Follow the Money Trail Part 1: 30% of Capital Improvement Budget for 2.2 Miles in River Arts District?

This is follow the Money Trail Part 1
Click here to read Follow the Money Trail Part 2: Selling Yourself to New Belgium

The City of Asheville's proposed budget for fiscal year 2015-2016 is ready.  It will be presented at City Council on June 9th and they hope, approved by June 23rd, giving taxpayers less than a month to review and ask questions. We decided to do our own budget analysis.

As a former administrator, I know that budgets are a moving target but they do tell a story especially when you a) review them over a period of time and b) compare the proposed budgets to actual

Here's our highlights as it relates to the River Arts District RADTIP project (the 2.2 miles in River Arts District on French Broad River) which can be found in the Capital Improvements Program of the City Budget, followed by more details and analysis:

RADTIP is 31% of Capital Improvement Program
The RADTIP project (the 2.2 mile stretch in the River Arts District) represents 31% of the entire Capital Improvement Budget. LET ME SAY THAT AGAIN - 31%.  
RADTIP is the largest of all City capital improvement projects 
It is the largest project and even if with some portion of that being funded, the RADTIP still represents an entire year's worth of the CIP budget.  
RADTIP shows up in 2012-2013 budget 
In February 2012, Gary Jackson stated that the construction funds needed for the RADTIP section of the RiverWay could cost $50 million dollars, whereas all of the City’s capital improvement fund availability for the next 5 years is about $40 million dollars. Why are we dedicating so much to such a small area?
RADTIP did not show up in the CIP budget plan until the proposed budget for 2012-2013 shortly after New Belgium announces Asheville as its east coast site.  Something to be noted especially when people say this has been in the works for years.  Apparently, it wasn't important enough to fund in years past.

RADTIP budget grows over $10 Million from last year 
The RADTIP budget was 21.9 Million in the 2014-2015 proposed budget. It is now $34.3 Million in this year's proposed budget.  
Here's a comparison of proposed spending by budget fiscal year



Capital Improvement Program
2014 to 2019
Capital Improvement Program
2015 - 2020
1,557,577 (FY 2015)

$1,046,836 (FY 2015)

1,206,344 (2016)

$8,011,053 (2016)

3,660,307 (2017)

$7,000,000 (2018)

5,840,915 (2018)

$6,102,000 (2017)

9,634,857 (2019)

$7,299,000 (2019)


$4,859,000 (2020)


$16 Million of the total is coming from funding sources but we know a) those funds can change, b) budgets change as plans change and c) we already know that they want an additional $3 million new Craven Street bridge.  This budget will not shrink but will probably get bigger.

Why such huge spending in a small area? New Belgium, of course

The Asheville Blade wrote about the proposed budget of 2014:

About $90 million of that is city funds, including both loans and cash, especially the RADTIP overhaul in the River District.
Of course, New Belgium brewing is a big part of this, as improving infrastructure near the future brewery was a major part of the deal to bring Big Beer here in the first place.
Part of the deal for getting New Belgium were capital improvements such as the road work done on Craven Street. More on that in Part 2 of this series.

Capital Improvement Program  Budgets increases over 100% over last 5 years 

In 2011, the Capital Improvements budget for the next 5 years was only $59 Million.  In the previous 5 years, that represented a 45% increase.

5 years later and the CIP budget is now $142 Million.  It has more than doubled over the last 5 years.


CAPITAL IMPROVEMENT PROGRAM -what is it and why should I care?

Taxpayers should care because taxpayers are paying for it.  

(pg 69 of Proposed Budget) In 2013, the City increased property taxes by 3% specifically to pay for these Capital Improvement projects.  In order to continue funding these, they will have to continue increasing tax rates.  Read this on Municipal Service Districts in which the City can now finance these projects without taxpayer vote.

Taxpayers should care about the CIP because these are projects that don't always have to be funded and where there is discretion in how much you pay and when and how you finance them. Unlike salaries, benefits, insurance, etc. these are moving targets and subject to change. However, CIP's generally grow unless there is a recession or other slow down in revenue growth in which case the City must then cut back.

The Capital Improvement Program in short, is a basic plan to reinvest in your assets by maintaining and improving upon them.

Example: If you own a home or business, a capital improvement would be similar to having a new roof installed or buying new equipment like HVAC which can be very expensive. These are items that you know are generally going to require more than your annual budget and some of these will be depreciated over time on your taxes.  Business owners, like homeowners, often have to finance capital improvement projects because they are so expensive.

Capital improvement projects are NOT always required but generally are needed.  It improves value and makes the most of your assets but one should not break the bank for these projects.  This is a delicate balancing act.

In the care of a municipality, taxpayers should watch these items because this is simply a projection of cash but does NOT include the cost to finance.  In other words, the City will go into debt in some form or fashion to cover what is not funded through grants.

SUMMARY

We will continue to provide an analysis of the City's budget and will review other items in detail but we leave you with this:

City has increased taxes, year after year
City has increased fees on all services, year after year
City has cut back on services, year after year
Shouldn't expenses be cut back too? Show us those, please

Documents Referenced (click to access)
City of Asheville Proposed 2015-2016 Budget
City of Asheville Approved 2014-2015 Budget
2011 to 2015 Capital Improvement Budget Section

Click here to read Follow the Money Trail Part 2: Selling Yourself to New Belgium


2 comments:

  1. One question we do have: if the total CIP budget, including expenses, is $142,197,272 million but the total in projects (excluding any grant funds) is $107 million; where is the other $35 million?

    ReplyDelete
  2. Well, from further review, we believe the $35 million is what the City expects to receive from other funding sources and grants. We will need to confirm that information but if that's true, then the City and taxpayers will be funding $107 million over 5 years.

    ReplyDelete