BROOKINGS – Officials don’t anticipate any new capital improvement projects in Brookings for the foreseeable future as the city’s revenue recovers from COVID-19.
The Brookings City Council got a detailed look during Tuesday’s study session of the 10-year Capital Improvement Plan (CIP) as it stands in the 2021 budget.
Councilor Nick Wendell chaired the meeting. Mayor Keith Corbett was absent, and Deputy Mayor Patty Bacon attended by phone.
The Capital Improvement Plan is a 10-year fluid plan of future expenditures with expected revenues to guide the city council, City Manager Paul Briseno said.
“For the foreseeable future, our finances only allow for our maintenance plan with little room for any new projects,” Briseno said.
Due to COVID-19, staff had to revamp the entire document to get a balanced budget.
“Staff had to cut millions to make this plan work,” Briseno said.
They had to come up with ways to finance needs and put off large purchases.
“However, … we are short,” he said. They hope to augment shortages with grants or other funds in the future.
Prior commitments claim 15% of the city’s revenue and will for years to come, he warned.
“Not until 2028 can the city afford new projects,” Briseno said.
He gave a quick overview of specific areas: outside agency funding, debt service, and revenue.
In outside agency funding, the city has committed $100,000 to the Performing Arts Center II expansion for this year.
“I do value the PAC and that improvement, but the council and the public should understand that that has bound us for the foreseeable future,” Briseno said.
In 2022, the city has committed $100,000 to the hospital expansion/addition and $916,666 to the PAC II expansion for a total of $1,016,666. That yearly commitment continues through 2026.
In 2027, the city has committed $916,666 to the PAC II expansion and $75,000 to the hospital expansion/addition for a total of $991,666. Those commitments do not exist in 2028.
In the debt service funding, the city has committed $100,000 to the County Resource Center and $2,730,396 to total bond and interest payments for a total of $2,830,396 for this year.
From 2022 on, the city’s only debt service commitment is to the total bond and interest payments, which will vary from $1.6 million in 2022, and gradually decreasing down to $730,691 in 2030.
Revenue from second-penny sale tax and other funds total $9.4 million in 2021; it’s expected to rebound to $12.68 million by 2030.
“At the end of the day, the CIP plan takes care of what we have. Much like the rest of the budget, it’s a bare-bones budget. It’s a maintenance budget for the next eight years,” Briseno said.
In the next eight years, the council will have to have critical discussions about community investments.
“One discussion that will need to occur sooner is how to finance the renovations or development of a new police station; and that’ll be coming before council here within the next year or two,” Briseno said.
Presentation
Jacob Meshke, assistant city manager, detailed the information in the 20-page presentation.
“City staff is projecting negative sales tax throughout 2021,” Meshke said.
The 2020 budget totaled $55,130,696; the 2021 budget is $53,968,114.
The 2021 CIP at-a-glance showed the 2021 expenditures at $9,348,846 and the 2021 revenue at $9,446,449.
Revenue is from second-penny sales tax, Tax Increment Financing revenue, and City Council priority funding.
Councilor comments
Councilor Leah Brink wanted more details about the LED conversion project.
They are still working on the logistics, Meshke said, but it has to do with when the city goes for a Request for Proposals project.
“What the company actually do is they guarantee your energy savings through audits,” Meshke said. They will assess all the buildings and guarantee an amount that will be saved on the energy bill.
“We utilize those energy savings to pay off that project over the life (of the project),” Meshke said.
Councilor Ope Niemeyer asked how the city was doing this year and if the 15th Street and Seventh Avenue project was still on budget.
“We preempted some declines in revenue and adjusted our budget around 20% to 25% down,” Chief Financial Officer Erick Rangel said. They will keep a close eye on things and evaluate everything in August to see where the city is.
City Engineer Jackie Lanning said they have an updated engineer’s estimate on the 15th Street South project.
“We do have enough to cover that project,” she said, adding it could be bid in 2021.
Brink asked if the PAC payments were a legally binding contractual obligation.
It is a contractual obligation until 2027, Rangel answered.
“It does impact our debt capacity, as well, for the next eight years,” Briseno added.
Rangel mentioned the city could renegotiate the commitment.
Councilor Joey Collins asked if the obligations to the PAC and the hospital could be paid off early.
It is possible, Rangel said, and explained how it could be done.
“Since it is zero interest, we’d be better off paying off, for instance, the debt to the city building, which is at a higher interest rate. That way we could save additional money in the future,” Briseno said.
Wendell had noticed that after the fiscal year 2021, the city’s debt service total decreases by more than $1 million and asked what debt is retired.
Rangel said it was a combination of the 2010 bond that will go away and the payments to the county for the County Resource Center building.
“This is a really lean budget, right? And I think it’s just really important that that is emphasized in the community and that everyone understands that there’s not gonna be lots of funding for extra or new projects,” Brink observed.
Contact Jodelle Greiner at jgreiner@brookingsregister.com.
