• warning: Parameter 2 to ed_classified_link_alter() expected to be a reference, value given in /home/soloneconomist/www/www/includes/common.inc on line 2968.
  • warning: Parameter 2 to ed_classified_link_alter() expected to be a reference, value given in /home/soloneconomist/www/www/includes/common.inc on line 2968.

Paying for progress

Tiffin approves five year CIP

TIFFIN– Make way for progress.
In January, the City of Tiffin adopted its most recent Capital Improvements Plan for fiscal years 2015 through 2020, and the to-do list is born of necessity, said Mayor Steve Berner.
“It includes needed projects. I don’t see much for wants until you reach years four or five, and those are there more as placeholders than as specific projects,” Berner said.
A Capital Improvements Plan, or CIP, is a documentation process common to most communities. Typically done during early budget discussions, city officials brainstorm big projects they would like to see both short-term and long-term, prioritize them in order of importance, assign estimated cost values to each and then determine general possibilities for funding the projects over the course of the next several years.
In the past, Tiffin City Council members, administration and public works officials have conducted brainstorming, made a list and placed projects in order, but the process didn’t carry over to budgeting and city planning because there were no financial details included.
The creation of Tiffin’s CIP plan was a little different this year.
The difference came last June, when the council hired engineering firm Veenstra & Kimm (V&K) Inc., to provide consulting services on crafting the CIP.
“We needed expertise beyond what Michon and I were able to provide, to supplement what we were able to tell the council,” said Berner about himself and former City Administrator Michon Jackson. “The council continued to say yes, all these projects are needed, but also was unsure about how are we going to pay for them.”
V&K helped refine the funding plan for the five-year CIP and their recommendations dovetailed with the city’s bond counsel Jeff Heil of Northland Securities.
“In 2011, Jeff Heil proposed a two-phase plan for financing. V&K essentially confirmed that plan, including using annual appropriations,” Berner said. Employing an annual appropriations strategy allows the city to borrow the whole amount for a project but restricts the city’s obligation in its legal lending limits to an annual payment. In Tiffin’s case, that annual payment would be paid with Tax Increment Financing (TIF) for certain projects.
“Therefore, it has no expected effect on the tax levy because of the strength of our town and where we are sitting with TIF funds,” Berner added.
The result of V&K’s guidance was a CIP document that was clearly defined, more strategic, and complete with placeholder numbers– estimated costs and potential funding sources– to better inform budgetary discussions.
The complexity of paying for things like streets, infrastructure and improvements to public facilities warrants, at least for now, the assistance of professionals who have expertise in city financing and the ability to help councils understand those very important nuances.
Cities have a number of possible revenue streams for various kinds of projects: everything from general bond issues, state-backed low interest loans, tax increment financing and revenue bonds to fee-based revenues and grant sources. Funding can depend on the nature of each project as well as state and federal regulations that can restrict or enhance a city’s ability to finance it.
V&K representatives were asked to return before the council to discuss in greater detail various options for paying for projects and possible timelines for their funding and completion.
Berner asked representatives from Northland Securities to attend the council’s March 26 meeting to answer questions about project financing and bonding strategies.
While the council formally approved the new CIP in January, it doesn’t mean the five-year plan is set in stone. Rather, it becomes a guiding document that allows for flexibility when different needs arise in the city. Tiffin’s current CIP now looks five years into the future, but Berner said it will be updated frequently as new priorities arise, grant funds become available (or drop off), and growth continues to drive the community’s needs.
“It’s a continuous process,” Berner said. For example, a $176,000 sewer line extension project was just added to accommodate a proposed commercial development project, and the city’s sewer plant expansion has been split into two phases, so related amounts on the CIP will be adjusted accordingly. “It’s a living document, and I expect we will have to re-approve it from time to time throughout the year,” Berner concluded.