Page 235 - Watauga FY21 Budget

CIP AND CAPITAL PROJECTS FUNDS

CAPITAL IMPROVEMENTS PROGRAM (CIP)

It is the goal of the City of Watauga to have a Capital Improvements Program that is focused
on adding value and extending the life of City infrastructure with no increase in operating
costs or property tax. Consideration is given to debt issuance only if the overall tax rate
remains unchanged and to prioritizing projects that will either decrease operational costs or
have no operational cost impact.

The funds are accounted for on the modified accrual basis of accounting. Revenues are
recorded when available and measurable, and expenditures are recorded when the liability is
incurred.

During FY2003-FY2011, the City was focused on an aggressive facilities campaign. During
this time, we have constructed a new City Hall and Animal Shelter, and upgraded facilites for
the Police and Recreation departments, along with upgrades to major streets. The new
Fire/EMS facility, was completed in FY2011, for just under $3.8 million dollars.

In FY2011, the City’s focus began to move from constructing and renovating facilities to the
city’s infrastructure and the need for replacement of outdated equipment and vehicles city-
wide. In July of 2011, in order to fund future capital projects and needed equipment, the City
issued $7,365,000 in Combination and Limited Pledge Revenue Certificates of Obligation.
This new issuance was designed to fund the following:

x street improvements, curb, gutter, and sidewalks
x drainage projects
x renovation of public buildings
x purchase of new equipment and vehicles
x traffic lights and traffic safety equipment
x vehicles and machinery, and
x improvements to the City’s utility system
x hardware, software and other technology

This debt issuance is payable by ad valorem taxes and additionally payable from and secured
by a lien on and pledged revenues in the amount of $4.5M. The issuance was timed in
FY2011 as a portion of debt was paid off. This timing allowed the City to maintain relatively
the same amount of debt service as prior years. The utility fund debt portion was for
approximately $2.8 million. The fund was able to maintain relatively the same amount of debt
service as prior years.

In the Spring of 2012, the City staff and Council began discussions on a possible debt
issuance for large water and sewer infrastructure projects and related street projects. These
discussions resulted in an issuance of $7.73 million in new debt for the utility fund in July,
2012. The issuance funded:

x constructing, renovating, and improving the City’s utility system

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