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Joyce Clark Unfiltered

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Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

City council has now spent several workshops on the Capital Improvement Program (CIP) with at least one more workshop scheduled on the same topic. Why all the emphasis on the CIP?

In all government whether federal, state or local, power derives from how taxpayer dollars are spent. Having the authority to decide where money is spent is a very powerful. On a federal level a successful Congressman/woman will bring home a project like a road or federal building to a district. It means jobs and an infusion of cash into a district. On a local level one of the imperatives is to provide amenities for district residents or to get the streets fixed in a district.

In this blog I will try to explain the CIP in detail. If you aren’t interested, stop here…but if you are, please read on.

The Capital Improvement Program (CIP) is a constant 10 year plan that specifies which projects will get built and where the funding will come from. It applies to any project that costs over $50,000 and has a life span of at least ten years.

Even though it is a ten year plan, the first 5 years are the years to which you should pay attention. The second five years are placeholders and over time, they may be eliminated or moved up into the first five years, as needs and priorities change.

Where does the money come from to fund the CIP? This is perhaps, the most complicated part of the process to understand. The major categories are:

  • General Obligation Bonds (G.O. Bonds). In the Glendale election of 2019 voters were asked to approve authorization to fund certain city areas running out of authorization such as Parks and Recreation. The city only issues G.O. Bonds when there is an identified project to construct and more importantly, if the issuance of the bonds will not raise your property taxes. As an FYI, city council voted on and approved a policy of not raising your property taxes to fund G.O. Bonds. There are about 12 different categories of G.O. Bonds from Public Safety to Open Spaces/Trails to Local Drainage (streets that get flooded).
  • Pay-As-You-Go. Money for the construction of some projects comes directly from the city’s General Fund. The city’s General Fund’s monies come from various sources including city sales taxes and state-shared revenues.
  • Transportation Sales Tax. Part of the city’s sales tax is restricted and dedicated to be used only for transportation related projects such as Pavement Management.
  • Highway User Revenue Fund (HURF). The state reimburses each city a portion of what you pay in gasoline sales tax. These funds are also restricted and can be used only for transportation related projects including mass transit such as buses.
  • Development Impact Fees (DIF). These are fees paid by a developer when a new project is constructed. They are to be used in the general proximity of where the new development was constructed. Hence the need for geographical zones to ensure that the money is spent in the appropriate geographical area. Over the years the city has modified DIF geographical zones requiring checking the boundaries of the zone to see if the money can actually be spent in a certain geographical area. It must also meet stringent regulations established by the state legislature. Currently there are at least a dozen DIF funding sources dependent on the year the funds were collected and what the DIF boundaries were at the time of collection.
  • Grants. The city is always applying for grants from various governmental agencies. Many grants require the city to provide matching funds. From the feds we often get grants in Public Safety, for our airport and the annual Community Development Block Grants. Maricopa County may issue grants for flooding issues. The state may issue grants for transportation issues. This list is not all inclusive as grant opportunities come and go.
  • Enterprise Funds. This area includes water, sewer, landfill and trash collection. These areas are restricted and are dependent upon rate payers for these services. These areas tend to issue their own bonds for projects as long as restrictive guidelines are observed although there have been times when General Fund revenues have been used to help fund a major project.

So it isn’t just good enough to identify a major project in the CIP, the funding source must be identified confirming there is enough money in that fund and that it is the correct funding source for the project.

I am going to list a CIP project in some of the areas presented to city council. If you would like to see all of the projects here is the link: 01 Draft CIP 2021.02.02. I must warn you this file is approximately 300 pages but this is what city council uses to do its homework for budget workshops on just the CIP.

  • Under Airport is CIPAP21010, Southwest Apron Design/Construct. All projects begin with CIP. AP stands for airport. The number refers to when it was added to the CIP. There is a Description of the project. In this case it is, “Project design and construction of southwest apron, taxi lane and access road to accommodate capacity needs.” Then there is a Justification, “Design and construction of new public apron, taxi land, and infrastructure to accommodate expansion of aircraft storage to meet capacity needs. Project required under FAA and ADOT Grant Assurances and Airport Design Standards.” The estimated cost of the project is offered and in this case is, Design from Fund 2190 slated for Fiscal Year (FY) 2024 in the amount of $225,000 and Construction from Fund 2190 slated for FY 2025 for $1,800,000 for a Grand Total of $2,025,000. Fund 2190 as a funding source is an Airport Capital Grant. The city has or will apply to the FAA for a grant for this project and it may require some city matching funds but that will not be known until the grant is issued.
  • Under Arts is CIPAT20033, Municipal Arts Program. There is Carryover of $1,245,125. That means money collected from previous years has accumulated to this amount and is available. The Description is, “City Council Ordinance No. 1226 created a Municipal Art Fund which provides for the purchase of works of art for public places. This consists of commissioned, non-commissioned and the performing arts, all reviewed and recommended by the Glendale Arts Commission (via the Annual Arts Plan0. These funds are used to implement the Annual Arts Plan and maintain and restore the City’s art portfolio (when necessary).” The Justification is, “By City Council Ordinance. No. 1226, a Municipal Art Fund is created which provides for the purchase of works of art for public places.”
  • Under Drainage is CIPDR21034, Bethany Home Road SD (storm drain), 43rd to 51st Description is, “Design and construction of storm drain pipe, inlets, catch basins and other appurtenances in a ½ square mile area centered on Bethany Home Road between 43rd Ave. and 51st Ave. Design began in FY21.” The Justification is, “Project is identified in the Storm Water Master Plan adopted by the city 2011. Maricopa County Flood Control District has budgeted $4.5 million toward completion of the project.” In FY 2022 the sources of funding and expenditures are: Carryover from Fund 2160, Other Grants of $604,173; In FY 2022,Construction from Fund 2160, Other Grants and Fund 4110, Flood Control Construction totaling $2,750,000; and in FY 2023, Construction from Fund 2160, Other Grants and Fund 4110, Flood Control Construction totaling $5,150,00; There is also the cost of Internal Charges from Fund 4110, Flood Control Construction of $123,500 in FY 2022 and $195,700 in FY 2023; in FY 2022 the cost of land totals $500,000 with funding from Fund 2160 and Fund 4110; Public Art in FY 2022 totals $27,500 from Fund 4110. The total cost of the project is $9,402,373 and the money comes from grants with some matching funds from the city.
  • City Hall 2nd Floor HVAC UNIT, CIPFC21048. Description is, “Replacement of the main HVAC for the second floor at City Hall.” Justification is, “The HVAC unit for the second floor of City Hall has exceeded it’s expected life cycle and has begun to fail.” The funding source is Fund 1080, General Government, Pay As You Go, and is Carryover in the amount of $44,221 that will be expended in FY 2022.

I could go on but I think you get the idea about the information that is presented to city council during the CIP budget workshops. The other categories I did not cover are Landfill, Library, Parking Lots, Parks, Public Safety, Solid Waste, Streets, Transit, Water and Wastewater. You can see the full presentation of the CIP in the link I cited above.

Mind you, that is just one part of our budget review. The other portion will be a city council review of and approval of departmental expenditures and employee salaries and benefits. We will probably wrap up budget discussions and decisions in April having taken 4 months of workshop discussions to arrive at a balanced budget for Fiscal Year 2022.

© Joyce Clark, 2021       

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This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such material. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 82 days since the city’s pledge to build the West Branch Library.

This afternoon, March 24, 2015 at 1:30 PM the city council will be meeting in workshop session to receive more information on the proposed Fiscal Year 2016-17 budget. The focus will be on the Capital Improvement Program.

The City of Glendale has posted the Capital Improvement Program (CIP) 2016-2025 on its website.  Here is the link: CIPDRAFT3_24v

The current proposed CIP has no funding from the General Fund for anything other than construction of a parking garage at Westgate. One note: you will see funding for water, sewer and sanitation projects but their bond repayment is not from the General Fund. They are paid from stand alone Enterprise Funds and the Enterprise bonds issued are paid back from the rate payers who use those services. You will also see funding for some street and airport projects but the funding for those does not come from the General Fund either. They are funded from the voter approved, dedicated portion of the sales tax that goes into the Transportation Fund.

The city’s General Fund is used to pay ongoing operating (the largest line item being employee salaries) and maintenance expenses (for city facilities) as well as to pay back bonds that have been issued for the following categories:

  • Fund 1980 – Street/Parking bonds
  • Fund 2140 – Open Space/Trails bonds
  • Fund 2060 – Parks bonds
  • Fund 2160 – Library bonds
  • Fund 2040 – Public Safety bonds
  • Fund 2080 – Government Facilities bonds
  • Fund 2130 – Cultural Facility bonds
  • Fund 2100 – Economic Development bonds
  • Fund 2180 – Flood Control bonds                                                                                              

The major General Fund bond issuance in the draft CIP 2016-2015 is for a parking garage at Westgate. It is Project 68124, Parking garage at Westgate with the following schedule of funding:

  • FY 2016 $  2,404,337
  • FY 2017 $20,000,172
  • FY 2018 $23,999,730
  • TOTAL  $46,404,239

Within the General Fund bond capacity funding are a few, small street projects (about 3), each less than $350,000; $1.6 million to upgrade storm drains; and an upgrade of the police digital communication system for $1.9 million. There is nothing even considered until after 2020 for Open Space/Trails, Parks, Library, Government Facilities, Cultural Facilities or Economic Development. These are all quality-of-life amenities that make a city great. They are the projects that attract new residents to Glendale and new businesses that appreciate the amenities that will help them attract quality employees. All of that is forsaken for a new parking structure at Westgate for over $46 million dollars. Trust me…that price tag will increase over time.

This new parking garage will cost a little under a million dollars annually for utilities and maintenance. A new operating expense will be added to the General Fund. For the past ten years staff was required to show where new money for a new operating expense would come from. The narrative for this expense within this CIP is cursorily dismissed with “Additional O and M will be absorbed within the current operating budget.”

The bottom line is that Glendale still has a structural deficit. To date, former City Manager Fischer and the Director of Finance, Tom Duensing, have used band aids. They have refinanced the city’s debt (done previously and historically when the market is favorable) and they have relied on making the temporary sales tax increase permanent. They have never attacked the real problem – the city is spending more than it takes in while it’s major debt components (construction debt for the arena and ball park and the annual $15 million dollar payment to Ice Arizona for managing the arena) bleeds the city dry.

Until senior management decides to live within its means by cutting General Fund expenses and resolves the construction debt burden and the $15 million annual payment burden we won’t see the city build amenities that can be used by its residents.

Apparently senior management believes there is some debt repayment capacity within the General Fund. What is it being used for? A parking garage at Westgate. Can you imagine what could be done with $46 million dollars? The city could build the West Branch Library, and still have money left over to renovate and upgrade existing parks and build some new parks as well. In other words, that money could be used to upgrade your quality-of-life and attract new business development to Glendale.

Why a parking garage at Westgate now? There is a 2002 contractual obligation with the Arizona Sports and Tourism Authority (I no longer have a copy of the agreement) that requires the city to guarantee 6,000 parking spaces for games. Those spaces have been located within Westgate since the stadium opened. As Westgate’s land is used for new development those 6,000 spaces diminish. However, there is still a great deal of raw land to the east and north within Westgate. The purpose of the Youth Sports fields construction just to the east of the stadium was to relieve any parking spaces lost in Westgate proper. It provides 4,000 to 6,000 overflow parking spaces that still fulfill the agreement’s requirement for parking. Apparently that’s not good enough for the Bidwill’s who have been grousing and pushing for this parking garage for several years. So, the city has caved and will build the parking garage to be completed by the end of 2017. Great for the Bidwills…not so great for the residents of Glendale.

It’s a matter of priorities. It seems the greatest priority is to build a parking garage in Westgate while bonding for another $46 + million dollars and lesser priorities — to be fulfilled someday — are the quality-of-life amenities that Glendale citizens can enjoy.  Is this your priority? If not, what are you going to do about it? Sit back and eat it? Or let your councilmembers know what matters to you?

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

 

The major categories of debt that Glendale carries have been identified in the bdu-4-pocket-khaki-tan-jacket-100-ripstop-cotton[1]previous 4 blogs. How the revenues are spent has also been explored.  The next question is…was the issuance of all Glendale debt prudent and necessary?

The issuance of Enterprise Fund debt, Highway User Revenue Fund (HURF) debt and Transportation debt has historically been reasonable and prudent. The debt associated with these three funds are for the “bricks and mortar” of the city. They fund projects for the construction of new infrastructure as Glendale grew and for the repair and maintenance of all city infrastructures. They were used on projects as diverse as new water treatment facilities to new traffic lights to Northern Parkway.

There is one form of debt that I have not covered previously and that is the Interfund Loan debt. The General Fund borrowed from the Water/Sewer, Landfill, Sanitation, Technology Replacement and Vehicle Replacement Funds to cover two annual $25 million management fee payments to the National Hockey League (NHL) for Jobing.com Arena during Fiscal Years 2011 and 2012. The first $25 million annual fee payment in 2011 came from the General Fund’s Contingency Fund and no Enterprise Funds were used.

The second $25 million annual fee payment in 2012 came from loans from the above mentioned funds with the lion’s share of $20 million borrowed from the Water/Sewer Enterprise Fund. We know from Ordinance 1451 that, “The sanitation fund shall be a separate and protected fund, to be used for no other purpose than expenses associated with sanitation services.” The other Enterprise Fund Ordinances carry the same caveat.

There are some who have heart burn over the concept of the city having borrowed money from these funds. What they fail to recognize is that over many years, General Fund dollars were used to support these funds by carrying some of the Enterprise Fund employees or by not receiving full compensation for the support functions performed by General Fund employees. Historically, over the years, the Enterprise Funds have been supported financially in some form or fashion by the General Fund. Under those circumstances borrowing from the Enterprise Funds is not as egregious as some think it to be. Here is just one example of the financial interrelationship between the General Fund and the Enterprise Funds occurring on January 8, 2013, This is a request for City Council to waive reading beyond the title and adopt an ordinance approving an operating cash transfer from the General Fund (GF) to the Water/Sewer Enterprise Fund; and the transfer of 3.5 Full Time Employees (FTEs), and the associated appropriation authority, from the Water/Sewer Enterprise Fund to the GF, both of which are within the Financial Services Department.”

The debt issuance decisions associated with the General Obligation (G.O.) bonds and the Municipal Property Corporation (MPC) bonds have not always been prudent or even necessary. As has been stated previously some of the council decisions were political. In the G.O. bond category just two examples are: the accelerated advancement of the Foothills Recreation & Aquatic Center which was politically motivated; as was the Capital Improvement Program (CIP) number 1 placement of the Public Safety & Training Facility (PSTF). The PSTF was funded with a combination of G.O. debt and MPC debt.

Was the need for either of these facilities critical? No. Those that get everything in north Glendale wanted more and in this case it was their own recreation and aquatic center so that they wouldn’t have to travel down “there.” The number of resident-owned swimming pools in north Glendale and especially the Cholla district is astronomical compared to any other region of Glendale. It’s ironic that this facility has become regional serving the interests of Peoria and Phoenix residents. Councilmember Martinez would be quick to point out that the facility earned revenues that just about cover the annual O&M facility costs but those revenues do not cover the debt issued to pay for its construction. That’s being paid off by every property owner in Glendale with their secondary property tax.

Was the need for a Public Safety Training Facility (PSTF) critical? Again, the answer is No. To this day new police recruits go to a regional police academy such as the Arizona Law Enforcement Training Academy (ALETA) for initial training. The PSTF is used by Glendale police for advanced training only, another function whose needs can be met elsewhere. The Glendale fire department just had to have this facility even though they have always been able to obtain training slots for new recruits at the regional facilities in Phoenix and Mesa. Training slots had never been an issue. Suddenly the dearth of slots became the rationale for Glendale’s very own training facility.

Lastly we arrive at the MPC Bond debt. Were the projects funded by MPC debt critical and necessary? The answer is No.  Decisions regarding MPC expenditures were often political. Former Mayor Scruggs always went ballistic when she heard references to Glendale as the town of “hicks and sticks, plows and cows.” She and former City Manager Ed Beasley shared a vision. Their vision was that Glendale would become an equal of the well known Valley cities who had developed a niche and a city brand for themselves. Tempe is known as a college town. Scottsdale has always been the “west’s most western town.” Chandler and Gilbert were becoming the technology towns. Glendale wanted to be the sports town.

The former mayor often had majority council support from Councilmembers Eggleston, Martinez, Frate and Goulet. All wanted Glendale to be a member of the “big boys’ club” that included cities like Phoenix, Scottsdale and Tempe. All had cache and Glendale had none. The road to acceptance meant Glendale’s branding as a sports and entertainment mecca and accepting the cost associated with making that a reality. As major developments appeared and wanted costly incentives to locate in and around the Westgate area, more and more MPC debt was issued.

Glendale has issued more MPC debt than it can sustain for such projects as Jobing.com Arena, Camelback Ranch, the Regional Public Safety Training Facility, Zanjero infrastructure and the Westgate parking garage, media center & convention center. All…very “big ticket” projects. These projects are the albatrosses hanging from Glendale’s neck.

The final blog in this series will explore any possible solutions to paying down or eliminating the MPC debt. Can it be done? Yes but it requires the will to do so.

© Joyce Clark, 2014

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

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