The beginning of the budget process involved the preparation of the 5-year Capital Improvement Plan (CIP).  Capital Improvements are the projects that require the expenditures of public funds for the acquisition, construction or replacement of infrastructure and capital assets necessary for the community.  The creation and update of a multi-year capital plan allows the city to plan for its current and long-term needs.  Project areas within the CIP include buildings, equipment replacement, information technology, parks, streets, tree replacement, sanitary sewer and storm drainage.

The CIP is part of the budget process, but it is not a budget, it is a plan.  It is also a plan that changes often.  Once the CIP is officially adopted by council, the 2025 projects will then be added to the 2025 budget for final approval in December.  All future year's projects (2026 and beyond) are plans at this point that are subject to change and will be updated in future CIP's.  City staff is currently updating the 15-year CIP that will be included as an appendix, this is not available at this time.

The city has a finite amount of resources, so prioritizing projects and then being able to finance projects is crucial for ensuring the city's long-term sustainability and being responsible stewards of the city's investments.  Staff is continually working to find outside funding solutions to limit the impact on the tax levy.

In recent years, staff added a 20-year Equipment Replacement Schedule as an additional appendix in the CIP book.  The equipment list encompasses all city equipment,  their estimated lives and scheduled replacement cost.  This is a standalone document from the 15-year CIP.

The plan for the workshop is to have a general overview of each fund and then review various projects within each fund.  Staff is seeking the council's input in regards to project direction and priority.  Below are a few highlights from various funds.

Park Development Fund

• The Park Development fund includes 9 projects for 2025 totaling $9.3 million, including Riverfront Marina, Trail Wayfinding and Amenities, West End Dog Park, Killarney Hills Park, Windermere Bluff Regional Corridor, Riverbank Stabilization, Cultural Corridor, Valley Crest, Jackson Commons (Highview) and Valley Crest.
• Park Dedication fees remain the primary source of funds.  The City received $3.8 million in park dedication fees in 2023.
• The Riverbank Stabilization project of $16.7 million is included in the five year plan.  The City has been awarded $8.26 million in State bonding and $3.5 million in Federal funding for these improvements and continues to seek additional funding opportunities.  The City share will come from park development,  sewer and storm drainage utility funds.
• The Cultural Corridor project of $2.2 million is included in 2025.  The City has been awarded $750,000 of Federal Community Project Funds and the remainder will come from park development funds.
• Riverfront Marina project of $2.6 million has been included in the plan and is proposed to be completed in phases 1) rehabilitation of the Livery and Schroeder House and parking, 2) historical markers under the Cultural Trail program, 3) riverbank stabilization under the larger riverbank project and 4) additional docks and trails which have been allocated $350,000 of state funding.
• Windermere Bluff Regional Corridor project of $2.25 million has been included which includes land acquisition for future park development and trail improvements.
• Parks will only be completed if funding is available and sufficient.

Capital Improvement Fund (CIF)

• The plan identifies $46.1 million in CIF projects including overlays and reconstruction projects for 2025-2029. 
• A portion of the Downtown ADA, Lighting and Tree Rehab project is currently being completed, the remaining $3.4 million is currently programmed in equal installments over the next three years.
• Two traffic improvement projects, outside the scope of overlays and reconstruction, have been programmed for 2025/2026.  Which are the Marystown Rd./Highway 169 interchange improvements ($7.8 million) and The Old Carriage Ct./Old Carriage Rd. roundabout project ($2.7 million). The Marystown Rd. interchange will be funded predominantly by a $3.7 million Met Council Regional Solicitation program award and $1.4 million Local Road Improvement Program.  Both projects are aimed to improve safety of traffic and pedestrians using those intersections.
• Over the five year plan annual overlay, rehab and reconstruction projects total $39.6 million, which is an average annual cost of $7.9 million needed to maintain current city roadways.  This is a significant increase over the previous five years, looking back at the 2020-2024 CIP, those same annual projects total $18.3 million, which  was an average of $3.7 million.
• Recurring funding sources include tax levy, franchise fees, special assessments, municipal state aid and special assessments.  Recurring funding has not kept pace with increasing street improvement costs.  That funding gap has been plugged in recent years through one-time funding sources, including a bond issue in 2022 and year-end General Fund transfers.  For 2025, staff is preliminarily recommending an increase the CIP levy from $700,000 to $1.2 million to prevent that annual funding gap from further widening.
  
  

Equipment Replacement Internal Service Fund

•  A number of pieces of new equipment and existing equipment have been added to various years on the equipment replacement schedule.  This will allow the city to begin accumulating funds for future replacement costs.  These have been identified on the equipment replacement schedule as (New).
•  Generally, equipment and vehicles costs have seen an increase from last CIP’s amounts.  The schedule includes a three percent annual inflation factor for the majority of equipment listed.  This inflationary increase, along with added equipment calculate to over a half million of additional annual rent costs.

Building Internal Service Fund

• The Innovation Center is programmed for 2025 at $13 million, but would be contingent on securing outside funding sources.
• The Fire Station #2 renovation includes the conversion of the temporary living quarters into permanent dorm rooms to allow for overnight staff.  The $950k renovation is programmed in 2026.
  
  

A final 2025-2029 CIP will be prepared after receiving council input and direction.  The goal is to have it officially adopted in October.

Please note the following sections included in the draft CIP for reference:

•  Page 6 – Listing of all projects for 2025-2029 by fund.

•  Page 251 – 20 year equipment list (encompassing all City owned equipment)