The City of Dublin

Five Year Capital Improvements Progarm

Financial Guidelines

The Five-Year CIP establishes the City's blueprint for investments in its capital infrastructure.  This document is used as a tool to help ensure that the City's long and short-term capital investments are made in the context of careful consideration of the City's needs as well as the resources available to fund all projects.

The financial guidelines used in the preparation of the CIP will provide assurance that the City can meet, in a full and timely manner, both our debt service obligations and all the other obligations competing for the available resources.  It is our objective to complete as many needed capital improvement projects as financially possible while maintaining flexibility and the ability to adapt to changes as they occur.

There are several key guidelines which the administration utilized in determining the City's fiscal capacity to complete capital projects over the next five years. These are summarized as follows:

• The five-year plan will be updated annually.

• 25 percent of the City’s 2 percent income tax revenue shall be made available to fund capital improvements. This allocation is in accordance with Ordinance No. 17-87 and the ballot language approved by the voters in November 1987.

• Of the 25 percent of the total income tax revenues which are utilized for capital improvements, 60 percent of that amount will be allocated to fund long-term debt, and 40 percent to fund projects and capital expenses on a cash basis.  The reasons for this guideline are:

  a) It is important to stress that funding projects with long-term debt obligates the use of public funds for the next 20 years in most cases.  The more long-term debt which is incurred now significantly reduces the options available to future City Councils to fund needed projects.
  
  b) The City has determined that paying cash for projects where financially possible (pay-as-you-go financing) will increase our flexibility in the future.  In utilizing pay-as-you-go financing, revenue projections and estimated fund balances will be reviewed and evaluated to assure that sufficient reserves are maintained.
  
  c) It is not economical to issue debt for some projects.
  
  d) The estimated life of some projects does not meet the criteria to issue long-term debt.

• Income tax revenue projections will be conservative.  We are projecting a rate of growth in income tax revenue as follows:

Our philosophy for projecting income tax revenues is to be conservative. These projections are being used to determine the amount of long-term debt that can be retired using income tax revenues.  To incur substantial long-term debt based upon a high rate of growth could result in a serious financial strain on the City if those growth projections are not achieved.  Issuing long-term debt, in most cases, will result in debt service payments over a 20 year period.  Issuing long-term debt based on less than conservative growth estimates would not be a financially sound approach.

2012 - 0.5%	2014 - 2.00%
2013 - 1.5%	2015 - 2.00%

 

In addition to funding projects on a cash basis over the next five years, the purpose of these projections is to determine the amount of long-term debt that can be retired using income tax revenues. To incur substantial long-term debt based upon a less than conservative rate of growth could result in a serious financial strain on the City if those growth projections are not achieved. Issuing long-term debt, in most cases, will result in debt service payments over a 20 year period. Issuing long-term debt based on less than conservative growth estimates would not be a financially sound approach.

• To the degree that the income tax revenue rate of growth exceeds our projections in any given year, the excess revenue should be utilized to fund projects on a cash basis the following year.  Again, it would not be fiscally prudent to incur long-term debt based upon income tax projections that were not conservative. 

• The availability of adequate financial reserves or balances that can be used to address unforeseen contingencies or take advantage of opportunities is a critical element in evaluating financial strength. The City’s practice is to maintain a General Fund balance of at least 50% of the General Fund expenditures, including operating transfers. The 2009 General Fund year-end balance equaled 64.9% of expenditures and operating transfers. The percentage as of the year-end 2010 is projected to remain above 60%.

• Since a significant portion of the debt outstanding and future capital improvements are utility (water and sewer) related, the systems' user fees and capacity charges (tap permits) will continue to be evaluated. Water related improvements will be programmed based on the Water Fund's available cash reserves and estimated annual revenues. The repayment of the Ohio Water Development Authority loan for the Upper Scioto West Branch Interceptor will be retired utilizing the Sewer Fund's available cash reserves and estimated annual revenues. Every effort will be made to structure the debt service obligations for utility infrastructure improvements in such a manner as to utilize the Sewer Fund and Water Fund available cash reserves and estimated annual revenues to the fullest and thereby reducing or eliminating the dependency on income tax revenues. The goal in the Water and Sewer funds has been to maintain fund balances equal to approximately 25% of the total historical value of each system. The 2009 combined Water and Sewer Fund balances, including advances, equal 24.35% of the total historical value of both systems.

• In 2011, approximately 80% of the property tax revenue from the City’s “inside millage” will be allocated to the Capital Improvements Tax Fund. A portion of the funding will be utilized to reimburse the General Fund for advances made to acquire right-of-way for the US33/SR161/Post Road project and the remaining funding will be utilized to fund capital projects.

• The property tax revenue from the City’s inside millage (1.75 mills) was allocated 100 percent to the Parkland Acquisition Fund from 2001-2006. From 2007 - 2009, the City began allocating .95 mills of the total 1.75 mills to the Parkland Acquisition Fund and the remaining .80 mills allocated to the Capital Improvements Tax Fund, we will return to this allocation for 2012 - 2015.

• The maximum amount of income tax supported debt to be issued is 10 percent less than the estimated maximum amount of debt that can be supported by the income tax revenue allocated as available for annual debt service obligations, see page 3-2. This guideline provides an additional buffer in the event that income tax revenues fall short of projections or that an unexpected increase in interest rates occurs.

• As a matter of general policy, the City will do the following in order to be able to fund additional projects needed to serve the citizens of Dublin:
  
  a) Pursue federal, state and local assistance in the form of grants, low interest loans, cost-sharing, etc.
  
  b) Utilize assessment procedures for projects which have a reasonably well defined group of beneficiaries and which legally lend themselves to this type of financing.
  
  c) Look increasingly at ways to obtain revenue through user fees as a means to fund capital projects or as a way to free-up other income tax dollars so that they can be used to fund capital projects.
  
  d) Utilize, where appropriate, economic development incentives such as tax increment financing.

• As projects are proposed for funding, the statutory debt limitations will be reviewed to ensure compliance.
  

The five-year program provides for significant capital programming, especially given the current
economic times. The programming of projects needs to be distributed over the five-year period
so that as we update our capital program each year, we can evaluate current conditions, including
the capital needs, revenue growth, and respond to new priorities.