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Home My WebLink AboutCIP Retreat Presentation - Day 1FY 2025-26 CIP Retreat January 27-28, 2025 1 Introduce yourself and answer the question below that corresponds to the appropriate number. 1.What are you anxious about coming into this retreat? 2.What are you optimistic about for this retreat? 3.At the end of tomorrow, what would make you say we had a successful retreat? 4.What would you like to learn from this retreat? 5.If you had to describe the CIP as an item of food, what would you describe it as and why? 6.What is a key benefit for residents of a well-done CIP? 2 CIP Inflation: PPI Construction Materials Month over Month -10% -5% 0% 5% 10% 15% 20%Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23Jan-24Apr-24Jul-24The Producer Price Index is an inflationary measure that captures the average sales price of goods and services from one year to the next. 3 $227 $199 $128 $0 $50 $100 $150 $200 $250 Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23Jan-24Apr-24Jul-24CIP Inflation: PPI Construction Materials Indexed Source: Federal Reserve Economic Data 4 Recent Examples of Current Market Volatility •Elbow Road II-B & II-C: Bid twice - Exceeded $13.5 million •5/31 Memorial: Bid twice - Exceeded $4.3 million •Winston Salem Avenue: Bid three times- last Exceeded $4.6 million •Shore Drive Phase III: Bid exceeded budget by $26 million •Atlantic Avenue Street Improvements: Construction estimate $62 million balance to complete •Virginia Beach Trail: Construction estimate Phase I potentially $10 million or more 5 Past and Current Challenges •FY 2023-24 CIP Process: •Eliminated/Delayed 9 projects •Redirected $60 million to fill other gaps •FY 2024-25 CIP Process: •Redirected $30.4 million to partially restore funding on three of those roadway projects with grant obligations •Balance to complete for those three road projects reflected as $73.7 million •Redirected Beach Maintenance Facility programmed funding to Central Plant Loop •FY 2024-25 Mid-Year Adjustments: •Consideration to redirect from Roadway projects to award minimum bids. •Redirection of $8.4m within Buildings CIP section for Buildings 1/3/11 6 “Myth” of $5 Billion CIP Unappropriated Subsequent Years Appropriation/Financing Appropriated to Date FY 2025 Budget FY 2026 Budget FY 2027 Budget FY 2028 Budget FY 2029 Budget FY 2030 Budget CIP Total Capital Projects Buildings & Assets Section 307,186,793 39,178,526 40,615,254 21,066,142 30,070,884 29,342,589 15,909,202 483,369,390 Coastal Projects Section 130,098,243 17,460,931 12,249,849 10,991,137 10,212,341 13,356,341 12,606,341 206,975,183 Economic and Tourism Section 415,472,648 80,531,294 12,455,293 10,765,139 4,380,394 4,300,734 4,300,734 532,206,236 Information Technology Section 158,764,653 16,699,293 12,545,082 7,946,606 11,962,329 12,946,605 11,962,328 232,826,896 Parks and Recreation Section 180,986,804 31,403,163 64,535,860 14,654,239 24,756,603 14,861,629 14,969,385 346,167,683 Roadways Section 676,503,173 74,111,021 83,263,452 76,075,881 49,337,289 41,721,890 55,101,040 1,056,113,746 Sewer Utility Section 159,839,255 29,887,733 24,162,000 28,109,000 26,015,000 27,730,000 24,190,000 319,932,988 Stormwater Section 338,048,714 25,503,960 29,144,001 29,144,001 29,544,001 29,544,001 29,544,001 510,472,679 Water Utility Section 110,498,681 11,893,000 15,814,000 9,777,000 13,865,000 5,370,000 17,990,000 185,207,681 Schools Section 406,625,514 63,800,000 61,300,000 61,800,000 61,800,000 61,800,000 61,800,000 778,925,514 Flood Protection Section 775,683,006 28,062,917 4,100,000 4,622,000 3,000,000 3,000,000 3,000,000 821,467,923 Total Capital Projects 3,659,707,484 418,531,838 360,184,791 274,951,145 264,943,841 243,973,789 251,373,031 5,473,665,919 7 “Myth” of $5 Billion CIP- Continued FY 2025 Total $ 418,531,838 Less: Enterprise Funds (66,759,960) Flood Protection (4,050,000) State Funding (49,211,483) Federal Funding (37,637,627) Special Service District Funds (5,409,149) Fire Grant Funding (300,000) Franchise/Medicaid/Private Contribution, etc.(1,372,066) = Local Revenues $253,791,553 Less: Dedication Funds (18,935,504) Dedication Fund (Bonds)(68,935,424) Schools Local (63,800,000) = Remaining City Local Revenue $102,120,625 General Fund Debt 39,802,819 General Fund - Pay -as-you-go 26,797,390 General Fund- Fund Balance 35,520,416 8 $102 Million Allocation Section Amount Buildings and Assets 33,035,526 Coastal 11,980,015 Economic and Tourism Development 3,620,000 Information Technology 16,699,293 Parks and Recreation 5,006,135 Roadways 31,779,656 Total $102,120,625 •Roughly 24% of total yearly programmed CIP •Annual allocation across these sections is close to the construction cost of two roads. 9 Various Challenges to Navigate •Projects driven by construction timeline •Projects with local funding as an obligatory grant match •Project timeline acceleration due to failure or risk associated with failure •Maintenance “must do’s” vs. “addressing maintenance backlogs” •Planning for more than just one-year but balancing an approach each year over the six-year CIP 10 Stage in CIP Process •All CIP sections have updated their sections with revised project costs and stated needs of resources •After high level review and meeting with City Manager, requests paired down to the amounts reflected by project in handouts provided: •Total Additional Request for Existing CIP = $ 783,703,206 •Total Request for New CIP = $ 299,303,239 •Total = $1,083,006,445 •Includes inflationary assumptions within projects requested; however, does not “blanket” all projects or programs with inflationary assumptions to generated RBNF amount. 11 $8,399,048 $6,240,218 $2,500,000 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23Jan-24Apr-24Jul-24CIP Inflation: PPI Construction Materials Indexed- HVAC Source: Federal Reserve Economic Data 12 13 14 15 16 CIP Funding and Outlook 17 Additional Funding Requested by Section CIP Section Existing Projects New Projects Total Buildings & Assets 109,884,236 202,629,037 312,513,273 Information Technology 50,313,303 33,287,002 83,600,305 Coastal 4,446,635 2,387,200 6,833,835 Parks & Recreation 14,820,538 61,000,000 75,820,538 Flood Protection 1,400,000 -1,400,000 Roadways 448,652,180 -448,652,180 Economic Development 154,186,314 -154,186,314 Total: 783,703,206 299,303,239 1,083,006,445 18 Full Funding Stress Test- Hypothetical Real Estate Rate Equivalent Request Type Balance to Complete Real Estate- Pennies to Finance Existing Projects $783,703,206 5.5¢ New Projects $299,303,240 2.5¢ Combined $1,083,006,446 8.0¢ •Fully funding in 6 years and issuing trips debt metrics…… 19 Full Funding Stress Test- Dedication Redirection through Policy Change •Existing Projects- $783.7 Million BTC •Redirection of TIF Annual Surplus, ARP Capacity Redirection, Open Space Capacity Redirection, etc. •Gap would remain - requiring equivalent of 3.75¢ Real Estate dedication to finance •Total Projects- $1.08 Billion BTC •Redirection of TIF Annual Surplus, ARP Capacity Redirection, Open Space Capacity Redirection, etc. •Gap would still remain requiring equivalent of 6.0¢ Real Estate dedication to finance •Fully funding in 6 years and issuing trips debt metrics…… 20 Full Funding Stress Test- Through Redirection from Currently Funded Projects •Existing Projects- $783.7 Million BTC •General Fund support for all six years of CIP totals $493.4 Million •Gap would still remain of $290.3 Million •Existing Projects- $1.08 Billion BTC •Current General Fund support for all six years of CIP totals $493.4 Million •Gap would still remain of $589.6 Million 21 No Single Approach nor Single Revenue Source •Ultimate plan will likely be a combination of reductions, reducing, and identifying sustainable revenue sources. •Real Estate tax dedication used in hypotheticals; however, not only source with flexibility. Tax Diversification report identified flexibility in several rates: •Restaurant •Personal Property (Pleasure Boat, Machinery and Tools, etc.) •Right size fees and charges for services •Request General Assembly for additional authority 22 Additional Consideration: •Capacity needs to remain for: •Projects that are early in discussion but will have substantial BTC •Programmatic maintenance projects in nature with reduced buying power •Operating Budget impact and decisions will also influence CIP •Execution rate determined by staffing levels and contractor capacity •Flood Protection •School Modernization •Extended time creates capacity and flexibility in the financing of projects 23 Questions and Discussion 24