement. The City has not increased its fire impacts fees in more than a
decade, and there is additional capacity in these fees to support the new fire stations. The
update of the fire and park impact fees is scheduled to be presented to the Finance Committee
in March, 2018. Should the Council adopt the new impact fees, staff estimates that they would
generate between $200,000 and $400,000 per year that could be used to pay off LTGO bonds.
An additional $1.5 million in fire impact fees exist today that will be dedicated to the fire station
projects.
Staff recommendation: Dedicate current and future Fire Impact Fees to the Fire Stations.
Land Sales and other one-time funds:
The City owns a variety of land that could be sold with the proceeds being dedicated to the
Public Safety Plan. Staff estimates there is approximately $15 million in proceeds that could be
available to fill the gap. Potential land sales include:
• Newporter site
• Tukwila Village Phases 1, 2 and 3
• Longacres site
• Old Fire Station 53 site
• Current Fire Station 51
• Current Fire Station 52
• Current Fire Station 54
• George Long Shops
• Minkler Shops
Additionally, the City currently has $3 million in the 301 fund for parks acquisition from REET 1.
The Council recently gave the authority for REET 1 to be used for the Public Safety Plan and
this funding could be dedicated to the public safety plan in a one-time manner similar to the land
sales.
Staff recommendation: Dedicate land sales identified above and the $3 million in the 301 fund
to the Public Safety Plan.
W:12018 Info MemosIPSPIanFinancing1.doc
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INFORMATIONAL MEMO
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Ongoing REET 1:
The City also has the opportunity to dedicate REET 1 funding to the Public Safety Plan moving
forward. Given historical REET 1 accruals, staff believes that approximately $500,000 per year
could be dedicated to the Public Safety Plan gap.
Staff recommendation: Dedicate ongoing REET 1 to the Public Safety Plan; funds above
$500,000 per year would go to parks acquisition.
RECOMMENDATION
Staff is seeking committee interest in the various tools presented today. At the next Committee
meeting there will be a full discussion of the various potential new revenue tools the Committee
may want to employ to fill the funding gap. Subsequent to that meeting, the Committee will also
discuss any potential general fund obligations that could be used for the gap. This direction will
allow staff to build a model based on the Council's priorities and Administration
recommendations. Finally, a discussion on the project schedule and potential cost implications
of accelerating/delaying projects, can be placed into the model to understand the cash flow and
facility ramifications.
ATTACHMENT
Public Safety Plan Cash Flow
16 W.12018 Info Memos\PSPIanFinancing 1.doc
City of Tukwila - Facilities Plan
Conceptual Cash Flow Plan
YOE $ (in thousands)
based on Budget updates through January 30,2018
Justice Center
2016 2017
2018 2019 2020 2021
01 Q2 Q3 Q4 01 Q2 Q3 Q4 01 Q2 Q3 Q4 01 Q2
Category
Construction Costs
Site Acquistion
Soft Costs
YOE$ (x$1K)
$35,555 OK
$14,269 OK
$17,090 OK
TOTAL $66,913
$ -
$ 36
$ 449
$ - $ -
$ 1,346 $12,387
$ 854 $ 854
$ - $ -
$ 400 $ 100
854 $ 1,196 $ 1,709
$ 4,267 $ 6,044 $ 7,822
$ - $ - $ -
$ 1,709 $ 1,709 $ 1,709
$ 8,178 $ 6,400 $ 2,844 $ -
$ - $ - $ - $ -
$ 1,709 $ 1,709 $ 1,709 $ 833
$ 85
$ 485
$ 2,201 $ 13,241 $ 854 $ 1,596 $ 1,809 $ 5,976 $ 7,753 $ 9,531
$ 9,887 $ 8,109 $ 4,553 $ 833
$ - $
Fire Station 51
2016
2017
01
2016
2017
Q1
2018
Q4
Q1
2019
Q4
Q1
2020
Q4
2021
Q2 Q3
Q2 Q3
Q2 Q3
Q1 Q2
Q2
Category
Category YOE$ (x$1K)
YOE$ (x$1K)
Construction Costs
$8,005
OK
$ -
$ -
$ -
$ - $ -
$ 80
$ 1,201
$ 1,601 $ 2,001
$ 1,761
$ 1,121
$ 240 $ -
$ -
$ - $
Site Acquistion
$ 4,735
$0
OK
$ -
$ -
$ -
$ - $ -
$ -
$ -
$ - $ -
$ -
$ -
$ - $ -
$ -
$ - $ -
Soft Costs
$ -
$4,503
OK
$ 23
$ 185
$ 180
$ 225 $ 360
$ 540
$ 540
$ 540 $ 540
$ 540
$ 450
$ 378 $ -
$ -
$ - $ -
$ 777
TOTAL
$12,508
$ 777
$ 23
$ 185
$ 180
$ 225 $ 360
$ 620
$ 1,741
$ 2,141 $ 2,542
$ 2,302
$ 1,571
$ 618 $ -
$ -
$ - $ -
Fire Station 52
$ 812
$ 846
$ 812
$ 16,893
$ 777
$ 777
2018
$ 2,502
$ 6,290
2019
$ 7,868
$ 7,868
2020
$ 4,014
2021
- assume
2016
2017
2019
2020
2021
2016
2017
Q1
Q2 Q3
Q4
Q1
Q2 Q3
Q4
Q1
Q2 Q3
Q4
Q1 Q2
Category
Q1
YOE$ (x$1K)
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Category YOE$ (x$1K)
Construction Costs
$11,297
OK
$ -
$ -
$ -
$ - $ -
$ -
$ -
$ - $ -
$ 226
$ 2,824
$ 3,389 $ 2,824
$ 1,469
$ 565 $
Site Acquistion
Construction Costs
$0
OK
$ -
$ -
$ -
$ - $ -
$ -
$ -
$ - $ -
$ -
$ -
$ - $ -
$ -
$ - $ -
Soft Costs
$ 3,824
$6,355
OK
$ 32
$ 238
$ 127
$ 127 $ 318
$ 318
$ 508
$ 508 $ 635
$ 635
$ 635
$ 635 $ 635
$ 635
$ 366 $ -
$ -
TOTAL
$17,652
$ -
$ 32
$ 238
$ 127
$ 127 $ 318
$ 318
$ 508
$ 508 $ 635
$ 861
$ 3,460
$ 4,024 $ 3,460
$ 2,104
$ 931 $ -
Fire Station 54
$ 471
$ 565
$ 942
$ 942
$ 942
$ 942
2018
$ 631
$ 408
2019
$44,817
2020
$ 303
2021
$ 540
$ 505
$ 16,587
$ 471
2016
2017
$ 2,854
$ 3,810
$ 3,810
$ 4,766
$ 4,766
$ 2,543
$ 2,321
Q1
Q2 Q3
Q4
Q1
Q2 Q3
Q4
Q1
Q2 Q3
Q4
Q1 Q2
Category
YOE$ (x$1K)
Construction Costs
$8,896
OK
$ -
$ -
$ -
$ - $ -
$ -
$ -
$ - $ -
$ 178
$ 2,224
$ 2,669 $ 2,224
$ 1,156
$ 445 $
Site Acquistion
$854
OK
$ -
$ 0
$ 854
$ - $ -
$ -
$ -
$ - $ -
$ -
$ -
$ - $ -
$ -
$ - $ -
Soft Costs
$5,004
OK
$ 25
$ 98
$ 100
$ 100 $ 250
$ 250
$ 400
$ 400 $ 500
$ 500
$ 500
$ 500 $ 500
$ 500
$ 378 $ -
TOTAL
$14,753
$ 25
$ 99
$ 954
$ 100 $ 250
$ 250
$ 400
$ 400 $ 500
$ 678
$ 2,724
$ 3,168 $ 2,724
$ 1,657
$ 822 $ -
City Shops (PW5 Site - w/Surface Parking)
2016
2017
01
2018
Q4
01
2019
Q4
Q1
2020
Q4
2021
Q2
Q3
Q2
Q3
Q2
Q3
Q1
Q2
Category YOE$ (x$1K)
Construction Costs
$31,568
OK
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ 947
$ 4,735
$ 4,735
$ 6,314
$ 6,314
$ 5,367
$ 3,157
Site Acquistion
$16,277
OK
$ -
$ 24
$ 34
$ 69
$ 34
$ 16,116
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
Soft Costs
$15,548
OK
$ -
$ 279
$ 777
$ 777
$ 777
$ 777
$ 777
$ 777
$ 933
$ 1,555
$ 1,555
$ 1,554
$ 1,555
$ 1,555
$ 1,042
$ 857
TOTAL
$63,393
$ -
$ 303
$ 812
$ 846
$ 812
$ 16,893
$ 777
$ 777
$ 933
$ 2,502
$ 6,290
$ 6,289
$ 7,868
$ 7,868
$ 6,408
$ 4,014
City Shops (PW5 Site - w/Surface Parking
- assume
2018
2019
2020
2021
2016
2017
reuse of existing building)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Category YOE$ (x$1K)
Construction Costs
$19,122
OK
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ 1,912
$ 2,868
$ 2,868
$ 3,824
$ 3,824
$ 1,912
$ 1,912
Site Acquistion
$16,277
OK
$ -
$ 24
$ 34
$ 69
$ 34
$ 16,116
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
Soft Costs
$9,418
OK
$ -
$ 279
$ 471
$ 471
$ 471
$ 471
$ 471
$ 471
$ 565
$ 942
$ 942
$ 942
$ 942
$ 942
$ 631
$ 408
TOTAL
$44,817
$ -
$ 303
$ 505
$ 540
$ 505
$ 16,587
$ 471
$ 471
$ 565
$ 2,854
$ 3,810
$ 3,810
$ 4,766
$ 4,766
$ 2,543
$ 2,321
RANGE OF PROJECT COSTS (LOW -HIGH)
2016 2017
2018
2019
2020
2021
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 43 Q4 Q1 Q2
TOTAL PROJECT COSTS
LOW
HIGH
YOE$ (x$1K)
$156,644 OK
$175,220 OK
$ 165
$ 165
$ 1,310
$ 1,310
$ 3,967 $ 14,233 $ 2,288 $ 19,372
$ 4,273 $ 14,539 $ 2,594 $ 19,678
$ 4,930 $ 9,497 $ 11,996 $ 16,226
$ 5,236 $ 9,803 $ 12,364 $ 15,874
$ 21,452 $ 19,729 $ 15,504 $ 9,360
$ 23,932 $ 22,208 $ 18,606 $ 12,462
$ 4,296 $ 2,321
$ 8,161 $ 4,014
$ 35,555.005 $ -
$ 14,268.546 $ -
$ 17,089.889 $ -
$ 8,005.426 $
$ - $
$ 4,503.051 $
$ 11,297.204 $
$ - $
$ 6,354.677 $
$ 8,895.521 $
$ 854.000 $
$ 5,003.731 $
$ 31,568.000 $
$ 16,277.000 $
$ 15,548.418 $
$ 19,122.000 $
$ 16,277.000 $
$ 9,418.299 $
$ 156,644.349
$ 175,220.468