Page 401 - Hurst FY20 Approved Budget

CITY OF HURST
CAPITAL IMPROVEMENTS PROGRAM

CAPITAL IMPROVEMENTS PROGRAM SUMMARY

The City of Hurst Capital Improvements Program (CIP) is a process by which the City develops a multi-year plan
for major capital expenditures that matches available resources and satisfies City tax rate objectives and long-term
plans. The CIP, a separately published document, lists each approved and proposed capital project, the time frame
in which the project is estimated to be undertaken, the financial requirements of the project, and approved and
proposed methods of financing. The CIP attempts to identify and plan for all major capital needs, both currently
funded and unfunded, and deals with capital items that are different from those which are typically covered under
the capital outlay category in each department's operating budget. Projects are divided into short range (necessary
within one year), intermediate range (two to four years) and long range (beyond five years). Generally, the CIP
includes improvements costing $100,000 or more, that are debt funded, that are non-recurring and have a
multi-year useful life resulting in fixed assets. These include the construction and acquisition of new buildings,
additions or renovations of existing buildings, construction and reconstruction of streets, water and sanitary sewer
improvements, drainage improvements, land purchases and major equipment purchases. Projects are identified
for funding through staff analysis, citizen input and meetings with City Council and Boards and Commissions.

As projects in the CIP are finally approved for financing by the City Council, they are moved from the "unfunded"
section of the CIP to the "funded" section and become part of the detailed capital project lists in this section of the
operating budget. The lists herein are categorized by funding source and project type.

THE CITY’S GENERAL APPROACH AND OPERATING IMPACT OVERVIEW

The CIP for the City of Hurst is focused on adding value and extending life of City infrastructure with minimal
increase in current operating costs. Funds in the Street Bond Fund are expended for reconstruction work on major
streets and the resurfacing of roads with no anticipated operating costs. In fact, street improvements typically
reduce maintenance costs for the City. The Drainage Improvements Program also has a positive impact on
maintenance costs for the General Fund with the addition of concrete lined drainage channels in place of “natural”
channels, which typically require a more substantial amount of landscape maintenance. For the Enterprise Fund,
the replacement of water and wastewater mains and lines will also help remove costs in the operating budget. A
positive impact to future operating costs are realized upon the completion of street, drainage, and water and
wastewater improvements due to the upgrade or replacement of aged and sometimes malfunctioning infrastructure
with newer more functional infrastructure. In fact, the upgrade and replacement of aging infrastructure lowers
maintenance costs. Even so, windfall savings are not expected as infrastructure yet to be repaired or replaced
continues to age creating a balance between new maintenance requirements and new infrastructure requiring little
or no maintenance.

In prior years, major debt-related CIP projects have been timed so that debt issuance would not increase the
property tax rate. In other words, debt service costs are scheduled to have as little impact annually as possible on
taxpayers. Operations and maintenance revenue is also stabilized as a result of not having to shift tax revenues to
the City’s interest and sinking funds to cover debt service payments. These unfunded projects, as well as others,
are prioritized by needs and compared against future debt levels and revenue projections to determine the timing of
debt issuance and construction. Again, CIP projects financed through property tax supported debt indirectly impact
the operating budget through the payment of principal and interest on the incurred debt. Funding sources other
than debt are utilized when possible to minimize debt-related operating impact.

Operating costs of projects such as additional utilities, maintenance costs, and additional staffing are given
consideration in establishing project priorities. The City's financial policy for new programs prevails for all CIP
projects as follows: "New projects/programs will not be budgeted (funded) and implemented until the full annual
costs and financial impact of the programs are known." The projects most likely to have an operating impact are
those completed with Section 4B, half-cent sales tax revenue, as explained below.

The approval of an additional half percent sales tax on taxable goods and services within the City by voter
referendum on January 16, 1993, provided a funding source restricted to Community Services' CIP projects. These
projects would have otherwise been financed by property tax supported bonds or, if approved, through the General

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