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7/12/2017 2:54:00 PM
City's Capital Project Needs Overwhelm Annual Budget
Spending Reserves For Capital Expenses
The City’s Five Year, 2017-2021, Capital Plan identifies a total of $257.7 million in capital projects over the next five years. The City’s 2017 budget calls for spending about $58 million on capital projects in 2017.

 Last October, Marty Lyons, the City’s Chief Financial Officer, told the RoundTable the City was planning to spend down balances in capital funds, or using reserves, to pay for some capital projects.

The City’s Fund Balance Summary for 2017 showed that the City’s estimated unreserved fund balances  (excluding the police and firefighter pension funds, which are earmarked to pay pensions), would decline from about $66.9 million at Dec. 31, 2016, to about $42.5 million at Dec. 31, 2017, or by about $24.5 million.

The City is thus using about $24.5 million in reserves to balance its 2017 capital budget. Mr. Lyons told the RoundTable that the City is spending down fund balances in only “appropriate” capital funds such as the Capital Projects Fund, the Washington National TIF Fund, the Water Fund, the Sewer Fund, and the Parking Fund.


By Shawn Jones


According to a “Capital Improvement Planning Issues” presentation at the July 10 City Council meeting, capital needs in the City of Evanston far exceed the money devoted toward them each year out of the City’s annual budget. As projects continue to get delayed, deferred maintenance approaches crisis level.

City Manager Wally Bobkiewicz introduced the Special Order of Business, saying, “There are concerns on the operational side [of the budget], but serious concerns on the capital side as well. It is fair to say we do not have sufficient resources to deal with capital programs in Evanston.” He pointed to the “importance and severity” of some of the City’s more immediate capital needs.

Lara Biggs, the City’s Bureau Chief of Capital Planning, began the presentation with an overview of 2017 capital projects, budgeted at about $58.2 million. In a typical year, according to the presentation, the City spends about $35 million on such projects.

Streets, water mains, sewers, transportation, parks, water treatment, facilities, and a broad “other” make up the project categories. Funding comes from general obligation (GO) bonds, which must be paid back over time out of property-tax revenues, to the tune of $12.3 million this year. In a typical year, the City bonds out about $7 million to $8 million.

City “enterprise funds” made up of revenue collected from a specific service, such as water and sewer or parking decks, provide funding for projects specifically related to the service. This year, the water fund provides $7.9 million, the sewer fund $2.7 million, and the parking fund $3.9 million. TIF districts will fund $7.1 million worth of capital projects within their specific districts (largely the Fountain Square project this year). Federal grants make up $10.9 million; low interest Illinois EPA loans another $7.5 for water and sewer projects only; the motor fuel tax funds $1.4 million in street resurfacing.

The problem, noted Ms. Biggs and Mr. Bobkiewicz alike, is that some projects must be funded either out of the annual budget or GO bonds only. While streets, water, sewer, and parking projects can find grants or low-interest loans, projects like the City parks and facilities cannot.

“We have done great work on our streets, but our parks have suffered,” said Mr. Bobkiewicz. A recent “parks report card” gave a number of City parks the grade of F. The presentation noted, “Parks improvement has been underfunded for long-term,” and the total annual funding needed was estimated at $4.4 million. It is not enough to “meet identified goals,” and those goals “do not address larger City concerns, such as equity or age-friendly.” Because GO bonds are the primary and often only source of funding, there is a “limited opportunity for increase.”

The City “likely needs to keep a steady state in 2018,” but continued funding at 2017 and 2018 levels “is not a viable option,” said Mr. Bobkiewicz. There were no immediate suggestions as to where to find additional funding. Shifting priorities in the annual budget and property tax increases are the most likely sources, but Council will need to wrestle with the issue in coming years.

Similarly, future needs for City facilities far exceed the current funding level and GO bond limit. “The focus is on a few goals – life safety, keeping the water out of the building,” said Ms. Biggs – “aging systems that need replacement before they fail.” She cited the Chandler-Newberger electrical and HVAC systems, as well as Fleetwood-Jourdain. If those systems were to fail, the buildings would be useless.

The Civic Center building alone needs more than $5 million in immediate work. The boilers (or “steam plant”) and HVAC need to be replaced before failure, and to do so requires an upgrade of the electrical system. The estimated cost: $3.4 million, though when a similar project was sent out for bid for Fleetwood-Jourdain Community Center last year, only one bid came back and it was for well above the estimate. Fire protection upgrades and new elevators make up another almost $2 million. “The innards of the building – steam plant, electrical – have to be addressed soon,” said Mr. Bobkiewicz.

On the water side, “The revenue coming in is not sufficient to cover payment of the water main replacements,” said Ms. Biggs. The City replaces 1% of its water mains every year, putting every pipe on a 100-year cycle. The good news is that water sales to other communities and a reworked contract with Skokie could make up the difference, she said. It was the single bright spot in the presentation.

“This is really sobering,” said Alderman Judy Fiske, 1st Ward, “Wow.”

 Although the capital and operating budget presentations were the first two Special Orders of Business on the agenda, Mayor Steve Hagerty adjusted the agenda to present the Harley Clarke matter and a water-shut off presentation first. As a result, Ms. Biggs did not step up until after 9:30 p.m., when most of the crowd had made its way home.

“I wish we had this conversation at the very beginning of the meeting when there were more people here,” said. Ald. Fiske. “We engage more people” in the process “if we do this earlier.”

Spending Reserves For Capital Expenses

The City’s Five Year, 2017-2021, Capital Plan identifies a total of $257.7 million in capital projects over the next five years. The City’s 2017 budget calls for spending about $58 million on capital projects in 2017.

 Last October, Marty Lyons, the City’s Chief Financial Officer, told the RoundTable the City was planning to spend down balances in capital funds, or using reserves, to pay for some capital projects.

The City’s Fund Balance Summary for 2017 showed that the City’s estimated unreserved fund balances  (excluding the police and firefighter pension funds, which are earmarked to pay pensions), would decline from about $66.9 million at Dec. 31, 2016, to about $42.5 million at Dec. 31, 2017, or by about $24.5 million.

The City is thus using about $24.5 million in reserves to balance its 2017 capital budget. Mr. Lyons told the RoundTable that the City is spending down fund balances in only “appropriate” capital funds such as the Capital Projects Fund, the Washington National TIF Fund, the Water Fund, the Sewer Fund, and the Parking Fund.







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