Page 352 - Hurst Budget FY21

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 plan for major
capital expenditures that matches available resources and satisfies City tax rate objectives. The CIP attempts to
identify and plan for all major capital needs. 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. 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. 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 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. 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
Fund budget. A corporation was formed to issue revenue bonds and authorize principal and interest payments from
the Half-Cent Sales Tax proceeds. Importantly, the completed CIP projects will not impact General Fund
operational costs. Maintenance and operation costs for the new facilities and improvements will instead be paid
from sales tax proceeds as authorized by the State Legislature effective September 1, 1993. City of Hurst Officials
were instrumental in communicating the need for an amendment to the Industrial Development Act of 1979, Article
5190.6, Section 4B, which now allows sales tax proceeds to not only construct major facilities and improvements
but pay costs necessary to operate them. The City maintains a multi-year financial plan for the Half-Cent
Community Services Fund to ensure all operating costs created by projects can continue to be absorbed by this
special revenue fund.

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