revenue options group identify a sustainable sources of revenue for infrastructure august 11, 2014

Revenue Options Group

Identify a Sustainable Sources of Revenue for Infrastructure

August 11, 2014

Introduction

• Revenue Challenges

• Infrastructure-Street Maintenance

• Street Maintenance Funding Obligations

• Options

• Recommendation

Challenges: TIF Districts

• Geographically Limited in its ability support street maintenance program– TIF funds can only support projects within the

districts. All other roads are not eligible.

• TIF funding not a dedicated source of revenue; other projects compete for this funding.

Challenges-TIF Funding Disproportionate

• The TIF District contains 24% of the total miles of roads within the City Limits and account 71% of the expenditures.

• Non TIF areas account for 76% of the total miles of roads within the City limits and account for 29% of the expenditures.

Challenges-TIF Funding Disproportionate

24%

76%

Road Miles

TIFNon-TIF

71%

29%

Road Maintenance Funding Sources

TIF Funding $1,000,000.00Non-TIF Funding $400,000.00

Categorizing Streets

• Infrastructure Management Systems (IMS) allow staff to utilize software to provide each street in town with a pavement index number.– Streets in red are streets that need immediate

attention and are failing. IMS Rating (0-59)– Streets in yellow indicate that the streets need

maintenance to prevent them to from deteriorating to the failing condition. IMS rating (60-79)

– Streets in green indicate streets that are in acceptable condition. IMS rating (80+)

Street Ratings

Red (0-59) Yellow (60-79) Green (80-100)0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

26.63%

44.66%

28.71%

Categorized Street Condition Inventory

Street Condition Inventory

26.63%

44.66%

28.71%

SatisfactoryPreFailing ConditionFailing Condition

Street Ratings Exhibit B

Funding Obligations-Comparison

Characteristic DeKalb SycamorePopulation 44,030 17,519Total Road Miles 129.6 87

TIF 98.6 -Non-TIF 31 -

Total Road Budget 2014 $1,400,000.00 $2,698,000.00Projected Budget 2015 TBD $1,414,808.00Projected Budget 2016 TBD $1,414,808.00Projected Budget 2017 TBD $1,414,808.00$/Person spent on roads $31.80 $154.00$/ Mile $10,802.47 $31,011.49

Table 1. City DeKalb-City of Sycamore Street Maintenance Expenditure Comparison

Funding Obligations-Comparison

Characteristic DeKalb SycamorePopulation 44,030 17,519Total Road Miles 129.6 87Total Budget $400,000.00 $1,414,808.00$/Person spent on roads $9.12 $80.69$/ Mile $3,086.42 $16,262.16

Table 2. Future funding in the City of DeKalb and Sycamore.

Funding Obligations-Future

• Infrastructure Management System (IMS) – Maintain Level of Service (LOS)– Result of the study indicates $33,130,833.33 is

required over 5 years or $6,626,166.67 per year

Future Considerations

• The allocation of TIF funding may be directed to other activities within the TIF district and is not a dedicated source of revenue.

• Unreliable because it can be variable due to competition.• In 2018 TIF #1 will expire and the street maintenance

program will lose $500,000.00• In 2020 TIF #2 will expire and the street maintenance

program will lose the remaining $500,000.00 from the TIF Districts

• In 2020 the only source of funding for street maintenance will be the local gas tax at $400,000.00

Options

• Identify a Dedicated and Sustainable Funding Source – An 1% increase in sales tax provides $4,000,000.00 in revenue.– Total funds would be $4,400,000.00 and reduce the funding

shortfall to $2,226,166.67 per year. • Allow the TIF Districts to expire without identifying a

future dedicated funding source for capital projects. The impact is the condition of City streets will deteriorate.

• Request additional information from staff and/or identify alternate options.

Recommendation

• A future dedicated funding source for capital projects needs to be identified in order to properly maintain streets. It is recommended that the Finance Advisory Committee review infrastructure funding, particularly the sales tax as a dedicated source and make a formal recommendation to the City Council.